Senate Judiciary Committee Requests Information From FBI Regarding Data Mining Project

8/25. Sen. Arlen Specter (R-PA), the Chairman of the Senate Judiciary Committee, wrote a letter to Robert Mueller, the Director of the Federal Bureau of Investigation (FBI), asking for information about a data mining project named Able Danger.

Sen. Specter (at right) wrote that "It has been reported in the news media and directly to my staff that Army Lt. Colonel Anthony Shaffer was the operations officer for a secret military program referred to as Able Danger. The mission of Able Danger was to use a sophisticated data mining program in conjunction with more traditional military intelligence methods to identify and track al Qaida terrorists oversees."

"This is an official request that your office provide to the Judiciary Committee all information and documents it has in connection with Able Danger," the letter states.

Trade Secrets Case To Proceed Against Corporation Owned by PRC

8/25. The U.S. Court of Appeals (8thCir) issued another opinion [PDF] in BP Chemicals v. Jiangsu SOPO, a trade secrets case involving a process used to manufacture acetic acid, a chemical component used in inks, plastics, resins, and fabrics. However, this opinion only addresses the jurisdictional issues of sovereign immunity and minimum contacts for the exercise of personal jurisdiction.

The first opinion, which was reported at 285 F.3d 677, held that BP's action survives a facial jurisdictional challenge under the Foreign Sovereign Immunities Act (FSIA). SOPO is wholly owned by the PR Chinese government.

The present opinion holds that BP's action survives a factual jurisdictional challenge under the FSIA, and a challenge to the court's personal jurisdiction over SOPO. The Court of Appeals held that SOPO meets the "commercial activity carried on in the United States" exception to immunity under the FSIA. The Court of Appeals also held that SOPO has sufficient contacts with the forum for the court to exercise personal jurisdiction over it.

This case may yet be back before the Court of Appeals on substantive issues pertaining to trade secrets law.

This case is BP Chemicals Ltd. v. Jiangsu SOPO Corporation, App. Ct. No. 04-1814, an appeal from the U.S. District Court for the Eastern District of Missouri, Judge Catherine Perry presiding.

People and Appointments

8/25. President Bush announced his intent to nominate James Andrew to be Administrator of the Department of Agriculture's Rural Utilities Service (RUS). He is a consultant for BAS, Inc., in Waynesboro, Georgia, which designs and services agricultural irrigation systems. He previously owned and operated BAS. See, White House release.

8/25. President Bush announced his intent to nominate Dale Meyerrose to be Chief Information Officer (CIO) at the Office of the Director of National Intelligence. He is Director of Command Control Systems and CIO for Headquarters North American Aerospace Defense Command. The White House press office also stated in a release that "He also assumes the positions of Director of Architectures and Integration as well as Chief Information Officer for Headquarters United States Northern Command." He was commissioned in the Air Force in 1975.

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8/25. The Department of Justice (DOJ) stated that a grand jury of the U.S. District Court (DAriz) returned a criminal indictment that charges Jennifer R. Clason, Jeffrey A. Kilbride, and James R. Schaffer with violation of the CAN-SPAM Act of 2003, as well as federal obscenity, money laundering and conspiracy statutes, in connection with their sending bulk unsolicited commercial e-mail that advertised pormographic web sites. The DOJ stated in a release that "The indictment charges all three defendants with two counts of fraud and related activity in connection with electronic mail under the CAN-SPAM Act and one count of criminal conspiracy. The indictment also charges Kilbride and Schaffer with two counts of interstate transportation of obscene material using an interactive computer service, two counts of interstate transportation of obscene material for the purpose of sale or distribution, and one count of money laundering. Schaffer is also charged with one count of operating three pormographic Internet websites without including required statements describing the location of identification and other records for the performers portrayed in the websites, as is required by federal law."

4th Circuit Rules for Jerry Falwell's Cyber Squatter

8/24. The U.S. Court of Appeals (4thCir) issued its opinion [20 pages in PDF] in Lamparello v. Falwell, a cyber squatting case in which the Court of Appeals reversed the District Court's injunction against the cyber squatter.

This opinion contains a detailed analysis of the law, in the 4th Circuit, of trademark infringement, false designation of origin, initial interest confusion, and cyber squatting under the ACPA, as applied to the use of domain names that are very similar to protected marks, where the purpose of the infringing web site is to criticize (rather than compete with, or divert sales and customers from) the holder of the protected mark.

In this case, the critic (Christopher Lamparello) prevailed over the holder of the mark (Jerry Falwell) on all issues.

See, full story.

FCC Delays Proceeding on State Regulation of Airport WiFi Hotspots

8/24. The Federal Communications Commission (FCC) Office of Engineering and Technology (OET) released an order [2 pages in PDF] in its proceeding on the state of Massachusetts' attempt to regulate WiFi hotspots at the Boston Logan Airport. The order grants the state a one month delay. See, full story.

Suit Challenges Constitutionality of National Security Letters

8/24. A plaintiff filed a complaint [18 page PDF scan] in U.S. District Court (DConn) against Attorney General Alberto Gonzales and others seeking a declaratory judgment that 18 U.S.C. § 2709 violates the First, Fourth and Fifth Amendments of the US Constitution, and an injunction barring the FBI from enforcing a National Security Letter. See, full story.

People and Appointments

8/24. Katherine Addleman was named Associate District Administrator for Enforcement in the Securities and Exchange Commission's (SEC) Fort Worth District Office. See, SEC release.

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8/24. Archivist of the United States, who manages the National Archives and Records Administration, published a notice in the Federal Register announcing the establishment of the Advisory Committee on Electronic Records Archives. This new committee will provide advice related to the planned Electronic Records Archives (ERA). It will be comprised of twenty members appointed by the Archivist. See, Federal Register, August 24, 2005, Vol. 70, No. 163, at Page 49683.

Federal Circuit Addresses Inducement of Patent Infringement by Foreign Silicon Wafer Maker

8/23. The U.S. Court of Appeals (FedCir) issued its opinion [26 pages in PDF] in MEMC v. Sumco, a patent infringement case involving technology for the preparation of semiconductor grade single crystal silicon, which is used in integrated circuits.

Summary. A US silicon wafer company (MEMC) with a US patent brought suit in a US court under US law against a Japanese silicon wafer company (Sumco) that makes wafers in Japan, and sells them to another Japanese company, which in turn sells to a company in the US (Samsung Austin Semiconductor, which is not a party). MEMC alleges that Sumco directly infringed its patent, and that Sumco induced infringement of its patent by Samsung Austin Semiconductor. The District Court granted summary judgment to Sumco on both claims.

The Court of Appeals affirmed on the direct infringement count, but reversed on the inducement of infringement count. It held that one can only be held liable for direct infringement for infringing activities that occur within the US. However, a foreign infringer that sells to a foreign supplier of a US company, provides technical support to the US company, and knows of infringing activity of the US company, may be held liable for inducement of infringement.

Background. MEMC Electronic Materials is incorporated in the state of Delaware. It operates manufacturing facilities around the world, including in Europe, Japan, Malaysia, Korea, Taiwan and the US. (See, SEC Form 10-Q dated August 9, 2005.) It supplies silicon wafers for the semiconductor industry. It is the assignee of U.S. Patent No. 5,919,302, titled "Low Defect Density Vacancy Dominated Silicon". This patent discloses a method of preparing single crystal silicon that is substantially free of agglomerated intrinsic point defects.

Sumitomo Mitsubishi Silicon Corporation (which is also known as Sumco) is also a supplier of silicon wafers for the semiconductor industry. Sumco makes its silicon wafers at its manufacturing plant in Yonezawa, Japan. Mitsubishi Materials Silicon Corporation and the Sitix Division of Sumitomo Metals Industries, Ltd. formed Sumco Corporation as a joint venture in February of 2002.

MEMC alleges that Sumco infringes its patent. It alleges that Sumco sells these silicon wafers to Samsung Japan Corporation, which then sells them to Samsung Austin Semiconductor, which is located in Austin, Texas. Samsung makes semiconductor, telecommunications, and digital media products. Samsung Austin makes Dynamic Random Access Memory (DRAM) chips. MEMC further alleges that Sumco encouraged and enabled Samsung Austin to use the silicon wafers at issue by manufacturing wafers according to Samsung Korea's specifications, by providing technical support to the Samsung Austin facility, and by agreeing to indemnify for patent infringement liability.

District Court. MEMC filed a complaint in December of 2001 in U.S. District Court (NDCal) against Mitsubishi Materials Silicon Corporation and Mitsubishi Silicon America Corporation. MEMC later amended the complaint to include Sumco Corporation, Sumco USA Corporation, and Sumco USA Sales Corporation. The amended complaint alleges direct infringement of the patent under 35 U.S.C. § 271(a), and inducement of infringement of the patent under 35 U.S.C. § 271(b).

The District Court granted summary judgment to the defendants on both direct and inducement of infringement. This appeal followed.

Court of Appeals. The Court of Appeals affirmed the grant of summary judgment on the direct infringement count. See, opinion, at pages 7-14.

35 U.S.C. § 271 pertains to infringement of patents. § 271(a) provides that "Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent."

Sumco makes wafer in Japan, and sells them to a company in Japan. The statute requires that the alleged infringer "offers to sell, or sells any patented invention, within the United States or imports into the United States" for there to be patent infringement. The Court of Appeals wrote that "It is well-established that the reach of section 271(a) is limited to infringing activities that occur within the United States."

The Court of Appeals also concluded that Sumco's communications, and other activities, with Samsung Austin Electronics, did not amount to "offers to sell". It elaborated that the term "offers to sell" is defined "according to the norms of traditional contractual analysis". This means that the defendant must communicate "a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it". It concluded that sending e-mail regarding technical support does not amount to "offers to sell".

The Court of Appeals reversed the grant of summary judgment on the inducement count. See, opinion, at pages 14-21.

§ 271(b) provides that "Whoever actively induces infringement of a patent shall be liable as an infringer."

The Court of Appeals wrote, quoting from the Federal Circuit's opinion [PDF] in Minn. Mining & Mfg. Co. v. Chemque, Inc., 303 F.3d 1294 (2002), that "``In order to succeed on a claim of inducement, the patentee must show, first that there has been direct infringement,´´ and ``second, that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another’s infringement.´´" It added that circumstantial evidence of intent may suffice.

The Court of Appeals held that an indemnification agreement will generally not establish an intent to induce infringement.

However, it wrote that "SUMCO had knowledge of MEMC's patent as well as knowledge of Samsung Austin’s potentially infringing activities. In addition, there is evidence that SUMCO provides substantial technical support to Samsung Austin in the form of e-mail communications." It added that Sumco "sent a shipment of certain wafers directly to Samsung Austin", and that "there is evidence that SUMCO personnel made several on-site visits to Samsung Austin, during which technical presentations on the SUMCO wafers were made." Also, the Court noted that a witness for Samsung Austin testified that it will not enter into an agreement to buy wafers from a wafer supplier unless the supplier will also provide it with technical support for the wafers. And these create genuine issues of material fact.

The case is remanded to the District Court for further proceedings on the inducement of infringement count.

This case is MEMC Electronic Materials Inc. v. Mitsubishi Materials Silicon Corporation, et al., U.S. Court of Appeals for the Federal Circuit, App. Ct. Nos. 04-1396 and 04-1513, an appeal from the U.S. District Court for the Northern District of California, D.C. No. 4:01-CV-04925, Judge Saundra Armstrong presiding. Judge Schall wrote the opinion of the Court of Appeals, in which Judges Newman and Dyk joined.

FCC Releases Report and Order on Satellite Must Carry Requirements in Alaska and Hawaii

8/23. The Federal Communications Commission (FCC) released a Report and Order [25 pages in PDF] in its proceeding titled "In the Matter of: Implementation of Section 210 of the Satellite Home Viewer Extension and Reauthorization Act of 2004 to Amend Section 338 of the Communications Act". See also, FCC release [PDF].

The Congress included the Satellite Home Viewer Extension and Reauthorization Act of 2004 (SHVERA) in the huge omnibus appropriations bill, HR 4818 (108th Congress), that it enacted late last year. § 210 of the SHVERA applies to "a State that is not part of the contiguous United States", which means the states of Hawaii and Alaska. § 210 amended 47 U.S.C. § 338(a), which pertains to the carriage of local television broadcast stations by satellite carriers. It added the following paragraph:

"(4) CARRIAGE OF SIGNALS OF LOCAL STATIONS IN CERTAIN MARKETS- A satellite carrier that offers multichannel video programming distribution service in the United States to more than 5,000,000 subscribers shall (A) within 1 year after the date of the enactment of the Satellite Home Viewer Extension and Reauthorization Act of 2004, retransmit the signals originating as analog signals of each television broadcast station located in any local market within a State that is not part of the contiguous United States, and (B) within 30 months after such date of enactment retransmit the signals originating as digital signals of each such station. The retransmissions of such stations shall be made available to substantially all of the satellite carrier's subscribers in each station's local market, and the retransmissions of the stations in at least one market in the State shall be made available to substantially all of the satellite carrier's subscribers in areas of the State that are not within a designated market area. The cost to subscribers of such retransmissions shall not exceed the cost of retransmissions of local television stations in other States. Within 1 year after the date of enactment of that Act, the Commission shall promulgate regulations concerning elections by television stations in such State between mandatory carriage pursuant to this section and retransmission consent pursuant to section 325(b), which shall take into account the schedule on which local television stations are made available to viewers in such State."

On April 29, 2005, the FCC adopted a notice of proposed rulemaking (NPRM). The NPRM is FCC 05-92 in Docket 05-181.

The just released Report and Order provides that must carry mandates apply to both analog and digital signals, and shall include high definition and multicast signals.

The Report and Order amends the FCC's rules to provide that "A satellite carrier that offers multichannel video programming distribution service in the United States to more than 5,000,000 subscribers shall, no later than December 8, 2005, carry upon request the signal originating as an analog signal of each television broadcast station that is located in a local market in Alaska or Hawaii; and shall, no later than June 8, 2007, carry upon request the signals originating as digital signals of each television broadcast station that is located in a local market in Alaska or Hawaii. Such satellite carrier is not required to carry the signal originating as analog after commencing carriage of digital signals on June 8, 2007. Carriage of signals originating as digital signals of each television broadcast station that is located in a local market in Alaska or Hawaii shall include the entire free over-the-air signal, including multicast and high definition digital signals."

This present Report and Order is FCC 05-159 in MB Docket No. 05-181.

People and Appointments

8/23. President Bush announced his intent to nominate Thomas Barnett to be Assistant Attorney General in charge of the Department of Justice's (DOJ) Antitrust Division. If confirmed by the Senate, he will replace Hewitt Pate, who has left. Barnett is currently the acting Assistant Attorney General and Deputy Assistant Attorney General for Civil Enforcement. Before joining the DOJ, he was a partner in the Washington DC office of the law firm of Covington & Burling, and vice-chair of the firm's Antitrust and Consumer Protection practice group. See, White House release. See also, November 19, 2004, speech by Barnett titled "Antitrust Enforcement Priorities: A Year in Review".

8/23. President Bush announced his intent to nominate Clay Lowery to be Deputy Under Secretary of the Treasury (International Affairs), and after Senate confirmation, to designate Lowery Assistant Secretary of the Treasury (International Affairs). Lowery is currently VP for Markets and Sector Assessments at Millennium Challenge Corporation. He was previously Deputy Assistant Secretary for Debt and Development Finance at the Department of Treasury. Before that, he was Director for International Finance for the National Security Council. See, White House release.

8/23. President Bush announced his intent to appoint Charles Allen to be Assistant Secretary for Information Analysis at the Department of Homeland Security (DHS). Allen is currently Special Assistant to the Director of the Central Intelligence Agency (CIA). He has worked at the CIA since 1958. Prior to his appointment as Special Assistant, Mr. Allen served as Assistant Director of Intelligence for Collection. See, White House release.

8/23. John Miller was named Assistant Director for the Office of Public Affairs at the Federal Bureau of Investigation (FBI). He replaces Cassandra Chandler, who has been named Special Agent in Charge of the FBI’s Norfolk Virginia Division. See, FBI release. Miller has a background in both law enforcement and journalism. He was previously Chief of the Los Angeles Police Department’s Counter-Terrorism and Criminal Intelligence Bureau. Before that, he worked for ABC News covering terrorism. Before that, he worked for the New York City Police Department. And before that, he worked for broadcast media in New York City. In 1998 he interviewed Osama bin Laden.

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8/23. The U.S. Court of Appeals (11thCir) issued its opinion [15 pages in PDF] in Horizon Aggressive Growth v. Rothstein-Kass, a case regarding personal jurisdiction over an out of state defendant based upon telephone calls to, and accessing computer servers in, the forum state. The District Court held that there is no jurisdiction under the forum state's long arm jurisdiction statute. It did not address the question of whether exercise of jurisdiction would be consistent with the due process clause of the 14th Amendment. The Court of Appeals reversed. It held that there is jurisdiction under the state statute. The case returns to the District Court, which will now address the more important due process question. This case is Horizon Aggressive Growth LP v. Rothstein-Kass, et al., U.S. Court of Appeals for the 11th Circuit, App. Ct. No. 04-12890, an appeal from the U.S. District Court for the Middle District of Florida, D.C. No. 03-02356-CV-T-30-MSS. Judge Birch wrote the opinion of the Court of Appeals, in which Judges Cox and Edmondson joined.

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8/22. The Federal Trade Commission (FTC) announced that on August 19, 2005, it granted early termination to News Corporation's acquisition of Intermix Media, Inc. See, FTC notice [PDF], at page 2. See also, Intermix's July 18, 2005, release announcing the transaction.

8/22. The Federal Trade Commission (FTC) announced that on August 19, 2005, it granted early termination to Carlyle Group's acquisition of SS&C Technologies. See, FTC notice [PDF], at page 2. SS&C provides investment and financial management software and related services. Carlyle and SS&C announced the transaction in a July 28, 2005, release.

8/22. The Progress and Freedom Foundation (PFF) published in its web site a book [131 pages in PDF] titled "The Digital Economy Fact Book, Seventh Edition, 2005". The authors are Michael Pickford, Tom Lenard, Brooke Emmerick, and Alicia Fazzano.

8/22. The Supreme Court denied rehearing in Kelo v. New London, No. 04-108. This is the Takings Clause case. See, Order List [3 pages in PDF] at page 2.

8/22. Edgar Bronfman, Ch/CEO of Warner Music Group (WMG), gave a speech [7 pages in PDF] in Aspen, Colorado, in which he discussed the Supreme Court's June 27, 2005, opinion [55 pages in PDF] in MGM v. Grokster. He also opposed compulsory licensing of music, and government mandated interoperability and standards for device makers. He also announced that Warner will offer a "digital only label", or "e-label". He spoke at a conference hosted by the Progress and Freedom Foundation (PFF). See, WMG release and PFF release.

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8/21. Jonathan Schwartz, P/COO of Sun Microsystems, gave a speech in Aspen, Colorado, in which he advocated an open source project developing a royalty free digital rights management standard. He spoke at a conference hosted by the Progress and Freedom Foundation (PFF). See, Sun release and PFF release.

Go to News from August 16-20, 2005.