|News from December 1-5, 2002|
Wal-Mart Withdraws Subpoena in DMCA Dispute
12/5. Lawyers for FatWallet stated that Wal-Mart "backed down" in a DMCA dispute over the posting of a Wal-Mart's Thanksgiving advertising circular in the FatWallet web site. Wal-Mart had demanded that FatWallet take down the posting, which it did. It had also obtained a subpoena from the U.S. District Court (NDIll) on November 27 directing FatWallet to disclose the identity of the anonymous user who posted Wal-Mart's sale prices.
FatWallet operates a web site that, among other things, enables users to post and discuss information about prices and products. FatWallet's attorneys threatened to obtain an order quashing the subpoena.
Wal-Mart had obtained the subpoena, pursuant to a provision in the Digital Millennium Copyright Act, which provision is codified at 17 U.S.C. § 512(h), that allows a party claiming a copyright to obtain a subpoena to learn the identity of a poster. The subpoena is issued by a court clerk as a ministerial function, without the filing of a complaint, the proving of ownership of a copyright, or notice to the poster.
FatWallet objects both to the statute itself, as well as the circumstances under which this subpoena was obtained. It asserts that the advertising circular, which is merely data on prices at which Wal-Mart offers items for sale, is not copyrightable subject matter.
Deirdre Mulligan, an attorney for FatWallet, stated in a release that "When the DMCA passed, many were concerned that the takedown provisions were heavily tilted against speakers -- by merely claiming copyright, any individual or business can silence speech. While this case caught the public's attention, there are certainly other instances of speakers being wrongfully silenced under the DMCA."
Tim Storm, President FatWallet said in the same release that "We're pleased Wal-Mart dropped its request for the poster’s identity, but an injustice still occurred here. The use of the DMCA to remove factual information about prices that retailers charge consumers is just wrong. We stand by our belief that consumers have the right to share the factual shopping information required to be a smart consumer. That is what FatWallet is all about."
See also, story in TLJ Daily E-Mail Alert No. 560, Wednesday, December 4, 2002.
People and Appointments
12/5. The U.S. Telecommunications Association (USTA) named Brad Edwards Vice President for Government Affairs. He has been with the USTA since March. He previously worked for the American Council of Life Insurers and UST Public Affairs. Before that he worked for Sen. Jesse Helms (R-NC). See, USTA release.
12/5. The Commerce Department's (DOC) Technology Administration (TA) published in its web site a report [114 pages in PDF] titled "Suborbital Reusable Launch Vehicles and Applicable Markets". The report was prepared by The Aerospace Corporation for the DOC's Office of Space Commercialization. See also, TA release.
12/5. The Federal Communications Commission (FCC) published in its web site the latest semi-annual report [34 page PDF scan] of its Inspector General.
12/5. The U.S. Patent and Trademark Office's (USPTO) published in its web site the annual report [14 pages in PDF] of the Patent Public Advisory Committee,
12/5. The U.S. Patent and Trademark Office's (USPTO) published in its web site the annual report [28 pages in PDF] of the Trademark Public Advisory Committee, dated November 29, 2002.
12/5. The U.S. government's Overseas Private Investment Corporation (OPIC) announced that it "will provide $300,000 in insurance to International Communications Systems, Inc. (ICS) of Huntington Station, New York, for the purchase of voice/data transit traffic equipment and Internet routing equipment for its Moldovan subsidiary, ICS Moldova. The new equipment will enable ICS Moldova to carry traffic between Moldova and the rest of the world, at the same time improving the existing system both in quality and in volume of traffic available, and providing state of the art routing technology at a reduced cost." See, OPIC release.
12/5. The Federal Communications Commission (FCC) published a notice in the Federal Register announcing Auction 50, and seeking comment on reserve prices or minimum opening bids and other auction procedures. The deadline to submit comments is December 9, 2002. The deadline for reply comments is December 16, 2002. The auction, which pertains to 54 Personal Communications Service (PCS) licenses in the 900 MHz band, is scheduled to commence on March 26, 2003. See, Federal Register, December 5, 2002, Vol. 67, No. 234, at Pages 72417 - 72422.
Bush Signs Dot Kids Bill
12/4. President Bush signed HR 3833, the Dot Kids Implementation and Efficiency Act. The bill provides that the NTIA must require the establishment of second level domain within the .us country code domain that is restricted to material that is not harmful to minors.
The bill requires that the National Telecommunications and Information Administration (NTIA) "shall require the registry selected to operate and maintain the United States country code Internet domain to establish, operate, and maintain a second-level domain within the United States country code domain that provides access only to material that is suitable for minors and not harmful to minors ..."
Bush gave a speech at a signing ceremony at the White House. He said, "Legislation I sign today will create a new place on the Internet that is safe for our children to learn and to play and to explore. Dot Kids will be part of the U.S. country domain on the Internet. It will function much like the children's section of the library, where parents feel comfortable allowing their children to browse. Be a safe place for children to go."
He continued that "This bill is a wise and necessary step to safeguard our children while they use computers and discover the great possibilities of the Internet. Every site designated .kids will be a safe zone for children. The sites will be monitored for content, for safety, and all objectionable material will be removed. Online chat rooms and instant messaging will be prohibited, unless they can be certified as safe. The websites under this new domain will not connect a child to other online sites outside the child friendly zone."
Bush also took several questions from reporters. However, all of the questions dealt with Iraq, Al Qaeda, and the Middle East.
The bill is largely the product of two members of the House Commerce Committee: Rep. John Shimkus (R-IL) (at right) and Rep. Ed Markey (D-MA). Both are also members of its Subcommittee on Telecommunications and the Internet.
Shimkus and Markey first introduced a bill, HR 2417, that would have required a "top-level, International domain", but later settled for a second level domain within the .us country code domain. See, stories titled "Reps. Shimkus and Markey Seek a .kids Domain", TLJ Daily E-Mail Alert No. 234, July 25, 2001; "House Subcommittee Holds Hearing on Kids Domain" TLJ Daily E-Mail Alert No. 300, November 2, 2001; and "House Passes Dot Kids Domain Bill", TLJ Daily E-Mail Alert No. 436, May 22, 2002.
Indictment Charges Theft of Trade Secrets from Transmeta, Sun, NEC & Trident
12/4. A grand jury of the U.S. District Court (NDCal) returned an indictment [10 page PDF scan] against Fei Ye and Ming Zhong alleging economic espionage, possession of stolen trade secrets, transportation of stolen property, and conspiracy, in violation of various federal criminal statutes.
The indictment alleges theft of trade secrets of Transmeta Corporation, which makes software based microprocessors, including the Crusoe line, Sun Microsystems, NEC Electronics Corporation, and Trident Microsystems, which makes graphics controllers and multimedia integrated circuits for desktop and portable computing applications.
While the indictment alleges that the defendants conspired to provide stolen trade secrets to the PRC, it does not list any PRC government entity as a conspirator.
The indictment contains ten counts. Count I alleges conspiracy in violation of 18 U.S.C. §§ 371, 1831(a)(5), and 1832(a)(5). It states that "On or about a date unknown but at least by the summer of 2001, and continuing to on or about November 24, 2001, in the Northern District of California and elsewhere, the defendants did knowingly conspire and agree with each other and other persons to commit the following offenses: economic espionage, in violation of 18 U.S.C. § 1831(a)(3); possession of stolen trade secrets, in violation of 18 U.S.C. § 1832(a)(3); and foreign transportation of stolen property, in violation of 18 U.S.C. § 2314."
The indictment further alleges that "It was part of the conspiracy that the defendants and other persons would and did establish and promote Supervision, Inc. ... to produce and sell microprocessors in the People's Republic of China (PRC). ... It was further part of the conspiracy that the defendants would travel to the PRC and take with them documents and materials containing trade secrets belonging" to Transmeta and Sun.
The indictment also describes certain trade secrets that the defendants stole. The indictment also contains two counts of economic espionage in violation of 18 U.S.C. § 1831(a)(3), five counts of possession of stolen trade secrets in violation of 18 U.S.C. § 1832(a)(3), and two counts of foreign transportation of stolen property in violation of 18 U.S.C. § 2314.
The U.S. Attorneys Office for the Northern District of California stated in a release that "Both defendants are former employees of Transmeta and Trident. Fei Ye also worked at Sun and NEC. Some of the stolen trade secrets were seized from the defendants at the San Francisco International Airport (SFO) while they were attempting to fly to China. Other trade secrets were seized from the defendants' residences and Ming Zhong's Transmeta office in the County of Santa Clara."
FCC Announces Agenda for Open Meeting
12/4. The Federal Communications Commission (FCC) announced the agenda for its open meeting on Wednesday, December 11, 2002. The agenda indicates that the FCC will likely adopt several spectrum related notices of inquiry.
The FCC's Spectrum Policy Task Force (SPTF) released its Report [73 pages in PDF] on November 15. Several items on the agenda relate to issues addressed in the report.
This is the FCC's last open meeting for the year 2002. Notably, it appears unlikely that the FCC will act on several proceedings that Commissioners have previously stated ought to be completed this year. For example, there is nothing in the agenda for the December 11 meeting regarding the UNE triennial proceeding, performance measures or broadband.
One item on the agenda is a NOI regarding "the effectiveness of current regulatory tools in facilitating the delivery of spectrum based services to rural areas and the extent to which rural telephone companies and other entities seeking to serve rural areas have opportunities to provide spectrum based services."
The SPTF report recommended that the FCC "explore ways to promote spectrum access and flexibility in rural areas". In particular, it recommended that the FCC "should promote the development of an efficient and flexible secondary markets regime that, in addition to partitioning, facilitates the leasing of spectrum usage rights in rural areas, which would significantly lower transaction costs. The Commission could also consider expanding ``easements´´ on licensed spectrum ... in low-congestion areas to allow access, on a non-interference basis, by other spectrum users." The report also recommended that the FCC "should consider the impact of its rules on access to rural spectrum". See, report, at pages 58-60.
Another agenda item is a NOI "concerning the possibility of permitting unlicensed transmitters to operate in additional frequency bands". The agenda further specifies that this would be spectrum bands "Below 900 MHz and in the 3 GHz Band".
The SPTF report recommended that the FCC "should consider designating additional bands for unlicensed use to better optimize spectrum access", and that "it appears that additional spectrum is needed for unlicensed devices."
The report found that "the growing popularity of computer networking has stimulated a heightened interest in unlicensed technology and one of the fastest growing applications of unlicensed devices is for WLANs. Among the more popular wireless data services are devices that operate in the 2.4 GHz band in accordance with the 802.11b or ``Wi-Fi´´ standards and protocols developed by the Institute of Electrical and Electronic Engineers. Unlicensed devices are also being developed to provide very short range wireless ``personal area´´ networks (WPANs), such as Bluetooth." See, report, at pages 54-55.
Another item is a NOI "seeking information that can be used to analyze the status of competition in the CMRS industry for purpose of its Eighth Report and Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services."
There are two other items are on the agenda. The FCC will consider a Further Notice of Proposed Rulemaking concerning "access to emergency services from services and devices that may not be currently within the scope of the Commission’s E911 rules", and the FCC's Wireless Telecommunications Bureau will report on "the status of unintentional wireless 911 calls".
The meeting will be held at 9:30 AM, in the Commission Meeting Room, TW-C305, at FCC offices at 445 12th Street, SW. It is open to the public, and web cast.
Bush Names McCallum Associate Attorney General
12/4. President Bush announced his intent to nominate Robert McCallum to be the Associate Attorney General at the Department of Justice (DOJ). He is currently Assistant Attorney General in charge of the Civil Division. See, White House release.
McCallum (at right) was previously a partner in the Atlanta office of the law firm of Alston & Bird. He focused on civil litigation, including appeals, commercial real estate litigation, insurance class action litigation and medical malpractice defense.
The top officer at the DOJ is the Attorney General, John Ashcroft. The second position is the Deputy Attorney General, Larry Thompson. The Associate Attorney General oversees many of the civil units of the DOJ, including five key divisions: Civil, Antitrust, Tax, Environment and Natural Resources, and Civil Rights. He also oversees many other units, including the Office of Justice Programs, Community Oriented Policing Services (COPS), Community Relations Service, Office of Dispute Resolution, Violence Against Women Office, Office of Information and Privacy, Executive Office of U.S. Trustees, and the Foreign Claims Settlement Commission.
He does not have authority, however, over the Solicitor General, the Office of Legal Counsel, or any of the crime related units. See, DOJ Organizational Chart.
Jay Stephens was the previous Associate Attorney General. Peter Keisler (a telecom lawyer from Sidley Austin) is currently the acting Associate Attorney General.
McCallum is one of many Atlanta lawyers, sometimes called the "Atlanta mafia", who joined the DOJ as part of the Bush Administration. Others include Deputy Attorney General Thompson, and the head of the Computer Crimes and Intellectual Property Section, John Malcolm.
People and Appointments
12/4. William Davenport was named Assistant Chief of the Federal Communications Commission (FCC) Enforcement Bureau's Investigations and Hearings Division (IHD). See, FCC release.
12/4. The Federal Trade Commission (FTC) gave an award to Robert Pitofsky, who was Chairman of the FTC from 1995 to 2001. See, FTC release.
12/4. The Commerce Department's Bureau of Industry and Security (BIS) announced that it fined Jet Info Systems International (Jet) $40,000 for re-exportation of computers to Russia in violation of U.S. export controls. The BIS, which was formerly known as the Bureau of Export Administration (BXA), stated that Jet re-exported computers in 1996 from Germany to the Russian Federal Nuclear Center of the Russian Research Institute of Experimental Physics without BIS authorization. The BIS also imposed a two year denial of export privileges on Jet. See, BIS release.
12/4. The U.S. Court of Appeals (DCCir) issued its opinion in Sparshott v. Feld, a civil case involving, among other things, the wiretap provisions of the Omnibus Crime Control and Safe Streets Act of 1968. Plaintiffs alleged illegal wiretapping of their home and office telephones. The jury returned a verdict for plaintiffs. The Appeals Court reversed, on statute of limitations grounds.
12/4. The U.S. Patent and Trademark Office (USPTO) announced that it is adjusting certain patent and trademark fee amounts to reflect increases in the Consumer Price Index (CPI). See, release, with list of fee increases.
12/4. The Progress & Freedom Foundation (PFF) will move its office location to 1401 H Street, NW, effective as of January 6, 2003.
Adelstein Sworn In as FCC Commissioner
12/3. Jonathan Adelstein was sworn in as a Commissioner of the Federal Communications Commission (FCC) with a term that expires on June 30, 2003.
Adelstein (at right) worked for 15 years in various staff positions in the U.S. Senate, with the last seven as an aide to Senate Majority Leader Tom Daschle (D-SD). His nomination had been held up in the Senate by Senate Minority Leader Trent Lott (R-MS) because of Sen. Daschle's role in blocking President Bush's judicial nominees, including a Mississippian supported by Sen. Lott.
Adelstein said in a confirmation statement that "The issues before this agency touch every American in the most basic ways -- their phone services, television, radio, cable and Internet access." He added that "I will work to ensure that Americans have the best possible communications services by enhancing competition, promoting universal access to all communications services, and efficiently managing the public spectrum."
He also announced appointments to his personal staff. Lisa Zaina will be his Senior Legal Advisor and wireline competition advisor. He also named three interim legal advisors: Eric Einhorn (wireline competition), Barry Ohlson (spectrum and international), and Sarah Whitesell (media). Also, Katherine Lapin will be his Confidential Assistant. Kevin Venters will be a Staff Assistant. See, release [MS Word] regarding staff.
Zaina is currently Vice President for Industry and Regulatory Affairs and Corporate Secretary of Shenandoah Telecommunications Company (Shentel) in Edinburg, Virginia. Before that, she worked at Wallman Strategic Consulting. And before that, she worked at the FCC, as Senior Counsel and Deputy Bureau Chief of the Common Carrier Bureau.
Zaina has also worked for the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), and the National Association of Regulatory Utility Commissioners (NARUC).
Einhorn is currently Acting Chief of the Telecommunications Access Policy Division of the Wireline Competition Bureau. Ohlson is currently Chief of the Policy Division of the Wireless Telecommunications Bureau. Whitesell is currently Associate Chief of the Media Bureau. She was also a legal advisor to former Commissioner Gloria Tristani, who just lost a race for the Senate.
WorldCom and AT&T Seek Cert in USTA v. FCC
12/3. WorldCom, AT&T and Covad filed a Petition for Writ of Certiorari [42 pages in PDF] with the Supreme Court seeking review of the May 24, 2002 opinion of the U.S. Court of Appeals (DCCir) in USTA v. FCC granting petitions for review of an FCC unbundling order and line sharing order. (The West citation for the opinion is 290 F.3d 415.)
Incumbent local exchange carriers (ILECs) and the U.S. Telecom Association (USTA), a group that represents them, challenged the Federal Communications Commission's (FCC) order requiring ILECs to lease a variety of unbundled network elements to competitive local exchange carriers (CLECs). They also challenged a FCC line sharing order that requires ILECs to lease to CLECs only a portion of local copper loops, rather than the whole line, for the purpose of offering DSL service.
The Appeals Court granted both petitions. It remanded both rules to the FCC for further proceedings. The ILECs prevailed.
The FCC already had underway a proceeding in which it is examining its unbundling rules. That proceeding is still pending.
The petitioners now assert that the question presented is as follows: "Under AT&T Corp. v. Iowa Utilities Board, 525 U.S. 366 (1999), Verizon Communications Inc. v. FCC, 122 S.Ct. 1646 (2002), and the provisions of the Telecommunications Act of 1996, may the FCC require incumbent telephone monopolists to lease elements of their network to competitors based on the FCC's findings that the ability of hundreds of firms to provide competing services will be materially lessened if they must obtain the elements from sources outside the incumbents' networks, or must the FCC also satisfy extra-statutory requirements in order to address putative adverse effects that the leasing of those elements will have on investment in alternative facilities?"
Mark Rosenblum, AT&T's VP for law, stated in a release that "There's no question that the D.C. Circuit Court decision reflects a view of the 1996 Act that is radically different from the one Congress enacted, that is foreclosed by the Supreme Court's decisions in two prior cases, and that cannot possibly create the local telephone competition consumers have been promised ... We are simply asking the Supreme Court to reaffirm its two previous rulings and provide the certainty needed to set the telecom industry back on course."
In sharp contrast, Walter McCormick, P/CEO of the USTA stated in a release that "AT&T could invest its financial resources in facilities and jobs, but instead it chooses to invest in lawyers and litigation. We are confident that the Supreme Court will dismiss AT&T's arguments. The public interest lies in economic growth and job creation that can best be encouraged through investment in facilities based competition."
Similarly, Herschel Abbott, BellSouth VP for governmental affairs, stated in a release that "The original court decision lent support to the direction that the Federal Communications Commission seems to be going with its current reviews of rules on the microscopic dissection of Bell networks. We urge the commission to stay the course. The commission is nearing completion of a fact-based proceeding to see which rules are really necessary to spur competition and which can be abandoned because competition has already taken hold. The May 24th appeals court decision seems to support going down that path."
WalMart Obtains DMCA Subpoena to Obtain Identity of Poster of Advertised Price Data
12/3. Wal-Mart obtained a subpoena from the U.S. District Court (NDIll) on November 27 directing FatWallet to disclose the identity of an anonymous user who posted Wal-Mart's Thanksgiving advertising circular. Wal-Mart is a retailer. FatWallet operates a web site that, among other things, enables users to post and discuss information about prices and products of consumer goods.
The subpoena was issued by a clerk of the U.S. District Court (NDIll). It is directed to Storm Concepts LLC d/b/a Fatwallets.com. It states that "YOU ARE COMMANDED to produce and permit inspection and copying of the following documents or objects at the place, date, and time specified below (list documents or objects): Information sufficient to identify the alleged infringer who posted the material described in the notification attached hereto, including for example that person's name, address, telephone number, and email address."
The subpoena was obtained on November 27, 2002, by Jeffrey Gitchel, an attorney in the Pittsburgh office of the law firm of Kirkpatrick & Lockhart. See, eight page PDF file in FatWallet web site containing subpoena and legal correspondence. (Wal-Mart did not returned phone calls from TLJ. Its counsel declined to answer questions.)
A demand letter from Wal-Mart's attorney referenced "the illegal posting of our Thanksgiving Circular on the Fatwallet.com website" and alleged that "the posting of the Circular violates Wal-Mart's intellectual property rights in the Circular".
FatWallet is represented by Megan Gray, a Washington DC based attorney, and Dierdre Mulligan of the Samuelson Law, Technology & Public Policy Clinic at Boalt Hall, at U.C. Berkeley. They assert that this subpoena constitutes "blatant misuse of the Digital Millennium Copyright Act". See, release.
Gray also prepared a brief for amicus curiae privacy groups in RIAA v. Verizon Internet Services, a case pending in the U.S. District Court (DC) involving the subpoena provisions of DMCA. That brief also argued, among other things, misuse of the DMCA. It stated that "the statute never intended to reach a situation in which the allegedly infringing material resides on the user’s own computer rather than a computer owned or controlled by the ISP". See, TLJ story titled "Verizon and Privacy Groups Oppose RIAA Subpoena", August 30, 2002.
In the present matter, if a lawsuit is filed, FatWallet will likely assert that there is misuse of the DMCA because there is no copyrightable subject matter involved in price advertisements.
However, in addition, Gray told TLJ that FatWallet would likely also assert that the subpoena provision of the DMCA is unconstitutional, that the issuance of the subpoena violates anonymity rights, and that First Amendment free speech rights are implicated.
The Statute. The DMCA was passed in 1998 at the end of the 105th Congress. It was HR 2281. It contains many provisions, including sections pertaining to circumvention of copyright protection systems, implementation of WIPO treaties, and protection for vessel hull designs. However, the language at issue in this matter is the section pertaining to the limitation of liability of interactive service providers for copyrighted material placed on its system by users.
It is codified at Section 512 of Title 17. It reflects an attempt at compromise between the goals of protecting copyrights in digital content in movies, music, books, and other media, and promoting electronic commerce. It is an ISP immunity provision. See, for example, House Report 105-551. However, its details have given rise to disputes such as those in the FatWallet and Verizon matters.
Subsection 512(c)(1) provides, in part, that "A service provider shall not be liable for monetary relief ... for injunctive or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider ... (C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity."
In the FatWallet matter, FatWallet did take down the alleged infringing material.
Subsection 512(c)(3) then provides, in part, that "To be effective under this subsection, a notification of claimed infringement must be a written communication provided to the designated agent or a service provider that includes ... Identification of the copyrighted work claimed to have been infringed ..."
Subsection 512(h) then 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." The requester need only provide a copy of the 512(c)(3) notice, a proposed subpoena, and a sworn declaration.
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."
House Report 105-551 stated that "The Committee intends that such orders be expeditiously issued if the notification meets the provisions of new subsection (c)(3)(A) and the declaration is properly executed. The issuing of the order should be a ministerial function performed quickly for this provision to have its intended effect. After receiving the order, the service provider shall expeditiously disclose to the copyright owner or its agent the information required by the order to the extent that the information is available to the service provider ..."
Copyrightable Subject Matter. A key issue in this dispute is whether the item posted to the FatWallet web site is protected under copyright law. It is a published advertisement listing prices at which items are offered for sale. By posting such information of retailers, the anonymous poster enabled FatWallet users to compare price offers of various retailers. Wal-Mart has asserted that its ad is subject to copyright protection.
FatWallet is likely to assert that it constitutes facts, rather than an original work of authorship, and is therefore not copyrightable under the Supreme Court's opinion in Feist Publications v. Rural Telephone Service, 499 U.S. 340 (1991). In that case the Court held that a collection of phone numbers given to the publisher was not copyrightable subject matter, because it involved no originality.
In contrast, the U.S. Court of Appeals (9thCir) subsequently held, in its opinion in CDN Inc. v. Kapes, 197 F.3d 1256 (1999), that a collection of prices can constitute copyrightable subject matter. It distinguished Feist on the basis that in that case the phone numbers were given to the phone company, while in the CDN case, CDN created the data following a process of analysis of information from other publications, actual trades, and other sources. Its publication also involved arrangement, selection, graphics and organization. See also, opinion of the U.S. Court of Appeals (2ndCir) in CCC Information Services v. Maclean Hunter Market Reports, 44 F.3d 61 (1994), which is also known as the "red book" case.
In CDN and the red book case the publishers received copyright protection for price information. However, they collected and analyzed transaction data to estimate actual market prices. Moreover, they were in the business of selling these price publications. In contrast, Wal-Mart has not evaluated and estimated market prices. Rather, it has published its own price offers. The function of collecting and analyzing various data is being performed by FatWallet and its anonymous users.
Also, Wal-Mart's likely purpose in this matter has not been to prevent dissemination of its price offers. It publicly advertised them. Rather, its purpose is to prevent consumers from efficiently comparing its prices with those of its competitors. That is, its purpose in asserting copyright may be to prevent the efficient operation of the market. One can imagine what would be the outcome, if a complaint were filed, a final judgment were reached, an appeal were made to the Seventh Circuit, and an opinion were written by the Seventh Circuit's Judge Posner, the dean of the law and economics school of thought.
However, the likelihood that this dispute will proceed may be limited. There is less at stake in this matter than in some other DMCA subpoena disputes. FatWallet has an interest in continuing to have users post and discuss prices. However, there may be less at stake for its users. In some other recent anonymous posting matters, the posters have faced the possibility of suffering consequences unrelated to copyright infringement claims. Some face defamation litigation. In the FatWallet case the poster merely republished Wal-Mart's prices. Some face loss of employment for posting information critical of their employer.
In the present matter, perhaps the anonymous poster faces the possibility of being publicly exposed as a Wal-Mart shopper.
SEC Fines Broker Dealers $8,250,000 for Failure to Save E-Mail
12/3. The Securities and Exchange Commission (SEC) initiated, and settled, an administrative proceeding against Deutsche Bank Securities, Goldman Sachs, Morgan Stanley, Salomon Smith Barney, and U.S. Bancorp Piper Jaffray in which it alleged violation of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder, for failure to maintain adequate systems or procedures for the preservation of electronic mail communications.
The SEC's Order instituting the proceeding alleged that the five companies' personnel failed "to preserve copies of electronic mail communications for three years, and/or maintain electronic mail communications for the first two years in an accessible place". It also noted that while companies kept back up tapes, these were for disaster recovery purposes, and were overwritten "often a year or less after back-up occurred".
The five broker dealers settled the matter, without admitting wrongdoing. Each agreed to pay a $1,650,000 fine. Each was censured. Each was also ordered to cease and desist from further violation of Section 17(a). See also, SEC release.
12/3. The Federal Trade Commission (FTC) announced that it has settled a civil proceeding against the sellers of non-existent domain names. See, Stipulated Final Judment [PDF].
12/3. The U.S. Court of Appeals (9thCir) issued its opinion in Microsoft v. CIR, a tax case involving whether Microsoft could claim as "export property" deductions for commissions it paid to a foreign sales corporation for royalty income from the international distribution of master copies of software. The IRS disallowed the deductions on the grounds that software is not "export property" under the applicable statute. The Appeals Court reversed, and remanded. However, the case arose ten years ago, and the statute construed in this case has since been repealed.
Supreme Court Asks Solicitor General for Brief in SBCCI v. Veeck Copyright Case
12/2. The Supreme Court invited the Solicitor General to file a brief expressing the views of the United States in SBCCI v. Veeck, a copyright case. See, Order List [20 pages in PDF], at page 2.
The Southern Building Code Congress International (SBCCI) is a nonprofit organization that develops, promotes, and promulgates model building codes. Local governments, in turn, enact its codes into law by reference, in whole, or in part. SBCCI asserts a copyright in each of its codes. Peter Veeck operates a web site that contains information about North Texas, including the towns of Anna and Savoy. Several towns in North Texas have adopted SBCCI model codes, including Anna and Savoy. Veeck purchased from SBCCI CDs with copies of the building codes. In disregard of the software license and copyright notice, Veeck copied and published these building codes into his web site.
The District Court entered a judgment of copyright infringement. On February 2, 2001, a divided three judge panel of the U.S. Court of Appeals (5thCir) issued its opinion upholding the judgment of copyright infringement. On June 10, 2002, a divided en banc panel of the Fifth Circuit issued its opinion reversing the three judge panel. This en banc opinion arguably creates a conflict between the Fifth Circuit, and the First, Second and Ninth Circuits.
See also, TLJ story titled "5th Circuits Affirms Judgment of Internet Copyright Infringement", February 5, 2001, and story titled "Divided En Banc 5th Circuit Reverses in Veeck v. SBCCI", TLJ Daily E-Mail Alert No. 448, June 11, 2002.
West Virginia to Appeal in Microsoft Antitrust Case
12/2. The state of West Virginia announced that it would join the state of Massachusetts in appealing the judgment [PDF] of the U.S. District Court (DC) in the government antitrust suit against Microsoft.
It stated in a release that "Although the United States District Court in Washington, D.C., found that Microsoft Corporation violated federal and state antitrust laws, the court largely sided with Microsoft in its decision on how to remedy the unlawful conduct. The court’s decision modified Microsoft’s proposal by providing stronger compliance provisions, including the court retaining jurisdiction of the matter for the next five years. However, the court failed to impose sanctions that will remedy the unlawful co-mingling of computer software code that the federal court of appeals specifically agreed was an antitrust violation."
GAO Reports on Internet Gambling
12/2. The General Accounting Office (GAO) released a report [66 pages in PDF] titled "Internet Gambling: An Overview of the Issues". The report was written at the request of senior members of the House Financial Services Committee. Hence, it focuses on the role of the payments system, and particular, credit cards, in financing Internet gambling. It reviews relevant laws and practices, but makes no recommendations. It also examines the vulnerability of online gambling to money laundering.
The report states that "Many major credit card industry participants have attempted to restrict the use of credit cards for Internet gambling but have faced challenges in their efforts to do so. Full-service credit card companies that issue their own cards and license merchants to accept cards have implemented policies prohibiting customers from using their cards to pay for Internet gambling transactions and will not license Internet gambling sites. Credit card associations have instituted a different approach -- a transaction coding system that enables association members, at their discretion, to deny authorization of properly coded Internet gambling transactions. Many major U.S. issuing banks that are members of these associations have chosen to block such transactions because of concerns over Internet gambling’s unclear legal status and the high level of credit risk associated with the industry."
The report continues that "These efforts are hampered, however, by Internet gambling sites that attempt to disguise their transactions to keep from being blocked by the issuing banks. In addition, some association members -- primarily those in foreign jurisdictions where Internet gambling may be legal -- continue to acquire Internet gambling sites as merchants. Further, efforts to restrict the use of credit cards for Internet gambling can be circumvented by cardholders’ use of on-line payment providers to pay for gambling activities. With such intermediaries, issuing banks cannot necessarily determine the nature of the activity being charged."
It also states that "as banks increasingly choose to restrict the use of credit cards for Internet gaming, Internet gambling sites are expected to emphasize newer forms of payment, such as e-cash, that could eventually replace credit cards."
GAO Reports on Digital TV
12/2. The General Accounting Office (GAO) released a report [57 pages in PDF] titled "Telecommunications: Additional Federal Efforts Could Help Advance Digital Television Transition".
The report was written at the request of Rep. Ed Markey (D-MA) (at right), the ranking Democrat on the House Commerce Committee's Subcommittee on Telecommunications and the Internet.
The report addresses the nature of analog and digital signals. It covers the allocation of spectrum to broadcasters for analog and digital signals, and the target date of December 31, 2006 for completing the conversion to DTV, and the recovery of spectrum used for analog signals.
The report notes that to be able to receive DTV signals, TV watchers must spend money, either to "(1) purchase a television set that includes a tuner capable of receiving digital broadcast signals, (2) purchase a converter box that captures the digital broadcast signal and converts it to a format that can be shown on an analog television set, or (3) subscribe to a cable or satellite provider that is carrying the broadcast stations’ digital signals as well as have the equipment necessary to receive that provider’s digital signals." (Footnote omitted.)
The report states that its public opinion survey shows that "many people have little understanding of the DTV transition".
The report continues that "If consumers are unfamiliar with DTV -- particularly with benefits such as high definition television -- they are less likely to purchase digital television sets. Yet, if few consumers purchase digital television sets, producers have little incentive to provide much digital content and cable systems have little incentive to carry the digital signal. Thus, consumer awareness of the transition -- and subsequent consumer adoption of DTV equipment -- is a key element in facilitating the transition."
The report also addresses cable and satellite carriage of digital signals. It states that "On the basis of current plans for digital carriage by cable and satellite companies, it appears unlikely that many households will have access to all of their local digital channels via cable or satellite by December 2006. FCC has tentatively decided against mandating that cable systems carry analog and digital channels simultaneously during the transition. In lieu of dual carriage, however, another option we have identified is to set a ``date certain´´ when cable systems would, all at once, switch from carrying analog channels to carrying digital channels."
The report also states that there is little digital programming being produced, because of lack of digital TV viewers, lack of advertisers' interest, and lack of protection for copyrighted works.
The report states that "Many content providers say they are reluctant to provide high-value digital content over the air via DTV because they are concerned about consumers making unauthorized copies as well as redistributing the content over the Internet."
"To address copy protection for over-the-air content, studios want the use of a ``broadcast flag,´´ which would identify rules for how particular content could be used. The flag would be recognized by technology embedded in digital television sets and other devices that receive DTV broadcast signals," the GAO report states. "In August 2002, FCC initiated a rulemaking exploring whether it can and should mandate the use of a copy protection mechanism for DTV."
The report next addresses mandating digital tuners. "To speed the DTV transition, FCC has adopted an order requiring that by 2007 most new broadcast television sets include a tuner capable of receiving digital signals over the air. Another policy option would be to pair the over-the-air mandate with a requirement that new television sets also be digital cable-ready. Because many more American households receive television via cable than receive it over the air, mandating digital cable-ready capability could be an effective policy for speeding the DTV transition if the marginal cost of this requirement were found to be reasonable."
The report recommends that the FCC "Explore options to raise public awareness about the DTV transition and the implications it will have." It also recommends that the FCC "examine the advantages and disadvantages of a policy that would set a date-certain for cable carriage to switch from full carriage of analog signals to full carriage of digital signals." The report contains no legislative recommendations.
To prepare the report, the GAO reviewed relevant statutes and regulatory proceedings. It also spoke with representatives of communications companies and industry groups. It also spoke with government officials. It also contracted with a public opinion research firm to conduct a survey.
The report contains no economic analysis. However, it does note that "Perhaps the most significant barrier to greater consumer adoption of DTV equipment is its cost. In 2001, the average price of a digital television set was more than $1,800."
The report also states that "television has become an important part of American life" and that "the Congress has repeatedly noted the importance of maintaining the nation's free, over the air system of local broadcasting".
Rob Stoddard of the National Cable & Telecommunications Association (NCTA) stated in a release that the report "confirms our belief that consumers are just now learning about digital TV, that additional education for consumers and retailers would be helpful, and that the transition itself is fairly complex, not only for consumers but also for the industries that are voluntarily working together to make it happen."
He added that "Though we remain opposed to expanding our carriage requirements through dual or multiple ``must carry´´ which would disadvantage many non-broadcast programmers and content providers, we look forward to working with Congress and the FCC to deliver high definition and digital television to American consumers."
Edward Fritts of the National Association of Broadcasters (NAB) stated in a release that the NAB desires greater consumer awareness.
GAO Reports on Internet Porm
12/2. The General Accounting Office (GAO) released a report [40 pages in PDF] titled "Combating Child Pormography: Federal Agencies Coordinate Law Enforcement Efforts, but an Opportunity Exists for Further Enhancement".
The report states that "The Internet, while changing the way our society communicates, has also changed the nature of many crimes, including child pornography. ... The trafficking of child pormography through increasingly sophisticated electronic media, including Internet chat rooms, newsgroups, and peer-to-peer networks, has made these images more readily accessible." (Footnotes omitted.)
However, the report focuses on the coordination of law enforcement efforts. It states that "Multiple federal agencies play roles in combating child pornography, many of them as a part of an overall effort to combat child exploitation in general. Additionally, state and local law enforcement agencies may also have jurisdiction over certain child exploitation cases and may work collaboratively with federal agencies to combat child pormography. While technology has created more challenges for law enforcement, it also requires federal agencies to coordinate efforts to work well together in identifying crimes, targeting suspects, investigating cases, and gathering evidence."
It concludes that "some improvements to information sharing can be made", and offers some specific recommendations.
The report also notes that "three of the leading electronic communications service providers, including two of the largest Internet service providers, report no significant problems with the coordination of federal law enforcement efforts. These entities report that it has been rare that they receive duplicate subpoenas from the federal law enforcement community relating to the same investigation."
The report was written at the request of Rep. Henry Waxman (D-CA), the ranking Democrat on the House Government Reform Committee.
Editor's Note: TLJ intentionally misspells words that, if spelled correctly, would cause many subscribers' e-mail systems to block the TLJ Daily E-Mail Alert.
12/2. The Federal Trade Commission (FTC) announced that its Division of Enforcement "conducted a surf of 63 Internet retailers offering top-selling holiday items" to "find out whether e-tailers were making ``quick ship´´ claims, rebate offers, and certain disclosures for popular holiday items". The FTC stated that it has sent letters to 51 e-tailers regarding FTC enforced statutes and regulations that apply to online sales. See, FTC release.
12/2. The Supreme Court denied certiorari in Nolen v. Nucentrix, a class action suit filed on behalf of cable service subscribers complaining about charges. The U.S. Court of Appeals (5thCir) issued its opinion on June 26, 2002, affirming the District Court's dismissal. See, Order List [20 pages in PDF], at page 5.
12/2. The Supreme Court denied certiorari in Deseret Book Company v. Jacobsen, a copyright case involving the supersubstantial similarity test. This denial lets stand the opinion of the U.S. Court of Appeals (10thCir) in Jacobsen v. Deseret Book Co., 287 F.3d 936 (April 19, 2002). See, Order List [20 pages in PDF], at page 16.
Go to News from November 26-30, 2002.