Tech Law Journal Daily E-Mail Alert
April 19, 2001, 8:00 AM ET, Alert No. 169.
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Pretexting
4/18. The FTC filed three complaints in U.S. District Courts alleging unfair or deceptive practices under the Federal Trade Commission Act, and using false pretenses to obtain customer financial information from financial institutions under the Gramm Leach Bliley Act. Each defendant offered for sale through their web sites, and by other means, consumer financial information obtained illegally through the practice known as pretexting. See,
  Complaint [PDF] in FTC v. Guzzetta dba Smart Data Systems (EDNY).
  Complaint [PDF] in FTC v. Information Search Inc. and David Kacala (DMd).
  Complaint [PDF] in FTC v. Garrett (SDTex).
The FTC's decision was controversial. Two of the five Commissioners, Orson Swindle and Thomas Leary, opposed the filing of these lawsuits. See, Swindle dissent and Leary statement. See also, FTC release.
Reciprocal Compensation
4/17. Rep. Billy Tauzin (R-LA), Chairman of the House Commerce Committee, sent letters to the several local telecommunications companies requesting detailed information related to their costs and revenues associated with servicing ISPs. The letters focus on the practice of reciprocal compensation. Section 251(b)(5) of the Telecom Act of 1996 provides that competing companies must pay certain charges to one another for calls that terminate on each other's networks. The letters request information regarding the reciprocal compensation revenue received by certain companies, including the amount, its percentage of total revenue, the percentage attributable to ISP bound traffic, and costs associated with generating it.
New Documents
CCA: opinion in Howard Gunty Profit Sharing Plan v. Superior Court re class action litigation, 4/18 (PDF, CCA).
Sachs: speech re cable, First Amendment, and must carry rules, 4/18 (HTML, NCTA).
Tauzin: letters to telecom companies re reciprocal compensation, 4/17 (HTML, TLJ).
FTC: complaint in FTC v. Smart Data Systems, complaint in FTC v. Information Search Inc., and complaint in FTC v. Garrett, all re pretexting, 4/18 (PDF, FTC).
Milberg: securities class action complaint against Winstar, 4/16 (PDF, Milberg).
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Patent Cases
4/18. The U.S. Court of Appeals (FedCir) issued its opinion in Electro Scientific v. General Scanning, a patent infringement case. Electro Scientific Industries (ESI) filed a complaint in U.S. District Court (NDCal) against General Scanning (GS) alleging infringement of U.S. Patent Nos. 5,265,114 and 5,473,624, both of which pertain to the use of lasers in the manufacture of integrated circuits. On summary judgment, the District Court held that GS literally infringed both patents. At trial, the jury awarded ESI $13,133,370 in damages for infringement of the '114 patent, but held the '624 patent invalid. GS then brought this appeal. The Court of Appeals affirmed.
4/18. The U.S. Court of Appeals (FedCir) issued its opinion in In Re Tsutomu Haruna and Sadao Kita. The Court of Appeals reversed the decision of the U.S. Board of Patent Appeals and Interferences that upheld the examiner's rejection of the sole claim in design patent application serial number 29/058,031. The sole claim of the '031 application is directed to an "ornamental design for a pre-recorded optical disk." The examiner rejected the claim as being unpatentable for obviousness.
Class Actions
4/18. The California Court of Appeal issued its opinion [PDF] in Howard Gunty Profit Sharing Plan v. Superior Court, a case regarding certification of a class representative in a state securities class action proceeding. The trial court held that the Howard Gunty PSP is a "professional plaintiff".
Winstar
4/18. Winstar, a competitive local exchange carrier (CLEC) which provides local and long distance voice, Internet access, and data transport, filed a Chapter 11 petition for bankruptcy in U.S. Bankruptcy Court (DDel). Winstar Ch/CEO William Rouhana stated that "We expect to emerge from the Chapter 11 process with a new balance sheet that has significantly less debt, thereby dramatically lowering our interest payments and providing us with more operating flexibility." See, Winstar release.
4/18. Winstar also filed a complaint in U.S. Bankruptcy Court (DDel) against Lucent. The complaint seeks damages for Lucent's alleged breach of its obligations under its strategic partnership agreement with Winstar, and specific performance of its alleged contractual obligations, including the payment of more than $90 million to Winstar. See, Winstar release.
4/16. Several plaintiffs filed a complaint [PDF] in U.S. District Court (SDNY) against Winstar and several of its officers and directors alleging violation of federal securities laws. Plaintiffs, who are represented by the law firm of Milberg Weiss, seek class action status. Count I alleges violation of  10(b) of the Exchange Act, and Rule 10b-5 thereunder, by all defendants. Count II alleges violation of  20(a) of the Exchange Act by the individual defendants. Milberg Weiss is a law firm the specializes in bringing class action lawsuits against high tech companies. The other class action law firms that have filed similar complaints include Shalov Stone & Bonner.
More News
4/18. Robert Sachs P/CEO of the NCTA gave a speech to the Media Institute in Washington DC titled "Cable, Broadcast and the First Amendment" in which he addressed "must carry" requirement.
4/17. Novell announced that it has settled its case against Academic Data Solutions and its principals, Ezra Natanely and Rachael Natanely. Novell brought suit in U.S. District Court (EDNY) against ADS in January of 1999 for copyright and trademark infringement for distributing counterfeit versions of Novell's NetWare software, and for using counterfeit Novell labels. See, release.
4/18. The ICANN published a notice in its web site regarding a proposal to change registrar application fees and annual registrar fixed accreditation fees. The ICANN will address this proposal on June 3 in a public forum at its next round of meetings in Stockholm, Sweden.
Rep. Mel Watt
4/18. The U.S. Supreme Court issued its opinion [PDF] in Hunt v. Cromartie, a case regarding the drawing of boundaries of Congressional districts. The case will be of great importance for redistricting following the 2000 census, which resulted in some states gaining seats, and others losing seats. However, it is also noteworthy that the district at issue in this case, the North Carolina 12th, is held by Rep. Mel Watt (D-NC). He is a senior member of the House Judiciary Committee, and the Ranking Member of its Commercial and Administrative Law Subcommittee. He has also been a proponent of legislation protecting the electronic privacy of individuals from incursions by federal law enforcement authorities. The Supreme Court upheld the oddly shaped 160 mile long district held by Rep. Watt.
Today
9:00 AM. FTC Commissioner Thomas Leary will give informal remarks at the Association of National Advertisers' Annual Washington Board of Directors Meeting. Location: Four Seasons Hotel, 2800 Pennsylvania Avenue, NW, Washington DC.
9:00 AM. The Department of Commerce's Bureau of Export Administration's Information Systems Technical Advisory Committee (ISTAC) will hold the second of two days of meetings. The ISTAC advises the Office of the Assistant Secretary for Export Administration on technical questions that affect the level of export controls applicable to information systems equipment and technology. See, notice in Federal Register, April 3, 2001, Vol. 66, No. 64, at Page 17683. Location: Hoover Building, Room 3884, 14th Street between Pennsylvania Ave. & Constitution Ave., NW., Washington DC.
9:30 AM. The Federal Communications Commission will hold a meeting. Location: Commission Meeting Room, 445 12th Street, SW, Washington DC. The agenda includes:
  Developing a Unified Intercarrier Compensation Regime. The Commission will consider a Notice of Proposed Rulemaking to explore ways of reforming existing intercarrier compensation rules.
  Amendment of Section 73.658(g) of the Commission's Rules -- The Dual Network Rule (MM Docket No. 00-108). The Commission will consider a Report and Order resolving the issues raised in the Notice of Proposed Rule Making.
  Status of the Digital Television Transition. The Commission will hear a presentation on the status of the transition from analog to digital television (DTV) broadcasting and the various actions and proceedings associated with the transition.
10:00 AM. The Federal Election Commission will meet to consider its draft advisory opinion regarding Morgan Stanley Dean Witter's plans to use a web site to authorize payroll deductions for political actions committees. MSDW submitted a Request for Advisory Opinion [PDF] requesting an opinion that it is permissible, pursuant to the E-SIGN Act, to use electronic signatures to authorize payroll deductions for the MSDW political action committee. The draft advisory opinion permits the activity, but does not rely upon the E-SIGN Act.
12:00 NOON. The Cato Institute will host a book forum titled "Are the Crypto Wars Over? Privacy, Digital Security and the Future of Encryption Policy." The speakers will be Steven Levy, author of Crypto: How the Code Rebels Beat the Government -- Saving Privacy in the Digital Age, and Bruce Schneier, author of Secrets and Lies: Digital Security in a Networked World. Location: Cato Institute, 1000 Massachusetts Avenue, NW, Washington DC.
Deadline to submit comments to the SEC on its proposed amendments to revise rules under the Investment Company Act of 1940 and the Investment Advisers Act of 1940 that permit registered investment companies and registered investment advisers to preserve required records using electronic storage media such as magnetic disks, tape, and other digital storage media, pursuant to the ESIGN Act. See, notice in the Federal Register, March 19, 2001, Vol. 66, No. 53, at Pages 15369 - 15373.