Tech Law Journal Daily E-Mail Alert
September 14, 2001, 9:00 AM ET, Alert No. 268.
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FCC Adopts Software Defined Radio Rules
9/13. The FCC adopted rule changes at its September 13 meeting to accommodate the authorization and deployment of a software defined radios (SDRs). The FCC released a statement, in which it wrote: "Software defined radios can be quickly reprogrammed to transmit and receive on multiple frequencies in different transmission formats. This reprogramming capability could change the way users traditionally communicate across wireless services and promote more efficient use of radio spectrum. In a software defined radio, functions that were formerly carried out solely in hardware, such as the generation of the transmitted radio signal and the tuning of the received radio signal, are performed by software. Because these functions are carried out in software, the radio is programmable, allowing it to transmit and receive over a wide range of frequencies and to emulate virtually any desired transmission format." (ET Docket 00-47.)
Michael Powell Addresses Events of September 11
9/13. FCC Chairman Michael Powell made a statement at the FCC's September 13 meeting regarding the events of September 11. He praised the work of telecom companies to maintain service in New York City, and stated that "I am confident that these efforts will continue to ensure the nation's communications infrastructure will operate effectively to serve the communications needs of our citizens and an efficient functioning economy."
Martin Names Bohigan to be Legal Advisor
9/13. FCC Commissioner Kevin Martin named Catherine Bohigian to be his Legal Advisor on cable and mass media issues. Like Martin, she previously worked in the Washington DC office of the law firm of Wiley Rein & Fielding. Prior to law school, she worked as a legislative analyst for Bellcore (now Telcordia Technologies), and as a program analyst for IBM governmental affairs. See, FCC release.
FCC Examines Ownership Rules
9/13. The FCC adopted, but did not release, a Further Notice of Proposed Rulemaking (FNPRM) to review its horizontal and vertical limits for cable companies. (CS Docket Nos. 98-82 and 96-85, and MM Docket No. 92-264.) See, FCC release. The FCC also adopted, but did not release, a NPRM to review its rule barring common ownership of a broadcast station and daily newspaper in the same market, and to consider whether or to what extent the rule should be revised. (MM Docket No. 01-235). See, FCC release.
BXA Issues Injunction for Exporting Computer Equipment to Terrorist States
9/13. The Bureau of Export Administration (BXA) published a notice in the Federal Register regarding its injunction against Infocom, its officers, and others, for selling computer equipment to Libya and Syria in violation of the Export Administration Regulations (EAR). The notice contains a full copy of the BXA's September 6 order, which provides, in part, that Infocom and others "may not, directly or indirectly, participate in any way in any transaction involving any commodity, software or technology (hereinafter collectively referred to as "item") exported or to be exported from the United States that is subject to the Export Administration Regulations (EAR), or in any other activity subject to the EAR ..." The notice further provides "notice to companies in the United States and abroad that they should cease dealing with Infocom ..." Infocom is based in Richardson, Texas. Its CEO is Bayan Medhat Elashi. Four other Elashis are covered by the order, as is Fadwa Elafrangi, the majority owner of Infocom. The order also covers Tetrabal Corporation, Inc. See, Federal Register, September 13, 2001, Vol. 66, No. 178, at pages 47630 - 47632.
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Offering Virtual Stocks Can Violate Securities Laws
9/13. The U.S. Court of Appeals (1stCir) issued its opinion in SEC v. SG Ltd, a case regarding whether virtual shares in an enterprise existing only in cyberspace fall are affected by the federal securities laws. The Appeals Court, applying SEC v. Howey, reversed the District Court's dismissal of the SEC's complaint.
Facts. SG operated a web site called StockGeneration that offered shares in eleven "virtual companies" listed on the web site's "virtual stock exchange." SG arbitrarily set the purchase and sale prices of each of these imaginary companies in biweekly "rounds," and guaranteed that investors could buy or sell any quantity of shares at posted prices. SG advertised that investing in one of the stocks was a "game without any risk" and that it "is supported by the owners of SG, this is why its value constantly rises; on average at a rate of 10% monthly". SG further stated that "capital inflow from new participants provided liquidity for existing participants who might choose to sell their virtual shareholdings". SG later sharply reduced the prices of shares, and suspended all pending requests to withdraw funds. Finally, SG asserted that the web site offerings were merely a "game".
SEC Complaint. The SEC filed a civil complaint in U.S. District Court (DMass) alleging violation of the registration and anti fraud provisions of the federal securities laws. Specifically, the SEC alleged offer, sale or delivery of unregistered securities in violation of the Securities Act of 1933 5(a), (c), 15 U.S.C. 77e(a), (c); the SEC also alleged fraud in the offer or sale of securities in violation of 17(a), 15 U.S.C. 77q(a); finally, the SEC alleged fraud in purchase or sale of securities in violation of the Securities Exchange Act of 1934 10(b), 15 U.S.C. 78j(b), and SEC Rule 10b-5, 17 C.F.R. 240.10b-5. The SEC alleged that SG's offerings constituted investment contracts.
District Court Dismissal. The District Court dismissed the complaint for failure to state a claim upon which relief can be granted pursuant to FRCP 12(b)(6), holding that the complaint did not allege facts constituting transactions in investment contracts.
Appeals Court. The First Circuit reversed. It held the SEC had satisfied the three pronged test set out in the seminal case of SEC v. Howey, 328 U.S. 293 (1946), to determine whether SG offered investment contracts, that is, (1) the investment of money (2) in a common enterprise (3) with an expectation of profits to be derived solely from the efforts of the promoter or a third party.
Patent Infringement Case
9/12. The U.S. Court of Appeals (FedCir) issued its opinion in Fin Control Systems v. OAM, a patent infringement case involving removable surfboard fins. The District Court granted summary judgment that OAM did not infringe Fin Control System's U.S. Patent No. 5,464,359, either literally or under the doctrine of equivalents. The Appeals Court affirmed in part, vacated in part, and remanded.
More News
9/10. Paul Roye of the SEC gave a speech to investment advisors in Philadephia. Among the topics that he discussed was electronic record keeping by investment advisors, and the recently promulgated changes to Rule 204-2, implementing the Electronic Signatures in Global and National Commerce Act, also known as the E-SIGN Act. Roye is Director of the SEC's Division of Investment Management. He addressed the National Symposium on Investment Adviser Regulation.
9/11. Microsoft filed its Reply Brief with the Supreme Court in Microsoft v. U.S.A. This is its reply to the government's opposition to its petition for writ of certiorari seeking to have the entirety of Judge Jackson's findings of fact and conclusions of law and judgment set aside for improper conduct by the Judge.
Cancelled Hearings
Most Congressional hearings that had been scheduled for Thursday, September 13, were cancelled or postponed, including the House Judiciary Committee's meeting to mark up HR 1552 (Internet Tax Nondiscrimination Act), and the Senate Commerce Committee's Science, Technology, and Space Subcommittee's hearing on digital divide issues.
Ninth Circuit Rules in Downing v. Abercrombie
9/13. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in Downing v. Abercrombie & Fitch, a case involving publication of pictures and names of individuals without their permission in an advertising catalogue. The Appeals Court reversed a District Court summary judgment for the advertiser. The individuals' intellectual property, privacy, and other, rights prevailed over the free speech and fair use rights of the advertiser.
Facts. Abercrombie & Fitch (AF) publishes a fat quarterly catalogue to advertise its clothing and other products. This advertising catalogue also contains some "articles". One edition of the catalogue published pictures and identities of the plaintiffs without their permission. The pictures were taken in Hawaii. The catalogue also included pictures of scantily clad models.
Complaint. Plaintiffs filed a complaint in U.S. District Court (CDCal) against AF alleging various federal and California claims. Plaintiffs alleged violation of California's common law and statutory prohibition against misappropriation of a person's name and likeness for commercial purposes, a violation of the Lanham Act for confusion and deception indicating sponsorship of Abercrombie goods, and a claim for negligence and defamation.
District Court. The District Court entered summary judgment for AF. It held that the California state claims were foreclosed because AF's use of the photograph was protected by the First Amendment; it also held that these claims were preempted by the federal Copyright Act. It further held that Hawaii law was the proper choice of law for some of these claims; that the Lanham Act claim was precluded by the First Amendment and it was also precluded by the nominative fair use doctrine; and that there was insufficient evidence to sustain the negligence or defamation claims.
First Amendment. The Appeals Court reversed on almost all issues, and remanded. It held that the First Amendment does not insulate AF in this case because its "articles" were advertising copy.
Copyright Act Preemption. The Appeals Court also held that the federal Copyright Act does not preempt this action. It wrote that while the Copyright Act does preempt state laws that are equivalent to the exclusive rights contained in 106 of the Copyright Act, in this case, "it is not the publication of the photograph itself, as a creative work of authorship, that is the basis for Appellants' claims, but rather, it is the use of the Appellants' likenesses and their names pictured in the published photograph."
Other Issues. The Appeals Court also reversed the District Court on the choice of law issue. The Appeals Court also reversed District Court's rejection of the Lanham Act 43(a) claim, and its holding for AF on nominative fair use.
Scantily Clad Models. However, the Appeals Court affirmed the summary judgment on the defamation claim. Plaintiffs had submitted no evidence of injury. Apparently, it is not defamation to depict someone in a clothing catalogue with nude or scantily clad beach models.
Friday, Sept 14
POSTPONED. Meetings of the FCC's Public Safety National Coordination Committee scheduled for September 13 and 14. See, FCC notice of postponement.
2:00 - 5:00 PM. National Science Foundation's (NSF) Advisory Committee for Cyberinfrastructure will hold a meeting to develop a plan for the preparation of a report to the NSF regarding advanced cyberinfrastructure and the evaluation of the existing Partnerships for Advanced Computational Infrastructure. Teleconferencing is available. See, notice in Federal Register, September 4, 2001, Vol. 66, No. 171, at Page 46293. Location: Room 1150, National Science Foundation, 4201 Wilson Boulevard, Arlington, Virginia.
Monday, Sept 17
9:30 AM. The U.S. Court of Appeals for the District of Columbia Circuit is scheduled to hear oral argument in Sprint v. FCC, No. 01-1076. Judges Williams, Tatel and Silberman will preside. Location: 333 Constitution Ave., NW, Washington DC.
12:00 NOON. The Federal Communications Bar Association (FCBA) will host a lunch featuring FCC Commissioner Kathleen Abernathy.