News from August 16-20, 2002

Federal Circuit Rules on Preemption and Shrink Wrap Contracts
8/20. The U.S. Court of Appeals (FedCir) issued its opinion in Bowers v. Baystate Technologies, a patent, copyright and contract case involving templates for CAD software. The Appeals Court affirmed in part and reversed in part.
Background. Harold Bowers created a template to aid in the use of computer aided design (CAD) software, such as the CADKEY tool of Cadkey, Inc. He filed a patent application for his template in 1989, and U.S. Patent No. 4,933,514 was issued in 1990.
CAD software works with menus, and menus nested within menus, which may be difficult for some to use. Bowers' patent disclosed a template, or desktop digitizing tablet, with various commands arranged in logical locations. The user points to and clicks upon the desired command.
George Ford designed Geodraft, a DOS based add-on program to operate with CAD. Geodraft allows an engineer to insert technical tolerances for features of the computer generated design. He copyrighted Geodraft. Bowers then obtained an exclusive license to Ford's Geodraft. Bowers then bundled and sold his template and Geodraft software, with a shrink wrap agreement that prohibits reverse engineering.
Baystate then developed a competing template and software, which incorporated features of Bowers' product. Under competition from Baystate, Bowers entered into a distribution agreement with Cadkey whereby Cadkey bundled Bowers' template and software for free. Bowers sought to make money off of selling software upgrades. Baystate subsequently acquired Cadkey, and repudiated the contract with Bowers.
District Court. Baystate filed a complaint in U.S. District Court (DMass) against Bowers alleging that Baystate’s products do not infringe the ‘514 patent, that the ‘514 patent is invalid, and that the ‘514 patent is unenforceable. It sought declaratory relief. Bowers filed counterclaims for copyright infringement, patent infringement, and breach of contract (including the prohibition on reverse engineering).
The trial jury found for Bowers on all claims, and awarded him $1,948,869 for copyright infringement, $3,831,025 for breach of contract, and $232,977 for patent infringement. The District Court set aside the copyright damages as duplicative of the contract damages and entered judgment for $5,270,142, including pre-judgment interest. Baystate appealed. Bowers cross appealed the District Court's denial of copyright damages.
Court of Appeals. The Court of Appeals affirmed in part, and reversed in part. It affirmed the breach of contract award. It also affirmed the District Court's modification of the damages award (by finding copyright damages duplicative of contract damages). Finally, it reversed the judgment as to patent infringement, as a matter of claim construction.
The Appeals Court held that the Copyright Act, and in particular, 17 U.S.C. § 301, does not preempt or narrow  Bowers' contract claims. The Court held this as a matter of the law of the originating Court -- in this case, the First Circuit. The Court further found that Bowers had presented ample evidence of reverse engineering by Baystate of the subject matter covered by the shrink wrap contract. The Court affirmed the judgment for breach of contract, and the dollar amount of the award.
The Appeals Court then affirmed the District Court's decision to set aside the jury's award of copyright damages. It wrote that "The shrink wrap license agreement prohibited, inter alia, all reverse engineering of Mr. Bowers' software, protection encompassing but more extensive than copyright protection, which prohibits only certain copying. Mr. Bowers' copyright and contract claims both rest on Baystate's copying of Mr. Bowers' software. ... In this case, the breach of contract damages arose from the same copying and included the same lost sales that form the basis for the copyright damages. The district court, therefore, did not abuse its discretion by omitting from the final damage award the duplicative copyright damages."
The Appeals Court also wrote that "Because this court affirms the district court's omission of the copyright damages, this court need not reach the merits of Mr. Bowers' copyright infringement claim."
On the patent infringement claim, the Appeals Court reversed. It wrote that "this court perceives no basis upon which a reasonable jury could find that Baystate's accused templates infringe claim 1 of the '514 patent." Hence, there was no literal infringement. Bowers did not assert infringement under the doctrine of equivalents.
RIAA Seeks to Enforce Subpoena to Identify Anonymous Infringer
8/20. The Recording Industry Association of America (RIAA) filed a motion and memorandum [19 pages in PDF] in U.S. District Court (DC) in a proceeding brought by the RIAA for the purpose of obtaining and enforcing a subpoena of Verizon's Internet services subsidiary. The RIAA motion states that it seeks the identity of the user of "a computer connected to the Verizon network that is a hub for significant music piracy".
The RIAA motion states that it seeks to enforce a subpoena issued on July 24, 2002, pursuant to the Digital Millenium Copyright Act (DMCA). It states that "Verizon has refused to comply."
17 U.S.C. § 512(h) provides, in part, that "A copyright owner or a person authorized to act on the owner's behalf may request the clerk of any United States district court to issue a subpoena to a service provider for identification of an alleged infringer in accordance with this subsection."
Subsection 512(h)(5) provides, in part, that "Upon receipt of the issued subpoena, ... the service provider shall expeditiously disclose to the copyright owner or person authorized by the copyright owner the information required by the subpoena, notwithstanding any other provision of law and regardless of whether the service provider responds to the notification."
The proceeding is titled "In Re Verizon Internet Services, Inc.; Recording Industry Association of America v. Verizon Internet Services, Inc." It is D.C. No. 1:02MS00323.
DOJ Official Addresses Online Copyright Infringement
8/20. John Malcolm, Deputy Assistant Attorney General in charge of the Computer Crimes and Intellectual Property Section (CCIPS) at the Department of Justice (DOJ), gave a speech at the Progress and Freedom Foundation's Aspen Summit 2002 in which he addressed the role of law enforcement in online copyright infringement. He wrote that "Effective law enforcement is obviously going to be a critical part of that equation. The Department of Justice stands ready to do its part." See, text of speech as prepared for delivery.
He wrote that "The demise of Napster has done nothing to dampen the demand for on-line content, and Napster has been replaced by even more sophisticated peer to peer services such as Morpheus, Kazaa, and Grokster." He added that "intellectual property piracy is increasing in the on-line environment".
Malcolm elaborated that "unlike in the past, when law enforcement would shut down the initial distribution source and in effect ended the piracy operation, in the digital age, cutting off the initial source does not end the threat, as each and every copy distributed prior to law enforcement intervention continues to exist on the Internet and can be reproduced and distributed indefinitely by others."
He added that "this poses significant challenges to law enforcement. Moreover, many, if not most, of the major software pirates are highly skilled, covering their tracks, operating in relative anonymity, moving from location to location to conduct their activities, and many times hijacking the computers of innocent users to perpetrate their crimes."
Malcolm also reviewed some pending legislation. He wrote that "There are several proposals currently being debated by Congress to address this problem. They range from a proposal offered by Senator Fritz Hollings which would prohibit firms from making or selling digital media devices that did not incorporate so-called ``standard security technologies´´ to a proposal offered recently by Congressman Howard Berman which would permit copyright holders to disrupt file sharing systems when they suspect that copyrighted material is being distributed without authorization." See, HR 5001, introduced by Rep. Berman on July 25, 2002, and S 2048, introduced by Sen. Hollings on March 21, 2002.
He also discussing private litigation efforts and enforcement proceedings by the DOJ.
He concluded that "Civil remedies are simply inadequate against those who are judgment proof or who are adept at hiding their money or who may be engaging in massive IP theft for non-economic reasons or who may simply move their illegal operations to another venue and set up shop again. Moreover, the tools available to civil litigators are usually not as effective as the tools available to law enforcement authorities. Further, federal law enforcement authorities have the ability to conduct multi jurisdictional and international investigations, which is of particular importance since many of the criminal organizations that engage in massive infringement operate overseas and since the Internet knows no geographic boundaries."
CDT Reports on Access to State Court Records
8/20. The Center for Democracy and Technology (CDT) published a report titled "A Quiet Revolution in the Courts: Electronic Access to State Court Records". It is subtitled "A CDT Survey of State Activity and Comments on Privacy, Cost, Equity and Accountability".
The CDT reports that "this movement to post court information online represents a quiet revolution in citizen access and government accountability, part of the growing reality of e-government. Public access to electronic court records provides a convenient way for the public to monitor the judicial system and ensure the fairness and equality of its operations."
However, the CDT also wrote that "At the same time, a review of current practices indicates that the state and local courts are engaged in a series of difficult and novel balancing acts. One involves the balance between privacy and accountability. What information should be available online? ... Another set of issues concern cost: Is it appropriate to charge for online access?"
The bulk of the report is a state by state summary of the type of electronic access provided, and contact information. The report was principally researched by CDT Research Fellow Kathy Roche.
Record Companies Withdraw Lawsuit Against Internet Backbone Companies
8/20. The Recording Industry Association of America (RIAA) announced that the lawsuit brought by thirteen of its member music companies against four Internet backbone companies has been "withdrawn".
On August 15, the music companies filed a complaint in U.S. District Court (SDNY) against four Internet backbone companies seeking an order requiring the defendants to block access to the Internet protocol addresses assigned to the Listen4ever servers in the People's Republic of China. The complaint alleged that Listen4ever operates a web site that engages in infringement of the music companies' copyrighted sound recording by making them available for download. Plaintiffs also filed a motion for preliminary injunction.
The RIAA stated in a release that only that the complaint was "withdrawn" because the infringing web site is "now offline".
The RIAA published in its web site one huge PDF file that includes various documents, including the Complaint, Plaintiffs' Memorandum of Law in Support of Their Motion for Preliminary Injunction, and declarations of witnesses and experts.
The one count complaint sought only injunctive relief, pursuant to Section 512(j)(1)(B)(ii) of the Digital Millennium Copyright Act (DMCA), which section is codified at 17 U.S.C. § 512. The complaint requested "That the Court order Defendants to block Internet traffic to and from the website ... all the pages affiliated with it, and any substantially similar successor website".
The defendants were AT&T Broadband, Cable and Wireless USA, Sprint Corporation -- Advanced Network Systems, and UUNet Technologies, Inc. The operator of the infringing web site was not named as a defendant.
Rep. Barr Loses Primary Election
8/20. Rep. John Linder (R-GA) defeated Rep. Bob Barr (R-GA) in the Republican primary election for the Georgia 7th Congressional District. The two incumbents faced each other as a result of redistricting.
Rep. Barr has been active on a wide range of technology related issues, particularly matters pertaining to electronic privacy and Internet taxation. As a member of the House Judiciary Committee, and Chairman of its Subcommittee on Commercial and Administrative Law, he has been in a position to pursue his technology related agenda. See, full story.
Sen. Enzi Wins Primary Election
8/20. Sen. Mike Enzi (R-WY) easily won the Republican primary in Wyoming. He is the sponsor and leading proponent of S 149, Export Administration Act of 2001.
Sen. Enzi's bill would modernize export control laws. It would ease restraints on most dual use products, such as computers and software, but increase penalties for violations. The Bush Administration supports this version of the bill. The Senate passed it by a vote of 85 to 14, five days before the terrorist attacks of September 11, over the opposition of a small group of Senators who assert that it would harm national security.
The bill would also repeal provisions of the 1998 National Defense Authorization Act which require the President to use Million Theoretical Operations Per Second (MTOPS) to set restrictions on the export of high performance computers.
DOJ Clears eBay Acquisition of PayPal
8/20. PayPal announced in a release "that the waiting period under the Hart Scott Rodino Antitrust Improvements Act of 1976 expired without a formal request from the Department of Justice for additional information or documentary material, which is commonly referred to as a second request. The waiting period pertained to notices filed in respect of eBay's pending acquisition of PayPal."
On July 8 eBay and PayPal announced that eBay will acquire PayPal. eBay operates an auction web site. PayPal facilitates online payments. eBay stated in a release that "eBay will acquire all of the outstanding shares of PayPal in a tax free, stock for stock transaction using a fixed exchange ratio of 0.39 eBay shares for each PayPal share. Based on eBay's stock price on July 5, 2002, the acquisition is valued at $1.5 billion." Also, PayPal "will continue to operate as an independent brand". eBay also stated that "In view of the uncertain regulatory environment surrounding online gaming, eBay plans to phase out PayPal's gaming business after the transaction closes."
eBay's acquisition of PayPal still remains subject to approval by stockholders of PayPal.
FTC Sets Deadline for Comments on MSC Software Consent Agreement
8/20. The Federal Trade Commission (FTC) published a notice in Federal Register setting a deadline of September 13 for public comments on its proposed consent agreement with MSC Software Corporation. See, Agreement Containing Consent Order [22 pages PDF], and notice in the Federal Register, August 20, 2002, Vol. 67, No. 161, at Pages 53942 - 53945.
On August 14, the FTC issued an administrative complaint against MSC Software alleging violations of Section 5 of the Federal Trade Commission Act (FTCA) and Section 7 of the Clayton Act in connection with its 1999 acquisitions of Universal Analytics, Inc. (UAI) and Computerized Structural Analysis & Research Corp. (CSAR).
MSC sells simulation software, and related services and systems. The FTC stated that MSC was the dominant supplier of Nastran software, which is an engineering simulation software program used in the aerospace and automotive industries, with an estimated 90% of worldwide revenue; UAI and CSAR each had sales of about 5% of worldwide revenue. MSC then acquired UAI and CSAR.
Under the terms of the proposed agreement, MSC must divest at least one copy of its current advanced Nastran software, including the source code. The divestiture will be through royalty free, perpetual, non-exclusive licenses to one or two acquirers who must be approved by the FTC.
This proceeding is titled "In the Matter of MSC.Software". It is FTC Docket No. 9299.  
People and Appointments
8/20. President Bush announced his intent to appoint Clay Davis, Gilbert Gonzalez, James House, Luis Luna, Roberto Salazar, and Christine Toretti to be Members of the Board of Directors of the Rural Telephone Bank. The Rural Telephone Bank was established in 1971 by an amendment to the Rural Electrification Administration Act as a source of financing for telecommunications companies and cooperatives eligible to borrow under the Act's telephone loan program. See, White House release.
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8/20. The Federal Communications Commission (FCC) published a notice in the Federal Register describing its "broadcast flag" Notice of Proposed Rulemaking (NPRM) [15 pages in PDF]. The FCC adopted this NPRM at its meeting on August 8, 2002. It released the text of the NPRM on August 9, 2002. This notice confirms previously announced comment deadlines. Comments due by October 30, 2002. Reply comments are due December 13, 2002. See, Federal Register, August 20, 2002, Vol. 67, No. 161, Pages 53903 - 53909. This is MB Docket No. 02-230.
8/20. The Securities and Exchange Commission (SEC) announced in a release that it "has completed processing the sworn statements filed as of Aug. 14 by the CEOs and CFOs of the largest U.S. based companies and found that the overwhelming majority of CEOs and CFOs filed statements certifying the material accuracy and completeness of their companies' prior disclosure reports." See also, Statements by Company CEOs and CFOs.
8/20. The U.S. Trade and Development Agency (TDA) announced in a release that the TDA and the nation of Jordan "entered into a grant agreement to fund technical assistance in planning for the liberalization of Jordan's fixed line telecommunications services". The amount of the grant is $417,252.
CDT Writes NTIA Regarding Reform of ICANN
8/19. The Center for Democracy and Technology (CDT) sent a letter to the National Information and Technology Administration (NTIA) regarding restructuring of the Internet Corporation for Assigned Names and Numbers (ICANN).
The letter urges the NTIA "to insert a limited set of new requirements into any renewal of ICANN's Memorandum of Understanding with the Department of Commerce calling for increased accountability and meaningful checks on ICANN's powers."
The letter continues that "Although the reform package approved in Bucharest improves on previous drafts, it lacks adequate provisions to protect the public's interest in ICANN's activities and establish meaningful constraints on the ICANN Board's future authority. With the Department's MOU with ICANN set to expire on September 30, the present opportunity for leadership should not be missed."
The CDT stated, among other things, that "This should include an explicit enumeration of ICANN's powers and a strong prohibition of any activities that would deny individuals and organizations basic due process."
The CDT also seeks an "Independent Review Panel, capable of scrutinizing Board and staff actions for compliance with critical documents such as the ICANN Bylaws".
The CDT letter was signed by Alan Davidson, Associate Director, and Rob Courtney, Policy Analyst.
People and Appointments
8/19. Richard Notebaert was named Chairman of the Federal Communications Commission's (FCC) Network Reliability and Interoperability Council (NRIC). Notebaert is the Ch/CEO of Qwest Communications. Joseph Nacchio, a former Ch/CEO of Qwest, previously held the position. The purpose of the NRIC is to develop recommendations for the FCC and the telecommunications industry regarding reliability, security, interoperability and interconnectivity of, and accessibility to, public telecommunications networks and the Internet. See, FCC release [PDF].
8/19. U.S. Trade Representative (USTR) Robert Zoellick named Harry Clark Counselor to the Office of the USTR. See, USTR release.
8/19. Robert Jordan was named Assistant Director of the Federal Bureau of Investigation's (FBI) Office of Professional Responsibility. He has worked for the FBI since 1980. He replaces Michael DeFeo, who is leaving the country. See, FBI release.
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8/19. Federal Communications Commission (FCC) Commissioner Michael Copps released a statement [PDF] regarding an obscene radio broadcast in New York City. He wrote that "Congress passed laws limiting the broadcast of ``obscene, indecent or profane´´ language and charged the FCC with the enforcement of these laws. The FCC has a responsibility to ensure that the indecency laws of the United States are being vigorously enforced. I take this responsibility with the utmost seriousness. If these complaints and press accounts prove true, this Commission should consider the strongest enforcement action possible against this station, up to and including revocation of the station's license."
8/19. The Federal Election Commission (FEC) announced that it has fined several committees for civil violations of federal election laws. It fined VenturePAC $750 for filing a report late in 2001. VenturePAC is the political action committee sponsored by the National Venture Capital Association (NVCA). According to Political Money Online, VenturePAC has $644,581 in total receipts so far for the 2002 election cycle. The FEC also fined the AT&T Political Action Committee $1,200 for filing a report late in 2001. The AT&T PAC has $728,494 in total receipts so far in this election cycle. See, FEC release.
Bush Extends Export Administration Act Again
8/16. President Bush signed a document titled "Notice: Continuation of Emergency Regarding Export Control Regulations", which extends the Export Administration Act (EAA) for one more year. The EAA was scheduled to expire on August 20, 2001. On August 17, 2001, President Bush issued Executive Order 13222 extending the EAA for one year. The current action extends the EAA for another year.
Bush wrote that "Because the Export Administration Act has not been renewed by the Congress, the national emergency declared on August 17, 2001, must continue in effect beyond August 17, 2002. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency declared in Executive Order 13222."
Sen. Mike Enzi (R-WY), and others, have attempted to pass legislation in the 107th Congress extending and reforming export control laws. The Senate bill, S 149, titled the "Export Administration Act of 2001", sponsored by Sen. Enzi, is a major overhaul of export control laws. It passed the Senate Banking Committee on March 22, 2001 by a vote of 19-1. It passed the full Senate on September 6, 2001, by a vote of 85-14.
S 149 would ease restraints on the export of most dual use products, such as computers and software. However, it would raise penalties for violation of remaining prohibitions. It would also repeal provisions of the 1998 National Defense Authorization Act which require the President to use Million Theoretical Operations Per Second (MTOPS) to set restrictions on the export of high performance computers.
On August 1, 2001, the House International Relations Committee approved HR 2581, which is also titled the "Export Administration Act of 2001", sponsored by Rep. Benjamin Gilman (R-NY), by a vote of 26-7. However, it is a much different bill. The Bush administration supports S 149.
While S 149 passed the Senate overwhelmingly, it passed before the terrorists attacks of September 11, 2001. It now faces new opposition. No action has been taken in either the House or Senate on this bill since September 11, 2001. On the other hand, Sen. Fred Thompson (R-TN), one of the leading opponents of S 149 in the Senate, is retiring. Rep. Gilman has also announced his retirement.
4th Circuit Rules in Lanham Act Case
8/16. The U.S. Court of Appeals (4thCir) issued its opinion [PDF] in U.S. Search LLC v. US, Inc., a trademark case.
U.S. Search LLC (LLC) is an executive recruiting and placement firm based in Falls Church, Virginia, that specializes in recruiting for the plastics industry. The company's President is its sole recruiter. US, Inc. (Dotcom) is a publicly traded Delaware corporation based in Los Angeles, California, that provides access to online public record information over the Internet and through the use of its toll free telephone number, 1-800- USSEARCH. Its services are used to locate people, and to verify prospective employees' credentials and background after an employer had identified the candidate. Dotcom registered the mark "1-800- U.S. SEARCH" in 1998. After initiation of litigation, LLC sought to register the mark "U.S. Search". The U.S. Patent and Trademark Office rejected the application.
LLC filed a complaint in U.S. District Court (EDVa) against Dotcom alleging false designation of origin under the Lanham Act, 15 U.S.C. § 1125(a), and unfair competition under Virginia common law. Dotcom counterclaimed against LLC alleging infringement of its federally registered mark, pursuant to 15 U.S.C. §§ 1114, 1116-18, false designation of origin, pursuant to 15 U.S.C. § 1125(a), and common law unfair competition.
The District Court found that "U.S. Search" was not entitled to service mark protection when used in connection with LLC's executive recruiting services and granted summary judgment to Dotcom. The Appeals Court affirmed.
9th Circuit Issues Amended Opinion in Syntek Semiconductor v. Microchip Technology
8/16. The U.S. Court of Appeals (9thCir) issued its amended opinion [11 pages in PDF] in Syntek Semiconductor v. Microchip Technology, a case in which an alleged infringer sought a declaratory judgment from the U.S. District Court that a copyright registration of computer source code is invalid. The District Court granted summary judgment to the copyright holder. The Appeals Court, in its original opinion [13 pages in PDF], issued on April 8, 2002, vacated. It held that, pursuant to the doctrine of primary jurisdiction, the case should be dismissed without prejudice, so that the infringer may seek an administrative remedy at the Copyright Office. The amended opinion provides that the judicial proceeding is stayed (not dismissed) pending outcome of the administrative proceeding. The Appeals Court also denied Syntek's petition for rehearing.
The Appeals Court reasoned in its amended opinion that dismissal might "unfairly disadvantage" Syntek. It wrote that "Because the statute of limitations may prevent Syntek from refiling its claim if necessary at the conclusion of its administrative challenge to the Copyright Office’s decision, we stay the proceedings pending the outcome of the administrative process".
The amended opinion does not alter the original opinion's analysis with respect to application of the primary jurisdiction doctrine. The following description of the case revises TLJ coverage of the original opinion. See, article titled "Challenges to Source Code Copyright Registration & the Doctrine of Primary Jurisdiction", in TLJ Daily E-Mail Alert No. 406, April 9, 2002.
Background. Microchip Technology is a Delaware corporation based in Chandler, Arizona. It designs, manufactures, and sells micro controllers. Micro controllers are integrated circuits used to control a particular system or process in an electronic product. The operation of micro controllers is dictated by low level programming micro instructions called micro code, which are fixed in storage. Microchip manufactures and sells the PIC 16C5x micro controllers, which contain the PIC 16C5x micro code.
Microchip registered its PIC 16C5x micro code with the U.S. Copyright Office. However, the Appeals Court explained that "Microchip did not have in its possession the original PIC 16C5x source code when it registered its program with the Copyright Office; so Microchip deposited source code that it had decompiled from the object code embedded in the PIC 16C5x computer chip. Microchip informed the Copyright Office of the nature of its deposit". The Copyright Office then registered the copyright.
Syntek Semiconductor is a Taiwan corporation that also designs, manufactures, and sell micro controllers. Microchip asserts that Syntek products have infringed its copyright.
Taiwanese Actions. Microchip has twice presented its findings to the public prosecutor in Taiwan that Syntek has produced and sold products that infringe its copyright. In a 1993 proceeding, Syntek was indicted, but later settled with Microchip. More recently, the Taiwan prosecutor again indicted Syntek and two of its senior officers for criminal copyright infringement. The Taiwan criminal court found Syntek's officers guilty of criminal copyright infringement in April of 1999. Syntek appealed that decision.
District Court. Syntek filed a complaint in March of 1999 in U.S. District Court (DAriz) against Microchip seeking a declaratory judgment that Microchip's U.S. copyright registration of the PIC 16C5x micro code is invalid. Syntek alleges that Microchip, by depositing source code that it had decompiled from object code, did not comply with the applicable regulations when registering its program. The District Court granted summary judgment to Microchip.
Appeals Court. The Court of Appeals raised the question of primary jurisdiction, sua sponte. It vacated the judgment of the District Court and stayed the action pursuant to the primary jurisdiction doctrine in order that the parties may pursue appropriate administrative remedies before the Copyright Office.
The Appeals Court wrote that "Primary jurisdiction is not a doctrine that implicates the subject matter jurisdiction of the federal courts. Rather, it is a prudential doctrine under which courts may, under appropriate circumstances, determine that the initial decisionmaking responsibility should be performed by the relevant agency rather than the courts." It added that "The doctrine of primary jurisdiction is not equivalent to the requirement of exhaustion of administrative remedies."
The Appeals Court followed a four part test announced by the Ninth Circuit in U.S. v. General Dynamics Corp., 828 F.2d 1356 (9th Cir 1987). The Appeals Court wrote in the present appeal that "Although the question is a matter for the court's discretion, courts in considering the issue have traditionally employed such factors as (1) the need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry or activity to a comprehensive regulatory authority that (4) requires expertise or uniformity in administration."
The Court analyzed each of these four factors. On the first factor, it wrote that "Congressional intent to have national uniformity in copyright laws is clear." On the second factor, it wrote that "the question of whether decompiled object code qualifies for registration as source code under the Copyright Act and regulations is an issue of first impression. It also involves a complicated issue that Congress has committed to the Register of Copyrights."
On the third prong, the Appeals Court noted that Syntek seeks, not a declaratory judgment that the copyright in invalid, but rather a declaration that the registration is invalid. The Appeals Court wrote, "Thus, resolution of the question at hand requires an analysis of whether the agency acted in conformance with its own regulations when it granted the registration. Accordingly, referral to the agency for consideration of these issues in the first instance is particularly appropriate."
Fourth, and finally, the Court reasoned that while Syntek plead that it seeks a declaration of registration invalidity, this is indistinguishable from the administrative remedy of copyright registration cancellation. Hence, it already has an administrative remedy.
The Court concluded that all four factors are met, and hence, that a stay pursuant to the doctrine of primary jurisdiction is appropriate.
The Court's ruling addresses only the doctrine of primary jurisdiction. The Appeals Court did not address the question of whether decompiled object code qualifies for registration as source code under the Copyright Act and regulations. Nor did it address whether a private right of action exists for cancellation of a copyright registration.
Finally, the Appeals Court added that "we need not decide ... whether remedies are available under 17 U.S.C. § 701(e)". This section pertains to the general responsibilities of the Copyright Office. See also, 17 CFR § 201.7, regarding cancellation of completed registrations by the Copyright Office.
The original opinion is also published at 285 F.3d 857.
People and Appointments
8/16. Supachai Panitchpakdi will become the new Director General of the World Trade Organization (WTO), effective September 1, 2002. He will replace Mike Moore. Roderick Abbott, Kipkorir Aly Azad Rana, Francisco Thompson Flôres, and Rufus Yerxa will be the Deputy Directors General, effective October 1, 2002. They will replace Ablassé Ouedraogo, Paul Henri Ravier, Miguel Rodriguez Mendoza, and Andrew Stoler. See, WTO release.
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8/16. The U.S. Court of Appeals (6thCir) issued its opinion in Michael Smith v. Bureau of Prisons, a case in which a federal prisoner complained regarding the quality and pricing of telephone service afforded to federal inmates. The District Court dismissed the complaint for failure to exhaust administrative remedies. The Appeals Court affirmed.

Go to News from August 11-15, 2002.