Source: http://www.techlawjournal.com/alert/2004/02/19.asp
Timestamp: 2019-04-20 10:51:57+00:00

Document:
TLJ Daily E-Mail Alert No. 840, February 19, 2004.
February 19, 2004, 9:00 AM ET, Alert No. 840.
2/18. The Department of Health and Human Services' (HHS) Food and Drug Administration (FDA) released a report titled "Combating Counterfeit Drugs: A Report of the Food and Drug Administration". This lengthy report, among other things, endorses the use of radio-frequency identification (RFID) technology, and states that the FDA should regulate RFID use, but only after there is sufficient data and significant marketplace experience with RFID.
The report begins with the statement that "The counterfeiting of currency and consumer products are common problems that plague governments and manufacturers around the world, but the counterfeiting of medications is a particularly insidious practice. Drug counterfeiters not only defraud consumers, they also deny ill patients the therapies that can alleviate suffering and save lives."
The report further finds that "It currently appears that the technology most likely to bring mass serialization into widespread commercial use by the pharmaceutical industry is RFID, although two-dimensional bar codes may be used for some products. RFID technology includes not only the silicon tags containing the EPC, but also antennas, tag readers, and information systems that allow all users to identify each package of drugs and its associated data. This data can be used not only to authenticate drugs but also to manage inventory, conduct rapid, targeted recalls, prevent diversion, and ensure correct dispensing of prescriptions."
Finally, the report addresses FDA regulation. It states that "In the long term, after there is significant market place experience with RFID, FDA plans to propose or clarify, as necessary and appropriate, policies and regulatory requirements relating to the use of RFID. Labeling, electronic records, product quality, and Current Good Manufacturing Practices (cGMP) requirements are issues that have arisen in connection with RFID. However, regulatory or policy determinations regarding these, or other, issues should not be made until they can be informed by sufficient data and significant marketplace experience with RFID."
2/12. The U.S. Court of Appeals (2ndCir) issued its opinion [28 pages in PDF] in Swedenburg v. Kelly,. The District Court held that the NY statute prohibiting out of state wineries from selling directly to NY residents, such as via the internet, violated the Commerce Clause of the Constitution. The Appeals Court reversed, holding that NY's statute is a permissible exercise of authority granted to states under the 21st Amendment, thus rejecting the Commerce Clause challenge.
The Appeals Court also rejected the out of state wineries' Privileges and Immunities Clause argument. However, it held unconstitutional under the First Amendment one statutory provision that bans certain commercial speech.
The 2nd Circuit reaches the same result, on the Commerce Clause issue, as the 7th Circuit. However, it is in conflict with the 4th, 5th, 6th and 11th Circuits.
Parties. Small wineries and wine consumers challenge the constitutionality of a New York state liquor control law, which prohibits out of state wineries from selling directly to New York residents. The state statute at issue is not directed solely at internet sales. However, it has the effect of restricting internet sales.
The winery plaintiffs are the Swedenburg Winery in the state of Virginia, which is owned by Juanita Swedenburg, and the Lucas Winery, located in Lodi, California. The plaintiffs are represented by the Institute for Justice.
The defendants are Edward Kelly and other members of the New York State Liquor Authority. There are also several intervening and amicus parties on appeal.
A New York state statute, which is enforced by Kelly and others, prohibits Swedenburg and Lucas from selling directly to prospective customers in New York state. The New York system for alcohol sales requires that alcohol producers must go through licensed wholesalers and distributors who must in turn go through licensed retailers who then may sell to consumers. The New York statutes provide several exceptions to the ban on direct sales, but they apply only to wineries located within the state of New York.
District Court. The wineries and oenephiles filed their Original Complaint in U.S. District Court (SDNY) against the members of the NY State Liquor Authority, in their official capacities, on February 3, 2000, arguing that the NY statute violates the dormant commerce clause, the privileges and immunities clause and the First Amendment.
The state moved to dismiss. The District Court issued its Decision and Order denying that motion on September 5, 2000. See, story titled "Federal Court Denies Motion to Dismiss in Internet Wine Sales Case", September 8, 2000.
On November 12, 2002, the District Court issued its opinion [32 page PDF scan] holding that New York state's ban on the direct shipment of out of state wine is unconstitutional. The District Court held that New York's ban on direct wines sales violates the dormant Commerce Clause of the U.S. Constitution. See, story titled "Court Holds New York's Ban on Internet Wine Sales Is Unconstitutional" in TLJ Daily E-Mail Alert No. 551, November 18, 2002.
New York Statute. New York Alco. Bev. Cont. Law � 102(1)(c) provides in part: "No alcoholic beverages shall be shipped into the state unless the same shall be consigned to a person duly licensed hereunder to traffic in alcoholic beverages. This prohibition shall apply to all shipments of alcoholic beverages into New York state and includes importation or distribution for commercial purposes, for personal use, or otherwise, and irrespective of whether such alcoholic beverages were purchased within or without the state ..."
New York Alco. Bev. Cont. Law � 102(1)(d) provides in part: "No common carrier or other person shall bring or carry into the state any alcoholic beverages, unless the same shall be consigned to a person duly licensed hereunder to traffic in alcoholic beverages ..."
New York Alco. Bev. Cont. Law � 102(1)(a) provides that: "No person shall send or cause to be sent into the state any letter, postcard, circular, newspaper, pamphlet, order kit, order form, invitation to order, price list, or publication of any kind containing an advertisement or a solicitation of any order for any alcoholic beverages, irrespective of whether the purchase is made or to be made within or without the state, or whether intended for commercial or personal use or otherwise, unless such person shall be duly licensed hereunder to traffic in alcoholic beverages."
Appeals Court. The Court of Appeals affirmed in part, reversed in part, and remanded.
The Court wrote that "This case requires us to reconcile the competing demands of the Twenty-first Amendment's grant of authority to the states to regulate the intrastate traffic of alcohol, with the power reserved to Congress under the Commerce Clause ``[t]o regulate Commerce ... among the several States.��" The Court concluded that "the challenged regime is within the ambit of the Twenty-first Amendment".
The Appeals Court also rejected the plaintiffs privileges and immunities clause argument. It wrote that "the statutory scheme operates without regard to residency and does not provide New York residents with advantages unavailable to nonresidents. ... Accordingly, we find that the regulatory scheme does not violate the Privileges and Immunities Clause."
However, the Appeals Court held that � 102(1)(a) is overbroad and violates the First Amendment.
After the ruling the wineries' counsel, Clint Bolick, of the Institute for Justice stated in a release that "This decision will be a momentary blip on the legal radar screen ... The liquor distributors who benefit from the state-imposed monopoly can hold off popping the champagne corks. The decision is profoundly anti-consumer and anti-free trade, and will not stand." Bolick added that "The 2nd Circuit decision is an anomaly in a tide of jurisprudence that is striking down barriers to protectionism across the country".
Opinions in Other Circuits. On April 8, 2003, the U.S. Court of Appeals (4thCir) issued its opinion [20 pages in PDF] in Beskind v. Easley, holding that North Carolina's ban on direct shipment of wine from out of state wineries to North Carolina residents violates the Commerce Clause. See, story titled "4th Circuit Holds North Carolina Ban On Internet Wine Sales Is Unconstitutional", also published in TLJ Daily E-Mail Alert No. 640, April 9, 2003).
On June 26, 2003, the U.S. Court of Appeals (5thCir) issued its opinion [39 pages in PDF] in Dickerson v. Bailey, a constitutional challenge to Texas' ban on direct sale by out of state wine sellers. The Appeals Court held that the Texas statute violates the dormant commerce clause. See, story titled "5th Circuit Holds Texas Wine Sales Statute Unconstitutional" in TLJ Daily E-Mail Alert No. 690, June 30, 2003.
Other opinions holding that state direct sales statutes are unconstitutional under the Commerce Clause include Heald v. Engler, 342 F.3d 517 (6th Cir. 2003), and Bainbridge v. Turner, 311 F.3d 1104 (11th Cir. 2002).
The 7th Circuit wrote that "Indiana insists that every drop of liquor pass through its three-tier system and be subjected to taxation. Wine originating in California, France, Australia, or Indiana passes through the same three tiers and is subjected to the same taxes. Where's the functional discrimination?"
The present case is Juanita Swedenburg, et al. v. Edward Kelly, et al., U.S. Court of Appeals for the 2nd Circuit, Nos. 02-9511 and 03-7089, appeals from the U.S. District Court for the Southern District of New York, Judge Richard Berman presiding.
2/12. The U.S. Court of Appeals (FedCir) issued its opinion [MS Word] in Superguide v. DirecTV, a patent infringement case involving interactive electronic program guides. The District Court ruled that DirecTV and other defendants did not infringe the patents in suit. The Court of Appeals reversed.
Program guides provide viewers of television programming with information about upcoming programming. Interactive electronic program guides (IPGs) display information on a television screen, and allow viewers to control what information is displayed.
SuperGuide Corporation holds U.S. Patent No. 4,751,578 titled "System for electronically controllably viewing on a television updateable television programming information", U.S. Patent No. 5,038,211 titled "Method and apparatus for transmitting and receiving television program information", and U.S. Patent No.5,293,357 titled "Method and apparatus for controlling a television program recording device". Gemstar Development Corporation is a licensee.
Defendants DirecTV and Echostar are direct broadcast satellite (DBS) operators whose transmissions include program guide information that supports IPGs.
Defendants Hughes Electronics Corporation and Thomson Consumer Electronics manufacture systems that receive DirecTV broadcasts and process them for display on television, including antennas, filters, and set top boxes.
SuperGuide filed a complaint in U.S. District Court (WDNC) agaisnt DirecTV, Echostar, Hughes, and Thomson alleging infringement of the three patent in suit. DirecTV and Hughes moved to implead implead Gemstar as a third-party defendant; the District Court granted this motion.
The District Court granted summary judgment of non-infringement in favor of all defendants as to all asserted claims and products with the exception of two EchoStar models. However, the parties filed a stipulation that SuperGuide would be unable to establish infringement of the two EchoStar models if the District Court's claim construction and summary judgment rulings were upheld on appeal.
These appeals followed. The Court of Appeals held that the District Court erred in construing certain of the claims upon which its non-infringement judgment was based. It affirmed in part and reversed in part.
This case is Superguide Corporation v. Directv Enterprises, Inc., et al., U.S. Court of Appeals for the Federal Circuit, Nos. 02-1561, 02-1562, and 02-1594, appeals from the U.S. District Court for the Western District of North Carolina, Judge Lacy Thornburg presiding.
2/6. Robert Morse, Brian Higgins and Mary O'Connor were elected partners in the Washington DC law firm of Wilkinson Barker & Knauer. All three focus on communications law.
2/18. The Federal Communications Commission (FCC) issued a release [PDF] announcing the appointment of Martin Perry as Chief Economist. He started back on January 1.
2/17.The Recording Industry Association of America (RIAA) announced that it filed, on behalf of its member companies, "lawsuits against 531 individual computer users offering substantial amounts of copyrighted music files for free on peer-to-peer networks". The complaints were filed on February 17 in federal courts in Philadelphia, Atlanta, Orlando and Trenton, New Jersey. The RIAA also stated that it "utilized the ``John Doe�� litigation process -- which is used to sue defendants whose names aren't known". See, RIAA release and TLJ story titled "RIAA Shifts to John Doe Lawsuits Against P2P Infringers" in TLJ Daily E-Mail Alert No. 821, January 22, 2004.
2/18. The U.S. District Court (DC) issued a Memorandum Opinion and Judgment [20 pages in PDF] in Regency Communications v. Cleartel Communications, regarding the award of damages in this contract dispute involving pay telephones. This case is Regency Communications, Inc., et al. v. Cleartel Communications, Inc, et al., U.S. District Court for the District of Columbia, No. 98-1160, Judge Royce Lambeth presiding.
2/18. The Department of Justice's (DOJ) Antitrust Division announced that it will host a day long conference on March 18, 2004 titled "Developments in the Law and Economics of Exclusionary Pricing Practices: From Classroom to Courtroom". Judge Richard Posner (U.S. Court of Appeals for the 7th Circuit) will be the luncheon speaker. Reservations are required. The deadline to register is March 8. The event is free. See, notice.
The TLJ Daily E-Mail Alert will not be published on Friday, February 20, 2004.
2/18. Department of Homeland Security (DHS) announced, but did not release, interim rules pertaining to receiving and protecting critical infrastructure information (CII). These rules pertain to the Homeland Security Act's exemption to the Freedom of Information Act (FOIA) for certain information about critical infrastructures, such as cyber security, that is voluntarily provided to the federal government.
The DHS issued a short press release describing a program which it named the "Protected Critical Infrastructure Information (PCII) Program". Also, DHS Assistant Secretary Bob Liscouski held a press conference.
The DHS release states, incorrectly, that "The rule establishing the procedures for PCII was published this week in the Federal Register." This publication has not yet occurred. Also, these regulations will be codified at 6 CFR 29.
The DHS is required by the Homeland Security Act (HSA) to conduct this rulemaking proceeding to implement the provisions of the HSA creating an exemption to the FOIA for certain information about critical infrastructures. The relevant statutory provisions are found at �� 211-215 of HR 5005 (107th Congress). These sections are collectively named that "Critical Infrastructure Information Act of 2002". President Bush signed the HSA on November 25, 2002. It became Public Law No. 107-296. The FOIA is codified at 5 U.S.C. � 552.
The CII exemption to the FOIA was enacted to incent companies to share information with the government that they would not otherwise share because of fears that their competitors or critics could obtain it under the FOIA. The rationale for the CII exemption is that the government needs information from the private sector to be able to combat cyber terrorism and other threats to critical infrastructures.
Technology companies and some of the groups that represent them in Washington DC strongly supported creating this exemption. However, some other groups opposed creating the exemption, arguing that they would use the FOIA to obtain records regarding critical infrastructures, in furtherance of their watchdog functions.
The DHS release states that "Under provisions of the Critical Infrastructure Information Act of 2002 (CII Act), information that is voluntarily submitted per those provisions will be protected from public disclosure until and unless a determination is made by the PCII Program Office that the information does not meet the requirements for PCII. If validated as PCII, the information will remain exempt from public disclosure. The rule establishing the procedures for PCII was published this week in the Federal Register. The PCII Program Office is part of Homeland Security's Information Analysis and Infrastructure Protection (IAIP) Directorate and is charged with receiving submissions, determining if the information qualifies for protection and, if validated, sharing it with authorized entities for use as specified in the CII Act."
The release adds that "Initially, the PCII Program Office will limit the sharing of PCII to IAIP analysts. PCII may be used for many purposes, focusing primarily on analyzing and securing critical infrastructure and protected systems, risk and vulnerabilities assessments, and assisting with recovery as appropriate."
The DHS also published a web page for its PCII Program. It states that the DHS "recognizes the importance of receiving information from those with direct knowledge of the security of the critical infrastructure in order to help reduce the vulnerability of the critical infrastructure to acts of terrorism. The Department also recognizes that to best encourage industry to voluntarily submit information relating to the security of critical infrastructure -- much of which is not customarily within the public domain -- there must be assurance that such information will be utilized for securing the United States and will not be released to the general public."
This web page also states that "Submissions to the PCII Program Office must meet the following criteria to be certified for protection: The information must quality as Critical Infrastructure Information under the CII Act of 2002; it must include an Express Statement requesting protection under the CII Act; and it must include a Certification Statement certifying that the material qualifies for protected status."
This web page also states that "The PCII Program Office has developed rigorous safeguarding and handling procedures to prevent unauthorized access to information submitted under this program. All information submitted in accordance with the procedures set forth in the regulations will be presumed to be and will be treated as Protected Critical Infrastructure Information (PCII) from the time the information is received by DHS. If the information does not subsequently qualify as protected critical infrastructure information, the submitter has the opportunity to provide supporting information or may withdraw the submittal up until the final determination is made, at which point the information either will be destroyed or maintained without the protections of PCII, depending on the preference of the submitter. The information submitted remains protected during this entire process."
See also, notice in the Federal Register (April 15, 2003, Vol. 68, No. 72, at Pages 18523 - 18529) announcing this rule making proceeding, and story titled "DHS Begins Rulemaking Proceeding on FOIA Exemption for Critical Infrastructure Information", also published in TLJ Daily E-Mail Alert No. 645, April 16, 2003.
10:00 AM. The Senate Judiciary Committee's Subcommittee on Terrorism, Technology and Homeland Security will hold a hearing on titled "Cyberterrorism". Sen. Jon Kyl (R-AZ) will preside. See, notice. Location: Room 226, Dirksen Building.
The National Institute of Standards and Technology's NIST) Computer Security Division (CSD) will hold a workshop on DRAFT Special Publication 800-60, titled "Guide for Mapping Types of Information and Information Systems to Security Categories". See, Volume I [PDF] and Volume II [PDF]. The workshop is open to government workers only. For more information, contact Elaine Frye at elaine.frye@nist.gov.

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