TLJ News from March 26-31, 2006

People and Appointments

3/31. The Senate confirmed Jeffrey Sedgwick to be Director of the Bureau of Justice Statistics. See, Congressional Record, March 31, 2006 at Page S2698.

More News

3/31. The Federal Communications Commission (FCC) issued a Public Notice (DA 06-701) regarding its Auction 65, which is scheduled to begin on May 10, 2005. The notice is titled "Auction of 800 MHz Air-Ground Radiotelephone Service Licenses: Status of FCC Form 175 Applications to Participate in Auction No. 65"

3/31. The Secretary of Commerce announced that Federal Information Processing Standard (FIPS) 200, titled "Minimum Security Requirements for Federal Information and Information Systems", is approved and effective as of March 31, 2006. See, notice in the Federal Register, March 31, 2006, Vol. 71, No. 62, at Pages 16288-16289.

3/31. The Secretary of Commerce announced that Federal Information Processing Standard (FIPS) 201-1, titled "Standard for Personal Identity Verification of Federal Employees and Contractors", is approved and effective as of March 31, 2006. See, notice in the Federal Register, March 31, 2006, Vol. 71, No. 62, at Pages 16289-16290.

3/31. The U.S. Court of Appeals (FedCir) issued its opinion [23 pages in PDF] in On Line Demand Machine v. Ingram Industries, reversing the District Court's judgment of patent infringement, and vacating the damages award. This case concerns U.S. Patent No. 5,465,213, titled "System and method of manufacturing a single book copy". This case is On Line Demand Machine Corporation v. Ingram Industries, Inc., Lighting Source, Inc. and, Inc., U.S. Court of Appeals for the Federal Circuit, App. Ct. Nos. 05-1074, 05-1075, 05-1100 , an appeal from the U.S. District Court for the Eastern District of Missouri, D.C. No. 4:01cv1668MLM, Judge Ann Medler presiding. Judge Pauline Newman wrote the opinion of the Court of Appeals, in which Judges Mayer and Bryson joined.

3/31. The Securities and Exchange Commission (SEC), Federal Reserve Board (FRB), Department of the Treasury, and other financial services regulators, released a report written by Kleimann Communication Group titled "Evolution of a Prototype Financial Privacy Notice". It  summarizes consumer research commissioned by the regulators regarding improving financial privacy notices mandated by the Gramm Leach Bliley Act. See also, SEC release.

Summary of COPE Act

3/30. The House Commerce Committee's (HCC) Subcommittee on Telecommunications and the Internet held a hearing on HR __ [PDF], a committee print of a bill that may be titled the "Communications Opportunity, Promotion, and Enhancement Act of 2006".

It would create a national cable franchising regime. It would give the Federal Communications Commission (FCC) authority to enforce its August 2005 policy statement [3 pages in PDF] regarding network neutrality through case by case adjudicatory proceedings. It would impose E911 requirements on voice over internet protocol (VOIP) service providers. Finally, it would prevent states from preventing state and local governments from providing telecommunications, cable, or information services. The following is a summary.

See, full story.

House Subcommittee on Telecommunications and the Internet Holds Hearing on COPE Act

3/30. The House Commerce Committee's (HCC) Subcommittee on Telecommunications and the Internet held a hearing on HR __ [PDF], a committee print of a bill that may be titled the "Communications Opportunity, Promotion, and Enhancement Act of 2006", or COPE Act.

Formally, there is not yet a bill, or sponsors of a bill. However, members of the Subcommittee stated at the hearing that the sponsors are Rep. Joe Barton (R-TX), the Chairman of the HCC, Rep. Fred Upton (R-MI), the Chairman of the Subcommittee, Rep. Chip Pickering (R-MS), and Rep. Bobby Rush (D-IL).

Rep. Upton, who presided through most of the hearing, stated that he expects there to be a Subcommittee markup during the week of April 3. Both he and Rep. Barton added that he wants there to be a full Committee mark up in 4 to 5 weeks.

The statements and questions of the members of the Subcommittee demonstrated that this is not a consensus bill, and that there is more support among Republicans than Democrats. Rep. Ed Markey (D-MA), the ranking Democrat on the Subcommittee, criticized the bill. Rep. John Dingell (D-MI), the ranking Democrat on the full Committee, said that "I do not support the legislation being considered today."

See, full story.

Senate Commerce Committee Approves Phone Records Bill

3/30. The Senate Commerce Committee (SCC) amended and approved S 2389, the "Protecting Consumer Phone Records Act". The SCC approved an amendment in the nature of a substitute [41 pages in PDF], with three other amendments.

Section 2(a) of the bill provides that "It is unlawful for any person -- (1) to acquire or use the customer proprietary network information of another person without that person's affirmative written consent, which shall include electronic consent that meets the requirements of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7001 et seq.); (2) to misrepresent that another person has consented to the acquisition or use of such other person’s customer proprietary network information in order to acquire such information; (3) to obtain unauthorized access to the data processing system or records of a telecommunications carrier or an IP-enabled voice service provider in order to acquire the customer proprietary network information of 1 or more other persons; (4) to sell, or offer for sale, customer proprietary network information; or (5) to request that another person obtain customer proprietary network information from a telecommunications carrier or IP-enabled voice service provider, knowing that the other person will obtain the information from such carrier or provider in any manner that is unlawful under subsection (a)."

The bill adds that for purposes of this prohibition, "an IP-enabled voice service provider shall be treated as if it were a telecommunications carrier covered by section 222 of the Communications Act of 1934 (47 U.S.C. 222) before the date of enactment of this Act." The bill also amends 47 U.S.C. § 222 to cover both "telecommunications carriers" and "IP-enabled voice service providers".

The bill also amends Section 222 to add a definition of "IP-enabled voice service". The term means "the provision of realtime 2-way voice communications offered to the public, or such classes of users as to be effectively available to the public, transmitted through customer premises equipment using TCP/IP protocol, or a successor protocol, for a fee (whether part of a bundle of services or separately) with interconnection capability such that the service can originate traffic to, or terminate traffic from, the public switched telephone network." (Parentheses in original.)

The bill also requires notice to customers of violations. It requires telecommunications carriers and IP-enabled voice service providers to "notify a customer within 14 calendar days after the carrier or provider is notified of, or becomes aware of, an incident in which customer proprietary network information relating to such customer was disclosed to someone other than the customer in violation of this section or section 2 of the Protecting Consumer Phone Records Act."

The bill also provides for wireless number confidentiality. It provides that "A provider of commercial mobile services, or any direct or indirect affiliate or agent of such a provider, may not include the wireless telephone number information of any subscriber in any wireless directory assistance service database unless the mobile service provider" provides conspicuous notice, and "obtains express prior authorization for listing from such subscriber, separate from any authorization obtained to provide such subscriber with commercial mobile service, or any calling plan or service associated with such commercial mobile service, and such authorization has not been subsequently withdrawn." The bill also prohibits service providers from charging for such confidentiality.

The bill gives the FCC various rule making powers. It gives the FTC civil enforcement authority; violations of this bill would be enforceable as unfair or deceptive trade practices within the meaning of the FTC Act. It also gives the FCC concurrent enforcement authority. The bill also provides for enforcement by states. Finally, the bill gives a private right of action to service providers, and to consumers who have been harmed by violations.

The bill also also extends the current one year statute of limitations to two years. It also requires services providers to file annual certifications of compliance.

The SCC approved three amendments. The SCC approved by voice vote an amendment offered by Sen. Ted Stevens (R-AK), the Chairman of the SCC, and Sen. Conrad Burns (R-MT) that expands the state enforcement provision to allow enforcement by state public utility commissions or other state agencies in states that have delegated enforcement of such matters to such officials. The amendment in the nature of a substitute, without this amendment, had given authority to chief legal officers of states.

The SCC approved by voice vote an amendment offered by Sen. Barbara Boxer (D-CA) and Sen. Burns that allows consumers to decide whether their wireless numbers are listed in any future cell phone directories.

The SCC approved by a vote of 11-10 an amendment offered by Sen. Mark Pryor (D-AR) that authorizes civil suits by individuals whose phone records have been unlawfully acquired, sold, or used.

See also, SCC release.

Rep. Goodlatte Introduces Design Protection Bill

3/30. Rep. Bob Goodlatte (R-VA), Rep. William Delahunt (D-MA), Rep. Howard Coble (R-NC), and Rep. Robert Wexler (D-FL) introduced HR 5055, a bill to amend Chapter 13 of Title 17, which is codified at 17 U.S.C. § 1301, et seq.

This is another in a series of long running efforts to provide copyright like protection for designs. Although, this bill would only create short term protection for fashion designs, including clothing, hand bags, and eyeglass frames.

Following the Supreme Court's opinion in Bonita Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (1989), the Congress provided protection for vessel hull designs, and certain other designs. That legislation was included in the Digital Millennium Copyright Act (DMCA), which was enacted in 1998, and is now Public Law No. 105-304. It is codified as Chapter 13 of Title 17.

Chapter 13 was also amended by S 1948 (106th Congress), the huge "Intellectual Property and Communications Omnibus Reform Act of 1999", which was incorporated into HR 3194 (106th Congress), the huge omnibus  FY 2000 consolidated appropriations bill, which became Public Law No. 106-113.

HR 5055 was referred to the House Judiciary Committee. The sponsors are members of the HJC.

Reps. Terry and Boucher Introduce Universal Service Bill

3/30. Rep. Lee Terry (R-NE) and Rep. Rick Boucher (D-VA) introduced HR 5072, the "Universal Service Reform Act of 2006". The bill greatly expands the scope of services that would be subject to universal service taxes. See also, Rep. Boucher's overview [PDF] and section by section summary [PDF].

The two released a discussion draft [31 pages in PDF] of this bill in November of 2005. The just introduced bill revises that draft. See, story titled "Reps. Terry and Boucher Propose New Internet Taxes" in TLJ Daily E-Mail Alert No. 1,257, November 21, 2005

Rep. Boucher stated in a release that "After a lengthy process of consultation with industry representatives and others with an interest in the Universal Service Fund, we are introducing this measure, which reflects broad areas of consensus. The legislation will control the spiraling growth of the Universal Service Fund while ensuring that universal service support is available to rural carriers which rely on it to provide service. Our measure will expand who pays into the Fund, cap the growth of the Fund and modernize the Fund by allowing its use for the deployment of high speed broadband service".

Rep. Lee TerryRep. Terry (at right) stated in the same release that "The commonsense approach embodied in this measure will assure that Universal Service support remains available for the preservation of local exchange and broadband service, particularly in rural and underserved areas, far into the future". He added that "This consensus measure will lessen demand for universal service support by limiting the number of eligible telecommunications carriers and compensating eligible telecommunications carriers based on their actual costs of providing service. Reforming USF is a significant step in closing the gap between rural America and urban America, allowing for all of America to compete in the global market place with both products and ideas."

The bill creates a new definition for "communications service provider", and then provides that all such communications service providers (CSPs) are subject to universal service taxation.

The bill provides that a CSP includes any entity that either,

   "(A) contributes to or receives universal service support for the most recent calendar quarter ending before the date of enactment of the Universal Service Reform Act of 2006;
   (B) uses telephone numbers or Internet protocol addresses, or their functional equivalents or successors, to offer a service or a capability (i) that provides or enables real-time 2-way voice communications; and (ii) in which the voice component is the primary function; or
   (C) offers for a fee, directly to the public, or to such classes of users as to be effectively available directly to the public, a physical transmission facility, whether circuit-switched, packet-switched, a leased line, or using radio frequency transmissions, regardless of the form, protocol, or statutory classification of the service, that allows an end user to obtain access, from a particular end user location, to a network that permits the end user to engage in electronic communications (including telecommunications) with the public."

The bill also creates a definition for the term "high-speed broadband service", or HSBS. It is "a two way network that uses the Internet protocol or a successor protocol, and the associated capabilities and functionalities, services, and applications provided over an Internet protocol platform or for which an Internet protocol capability is an integral component, and services, facilities, equipment, and applications that enable an end-user to receive communications in Internet protocol format, regardless of whether the communications are voice, data, video, or any other form, at a download receiving rate not lower than 1 megabit per second".

The bill then provides that "Universal service includes the services defined on the date of enactment of the Universal Service Reform Act of 2006 as universal services, high-speed broadband services, and an evolving level of telecommunications and information services that the Commission shall establish periodically under this section, taking into account advances in telecommunications and information technologies and services."

The bill provides that the FCC "shall assess contributions to universal service support mechanisms from communications service providers. The Commission shall assess such contributions in a manner that is equitable and competitively neutral, is nondiscriminatory in nature, and ensures that communications service providers are subject to similar obligations. The Commission may employ any methodology to assess such contributions, including consideration of (i) revenues derived from the provision of intrastate, interstate, and foreign communications services by communications service providers; (ii) working telephone numbers used by communications service providers; or (iii) any other current or successor identifier protocols or connections to the network used by communications service providers."

The bill also addresses distribution of universal service subsidies. They would not go to consumers. The bill first provides that "Only an eligible telecommunications carrier designated under section 214(e) shall be eligible to receive specific Federal universal service support. A carrier that receives such support shall use that support only for the provision, maintenance, and upgrading of facilities and services for which the support is intended. Any such support should be explicit and sufficient to achieve the purposes of this section."

It then adds that "The use of universal service support for all rural, insular, and high cost areas -- (A) should be expanded to include high-speed broadband services; (B) should be based on actual costs reasonably incurred in providing such services, exclusive of the cost of acquiring spectrum, except that an eligible telecommunications carrier that is an incumbent local exchange carrier may elect to have the Commission calculate the amount of universal service support payable to such carrier pursuant to section 54.309 of title 47, Code of Federal Regulations (as in effect on the date of the enactment of the Universal Service Reform Act of 2006); and (C) should be available to communications service providers that are determined to be eligible telecommunications carriers under section 214(e)."

The bill was referred to the House Commerce Committee. Both Rep. Terry and Rep. Boucher are members.

Walter McCormick, head of the U.S. Telecom Association, stated in a release that "We applaud Congressmen Boucher and Terry for their leadership to help ensure a sustainable future for universal telecom service for Americans living in rural areas. The introduction of this bill is a very positive step and we look forward to working closely with both the House and Senate to enact meaningful universal service reform legislation this year."

4th Circuit Holds Release and Covenant Not to Sue Extends to WIPO Domain Name Actions

3/30. The U.S. Court of Appeals (4thCir) issued its opinion [PDF] in Convey v. 1099 Pro, affirming the District Court's judgment for Convey.

Convey Compliance Systems, Inc. makes computer software products used to generate tax forms, including products pertaining to compliance with IRS Code § 1099. IRS Form 1009 pertains to independent contractors who received $600 or more during the previous year. 1099 Pro, Inc. competes with Convey in the market for the less expensive software.

Convey and 1099 Pro were involved in litigation involving an employee who left one company, and went to work for the other. The two companies settled that case, and entered into a settlement agreement that contained mutual releases, and covenants not to sue. This agreement covered "any claims, demands, rights and causes of action and damages, whether liquidated or unliquidated, absolute or contingent, known or unknown, arising out of any actions or events occurring in whole or part prior to or concurrent with the date hereof".

1099 Pro subsequently initiated a proceeding against Convey in the World Intellectual Property Organization (WIPO) to compel Convey to give up an domain name ( that Convey registered before the settlement agreement was executed. This registration was unknown to 1099 Pro at the time. Convey defaulted in the WIPO proceeding.

Convey then filed a complaint in U.S. District Court (EDVa) against 1099 Pro alleging breach of the settlement agreement. The jury returned a verdict for Convey, and the District Court awarded Convey $406,750.

The Court of Appeals affirmed. The Court of Appeals reasoned that the broad language of the settlement agreement extends to WIPO actions, and actions for claims unknown at the time of the agreement.

This case is Convey Compliance Systems, Inc. v. 1099 Pro, Inc., U.S. Court of Appeals for the 4th Circuit, App. Ct. No. 04-2335, an appeal from the U.S. District Court for the Eastern District of Virginia, at Alexandria, Gerald Bruce Lee presiding, D.C. No. CA-03-525. Judge Niemeyer wrote the opinion of the Court of Appeals, in which Judges Motz and Traxler joined.

People and Appointments

3/30. President Bush withdrew his nomination of Judge Daniel Ryan to be a Judge of the U.S. District Court for the Eastern District of Michigan. See, White House release. Bush most recently nominated Ryan on February 14, 2005. Bush also nominated Ryan in the 108th Congress. Ryan is a state court judge in Detroit, Michigan.

More News

3/30. The House Judiciary Committee's (HJC) Subcommittee on Immigration, Border Security, and Claims held an oversight hearing titled "Should Congress Raise the H1B Cap?". See, prepared testimony [PDF] of John Miano (Chief Engineer, Colosseum Builders, Inc.), prepared testimony of Stuart Anderson (Executive Director, National Foundation for American Policy), prepared testimony of David Huber (information technology professional, Chicago, Illinois), and prepared testimony of Delbert Baker (President, Oakwood College).

3/30. Rep. Lee Terry (R-NE) and Rep. Rick Boucher (D-VA) introduced HR 5072 [3.2 MB], the "Universal Service Reform Act of 2006". See also, Rep. Boucher's overview [PDF] and section by section summary [PDF]. The two released a discussion draft [31 pages in PDF] of this bill back in November of 2005. The just introduced bill revises that draft. See, story titled "Reps. Terry and Boucher Propose New Internet Taxes" in TLJ Daily E-Mail Alert No. 1,257, November 21, 2005

3/30. The Senate Commerce Committee held a hearing titled "Competition and Convergence". See, opening statement of Sen. Ted Stevens (R-AK) and opening statement of Sen. Daniel Inouye (D-HI). See also, prepared testimony [42 pages in PDF] of Kyle McSlarrow (National Cable and Telecommunications Association), prepared testimony [10 pages in PDF] of Earl Comstock (Comptel), prepared testimony [4 pages in PDF] of Walter McCormick (US Telecom Association), prepared testimony [13 pages in PDF] of Steve Largent (CTIA), prepared testimony [10 pages in PDF] of Jerry Ellig (George Mason University), and prepared testimony [11 pages in PDF] of Mark Cooper (Consumer Federation of America).

3/30. The U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register that describes, and sets the comment deadline (May 31, 2006) for, its its notice of proposed rulemaking (NPRM) regarding changes to the rules of practice relating to ex parte and inter partes reexamination. See, Federal Register, March 30, 2006, Vol. 71, No. 61, at Pages 16072-16086.

Sen. Schumer Introduces Bill to Expedite Supreme Court Review of NSA Intercept Program

3/29. Sen. Charles Schumer (D-NY) introduced S 2468, an untitled bill intended to provide quick Supreme Court review of the legality of the National Security Agency's (NSA) extra-judicial interception of electronic communications where one party is within the U.S. and another party is outside of the U.S.

The bill would provide standing to bring suit to any U.S. citizen who refrains from "wire communications because of a reasonable fear that such communications will be the subject of electronic surveillance" under this NSA program. Then, it provides any complaint must be filed in the U.S. District Court for the District of Columbia, that it be heard by a three judge panel, and that the only further review lies with the Supreme Court, which "appeal shall be taken".

Sen. Charles SchumerSen. Schumer (at right) stated that "one of the issues that has been hovering over this Chamber -- and this country, of course -- is the NSA program, the President's program to do wiretaps on American citizens if part of the call originated in a foreign country." See, Congressional Record, March 29, 2006, at Page S2535.

"Now there is a great debate. The President and his supporters say he was allowed to do these wiretaps without changing the law, without congressional approval. Some on the other side say he never should have been allowed to do it." He added that "The most logical place for this to be settled is in the U.S. Supreme Court."

He concluded that this bill "gives those people standing, gives them a right to go to district court quickly and then with expedited review to the Supreme Court, so we could actually get a decision, very possibly, on whether the President's wiretapping was under the ambit of the law very quickly."

The bill provides that "A United States citizen who has refrained or will refrain from wire communications because of a reasonable fear that such communications will be the subject of electronic surveillance conducted without an order issued in accordance with title I of the Foreign Intelligence Surveillance Act of 1978 (50 U.S.C. 1801 et seq.) under a claim of Presidential authority under either the Constitution of the United States or the Authorization for Use of Military Force (Public Law 107-40; 115 Stat. 224; 50 U.S.C. 1541 note) shall have a cause of action and shall be entitled to declaratory or injunctive relief with respect to such electronic surveillance."

Then, the bill provides that any such complaint "shall be filed in the United States District Court for the District of Columbia and shall be heard by a 3-judge court", and that "A final decision in the action shall be reviewable only by appeal directly to the Supreme Court of the United States. Such appeal shall be taken by the filing of a notice of appeal within 10 days, and the filing of a jurisdictional statement within 30 days, of the entry of the final decision."

Sen. Bennett Introduces Bill Regarding Sale of Contact Lenses

3/29. Sen. Robert Bennett (R-UT) and Sen. Patrick Leahy (D-VT) introduced S 2480, the "Contact Lens Consumer Protection Act". This bill pertains to commerce in contact lenses, including by internet retailers.

The bill would amend the Fairness to Contact Lens Consumers Act, which the Congress enacted in 2003. It is now codified at 15 U.S.C. §§ 7601 - 7610. The 2003 act required contact lens prescribers to give a copy of their prescription to their patients, to verify these prescription to third parties, and to otherwise enable their patients to obtain contact lenses from third party suppliers, such as internet based retailers.

The just introduced bill addresses manufacturers of contact lenses. It provides, subject to several exceptions, that "A manufacturer shall make any contact lens the manufacturer produces, markets, distributes, or sells available in a commercially reasonable and nondiscriminatory manner to -- (1) prescribers; (2) entities associated with prescribers; and (3) alternative channels of distribution."

Alternative channels of distribution is defined to include "any mail order company, Internet retailer ..."

The bill was referred to the Senate Commerce Committee.

2nd Circuit Rules FCC Has Primary Jurisdiction in Media Cross Ownership Matter

3/29. The U.S. Court of Appeals (2ndCir) issued its opinion [35 pages in PDF] in Ellis v. Tribune, a case regarding the primary jurisdiction of the Federal Communications Commission (FCC) in media cross ownership matters. The Court of Appeals vacated the judgment of the District Court, and remanded with instructions to dismiss.

Tribune Television Company owns a daily newspaper and two television stations in the Hartford, Connecticut area. This violates the FCC's newspaper broadcast cross ownership rules. Tribune previously had a waiver from the FCC, but that expired.

In June of 2003, the FCC promulgated a new rule. See, story titled "FCC Announces Revisions to Media Ownership Rules" in TLJ Daily E-Mail Alert No. 672, June 3, 2003. However, the U.S. Court of Appeals (3rdCir) stayed and then overturned the new rule.

On June 24, 2004, the U.S. Court of Appeals (3rdCir) issued its opinion [213 pages in PDF] in Prometheus Radio Project v. FCC. See, story titled "3rd Circuit Rules in Media Ownership Case" in TLJ Daily E-Mail Alert No. 930, July 1, 2004. See also, Prometheus Radio Project v. FCC, 373 F.3d 372 (3d Cir. 2004). The Supreme Court denied certiorari.

The FCC has yet to write new media ownership rules.

Neil Ellis, a resident of Hartford, filed a complaint in U.S. District Court (DConn) against Tribune alleging violation of 47 U.S.C. § 401(b), which gives a private cause of action to any party injured by a failure to comply with an FCC order. Tribune moved to dismiss the complaint on the basis that its 2003 rules changes rendered the claim moot, and that the FCC has primary jurisdiction. Ellis moved for summary judgment.

While these motions were pending, the FCC denied Tribune's request for a permanent waiver, but granted a temporary waiver.

The District Court denied Tribune's motion to dismiss, and granted Ellis's motion for summary judgment. See, Ellis v. Tribune TV Co., 363 F. Supp. 2d 121 (2005).

The Court of Appeals held that the District Court "erred in failing to refer this case in the first instance to the FCC under the doctrine of primary jurisdiction". The Court of Appeals vacated, and remanded with instructions to dismiss the complaint.

The Court of Appeals wrote that "The district court’s decision involved a substantial danger of establishing inconsistent rulings (a danger that later became a reality) on an issue squarely within the agency's expertise and discretion." (Parentheses in original.)

On the other hand, the Court of Appeals also held that Ellis has standing to sue, that the case is ripe, and that Tribune did not establish that the new cross ownership rule rendered the complaint moot.

This case is Neil Ellis v. Tribune Television Company., U.S. Court of Appeals for the 2nd Circuit, App. Ct. No. 05-1983-cv, an appeal from the U.S. District Court for the District of Connecticut, Judge Droney presiding. Judge Wesley wrote the opinion of the Court of Appeals, in which Judges Oakes and Sotomayor joined.

CompTel Seeks Judicial Review of FCC's Granting of Verizon Petition for Forbearance

3/29. CompTel filed a petition for review [17 pages in PDF] with the U.S. Court of Appeals (DCCir) of the Federal Communications Commission's (FCC) deemed grant of Verizon's petition for forbearance.

On March 21, 2006, the FCC issued a release [PDF] that states that the FCC, by operation of law, has granted Verizon's December 20, 2004, petition for forbearance from Title II of the Communications Act, and the FCC's Computer Inquiry rules. The FCC adopted no order or decision upon a majority vote of the members of the Commission. The FCC issued only a short release, and Commissioners wrote separate statements. See, story titled "FCC Announces that Verizon Petition for Forbearance is Deemed Granted" in TLJ Daily E-Mail Alert No. 1,334, March 22, 2006.

See, Verizon's December 20, 2004, petition [29 pages in PDF], its letter of February 7, 2006 (part I [25 pages in PDF] and part II  [PDF]), and its February 17, 2006, letter [1 page in PDF]. This proceeding is Docket No. 04-440.

The petition for review states that Comptel "petitions the Court for review of the Federal Communications Commission's grant by operation of law of Verizon Telephone Companies' Petition for Forbearance pursuant to Section 10(c) of the Communications Act".

CompTel's petition requests "an order holding the Commission's action unlawful and setting it aside on grounds that it is arbitrary, capricious, an abuse of discretion, contrary to statutory authority, unsupported by record evidence, and otherwise not in accordance with law, and that the deemed grant of approval under 47 U.S.C. § 160(c) violates the United States Constitution."

Earl Comstock, head of CompTel, stated in a release that "When the chairman of a federal agency is able to abdicate his responsibility to protect the public interest, and instead chooses to advance the private financial interests of a single giant corporation, it is time for the courts to step in and protect the public. The FCC's default grant of forbearance makes Verizon the only telecommunications company in the entire country that is not subject to regulatory oversight. COMPTEL believes that the statutory provision that allowed this situation to occur is an unconstitutional delegation by the Congress to an unelected federal official."

This case is CompTel v. FCC and USA, U.S. Court of Appeals for the District of Columbia, App. Ct. No. 06-1113, a petition for review.

CompTel is represented by the Washington DC law firm of Sher & Blackwell.

Senate Commerce Committee Holds Hearing on Basic Research

3/29. The Senate Commerce Committee's (SCC) Subcommittee on Technology held a hearing titled "Importance of Basic Research to United States' Competitiveness".

Sen. John Ensign (R-NV) wrote in his opening statement that "basic research is the key to future innovation", and that "increased funding of basic research at the National Science Foundation, the National Institute of Standards and Technology, and other federal agencies should be a national priority".

He added that U.S. "competitiveness in global markets and the creation of good jobs at home rely increasingly on the cutting edge innovation that stems from high-risk basic research. United States' technological leadership, innovation, and jobs of tomorrow require a commitment to basic research funding today.

John MarburgerJohn Marburger (at right), Director of the Executive Office of the President's (EOP) Office of Science and Technology Policy (OSTP), wrote in his prepared testimony [8 pages in PDF] that "America currently spends one and a half times as much on Federally-funded research and development as Europe, and three times as much as Japan, the next largest investor. Our scientists collectively have the best laboratories in the world, the most extensive infrastructure supporting research, the greatest opportunities to pursue novel lines of investigation, and the most freedom to turn their discoveries into profitable ventures if they are inclined to do so. We lead not only in science, but also in the productivity, innovation, and technological prowess that is necessary to translate science into economically significant products that enhance the quality of life for all people."

He also discussed President Bush's "American Competitiveness Agenda" and budget request for FY 2007, which seek "a 2 percent increase in non-defense R&D".

Philip Ritter of Texas Instruments wrote in his prepared testimony [6 pages in PDF] that "federal investment in basic research has not kept pace in key areas such as engineering and physical sciences, whether for semiconductor related research or other areas of inquiry. It has been essentially flat for three decades. As a percentage of GDP, it has declined."

He added that "While investment in the life sciences has grown exponentially, federal resources in the physical sciences, engineering, math, and computer science have been stagnant. These neglected areas must be revitalized, at least at the levels proposed in the Administration’s American Competitiveness Initiative."

He also focused on semiconductor research. He wrote that "Industry experts agree that a replacement technology for the current 30-year old semiconductor process, which is reaching its physical limits, needs to be discovered and manufactured by 2020 to continue the historical trends of performance enhancements, size reductions, power conservation, and cost savings. Seminal research papers usually appear 12-15 years before commercialization, in other words within the next few years."

He also said that a byproduct of government funding of basic research is that it produces a skilled workforce. It "contributes to building the pipeline of students with advanced degrees in science, technology, engineering, and math fields. In turn, this builds a skilled U.S. workforce for our businesses."

Adam Drobot of Telcordia addressed communications related research in his prepared testimony [3 pages in PDF]. He wrote that "U.S. industry is unable to fully self-fund the research necessary to discover and exploit long-term, ground-breaking advances so critical to the health and competitiveness of the nation. The history of the telecommunications industry has left us with weak public mechanisms for funding pre-competitive research in communications, paradoxically, because so much of the research was initially done in a dominant institution -- ``Bell Labs´´. While that institution left an incredible legacy of successful inventions which has paid off well for our nation – the mechanisms of funding on which it depended no longer exists. New partnerships between industry, government and universities are needed to meet tomorrow's challenges and to maintain the competitive position of the United States in the communications industry."

See also, prepared testimony [6 pages in PDF] of Arden Bement (Director of the National Science Foundation), prepared testimony [8 pages in PDF] of William Jeffrey (Director of the National Institute of Standards and Technology), prepared testimony [14 pages in PDF] of Leonard Pietrafesa (National Oceanic and Atmospheric Administration), and prepared testimony [6 pages in PDF] of Steven Knapp (Provost of Johns Hopkins University).

House Science Committee Debates Commerce Department's Outsourcing Study

3/29. The House Science Committee (HSC) rejected HRes 717, a resolution that states that "the Secretary of Commerce is directed to transmit to the House of Representatives, not later than 14 days after the date of the adoption of this resolution, a copy of the final draft report, produced by the professional staff of the Technology Administration, entitled: `Six-Month Assessment of Workforce Globalization In Certain Knowledge-Based Industries´."

A motion to report the resolution favorably failed on a vote of 19-14. A motion to report unfavorably produced a 17-17 tie. The HSC may hold another mark up session next week. See, HSC release.

Rep. Sherwood Boehlert (R-NY), the Chairman of the HSC, wrote in his opening statement [PDF] that "Today's debate is not about outsourcing". Rather, "It's only about scoring political points related to a report."

Rep. Bart GordonRep. Bart Gordon (D-TN) (at right), the ranking Democrat on the HSC, stated that "We are all concerned about jobs for hardworking Americans. It is difficult for me to understand how this Committee can seriously talk about bolstering America's global competitive position if, in the next breath, we claim not to want the most sophisticated analysis done by the Federal Government on what is happening with American jobs in high-tech fields". See, web page of House Science Committee Democrats on HRes 717.

Rep. Jerry Costello (D-IL) stated that "The American people spent $335,000 on this report and we believe they have a right to see its findings."

Copyright Office to Hold Hearings on Exemptions to Anti-Circumvention Provisions

3/29. The Copyright Office (CO) will hold a series of hearings in Washington DC on possible exemptions to the prohibition against circumvention of technological measures that control access to copyrighted works. See, CO schedule.

The Digital Millennium Copyright Act (DMCA) prohibits circumvention of technological measures that control access to copyrighted works. More specifically, 17 U.S.C. § 1201 provides, in Subsection (a)(1)(A), that "No person shall circumvent a technological measure that effectively controls access to a work protected under this title ...".

Then, Subsections (a)(1)(B) through (E) provide for rulemaking proceedings conducted by the CO every three years to establish exemptions to the prohibition of (a)(1)(A) for certain non-infringing uses.

The CO is now conducting its third rulemaking on exemptions from the prohibition on circumvention of technological measures that control access to copyrighted works. The CO has already solicited and received public comments. The CO has published 74 initial comments, and 35 reply comments.

The CO is now holding public hearings. It held a hearing last week in Palo Alto, California. The CO will hold a series of hearings in Washington DC on March 29, March 31, and April 3. All hearings will be in Room LM-649 (Mumford Room), Madison Building, Library of Congress, 101 Independence Ave, SE. This building is just to the east of the Cannon House Office Building.

Lists of Blocked URLs. The first hearing will be on Wednesday, March 29, at 1:30 PM. From 1:30 to 3:00 PM, the CO will hear testimony on "Compilations consisting of lists of Internet locations blocked by commercially marketed filtering software applications that are intended to prevent access to domains, websites or portions of websites, but not including lists of Internet locations blocked by software applications that operate exclusively to protect against damage to a computer or a computer network or lists of Internet locations blocked by software applications that operate exclusively to prevent receipt of email."

The witnesses will be Jonathan Band and Steven Metalitz.

Band represents the Library Copyright Alliance, which in turn represents the American Association of Law Libraries, the American Library Association, the Association of Research Libraries, the Medical Library Association, and the Special Libraries Association. He submitted a comment [10 pages in PDF] that addresses this and other proposed exemptions. The members of these groups wish to circumvent technological measures that control access to copyrighted works.

Steven Metalitz represents people who create things and companies that hold copyrights and distribute content. They seek copyright protection, and anti-circumvention protection. He submitted a lengthy reply comment [54 pages in PDF] that responds to numerous proposed exemptions.

He represents, among others, the American Association of Publishers (AAP), American Society of Media Photographers, Authors Guild, Business Software Alliance (BSA), Entertainment Software Association (ESA), Motion Picture Association of America (MPAA), National Music Publishers Association (NMPA), Recording Industry Association of America (RIAA), and Software and Information Industry Association (SIIA). Metalitz is also SVP of the International Intellectual Property Alliance (IIPA).

Certain E-Books. From 3:15 - 4:45 PM on March 29, the CO will hear testimony on "Literary works distributed in ebook format when all existing ebook editions of the work (including digital text editions made available by authorized entities) contain access controls that prevent the enabling of the ebook's read-aloud function and that prevent the enabling of screen readers to render the text into a specialized format." (Parentheses in original.)

The witnesses will be Mark Richert (American Foundation for the Blind), Jonathan Band (Library Copyright Alliance), and Steven Metalitz (creators and owners).

See, comment [PDF] of Richert (AFB) and Michael Richards and Joseph DiScipio (Fletcher Heald & Hildreth).

Exploitation of Security Vulnerabilities. On Friday, March 31, from 9:30 to 11:30 AM, the CO will hear testimony on sound recordings and audiovisual works "distributed in compact disc format and protected by technological protection measures that impede access to lawfully purchased works by creating or exploiting security vulnerabilities that compromise the security of personal computers."

This is the Sony BMG rootkit exemption. See, stories titled "Texas Sues Sony BMG Alleging Violation of Texas Spyware Statute" in TLJ Daily E-Mail Alert No. 1,258, November 22, 2005, and "Texas Amends Spyware Complaint Against Sony BMG" in TLJ Daily E-Mail Alert No. 1,280, December 29, 2005.

The witnesses will be Deidre Mulligan (Samuelson Law, Technology & Public Policy Clinic), Edward Felten (Princeton University), Matthew Schruers (Computer and Communication Industry Association and Open Source and Industry Alliance), Jay Sulzberger (New Yorkers for Fair Use), Steven Metalitz (creators and owners), and Megan Carney.

Mulligan and Felton wrote in their comment [13 pages in PDF] that "The creation of security vulnerabilities includes running or installing rootkits or other software code that jeopardize the security of a computer or the data it contains. The exploitation of security vulnerabilities includes running or installing software protection measures without conspicuous notice and explicit consent and failing to provide a permanent and complete method of uninstalling or disabling the technological measure."

Schruers wrote in his comment [PDF] that "Recent events demonstrate that technological protection measures can threaten critical infrastructure. Misguided efforts to cloak technological protection measures from consumers have in fact created computer security vulnerabilities worldwide, including on government and military systems. Computer security and other mission critical applications that protect critical infrastructure must not be compromised by technological protection measures. Where such measures threaten critical infrastructure and potentially endanger lives, prohibiting their circumvention – if only to disable or remove them – is an absurd result that Congress could not have intended. A temporary exemption to circumvent dangerous access control measures so as to make the non-infringing use of disabling or deleting these measures or the underlying work which they are meant to protect is therefore necessary."

Programs Protected by Dongles. From 2:30 - 4:00 PM, the CO will hear testimony on "Computer programs protected by dongles that prevent access due to malfunction or damage and which are obsolete." The witnesses will be

The witnesses will be Joseph Montoro and Steven Metalitz (creators and owners). See, Montoro's comment.

DVD Circumvention by Universities. On Monday, April 3, from 9:30 AM - 12:30 PM, the CO will hear testimony on two proposals related to circumvention for educational purposes.

First, the CO will hear testimony on "Audiovisual works included in the educational library of a college or university's film or media studies department and that are protected by technological measures that prevent their educational use." Second, the CO will hear testimony on "Derivative and collective works which contain audiovisual works that are in the public domain and that are protected by technological measures that prevent their educational use."

The witnesses will be Jonathan Band (Library Alliance), Peter Decherney (University of Pennsylvania), Bill Herman, Sandra Aistars (Time Warner), Fritz Attaway (Motion Picture Association of America), Steven Metalitz (creators and owners), and Bruce Turnbull (DVD Copy Control Association).

Decherney and others wrote in their comment [39 pages in PDF] that "Audiovisual works which are part of the educational library of universities’ film and media studies departments should be exempted from the access control circumvention prohibition of the DMCA. The libraries referred to here are not the general college or university libraries, but specialized ones that exist within film or media studies departments for the sole purpose of supporting classroom teaching. ... Despite the existence of such libraries, however, film and media studies professors are not able to make effective use of key works in their classroom because the CSS technology prevents the making of digital compilations of short selections (or clips) from DVD’s. If a professor wishes to show more than one clip from one DVD in the same class, it means shuffling discs and taking the time to navigate to the desired portion of the work." See also, reply comment [20 pages in PDF].

Turnbull (DVDCCA) wrote in his reply comment [23 pages in PDF] that "First, the marketplace has already provided a non-circumventing alternative to address the concerns raised by the Libraries. Second, further technological developments are occurring that will provide additional non-circumventing alternatives for these concerns. Third, permitting circumvention of CSS technology for these purposes would undermine the technological and legal underpinning of the content protection system that is the basis for the DVD video business."

He points out that "Pioneer offers two players, specifically developed for and marketed to the education community, that offer the functionality sought by the Libraries. The Pioneer DVD-V5000 player offers a command stack feature, that allows the user to select the beginning and end frames of specific clips of video and store them in the player's flash memory for later playback. The playback can either be in the form of sequential video clips (up to 300) that the teacher has pre-selected, or in real time where the teacher plays any clip by reading and transmitting information from printed barcodes using a wired/infrared barcode reader." He goes on to discuss a second DVD player.

He also wrote that "permitting circumvention of CSS to enable the creation of clip compilations would expose the CSS technical and legal protection regime to possible undermining for purposes far beyond those proposed in the exemption request. Once the technology is legally circumvented, the ability to limit the scope of the use of the circumvention may well be impossible, thereby undermining the whole system."

Aistars (Time Warner) wrote in her reply comment [14 pages in PDF] to these and other proposed exemptions that the CO should "accord significant weight to the consumer benefits derived from continued availability of copyrighted works via the numerous digital distribution modes supported by" technology protection measures (TPMs). With respect to circumvention of DVD TPMs, she stated that professors already have access to the content of DVDs, and there there are already devices that facilitate compilation of clips.

People and Appointments

3/29. Federal Communications Commission (FCC) Chairman Kevin Martin named Anthony Dale acting Managing Director and Mark Stephens acting Chief Financial Officer. See, FCC release [PDF].

More News

3/29. The House Commerce Committee amended and approved HR 4127, the "Data Accountability and Trust Act", or DATA. The Committee approved a manager's amendment offered by Rep. Cliff Stearns (R-FL). Several other amendments were either rejected or withdrawn. The vote on final approval was 41-0.

3/29. The Supreme Court heard oral argument in eBay v. MercExchange, Sup. Ct. No. 05-130. See, Supreme Court docket, March 16, 2004, opinion [31 pages in PDF] of the Court of Appeals (FedCir), and story titled "Supreme Court to Consider Availability of Injunctive Relief in Patent Cases" in TLJ Daily E-Mail Alert No. 1,261, November 29, 2005.

3/29. The U.S. Court of Appeals (DCCir) issued its opinion [14 pages in PDF] in American Association of Paging Carriers v. FCC, a petition for review pertaining to paging carriers and licensing by itinerant mobile radio transmitters on a nationwide, non-coordinated basis. See also, brief [43 pages in PDF] of the AAPC. The Court of Appeals dismissed the petition. This was a petition to review an order that denies a petition for agency reconsideration, which is unreviewable. This case is AAPC v. FCC and USA, App. Ct. No. 04-1359, a petition for review of the Federal Communications Commission's (FCC) Memorandum Opinion and Order (MOO) adopted September 1, 2004, and released on September 8, 2004. This MOO is FCC 04-212 in WT Docket No. 01-146. Judge Karen Henderson wrote the opinion of the Court of Appeals, in which Judges Garland and Griffith joined.

3/29. The Senate Judiciary Committee's (SCC) Subcommittee on the Constitution, Civil Rights and Property Rights held a hearing titled "What’s in a Game? State Regulation of Violent Video Games and the First Amendment". See, prepared testimony of Steve Strickland, prepared testimony of Elizabeth Carll (American Psychological Association), prepared testimony of David Bickham (Center on Media and Child Health, Harvard Medical School), prepared testimony of Patricia Vance (President, Entertainment Software Rating Board), prepared testimony of Rep. Jeff Johnson (Assistant Majority Leader, Minnesota House of Representatives), prepared testimony of Paul Smith (Jenner & Block), and prepared testimony of Kevin Saunders (Michigan State University law school).

3/29. The Department of Labor's (DOL) Bureau of Labor Statistics (BLS) announced that its Business Research Advisory Council (BRAC) will meet on April 19 and 20, 2006. The BLS's vaguely worded agenda in its notice in the Federal Register states that the BRAC's Committee on Productivity and Foreign Labor Statistics will meet at 10:00 AM on April 19 to address "new service industries", "international labor comparisons", and "compensation comparisons", including for China and India. See, Federal Register, March 29, 2006, Vol. 71, No. 60, at Pages 15768-15769.

3/29. The Federal Communications Commission (FCC) published a notice in the Federal Register that describes, and sets comment deadlines for, its notice of proposed rulemaking (NPRM) regarding licensing and use of frequencies in the 904-909.75 and 919.75-928 MHz portions of the 902-928 MHz band that are used for the provision of multilateration Location and Monitoring Service (M-LMS band). This NPRM is FCC 06-24 in WT Docket No. 06-49. See, text [24 pages in PDF] of NPRM. Initial comments are due by May 30, 2006. Reply comments are due by June 30, 2006. See, Federal Register, March 29, 2006, Vol. 71, No. 60, at Pages 15658-15666. See also, story titled "FCC Releases NPRM on M-LMS Systems" in TLJ Daily E-Mail Alert No. 1,325, March 8, 2006.

3/29. The Department of State (DOS) published a notice in the Federal Register that announces the dates, times, places, and topics of numerous upcoming meetings of the DOS's International Telecommunication Advisory Committee (ITAC). See, Federal Register, March 29, 2006, Vol. 71, No. 60, at Page 15798.

3/29. The U.S. Court of Appeals (2ndCir) issued its opinion [50 pages in PDF] in FTC v. Verity, a case involving application of the Federal Trade Commission Act's (FTCA) prohibition of unfair and deceptive trade practices to telephone billing charges for telephone pornography not authorized by phone customers. The defendants operated a porn web site that fraudulently billed users for telephone calls to Madagascar that did not take place. The Federal Trade Commission (FTC) filed a complaint in U.S. District Court (SDNY) alleging violation of 15 U.S.C. § 45(a). The FTC prevailed in the District Court. The Court of Appeals vacated the monetary judgment, and a contempt order, but otherwise affirmed the District Court's judgment. The Court of Appeals also wrote that "The incessant demand for pornography, some have said, is an engine of technological development." This case is FTC v. Verity International, Ltd., et al., U.S. Court of Appeals for the 2nd Circuit, App. Ct. No. 04-5487-cv, an appeal from the U.S. District Court for the Southern District of New York, Judge Lewis Kaplan presiding. Judge John Walker wrote the opinion of the Court of Appeals, in which Judges Feinberg and Straub joined.

Court of Appeals Holds that Rep. McDermott Violated Wiretap Act

3/28. The U.S. Court of Appeals (DCCir) issued its divided opinion [23 pages in PDF] in Boehner v. McDermott, a civil wiretap case in which the Court of Appeals affirmed the judgment of the District Court that Rep. Jim McDermott (D-WA) violated the wiretap statute,18 U.S.C. § 2511, and can be held civilly liable for damages.

The Wiretap Act, which was enacted as Title III of the Omnibus Crime Control and Safe Streets Act of 1968, is the principal federal wiretapping statute. It is codified at 18 U.S.C. § 2510 et seq. It prohibits the interception of wire, oral, and electronic communications, without a court order.

18 U.S.C. § 2511 provides, in relevant part, that "(1) Except as otherwise specifically provided in this chapter any person who ... (c) provides that "intentionally discloses, or endeavors to disclose, to any other person the contents of any wire, oral, or electronic communication, knowing or having reason to know that the information was obtained through the interception of a wire, oral, or electronic communication in violation of this subsection ... shall be subject to suit as provided in subsection (5)."

The plaintiff is Rep. John Boehner (R-OH). He is the nearly elected House Majority Leader. The defendant is Rep. McDermott. He is a member of the House Ways and Means Committee, and perhaps the most theatrical and immature member of the Congress.

Rep. Boehner participated in a telephone conference call, by cell phone, with several House Republican leaders in December of 1996. He was in the state of Florida at the time. John and Alice Martin, residents of Florida, used a radio scanner to intercept the conversation. They also made an audio recording of the conversation. They delivered a copy of the recording to Rep. Karen Thurman (D-FL), who advised them to delivery it to Rep. McDermott. The Martins then traveled to Washington DC, and delivered the recording to Rep. McDermott, along with a cover letter that stated that the recording contained "a conference call heard over a scanner", and that they understand that they "will be granted immunity." Rep. McDermott disclosed the contents of the recording to the New York Times (NYT), and the Atlanta Constitution Journal. The NYT then published a news story based upon the contents of the recorded telephone conversation. The Martins were promptly charged with, and pled guilty to, criminal violation of the Wiretap Act, and in particular, 18 U.S.C. § 2511.

Rep. Boehner filed a complaint in U.S. District Court (DC) against Rep. McDermott alleging violation of 18 U.S.C. § 2511, as well as violation of similar provisions of Florida and District of Columbia law.

Rep. McDermott moved to dismiss on First Amendment grounds. In a previous ruling, the District Court granted the motion to dismiss. The U.S. Court of Appeals (DCCir) reversed in a opinion published at 191 F.3d 463 (1999). The Supreme Court granted writ of certiorari, and vacated the judgment of the Court of Appeals, and remanded the case to the Court of Appeals in light of its decision in Bartnicki v. Vopper, 532 U.S. 514 (2001). The Court of Appeals then remanded the case to the District Court.

On May 21, 2001, the Supreme Court issued its opinion in Bartnicki v. Vopper, holding that a radio host (Vopper) cannot be sued under 18 U.S.C. § 2511 for playing an audio recording of a cellular telephone conversation, despite a federal statute that made illegal both the interception of the conversation, and its disclosure. The majority reasoned that the case pitted statutes banning disclosure of illegally obtained electronic communications against the First Amendment freedom of speech claims of persons with illegally obtained recordings to disclose them if their content pertains to a public issue.

The Supreme Court wrote that the recording violated federal wiretapping law, that Vopper knew this, but that he did not make the illegal intercept. He reasoned that the statute's application in this situation would violate Vopper's free speech rights under the First Amendment. See also, story titled "Supreme Court Diminishes Electronic Privacy" in TLJ Daily E-Mail Alert No. 192, May 22, 2001.

The District Court held that the facts of this case are distinguishable from those in Bartnicki. In particular, Rep. McDermott's receipt of the tape from the Martins was so closely tied by knowledge and action to the Martins' illegal disclosure that he obtained the information unlawfully. And, since he obtained the illegal recording unlawfully, unlike the defendants in Bartnicki, who received an anonymous package in a mailbox, Rep. McDermott is not shielded by the holding in Bartnicki.

The District Court awarded Rep. Boehner $10,000 in statutory damages, $50,000 in punitive damages, and reasonable attorney fees and costs.

See also, story titled "The District Court District Court Holds Rep. McDermott Violated Wiretap Act" in TLJ Daily E-Mail Alert No. 964, August 23, 2004.

In the just released Court of Appeals opinion, the Court affirmed the District Court.

Judge Randolph wrote the opinion of the Court of Appeals, in which Judge Ginsburg joined. The Court wrote that "Because there was no genuine dispute that Representative McDermott knew the Martins had illegally intercepted the conversation, he did not lawfully obtain the tape from them. The Martins violated § 2511 not once, but twice – first when they intercepted the call and second when they disclosed it to Representative McDermott. It is of little moment whether Representative McDermott’s complicity constituted aiding and abetting their criminal act, or the formation of a conspiracy with them, or amounted to participating in an illegal transaction." (Footnotes omitted.)

The Court added that "The difference between this case and Bartnicki is plain to see. It is the difference between someone who discovers a bag containing a diamond ring on the sidewalk and someone who accepts the same bag from a thief, knowing the ring inside to have been stolen. The former has committed no offense; the latter is guilty of receiving stolen property, even if the ring was intended only as a gift." (Footnotes omitted.)

Judge Sentelle wrote a long dissent. He argued that "There is no distinction of legal let alone constitutional significance between our facts and those before the Court in Bartnicki."

He elaborated that "Just as Representative McDermott knew that the information had been unlawfully intercepted, so did the newspapers to whom he passed the information. I see no distinction, nor has Representative Boehner suggested one, between the constitutionality of regulating communication of the contents of the tape by McDermott or by The Washington Post or The New York Times or any other media resource."

Judge Sentelle continued that "For that matter, every reader of the information in the newspapers also learned that it had been obtained by unlawful intercept. Under the rule proposed by Representative Boehner, no one in the United States could communicate on this topic of public interest because of the defect in the chain of title. I do not believe the First Amendment permits this interdiction of public information either at the stage of the newspaper-reading public, of the newspaper-publishing communicators, or at the stage of Representative McDermott’s disclosure to the news media. Lest someone draw a distinction between the First Amendment rights of the press and the First Amendment speech rights of nonprofessional communicators, I would note that one of the communicators in Bartnicki was himself a news commentator, and the Supreme Court placed no reliance on that fact."

Rep. McDermott stated in a release on March 28 that "There is no greater responsibility for a Member of Congress than to defend the Constitution, and I fully accept my duty to protect the First Amendment, which is what this case is all about."

However, his recent legislative actions suggest disregard for First Amendment rights. In particular, he was the author and backer of a last minute insertion into HR 3402, the Department of Justice reauthorization bill late last year that makes it a federal crime to use the internet to "annoy" someone. President Bush signed this bill on January 5, 2006.

HR 3402 also includes the Violence Against Women Act (VAWA). Rep. McDermott's amendment amended the VAWA portion of the bill. However, the amendment extends to actions that are neither violent, nor against women. Also, while the amendment contains the language "Preventing Cyberstalking", it extends criminal liability to conduct that is not in the nature of stalking. It criminalizes using the internet to annoy. Much of this is protected free speech.

For an explanation of this late amendment, see story titled "Bush Signs DOJ Reauthorization Bill" in TLJ Daily E-Mail Alert No. 1,284, January 6, 2006. See, subsection titled "The Internet as a Telecommunications Device".

Rep. McDermott claimed credit for this speech restrictive amendment in a release issued on January 11, 2006. The release that states that "Rep. Jim McDermott (D-WA), working behind the scenes with leaders on the Judiciary Committee in the House and in the Senate, authored language protecting women against online cyberstalking, and a bill -- Violence Against Women and Department of Justice Reauthorization Act of 2005 -- was passed and signed into law by the President."

Also, while writing the above referenced story, TLJ spoke with Congressional committee staff. House Judiciary Committee (HJC) staff stated that the internet annoyance language was not in the HJC bill, that it came from the Senate Judiciary Committee (SJC) version. A SJC staffer stated that the SJC inserted the provision at the request of Rep. McDermott. This person added that the Department of Justice did not request this provision.

Rep. McDermott's theatrics extend beyond wiretaps. He once brought a Christmas tree to a committee mark up session, in the month of June. See, story titled "House Ways and Means Committee Approves Tax Bill that Repeals ETI" in TLJ Daily E-Mail Alert No. 918, June 15, 2004. This was a mark up of HR 4520 (108th Congress), the "American Jobs Creation Act of 2004", which became Public Law No. 108-357. The World Trade Organization (WTO) has since ruled that this ETI/FSC replacement legislation violates U.S. treaty obligations. Hence, there may be yet another bill.

GAO Reports on Offshoring by Federally Funded Agencies

3/28. The Government Accountability Office (GAO) released a report [45 pages in PDF] titled "Offshoring in Six Human Services Programs: Offshoring Occurs in Most States, Primarily in Customer Service and Software Development".

This study concerns "offshoring in six federally-funded human services programs". The GAO studied the Child Support Enforcement, Food Stamp, Temporary Assistance for Needy Families (TANF), Unemployment Insurance, Pell Grant, and Federal Family Education Loan (FFEL) programs.

The report states that "Some work is performed offshore in the majority of states for the four federally-funded state-administered programs we reviewed, but no work is performed offshore for the two federally-administered student aid programs."

The report adds that offshoring occured "most frequently in the Food Stamp and TANF programs", but that "expenditures for services performed offshore in the four state-administered programs appear to be relatively small".

Moreover, the report states that the services most frequently performed offshore are "customer service, such as call centers". Hence, little of the report deals with offshoring of software development.

The report also states that "India was by far the most prevalent offshore location, followed by Mexico, but some offshore work was also performed in Canada, Ireland, and Poland."

The report states that state officials reported that the main benefit of offshoring is "lower costs". However, the report also provides anecdotal reports that foreign providers of software programming services sometimes offer specialized skills and quicker turnarounds.

The report offers some examples of software services offshoring. "In South Carolina, the contractor hired to update the state’s system for managing employer taxes is using software programmers in India to develop the new system. In Wisconsin, while the actual software programming was conducted in the United States, the contractors used an offshore help desk to obtain technical assistance in conducting software programming services. In several child support enforcement programs, the software designed for payment machines used in handling the receipt and disbursement of child support payments was created offshore."

People and Appointments

3/28. Andrew Card resigned as Chief of Staff for President Bush. Bush named Joshua Bolten to be his new Chief of Staff. See, transcript of transition ceremony. Bolten was previously Director of the Office of Management and Budget in the Executive Office of the President. From January 2001 through June of 2003, he was Assistant to the President and Deputy Chief of Staff for Policy. Before that, he worked on the Bush Cheney election campaign. From 1994 to 1999, he was Executive Director, Legal & Government Affairs, for Goldman Sachs International in London. He was General Counsel to the U.S. Trade Representative (USTR) during the administration of the elder President Bush. Before that, he worked for the Senate Finance Committee on trade issues. He has also worked for the law firm of O'Melveny & Myers.

3/28. Kenneth Glazer was named to be a Deputy Director of the Federal Trade Commission's (FTC) Bureau of Competition. He has been in house legal counsel at the Coca Cola Company since 1993. See, FTC release.

3/28. David Wales was named to be a Deputy Director of the Federal Trade Commission's (FTC) Bureau of Competition. Most recently, he briefly worked in the antitrust section of the law firm of Cadwalader Wickersham & Taft. Before that, he briefly worked for the antitrust section of the law firm of Shearman & Sterling. Early in the Bush administration, he was Counsel to Assistant Attorney General in charge of the Antitrust Division, Charles James. The FTC's release announcing his selection states that while at the Department of Justice he worked on "U.S. v. Microsoft and the DirecTV/Echostar, Northrop Grumman/TRW, General Dynamics/Newport News, and Univision/HBC mergers."

3/28. Federal Communications Commission (FCC) Commissioner Deborah Tate selected John Grant to be her Special Advisor for Policy. He was not named Legal Advisor, although he is working on a law degree at Georgetown University's law school. He previously worked as a Legislative Assistant to Sen. Lamar Alexander (R-TN). Before that, he worked for former Sen. Peter Fitzgerald (R-IL). Tate previously named Aaron Goldberger to be a Legal Advisor.

3/28. Johnny Sutton was named Chair of the Attorney General's Advisory Committee of U.S. Attorneys. He is the U.S. Attorney for the Western District of Texas. Susan Brooks was named Vice Chair. She is the U.S. Attorney for the Southern District of Indiana. Thomas Moss (U.S. Attorney for the District of Idaho) and Gregory White U.S. Attorney for the Northern District of Ohio) were also named to the Committee.

Daniel Caprio3/28. Daniel Caprio (at right), the Chief Privacy Officer and Acting Assistant Secretary for Technology Policy at the Department of Commerce (DOC), will join the Progress and Freedom Foundation (PFF) on April 17, 2006. He will be the PFF's Executive Vice President, and a Senior Fellow. He has chaired the DOC's radio frequency identification (RFID) working group. Prior to working at the DOC, he was Chief of Staff to former Federal Trade Commission (FTC) member Orson Swindle, who is now is a Distinguished Fellow at the PFF.

3/28. Blaine Rethmeier joined the White House Office of Communications. Until March 27 he was responsible for media relations at the Senate Judiciary Committee. He can now be contacted at brethmeier at who dot eop dot gov or 202-456-2777.

3/28. Sen. Charles Grassley (R-IA) and others introduced S 2467, the "United States Trade Enhancement Act of 2006". It relates to the activities of the Office of the U.S. Trade Representative (USTR). It also includes the "International Monetary and Financial Policy Cooperation Act of 2006".

Supreme Court Denies Certiorari in NY Times v. Hatfill

3/27. The Supreme Court denied certiorari in New York Times v. Hatfill, a defamation case against a newspaper that published news stories. See, Order List [11 pages in PDF] at page 2. See also, Supreme Court docket.

The NYT published news stories about the mailing of letters containing anthrax spores in the fall of 2001, the FBI's investigation, and Stephen Hatfill. Hatfill filed a complaint in U.S. District Court (EDVa) against the NYT pleading the state law claims of defamation and intentional infliction of emotional distress. The District Court dismissed the claims against the NYT for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Hatfill appealed. The Court of Appeals reversed, in a split opinion. The Court of Appeals quoted extensively from pieces in the NYT, and concluded that the complaint adequately alleged claims for defamation and intentional infliction of emotional distress, based upon the court's construction. The dissent argued for affirmance of the District Court. See, story titled "4th Circuit Reinstates Hatfill's Defamation Suit Against NYT" in TLJ Daily E-Mail Alert No. 1,185, August 1, 2005.

The Supreme Court's denial of certiorari lets stand the judgment of the Court of Appeals. The case goes back to the District Court for further proceedings.

This case is New York Times Co. v. Stephen Hatfill, Sup. Ct. No. 05-897, a petition for writ of certiorari to the U.S. Court of Appeals for the 4th Circuit. The Appeals Court case number is 04-2561. The Court of Appeals heard an appeal from the U.S. District Court for the Eastern District of Virginia, D.C. No. CA-04-807-A, Judge Claude Hilton presiding. Judge Dennis Shedd wrote the opinion of the Court of Appeals, in which Judge Wilkins joined. Judge Niemeyer dissented.

DOJ Responds to House Judiciary Committee Questions Regarding NSA's Extra-Judicial Surveillance

3/27. The House Judiciary Committee (HJC) released the Department of Justice's (DOJ) responses [55 pages in PDF] to the HJC's letters regarding the National Security Agency's (NSA) extra-judicial surveillance of electronic communications where one party is within the U.S. and one party is outside the U.S.

The questions and responses also address surveillance of terrorists, the Foreign Intelligence Surveillance Act (FISA), the FISA court, and the Congressional Authorization for the Use of Military Force.

Many of the responses are redundant of prior speeches, prepared testimony, and testimony.

Many DOJ answers are non-responsive. For example, one question is a follows: "Telecommunications companies and Internet Service Providers (“ISPs”) are protected from criminal and civil liability if they are provided a court order from the FlSA court or criminal court or if a high-ranking DOJ official has certified in writing that “No warrant or court order is required by law, that all statutory requirements have been met, and that the specified assistance is required.” Has anyone at the Justice Department provided any telephone companies or ISPs with these certifications in the course of implementing the NSA’s program?"

The DOJ's answer is that this NSA program "is classified and sensitive, and therefore we cannot confirm or deny operational details of the program in this setting". The DOJ likewise declined to provide responsive information for a question regarding which telecommunications companies have have facilitated warrantless interceptions.

Committee to Hold Hearing on National Cable Franchising, Net Neutrality, and VOIP/E911 Bill

3/27. The House Commerce Committee (HCC) released a draft [34 pages in PDF] of its committee print of a yet to be introduced bill regarding regulation of various internet and communications services.

The HCC's Subcommittee on Telecommunications and the Internet will hold a hearing on this bill on Thursday, March 30, 2006, at 10:00 AM.

The HCC's notice states that the bill is titled "Communications Opportunity, Promotion, and Enhancement Act of 2006". This produces the acronym, COPE Act. However, a HCC release states that this is the "Barton-Rush bill, formally known as the Communications Opportunity, Promotion and Enhancement Act of 2006".

First, the bill would create a national cable franchising regime.

Walter McCormick, head of the U.S. Telecom Association, stated in a release that "This draft legislation will eliminate outdated barriers to entry in the video market and will help spur real competition. We applaud Chairmen Barton and Upton for their efforts to bring meaningful video choice to consumers and we will continue to work with both the House and Senate to update our telecom laws, including stabilizing universal service."

Kyle McSlarrow, head of the National Cable Telecommunications Association (NCTA), stated in a release that "While our policy recommendation would be to reform and streamline the franchising process to ensure speedy entry by new competitors, we are pleased that the national franchising scheme proposed in the House bill seeks to ensure all providers compete on a level playing field. Under any scheme, what matters is the sets of responsibilities assigned to local, state, and federal authorities and we look forward to continuing to work with the Committee to develop an appropriately balanced set of responsibilities for all levels of government."

Second, the bill would also give the Federal Communications Commission (FCC) adjudicatory authority to implement and enforce its policy statement [3 pages in PDF] of August 5, 2005, regarding network neutrality. See, story titled "FCC Releases Policy Statement Regarding Internet Regulation" in TLJ Daily E-Mail Alert No. 1,221, September 26, 2005, and story titled "FCC Adopts a Policy Statement Regarding Network Neutrality" in TLJ Daily E-Mail Alert No. 1,190, August 8, 2005.

Gigi Sohn, head of the Public Knowledge, stated in a release that "We are pleased that the Committee draft included language recognizing the importance of keeping the Internet open to all consumers. However, we do not believe that the draft bill goes far enough. The provisions will not stop the cable and telephone companies from degrading Internet traffic and they do not contain strong enough penalties to discourage misbehavior. Without stronger legislation, the cable and telephone companies will have the power to change the fundamental nature of the Internet. This bill needs significant improvement before it will preserve the open Internet that consumers and service providers expect and deserve."

In contrast, the NCTA's McSlarrow stated that while the bill "has a net neutrality provision narrowly tailored to the FCC policy statement issued in 2005, we continue to believe that the better course is for the government to resist injecting itself into a thriving, dynamic market where investment and innovation are flourishing."

Finally, the bill addresses E911 and voice over internet protocol (VOIP) services.

U.S. Chamber of Commerce Study Ranks State Court Systems

3/27. The Institute for Legal Reform published a ranking [PDF] of state judicial systems based on a telephone survey of 1,456 attorneys at large companies. This study was conducted by The Harris Poll for the U.S. Chamber Institute for Legal Reform. See, full report [113 pages in PDF] titled "2006 U.S. Chamber of Commerce State Liability Systems Ranking Study". See also, U.S. Chamber release.

Delaware is ranked 1st overall, Nebraska 2nd, and Virginia is 3rd. Other highly ranked states include Connecticut (5th), Colorado (8th), and North Carolina (10th).

Six of the bottom ten states are in the deep south. Also, California is ranked 44th and Texas is 43rd. The report does not rate or rank federal courts, where much technology related litigation takes place. However, the Eastern District of Texas is held in low regard by many tech sector attorneys.

Harris conducted a telephone survey of a "nationally representative sample of senior attorneys at companies with annual revenues of at least $100 million." There were 1,456 respondents. Although, for any given state the number of respondents was smaller. For example, only 51 provided responses for the state of North Dakota, while 317 provided responses on California.

Harris questioned respondents, and ranked states, in nine categories:
(1) having and enforcing meaningful venue requirements.
(2) tort and contract litigation.
(3) treatment of class action suits and mass consolidation suits.
(4) punitive damages.
(5) timeliness of summary judgment/dismissal.
(6) discovery.
(7) scientific and technical evidence.
(8) non-economic damages.
(9) judges' impartiality and competence.
(10) juries' predictability and fairness.

Maryland is ranked 20th, while this study did not rank the District of Columbia.

New York is ranked 21st, Washington is 28th, Oregon is 30th, Pennsylvania is 31st, Massachusetts is 32nd, and Kentucky is 34th.

Also, while California is ranked near the bottom, the study suggests that there are regional variations within the state. The study states that "In order to understand if there are any cities or counties which might impact a state's ranking, respondents were asked which five cities or counties have the least fair and reasonable litigation environments, a question first asked in 2004. The worst jurisdiction was Los Angeles, California (mentioned by 20% of the respondents)". (Parentheses in original.)

Federal Election Commission to Consider Internet Speech Rules

3/27. The Federal Election Commission (FEC) will meet on Monday, March 27, 2006, at 10:00 AM. The agenda includes consideration of final rules regarding the regulation of internet speech. See, agenda and draft rules [96 pages in PDF].

In addition, the House agenda for the week of March 27 again includes consideration of HR 1606, the "Online Freedom of Speech Act". See, Republican Whip Notice.

The House rejected HR 1606 on November 2, 2005, by a vote of 225-182. See, Roll Call No. 559. However, it was considered under suspension of the rules, which meant that a two thirds majority was required for approval. It failed because fewer that two thirds of the members voted for it. See also, stories titled "House Rejects Online Freedom of Speech Act" and "Commentary: Analysis of the Vote on HR 1606" in TLJ Daily E-Mail Alert No. 1,246, November 3, 2005.

The Federal Election Campaign Act (FECA), as amended by the Bipartisan Campaign Reform Act of 2002 (BCRA), which is also known as "McCain Feingold", requires, among other things, that the FCC write rules restricting political speech. The FECA, and regulations thereunder, nominally regulate the financial transactions of campaign contributions and expenditures. The FEC, in its first attempt to write rules, created an exemption for communications over the internet. Sen. McCain and Sen. Feingold, and two members of the House, challenged this rule in the U.S. District Court, and won. The Court held that the FEC could not exempt communications over the internet. The rules under consideration are a response to this Court opinion.

The subject of HR 1606, and one of the subjects of the draft rules, is the definition of "public communication". 2 U.S.C. § 431(22) provides that "The term ``public communication´´ means a communication by means of any broadcast, cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to the general public, or any other form of general public political advertising."

The FEC's draft rules now provide that "Public communication means a communication by means of any broadcast, cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing or telephone bank to the general public, or any other form of general public political advertising. The term general public political advertising shall not include communications over the Internet, except for communications placed for a fee on another person's website."

The FEC's draft rules also revise the news media exemption. For example, the draft rules provide that "Any cost incurred in covering or carrying a news story, commentary, or editorial by any broadcasting station (including a cable television operator, programmer or producer), website, newspaper, magazine, or other periodical publication, including any Internet or electronic publication, is not a contribution unless the facility is owned or controlled by any political party, political committee, or candidate ..." (Parentheses in original.)

The draft rules also provide that certain uncompensated internet activity by individuals are neither contributions nor expenditures. For example, the draft rules provide as follows:

"(a) When an individual or a group of individuals, acting independently or in coordination with any candidate, authorized committee, or political party committee, engages in Internet activities for the purpose of influencing a Federal election, neither of the following is a contribution by that individual or group of individuals:
(1) the individual's uncompensated personal services related to such Internet activities:
(2) the individual's use of equipment or services for uncompensated Internet activities, regardless of who owns the equipment and services.
(b) Internet activities. For the purposes of this section, the term Internet activities includes, but is not limited to: sending or forwarding electronic messages; providing a hyperlink or other direct access to another person's website; blogging; creating maintaining or hosting a website; paying a nominal fee for the use of another person's website; and other forms of communications distributed over the Internet.
(c) Equipment and services. "Equipment and services" within the meaning of this section shall include, but are not limited to; computers, software, Internet domain names, Internet Service Provider (ISP), and any other technology that is used to provide access to or use of the Internet."

See also, stories titled "FBI Investigates FEC for Fraud and Corruption" and "CDT Releases Proposed Bill to Limit the FEC's Authority to Regulate Online Speech" in TLJ Daily E-Mail Alert No. 1,327, March 10, 2006; and story titled "House Committee Holds Hearing on Regulation of Internet Speech" in TLJ Daily E-Mail Alert No. 1,222, September 27, 2005.

People and Appointments

3/27. President Bush withdrew the nomination of Henry Saad to be a Judge of the U.S. Court of Appeals for the 6th Circuit. See, White House release. Bush most recently nominated Saad on February 14, 2005. Although, Bush has been trying to place Saad on the Court of Appeals since 2001.

More News

3/27. The Federal Election Commission (FEC) adopted new rules regarding the regulation of communications on the internet. The FEC approved by 6-0 votes its draft rules [96 pages in PDF], and amendments [13 pages in PDF]. See also, joint prepared statement [2 pages in PDF] of FEC Commissioners Lenard and Weintraub.

3/27. The Federal Communications Commission (FCC) released a notice of proposed rulemaking (NPRM) [52 pages in PDF] regarding the assessment and collection of regulatory fees for fiscal year 2006. This item is FCC 06-38 in MD Docket No. 06-68. Initial comments are due by April 14, 2006. Reply comments are due by April 21, 2006.

3/27. The Federal Communications Commission (FCC) released the text [14 pages in PDF] of its second further notice of proposed rulemaking (2ndFNPRM) regarding the obligation of television licensees to provide educational programming for children and the requirement that television licensees protect children from excessive and inappropriate commercial messages. The FCC adopted, but did not release, this 2ndFNPRM at its meeting of March 17, 2006. See, story titled "FCC Adopts Further NPRM Re Children's Programming Obligations" in TLJ Daily E-Mail Alert No. 1,332, March 20, 2006. This item is FCC 06-33 in MM Docket No. 00-167. Initial comments are due by April 24, 2006. Reply comments are due by May 8, 2006.

3/27. The Government Accountability Office (GAO) released a report [36 pages in PDF] titled "Information Assurance: National Partnership Offers Benefits, but Faces Considerable Challenges". The report states that "Commercial-off-the-shelf information assurance products and information assurance-enabled products or technologiesare readily available to agencies as well as consumers providing needed security services. Acquiring such products for use on national security systems that perform as claimed by the vendors who manufacture these products is a governmentwide challenge. In 1997, the National Information Assurance Partnership (NIAP) was formed by the National Security Agency and the National Institute of Standards and Technology (NIST) to boost federal agencies' and consumers' confidence in commercial-off-the-shelf products. To facilitate this goal, NIAP developed a national program that uses accredited laboratories to independently evaluate and validate the security of vendor products using standardized processes." The report finds that the NIAP's "effectiveness has not been measured or documented". It also finds that the NIAP faces several challenges that "hinder the effective use of the NIAP process by vendors and agencies".

Go to News from March 21-25, 2006.