Tech Law Journal Daily E-Mail Alert
March 28, 2001, 8:00 AM ET, Alert No. 153.
TLJ Home Page | News from the Web | Calendar | Search | Back Issues
Napster News
3/27. The plaintiffs in A&M Records v. Napster filed a pleading [PDF] with the U.S. District Court (NDCal) titled "Plaintiffs' Report on Napster's Non-Compliance with Modified Preliminary Injunction" in which they argue that "Napster has failed to abide by either the letter or spirit of this Court's Preliminary Injunction. Plaintiffs have provided Napster with notice of over 675,000 copyrighted works. Stunningly, every single song listed in the original complaint remains easily available on the Napster system. In a very recent search for approximately 7000 of those works that Napster claims to have filtered pursuant to plaintiffs' notices, approximately 70% of them could be found by simply searching for the artist and song name." Napster wants Judge Patel to require Napster to implement either a "filtering in" system, or an effective "filtering out" system. Napster CEO Hank Barry disputed these claims. He asserted that "Napster is aggressively complying with the injunction with significant measurable results." See, statement.
Trade Secrets & State Secrets
3/27. The U.S. Court of Appeals (4thCir) issued its opinion in DTM Research v. AT&T, a case involving claimed trade secrets in data mining technology. After signing a confidentiality agreement, AT&T negotiated with DTM regarding its "Orca Blue" process for mining and analyzing large quantities of call detail data. After receiving a demonstration, AT&T declined to contract with DTM, and conducted its data mining in house instead. DTM then filed a complaint in U.S. District Court (DMd) against AT&T based upon diversity of citizenship alleging misappropriation of trade secrets, under Maryland law, during the contract negotiations. AT&T's defense, in part, is that DTM's "Orca Blue" was misappropriated from the U.S. AT&T then sought discovery relevant to this defense from the U.S. and its contractors. The U.S. intervened, invoked the "state secrets" privilege, and moved to quash AT&T's subpoenas on the grounds that any inquiry into the technology would threaten national security. The District Court quashed AT&T's subpoenas. AT&T then moved for summary judgment on the grounds that it could not defend against DTM's claims. The District Court denied this motion, but certified an appeal. AT&T brought this appeal. The Appeals Court affirmed. It held that fee simple ownership in its traditional sense is not an element of a trade secrets misappropriation claim in Maryland. It also held that the U.S.'s assertion of the state secrets privilege does not deny AT&T a fair trial, and does not require termination of this litigation. Remanded.
New Documents
RIAA: pleading re Napster's failure to filter copyrighted music, 3/27 (PDF, RIAA).
USCA: opinion in DTM v. AT&T re trade secrets and state secrets, 3/27 (HTML, USCA).
USCA: opinion in Foundation v. Savannah College re antitrust and accreditation bodies, 3/27 (HTML, USCA).
USAO: Information and Plea Agreement re insider trading re Sun acquisition of Cobalt, 3/20 (PDF, USAO).
Bush: speech advocating free trade, 3/27 (HTML, WH).
3/27. The U.S. Court of Appeals (6thCir) issued its opinion in Foundation for Interior Design Education Research v. Savannah College of Art & Design, a case involving a claim that an accreditation body violated the Sherman antitrust act. The District Court found no violation of the Sherman Act, and the Appeals Court affirmed.
Quote of the Day
"It is doubtful that Napster's self-selected, technologically archaic filter ever could significantly limit access to plaintiffs' music. Yet, Napster contemptuously refuses to employ an effective filter-- for fear that it might actually work."

RIAA, from pleading filed on March 27.

"Napster is aggressively complying with the injunction with significant measurable results."

Hank Barry, CEO of Napster, from March 27 statement.
Insider Trading
3/27. Joel Mesplou plead guilty to making false statements to the SEC during an insider trading investigation, in violation of 18 U.S.C. § 1001. Mesplou acquired insider information of Sun Microsystems' impending acquisition of Cobalt Networks from an associate at Brobeck Phleger working on the transaction. Mesplou also settled civil insider trading charges brought by the SEC. The Information [PDF], dated March 20, 2001, states that Mesplou "is a professional investor and a partner in an investment firm based in Palo Alto, CA." It continues that he "became acquainted" with an associate "employed in the Business and Technology practice group of the Palo Alto, CA office of the law firm of Brobeck, Phleger & Harrison." She provided Mesplou "with material nonpublic information about a merger on which she was working, namely, a transaction in which Sun Microsystems, Inc. ("Sun") would acquire Cobalt Networks, Inc.". The Information continues that on or about the next day Mesplou purchased call options and stock in Cobalt totaling $1,182,687.70. Then, on or about the next day, "Sun announced publicly that it had reached an agreement to acquire Cobalt" and Mesplou "sold all of the Cobalt stock and options which he had purchased ..." When the SEC investigated his trades, he lied. See also, Plea Agreement and release. The associate is no longer with the firm.
Internet Pyramid Scheme
3/12. The FTC filed a complaint [PDF] in U.S. District Court (DAriz) against an Internet mall named, and two of its founders, Mark Tahiliani and Harry Tahiliani, alleging violation of the Federal Trade Commission Act for engaging in deceptive acts, and an illegal pyramid scheme. Bigsmart sold investments in Internet theme malls. It claimed that investors would earn substantial income from commissions on products purchased through the Internet. However, defendants structured the scheme so that for investors to realize continued financial gains, they would have to recruit other investors. The FTC and the defendants also reached a settlement of the case, in which defendants agreed to pay consumer redress, post a bond, and agree not to operate any more pyramid schemes. See, Stipulated Final Order Approving Settlement Agreement [PDF]. See also, FTC release.
House Policy Committee
3/27. House Speaker Dennis Hastert (R-IL) and Rep. Chris Cox (R-CA) announced the chairmen, membership, and jurisdiction of seven subcommittees of the House Policy Committee. This committee serves the House Republican leadership as a forum for discussion of legislative initiatives, for the enunciation of official priorities, and for the resolution of jurisdictional policy disputes. Rep. Cox is Chairman of the Committee. One of the seven subcommittees is name Biotechnology, Telecommunications, and Information Technology; its Chairman will be Rep. Jerry Weller (R-IL). Its jurisdiction includes biomedical research, development, and technology; telecommunications, the Internet, and information technology; intellectual property; astronautical research and development; scientific research and development; and the activities of the NIST, the NASA, the NSF, the FCC, the FDA, and the FTC. It other members will be Barbara Cubin (R-WY), Tom Davis (R-VA), Ernie Fletcher (R-KY), Vito Fossella (R-NY), Bob Goodlatte (R-VA), Felix Grucci (R-NY), Darrell Issa (R-CA), Deborah Pryce (R-OH), Nick Smith (R-MI), Cliff Stearns (R-FL), John Sununu (R-NH), Billy Tauzin (R-LA), John Thune (R-SD), and Dave Weldon (R-FL). See, complete list [PDF] of subcommittees, chairmen, and memberships.
More News
3/27. The ITAA and Unisys stated that they conducted a poll of public opinion on modernization of voting technology. They stated that "only 39% believed that the Internet should be used to allow people to vote." See, ITAA release.
3/27. Edward Kientz was named Chairman of the Telecommunications Industry Association's Board of Directors. The TIA is a trade association involved in communications and information technology industry policy and standards setting. See, release. Kientz is President of Benner-Nawman, the inventor of the aluminum and glass phone booth.
3/27. The National Telephone Cooperative Association gave Sen. Blanche Lincoln (D-AR) its Congressional Leadership Award at its Annual Legislative Conference in Washington DC. Sen. Lincoln gave an address at the meeting.
3/26. Three defendants plead guilty in U.S. District Court (NDCal) in a case involving two Fremont computer component distribution businesses that sold stolen computer components. However, the Defendants plead to crimes associated with their laundering of proceeds. Paul Chen plead guilty to one count of money laundering conspiracy, in violation of 18 U.S.C. § 1956(h), and one count of filing a false income tax return in violation of 26 U.S.C. § 7206(1). Chiu-Mei Chen plead guilty to wire fraud and aiding and abetting, in violation of 18 U.S.C. §§ 1343 & 2, and filing a false income tax return in violation of 26 U.S.C. § 7206(1). Tony Ip pled guilty to one count of money laundering conspiracy, in violation of 18 U.S.C. § 1956(h). Charges against three other defendants are still pending. Joseph Sullivan, of the U.S. Attorney's Office Computer Hacking and Intellectual Property Unit, is prosecuting the case. See, release
3/27. Sen. Conrad Burns (R-MT) and Sen. Ron Wyden (D-OR) introduced a bill titled the CAN-SPAM Act. See, Burns release. On March 28, the House Commerce Committee is scheduled to mark up HR 718, the Unsolicited Commercial Electronic Mail Act of 2001, sponsored by Rep. Heather Wilson (R-NM) and Rep. Gene Green (D-TX). HR 718 was marked up by the House Telecom Subcommittee last week. The House Judiciary Committee also has jurisdiction.
Free Trade
3/27. President George Bush gave a speech in Kalamazoo, Michigan, in which he advocated free trade. He stated: "When economy slows down, protectionist pressures tend to develop. We've seen this happen before, and it could happen again. So I want to say this as clearly as I can: Trade spurs innovation; trade creates jobs; trade will bring prosperity."
Fast Track
3/27. Sen. Charles Grassley (R-IA) released a statement [PDF] in which he said that "Sometime this year Congress will decide whether or not to renew the President's trade negotiating authority. The decision will be to move forward and open new markets for America’s farmers, entrepreneurs and service providers or to take a back seat to our competitors. I'll do all I can to see that we continue to move forward." Sen. Grassley is Chairman of the Senate Finance Committee, which has jurisdiction over this legislation.
3/27. House Majority Leader Dick Armey (R-TX) gave a speech on fast track trade negotiating authority. He stated: "The votes are there in the House, and I suspect in the Senate as well, and we should just go ahead and do it," Armey told a March 27 luncheon of the Emergency Committee for American Trade, a pro-trade lobbying group. See, State Dept. release.
3/21. Sen. Chris Dodd (D-CT) introduced S 586, the Chile Fast Track Act of 2001, a bill to authorize negotiation for the accession of Chile to the North American Free Trade Agreement, and to provide for fast track consideration. It has been referred to the Senate Finance Committee. On January 22 Sen. Phil Gramm (R-TX) introduced S 136, the Fast Track Trade Negotiating Authority Act. On March 22 Sen. Pat Roberts (R-KS) introduced S 599, the Permanent Trade Promotion Authority and Market Access Act of 2001.
The House will consider the Budget Resolution for FY 2002 and HR 6, the Marriage Penalty and Family Tax Relief Act of 2001.
The Senate will continue its debate of S 27, the campaign bill sponsored by Sen. John McCain (R-AZ).
March 28-30. The American Bar Association's Antitrust Section will hold its annual spring meeting. See, agenda. Location: JW Marriott Hotel, 1331 Pennsylvania Ave., NW, Washington DC.
9:00 AM. The NTCA will host a press breakfast. The speaker will be Mike Rawson (telecom advisor to Sen. Conrad Burns) and Earl Owens (CEO of the Blackfoot Telephone Cooperative). RSVP to Aaryn Slafky at 703-351-2087 or
10:00 AM. The NTCA will host a panel discussion on regulatory issues at its Annual Legislative Conference. The panelists will be Dorothy Attwood (Chief of the FCC's Common Carrier Bureau), David Solomon (Chief of the FCC's Enforcement Bureau), James Schlichting (Deputy Chief of the FCC's Wireless Telecommunications Bureau), Brad Ramsay (General Counsel of the NARUC), and Warren Hight (Manager of SRT Communications, ND). Location: Hyatt Regency Washington, 400 New Jersey Ave., NW, Washington DC.
10:00 AM. Oral Argument before the Supreme Court of the U.S. in NYT v. Tasini, No. 00-201.
CANCELLATION. The FCC's Technological Advisory Council meeting, which has been scheduled for 10:00 AM, was cancelled. See, notice of cancellation in Federal Register.
10:00 AM. The House Commerce Committee will mark up HR 718, the Unsolicited Commercial Electronic Mail Act of 2001, sponsored by Rep. Heather Wilson (R-NM). Location: Room 2123, Rayburn Building.
10:30 AM. FTC Chairman Robert Pitofsky will participate in the American Bar Association's Antitrust Section's Council Meeting. Location: JW Marriott Hotel, 1331 Pennsylvania Ave., NW, Washington DC.
1:45 PM. FTC Commissioner Mozelle Thompson will speak at the American Bar Association's Antitrust Section's annual meeting. Location: JW Marriott Hotel, 1331 Pennsylvania Ave., NW, Washington DC.
About Tech Law Journal
Tech Law Journal is a free access web site and e-mail alert that provides news, records, and analysis of legislation, litigation, and regulation affecting the computer and Internet industry. This e-mail service is offered free of charge to anyone who requests it. Just provide TLJ an e-mail address.

Number of subscribers: 1,077.

Contact: 202-364-8882; E-mail.
P.O. Box 15186, Washington DC, 20003.

Privacy Policy

Notices & Disclaimers

Copyright 1998 - 2001 David Carney, dba Tech Law Journal. All rights reserved.