TLJ News from January 6-10, 2006

People and Appointments

1/10. Everett Eissenstat was named Assistant U.S. Trade Representative for the Americas, effective January 17, 2006. He was previously Chief International Trade Counsel to Sen. Charles Grassley (R-IA), the Chairman of the Senate Finance Committee. Before that, he was Legislative Director to Rep. Jim Kolbe (R AZ). See, USTR release.

1/10. Former Rep. Tom Foley (D-WA), Elliott Broidy, and John Magaw were named to the Department of Homeland Security's (DHS) Homeland Security Advisory Council. Broidy is CEO of Broidy Capital Management, and a member of the Los Angeles City Fire and Police Pension Fund. Magaw is a former head of the Transportation Security Administration (TSA), former Director of the U.S. Secret Service, and former Director of the Bureau of Alcohol, Tobacco and Firearms. See, DHS release.

1/10. Kent Nilsson was named acting Inspector General of the Federal Communications Commission (FCC). He is a longtime FCC employee. He replaces Horace Walker Feaster, who retired. In addition, Jon Stover was named acting Deputy Inspector General of the FCC. See, FCC release [PDF].

More News

1/10. The U.S. Patent and Trademark Office (USPTO) announced the top ten private sector patent recipients for 2005. As usual, IBM is number one. See, USPTO release.

1/10. The Government Accountability Office (GAO) released a report [62 pages in PDF] titled "Eliminating Nonmarket Economy Methodology Would Lower Antidumping Duties for Some Chinese Companies".

Supreme Court Denies Cert in Texas Spam Blocking Case

1/9. The Supreme Court denied certiorari in White Buffalo Ventures v. University of Texas at Austin. See, Order List [32 pages in PDF] at page 4.

This lets stand the August 2, 2005, opinion [13 pages in PDF] of the U.S. Court of Appeals (5thCir). See, story titled "Court Holds Texas's Blocking of Legal E-Mail Is Neither Preempted by CAN-SPAM Act, Nor In Violation of 1st Amendment" in TLJ Daily E-Mail Alert No. 1,187, August 3, 2005.

The University of Texas at Austin (UTAustin) is a political subdivision of the state of Texas. White Buffalo Ventures (WBV) sends bulk unsolicited commercial e-mail to UTAustin e-mail addresses. However, while it is a spammer, it complies with the federal CANSPAM Act. The UTAustin blocked e-mail from WBV pursuant to its e-mail policy.

The CAN-SPAM Act, the full title of which is the "Controlling the Assault of Non-Solicited Pormography and Marketings Act of 2003", was S 877 in the 108th Congress. It is now Public Law No. 108-187. It is codified at 15 U.S.C. §§ 7701-7713.

WBV argued below that the CANSPAM Act preempts the anti-spam component of UTAustin's e-mail policy. The Court of Appeals rejected this argument. It wrote that the statute is not clear on preemption. It concluded that since there is a presumption against preemption of state law, there is no preemption in this case.

WBV also argued below that the UTAustin's e-mail policy violates its First Amendment freedom of speech rights. The Court of Appeals rejected this argument.

This case is White Buffalo Ventures, LLC v. University of Texas at Austin, Sup. Ct. No. 05-520. This is a petition for writ of certiorari to the U.S. Court of Appeals for the Fifth Circuit, App. Ct. No. m 04-50362. The Court of Appeals heard an appeal from the U.S. District Court for the Western District of Texas.

Supreme Court Denies Certiorari in EC v. RJR Nabisco

1/9. The Supreme Court denied certiorari in European Community v. RJR Nabisco. See, Order List [32 pages in PDF] at page 5. This lets stand the September 13, 2005, opinion [12 pages in PDF] of the U.S. Court of Appeals (2ndCir).

While this is a case regarding use of the U.S. RICO statute by foreign governments to collect taxes from cigarette companies, it has wider implications. The denial of certiorari benefits e-commerce. Although, other circuits are not bound by the opinion of the Second Circuit, and the Supreme Court could grant certiorari in a future case.

TLJ published a lengthy story on the Court of Appeals' opinion in this case, the Supreme Court's opinion in Pasquantino v. United States, and how these two cases may impact taxation of e-commerce. See, story titled "2nd Circuit Holds Foreign Governments Cannot Use RICO to Collect Taxes in US Courts" in TLJ Daily E-Mail Alert No. 1,213, September 14, 2005.

In the present case, the Court of Appeals held that the European Community (EC), and various European nations, cannot use the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO), which is codified at 18 U.S.C. §§ 1961-1968, to sue companies in U.S. courts for the purpose of collecting taxes allegedly due to the EC and European nations.

Previously, in Pasquantino, the Supreme Court upheld efforts the U.S., on behalf of Canada, to collect taxes in the U.S. However, in Pasquantino, unlike EC v. RJR Nabisco, it was the U.S., not the foreign government, that maintained the action. Moreover, it alleged violation of the wire fraud statute, which is codified at 18 U.S.C. § 1343.

Both the present case and Pasquantino arise out of efforts by foreign governments to collect taxes on goods made in the US and sold in their countries. David and Carl Pasquantino bought alcohol legally in the state of Maryland, and paid all US taxes. They had a third person to smuggle it into Canada in car trunks, and sell it in Canada, without paying the required excise taxes, in violation of Canadian law. The venture made business sense because Canadian taxes on alcohol are much higher than those in the US. The US revenue rule prevents US prosecutors from prosecuting for violation of foreign tax laws. However, the Court reasoned that U.S. was not enforcing Canadian tax laws; it was enforcing the wire fraud statute.

It is one tendency of taxing authorities to impose and collect greater taxes on persons and entities who have less political influence, than those who have more political influence. This often results in taxing authorities seeking means to tax non-resident persons and entities, while providing exemptions to residents. Some national governments, and U.S. states, exhibit this tendency.

Moreover, e-commerce provides a particularly attractive target for such taxing authorities, because e-commerce entities have some connection to many, if not all, states and nations. E-commerce companies have web sites accessible anywhere in the world, sell their products and services over the internet all over the world, and maintain some operations in many nations. Taxing authorities can easily assert a connection between their state, and the entities to be taxed. And U.S. courts can exercise personal jurisdiction over many.

Had the Supreme Court granted certiorari, reversed the Second Circuit, and allowed the EC to use the RICO statute against NJR, then foreign governments would be able to file RICO actions in U.S. District Courts to collect taxes from businesses over which the U.S. courts have jurisdiction. This would have provided tax collectors from around the world a procedure and a venue for collecting arbitrary and discriminatory taxes from foreign entities.

The Supreme Court issued no opinion. One might speculate as to why the Court denied certiorari in this case, but upheld the government action in Pasquantino. First, in the present case the action is maintained by the foreign government, not the U.S. government. That is, in the present case, the U.S. government has not manifested any consent to the tax collection effort. Second, the composition of the Court has changed. The Pasquantino case was decided with a 5-4 split. One member of the majority has died (William Rehnquist) and another is about to retire (Sandra O'Connor).

The present case is European Community, et al. v. RJR Nabisco, et al., Sup. Ct. No. 05-549. It is a petition for writ of certiorari to the U.S. Court of Appeals for the 2nd Circuit, App. Ct. Nos. 02-7325 (L), 02-7330 (CON), and 02-7323.

The EC is represented by John Halloran of the law firm of Speiser Krause Nolan & Granito. RJR is represented by Murray Garnick of the law firm of Arnold & Porter.

Supreme Court Seeks SG Brief in Patent Case Involving Inherent Anticipation

1/9. The Supreme Court invited the Solicitor General to submit a brief on the question of whether the Court should grant certiorari in SmithKline Beecham v. Apotex. See, Order List [32 pages in PDF] at page 3.

This is a patent case involving invalidity for inherent anticipation, and the experimental use exception to the public use bar of 35 U.S.C. § 102(b). Section 102 provides, in part, that "A person shall be entitled to a patent unless ... the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States ..."

The U.S. Court of Appeals (FedCir) issued its opinion [59 pages in PDF] by Judge Randall Rader on April 8, 2005. See also, order [8 pages in PDF] denying rehearing en banc, with dissent by Judge Pauline Newman. See also, Supreme Court docket and Patently-O summary.

This case is Sup. Ct. No. 05-489. The Appeals Court numbers are 03-1285 and 03-1313. See also, amicus curiae brief [23 pages in PDF] of the Washington Legal Foundation.

Apotex is represented by Hugh Scott Balsam of the law firm of Lord Bissel & Brook.

SmithKline Beecham is represented by Carter Phillips, a partner in the Washington DC office of the law firm of Sidley Austin Brown & Wood. Phillips has also represented Microsoft in the Eolas patent case. On October 31, 2005, the Supreme Court denied certiorari in Microsoft v. Eolas Technologies. See, Order List [16 pages in PDF] at page 15. That case is Sup. Ct. No. 05-288. See also, story titled "Supreme Court Denies Certiorari in Microsoft v. Eolas" in TLJ Daily E-Mail Alert No. 1,244, November 1, 2005.

Phillips will also be a witness later this week at the Senate Judiciary Committee's (SJC) hearing on the nomination of Judge Sam Alito to be a Justice of the Supreme Court.

Law Professors Assert That NSA Electronic Surveillance Program Violates Law

1/9. Thirteen law professors and former government officials wrote a letter [11 pages in PDF] to Congressional leaders, and Judge Colleen Kotelly, the Chief Judge of the Foreign Intelligence Surveillance Court, regarding "the Bush administration's National Security Agency domestic spying program".

They assert that "the Justice Department's defense of what it concedes was secret and warrantless electronic surveillance of persons within the United States fails to identify any plausible legal authority for such surveillance. Accordingly the program appears on its face to violate existing law."

Most of the signers of the letter are either former Clinton administration officials, Democrats, and/or persons connected with the American Civil Liberties Union (ACLU). However, several are not, including William Sessions, who was appointed Director of the Federal Bureau of Investigation (FBI) back in 1987 by former President Reagan.

This National Security Agency (NSA) surveillance program began after the terrorist attacks of September 11, 2001. Its existence was publicly disclosed on Friday, December 16, 2005. The New York Times published a story by James Risen and Eric Lichtblau titled "Bush Lets U.S. Spy on Callers Without Courts". It stated that "President Bush secretly authorized the National Security Agency to eavesdrop on Americans and others inside the United States to search for evidence of terrorist activity without the court-approved warrants ordinarily required for domestic spying, according to government officials."

President Bush confirmed the existence of the NSA program in his radio address on Saturday, December 17, 2005. See also, story titled "President Bush Discloses Interception of Communications Without Court Approval" in TLJ Daily E-Mail Alert No. 1,275, December 19, 2005.

President Bush, Attorney General Alberto Gonzales and General Michael Hayden then held news conferences on December 19, 2005, to discuss and defend the NSA program. See, story titled "Bush, Gonzales & Hayden Discuss Presidential Intercepts and PATRIOT Act" in TLJ Daily E-Mail Alert No. 1,276, December 20, 2005.

Also, William Moschella, Assistant Attorney General in charge of Congressional relations, wrote a letter [5 pages in PDF] on December 22, 2005, to the Chairmen and ranking Democrats of the House and Senate Intelligence Committees in which he reduced to writing the asserted legal authority for the program.

The law professors letter asserts that "the DOJ letter fails to offer a plausible legal defense of the NSA domestic spying program. If the Administration felt that FISA was insufficient, the proper course was to seek legislative amendment, as it did with other aspects of FISA in the Patriot Act, and as Congress expressly contemplated when it enacted the wartime wiretap provision in FISA. One of the crucial features of a constitutional democracy is that it is always open to the President -- or anyone else -- to seek to change the law. But it is also beyond dispute that, in such a democracy, the President cannot simply violate criminal laws behind closed doors because he deems them obsolete or impracticable."

See also, Congressional Research Service (CRS) memorandum [44 pages in PDF] titled "Presidential Authority to Conduct Warrantless Electronic Surveillance to Gather Foreign Intelligence Information", and dated January 6, 2006.

The signers of the law professors letter include Walter Dellinger (a professor at Duke University law school, who was Assistant Attorney General in charge of the Office of Legal Counsel, and acting Solicitor General, in the Clinton administration), Ronald Dworkin (a professor at New York University Law School, and a former Co-Chairman of Democratic Party Abroad), Philip Heymann (a professor at Harvard Law School, and Deputy Attorney General in the Clinton administration), Martin Lederman (a Georgetown University law professor, and Office of Legal Counsel attorney in the Clinton administration), Beth Nolan (a partner at the law firm of Crowell & Moring, who was Counsel to the President, and a Deputy Assistant Attorney General in the Office of Legal Counsel, during the Clinton administration), Geoffrey Stone (a professor at the University of Chicago law school, and a member of the National Advisory Council of the ACLU), Laurence Tribe (a professor at Harvard Law School), and William Van Alstyne (a professor at William and Mary Law School, and former member of the National Board of Directors of the ACLU).

However, several of the signers of the letter are not likely critics of the Bush administration. One signer, William Sessions, is 75 years old, and retired. He was appointed U.S. Attorney, U.S. District Court Judge, and FBI Director by Republican Presidents. Another, Richard Epstein, is a law professor at the University of Chicago law school. His writings in defense of property rights have made him a favorite with many Republicans. Also, Curtis Bradley, a professor at Duke University law school, worked in the State Department Legal Adviser's Office in 2004.

The other signers of the letter are David Cole (Georgetown University law school), Kathleen Sullivan (Stanford Law School), and Harold Hongju Koh (Yale law school).

More Supreme Court News

1/9. The Supreme Court denied certiorari in Hoffer v. Microsoft. See, Order List [32 pages in PDF] at page 26. This lets stand the April 22, 2005, opinion [14 pages in PDF] of the U.S. Court of Appeals (FedCir). See also, story titled 'Federal Circuit Rules in Hoffer v. Microsoft" in TLJ Daily E-Mail Alert No. 1,124, April 27, 2005. This case is Sup. Ct. No. 05-7075. The Court of Appeals number is No. 04-1103. The Court of Appeals heard an appeal from the U.S. District Court for the Northern District of California, D.C. No. 01-CV-20731 JW.

People and Appointments

1/9. Harris Miller, former head of the Information Technology Association of America (ITAA), will run for the U.S. Senate in the state of Virginia. The incumbent, Sen. George Allen (R-VA), is one of the Senate's leading technophiles.

Copyright Royalty Board Commences Proceedings

1/9. The Copyright Office's (CO) Copyright Royalty Board (CRB) published notices in the Federal Register announcing the commencement of three proceedings to determine reasonable rates and terms of royalty payments. Each of these proceeding is required by Section 3 of the Copyright Royalty and Distribution Reform Act of 2004, which added the new Section 804 to the Copyright Act. This bill was HR 1417 in the 108th Congress. It is now Public Law No. 108-419.

First, the CRB published a notice in the Federal Register regarding the commencement of a proceeding to determine the reasonable rates and terms for use of certain works in connection with noncommercial broadcasting. Petitions to Participate are due by February 8, 2006. See, Federal Register, January 9, 2006, Vol. 71, No. 5, at Pages 1453 - 1454.

Second, the CRB published a notice in the Federal Register regarding the commencement of a proceeding to determine the reasonable rates and terms for making and distributing phonorecords. Petitions to Participate are due by February 8, 2006. See, Federal Register, January 9, 2006, Vol. 71, No. 5, at Pages 1454 - 1455.

Third, the CRB published a notice in the Federal Register regarding the commencement of a proceeding to determine the reasonable rates and terms for preexisting subscription and satellite digital audio radio services. Petitions to Participate are due by February 8, 2006. See, Federal Register, January 9, 2006, Vol. 71, No. 5, at Page 1455.

People and Appointments

1/9. James Sledge, Stanley Wisniewski, and William Roberts take office as Copyright Royalty Judges on January 9, 2006. See, Copyright Office notice. They will serve on the Copyright Royalty Board, which was created by the Copyright Royalty and Distribution Reform Act of 2004. This bill was HR 1417 in the 108th Congress. It is now Public Law No. 108-419. See also, stories titled "House Approves Copyright Royalty and Distribution Act" in TLJ Daily E-Mail Alert No. 1,021, November 18, 2004, and "House Passes Copyright Royalty and Distribution Act" in TLJ Daily E-Mail Alert No. 849, March 4, 2004.

More News

1/9. The National Institute of Standards and Technology (NIST) published a notice in the Federal Register regarding its 2006 SURF grant programs. These are the Gaithersburg Summer Undergraduate Research Fellowship Program, and its Boulder Summer Undergraduate Research Fellowship Program. The NIST distributes grants for, among other topics, electronics and electrical engineering, and information technology. The deadline for applications is February 15, 2006. See, Federal Register, January 9, 2006, Vol. 71, No. 5, at Pages 1411 - 1416.

CEA's Shapiro Addresses Tech Policy

1/6. The Consumer Electronics Association (CEA) hosted a convention titled "2006 International CES" in Las Vegas, Nevada. Most of the event focused on new technologies. However, Gary Shapiro, P/CEO of the CEA, gave a speech [PDF] in which he discussed policy.

He advocated "net neutrality". He said that "we must be sure consumers also have unfettered access to content, services and applications. Openness and access have fueled the growth of the Internet, and we must reject models which rely on proprietary systems block access to competitive or disfavored websites or services. Innovation will flourish only if device manufacturers who develop ``edge technologies´´ have certainty that their products and services, like new IP-based video, can connect to the Internet."

Shapiro advocated free trade, and freer movement of people. He said that the U.S. should resist "the urge of isolationism" and tear down "walls of protectionism", and welcome and attract "the best and brightest from around the world". He added that "We must make sure our visa policies allow America to remain a magnet for the worlds’ brightest and hardworking people."

He touched on fair use rights of consumers. "Americans must retain the right to time-shift and place-shift lawfully acquired content within their private homes. That includes noncommercial recording of free over-the-air broadcasts, or time-shifting a satellite radio program that you have paid for."

He also discussed aftermarkets for tech products in cars. "We must ensure that car manufacturers provide aftermarket installers with the information they need to install products in today's sophisticated, computer controlled automobiles. Also, we must work with the auto industry to ensure consumers can make the choices they need and want for a standardized interface."

Also, he discussed the environmental benefits of information technologies. "The world's resources are limited but digital technology allows us to preserve our environment for future generations. Think of all the paper saved by email or the gasoline saved by telecommuting and online buying. We must embrace policies favoring home offices, telework and teleconferencing." He added that "We must make clear how much energy our products use so consumers can make informed buying choices" and "with Congress’ help, we must establish a nationwide recycling program with shared responsibility among consumers, retailers and manufacturers."

See also, speech by Bill Gates (Microsoft) and speech [PDF] by Paul Otellini (Intel).

More News

1/6. President Bush wrote a letter to the Speaker of the House and the President of the Senate in which he formally notified the Congress of his intent to "enter into a free trade agreement with the Republic of Peru".

1/6. Bob Portman, the U.S. Trade Representative (USTR), wrote a short essay titled "Keeping Doha Alive", which was published in the USTR website, and in the Washington Times. He wrote that "The December meeting of the World Trade Organization in Hong Kong kept the Doha Development Agenda trade talks alive". He also stated that "We formalized a landmark breakthrough in the rules governing intellectual property rights that balances the needs of protecting patent rights with delivering life-saving medicines to areas hardest hit by disease. This will be of great importance to countries struggling to cope with HIV/AIDS, malaria and other health crises."

1/6. I-Che Lai waived indictment and pled guilty in U.S. District Court (DNev) to one count of conspiracy to commit criminal copyright infringement in connection with his acting as a site administrator for several warez web sites that contained a library of copyright protected software, including movies, music, games and business software. See, Department of Justice (DOJ) release.

People and Appointments

1/6. Tina Jordan was named VP of the Association of American Publishers (AAP), effective January 17, 2006. She will replace Kathryn Blough. Former Rep. Pat Schroeder (D-CO) remains the President. See, AAP release.

Go to News from January 1-5, 2006.