TLJ News: June 1-5, 2002.

News from June 1-5, 2002

House Approves NSF Authorization Bill
6/5. The House approved HR 4664, the Investing in America's Future Act, a bill to authorize appropriations for the National Science Foundation, by a vote of 397-25. See, Roll Call No. 212.

HR 4664 would authorize the appropriation of $5.5 Billion for FY 2003 for the NSF. Included in the funding authorization is $704 Million for networking and information technology research, $238 Million for the Nanoscale Science and Engineering Priority Area, and $60 Million for the Mathematical Sciences Priority Area.

The bill authorizes an increase in funding for the NSF of 15% in FY 2003, and similar increases in future years. If the funding authorized by this bill were actually appropriated, it would double the NSF's budget within five years.

The bill is sponsored by Rep. Nick Smith (R-MI) and others. It was reported by the House Science Committee on May 22.

Rep. Sherwood Boehlert (R-NY), Chairman of the Committee, stated during the floor debate that "When we look at the new fields of science and engineering that will boost our economy in this new century, fields like nanotechnology, where do we turn to ensure that our nation's researchers stay at the cutting edge? NSF. When we look at the field of information technology, which facilitates every activity in today's economy, where do we turn to ensure that the U.S. remains at the cutting edge? NSF. When we consider our ever more urgent need for a highly skilled, technologically literate workforce, where do we turn to ensure that our education system from kindergarten through post-graduate work is preparing the people we need? NSF. We turn to NSF to solve some of our most pressing problems; we can't turn from NSF when we decide where to invest federal funds. It's time to give NSF the money it needs."

Rep. Boehlert also pointed out that the bill is backed by tech groups, such as the Semiconductor Industry Association and Technet.

The bill only authorizes the appropriation of funds. Whether the House Appropriations Committee will actually appropriate this level of funding is another question.

See, HR 4664 [PDF], as reported by the Subcommittee on Research on May 9. The full Committee approved one amendment [PDF] on May 22 offered by Rep. Boehlert. It authorizes the appropriation of $50 Million for the Advanced Technological Education Program established under the Scientific and Advanced Technology Act of 1992, and $30 Million for the Minority Serving Institutions Undergraduate Program.

House Subcommittee Holds Hearing on UWB
6/5. The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing titled "The FCC's UWB Proceeding: An Examination of the Government's Spectrum Management Process."

See, prepared statement of Rep. Billy Tauzin (R-LA), Chairman of the full Committee. See also, prepared testimony of witnesses: Julius Knapp (Deputy Chief of the FCC's Office of Engineering and Technology), Michael Gallagher (Deputy Assistant Secretary of Commerce, NTIA), Stephen Price (Deputy Assistant Secretary for Spectrum, Space, Sensors and C3 Policy, Department of Defense), Jeff Shane (Department of Transportation), Richard Nowakowski (Chicago Office of Emergency Communications R&D), Ralph Petroff (Time Domain Corporation), Dennis Johnson (Geophysical Survey Systems).

Sen. Lieberman Introduces Broadband Bill
6/5. Sen. Joe Lieberman (D-CT) introduced a bill titled the National Broadband Strategy Act of 2002, a bill that would require the President to adopt a broadband strategy.

Sen. Lieberman stated in the Senate that "I rise today to introduce what I believe will be a roadmap to revitalization. It's premised on the extraordinary promise of high speed Internet to help us return to high intensity growth; by revolutionizing the way we communicate and live our lives. Its goal is to highlight the challenges we face in tapping the transformative potential of broadband technology, to spur agreement on a national strategy for accelerating its development and deployment, and ultimately to help bring on what we all hope will be the broadband boom." See, transcript.

However, this bill has only one substantive provision -- a requirement that the President develop a broadband policy. The bill provides that "Not later than six months after the date of the enactment of this Act, the President shall submit to Congress a report setting forth a strategy for the nationwide deployment of high speed broadband Internet telecommunications services."

Sen. Lieberman also said that he will introduce more broadband related legislation later. He stated that "The follow-up legislation I'll propose in the coming months will call on the FCC to develop a regulatory framework to meet the challenges of the next generation Net ... propose tax credits for the deployment of advanced broadband ... encourage research and development on advanced broadband infrastructure that will enable this technology to reach into all the corners and crevices of the country ... and present a program to incentivize research and development on major applications in areas where government plays a central role, including education, healthcare, and e-government." (Dots in original.)

Cal App Affirms Conviction for Knowingly Accessing and Taking Data from a Computer
6/5. The California Court of Appeal (6) issued its opinion [PDF] in People v. David Hawkins, affirming a conviction for the felony of knowingly accessing and taking data from a computer system.

The defendant, David Hawkins, was charged with taking the source code of his former employer Network Translation Incorporated (NTI). Cisco Systems acquired NTI in 1995, and Hawkins then worked for Cisco until August of 1996. Hawkins later worked on the development of an application that was similar to a Cisco product. San Jose police officers executed a search warrant for Hawkin's apartment. They found NTI source code on one of his computers. Police investigators further determined that these source code files had been accessed after he stopped working for Cisco.

Hawkins was charged with misappropriating a trade secret (California Penal Code § 499) and knowingly accessing and taking data from a computer system (§ 502(c)(2)). The trial jury returned a verdict of not guilty on the trade secret charge. However, he was convicted on the § 502 charge.

Section 502(c)(2) of the California Penal Code provides "... any person who commits any of the following acts is guilty of a public offense ... (2) Knowingly accesses and without permission takes, copies, or makes use of any data from a computer, computer system, or computer network, or takes or copies any supporting documentation, whether existing or residing internal or external to a computer, computer system, or computer network."

On appeal, Hawkins argued that his crime should not be a felony because § 502(c)(2) lacks a mens rea requirement, that the statute is unconstitutionally vague, and that the trial court erred in admitting evidence of prior misconduct and in admitting printouts of computer access times.

The Appeals Court affirmed. It wrote that the requirement that defendant act "knowingly" satisfies the mens rea requirement. On the vagueness argument, the Appeals Court concluded that the statute is "sufficiently clear to avoid constitutional problems". The Appeals Court also found no error in the admission of evidence of prior misconduct (that Hawkins had also possessed proprietary source code of Sun Microsystems on his computer), or in the admission of the printouts of access times.

People and Appointments
6/5. The Cellular Telecommunications & Internet Association (CTIA) elected its new Board of Directors and Executive Committee for 2002-2003. Tim Donahue of Nextel will be Chairman, Scott Ford of ALLTEL will be Vice Chairman, Terry Addington of First Cellular of Southern Illinois will be Treasurer, and Mikal Thomsen of Western Wireless will be Secretary. Two new Board members were also named: Robert Dawson of Southern LINC and Mick Mullagh of Telephia.

DC Circuit Rules in Global Naps v. FCC
6/4. The U.S. Court of Appeals (DCCir) issued its opinion in Global Naps v. FCC, a petition for review of a Federal Communications Commission (FCC) order refusing to preempt the regulatory authority of Massachusetts Department of Telecommunications and Energy (DTE) in a matter regarding the interpretation of the reciprocal compensation provisions of an interconnection agreement between Global NAPs and Verizon. The Court rejected the petition.

Global NAPs is a local exchange carrier (LEC) in Massachusetts and other states. Verizon is the incumbent local exchange carrier (ILEC) in Massachusetts. Global NAPs and Verizon entered into an interconnection agreement that provides for reciprocal compensation (i.e., for completing local calls made by customers of one company to customers of the other). Many of Global NAPs' customers are Internet Service Providers (ISPs).

Global NAPs sought a declaratory ruling from the DTE that ISP bound traffic is subject to reciprocal compensation under this interconnection agreement. Global NAPs then petitioned the FCC to preempt DTE's jurisdiction and decide the question. Before the FCC responded, the DTE issued an order dismissing GNAPs' claim as moot in light of the DTE's decision that ISP bound calls were not local within the meaning of an identically worded interconnection agreement between Verizon and MCI WorldCom.

The FCC then concluded that the DTE had not failed to act to carry out its responsibility under 47 U.S.C. § 252 and, therefore, that preemption was not warranted. Global NAPs then filed the present petition for review.

The Appeals Court rejected the petition. The Court held that "the FCC's conclusion that § 252(e)(5) does not empower it to look behind a state agency's dismissal of a carrier's claim to evaluate the substantive validity of that dismissal is both a reasonable interpretation of that provision and consistent with the Commission's past practices and precedents."

Fed Circuit Rules on Patent Unenforceability Due to Failure to Name an Inventor
6/4. The U.S. Court of Appeals (FedCir) issued its opinion in Frank's Casing Crew and Rental Tools v. PMR Technologies, a patent case involving failure by named inventors to list a true inventor, and unenforceability due to inequitable conduct by named inventors in failing to name an inventor.

This action involves U.S. Patent No. RE 34,063, which is directed to a method and apparatus for monitoring torque while connecting threaded tubular goods; it has utility in oil and gas drilling. PMR obtained a license to it shortly after its issuance in 1992. PMR then attempted to sell licenses to the patent to oil and gas companies. PMR also sent cease and desist letters. One letter was sent to Frank's Casing Crew and Rental Tools.

Frank's Casing then filed a complaint in U.S. District Court (WDLa) against PMR seeking a declaratory judgment that the '063 patent is invalid, unenforceable, and not infringed. Others actions were instituted, and consolidated into this one action.

The District Court held that an inventor had been omitted. It further found that the parties who prosecuted the patent had engaged in inequitable conduct by failing to name this person as an inventor. It further found that they deliberately omitted him from the patent and acted to hide his involvement in the invention throughout the patent prosecution process. As a result, the District Court held the patent unenforceable.

The Appeals Court affirmed the District Court's findings that a true inventor of at least one of the '063 patent claims was not named on the patent, and that the '063 patent was unenforceable because of inequitable conduct during its prosecution. However, the Appeals Court remanded to the District Court for the limited purpose of determining the correct inventorship of the patent.

Nader Writes OMB Re Government Software Procurement
6/4. Ralph Nader and Jamie Love, of the Consumer Project on Technology, wrote a letter to Mitch Daniels, Director of the Office of Management and Budget (OMB), regarding federal government procurement of Microsoft software. The letter both asks for information from the OMB, and makes suggestions for using procurement policies to promote competition.

The letter states that "OMB should consider if Microsoft should be required (as a matter of procurement policy) to fully disclose the file formats of its office productivity and multimedia programs, so that the data created in such programs could be reliably read by non-Microsoft software."

The letter also states that "OMB should consider a cost benefit analysis to determine whether dominant software providers should make their source code public, in order to enhance interoperability with products offered by smaller competitors" and that "OMB should consider if limits on the number of purchases from any one firm would enhance competition for PC operating systems and office productivity tools, and if such enhanced competition would have significant benefits in terms of licensing fees."

APEC Ministers Issue Statement Regarding New Economy and IPR
6/4. Asia Pacific Economic Cooperation (APEC) trade ministers met in Puerto Vallarta, Mexico, on May 29-30. They issued a statement which contains some technology and intellectual property rights (IPR) related items.

The statement provides that "Ministers emphasized the positive impact of the new economy on growth and development. In this regard, Ministers welcomed Officials' work to identify key trade policies on services liberalization and tariff and intellectual property regimes that support the new economy, and reviewed their report on the exchange on trade policy information in these areas."

It states that "Ministers also discussed ways to improve IPR enforcement, including Japan's proposal to establish an IPR Service Centre Network, and instructed Officials to continue their discussion in order to report the proposal of appropriate mechanism by next Ministerial Meeting. Ministers called on APEC members to encourage wide participation from business sector in the upcoming "APEC Seminar on Venture Capital and Start-up Companies" to be held in Beijing in December this year."

SEC Commissioner Addresses Fake Scam Web Sites
6/4. Securities and Exchange Commission (SEC) Commissioner Cynthia Glassman gave a speech at a Federal Deposit Insurance Corporation (FDIC) symposium on Enhancing Financial Transparency, held in Washington DC.

She discussed, among other topics, the SEC's use of the fake scam web sites to educate investors. She stated that "In January 2002, the SEC launched a fake ``scam´´ website to warn investors about fraud before they lose their money. Anyone who tried to invest was greeted with an educational message that warns of potential scams. Within weeks of its launch, the site got more than 1.5 million hits, and our Office of Investor Education and Assistance received more than 500 emails, nearly all of which were overwhelmingly positive. We have launched two additional fake scam websites and plan to create more in the months ahead."

Rep. Capuano Writes FCC Re Classification of Cable Modem Service as Interstate Information
6/4. Rep. Michael Capuano (D-MA) wrote a letter [PDF] to the Federal Communications Commission (FCC) regarding its notice of proposed rulemaking (NPRM) titled "Appropriate Regulatory Treatment for Broadband Access to the Internet over Cable Facilities".

He wrote that "It is my understanding that on March 15, 2002, the FCC issued a Declaratory Ruling that found cable modem service provided on a cable system should be classified as an ``interstate information service´´. This ruling has broad implications for the ability of local communities to regulate this service."

He argued that "the NPRM will drastically impact the ability of local governments to charge franchise fees based on cable modem service revenues. This creates economic hardship for thousands of cities and towns, many already struggling with revenue shortfalls. In addition, it will also deny these communities the opportunity to recoup the expense of providing right of way for cable companies."

The FCC announced its Declaratory Ruling and Notice of Proposed Rulemaking [PDF] at its meeting on March 14. It released the 75 page document on March 15. It addresses the legal classification and the appropriate regulatory framework for broadband access to the Internet over cable system facilities. The vote was three to one. Commissioner Michael Copps wrote strenuous dissent. This is GN Docket No. 00-185 and CS Docket No. 02-52. See also, FCC release.

The FCC concluded "that cable modem service, as it is currently offered, is properly classified as an interstate information service, not as a cable service, and that there is no separate offering of telecommunications service. In addition, we initiate a rulemaking proceeding to determine the scope of the Commission's jurisdiction to regulate cable modem service and whether (and, if so, how) cable modem service should be regulated under the law ..."

The DR & NPRM further states that "The Communications Act does not clearly indicate how cable modem service should be classified or regulated", but nevertheless "conclude[s] that cable modem service as currently provided is an interstate information service, not a cable service, and that there is no separate telecommunications service offering to subscribers or ISPs."

This declaratory ruling is also the subject of petitions for review pending in the U.S. Court of Appeals.

Reps. Tauzin and Upton Write FCC Re Cross Ownership Rule
6/4. Rep. Billy Tauzin (R-LA) and Rep. Fred Upton (R-MI) wrote a letter to Federal Communications Commission (FCC) Chairman Michael Powell urging the FCC to repeal its newspaper broadcast cross ownership rule.

The two argued that much has changed since the rule was promulgated in 1975, when "there were 7,785 radio stations, 952 television stations, three major broadcast networks (ABC, CBS, and NBC), cable television systems served 13 per cent of television households, direct broadcast satellite (DBS) providers were nonexistent, and the Internet was not commercially available."

The two wrote that today, "there are approximately 12,900 radio stations, 1,600 full power television stations, 2,390 low power television stations, and 230 Class A television stations. There are now four major broadcast networks (ABC, CBS, NBC, and Fox), along with other emerging broadcast networks (e.g., UPN and WB). Today, cable television systems serve approximately 70 per cent of television households (with over 200 video programming services available on such systems, including significant news programming). Today, DBS is serving approximately 15 per cent of multichannel video programming distribution (MVPD) households."

They added that "the Internet also has become a significant source of local and national news for many Americans."

"We believe this explosion of media sources should eliminate any concern regarding a lack of diversity of views in the marketplace and competition, which have been the principal justifications for the rule", they concluded.

The FCC released a Notice of Proposed Rulemaking (NPRM) [PDF] on September 20, 2001 on this matter. It is MM Docket 01-235. Rep. Tauzin is Chairman of the House Commerce Committee; Rep. Upton is Chairman of the Telecommunications and the Internet Subcommittee.

House to Vote on NSF Authorization Bill
6/4. The House will likely debate and vote on HR 4664, the Investing in America's Future Act, on Wednesday, June 5. The bill is sponsored by Rep. Nick Smith (R-MI) and others. The House Science Committee amended and approved the bill on May 22.

HR 4664 would authorize the appropriation of $5.5 Billion for FY 2003 for the National Science Foundation (NSF). Included in the funding authorization is $704 Million for networking and information technology research, $238 Million for the Nanoscale Science and Engineering Priority Area, and $60 Million for the Mathematical Sciences Priority Area.

See, HR 4664 [PDF], as reported by the Subcommittee on Research on May 9. The full Committee approved one amendment [PDF] on May 22 offered by Rep. Sherwood Boehlert (R-NY). It authorizes the appropriation of $50 Million for the Advanced Technological Education Program established under the Scientific and Advanced Technology Act of 1992, and $30 Million for the Minority Serving Institutions Undergraduate Program.

House Crime Subcommittee Approves Information Sharing Bill
6/4. The House Judiciary Committee's Subcommittee on Crime held a hearing and a mark up session for HR 4598, the Homeland Security Information Sharing Act, sponsored by Rep. Saxby Chambliss (R-GA). The Subcommittee approved the bill with minor technical amendments. The full Committee is currently scheduled to mark up the bill on Friday, June 7. The purpose of this bill is to provide for increased sharing of federal government information relating to homeland security with state and local governments.

People and Appointments
6/4. California Governor Gray Davis announced the appointments of Marcel Poché and Patrick Tondreau as Judges of the Santa Clara County Superior Court. Poché was appointed to the Santa Clara County Superior Court in 1977, and to the Court of Appeal in 1979. He retired in 2000. Tondreau is a partner in the Santa Clara law firm of McTernan Stender Walsh Weingus & Tondreau.

6/4. Peggy Binzel, EVP of the National Cable & Telecommunications Association (NCTA) will leave the NCTA on June 30 to become CEO of CoreNet Global, an Atlanta based professional association representing corporate real estate executives. See, release.

More News
6/4. The Department of Education published a notice in the Federal Register regarding applying for Community Technology Centers Program grants for Fiscal Year 2002 to create or expand community technology centers that provide disadvantaged residents of economically distressed urban and rural communities with access to information technology and related training. The deadline for submitting applications is July 19, 2002. See, Federal Register, June 4, 2002, Vol. 67, No. 107, at Pages 38555 - 38577.

SEC Brings and Settles Improper Accounting Charges Against Microsoft
6/3. The Securities and Exchange Commission (SEC) instituted an administrative proceeding against Microsoft alleging violation of federal securities law in connection with its accounting practices from 1995 through 1998.

The Order instituting the proceeding alleges that "During Microsoft's fiscal years ended June 30, 1995, June 30, 1996, June 30, 1997 and June 30, 1998 (the ``relevant period´´), Microsoft maintained undisclosed reserves, accruals, allowances and liability accounts (collectively ``reserves´´ or ``reserve accounts´´) that (a) were not in conformity with generally accepted accounting principles (``GAAP´´) to a material extent, and/or (b) lacked properly documented support and substantiation, as required by the federal securities laws."

The Order also states that "Microsoft failed to maintain internal controls that were adequate under the federal securities laws. Specifically, during the relevant period, Microsoft maintained between approximately $200 million and $900 million in unsupported and undisclosed reserves, a significant portion of which did not comply with GAAP, which resulted in material inaccuracies in filings made by Microsoft with the Commission."

Microsoft and the SEC simultaneously settled the matter. Microsoft admitted no wrongdoing. The SEC imposed no fine or other penalty. Microsoft also stated in a release that "The agreement has no impact on Microsoft’s reported financial results; no restatement of any reported financial results is required and no penalty has been assessed."

Stephen Cutler, Director of the SEC's Division of Enforcement stated in a release that "This case emphasizes that the Commission will act against a public company that issues financial statements with material inaccuracies, even in the absence of fraud charges".

Supreme Court Rules on Appellate Jurisdiction of Federal Circuit
6/3. The Supreme Court issued its opinion [PDF] in Holmes Group v. Vornado Air Circulation Systems, a case regarding the appellate jurisdiction of the U.S. Court of Appeals for the Federal Circuit. The Supreme Court held that when a complaint does not allege a claim arising under federal patent law, but the answer contains a counterclaim based upon federal patent law, the Federal Circuit does not have appellate jurisdiction.

Lower Court Proceedings. Holmes Group filed a complaint in U.S. District Court (DKan) against Vornado Air Circulation Systems seeking a declaratory judgment that its products did not infringe Vornado's trade dress and an injunction restraining Vornado from accusing it of trade dress infringement in promotional materials. Vornado's answer asserted a compulsory counterclaim alleging patent infringement.

The District Court granted Holmes the declaratory judgment and injunction it sought. Vornado appealed to the Federal Circuit. Holmes challenged the jurisdiction of the Federal Circuit. However, the Federal Circuit rejected the argument, and vacated and remanded. The Supreme Court granted certiorari on the issue of jurisdiction.

Relevant Statutes. 47 U.S.C. § 1338 provides, in part, that "The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks. Such jurisdiction shall be exclusive of the courts of the states in patent, plant variety protection and copyright cases."

47 U.S.C. § 1295(a), in turn, provides, in part, that "The United States Court of Appeals for the Federal Circuit shall have exclusive jurisdiction (1) of an appeal from a final decision of a district court of the United States ... if the jurisdiction of that court was based, in whole or in part, on section 1338 of this title ..."

Supreme Court. The Supreme Court reversed. It wrote that " Section 1338(a) uses the same operative language as 28 U. S. C. §1331, the statute conferring general federal question jurisdiction, which gives the district courts ``original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States. ... The well- pleaded- complaint rule has long governed whether a case ``arises under´´ federal law for purposes of §1331.´´ ... As ``appropriately adapted to §1338(a),´´ the well- pleaded- complaint rule provides that whether a case ``arises under´´ patent law ``must be determined from what necessarily appears in the plaintiff's statement of his own claim in the bill or declaration. ... The plaintiff's well pleaded complaint must ``establis[h] either that federal patent law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law ...´´ ... Here, it is undisputed that petitioner's well pleaded complaint did not assert any claim arising under federal patent law. The Federal Circuit therefore erred in asserting jurisdiction over this appeal." (Citations omitted.)

The Supreme Court also rejected the argument that it should give different meaning to "arising under" in determining Federal Circuit jurisdiction because of Congress' goal of promoting uniformity of patent law. The Court wrote that "Our task here is not to determine what would further Congress' goal of ensuring patent-law uniformity, but to determine what the words of the statute must fairly be understood to mean."

It added that "It would be an unprecedented feat of interpretive necromancy to say that §1338(a)'s ``rising under´´ language means one thing (the wellpleaded- complaint rule) in its own right, but something quite different (respondent's complaint- or- counterclaim rule) when referred to by §1295(a)(1)." (Justice Antonin Scalia wrote the opinion of the Court.)

The Court concluded that "Not all cases involving a patent-law claim fall within the Federal Circuit's jurisdiction. By limiting the Federal Circuit's jurisdiction to cases in which district courts would have jurisdiction under §1338, Congress referred to a well- established body of law that requires courts to consider whether a patent-law claim appears on the face of the plaintiff's well pleaded complaint. Because petitioner's complaint did not include any claim based on patent law, we vacate the judgment of the Federal Circuit and remand the case with instructions to transfer the case to the Court of Appeals for the Tenth Circuit."

Supreme Court Vacates and Remands in Nine Cases Following Festo
6/3. The Supreme Court granted certiorari in nine cases, following its May 28 landmark opinion [PDF] in Festo v. Shoketsu Kinzoku Kogyo Kabushiki. In each case the Supreme Court merely vacated and remanded to the U.S. Court of Appeals (FedCir).

Festo is a patent case regarding the doctrine of equivalents and the rule of prosecution history estoppel. The unanimous Supreme Court reversed the Court of Appeals and remanded. The Court again affirmed the doctrine of equivalents, articulated its purpose, held that the narrowing of a patent claim may give rise to prosecution history estoppel (but that it does not absolutely bar application of the doctrine of equivalents), and listed circumstances under which it might or might not operate as a bar.

In each of the nine orders granting certiorari, the Supreme Court wrote this: "The petition for a writ of certiorari is granted. The judgment is vacated and the case is remanded to the United States Court of Appeals for the Federal Circuit for further consideration in light of Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. __ (2002)."

The nine cases are Pioneer Magnetics, Inc. v. Micro Linear Corp., No. 00-1765, Instituform Technologies v. Cat Contracting, No. 00-1946, Senior Technologies, Inc. v. R.F. Technologies, Inc., No. 01-35, Creo Products, Inc. v. Dainippon Screen, No. 01-269, Semitool, Inc. v. Novellus Systems, Inc., No. 01-423, Lockheed Martin Corp. v. Space Systems/Loral, Inc., No. 01-506, Accuscan, Inc. v. Xerox Corp., No. 01-541, PTI Technologies, Inc. v. Pall Corp. Techn., Inc., No. 01-677, and Mycogen Plant Science v. Monsanto Company, No. 01-740. See, Order List [PDF].

More Supreme Court News
6/3. The Supreme Court denied certiorari in Hagenbuch v. Compaq, No. 01-1448, and Circuit City Stores v. Adams, No. 01-1460. See, Order List [PDF] at page 6.

6/3. The Supreme Court announced that it will be on recess until Monday, June 10.

GAO Releases Report on Government Use of Social Security Numbers
6/3. The General Accounting Office (GAO) released a report [PDF] titled "Social Security Numbers: Government Benefits from SSN Use but Could Provide Better Safeguards".

The report discussed the benefits of government use of SSNs. "When federal, state, and county government agencies administer programs that deliver services and benefits to the public, they rely extensively on the SSNs of those receiving the benefits and services. Because SSNs are unique identifiers and do not change, the numbers provide a convenient and efficient means of managing records. They are also particularly useful for data sharing and data matching because agencies can use them to check or compare their information quickly and accurately with that from other agencies. In so doing, these agencies can better ensure that they pay benefits or provide services only to eligible individuals and can more readily recover delinquent debts individuals may owe."

The report continued that "While government agencies are making wide use of SSNs, they are also taking some steps to safeguard the numbers; however, certain measures that could help protect SSNs are not uniformly in place at any level of government. First, when requesting SSNs, government agencies are not consistently providing individuals with information required by federal law. This information, such as how the SSNs will be used and whether individuals are required to provide their SSNs, is the first line of defense against improper disclosure because it allows SSN holders to make informed decisions about whether to provide their SSN to obtain the services in question. Second, ... our survey identified potential weaknesses in the security of information systems at all levels of government."

The report then addressed the use of SSNs in identity theft. "This growth in the use of SSNs is important to individual SSN holders because these numbers, along with names and birth certificates, are among the three personal identifiers most often sought by identity thieves. Identity theft ... occurs when an individual steals another individual's personal identifying information and uses it fraudulently."

The report also states that "identity thieves most often gained access to this personal information by taking advantage of an existing relationship with the victim. The next most common means of gaining access were by stealing information from purses, wallets, or the mail. In addition, individuals can also obtain SSNs from their workplace and use them or sell them to others. Finally, SSNs and other identifying information can be obtained legally through Internet sites maintained by both the public and private sectors and from records routinely made available to the public by government entities and courts."

NTIA Seeks Comments on Internet Filtering Technologies
6/3. The National Telecommunications and Information Administration (NTIA) published in its web site a release and a notice [PDF] requesting comments on the effectiveness of Internet blocking and filtering technologies. Comments are due by August 27, 2002.

§ 1703 of the Children's Internet Protection Act (CIPA) [PDF] directs the NTIA to initiate a notice and comment proceeding to evaluate whether currently available Internet blocking or filtering technology protection measures and Internet safety policies adequately address the needs of educational institutions. It also directs NTIA to make recommendations to Congress on how to foster the development of technology protection measures that meet these needs.

The NTIA published a notice in the Federal Register last week regarding this proceeding. See, Federal Register, May 29, 2002, Vol. 67, No. 103, at Pages 37396 - 37398.

On May 31, a three judge panel of the U.S. District Court (EDPenn) issued its opinion in American Library Association v. U.S., finding unconstitutional library related provisions of the CIPA. The Act requires, among other things, that schools and libraries receiving e-rate subsidies certify that they are using a "technology protection measure" that prevents library users from accessing "visual depictions" that are "obscene," "child pormography," and in the case of minors, "harmful to minors." However, the CIPA, as it applies to schools, remains unaffected by this opinion. Also, the Court did not find unconstitutional Section 1703, requiring the NTIA to conduct this evaluation.

FCC Seeks Comments on Study of Horizontal Concentration Among Cable Operators
6/3. The Federal Communications Commission (FCC) published a paper [121 pages in PDF] titled "Horizontal Concentration in the Cable Television Industry: An Experimental Analysis".

The paper examines the effects of changes in horizontal concentration among cable operators on the flow of video programming to consumers. It is based on an experimental economics study in which experiment participants played the roles of actual market participants.

The paper was written by Mark Bykowsky and William Sharkey of the FCC's Office of Plans and Policy, and Anthony Kwasnica of Pennsylvania State University. The paper is also known as OPP Working Paper Series 35.

In addition, the FCC's Media Bureau announced that it is seeking public comment on the study. Comments are due by July 18. Reply comments are due by August 2. See, notice [PDF].

USPTO Releases Strategic Plan
6/3. The U.S. Patent and Trademark Office (USPTO) released a document titled The 21st Century Strategic Plan [18 pages in PDF]. USPTO Director James Rogan states in the introduction that this plan "is our road map for transformation. It lays out exactly what we will do over the next five years to reduce to 18 months the total time it takes to receive a patent, to make both patent and trademark processes almost paperless, and to work with intellectual property offices around the world to create a global framework for enforceable intellectual property rights."

"The time has come to transform the USPTO from a one size fits all government bureaucracy into a quality focused, responsive, market driven intellectual property institution," wrote Rogan.

The plan states that the USPTO will "Achieve an average time to first action in patent applications that is more than 50 percent lower than the time projected in the 2003 Business Plan ; i.e., 5.8 months in 2008 rather than 12.3 months." It states that the USPTO will "Achieve and maintain 18 months patent pendency by 2008". The plan also states that the USPTO will "Competitively source classification and search functions, and concentrate Office expertise as much as possible on the core government functions."

Electronic Processing of Applications. "As a first priority, we have made electronic end to end processing of both patents and trademarks the centerpiece of our business model." The plan then promises to "Deliver an operational system to process patent applications electronically by October 1, 2004, including electronic image capture of all incoming and outgoing paper documents" and to "Develop an automated information system to support a post grant patent review process."

Pendency. The plan states that it will "ensure a steady 18-month average pendency time in Patents -- by far the fastest in the world -- and a 12-month pendency time in Trademarks. This will be accomplished through a radical redesign of the entire patent search and examination system based upon four examination tracks, greater reliance on commercial service providers, and variable, incentive driven fees."

Four Track Process. The plan states that the USPTO will "Move from a ``one size fits all´´ patent examination process to a four track examination process that leverages search results of other organizations and permits applicants to have freedom of choice in the timing of the processing of their applications. This new process will eliminate duplication of effort, encourage greater participation by the applicant community and public, permitting lapse of applications when examination is not requested, and improving the quality of our patents and decreasing processing time."

Rocket Docket. It also states that the USPTO will "Offer patent applicants the market driven ``new rocket docket´´ option of choosing an accelerated examination procedure with priority processing and a pendency time of no longer than 12 months."

Fee Schedule. To facilitate these changes, the USPTO will "Seek legislation to restructure the USPTO fee schedule by October 1, 2002, and thereby create incentives and disincentives that contribute to achievement of USPTO goals, for example, the filing fee will be reduced to incentivize applicants to file, and a separate examination fee will be established to permit applicants to choose the timing for examination."

Post Grant Review. The plan states that the USPTO will "Make patents more reliable by proposing amendments to patent laws to improve a post grant review of patents."

Congressional Action Needed. Implementation of the plan will require changes at the USPTO, including the promulgation of rules. However, it is also contingent upon Congressional action. The plan states that "We will need enactment of legislation by the Congress to adjust certain patent and trademark fees by October 1, 2002. ... We will need enactment of an appropriation for fiscal year 2003 that is consistent with the level of the President’s 2003 budget." Legislation would also be required to change the post grant review process.

People and Appointments
6/3. Jane Cobb was named Director for the Securities and Exchange Commission's (SEC) Office of Legislative Affairs. She replaces Casey Carter. Peter Kiernan was named Deputy Director. See, SEC release.

6/3. Robert Dellinger was named EVP and Chief Financial Officer of Sprint. He replaces Arthur Krause, who retired. See, release.

6/3. Karan Bhatia was named Deputy Under Secretary for Industry and Security at the Department of Commerce's (DOC) Bureau of Industry and Security, which was formerly known as the Bureau of Export Administration. The DOC stated in a release that Bhatia "will advise and assist the Under Secretary in overseeing all aspects of Bureau management and policymaking, including the administration and enforcement of dual-use export controls, promoting the assurance of public and private sector critical infrastructures, ensuring compliance with U.S. antiboycott laws, and ensuring the viability of the U.S. defense industrial base." He has been Chief Counsel for Export Administration since July 2001. Before that, he was a partner in the law firm of Wilmer Cutler & Pickering.

6/3. Alan Nugent was named Chief Technology Officer of Novell. See, release.

Microsoft Publishes Essay on Digital Copyrights
6/3. Microsoft published in its web site an essay titled "Art & Commerce in the Digital Decade: Protecting intellectual property will take cooperation and innovation". It states that "At stake is the continued growth of the digital economy. Copyright holders -- authors, musicians, filmmakers, software developers and others -- will be able to take full advantage of the Internet as a powerful distribution channel only if their creations are appropriately protected." The essay argues that "a government mandated standard could actually hinder anti-piracy efforts by stifling technical innovation." It concludes that "A more effective solution would be for entertainment companies to invest in digital distribution. Few companies have made much content available online, yet the popularity of file sharing among music fans suggests that the market is large. Making legitimate content available easily and affordably would help to counter the illegal supply."

More News
6/1. President Bush gave a graduation speech at West Point. He stated that "The gravest danger to freedom lies at the perilous crossroads of radicalism and technology."

Go to News from May 26-31, 2002.