Source: http://www.techlawjournal.com/alert/2003/01/14.asp
Timestamp: 2019-04-23 10:51:41+00:00

Document:
TLJ Daily E-Mail Alert No. 582, January 14, 2003.
January 14, 2003, 9:00 AM ET, Alert No. 582.
1/13. The Supreme Court returned from its long holiday recess. It released no opinions. However, it did release a long Order List [32 pages in PDF]. What is most significant is the cases that the Supreme Court decided not to review.
First, it denied certiorari in a case involving personal jurisdiction based upon Internet activities (ALS Scan v. Digital Services Consultants). Second, the Supreme Court denied certiorari in a copyright case involving the fair use defense (Ty v. Publications International).
Finally, the Supreme Court issued an order in the Intel v. Advanced Micro Devices. It stated, in part, that "The Solicitor General is invited to file a brief in this case expressing the views of the United States." See, stories below.
1/13. The Supreme Court announced in its Order List [32 pages in PDF] that the Solicitor General is invited to file a brief in Intel v. Advanced Micro Devices. On June 6, 2002, the U.S. Court Court of Appeals (9thCir) issued its opinion [10 pages in PDF] in this case holding that discovery is available in the U.S. pursuant to 28 U.S.C. § 1782 for a complainant in an Article 82 antitrust matter before the European Commission.
Advanced Micro Devices (AMD) filed a complaint with the Directorate General-Competition of the European Commission alleging that Intel violated Article 82 of the EC Treaty, which prohibits "abuse by one or more undertakings of a dominant position within the common market." AMD then sought discovery from Intel under 28 U.S.C. § 1782, which provides that "The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal ..."
AMD sought documents from Intel pertaining to another antitrust action in the U.S. against Intel (Intergraph case). Intel objected. AMD sought to compel discovery in the U.S. District Court (NDCal). The District Court held that the EC action was not a proceeding within the meaning of Section 1782. AMD appealed.
Moreover, the Appeals Court held that Section 1782 does not "require a threshold showing on the party seeking discovery that what is sought be discoverable in the foreign proceeding." The Appeals Court reversed and remanded to the District Court.
The case has attracted outside attention. For example, the U.S. Chamber of Commerce filed an amicus curiae brief. It argued that "Under the Ninth Circuit's ruling, any company that operates abroad can obtain nearly unlimited access to the business documents and competitive plans of its business rivals by filing a complaint with the European Commission and then seeking discovery under 28 U.S.C. § 1782. Under the Ninth Circuit's decision, the company is allowed this discovery without taking on any costs or risks of litigation, even though the discovery is not necessary to the decisionmaking of the Commission. By breezing past the statutory requirements that limit Section 1782 discovery to an "interested person" "for use in a proceeding in a foreign or international tribunal" and ignoring the discovery rules of the European Commission, the Ninth Circuit's ruling, if not reviewed by this Court, would open the door to businesses seeking to harass and obtain sensitive information from their U.S.-based rivals by exploiting the liberal discovery rules of the United States."
Perhaps the Solicitor General himself, Ted Olson, will not file the brief. Prior to his appointment as Solicitor General, he was a partner in the law firm of Gibson Dunn & Crutcher, which represents AMD in this case. O'Melveny & Myers represents Intel.
ALS Scan is a Maryland corporation with its place of business in Columbia, a Maryland suburb situated between Washington DC and Baltimore. ALS Scan is in the business of taking girly pictures, which it then markets over the Internet. ALS Scan alleges that Alternative Products and Robert Wilkins copied some of its photographs, and published them in their web sites for commercial gain. Digital Service Consultants is an ISP in Georgia that provides web hosting services to Alternative Products and Wilkins.
ALS filed a complaint in U.S. District Court (DMd) against Digital, Alternative, and Wilkins alleging copyright infringement. Digital filed a motion to dismiss for lack of personal jurisdiction. Digital alleged that it has no office or customers in Maryland, that it derives no revenues from Maryland, and that it does not advertise in Maryland, except by having a web site. The District Court granted Digital's motion to dismiss for lack of personal jurisdiction. ALS filed this interlocutory appeal. The Court of Appeals affirmed.
The Appeals Court hinted that Supreme Court review might be appropriate. It wrote that "Until the due process concepts of personal jurisdiction are reconceived and rearticulated by the Supreme Court in light of advances in technology ..." However, the Supreme Court did not take the hint. It denied certiorari.
See also, stories titled "Internet Shoes: Two Appeals Courts Address Internet Based Personal Jurisdiction", "Fourth Circuit Holds No Personal Jurisdiction Over Out of State Web Host", and "DC Circuit Suggests Personal Jurisdiction Over Out of State Online Brokerage", all published in TLJ Daily E-Mail Alert No. 452, June 17, 2002.
There have also been several more recent cases addressing personal jurisdiction based upon Internet contacts. On January 9, 2003, the U.S. District Court (CDCal) issued an opinion in MGM v. Grokster in which it denied Sharman Network's motion to dismiss for lack of personal jurisdiction. Sharman, which now owns the key assets of Kazaa, is organized in Vanuatu. Sharman provides free software, known as the Kazaa Media Desktop (KMD), that can be downloaded and used to search for and exchange digital music, movies, and other mostly copyrighted works, using FastTrack file sharing technology. The Court based its finding of personal jurisdiction largely on the fact that Sharman had made the KMD software available to about two million residents of California. See, story titled "District Court Squeezes Sharman on Internet Based Personal Jurisdiction" in TLJ Daily E-Mail Alert No. 581, January 13, 2003.
On December 10, 2002, the High Court of Australia issued its opinion in Dow Jones v. Gutnick, a case involving personal jurisdiction and other procedural issues in a tort action brought in Australia for an allegedly defamatory news story published on the Internet by Dow Jones, a U.S. publisher. The Court held that because of publication on the Internet, the Australian courts have jurisdiction. See, story titled "High Court Rules Australia Has Jurisdiction Over Dow Jones Based on Web Publication", TLJ Daily E-Mail Alert No. 564, December 10, 2002.
1/13. The Federal Trade Commission (FTC) announced that Ted Cruz will leave his position as Director of the FTC's Office of Policy Planning at the end of January to become Solicitor General of the State of Texas. See, FTC release.
At the FTC Cruz has been active in studying and advocating the reduction of unnecessary regulatory barriers to electronic commerce. In his new job in Texas, he will represent a state known for imposing barriers to e-commerce. Texas ranked 31st in the Progressive Policy Institute's statistical study [huge PDF file] titled "The Best States for E-Commerce". This March 2002 study rated Texas low in particular for its regulatory barriers to Internet based sales of automobiles and wine, and mortgage lending.
He testified on September 26, 2002, at the House Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection hearing titled "State Impediments to E-Commerce: Consumer Protection or Veiled Protectionism?" See, prepared testimony.
He co-signed a letter from the FTC and Department of Justice (DOJ) to the American Bar Association (ABA) regarding the ABA's proposed definition of the practice of law. One of the issues addressed in this long letter was the impact on e-commerce. This letter stated that "In addition to the significant restrictions on consumer choice and increases in consumer costs that flow from an overly broad definition of the practice of law in the non-electronic realm, such restrictions are also likely to impede substantially the growth of e-commerce and software-based solutions. The Internet is changing how many goods and services are delivered, and consumers benefit from the increased choices and convenience and decreased costs that the Internet can deliver. Yet over-broad restrictions on the practice of law can impair the growth of e-commerce by (1) prohibiting or increasing the costs of electronic provision of forms or other legal self-help computer programs, (2) negatively impacting Internet mortgage lenders who rely on lay real estate closers, and (3) restricting the ability of providers to experiment and develop new forms of Internet services touching on legal matters that could benefit consumers directly."
He co-signed a comment to the state of Connecticut on March 27, 2002, criticizing state bans on sales of contact lens by out of state vendors as unnecessary to protect health, and an impediment to e-commerce. He co-signed an amicus curiae brief [PDF] filed with the U.S. District Court (Okla) in a case filed by an Internet based casket retailer against the state of Oklahoma challenging the constitutionality of Oklahoma's Funeral Services Licensing Act. Cruz also helped organize a workshop at the FTC on October 8 through 10, 2002, titled "Possible Anticompetitive Efforts to Restrict Competition on the Internet". See, workshop web site, with links to testimony of participants.
Before his appointment at the FTC, Cruz was briefly Associate Deputy Attorney General at the Department of Justice. Before that, he was a Domestic Policy Advisor on the Bush Cheney campaign. He also assisted in the preparation of briefs for the U.S. Supreme Court and Florida Supreme Court on behalf of George Bush during the Florida election contest. Before that, he was an associate at the Washington DC law office of Cooper Carvin & Rosenthal. He also clerked for Judge Mike Luttig (4th Cir) and Chief Justice William Rehnquist.
1/13. The Consumers Union (CU) and the Consumer Federation of America (CFA) wrote a letter to Sen. John McCain (R-AZ) and Sen. Ernest Hollings (D-SC), the Chairman and ranking Democrat on the Senate Commerce Committee, regarding impending Federal Communications Commission (FCC) actions pertaining to "competition in local telephone and advanced Internet service markets".
The two groups argue in the letter that "Congress has a simple choice to make: either regulate the Bell's wires to promote competition by preserving unbundled network element (``UNE´´) pricing and availability, or deregulate at the wholesale level, allowing the Bells to expand their local market dominance into long distance. If you choose the latter course, it is virtually certain that the vast majority of consumers will never see meaningful competition for their local and long distance needs, and therefore the states and FCC will need to regulate to prevent inflated prices and discriminatory practices."
They added that "The only thing that Congress must not permit is the path that appears to be favored by Chairman Powell-deregulation of the Bell monopolies -- a path that short-circuits local competition in violation of the Act without any protection for consumers. That would be the worst of both worlds -- no regulation to protect consumers and no competition to keep prices and service quality in check."
The Boucher Doolittle bill would add to this sentence the following phrase: "and it is not a violation of this section to circumvent a technological measure in connection with access to, or the use of, a work if such circumvention does not result in an infringement of the copyright in the work".
1/13. The U.S. Court of Appeals (FedCir) issued its opinion [MS Word] in Plant Genetic Systems v. Dekalb, a patent infringement case involving the issue of enablement. The U.S. District Court (DConn) concluded that certain claims of PGS's U.S. Patent No. 5,561,236 titled "Genetically engineered plant cells and plants exhibiting resistance to glutamine synthetase inhibitors, DNA fragments and recombinants for use in the production of said cells and plants" were invalid for lack of enablement. 35 U.S.C. § 112 requires that a patent application must "contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention." The Appeals Court affirmed.
1/13. The U.S. Patent and Trademark Office (USPTO) released the list of top patent recipients in 2002. The top ten, in order, are IBM, Canon, Micron, NEC, Hitachi, Matsushita, Sony, GE, HP, and Mitsubishi. See, USPTO release.
9:30 AM. The Senate Commerce Committee will hold a hearing titled the "State of the Competition in the Telecom Industry". Media contact: Andy Davis (Hollings) at 202 224-6654. The hearing will be webcast by Capitol Hearings. Location: Room 253, Russell Building.
10:00 AM. The Office of Personnel Management (OPM) will hold a launch event for its new government wide payroll program titled e-Payroll. RSVP to Rusty Asher at 202 606-2402. Location: OPM, The Pendleton Room, Theodore Roosevelt Building, 1900 E Street, NW.
Martin Luther King Day. The FCC will be closed.

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