E-Commerce Law Week, Issue 498

House (Again) Passes FISA Bill without Retroactive Immunity; President (Again) Threatens Veto

On a largely party line vote, the House on March 14 passed an alternative to a Senate bill to amend the Foreign Intelligence Surveillance Act (FISA). The House vote came after representatives spent a late-night closed session debating the bill -- the House's first close session in a quarter century. President Bush has promised to veto the House bill, noting that, unlike the Senate version, it would not provide retroactive immunity for communications companies that cooperated with the government's warrantless surveillance program. Both the President and the Department of Justice have expressed their support for the Senate bill, claiming that companies will be reluctant to cooperate with the government's future surveillance efforts without retroactive immunity. For House lawmakers, this is déjà vu all over again. The House first responded to the Bush Administration's calls to make its stop-gap measure, the Protect America Act of 2007 (PAA), permanent last fall, when it passed legislation that did not provide retroactive immunity, despite the President's promise of a veto. After the Senate passed its bill in February, the House was again forced to address the issue of retroactive immunity and the other differences between its bill and the Senate's. Unable to resolve this impasse before the PAA's original sunset of February 1, House lawmakers first temporarily extended the Act, and then allowed it to expire. Now the House has again passed legislation that faces an uncertain future in the Senate, and is sure to draw a veto if passed by the full Congress. In any case, the outcome of the FISA fight will not be decided anytime soon -- Congress began its "spring break" on March 15 and is not scheduled to reconvene until the last day of March.

Can Software Developed For Government Still Be A Trade Secret?

According to a federal court in Louisiana, software developed exclusively with government funding may lose "trade secret" status even as against third parties, at least if the developer fails to take steps to maintain the secrecy of the source code. In L-3 Communications Westwood Corp. v. Robichaux, the plaintiff alleged that several of its former employees had inappropriately used code copied from company laptops to establish a competing defense contractor. L-3 claimed violations of several laws, including Louisiana's Uniform Trade Secrets Act. But the court found that the source code at issue was not a trade secret, since L-3 had granted the government unlimited rights to the software containing the code and had not used "efforts reasonable under the circumstances to maintain [its] secrecy." The upshot for companies that develop or sell software (or hardware) to the government is to make sure that they take all necessary steps in their contracts or other agreements with the government to identify and protect trade secrets.

EC Considers Trade Action Against US Over Internet Gambling

The European Commission announced on March 10 that it is investigating the impact of U.S. law on European Internet gambling providers. The EC's action was prompted by a complaint filed by the Remote Gambling Association (RGA), and will be handled within the framework of the EC's "Trade Barriers Regulation" process. According to an EC fact sheet, the RGA alleges that U.S. laws restricting Internet gambling, and their enforcement by the Department of Justice, discriminate against EU suppliers of Internet gambling services, in violation of Articles XVI (market access) and XVII (national treatment) of the General Agreement on Trade in Services (GATS). So, just as a similar dispute between the U.S. and Antigua and Barbuda is winding down, the U.S. could again find itself entangled in an international trade dispute involving its Internet gambling laws, only this time with a much more powerful adversary. As we've previously reported, the EC is also in the process of investigating several EU member states (including Greece, the Netherlands, France, Sweden, Denmark, Finland, Germany, Hungary, and Italy) for their own allegedly inconsistent treatment of foreign and domestic gambling operators. So with all its ongoing investigations, the EC could become the main engine for change in the world's restrictions on Internet gambling restrictions over the next year. Moreover, if the EC concludes that U.S. law has been "unclear" on the legality of Internet gambling, that finding could bolster the defenses of individual defendants (such as former BETonSPORTS CEO David Carruthers) caught up in the DoJ's online gambling dragnet.

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