Source: http://www.techlawjournal.com/alert/2005/08/03.asp
Timestamp: 2019-04-19 04:42:13+00:00

Document:
TLJ Daily E-Mail Alert No. 1,187, August 3, 2005.
August 3, 2005, 9:00 AM ET, Alert No. 1,187.
8/2. The U.S. Court of Appeals (5thCir) issued its opinion [13 pages in PDF] in White Buffalo Ventures v. University of Texas at Austin, a case regarding the blocking of e-mail by a state. The opinion addresses two separate issues -- whether the federal CAN-SPAM Act preempts a state policy to block e-mail sent to state users where the e-mail being blocked does not violate the CAN-SPAM Act, and whether such a policy violates the First Amendment rights of the e-mail sender. The Court of Appeals answered both questions in the negative. It affirmed the District Court's summary judgment for the state that blocked e-mail.
The University of Texas at Austin (UTAustin) is a political subdivision of the state of Texas. It provides internet access and e-mail service to its faculty, staff, and students. It has a policy pertaining to the blocking of incoming e-mail. White Buffalo Ventures (WBV) operates several online dating services, including one that targets UTAustin students. WBV obtained from UTAustin a list of UTAustin e-mail addresses. It then began sending bulk unsolicited e-mail messages to these addresses regarding its dating service. E-mail users complained. UTAustin then blocked e-mail sent from WBV's domain.
UTAustin and WBV agree that the e-mail being blocking does not violate the federal CAN-SPAM Act. The CAN-SPAM Act, the full title of which is the "Controlling the Assault of Non-Solicited Pormography and Marketings Act of 2003", was S 877 in the 108th Congress. On December 16, 2003, President Bush signed it into law. It is now Public Law No. 108-187. It is codified at 15 U.S.C. §§ 7701-7713.
WBV filed a complaint in state court in Texas. It obtained a temporary restraining order. UTAustin removed the action to the U.S. District Court (WDTex), based upon federal question jurisdiction. The District Court lifted the injunction, and granted summary judgment to UTAustin.
WBV appealed. It argues on appeal that federal law preempts the anti-spam component of UTAustin's e-mail policy, and that the policy violates the First Amendment. The Court of appeals affirmed.
Preemption by the CAN-SPAM Act. The Court of Appeals first addressed the preemption issue.
Section 8(b)(1) of S 877, which is codified at 15 U.S.C. S 7707(b)(1), provides that "This chapter supersedes any statute, regulation, or rule of a State or political subdivision of a State that expressly regulates the use of electronic mail to send commercial messages, except to the extent that any such statute, regulation, or rule prohibits falsity or deception in any portion of a commercial electronic mail message or information attached thereto."
Subsection (b)(2) then provides that "This Act shall not be construed to preempt the applicability of -- (A) State laws that are not specific to electronic mail, including State trespass, contract, or tort law; or (B) other State laws to the extent that those laws relate to acts of fraud or computer crime."
Subsection (c) provides that "Nothing in this Act shall be construed to have any effect on the lawfulness or unlawfulness, under any other provision of law, of the adoption, implementation, or enforcement by a provider of Internet access service of a policy of declining to transmit, route, relay, handle, or store certain types of electronic mail messages."
The Court of Appeals concluded that the statutory preemption language is not clear. And, since preemption is an "extraordinary power", there is a "presumption against preemption of state law".
The Court reasoned that "There are two competing interpretations, both rooted firmly in the text of the Act, of the degree of authority state actors may wield in response to commercial spam. Under the first, state entities may not regulate commercial speech except where that regulation relates to the authenticity of the speech’s source and content. Under the second, state entities may implement a variety of non-authenticity related commercial speech restrictions, provided the state entity implementing them is an ``Internet access provider.´´"
It concluded that "As a result of Congress’s apparent failure to contemplate this question, we must not infer preemption. The textual ambiguity triggers the strong presumption against such a finding, and we cannot be sure whether UT’s regulations fall within the ambit of the express preemption clause. UT may therefore implement" its e-mail blocking policy.
UTAustin also argued that the CAN-SPAM Act only preempts certain state regulation of the sending of e-mail, as opposed to the receipt of e-mail, and that the UTAustin's policy regulates receipt. The words "send" and "sender" appear throughout the Act. However, the Court of Appeals wrote that "We decline to imbue the word ``send´´ with the particular significance UT urges."
First Amendment Rights. The Court of Appeals then addressed WBV's claim that UTAustin's blocking of its dating service e-mail violates its right to freedom of speech.
The Court first concluded that the speech at issue is commercial speech, and therefore, it must apply the four part test in the Supreme Court's opinion in Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980).
The Court of Appeals wrote that the Supreme Court, in Central Hudson, "announced a four-part test to evaluate the legality of commercial speech regulation: (1) whether the speech is unlawful or misleading; (2) whether the government’s expressed interest is substantial; (3) whether the state action directly promotes that interest; and (4) whether the state action is more extensive than necessary to promote that interest." The Court of Appeals applied the four part test.
The Court of Appeals stated that the UTAustin satisfies the first part. The e-mail is not unlawful or misleading.
The Court of Appeals next addressed the second part, whether the state's interest is substantial. The Court reasoned that the state has two interests, user efficiency and server efficiency. It concluded that the state's interests are substantial. Although, it was more persuaded by the user efficiency argument -- that users need to be insulated from the burden of unwanted spam. The Court added that server efficiency "is among the most chronically over-used and under-substantiated interests asserted by parties ... involved in Internet litigation".
Perhaps it would not be too impertinent to note here that almost all federal judges are e-mail users, but few, if any, have ever attempted to manage e-mail systems, e-mail servers, or web servers.
The Court then addressed whether the state action directly promotes these substantial interests. It concluded that the UTAustin's actions do. It wrote that "One can hardly imagine a more direct means of preventing commercial spam from appearing in account-holders' inboxes and occupying server space than promulgating a policy that excludes such material from the email network."
Finally, the Court addressed whether the UTAustin's e-mail blocking is more extensive than necessary to promote its substantial interests. It concluded that with respect to promoting the interest of user efficiency, blocking is no more extensive than necessary. However, it concluded that with respect to promoting server efficiency, blocking is not no more extensive than necessary. The Court wrote that the UTAustin could have regulated the time and volume of WBV e-mail. That is, is could have allowed WBV to send its bulk e-mail at "off-peak times".
Since the Court found that the user efficiency interest meets the fourth part of the test, and the UTAustin's blocking satisfied the other three parts of the Hudson test, it held that UTAustin's e-mail blocking policy does not violate the First Amendment.
The Court's different conclusions regarding protecting the users, and protecting the servers, does nothing to assist WBV or other spammers in the sending of spam. However, the Court has established a precedent that may assist spammers in the practice of spidering web pages to harvest e-mail addresses. There is no user efficiency issue in this situation. Moreover, this precedent may be benefit those who engage in non-spam related spidering or crawling of the contents of web sites. This could be significant in suits involving claims such as computer trespass, unauthorized use of web sites, or and misappropriation of collections of data.
The Court also added that "we need not address what type of First Amendment forum a public university email network constitutes."
This case is White Buffalo Ventures, LLC v. University of Texas at Austin, U.S. Court of Appeals for the Fifth Circuit, App. Ct. No. m 04-50362, an appeal from the U.S. District Court for the Western District of Texas. Judge Jerry Smith wrote the opinion of the Court of Appeals, in which Judges Davis and DeMoss joined.
8/2. The U.S. Court of Appeals (1stCir) issued its opinion in McBee v. Delica, a case regarding extraterritorial use of the Lanham Act. The Court of Appeals adopted a test that is different from that in the 2nd and 9th Circuits.
Cecil McBee is a U.S. citizen and resident, and a jazz musician who has toured in Japan. See for example, his album titled " Unspoken" [Amazon].
Delica Co. Ltd. is a Japanese corporation that adopted the name Cecil McBee for its girls clothing line. It operates a web site that is mostly in the Japanese language. Its URL is www.cecilmcbee.net. After McBee asserted a claim, Delica adopted a policy of not selling into the U.S.
A Google images search for "Cecil McBee" returns as top results both pictures of the musician McBee and pictures of Delica clothing and stores. A Google web search for "Cecil McBee" returns as the top result the above referenced Delica's web site.
McBee filed a complaint in U.S. District Court (DMaine) against Delica alleging trademark dilution and unfair competition claims under the Lanham Act, which is codified at 15 U.S.C. § 1051 et seq., and various Maine state law claims. He requested injunctive relief (including an injunction of the operation of the web site), damages, and attorney's fees.
McBee argued false endorsement, that the unlicensed use of his name has made a misleading and false inference that McBee endorses, approves, or sponsors Delica's product, and that inference has caused McBee harm. However, the Anti-cybersquatting Consumer Protection Act's (ACPA) is not at issue in this case.
The District Court dismissed for lack of subject matter jurisdiction. McBee appealed.
The Court of Appeals affirmed, but with an analysis that differed from that of the District Court, and other circuits.
The Court of Appeals concluded that "Our framework asks first whether the defendant is an American citizen; that inquiry is different because a separate constitutional basis for jurisdiction exists for control of activities, even foreign activities, of an American citizen. Further, when the Lanham Act plaintiff seeks to enjoin sales in the United States, there is no question of extraterritorial application; the court has subject matter jurisdiction."
It continued that "In order for a plaintiff to reach foreign activities of foreign defendants in American courts, however, we adopt a separate test. We hold that subject matter jurisdiction under the Lanham Act is proper only if the complained-of activities have a substantial effect on United States commerce, viewed in light of the purposes of the Lanham Act. If this ``substantial effects´´ question is answered in the negative, then the court lacks jurisdiction over the defendant's extraterritorial acts; if it is answered in the affirmative, then the court possesses subject matter jurisdiction."
Finally, the Court of Appeals wrote that "We reject the notion that a comity analysis is part of subject matter jurisdiction. Comity considerations, including potential conflicts with foreign trademark law, are properly treated as questions of whether a court should, in its discretion, decline to exercise subject matter jurisdiction that it already possesses."
Notably, the Court of Appeals did not follow the test set by the 2nd Circuit in Vanity Fair Mills v. T. Eaton Co., 234 F.2d 633 (1956). In that case the 2nd Circuit applied a three prong test, which the 1st Circuit summarized as follows: "(1) whether the defendant is an American citizen, (2) whether the defendant's actions have a substantial effect on United States commerce, and (3) whether relief would create a conflict with foreign law." See also, Reebok Int'l, Ltd. v. Marnatech Enters., 970 F.2d 552 (9th Cir. 1992).
Applying this new analysis to the facts of the present case, the 1st Circuit concluded that the District Court "lacked jurisdiction over McBee's claims seeking (1) an injunction in the United States barring access to Delica's Internet website, which is written in Japanese, and (2) damages for harm to McBee due to Delica's sales in Japan."
It further concluded that "McBee has made no showing that Delica's activities had a substantial effect on United States commerce. As to McBee's claim for (3) an injunction barring Delica from selling its goods in the United States, we hold that the district court had jurisdiction but conclude that this claim is without merit because the only sales Delica has made into the United States were induced by McBee for purposes of this litigation, and there is no showing that Delica plans on selling into the United States again."
This case is Cecil McBee v. Delica Co. Ltd., U.S. Court of Appeals for the First Circuit, App. Ct. No. 04-2733, an appeal from the U.S. District Court for the District of Maine, D.C. No. 02-198-P-C, Judge Gene Carter presiding. Judge Lynch wrote the opinion of the Court of Appeals, in which Judges Selya and Howard joined.
8/2. The White House press office released a document, signed by President Bush, titled "Notice: Continuation of Emergency Regarding Export Control Regulations". See also, letter to the Speaker of the House and the President of the Senate.
The Export Administration Act expired in 2001. The Congress has worked on enacting replacement legislation, but has not done so. Meanwhile, the Department of Commerce's (DOC) Bureau of Industry and Security (BIS), which was formerly named the Bureau of Export Administration (BXA), continues to revise and enforce implementing regulations. These regulations pertain to, among other things, exports and "deemed exports" of dual use items, such as computers, software, and encryption products.
The President's document states that "On August 17, 2001, consistent with the authority provided me under the International Emergency Economic Powers Act (50 U.S.C. 170l et seq.), I issued Executive Order 13222. In that order, I declared a national emergency with respect to the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States in light of the expiration of the Export Administration Act of 1979, as amended (50 U.S.C. App. 2401 et seq.). Because the Export Administration Act has not been renewed by the Congress, the national emergency declared on August 17, 2001, must continue in effect beyond August 17, 2005. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency declared in Executive Order 13222."
Every year at about this time the President signs a similar document. This document will have the effect of maintaining in effect the BIS regulations.
8/2. President Bush signed into law HR 3045, the "Dominican Republic-Central America-United States Free Trade Agreement Implementation Act". See, transcript of signing ceremony, and White House release.
8/2. Jean Schmidt won a special election to the Second Congressional District in Ohio. The vacancy was created by the appointment of former Rep. Bob Portman (R-OH) to be the U.S. Trade Representative. Schmidt, a Republican, defeated Paul Hackett 52-48%. See, web site of the Hamilton County, Ohio, Board of Elections.
8/2. President Bush gave a recess appointment to Peter Cyril Wyche Flory to be an Assistant Secretary of Defense (International Security Policy). See, White House release.
8/1. President Bush gave a recess appointment to John Bolton to be the U.S. Ambassador to the United Nations. See, transcript of event at which Bush made the announcement. Senate Democrats had blocked a vote on his nomination by the full Senate. The appointment lasts until the end of the 109th Congress -- January 2007.
7/29. The Senate confirmed former Rep. Christopher Cox (R-CA), Roel Campos, and Annette Nazarath to be Commissioners of the Securities and Exchange Commission (SEC). Cox has been designated by President Bush to be Chairman. His term expires on June 5, 2009. Campos, who was reappointed, has a new term that expires on June 5, 2010. Nazareth has term that expires on June 5, 2007. See also, story titled "Rep. Cox to Replace Donaldson as SEC Chairman" in TLJ Daily E-Mail Alert No. 1,146, June 2, 2005.
7/29. The Senate confirmed Josette Shiner to be an Under Secretary of State (Economic, Business, and Agricultural Affairs). She was Deputy U.S. Trade Representative. Before that, she was Associate U.S. Trade Representative for Policy and Communications. Before that, she was P/CEO of a group named Empower America. She is also a former Managing Editor of the Washington Times.
7/29. The Senate confirmed Karen Hughes to be Under Secretary of State for Public Diplomacy.
7/29. The Senate confirmed Kristen Silverberg to be an Assistant Secretary of State (International Organization Affairs). She was Deputy Assistant to the President and Advisor to the Chief of Staff in the White House. Before that, she was Deputy Assistant to the President for Domestic Policy. Before that, she was Senior Advisor to Ambassador Paul Bremer in Iraq. And before that, she was Special Assistant to the President in the Office of the Chief of Staff. Before her positions in the Bush administration, she worked for the Bush Cheney 2000 campaign. She has also worked for the Washington DC office of the law firm of Williams & Connolly, for Supreme Court Justice Clarence Thomas, and for U.S. Court of Appeals (DCCir) Judge David Sentelle.
7/29. The Senate confirmed Shara Aranoff to be Commissioner of the U.S. International Trade Commission (USITC) for the remainder of a nine year term expiring on December 16, 2012. Sen. Harry Reid (D-NV), the Senate Democratic Leader, designated Aranoff for nomination to a Democratic position on the USITC. She was Senior International Trade Counsel on the Democratic staff of the Senate Finance Committee. She has also worked in the USITC's Office of General Counsel, and for the law firm of Steptoe & Johnson. She replaces Marcia Miller, whose term has expired. Sen. Max Baucus (D-MT), the ranking Democrat on the Senate Finance Committee, praised Aranoff in a January release [PDF].
7/29. The Senate confirmed Sandra Pack to be an Assistant Secretary of the Treasury, Timothy Adams to be an Under Secretary of the Treasury, Randal Quarles to be an Under Secretary of the Treasury, Kevin Fromer to be a Deputy Secretary of the Treasury, and Robert Kimmitt to be a Deputy Secretary of the Treasury.
7/29. The Senate confirmed Michael J. Garcia to be the U.S. Attorney for the Southern District of New York for a term of four years.
7/28. The Senate confirmed Rachel Brand to be Assistant Attorney General in charge of the Office of Legal Policy at the Department of Justice (DOJ). She was the Principal Deputy Assistant Attorney General in the OLP. She previously worked as Associate Counsel to the President, for the law firm of Cooper Carville & Rosenthal, which is now Cooper & Clark, and for Supreme Court Justice Anthony Kennedy. The responsibilities of the OLP relate to, among other things, the screening, selection and confirmation of judicial nominees.
7/28. The Senate confirmed Richard Skinner to be Inspector General of the Department of Homeland Security (DHS).
7/28. The Senate confirmed Janice Gardner to be Assistant Secretary for Intelligence and Analysis at the Department of the Treasury.
7/28. The Senate confirmed John Redd to be Director of the National Counterterrorism Center in the Office of the Director of National Intelligence.

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