Tech Law Journal Daily E-Mail Alert
August 7, 2001, 9:00 AM ET, Alert No. 243.
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McAfee Granted Patent Related to Selling Software over the Internet
7/24. The USPTO granted U.S. Patent No. 6,266,774 to McAfee titled "Method and system for securing, managing or optimizing a personal computer." It discloses a "system, method, and computer program product for delivery and automatic execution of security, management, or optimization software over an Internet connection to a user computer responsive to a user request entered via a web browser on the user computer."
McAfee P/CEO Srivats Sampath said in a release on August 6 that "this patent further reinforces our belief that the future lies in software applications being delivered online as web services to users around the world. This patent also reinforces our first mover advantage by securing our foothold in this space." Sampath and others are the inventors; McAfee is the assignee of the patent.
GAO Releases Report on On-Line Securities Trading
8/6. The GAO released a report [PDF] titled "On-Line Trading: Investor Protections Have Improved but Continued Attention Is Needed". The report, which was prepared for Rep. John Dingell (D-MI) and Rep. Ed Markey (D-MA), addresses progress being made by broker dealer web sites regarding investor privacy, trade execution, margin risk, trading risk, and the potential for service disruptions. The report found that the number of complaints, relative to the number of on line trades, declined from 1999 to 2000.
The report also recommended that the SEC (1) "work with the securities industry to establish a consistent and meaningful measure for outages and delays and ensure that broker- dealers maintain consistent records of system outages and delays, and disclose the potential for service disruption on their Web sites"; (2) "take steps to ensure broker- dealers disclose additional information related to investor protection on their Web sites"; and (3) "monitor the extent to which broker- dealers accept OCIE recommendations on disclosing trading risk, potential for systems outages and failures, and protecting investor records and information. If SEC finds that broker-dealers are not incorporating such recommended practices, we recommend that SEC's Acting Chairman consider further rulemaking in these areas."
Appeals Court Decisions
8/6. The U.S. Court of Appeals (3rdCir) issued its opinion in Newton v. Merrill Lynch, a case involving class certification under FRCP 23 in cases involving allegations of violation of federal securities laws.
8/6. The U.S. Court of Appeals (1stCir) issued its opinion in Yankee Candle v. Bridgewater Candle, a case involving claims of copyright infringement, trade dress infringement, tortious interference, and deceptive trade practices. The dispute involved candle fragrance labels. Affirmed.
New Documents
FCC: motion for stay in NextWave v. FCC, 8/6 (HTML, TLJ).
GAO: report re on-line securities trading and investor protections, 8/6 (PDF, GAO).
USCA: opinion in Newton v. Merrill Lynch re class certification in securities litigation, 8/6 (HTML, USCA).
USCA: opinion in Yankee Candle v. Bridgewater Candle re copyright infringement, 8/6 (HTML, USCA).
FCC May Petition for Writ of Certiorari in NextWave Case
8/6. The FCC filed a motion with the U.S. Court of Appeals (DCCir) in the NextWave v. FCC. The motion is titled "Motion to Stay the Mandate Pending the Filing of a Petition for a Writ of Certiorari." It states that the "Acting Solicitor General authorized the FCC on August 6, 2001, to file a petition" for writ of certiorari to review the Appeals Court's June 22 opinion holding that the FCC is prevented from canceling NextWave's spectrum licenses by the Bankruptcy Code. The FCC's motion further requests that the U.S. Court of Appeals "stay issuance of the mandate in this case pending the government's filing of a petition for a writ of certiorari in the Supreme Court."
Background. This is a continuation of the seemingly never ending litigation deriving from the FCC's bungled management of the C Block auctions. NextWave obtained spectrum licenses at FCC auctions in 1996. The FCC permitted NextWave to obtain the licenses then, and later make payment under an installment plan, thus creating a debtor creditor relationship between NextWave and the FCC. NextWave did not make payments required by the plan, and filed a Chapter 11 bankruptcy petition. The FCC, which usually acts as though the Communications Act of 1934 is the only legal authority which constrains its actions, cancelled the licenses. However, the FCC was blocked by the bankruptcy court, citing  525 of the Bankruptcy Code. The U.S. District Court (SNDY) affirmed. The U.S. Court of Appeals (2ndCir) issued its order reversing and remanding the case on Nov. 24, 1999; it issued its opinion explaining its reversal in May 2000. The FCC then re- auctioned this spectrum to Verizon Wireless, Voice Stream and other successful bidders, which intend to use it for third generation wireless, and other, services.
Opinion of the DC Circuit.  NextWave petitioned the FCC to reconsider its cancellation of its licenses. The FCC refused, and NextWave petitioned for review by the Court of Appeals in the District of Columbia. The DC Circuit ruled on June 22 that the 2nd Circuit had not already addressed NextWave's bankruptcy claims. It wrote that the FCC is prevented from canceling the spectrum licenses pursuant to  525 of the Bankruptcy Code. It wrote that the FCC "violated the provision of the Bankruptcy Code that prohibits governmental entities from revoking debtors' licenses solely for failure to pay debts dischargeable in bankruptcy. The Commission, having chosen to create standard debt obligations as part of its licensing scheme, is bound by the usual rules governing the treatment of such obligations in bankruptcy."
Chairman Powell. FCC Chairman Michael Powell released a statement in which he said that "I welcome the decision today by the Justice Department to support our appeal of the NextWave case to the Supreme Court. High Court review will protect the integrity of the FCC's auctions program, which Congress has chosen as the best method of assigning scarce and precious spectrum resources to those that will put them to their most productive use. Through this appeal, I also hope the Court will clarify how the important public policy goals of the Bankruptcy Code should interact with the equally important public policy goal of ensuring that spectrum is used for the benefit of the American people. The FCC's petition for a writ of certiorari is due to be filed on September 22nd."
Consequences. The FCC's management of this spectrum, and the resulting litigation, have created considerable regulatory uncertainty, delayed the use of valuable spectrum, and delayed the deployment of new technologies that might use this spectrum. Moreover, even if the claims of NextWave and the re-auction winners are settled, or resolved by the courts, it is hypothetically possible that other communications companies that did not participate in the auction will bring legal challenges to the FCC's handling of this process.
People and Appointments
8/6. Paul Margie will become legal advisor to FCC Commissioner Michael Copps for spectrum and international issues, effective August 20, 2001. Margie is currently Senior Commerce Counsel for Sen. John Rockefeller (D-WV), a senior member of the Senate Commerce Committee. He is also an Adjunct Professor of Law at Georgetown University (GU), where he co-teaches a course titled Law in Cyberspace. He previously worked at the Washington DC law firm of Wiley, Rein & Fielding, in its communications and technology law practice groups. See, GU bio.
8/3. The Senate confirmed Jon Huntsman to be a Deputy United States Trade Representative. See, USTR release.
Tuesday, August 7
10:00 AM. The U.S. Court of Appeals for the Federal Circuit will hear oral argument in Xerox v. 3Com, No. 00-1464, a patent infringement case involving handwriting recognition software. Location: Courtroom 402, 717 Madison Pl., NW, Washington DC.
10:00 AM. The U.S. Court of Appeals for the Federal Circuit will hear oral argument in Taiwan Semiconductor v. ITC, No. 01-1060. Location: Courtroom 402, 717 Madison Pl., NW, Washington DC.
12:00 NOON. The USPTO's Commissioner for Trademarks, Anne Chasser, will be available online to answer questions from the agency's customers and the public on issues related to the work of the USPTO. See, notice.
Wednesday, August 8
1:00 PM. There will be a press conference titled "Surveillance vs. Privacy." For more information, contact David Saddler of the Security Industry Association at 703-683-0276. Location: National Press Club, Murrow Room, Washington DC.
Thursday, August 9
9:30 AM. The FCC will hold a meeting. See, agenda. Location: FCC, 445 12th Street, SW, Room TW- C305.The agenda includes the following:
  A Third Notice of Inquiry concerning the availability of advanced services pursuant to Section 706 of the Telecom Act in preparation for its Third Report on the Deployment of Advanced Telecommunications Capability to all Americans. (CC Docket No. 98-146)
  The Commission will consider a Memorandum Opinion and Order and Further Notice of Proposed Rule Making exploring additional frequency bands below 3 GHz to support the introduction of advanced wireless service, resolving in part petitions for reconsideration of 2 GHz MSS band arrangements, and addressing petitions for rulemaking concerning the 2 GHz MSS and Unlicensed PCS bands.
9:30 AM. There will be a panel discussion titled "Perspectives on China's Accession Into the WTO." Location: National Press Club, Washington DC. The speakers will be Rick Dunham (Business Week), Pieter Bottelier (Harvard University), Will Martin (World Bank), Don Phillips, and James Tsao (Journal of Asian Economics).
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