News from November 26-30, 2004

Bush Issues Memorandum Regarding Spectrum Management

11/30. President George Bush released a memorandum for the heads of executive departments and agencies titled "Improving Spectrum Management for the 21st Century". It is a plan for a planning process.

It requires various executive branch entities to prepare agency plans; it requires a comprehensive "Spectrum Needs Plan"; it requires a "Federal Strategic Spectrum Plan" and "National Strategic Spectrum Plan"; it requires a "a plan for identifying and implementing incentives that promote more efficient and effective use of the spectrum while protecting national and homeland security, critical infrastructure, and Government services"; it requires a plan for the implementation of previous spectrum reports and progress reports on implementation; and, it plans the roles of the various planners, and their timetable for writing plans.

The just released memorandum contains no new legislative or policy recommendations. Nor does it include any appointments of personnel. It is a management document.

It provides that "Within 6 months of the date of this memorandum, the Office of Management and Budget (OMB) shall provide guidance to the agencies for improving capital planning and investment control procedures to better identify spectrum requirements and the costs of investments in spectrum-dependent programs and systems. Within 1 year of the date of this memorandum, agencies shall implement methods for improving capital planning and investment control procedures consistent with the OMB guidance, including making any modifications to agency capital planning procedures necessary to ensure greater consideration of more efficient and cost-effective spectrum use."

It also provides that "Within 1 year of the date of this memorandum, the heads of agencies selected by the Secretary of Commerce shall provide agency-specific strategic spectrum plans (agency plans) to the Secretary of Commerce that include: (1) spectrum requirements, including bandwidth and frequency location for future technologies or services; (2) the planned uses of new technologies or expanded services requiring spectrum over a period of time agreed to by the selected agencies; and (3) suggested spectrum efficient approaches to meeting identified spectrum requirements. The heads of agencies shall update their agency plans biennially."

It requires the Department of Homeland Security (DHS), within six months, to "identify public safety spectrum needs." It requires the DHS, within one year, to "develop a comprehensive plan, the Spectrum Needs Plan, to address issues related to communication spectrum used by the public safety community, as well as the continuity of Government operations."

It requires the Department of Commerce (DOC), within six months of receiving the above referenced OMB guidance, to "integrate the agency plans and Spectrum Needs Plan, based upon a Department of Commerce framework, into a Federal Strategic Spectrum Plan and shall assist in the formulation of a National Strategic Spectrum Plan." It also requires the DOC to update the National Strategic Spectrum Plan on a biennial basis.

President Bush issued a memorandum titled "Memorandum for the Heads of Executive Departments and Agencies" regarding "Spectrum Policy for the 21st Century" on May 29, 2003. The White House Press Office released it on June 5, 2003. See, stories titled "Bush Issues Spectrum Policy Memorandum" and "Reaction to the President's Spectrum Memorandum" in TLJ Daily E-Mail Alert No. 675, June 6, 2003. The 2003 memorandum announced the creation of the "Federal Government Spectrum Task Force".

Pursuant to the 2003 memorandum, on June 24, 2003, the DOC's National Telecommunications and Information Administration (NTIA) released two reports. See also, NTIA release and story titled "NTIA Releases Reports on Spectrum Management" in TLJ Daily E-Mail Alert No. 929, June 30, 2004.

The first report is titled "Spectrum Policy for the 21st Century -- The President's Spectrum Policy Initiative: Report 1". It is subtitled "Recommendations of the Federal Government Spectrum Task Force". It contains the views of the administration's task force.

The second report is titled "Spectrum Policy for the 21st Century -- The President's Spectrum Policy Initiative: Report 2". It is subtitled "Recommendations from State and Local Governments and Private Sector Responders".

The just released memorandum also requires that the DOC, within six months, "shall establish a plan for the implementation of all other recommendations included in the Reports." It also requires that the DOC, within one year, "shall provide to the President a report describing the progress on implementing the recommendations in the Reports. The report shall include a section prepared by the Secretary of Homeland Security that describes the progress made with respect to public safety spectrum issues. This report shall be updated on an annual basis, until completion of the actions required by this memorandum."

The memorandum assigns no new tasks to the Federal Communications Commission (FCC). However, it provides that certain executive branch entities that are assigned tasks shall consult the FCC.

DOJ Charges Former McAfee Executive with Insider Trading for Exercising Stock Options

11/30. The Department of Justice (DOJ) charged Evan Collins by criminal information [4 pages in PDF] with securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff, and 17 C.F.R. § 240.10b-5, in connection with his alleged trading of securities based upon non-public material information. The transactions alleged to constitute criminal violations are his exercise and sale of stock options in the company which employed him.

The information states that Collins was previously the controller of McAfee Associates (until 1999), and then Chief Financial Officer of (until 2002).

The information states that in 2000 "Collins learned that Network Associates' then controller and others knowingly employed a scheme to defraud Network Associates' shareholders, its creditors, the public, and the SEC, and to deprive Network Associates of its intangible right to honest services, by manipulating Network Associates' financial statements, including those relating to software license sales revenue, by among other things, improperly transferring 15 million dollars from a Network Associates' tax reserve account to an accounts receivable reserve account in order to improperly increase revenue."

The information does not charge him with securities fraud for a role in the preparation, release or filing or false financial statements. Rather, it alleges that "Based on this and other inside information Collins obtained, Collins sought to enrich himself by trading Network Associates' stock during November 200 because he believed that Network Associates would not meet its 4th quarter 2000 earning estimates and that its financial books and records did not comply with GAAP."

It further alleges that "On or about November 1 and 2, 2000, defendant Collins exercised stock options and sold 30,000 shares of Network Associates' common stock for net proceeds of approximately $250,000. Collins made these trades on the basis of the material non-public information that Network Associates' publicly reported financial statements were false and misleading and materially misrepresented the company's revenues, expenses and net income and the probability that the company would eventually need to restate those numbers."

The DOJ stated in a release that Collins "is the third former Network Associates executive charged with securities fraud arising out of allegedly fraudulent financial statements submitted in 1999 and 2000. Prabhat Goyal, the former chief financial officer (CFO) of Network Associates, was indicted on June 17, 2004, by a federal grand jury in San Francisco on 20 counts of securities fraud and conspiracy. The indictment against Mr. Goyal alleges that between 1998 to 2000, while he was CFO of Network Associates, he conspired with others to commit securities fraud by causing Network Associates to make millions of dollars in payments to its distributors falsely disguised as discounts, rebates, and marketing fees in order to convince the distributors to hold excess inventory, not return unsold products, and purchase more products than the distributors could actually sell to customers during a given quarter." Also, the DOJ stated that "Collins' replacement as Controller, Terry Davis, pled guilty to securities fraud on June 11, 2003."

Tom Ridge Resigns

Tom Ridge11/30. Tom Ridge (at right), the Secretary of Homeland Security, announced that "Earlier today, I submitted a formal letter of resignation to the President, and with his concurrence it is my desire to continue to serve as Secretary of Homeland Security through February 1st of next year unless my successor is confirmed by the Senate earlier." See, transcript of press conference.

President George Bush stated that "As the Nation's first Assistant to the President for Homeland Security and first Secretary of Homeland Security, he oversaw the most extensive reorganization of the Federal Government in 50 years. His efforts have resulted in safer skies, increased border and port security, and enhanced measures to safeguard our critical infrastructure and the American public." See, statement.

People and Appointments

11/30. Deborah Daniels, Assistant Attorney General in charge of the Department of Justice's (DOJ) Office of Justice Programs (OJP), announced that she will leave, effective January 31, 2005.

11/30. The law firm of Akin Gump announced the addition of five attorneys to its intellectual property litigation practice in its Washington DC office: Michael O'Shea, Frank Cimino, John Caracappa, Paul Gennari, Rashida Lockhart, and Jin-Suk Park. See, release.

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11/30. The U.S. Court of Appeals (FedCir) issued its opinion [6 pages in PDF] in Kyocera Wireless v. President Electronics, a patent case involving cell phone designs. Tony Colida holds several patents for the design of cellular telephone handsets. He filed a complaint in U.S. District Court (SDCal) against Kyocera Wireless alleging infringement of these patents. The District Court granted summary judgment of non-infringement to Kyocera. The Court of Appeals affirmed. This case is Kyocera Wireless Corporation v. President Electronics, Ltd. and Tony Colida, U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 04-1345, an appeal from the U.S. District Court for the Southern District of California, D.C. No. 02-CV-2042.

11/30. William Donaldson, Chairman of the Securities and Exchange Commission (SEC) gave a speech in Minneapolis, Minnesota in which he discussed business ethics and technology. He said that "Some managers will pursue questionable activity right up to technical conformity with the letter of the law, and some will step over the red line either directly or with crafty schemes and modern financial technology that facilitates deception."

11/30. The U.S. District Court (DMass) published in its web site its October Memorandum and Order [23 pages in PDF] in TouchPoint Solutions, Inc. v. Kodak, a trade secret misappropriation case involving software. The District Court granted in part TouchPoint's motion for a preliminary injunction. This case is TouchPoint Solutions, Inc. v. Eastman Kodak Company, U.S. District Court for the District of Massachusetts, D.C. No. 04-11014-NMG, Judge Nathaniel Gorton presiding.

Supreme Court Declines to Hear Several Tech Related Cases

11/29. The Supreme Court released an Order List [14 pages in PDF] which states that the Court declined to take several technology related cases.

The Court denied certiorari, without opinion, in University of Rochester v. G.D. Searle, No. 04-476. See, Order List at page 10. This lets stand the February 13, 2004 opinion of the U.S. Court of Appeals (FedCir). See also, Order denying petition for rehearing, with dissenting and concurring opinions.

This is a drug patent case involving invalidity for lack of written description and invalidity for lack of enablement.

The Court also denied certiorari, without opinion, in Pellegrini v. Analog Devices, No. 04-485. See, Order List at page 4. This lets stand the July 8, 2004 opinion [MS Word] of the U.S. Court of Appeals (FedCir).

Pellegrini owns U.S. Patent 4,651,069 titled "Back-emf brushless d.c. motor drive circuit". Analog Devices develops and fabricates integrated circuit chips, including a line of chips named ADMC. Pellegrini filed a complaint in U.S. District Court (DMass) against Analog Devices alleging direct infringement and inducement of infringement of the '069 patent, contending that certain claims of the '069 patent read on the combination of ADMC chips and other components in brushless motors. The District Court granted partial summary judgment to Analog Devices. The Court of Appeals affirmed.

The Court also denied a motion to file a petition for writ of certiorari out of time in Global Naps v. Massachusetts Department of Telecommunications. See, Order List at page 1.

Appeals Court Issues Opinion Regarding Compelled Speech

11/29. The U.S. Court of Appeals (3rdCir) issued its divided opinion [102 pages in PDF] in Forum for Academic and Institutional Rights v. Rumsfeld. Various plaintiffs disagree with the policy of the Congress in maintaining the Solomon amendment. They assert a violation of their First Amendment free speech rights. The District Court denied their motion for a preliminary injunction. The divided Courts of Appeals reversed.

The majority held unconstitutional a part of the National Defense Authorization Act for Fiscal Year 1995 known as the Solomon Amendment. It provides, in part, that no Department of Defense (DOD) funding shall be given to any educational institution with a policy of denying or effectively preventing the military from obtaining entry to campuses, or access to students on campuses, for recruiting purposes. This provision takes its name from former Rep. Gerald Solomon (R-NY). The 1995 bill is Public Law No. 103-337. It has been amended, and is now codified at 10 U.S.C. § 983.

No educational institution joined in the lawsuit. (Nevertheless, the District Court found standing in the first part of its opinion [PDF].) However, various educational institutions, and especially law schools, wish to both receive funding from the DOD, and discriminate against military recruiters. The plaintiffs, the Forum for Academic and Institutional Rights (no web site), and other groups and individuals, filed a complaint in 2003 in U.S. District Court (DNJ) against Secretary of Defense Donald Rumsfeld and other department heads alleging that the Solomon amendment violates their First Amendment free speech rights. See, Second Amended Complaint [35 pages in PDF].

The District Court denied the plaintiffs' motion for a preliminary injunction. See, second part of opinion [49 pages in PDF], dated November 5, 2003, and published at 291 F. Supp. 2d 269. This appeal followed.

The Court of Appeals, in a divided decision, reversed.

The facts giving rise to this case do not involve technology. Nor do they involve speech. Nevertheless, communications and technology lawyers concerned with developments in First Amendment law may find this case significant. The majority determined that this case does implicate speech, and applied the doctrine of compelled speech, which is also involved in several types of regulation of communications. Compelled speech is involved, for example, in forced access to cable facilities, must carry, equal time, free time for candidates, and truth in billing.

The majority opinion relies upon several leading cases from communications law, including Sable Communications of Cal., Inc. v. FCC, 492 U.S. 115 (1989), Turner Broadcasting System, Inc. v. FCC, 512 U.S. 622 (1994), and Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241 (1974). In addition, the dissent raises FCC v. League of Women Voters, 468 U.S. 364 (1984).

Moreover, it is likely, given the importance attached to the Solomon amendment by the Congress, the President, and the DOD, that the Department of Justice (DOJ) will seek en banc rehearing and/or certiorari in this case. Hence, it is possible that the Supreme Court will write an opinion on compelled speech.

Judge Thomas Ambro wrote the opinion of the Court, in which Judge Walter Stapleton joined. He did not argue that the Solomon amendment prohibits or restrains speech. Nor does it compel speech. Rather, he reasoned, there is a "danger of misattribution". That is, law students at schools such as Yale University might misattribute the speech or policies of the DOD to their professors. He reasoned that the Solomon amendment thus "requires law schools to express a message that is incompatible with their educational objectives".

In addition, Judge Ambro, a Clinton appointee, applied the strict scrutiny standard.

Judge Ruggero Aldisert wrote a 39 page dissent, which begins at page 63. He wrote, "I would hold that Congress' use of the spending power and fulfillment of the requirements to maintain the military under Articles I and II do not unreasonably burden speech and, therefore, do not offend the First Amendment. I apply the balance-of-interests test and decide that the interest of protecting the national security of the United States outweighs the indirect and attenuated interest in the law schools’ speech, expressive association and academic freedom rights. The Solomon Amendment survives the constitutional attack because its provisions, the 2004 amendments thereto and related regulations, govern conduct while only incidentally affecting speech. In serving its compelling interest in recruiting military lawyers, the statute does not require the government to engage in unconstitutional conduct."

This case is Forum for Academic and Institutional Rights, et al. v. Donald Rumsfeld, et al., U.S. Court of Appeals for the 3rd Circuit, App. Ct. No. 03-4433, an appeal from the U.S. District Court for the District of New Jersey, D.C. No. 03-cv-04433, Judge John Lifland presiding.

See also, Georgetown University law school web page with hyperlinks to pleadings in this case.

People and Appointments

Carlos Gutierrez11/29. President George Bush announced his intent to nominate Carlos Gutierrez (at right) to be Secretary of Commerce. Gutierrez is CEO and Chairman of the Board of the Kellogg Company, a producer of breakfast cereals and other foods. See, White House release. Bush and Gutierrez both spoke at a White House event. Bush stated that "We'll reduce the burden of junk lawsuits and regulations on our entrepreneurs. We'll reform our outdated tax code to eliminate needless paperwork and encourage savings, investment and growth. We'll continue our commitment to free and fair trade." See, transcript. If confirmed by the Senate, he will replace Donald Evans.

11/29. Steve Friedman, Chairman of the President's National Economic Council, announced his resignation. President Bush stated in a release that "Steve played a valuable role in enacting the Jobs and Growth Act of 2003 that helped move our economy from recession to the robust growth we are experiencing today. As a key member of my White House senior staff, Steve has led efforts to develop the policies that are strengthening our economy and helping to create jobs. Steve has done an excellent job of coordinating the work of my economic team and has played a key role in developing the economic policies for my second-term agenda."

11/29. The Federal Communications Commission (FCC) released an Order on Reconsideration [25 pages in PDF] that addresses several petitions for reconsideration filed in response to the rules adopted in the 1997 First Report and Order and 1997 Fourth Order on Reconsideration regarding universal service. This item states that the FCC adopted this item on October 1, 2004, but did not release it until November 29, 2004. This item is FCC 04-237 in CC Docket No. 96-45.

11/29. BellSouth announced that, effective January 1, 2005, Mark Feidler will be Chief Operating Officer, Dick Anderson, who is now President -- Customer Markets, will be Vice Chairman -- Planning and Administration, and Ike Harris will be President -- BellSouth Advertising & Publishing Group.

11/29. The law firm of Cooley Godward announced that, effective January 1, 2005, it has elevated eight associates to partner: Gian-Michele a Marca, John Brockland, Koji Fukumura, Christopher Hutter, Craig Jacoby, Jeffrey Karr, John McKenna and Lori Ploeger. See, release.

SBC Files Tariff with FCC on Service for VOIP Providers

11/26. SBC's Southwestern Bell Telephone Company (SWBT) filed a tariff with the Federal Communications Commission (FCC) on Wednesday evening, November 24, 2004. The tariff pertains to SBC's service for voice over internet protocol (VOIP) service providers that it has named "TIPToP", a partial acronym for "True Internet Protocol To Public Switched Telephone Network". It is now a voluntary service. VOIP providers need not purchase it to access SBC's customers on the Public Switched Telephone Network (PSTN).

On Friday, November 26, the day after Thanksgiving, FCC Chairman Michael Powell wrote in a statement [PDF] that he is committed to ensuring that the FCC avoid "any action that might slow the IP-services revolution".

Michael PowellPowell (at right) warned that "Should we conclude that this tariff is being used to justify the imposition of traditional tariffed access charges on VoIP providers or to discriminate against SBC's competitors, the Commission will take appropriate action including, but not limited to, initiating an investigation of SBC's interstate tariff and any other tariff that proposes similar terms. Nothing in this tariff should be interpreted to force a set of compensation relationships on VoIP providers and their connecting carriers either at this Commission or in other venues."

See, full story.

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11/26. President Bush met with reporters in Crawford, Texas. He was asked to comment about European Union sanctions in connection with the Byrd amendment. He said this: "Well, we've worked hard to comply with the WTO. I think it's important that all nations comply with WTO rulings. I'll work with Congress to get into compliance. As you might remember, we worked on the FISC/ETI bill because of the WTO ruling. We expect the WTO, as well, to treat our trading partners as they treat us. And that's why, for example, I filed complaint on the Airbus situation. We believe that the subsidies for Airbus are unfair for U.S. companies, such as Boeing." See, transcript.

Go to News from November 21-25, 2004.