|News from September
IIPI Conference Addresses Creation of Specialized Courts for
9/13. The International Intellectual Property
Institute (IIPI) hosted a two day conference in Washington DC titled
"Specialized Intellectual Property Courts" on September 12 and 13. One
of the topics addressed was the creation of specialized courts with jurisdiction
over copyright law. See, full
Judge Rader Comments on IPR and Courts in PR China
9/13. Randall Rader,
Chief Judge of the U.S. Court of Appeals for
the Federal Circuit, addressed enforcement of intellectual property rights
in the People's Republic of China in a meeting with reporters. He stated that
the Shanghai High Court is doing very well, but other courts are behind.
Judge Rader, who has been to China five times since 1994, stated that
"China has places like Shanghai that just expanding economically. And I
think the correlation there is that the Shanghai High Court has been very
diligent in enforcing contracts, and protecting intellectual property, and
resolving commercial disputes, which has formed the climate for investment, and
for growth. And, if an international business feels that they are not working in
a climate that protects their property, they will take their business elsewhere.
And I think the best thing that can happen for an emerging economy, or a
transitioning economy, is to have a really sound court system -- independent
court system, a competent court system. They need to learn the international
standard and enforce it."
Judge Rader, who was responding to questions from a China Radio International reporter, continued
that China "is uneven". He continued, "Let me humbly offer this
opinion. It is not for me to judge a great nation like China. My observation is
that some places are approaching the international standard, and working hard to
He continued that "Shanghai I think is doing very well. Other places are
behind Shanghai, and not recognizing their potential yet. Shanghai, Hong Kong,
of course, for many years have been economic centers, and they recognize the
importance of international investment. But, if you go more into the western
reaches of China you see less evidence of this concern about economic --
protection of economic rights."
He was asked what are the most pressing problems that China needs to address.
Rader responded, "it is all somewhat interconnected, but I do think you
need more judicial resources, you need to train those resources. We are talking
about judges, but it stretches beyond judges. You need policemen. You need
customs authorities. You need legislatures and law makers who will make their
laws conform to the laws of TRIPS, who will provide the funding for the courts,
who will provide the funding for the customs officers. It is a national
commitment to make their economic institutions work. And, our narrower focus is
on judicial capacity and judicial resources. But, we recognize that judges will
only become independent and capable if they have the support of their
governments, their police forces, their justice ministries, their societal
framework in general."
Judge Rader also stated that "I have seen progress. Each time I go back
more judges are becoming educated in intellectual property. And I have seen a
growing effort to enforce economic rights."
IIPI Report Argues IP Courts are Critical for Economic Growth
9/13. Michael Ryan, a professor at the Georgetown
University McDonough School of Business, and Albena Petrova, of the International Intellectual Property Institute (IIPI),
wrote a report titled "Judicial Capacity Regarding Intellectual Property --
Enforcement and Dispute Settlement".
The two argue that "capitalist, market based economies owe their successes
in part to effective social institutions, governments and courts. ... Courts are
becoming increasingly appreciated as critical institutions for economic success.
We contend that growth in the developing and transitioning economies of Latin
America, Africa, eastern Europe, the Middle East, Asia, and the Pacific
critically rests on the capacities of courts and judges to enforce commercial
rights and resolve commercial conflicts."
The report argues that "increased specialization by judges and courts can
help manage challenges of complexity ..." It also argues that "the
establishment of specialized IP courts composed of knowledgeable, fair judges,
adequately supported through transparent, meritocratic processes, who are
well-paid, who are empowered with bench authority, yet made accountable to the
public and their elected representatives will over time earn legitimacy."
It concludes that "the establishment of specialized intellectual courts is
an emerging trend in the world economy. The logic of the organizational demands
of building judicial capacity to manage knowledge, achieve efficiency, and earn
legitimacy with respect to IP enforcement and dispute settlement suggests that
specialized IP courts may become ever-more common around the world."
The 120 report was published by the IIPI. It was sponsored by the USPTO.
EU Lists Products Under Consideration for FSC/ETI Related
9/13. The European Union published a document
[14 pages in PDF] titled "Notice relating to the WTO Dispute Settlement
proceeding concerning the United States tax treatment of Foreign Sales
Corporations (FSC) -- Invitation for comments on the list of products that could
be subject to countermeasures".
On August 30, the World Trade Organization (WTO)
issued a Decision
of the Arbitrator [46 pages in PDF] in the FSC/ETI dispute. The WTO had
previously held that the United States' Foreign Sales Corporation (FSC) tax
regime, and its replacement, the Extraterritorial Income (ETI) regime,
constitute illegal export subsidies. This decision authorizes the EU to impose
$4 Billion in countermeasures, or retaliatory tariffs.
The just released EU notice states that "In order to elaborate the final
list of products to be presented to the WTO and which could be subject to
countermeasures, the Commission invites European Community companies, trade
associations or any other interested party in the European Community ... to
present their views and comments."
It continues that "Interested parties are hereby invited to present their
views and comments on the products covered by the list contained in Annex A to
this notice within 60 days from the publication of this notice in the Official
Journal of the European Communities."
The attached Annex A then lists thousands of product category numbers from the European Union Harmonized
Tariff Schedule 2002 (EUHTS). Notably, page 12 of the EU notice lists 310
product category codes from Chapter
85 [PDF] of the EUHTS, which pertains to "Electrical machinery and
equipment and parts thereof; sound recorders and reproducers, television image
and sound recorders and reproducers, and parts and accessories of such
This list includes some products of the U.S. electronics industry. However, it
does not list many other products of the U.S. electronics and other high tech
The following is a partial listing of category numbers, and the associated
product descriptions, that are on the EU list: 8517 telephone equipment, 8518
microphones and speakers, 8519 cassette players and other sound producing
devices, 8520 tape recorders and other sound recording apparatus, 8521 video
recording or producing apparatus, 8523 magnetic disks, 8524 20 91 transmission
apparatus for cellular networks, 8525 40 11 digital cameras, 8527 21 radio
receivers, 8528 12 television reception apparatus, 8528 21 14 video monitors,
8531 20 LCDs and LEDs, 8532 electrical capacitors, 8533 electrical resistors,
8535 & 8536 switches, circuit breakers, relays, 8541 21 dynamic random
access memories (DRAMs), Static random access memories (SRAMs), and FLASH E˛PROMs,
8542 29 70 interface circuits and interface circuits capable of performing
control functions, and 8548 90 10 memories in multicombinational forms such as
stack DRAMs and modules.
The EU list also includes books and newspapers.
The U.S. may avoid the imposition of EU retaliatory measures, by repealing the
ETI. Rep. Bill Thomas (R-CA), the
Chairman of the House Ways and Means
Committee, introduced HR 5095,
the American Competitiveness and Corporate Accountability Act of 2002, on July
11, 2002, to address the WTO's rulings regarding the FSC and ETI. See also, Rep.
However, no action has been taken on the bill. Also, there is no replacement
legislation pending in the Senate.
9/13. California Gov. Gray Davis signed SB
2095, sponsored by Sen. Ross
Johnson (R-Irvine). This bill provides that "The Secretary of State
shall include on the Internet Web site of the Secretary of State's office, as
part of the campaign finance activity that is publicly disclosed, any
independent expenditure, as defined in Section 82031, that is reported pursuant
to Section 85500 with respect to a candidate for elective state office and a
statewide ballot measure. This information shall be linked to the part of the
Web site that the Secretary of State maintains concerning that candidate or
ballot measure." It covers expenditures of $1,000 or more made for
candidates for state office or state ballot measures.
9/13. California Gov. Gray Davis returned, without his signature, AB
2048, sponsored by Simon
Salinas (D-Salinas). This bill would have allowed videotapes or recordings
made by security cameras on public transit systems to be destroyed immediately.
Gov. Davis wrote a letter
[PDF] to the state legislature explaining why he did not sign the bill.
"While AB 2048 is intended to free transit agencies from the added
expense of processing and storing these videotapes, such tapes can be a valuable
tool to help solve crimes. The fact that a monitoring video contains useful
information may not be known in time to preserve a particular tape under the
terms in this bill. Requiring transit agencies to hold tapes for a least a short
period of time could prevent the loss of useful evidence."
FCC Seeks Comments on Scenarios for Relief of NextWave
9/12. The Federal Communications Commission
(FCC) issued a Public
Notice [7 pages in PDF] in which it asks for public comments regarding two
possible scenarios for providing relief to the Auction No. 35 winners: full
refund and option to dismiss all pending applications, and selective opt out for
Companies, such as Verizon Wireless and Deutsche Telekom's T-MobileUSA, who were
the winning bidders in the FCC's ill fated January 2001 re-auction of spectrum
previously auctioned to NextWave, are currently obligated to pay a total of $16
Billion for the spectrum, if they do ever actually receive it.
NextWave obtained spectrum licenses at
FCC auctions in 1996. The FCC permitted NextWave to obtain the licenses, and
make payments under an installment plan, thus creating a debtor creditor
relationship between NextWave and the FCC. NextWave did not make payments
required by the plan, and filed a Chapter 11 bankruptcy petition. The FCC
cancelled the licenses. It then proceeding to re-auction the disputed spectrum.
The U.S. Court of Appeals (DCCir)
ruled in its June 22, 2001, opinion
that the FCC is prevented from canceling the spectrum licenses by § 525 of the
Bankruptcy Code. The FCC petitioned the Supreme Court for writ of certiorari.
The Court granted certiorari. Oral argument is scheduled for October 8.
On March 26, 2002, the FCC issued a partial refund order which granted partial
refunds of the down payments made by certain winning bidders in Auction No. 35.
The FCC wrote in its September 12 Public Notice that "Pursuant to the Partial
Refund Order, the Commission has already refunded approximately $2.8 billion
to the Auction No. 35 winning bidders ...", but that the FCC has retained
$489,548,061, and that the total amount of the obligations of the Auction No. 35
winners to the FCC is now $16,318,268,700.
The winning bidders in Auction No. 35, and their many supporters in Congress,
have repeatedly argued that these financial obligations adversely affect their
ability to improve their facilities, because they must always have this capital
on hand in the event the the FCC is ever able to provide them spectrum rights.
The Public Notice states that "Specifically, we seek comment on whether we
should consider further, inter alia, the following scenarios: (1) Full
Refund and Option to Dismiss All Pending Applications. Upon request, the
Commission would refund to the payor of record the full amount of monies on
deposit with the Commission for the licenses subject to the NextWave litigation
and Urban Comm proceedings. The Commission would also provide a period of time
for individual applicants to request voluntary dismissal of all of their
applications, with prejudice. Under this scenario, applicants obtaining a full
refund and choosing to dismiss their applications would lose all claims to the
affected Auction No. 35 licenses. Should the Commission prevail in the
litigation, new initial licenses for the spectrum would be assigned by auction
at a future date."
The second scenario announced in the Public Notice is as follows: "(2)
Selective Opt-Out for Pending Applications. Under this scenario, the Commission
would provide applicants the opportunity to pick and choose licenses for which
to keep the applications pending and which to dismiss. We seek comment on
whether all of the down payments should be refunded or only down payments
associated with the dismissed licenses."
FCC Commissioner Michael Copps
issued a concurring statement. He wrote that "I believe that there are
strong equitable arguments to support returning the remaining funds on deposit
related to Auction 35, and even for dismissing all pending applications related
to that auction. But I am frankly somewhat concerned about the timing of today's
Public Notice, as drafted. I have been in this town long enough to know that
there is something called the Law of Unintended Consequences, and I never
underestimate its power. I must, therefore, concur rather than approve of this
Tom Wheeler, P/CEO of the Cellular
Telecommunications & Internet Association (CTIA), praised the FCC's
Public Notice. He stated in a release
that "By proposing to remove this enormous contingent liability, the FCC,
with the support of the Bush Administration and Congress, will free billions of
dollars for network expansion and upgrades, which will in turn, create tens of
thousands of jobs ... Today's action promises to provide a boost to every
wireless carrier, whether they participated in the auction or not. This debt
overhang had created severe capital restrictions throughout the entire
Public comments are due by September 30, 2002. Reply comments are due by
October 15, 2002.
FCC Announces Broad Review of Media Ownership Rules
9/12. The Federal Communications Commission
(FCC) adopted, but did not release, a Notice of Proposed Rulemaking (NPRM)
pertaining to its various broadcast ownership rules. Instead, it issued a short press
release [PDF] in which it stated that it "initiated the third Biennial
Regulatory Review of Broadcast Ownership Rules" to "develop ownership
rules and policies that are reflective of the current media marketplace, are
based on empirical evidence, and are analytically consistent."
The FCC release further states that the NPRM "addresses all of the media
ownership rules related to use of the broadcast spectrum".
This proceeding is another element of the FCC's current trend of relaxing media
ownership rules, and allowing for more media consolidation.
The NPRM covers six different sets of media ownership rules. First, there is the
FCC's Newspaper Broadcast Cross Ownership Prohibition. This is already the
subject of a NPRM initiated last fall. (This is Docket No. MM 01-235.)
There are also competing bills in Congress on this subject. On July 17, 2001, Sen. Ernest Hollings (D-SC), Sen. Daniel Inouye (D-HI), and Sen. Byron Dorgan (D-ND) introduced S 1189, a bill
to require the FCC to amend its daily newspaper cross ownership rules. Sen.
Hollings stated that at the time that "This legislation is necessary to
stem the tide toward concentration in the broadcast and newspaper industries and
force a thorough and reasoned examination of the claims that further
consolidation will serve the public interest." In contrast, at the same
time, Rep. Clifford Stearns (R-FL)
introduced HR 2536,
a bill to reduce restrictions on media ownership.
Second, this NPRM addresses the Local Radio Ownership rules. This is also the
subject a pending NPRM. (This is Docket No. MM 00-244.)
This NPRM also addresses the National TV Ownership rule, and the Local TV
Multiple Ownership rule, both of which are currently on remand from the U.S.
Court of Appeals (DCCir). Finally, this NPRM addresses the Radio/TV Cross
Ownership Restriction and the Dual Television Network Rule.
The FCC release also states that "the FCC has commissioned a number of
empirical studies examining the current state of the media marketplace,
including how consumers use the media, how advertisers view the different media
outlets, and how media ownership affects diversity, localism and competition.
The results of these studies will be released in the coming weeks." Then,
comments will be due 60 days after release of the studies, and reply Comments
will be due 30 days after the initial comment deadline. This means that the
comment period may close during or just after the Christmas and New Years
FCC Commissioner Michael Copps
wrote a separate
statement [PDF] in which he stressed that "Because the stakes here are
so incredibly high, it is far more important that we get this done right than
that we get it done quickly." See also, separate
statement of FCC Commissioner Kevin Martin.
Mark Cooper, of the Consumer Federation of
America (CFA), condemned the FCC's announcement of this NPRM. He stated in a
release that "the FCC launched the second phase in its assault on the
cornerstone of a vibrant democracy by continuing and consolidating its campaign
to eliminate or dramatically weaken longstanding rules designed to promote
diverse ownership of media outlets and encourage an open marketplace for ideas.
What's more, the FCC is in such a rush to eliminate these rules, they can't wait
until the results of their own studies are in. Once again the lines have been
drawn between corporate power and the public interest. And once again the public
interest has come out the loser."
The proceeding initiated by this NPRM is MB Docket No. 02-277.
Satellite Broadcasters Criticize Landrieu Bill
9/12. The Satellite Broadcasting and
Communications Association (SBCA) announced its opposition to S 2922,
the Emergency Communications and Competition Act of 2002 (ECCA), sponsored by Sen. Mary Landrieu (D-LA) and Sen. Conrad Burns (R-MT).
SBCA President Andy Wright stated in a release that "Northpoint
Technology's most recent attempt at a spectrum grab -- S. 2922 -- is
anti-consumer legislation that would cause harmful interference and interrupt
the service of millions of satisfied satellite TV customers. The legislation
would also unilaterally enrich Northpoint over its potential competitors by
giving a handful of politically connected individuals millions of dollars of
publicly owned spectrum for free."
The bill would require that the Federal
Communications Commission (FCC) "shall assign licenses in the 12.2-12.7
GHz band for the provision of fixed terrestrial services using the rules,
policies, and procedures used by the Commission to assign licenses in the
12.2-12.7 GHz band for the provision of international or global satellite
communications services in accordance with section 647 of the Open-market
Reorganization for the Betterment of International Telecommunications Act (47
The bill would provide for the licensing, without auction, of digital broadcast
satellite (DBS) spectrum for terrestrial use by Multichannel Video Distribution
and Data Services (MVDDS) -- essentially, NorthPoint Technology.
Greenspan Testifies Regarding Fiscal Issues
9/12. Federal Reserve Board
Greenspan testified before the House
Budget Committee on current fiscal issues.
He stated in his prepared
testimony that "The U.S. economy has confronted very significant
challenges over the past year -- major declines in equity markets, a sharp
retrenchment in investment spending, and the tragic terrorist attacks of last
September. To date, the economy appears to have withstood this set of blows
well, although the depressing effects still linger and continue to influence, in
particular, the federal budget outlook."
He elaborated that "A year ago, the Congressional Budget Office expected
the unified budget to post large and mounting surpluses over the coming decade.
As you know, CBO is currently forecasting that, if today's policies remain in
place, the unified budget will post deficits through fiscal year 2005. For the
fiscal year just ending, CBO now projects a budget balance that is more than
$300 billion below the level it had projected a year ago."
However, he added that, "despite the budget erosion over the past year, our
underlying fiscal situation today remains significantly stronger than that of a
decade ago, when policymakers were struggling to rein in chronic large deficits
and the ratio of federal debt to gross domestic product was approaching 50
percent and climbing."
See also, excerpts from
statement by Rep. Jim Nussle
(R-IA), the Budget Committee Chairman.
US Chamber Reports on PR China's Compliance with WTO
9/12. The U.S. Chamber of Commerce
released a report
[30 pages in PDF] titled "First Steps: A U.S. Chamber Report on China's WTO
Progress". The report concludes that it "is too early to issue
sweeping judgments about China's overall compliance with its WTO obligations,
many of which are due to be phased in over a period of years." The report
also contains specific findings and recommendations regarding enforcement of
intellectual property rights in China.
In general, the report argues that "while China's progress must indeed be
measured against the commitments it made to join the WTO, realistically, it must
also be evaluated in the context of the enormity of this undertaking." It
also finds that China has made "promising first steps" in several
areas, including its issuance of "Administrative Regulations on Operational
Licenses for Telecom Business", its "good faith efforts" to
revise its laws and regulations governing the protection of intellectual
In contrast, the report also notes that "international companies are also
concerned about insufficient progress in other areas. There are challenges that
stem from a lack of transparency, insufficient consultation in the development
of regulations, the lack of an independent regulator, inadequate protection of
intellectual property rights, and the dominance of domestic political
considerations over commercial decision making."
In the area of intellectual property rights, the report states that "China
agreed to comply with the WTO Agreement on Trade Related Aspects of Intellectual
Property Rights (TRIPs) upon its accession to the WTO, including changes to laws
and administrative practices to conform to the agreement. Although China has
revised its laws to provide criminal penalties for certain IPR violations, poor
enforcement and weak penalties mean that widespread IPR violations continue.
While enforcement raids occur, the political will and legal institutions
necessary to ensure that deterrent punishments are imposed on intellectual
property pirates are clearly lacking, and there is little sign of this
"General indications are that China has been working in good faith to bring
its laws and regulations into TRIPs compliance. However, technical shortcomings
and bureaucratic slowness has meant that many of these laws and regulations have
not been brought into force, as required by China’s commitments. In addition,
as noted, while enforcement raids occur, the political will and legal
institutions necessary to ensure that deterrent penalties are imposed on IP
pirates are clearly lacking, and there is little sign of this changing."
The report offers several recommendations with respect to IPR in China. First,
"China needs to revise its IPR laws and regulations, including those
related to patents, trademarks, trade secrets, integrated circuits, and
copyrights, to bring them into full compliance with TRIPs."
Second, the reports recommends that Chinese officials need more "political
will", and that the "Rule of law generally, including in such areas as
transparency, judicial review, and uniform enforcement of laws, also needs to be
Finally, the report states that the "Lack of knowledge and understanding
and insufficient training also impedes effective enforcement efforts. ... The
U.S. government should develop a unified, mid-to-long term strategic plan for
capacity building in the IP area, to replace the ad hoc and therefore haphazard
efforts that are currently underway."
FCC Announces Appointments
Chairman Michael Powell
named Bryan Tramont (at right) his Senior Legal Advisor. Tramont will
also be responsible for wireless and international issues. Since June 2001,
Tramont has been Senior Legal Advisor to FCC Commissioner Kathleen Abernathy.
Before that, he advised Abernathy on wireless, international, technology and
enforcement issues. Before that, he was Legal Advisor and then Senior Legal
Advisor to former FCC Commissioner Harold Furchtgott Roth. And before that, he
was an attorney in the Washington DC office of the the law firm of Wiley Rein & Fielding. See, FCC
9/12. FCC Commissioner Kathleen
Abernathy named Matthew Brill to be her Acting Senior Legal Advisor.
He is currently her Legal Advisor for wireline competition issues. In addition, John
Branscome, of the Commercial Wireless Division of the Wireless Telecommunications Bureau, will be
detailed to Abernathy as Acting Legal Advisor for wireless, international and
technology issues until a permanent advisor is named. See, FCC
Tenhula (at right) was named Co- Director of the FCC's Spectrum Policy Task Force. The FCC stated
in a release
[PDF] that he "will be working closely with Dr. Paul Kolodzy, current
Director of the Task Force, on the next phases of its mission. Mr. Tenhula will
be primarily responsible for coordinating all Commission spectrum policy
activities across the various bureaus, with Congress and with the
administration." Tenhula will be replaced in his current position as Senior
Legal Advisor to FCC Chairman Powell by Bryan Tramont. Tenhula joined
Powell's staff as a Legal Advisor in 1997. He has worked in various positions at
the FCC for 12 years. He has also worked for Rep. Mike Oxley (R-OH) and the National Association of Broadcasters (NAB).
People and Appointments
9/12. The Senate Banking
Committee unanimously approved the nomination of Wayne Abernathy to
be Assistant Secretary of the Treasury for Financial Institutions. Abernathy has
worked for the Committee since 1981. He is currently the Republican Staff
Director. See, Abernathy's prepared statement.
9/12. Leslie Lott, David
Moyer and Jon Sandelin were named to the U.S. Patent and Trademark Office's (USPTO) Trademark Public Advisory
Committee (TPAC). The TPAC was created by the American Inventors Protection
Act in 1999 to advise the Under Secretary of Commerce and Director of the USPTO
on the agency's operations, including its goals, performance, budget, and user
fees. Leslie Lott is an attorney with the law firm of Lott & Friedland. She focuses on patent,
trademark, and copyright law. David Moyer is an Associate General Counsel of
Intellectual Property at the Procter & Gamble
Company. Jon Sandelin is a Senior Licensing Associate at Stanford University, where he is the Founder
and Director of the Trademark Licensing Program. See, USPTO release.
9/12. President Bush nominated five people to be federal judges: Maurice
Hicks (to be a U.S. District Judge for the Western District of Louisiana), Ralph
Erickson (U.S.D.C., District of North Dakota), William Quarles (U.S.D.C.,
District of Maryland), Thomas Ludington (U.S.D.C., Eastern District of
Michigan), and Victor Wolski (U.S. Court of Federal Claims, for a term of
fifteen years). See, White
9/12. The Senate confirmed Arthur Schwab to be a Judge of the U.S.
District Court for the Western District of Pennsylvania by a vote of 92-0. See, Senate Roll
Call No. 216.
9/12. The Senate confirmed Timothy Corrigan to be a Judge of the U.S.
District Court for the Middle District of Florida by a vote of 88-0. See, Senate Roll
Call No. 213.
9/12. The Federal Communications Commission
(FCC) announced, but did not release, a Notice of Proposed Rulemaking (NPRM) and
Memorandum Opinion and Order (MOO) regarding its telemarketing rules. The FCC
issued a press
release [PDF] in which it stated that among the questions asked in the NPRM
is whether "to revisit the option of establishing a national do not call
list and, if so, how such action might be taken in conjunction with (1) the
Federal Trade Commission's (FTC) recent proposal to adopt a national do not call
list and (2) the various state do not call lists." See also, statement
[PDF] of Michael Powell, and statement
[PDF] of Kathleen Abernathy.
9/12. The U.S. International Trade Commission
(USITC) announced that it has extended its deadline to complete its
investigation titled "Certain Integrated Circuits, Processes for Making
Same, and Products Containing Same" until October 7, 2002. This is the
USITC's Investigation No. 337-TA-450. See, notice
in the Federal Register, September 12, 2002, Vol. 67, No. 177, at Pages 57850 -
9/12. Assistant U.S. Trade Representative (USTR) Dan Brinza gave a speech to a
special session of the World Trade Organization
(WTO) Dispute Settlement Body (DSB) in Geneva, Switzerland, in which he
advocated making the WTO dispute settlement system more open and transparent. He
addressed permitting amicus curiae briefs, and publication of submissions,
statements and final reports.
9/12. The Electronic Privacy Information Center
(EPIC) and other groups published a book titled "Litigation Under the
Federal Open Government Laws 2002". The 570 page book covers the Freedom of
Information Act, Privacy Act, Federal Advisory Committee Act, and
Government in the Sunshine Act. The price is $40.00. See, information and online order page.
9/12. The House Judiciary Committee's
Subcommittee on the Constitution held an oversight hearing titled "Privacy
Concerns Raised by the Collection and Use of Genetic Information by Employers
and Insurers". See, opening statement by Rep. Steve Chabot (R-OH), Chairman of
the Subcommittee. See also, prepared testimony of witnesses: Deborah Peel (American
Psychoanalytic Association), John Rowe (Aetna), Joanne Hustead
(Georgetown University's Institute for Health Care Research and Policy), and Tom Miller (Cato
9/12. The Senate Commerce Committee's
Subcommittee on Science, Technology, and Space Subcommittee held a hearing to
examine S 2537,
the Dot Kids Implementation and Efficiency Act of 2002, and HR 2417,
the Dot Kids Domain Name Act of 2001. These bills would facilitate the creation
of a new second level Internet domain within the U.S. country code domain that
would provide a safe online environment for children. The House has already
passed another version -- HR 3833.
testimony of Rep. John Shimkus
(R-IL), sponsor of HR 3833. See also, prepared testimony of other
Rodriguez (National Center for Missing and Exploited Children), Ann Brown (Safer
America for Everyone), and James Casey
(Director of Policy and Business Development of NeuStar, which operates the .us
country code top-level domain under contract with the Department of Commerce).
9th Circuit Rules on Priority of Security Interests in
9/11. The U.S.
Court of Appeals (9thCir) issued its opinion
[PDF] in Aerocon
Engineering v. Silicon Valley Bank, a bankruptcy case involving
the question of whether federal or state law governs priority of security
interests in unregistered copyrights. The Appeals Court's holding (that state
law governs), as well as its discussion, may be of interest to lenders who
obtain security interests in software copyrights as collateral for their loans.
Background. Three companies which designed and sold products for
modifying airplanes obtained financing from the Silicon
Valley Bank (SVB). It took a security interest in, among other things, all
"copyright rights, copyright applications, copyright registrations, and
like protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired." SVB perfected
its security interest under the California Uniform Commercial Code (UCC). The
borrowers did not register the copyrights at issue.
Proceedings Below. The borrowers went into bankruptcy. Another creditor,
Aerocon, purchased the copyrights from the bankruptcy trustee. SVB obtained
relief from the bankruptcy stay, and foreclosed on the copyrights, pursuant to
its state security interest. SVB and Aerocon both claimed priority of security
interests in the borrowers' copyrights in the drawings, technical manuals,
blueprints, and computer software used to make modifications to civilian
aircraft. The Bankruptcy Court ruled, on summary judgment, in favor of SVB. The
District Court affirmed. This appeal followed.
Appeals Court. The Appeals Court affirmed. It wrote that "this is a
bankruptcy contest over unregistered copyrights between a bank that got a
security interest in the copyrights from the owners and perfected it under state
law, and a company that bought the copyrights from the bankruptcy trustees after
the copyright owners went bankrupt."
The Court concluded, "Regarding perfection and priority of security
interests in unregistered copyrights, the California U.C.C. has not stepped back
in deference to federal law, and federal law has not preempted the U.C.C.
Silicon Valley Bank has a perfected security interest in the debtors'
unregistered copyrights, and Aerocon, standing in the bankruptcy trustees'
shoes, cannot prevail against it."
The Court first noted that the Copyright Act protects original works of
authorship, and provides for registration of copyrights; however, registration
is permissive, not mandatory, and in fact, most copyrights are not registered.
Moreover, the Act further provides for the transfer of copyright interests, and
for priority between conflicting transfers, based upon constructive notice.
However, one who obtains a security interest in an unregistered copyright cannot
record with the Copyright Office a transfer that would give constructive notice
because there is no underlying registration that would provide a title and
registration number. And also, the security holder cannot register the
copyright, because he is not the author or owner of the copyright. And hence,
the holder of a security interest in an unregistered copyright cannot preserve
his priority by filing anything at the Copyright Office.
The Court wrote that SVB perfected its security interest under California state
law. State law also provides priority to perfected over non perfected security
interests. Hence, if state law controls, SVB has priority.
On the other hand, Aerocon argued that the Copyright Act's recordation and
priority scheme exclusively controls perfection and priority of security
interests in copyrights, under either of two arguments: the step back provisions
of the California UCC, or that the Copyright Act preempts the California UCC on
this issue. The Appeals Court rejected both arguments.
Under this analysis, the Appeals Court rejected several District Court opinions
that have held that security interests in unregistered copyrights can not be
perfected under the UCC, and that perfection can be obtained only by registering
the copyrights and recording the security interest with the Copyright Office.
The Court reasoned that "Though Congress must have contemplated that most
copyrights would be unregistered, it only provided for protection of security
interests in registered copyrights. There is no reason to infer from
Congress’s silence as to unregistered copyrights an intent to make such
copyrights useless as collateral by preempting state law but not providing any
federal priority scheme for unregistered copyrights. That would amount to a
presumption in favor of federal preemption, but we are required to presume just
the opposite. The only reasonable inference to draw is that Congress chose not
to create a federal scheme for security interests in unregistered copyrights,
but left the matter to States, which have traditionally governed security
interests." (Footnote omitted.)
RIAA Files Proposed Injunction Order in Aimster Case
9/11. The Recording Industry Association of
America (RIAA) filed with the U.S.
District Court (NDIll) its Plaintiffs' Proposed
Preliminary Injunction Order and Memorandum in Support [101 pages in PDF] on
behalf of its member companies in the proceeding titled In Re Aimster Copyright
On September 4, the District Court issued its Memorandum
Opinion and Order granting a motion for preliminary injunction filed by
various record companies and music publishers against the Aimster file sharing
service, which is now known as Madster.
The Court also requested that the plaintiffs submit proposed language for the
preliminary injunction order.
Go to News from September 6-10, 2002.