DC Circuit Revises Opinion in 21st Century Telesis v. FCC

2/14. The U.S. Court of Appeals (DCCir) issued a revised opinion [PDF] in 21st Century Telesis v. FCC. See, also, opinion of January 31, 2003.

The Federal Communications Commission (FCC) canceled 19 broadband licenses held by 21st Century Telesis following its failure to make timely payments on its licenses. 21st Century petitioned for review of FCC orders determining that it was provided adequate notice before cancellation of its licenses, and declining to consider its late filed arguments that the automatic cancellation rule exceeds the FCC's statutory authority and as applied violates due process.

On January 31, the Court of Appeals ruled that "Because 21st Century's challenges to the automatic cancellation of its C block licenses are either moot or unripe, 21st Century lacks standing to bring those challenges, and we dismiss that part of the petition. Because 21st Century fails to show with respect to its F block licenses either that the Commission abused its discretion under 47 U.S.C. § 405 and 47 C.F.R. § 1.106(f) by declining to consider late filed hearing arguments, thus making it improper for the court to address those contentions, or that the Commission failed to provide sufficient notice of 21st Century's payment obligations, we deny the petition in part."

On February 14, the Court of Appeals concluded that "because 21st Century lacks standing to challenge the cancellation of its C block licenses, we dismiss that portion of its appeal; because 21st Century’s hearing contentions are not properly before the court, as 21st Century failed to exhaust its administrative remedies by timely presenting its hearing arguments to the Commission, and its notice contentions fail in light of record evidence that it had sufficient notice of its payment obligations, we affirm the orders of the Commission."

The revised opinion also changes all references to petition for review to appeal.

Bush Administration Releases Final Cyber Security Plan

2/14. President Bush announced the release of a collection of documents titled the National Strategy for Combating Terrorism. It includes a document titled National Strategy to Secure Cyberspace (NSSC), and another titled Physical Protection of Critical Infrastructure and Key Assets.

Among the NSSC's many conclusions is that "the private sector is best equipped and structured to respond to an evolving cyber threat". It encourages public private cooperation rather than government mandates or regulation.

President Bush wrote in a letter [1 page in PDF] that "The way business is transacted, government operates, and national defense is conducted have changed. These activities now rely on an interdependent network of information technology infrastructures called cyberspace. The National Strategy to Secure Cyberspace provides a framework for protecting this infrastructure that is essential to our economy, security, and way of life." He added that "Securing cyberspace is an extraordinarily difficult strategic challenge that requires a coordinated and focused effort from our entire society -- the federal government, state and local governments, the private sector, and the American people."

He also referenced the National Strategy in his weekly Saturday radio address on February 15. He stated that "This past week, Secretary of Homeland Security Tom Ridge issued strategic plans to protect our critical infrastructure. These plans will guide local officials in securing our nation's dams and power plants, electrical goods, computer networks and communication systems."

The NSSC states that its purpose "is to engage and empower Americans to secure the portions of cyberspace that they own, operate, control, or with which they interact."

It states that "Of primary concern is the threat of organized cyber attacks capable of causing debilitating disruption to our Nation’s critical infrastructures, economy, or national security. The required technical sophistication to carry out such an attack is high -- and partially explains the lack of a debilitating attack to date. We should not, however, be too sanguine. There have been instances where organized attackers have exploited vulnerabilities that may be indicative of more destructive capabilities."

The NSSC lists too many recommendations and plans to enumerate here. However, several of its statements regarding intelligence and international action may be noteworthy. For example, it recommends strengthening cyber related counterintelligence efforts. It states that "The FBI and intelligence community should ensure a strong counterintelligence posture to counter cyber-based intelligence collection against the United States government, and commercial and educational organizations. This effort must include a deeper understanding of the capability and intent of our adversaries to use cyberspace as a means for espionage."

It also references retaliation for cyber attacks. It states that "When a nation, terrorist group, or other adversary attacks the United States through cyberspace, the U.S. response need not be limited to criminal prosecution. The United States reserves the right to respond in an appropriate manner. The United States will be prepared for such contingencies."

Finally, it provides that "The United States will encourage other nations to accede to the Council of Europe Convention on Cybercrime ..."

Robert Holleyman, P/CEO of the Business Software Alliance (BSA), stated in a release that "it is crucial for Congress and the Administration to ensure that cyber security remains a key focus of the new Department of Homeland Security and that the proper resources are allocated to establish the necessary programs and improve the security of government networks."

Harris Miller, President of the Information Technology Association of America (ITAA) stated in a release that "We are gratified that after a full and open process, the Administration has issued a plan that recognizes the need for partnership and participation to protect cyberspace -- not mandates and government intervention."

Federal Circuit Affirms in Intel v. Via

2/14. The U.S. Court of Appeals (FedCir) issued its opinion [MS Word] in Intel v. Via, a patent infringement case involving microchip technology. Intel makes microchips. So does VIA Technologies. Intel asserted that VIA infringed a patent pertaining to its "Fast Write" technology. VIA asserted that it practices several claims of the patent, but that it is licensed by Intel to do so. VIA also argued that the patent is invalid. The District Court held on summary judgment that the cross license agreement at issue is ambiguous, and therefore to be construed against the drafter, Intel. Hence, it held that there is no infringement by VIA. The District Court also denied VIA's motion for summary judgment that the patent is not invalid. The Appeals Court affirmed.

Intel is the assignee of U.S. Patent No. 6,006,291 titled "High-throughput interface between a system memory controller and a peripheral device". The abstract states that "A high-throughput memory access interface allows higher data transfer rates between a system memory controller and video/graphics adapters than is possible using standard local bus architectures. The interface enables data to be written directly to a peripheral device at either one of two selectable speeds. The peripheral device may be a graphics adapter. A signal indicative of whether the adapter's write buffers are full is used to determine whether a write transaction to the adapter can proceed. If the transaction can not proceed at that time, it can be enqueued in the interface."

Intel promulgated a new industry standard for certain computer chip specifications that relates to the electronic interface and signal protocols by which devices in a computer system communicate with each other. In 1996, Intel published the Accelerated Graphic Port (AGP) Interface Specification, Revision 1.0 (AGP 1.0), describing how AGP allows graphics devices to communicate with the core logic without using the traditional Peripheral Component Interface (PCI) bus. In 1998, Intel published AGP Interface Specification, Revision 2.0, which added two new protocols known as date transfers at 4x and Fast Write. Both 4x and Fast Write are optional protocols of AGP 2.0. See also, Intel's AGP technology web site.

Intel licenses both AGP 1.0 and 2.0 on a reciprocal, royalty free basis. The AGP 2.0 agreement provides for "a nonexclusive, royalty-free, nontransferable, non-sublicenseable, worldwide license under its Interface Claims to make, have made, use, import, offer to sell and sell products which comply with the AGP Interfaces; provided that such license shall not extend to features of a product which are not required to comply with the AGP Interfaces or to which there was a feasible alternative to infringing a given claim." However, while the agreement includes definitions of "Interface Claims" and "AGP Interfaces", it does not expressly state whether chipsets that include the Fast Write technology are covered by the agreement.

Intel drafted the agreement, and VIA signed it. VIA produced chipsets that supported Fast Write. VIA concedes that its chipsets practice at least claims 1, 4, 6, and 7 of the '291 patent. However, it asserts that it is licensed to practice this patent under a cross license agreement with Intel.

Intel filed a complaint in U.S. District Court (NDCal) against VIA alleging patent infringement. VIA counterclaimed for a declaratory judgment of invalidity for indefiniteness. The District Court granted summary judgment of non-infringement to VIA on the ground that VIA was licensed to practice the patent. It also denied summary judgment of invalidity.

Intel appealed the judgment of non-infringement. VIA cross appealed the judgment of no invalidity.  The Court of Appeals affirmed both judgments of the District Court.

Trade News

2/14. Kenneth Dam, Deputy Secretary of the Treasury, gave a speech to the Atlantic Council in Washington DC titled "A Fresh Perspective on U.S. EU Economic Relations". He stated that "If you've been reading the financial press on a regular basis, you might think the United States and the EU were fighting a transatlantic trade war." But, he said, "The facts tell a different story. In the last decade, the U.S. EU economic relationship, when measured as trade plus investment, has swelled into the largest and most complex on earth. U.S. investors are deeply invested in Europe’s growth, and vice-versa." He added that, "In any event, the real action today in international trade is not in the WTO dispute settlement process, but in the new Doha Round of negotiations. There we have put on the table unprecedented proposals for the reduction of barriers in both agricultural and industrial products." He went on to discuss financing of terrorism.

2/14. The Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) entered into an agreement with Neustar. The agreement [3 pages in PDF], titled "Amendment of Solicitation / Modification of Agreement", modifies the agreement for the management of the .us domain by NeuStar, to provide that Neustar will establish, operate and maintain a second level domain in the .us domain for material that is suitable for minors, pursuant to HR 3833, the "Dot Kids Implementation and Efficiency Act of 2002", which was signed into law on December 4, 2002. See, Public Law No. 107-317.

2/14. U.S. Trade Representative (USTR) Robert Zoellick will be in the PR China from February 17 through 21. He will meet with Vice Premier Wen Jiabao and Ministry of Trade and Economic Cooperation (MOFTEC) Minister Shi Guangsheng. The Office of the USTR stated in a release that he will "discuss the WTO's impact on China, ongoing economic reforms, bilateral trade issues and current global trade negotiations".

Don Evans Proposes Combining Tech Related Entities at Commerce Department

2/13. Secretary of Commerce Don Evans announced that he will seek Congressional approval to combine several technology and spectrum related entities that are a part of Department of Commerce (DOC). The new combined entity would include the Technology Administration (TA), the National Telecommunications and Information Administration (NTIA), and the e-commerce policy functions of the International Trade Administration (ITA).

A DOC release states that "the Under Secretary for Technology would oversee the new agency that would focus on a range of issues including technical standards, spectrum management, and technology and e-commerce policy issues."

Phil Bond is the Under Secretary of Commerce for Technology. He heads the Technology Administration, which includes three entities, the National Institute of Standards and Technology (NIST), the Office of Technology Policy (OTP), and the National Technical Information Service (NTIS).

The NTIA, which is headed by Nancy Victory, has spectrum management authority, represents the administration on certain communications matters, and has grant making authority (although President Bush's budget proposal would eliminate this responsibility). Arden Bement is the Director of the NIST. Bruce Mehlman is the Assistant Secretary of Commerce for Technology Policy, and head of the OTP.

Secretary Evans (at right) stated that "Convergence is the business model in the digital economy -- it should be the business model in the federal government ... This Administration understands that our global marketplace has changed and that telecom and technology operate together, not separately. We need to adjust our thinking and adjust our structure to keep pace with the world, our economy and innovation."

Secretary Evans' proposal did not reference other technology related units at the DOC, such as the U.S. Patent and Trademark Office (USPTO) and the Bureau of Industry and Security (BIS). The BIS administers the export control regime, which grants export licenses for, among other things, dual use items, such as software and encryption products, and high performance computers. The BIS also included the Critical Infrastructure Assurance Office (CIAO), which has responsibilities pertaining to cyber security. The recently enacted bill to create the Department of Homeland Security (DHS) transfers the CIAO to the new DHS. It now becomes part of the DHS's Directorate of Information Analysis and Infrastructure Protection (IAIP). However, the DOC's Computer Security Division (CSD) was not transferred to the DHS; it remains a part of the NIST, which is part of the Technology Administration, which is involved in Secretary Evans' proposal.

Sen. Edwards Proposes Homeland Intelligence Agency

2/13. Sen. John Edwards (D-NC) introduced S 410, the Foreign Intelligence Collection Improvement Act of 2003. It would revise the way the government conducts foreign intelligence operations within the U.S., and the way government stores, shares and safeguards information. It would create a Homeland Intelligence Agency within the Department of Homeland Security, and reduce the responsibilities of the FBI. The bill does not expand the powers of the federal government with respect to intelligence gathering. Rather, it is premised upon the assumption that by moving certain functions to a new agency, those functions will be conducted more effectively. It also limits executive power, in two respects. First, a substantial part of the bill is devoted to protecting privacy, civil rights and Constitutional rights, particularly through the creation of an entity to safeguard these rights. Second, it would increase the ability of the Congress to oversee and control the operations of executive branch. See, full story.

Senate Passes Do Not Call Implementation Act

2/13. The Senate passed HR 395, the Do-Not-Call Implementation Act, by unanimous consent. The House passed this bill on February 12 by a vote of 418-7. See, Roll Call No. 26.

Sen. John McCain (R-AZ), the Chairman of the Senate Commerce Committee, spoke in support of the bill in the Senate. He stated that the Federal Trade Commission (FTC) "proposed regulations to create a national do no call registry that consumers can sign up for to avoid unwanted solicitations. H.R. 395 authorizes the Federal Trade Commission, FTC, to collect offsetting fees from telemarketers to implement and enforce the registry as part of the Telemarketing Sales Rule. The legislation would authorize the FTC to collect these fees from telemarketers for Fiscal Years 2003 through 2007, and to move forward this year on setting up this much-needed registry. The legislation also directs the Federal Communications Commission to conclude its own rulemaking regarding telemarketing calls which, given the FTC's lack of jurisdiction over certain industries, is an important component in creating an effective and comprehensive do not call option for consumers." See, Cong. Record, Feb. 13, 2003, at S2500.

Rep. Ron Paul (R-TX) was one of only seven members of the House to vote against the bill. He submitted a statement for the Congressional Record (Feb. 13, 2002, at E243). He wrote that "I would remind those who support federal intervention to ``put a stop´´ to telemarketing on the basis of its annoyance, that the Constitution prohibits the federal government from interfering in the areas of advertising and communications. In addition to exceeding Congress' constitutional authority, legislation to regulate telemarketing would allow the government to intrude further into our personal lives."

Representatives Introduce Bill To Authorize Nanotech R&D Funding

2/13. Rep. Sherwood Boehlert (R-NY), Rep. Mike Honda (D-CA), and others introduced HR 766, the National Nanotechnology Research and Development Program. It would authorize the appropriation of $2.1 Billion over three years for nanotechnology research and development programs at the National Science Foundation (NSF), Department of Energy (DOE), Department of Commerce's (DOC) National Institute of Standards and Technology (NIST), National Aeronautics and Space Administration (NASA), and Environmental Protection Agency (EPA). The majority of the funding would go to the NSF.

The bill would also require the President to implement "a National Nanotechnology Research and Development Program to promote Federal nanotechnology research, development, demonstration, education, technology transfer, and commercial application activities as necessary to ensure continued United States leadership in nanotechnology research and development and to ensure effective coordination of nanotechnology research and development across Federal agencies and across scientific and engineering disciplines."

The Program created by the bill would "provide sustained support for nanotechnology research and development" and "expand education and training of undergraduate and graduate students". In addition, it would establish "a research program to identify societal and ethical concerns related to nanotechnology, and ensuring that the results of such research are widely disseminated".

Rep. Honda (at right) stated in a release that "Nanotechnology will have a dramatic impact on society, and it is critical that the U.S. has structures in place that allow us to assess and understand technical issues, as well as the social, ethical, philosophical, and legal issues that will arise."

On January 8, Rep. Honda introduced HR 283, the Nanoscience and Nanotechnology Advisory Board Act of 2003. See, story titled "Rep. Honda Introduces Nanotechnology Bill", TLJ Daily E-Mail Alert No. 582, January 14, 2003. HR 766 would also create an advisory committee.

Also, on January 16, 2003, Sen. Ron Wyden (D-CA) introduced S 189, the 21st Century Nanotechnology Research and Development Act. Rep. Boehlert stated in a release that "We've already been having conversations with both the Senate and the White House about nanotechnology, and I'm hopeful we can get a bill enacted this year. We will try to move the bill through the Science Committee before the April recess." Rep. Boehlert is Chairman of the House Science Committee.

See also, House Science Committee summary of HR 766 [MS Word].

Representatives Introduce Bill to Exempt Lawyers from GLB Privacy Provisions

2/13. Rep. Judy Biggert (R-IL), Rep. Carolyn Maloney (D-NY) and others introduced HR 781, a bill to exempt attorneys from the privacy provisions of the Gramm Leach Bliley (GLB) Act.

Rep. Maloney (at right) submitted a statement for publication in the Congressional Record (Feb. 13, 2003, at E238-9). "This legislation resolves the controversy as to whether attorneys at law, who are subject to strict codes of professional conduct, should be subject to the privacy section of the Gramm Leach Bliley Act (GLBA). The Biggert Maloney legislation recognizes that the practice of law and the business of financial services are wholly different and that GLBA should be clarified to recognize this distinction."

She added that "The privacy protections in Title V of GLBA were a response to specific cases where consumers' private, personal financial information was mined without their consent in an effort to market products. Where Title V is an appropriate response to such cases, it is inappropriate to apply it to most lawyers whose clients already expect that all their disclosures are confidential, covered by state codes of ethics and attorney client privilege."

Rep. Biggert also submitted a statement for the Congressional Records (Feb. 13, 2003, at E244). She said that "in order to comply with the privacy provisions under Gramm Leach Bliley, these attorneys now run the risk of violating the client-confidentiality restrictions placed on their profession."

"Why is that? Well, under the FTC interpretation, every attorney who engages in any of the four defined ``financial activities´´ for a non-corporate client must mail to that client a privacy notice -- every year, for as long as he or she is in practice. And what does that privacy notice convey? Well, it informs clients that they may direct their attorney not to share their personal information with other entities -- the so-called ``opt-out´´ provision of Gramm Leach Bliley. Yet the attorney client confidentiality relationship is, by nature, an, ``opt-in´´ protection. In short, for attorneys, the very act of disclosing a privacy policy can create a confidentiality violation."

Reps Biggert and Maloney introduced similar legislation late in the 107th Congress. See, HR 5457.

FCC Announces UWB Report and Order and Further NPRM

2/13. The Federal Communications Commission (FCC) announced, but did not release, a Memorandum Opinion and Order and Further Notice of Proposed Rulemaking (MOO and FNPRM) regarding ultra wideband (UWB) transmission systems. It issued only a short release [PDF].

Also, Ed Thomas, Chief of the FCC's Office of Engineering and Technology (OET) spoke and answered questions about this item at an FCC event on Thursday morning, February 13. He was joined by Julius Knapp and John Reed of the OET.

This proceeding is titled "Revision of Part 15 of the Commission's Rules Regarding Ultra-Wideband Transmission Systems, Memorandum Opinion and Order and Further Notice of Proposed Rulemaking". It is ET Docket No. 98-153. The FCC adopted its First Report and Order [119 pages in PDF] permitting the marketing and operation of certain types of new products incorporating UWB technology on February 14, 2002. However, the FCC did not release the actual document until late April of 2002.

Fourteen petitions for reconsideration of the First Report and Order were filed with the FCC. The FCC release states that the present MOO "largely reaffirmed the procedures adopted last year to authorize the unlicensed operations of ultra-wideband ... Minor changes were implemented to further facilitate the operation of imaging devices."

Ed Thomas stated that "the Commission action affirms all major aspects of the First Report and Order, that will provide ultra wideband developers and manufacturers with much need certainty." He added that it "affirms the Commission's commitment to the framework adopted last year to guide deployment and support the technology."

UWB devices, which use very narrow pulses with very wide bandwidths, have potential applications in both radar and communications technologies. Proponents of its use have argued that UWB devices can use large portions of already allocated spectrum with minimal or no interference to incumbent users. Companies, such as Intel, have argued that UWB is a very promising technology for enabling short distance, high data rate connections that can support new and innovative applications.

Six of the petitions for reconsideration were filed by authorized radio services seeking more protection. Eight sought relaxation of the rules contained in the First Report and Order.

John Reed, a senior engineer at the OET, stated that "we don't believe that any major changes to the rules are warranted. Further, we believe that major changes to the rules at this stage would be disruptive to current industry product development efforts."

He also stated that the Further NPRM proposes "limited changes to the rules to accommodate devices with technical characteristics similar to ultra wideband devices. We expect the ultra wideband regulations will continue to evolve. The next twelve to eighteen months should allow the new production of new products. Further, interference analysis and testing is being contemplated by government and non-government entities."

The FCC release states that "The Commission also proposed additional new rules to address issues raised regarding the operation of low pulse repetition frequency (PRF) UWB systems, including vehicular radars, in the 3.1-10.6 GHz band; the operation of frequency hopping vehicular radars in the 22-29 GHz band as UWB devices; the establishment of new peak power limits for wideband Part 15 devices that do not operate as UWB devices; and the definition of a UWB device."

Finally, Ed Thomas was asked, "Do you see any easing of the restrictions on the outside use, especially in the peer to peer networking area?" Thomas responded, "Not at this time." He added that "That will be a question that possibly will be addressed after we do the testing."

FCC Chairman Michael Powell did not attend the meeting, but released a statement [PDF]. He wrote that "By our action today -- affirming in all major respects the Ultra-Wideband (UWB) First Report & Order -- the Commission provides UWB developers and manufacturers with much needed regulatory certainty. Consistent with the objectives identified in the Spectrum Policy Task Force report, the Order we adopt increases access to spectrum by leveraging innovative technology while protecting incumbents from harmful interference. Achieving a stable regulatory framework will allow a reorientation of energy away from the regulatory process and toward making these remarkable, potentially life-saving devices available for use -- particularly by the public safety community.

Chairman Powell added that "The UWB experience also offers a valuable lesson in the pitfalls of reactive spectrum policymaking, and emphasizes the need for new, forward thinking approaches, such as those recommended by the Task Force. Presented with a disruptive technology like UWB, the Commission scrambled to develop a regulatory framework to allow for its deployment in the marketplace. Implementation of the Task Force's recommendations would place the Commission on the leading edge of innovation -- creating clear ground rules that allow new technologies to be developed and then deployed immediately, without requiring innovators to approach the Commission on bended knee, and to face a protracted regulatory approval process. Future developments in spectrum-based technologies should be limited only by the constraints of physics -- not by the out-dated constraints of the regulatory code.

Similarly, Commissioner Michael Copps did not attend, but released a statement. He wrote that UWB technologies "have made great progress over the year since our First Report & Order. I have confidence that, given the proper regulatory climate, the companies that are bringing this technology to consumers will make even more progress in the year to come. Today’s decision should be seen as a reaffirmation that UWB is here to stay." He added that "As UWB devices are brought to market, the FCC will test them and be alert for interference complaints – but today's continued conservative approach should minimize interference problems.

One year ago, Commissioner Copps was less enthusiastic. He wrote in a separate statement then that "Because the effects of widespread use of UWB are not yet fully known, and interference could impact critical spectrum users, I will support, albeit somewhat reluctantly, the ultra-conservative ultra-wideband step we take today."

House and Senate Pass FY 2003 Appropriation Package With TIA Amendment

2/13. The House approved the conference report on HJRes 2, the further appropriations for FY 2003 resolution, by a vote of 338-83. See, Roll Call No. 32. The Senate approved the conference report by a vote of 76-20. See, Roll Call No. 34. President Bush said he will sign it. See, White House release.

The House Rules Committee published the conference report on HJRes 2 in its web site. It includes funding for most executive branch departments, except the Department of Defense (DOD). However, Division M of the conference report is titled "Defense Matters". Its Section 111 is titled "Limitation on Use of Funds for Research and Development on Total Information Awareness Program". This was first added to the Senate version of the resolution in January as an amendment (SA 59) offered by Sen. Ron Wyden (D-OR). The original House version of HJRes 2 did not include this amendment.

The Wyden amendment limits the ability of the DOD to spend money on Defense Advanced Research Projects Agency's (DARPA) Total Information Awareness (TIA) project.

See, Division M and N [56 page PDF scan], at Division M, Section 111, pages 7-12. The language in the conference report is almost identical to the language as originally proposed by Sen. Wyden. The 60 day deadlines have been expanded to 90 days.

10th Circuit Holds No Federal Subject Matter Jurisdiction in Railroad Rights of Way Case

2/13. The U.S. Court of Appeals (10thCir) issued its opinion in Nicodemus v. Union Pacific, holding that there is no federal subject matter jurisdiction over a case brought by landowners against a railroad regarding whether certain railroad rights of way dating back to the 19th Century extend to fiber optic cable.

Union Pacific acquired railroad rights of way over plaintiffs' lands under federal land grant statutes dating from 1852 to 1875. Union Pacific has entered into agreements with telecommunications providers in which it has licensed the right to install and maintain fiber optic cables in the rights of way over plaintiffs' lands.

Plaintiff land owners filed a complaint in U.S. District Court (DWyo) against Union Pacific alleging that the granting of fiber optic cable licenses exceeds Union Pacific's authority. Plaintiffs sought damages for trespass, damages for unjust enrichment, an accounting and disgorgement of rents and profits, a permanent injunction, and a declaratory judgment. Some of the plaintiffs additionally plead damages for slander of title, damages for inverse condemnation, and an injunction requiring removal of the cable.

The District Court dismissed for lack of subject matter jurisdiction -- there is no federal question. Union Pacific appealed. The Appeals Court affirmed. Although Union Pacific acquired its rights of way under federal grants, all of the plaintiffs causes of action are based upon Wyoming state property and tort law claims. This is a matter for the state courts.

Tech Crimes

2/13. The U.S. District Court (EDCal) sentenced Mohsin Mynaf to 24 months in prison and a three year term of supervised release, and ordered him to pay approximately $201,738.70 in restitution. He had previously plead guilty to six counts of criminal copyright infringement, six counts of trafficking in counterfeit labels, and one count of circumventing a technological measure that protects a copyrighted work, in violation of 17 U.S.C. §§ 1201 and 1204. This is also known as the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA). He made counterfeit videocassette movies and labels, and in the process, circumvented security measures placed on analog videocassettes containing copyrighted movies. See, CCIPS release and USAO release [PDF].

2/13. A grand jury of the U.S. District Court (CDCal) returned an indictment charging Mongkol Prapakamol with ten counts of trafficking in counterfeit software and one count of smuggling counterfeit software. He is accused of smuggling into the U.S. from Thailand, and attempting to sell, counterfeit copies of Symantec's Norton AntiVirus and SystemWorks, Intuit's Quicken, and video games published by LucasArts and Activision. See, USAO release.

2/13. The Securities and Exchange Commission (SEC) filed a complaint in U.S. District Court (NDCal) against Kenneth Mellert and Roman Mayer alleging violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder in connection with the use of inside information to buy stock of PeopleSoft, a software company. The SEC stated in a release that Mellert, a former PeopleSoft sales director, and Mayer, possessed inside information that PeopleSoft "would be preannouncing an earnings shortfall at the end of the day. ... Mellert called Mayer, and the two agreed that Mayer would purchase $16,000 in PeopleSoft put options -- securities that would rise in value if the Company's stock price fell." The SEC also stated that Mayer has consented to a court order enjoining him from future violations, and ordering him to pay disgorgement and penalties. In addition, the U.S. Attorneys Office (USAO) for the Northern District of California charged Mellert by criminal information [2 page PDF scan] with insider trading, in violation of 15 U.S.C. §§ 78j and 78ff. See also, USAO release.

People and Appointments

2/13. The Senate confirmed William Donaldson to be head of the Securities and Exchange Commission (SEC). See also, statement by President Bush.

2/13. Eric Einhorn was named Chief of the Telecommunications Access Policy Division of the Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB). This Division oversees funds used to support universal service, the Telecommunications Relay Service (TRS), and numbering resources. Before going to work at the FCC, Einhorn work in the Washington DC office of the law firm of Swidler Berlin and at the law firm of Cadwalader Wickersham & Taft. See, FCC release [PDF].

2/13. Katherine Schroder was named Senior Advisor to the Federal Communications Commission's (FCC) Wireline Competition Bureau Chief, William Maher. However, she is on parental leave now. She joined the FCC in 1994 straight out of law school. See, FCC release [PDF].

2/13. Stephen McGuire was appointed Chief Administrative Law Judge (ALJ) at the Federal Trade Commission (FTC), effective on March 3. He will replace James Timony, who recently retired. McGuire is currently an ALJ at the Environmental Protection Agency (EPA), as well as Alternative Dispute Resolution (ADR) Neutral in the EPA's office of Administrative Law Judges. See, FTC release.

More News

2/13. The Federal Communications Commission (FCC) released the agenda for its meeting on Thursday, February 20, 2003. The only item is its report and order in the triennial review of incumbent local exchange carriers (ILEC) unbundling obligations, and the appropriate framework for broadband access over wireline facilities. This item had previously been schedule for Thursday, February 13. The meeting will take place at 9:30 AM at the FCC, Room TW-C305, 445 12th Street, SW. See, FCC release.

2/13. Deputy Treasury Secretary Kenneth Dam (at right) gave a speech titled "The Road to Wellville: Economic Challenges Facing Japan" to the Japan Society in New York City  He addressed, among other things, structural reform deregulation. He stated that "industries that don't face competition fail to innovate. And they fall further behind. Unfortunately, many of these regulated and lagging industries -- business services, medical services, communications, and financial services -- are industries that offer the greatest potential for growth in today's economy. Structural reform and deregulation that removes barriers to competition, new entry, and new product introduction is the strongest tool for pushing productivity and growth upwards. The deregulation of Japan's cellular telephone industry provides a vivid example."

2/13. Federal Communications Commission (FCC) Chairman Michael Powell wrote a letter [4 page PDF scan] to Department of State's (DOS) David Gross regarding ENUM, or electronic numbering. He wrote that "ENUM is a new and potentially important service, a product of the convergence of the traditional public switched telephone network with the Internet." He added that "I endorse the recommendation, as expressed in Assistant Secretary Victory's letter of February 12, 2003, that the United States take concrete steps towards studying whether or not to opt in to e164.arpa, and that the United States government promote resolution of the many issues surrounding a possible domestic implementation of ENUM. I further support the notion that any implementation should involve minimal domestic and international regulation, and should reflect the need to preserve national sovereignty, competition, interoperability, innovation, stability, security and privacy." See also, story titled "NTIA Director Writes State Department Re ENUM" in TLJ Daily E-Mail Alert No. 603, February 13, 2003.

2/13. The National Infrastructure Protection Center (NIPC) announced that it entered into a Memorandum of Understanding with the U.S. Customs Bureau and the National Response Center. See, NIPC release and statement of NIPC Director James Plehal. The NIPC is an entity with computer intrusion investigation responsibilities. It was transferred from the FBI to the Department of Homeland Security by the Homeland Security Act.

House Homeland Security Committee Members Named

2/12. Rep. Chris Cox (R-CA), Chairman of the House Select Committee on Homeland Security, and Rep. Jim Turner (D-TX), the ranking Democrat, announced the membership of the Committee. See, Cox release.

The other Republican members are Bill Young (FL), Christopher Shays (CT), Curt Weldon (PA), Dave Camp (MI), David Dreier (CA), Don Young (AK), Duncan Hunter (CA), Ernest Istook (OK), James Sensenbrenner (WI), Harold Rogers (KY), Jennifer Dunn (WA), Jim Gibbons (NV), John Linder (GA), John Shadegg (AZ),  John Sweeney (NY), Kay Granger (TX), Lamar Smith (TX), Lincoln Diaz-Balart (FL), Mac Thornberry (TX), Mark Souder (IN), Pete Sessions (TX), Peter King (NY), Porter Goss (R-FL), Bob Goodlatte (VA), Sherwood Boehlert (NY), and Billy Tauzin (LA).

The other Democratic members are Robert Andrews (NJ), Benjamin Cardin (MD), Donna Christensen (VI), Peter DeFazio (OR), Norman Dicks (WA), Bob Etheridge (NC), Barney Frank (MA), Charles Gonzalez (TX), Jane Harman (CA), Sheila Lee (TX), James Langevin (RI), Zoe Lofgren (CA), Nita Lowey (NY), Ken Lucas (KY), Ed Markey (MA), Karen McCarthy (MO), Kendrick Meek (FL), Eleanor Norton (DC), Bill Pascrell (NJ), Loretta Sanchez (CA), Louise Slaughter (NY), and Bennie Thompson (MS).

Several of the members have been active in information technology, cyber security and communications related debates. Rep. Cox (at right) has long been a leading proponent of an untaxed and unregulated internet. Rep. Dunn represents a district that includes many Microsoft workers. Rep. Smith has been active in passing cyber crime legislation. Rep. Goodlatte is a co-chair of the Internet Caucus, and, along with Rep. Lofgren, led the effort in previous Congresses to defend encryption rights. Both have also been involved in other tech related issues. Rep. Lofgren represents a Silicon Valley district. Rep. Markey is the ranking Democrat on the Telecom and Internet Subcommittee, and a leading proponent in the House of privacy rights. Rep. Harman has been active in cyber security issues.

NTIA Director Writes State Department Re ENUM

2/12. Nancy Victory, Director of National Telecommunications and Information Administration (NTIA), wrote a letter to the Department of State's (DOS) David Gross, recommending that the DOS be more active at the International Telecommunications Union (ITU) on the ENUM issue.

Gross (at right) is the U.S. Coordinator for International Communications and Information Policy in the Bureau of Economic and Business Affairs at the Department of State.

Victory wrote that "We currently have the opportunity to participate or ``opt in´´ to the new global domain set aside for electronic numbering (ENUM), e164.arpa. Because of the potential benefits of ENUM, the Department of Commerce through the National Telecommunications and Information Administration (NTIA) believes that the United States should seize this opportunity and take steps to participate in e164.arpa, consistent with the highest standards of security, competition, and privacy."

She elaborated that "As a mapping protocol that links the Internet and telephony platforms through a single identifier, ENUM has the potential to facilitate convergence of communications networks by linking e-mail addresses, telephone numbers, fax numbers, and cell phone numbers for individuals or businesses."

Third Circuit Rules in Cell Tower Section 332 Dispute

2/12. The U.S. Court of Appeals (3rdCir) issued its opinion [PDF] in Omnipoint Communications v. Easttown Township, a cell tower siting case.

Omnipoint is a wireless telecommunications provider that provides service in Easttown Township, Pennsylvania. It sought a variance from the Zoning Hearing Board of Easttown to locate a tower in a residential district. It argued that there is a gap in wireless telecommunications. Easttown denied the request.

Omnipoint filed a complaint in U.S. District Court (EDPenn) against Easttown alleging violation of the mobile services provisions of the Communications Act (see, 47 U.S.C. § 332(c)(7)(B)(i)) and Pennsylvania law. This is the second time this case has been to the Court of Appeals. See, first opinion of the Court of Appeals, Omnipoint v. Easttown, 248 F.3d 101 (3d Cir. 2001), which remanded the case to the District Court. On remand, the District Court rejected Omnipoint's claims on the basis that it failed to establish a significant gap or unreasonable discrimination under the Communications Act, or unconstitutional exclusion under Pennsylvania law.

In the present opinion, the Appeals Court vacated the District Court's holding that there is no significant gap, but affirmed the rest of the District Court's holding, and remanded.

Federal Circuit Sanctions Appellant for Frivolous Appeal

2/12. The U.S. Court of Appeals (FedCir) issued its opinion [MS Word] in Phonometrics v. Westin Hotel, a frivolous appeal from a summary judgment in a patent infringement case.

Phonometrics is the holder of U.S. Patent No. 3,769,463, which claims, in relevant part, "An electronic solid state long-distance telephone call cost computer apparatus ... comprising: ... call cost register means, including a digital display, for providing a substantially instantaneous display of cumulative call cost in dollars and cents".

Phonometrics filed a complaint in U.S. District Court (SDFl) against Westin Hotel alleging the Westin's hotel room telephones infringe the '463 patent. It argued, among other things, that Westin's printed paper notices constitute a "digital display". The District Court granted summary judgment to Westin. Phonometrics appealed. This is the latest in a series of appeals brought by Phonometrics attempting to enforce this patent.

The Appeals Court was neither convinced, nor amused, by Phonometric's arguments. It affirmed the District Court, ruled that Phonometric's arguments were "frivolously unmeritorious", and sanctioned Phonometrics, and its attorney, John Sutton, $3,000.

FRB Vice Chairman Reviews Y2K Remediation Efforts

2/12. Federal Reserve Board (FRB) Vice Chairman Roger Ferguson gave a speech in Athens, Georgia titled "Rules and Flexibility in Monetary Policy" in which he reviewed the recent history of monetary policy. He included a review of the year 2000 conversion in the banking sector.

He said that "concerns were widespread during 1999 that computer systems controlling everything from cash registers to power grids could fail because of Y2K bugs in computer code. Given the pervasiveness of automated systems in the financial sector, concerns about fixing the Y2K bug in that sector were particularly severe. Despite intensive and careful preparations, market participants and others remained concerned that computer failures could result in problems for individual firms and, conceivably, even for the economy. Firms, for example, were extremely reluctant to be exposed to the risk that on January 1, 2000, they would be unable to roll over their debt, and banks similarly were concerned about their own access to funding."

Ferguson stated that "the Federal Reserve put in place a number of contingency measures to ensure the availability of adequate liquidity to the economy. Moreover, to minimize the risk that monetary policy would inadvertently trigger problems, the monetary tightening process was put on hold at the December 21, 1999, meeting to minimize the uncertainty when everyone was concerned about the century date change. As it turned out, the careful planning and massive investment in updated and more robust information technology paid off -- computers functioned smoothly. Again, our approach to monetary policy in the run-up to Y2K would have been very difficult to capture in a simple rule, or in a complicated one for that matter."

Federal Circuit Rules in Altiris v. Symantec

2/12. The U.S. Court of Appeals (FedCir) issued its opinion [MS Word] in Altiris v. Symantec, a patent infringement case involving software that controls the computer boot process.

Altiris is the holder of U.S. Patent No. 5,764,593 titled "Method and system for the interception and control of the computer boot process". The invention is the use of software to allow a network administrator working from the network server to remotely access individual network computers as they are booted. This enables network administrators to update or install software. Prior to the '593 patent, this could be accomplished through the serial installation of hardware.

Altiris filed a complaint in U.S. District Court (DUtah) against Symantec alleging infringement of the '593 patent. After a Markman hearing, the District Court issued an order construing the claim limitations at issue. Based upon these claim limitations, the parties stipulated to Symantec's noninfringement of the '593 patent. The District Court then granted summary judgment of non-infringement. Altiris appealed the District Court's claims construction. The Court of Appeals vacated and remanded on the grounds that the District Court court erred in the construction of each of the five claim limitations giving rise to the grant of summary judgment.

People and Appointments

2/12. President Bush nominated Consuelo Callahan to be a Judge of the U.S. Court of Appeals for the Ninth Circuit. See, White House release. She is currently a member of the California Court of Appeal, Third Appellate District. Before that, she was an Superior Court Judge.

2/12. President Bush nominated Steven Colloton to be a Judge of the U.S. Court of Appeals for the Eighth Circuit. See, White House release. Colloton is the U.S. Attorney for the Southern District of Iowa. He previously clerked for Judge Laurence Silberman (U.S. Court of Appeals for the District of Columbia), and Chief Justice William Rehnquist. He was also an assistant to Independent Counsel Ken Starr. And, he has been an Assistant U.S. Attorney in Iowa.

2/12. Richard Diamond was named Deputy Director of Media Relations at the Federal Communications Commission (FCC). He previously worked as press secretary to former Rep. Richard Armey (R-TX), who was the House Majority Leader through the 107th Congress. Diamond can be reached at 202 418-0506. See, FCC release [PDF].

2/12. William Stavropoulos resigned from the Board of Directors of Computer Associates (CA). See, CA release.

More News

2/12. The House passed HR 395, The Do-Not-Call Implementation Act, on a roll call vote of 418-7. See, Roll Call No. 26. The sponsor of the bill, Rep. Billy Tauzin (R-LA), stated in a release that "The bill provides a five year authorization for the FTC to collect fees from telemarketers to operate, maintain, and enforce the national do-not-call registry, which will cost $16 million annually. Now that the House has passed this legislation, the Senate must move quickly so that the registry can be put into motion this year."

2/12. The Federal Communications Commission (FCC) released its annual report [47 pages in PDF] on the number of telephone subscribers. It found, once again, that most people have phones. That is, over 95 percent of all households in the U.S. had telephone service as of July 2002. Access rates vary across income groups, with low income households having less access than high income households. The report was written by Alexander Belinfante of the Industry Analysis and Technology Division of the FCC's Wireline Competition Bureau. See also, FCC release [1 page in PDF].

2/12. The Department of Justice's (DOJ) Antitrust Division filed its pleading titled "Certificate of Complicance with Tunney Act and Motion for Entry of Final Judgments" with the U.S. District Court (EDVa) in the case U.S.A. v. MathWorks and Wind River Systems. On June 21, 2002, the DOJ filed its complaint against MathWorks and Wind River Systems alleging violation of Section 1 of the Sherman Act. The complaint alleged that MathWorks and Wind River were competitors in the development and sale of dynamic control system design software tools, and that they entered into an agreement that gave MathWorks the exclusive right to sell Wind River's MATRIXx products and required Wind River to stop its own development and marketing. See, DOJ June 21, 2002 release. The DOJ settled with the defendants last year. See, DOJ August 15, 2002 release. See also, notice in the Federal Register regarding the Proposed Final Judgment and Competitive Impact Statement, October 21, 2002, Vol. 67, No. 203, at Pages 64657 - 64666.

2/12. The Department of Justice's (DOJ) Antitrust Division published a notice in the Federal Register of its proposed Final Judgment and Competitive Impact Statement in U.S.A. v. Village Voice Media and NT Media. See, Federal Register, February 12, 2003, Vol. 68, No. 29, at Pages 7132-7147. See also, story titled "DOJ Files Antitrust Complaint Against Newspaper and Web Site Publishers for Allocation of Markets" in TLJ Daily E-Mail Alert No. 592, January 28, 2003.

2/12. Microsoft filed its appeal brief [PDF] with the U.S. Court of Appeals (4thCir) in Sun Microsystems v. Microsoft. Microsoft requests that the Appeals Court vacate the District Court's preliminary injunction that requires Microsoft to include Sun's Java technology in certain of its products.

2/12. The European Commission issued a release regarding a "framework for electronic communications".

2/12. Microsoft published a brief essay titled "Spiking The Spammers". It states that spam, which its defines as "unsolicited commercial e-mail", "can be tamed further, by a combination of advanced filtering technologies, consumer education and the cooperation of industry and government". It argues that "new, strong laws are needed. At a minimum, senders should not be allowed to misrepresent their identity, falsify the subject of a message, or use automated means to gather e-mail addresses without the owners' consent".

3rd Circuit Rules on Retroactivity of Cyber Squatting Act

2/11. The U.S. Court of Appeals (3dCir) issued its opinion [4 pages in PDF] in Schmidheiny v. Weber, a case regarding retroactive application of the Anti-cybersquatting Consumer Protection Act's (ACPA) protection of individuals' names, and the effect of re-registration of a domain name. The Appeals Court held that while the ACPA does not apply retroactively to registrations of domain names prior to the effective date of the statute, it does apply to re-registrations of domain names after the effective date, for which the original registration was before the effective date. See, full story.

USTR Makes Proposals for FTAA

2/11. The office of the U.S. Trade Representative (USTR) announced that it has made an offer in the negotiations for the Free Trade Area of the Americas. The offer includes provisions pertaining to information technology, telecommunications, and e-commerce. See, USTR release and summary of proposal [4 pages in PDF].

USTR Robert Zoellick (at right) stated that "The U.S. is already a very open market. The FTAA will benefit American farmers, workers, consumers and businesses by reducing high tariffs and trade barriers throughout the rest of the Western Hemisphere, while promoting regional economic growth and integration."

The USTR stated in its summary that the proposal includes "Immediate, reciprocal elimination of tariffs offered in key sectors such as ... electrical equipment, ... information technology ..."

The USTR summary also states that "Liberalized services and investment would support development of critical infrastructure in FTAA economies, such as strong banking and financial systems, modern telecommunications and e-commerce networks, and more efficient distribution systems."

It continues that "The U.S. offers are comprehensive in scope and substance. Market access opportunities would be provided across the U.S. services and investment regime unless a specific reservation is taken. The U.S. offers, and will seek from others, broad market access including but not limited to such areas as: Financial services ... Telecommunications services ... Computer and related services ..."

FBI Asks People Not To Hack Iraq

2/11. The Federal Bureau of Investigation's (FBI) National Infrastructure Protection Center (NIPC) issued an advisory regarding patriotic hacking. While NIPC advisories typically warn readers about cyber threats, this advisory also requests readers not to engage in "patriotic hacking" of systems in Iraq, or operated by supporters of Iraq.

The advisory states that "Recent experience has shown that during a time of increased international tension, illegal cyber activity: spamming, web defacements, denial of service attacks, etc., often escalates. This activity can originate within another country, which is party to the tension. It can be state sponsored or encouraged, or come from domestic organizations or individuals independently. Additionally, sympathetic individuals and organizations worldwide tend to conduct hacking activity, which they view as somehow contributing to the cause. As tensions rise, it is prudent to be aware of, and prepare for this type of illegal activity."

The advisory continues that "Attacks may have one of several motivations", including "Political activism targeting Iraq or those sympathetic to Iraq by self described ``patriot´´ hackers" and "Political activism or disruptive attacks targeting United States systems by those opposed to any potential conflict with Iraq".

The advisory warns such persons that "such activity is illegal and punishable as a felony. The U.S. Government does not condone so-called ``patriotic hacking´´ on its behalf. Further, even ``patriotic hackers´´ can be fooled into launching attacks against their own interests by exploiting malicious code that purports to attack the other side when in fact it is designed to attack the interests of the side sending it. In this and other ways ``patriotic hackers´´ risk becoming tools of their enemy."

Greenspan Discusses Role of Flexibility, IT & Innovation in Economy

2/11. Federal Reserve Board (FRB) Chairman Alan Greenspan testified before the Senate Banking Committee on monetary policy. He also presented the FRB's semiannual Monetary Policy Report to the Congress. See, prepared testimony.

He stated that "growth of economic activity slowed markedly late in the summer and in the fourth quarter, continuing the choppy pattern that prevailed over the past year. According to the advance estimate, real GDP expanded at an annual rate of only 3/4 percent last quarter after surging 4 percent in the third quarter."

Greenspan (at right) also addressed the long term. He said that "the most significant lesson to be learned from recent American economic history is arguably the importance of structural flexibility and the resilience to economic shocks that it imparts." He elaborated that the "increased flexibility has been in part the result of the ongoing success in liberalizing global trade, a quarter century of bipartisan deregulation that has significantly reduced rigidities in our markets for energy, transportation, communication, and financial services, and, of course, the dramatic gains in information technology that have markedly enhanced the ability of businesses to address festering economic imbalances before they inflict significant damage. This improved ability has been facilitated further by the increasing willingness of our workers to embrace innovation more generally."

He added that "the benefits appear sufficiently large that we should be placing special emphasis on searching for policies that will engender still greater economic flexibility and dismantling policies that contribute to unnecessary rigidity. The more flexible an economy, the greater its ability to self-correct in response to inevitable, often unanticipated, disturbances, thus reducing the size and consequences of cyclical imbalances. Enhanced flexibility has the advantage of adjustments being automatic and not having to rest on the initiatives of policymakers, which often come too late or are based on highly uncertain forecasts."

Greenspan also mentioned that "Investment in equipment and software is estimated to have risen at a 5 percent rate in real terms in the fourth quarter and a subpar 3 percent over the four quarters of the year."

9th Circuit Affirms in Oracle v. Falotti

2/11. The U.S. Court of Appeals (9thCir) issued its opinion [17 pages in PDF] in Oracle v. Falotti, a dispute regarding whether a former employee is entitled unvested stock options, or stock option damages.

Oracle hired Pier Carlo Falotti in July 1996 to be Senior Vice President for Europe, the Middle East, and Africa. Oracle terminated him on May 31, 2000. Oracle and Falotti signed an agreement in 1996 that provided that Oracle would grant him an option, over time and in specified periodic installments, to purchase an initial 600,000 shares of Oracle common stock. The agreement also provided that Oracle could terminate his employment with or without cause. Oracle terminated Falotti four months before he was scheduled to vest his remaining stock options worth more than $85 Million.

Oracle filed a complaint in U.S. District Court (NDCal) against Falotti in July 2000 seeking a declaratory judgment that Falotti is neither entitled to vest these stock options nor to receive their value as damages. Falotti defended and counterclaimed. The District Court granted summary judgment to Oracle. The Appeals Court affirmed.

9th Circuit Rules in Challenge to AT&T Consumer Services Agreement

2/11. The U.S. Court of Appeals (9thCir) issued its opinion [42 pages in PDF] in Ting v. AT&T, a class action lawsuit challenging provisions of AT&T's Consumer Services Agreement (CSA) as a violation of California law. The District Court rejected a federal Communications Act preemption defense, and enjoined certain provisions of the CSA, including its ban on class actions. The Appeals Court affirmed in part and reversed in part.

AT&T mass mailed a CSA to customers in 2000. Its Section 4 limited AT&T’s liability for claims other than negligence to the amount of charges for service during the affected period and precludes liability for punitive, reliance, special, and consequential damages. Its Section 7(a) mandated binding arbitration and bans all class wide dispute resolution. It also contains a secrecy provision for all arbitration proceedings and requires consumers to bring all claims within a two year limitations period. It also stated that continuing to receive AT&T service constitutes agreement to the terms of the CSA. It was drafted and distributed in a manner that was designed to minimize the number of customers that would read or understand it.

Darcy Ting, an AT&T customer, on behalf of other similarly situated class members, and Consumer Action, filed a complaint in U.S. District Court (NDCal) against AT&T alleging that certain provisions of AT&T's CSA violate California's Consumer Legal Remedies Act (CLRA) and Unfair Practices Act. AT&T denied these allegations, and further asserted that California law is preempted by the Communications Act and the filed rate doctrine, and the Federal Arbitration Act (FAA). The District Court held that certain provisions of the CSA are unconscionable, and in violation of California law, and enjoined their enforcement. It rejected the Communications Act preemption claim.

The Appeals Court also rejected the Communications Act preemption argument, following a lengthy discussion. It also affirmed the District Court's holding on some points, but reversed on others. For example, it affirmed the holding that the legal remedies provisions of the CSA are unenforceable as unconscionable. It also concluded that the "FAA preempts the CLRA's antiwaiver provision. We therefore reverse the district court's conclusion that the CLRA renders void the CSA's class action ban and two-year limitations period. Because the district court did not find the two-year limitations period unconscionable, this aspect of the CSA is revived. The other provisions remain unenforceable as originally drafted."

Grand Jury Returns DMCA Indictments

2/11. The U.S. Attorneys Office (USAO) for the Central District of California issued a release regarding the prosecution of seventeen persons involved in theft of satellite television signals from DirecTV and EchoStar. The release discloses, among other things, the unsealing of four indictments that a grand jury of the U.S. District Court (CDCal) returned in January against six persons alleging violation of the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA) in connection with this theft.

The release states that satellite broadcasters use encryption and conditional access technology on a smart card to restrict access, and that defendants are software developers and hardware developers involved in making equipment that allows theft of programming from satellite broadcast signals.

The release states that a total of seventeen persons have been charged with violations of 17 U.S.C. § 1204, 18 U.S.C. § 371, and/or 47 U.S.C. § 605. Six of these have been charged with violation of Section 1204 (DMCA). Some defendants have already plead guilty.

17 U.S.C. § 1204 contains the criminal prohibition of violation of 17 U.S.C. § 1201, which, in turn prohibits the circumvention of technological measures that effectively controls access to a work protection under Title 17 (which includes the Copyright Act), and trafficking in circumvention devices. 18 U.S.C. § 371 is the criminal conspiracy provision in the Criminal Code. 47 U.S.C. § 605 is the criminal prohibition in the Communications Act of making or trafficking in devices that are "of assistance in the unauthorized decryption of satellite cable programming, or direct-to-home satellite services".

This is the second set of criminal prosecutions under the DMCA. The first was the Skylarov case in the U.S. District Court (NDCal).

The USAO release names the six persons charges with criminal violation of the DMCA. It states that Jason Hughes "has agreed to plead guilty to violating the DMCA for developing and distributing software designed to circumvent smart cards for DirecTV." Edward Vanderziel "was indicted on charges of conspiracy, manufacturing signal theft devices and violating the DMCA." Michael Whitehead "was indicted for conspiracy, manufacturing satellite signal theft devices and violating the DMCA for his nationwide distribution of devices to circumvent the conditional access technologies in smart cards." Peter DeForest was "indicted on charges of manufacturing satellite signal theft devices and charges under the DMCA for manufacturing ``unloopers´´ used to circumvent the smart card technology." Linh Ly "agreed to plead guilty to violating the DMCA and distributing decryption hardware". Finally, the USAO release states that Richard Seamans "who was indicted on charges of violating the DMCA and distributing decryption devices".

People and Appointments

2/11. The Senate continues its consideration of Miquel Estrada. President Bush stated in a release that "Last week, the Senate began floor consideration of the nomination of Miguel Estrada to the D.C. Circuit Court of Appeals. Mr. Estrada's nomination was first submitted to the Senate in May 2001 -- almost two years ago. Miguel Estrada is a well-qualified and well-respected nominee who enjoys the bipartisan support of a majority of Senators. Fairness demands that he receive an up-or-down vote on the Senate floor. I urge the Senate to act quickly and allow for an up-or-down vote on this worthy candidate." President Bush also stated at a White House event that "He has the votes necessary to be confirmed. Yet a handful of Democrats in the Senate are playing politics with his nomination. And it's shameful politics." See, transcript.

More News

2/11. The Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) announced in a release that eligibility for .edu domain names will be expanded to include more postsecondary institutions than are currently eligible. Eligibility will be expanded from postsecondary degree granting institutions accredited by one of the six U.S. regional accrediting agencies, to also include institutions accredited by agencies on the Department of Education's list of nationally recognized accrediting agencies. See also, Educause release.

2/11. February 11 was National Inventors Day. The Senate passed a resolution, SRes 49, on February 10, recognizing that "the American people and the world have benefited from the creations and discoveries of America's inventors; and ... the patents that protect those creations and discoveries spur technological progress, improve the quality of life, stimulate the economy, and create jobs for Americans". Sen. Patrick Leahy (D-VT), the ranking Democrat on the Senate Judiciary Committee, which has jurisdiction over intellectual property matters, stated in the Senate that "Today's inventors are individuals in a shop, garage or home lab. They are teams of scientists working in our largest corporations or at our colleges and universities. In the spirit of independent inventors, small businesses, venture capitalists and larger corporations in Vermont and all over the United States, I would like to recognize February 11, 2003, as ``National Inventors' Day.´´'' See, Cong. Record, Feb. 10, 2003, at S2124.

2/11. Rep. Richard Baker (R-LA) and Rep. Mike Oxley (R-OH) introduced HR 658 [2 pages in PDF], the Accountant, Compliance and Enforcement Staffing Act, a bill to enable the Securities and Exchange Commission (SEC) to more easily hire certain professionals. Specifically, it provides that "All accountant, economist, and securities compliance examiner positions in the Securities and Exchange Commission shall be excepted from the competitive service, as defined in section 2102 of title 5, United States Code. An employee who is in the competitive service at the time his or her position becomes excepted from the competitive service under this paragraph shall be considered as continuing in the competitive service as long as he or she continues to occupy such position."

2/11. Herschel Abbott, BellSouth's VP for governmental affairs, commented on the Federal Communications Commission's (FCC) one week delay in announcing its Report and Order in its Triennial Review of the unbundling requirements of incumbent local exchange carriers (ILEC) and other matters. He said, in part, that "The practical effect of the delay is small, it allows us a few more days to make our case and we will take that opportunity. The postponement really tells us that there is no three-vote majority for any proposal." The FCC is now scheduled to make its announcement on February 20.

Go to News from February 6-10, 2003.