12/1. The U.S. Court of Appeals (DCCir) issued its opinion [15 pages in PDF] in BellSouth v. FCC, vacating and remanding an order of the Federal Communications Commission (FCC). The FCC had concluded that BellSouth's discount plan for special access services violates Section 272, which bars the baby bells from discriminating in favor of their own affiliates.

BellSouth is a regional Bell operating company that, among other things, sells special access services. In 1999, it created its Transport Savings Plan (TSP), which gave its customers the option of earning price discounts in exchange for committing to purchase certain volumes of services for no less than five years. The opinion of the Court of Appeals describes this TSP in detail.

AT&T, a purchaser of special access services from BellSouth, complained to the FCC that the TSP discriminated in favor of BellSouth's long distance affiliate in violation of 47 U.S.C. § 272(c)(1) and (e)(3).

Subsection (c)(1) provides, in part, that "In its dealings with its affiliate described in subsection (a) of this section, a Bell operating company -- (1) may not discriminate between that company or affiliate and any other entity in the provision or procurement of goods, services, facilities, and information, or in the establishment of standards".

Subsection (e)(3) provides, in part, that "A Bell operating company ... shall charge the affiliate described in subsection (a) of this section, or impute to itself (if using the access for its provision of its own services), an amount for access to its telephone exchange service and exchange access that is no less than the amount charged to any unaffiliated interexchange carriers for such service". (Parentheses in original.)

The FCC reviewed that details of BellSouth's TSP and concluded that it violated the statute by creating a volume discount plan that, though facially neutral, favored small and growing companies such as its own affiliate.

BellSouth filed a petition for review with the Court of Appeals. The Court reviewed the details of the TSP and concluded that it does not discriminate in favor of BellSouth's affiliate. Hence, it vacated the order of the FCC, and remanded.

AT&T and BellSouth have announced plans to merge. The FCC is delaying its decision on AT&T's and BellSouth merger review application. The Court of Appeals noted that "Approval of the merger would not moot this case because the Commission has ordered BellSouth to terminate the TSP with respect to all customers, not just AT&T."

This case is BellSouth Telecommunications, Inc. v. FCC and USA, U.S. Court of Appeals for the District of Columbia, App. Ct. No. 05-1032, a petition for review of a final order of the FCC. Judge Tatel wrote the opinion of the Court of Appeals, in which Judges Kavanaugh and Williams joined.

12/1. The U.S. Court of Appeals (3rdCir) issued its opinion [PDF] in AT&T v. JMC Telecom, affirming the judgment of the District Court for AT&T on JMC's Sherman Act counterclaim. JMC alleged that there was an implicit agreement between AT&T and JMC to restrict JMC's prepaid phone card sales to the maritime sector.

The Court of Appeals opinion also addresses issues related to the filed rate doctrine, federal preemption, and tariffs. These other issues are not addressed in this article.

JMC Telecom previously was a wholesaler, marketer, and designer of prepaid telephone cards. It operated in the maritime market. This market includes ships and their crew members and cruise ships and their passengers.

AT&T and JMC entered into an agreement that provided that AT&T would sell prepaid calling services to JMC, and JMC would sell the services as prepaid telephone cards to end users. It is no longer in business.

JMC alleged that AT&T provided bad service, and sought to renegotiate the agreement.

JMC also alleged that the two companies had an implicit agreement that restricted JMC’s sales territory for the cards to the maritime sector.

AT&T filed a complaint in U.S. District Court (DNJ) against JMC seeking to collect amounts that it alleged were owing under the agreement. JMC counterclaimed against AT&T alleging violations of the Sherman Act, federal common law, and state law. The District Court ruled for AT&T on its claim, and against JMC on its counterclaims. JMC brought the present appeal. The Court of Appeals affirmed.

Section 1 of the Sherman Act, which is codified at 15 U.S.C. § 1, provides, in part, that "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."

The Court of Appeals rejected JMC's first antitrust argument -- refusal to deal. The Court of Appeals wrote that a supplier can deal with, or refusal to deal with, a distributor, so long as it does so independently, as AT&T did.

The Court of Appeals also rejected JMC's second argument that AT&T violated the Sherman Act by prohibiting JMC from selling the cards to nonmaritime customers. JMC argued that the agreement between the two companies represented a horizontal, rather than vertical, restraint.

A horizon restraint is a per se violation of the Sherman Act. Vertical restraints are subject to the rule of reason.

The Court of Appeals wrote that "The problem with JMC’s argument, however, is that the relationship was primarily vertical. Although we agree that the relationship had horizontal elements, it is undisputed that AT&T supplied telecommunications service to JMC for resale. The fact that AT&T also sold phone cards at the resale level does not change the analysis. Vertical restraints are generally not per se violations of the Sherman Act, even where a distributor and manufacturer also compete at the distribution level, i.e., have some form of horizontal relationship (a/k/a/ dual distributor arrangement), as is the case here." (Parentheses in original.)

JMC did not also, or alternatively, argue that the alleged restraint should be analyzed under the rule of reason. Hence, the Court of Appeals affirmed the judgment of the District Court without subjecting the alleged restraint to rule of reason analysis. Also, the Court of Appeals did not address whether or not JMC suffered antitrust injury.

The Court of Appeals relied upon the 2nd Circuit's 1997 opinion in Electronics Communications Corp. v. Toshiba America Consumer Products, which is reported at 129 F.3d 240.

This case is AT&T Corporation v. JMC Telecom LCC, U.S. Court of Appeals for the 3rd Circuit, App. Ct. No. 05-1304, an appeal from the U.S. District Court for the District of New Jersey, D.C. No.99-cv-02578. Judge Greenberg wrote the opinion of the Court of Appeals, in which Judges Roth and Buckwalter joined.

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The House will next meet on Tuesday, December 5, 2006, at 10:00 AM. See, Republican Whip Notice. See also, HConRes 496.

The Senate will return from its Thanksgiving recess at 10:00 AM. See, HConRes 496.

8:30 AM - 5:00 PM. The National Science Foundation's (NSF) Advisory Committee for International Science and Engineering will meet. See, notice in the Federal Register, November 13, 2006, Vol. 71, No. 218, at Page 66201. Location: 4201 Wilson Boulevard, Room 1235, Arlington, VA.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in E-PASS Tech v. 3Com, App. Ct. No. 2006-1356. Location: Courtroom 203, 717 Madison Place, NW.

Extended deadline to submit comments to the Department of Commerce's (DOC) Bureau of Industry and Security (BIS) regarding its proposed changes to its Export Administration Regulations (EAR) pertaining to exports and reexports of dual-use items to the People's Republic of China (PRC). Dual use items include certain encryption products, information security products, fiber optic products, computers, and software. See, original notice in the Federal Register, July 6, 2006, Vol. 71, No. 129, at Pages 38313-38321, and notice of extension in the Federal Register, October 19, 2006, Vol. 71, No. 202, at Page 61692.

The House will return from its Thanksgiving recess at 10:00 AM. It will consider HR 4742 under suspension of the rules. This bill would amend the Title 35 to allow the Director of the USPTO to "waive statutory provisions governing the filing, processing, renewal, and maintenance of patents, trademark registrations, and applications therefor to the extent the Director deems necessary in order to protect the rights and privileges of applicants and other persons affected by an emergency or a major disaster. See, Republican Whip Notice. See also, HConRes 496.

The Senate will meet at 12:00 NOON.

9:00 AM - 1:30 PM. The U.S. Chamber of Commerce will host an event titled "Minding Your Business: The Future of Privacy". The speakers will include Federal Trade Commission (FTC) Chairman Deborah Majoras. See, notice. The price to attend ranges from free to $249. There will also be a webcast. The Chamber adds that "CREDENTIALED MEMBERS OF THE MEDIA ARE INVITED TO ATTEND. For an Agenda and Full List of Speakers or to Register to Attend Please Call Chamber Media Relations at 202-463-5682 or" press at uschamber dot com. A continental breakfast will be served at 8:30 AM. Location: U.S. Chamber of Commerce, 1615 H Street, NW.

9:00 - 10:15 AM. The Washington Legal Foundation (WLF) will host a panel discussion titled "Self-Regulation of Advertising: Promoting Responsibility and Maintaining Commercial Speech". The speakers will be Jodie Bernstein (Bryan Cave), Lynne Omlie (Distilled Spirits Council of the United States), and Diane Bieri (Pharmaceutical Research and Manufacturers of America). See, notice [PDF]. Breakfast will be served. Location: WLF, 2009 Massachusetts Ave., NW.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in IPVenture v. Prostar Computer, App. Ct. No. 2006-1012, a patent infringement case involving thermal management for computers. Location: Courtroom 201, 717 Madison Place, NW.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Quickview System v. Belo Interactive, App. Ct. No. 2006-1091. This is an appeal from the U.S. District Court (NDTex), D.C. No. 3:04-CV-1254-B. The District Court construed the term "computer" in the patent claim not to include a networked systems of two or more computers. Location: Courtroom 201, 717 Madison Place, NW.

12:00 PM. The Senate Finance Committee (SFC) will hold a hearing on pending nominations, including Phillip Swagel (to be Assistant Secretary for Economic Policy at the Department of the Treasury), Anthony Ryan (Assistant Secretary for Financial Markets, DOT), Dean Pinkert (US International Trade Commission), Irving Williamson (USITC). See, notice. Location: Room 215, Dirksen Building.

2:00 - 5:00 PM. The Privacy and Civil Liberties Oversight Board (PCLOB) will hold its first public meeting. The PCLOB notice states that "Members of the public interested in attending this meeting as audience members should contact the Board at (202) 456-1240. Space is limited. Credentialed representatives of the media wishing to attend should contact Andy Pino, Georgetown University Office of Public Affairs at (202) 687-4328 or" pinoa at georgetown dot edu. Location: Gaston Hall at Healy Hall, Georgetown University.

2:00 PM. The U.S. Court of Appeals (FedCir) will hear oral argument in Monster Cable Products, Inc. v. The Quest Group d/b/a AudioQuest, App. Ct. No. 2006-1111, a patent case involving audio cables. Location: Courtroom 203, 717 Madison Place, NW.

CANCELLED. 2:30 PM. The Senate Judiciary Committee (SJC) will hold a hearing titled "Judicial Nominations". See, notice. Press contact: Blair Latoff at 202-228-5860. Location: Room 226, Dirksen Building.

6:00 - 8:15 PM. The Federal Communications Bar Association's (FCBA) Transactional Practice Committee will host a continuing legal education (CLE) seminar titled "Equity Investments and Lending to FCC-Regulated Communications Companies: Legal Issues and Business Considerations". See, notice and registration form [PDF]. Registrations and cancellations are due by 5:00 PM on December 1. The price to attend ranges from $50 to $125. Location: Sidley Austin, 6th floor, 1501 K St., NW.

Deadline to submit initial comments to the Federal Communications Commission (FCC) regarding Autotel's petition for preemption of the jurisdiction of the Arizona Corporation Commission with respect to its decisions to dismiss Autotel’s request for arbitration of an interconnection agreement with Citizens Utilities Rural Company, Inc. and Autotel’s request for termination of the rural exemption under section 251(f) of the Act. See, FCC Public Notice [PDF] (DA 06-2083). This proceeding is WT Docket No. 06-194.

The House will meet at 10:00 AM. See, Republican Whip Notice.

9:30 AM. The Senate Judiciary Committee (SJC) will hold a hearing titled "FBI Oversight". See, notice. Press contact: Blair Latoff at 202-228-5860. Location: Room 226, Dirksen Building.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in New Generation v. Slocum Enterprises, App. Ct. No. 2006-1137. Location: Courtroom 203, 717 Madison Place, NW.

12:30 - 2:00 PM. The DC Bar Association will host a panel discussion titled "Identity Theft, Internet Privacy and Cell Phone Privacy -- What are the Rules of the Road?". The speakers will include Marc Groman (Federal Trade Commission), Al Gidari (Perkins Coie), Eric Wenger (DOJ's Computer Crimes and Intellectual Property Section), and Heidi Salow (Sprint Nextel). The price to attend ranges from $15 to $20. For more information, call 202-626-3463. See, notice. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 Level.

1:00 - 2:30 PM. The Department of Homeland Security's (DHS) Homeland Security Advisory Council's (HSAC) Secure Borders and Open Doors Advisory Committee will hold a partially open meeting. The open portion of the meeting will be from 1:00 to 2:30 PM. See, notice in the Federal Register, November 29, 2006, Vol. 71, No. 229, at Page 69139. Location: Hilton Washington, Washington Room, 1919 Connecticut Ave., NW.

2:00 PM. The U.S. Court of Appeals (FedCir) will hear oral argument in MyMail v. America Online, App. Ct. No. 2006-1147. Location: Courtroom 203, 717 Madison Place, NW.

2:00 - 4:00 PM. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will meet to discuss the upcoming meeting of the ITU Radiocommunication Sector's Conference Preparatory Meeting (CPM) for the 2007 World Radiocommunication Conference, to be held on February 19 through March 2, 2007 in Geneva, Switzerland. See, notice in the Federal Register, October 10, 2006, Vol. 71, No. 195, at Page 59580. Location: Boeing Company, 1200 Wilson Blvd., Arlington, VA.

2:30 PM. The Senate Homeland Security and Governmental Affairs Committee will hold a hearing on the nomination of Paul Schneider to be Under Secretary for Management, Department of Homeland Security. See, notice. Location: Room 342, Dirksen Building.

The House will meet at 10:00 AM. See, Republican Whip Notice.

8:00 - 10:30 AM. The DC Bar Association will host an event titled "Trademark Office Speaks". The speakers will include Lynne Beresford (Commissioner for Trademarks), Sharon Marsh (Deputy Commissioner for Trademark Examination Policy), and David Sams (Chief Administrative Trademark Judge, Trademark Trial and Appeal Board). The price to attend ranges from $25 to $45. For more information, call 202-626-3463. See, notice. Location: Cosmos Club, 2121 Massachusetts Ave., NW.

8:30 AM - 5:00 PM. Day one of a two day meeting of the National Institute of Standards and Technology's (NIST) Information Security and Privacy Advisory Board. See, notice in the Federal Register, November 15, 2006, Vol. 71, No. 220, at Page 66504. Location: George Washington University, Cafritz Conference Center, Rooms 101 and 308, 800 21st Street, NW.

11:00 AM. The Senate Judiciary Committee (SJC) will hold a hearing titled "Vertically Integrated Sports Programming: Are Cable Companies Excluding Competition?" See, notice. Press contact: Blair Latoff at 202-228-5860. Location: Room 226, Dirksen Building.

Day one of a two day closed meeting of the Library of Congress's (LOC) Section 108 Study Group. This meeting will address "Review of public roundtables", "Clarifications and conclusions", and "Report drafting". This meeting is closed to the public. See also, 17 U.S.C. § 108. Location: undisclosed.

Deadline to submit initial comments to the Federal Communications Commission (FCC) on the Supporters of the Missoula Plan's proposed interim process to address phantom traffic issues. See, FCC Public Notice [PDF] (DA 06-2294).

The House will meet at 9:00 AM. See, Republican Whip Notice.

8:30 AM - 5:00 PM. Day two of a two day meeting of the National Institute of Standards and Technology's (NIST) Information Security and Privacy Advisory Board. See, notice in the Federal Register, November 15, 2006, Vol. 71, No. 220, at Page 66504. Location: George Washington University, Cafritz Conference Center, Rooms 101 and 308, 800 21st Street, NW.

Day two of a two day closed meeting of the Library of Congress's (LOC) Section 108 Study Group. This meeting will address "Review of public roundtables", "Clarifications and conclusions", and "Report drafting". This meeting is closed to the public. See also, 17 U.S.C. § 108. Location: undisclosed.

8:50 AM - 1:30 PM. The American Enterprise Institute (AEI) will host an event titled "Tax Havens and Foreign Direct Investment". The luncheon speaker will be Rep. Bill Thomas (R-CA), the outgoing Chairman of the House Ways and Means Committee. See, notice. Location: AEI,12th floor, 1150 17th St., NW,

9:00 AM - 3:30 PM. Day one of a two day meeting of the National Commission on Libraries and Information Science (NCLIS). The agenda includes discussion of digitization. See, notice in the Federal Register, November 28, 2006, Vol. 71, No. 228, at Pages 68845-68846. Location: Dining Room A, Madison Building, Library of Congress, 101 Independence Ave., SE.

4:00 - 7:00 PM. The Progress and Freedom Foundation (PFF) will host its holiday party. RSVP to Eileen Goulding at EGoulding at pff dot org or 202-289-8928. Location: Suite 500, 1444 Eye St., NW.

Deadline to submit reply comments to the Federal Communications Commission (FCC) regarding the intercarrier compensation reform plan known at the Missoula Plan. This proceeding is titled "Developing a Unified Intercarrier Compensation Regime" and numbered CC Docket No. 01-92. See, notice in the Federal Register: September 13, 2006, Vol. 71, No. 177, at Pages 54008-54009.