Tech Law Journal Daily E-Mail Alert
Feb. 23, 2001, 8:00 AM ET, Alert No. 130.
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What Digital Divide?
 2/22. The GAO released a report [PDF], dated Feb. 16, prepared for Rep. Ed Markey (D-MA), the ranking Democrat on the House Telecom Subcommittee, regarding "digital divide" policy. The report found "greater home usage of the Internet by more highly educated and wealthier individuals. ... Furthermore, although we did not find Internet use to be statistically related to differences in community size, we did find less broadband availability in the more rural areas of America." However, the report continued that "it is often the case that individuals with greater education and income are the first to adopt new technologies, and individuals in rural areas are the last to be reached by the deployment of new telecommunications infrastructure. Since the Internet is still in a relatively early stage of commercial deployment, these socioeconomic and geographic differences in Internet usage are not surprising and may not be long lasting."
2/22. The Consumer Electronics Association (CEA) announced that it conducted a survey of Internet users regarding the legal issues involved in the case A&M Records v. Napster. The CEA stated that the survey shows that "61 percent oppose laws that prevent the usage of file sharing software such as Napster." CEA CEO Gary Shapiro stated that "Public policy debates must shift to reflect the paradigm of the new economy as technology creates new ways for more consumers to access information and entertainment. We must protect the ability of technologies to evolve, especially those that allow personal, non-commercial recording." The CEA stated the survey was "conducted via the Internet to a sample of 1,812." The CEA did not assert that the sample was random. See, CEA release. CEA member companies make products that facilitate infringement of copyrights in music recordings.
Securities Litigation
2/22. The U.S. Court of Appeals (4thCir) issued its opinion in Dellastatious v. Williams, a case involving controlling person liability in securities fraud cases. Plaintiff filed a complaint for securities fraud that included claims against Donald Williams and Raymond Kelly, officers of LaserVision Technologies, alleging liability as "control persons" under  20 of the Securities Exchange Act of 1934. The U.S. District Court (EDVa) granted Williams' and Kelly's motion for summary judgment, holding that they were not control persons and that they satisfied the statutes' good-faith defense. The Court of Appeals affirmed. The suit involved LaserVision, a photography company. However, Section 20 liability is frequently alleged in securities fraud cases against high tech companies.
New Documents
GAO: report re digital divide, 2/16 (PDF, GAO).
USCA: opinion Dellastatious v. Williams re controlling person liability in securities fraud cases, 2/22 (HTML, USCA).
FCC Lacks Engineering Expertise
2/22. The Federal Communications Commission held a meeting at which the four members of the Commission (Powell, Ness, Tristani, and Furchtgott-Roth) heard testimony from its own bureau and office chiefs. The new Chairman, Michael Powell, stated that "it is important, before you decide where you are going, to take stock of where you are." He stated that these meetings will be annual.
2/22. Two themes ran throughout the statements of both the bureau chiefs and Commissioners: first, the FCC staff is excellent; second, the FCC staff lacks the engineering expertise to understand the new Internet technologies that it has recently undertaken to regulate. FCC Chairman Powell and most of his bureau chiefs stated that the FCC lacks "engineering resources". Powell noted that about "30 to 45 percent of engineers are approaching retirement age. When we hire entry level engineers at GS 5 and 7 level, and you are competing with the very industries you regulate for the same talent, you have a problem." He also stated that "this Commission has to have an independent technical capability" and "cannot rely on the industry we regulate." He suggested the FCC needs more money from Congress for salaries, training, and "new technical tools and assets that the engineers like to play with." However, Powell, who is a lawyer, added that "we need lawyers to understand engineering" and "I would not undersell the ability of lawyers to be much more thoughtful ..."
2/22. FCC Cable Services Bureau Chief Deborah Lathen stated that her Bureau has 30 attorneys, but only 5 engineers. She also stated that her Bureau's responsibilities have "exploded." She said that "we have moved into broadband policy, direct broadcast satellite, ... Internet access, and new missions, such as interactive television." She added that "we have to recognize that our capabilities really are strained" and "we have difficulties attracting people to come because of salary limitations."
2/22. The FCC's aging engineering staff possesses expertise in areas related to legacy technologies, including the public switched telephone network, and broadcast radio and television -- particularly, testing for interference. However, since Prof. David Farber returned to the University of Pennsylvania several weeks ago, no one at the FCC understands many Internet based technologies, such as instant messaging and Internet access over cable facilities. This now leaves the agency dependent for information upon the companies that it regulates, speakers at public forums, and its communications lawyers. See also, TLJ story of Jan. 7, 2000 regarding Farber's appointment as FCC Chief Technologist.
2/22. FCC Commissioner Harold Furchgott-Roth, who has said that he will step down as soon as President Bush names his replacement, offered advice to the new Chairman. First: "Follow the law, not to go beyond it, not to keep this agency, kind of breathing a sigh of relief every time we win in court, and hanging our shoulders when we loose ..." Second: "Efficiency. We really need to take Section 11 and Section 10 very seriously about deregulation, getting rid of some of the underbrush ..." Third: "Transparency. The public needs to know where items are in the process. The public needs to know that decisions are made based entirely on the record before this Commission, that there aren't secret deals, that there aren't little side agreements ..." Fourth: "Equality. The public needs to know that everyone before the Commission, whether a large company, or a small company, is going to get treated exactly the same."
Quote of the Day
"I think the future is very very exciting. And, many of you who know me, know that I am an avid sci-fi fan. Anything Star Trek, anything dealing with space, I will stay up all night long to watch, because it deals with the future. And that is what we deal with here."

Deborah Lathen, Chief of the FCC Cable Services Bureau, describing her interest and background in engineering at the FCC meeting of Feb. 22.
Fast Track
2/22. President Bush held his first press conference as President. He was asked many questions, including one about fast track trade negotiating authority, a free trade agreement for the Americas, and the upcoming meeting in Quebec. He stated "I'd love to have fast track approval. I think it's going to be important to work with our neighbors to the south, and Canada to the north, to promote free trade throughout the Hemisphere. I spoke to the Prime Minister of Canada this morning, and that subject came up, about the summit, upcoming summit. And so we're going to begin the process in Congress. Ambassador Zoellick will be working with members of Congress to lay the groundwork for the ability for the President to have what they call fast track negotiating authority. ..." See, transcript and audio [RAM].
2/22. WTO Director General Mike Moore met over several days with USTR Robert Zoellick, Commerce Secretary Donald Evans, Agriculture Sec. Ann Veneman, NSC Advisor Condoleezza Rice, and NEC Advisor Lawrence Lindsey. Moore released a statement, in which he said that "I am also impressed by the determination of President Bush and Ambassador Zoellick to work closely with the Congress to gain trade promotion authority as soon as possible. This is very important not just for the United States but for all US trading partners. I very much appreciate the support the Administration has shown for the launch of a round this year."
Intel Patents
2/21. Intel announced that it has settled its patent litigation against First International Computer (FIC). Intel sued FIC and others in U.S. District Court (NDCal) and elsewhere in late 1999 alleging patent infringement regarding its P6 bus microarchitecture. Intel stated that two companies entered into "a settlement and license agreement covering certain patents" but did not disclose the terms of the settlement. FIC is a mainboard producer based in Taipei, Taiwan. See, Intel release. Intel is represented in this matter by the law firm of Brobeck Phleger.
12:15 PM. The Federal Communications Bar Association's International Practice Committee will host a Brown Bag Luncheon. The topic will be "Telecommunications Reform in the European Union." RSVP to Kurt Wimmer at Location: Covington & Burling, 1201 Pennsylvania Avenue, NW, 11th Floor.
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