Senate Subcommittee Holds Hearing on Spyware

10/5. The Senate Commerce Committee's (SCC) Subcommittee on Trade, Tourism, and Economic Development held another hearing on spyware.

Deborah Majoras, Chairman of the Federal Trade Commission (FTC), wrote in her prepared testimony [PDF] that "Spyware is a serious and growing problem that is causing substantial harm to consumers and to the Internet as a medium of communication and commerce. Preventing spyware that causes such harms is a priority for the Commission."

She discussed the nature of spyware, how it harms consumers, what actions the FTC has taken against spyware distributors, and education of consumers. She also discussed legislative approaches. She did not endorse any broad legislation to regulate spyware.

She testified that "the FTC supports legislation that would enhance its ability to investigate and prosecute spyware distributors that are located abroad or who try to mask their location by using foreign intermediaries to peddle their scams."

She said that "The FTC's ability to pursue distributors of spyware, spam, and other Internet threats to consumers would be significantly improved if the Congress were to pass the US SAFE WEB Act, introduced by Chairman Smith in the Senate as S.1608. The Act makes it easier for the FTC to share information and otherwise cooperate with foreign law enforcement officials."

She also said that the FTC "believes that legislation granting the Commission authority to seek civil penalties against spyware distributors may be useful in deterring the dissemination of spyware. As described above, the Commission has challenged conduct related to spyware dissemination as unfair or deceptive acts or practices in violation of Section 5 of the FTC Act. Under Section 13(b) of the FTC Act, the Commission has the authority to file actions against those engaged in this conduct in federal district court and obtain injunctive relief, including monetary relief in the form of consumer redress or disgorgement of ill-gotten profits. However, it may be difficult in some instances for the FTC to prove the sort of financial harm to consumers needed to order consumer redress, or the ill-gotten gains necessary to order disgorgement."

However, she also wrote that "the best and most comprehensive responses to misuse of technology will often be improved technology."

Sen. Gordon Smith (R-OR) presided. He stated in his opening statement that "I believe we must limit the abusive and deceitful practices while allowing industry the ability to build-on and improve existing technologies. To that end, I introduced the US Safe Web Act to expand the Federal Trade Commission's current authority to enforce existing laws and allow the agency to coordinate with foreign law enforcement officials to prosecute deceptive online activities. I have also co-sponsored legislation with Senator Allen to increase the FTC's current authority to enforce existing laws to prevent deceitful acts of spyware. We need to give the FTC the necessary tools to go after the individuals who are already violating current federal law. We need to address the most egregious activities and behaviors online without placing unnecessary restrictions on the entire technology industry."

Sen. Smith introduced, on July 29, 2005, S 1608, the "Undertaking Spam, Spyware, And Fraud Enforcement With Enforcers beyond Borders Act of 2005", which produces the near acronym of "U.S. SAFE WEB Act" of 2005".

This bill would amend the FTC Act to increase the authority of the FTC to pursue cross border fraud, particularly internet related conduct. For example, it would add to the definition of "unfair or deceptive acts or practices" acts or practices that "cause or are likely to cause reasonably foreseeable injury within the United States". The bill also addresses multi-national law enforcement efforts and information sharing.

See also, opening statement of Sen. Conrad Burns (R-MT).

The full SCC also held a hearing on spyware in May. See, story titled "Senate Commerce Committee Holds Hearing on Spyware" in TLJ Daily E-Mail Alert No. 1,136, May 16, 2005.

There have also been efforts to enact broad legislation that would regulate spyware. In the present Congress, the House has passed legislation.

Sen. Burns, Sen. Ron Wyden (D-OR) and others sponsored S 2145, "The Spy Block Act", in the 108th Congress. The SCC, but not the full Senate, approved that bill. See, stories titled "Senate Commerce Committee Approves Spyware Bill" in TLJ Daily E-Mail Alert No. 983, September 24, 2004, and "Senators Introduce Anti-Spyware Bill" in TLJ Daily E-Mail Alert No. 847, March 2, 2004.

On March 20, 2005, Sen. Burns, Sen. Wyden, Sen. Barbara Boxer (D-CA), and Sen. Bill Nelson (D-FL) reintroduced this bill as S 687, also titled "The Spy Block Act". It has not yet been approved by the SCC.

The House Commerce Committee (HCC) promptly approved its bill to regulate spyware, HR 29, the "Securely Protect Yourself Against Cyber Trespass Act", or SPY Act, sponsored by Rep. Mary Bono (R-CA) and others. See, story titled "House Commerce Committee Approves Spyware Bill" in TLJ Daily E-Mail Alert No. 1,092, March 10, 2005. The full House then approved this bill on May 23, 2005, by a vote of 393-4. See, Roll Call No. 201.

HR 29 (109th) is a revised version of HR 2929 (108th), also titled the SPY ACT, which the House approved by a vote of 399-1 on October 5, 2004. See, Roll Call No. 495. HR 2929 was the HCC's spyware bill. HR 29 (109th Congress), like HR 2929 (108th Congress) prohibits certain conduct with respect to spyware, and gives the FTC civil enforcement authority. See also, story titled "House Passes First Spyware Bill" and story titled "Summary of House Commerce Committee Spyware Bill" in TLJ Daily E-Mail Alert No. 991, October 6, 2004.

There is also a spyware bill that falls within the jurisdiction of the House Judiciary Committee (HJC), HR 744 (109th), the "Internet Spyware (I-SPY) Prevention Act of 2005", sponsored by Rep. Bob Goodlatte (R-VA), Rep. Zoe Lofgren (D-CA), and others. It amends Title 18 to provide criminal penalties for certain conduct related to spyware. HR 744 (109th) is a re-introduction of HR 4661 (108th Congress), titled the "Internet Spyware (I-SPY) Prevention Act of 2004". The House approved HR 4661 by a vote of 415-0 on October 6, 2004. See, Roll Call No. 503. See also, story titled "House Approves Second Spyware Bill" in TLJ Daily E-Mail Alert No. 993, October 8, 2004. The House approved HR 744 on May 23, 2005 by a vote of 395-1. See, Roll Call No. 200.

2nd Circuit Dismisses Uzan Appeal

10/5. The U.S. Court of Appeals (2ndCir) issued another opinion [6 pages in PDF] in Nokia v. Uzan. In this opinion the Court of Appeals dismissed the defendants' appeal. It wrote that the issues raised in the present appeal "were ripe for review on a prior appeal that they took from the underlying order imposing the sanction contained in the contempt judgment. Because those arguments were not raised on the prior appeal, we deem them waived and grant plaintiff’s motion to dismiss this appeal."

See also, the 2nd Circuit's prior opinions, reported at 388 F.3d 39 and 322 F.3d 130.

See also, stories titled "Supreme Court Denies Certiorari in Uzan v. Motorola" in TLJ Daily E-Mail Alert No. 1,137, May 17, 2005; "2nd Circuit Rules in Motorola v. Uzan" in TLJ Daily E-Mail Alert No. 1,008, November 1, 2004; "Judge Awards Motorola $4,265,793,811.32 From Turkish Telecom Deadbeats" in TLJ Daily E-Mail Alert No. 709, August 1, 2003; and "Motorola & Nokia Sue Turkish Cellular Company for RICO Violations and Computer Hacking" in TLJ Daily E-Mail Alert No. 357, January 30, 2002.

This case is Nokia Corporation v. Kemal Uzan, et al., U.S. Court of Appeals for the 2nd Circuit, App. Ct. No. 05-0938-cv, an appeal from the U.S. District Court for the Southern District of New York.

EC Appoints Monitoring Trustee for Microsoft

10/5. The European Commission (EC) announced that it appointed Neil Barrett to be the Monitoring Trustee "who will provide technical advice to the Commission on issues relating to Microsoft’s compliance with the Commission’s 2004 Decision". See, EC release.

He has worked as a book author, professor, and expert witness.

The EC announced its Commission Decision [302 pages in PDF] on March 24, 2004, and released it on April 22, 2004. The EC fined Microsoft 497,196,304 Euros, and ordered it to sell Windows without Media Player and make certain intellectual property available to competitors. The provisions regarding the Monitoring Trustee are addressed at pages 289-291.

The 2004 Decision states that "The primary responsibility of the Monitoring Trustee should be to issue opinions, upon application by a third party or by the Commission or sua sponte¸ on whether Microsoft has, in a specific instance, failed to comply with this Decision, or on any issue that may be of interest with respect to the effective enforcement of this Decision."

See also, story titled "European Commission Seeks 497 Million Euros and Code Removal from Microsoft" in TLJ Daily E-Mail Alert No. 863, March 25, 2004; and story titled "European Commission Releases Microsoft Decision" in TLJ Daily E-Mail Alert No. 883, April 23, 2004.

Hewitt Pate, then the chief U.S. antitrust enforcer, frequently criticized the EC's decision. See for example, stories titled "US Antitrust Chief Says EU's Microsoft Decision Could Harm Innovation and Consumers" in TLJ Daily E-Mail Alert No. 863, March 25, 2004; "Pate Criticizes EC Decision Regarding Microsoft" in TLJ Daily E-Mail Alert No. 869, April 5, 2004; and "Pate Addresses US EU Differences on Antitrust, Microsoft, and IPR" in TLJ Daily E-Mail Alert No. 913, June 8, 2004.

People and Appointments

10/5. The Senate Foreign Relations Committee approved, by unanimous voice vote, the nominations of Robert Mosbacher (to be President of the Overseas Private Investment Corporation), Jan Boyer (US. Alternate Executive Director of the Inter-American Development Bank), Boyden Gray (Representative of the United States of America to the European Union), Josette Shiner (US Alternate Governor of the International Bank for Reconstruction and Development, and other positions), and others. See, release.

10/5. Courtney Elwood was named Deputy Chief of Staff at the Department of Justice (DOJ). See, DOJ release. She replaces Kyle Sampson, who was named the DOJ Chief of Staff in August. See, DOJ release. Elwood was Counselor to Attorney General Alberto Gonzales. Before that, she was Deputy Counsel to the Vice President Dick Cheney. Before that, she was an Associate Counsel to President Bush. Before that, she worked for the Washington DC telecommunications law firm of Kellogg Huber. She also clerked for former Chief Justice William Rehnquist, and for Judge Michael Luttig of the U.S. Court of Appeals (4thCir). See, DOJ release. While at Kellogg Huber, Elwood represented SBC in telecommunications matters. She also worked on Lexecon's successful suit against the class action law firm of Milberg Weiss for abuse of process. She also represented Terry Lenzner in Alexander v. FBI (USDC, DC, 96-2123 & 97-1288). Lenzner, in an unrelated matter, was Larry Ellison's garbage man. See, TLJ story titled "Oracle Admits Hiring Investigators who Sought Trash of Pro-Microsoft Groups", June 28, 2000.

More News

10/5. The Federal Communications Commission (FCC) released the text [89 pages in PDF] of a Memorandum Opinion and Order (MO&O) that addresses petitions for reconsideration, a request for waiver, and a request for declaratory ruling, in its 800 MHz public safety proceeding. This MOO is FCC 05-174 in WT Docket 02-55, ET Docket No. 00-258, RM-9498, RM-10024, and ET Docket No. 95-18. The FCC adopted this item on October 3, 2005.

DOJ Amends Complaint Against Realtors

10/4. The Department of Justice's (DOJ) Antitrust Division filed an amended complaint in U.S. District Court (NDIll) against the National Association of Realtors (NAR). On September 8, 2005, the DOJ filed its original complaint alleging violation of federal antitrust laws in connection with its obstruction of real estate brokers who use internet tools to offer services to consumers.

The one count complaint alleges violation of Section 1 of the Sherman Act, which is codified at 15 U.S.C. § 1. The DOJ seeks to enjoin the NAR "from maintaining or enforcing a policy that restrains competition from brokers who use the Internet to more efficiently and cost effectively serve home sellers and buyers, and from adopting other related anticompetitive rules". See, story titled "DOJ Sues National Association of Realtors for Obstructing Internet Based Brokers" in TLJ Daily E-Mail Alert No. 1,210, September 9, 2005.

The NAR changed its rules. However, the DOJ's amended complaint adds that the NAR's rules still obstruct internet based real estate brokers.

Bruce McDonald, a Deputy Assistant Attorney General in the Antitrust Division, stated in a release that "Last-minute changes by NAR did not fix the anticompetitive problems of its policy ... When buying and selling a home, consumers should receive the full benefits of competition -- better services and lower costs. NAR's modified policy continues to prevent consumers from realizing these benefits."

The NAR has not yet filed an answer. It did issue in a release on October 5 in which it said that "it has no plans to settle the case".

The NAR is represented by Jack Bierig of the Chicago office of the law firm of Sidley Austin Brown & Wood.

This case is U.S.A. v. National Realtors Association, U.S. District Court for the Northern District of Illinois, Eastern Division, D.C. No. 05C-5140, Judge Filip presiding.

Sprint Sues Vonage for Patent Infringement

10/4. Sprint Communications Company, a subsidiary of Sprint Nextel, filed a complaint [PDF] in U.S. District Court (DKan) against Vonage Holdings Corp., Voiceglo Holdings Inc. and theglobe.com Inc. alleging infringement of seven patents pertaining to VOIP and other technology.

The complaint alleges infringement the following patents:
 • U.S. Patent No. 6,304,572 titled "Method, System and Apparatus for Telecommunications Control".
 • U.S. Patent No. 6,633,561 titled "Method, System and Apparatus for Telecommunications Control".
 • U.S. Patent No. 6,463,052 titled "Method, System and Apparatus for Telecommunications Control".
 • U.S. Patent No. 6,452,932 titled "Method, System and Apparatus for Telecommunications Control".
 • U.S. Patent No. 6,473,429 titled "Broadband Telecommunications System".
 • U.S. Patent No. 6,298,064 titled "Broadband Telecommunications System".
 • U.S. Patent No. 6,665,294 titled "Broadband Telecommunications System".

Sprint stated in a release that "The patents protect a series of innovations that enable the processing and delivery of packetized voice and data communications, including Voice over Internet Protocol (“VoIP”) communications."

Sprint seeks injunctive relief and damages.

Sprint is represented by Trent Webb of the Kansas City office of the law firm of Shook Hardy & Bacon.

This case is Sprint Communications Company v. Vonage Holding Corp., et al., U.S. District Court for the District of Kansas, D.C. No. 05-2433 JWL.

11th Circuit Rules in HGI v. Wetmore

10/4. The U.S. Court of Appeals (11thCir) issued its opinion [30 pages in PDF] in HGI v. Wetmore, a diversity case involving contract law in the context of software licensing.

This case may be of interest, not only because of its discussion of licensing law, but also because it is useful case study of the pitfalls and risks to software companies in pursuing those whom they suspect of piracy, and those who deal outside of their authorized distribution chain. The software company's target sued for breach of contract and fraud in the inducement, won in the District Court, and obtained an award of damages for accrued lost profits, and for punitive damages. The Court of Appeals affirmed all of this, but reversed the District Court's refusal to also award damages for lost future profits for undelivered software.

The software company in this case is Microsoft. Although, it is not a party to this case. The Court of Appeals wrote that Microsoft, through its subsidiary, Microsoft Licensing, Inc. (MSLI), and its business partner, Wetmore Printing Company, a Texas based company, "attempted to set an ill-conceived trap to ensnare a suspected software pirate, HGI. The trap, however, only managed to ensnare Wetmore."

Microsoft and Wetmore worked together to build a case against HGI Associates, Inc., and its principal, Ron Schwarz, who are based in the state of Florida. HGI sells software products in the secondary market. Wetmore, in consultation with Microsoft, dealt with HGI, invited Schwarz to its offices, made representations to him, entered into contracts for the sale of software products, received payment from HGI, and began to ship products. Then, Wetmore claimed all had been a mistake, and refused to perform on its contracts.

The consequence was that instead of HGI and Schwarz being prosecuted, HGI filed a civil complaint in U.S. District Court (SDFl) against Wetmore alleging breach of contract and fraud.

The District Court held that Wetmore breached its contracts, and engaged in fraud in the inducement. It awarded HGI damages for accrued lost profits from Wetmore's breach of the contracts and fraud, in the amount of $811,733, plus prejudgment interest. The District Court also awarded HGI $50,000 in punitive damages. However, the District Court refused to award damages for lost future profits.

Wetmore filed an appeal, which only increased its problems. The Court of Appeals rejected all of its appeal points. HGI cross-appealed the denial of damages for lost future profits. The Court of Appeals held that the District Court erred on this point, and reversed and remanded for a determination of such damages.

The Court of Appeals held that the contracts formed by Wetmore and HGI are valid and enforceable. It also rejected Wetmore's argument that the contracts are void as against public policy.

The Court reasoned that while "violation of intellectual property rights is of great concern to public policy", there was no violation of IPR in this case. Wetmore argued that the software that was the subject of the contracts was unlicensed. Au contraire, concluded the Court. There was a contract to sell only licensed software; and Microsoft approved the transaction, and did not subsequently assert its IPR, or issue any cease and desist letters. Thus, the Court held that Wetmore "cannot now circumvent this valid contractual obligation to HGI. Wetmore's argument that the contract violates public policy fails because the actual contract created did not violate Microsoft's rights or public policy."

The Court also addressed the doctrines of copyright waiver and copyright estoppel, the availability of punitive damages for fraudulent inducement, and the availability of damages for future lost profits on the undelivered software.

This opinion does not address the law regarding secondary markets for software products. The District Court and Court of Appeals applied Texas law to questions of contract formation, interpretation, and validity, and Florida law to questions of remedies and damages.

This Court's legal analysis relies upon citations to state statutes, and court opinions on contract law. For a more thorough discussion of software licensing law, see, Modern Licensing Law: 2005 Edition, by Raymond Nimmer and Jeff Dodd.

This case is HGI Associates, Inc. v. Wetmore Printing Company, U.S. Court of Appeals for the 11th Circuit, App. Ct. No. 04-11931, an appeal from the U.S. District Court for the Southern District of Florida, D.C. No. 01-07160-CV-JIC.

Bush Holds Press Conference

10/4. President Bush held a news conference at which he discussed his nomination of Harriet Miers to be an Associate Justice of the Supreme Court. See, transcript.

He said that "I expect the Senate to conduct fair hearings, and to hold an up or down vote on Harriet's nomination by Thanksgiving."

He also said that "She shares my philosophy that judges should strictly interpret the laws and the Constitution of the United States, and not legislate from the bench."

PATRIOT Act. Bush also discussed the USA PATRIOT Act, and extension of those provisions that are scheduled to expire at the end of this year.

He said that "We also got to continue to make sure we meet our obligations to prevent further terrorist attack. One of the most important effective tools for safeguarding our country is the Patriot Act. This good law allows law enforcement officers to hunt down terrorists with many of the same tools they already use to fight organized crime and drug dealers. The Patriot Act is getting results; it's a positive piece of legislation. Parts of it are set to expire. Congress needs to recognize that terrorist threats won't expire, and so they need to send me a bill that reauthorizes the Patriot Act."

Next Fed Chairman. President Bush was also asked about the process for selecting the next Chairman of the Federal Reserve Board (FRB). He said that the process is "ongoing".

Alan Greenspan's term of office expires on January 31, 2006.

Bush added that "There is a group of people inside the White House who are bringing forth -- who will bring forth nominees. These are people that -- the nominees will be people that, one, obviously, can do the job; and secondly, will be independent. It's important that whomever I pick is viewed as an independent person from politics. It's this independence of the Fed that gives people not only here in America, but the world, confidence."

Other topics discussed at the press conference included Iraq, Hurricane Katrina, federal spending, Social Security, avian flue, elections, and politics.

More News

10/4. Sun Microsystems and Google announced "an agreement to promote and distribute their software technologies". They stated that this agreement "aims to make it easier for users to freely obtain Sun's Java Runtime Environment (JRE), the Google Toolbar and the OpenOffice.org office productivity suite". The two companies stated that "Sun will include the Google Toolbar as an option in its consumer downloads of the Java Runtime Environment". See, Sun release and Google release.

10/4. Sen. Ted Stevens (R-AK) gave a speech to the Association of Maximum Service Television (AMST) regarding a transition to digital television.

Copyright Office Announces Proceeding on DMCA Anti-Circumvention Exemptions

10/3. The Copyright Office (CO) published a notice in the Federal Register announcing a rule making proceeding to adopt exemptions to the Digital Millennium Copyright Act's (DMCA) ban on circumvention of technological measures that effectively control access to copyrighted works. The DMCA requires this proceeding.

The CO notice states that "The purpose of this rulemaking proceeding is to determine whether there are particular classes of works as to which users are, or are likely to be, adversely affected in their ability to make noninfringing uses due to the prohibition on circumvention. This notice requests written comments from all interested parties, including representatives of copyright owners, educational institutions, libraries and archives, scholars, researchers and members of the public, in order to elicit evidence on whether noninfringing uses of certain classes of works are, or are likely to be, adversely affected by this prohibition on the circumvention of measures that control access to copyrighted works."

The CO notice describes this as a "Notice of Inquiry" or NOI, rather than as a "Notice of Proposed Rulemaking" or NPRM. The notice does not contain any proposed rules, or describe any proposed exemptions. Nevertheless, the notice states the purpose of this proceeding is to promulgate rules.

Initial comments are due by December 1, 2005. Reply comments are due by February 2, 2006.

The CO has not yet announced the dates and places of public hearings. However, the notice does state that the CO "plans on holding public hearings in the Spring after receipt of the comments and reply comments. The tentative dates for the Washington, DC hearings are currently March 29 and 31, 2006, and April 3 and 4, 2006, and the hearings most likely will take place in the James Madison Memorial Building of the Library of Congress in Washington, DC. The dates and location of hearings for the West Coast have yet to be decided."

Anti-Circumvention Statute. The Congress enacted the DMCA in 1998. This is a large statute that includes, among other provisions, a prohibition on circumventing technological measures that effectively control access to copyrighted works, and a prohibition on trafficking in circumvention technology. The anti-circumvention provisions are codified at 17 U.S.C. §§ 1201 - 1205.

17 U.S.C. § 1201(a)(1)(A) provides that "No person shall circumvent a technological measure that effectively controls access to a work protected under this title."

Then, § 1201(a)(2)(A) provides that "No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that --- (A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title;"

Furthermore, § 1201(b)(1)(A) provides that "No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that --- (A) is primarily designed or produced for the purpose of circumventing protection afforded by a technological measure that effectively protects a right of a copyright owner under this title in a work or a portion thereof;"

Unlike the prohibition of infringement of copyrighted works, the prohibition of circumvention provides no defense based upon fair use. Nor is it a defense that the circumvention, or circumvention technology, does not result in infringement of copyrighted works.

The DMCA does, however, provide that the CO shall conduct rulemaking proceedings every three years to establish exemptions to the general ban on circumvention.

§ 1201(a)(1)(C) provides that the CO "shall make the determination in a rulemaking proceeding ... of whether persons who are users of a copyrighted work are, or are likely to be in the succeeding 3-year period, adversely affected by the prohibition under subparagraph (A) in their ability to make noninfringing uses under this title of a particular class of copyrighted works. In conducting such rulemaking, the Librarian shall examine--
  (i) the availability for use of copyrighted works;
  (ii) the availability for use of works for nonprofit archival, preservation, and educational purposes;
  (iii) the impact that the prohibition on the circumvention of technological measures applied to copyrighted works has on criticism, comment, news reporting, teaching, scholarship, or research;
  (iv) the effect of circumvention of technological measures on the market for or value of copyrighted works; and
  (v) such other factors as the Librarian considers appropriate."

Also, § 1201 itself enumerates numerous exemptions. There is a blanket exemption for state and federal law enforcement and intelligence activities. There is also an encryption research exemption. There is also an exemption for a "nonprofit library, archives, or educational institution which gains access to a commercially exploited copyrighted work solely in order to make a good faith determination of whether to acquire a copy of that work ..."

Previous Anti-Circumvention Rulemaking Proceedings. The just announced proceeding is the CO's third rule making proceeding on DMCA anti-circumvention exemptions. It concluded its first proceeding in October of 2000. See, CO's web page on this first proceeding. It concluded its second rulemaking proceeding in October of 2003. See, CO's web page on this second proceeding. The CO received 50 written comments in its 2003 proceeding.

In 2003, the CO ultimately adopted a rule that exempted four classes of works. First, it exempted circumvention of certain lists of web sites blocked by filtering software, such as lists of indecent web sites. It exempted compilations consisting of lists of internet locations blocked by commercially marketed filtering software applications that are intended to prevent access to domains, web sites or portions of web sites. However, this exemption does not extend to lists of internet locations blocked by software applications that operate exclusively to protect against damage to a computer or computer network, or to lists of internet locations blocked by software applications that operate exclusively to prevent receipt of email. See also, comment submitted by Seth Finkelstein.

Second, the CO exempted computer programs protected by dongles that prevent access due to malfunction or damage and which are obsolete.

Third, the CO exempted computer programs and video games distributed in formats that have become obsolete and which require the original media or hardware as a condition of access.

Finally, the CO exempted literary works distributed in ebook format when all existing ebook editions of the work, including digital text editions made available by authorized entities, contain access controls that prevent the enabling of the ebook's read-aloud function and that prevent the enabling of screen readers to render the text into a specialized format.

Notice of Inquiry. The just published notice does not propose any exemptions. Rather, it solicits comments on what exemptions it should adopt. However, the notice does list and describe the four exemptions adopted in its 2003 proceeding.

Instead, much of the just published notice addresses how the CO will go about determining whether a requested exemption is warranted. It provides guidance to prospective commenters on what information the CO seeks.

The notice states that "a determination to exempt a class of works from the prohibition on circumvention must be based on a showing that the prohibition has or is likely to have a substantial adverse effect on noninfringing uses of a particular class of works".

It further states that "proponents of an exemption must provide evidence either that actual harm exists or that it is ``likely´´ to occur in the ensuing 3-year period. Actual instances of verifiable problems occurring in the marketplace are generally necessary in order to prove actual harm".

It also states that "a proponent must show that such problems warrant an exemption in light of all of the relevant facts".

This proceeding is RM 2005-11. The notice is published at Federal Register, October 3, 2005, Vol. 70, No. 190, at Pages 57526 - 57531. See also, the CO's web page for this proceeding.

Supreme Court Requests Brief From Solicitor General in Patent Obviousness Case

10/3. The Supreme Court invited the Office of the Solicitor General to file a brief in the case KSR International v. Teleflex, a patent case involving the issue of obviousness. The Court has not yet granted certiorari, but this request suggests that it might. See, full story.

Supreme Court Vacates in US v. Maxwell

10/3. The Supreme Court granted certiorari, vacated, and remanded, without opinion, in US v. Maxwell, a case regarding the authority of the Congress to enact criminal statutes under the authority of the Commerce Clause.

Since the Supreme Court issued no opinion, and will issue no opinion, it has passed up an opportunity to discuss what authority the Congress has under the Commerce Clause to enact criminal statutes that pertain to conduct involving use of computers and the internet.

The Supreme Court wrote in its October 3, 2005, Order List [84 pages in PDF], at page 2, that "The motion of respondent for leave to proceed in forma pauperis is granted. The petition for a writ of certiorari is granted. The judgment is vacated and the case is remanded to the United States Court of Appeals for the Eleventh Circuit for further consideration in light of Gonzales v. Raich, 545 U.S. __ 2005. The Chief Justice took no part in the consideration or decision of this motion and this petition."

This case involves the constitutionality of 18 U.S.C. § 2252A(a)(5)(B), which addresses pormography on computer disks or computers hard drives. The defendant was charged and convicted in the U.S. District Court of violation of this statute. The U.S. Court of Appeals (11thCir) reversed his conviction on the grounds that the Congress lacked authority to enact this statute.

Gonzales v. Raich involved the constitutionality of the Controlled Substances Act (CSA). On June 6, 2005, the Court issued its opinion [79 pages in PDF] upholding a section of the CSA as a valid exercise of federal power. The Court concluded that the Congress has broad and sweeping power to enact criminal statutes under the Commerce Clause. See, story titled "Supreme Court Upholds Broad Congressional Power to Enact Criminal Statutes Under Commerce Clause" in TLJ Daily E-Mail Alert No. 1,149, June 7, 2005.

There is no general grant of criminal law making authority in the Constitution, although, the Congress often acts as though there were. There is an implied power to enact certain criminal laws as "necessary and proper for carrying into Execution" other enumerated powers. See, Article I, Section 8, Clause 18. Some federal criminal statutes, such as the CSA and some technology related criminal statutes, are based upon the authority of the Commerce Clause. See, Article I, Section 8, Clause 2.

The Supreme Court has just vacated the judgment of the Court of Appeals, and let stand the criminal statute at issue. This means that the Supreme Court has determined that the statute at issue is constitutional. However, the Supreme Court has written nothing that serves as precedential guidance, and that puts the Congress and the American public on notice as to what types of federal criminal regulation of internet related conduct will pass constitutional muster, and why.

Nevertheless, the Supreme Court's opinion in Gonzales v. Raich, and its disposition of the present case, suggest that the Supreme Court will not be receptive to further challenges to criminal prohibitions of internet related conduct based upon the argument that they exceed Congressional Commerce Clause authority.

Much bad conduct involving the internet is clearly commercial and interstate. However, some of the bad acts that are related to the use of information technologies are committed by individuals who are not buying or selling anything in interstate commerce. Some of these individuals are sitting at home, using their personal computers. Yet, the Congress is increasingly  regulating this conduct. The Supreme Court has just upheld one such criminal law. It appears likely that it will uphold others that are similarly challenged.

This case is U.S. v. James Maxwell, Sup. Ct. No. 04-1382.

Supreme Court Lets Stand Holding that Copyright Action Cannot Be Assigned

10/3. The Supreme Court denied certiorari, without opinion, in Nancey Silvers v. Sony Pictures Entertainment, a case regarding whether copyright infringement actions can be assigned. See, Order List [84 pages in PDF], at page 20.

This order denies a petition for writ of certiorari to the U.S. Court of Appeals (9thCir). On March 25, 2005, an en banc panel issued its divided opinion [57 pages in PDF] holding that an accrued action for copyright infringement cannot be assigned. See also, story titled "9th Circuit En Banc Panel Holds That Copyright Infringement Actions Cannot Be Assigned" in TLJ Daily E-Mail Alert No. 1,104, March 28, 2005. The Supreme Court's denial lets stand the opinion of the Court of Appeals.

Earlier, a three judge panel of the Court of Appeals, like the U.S. District Court (CDCal), held that the action could be assigned. The opinion of the three judge panel is 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.

The Supreme Court number is 04-1738. See, Supreme Court docket. The Court of Appeals number is App. Ct. No. 01-56069. The District Court number is D.C. No. CV-00-06386-SVW.

Supreme Court Lets Stand Holding That Product Numbers Are Not Copyrightable

10/3. The Supreme Court denied certiorari in Southco v. Kanbridge, a copyright case involving copyrightable subject matter. See, Order List [84 pages in PDF], at page 14. This lets stand the holding of the Third Circuit that product part numbers, even rules based numbering systems that convey information about products, are not subject to copyright protection.

On December 3, 2004, the U.S. Court of Appeals (3rdCir) issued its divided en banc opinion [40 pages in PDF]. The issue is what constitutes sufficient originality to be protected by copyright. Southco claimed copyright in the serial numbers that it assigns to the parts that it manufacturers. Southco used four part numbers that not only identify the product, but also convey information about the product. Kanebridge copied Southco's numbering system and numbers.

This case goes to what rules based expression satisfies the originality requirement of the Copyright Act. Ideas, no matter how creative, cannot be protected by copyright. Expression can be protected by copyright. In this case the majority of the 3rd Circuit's en banc panel held that all of the creativity came in the creation of the rules (an idea) for assigning numbers. The numbers themselves (expression) are entirely dictated by the rules, and hence involve no creativity, or originality. Thus, they are not entitled to protection. The dissent argued that the majority unreasonably pushes all of the creativity and originality to the ideas side of the idea expression dichotomy, and threatens to remove the incentive to create rules based expression.

The Solicitor General took no position on the petition for writ of certiorari. However, the U.S. filed an amicus curiae brief with the Court of Appeals on May 23, 2003 arguing that part numbers are not subject to copyright protection.

This brief listed as counsel of record senior attorneys at the Copyright Office (David Carson, Jule Sigall and Steven Tepp), the U.S. Patent and Trademark Office (James Toupin, John Whealan, and Thomas Krause), and the Department of Justice's Antitrust Division (Hewitt Pate and others).

See, story titled "3rd Circuit Opines on Copyright Originality Requirement and Rules Based Expression" in TLJ Daily E-Mail Alert No. 1,042, December 22, 2004.

This Supreme Court case is Southco, Inc. v. Kanbridge Corp., No. 04-1459. See also, Supreme Court docket. This Court of Appeals number is 02-1243. The Court of Appeals heard an appeal from the U.S. District Court for the Eastern District of Pennsylvania, D.C. No. 99-cv-04337, Judge Norma Shapiro presiding.

On December 8, the Appeals Court issued a correction [2 pages in PDF]. On December 13, the Appeals Court issued a second correction [2 pages in PDF]. Both corrections pertain to identifying which judges joined in which portions of the majority opinion.

More Supreme Court News

10/3. The Supreme Court denied certiorari in Board of Trustees, University of Illinois v. Fujitsu Limited, et al., Sup. Ct. No. 04-1346. See, Order List [84 pages in PDF], at page 14. This is a patent infringement case involving plasma screen technology, and 11th Amendment immunity of state universities. This order denies the petition for writ of certiorari to the U.S. Court of Appeals (FedCir). The Federal Circuit dismissed an appeal from the U.S. District Court (NDCal) for lack of jurisdiction.

10/3. The Supreme Court denied certiorari in Brokaw v. Qualcomm, Sup. Ct. No. 04-1711, a case involving a former Qualcomm employee's loss of non-vested stock options upon his termination by Qualcomm. See, Order List [84 pages in PDF], at page 20. This order denies a petition for writ of certiorari to the U.S. Court of Appeals (9thCir). See, unpublished opinion [3 pages in PDF] of the Court of Appeals. This case is App. Ct. No. No. 04-55198. This was an appeal from the U.S. District Court (SDCal), D.C. No. CV-01-01172-DMS.

10/3. The Supreme Court denied certiorari in James Kay v. FCC, Sup. Ct. No. 05-46. See, Order List [84 pages in PDF], at page 43. On January 11, 2005, the U.S. Court of Appeals (DCCir) issued its opinion [11 pages in PDF] in an appeal from a final order of the Federal Communications Commission (FCC) denying James Kay's application for review of the decision of the FCC's Wireless Telecommunications Bureau finding untimely the "finder's preference" request Kay filed involving specialized mobile radio systems (SMR) station WNPA325. The Court of Appeals affirmed the FCC. The Appeals Court No. is 04-1014.

10/3. The Supreme Court denied certiorari in Stainless Systems Inc. v. Nextel West Corp., a case involving billing disputes between wireless carriers and their customers. See, Order List [84 pages in PDF], at page 18. This lets stand the opinion [21 pages in PDF] of the U.S. Court of Appeals for the 8th Circuit. The Supreme Court number is 04-1641. See also, Supreme Court docket. The Court of Appeals number is 04-2298 . The trial court was the U.S. District Court for the Western District of Missouri.

10/3. The Supreme Court denied certiorari in PMI Photomagic, Ltd. v. Foto Fantasy, Inc., No. 04-1646. See, Order List [84 pages in PDF], at page 18. See also, Supreme Court docket.

2nd Circuit Vacates in Twombly v. Bell Atlantic

10/3. The U.S. Court of Appeals (2ndCir) issued its opinion [43 pages in PDF] in Twombly v. Bell Atlantic, an class action antitrust suit against the regional bell operating companies (RBOCs) alleging conspiracy to exclude competitors from, and not to compete against one another in, their respective geographic markets for local telephone and high speed internet services. The District Court dismissed the complaint for failure to state a claim. The Court of Appeals vacated and remanded. See, full story.

Bush Picks Harriet Miers for Supreme Court

10/3. President Bush nominated Harriet Miers to be a Justice of the Supreme Court. She is currently the White House Counsel.

Miers (at left) is from Dallas, Texas. She received an undergraduate degree in mathematics, and a law degree in 1970, from Southern Methodist University (SMU), which is located in suburbs of Dallas.

Laura Bush is an alumnus and trustee of SMU. Miers is a former member of the SMU Law School Executive Committee. See, SMU biography of Miers.

She clerked for former U.S. District Court Judge Joe Estes. She worked for the Dallas based law firm of Locke Purnell (now Locke Liddell & Sapp) from 1972 through 1999, where she rose to the position of Co-Managing Partner. Locke Purnell is a firm that built its reputation in Dallas as a leading insurance defense firm, although it focus is broader today.

The National Law Journal's ranking of law firms based on number of attorneys ranks Locke Liddell 94th. Vault's ranking of the top 100 law firms in 2004 based upon prestige does not list Locke Liddell. The Am Law 100 2002 ranking of law firms by total revenue ranked Locke Liddell 84th.

A biography of Miers published by the American Justice Partnership, states that she represented "Microsoft, Walt Disney Co. and SunGard Data Systems Inc.".

Unlike most other Appeals Court and Supreme Court nominees in recent decades, she has never served as a state or federal judge, and has worked little in Washington DC. Instead, she has considerable experience as a practicing lawyer representing clients in the private sector.

She went to work in the Bush White House on January 20, 2001, the first day of the Bush administration. She was first Assistant to the President and Staff Secretary. She later became Deputy Chief of Staff for Policy. In November of 2004, Bush picked her to succeed Alberto Gonzales as White House Counsel, whom he had nominated to be the Attorney General.

There is little in the public record regarding Miers' views on legal issues. She has written no judicial opinions. She will likely strive to say little during the confirmation process. However, since she has worked for years as George Bush's gatekeeper and attorney, he has likely had ample opportunity to learn her views, in a manner that has left no trail of documents. There is a great asymmetry of information between the President and Miers, on the one hand, and the Senate and American public, on the other.

Bush stated little at the announcement on October 3. He said that "Harriet Miers will strictly interpret our Constitution and laws. She will not legislation from the bench."

Miers is also a former member of the Dallas City Council. She is also a former member of the Executive Committee and Board of the Greater Dallas Chamber of Commerce.

Sen. Harry Reid. Also, from 1995 through 2000, Miers was Chair of the Texas Lottery Commission, which oversees state run gambling operations. Sen. Harry Reid (D-NV), the Senate Minority Leader, is one person opponents of Miers will rely upon to lead the effort to reject Miers. He is a former Chair of the Nevada Gaming Commission. The economy of Nevada is heavily dependent on the gambling industry, and the associated hotel, convention, and entertainment services.

Sen. Reid stated in a release on October 3 that "I like Harriet Miers".

Sen. Reid continued that "As White House Counsel, she has worked with me in a courteous and professional manner. I am also impressed with the fact that she was a trailblazer for women as managing partner of a major Dallas law firm and as the first woman president of the Texas Bar Association."

"In my view, the Supreme Court would benefit from the addition of a justice who has real experience as a practicing lawyer. The current justices have all been chosen from the lower federal courts. A nominee with relevant non-judicial experience would bring a different and useful perspective to the Court", said Sen. Reid. "I look forward to the Judiciary Committee process which will help the American people learn more about Harriet Miers, and help the Senate determine whether she deserves a lifetime seat on the Supreme Court."

Campaign Contributions. Federal Election Commission (FEC) records show that in recent years she has generously supported Republicans. However, she was previously a Democratic contributor.

She contributed $2,000 to the Bush Cheney 2004 campaign.

During the 2000 election cycle she gave money to Bush for President ($1,000), the Bush Cheney 2000 Compliance Committee ($1,000), and the Bush Cheney Inc. Recount Fund ($5,000).

She also contributed in the 2000 cycle to Sen. Kay Hutchison (R-TX), who won re-election, and Jon Newton for Congress ($1,000), who lost. Newton ran against Rep. Ralph Hall (R-TX), who was then a Democrat, but is now a Republican. Hall had long acted more like a Republican than many actual Republicans. He beat Newton by 60%-38%.

She also gave money in the 2000 cycle to the Dallas County Republican Party ($1,000), the Locke Liddell PAC ($415), and the Good Government Fund ($500)

She gave to Hutchison in the 1998 election cycle, and to Phil Gramm for President in the 1996 cycle.

She was an early supporter of Rep. Pete Sessions (R-TX), contributing to his campaigns in the 1992, 1994, and 1996 election cycles. He finally won a House seat in 1996. Sessions was a longtime SBC employee before becoming a politician.

While her recent record of contributions has been all Republican, earlier she gave money to Democrats.

In the 1988 election cycle she gave money to Al Gore's presidential campaign (he lost the Democratic nomination to Dukakis), former Senator Lloyd Bentson's Senate campaign, the Democratic National Committee, and her law firm's PAC.

More Statements About Miers. Attorney General Alberto Gonzales stated in a release that "President Bush has made an exceptional choice in selecting Harriet Miers as his nominee to the Supreme Court of the United States. I have worked with her for many years and have seen firsthand her legal acumen and know that she will be a credit to the Court and this Nation. She has risen to the very top of the legal profession, earning the respect of all who know her. Ms. Miers would bring to the Court her brilliance, dedication, and her commitment to the rule of law and equal access to justice for all."

"Throughout her career, Ms. Miers has been recognized as a pioneer in the law. As the first woman president of the State Bar of Texas and as a dedicated public servant, she has been a role model for women and for all lawyers. I am confident that Ms. Miers will serve with distinction on the highest Court in the land."

Sen. Charles Grassley (R-IA), a senior member of the Senate Judiciary Committee, wrote in a release that "President Bush made his choice for the remaining Supreme Court vacancy after consulting with 80 Senators.  There's no doubt Harriet Miers is an experienced lawyer and has been a trailblazer for women throughout her legal career.  I now look forward to the next step in the confirmation process and learning more about Ms. Miers’ views and reviewing her qualifications."

He added that "The Senate conducted a dignified hearing and timely floor debate, including an up or down vote, during the last nomination. But before this nomination was even announced, the liberal interest groups threatened a filibuster. Despite these threats from outside interest groups, I hope to see Senators -- both Republican and Democratic -- stay open-minded and treat Ms. Miers with the even hand and respect we saw during the confirmation of Chief Justice Roberts."

Sen. Orrin Hatch (R-UT), also a member of the SJC, wrote in a release that "Harriett Miers will bring diversity and depth to the Court ... She has broad professional experience that will provide a fresh perspective from outside the insular walls of the judiciary. As White House Counsel, she has been overseeing the process of choosing judges who will interpret, but not make, the law. Throughout her life, she has been dedicated to the law and has always set an example of integrity, accomplishment and service. It's important that we don’t prejudge the nominee; I hope the Senate again shows the American people that we can conduct a dignified and thorough confirmation process."

People for the American Way, a Washington DC based interest group that opposes the appointment of conservatives to the courts, issued a release regarding Miers. Ralph Neas, President of PFAW, stated in this release that "President Bush has nominated his personal lawyer and long-time friend to a lifetime appointment on the Supreme Court. His choice raises serious questions about whether he has found a nominee who has the requisite qualifications and independence for the nation’s highest court. This nomination will require the closest scrutiny by the Senate ... With no past judicial experience for the senators to consider, the burden will be on Miers to be forthright with the Senate and the American people.  She must outline her judicial philosophy and provide direct answers to questions about how -- and whether -- she will uphold fundamental rights, liberties and legal protections on which Americans rely."

SMU Law School

10/3. News reports and blog discussions have already focused on whether or not Miers is qualified to be a Supreme Court Justice, citing her education, and that she has not been a judge. Harriet Miers' educational credentials are an undergraduate and law degree from Southern Methodist University (SMU).

This article provides information regarding the ranking of SMU, and other graduates that have attained high government office.

Law School Rankings. SMU's law school is not highly ranked. The Association of American Law Schools has 166 member schools, including SMU. Although, not all U.S. law schools are members.

The U.S. News and World Report's ranking of law schools ranks SMU 52nd.

The Thomas M. Cooley Law School 2005 ranking ranks SMU 38th.

Brian Leiter, of the University of Texas Law School, has published numerous rankings of law schools based upon various criteria. For example, he has several ratings based upon the number of citations to works authored by faculty members. He rates the top forty. SMU is not listed. He also rates the top 40 law schools based upon faculty quality. Again, SMU is not listed.

SMU Law Graduates. Perhaps the SMU law school graduate who is best known to those who follow developments in technology law is Rep. Lamar Smith (R-TX), the Chairman of the House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property (CIIP). He has worked with Rep. Howard Berman (D-CA), the ranking Democrat on the CIIP Subcommittee, to enact legislation providing further copyright protection and remedies, primarily for the entertainment industries. He is now working on a major rewrite of patent law. He is also a likely future Chairman of the full Committee.

Other SMU law school graduates include the following:
 • Rep. Ralph Hall (R-TX), the Chairman of the House Energy and Commerce Committee's Subcommittee on Energy.
 • Antonio Garza, U.S. Ambassador to Mexico.
 • Terry Means, Judge of the U.S. District Court (NDTex).
 • Barbara Lynn, Judge of the U.S. District Court (NDTex).
 • Richard Schell, Judge of the U.S. District Court (EDTex).
 • Fred Biery, Judge of the U.S. District Court (WDTex).
 • Jane Boyle, Judge of the U.S. District Court (NDTex).
 • Robert Maloney, Judge of the U.S. District Court (NDTex), senior status.
 • Nathan Hecht, Justice of the Texas Supreme Court.
 • Craig Enoch, former Justice of the Texas Supreme Court.
 • Deborah Hankinson, former Justice of the Texas Supreme Court.

Not all SMU law school graduates are accomplished. For example, the publisher of TLJ graduated from SMU law school.

People and Appointments

10/3. Rep. Ernest Istook (R-OK) announced that he will run for Governor of the state of Oklahoma. He has been one of the members of the House who has been most active in seeking to address, through federal legislation, problems associated with online pormography. He has used his position as a member of the House Appropriations Committee to add amendments to appropriations bills requiring that internet filtering technology be used when certain federal funding is involved. Most of the Representatives and Senators who have led the efforts to censure internet content and internet use have also left the Congress. Former Sen. Dan Coats (R-IN) left the Senate in 1999, and is now Ambassador to Germany. Former Rep. Bob Franks (R-NJ) retired to run for the Senate in 2000 (and lost). Former Sen. Ernest Hollings (D-SC) retired at the end of the 108th Congress.

10/3. Parul Desai was hired by the Media Access Project (MAP) as Assistant Director. Previously, she worked for Microstrategy, Inc., and for the law firm of Crowell & Moring.

10/3. Elizabeth Grossman was named Staff Director of the House Science Committee's Subcommittee on Research. She replaced Dan Byers who was named Deputy Chief of Staff at the White House Office of Science and Technology Policy (OSTP).

More News

10/3. The Office of the U.S. Trade Representative (USTR) announced the completion of negotiations on a free trade agreement between the United States and Oman. USTR Robert Portman stated that this FTA will "provide new opportunities for U.S. service firms involved in banking and securities, telecommunications", and other services. He added that "In addition to Oman’s decision to eliminate its tariffs on U.S. products, and providing substantial market access across its entire services regime, this agreement will also ensure a secure, predictable legal framework for U.S. investors operating in Oman, provide for effective enforcement of labor and environmental laws, and protect intellectual property." See, statement.

10/3. The Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB) released a notice [PDF] requesting nominations for seven positions on the Board of Directors of the Universal Service Administrative Company (USAC).

10/3. The Federal Communications Commission (FCC) and Department of Justice (DOJ) filed their brief [PDF] with the U.S. Court of Appeals (DCCir) in AT&T v. FCC. This is AT&T's petition for review of the FCC's declaratory order holding that AT&T’s enhanced prepaid calling card (EPPC) service is a regulated basic service, or telecommunications service. The Court of Appeals has not yet scheduled oral argument. This case is App. Ct. No. 05-1096.

People and Appointments

10/1. World Trade Organization (WTO) Deputy Directors-General Alejandro Jara, Valentine Rugwabiza, Harsha Singh, and Rufus Yerxa began their terms of office on October 1, 2005.

Go to News from September 26-31, 2005.