| Librarian of Congress
Rejects CARP's Proposed Rates for Webcasting |
5/21. The Librarian of Congress, at the recommendation of
the Register of Copyrights Marybeth
Peters, issued an order
rejecting the Copyright
Arbitration Royalty Panel's (CARP) February 20
determination proposing rates and terms for licenses in the
proceeding titled "In the Matter of Digital Performance
Right in Sound Recordings and Ephemeral Recordings".
On February 20, 2002, the CARP released its report
[143 pages in PDF] recommending rates and terms for the
statutory license for eligible nonsubscription services to
perform sound recordings publicly by means of digital audio
transmissions, also known as webcasting, pursuant to 17 U.S.C.
§ 114, and to make ephemeral recordings of sound
recordings for use of sound recordings under the statutory
license set forth in 17 U.S.C.
§ 112. May 21 was the deadline for the Librarian of
Congress to accept or reject the CARP's recommendation.
The CARP recommended that both webcasters and commercial
broadcasters pay a performance fee of 0.07¢ per performance,
and 9% of performance fees due, for simultaneous Internet
retransmissions of over the air AM or FM radio broadcasts. It
recommended that the performance fee be 0.14¢ per performance
and 9% of performance fees due for all other Internet
transmissions.
It further recommended that non commercial broadcasters pay a
performance fee of 0.02¢ per performance for simultaneous
Internet retransmissions of over the air AM or FM radio
broadcasts, and 0.05¢ for other Internet transmissions,
including up to two side channels of programming consistent
with the public broadcasting mission of the station.
At that time, record industry representatives complained that
the rates were too low, while webcasters said they were too
high. The May 21 order does not state the basis for rejecting
the CARP's recommendation.
The body of the order states, in full: "On February 20,
2002, the Copyright Arbitration Royalty Panel (CARP) reported
its determination to the Librarian of Congress in the above-
captioned proceeding. In accordance with 17
U.S.C. 802(f), the Librarian is given 90 days from date of
delivery of a CARP report to review the determination and
issue a decision setting forth the final royalty fee and terms
of payment. However, if the Librarian rejects the CARP's
determination, section 802(f) provides an additional 30 days
for the Librarian to render his final determination. The
Register of Copyrights recommends, and the Librarian agrees,
that the CARP's determination must be rejected. A final
decision will be issued no later than June 20, 2002."
The Recording Industry
Association of America (RIAA) responded in a release:
"The Librarian has rejected the arbitration panel’s
determination, but we do not know why or what decision the
Librarian will ultimately make based on the evidence
presented. Since both sides appealed the panel’s
determination, anything is possible. We look forward to the
conclusion of this process on June 20th, and to the day when
artists and labels finally get paid for the use of their
music."
John Simson of SoundExchange
stated in a release
that "Given the complexity of the issues, I am not
surprised by the Librarian's decision. I remain confident that
we can find creative solutions to enable webcasting to thrive
while providing recording artists and those who invest in
sound recordings a fair and equitable royalty in return. Over
the past three years, webcasters have paid for bandwidth,
rent, hardware, software and other business expenses. It is
time that they finally start to pay the Artists and record
companies whose creative output is the most important
component of their business." |
|
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| SEC Initiates Actions
Against Software Companies |
5/21. The Securities and
Exchange Commission (SEC) announced a series of civil,
administrative and criminal actions against former officers of
three northern California software companies in connection
with accounting practices. See, SEC release.
The SEC filed a civil complaint
in U.S. District Court
(NDCal) against David Malmstedt and Mark Huetteman, former
executives at Legato Systems,
alleging violation of federal securities laws for causing
Legato to recognize revenue on unconsummated
"sales". Legato is a Delaware corporation based in
Mountain View, California, that develops and markets software
for managing the data storage functions of computer networks.
The SEC also filed a civil complaint in U.S. District Court (NDCal)
against Unify Corporation,
and two of its former executives, Reza Mikailli and Gary Pado,
alleging violation of federal securities laws in connection
with the improper recognition of revenue. Unify is a software
company based in Sacramento, California, that manufactures and
sells database management software. See, SEC
release.
The SEC also filed a civil complaint in U.S. District Court (NDCal)
against Alan Anderson alleging violation of federal securities
laws for forging contracts, e-mails, purchase orders, letters,
and an audit confirmation in order to boost Quintus' financial
results. The SEC also announced that the U.S. Attorneys Office (NDCal)
has charged Anderson with one count of securities fraud. See, SEC
release.
In addition, on May 20, the SEC announced that it initiated
administrative proceedings against former officers of Legato
Systems, Quintus, and Unify for perpetrating financial
accounting frauds. See, SEC release.
See for example, Order
Instituting Public Cease and Desist Proceedings, Making
Findings and Issuing a Cease and Desist Order in its
proceeding titled "In the Matter of: Legato Systems, Inc.
and Stephen Wise". Stephen Wise was Legato's Chief
Financial Officer. |
|
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| 6th Circuit Rules in Domain
Name Dispute |
5/21. The U.S.
Court of Appeals (6thCir) issued its opinion
in Bird
v. Parsons, a case involving the application of
trademark, cyber squatting, and copyright law to the
registration of domain names. It affirmed the District Court's
dismissal for failure to state a claim.
Background. Darrell Bird brought this pro se case. He
has a computer software business named Financia, Inc. He
registered the tradename "Financia" with the U.S. Patent and Trademark Office
in 1984. He also holds the Internet domain financia.com. Marshall
Parsons registered the Internet domain "efinancia.com"
through the registrar, Dotster, which is also a defendant.
District Court. Bird filed a complaint in U.S.
District Court (SDOhio) against Parsons, Dotster, and
others, alleging trademark infringement, unfair competition,
and trademark dilution, in violation of 15 U.S.C. §§ 1114(1)(a),
1125(a),
and 1125(c),
respectively. He also alleged violation of the
Anticybersquatting Consumer Protection Act of 1999 (ACPA), 15
U.S.C. § 1125(d), and copyright infringement in violation
of 17
U.S.C. § 106. The District Court dismissed for failure to
state a claim, and lack of personal jurisdiction over certain
defendants.
Appeals Court. The Appeals Court ruled that the
District Court erred on the jurisdictional issue. However,
since the Appeals Court found that Bird had failed to state a
claim upon which relief can be granted on each of his
substantive claims, it affirmed the District Court.
The Court noted that the ACPA requires "a bad faith
intent to profit from that mark", and that Bird failed to
plead allegations amounting to bad faith by defendants. On the
copyright infringement claim, the Court stated that the text
that was copied -- financia -- is not only a single word, but
also lacks originality, and hence, is not entitled to
copyright protection. |
|
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| Spectrum Management and 3G
Services |
5/21. Steve Berry, SVP for Government Affairs at the CTIA, spoke at a luncheon
hosted by the Federal
Communications Bar Association's (FCBA) Young Lawyers
Committee in Washington DC. He stated that "one of the
more difficult problems that the wireless industry is facing
now ... is spectrum management".
He addressed the needs of the wireless industry for spectrum
for Third Generation (3G) services, which are intended to
bring broadband Internet access to portable devices. He said
that "we don't have a spectrum management process that is
designed for major movements of spectrum". He added that
"the NTIA
and FCC are really
good at managing that spectrum that they have", but not
at reassigning spectrum. He concluded that "our spectrum
management process is broken; it is not working, for major
realignments". He suggested that only the Congress will
be able to address spectrum for 3G services.
Nevertheless, Berry stated that the U.S. has the opportunity
to take the lead in 3G technology. He said that the Europeans
made mistakes by going to auction and "sucking capital
out of the market", and by setting technology standards.
Berry also offered some recommendations for procedural and
structural reform, such as creating an interagency senior
advisory group to facilitate decision making on controversial
spectrum matters, developing a rolling long term spectrum
planning process, and creating an independent review mechanism
similar to the Base Realignment and Closure Commission. |
|
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| DOJ & FTC Abandon
Merger Review Agreement Under Threat from Sen. Hollings |
5/20. The Department of Justice's (DOJ) Antitrust Division and
the Federal Trade Commission
(FTC) announced that they will not adhere to their Memorandum of
Agreement concerning clearance procedures for merger
reviews and other antitrust matters. The agreement attempted
to define, by industry, which transactions would be reviewed
by which agency. Both the FTC and DOJ have statutory authority
to conduct antitrust merger reviews. Sen. Ernest Hollings
(D-SC) threatened to retaliate through the appropriations
process if the DOJ and FTC did not drop the agreement. He is
Chairman of the Senate
Commerce Committee, which oversees the FTC, but not the
DOJ, and Chairman of the Senate
Appropriations Committee's subcommittee that passes the
appropriations bill for both the DOJ and FTC.
Charles James,
Assistant Attorney General in charge of the Antitrust
Division, stated in a release
that "The Department stands by its view that the
agreement was good public policy that was working to make
antitrust enforcement more effective. In fact, since the
agreement became effective, antitrust investigations were
being commenced within a matter of days, and there were no
clearance disputes between the agencies. However, in view of
the opposition expressed by Senator Hollings, Chairman of the
Commerce, Justice and State Appropriations Subcommittee, to
the agreement and the prospect of budgetary consequences for
the entire Justice Department if we stood by the agreement,
the Department will no longer be adhering to the
agreement."
The agreement stated that the FTC will have responsibility for
"Computer Hardware", which it defined as
"Matters involving computer hardware do not become
matters involving computer software, for purposes of this
allocation, merely because software is being shipped with the
hardware. In matters involving both hardware and software,
clearance will be determined on the basis of the market in
which the competitive effects being investigated are
predominantly likely to occur." The FTC would also have
been assigned transactions involving "Professional
Services" and "Satellite Manufacturing and Launch,
and Launch Vehicles".
The agreement assigned to the DOJ's Antitrust Division
transactions involving "Computer Software", which it
defined as "Matters involving computer software do not
become matters involving computer hardware, for purposes of
this allocation, merely because the software is being shipped
with hardware. In matters involving both hardware and
software, clearance will be determined on the basis of the
market in which the competitive effects being investigated are
predominantly likely to occur."
The agreement also gave the DOJ "Media and
Entertainment", which it stated "Includes cable
services, satellite services, television and radio
broadcasting, publishing, newspapers, magazines, movies, movie
theaters and upstream video distribution, advertising, music,
toys and games, gaming, and sports".
The agreement also gave the DOJ "Telecommunications
Services and Equipment", which it stated "Includes
set-top boxes, cable plant and related infrastructure,
satellite data and programming, communications infrastructure,
and telecommunications equipment (e.g., telephones, pagers,
switches, Internet backbone, telephone cable)".
Finally, the agreement assigned to the DOJ "Financial
Services/ Insurance/ Stock and Option, Bond, and Commodity
Markets" and "Defense Electronics".
Sen. Hollings objected to the allocation of the media and
entertainment industries to the DOJ. The DOJ's oversight
committee is the Senate
Judiciary Committee, not Sen. Hollings' Commerce
Committee.
On April 15, Federal Trade
Commission (FTC) Chairman Timothy Muris issued a statement
regarding statements made by Sen. Ernest Hollings
(D-SC). Muris stated that "A press report indicates that
Senator Ernest F. Hollings of the Senate Appropriations
Committee is considering suspending funding for the salaries
of all of the Commissioners and the senior staff of the
Federal Trade Commission. Although this step would not affect
the salaries of the vast majority of employees at the FTC, it
essentially would eliminate the Commission's ability to
enforce the laws under its jurisdiction. ... I am surprised
that Senator Hollings, being such a strong advocate of
consumer protection, would consider a measure that would
virtually eliminate the FTC's ability to protect
consumers."
The Computer &
Communications Industry Association (CCIA) praised the
decision by the DOJ and FTC to abandon their agreement,
although, for different reasons. The CCIA, which is a leading
proponent of government antitrust action against Microsoft,
objected to the DOJ handling all software related mergers.
See, CCIA
release. |
|
|
| House Passes Bill to Expand
Wiretap Authority |
5/21. The House passed HR 1877,
the Child Sez Crimes Wiretapping Act of 2001, by a vote of
396-11. See, Roll
Call No. 175.
This bill would amend 18
U.S.C. § 2516 to expand the list of predicate offenses
that may serve as the basis for the issuance of a wiretap
order. |
|
|
| FRB Governor Addresses
Technology, Privacy and Banking |
5/21. Federal
Reserve Board Governor Mark Olson
gave a speech
titled "A Look at the Banking Industry in 2002.
Olson stated that "The major driver of future change will
undoubtedly continue to be technological changes. With all the
changes in technology to this point, experts tell us we are
nowhere near the limits of technological improvement. As new
options become available, decisions regarding the use of
technology may be the most critical decision that bank
management will make. That banks first identify a business
strategy and then make technology decisions to support that
strategy has become increasingly critical. The range of
choices is not limited to large institutions. Even the
smallest institutions can offer real time online account
access to their customers and can have access to data on
customer profitability, which allows them to better develop
and price their products."
He continued that "Greater technological sophistication
has two other important ramifications for banks. First, it
allows your nonbank competitors to improve both the speed to
market and the quality of their financial products. Second, it
continues to concern customers who more and more ask for
assurances about the privacy of their financial information.
Privacy issues continue to be topics for potential state and
federal legislation. Though the banking industry is rightfully
concerned about the effects of these legislative initiatives,
it must remember that privacy is a political issue because it
reflects the genuine concern of bank customers. Providing the
assurance of financial privacy is a vital part of managing
technological change in the banking industry."
Olson spoke at the 107th Annual Convention of the Maryland
Bankers Association, Palm Beach, Florida. |
|
|
| People and Appointments |
| 5/17. Debra Yang was sworn in as the U.S. Attorney
for the Central District of California. See, release. |
|
|
| More News |
5/21. The U.S.
Court of Appeals (5thCir) issued its opinion
in David
Abrams v. Baker Hughes, a class action
securities case involving the pleading requirements of the Private
Securities Litigation Reform Act (PSLRA). The District
Court dismissed for failure to state a claim, on the basis
that the plaintiffs failed to adequately allege particularized
facts to establish the necessary element of scienter. The
Appeals Court affirmed.
5/20. The World Intellectual Property Organization (WIPO)
Phonograms and Performances Treaty (WPPT) entered into force
on May 20, 2002. See, WIPO
release.
5/17. The U.S.
District Court (EDVa) sentenced John Sankus to 46 months
in federal prison for conspiring to violate the criminal
copyright laws. Shankus was a was co-leader of the online
software piracy group known as DrinkOrDie. A co-conspirator,
Barry Erickson, was sentenced to 33 months in prison on May 2.
The Department of Justice's Computer
Crimes and Intellectual Property Section (CCIPS) announced
in a release
that "The sentences are the longest ever imposed for
organized Internet software piracy." The Software & Information
Industry Association (SIIA) praised the prosecutors. SIIA
release.
5/21. The U.S. Postal Service
(USPS) published a notice
in the Federal Register containing a proposed rule to require,
in most instances, that participants in USPS proceedings file
documents electronically over the Internet. The USPS requests
public comments by June 21 on this proposed rule -- on paper.
See, Federal Register, May 21, 2002, Vol. 67, No. 98, at Pages
35766 - 35774. |
|
|
|
| House Passes Dot Kids
Domain Bill |
5/21. The House passed HR 3833,
the Dot Kids Implementation and Efficiency Act of 2002, by a
vote of 406-2. See, Roll
Call No. 174.
The bill would require the Department of Commerce's National Telecommunications
and Information Administration (NTIA) to operate a .kids
second level domain within the .us country code domain.
Currently, the NTIA has contracted with NeuStar to act as the
registry of the .us country code.
The bill would amend the NTIA Organization Act, 47
U.S.C. § 902, to provide that "The NTIA shall
require the registry selected to operate and maintain the
United States country code Internet domain to establish,
operate, and maintain a second level domain within the United
States country code domain that provides access only to
material that is suitable for minors and not harmful to
minors".
The bill would also require that the registrar enter into
written agreements with registrants "to prohibit two-way
and multiuser interactive services in the new domain, unless
the registrant certifies to the registrar that such service
will be offered in compliance with the content standards ...
and does not compromise the safety or security of
minors."
Also, registrars would be required to enter into written
agreements with all users of the new domain "to prohibit
hyperlinks in the new domain that take new domain users
outside of the new domain." Thus, a web site in the new
domain could not hyperlink to children's web sites in the .com
domain.
The bill is sponsored by Rep. John Shimkus
(R-IL), Rep. Ed Markey
(D-MA), and 38 others. It was reported by the House Commerce Committee
earlier this year. Rep.
Billy Tauzin (R-LA), the Chairman of the Committee, stated
in a release that "This legislation will ensure that our
country's children will have safer experiences on the
Internet. We believe the '.kids.us' domain will be hugely
successful, and we hope that all parents will take advantage
of its benefits."
See also, TLJ story, "House Commerce Committee Approves
Dot Kids Bill," TLJ
Daily E-Mail Alert No. 408, April 11, 2002. |
|
|
| Wednesday, May 22 |
The House will meet at 10:00 AM for legislative business.
9:00 AM - 4:30 PM. The Antitrust
Division of the Department of Justice and the FTC
will hold another in their series of hearings on antitrust and
intellectual property. This event is titled "An
International Comparative Law Perspective on the Relationship
Between Competition and Intellectual Property, Part I".
The DOJ requires that attendees provide their name and date of
birth 24 hours in advance to Kathleen Leicht at kathleen.leicht
@usdoj.gov or 202 514-7018. For more information, contact
Gina Talamona in the Office of Public Affairs at 202 514-2007,
or Frances Marshall in the Antitrust Division at 202 305-2520.
See, FTC
notice. Location: Great Hall, Department of Justice, Main
Building, 950 Pennsylvania Avenue, NW.
9:00 AM. Microstrategy
will host a press breakfast on the "state of the
industry". For more information, contact Mark Brailov at
703 770-1670. Location: Murrow Room, National Press Club, 529 14th
St. NW, 13th Floor.
9:30 AM. The Senate
Commerce Committee will hold a hearing titled
"Promoting Local Telecommunications Competition: The
Means to Greater Broadband Deployment". Sen. Ernest Hollings
(D-SC) will preside. The scheduled witnesses will be Rep. Edward Markey
(D-MA), Loretta Lynch (California PUC), Robert Nelson
(Michigan PSC), Mary Jo White (Pennsylvania State Senator),
Paul Vassington (Mass. Dept. of Telecom. & Energy). Press
contact: Andy Davis 224-6654. Location: Room 253, Russell
Building.
10:00 AM. The House
Judiciary Committee's Subcommittee on Courts, the
Internet, and Intellectual Property has rescheduled its
hearing titled "The Accuracy and Integrity of the Whois
Database". Howard Beales, Director of the FTC's
Consumer Protection Bureau is scheduled to testify. Webcast.
Press contact: Jeff Lungren or Terry Shawn at 202 225-2492.
Location: Room 2141, Rayburn Building. This hearing has been
scheduled and postponed twice.
10:00 AM. The House
Science Committee will hold a meeting to mark up several
bills, including HR 4664,
the Investing in America's Future Act of 2002, and HR 3130,
the Undergraduate Science, Mathematics, Engineering and
Technology Improvement Act (Technology Talent Act of 2001).
Webcast. Press contact: Heidi Tringe at Heidi.Tringe
@mail.house.gov. Location: Room 2318, Rayburn Building.
1:00 - 5:00 PM. The FCC will host a
discussion of regulatory issues affecting broadband
deployment. At 1:00 PM, FCC Chairman Michael Powell and
Industry Canada's Michael Binder will speak. At 2:15 PM, FCC
Commissioners Kathleen Abernathy, Michael Copps and Kevin
Martin, FCC Wireline Competition Bureau Chief Dorothy Attwood,
and Michael Binder will speak on rural broadband. At 3:45 PM
Jeong Seon Seol, Information and Communications Counselor at
the Korean Embassy, and Simon Towler, Telecommunications
Attache at the British Embassy, will speak. See, FCC
notice [PDF]. For more information, contact Patricia
Cooper at 202 418-0723 or Linda Haller at 202 418-1408.
Location: FCC, 445 12th Street, SW, Commission Meeting Room.
1:30 - 3:30 PM. The FCC's WRC-03
Advisory Committee, Informal Working Group 7: Regulatory
Issues and Future Agendas, will hold a meeting. Location: FCC,
445 12th Street, SW, Room 7-B516 (7th Floor South Conference
Room).
2:30 PM. The Senate
Commerce Committee's Subcommittee on Science, Technology,
and Space will hold a hearing on the National Science Foundation
budget, focusing on federal research and development
activities. Location: Room 253, Russell Building.
Day five of a five day annual conference of the International Trademark
Association (INTA). See, agenda.
Location: Washington Convention Center, 900 9th Street NW.
Day one of a two day conference titled "The Forrester
Telecom Summit: The Impact Of Displacement". See, conference
web site. The price to attend ranges from $1295 to $1495.
For more information, contact events @forrester.com
or 1 888 343-6786. Location: Grand Hyatt Washington. |
|
|
| Thursday, May 23 |
The House will meet at 10:00 AM for legislative business.
9:30 - 11:45 AM. The Antitrust
Division of the Department of Justice and the FTC
will hold another in their series of hearings on antitrust and
intellectual property. This event is titled "An
International Comparative Law Perspective on the Relationship
Between Competition and Intellectual Property, Part II".
For more information, contact Derick Rill (FTC Office of
Public Affairs) at 202 326-2472 or Susan DeSanti (FTC Policy
Planning Division) at 202 326-2167. See, FTC notice.
Location: Room 432, FTC, 600 Pennsylvania Ave., NW.
10:00 AM. The Senate
Judiciary Committee will hold a business meeting. The
agenda includes a vote on Brooks Smith to be a Judge of the
U.S. Court of Appeals for the Third Circuit (held over from
last week), and consideration of S 1989,
The National Cyber Security Defense Team Authorization Act.
See, agenda.
Press contact: Mimi Devlin at 202 224-9437. Location: Room
226, Dirksen Building.
12:00 NOON. Congressional
Internet Caucus Advisory Committee will host a panel
discussion of online pormography, the Children's Online
Protection Act, and the National Academy of Science's report
to Congress titled "Youth, Pormography, and the
Internet." Lunch will be served. RSVP to rsvp @netcaucus.org or
call Danielle at 202 638-4370. Location: Room HC-5, Capitol
Building.
2:00 PM. The Senate
Judiciary Committee will hold a hearing on pending
judicial nominations: Lavenski Smith (to be a Judge of the
U.S. Court of Appeals for the Eighth Circuit), Henry Autrey
(U.S. District Court, E.D. Missouri), Richard Dorr (U.S.D.C.,
W.D. Missouri), Amy St. Eve (U.S.D.C., N.D. Illinois), Henry
Hudson (U.S.D.C., E.D. Virginia), and Timothy Savage
(U.S.D.C., E.D. Pennsylvania). See, agenda.
Press contact: Mimi Devlin at 202 224-9437. Location: Room
226, Dirksen Building.
2:15 PM. The Senate
Foreign Relations Committee will hold a business meeting
to consider many items, including the nomination of David
Gross to be Deputy Assistant Secretary of State for
International Communications and Information Policy in the
Bureau of Economic and Business Affairs and U.S. Coordinator
for International Communications and Information Policy.
Location: Room 419, Dirksen Building.
Day one of a two day conference titled "The Forrester
Telecom Summit: The Impact Of Displacement". See, conference
web site. |
|
|
| Friday, May 24 |
| The House will meet at 9:00 AM for legislative business. No
votes expected after 2:00 PM. |
|
|
| Monday, May 27 |
| Memorial Day. The House and Senate will not be in session
from Monday, May 27 through Friday, May 31, for the Memorial
Day District Work Period. The FCC will be closed. The National
Press Club will be closed. The Library of Congress will be
closed. |
|
|
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