TLJ News from April 16-20, 2006

Gonzales Proposes Data Retention Mandate, Web Site Labeling, and Ban on Deceptive Source Code

4/20. Attorney General Alberto Gonzales gave a speech in Alexandria, Virginia, in which he proposed that internet service providers (ISPs) be required to retain data. The Department of Justice (DOJ) also released a draft bill [PDF] that would require web site operators to label web sites that contain "sexually explicit material", and criminalize the deceptive use of words in the source code of certain web sites.

Gonzales' argument for a data retention mandate is that the internet is used to disseminate child pornography (CP), that the federal government wants to enforce laws that criminalize CP, and that requiring all ISPs to retain data will facilitate investigation and prosecution of CP laws.

The Center for Democracy and Technology (CDT) responded that "Data retention requirements would be burdensome, raise serious privacy concerns, and be of questionable value given existing laws that require ISPs to preserve data at the request of law enforcement."

See, full story.

FCC Issues Notice Regarding Procedures for Transition of the 1710-1755 MHz Band

4/20. The The Federal Communications Commission (FCC) issued a notice regarding the transition of the 1710-1755 MHz band from federal to non-federal use.

This notice states that the FCC, in consultation with the National Telecommunications and Information Administration (NTIA),  "will require all AWS licensees to coordinate AWS use of the 1710-1755 MHz band during the transition so that licensees can deploy their systems in a timely and efficient manner without causing harmful interference to existing federal operations during the transition. Coordination will assist new licensees in determining when new systems can be deployed without causing harmful interference to federal incumbents. At the same time, coordination will provide federal incumbents with some assurance that critical operations will not be interrupted due to harmful interference."

The notice states that "The Commission’s Part 24 and Part 101 rules contain coordination rules applicable to shared use of the PCS band which may provide guidance regarding similar procedures that could be used in the AWS band." In particular, "In engineering a system or modification thereto, the applicant must, by appropriate studies and analyses, select sites, transmitters, antennas and frequencies that will avoid interference in excess of permissible levels to other users. All applicants and licensees must cooperate fully and make reasonable efforts to resolve technical problems and conflicts that may inhibit the most effective and efficient use of the radio spectrum; however, the party being coordinated with is not obligated to suggest changes or re-engineer a proposal in cases involving conflicts."

The FCC's notice also enumerates several "pre-operational procedures", adherence to which will "constitute a reasonable effort on the part of AWS licensees to comply with the license condition that they coordinate frequency usage with incumbent federal users." These procedures address contacting federal agencies, interference analyses, non-disclosure agreements, and TIA Bulletin 10F.

The notice also enumerates several requirements imposed upon federal agencies.

The notice concludes with the statements that "AWS licensees unable to reach agreement on the mitigation of interference may seek redress from the Commission", and "For federal agencies, in the event that the potential for harmful interference cannot be resolved satisfactorily, the matter may be referred to the NTIA, for assistance."

This item is FCC 06-50 in WTB Docket No. 02-353.

Hu Says PR China Will Strengthen Intellectual Property Rights and Increase Market Access

4/20. President Hu Jintao of the People's Republic of China traveled to Washington DC where he met with President Bush. Bush and Hu both delivered welcoming speeches. See, transcript. They also held a joint news conference. See, transcript.

President Bush stated in his welcoming speech that "we welcome China's commitments ... to expand market access for U.S. goods and services, to improve enforcement of intellectual property rights, and to move toward a flexible, market-based exchange rate for its currency. These policies will benefit the Chinese people -- and are consistent with being a responsible member of the international economic system and a leader in the World Trade Organization."

Bush also said that "China has become successful because the Chinese people are experience the freedom to buy, and to sell, and to produce -- and China can grow even more successful by allowing the Chinese people the freedom to assemble, to speak freely, and to worship."

Hu said in his welcoming speech that "The Chinese are industrious, courageous, honest, and intelligent. They created the splendid ancient Chinese civilization. And today, they're firmly committed to the path of peaceful development and are making continuous progress in the modernization drive by carrying out the reform and opening up program."

"We share important common strategic interests in a wide range of areas, including economic cooperation and trade", said Hu. "In particular, mutually beneficial and win-win China-U.S. economic cooperation and trade benefit our two peoples and promote the economic growth in the Asia Pacific region and the world at large. Indeed, they have become an important foundation for China-U.S. relations."

Hu pledged that "We will continue to ... take positive steps in such areas as expanding market access, increasing imports, and strengthening the protection of intellectual property rights, and further expand China-U.S. economic cooperation and trade."

He said at the news conference that "We understand the American concerns over the trade imbalances, the protection of the intellectual property rights and market access. We have taken measures, and we'll continue to take steps to properly resolve the issues." He added that "We'll continue to expand the market access and increase the import of American products."

Hu also discussed US barriers to trade, including export controls and visa restrictions. He said that "The U.S. technology products exported to China, particularly in the field of the export of high-tech products, are quite incompatible with the economic might of the United States. I hope that the United States government will be able to relax or ease the restrictions imposed on its exports, particularly high-tech exports to China. And we also hope that the U.S. government will be able to create a level playing field for Chinese businesses who want to enter the American market. And this will certainly help bring down the trade deficit of the United States. And this will also contribute to the further sound and stable growth of the trading ties and economic cooperation between the two countries."

Hu also discussed Taiwan ("an inalienable part of Chinese territory"), North Korea, and Iran's nuclear program, in his welcoming speech, and at the news conference.

See also, toasts by Bush and Hu.

U.S. Trade Official Frustrated With Doha Negotiations

4/20. The Office of the U.S. Trade Representative (USTR) released a transcript of a news conference held by a "Senior U.S. Trade Official" (SUSTO) in Geneva, Switzerland, regarding the lack of progress in Doha round trade negotiations.

This SUSTO stated that "we have TPA for only so long. So we've got to get this thing done." (Trade promotion authority, which provides that the Congress can approve or reject, but not amend, trade agreements, expires June 30, 2007.)

The SUSTO continued that "To our frustration, we haven't seen countries coming forward with the types of proposals that we think are needed to achieve our mandate of having substantial reform in the negotiations", and "time is really slipping away and that this is an opportunity that could be slipping away."

This SUSTO elaborated that "I think a common complaint of other countries would be that they're at their limit in terms of what is sellable at home. For our part, we'd say when another country would ask us for a deeper cut in trade distorting support, we'd say, are you kidding? We've put a great offer down here, a very strong offer on the table, and we don't see enough coming back to justify a deeper offer. So there is just not a political viability for that and moreover we don’t think it’s fair, so we can’t sign off on something like that."

"Similarly, if we were asking the Europeans to cut their tariffs deeper, what they will cite is the protectionist sentiment in the member states, and that they couldn't carry a deal at home that calls for more market opening." The SUSTO added, "So our job is to try and figure out when they're bluffing and when they're serious. I think one of the things that we'll see here is, as the deadlines really start to crank down, if we do a good job of keeping the pressure on and framing the issues, and showing that we're not the problem here, that we're flexible, we can negotiate, then hopefully that will help drive people to their bottom lines and we'll see if the deal winds up and makes sense or not."

More Fraud in the FCC's E-Rate Program

4/20. The Department of Justice (DOJ) announced two developments in criminal prosecutions related to the Federal Communications Commission's (FCC) fraud ridden e-rate subsidy program.

On April 20, 2006, the U.S. District Court (DSDak) sentenced NextiraOne LLC, a subsidiary of Platinum Equity LLC, for wire fraud in connection with e-rate fraud. The DOJ stated in a release that the defendant was sentenced "to pay a $4.6 million criminal fine and restitution for defrauding" the FCC and schools located on the Pine Ridge Reservation in the state of South Dakota. The DOJ added that "NextiraOne has cooperated in the investigation, and under the plea agreement, has agreed to continue to do so. NextiraOne will pay a $1.9 million criminal fine. A civil settlement filed today requires NextiraOne to forfeit more than $2.6 million in reimbursement for uncompensated work previously performed at other school districts."

On April 20, 2006, a grand jury of the U.S. District Court (DSCar) returned a 12 count indictment that charges Cynthia K. Ayer with mail and wire fraud in connection with her alleged scheme to defraud the e-rate program. The DOJ stated in a release that "from April 1, 1999, until Feb. 1, 2003, Ayer used her position as the technology director of the school district to award technology contracts to her company, Go Between Communications, by submitting fraudulent applications for E-Rate funding of more than $3.5 million".

The e-rate program is a tax and subsidy program administered by the FCC and its Universal Service Company (USAC).

More News

4/20. The Federal Communications Commission (FCC) sent letters of inquiry to Clear Channel Communications Inc., CBS Radio Inc., Entercom Communications Corp. and Citadel Broadcasting. FCC Commissioner Jonathan Adelstein wrote in a statement [PDF] that "I am pleased that we have launched this formal phase of the payola investigation. This should put to rest any question about the FCC's commitment to enforce the law. Our investigation will be a thorough and complete review of the industry's alleged payola practices."

4/20. Sen. Charles Grassley (R-IA), Chairman of the Senate Finance Committee, commented in a release [PDF] about Chinese President Hu Jintao's visit to the U.S. "As he himself said, China needs to take positive steps to reform its currency, to expand market access in China and increase imports, and to strengthen the protection of intellectual property rights. Now we'll see what comes of those remarks. Good words need to be followed by concrete action. If not, that’ll only increase the frustration in Congress that China’s not living up to its commitments."

4/20. Sen. Max Baucus (D-MT), the ranking Democrat on the Senate Finance Committee, stated in a release [PDF] that "I am pleased that China agreed to take verifiable action to reduce software piracy", but that "I am extremely disappointed that President Hu did not today commit to take concrete steps to allow China’s currency to reflect market forces".

4/20. The Federal Communications Commission (FCC) cancelled its Auction 67, which had been scheduled fro August. This was the 400 MHz Air-Ground Radiotelephone Service auction. See, notice of cancellation [PDF]. This is Docket No. 06-38.

WTO Releases Trade Policy Review of PR China

4/19. The World Trade Organization (WTO) released its Trade Policy Review (TPR) of the People's Republic of China. See, WTO release, with hyperlinks to the TPR, in MS Word format. See also, Contents and Summary Observations

Intellectual Property. Section III, titled "Trade Policies and Practices by Measure", includes the section on intellectual property rights, at pages 145 through 157. It includes a lengthy summary of the nominal intellectual property rights and enforcement regime.

However, it also makes brief mention of complaints that theft is widespread, and that the enforcement procedures are illusory. It states that "The main problems identified by China's major trading partners include: lack of coordination among the main enforcement agencies; local protectionism and corruption; inadequate deterrence provided by the system of administrative, civil, and criminal penalties; and a lack of sufficient training of personnel."

It also states that " it appears that enforcement remains weak and infringement of intellectual property rights widespread. In addition to inadequate deterrents provided through the prosecution system, it is also claimed that ``local protectionism´´ is a major cause of IPR infringement. Local protectionism may be the result of discretionary actions that give preference to local traders and producers, and of local corruption, which may provide local manufacturers or traders of counterfeit goods advance notice of police raids; there is also concern that regional administrative agencies lack sufficient knowledge and training in IPR enforcement."

Deputy U.S. Trade Representative Peter Allgeier gave a speech in Geneva, Switzerland, regarding the WTO China TPR on April 19. He commented on intellectual property rights. He stated that "Another area that continues to generate significant problems for the United States is China’s inadequate enforcement of laws, particularly in the area of intellectual property rights. As the Secretariat’s Report explains, enforcement remains weak and infringement of intellectual property rights remains widespread in China. A number of factors contribute to this situation, including lack of coordination among the main enforcement agencies, local protectionism and corruption, inadequate deterrence provided by China’s system of administrative, civil and criminal penalties, and a lack of sufficient training of enforcement personnel."

Telecommunications. Section IV, titled "Trade Policies by Selected Sectors", includes a section titled "Electronics and communications industry equipment", at pages 204 through 207, and another section titled "Telecommunications services", at pages 229 through 236.

Allgeier commented on telecommunications services. "The service sector is another area that has generated concerns. The Secretariat’s Report only selected two sectors to examine -- financial services and telecommunications services -- but they are representative of problems that the United States has encountered in other areas. In these sectors, we have seen protectionist and non-transparent policies, delays in the issuance of regulatory measures and the use of entry threshold requirements -- particularly capital requirements -- that exceed international norms. In the questions that we submitted, we seek clarification of several of China's policies."

Bush Discusses Research Funding, R&D Tax Credit, and STEM Education

4/19. President Bush gave another speech on his collection of policy proposals that he has named the "American Competitiveness Initiative", or ACI. He spoke at Tuskegee University in the state of Alabama. As in prior speeches, he advocated increasing federal spending on basic research, making the R&D tax credit permanent, and improving science, technology, engineering and math (STEM) education.

On April 18, 2006, Bush gave a similar speech at a public school in the Maryland suburbs of Washington DC. See, story titled "Bush Discusses His American Competitiveness Initiative" in TLJ Daily E-Mail Alert No. 1,353, April 19, 2006.

Bush said at Tuskegee University that "here are some things we need to do to make sure we shape the future. First is to make sure we're always on the leading edge of research and technology." After discussing Tuskegee University's doctoral program, and nanotechnology, he said that "the first thing that I intend to work with Congress on to make sure that we're on the leading edge of change and technology, and that is to increase federal support for vital, basic research".

He added that "So the government should double the commitment to the most basic -- critical research programs in the physical sciences over the next 10 years. I look forward to Congress to doubling that commitment." He cited the original internet project, microdrive storage, electrochemistry and signal compression as examples of federal research projects that have benefited the US economy.

Bush next advocated making permanent the research and development tax credit. He said, "But the private sector spends twice as much money on research and development that the federal government does. So I think it's important for us to put policy in place to continue that kind of research."

Third, Bush advocated improving STEM education. He said that "if we don't get the children the skills in math and science and engineering, those jobs are going elsewhere. That's just the way it is. And therefore, we've got to deal with it head on."

Bush also expressed support for the Pell grant system, and for increasing federal support for historically black colleges.

NSF Creates STEM Commission

4/19. The National Science Foundation (NSF) published a notice in the Federal Register announcing the establishment of an entity titled "Commission on 21st Century Education in Science, Technology, Engineering, and Mathematics", or STEM. The NSF states that it will "address pre-K-16 education". See, Federal Register, April 19, 2006, Vol. 71, No. 75, at Page 20141.

On April 18, President Bush created, by executive order, a National Mathematics Advisory Panel within the Department of Education. See, story titled "Bush Creates National Mathematics Advisory Panel" in TLJ Daily E-Mail Alert No. 1,353, April 19, 2006.

President Bush elaborated in a speech on April 19, 2006, that "I set up what's called a national math panel. It's a way to analyze -- we got experts coming together, and they're going to analyze the best teaching methodology for math, the best curriculum for math."

He added that "We need to make sure that our teachers, our school boards, our principals, our superintendents, our governors understand what works. You cannot set an objective and achieve that objective unless you have the tactics necessary to do that. And so we're going to call the experts together. They'll be presenting a report to Margaret and myself by January 31st of 2007. It will be a really important study, because, again, it will give -- it will help states and local school districts have the methodology, the teaching methods necessary to help achieve an important objective."

On April 26, 2006, the Senate Commerce Committee's (SCC) Subcommittee on Technology will hold a hearing titled "Fostering Innovation in Math and Science Education".

Federal Circuit Rules in Software Patent Case

4/19. The U.S. Court of Appeals (FedCir) issued its divided opinion [15 pages in PDF] in Lava Trading v. Sonic Trading Management, vacating the District Court's judgments of non-infringement in a patent infringement case involving software for aggregating information from multiple securities trading systems.

The District Court held a Markman hearing, issued a claim construction from the bench, and entered judgments of non-infringement, without ruling on counterclaims, including invalidity. The Court of Appeals vacated and remanded. However, this case, in the least, demonstrates that deciding infringement claims, following Markman hearings and claims construction, but not deciding counterclaims, can place the Court of Appeals in an awkward position. However, the dissent used this case to argue the absurdity of the Markman conclusion that claim construction is solely a legal issue.

Lava Trading owns by assignment U.S. Patent No. 6,278,982, titled "Securities trading system for consolidation of trading on multiple ECNS and electronic exchanges". ECNs are electronic trading networks. This patent claims software that aggregates and integrates information from various systems for buying and selling securities.

Lava filed a complaint in U.S. District Court (SDNY) against Sonic Trading Management and others alleging patent infringement. The defendants counterclaimed that the patent is invalid and unenforceable.

The District Court held a Markman hearing. See, en banc opinion of the Federal Circuit in Markman v. Westview Instruments, Inc., 52 F.3d 967 (1995), and opinion of the Supreme Court in Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), holding that construction of patent claims is to be decided by the court, rather than by juries. These holdings also provide that the Federal Circuit has appellate jurisdiction over claims construction.

The District Court then issued a claim construction from the bench. The parties then stipulated to judgments of non-infringement. The District Court did not rule on the invalidity and unenforceability counterclaims. The District Court issued a Rule 54(b), FRCP, certification. This appeal followed.

Randall RaderJudge Randall Rader (at right), writing for the majority of the three judge panel, acknowledged that "These pending counterclaims put this court in the awkward position of reviewing a claim construction that may implicate issues and claims beyond this court’s current reach." He also noted that the bench ruling "does not supply any meaningful comparison of the accused products to the asserted claims. Without knowledge of the accused products, this court cannot assess the accuracy of the infringement judgment under review and lacks a proper context for an accurate claim construction."

Rader commented that "this appeal takes on the attributes of something akin to an advisory opinion on the scope of the '982 patent", but concluded nevertheless that the Court of Appeals has jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

The majority set aside the claims construction, and the judgments based upon them. Hence, it vacated and remanded.

Judge Haldane Robert Mayer dissented. He wrote that "Because there was no final judgment from which to appeal in the district court due to the interrelatedness of the infringement claim and the unresolved unenforceability counterclaim, I would dismiss this case for lack of jurisdiction."

However, he did not stop there. He continued that this case is "yet another example of the unfortunate consequences" of the Markman decision, which "cemented this court’s jurisprudence with respect to claim construction as being purely a matter of law subject to de novo review."

He opined that "Because claim construction is treated as a matter of law chimerically devoid of underlying factual determinations, there are no ``facts´´ on the record to prevent parties from presenting claim construction one way in the trial court and in an entirely different way in this court. By not dismissing this case, we issue a decision based on an undeveloped record. We set ourselves up to have to decide claim construction again later, which could well differ from the ruling today. Furthermore, allowance of an appeal of the trial court’s perfunctory, offhand ruling from the bench, for all intents and purposes allows an interlocutory appeal of claim construction, which portends chaos in process."

This case is Lava Trading, Inc. v. Sonic Trading Management, LLC, U.S. Court of Appeals for the Federal Circuit, App. Ct. Nos. 05-1177 and 05-1192, appeals from the U.S. District Court for the Southern District of New York, Judge Thomas Griesa presiding. Judge Rader wrote the opinion of the Court of Appeals, in which Judge Linn joined. Judge Mayer wrote a dissent.

11th Circuit Rules in Florida UNE Case

4/19. The U.S. Court of Appeals (11thCir) issued its opinion [32 pages in PDF] in MCI WorldCom Communications v. BellSouth Telecommunications, a case regarding interconnection and access to unbundled network elements, and 47 U.S.C. §§ 251 and 252.

Competitive local exchange carriers (CLECs) petitioned the Florida Public Service Commission (FPSC) in 1998 to set rates for access to the unbundled network elements of the incumbent local exchange carrier (ILEC), BellSouth Telecommunications.

The FPSC adopted an order in 2002 that set the rates for the use of the UNEs of BellSouth by CLECs. The FPSC adopted a model that employs three scenarios that model the different types of wire loops instead of a unitary network comprised of all three types of wire loops. The three scenarios are (1) copper wire only, (2) BST2000, which uses copper for wire loops up to 12,000 feet and fiber optic cable for loops of longer lengths, and (3) the integrated digital loop carrier technology for fiber optic switch loop combinations under which the CLEC must lease both the wire loop and the switch. The FPSC model also incorporated an inflation factor to account for BellSouth's cost of capital. Finally, the FPSC model also created three tiers for geographic cost based deaveraging.

MCI WorldCom filed a complaint in U.S. District Court (NDFl) against BellSouth, the FPSC, and its members, pursuant to 47 U.S.C. § 252(e)(6), seeking declaratory and injunctive relief. The Florida Digital Network intervened.

The District Court held that the FPSC multiple scenario model violates federal law. It upheld the FPSC's inflation factor and geographic cost based deaveraging model.

BellSouth appealed the three scenarios holding. MCI WorldCom appealed the inflation factor holding. And, Florida Digital Network appealed the geographic cost based deaveraging model holding.

The Court of Appeals held that the District Court "court erred when it determined federal law forbids the use of multiple scenarios, and we remand this action to the district court to evaluate whether each scenario in the pricing model approved by the Florida Commission complies with federal law." It also held that the FPSC "did not err when it approved the inflation factor and the geographic cost-based deaveraging model."

Hence, it reversed and remanded in part, and affirmed in part.

This case is MCI WorldCom Communications, Inc., et al. v. BellSouth telecommunications, Inc., et al., U.S. Court of Appeals for the 11th Circuit, App. Ct. No. 05-12252, an appeal from the U.S. District Court for the Northern District of Florida, D.C. No. 01-00492-CV-4-SPM/AK. Judge Pryor wrote the opinion of the Court, in which Judges Carnes and Wilson joined.

People and Appointments

4/19. President Bush named Joel Kaplan to be Assistant to the President and Deputy Chief of Staff for Policy. He was previously Deputy Director of the Office of Management and Budget See, White House release.

4/19. Scott McClellan announced that he will resign his position as White House Press Secretary. See, transcript of news conference.

More News

4/19. Hu Jintao, President of the Peoples Republic of China, visited the offices of Microsoft. Bill Gates gave a speech in which he said that "Both the United States and China will prosper in an environment of open trade and mutual respect for international norms. And China and the United States will flourish in an environment that encourages the exchange of people and ideas." He added that "we are encouraged by the efforts of the Chinese government to strengthen intellectual property protection." Gates also said that "This new era of an Internet-based economy also presents new challenges to all of us. It is my belief that industry and government around the world should work even more closely to protect the privacy and security of Internet users, and promote the exchange of ideas, while respecting legitimate government considerations."

4/19. John Kneuer, acting Assistant Secretary for Communications and Information, gave a speech titled "E-num: The View from Washington". See, presentation slides [PDF]. Kneuer is the head of the National Telecommunications and Information Administration (NTIA).

4/19. The Federal Communications Commission (FCC) issued a notice [10 pages in PDF] that sets deadlines to submit comments regarding the transfer of licenses associated with the AT&T, BellSouth, and Cingular transaction. This is nominally a license transfer proceeding, but is also in the nature of an antitrust merger review. Initial comments are due by June 5, 2006. Reply comments are due by June 20, 2006. This proceeding will be governed by "permit but disclose" ex parte communications procedures under Section 1.1206 of the FCC's rules. See also, the FCC's web page for its AT&T/BellSouth/Cingular merger review. This proceeding is WC Docket No. 06-74.

Bush Picks Schwab to be USTR

4/18. President Bush nominated Susan Schwab to be the United States Trade Representative. She has been a Deputy USTR since November of 2005. See, White House release and transcript of White House event.

She was previously P/CEO of the University of Maryland Foundation, Inc. and USM Vice Chancellor for Advancement. She has also been Dean of the University of Maryland School of Public Policy.

Earlier in her career, she worked as a trade negotiator at the Department of Commerce, and for former Sen. John Danforth (R-MO). She is the author of the 1994 book titled Trade Offs: Negotiating the Omnibus Trade and Competitiveness Act [Amazon]. She has also worked for Motorola.

See, full story.

Bush Discusses His American Competitiveness Initiative

4/18. President Bush gave a speech regarding the collection of policy proposals that he has named the "American Competitiveness Initiative", or ACI, at a public school in the Maryland suburbs of Washington DC. He advocated increased federal spending on research, making the research and development tax credit permanent, promoting math and science education, and free trade. He said that his proposals will "make sure that we're still the technological capital of the world".

He first announced this initiative in his speech titled "State of the Union Address" on January 31, 2006. See, story titled "Bush Announces American Competitiveness Agenda" in TLJ Daily E-Mail Alert No. 1,301, February 1, 2006. President Bush also discussed his ACI in a speech on February 13, 2006. See, story titled "Bush Awards National Medals of Technology and Science" in TLJ Daily E-Mail Alert No. 1,312, February 17, 2006.

Bush said, "Here's the question that faces the country: Will we become a nation that is isolationist and fearful of competition from around the world, or will be we be -- continue to be a bold and innovative country?"

"And we can either look at China and say, let's compete with China in a fair way, or say, we can't compete with China and therefore kind of isolate ourselves from the world", said Bush.

He said that "we must increase federal support for vital basic research." He continued that "investment at the federal level in research has led to practical applications which improve the lives of our citizens. And so I proposed to the Congress that we double the federal commitment to the most critical basic research programs in physical sciences over the next 10 years. One way to make sure this country is the economic leader of the world so that our people benefit and can find work is for there to be a federal commitment to research.

Next, he said that "most research and development takes place in the private sector." Hence, "One way to encourage people to invest corporate funds is through the research and development tax credit."

Finally, he addressed education. He stated that "we have got to continue our focus in education on high standards, accountability, and a new focus -- an intense focus on math and science". He also advocated more math teachers, and the grading of schools' performances.

Also, he announced that he has signed an executive order creating a National Mathematics Advisory Panel.

Bush Creates National Mathematics Advisory Panel

4/18. President Bush issued an executive order that creates a "National Mathematics Advisory Panel" within the Department of Education.

The order also states a "policy", in broad terms: "To help keep America competitive, support American talent and creativity, encourage innovation throughout the American economy, and help State, local, territorial, and tribal governments give the Nation's children and youth the education they need to succeed, it shall be the policy of the United States to foster greater knowledge of and improved performance in mathematics among American students."

The responsibility of the panel is to write reports. While the order references "children" and "students", it does not expressly state that it is limited to secondary education. The order does not define the term mathematics. However, the order refers to "mathematics, geometry, algebra, and calculus". It does not refer to other mathematics fields, such as trigonometry, accounting, or programming. Nor does it refer to sciences that apply mathematics.

President Bush stated in a speech in Maryland on April 18, 2006 that "It is a part of our strategy to make sure that we achieve the objective of laying that foundation for our children in math and science. By January 31st, 2007, the National Math Panel will report their assessments of the best practices for teaching math. Those experts will come together and help advise school districts about what is working and what's not working; what skills students need at what grade to master algebra and higher mathematics.

Bush added, "In other words, starting to set those -- help set realistic standards. The standards and accountability that will be needed to ensure students are learning math -- that will be a part of their mandate. They will look at the teaching methods that are most effective for students of different abilities and backgrounds. They will look at the programs and learning materials that work best."

Appeals Court Holds Indirect Purchasers Cannot Pursue Microsoft on Antitrust Claims

4/18. The U.S. Court of Appeals (4thCir) issued its opinion [19 pages in PDF] in Kloth v. Microsoft, multidistrict class action antitrust litigation that followed the Department of Justice's judgment against Microsoft.

The named plaintiffs are purchasers of Microsoft software. The District Court dismissed the claims of 26 plaintiffs who did not buy software directly from Microsoft. Instead, they were indirect purchasers. These plaintiffs appealed. The Court of Appeals affirmed.

The Court of Appeals, like the District Court, held that these 26 purchasers are barred from seeking recovery for illegal pass through overcharges under the principles of Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977). Both Courts also held that these 26 plaintiffs lack standing because they failed to demonstrate that they have sustained direct antitrust type injury as required by § 4 of the Clayton Act and Associated General Contractors v. California State Council of Carpenters, 459 U.S. 519 (1983).

This case is Linda Kloth, et al. v. Microsoft, U.S. Court of Appeals for the 4th Circuit, App. Ct. No. 04-2566, an appeal from the U.S. District Court for the District of Maryland, D.C. Nos. CA-00-1332-MDL and CA-00-2117-JFM, Judge Frederick Motz presiding. Judge Niemeyer wrote the opinion of the Court of Appeals, in which Judges Widener and Gregory joined.

More News

4/18. The Office of the U.S. Trade Representative (USTR) issued a release [3 pages in PDF] titled "Proactive Trade Agenda Delivers Results: USTR Accomplishments in Last 12 Months".

4/18. The Department of Homeland Security (DHS) issued a release regarding its testing of e-Passports and e-Passport readers. The DHS stated that "The test, which was conducted between January 15, 2006, and April 15, 2006, evaluated the operational impact of reading and verifying information embedded in the e-Passports on the border inspection process. This test was a collaborative effort between the United States, Australia, New Zealand and Singapore. A total of 1,938 e-Passports were successfully processed during the test in San Francisco.  A similar test was conducted in 2005 at Los Angeles International Airport."


4/18. President Bush announced his intent to nominate Rob Portman (at right) to be the Director of the Office of Management and Budget. Portman, who is currently the U.S. Trade Representative, would replace Josh Bolten. Bush just named Bolten to be his new Chief of Staff. Bush also announced his intent to name Susan Schwab to be the new USTR. See, White House release.

FTC Settles CAN-SPAM Act Case

4/17. The Federal Trade Commission (FTC) published in its web site the Stipulated Final Judgment and Order for Permanent Injunction [11 pages in PDF] in FTC v. Matthew Olson and Jennifer Leroy. The Court signed this judgment on March 27, 2006.

On December 20, 2005, the FTC filed a civil complaint [9 pages in PDF] in U.S. District Court (WDWash) against Olson and Leroy alleging violation of the FTC Act and Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act), which is codified at 15 U.S.C. § 7706(a).

Olson and LeRoy admitted to no violation of law, and the judgment contains no finding of wrongdoing. However, the defendants stipulated to entry of an injunction that bars them from violating the CAN SPAM Act. The judgment also requires them to engage in certain monitoring, record keeping, and reporting.

The FTC also issued a release that states that the defendants are "spam merchants who hijacked consumers' computers and turned them into spamming machines".

People and Appointments

4/17. Brian Huseman was named Chief of Staff of the Federal Trade Commission (FTC). He is currently an Attorney Advisor to FTC Chairman Deborah Majoras. He has worked at the FTC since 2001. Before that, he worked in the Department of Justice's (DOJ) Criminal Division. He will replace Maryanne Kane, who will retire at the end of April. See, FTC release.

4/17. President Bush announced his intent to nominate Paul Denett to be Administrator for Federal Procurement Policy at the Office of Management and Budget. Denett is currently Vice President of Contracting Programs at ESI International. See, White House release.

More News

4/17. The Supreme Court denied certiorari in Izumi Products v. Koninklijke Philips Electronics, a patent case involving electric rotary razors. See, Order List [18 pages in PDF] at page 3. See also, Supreme Court docket. This lets stand to July 7, 2005, divided opinion [PDF] of the U.S. Court of Appeals (FedCir). Kathleen Sullivan (Quinn Emanuel Urquhart Oliver & Hedges) represented Izumi. John Dimatteo (Willkie Farr & Gallagher) represented Koninklijke. This case is Izumi Products Company v. Koninklijke Philips Electronics N.V., Philips Electronics North America Corp., and Philips Domestic Appliances and Personal Care B.V., Sup. Ct. No. 05-961, a petition for writ of certiorari to the U.S. Court of Appeals for the Federal Circuit, App. Ct. Nos. 04-1418 and 04-1423. Judge Lourie wrote the opinion of the Court of Appeals, in which Judge Newman joined. Judge Linn wrote a dissenting opinion.

4/17. Roger Ferguson, Vice Chairman of the Federal Reserve Board (FRB), gave a speech in Atlanta, Georgia, titled "Thoughts on Financial Stability and Central Banking". He made the point, as have other FRB officials, that information technology has reduced the volatility of GDP growth. That is, information technology enables businesses to better manage inventories, which enables them catch incipient inventory overhangs before they become a problem.

4/17. The Government Accountability Office (GAO) released a report [77 pages in PDF] titled "Information Sharing: The Federal Government Needs to Establish Policies and Processes for Sharing Terrorism-Related and Sensitive but Unclassified Information". The report states that "More than 4 years after September 11, the nation still lacks the government-wide policies and processes that Congress called for to provide a framework for guiding and integrating the myriad of ongoing efforts to improve the sharing of terrorism-related information critical to protecting our homeland." It also states that "a large amount of terrorism information is already stored electronically in systems, but there remains an unknown quantity of relevant information not captured and stored electronically. However, many users are not connected to these systems; the information about terrorists, their plans, and their activities is fragmentary."

4/17. Microsoft and Lenovo Group (formerly the IBM Personal Computing Division) entered into an agreement that provides that Lenovo will pre-install licensed Microsoft operating system software on all of its product lines for sale in the China market. Bill Gates stated that "Microsoft commends Lenovo for recognizing the importance of intellectual property rights and the value of genuine software." See, Microsoft release.

Go to News from April 11-15, 2006.