|News from January
Antitrust Division Reorganizes
1/4. The Antitrust Division of the
Department of Justice announced a reorganization. Charles James, who was
appointed Assistant Attorney General in charge of the Antitrust Division by
President Bush early last year, stated in a release
that this "positions the Antitrust Division to address the challenges of
the New Economy in the 21st Century while strengthening enforcement capability
in traditional industries." See also, new organizational chart [PDF].
There will be five Deputy Assistant Attorneys General (DAAGs) for the following
areas: Regulatory, Economic, Civil, Criminal, and International.
Regulatory. Hewitt Pate
is the DAAG for the Regulatory area who was picked last year. He was previously
an antitrust lawyer for the law firm of Hunton
& Williams. He will preside over three sections: Network &
Technology Section, Telecommunications & Media Section, and Transportation,
Energy & Agriculture Section. The Network & Technology Section
was previously named the Computers and Finance Section. It will now "focus
on increasingly sophisticated high technology, networking, and intellectual
property issues." The Telecommunications & Media Section was
previously named the Telecommunications Task Force. The DOJ release states that
"in this era of technology convergence this section's work extends beyond
telecommunications and to reflect the permanent need for a section that
concentrates on these industries". The third section is Transportation,
Energy & Agriculture. The reorganization eliminates the Health Care Task
Economic. Michael Katz
is the DAAG for the Economic area; he was selected for this post last summer.
From 1994 through 1996 he was Chief Economist at the FCC.
More recently, he was a professor of economics and business at the University of California at
Berkeley's Haas School. The Economic area includes three sections: Economic
Litigation, Economic Regulation, and Competition Policy.
Herman, a former law partner of Charles James at Jones Day, is the DAAG for the Civil area.
This area will include Litigation I Section, Litigation II Section, and
Litigation III Section. Litigation I and II Sections are being created by
splitting up the old Litigation II Section. Litigation III Section is the
renamed Civil Task Force. The DOJ release states only that "Each of these
sections will be responsible for the full range of civil enforcement --
including merger and non-merger matters -- in their assigned commodities."
Criminal. The former Litigation I Section will be renamed the National
Criminal Enforcement Section. It is part of the Criminal area.
International. The International area contains just one section: Foreign
Rep. Boucher Complains to RIAA about Copy Protection
1/4. Rep. Rick Boucher (D-VA) sent a
letter to Recording Industry Association of America (RIAA)
P/CEO Hillary Rosen and IFPI Chairman Jay Berman regarding CD and DVD copy
protection, and consumer rights under copyright law. He wrote that "record
labels have begun releasing compact discs into the market which apparently have
been designed to limit the ability of consumers to play the discs or record on
personal computers and perhaps on other popular consumer products, such as DVD
players, video game consoles, and even some CD players, for traditional fair-use
purposes such as space shifting."
This, wrote Boucher, "may prevent or inhibit consumer home recording using
recorders and media covered by the Audio Home Recording Act of 1992 (AHRA)."
The Audio Home Recording Act of 1992, Public Law 102-563, is codified in Chapter
10 of the Copyright Act. See, 17 U.S.C. § 1001, et
seq. It was passed in response to the music industry's shift from the use of
analog formats, such as vinyl records and audio tapes, to the digital format of
CDs. The AHRA permits manufacturers to sell digital audio recording technology
to consumers, who can then use it to copy for private non commercial use. In
return, the AHRA sets up a royalty fund to compensate copyright owners for
losses resulting from such use.
In particular, 17
U.S.C. § 1008 provides that "No action may be brought under this title
alleging infringement of copyright based on the manufacture, importation, or
distribution of a digital audio recording device, a digital audio recording
medium, an analog recording device, or an analog recording medium, or based on
the noncommercial use by a consumer of such a device or medium for making
digital musical recordings or analog musical recordings." §§ 1003 - 1007
establish the associated royalty payment system.
Rep. Boucher's letter also propounds five interrogatories regarding copy
protection technology. For example, he asks: "have any discs entered the
U.S. market that may not be copied on a device or on media for which a royalty
has been paid under the AHRA?"
Sen. Daschle Addresses Tech Issues
1/4. Sen. Tom Daschle (D-SD), the
Senate Majority Leader, gave a speech on
the economy in which he addressed several technology related issues. He
advocated passage of legislation that would create tax credits for broadband
service, grant the President trade promotion authority, make the R&D tax
credit permanent, and double civilian R&D funding. He stated that "By
embracing fiscal discipline, investing in people and technology, and opening up
new markets abroad, we helped lay a foundation for a new growth economy."
Broadband Tax Credits. Sen. Daschle stated that "High speed,
broadband Internet access has become an indispensable tool for businesses,
schools, libraries, and hospitals. And access to this service is fast becoming
the line between the haves and have nots in the information age. We should
create tax credits, grants, and loans to make broadband service as universal
tomorrow as telephone access is today." He did not reference any specific
bills. However, Sen. Daschle is a sponsor of S 88, the
Broadband Internet Access Act of 2001. This bill, which was introduced by Sen. Jay Rockefeller (D-WV) on January
22, 2001, is sponsored by 66 Senators.
Trade Promotion Authority. Sen. Daschle stated that he supports trade
promotion authority, which is also called TPA and fast track. TPA gives the
President authority to negotiate trade agreements which can only be voted up or
down, but not amended, by the Congress. TPA strengthens the bargaining position
of the President, and the U.S. Trade
Representative (USTR), in trade negotiations with other nations.
Sen. Daschle stated that "we must open new markets and help workers who are
hurt by trade. No country is better situated to thrive in this global
information economy than the United States of America. That is why I support
fast track and intend to bring it up for a vote in the full Senate early this
year. In the Finance Committee, we passed a bill that addresses critical labor
and environmental issues."
The House passed its version of the TPA bill, HR 3005,
the Bipartisan Trade Promotion Authority Act of 2001, by a roll call vote of 215
to 214 on December 6, 2001. See, TLJ Daily E-Mail Alert
However, Sen. Daschle added that "we need to recognize that not everyone
benefits. Some workers are displaced. ... That is why, as part of our
consideration of fast track, Senate Democrats are proposing to expand Trade
Adjustment Assistance. We believe that we should expand assistance to all
workers who are hurt by global production shifts."
R&D Tax Credit. He stated that "we should act to make the
research and development tax credit permanent -- the sooner, the better."
For decades, the Congress has passed a series of short term extensions of this
tax credit. Sen. Daschle added that "the R&D tax credit is one of the
most effective mechanisms to encourage innovation, increase business investment
and keep the economy growing."
R&D Funding. Sen. Daschle stated that "Over the past century,
federal investments in research have helped split the atom, sequence the genome,
invent the microchip, the laser, and the Internet ... and helped create millions
of jobs. In this century, nanotechnology, robotics, advanced energy technologies
like fuel cells and solid state lighting, and biotechnologies like gene therapy,
have the potential to do the same. We should double civilian R&D funding,
including funding for the National Science Foundation. And we should fully fund
the Advanced Technology Program -- to speed these innovations to market."
He also said that "Expanded investments in areas such as physics, computer
science, mathematics, and electrical engineering -- are essential to maintaining
America's economic and technological leadership in the 21st century."
DOJ Recommends Approval of Verizon RI 271 Application
1/4. The Antitrust Division of the
Department of Justice (DOJ) issued its Evaluation
[PDF] recommending that the Federal Communications
Commission (FCC) approve Verizon's
Section 271 application to provide long distance services in the state of Rhode
Island. It cited the availability of facilities based competition, especially
cable telephony. However, it urged the FCC to examine Verizon's pricing of
unbundled network elements (UNEs). See, DOJ release
Verizon has already gained approval from the FCC under 47 U.S.C. § 271 to
provide in region interLATA services in the states of Connecticut,
Massachusetts, Pennsylvania, and New York. The DOJ concluded that "Verizon
has generally succeeded in opening its local markets in Rhode Island to
competition and recommends approval of Verizon’s application for Section 271
authority in Rhode Island, subject to the Commission satisfying itself as to the
pricing issues ..."
The DOJ eleborated that "CLECs serve approximately 9.2 percent of all
residential lines in Rhode Island. Most CLEC service to residential customers in
Rhode Island is facilities based, including that provided over the cable
television facilities of Cox Communications. Cox’s cable telephony service is
available to between 75 and 95 percent of homes in the state. The wide-spread
availability of facilities based competition, which is the type of competitive
entry best able to ensure healthy ongoing competition and deregulation, counts
heavily in favor of granting Verizon’s application." (Footnotes omitted.)
However, the DOJ added that "Other CLECs serve approximately 1.1 percent of
all residential lines through resale, and less than one-tenth of 1 percent of
such lines by means of the UNE-platform. ... While there is significantly less
competition to serve customers by means of the UNE platform, the Department does
not believe there are any material non-price obstacles to competition in Rhode
Island." It concluded that the FCC should examine Verizon's UNE pricing in
Rhode Island to determine "whether Verizon’s prices are cost-based."
10th Circuit Rules in § 252 Interconnection Case
1/4. The U.S. Court of Appeals (10thCir)
issued its opinion
West v. Sprint, holding the CLECs, when negotiating
interconnection agreements with ILECs, can opt into tariff provisions.
Background. U.S. West (now known as Qwest)
is an incumbent local exchange carrier (ILEC) in the state of Colorado. Sprint
and MCI, as competitive local exchange carriers (CLECs), sought entry to Qwest's
market for local phone service. They each attempted unsuccessfully to negotiate
interconnection agreements with Qwest. They each then filed petitions with the Colorado Public Utilities Commission
(CPUC), which arbitrated the disputes. Qwest sought judicial review in the U.S. District Court (DColo),
which vacated portions of the arbitrations orders. Sprint and MCI then brought
the present appeal. The Appeals Court reversed and remanded.
Section 251. § 251, enacted as part of the Telecom Act of 1996, requires
ILECs, including the Qwest, to open up their networks to their competitors. 47 U.S.C.
§ 251(a)(1) provides that "... Each telecommunications carrier
has the duty - (1) to interconnect directly or indirectly with the facilities
and equipment of other telecommunications carriers ..."
§ 251(c) further provides that ILECs have "The duty to provide, for
the facilities and equipment of any requesting telecommunications carrier,
interconnection with the local exchange carrier's network -- (A) for the
transmission and routing of telephone exchange service and exchange access; (B)
at any technically feasible point within the carrier's network; (C) that is at
least equal in quality to that provided by the local exchange carrier to itself
or to any subsidiary, affiliate, or any other party to which the carrier
provides interconnection; and (D) on rates, terms, and conditions that are just,
reasonable, and nondiscriminatory, in accordance with the terms and conditions
of the agreement and the requirements of this section and section 252 ..."
A competitor can negotiate an agreement with an ILEC. Indeed, 251(c)(1) imposes
a duty upon ILECs to negotiate in good faith. Alternatively, if negotiation
fails, either party can petition the state commission that regulates local phone
service to arbitrate.
Section 252. This section provides procedures for negotiation,
arbitration, and approval of agreements. 47 U.S.C. § 252(i)
provides that "A local exchange carrier shall make available any
interconnection, service, or network element provided under an agreement
approved under this section to which it is a party to any other requesting
telecommunications carrier upon the same terms and conditions as those provided
in the agreement."
CPUC. MCI and Sprint sought provisions in their interconnection
agreements with Qwest giving them "most favored nation", or "pick
and choose", clauses affording them the right to pick any clause from any
other interconnection agreement either agreed to or arbitrated by any other
carrier that interconnected with Qwest, and to purchase services from Qwest out
of any effective tariffs filed by Qwest with the CPUC. The CPUC required Qwest
to "make available any interconnection, service, or network element
provided under an agreement approved under Section 252(i) of the Act to which it
is a party to Sprint upon the same terms and conditions as those provided in the
District Court. Qwest filed complaints in the District Court challenging
the CPUC's orders. The District Court consolidated these cases. In particular,
Qwest challenged the right of CLECs to purchase services out of Qwest's Colorado
tariffs. The District Court ruled in favor of Qwest. It held that neither
§ 252 nor the FCC's implementing regulation permit CLECs to opt into
tariff provisions. It wrote that such a requirement "would eviscerate the
provisions of 251 and 252 of the Act which require that the parties negotiate
the terms of an interconnection agreement and arbitrate those terms that they
are not able to agree to".
Appeals Court. The Tenth Circuit reversed. It held that the tariff opt-in
provisions of the CPUC orders do not violate either § 252(i) or the FCC
regulation. The Court remanded to the District Court with instructions to enter
judgment in favor of Sprint and MCI.
People and Appointments
1/4. Joseph Nacchio,
Ch/CEO of Qwest Communications, will chair
the next term of the Federal Communications
Commission's (FCC's) Network Reliability and
Interoperability Council (NRIC). The group provides recommendations to the
FCC and telecom industry regarding optimal reliability and interoperability of
public telecommunications networks. In addition, in July of 2001, President Bush
picked Nacchio to be Vice Chairman of the National Security Telecommunications
Advisory Committee (NSTAC); he will be Chairman starting in March of
2002.The outgoing chair of the NRIC is James Crowe, P/CEO of Level 3 Communications.
Third Circuit Holds Evidence Obtained in Computer Search
1/4. The U.S.
Court of Appeals (3rdCir) issued its split opinion in USA
v. Zimmerman, reversing a conviction that was based upon evidence
found in a computer.
Background. Several parents, students, and former students of the
defendant, a high school coach, provided local police with information regarding
improper sexual conduct by the coach. Police obtained a search warrant which
covered his "Computer and any computer related or attached equipment,
including but not limited to hard drives, keyboard, mouse(s), printers,
terminals, display screens, modems and connectors, cables, magnetic and optical
media storage devices, any sexual materials including photos, ..." Police
conducted a search of his computer, and found child pormography.
District Court. A grand jury of the U.S.
District Court (WDPenn) returned a one count indictment of Zimmerman
alleging possession of child pormography in violation of 18 U.S.C. §
2252A(a)(5)(B). He filed a motion to suppress evidence obtained from the
search of his computer. The District Court denied his motion. He entered a
conditional plea of guilty, and filed this appeal.
Appeals Court. The Appeals Court reversed, 2-1, pursuant to the Fourth
Amendment. Judge Barry opined that police had probable cause to search for adult
pormography, but did not have fresh probably cause to search for child
pormography; hence, evidence of child pormography is inadmissible under the
exclusionary rule. Judge Alito wrote a dissent in which he argued that the good
faith exception to the exclusionary rule should be applied in this case.
USPTO Revises Rules of Practice Re PCT Applications
1/4. The U.S. Patent and Trademark Office (USPTO)
published a notice
in the Federal Register that it has adopted a rule revising its rules of
practice relating to applications filed under the Patent Cooperation Treaty
The notice states that last year "the PCT Assembly adopted an amendment to
the PCT Article 22 ... to change its time limit for entering the national stage
of twenty months from the priority date of the PCT application to a time limit
of thirty months from the priority date of the PCT application."
The notice continues that "With this amendment to PCT Article 22, the time
limit under PCT Article 22 and the time limit under PCT Article 39 will be the
same: thirty months from the priority date of the PCT application. Thus, the PCT
will provide a single time period for national stage commencement for PCT
applications, regardless of whether the applicant filed a Demand for an
international preliminary examination. Therefore, applicants will no longer be
required to file a Demand for an international preliminary examination under PCT
Article 31 (and pay the international preliminary examination fees under 37 CFR
1.482) in order to delay commencement of the national stage until thirty months
from the priority date. An applicant's decision whether to file a Demand under
PCT Article 31 may be based upon whether the applicant wants an international
preliminary examination report, and not upon whether the applicant wants to
delay commencement of the national stage until thirty months from the priority
This rule is effective April 1, 2002. See, Federal Register, January 4, 2002,
Vol. 67, No. 3, at Pages 520 - 524.
BXA Amends Control List Regarding Computer Electronics
1/3. The Bureau of Export Administration (BXA)
published a notice
in the Federal Register that it has amended its rules regarding export of dual
use items. These are changes to the Commerce Control List (CCL), which
identifies items subject to Department of Commerce export controls. There are
numerous changes regarding microprocessors and other computer components and
technologies. These rule changes are effective January 3, 2002. See, Federal
Register, January 3, 2002, Vol. 67, No. 2, at Pages 457 - 478.
People and Appointments
1/3. The U.S. Telecom Association (USTA), a
Washington DC based group that represents incumbent local exchange carriers,
announced expanded roles for its three VPs who oversee legislative, policy and
regulatory efforts. Michael Rubin will continue to lead the lobbying
efforts, with the title of VP, Government Affairs and Chief Lobbyist. David
Cohen will manage the newly created policy division as VP, Policy. Lawrence
Sarjeant will oversee the law department as VP, Law and General Counsel. The
USTA is lobbying for passage of HR 1542, the
Tauzin Dingell bill. See, USTA release.
1/3. California Governor Gray Davis announced the appointment of Jesse Szeto
as Assistant Secretary of the Division of Science, Technology and Innovation, of
the Technology, Trade and Commerce Agency.
Cal App Upholds State Spam Statute Against Commerce Clause
1/2. The California
Court of Appeal (1/2) issued its opinion [PDF]
v. Friendfinders, holding that a California statute that
regulates the use of unsolicited e-mail advertising does not violate the dormant
commerce clause of the U.S. Constitution. The Court rejected the notion that any
state regulation of the Internet violates the commerce clause.
Proceedings Below. Mark Ferguson, a California resident, filed a
complaint in California Superior Court for San Francisco County against
Friendfinders, Inc. and Conru Interactive, Inc., two California businesses
located in Palo Alto, California, alleging that they sent unsolicited e-mail
advertisements that did not comply with the requirements set forth in § 17538.4
of the California Business and Professions Code. He also alleged trespass,
unfair business practices, and unlawful advertising practices. He sought class
action status. Defendants filed a demurrer, which the trial court granted. The
trial court held, among other things, that "California Business and
Professions Code section 17538.4 unconstitutionally subjects interstate use of
the Internet to inconsistent regulations, therefore violating the dormant
Commerce Clause of the United States Constitution."
The Statute: Requirements for Unsolicited Advertising E-mail. § 17538.4
provides that no unsolicited advertising e-mail may be sent in California unless
in meets certain enumerated requirements. Subsection (a) provides that there
must be a return e-mail address for recipients to use to opt out of receiving
further e-mail. Subsection (b) provides that there must be a notice at the top
of the e-mail notifying the recipient of the right to opt out. Subsection (c)
provides that once a recipient has notified the sender of his decision to opt
out, the sender cannot send that person any further unsolicited e-mail.
The Statute: Limited to In State Mailers. § 17538.4 also contains
restrictions on its scope. Subsection (d) provides, in part, that "this
section shall apply when the unsolicited e-mailed documents are delivered to a
California resident via an electronic mail service provider's service or
equipment located in this state."
Dormant Commerce Clause. Article I, Section 8, of the Constitution
provides that "The Congress shall have Power ... to regulate Commerce with
foreign Nations, and among the several States ..." The dormant commerce
clause is the judicial concept that the Constitution, by delegating certain
authority to the Congress to regulate commerce, thereby bars the states from
legislating on certain matters that affect interstate commerce, even in the
absence of Congressional legislation. It is applied to block states from
regulating in a way that materially burdens or discriminates against interstate
commerce. See, Gibbons v. Ogden,
22 U.S. 1 (1824), and Cooley v. Board of Wardens, 53 U.S. 299 (1851).
More recent treatments of the concept include Healy v. The Beer Institute,
491 U.S. 324 (1989), and CTS Corp. v. Dynamics Corp. of America, 481 U.S.
Court of Appeal. The Court of Appeal reversed the trial court. The Court
reasoned that the dormant commerce clause entails a two part enquiry: first,
whether the state regulation discriminates against interstate commerce, and
second, whether the regulation imposes a burden on interstate commerce that is
clearly excessive in relation to the local benefits.
The Court stated that the first part of the analysis invokes the strict scrutiny
test. However, it noted that the statute equally affects in state and out of
state e-mailers. Hence, there is no discrimination against out of state
e-mailers. Moreover, the Court reasoned, since the statute only applies to
e-mailers sent via a service provider or equipment located in California, it
cannot be said to regulate commerce wholly outside of California.
The Court stated that the second part of the analysis involves a balancing test.
It found that protecting its citizens from the harmful effects of unsolicited
e-mail is a legitimate state interest, and the statute furthers that interest.
On the other side of the scale, the Court found that regulating unsolicited
e-mail does not burden interstate commerce. Rather, it benefits it by reducing
fraud. Moreover, the requirements imposed upon the senders are slight. Hence, in
applying the balancing test, the benefits of the statute outweigh the burdens.
Washington Statute. The state of Washington has also upheld its anti spam
statute against a dormant commerce clause challenge. See, Commercial Electronic
Mail Act, Chapter 19.190 Revised Code of Washington, at RCW
19.190.020. On October 29, 2001, the Supreme Court of the United States
denied a petition for writ of certiorari in this case, Heckel v. Washington. The
California Court of Appeal relied on this Washington precedent.
SEC Files Internet Stock Fraud Complaint
1/2. The Securities and Exchange Commission
(SEC) filed a civil complaint
with the U.S.
District Court (NDCal) against Ned Sneiderman alleging violation of federal
securities laws in connection with the posting of a fake press release on a
Yahoo message board regarding a stock traded on the NASDAQ.
The complaint states that he "posted a phony press release on an Internet
stock discussion board in which Extreme Networks ... a Santa Clara technology
company, purported to announce a cash tender offer for Viasource Communications
... a small Florida technology company. The fabricated press release caused
Viasource stock to double in price on volume nearly seven times that of the
previous trading day. The price increase caused Viasource's market
capitalization to be artificially inflated by nearly $4.7 million. ... Minutes
before posting the false press release, Sneiderman had purchased shares of
The complaint elaborates that Sneiderman used his home computer to post the
phony release to the Yahoo stock discussion board for Viasource, and that he
used the same computer to purchase shares of Viasource in his online brokerage
The complaint alleges violation of § 10(b) of the Exchange Act, 15 U.S.C. § 78j(b),
and Rule 10b-5, 17 C.F.R. §§ 240.10b-5, thereunder. The complaint seeks
injunctive and monetary relief. This is D.C. No. C-02-0001 JW. See, SEC release.
WTO AB Addresses U.S. Statute Affecting Confiscated Trademarks
1/2. A World Trade Organization (WTO)
Appellate Body (AB) issued a report [108
pages in PDF] titled "United States -- Section 211 Omnibus Appropriations
Act of 1998". The report found that portions of Section 211, which is
directed at trademarks confiscated by Castro's Cuban communists, violates WTO
rules. However, AB report found that WTO members may protect trademarks by
establishing their own trademark ownership criteria that take into consideration
Section 211. The U.S. Congress enacted the Omnibus Appropriations Act of
1998 at the tail end of the 105th Congress. It was a massive bill containing
appropriations for a wide range of agencies. It also contained a large number of
non appropriations items, such as the original Internet Tax Freedom Act, and
Section 211, which is the subject of this WTO AB report.
Section 211 provides, in part, that "No U.S. court shall recognize, enforce
or otherwise validate any assertion of treaty rights by a designated national or
its successor- in- interest under sections 44 (b) or (e) of the Trademark Act of
1946 (15 U.S.C. 1126 (b) or (e)) for a mark, trade name, or commercial name that
is the same as or substantially similar to a mark, trade name, or commercial
name that was used in connection with a business or assets that were confiscated
unless the original owner of such mark, trade name, or commercial name, or the
bona fide successor- in- interest has expressly consented." It further
provides that "The term ``designated national´´ has the meaning given
such term in section 515.305 of title 31, Code of Federal Regulations, as in
effect on September 9, 1998, and includes a national of any foreign country who
is a successor- in- interest to a designated national." This regulation, in
turn, identifies post 1959 Cuba. Hence, the statute applies to trademarks
confiscated by Castro's communist government after its take over of Cuba.
Havana Club Rum. The present proceedings resulted from a dispute between
claimants to the use of the mark "Havana Club" in the U.S. in
connection with the sale of rum. Bacardi Ltd, a Bermuda corporation, claims that
it acquired the mark from the original owner. Pernod Ricard, a French company,
claims that it acquired the mark from Castro's communist government.
Earlier Proceedings. The European Communities initiated a WTO proceeding
in which they alleged that Section 211 is inconsistent with the obligations of
the U.S. under the Agreement on Trade Related Aspects of Intellectual Property
Rights (TRIPS Agreement). A WTO panel ruled previously. Both sides appealed that
AB Report. The WTO Appellate Body wrote that Section 211 violates WTO
rules. It is contrary to the national treatment and most favored nation
obligations under WTO rules. However, the AB added that "this ruling is not
a judgment on confiscation as that term is defined in Section 211. The validity
of the expropriation of intellectual or any other property rights without
compensation by a WTO Member within its own territory is not before us. Nor do
we express any view, nor are we required to express any view in this appeal, on
whether a Member of the WTO should, or should not, recognize in its own
territory trademarks, trade names, or any other rights relating to any
intellectual or other property rights that may have been expropriated or
otherwise confiscated in other territories. ... However, where a WTO Member
chooses not to recognize intellectual property rights in its own territory
relating to a confiscation of rights in another territory, a measure resulting
from and implementing that choice must, if it affects other WTO Members, comply
with the TRIPS Agreement, by which all WTO Members are voluntarily bound. In
such a measure, that WTO Member must accord "no less favourable
treatment" to the nationals of all other WTO Members than it accords to its
own nationals, and must grant to the nationals of all other WTO Members ``any
advantage, favour, privilege or immunity´´ granted to any other WTO Member.
Both the USTR and EU issued press releases claiming victory. See, USTR
release and EU
Bush Relaxes Computer Export Controls
1/2. President Bush announced that he is relaxing certain controls on the export
of high performance computers and microprocessors. This change applies to
"Tier 3 countries", which include Russia, Israel, India, Pakistan, and
China. Currently, U.S. exporters are required to notify the Department of
Commerce of proposed exports to Tier 3 countries of computers with the capacity
to conduct at least 85,000 Millions of Theoretical Operations Per Second (MTOPS).
President Bush raised this level to 190,000 MTOPS.
This change will become effective after the expiration of a 60 day notice period
for the U.S. Congress. Bush wrote a letter
to Congressional leading informing them of the change. He wrote, in part:
"In accordance with the provisions of section 1211(d) of the National
Defense Authorization Act for Fiscal Year 1998 (Public Law 105-85), I hereby
notify you of my decision to establish a new level for the notification
procedure for digital computers set forth in section 1211(a) of Public Law
105-85. The new level will be 190,000 millions of theoretical operations per
second (MTOPS). In accordance with the provisions of section 1211(e), I hereby
notify you of my decision to remove Latvia from the list of countries covered
under section 1211(b)."
See also, White
House release and statement
by the Deputy Press Secretary.
SEC Sues Software CEO for False Financial Statements
1/2. The SEC announced that it filed a
in U.S. District Court (DUtah) against Bruce Acacio alleging violation of
federal securities laws. Acacio is the Ch/CEO of California Software
Corporation, an Irvine, California, based software company. The complaint
alleges, among other things, that Acacio provided false and misleading
information in the offer and sale of securities, falsified the books and records
of an issuer of securities, and provided false information to auditors in
connection with the audit of financial statements. Acacio simultaneously
consented to entry of an injunction enjoining him from future violations of
federal securities laws; he also agreed to pay $30,000 in penalties. (See, SEC
v. Acacio, U.S. District Court for the District of Utah, D.C. No.
USTR Imposes Prohibitive Duties on Ukraine for Failure to
1/2. The Office of the United States Trade
Representative (USTR) published a notice
in the Federal Register that it has determined to impose prohibitive duties on
certain imports from the Ukraine in order "to obtain the elimination of the
acts, policies, and practices of the Government of Ukraine that result in the
inadequate protection of intellectual property rights". This action was
taken as a result of the Ukraine's failure "to use existing law enforcement
authority to stop the ongoing unauthorized production of optical media products
and failure to enact an optical media licensing regime ..." The 100% duties
cover fuel oil, fertilizers, cooper, aluminum, and other products. The duties
take effect on January 23, 2002. See, Federal Register, January 2, 2002, Vol.
67, No. 1, at Pages 120 - 121.
People and Appointments
1/2. Robert Borchardt will be the 2002 Chairman of the Board of Governors
of the Electronic Industries Alliance (EIA).
Borchardt is Ch/CEO/P of Recoton Corporation,
a producer and marketer of consumer electronic accessories, home speakers and
car audio products and video game products. See, EIA release.
1/2. Motorola announced that Edward
Breen is P/CEO, effective January 1, 2002, and has been elected to the Board
of Directors. He will report to Christopher Galvin, the Ch/CEO. See, Motorola
1/2. The law firm of Latham & Watkins named
eight new partners, including Kenneth Schuler, Raymond Grochowski, and Howard
Schuler is based in the firm's Chicago office, where he litigates cases
involving intellectual property rights. Raymond
Grochowski is in the Communications Law Practice Group in the Washington
DC office; he focuses on federal regulation of, and purchase, sale and financing
of, broadcast stations, satellite earth and space stations and mobile
communications services facilities and businesses; he also advises clients in
Internet related matters. Howard
Armstrong is in the Corporate Department and the Telecommunications and
Wireless Practice Group in the San Diego office; he focuses on corporate
finance, mergers and acquisitions, commercial transactions, and general company
representation for public and private companies. See, L&W release.
1/2. The Venable law firm named five new
partners, including Marcia
Auberger, of the Washington DC office. She focuses on domestic and
international trademark prosecution, including analysis of trademark searches,
clearance of marks, preparation of trademark applications, responding to
Trademark Office correspondence, maintenance of domestic and international
trademark portfolios, and represents client before the Trademark Trial and
Appeal Board. See, Venable
1/2. The U.S. District Court
(DC) issued an order
[PDF] in the Microsoft antitrust case setting a hearing for January 7 on
to amend the scheduling order (to delay the trial date). Nine of the state
plaintiffs have not joined in the settlement agreement negotiated by Microsoft,
the Department of Justice, and the other state plaintiffs. The hearing will be
held at 9:15 AM before Judge Colleen Kotelly. This is Civil Action No. 98-1233 (CKK).
1/2. The U.S. Patent and Trademark Office (USPTO)
announced that it "discovered a programming error that has resulted in
Notices of Allowance mailed on or after November 13, 2001 and before December
23, 2001 being printed with a zero (0) in the patent term adjustment field,
regardless of whether the application is entitled to patent term adjustment or
not." See, USPTO
1/2. The Senate Government Affairs
Committee will hold a hearing regarding the collapse of Enron, and how it
might be exploited for political purposes. Sen. Joe Lieberman (D-CT) is the
Chairman of the full Committee. Sen. Carl
Levin (D-MI), Chairman of its Permanent Subcommittee on Investigations, also
announced that his subcommittee is investigating Enron. See, Levin release and statement.
1/2. The GAO
released a report [PDF]
titled "Purchase Cards: Control Weaknesses Leave Two Navy Units Vulnerable
to Fraud and Abuse". It reviews the breakdown of internal controls over
purchase card activity at two Navy units in San Diego, California -- the Space
and Naval Warfare Systems Command (SPAWAR) Systems Center and the Navy Public
Works Center. The report found that the two units are "vulnerable to
fraudulent, improper, and abusive purchases and theft and misuse of government
property" and recited instances of abuse. For example, the GAO could not
verify that certain items, "including laptop computers, personal digital
assistants (PDA) such as Palm Pilots, and digital cameras, were in the
possession of the government." The GAO also found that PDAs were purchased
"without documented government need", and that flat panel monitors
were purchased at excessive prices. The report also sets out recommendations for
more effective management control.
Taiwan Joins WTO
1/1. Taiwan became the 144th member of the World
Trade Organization (WTO). Secretary of Commerce Don Evans stated in a release
that "I congratulate Taiwan on this historic achievement. Taiwan's
accession to the WTO will further open Taiwan's market to American exports of
industrial goods and services, including key telecommunications and financial
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