Source: http://www.techlawjournal.com/alert/2003/03/25.asp
Timestamp: 2019-04-20 15:14:59+00:00

Document:
TLJ Daily E-Mail Alert No. 630, March 25, 2003.
March 25, 2003, 9:00 AM ET, Alert No. 630.
3/24. The Supreme Court denied certiorari in WorldCom v. USTA, No. 02-858. See, Order List [16 pages in PDF] at page 14. The Supreme Court issued no opinion.
WorldCom, AT&T and Covad filed a Petition for Writ of Certiorari [42 pages in PDF] on December 3, 2002, seeking review of the May 24, 2002 opinion of the U.S. Court of Appeals (DCCir) in USTA v. FCC. The Appeals Court granted petitions for review of an FCC unbundling order and line sharing order.
In the Appeals Court proceeding, incumbent local exchange carriers (ILECs) and the U.S. Telecom Association (USTA), a group that represents them, challenged the Federal Communications Commission's (FCC) order requiring ILECs to lease a variety of unbundled network elements to competitors. They also challenged a FCC line sharing order that requires ILECs to lease only a portion of local copper loops, rather than the whole line, for the purpose of offering DSL service. The Appeals Court granted both petitions. It remanded both rules to the FCC for further proceedings.
The petitioners asserted in their petition for writ of certiorari that the question presented was as follows: "Under AT&T Corp. v. Iowa Utilities Board, 525 U.S. 366 (1999), Verizon Communications Inc. v. FCC, 122 S.Ct. 1646 (2002), and the provisions of the Telecommunications Act of 1996, may the FCC require incumbent telephone monopolists to lease elements of their network to competitors based on the FCC's findings that the ability of hundreds of firms to provide competing services will be materially lessened if they must obtain the elements from sources outside the incumbents' networks, or must the FCC also satisfy extra-statutory requirements in order to address putative adverse effects that the leasing of those elements will have on investment in alternative facilities?"
On February 20, 2003, the FCC adopted, but did not release, a report and order regarding the Section 251 unbundling obligations of incumbent local exchange carriers (ILECs). This report and order will address the Appeals Courts' remand in USTA v. FCC. While the FCC has yet to release the report and order, it has issued a short press release [2 pages in PDF] and an attachment [4 pages in PDF] that describe the contents of the forthcoming report and order.
The report and order eliminates unbundling requirements for certain broadband facilities. It also eliminates line sharing as an unbundled network element. It also provides that ILECs must continue to provide unbundled access to copper loops and copper subloops. Finally, FCC wrote on February 20 that "The Commission finds that switching -- a key UNE-P element -- for business customers served by high-capacity loops such as DS-1 will no longer be unbundled based on a presumptive finding of no impairment. Under this framework, states will have 90 days to rebut the national finding. For mass market customers, the Commission sets out specific criteria that states shall apply to determine, on a granular basis, whether economic and operational impairment exists in a particular market. State Commissions must complete such proceedings (including the approval of an incumbent LEC batch hot cut process) within 9 months. Upon a state finding of no impairment, the Commission sets forth a 3 year period for carriers to transition off of UNE-P."
The Solicitor General had filed an opposition to the petition for writ of certiorari.
See also, stories titled "WorldCom and AT&T Seek Cert in USTA v. FCC" in TLJ Daily E-Mail Alert No. 561, December 5, 2002, and "FCC Announces UNE Report and Order", February 20, 2003.
3/21. The U.S. Court of Appeals (8thCir) issued its opinion [17 pages in PDF] in Missouri v. American Blast Fax, upholding the constitutionality of the fax advertising ban contained in the Telephone Consumer Protection Act of 1991.
American Blast Fax (which the Appeals Court noted may no longer be in business) and Fax.com transmitted advertising material via facsimile on behalf of commercial clients.
Statute. The Telephone Consumer Protection Act of 1991 (TCPA), which is codified in 47 U.S.C. � 227, bans unsolicited fax advertising. 47 U.S.C. � 227(b)(1)(C) provides that "It shall be unlawful for any person within the United States ... to use any telephone facsimile machine, computer, or other device to send an unsolicited advertisement to a telephone facsimile machine ..."
47 U.S.C. � 227(a)(4), in turn, defines "unsolicited advertisement" as "any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission".
District Court. The state of Missouri filed a complaint in U.S. District Court (EDMO) against American Blast Fax and Fax.com alleging that they violated the fax advertising ban.
The District Court held that the fax advertising ban provision of the TCPA violates the First Amendment of the Constitution's free speech clause, and dismissed.
The District Court received evidence that "unsolicited fax advertising shifts costs to the recipients who are forced to contribute ink, paper, wear on their fax machines, as well as personnel time. There was also evidence to show that a fax advertisement interferes with the recipients' use of their machines by preempting the fax line for the time it takes to send a message." Nevertheless, the District Court held that the government failed to satisfy the test for restrictions of commercial speech contained in Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980).
Court of Appeals. The Court of Appeals reversed. It also applied the Central Hudson test, but upheld the constitutionality of the statute.
The Supreme Court wrote in Central Hudson that "If the speech concerns lawful activity and is not misleading, however, we next ask ``whether the asserted governmental interest is substantial.�� If it is, then we ``determine whether the regulation directly advances the governmental interest asserted,�� and, finally, ``whether it is not more extensive than is necessary to serve that interest.�� Each of these latter three inquiries must be answered in the affirmative for the regulation to be found constitutional."
So, for communications that are not unlawful or misleading, three elements must be present: (1) a substantial government interest, (2) the regulation advances that interest, and (3) it is not more extensive than necessary.
First, the Appeals Court reviewed the legislative history of the fax bills in the Congress, and concluded that "that the Government has demonstrated a substantial interest in restricting unsolicited fax advertisements in order to prevent the cost shifting and interference such unwanted advertising places on the recipient."
The Appeals Court also wrote that the government does not need to present "empirical studies to show the significance of the harm it seeks to remedy ... the legislative record and the evidence produced in the district court adequately demonstrate the potential harm of unrestrained fax advertising."
Second, the Appeals Court concluded that the "TCPA's prohibition on unsolicited commercial fax advertisements directly and materially advances the asserted governmental interest and satisfies the third element of the Central Hudson test."
And third, the Appeals Court concluded that the "TCPA restriction on unsolicited commercial fax advertisements achieves a reasonable fit between the means it adopts and the ends it seeks to serve." And hence, the TCPA satisfies the Central Hudson test.
Spam. This case dealt only with application of the fax advertising ban to unsolicited commercial fax messages. However, were the Congress to enact a ban on unsolicited commercial e-mail advertising, the analysis of its constitutionality would be very similar to the analysis in this case. But then, challenges to any such legislation are not likely to be brought in the 8th Circuit.
3/20. The U.S. Court of Appeals (5thCir) issued its opinion [12 pages in PDF] in Bridgmon v. Array Systems, a software copyright case in which the Appeals Court discussed, but did not rule upon, the issue of when a federal court has jurisdiction over a claim for a declaratory judgment of ownership of a copyright when the claimant is also a party to a pending divorce action involving property division.
George Bridgmon filed a complaint in U.S. District Court (NDTex) against Array Systems Corporation alleging copyright infringement and breach of contract, and against Kenna Bridgmon seeking declaratory judgment that he is the owner of the copyright in certain software. He was also involved in a divorce proceeding with Kenna Bridgmon. The District Court granted summary judgment to Array and Kenna. George brought this appeal.
The Appeals Court affirmed the grants of summary judgment, but vacated and remanded the award of attorneys fees to Array.
Judge Edith Jones, writing for the Appeals Court, also engaged in a sua sponte discussion of jurisdiction. That is, George sought jurisdiction over the declaratory judgment claim against his former wife, under the Copyright Act, when there was also a divorce action pending in state court in which division of the property of the marriage was at issue. After a lengthy discussion, the Appeals Court concluded that the issue was moot.
The Court's discussion is merely dicta. Most of it is buried in footnote 4. The Court wrote, in part, "If the declaratory judgment claim arose under the Copyright Act the district court would have jurisdiction under 28 U.S.C. � 1338(a). If it arose out of the same case or controversy as the copyright infringement claim the court could properly exercise its discretion to exercise supplemental jurisdiction over the claim under 28 U.S.C. � 1367. In this case, however, it is not clear if either of these statutes provides a basis for the district court�s jurisdiction. George's declaratory judgment claim might have violated the well-pleaded complaint rule by raising his ownership under federal law as a defense to Kenna's state law claims. ... If George's declaratory judgment claim did arise under the Copyright Act, then the federal courts would have exclusive jurisdiction over such claims pursuant to 28 U.S.C. � 1338(a), and the state courts would be without jurisdiction to dispose of copyrights held by a party to a divorce action. ... It is also unclear whether the dispute between George and Kenna arose out of the same nucleus of operative facts as George's copyright infringement claim against Array. However, we need not address this complicated jurisdictional issue in light of the declaratory judgment claim's mootness."
3/21. The U.S. Court of Appeals (4thCir) issued its opinion [PDF] in Xoom v. Imageline, a copyright case involving registration of copyright in CD-ROM clip art packages.
Imageline introduced a product in 1994 on CD-ROM named PicturePak SuperBundle. It contained 1,580 individual electronic clip art images. Imageline registered the art, text, and packing design for CD-ROM and diskette media with the Copyright Office. The registration became effective on March 12, 1996. The registration covered the product in its entirety. There was no specific mention of the individual clip-art images. Imageline deposited printed and electronic copies of each clip-art image with its registration application.
Subsequently, in 1997, Xoom introduced a product on CD-ROM and on the web that contained clip art images, including some that were in Imageline's product.
Xoom filed a complaint in U.S. District Court (EDVa) against Imageline alleging copyright infringement and interference with contractual relations. Imageline counterclaimed alleging copyright infringement, false advertising, unfair competition, and business conspiracy.
The District Court made various ruling in favor of Xoom. Imageline appealed.
The Appeals Court wrote that the District Court held that "Imageline had no basis for litigating claims of infringement with respect to the individual images because, as registered, the copyright claims were only in the works as a whole and not in the individual images." Imageline asserted that its copyright registration of its products extended to the individual clip art images contained in both products and in the computer programs used to create those images.
The Appeals Court did not rule on whether the registration of the products covered the individual clip art images. It did, however, rule that Imageline's registration "was sufficient to permit an infringement action on the underlying parts, whether they be new or preexisting." Hence, it reversed the District Court on this issue.
The Appeals Court also addressed the issues of entitlement to statutory damages, false advertising and unfair competition.
3/24. President Bush announced his intent to appoint Robert Ehrlich and Martha Marsh to be Members of the National Infrastructure Advisory Council (NIAC). The NIAC was established by Executive Order 13231. It makes recommendations regarding the security of the cyber and information systems of U.S. national security and economic critical infrastructures. Ehrlich is the Governor of Maryland, and a former member of the House Commerce Committee's Subcommittee on Telecommunications and the Internet. Marsh is P/CEO of Stanford Hospital & Clinics. See, White House release.
2:00 PM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing on HR 1320, the Commercial Spectrum Enhancement Act. The witnesses will include Nancy Victory (Director of the National Telecommunications and Information Administration), Stephen Price (Deputy Assistant Secretary of Defense for Spectrum, Space, Sensors and C3 Policy), Steven Berry (SVP for Government Affairs of the Cellular Telecommunications Industry Association), and Larry Grossman (Digital Promise Project). The hearing will be webcast. Press contact: Ken Johnson or Jon Tripp at 202 225-5735. Location: Room 2123, Rayburn Building.
8:00 AM. Sen. Charles Grassley (R-IA), Chairman of the Senate Finance Committee, will give a speech on tax and bills and economic policy. Location: Hyatt Regency Capitol Hill, 400 New Jersey Ave., NW, in Rooms Columbia A and B on the lower level.
The Federal Trade Commission's (FTC) amended final Telemarketing Sales Rule (TSR) takes effect. See, notice in the Federal Register containing the final amended TSR, and the Statement of Basis and Purpose. However, full compliance with the caller identification transmission provision is required by January 29, 2004. Also, the FTC will announce later the date by which full compliance with the ``do-not-call�� registry provision, will be required. See, Federal Register, January 29, 2003, Vol. 68, No. 19, at Pages 4579-4679. See also, FTC release.
Day one of a two day event hosted by the Association for Competitive Technology (ACT) titled "Member Fly-In". For more information, contact Catherine Parsons at 202 331-2130 x106.
Deadline to submit comments to the The National Telecommunications and Information Administration (NTIA) regarding the utility service cancellation notice exception to the Electronic Signatures in Global and National Commerce (E-SIGN) Act. The Act provides, at �101, for the acceptance of electronic signatures in interstate commerce, with certain enumerated exceptions. �103 of the Act provides that the provisions of section 101 shall not apply to "any notice of ... the cancellation or termination of utility services (including water, heat, and power)". (Parentheses in original.) The Act also requires the NTIA to review, evaluate and report to Congress on each of the exceptions. The E-SIGN Act is codified at 15 U.S.C. � 7001, et seq. The exceptions are codified at 15 U.S.C. � 7003. See, NTIA notice and notice in the Federal Register, January 28, 2003, Vol. 68, No. 18, at Pages 4179-4181.
Deadline to submit comments to the Federal Communications Commission (FCC) regarding its staff study relating to alternative methodologies for calculating contributions to the federal universal service support mechanisms. See, notice in the Federal Register, March 6, 2003, Vol. 68, No. 44, at Pages 10724 - 10725.
3/20. Rep. Ed Markey (D-MA) and Rep. John Larson (D-CT) introduced HR 1396 [20 pages in PDF], the Spectrum Commons and Digital Dividends Act of 2003. Rep. Markey introduced a similar bill, HR 4641, the Wireless Technology Investment and Digital Dividends Act of 2002, in the 107th Congress.
3/25. The U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register regarding its notice of proposed rulemaking (NPRM) to amend its rules to adapt to a patent electronic image management system. The USPTO stated that the rule changes will "facilitate electronic data capture and processing, streamline the patent application process, and simplify and clarify the pertinent provisions of the rules of practice." Comments are due by April 24, 2003. See, Federal Register, March 25, 2003, Vol. 68, No. 57, at Pages 14365 - 14379.
3/24. The General Accounting Office (GAO) released a report [13 pages in PDF] titled "Electronic Procurement: Business Strategy Needed for GSA's Advantage System". This report addresses the General Services Administration's (GSA) Advantage internet based ordering system. The report concludes that "GSA Advantage has had only limited success as an on-line market research and ordering tool. Market research has been limited primarily to off-the-shelf office products, and sales through Advantage have never exceeded one�half of 1 percent of overall schedule sales. Because of initial design limitations, Advantage has not been effective in acquiring complex products and services, particularly information technology services that make up most of the growth in schedule sales."
3/24. The General Accounting Office (GAO) released a letter [22 pages in PDF] to Rep. Todd Tiahrt (R-KS) regarding law enforcement technologies that use cameras to identify drivers running red lights or speeding and issue tickets to owners of identified vehicles.

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