News from May 11-15, 2002

FCC Approves Georgia's and Louisiana's Long Distance Requests
5/15. The Federal Communications Commission (FCC) approved BellSouth's Section 271 application to provide in region interLATA service originating in the states of Georgia and Louisiana. This is the first 271 approval for BellSouth.
Rep. Billy Tauzin (R-LA), the Chairman of the House Commerce Committee, stated in a release that "I am delighted that Louisiana consumers will now reap the benefits of unfettered local and long distance telephone competition."
Duane Ackerman, Ch/CEO of BellSouth stated in a release that "We are pleased that the Federal Communications Commission, after a very lengthy and thorough examination of BellSouth's compliance with the Telecommunications Act's market opening requirements, has affirmed that we have in fact met our obligations to our competitors who currently serve over 4.2 million customer lines in our region ... With today's approval we will now move ahead with our plan to obtain long distance relief in all nine of our states."
This is FCC Docket No. WC 02-35. See also, FCC release.
Court Stays Surveillance Order in Paramount v. ReplayTV
5/15. The U.S. District Court (CDCal), Judge Florence Marie Cooper presiding, granted SONICblue's request for a temporary stay of the its April 26 ruling in Paramount Pictures v. ReplayTV mandating surveillance of ReplayTV 4000 television users. The ReplayTV 4000, sold by SONICblue, is a personal video recorder that enables users to store television programming to hard disks. The Court also set June 3 for a hearing on SONICblue's motion to vacate.
On May 13, the Electronic Privacy Information Center (EPIC) and other groups filed an amicus curiae brief [PDF] with the District Court. They wrote that "Requiring disclosure of consumer viewing habits in the emerging digital environment raises far reaching privacy questions and implicates the design of new technology."
On May 14, the Consumer Electronics Association (CEA) and other trade groups filed a second amicus curiae brief [PDF]. It was joined in the brief by the Information Technology Association of America (ITAA), the Computer & Communications Industry Association (CCIA), and the Association for Competitive Technology (ACT).
These trade groups wrote that "Although framed as a simple discovery order, the Magistrate Judge's order of April 26, 2002 appears to be breathtaking in scope. Defendants must fundamentally alter the structure of their product and their customer relationship by creating and adding complex new software to monitor customers' individual use of the ReplayTV product. The order compels the design, development, and implementation of specific computer technologies to assist Plaintiffs in the collection of evidence. Simply put, the Magistrate Judge has ordered Defendants to create a new software work against their will, transmit it to user's homes without users' consent, and install it on consumers' property without their consent, in order to retrieve detailed information from them without their consent, to transmit it to third parties without their consent."
See also, EPIC release, CEA release, and SONICblue release.
Groups Oppose Hollings' Bill To Regulate Online Information Practices
5/15. The Computer & Communications Industry Association (CCIA) announced its opposition S 2201, the Online Personal Privacy Act. The Senate Commerce Committee is scheduled to mark up this bill on Thursday, May 16.
CCIA P/CEO Ed Black wrote in a letter to Sen. Ernest Hollings (D-SC), the sponsor of the bill and Chairman of the Committee, that "this legislation will cause great harm to the Internet and e-commerce, discriminating against those who conduct business online."
Black continued that "We are particularly concerned with the proliferation of litigation that we anticipate would result from adoption of this legislation. Given the fragile economic state of many Internet based companies, the threat of massive litigation, coupled with costly and burdensome regulations mandating access requirements and onerous sign-on schemes would have a disastrous impact. We believe this legislation would also harm consumers as the free flow of services and information facilitated by the Internet and online commerce would be greatly curtailed." See also, CCIA release.
Also on May 15, the U.S. Chamber of Commerce urged the Committee to reject the bill. The Chamber's Bruce Josten stated in a release that "If enacted, this bill would derail the growth of online commerce and could actually increase identity thefts by making it easier to obtain personal information."
House Judiciary Committee Postpones More Meetings
5/15. The House Judiciary Committee and its Subcommittee have postponed more scheduled hearings and mark up sessions that had been scheduled for Thursday, May 16, and Friday, May 17.
The full Committee had been scheduled to mark up several bills on May 16, including HR 4623, the Child Obscenity and Pormography Prevention Act of 2002 (which pertains to computer generated images), and HR 3215, the Combatting Illegal Gambling Reform and Modernization Act (Goodlatte Internet gambling bill). HR 4623 was amended and approved by the Crime Subcommittee on May 9. It likely has wide support in the House. HR 3215 has been scheduled for mark up, but held over, on many previous occasions. The Committee lacked a quorum.
Also on May 16, the House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property again noticed and postponed its hearing titled "The Accuracy and Integrity of the Whois Database."
The House Judiciary Committee's Subcommittee on Crime again postponed its hearing on, and mark up of, several bills, including HR 4640, a bill to provide criminal penalties for providing false information in registering a domain name on the Internet, and HR 4658, the Truth in Domain Names Act. This had been scheduled for Friday, May 17.
Committee members and staff have cited various reasons for not following schedules in the past several weeks, including that the Democrats have invoked the 24 hour rule, that the Republicans have had a conference to attend, that not enough members have attended for a quorum, that there have been floor votes, and that there has not been enough time.
House Judiciary Committee Postpones Hearings
5/15. The House Judiciary Committee postponed from Wednesday, May 15, to Thursday, May 16, its mark up of several bills, including HR 4623, the Child Obscenity and Pormography Prevention Act of 2002 (which pertains to computer generated images), and HR 3215, the Combatting Illegal Gambling Reform and Modernization Act (Goodlatte Internet gambling bill). HR 4623 was amended and approved by the Crime Subcommittee on May 9; it is on the fast track for approval by the full House. HR 3215 has been scheduled for mark up, but held over, on several previous occasions.
The House Judiciary Committee's Subcommittee on Courts, Intellectual Property and the Internet postponed its oversight hearing titled "The Accuracy and Integrity of the WHOIS Database", which had been scheduled for Thursday, May 16. No new date has been set.
The House Judiciary Committee's Subcommittee on Crime postponed its hearing on, and mark up of, several bills, including HR 4640, a bill to provide criminal penalties for providing false information in registering a domain name on the Internet, and HR 4658, the Truth in Domain Names Act. Both of these bills had been scheduled for hearing and mark up on May 9, and then on May 17. No new date has been set.
Rep. Stearns Introduces Auction 35 Down Payment Refund Bill
5/15. Rep. Cliff Stearns (R-FL) introduced HR 4738, a bill to enable the winning bidders in the Federal Communications Commission's (FCC) re-auction of Nextwave spectrum to obtain a return of their deposits.
The bill provides that "On or before the 15th day after the date of enactment of this Act, the Federal Communications Commission shall return to the winning bidders of auction 35 the full amount of all deposits and downpayments made by such winning bidders for licenses that the Commission has not by that date delivered to such winning bidders."
Rep. Stearns explained this bill in a release. "The successful bidders on Auction No. 35 have not received the spectrum they bid on and they have not received their total deposits back. While this issue is mired in litigation, these wireless companies are denied the use of these deposits for new investments or to improve customer service. They are entitled to the licenses or to their deposits."
The other initial cosponsors are Rep. Rick Boucher (D-VA), Rep. Lee Terry (R-NE), Rep. Chip Pickering (R-MS), Rep. Adolphus Towns (D-NY), and Rep. Bobby Rush (D-IL). The bill was referred to the House Commerce Committee. All of the sponsors are members of this Committee.
Appeals Court Opinions
5/15. The U.S. Court of Appeals (6thCir) issued its opinion in Conwood v. U.S. Tobacco, an antitrust case involving smokeless tobacco. Conwood prevailed in the District Court on its Sherman Antitrust Act, 15 U.S.C. § 2, claim involving use of monopoly position to exclude competitors from the market. The Court of Appeals affirmed.
5/15. The U.S. Court of Appeals (FedCir) issued its opinion (MS Word) in Cooper Cameron v. Kvaerner Oilfield Products, a patent case. The case involves U.S. Patent 5,544,707 and U.S. Patent 6,039,119 which pertain to the oil business. Specifically, they are directed to subsea wellheads having a horizontal spool tree arrangement that protects the integrity of the well during workover activities for repair and maintenance. The Appeals Court's opinion addresses the doctrine of equivalents, invalidity for inadequate written description, and documents that qualify as "printed publications" under 35 U.S.C. § 102.
5/15. The U.S. Court of Appeals (9thCir) issued an opinion [PDF] in Vizcaino v. Microsoft, the long running litigation between Microsoft and its freelance workers. This opinion pertains only to the amount of attorneys' fees awarded to class counsel. The District Court entered an order approving class counsel's fee request of $27,127,800, which was 28% of the cash settlement fund. The Court of Appeals affirmed.
People and Appointments
5/15. President Bush nominated Kevin Ryan to be the U.S. Attorney for the Northern District of California for the term of four years. Ryan has been a Judge on the Superior Court of California since 1999. Before that he was a Judge on the San Francisco Municipal Court. And before that, he was Deputy District Attorney in the Alameda County District Attorney's Office. See, White House release.
5/15. Michael Marinelli and Bruce Barker joined the Washington DC office of the law firm of Gray Cary Ware & Freidenrich as partners in the firm's intellectual property and technology group. Barker focuses on intellectual property transactions and patent litigation; he was previously a partner in the Washington DC office of the law firm of Pennie & Edmonds. Marinelli focuses on international trade regulation; he was previously a partner in the Austin, Texas office of the law firm of Verner Liipfert. GCWF opened its Washington DC office in January when it merged with the former Washington DC law firm of Blumenfeld & Cohen. See, GCWF release.
More News
5/15. The Senate Judiciary Committee held a hearing titled "Copyright Royalties: Where is the Right Spot On The Dial For Webcasting?" See, prepared statements of Committee members: Sen. Patrick Leahy (D-VT) and Sen. Orrin Hatch (R-UT). See also, prepared statements of witnesses: Hilary Rosen (Recording Industry Association of America), Jon Potter (Digital Media Association), Bill Rose (Arbitron), Frank Schliemann (Onion River Radio), Billy Straus (, and Dan Navarro (American Federation Of Television and Radio Artists).
5/15. Robert Sachs, P/CEO of the National Cable and Telecommunications Association (NCTA), gave a speech at the Advanced Television Systems Committee (ATSC) annual meeting in which he addressed the DTV transition. He stated that "HDTV will bolster cable's competitiveness and value proposition to consumers. This is why the cable industry two weeks ago pledged strong support for voluntary industry actions to speed the transition to digital television proposed by Chairman Powell." He also said that "Key to the creation of more HDTV programming are digital rights protections. The cable industry shares the broadcast industry's desire to protect copyrighted digital video content from being retransmitted for free over the Internet."
5/15. The House International Relations Committee held a hearing titled "The Administration’s National Export Strategy: Promoting Trade and Development in Key Emerging Markets". See, prepared testimony of Secretary of Commerce Donald Evans.
5/15. The USPTO published the May issue of the USPTO Pulse in its web site.
More New Bills
5/14. Sen. Jean Carnahan (D-MO) and Sen. Kay Hutchison (R-TX) introduced S 2511. This is a bill to prevent trafficking in child pormography and obscenity. It is a response to the Supreme Court's opinion [PDF] in Ashcroft v. FSC, in which the Court held that the ban on child pormography in the form of computer generated images violates the First Amendment. This is the Senate companion bill to HR 4623, which has already been approved by the House Judiciary Committee's Subcommittee on Crime.
5/14. Rep. Steve Israel (D-NY), Rep. Greg Walden (R-OR), and Rep. Pete Sessions (R-TX) introduced HR 4720, the Amateur Radio Emergency Communications Consistency Act of 2002. This brief bill would provide that "For purposes of the Federal Communications Commission's regulation relating to station antenna structures in the amateur radio services (47 CFR 97.15), any private land use rules applicable to such structures shall be treated as a State or local regulation and shall be subject to the same requirements and limitations as a State or local regulation." It was referred to the House Commerce Committee.
Supreme Court Upholds FCC Pricing Rules
5/13. The Supreme Court of the U.S. issued its opinion [104 pages in PDF] in Verizon v. FCC, upholding the FCC's rules regarding how incumbent local exchange carriers (ILECs) charge interexchange carriers (IXCs) and competitors local exchange carriers (CLECs) for access to their facilities; it reversed the U.S. Court of Appeals (8thCir).
The Supreme Court held, in a 5-3 decision, that the Federal Communications Commission (FCC) is authorized under the Communications Act to require state utility commissions to set the rates charged by the incumbents for leased elements on a forward looking basis untied to the incumbents' investment, and to require incumbents to combine such elements at the entrants' request when they lease them to the entrants.
The Court noted that "knowing that incumbents and prospective entrants would sometimes disagree on prices for facilities or services, Congress directed the FCC to prescribe methods for state commissions to use in setting rates that would subject both incumbents and entrants to the risks and incentives that a competitive market would produce."
The Court wrote that "the incumbent local exchange carriers claim error in the Eighth Circuit's holding that a ``forward looking cost´´ methodology (as opposed to the use of ``historical´´ cost) is consistent with §252(d)(1), and its conclusion that the use of the TELRIC forward looking cost methodology presents no ``ripe´´ takings claim. The FCC and the entrants, on the other side, seek review of the Eighth Circuit's invalidation of the TELRIC methodology and the additional combination rules. We ... now affirm on the issues raised by the incumbents, and reverse on those raised by the FCC and the entrants."
Justice Souter wrote the opinion of the Court, in which Rehnquist, Stevens, Kennedy, and Ginsburg joined. Scalia and Thomas joined in parts of the opinion. Breyer wrote a separate opinion. O'Connor recused herself.
FCC Chairman Michael Powell stated in a release that "I'm pleased that the Supreme Court has affirmed the Commission's implementation of the 1996 Telecom Act. This decision brings much needed additional certainty to the legal landscape and should advance the Commission's efforts to carry out the statute's competition goals. I thank the Solicitor General for his vigorous efforts in representing the Commission before the Court."
IXCs and CLECs were pleased with the decision. AT&T VP/Law Mark Rosenblum stated in a release that "We're obviously delighted that the Supreme Court today has again validated the Telecom Act's purpose of establishing local phone competition." WorldCom General Counsel Michael Salsbury stated in a release that the decision is "a tremendous victory for consumer and business customers and the competitive carriers such as WorldCom that serve them. This ruling finally ends six years of uncertainty created by Bell legal challenges and other stonewalling." CompTel President Russell Frisby stated in a release that "The Supreme Court is right on target with its assessment of TELRIC as the appropriate method for pricing the vital elements that competitors need access to in order to serve their customers." He added that "We hope the FCC keeps this ruling in mind as it considers its Triennial Review of UNEs."
In contrast, the ILECs were disappointed. USTA P/CEO Walter McCormick stated in a release that "Today’s ruling on TELRIC pricing is unfortunate. The decision upholds the unjust status quo that requires local telephone companies to give competitors access to their networks at prices below cost. These extreme requirements sharply discourage both incumbents and competitors from making new investments in infrastructure."
BellSouth stated in a release that "Today's decision maintains an unfortunate status quo: BellSouth must continue to provide pieces of its network to competitors at below cost prices. This status quo discourages investment by both us and our competitors, resulting in poorer choices for customers. We hope the FCC will correct this incorrect pricing policy and eliminate its unnecessary requirements to provide certain network pieces in dockets now pending before it." See, also Verizon release.
Jeff Eisenach of the Progress and Freedom Foundation stated in a release that the decision makes bad economics. He wrote that "There is nearly unanimous agreement among economists that rules which require incumbent facilities to be sold at below cost prices reduce the incentives for both incumbents and new entrants to invest. But you don't have to be an economist to know the current rules have failed: Just look at the mess they have made in the telecom marketplace, where investors are in the process of losing literally hundreds of billions of dollars. As a matter of economic policy, the current rules are not just unreasonable -- they define unreasonableness."
Supreme Court Reverses Third Circuit in COPA Case
5/13. The Supreme Court of the U.S. issued its opinion [PDF] in Ashcroft v. ACLU, upholding the constitutionality of the community standards component of the Children's Online Protection Act (COPA). The Court remanded the case for further proceedings.
The Statute. The COPA prohibits any person from "knowingly and with knowledge of the character of the material, in interstate or foreign commerce by means of the World Wide Web, mak[ing] any communication for commercial purposes that is available to any minor and that includes any material that is harmful to minors".
Unlike the Communications Decency Act, which the Supreme Court held unconstitutional in Reno v. ACLU, the COPA only affects the web, only affects commercial communications, and only restricts material that is harmful to minors (rather than all indecency).
Proceedings Below. Promptly after enactement, the ACLU and others filed a complaint in U.S. District Court (EDPenn) against then Attorney General Janet Reno challenging the constitutionality of the act. The District Court issued a preliminary injunction on First Amendment grounds. The U.S. Court of Appeals (3rdCir) affirmed. The Supreme Court then granted certiorari.
Holding. The Court wrote that "This case presents the narrow question whether the Child Online Protection Act's (COPA or Act) use of ``community standards´´ to identify ``material that is harmful to minors´´ violates the First Amendment. We hold that this aspect of COPA does not render the statute facially unconstitutional."
However, the Court added that "The scope of our decision today is quite limited. We hold only that COPA's reliance on community standards to identify ``material that is harmful to minors´´ does not by itself render the statute substantially overbroad for purposes of the First Amendment. We do not express any view as to whether COPA suffers from substantial overbreadth for other reasons, whether the statute is unconstitutionally vague, or whether the District Court correctly concluded that the statute likely will not survive strict scrutiny analysis once adjudication of the case is completed below. While respondents urge us to resolve these questions at this time, prudence dictates allowing the Court of Appeals to first examine these difficult issues."
The Court also noted that the Attorney General did "not ask us to vacate the preliminary injunction entered by the District Court, and in any event, we could not do so without addressing matters yet to be considered by the Court of Appeals. As a result, the Government remains enjoined from enforcing COPA absent further action by the Court of Appeals or the District Court."
The Supreme Court vacated the judgment of the Court of Appeals and remanded the case for further proceedings.
Now, the lower courts are free to enjoin enforcement of the COPA on other grounds. And in the likely event that they do, this case will likely return to the Supreme Court.
Justice Clarence Thomas wrote the opinion of the Court. O'Connor wrote a concurring opinion. Breyer wrote a concurring opinion in which he stated that "I believe that Congress intended the statutory word ``community´´ to refer to the Nation's adult community taken as a whole, not to geographically separate local areas." Kennedy wrote a separate concurrence in which Souter and Ginsburg joined.
Stevens dissented. He stated that he would have affirmed the Court of Appeals. He wrote that "In the context of the Internet, however, community standards become a sword, rather than a shield. If a prurient appeal is offensive in a puritan village, it may be a crime to post it on the World Wide Web."
Treasury Official Says Info Tech Enables Small Banks to Survive
5/13. Under Secretary of the Treasury Peter Fisher gave a speech to the Independent Community Bankers of America in which he argued that information and communications technologies will enable community banks to survive amid consolidation of large financial institutions.
He stated that "I am skeptical of the view that the future of financial services will be all about financial conglomeration. I expect that small and nimble financial institutions will compete effectively in the coming years and, thus, I expect that well managed community banks will prosper."
He elaborated that "Community banks have options and advantages that can counter balance large banks' built-in diversification advantage."
Fisher stated that one of these advantages is that "advances in information and communication technology offset some of the scale and diversification advantages that large banks may have. The theory that supports large firms and conglomerates is that it is cheaper to move information inside a single corporation than between and among different corporations. The communications revolution that we have lived through in the last twenty years challenges this theory."
He continued that "Today technology permits small firms to outsource many functions and thereby recapture some of the advantages previously associated only with economies of scale. In fact, small banks increasingly have been employing technological and financial innovations to improve efficiency and diversify operating and balance sheet risks. More of you are turning to nonbank technology providers as a means of outsourcing administrative and payments functions and other activities. Eighty percent of community banks now have web sites, up from 21 percent in 1997."
House Judiciary Committee Schedules Mark Up of Tech Bills
5/13. The House Judiciary Committee has scheduled a meeting on Wednesday, May 15, to mark up several bills, including HR 4623, the Child Obscenity and Pormography Prevention Act of 2002, and HR 3215, the Combatting Illegal Gambling Reform and Modernization Act.
HR 4623 pertains to computer generated images. It was amended and approved by the Crime Subcommittee on May 9. It is on the fast track for approval by the full House before the Memorial Day recess.
HR 3215, which is Rep. Bob Goodlatte's (R-VA) latest attempt to restrict Internet gambling, has been scheduled for mark up, but held over, on several previous occasions.
People and Appointments
5/13. The Senate confirmed Paul Cassell to be a U.S. District Court Judge for the District of Utah, by a vote of 67-20.
5/13. Lucent Technologies elected Robert Denham and Daniel Goldin to its board of directors. Betsy Atkins resigned from the board. Denham is a partner in the law firm of Munger Tolles & Olson. Goldin is a senior fellow at the Council on Competitiveness. See, Lucent release.
More News
5/13. Business Software Alliance (BSA) P/CEO Robert Holleyman wrote a letter to Sen. Tom Daschle (D-SD) and Sen. Trent Lott (R-MS) in which he advocated passage of trade promotion authority (TPA) legislation. He wrote that "Free trade is essential for the future of the high tech industry". He added that "TPA will give the United States the ability to break down the trade barriers and lower the tariffs that increasingly threaten our ability to lead and compete in the global marketplace. Passing TPA will guarantee us a seat at the table to help protect our economy and our jobs. As Senate Leaders, the high tech industry is looking to you to exercise your full leadership skills to get TPA legislation passed and sent to the President for enactment."
5/13. The U.S. Conference of Mayors, National League of Cities, National Association of Counties, International Municipal Lawyers Association, and the National Association of Telecommunications Officers and Advisers announced that they filed a petition for review with the U.S. Court of Appeals (DCCir) of an Federal Communications Commission (FCC) classification of cable modem service as an information service. These groups state that they will collect fewer fees from operators as a result.
5/13. The Cellular Telecommunications & Internet Association (CTIA), Information Technology Association of America (ITAA), Telecommunications Industry Association (TIA) and U.S. Telecom Association (USTA) issued releases in which they stated that they wrote something that pertains to the "protection of the nation's critical infrastructure", which they delivered to Nancy Victory (Director of the National Telecommunications and Information Administration), and Richard Clarke (Chairman of the President's Critical Infrastructure Protection Board). However, they did not release the item which they wrote. See, substantially identical CTIA release, ITAA release, and TIA release.
5/13. The U.S. Patent and Trademark Office (USPTO) published a notice in its web site regarding computer security. It states that "If you receive an email purporting to be from the address, please delete it." It may have a file attached to it that contains a malicious worm or virus.

Go to News Briefs from May 6-10, 2002.