12/18. The Office of the U.S. Trade Representative (USTR) released a report [73 pages in PDF] titled "2003 Report To Congress On China's WTO Compliance".

The report is dated December 11, 2003. It is the USTR's second annual report submitted to the Congress pursuant to Section 421 of the U.S.-China Relations Act of 2000, which is codified at 22 U.S.C. § 6951. The USTR released its first report [55 pages in PDF] on December 12, 2002. See also, story titled "USTR Reports to Congress on PR China's WTO Compliance" in TLJ Daily E-Mail Alert No. 567, December 13, 2002.

In intellectual property rights (IPR) protection, the report finds that China's compliance with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) has been "largely satisfactory" to the extent that Chain has passed laws, regulations and rules. However, the report finds that IPR enforcement in China "remains ineffective".

In telecommunications, the report finds that "China has not yet established an independent regulator in the telecommunications sector" and that "the problems in the telecommunications sector have increased".

Intellectual Property Rights. The just released second report addresses intellectual property rights (IPR) at length. It first reviews China's obligations under the TRIPS Agreement, including its obligations to bring its laws into compliance. The report finds that "Overall, China's efforts to bring its framework of laws, regulations and implementing rules into compliance with the TRIPS Agreement have been largely satisfactory, although some improvements still need to be made."

It elaborates that "As reported in detail in 2002, U.S. experts carefully reviewed China's new IPR laws, regulations and implementing rules and, together with other WTO members, participated in a comprehensive review of them as part of the first transitional review of China before the WTO's Council for Trade-related Aspects of Intellectual Property Rights (TRIPS Council) in September 2002. A further review took place during the transitional review before the TRIPS Council in November 2003. While this process identified various areas where China could make improvements, and the United States and U.S. industry continue to press China to do so, overall the legal changes made by China are major improvements that move China generally in line with international norms in most key areas."

The report also identifies the new laws adopted by China in 2003. It states that "In the patent area, the State Council issued the Amendments to the Patent Law Implementing Measures. In the trademark area, the State Administration of Industry and Commerce issued the Rules on the Determination and Protection of Well-Known Trademarks, the Measures on the Implementation of the Madrid Agreement on Trademark International Registration and the Measures on the Registration and Administration of Collective Trademarks and Certification Marks. In the copyright area, the National Copyright Administration of China issued the Measures on the Implementation of Administrative Penalties in Copyright Cases. These regulations and implementing rules have generally been well-received by U.S. companies as steps toward full compliance with China’s TRIPS Agreement obligations. China is also reportedly drafting revisions to its 2001 Internet-related implementing rules. This development is welcomed by U.S. companies because loopholes in those rules have allowed copyright infringement on the Internet to become a growing phenomenon in China."

However, the report identifies that "China still had not acceded to the 1996 World Intellectual Property Organization (WIPO) Internet-related treaties, which entered into force in 2002 and have been ratified by many developed and developing countries."

The report notes that "China is not obligated under WTO rules to accede to the WIPO treaties", but adds that the U.S. "considers these treaties to reflect international norms for providing copyright protection over the Internet. While China’s existing regulations and implementing rules do address certain copyright issues related to the Internet, and China is in the process of drafting further Internet-related implementing rules, the United States has urged China to promptly accede to the WIPO treaties and harmonize its regulations and implementing rules with them fully."

The report is more critical of China in the area of enforcement. It finds that while the "TRIPS Agreement requires China to implement effective enforcement procedures and to provide civil and criminal remedies that have a deterrent effect" there is not "effective IPR enforcement at the local level". It identifies "lack of coordination among Chinese government ministries and agencies, local protectionism and corruption, high thresholds for criminal prosecution, lack of training and weak punishments."

The report finds that as a result, "In 2003, IPR infringement in China continued to affect products, brands and technologies from a wide range of industries, including films, music, publishing, software, pharmaceuticals, chemicals, information technology, consumer goods, electrical equipment, automotive parts and industrial products, among many others."

The report then examines the weaknesses in China's administrative enforcement, criminal enforcement, and civil actions for damages.

With respect to administrative enforcement, the report states that "China continues to take a large number of administrative enforcement actions against IPR violators. However, they are not having a deterrent effect." The report identifies several reasons, including that fines are artificially low, that "evidence showing that a person was caught warehousing infringing goods is not sufficient to prove an intent to sell them", and that administrative authorities rarely forward an administrative case for criminal investigation.

With respect to criminal enforcement, the report states that "At present, criminal enforcement has virtually no deterrent effect on infringers. China's authorities have pursued criminal prosecutions in a small number of cases, and a lack of transparency makes it sometimes difficult to find out if they resulted in convictions and, if so, what penalties were imposed. If this situation is to change, China needs to revise its laws and regulations and to prosecute a much higher percentage of IPR infringers, particularly those engaged in commercial-scale counterfeiting or piracy and repeat offenders."

Finally, with respect to civil enforcement, the report finds that while IPR holders are increasingly bringing civil actions, and China's IPR courts have shown "increasing sophistication", nevertheless, "U.S. companies complain that there is still a lack of consistent and fair enforcement of China’s IPR laws and regulations in the courts. They have found that most judges lack necessary technical training and that court rules regarding evidence, expert witnesses, protection of confidential information are vague or ineffective. In addition, in the patent area, where enforcement through civil litigation is of particular importance, a single case still takes four to seven years to complete, rendering the new damages provisions adopted to comply with China's TRIPS Agreement obligations less meaningful."

Telecommunications. The USTR report also addresses telecommunications.

First, the report summarizes China's obligations. It states that "In its accession agreement, China agreed to permit foreign suppliers to provide a broad range of telecommunications services through joint ventures with Chinese companies, including domestic and international wired services, mobile voice and data services, value-added services, such as electronic mail, voice mail and on-line information and database retrieval, and paging services. The foreign stake permitted in the joint ventures is to increase over time, reaching a maximum of 49 percent for most types of services."

In addition, "China also accepted key principles from the WTO Agreement on Basic Telecommunications Services. As a result, China became obligated to separate the regulatory and operating functions of MII (which has been both the telecommunications regulatory agency in China and the operator of China Telecom) upon its accession. China also became obligated to adopt pro-competitive regulatory principles ..." (Parentheses in original.)

The report notes that in December 2001, China "issued regulations on the administration of foreign-invested telecommunications enterprises." However, these regulations "establish high capital requirements (in basic and value-added telecommunications services) that pose a barrier to entry for many potential foreign suppliers". (Parentheses in original.)

Moreover, the report states that "China has not yet established an independent regulator in the telecommunications sector. The current regulator, MII, while nominally separate from the current telecommunications operators, maintains extensive influence and control over their operations and continues to use its regulatory authority to disadvantage foreign firms."

The report continues that "Over the last year, the problems in the telecommunications sector have increased." For example, in states that in April of 2003, "MII reclassified several telecommunications services from the value-added category to the basic category, contrary to widely accepted international practice and, in some instances, in apparent contravention of the spirit, if not the letter, of China's scheduled commitments."

Also, "MII also placed restrictions on what new services could be classified under the value-added category. These moves are likely to limit the ability of U.S. firms to access China’s telecommunications market. Under China’s Services Schedule, basic services are on a slower liberalization schedule, and MII subjects them to higher capitalization requirements. Indeed, MII requires suppliers of basic services to satisfy an excessive registered capital requirement of RMB 2 billion ($241.2 million)."

Also, "MII continues to process applications very slowly for the few foreign-invested telecommunications enterprises that have attempted to satisfy MII's licensing requirements."

12/18. The California Court of Appeal (4/2) issued its opinion [MS Word] in Williams v. Riverside, a case regarding a California city's attempt to exact monopoly rents from a company installing a fiber optic network using the city's local rights of way. The company paid under protest, built its network, and then sued the city. The Superior Court upheld the city's scheme. The Court of Appeal, applying California's public utilities and government codes, reversed.

Williams Communications installed conduit, fiber optic cable, and related equipment in streets in the City of Riverside, in southern California. Riverside required Williams to pay $750,000, calculated at the rate of $1.50 per foot, to build these facilities. Williams paid under protest, and built the facilities.

Williams then filed a complaint in Superior Court for Riverside County arguing that the mandated payment was in excess of Riverside's reasonable costs, and therefore illegal under California's Public Utilities Code section 7901 and Government Code section 50030. Williams further argued that the payment was coerced and that it had the right to recover the illegal payment under the California Mitigation Fee Act, codified at Gov. Code, § 66000, et seq.

Riverside argued that it did not require the payment. Rather, it was negotiated. However, it did not assert that $750,000 represented its costs.

The trial court ruled in favor of Riverside, and ordered Williams to pay Riverside an additional $212,861, as attorneys fees.

Section 7901 provides that "Telegraph or telephone corporations may construct lines of telegraph or telephone lines along and upon any public road or highway, along or across any of the waters or lands within this State, and may erect poles, posts, piers, or abutments for supporting the insulators, wires, and other necessary fixtures of their lines, in such manner and at such points as not to incommode the public use of the road or highway or interrupt the navigation of the waters."

Riverside argued that section 7901 is inapplicable because Williams failed to show that it is a telephone corporation which will use the right of way on Riverside to provide telephone services. The gist of its argument was that Williams does not provide telephone services within the meaning of this section because it is building a digital fiber optic network that that provides voice, data, video, and internet transmission services.

The trial court adopted this argument. The Court of Appeal did not. It wrote that "The fundamental issue, therefore, is whether the City may levy charges for use of the City streets to a telephone company when the telephone company lines may carry signals which are not telephone signals." It concluded that "Williams established that it is a telephone company which provides telephone services. The bulk of its income is derived from telephone transmission services.  The fact that other data is transmitted over the telephone lines does not deprive Williams of the protection afforded by section 7901."

Section 50030 provides that "Any permit fee imposed by a city, including a chartered city, a county, or a city and county, for the placement, installation, repair, or upgrading of telecommunications facilities such as lines, poles, or antennas by a telephone corporation that has obtained all required authorizations to provide telecommunications services from the Public Utilities Commission and the Federal Communications Commission, shall not exceed the reasonable costs of providing the service for which the fee is charged and shall not be levied for general revenue purposes."

The Court of Appeal held that the payment was in excess of "reasonable costs" under section 50030, and hence, illegal.

The Court of Appeal construed sections 7901 and 50030. However, it also referred to the legislative history of section 50030, which was enacted in 1996. It addresses the policy of promoting emerging technologies, and hence, economic growth and social benefits.

The Court of Appeal quoted from the state legislature's findings and declarations: "(1) Connecting all California homes and businesses to the information superhighway has the potential to position the state on the leading edge of the telecommunications revolution. The emerging technologies will encourage economic growth and provide social benefits to all Californians, as well as allow California businesses and residents to compete in national and international markets. [¶] (2) Congress and the Legislature of the State of California have enacted telecommunications policies that include provisions to encourage the development and deployment of new technologies, and the equitable provision of services in a way that efficiently meets consumer need and encourages the ubiquitous availability of a wide choice of state-of-the-art services, and to promote economic growth, job creation, and the substantial social benefits that will result from the rapid implementation of advanced information and communications technologies. [¶] (3) New technologies require investment and expansion of telecommunications networks in order to bring greater choice to consumers by encouraging universally available telecommunications service. [¶] (b) The Legislature further finds and declares that this act does not constitute a change in existing law."

The Court of Appeal also rejected Riverside's argument that it did not require the payment. It wrote that "The evidence established, however, that the City would not grant the necessary permits without a license agreement, and would not enter into a license agreement without payment of the fee".

The Court of Appeal also reversed the trial court's holding that the California Mitigation Fee Act does not apply.

Finally, the Court of Appeals reversed the award of attorneys fees to Riverside, because Williams is the prevailing party.

This case is Williams Communications LLC v. City of Riverside, Court of Appeal, Fourth Appellate District, Division Two, No. E032661, an appeal from the Superior Court for Riverside County, Super. Ct. No. RIC354749.

12/18. Kurt Schroeder, Deputy Chief of the Telecommunications Consumers Division of the Enforcement Bureau of the Federal Communications Commission (FCC) wrote a letter [4 pages in PDF] to CPM Funding, Inc., d/b/a California Pacific Mortgage, regarding its alleged failure to comply with the FCC's national do not call rules.

The letter states that "This is an official CITATION, issued pursuant to section 503(b)(5) of the Communications Act of 1934, as amended (the Communications Act), 47 U.S.C. § 503(b)(5), for violations of the Federal Communications Commission's rules that govern telephone solicitations and unsolicited advertisements." (Emphasis in original. Hyperlink added.)

FCC Enforcement Bureau Chief David Solomon stated in a release [PDF] that "This is a landmark enforcement step -- the first FCC action to enforce our new National Do Not Call rules. This citation demonstrates our resolve to ensure that consumers are not bothered by unwanted, intrusive calls to their homes. Do Not Call enforcement is the FCC’s top consumer protection priority and we, along with our partners at the FTC, will continue to be vigilant in this area on behalf of the American public."

The TLJ Daily E-Mail Alert will not be published on Wednesday, December 24, Thursday, December 25, or Friday, December 26.

12/18. The General Accounting Office (GAO) released a report [427 pages in PDF] titled "Information Technology: Leadership Remains Key to Agencies Making Progress on Enterprise Architecture Efforts".

This report, which was prepared for the House Government Reform Committee, finds that federal agencies' progress toward effective enterprise architecture management is limited. Of the agencies studied by the GAO, only the Executive Office of the President reported performing all of the management practices that are indicative of effective enterprise architecture management. In contrast, the Department of Commerce (DOC) and the Department of Justice (DOJ) both performed only one of five such practices.

The report begins with a discussion of information technology (IT) and enterprise architecture (EA). It states that "attempting to modernize and evolve IT environments without an enterprise architecture to guide and constrain investments often results in operations and systems that are duplicative, not well integrated, unnecessarily costly to maintain and interface, and ineffective in supporting mission goals. A properly managed enterprise architecture helps to clarify and optimize the interdependencies and relationships among enterprise operations and their supporting IT assets, so that agencies can base IT investment decisions on an explicit and common understanding of both today’s and tomorrow’s environments. The development, implementation, and maintenance of architectures are widely recognized as hallmarks of successful public and private organizations, and their use is required by the Clinger-Cohen Act and the implementing guidance, issued by the Office of Management and Budget (OMB). Further, the E-Government Act of 2002 assigns OMB responsibility for overseeing enterprise architectures." (Footnotes omitted.)

The report finds that "Federal agencies progress toward effectively managing enterprise architectures is limited, with much work remaining. Since our 2001 assessment of agencies' enterprise architecture management maturity, the percentage of agencies that have established at least a foundation for enterprise architecture management (i.e., they perform management practices that provide the basis for effectively managing the development, maintenance, and use of architectures) is virtually unchanged, decreasing from 53 to 48 percent. Further, the percentage of agencies performing the full complement of management practices that are necessary for effective enterprise architecture management is the same (about 4 percent)." (Parentheses in original.)

In addition, the report states that "when agencies are assessed against the recent update of our maturity framework (Version 1.1), the percentage that have established at least a foundation for enterprise architecture management drops to 21 percent; only one agency (1 percent), the Executive Office of the President, reported performing all of the management practices that are indicative of effective enterprise architecture management.

The report concludes that "This limited progress can be attributed in part to long-standing enterprise architecture challenges that have yet to be addressed. In particular, since 2001, more agencies now report that agency executive understanding of enterprise architecture and the scarcity of skilled architecture staff are significant challenges. Until agencies have and use well-defined enterprise architectures, their ability to effectively leverage IT in transforming mission operations will be impaired."

12/18. The U.S. Court of Appeals (7thCir) issued its opinion [PDF] in Primeco Personal Communications v. City of Mequon, a cell tower construction case. The city denied a permit. The District Court granted summary judgment to the service provider. The Appeals Court affirmed.

The City of Mequon, in the state of Wisconsin, denied Primeco's (dba Verizon Wireless) request to build a cell tower. Primeco then filed a complaint in U.S. District Court (EDWisc) against Mequon alleging violation of 47 U.S.C. § 332(c)(7).

Section 332(c)(7)(B)(iii) requires that "Any decision by a State or local government or instrumentality thereof to deny a request to place, construct, or modify personal wireless service facilities shall be in writing and supported by substantial evidence contained in a written record."

The Appeals Court wrote that Mequon's decision was made "without opinion, so that the only written record of the evidence and reasoning supporting denial is the transcript of the planning commission’s deliberations". Nevertheless, the Appeals Court gave a detailed review of the statute and precedent, analyzed the planning commission's members' statements, and concluded that Mequon had violated the statute.

The Court wrote, in the end, that "It is doubtful that the planning commission's decision can be said to be supported by any evidence at all; certainly it cannot be said to be supported by substantial evidence."

Judge Richard Posner wrote the opinion of the Court, in which Judges Kanne and Rovner joined.

Posner gave this summary of the analysis to be applied under Section 332. "A reasonable decision whether to approve the construction of an antenna for cellphone communications requires balancing two considerations. The first is the contribution that the antenna will make to the availability of cellphone service. The second is the aesthetic or other harm that the antenna will cause. The unsightliness of the antenna and the adverse effect on property values that is caused by its unsightliness are the most common concerns, ... and even safety effects: fear of adverse health effects from electromagnetic radiation is excluded as a factor, ... but not, for example, concern that the antenna might obstruct vision or topple over in a strong wind." (Citations omitted.)

He elaborated that "The balancing test can be refined a bit. The availability of cellphone service is a function of the number of existing service providers and the coverage and quality of service that the applicant could achieve by constructing his antenna in another location where its unsightliness (or other harmful effects, but none is suggested here) would be less of a problem or by sharing an already existing telecommunications tower. The unsightliness of an antenna depends on its height, thickness, and general appearance, the number of other antennas in the area, and the character of the area’s land uses (for example, residential versus commercial), including the height of other buildings in the area. Coverage is a function of the number of providers, the coverage by each provider, and the increase in overall coverage at the disputed site if the antenna is built there, compared to alternative locations. Thus a new firm that has from a service standpoint two equally good alternative sites can rightly be compelled to place the antenna in the less conspicuous location, which might be an existing telecommunications tower." (Parentheses in original.)

This case is Primeco Personal Communications, Limited Partnership, d/b/a Verizon Wireless v. City of Mequon, U.S. Court of Appeals for the 7th Circuit, Nos. 03-1514 and 03-1548, appeals from the U.S. District Court for the Eastern District of Wisconsin, D.C. No. 01-C-1205, Judge Lynn Adelman presiding.

12/18. Timothy Donahue, P/CEO of Nextel Communications, will be the chairman of the newly re-chartered Network Reliability and Interoperability Council (NRIC VII). See, FCC release [PDF].

12/18. The Members of the Federal Election Commission (FEC) elected Bradley Smith as Chairman and Ellen Weintraub as Vice Chair for 2004. See, FEC release. Smith is best known for taking seriously First Amendment protections of political speech. Before his appointment to the FEC in 2000, Smith was a law professor at Capital University Law School in Columbus, Ohio.

12/18. Howard Griboff was named Assistant Chief of the Policy Division of the International Bureau (IB) of the Federal Communications Commission (FCC). The FCC stated in a release that Griboff will "manage projects and provide policy and legal expertise, including regarding spectrum policy rulemaking items. He also will oversee certain licensing activities, including mergers." Griboff has worked in the IB since 1998. From 1996-1998, he worked in the Wireless Telecommunications Bureau. Before that, he worked for the law firm of Fisher Wayland Cooper Leader & Zaragoza.

12/18. Paul Locke was named Assistant Chief -- Engineering of the Policy Division of the International Bureau (IB) of the Federal Communications Commission (FCC). The FCC stated in a release that he will "provide engineering management expertise and contribute to the technical aspects of spectrum policy rulemaking items". He has worked for the FCC since 2000.

12/18. Real Networks filed a complaint in U.S. District Court (NDCal) against Microsoft alleging violation of federal and state antitrust laws. Real stated in a release that Microsoft has "illegally used its monopoly power to restrict competition, limit consumer choice and attempt to monopolize the growing field of digital media". Microsoft responded in a release that "this is a case where a leading firm is seeking to use the antitrust laws to protect and increase its marketplace share and to limit the competition it must face". Microsoft added that "These issues are a rehash of the same issues that have already been the subject of extensive litigation and a tough but fair resolution of the government antitrust lawsuit."

12/18. Microsoft filed six complaints on December 17, 2003 in King County Superior Court in the state of Washington against numerous individuals, corporations, and unknown parties, alleging violation of anti-spam laws of the states of New York and Washington by sending deceptive spam messages that contained forged sender names, false subject lines, fake server names, inaccurate and misrepresented sender addresses, or obscured transmission paths. See, Microsoft release and list of cases. Much of the spam was routed through compromised internet protocol (IP) addresses located in the state of New York. Eliot Spitzer (Attorney General of New York), Brad Smith (SVP/GC of Microsoft), and Tim Cranton (Senior Corporate Attorney for Microsoft) held a press conference on December 18 to announce the lawsuits. See, transcript.

12/18. The Department of Justice's (DOJ) Antitrust Division and the Federal Trade Commission (FTC) announced that they will jointly hold a three day workshop on February 17-19, 2004 on application of the Horizontal Merger Guidelines. Also, February 10, 2004 is the deadline to submit comments to the DOJ and FTC regarding this workshop. See, notice. The DOJ and FTC also released a report titled "Merger Challenges Data, Fiscal Years 1999-2003". See also, DOJ release.

The House is in adjournment.

The Senate is in adjournment. (It will convene on January 20, 2004.)

The Supreme Court is in recess. (It will return on January 12, 2004.)

9:00 - 11:30 AM. The Executive Office of the President's (EOP) Office of Science and Technology Policy's (OSTP) National Science and Technology Council's (NSTC) Committee on Technology and Physical Infrastructure Working Group (formerly named the Subcommittee on Construction and Building) will hold a meeting that is closed to the public. For more information, contact Paul Domich at domich@nist.gov or 301 975-5624. Location: White House Conference Center, Jackson Room, 726 Jackson Place, NW.

12:00 NOON. The Federal Communications Bar Association's (FCBA) International Telecommunications Committee will host a brown bag lunch titled "The United Nations World Summit on Information Society (WSIS): Geneva 2003 and the Road to Tunisia 2005". The speaker will be David Gross, Deputy Assistant Secretary for International Communications and Information Policy, Department of State. RSVP to julie.kearney@mci.com. Location: Wiley Rein & Fielding, 1750 K Street, NW.

Deadline to submit reply comments to the Federal Communications Commission (FCC) regarding Northland Networks' petition pursuant to 47 U.S.C. § 252(e)(5) requesting that the FCC preempt the jurisdiction of the New York Public Service Commission to resolve a dispute between Northland and Verizon regarding reciprocal compensation and change of law provisions of their interconnection agreements. This is WC Docket No. 03-242. See, FCC notice [PDF].

Hanukkah.

Deadline to submit initial comments to the Copyright Office (CO) in response to its Notice of Inquiry (NOI) regarding notice and recordkeeping for use of sound recordings under statutory license. The CO published a notice in the Federal Register stating that it "is requesting public comment on the adoption of regulations for records of use of sound recordings performed pursuant to the statutory license for public performances of sound recordings by means of digital audio transmissions between October 28, 1998, and the effective date of soon-to-be-announced interim regulations." See, Federal Register: October 8, 2003, Vol. 68, No. 195, at Page 58054.

Christmas. Executive branch agencies will be closed.

Executive branch agencies will be closed. See, Executive Order.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding digital low power television and television translator stations. This is FCC 03-198, in MB Docket No. 03-185. See, notice in the Federal Register, September 26, 2003, Vol. 68, No. 187, at Pages 55566 - 55573.

Deadline to submit comments to the Federal Communications Commission (FCC) regarding its notice of proposed rulemaking (NPRM) pertaining to promoting spectrum based services in rural areas. See, notice in the Federal Register summarizing this NPRM, and story titled "FCC Announces NPRM Regarding Regulations Affecting the Use of Spectrum in Rural Areas" in TLJ Daily E-Mail Alert No. 739, September 15, 2003. This NPRM is FCC 03-222 in WT Docket Nos. 02-381, 01-14, and 03-202. The FCC adopted this NPRM on September 10, 2003, and released it on October 6, 2003. See, Federal Register, November 12, 2003, Vol. 68, No. 218, at Pages 64050-64072.