|News from February
CARP Recommends Rates and Terms for Webcasting
2/20. The Copyright Arbitration
Royalty Panel (CARP) released its report [1
page in PDF] recommending rates, and its report [29
pages in PDF] recommending terms, for the statutory license for eligible
nonsubscription services to perform sound recordings publicly by means of
digital audio transmissions, also known as webcasting, pursuant to 17 U.S.C. § 114, and
to make ephemeral recordings of sound recordings for use of sound recordings
under the statutory license set forth in 17 U.S.C. § 112.
The CARP recommended that both webcasters and commercial broadcasters pay a
performance fee of 0.07¢ per performance, and 9% of performance fees due, for
simultaneous Internet retransmissions of over the air AM or FM radio broadcasts.
It recommended that the performance fee be 0.14¢ per performance and 9% of
performance fees due for all other Internet transmissions.
It further recommended that non commercial broadcasters pay a performance fee of
0.02¢ per performance for simultaneous Internet retransmissions of over the air
AM or FM radio broadcasts, and 0.05¢ for other Internet transmissions,
including up to two side channels of programming consistent with the public
broadcasting mission of the station.
Hillary Rosen, P/CEO of the Recording Industry
Association of America (RIAA), stated in a release that "We would
have preferred a higher rate. But in setting a rate that is about 10 times that
proposed by the webcasters, the panel clearly concluded that the webcasters'
proposal was unreasonably low and not credible. It is apparent to us, as it was
to the Panel, that webcasters and broadcasters of every size will be able to
afford these rates and build businesses on the Internet".
Jonathan Potter, Executive Director of the Digital
Media Association (DiMA), stated in a release that "We are
extremely disappointed, however, that the Panel's proposed rate is not
significantly lower, as a lower rate would more accurately reflect the
marketplace for music performance rights and the business environment of the
webcast industry. We believe that the Digital Millennium Copyright Act webcast
sound recording statutory license reflected Congress's effort to ensure fair
compensation for creators and a reasonable and competitive business environment
for webcasters. America deserves an equitable royalty formula so that both
creators and consumers can continue to benefit from the advantages of Internet
based broadcasting and the innovation that continues to be developed by DiMA
companies. ... Webcasters will study the panel's decision further, and provide
analysis and recommendations to the Copyright Office for consideration during
that Office's statutory review period."
The Copyright Office stated that
"The CARP report will be reviewed by the Copyright Office, which will
recommend to the Librarian of Congress whether to accept, reject or modify the
rates and terms set forth in the report. The Librarian must accept or reject the
report no later than May 21, 2002."
California Supreme Court To Review DeCSS Case
2/20. The Supreme Court of
the State of California ordered review of the Court of Appeal decision in DVD Copy Control Association v. Bunner,
a case regarding California trade secret law, and the publication of the DeCSS
program in web sites. The Santa Clara County Superior Court issued a preliminary
injunction. On November 1, 2001, the California
Court of Appeal (6th) issued its opinion
reversing that injunction. See, Conference
Results [PDF], February 20, 2002, at page 1.
Plaintiff. DVD is sometimes known as Digital Versatile Disc. CSS is a
Content Scrambling System for DVD to protect intellectual property rights by
means of encryption. The DVD Copy Control Association (DVDCCA) is a trade
association of businesses in the movie industry. It controls the rights to CSS.
DVDCCA licenses the CSS decryption technology to manufacturers of hardware and
software for playing DVDs.
Defendant. DeCSS is a decryption tool that facilitates infringement.
DeCSS consists of computer source code which describes a method for playing an
encrypted DVD on a non CSS equipped DVD player or drive. It was written by Jon
Johansen, a 15 year old Norwegian. Andrew Bunner published a copy of DeCSS on a
Complaint. The DVDCCA filed a complaint in 1999 in California Superior
Court against Andrew Brunner and others alleging violation of the California
Uniform Trade Secrets Act in connection with their publishing copies of DeCSS in
web sites, or linking to copies of DeCSS.
Preliminary Injunction. The Superior Court issued an order granting a
preliminary injunction in January 2000 which enjoined defendants from "[p]osting
or otherwise disclosing or distributing, on their web sites or elsewhere, the
DeCSS program, the master keys or algorithms of the Content Scrambling system
(‘CSS’), or any other information derived from this proprietary
The Court of Appeal. The Court of Appeal reversed. It reasoned that the
DeCSS source code is speech entitled to First Amendment protection. It also
noted that unlike copyright, trade secret protection is not secured by the
Constitution. The Court of Appeal further reasoned that the Superior Court order
constituted a prior restraint of pure speech.
Supreme Court. On February 20, 2002, the state Supreme Court agreed to
hear the case. It did not issue an opinion; it did not set a date for oral
argument. This is Supreme Court No. S102588.
EC Proposes Directive on Patents of Computer Implemented
2/20. The European Commission released a proposal for a Directive on patents of
computer implemented inventions. See, document
titled "Patents: Commission proposes rules for inventions using
software" and document
titled "Proposal for a Directive on the patentability of computer
implemented inventions -- frequently asked questions".
The proposal states that inventions "whose operation involves the use of a
computer program and which make a ``technical contribution´´ -- in other words
which contribute to the ``state of the art´´ in the technical field concerned
-- would be eligible for patents. Computer programs as such would not be
eligible for a patent under the proposal. Nor would business methods that employ
existing technological ideas and apply them to, for example, e-commerce. These
would continue where appropriate to be covered by copyright law or the law of
The proposal elaborates that it "takes as its basis the concept of
``technical contribution´´ as an essential requirement of any patentable
invention. ... It implies that a computer implemented invention which makes a
``technical contribution´´ to the state of the art, which would not be obvious
to a person of normal skill in the field concerned, is more than just a computer
program ``as such´´ and can therefore be patented.
The proposal continues that "The requirement for a ``technical contribution´´
is fully consistent with the European Patent
Convention and the EU's wider international obligations". It also
states that "it would put beyond doubt that creations in which the
innovative element is not technical in nature, that is to say which make no
technical contribution, cannot be patented. The proposal thus addresses concerns
that EU patent law might in future be extended to cover fields of human
endeavour which have up to now been excluded, in particular business methods and
mathematical entities or logical constructs having no relation to the physical
Internal Market Commissioner Frits
Bolkestein (Netherlands) stated that "European industry needs a legal
environment that encourages innovation without stifling competition. We need
certainty over what can, and cannot, be patented".
He added that "The proposed Directive would provide this certainty by
making the conditions for patentability of computer implemented inventions clear
and uniform. Current law on this question was drafted in the early 1970s when
there was no inkling of what was to come in the shape of modern computers and
networks, not to mention the emergence of a software industry worth billions of
euros. The courts have done their best to develop the law in response to the
changing environment, but there is now no alternative to legislation at European
level to prevent potentially divergent interpretations by the courts."
Rep. Goodlatte Criticizes Russia on IPR Enforcement
2/20. Rep. Bob Goodlatte (R-VA),
who traveled to Moscow with a Congressional delegation, criticized Russia's
record on enforcement of intellectual property rights. He stated that
"Protecting valuable copyrighted work is vitally important for the growth
of the Internet and the global electronic marketplace. ... In the past five
years, it is estimated that the copyright industries have lost over $5 billion
due to piracy in Russia. The Internet will not reach its full potential until
creative people feel that their works will be fully protected when they put them
on the Internet."
He continued that "Russia has made progress in adopting laws that would
protect copyrighted works, by they can't just talk the talk. They have to walk
to walk by enforcing those laws and cracking down on the production and sale of
pirated works, both online and offline ... It is in Russia's interest to promote
respect for intellectual property rights and strongly prosecute pirates. This is
a nation with many creative and talented people in the arts and sciences whose
value to their country's economy will grow if their creativity is protected
through enforcement of intellectual property laws".
CompTel Opposes FCC NPRM on Classification of Services
2/20. Russell Frisby, President of CompTel,
wrote a letter to Sen. Ernest Hollings
(D-SC), Chairman of the Senate
Commerce Committee, requesting a hearing on the Federal Communications Commission's (FCC)
Notice of Proposed Rulemaking (NPRM) regarding classification of services.
The FCC held a meeting on February 14 at which it announced a NPRM regarding
classification of services. It then issued a press
release that is associated with this NPRM. This release states that this
NPRM "is poised to resolve outstanding issues regarding the classification
of telephone based broadband Internet access services and the regulatory
implications of that classification". It further states that the "the
FCC tentatively concluded the wireline broadband Internet access services --
whether provided over a third party's facilities or self-provisioned facilities
-- are information services, with a telecommunications component, rather than
telecommunications services. Information services include such services as voice
mail and e-mail, which ride over telecommunications facilities." This is CC
Frisby wrote that such a finding "will simply serve to benefit the very
largest carriers at the expense of competition and consumers." See, CompTel release.
People and Appointments
2/20. The Federal Election Commission
(FEC) named Rhonda Vosdingh Associate General Counsel for Enforcement in
the FEC's Office of General Counsel (OGC). She has been with the FEC since 1994.
See, FEC release.
2/20. World Trade Organization (WTO) Director
General Mike Moore gave a speech titled
"Making Globalization Work" to the International Confederation of Free
Trade Unions (ICFTU) in Geneva, Switzerland.
2/20. President Bush and South Korean President Kim Dae-Jung held a joint press
conference. Kim Dae-Jung stated that "President Bush and I concurred that
continued expansion and progress of bilateral, economic and trade relations are
in the interest of both our countries. Furthermore, we also agreed to
further deepen cooperative relations at the multilateral level, such as the WTO
-- development agenda." Bush stated that "It's also vital that we
continue to trade together. ... we also discussed ways to make sure our
trade was more open and fair to both sides." See, transcript.
2/20. The U.S.
Court of Appeals (6thCir) issued its opinion in USA
v. Yang, a criminal case involving attempted theft of a trade
secret and conspiracy to commit theft of a trade secret in violation of the
Economic Espionage Act of 1996 (EEA), 18 U.S.C. § 1832.
2/20. The Federal Trade Commission (FTC)
announced that it filed a civil complaint [PDF] in U.S.
District Court (SDFl) against Stock Value 1, Inc. and its President, Deborah
Jenkins, alleging violation of the Federal Trade Commission Act in connection
with the marketing of "products that purportedly block electromagnetic
energy emitted from cellular and cordless telephones". The FTC alleges that
defendants engaged in deceptive acts or practices in or affecting commerce in
violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and
false advertising in violation of Section 12(a) of the FTC Act, 15 U.S.C. § 52(a). The
FTC seeks an injunction. The FTC also filed a similar civil complaint [PDF] in U.S.
District Court (EDCal) against Comstar Communications, Inc. and Randall Carasco.
See also, FTC release.
2/20. The U.S. Patent and Trademark Office (USPTO)
published a copy of the February
issue of USPTO Today [PDF] in its web site.
2/20. Lincoln Bloomfield, Assistant Secretary of State for Political Military
Affairs, gave a speech
regarding the State Department's portion of the export control system at an American Institute of Aeronautics and Astronautics
(AIAA) conference. He is responsible for the State Department's Office of
Defense Trade Controls (DTC). He also discussed the upgrading of the DTC's
information technology infrastructure. He stated that "Our plan is to
initiate a six month beta test of a fully electronic licensing program in the
coming weeks ..."
Supreme Court Grants Cert in Challenge to Copyright Term
2/19. The Supreme Court granted
certiorari in Eldred
v. Ashcroft, a constitutional challenge to the Copyright Term
Extension Act, which retroactively extended the maximum duration of copyrights
from 75 to 95 years.
Background. The 105th Congress (1997-1998) passed, and President Clinton
signed into law, two copyright statutes that the Plaintiffs and their lawyers
dislike. The original plaintiff of record is Eric Eldred, the proprietor of the
unincorporated Eldritch Press, a web site that republishes the works of others
which are not protected by copyright. However, the suit was brought by a group
of activist law professors, Charles
Lessig, and Jonathan
Zittrain. At the time the lawsuit was filed, all worked at The Berkman Center for Internet &
Society at Harvard Law School.
Proceedings Below. Plaintiffs filed a complaint (see, Second
Amended Complaint) in U.S. District Court
(DC) against former Attorney General Janet Reno seeking injunctive and
declaratory relief. They seek a declaration that the Copyright
Term Extension Act (CTEA) is unconstitutional; they also seek an injunction
against enforcement of the No Electronic
Theft Act (NET ACT) against violators of the CTEA. The CTEA retroactively
extended the maximum duration of copyrights from 75 to 95 years. The District
Court granted summary judgment denying relief to the plaintiffs. The Court wrote
a short memorandum
explaining its ruling. The U.S. Court of
Appeals (DCCir) issued its opinion
affirming the District Court on February 16, 2001. Chief Judge Douglas
Ginsburg wrote the opinion; Karen Henderson joined; and David
Sentelle dissented. The Court of Appeals denied plaintiffs' petition for
rehearing en banc on July 13, 2001. Sentelle and David Tatel dissented. See, opinion.
Certiorari. Plaintiffs wrote in their Petition
for Writ of Certiorari that the issues are: "Did the D.C. Circuit err
in holding that Congress has the power under the Copyright Clause to extend
retrospectively the term of existing copyrights? Is a law that extends the term
of existing and future copyrights “categorically immune from challenge under
the First Amendment”? May a circuit court consider arguments raised by amici,
different from arguments raised by a party, on a claim properly raised by a
party?" See also, brief
[PDF] of the government opposing certiorari, and plaintiffs' reply
brief. The Supreme Court granted writ of certiorari, without opinion. See,
February 19, 2002, Order
List [PDF] at page 3.
Constitution, Art. I, Sec. 8. The Constitution provides, in relevant
part, that "Congress shall have the Power... To regulate Commerce ... To
promote the Progress of Science and useful Arts, by securing for limited Times
to Authors and Inventors the exclusive Right to their respective Writings and
Discoveries ... To make all Laws which are necessary and proper for carrying
into Execution the foregoing Powers ..."
The CTEA is supported by holders of entertainment industry copyrights, and their
trade associations, such as the the Association
of American Publishers, Motion Picture
Association of America (MPAA), National Music
Publishers' Association (NMPA), and Recording
Industry Association of America (RIAA). The CTEA is opposed by some law
professors, library groups, and the Cato Institute.
Wendy Seltzer, of the
Berkman Center, commented in a release
on the Supreme Court's decision to hear the case: "From Lawrence Lessig and
the Openlaw team: We are extremely pleased to report that the Supreme Court has
today granted cert in Eldred v. Ashcroft. After the case was listed on the
court's conference calendar 4 weeks in a row, the court decided to hear the full
range of issues in the appeal."
The Consumer Electronics Association (CEA)
stated in a release
that "The Supreme Court's decision to hear arguments in this copyright case
affirms the grave threat to innovation and public access that has been evident
in seemingly indefinite copyright term extensions by Congress. ... It is highly
doubtful the Framers intended the `limited´ term of copyright to be extended on
a routine and regular basis."
See also, Berkman
Center case summary and TLJ case
DC Circuit Vacates Cable Broadcast Cross Ownership Rule
2/19. The U.S. Court of Appeals (DCCir) issued its opinion
v. FCC, holding that the Federal
Communications Commission's (FCC) national TV station ownership rule (NTSO)
and its cable broadcast cross ownership rule (CBCO) both violate the
Administrative Procedure Act (APA) as arbitrary and capricious. The Court
vacated the CBCO rule, but merely remanded the NTSO rule to the FCC.
Congress passed the Telecom Act of 1996. It provides, at Section 202(h), that
the FCC "shall review its rules adopted pursuant to this section and all of
its ownership rules biennially as part of its regulatory reform review under
section 11 of the Communications Act of 1934 and shall determine whether any of
such rules are necessary in the public interest as the result of competition.
The Commission shall repeal or modify any regulation it determines to be no
longer in the public interest."
The FCC maintained its NTSO rule (47
C.F.R. § 73.3555(e)) and its CBCO rule (47
C.F.R. § 76.501(a)) in 1998. Fox Television Stations and various other TV
networks and cable companies petitioned the Court of Appeals for review of the
FCC's 1998 decision not to repeal or modify these two rules. The petitioners
asserted that these rules violate the Administrative Procedure Act (APA),
§ 202(h) of the Telecom Act of 1996, and the First Amendment of the
The Court of Appeals held: "We conclude that the Commission's decision to
retain the rules was arbitrary and capricious and contrary to law. We remand the
national television station ownership rule to the Commission for further
consideration, and we vacate the cable/ broadcast cross ownership rule because
we think it unlikely the Commission will be able on remand to justify retaining
Chief Judge Douglas
Ginsburg, writing for a three judge panel, found that the FCC "has
adduced not a single valid reason to believe the NTSO Rule is necessary in the
public interest, either to safeguard competition or to enhance diversity.
Although we agree with the Commission that protecting diversity is a permissible
policy, the Commission did not provide an adequate basis for believing the Rule
would in fact further that cause. We conclude, therefore, that the 1998 decision
to retain the NTSO Rule was arbitrary and capricious in violation of the APA."
The Court similarly held that the CBCO violates of the APA. It found that the
FCC "failed to consider the increased number of television stations now in
operation, and it is clear that the Commission failed to reconcile the decision
under review with the TV Ownership Order it had issued only shortly before. We
conclude, therefore, that the Commission's diversity rationale for retaining the
CBCO Rule is woefully inadequate."
Michael Powell, who was a
FCC Commissioner in 1998, dissented from the retention of the NTSO and CBCO
rules. He is now Chairman of the FCC, and is joined by two other Republican
Commissioners, Kevin Martin and Kathleen Abernathy, who are skeptical of
Be Sues Microsoft
2/19. Be Incorporated,
maker of the BeOS operating system, filed a complaint [PDF] in U.S. District
Court (NDCal) against Microsoft alleging violation of federal antitrust laws
and California law.
Count one alleges monopoly maintenance of the Intel compatible PC operating
system market in violation of Section 2 of the Sherman Act. Count two alleges
exclusive dealing in violation of Section 1 of the Sherman Act and Section 3 of
the Clayton Act. Count three alleges violation of the California Cartwright Act,
California Business and Professions Code, §§ 16720 et seq. Count four alleges
unfair competition under the California Business and Professions Code, §§
17200 et seq. Count five alleges tortious interference under California state
law. Be seeks treble damages, punitive damages, and other relief.
This is D.C. No. 02837MEJ, filed in the San Francisco Division. MEJ references
Magistrate Judge Maria-Elena James.
Congressional Delegation Travels to Moscow
2/19. A Congressional delegation that includes Reps. Bob Goodlatte (R-VA), Rick Boucher (D-VA), Lamar Smith (R-TX), Dana Rohrabacher (R-CA), Martin Sabo (D-MN), James Walsh (R-NY), and John LaFalce (D-NY), traveled to
Moscow, Russia, to discuss e-commerce and cyber security issues with members of
the Russian government.
Rep. Goodlatte stated in a release that "The Russian government is divided
between those who support the same tired, old proposals, like key escrow, that
drain consumer confidence in their security online, and those who support a free
and open Internet, where consumers are given the tools to protect their privacy
and security. The U.S. has abandoned key escrow as a policy position shared by
Britain, France, and the rest of the nations that have entered the Information
Age. Russia's economic prosperity depends on the success of those who argue for
strong privacy protections and against government monitoring schemes".
This delegation goes next to Brussels, Belgium.
People and Appointments
2/19. Jeffery Goldthorp was named Chief of the Network Technology
Division at the Federal Communications Commission's (FCC) Office of Engineering and Technology (OET).
Goldthorp will also represent the OET on the FCC’s Homeland Security Policy
Council. He will also be the designated federal official for both the Network Reliability and Interoperability Council
and the Technology Advisory Council. He was previously General Manager of
Network Access Engineering Services at Telcordia
Technologies. See, FCC
2/19. The Department of Justice's (DOJ) Office
of Legal Policy (OLP) announced several appointments and promotions. Jennifer Newstead
was promoted from Deputy Assistant Attorney General (DAAG) to Principal DAAG of
the OLP. Before joining the DOJ in 2001 she was an attorney at the law firm of Davis Polk & Wardwell. Michael Carrington
joined the OLP as a DAAG. Don Willett also joined the OLP as a DAAG. He
was previously Special Assistant to President Bush and Director of Law and
Policy for the White House Office of Faith Based and Community Initiatives.
Before that, he worked for Governor Bush, and for the Bush Cheney campaign. Grace
Mastalli, who was a DAAG at the OLP, left to become Chief of Staff and
Deputy Director for Law and Policy for the Joint Foreign Terrorist Tracking Task
Force. Viet Dinh
remains Assistant Attorney General in charge of the OLP. The OLP is involved in
the formulation of legal policy, such as drafting and advocating passage of the
USA PATRIOT Act, also known as the anti terrorism bill. See, DOJ release.
2/19. Matthew Lehr and Anthony
Klein joined the Palo Alto office of the law firm of Latham & Watkins as partners. Both were
previously partners in the Palo Alto office of the law firm of Cooley Godward. Lehr is an intellectual
property litigator who focuses on biotechnology, computer architecture, chemical
products, plasma physics and electrical devices, computer networking and
software, and consumer products. Klein focuses on licensing and technology
transactions in the software, telecommunications, Internet, e-commerce, and
semiconductor industries. He handles software licensing and distribution deals,
manufacturing, supply and OEM relationships, semiconductor design and
fabrication agreements, outsourcing arrangements, internet traffic deals and
co-marketing alliances, game development deals, settlement agreements, strategic
alliances, joint ventures, development agreements, asset transfers and
co-branding and marketing arrangements, and other business relationships. See, LW release.
Brinkmann joined the Washington DC office of the law firm of Morrison & Foerster as Of Counsel in the
firm's Appellate Practice Group. She previously worked in the Office of the Solicitor General at the
Department of Justice. See, MoFo
2/19. Securities and Exchange Commission (SEC)
Chairman Harvey Pitt gave a speech
at the Winter Bench and Bar Conference of the Federal Bar Council in Puerto Rico
regarding financial reporting.
2/19. The Supreme Court granted
certiorari in Ford
Motor Co. v. McCauley, a case regarding federal jurisdiction.
See, February 19, 2002, Order
List [PDF] at page 3. The U.S. Court
of Appeals (9thCir) issued its opinion
[PDF] on September 6, 2001.
2/19. The Supreme Court cert denied
certiorari in Feltner
v. Columbia Pictures. See, February 19, 2002, Order
List [PDF] at page 3.
2/19. Sen. Paul Wellstone (D-MN)
wrote a letter [PDF]
to Senators asking them to co-sign a letter to the Federal
Communications Commission (FCC) urging it "to adopt an ``opt-in´´
approach to protecting privacy, ensuring that a consumer must affirmatively
consent to the sharing by telephone companies of his or her Customer Proprietary
Network Information (CPNI) before such information is shared."
Go to News Briefs from February 11-15,