FCC Rules That State PUCs Cannot Require ILECs To Provide DSL To CLEC's UNE Voice Customers With Voice Service

3/25. The Federal Communications Commission (FCC) issued a Memorandum Opinion and Order and Notice of Inquiry [24 pages in PDF] in its proceeding titled "In the Matter of BellSouth Telecommunications, Inc. Request for Declaratory Ruling that State Commissions May Not Regulate Broadband Internet Access Services by Requiring BellSouth to Provide Wholesale or Retail Broadband Services to Competitive LEC UNE Voice Customers".

The order portion of this item states that "we find that a state commission may not require an incumbent local exchange carrier (LEC) to provide digital subscriber line (DSL) service to an end user customer over the same unbundled network element (UNE) loop facility that a competitive LEC uses to provide voice services to that end user."

FCC Commissioners Jonathan Adelstein and Michael Copps wrote in a separate statement [PDF] that this order "unwisely flashes the green light for broadband tying arrangements".

Adelstein (at right) and Copps explained that "A tying arrangement occurs when a seller conditions the availability of one product on the buyer’s purchase of a second product. Here, the incumbent carrier refused to sell DSL service to end-users who elected not to purchase voice service from the same carrier. Recognizing that this practice could limit consumer choice and reduce competition, Florida, Kentucky, Louisiana and Georgia chose to do something about it. Each state sought to put an end to tying practices that restricted the availability of broadband service to customers who also purchased analog voice service. The majority responds to these state efforts with the heavy hammer of preemption."

In contrast, Jonathan Banks, VP for Federal, Executive and Regulatory Affairs at BellSouth, the ILEC that filed the petition, stated in a release that "This FCC order continues progress on clearing out regulatory underbrush that handicaps rolling out broadband. By affirming a single national policy in this area, this FCC action will increase the speed and efficiency of bringing to consumers new and innovative broadband service offerings over wireline networks."

In the notice of inquiry (NOI) portion of this item, the FCC stated that "we seek to examine the competitive consequences when providers bundle their legacy services with new services, or ``tie´´ such services together such that the services are not available independent from one another to end users. We seek comment on how such bundling might affect both intramodal and intermodal competition and the effect that it might have on the public interest, including benefits to consumers."

The FCC also rejected efforts by law enforcement entities to sneak unrelated Communications Assistance for Law Enforcement Act (CALEA) determinations into this order. This item states that "We decline to address new and novel issues that are more appropriately dealt with in other Commission proceedings. For example, commenters argue that the Commission should determine that BellSouth’s wholesale and retail broadband Internet access services and its wholesale and retail DSL access services are subject to CALEA."

After the FBI filed its comment [8 pages in PDF], the FCC issued a Notice of Proposed Rulemaking and Declaratory Ruling (NPRM & DR) [100 pages in PDF] regarding imposing CALEA obligations upon broadband internet access services and voice over internet protocol (VOIP) services. That proceeding is ET Docket No. 04-295. See also, story titled "Summary of the FCC's CALEA NPRM" in TLJ Daily E-Mail Alert 960, August 17, 2004.

The FCC adopted this item on March 17, but announced and released it on March 25. This item is 05-78 in WC Docket No. 03-251.

9th Circuit En Banc Panel Holds That Copyright Infringement Actions Cannot Be Assigned

3/25. The U.S. Court of Appeals (9thCir) issued its divided en banc opinion [57 pages in PDF] in Silvers v. Sony, a case regarding whether an accrued action for copyright infringement can be assigned. The majority held that it cannot.

Nancey Silvers wrote the script of a made for television movie titled "The Other Woman", as a work made for hire for Bob & Frank Films. Bob & Frank Films produced the movie. It was broadcast on television. Three years late, Sony Pictures Entertainment produced a movie titled "Stepmom". Silvers asserts that Sony infringed the copyright for the script that she authored.

Bob & Frank Films did not sue Sony. Rather, it executed a document titled "Assignment of Claims and Causes of Action" in favor of Silvers. Bob & Frank Films retained ownership of the copyright in "The Other Woman".

Silvers then filed a complaint in U.S. District Court (CDCal) against Sony alleging copyright infringement, based upon the alleged substantial similarity of the two movies.

Sony filed a motion to dismiss, arguing that Silvers lacks standing to maintain the action because she has no ownership interest in the underlying copyright. The District Court denied Sony's motion to dismiss.

A three judge panel of the Court of Appeals affirmed. That opinion is also reported at 330 F.3d 1204. See also, story titled "9th Circuit Rules That An Accrued Cause of Action for Copyright Infringement May Be Assigned" in TLJ Daily E-Mail Alert No. 673, June 4, 2003.

An eleven judge en banc panel reversed. Judge Susan Graber wrote the majority opinion. Judge Marsha Berzon wrote a lengthy dissent that was joined by Judge Stephen Reinhardt. Judge Carlos Bea wrote a lengthy dissent that was joined by Judge Andrew Kleinfeld.

These three long and wide ranging opinions provide detailed discussions of the nature of copyright, the source of copyright law, rules of construction of the Copyright Act, the use of legislative history and legislative intent, the role of the underlying purpose of copyright protection, and other matters.

Judge Graber, writing for the majority, reasoned that copyright is solely a creature of statute. Hence, if Silvers has standing to sue, it must be granted by the Copyright Act.

Judge Graber relied heavily upon 17 U.S.C. § 501(b), which provides, in part, that "The legal or beneficial owner of an exclusive right under a copyright is entitled ... to institute an action for any infringement of that particular right committed while he or she is the owner of it."

Silvers is neither the legal nor beneficial owner of the copyright. Hence, Graber, who would not look beyond the statute, the legislative history and intent, and other opinions construing the Copyright Act of 1976, concluded Silvers has no standing.

She wrote that "an assignee who holds an accrued claim for copyright infringement, but who has no legal or beneficial interest in the copyright itself" cannot institute an action for infringement.

Four Judges rejected this analysis. Judge Berzon concluded that Silvers does have standing. She would extend standing to the holders of assignments, such as Silvers, who have an interest in the litigation. In this case, Silvers is the author. Judge Bea not only concluded that Silvers has standing to sue, but that any assignee of any accrued claim for infringement has standing.

The dissenters found several points of attack. First, they noted that while the statute provides that the "legal or beneficial owner of an exclusive right under a copyright" can sue, it does not state that anyone else lacks standing. Moreover, nothing in the statute prohibits the assignment of claims. As one dissenter noted, the Congress knows how to write a clause barring assignments of claims.

The dissenters also found support for their positions in materials outside of the statute, including the common law, contract law, the underlying purpose of copyright protection -- to incent authors such as Silvers to create works.

Judge Bea also wrote that the 9th Circuit has allowed assignees of other accrued claims that arise under federal statute to bring actions, and that it would be inconsistent not to allow assignees of copyright claims to bring actions.

There is also the matter of precedent. The Second Circuit has issued an opinion that is in accord with the majority opinion in this case. However, there is a contrary Fifth Circuit opinion. The majority concluded that it is inapplicable because it was written before the enactment of the Copyright Act of 1976, which includes the Section 501 language referencing "legal or beneficial owner of an exclusive right under a copyright". The dissenters argued that it remains precedent for the proposition that a copyright claim can be assigned.

Neither the majority opinion, nor either of the dissenting opinions, discusses Article 6 of the Berne Convention, the moral rights or authors, or the personal interests of authors in enforcing copyrights that are separate from the financial interests of the publishers that own the copyrights for their works.

This case is Nancey Silvers v. Sony Pictures Entertainment, Inc., App. Ct. No. 01-56069, an appeal from the U.S. District Court for the Central District of California, D.C. No. CV-00-06386-SVW.

More News

3/25. The Federal Communications Commission (FCC) announced deadlines for petitions and comments in its antitrust merger review proceeding (transfer of control of licenses) associated with the acquisition of MCI by Verizon. Initial comments and petitions to deny are due by May 9, 2005. Reply comments and oppositions to petitions to deny are due by May 24, 2005. See, FCC Public Notice DA 05-762 in WC Docket No. 05-75.

3/25. The Federal Communications Commission (FCC) released an order [6 pages in PDF] in its proceeding titled "In the Matter of Rules and Regulations Implementing the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991". This order amends the FCC's CAN-SPAM Act rules to reflect changes in the Federal Trade Commission's (FTC) rules. The proceeding is CG Docket Nos. 04-53 and 02-278.

3/25. The Copyright Office published a notice in the Federal Register announcing the voluntary negotiation period for the purpose of determining the royalty fees for the retransmission of digital over the air television broadcast signals by satellite carriers under the statutory license. The voluntary negotiation period commences on March 25, 2005 and concludes on April 25, 2005. Voluntary agreements must be submitted by April 25, 2005. See, Federal Register, March 25, 2005, Vol. 70, No. 57, at Pages 15368 - 15369.

3/25. The National Institute of Standards and Technology (NIST) released Special Publication 800-66 [huge PDF file] titled "An Introductory Resource Guide for Implementing the Health Insurance Portability and Accountability Act (HIPAA) Security Rule". SP 800-66 identifies NIST resources relevant to the specific security standards included in the HIPAA Security Rule, and provides implementation examples for each.

GAO Finds Weak Information Security At SEC

3/24. The Government Accountability Office (GAO) released a report [29 pages in PDF] titled "Information Security: Securities and Exchange Commission Needs to Address Weak Controls over Financial and Sensitive Data".

The report finds that the Securities and Exchange Commission (SEC) "did not effectively implement information system controls to protect the integrity, confidentiality, and availability of its financial and sensitive information. Specifically, the commission had not consistently implemented effective electronic access controls, including user accounts and passwords, access rights and permissions, network security, or audit and monitoring of security-relevant events to prevent, limit, and detect access to its critical financial and sensitive systems."

In addition, the GAO report identifies "weaknesses in other information system controls, including physical security, segregation of computer functions, application change controls, and service continuity, further increase the risk to SEC’s information systems.

This means that the SEC's "sensitive data -- including payroll and financial transactions, personnel data, regulatory, and other mission critical information -- were at increased risk of unauthorized disclosure, modification, or loss, possibly without being detected."

FEC Approves NPRM on Internet Speech

3/24. The Federal Election Commission (FEC) adopted its draft [48 page PDF scan] notice of proposed rulemaking (NPRM) regarding exempting certain unpaid individual communications on the internet from the Federal Election Campaign Act's (FECA) regulatory regime. The FEC approved the above hyperlinked NPRM with two minor changes.

The FEC inserted a date for a public hearing on this matter -- June 28 and 29, 2005. The FEC also made one minor change in wording. Also, public comments will be due 60 days after publication in the Federal Register.

FEC Commissioner Ellen Weintraub stated at the meeting that "We are not the speech police. The FEC does not tell private citizens what they can or cannot say, on the Internet, or elsewhere." The vote was 5-1. The one negative vote was cast by Commissioner David Mason. He did not oppose exempting certain internet activities. Rather, he stated that he voted against the NPRM because it does not go far enough in exempting internet speech. He favors a blanket internet exemption.

The vote is a setback for Sen. John McCain (R-AZ), Sen. Russ Feingold (D-WI), Rep. Christopher Shays (R-CT), and Rep. Marty Meehan (D-MA). Sen. McCain and Sen. Feingold were the Senate sponsors, and Rep. Shays and Rep. Meehan were the leading House proponents, of the 2002 act that required the FEC to write new regulations. The FEC did so, but added an exemption for internet communications.

Rep. Shays and Rep. Meehan challenged the FEC regulations in court, and won. Sen. McCain and Sen. Feingold supported their legal action. The FEC is undertaking the present rulemaking proceeding at the direction of the court. The four wrote a cautionary letter to the FEC on March 22.

The four authors of the opposition letter wrote that the overturned regulation "served to seriously undermine the law", and warned that the FEC should write new regulations "without creating loopholes".

See also, stories titled "Bloggers Dodge McCain Feingold Bullet" in TLJ Daily E-Mail Alert No. 1,102, March 24, 2005, "FEC to Consider Rules Regarding Internet Speech" in TLJ Daily E-Mail Alert No. 1,100, March 22, 2005, "Sen. Reid Introduces Bill to Exempt Internet Communications From Certain FEC Regulation" in TLJ Daily E-Mail Alert No. 1,101, March 23, 2005, and "Democratic Representatives Urge FEC Not to Regulate Blogs" in TLJ Daily E-Mail Alert No. 1,101, March 23, 2005.

TLJ intends to publish a more detailed story on this proceeding in the next issue.

People and Appointments

3/24. Daniel Bryant, the Assistant Attorney General in charge of the Department of Justice's (DOJ) Office of Legal Policy resigned, effective Friday, March 25, 2005. See, statement by Attorney General Alberto Gonzales.

3/24. President Bush announced his intent to nominate Sean McCormack to be Assistant Secretary of State for Public Affairs. See, White House release.

3/24. David Strickland was named Assistant Division Chief in the Federal Communications Commission's (FCC) International Bureau's (IB) Policy Division. He was previously a Legal Advisor to the Bureau Chief. Before joining the FCC in 2002 he worked for the law firm of Bryan Cave. See, FCC release [PDF].

3/24. Steven Spaeth was named Assistant Division Chief in the Federal Communications Commission's (FCC) International Bureau's (IB) Satellite Division. He was previously a Legal Advisor to the Bureau Chief. See, FCC release [PDF].

More News

3/24. The Federal Election Commission (FEC) announced the assessment of thirteen administrative fines. See, FEC release. One of the fined entities is titled "Friends of John Conyers". The FEC fined this committee $1,350 for not filing a 12 day pre-primary report. Rep. John Conyers (D-MI) is the ranking Democrat on the House Judiciary Committee. On March 11, he signed a letter to the FEC urging it not to impose the Federal Election Campaign Act's (FECA) regulatory regime upon individual bloggers. See, story titled "Democratic Representatives Urge FEC Not to Regulate Blogs" in TLJ Daily E-Mail Alert No. 1,101, March 23, 2005.

3/24. Computer Associates International, Inc. (CAI) and Quest Software Inc. announced that they have settled a lawsuit regarding intellectual property rights in the development of database administration products. See, CAI release and Quest release.

3/24. The Federal Communications Commission (FCC) published a notice in the Federal Register that describes and sets comment deadlines for its Further Notice of Proposed Rulemaking (FNPRM) regarding its intercarrier compensation system. The deadline to submit initial comments is May 23, 2005. The deadline to submit reply comments is June 22, 2005. This FNPRM is FCC 05-33 in CC Docket No. 01-92. The FCC adopted this FNPRM at its meeting of February 10, 2005, and released it on March 3, 2005. See, Federal Register, March 24, 2005, Vol. 70, No. 56, at Pages 15030 - 15044. See also, story titled "FCC Adopts FNPRM in Intercarrier Compensation Proceeding" in TLJ Daily E-Mail Alert No. 1,076, February 14, 2005.

Copps Addresses Satellite and Communications Issues

3/23. Federal Communications Commission (FCC) Commissioner Michael Copps gave a speech [PDF] at a dinner hosted by the Satellite Industry Association (SIA) and the Satellite Broadcasting and Communications Association (SBCA).

Copps (at right) stated that "the Commission needs to provide more certainty that satellite spectrum will remain satellite spectrum. We also need to guarantee that internationally harmonized spectrum isn't used for other purposes because such harmonization was won only after hard battles."

He discussed homeland security and public safety at length. He discussed, or referenced, communications readiness, communications infrastructure vulnerability, interoperability, redundancy, CALEA, E911 and GPS. And, he said that the new Chairman, Kevin Martin, should appoint one of the other Commissioners to "specifically to lead the FCC's efforts".

He also said that the FCC is "not adequately addressing" how "to integrate our hospitals, health centers, and doctors much more closely into the emergency response communications system".

Finally, he discussed the lack of transparency of other governments' regulation of communications. He said that "we should work harder internationally to improve the transparency of foreign regulatory regimes and ensure that they are not discriminatory."

In a related matter, on February 9, 2005, Copps and former Chairman Michael Powell wrote a letter [PDF] to Sen. Ted Stevens (R-AK), the Chairman of the Senate Commerce Committee, in which they stated that the open meeting requirement of the Government in Sunshine Act should no longer be applied to meetings of the FCC's Commissioners.

Bloggers Dodge McCain Feingold Bullet

3/23. The Federal Election Commission (FEC) released late on Wednesday, March 23, a draft [48 page PDF scan] of the notice of proposed rulemaking (NPRM) to be voted upon at the FEC's 10:00 AM meeting on Thursday, March 24. This draft NPRM contains many proposed changes to the FEC's rules pertaining to regulation of internet activity. These draft rules reflect an effort on the part of the FEC not to impose the federal election campaign regulatory regime upon individuals who, without compensation, engage in political speech in their own blogs, web sites, or e-mailings.

The FEC is conducting this rulemaking proceeding because the U.S. District Court (DC), Judge Colleen Kotelly presiding, vacated and remanded many of the FEC's previously promulgated regulations implementing the McCain Feingold Act. See, Shays v. FEC, 337 F.Supp.2d 28 (D.D.C. 2004). This bill, titled the Bipartisan Campaign Reform Act of 2002 (BCRA), amends the Federal Election Campaign Act (FECA).

The BCRA includes a definition of "public communication", which is now codified at  2 U.S.C. § 431(22). It provides that "The term ``public communication´´ means a communication by means of any broadcast, cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to the general public, or any other form of general public political advertising."

The FEC wrote in its rules that "The term public communication shall not include communications over the Internet." This is codified at 11 C.F.R. § 100.26. The District Court held that the FEC lacked authority to do this. Hence, internet communications, such as personal blogs, web sites, and e-mail, could be subject to regulation under the FECA as "public communication"s.

The NPRM now proposes to would revise §100.26 to provide that "Public communication means a communication by means of any broadcast, cable, satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to the general public, or any other form of general public political advertising. The term ``general public political advertising´´ shall not include communications over the Internet, except for announcements placed for a fee on another person's or entity's website."

The NPRM also proposes to revise its rules implementing the "press exemption" of the FECA, to take into consideration certain internet activities. First, the NPRM proposes to revise §100.73 to provide that "Any cost incurred in covering or carrying a news story, commentary, or editorial by any broadcasting station (including a cable television operator, programmer or producer), newspaper, magazine, or other periodical publication, whether the news story, commentary, or editorial appears in print or over the Internet, is not a contribution unless the facility is owned or controlled by any political party, political committee, or candidate ..." (Parentheses in original.)

Second, the NPRM proposes to revise §100.132 to provide that "Any cost incurred in covering or carrying a news story, commentary, or editorial by any broadcasting station (including a cable television operator, programmer or producer), newspaper, magazine, or other periodical publication, whether the news story, commentary, or editorial appears in print or over the Internet, is not an expenditure unless the facility is owned or controlled by any political party, political committee, or candidate ..." (Parentheses in original.)

The NPRM also would revise the rules pertaining to "contributions" and "expenditures" to clarify that certain uncompensated activities on the internet by individuals are not included. For example, the NPRM proposes to provide that "No contribution results where an individual, acting independently or as a volunteer, without receiving compensation, performs Internet activities using computer equipment and services that he or she personally owns for the purpose of influencing any Federal election, whether or not the individual's activities are known to or coordinated with any candidate, authorized committee or party committee."

The relief proposed by this draft NPRM would be limited almost exclusively to unpaid individuals. Internet based activities of corporations, non-profit corporations, and groups would remain largely unaffected by these proposed rules changes. One exception is a proposal to exempt "occasional, isolated and incidental" use of company computers by company employees in volunteer efforts on behalf of federal election campaigns.

Lexar Wins Jury Verdict In Flash Memory Case Against Toshiba

3/23. A trial jury of the Superior Court for the State of California, County of Santa Clara, returned a verdict in favor of Lexar Media on its theft of trade secrets and breach of fiduciary duty claims against Toshiba. The case involves flash memory technology.

The jury awarded Lexar $380 Million in damages. Lexar's claim for unfair competition, under California Business and Professions Code Section 17200, will be tried by the Court. See, Lexar release.

Lexar filed its complaint on November 5, 2002. See, Lexar's release of November 5, 2002.

This case is Lexar Media, Inc. v. Toshiba Corporation, Toshiba America Inc., Toshiba America Electronic Components, Inc., No. CV-812458. Lexar is represented by Matthew Powers of the Redwood Shores office of the law firm of Weil Gotshal & Manges.

There is also a pending civil action in U.S. District Court (NDCal) involving patent related claims. That action is Toshiba Corporation v. Lexar Media, Inc., D.C. No. C02 05273 (RS).

People and Appointments

3/23. John Stanley was named acting Legal Advisor to Federal Communications Commission (FCC) Commissioner Kathleen Abernathy. He will have primary responsibility for wireline competition issues, and will assist with some media issues. In addition, Matthew Brill, Abernathy's Senior Legal Advisor, will assume primary responsibility for media issues, and acting Legal Advisor John Branscome will be continue to be primarily responsible for wireless, international, and technology issues. See, FCC release [PDF].

3/23. President Bush announced his intent to nominate Timothy Adams to be Under Secretary of the Treasury for International Affairs. He previously worked on the Bush-Cheney 2004 election campaign. Before that, he was Chief of Staff at the Department of the Treasury. And before that, he worked on the Bush-Cheney 2000 election campaign. See, White House release.

3/23. President Bush announced his intent to designate Arnold Havens the Acting Deputy Secretary of the Treasury. He is the General Counsel. See, White House release.

People and Appointments

3/23. Dina Dublon was named to the Board of Directors of Microsoft. She was previously EVP and CFO of JPMorgan Chase. Microsoft expanded the size of its Board from nine to ten. See, Microsoft release.

3/23. Arvind Sodhani was named President of Intel Capital, effective immediately. He was SVP and Treasurer. He replaces John Miner as President. Miner will leave Intel on June 1, 2005. In addition, Pamela Pollace, VP and Director of Intel's Corporate Communications Group, will leave Intel on May 1, 2005. See, Intel release.

3/23. Ed Keating was named VP of the Content Division of the Software & Information Industry Association (SIIA), effective immediately. See, SIIA release [PDF].

More News

3/23. The Federal Communications Commission (FCC) released a report titled "FCC Report to Congress on the Deployment of E-911 Phase II Services by Tier III Service Providers".

3/23. Ericsson filed lawsuits in the courts of European nations against Sendo alleging infringement of its patents pertaining to GSM and GPRS technologies. See, Ericsson release. Sendo then complained to the European Competition Commission regarding Ericsson's patent licensing fees. In 2002, Sendo filed a complaint [27 pages in PDF] in U.S. District Court in Texas against Microsoft. It made allegations about a Microsoft "Secret Plan" to misappropriate its trade secrets. See, story titled "Sendo Sues Microsoft" in TLJ Daily E-Mail Alert No. 574, December 24, 2002. Microsoft and Sendo announced a secret settlement on September 13, 2004.

Supreme Court Holds That Individuals Who Sue Under §332 Cannot Also Recover Damages Under §1983

3/22. The Supreme Court issued its opinion [22 pages in PDF] in Rancho Palos Verdes v. Abrams. The Supreme Court held that an individual who brings an action to enforce the limitations on state and local authority to regulate the location, construction, and modification of wireless communications facilities under 47 U.S.C. § 332, cannot also recover damages under 42 U.S.C. § 1983.

Section 332, which was added to the Communications Act by the Telecommunication Act of 1996, provides a cause of action for injunctive relief against state and local governments that deny certain applications to build cell towers. But, this statute does not provide for the recovery of monetary damages. Section 1983 provides a cause of action for monetary damages for people who have been deprived of federal rights by state or local governments. The question before the Court was whether people whose rights under Section 332 have been violated can sue under both Section 332 and Section 1983. The Supreme Court held that they cannot. The remedies provided by Section 332 are exclusive.

42 U.S.C. § 1983 provides, in part, that "Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory ... subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress."

47 U.S.C. § 332 limits the authority of state and local governments to regulate the location, construction, and modification of wireless communications facilities, including cell towers.

It provides, at § 332(c)(7)(A) that "Except as provided in this paragraph, nothing in this chapter shall limit or affect the authority of a State or local government or instrumentality thereof over decisions regarding the placement, construction, and modification of personal wireless service facilities." § 332(c)(7)(B) then provides limitations to this general rule. § 332(c)(7)(B)(i) provides that state and local governments "(I) shall not unreasonably discriminate among providers of functionally equivalent services; and (II) shall not prohibit or have the effect of prohibiting the provision of personal wireless services."

Then, § 332(c)(7)(B)(iv) provides that "Any person adversely affected by any final action or failure to act by a State or local government or any instrumentality thereof that is inconsistent with this subparagraph may, within 30 days after such action or failure to act, commence an action in any court of competent jurisdiction."

Mark Abrams owns real property in the City of Rancho Palos Verdes, California. He applied to the city for a permit for a commercial communications tower. The city had previously approved the tower for non-commercial use. He had previously constructed and used the tower. The application only sought permission to also use the tower for commercial use. The city rejected his application.

Abrams filed a complaint in U.S. District Court (CDCal) against the city alleging violation of 47 U.S.C. § 332. He also sought damages under 42 U.S.C. § 1983. The District Court held that the denial violated Section 332. It also held that Section 332 was Abrams' only remedy.

The U.S. Court of Appeals (9thCir) reversed the District Court on the question of whether Abrams also has a Section 1983 remedy. It held that he may both sue for injunctive relief under Section 332, and recover attorneys fees and damages under Section 1983. This opinion is also reported at 354 F.3d 1094.

The Supreme Court granted certiorari on September 28, 2004. The Solicitor General filed an amicus curiae brief urging the Supreme Court to reverse the Court of Appeals. See also, brief [104 pages in PDF] of the City of Rancho Palos Verdes, and brief [PDF] of Abrams.

Justice Antonin Scalia wrote the opinion of the Court. Justices Rehnquist, O'Conner, Kennedy, Souter, Thomas, Ginsburg, and Breyer joined. That is, all but Stevens joined in this opinion.

Scalia wrote that "Enforcement of §332(c)(7) through §1983 would distort the scheme of expedited judicial review and limited remedies created by §332(c)(7)(B)(v). We therefore hold that the TCA -- by providing a judicial remedy different from §1983 in §332(c)(7) itself -- precluded resort to §1983. The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion."

Justice Breyer wrote a concurring opinion in which Justices O'Conner, Souter and Ginsberg joined.

Justice Stevens wrote a concurring opinion. He concurred with the Court's conclusion as to Section 332. However, he wrote that the Court has not "properly acknowledged the strength of our normal presumption that Congress intended to preserve, rather than preclude, the availability of §1983 as a remedy for the enforcement of federal statutory rights."

See also, release of the law firm of Miller & Van Eaton, which represented the City of Rancho Palos Verdes.

This case is City of Rancho Palos Verdes v. Mark Abrams, Sup. Ct. No. 03–1601, a petition for writ of certiorari to the U.S. Court of Appeals for the 9th Circuit.

Texas Sues Vonage Over Marketing of VOIP Service

3/22. The Attorney General of the State of Texas filed a complaint [14 pages in PDF] in state court in Austin, Texas, against Vonage alleging violation of the Texas Deceptive Trade Practices Act (DTPA) in connection with Vonage's marketing and sale of voice over internet protocol (VOIP) service.

The complaint alleges that Vonage has engaged in deceptive marketing of its VOIP service by failing to clearly inform consumers of the difference between its 911 service and "traditional 911 service".

The complaint does not seek to compel Vonage to provide any type of 911 service. Rather, the state of Texas seeks monetary damages from Vonage. It also seeks injunctive relief, to bar Vonage from continuing to engage in deceptive marketing practices.

Texas Attorney General Greg Abbott stated in a release that this complaint follows an incident in Houston, Texas, in which a Vonage customer tried unsuccessfully to reach emergency assistance during a home invasion and shooting.

See, full story.

Sen. Reid Introduces Bill to Exempt Internet Communications From Certain FEC Regulation

3/22. Sen. Harry Reid (D-NV), the Senate minority leader, introduced S 678, on March 17. This bill would amend the Federal Election Campaign Act (FECA) with respect to internet communications.

Sen. Reid (at right) introduced the bill in reaction to the September 18, 2004 Memorandum Opinion and Order [159 pages in PDF] of the U.S. District Court (DC) in Shays v. FCC, which overturned many of the rules promulgated by the Federal Elections Commission (FEC) to implement the Bipartisan Campaign Reform Act of 2002 (BCRA). The BCRA, which is also known as the McCain Feingold Act, amended the FECA.

At issue is the definition of "public communication". 2 U.S.C. § 431(22) provides that "The term ``public communication´´ means a communication by means of any broadcast, cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to the general public, or any other form of general public political advertising."

The FEC wrote in its rules that "The term public communication shall not include communications over the Internet." This is codified at 11 C.F.R. § 100.26.

The District Court held that the FEC lacked authority to do this. Hence, internet communications, such as personal blogs, web sites, and e-mail, may be subject to regulation under the FECA as "public communication"s.

The purported purpose of the FECA, which has never been accomplished, has been to limit the influence of money in federal elections. Regulation of activities such as individual blogs would have an effect contrary to the purported purpose of the FECA. It would limit political speech and inhibit political participation by many people who do not have the ability to influence elections with money.

The entire substance of Sen. Reid's bill is as follows: "Paragraph (22) of section 301 of the Federal Election Campaign Act of 1971 (2 U.S.C. 431(22)) is amended by adding at the end the following new sentence: ``Such term shall not include communications over the Internet.'' That is, it would add to the statute the very language of the regulation that the District Court held was contrary to the FECA.

The FEC has scheduled a meeting for March 24 at which it may adopt a notice of proposed rulemaking (NPRM) on this subject.

In addition, Sen. Reid wrote a letter [PDF] to FEC Chairman Scott Thomas dated March 17 which the FEC published on March 22.

He wrote that "I am writing to express my serious concerns with the Federal Election Commission's (FEC) pending rulemaking concerning internet communications and your recent remarks in this regard. Today I introduced legislation to make it clear that Congress did not intend to regulate this new and growing medium in the" BCRA.

Sen. Reid continued that "the internet has provided a new and exciting medium for political speech. It has generated a surge in grassroots involvement in our government and has proven to be a democratizing medium in our political process. Regulation of the internet at this time, with its blogs and other novel features, would blunt its tremendous potential, discourage broad political involvement in our nation and diminish our representative democracy."

He concluded that "One of your Democratic colleagues on the FEC recently made clear in public remarks that the regulation of blogs in particular is neither required by BCRA, or by the litigation surrounding the FEC's implementation of that law. I urge you to work with her and your other FEC colleagues in the coming weeks to avoid silencing this new and important form of political speech."

See also, story titled "FEC to Consider Rules Regarding Internet Speech" in TLJ Daily E-Mail Alert No. 1,100, March 22, 2005.

Democratic Representatives Urge FEC Not to Regulate Blogs

3/22. The Federal Election Commission (FEC) published in its web site a letter [PDF] from fourteen Representatives regarding the FEC's forthcoming rulemaking proceeding to revise its rules regarding regulation of internet communications.

See also, above story titled "Sen. Reid Introduces Bill to Exempt Internet Communications From Certain FEC Regulation", and story titled "FEC to Consider Rules Regarding Internet Speech" in TLJ Daily E-Mail Alert No. 1,100, March 22, 2005.

The Representatives wrote "to express our concern over the possible implications of U.S. District Court Judge Colleen Kollar-Kotelly's decision in Christopher Shays & Martin Meehan v. Federal Election Commission, 337 F.Supp.2d 28 (D.D.C. 2004), to overturn the Federal Election Commission's (FEC) blanket exemption of the Internet from the Bipartisan Campaign Reform Act of 2002 (BCRA). Specifically, we are concerned about the impact this decision could have on internet weblogs ("blogs")."

Almost all of the Representatives who signed the letter are Democrats. In contrast, when the FEC considered appealing this issue to the Court of Appeals, the three Republicans voted to appeal, while the three Democrats voted against the appeal.

The letter continues that "We have been advised the FEC will soon open a rulemaking in this area. Many of us were strong supporters of campaign finance reform generally, and of the BCRA. While the impact of the Shays decision on blogs remains subject to debate, we urge you to remove any ambiguity and make explicit in this rule that a blog would not be subject to disclosure requirements, campaign finance limitations or other regulations simply because it contains political commentary or includes links to a candidate or political party's website, provide that the candidate or political party did not compensate the blog for such linking. We believe such an interpretation is entirely consistent with the BCRA, which has helped to mitigate the impact of soft money on politics. We also believe such an interpretation would easily pass judicial muster as well."

"Throughout our nation's history, Americans have turned to the press for information and analysis in order to make a more informed decision concerning politics. The past decade has witnessed exponential growth of the Internet, as well as in the number of Americans accessing the World Wide Web. Along with this growth has been the emergence of Web reporters who play a critical role in commentating on American political affairs and who seek to inform the debate in an environment that is generally accessible by all."

They conclude that "In our view, this ``democratization´´ of media is a welcome development in this era of media consolidation and a corresponding lack of diversity of views in traditional media outlets. Given the emergence of this new method of reporting and Americans' increasing reliance on it for their political information, it is critical that BCRA's press exemption should be clarified to apply to those who are reporting on the Internet."

The letter is dated March 11. The FEC's date stamp on the letter is March 21.

The letter is signed by Rep. John Conyers (D-MI), Rep. Rick Boucher (D-VA), Rep. Zoe Lofgren (D-CA), Rep. Adam Smith (D-WA), Rep. Maxine Waters (D-CA), Rep. Jim McDermott (D-WA), Rep. Lynn Woolsey (D-CA), Rep. Luis Gutierrez (D-IL), Rep. Raul Grijalva (D-AZ), Rep. Jim McGovern (D-MA), Rep. Sheila Lee (D-TX), Rep. Chaka Fattah (D-PA), Rep. Bernie Sanders (I-VT), and Rep. Ron Paul (R-TX).

People and Appointments

3/22. Edward Mueller was named to the Board of Directors of VeriSign. He is the CEO of Williams-Sonoma. See, VeriSign release.

More News

3/22. Mark Cooper wrote a paper [79 pages in PDF] titled "Time For Recording Industry To Face The Music: The Political, Social And Economic Benefits Of Peer-To-Peer Communications Networks". Cooper is, among other things, a fellow at Stanford University's Center on Internet and Society. He wrote the paper on behalf of several groups.

FEC to Consider Rules Regulating Internet Speech

3/21. The Federal Election Commission (FEC) will hold a meeting at 10:00 AM on Thursday, March 24. It will discuss a draft notice of proposed rule making (NPRM) regarding regulation of internet communications.

The FEC's notice of this meeting in the Federal Register states only that the items to be discussed included "Notice of Proposed Rulemaking on the Internet: Definitions of ``Public Communication´´ and ``Generic Campaign Activity,´´ and Disclaimers." See, Federal Register, March 18, 2005, Vol. 70, No. 52, at Page 13197.

The FEC press office states that there is a draft NPRM, that it has not yet been released, that it will be released before the Thursday meeting, and that this NPRM will be the first item of the Commission's agenda.

Introduction. The Congress enacted the Bipartisan Campaign Reform Act of 2002 (BCRA) in early 2002, a bill that expands federal regulation of election campaign finance and political speech. It amends the Federal Election Campaign Act (FECA), which is codified at 2 U.S.C. § 431, et seq. The BCRA also required the FEC to write rules to implement many provisions of the BCRA. The FEC did so.

Then, two sponsors of the bill filed a complaint in U.S. District Court challenging many of the FEC's BCRA regulations. The District Court, Judge Colleen Kotelly presiding, overturned 14 different parts of the FEC's rules, and remanded to the FEC to rewrite its rules that are consistent with her opinion. Two of the overturned portions of the rules pertain to exemption of certain internet based activities.

After the District Court issued its opinion, only three members of the six member FEC voted to appeal the internet related provisions of the District Court's decision. Four votes are required to authorize an appeal. The three Republicans on the Commission voted to appeal, and thus sought to maintain the exemptions for internet based activities. The three Democrats voted against an appeal, and thus acquiesced in the District Court's opinion that these internet based activities must be regulated.

The FEC has not yet promulgated the new rules that Judge Kotelly directed the FEC to write. Nor has the FEC released, or announced the adoption of, any notice of proposed rulemaking (NPRM) or notice of inquiry (NOI). Nor has it held any public hearings.

The FEC has only publicly announced that it will hold a meeting on Thursday, March 24, and the the agenda includes a discussion of "Notice of Proposed Rulemaking on the Internet: Definitions of ``Public Communication´´ and ``Generic Campaign Activity,´´ and Disclaimers."

John Morris works for the Center for Democracy and Technology (CDT), which submitted a lengthy comment when the FEC issued a Notice of Inquiry (NOI) regarding internet speech back on November 1, 1999. This NOI was published in the Federal Register, November 5, 1999, Vol.  64, No. 214, at Pages 60360 - 60368. The CDT also wrote a report in 1999 titled "Square Pegs and Round Holes: Applying the Campaign Finance Law to the Internet -- Risks to Free Expression and Democratic Values".

Morris stated in a release on March 21 that "We don't know exactly what to expect, but there is certainly a risk to the Internet as an open, inexpensive forum for independent voices. CDT will be urging the Commission to take a cautious approach consistent with the goal of McCain-Feingold and the underlying campaign finance laws, which is to promote independent speech and to decrease big money's dominance of the political process. The Internet lets individuals participate. Imposing regulations on independent bloggers would produce exactly the opposite of the goal of McCain-Feingold".

The Statute. The House and Senate enacted the Bipartisan Campaign Reform Act of 2002 (BCRA) in early 2002. It was HR 2356 in the 107th Congress. It is also known as the McCain-Feingold Act, because the lead sponsors of the Senate version of the bill were Sen. John McCain (R-AZ) and Sen. Russ Feingold (D-WI).

Rep. Christopher Shays (R-CT) and Rep. Marty Meehan (D-MA) were two sponsors and leading proponents of the House bill.

President Bush signed the bill on March 27, 2002. It became Public Law No. 107-155.

The FECA, as amended by the BCRA, regulates, among other things, certain "public communications"s.

Several definitions in the FECA, which are codified at 2 U.S.C. § 431, are at issue. First, 2 U.S.C. § 431(22) provides that "The term ``public communication´´ means a communication by means of any broadcast, cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to the general public, or any other form of general public political advertising."

Second, 2 U.S.C. § 431(20) provides that "(A) In general.--The term ``Federal election activity´´ means ... (ii) voter identification, get-out-the-vote activity, or generic campaign activity conducted in connection with an election in which a candidate for Federal office appears on the ballot (regardless of whether a candidate for State or local office also appears on the ballot);" (Parentheses in original.)

FEC Regulations. The FEC, as directed by the Congress, wrote implementing regulations.

The FEC rules defined a "public communication" as "a communication by means of any broadcast, cable or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing or telephone bank to the general public, or any other form of general public political advertising. The term public communication shall not include communications over the Internet." This is codified at 11 C.F.R. § 100.26.

Notably, it exempts from the definition of "public communication"s all internet communications. This would mean that blogs, web sites, and e-mail are not "public communication"s.

The FEC rules defined "generic campaign activity" as "a public communication that promotes or opposes a political party and does not promote or oppose a clearly identified Federal candidate or a non-Federal candidate." This is codified at 11 C.F.R. § 100.25. This definition incorporates the term "public communication", which the FEC defines to exclude internet communications.

District Court. October 8, 2002, Rep. Shays and Rep. Meehan filed a complaint in U.S. U.S. District Court (DC) challenging numerous of the rules promulgated by the FEC to implement the BCRA. They filed their amended complaint on January 21, 2003.

On September 18, 2004, the District Court, Judge Kotelly presiding, issued its Memorandum Opinion and Order [159 pages in PDF] overturning numerous parts of the FEC's rules.

The opinion is 157 pages long. In addition to rejecting several justiciability challenges to the action, it overturns fourteen portions of the FEC's rules, and affirms three. There is no table of contents.

The District Court overturned "11 C.F.R. § 109.21(c) (coordination content regulations), including 11 C.F.R. § 109.21(c)(iv) (provision excluding the Internet from coordination communication regulations)". (Parentheses in original.) However, while Rep. Shays and Rep. Meehan specifically challenged the rules regarding coordination of communications, these rules applied the definitional rules, including the definition of "public communication". The District Court's discussion of this begins at page 48 of the opinion.

Judge Kotelly wrote (at page 49) that "The coordinated communication regulation ... applies only to ``public communications´´ unless the communication constitutes an ``electioneering communication.´´ ... Congress defined ``public communication´´ in BCRA to mean ``a communication by means of any broadcast, cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to the general public, or any other form of general public political advertising.´´ ... The FEC promulgated a regulation defining ``public communication´´ as ``a communication by means of any broadcast, cable or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing or telephone bank to the general public, or any other form of general public political advertising. The term public communication shall not include communications over the Internet.´´ ... Therefore, Internet communications, no matter how closely they are coordinated with political parties or a candidate's campaign, cannot be considered ``coordinated´´ under the FEC’s regulations." (Citations and cross references omitted.)

She continued that "Congress did not expressly include the term ``Internet´´ in its statutory definition of ``public communication,´´ but it did include the phrase ``any other form of general public political advertising.´´ ... While all Internet communications do not fall within this descriptive phrase, some clearly do. Consequently, it is difficult to argue that the statutory terms evidence Congressional intent for the Internet, or any other forms of communications that constitute ``general public political advertising,´´ to be excluded wholesale from its definition of ``public communication.´´"

She concluded that "under Chevron step one, Congress intended all other forms of ``general public political advertising´´ to be covered by the term ``public communication.´´ What constitutes ``general public political advertising´´ in the world of the Internet is a matter for the FEC to determine."

Moreover, she concluded, in the alternative, that "exclusion of Internet communications from the coordinated communications regulation severely undermines FECA's purposes and therefore violates the second prong of Chevron."

She added that "To permit an entire class of political communications to be completely unregulated irrespective of the level of coordination between the communication's publisher and a political party or federal candidate, would permit an evasion of campaign finance laws".

The District Court also overturned 11 C.F.R. § 100.25, regarding the definition of "generic campaign activity". This discussion begins at page 120 of the opinion.

Judge Kotelly wrote that the "Congress also deemed ``Federal election activity´´ to include ``generic campaign activity conducted in connection with an election in which a candidate for Federal office appears on the ballot ....´´ ... Congress defined the phrase ``generic campaign activity´´ to mean ``a campaign activity that promotes a political party and does not promote a candidate or non-Federal candidate.´´ ... The Commission's regulation has defined the phrase as follows: ``a public communication that promotes or opposes a political party and does not promote or oppose a clearly identified Federal candidate or a non-Federal candidate.´´"

She noted that, because of the FEC's definition of "public communication", its definition of "generic campaign activity" excludes internet communications.

She also wrote that the "Congress did not exclude Internet communications from its definition of ``public communication´´ -- the FEC did.". Therefore, she concluded that "if a form of activity can be ``campaign activity´´ -- and it is clear to the Court that Internet communications can constitute ``campaign activity´´ -- the Court sees no basis for the wholesale exclusion of that form of activity from the definition of ``generic campaign activity´´ under the terms of the statute."

Hence, she found that "the wholesale exclusion of the Internet from the definition of ``generic campaign activity´´ to be an impermissible construction of the Act."

This opinion is also reported at 337 F. Supp. 2d 28. This case is Christopher Shays and Martin Meehan v. Federal Election Commission, U.S. District Court for the District of Columbia, D.C. No. 02-1984 CKK, Judge Colleen Kotelly presiding.

Reaction to the District Court's Opinion. Sen. Feingold stated in a release on September 20, 2004 "The federal district court's decision in Shays v. FEC underscores what Senator McCain and I have been saying -- that the FEC is refusing to properly interpret and enforce the federal election laws. Senator McCain and I filed an amicus brief in this lawsuit, which was brought by Representatives Shays and Meehan. The court's ruling in our favor sends a powerful message to the FEC that it does not have the power to rewrite statutes passed by Congress."

"The court agreed with us that many of the regulations that the FEC put in place after McCain/Feingold passed in 2002 were contrary to the intent of the law. It is now up to the FEC to redo these rules and follow congressional intent."

The FEC voted to appeal some, but not all, of the District Court's decision. It did not appeal the internet related part. See, FEC release of October 29, 2004.

A group named Online Coalition has written a letter to the FEC regarding regulation of internet communications. The letter states that "we ask that you grant blogs and online publications the same consideration and protection as broadcast media, newspapers, or periodicals by clearly including them under the Federal Election Commission’s ``media exemption´´ rule."

Second, it states that "In order to ensure that there are sufficient measures taken, we also request that the FEC promulgate a rule exempting unpaid political activity on the Internet from regulation, thereby guaranteeing every American’s right to speak freely and participate in our democratic process.

And third, it states that "we ask that you clarify the rules and definitions related to ``coordinated activity´´ to protect bloggers and journalists from running afoul of Commission rules regarding the republication of campaign materials."

The Online Coalition also invites others to digitally sign the letter. As of the night of March 21, there were 3085 signatures.

Disclosure. Tech Law Journal is published on the web. The TLJ Daily E-Mail Alert is published by e-mail, and then on the web. TLJ publishes information about Senators, Representatives, and Presidents, all of whom have run in elections for federal office, and most of whom intend to run in elections for federal office in the future. The FECA regulates the disclosures of, and places limitations upon, expenditures "for the purpose of influencing any election for Federal office". The FECA defines expenditure to include "anything of value", but to exclude "any news story, commentary, or editorial distributed through the facilities of any broadcasting station, newspaper, magazine, or other periodical publication". This enumeration of exempted media includes neither of the media used by TLJ -- the web and e-mail. Similarly, the FECA regulates certain "public communication"s, but does not state what internet communications, if any, are "public communication"s. The FEC's pertinent regulations add complexity, but not clarity. Hence, how the FEC proceeds in this matter, and in other internet related matters, may affect TLJ. Readers may wish to take this into consideration in assessing the reliability or objectivity of any TLJ story on these matters.

Supreme Court Denies Certiorari in Recess Appointments Cases

3/21. The Supreme Court denied certiorari in Shannon Miller v. United States (No. 04-38) a challenge to President Bush's recess appointment of Judge William Pryor. See, Order List [21 pages in PDF] at pages 8.

Shannon Miller was convicted of possessing cocaine with intent to distribute it, in violation of 21 U.S.C. § 841, by the U.S. District Court (SDFl). Miller appealed. A three judge panel of the U.S. Court of Appeals (11thCir) affirmed the conviction in a per curiam opinion. This panel included Judge William Pryor, who sits on the Court of Appeals pursuant to a recess appointment. Miller petitioned the Supreme Court for writ of certiorari on the basis of Pryor's participation.

The Solicitor General filed an opposition to the petition.

Senate Democrats have opposed many of President Bush's nominees for the federal courts, including Pryor. Lacking the 50 votes needed to defeat the nominees, Senate Democrats have employed the filibuster. President Bush lacks the 60 votes necessary to end a filibuster. So, in several instances, President Bush has given temporary recess appointments to his nominees.

The Supreme Court also denied certiorari in Charles Franklin v. United States (No. 04-5858), another petition for writ of certiorari to the U.S. Court of Appeals (11thCir) regarding the Pryor appointment. See, Order List [21 pages in PDF] at page 10. Franklin was convicted of driving a truck into a mosque. There is another petition for writ of certiorari in Peter Evans v. Stephens (No. 04-828). Evans was convicted of reckless driving.

Supreme Court Denies Certiorari in DMCA Case

3/21. The Supreme Court denied certiorari, without opinion, in Chamberlain Group v. Skylink, a case involving the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA), and interoperability of after market products. See, Order List [21 pages in PDF] at page 9. This lets stand the judgment of the U.S. Court of Appeals (FedCir).

The Federal Circuit issued its opinion [46 pages in MS Word] on August 31, 2004. In this case, the product is portable radio frequency transmitting devices that activate garage door openers (GDO). Chamberlain asserted that Skylink, by selling GDOs that interoperate with its equipment, is trafficking in devices that circumvent a technological measure that effectively controls access to a copyrighted work. The District Court rejected Chamberlain's claim. The Court of Appeals affirmed. The opinion of the Federal Circuit stands.

See, story titled "Federal Circuit Rejects Anti-Circumvention Claim in Garage Door Opener Case" in TLJ Daily E-Mail Alert No. 971, September 7, 2004.

This case is Chamberlain Group, Inc. v. Skylink Technologies, Inc., Sup. Ct. No. 04-997, a petition for writ of certiorari to the U.S. Court of Appeals for the Federal Circuit. The Court of Appeals case is App. Ct. No. 04-1118. The case originated in the U.S. District Court for the Northern District of Illinois.

Utah Supreme Court Grants Certiorari to Decide Whether Sending One E-Mail Can Create Personal Jurisdiction

3/21. The Supreme Court of the State of Utah granted certiorari in Fenn v. MLeads Enterprises, a case regarding whether a state court can exercise personal jurisdiction, in a case brought under a state anti-spam statute, over an out of state defendant, based solely upon the defendant having contracted with an agent who sent one unsolicited e-mail to a person within the state.

The Utah District Court (a trial court) dismissed the case for lack of personal jurisdiction. The Utah Court of Appeals (an intermediate appellate court) reversed. The Supreme Court of Utah granted certiorari on March 17, 2005. However, it did not mail out the order until March 21.

Various courts, federal and state, and U.S. and foreign, have begun to grapple with the issue of what internet based activities give a forum personal jurisdiction over an out of forum defendant. Some cases are in conflict. The U.S. Supreme Court has not yet weighed in. The Court of Appeals of Utah wrote in its November 12, 2004 split opinion that "This issue is a matter of first impression in Utah and, as far as our research has revealed, in all of the United States." Soon, the Utah Supreme Court will rule on this issue.

See, full story.

SEC Sues Time Warner for Overstating Online Ad Revenues

3/21. The Securities and Exchange Commission (SEC) filed a civil complaint [29 pages in PDF] in U.S. District Court (DC) against Time Warner Inc. alleging securities fraud in violation of Section 10b of the Exchange Act and Section 17a of the Securities Act, as well as violations of the reporting and record keeping provisions of federal securities law, in connection with its materially overstating online advertising revenue and the number of its internet subscribers.

The complaint alleges that AOL, and its successor, AOL Time Warner, "artificially inflated reported online advertising revenues and Internet subscriber counts -- two key measures by which investors and analysts evaluated the Company. The Company reported inflated online advertising revenue in periodic reports filed with the Commission and other public statements from October 2000 through February 2003 based on transactions entered into from June 2000 through December 2001. The Company also inflated its Internet subscriber counts in 2001." AOL Time Warner has since reverted to the name Time Warner.

The complaint further alleges that AOL "inflated its online advertising revenues by engaging in ``round-trip´´ transactions with a host of companies with which it had commercial relationships. These transactions ranged in complexity and sophistication, but in substance, the Company provided its customers with funds to purchase online advertising from AOL. Simultaneously, the customer would enter into an agreement to ``purchase´´ online advertising from AOL in an amount corresponding to the payment from the Company. AOL and AOLTW improperly recognized as online advertising revenue the amounts received pursuant to these purported advertising agreements and improperly accounted for the funds it provided to the customers."

The SEC also announced that Time Warner consented to the entry of a judgment that order Time Warner to pay $300 Million in civil penalties. See, SEC release.

European Commissioner Advocates More Competition in ICT

3/21. Viviane Reding, the European Commissioner for Information Society and Media, gave a speech titled "Convergence and Innovation: the New Agenda for Growth and Jobs" at the Meeting of the Council of Presidents of UNICE, in Brussels, Belgium, on March 21, 2005.

She explained her understanding of her role, and her plans for increasing productivity growth and economic growth by limited regulation, increasing competition in ICT, increasing government ICT research spending, and encouraging private sector ICT research.

"I am the Commissioner for Convergence. For the first time there is one Commissioner responsible for both infrastructure and content." She added, "you should know that I am the Commissioner for innovation and growth".

She argued that the information and communications technology sector (ICT) is critical for increased productivity, economic growth, and creating more jobs. She said that "one of the key reasons why Europe is not growing enough is because it is not investing enough ICT and it is not investing broadly enough in ICT. I will explain to you what I intend to do about this". She also said that Europe lags behind the US in productivity growth and economic growth, "And a good deal of the difference between the USA and Europe can be explained by the fact that we are not as strong in the ICT industries."

"I have under my responsibility two important regulatory instruments. The first is the Directive on Television without Frontiers. The second is the electronic communications regulatory framework. Both are subject to review and adaptation in favour of growth and jobs in the first two years of my mandate. I can tell you now that both of these reviews will be undertaken with the intention to promote convergence and to generate growth and jobs", said Reding.

"The Television without Frontiers Directive can no longer just be concerned with broadcasting. Television is now on the Internet; it is also going mobile. Admittedly, for the moment TV on the internet is small scale -- but it will grow", said Reding. "I will only regulate this new market where absolutely necessary in the concerns of European citizens for diversity, quality, decency and safety from abusive uses."

She added that "convergence means increased competition between media. This indicates relaxing regulatory restrictions to leave more to the market and to consumer choice than in the traditional media world. In particular, I am thinking about easing advertising restrictions."

Increasing Competition in Electronic Communications. She then discussed, in vague terms, increasing competition in communications. She said that "Next year I will have to launch the review of the electronics communications regulatory package. I am generally quite impressed with this legislation, it is open, encourages competition and it is technology neutral. I am not at all impressed with the response of some Member States towards it."

"Where competition fails, the market is blocked. Member States that do not promote competition are hampering their own growth."

She continued that "My experts tell me that one of the reasons why broadband is not taking off is that interesting content is not available. ... Experts say that it is quite likely that high definition video images, particularly TV on demand, will be crucial to trigger a wide and rapid take up of high speed broadband. Unfortunately, it appears that the current broadband technologies cannot deliver a high quality of TV on demand."

"I am not planning an attack on tele-communication providers", said Reding. But, she said that she "will be tough on the principles of competition. This is enshrined in the regulatory framework, and it works. There is a direct causal relationship between more competition and higher broadband take-up. My question is how can I increase competition to make sure that convergence keeps on track?"

Research Spending. She said that Europe should spend more on ICT research. She elaborated that currently, "Europe has research leadership in some ICT areas notably microprocessors and embedded systems and fixed and mobile communications. But advantage today does not mean advantage tomorrow. Europe is vulnerable to increased international competition against the very high levels of investment in emerging countries like India and China."

She said that the Community Research Budget should include more for ICT.

She listed some worthy areas: "nanoelectronics, embedded systems mobile technologies and so on. Frontier research is also very important, for example quantum communications, cognitive systems, organic micro-systems and advanced robotics." She also cited "security, authentication and standards & interoperability".

She also said the she wants to "make sure that the framework conditions are right for encouraging investment in research". However, she did not state how she plans to do this.

She also praised RFID as something that can open up "many new markets".

Finally, she admitted that "I cannot deliver on these promises alone."

People and Appointments

3/21. Joe Whitley, General Counsel of the Department of Homeland Security (DHS), resigned, effective as of a date to be determined. See, DHS release.

More News

3/21. The Supreme Court denied certiorari, without opinion, in Tony Colida v. Kyocera Wireless Corporation, Sup. Ct. No. 04-8137. See, Order List [21 pages in PDF].

Go to News from March 16-20, 2005.