|News Briefs from June
Supreme Court Rules for Freelance Authors in NYT v. Tasini
6/25. The Supreme Court of
the U.S. issued its opinion [PDF]
York Times v. Tasini, a case regarding the application of
copyright law to the republication of the articles of free lance writers in
electronic databases. The Court ruled, 7-2, that the defendant publishers did
not have a privilege under Section 201(c) of the Copyright Act to include in
electronic databases free lance articles written for print publications.
Facts. The plaintiffs are free lance authors whose articles were
previously published in periodicals. The defendants
are publishers and owners of electronic databases which have republished their
articles. None of the plaintiffs were employed by the periodical publications in
which their articles appeared. Nor did they have work for hire contracts. All
registered a copyright in each of the articles at issue in this proceeding. The
authors' ownership of the copyright in their individual works is not in dispute.
Subsequently, the periodical publications licensed much of the content of their
periodicals, including the plaintiffs' works, to one or more of the electronic
Lower Court Proceedings. Plaintiffs filed a complaint in U.S. District Court
in 1993 alleging copyright infringement. The District Court issued its opinion in 1997 holding that
defendants are protected by the privilege afforded the publishers of
"collective works" under Section 201(c) of the Copyright Act.
Collective works include newspapers and magazines. Judge Sotomayor ruled on
cross motions for summary judgment that the electronic databases are a
"revision" of the individual periodical issues from which the articles
were taken, and hence, granted summary judgment for the defendants. The U.S. Court of Appeals (2ndCir)
issued its opinion
reversing the District Court in 1999. Judge Winter, writing for a three judge
panel, held that the privilege afforded authors of collective works under
Section 201(c) does not permit the publishers to license individually
copyrighted works for inclusion in the electronic databases.
17 U.S.C. 201(c). "Contributions to Collective Works. Copyright in
each separate contribution to a collective work is distinct from copyright in
the collective work as a whole, and vests initially in the author of the
contribution. In the absence of an express transfer of the copyright or of any
rights under it, the owner of copyright in the collective work is presumed to
have acquired only the privilege of reproducing and distributing the
contribution as part of that particular collective work, any revision of that
collective work, and any later collective work in the same series."
Opinion of the Court. Justice Ginsburg wrote the opinion of the Supreme
Court. She wrote that "§201(c) does not authorize the copying at issue
here. The publishers are not sheltered by §201(c), we conclude, because the
databases reproduce and distribute articles standing alone and not in context,
not "as part of that particular collective work" to which the author
contributed, "as part of ... any revision" thereof, or "as part
of ... any later collective work in the same series." Both the print
publishers and the electronic publishers, we rule, have infringed the copyrights
of the freelance authors." Ginsburg added, "we leave remedial issues
open for initial airing and decision in the District Court."
Dissent. Justice Stevens wrote a dissent, in which Justice Breyer joined.
He wrote that electronic databasing is a revision within the meaning of Section
201. Stevens also stated that he was concerned about "the difficulties of
locating individual freelance authors and the potential of exposure to statutory
damages may well have the effect of forcing electronic archives to purge
freelance pieces from their databases." He also commented, in a footnote,
that "congressional action may ultimately be necessary to preserve present
databases in their entirety. At the least, Congress can determine the nature and
scope of the problem and fashion on appropriate licensing remedy far more easily
than can courts."
The Software & Information Industry
Association (SIIA) criticized the opinion, and called for legislation. It is
a Washington DC based trade group which represents, among others, the electronic
database companies which lost this case. SIIA President Ken Wasch stated that
the "SIIA is committed to uniting publishers of digital content and
companies providing electronic archival services to lobby Congress to consider
the effects of this decision". See, release.
SCUS Grants Cert in 11th Amendment Telecom Case
6/25. The Supreme Court of
the U.S. granted certiorari in Verizon Maryland v. Public Service Commission
of Maryland (No. 00-1531) and U.S. v. PSC of Maryland (No. 00-1711). These two
cases are set for oral argument in tandem with Mathias v. Worldcom (No. 00-878).
List [PDF] at page 3. The issue is whether state public utility commissions
are immune under the 11th Amendment from being sued in federal court under the
Communications Act. The Constitution provides: "The Judicial power of the
United States shall not be construed to extend to any suit in law or equity,
commenced or prosecuted against one of the United States by Citizens of another
State, or by Citizens or Subjects of any Foreign State."
More Supreme Court News
6/25. The Supreme Court of the U.S. denied certiorari certiorari in Graceba
Total Communications v. FCC. See, Order
List [PDF] at page 5.
The Supreme Court is likely to hand down its remaining decisions of the term on
Thursday, June 28.
Nilssen v. Motorola
6/25. The U.S. Court of Appeals (7thCir)
issued an opinion
v. Motorola. The underlying dispute pertains to intellectual
property. However, the appellate opinion avoids the substantive issues, and
instead only addresses various procedural rules in patent and trade secret
Ole Nilssen, a litigious inventor, filed a complaint in U.S. District Court
against Motorola alleging patent infringement, breach of contract, and violation
of trade secret rights. The District Court split the proceeding into two cases,
one for patent claims, and the other for state law claims. This created issues
of jurisdiction of the District Court over the state law proceeding, finality of
any judgment of the purpose of appeal, and which appellate court has
jurisdiction over an appeal. It also affected several aspects of each
proceeding, including issues to be tried by a jury, and calculation of damages.
In this appeal from a judgment in the state law proceeding, Judge Easterbrook
vacated the judgment of the District Court, and remanded with instructions to
consolidate this state law proceeding with the patent law proceeding. Once
consolidated, any appeal will lie in the Federal Circuit.
6/25. Rep. Zoe Lofgren (D-CA) placed
extended remarks in the Congressional Record regarding HR 2231, the
Patent Reexamination Enhancement Act of 2001, which she introduced on June 19.
She wrote that "an invalid patent -- a patent that either should never have
been issued or which confers protection beyond what is entitled -- can cause
significant damage not only to individual companies but to competitors. Those
individuals who rely on their patent and discover a defect, or those who face
the threat of litigation on the basis of a patent that is invalid each have a
substantial interest in having a mechanism to 'fix' the problem with the patent.
This is why I am calling for an enhancement of our patent reexamination
Her bill would expand the grounds upon which one may initiate a patent
reexamination. She wrote that "Under current law, reexaminations may be
based only on patents or printed publications. In a number of fast-moving
technologies, such as business methods and software, there is often a
substantial body of information that is not formally published or found in
patents, so that other information is not considered when making the
determination to issue a patent." See, Congressional Record, June 25, 2001,
at Page E1191.
Online Auction Fraud
6/25. Rep. Billy Tauzin (R-LA), the
Chairman of the House Commerce
Committee, and Rep. Heather Wilson
(R-NM) sent a letter to
the CEOs of Yahoo, eBay and Amazon seeking details on marketplace efforts to
curb online auction fraud, and specifically shilling, the practice of driving up
bidding prices on behalf of the seller. "The ability to disguise identity,
revoke bids and maintain multiple online identities may facilitate undesirable
practices like shilling," wrote Tauzin and Wilson. "Although there are
copious statistics on Internet auction fraud, there is little analysis of the
practices that facilitate that fraud. We request your assistance in determining
the causes of online auction fraud as well as solutions to help protect
consumers and boost confidence in e-commerce."
Abernathy Gives Speech on FCC
6/25. Recently appointed FCC Commissioner Kathleen Abernathy gave a
which she summarized her approach to regulation. She stated that "I will
always prefer a private market based solution to a government mandate. I have
learned through experience that functioning markets will always make better
decisions than government. It will reward winners and punish losers more
effectively and efficiently than regulators and provides consumers with greater
benefits. In areas where it is necessary for government to intervene and to
enact rules, they must be clear, obtainable, and enforced vigorously. Government
must be humble, especially in regulating technology."
6/25. The Recording Industry Association of
America released a statement in which it said that "the full Ninth
Circuit has rejected Napster's request that the case be reheard." See, RIAA release. (Napster v.
6/25. President Bush announced his intent to nominate John Marburger to
be Director of the Office of Science and Technology. See, release.
6/25. The U.S. International Trade Commission
held a Section 337 evidentiary
hearing regarding "Certain Field Programmable Gate Arrays and Products
Containing Same." This is a matter in which Xilinx is the complainant and Altera is the respondent. See also, notice of investigation.
DC Cir Rules FCC Cannot Cancel NextWave Licenses
6/22. The U.S.
Court of Appeals (DCCir) issued its opinion
in NextWave v. FCC,
holding that the FCC is prevented from canceling NextWave's spectrum licenses by
the Bankruptcy Code. The decision will further delay the use of this spectrum
for wireless communications services, including third generation services.
Background. NextWave obtained spectrum licenses at FCC auctions in 1996.
The FCC permitted NextWave to obtain the licenses then, and later make payment
under an installment plan. NextWave was unable to make payments, and filed a
Chapter 11 bankruptcy petition. The FCC cancelled the licenses, but
was blocked by the bankruptcy court. The U.S. District Court (SNDY)
affirmed. The U.S. Court of
Appeals (2nd Cir.) issued its order reversing and remanding the case on Nov.
24, 1999; it issued its opinion
explaining its reversal in May 2000. The FCC then re-auctioned this spectrum to
Verizon Wireless and other successful bidders, which intend to use it for third
generation wireless, and other, services.
Holding of the DC Circuit. Judge Tatel, writing for a three judge panel,
opined that the 2nd Circuit had not already addressed NextWave's bankruptcy
claims. He further wrote that the FCC was prevented from canceling the spectrum
licenses pursuant to Section 525 of the Bankruptcy Code. He wrote that the FCC
"violated the provision of the Bankruptcy Code that prohibits governmental
entities from revoking debtors' licenses solely for failure to pay debts
dischargeable in bankruptcy. The Commission, having chosen to create standard
debt obligations as part of its licensing scheme, is bound by the usual rules
governing the treatment of such obligations in bankruptcy."
9th Circuit Nominations
6/22. President Bush formally nominated Richard Clifton to be a United
States Circuit Judge for the Ninth Circuit. He is a partner in the litigation department of Cades
Schutte Fleming & Wright, in Honolulu, Hawaii. His practice focuses on
antitrust counseling and litigation, financial institution litigation,
securities litigation, and arbitrations. He is also general counsel of
the Republican Party of Hawaii. See, Cades bio and White
6/22. President Bush formally nominated Carolyn Kuhl to be a United
States Circuit Judge for the Ninth Circuit. She is a Los Angeles County Superior
Court Judge; she was appointed by former Gov. Pete Wilson. Prior to that, she
was a partner at the law firm of Munger
Tolles & Olson. Before that, she worked in the Reagan administration as
Special Assistant to Attorney General William French Smith, Deputy Assistant
Attorney General in the Civil Division, and Deputy Solicitor General. Sen. Barbara Boxer (D-CA), who may attempt
to block Kuhl's confirmation, stated in a release that
"I am continuing to evaluate this nomination."
6/22. The Federal Election Commission extended
the temporary appointment of Acting General Counsel Lois Lerner until
September 15, 2001." See, release.
Antitrust Panel Discusses New Economy
6/22. The Progress and Freedom Foundation (PFF)
hosted a panel discussion on antitrust law and policy in the Rayburn House
Office Building in Washington DC. The panel was comprised of Jeffrey
Eisenach (PFF), Ken Starr (Kirkland & Ellis), Robert Atkinson (Progressive
Policy Institute), Albert Foer (Antitrust Institute), and Makan Delrahim (Sen.
Makan Delrahim, who is the Republican Staff Director for the Senate Judiciary
Committee, stated that just there was an injection of economic analysis into
antitrust law in recent decades, "it may be time for a new injection of
technical expertise" into antitrust law.
Bob Atkinson, of the Progressive Policy
Institute, a Democratic think tank, stated that antitrust enforcement should
focus on collusion by middlemen who prevent to development of e-commerce. He
cited auto dealers who seek to prevent Internet auto sales as an example. He
also stated that online exchanges, such as Covisant
and Orbitz, pass antitrust muster.
Ken Starr, whose firm presents ProComp, an anti Microsoft group, stated that
"the government is going to stay the course" in the Microsoft case. He
also criticized Microsoft's forthcoming XP technology. He stated that with XP
Smart Tags "Microsoft can re-edit anyone's site." He also said that XP
"should be examined through the lens of traditional antitrust law."
The PFF did not include a Microsoft proponent on the panel.
WTO Issues Report on FSC Challenge
6/22. The USTR
released a statement
regarding the U.S. Foreign Sales Corporation (FSC) tax regime, and EU challenges
to legality before the World Trade Organization
(WTO). He stated: "A panel of the World Trade Organization has issued a
confidential interim report today on the FSC Repeal and Extraterritorial Income
Exclusion Act of 2000, the law which replaced the Foreign Sales Corporation
provisions of U.S. tax law. The report will be distributed on a confidential
basis to the United States and the European Union, who will have the opportunity
to submit written comments on the report to the panel. The WTO panel is
scheduled to issue its final report in July, and the report will be made public
in August. The United States will respect the confidential nature of the report
and will not comment on its findings, nor its implications, at this time."
ABA Releases PKI Assessment Draft
6/22. The American Bar Association released
for public comment its Public Key
Infrastructure Assessment Guidelines -- PAG v0.30 Public Draft. The draft
was written by the Information Security Committee of the ABA Section of Science and Technology Law.
EU and E-Commerce
Burghardt, Head of the European Commission Delegation to the U.S., gave a speech in New
Haven, Connecticut titled "The New Europe and the e-Economy."
Calif. Court Refuses to Enforce Forum Selection Clause in
6/21. The California
Court of Appeal (1/2) issued its opinion [PDF]
v. Superior Court affirming the trial court's denial a AOL's
motion to stay or dismiss a class action suit brought by AOL subscribers in
California state court, despite a choice of forum clause in AOL's Terms of
Service (TOS) designating Virginia as the jurisdiction for all litigation.
Facts and Procedure. Al Menendez and other former AOL subscribers filed a
complaint in the Superior Court of Alameda County, California, against AOL
alleging unauthorized billing of credit card accounts in violation of several
California state statutes. Plaintiffs seek class action status. AOL's TOS
contains both a choice of forum clause, and a choice of law clause. Both
designate Virginia, the home of AOL. Significantly, Virginia state law does not
allow consumer lawsuits to be brought as class actions. The Superior Court
denied AOL's motion. AOL then brought this petition for writ of mandate.
Holding. The California Court of Appeal denied AOL's petition on the
basis the AOL's choice of forum clause is unenforceable. The Court wrote that
"Our law favors forum selection agreements only so long as they are
procured freely and voluntarily, with the place chosen having some logical nexus
to one of the parties or the dispute, and so long as California consumers will
not find their substantial legal rights significantly impaired by their
enforcement." It continued that "enforcement of AOL's forum selection
clause, which is also accompanied by a choice of law provision favoring
Virginia, would necessitate a waiver of the statutory remedies of the CLRA, in
violation of that law's anti-waiver provision (Civ. Code, § 1751) and
California public policy. For this reason alone, we affirm the trial court’s
Trade Promotion Authority Hearings
6/21. The Senate Finance Committee
completed two days of hearings on granting the President trade promotion
authority, formerly known as fast track. Sen.
Max Baucus (D-MT), the new Chairman of the Committee, said in his opening statement [PDF]
on June 20 that he supports trade promotion authority, but is pessimistic that
it will pass this year. He continued that "In the 1980s, the issue was
intellectual property. And on this issue, there is great parallel with the
current discussions on labor rights and environmental standards. Initially,
developing countries hotly opposed the U.S. position on intellectual property.
And they wanted it addressed through the largely ineffective World Intellectual
Property Organization. In our own country, many argued that trying to address
this issue "muddied the waters." But after years of hard negotiation,
the developing world relented, and intellectual property protection became an
integral part of trade agreements. It remains so today. Now the issue is
standards on labor and the environment." See also, Sen. Baucus' opening
statement from June 21.
Sen. Charles Grassley (R-IA), the
ranking Republican, said in his opening statement [PDF]
on June 20 that "Unfortunately, whenever we have attempted to talk about
the benefits of international trade during the last six months, the discussion
has soon been diverted into a discussion on labor and the environment. These are
important issues. We have to address them in some fashion. I hope to do that in
a constructive, bipartisan way this year. But they are not, and should not be,
the central focus of the trade debate."
USTR Robert Zoellick stated in his prepared
testimony of June 21 that "If the Congress cannot or will not act, the
United States will pay a price. Since the Congressional grant of authority to
negotiate trade agreements expired in 1994, America has fallen behind." He
also said that "It really will not help working men and women at home or
abroad -- or environmental causes -- to paralyze trade negotiations with
cumbersome limits or sanctions or pressures. Together, we want to achieve
results, not procedural breakdowns."
See also, prepared testimony of June 20 witnesses: Harold McGraw
(McGraw-Hill Companies), Chuck Merja (National
Association of Wheat Growers), John Sweeney
(AFL-CIO), Mark Van
Putten, President and CEO, National Wildlife Federation), Robert Hormats
(Goldman Sachs), Peter
Scher (Mayer, Brown & Platt), Alan Wolff (Dewey
Yeutter (Hogan and Hartson).
Fast Track Debate
6/21. Rep. Phil English (R-PA) spoke
in the House about HR 1446, the
Standard Trade Negotiating Authority Act, which he introduced on April 4, 2001.
He stated that his bill "allows for full and appropriate consideration of
labor and environmental issues as important trade agreements are
negotiated." He added that it "ensures that no country could engage in
a race to the bottom in order to lure jobs by sacrificing the environment or
debasing the common rights of its citizens."
Tax Treatment of Donated Computers
6/21. Rep. William Jefferson
(D-LA) and others introduced HR 2281, a bill to amend the Internal Revenue Code
to extend and expand the enhanced deduction for charitable contributions of
computers. It was referred to the House
Ways and Means Committee.
Stearns Subcommittee Holds Another Privacy Hearing
6/21. The House Commerce Committee's
Subcommittee on Commerce, Trade, and Consumer Protection held a hearing titled Information
Privacy: Industry Best Practices and Technological Solutions. This was its
fifth hearing on privacy related issues this year. Rep. Cliff Stearns (R-FL), Chairman of
the Subcommittee, stated that "technological solutions designed to reach
information privacy concerns of the consumer are a critical ingredient of
whatever is the recipe to the solution for the problem. ... The second component
of the private sector response to the American consumer’s information privacy
concerns is the adoption of self-regulatory measures." See also, prepared
statement of Rep. Billy Tauzin (R-LA), the full committee Chairman.
See also, prepared testimony of witnesses: Michael
Wallent (Microsoft), Austin
Hill (Zero-Knowledge), Frances
Schlosstein (Webwasher), Stephen
Hsu (SafeWeb), John
Schwarz (Reciprocal), Trevor
Hughes (Engage), Jerry
Cerasale (Direct Marketing Association), Steven
Cole (Council of Better Business Bureaus), Jerry
DeVault (Ernst & Young), and Marc
Rotenberg (Electronic Privacy Information Center).
US Will Not Renew NTT Procurement Agreement
Robert Zoellick announced that the U.S. "will not renew the bilateral
Nippon Telegraph and Telephone (NTT) Agreement with Japan covering NTT
procurement due to substantive progress on this issue. The agreement is set to
expire July 1, 2001. Instead, the United States will actively monitor NTT's
procurement practices and purchases from U.S. suppliers through information
provided by U.S. industry." See, USTR release. See
SEC E-SIGN Act Interpretation
6/21. The SEC published an interpretation
in the Federal Register regarding the Application of the Electronic Signatures
in Global and National Commerce (E-SIGN) Act to record retention requirements
pertaining to issuers under the Securities Act of 1933, the Securities Exchange
Act of 1934, and Regulation S-T.
People and Appointments
6/21. President Bush nominated Harris Hartz to be a Judge of the U.S.
Court of Appeals for the Tenth Circuit. See, release.
6/21. President Bush nominated Jon Huntsman to be a Deputy United States
Trade Representative. See, release.
6/21. The Senate Finance Committee
held a hearing on several nominations, including Allen Johnson (Chief
Agricultural Negotiator, USTR), William Lash (Asst. Sec. of Market Access
and Compliance, DOC), Brian Roseboro (Asst. Sec. of Financial Markets,
6/21. The ICANN announced
that Theresa Swinehart will join ICANN as its Counsel for International
Legal Affairs. She previously worked as Associate Counsel, and in other
positions, at MCI
WorldCom in Washington DC. See, ICANN release.
6/21. Floyd Chapman and David Kulik joined the Washington DC
office of the law firm of Wiley Rein &
Fielding as a partner and of counsel, respectively, in the firm's
intellectual property practice. Both were formerly with the Washington DC office
of the law firm of Brobeck Pheleger &
Harrison. See, release.
FCC Chairman Powell Advocates Policy Based on Market Economics
6/21. FCC Chairman Michael
Powell gave a speech to the Federal Communications Bar Association in
Washington DC. This was another in a series of addresses in which he advocated
"building policy that is centered around market economics."
He stated that "Market systems, far from being the bane of consumers, have
unquestionably produced more consumer welfare than any other economic model
devised by mankind. How is it that anyone can argue that the pro-market policies
of the United States have not yielded enviable productivity in our economy, jobs
for our citizens, a higher standard of living than nearly any other country in
the world, and a tradition of innovation and invention that has brought new
products, tools and services to our citizens?" However, he also stated that
"deregulation for its own sake is not responsible policy." He also
stated that "responsible government policy must acknowledge that consumers
can be harmed by market abuses and we must have a robust and effective consumer
protection component at the FCC."
Go to News Briefs from June 16-20, 2001.