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January 28, 2002, 9:00 AM ET, Alert No. 355.
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Split Federal Circuit Allows Prosecution Laches Claim to Proceed
1/24. The U.S. Court of Appeals (FedCir) issued its opinion in Symbol Technologies v. Lemelson Medical, reversing a District Court order dismissing a prosecution laches claim in a patent declaratory judgment action. The Appeals Court held that the equitable doctrine of laches may be applied to bar enforcement of patent claims that issued after an unreasonable and unexplained delay in prosecution even though the applicant complied with pertinent statutes and rules. The ruling provides technology companies that produce things a further means for fighting submarine patents.
Background. This action pertains to numerous patents of defendant Lemelson Medical involving machine vision and automatic identification technology. Symbol Technologies and other plaintiffs design, manufacture, and sell bar code scanners and related products. In 1998, plaintiffs' customers began to receive letters from Lemelson stating that the use of the plaintiffs' products infringed various Lemelson patents. Lemelson claims priority based upon specifications that were originally filed as early as 1954. Plaintiffs assert unreasonable and prejudicial delay by Lemelson.
District Court. Plaintiffs filed two complaints in U.S. District Court (DNev) against Lemelson Medical and others pursuant to 28 U.S.C. § 2201(a) seeking declaratory judgments that the patents are invalid, unenforceable and not infringed by plaintiffs or their customers. In particular, plaintiffs asserted prosecution laches. The two suits were consolidated. The District Court dismissed the prosecution laches claim. This appeal followed.
Issue. The Appeals Court stated that "The sole issue on appeal is whether, as a matter of law, the equitable doctrine of laches may be applied to bar enforcement of patent claims that issued after an unreasonable and unexplained delay in prosecution even though the applicant complied with pertinent statutes and rules." Alternatively, stated in layman's terms, the question is whether the courts can, in the absence of applicable language in the Patent Act, prevent patentees from enforcing certain submarine patents.
Amici. The case attracted several amici curiae briefs, in support of the plaintiffs, and the notion of prosecution laches. For example, the Semiconductor Industry Association submitted a brief [PDF], along with the National Association of Manufacturers. They argued that "Unreasonable delay in the prosecution of a patent is pernicious because it allows an applicant to lie in wait for years, watching others invest in and develop a new technology, while secretly amending claims to cover it. Because those bringing the technology to market remain unaware of the submerged threat, they cannot factor it into their investment decisions or design around the still hidden claims. And once the applicant surfaces to demand payment, the targets may have little choice but to pay for a license rather than jeopardize their entire investment or undergo the costs of retooling or redesign."
The Intellectual Property Owners Association (IPO) filed a brief in which it argued that the courts have equitable power to deny enforcement to patents based on unjustifiable and prejudicial delay in prosecution. Likewise, the U.S. Chamber of Commerce filed a brief [PDF] siding with the plaintiffs in arguing for reversal. It argued that allowing enforcement of patents obtained by unreasonable and inexcusable prosecution delay unjustly penalizes users of matured technologies and unjustly rewards the patentee for the delay.
Appeals Court Holding. Judge Robert Mayer wrote the opinion of the three judge panel, in which Judge Raymond Clevenger joined. The Court wrote that the defense of prosecution laches finds its origin in two Supreme Court cases: Woodbridge v. U.S., 263 U.S. 50 (1923) and Webster Electric v. Splitdorf Electrical, 264 U.S. 463 (1924). The Court rejected the argument of Lemelson that Webster Electric and its progeny only apply to interference actins. The Court also rejected Lemelson's argument that the language and legislative history of the 1952 Patent Act preclude application of prosecution laches. The Court reversed the District Court and remanded.
Dissent. Judge Pauline Newman dissented strenuously. She wrote that "The Patent Act and implementing regulations authorize the filing of continuing applications provided that certain requirements are met. Heretofore, there has been no cause of action whereby a patentee who fully complied with the statute and rules must nonetheless defend the charge that he should have done more than the statute and rules require." She continued that "my colleagues on this panel have chosen to intervene, creating a new equitable cause of action called ``prosecution laches.´´  This judicial creation of a new ground on which to challenge patents that fully comply with the statutory requirements is in direct contravention to the rule that when statutory provisions exist they may be relied on without equitable penalty." She concluded that "It is inappropriate for this court, under the guise of equity, to change the law and adopt the position that was rejected by the Congress."
URAA. The problems associated with delay in patent prosecution have been reduced by the passage of the Uruguay Round Agreements Act (URAA). This statute, which was signed by former President Clinton on December 8, 1994, limits the duration of patents until 20 years after the filing of the initial application. However, there are still applications that have been pending since before passage of the URAA.
AAI Files Tunney Act Claim Against DOJ and Microsoft
1/24. The American Antitrust Institute (AAI) filed a complaint [PDF] in U.S. District Court (DC) against Microsoft and the Department of Justice (DOJ) seeking declaratory relief pursuant to 15 U.S.C. § 16(b), which is also known as the Tunney Act. The AAI seeks to compel Microsoft and the DOJ to disclose further information about their Proposed Final Judgment (PFJ). The AAI opposes the proposed settlement.
The Tunney Act provides, in part, that "Any proposal for a consent judgment submitted by the United States for entry in any civil proceeding brought by or on behalf of the United States under the antitrust laws shall be filed with the district court before which such proceeding is pending and published by the United States in the Federal Register at least 60 days prior to the effective date of such judgment."
The Act further provides that "the United States shall file with the district court ... a competitive impact statement which shall recite (1) the nature and purpose of the proceeding; (2) a description of the practices or events giving rise to the alleged violation of the antitrust laws; (3) an explanation of the proposal for a consent judgment, including an explanation of any unusual circumstances giving rise to such proposal or any provision contained therein, relief to be obtained thereby, and the anticipated effects on competition of such relief; (4) the remedies available to potential private plaintiffs damaged by the alleged violation in the event that such proposal for the consent judgment is entered in such proceeding; (5) a description of the procedures available for modification of such proposal; and (6) a description and evaluation of alternatives to such proposal actually considered by the United States."
The AAI complaint asserts that the DOJ's competitive impact statement must be amended "(1) to include an explanation of why certain remedies previously pursued by the Justice Department were abandoned; (2) to include an explanation of the Justice Department’s evaluation and comparison of  the remedies that are being pursued in the PFJ and the various alternative remedies that are not; and (3) to include an explanation of how the PFJ will affect private litigation".
Count I of the 16 page complaint seeks a declaratory judgment that the DOJ has made insufficient disclosures under the Tunney Act. Count II seeks a declaratory judgment that Microsoft has made insufficient disclosures. Count III seeks an injunction against the DOJ and Microsoft against proceeding with their proposed settlement.
FCC Official Addresses Broadband Policy
1/23. Kenneth Ferree, Chief of the FCC's Cable Services Bureau, gave a speech titled "How Do You Build The Information Superhighway?" at the Broadband Outlook 2002 Conference in Washington DC.
He addressed several issues, including open access. He stated that "it’s not entirely clear what the advantage of building a network is if it always is possible to use someone else’s. And, in a reverse chicken and egg problem, the ``someone else´´ that you are expecting to build the network might never come along because of the lack of an economic return on the investment in new facilities. ... So we have to be wary of accepting, without due and thorough consideration, apparently attractive propositions like ``open access.´´ "
Ferree also stated that "Another theory is that infrastructure deployment must first be ubiquitous, or nearly so, before we fret too much over adoption rates. This is the ``build it and they will come´´ approach to the broadband revolution. It also is a favorite among those who favor government subsidies for broadband deployment. The problem with this one is that it just does not appear to be so as a factual matter. By all accounts, a large majority of homes passed by cable, something like 70%, now have cable modem service available and almost half of qualified DSL homes have DSL service available. Nonetheless, few Americans are making the economic choice to subscribe to broadband services." He concluded, "And I don’t think it is any mystery as to why. The fact is that there are very few true broadband applications that would generate consumer demand today."
DAAG Kolasky Addresses IPR, Mergers and Antitrust
1/25. William Kolasky, Deputy Assistant Attorney General for the Antitrust Division of the Department of Justice, gave a speech titled "U.S. and EU Competition Policy: Cartels, Mergers, and Beyond" to the Council for the United States and Italy Bi-Annual Conference in New York, New York.
Intellectual Property. Kolasky addressed the relationship between intellectual property rights (IPR) and antitrust law. He stated that "intellectual property and antitrust laws share the common purpose of promoting innovation and enhancing consumer welfare." Also, "intellectual property should generally be treated just as any other property for purposes of the antitrust laws. A patent or a copyright gives the patent holder or copyright holder the right to exclude others from using its property just as a deed to land gives the landowner the right to keep trespassers off. In both cases, what antitrust cares about is the structure, conduct, and performance of the markets in which the property is used, not the existence of the property itself."
He stated that the Antitrust Division and the Federal Trade Commission (FTC) would hold hearings on IPR issues later this year. He said that the hearings would cover "the importance of intellectual property to businesses and innovation; competitive issues raised by the type and scope of patents issued, as well as by the procedures and criteria used during the patent examination process; the licensing of intellectual property; standard setting; competitive concerns raised by the settlement of patent disputes; comparative international treatment of many of these issues; and the role of the U.S. Court of Appeals for the Federal Circuit in developing antitrust law."
He also touched on differences between Europe and the U.S. on the essential facilities doctrine. He stated that "the European Commission appears to be taking a more expansive view than we do of the essential facilities doctrine, especially as it applies to intellectual property. In the United States, we have generally applied the essential facilities doctrine much more narrowly, believing that its overuse might reduce incentives to innovate and invest."
Merger Reviews. He asserted that Europe and the U.S. have an "excellent working relationship in reviewing the growing number of mergers that are notified in both jurisdictions." As for the dispute over the GE Honeywell merger, he said we "are eager to put that case behind us and move on, hoping it will prove to be an aberration."
He also discussed plans by the Antitrust Division and FTC to allocate industries. He said that "we are endeavoring to improve the functioning of the clearance process by which the FTC and we decide which agency will conduct particular investigations. Although the clearance process has generally functioned smoothly, the allocation of industries between the two agencies developed over the years in a somewhat ad hoc fashion along lines that in some cases no longer make sense given how those industries have evolved. This has resulted in too many instances of investigations being delayed by clearance disputes between the two agencies."
He did not list industries that would be allocated to each agency. He did state that "The proposed changes are currently being reviewed with the congressional committees that have oversight over our two agencies and will, hopefully, be completed soon."
Groups Oppose FTC and Antitrust Division Industry Allocation Plan
1/22. The Consumers Union and the Consumer Federation of America wrote a letter to Sen. Ernest Hollings (D-SC), the Chairman of the Senate Commerce Committee, regarding "the Bush administration's plans to transfer the oversight of media industry mergers from the Federal Trade Commission (FTC) to the Department of Justice (DOJ)".
These groups stated that "this jurisdictional gerrymandering seems to have been motivated more by politics and ideology than a desire to better serve the public. Such a move would be extremely detrimental to the public interest and to media consumers. We urge you to continue to do your utmost to persuade the administration to abandon its plans."
Bills Introduced
1/23. Rep. Tom Davis (R-VA), Rep. James Moran (D-VA), Rep. Jo Ann Davis (R-VA), and Rep. Frank Wolf (R-VA) introduced HR 3611, a bill to permit the closed circuit televising of the criminal trial of Zacarias Moussaoui for the victims of September 11th. It was referred to the House Judiciary Committee.
1/24. Sen. Jean Carnahan (D-MO) and Sen. Mark Dayton (D-MN) introduced S 1897, a bill to require prompt disclosure in electronic form of certain sales of securities. Sen. Carnahan explained her bill. "One warning sign that a company may be in trouble is when its executives are selling large amounts of company stock, as occurred at Enron. I have learned, however, that information about insider sales of stock is not easily accessible. Under our current system, a company's officers are required to file a disclosure form with the Securities and Exchange Commission, (SEC), any time they sell securities issued by their company. ... The paper disclosure forms are not easily accessible to the public. ... This is unacceptable in the electronic age. So today I am introducing legislation that requires information about insider sales of publicly traded companies to be filed electronically on the day of the sale." See, Congressional Record, January 24, 2002, at page S101.
1/23. Rep. Ed Markey (D-MA) introduced HR 3617, titled the "Accountability for Accountants Act of 2002", a bill to withdraw certain benefits of the Private Securities Litigation Reform Act (PSLRA) from auditors that perform non-audit functions. It was referred to the House Committee on Financial Services. See, Markey release.
People and Appointments
1/25. Maureen McLaughlin has been named Senior Counsel in the FCC's Office of Legal Counsel. She was previously Counsel and later Senior Counsel to the Senate Commerce Committee's Communications Subcommittee, where she worked on communications issues, e-commerce issues, and FCC oversight. Before that, she worked it the FCC's International and Wireless Telecommunications Bureaus. And before that, she worked for the law firm of Sheppard Mullin. See, FCC release [PDF].
1/25. Harry Wingo has been named Special Counsel in the FCC's Office of General Counsel. He previously worked for the law firm of Skadden Arps. He worked in the communications group, and focused on broadcast and satellite matters. Before law school, he graduated from the U.S. Naval Academy, and served for six years as a U.S. Navy SEAL officer. See, FCC release [PDF].
1/22. Sen. George Allen (R-VA) announced several changes to his legislative and communications staff, effective February 1. Paul Unger has been named Counsel and Legislative Director. Matt Raymond will be Communications Director and Senior Policy Advisor. Carrie Cantrell will be Press Secretary. All are current members of Sen. Allen's staff. Sen. Allen is a member of the Senate Commerce Committee, and its Communications Subcommittee. See, Allen release.
1/25. The Senate confirmed John Williams to be Chief Counsel for the Internal Revenue Service and an Assistant General Counsel in the Department of the Treasury.
1/25. The Senate confirmed Marcia Krieger to be a U.S. District Judge for the District of Colorado.
1/25. The Senate confirmed James Mahan to be a U.S. District Judge for the District of Nevada.
1/17. The Securities Industry Association (SIA) announced changes to its Board of Directors. Stephen Lessing, who is currently a board member, will replace Stanley O'Neal as Vice Chairman. Three new members of the board are David Denison, James Gorman and Seth Waugh. Lessing is Managing Director of Lehman Brothers Holding. Denison is President of the Institutional Brokerage Group at Fidelity Investments. Gorman is EVP of the U.S. Private Client Group at Merrill Lynch. Seth Waugh is CEO of Corporate and Investment Banking - Americas at Deutsche Bank Securities. See, SIA release.
1/23. Nacer Benjelloun Touimi, of Morocco, was named Senior Advisor to World Trade Organization (WTO) Director General Mike Moore. His function will include coordination within the Secretariat for promoting coherence. Moore stated in a release that "Coherence is about making sure technical assistance is delivered in the most effective way to those who need it most".
1/18. David Dorman resigned from the Board of Directors of the 3Com Corporation, effective immediately. He is President of AT&T Corporation. See, 3Com release.
1/24. Joe Ford will resign as CEO of Alltel, effective July 1. However, he will remain as Chairman of the Board of Directors. Scott Ford, who is currently Alltel's President and Chief Operating Officer, will become President and CEO, effective July 1. See, Alltel release.
1/25. Federal Communications Commission (FCC) Chairman Michael Powell left the hospital after a two night stay.
More News
1/25. Beyond.com filed a Chapter 11 bankruptcy petition. Beyond.com is a Santa Clara, California, based company that builds, manages and markets online stores for businesses. It also announced that "it has agreed to sell substantially all of its assets to Digital River, Inc." See, Beyond.com release.
1/25. The National Telecommunications and Information Administration (NTIA) released a report regarding alternative frequencies for use by state and local public safety agencies.
1/25. The Antitrust Division released a notice regarding its rules regarding delivery of Hart Scott Rodino premerger filings. It states that "Law firms or corporate counsel offices may now send these filings via express mail (i.e., FedEx, UPS, etc.) or 3rd party couriers to the following address: Premerger Unit, Antitrust Division, Patrick Henry Building, 601 D Street, N.W., Room 10-013, Washington, D.C. 20530". See, ATR release.
1/25. Randolph May, of the Progress and Freedom Foundation (PFF), released a paper [PDF] titled "A Scorecard for Evaluating Whether State Telecommunications Policies are Deregulatory and Pro-competitive". This paper provides "basis for scoring whether a state’s telecommunications policies are, in fact, "deregulatory" and "pro-competitive", or, whether, instead, they tilt too far in a "regulatory" and "anti-competitive" direction." However, it does not actually score the states. May is a Senior Fellow and the Director of Communications Policy at the PFF.
Monday, Jan 28
The House will not be in session.
The Senate will convene at 3:00 PM to resume consideration of HR 662.
Day one of the COMNET Conference & Expo. Location: Convention Center.
8:30 - 10:00 AM. The American Enterprise Institute (AEI) will host a press breakfast. AEI scholars will provide a retrospective on the first six years under the Telecom Act of 1996. RSVP to Veronique Rodman, Director of Public Affairs, at 202 862-4871 or vrodman@aei.org. Location: AEI, 1150 17th Street, NW, 11th Floor, Conference Room.
11:00 AM. The Congress Online Project will hold a media briefing to release a report titled "Congress Online: Assessing and Improving Capitol Hill Web Sites". Location: Room 2318, Rayburn House Office Building.
11:00 AM. The Information Technology Association of America (ITAA) Tax Committee will hold its monthly meeting. RSVP as admission to the building is controlled. Contact Amy Zemp at (703) 284-5304 or Bartlett Cleland at bcleland@itaa.org. See also, online registration page. Location: AOL Time Warner, 2nd floor, 800 Connecticut Ave., NW.
12:00 NOON. Deadline to submit comments to the Office of the United States Trade Representative (USTR) regarding the operation and effectiveness of the World Trade Organization (WTO) Basic Telecommunications Agreement, the telecommunications provisions of the North American Free Trade Agreement (NAFTA), and other telecommunications trade agreements. This request for comments is pursuant to an annual review of telecom agreements required by Section 1377. See, notice in the Federal Register, December 27, 2001, Vol. 66, No. 248, at Pages 66963 - 66964.
3:00 PM. The Embassy of Ireland will host a press conference titled "Ireland's 3G". There will be a reception at 5:00 PM. For more information, contact Deirdre Fannin at 202 265-6497. Location: First Amendment room, National Press Club, 529 14th St. NW, 13th Floor.
3:00 PM. Procomp will hold a press conference. For more information, contact Paul Skowronek at 973-2913. Location: Murrow Room, National Press Club, 529 14th St. NW, 13th Floor.
Tuesday, Jan 29
The House will meet at 12:30 PM for morning hour and 2:00 PM for legislative business.
The House and Senate will meet in joint session at 9:00 PM to hear President Bush deliver the State of the Union Address.
Day two of the COMNET Conference & Expo. Location: Convention Center.
Wednesday, Jan 30
The House will not be in session. (The Republican retreat is being held on January 30 and 31.)
Day three of the COMNET Conference & Expo. Location: Convention Center, Washington DC.
Day one of the 2nd Annual Privacy & Data Security Summit, sponsored by the International Association of Privacy Officers. See, online brochure [PDF]. Location: Hyatt Regency Washington, 400 New Jersey Ave., NW.
8:45 AM - 3:45 PM. The National Institute of Standards and Technology (NIST) Advanced Technology Program Advisory Committee will hold a partially closed meeting. See, notice in Federal Register. Location: NIST, Administration Building, Employees' Lounge, Gaithersburg, MD.
9:00 AM. The Global Business Dialogue will host a press conference on the Foreign Sales Corporation (FSC) tax regime. For more information, contact Judge Morris at 202 463-5075. Location: First Amendment Room, National Press Club, 529 14th St. NW, 13th Floor.
POSTPONED TO FEB 6. 10:00 AM - 12:00 NOON. The FCC's Advisory Committee for the 2003 World Radiocommunication Conference (WRC-03) will meet. Location: FCC, 445 12th Street, SW, Room TWC305 (Commission Meeting Room). See, FCC notice of postponement [PDF].
12:15 PM. The Federal Communications Bar Association's Cable Practice Committee will host a luncheon. The speaker will be Stacy Robinson, Mass Media Legal Advisor to FCC Commissioner Kathleen Abernathy. The price to attend is $15. RSVP to Wendy Parish at wendy@fcba.org. Location: National Cable & Internet Association, 1724 Massachusetts Ave., NW.
Thursday, Jan 31
The House will not be in session. (The Republican retreat is being held on January 30 and 31.)
Day two of the 2nd Annual Privacy & Data Security Summit, sponsored by the International Association of Privacy Officers. See, online brochure [PDF]. Location: Hyatt Regency Washington, 400 New Jersey Ave., NW. Highlights include:
 • 8:15 AM. Howard Beales (Director of the FTC's Bureau of Consumer Protection) will speak on "Privacy Regulation and the Federal Trade Commission".
 • 8:45 AM. Phillip Bond (Undersecretary for Technology, Department of Commerce) will speak on "Privacy and Commerce".
 • 9:15 AM. Amy Friend (Office of the Comptroller of the Currency) will speak on "Privacy and Financial Affairs".
 • 9:45 AM. Kathleen Fyffe (Department of Health and Human Services) will speak on "Healthcare Privacy, Security and HIPAA Compliance".
 • 10:15 AM. Daniel Collins (Chief Privacy Officer of the Department of Justice) will speak on "Prosecuting Privacy Violations".
 • 12:30 PM. Keynote Panel titled "Privacy in America Following the Terrorist Attacks on the World Trade Center and the Pentagon". The participants will be Agnes Scanlan (CPO of FleetBoston Financial), Gary Clayton (Chairman of the Privacy Council), James Harper (Privacilla.org), John Kamp (Wiley Rein & Fielding), Mark Rotenberg (EPIC), David Stampley (AAG, Internet Bureau, Office of the NY Attorney General), Zoe Strickland (CPO of the USPS), Bruce Johnson (Davis Wright Tremaine).
10:00 AM - 12:00 NOON. The Information Technology Association of America (ITAA) Telecommunications Committee will meet. For more information, contact Thomas Vincent at tvincent@itaa.org. Location: ITAA, 1401 Wilson Blvd., Suite 1100, Arlington, VA.
12:30 PM. John Browne, the Director of the Los Alamos National Laboratories, will speak at a luncheon. Location, Ballroom, National Press Club, 529 14th St. NW, 13th Floor.
12:30 - 2:00 PM. The Federal Communications Bar Association's International Practice Committee will host a brown bag lunch with FCC Commissioner Kathleen Abernathy. Location: FCC, 445 12th St, SW, 8th Floor, Conference Room 1.
1:00 - 3:30 PM. The FCC's WRC-03 Advisory Committee, Informal Working Group 7: Regulatory Issues and Future Agendas, will meet. Location: The Boeing Company, 1200 Wilson Boulevard, Arlington, VA. (This is near the Rosslyn Metro station.)
7:00 - 8:00 PM. There will be a panel discussion titled "The State of Online Journalism" featuring Rich Jaroslovsky (Wall Street Journal) and Doug Feaver (Washington Post). Location: National Press Club, 529 14th St. NW, 13th Floor.
Friday, Feb 1
The House will meet at 10:00 AM in pro forma session only.
Day three of the 2nd Annual Privacy & Data Security Summit, sponsored by the International Association of Privacy Officers. See, online brochure [PDF]. Location: Hyatt Regency Washington, 400 New Jersey Ave., NW.
12:30 PM. The Federal Communications Bar Association will host a luncheon. The speaker will be FCC Commissioner Kevin Martin. There will be a reception at 12:00 NOON. The price to attend is $45 for FCBA members, $35 for government and law student members, and $55 for non-members. Registrations and cancellations due by 5:00 PM on Tuesday, January 29. To register, contact Wendy Parish at wendy@fcba.org. Location: Capital Hilton Hotel, 16th & K Streets NW.
12:30 - 2:00 PM. Harold Furchtgott-Roth will give a speech titled "A Tough Act to Follow: The Telecommunications Act of 1996". To register, contact Linzey Powers at lpowers@aei.org. Location: American Enterprise Institute, Twelfth floor, 1150 Seventeenth St., NW.
Deadline to submit comments to the Federal Election Commission (FEC) in response to its requests comments on the second draft of the revisions to the 1990 national voluntary performance standards for computerized voting systems and the first draft of the revisions to the 1990 national test standards. See, notice in Federal Register.
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