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Tech Law Journal |
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| News, records, and analysis of legislation, litigation, and regulation affecting the computer, internet, communications and information technology sectors | |
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12/20. The U.S. District Court (SDNY) ordered six defendants to pay disgorgement, interest and penalties totaling $581,117 in a major insider trading case arising out of IBM's 1995 takeover of Lotus. (SEC v. Lorraine K. Cassano, Case No. 99-CV-3822.) See, SEC release. 12/20. An individual named Herbert Becker filed a complaint [PDF] in U.S. District Court (NDTex) against CapRock Communications, several of its officers and directors, and several underwriters, alleging violations of federal securities laws. The plaintiff, who seeks class action status, is represented by several law firms, including Milberg Weiss. Count one alleges violation of §11 of the Securities Act, 15 U.S.C. §77k, by CapRock and the individual defendants. Count two alleges violation of §11 by the underwriter defendants. Count three alleges violation of §12(a)(2) of the Securities Act by CapRock and the underwriter defendants. Count four alleges violation of §15 of the Securities Act, 15 U.S.C. §77o, by the individual defendants. The suit pertains to the content of a registration statement and prospectus filed with the SEC in connection with an IPO. CapRock is building an extensive fiber optic network in the Southwestern U.S. Milberg Weiss is a law firm that specializes in bringing securities class action suits against technology companies. 12/20. The Employment and Training Administration of the Labor Department published in the Federal Register H1B visa interim final regulations implementing recent legislation. These interim rules implement changes made to the Immigration and Nationality Act by the American Competitiveness and Workforce Improvement Act of 1998. The Labor Dept. seeks further comment. This bill, and another passed this year, temporarily increase the annual cap on visas for foreign high tech workers. This act was passed by the 105th Congress in Nov. of 1998. Some Members of Congress have criticized the Dept. of Labor for its long delay in issuing these regulations, which implement the American worker protection provisions of the act. The massive document is online in three sections. See, Federal Register, Dec. 20, 2000, Vol. 65, No. 245, at pages 80109-80158, 80159-80208, and 80209-80254. 12/20. SEC Chairman Arthur Levitt announced he will step down as Chairman before mid February 2001. He was first appointed in July 1993, and then reappointed for a second five year term in May 1998. See, Levitt's farewell address to SEC staff. 12/20. President Elect Bush announced that he will nominate Don Evans to be Secretary of Commerce. He served as General Chairman and National Finance Chairman for the Bush 2000 presidential campaign. 12/20. The FTC approved Computer Sciences Corp.'s (CSC) acquisition of Mynd, subject to the condition that CSC divest Mynd's claims assessment system, known as Claims Outcome Advisor, to Insurance Services Office, Inc. To put this into effect, the FTC filed an administrative complaint [PDF] against CSC and Mynd. The parties also simultaneously filed an Agreement and Decision and Order [PDF]. See also, FTC release and FTC Analysis [PDF]. 12/20. The Dept. of Health and Human Services released its final regulations regarding medical privacy. See, HHS release, HHS summary, and the entire text of the regulations [1535 pages in PDF]. See also, ITAA reaction and Clinton statement. 12/20. ACTV and HyperTV filed a complaint in U.S. District Court (SDNY) against Disney, ABC, and ESPN alleging patent infringment. Plaintiffs assert that Defendants' integration of television programming with web page access on Monday Night Football, and other programs, infringes upon three patents held be ACTV. See, ACTV release. See also, TLJ story. 12/20. AOL and Time Warner issued a joint release, which stated, "America Online, Inc. (NYSE: AOL) and Time Warner (NYSE: TWX) reiterated today, consistent with what they have said in the past, that their merger will close at the end of the year or in the very early days of January." 12/20. USA Today published an opinion piece by Cisco CEO John Chambers on elections. "Our system of conducting elections is out of date. We live in the Internet age, but we vote with punch-card technology that's as old as radio," wrote Chambers. "We must -- and we can -- do better. Computer technology and the Internet can make it easier for us to vote and make the process of counting votes faster and more accurate." 12/20. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in Western Journalism Center v. Cederquist, affirming the trial court's dismissal of the case. Plaintiff, WJC, an ideologically conservative media foundation, alleged that the defendants, two officers of the IRS, conducted an audit of the WJC to review its tax-exempt status in order to retaliate against it for its First Amendment activity -- writing about the Whitewater scandal. The IRS, which found no irregularities, also audited contributors of the WJC. The district court dismissed for failure to state a claim upon which relief can be granted. The Appeals court affirmed on different grounds -- that the complaint was not filed within the one year statute of limitations in Calif. for tort actions. However, one judge, Stephen Reinhardt, wrote a concurring opinion stating that while the action was barred by the statute of limitations, the District Court also erred in ruling that taxpayers have no remedy against the IRS for audits which violate First Amendment rights. This was not a technology related case. However, the IRS is also now conducting an inquiry regarding whether it should revise its rules regarding the effect of Internet communications by tax exempt entities on their eligibility for tax exempt status. Both the WJC, and its attorney in this proceeding, Judicial Watch, maintain extensive web sites. The IRS's announcement of its Internet inquiry posses many questions, including, "Does providing a hyperlink on a charitable organization's website to another organization that engages in political campaign intervention result in per se prohibited political intervention?" and "To what extent are statements made by subscribers to a forum, such as a listserv or newsgroup, attributable to an exempt organization that maintains the forum?" 12/20. The FCC announced that Bill Dever has been promoted to Asst. Div. Chief of the Policy and Program Division of the Common Carrier Bureau. This Division works on FCC evaluations of RBOC's Section 271 applications to provide long distance phone service, and antitrust merger review proceedings involving common carriers. For example, Dever worked as a team leader for the FCC's review of the SBC Ameritech merger, which the FCC dragged out for 18 months. See, FCC release. 12/20. The FCC announced that Jonathan Levy has been promoted to Acting Deputy Chief Economist of the FCC. He has been with the FCC since 1980; he is currently Senior Staff Economist in the Office of Plans and Policy. See, FCC release [PDF]. 12/20. The USPTO published in the Federal Register a notice and request for comments pertaining to declaring a patent interference. Comments on or before January 31, 2001. See, Federal Register, Dec. 20, 2000, Vol. 65, No. 245, at pages 79809-79810. 12/19. A federal grand jury (NDCal) returned an indictment for one count of wire fraud against Darla Prestwich. The defendant was charged with engaging in a fraud scheme on eBay by registering repeatedly as a seller with eBay under different aliases, posting auction listings on eBay in which she offered to sell items that she either did not possess or misdescribed, and after receiving payment, either failing to deliver the merchandise or delivering merchandise that did match the description of the merchandise described in the auction listing. The prosecution is the result of an investigation by the U.S. Secret Service. Joseph Sullivan is the Asst. U.S. Attorney who is prosecuting the case. See, USA/NDCal release. 12/19. The Web-Based Education Commission released its report titled The Power of the Internet for Learning: Moving from Promise to Practice. The report concluded that "regulations that govern much of education today, from pre-kindergarten to higher education, are focused on supporting the welfare of the educational institution, not the individual learner. They were written for an earlier model, the factory model of education in which the teacher is the center of all instruction and all learners must advance at the same rate, despite their varying needs or abilities. ... Funding follows this progression, and is based on the time a student spends in class ("seat time") and the location of that student and that educational program. Estimates for school construction, educational services, and materials are built on these time-fixed and place-based models of yesterday. These regulations and requirements no longer match today's realities. ... What is needed, in short, is a wholesale rethinking of the regulatory foundations governing our educational institutions. The Internet cannot be ignored in any such effort of regulatory reform." The Commission's Chairman is Sen. Bob Kerrey (D-NE); its Vice Chairman is Rep. Johnny Isakson (R-GA). 12/19. President Clinton pocket vetoed HR 2415, the Bankruptcy Reform Act of 2000, a major overhaul of the U.S. bankruptcy code. (This bill incorporated the language of S 3186.) Clinton exercised a pocket veto by not signing the bill. The 106th Congress has adjourned, so the veto cannot be overriden. See, Clinton statement. 12/19. EMusic.com and six of its independent record label partners filed a complaint in U.S. District Court (SDNY) against MP3.com and its My.MP3.com streaming service alleging copyright infringement. EMusic.com CEO Gene Hoffman stated, "Although MP3.com has entered into settlement agreements with the five major record labels, they have chosen to ignore their infringing actions with respect to independent record labels." See, EMusic.com release. 12/18. The Intellectual Property Owners Association (IPO) filed an amicus curiae brief with the U.S. Court of Appeals (FedCir) in Symbol Technologies v. Lemelson that argues that the courts have equitable power to deny enforcement to patents based on unjustifiable and prejudicial delay in prosecution. 12/18. Outgoing President Bill Clinton made a recess appointment of Susan Ness to be a Commissioner of the FCC. See, Clinton release. Clinton nominated, and the Senate confirmed, Ness to be one of the five members of the FCC in 1994. Clinton renominated Ness for a second five year term in 1999. However, the Senate did not confirm her. The Constitution gives the President the authority to make recess appointments. The 106th Congress recessed last Friday. The 107th Congress will convene on January 3. Ness is a liberal Democrat. The Senate Commerce Committee, which is chaired by Sen. John McCain (R-AZ), did not vote on her nomination. 12/18. EU and the US held their an annual summit in Washington DC. U.S. President Clinton, European Commission President Prodi, and French President Chirac participated. Little progress was made on resolved longstanding disputes over EU agricultural policies and the U.S. FSC tax policy that could lead to a trade conflict that would harm U.S. high tech companies. See, TLJ story. 12/18. The EU and US issued a joint statement on e-commerce and alternative dispute resolution mechanisms. 12.18. Clinton assistants Gene Sperling and Tony Blinken held a joint press conference on the EU and US summit. See, transcript. 12/18. The Congress made available a copy of the section of the budget bill [PDF] passed late on Friday, Dec. 15, that requires that schools and libraries receiving federal subsidies to use porn filtering technology on computers used by children to access the Internet. Sen. John McCain (R-AZ), a Senate sponsor of an earlier version of the bill, stated in a release that "While schools and libraries across the country increasingly use the Internet as a learning tool, we need to ensure that pervasive obscene and violent material is screened out and that our children are protected." Sen. McCain added, "Parents can protect their children from Internet smut at home, but have no control over the computers at school. This legislation allows local communities to decide what technology they want to use and what to filter out so that our children's minds aren't polluted." The ACLU, which has successfully challenged other Internet censorship statutes and ordinances, promised file a legal challenge to this measure. See, ACLU release. 12/18. Verizon withdrew its Section 271 application to the FCC to provide long distance service in Massachusetts. Verizon plans to refile its application after satisfying FCC objections regarding providing non-discriminatory access to unbundled loops to other DSL providers. Verizon SVP Tom Tauke stated that "We also will update the existing application with the most current data that further confirms that we do provide parity of service for DSL." See, Verizon release. See also, statement by FCC Chairman Kennard. 12/18. Verizon filed a complaint and motion for a temporary restraining order in U.S. District Court (DWV) against West Virginia seeking a halt to bidding on a RFP issued by the Governor's Office of Technology for a state contract that would provide exclusive access to the rights of way along state highways. Verizon alleges that the RFP violates a provision of the Telecom Act of 1996 that requires that state governments manage rights-of-way on a "competitively neutral and nondiscriminatory basis." The RFP also provides that bidders must offer free services to the State of West Virginia in return for the exclusive access. See, Verizon release. 12/18. The USPTO published in the Federal Register revisions to its Rules of Practice pertaining to the Patent Business Goals. The revisions are effective Dec. 18. See, Federal Register, Dec. 18, 2000, Vol. 65, No. 243, pages 78958 - 78960. 12/16. The FCC continued its regular pattern of leaking confidential pre-decisional information to the press regarding its pending review of the merger AOL and Time Warner. The Washington Post reported in a story in its Saturday edition that the FCC may require AOL to make its instant messaging service interoperable with other IM services. Quote: "The FCC recommendation, about an inch-thick document that was distributed late Wednesday evening to the five commissioners, includes a clause to ensure that AOL does not discriminate in its contracts with other instant-messaging firms, sources said." Background: see, Oct. 12 statement of FCC Chairman Kennard and statement of Comm'n Powell. 12/16. The Swedish PTS awarded UMTS licenses to four entities: Europolitan, HI3G, Orange, and Tele2. UMTS, or Universal Mobile Telecommunications System, is one Third Generation (3G) wireless technology. It is a successor to the European GSM standard. It has the goal of providing broadband mobile Internet access at 2Mbps. See, UMTS Forum. The PTS awarded the licenses on the basis of its assessment of merit, rather than by competitive auction. Ten applied in this beauty contest. The six rejected contestants, and the reasons for their rejections, were as follows: Broadwave (deficiency of technical feasibility), Mobility4Sweden (deficiency of financial feasibility), Reach Out Mobile (deficiency of technical feasibility), Telia (deficiency of technical feasibility), Tenora (deficiency of financial and technical feasibility), and Telenordia Mobil (it scored fewer points than the four winners on commitments concerning coverage and development rate). See, PTS press release (English). See also, documents in Swedish: Bakgrund och Bedömning, Inledande Prövning, and Fördjupad Prövning och Avgörande. 12/15. The House and Senate both passed HR 4577 on Friday night. It contains the FY 2001 Labor-Education, Treasury-Postal, and Legislative Branch appropriations bills. The House passed this conference report on a roll call vote of 292 to 60. See, Roll Call No. 603. This is a short bill which merely incorporates by reference 9 just introduced major bills. Copies of these major bills have not yet been published online by the Congress. However, a release issued by the House Appropriations Committee states that the bill "includes the Children's Internet Protection Act which requires schools and libraries to implement filtering technology for computers with Internet access as a condition of receiving education technology funds, library services funds, or universal service discounts" (i.e., e-rate subsidies). The release also states that "Technology purchased with educational technology or library service funds must have filters on computers accessible to minors. The conference agreement also includes the Neighborhood Children's Internet Protection Act, which requires schools or libraries with Internet access to hold public hearings and adopt Internet use policies for material inappropriate for minors." 12/15. The House and Senate both passed HR 2816, the Computer Crime Enforcement Act, a bill to make available grants to assist state and local law enforcement agencies in enforcing state and local criminal laws relating to computer crime. the bill is sponsored by Rep. Matt Salmon (R-AZ). 12/15. AT&T notified the FCC that it "intends to fulfill its MediaOne merger conditions by spinning off the Liberty Media Group. The company will also take the other steps needed to ensure that it will not have attributable interests, under the FCC's rules, in providers of video programming purchased by Time Warner Entertainment (TWE)." See, AT&T release. 12/15. Gary Lytle, Chairman of the USTA, wrote a letter [PDF] to the FCC regarding reciprocal compensation, and in particular, compensation for Internet bound traffic. He reaffirmed the ILECs' desire for "mandatory inter-carrier compensation structure for Internet-bound traffic". 12/15. Jason Spatafore pled guilty to one count of a four count Information [PDF] charging criminal copyright infringement in U.S. District Court (NDCal). Spatafore, aka Dis-man, reproduced and distributed over the Internet digital copies of the film titled "Star Wars Episode I: The Phantom Menace," in violation of 17 U.S.C. § 506(a)(2) and 18 U.S.C. § 2319(c)(3). The Dis-man will be sentenced on March 23, 2001, by Magistrate Judge Spero in San Francisco. Ross Nadel, an Assistant U.S. Attorney for the Northern District of California, is prosecuting the case. See, plea agreement [PDF], and release. 12/15. The USITC voted to institute an investigation of certain field programmable gate arrays as a result of a complaint filed by Xilinx on Nov. 16, 2000, that alleged that Altera violated Sec. 337 of the Tariff Act of 1930 by importing into the U.S., and selling within the U.S., field programmable gate arrays, and products containing same, that infringe patents owned by Xilinx. (Inv. No. 337-TA-441.) See, USITC release. Both companies produce programmable logic devices, and are involved in litigation. See also, Xilinx release of Dec. 4 regarding filing of complaint with the USITC, and Altera's response. 12/15. The FTC published in the Federal Register several technical amendments to its Rules of Practice. See, Federal Register, Dec. 15, 2000, Vol. 65, No. 242, pages 78407 - 78409. 12/15. Margaret Wiener was named Chief of the FCC's Wireless Telecommunications Bureau's Auctions and Industry Analysis Division, which is responsible for implementing the FCC's competitive bidding authority for spectrum auctions. See, FCC release [PDF]. 12/15. Robert Dunkel will join the United States Telecom Association (USTA) as a lobbyist in January. He is currently director of legislative affairs for Lockheed Martin Global Telecommunications (LMGT). See, USTA release. 12/14. Lori Sharpe will join the Congressional Affairs staff of the Cellular Telecommunications & Internet Association (CTIA) in January. She is currently Deputy Chief of Staff to Sen. John Ashcroft (R-MO), who lost his bid for re-election in November. Sen. Ashcroft served on the Senate Commerce Committee, and its Communications Subcommittee. See, CTIA release. 12/14. The SEC brought and settled an administrative complaint against MicroStrategy. It also filed a complaint in U.S. District Court (DDC) against its CEO, Michael Saylor, its COO, Sanjeev Bansal, and its former CFO, Mark Lynch, alleging civil accounting fraud, for overstating the company's revenue and earnings from the sale of software and services contrary to GAAP. The SEC alleged that Microstrategy prematurely recognized revenue. It sold software, as well as software upgrades, enhancements, and consulting services. In multiple element deals, when it sold software, it also recognized anticipated future revenue up front. The SEC also simultaneously settled this action. The settlement provides for the three officers to disgorge a total of $10 Million, and pay $350,000 in penalties. See, SEC release. In October, Microstrategy settled two class action securities suits brought on behalf of shareholders for the same accounting practices. See, Microstrategy release. 12/14. The FTC reached an agreement with AOL and Time Warner that will result in the FTC approving the two companies' merger. As part of the deal, AOL and TW agree to many conditions, including that they open their cable system to competing ISPs. The agreement gives the FTC ongoing regulatory authority over the merged company. To put this arrangement into effect the FTC filed an administrative Complaint [PDF] against AOL and Time Warner for violation of §7 of the Clayton Act and §5 of the Federal Trade Commission Act. (See, Docket Number C-3938.) The FTC also simultaneously filed an Agreement Containing Consent Orders [PDF] and Decision and Order [PDF]. See, joint statement of AOL and TW and Analysis [PDF] by FTC. The European Commission has approved the merger too. However, AOL and Time still need to win the approval of the FCC, which is conducting its own proceeding. 12/14. FCC Commissioner Gloria Tristani gave a speech in Washington DC in which she defended the FCC's recent practice of conducting duplicative antitrust merger review proceedings. "There is clearly an ongoing debate about the Commission's involvement in mergers both at the Commission and on Capitol Hill. But at present, the Commission’s review of mergers is clearly required by law." Tristani added that this review must include "an analysis of the competitive impact of the transaction on the relevant communications market." She also discussed the FCC's new Enforcement Bureau and its Section 271 proceedings. 12/14. The FTC's action on the AOL TW merger prompted much reaction and commentary. The NCTA, which represents cable operators, argued that "no other cable company serves more than a small fraction of the Internet access market. The anti-trust safeguards imposed by the FTC are unique to AOL's substantial Internet position and are not a precedent for broader government regulation." See, NCTA release. In contrast, the OpenNet Coalition, which represents many ISPs, stated that "this can serve as a model for other cable systems across the country". See, OpenNet release. The Association for Competitive Technology released a statement that condemned the deal. "It is unfortunate that the FTC succumbed to the lobbying efforts of forced accessed advocates" said ACT President Jonathan Zuck. "In the end, forced access amounts to corporate welfare and consumers will be the losers." Meanwhile, the Consumers Union issued a release that praised the "open access" component of the deal, but criticized the FTC for not also ordering the divestment of certain assets. 12/14. The U.S. Justice Dept. released the final report of the Illinois Institute of Technology Research Institute (IITRI) on the e-mail surveillance system named Carnivore. It contained few changes from the preliminary report. See, DOJ's Final Carnivore Report [caution: 4.5 MB PDF file]. House Majority Leader Dick Armey (R-TX) criticized the report: "This superficial review doesn't get to the heart of the matter. It does nothing to restore the confidence that Americans should have in the confidentiality of their online transactions. Why should average Internet users have to wonder whether a rogue agent could snoop through their emails and other online transactions?" See, Armey statement. 12/14. Gov. James Gilmore (R-VA), and other members of an anti terrorism panel released their second annual report, which also addresses cyber terrorism, at a press conference in Washington DC. See, TLJ story. 12/14. The USTR announced that it submitted to the WTO a "negotiating plan to remove trade barriers across a broad range of services sectors", including telecommunications. See, USTR release. 12/14. Outgoing USTR Charlene Barshefsky gave a speech in Washington DC to the Democratic Leadership Council on trade policy. She also outlined upcoming trade related items. "Next year, the new Congress will consider at least six major bills: implementation of the U.S.-Vietnam Trade Agreement and a similar agreement with Laos through approval of annual NTR; Free Trade Agreements with Jordan, Singapore and Chile; a renewed and expanded Andean Trade Preferences Act. The new Administration and Congress will also need to decide whether the procedural device of "fast-track" negotiating authority remains necessary. ... China's WTO commitments will come into force, and the task of monitoring and enforcement will begin. ... The Free Trade Agreement with Singapore, which may be expanded in Asia, begins ..." She also reviewed and praised the trade accomplishments of the Clinton administration. 12/14. The Federal Election Commission elected Danny McDonald as Chairman and David Mason as Vice Chairman for 2001. These positions rotate annually. See, FEC release. The FEC, which is responsible for enforcing the Federal Election Campaign Act (FECA), has increasingly been addressing issues that affect the Internet, including determining whether certain Internet activities constitute campaign contributions or expenditures, and applying the FECA to fund raising on the Internet. 12/13. BT filed a complaint in U.S. District Court (SDNY) against Prodigy alleging patent infringement. BT, the British legacy telecom company, asserts that the use of hyperlinks by Prodigy, an Internet Service Provider, violates its U.S. Patent 4,873,662. 12/13. The FCC's Office of Plans and Policy released two working papers which offer proposals regarding interconnection between carriers, including ISPs. One is Bill and Keep at the Central Office as the Efficient Interconnection Regime [PDF], Working Paper No. 33, by Patrick DeGraba. It proposes "a unified approach to interconnection pricing called Central Office Bill and Keep ("COBAK"), which applies to all types of carriers that interconnect with, and to all types of traffic that pass over, the local circuit-switched network. COBAK is a default interconnection regime, which means it would apply only when two networks cannot agree on terms for interconnection. The COBAK proposal consists of two rules for local calls involving two networks. First, a called party’s carrier cannot charge an interconnecting carrier to terminate a call. (Thus, each carrier recovers the cost of the loop and local switch from its own end-user customers). Second, the calling party’s network is responsible for the cost of transporting a call between the calling party’s central office and the called party's central office." The second paper is A Competitively Neutral Approach to Network Interconnection [PDF], Working Paper No. 34, by Jay Atkinson and Christopher Barnekov. It proposes "a default bill and keep solution under which carriers split equally those costs that are solely incremental to interconnection, and recover all remaining costs from their own customers." 12/13. The FBI's NIPC issued an assessment which stated that "A regional entity in the electric power industry has recently experienced computer intrusions through the Anonymous FTP (File Transfer Protocol) Login exploitation. The intruders used the hacked FTP site to store and play interactive games that consumed 95 percent of the organization's Internet bandwidth. The compromised bandwidth threatened the regional entity's ability to conduct bulk power transactions." See, release. 12/13. The USPTO published an unofficial list [PDF] of the individuals who passed the examination given on Oct. 18, 2000 to practice before the USPTO in patent cases. 12/13. The USITC decided to review an initial determination (ID) issued by the Administrative Law Judge Sidney Harris terminating an investigation based on withdrawal of the complaint by complainant Rambus. His ID accused Rambus of judge shopping, and conditioned the termination on any future refiling of the Rambus complaint being assigned to him. Rambus petitioned for this review. Rambus filed, but later withdrew, a complaint against Hyundai Electronics alleging violation of § 337 of the Tariff Act of 1930 by importing into the U.S., and selling within the U.S., SDRAMs, and products containing same, that infringe patents owned by Rambus. Hyundai and Rambus are also parties to litigation in U.S. District Court involving claims regarding patent infringement, patent validity, and anticompetitive practices. 12/13. Atmel and STMicroelectronics announced that they settled all claims against each other in two patent infringement lawsuits pending in the U.S. District Courts (NDTex and DDel). Atmel, based in San Jose, California, makes advanced logic, mixed signal, nonvolatile memory, and RF semiconductors. STMicroelectronics, formerly know as SGS - Thomson Microelectronics, is based in Geneva, Switzerland, and makes semiconductor integrated circuits. See, Atmel release and ST release. ST filed its original complaint in U.S. District Court (NDTex) against Atmel on July 25, 2000, alleging patent infringement. The suit concerned nine patents covering manufacturing processes as well as various products, including memory products, microcontroller products, and smart card products. ST alleged infringement of U.S. Patents 5,748,528; 5,594,793; 5,452,467; 5,045,495; 5,031,092; 4,879,693; 4,849,942; 4,553,314; and 4,348,743. Neither company disclosed the terms of the settlement, except to state that they "entered into a broad patent cross-license agreement". 12/13. The Jungreis Foundation filed a complaint [PDF] in U.S. District Court (SDNY) against Deutsche Telekom, six underwriters, and one director, Ron Sommer, alleging violation of federal securities laws in connection with the filing by Deutsche Telekom of a registration statement with the SEC on May 22, 2000, and the issuance of a prospectus dated June 17. Plaintiff alleges that there were material omissions from the registration statement and prospectus regarding Deutsche Telekom's acquisition of VoiceStream, which was announced on July 24. The plaintiff, which seeks class action status, is represented by the law firms of Milberg Weiss and Fruchter & Twerskey. Count one alleges registration statement fraud in violation of § 11 of the Securities Act of 1933. Count two alleges prospectus fraud in violation of § 12(a)(2) of the Act. Count three alleges controlling person liability under § 15 of the Act. Milberg Weiss is a law firm that specializes in bringing class action securities suits against technology companies when their stock prices drop. It has also recently filed similar suits against AT&T, WorldCom, PSINet, and Gateway. 12/12. The SEC brought and settled an administrative complaint against Jeffrey Honigman under §§ 15(b) and 19(h) of the Securities Exchange Act of 1934 for manipulating the immediate after-market of the initial public offering (IPO) of the securities of Paravant Computer Systems. Honigman was formerly associated with Duke and Company, a SEC registered broker-dealer. Duke sold securities in the Paravant IPO to accounts controlled by individuals who had agreed to sell those securities immediately back to Duke. Duke then repurchased the Paravant securities from the controlled accounts and sold them to Duke's customers at artificially inflated prices. Paravant Computer Systems (PCS) is a subsidiary of Paravant Inc., a defense electronics company. PCS makes rugged handheld, vehicle mount, and laptop systems for Command, Control, Communications and Computer applications for land armed forces. See, SEC Order. 12/12. The FCC denied petitions filed by PanAmSat and GE Americom seeking reconsideration of its Aug. 8, 2000 decision (FCC 00-287) authorizing INTELSAT as a U.S. licensee upon its privatization in 2001. That decision granted INTELSAT full access to the U.S. market providing that it privatizes in a manner consistent with U.S. law. See, FCC release. See also, contact info. 12/12. The Global Internet Liberty Campaign (GILC) sent a letter to the Council of Europe (COE) stating its opposition to the COE's draft convention on cyber crime. The letter was signed by 22 major (and minor) privacy and Internet related groups. The letter states that "the convention continues to be a document that threatens the rights of the individual while extending the powers of police authorities, creates a low-barrier protection of rights uniformly across borders, and ignores highly-regarded data protection principles." The CDT, signatory to the GILC letter, also released its own report of the draft treaty. See, also, Council of Europe Draft Treaty on Cyber Crime (Draft No. 24). 12/12. The International Intellectual Property Alliance (IIPA) released a study titled "Copyright Industries in the U.S. Economy: The 2000 Report" and prepared by Stephen Siwek of Economists Incorporated. It reports that the U.S. copyright industries continue to be one of the fastest growing segments of the U.S. economy. The study found that "In 1999, the core copyright industries contributed an estimated $457.2 billion to the U.S. economy, accounting for approximately 4.94% of GDP. This 1999 contribution represents an increase of 10.9% from 1998 ... The copyright industries have created jobs at a much faster rate than many leading sectors of the economy." An Executive Summary [PDF] is in the IIPA web site. The full report is for sale from the IIPA. (Call 202-833-4198.) See also, IIPA release [PDF]. 12/12. The Office of Management and Budget (OMB) published in the Federal Register lengthy amendments to its circular titled "Management of Federal Information Resources" regarding the acquisition and use of information technology by the government. This OMB revision also pertains to implementation of the 1996 Electronic FOIA Amendments. These revisions were made pursuant to the Clinger Cohen Act, which is also titled the Information Technology Management Reform Act of 1996, which grants authority to the OMB Director to oversee the acquisition, use, and disposal of information technology by the federal government. See also, contact info. (Federal Register, Dec. 12, Vol. 65, No. 239, at pages 77677 - 77687.) 12/12. Microsoft settled its temporary worker lawsuits. 12/12. The FCC conducted the first day of auctions of C and F block Personal Communications Services (PCS) licenses in the 2 GHz band. 12/12. SEC Chairman Arthur Levitt gave a speech in NYC to the FRB of NY regarding the need for "corporate governance" in "a marketplace driven by technology, information, and a more empowered investor base". 12/12. The FTC voted to approve a settlement agreement with WebTV. The FTC released its administrative complaint against WebTV on October 25 alleging that WebTV's advertising practices constitute unfair or deceptive acts or practices in violation of §5(a) of the Federal Trade Commission Act. The FTC and WebTV also simultaneously settled the matter. The Commission's vote followed the public comment period. The complaint alleged that WebTV advertised that "The WebTV set-top box is equivalent to a personal computer with respect to its Internet-related performance" whereas, in fact, "The WebTV set-top box is not equivalent to a personal computer with respect to its Internet-related performance. For example, WebTV set-top box users are unable to download, store, or run software available on the Internet, display certain Web pages or play certain Web files, or open email attachments in certain common formats". WebTV agreed not to advertise that its product "and a computer are equivalent in their ability to provide access to content available on the Internet" or that its product "provides access to all of the Internet's content". 12/12. The USTR designated three more Jordan Israeli Qualifying Industrial Zones (QIZs) from which goods can enter the U.S. duty-free. The newly designated QIZs are the Mushatta International Complex, the El Zay Duty Free Area and the Al Qastal Industrial Zone. See, USTR release. 12/12. The FCC begins it auction of C and F block Personal Communications Services (PCS) licenses in the 2 GHz band. These licenses may be used to provide a variety of services, including cellular phone service, wireless Internet access, and 3G service. This is the re-auction of the bankrupt NextWave's spectrum licenses. 12/11. The U.S. Court of Appeals (2nd Cir) issued its opinion in Airtouch Paging v. FCC. Airtouch petitioned for review of an FCC Order that included a definition of the term "telephone exchange service" found in Section 251(b) of the 1996 Telecom Act. The definition did not include paging services. The Court dismissed the petition for lack of standing, on the grounds that Airtouch had not yet suffered an injury. 12/11. The International Court of Arbitration (ICA) of the International Chamber of Commerce (ICC) issued its decision and award in an arbitration between Qualcomm and the Korean Electronics and Telecommunications Research Institute (ETRI) regarding royalties on sales of certain Code Division Multiple Access (CDMA) equipment in Korea. The ICA ordered Qualcomm to share royalty revenues with ETRI. "While we are disappointed by the ICA's decision, we continue to look forward to receiving strong royalty revenues from sales of CDMA equipment in Korea," said Qualcomm SVP and General Counsel Louis Lupin in a release. 12/11. Long distance phone service provider AT&T filed comments with the FCC opposing SBC's Section 271 application to provide long distance service in Kansas and Oklahoma. See, AT&T release. 12/11. SBC filed reply comments with the FCC in support of its Section 271 application to provide long distance service in Kansas and Oklahoma. See, SBC release. 12/11. The USPTO published a notice [PDF] in the Federal Register that it is reopening the time period for comments on a convention being negotiated by the Hague Conference on Private International Law that is designed to create common jurisdictional rules for international recognition and enforcement of judgments issued under these rules (65 F.R. 61306 (2000)). The new deadline is January 12, 2001. See, Federal Register, Dec. 11, 2000, Vol. 65, No. 238, at page 77347. |
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