|News from October 21-25, 2004|
DOJ Approves Cingular's Acquisition of AT&T Wireless, Subject to Divestitures
10/25. The Department of Justice (DOJ) approved Cingular Wireless's acquisition of AT&T Wireless, subject to divestiture of assets in 13 markets. Cingular Wireless is a joint venture between SBC Communications Inc. and BellSouth Corporation.
To put this settlement into effect, the DOJ, and the states of Texas and Connecticut, filed a complaint [19 pages in PDF] in U.S. District Court (DC) against Cingular, SBC, BellSouth, and AT&T Wireless. It alleges that "The effect of Cingular's proposed acquisition of AT&T Wireless, if it were to be consummated, may be substantially to lessen competition in interstate trade and commerce in the relevant geographic markets for mobile wireless telecommunications services and mobile wireless broadband services, in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18." See, full story.
1st Circuit Rules in Export Administration Act Case
10/25. The U.S. Court of Appeals (1stCir) issued its opinion in U.S. v. Lachman, a criminal prosecution under the expired Export Administration Act (EAA).
The EAA regulates the export of military items, including dual use items, such as computers and software. The EAA has lapsed, but contains a provision enabling the President to extend the implementing regulations, provided that he declares that there exists a national emergency, and that the provisions of the EAA must be continued. President Bush signs such an order every August. See, for example, August 6, 2004 order.
Walter Lachman, and the other defendants, exported a control panel for a hot isostatic press (HIP) to the government of India. They did not first obtain a license from the Department of Commerce.
The U.S. prosecuted them on charges of violating and conspiring to violate the expired Export Administration Act of 1979, which was Public Law No. 96-72, and which was codified at 50 U.S.C. app. §§ 2401-2420 (2000), as well as the regulations implementing the EAA. The U.S. argued that the control panel exported by the defendants was "specially designed", within the meaning of implementing regulations, for use with a HIP, which the regulations provided could only be exported with a license.
The trial jury convicted, but the District Court granted the defendants' motion for acquittal notwithstanding the verdict. The District Court held that the EAA regulation and the term "specially designed" was unconstitutionally vague.
The Court of Appeals held that the applicable EAA regulation was not unconstitutionally vague, and vacated the judgment of acquittal.
The defendants did not raise the issue of whether they could be prosecuted under an expired statute. However, the Court of Appeals hinted in a footnote that it might consider this issue, if properly raised. It wrote that "The EAA expired in 1994, was briefly renewed by Congress in 2000, and expired again in 2001. ... The defendants do not make any argument that the EAA and its regulations are inapplicable due to the expiration of the original statute."
At least one Judge has opined on the inapplicability of the expired EAA. Judge Raymond Randolph wrote a dissenting opinion in Wisconsin Project on Nuclear Arms Control v. Department of Commerce, a case involving a Freedom of Information Act (FOIA) request for information contained in export license applications. See, January 31, 2003 opinion of the U.S. Court of Appeals (DCCir).
The Appeals Court held that such information is exempt from disclosure under FOIA Exemption 3, which pertains to records exempted by a federal statute. The EAA exempts application information from disclosure. Randolph dissented that the EAA no longer exists, and hence, its FOIA exemption provision no longer exists. He ridiculed the majority's Alice in Wonderland logic. He suggested that enforcing a statutory provision, when there is no statute, is like observing the Cheshire Cat's grin, when there is no Cheshire Cat.
See also, story titled "Court Holds Export License Application Information is Exempt from FOIA Disclosure" in TLJ Daily E-Mail Alert No. 598, February 5, 2003.
Many members of the House and Senate worked on passage of a new and updated EAA, particularly in 2000 and 2001. The Senate passed S 149 (107th Congress), the Export Administration Act of 2001, sponsored by Sen. Mike Enzi (R-WY), on September 6, 2001 by a vote of 85 to 14. This bill would have modernized export control laws. It would have eased restraints on most dual use products, but increased penalties for violations. It would have also repealed provisions of the 1998 National Defense Authorization Act which require the President to use million theoretical operations per second (MTOPS) to set restrictions on the export of high performance computers (HPCs). The House had not yet enacted this bill. When Al Qaeda terrorists struck five days after Senate passage of its bill, they destroyed the bill's chances for enactment.
This case is U.S. v. Walter Lachman, Maurice Subilla, Jr., Fiber Materials, Inc., and Materials International, Inc., App. Ct. Nos. 03-2274 & 03-2275, appeals from the U.S. District Court for the District of Massachusetts, Judge Douglas Woodlock presiding. Judge Timothy Dyk, of the Federal Circuit, sitting by designation, wrote the opinion of the Court of Appeals. Judges Selya and Howard joined.
Music Companies Settle Puretunes Infringement Case
10/25. The Recording Industry Association of America (RIAA) announced that various record companies settled the case Arista Records v. Sakfield Holding Company, a copyright infringement lawsuit against the individuals and company associated with the puretunes.com website.
Sakfield Holding Company, a Spanish company located in Madrid, Spain, operated a web site located at www.puretunes.com that allowed persons to download copyrighted musical works owned by the plaintiffs without their authorization.
The RIAA stated in a release that the defendants are enjoined from further infringement of the plaintiffs' music copyrights, and that "under the settlement agreement, Sakfield Holding Co. is ordered to pay the major record companies $10 million while the four individuals behind the service must pay a total of $500,000."
See also, story titled "District Court Rules on Personal Jurisdiction Over Foreign Web Site Operator in Copyright Infringement Case" in TLJ Daily E-Mail Alert No. 887, April 29, 2004.
This case is Arista Records, Inc., et al. v. Sakfield Holding Company, S.L., et al., U.S. District Court for the District of Columbia, D.C. No. 03-1474 (RCL), Judge Royce Lamberth presiding.
EU May Lift FSC/ETI Sanctions
10/25. Pascal Lamy, the EU Commissioner for Trade, announced that he will propose lifting the sanctions that the EU imposed following the World Trade Organization's (WTO) rulings that the United States' foreign sales corporation (FSC) tax regime, and its replacement, the extraterritorial income (ETI) tax regime were illegal export subsidies.
On October 22, President Bush signed HR 4520, the "American Jobs Creation Act of 2004", which repeals the ETI. See, White House release. See also, story titled "House and Senate Approve Tax Bill That Repeals FSC/ETI" in TLJ Daily E-Mail Alert No. 995, October 13, 2004.
Lamy (at right) stated in a release that "I am extremely pleased that this Bill now has become law. It is a victory for multilateralism and for the rule of law in foreign affairs and I want to thank leaders of the US Congress and Bob Zoellick for their efforts in this respect. Obviously, I am very satisfied that our efforts have been rewarded after 5 years, right before the end of the mandate of the current European Commission."
He continued that "In recognition of the progress that has been made, I will now propose to the Council the lifting of the FSC sanctions currently in force. As there remain some problems with the Bill, which we have previously discussed both with the US Administration and Congress, we intend to resolve these issues in the WTO."
Lamy concluded, "We have been trying to put FSC to bed for a long time. It is now in bed, but we need to just check before the lights go out."
On October 25, Rich Mills, spokesman for the Office of the U.S. Trade Representative (USTR) stated in a release that "We welcome the EU's lifting of sanctions so U.S. exports no longer will be burdened by higher tariffs. Congressional action has clearly ended the FSC/ETI, bringing the U.S. into compliance with WTO rules as the EU sought. We will continue to explain to the EU and others how the new law brings the U.S. into compliance."
On October 22, Sen. Charles Grassley (R-IA), the Chairman of the Senate Finance Committee, stated in a release that "We fulfilled our commitment to repeal FSC/ETI. I fully expect the European Union to fulfill its commitment to lift these sanctions now."
Assistant USTR Addresses IPR and Europe
10/25. Linnet Deily, an Assistant U.S. Trade Representative, addressed the European Communities' review of World Trade Organization (WTO) policy.
She stated that "The United States remains concerned about the European Union's response on WTO issues related to its enlargement, and in particular its need to provide for adequate compensation in the areas of tariffs and services. We are also interested in more information regarding the status of the new Member States' enforcement of intellectual property rights ..."
She also stated that "Europe and the United States share a strong interest in the services sector, in innovative technologies, and in the need to protect intellectual property rights. Several of our questions relate to these areas. For example, we continue to have significant questions about the protection of geographical indications in the EU, including with respect to non-EU nationals and agricultural products as well as with respect to wine and spirits. We note that a European Council regulation appears to require, as a condition for protecting the geographical indications of another WTO Member, that the other Member offer equivalent protection to EC products. We would be interested to learn how the EC squares that requirement with the national treatment obligation under TRIPS."
FCC Announces Report and Order Regarding Unbundling Obligations Under § 271
10/22. The Federal Communications Commission (FCC) announced, but did not release, a Report and Order regarding the unbundling obligations of regional Bell operating companies (RBOCs) under 47 U.S.C. § 271. This item particularly affects fiber optic networks.
The FCC issued a release [2 pages in PDF] that describes this item, and all five Commissioners wrote separate statements. This item is FCC-04-254 in WC Docket No. 01-338, WC Docket No. 03-235, WC Docket No. 03-260, and WC Docket No. 04-48.
The FCC release states that "The FCC voted to grant petitions by the regional Bell operating companies, or RBOCs, asking the FCC to forbear from enforcing rules that would impose obligations to share, or unbundle, certain parts of their new fiber networks with rivals on regulated terms and conditions."
It elaborates that this Report and Order "forbears from applying the unbundling obligations listed in Section 271 of the Telecommunications Act of 1996 for fiber-to-the-home loops, fiber-to-the-curb loops, the packetized functionality of hybrid copper-fiber loops, and packet switching."
That is, the triennial review order, and subsequent orders, have dealt with unbundling obligations under Section 251. This item pertains to Section 271 obligations.
FCC Chairman Michael Powell wrote in a separate statement [PDF] that "By removing unbundling obligations for fiber-based technologies, today’s decision holds great promise for consumers, the telecommunications sector and the American economy. The item eliminates barriers to companies that provide customers with an assortment of new services and applications including interactive educational content, improved telecommuting, life saving telemedicine applications, real-time two-way sign language conversations with people with disabilities, and enhanced video-on-demand services in competition with cable operators."
Powell (at right) added that "My mission is to continue to stimulate investment in next generation architectures, apply a light hand and let entrepreneurs bring the future to the people."
FCC Commissioner Kathleen Abernathy wrote in a separate statement [PDF] that in this Report and Order the FCC "retains regulatory authority to ensure that consumers will be protected if robust broadband competition fails to live up to its potential ... the Commission stands ready to act if a market failure occurs." Also, she stated that "this grant of forbearance is without prejudice to our ongoing proceeding regarding the Computer Inquiry nondiscrimination provisions, so the Commission will have a full opportunity to determine the extent to which those separate requirements remain necessary."
FCC Commissioner Kevin Martin wrote in a separate statement [PDF] that this Report and Order pertains to "fiber-to-the home loops, fiber-to-the-curb loops, the packetized functionality of hybrid loops, packet switching, and line-sharing."
He noted that while "While the Commission did not specifically address line sharing in today’s decision, the Bell Operating Companies had included a request in their petitions that we forbear from enforcing the requirements of section 271 with respect to line sharing. Since line-sharing was included in their request for broadband relief and we affirmatively grant their request, I believe today’s order also forbears from any Section 271 obligation with respect to line-sharing. Regardless of whether it was affirmatively granted, because the Commission’s decision fails to deny the requested forbearance relief with respect to line sharing, it is therefore deemed granted by default under the statute."
FCC Commissioner Michael Copps dissented. He also dissented from previous orders pertaining to unbundling obligations under Section 251. He wrote in a separate statement [PDF] that "The majority attempts to assure us that today's action is part of an effort to promote local competition. They contend that in the broadband market preconditions for dominance are not present because promising technologies are flooding the marketplace."
He added that "the majority gets so carried away with its vision of the country's telecom future that they act like it is already here, that competition is everywhere flourishing, and that intermodal competition is already ubiquitous reality. But their cheerful blindness to stubborn market reality actually pushes farther into the future the kind of competitive telecom world they say they want."
FCC Commissioner Jonathan Adelstein also dissented in part. See, separate statement [PDF].
Bush Signs FSC/ETI Repeal Bill
10/22. President Bush signed HR 4520, the "American Jobs Creation Act of 2004". See, White House release. This bill repeals the foreign sales corporation (FSC) tax regime, and its replacement, the extraterritorial income (ETI) tax regime, which the World Trade Organization (WTO) ruled were illegal export subsidies.
The bill also includes numerous other tax provisions, including a section that limits the deduction available under Section 170 of the Internal Revenue Code for contributions of intellectual property, such as contributions of patents to universities.
See also, stories titled "House and Senate Approve Tax Bill That Repeals FSC/ETI" and "House and Senate Approve Tax Bill That Limits Deductions for IP Contributions" in TLJ Daily E-Mail Alert No. 995, October 13, 2004.
2nd Circuit Rules in Motorola v. Uzan
10/22. The U.S. Court of Appeals (2ndCir) issued its opinion [42 pages in PDF] affirming in part, and reversing in part, the District Court's judgment in Motorola v. Uzan. The Appeals Court rejected the Uzans' arguments on appeal regarding lack of personal jurisdiction and other procedural issues. The Appeals Court vacated and remanded the punitive damages award and the imposition of a constructive trust over stock. The District Court's findings of fact, determination of liability, and award of over $2 Billion in compensatory damages, stand.
In January of 2002, Motorola Credit Corporation and Nokia Corporation filed a complaint in U.S. District Court (SDNY) against Kemal Uzan and others. The complaint states that the defendants, who are politically well connected in Turkey, were awarded a Global System for Mobile Telephony (GSM) license by the Turkish government.
Motorola provided defendants loans to obtain base stations from Motorola, and Nokia provided loans to obtain switching equipment from Nokia. This equipment was used to build a GSM and 2.5G wireless telecommunications system in Turkey.
Motorola and Nokia did not get paid up front. The complaint states that the defendants borrowed from Motorola and Nokia, and then intentionally and illegally diluted the value of stock pledged as collateral for the loans. The complaint also alleges that defendants manufactured transactions to transfer assets from the debtor companies. See also, story titled "Motorola & Nokia Sue Turkish Cellular Company for RICO Violations and Computer Hacking" in TLJ Daily E-Mail Alert No. 357, January 30, 2002.
On July 31, 2003, the District Court, Judge Ned Rakoff presiding, issued its Opinion and Order [172 pages in PDF] holding defendants liable for common law fraud, promissory fraud, and civil conspiracy to defraud, and awarding over $4 Billion in compensatory damages, punitive damages, and interest.
The District Court awarded $2,132,896,905.66 in compensatory damages plus interest. This District Court awarded Motorola the same amount in punitive damages. The District Court also imposed a constructive trust, in favor of Motorola and Nokia, of over 73.5% of Telsim's stock, along with an order requiring defendants to turn over those Telsim shares to the registry of the Court.
Judge Rakoff concluded that the "defendants -- in particular, the members of the Uzan family -- have perpetrated a huge fraud." He summed up the case as follows: "Under the guise of obtaining financing for a Turkish telecommunications company, the Uzans have siphoned more than a billion dollars of plaintiffs' money into their own pockets and into the coffers of other entities they control. Having fraudulently induced the loans, they have sought to advance and conceal their scheme through an almost endless series of lies, threats, and chicanery, including, among much else, filing false criminal charges against high level American and Finnish executives, grossly diluting and weakening the collateral for the loans, and repeatedly disobeying the orders of this Court."
See also, story titled "Judge Awards Motorola $4,265,793,811.32 From Turkish Telecom Deadbeats" in TLJ Daily E-Mail Alert No. 709, August 1, 2003.
The defendants appealed, raising many procedural issues, and challenging some of the remedies imposed by the District Court.
The Appeals Court held that the District Court "properly exercised personal jurisdiction over defendants".
The Appeals Court also held that the District Court "(1) correctly denied defendants’ motion to compel arbitration; (2) had jurisdiction to proceed with the case after defendants’ appeal from the denial of their motion to compel arbitration; (3) did not abuse its discretion by exercising jurisdiction over plaintiffs’ state-law claims after dismissal of the federal claims; (4) correctly held that plaintiffs' state law claims were ripe for adjudication".
The defendants did not challenge to District Court's award of over $2 Billion in compensatory damages. The defendants did appeal the punitive damages award, and the imposition of a constructive trust over stock. The Appeals Court reversed with respect to the remedies imposed. It held that "the District Court failed to make sufficiently specific factual findings in support of (a) its imposition of a constructive trust in favor of Motorola Credit Corporation, a plaintiff who already had a legal remedy; and (b) its ruling allowing plaintiffs to enforce their judgment against 130 nonparties to this litigation. Additionally, we hold that the District Court’s award of punitive damages was inconsistent with the Due Process Clause and with Illinois law." The Court of Appeals vacated, and remanded to the District Court for further proceedings on these issues.
Peter Lawson, Motorola's General Counsel, stated in a release that "From the outset of this case, the Uzans have raised one specious argument after another to divert attention from their massive fraud. After extensive briefing and argument, the Appeals Court has now clearly rejected the challenges of the Uzans. We look forward to continuing our efforts to execute on the assets of the Uzans worldwide, including the Uzan's jet aircraft, prestigious London apartments and luxury apartments in midtown Manhattan in New York City."
Motorola is represented by the law firm of Steptoe & Johnson. Nokia is represented by the law firm of Holland & Knight. Defendants are represented by the law firms of Cahill Gordon & Reindel, Lewin & Lewin, and Sidley Austin.
This case is Motorola Credit Corporation and Nokia Corporation v. Kemal Uzan, et al., U.S. Court of Appeals for the 2nd Circuit, App. Ct. Nos. 03-7792(L), 03-7794(CON), 03-7796(CON), 03-7878(XAP), appeals from the U.S. District Court for the Southern District of New York, D.C. No. 02 CV 666, Judge Ned Rakoff presiding. Judge Jose Cabranes wrote the opinion of the Court of Appeals, in which Judges Miner and Calabresi joined.
CEA Conducts Poll on Polling
10/22. The Consumer Electronics Association (CEA) announced that it conducted an online public opinion poll of 568 likely voters from October 2 through October 5, 2004. The CEA published a release describing poll results, but not the poll results. The CEA stated that it infers from the poll results that "As many as eight million U.S. households could be left out of the political polling process as a growing number of consumers move to cellular phones as their sole means of taking and making telephone calls".
CEA P/CEA Gary Shapiro stated in this release that "Number portability, advanced text messaging and voicemail features, and most importantly, falling prices for service plans are all allowing more and more consumers to cut the cord to their traditional landline services ... This trend is without question making it harder for political pollsters to get an accurate read on local, state and national races."
The CEA added that "Another factor thwarting the effectiveness of political pollsters is the practice of call-screening", and that it found that "Democrats are much more likely than Republicans to indicate they screen their calls". Finally, the CEA stated that it found that "Republicans are 25 percent more likely than Democrats to have responded to at least one poll".
Copps and Adelstein Seek Reexamination of the FCC's Public File Rules
10/22. The Federal Communications Commission's (FCC) Enforcement Bureau (EB) released an Order and Consent Decree [6 pages in PDF] in its investigation of complaints filed by two labor unions alleging that Comcast violated the FCC's public file rules.
The Consent Decree terminates the investigation and dismisses the complaint and all related filings. Comcast agrees to implement a Compliance Plan, which is attached to the Consent Decree. And, the FCC requires Comcast to "make a voluntary contribution (not a forfeiture or a penalty) to the United States Treasury in the amount of Two Hundred Twenty-Five Thousand Dollars ($225,000.00)." (Parentheses in original.)
FCC Commissioners Michael Copps and Jonathan Adelstein wrote in a release [PDF] that "Today's action highlights the urgent need for the Commission to reexamine the adequacy of its public file disclosure requirements. Cable operators and broadcasters should not shy away from making information about how they serve their communities widely available to their viewing public."
They added that "It's time the Commission reaffirmed the rights of viewers to receive basic information to gauge the accountability of their media. Information should be made widely available through modern means in a standard, easy-to-understand format. ... We call on the Chairman to designate this for immediate Commission action."
The Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW) filed their complaint on November 26, 2003. The CWA stated in a release that "the unions are considering an appeal to the full Commission."
The FCC's Order and Consent Decree is DA No. 04-3274.
Federal Circuit to Hear Oral Argument in Info Tech Cases
10/22. The U.S. Court of Appeals (FedCir) announced its oral arguments calendar for the month of December. Several information technology cases are on the agenda.
The list of cases to be heard in Washington DC on December 6, 2004 includes Northpoint Technology, Ltd v. MDS America, Inc., an appeal from the U.S. District Court (SDFl) involving claims infringement of patents pertaining to use of digital broadcast satellite (DBS) spectrum for terrestrial wireless services. This is App. Ct. No. 04-1249.
The schedule for December 9 includes Eolas Technologies v. Microsoft, an appeal from a judgment of the U.S. District Court (NDIll) that Microsoft infringed U.S. Patent No. 5,838,906 titled "Distributed hypermedia method for automatically invoking external application providing interaction and display of embedded objects within a hypermedia document". This case is also known as the web browser case. This is App. Ct. No. 04-1234.
See also, story titled "Jury Returns Verdict of Infringement Against Microsoft in Eolas Browser Patent Case" in TLJ Daily E-Mail Alert No. 716, August 12, 2003, and story titled "USPTO Orders Reexamination of Eolas Patent" in TLJ Daily E-Mail Alert No. 778, November 13, 2003.
The schedule for December 7 includes AT&T v. Microsoft, an appeal from the U.S. District Court (SDNY) in a patent infringement case involving voice compression technology. This is App. Ct. No. 04-1285 and D. C. No. 01 Civ. 4872. See, complaint.
The December 7 schedule also includes Block Financial v. Yodlee, Inc., a patent case involving account aggregation software, distributed object technology and internet applications. This is App. Ct. No. 04-1087.
The December 7 schedule also includes Stambler v. RSA Security, No. 04-1129.
See, Federal Circuit calendar. Arguments in all of the above listed will be heard in either Courtroom 203 or 402, 717 Madison Place, NW.
People and Appointments
10/22. Robert Tanner was named Assistant Bureau Chief of the Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB). The FCC stated in a release [PDF] that he will work "on policy matters and manage special projects". He was previously Legal Counsel to the WCB Bureau Chief. Before that, he was an Attorney Advisor in the WCB's Competition Policy Division (CPD). From 1998 through 1991, he worked for the law firm of Davis Wright Tremaine. Before that, he worked at the FCC.
10/22. Thomas Newkirk will leave the Securities and Exchange Commission (SEC) to become a partner in the Washington DC office of the law firm of Jenner & Block. He went to work for the SEC in 1986. He is currently an Associate Director of the SEC's Division of Enforcement. See, SEC release.
10/22. The Federal Trade Commission (FTC) sent warning letters [PDF] to contact lens prescribers regarding violations of the Fairness to Contact Lens Consumers Act (FCLCA), which is codified at 15 U.S.C. §§ 7601-7610, and the FTC's Contact Lens Rule, 16 C.F.R. Part 456. The letter warns prescribers that the FTC has received complaints about them, and reminds them that "the Act and the Rule require prescribers to give patients a copy of their contact lens prescription at the completion of a contact lens fitting -- even if the patient does not ask for the prescription. In addition, prescribers are prohibited from requiring their patients to purchase contact lenses from them as a condition of providing the prescription." The Congress enacted this requirement, in part, to facilitate competition in the sales of contact lenses, particularly through internet sales. See also, FTC release.
10/22. The U.S. Patent and Trademark Office (USPTO) announced two new electronic forms for filing Trademark Trial and Appeal Board (TTAB) documents online. The USPTO stated in a release that "One e-form allows parties in opposition and cancellation proceedings to notify the TTAB of an address change. Changes of address submitted electronically automatically update TTAB's electronic records. The other e-form is for certain consented motions in oppositions and cancellation proceedings. When parties use the new e-form to file consented motions to suspend proceedings or to extend discovery and testimony dates, the system will, in most cases, automatically send out a TTAB order to both parties granting the motion."
DOJ Releases Policy Guide to Remedies for Anticompetitive Mergers
10/21. The Department of Justice's (DOJ) Antitrust Division released a document titled "Antitrust Division Policy Guide to Merger Remedies".
Section 15 of the Clayton Act, which is codified at 15 U.S.C. § 25, and Section 4 of the Sherman Act, which is codified at 15 U.S.C. § 4, authorize the DOJ to challenge mergers and acquisitions. This Guide states that its purpose "is to provide Antitrust Division attorneys and economists with a framework for fashioning and implementing appropriate relief short of a full-stop injunction in merger cases."
The Guide states that it "sets forth the policy considerations that should guide Division attorneys and economists when fashioning remedies for anticompetitive mergers", but that it is not a "practice handbook" or "a compendium of decree provisions".
See, full story.
SEC Fines Qwest $250 Million
10/21. The Securities and Exchange Commission (SEC) filed a civil complaint [56 pages in PDF] in U.S. District Court (DColo) against Qwest Communications alleging securities fraud and other violations of federal securities laws. Qwest simultaneously agreed to the entry of a judgment that requires it to pay a civil penalty of $250 Million, which will be distributed to defrauded investors pursuant to the Fair Funds provision of the Sarbanes-Oxley Act of 2002.
The complaint alleges that "From at least the second quarter ended June 30, 1999, and continuing through the first quarter ended March 31, 2002, Qwest ... engaged in a massive financial fraud designed to mislead the investing public about its revenue and growth. In annual, quarterly, and current reports, in registration statements that incorporated Qwest's financial statements, and in other public statements, including earnings releases and investor calls, Qwest made numerous false and misleading statements about its financial condition."
The complaint continues that "Qwest fraudulently recognized approximately $3.8 billion of spurious revenue, and fraudulently excluded $231 million in expenses. The fraudulent scheme, approved and directed by Qwest’s senior management and implemented by numerous other managers and employees, was orchestrated to meet the company's outrageously optimistic revenue projections, artificially inflate Qwest’s stock price, and falsely present Qwest as a ``new technology´´ company with enormous earnings growth and potential."
The complaint alleges violation of §§ 5(a), 5(c), and 17(a) of the Securities Act of 1933, §§ 10(b), 13(a), 13(b)(2), and 14(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78m(a), 78m(b)(2), and 78n(a), and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 13b2-1, 14a-3, and 14a-9.
See also, SEC release and Qwest release.
People and Appointments
10/21. Stephen Kunin, Deputy Commission of Patent Examination Policy, at the U.S. Patent and Trademark Office (USPTO), will leave the USPTO at the end of October. He will join the law firm of Oblon Spivak.
10/21. The Federal Communications Commission (FCC) released its Seventh Report and Order [45 pages in PDF], which takes further action to clear 45 MHz of spectrum in the 1710-1755 MHz band for Advanced Wireless Services (AWS) such as Third Generation (3G) wireless services. The FCC adopted, but did not release, this item at its October 14 meeting. This report and order is FCC 04-246 in ET Docket No. 00-258 and WT Docket No. 02-8. See also, story titled "FCC Adopts Report and Order Re 1710-1755 MHz Band" in TLJ Daily E-Mail Alert No. 997.
10/21. The Federal Communications Commission's (FCC) Enforcement Bureau (EB) released two consent decrees that resolve investigations pertaining to the FCC's children's programming rules. See, Order and Consent Decree [9 pages in PDF] in the proceeding Viacom International Inc.'s Nickelodeon, and Order and Consent Decree [10 pages in PDF] in the proceeding pertaining to ABC Family Worldwide, Inc. FCC Chairman Michael Powell stated in a release [PDF] that "As a result of routine audits conducted by Enforcement Bureau field agents, serious questions arose concerning the amount of commercial matter during children’s programs on the ABC Family Channel and Nickelodeon. Both channels are hugely popular with children and are carried on virtually all cable systems nationwide, each reaching in excess of 85 million households. The consent decrees entered into today will not only help protect children who watch these cable channels, but will have a much broader impact. All cable operators, DBS providers, commercial television broadcasters, and companies that provide children’s programming should know that we will vigorously enforce our children’s advertising limits."
10/21. Secretary of the Treasury John Snow gave a speech titled "New Directions for U.S. Economic Policy towards Japan and China" in St. Louis, Missouri. He said that the Bush administration has been actively engaging with the People's Republic of China on trade and intellectual property rights. For example, he sited that China has recently "agreed to non-discriminatory tax treatment for U.S. integrated circuits in China, the world's fastest growing semiconductor market." Yet, he said, "Despite these significant, tangible improvements, a major concern for the United States government remains China's failure to provide adequate protection for, and enforcement of, intellectual property rights. Real progress in this area requires China to show significant reductions in infringements of intellectual property rights and substantial improvements in enforcement."
Go to News from October 16-20, 2004.