| District Court Grants
Summary Judgment to Prodigy in Patent Infringement Case |
8/22. The U.S.
District Court (SDNY) issued its Memorandum
and Order Granting Summary Judgment [27 pages in PDF] in
British Telecom v. Prodigy granting summary judgment to Prodigy. This is a case
brought by British Telecom
(BT) to test whether it can assert, based on a 1989 patent,
that it has patented hyperlinking and web browsing on the
Internet. The Court rejected this assertion.
BT asserted in its complaint
filed on December 13, 2000, that its U.S.
Patent No. 4,873,662, titled "Information handling
system and terminal apparatus therefor", also known as
the "Sargent patent", covers hyperlinking and web
browsing. It alleged that Prodigy infringed that patent
directly by being an Internet Service Provider (ISP), and that
it induced and contributed to patent infringement by its
subscribers.
The District Court held "that as a matter of law, no jury
could find that Prodigy infringes the Sargent patent, nor that
Prodigy contributes to infringement of the Sargent
patent".
While the sole defendant is Prodigy,
the case was brought to test the validity and enforceabilty of
its patent against a broad array of web related entities and
individuals. Prodigy is just one of thousands of ISPs.
BT's complaint alleges that by maintaining "a web server
which stores plural blocks of information, i.e. web pages, at
locations of a storage medium, such as a disk" and by
including in these web pages both "a displayed
portion" and "an undisplayed portion with hidden
information that is not seen by the user" which includes
"addresses associated with the displayed portion",
Prodigy is infringing BT's patent.
BT sought declaratory relief that its patent is valid and
enforceable, that Prodigy has directly and contributorily
infringed, and induced infringement, of the patent, and
enjoining Prodigy from further infringement. BT also sought
damages, costs, and attorney fees.
Prodigy, which is now a subsidiary of SBC Communications, asserted
the defenses of non-infringement and invalidity.
On March 13, 2002, the District Court issued its Opinion
and Order Following Markman Hearing [38 pages in PDF]. It
concluded that BT's patent describes a system in which
multiple users, located at remote terminals, can access data
stored at a central computer.
The Court held in its August 20 opinion that there are several
reasons why the BT patent is not infringed by Prodigy or its
subscribers. First, it distinguished between accessing data
from a central computer, as described by the BT patent, and
accessing information from the Internet. It also distinguished
between accessing blocks of information, as described by the
BT patent, and accessing information on the Internet. Finally,
it distinguished between complete addresses, as described by
the BT patent, and virtual addresses used on the Internet.
The Court wrote that "The Internet is a network of
computers intertwined with each other in order to allow users
around the world to exchange information. The whole purpose of
the Internet is for the sources of information to be in
many places rather than centralized. Any user can retrieve
information that is stored on a Web server in any physical
location, as long as that server is connected to the Web. ...
This ``network of networks´´ or ``system of systems´´
allows users access to information from a variety of sources,
in any location. BT cites the general rule that addition to an
accused apparatus of one or more features than the claim
requires does not preclude a finding of infringement. But what
BT characterizes as ``additions´´ are fundamental
differences in the nature of the claim elements. As it did
during the Markman hearing, BT would have me exclude the word
``central´´ from the construction of ``central computer.´´
The Court expressly rejected BT's interpretation by ruling
that the Sargent patent claims a central computer that is a
single computer with a centralized database. Because the
Internet is not a computer network consisting of a centralized
computer that stores all of the data accessible by remote
terminals, Web servers on the Internet cannot literally
infringe the '662 patent."
The Court wrote that "A key distinction between the '662
patent and the Prodigy Internet Service is the requirement of
the '662 patent that information be stored as blocks of
information." The Court continued that "Unlike the
blocks of information required by the '662 patent, HTML code,
which is the primary language of the World Wide Web and of the
Prodigy Internet Service, does not use blocks. HTML code does
not separate displayed information into a first sub-unit, and
nondisplayed information in a contiguous, separable second
sub-unit. Rather, HTML code contains information to be
displayed intermingled with other information concerning
formatting and linking, such as URLs and anchors."
See also, TLJ story
titled "Patent Infringement Suits Lay Claims to
Hyperlinking Technology", December 21, 2000. |
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| House Committee Seeks
Records from Global Crossing and Citibank |
8/21. Rep. Mike Oxley
(R-OH), Chairman of the House Financial
Services Committee (HFSC), wrote a letter
[4 pages in PDF] to Gary Winnick and John Legere asking for
records pertaining to "corporate governance and financial
management; the relationships between securities analysts and
the companies they analyze; and the impact of potential
conflicts of interest faced by securities analysts."
Winnick is Chairman of Global
Crossing. Legere is CEO of Global Crossing.
Rep. Oxley also sent a letter
[4 pages in PDF] to Sanford Weill, Ch/CEO of Citigroup, the
parent company of Salomon
Smith Barney (SSB), requesting records. This request
focuses records pertaining to Jack Grubman, a former SSB stock
analyst.
Both letters also request records "relating to the
announced sale of a majority interest in Global Crossing to
Hutchison Telecommunications Limited and Singapore
Technologies Telemedia". Global Crossing announced on
August 9 that it proposed to sell for $250 Million a 61.5%
interest in a newly constituted Global Crossing to Hutchison
Telecommunications Limited, a wholly owned subsidiary of Hutchison Whampoa
Limited, and Singapore
Technologies Telemedia. See, Global Crossing release
regarding the proposed sale.
Rep. Oxley set a deadline of September 4 for responding to the
requests, after which date, the Committee may issue subpoenas.
See also, HFSC
release. |
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| DOJ Recommends Approval of
Qwest Long Distance Request |
8/21. The Department of Justice's (DOJ) Antitrust Division issued
its evaluation
[35 pages in PDF] conditionally recommending that the Federal Communications Commission
(FCC) approved Qwest
Communications' Section
271 petition to provide in region interLATA services in
the states of Montana, Utah, Washington, and Wyoming.
The DOJ wrote that "Qwest's Application demonstrates that
it has succeeded in opening its local markets in Montana,
Utah, Washington, and Wyoming in many respects. However,
Qwest's assertions that it provides adequate manual order
processing and electronically auditable billing for UNE-platform
service remain questionable, although evidence submitted by
Qwest after its application was filed may support the FCC’s
approval of this application at the conclusion of this
proceeding. It also is unclear whether the UNE rates in
Montana and Wyoming, which were developed recently, are
appropriately cost-based. The Department therefore recommends
that the Commission approve Qwest’s application for long
distance authority in these states only if it is able to
assure itself that the concerns expressed in this Evaluation
have been resolved."
The DOJ evaluation also addresses line sharing and broadband
connections. Qwest unbundles the high frequency portion of its
loops so that Competitive Local Exchange Carriers (CLECs),
such as Covad, can provide
Digital Subscriber Line (DSL) service to customers who receive
voice service from Qwest. Covad complained that Qwest
improperly provisions such lines, and that it has long refused
Covad's request to provide a router test of end-to-end
continuity of the data signal on such lines.
The DOJ concluded that "Although Qwest has instituted
router testing for its retail customers, it still refuses to
perform the router test requested by Covad. Qwest has
presented no justification for its refusal to provide the same
router testing for CLECs as it does for its retail customers.
If Qwest does not agree to follow the same provisioning
process for both wholesale and retail customers, then it must
provide a detailed explanation justifying its refusal to do
so, including data demonstrating that the performance results
are equivalent even where the testing process differs."
See also, Qwest
release and DOJ
release. |
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| CDT Reports on Access to
State Court Records |
8/20. The Center for Democracy
and Technology (CDT) published a report
titled "A Quiet Revolution in the Courts: Electronic
Access to State Court Records". It is subtitled "A
CDT Survey of State Activity and Comments on Privacy, Cost,
Equity and Accountability".
The CDT reports that "this movement to post court
information online represents a quiet revolution in citizen
access and government accountability, part of the growing
reality of e-government. Public access to electronic court
records provides a convenient way for the public to monitor
the judicial system and ensure the fairness and equality of
its operations."
However, the CDT also wrote that "At the same time, a
review of current practices indicates that the state and local
courts are engaged in a series of difficult and novel
balancing acts. One involves the balance between privacy and
accountability. What information should be available online?
... Another set of issues concern cost: Is it appropriate to
charge for online access?"
The bulk of the report is a state by state summary of the type
of electronic access provided, and contact information. The
report was principally researched by CDT Research Fellow Kathy
Roche. |
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| Federal Circuit Rules on
Preemption and Shrink Wrap Contracts |
8/20. The U.S.
Court of Appeals (FedCir) issued its opinion in Bowers
v. Baystate Technologies, a patent, copyright
and contract case involving templates for CAD software. The
Appeals Court affirmed in part and reversed in part.
Background. Harold Bowers created a template to aid in
the use of computer aided design (CAD) software, such as the
CADKEY tool of Cadkey, Inc. He filed a patent application for
his template in 1989, and U.S.
Patent No. 4,933,514 was issued in 1990.
CAD software works with menus, and menus nested within menus,
which may be difficult for some to use. Bowers' patent
disclosed a template, or desktop digitizing tablet, with
various commands arranged in logical locations. The user
points to and clicks upon the desired command.
George Ford designed Geodraft, a DOS based add-on program to
operate with CAD. Geodraft allows an engineer to insert
technical tolerances for features of the computer generated
design. He copyrighted Geodraft. Bowers then obtained an
exclusive license to Ford's Geodraft. Bowers then bundled and
sold his template and Geodraft software, with a shrink wrap
agreement that prohibits reverse engineering.
Baystate then developed a competing template and software,
which incorporated features of Bowers' product. Under
competition from Baystate, Bowers entered into a distribution
agreement with Cadkey whereby Cadkey bundled Bowers' template
and software for free. Bowers sought to make money off of
selling software upgrades. Baystate subsequently acquired
Cadkey, and repudiated the contract with Bowers.
District Court. Baystate filed a complaint in U.S. District Court (DMass)
against Bowers alleging that Baystate’s products do not
infringe the ‘514 patent, that the ‘514 patent is invalid,
and that the ‘514 patent is unenforceable. It sought
declaratory relief. Bowers filed counterclaims for copyright
infringement, patent infringement, and breach of contract
(including the prohibition on reverse engineering).
The trial jury found for Bowers on all claims, and awarded him
$1,948,869 for copyright infringement, $3,831,025 for breach
of contract, and $232,977 for patent infringement. The
District Court set aside the copyright damages as duplicative
of the contract damages and entered judgment for $5,270,142,
including pre-judgment interest. Baystate appealed. Bowers
cross appealed the District Court's denial of copyright
damages.
Court of Appeals. The Court of Appeals affirmed in
part, and reversed in part. It affirmed the breach of contract
award. It also affirmed the District Court's modification of
the damages award (by finding copyright damages duplicative of
contract damages). Finally, it reversed the judgment as to
patent infringement, as a matter of claim construction.
The Appeals Court held that the Copyright Act, and in
particular, 17 U.S.C.
§ 301, does not preempt or narrow Bowers' contract
claims. The Court held this as a matter of the law of the
originating Court -- in this case, the First Circuit. The
Court further found that Bowers had presented ample evidence
of reverse engineering by Baystate of the subject matter
covered by the shrink wrap contract. The Court affirmed the
judgment for breach of contract, and the dollar amount of the
award.
The Appeals Court then affirmed the District Court's decision
to set aside the jury's award of copyright damages. It wrote
that "The shrink wrap license agreement prohibited, inter
alia, all reverse engineering of Mr. Bowers' software,
protection encompassing but more extensive than copyright
protection, which prohibits only certain copying. Mr. Bowers'
copyright and contract claims both rest on Baystate's copying
of Mr. Bowers' software. ... In this case, the breach of
contract damages arose from the same copying and included the
same lost sales that form the basis for the copyright damages.
The district court, therefore, did not abuse its discretion by
omitting from the final damage award the duplicative copyright
damages."
The Appeals Court also wrote that "Because this court
affirms the district court's omission of the copyright
damages, this court need not reach the merits of Mr. Bowers'
copyright infringement claim."
On the patent infringement claim, the Appeals Court reversed.
It wrote that "this court perceives no basis upon which a
reasonable jury could find that Baystate's accused templates
infringe claim 1 of the '514 patent." Hence, there was no
literal infringement. Bowers did not assert infringement under
the doctrine of equivalents. |
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| GAO Reports on Foreign
Patent Challenges Facing Small Businesses |
8/22. The General Accounting
Office (GAO) released a report [126
pages in PDF] titled "International Trade: Federal Action
Needed to Help Small Businesses Address Foreign Patent
Challenges".
The GAO convened a panel of 39 U.S. patent attorneys with
expertise in obtaining foreign patents for both small and
large businesses. It then sent a questionnaire to a random
sample of small businesses that had obtained or considered
obtaining foreign patents in the last 5 years.
The GAO concluded from these efforts that "Foreign patent
costs are the most significant impediment that small
businesses face in trying to protect their inventions abroad,
according to the small businesses and patent attorneys GAO
contacted. The minimum cost to a small business to obtain and
maintain a relatively simple patent in the United States for
20 years could be about $10,000, based on a scenario that GAO
developed. However, extending this patent to nine other
countries, which could be a typical small business foreign
patent strategy, could cost between $160,000 and $330,000
..."
The GAO found that other impediments include "companies'
limited resources and limited foreign patent knowledge;
differences among foreign patent systems, which increase costs
and make the process more complex; and the existence of
challenging business climates and weak patent enforcement in
certain countries."
The GAO also reported that "More than 70 percent of the
survey respondents in both groups supported federal efforts to
promote harmonization among the world's patent laws and
systems and to seek patent cost reduction."
Finally, it found that "nearly 70 percent of the
businesses thought that federal financial assistance to help
defray the costs of foreign patents would be helpful, but less
than 50 percent of the patent attorneys held this view. Most
of the patent attorneys regarded federal financial assistance
as an indirect solution to the broader problem of a lack of
uniformity among global patent systems. Conversely, nearly 70
percent of the attorneys, but only about 40 percent of the
businesses, thought that making information about foreign
patents available to small businesses, particularly those that
are just beginning to consider foreign patents, would be
useful."
The report was prepared at the request of Sen. Christopher Bond
(R-MO), the ranking Republican on the Senate Small Business
Committee, and Rep.
Donald Manzullo (R-IL), Chairman of the House Small
Business Committee. |
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| DOJ Official Addresses
Online Copyright Infringement |
8/20. John Malcolm, Deputy Assistant Attorney General in
charge of the Computer
Crimes and Intellectual Property Section (CCIPS) at the
Department of Justice (DOJ), gave a speech at the Progress and Freedom Foundation's
Aspen Summit 2002 in which he addressed the role of law
enforcement in online copyright infringement. He wrote that
"Effective law enforcement is obviously going to be a
critical part of that equation. The Department of Justice
stands ready to do its part." See, text
of speech as prepared for delivery.
He wrote that "The demise of Napster has done nothing to
dampen the demand for on-line content, and Napster has been
replaced by even more sophisticated peer to peer services such
as Morpheus, Kazaa, and Grokster." He added that
"intellectual property piracy is increasing in the
on-line environment".
Malcolm elaborated that "unlike in the past, when law
enforcement would shut down the initial distribution source
and in effect ended the piracy operation, in the digital age,
cutting off the initial source does not end the threat, as
each and every copy distributed prior to law enforcement
intervention continues to exist on the Internet and can be
reproduced and distributed indefinitely by others."
He added that "this poses significant challenges to law
enforcement. Moreover, many, if not most, of the major
software pirates are highly skilled, covering their tracks,
operating in relative anonymity, moving from location to
location to conduct their activities, and many times hijacking
the computers of innocent users to perpetrate their
crimes."
Malcolm also reviewed some pending legislation. He wrote that
"There are several proposals currently being debated by
Congress to address this problem. They range from a proposal
offered by Senator Fritz
Hollings which would prohibit firms from making or selling
digital media devices that did not incorporate so-called
``standard security technologies´´ to a proposal offered
recently by Congressman
Howard Berman which would permit copyright holders to
disrupt file sharing systems when they suspect that
copyrighted material is being distributed without
authorization." See, HR 5001,
introduced by Rep. Berman on July 25, 2002, and S 2048,
introduced by Sen. Hollings on March 21, 2002.
He also discussing private litigation efforts and enforcement
proceedings by the DOJ.
He concluded that "Civil remedies are simply inadequate
against those who are judgment proof or who are adept at
hiding their money or who may be engaging in massive IP theft
for non-economic reasons or who may simply move their illegal
operations to another venue and set up shop again. Moreover,
the tools available to civil litigators are usually not as
effective as the tools available to law enforcement
authorities. Further, federal law enforcement authorities have
the ability to conduct multi jurisdictional and international
investigations, which is of particular importance since many
of the criminal organizations that engage in massive
infringement operate overseas and since the Internet knows no
geographic boundaries." |
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| Publication Schedule |
| TLJ did not publish an issue of the TLJ Daily E-Mail Alert
on Thursday, August 22. The TLJ Daily E-Mail Alert will not be
published on Wednesday, August 28, Thursday, August 29,
Friday, August 30, or Monday, September 2. |
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| Record Companies Withdraw
Lawsuit Against Internet Backbone Companies |
8/20. The Recording Industry
Association of America (RIAA) announced that the lawsuit
brought by thirteen of its member music companies against four
Internet backbone companies has been "withdrawn".
On August 15, the music companies filed a complaint in U.S. District Court
(SDNY) against four Internet backbone companies seeking an
order requiring the defendants to block access to the Internet
protocol addresses assigned to the Listen4ever servers in
the People's Republic of China. The complaint alleged that
Listen4ever operates a web site that engages in infringement
of the music companies' copyrighted sound recording by making
them available for download. Plaintiffs also filed a motion
for preliminary injunction.
The RIAA stated in a release
that only that the complaint was "withdrawn" because
the infringing web site is "now offline".
The RIAA published in its web site one huge PDF
file that includes various documents, including the
Complaint, Plaintiffs' Memorandum of Law in Support of Their
Motion for Preliminary Injunction, and declarations of
witnesses and experts.
The one count complaint sought only injunctive relief,
pursuant to Section 512(j)(1)(B)(ii) of the Digital Millennium
Copyright Act (DMCA), which section is codified at 17
U.S.C. § 512. The complaint requested "That the
Court order Defendants to block Internet traffic to and from
the website ... all the pages affiliated with it, and any
substantially similar successor website".
The defendants were AT&T Broadband, Cable and Wireless
USA, Sprint Corporation -- Advanced Network Systems, and UUNet
Technologies, Inc. The operator of the infringing web site was
not named as a defendant. |
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| Friday, August 23 |
| 9:30 AM. Executives of Time Warner Telecom and BellSouth will hold a
press briefing on an undisclosed topic. Reporters may join by
conference call by calling 800 313-6624 and asking for the
Time Warner BellSouth press event. Location: BellSouth
Washington office, 9th Floor, 1133 21st St., NW. |
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| Monday, August 26 |
8:00 - 11:00 AM. Equity International will host a conference
titled "Homeland Security Financing Briefing".
Speakers will address supplemental homeland security spending
for 2002, priorities for 2003 homeland security spending,
critical infrastructure protection, counter terrorism programs
of the FBI, and how to win homeland security contracts. Ron
Dick, Director of the FBI's National
Infrastructure Protection Center, will speak from 9:15 to
9:30 AM. Other speakers include Dale Watson (Executive
Assistant Director for Counterterrorism at the FBI), William
Hoagland (Staff Director of the Senate Budget Committee),
Scott Lilly (Minority Staff Director of the House
Appropriations Committee), Paul Bergeron (Office of the Deputy
Assistant to the Secretary of Defense for Chemical &
Biological Defense), and Donald Vincent (VP for Homeland
Security at Booz Allen). Location: Holeman Lounge, National
Press Club, 529 14th St., NW.
1:00 PM. FTC Chairman Timothy Muris, Postmaster General John
Potter, and other government officials will hold a press
conference regarding telemarketing fraud. See, release.
Location: USPS Headquarters, 475 L'Enfant Plaza SW, Ben
Franklin Room (11th Floor). |
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| Tuesday, August 27 |
10:00 AM - 12:00 NOON. The State Department's International
Telecommunication Advisory Committee (ITAC) will meet. See, notice
in Federal Register, July 23, 2002, Vol. 67, No. 141, at Page
48241. Location: Room 1105, State Department.
8:00 AM - 3:30 PM. The National
Academy of Sciences (NAS) will host partially open, and
partially closed, seminar titled "Review of the Patent
Office's 21st Century Strategic Plan". See, agenda.
Location: NAS, Lecture Room, 500 Fifth Street, NW.
Deadline to submit comments to the National Telecommunications
and Information Administration (NTIA) in response to its
request for comments on the effectiveness of Internet blocking
and filtering technologies. § 1703 of the Children's
Internet Protection Act (CIPA) [PDF] directs NTIA to
initiate a notice and comment proceeding to evaluate whether
currently available Internet blocking or filtering technology
protection measures and Internet safety policies adequately
address the needs of educational institutions. It also directs
NTIA to make recommendations to Congress on how to foster the
development of technology protection measures that meet these
needs. See, notice
in the Federal Register. |
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| Wednesday, August 28 |
| Day one of a two day public hearing before the Federal Election Commission
(FEC) on its second Notice
of Proposed Rulemaking (NPRM) [67 pages in MS Word]
regarding the Bipartisan Campaign Reform Act of 2002 (BCRA),
the recently enacted campaign finance reform legislation. This
NPRM pertains to "electioneering communications".
The proposed rules would exempt webcasts. See also, FEC release. |
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| Thursday, August 29 |
8:30 AM - 12:35 PM. The President's Homeland Security
Advisory Council (PHSAC) will hold a meeting to receive
briefings and to discuss best practices in the areas of
mergers and acquisitions, information technology, personnel
management and related issues that may concern the creation of
the proposed Department of Homeland Security. Public access is
limited. See, notice
in Federal Register. Location: Indian Treaty Room, Eisenhower
Executive Office Building, 725 Seventeenth St., NW.
Day two of a two day public hearing before the Federal Election Commission
(FEC) on its second Notice
of Proposed Rulemaking (NPRM) [67 pages in MS Word]
regarding the Bipartisan Campaign Reform Act of 2002 (BCRA),
the recently enacted campaign finance reform legislation. This
NPRM pertains to "electioneering communications".
The proposed rules would exempt webcasts. See also, FEC release.
Deadline to submit comments to the FEC regarding its NPRM
regarding "electioneering communications". |
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| People and Appointments |
| 8/22. California Governor Gray Davis appointed Jo-Lynne
Lee as a Judge of the Alameda County Superior Court. She
is an attorney with the law firm of Griffith Castle &
Schwartzman, whose attorneys only act as court appointed
special masters, court appointed discovery referees, and
private mediators and arbitrators in construction defect
litigation and other real estate disputes. |
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