Tech Law Journal Daily E-Mail Alert
November 27, 2001, 9:00 AM ET, Alert No. 315.
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Cal App Rules No Jurisdiction Over Out of State Poster to Yahoo Message Board
11/26. The Court of Appeal of California (2/4) issued its opinion [PDF] in Nam Tai Electronics v. Joe Titzer, a case regarding personal jurisdiction over persons who publish allegedly defamatory statements in Internet message boards. The Appeals Court affirmed the trial court's order quashing service and dismissing the complaint.
Parties. Nam Tai Electronics makes consumer electronic products. Its stock is traded on the NASDAQ [ticker: NTAI]. It is incorporated in the British Virgin Islands, and based in Hong Kong. Joe Titzer is an individual who anonymously published statements about Nam Tai stock on a Yahoo message board. He is a resident of Colorado. Yahoo is a California corporation.
Procedure. Nam Tai filed a complaint in California Superior Court alleging libel, trade libel, and violations of the California Business and Professions Code, Section 17200, against the unknown author of the Yahoo message board statements. Nam Tai subsequently obtained the identity of the anonymous poster (Titzer) from Yahoo pursuant to a subpoena, and amended its complaint. Titzer moved to quash service of process and dismiss the complaint on the grounds that, as a resident of Colorado, the California court lacked jurisdiction over him. The trial court quashed service and dismissed the complaint. Nam Tai filed this appeal.
Court of Appeal Holding. The Court of Appeal, relying heavily on Jewish Defense Organization v. Superior Court, 72 Cal.App.4th 1045 (1999), affirmed the trial court. It wrote that "The issue is not whether the company that makes the Web sites available is incorporated or based in California. As the courts recognize, an Internet company of Yahoo!'s type may be based anywhere in the world. The determinative question is whether the Web sites themselves are of particular significance to California or Californians such that the user has reason to know the posting of a message will have significant impact in this state. Although we presume respondent's messages were available to Californians or anyone else with access to the Internet, appellant presented no evidence to suggest that respondent's messages or the Web sites on which they were posted were directed at Californians or disproportionately likely to be read by residents of this state. Alternatively, appellant presented no evidence to suggest that its relationships with residents of California were of particular importance to its business and likely to be impacted negatively by the messages posted on the Web sites."
Choice of Forum Clause. The Appeals Court also rejected Nam Tai's argument that the choice of forum clause in Yahoo's terms of service (TOS) provided jurisdiction in California. The TOS state that the relationship between Yahoo and its subscribers "shall be governed by the laws of the State of California without regard to its conflict of law provisions". The Court reasoned that while choice of forum clauses are enforceable, they must be unambiguous, and in this case, the TOS do not unambiguously state that disputes between Yahoo's subscribers and third parties are covered by the clause.
District Court Denies Preliminary Injunction in SunGard Case
11/21. The U.S. District Court (DDC) issued its Redacted Memorandum Opinion [PDF] in USA v. SunGard Data Systems, denying the government's motion for preliminary injunction.
On October 22, the Department of Justice (DOJ) filed a civil complaint in U.S. District Court (DDC) against SunGard and Comdisco seeking to block SunGard's purchase of Comdisco's Availability Solutions (AS) business for $825 Million. See, DOJ release. AS provides disaster protection and relief to keep computer systems accessible in disasters and other disruptions. Only July 16, Comdisco filed a Chapter 11 bankruptcy petition in U.S. Bankruptcy Court (NDIll). The Bankruptcy Court ordered that the relevant Comdisco assets be sold at an auction. SunGard offered the highest of two bids at an October 11 auction -- $825 Million. See, October 12 Comdisco release.
The DOJ also sought a preliminary injunction, arguing that the acquisition would substantially lessen competition in the market for shared hotsite disaster recovery services for mainframe and midrange computers, in violation of the Clayton Act.
The District Court denied the request for an injunction. It concluded that "In light of the decreasing costs of equipment and telecommunications and the rapidly evolving computer technology, the Court cannot accept the government's overly narrow and static definition of the product market. The defendants' customers, as well as their computer systems, are simply too varied and too dissimilar to support any generalizations. Therefore, the central premise of the government's case – that there are ``a substantial number of customers for whom there are no competitive alternatives´´ ... has not been proven." (Citation omitted.)
The original opinion was dated November 14; the public redacted version was released on November 21.
Supreme Court Denies Cert in Tereschouk v. USPTO
11/26. The Supreme Court denied certiorari in Tereschouk v. USPTO, thereby letting stand the April 4, 2001, opinion of the U.S. Court of Appeals (FedCir). The Court of Appeals affirmed a decision of the U.S. Patent and Trademark Office's Board of Patent Appeals and Interferences that sustained rejection of all of the claims of Tereschouk's patent application No. 08/490,903. Tereschouk petitioned for writ of certiorari. The Supreme Court denied the petition, without opinion. See, November 26 Order List [PDF] at page 7.
Computer Criminals Sentenced
11/26. Geoffrey Osowski and Wilson Tang were each sentenced in U.S. District Court (NDCal) to serve 34 months in prison. Both plead guilty on August 20, 2001, to one count of computer fraud in violation of 18 U.S.C. § 1030(a)(4). The two exceeded their authorized access to the computer systems of Cisco Systems in order to illegally issue almost $8 million in Cisco stock to themselves. See, Osowski Plea Agreement [PDF], Tang Plea Agreement [PDF], and USAO release.
7th Circuit Reverses in Level 3 Insurance Case
11/26. The U.S. Court of Appeals (7thCir) issued its opinion in Level 3 Communications v. Federal Insurance, a diversity suit involving application of a policy of directors' and officers' liability insurance to shareholder securities fraud law suits. Reversed and remanded.
Supreme Court Denies Cert in NAFTA Challenge
11/26. The Supreme Court denied certiorari in United Steel Workers of America v. U.S., thereby letting stand the February 27, 2001, opinion of the U.S. Court of Appeals (11thCir) which invoked the political question doctrine to reject a challenge to the constitutionality of the North America Free Trade Agreement (NAFTA).
The United Steel Workers of America (USWA) filed a complaint in the U.S. District Court (NDAla) against the United States alleging that the NAFTA should be declared unconstitutional on the grounds that it was not ratified as a treaty by a two thirds vote in Senate. The Clinton administration and the Congress treated the NAFTA as an executive agreement not requiring Senate ratification as a treaty, and implemented it by passing legislation by simple majorities in the House and Senate.
The Appeals Court wrote in February that "We nonetheless decline to reach the merits of this particular case, finding that with respect to international commercial agreements such as NAFTA, the question of just what constitutes a "treaty" requiring Senate ratification presents a nonjusticiable political question."
The USWA petitioned for writ of certiorari. The Supreme Court denied the petition, without opinion. See, November 26 Order List [PDF] at page 2.
Federal Jurisdiction in Contract Disputes Involving IPR
11/26. The U.S. Court of Appeals (7thCir) issued its opinion in International Armor v. Moloney Coachbuilders, a appeal from a case plead as a Lanham Act claim. The Appeals Court applied the "arising under" clause of Article III of the Constitution, and the artful pleading doctrine, to rule that the federal judiciary lacks jurisdiction in this case.
The Appeals Court concluded that the dispute was a contract dispute between citizens of the same state. The contract at issue concerned ownership of trademarks. Judge Easterbrook, writing for a three judge panel, wrote that intellectual property rights (IPR) in the form of patents, copyright and trademarks exist because of federal law. However, when parties enter into contracts regarding ownership of IPR, and then dispute the effect of those contracts, the disputes are claims arising under state contract law, not claims arising under federal IP law. The Appeals Court vacated the judgment of the District Court, and remanded with instructions to dismiss for lack of subject matter jurisdiction.
NTIA Chief Addresses Spectrum Issues
11/26. NTIA chief Nancy Victory gave a speech to the Latin American Wireless Industry Association (ALACEL) titled "The Politics of Telecommunications in Times of Crisis". She addressed the proposed Free Trade of the Americas Agreement (FTAA), government management of spectrum, the status of spectrum allocation for Third Generation (3G) wireless services, and the multitude of U.S. governmental bodies involved in international spectrum policy making.
Spectrum Management. She stated that certain basic principles regarding spectrum management have become apparent. "First, spectrum policy must recognize that it is not practical to try to anticipate consumer demand or technological development -- policies should be flexible to allow service growth and evolution."
"Second, spectrum policy must recognize the practicalities of running a business - certainty and predictability of regulation is essential to a company's ability to grow and succeed. The continued development of wireless services in the region requires that additional spectrum be offered in a non-discriminatory, transparent manner in order to secure further and sustained investment."
"Third, spectrum policy must recognize the practicality of limited government resources that cannot respond as quickly as the market - policies and requirements that are not necessary should not be imposed or should be eliminated if they exist."
"And finally, spectrum policy must recognize the practicalities of current spectrum use and the difficulties of changing the hand that we've been dealt," said Victory.
3G Wirless. She reiterated that the NTIA, Department of Defense, FCC, and others, are conducting an assessment of the viability of making certain identified spectrum available for 3G services. She said that this assessment will focus on the 1710-1770 and 2110-2170 MHz bands by NTIA and the FCC, respectively. She said that "We expect to complete this assessment by the late spring of 2002."
She also stated that "the need to harmonize our decisions within the region is a key component of our domestic discussions."
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Tuesday, Nov 27
The Senate will reconvene from its Thanksgiving recess at 10:30 AM.
The House will reconvene at 2:00 PM. There will be no votes before 6:30 PM. The House will consider many items under suspension of the rules (no amendments and 2/3 majority required for passage). The agenda includes HR 1259, the Computer Security Enhancement Act, and HR 3189, the Export Extension Act, a bill sponsored by Rep. Henry Hyde (R-IL) to extend the Export Administration Act until April 20, 2002.
9:30 AM. There will be a hearing before the U.S. District Court (DMD) in In re Microsoft Corp. Antitrust Litigation, Multi District Litigation No. 1332. This is a hearing on Settlement Agreement, which proposes a settlement of the private antitrust class action lawsuits against Microsoft alleging that it overpriced its products. Location: Courtroom 1A, first floor, U.S. District Court, Baltimore, MD.
8:30 AM - 5:00 PM. The North American Numbering Council will meet. Location: FCC, Room TW-C305 (Commission Meeting Room), 445 12th Street, SW.
1:30 PM. The U.S. International Telecommunication Advisory Committee (ITAC) will hold a meeting. See, notice in Federal Register. Location: State Dept.
6:00 - 8:15 PM. The Federal Communications Bar Association (FCBA) will host as CLE seminar titled "The Economics of FCC Decisionmaking." From 6:00 to 7:00 PM David Sappington (FCC Chief Economist) will speak on "Economic Principles of Telecommunications Regulation." From 7:15 to 8:15 PM there will be a panel discussion titled "Economists Roundtable: Of Caps, Limits, and the Free Market." The speakers will be Robert Pepper (Chief of the FCC's Office of Plans and Policy), Jim Bird (head of the FCC's antitrust merger review office), Walt Strack (Chief Economist in the FCC's Wireless Bureau), and Jonathan Levy (Deputy Chief of the FCC's Office of Plans and Policy). RSVP to Location: Dow Lohnes & Albertson, 1200 New Hampshire Ave., NW, Suite 800.
Wednesday, Nov 28
8:30 AM - 12:00 NOON. The North American Numbering Council will meet. Location: FCC, Room TW-C305 (Commission Meeting Room), 445 12th Street, SW,  Washington DC.
10:00 AM. The Supreme Court of the United States will hear oral argument in Ashcroft v. ACLU, No. 00-1293. This case involves the constitutionality of the 1998 Child Online Protection Act which makes it illegal to provide to minors over the web material that is harmful to minors.
10:00 AM. The Senate Judiciary Committee will hold a hearing titled "DOJ Oversight: Preserving Our Freedoms While Defending Against Terrorism". Sen. Patrick Leahy (D-VT) will preside. Location: Room 226, Dirksen Building.
12:00 PM. Exostar will host a press luncheon. For more info, contact Karen Halligan at 703 793-7715. Location: Lisagor Room, National Press Club, 529 14th St. NW, 13th Floor.
12:30 PM. Mitch Daniels, Director of the Office of Management and Budget (OMB), will speak at a luncheon. Location: Ballroom, National Press Club, 529 14th St. NW, 13th Floor.
Thursday, Nov 29
8:00 AM - 5:00 PM. Day one of a two day meeting of the National Science Foundation's Advisory Committee for Cyber Infrastructure. See, notice in Federal Register. Location: Room 1150, National Science Foundation, 4201 Wilson Boulevard, Arlington, VA.
10:00 AM. The Senate Judiciary Committee is scheduled to hold an executive business meeting. Location: Room 226, Dirksen Building.
10:00 AM. The House Government Reform Committee's Subcommittee on National Security, Veterans Affairs, and International Relations will hold a hearing titled "Risk Communication: National Security and Public Health". Location: Room 2154, Rayburn Building.
12:00 NOON - 2:00 PM. Jane Mago, General Counsel of the FCC, will speak at a brown bag lunch hosted by the District of Columbia Bar Association and the FCBA. To register, contact the DC Bar at 202 626-3463.
12:15 PM. The FCBA's International Committee will host a brown bag lunch. Jeanette Chan and Michael Reede of the Hong Kong office of Paul Weiss will speak on recent regulatory developments in Hong Kong, China and India. Location: Paul Weiss, 1615 L Street, 13th floor.
2:00 PM? The U.S. International Telecommunication Advisory Committee (ITAC) will hold a meeting regarding preparations for the 2002 World Telecommunication Development Conference (WTDC). See, notice in Federal Register. Location: State Department, Room 1408.
Deadline Extended. Deadline to submit comments and Notices of Intention to Participate with the Copyright Office (CO) regarding royalty payments for retransmission of over the air broadcast signals. The CO notice "directs all claimants to royalty fees collected under the section 119 statutory license in 2000 to submit comments as to whether a Phase I or Phase II controversy exists as to the distribution of those fees, and a Notice of Intention to Participate in a royalty distribution proceeding."
Friday, Nov 30
8:00 AM - 5:00 PM. Day two of a two day meeting of the National Science Foundation's Advisory Committee for Cyber Infrastructure. See, notice in Federal Register. Location: Room 1150, National Science Foundation, 4201 Wilson Boulevard, Arlington, VA.
10:00 AM - 12:00 NOON. The American Enterprise Institute (AEI) will host a panel discussion titled "The PCS C Block Mess: The FCC as Auctioneer and Banker". The panelists will be Robert Hahn (AEI Brookings), Rudy Baca (Precursor Group), Harold Furchtgott- Roth (AEI), George Reed- Dellinger (Washington Analysis), John Thorne (Verizon), and Thomas Hazlett (AEI). See, online registration page. Location: AEI, Wohlstetter Conference Center, Twelfth Floor, 1150 17th Street, NW.
Deadline to submit comments to the Federal Trade Commission (FTC) in its a notice of proposed rulemaking (NPRM) regarding extending its Children's Online Privacy Protection Rule. It proposes to extend the time period during which web site operators may use an e-mail message from the parent, coupled with additional steps, to obtain verifiable parent consent for the collection of personal information from children for internal use by the web site operator. The current rule expires on April 21, 2002. The FTC proposes to extend this until April 21, 2004. See, FTC release, and notice.
Deadline to submit comments to the Bureau of Export Administration (BXA) regarding its annual review of the foreign policy based export controls in the Export Administration Regulations to determine whether they should be modified, rescinded, or extended. See, for example, Export Administration Regulations (EAR), Section 742.12, pertaining to high performance computers. See, BXA notice.