Source: http://www.techlawjournal.com/alert/2004/03/02.asp
Timestamp: 2019-04-23 10:58:19+00:00

Document:
TLJ Daily E-Mail Alert No. 847, March 2, 2004.
March 2, 2004, 9:00 AM ET, Alert No. 847.
3/1. The European Union (EU) announced in a release that it imposed retaliatory tariffs on the US pursuant to World Trade Organization (WTO) rulings regarding the US FSC and ETI tax regimes.
The WTO previously ruled that the US Foreign Sales Corporation (FSC) tax regime, and its replacement, the Extraterritorial Income (ETI) tax regime, constitute illegal export subsidies. The WTO also authorized the EU to impose up to $4 Billion in retaliatory tariffs on US exports.
The EU announced that the actual tariffs are "well below the US $4 billion level authorized by the WTO".
Also on March 1, Sen. Charles Grassley (R-IA), the Chairman of the Senate Finance Committee, announced in a release that "Midweek, the Senate likely will begin debate on the FSC/ETI legislation." Sen. Grassley is the lead sponsor of the bill, S 1637, the "Jumpstart Our Business Strength (JOBS) Act".
Sen. Grassley added that "The Majority Leader is seeking a unanimous consent agreement to limit amendments. Expect debate and votes to continue into Friday, but it is not anticipated the Senate will reach final passage this week."
The EU elaborated on its retaliatory tariffs. "Countermeasures on the selected products consist of an additional customs duty of 5% to be enforced from today, followed by automatic monthly increases of 1% up to a ceiling of 17% to be reached on 1 March 2005, if compliance has not happened in the meantime."
EU Trade Commissioner Pascal Lamy (at right) stated that "Despite waiting for more than two years, the US has not brought its legislation in line with WTO rules. We are therefore left with no choice but to impose countermeasures. The name of the game is not retaliation but compliance: countermeasures will be lifted the day the FSC is repealed. We now need to turn our attention to the post-March 1 period. In my recent trip to Washington, I have discussed this issue with the US administration and congressional leaders and I am encouraged that progress can be rapidly achieved to adopt legislation repealing the FSC."
2/27. Sen. Conrad Burns (R-MT), Sen. Ron Wyden (D-OR), and Sen. Barbara Boxer (D-CA) introduced S 2145, the "Software Principles Yielding Better Levels of Consumer Knowledge Act". This awkward title yields an approximate acronym -- SPY BLOCK.
Sen. Burns stated that "Spyware refers to software that is downloaded onto users' computers without their knowledge or consent. This sneaky software is then often used to track the movements of consumers online or even to steal passwords. The porous gaps spyware creates in a computer's security may be difficult to close. For example, one popular peer-to-peer file sharing network routinely installs spyware to track users' information and retrieves targeted banner ads and popups." See, Congressional Record, February 26, 2004, at Page S1685.
Sen. Wyden (at right) summarized the problems that the bill addresses. "First, some software, often referred to as ``spyware,´´ collects information about the computer user and transmits that information over the Internet to the spyware's author. Second, software sometimes referred to as ``adware´´ causes pop-up ads to appear on the user's computer, perhaps based on the user's apparent interests or on the websites he or she visits. Third, some software essentially hijacks the computer's processing and communications capability to forward spam, viruses, or other messages, all without the user's knowledge. Finally, some software changes user settings -- for example, overriding the user's intended choice of homepage." See, Congressional Record, February 26, 2004, at Page S1684.
He then explained that the bill would "establish a clear legal principle that you cannot cause software to be installed on somebody else's computer without that person's knowledge and consent. This general notice and consent requirement could be satisfied by something as simple as an on-screen dialogue box telling the user that clicking ``ok´´ will trigger the download of, say, a particular game program. In addition, the bill says that software must be capable of being uninstalled without resorting to extraordinary and highly technical procedures."
The bill contains three prohibitions. First, Section 2(a) provides that "It is unlawful for any person who is not the user of a protected computer to install computer software on that computer, or to authorize, permit, or cause the installation of computer software on that computer, unless ... the user of the computer has received notice ... the user of the computer has granted consent ... and ... the computer software's uninstall procedures satisfy the requirements" of the bill.
The bill then elaborates in detail the requirements for notice, consent and uninstall procedures.
The bill contains several exceptions pertaining to pre-installed software, software resident in temporary memory, and other software.
The bill also contains a subsection providing immunity from liability for passive transmission, web hosting, and hyperlinking.
On November 18, 2003, the Center for Democracy and Technology (CDT) released a report [14 pages in PDF] titled "Ghosts in Our Machines: Background and Policy Proposals on the ``Spyware´´ Problem". See also, story titled "CDT Releases Report on Spyware" in TLJ Daily E-Mail Alert No. 782, November 19, 2003.
The CDT report states that "Computer users are increasingly finding programs on their computers that they did not know were installed and that they cannot uninstall, that create privacy problems and open security holes, that can hurt the performance and stability of their systems, and that can lead them to mistakenly believe that these problems are the fault of another application or their Internet provider."
Other spyware related bills have been introduced. On July 25, 2003 Rep. Mary Bono (R-CA) and Rep. Edolphus Towns (D-NY) introduced HR 2929, the "Safeguard Against Privacy Invasions Act" introduced . This bill would prohibit the distribution of certain spyware programs over the internet without notice and consent. See, story titled "Rep. Bono Introduces Spyware Bill" in TLJ Daily E-Mail Alert No. 706, July 29, 2003.
S 2154 has been referred to the Senate Commerce Committee. All three original cosponsors are members.
Sen. Burns, Sen. Wyden, and Sen. Boxer also introduced S 2131, the "Controlling Invasive and Unauthorized Software Act", on February 26. This bill is almost identical to S 2145. S 2145 makes several minor changes, including the title of the bill. Staff for the sponsors told TLJ that S 2131 is an earlier version of the bill, that was introduced by mistake.
3/1. The Supreme Court denied certiorari, without opinion, in Cleveland v. Viacom, an antitrust case involving movie video rentals. See, Order List [10 pages in PDF] at page 3.
Ronald Cleveland, who does business as Lone Star Videotronics, is an independent video retailer. He competes with Blockbuster, Inc., which is a subsidiary of Viacom, Inc.
Blockbuster entered into a contract with the movie studios that provides it with more new release copy depth, thus improving its ability to provide its customers with movie videos on a timely basis.
Cleveland and other independent video retailers filed a complaint in U.S. District Court (WDTex) against Viacom, Blockbuster, and the home video affiliates of the seven major US movie studios, alleging violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and price discrimination in violation of the Robinson Patman Act, 15 U.S.C. § 13, and the California Unfair Trade Practices Act.
On the Sherman Act claim, the plaintiffs argued that there was a a horizontal conspiracy among the studios that was orchestrated by Blockbuster. They argued that at Blockbuster's instigation, the studio defendants conspired with each other to exclude independents from enjoying pricing terms similar to those provided to Blockbuster. They also argued that Blockbuster's separate agreements with the individual studio defendants constitute a series of vertical conspiracies to exclude independents from enjoying favored pricing arrangements.
The District Court granted summary judgment to defendants. The Appeals Court affirmed. And now, the Supreme Court has denied certiorari. See, 5th Circuit opinion [7 pages in PDF].
This case is Ronald Cleveland, et al. v. Viacom Inc., et al., No. 03-917, a petition for writ of certiorari to the U.S. Court of Appeals for the 5th Circuit.
2/26. The U.S. Court of Appeals (7thCir) issued its opinion [9 pages in PDF] in Indiana Bell Telephone Company v. Indiana Utility Regulatory Commission.
Indiana Bell Telephone Company, Inc. (which is now SBC Indiana), is both an incumbent local exchange carrier (ILEC), and a regional Bell operating company (RBOC). SBC Indiana sought permission to provide in region interLATA services in the state of Indiana, pursuant to 47 U.S.C. § 271. It initiated a proceeding before the Indiana Utility Regulatory Commission (IURC) to have it evaluate its compliance with Section 271.
However, in evaluating SBC Indiana's compliance with Section 271, the IURC also set up a process that allowed the competitive local exchange carriers (CLECs) to participate.
Several of the CLECs presented the IURC with proposed "performance assurance" or "remedy" plans to ensure SBC's performance toward the competing carriers and to provide for enforcement of the plan through liquidated damages payable to the competing carriers and assessments payable to Indiana. The participants reached no agreement, but, the IURC entered an order adopting a remedy plan of its own.
The IURC order provided that it was stand-alone document, that the IURC asserted was available to new entrants into the local service market, independent of the §§ 251 and 252 interconnection agreement process.
SBC Indiana filed a complaint in U.S. District Court (SDInd) against the IURC, and its commissioners, alleging that the IURC order conflicted with and was preempted by 47 U.S.C. §§ 251, 252, and 271 and that the order exceeds the IURC's authority under Indiana law.
The IURC argued that Indiana law gave it the authority to adopt the plan and to issue orders regarding the quality of service SBC provided.
The District Court granted summary judgment to SBC Indiana. The IURC, its commissioners, and AT&T and WorldCom (as intervenor), brought this appeal. The Appeals Court affirmed. It held that Section 251 and 252 preempt the IURC order.
It wrote that "What the IURC has done is to make an end run around the Act. By issuing its freestanding order, the IURC set up baselines for interconnection agreements. The order interferes with the procedures set out in the Act, which require that the agreements be negotiated between private parties, and only when that fails are they subject to mediation by state agencies. We find that the order of the IURC is preempted by sections 251 and 252 of the Act."
The Court relied upon its recent opinion [18 pages in PDF] in Wisconsin Bell v. Bie. See, "7th Circuit Holds State Cannot Substitute Tariff Filings for Negotiations to Set Prices and Terms for Interconnection" in TLJ Daily E-Mail Alert No. 717, August 13, 2003.
This case is Indiana Bell Telephone Company, Inc. v. Indiana Utility Regulatory Commission, et al., U.S. Court of Appeals for the 7th Circuit, No. 03-1976, an appeal from the U.S. District Court for the Southern District of Indiana, D.C. No. 02 C 1772, Judge Larry McKinney presiding.
2/26. Federal Communications Commission (FCC) Commissioner Jonathan Adelstein gave a wide ranging speech [5 pages in PDF] titled "Preserving the Public Interest in a Dynamic Telecommunications Industry".
One point that he made is that governors and state officials "are concerned about losing control" as a result of broadband deployment. "The days of easy-to-track point-to-point transmissions -- which enabled us to distinguish easily between intrastate and interstate services -- appear to be numbered, as tomorrow's digital packets will be routed dynamically through overlapping networks."
He also said that broadband is making possible "the outsourcing of jobs overseas", and that "Here within our borders, similar ``outsourcing´´ is shifting work from high-cost areas, often urban areas, to areas with lower costs of doing business, often less populated areas. I imagine that puts pressure on you to keep your tax rates and business climate as friendly as possible to remain competitive."
Adelstein also addressed universal service, voice of internet protocol, and the Pulver.com declaratory ruling.
Finally, he addressed the FCC's triennial review order. He said that he is "hopeful" that it will be upheld by the U.S. Court of Appeals (DCCir), and that he is "committed to defending the order strongly."
Adelstein spoke at a meeting of the National Governors Association in Washington DC.
1:00 PM. The House Judiciary Committee's Subcommittee on the Constitution will hold an oversight hearing on the Department of Justice's (DOJ) Civil Rights Division (CRD). The CRD occasionally takes actions that affect technology, such as asserting that the American's with Disabilities Act (ADA) applies to web sites, and that interactive computer services may be held liable for violation of various civil rights statutes for statements posted by others, notwithstanding 47 U.S.C. § 230(c)(1). Press contact: Jeff Lungren or Terry Shawn at 202 225-2492. The hearing will be webcast. Location: Room 2141, Rayburn Building.
3/1. The General Accounting Office (GAO) released a report [pages in PDF] titled "Information Security: Further Efforts Needed to Address Serious Weaknesses at USDA". The report finds that "Significant, pervasive information security control weaknesses exist at USDA, including serious access control weaknesses, as well as other information security weaknesses. Specifically, USDA has not adequately protected network boundaries, sufficiently controlled network access, appropriately limited mainframe access, or fully implemented a comprehensive program to monitor access activity. In addition, weaknesses in other information security controls, including physical security, personnel controls, system software, application software, and service continuity, further increase the risk to USDA’s information systems. As a result, sensitive data -- including information relating to the privacy of U.S. citizens, payroll and financial transactions, proprietary information, agricultural production and marketing estimates, and other mission critical data -- are at increased risk of unauthorized disclosure, modification, or loss, possibly without being detected.
3/1. President Bush submitted to the Congress a report titled "The 2004 Trade Policy Agenda and 2003 Annual Report of the President of the United States on the Trade Agreements Program". The Office of the U.S. Trade Representative (USTR) prepared the report.
3/1. The Supreme Court announced in its March 1 Order List [10 pages in PDF] that it will take a recess from Monday, March 8, 2004, until Monday, March 22, 2004.

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