News from December 6-10, 2004

Supreme Court Grants Certiorari in P2P Case

12/10. The Supreme Court granted certiorari in MGM Studios v. Grokster, 04-480. See, Order List [2 pages in PDF], at page 2.

On August 19, 2004, the U.S. Court of Appeals (9thCir) issued its opinion [26 pages in PDF] affirming the District Court judgment that Grokster's and Streamcast's peer to peer (P2P) file copying networks do not contributorily or vicariously infringe the copyrights of the holders of music and movie copyrights. See also, April 25, 2003, opinion of the U.S. District Court (CDCal), which the Appeals Court followed and praised.

See, story titled "9th Circuit Holds No Vicarious Infringement in Grokster Case" in TLJ Daily E-Mail Alert No. 963, August 20, 2004; story titled "Movie and Music Industry Entities File Cert Petition in MGM v. Grokster" in TLJ Daily E-Mail Alert No. 994, October 11, 2004; story titled "PFF Urges Supreme Court to Grant Certiorari in MGM v. Grokster" in TLJ Daily E-Mail Alert No. 1,014, November 9, 2004; and, story titled "Summary of Briefs in MGM v. Grokster" in TLJ Daily E-Mail Alert No. 1,020, November 17, 2004.

Mitch Bainwol, Ch/CEO of the Recording Industry Association of America (RIAA), stated in a release that "We appreciate that the Supreme Court has agreed to review this case. There are seminal issues before the Court -- the future of the creative industries and legitimate Internet commerce. These are questions not about a particular technology, but the abuse of that technology by practitioners of a parasitical business model."

He continued that "Bad actors who have hijacked a legitimate technology for illegitimate means must be held accountable. Without strong rules of the road, there will never be a level playing field for the multitude of legitimate online music services trying to do the right thing. The launch of legitimate file sharing companies like Snocap and Wurld Media highlight that there is a right way and a wrong way to distribute music online. Already, compelling, viable technological tools like filtering are available and are being utilized in the marketplace. Peer-to-peer networks today filter for viruses, so why not filter out infringing copyrighted works as well?"

In contrast, Gigi Sohn, President of Public Knowledge, stated in a release that "While we are disappointed that the Court has taken the case, we believe strongly that at the end of the day, the 1984 Sony Betamax doctrine, which has done so much to promote technological innovation to improve the lives of consumers, will be reaffirmed. The big content companies are trying to accomplish in this case what they have failed to do in the 20 years since Betamax, and what they have failed this year to accomplish in Congress -- to put restrictions on new technologies that suit their purposes not the needs of consumers."

Similarly, the Home Recording Rights Coalition (HRRC) stated in a release that "The Supreme Court's Betamax doctrine has been a fundamental basis of support for the introduction of so many products and services that are valued today by both consumers and all industries. We trust that in taking up this particular case, the Court will do no harm to the ability of entrepreneurs and consumers to rely on this vital precedent."

The Supreme Court held in its 1984 opinion in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, held that Sony did not contributorily infringe with its Betamax technology. It was a 5-4 opinion.

Sohn added that "The evidence that file-sharing has significantly hurt the large content companies is very thin. But the trade-off of giving content companies more control over the development of technologies and of overturning Betamax, would be very significant and very harmful to consumers and to our economy."

Supreme Court Grants Certiorari in Takings Clause Case

12/10. The Supreme Court granted certiorari in San Remo Hotel v. San Francisco, No. 04-340. See, Order List [2 pages in PDF], at page 1. The Court wrote that "The petition for a writ of certiorari is granted limited to Question 1 presented by the petition."

This is a petition for writ of certiorari to the U.S. Court of Appeals (9thCir). The 9th Circuit upheld a San Francisco ordinance that prevents owners of residential hotels from converting their properties into tourists hotels, over a takings clause challenge. The 9th Circuit wrote in its April 14, 2004 opinion [18 pages in PDF] that the property owner is barred from litigating its challenge because of a determination by the courts of the state of California. See, March 4, 2002 opinion [85 pages in PDF] of the Supreme Court of California.

This case is U.S. Sup. Ct. No. 04-340, and App. Ct. No. 03-15853.

9th Circuit Decisions Scrutinized by Supreme Court

12/10. The decisions of the U.S. Court of Appeals (9thCir) have not fared well recently before the Supreme Court.

The Supreme Court has granted eight petitions for writ of certiorari in the last two weeks. Two have merely granted certiorari, vacated and remanded in light of recent opinions in similar cases. Three others have pertained to criminal justice. The three most significant cases in which the Supreme Court has granted certiorari are all 9th Circuit cases -- MGM v. Grokster (P2P systems and vicarious infringement), FCC v. Brand X (FCC's regulatory treatment of cable modem service), and San Remo Hotel v. San Francisco (regulatory takings).

The Supreme Court has also issued four opinions in the last two weeks. In two of these, KP v. Lasting (trademark and fair use) and San Diego v. Roe (first amendment), the Supreme Court vacated or reversed judgments of the 9th Circuit. Technically, the Supreme Court also granted certiorari in San Diego v. Roe.

See also, story titled "Supreme Court Grants Certiorari in Brand X Case" in TLJ Daily E-Mail Alert No. 1,030, December 3, 2004; story titled "Supreme Court Reverses in San Diego v. Roe" in TLJ Daily E-Mail Alert No. 1,032, December 7, 2004; story titled "Supreme Court Rules on Fair Use in Trademark Case" in TLJ Daily E-Mail Alert No. 1,034, December 9, 2004; and, stories titled "Supreme Court Grants Certiorari in P2P Case" and "Supreme Court Grants Certiorari in Takings Clause Case" in this issue.

1st Circuit Affirms Insider Trading Judgment

12/10. The U.S. Court of Appeals (1stCir) issued its opinion in SEC v. Robert Happ, a civil enforcement action involving allegations of securities fraud for alleged insider trading by a former Director of Galileo Corporation, a manufacturer of fiber optic and electro optic products.

The Securities and Exchange Commission (SEC) filed a civil complaint in U.S. District Court (DMass) alleging violation of § 10b of the Securities Exchange Act and § 17 of the Securities Act of 1933, and rules thereunder, in connection with his alleged trading in the stock of Galileo on material, nonpublic information.

Happ, in his capacity as a Director, learned that Galileo would not meet its previous forecast for a net profit. He sold 4,000 shares. After the company announced a loss, its stock price dropped 64%. Happ then purchased 5,000 shares. These transactions did not escape the attention of the SEC.

Following a jury trial, the District Court entered judgment against Happ, and denied motions by Happ. The Court of Appeals affirmed.

This case is Securities and Exchange Commission v. Robert Happ, App. Ct. Nos. 04-1406, 04-1461, an appeal from the U.S. District Court for the District of Massachusetts, Judge Robert Keeton presiding.

President Signs CREATE Act

12/10. President Bush signed S 2192, the "Cooperative Research and Technology Enhancement (CREATE) Act of 2004". See, White House release. It is now Public Law No. 108-453.

The Senate approved this bill on June 25, 2004. The House approved it on November 20, 2004, by unanimous consent. See, Congressional Record, November 20, 2004, at Page H10219.

Although, the House had previously passed an identical version of the bill, HR 2391, on March 10, 2004, by voice vote. See, story titled "House Passes CREATE Act" in TLJ Daily E-Mail Alert No. 854, March 11, 2004; and, story titled "House Approves CREATE Act Again" in TLJ Daily E-Mail Alert No. 1,025, November 25, 2004.

There may have been a dispute over which sponsors would be able to claim authorship. Rep. Orrin Hatch (R-UT), Sen. Patrick Leahy (D-VT) and others introduced the Senate bill. Rep. Lamar Smith (R-TX), Rep. Howard Berman (D-CA) and others introduced the House bill.

Rep. James Sensenbrenner (R-WI), the Chairman of the House Judiciary Committee, who is not a sponsor, described the bill in the House on November 20, 2004. He said that the bill "will help to spur the development of new technologies by making it easier for collaborative inventors who represent more than one organization to obtain the protection of the U.S. patent system for their inventions."

Rep. Sensenbrenner elaborated that "The bill achieves this goal by limiting the circumstances in which confidential information, which is voluntarily exchanged by individual research team members, may be asserted to bar the patenting of the team's new inventions."

The CREATE Act amends Section 103(c) of the Patent Act, which is codified at 35 U.S.C. § 103, to address the August 8, 1997 opinion of the U.S. Court of Appeals for the Federal Circuit in OddzOn Products, Inc. v. Just Toys, Inc., which ruled that derived prior art may serve as evidence of obviousness.

Section 103(c) currently provides a safe harbor for inventions that are the product of collaboration involving co-inventors within a single company. However, scientific research is increasingly being conducted jointly by multiple companies, universities, government labs, and/or other entities.

The holding in the OddsOn case threatens to discourage collaborative research, where the scientists involved are not employed by the same company or entity. Basically, the Court interpreted Section 103(c) to mean that prior art under Sections 102(f) or 102(g) could be used to determine the obviousness of an invention where there is no common ownership or assignment of the invention and information being shared among the collaborators, and the information exchanged is not publicly known. The bill amends Section 103 to provide that patentability is not precluded in the case of research conducted across entities pursuant to a joint research agreement.

Rep. Sensenbrenner concluded that "By enacting S. 2192, Congress will help to foster improved communication among researchers, provide additional certainty and structure for those who engage in collaborative research, reduce patent litigation incentives, and facilitate innovation and investment."

People and Appointments: Government

12/10. Bernard Kerik withdraw from consideration for Secretary of the Department of Homeland Security (DHS). See, White House release.

12/10. President Bush announced his intent to nominate Samuel Bodman to be Secretary of Energy. See, White House release and transcript of White House event. He will replace Spencer Abraham.

12/10. President Bush announced his intent to appoint Bruce Ames, Randolph Bromery, Winfred Phillips, and Jean'ne Shreeve to be Members of the President's Committee on the National Medal of Science, for three year terms expiring on December 31, 2007. Ames is a professor of biochemistry and molecular biology at the University of California at Berkeley. Bromery is a geophysicist and academic administrator. Phillips is a mechanical engineer and VP for Research and Dean of the Graduate School at the University of Florida. Shreeve is a professor of chemistry at the University of Idaho. See, White House release.

More News

12/10. The U.S. Court of Appeals (10thCir) issued its opinion in Bastien v. Sen. Campbell, a case regarding the scope of the Speech or Debate Clause of the U.S. Constitution. Article I, Section 6 provides that "for any Speech or Debate in either House, they shall not be questioned in any other Place." Rita Bastien, a former a member of Sen. Ben Campbell's (R-CO) staff, filed a complaint in U.S. District Court (DColo) against Sen. Campbell alleging employment discrimination. He asserted that the suit is barred by the Speech or Debate Clause. The District Court dismissed the complaint. The Court of Appeals reversed, holding that the Speech or Debate Clause does not bar this claim, because it does not question the conduct of official Senate legislative business by Sen. Campbell or his aides. This case is Rita Bastien v. Office of Sen. Ben Campbell, App. Ct. No. 02-1343, an appeal from the U.S. District Court for the District of Colorado, D.C. No. 01-WY-799-CB(OES).

12/10. The Federal Communications Commission (FCC) released a Forfeiture Order that fines three broadcast licensees $10,000 for violation of 47 C.F.R. § 1.1310 in connection with their operation of broadcast towers in the Los Angeles, California, area that exceed maximum radiofrequency (RF) radiation exposure limits. The FCC fined Radio One Licenses, LLC, licensee of FM radio station KKBT, Infinity Broadcasting Operations, Inc., licensee of FM radio station KRTH-FM, and Telemundo of Los Angeles License Corporation, licensee of TV station KWHY-TV. See also, FCC release.

12/10. The Government Accountability Office (GAO) released a report [76 pages in PDF] titled "Federal Communications Commission: Federal Advisory Committees Follow Requirements, but FCC Should Improve Its Process for Appointing Committee Members". The FCC currently maintains seven federal advisory committees that are covered by the Federal Advisory Committee Act (FACA). These are the follows the Advisory Committee for the 2007 World Radiocommunication Conference (WRC-07 AC), Advisory Committee on Diversity for Communications in the Digital Age, Consumer Advisory Committee (CAC), Media Security and Reliability Council (MSRC), Network Reliability and Interoperability Council (NRIC), North American Numbering Council (NANC), and Technological Advisory Council (TAC).

12/10. The U.S. Patent and Trademark Office's (USPTO) Office of Public Affairs (OPA) has moved to the USPTO's new headquarters in Alexandria, VA. The new number for Brigid Quinn and the OPA is 571 272-8400. The new address is 600 Dulany Street, Madison West Building, First Floor, Alexandria, VA 22314. See, notice.

Congress Approves Telecom Bill

12/9. The Senate approved HR 5419, by unanimous consent, on December 8, 2004. The House approved this bill on November 20, 2004. It is ready for signature by the President.

This is a composite bill that includes the "Commercial Spectrum Enhancement Act" (CSEA), the "Universal Service Antideficiency Temporary Suspension Act", and the "Ensuring Needed Help Arrives Near Callers Employing 911 Act of 2004" or "ENHANCE Act".

See also, story titled "House Approves Bill that Includes the Commercial Spectrum Enhancement Act" in TLJ Daily E-Mail Alert No. 1,025, November 24, 2004; and story titled "Powell Urges Senate to Approve Telecom Bill" in TLJ Daily E-Mail Alert No. 1,032, December 7, 2004.

Federal Communications Commission (FCC) Chairman Michael Powell stated in a release on December 9 that "House and Senate leaders worked hard to get this done, and consumers will benefit from their efforts. The legislation brings needed changes that will promote homeland security and increase wireless broadband opportunities. An accounting rule fix also ensures that the e-rate program for schools and libraries remains strong. I look forward to working with the NTIA and administration to implement this vital legislation and advance E911, promote wireless broadband, and secure universal service for America's schools and libraries."

Commercial Spectrum Enhancement Act. Title II of HR 5419 is the CSEA. It changes the process for reallocating spectrum from federal users to commercial users, such as wireless broadband services. The bill creates a Spectrum Relocation Fund, funded by auction proceeds, to compensate federal agencies for the cost of relocating. The bill replaces the current role of the House and Senate Appropriations Committees.

Michael Gallagher, head of the Department of Commerce's National Telecommunications and Information Administration (NTIA), stated in a release on December 9 that "Last night's vote will accelerate the arrival of the broadband digital wireless age in the U.S."

Michael GallagherGallagher (at right) continued that "Streamlining the relocation process is a significant step in meeting President Bush's call to remove regulatory roadblocks to rapid deployment of broadband. The bill will speed much-needed consumer access to spectrum -- rocket fuel for economic growth. With 45 percent more wireless spectrum, mobile wireless carriers can accelerate their transition to becoming broadband carriers. Congressional leaders who maintained their intensity through passage of this bill, and those industry leaders who worked well into the night, deserve credit for legislation that will boost both our national and our economic security."

Universal Service Antideficiency Temporary Suspension Act. Title III of HR 5419 provides that funds received as universal service contributions under 47 U.S.C. § 254, and the universal service support programs established thereunder, are not subject to the "Antideficiency Act".

BellSouth's Mary Henze commented on the e-rate program, and universal service generally. She said that "the new Congress will need to take a hard look at all of the funding and distribution problems that changes in the marketplace have brought to bear on the federal goal of telephone service that is available and affordable for all Americans. The current Universal Service system is in great peril. The schools and libraries issue is just the tip of the iceberg."

Walter McCormick, P/CEO of the U.S. Telecom Association (USTA), stated in a release that "The Senate passed critical legislation last night to ensure continued service for educational programs in schools and libraries across the nation and to avoid an unnecessary increase in consumer phone rates. We appreciate the determined efforts of Senators Snowe and Rockefeller to get this important legislation through in the final hours of this session of Congress. This legislation highlights the many challenges facing the nation’s universal service system and the entire telecom industry. We look forward to working with Congress to address and resolve these critical issues early next year."

People and Appointments

12/9. Judge Charles Pickering, Sr. announced his retirement. President Bush nominated him in 2001 to be a Judge of the U.S. Court of Appeals for the 5th Circuit. Bush gave him a recess appointment to the 5th Circuit in January 2004. See, story titled "Bush Gives Judge Pickering a Recess Appointment" in TLJ Daily E-Mail Alert No. 818, January 19, 2004. Senate Democrats hold enough votes to filibuster, but not enough to defeat him on a straight majority vote.

12/9. The U.S. District Court (DRI), Judge Ernest Torres presiding, sentenced Jim Taricani on Thursday, December 9, 2004 to six months of home detention for criminal contempt of court in connection with his refusal to inform the government of the identify a confidential source. For background on this matter, see Memorandum and Order [34 pages in PDF] of October 2, 2003. This case is D.C. Misc. No. 01-47-T. On November 19, 2004, Sen. Chris Dodd (D-CT) introduced S 3020, the "Free Speech Protection Act of 2004", a bill to establish protections against compelled disclosure of sources, and news or information, by persons providing services for news media.

12/9. Karen Wheeless was named Associate Managing Director for Performance Evaluation and Records Management (PERM) at the Federal Communications Commission (FCC). The FCC stated in a release [PDF] that she will handle the FCC's "annual regulatory fee assessment process, planning and performance reporting required by the Government Performance and Results Act, the Freedom of Information and Privacy Act programs, and compliance with government-wide paperwork, data quality, and records management legislation."

12/9. Patrick Gnazzo was named SVP, Business Practices and Chief Compliance Officer, at Computer Associates International, Inc. See, release.

More News

12/9. The Department of Commerce's (DOC) Bureau of Industry and Security (BIS) published a notice in the Federal Register that describes and contains revisions to its rules regarding the criteria for determining if a foreign made item incorporating U.S. origin encryption is subject to the Export Administration Regulations (EAR). It also revises the notification requirements for beta test encryption software and certain publicly available encryption software. And, it revises the review and reporting requirements for exports and reexports of certain encryption items under License Exception ENC that are neither publicly available nor eligible for mass market treatment. These rule changes took effect on December 9, 2004. Also, while this is a final rule, the BIS added that "comments on this rule are welcomed on an ongoing basis." See, Federal Register, December 9, 2004, Vol. 69, No. 236, at Pages 71356-71364.

Bush Signs Omnibus Appropriations Bill

12/8. President Bush signed HR 4818, the omnibus appropriations bill, on Wednesday, December 8, 2004. See, White House release.

This is a huge omnibus appropriations bill that provides appropriations for fiscal year 2005 for most of the technology related executive branch entities. It also includes many substantive law provisions, including the "L-1 Visa and H-1B Visa Reform Act", the "Satellite Home Viewer Extension and Reauthorization Act of 2004", and new and increased patent fees. See also, story titled "Congress Approves Omnibus Appropriations Bill" in TLJ Daily E-Mail Alert No. 1,023, November 22, 2004.

The House and Senate both approved the conference report on HR 4818, on Saturday, November 20, 2004. However, that version included a provision that gave the Chairman of the House and Senate Appropriations Committees, and their staff members, unrestricted access to federal tax returns. Members were not aware that this provision was in the bill. Hence, both the House and Senate amended the enrollment of HR 4818. This was accomplished by the approval of HConRes 528. The Senate promptly approved this. The House approved this on December 6 by a vote of 381-0. See, Roll Call No. 543. This accounts for the delay in the signing of the bill into law.

H1B Visas. HR 4818 includes the "L-1 Visa and H-1B Visa Reform Act". This provision was slipped into the bill without prior hearings or markups.

H-1B visas enable skilled high tech workers to work in the U.S. The annual quota is currently 65,000. This provision would allow an additional 20,000 visas to be issued to graduates of U.S. universities with a masters, or higher, degree. See, story titled "Appropriations Bill Includes H1B and L1 Visa Provisions" in TLJ Daily E-Mail Alert No. 1,023, November 22, 2004.

On December 9, 2004 the Department of Homeland Security's (DHS) office of Citizen and Immigration Services (USCIS) issued a release [PDF] in which it stated that "The first 20,000 H-1B beneficiaries who have earned a master’s degree or higher from a U.S. institution of higher education are not subject to the annual congressionally mandated H-1B visa cap of 65,000. After those 20,000 slots are filled, USCIS is required to count those cases against the cap for the remainder of the fiscal year."

The USCIS continued that "For FY 2005, the new provision will allow USCIS to accept new petitions on behalf of up to 20,000 beneficiaries meeting these criteria. Petitions under this provision cannot be filed at this time, as the provision is not effective until March 8, 2005. USCIS will provide additional guidance on eligibility and process at a later date."

This USCIS release also details the increases in H1B visa related fees.

The USCIS issued a second release [PDF] regarding the L1 visa provisions of HR 4818. It states that "An L-1B nonimmigrant is an alien who has been employed overseas by a firm with an affiliated entity in the U.S., who comes to the U.S. to perform services for the international entity that involve specialized knowledge."

It further states that "The L-1 Reform Act amends previous legislation by addressing the issue of ``outsourcing.´´ L-1B temporary workers can no longer work primarily at a worksite other than their petitioning employer if the work will be controlled and supervised by a different employer or if the offsite arrangement is essentially to provide labor for hire, rather than service related to the specialized knowledge of the petitioning employer. This limitation will apply to all L-1B petitions filed with USCIS on or after June 6, 2005. This includes extensions and amendments involving individuals currently in L-1 status."

This USCIS release also reviews the other LI visa provisions in the bill, including new and increased L1 visa related fees.

USPTO Fees. HR 4818 provides appropriations totaling $1,540,000,000 for the U.S. Patent and Trademark Office (USPTO) for FY 2005. The Congress has not approved HR 1561, the "United States Patent and Trademark Fee Modernization Act of 2003", which is also known simply as the USPTO fee bill. The House passed this bill on March 2, 2004. See, story titled "House Passes USPTO Fee Bill", also published in TLJ Daily E-Mail Alert No. 849, March 4, 2004. The Senate did not pass it.

HR 4818 contains the fee increases of HR 1561. However, the increases are only applicable for FY 2005 and 2006. HR 4818 also contains the fee bill's language regarding outsourcing patent searches to U.S. companies. However, the fee bill's language regarding ending fee diversion is not in the appropriations bill. See, story titled "Appropriations Bill Provides $1.54 Billion for USPTO, Temporary Fee Increases, But No End to Diversion" in TLJ Daily E-Mail Alert No. 1,023, November 22, 2004.

The USPTO released a notice on December 8, 2004, regarding the bill's provisions regarding patent fees. It states, in part, that HR 4818 "revises certain patent application and maintenance fees; provides separate fees for a basic filing fee, a search fee, and an examination fee; and requires an additional fee for any patent application whose specification and drawings exceed 100 sheets of paper (application size fee). The new patent fees are now effective and will remain in effect during the remainder of fiscal year 2005 and during fiscal year 2006. The patent maintenance fee changes apply to any maintenance fee payment made on or after December 8, 2004, regardless of the filing or issue date of the patent for which the fee is submitted. The revised maintenance fees took effect on December 8, 2004. Thus, any maintenance fee paid at any time on (or after) December 8, 2004 is subject to the revised maintenance fee amounts set forth in the Consolidated Appropriations Act."

The Intellectual Property Owners Association (IPO) issued a release in which it states that "Inventors, creators, and businesses have been urging Congress to better fund the United States Patent Office (USPTO). They have even supported raising the fees they pay on patent applications, if Congress would promise not to divert those funds to unrelated government programs."

"The lame duck session got the increase in fees part right; they raised fees by 15 to 25 percent", wrote the IPO. "But they did nothing to stop the diversion of funds. In fact, while they were raising the fees that inventors have to pay for their patents, Congress diverted yet another $30 million of inventors’ money from the USPTO for other purposes. Diversion of fees away from the USPTO since 1992 has totaled about three-quarters of a billion dollars."

SHVERA. HR 4818 includes a revised version of the "Satellite Home Viewer Extension and Reauthorization Act of 2004", which is also known as the "W. J. (Billy) Tauzin Satellite Television Act of 2004". See, story titled "Appropriations Bill Includes SHVERA" in TLJ Daily E-Mail Alert No. 1,025, November 24, 2004.

Senates Approves Anti-counterfeiting Amendments Act and Fraudulent Online Identity Sanctions Act

12/8. The Senate approved HR 3632, the "Intellectual Property Protection and Courts Amendments Act of 2004", by unanimous consent, without debate. See, Congressional Record, December 8, 2004, at Page S12028.

The House approved this composite bill by voice vote on September 21, 2004. See, story titled "House Approves Anti-counterfeiting Amendments of 2003 and Fraudulent Online Identity Sanctions Act" in TLJ Daily E-Mail Alert No. 981, September 22, 2004.

The bill is now ready for the President's signature.

Rep. Lamar Smith (R-TX) and others introduced this bill (HR 3632), in its original form, on November 21, 2003. This bill has also been titled "Anti-counterfeiting Amendments of 2003" and "Anti-counterfeiting Amendments Act of 2004". It also includes the "Fraudulent Online Identity Sanctions Act", which was also a stand alone bill (HR 3754).

See, stories titled "Rep. Smith Introduces Bill to Strengthen Ban on Counterfeit Labeling of Software, Movies and Music" in TLJ Daily E-Mail Alert No. 787, November 26, 2003, and "Representatives Introduce Bill to Deter Domain Name Fraud" in TLJ Daily E-Mail Alert No. 830, February 5, 2004.

The bill also includes two bills to provide for additional meeting places of federal courts -- in Colorado Springs, Colorado, and Plattsburg, New York.

The anti-counterfeiting provisions revise and expand 18 U.S.C. § 2318, which pertains to trafficking in counterfeit labels, documentation and packaging of computer programs, phonorecords, and movies.

Robert Holleyman, P/CEO of the Business Software Alliance (BSA), praised the bill and the Senators and Representatives who worked to secure its passage. He stated in a release that "In recent years, we have seen a dramatic increase in the amount of 'look alike' counterfeit software imported into the U.S., especially from Asia. Unlike the obvious fakes sold on street corners, counterfeit software is marketed as a genuine product to unsuspecting consumers. In fact, using security features such as genuine holograms on pirated copies of software was, unfortunately, legal. This legislation now makes it illegal to use legitimate security features on pirated and counterfeit software products, an important amendment to existing law which will go a long way to protecting consumers."

The bill provides that "Whoever ... knowingly traffics in--
  (1) a counterfeit label or illicit label affixed to, enclosing, or accompanying, or designed to be affixed to, enclose, or accompany--
    (A) a phonorecord;
    (B) a copy of a computer program;
    (C) a copy of a motion picture or other audiovisual work;
    (D) a copy of a literary work;
    (E) a copy of a pictorial, graphic, or sculptural work;
    (F) a work of visual art; or
    (G) documentation or packaging; or
  (2) counterfeit documentation or packaging,
shall be fined under this title or imprisoned for not more than 5 years, or both."

The bill addresses not only "counterfeit label"s, but also "illicit label"s. It defines this latter category as genuine labels that are used without the authorization of the copyright holder.

More specifically, the bill provides that an "illicit label" is "a genuine certificate, licensing document, registration card, or similar labeling component--
  (A) that is used by the copyright owner to verify that a phonorecord, a copy of a computer program, a copy of a motion picture or other audiovisual work, a copy of a literary work, a copy of a pictorial, graphic, or sculptural work, a work of visual art, or documentation or packaging is not counterfeit or infringing of any copyright; and
  (B) that is, without the authorization of the copyright owner--
    (i) distributed or intended for distribution not in connection with the copy, phonorecord, or work of visual art to which such labeling component was intended to be affixed by the respective copyright owner; or
    (ii) in connection with a genuine certificate or licensing document, knowingly falsified in order to designate a higher number of licensed users or copies than authorized by the copyright owner, unless that certificate or document is used by the copyright owner solely for the purpose of monitoring or tracking the copyright owner's distribution channel and not for the purpose of verifying that a copy or phonorecord is noninfringing".

The bill also creates a new civil remedy for violation of these anti-counterfeiting provisions.

The unopposed votes to approve HR 3632 in the House in September, and the Senate in December, belie the long and difficult history of the Anti-counterfeiting Amendments bill. Proponents of this bill have introduced several versions over two Congresses, and held many hearings and markups. Proponents have also tried to enact this bill by including it in other composite legislation.

Sen. Joe Biden (D-DE) and Rep. Lamar Smith (R-TX) have been two of the Anti-counterfeiting Amendments Act's most active proponents.

The Fraudulent Online Identity Sanctions Act component of the bill addresses problems associated with the registration of domain names with false information.

Law enforcement authorities use the Whois database of domain name registration information to identify and locate people who use web sites to commit crimes. False registration information makes identifying the fraud artists more difficult. Similarly, false registration information makes it harder for trademark holders to pursue cybersquatters who register domain names that infringe their trademarks. False registration information also makes it harder for copyrights holders and manufacturers to locate online infringers and online sellers of counterfeit goods.

Senate Approves Commercial Space Launch Bill

12/8. The Senate approved HR 5382, the "Commercial Space Launch Amendments Act of 2004", by unanimous consent, without debate. See, Congressional Record, December 8, 2004, at Page S12029.

The House approved this bill on November 20, 2004, by a vote of 269-120. See, Roll Call No. 541. See also, story titled "House Approves Commercial Space Launch Bill" in TLJ Daily E-Mail Alert No. 1,025, November 24, 2004.

This bill is now ready for the President's signature.

This bill is a revised version of HR 3752, which the House approved back on March 4, 2004, by a vote of 402-1. See, Roll Call No. 39. The House Science Committee stated in a release that HR 5382 "had faced an uncertain future up until the last minutes of the Congress. The final version of the bill was hammered out in months of bipartisan negotiations between the House Science Committee and the Senate Committee on Commerce, Science and Transportation that resulted in an agreement on Nov. 12.  That agreement then ran into several roadblocks in the House and Senate, and the bill appeared all but dead until final holds were lifted in the Senate last night."

HR 5382 amends the Commercial Space Launch Act, Public Law No. 98-575, which is codified at 49 U.S.C. § 70101, et seq. Rep. Dana Rohrabacher (R-CA), the sponsor of the bill, stated in this release that "The people who will invest the type of big dollars necessary to make this a major new step in mankind's ascent into space have been waiting for the government to lay down the regulatory regime and set the rules of the game, and this is the first major step towards doing that."

Baucus Criticizes Administration Failure to Negotiate Free Trade Agreements in Asia

12/8. Sen. Max Baucus (D-MT), the ranking Democrat on the Senate Finance Committee, gave a speech [PDF] to the Institute of International Economics in which he criticized the Bush administration's failure to more actively pursue free trade agreements (FTAs) with Asian nations.

He said that most of the Bush administration's negotiation of trade agreements is with countries outside of Asia, and it appears "content to leave Asia to the Asians". He said that this is a "mistake".

Sen. Max BaucusBaucus (at right) said that "This Administration's trade policy is dictated largely by its foreign policy, not by economics. And as a result, Asian countries are increasingly looking to China as their primary economic partner, just as they once looked to America."

The U.S. did recently enter into a FTA with Singapore. It has also negotiated FTA's with many small economies with which the U.S. trades little, including Jordan, Israel, Morocco, Bahrain, and Panama. Sen. Baucus made the point that "During its first term, the Administration started free trade talks with twenty countries around the globe. But only one of those is with an Asian nation -- Thailand." In contrast, said Baucus, Asian nations are actively pursuing trade agreements with each other.

See, full story.

FCC Releases Agenda for December 15 Meeting

12/8. The Federal Communications Commission (FCC) released the agenda [PDF] for its December 15, 2004, meeting. The agenda includes an Order on Remand regarding incumbent local exchange carriers' (ILECs) obligations under 47 U.S.C. § 251 to make their network elements available on an unbundled basis. Other items include an order regarding UWB systems, and an NPRM on the use of cell phones on airplanes.

The items to be taken up by the FCC, in the order that they appear on the agenda, is as follows. First, the FCC will consider a Second Report and Order (R&O) and Second Memorandum Opinion and Order (MO&O) pertaining to Part 15 of its rules regarding ultra-wideband (UWB) transmission systems. This is ET Docket No. 98-153.

The FCC adopted its First Report and Order [119 pages in PDF] permitting the marketing and operation of certain types of new products incorporating UWB technology in 2002. The FCC received numerous petitions for reconsideration of the First R&O. The FCC addressed these in its Memorandum Opinion and Order and Further Notice of Proposed Rulemaking [91 pages in PDF] adopted on February 13, 2003. The MO&O portion largely reaffirmed the procedures adopted in 2002 to authorize the unlicensed operation of UWB, but made some changes to further facilitate the operation of imaging devices. The FNPRM portion proposed numerous new rules. See also, story titled "FCC Announces UWB Report and Order and Further NPRM" in TLJ Daily E-Mail Alert No. 604, February 14, 2003, and FCC release [2 pages in PDF], and story titled "NTIA Submits Comment to FCC in UWB Proceeding" in TLJ Daily E-Mail Alert No. 819, January 20, 2004.

Second, the FCC will consider a R&O establishing licensing and service rules for earth stations on vessels operating in the 5925-6425 MHz / 3700-4200 MHz (C-Band) and 14.0-14.5 / 11.7-12.2 GHz (Ku-band) frequencies. This is IB Docket No. 02-10. See, notice in the Federal Register, January 22, 2004, Vol. 69, No. 14, at Pages 3056 - 3064.

Third, the FCC will consider a R&O and FNPRM regarding several matters. This will address commercial air-ground telecommunications service. This is WT Docket No. 03-103. See also, notice in the Federal Register, July 25, 2003, Vol. 68, No. 143, at Pages 44003 - 44011. This item will also address the FCC's Part 22 non-cellular Public Mobile Service rules, and general aviation air-ground radiotelephone service mutually exclusive applications. Finally, the FCC will consider the application of Verizon Airfone for renewal of 800 MHz Air-Ground Radiotelephone license call sign KNKG804.

Fourth, the FCC will consider a NPRM regarding changes to the rule prohibiting the airborne use of cellular telephones.

Fifth, the FCC will consider a Second R&O, Order on Reconsideration, and FNPRM regarding modifications to the FCC's rules pertaining to the rural health care subsidy system. This is WC Docket No. 02-60.

Finally, the FCC will consider an Order on Remand regarding incumbent local exchange carriers' (ILECs) obligations under 47 U.S.C. § 251 to make network elements available on an unbundled basis. This is WC Docket No. 04-313 and CC Docket No. 01-338.

This event will be held at 9:30 AM on Wednesday, December 15, 2004 in the Commission Meeting Room, Room TW-C305, 445 12th Street, SW. The event will be web cast by the FCC. The FCC does not always take up all of the items on its agenda. The FCC does not always start its monthly meetings at the scheduled time.

DOJ Charges Company with Universal Service Subsidy Fraud

12/8. The Department of Justice (DOJ) and the U.S. Attorneys Office (USAO) for the Northern District of California charged Inter-Tel Technologies Inc., a subsidiary of Inter-Tel Incorporated, with one count of mail fraud and aiding and abetting, in violation of 18 U.S.C. §§ 1341 and 2, and one count of criminal violation of the Sherman Antitrust Act, in violation of 15 U.S.C. § 1, in connection with its bid rigging and wire fraud related to the Federal Communications Commission's (FCC) schools and libraries subsidy program.

The DOJ charged Inter-Tel by sealed criminal information [9 pages in PDF] on December 6, 2004. The DOJ unsealed the information on December 8, 2004. The DOJ also announced that Inter-Tel has agreed to plead guilty. See, DOJ release and USAO release.

Hewitt Pate, Assistant Attorney General in charge of the DOJ's Antitrust Division, stated that "This conduct deprived the E-Rate program of fair and competitive prices, caused the program to pay for unnecessary, inappropriate, and ineligible items, and as a result, prevented the program from funding projects at other schools that should have received funding".

This case is another in a series of e-rate fraud prosecutions.

This case is United States of America v. Inter-Tel Technologies, Inc., U.S. District Court for the Northern District of California, San Francisco Division, D.C. No. CR 04-0399-JSW.

Supreme Court Rules on Fair Use in Trademark Case

12/8. The Supreme Court issued its opinion [15 pages in PDF] in KP Permanent Makeup v. Lasting Impressions, a trademark case. The Court held that "a plaintiff claiming infringement of an incontestable mark must show likelihood of consumer confusion as part of the prima facie case, 15 U. S. C. §1115(b), while the defendant has no independent burden to negate the likelihood of any confusion in raising the affirmative defense that a term is used descriptively, not as a mark, fairly, and in good faith". It vacated the judgment of the Court of Appeals. The opinion, which is unanimous, except as to a few footnotes, is based upon statutory interpretation of the relevant statute, 15 U.S.C. § 1115(b)(4). See, full story.

More News

12/8. Several government agencies, technology companies, financial institutions, and other entities formed a joint initiative, titled Digital PhishNet, to address phishing attacks. The initiative's web site states that its goals are "to identify, arrest and hold accountable, those that are involved in all levels of phishing attacks to include spammers, phishers, credit card peddlers, re-shippers and anyone involved in the further abuse of consumers' personal information. This operation will draw upon the vast resources available to its national and international members in order to successfully achieve its goals." See also, Microsoft release.

Zoellick Discusses Tech, TPA and Trade Agreements

12/7. U.S. Trade Representative (USTR) Robert Zoellick spoke in Paris, France. He discussed, among other topics, extending trade promotion authority (TPA), building political support for free trade in the U.S. tech sector, and technology related provision in trade agreements. See, transcript.

Robert ZoellickZoellick (at right) said that "The intellectual property rules in the WTO system reflect the era that they were created, sort of late ‘80s, early ‘90s. Just think what has happened in the world of digital technology since then. Those international rules have no protection for if you download software, music, videos, because it wasn’t a hard copy. So, in all our bilateral agreements, we create what is called a “temporary copyright” as you download something into your hard drive because otherwise, frankly, you would never have to have any paper form and you could distribute it out to all the networks. So people in the publishing industry should have a particularly keen interest in this."

He also explained trade promotion authority, its legislative history, and prospects for extension. He said that "one of our greatest challenges under the U.S. Constitution is that Congress has the authority over trade. That’s one reason why President Bush made such a strong effort in 2001-02 to get the basic negotiating authority, which is the foundation for all the agreements we do, whether WTO or Free Trade Agreements, because absent that trade promotion authority Congress could amend agreements. And who is going to do a deal with you if, basically, Congress can take it apart?"

He explained that "trade promotion authority allows the President to bring back an agreement for an up or down vote. As most people know, in one of the votes in that process, we won by one vote. So, yes, it’s always difficult, in that authorizing legislation is one of the toughest because, frankly, you have all the people, who are against trade with all the scare stories, and the people who are for trade don't really have a particular agreement to argue for.  But, frankly, we are very proud of the fact that we got that done because it had lapsed for eight years under our predecessors."

The key House vote on December 6, 2001 was 215-214. See, Roll Call No. 481. See, story titled "House Passes Trade Promotion Authority Bill" in TLJ Daily E-Mail Alert No. 323, December 7, 2001.

Zoellick continued that "heading into 2005 ... trade promotion authority has to be extended another two years. So, the President has to request that authority by the end of March. I have no doubt that he will do so, but there is an unusual procedure. He gets the authority for another two years unless either house of Congress blocks it, OK?  That will be, no doubt, a challenge, but one that I believe that we will succeed in."

Zoellick also discussed building political support for trade promotion authority. He recollected that "The two Congresswomen from Silicon Valley did not vote for trade promotion authority. Now, somebody has to explain to me the economic logic of that. Well, the political logic was that the high-tech community wasn’t organized in its own interest. So, we have tried to work not only with the agriculture community and the manufacturing community but with the retailers, with the high-tech community, with the entertainment industry.  Jack Valenti and I put together a coalition to try and get entertainment to be supportive."

Not only did Rep. Anna Eshoo (D-CA) and Rep. Zoe Lofgren (D-CA) vote no, other Silicon Valley area Democrats also voted no, including Rep. Mike Honda (D-CA) and Rep. Ellen Tauscher (D-CA). Moreover, Rep. Jay Inslee (D-WA), a Congressman from Microsoft, also voted no. The vote broke down largely along party lines. However, a few tech Democrats crossed over to vote for the bill. Rep. James Moran from northern Virginia was one of its most vocal supporters. Rep. Bill Etheridge from the Research Triangle in North Carolina also voted for the bill. See, story titled "Technology, IPR and TPA" in TLJ Daily E-Mail Alert No. 323, December 7, 2001.

Senate Approves Video Voyeurism Prevention Act

12/7. The Senate approved S 1301, the "Video Voyeurism Prevention Act", by unanimous consent on December 7, 2004. See, Congressional Record, December 7, 2004, at Page S11876.

The House approved the bill by a voice vote on September 21, 2004. See, story titled "House Approves Video Voyeurism Prevention Act" in TLJ Daily E-Mail Alert No. 981, September 22, 2004. The bill is now ready for the President's signature.

This bill amends Title 18, the Criminal Code, to provide that "Whoever, in the special maritime and territorial jurisdiction of the United States, has the intent to capture an image of a private area of an individual without their consent, and knowingly does so under circumstances in which the individual has a reasonable expectation of privacy, shall be fined under this title or imprisoned not more than one year, or both."

Sen. Patrick Leahy (D-VT), a cosponsor of the bill, stated in the Senate on December 7 that "In recent years, the explosion of microcamera technology has fed the growing phenomenon of video voyeurism. Hidden cameras have been discovered in bedrooms, bathrooms, public showers, changing rooms, locker rooms, and tanning salons, all aimed at filming unsuspecting victims in various states of undress. Often, the invasion of privacy is exacerbated when captured images are posted on the Internet for all the world to see."

Sen. Leahy added that "The bill before the Senate today covers the simultaneous Web casting of images or any other transmissions that may not be recorded so that defendants who use this means of violating people's privacy cannot escape punishment."

DC Circuit Rules in EMR v. FCC

12/7. The U.S. Court of Appeals (DCCir) issued its opinion [8 pages in PDF] in EMR Network v. FCC, a case regarding environmental impacts of FCC decisions.

EMR Network filed a petition asking the FCC to initiate an inquiry on the need to revise its regulations to address nonthermal effects of radio frequency (RF) radiation. The FCC's Office of Engineering and Technology (OET) rejected EMR’s initial petition; EMR submitted further materials; and, the FCC issued an order rejecting EMR's petition.

EMR then filed the present petition for review, arguing that the FCC violated § 102 of the National Environmental Policy Act (NEPA), which is codified at 42 U.S.C. § 4332.

The Court of Appeals rejected the petition for review. It reviewed the actions of the FCC, the language of the NEPA, and other court cases construing the NEPA, and concluded that the FCC did not violated the NEPA.

This case is EMR Network v. FCC and USA, No. 03-1336, a petition for review of a final order of the FCC. Judge Williams wrote the opinion of the Court, in which Judges Edwards and Garland joined.

FTC Settles With Alyon Technologies

12/7. The Federal Trade Commission (FTC) announced that the FTC and Alyon Technologies, Inc. and Stephane Touboul entered into a Stipulated Final Judgment [29 pages in PDF] that settles the FTC's claims that the defendants engaged in unauthorized billing of consumers for purportedly accessing pormographic videotext services on the internet.

On May 13, 2004, the FTC filed a complaint in U.S. District Court (NDGa) against Alyon, Touboul, and Telcollect, Inc., alleging violation of the Federal Trade Commission Act, 15 U.S.C. §§ 45(a), 53(b), and 57b, and the Telephone Disclosure and Dispute Resolution Act of 1992, 15 U.S.C. § 5701, et seq., in connection with their alleged illegal billing and collection for pormographic videotext services accessed on the internet.

The FTC summarized the defendants actions in a release announcing the settlement. It states that "the defendants downloaded a modem-dialing program onto consumers' computers, allegedly after consumers clicked on a button to agree to the terms and conditions for such a download. The dialing program then disconnected consumers from their own Internet service providers and reconnected them to the defendants’ network. The defendants captured the telephone number used by the modem and matched it against databases of line subscriber information. The line subscribers identified as responsible for the captured telephone numbers later received bills charging them $4.99 a minute for each minute the defendants claimed videotext services were purchased, regardless of whether the line subscribers authorized the purchase."

Under the Stipulated Final Judgment the defendants will drop $17 Million in consumer bills, and forgive another $22 Million in bills if consumers challenge the charges. The Stipulated Final Judgment further imposes limitations upon defendants' business practices. It imposes no fines. Moreover, the defendants admit no wrongdoing.

Alyon and Touboul are represented by the law firm of McDermott Will & Emery in this proceeding.

Groups Complain to FTC About CRAs' Design of Web Site for Free Credit Reports

12/7. The Electronic Privacy Information Center (EPIC) and other groups wrote a letter to the Federal Trade Commission (FTC) in which they requested the FTC to compel credit reporting agencies (CRAs) to redesign the web site that they have created to comply with free annual credit report requirement imposed by the FACT Act.

The EPIC argues that the CRAs have blocked access to the web site via hyperlinking from most web sites, and have incorporated a number of design features that cause the web site to obtain low rankings in search engine results.

Introduction. The EPIC and the other signatories of the letter are advocacy groups involved in privacy policy. However, this letter illustrates a larger phenomenon. As the American public has increasingly come to rely upon the web for communications, commerce, and obtaining services, the Congress has enacted statutes that require government agencies, and regulated entities, to create web sites that contain certain information, or provide certain services. Moreover, regulatory agencies are promulgating rules that impose further and more detailed web site requirements upon regulated entities.

Yet, as the conduct of the three American CRAs in this matter might illustrates, regulated companies can create a web site that nominally complies with statutory and regulatory requirements, but nevertheless is not accessible to the public by the methods that consumers are accustomed to using.

In the present matter, the Congress enacted a statute in late 2003 (HR 2622, the FACT Act) that requires the CRAs to create a web site at which consumers can once per year obtain a free credit report on themselves. The CRAs have created such a web site. But, they designed it in a manner that makes it inaccessible by ordinary methods, including hyperlinks from news websites, and high rankings in search engine results.

For example, TLJ's web page titled "Reference" contains a hyperlink to the CRAs' new web site for free credit reports. When clicked late on Tuesday, December 7, it generated only an error page. However, clicking in a hyperlink in an e-mail from TLJ did not produce an error page.

Similarly, late on December 7, entering the search phrase "free credit report" (in quotations) in several search engines produced no high rankings for the CRAs' new web site. Google provided a ranking of 52.

Statute and Regulations. The Congress enacted the original Fair Credit Reporting Act (FCRA) in 1970. It was Public Law No. 91-508. It is now codified at 15 U.S.C. §§ 1681, et seq.

The current Congress, the 108th, amended the FCRA with HR 2622, the "Fair and Accurate Credit Transactions Act of 2003", which is also known as the FACTA or FACT Act. President Bush signed the bill on December 4, 2003. It is now Public Law No. 108-159.

Section 211 of HR 2622 provides that "All consumer reporting agencies described in subsections (p) and (w) of section 603 shall make all disclosures pursuant to section 609 once during any 12-month period upon request of the consumer and without charge to the consumer." It also provides that the FTC "shall prescribe regulations applicable to each consumer reporting agency described in section 603(w) to require the establishment of a streamlined process for consumers to request consumer reports ..."

Section 211 further provides that the FTC "shall prescribe regulations applicable to consumer reporting agencies ... to require the establishment of ... a centralized source through which consumers may obtain a consumer report from each such consumer reporting agency, using a single request, and without charge to the consumer ..." It further provides that "The centralized source for a request for a consumer report from a consumer required by this subsection shall provide for ... (B) use of an Internet website for such purpose ..."

The FTC published a notice [36 pages in PDF] in the Federal Register on June 24, 2004 that describes and sets out its new rule for free credit reports. See, Federal Register, June 24, 2004, Vol. 69, No. 121, at pages 35468 - 35502.

The FTC rules provide that "The purpose of the centralized source is to enable consumers to make a single request to obtain annual file disclosures from all nationwide consumer reporting agencies".

The EPIC's letter asserts that the CRAs have violated Section 610(g)(2) of these rules. Section 610(g) provides, in full as follows:

(g) Communications provided by centralized source.
  (1) Any communications or instructions, including any advertising or marketing, provided through the centralized source shall not interfere with, detract from, contradict, or otherwise undermine the purpose of the centralized source stated in paragraph (a) of this section.
  (2) Examples of interfering, detracting, inconsistent, and/or undermining communications include:
    (i) A website that contains pop-up advertisements or other offers or promotions that hinder the consumer's ability to complete an online request for an annual file disclosure;
    (ii) Centralized source materials that represent, expressly or by implication, that a consumer must purchase a paid product in order to receive or to understand the annual file disclosure;
    (iii) Centralized source materials that represent, expressly or by implication, that annual file disclosures are not free, or that obtaining an annual file disclosure will have a negative impact on the consumer’s credit standing; and
    (iv) Centralized source materials that falsely represent, expressly or by implication, that a product or service offered ancillary to receipt of a file disclosure, such as a credit score or credit monitoring service, is free, or fail to clearly and prominently disclose that consumers must cancel a service, advertised as free for an initial period of time, to avoid being charged, if such is the case.

The FTC's discussion of this language suggests that subsection (g)(2) does not pertain to inhibiting access to the central web site, but rather pertains to ads and other communications that the consumer encounters while using the central web site. See, page 35486 of Federal Register notice.

Hence, neither the statute, nor the regulations, provide a clear prohibition of the web site design features used by the CRAs that frustrate consumer access to the site by customary methods.

EPIC Letter. The groups joining in the letter are the EPIC, Consumers Union (CU), Privacy Rights Clearinghouse (PRC), Consumer Federation of America (CFA), US PIRG, and Privacy Times.

They wrote that "Congress required the national credit reporting agencies to operate a free, central source for obtaining credit reports. They have done so, but in creating the site,, the credit reporting agencies have blocked web links from reputable consumer sites such as Privacy Rights Clearinghouse ( and Consumers Union (, and from mainstream news web sites." The letter states that if web users click on such a link, they get the following error message.

For security purposes, can be accessed by typing the web address "", or from links from the Federal Trade Commission (, Equifax (, Experian ( and TransUnion ( websites. is the only web source authorized by all three nationwide consumer credit reporting companies from which free annual credit file disclosures can be requested.

The letter continues that "Links from consumer groups and news sites reduce the risk of phishing. In fact, by blocking the links and requiring consumers to type in the URL, the credit reporting agencies are creating new security risks. In typing in "," an individual may misspell the URL, and thereby be directed to a fraudulent website with a similar URL."

The blocking of access via clicking on hyperlinks, in turn, also frustrates the method by which the better search engines operate. The EPIC letter states that "Many search engines treat links as an indicator of relevance. The more links to a website present, the easier it is to find on a search engine. Therefore, if the credit reporting agencies block the links, they reduce the likelihood that individuals will find the free source."

The letter also delves in the CRAs' failure to employ meta keyword tags in the source code of web pages in a manner that would maximize consumer access through search engine results.

Finally, the EPIC letter asserts that the CRAs' web site "is not Section 508 compliant", because "the most basic requirements for access to the site for people with disabilities are absent". There is a Section 508 in the Workforce Investment Act of 1998. It was enacted as HR 1385 in the 105th Congress. It is Public Law No.105-220. However, while it imposes requirements regarding disability access, it only applies to federal departments and agencies. The CRAs are not federal departments or agencies.

The EPIC letter does not advance the argument that the CRAs' free credit report web site violates the Americans with Disabilities Act (ADA), which does apply to the private sector. However, there is scant authority or argument for the proposition that the ADA, which applies to public accommodations, would apply to the web site in question.

The EPIC letter concludes that "every subtle and not so subtle web design tactic has been employed to make difficult to find and use".

See also, the EPIC's web page titled "The Fair Credit Reporting Act (FCRA) and the Privacy of Your Credit Report".

7th Circuit Rules on Jurisdictional Issues in IP Case

12/7. The U.S. Court of Appeals (7thCir) issued its opinion [18 pages in PDF] in Salton v. Philips, three consolidated appeals in related cases pertaining to misappropriation of trade secrets and copyright infringement. However, this case is primarily about some of the many procedural issues that can arise when multiple parties, from multiple nations, bring multiple suits, in multiple courts to resolve their intellectual property disputes.

Salton, which is based in Illinois, and Philips, which is based in the Netherlands, both make consumer appliances. This case involves coffee makers. Electrical & Electronics Ltd. (E&E) is a Hong Kong based manufacturer. Both Salton and Philips contracted with E&E to make coffee makers. Philips provided Salton with proprietary information, on how to make coffee and coffee makers, including software. Its contract with E&E prohibited E&E from revealing proprietary information to third parties. The contract also included a choice of forum clause, which designated Hong Kong. E&E was also hired by Salton to make coffee makers, and Philips asserts that E&E passed proprietary information to Salton.

In another action, Philips filed a complaint in a court in Hong Kong against E&E alleging misappropriation of proprietary information. Philips also sued E&E in Hong Kong for copyright infringement.

But, before Philips could sue Salton, Salton, which based in Chicago, filed a complaint in U.S. District Court (NDIll) against Salton seeking declaratory relief. Jurisdiction was based upon diversity of citizenship. However, the District Court held that E&E is an indispensable party, and diversity is therefore defeated, because both Philips (Netherlands) and E&E (Hong Kong) are foreign corporations. Philips counterclaimed for copyright infringement, but a counterclaim cannot serve as the basis for federal question jurisdiction. Philips appeals the dismissal.

Philips also filed a separate complaint in the U.S. District Court (NDIll) against Salton alleging copyright infringement, the same claim as its counterclaim in Salton's suit. E&E intervened. But, since jurisdiction in this case was based upon a federal question, E&E participation did not affect jurisdiction. The District Court nevertheless dismissed this complaint also. Philips appeals this dismissal also.

Finally, in a third suit in the U.S. District Court (NDIll) E&E sought injunctive relief barring Philips from suing it anywhere but Hong Kong. The District Court denied E&E's request. E&E appeals.

Thus, the Court of Appeals was presented with appeals in three related cases. The 7th Circuit of late has randomly assigned most of its interesting intellectual property cases to Judge Richard Posner, who has taken a keen interest in the subject, and has just co-authored a book, The Economic Structure of Intellectual Property Law [Amazon].

This case perplexed and frustrated Judge Posner to no end. He could not figure out why the parties took the actions that they did. For example, it was Salton that rushed to the court in Chicago with a declaratory judgment action, but it is Philips that seeks to keep the case there. Posner also expresses frustration with counsel's unfamiliarity with Hong Kong law. And, he was left stuck writing an entire complicated opinion on civil procedure, rather intellectual property law.

This opinion is about federal question jurisdiction, diversity jurisdiction, indispensable parties, and appellate procedure.

In the end, Posner affirmed the District Court's denial of E&E's request for an injunction against litigation in Chicago. Otherwise, he reversed the District Court's dismissal of the two other suits. The case is remanded to the District Court, and Philips can litigate its copyright claims against Salton. Although, Posner suggested that Salton might still file a motion to dismiss on the grounds of forum non conveniens. This would bring all of the litigation, including Hong Kong suits, together in Hong Kong.

This case is Salton, Inc. v. Philips Domestic Appliances, Philips v. Salton, and Salton v. Philips, U.S. Court of Appeals for the 7th Circuit, App. Ct. Nos. 04-1042, 04-1359 and 04-2994, appeals from the U.S. District Court for the Northern District of Illinois, Judge Joan Lefkow presiding. Judge Richard Posner wrote the opinion of the Court of Appeals, in which Judges Ripple and Rovner joined.

House Resolution Would Require that Bills and Amendments Be Published on Internet 24 Hours Before Consideration

12/7. Rep. Carolyn Maloney (D-CA) and Rep. George Miller (D-CA) introduced HRes 875, a resolution to amend the House rules to require that certain legislation be available to the public via the internet 24 hours been consideration on the House floor.

This resolution would amend clause 6(c) of House Rule XIII. Clause 6(c) begins with the phrase "The Committee on Rules may not report --". It then lists two items that the Committee may not report. The resolution would add a third item, which is as follows:

"(3) a rule or order eliminating the reading in full of any bill, resolution, conference report, or amendment unless such measure is available to all Members and made available to the general public by means of the Internet for at least 24 hours before its consideration."

The Rules Committee plays a gate keeping and agenda setting role in the House of Representatives. It often meets early in the evening and adopts a rule for consideration of a bill to be taken up the following morning or afternoon. The Rules Committee usually, but not always, publishes in its web site a copy of the rule, as well as any amendments that are made in order by the rule. However, this publication is less than 24 hours before consideration. Also, the Rules Committee sometimes does not publish the bill or amendments, especially large composite bills and conference reports considered at the tail end of a session.

People and Appointments

12/7. Federal Communications Commission (FCC) Commissioner Jonathan Adelstein took the oath office for a new five year term that expires June 30, 2008. Outgoing Sen. Tom Daschle (D-SD), Adelstein's former employer, administered the oath. Former Senate Republican leader Trent Lott (R-MS) was in attendance. Adelstein stated in a release [PDF] that "It was particularly touching to be sworn in with the same bipartisan spirit that led to my confirmation by the U.S. Senate." When Adelstein was nominated the first time, Senate Republicans delayed his confirmation, because Senate Democrats were delaying other nominees.

12/7. Pamela Arluk was promoted to the position of Legal Counsel in the Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB). She will be responsible for matters addressed by the WCB's Competition Policy Division (CPD) and Industry Analysis and Technology Division (IATD). Arluk joined the FCC in 2002. She was a Senior Attorney Advisor in the CPD. She has been a team leader for the Triennial Review Reconsideration Orders, and team leader for the Section 271 proceedings for the states of Illinois, Indiana, Wisconsin, Ohio and Nevada. Before joining the FCC, she worked Focal Communications. See, FCC release [PDF].

12/7. Jeremy Marcus was promoted to the position of Legal Counsel in the Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB). He will be responsible for the development and oversight of policy in the WCB's Telecommunications Access Policy Division (TAPD). He joined the FCC in 2002, and has been a Senior Attorney Advisor in the WCB's Pricing Policy Division (PPD), and a team leader on the pricing portion of the Virginia arbitration proceeding and of the ongoing reexamination of the TELRIC pricing rules. Before joining the FCC he was an attorney at the former law firm of Blumenfeld & Cohen. Many of the former B&C attorneys are at the law firm of Piper Rudnick Gray Cary. He also previously worked for MCI. See, FCC release [PDF].

More News

12/7. Federal Reserve Board (FRB) Governor Susan Bies gave a speech at a conference in Geneva, Switzerland in which she addressed, among other things, the history of the use of information technology in interest risk management. She said that back in the early 1980s, "One of the first challenges bankers faced in this environment was developing the information and analytical systems needed to manage the institution's overall interest rate sensitivity. So, in the early 1980s, taking advantage of the newly emerging computer technology and software, they developed asset-liability management models that integrated information on deposit and loan repricing." She also stated that "computer technology facilitated rapid innovation in financial instruments".

Supreme Court Denies Local Governments' Cross Petition for Cert in Brand X Case

12/6. On December 3, 2004, the Supreme Court issued an order [1 page in PDF] in which it granted petitions for writ of certiorari in NCTA v. Brand X Internet Services, No. 04-277, and FCC v. Brand X Internet Services, No. 04-281. The Court also consolidated the two cases. On December 6, the Supreme Court denied certiorari, without opinion, in National League of Cities v. FCC, No. 04-460. See, Order List [9 pages in PDF] at page 2.

All of these petitions for writ of certiorari pertain to the Federal Communications Commission's (FCC) March 14, 2002, Declaratory Ruling and Notice of Proposed Rulemaking [75 pages in PDF], and the October 6, 2003, opinion [39 pages in PDF] of the U.S. Court of Appeals (9thCir) (which is also published at 345 F.3d 1120) vacating the FCC's declaratory ruling.

See also, story titled "9th Circuit Vacates FCC Declaratory Ruling That Cable Modem Service is an Information Service Without a Separate Offering of a Telecommunications Service" in TLJ Daily E-Mail Alert No. 754, October 7, 2003; and story titled "Reaction to 9th Circuit Opinion in Brand X Internet Services v. FCC" in TLJ Daily E-Mail Alert No. 756, October 9, 2003.

The Declaratory Ruling states that "we conclude that cable modem service, as it is currently offered, is properly classified as an interstate information service, not as a cable service, and that there is no separate offering of telecommunications service." This item is FCC 02-77 in Docket No. 00-185 and Docket No. 02-52.

The NCTA (in No. 04-277) and the FCC (in No. 04-281) filed petitions for writ of certiorari. The National League of Cities (in No. 04-460) filed a Conditional Cross Petition for Writ of Certiorari.

The NCTA and FCC seek review of the Court of Appeals' holding that cable modem service is partly an information service and partly a telecommunications service.

That is, the Court of Appeals, without applying Chevron deference, vacated the FCC's declaratory ruling, on the basis that it was bound by its June 22, 2000 opinion in AT&T v. Portland, which is also reported at 216 F.3d 871). Neither the Appeals Court's Portland opinion, nor its Brand X opinion, held that cable modem service is a cable service within the meaning of the Communications Act. The portion of the FCC's declaratory ruling that states that cable modem service is not a cable service, remains unchallenged by the Appeals Court.

The Appeals Court's proceeding was a consolidation of numerous petitions for review filed in several different circuits. (The 9th Circuit won the lottery.) The National League of Cities, along with the National Association of Telecommunications Officers and Advisors, the United States Conference of Mayors, the National Association of Counties, and the Texas Coalition of Cities for Utility Issues, and others argued that cable modem service is both an information service and a cable service, and therefore is subject to regulation by local authorities as a cable service.

The National League of Cities petition seeks Supreme Court review of the Appeals Court holding to the extent that it holds that cable modem service is not a cable service. One aspect of this cross petition that is notable is that since the Appeals Court agreed with the FCC that cable modem service is not a cable service, there is no issue of failure to apply Chevron deference.

In contrast, the FCC's case rests heavily on the argument that the 9th Circuit failed to apply Chevron deference. See, Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984).

The Petition for Writ of Certiorari [37 pages in PDF] filed by the Department of Justice's (DOJ) Office of the Solicitor General (OSG), the DOJ's Antitrust Division, and the FCC on September 3, 2004 states that "This case is likely to determine the regulatory classification under the Communications Act that will apply to broadband (i.e., “high-speed”) Internet access services in the United States. The Federal Communications Commission concluded that broadband service provided over cable television facilities, known as “cable modem” service, should be classified as an “information service” under the Communications Act, a classification that would presumptively keep cable modem providers free from regulation as telecommunications common carriers under the Act."

The petition continues that "the Ninth Circuit, acting in a series of cases that had been filed in various circuits but consolidated and by lottery assigned to that court, rejected the FCC's conclusion without evaluating the substance of the agency’s decision or applying the standards for administrative deference set forth in Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984). Instead, the court held that stare decisis compelled adherence to its own circuit precedent -- dating from before the FCC had reached its conclusion on the issue -- that classified cable modem service as partly an information service and partly a telecommunications service. See AT&T Corp. v. City of Portland, 216 F.3d 871 (9th Cir. 2000). Absent this Court's review, therefore, a vastly important aspect of national telecommunications policy will have been settled in the Ninth Circuit, and for all practical purposes throughout the country, without any evaluation whatever of the FCC’s contrary interpretation of the statute it is charged with administering."

The petition argues that "The Ninth Circuit has incorrectly overridden the expert agency responsible for administering and interpreting the Communications Act with respect to a communications policy issue of immediate and compelling national importance: the regulatory framework under the Act that will apply to, and thus either promote or retard, the timely and universal deployment of broadband Internet access services in the United States. If the court of appeals’ decision stands, the FCC will be required to regulate cable modem service -- and likely other forms of broadband Internet access service -- as a telecommunications service under the Communications Act, even though the Commission has concluded that such regulation is inconsistent with, and would directly threaten, the important federal policy of promoting access to those services."

See, story titled "Office of the Solicitor General Backs FCC in Brand X Case" in TLJ Daily E-Mail Alert No. 968, September 2, 2004.

The Supreme Court announced that it granted the FCC's and NCTA's petitions on Friday, December 3, 2004. See, story titled "Supreme Court Grants Certiorari in Brand X Case" in TLJ Daily E-Mail Alert No. 1,029, December 3, 2004.

More groups and companies have since commented on the Supreme Court's decision.

The Consumers Union and the Consumer Federation of America (CFA) wrote in a joint release that "We are confident that when the Court examines the facts, it will decide to uphold the 9th Circuit Appeals Court ruling that affirmed the critical principle of open, non-discriminatory networks as the cornerstone of competition in communications markets." The CFA was a party to the 9th Circuit proceeding.

They added that "The principles of non-discrimination in communications have been a cornerstone of our democracy and dynamic economy since the founding of our republic. Indeed, it is a fundamental part of common law that reaches back to the earliest days of capitalism. We are confident that the Supreme Court will uphold the principle, as the 9th Circuit Court of Appeals has done twice, and put an end to the legal gymnastics at the FCC that has denied consumers choice and slowed the spread of broadband."

The Media Access Project (MAP) wrote in a release that "we're disappointed that the Supreme Court has decided to hear the government’s appeal of the Brand X internet open access case." The MAP was involved in the 9th Circuit proceeding as counsel for the Center for Digital Democracy.

The MAP asserted that this case "is an important test of the First Amendment in the age of the Internet." It elaborated that "The right of citizens to send and receive any content over the Internet depends on rules which allow them to take full advantage of the open architecture of the Internet. If the Supreme Court rules against Internet open access, cable companies will be able to block content at will for political or financial reasons, and deny the public the ability to choose among competing Internet providers."

BellSouth stated in a release that "The Supreme Court's decision to hear these cases is a positive step. The high court's resolution of the cases in favor of the FCC's previous determination will clear the way for the Commission to finish work on modernizing regulations to allow all internet service providers -- phone companies, cable companies, satellite companies and independents -- to compete under the same rules as they bring high-speed internet services to their customers."

SEC Official Suggests Role for Web and E-Mail in Mutual Fund Disclosure Regime

12/6. Paul Roye, Director of the Securities and Exchange Commission's (SEC) Division of Investment Management, gave a speech in Washington DC titled "Mutual Fund Regulation: What Happens Next".

He discussed, among other topics, the SEC's review of the mutual fund disclosure regime. He said that he believes that this "will be the Commission's upcoming mutual fund regulatory agenda".

He said that as new new mutual fund disclosures have been imposed, it can lead to "information overload". He suggested utilizing new communications technologies, including web site based disclosures.

He said that "It has been over six years since the Commission adopted its mutual fund prospectus simplification reforms. In the intervening years, prospectuses have started to bulk up again-containing information that is no doubt useful, but perhaps in a format and in a level of detail that may be overwhelming for many mutual fund investors. During the same period, we have witnessed the continued acceptance of the Internet, e mail and other disclosure mediums from which to obtain information, including investment information."

He added that "I believe that there is a role for ``layered´´ disclosure in the mutual fund regime. By layered, I mean getting critical, key information into the hands of investors when they are making an investment decision or reviewing a fund investment, while providing investors-and their advisors and the financial press-access to more detailed information that can flesh out some of the details for those investors who have particular areas of interest and concern."

SEC's Glassman Addresses Use of Internet in Securities Offerings

12/6. Securities and Exchange Commission (SEC) Commissioner Cynthia Glassman gave a speech in San Francisco, California in which she suggested that some of the 1930s era restraints on the offering of securities are obsolete in the context of internet based communications.

Cynthia GlassmanGlassman (at right) stated that "just because a rule represents the way it has always been done, doesn't necessarily make it right now. Over time, rules can become obsolete or outlive their original purpose."

She elaborated that "A good example is the Commission's recent release soliciting comments on proposed changes to the implementation of the Securities Act of 1933 that, among other things, would make it easier for issuers, especially the largest issuers, to disseminate information to investors during the securities offering process. This proposal arose, at least in part, from the recognition that the internet and other means of communications have revolutionized the flow of information, rendering some of the Commission's information restrictions outdated, if not outright impediments to the offering process."

She said that "The goal of the proposed rule is to promote the delivery of information to investors in a more transparent and efficient manner by streamlining the offering process and removing restrictions that at one time were appropriate but may no longer be necessary."

The SEC has issued a Notice of Proposed Rulemaking. It states, for example, that "Significant technological advances over the last three decades have increased both the market's demand for more timely corporate disclosure and the ability of issuers to capture, process, and disseminate this information. Computers, sophisticated financial software, electronic mail, teleconferencing, videoconferencing, webcasting, and other technologies available today have replaced, to a large extent, paper, pencils, typewriters, adding machines, carbon paper, paper mail, travel, and face-to-face meetings relied on previously. Our evaluation of the securities offering process and procedural enhancements seeks to recognize the integral role that technology plays in timely informing the markets and investors about important corporate information and developments."

Public comments in response to this NPRM are due by January 31, 2005.

See also, TLJ story titled "Can Securities Registration Survive the Internet?", November 13, 1998.

Supreme Court Denies Certiorari in Pruitt v. Comcast

12/6. The Supreme Court denied certiorari, without opinion, in Martin Pruitt v. Comcast Cable Holdings, No. 04-308, a case regarding privacy and cable converter boxes. See, Order List [9 pages in PDF] at page 2.

Martin Pruitt, and other subscribers of Comcast's digital cable service, filed a complaint in U.S. District Court (DColo) against Comcast Cable Holdings, LLC alleging violation of the 1984 Cable Communications Privacy Act, which is codified at 47 U.S.C. § 551, et seq., in connection with its alleged retention of personally identifiable information in its cable converter boxes without notice or consent.

The District Court granted summary judgment to Comcast. Pruitt and other plaintiffs appealed. The U.S. Court of Appeals (10thCir) affirmed in its June 3, 2004 Order and Judgment. And now, the Supreme Court has declined to take the case, letting stand the opinion of the Court of Appeals.

Subsection 551(a) provides, in part, that "At the time of entering into an agreement to provide any cable service or other service to a subscriber and at least once a year thereafter, a cable operator shall provide notice in the form of a separate, written statement to such subscriber which clearly and conspicuously informs the subscriber of ... the nature of personally identifiable information collected or to be collected with respect to the subscriber and the nature of the use of such information".

In addition, subsection 551(e) provides, in part, that "A cable operator shall destroy personally identifiable information if the information is no longer necessary for the purpose for which it was collected and there are no pending requests or orders for access to such information under subsection (d) of this section or pursuant to a court order."

The plaintiffs alleged violation of both subsections (a) and (e). The District Court granted summary judgment on the basis that the boxes retained no personally identifying information.

The Appeals Court wrote that "The heart of this dispute is whether the information stored within Comcast's converter boxes is personally identifiable information. ... Appellants concede the information in the converter boxes does not contain the name, address or any information regarding the customer. However, they maintain the unit address enables Comcast to identify a customer's viewing habits by connecting the coded information with its billing or management system. Because the information in any given converter box is not eradicated when it is recycled to another customer, they conclude the converter boxes contain personally identifiable information which may never be purged."

The Appeals Court continued that "the district court distinguished the information in the converter boxes from that contained in the billing system. It noted the converter box code -- without more -- provides nothing but a series of numbers."

The Appeals Court agreed with the District Court's analysis. "Without the information in the billing or management system one cannot connect the unit address with a specific customer; without the billing information, even Comcast would be unable to identify which individual household was associated with the raw data in the converter box. Consequently, it is the billing system that holds the key to obtaining personally identifiable information, not the converter box. Appellants made no claim in their briefs or at oral argument that the collection of information in the billing system violates the Cable Act. Moreover, Comcast's privacy notice to subscribers clearly states the retention policies related to information in the billing system".

This case is Martin Pruitt, et al. v. Comcast Cable Holdings, LLC, Sup. Ct. No. 04-308, a petition for writ of certiorari to the U.S. Court of Appeals for the 10th Circuit. The Appeals Court case is No. 03-1297. The District Court case is D.C. No. 00-N-1250.

Supreme Court Reverses in San Diego v. Roe

12/6. The Supreme Court issued its opinion [7 pages in PDF] in San Diego v. Roe, a First Amendment free speech case involving the government's ability to impose restrictions upon the speech of government employees. The Supreme Court reversed the U.S. Court of Appeals (9thCir).

This case involved a police officer's sale of homemade pormographic DVDs on eBay. This is nevertheless a significant case for technology. While few public employees will wish to sell sordid DVDs of themselves online, many public employees engage in discussions in blogs, chat rooms, bulletin boards, and other interactive fora, in which they disclose information about, or offer criticisms of, the activities and operations of the agencies for which they may or may not work.

The 9th Circuit's opinion, if it had been allowed to stand, might have essentially eliminated, in the 9th Circuit, the requirement that public employees speak on a matter of "public concern" before their speech can be considered protected by the First Amendment against restriction by the government.

The Supreme Court made no new law. Rather, the 9th Circuit issued an opinion [42 pages in PDF] that failed to follow Supreme Court precedent. The Supreme Court once again reminded the 9th Circuit that it is an inferior court. The Supreme Court's opinion is short, brutish and per curiam.

The 9th Circuit's opinion purported to rely upon the Supreme Court's 1995 opinion in United States v. National Treasury Employees Union, 513 U.S. 454, which as also known at the NTEU case. The Supreme Court wrote that the 9th Circuit's "reliance on NTEU was seriously misplaced". The Supreme Court added that "We have little difficulty in concluding" that the 9th Circuit erred. The Court concluded with a nasty comment: "this is not a close case".

It is also notable that the Supreme Court wrote this opinion without bothering to receive briefs or hear oral argument. In one action, the Supreme Court granted certiorari, reversed the 9th Circuit, and issued its opinion.

The plaintiff below is identified only as John Roe. He was a police officer for the City of San Diego, California. He made DVDs of himself removing a police uniform and masturbating. He then sold these DVDs on eBay's auction web site. Roe also failed to follow orders from his superiors to remove items from eBay. San Diego terminated his employment.

Roe filed a complaint in U.S. District Court (SDCal) against San Diego alleging that it violated his First and Fourteenth Amendment free speech rights. The District Court granted summary judgment to San Diego. Roe appealed. The 9th Circuit reversed. It held that what Roe did was protected free speech, and that is was "commentary on matters of public concern", protected by the First Amendment, as construed by the NTEU opinion.

This case involves the scope of the government's power to impose certain restraints on the speech of government employees. The leading cases on point are Connick v. Myers, 461 U.S. 138 (1983) and Pickering v. Board of Education, 391 U.S. 563 (1968). The Supreme Court reaffirmed that these case are still good law.

The Supreme Court wrote in the present opinion that "a governmental employer may impose certain restraints on the speech of its employees, restraints that would be unconstitutional if applied to the general public. ... The Court has recognized the right of employees to speak on matters of public concern, typically matters concerning government policies that are of interest to the public at large, a subject on which public employees are uniquely qualified to comment." But, the Supreme Court held that what Roe did was not commentary on matters of public concern.

The NTEU case involved the federal government's efforts to restrict federal employees' income from outside speaking and writing on topics unrelated to their employment. The Supreme Court wrote in the present case that Roe's activities were not unrelated to his work. He wore a uniform, and identified himself as a law enforcement officer, thereby bringing disrepute upon police officers. Moreover, Roe's activities did not meet the "public concern" test.

The Court wrote that the Pickering case requires "a court evaluating restraints on a public employee's speech to balance ``the interests of the [employee], as a citizen, in commenting upon matters of public concern and the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees.´´" And then, the Court wrote that the Connick case clarifies that "in order to merit Pickering balancing, a public employee's speech must touch on a matter of ``public concern.´´"

The Court then applies the facts of the Roe case to Supreme Court precedent, and concluded that Roe's "expression does not qualify as a matter of public concern under any view of the public concern test. He fails the threshold test and Pickering balancing does not come into play."

Judge Raymond Fisher wrote the opinion of the 9th Circuit, in which Judge Dorothy Nelson joined. Judge Kim Wardlaw wrote a vigorous dissent.

More Supreme Court News

12/6. The Supreme Court denied certiorari in Phonometrics v. ITT Sheraton, No. 04-543, a patent case involving phone technology. See, Order List [9 pages in PDF] at page 2. See also, opinion of the U.S. Court of Appeals (FedCir).

12/6. The Supreme Court denied certiorari in Colida v. Motorola, No. 04-6633, a design patent case. See, Order List [9 pages in PDF] at page 7. Motorola prevailed below. See, October 8, 2003 opinion [PDF] of the U.S. District Court (FedCir). Tony Colida has sued several cell phone manufacturers. Also, on December 2, 2004, the Federal Circuit issued its opinion [PDF] in another case, affirming the District Court's judgment of non-infringement for Sanyo North America Corporation.

12/6. The Supreme Court announced that "The Court will take a recess from Monday, December 13, 2004, until Monday, January 10, 2005. See, Order List [9 pages in PDF] at page 9.

Powell Urges Senate to Approve Telecom Bill

12/6. Federal Communications Commission (FCC) Chairman Michael Powell issued a statement [PDF] in which he commented on HR 5419.

This is a composite bill that includes the "Commercial Spectrum Enhancement Act" (CSEA), the "ENHANCE Act", and the "Universal Service Antideficiency Temporary Suspension Act". See, story titled "House Approves Bill that Includes the Commercial Spectrum Enhancement Act" in TLJ Daily E-Mail Alert No. 1,025, November 24, 2004.

Powell wrote that "I understand that Congress is close to moving on a package of telecommunications provisions-namely a spectrum relocation trust fund, an exemption to the Anti-Deficiency Act, and E911 legislation. The trust fund legislation is a vital step to release valuable spectrum for wireless broadband services. Similarly, the E911 provisions provide critical resources to America's first responders."

He added that "USAC recently filed its projections of demand and total contribution base for the first quarter of 2005 for the universal service support mechanism. These filings demonstrate that the temporary Anti-Deficiency Act exemption is necessary to mitigate unnecessary increases to our contribution factor as well as to ensure our school children have continued access to computer resources. I hope that Congress is able to pass this legislation before adjourning."

The House approved this bill on November 20, 2004. The Senate returns on Tuesday, December 7, 2004.

Sen. Wyden to Leave Commerce Committee

12/6. Sen. Ron Wyden (D-OR) announced that he will be named to the Senate Finance Committee, and will therefore give up his seat on the Senate Commerce Committee.

Sen. Ron WydenSen. Wyden (at right) is one of the leading technophiles in the Senate. Much of the technology related legislation considered by the Senate falls within the jurisdiction of the Commerce Committee.

The Finance Committee has jurisdiction over most tax matters and social security. However, it does possess some technology related jurisdiction, particularly with respect to trade and taxation of technology.

Sen. Wyden issued a release that states that he will "continue to promote robust and responsible Federal technology policy as a member of the Finance panel. As the author of the ban on unfair and discriminatory taxation of the Internet, he will maintain a major role in the creation of technology tax law; he will also seek to increase the growth and economic impact of the U.S. technology sector."

People and Appointments

12/6. The United Kingdom based DLA and the U.S. based Piper Rudnick Gray Cary announced their merger. The merged entity will be named DLA Piper Rudnick Gray Cary Group. In October, Piper Rudnick and Gray Cary Ware & Freidenrich announced their merger to form Piper Rudnick Gray Cary. Both mergers are effective January 1, 2005. See, Gray Cary release and DLA release.

12/6. The intellectual property law firm of Townsend Townsend Crew announced that, effective January 1, 2005, it has elevated the following attorneys to partner: April Abele, Laurence Hyman, and Igor Shoiket (in the firm's San Francisco office), Sujit Kotwal (Palo Alto), Gerald Gray (Walnut Creek), and Thomas Franklin and Ian Saffer (Denver office). See, release.

12/6. Jonathan Retsky returned to the law firm of Brinks Hofer in its Chicago office. He was previously the head of Motorola's patent operations. See, release.

12/6. Valerie Di Maria was named Corporate VP of Communications and Public Affairs at Motorola. See, release.

12/6. Pam Wickham was named VP of Corporate Communications at Hewlett Packard. HP stated in a release that she will "lead HP's external communications strategy and oversee corporate media relations, corporate analyst relations, executive communications, and corporate events and tradeshows". She previously worked for GE Healthcare.

Go to News from December 1-5, 2004.