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Digital business: Taxes, gambling, and piracy

Congress is trying to strike a legislative balance that will allow plenty of digital business without endangering copyrights or causing lost tax revenue.

    Digital business The commercialization of the Net hasn't avoided the regulatory eye of Congress. For example, a bill to federally outlaw online casinos is on the table. Strict penalties for those who distribute, reproduce, and sell illegal copies of digital music, video, or literature are being considered as well. But many lawmakers
    Legislation to watch Legislation to watch
    Signed into law Signed into law
    also want the high-tech and online industries to grow. One effort would shield Net access and services from new state and local taxes. And two appropriations bills doled out more money for telemedicine projects and education technology.


    Bills to watch Internet Gambling Prohibition Act
    Introduced by Sen. Jon Kyl (R-Arizona)

    Includes the Net under the federal Wire Act, which prohibits making or accepting wagers over telephone wires. States would not be allowed to permit online bets under the act. Operators could get a $20,000 fine and four years in prison for accepting just one cyber-wager, and a "casual bettor" would get a $2,500 fine and six months in prison for betting on the Net.

    Passed various Senate committees, now awaiting debate and a vote by the full Senate.

    Previous coverage
    •  Net gambling looks grim, October 23, 1997
    •  Rivals roll dice on Net gambling, August 28, 1997
    •  Net gambling called Pandora's box, July 28, 1997
    •  Virtual casinos bet big, July 11, 1997
    •  Gambling with the law, July 11, 1997


    Bills that have passed Software Equity Act
    Introduced by Rep. Jennifer Dunn (R-Washington) and Sen. Orrin Hatch (R-Utah)

    Cuts software exporters a tax break that was previously enjoyed by most other industries under the 1971 Foreign Sales Corporation statute, which gave U.S. manufacturers up to a 15 percent export tax exemption. Now software exporters can apply for the exemption, which Congress estimates could save them $1.6 billion over the next decade.

    Signed into law by President Clinton in August.

    Previous coverage
    •  Software gets export tax exemption, August 5, 1997
    •  Software tax break on table, February 12, 1997
    •  Tax break for software on Hill, January 8, 1997

    Bills to watch Internet Tax Freedom Act
    Introduced by Sen. Ron Wyden (D-Oregon) and Rep. Chris Cox (R-California)

    Places a six-year ban on states and localities passing new taxes specifically aimed at online access, e-commerce, and other Net services. The bill has moved forward despite ongoing opposition from U.S. mayors and some state lawmakers, who say the legislation takes away their right to tax and create new revenue streams.

    Passed by crucial committees in both the Senate and House; they are expected to vote on the bill early next year.

    Previous coverage
    •  Net Tax Freedom Act closer, November 4, 1997
    •  Net tax moratorium to committees, October 10, 1997
    •  Keeping the Net tax-free, July 1, 1997
    •  Mayors ding bill to ban Net taxes, June 25, 1997
    •  Net tax freedom bill debated, May 22, 1997


    Bills to watch No Electronic Theft Act
    Introduced by Rep. Bob Goodlatte (R-Virginia)

    Gives online pirates of software, music, video, or literature up to five years in prison and a $250,000 fine for a felony offense, which is defined as "willfully" making or possessing ten or more illegal copies with a retail value of $2,500 or more.

    Passed by Congress, awaiting action by President Clinton.

    Previous coverage
    •  Congress approves copyright bill, November 18, 1997
    •  Bill to make pirates walk plank, September 30, 1997

    Bills to watch WIPO Copyright and Performances and Phonograms Treaty Implementation Act
    Introduced by Rep. Howard Coble (R-North Carolina) and Sen. Orrin Hatch (R-Utah)

    Ratifies international treaties to protect copyrights in cyberspace. The United States signed the treaties at the World Intellectual Property Organization's diplomatic conference in Geneva, Switzerland, last December. One controversial provision would make it a crime to import, manufacture, or distribute technology, which could include PCs, that could be used to "circumvent" copyright protection devices.

    House subcommittee hearings held.

    Previous coverage
    •  Trademarks haunt domains, November 5, 1997
    •  Media moguls lobby for copyright bill, September 25, 1997
    •  Congress confronts copyrights, September 16, 1997

    Bills to watch Online Copyright Limitation Liability Act

    Exempts Net access providers and telephone companies from liability for their customers' copyright violations if the providers don't know about the illegal activity on their networks.

    House subcommittee hearings held.

    Previous coverage
    •  The CDA: Case closed, June 26, 1997
    •  Policing the Internet, December 13, 1996

    Digital Copyright Clarification and Technology Education Act
    Introduced by Sen. John Ashcroft (R-Missouri)

    Makes it illegal for Net users to circumvent anticopying technology that protects copyrighted material online. The bill also expands the fair use of a copyrighted work to include digital materials so that teachers, researchers, and libraries will not be in violation of the proposed law.

    Judiciary Committee hearings held.

    Previous coverage
    •  Johnny Cash sings copyright blues, September 17, 1997
    •  Congress confronts copyrights, September 16, 1997
    •  Copyright law revision urged, September 5, 1997
    •  Copyright bill splits PC industry, August 29, 1997
    •  Bill to take ISPs off copyright hook, July 18, 1997

    Digital Era Copyright Enhancement Act
    Introduced by Rep. Rick Boucher (D-Virginia) and Rep. Tom Campbell (R-California)

    This bill also implements the WIPO treaties. The proposal would make it a crime to break anticopying devices, but would not outlaw products that could be used to destroy copyright-protection devices. In addition, this act lays out more exemptions for libraries and distance-learning institutions regarding fair use and fair sale, so that downloading or sharing copies of protected online material that was purchased legally by someone else is not a crime for these entities. Finally, the bill overturns software makers' claims that by unwrapping their products or clicking past an online licensing agreement, end users have agreed to honor certain copyright stipulations.

    Previous coverage
    •  Shrinkwrapping the social contract, April 23, 1997
    •  Who owns information?, July 1, 1997
    •  Copyrights in classrooms, January 4, 1997
    •  Geneva treaty wins over skeptics, December 23, 1996
    •  Global copyrights on table, December 2, 1996

    Criminal Copyright Improvement Act
    Introduced by Sen. Patrick Leahy (D-Vermont)

    Amends existing copyright laws to include electronic piracy under existing criminal code.

    Referred to Senate Judiciary Committee.

    Previous coverage
    •  Bill to OK Net copyright treaties, July 30, 1997
    •  Software piracy rife in Latin America, May 23, 1997
    •  Piracy in Middle East, Africa still high, May 16, 1997
    •  Microsoft slams Lebanese piracy, May 13, 1997
    •  CNET Special Report: Crime on the Net, February 7, 1997

    Net Access

    Internet Protection Act
    Introduced by Rep. Rick White (R-Washington)

    Prohibits any new regulation targeted specifically at the Net, including any action by the Federal Communications Commission concerning Internet access providers.

    Referred to House Subcommittee on Telecommunications, Trade, and Consumer Protection.

    Next Generation Internet Initiative

    White House plan to create new applications for the Internet and develop networking technologies to improve communication among the nation's academic and research centers as well as federal agencies and the health care industry. NGI technology also promises to route data at 1,000 times the speed of today's Net, setting aside bandwidth so that huge packets of data can be transmitted in real time. The Clinton administration sought $100 million for the project for 1998; Congress allocated $95 million.

    Sent to President Clinton on October 21.

    Previous coverage
    •  Domain fund marked for next Net, October 14, 1997
    •  New Net may not get '98 funding, September 10, 1997
    •  Private dollars wanted for next Net, June 5, 1997

    Bills that have passed Technology Literacy Challenge Fund appropriation bill

    Earmarked $425 million of the Education Department's 1998 budget for education technology spending--more than doubling the 1997 budget. The one-year-old federal program allocates funds to states for hardware, software, and online access, but on the condition that localities work with private industry to turn out tech-savvy students. In addition, the part of the tech-literacy fund known as the Technology Challenge Grant Program will receive $116 million next year to distribute technology grants to low-income schools.

    Signed by President Clinton on November 13.

    Previous coverage
    •  Budget doubled for wiring schools, November 18, 1997
    •  Study tracks school tech use, November 12, 1997
    •  Wired schools: It takes a village, October 16, 1997
    •  School tech money may double, July 29, 1997


    Bills that have passed Balanced Budget Act

    Provides funding for a demonstration project that uses computers and networks to provide primary care and preventative services to diabetes patients in medically underserved rural and urban areas.

    Signed by President Clinton on August 5.

    Medicare Modernization and Patient Protection Act
    Introduced by Sen. Ron Wyden (D-Oregon)

    Reforms Medicare; calls for the creation of a Commission on Telemedicine to make recommendations regarding which telemedicine services should be covered by Medicare. In addition, it doles out benefits for telemedicine providers and Net access for physicians in rural areas who deliver medical information via electronic systems including videoconferencing to share patient records and diagnostic images.

    Referred to House Finance Committee.

    Previous coverage
    •  Bill backs telemedicine, March 7, 1997

    High-Tech Stocks

    Bills to watch Securities Litigation Uniform Standards Act
    Introduced by Rep. Tom Campbell (R-California)

    Moves all civil securities lawsuits under federal jurisdiction.

    Referred to Subcommittee on Finance and Hazardous Materials from the House Commerce Committee.

    Previous coverage
    •  High tech christens lobby group, July 8, 1997
    •  Shareholder suit nixed again, May 29, 1997
    •  Investor suits flood Valley, March 28, 1997
    •  Clinton flip-flops on litigation, August 8, 1996

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