Source: http://techlawjournal.com/home/newsbriefs/2004/08b.asp
Timestamp: 2019-04-22 08:24:21+00:00

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TLJ News: August 6-10, 2004.
8/10. The Congressional Budget Office (CBO) released a report titled "Copyright Issues in the Digital Media".
This report reviews legal and technological developments affecting copyright. This report then offers an economic analysis of property rights in certain works reproduced in digital media, and analyses three different options available to the Congress.
First, the Congress could do nothing and let the various copyright owners and consumers act in the free market unrestrained by further legislation. The report contemplates the copyright owners will further develop digital rights management technologies and business methods that protect their works and revenues.
Second, the Congress could legislate a compulsory licensing regime. Prices would be regulated, and revenues would be distributed to copyright owners according to the relative use of their works.
Third, the Congress could "revise copyright law in favor of one of the groups whose interests are at stake in the copyright debate: the copyright owners or the users of copyrighted material".
8/10. President Bush announced his intent to nominate Rep. Porter Goss (R-FL) to be Director of the Central Intelligence Agency (CIA). See, Bush speech.
8/10. The Federal Communications Commission (FCC) published a notice in the Federal Register describing and setting comments deadlines for the FCC's notice of proposed rulemaking (NPRM) regarding amendments to FCC rules to permit VHF public coast (VPC) and automated maritime telecommunications system (AMTS) licensees to provide private mobile radio service to units on land. Written comments are by October 12, 2004, and reply comments are due by November 8, 2004. The FCC adopted this item on July 8, 2004, and released it on July 30, 2004. It is FCC 04-171 in WT Docket No. 04-257 and RM-10743. See, Federal Register, August 10, 2004, Vol. 69, No. 153, at Pages 48440 - 48443.
8/9. The Federal Communications Commission (FCC) released its Notice of Proposed Rulemaking and Declaratory Ruling (NPRM & DR) [100 pages in PDF] regarding imposing CALEA obligations upon broadband internet access services and voice over internet protocol (VOIP) services.
The NPRM is 100 pages, single spaced, with 426 footnotes. This article, and the articles that follow, do not review everything that is in this NPRM. The NPRM also addresses the obligations that the CALEA imposes upon telecommunications carriers and how these might be extended to information services, the CALEA's safe harbor standards, the application of the CALEA to satellite networks, and cost and cost recovery.
The NPRM also tentatively concludes that "providers of non-managed, or disintermediated, communications should not be subject to CALEA". It adds that these "Non-managed VoIP services" include "peer-to-peer communications and voice enabled Instant Messaging". (See, NPRM at Paragraph 58.) See, full story.
8/9. The Federal Communications Commission's (FCC) CALEA NPRM [100 pages in PDF], released on August 9, 2004 contains a declaratory ruling that push to talk services are subject to CALEA requirements. See, full story.
8/9. The Federal Communications Commission's (FCC) CALEA NPRM [100 pages in PDF], released on August 9, 2004 tentatively concludes that broadband internet access services (BIAS) and certain voice over internet protocol (VOIP) services are subject to the requirements of the CALEA. To reach these conclusions the NPRM had to surmount two substantial obstacles to such conclusions. First, the CALEA provides that it only imposes obligations upon a "telecommunications carrier". Second, it provides that it does not impose obligations upon information services. The CALEA does, however, contain a clause pertaining to substantial replacement that forms the entire basis of the NPRM's tentative conclusions. See, full story.
8/9. The Federal Communications Commission's (FCC) CALEA NPRM [100 pages in PDF], released on August 9, 2004, addresses the Department of Justice's (DOJ) request that certain future services also be subjected to CALEA requirements. See, full story.
8/9. The Federal Communications Commission's (FCC) CALEA NPRM [100 pages in PDF], released on August 9, 2004, contains a proposal regarding the processing of court orders, the installation of surveillance equipment, the operation of surveillance activities, and other activities related to carrying out surveillance and intercepts. The NPRM suggests that carriers and service providers rely upon a new category of service provider to perform these functions. The NPRM seeks comment on this, but does not indicate how the rules contained in a final order might implement this proposal.
8/9. The Federal Communications Commission (FCC) released its Order on Reconsideration [20 pages in PDF] regarding multiple dwelling units (MDUs) and the Section 251 unbundling obligations of incumbent local exchange carriers (ILECs).
The FCC adopted, but did not release, this Order on Reconsideration at its August 4, 2004 meeting. This order is FCC 04-191 in CC Docket Nos. 01-338, CC 96-98, and CC 98-147.
See, story titled "FCC Adopts Order on Reconsideration Re Unbundling Requirements of ILECs for FTTH to MDUs" in TLJ Daily E-Mail Alert No. 954, August 6, 2004.
This order states that "we reconsider certain of the Commission's determinations with regard to multiple dwelling units (MDUs) and conclude that the fiber-to-the-home (FTTH) rules will apply to MDUs that are predominantly residential. We further clarify that the definition of FTTH loops includes fiber loops deployed to the minimum point of entry (MPOE) of MDUs, regardless of the ownership of the inside wiring."
8/9. The Federal Communications Commission (FCC) released its Notice of Proposed Rulemaking and Declaratory Ruling (NPRM & DR) [100 pages in PDF] regarding imposing CALEA obligations upon broadband internet access services, including voice over internet protocol (VOIP), and other information services. This NPRM is 100 pages, single spaced, with 432 footnotes.
It contains significant additional information about the FCC's reconstruction of the Communications Assistance for Law Enforcement Act (CALEA) that the FCC did not disclose at its meeting on August 4, 2004. See, story titled "FCC Adopts NPRM and Declaratory Ruling Regarding CALEA Obligations" in TLJ Daily E-Mail Alert No. 953, August 5, 2004. See also, stories titled "FCC Legislatively Expands Scope of CALEA Obligations" in TLJ Daily E-Mail Alert No. 953, August 5, 2004, and "Powell Discusses Brand X Case" in TLJ Daily E-Mail Alert No. 954, August 6, 2004.
This NPRM also contains a more detailed articulation of how the FCC has come to tentatively conclude that broadband internet access services are subject to CALEA requirements, and that managed or mediated VOIP services are also subject to CALEA requirements.
Comments will be due 45 days after publication of a notice in the Federal Register. Reply comments will be due 75 days after publication in the Federal Register. As of August 10, the FCC had not published this notice in the Federal Register. TLJ plans to publish in a subsequent issue a more detailed review of the content of this NPRM.
8/9. Scott Delacourt was named Deputy Bureau Chief of the Federal Communications Commission's (FCC) Wireless Telecommunications Bureau (WTB). He will oversee matters before the WTB's Broadband Division and Spectrum & Competition Policy Division. He was previously Chief of Staff and Associate Bureau Chief of the WTB. He also previously worked for the law firm of Wiley Rein & Fielding. See, FCC release [PDF].
8/9. The Federal Communications Commission (FCC) announced that it denied two complaints against broadcast television licensees alleging violation of the FCC's indecency rules. One complaint pertained to an episode of a television program titled "Buffy the Vampire Slayer". This Memorandum Opinion and Order (MOO) [PDF] is FCC 04-196. See, FCC release [PDF]. The other complaint pertained to an episode of a television program titled "Will & Grace". This MOO [4 pages in PDF] is FCC 04-197. See, FCC release [PDF].
8/9. The Federal Communications Commission (FCC) published a notice in the Federal Register announcing, and setting the effect date for, its final rule regarding two matters -- first, spectrum sharing among non-geostationary satellite orbit mobile satellite service systems in the 1610-1626.5 MHz (L-band) and 2483.5-2500 MHz (S-band), and second, allocation of spectrum below 3 GHz for mobile and fixed services to support the introduction of new advanced wireless services, including third generation (3G) wireless systems. The FCC adopted its Report and Order and Fourth Report and Order on June 10, 2004, and released it on July 16, 2004. This item is FCC 04-134 in IB Docket No. 02-364 and ET Docket No. 00-258. The effective date is September 8, 2004. See, Federal Register, August 9, 2004, Vol. 69, No. 152, at Pages 48157 - 48162. The FCC also published a separate notice in the Federal Register that describes and sets comment deadlines for comments on its further notice of proposed rulemaking (FNPRM) to determine whether mobile satellite service (MSS) operators using different technologies could share additional spectrum in the L-band. This item is also FCC 04-134. Comments are due by September 8, 2004, and reply comments are due by September 23, 2004. See, Federal Register, August 9, 2004, Vol. 69, No. 152, at Pages 48192 - 48194.
8/9. The Federal Communications Commission (FCC) published a notice in the Federal Register that describes and sets comment deadlines for its notice of proposed rulemaking (NPRM) regarding its proposal to eliminate paper filings and require applicants to file electronically filings related to international telecommunications services. Comments are due by October 8, 2004, and reply comments are by November 8, 2004. This NPRM is FCC 04-133 in IB Docket No.04-226. The FCC adopted this item on June 10, 2004 and released it on June 30, 2004. See, Federal Register, August 9, 2004, Vol. 69, No. 152, at Pages 48188 - 48192.
8/6. In August of every year President Bush signs an executive order extending the Export Administration Act of 1979 (EAA) for one more year. On August 6, 2004 he signed another such order. See, While House release.
The EAA regulates the export of military items, including dual use items, such as computers and software. The EAA has lapsed, but contains a provision enabling the President to extend it, provided that he declares that there exists a national emergency, and that the provisions of the EAA must be continued.
The EAA was drafted with the Cold War conflict, and 1970s technologies, in mind. It is outdated in the context of the dissolution of the Soviet Union, globalization, and the development of information technologies. Many members of Congress worked diligently to pass a new EAA, particularly in 2000 and 2001.
The Senate passed S 149 (107th Congress), the Export Administration Act of 2001, sponsored by Sen. Mike Enzi (R-WY), on September 6, 2001 by a vote of 85 to 14. This bill would have modernized export control laws. It would have eased restraints on most dual use products, but increased penalties for violations. It would have also repealed provisions of the 1998 National Defense Authorization Act which require the President to use million theoretical operations per second (MTOPS) to set restrictions on the export of high performance computers (HPCs).
The House International Relations Committee, but not the full House, had passed a different bill in August of 2001. President Bush supported the Senate bill.
When Al Qaeda terrorists struck five days after Senate passage of its bill, they destroyed the bill's chances for enactment. And, President Bush continually extends the provisions of the old EAA.
8/6. The Federal Election Commission (FEC) announced that it dismissed a complaint filed by David Bossie against Michael Moore and several other individuals and corporations alleging imminent violation of the Federal Election Campaign Act (FECA) in connection with the distribution of a film titled "Fahrenheit 9/11".
Bossie is a long time partisan Republican. He wrote extensively, in an unfavorable light, about former President Bill Clinton and former Vice President Al Gore. He was also Chief Investigator for the House Government Reform Committee during Rep. Dan Burton's (R-IN) tenure as Chairman. He is now the President of Citizens United. He has just written a book titled The Many Faces of John Kerry: Why This Massachusetts Liberal Is Wrong for America [Amazon].
The respondents in the FEC proceeding are Moore, Lions Gate Entertainment Corporation, Lions Gate Films Inc., Cablevision Systems Corporation, Rainbow Media Holdings LLC, The Independent Film Channel LLC, Fellowship Adventure Group LLC, Harvey Weinstein, Bob Weinstein, Showtime Network, Inc., Viacom International Inc. See, FEC notice.
In addition, Citizens United submitted a request for an advisory opinion (AOR) to the FEC requesting an opinion regarding Bossie's book about John Kerry.
It seeks an opinion on three issues. First, it asks "whether paid broadcast advertisements for" the book "would qualify as ``electioneering communications´´ if the ads are broadcast during either the 30 day period preceding the Democratic National Convention or the 60 day period preceding the presidential election on November 2, 2004".
Second, it asks "whether the broadcast of a documentary film on John Kerry and John Edwards and/or broadcast advertisements for the film would qualify as ``electioneering communications´´ if the film or ads are broadcast during the 60 day period preceding the presidential election ..."
Third, it asks "if the film or ads at issue in this advisory opinion request qualify as ``electioneering communications´´, whether the film or ads for the film or book fall within the FECA's press exemption." Citizens United argues that it is "part of the news media".
Thus, in the first matter, David Bossie, the President of Citizens United, argued that certain activities of Michael Moore and others in the advertising and distribution of an anti-Bush diatribe might violate the FECA, while in the second matter, Citizens United argues that certain of its activities in the advertising and distribution of an anti-Kerry diatribe do not violate the FECA.
The FEC has opined on the press entity exemption in other advisory opinions. Most recently, on April 1, 2004, it issued Advisory Opinion 2004-7 in which it concluded that "MTV is a press entity".
Citizens United submitted its original AOR on July 8. The FEC wrote to Citizens United on July 19 requesting further information. On July 22 Citizens United responded, and produced numerous exhibits. See, FEC documents [173 pages in PDF].
8/6. The U.S. Court of Appeals (9thCir) issued its opinion [41 pages in PDF] in ACLU Nevada v. Heller, a First Amendment case involving anonymous political speech.
The state of Nevada enacted a statute that requires certain groups or entities publishing "any material or information relating to an election, candidate or any question on a ballot" to reveal on the publication the names and addresses of the publications' financial sponsors.
The American Civil Liberties Union of Nevada and its executive director, Gary Peck, filed a complaint in U.S. District Court (DNev) against Dean Heller, in his capacity as the Secretary of State of Nevada, and others, alleging that the state statute violates the First Amendment of the U.S. Constitution. The District Court upheld the constitutionality of the statute.
The Appeals Court vacated the District Court judgment. It held, under strict scrutiny analysis, that the Nevada statute is facially unconstitutional because it violates the free speech clause of the First Amendment. The Appeals Court followed the Supreme Court precedent of McIntyre v. Ohio Elections Commission, 514 U.S. 334 (1995).
The case is ACLU Nevada and Gary Peck v. Dean Heller, et al., No. 01-15462, an appeal for the U.S. District Court for the District of Nevada, D.C. No. CV-00-00370-DWH, Judge David Hagen presiding. Judge Marsha Berzon wrote the opinion of the Court of Appeals.
8/6. The U.S. Court of Appeals (7thCir) issued its opinion [10 pages in PDF] in Haslund v. Simon Property Group, a dispute regarding a agreement to give an employee an equity interest in an internet based company.
Simon Property Group (SPG) operates hundreds of shopping malls. It formed a subsidiary company to function as an internet related services ancillary to its mall business. SPG hired Shannon Haslund to be the subsidiary's vice president for operations. The employment agreement, which was confirmed in a letter, provided that she would receive "$175,000 plus 1% equity ... structure to be determined."
The subsidiary soon after terminated Haslund's employment, without giving her stock in the company. Soon after that, subsidiary was dissolved. It never made a profit.
Haslund filed a complaint in U.S. District Court (NDIll) against SPG alleging breach of contract under Illinois state law in connection with its failure to transfer stock to her. The District Court awarded Haslund $537,634.41 in damages, which the Court calculated by taking one percent of its estimate of the net worth of the subsidiary at the time she was terminated. It examined the dollar value of a purchase of stock in the subsidiary. The buyer (CPG) acquired a 9.3 percent equity interest for $5 million. The District Court calculated from this the value of 100% of the stock.
The Appeals Court reversed and remanded. The first issue that the Appeals Court addressed was whether the contract was void for indefiniteness. That is, the contract did not specify whether Haslund was to receive voting or non-voting stock, whether there were restrictions on vesting, and so forth. However, the Appeals Court held that the contract was not void.
Judge Richard Posner wrote the opinion. He wrote that "The fact that a contract is incomplete, presents interpretive questions, bristles with unresolved contingencies, and in short has as many holes as a Swiss cheese does not make it unenforceable for indefiniteness. Otherwise there would be few enforceable contracts. Complete contingent contracts are impossible. The future, over which contractual performance evolves, is too uncertain." Hence, this contract was enforceable, and broken by SPG.
The second issue addressed by the Court was the measurement of damages. The Appeals Court held that the District Court erred in concluding that the subsidiary had a net worth of $54 Million. The Appeals Court noted that the subsidiary never turned a profit, and had no assets that could be appraised. The Appeals Court rejected the District Court's method of valuing the company. The Appeals Court concluded that CPG transaction was devoid of economic substance, because, at the same time that CPG paid SPG for equity in its subsidiary, SPG paid CPG and equal amount for an interest in one of its subsidiaries.
Thus, the Appeals Court concluded that the failed dot com had never been worth anything. While SPG breached its contract with Haslund to give her 1% of the stock, the value of that stock could never have had any value. Hence, she is entitled to only nominal damages, not $537,634.41.
This case is Shannon Haslund v. Simon Property Group, Inc., No. 03-3658, an appeal from the U.S. District Court for the Northern District of Illinois, D.C. No. 01 C 9587, Judge Milton Shadur presiding.
8/6. The U.S. Court of Appeals (9thCir) issued its opinion [30 pages in PDF] in Nissan Motor Co. v. Nissan Computer Corp., a dispute over the operation of a web site with a domain name that includes a trademarked name.
Uzi Nissan is an individual who owns a computer store in the state of North Carolina. He formed a corporation named Nissan Computer Corp. He registered the domain name nissan.com in 1994. He maintained a web site at this domain name that also included automobile related advertising.
Nissan Motor Co. is an automobile manufacturer based in Japan, with operations and sales in the U.S. It registered the trademark "Nissan" in 1959. Nissan Motor unsuccessfully sought to obtain the domain name from Nissan Computer.
Nissan Motor filed a complaint in U.S. District Court (CDCal) against Nissan Computer alleging that the domain name "nissan.com" diluted the "NISSAN" trademark in violation of the Federal Trademark Dilution Act (FTDA), which is codified at 15 U.S.C. § 1125(c), and that the domain name registration infringed the trademark under the Lanham Act, which is codified at 15 U.S.C. § 1114.
The complaint also included claims for domain name piracy, false designation of origin, and violation of Cal. Bus. & Prof. Code § 14330, which are not at issue in this appeal.
The District Court held that Nissan Computer's automobile related advertising constituted trademark infringement on the basis of initial interest confusion, but that non-automobile related advertising did not.
It also held that Nissan Motor's dilution suit was not barred by laches, that Nissan Computer's first commercial use of "nissan" was in 1994 when it registered the domain name because that was the only use identical to the mark, that by then Nissan Motor’s mark had become famous, and that Nissan Computer's use of the domain name dilutes the quality of Nissan Motor’s mark.
The District Court enjoined Nissan Computer from publishing any commercial content in its web site located at nissan.com and from placing links to other web sites that contain disparaging remarks or negative commentary about Nissan Motor.
See, the District Court's 2000 preliminary injunction order, also published at 89 F.Supp.2d 1154, which the Court of Appeals previously affirmed, and the District Court's 2002 permanent injunction [9 pages in PDF], also published at 231 F.Supp.2d 977, which is the subject of the present appeal.
The Court of Appeals affirmed in part, reversed in part, and remanded.
The Appeals Court affirmed on the trademark infringement issue. It wrote that "Initial interest confusion exists as a matter of law as to Nissan Computer’s automobile-related use of ``nissan.com´´ because use of the mark for automobiles captures the attention of consumers interested in Nissan vehicles. To this extent ``nissan.com´´ trades on Nissan Motor's goodwill in the NISSAN mark and infringes it, but other uses do not because there is no possibility of confusion as to them."
The Appeals Court reversed on the trademark dilution issue. It concluded that "Even though the NISSAN mark was distinctive and incontestible within five years of registration, it must also have become ``famous´´ before Nissan Computer’s first commercial use in order to be entitled to protection against dilution. The first use for purposes of the FTDA is that use which is arguably offending, here, ``Nissan Computer,´´ because any commercial use of a famous mark is diluting regardless of whether it is confusing or combined with other identifiers. As such a use occurred in 1991, and because the district court believed that triable issues of fact exist about fame of the NISSAN mark before 1994, summary judgment on the dilution claim cannot be sustained."
The Appeals Court also reversed the injunction. It concluded that "to enjoin Nissan Computer from providing visitors to nissan.com a link to sites with disparaging or negative commentary about Nissan Motor is a content-based restriction on non-commercial speech that is inconsistent with the First Amendment."
Judge Pam Rymer wrote the opinion for the Appeals Court. Judges Stephen Trott and Sidney Thomas joined.
This case is Nissan Motor Co. v. Nissan Computer Corp., et al., and consolidated cases, Nos. 02-57148, 03-55017, 03-55144, and 03-55236, appeals from the U.S. District Court for the Central District of California, Judge Dean Pregerson presiding.
8/6. Eric Bash was named Assistant Division Chief of the Federal Communications Commission's (FCC) Enforcement Bureau's (EB) Investigations and Hearings Division. He will be responsible for managing and supervising audits and investigations of potential violations of the FCC's competition and universal service rules for common carriers. He went to work at the FCC in 1996. See, FCC release.
8/6. Bill Gradison was reappointed, by the Securities and Exchange Commission (SEC), to the Public Company Accounting Oversight Board (PCAOB). See, SEC release.
8/6. The Federal Communications Commission (FCC) released the text [256 pages in PDF] of its report and order regarding interference in the 800 MHz band, which is also known as the Nextel order. The FCC adopted, but did not release, this item at its meeting on July 8, 2004. See, story titled "FCC Adopts Report and Order Regarding Interference in the 800 MHz Band" in TLJ Daily E-Mail Alert No. 936, July 13, 2004.
8/6. BellSouth announced in a release that it has reached a tentative agreement with the Communications Workers of America (CWA) to enter into a collective bargaining agreement with the union that would affect about 45,000 employees and have a duration of five years. See also, CWA release.
8/6. The Federal Communications Commission (FCC) published a notice in the Federal Register announcing and describing its final rule extending mandatory electronic filing to all satellite and earth station applications. This is the Fourth Report and Order, numbered FCC 04-92, in IB Docket No. 02-34. The FCC adopted this item on April 9, 2004, and released on April 16, 2004. See, Federal Register, August 6, 2004, Vol. 69, No. 151, at Pages 47790 - 47795.
8/6. The Progress and Freedom Foundation (PFF) released a paper [20 pages in PDF] titled "The Fallacy of Predation in Wireline Communications". The paper argues that price predation, which it defines as "the lowering of prices to drive out rivals" is often alleged in debates over communications policy, but is rarely a real concern. It points out that price predation is competing through lower prices, which benefits consumers. It asserts that "Though a theoretical case might be made about predation, the actual threat of it occurring is low. At most, predation claims in communications markets should be tried after the fact through an antitrust-like adjudicatory method, rather than the current practice of retail rate regulation and prohibitions on downward price movements by incumbents." And finally, the paper argues that government regulators cannot tell the difference between beneficial competitive behavior and harmful predatory pricing behavior. This paper was written by Raymond Gifford and Adam Peters of the PFF.
8/6. The International Intellectual Property Alliance (IIPA) submitted a comment [9 pages in PDF] to the Office of the U.S. Trade Representative (USTR) regarding its Special 301 out of cycle review of Israel and other nations. IIPA recommends that the USTR place Israel on its Priority Watch List. It states that the government of Israel is not affording protection to copyrights in sound recordings. Section 182 of the Trade Act of 1974, which is codified at 19 U.S.C. § 2242, requires the USTR to identify countries that deny adequate and effective protection of intellectual property rights or deny fair and equitable market access to U.S. persons who rely on intellectual property protection. This is also referred to as the Special 301 provision. August 6 was the deadline for submitting such comments. See, notice in the Federal Register, July 13, 2004, Vol. 69, No. 133, at Pages 42077-42078.
8/6. The Federal Communications Commission (FCC) filed a petition for rehearing en banc [15 pages in PDF] with the U.S. Court of Appeals (3rdCir) in Prometheus Radio Project v. FCC. The Appeals Court issued its opinion [213 pages in PDF] on June 24, 2004, overturning some of the FCC's media ownership rules.
Go to News from August 1-5, 2004.

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