TLJ News from February 21-25, 2008

Supreme Court Denies Cert in Darden v. Peters

2/25. The Supreme Court denied certiorari in Darden v. Peters, a case regarding the meaning of the intellectual property clause of the Constitution. See, Orders List [10 pages in PDF] at page 3.

This lets stand the May 24, 2007, opinion [14 pages in PDF] of the U.S. Court of Appeals (4thCir). This is a little noted case about standards of review in judicial review of decisions of the Copyright Office. However, to determine which standard of review to apply, the courts had to determine whether or not the review concerns a "constitutional right" within the meaning of the Administrative Procedure Act (APA), at 5 U.S.C. § 706.

Article I, Section 8, of the Constitution provides that "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries".

The District Court and Court of Appeals ruled that while copyright is in the Constitution, and the Constitution states that it is a "Right", it does not follow that copyright is a Constitutional right.

The Court of Appeals wrote that this clause "grants Congress the power to provide copyright protection to the extent Congress sees fit", that "Congress is under no mandate from this clause, however, to provide copyright protection", and that "whatever rights and remedies exist do so only because Congress provided them".

This is all quite consistent with long standing Supreme Court and lower court precedent. It is also consistent with how the Congress has long treated the intellectual property clause. Nevertheless, it is inconsistent with the plain words of the Constitution, and arguably, the original understanding of the drafters and ratifiers of the Constitution. It is also inconsistent with judicial interpretation of other Constitutional provisions that both identify a right and provide Congressional authority to enact legislation. For example, 14th Amendment (which includes due process and equal protection rights) provides that "The Congress shall have power to enforce, by appropriate legislation, the provisions of this article", but the courts have not held that "whatever rights and remedies exist do so only because Congress provided them".

See also, story titled "4th Circuit Rules Copyright is Not a Constitutional Right" in TLJ Daily E-Mail Alert No. 1,588, May 29, 2007.

This case is William Darden v. Marybeth Peters, U.S. Court of Appeals for the 4th Circuit, App. Ct. No. 06-1177, an appeal from the U.S. District Court for the Eastern District of North Carolina, D.C. No. 2:04-cv-00030-BO, Judge Terrence Boyle presiding. Judge Traxler wrote the opinion of the Court of Appeals, in which Judges Widener and Duncan joined.

Supreme Court Denies Cert in Convolve v. Seagate

2/25. The Supreme Court denied certiorari in Convolve v. Seagate Technology, a case regarding the scope of the waiver of attorney client privilege and work product protection that results when an accused patent infringer asserts an advice of counsel defense to a charge of willful infringement. See, Orders List [10 pages in PDF] at page 4.

This lets stand the August 20, 2007, en banc opinion [42 pages in PDF] of the U.S. Court of Appeals (FedCir) which held that the waiver extends to opinion counsel, but not to trial counsel.

The Court of Appeals wrote that "we conclude that the significantly different functions of trial counsel and opinion counsel advise against extending waiver to trial counsel. Whereas opinion counsel serves to provide an objective assessment for making informed business decisions, trial counsel focuses on litigation strategy and evaluates the most successful manner of presenting a case to a judicial decision maker. ... Therefore, fairness counsels against disclosing trial counsel’s communications on an entire subject matter in response to an accused infringer’s reliance on opinion counsel’s opinion to refute a willfulness allegation."

The Court of Appeals therefore held, "as a general proposition, that asserting the advice of counsel defense and disclosing opinions of opinion counsel do not constitute waiver of the attorney-client privilege for communications with trial counsel."

However, it added that "We do not purport to set out an absolute rule. Instead, trial courts remain free to exercise their discretion in unique circumstances to extend waiver to trial counsel, such as if a party or counsel engages in chicanery."

Similarly, the Court of Appeals held, with respect to work product protection, that the waiver does not extend to trial counsel's work product, "absent exceptional circumstances".

This case is Convolve, Inc. v. Seagate Technology, LLC, U.S. Supreme Court, Sup. Ct. No. 07-656, a petition for writ of certiorari to the U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 06-M830. The Court of Appeals heard a petition for writ of mandamus to the U.S. District Court for the Southern District of New York. See also, Supreme Court docket.

Court of Appeals Holds One Satisfaction Rule Applies in Copyright Cases

2/25. The U.S. Court of Appeals (11thCir) issued an opinion [15 pages in PDF] in Buc v. International Yacht Council, a copyright infringement case. The Court of Appeals held that the one satisfaction rule applies to copyright infringement

Buc International filed a complaint in U.S. District Court (SDFl) against six defendants alleging direct, vicarious and contributory copyright infringement. Buc also alleged antitrust law violations, unfair and deceptive trade practices under state law, and breach of contract; those claims are not pertinent to the present appeal.

Buc settled with several defendants, for a total of $790,000. Buc then prevailed at the bench trial against the non-settling defendants, and received an award of $1,598,278. These non-settling defendants argued that this award should be reduced, pursuant to the one satisfaction rule, by the amount of the settlement amounts. The District Court denied the request.

This appeal followed. The Court of Appeals reversed.

The Court of appeals wrote that the one satisfaction rule "has its roots in elementary principles of tort law. ... The rule generally provides that a plaintiff is entitled to only one satisfaction for a single injury, such that amounts received in settlement from an alleged tortfeasor are credited against judgments for the same injury against non-settling tortfeasors." The Court added that the rule "operates to prevent double recovery, or the overcompensation of a plaintiff for a single injury."

The Court of Appeals held that copyright infringement is in the nature of tort, and that principles of tort law limiting multiple recoveries for one injury apply to copyright infringement actions.

It wrote, "To hold otherwise would allow a plaintiff to recover multiple times for a single injury, frustrating this elementary principle of tort law in a manner that we cannot imagine envisioned by Congress."

This case is Buc International, Inc. v. International Yacht Council Ltd., et al., U.S. Court of Appeals for the 11th Circuit, App. Ct. No. 05-16151, an appeal from the U.S. District Court for the Southern District of Florida, D.C. No. 02-60772-CV-WPD. Judge Barkett wrote the opinion of the Court of Appeals, in which Judges Anderson and Trager, sitting by designation, joined.

More Court News

2/25. The Supreme Court denied certiorari in Autotech Tech v. Integral Research, a case regarding jurisdiction of a U.S. District Court over a claim against a semiconducter maker owned by a foreign government. This lets stand the opinion of the U.S. Court of Appeals (7thCir), which vacated the judgment and writ of execution of the District Court. The Court of Appeals held that the District Court properly exercised jurisdiction over a claim by a U.S. company (Autotech) against a commercial semiconductor manufacturer (Integral) that is owned by a foreign government (Belarus). However, it vacated the judgment against the Integral on other procedural grounds. See also, story titled "7th Circuit Addresses Jurisdiction in Actions Against Companies Owned by Foreign Governments" in TLJ Daily E-Mail Alert No. 1,631, August 30, 2007. This case is Autotech Technologies L.P. v. Integral Research & Development Corporation, U.S. Supreme Court, Sup. Ct. No. 07-879, a petition for writ of certiorari to the U.S. Court of Appeals for the 7th Circuit, App. Ct. No. 06-1718. The Court of Appeals heard an appeal from the U.S. District Court for the Northern District of Illinois, Eastern Division, D.C. No. 96 C 3193, Judge David Coar presiding. Judge Wood wrote the opinion of the Court of Appeals, in which Judge Kane and Williams joined. See also, Supreme Court docket.

2/25. The U.S. Court of Appeals (5thCir) issued its divided opinion [PDF] in American Rice v. Producers Rice Mill, a trademark and contract case involving marketing of rice in Saudi Arabia. This case addresses several issues, including extraterritorial applications of US law, likelihood of confusion, and remedies. This case is American Rice, Inc. v. Producers Rice Mill, Inc., U.S. Court of Appeals for the 5th Circuit, App. Ct. No. 06-20645, an appeal from the U.S. District Court for the Southern District of Texas. Judge Eugene Davis wrote the opinion of the Court of Appeals, in which Judge Higginbotham joined. Judge Jerry Smith dissented on the likelihood of confusion issue.

CCIA Comments on FTC Letter Regarding Copyright Notices Complaint

2/25. The Computer and Communications Industry Association (CCIA) issued a release regarding its August 1, 2007, complaint [PDF] submitted to the Federal Trade Commission (FTC) regarding copyright notices.

The CCIA alleged in its complaint that Major League Baseball, National Football League, NBC/Universal, and others violated Section 5 of the FTC Act, which is codified at 15 U.S.C. § 45, in connection with their alleged use of deceptive and threatening copyright notices. See also, CCIA's August 1, 2007, release.

Section 5 is not directed at copyright notices or sports programming. Rather, it is a broad prohibition of unfair and deceptive trade practices. It provides that "Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful."

The CCIA requested that the FTC order the copyright holders to cease making deceptive statements. It also sought an order directing copyright holders to "forebear from attempting to force consumers into waiving their rights through contractual instruments". It also sought an order directing the copyright holders to "provide for educational awareness programs" from third parties regarding "fair use rights".

The FTC sent the CCIA a letter [6 pages in PDF] on December 6, 2007, stating that "the FTC staff has determined not to recommend that the Commission take any formal action against the companies named in the CCIA's complaint at this time". (TLJ failed to report on the issuance of this letter in a timely manner.)

Nevertheless, Ed Black, head of the CCIA, stated that "We are pleased with the statements of the FTC that acknowledge the risks to consumer rights ... The FTC letter issues an early warning to copyright owners that they are not immune from consumer protection laws and that the FTC will be monitoring the situation."

Also, TLJ spoke with Black. He added that "we will be submitting more information to the FTC of various types".

The FTC letter states that "Copyright warnings can serve the valuable purpose of notifying consumers in a succinct fashion that infringement has potentially serious legal consequences. ``FBI copyright warnings´´ on DVD and VHS tape cases, as well as in the motion pictures embodied in the DVDs and tapes therein, can be evidence in criminal piracy cases that defendants' copyright infringement was willful."

"Copyright owners are not, however, entitled to engage in deceptive and unfair practices to protect their copyrighted works against infringement."

It continues that "After reviewing the various warnings cited in the CCIA's complaint, the FTC staff concludes that consumers would likely interpret the statements as representations that the material at issue is copyrighted and that there can be significant penalties for infringing that copyright. We do not have a sufficient basis to conclude that consumers would view those brief warnings as complete statements of their rights with respect to the works. Nor do we have a sufficient basis to conclude that consumers would be likely to refrain from engaging in lawful activities as a consequence of reading those warnings."

However, the letter adds that "FTC staff encourages copyright owners to be accurate in their characterizations of their rights and any limitations on consumers' rights to use copyrighted works. Widespread use of inaccurate copyright warnings could contribute to consumers' misunderstanding of the statutory protections available to them under the Copyright Act. Further, if consumers routinely confront exaggerated and inaccurate copyright warnings they may tend to disregard them altogether, to the detriment of consumers and copyright owners alike."

See also, August 3, 2007, letter [PDF] of the Public Knowledge and other groups, and August 1, 2007, letter [4 pages in PDF] of the Library Copyright Alliance (LCA).

People and Appointments

2/25. Devin Whitney joined the California public policy office of the AeA. See, release.

Bush and Democrats Swap Insults Over Surveillance Bill

2/23. House and Senate Democrats again accused House and Senate Republicans and President Bush of politicizing debate over Foreign Intelligence Surveillance Act (FISA) reform. Bush administration representatives made reciprocal accusations against Democrats.

Democrats. On February 22, Sen. Patrick Leahy (D-VT), the Chairman of the Senate Judiciary Committee (SJC), Sen. Jay Rockefeller (D-WV), Chairman of the Senate Intelligence Committee, Rep. John Conyers (D-MI), Chairman of the House Judiciary Committee, and Rep. Silvestre Reyes (D-TX), Chairman of the House Intelligence Committee (HIC) released a statement.

The ranking Republican members of these four Committees did not join in this statement.

The four Democrats wrote that on Friday, February 22, "our staffs met again in what should have been a bipartisan, bicameral meeting with our Republican colleagues' staffs and Administration officials to continue working through the recess period on important reforms to FISA. Again, the Republicans refused to join the dialogue. And today, neither the Justice Department nor the Director of National Intelligence sent representatives. Today was another missed opportunity."

"Further politicizing the debate, the Administration today announced that they believe there have been gaps in security since the Protect America Act expired." The four continued that "They cannot have it both ways; if it is true that the expiration of the PAA has caused gaps in intelligence, then it was irresponsible for the President and congressional Republicans to block an extension of the law."

Rep. Reyes added in his own February 25 statement that Bush "has resorted to scare tactics and political games".

He added that "our country did not ``go dark´´ on Feb. 16 when the Protect America Act (PAA) expired. Despite President Bush's overheated rhetoric on this issue, the government's orders under that act will last until at least August. These orders could cover every known terrorist group and foreign target. No surveillance stopped. If a new member of a known group, a new phone number or a new e-mail address is identified, U.S. intelligence can add it to the existing orders, and surveillance can begin immediately."

Rep. Reyes also said that "It is clear that he and his Republican allies, desperate to distract attention from the economy and other policy failures, are trying to use this issue to scare the American people into believing that congressional Democrats have left America vulnerable to terrorist attack."

He added that "If the president thinks he can use this as a wedge issue to divide Democrats, he is wrong."

Also, on February 22, Rep. Steny Hoyer (D-MD), the House Majority Leader, stated in a release that "Democrats continued today to work hard on crafting a new FISA bill that will keep our nation safe and protect our civil liberties. We were disappointed that not only Congressional Republicans but also the Bush Administration refused to join us in these critical negotiations. This refusal simply puts partisanship and politics ahead of our nation’s urgent national security interests."

Bush Administration. On Monday, February 25, the White House news office issued a statement. "There is an old rhetorical tactic in Washington: you repeat something often enough, regardless of whether it's true, and hope people will start to believe it. This has been the preferred tactic of many Democrats involved in the FISA debate".

It adds that House Democratic leaders are pursuing an "irresponsible, minority position" to "appease trial lawyers and".

The statement concludes, "Pointing out the cost of Congress' failure to act is not a ``scare tactic´´ and it is not a ``wedge issue´´. Instead it is a sober, transparent assessment of the terrorist threat our nation faces, and the critical importance of the needs of our intelligence community to combat that threat. Unless this threat is taken more seriously in Congress, the ability to obtain the intelligence we need will be at risk, and with it our national security."

On Saturday, February 23, the Department of Justice (DOJ) released a joint statement of the DOJ and Office of the Director of National Intelligence (ODNI) regarding electronic surveillance, the Foreign Intelligence Surveillance Act (FISA), and telco immunity.

It states that "the Department of Justice and the Intelligence Community have been working assiduously to mitigate the effects of the uncertainty caused by the failure to enact long-term modernization of the" FISA.

In the meantime, it states, "new surveillances under existing directives issued pursuant to the Protect America Act will resume, at least for now." But, it also states that "the delay resulting from this discussion impaired our ability to cover foreign intelligence targets, which resulted in missed intelligence information".

It also discusses assistance from unspecified companies. "In addition, although our private partners are cooperating for the time being, they have expressed understandable misgivings about doing so in light of the on-going uncertainty and have indicated that they may well discontinue cooperation if the uncertainty persists. Even with the cooperation of these private partners under existing directives, our ability to gather information concerning the intentions and planning of terrorists and other foreign intelligence targets will continue to degrade because we have lost tools provided by the Protect America Act that enable us to adjust to changing circumstances. Other intelligence tools simply cannot replace these Protect America Act authorities."

It concludes that "The bipartisan Senate bill contains these authorities, as well as liability protection for those companies who answered their country’s call in the aftermath of September 11. We hope that the House will pass this bill soon and end the continuing problems the Intelligence Community faces in carrying out its mission to protect the country."

People and Appointments

2/22. A grand jury of the U.S. District Court (DAriz) returned an indictment that charges Rep. Rick Renzi (R-AZ) and others with 35 counts of wire fraud, extortion, money laundering, conspiracy and other offenses in connection with real estate transactions in the state of Arizona. See, DOJ release.

More News

2/22. The Government Accountability Office (GAO) released a report [34 pages in PDF] titled "Information Security: Protecting Personally Identifiable Information". It reviews laws related to protecting personally identifiable information (PII) held by government agencies, the history of data breaches at government agencies, and efforts by agencies to protect PII.

Representatives Trade Accusations Over Expiration of FISA Bill

2/21. House Democrats and Republicans continued to posture, and assign blame, regarding electronic surveillance and legislation to revise the Foreign Intelligence Surveillance Act (FISA).

S 1927 [LOC | WW], the "Protect America Act", the temporary act enacted in August of 2007 to revise and expand federal wiretap, surveillance, and related authorities, expired on Saturday, February 16, 2008.

Rep. Steny Hoyer (D-MD), the House Majority Leader, stated in a release on February 21, 2008, that "I am disappointed that House and Senate Republicans apparently instructed their staffs not to participate in today’s bicameral meeting on modernizing the Foreign Intelligence Surveillance Act. The decision to not participate, coupled with their vote against an extension of their bill -- the Protect America Act -- only serves to reinforce the perception that Republicans prefer to have a political issue rather than a strong new FISA bill in place as quickly as possible. Certainly Republicans do not really believe that the role of the House is to simply rubberstamp whatever bills the Senate passes."

He added that "I am hopeful that Republicans will reconsider and join us in crafting a bipartisan FISA bill that protects our nation and our civil liberties. It is time to come together and work in the best interests of our nation’s security."

Rep. Roy Blunt (R-MO) stated in a release that "Democrats are saying today's meeting was called to craft bipartisan legislation that would update our antiquated foreign intelligence laws. This meeting was nothing more than an attempt to give the majority political cover for irresponsibly allowing the Protect America Act to expire. We already have a bi-partisan bill that was supported by more than two-thirds of the Senate and enjoys the support of a majority of Members of the House. The only remaining issue is how long House Democrat Leadership will delay before scheduling this bi-partisan bill for a vote."

He added that "House Democrats have had ample time. Now, I’m asking them to listen to a respected member of their own party and pass the bill Senator Jay Rockefeller and my good friend Kit Bond wrote -- and 66 of their Senate colleagues supported."

Microsoft Announces Commitment to Open Connections

2/21. On February 21, 2008, Microsoft announced in a release that it "is implementing four new interoperability principles and corresponding actions across its high-volume business products: (1) ensuring open connections; (2) promoting data portability; (3) enhancing support for industry standards; and (4) fostering more open engagement with customers and the industry, including open source communities."

This announcement may be related to pressures put on Microsoft by the European Commission (EC).

Microsoft added that this applies to "Windows Vista (including the .NET Framework), Windows Server 2008, SQL Server 2008, Office 2007, Exchange Server 2007, and Office SharePoint Server 2007, and future versions of all these products." (Parentheses in original.)

Microsoft elaborated that it "will openly publish on MSDN over 30,000 pages of documentation for Windows client and server protocols that were previously available only under a trade secret license through the Microsoft Work Group Server Protocol Program (WSPP) and the Microsoft Communication Protocol Program (MCPP)."

Moreover, it "will indicate on its Web site which protocols are covered by Microsoft patents and will license all of these patents on reasonable and non-discriminatory terms, at low royalty rates". Also, it "is providing a covenant not to sue open source developers for development or non-commercial distribution of implementations of these protocols".

Steve Ballmer, CEO of Microsoft, commented regarding the EC's reaction at a news conference. He said that "I think it's important. The Commission has posted a statement, and they speak for themselves. We certainly don't speak for the Commission. I think we're happy to talk about ways in which what we're announcing today is certainly expanded and new from anything we've done in the past." See, transcript.

TLJ requested, but did not receive, from the EC reaction to Microsoft's announcement of February 21.

The Wall Street Journal published an article [subscription website] on February 25, 2008, by Charles Forelle titled "Europe's Antitrust Chief Defies Critics, and Microsoft".

People and Appointments

2/21. Barbara Esbin will join the Progress & Freedom Foundation (PFF) as a Senior Fellow and Director of the Center for Communications and Competition Policy. She was a long time employee of the Federal Communications Commission (FCC), where she worked in the Common Carrier Bureau, Wireless Telecommunications Bureau, Enforcement Bureau, and Cable Services Bureau (CSB) and Media Bureau. Back in 1998, when she was Associate Bureau Chief of the CSB, she authored FCC's Office of Plans and Policy's Working Paper No. 30 [129 pages in PDF], titled "Internet Over Cable: Defining the Future in Terms of the Past: FCC Staff Working Paper on Regulatory Categories and the Internet". She then worked briefly in the Washington DC office of the law firm of Dow Lohnes. She then returned to the FCC and worked on, among other things, antitrust merger reviews. For example, she worked on the proposed Echostar Directv merger with Ken Ferree, who was then Chief of the CSB, and is now the head of the PFF. Her final position at the FCC was Special Counsel in the Market Disputes Resolution Division of the Enforcement Bureau. The PFF stated in a release that she will focus on "broadband deployment, telecommunications competition policy, spectrum policy, FCC reform" and other issues. See, FCC release.

2/21. Lucinda Dugger joined the Copyright Alliance as Director of Outreach and Field Initiatives. She previously worked for the National League of Cities.

Go to News from February 16-20, 2008.