TLJ News from July 16-20, 2005

House Rules Committee Adopts Rule for PATRIOT Act Extension Bill

7/20. The House Rules Committee adopted a rule for consideration of HR 3199, the "USA PATRIOT and Terrorism Prevention Reauthorization Act of 2005". The full House will begin consideration of the bill on Thursday, July 21, and likely finish on Friday, July 22. The rule permits twenty amendments to be offered. See, summary, with hyperlinks to each amendment.

The Committee met for two and one half hours on Wednesday afternoon, July 20. It heard from fourteen Representatives who sought to have amendments made in order. In addition, several members of the Committee offered their own amendments. The Committee met again Wednesday night. It approved a substitute version of the bill, and made in order for consideration by the full House twenty amendments. About sixty-three proposed amendments had been submitted to the House Rules Committee (HRC).

The HRC's substitute [PDF] takes the bill as introduced [PDF] on July 11, and incorporates most, but not all, of the amendments approved on July 13 by either the House Judiciary Committee (HJC) and the House Intelligence Committee.

The USA PATRIOT Act includes a section that sunsets sixteen sections of Title II of the Act at the end of this year. These sixteen provisions pertain mostly to surveillance, searches, and seizures by the Federal Bureau of Investigation (FBI), and in particular, to wiretapping in traditional telecommunications, surveillance in new internet protocol based services, and accessing stored electronic data.

During the HJC meeting to mark up HR 3199 on Wednesday, July 13, much of the debate focused on just a few provisions, and especially § 206 (regarding roving wiretaps) and § 215 (regarding access to business records, including library records, under the FISA).

The concern over § 215 pertains in large part to Foreign Intelligence Surveillance Act (FISA) orders for the records of libraries. Rep. James Sensenbrenner (R-WI), the Chairman of the HJC, spoke at the HRC meeting. He stated, as he has in the past, that the Department of Justice (DOJ) has informed the HJC that it has never used a § 215 related order to obtain records from a library about a U.S. person.

Nevertheless, Rep. James McGovern (D-MA), who is a member of the HRC, and Representatives who offered further § 215 related amendments, argued that the current law has a chilling effect, and needs to be revised.

The HRC did not make in order most of the amendments offered that pertain to § 215. It did, however, make in order an amendment [PDF] offered by Rep. Jeff Flake (R-AZ) and Rep. Adam Schiff (D-CA) that would require that the Director of the FBI must personally approve any request for records from a library or bookstore by the FBI under § 215. This is largely symbolic, given the likely rarity of the exercise of this authority.

The HRC also made in order an amendment [PDF] offered by Rep. Darrell Issa (R-CA) regarding § 206 and roving wiretaps. It would increase the oversight over the use of roving wiretaps by requiring an applicant to notify the issuing judge within a reasonable time, as determined by the court but not more than 15 days, of the change of surveillance from the initial facility or place to a new one. It would also require the applicant to specify the total number of electronic surveillances that have been or are being conducted.

The HRC also made in order an amendment [PDF] offered by Rep. Flake, Rep. William Delahunt (D-MA), Rep. Butch Otter (R-ID), and Rep. Jerrold Nadler (D-NY). The authors wrote this summary. "Specifies that the recipient of a national security letter may consult with an attorney, and may also challenge national security letters in court. Authorizes a judge to throw out the national security letter request by the government “if compliance would be unreasonable or oppressive” to the recipient of the national security letter. Allows the recipient to challenge the non-disclosure requirement (gag order) of the national security letter request. Permits a court to modify or remove the non-disclosure requirement of the national security letter request “if it finds that there is no reason to believe that disclosure may endanger the national security of the United States, interfere with a criminal, counterterrorism, or counterintelligence investigation, interfere with diplomatic relations, or endanger the life or physical safety of any person.” Modifies the non-disclosure requirement so that recipients may tell individuals whom they work with about the national security letter request in order to comply with the national security request. Contains penalties for individuals who violate the non-disclosure requirements of a national security letter. Requires that reports on national security letters by federal agencies to Congress must also be sent to the House and Senate Judiciary Committees."

The HRC also made in order numerous amendments that may relate to terrorism, but not to the extension of the sixteen sunsetted provisions of the PATRIOT Act.

For examples, there is an amendment [PDF] offered by Rep. Shelley Capito (R-WV) regarding terrorist attacks on railroad and other transportation systems, an amendment [PDF] offered by Rep. Schiff and others that would make it a crime to use a vessel to smuggle terrorists or dangerous materials, an amendment [PDF] offered by Rep. Henry Hyde (R-IL) that would make narco-terrorism a crime, an amendment [PDF] offered by Rep. Pete Sessions (R-TX) regarding aircraft, and an amendment offered by Rep. Nita Lowey (D-NY) regarding the way the federal government provides grant funding to first responders.

The HRC also made in order an irrelevant amendment [PDF] offered by Rep. Howard Coble (R-NC). It would amend the Contraband Cigarette Trafficking Act. Perhaps it should be noted the HJC held about twelve hearings on the PATRIOT Act in April, May and June. Most of these were conducted by the Subcommittee on Crime, which Rep. Coble chairs. That is, he contributed a vast amount of time and effort to leading the HJC's PATRIOT Act oversight activities.

Finally, there is a technology related amendment [PDF] offered by Rep. Howard Berman (D-CA) and Rep. Delahunt. It would require a report to the Congress on the development and use of data mining technology by departments and agencies of the federal government.

Rep. Berman and Rep. Delahunt offered a very similar data mining amendment during the HJC mark up on July 11. Chairman Sensenbrenner stated that it was not germane, and Rep. Berman withdrew the amendment. However, Sensenbrenner also stated at that mark up that he supports the concept, and wants to see the Congress enact data mining related legislation as part of a separate bill.

The amendment defines data mining, requires an annual report on data mining activities by federal agencies, and specifies the contents of the report.

U.S. Chamber and Visa USA to Host Seminars on Data Security

7/20. The U.S. Chamber of Commerce and Visa USA announced that they will hold a series of nine seminars in nine U.S. cities in August and September to educate businesses regarding maintaining the security of customer data.

Daniel Caprio, the Chief Privacy Officer at the Department of Commerce, also spoke at the event. He said that it is important to "create a culture of security", in order "to safeguard consumer information".

Steve Ruwe of Visa USA stated that the Visa fraud rate is now down to five cents on every $100. He said that this is an "all time low".

Members of Congress will also be invited to participate in the seminars. The nine seminars will be held in or near the districts of some of the Representatives who will play major roles in drafting legislation affecting data security. Some have already sponsored bills. For example, while no seminars will be held in the huge metropolitan areas of New York City, Chicago, San Francisco, or Houston, one will be held in or near Arlington, Texas, which is represented by Rep. Joe Barton (R-TX), the Chairman of the House Commerce Committee.

Another will be held in Charlotte, North Carolina, which, in addition to being a financial services industry center, is represented by Rep. Mel Watt (D-CA), a member of the House Financial Services Committee and its Consumer Credit Subcommittee, and Rep. Sue Myrick (R-NC), a member of the HCC and its Consumer Protection Subcommittee. Another seminar will be held in Springfield, Missouri, which is represented by Rep. Roy Blunt (R-MO), a member of the HCC, and the Republican leadership. Yet another will be held in Columbus, Ohio, which is represented by Rep. Patrick Tiberi (R-OH) and Rep. Deborah Pryce (R-OH), both of whom are members of the HFSC. Another seminar will be held in Wilmington, Delaware, which is represented by Rep. Michael Castle (R-DE), a senior member of the HFSC, and its Consumer Credit Subcommittee.

PFF Paper Argues Against Data Breach Notification Mandates

7/20. The Progress and Freedom Foundation (PFF) released a paper [19 pages in PDF] titled "An Economic Analysis of Notification Requirements for Data Security Breaches". Thomas Lenard (PFF) and Paul Rubin wrote the paper. Rubin is a professor of law and economics at Emory University.

They conclude that "A series of highly publicized data security breaches have created the perception that identity theft and related frauds are a large and growing problem, in need of a new regulatory solution. But, this perception is not borne out by the actual data, which indicate that, depending on the time period and measure used, identity theft has been either constant or diminishing over time. Thus, calls for new regulation should be treated with some skepticism."

They add that "the market seems to be working fairly well to restrain identity theft. Firms in the credit industry bear most of its costs and have a strong incentive to keep those costs under control."

They assert that "the costs of a notification requirement are likely to be substantially higher than the benefits. Even for consumers whose data has been compromised, the probability of being a victim of fraud is so low -- only 2 percent -- that little action is justified."

They argue that consumers and businesses will incur substantial costs in the form of overreaction to notifications of data breaches. "Consumers, for example, may be induced to place fraud alerts on their accounts or close them entirely, actions that are likely to be far more costly than being an identity theft victim. They may also be induced to shift their credit transactions offline, which the data show would actually increase their exposure to identity theft."

Also, on Friday, July 22, at 12:00 NOON the PFF will host a panel discussion titled "Data Security and Privacy Protection: What is the Public Sector's Role?" in Room B-369 of the Rayburn Building on Capitol Hill. Professor Rubin will be one of the panelists. Marc Rotenberg of the Electronic Privacy Information Center, will argue in favor of notification laws. David Cavicke, Chief Counsel to the House Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection, will also participate.

People and Appointments

7/20. James Plummer was elected to the Board of Directors of Intel. He is Dean of the Stanford School of Engineering. See, Intel release.

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7/20. The U.S. Court of Appeals (6thCir) issued its opinion [8 pages in PDF] in Mid-Michigan Computer Systems v. Glassman, a diversity case, applying the state law of Ohio, regarding the computation of damages for misappropriation of trade secrets involving software. This case is Mid-Michigan Computer Systems, Inc. v. Marc Glassman, Inc., U.S. Court of Appeals for the 6th Circuit, App. Ct. No. 04-3058, an appeal from the U.S. District Court for the Northern District of Ohio, at Cleveland., D.C. No. 00-03117, Judge Kathleen O'Malley presiding.

7/20. The Copyright Office published a notice in the Federal Register regarding its settlement proposal for the adjustment of certain royalty rates for use of the cable statutory license. The deadline to submit comments in response to, and notices of intent to participate in proceedings on, the proposed settlement is August 19, 2005. See, notice in the Federal Register, July 20, 2005, Vol. 70, No. 138, at Pages 41650 - 41652.

Bush Nominates John Roberts for Supreme Court

7/19. President Bush announced his intent to nominate Judge John Roberts to be a Justice of the Supreme Court. He is currently a Judge of the U.S. Court of Appeals (DCCir). Technophiles may take note that he wrote the opinion of the DC Circuit in CEA v. FCC, upholding the FCC's DTV tuner mandates order, and that he joined in the opinion of the DC Circuit in RIAA v. Verizon, holding that DMCA § 512(h) subpoenas may only be issued to an ISP that is engaged in storing on its servers material that is infringing or the subject of infringing activity.

John RobertsEarly in his career, Roberts (at left) clerked for Justice William Rehnquist, worked for former Attorney General William Smith, and worked as Associate Counsel to the President during the Reagan administration.

In 1986 he joined the Washington DC office of the law firm of Hogan & Hartson. He worked as Principal Deputy Solicitor General of the United States during the first Bush administration, and then returned to Hogan & Hartson in 1993.

The first President Bush nominated Roberts to be a Judge on the DC Circuit late in his term of office. However, he lost the 1992 election, and the nomination lapsed in the Democratic controlled Senate. The second President Bush nominated Roberts in 2001. However, the Democratic controlled Senate took no action. Bush again nominated Roberts in January of 2003. He was confirmed by the Senate on May 8, 2003.

See also, transcript of White House event at which President Bush announced the nomination. See also, Department of Justice's (DOJ) biography of Judge Roberts.

Few of President Bush's nominees for federal judgeships have had a background in technology related fields of law. A review of the questionnaire responses and financial disclosure statements submitted by these nominees to the Senate Judicial Committee (SJC) often reveals that the nominees' only connection to technology is that they hold stock portfolios that include technology and telecommunications companies.

However, Judge Roberts has had some exposure to technology law. At Hogan & Hartson he represented media companies in their challenges to the Federal Communications Commission's (FCC) media ownership rules.

He has also participated in two important cases as a Judge of the Court of Appeals. First, he wrote the October 28, 2003, opinion [20 pages in PDF] in Consumer Electronics Association v. FCC, upholding the FCC's order mandating that most TV sets be built with digital TV tuners. Neither the FCC's order, nor Judge Roberts' opinion, were well received by the Consumer Electronics Association (CEA).

See also, story titled "DC Circuit Upholds FCC DTV Tuner Mandates Order" in TLJ Daily E-Mail Alert No. 768, October 29, 2003.

Second, Judge Roberts joined in Judge Douglas Ginsburg's December 19, 2003 opinion [16 pages in PDF] in RIAA v. Verizon. In this case the Court of Appeals held that a Section 512(h) subpoena may only be issued to an ISP that is engaged in storing on its servers material that is infringing or the subject of infringing activity. This ruling the deprived the Recording Industry Association of America (RIAA), and its member record companies, of an expeditious and inexpensive means for acquiring the names of P2P infringers from their ISPs. It forced the record industry to resort to more time consuming and expensive procedures. This opinion was not well received by the record and movie industries.

See also, story titled "DC Circuit Reverses in RIAA v. Verizon" in TLJ Daily E-Mail Alert No. 804, December 22, 2003. See also, 17 U.S.C. § 512.

President Bush stated on July 19 that "Under the Constitution, Judge Roberts now goes before the United States Senate for confirmation. I've recently spoken with leaders Senator First and Senator Reid, and with senior members of the Judiciary Committee, Chairman Specter and Senator Leahy. These senators share my goal of a dignified confirmation process that is conducted with fairness and civility."

Sen. Patrick Leahy (D-VT), the ranking Democrat on the SJC, stated in a release that the confirmation process "will take time".

Sen. Leahy added that "We need to ensure that the Supreme Court remains a protector of all Americans' rights and liberties from government intrusion and that the Supreme Court understands the role of Congress in passing legislation to protect ordinary Americans from abuse by powerful special interests.  No one is entitled to a free pass to a lifetime appointment to the Supreme Court. There are far different considerations for circuit court nominations than for those to the Supreme Court. How the nominee views precedent, what the nominee regards as settled law, and how the nominee will exercise the incredible power of a Supreme Court Justice to be the final arbiter of the meaning of the Constitution -- all of these raise very different considerations than those weighed for the lower courts."

Sen. Ted Kennedy (D-MA), who is also a senior member of the SJC, issued a statement. It was far more subdued than his 1987 "In Robert Bork's America" speech on the Senate floor. Sen. Kennedy wrote that "No nominee, especially a nominee who is well known to have argued ideological positions on issues important to the American people, should be confirmed without full and candid disclosure and discussion of those positions and their importance to him. I welcome the opportunity to question Mr. Roberts, and believe that the American people will know at the end of this process whether he should advance to the Supreme Court."

The People for the American Way (PFAW) is a Washington DC based interest group that has long played a leading role in opposing certain judicial nominees of Republican Presidents. It released a report [10 pages in PDF] on July 19 titled "The Record of John G. Roberts, Jr.: A Preliminary Report". This report reviews opinions of Judge Roberts, and briefs that he wrote for the DOJ. It states that "Roberts's record is a disturbing one". However, none of the opinions or briefs discussed in the report are technology related. See also, PFAW release.

The Alliance for Justice (AFJ) is another Washington DC group that has opposed many Republican judicial nominees since the Reagan administration. It issued a release that is critical of Judge Roberts, but only on non-technology related issues.

Rep. James Sensenbrenner (R-WI) stated in a release that "President Bush tonight has nominated to the U.S. Supreme Court a highly qualified, capable, and accomplished jurist in Judge John Roberts. The Senate’s unanimous confirmation of Judge Roberts to the D.C. Circuit Court of Appeals speaks to the impressive legal credentials and qualifications the Senate recognized in him just two short years ago. In addition, Clinton Administration legal officials such as former Solicitor General Seth Waxman profess high praise for Judge Roberts, demonstrating that support for his professional qualifications crosses political party lines." However, neither the House Judiciary Committee, nor the House of Representatives, have any formal role to perform in the confirmation of Supreme Court nominees.

Meanwhile, Sen. Ted Stevens (R-AK), the Chairman of the Senate Commerce Committee, gave a speech on July 19 in which discussed the impact of Supreme Court nomination contests on the other activities of the Senate. He said that "It is a difficult time for us right now, because as you know we are going to face the problem in the Senate of confirmation of a Supreme Court Justice, or perhaps more than one in the balance of the year. And, that is going to take considerable time. So, we’re trying to work out as many of these items as we can on a consensus basis."

Sen. Stevens added that "our Commerce Committee is in fact a bipartisan Committee. Senator Inouye and I co-chair that Committee and we don’t proceed on anything without the approval of the other. We’re working to try to get our bills to the floor in a manner that will not take a lot of time on the floor, that will not be partisan, to really try to get around things like the confirmation process for the justice and judges and see if we can deal with the issues that affect your industry on a bipartisan basis." Sen. Stevens spoke in Washington DC to the American Association of Airport Executives (AAAE) and the Airports Council International Summer Legislative Conference.

House Scheduled to Consider PATRIOT Act Extension Bill

7/19. The full House is scheduled to take up HR 3199, the "USA PATRIOT and Intelligence Reform Reauthorization Act of 2005". The House Rules Committee is scheduled to meet at 2:30 PM on Wednesday, July 20, to adopt a rule for consideration of HR 3199. Full House consideration could begin as early as Thursday morning, July 21. See, Republican Whip Notice.

The House Judiciary Committee (HJC) and House Intelligence Committee (HIC) both amended and approved HR 3199, the "USA PATRIOT and Intelligence Reform Reauthorization Act of 2005", on Wednesday, July 13.

See, stories titled "House Judiciary Committee Marks Up Bill to Extend Expiring Provisions of PATRIOT Act" and "Summary of Amendments to HR 3199 Approved by the House Judiciary Committee" in TLJ Daily E-Mail Alert No. 1,174, Thursday, July 14, 2005. See also, stories titled "House Judiciary Committee to Mark Up Bill to Make Permanent the Sunsetted Provisions of the PATRIOT Act" and "Summary of HR 3199 IH" in TLJ Daily E-Mail Alert No. 1,172, July 12, 2005. And see, story titled "House Intelligence Committee Marks Up Bill to Extend Expiring Provisions of PATRIOT Act" in TLJ Daily E-Mail Alert No. 1,175, July 15, 2005.

Also, the Senate Judiciary Committee (SJC) has on the agenda for its business meeting of Thursday, July 21, S 1389, the "USA PATRIOT Improvement and Reauthorization Act of 2005". However, the SJC typically does not take up most of the items that it lists on its agenda. See also, story titled "Senators Introduce Bill to Extend Expiring Provisions of PATRIOT Act" in TLJ Daily E-Mail Alert No. 1,175, July 15, 2005.

On July 18, Attorney General Alberto Gonzales gave a speech at a meeting of the National District Attorneys Association in Portland, Maine, in which he discussed the PATRIOT Act.

Alberto GonzalesGonzales (at right) stated that "In my experience in the White House and now at the Department of Justice, I have seen just how critical it is for law enforcement to use the PATRIOT Act to build better communication and cooperation." He added that the terrorists of September 11, 2001 avoided detection "in part, because of our inability to share information adequately".

Gonzales added that "President Bush believes that winning the war on terror requires winning the war of information." He continued that "Sixteen critical provisions of the PATRIOT Act -- including those that encourage information sharing -- are scheduled to expire at the end of the year. We are at a critical point as the bill is being debated in both houses of Congress. I am optimistic that members of Congress share my sense of urgency in making sure that law enforcement officials have the tools they need to protect this country from future terrorist attacks -- tools that are consistent with our long cherished values and consistent with our rights under the Constitution."

Microsoft Sues Former Employee Who Joined Google

7/19. Microsoft filed a complaint in state court in the state of Washington against Kai-Fu Lee alleging breach of Microsoft's employee confidentiality and non-compete agreement. Lee was a Corporate VP who worked on Microsoft's search technologies.

Microsoft stated in a release that Kai-Fu Lee was Corporate VP of Microsoft's Natural Interactive Services Division, and that he went to work for Google "to lead their China research and development center". Microsoft stated that "We are asking the Court to require Dr. Lee and Google to honor the confidentiality and non-competition agreements he signed when he began working for Microsoft."

Microsoft added that "Creating intellectual property is the essence of what we do at Microsoft, and we have a responsibility to our employees and our shareholders to protect our intellectual property. As a senior executive, Dr. Lee has direct knowledge of Microsoft's trade secrets concerning search technologies and China business strategies.  He has accepted a position focused on the same set of technologies and strategies for a direct competitor in egregious violation of his explicit contractual obligations."

Google stated in its release that "it will open a product research and development center in China, and has hired respected computer scientist and industry pioneer, Dr. Kai-Fu Lee, to lead the operation and serve as President of the company's growing Chinese operations."

Microsoft did not immediately release a copy of the complaint, or the non-compete agreement.

10th Circuit Dismisses Appeal by Payphone Providers

7/19. The U.S. Court of Appeals (10thCir) issued its opinion in Crystal Clear Communications v. Southwestern Bell, a dispute between an ILEC and independent payphone providers.

Southwestern Bell Telephone Company (SWBT) is an incumbent local exchange carrier (ILEC). Crystal Clear Communications and other independent payphone providers filed a complaint in U.S. District Court (WDOkla) against SWBT alleging violation of Section 2 of the Sherman Act and the Oklahoma Antitrust Reform Act in connection with its alleged anticompetitive conduct in an attempt to retain its payphone monopoly after the deregulation mandated by the Telecommunications Act of 1996.

The District Court held that Federal Communications Commission (FCC) and the Oklahoma Corporation Commission (OCC) have primary jurisdiction over the issues raised in the complaint, and stayed the District Court action pending administrative resolution. The payphone plaintiffs then brought this interlocutory appeal.

The Court of Appeals reached neither the merits of the antitrust issues, nor the merits of the procedural decision to stay the District Court proceeding. It held that the stay order of the District Court is not an appealable final order. Hence, it dismissed for lack of appellate jurisdiction.

This case is Crystal Clear Communications, Inc., et al. v. Southwestern Bell Telephone Company, U.S. Court of Appeals for the 10th Circuit, App. Ct. No. 03-6219, an appeal from the U.S. District Court for the Western District of Oklahoma, D.C. No. 00-CV-1683-C.

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7/19. José Manuel Barroso, the President of the European Commission, gave a speech to the European Chamber of Commerce titled "From fragrant harbour to world city: Hong Kong as a beacon for free trade", in which he discussed the Doha Development Agenda.

OMB Seeks Comments on Federally Funded Collaborative Research

7/18. The Office of Federal Financial Management (OFFM) in the Office of Management and Budget (OMB) published a notice in the Federal Register that seeks comments on the use of multiple principal investigators (PI) on awards made under federal research and research related programs.

The deadline to submit comments is Friday, September 16, 2005. See, Federal Register, July 18, 2005, Vol. 70, No. 136, at Page 41220 - 41222.

The OFFM wrote that "the federal research agencies will allow more than one PI to be named on grant and contract proposals and awards".

It elaborated. "Many areas of research, in particular, translations of complex discoveries into useful applications, increasingly require multi-disciplinary and inter-disciplinary teams. Innovation and progress still spring from and depend on creative individual investigators, but collaborative synergy plays an increasingly important role in advancing science and engineering. In deciding whether to do research as members of multi-disciplinary teams, individual investigators must consider how credit for their participation would be judged by the current incentive and reward policies of their academic institutions, by their funding agencies, and by colleagues within their own disciplines. The present system takes its structure from the paradigm of the single ``Principal Investigator´´. Although this model has worked well and encourages individual creativity and productivity, it also can discourage team efforts."

UN Seeks Vast Authority to Regulate Operation and Use of the Internet

7/18. United Nation's (UN) Working Group on Internet Governance (WGIG) released a report [24 pages in PDF] titled "Report of the Working Group on Internet Governance". This is the UN's long awaited report in which it states its ambitious case for acquiring vast power to regulate various aspects of the operation and use of the internet. See, full story.

Go to News from July 11-15, 2005.