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Tech Law Journal Daily E-Mail Alert
January 2, 2002, 9:00 AM ET, Alert No. 337.
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FTC Can Investigate Deceptive Internet Advertising in Securities & Commodities Businesses
12/28. The U.S. Court of Appeals (DCCir) issued its opinion in FTC v. Ken Roberts Co., holding that the Federal Trade Commission (FTC) has authority to investigate deceptive Internet advertising and marketing practices, notwithstanding the fact that such practices relate to securities and commodities trading regulated by the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC).
Background. The appellants, Ken Roberts Co., and others, sell instructional materials that purport to teach investors how to make money by investing in the commodities and securities markets. The Court noted that they "rely heavily on Internet advertising: their web sites feature grandiose claims about potential earnings by investors and testimonials from persons who have allegedly benefitted from Ken Roberts' instructional materials." The FTC, which has authority under the Federal Trade Commission Act to investigate unfair and deceptive trade practices, began to investigate appellants' practices. The FTC issued civil investigative demands (CIDs) requiring them to produce documents and respond to written interrogatories. They refused to comply. They argued that the FTC was precluded from investigating in this area because its activities fall under the authority of the CFTC and SEC, pursuant to the Commodity Exchange Act and the Investment Advisers Act.
Proceedings Below. Appellants filed an administrative petition with the FTC to quash the CIDs. The FTC rejected the petition. Appellants still refused to comply. The FTC then petitioned the U.S. District Court (DC) to compel enforcement. The District Court granted the petition. Appellants then filed the present appeal.
Appeals Court Holding. The Appeals Court affirmed. Judge Harry Edwards, writing for a unanimous three judge panel, rejected appellants' arguments: "Neither the Commodity Exchange Act nor the Investment Advisers Act evince an unambiguous intent to deprive the FTC of its otherwise applicable authority to investigate possibly deceptive advertising and marketing practices merely because those practices relate to either the commodities or the securities business."
USTR Imposes Prohibitive Duties on Ukraine for Failure to Protect IPR
1/2. The Office of the United States Trade Representative (USTR) published a notice in the Federal Register that it has determined to impose prohibitive duties on certain imports from the Ukraine in order "to obtain the elimination of the acts, policies, and practices of the Government of Ukraine that result in the inadequate protection of intellectual property rights". This action was taken as a result of the Ukraine's failure "to use existing law enforcement authority to stop the ongoing unauthorized production of optical media products and failure to enact an optical media licensing regime ..." The 100% duties cover fuel oil, fertilizers, cooper, aluminum, and other products. The duties take effect on January 23, 2002. See, Federal Register, January 2, 2002, Vol. 67, No. 1, at Pages 120 - 121.
DC Circuit Rules on Challenge to FCC 271 Order for OK/KAN
12/28. The U.S. Court of Appeals (DCCir) issued its opinion in Sprint v. FCC, a challenge to the FCC's approval of SBC's application to provide long distance service in the Oklahoma and Kansas. The Appeals Court did not overturn the FCC's order; however, it remanded the matter to the FCC for further proceeding on one issue. See also, PDF copy.
Background. 47 U.S.C. § 271, which was part of the bargain struck in the 1996 Telecom Act, provides that the Regional Bell Operating Companies (RBOCs) are allowed to provide in region interLATA service (i.e., long distance service) in a state once they have satisfied the FCC that they have opened up their facilities to their competitors in that state. SBC, the RBOC whose original territory includes Oklahoma and Kansas, filed a § 271 application for these two states on October 26, 2000. Various commenters opposed the application. The FCC issued an order granting that application on January 22, 2001. Sprint and other appellants filed a petitions for review of that order with the Court of Appeals, which were subsequently consolidated into this one case.
Issues on Appeal. Appellants made three arguments. First, they pointed out the low level of residential service being provided by competitive local exchange carriers (CLECs) in these states, and argued that the unbundled network element (UNE) rates could not have genuinely conformed to the cost requirement, or else competition would have flourished, or at least not proven so modest. The also argued that SBC's UNE rates were too high to provide profitable residential service, and hence, that SBC was engaged in a price squeeze -- the charging of prices for inputs that precluded competition from firms relying on those inputs. This argument concluded that the FCC could not find that authorization of its entry into the long distance market was "consistent with the public interest". Second, appellants attacked the FCC's findings that the UNE rates were cost based. Third, appellants argued that the FCC improperly relied on ex parte communications.
Appeals Court Holding. Judge Stephen Williams, writing for a unanimous three judge panel of the DC Circuit, wrote that the FCC "gave appellants' claim rather a brush-off" on the "public interest" aspect of the first issue. The Court concluded that "Because the Commission has offered an inadequate justification for why it thought that evidence of a "price squeeze" precluding profitable CLEC competition was irrelevant to its public interest analysis, we remand the case for reconsideration of that issue." The Court rejected the other two appeal arguments.
More Microsoft News
12/31. The states which have not joined in the settlement in the Microsoft antitrust cases brought by the Department of Justice and states filed an opposition to Microsoft's December 21 motion to delay the trial. Microsoft promptly filed a reply on December 31. This is Civil Action Nos. 98-1232 and 98-1233 (CKK), pending in the U.S. District Court (DC).
Friday, Jan 4
10:00 AM - 1:00 PM. The FCC's Network Reliability and Interoperability Council will hold a meeting. See, notice in Federal Register, November 13, 2001, Vol. 66, No. 219, at Page 56823. Location: FCC, Commission Meeting Room, Room TW-C305, 445 12th St. SW., Washington DC.
12:15 PM. The Federal Communications Bar Association's Wireless Telecommunications Practice Committee will host a luncheon. The speakers will be advisors to the FCC Commissioners: Peter Tenhula (Powell), Bryan Tramont (Abernathy), Paul Margie (Copps), and Monica Desai (Martin). The price to attend is $15.00. RSVP to Wendy Parish at wendy@fcba.org. Location: Sidley Austin Brown & Wood, 1501 K Street, NW Conference Room 6-E, Washington DC.
Deadline to submit oppositions and comments to the FCC in response to Cingular Wireless', Nextel's, and Verizon Wireless' petitions for reconsideration of certain provisions of the FCC's October 12 orders addressing and conditionally approving requests for waivers and approval of revised deployment plans for wireless Enhanced 911 (E911) services. See, FCC Notice. (CC Docket No. 94-102.)
Monday, Jan 7
10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Bowers v. Baystate Technologies, No. 01-1108. Location: Courtroom 402, 717 Madison Place, NW, Washington DC.
Deadline to resubmit comments with the U.S. Department of Justice (DOJ) regarding the proposed settlement in the antitrust case titled U.S. v. 3d Systems Corp. and DTM Corp. (D.C. No. 1:01CV01237). The original comment period closed on November 26, 2001. However, because of disruption of the U.S. Mail in Washington DC, the DOJ requests that comments be resubmitted. The deadline is 15 after publication of a notice in the Federal Register on December 21, 2001, which would fall on Saturday, January 5. See, notice in Federal Register, December 21, 2001, Vol. 66, No. 246, at Page 65992.
Tuesday, Jan 8

The Supreme Court will hear oral argument in Festo Corporation v. Shoketsu Kinzoku Koygo Kabushiki, No. 00-1543, a case regarding the doctrine of equivalents in patent law.
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