|News Briefs from July
CompTel Urges Structural Separation
7/14. The Competitive Communications
Association (CompTel) released a report
[PDF] on structural separation at the National
Association of Regulatory Commissioners (NARUC) conference in Seattle,
Washington. The report recommends the functional separation of incumbent local
exchange carriers (ILECs) into wholesale and retail units. See also, CompTel release.
Felton Versus the DMCA
7/13. The Recording Industry Association of
America (RIAA) filed a motion to dismiss and memorandum in
support [PDF] in Felton
v. RIAA, a case filed by Edward Felton and others in U.S.
District Court (DNJ)
against the RIAA, SDMI and Attorney General John Ashcroft, seeking a declaration
that the Digital Millennium Copyright Act (DMCA) is unconstitutional. The RIAA
argues that there is no adversity of interest, and that the plaintiffs lack
standing. See also, RIAA
The RIAA's memorandum states that the "Plaintiffs' true agenda, however, is
not to adjudicate a real dispute but to obtain favorable press attention and to
secure an advisory opinion on the constitutionality of the Digital Millennium
Copyright Act. Plaintiffs have therefore filed an Amended Complaint full of
vaporous imaginings and chimerical fears. We respectfully submit that even the
Amended Complaint fails to pass muster, and must be dismissed under Rule
12(b)(1)" of the FRCP.
The plaintiff's lawsuit followed a letter from the Secure Digital Music Initiative (SDMI) to Felton
threatening a lawsuit under the DMCA if he published a particular paper.
However, the RIAA stated in its memorandum that "Defendant RIAA has
repeatedly expressed publicly and in correspondence with Plaintiffs' counsel --
both before and after this lawsuit was filed -- that it has no objection
whatsoever to Plaintiffs publishing or presenting their three papers. Thus, as
to that aspect of the Amended Complaint, there is no adversity of interests
between Plaintiffs and the RIAA ..."
The SDMI. The SDMI is a music industry group that is attempting to
develop a watermark based system to prevent music piracy. Watermarking embeds
copyright information in digital music files to enable devices like MP3 players
and recorders to refuse to make copies of copyrighted music. Last year the SDMI
issued a "Public Challenge" to help choose among four proposed
watermarking technologies. It invited researchers to attempt to remove the
copyright watermarks. Felton responded, and successfully defeated all four
technologies. The SDMI then sought to prevent Felton from presenting or
publishing his findings.
The Letter. On April 9, Matthew Oppenheim, Secretary of the SDMI
Foundation, wrote a letter to Edward Felton, an associate
professor in the Department of Computer Science at Princeton University, and others, warning
them that public release of information concerning the Secure Digital Music
Initiative (SDMI) "could subject you and your research team to actions
under the Digital
Millennium Copyright Act ..." Felton was scheduled to participate in
the 4th International Information Hiding Workshop on April 25-29 in Pittsburgh,
The Lawsuit. On June 6, Felton and others filed their Original
Complaint in U.S. District Court against the RIAA, SDMI, and AG Ashcroft.
The plaintiffs filed their First
Amended Complaint on June 26, 2001. The plaintiffs seek a declaration
that the DMCA is unconstitutional for violating the First Amendment, and for
exceeding the enumerated powers of the Congress.
Lessig Versus the CTEA
7/13. The U.S. Court
of Appeals (DCCir) issued an order
and opinion in Eldred
v. Ashcroft, a challenge to the constitutionality of the Copyright Term Extension Act.
The Appeals Court denied plaintiff's petition for a rehearing en banc.
The original plaintiff of record is Eric Eldred, the proprietor of the
unincorporated Eldritch Press, a website that republishes the works of others
that are not protected by copyright. However, the suit is being pursued by Laurence Lessig
and other law professors who disagree with recently enacted intellectual
The 105th Congress passed the Copyright Term Extension Act (CTEA) to extend the
maximum duration of copyrights from 75 to 95 years. The late Rep. Sonny Bono
(R-CA) sponsored the House version of the bill in 1997. Hence, the statute is
also known by his name. (See, P.L. 105-298, 112 Stat. 2827. It amends 17 U.S.C.
On January 11, 1999 the plaintiffs filed their original complaint
in U.S. District Court (DDC). (See also, TLJ story.) On
June 28, 1999, the plaintiffs filed their Second
Amended Complaint. Plaintiffs allege, among other claims, that the CTEA
violates the First Amendment and the copyright clause of the Constitution. On
October 27, 1999, the District Court ruled that the CTEA does not violate the
Constitution. See, Memorandum
of the Court. (See also, TLJ story.) On
February 16, 2001, the U.S. Court of Appeals (DCCir) issued its opinion
affirming the District Court.
Plaintiffs asserted in their petition for rehearing that the Court of Appeals
erred in its treatment of the contentions advanced by one of the amici, The
Eagle Forum (i.e., Phillys Schlafly). Judge Ginsburg, writing for the Court,
rejected the argument. Judge Sentelle dissented.
See also, TLJ
summary of Eldred v. Reno.
Fed Circuit Vacates District Court Judgment on Freeny Patent
7/13. The U.S.
Court of Appeals (FedCir) issued its opinion in Interactive
Gift Express v. Compuserve, an en banc rehearing of an appeal of
a judgment of noninfringement of U.S.
Patent No. 4,528,643. This patent, also known as the Freeny patent,
discloses a system for reproducing information in material objects at point of
sale locations. Plaintiff asserts that it applies to sales over the Internet of
software, books, and music. The District Court entered a judgment of
noninfringement. The Court of Appeals vacated and remanded.
Plaintiff, Interactive Gift Express, which is now known at E-Data Corp., filed a
complaint in U.S. District Court (SDNY) against numerous software, publishing,
and bookstore companies alleging infringement of the Freeny patent by selling
software and documents via the Internet.
The Feeny patent defines the following invention: "A method for reproducing
information in material objects utilizing information manufacturing machines
located at point of sale locations, comprising the steps of: providing from a
source remotely located with respect to the information manufacturing machine
the information to be reproduced to the information manufacturing machine, each
information being uniquely identified by a catalog code; providing a request
reproduction code including a catalog code uniquely identifying the information
to be reproduced to the information manufacturing machine requesting to
reproduce certain information identified by the catalog code in a material
object; providing an authorization code at the information manufacturing machine
authorizing the reproduction of the information identified by the catalog code
included in the request reproduction codes; and receiving the request
reproduction code and the authorization code at the information manufacturing
machine and reproducing in a material object the information identified by the
catalog code included in the request reproduction code in response to the
authorization code authorizing such reproduction."
The Appeals Court held that the District Court erred in at least one aspect of
its construction of each of the five claim limitations upon which the judgment
of noninfringement was based. The Appeals Court vacated and remand for further
proceedings consistent with the claim construction provided in the opinion.
DOJ v. Microsoft
7/13. The Department of Justice and
state plaintiffs in the Microsoft antitrust case filed a Motion for Immediate
Issuance of Mandate with the U.S. Court of Appeals (DCCir) in order to allow
"proceedings on remand to go forward as quickly as possible." The
motion also states that "The United States and the State Plaintiffs do not
intend to petition for rehearing" and that "the United States and the
State Plaintiffs do not intend to seek Supreme Court review of the case at this
stage." The motion asks the Appeals Court promptly remand the case to the
U.S. District Court (DDC).
Michigan Bell v. Engler
7/13. The U.S.
Court of Appeals (6thCir) issued its opinion
Bell v. Engler, a challenge to a Michigan statute abolishing the
end user common line charge on phone customers. Phone companies filed a
complaint in the U.S. District Court (EDMich) challenging
§ 310(7) of the Michigan Telecommunications Act (MTA) of 2000. The
District Court denied Plaintiffs' request for a preliminary injunction of
§ 310(7). However, the District Court enjoined another provision of the
MTA, § 701, which froze certain regulated telephone rates at their May 1,
2000 level until December 31, 2003. The phone companies appealed, and Michigan
cross appealed. The Court of Appeals affirmed the District Court's order
preliminarily enjoining § 701, and reversed its order denying the motion
to enjoin § 310(7).
FCC Commissioner Tristani Addresses Cable Mergers
7/13. FCC Commissioner Gloria Tristani gave a speech in
Washington DC to the Alliance for Community Media titled "Public,
Educational, and Governmental Access Channels: Localism and Diversity In
Action." She also addressed mergers. She stated that "As cable
operators get bigger, control over programming will be held by fewer and fewer
gatekeepers. This enormous power concerns me. It's one thing to say there are a
diversity of voices out there, and the Internet will ensure that no one exerts
undue control over America's information conduits. But look where the vast
majority of Americans spend the most of their free time - in front of the
television." She continued that "the content of television has far
more influence on what Americans know, what they think, and how they govern
themselves that whatever is on the Internet or in the newspapers. Television is
a uniquely powerful and influential medium, and government regulators should
think long and hard before approving another round of cable consolidation."
7/13. The U.S. District Court (SDCal) sentenced Ira
Itskowitz, Daniel Rearick, and Linsday Wellman for various crimes associated
with a telemarketing operation that defrauded over 3,000 victims of almost
$50,000,000 through its design, development and marketing of a series of
"high-tech" telecommunications related securities. Itskowitz was
sentenced to 71 months imprisonment, 3 years supervised release, and ordered to
pay $49,031,740 in restitution to victims. Rearick was sentenced to 60 months
imprisonment, 3 years supervised release, and ordered to pay $46,526,740 in
restitution to victims. Lindsay Wellman, an attorney who conspired to structure
$149,000 in currency transactions under $10,000.00 each to avoid reporting
requirements of the IRS was sentenced to 3 years supervised probation with 8
months custody in a community confinement center. See, USAO release.
7/13. The SEC filed a civil complaint in
U.S. District Court (DColo)
against William Brotherton and International Business Consortium, a business
founded by Brotherton, for perpetrating a fraudulent and unregistered securities
offering over the Internet. (Civil Action No. 01-WM-1340.) See, SEC release.
People and Appointments
7/13. Rep. Bob Goodlatte (R-VA), a
Co-Chair of the Internet Caucus, named Janet Polarek as his new press
secretary. She replaces Michelle Semones, who joined Dittus Communications, a Washington DC based
public relations firm, as Associate Director of Technology Policy.
House Holds Hearing on Internet Gambling
7/12. The House Financial
Service Committee's Oversight and Investigations Subcommittee held a hearing
on Internet gambling. Rep. John LaFalce
(D-NY) stated that he will shortly reintroduce two bills to prohibit the use of
credit card debt to place bets over the Internet, and to prohibit the placement
of ATMs close to gambling sites. See also, HR 4419
(106th Congress), sponsored by Reps. Leach and LaFalce. Rep. Jim Leach (R-IA) stated that the
Financial Services Committee has jurisdiction over the only effective
enforcement enforcement mechanisms. Sen. Jon
Kyl (R-AZ) and Rep. Bob Goodlatte
(R-VA) have sponsored legislation in the previous two Congresses to ban many
forms of Internet gambling. These bills include attempts to enforce the ban at
the ISP level. No Internet gambling bill has yet been enacted into law.
Subcommittee Chairman Sue Kelly
(R-NY), said in her opening testimony
[PDF] that "the most serious offenders in the Internet gambling arena are
the virtual casinos operating offshore, beyond the reach of U.S. law." She
also stated that she would "work with the legislative Subcommittees under
this Committee to support appropriate legislative action". Committee
Chairman Mike Oxley (R-OH) did not
advocate any specific legislative solutions in his opening statement
John Suarez, of the state of New Jersey, complained that off shore gambling
sites are advertising in New Jersey, and allowing minors to gamble on their
sites. He suggested that Congress "declare that any credit card or other
wager placed via the Internet is illegal and therefore uncollectable in the
United States." Sebastian Sinclair, of
Christiansen Capital Advisors, did not dispute the problems associated with
online gambling, but cautioned the Subcommittee to "keep your friends
close, and your enemies closer." For example, he stated that making credit
card gambling debts uncollectable would simply drive online gamblers to use
foreign banks and third party payment mechanisms, such as PayPal.
See also, prepared statements of witnesses in PDF: John Suarez (New
Jersey Division of Gaming Enforcement), Sebastian Sinclair
(Christiansen Capital Advisors), Keith Whyte (National Council on Problem Gambling), Valerie Lorenz
(Compulsive Gambling Center), Frank Fahrenkopf
(American Gaming Association), Bill Saum
(National Collegiate Athletic Association), Mark MacCarthy
Schneider (Interactive Gaming Council),
(Virginia Lottery), Greg Avioli (National Thoroughbred Racing Association).
House Committee Holds Hearing on Whois Database
7/12. The House Judiciary
Committee's Subcommittee on Courts, the Internet, and Intellectual Property
held a hearing titled The Whois Database: Privacy and Intellectual Property
Rep. Howard Coble (R-NC), Chairman of
the Subcommittee, said in his opening statement
that "It is my hope that as the Internet grows and these policies develop,
the public can count on the availability of a robust and dynamic Whois
Database." Rep. Howard Berman
(D-CA), the ranking Democrat, said in his opening statement
that "For web sites conducting e-commerce, why should they have a privacy
right to keep their place of business and controlling owner a secret? ...
however, a person who has a website for purely personal reasons, pictures of his
cat, perhaps, or political complaints against a Member of Congress - shouldn't
that person be able to do his personal business without everyone knowing who he
is and how he can be found? And isn't political speech worth protecting by
redacting the personally identifiable contact information for the website
See also, prepared statements of witnesses: Jason Catlett (Junkbusters),
Lori Fena (TRUSTe),
(Interactive Digital Software Assoc.), and Timothy Trainer
(International Anti Counterfeiting Coalition).
4th Circuit Rules in Cybersquatting Case
7/12. The U.S.
Court of Appeals (4thCir) issued its "unpublished" opinion
Name Clearing Company v. FCF, a cybersquatting case. The Appeals
Court affirmed the District Court decision which held that DNCC had violated the
1999 Anticybersquatting Consumer Protection Act by registering the domain name
8th Circuit Rules in Trademark Case
7/12. The U.S.
Court of Appeals (8thCir) issued its opinion in National
Association for Healthcare Communications v. Central Arkansas Area Agency on
Aging, a case brought under the Lanham Act and state law to
determine which party has the superior right to use the service mark "CareLink"
Crime on the Internet
7/12. The U.S. Court of Appeals (1stCir)
issued its opinion
v. Brunette, a criminal case involving the validity of search
warrants used to seize evidence of child pormography located on computers and in
other locations. Affirmed.
7/12. The U.S. Court of Appeals (7thCir)
issued its opinion
v. Bautista, a criminal case involving sentencing for traveling
in interstate commerce with the intent and for the purpose of engaging in sexual
acts with a minor, in violation of 18 U.S.C. § 2423(b). Defendant had
communicated in an Internet chat room with an undercover police officer posing
as a 13 year old. The Appeals Court vacated the sentence on the grounds that it
was too light.
7/12. The FCC adopted rules concerning
collocation requirements of incumbent local exchange carriers (ILECs). The FCC
did not release the rules. It did release a press
release. The USTA, which represents ILECs,
criticized the rules. See, USTA release.
GAO Issues Report on Legal Obstacles to Telecommuting
7/12. The GAO released a report [PDF] titled
"Telecommuting: Overview of Potential Barriers Facing Employers." The
report concludes that state and federal laws and regulations present potential
barriers to telecommuting. These include state tax laws that could expose
employers and employees to additional state taxes and federal workplace health
and safety laws and regulations that could be applied to telecommuters' home
The report also states that "many telecommuting proponents believe that
significant obstacles to increased use of telecommuting involve internal
management concerns related to (1) assessing whether the employer has the types
of positions and employees suitable for a telecommuting program, (2) maintaining
security over sensitive company data while monitoring the actions of remote
workers, and (3) ensuring that telecommuting activities do not adversely affect
profits." The report was prepared at the request of House Majority Leader Dick Armey (R-TX).
People and Appointments
Acting Chairman Laura Unger named Stephen Cutler Acting Director of the
Division of Enforcement. Cutler has been the Division's Deputy Director since
January 1999. He replaces Richard Walker, who recently announced his
intention to leave the SEC. See, SEC release. Cutler worked
at Wilmer Cutler and Pickering from 1987
until being appointed to the SEC in 1998.
7/12. The FCC announced the appointment of
new federal and state members to the Federal State Joint
Board on Universal Service. FCC Commissioners Kathleen Abernathy
and Kevin Martin
were appointed as federal representatives, replacing former FCC Commissioners Susan
Ness and Harold Furchtgott- Roth. Commissioner Lila Jaber of
the Florida Public Service Commission and Commissioner Thomas Dunleavy of
the New York Public Service Commission were appointed to serve as state
representatives, replacing Pat Wood, former Chairman of the Texas Public
Utility Commission, and the late Laska Schoenfelder, former Commissioner
of the South Dakota Public Utilities Commission. See, FCC
7/12. The Senate Banking Committee
approved several nominations, including Roger Ferguson (Board of
Governors of the Federal Reserve System), Donald Powell (Chairman of the Federal
Deposit Insurance Corporation), Angela Antonelli (CFO of the Department
of Housing and Urban Development), Jennifer Dorn (Federal Transit
Administrator), and Ronald Rosenfeld (President of the Government
National Mortgage Association, GINNIE MAE).
7/12. Napster settled the lawsuit filed
against it by rock band Metallica for
copyright infringement. See, Napster release
4th Circuit Rules Against Henrico Open Access Requirement
7/11. The U.S.
Court of Appeals (4thCir) issued its opinion
v. County of Henrico, affirming the District Court's ruling that
the County of Henrico's open access requirement is preempted by federal law. The
Appeals Court held that "Henrico County violated § 541(b)(3)(D)" of
the Communications Act "when it conditioned the transfer of control of
MediaOne's cable franchise by requiring MediaOne to unbundle its Road Runner
service and provide open access to its telecommunications facilities, that is,
its cable modem platform. Because the open access provision is inconsistent with
the federal Communications Act, it is preempted."
Facts. MediaOne is a cable company with a license from Henrico County
(i.e., Richmond, Virginia). AT&T acquired MediaOne in 1999. AT&T and
MediaOne applied to Henrico for approval of the transfer of control of
MediaOne's license. Henrico conditioned its approval with an open access
requirement. It required that AT&T and MediaOne "shall provide any
requesting Internet Service Provider (ISP) access to its cable modem platform
(unbundled from the provision of content) on rates, terms, and conditions that
are at least as favorable as those on which it provides such access to itself,
to its affiliates, or to any other person." (Parentheses in original.)
Trial Court. AT&T and MediaOne filed a complaint in U.S. District
seeking a declaratory judgment that the open access condition violates the First
Amendment and the Commerce Clause, is preempted by federal law, and is void
under Virginia law. AT&T and MediaOne moved for summary judgment on the
grounds that the open access requirement is preempted by the Communications Act
of 1934, and is unenforceable under Virginia law. The district court granted
AT&T and MediaOne's motion for summary judgment on the grounds that the open
access condition was preempted by several provisions of the Communications Act.
(See, MediaOne v. Henrico, 97 F. Supp. 2d 712 (E.D. Va. 2000).)
Section 541(b)(3)(D). § 541(b)(3)(D) of the Communications Act provides
that "a franchising authority may not require a cable operator to provide
any telecommunications service or facilities, other than institutional networks,
as a condition of the initial grant of a franchise, franchise renewal, or a
transfer of a franchise."
4th Circuit Holding. The Court held that Henrico's open access
provision required MediaOne to provide telecommunications facilities in
violation of § 541(b)(3)(D). However, the Court did not rule on the specific
regulatory classification of MediaOne's Road Runner service. The Court
merely reasoned as follows: "MediaOne's Road Runner service combines the
use of a cable modem platform with access to the Internet. Road Runner's cable
modem platform, separated from its Internet service component, is a
telecommunications facility because it is a pipeline for telecommunications,
that is, for "the transmission . . . of information of the user's choosing,
without change in the form or content." Id. § 153(43) (defining
"telecommunications"). As a condition for approving the change in
control of the MediaOne franchise, the County required MediaOne to provide its
"cable modem platform (unbundled from the provision of content)" to
"any requesting Internet Service Provider." The provision unbundles
Road Runner's Internet access service from its cable modem platform and compels
MediaOne to offer the platform to unaffiliated ISPs for use as a transmission
pipeline for their services. The open access provision therefore requires
MediaOne to provide "telecommunications ... facilities ... as a condition
of ... a transfer of a franchise" in violation of § 541(b)(3)(D)."
FCC NOI Re Internet Access Over Cable. The Court also noted that FCC has
issued a Notice
of Inquiry [PDF] that seeks comment on whether cable modem technology should
be classified as a cable service, a telecommunications service, or an
information service, and the implications of adopting any particular
classification. (See, GN Docket No. 00-185.) The Court then concluded that
"we do not have to reach the question of whether MediaOne's bundled Road
Runner service is a cable service, a telecommunications service, or an
information service. For the time being, therefore, we are content to leave
these issues to the expertise of the FCC."
The three judge panel was composed of Judges Blane Michael, William Wilkins and
Emory Widener. Judge Michael wrote the opinion of the court, in which Judge
Wilkins joined. Judge Widener wrote a concurring opinion. He concurred in the
result, but not the analysis. He wrote that it was unnecessary to decide the
federal preemption issue, because Henrico's action was barred by Virginia state
Reaction. NCTA P/CEO Robert
Sachs said in a release
that "The Fourth Circuit's decision in the Henrico case offers the
strongest judicial affirmation yet that public policy decisions regarding cable
modem services are not within the jurisdiction of local governments. Today's
court decision will further encourage the rapid deployment of high speed cable
Internet services to consumers."
Court Limits Discovery Regarding Identity of Anonymous Posters
7/11. The Superior Court of New Jersey, Appellate Division, issued its opinion in Dendrite
International v. John Doe, a case regarding discovery requests
for the identity of anonymous posters to message boards. The Court established a
three part test that must be met before the trial court may issue an order
compelling discovery from an ISP regarding the identity of an anonymous poster
to one of its message boards who has been sued for defamation or other claims
based on the content of his posting.
Background. An anonymous poster, known in this litigation as John Doe 3,
posted messages on a Yahoo message board critical of Dendrite International, a business which
provides software products and support services for the pharmaceutical industry.
Dendrite filed a complaint in Superior Court of New Jersey against John Doe 3,
and other John Doe defendants, alleging various claims for breach of contract,
defamation and other actionable statements on Yahoo's message board. Dendrite
then sought pre-trial discovery from Yahoo regarding the identities of the
anonymous defendants. The trial court denied a motion to compel discovery. This
Holding. The appeals court affirmed the denial of the motion to compel
discovery. The appeals court articulated a set of standards for reviewing such
requests. The appeals court wrote that "The trial court must consider and
decide those applications by striking a balance between the well- established
First Amendment right to speak anonymously, and the right of the plaintiff to
protect its proprietary interests and reputation through the assertion of
recognizable claims based on the actionable conduct of the anonymous,
fictitiously- named defendants." In addition, the appeals court listed
three requirements. First, the plaintiff must make efforts to notify the
anonymous defendant of the discovery request, including by posting to the
message board involved in the case. Second, the trial court must determine that
the plaintiff has plead a prima facie cause of action and produced evidence in
support. Third, the trial court must balance the interests of the parties.
Notice to Anonymous Defendants. The appeals court wrote that "the
trial court should first require the plaintiff to undertake efforts to notify
the anonymous posters that they are the subject of a subpoena or application for
an order of disclosure, and withhold action to afford the fictitiously- named
defendants a reasonable opportunity to file and serve opposition to the
application. These notification efforts should include posting a message of
notification of the identity discovery request to the anonymous user on the
ISP's pertinent message board."
Prima Facie Case and Evidence. The appeals court wrote that "The
court shall also require the plaintiff to identify and set forth the exact
statements purportedly made by each anonymous poster that plaintiff alleges
constitutes actionable speech. The complaint and all information provided to the
court should be carefully reviewed to determine whether plaintiff has set forth
a prima facie cause of action against the fictitiously- named anonymous
defendants. In addition to establishing that its action can withstand a motion
to dismiss for failure to state a claim upon which relief can be granted ...,
the plaintiff must produce sufficient evidence supporting each element of its
cause of action ..."
Balancing Test. The appeals court wrote that "the court must balance
the defendant's First Amendment right of anonymous free speech against the
strength of the prima facie case presented and the necessity for the disclosure
of the anonymous defendant's identity to allow the plaintiff to properly
Public Citizen and the American Civil
Liberties Union Foundation of New Jersey, which participated as amici curiae,
praised the decision, and called it "a tremendous victory for free
speech." See, PC
District Court Issues Order in Napster Case
7/11. The U.S.
District Court (NDCal), Judge Marilyn Hall presiding, issued an order in A&M
Records v. Napster requiring Napster
to block all copying of infringing music files. Judge Hall also held a closed
meeting with the parties. Napster CEO Hank Berry issued a statement in
which he said that "The Judge issued an order prohibiting Napster from
enabling file transfers unless Napster reaches 100% success. The Court delegated
to the technical expert further examination and testing of the Napster system.
The Court's ruling today that Napster must block all file transfers threatens
all peer-to-peer file sharing over the Internet and is at direct odds with the
9th Circuit's ruling. While we are disappointed by this ruling, we will work
with the technical expert to enable file transfers as soon as possible and we
are continuing full steam ahead toward the launch of our new service later this
summer." RIAA P/CEO Hillary Rosen
had this reaction: "Judge Patel's decision today that Napster should not
resume operations until it can show that it can comply with the court's modified
preliminary injunction was inevitable given its failure to comply with the
court's order for so long."
§ 271 InterLATA Services Means Both Data and Voice
7/11. The FCC published in the Federal
Register a notice
of its final rule in "Implementation of the Non- Accounting Safeguards of
Section 271 and 272 of the Communications Act of 1934," CC Docket No.
96-149. The FCC ruled that the term "interLATA service" used in § 271 encompasses
interLATA information services as well as interLATA telecommunications services.
See, Federal Register, July 11, 2001, Vol. 66, No. 133, at Pages 36206 - 36208.
Background. Section 271 of the Communications Act of 1934 provides that
the Bell companies may not provide "interLATA services" until they
have satisfied the FCC that they have opened up their local networks to
competitors. In a previous Non- Accounting Safeguards Order, the FCC concluded
that the term "interLATA services" as used in section 271 encompasses
interLATA telecommunications services and interLATA information services. The
predecessor companies of Verizon and Qwest petitioned for judicial review.
However, because their arguments had not been raised in the administrative
proceeding, the U.S. Court of Appeals (DCCir) remanded this matter.
The present rule is the reconsideration on remand.
Federal Chief Information Officer
7/11. The Senate Governmental
Affairs Committee held a hearing on S 803, a bill
to establish a Federal Chief Information Officer within the Office of Management
and Budget. See, prepared testimony of witnesses: Sean O'Keefe
Altman (International Business Machines), Costis Toregas
(Public Technology, Inc.), Aldona Valicenti
(National Association of State Chief Information Officers), Greg Woods
(Department of Education), Sharon Hogan
(University of Illinois at Chicago), Barry Ingram (ITAA),
McGinnis (Council for Excellence in Government), Joseph Wright (Terremark
Worldwide). See also, testimony
[PDF] of David McClure (GAO).
Senate Committee Holds Hearing on Online Privacy
7/11. The Senate Commerce Committee
held a hearing on Internet privacy issues. See, opening statement
[PDF] of Sen. Ernest Hollings (D-SC),
the new Chairman of the Committee: "Clearly we need legislation that
requires notice, affirmative consent, reasonable access, and reasonable security
to protect individuals online." See also, opening statement
[PDF] of Sen. John McCain (R-AZ), the
ranking Republican. See also, prepared testimony in PDF of witnesses: Marc
Rotenberg (EPIC), Fred Cate
(Indiana University School of Law), Paul Schwartz
(Brooklyn Law School), Paul Misener
Seagraves (Earthlink), Ira
Rubinstein (Microsoft), Jason Catlett
House Subcommittee Approves TEACH Act
7/11. The House Judiciary Committee's
Subcommittee on Courts, the Internet, and Intellectual Property approved S 487, the
Technology, Education, and Copyright Harmonization (TEACH) Act of 2001,
unanimously and without amendment. Rep.
Howard Coble (R-NC) and Rep. Howard
Berman (D-CA) emphasized that the Senate bill was the product of a carefully
negotiated compromise between educators, copyright holders, and others, and
should not be amended. Rep. Rick Boucher
(D-VA), who introduced a competing version of the bill, HR 2100, did not
attend the mark up session.
This bill, which passed the Senate on June 7 by unanimous consent, extends the distance
learning exemption to infringement contained in Section 110 of the
Copyright Act to Internet technologies.
Rep. Zoe Lofgren (D-CA) had raised
concerns at the Subcommittee's June 27 hearing about the anti circumvention
provision of the bill. It requires that educational institutions "not
engage in conduct that could reasonably be expected to interfere with
technological measures used by copyright owners to prevent such retention or
unauthorized further dissemination". At the July 11 mark up she stated that
she would be satisfied by language in the committee report that clarifies that
it is the intent of Congress not to limit the academic work of math professors,
and that the conduct prohibited by the bill is "transmission
House Subcommittee Approves HR 1992
7/11. The House Science Committee's
Subcommittee on 21st Century Competitiveness amended and approved HR 1992, the
"Internet Equity and Education Act of 2001," a bill to make it easier
to obtain student loans for Internet based education, and other distance
learning. The bill is sponsored by Rep.
Johnny Isakson (R-GA).
The bill would remove the burden of the "12-hour rule" for
non-traditional programs. This rule requires educational institutions to keep
voluminous attendance records to demonstrate that their students attended
certain types of work sessions. The bill also makes exceptions to the 50%
requirement by allowing a limited number of institutions to offer more than 50 %
of their courses by telecommunications, or to serve more than 50 % of their
students through telecommunications courses. The bill also addresses incentive
The Subcommittee approved an amendment in the nature of a substitute offered by
Rep. Isakson, as amended by by an amendment offered by Rep. David Wu (D-OR). The Wu amendment
requires the Education Department to prepare annual reports for the House and
Senate on the effectiveness of the provisions of the bill. Rep. Patsy Mink (D-HI), the ranking
Democrat on the Subcommittee, unsuccessfully opposed the bill. She argued that
it would remove safeguards against fraud and abuse in the student loan program.
Lofgren Bill Would Ban Sending Unmarked E-Smut Spam to Kids
7/11. Rep. Zoe Lofgren (D-CA) introduced the
"Protect Children from E-Smut Act of 2001", a bill to ban the sending
of unmarked sexually explicit e-mail advertisements to children. It would make
it a federal crime to create and/or forward unmarked sexually explicit material
to a minor's e-mail account. It would also create a private right of action. The
bill also would direct the National Institute of
Standards and Technology (NIST) to help create a universal electronic mark
that must be affixed to sexually explicit e-mails. Parents would then be able to
set their children's e-mail service to block e-mails containing such a mark or
designation. See, Lofgren release.
Sen. Edwards Introduces Location Privacy Bill
7/11. Sen. John Edwards (D-NC)
introduced S 1164,
the Location Privacy Protection Act of 2001. The bill was referred to the Senate Commerce Committee, of which
Sen. Edwards is a member. Sen. Edwards stated in the Senate that under this
bill, "any company that monitors consumers' physical location will be
prohibited from using or disclosing that information without express permission
from the consumer. And third parties that gain access to the information cannot
use or disclose it without the individual's permission first." He continued
that "Our cell phones, pagers, cars, palm pilots and other devices will
enable companies to constantly track where we go and how often we go there. ...
But these new technologies also raise serious privacy issues. Location
information is very private, sensitive information that can be misused to harass
consumers with unwanted solicitations or to draw inaccurate or embarrassing
inferences about them. And in extreme cases, improper disclosure of location
information to a domestic abuser or stalker could place a person in physical
See also, HR
260, the Wireless Privacy Protection Act of 2001, introduced in the House on
January 30, 2001, by Rep. Rodney
Microsoft Announces Changes Following Court Ruling
7/11. Microsoft announced that it "is offering computer manufacturers
greater flexibility in configuring desktop versions of the Microsoft Windows
operating system in light of the recent ruling by the U.S. Court of Appeals for
the District of Columbia." In particular, Microsoft stated that OEMs
will be able "to remove the Start menu entries and icons that provide end
users with access to the Internet Explorer components of the operating
system". Microsoft also stated that is will also allow OEMs to put
"icons directly onto the Windows desktop." Finally, Microsoft stated
that "Consumers will be able to use the Add-Remove Programs feature in
Windows XP to remove end-user access to the Internet Explorer components of the
operating system." See, Microsoft
FCC Delays Spectrum Auction
7/11. The FCC's Wireless Telecommunications
Bureau announced that the auction of licenses in the 747-762 and 777-792 MHz
bands (Auction No. 31), previously scheduled to begin on September 12, 2001,
have been delayed to an unspecified date.
Tom Wheeler, P/CEO of the Cellular
Telecommunications & Internet Association, praised the postponement. He
stated that "Today’s decision by the Wireless Bureau was a good one for
the wireless industry, the U.S. Treasury, and most importantly, for wireless
consumers. While the industry indeed faces a spectrum shortage, this delay
reflects the facts on the ground: no one today can predict how or when this
spectrum will be available or how it will fit into a national, long-term
spectrum policy. Until other, related proceedings are concluded, this spectrum’s
full potential value cannot be realized. This delay will allow government and
industry to review their long-term spectrum needs, give greater clarity to the
spectrum allocation process and ensure this spectrum earns its market
value." See, CTIA release.
House Holds Hearing on Export Administration Act
7/11. The House
International Relations Committee held its third hearing on S 149, The
Export Administration Act. The Senate
Banking Committee approved the bill on March 22. It would ease restraints on
the export of most dual use products, such as computers and software.
statement of Rep. Henry Hyde
(R-IL), Chairman of the Committee. See also, prepared testimony of witnesses: John Bolton
(Under Secretary for Arms Control and International Security, Department of
Tarbell (Deputy Under Secretary of Defense for Technology Security Policy) ,
Bryen (Jefferson Partners) and Larry
7/11. Nine people joined the San Francisco area offices of the law firm of Perkins Coie in its patent prosecution
practice. The firm acquired the Iota Pi Law Group of Palo Alto. Peter
Dehlinger, head of the Iota Pi Law Group, joined Perkins Coie as a partner. Linda
Judge joined as an associate. Four registered Patent Agents, Judy Mohr,
LeeAnn Gorthey, Larry Thrower, and Jacqueline Mahoney, also
joined. Mohr and Thrower also are enrolled in law school. Perkins Coie also
hired three patent prosecution associates, Barbara Courtney, Richard
Gregory, and Michael Martensen, who previously worked for the law
firm of Wilson Sonsini. See, release.
7/11. President Bush issued a Memorandum
for the Heads of Executive Departments and Agencies regarding government
reform. It states, among other things, that "Each agency head shall
designate a Chief Operating Officer ... [who] shall report directly to the
agency head and shall ... advance e-government, apply information policy and
technology policies ..."
7/11. The House Commerce Committee's
Subcommittee on Commerce, Trade and Consumer Protection held a hearing titled
"The Potential for Discrimination in Health Insurance Based on Predictive
7/11. The U.S.
Court of Appeals (5thCir) issued its opinion
v. Hill. Defendant, Hill, used an AOL account to send image files
containing child pormography
to 108 recipients, including an undercover law enforcement officer. He was
charged with, plead guilty to, and sentenced for two counts of distributing
child pormography and two counts of receiving child pormography, in violation of
18 U.S.C. §§ 2252(a)(2) and 2252(b)(1). The appeal only concerned
sentencing issues. Affirmed.
7/11. Rep. Jim Turner (D-TX) and
others introduced HR 2458, a bill to enhance the management and promotion of
electronic government services and processes by establishing a Federal Chief
Information Officer within the Office of Management and Budget.
Go to News Briefs from July 6-10, 2001.