Taxes
Differences Over Length Of Tax Ban Prompt Delay
     The Senate Commerce Committee this week pulled from consideration legislation that would extend the federal ban on taxing Internet access. The move occurred amid rancor over whether the moratorium should be extended temporarily or permanently, and after panel Chairman Daniel Inouye, D-Hawaii, appeared to have brokered a compromise. Inouye and other committee Democrats have settled on a six-year continuation, but not all Republicans have agreed. The bill that was scheduled for debate calls for a four-year ban. Technology industry groups and companies have been lobbying for a permanent remedy, arguing that certainty is needed to foster infrastructure investment and encourage consumer adoption of the technology. Several sellers on the eBay online auction site traveled to Capitol Hill on Thursday to lobby for the Internet tax ban and other tax issues. Top administration officials also called for a permanent extension of the moratorium.

On The Hill
Bill To Create Media 'Shield' Stalls In Senate Panel
     A bill that would prevent journalists from being prosecuted for protecting confidential sources stalled in the Senate Judiciary Committee after Arizona Republican Jon Kyl said the language could undermine national security. Committee Chairman Patrick Leahy, D-Vt., expressed reluctance about delaying action on the "shield" bill but said, "I think we can work through it." The House Judiciary Committee approved a companion bill in August that would explicitly extend the journalistic shield to bloggers. The Senate legislation and several amendments do not specifically cite bloggers. The bill includes exceptions so law enforcers can obtain information from reporters in investigating crimes or national security threats, which co-sponsor Charles Schumer, D-N.Y., said makes it a balanced proposal. Kyl disagreed, saying the standards for protecting certain classified communications would be too loose.

Intellectual Property
Vonage Loses Second Patent Ruling In Two Days
     A three-judge panel of the Federal Circuit Court of Appeals struck a blow against the Internet telephone firm Vonage by affirming that the company infringed on several Verizon Communications patents. The court granted a permanent injunction against Vonage but vacated the $58 million damages award imposed by a lower court. The injunction was stayed pending appeal. The ruling upheld a U.S. district court's infringement finding for two patents but concluded that the court improperly construed one of the disputed terms in a third patent. The panel vacated that ruling and requested a new trial. The ruling came a day after a federal jury ordered Vonage to pay $69.5 million in a separate case involving Sprint Nextel patents. In other court news, pending cases against bloggers in Texas and Pennsylvania may affect the boundaries of free speech on the Internet.

Courts
Supreme Court To Weigh Net Porn, Securities Fraud
     The Supreme Court is prepping for a new term that begins next week and has agreed to hear some cases of interest to the high-tech community. Among other issues, the court will address the constitutionality of a 2003 child-protection law. In that case, a Florida man who was convicted of promoting child porn had the decision reversed by the 11th U.S. Circuit Court of Appeals. The man was arrested as part of an undercover sting in which he swapped non-pornographic images on the Internet with someone whom he believed was a minor. The appeals court ruled that a law criminalizing the distribution of material that is believed to be child porn even if it is clean is overly broad. Supreme Court watcher Tom Goldstein expects the justices to narrowly agree. In another case, the high court is being asked to determine whether defrauded investors can recover money from third parties.

Antitrust
Senator Sees High Stakes In Google, DoubleClick Plan
     Google's proposed $3.1 billion bid for the DoubleClick online advertising firm underwent its first round of congressional scrutiny when a Senate panel heard from fans and foes of the planned acquisition. Critics argue that the deal raises serious competition and privacy concerns. Senate Judiciary Antitrust Subcommittee Chairman Herb Kohl, D-Wis., said in opening remarks that "the stakes for our society and the increasingly Internet-based economy are very high." David Drummond, the Internet search giant's top lawyer, told lawmakers that the merger actually will promote competition. "Numerous independent analysts" have found the pairing to be a combination of complementary businesses, he said in written testimony. "DoubleClick is to Google what FedEx or UPS is to Amazon.com." But Brad Smith, Microsoft's general counsel, argued that the merger could mean higher prices for advertisers, lower revenues for Web sites that serve ads, and poorer quality content for consumers. Also on the antitrust front, former FTC Chairman Robert Pitofsky said a European ruling against Microsoft went too far.

Television
GOP Regulators Defend Their Work On Digital TV
     Republican regulators tasked with overseeing the nationwide rollout of digital television signals fiercely rejected criticism that they lack coordination and vision. "Congress has provided that different government agencies have different responsibilities," FCC Chairman Kevin Martin said, adding that the National Telecommunications and Information Administration and his agency will "respond to the authority that Congress has given us." The accusation was made last week by an investigator with the Government Accountability Office. NTIA chief John Kneuer added that a single government entity dictating public educational efforts would dissuade industry groups from voluntarily running public-service advertisements. The regulators spoke at an NTIA meeting designed to promote the shift from analog to digital signals. But the forum also exposed some potential shortcomings, including the fact that industry stakeholders have not produced TV ads explicitly mentioning an NTIA coupon program for analog-to-digital converter boxes.

E-Commerce
Cigarette Giant Goes After Some Internet Operators
     A leading cigarette manufacturer has filed two federal lawsuits against Internet operators for allegedly violating a 2000 law on the importation of cigarettes and skirting tax laws. According to Philip Morris USA, some Internet-based cigarette vendors have been illegally selling imported cigarettes with Philip Morris trademarks. The company accused the Web sites of failing to comply with applicable tax laws as well. Philip Morris made the allegations in lawsuits filed last week in a U.S. district court in New York. The defendants are the owners or operators of www.cigmall.net, www.paylessmoke.com and related Web sites. The company said the illegally imported cigarettes include the popular Marlboro trademark. Philip Morris "pursues numerous strategies to address the sale of illegally imported, counterfeit, stolen, and untaxed or under-taxed cigarettes," according to a statement.