| Implied in Fact Contract
Claims not Preempted by Copyright Act |
7/6. The U.S.
Court of Appeals (6thCir) issued its opinion
in Wrench v.
Taco Bell, a case involving preemption of state
law contract and tort remedies by the federal Copyright Act.
Background. The plaintiffs, Wrench LLC and its two
principals, are the creators of a cartoon character named
"Psycho Chihauhua." Following discussions with the
plaintiffs, the defendant, Taco Bell, began an ad campaign
featuring a Chihuahua dog similar to that developed by
plaintiffs, but without plaintiffs' permission. Plaintiffs
filed a complaint in U.S. District Court (WDMich)
against Taco Bell, based upon diversity of citizenship, in
which they plead various implied contract and tort causes of
action.
District Court Opinions. The trial court issued three
opinions. It granted summary judgment to Taco Bell on the
grounds that the Copyright Act preempted all of the claims,
including those based on breach of an implied in fact
contract. The trial court also held that plaintiffs' concept
lacked the novelty necessary to sustain their claims. (See,
1998 WL 480871, 36 F. Supp. 2d 787, and 51 F. Supp. 2d
840.)
Appeals Court. The Appeals Court reversed. The
preemption language of the Copyright Act, found at § 301,
provides that a state common law or statutory claim is
preempted if the work is within the scope of the "subject
matter of copyright," as specified in §§ 102
and 103, and, the rights granted under state law are
equivalent to any exclusive rights within the scope of federal
copyright as set out in § 106.
The Appeals Court held that neither the subject matter nor
equivalency prongs of the test were satisfied, and hence,
there is no preemption. It held that since the plaintiffs'
claims pertain to intangible ideas and concepts, they do not
come within the subject matter of copyright; § 102(b)
expressly excludes intangible ideas and concepts. It also held
that an implied in fact contract claim under Michigan law
contains the additional element of expectation of
compensation, which is not an element of a § 106 claim,
and hence, not equivalent. The Appeals Court also held that
the Michigan Courts would not impose a novelty requirement in
an implied in fact contract claim. |
|
|
| James Condemns EU Action on
GE Honeywell Merger |
7/3. The EU announced that it is blocking GE's acquisition
of Honeywell. It asserted that antitrust is the basis. See, EU
release. U.S. Assistant Attorney General in charge of the
Antitrust Division, Charles James, promptly condemned the
action as protectionist, rather than antitrust based.
James issued the following statement.
"Having conducted an extensive investigation of the
GE/Honeywell acquisition, the Antitrust Division reached a
firm conclusion that the merger, as modified by the remedies
we insisted upon, would have been procompetitive and
beneficial to consumers. Our conclusion was based on findings,
confirmed by customers worldwide, that the combined firm could
offer better products and services at more attractive prices
than either firm could offer individually. That, in our view,
is the essence of competition. The EU, however, apparently
concluded that a more diversified, and thus more competitive,
GE could somehow disadvantage other market participants.
Consequently, we appear to have reached different results from
similar assessments of competitive conditions in the affected
markets. Clear and longstanding U.S. antitrust policy holds
that the antitrust laws protect competition, not competitors.
Today's EU decision reflects a significant point of
divergence. For years, U.S. and EU competition authorities
have enjoyed close and cooperative relations. In fact, there
were extensive consultations in this matter throughout the
entire process. This matter points to the continuing need for
consultation to move toward greater policy convergence." |
|
|
| Bush Picks Mueller for FBI
Director |
7/5. President Bush nominated Robert Mueller to be Director
of the FBI. He was
acting Deputy Attorney General for the Department of Justice from
January through May of 2001. Before that he was the U.S.
Attorney for the Northern District of California, which
includes the Silicon Valley / San Francisco area. Prior to
that he was Chief of the Homicide Section of the U.S.
Attorney's Office for the District of Colombia. He was also
the Assistant Attorney General in charge of the Criminal
Division during the administration of the elder President
Bush. See also, statement
by President Bush and statement
by Attorney General John Ashcroft.
Members of Congress were quick to criticize the FBI, but not
Mueller. Sen. Pat Leahy
(D-VT), the Chairman of the Senate Judiciary
Committee, stated in a release
that "The new FBI director will inherit an agency with
superb resources and capabilities, but it is also an agency
beleaguered by a series of high-profile mistakes and by a
culture that too often does not recognize and correct its
errors. It will be the committee's job to determine if Mr.
Mueller is the right person for the job." The Committee
has jurisdiction over this nomination. Also, Sen. Charles Grassley
(R-IA), another member of the Senate Judiciary Committee,
stated in a release
that he will meet with Mueller on Monday, July 9. He stated
that "I look forward to sitting down with Mr. Mueller and
talking about the systemic problems I've identified with the
FBI and the kinds of dramatic reforms that must be made in
order to restore public confidence in federal law
enforcement". Rep.
Bob Barr (R-GA), a member of the House Judiciary
Committee, stated in a release
that "The FBI is an agency, that in recent years, has
grown too powerful with too little oversight; and as a result,
has lost much confidence of the American people." |
|
|
| Privacy News |
7/3. The ACLU sent a letter
to the FTC asking it to
investigate Eli Lilly
for inadvertently using the "to" line to address an
e-mail to hundreds of users of the anti depressant drug
Prozac, thereby disclosing the e-mail list to those on the
list. See also, ACLU
release.
The Senate Commerce
Committee, which is now Chaired by Sen. Ernest Hollings
(D-SC), has scheduled a hearing on Internet privacy for
Wednesday, July 11, at 9:30 AM. See, release. |
|
|
| New Documents |
Moore: speech
re hooligans who attempt to disrupt WTO meetings, 7/6 (HTML,
WTO).
Moore: speech
re new round of trade negotiations, 7/5 (HTML, WTO).
USCA:
opinion
in Hoffman v. LA Magazine re IP rights and the First
Amendment, 7/6 (PDF, USCA).
USCA:
opinion
in Wrench v. Taco Bell re preemption under the federal
Copyright Act, 7/6 (HTML, USCA).
USCA:
opinion
in NPR v. FCC re noncommercial educational broadcast licenses,
7/3 (HTML, USCA).
USCA:
opinion
in In Re Digi International Securities Litigation re pleading
securities fraud, 7/5 (PDF, USCA).
USCA:
opinion
in Building Owners and Managers Assoc. Intl. v. FCC re OTARD
rule, 7/6 (HTML, USCA).
USCA:
opinion
re False Claims Act, 7/5 (PDF, USCA).
USCA:
opinion
in US West v. Washington re reciprocal compensation, 7/3 (PDF,
USCA).
Tauzin:
letter
to Rep. Dreier re Torricelli amendment, 7/6 (HTML, HCC).
ICANN:
Third
Status Report to the Department of Commerce, 7/3 (HTML,
ICANN). |
|
|
|
| First Amendment Trumps IP
Rights in Tootsie Case |
7/6. The U.S.
Court of Appeals (9thCir) issued its opinion
[PDF] in Hoffman
v. LA Magazine, reversing the District Court's
holding that the LA Magazine
had misappropriated actor Dustin Hoffman's name and likeness
by publishing a fake photo of him in women's cloths. The
Appeals Court invoked New
York Times v. Sullivan, the landmark First Amendment case
protecting serious journalism, to insulate a publisher of a
fake celebrity photo from intellectual property claims. While
the suit is over publication of a computer altered photo of
Hoffman, the intellectual property issues involved in the case
will affect a broad range of other fact patterns.
Facts. Dustin Hoffman starred in a 1982 movie titled
"Tootsie" in which he played the part of a straight
man who dressed up as a woman to get an acting job. In 1997 LA
Magazine (LAM) published an altered photograph from the movie.
It did not obtain the permission of either Hoffman or the
copyright holder, Columbia pictures. LAM used computer
technology to alter a still photograph from the movie to
depict Hoffman in a Richard Tyler gown and Ralph Lauren heels.
The caption referenced the Lauren heels; Lauren advertised in
the same issue.
Complaint. Hoffman filed a complaint in California
state court against LAM's parent company, Capital Cities/ABC
(now ABC), alleging that LAM's publication of the altered
photograph misappropriated Hoffman's name and likeness in
violation of the California common law right of publicity, the
California statutory right of publicity (Civil Code § 3344),
the California unfair competition statute (Business and
Professions Code § 17200), and the federal Lanham Act (15
U.S.C. § 1125(a)). The defendant removed the case to U.S.
District Court (CDCal).
Hoffman later added LAM as a defendant.
District Court. The District Court held for Hoffman on
all claims against LAM. It also rejected LAM's First Amendment
defense, holding that the "First Amendment does not
protect the exploitative commercial use of Mr. Hoffman's name
and likeness." The Court also awarded Hoffman $1.5
Million in compensatory damages and $1.5 Million in punitives.
Appeals Court. A three judge panel of the Ninth Circuit
reversed, and directed that judgment for LAM be entered. In
many recent cases defendants have sought unsuccessfully to
avoid the consequences of intellectual property laws by
invoking the First Amendment clause protecting "freedom
of speech or of the press". However, in this case, the
Court reversed on First Amendment grounds. The Court held that
the publication of the picture in question was not commercial
speech. It further held that since Hoffman is a public figure,
he could only prevail by showing actual malice, that its,
"reckless disregard for the truth" or a "high
degree of awareness of probable falsity", pursuant to New
York Times v. Sullivan, 376 U.S. 254 (1964). But, the Court
reasoned, there was no falsity, because the LAM article stated
that the photo was a fake. Robert Boochever wrote the opinion;
Wallace Tashima and Richard Tallman joined. |
|
|
| 9th Circuit Construes False
Claims Act |
7/5. The U.S.
Court of Appeals (9thCir) issued its opinion
[PDF] in Seal
1, federal False Claims Act case. Abraham Gale
worked for ten weeks for Packard-Bell NEC (PBNEC) before being
fired. He then filed a qui tam action against that company
under the False Claims Act (FCA),
alleging that it had committed fraud by selling computers to
the government as new even though they contained used parts.
The government declined to intervene. Gale then learned from
government investigators that Zenith may have been involved in
the same type of fraud as PBNEC; he then filed a separate FCA
action against Zenith. The District Court held that it did not
have jurisdiction over Gale's FCA claim against Zenith. The
Appeals Court affirmed on the basis that Gale was not the
original source of the information against Zenith.
The False Claims Act is a statute designed to give
"whistle blowers" an incentive to disclose fraud
upon the government. It allows parties who bring qui tam
actions, as "relators" on behalf of the government,
to share in the recovery. The Appeals Court noted that
"The compensation available to relators, however,
encourages parasitic lawsuits in which those with no
independent knowledge of fraud use information already
available to the government to reap rewards for themselves
without exposing any previously unknown fraud." |
|
|
| DC Circuit Upholds OTARD
Order |
7/6. The U.S.
Court of Appeals (DCCir) issued its opinion
in Building
Owners and Managers Assoc. Intl. v. FCC, a
petition for review of the FCC's rule
prohibiting restrictions on certain over the air reception
devices (aka OTARD) that are designed to receive direct
broadcast satellite service, video programming services via
multipoint distribution services, or TV broadcast signals.
Several trade associations challenged the FCC's order on the
grounds that it exceeds the statutory authority of the FCC,
constitutes an unconstitutional taking, and is arbitrary and
capricious. Petition denied.
Judge Rogers wrote the opinion, in which Randolph and Garland
concurred. In addition, Randolph wrote a separate concurance
to state that he would have overruled Bell Atlantic v. FCC, 24
F.3d 1441 (D.C. Cir. 1994). |
|
|
| 8th Circuit Rules in Digi
International Securities Case |
| 7/5. The U.S.
Court of Appeals (8thCir) issued its unpublished opinion
[PDF] in In
Re Digi International Securities Litigation, a
consolidation of securities fraud actions. The numerous
plaintiffs' complaints allege violation of §§ 10(b) and
20(a) of the Securities Exchange Act of 1934, and other causes
of action. Plaintiffs alleged fraud by Digi International and
three of its former officers for artificially and fraudulently
inflating Digi's earnings by improperly accounting for Digi's
investments in AetherWorks. Defendants moved to dismiss the
complaints for failure to plead fraud with particularity
pursuant to FRCP 9(b) and the Private Securities
Litigation Reform Act (PSLRA), and for failure to state a
claim pursuant to FRCP 12(b)(6). The District Court
dismissed some claims prior to discovery, and others in a
second ruling after discovery. Plaintiffs appealed. The
Appeals Court affirmed with little explanation. However, the
Appeals Court did comment on the meaning of scienter. |
|
|
| NPR v. FCC |
| 7/3. The U.S.
Court of Appeals (DCCir) issued its opinion
in NPR
v. FCC, a petition for review of an FCC order
regarding noncommercial educational broadcast licenses.
The Appeals Court vacated the FCC's determination that
noncommercial educational broadcast applications are subject
to auction when the applicant applies to operate on a channel
that has not been reserved for noncommercial educational
stations. |
|
|
| 9th Circuit Reverses Recip
Comp Determination |
| 7/3. The U.S.
Court of Appeals (9thCir) issued its opinion
[PDF] in US West v. Washington,
an appeal of a District Court summary judgment affirming a
Washington state reciprocal compensation arbitration
determination. Washington concluded that AT&T Wireless
should be compensated at the lower end-office rate for US West
traffic terminating on its network, rather than at the higher
tandem rate. US West filed a complaint in U.S. District
Court (WDWash) seeking review of the arbitration
determination. AT&T counterclaimed. The District Court
upheld the arbitration determination. The Appeals Court
reversed. |
|
|
|
| WTO Chief Condemns
"Anti Globalization Dot Com Types" |
7/6. WTO Director General
Mike Moore gave a speech
in Geneva, Switzerland, titled "Open Societies, Freedom,
Development and Trade". It was a condemnation of the
hooligans who use violence to try to stop WTO meetings from
taking place. He criticized the "mindless, undemocratic
enemies of the open society who have as a stated aim the
prevention of Ministers and our leaders from even
meeting."
However, Moore also stated that "It would strengthen the
hand of those who seek change if NGOs distance themselves from
masked stone-throwers who claim to want more transparency,
anti-globalization dot.com-types who trot out slogans that are
trite, shallow and superficial. This will not do as a
substitute for civilized discourse." He did not explain
what he meant by the phrase "anti-globalization dot.com-types."
7/5. DG Moore also gave a speech
in Interlaken, Switzerland, in which he again advocated a new
round of multilateral trade negotiations. |
|
|
| Monday, July 9 |
11:00 AM. The U.S.
International Trade Commission will hold a meeting. The agenda
includes Document No. GC-01-068 in Inv. No. 337-TA-455,
regarding certain network interface cards and access points
for use in direct sequence spread spectrum wireless local area
networks. Location: USITC, Room 101, 500 E Street SW,
Washington DC.
12:00 NOON. The Senate will reconvene following the July
Fourth recess. It will take up S 1077, the supplemental
appropriations bill. |
|
|
| Tuesday, July 10 |
12:00 NOON - 1:30 PM. The Internet
Education Foundation (501(c)(3) affiliated with the
Congressional Internet Caucus Advisory Committee) will host a
panel discussion on the Markle Foundation's study titled
"Toward a Framework for Internet Accountability."
The speakers will be Zoe Baird (Markle Foundation) and Stan
Greenberg (Greenberg, Quinlan, and Rosner Research). Lunch
will be served. RSVP to Danielle at RSVP@neted.org or
202-638-4370. Location: Reserve Officers Association, One
Constitution Ave, NE, Washington DC.
2:00 PM. The House reconvenes following its July 4 recess. The
House will consider several non tech related measures under
suspension of the rules.
2:00 PM. The House
Ways and Means Committee's Subcommittee on Trade will hold
a hearing on renewal of Normal Trade Relations with the
People's Republic of China. Location: Room B-318 Rayburn
Building. |
|
|
| People and Appointments |
7/3. Kevin
Martin was sworn in as an FCC
Commissioner. His term ends June 30, 2006. His prior
experience includes being an associate at the Washington DC
law office of Wiley Rein &
Fielding, advisor to former Commissioner Harold Furchtgott-
Roth, and aide to George W. Bush. See, FCC
release.
7/2. Daniel Lungren joined the law firm of Venable Baetjer as a
partner. He represented Los Angeles County and Orange County
in the U.S. House of Representatives from 1979 through 1989.
He was a member of the House Judiciary Committee. He was also
California Attorney General from 1991 through 1999. See, Venable
release.
7/5. Seth Waxman joined the Washington DC office of the
law firm of Wilmer Cutler
& Pickering as a partner. He was previously Solicitor
General of the United States. See, release.
7/3. President Bush announced his intent to nominate Phil
Bond to be Under Secretary of Commerce for Technology.
This office oversees the National
Institute of Standards and Technology and the National Technical Information
Service. He is currently director of Hewlett Packard's Federal Public
Policy Programs. Bond was Chief of Staff to Rep. Jennifer Dunn
(R-WA) from 1993 to 1998. See, White
House release and HP
release.
7/3. President Bush announced his intent to nominate Clifford
Sobel to be Ambassador to the Netherlands. Sobel is
Chairman of Net2Phone,
a provider of Internet telephony service. See, WH
release. He is also a major Republican political
contributor.
7/4. The partners of the Canadian law firm of Gowling Lafleur Henderson
and the Toronto based Smith Lyons voted to merge their
operations, effective September 1, 2001. See, release. |
|
|
| Torricelli Amendment |
7/6. Rep. Billy
Tauzin (R-LA), Chairman of the House Commerce Committee,
and Rep. Fred Upton
(R-MI), Chairman of the Telecom Subcommittee, wrote a letter
to Rep. David Dreier
(R-CA), Chairman of the House
Rules Committee, regarding the Torricelli amendment. This
is an amendment to the McCain Feingold campaign finance bill
that imposes a new lowest unit charge rule on broadcasters,
cable operators, and satellite providers. Tauzin and Upton
requested that the Rules Committee craft a rule that would
delete the provision from the base text of the Shays Meehan
bill, yet permit its proponents to offer an amendment on the
House floor.
On June 28, 2001, the House
Administration Committee reported two bills. HR
2360, sponsored by Rep. Robert Ney (R-OH) and Rep. Al Wynn
(D-MD), was reported favorably. HR
2356, sponsored by Rep. Chris Shays (R-CT) and Marty
Meehan (D-MA), was reported unfavorably. HR 2356 more closely
resembles S
27, the McCain Feingold bill, which passed the Senate on
April 2 after a long and contentious debate. It contains the
Torricelli amendment.
Sen. Robert Torricelli
(D-NJ) is an unlikely sponsor of campaign finance reform
legislation. Torricelli, and current and former staff members,
are currently being investigated by U.S. Attorney Mary Jo
White (SDNY) for
violation of campaign finance laws. Several persons have
already plead guilty to making illegal contributions to his
campaign. |
|
|
| More News |
7/3. The ICANN
released its Third
Status Report to the Department of Commerce regarding the
transfer of responsibility for functions involving the
technical management of the Internet from the U.S. Government
and its contractors to the private sector.
7/3. The FTC filed a complaint
in U.S. District Court (DUtah)
against Christopher Enterprises alleging violation of the
Federal Trade Commission Act in connection with marketing of
unproven herbal health products via the Internet and other
media. The parties simultaneously filed a Stipulated
Order for Preliminary Injunction. See also, FTC
release. |
|
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