Source: http://www.techlawjournal.com/alert/2005/04/20.asp
Timestamp: 2019-04-20 15:11:00+00:00

Document:
TLJ Daily E-Mail Alert No. 1,119, April 20, 2005.
April 20, 2005, 9:00 AM ET, Alert No. 1,119.
4/19. The House approved, by voice vote, S 167, the "Family Entertainment and Copyright Act of 2005". The Senate approved this bill on February 1, 2005. It now goes to President Bush for his signature.
The ART Act includes, among other provisions, criminalization of certain unauthorized recording of motion pictures in a motion picture exhibition facility. That is, it criminalizes using camcorders to copy movies in motion picture exhibition facilities, such as movie theaters. It also gives movie theater owners limited immunity for detaining violators.
Another provision of the ART Act requires the Register of Copyrights to "establish procedures for preregistration of a work that is being prepared for commercial distribution and has not been published ... for any work that is in a class of works that the Register determines has had a history of infringement prior to authorized commercial distribution". It also provides that infringement actions may be based upon these preregistrations.
Rep. Howard Berman (D-CA), the ranking Democrat on the Subcommittee on Courts, the Internet and Intellectual Property, stated in floor debate that "It has become clear that pirates are most harmful when a creator delivers a new or highly anticipated product. Title I of S. 167 is designed to prevent the pirates from obtaining an initial copy of a motion picture through camcording or distributing by computer network a work being prepared for commercial distribution. Section 102 clarifies that it is a felony to surreptitiously record a movie in a theater. This section deals with the growing phenomenon of copyright thieves who use portable digital video recorders to record movies of theater screens during public exhibitions. Organized piracy rings then distribute copies of these surreptitious recordings both online and on the streets."
Rep. Berman (at right) continued that "Even more detrimental to copyright owners than camcording a movie in the theaters is the effect of distributing an unauthorized copy of a movie or sound recording as it is prepared for commercial distribution. Distributing a film before final edits are made can undermine artistic integrity and can also harm the film's commercial prospects because the release is typically coordinated with a marketing effort. Sections 103 and 104 provide for enhanced penalties for prerelease of a work being prepared for commercial distribution. Furthermore, it requires the Copyright Office to establish rules for preregistration of works."
The Family Movie Act addresses technology, such as that of ClearPlay, that skips content in copyrighted works.
The Family Movie Act adds a new ¶ 11 to 17 U.S.C. § 110 (which provides exceptions to the exclusive rights of copyright).
It contains a content skipping exception: "the making imperceptible, by or at the direction of a member of a private household, of limited portions of audio or video content of a motion picture, during a performance in or transmitted to that household for private home viewing, from an authorized copy of the motion picture, or the creation or provision of a computer program or other technology that enables such making imperceptible and that is designed and marketed to be used, at the direction of a member of a private household, for such making imperceptible, if no fixed copy of the altered version of the motion picture is created by such computer program or other technology".
The bill also contains related language amending trademark law.
However, it does not include language regarding ad skipping. That is, ClearPlay and other companies can market products that skip violent or obscene content, and ads, in movies.
Rep. James Sensenbrenner (R-WI), the Chairman of the House Judiciary Committee, stated during floor debate that "this legislation addresses the growing desire of parents to be able to control what their children see in the privacy of their own homes. One component of this legislation, the Family Movie Act, clarifies that existing copyright and trademark law cannot be used to prevent a parent from utilizing available technology to skip over portions of a movie they may find objectionable."
In contrast, Rep. Dianne Watson (D-CA) stated in the House that "I disagree with title II of the legislation, which shields companies that make movie-filtering systems from liability for copyrighting infringements. The intent of the movie-filtering technology is to sanitize movies to protect children. While I support a family-friendly entertainment, I believe this method is not only a violation of film makers' copyright protections but also an infringement of their artistic vision."
Rep. Berman also opposes the content skipping provisions of the Family Movie Act. He said that "What some of us do debate is the right of a commercial enterprise to peddle a technology which fundamentally alters the creator's work any more than some publisher has the right to take an unabridged version of a book that is under copyright, in order to excerpt and take out objectionable patches of that book, and then make a commercial profit without the permission of the copyright owner in peddling that book. That is the issue underlying our opposition to the Family Movie Act."
4/19. The House approved HR 683, the "Trademark Dilution Revision Act of 2005" by a vote of 411-8. See, Roll Call No. 109. The Senate has yet to approve this bill.
Under HR 683, subsection (c)(1) would provide that "Subject to the principles of equity, the owner of a famous mark that is distinctive, inherently or through acquired distinctiveness, shall be entitled to an injunction against another person who, at any time after the owner's mark has become famous, commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury."
Rep. James Sensenbrenner (R-WI), the Chairman of the House Judiciary Committee, stated during floor debate that "H.R. 683 does not establish new precedent or break new ground. Rather, the bill represents a clarification of what Congress meant when it passed the dilution statute a decade ago."
Rep. Lamar Smith (R-TX), the Chairman of the Subcommittee on Courts, the Internet and Intellectual Property, stated in the House that "the Federal dilution statute is being amended for two main reasons. First, a 2003 Supreme Court decision involving Victoria's Secret ruled that the standard of harm in dilution cases is actual harm. Based on testimony taken at our two Intellectual Property Subcommittee hearings, this is contrary to what Congress intended when it passed the dilution statute and is at odds with the concept of dilution. Diluting needs to be stopped at the outset because actual damage can only be proven over time, after which the good will of a mark cannot be restored."
"Second," said Smith (at right), "the regional circuits have split as to the meaning of what constitutes a famous mark, distinctiveness, blurring and tarnishment. The bill more distinctly defines these terms. This will clarify rights and eliminate unnecessary litigation, an outcome that especially benefits small businesses that cannot afford to have a misunderstanding of what is permissible under the Federal dilution statute."
Rep. Smith added that "amendments developed at the subcommittee level will more clearly protect traditional first amendment uses, such as parody and criticism. These amendments provide balance to the law by strengthening traditional fair-use defenses."
4/19. The House approved by voice vote HR 1038, the "Multidistrict Litigation Restoration Act of 2005". This bill amends 28 U.S.C. § 1407, which pertains to multidistrict litigation, to allow a designated U.S. district court, known in the statute as the "transferee" court, to retain jurisdiction over referred cases arising from the same fact scenario for purposes of determining liability and punitive damages, or to send them back to the respective courts from which they were transferred. This bill responds to the 1998 opinion of the Supreme Court in Lexecon v. Milberg Weiss, which is also reported at 523 U.S. 26. See also, House Report 109-024.
4/19. The House approved by voice vote HConRes 53. This is a non-controversial resolution expressing the sense of the Congress regarding the issuance of the 500,000th design patent by the U.S. Patent and Trademark Office (USPTO) to DaimlerChrysler Corporation.
4/19. The House Judiciary Committee's Subcommittee on Crime, Terrorism, and Homeland Security held a hearing titled "Oversight Hearing on Implementation of the USA PATRIOT Act: Effect of Sections 203 (b) and (d) on Information Sharing". Both of these sections are scheduled to sunset at the end of this year. See, prepared testimony of Rep. Michael McCaul (R-TX), prepared testimony [8 pages in PDF] of Barry Sabin (Chief of the Counterterrorism Section, Criminal Division, Department of Justice), and prepared testimony of Maureen Baginski (Executive Assistant Director for the Office of Intelligence, FBI), in support of these provisions. See also, prepared testimony [8 pages in PDF] of Tim Edgar (ACLU), who argued that "uncontrolled sharing of criminal investigative information with intelligence agencies poses real risks to civil liberties. The most acute danger is that federal prosecutors and law enforcement agents will be transformed from law enforcement officials concerned with preventing and punishing criminal activities into a domestic spy network directed at unpopular religious and political organizations." See also, prepared statement of Rep. Howard Coble (R-NC), the Chairman of the Crime Subcommittee.
4/19. The Senate Intelligence Committee held a hearing on the USA PATRIOT Act. See, prepared testimony [PDF] of Greg Nojeim (ACLU), prepared testimony [PDF] of James Dempsey (Center for Democracy & Technology), and prepared testimony [PDF] of Heather MacDonald (Manhattan Institute). See also, statement [PDF] of former Rep. Bob Barr (R-GA) (Patriots to Restore Checks and Balances), statement [PDF] of former Attorney General Ed Meese (Heritage), statement of Kate Martin (Center for National Security Studies), and statement of Orin Kerr (George Washington University Law School).
4/18. The U.S. Court of Appeals (7thCir) issued its opinion [9 pages in PDF] in USA v. Mitra, affirming the District Court's conviction of Rajib Mitra on two counts of violating 18 U.S.C. § 1030.
Mitra, a graduate student at the University of Wisconsin, transmitted a radio signal that prevented the communications system for police, fire, ambulance, and other emergency communications in Madison, Wisconsin, from operating. He was prosecuted for violation of Section 1030, which is titled "Fraud and related activity in connection with computers". It is generally known as the criminal ban on computer hacking.
Mitra argued unsuccessfully in the District Court, and before the Court of Appeals, that his actions were in the nature of unauthorized broadcasts, or interference, and that Section 1030 is intended only to cover those who hack into computer servers to steal or alter information.
This opinion demonstrates that, as computer chips become more ubiquitous in products ranging from police communications equipment, to cell phones and iPods, to automobiles, the scope of malicious conduct that will fall under § 1030 will continue to grow.
The public safety radio frequency communications system in Madison, Wisconsin uses Motorola's Smartnet II. This spreads transmissions across 20 frequencies. Computer hardware and software assigns each conversation to an open channel, with one channel designated for control.
The Court of Appeals wrote that a signal transmitted by Mitra "blanketed all of the City's communications towers and prevented the computer from receiving, on the control channel, data essential to parcel traffic among the other 19 channels." As a result, "public safety departments were unable to coordinate their activities because the radio system was down".
The Court explained that Mitra would "send the signals that took control of the system". Law enforcement authorities found him by using radio direction finders. They also seized Mitra's computer and radio transmission equipment.
§ 1030(e) then defines "computer" as "an electronic, magnetic, optical, electrochemical, or other high speed data processing device performing logical, arithmetic, or storage functions, and includes any data storage facility or communications facility directly related to or operating in conjunction with such device, but such term does not include an automated typewriter or typesetter, a portable hand held calculator, or other similar device".
It also provides that a "protected computer" includes any computer "which is used in interstate or foreign commerce or communication, including a computer located outside the United States that is used in a manner that affects interstate or foreign commerce or communication of the United States".
The Court of Appeals wrote that prosecutor's theory, which the District Court accepted, "is that Smartnet II is a ``computer´´ because it contains a chip that performs high-speed processing in response to signals received on the control channel, and as a whole is a ``communications facility directly related to or operating in conjunction´´ with that computer chip. It is a ``protected computer´´ because it is used in ``interstate ... communication´´; the frequencies it uses have been allocated by the Federal Communications Commission for police, fire, and other public-health services. Mitra's transmissions on Halloween included ``information´´ that was received by the Smartnet. Data that Mitra sent interfered with the way the computer allocated communications to the other 19 channels and stopped the flow of information among public-safety officers. This led to ``damage´´ by causing a ``no system´´ condition citywide, impairing the ``availability of ... a system, or information´´ and creating ``a threat to public health or safety´´ by knocking out police, fire, and emergency communications."
The Court of Appeals wrote that Mitra's theory is that all he did was "gum up a radio system". He did not hack into a computer, as the Congress intended the statute to mean. He argued that if what he did violates § 1030, then "Every cell phone and cell tower is a ``computer´´ under this statute's definition; so is every iPod, every wireless base station in the corner coffee shop, and many another gadget. Reading §1030 to cover all of these, and police radio too, would give the statute wide coverage, which by Mitra's lights means that Congress cannot have contemplated such breadth."
Judge Frank Easterbrook, who wrote the Court of Appeals opinion, appears to endorse the prosecution's interpretation of the statute, rather than Mitra's. The Court of Appeals affirmed the conviction, but was not precise in its analysis.
Easterbrook did not discuss in detail the ramifications of this holding for a computer chip based economy. However, he did go into detail on the nature of the legislative process, and legislative intent. That is, Mitra argued that the Congress could not have intended when it enacted § 1030 over twenty years ago that it would apply to communications systems that use computer chips. Judge Easterbrook, like his fellow Chicago school jurist, Antonin Scalia, argues that courts should not be guided by legislative intent.
Legislatures do not have intent, wrote Easterbrook, only individual legislators do. And, their intent is not pertinent to courts. He wrote that neither the Congress nor legislators intended the application of § 1030 to the acts of Mitra. But, this does not matter. He wrote that legislatures "write general statutes rather than enacting a list of particular forbidden acts. And it is the statutes they enacted -- not the thoughts they did or didn’t have -- that courts must apply."
Easterbrook noted that there are limitations on the scope of § 1030. There must be intentional damage. Also, the damage must be at least $5,000 or bodily injury or danger to pubic safety. Finally, the computer must operate in interstate commerce. However, this third limitation hardly operates as a limitation. Easterbrook wrote that any use of radio frequency is interstate commerce, because spectrum is licensed by the Federal Communications Commission (FCC). It does not matter if the use of the spectrum is neither interstate nor commercial. By operation of law, it is interstate commerce.
Judge Easterbrook noted that the spectrum used by Madison public safety entities is licensed by the FCC. His opinion is silent on what affect use of unlicensed spectrum would have on the interstate commerce analysis.
This case is U.S.A. v. Rajib Mitra, U.S. Court of Appeals for the 7th Circuit, App. Ct. No. 04-2328, an appeal from the U.S. District Court for the Western District of Wisconsin, D.C. No. 03-CR-153-S, Judge John Shabaz presiding. Judge Frank Easterbrook wrote the opinion of the Court of Appeals, in which Judges Wood and Sykes joined.
The Senate will meet at 9:30 AM for morning business. At 10:30 AM it will resume consideration of HR 1268, the Iraq/Afghanistan Supplemental Appropriations bill.
10:00 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet "How Internet Protocol-Enabled Services Are Changing the Face of Communications: A Look at Video and Data Services". The witnesses will be Lea Ann Champion (SBC), David Cohen (Comcast), Greg Schmidt (LIN Television Corporation, on behalf of the National Association of Broadcasters), Paul Mitchell (Microsoft TV Division), Robert Ingalls (Verizon), James Gleason (New Wave Communications, and the American Cable Association), Jack Perry (Decisionmaker Corp.). The hearing will be webcast by the Committee. See, notice. Press contact: Kevin Schweers (Barton) at 202 225-5735 or Sean Bonyun (Upton) at 202 225-3761. Location: Room 2123, Rayburn Building.
2:00 PM. The House Judiciary Committee will hold a hearing titled "Oversight Hearing on the Industry Competition and Consolidation: The Telecom Marketplace Nine Years After the Telecom Act". The witnesses will be Carl Grivner (CEO of XO Communications), Brian Moir (on behalf of eTUG), Michael Kellogg (on behalf of the USTA), and Philip Verveer (former DOJ attorney in original DOJ filing that led to the breakup of AT&T). See, notice. Press contact: Jeff Lungren or Terry Shawn at 202 225-2492. The hearing will be webcast by the Committee. Location: Room 2141, Rayburn Building.
4:30 PM. The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property will hold a hearing titled "Oversight Hearing on Committee Print Regarding Patent Quality Improvement". The witnesses will be Jeffrey Hawley (Eastman Kodak, on behalf of the Intellectual Property Owners Association), Richard Lutton (Apple, on behalf of the Business Software Alliance), Jeffrey Kushan (Sidley Austin, on behalf of Genetech), William LaFuze (Vinson & Elkins, on behalf of the ABA). See, Committee Print of HR __ [52 pages in PDF], the "Patent Act of 2005". Press contact: Jeff Lungren or Terry Shawn at 202 225-2492. Location: Room 2141, Rayburn Building.
9:30 AM. The Senate Judiciary Committee (SJC) will hold an executive business meeting. The agenda includes consideration of several non-technology related bills and consideration of several judicial nominees, including Terrence Boyle (to be a Judge of the U.S. Court of Appeals for the 4th Circuit), Priscilla Owen (5th Circuit), and Janice Brown (DC Circuit). The SJC rarely follows its published agenda. See, notice. Press contact: Blain Rethmeier (Specter) at 202 224-5225, David Carle (Leahy) at 202 224-4242 or Tracy Schmaler (Leahy) at 202 224-2154. Location: Room 226, Dirksen Building.
10:00 AM. The House Government Reform Committee will hold a hearing titled "OMB Management Watch List: $65 Billion Reasons to Ensure the Federal Government is Effectively Managing Information Technology Investments". The witnesses will be Karen Evans (Administrator for Electronic Government and Information Technology, Office of Management and Budget), David Powner (Director of Information Technology Management Issues, Government Accountability Office), Dan Matthews (CIO of the, Department of Transportation), Robert McFarland (Department of Veterans Affairs), Rosita Parkes (CIO of the Department of Energy), and Lisa Schlosser (CIO of the Department of Housing and Urban Development). Press contact: Robert White or Drew Crockett at 202 225-5074. Location: Room 2154, Rayburn Building.
11:30 AM. Four groups that oppose the SBC/AT&T and Verizon/MCI mergers will hold a news conference to discuss their opposition. The speakers will be Mark Cooper (CFA), Susanna Montezemolo (Consumers Union), John Perkins (National Association of State Utility Consumer Advocates), and a representative of USPIRG. To participate by teleconference call 1-888-577-8992 and provide code number 9087641. Press contact: Susanna Montezemolo at 202 462-6262. Location: 1666 Connecticut Ave., NW, Suite 310.
? RESCHEDULED FROM APRIL 7. 2:30 PM. The Senate Judiciary Committee's Subcommittee on Intellectual Property will hold a hearing titled "The Patent System Today and Tomorrow". Sen. Orrin Hatch (R-UT) will preside. See, notice. Press contact: Blain Rethmeier (Specter) at 202 224-5225, David Carle (Leahy) at 202 224-4242 or Tracy Schmaler (Leahy) at 202 224-2154. Location: Room 226, Dirksen Building.
? 1:30 PM. The Senate Judiciary Committee's (SJC) Intellectual Property Committee will hold a hearing on patents. Press contact: Blain Rethmeier (Specter) at 202 224-5225, David Carle (Leahy) at 202 224-4242 or Tracy Schmaler (Leahy) at 202 224-2154. Location: Room 226, Dirksen Building.
9:30 AM. The Senate Judiciary Committee (SJC) will hold a hearing on the nomination of Paul Clement to be Solicitor General. Press contact: Blain Rethmeier (Specter) at 202 224-5225, David Carle (Leahy) at 202 224-4242 or Tracy Schmaler (Leahy) at 202 224-2154. Location: Room 226, Dirksen Building.
4/19. The Supreme Court issued its opinion [PDF] in Dura Pharmaceuticals v. Broudo, a class action securities fraud case involving whether a plaintiff in a 10b-5 action who invokes the fraud on the market theory must demonstrate loss causation by pleading and proving a causal connection between the alleged fraud and the investment's subsequent decline in price.
The U.S. Court of Appeals (9thCir), contrary to other circuits, held not. It concluded that the plaintiff can satisfy the loss causation requirement simply by alleging in his complaint and subsequently establishing that the price of the security "on the date of purchase was inflated because of the misrepresentation."
The opinion of the Supreme Court was short and to the point. Justice Breyer, writing for a unanimous court, announced at the outset that "the Ninth Circuit is wrong".
He wrote that "we find the Ninth Circuit’s approach inconsistent with the law's requirement that a plaintiff prove that the defendant’s misrepresentation (or other fraudulent conduct) proximately caused the plaintiff’s economic loss. We need not, and do not, consider other proximate cause or loss-related questions."
The Solicitor General filed a brief urging the Court to grant certiorari, and a brief on the merits urging the Court to reverse the 9th Circuit. The Supreme Court heard oral argument on January 12, 2005. See, transcript [56 pages in PDF].
This case is Dura Pharmaceuticals, Inc., et al. v. Michael Broudo, No. 03-932.

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