CompUSA Insider Trading. 5/10. The SEC
filed a civil complaint in
U.S. District Court (SDNY) against
Alejandro Duclaud and others in connection with possible insider trading in CompUSA stock in violation of federal
securities laws. On January 24, 2000, CompUSA, a retailer of computer equipment,
peripherals and software, and Grupo Sanborns, S.A. de C.V., a Mexican holding
company, announced that Grupo Sanborns would acquire CompUSA. Duclaud is an
attorney in the Mexico City law firm of Franck
Galicia Duclaud & Robles which represented Grupo Sanborns. The District
Court issued a temporary restraining order that prohibits the defendants from
obtaining their assets in brokerage accounts in the U.S. or disposing of any
assets, wherever held, in a manner that could impair the SEC's ability to
recover ill-gotten gains and obtain civil penalties. The complaint alleges
violation of § 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and § 14(e) of
the Exchange Act, and Rule 14e-3 thereunder. See, SEC release.
5/10. Robert Verrue gave a speech in
Washington DC titled "The New Regulatory Framework for Electronic
Communications." Verrue is the Director General of the European
Commission's Information Society Directorate General (DG XIII).
Spread Spectrum Devices. 5/10. The FCC proposed to
revise its rules for spread spectrum systems. It released a Notice
of Proposed Rulemaking (NPRM) [PDF]. See also, Trends
in Spread Spectrum Devices [PDF], a presentation made by the FCC's Office of
Engineering and Technology at the FCC's May 10 meeting. (ET Docket No. 99-231.)
See also, FCC
release. The FCC's NPRM "proposes to revise the rules for frequency
hopping spread spectrum systems operating in the 2.4 GHz band to reduce the
amount of spectrum that must be used with certain types of operation, and to
allow new digital transmission technologies to operate pursuant to the same
rules as spread spectrum systems. It also proposes to eliminate the processing
gain requirement for direct sequence spread spectrum systems".
SPAM Hearing. 5/10. The House Judiciary Committee held a
hearing on HR 718, the Unsolicited Commercial Electronic Mail Act of 2001, and
HR 1017, the Anti-Spamming Act of 2001. HR 718, sponsored by Rep. Heather Wilson (R-NM) and Rep. Gene Green (D-TX), has already been
approved by the House Commerce Committee. The Committee heard testimony from
business group representatives in opposition to pending anti spam legislation.
See, prepared statements of Wayne Crews (Cato
Institute), Marc
Lackritz (Securities Industry Association), Rick Lane (Chamber of
Commerce), Paul
Misener (Amazon.com).
Crews testified that "Laws supposedly designed to halt spam can do more
harm than good." Lackritz testified that "we believe enacting
legislation that frustrates the innovative use of the Internet would be bad and
misguided public policy. Moreover, it would constitute a severe over-reaction to
a problem that can be addressed with a narrowly tailored solution along the
lines of HR 1017." Lane testified that "the primary focus of
legislation regarding commercial e-mail should center-around combating the
sending of fraudulent and deceptive e-mail." Misener testified that HR 718
"makes a good effort to prohibit egregious e-mail practices. Unfortunately,
we believe this bill goes too far to limit such practices and would
inadvertently constrain legitimate business activities."
Patent Hearing. 5/10. The House Judiciary Committee's
Subcommittee on the Courts, the Internet, and Intellectual Property held a
hearing titled "Patents: Improving Quality and Curing Defects." See,
prepared statements of Rep.
Howard Coble (R-NC), James Cottone
(National Intellectual Property Researchers Association), Michael Kirk (American
Intellectual Property Law Association), Jeffrey Kushan
(Powell Goldstein), and David Martin
(M•CAM Inc.).
SBC Missouri 271. 5/10. The Antitrust Division of the Department of
Justice (DOJ) submitted an analysis to the FCC regarding SBC's Section 271 application to
provide long distance service in Missouri. The DOJ recommended that the FCC
should independently review the prices that SBC charges its competitors for use
of its network. The DOJ stated that many of the prices charged by SBC for the
use of "unbundled network elements" are significantly higher in
Missouri than in states where SBC has already been permitted to provide long
distance service. Also, the DOJ stated that there is limited use of those
elements by competitors, and indications that Missouri prices might not be based
on forward looking costs. See, DOJ release.
SBC SVP Priscilla Ardoin, stated in response that "SBC is confident that it
will be able to demonstrate to the FCC that the evidence supports approval of
our Missouri long distance application." See, SBC
release.
DOJ Nominations. 5/10. The Senate Judiciary Committee held an
executive business meeting. The Committee approved the nominations of Charles
James to be Assistant Attorney General in charge of the Antitrust Division, Daniel
Bryant to be Assistant Attorney General for legislative affairs, and Larry
Thompson to be Deputy Attorney General. However, the Committee again delayed
its vote on the nomination of Ted Olson to be Solicitor General.
Securities Class Actions. 5/10. The U.S.
Court of Appeals (1stCir) issued its opinion
in Geffon
v. Micrion, a class action securities suit against Micrion and
several of its officers. Micrion, which has since merged with FEI Company, produced focused ion beam
systems for semiconductor mask repair and device edit applications. The District
Court granted defendant's motion for summary judgment on the grounds that there
was no genuine dispute of material fact as to whether the statements in question
were misleading or fraudulent. (Geffon v. Micrion, 76 F. Supp. 2d 134.) The
Court of Appeals affirmed on the grounds that plaintiffs adduced insufficient
evidence of defendants' scienter.
Fed Cir Jurisdiction. 5/10. The U.S.
Court of Appeals (4thCir) issued its opinion
in McCook
Metals v. Alcoa, a case regarding appellate jurisdiction over an
appeal from a discovery order in a proceeding that is ancillary to a proceeding
regarding patent validity and enforceability. The 4th Circuit transferred the
appeal to the Federal Circuit. Background:
McCook filed a complaint against Alcoa in
U.S. District Court (NDIll) alleging
interference with customer contracts and prospective business advantage in
violation of state law, monopolization of the relevant product market in
violation of the Sherman Act, and that two of Alcoa's patents for making
high strength aluminum alloy were neither valid nor enforceable. McCook then
obtained a third party subpoena from the U.S. District Court (EDVa)
directing Reynolds Metals to appear, testify, and produce documents at a
deposition. Reynolds refused, citing work product and attorney client
privileges. The District Court (EDVa) upheld Reynolds objections. McCook
appealed to the Appeals Court (4thCir). Holding: The Appeals Court
(4thCir) reasoned that because jurisdiction in the underlying action is based in
part on 28 U.S.C. § 1338, which confers jurisdiction upon district courts in
patent matters, any review of the ancillary discovery ruling must be sought from
the U.S. Court of Appeals for the Federal Circuit under 28 U.S.C. §§ 1292(c)
and 1295(a). The Appeals Court then transferred the appeal to the Federal
Circuit pursuant to 28 U.S.C. § 1631.
SEC News. 5/10. Rep. Mike Oxley (R-OH), Chairman of the House Financial Services
Committee, stated that he welcomes President Bush's statement that he
intends to nominate Harvey Pitt to be Chairman of the SEC. He stated that
"I look forward to working with him as we use the advantages of modern
technology to advance our capital markets in the world’s financial arena and
to make the advantages of investing accessible to more and more Americans."
See, release.
Commerce Dept. Nominees. 5/10. The Senate Banking Committee approved
four of President Bush's nominees: Ken Juster (Undersecretary of Commerce for
Export Administration), Grant Aldonas (Undersecretary of Commerce for
International Trade), Maria Cino (Asst. Sec. of Commerce and Director General of
the U.S. and Foreign Commercial Service), and Glenn Hubbard (Council of Economic
Advisers). See, release.
FCC Apppointments. 5/10. FCC Chairman Michael
Powell announced that W. Kenneth Ferree will be the new Chief of the Cable Services Bureau, effective May 21,
2001. He replaces Deborah Lathen. Ferree is a partner at Goldberg Godles Wiener & Wright a small
Washington DC law office specializing in communications law. He is also an
adjunct professor at Georgetown University Law Center, where he teaches
communications law and professional responsibility. He is also the author of Communications Law and
Regulation. See, FCC
release.
5/10. FCC Chairman Michael Powell announced that Julius Knapp will be a
Deputy Chief of the Office of Engineering and
Technology (OET). Knapp is currently Chief of the Policy and Rules Division
in OET and oversees spectrum allocations and technical rules for radio frequency
devices as well as coordination of radiofrequency issues with the Federal
Government. He has been with the FCC for 26 years.
Fast Track. 5/10. President George Bush sent a cover
letter to Congressional leaders in which he stated that "I have placed
the enactment of U.S. Trade Promotion Authority at the top of my trade
legislative agenda."
Echelon. 5/10. A delegation from the European Union
that is in Washington DC to investigate Echelon condemned several federal
agencies for not meeting with it. Carlos Coelho, Chairman of the European
Parliament's Temporary Committee on the Echelon Interception System, released a statement
which included the following: "we are concerned and dismayed that scheduled
meetings with the State Department, with the Advocacy Centre of the Department
of Commerce were cancelled at the last minute without a satisfactory
explanation. We are very disappointed by the last-minute reluctance of the CIA
and the NSA to meet our delegation in spite of the advanced preparations that
had been made. As a result we are cutting short our visit to Washington and
returning to Europe immediately.
"
New Bills. 5/10. Rep. Ellen Tauscher (D-CA) and Rep. David Dreier (R-CA) introduced H. Con. Res.
132, a concurrent resolution expressing the sense of Congress on the
importance of promoting electronic commerce. It states that the "Secretary
of Commerce and the United States Trade Representative should make the promotion
of cross-border trade via electronic commerce a high priority." It was
referred to the House Ways and Means Committee. See, Dreier release. Sen. Joe Lieberman (D-CT) and Sen. John McCain (R-AZ) introduced the same
language in the Senate. See, Lieberman
release.
5/10. Rep. Maurice Hinchey (D-NY)
introduced HR 1803, a bill to provide for public library construction and
technology enhancement. It was referred to the House Committee on Education and
the Workforce.
More News. 5/10. The Association of Communications Enterprises
(ASCENT), AT&T, Competitive
Telecommunications Association (CompTel) and McLeodUSA filed a joint petition with the Indiana Utility Regulatory Commission (IURC)
seeking the structural separation of SBC/Ameritech Indiana into separate
retail and wholesale operations. See, AT&T release, ASCENT release, and CompTel release.
5/10. Xilinx announced that it would appeal
the decision of U.S. District Court (NDCal) Judge James Ware
in Xilinx v. Altera. See, release.
Xilinx filed its complaint against Altera
in U.S. District Court (NDCa) in 1993 alleging
patent infringement. Xilinx makes programmable logic devices, including
integrated circuits, software design tools, and predefined system functions
delivered as cores. Altera also produces programmable logic devices.
FCC Dead Sharks. 5/9. NCTA President Robert Sachs gave a speech
in Orlando, Florida, in which he addressed FCC regulation of interactive
cable services. He stated that "A great deal of our work at NCTA is
encouraging public policy that gives technology the free market running room it
needs to grow. A case in point is the Notice of
Inquiry on Interactive TV which the FCC put out for comment in January. ...
But we consider regulation of yet to be developed services to be counter-
productive to their very development. There are those, for commercial reasons of
their own, who want the government to regulate Interactive Television before
it's ever launched. And it's a bit disconcerting that they have gotten as far as
an FCC Notice of Inquiry. FCC Chairman Michael Powell recently commented on
whether it's wise to start regulating ITV before the market is even visible. As
the Chairman put it: 'I don't believe in regulating phantoms.' I couldn’t
agree more. And given the Chairman's caution, it's unlikely that this particular
effort will get very far." However, Sachs concluded, "It's like
finding a dead shark in your swimming pool."
Privacy Commission. 5/9. Sen. Fred Thompson (R-TN) and Sen. Herb Kohl (D-WI) introduced the
"Citizens' Privacy Commission Act," a bill to establish an 11 member
commission to examine how federal, state, and local
governments collect and use personal information, and to make recommendations to
Congress. See, Thompson
release.
Commerce Committee Passes Bell Relief Bill. 5/9.
The House Commerce Committee
approved HR 1542, a bill to provide regulatory relief to the Baby Bells. The
Committee often passes legislation by unanimous voice vote. However, this bill
was adopted after an eight and one half hour debate by a roll call vote
of 32 to 23. The bill is also known as "Tauzin Dingell," for its lead
sponsors, Rep. Billy Tauzin (R-LA)
and Rep. John Dingell (D-MI), the
Chairman and ranking Democrat on the Committee. Tauzin and Dingell had the votes
to pass the bill from the outset. Opponents of the bill used the debate to
demonstrate the extent of opposition to the bill, and to attempt
(unsuccessfully) to amend the bill to increase the DSL buildout requirements
imposed upon the Bells, raise the bits per second rate in the definition of high
speech data service, impose reporting requirements on the Bells, give the FCC
more authority to enforce the provisions of the bill, and extend the existing
line sharing rule to cover fiber. Early in the meeting, Rep. Tauzin offered an
amendment in the nature of a substitute, also know as the "manager's
amendment," to the version of the bill reported by the Telecom
Subcommittee, also known as the "subcommittee
print." The committee approved several amendments to this manager's
amendment. However, all significant amendments that were opposed by Tauzin and
Dingell were either rejected, withdrawn or ruled out of order.
Arguments. Supporters of the bill stated that it will incent the Baby
Bells to deploy broadband Internet access services, particularly DSL service.
Supporters also argued that the bill will increase the Bells' ability to compete
with broadband cable service providers. See, prepared statements of Tauzin and Dingell.
Opponents argued that the bill would end competition in local phone markets,
revert the Bells to monopoly status, kill off many of the CLECs, and reduce
innovation and investment in new technologies and companies. The meeting lasted
from 10:00 AM until 6:30 PM, with breaks for two floor votes and one fire alarm.
Rep. Ed Markey (D-MA), an outspoken
opponent of HR 1542, added his usual color to the debate. He stated that this
bill adds "two new genres for the readers of telecommunications law."
He said that it adds "science fiction", referring to the bill's
attempt to distinguish between packet switched voice and data traffic. "The
Bell Empire is striking back," said Markey. He also said that the bill adds
"mystery". That is, "Will competition survive?" He also said
of the bill: "It's undigital, it's unnecessary, it's unfair."
Rep. Chip Pickering (R-MS), a
young Baptist from Mississippi, and another leader of the opposition, asserted
that he is "a lonely prophet in the wilderness." This prompted Tauzin
to interject that "Prophets generally have very short lives."
Build Out Requirements. The Committee spent much of the meeting debating
language that would mandate deployment of broadband service. While the
underlying premise of the bill is that the regulatory relief which it offers to
the Bells will incent them to deploy DSL service, even its sponsors conceded
that the bill also needs to actually require the Bells to deploy DSL service.
The debate was over whether to adopt a modest amendment
[PDF] offered by Rep. Tom Sawyer
(D-OH) and Rep. Bobby Rush (D-IL), and
backed by Tauzin and Dingell, or a more stringent amendment
[PDF] offered by Rep. Bart Stupak
(D-MI). The Sawyer amendment sets year by year requirements for the deployment
of DSLAMs
in central offices (COs). The Stupak amendment would have measured deployment
beyond that what has already been deployed. Stupak argued that the levels set by
the Sawyer amendment for the next few years have already been met by most Bells,
and hence, impose no real requirement. The Stupak amendment also would have
measured buildout based upon all local loops of up to 150,000 feet, while the
Sawyer amendment would cover only those of up to 15,000 feet. Stupak argued that
most customers in urban areas are within 15,000 feet of their COs, but that in
rural districts, such as his, many customers are far beyond 15,000 feet. The
bill, as amended by the Sawyer amendment, would impose no obligation to deploy
DSL service to customers who are beyond 15,000 feet from their COs. The
committee rejected the Stupak amendment by a vote of 17 to 37, and then approved
the Sawyer amendment by a voice vote.
Line Sharing. The Committee narrowly rejected, by a vote of 27 to 27, an amendment
[PDF] offered by Rep. Bill Luther
(D-MN) that would have extended the line sharing requirement to include fiber
and remote terminals. The Tauzin manager's amendment contained language
providing for line sharing, but only over copper lines. Tauzin said that
"this strikes at the heart of the bill." Dingell derided it as a
"killer amendment".
Definition of High Speed. The Committee also rejected, by a vote of 18 to
33, an amendment
[PDF] offered by Rep. Tom Davis
(R-VA) that would have defined "high speed data service" as at least
1.5 million bits per second downstream, and at least 128 thousand bps upstream.
Tauzin's manager's amendment defined it as only 384 thousand bps in one
direction (presumably downstream). Harman and Largent cosponsored the amendment.
Rep. Markey spoke in support: "They are promising us a superhighway, but we
are only going to get a bike path." He added that the Bells will charge
monopoly prices for it.
Reporting Requirements.Rep. Anna
Eshoo (D-CA) offered an amendment
[PDF] that would have required the Bells to submit certain data regarding the
quality of their service to the FCC. She described it as a consumer protection
provision. Tauzin and Dingell opposed it, and it went down to defeat, 18 to 27.
The main defenders of the bill throughout the day were Tauzin and Dingell, but
they received frequent support from Green, Stearns, Sawyer, Rush and others.
Upton made all of the procedural objections to various proposed amendments to
the bill. The most vocal opponents were Markey, Largent, Wilson, Davis, and
Stupak, with support from McCarthy, DeGette, and Harman. Rep. Chris Cox (R-CA), who is an opponent
of the bill, is now embroiled in partisan and ideological maneuvering over
President Bush's effort to put him on the U.S. Court of Appeals for the 9th
Circuit. He voted against the bill, but was not active in the debate.
Ken Johnson, spokesman for Chairman Tauzin, stated that "we will pass it
out of the House" but that "bill's chances are much more problematic
in the Senate." The Judiciary Committee has also asked to be given
jurisdiction over the bill. Johnson said that Speaker Hastert was unlikely to do
this.
Related Issues. 5/9. Enforcement.Rep. Fred Upton (R-MI) introduced HR 1765
on May 8. It would enhance the FCC's authority to enforce the Telecom Act of
1996, by increasing penalties, and lengthening the statute of limitations on
certain forefeiture actions against phone companies. This bill was not offered
as an amendment to HR 1542. Tauzin stated that the Committee would hold a
hearing on the bill, but that there would be no attempt to move the bill through
committee or to the floor. Rather, it would be offered as an amendment to HR
1542 on the floor. HR 1765, asserted Tauzin, is not germane to HR 1542; and, he
will ask the Rules Committee to waive
the germaneness rule. Davis offered an amendment to HR 1542 that would have
given the FCC enforcement authority for violation of its provisions. It was
rejected on a voice vote.
Open Access. The markup of HR 1542 was also used a forum to discuss and
debate several other Internet and telecommunications issues that are not
addressed in HR 1542. Rep. Rick Boucher
(D-VA) spoke in favor of mandating open access. Tauzin stated that this
is "a very appropriate subject matter for hearings of our committee."
Boucher offered no amendment.
Nondiscrimination. Boucher did offer an amendment
[PDF] that would require that volume discounts by phone companies to ISPs be
offered on a nondiscriminatory basis. Tauzin promised to work with Rep. Boucher
on this issue, and Boucher then withdrew his amendment.
Right of Way Fees. Wilson offered, but withdrew, an amendment
[PDF] that would require the Bureau of Land Management, and other government
agencies, when granting rights of way, to charge on the basis of either footage
or cost of management, rather than on the basis of the capacity or content of
the line. Tauzin expressed support for the idea. He said that right of way fees
based upon content amount to an "Internet tax."
Analysis of Vote on HR 1542. 5/9. The votes on
amendments and final passage did not break down on party or ideological lines.
Although, there was some correlation between party and vote, with Republicans
more likely than Democrats to support the bill. See, roll call votes.
However, several other factors were predictors of votes -- prior record of
support for the Internet, gender, region, and seniority. Techies, women,
westerners and junior members tended to oppose the bill.
Members from districts with new technology companies, or who have been advocates
of the Internet, tended to oppose the bill. For example, Reps. Eshoo (Silicon
Valley), Davis (Northern Virginia), and Markey (suburban Boston) all represent
tech heavy districts, and were leaders of the opposition to the bill. The one
notable exception was Rep. Rick Boucher
(D-VA), a Co-chair of the Internet Caucus, who supported the bill, and voted for
the Tauzin Dingell position on every vote in subcommittee and full committee.
Another good predictor of support for the bill was gender. Of the eight women on
the Committee, six voted no (Eshoo, Wilson, DeGette, Harman, Capps, and
McCarthy), only one voted yes (Bono), and one was absent (Cubin).
Region was also a predictor of support for the bill. Westerners were more likely
than members as a whole to oppose the bill. Of the seven Californians, five
voted no (Eshoo, Cox, Waxman, Capps, and Harman), and two voted yes (Bono and
Radanovich). The mountain state representatives -- Shadegg (AZ), DeGette (CO),
and Wilson (NM) -- all voted no. The upper midwest representatives -- Luther
(MN) and Barrett (WI) -- voted no. Also, representatives from districts with
widely dispersed populations (including many beyond the 15,000 foot range of DSL
service) tended to oppose the bill. Notably, Stupak (upper Michigan), Strickland
(Appalachian Ohio), and Largent (who represents Tulsa, but seeks to become
governor of Oklahoma) were vocal opponents of the bill. Also, Shadegg, Wilson,
and DeGette (who represent urban Phoenix, Albuquerque, and Denver) are from
states with many citizens who live in sparsely populated areas. Also, if the
vote is broken down by the territories of the original Regional Bell Operating
Companies, representatives from PacBell and US West tended to oppose the bill,
while representatives from SBC, Ameritech, BellSouth, Bell Atlantic, and Nynex
tended to support the bill.
Seniority on the Committee also correlated positively with support for the bill.
For example, the seven Republicans with the most seniority all supported the
bill. There are 31 Republicans on the Committee. Of the Republicans from the top
half in seniority, 13 voted yes, 2 voted no, and 1 was absent. Of the bottom
half in seniority, 8 voted yes, 6 voted no, and 1 was absent. These junior
members include all members appointed to the committee since 1998, when Wilson
got a seat following her special election. On the Democratic side, the telling
statistic is that 8 of the 9 most junior members voted no.
Party membership was also a predictor of a member's vote. The Republicans split
21 in favor, 8 against, and 2 absent. The Democrats split 11 in favor and 15
against.
People. 5/9. Deborah Lathen announced her
resignation as Chief of the Cable Services
Bureau at the FCC, effective May 18, 2001.
5/9. Troup Coronado was named Assistant Vice President for Federal
Relations in BellSouth's
Washington DC Governmental Affairs office. Previously, he was Director of
Government Relations with Sinclair Broadcast
Group. He has also worked for Sen. Orrin
Hatch (R-UT). See, release.
5/9. The FCC released its Memorandum
Opinion and Order on Reconsideration [PDF] In the Matter of Interconnection
and Resale Obligations Pertaining to Commercial Mobile Radio Services (CMRS).
The FCC denied the petition for reconsideration filed by the Association of Communications Enterprises
(ASCENT) of the Fourth Report and Order in this proceeding. The FCC reaffirmed
that facilities-based CMRS providers are not required to interconnect with
resellers' switches. The MOO was adopted on May 1, and released on May 9. (See,
CC Docket No. 94-54.)
New Bills. 5/9. Rep. Jerry Weller (R-IL), Rep. James Moran (D-VA), and others
introduced HR
1769, a bill to amend the Internal Revenue Code of 1986 to allow a credit
against income tax for information technology training expenses. It was referred
to the House Ways and Means Committee. The bill would allow a tax credit equal
to "100 percent of information technology training program expenses"
of up to $1,500 per employee, and $2,000 per employee in specified cases. To
qualify, the expenses must be paid in connection with course work and
certification testing, and must "lead to an industry-accepted information
technology certification".
5/9. Rep. Don Manzullo (R-IL)
introduced HR
1782, a bill to amend the Trade Act of 1974 to provide for the position of
Assistant USTR for Small Business. The bill was was referred to the House Ways
and Means Committee. Manzullo published a statement in the Congressional Record
in which he stated that "With the growth of the Internet economy, more
small businesses are able to export overseas but sometimes face difficult
obstacles in completing a sale." He added that small business needs
representation in trade talks. He stated that "trade talks could have
positive benefits for small business exporters, primarily in the area of trade
facilitation. Topics of discussion under this umbrella are streamlining trade
dispute resolution procedures; reforming the documentation and filing procedures
for patent and trademark protection; opening the public procurement process by
foreign governments to small businesses; enhancing transparency in international
tax, finance, customs procedures, and trade rules; and exploring means to
internationalize the recognition of technical certification of
professionals."
Antitrust. 5/9. The FTC published a notice
in the Federal Register that it is amending the Antitrust Improvements Act
Notification and Report Form and the accompanying Instructions for Certain
Mergers and Acquisitions which must be completed and submitted by persons
required to report mergers or acquisitions pursuant to § 7A of the Clayton Act.
The interim rule takes effect on July 1, 2001. However, the FTC requests
comments, by June 8, 2001, regarding the effective date. See, Federal Register,
May 9, 2001, Vol. 66, No. 90, at Pages 23561 - 23587.
SEC 10b Complaint. 5/9. The SEC
filed a civil complaint in U.S. District Court (DMass)
against Arcangelo Capozzolo and Market Traders alleging violation of federal
securities laws. Capozzolo is the operator of a stock recommendations web site.
Market Traders is his company. The complaint alleges that the defendants
violated § 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder by
making false and misleading statements on in the web site, and in bulk e-mail.
In addition, the defendants agreed, without admitting or denying the
allegations, to the entry of a permanent injunction and to the imposition of a
civil penalty against Market Traders.
More News. 5/9. The Recording
Industry Association of America. (RIAA) published a report [PDF]
titled 2000 Yearend Piracy Statistics. See also, RIAA release.
5/9. A grand jury of the U.S. District Court (NDCal)
returned an indictment
[PDF] against Robert Gordon, a former Cisco
Systems employee, charging two counts of wire fraud in violation of 18
U.S.C. § 1343. Gordon, who is a former Vice President and Director of Business
Development, is alleged to have transfered stock owned by Cisco to himself, and
to fraudulently induced Cisco to provide $15 Million to Spanlink, a Cisco
affiliated start-up company, so that he could fraudulently obtain $5 Million
from Spanlink. See, release.
5/9. The Electronics Industry Alliance (EIA) wrapped up its three day conference
in Washington DC. See, EIA conference web site and agenda.
5/9. The U.S. Court of Appeals (DC Cir)
heard oral argument in Qwest v. FCC, Appeal No. 00-1376.
Public Opinion on Privacy. 5/8. The House Commerce Committee's
Subcommittee on Commerce, Trade, and Consumer Protection held a hearing titled Opinion
Surveys: What Consumers Have To Say About Information Privacy. Rep. Cliff
Stearns (R-FL), the Chairman of the Subcommittee, presided. He stated that
"If the public opinion polls suggest one thing, it is that the American
public's encounter with the issues of information privacy is as complex as the
issue itself."
Frank Newport of Gallup testified that "Our conclusion is that this is an
issue which is of significant potential concern, but one which has not yet moved
to the point where it is a currently front-burner problem to many Americans who
regularly use the Internet." Harrison Rainie testified that Internet users
"would like the presumption of privacy when they are online; they want to
be asked before information is gathered or disseminated. They want rules, but
they have no clear preference for government standards or industry
self-regulation." See, prepared statements of witnesses: Frank
Newport (Gallup Poll), Harrison
Rainie (Pew Internet & American Life Project), Alan
Westin (Columbia University), Humphrey
Taylor (Harris Interactive), and Sandra
Bauman (Wirthlin Worldwide).
Costs of Complying with Privacy Legislation. 5/8.
Robert Hahn, Director of the AEI-Brookings
Joint Center for Regulatory Studies, presented a study [PDF] titled
"An Assessment of the Costs of Proposed Online Privacy Legislation" at
a luncheon on Capitol Hill hosted by the Association for Competitive
Technology (ACT). Hahn estimated the costs of some aspects of proposed
online privacy legislation and concluded that the costs to online businesses of
complying "could be in the billions, if not tens of billions of
dollars." He also argued that "further regulation of online privacy is
premature for three reasons. First, the costs could be substantial. Second, I am
not aware of any good quantitative estimates of the benefits of such regulation.
Third, the market is reacting to ensure that at least some of the consumer
concerns related to online privacy are being addressed." Hahn conceded that
over time compliance costs could decrease. He also stated that it is possible
that the electronic economy is being held back by individuals' fears of loss of
privacy. See also, summary
of study and ACT
release.
Privacy Commission. 5/8. The House Reform Committee's Subcommittee on
Government Efficiency, Financial Management adopted HR 583, the
Privacy Commission Act, by a voice vote. The bill would create a 17 member
commission to study privacy issues, and then issue a report within 18 months. It
is sponsored by Rep. Asa Hutchinson
(R-AR), Rep. James Moran (D-VA), and others.
HR 1542 is one of two major bills that would change the regulatory environment
in which the Baby Bells operate. The other bill, HR 1698, is
sponsored by Rep. Chris Cannon (R-UT)
and Rep. John Conyers (D-MI), who
are both members of the House
Judiciary Committee. Sponsors and supporters of both bills assert that their
bills would promote the deployment of broadband Internet access services.
Trademark. 5/8. The U.S.
Court of Appeals (6thCir) issued its opinion
in Allard
v. Advanced Programming Resources, an appeal from a judgment in a
trademark infringement case on a number of issues. Both parties claim the
exclusive right to use the mark "APR". The Appeals Court concluded
that the District Court did not err in granting a new trial but did err in
permitting defendants to amend their counterclaim to request cancellation of
plaintiff's federal registration. The Appeals Court reversed the cancellation of
plaintiff's registration. The Appeals Court affirmed the conclusion that
defendants have the exclusive right to use the mark in central Ohio. The Appeals
Court remanded to evaluate the parties' rights to use the mark on the Internet,
throughout Ohio and throughout the U.S.
Export Controls. 5/8. The U.S.
Court of Appeals (DCCir) issued its opinion
in USA v. Hitt,
a criminal case involving allegations of fraudulent misrepresentations made to
the Department of Commerce in connection with the sale by McDonnell Douglas to
the People's Republic of China of machinery that was subject to export
controls. The District Court ruled that the charges were barred by the statute
of limitations. The Appeals Court affirmed.
Stock Options. 5/8. The U.S.
Court of Appeals (9thCir) issued its opinion
in Scribner
v. WorldCom, a case construing the meaning of the words
"termination without cause" mean in the context of a stock option
contract between an employer and employee.
Fast Track. 5/8. USTR Robert Zoellick testified before the
House Ways and Means Committee's
Trade Subcommittee. He advocated fast track trade negotiating authority. He
stated: "The Bush Administration's top trade priority is for the Congress
to enact U.S. Trade Promotion Authority by the end of the year. Under this
authority, the executive branch would be bound by law to consult regularly and
in detail with members of Congress as trade agreements are being negotiated. But
once that long and exhaustive process of consultations is completed, and the
painstaking negotiations have ended in an agreement, our trading partners have
the right to know that Congress will vote on the agreement up or down. Indeed,
in the absence of Trade Promotion Authority, which expired in 1994, other
countries have been reluctant to close out complex and politically sensitive
trade agreements with the United States." See, prepared
testimony.
See also, statements of Rep. James
Moran (D-VA) and ERep.
Ellen Tauscher (D-CA), and prepared testimony of other witnesses: Loren
Yager (GAO), Richard
Fisher (former Deputy USTR), John
Sweeney (AFL/CIO), Franklin
Vargo (NAM), Daniel
Price (U.S. Council for International Business), William
Gambrel (U.S. Chamber of Commerce), Marta Lucía
Ramirez de Rincón (Minister of Foreign Trade, Colombia), Ana Maria
Solares (Vice-Minister of Trade and Economics, Bolivia), Carlos
Moore (American Textile Manufacturers Institute), Stephen
Lamar (American Apparel and Footwear Association).
E-Rate. 5/8. The FCC published a Notice
of Proposed Rulemaking (NPRM) in the Federal Register regarding revisions to
the method of subsidizing schools and libraries under its e-rate program when
there is insufficient funding to support all requests. Comments are due by May
23, 2001. Reply comments are due by May 30, 2001. See, Federal Register, May 8,
2001, Vol. 66, No. 89, at Pages 23204 - 23208.
People. 5/8. Four lawyers, Ann
Ford, Mark
Tidman, Lisa
Trovato, and Emily
Sexton, joined the Washington DC office Piper
Marbury in its intellectual property practice group. All four previously
worked in the Washington DC office of the law firm of Baker & Hostetler. Ford practices in the
areas of international trademark and copyright law, including the the use of
intellectual property on the Internet. Tidman practices in the areas of
trademark, trade dress and unfair competition practice and prosecution. Trovato
handles drafting and negotiating intellectual property licensing, joint venture
and e-commerce related agreements as well as counseling clients with respect to
trademark, copyright and domain name matters. Saxton handles trademark
prosecution and enforcement, copyright counseling and enforcement, and domain
name infringement actions. See, release.
More News. 5/8. The Federal
Trade Commission held the second day of two day workshop on competition
issues that arise in connection with business to business (B2B) and business to
consumer (B2C) e-commerce. See, release.
5/8. The Senate Judiciary Committee
postponed its hearing on patents relating to genetics and biotechnology.
No future date has been scheduled. The Committee is also scheduled to hold a
hearing on May 15 titled "High Technology Patents I: Business Methods and
the Internet."
5/8. The FCC announced that it adopted a
Notice of Proposed Rulemaking (NPRM) Notice of Proposed to explore ways to
reform the existing universal service fund (USF) subsidy system. See, release.
Pitt to Chair SEC, 5/7. President Bush will
nominate Harvey
Pitt to be Chairman of the SEC. He will replace Arthur
Levitt, who departed in February. Laura Unger has been Acting Chairman since
February. Pitt is a partner in the Washington DC and New York City offices of
the law firm of Fried Frank. His
clients include the New York Stock Exchange and Lloyd's of London. He worked at
the SEC in the 1970s, culminating as General Counsel from 1975 - 1978. Pitt is a
co-author of several treatises on the securities industry and law, including Securities
in the Electronic Age (2000) and The
Law of Financial Services (1988).
FCC Enforcement. 5/4. FCC Chairman Michael Powell
sent a letter
to the leaders of the Senate and House Commerce and Appropriations Committees in
which he requested increased authority in enforcement actions against incumbent
local exchange carriers (ILECs) for violation of local competition provisions of
the 1996 Telecom Act. He stated that "in some cases, CLECs may have been
stymied by practices of incumbent local exchange carriers that appear designed
to slow the development of local competition."
Powell wants legislation increasing the maximum fine from $1.2 Million to $10
Million. He wrote: "Currently, under 47 U.S.C. § 503(b)(2)(B),
the Commission's forfeiture authority against common carriers for any single
continuing violation of the Act or the Commission's rules is limited $1.2
million, including inflationary adjustments. Given the vast resources of many of
the nation's ILECs, this amount is insufficient to punish and to deter
violations in many instances. Congress should consider increasing the forfeiture
amount to at least $10 million in order to enhance the deterrent effect of
Commission fines.
Powell also asked for a longer statute of limitations for forfeiture actions
against common carriers. It is currently set at one year from the date of the
alleged violation. He also asked that the FCC be given authority to award
punitive damages, attorneys fees and costs in formal complaint cases filed under
§ 208.
Free Trade & the Internet. 5/7. President
George Bush gave a speech
to the Council of the Americas at the State Department in Washington DC in which
he made the case for free trade. He stated that "Americans are the world's
pre-eminent inventor of new technology and the world's biggest foreign investor.
We're the world's most efficient food producer, and the world's leading source
of information and entertainment. For our farmers and our inventors, for our
artists and for ordinary savers, open trade pays off in the form of higher
incomes and higher returns." He then added that "Open trade is not
just an economic opportunity, it is a moral imperative. Trade creates jobs for
the unemployed. When we negotiate for open markets, we are providing new hope
for the world's poor. And when we promote open trade, we are promoting political
freedom. Societies that open to commerce across their borders will open to
democracy within their borders, not always immediately, and not always smoothly,
but in good time."
Secretary of State Colin Powell also gave a speech
to the Council of the Americas. He stated that "In Quebec, we were all
excited by the possibilities of closing the digital divide to make sure that
nobody's child, nobody's school, nobody's society, is left behind from the power
of the information and technology revolution, so that the poorest and most
disadvantaged members of society get that same access. ... But we can't deny
youngsters the opportunity to learn, to have the world come into their world,
have their lives changed by this power. And by so doing we would increase
economic integration, bring the poor and marginalized into fuller participation
in their own democratic systems. As I say, I hope you and the business community
will use your energies and creativity to help make the Internet a force for
prosperity and for democracy."
The Council of
the Americas is a New York City based business group that promotes free
trade in the Western Hemisphere. See also, USTR
Robert Zoellick's speech,
and Assistant Secretary for Western Hemisphere Affairs Peter Romero's speech.
5/7. The U.S.
Court of Appeals (FedCir) issued its opinion in Intellectual
Property Development v. TCI, a case involving standing to
sue in a patent infringement matter. The case involves U.S.
Patent No. 4,135,202, which pertains to wired broadcasting systems with
fiber optic lines. The District Court (CDCal)
granted the motion filed by Intellectual Property Development to dismiss its
complaint against TCI with prejudice and to dismiss TCI's counterclaims without
prejudice. The Appeals Court affirmed.
5/7. The U.S.
Court of Appeals (FedCir) issued its opinion in Robotic
Vision Systems v. View Engineering, a patent infringement
case involving the on sale bar. 35 U.S.C. § 102(b)
provides that "A person shall be entitled to a patent unless ... the
invention was ... on sale in this country, more than one year prior to the date
of the application for patent in the United States." Robotic is the
assignee of U.S.
Patent 5,463,227, which discloses a method of scanning the leads on
integrated circuit devices that are arranged in rows and columns on a
multi-pocketed tray. The application for the '227 patent was filed on June 24,
1992, thus making June 24, 1991 the critical date for the purpose of applying §
102(b). As soon as the patent was granted, Robotic filed a complaint in the U.S.
District Court (CDCal)
against View alleging that its three dimensional scanning machines infringed the
patent '227 patent. View filed a motion for summary judgment on the grounds that
the patent was invalid under the on sale bar. The District Court held that claim
1 of the '227 patent is invalid. The District Court applied the Supreme Court's
two part test in Pfaff v. Wells
Electronics, 525 U.S. 55 (1998); the invention was (1) the subject of a
commercial offer for sale before the critical date, and (2) ready for patenting
before the critical date, and hence, the patent was invalid. The Appeals Court
affirmed.
5/7. Paul
Rogers and Ross Meador
joined the San Francisco office of the law firm of Preston Gates & Ellis as partners in
the firm's business and technology practices. See, release.
5/7. The SEC published in the Federal
Register a guidance
on the operation of its rule permitting electronic storage of broker- dealer
records in light of the recently enacted Electronic Signatures in Global and
National Commerce Act of 2000 (E-SIGN Act). See, Federal Register, May 7, 2001,
Vol. 66, No. 88, at Pages 22916 - 22921.
5/7. The Federal Trade Commission held the
first day of a two day workshop on competition issues that arise in connection
with business to business (B2B) and business to consumer (B2C) e-commerce. See, release. The workshop
continues on May 8.
5/7. The Electronics Industry Alliance (EIA) began a three day conference in
Washington DC. See, EIA conference web site and agenda.
5/6. Laura Unger, Acting Chairman of the SEC, gave a speech Los Angeles
regarding investing, securities regulation and the Internet in which she
addressed the SEC's new Order Execution and Routing Disclosure Rules, whether
financial portals should register as broker- dealers, Regulation FD, potential
conflicts of analysts, and Internet fraud.
5/6. Napster released a statement in
Q&A format about "acoustic fingerprinting", a technology for
blocking the copying of copyrighted music files.