Source: http://www.techlawjournal.com/alert/2004/05/26.asp
Timestamp: 2019-04-19 05:09:12+00:00

Document:
TLJ Daily E-Mail Alert No. 905, May 26, 2004.
May 26, 2004, 9:00 AM ET, Alert No. 905.
5/24. The Supreme Court granted certiorari in three case pertaining to the relationship between the Constitution's dormant commerce clause, and the states' ability to regulate internet sales, and other direct sales, of alcoholic beverages under the 21st Amendment.
The Court wrote the following: "The petitions for writs of certiorari are granted limited to the following Question: ``Does a State's regulatory scheme that permits in-state wineries directly to ship alcohol to consumers but restricts the ability of out-of-state wineries to do so violate the dormant Commerce Clause in light of Sec. 2 of the 21st Amendment?´´ These cases are consolidated and a total of one hour is allotted for oral argument." See, Order List [14 pages in PDF] at pages 3-4.
Cases Under Review. The three cases are Swedenburg v. Kelly (No. 03-1274), Granholm v. Heald (No. 03-1116), and Michigan Beer & Wine Wholesalers v. Heald (No. 03-1120).
On February 12, 2004, the U.S. Court of Appeals (2ndCir) issued its opinion [28 pages in PDF] in Swedenburg v. Kelly. The District Court had held that a New York statute prohibiting out of state wineries from selling directly to New York residents, such as via the internet, violated the Commerce Clause of the Constitution. The Appeals Court reversed, holding that New York's statute is a permissible exercise of authority granted to states under the 21st Amendment, thus rejecting the Commerce Clause challenge.
See, stories titled "2nd Circuit Rules in Internet Wines Sales Case" in TLJ Daily E-Mail Alert No. 840, February 19, 2004; and "Court Holds New York's Ban on Internet Wine Sales Is Unconstitutional" in TLJ Daily E-Mail Alert No. 551, November 18, 2002.
These New York and Michigan cases are just two of a larger number of Appeals Court cases that have addressed internet wine sales.
Dormant Commerce Clause and the 21st Amendment. There is no dormant commerce clause in the Constitution. There is only a commerce clause. Article I, Section 8, of the Constitution provides that "The Congress shall have Power ... to regulate Commerce with foreign Nations, and among the several States ..."
The dormant commerce clause is the judicial concept that the Constitution, by delegating certain authority to the Congress to regulate commerce, thereby bars the states from legislating on certain matters that affect interstate commerce, even in the absence of Congressional legislation.
It is applied to block states from regulating in a way that materially burdens or discriminates against interstate commerce. See, Gibbons v. Ogden, 22 U.S. 1 (1824), and Cooley v. Board of Wardens, 53 U.S. 299 (1851). More recent treatments of the concept include Healy v. The Beer Institute, 491 U.S. 324 (1989), and CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69 (1987).
Section 2 of the 21st Amendment provides, in part, that "The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited."
It prohibits, as a matter of federal Constitutional law, violation of a state's laws regarding the transportation or importation of alcoholic beverages into that state . It thus confers upon the states some authority to regulate interstate commerce in alcoholic beverages.
Potential Impact of the Supreme Court's Opinion. There exists an unresolved collection of legal issues regarding the extent to which the dormant commerce clause, and other constitutional provisions, such as the privileges and immunities clauses, limit the states' ability to regulate electronic commence. The present case does not put all of these issues before the Court.
First, state regulation of electronic commerce in wine is a special case of electronic commerce. The 21st Amendment gives the states certain regulatory authority over alcohol, but not other goods and services. The Court could write an opinion that consists of a narrow application of the 21st Amendment, in a manner that would affect regulation of internet alcohol sales, but not, for example, internet book sales.
Also, the Supreme Court, in granting certiorari, expressly limited the issue on review to whether the New York and Michigan statutes "do so violate the dormant Commerce Clause in light of Sec. 2 of the 21st Amendment?" This excludes consideration of challenges based on clauses other than the dormant Commerce Clause.
Nevertheless, the Court's opinion in this case could be written in a manner that does impact state attempts to regulate e-commerce beyond regulation of wine sales.
Steve Simpson, of the Institute for Justice, which represents small wineries and wine consumers in the New York case, stated in a release that "The case could impact Internet commerce far beyond wine. The 2nd Circuit ruled that New York could require out-of-state businesses to set up a separate business with the state in order to sell goods there. If that ruling stands, it could severely inhibit the vast potential of the Internet to expand consumer freedom and choice."
5/24. The Supreme Court denied certiorari in Turn-Key-Tech v. National Film Laboratory, et al, a patent case. This is Sup. Ct. No. 03-1138 See, Order List [14 pages in PDF] at page 4.
5/24. The Supreme Court announced that it "will take a recess from Monday, May 24, 2004, until Tuesday, June 1, 2004." See, Order List [14 pages in PDF] at page 14.
5/25. The Federal Communications Commission (FCC) released its Notice of Proposed Rulemaking (NPRM) [38 pages in PDF] regarding use by unlicensed devices of broadcast television spectrum where that spectrum is not in use by broadcasters. The purpose of the proposed rules is to make more spectrum available, and make available spectrum that can penetrate buildings, for networking electronic devices within premises, and providing wireless broadband internet access.
This NPRM states that "To ensure that no harmful interference to authorized users of the spectrum will occur, we propose to define when a TV channel is “unused” and to require these unlicensed devices comply with significant restrictions and technical protections. Unlicensed devices would be required to incorporate “smart radio” features to identify the unused TV channels in the area where they are located. We intend to consider several alternative methods for identifying the unused TV channels, including approaches that would: 1) allow existing television and/or radio stations to transmit information on TV channel availability directly to an unlicensed device; 2) employ geo-location technologies such as the Global Positioning Satellite (GPS) system; or 3) employ spectrum sensing techniques that would determine if the signals of authorized TV stations are present in an area."
The FCC adopted, but did not release, this NPRM at its May 13 meeting. See, story titled "FCC Adopts NPRM Regarding Unlicensed Use of Broadcast TV Spectrum" in TLJ Daily E-Mail Alert No. 898, May 14, 2004.
The FCC announced a Notice of Inquiry [MS Word] (NOI) in its proceeding number 02-380 on December 11, 2002. See, story titled "FCC Announces Notice of Inquiry Re More Spectrum for Unlicensed Use" in TLJ Daily E-Mail Alert No. 566, December 12, 2002.
Comments will be due 75 days after publication of a notice in the Federal Register. Reply comments will be due 105 days after publication of this notice. This notice has not yet been published.
This proceeding is titled "In the Matter of Unlicensed Operation in the TV Broadcast Bands Additional Spectrum for Unlicensed Devices Below 900 MHz and in the 3 GHz Band". This NPRM is FCC 04-113 in ET Docket Nos. 04-186 and No. 02-380.
5/24. Secretary of the Treasury John Snow gave a speech in New York City in which he addressed the nature of innovation and entrepreneurship. He stated that "The basic question we face is how to increase the number of entrepreneurs, to spread the spirit of entrepreneurship; and how do we do it?"
He stated that the "entrepreneur's innovations take many forms from new products and services to new technologies to new forms of organization to opening up new markets". But, he noted, economists "have no formal theory of entrepreneurship", and "have been unable to model entrepreneurship".
Nevertheless, he said, "We do believe, however, that we can foster an environment that enables entrepreneurship to flourish." He suggested that part of this environment is cultural. That is, "Entrepreneurs are essentially individualistic and self-reliant. They are people who trust their own judgment, so a culture that stresses individuality, independent judgment, self-reliance and self-confidence is certainly likely to be favorable to entrepreneurship. So is a culture that celebrates creativity and the joy of creativity."
In the end, he did not explain in this speech how government policy can foster an environment of entrepreneurship and innovation.
5/25. The Department of Commerce (DOC) announced that Michelle O'Neill will be appointed as Deputy Under Secretary of Commerce for Technology, "Effective next month". Ben Wu, who has been nominated for the position of Assistant Secretary of Commerce for Technology Policy, is currently Deputy Under Secretary of Commerce for Technology. O'Neill has worked for the DOC for 17 years. See, DOC release.
5/25. The Department of Commerce (DOC) announced that Daniel Caprio will be appointed to be Deputy Assistant Secretary for Technology Policy, "Effective next month". He will replace Chris Israel, who is now Deputy Chief of Staff for Secretary of Commerce Don Evans. Caprio has worked for Federal Trade Commission (FTC) Commissioner Orson Swindle as Special Assistant, Chief of Staff, and principal technology policy advisor. See, DOC release.
9:30 - 10:30 AM. The Federal Communications Commission's (FCC) Media Security and Reliability Council will meet. See, notice in the Federal Register, April 30, 2004, Vol. 69, No. 84, at Page 23758. Location: FCC, Room TW-C305, 445 12th St., SW.
5/25. Secretary of Homeland Security Tom Ridge gave a speech in Washington DC to the Council for Excellence in Government in which he addressed, among other topics, interoperability of communications systems. He stated that "This Department is taking steps in the short term to fix the immediate communications problems that were dramatized at the Trade Center on 9/11. In the end, when we say ``interoperability´´ we are basically talking about a ``technology translator´´ -- the capability of first responders to communicate and understand each other regardless of technology, mode of communication, or frequency. Already, we have identified technical specifications for a baseline interoperable communications capability, so that first responders will have an interim way to talk to each other during a crisis."
5/24. The General Accounting Office (GAO) released a report [31 pages in PDF] titled "Information Technology: Homeland Security Should Better Balance Need for System Integration Strategy with Spending for New and Enhanced Systems".
5/24. The General Accounting Office (GAO) released a report [pages in PDF] titled "Telecommunications: Issues Related to Federal Funding for Public Television by the Corporation for Public Broadcasting".

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