TLJ News from May 11-15, 2008

Icahn Announces Proxy Fight to Elect Yahoo Board that will Negotiate with Microsoft

5/15. Carl Icahn sent a letter to the Board of Directors of Yahoo condemning its handling of Microsoft's offer to acquire Yahoo, announcing that he has purchased 59  million shares of Yahoo in the past 10 days, and announcing that he will lead a proxy fight to replace the current board of directors with one that would negotiate with Microsoft.

See, Icahn's filing of a Form DFAN14A with the Securities and Exchange Commission (SEC), to which this letter is attached.

Icahn wrote that "It is clear to me that the board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft. It is quite obvious that Microsoft's bid of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis. I am perplexed by the board's actions. It is irresponsible to hide behind management's more than overly optimistic financial forecasts. It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer. I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet."

Icahn continued that "During the past week, a number of shareholders have asked me to lead a proxy fight to attempt to remove the current board and to establish a new board which would attempt to negotiate a successful merger with Microsoft, something that in my opinion the current board has completely botched. I believe that a combination between Microsoft and Yahoo is by far the most sensible path for both companies. I have therefore taken the following actions: (1) during the last 10 days, I have purchased approximately 59 million shares and share-equivalents of Yahoo; (2) I have formed a 10-person slate which will stand for election against the current board; and (3) I have sought antitrust clearance from the Federal Trade Commission to acquire up to approximately $2.5 billion worth of Yahoo stock. The biographies of the members of our slate are attached to this letter. A more formal notification is being delivered today to Yahoo under separate cover."

Icahn also wrote that "While it is my understanding that you do not intend to enter into any transaction that would impede a Microsoft-Yahoo merger, I am concerned that in several recent press releases you stated that you intend to pursue certain "strategic alternatives". I therefore hope and trust that if there is any question that these "strategic alternatives" might in any way impede a future Microsoft merger you will at the very least allow shareholders to opine on them before embarking on such a transaction.

He concluded that "I sincerely hope you heed the wishes of your shareholders and move expeditiously to negotiate a merger with Microsoft, thereby making a proxy fight unnecessary."

Roy Bostock, Chairman of the Board of Yahoo, responded in a letter to Icahn on May 15 that "your letter reflects a significant misunderstanding of the facts" and that "it is in the best interests of Yahoo! stockholders to allow you and your hand-picked nominees to take control of Yahoo". This letter is included in a Yahoo release, and as an attachment to a Form 8-K filed with the SEC.

Bostock again asserted that Microsoft's offer, which reached $33 per share, "significantly undervalued" Yahoo.

Senate Approves Media Ownership Resolution

5/15. The Senate approved, by voice vote, SJRes 28, which provides as follows: "Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That Congress disapproves the rule submitted by the Federal Communications Commission relating to broadcast media ownership (Report and Order FCC 07-216), received by Congress on February 22, 2008, and such rule shall have no force or effect." See, full story.

11th Circuit Rules in Copyright Case

5/15. The U.S. Court of Appeals (11thCir) issued its opinion [PDF] in Oravec v. Sunny Isles Luxury Ventures, a copyright infringement case involving architectural designs. The Court of Appeals affirmed the District Court's summary judgment for the defendants. This opinion provides a discussion of the difference between ideas and expressions.

Paul Oravec designed a high rise building. He registered copyrights with the Copyright Office (CO), and then marketed his design to developers. The defendants build a pair of building that Oravec alleges infringed his copyrights. He filed a complaint in U.S. District Court (SDFl) against Sunny Isles Luxury Ventures and others alleging copyright infringement.

The District Court granted summary judgment to the defendants. Oravec brought this appeal.

First, as to designs for which the CO issued certificates of registration for architectural designs, the Court of Appeals held that there was not a substantial similarity between the copyrighted designs and the buildings.

Oravec could point to numerous concepts from his copyrighted designs that were incorporated into the defendants' buildings. However, following a lengthy discussion of the dichotomy of expressions (which can be protected by copyright) and ideas (which can not), the Court of Appeals concluded that the defendants had not copied his expressions.

Second, as for other asserted copyrights, Oravec was tripped up by the CO's byzantine and arbitrary registration process.

This case is Paul Oravec v. Sunny Isles Luxury Ventures, L.C., et al., U.S. Court of Appeals for the 11th Circuit, App. Ct. No. 06-14495, an appeal from the U.S. District Court for the Southern District of Florida, D.C. No. 04-22780-CV-PAS.

5th Circuit Rules on Personal Jurisdiction Over State Regulators

5/15. The U.S. Court of Appeals (5thCir) issued its opinion [8 pages in PDF] in Stroman Realty v. Florida and California, another case regarding personal jurisdiction over distant state regulators of internet and direct mail based businesses. The Court of Appeals held that the District Court located in the state of Texas lacks personal jurisdiction over state regulators in the states of California and Florida.

This case follows, and is closely related to, Stroman Realty v. Wercinski, an almost identical action against the state of Arizona, in which the Court of Appeals held that there is no personal jurisdiction.

TLJ wrote a 38 paragraph story regarding that opinion [19 pages in PDF]. See, story titled "5th Circuit Rules No Personal Jurisdiction Over Out of State Regulator of Online Commerce" in TLJ Daily E-Mail Alert No. 1,700, January 15, 2008.

The present case differs from Stroman Realty v. Wercinski only in that California and Florida had even greater contacts with Texas than did Arizona. In particular, California and Florida both have offices in Texas, and used the services of Texas regulators. Nevertheless, the Court of Appeals still held there is no personal jurisdiction.

These opinions are judicial gifts to state and local tax and regulatory authorities that seek to tax and regulate distant internet based businesses, and also evade judicial review when their actions contravene the federal Constitution or federal law.

These opinions will force internet based businesses (or at least those located in the 5th Circuit) that are subjected to the unconstitutional or unlawful tax or regulatory regimes of distant state and local authorities to travel to the locales of each of those governmental entities to seek federal judicial review.

The present opinion also suggests that the traditional analysis of personal jurisdiction that apply in actions against businesses do not apply in the same manner in actions against governmental entities.

Stroman Realty is a Texas based business involved in the resale of timeshares. Stroman advertises through an internet website, and matches buyers and sellers via an internet access electronic database. Stroman's prospective buyers and sellers are located everywhere, including in Arizona, California and Florida.

Stroman filed a complaint in U.S. District Court (SDTex) against the head of the Department of Business and Professional Regulations for the State of Florida alleging violation of 42 U.S.C. § 1983 in connection with violation of the commerce clause of the U.S. Constitution. Strohman later added the Department of Real Estate for the State of California to this action.

The District Court held that it has personal jurisdiction over both defendants, and granted injunctive relief to Stroman. Florida and California brought the present appeal.

The Court of Appeals reversed. As for specific jurisdiction, it simply cited and followed the opinion in Stroman Realty v. Wercinski.

However, in this case, Stroman also argued general jurisdiction, based in part of the facts that both California and Florida maintain offices in Texas. The Court of Appeals reasoned that since these offices exist for the purpose of collecting taxes, rather than enforcing real estate regulatory regimes, they do not give rise to general jurisdiction.

The Court of Appeals noted that in the present case against California and Florida, unlike in the case against Arizona, "California attacked Stroman in letters to the Texas Real Estate Commission, and Florida used the Texas Attorney General’s office to get information". But, the Court of Appeals reasoned, these actions do not constitute "purposeful availment" within the meaning of earlier opinions that articulate the concept of purposeful availment.

This case is Stroman Realty, Inc. v. Jim Antt, et al., U.S. Court of Appeals for the 5th Circuit, App. Ct. No. 05-20803, an appeal from the U.S. District Court for the Southern District of Texas.

Judge Jerry Smith wrote the opinion of the Court of Appeals, in which Judges Garwood and DeMoss joined. This is an entirely different panel from that which presided in Stroman Realty v. Wercinski -- Edith Jones, Weiner and Barksdale.

Group Releases Report on BitTorrent Blocking

5/15. The Max Planck Institute for Software Studies released a report titled "Glasnost: Results from tests for BitTorrent traffic blocking". Glasnost is its software tool for testing whether or not BitTorrent traffic is being manipulated.

The report states that "We found widespread blocking of BitTorrent transfers only in the U.S. and Singapore."

It continues that "Both in the U.S. and in Singapore, all hosts that suffered BitTorrent blocking are located in cable ISPs. We did not see any blocking of BitTorrent transfers from DSL hosts in these countries."

It further states that "Most (573 of 599) U.S. hosts that observed blocking are located in Comcast and Cox networks." (Parentheses in original.)

The report adds that "ISPs may throttle (rate-limit) BitTorrent traffic without blocking it. The results we present here are limited to hosts whose BitTorrent transfers to our servers are blocked, i.e., interrupted by RST packets generated by some ISP along the path. We are still actively investigating techniques to accurately detect throttling." (Parentheses in original.)

On March 27, 2008, Comcast and BitTorrent announced that "they will undertake a collaborative effort with one another and with the broader Internet and ISP community to more effectively address issues associated with  rich media content and network capacity management." See, story title "Comcast and BitTorrent Reach Accord on Network Management Practices" in TLJ Daily E-Mail Alert No. 1,738, March 27, 2008.

Gigi Sohn, head of the Public Knowledge (PK), stated in a release on May 15, 2008, that "This study is further proof that the largest cable companies are hiding behind `network management´ excuses when caught throttling the legitimate traffic of their customers. This study clearly shows there is no blocking at peak usage times, or on certain busy days. The study found the `percentage of blocked connections remains high at all times of the day. Our data suggests that the BitTorrent blocking is independent of the time of the day.´"

Sohn wrote that "These results lead us to three conclusions. First, the largest cable companies were doing more blocking than they have admitted to Congress or to the FCC. Second, other cable companies, and all telephone companies, can manage their networks without the need for blocking the traffic of customers. Finally, the fact that the blocking goes on all the time should tell the Commission that it needs to act soon to prevent the practice."

On November 1, 2007, the Free Press and PK filed a complaint [48 pages in PDF] with the FCC that alleges that Comcast is "degrading peer-to-peer protocols" by inserting forged reset packets into communications between peers in peer to peer (P2P) communications that terminate those communications. This, the complaint alleges, interferes with Comcast's subscribers use of applications like BitTorrent, and violates the FCC's 2005 Policy Statement. See, story titled "Free Press Files Complaint with FCC Alleging that Comcast Is Violating 2005 Policy Statement" in TLJ Daily E-Mail Alert No. 1,669, November 1, 2007.

The FCC adopted this Policy Statement [3 pages in PDF] on August 5, 2005. See, story titled "FCC Adopts a Policy Statement Regarding Network Neutrality" in TLJ Daily E-Mail Alert No. 1,190, August 8, 2005. The FCC released the text of the Policy Statement on September 23, 2005. See, story titled "FCC Releases Policy Statement Regarding Internet Regulation" in TLJ Daily E-Mail Alert No. 1,221, September 26, 2005.

FCC Chairman Kevin Martin and other Commissioners have spoken and written publicly about this complaint, Comcast, BitTorrent, and network management practices. However, the FCC has not yet acted on the complaint. See for example, story titled "Martin Discusses Complaints Against Comcast and Verizon Wireless" in TLJ Daily E-Mail Alert No. 1,728, March 10, 2008.

Senate Judiciary Committee Amends and Approves Orphan Works Bill

5/15. The Senate Judiciary Committee (SJC) amended and approved S 2913 [LOC | WW], the "Shawn Bentley Orphan Works Act Of 2008".

The SJC approved an amendment in the nature of a substitute [18 pages in PDF], and then the bill as amended, without objection. There was no debate of this bill. Although, members of the SJC inserted statements and letters into the record.

Sen. Sam Brownback (R-KS) discussed the possibility of offering as an amendment to S 2913 the "Internet Radio Equality Act of 2008". This contains the language of S 1353 [LOC | WW], the "Internet Radio Equality Act of 2007", introduced by Sen. Ron Wyden (D-OR) on May 10, 2007. This is a reaction to the March 2, 2007, determination by the Copyright Royalty Judges regarding webcasting royalties, which webcasters argue are excessive.

Similarly, Sen. Dianne Feinstein (D-CA) discussed the possibility of offering as an amendment S 256 [LOC | WW], the "Platform Equality and Remedies for Rights Holders in Music Act of 2006", which is also known as the PERFORM Act. This bill was first introduced as S 2644 (109th Congress). See, story titled "Summary of the Sen. Feinstein's Perform Act" and related stories in TLJ Daily E-Mail Alert No. 1,384, June 5, 2006.

However, after extracting vague concessions from Sen. Patrick Leahy (D-VT), the Chairman of the SJC, regarding holding a hearing and a markup that would cover the Internet Radio Equality Act and PERFORM Act, Sen. Brownback and Sen. Feinstein declined to offer their amendments.

The title "Orphan Works" is not descriptive of the content of the bill. This bill would reduce the remedies available to the copyright owner for infringement of copyrighted works when the infringer proves that before infringing, it "performed and documented a qualifying search, in good faith, to locate and identify the owner of the infringed copyright" and "was unable to locate and identify an owner".

This bill is similar to HR 5889 [LOC | WW], the "Orphan Works Act of 2008", which the House Judiciary Committee's (HJC) Subcommittee on Courts, the Internet and Intellectual Property (SCIIP) amended and approved on May 7, 2008. The full HJC has yet to approve that bill.

See, story titled "House IP Subcommittee Approves Orphan Works Bill" in TLJ Daily E-Mail Alert No. 1,762, May 7, 2008. See also, TLJ mark up of HR 5889 showing changes made by the managers' amendment, and changes that would be made by each of the amendments of Rep. Lofgren and Rep. Schiff, if adopted at the full Committee markup.

CBS to Acquire CNET

5/15. CBS announced in a release that it has entered into an agreement to acquire CNET Networks, Inc.

CBS wrote that "Under the terms of the agreement, CBS will make a cash tender offer for all issued and outstanding shares of CNET Networks for $11.50 per share, representing an equity value of approximately $1.8 billion."

It added that "The Board of Directors of CNET Networks has unanimously approved the merger agreement and unanimously recommends that CNET Networks stockholders accept the tender offer and tender their shares."

CNET Networks owns news and information sites, including CNET, TechRepublic, ZDNet, and BNET. It owns entertainment sites, including,, and It also owns UrbanBaby, CHOW,, and MySimon.

Previously, Jana Partners attempted to gain control of the CNET Networks board of directors. See, March 13, 2008, story titled "Court says Jana can nominate members to CNET's board", by Richard Defendorf.

PFF Seeks Release of FCC's 13th Annual Report on Video Competition

5/15. The Progress & Freedom Foundation (PFF) released a paper titled "Where is the FCC's Annual Video Competition Report?" The authors are the PFF's Barbara Esbin and Adam Thierer.

The Federal Communications Commission (FCC) adopted, but did not release, an item titled "13th Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming" at its event of November 27, 2007, titled "Open Meeting". This report to the Congress is FCC 07-206 in MB Docket No. 06-189.

The FCC issued only a release [5 pages in PDF] that describes this report, and the five Commissioners each wrote statements. See, story titled "FCC Commissioners Withhold Support for Martin's 70/70 Conclusion" in TLJ Daily E-Mail Alert No. 1,680, November 30, 2007.

The FCC adopted its 12th Annual Report [161 pages in PDF] on February 10, 2006, and released it on March 3, 2006. See also, story titled "FCC Describes Annual Report on Video Competition" in TLJ Daily E-Mail Alert No. 1,308, February 13, 2006. The13th Report was already late in November of 2007.

The FCC frequently adopts items that it does not release. It sometimes adopts items that it has not written. The relevant statute, codified at 47 U.S.C. § 548(g), mandates that these reports be prepared annually. It provides that the FCC "shall, beginning not later than 18 months after promulgation of the regulations required by subsection (c) of this section, annually report to Congress on the status of competition in the market for the delivery of video programming".

However, the FCC often fails to follow, enforce, or implement statutes. It also sometimes implements statutes that do not exist.

Esbin and Thierer wrote that "The 12th Report was published in March 2006 and summarized 2005 data. Yet it remains the most recent report from the FCC regarding data and developments in this fast-moving field."

They speculated that "one cause of delay in releasing the report is its failure to provide the critical empirical support for FCC Chairman Kevin Martin's ``70/70´´ plan for expanding the Commission's powers over the cable industry".

The PFF paper adds that "A six-month post-adoption delay in release of such a report must be a record-setter."

One of the FCC's most delayed, and most awaited, releases was the 2003 triennial review order regarding unbundling by incumbent local exchange carriers. The FCC adopted this order [576 pages in PDF] on February 20, 2003, but did not release it until August 21, 2003. That is, it delayed for six months and one day. See, story titled "FCC Announces UNE Report and Order" and related stories in TLJ Daily E-Mail Alert No. 609, February 21, 2003, and story titled "Summary of FCC Triennial Review Order" in TLJ Daily E-Mail Alert No. 725, August 25, 2003. Then, as anticipated, the U.S. Court of Appeals (DCCir) issued its opinion [62 pages in PDF] overturning parts of this unbundling order. See, story titled "Appeals Court Overturns Key Provisions of FCC Triennial Review Order" in TLJ Daily E-Mail Alert No. 848, March 3, 2004.

People and Appointments

5/15. Donal Byard (City University of New York), Susan Krische (University of Illinois at Urbana-Champaign), and Roger Martin (University of Virginia) were named Academic Accounting Fellows at the Securities and Exchange Commission (SEC). See, SEC release.

5/15. The Senate Commerce Committee approved the nomination of Lily Claffee to be General Counsel of the Department of Commerce (DOC).

More News

5/15. Comcast entered into an agreement to acquire Plaxo, a privately held company that operates a web site that provides address book services. See, Plaxo release.

5/15. The Federal Communications Commission (FCC) published a notice in the Federal Register that announces, describes, and sets the effective date (July 14, 2008) of, its Report and Order (R&O) regarding regulating of the terms of contracts between telecommunications carriers and residential multiunit premises owners. The FCC adopted this R&O on March 19, 2008, and released the text [30 pages in PDF] on March 21, 2008. This R&O is FCC 08-87 in WT Docket No. 99-217. See, Federal Register, May 15, 2008, Vol. 73, No. 95, at Pages 28049-28057.

Rep. Schiff Introduces Bill to Revise Section 1030

5/14. Rep. Adam Schiff (D-CA) and other introduced HR 6060 [LOC | WW], the "Identity Theft Enforcement and Restitution Act of 2008". This bill does contain provisions related to identity theft. However, more of the bill addresses 18 U.S.C. § 1030, the computer hacking statute. This bill would affect activities other than identity theft. It would also affect both criminal prosecutions and civil actions.

On November 16, 2007, the Senate passed S 2168 [LOC | WW], the "Identity Theft Enforcement and Restitution Act of 2007 ", sponsored by Sen. Patrick Leahy (D-VT) and Sen. Arlen Specter (R-PA). S 2168 and HR 6060 are substantially identical.

Rep. Adam SchiffRep. Schiff (at right) stated in a release that "Criminals are increasingly using new technologies to prey upon their victims ... As they adapt to these new opportunities to defraud consumers, we must develop better ways to track down the perpetrators and put them away. This legislation will help protect American consumers and businesses from the costly effects of cyber crime and identity theft.”

Rep. Steve Chabot (R-IN), a cosponsor of the bill, stated in this release that "Cyber-criminals are becoming increasingly more tech-savy and aggressive, which raises the stakes for consumers and businesses ... Statistics released by the FBI and industry experts reveal that as many as 10 million computers are under the control of someone other than the owner. This is a serious problem and current law must be updated so we can deal with the sophistication of these crimes."

Bill Summary. Section 1 of the bill contains its title.

Section 2 of the bill would provide for restitution to identity theft victims.

Section 3 of the bill would add to the predicate offenses for aggravated identity theft.

Section 4 of the bill would delete from Subsection 1030(a)(2)(C) the "interstate or foreign communication" requirement.

That is, if this bill is enacted, the statute would provide that "(a) Whoever ... (2) intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains ...(C) information from any protected computer ... shall be punished".

Spyware, Hacking and Keyloggers. Section 5 of the bill is titled "Malicious spyware, hacking and keyloggers". Although, the terms "spyware" and "keyloggers" appear in neither Section 1030 as currently written, nor as it would read after revision by this bill.

Currently, subsection 1030(a)(5)(A) lists three types of acts, while subsection 1030(a)(5)(B) enumerates various types of injuries that might be caused by these acts. Currently, there is a criminal violation of subsection 1030(a)(5) only if there is both an act under subsection (A) and an injury listed in subsection (B) that was caused by the act.

This bill would eliminate subsection (B). However, the bill would add similar language to the sentencing section of the statute, so that the injury caused by the act would be relevant to the sentence, and hence the offense's classification as either felony or misdemeanor, but would not be an element of the offense.

The three prohibited acts under subsection (a)(5) currently are "knowingly causes the transmission of a program, information, code, or command, and as a result of such conduct, intentionally causes damage without authorization, to a protected computer", "intentionally accesses a protected computer without authorization, and as a result of such conduct, recklessly causes damage" and "intentionally accesses a protected computer without authorization, and as a result of such conduct, causes damage". The bill would, in the third item, replace "damage" with "damage and loss".

The effects of Section 5 of the bill would be to make it easier for prosecutors to bring criminal actions for variety have hacking activities, including use of malicious spyware and keyloggers. It would also make it easier for civil litigants to obtain judicial relief for the same sort of conduct.

It would also sweep within the scope of the statute certain non-malicious conduct that individuals may not understand to be prohibited, for example, in the context of employees accessing the computers of their employers.

Cyber Extortion. Section 6 of the bill would rewrite the cyber extortion subsection. Currently, subsection 1030(a)(7) provides that "(a) Whoever ... (7) with intent to extort from any person any money or other thing of value, transmits in interstate or foreign commerce any communication containing any threat to cause damage to a protected computer ... shall be punished".

The bill would maintain the clause "threat to cause damage to a protected computer", and add two acts that would also constitute extortion under this subsection.

First, it would add this: "threat to obtain information from a protected computer without authorization or in excess of authorization or to impair the confidentiality of information obtained from a protected computer without authorization or by exceeding authorized access".

Second, it would add this: "demand or request for money or other thing of value in relation to damage to a protected computer, where such damage was caused to facilitate the extortion". Thus, if a person were to access a computer without authorization, damage the computer, and then demand payment to fix it, that too would be cyber extortion.

Conspiracy. Currently, subsection 1030(b) provides that "Whoever attempts to commit an offense under subsection (a) ... shall be punished ...".

Section 7 of this bill would add to this whoever "conspires to commit" an offense under subsection (a).

Interstate Commerce and Communications. Section 8 of the bill would amend the definition of "protected computer". Currently, a "protected computer" is one used by the federal government, a financial institution, or any other computer "which is used in interstate or foreign commerce or communication".

This bill would change this final clause to "which is used or affecting".

See, also Section 4 of the bill. These two sections would deprive defendants of the defense that since both the defendant and the accessed computer were located in the same state, their actions cannot constitute a violation of Section 1030.

Forfeiture of Property Used in Section 1030 Violations. Section 9 of the bill would add a new subsection to Section 1030 providing for forfeiture of property used in Section 1030 criminal violations.

Finally, Section 10 of the bill gives directives to the U.S. Sentencing Commission.

The bill is cosponsored by Rep. Chabot, Rep. Rahm Emanuel (D-IL), and Rep. Chris Murphy (D-CT). It was referred to the House Judiciary Committee (HJC). Rep. Schiff and Rep. Chabot are members.

Sen. Kerry Introduces Internet Crime Education Bill

5/14. Rep. John Kerry (D-MA) and others introduced S 3016 [LOC | WW], the "Internet Crime Prevention Act of 2008".

This bill would create a grant program at the Department of Justice (DOJ) to fund internet crime prevention education programs that "educate parents, children, educators, and communities about how to recognize and prevent potentially criminal activity on the Internet".

The bill states that "potential criminal activity" includes "access through the Internet and other electronic devices to potentially illegal activity including sexual or racial harassment, cyberbullying, sexual exploitation, exposure to pornography, and privacy violations".

The bill would define "cyberbullying" as "verbal, visual, or written psychological bullying or harassment by an individual or group, using an electronic device or devices including e-mail, instant messaging, text messages, blogs, telephones, pagers, and websites, to support deliberate, repeated, and hostile behavior that is intended to harm others".

This bill would also authorized the appropriation of $5 Million per year for fiscal years 2008 through 2012.

The original cosponsors of this bill are Sen. Lisa Murkowski (R-AK), Sen. Sheldon Whitehouse (D-RI), Sen. Norm Coleman (R-MN), and Sen. Joe Lieberman (D-CT). The bill was referred to the Senate Judiciary Committee (SJC). Sen. Whitehouse is a member.

Rep. Harman Introduces D Block Reauction Bill

5/14. Rep. Jane Harman (D-CA) introduced HR 6055 [LOC | WW], the "Public Safety Broadband Authorization Act of 2008", a bill to instruct the Federal Communications Commission (FCC) on how to reauction the D block component of the 700 MHz auction. The FCC adopted an NPRM regarding this reauction on May 14.

Rep. Jane HarmanRep. Harmon (at right) issued a statement regarding her bill. She wrote that "Congress should be involved in this process and ensure that the Public Safety Broadband Licensee, the not-for-profit entity representing public safety in this partnership, is an independent and effective voice for first responders."

She continued that her bill "will start a conversation about how to achieve that goal. It authorizes $4 million -- a modest, interim funding stream -- to help the FCC establish this new interoperable network and allows the FCC to grant part of these funds to the Public Safety Broadband Licensee to cover its administrative and operational costs."

She also wrote that "My legislation includes requirements to ensure transparency and promote vigorous oversight by both Congress and the FCC. It prohibits the Public Safety Broadband Licensee from accepting third-party funds after receiving FCC grants and from using government funding to repay outstanding debts. The bill also mandates strict reporting requirements to the FCC and Congress."

D Block. The D Block is 10 megahertz of paired spectrum (758-763 MHz and 788-793 MHz). It was to have been auctioned in the 700 MHz auction (the FCC's Auction No. 73) as one nationwide license, subject to a Public/Private Partnership.

The plan was for a commercial licensee to build a nationwide broadband interoperable network for use by public safety entities. This licensee would then have had preemptible secondary access to the spectrum.

The FCC closed this auction on March 18, 2008. However, no bidder bid the reserve price for the D Block.

The public safety sector already has 97 megahertz of spectrum, much of which is unused. But, this sector has not developed an interoperable broadband network.

On May 14, 2008, the FCC adopted a notice of proposed rulemaking (NPRM) regarding reauctioning the D block. See, story titled "FCC Announces NPRM for D Block Auction" in TLJ Daily E-Mail Alert No. 1,766, May 14, 2008.

The FCC later released the text [101 pages in PDF] of this NPRM. It is FCC 08-128 in WT Docket No. 06-150 and PS Docket No. 06-229.

Initial comments are due by June 20, 2008. Reply comments are due by July 7, 2008. See, notice in the Federal Register, May 21, 2008, Vol. 73, No. 99, at Pages 29581-29623.

Bill Summary. Rep. Harman's bill is directed to "the nationwide license" issued to the "Public Safety Broadband Licensee", or PSBL. The bill would require the FCC to require the PSBL to "collaborate with a commercial entity to establish a nationwide, interoperable broadband public safety communications network", "be broadly representative of the public safety community", "operate as a not-for-profit organization", and "have no participation in its management by commercial entities or interests"

The bill would further mandate that this PSBL "submit an annual budget" to the FCC, and "submit a report" to the FCC and certain Congressional Committees, "not later than 30 days after the end of each fiscal year documenting all income and expenditures made in such fiscal year".

The bill would further provide that the FCC "shall make grants, not to exceed $1,000,000 per fiscal year for each of fiscal years 2009 and 2010, to the PSBL to fund administrative and operational costs". And, the bill authorizes appropriations for this purpose.

The bill was referred to the House Commerce Committee (HCC). Rep. Harman is a member.

FCC Announces NPRM for D Block Auction

5/14. The Federal Communications Commission (FCC) adopted, but did not release, a Second Further Notice of Proposed Rulemaking (2ndFNPRM) regarding its reauction of spectrum following the failure of the D Block component of Auction No. 73.

The FCC issued a short release [2 pages in PDF] that describes this 2ndFNPRM. Each of the five Commissioners released statements.

The D Block is 10 megahertz of paired spectrum (758-763 MHz and 788-793 MHz). It was to have been auctioned in the 700 MHz auction as one nationwide license, subject to a Public/Private Partnership. That is, the plan was for a commercial licensee to build a nationwide broadband interoperable network for use by public safety entities. This licensee would then have had preemptible secondary access to the spectrum.

The FCC closed this auction on March 18, 2008. However, no bidder bid the reserve price for the D Block.

The public safety sector already has 97 megahertz of spectrum, much of which is unused. But, this sector has not developed an interoperable broadband network.

See also, stories titled:

Commissioner Robert McDowell wrote in his statement [PDF] that "we tried something and failed at it. Now we're back to the drawing board".

Commissioner Jonathan Adelstein wrote in his statement [PDF] regarding the adoption of this 2ndFNPRM that "One of our greatest failings last time was that the expectations were not made clear upfront as to how the network would look and what would be asked of a private sector partner. We have since learned that potential private partners did not have the certainty they needed to raise or commit capital to the project."

Robert McDowellMcDowell (at left) added that "potential bidders were deterred by onerous build-out and service requirements that required the eventual licensee to incur massive costs in an atmosphere of extreme uncertainty regarding how many, if any, public safety entities might actually sign up as paying customers".

Several statements by Commissioners relate that they will continue to pursue a model based upon a privately built network, in partnership with public safety sector. For example, Commissioner Adelstein wrote that "the public-private partnership framework itself presents the only option available to us".

Nevertheless, the FCC's release describing the 2ndFNPRM asks "whether it remains in the public interest, following the 700 MHz Auction, to retain a Public/Private Partnership".

The FCC will pursue a multi-stage process. First, it is putting out the 2ndNPRM to pose a wide array of open ended questions. Then, the FCC will put together a set of proposed rules for the reauction of the D Block, and put out a 3rd NPRM to allow comment on its proposal. Sometime in this process, the FCC will hold an en banc hearing.

The FCC release states that the FCC now seeks "comment, ideas, and recommendations on how to revise the rules for the D Block".

FCC Chairman Kevin Martin wrote in his statement [PDF] that this 2ndFNPRM "is the first step in a renewed effort to provide our Nation's first responders with the broadband network they need and deserve".

He said that subsequent steps will be a "Third Further Notice of Proposed Rulemaking" (3rdFNPRM) and "an en banc hearing on these issues".

FCC Commissioner Michael Copps wrote in his statement [4 pages in PDF] the there will be "30 days for comments and 15 days for reply comments" on the 2ndFNPRM. He said that the 3rdFNPRM "will tee up very specific, proposed rules for the public-private sharing concept". He added that the "en banc" event will be "this summer".

Commissioner Copps also wrote that the best option "would have been to build a dedicated, federally-funded, interoperable national broadband network for first responders", but that "that option is no longer on the table".

The FCC release states that the FCC "seeks comment on how the D Block should be auctioned and licensed for commercial use if it were not required to be part of a Public/Private Partnership."

Commissioner Copps complained that this 2nd FNPRM solicits "comment on the possibility of stating, up-front, that if this auction does not yield a bidder it will be re-auctioned for commercial purposes".

Commissioner Deborah Tate suggested in her statement that "auctioning the D Block with no public/private partnership and minimal service rules might maximize the funds raised at auction, funds that then would be available for Congress -- if it so chooses -- to appropriate for public safety communications."

The FCC release enumerates many questions to be posed by the 2ndFNPRM. For example, the release states that the notice asks "whether only entities that provide public safety services, as defined in the Communications Act, are eligible to use the public safety spectrum portion of the shared network established by the Partnership".

The FCC release also states that comments are "sought on the technical requirements of the shared wireless broadband network".

Copps also asks the questions, "Is USF funding a possible answer? Or the Telecommunications Development Fund?" The FCC release is silent on these questions.

This 2ndFNPRM is FCC 08-128 in WT Docket No. 06-150 and PS Docket No. 06-229.

SEC Proposes Rules Requiring XBRL Tagged Filings

5/14. The Securities and Exchange Commission (SEC) adopted, but did not release, a notice of proposed rulemaking, that proposes to change the SEC's rules to mandate over time that certain filings with the SEC be in interactive data format. The SEC's interactive data program is currently voluntary. See, SEC release.

Interactive data format means inserting into the source code of electronic filings eXtensible Business Reporting Language (XBRL) tags that enable software to read and extract information from those filings. See, SEC's web section on XBRL.

See, full story.

SEC Files Complaint Against Samueli and Other Broadcom Officers

5/14. The Securities and Exchange Commission (SEC) filed a civil complaint [39 pages in PDF] in U.S. District Court (CDCal) against four current or former officers of Broadcom, Henry Samueli, Henry Nicholas, William Ruehle, and David Dull, alleging violation of federal securities laws in connection with their alleged involvement in the back dating of stock options.

Broadcom makes semiconductors for communications and entertainment devices. Samueli is a former professor of electrical engineering and a founder of Broadcom. As a result of this complaint, he resigned as Chairman and Chief Technology Officer, and took a leave of absence as an executive officer. Although, he will remain as a non-officer employee.

The Henry Samueli School of Engineering and Applied Science at UCLA is named for him, as is the Henry Samueli School of Engineering at UC Irving.

Nicholas, another founder and former CEO of Broadcom, left the company in 2003. Dull, General Counsel of Broadcom, also took a leave of absence as a result of this complaint, but remains as a non-officer employee.

The complaint alleges "improper stock option backdating" that resulted in the "issuance of false financial statements that concealed from shareholders billions of dollars in stock-based compensation expenses".

The complaint states that "From June 1998 through May 2003, Broadcom systematically backdated employee and officer stock options to coincide with the dates of low closing prices for the Company's common stock without properly recording the compensation expenses associated with such options."

It adds that "In January 2007, Broadcom restated its financial results for the years 1998 through 2005 and reported an additional $2.22 billion in net non-cash compensation expenses."

Linda Thomsen, Director of the SEC's Division of Enforcement, stated in a release that "the executives at Broadcom perpetrated a massive, five-year scheme that involved fraudulent backdating of dozens of option grants, falsifying corporate records, intentionally false accounting, and lying to shareholders ... This egregious misconduct resulted in the largest accounting restatement to date arising from stock option backdating and warrants the significant sanctions sought from these individuals."

Backdating stock options is not a violation of federal securities laws. Hence, the complaint alleges violation of those sections of the securities laws pertaining to fraud (§17(a) of the Securities Act and §10(b) of the Exchange Act), proxies (§14(a) of the Exchange Act), and books and records (§13(b)(5) of the Exchange Act).

The complaint also alleges internal control violations, record keeping violations, periodic reporting requirements violations, and violation of SEC rules pertaining to statements to accountants and certification of quarterly reports.

Broadcom announced in a release that Samueli and Dull "have each taken leaves of absence as executive officers of Broadcom pending resolution of a civil complaint filed against them today ..."

It added that Samueli "has resigned as a member of the Board of Directors and as Chairman of the Board of Directors of the company. The Board has named John E. Major, an independent director of the company since January 2003, to serve as non-executive Chairman of the Board of Directors."

Broadcom also wrote that Samueli and Dull "will continue to serve as non-officer employees of the company".

The just filed complaint does not name Broadcom as a defendant. The SEC previously filed, and settled, a complaint against the company. Under that settlement, Broadcom admitted no wrongdoing, but consented to entry of an injunction against future violation of federal securities laws, and agreed to pay a $12 Million fine. See, story titled "SEC Files Complaint Against Broadcom Over Backdated Stock Options" in TLJ Daily E-Mail Alert No. 1,752, April 23, 2008.

En Banc Panel of 9th Circuit to Hear Sprint v. San Diego

5/14. The U.S. Court of Appeals (9thCir) issued an order [2 pages in PDF] in Sprint Telephony v. City of San Diego, a case regarding municipal regulation of wireless service providers.

This order states that "Upon the vote of a majority of nonrecused active judges, it is ordered that this case be reheard en banc pursuant to Circuit Rule 35-3. The three-judge panel opinion shall not be cited as precedent by or to any court of the Ninth Circuit." (Footnote listing recused Judges omitted.)

The Court of Appeals previously affirmed the judgment of the District Court that San Diego's municipal wireless zoning ordinance in question is preempted by 47 U.S.C. § 253, but that this violation creates no private right of action for damages under 18 U.S.C. § 1983.

To begin with, this is not an action brought under 47 U.S.C. § 332, which specifically addresses local regulation of wireless services.

47 U.S.C. § 253 provides, in part, that "No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service." However, it also contains several limitations upon the scope of this prohibition.

18 U.S.C. § 1983 provides that "Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress ..."

The Court of Appeals issued its original opinion on March 13, 2007. See, story titled "9th Circuit Holds That Wireless Zoning Ordinance Violates § 253(a), But This Creates No Private Right Of Action Under § 1983" in TLJ Daily E-Mail Alert No. 1,551, March 13, 2007. The Court of Appeals issued an amended order and opinion [34 pages in PDF] on June 13, 2007.

This case is Sprint Telephony PCS and Pacific Bell Wireless v. County of San Diego, et al., U.S. Court of Appeals for the 9th Circuit, App. Ct. Nos. 05-56076 and 05-56435, appeals from the U.S. District Court for the Southern District of California, D.C. No. CV-03-1398-BTM, Judge Barry Ted Moskowitz presiding. Judge Myron Bright wrote the opinion of the Court of Appeals, in which Judges Wallace Tashima and Carlos Bea joined.

People and Appointments

Paul Clement5/14. Paul Clement (at right), the Solicitor General at the Department of Justice (DOJ), will leave on June 2, 2008. See, DOJ release. He has been the Solicitor General since June of 2005. However, he has worked in the Office of the Solicitor General for seven years. He argued 49 cases before the Supreme Court, including MGM v. Grokster, the landmark copyright case regarding peer to peer technologies. See, story titled "Supreme Court Hears Oral Argument in MGM v. Grokster" in TLJ Daily E-Mail Alert No. 1,106, March 30, 2005. See also, story titled "Supreme Court Rules in MGM v. Grokster" in TLJ Daily E-Mail Alert No. 1,163, June 28, 2005.

Rep. Lofgren Introduces Bill to Allow Aliens with Advanced STEM Degrees to Work in US

5/13. Rep. Zoe Lofgren (D-CA) and others introduce HR 6039 [LOC | WW], an untitled bill to amend the immigration statute to provide that any alien who obtains a masters or Ph.D. degree from a U.S. university in a STEM field, and has a job offer related to that degree, shall be admitted for permanent residence.

Rep. Zoe LofgrenRep. Lofgren (at right) stated in a release that "More than 50% of the graduates from U.S. universities in masters and Ph.D. programs in science and engineering are foreign born ... If we want our economy to continue competing in the global market, we have to retain these foreign students so they compete with us instead of against us in other countries."

She continued that "These men and women are the innovators of tomorrow, and we aren’t the only ones looking to retain their talents. Increasingly, employers from Europe, Australia, Canada, and even China and India, are beating U.S. employers for valuable talent. In 2000, for example, 75% of the world’s engineers were hired by U.S. employers -- just six years later in 2006, that percentage dropped to 63%."

She concluded that her bill "will give U.S. employers another tool to recruit the world’s best and brightest."

The bill was referred to the House Judiciary Committee (HJC). She is a member.

The original cosponsors of the bill are Rep. Chris Cannon (R-UT), Rep. Michael Capuano (D-MA), Rep. Chris Carter (R-TX), Rep. John Conyers (D-MI), Rep. Joseph Crowley (D-NY), Rep. Tom Davis (R-VA), Rep. Anna Eshoo (D-CA), Rep. Wayne Gilchrist (R-MD), Rep. Mike Honda (D-CA), Rep. Patrick Kennedy (D-RI), Rep. Carolyn Maloney (D-NY), Rep. Jim McDermott (D-WA), Rep. George Miller (D-CA), Rep. David Reichert (R-WA), Rep. Linda Sanchez (D-CA), Rep. Loretta Sanchez (D-CA), Rep. John Shadegg (R-AZ), Rep. Adam Smith (D-WA), and Rep. Ellen Tauscher (D-CA).

Most of these cosponsors represent districts that are home to technology companies, including those located in the Silicon Valley, Seattle, southern California, and northern Virginia and Maryland areas.

The bill would amend the Immigration and Nationality Act (INA).

It would add to 8 U.S.C. 1151(b)(1), which enumerates categories of aliens no subject to numerical limitations, the following: "Aliens who have earned a master's or higher degree from a United States institution of higher education (as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a))) in a field of science, technology, engineering, or mathematics and who have an offer of employment from a United States employer in a field related to such degree."

The INA does provide for visas for highly skilled workers, known as H1B visas. These enable tech companies to employ in the US many aliens who would also be affected by HR 6039. However, there are annual caps on the number of H1B visas, which the Congress has varied in recent years. Currently, tech companies report that they cannot employ all the alien graduates of US universities that they want, because of the annual limitation.

Rep. Graves Introduces Integrated Public Alert and Warning System Bill

5/13. Rep. Sam Graves (R-MO) introduced HR 6038 [LOC | WW], the "Integrated Public Alert and Warning System Modernization Act of 2008".

Rep. Sam GravesRep. Graves (at right) issued a release that states that this bill would "modernize the nation’s public warning and alert system in order to allow officials to more effectively warn those threatened by disasters".

Introduction. The Federal Emergency Management Agency (FEMA), which is a part of the Department of Homeland Security (DHS), has a web page titled "Integrated Public Alert and Warning System (IPAWS)". The FEMA states that it conceives that this IPAWS will be the "next generation public communications and warning capability".

HR 6038 is a vaguely worded bill that would provide the FEMA further statutory authority and guidance for expanding and integrating this IPAWS. In particular, it would expand the methods and "technologies" used by the government to send communications to the public regarding hurricanes, tornadoes, disasters, and other unspecified things.

The bill does not list these "technologies".

Most of the entities that would create alerts, warnings, and forecasts, such as the National Weather Service (NWS), are governmental. However, most of the entities that make and operate the equipment, devices, networks, software and technologies that would carry or publish these communications are private sector entities. The bill is vague as to what authority the FEMA, or other government agencies, would have to write regulations and impose mandates upon these private sector entities.

The bill is vague as to whether or not the FEMA would have authority to mandate the design of networks, equipment, consumer devices, software, protocols and procedures to accommodate this IPAWS. It is also vague as to how much authority the FEMA would have to compel service providers to publish or carry these IPAWS communications.

This bill only addresses communications that go from the government to the public. It does not address public to the government communications, such as the existing 911 and E911 systems and regulatory regimes.

Nor does the bill address what categories of information should be included in alerts and warnings, what persons or entities would be able to send alerts or warnings, or what entity would serve as a gateway for the origination of alerts.

The bill was referred to the House Transportation Committee (HTC), but not the House Commerce Committee (HCC). Rep. Graves is a member of the HTC, but not the HCC. The bill provides that it does not affect Federal Communications Commission (FCC) or NWS authority. If it did, the HCC would also have jurisdiction.

Bill Summary. The bill recites in its findings that "numerous technologies exist to enable the Federal Government to vastly enhance its public alert and warning system". However, it does not identify any of these "technologies".

The bill also finds that "the Federal Government should modernize its alert and warning system to improve its ability to alert the residents of the United States of all potential hazards under all conditions".

The bill would amend 42 U.S.C. § 5132, which pertains to "Disaster Warnings". This statute currently requires federal agencies to issue warnings.

Moreover, the statute currently provides that "The President is authorized to enter into agreements with the officers or agents of any private or commercial communications systems who volunteer the use of their systems on a reimbursable or nonreimbursable basis for the purpose of providing warning to governmental authorities and the civilian population endangered by disasters."

However, nothing in Section 5132 mandates that any broadcaster, carrier or other entity that might send or publish warnings must participate in any federal program.

The bill would add a new subsection 5132(e) titled "Integrated Public Alert and Warning System Modernization". It would provide that the FEMA "shall ... modernize the integrated public alert and warning system ... to ensure that the President under all conditions can alert and warn governmental authorities and the civilian population in areas endangered by disasters " and "implement the public alert and warning system ".

It would require the FEMA to "establish or adopt, as appropriate, common alerting and warning protocols, standards, terminology, and operating procedures for the public alert and warning system".

It would also require the FEMA to "include in the public alert and warning system the capability to alert and warn individuals with disabilities and individuals with limited English proficiency".

This bill provides that this IPAWS "shall ... incorporate multiple communications technologies" and "be designed to adapt to, and incorporate, future technologies for communicating directly with the public".

The bill does not elaborate on what types communications would be carried or published by the IPAWS, and what entity would make determinations regarding specific communications, or what entity would act as a gateway.

Rep. Graves also stated that his proposal would "enable officials at all levels of government to target their warnings to the right people". Notably, he did not use the phrase "public safety officials".

The bill would authorize appropriations -- "$37,000,000 for fiscal year 2009 and such sums as may be necessary for each fiscal year thereafter". There is nothing in the bill about compensating affected companies or consumers.

The bill adds that "Nothing in this Act (including the amendment made by this Act) shall be construed to affect the authority of the Department of Commerce or the Federal Communications Commission." (Parentheses in original.) Both the NWS, which issues weather alerts, and the National Telecommunications and Information Administration (NTIA), which has spectrum management authority, are a part of the Department of Commerce.

What Technologies? There is no mention in the bill of terrestrial broadcasters, satellite radio, internet radio, cell phone service, multichannel video programming distributors (MVPDs), telecommunications services, voice over internet protocol services, internet access services, e-mail services, online social networking services, IP based news products or services, or anything else.

However, Rep. Graves stated in his release that his bill would cover "modern technologies like cell phones, reverse 911, email, text messages, and satellite radio and television". He did not elaborate on the meaning of "reverse 911".

Also, the FEMA states its understanding in its web site. It states that IPAWS alerts and warnings will "flow through multiple devices, such as cell phones, pagers, satellite television/radio, landline phones, desktop computers, personal digital assistants, and road signs. These live or pre-recorded messages may be sent via audio, video or text in multiple languages, including American Sign Language and Braille."

TLJ asked an HTC aide if the bill would cover interactive computer services, or social networking web sites, with e-mail functions. He stated that there is no effort at the FEMA to include it, and "at this point, I would have to say no". However, he added that future inclusion of these technologies in IPAWS is not precluded.

What Authority Would FEMA Have? The bill would require that the FEMA "shall ... modernize" the IPAWS, and this means that it shall "establish or adopt" protocols and procedures, and it "shall ... incorporate multiple communications technologies".

But, the bill does not specify whether this means that the FEMA can write regulations. The language in the bill stating that FCC authority is unaffected by this bill suggests that the FCC could not write implementing regulations.

Nor does the bill state whether or not the FEMA can enforce those regulations against any particular company, industry sector, or the developer, or producer or user of any technology.

TLJ asked the HTC aide about new FEMA authority under this bill. He said that "there are systems in place today, and there are legal authorities in place." He elaborated on the EAS, NAWS, and CMAS. See, related story in this issue titled "Summary of Public Alert and Warning Systems".

But, he said that this bill would create no new mandates.

Compensation? There is nothing in the bill about compensating affected companies or consumers for converting to new equipment, or redesigning and rebuilding, to come into compliance with the IPAWS.

TLJ asked the HTC aide if the bill contemplates compensation to private sector entities for the costs of coming into compliance with IPAWS requirements. He said that the authorization for appropriations in the bill is only for the FEMA, and not for private sector compensation.

However, he added that in the past some IPAWS pilot programs have provided public funding for hardening repeater sites.

He concluded that although equipment conversions may be needed, since there are no mandates under this bill, there will not likely be any public funding for private sector conversions.

Congressional Jurisdiction. There are multiple committees in the House and Senate with jurisdiction over legislation and oversight related to alerts and warnings.

For example, in the House, the House Transportation Committee (HTC) has jurisdiction over national disasters. This derives from the historic role of the federal government in rebuilding damaged bridges, roads and other things.

The House Commerce Committee (HCC) has jurisdiction over communications, carriers, commercial spectrum, the FCC, NTIA, and much of the Department of Commerce.

However, the House Science Committee (HSC) has jurisdiction over the NOAA and its NWS.

The House Judiciary Committee (HJC) has jurisdiction over crime issues, including bills that create crime related public alert programs, such as Amber Alerts. This program was created by the "Prosecutorial Remedies and Other Tools to End the Exploitation of Children Today Act ", or "PROTECT Act" in 2003. See, story titled "House and Senate Pass Conference Report on Child Protection Bill" in TLJ Daily E-Mail Alert No. 642, April 11, 2003.

The House Appropriations Committee has jurisdiction over funding for all of these activities.

GAO Reports on PRC's Noncompliance with Trade Agreements

5/13. The Government Accountability Office (GAO) released a report [64 pages in PDF] titled "U.S.-China Trade: USTR’s China Compliance Reports and Plans Could Be Improved".

The report finds that the Office of the U.S. Trade Representative's "annual reports to Congress do not have the systematic analysis needed to clearly understand China’s compliance situation."

For example, it finds that the "USTR’s narrative reports make it difficult to understand the comparative level of progress China made in each trade area in a given year and identify overall patterns or trends over time." It adds, "For instance, the reports do not describe how much progress is being made in the area of agriculture relative to the progress being made in intellectual property rights or services."

The report also finds that "China has made more progress in some commitment areas -- such as trading rights and distribution services, agriculture, and internal policies -- having resolved over 30 percent of all issues mentioned in each area, and less progress in other areas such as services and intellectual property rights, where less than 10 percent of issues have been resolved."

It continues that while there is more progress in areas such as agriculture, "other trade areas such as intellectual property rights have seen less progress, with the smallest proportion of issues, less than 10 percent, reaching resolution and a sizable proportion of issues, over 30 percent, not making any progress from 2003 to 2007. In addition, there are an increasing number of compliance issues mentioned in this area, with a peak in 2006. USTR noted in its 2007 annual report that while China has put in place a relatively good set of laws and regulations aimed at protecting intellectual property rights, some critical measures still need to be revised, and China’s overall enforcement of these laws has been ineffective. Thus, while many of the intellectual property laws have been rewritten, there are still many outstanding issues, and more complex issues related to enforcement continue to arise."

The GAO report also states that "our analysis revealed that China’s progress in resolving compliance issues appears to be slowing over time, especially since 2003 and 2004, when most progress was made. We also found that China’s progress on resolving individual issues varies significantly by trade area. For instance, USTR reported that the highest proportion of issues on which China either made progress or resolved the issue were in the agriculture section, and the lowest proportion of progress was in import regulation."

FCC Commissioner Tate Addresses Broadband Regulation

5/13. Federal Communications Commission (FCC) Commissioner Deborah Tate gave a speech [PDF] in Dallas, Texas, titled "Broadband to the Home: Broadband to America".

Deborah TateTate (at right) said that "When considering broadband penetration in the U.S. -- and what policymakers might do to promote more of it -- we should be mindful of the unique characteristics of the U.S. market. And when we compare the U.S. market to that of other countries, we should be mindful of how countries differ. For example, failure to properly consider differences in household size or population density across countries can confuse the analysis."

She added that "This is not to say that there is no role for policy."

She discussed her vague and undefined "regulatory philosophy" of the "light touch approach".

She said that the FCC has done many things in recent years to promote broadband, including classifying broadband DSL, BPL and wireless services as information services, changing the video franchising process, auctioning spectrum for wireless broadband services in the 700 MHz auction, and seeking more information about broadband deployment.

She also discussed current FCC proceedings that relate to network management practices of broadband service providers. She said that "As usage increases exponentially, the need for reasonable network management becomes clear. At the same time, such reasonable network management should be consistent with the Commission’s four principles of network neutrality, adopted in 2005."

She added, "We again should be clear that we are talking about legal content and applications." She elaborated that she is concerned about the ability of new technologies, such as peer to peer, "to promote some of the most harmful threats online -- child pornography, piracy, and privacy violations". She did not reference "copyright" or "infringement".

More News

5/13. Hewlett Packard (HP) announced in a release that HP and Electronic Data Systems (EDS) "have signed a definitive agreement under which HP will purchase EDS at a price of $25.00 per share". See also, EDS release.

5/13. The United States and the European Union issued a joint statement titled "EU-US Open Investment Statement". See also, statement by Robert Kimmitt, Deputy Secretary of the Treasury.

5/13. Rep. Adolphus Towns (D-NY) and Rep. Ed Whitfield (R-KY) introduced HR 6044 [LOC | WW], an untitled bill to amend the Federal Trade Commission Act (FTCA) to authorize the appropriation of $10 Million per year for fiscal years 2009 through 2015 for "international technical assistance with respect to foreign consumer protection and competition regimes".

9th Circuit Issues Third Opinion Regarding California's Bogus Escheat Schemes

5/12. The U.S. Court of Appeals (9thCir) issued its third opinion [6 pages in PDF] in Taylor v. Westly, the long running action regarding California's bogus escheat schemes.

Chris Taylor is a former employee of Intel. His wife is former general counsel for Intel in Europe. He owns 52,224 shares of Intel stock. He did not die intestate, or abandon his stock. Nevertheless, California seized his stock, asserting escheat. Taylor and others filed a complaint in the U.S. District Court (EDCal) to get their stock back. California then attempted to hide behind 11th Amendment immunity.

The just released opinion does not recount the factual and procedural history of this case in detail. For further background on this litigation, see story titled "9th Circuit Rejects California's 11th Amendment Defense of Bogus Escheat of Intel Stock" in TLJ Daily E-Mail Alert No. 1,106, March 30, 2005. TLJ wrote in that story that "California's escheat procedure resembles confiscation of property by third world people's republics more than it resembles the doctrine of escheat."

In its first opinion, the Court of Appeals rejected California's claim of sovereign immunity. In a second opinion in 2007, the Court of Appeals held that California's escheat scheme is unconstitutional. The District Court, on remand, then issued an injunction against operation of this unconstitutional escheat scheme.

California then amended its escheat statute and rules, and moved to dissolve the injunction. The District Court granted the motion. And now, the Court of Appeals has affirmed.

The Court of Appeals' short opinion states that since the injunction was issued on a facial challenge to the old statute, and the new statute provides that California is required to provide pre-escheat "notice reasonably calculated, under all the circumstances to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections", it survives a facial challenge.

The Court of Appeals continued that "The Controller has hardly begun enforcing the new escheat law. We cannot say, on the record before us, that the district court abused its discretion in dissolving the preliminary injunction. Our review in this case is confined by our limited standard of review, and is not a definitive adjudication of the constitutionality of the new law and administrative procedure."

The Court of Appeals also reversed in part that portion of the District Court's judgment pertaining to the award of attorneys fees.

The 2005 opinion [22 pages in PDF] on sovereign immunity is Taylor I. The 2007 opinion [9 pages in PDF] on the unconstitutionality of the escheat scheme is Taylor II. The just released opinion may be known as Taylor III. The next opinion, on California's new statute and rules as implemented, would then be Taylor IV.

This case is Chris Taylor, et al. v. Steve Westly, et al., U.S. Court of Appeals for the 9th Circuit, App. Ct. Nos. 07-16902 and 07-17223, appeals from the U.S. District Court for the Eastern District of California, D.C. Nos. CV-01-02407-WBS/GGH and CV-01-02407-WBS/GGH, Judge William Shubb presiding. The Court of Appeals issued a per curiam opinion of Robert Beezer, Andrew Kleinfeld, and Michael Hawkins.

Supreme Court News

5/12. The Supreme Court denied certiorari in Apotex v. Abbott Laboratories, Sup. Ct. No. 07-912, a patent case. See, Orders List [15 pages in PDF] at page 4. This lets stand the October 11, 2007, opinion [20 pages in PDF] of the U.S. Court of Appeals (FedCir). See also, Supreme Court docket.

5/12. The Supreme Court denied certiorari in Panorama v. Zomba Enterprises, Sup. Ct. No. 07-1028, a copyright case involving karaoke. See, Orders List [15 pages in PDF] at page 4. This lets stand the June 26, 2007, opinion [PDF] of the U.S. Court of Appeals (6thCir), which affirmed the judgment of copyright infringement against a maker of karaoke CDs. See also, Supreme Court docket.

5/12. The Supreme Court denied certiorari in Rechanik v. Microsoft, Sup. Ct. No. 07-9250, a counterfeit software case. See, Orders List [15 pages in PDF] at page 12. This lets stand the October 2, 2007, opinion of the U.S. Court of Appeals (7thCir). See also, Supreme Court docket.

5/12. The Supreme Court dismissed a pro se petition for writ of mandamus in In Re Leo Stoller, Sup. Ct. No. 07-9592. See, Orders List [15 pages in PDF] at page 14. See also, Supreme Court docket. On January 7, 2008, the Supreme Court denied certiorari in Leo Stoller v. Google, Sup. Ct. No. 07-7043. See, Orders List [44 pages in PDF] at page 25.

People and Appointments

5/12. Berin Szoka joined the Progress & Freedom Foundation (PFF) with the title of "Visiting Fellow". He previously worked in the Washington DC office of the law firm of Latham & Watkins. Before that, he worked for the Washington DC law firm of Lawler Metzger Milkman & Keeney. The PFF stated in a release that Szoka will "study a number of Internet policy issues at PFF, including privacy, intermediary immunity and online taxation". See also, Szoka's LinkedIn page.

More News

5/12. The Competitive Enterprise Institute (CEI) published a short essay titled "Selling Out Online Advertising". The authors are the CEI's Wayne Crews and Ryan Radia. It concludes that "Hypothetical privacy infringements hardly justify a new law to regulate online advertising. The Internet can better serve customers as a realm with few top-down rules. Lawmakers cannot foresee the technical achievements of tomorrow, but laws can indeed stop pioneers in their tracks.

Go to News from May 6-10, 2008.