News from March 16-20, 2004

Study Suggests Public Subsidies of Research Parks are Ineffective

3/19. The AEI-Brookings Joint Center for Regulatory Studies released a paper [20 pages in PDF] titled "Do Science Parks Generate Regional Economic Growth? An Empirical Analysis of Their Effects on Job Growth and Venture Capital". This paper, which was written by Scott Wallsten, finds that "there is little empirical evidence on the effectiveness of public policies intended to start these clusters from scratch."

Wallsten wrote that "First, I match counties with research parks to ``similar´´ counties without parks and compare them over time ... Second, I test econometrically the effect of establishing science parks. I find no evidence that research parks had any measurable economic impact, suggesting that public subsidies to these ventures were not wise investments."

Using multivariate statistical analysis and county level data, Wallsten found that establishing a research park tends to have no net impact on job growth, the number of firms, or the amount of venture capital attracted to the county. In of some of his regression models, the estimated coefficient for the dichotomous independent variable for whether or not there is research park is actually negative, although not statistically significant at conventional levels.

Sen. Lieberman Propounds Interrogatories to DHS on Cyber Security

3/19. Sen. Joe Lieberman (D-CT), wrote a letter and interrogatories [22 pages in PDF] to Tom Ridge, the Secretary of Homeland Security, regarding cyber security.

Sen. Lieberman, who is the ranking Democrat on the Senate Governmental Affairs Committee, wrote that "far too little progress has been made in securing the information systems on which the nation’s critical infrastructures depend".

"Terrorists, international criminal groups, and intelligence services, as well as hackers and disgruntled insiders, are quickly developing the ability to use, and are using, cyber tools to steal data or cause damage to government and business systems", wrote Lieberman.

He noted that "The Administration issued a National Strategy to Secure Cyberspace in February 2003," but added that it "has accomplished little since then". See, National Strategy to Secure Cyberspace, and story titled "Bush Administration Releases Final Cyber Security Plan" in TLJ Daily E-Mail Alert No. 605, February 17, 2003.

Sen. Joe LiebermanSen. Lieberman (at right) also asserted that "under pressure from business interests, the Administration substantially weakened the Strategy while readying it for the President's signature, stripping any hint that the federal government might require or even exert pressure on non-federal entities to make the parts of cyber infrastructure for which they are responsible more secure."

He continued that "Having issued this vague and weak plan, the Administration did little in the area of cybersecurity for over half a year. Richard Clarke, President Bush’s special advisor for cybersecurity, resigned two weeks before the Strategy was issued, and his successor, Howard Schmidt, resigned two months later after unsuccessfully attempting to persuade the Department to create a high-ranking cybersecurity position. It was not until mid-September that a cybersecurity chief was brought into the Administration, when Amit Yoran was appointed to head the Department’s new National Cyber Security Division. While he brings valuable computer-security experience to the job, the Administration's lassitude and lack of leadership have left him the unenviable job of playing a difficult game of catch-up."

Then after six pages of criticizing the Bush administration's cyber security efforts, Sen. Lieberman concludes with the statement, "I am therefore requesting that you provide a full account of the Administration's efforts to protect our nation's critical computer-dependent infrastructure and to evaluate its vulnerabilities. In doing so, please include answers to the following specific questions:"

He then proceeds to propound 16 pages of interrogatories, single spaced, with subquestions.

For example, he asks "Please provide a timetable, including final deadlines, for taking steps to secure the mechanisms of the Internet, including each of the relevant tasks as set forth in the Cyberspace Strategy. Please include a description of processes by which DHS will identify, and will establish timetables for addressing, emerging threats to, and vulnerabilities of, the Internet."

See also, Lieberman release.

People and Appointments

3/19. Barry Allen was named EVP of operations at Qwest Communications. He will be responsible for network and information technology operations. He was previously Qwest's chief human resources officer. Jill Sanford was named to fill his previous post. See, Qwest release.

More News

3/19. The U.S. Court of Appeals (5thCir) issued its opinion [16 pages in PDF] in US Cellular v. City of Wichita Falls, a case regarding the location of a cell tower. The City denied US Cellular's application to build a cell tower. US Cellular filed a complaint in U.S. District Court against the City alleging that it did not satisfy the substantial evidence requirement of 47 U.S.C.A. § 332(c)(7)(B)(iii). The District Court granted summary judgment to the City. The Court of Appeals affirmed. This case is United States Cellular Corporation v. City of Wichita Falls, Texas and Wichita Falls City Council, No. 03-10491, an appeal from the U.S. District Court for the Northern District of Texas.

3/19. The U.S. Court of Appeals (6thCir) issued its opinion in Murray Hill Publications v. Twentieth Century Fox, a copyright infringement case involving movie screenplays. The legal issue on appeal was the analysis of substantial similarity of copyrighted works. The Appeals Court reversed the District Court's judgment for Murray Hill. This case is Murray Hill Publications, Inc. v. Twentieth Century Fox Film Corporation, U.S. Court of Appeals for the 6th Circuit, Nos. 01-2668 and 01-2721, appeals from the U.S. District Court for the Eastern District of Michigan, at Ann Arbor, D.C. No. 97-60405, Judge Marianne Battani presiding.

3/19. The Internet Corporation for Assigned Names and Numbers (ICANN) announced that it has received ten applications for new sponsored top level domains (sTLD's). See, list of applicants.

3/19. The World Intellectual Property Organization's (WIPO) Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (IGC) issued a release on IP protection in traditional knowledge and folklore.

EU and Microsoft Fail to Reach Settlement

3/18. The European Union (EU) and Microsoft announced that they have failed to reach a settlement. The EU did not identify what action it may take against Microsoft.

Mario Monti, the EC Commissioner for Competition, wrote in a statement released on March 18, that "a settlement on the Microsoft case has not been possible."

"I therefore intend to propose to my colleagues in the Commission next Wednesday to adopt a decision, which has already received the unanimous backing of Member States", wrote Monti.

Mario MontiMonti (at right) praised the cooperation and professionalism of Microsoft's negotiators, and stated that "We made substantial progress towards resolving the problems which have arisen in the past but we were unable to agree on commitments for future conduct."

"In the end, I had do decide what was best for competition and consumers in Europe. I believe they will be better served with a decision that creates a strong precedent." He concluded that "It is essential to have a precedent which will establish clear principles for the future conduct of a company with such a strong dominant position in the market."

The U.S. Department of Justice's (DOJ) Antitrust Division stated in a release that "It is premature to speculate on the contents or substance of whatever decision, remedies, or penalties the EU may eventually decide to impose."

The DOJ added that the US and EU "enjoy a strong working relationship on matters relating to competition policy and have a shared interest in avoiding divergent enforcement approaches. Our cooperation with the European commission on antitrust issues will continue under the provisions of our 1991 agreement on antitrust cooperation and we will use these channels to address issues as they arise."

The DOJ added that it "will continue the work of enforcing the consent decree entered in its case against Microsoft, which in the Government's view provides the appropriate framework for marketplace competition in this important sector."

Steve Ballmer, CEO of Microsoft, stated in a release that "I believe negotiations between Microsoft and the European Commission broke down because we were unable to agree on a set of consumer driven principles on issues that might arise in the future."

Brad Smith, SVP and General Counsel of Microsoft, stated in another release that "We have to ensure that the law is not just about competitors' complaints about the impact of new features. There needs to be consideration of the needs of consumers for new innovations. Consumers must be part of the equation. Perhaps the courts will provide the clarity that is necessary to resolve these issues ... Today is just another step in what could be a long process."

Ed Black, P/CEO of the Computer & Communications Industry Association (CCIA), an interest group that complains to antitrust enforcement authorities regarding Microsoft, stated in a release that "the decision we can expect from the Commission next week will be a watershed in efforts by competition regulators to reign in the long-standing anti-competitive behavior of Microsoft. It will be a first step to restoring consumer choice and innovation in multiple markets subject to the stranglehold of a monopolist."

US Complains to WTO About PR China's Tax Preference for Domestic Producers of Integrated Circuits

3/18. The U.S. filed a complaint with the World Trade Organization (WTO) against the People's Republic of China stating that the PRC's preferential tax treatment of integrated circuits produced in the PRC is discriminatory, and a violation of the PRC's WTO obligations. See, full story.

More People Write DOJ and FCC Regarding Whether to Seek Cert in TRO Case

3/18. Legislators, state officials, and interest groups continue to write the Department of Justice (DOJ) and Federal Communications Commission (FCC) expressing their views regarding whether or not the DOJ and FCC should file a petition for writ of certiorari with the U.S. Supreme Court seeking review of the Appeals Court opinion overturning parts of the FCC's triennial review order [576 pages in PDF].

On March 2, 2004 the U.S. Court of Appeals (DCCir) issued its opinion [62 pages in PDF] in USTA v. FCC overturning key parts of the FCC's triennial review order (TRO). The opinion leaves largely untouched those portions of the TRO in which the FCC refrained from unbundling next generation broadband facilities. The opinion vacates those portions of the TRO in which the FCC delegated decision making authority to the states to make impairment findings. See, story titled "Appeals Court Overturns Key Provisions of FCC Triennial Review Order", also published in TLJ Daily E-Mail Alert No. 848, March 3, 2004.

On March 17, leaders of the House Commerce Committee wrote a letter to Attorney General John Ashcroft and the Commissioners of the FCC to "strongly urge the Department of Justice not to seek a rehearing or appeal of the D.C. Circuit's sound decision" in USTA v. FCC.

The letter was signed by Rep. Joe Barton (R-TX), the Chairman of the Committee, Rep. John Dingell (D-MI), the ranking Democrat on the Committee, Rep. Fred Upton (R-MI), the Chairman of the Subcommittee on Telecommunications and the Internet, and Rep. Rick Boucher (D-VA), a senior Democrat on the Subcommittee. (Rep. Ed Markey (D-MA), the ranking Democrat on the Subcommittee, did not sign the letter.)

Rep. Joe BartonRep. Barton (at left) and the others wrote that "The Commission's TRO, released in August 2003, was the third and most recent of the Commission’s efforts to implement the unbundling requirement of Section 251 of the Communications Act of 1934, which was added to statute as part of the Telecommunications Act of 1996. The U.S. Supreme Court (once) and the D.C. Circuit (twice) have invalidated Commission rules implementing Section 251 on three successive occasions. It is time for the Commission to recognize that, in a government based upon the rule of law, it cannot adopt regulations that are inconsistent with the statutes enacted by Congress. Further appeals will not affect the outcome when the regulations adopted by the Commission are so completely at odds with the statutory language cited by the courts." (Parentheses in original.)

Charles DavidsonOn March 18, a group state public utilities commission (PUC) members wrote a letter to Ted Olson, the Solicitor General, suggesting that filing a petition for writ of certiorari "would not best serve the nation's consumers". The signers include Florida's Charles Davidson (at right), and some of the other more market oriented PUC commissioners.

They wrote that "Regardless of the ultimate decision rendered, an appeal to the Supreme Court would result in a continued delay of the specific guidance necessary to restore some sense of certainty to the ailing telecommunications sector. It has been eight years since the Telecommunications Act of 1996 was passed, and the D.C. Circuit has, on more than one occasion, sent strong signals regarding the FCC’s responsibilities with respect to the unbundling provisions. Further delay will only serve to keep the industry in a prolonged state of uncertainty and flux."

The signers include members of the PUCs of the states of Florida, Colorado, Connecticut, Missouri, Maryland, North Dakota, District of Columbia. The majority of the PUC commissioners support the FCC's attempt to delegate decision making authority to the states to make impairment findings. Hence, this letter states that "it is frequently represented that the state regulators speak with unanimity on this issue. They do not."

On March 8, the National Association of Regulatory Utility Commissioners (NARUC) wrote a letter [PDF] urging appeal.

Also, the Consumer Federation of America, the Consumers Union, and other interest groups, wrote a letter to FCC Chairman Michael Powell on March 17 urging the FCC "to appeal the court's decision to the Supreme Court".

Also, on March 15, Sen. Ernest Hollings (D-SC) and other Senators on the Senate Commerce Committee, wrote a letter [PDF] to Attorney General John Ashcroft urging him to appeal. See, story titled "Four Senators Urge AG Ashcroft to Appeal in Unbundling Case" in TLJ Daily E-Mail Alert No. 857, March 17, 2004.

Jon Dudas Testifies Before House Appropriations Subcommittee on USPTO Budget

3/18. The House Appropriations Committee's Subcommittee on Commerce, Justice, and State, the Judiciary, and Related Agencies held a hearing on the proposed budget for the U.S. Patent and Trademark Office (USPTO).

Acting Director of the USPTO Jon Dudas wrote in his prepared testimony that "due to the record growth that began in the 1990s and continues today, the USPTO is facing a record workload crisis. The rate of growth of patent applications has slowed, but we continue to get record numbers of applications every year. Unless bold new actions are taken, progress on our quality enhancement and electronic government initiatives will be in jeopardy, the backlog of unexamined patent applications will skyrocket, and average patent pendency will dramatically increase."

But, said Dudas, HR 1561, the "United States Patent and Trademark Fee Modernization Act of 2003", "offers us a way out of this dilemma."

On March 3, 2004, the House amended and approved HR 1561. See, story titled "House Passes USPTO Fee Bill", in TLJ Daily E-Mail Alert No. 849, March 4, 2004. The companion bill in the Senate is S 1760, also titled the "United States Patent and Trademark Fee Modernization Act of 2003". No action has been taken on the Senate bill.

Rep. Dreier Addresses Innovation, Offshoring and Isolationism

3/18. Rep. David Dreier (R-CA) spoke in the House regarding "offshoring". He stated that "We can try to isolate ourselves from the rest of the world or we can continue, as has been the case throughout recent history, to innovate and create better and better jobs for Americans right here in the United States." See, Congressional Record, March 18, 2004, at Page H1279.

Rep. David DreierRep. Dreier (at right) is a leading free trader and technophile in the House. He is also the Chairman of the House Rules Committee.

"After decades of American global economic leadership successfully competing in the worldwide marketplace and producing cutting-edge technologies and business practices, the economic isolationism option is clearly no option at all because of the success that we have enjoyed", said Rep. Dreier. "That leaves us with only one choice, Mr. Speaker, and that is to allow Americans to continue to innovate, grow, and create better jobs right here. In fact, innovation has always been the key to our global economic leadership."

He elaborated on the extent of research and development in the U.S., and the resulting discoveries, patenting, and licensing. He further addressed the role of venture capital in the process of innovation in the U.S.

He elaborated that venture capital "gives individuals the freedom to develop new ideas and concepts and encourages creativity and risk-taking. It has unparalleled financial markets and a venture capital system that are constantly helping Americans turn their dreams into reality. It has given American companies and individuals the power to invest, grow and create new jobs in cutting-edge fields, and it is our best answer to those who see offshoring as a reason to retreat behind the walls of economic isolationism."

He concluded that "We should not be trying to isolate ourselves from the worldwide market which would actually stifle our innovative environment and cede our position as the global leader. Instead, we should continue to allow our spirit of innovation and entrepreneurship to empower Americans as we lead the world and create better and better jobs right here in the United States."

People and Appointments

3/18. Heidi Tringe was named Assistant to the Director for Legislative Affairs at the White House Office of Science and Technology Policy (OSTP), effective Monday, March 22. She will work for John Marburger [PDF]. She has been Communications Director for the House Science Committee. Her new contact information will be and 202 456-6124. Until the Science Committee names a new Communications Director, contact Joe Pouliot, Deputy Communications Director, at and 202 225-6371.

More News

3/18. The Federal Communications Commission (FCC) published a notice in the Federal Register that summarizes, and sets comments deadlines for, its notice of proposed rulemaking regarding whether certain rules should be repealed or modified because they are no longer necessary in the public interest. Comments are due by April 19, 2004. Reply comments are due by May 3, 2004. The FCC released this NPRM on January 12, 2004. This item is FCC 03-337 in WC Docket No. 02-313. See, Federal Register, March 18, 2004, Vol. 69, No. 53, at Pages 12814-12826.

3/18. Federal Communications Commission (FCC) Commissioner Jonathan Adelstein gave a speech at the FCC's event titled "Solutions Summit: 911/E911 Issues Associated with Internet-based Communications Services". He stated that "When dealing with new technologies like VoIP, we cannot let public safety concerns slip."

3/18. The Federal Communications Commission (FCC) filed its brief [47 pages in PDF] with the U.S. Court of Appeals (3rdCir) in SBC v. FCC, a petition for review of an order of the FCC pertaining to authorizing a competitive carrier to be paid the incumbent local exchange carrier (ILEC) tandem interconnection rate as reciprocal compensation for terminating traffic on its network when the competitive carrier's switch serves a geographic area comparable to the area served by the ILEC's tandem switch. This case is SBC Communications, Inc. v. FCC and USA, App. Ct. No. 03-4311.

House Subcommittee Holds Hearing on Process of Preparing for WRCs

3/17. The House Government Reform Committee's Subcommittee on National Security, Emerging Threats and International Relations held a hearing titled "U.S. Preparation for the World Radio Conferences: Too Little, Too Late?"

Rep. Christopher Shays (R-CT), the Chairman of the Subcommittee, wrote in a prepared statement [PDF] that the "WRC 2003 also confirmed some longstanding institutional weaknesses in U.S. spectrum policy management. The United States has no overarching spectrum strategy to guide near and long-term policy on use of this precious, finite resource. Separate responsibility for commercial spectrum allocation decisions at the Federal Communications Commission and federal spectrum policies at the National Telecommunications and Information Administration make conflicts between public and private users almost inevitable, and more difficult to resolve. No head of the U.S. delegation is appointed more than six month before the next WRC convenes, long after other nations have been conducting important discussions at that level."

John Bryant, the Ambassador to 1997 WRC, wrote in his prepared testimony [4 pages in PDF] that "I also strongly believe our critical national interests are placed at risk by a process that begins late in the WRC treaty-writing cycle, lacks year-around management for long-term objectives, and is underfunded."

He offered several recommendations for changes in the process. First, "The responsibility for the WRC and the rank of ambassador should be given to a presidential appointee or career foreign service professional who works year-around in the International Telecommunications Union process."

Second, "If the WRC Ambassador is to continue to be a political appointee, that person should be appointed to full-time duty no less than two years before the next scheduled WRC." Currently, the Ambassador is appointed six months in advance.

And third, "Funding for the WRC process should match its critical importance to our economy and national security. It must include an office and staff for the WRC Ambassador and an adequate travel budget."

Similarly, Gail Schoettler, the Ambassador to the 2000 WRC, wrote in her prepared testimony [2 pages in PDF] that the WRC Ambassador be appointed earlier, and receive more office space and staff. And, Janice Obuchowski, Ambassador to the 2003 WRC, praised her work in her prepared testimony [PDF].

David Gross, the Deputy Assistant Secretary of State for International Communications and Information Policy, wrote in his prepared testimony [15 pages PDF] that the Department of State has the "ultimate responsibility for establishing U.S. foreign policy with respect to international telecommunications".

David GrossGross (at right) asserted that "the United States has been remarkably successful at WRCs", and "the U.S. has never lost an important objective through its participation in ITU WRCs".

He also reviewed the process for preparing for the WRCs, the appointment of an Ambassador in charge of the WRC delegation, and the structure of the WRC delegation.

Kathleen Abernathy, a Commissioner of the Federal Communications Commission (FCC), wrote in her prepared testimony [10 pages in PDF] that "The FCC has worked on reforming its prepatory process for the WRC and its participation on the U.S. delegation to the WRC over the past few years in an effort to improve the effectiveness of the United States at each WRC."

Abernathy also stated that "former Assistant Secretary of Commerce Nancy Victory is chairing the WAC preparing for WRC 2007" -- that is, the FCC's Advisory Committee for the 2007 World Radiocommunication Conference.

Victory was previously the Assistant Secretary of Commerce for Communications and Information, and Administrator of the National Telecommunications and Information Administration (NTIA). She resigned from that position in August of 2003 following a finding by the Office of the Inspector General (OIG) of the Department of Commerce (DOC) that she had violated rules governing the ethical standards for federal government employees. See, OIG Memorandum dated June 25, 2003, and story titled "Powell Appoints Nancy Victory to WRC-07 Post, October 17, 2003.

Michael Gallagher, the acting Administrator of the NTIA, wrote in his prepared testimony [PDF] that "The United States has historically been very successful in achieving its objectives at the WRCs as a result of good preparation, the leadership of the heads of the United States delegations, and efforts of the United States delegation." But, he added, "there is always room for improvement."

Jeffrey Shane of the Department of Transportation praised the work of prior WRC delegations in his prepared testimony [8 pages in PDF].

See also, prepared testimony [PDF] of William Readdy of the National Aeronautic and Space Administration (NASA).

The Center for Strategic and International Studies (CSIS) released a report [11 pages in PDF] in October of 2003 titled "Spectrum Management for the 21st Century" in which it argued for several changes in the process of preparing for the WRCs. For example, it recommended that the Ambassador in change of the delegation be appointed at least one year before each WRC, that this position and that of Deputy Assistant Secretary of State for International Communications and Information Policy be merged, and that the preparation of spectrum negotiations be placed under White House purview.

House Subcommittee Holds Hearing on CAPPS II

3/17. The House Transportation Committee's Subcommittee on Aviation held a hearing the Computer Assisted Passenger Prescreening System (CAPPS II), the next generation airline passenger screening system being developed by the Department of Homeland Security's (DHS) Transportation Security Administration (TSA)

See, prepared testimony of witnesses in PDF: Admiral David Stone (TSA), Norman Rabkin (General Accounting Office), James May (Air Transport Association), Kevin Mitchell (Business Travel Coalition), Paul Rosenzweig (Heritage Foundation), and David Sobel (Electronic Privacy Information Center). See also, Committee memorandum summarizing purpose of hearing.

On November 5, the Senate Commerce Committee held a hearing on aviation security, including CAPPS II. See, story titled "Senate Commerce Committee Holds Hearing on Aviation Security & CAPPS II" in TLJ Daily E-Mail Alert No. 773, November 6, 2003.

See also, story titled "GAO Report Finds CAPPS II Fails to Meet Congressional Criteria", in TLJ Daily E-Mail Alert No. 836, February 13, 2004; "Europeans Agree to Transfer of Airline Passenger Data to DHS" in TLJ Daily E-Mail Alert No. 801, December 17, 2003; and "Homeland Security Appropriations Bill Purports to Restrict Use of Funds for CAPPS II" in TLJ Daily E-Mail Alert No. 751, October 2, 2003.

Representatives Introduce Resolution Condemning Judicial Reliance Upon Foreign Precedent

3/17. Rep. Bob Goodlatte (R-VA), Rep. Tom Feeney (R-FL), and others, introduced HRes 568, a resolution expressing the sense of the House that federal courts should not rely on the interpretations or laws of foreign countries when interpreting U.S. laws.

This resolution provides, "That it is the sense of the House of Representatives that judicial determinations regarding the meaning of the laws of the United States should not be based in whole or in part on judgments, laws, or pronouncements of foreign institutions unless such foreign judgments, laws, or pronouncements are incorporated into the legislative history of laws passed by the elected legislative branches of the United States or otherwise inform an understanding of the original meaning of the laws of the United States."

Rep. Goodlatte stated in a release that "Recently there has been a deeply disturbing trend in American jurisprudence. The Supreme Court, the highest court in the land, has begun to look abroad, to international law instead of our own Constitution as the basis for its decisions. In fact six of the Court's nine justices have either written or joined opinions that cite foreign authorities. This is an affront to both our national sovereignty and the broader democratic underpinnings of our system of government."

Rep. Feeney stated in a release that "The American people have not consented to being ruled by foreign powers or tribunals, and their elected representatives have an obligation to ensure that America’s courts do not impose this rule upon them".

This resolution, has 60 original sponsors, all of whom are Republicans. It was referred to the House Judiciary Committee. Both Rep. Goodlatte and Rep. Feeney are members. Rep. James Sensenbrenner (R-WI), the Chairman of the Committee, and Rep. Lamar Smith (R-TX), the Chairman of the Subcommittee on Courts, the Internet and Intellectual Property, are also sponsors.

See, Rep. Feeney's release, and Rep. Smith's release.

California Court Finds Jurisdiction Over Out of State Telemarketers

3/17. The California Court of Appeal (4/1) issued its opinion [PDF] in West v. Superior Court of San Diego, a case regarding the exercise of personal jurisdiction over an out of state defendant. The Court held that a nationwide telemarketing company that has no offices or employees in California may nevertheless be sued in the courts of the state.

West Corporation, and its wholly owned subsidiary, West Telemarketing Corporation (WTC), are telemarketers based in the state of Nebraska and incorporated in the state of Delaware. WTC is an inbound teleservices bureau that answers telephone calls for 800 numbers and collects orders for various products and services on behalf of its clients. It also uses the 800 calls to upsell, or promote, other products. Neither West nor WTC have any offices, call centers or employees in the state California.

Patricia Sanford is a resident of the California. She telephoned to order a fitness tape for which she provided credit card information. The call center that she reach was located in the state of Virginia. However, WTC ultimately also placed unauthorized charges on her credit card account. WTC did not mail a bill to Sanford in California.

Sanford filed a complaint in the San Diego Superior Court (a state trial court) against West alleging various causes of action under California law, including violation of a consumers legal remedies act; unlawful, fraudulent and unfair business practices; untrue and/or misleading advertising; conversion; unjust enrichment; fraud and deceit; and negligent misrepresentation. She sought class action status. She is represented by the law firm of Milberg Weiss, a firm that brings numerous class action lawsuits against corporations.

West moved to quash the service of summons, arguing that it did not have sufficient contacts with California to support the exercise of personal jurisdiction. The Superior Court disagreed. It denied the motion. West then brought the present petition for writ of mandate directing the Superior Court to grant its motion to quash for lack of jurisdiction.

The Court of Appeals affirmed. WTC had contacts with California such that it would not offend traditional notions of fair play and substantial justice to subject it to suit in California.

The Court of Appeal wrote that "Companies, such as West and WTC that deliberately engage in nationwide or multi-state commercial activities, whether by phone, via the Internet, by mail, or by sending agents into forum states should reasonably expect to be subject to suit in the states where they solicit business."

It also wrote that "It is not unreasonable to hold telemarketers who engage in nationwide marketing subject to the potential of being sued in every state in the union, regardless of whether the telemarketer initiates the telephone call or engages in an upsell during a call initiated by a consumer."

This case is West Corporation v. Superior Court of San Diego, Fourth Appellate District, Division One, App. Ct. No. D042633, a petition for writ of mandate to the San Diego County Superior Court, in Sup. Ct. No. GIC805541.

Judge Posner Writes Opinion on Attorneys Fees in Copyright Case

3/17. The U.S. Court of Appeals (7thCir) issued another opinion [PDF] in Assessment Technologies v. Wiredata, a copyright case. The Court of Appeals issued an opinion [13 pages in PDF] on November 25, 2003 in which it addressed the substantive issues of copyright law. In its earlier opinion it reversed the District Court's judgment for the plaintiff, and remanded. The present opinion determines the award of attorneys fees. The Appeals Court awarded $91,765.28 to the defendant, as the prevailing party.

Judge Richard Posner wrote both opinions. He could have disposed of this question in a brief and/or unpublished opinion. But, this is a copyright case; and Judge Posner has taken a keen interest in copyright law in recent years. He also just co-authored a book on the subject -- The Economic Structure of Intellectual Property Law.

In his previous opinion he held that extracting the data from an electronic database incorporated within a copyrighted program does not constitute copyright infringement. See, story titled "7th Circuit Rules in Copyright and Database Protection Case", also published in TLJ Daily E-Mail Alert No. 788, November 28, 2003.

Judge Posner also used his November 25 opinion to discuss, in dicta, the doctrine of copyright misuse. See, story titled "Posner Addresses Copyright Misuse" in TLJ Daily E-Mail Alert No. 788, November 28, 2003. The present opinion also incorporates a discussion of copyright misuse. Posner raises the issue of misuse in the context of assessing "the strength of the prevailing party's case", which is one determinant of whether to award attorneys fees in copyright cases.

17 U.S.C. § 505 provides that "In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney's fee to the prevailing party as part of the costs".

Judge Posner noted that in copyright litigation there is no presumption in favor of plaintiffs or defendants when it comes to awarding attorneys fees. He wrote that "The courts have not said, however, that the symmetry of plaintiff and defendant in copyright cases requires a presumption that the prevailing party, whichever it is, is entitled to an award of attorneys' fees. They have instead left it to judicial discretion by setting forth a laundry list of factors, all relevant but none determinative."

"They have instead left it to judicial discretion by setting forth a laundry list of factors, all relevant but none determinative." Posner added, "The two most important considerations in determining whether to award attorneys' fees in a copyright case are the strength of the prevailing party’s case and the amount of damages or other relief the party obtained."

Judge Posner wrote that "The plaintiff was rather transparently seeking to annex a portion of the intellectual public domain." He continues that "We suggested in our opinion that ``for a copyright owner to use an infringement suit to obtain property protection, here in data, that copyright law clearly does not confer, hoping to force a settlement or even achieve an outright victory over an opponent that may lack the resources or the legal sophistication to resist effectively," could be a form of copyright misuse.´´"

Then, he concludes, "We did not reach the question whether the plaintiff’s conduct rose to the level of actual copyright misuse, but we made clear that it came close, and an award of attorneys' fees to the defendant is an appropriate sanction."

So, perhaps, while Judge Posner has not yet defined copyright misuse, and he did not hold that the plaintiff committed copyright misuse, he nevertheless held, under the "came close" doctrine, that a non-finding of copyright misuse by a plaintiff can serve as a basis for an award of attorneys fees to the defendant.

PFF Paper Criticizes Open Source and Free Culture Movements

3/17. The Progress and Freedom Foundation (PFF) released a paper [61 pages in PDF] titled "The Enigma of Open Source Software", by James DeLong of the PFF.

DeLong examines the open source model of software development as an alternative to proprietary and shared source models. He concludes that "For governments to embrace open source as the model would be a serious error. The only rational policy for governments is to let the models compete on a level playing field. If open source is superior it needs no preference; if it is not; it deserves none."

He also states that "The Free Culture Movement, which is based primarily in academia, regards the production of open source software as a pilot program for non-property-based, non-market production of these other forms of intellectual creativity", such as books, movies, music, games, and drugs.

But, he argues that "Current open source software is the product of so many idiosyncratic forces that the system producing it is an improbable model for anything, perhaps even including the future production of software."

On March 25 at 12:00 NOON the PFF will host a debate between Delong and Stanford Law School Professor Lawrence Lessig. Lessig will release a book on March 25 titled Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity [Amazon order page].

The PFF notice of the debate states that "Those interested in attending should register by contacting Brooke Emmerick at 202-289-8928 or Members of the media should contact David Fish at 202 289-8928 or" It will be held in the First Amendment Lounge, National Press Club, 529 14th St. NW, 13th Floor, in Washington DC.

Cato Paper Criticizes Hysteria and Demagoguery on IT Outsourcing

3/17. The Cato Institute released a paper [16 pages in PDF] titled "Job Losses and Trade: A Reality Check", written by the Cato's Brink Lindsey.

Lindsey seeks "to shun hysteria and demagoguery in assessing what is going on with the labor market and why. The employment picture today is that of a temporary, cyclical shortage of jobs caused by the recent downturn; there is no permanent shortage of good jobs on the horizon."

He argues that "Calls for new trade restrictions to preserve current jobs are misguided. There is no significant difference between jobs lost because of trade and those lost because of new technologies or work processes. All of those job losses are a painful but necessary part of the larger process of innovation and productivity increases that is the source of new wealth and rising living standards."

"Advances in information and communications technologies now make it possible for many jobs ... to be performed anywhere, with the work then transmitted electronically wherever it is needed." He adds that "In particular, the offshoring of information technology (IT) jobs to India and other low-wage countries has received a flurry of recent attention."

He concedes that "Employment in IT-related occupations has experienced a significant decline recently", but adds that "Although some of those jobs were lost because of offshoring, the major culprits were the slowdown in demand for IT services after the Y2K buildup, followed by the dot-com collapse and the broader recession."

He argues that "The wild claims that offshoring will gut employment in the IT sector are totally at odds with reality", and that "Despite the trend toward offshoring, IT-related employment is expected to see healthy increases in the years to come."

He argues that trade statistics offshoring of IT services from the U.S. to other countries is more than offset by offshoring into the U.S. He writes that "the fact is that the United States runs a trade surplus in the IT services most directly affected by offshoring. In the categories of ``computer and data processing services´´ and ``data base and other information services,´´ U.S. exports rose from $2.4 billion in 1995 to $5.4 billion in 2002, while imports increased from $0.3 billion to $1.2 billion over the same period. Thus, the U.S. trade surplus in these services has expanded from $2.1 billion to $4.2 billion."

He also argues that offshoring can increase economic growth. "Although offshoring does eliminate jobs, it also yields important benefits. To the extent that companies can reduce costs by shifting certain operations overseas, they are increasing productivity. The process of competition ultimately passes the resulting cost savings on to consumers, which then spurs demand for other goods and services. Thus do productivity increases -- whether caused by the introduction of new technology or new ways to organize work -- translate into economic growth and rising overall living standards."

House Committee Holds Hearing on Internet Pharmacy Bill

3/17. The House Government Reform Committee held a hearing on HR 3880, the "Internet Pharmacy Consumer Protection Act".

Rep. Tom Davis (R-VA), the Chairman of the Committee, and Rep. Henry Waxman (D-CA), the ranking Democrat, introduced the bill on March 3, 2004. It would amend the Federal Food, Drug, and Cosmetic Act to establish requirements for the sale of prescription drugs over the internet.

However, the bill was referred to the House Commerce Committee, and its Subcommittee on Health. Rep. Waxman is also a member of both of these.

Rep. Davis wrote in a prepared statement [PDF] that "I think all of us here today have opened our inboxes to find dozens of emails advertising medications at low cost, with no prescription required. The risks of this kind of self-medicating can include adverse reactions from inappropriately prescribed medications, dangerous drug interactions, use of counterfeit or tainted products, and addiction to habit forming substances."

He also summarized the bill: "First, the bill establishes disclosure standards for Internet pharmacies. These websites are required to display certain identifying information, including the name of the business, pharmacist, and physician associated with the website. Second, the bill prohibits Internet sites from selling or dispensing prescription drugs solely on the basis of an online questionnaire. Online medical evaluations do not meet reasonable standards of care and create risks for consumers. And third, the bill provides additional authority for states to take action against illegal Internet pharmacies. The bill allows state attorneys general to file an injunction in federal court to shut down a rogue site across the country."

He added that "H.R. 3880 is intended to tackle domestic Internet pharmacies that sell drugs without a valid prescription. The bill is not intended to address international pharmacies that sell drugs at a low cost to consumers who have a valid prescription from their U.S. doctors."

See also, prepared testimony in PDF of witnesses: William Hubbard (Food and Drug Administration), James Thompson (Federation of State Medical Boards of the U.S.), Carmen Catizone (National Association of Boards of Pharmacy), Jerry Kilgore (Virginia Attorney General), Rebecca Patchin (American Medical Association), and John Rector (National Community Pharmacists Association).

People and Appointments

right3/17. Todd Dickinson (at right) was named VP and Chief Intellectual Property Counsel of General Electric. He was previously at partner at the law firm of Howrey Simon Arnold & White. Before that, he was director of the U.S. Patent and Trademark Office (USPTO). See, GE release.

3/17. President Bush announced his intent to nominate Lauren Moriarty to have the Rank of Ambassador during tenure of service as United States Senior Official to the Asia-Pacific Economic Cooperation Forum. See, White House release.

More News

3/17. The Federal Communications Commission (FCC) published a notice in the Federal Register summarizing, and setting comments deadlines for, its notice of proposed rulemaking (NPRM) regarding broadband over powerline systems. Comments are due by May 3, 2004. Reply comments are due by June 1, 2004. The FCC adopted this NPRM on February 12, 2004. See, story titled "FCC Adopts Broadband Over Powerline NPRM" in TLJ Daily E-Mail Alert No. 836, February 13, 2004. The FCC released the text of this NPRM on February 23, 2004. This NPRM is FCC 04-29 in ET Docket Nos. 03-104 and 04-37. See, Federal Register, March 17, 2004, Vol. 69, No. 52, at Pages 12612-12618.

Colin Powell Discusses Outsourcing

3/16. Secretary of State Colin Powell, who is on a trip to India, Pakistan and Afghanistan, gave an interview to Karan Singh of Doordarshan News in New Delhi, India in which the two discussed outsourcing. Powell said that "outsourcing is just a fact of life in this 21st century, global economic environment".

Colin PowellPowell (at right) stated that "It is a real problem when people lose jobs, it becomes a political problem. And outsourcing has caused the loss of some jobs in the United States."

"But outsourcing is just a fact of life in this 21st century, global economic environment in which we live. We outsource to India. India, in some instances, outsources back to the United States when Indian businessmen ask for American lawyers or accountants or others to provide a service for Indian businesses", said Powell.

He continued that "And so what we have to do is make sure our people understand what outsourcing is about. How it is important to us and important to the nation when we outsource jobs, and then work hard to make sure to provide alternatives for those workers who have lost their jobs, and also to make sure that in our trade relations with other nations, they are encouraging us to invest and to trade with them by removing barriers and taking other actions that make it easier to enter into their markets, into the Indian market. In fact, it has turned out to be one of the major subjects we talked about today, how India can delve further with respect to economic reform and make it easier for the United States to do this with India, to the benefit of India and to the benefit of the United States."

See, transcript of interview.

Verizon Required to Bargain with CWA Over Giving Time Off for Blood Drives

3/16. The U.S. Court of Appeals (DCCir) issued its opinion in Verizon New York v. NLRB, upholding an enforcement order of the NLRB requiring Verizon to bargain with a union before it can deny time off with pay for participating in a blood donation drive.

Verizon is a company that provides telecommunications and other services in the state of New York. Some of its employees are member of a union named the Communications Workers of America (CWA). Verizon and the CWA have entered into a collective bargaining agreement. Verizon terminated a practice in one area of giving employees time out from work, with pay, to participate in blood drives. The CWA complained to the National Labor Relations Board (NLRB), which found that Verizon violated § 8(a)(5) and (1) of the National Labor Relations Act by refusing to bargain with the CWA over elimination of its blood drive practice. The Court of Appeals affirmed.

§ 8(d) of the NLRA defines collective bargaining as "the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment". § 8(a) addresses collective bargaining requirements. The Court reasoned that Verizon's decision to end its practice of giving time off to participate in blood drives is a mandatory subject of bargaining because it concerns wages and hours.

This case is Verizon New York, Inc. v. National Labor Relations Board, a petition for review of an order of the NLRB, Nos. 03–1155 and 03–1180.

People and Appointments

Jon Dudas3/16. President Bush announced his intent to nominate Jon Dudas (at right) to be Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office (USPTO). Dudas has been the acting Director since the departure of former Director James Rogan in January. Dudas was appointed Deputy Under Secretary and Deputy Director in January of 2002. He previously worked as Counsel to the House Judiciary Committee's Subcommittee on Courts and Intellectual Property, and as Counsel for Legal Policy and Senior Floor Assistant for the Office of the Speaker of the House of Representatives. See, White House release.

3/16. MCI WorldCom's Board of Directors elected Nicholas Katzenbach as non-executive Chairman of the Board. He has been a member of the Board since December of 2002. MCI WorldCom stated in a release that the election is "effective upon MCI's emergence from Chapter 11 protection". Katzenbach was the Attorney General of the United States early in the administration of former President Lyndon Johnson.

3/16. Andy Davis was named Communications Director for Sen. John Kerry's (D-MA) Senate office. He previously worked for Sen. Ernest Hollings (D-SC), handling, among other tasks, communications regarding the Senate Commerce Committee. Sen. Hollings is the ranking Democrat on the Committee, but is retiring at the end of the current Congress. Sen. Kerry is also a member of the Committee. The interim communications director for Sen. Hollings' Committee activities is Ilene Zeldin at 202 224-6654.

More News

3/16. The House Government Reform Committee's Subcommittee on Technology, Information Policy, Intergovernmental Relations and the Census held an oversight hearing titled "Information Security in the Federal Government: One Year Into the Federal Information Security Management Act". See, prepared testimony [8 pages in PDF] of Karen Evans, the Administrator for E-Government and IT at the Office of Management and Budget (OMB); prepared testimony [45 pages in PDF] of Robert Dacey of the General Accounting Office (GAO); GAO report [89 pages in PDF] titled "Information Security: Technologies to Secure Federal Systems"; and prepared testimony [13 pages in PDF] of Ben Wu of the Department of Commerce.

3/16. The General Accounting Office (GAO) released a report [89 pages in PDF] titled "Information Security: Technologies to Secure Federal Systems". The report, which was prepared for the House Government Reform Committee, categorizes and describes commercially available cybersecurity technologies that federal agencies can use to defend their computer systems against cyber attacks.

3/16. BellSouth filed two complaints in U.S. District Court (NDGa) against Comverse Technology, Inc. alleging patent infringement. See, BellSouth release. BellSouth alleges infringement of U.S. Patent No. 5,764,747 titled "Personal number communication system", and U.S. Patent No. 5,857,013 titled "Method for automatically returning voice mail messages". Comverse makes software and systems enabling network-based multimedia enhanced communication services.

3/16. Treasury Secretary John Snow gave a speech to the American Tort Reform Association in Washington DC in which he condemned frivolous litigation.

3/16. The European Union (EU) announced that its will hold an event titled "EU Conference on Broadband", on April 22, 2004, at Dundalk Institute of Technology in Ireland. The EU stated in a release that the conference will address "safer use of the Internet and combating Spam", "future trends and strategies for Broadband throughout the EU", and "content and demand stimulation".

Go to News from March 11-15, 2004.