Changes in Congress Cast Tech Fights in New Light

By Chris Nolan  |  Posted 2004-11-10

Changes in Congress Cast Tech Fights in New Light

The next session of Congress—with larger, newly elected Republican majorities on both sides of Capitol Hill—doesnt begin until January. But next week, lawmakers who have been in office for the past two years will head back to Washington for a "lame duck" session.

In these days of incumbent supremacy, its a bit of a misnomer to call the postelection session crippled in any way. Most of those serving will return, and the Republicans running the show this year will have more influence next year. They arent going to be shy about flexing their muscles.

One fight that doesnt look like much for tech could end up being a big deal. And another fight that was a big deal might quietly fade away.

The squabbling over the appointment of Sen. Arlen Specter (R-Pa.) to head the Senate Judiciary Committee is a symptom of the stresses at work within the Republican party. Specter isnt conservative enough for some. Hes pro-choice and his son is—gasp!—a trial lawyer, both of which are marks against him in a party with powerful members interested in appointing anti-abortion judges to the federal bench and reforming the nations tort law.

This is important for tech because way down on its list of things to do, the Senate Judiciary Committee oversees copyright law. And the chairman of that committee—currently Sen. Orin Hatch (R-Utah)—has a great deal of control over the way such legislation is treated.

To high-techs fury, Hatch has been a copyright fundamentalist. He works closely with Hollywood and its two big lobbying groups, the Recording Industry Association of America and the Motion Picture Association of America. Plenty of tech lobbyists are happy to see him leave the chairmanship.

From Hollywoods perspective, Specter is less reliable on copyright issues than Hatch is. But he got more than $300,000 from the movie people, according to the Center for Responsive Politics. That sounds like a lot, until you realize that Specter raised more than $2 million from lawyers and that the computer business is only credited with donating about $150 million to his campaign.

But there is nothing Hollywood loves more than a politician with campaign debt, and Specter, who fought a bruising primary earlier this year, has plenty of that. With fewer influential Democrats—Hollywoods traditional source of strength—in Congress, a moderate Republican such as Specter can find new friends fast.

Combine that with the strained circumstances within his party, and Specters taking of the judiciary chairmanship could spell trouble for tech, particularly on file-sharing and other copyright issues.

Next Page: "Caught between two streams."

Two Streams

The high-tech argument against legislation such as the "Induce Act"—which could make it a crime to permit someone to copy or file share—isnt one thats quickly grasped by those unfamiliar with the technology or the law. And that description, much to techs annoyance, covers most senators and their staffs.

"Hes going to be caught between two streams," one lobbyist who works against Hollywood says of Specter. "The property rights stuff on the one hand and the desire of some of his colleagues to champion consumer rights on the other."

The clubby Senate is where tech has been able to slow the passage of bills such as the "Induce Act," officially called the Inducing Infringement of Copyrights Act of 2004. Such legislation usually passes quickly through the House of Representatives, making the Judiciary Committee job more important this year.

If Specter doesnt get the job, a less experienced Judiciary Committee chairman might also spell trouble for tech. Hollywood is rich, powerful and popular, and it makes an argument—the protection of property—that has strong appeal for business-oriented Republicans. "I dont think [Specters] going to have a big consensus in favor of getting anything done," says the lobbyist.

Thats copyright. What about that other hot tech topic, expensing stock options? Well, the TechNet folks were right when they said the Federal Accounting Standards Board had gotten the message and wouldnt be coming down as hard or as fast on companies that didnt want to expense options.

FASB said in September that it would put off enforcement of the expensing requirement for six months.

That gives tech some breathing room, which is exactly what tech entrepreneurs and venture capitalists were looking for on Capitol Hill. It sounds strange—all of that noise and protest, and no law was passed—but sometimes such demonstrations, particularly before Congress, have just such an impact.

The outcome isnt exactly what was sought, but its good enough for now. And since tax reform is high on the Bush administrations agenda for the coming year, a six-month breather may be all thats necessary.

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