News from July 16-20, 2004

House Passes Stock Option Accounting Reform Act

7/20. The House passed HR 3574, the "Stock Option Accounting Reform Act" by a vote of 312-111. See, Roll Call No. 397.

This bill, which is supported by many technology companies, and the groups that represent them, requires public companies to expense only those stock options granted to the CEO and the next four highest paid officers. It also provides an exemption for small businesses. As for the top five employees, the bill requires companies to follow the FASB standards, but with a zero volatility assumption.

Rep. Zoe LofgrenRep. Zoe Lofgren (D-CA) (at right), who represents a Silicon Valley district, stated that "this is the most important technology vote we will take this year".

Background on Stock Options Accounting and FASB. On March 31, 2004, the Financial Accounting Standards Board (FASB) released a document titled "Exposure Draft, Share-Based Payment, an Amendment of FASB Statements No. 123 and 95" that proposes that companies must expense stock option plans for all employees.

The FASB stated that "The exposure draft covers a wide range of equity-based compensation arrangements. Under the Board's proposal, all forms of share-based payments to employees, including employee stock options, would be treated the same as other forms of compensation by recognizing the related cost in the income statement. The expense of the award would generally be measured at fair value at the grant date. Current accounting guidance requires that the expense relating to so-called fixed plan employee stock options only be disclosed in the footnotes to the financial statements."

The FASB's comment period for the exposure draft ended on June 30, 2004. See, story titled "FASB Proposes Expensing of Stock Options" in TLJ Daily E-Mail Alert No. 867, April 1, 2004.

Legislative History. Rep. Richard Baker (R-LA), the Chairman of the House Financial Services Committee's (HFSC) Subcommittee on Capital Markets, and others introduced the bill on November 21, 2003. The Subcommittee held a hearing on March 3, 2003.

On May 12, 2004, the Subcommittee approved the bill by a voice vote. See, story titled "Capital Markets Subcommittee Approves Stock Options Bill" in TLJ Daily E-Mail Alert No. 897, May 13, 2004.

On June 15, 2004, the full Committee approved the bill by a vote of 45-13. See, story titled "House Financial Services Committee Approves Stock Options Bill" in TLJ Daily E-Mail Alert No. 919, June 16, 2004.

On July 8, 2004 the House Commerce Committee (HCC), which also sought jurisdiction, held a hearing. See, story titled "House Commerce Subcommittee Holds Hearing on Stock Options Bill" in TLJ Daily E-Mail Alert No. 934, July 9, 2004. (The HCC received a sequential referral on July 15, that expired on July 16.)

Rep. Richard BakerRep. Baker (at right) stated in the House that "There is no dispute that the granting of stock options to a broad base of employees has been and remains a very strong component of job creation within our economy. Does it make sense for those who criticize what they mistakenly call a jobless recovery to take away one of the principal tools that does create jobs when they are still so badly needed? I think not."

Rep. Baker added that "Forcing companies to expense these options today would defeat the very purpose of offering them, and it’s difficult to imagine why or how many companies would continue to do so. They either wouldn't, or else they would simply hire fewer workers. And that is not an 'option' the people's representatives should accept."

Rep. Lofgren stated that "the illusion that stock options only benefit fat-cat corporate executives is just that, an illusion. 53% of companies that offer stock option plans offer them to all employees. Within the technology industry, 88% offer them to all employees. Stock options are even more important in start-ups. According to the National Venture Capital Association, more than 70% of venture-backed companies award stock options to all employees."

Amendments Considered by the House. The House considered four amendments. It approved one and rejected three others.

The House approved by voice vote an amendment [3 pages in PDF] offered by Rep. Mike Oxley (R-OH) that clarifies that a company that wants to expense stock options is not prevented by the bill from doing so. Although, the bill as reported by the HFSC contained no provision that prohibited the expensing of stock options.

Rep. Paul Kanjorsky (D-PA), the ranking Democrat on the Capital Markets Subcommittee, offered an amendment [7 pages in PDF] in the nature of a substitute bill. It was rejected by a vote of 127-293. See, Roll Call No. 396.

Rep. Carolyn Maloney (D-NY) offered an amendment [2 pages in PDF] that was rejected by a vote of 114-308. See, Roll Call No. 395. It would have provided that "Nothing in this Act shall be construed to impair or limit the authority of the Commission to establish accounting principles or standards on its own initiative as the Commission deems necessary in the public interest or for the protection of investors."

Rep. Brad Sherman (D-CA) offered an amendment [2 pages in PDF] that would have removed from the bill the requirement that an assumption of zero volatility be used when calculating the value of stock option expense for the top-five executives. It was rejected by a vote of 126-296. See, Roll Call No. 394.

Representatives Kanjorsky, Maloney and Sherman are all members of the HFSC, and had unsuccessfully advanced similar arguments and amendments during committee consideration.

Analysis of the Vote. The vote on this bill reflected a pattern of voting on many bills of importance to the tech sector. Republicans were more supportive than Democrats, and Westerners were more supportive that Representatives from other parts of the U.S.

Of all House members, 73.8% voted for passage. While a majority of the members from both parties voted for the bill, Republicans were more likely to vote for the bill. Republicans voted in favor of the bill by 198-22. That is, 90% votes yes. Democrats voted for the bill by a margin of 114-88. 56.4% voted yes. Thus, party affiliation was a determinant of a member's vote.

Region of the country was also a determinant of a member's vote. For example, being from one of the three west coast states (California, Washington or Oregon) made a member more likely to vote for the bill.

While a majority of the House members are Republicans, the overwhelming majority of the members of the west coast delegation are Democrats (43 out of 67). The regional effect of a member's vote becomes apparent when one controls for party affiliation.

West coast Democrats voted for the bill 30-13 -- 70% in favor. Democrats from all other states voted for the bill 84-75 -- 53% in favor. West coast Republicans voted for the bill 22-2 --92% in favor. Republicans from all other states voted for the bill 176-20 -- 90% in favor.

Similarly, the representatives from the other mountain states of the west voted for the bill 25-4 -- 86% in favor. The state by state breakdown was as follows: Utah (3-0), Nevada (3-0), Idaho (2-0), Montana (1-0), Wyoming (1-0), New Mexico (3-0), Arizona (5-3), Colorado (6-1), and Alaska (1-0).

It may also be notable that the majority of the 19 no votes cast by Representatives from west coast states and mountain states, a majority were cast by members from the Los Angeles area.

Members of the House Commerce Committee (HCC) were less likely than other members of the House to vote for this bill. The vote by HCC members was 36-20 -- 64% in favor -- which was less than the overall support of 74%. 7 of the 22 no votes cast in the House by Republicans were cast by HCC Republicans. The HCC aggressively defends its jurisdiction, and sometimes infringes upon the jurisdiction of other committees. It had sought jurisdiction over this bill. The bill, however, was a product of the HFSC, not the HCC. The HCC held no markup.

(Readers may note that some of the above numbers do not add up to 435. This is because of members who did not vote, and vacancies. Percentages are based on those who cast votes. The party breakdowns and percentages are based on members with party affiliation; the one independent was not factored in.)

Technology Sector. Representatives from districts that are home to tech companies and workers, and groups that represent tech companies, heaped praise upon the House for passing this bill.

Robert Holleyman, P/CEO of the Business Software Alliance (BSA), stated in a release that "Stock options have proven to be an invaluable instrument for companies large and small, established and entrepreneurial, to recruit and retain the best employees" He added that "At a time when other countries are encouraging the use of stock options by their companies, we need to ensure that American corporations have access to the same tools and incentives as their global competitors. In an increasingly borderless global economy, U.S. businesses must be able to attract talented employees who are the backbone of American innovation and entrepreneurial spirit".

John Palafoutas, of the American Electronics Association (AeA), stated in a release that "Today’s House action on stock options is a wake-up call for the US Senate ... The overwhelming bipartisan vote shows that the House understands the serious economic implications of expensing options and the negative impact expensing will have on American workers who are granted stock options by their companies. ... The FASB rule was a solution in search of a problem. And this rule would have grave consequences on a crucial incentive for high-tech companies and their workers."

He added that "We believe that the Senate Banking Committee should conduct immediate hearings on this bill. This is not a philosophical issue but a very practical problem facing the US economy. FASB has refused to look at the economic implications of expensing; Congress has the ultimate responsibility to examine the impact the FASB standard will have on American business, the American economy, and the American worker."

House Passes Junk Fax Bill

7/20. The House passed HR 4600, the "Junk Fax Prevention Act of 2004", by voice vote. This bill would amend 47 U.S.C. § 227 to preserve the "established business relationship" exception to the general ban on unsolicited faxes.

Rep. Fred Upton (R-MI), Rep. Ed Markey (D-MA), and others introduced this bill on June 16, 2004. The House Commerce Committee amended and approved it on June 24, 2004. See, story titled "House Commerce Committee Approves Junk Fax Bill" in TLJ Daily E-Mail Alert No. 927, June 28, 2004.

The Senate has yet to pass this bill. On June 23, Sen. Olympia Snowe (R-ME) introduced a related bill in the Senate, S 2569, the "Junk Fax Prevention Act of 2004", in the Senate. Also, on June 24, Sen. Gordon Smith (R-OR) and others introduced S 2603, also titled the "Junk Fax Prevention Act of 2004".

Microsoft Announces Stock Buy Back and Dividend Plans

7/20. Microsoft announced that it plans to "buy back up to $30 billion of the company's stock over the next four years" and make "a special one-time dividend of $3 per share". See, Microsoft release.

In addition, Microsoft executives held a teleconference in which they discussed these and other plans. See, transcript of teleconference held by Steve Ballmer (CEO), Bill Gates (Chairman and Chief Software Architect), John Connors (SVP and CFO), and Brad Smith (SVP and General Counsel).

John ConnorsJohn Connors (at right) stated that "taken together, these steps represent a combined total value to shareholders of up to 75 billion over the next four years, if our regular quarterly dividend remains at this current level."

The Microsoft release states that the stock buy back and dividend plans "will not affect Microsoft's commitment to research and development".

Gates added that "And so you might say, what's next for us, and the answer is record investment in innovation. One way to look at that is over the next year we'll file for over 3,000 patents and that's up very dramatically and would put us certainly in one of the top companies in the world in terms of innovative activities."

Gates also said that "our online properties, including our search properties, will be improving in a pretty dramatic way."

Microsoft General Counsel Discusses Legal Actions

7/20. Microsoft's announcements regarding stock buy back and dividends also addressed Microsoft's handling of various legal proceedings.

Microsoft stated in its July 20 release that "In the past two years, Microsoft has made significant progress in resolving many of the legal issues facing the company -- including the recent U.S. Court of Appeals decision reaffirming its settlement with the Department of Justice, most of the state class-action lawsuits, and the AOL and Sun Microsystems cases -- along with patent claims such as the InterTrust litigation. Resolving these issues marks an important step forward in clarifying Microsoft's legal and related business risk."

In addition, Microsoft's General Counsel, Brad Smith, stated in a teleconference that "over the past two years or so, we've been focused on resolving our legal issues from the past, on developing stronger relationships with the industry and with government, and focusing on the future. For example, we resolved the major antitrust case here in the United States, and the recent Court of Appeals ruling sent a clear and emphatic message that our settlement is a fair and appropriate resolution of those issues." See, transcript.

Brad SmithSmith (at right) continued that "We've resolved three-quarters of the state class action cases in the United States, either through settlement or by winning in the courts." He added that "We've resolved the largest private lawsuits pending against the company, such as AOL-Time Warner, Sun Microsystems and Intertrust."

He also said that "While we still face several legal issues and we take them seriously, we have significantly reduced the legal risks facing the company. We also have a much clearer understanding of the potential risks involved in the cases that remain, such as the European Commission case, which has moved into the appeals process.

Smith responded to a question about the EU antitrust case. "We anticipate that the hearing will take place perhaps in September, certainly this fall, on interim measures. That will decide whether the sanctions take effect while the case is litigated or whether they're suspended until later. Typically a case takes two to three years to go through the Court of First Instance. If there is an appeal, it can add another couple of years to the process. So it could be quite a long road."

He also said that "With respect to settlement, as we've always said, we're always open to an effort to explore a reasonable and amicable resolution. There are no discussions going on at the moment, but over the course of a number of years, obviously things can happen."

Finally, he stated that Microsoft "has always said that reducing our legal and associated business risks was a prerequisite to addressing our cash management plans. With so many of our cases resolved and the legal uncertainties so much better defined and narrowed, we are now in a position where we can return significant resources to our shareholders."

BTG Sues Microsoft and Apple Alleging Patent Infringement

7/20. BTG plc, Teleshuttle Corporation and Teleshuttle Technologies LLC filed a complaint in U.S. District Court (NDCal) against Microsoft and Apple alleging infringement of U.S. Patent No. 6,557,054. This patent is titled "Method and system for distributing updates by presenting directory of software available for user installation that is not already installed on user station"

The abstract of this patent provides the following description. "A method for distributing information to a plurality of uncoordinated user stations each of which is configured for communications with a multiplicity of independently-operated servers via a non-proprietary network includes steps for providing a distribution service that distributes updates for a plurality of different products, and providing a transporter software component to each of the plurality of uncoordinated user stations, wherein the transporter software component at each user station automatically effects communication sessions with the distribution service via the non-proprietary network for the purpose of obtaining updates for each of at least a subset of the plurality of different products that are installed on that user station. Moreover, a user station, which includes a storage medium, a plurality of different products installed on the storage medium, and transporter software installed on the storage medium for automatically effectuating communication sessions with a distribution service via a non-proprietary network in order to obtain updates for each of the plurality of different products, and a distribution service that distributes updates for a plurality of different products to a plurality of uncoordinated user stations via a non-proprietary network, are also described."

BTG stated in a release that "BTG asserts that Microsoft’s and Apple’s operating systems, as well as Microsoft’s Office® products, incorporate the patented technologies."

People and Appointments

7/20. Rep. Johnny Isakson (R-GA) won the Georgia Republican Senate primary. Rep. Denis Majette (D-GA) won the most votes in the Georgia Democratic Senate primary, but still faces a runoff election against Cliff Oxford. The general election in November is for the Senate seek being vacated by Sen. Zell Miller (D-GA).

7/20. Rep. Richard Burr (R-NC) won the North Carolina Republican Senate primary. He will run in November against Democrat Erskine Bowles for the seat being vacated by Sen. John Edwards (D-NC). Rep. Burr is a member of the House Commerce Committee.

7/20. President Bush released a statement in support of Bill Myers, his nominee to be a Judge of the U.S. Court of Appeals for the 9th Circuit. Senate Democrats are blocking a vote on his nomination. Bush said that "These tactics are unfair to Bill Myers and unfair to the American people." Myers is currently the Solicitor of the Department of the Interior.

7/20. Margaret Dailey was promoted to Legal Counsel to the Bureau Chief of the Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB). She had been an Attorney Advisor in the WCB's Pricing Policy Division. She will work on pricing policy and other matters. Before joining the FCC in 2000 she worked for American Cellular Corporation (CellularOne). Before that, she worked for WorldCom, and for the law firm of Morgan Lewis & Bockius. See, FCC release.

7/20. Vickie Robinson was promoted to Legal Counsel to the Bureau Chief of the Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB). She had been an Attorney Advisor in the WCB's Telecommunications Access Policy Division. She will work on on universal service, numbering, and other matters. Before joining the FCC in September of 2001 she worked for the law firm of Swidler Berlin. See, FCC release.

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7/20. President Bush gave a speech, and answered questions, in Cedar Rapids, Iowa. He stated that "One of the ways we got to make sure this economy continues to grow is to make sure there is broadband technology throughout the entire country, so people like this good man, people like Mike, can do -- can work out of home if they want to; or can bring educational information into their home."

7/20. The Department of Justice's Antitrust Division published in its web site a copy of the slides [120 pages in PDF] that it used in its closing argument before the U.S. District Court (NDCal) in U.S. v. Oracle.

7/20. Secretary of Homeland Security Tom Ridge gave a speech in which he stated that "our country has made tremendous technological progress and added important technological layers of security. Yet the greatest resource, the greatest asset, and that which we must focus on and sustain our focus is the individual citizens. You can have all the technology you want, but unless you have a vigilant, aware, America and a prepared citizen, the technology is not going to get you as far down the road as you need to go. No government entity, no organization, no information expert can replace individual responsibility."

7/20. The U.S. Court of Appeals (6thCir) issued its opinion in MCI v. Ohio Bell, a case regarding the interconnection provisions of §§ 251 and 252 of the Communications Act. The Appeals Court affirmed the District Court's order affirming the arbitration decision of the Public Utilities Commission of Ohio (PUCO). This case is MCI Telecommunications, Inc. v. Ohio Bell Telephone Company, et al., App. Ct. No. 03-3525, an appeal from the U.S. District Court for the Southern District of Ohio at Columbus, D.C. No. 97-00721, Judge Edmund Sargus presiding.

7/20. The Progressive Policy Institute (PPI) released a paper [16 pages in PDF] titled "Meeting the Offshoring Challenge". PPI is a New Democrats think tank. The author of the paper is Robert Atkinson, VP of the PPI's Technology & New Economy Project.

7/20. The U.S. Court of Appeals (4thCir) issued its opinion [11 pages in PDF] in Humanoids v. Rogan, affirming the District Court's holding that the U.S. Patent and Trademark Office (USPTO) may reject an application to register a trademark because the application contains multiple marks. This case is Humanoids Group v. James Rogan, U.S. Court of Appeals for the 4th Circuit, App. Ct. No. 03-1896, an appeal from the U.S. District Court for the Eastern District of Virginia, at Alexandria, Judge James Cacheris presiding, D.C. No. CA-02-1419.

Foundations Release Report on Health Care and Information Technology

7/19. The Markle Foundation and the Robert Wood Johnson Foundation released a report [67 pages in PDF] titled "Achieving Electronic Connectivity in Healthcare: A Preliminary Roadmap from the Nation's Public and Private-Sector Healthcare Leaders". See also, Markle release summarizing the report.

The report states that "the current system is economically inefficient and ... clinically dangerous". It also states that the current systems fails to empower individuals with information technology (IT).

It concludes that "empowering patients through IT will benefit the healthcare system directly by enabling patients to better maintain and improve their own health through informed choices. More informed patients are likely, in the long term, to push for higher quality, evidence-based care that is delivered as economically as possible."

The report contains three main recommendations, which pertain to creating a technical framework for connectivity, addressing financial barriers, and engaging the American public.

First, it recommends that "The creation of a nonproprietary ``network of networks´´ is essential to support the rapid acceleration of electronic connectivity that will enable the flow of information to support patient care. The network should be based on a ``Common Framework´´ of agreements among participants. The network should use a decentralized, federated architecture, that is based on standards, safeguards patient privacy and is built incrementally, without the use of a National Health ID or a centralized database of records."

Second, the report recommends that "The development of financial and other incentives and related processes, such as standards certification, to promote improvements in healthcare quality through the adoption of clinical applications and information exchange based on standards."

Third, it recommends that "Reaching out to the public with a consistent set of messages to be used by government, healthcare, and consumer leaders to promote the benefits of electronic connectivity and to encourage patients and consumers to access their own health information."

On April 27, 2004, President Bush gave a speech in Baltimore, Maryland in which he advocated the use of electronic records in the health care industry. He also issued an executive order regarding "the development and nationwide implementation of an interoperable health information technology infrastructure". See, stories titled "President Bush Advocates Conversion to Electronic Medical Records" and "Bush Addresses Privacy of Electronic Medical Records" in TLJ Daily E-Mail Alert No. 886, April 28, 2004.

See also, President Bush's speech in Minneapolis, Minnesota April 26, 2004, and story titled "Bush Addresses Broadband Access Taxes, Research and Development, and Conversion to Electronic Medical Records" in TLJ Daily E-Mail Alert No. 885, April 27, 2004.

There is also legislation pending in the Congress on the conversion to electronic medical records. See, for example, S 2421, the "Health Care Modernization, Cost Reduction, and Quality Improvement Act", introduced by Sen. Ted Kennedy (D-MA) on May 13, 2004. See also, story titled "Sen. Kennedy Introduces Health Care Info Tech Bill" in TLJ Daily E-Mail Alert No. 900, May 18, 2004. and Common Cause Request FTC to Censor TV Network

7/19., Inc. and Common Cause submitted a document [10 pages in PDF] to the Federal Trade Commission (FTC) that requests that the FTC "institute a complaint against Fox News under section 5 of the Act, for deceptive practices in the advertising and marketing of the programming of Fox News Channel".

The document offers, and relies upon, detailed descriptions and analysis of the political news and editorial content of Fox News. The document also asserts that Fox's use of the phrase "fair and balanced" in connection with its political news and editorial content constitutes marketing to consumers. The document asserts that "fair and balanced" does not accurately portray Fox's political news and editorial content, and that Fox's use of the phrase "fair and balanced" is commercial marketing subject to FTC regulation under the Federal Trade Commission Act (FTCA). See, full story.

Gallagher Addresses Independent Management of DNS

7/19. Michael Gallagher, the Assistant Secretary of Commerce for Communications and Information, released a statement regarding the Internet Corporation for Assigned Names and Numbers (ICANN).

Gallagher, who is the head of the U.S. Department of Commerce's National Telecommunications and Information Administration, is in Kuala Lumper, Malaysia for the meeting of the ICANN on July 19 through 23. See also, ICANN meeting agenda.

Michael GallagherGallagher (at right) stated that "I am pleased that ICANN has timely met the MOU milestones to date. Clearly more work remains to be done for ICANN to achieve functional, sustainable independence. We look forward to continuing to work collaboratively with ICANN to complete the remaining tasks over the course of the MOU as we complete the transition to independent, private sector management of the Internet Domain Name System."

In the beginning, the U.S. Department of Defense (DOD) created the internet. The DOD's Advanced Research Projects Agency Network (ARPANET) handled domain name registrations. Later, civilian registration activity was transferred from the DOD to the National Science Foundation (NSF), which subcontracted to Network Solutions, Inc. (NSI). In 1997, President Clinton transferred authority to the Department of Commerce (DOC). In 1998, the DOC entered into a Memorandum of Understanding (MOU) with the ICANN transferring considerable control over the DNS to the ICANN. However, this MOU is limited in its term, and is subject to termination by the DOC. The MOU was renewed in September 2003 for three years. The DOC's NTIA is responsible for matters relating to the DNS and this MOU.

The ICANN stated in a release that "it has successfully completed all of its objectives to date" under its MOU) with the DOC. It added that it "has so far completed seven independence enabling structural reforms from the MOU on time, and is on or ahead of schedule to complete all of the remaining key organisational tasks."

People and Appointments

7/19. John Kneuer was named Deputy Assistant Secretary of Commerce for Communications and Information. That is, he is Michael Gallagher's top assistant at the National Telecommunications and Information Administration (NTIA). Kneuer joined the NTIA in October of 2003 as Counselor to the Assistant Secretary. He has also worked for the law firm of Verner Liipfert (which is now part of Piper Rudnick), the Industrial Telecommunications Association, and the Federal Communications Commission's (FCC) wireless bureau. See, NTIA release.

7/19. President Bush announced his intent to nominate Michael Gallagher to be Assistant Secretary of Commerce for Communications and Information (head of the U.S. National Telecommunications and Information Administration). Bush nominated Gallagher for this position last fall following Nancy Victory's ethics related resignation. The Senate did not act on Gallagher's nomination. Bush gave Gallagher a recess appointment over the July 4 recess. Hence, he already holds the position for which he is being nominated. However, the recess appointment will terminate with the new Congress in January. In contrast, a person confirmed by the President serves at the pleasure of the President. That is, if Gallagher is confirmed by the Senate, and Bush is re-elected, he could hold the position through January of 2008, if Bush so decides. See, White House release.

7/19. President Bush announced his intent to nominate Theodore Kassinger to be Deputy Secretary of Commerce. Bush also just gave him a recess appointment.

7/19. Brad Huther was named CEO of the International Intellectual Property Institute (IIPI). He replaces Bruce Lehman, who joined the Washington DC office of the law firm of Akin Gump. Huther previously worked at the Department of Commerce. In 2002 and 2003 Huther worked at the U.S. Patent and Trademark Office (USPTO) as Senior Advisor to the former head of the USPTO, James Rogan. From 1999 through 2002, Huther was a Special Attaché to the World Intellectual Property Organization (WIPO). Lehman, who was the first head of the USPTO during the Clinton Gore administration, remains the Chairman of the Board of Directors of the IIPI. Before his appointment to the USPTO, he worked for the law firm of Swidler & Berlin. And before that, he worked for the House Judiciary Committee. See, IIPI release.

7/19. Doug Gaston was promoted to SVP and General Counsel of Comcast Cable. He has worked for Comcast for eight years. He will report to Mike Tallent, EVP for Finance and Administration of Comcast Cable, and Art Block, SVP and General Counsel of Comcast Corporation. He replaces Terry Bienstock who has left Comcast to establish a legal practice and consulting firm. See, Comcast release.

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7/19. Microsoft and Lindows (now Linspire) both announced that they have settled their trademark infringement litigation. They stated that "The settlement agreement resolves all claims in this litigation, both in the United States and internationally. Terms of the settlement are confidential." See, Microsoft release and Linspire release. However, the two companies did announce that Lindows will stop using the word "Lindows", and instead use "Linspire". On December 20, 2001, Microsoft filed a complaint [MS Word] in U.S. District Court (WDWash) against Lindows, Inc. alleging trademark infringement, trademark dilution, unfair competition, and a state law claim for unfair business practice. The claims are based upon the similarity of the term "Lindows" to the term "Windows", which is a Microsoft trademark.

7/19. Federal Communications Commission (FCC) Commissioner Michael Copps gave another speech [2 pages in PDF] in which he described a "deplorable mess" in radio and television broadcasting.

7/19. David Thomas was elected Chairman of the Software & Information Industry Association's (SIIA) Software Division. He is also the founder and former CEO of Intacct Corporation. See, SIIA release [PDF].

DC Circuit Grants Petition for Review in Verizon v. FCC

7/16. The U.S. Court of Appeals (DCCir) issued its opinion [11 pages in PDF] in Verizon v. FCC, granting Verizon's petition for review of the FCC's order denying its request to forebear from requiring it to unbundle and lease certain elements of its network. See, full story.

PFF Advocates Less Regulation by the ICANN

7/16. The Progress and Freedom Foundation (PFF) released a paper [27 pages in PDF] titled "New Domain Name Services: Should ICANN or Competition Govern?" The paper was written by William Adkinson of the PFF.

This paper argues that competition in the domain name service (DNS) markets promotes consumer welfare and innovation more than does economic regulation by the Internet Corporation for Assigned Names and Numbers (ICANN).

It concludes that "The ICANN ``experiment in governance´´ has been long on strife and short on successful outcomes. It is critical that ICANN narrow its focus on getting its core DNS missions (including security) right and cease regulating in areas where competition will promote innovation and protect consumers better than ICANN. The breadth of competitive forces described in this paper, coupled with ICANN’s severe shortcomings as a regulator, establish that ICANN’s proper scope of regulatory activity is narrow."

The paper also asserts that if VeriSign were to prevail in its lawsuit against the ICANN, then "consumers are likely to benefit from increased innovation as well as expanded product and service offerings".

People and Appointments

7/16. Howard Beales, Director of the Federal Trade Commission's (FTC) Bureau of Consumer Protection (BCP) will leave the FTC on August 6, 2004. He will become an Associate Professor of Strategic Management and Public Policy at George Washington University in Washington DC. Lydia Parnes, the Deputy Director of the BCP will become the acting Director of the BCP. See, FTC release.

7/16. The Senate Commerce Committee announced that it will hold a meeting on Thursday, July 22, at which it will consider, among other items, the nominations of Deborah Majoras and Jonathan Leibowitz to become Commissions of the Federal Trade Commission (FTC). Majoras would become Chairman, replacing Timothy Muris, who has already announced his intent to depart. See, story titled "Senate Commerce Committee Holds Hearing on FTC Nominees" in TLJ Daily E-Mail Alert No. 910, June 3, 2004.

7/16. President Bush announced his intent to designate Daniel Levin to be the acting Assistant Attorney General in charge of the Office of Legal Counsel. See, White House release.

7/16. Kevin Rollins was named P/CEO of Dell, replacing Michael Dell, who founded the company, and remains Chairman of the Board of Directors. The company stated in a release that "As they have for more than seven years, Messrs. Rollins and Dell continue to run the company with a distinctive shared-leadership structure".

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7/16. Trade representatives of the U.S., Canada and Mexico released a joint statement [4 pages in PDF] regarding the North American Free Trade Agreement (NAFTA) titled "A Decade of Achievement".

7/16. Federal Reserve Board Governor Susan Bies gave a speech in Chicago, Illinois titled "Using Enterprise-wide Risk Management to Effectively Execute Business Strategies". She spoke about risk management. She also related a historical anecdote about the early use of information technology in risk management. She stated that "When Regulation Q was lifted in 1978, the Federal Reserve no longer established the rate paid on non-demand deposit accounts. Bankers were then able to set the rate of interest paid on core deposits based on their own competitive conditions." She continued that "One of the first challenges bankers faced in this environment was that no one had the information systems needed to manage the entire balance sheet rate sensitivity. Not only were asset/liability models nonexistent, but data on loan and deposit maturities and repricing were also not available from standard loan and deposit computer application systems. So in the early 1980s, asset/liability models were developed, taking advantage of the newly emerging technology of computers and software."

Go to News from July 11-15, 2004.