Tech Law Journal Daily E-Mail Alert
October 22, 2001, 9:00 AM ET, Alert No. 291.
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FCC Files Petition for Writ of Certioriari in NextWave Case
10/19. The Federal Communications Commission (FCC) filed a petition for writ of certiorari with the Supreme Court of the U.S. in the NextWave spectrum dispute. The FCC faced an October 19 deadline for filing.
NextWave obtained spectrum licenses at FCC auctions in 1996. The FCC permitted NextWave to obtain the licenses, and make payments 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 cancelled the licenses. The U.S. Court of Appeals (DCCir) ruled in its June 22, 2001, opinion that the FCC is prevented from canceling the spectrum licenses by § 525 of the Bankruptcy Code.
The FCC now seeks review of this decision. It stated in its cert petition that the issue is "Whether Section 525 of the Bankruptcy Code, 11 U.S.C. 525, conflicts with and displaces the Federal Communications Commission’s rules for congressionally authorized spectrum auctions, which provide that wireless telecommunications licenses obtained at auction automatically cancel upon the winning bidder’s failure to make timely payments to fulfill its winning bid." The FCC elaborated that "the D.C. Circuit’s decision dramatically expands the reach of bankruptcy law into an area that Congress has traditionally reserved to the Commission ..."
NextWave bid $4.74 Billion in 1996 for the spectrum licenses at issue. The FCC recently re-auctioned the spectrum, receiving $15.85 Billion in bids. Various press accounts, citing anonymous sources, have stated in the last week that NextWave, the FCC, and the re-auction winner are close to a settlement. Also, FCC Chairman Powell has scheduled a press conference for Tuesday morning, October 23.
District Court Grants Summary Judgment in PSINet v. Chapman
10/11. The U.S. District Court (WDVa) issued its order and opinion [PDF] in PSINet v. Chapman, granting summary judgment that the 1999 amendment to the Va. Code Ann. § 18.2-391, which criminalizes the dissemination by computer of material that is harmful to minors, violates both the First Amendment and the Commerce Clause.
The District Court had previously enjoined enforcement of this portion of the statute. See, Memorandum Opinion and Order dated August 8, 2001. See also, TLJ Story, Judge Overturns Virginia Internet Porm Statute, August 10, 2000.
§ 18.2-391 is an anti porm provision that has long been on the books; it was primarily directed at brick and mortar businesses. However, the Virginia legislature amended the statute in early 1999 to include any "electronic file or message", thus making clear that it encompasses the Internet. It is this aspect of the statute that the District Court held unconstitutional.
Freedom of Speech. The Court concluded that § 18.2-391 is a content based restriction on expression protected by the First Amendment that is "presumptively invalid and can only be upheld if it survives strict scrutiny. ... To satisfy strict scrutiny, the law in question must be (1) narrowly tailored to (2) promote a compelling government interest." The Court found that "the state's asserted interest in protecting, and helping parents to protect, minors from sexually explicit materials is compelling." However, it also found that the statute was not narrowly tailored. It reasoned that "A law is narrowly tailored if it employs the least restrictive means to achieve its goal and if there is a nexus between the government’s compelling interest and the restriction." The Court continued that "The pre- amendment version of section 18.2-391 applied only to traditional media in physical spaces, and thus made it possible to restrict minors’ access to indecent material without substantially burdening adult access. For example, in a brick and mortar bookstore, a magazine considered harmful to minors can be wrapped in protective covering and placed behind the counter where only adults can purchase it. Presently, the same cannot be said for material on the Internet. That is, efforts to comply with the 1999 Act will result in the exclusion of too many adults from accessing material to be constitutionally sound."
Dormant Commerce Clause. Federal Judges have often struck down anti porm and indecency statutes on First Amendment grounds. However, the District Court in this case also held that the statute violates the dormant Commerce Clause of the Constitution. This part of the opinion could have implications for state regulation of the Internet and e-commerce.
The Court wrote that the "negative implication of the Commerce Clause, U.S. Const. Art I., § 8, cl. 3, includes a prohibition on state regulation that "discriminates against or unduly burdens interstate commerce and thereby "imped[es] free private trade in the national marketplace." " (Citation omitted.)
The Court continued that state laws regulating cyber porm "currently impose a much greater burden on out-of-state businesses providing adult material on the Internet than state laws regulating real-space pormography impose on out-of-state adult magazine publishers and other real-space pormography providers. ... Thus, to avoid prosecution, an adult Web site operator must comply with the most restrictive state obscenity regulations if it is to make its content available on the Web at all. In contrast, purveyors of real-space pormography can choose to comply with the regulations of only those states to which they affirmatively distribute. This leads the court to conclude that, due to the current status of geographic filtering technology on the Internet, section 18.2-391 violates the Commerce Clause."
More News
10/21. The moratorium on new and discriminatory Internet taxes contained in the Internet Tax Freedom Act expired.
10/18. Sen. Mike Enzi (R-WY) and others introduced S 1567, the Internet Tax Moratorium and Equity Act.
10/19. Macromedia filed a complaint in U.S. District Court (NDCal) against Adobe Systems alleging patent infringement. (D.C. No. 01-03940 SI.)
GAO Reports on Information Sharing and Cyber Attacks
10/19. The GAO released a report [PDF] titled "Information Sharing: Practices That Can Benefit Critical Infrastructure Protection."
GAO studied 11 organization to determine information sharing practices related to protection of critical information infrastructure. The organizations were The Agora, CDC, CERT/CC, Federal Computer Incident Response Center, International Information Integrity Institute, InfraGard, Joint Task Force -- Computer Network Operations, National Coordinating Center for Telecommunications, Network Security Information Exchanges, N.Y. Electronic Crimes Task Force, and the North American Electric Reliability Council.
The report states that "Information sharing and coordination are key elements in developing comprehensive and practical approaches to defending against computer based, or cyber, attacks, which could threaten the national welfare. Such attacks could severely disrupt computer supported operations, compromise the confidentiality of sensitive information, and diminish the integrity of critical data." The report continues that "The importance of sharing information and coordinating the response to cyber threats among various stakeholders has increased as our government and our nation have become ever more reliant on interconnected computer systems to support critical operations and infrastructures, such as telecommunications, power distribution, financial services, national defense, and critical government operations."
One of the challenges identified by the report is "overcoming new members’ initial reluctance to share information." The report elaborated that "All of the participating organizations told us that initially establishing trust among the original members was a challenge. This was because members were reluctant to share their organization’s problems and vulnerabilities with outsiders, some of whom were commercial competitors."
The report was prepared for Sen. Robert Bennett (R-UT). Sen. Bennett and Sen. Jon Kyl (R-AZ) are cosponsors of S 1456, the Critical Infrastructure Information Security Act of 2001. One of the main purposes of the bill is to encourage information sharing pertaining to cyber security issues, by removing legal disincentives for such actions. The bill would provide a Freedom of Information Act exemption for certain cyber security information provided to certain federal agencies, including the NIPC, FCC, Justice Department, Defense Department, and Commerce Department. The bill would also provide an antitrust exemption for certain collaboration on cyber security issues.
The report also concluded that "All of the organizations identified trust as the essential underlying element to successful relationships and said that trust could be built only over time and, primarily, through personal relationships." The report identified three "critical success factors": secure communication mechanisms, support of senior managers, and organization leadership continuity. The report also identified four "challenges": developing agreements on the use and protection of shared information, obtaining adequate funding, maintaining a focus on emerging issues, and maintaining professional and administrative staff with appropriate skills.
3rd Circuit Affirms in Check Point Trademark Case
10/19. The U.S. Court of Appeals (3rdCir) issued its opinion in Checkpoint Systems v. Check Point Software, a trademark case. Checkpoint Systems makes electronic security control systems that track the physical location of goods, including electronic article surveillance systems, access control systems, closed circuit television systems, and radio frequency identification devices. It registered the "CHECKPOINT" mark with the United States Trademark Office. Check Point Software Technologies makes firewall software products. Checkpoint Systems filed a complaint in U.S. District Court against Check Point Software Technologies alleging trademark infringement and unfair competition in violation of the Lanham Act. The District Court found no likelihood of confusion, and thus, held for the defendant on both counts. The Court of Appeals affirmed.
10/16. The Internet Security Alliance picked John Thomas to be its Director of Strategic Initiatives. The Internet Security Alliance is a collaborative effort between Carnegie Mellon University’s Software Engineering Institute (SEI) and its CERT Coordination Center and the Electronics Industries Alliance (EIA). See, EIA release.
10/13. The law firm of Fenwick & West elected new partners, including Stephen Gillespie, Samuel Angus, Raymond Hixson, and John Ryan. Gillespie works in the firm's Intellectual Property Group, focusing on technology licensing and Internet commerce counseling. Angus works in the firm's Corporate Group, concentrating on advising start up and venture backed companies, equity and debt financings, mergers and acquisitions and strategic and joint venture transactions. Hixson works in the Employment and Labor Law Group. Ryan works in the Tax Group. See, F&W release.
10/18. Six attorneys who practice in the areas of intellectual property and litigation joined the Minneapolis office of the law firm of Fulbright & Jaworski. The six are Alan Anderson, Ronn Kreps, Christopher Larus, Renee Jackson, John Klos, and Sharna Wahlgren. See, release.
10/15. Brent Slosky joined the Denver office of the law firm of Hogan & Hartson as a partner. He previously worked at the law firm of Brownstein Hyatt & Farber in Denver. His practice focuses on corporate transactions, with an emphasis on private capital formation and the structuring and financing of mergers and acquisitions, including for Internet based telecommunications businesses and Internet service satellite companies. See, release.
10/17. The law firm of Latham & Watkins named Charles Nathan Co-Chair of its firmwide M&A Practice Group. See, release.
Monday, Oct 22
Neither the House nor the Senate is in session.
1:00 - 2:30 PM. The Electronic Privacy Information Center (EPIC) and the Privacy Foundation will sponsor a panel discussion on the implications of new systems for identification and tracking on personal privacy. The speakers will be Richard Smith (Privacy Foundation), Robert Smith (Privacy Journal), Jeffrey Rosen (New Republic), John Woodward (RAND), and Whitfield Diffie (Sun Microsystems). Marc Rotenberg (EPIC) will moderate. For more information contact Sarah Andrews at 202 483-1140. Location: National Press Club, 529 14th Street, NW, Washington DC.
Tuesday, Oct 23
The Senate is scheduled to reconvene at 9:30 AM. The House is scheduled to reconvene at 12:30 PM.
10:00 AM. FCC Chairman Michael Powell will hold an informal press conference with reporters who cover the FCC. Location: FCC Meeting Room, 12th Street Level, 445 12th Street SW, Washington DC.
Wednesday, Oct 24
10:00 AM. The House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection will hold a hearing titled "Challenges Facing the Federal Trade Commission." FTC Chairman Timothy Muris will be the only witness. Location: Room 2123, Rayburn Building.
10:00 AM - 12:00 NOON. The FCC will hold a public forum on the Commission Registration System (CORES) and FCC Registration Number. Location: FCC, 445 12th Street, SW, Commission Meeting Room, Washington DC.
2:00 PM. The Senate Judiciary Committee's Subcommittee on Technology, Terrorism and Government Information will hold a hearing titled "The World's Most Wanted Terrorists - Who Are They and What Do They Want?" Sen. Diane Feinstein (D-CA) will preside. Location: Room 226, Dirksen Building.
2:30 - 4:30 PM. Roe Hemenway, Manager of Optical Network Equipment Research at Corning's Sullivan Park research facility, will give a presentation on optical fiber communications. See, FCC release. Location: Commission Meeting Room, TW-C305, FCC, 445 12th Street, SW, Washington DC.
Deadline for submitting public comments to the FTC's Bureau of Competition regarding AOL Time Warner's requests for approval of two alternative cable broadband ISPs. On September 26 and 24, AOLTW submitted two motions to the FTC titled "Motion for Approval of Non Affiliated ISP and Alternative Cable Broadband ISP Service Agreement". AOLTW is required, pursuant to ¶ II.A.2 of the FTC's Decision and Order [PDF] approving the merger of AOL and Time Warner, dated April 17, 2001, to enter into such agreements, and obtain FTC approval. The FTC published a redacted version of the motion [PDF] regarding AOLTW's agreement with Internet Junction Corp. and a  redacted version of the motion [PDF] regarding AOLTW's agreement with New York Connect.Net, Ltd.
Thursday, Oct 25
8:30 - 10:00 AM. Harold Furchtgott-Roth and others will hold an informal discussion titled "The Telecommunications Sector in a Slowing Economy". RSVP to Veronique Rodman at 202 862-4871 or Location: American Enterprise Institute, 1150 17th Street, NW, 11th Floor Conference Room, Washington DC.
9:30 AM. The Senate Commerce Committee will hold a hearing to examine promoting broadband, focusing on securing content and accelerating transition to digital television. Location: Room 253, Russell Building.
9:30 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a legislative hearing on HR 2417, the Dot Kids Domain Name Act of 2001. Location: Room 2123, Rayburn Building.
10:00 AM. The Senate Judiciary Committee might hold an executive business meeting. Room 226, Dirksen Building.
12:15 PM. The Federal Communications Bar Association's (FCBA) Common Carrier Committee will host a brown bag lunch. The speakers will be Tamara Preiss, Blair Levin, and Jonathan Askin. The topic will be "Perspectives on Local Competition and Local Competitors". RSVP to Naja Wheeler. Location: Wiley Rein & Fielding, 1750 K Street, 10th Floor, Washington DC.
Deadline to reply submit comments to the FCC in its rule making proceeding regarding locating spectrum bands below 3 Ghz for possible reallocation for Third Generation (3G) wireless services, and for other purposes. (ET Docket Nos. 00-258 and 95-18 and IB Docket No. 99-81.) See, notice in Federal Register, September 13, 2001, Vol. 66, No. 178, at Pages 47618 - 47621.
Deadline to submit reply comments to the FCC in its rule making proceeding regarding permitting Mobile Satellite Service (MSS) operators flexibility to use their spectrum for land based transmitters. (IB Docket No. 01-185, ET Docket No. 95-18.) See, notice in Federal Register, September 13, 2001, Vol. 66, No. 178, at Pages 47621 - 47625.
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