| Court Rejects Settlement
Agreement in Private Antitrust Actions Against Microsoft |
1/11. The U.S. District Court (DMd),
Judge Frederick
Motz presiding, rejected the proposed Settlement
Agreement between Microsoft and plaintiffs in over 100
private antitrust class action lawsuits against it alleging
that it overpriced its products. Under the proposed Settlement
Agreement, Microsoft would have provided $1 Billion in cash,
training, support and software to over 12,500 public schools.
These cases may now be litigated.
Tom Burt, Deputy General Counsel for Microsoft, stated in a release
that "While we are confident that Microsoft ultimately
will prevail in these lawsuits, we are disappointed that we
have missed this opportunity to improve education for
disadvantaged children while resolving litigation ...
Microsoft went the extra mile to make this settlement work. We
sought input from educators to fully address issues regarding
the independence of the education foundation that was a key
part of the proposed settlement. We also made modifications to
the original agreement to ensure that schools would have the
option to use the software and platform of their choice.
Microsoft is always open to looking for reasonable ways to
resolve litigation. We will review the courts opinion and at
the same time move forward with the next steps in the
litigation".
In contrast, Ed Black, a Microsoft critic, and P/CEO of the Computer & Communications
Industry Association (CCIA), stated in a release
that "By attempting to buy their way out of legal trouble
with the ‘donation’ of Microsoft products and hardware to
schools, they sought only to leverage a market that had been
the one of the few Microsoft has struggled to dominate:
education." |
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| Appeals Court Affirms FCC
Broadband PCS Spectrum Auction Order |
1/11. The U.S.
Court of Appeals (DCCir) issued its opinion
in High Plains Wireless
v. FCC, affirming an order of the Federal Communications Commission
(FCC) regarding the auction of broadband PCS licenses. The
Appeals Court addressed several issues, including the FCC's
rule against collusion in auctions, standing to challenge FCC
auction orders, and the effect of ex parte communications by
Members of Congress.
Background. The FCC allocated 120 MHz of spectrum for
broadband personal communications services (PCS). It divided
the spectrum into blocks: three of 30 MHz each (known as the
A, B, and C blocks) and three of 10 MHz each (D, E, and F). It
also divided spectrum geographically. Licenses for the C, D,
E, and F blocks were established for each of 493 Basic Trading
Areas (BTAs). For example, the FCC established BTAs for both
Lubbock and Amarillo, Texas. The FCC then auctioned licenses
for use of this spectrum, with open (auction participants
became aware of each others' bids as they were cast),
simultaneous (all 493 BTAs were open for bidding at the same
time), and ascending auctions. The FCC also has an anti
collusion rule.
High Plains and Mercury (now known as Tritel Communications)
both sought broadband PCS licenses in west Texas. Both bid in
the FCC F block license auctions for Lubbock, and in the D and
F block auctions for Amarillo. High Plains was the successful
bidder for the F block license in Amarillo. Mercury was the
successful bidder for the F block license in Lubbock.
Reflexive Bidding and the Anti Collusion Rule. Mercury
used a bidding tactic known as reflexive bidding, in which it
sought to deter others from bidding in certain markets. It
communicated this by including the BTA numbers for specific
markets in its dollar bids. The FCC's BTA number for Lubbock
is 013; its BTA number for Amarillo is 264. Mercury placed
bids in which the last three numbers of bids for a license in
one market corresponded to the BTA for another market.
The Appeals Court wrote: "In one round of the auction,
for example, Mercury bid $1,375,013 on the F block license in
Lubbock, "013" being the BTA for Amarillo; after
High Plains bid again for the F block license in Lubbock,
Mercury bid $1,615,264 on the F block license in Amarillo,
"264" being the BTA for Lubbock. ... By repeatedly
thus encoding its bids, Mercury was able to warn High Plains
that if High Plains did not stop bidding, then Mercury would
drive up the price of the F block license in Amarillo. ... The
message was not lost on High Plains, which stopped bidding for
the F block license in Lubbock."
High Plains filed an emergency motion to disqualify Mercury
from the auction on the grounds that it violated the FCC's anti
collusion rule. The FCC did not rule on this
motion. High Plains later filed a motion to deny the award of
licenses to Mercury. The FCC granted licenses to Mercury.
The Court of Appeals wrote that the question of "whether
reflexive bidding violated the rule against collusion appears
to have been an unsettled -- indeed, an unasked -- question
before the DEF auction. In this circumstance it was not
unreasonable for the Commission to have deemed the rule
ambiguous with respect to whether reflexive bidding was
prohibited."
Ex Parte Communications by Members of Congress. At
least 27 Members of Congress inquired of the FCC about
Mercury's licenses and the delay in their award. The Appeals
Court wrote that the FCC's ex parte communications rule is
violated if communications are both "directed to the
merits or outcome of a proceeding" and "not served
on the parties." It wrote that since none of the
communications in this matter met both criteria, there was no
violation of the rule.
Standing. The Appeals Court also addressed whether or
not it had standing to hear this matter. The Appeals Court
held that High Plains had standing to challenge the award of
the F block license in Lubbock, because it had bid on that.
However, High Plains lacked standing to challenge the award of
licenses other than the F block license in Lubbock, on which
it had not bid.
Judge Douglas Ginsburg wrote the opinion of the Court
affirming the FCC. Judges Edwards and Sentelle joined. |
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| Federal Circuit Rules on
Priority in Patent Interferences |
1/11. The U.S.
Court of Appeals (FedCir) issued its opinion in Brown
v. Barbacid, an appeal from a priority decision
in a patent interference proceeding. A divided Appeals Court
reversed.
This is a case involving an interference between U.S.
Patent No. 5,185,248, of which Mariano Barbacid is an
inventor, and Squib is the assignee, and U.S. patent
application Serial No. 07/937,893, of which Michael Brown is
an applicant. Both the Barbacid patent and the Brown
application claim an assay for identifying new anti cancer
compounds that inhibit farnesyl transferase (FT), an enzyme
involved in the control of cell growth. The USPTO Board
of Patent Appeals and Interferences awarded priority to
Barbacid. The Appeals Court reversed. Judge Rader wrote the
opinion of the Court. Judge Newman dissented. |
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| Federal Circuit Rules in
HRT v. Astechnologies |
| 1/11. The U.S.
Court of Appeals (FedCir) issued its opinion in HR
Technologies v. Astechnologies, a patent
infringement action involving a process for preparing
glass fiber containing polymer sheet. H.R. Technologies (HRT)
filed a complaint in U.S. District Court (EDMich) against
Astechnologies alleging infringement of its U.S.
Patent No. 5,665,185. Astechnologies counterclaimed
alleging noninfringement, unfair competition in violation of
the Lanham Act, and various state claims. The District Court
dismissed without prejudice. Astechnologies appealed. It
sought dismissal with prejudice. The Appeals Court affirmed
the dismissal without prejudice. However, it reversed the
dismissal of Astechnologies' counterclaims. Hence, the
judgment of the District Court was affirmed in part, vacated
in part, and remanded. |
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| Third Circuit Affirms in In
Re Ikon Securities Litigation |
1/1. The U.S.
Court of Appeals (3rdCir) issued its opinion
in In
Re Ikon Office Solutions Securities Litigation,
a case involving scienter is class action securities
litigation.
This is a class action suit against Ernst & Young, the
accounting firm for Ikon,
alleging violation of § 10(b) of the Securities Exchange
Act, and Rule 10b-5 thereunder. Plaintiffs allege that Ernst
& Young issued an unqualified audit report approving
Ikon's financial statements for FY 1997 knowing that they
overstated pre-tax income or, even if Ernst & Young did
not have actual knowledge of the overstatement, it recklessly
performed its audit.
The U.S.
District Court (EDPa) granted summary judgment to Ernst
& Young on the grounds that plaintiffs failed to raise a
genuine issue of material fact with respect to two elements of
a prima facie 10(b) claim: scienter (that Ernst harbored an
intent to deceive or acted with reckless disregard for the
truth and accuracy of Ikon's financial disclosures) and
causation (that the inflated value of Ikon's stock price
dropped when the market reevaluated the security after a
corrective disclosure). The Appeals Court affirmed on the
issue of scienter. It did not address the issue of causation. |
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| Greenspan Addresses Effects
of Technology and Terrorism on Economy |
1/11. Federal
Reserve Board Chairman Alan Greenspan gave a speech
at the Bay Area Council Conference in San Francisco,
California, titled "The Economy". He stated that
"immediately prior to September 11, there were tentative
signs that some sectors of the U.S. economy had begun to
stabilize ..." However, "That hope was decisively
dashed by the tragic events of early September. Adding to the
intense forces weighing on asset prices and economic activity
before September 11 were new sources of uncertainty and risk
that began to press down on global demand for goods and
services."
Greenspan elaborated that recent economic weakness has
resulted in part from retrenchment in the technology sector.
"We had already observed a coincident deceleration in
activity among the world economies over the past year, owing
apparently, at least in part, to the retrenchment in the high
technology sector. The global nature of most technology
industries and the global reach of the capital markets in
which the firms in these industries are valued and funded
appears to have fostered a greater synchronousness in world
activity in this cycle, seemingly broader than has generally
been the case."
Now, Greenspan sees signs of economic stability, which he
attributes to the use of new information technologies. He
explained that "indications of stabilization, similar in
many respects to those observed in the period immediately
preceding September 11, have been appearing with greater
frequency. A possible significant contributor to this
emergence of stability -- if that is what it is -- may be the
very technologies that have fostered coincident global
weakness: those that have substantially improved access of
business decision makers to real time information."
He added that "Today, businesses have large quantities of
data available virtually in real time. As a consequence, they
address and resolve economic imbalances more rapidly than in
the past."
Greenspan also stated that "the evidence strongly
suggests that new technologies will present ample
opportunities to earn enhanced rates of return. Indeed,
anecdotal reports from businesses around the country suggest
that the exploitation of available networking and other
information technologies was only partially completed when the
cyclical retrenchment of the past year began. Many business
managers are still of the view, according to a recent survey
of purchasing managers, that less than half of currently
available new, and presumably profitable, supply chain
technologies have been put into use."
However, he also cautioned that "While these
opportunities remain abundant, they will now play out against
the backdrop of a major uncertainty that we all must deal with
these days -- the specter of further terrorist incidents on
American soil." |
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| SEC Official Addresses
E-Marketing and Data and Communications Backup |
1/10. Paul Roye, Director, Securities
and Exchange Commission's Division of Investment
Management, gave a speech
to the Practicing Law Institute in New York City titled
"Understanding Securities Products of Insurance
Companies". He addressed many issues, including the use
of the Internet to market variable products, and the need for
backup data and communications systems to ensure business
continuity if terrorists strike.
Internet Marketing. He stated that "the variable
products industry is characterized by innovative products and
rapid growth" and that "the internet is emerging as
a new distribution medium for variable insurance
products."
He continued that "Several firms are building annuity
supermarkets to service online investors and financial
advisers. These firms are not only providing educational
information, but access to variable products; in some cases,
allowing investors to compare several annuity contracts side
by side."
He also addressed "electronic only" variable
annuities, in which the offeror does not provide paper copies
of any document relating to the annuity contract.
Terrorism and Data and Communications Backup. Roye
stated that "the year's single most significant change
occurred on September 11th. ... Never again will we take our
security for granted. And never again will we turn a blind eye
to the threat of terrorism. Never again will the financial
services industry take its communications systems, its record
storage facilities and its back office infrastructure for
granted. September 11th heightened our awareness of the
importance, indeed the necessity, of having back-up systems
and disaster recovery/ business continuity plans in
place."
He also cautioned that "our Inspections Office has
committed to making contingency planning a focus of future
inspections. When they come knocking, our inspections staff
will ask for a copy of contingency plans and likely will ask
questions about alternative physical facilities, back-up
records storage and back-up communications systems." |
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| GAO Reports on Software
Acquisition Problems at DLA |
1/11. The General Accounting
Office (GAO) released a report [49
pages in PDF] titled "Information Technology:
Inconsistent Software Acquisition Processes at the Defense
Logistics Agency Increase Project Risks".
The GAO wrote that the Defense
Logistics Agency (DLA) "relies on software intensive
systems to support this work. An important determinant of the
quality of software intensive systems, and thus DLA's mission
performance, is the quality of the processes used to acquire
these systems."
The GAO concluded that the "DLA does not have mature
software acquisition processes across the agency, Moreover,
DLA does not have a software process improvement program in
place to effectively strengthen its corporate software
acquisition processes." The GAO report recommends
"establishing a framework for long-term institution
software process improvement."
The report was prepared for Sen.
Carl Levin (D-MI) and Sen.
John Warner (R-VA), the Chairman and ranking Republican on
the Senate Armed Services Committee, and Rep. Bob Stump (R-AZ)
and Rep. Ike Skelton
(D-MO), the Chairman and ranking Democrat on the House Armed Services
Committee. |
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| Qualcomm Asserts UWB
Prevents GPS Enabled PCS Phones from Reporting Location |
1/11. Qualcomm
submitted a statement
[25 pages in PDF] to the Federal
Communications Commission (FCC) in which it argued that
its tests show that ultra wideband (UWB) devices interfere
with the Global Positioning System (GPS) devices in GPS
enabled PCS phones, thus preventing them from complying with
E-911 requirements.
Qualcomm wrote that its tests show "that close proximity
of UWB devices to GPS enabled wireless phones will prevent the
location of wireless callers to 911 from being determined in
compliance with the Commission's E-911 mandate. The presence
of UWB emissions within the GPS spectrum significantly raises
the noise floor of the GPS sensor to the extent that it will
render the GPS device useless in reporting position
information to Public Safety Answering Points (PSAPs), and
hence it will not be possible to meet the safety of life
system requirements embodied in the Commission's E-911 rules
in the face of UWB emissions."
UWB devices, which use very narrow pulses with very wide
bandwidths, have potential applications in both radar and
communications technologies. This is ET Docket No. 98-253. |
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| FCC Applies Ban on
Unsolicited Faxes to Foreign Faxer |
1/11. The Federal
Communications Commission (FCC) released a Forefeiture
Order imposing a $1,107,500 fine against 21st Century Fax
for faxing unsolicited advertisements to consumers in
violation of the Telephone Consumer Protection Act (TCPA), 47
U.S.C. § 227, and FCC rules, 47 C.F.R. § 64.1200(a)(3).
See, FCC
release.
Section 227(b) provides that "... It shall be unlawful
for any person within the United States ... to use any
telephone facsimile machine, computer, or other device to send
an unsolicited advertisement to a telephone facsimile machine
..." 21st Century Fax argued that the statute did not
apply to it because its faxes originated in the United
Kingdom. The FCC wrote that "the term ``person´´ in
Section 227(b)(1) includes the individual who actually
performs the faxing as well as the corporate entity on whose
behalf he or she is acting." The FCC noted that 21st
Century Fax maintains offices, employees and agents in the
U.S., and hence, is "within the United States"
within the meaning of the statute.
21st Century Fax also argued that the TCPA violates the First
Amendment. The FCC rejected this argument, noting that the U.S. Court of Appeals
(9thCir) has ruled to the contrary. See, Destination
Ventures v. FCC, 46 F.3d 54 (1995). |
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| Commerce Committee
Investigates Andersen's Destruction of Enron Records |
1/11. Rep. Billy
Tauzin (R-LA) and Rep. James Greenwood
(R-PA) wrote a letter
to Andersen CEO Joseph
Berardino regarding "thousands of other responsive
documents [that] were knowingly destroyed by Andersen
employees working on the Enron engagement".
Rep. Tauzin is Chairman of the House Energy and
Commerce Committee. Rep. Greenwood is Chairman of the
Commerce Committee's Subcommittee on Oversight and
Investigations.
The letter requests information about Andersen employees who
have worked on the Enron audit engagement, information about
Andersen's destruction of paper and electronic records, and
copies of reconstructed or retrieved documents. |
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| Monday, Jan 14 |
9:30 AM. The U.S.
Court of Appeals (DCCir) will hear oral argument in Sinclair
Broadcast Group v. FCC, No. 01-1079. Judges Sentelle,
Rogers and Williams will preside.
9:30 AM. The U.S.
Court of Appeals (DCCir) will hear oral argument in COMSAT
Corp v. FCC, No. 00-1458. Judges Sentelle, Rogers and
Williams will preside.
10:30 AM. The American
Association of Motor Vehicle Administrators' (AAMVA) Task
Force on Identification Security will announce its
recommendations regarding the issuance of identification
cards, and the use of biometric data. For more information,
contact Jason King at 703 908-8287 or jking@aamva.org. See also, web
cast information. Location: Holeman Lounge, National Press
Club, 529 14th St. NW, 13th Floor, Washington DC.
1:30 PM. The U.S. International Telecommunication Advisory
Committee (ITAC) will hold a meeting. See, notice
in Federal Register, October 17, 2001, Vol. 66, No. 201, Page
52825. Location: State Department. |
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| Tuesday, Jan 15 |
8:30 AM - 5:00 PM. The North American Numbering Council
(NANC) will meet. Location: FCC, 445 12th Street, SW, Room
TW-C305 (Commission Meeting Room), Washington DC.
9:30 AM. The Communications
for Coordinated Assistance and Response to Emergencies
Alliance (Comcare) will hold a press conference to release
a report titled "The E-Safety Program -- Making Americans
Safer". For more information contact Alan Kitey at akitey@comcare.org or 202
429-0574. See, Comcare
release. Location: Zenger Room, National Press Club, 529 14th
St. NW, 13th Floor, Washington DC. |
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| Wednesday, Jan 16 |
8:30 AM - 5:00 PM. The North American Numbering Council
(NANC) may continue its meeting of January 15, if necessary.
Location: FCC, 445 12th Street, SW, Room TW-C305 (Commission
Meeting Room), Washington DC.
11:00 AM. The Cato Institute
will host a panel discussion titled "Closing 'Windows' on
Antitrust or Opening a New Era of Intervention? Competition
Policy after the Microsoft Settlement". The participants
will be Jeffrey Eisenach (Progress
and Freedom Foundation), Robert Levy (Cato), Kenneth Starr
(Kirkland & Ellis), Jonathan Zuck (Association for Competitive
Technology), and James Miller (Citizens for a Sound
Economy). A luncheon will follow. See, online
registration page. Location: Cato Institute, 1000
Massachusetts Avenue, NW, Washington DC. |
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| Thursday, Jan 17 |
| 9:30 AM. The Federal
Communications Commission (FCC) will hold a meeting that
will focus on a review of FCC policies and procedures by the
Commissioners and senior agency officials. There will be three
panel presentations. Panel One will include Chiefs of the Mass
Media Bureau, Cable Service Bureau and Common Carrier Bureau.
Panel Two will include the Chiefs of the Consumer Information
Bureau and the Enforcement Bureau. Panel Three will include
the Chiefs of the Office of Engineering and Technology, the
International Bureau, and the Wireless Telecommunications
Bureau. See, FCC
release. Location: FCC, Commission Meeting Room (Room
TW-C305), 445 12th Street, SW, Washington DC. |
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| People and Appointments |
1/11. President Bush announced his intent to appoint three
more Members of the President's National Security
Telecommunications Advisory Committee (NSTAC): Thomas
Casey (Global
Crossing), Christopher
Galvin (Ch/CEO of Motorola),
and Edward Whitacre (Ch/CEO of SBC Communications). See,
current list
of NSTAC Members. See also, White
House release.
1/11. President Bush announced his intent to nominate Donald
Prophete to be General Counsel of the Equal Employment
Opportunity Commission. He has been Senior Attorney and
Director of the Law Department for Labor and Employment for Sprint since 1997. See, White
House release.
1/8. Jay Alexander joined the law firm of Fulbright & Jaworski
as a senior counsel in the firm's Washington DC office. He
focuses on patent litigation matters involving satellite
communications, cellular telephones, semiconductor
manufacturing processes, computer software, and gene
sequencing. He previously worked in the Washington DC office
of the law firm of Kirkland
& Ellis. See, F&J
release.
1/7. Daniel Pascucci joined the San Diego office of the
law firm of Fish & Richardson
as a principal. He previously was a partner at Gray Cary Ware & Freidenrich.
He focuses on complex class action and technology litigation
involving telecommunications and Internet law. See, F&R
release.
1/7. Robert
Zinkham was named chairman of the Venable law firm's business
division, encompassing all of the firm's specialty business
practice subdivisions. See, release.
1/7. Patricia Russo was named P/CEO of Lucent Technologies. She
succeeds Henry Schacht who will become chairman. Russo most
recently was P/COO of Eastman Kodak Company. Before that, she
was one of the founding executives of Lucent when it was spun
off from AT&T in 1996. See, Lucent
release. |
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| More News |
1/11. The National
Telecommunications and Information Administration (NTIA)
published in its web site copies
[PDF and MS word] of the "NTIA Manual of Regulations
& Procedures for Federal Radio Frequency Management
(January 2000 Edition with January/ May/ September 2001
Revisions)".
1/11. The Drug Enforcement
Administration (DEA) published a notice
in the Federal Register of its intent to conduct performance
verification testing of public key infrastructure (PKI)
enabled controlled substance orders. See, Federal Register,
January 11, 2002, Vol. 67, No. 8, at Pages 1507 - 1508.
1/11. The Food and Drug
Administration (FDA) published a notice
in the Federal Register announcing the availability of the
guidance titled "General Principles of Software
Validation." This document provides guidance to medical
device manufacturers and FDA staff concerning requirements for
validating software used in medical devices, in device
production, or in implementing the manufacturer's quality
system. See, Federal Register, January 11, 2002, Vol. 67, No.
8, at Pages 1482 - 1488.
1/11. The U.S. Customs
Service announced that Space System/ Loral has agreed to
pay a $20 Million fine for allegedly passing licensable
technology to China to improve its missile guidance systems.
See, release. |
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