Source: http://www.techlawjournal.com/alert/2001/08/08.asp
Timestamp: 2019-04-20 10:53:52+00:00

Document:
TLJ Daily E-Mail Alert No. 244, August 8, 2001.
August 8, 2001, 9:00 AM ET, Alert No. 244.
8/7. Microsoft filed a Petition for Writ of Certiorari with the Supreme Court. Microsoft also filed a motion titled "Appellant's Motion for Stay of the Mandate Pending Petition for Writ of Certiorari" with the U.S. Court of Appeals (DCCir). See also, PDF copy in USCA web site.
Microsoft seeks to have the entirety of U.S. District Court Judge Thomas Jackson's findings of fact and conclusions of law vacated. Microsoft submits that the question presented for review is "Whether the court of appeals erred in not disqualifying the district judge as of the date of his earliest known violation of 28 U.S.C. § 455(a) and the Code for Conduct of United States Judges, thus requiring that his findings of fact and conclusions of law be vacated."
On June 28 the U.S. Court of Appeals (DCCir) issued its en banc opinion in USA v. Microsoft. This is an antitrust action brought by the Department of Justice's Antitrust Division and by individual states. The Court of Appeals affirmed in part, reversed in part, and remanded in part the District Court's judgment assessing liability. The Appeals Court affirmed in part the Judge Jackson's judgment that Microsoft violated § 2 of the Sherman Act by employing anticompetitive means to maintain a monopoly in the operating system market. It vacated in full the Final Judgment containing the break up order. Finally, it remanded the case to a different trial judge, because Judge Jackson "engaged in impermissible ex parte contacts by holding secret interviews with members of the media and made numerous offensive comments about Microsoft officials in public statements outside of the courtroom, giving rise to an appearance of partiality."
ProComp, an anti Microsoft group, released a statement on August 2 in which it stated that "It is clear that Microsoft has gone into its four-corners offense, trying to run out the clock until its unlawful product, Windows XP, is shipped to consumers. It should not be surprising if Microsoft next appeals to the U.S. Supreme Court".
Steve DelBianco, VP of the Association for Competitive Technology (ACT), a pro Microsoft group, stated on August 7 that "It's ironic that some, including AOL Time Warner, would discount Microsoft's decision as a delaying tactic, when it is clear that they are desperately trying to delay Windows XP as they continue to play catch-up on the innovation they've neglected while whining to Congress and the courts. If AOL and the state Attorneys General had a credible case to block Windows XP, they could file for injunction at any time. But they don’t have a case, and they can't be so foolish as to stop the rollout of a product that will give a much needed shot in the arm to the tech sector."
8/7. The U.S. Court of Appeals for the Federal Circuit heard oral argument in Xerox v. 3Com, No. 00-1464, a patent infringement case involving handwriting recognition software.
8/7. The U.S. Court of Appeals for the Federal Circuit heard oral argument in Taiwan Semiconductor v. ITC, No. 01-1060.
8/7. The United States suspended the special duty-free status for Ukrainian products and issued a preliminary list [PDF] of other products that could face sanctions, due to Ukraine's persistent failure to curb unauthorized production of optical media products, including CDs, CD-ROMs, and DVDs. see, USTR release. The RIAA was pleased. See, RIAA release.
8/7. The USPTO published in its web site a copy of the August issue of the USPTO Pulse.
MSFT: Petition for Writ of Certiorari, 8/7 (HTML, MSFT).
MSFT: motion for stay in USA v. Microsoft, 8/7 (HTML, MSFT).
Muris: speech re antitrust, 8/7 (HTML, FTC).
CalApp: opinion in Pavlovich v. Superior Court re personal jurisdiction over non resident web site operator, 8/7 (PDF, CalApp).
HCC: letter to Commerce Sec. Evans re ICANN and TLDs, 8/7 (HTML, TLJ).
8/7. FTC Chairman Timothy Muris gave a speech in Chicago to the American Bar Association's Antitrust Section Annual Meeting titled "Antitrust Enforcement at the Federal Trade Commission: In a Word -- Continuity". He stated that "I am fully committed to the institution and its mission of protecting consumers through actively enforcing our antitrust and consumer protection laws" and that "Continuity will be the norm, with changes at the margins."
He summarized the purpose of antitrust enforcement by the FTC: "Although there are disagreements about specific cases, there is widespread agreement that the purpose of antitrust is to protect consumers, that economic analysis should guide case selection, and that horizontal cases, both mergers and agreements among competitors, are the mainstays of antitrust." He also stated that press reports that "the Bush administration will relax antitrust enforcement" are unfounded.
He told the gathering of antitrust practitioners that "if you come in with transactions that would not fly in the past, you are likely to "crash" unless you have compelling, stubborn facts on your side. To some of you, let me say it more bluntly. A few members of the merger bar have been telling the press that we are going to have more relaxed standards. Those folks will be doing their actual or potential clients a big disservice if those clients act on that presumption."
Antitrust and High Tech. Muris also addressed high tech companies. He stated that "Merger analysis in "high tech" industries is not fundamentally different than in other industries. The basic Guidelines analysis can be applied. We should proceed, however, cognizant of our lesser experience in high tech industries. Moreover, the high tech arena, by its nature, is constantly changing. New high tech industries, often with new technical issues, continue to be born and to change. One aspect of high tech may warrant especially close scrutiny. The fierce competition for success in these industries often results in the "winner" enjoying a (perhaps short-lived) monopoly. We should be especially reluctant to allow those firms to merge with actual (or potential) competitors. This was part of the basis for my criticism of the Clinton Antitrust Division's failure to challenge the Microsoft-Web TV merger."
More on Microsoft. Muris also addressed non merger enforcement. "There are several important issues here, such as competition in pharmaceuticals and intellectual property issues. ... More recent developments confirm the importance of a strong non-merger agenda. We used to believe that antitrust counseling, at least for major companies, would generally deter anticompetitive conduct. We have learned, however, from ADM, the vitamins case, numerous other price-fixing cases, and from Microsoft."
8/7. The Court of Appeal of California (6th Appellate District) issued its opinion [PDF] in Pavlovich v. Superior Court, holding that California's long-arm jurisdiction statute reaches owners, publishers, and operators of web sites when, in violation of California law, they make available for copying or distribution trade secrets or copyrighted material of California companies.
Jurisdictional Issue. This opinion does not address the merits of the case; that is, it does not address whether or not the defendant did violate the trade secrets or copyrights of the plaintiff. Rather, this opinion deals only with jurisdiction; that is, it addresses whether the California courts have authority to try this case. California's long arm jurisdiction statute authorizes California courts to "exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States."
DVD CCA Complaint. The DVD Copy Control Association (DVD CCA) filed a complaint in the Superior Court for Santa Clara County California against Matthew Pavlovich and others alleging misappropriation of trade secrets and other claims.
Defendant. Pavlovich published the DeCSS program in a web site which he owned and operated. He is not a resident of California. However, he is the President of a technology start up company, and a leader of the open source movement. He also testified that he knew that the movie industry was based in California, and that DeCSS would harm that industry. He sought to quash the summons.
DVD and DeCSS. DVD is sometimes known as Digital Versatile Disc. CSS is a Content Scrambling System for DVD to protect intellectual property rights by means of encryption. DeCSS is a decryption tool that facilitates piracy.
Holding. The Court of Appeal held that the exercise of jurisdiction over Pavlovich is consistent with California's long arm statute. The Court relied heavily on the Supreme Court of the United States' opinion in Calder v. Jones, 465 U.S. 783 (1984), which held that the California courts could exercise jurisdiction in a defamation case over a non resident Floridian who published an article in the National Enquirer, a print publication that circulated in California. The defendant in Calder, like Pavlovich, had sufficient minimum contacts with the California that it would not offend traditional notions of fair play and substantial justice to exercise jurisdiction, notwithstanding non resident status. In both cases the defendant knew that his activities were actionable, and were causing injury in California. The Court stated that Pavlovich's knowledge that the movie industry was based in California was significant.
8/7. Rep. Billy Tauzin (R-LA), Rep. John Dingell (D-MI), Rep. Fred Upton (R-MI), and Rep. Ed Markey (D-MA) sent a letter to Commerce Secretary Donald Evans regarding the ICANN process for selecting new Internet Top Level Domain Names (TLDs). The four want the "ICANN to expeditiously initiate a new TLD round", and want the Department of Commerce to monitor the ICANN with respect to this. The four are the Chairman and ranking Democrat of the House Commerce Committee, and the Chairman and ranking Democrat on the Telecom and Internet Subcommittee, respectively.
They also wrote that "there is pending in the Telecommunications and the Internet Subcommittee a bill that would require the Department of Commerce to negotiate with ICANN to chose an entity to operate a “.kids” domain. “.kids” would provide a safe place for children to access the Internet, a goal we all strongly support." See, HR 2417, the Dot Kids Domain Name Act of 2001, sponsored by Rep. John Shimkus (R-IL) and Rep. Markey.
1:00 PM. There will be a press conference titled "Surveillance vs. Privacy." For more information, contact David Saddler of the Security Industry Association at 703-683-0276. Location: National Press Club, Murrow Room, Washington DC.
• The Commission will consider a Memorandum Opinion and Order and Further Notice of Proposed Rule Making exploring additional frequency bands below 3 GHz to support the introduction of advanced wireless service, resolving in part petitions for reconsideration of 2 GHz MSS band arrangements, and addressing petitions for rulemaking concerning the 2 GHz MSS and Unlicensed PCS bands.
9:30 AM. There will be a panel discussion titled "Perspectives on China's Accession Into the WTO." The speakers will be Rick Dunham (Business Week), Pieter Bottelier (Harvard University), Will Martin (World Bank), Don Phillips, James Tsao (Journal of Asian Economics). Location: National Press Club, Washington DC.
8/6. BellSouth released a paper [PDF] titled "Measuring Local Competition in a Changing Telecommunications Market". It was written by Steve Pociask, and funded by BellSouth. The paper argues "once separate industries are converging to form an Information Sector, and with this convergence comes heightened inter-industry competition between the various means of transporting electronic information. However, while the Information Sector is rapidly changing, government measurements of competition have not".
The paper states that currently, "telecommunications industry policymakers rely on old measurements that understate and underestimate the actual level of the competition." Instead, the paper asserts that any measures of the level of competition should include use of cell phones and Internet data services, including email messaging, instant messaging, voice over internet protocol, IP teleconferencing and virtual PBX services. See, also BS release.
The paper does not address the competition goals of the Telecom Act of 1996. One of the main goals of the 1996 Act was to end the incumbent local exchange carriers' (ILECs) monopoly control over local wireline phone service. These ILECs, such as BellSouth, own almost all of the local facilities, including the central offices and the copper wires that run from the local offices into homes and businesses. § 151 of the Telecom Act requires telecommunications carriers to interconnect with other telecommunications carriers. It also mandates many specific things which ILECs must do for their competitors. ILECs have the duties to negotiate, to interconnect, to provide unbundled access to their network elements, to offer communication services at wholesale rates, and to allow collocation of equipment of competitive local exchange carriers (CLECs) in their central offices. However, the Bells have dragged their feet, and as a result, competition in the local loop has fallen far short of the goals of the authors of the 1996 Act.
BellSouth's paper advocates an abandonment of the goal of local wireline competition as envisioned by the 1996 Act. What now matters, according to BellSouth's paper, is competition between wireline service and wireless and Internet services, not competition among wireline service providers.

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