|4th Circuit Upholds 'Carry
One Carry All' Rule Against Free Speech Challenge
|12/7. The U.S.
Court of Appeals (4thCir) issued its opinion
Broadcasting and Communications Association v. FCC,
a case in which direct broadcast satellite (DBS) carriers
challenged the constitutionality of the "carry one, carry
all" rule of the Satellite Home Viewer Improvement Act of
1999 (SHVIA). The District Court upheld the rule. The Court of
Background. The SHVIA created a statutory copyright
license that allows DBS carriers to carry the signals of local
broadcast TV stations without obtaining authorization from the
holders of copyrights in programs. The SHVIA also imposes a
"carry one, carry all" rule, at 47 U.S.C.
§ 338(a)(1), under which any DBS carriers that choose to
take advantage of the statutory copyright license by carrying
one broadcast station in a local market to carry all
requesting stations in that market.
District Court. The Satellite
Broadcasting and Communications Association (SBCA), DirecTV, and EchoStar filed a
complaint in the U.S. District Court (EDVa) against the FCC alleging that the
"carry one, carry all" rule violates the Copyright
Clause, the First Amendment, and the Due Process and Takings
Clauses of the Fifth Amendment. The National Association of
Broadcasters (NAB) and PBS intervened on the side of the
FCC. The District Court granted the FCC's motion to dismiss.
See, SBCA v. FCC, 146 F.Supp.2d 803 (E.D. Va. 2001).
The District Court held that the "carry one, carry
all" rule is a content neutral regulation of the
satellite carriers' speech and upheld the rule under
intermediate First Amendment scrutiny. In addition, the court
rejected the satellite carriers' other arguments. This appeal
First Amendment. The Appeals Court first held that the
restriction upon speech imposed by the SHVIA is content
neutral, and therefore, intermediate scrutiny, rather than
strict scrutiny, applies. The Court reasoned that DBS
carriers, like the cable operators discussed by the Supreme
Court in Turner
Broadcasting System v. FCC, 512 U.S. 622 (1994) (aka
Turner I), function primarily as conduits for the speech of
others. However, both DBS carriers and cable operators
"engage in speech protected by the First Amendment when
they exercise editorial discretion over the menu of channels
they offer to their subscribers." The Court continued
that since the restriction does not follow from government
disagreement with the content carried, or the carrier's choice
of content, it is a content neutral restriction.
The Appeals Court then held that the restriction on speech
imposed by the SHVIA meets the intermediate scrutiny test, as
announced by the Supreme Court in U.S.
v. O'Brien, 391 U.S. 367 (1968). That is, "it
furthers an important or substantial governmental interest; if
the governmental interest is unrelated to the suppression of
free expression; and if the incidental restriction on alleged
First Amendment freedoms is no greater than is essential to
the furtherance of that interest." The Court found that
the "carry one, carry all" rule advances the goal of
preserving a multiplicity of broadcast outlets for over the
Copyright Clause. The Appeals Court rejected the DBS
carriers' argument that the SHVIA exceeds Congress's authority
under the Copyright Clause by playing favorites by using the
copyright power to protect the speech of independent local
broadcasters. The Appeals Court stated that the
"Congress's powers under the clause to grant copyright
protection and to define the scope of that protection are very
broad". It continued that "The copyright power
certainly includes the authority to grant statutory copyright
licenses like those created by SHVIA and the Cable Act. These
statutory licenses are designed to ensure that the high
transaction costs involved in privately acquiring copyright
clearances for the retransmission of broadcast programming do
not unduly restrict the free flow of information to the
public." The Court concluded that "We see no reason
why the Copyright Clause would prohibit Congress from
conditioning its grant of a statutory copyright license on
compliance with the carry one, carry all rule. ... Congress
was simply performing its constitutionally assigned task of
striking a balance between the interests of authors and the
The Appeals Court also denied three petitions for review of
the FCC's SHVIA order that had been consolidated with this
|Hold Out States Seek
Further Remedies Against Microsoft
|12/7. Nine states filed a pleading
[PDF] titled "Plaintiff Litigating States' Remedial
Proposals" with the U.S. District Court (DC) in the
Microsoft antitrust case. Most of the 40 page document is
comprised of single spaced text constituting proposed
additional language restraining the activities of Microsoft.
It requests that the Court enter judgment stating that
"Microsoft shall disclose and license all source code for
all Browser products and Browser functionality ..." It
also requests the Court to compel Microsoft to include Sun
Microsystems' version of Java.
The Justice Department and nine states entered into a proposed
settlement on November 2. They submitted a revised proposed
settlement agreement on November 6. Nine states
(California, Connecticut, Florida, Iowa, Kansas,
Massachusetts, Minnesota, Utah, and West Virginia) and the
District of Columbia have not joined in that settlement.
The nine hold out states condemned the agreement negotiated by
the Justice Department and other states. They wrote that
"Unlike the previously announced settlement between the
Department of Justice ("DOJ") and Microsoft, these
remedies create a real prospect of achieving what the DOJ said
it intended to accomplish: ``stop Microsoft from engaging in
unlawful conduct, prevent any recurrence of that conduct in
the future, and restore competition in the software market ...´´
Microsoft issued a release
in which it stated that the proposals were "extreme and
not commensurate with what is left of the case".
|Excerpts from Holdout
States' Proposed Remedies
|The following are excerpts from the "Plaintiff
Litigating States' Remedial Proposals" filed in the
Microsoft antitrust case on Friday, December 7. These parties
request that the Court include in its final judgment the
Ban on Binding. "Microsoft shall not, in any
Windows Operating System Product (excluding Windows 98 and
Windows 98 SE) it distributes beginning six months after the
date of entry of this Final Judgment, Bind any Microsoft
Middleware Products to the Windows Operating System unless
Disclosure of APIs. "Microsoft shall disclose to
ISVs, IHVs, IAPs, ICPs, OEMs and Third-Party Licensees ... all
APIs, Technical Information and Communications Interfaces
"Microsoft shall not take any action that it knows, or
reasonably should know, will directly or indirectly, interfere
with or degrade the performance or compatibility of any
non-Microsoft Middleware when Interoperating with any
Microsoft Platform Software ..."
"Microsoft shall not condition the granting of a Windows
Operating System Product license, ... on a licensee agreeing
to license, promote, distribute, or provide an access point
to, any Microsoft Middleware Product."
No Retaliation. "Microsoft shall not take or
threaten to take any action adversely affecting any individual
or entity that participated in any phase of the antitrust
Default Middleware. "Microsoft shall not, in any
Windows Operating System Product ... make Microsoft Middleware
the Default Middleware for any functionality unless the
Windows Operating System Product (i) affords the OEM or
Third-Party Licensee the ability to override Microsoft’s
choice of a Default Middleware and designate other Middleware
the Default Middleware for that functionality, and (ii)
affords the OEM, Third-Party Licensee or non-Microsoft
Middleware the ability to allow the end user a ... choice to
designate other Middleware as the Default Middleware ..."
Source Code. "Microsoft shall disclose and license
all source code for all Browser products and Browser
Java. "For a period of 10 years from the date of
entry of the Final Judgment, Microsoft shall distribute free
of charge, in binary form, with all copies of its Windows
Operating System Product and Internet Browser (including
significant upgrades) a competitively performing Windows
compatible version of the Java runtime environment (including
Java Virtual Machine and class libraries) compliant with the
latest Sun Microsystems Technology Compatibility Kit as
delivered to Microsoft ..."
Apple. "Microsoft shall port each new major
release of Office to the Macintosh Operating System within 60
days of the date that such version becomes commercially
available for use with a Windows Operating System Product
IPR. "Microsoft shall, within 20 days of request,
license to IAPs, ICPs, IHVs, ISVs, OEMs and Third-Party
Licensees all intellectual property rights owned or licensable
by Microsoft that are required to exercise any of the options
or alternatives provided or available to them under this Final
Judgment (including without limitation enabling their
product(s) to Interoperate effectively with Microsoft Platform
Software), on the basis that: a. the license shall be on a
royalty-free basis and all other terms shall be reasonable and
non-discriminatory; b. the license shall not be conditional on
the use of any Microsoft software, API, Communications
Interface, Technical Information or service ..."
Standards. If Microsoft publicly claims that any of its
products are compliant with any technical standard
("Standard") that has been approved by, or has been
submitted to and is under consideration by, any organization
or group that sets standards (a "Standard-Setting
Body"), it shall comply with that Standard.
Special Master. "... the Court will appoint a
special master (the "Special Master") to monitor
Microsoft’s obligations under the Final Judgment ..."
|Senators Hollings and
McCain Condemn NextWave Settlement
|12/6. Sen. Ernest
Hollings (D-SC) and Sen.
John McCain (R-AZ) announced their opposition to the
proposed settlement agreement in the NextWave matter. See, transcript
of December 6 press conference. On November 27 the FCC
released the proposed
settlement agreement [PDF] between the Federal Communications Commission
(FCC), NextWave, the Department
of Justice (DOJ), and the Auction 35 winners. The
agreement requires approval by the bankruptcy court, and
passage of legislation by Congress.
McCain. Sen. McCain, who is the ranking Republican on
the Senate Commerce
Committee, which has jurisdiction over telecommunications
and the FCC, stated that "We want this issue examined in
the proper hearing process. We want the FCC to come forward.
We want people to come forward and make their case, so the
American people can know what's going to happen to billions of
their tax dollars here."
Sen. McCain continued that "The principal defects in this
process are secrecy and timing. The settlement negotiations
have been ongoing for months, as we all know. The 66 page
NextWave settlement agreement and its associated enabling
legislation ... were sent to the Congress about one week ago,
on November 28th. Remarkably -- remarkably -- the terms of
this settlement demand that Congress pass this week old
legislation and appropriate $6 billion immediately, no later
than December 31st. Remarkable. ... Not only do the settling
parties demand the Congress and the president enact their
legislation according to their short schedule, they also
demand that the Congress and the president enact it without
any amendments or changes -- not even a comma. This process
shows profound contempt for this legislature ..."
Background. 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. 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 proceeding
to re-auction the disputed spectrum. NextWave next 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 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 has petitioned
the Supreme Court for writ of certiorari.
Hollings. Sen. Hollings, who is Chairman of the Senate Commerce
Committee, was just as critical. However, he has some
additional reasons. He agrees with the Second Circuit holding,
disagrees with the District of Columbia holding, and wants the
FCC to pursue its appeal. His opposition goes to the nature of
spectrum licenses. He believes that there are not, and should
not be, any property rights in spectrum. He stated that
"the public, the people, own the spectrum, and the
trustee of the people's spectrum is the Federal Communications
Commission. There is no need for legislation. They ought not
to be sending legislation; they ought to pursue the appeal.
They say it's a 50-50 chance whether or not it will be prevail
or not before the Supreme Court. If it doesn't prevail, then
we're going to have the court finding that there is an
ownership in spectrum, and you can get it ..."
The House Judiciary
Committee also held a hearing on the settlement last week.
The House Commerce
Committee has planned a hearing for Tuesday, December 11.
|House Committee Passes Bill
Authorizing Funding for Info Tech R&D
|12/6. The House
Science Committee passed HR
3400, the Networking and Information Technology Research
Advancement Act, by a unanimous voice vote. This bill, which
is sponsored by Rep.
Nick Smith (R-MI) and others, would authorize
appropriations totaling nearly $7 Billion over five years for
information technology research and development.
Most of the funding authorized by this bill would go to the National Science Foundation
(NSF), Department of Energy's
Office of Science, and National
Aeronautics and Space Administration (NASA).
The Committee passed an amendment by unanimous voice vote that
was offered by Rep. James
Matheson (D-UT) that adds a new section to the bill
creating a "Crisis Management Enabling Technology
Rep. John Larson
(D-CT) also offered an amendment, which he withdrew. Rep. Sherwood Boehlert
(R-NY), the Chairman of the Committee, stated that "we
will continue to work together" on this matter. The
amendment would add a new section to the bill authoring
funding for "Broadband Demonstration Projects."
|Federal Reserve Governor
Addresses Spread of E-Money
Reserve Board Governor Laurence
Meyer gave a speech
at Swarthmore College
in Pennsylvania titled "The Future of Money and of
Monetary Policy". He stated that while the paper check is
still the most widely used method for transferring money by
the public, "The next step in the evolution of the nature
and transfer of money appears to be the spread of electronic
forms of money and payment."
Meyer stated that in the 1990s "a new generation of
technology created the possibility of storing monetary value
on a silicon chip embedded in a plastic card or in a personal
computer. With these developments, the focus of payments
development shifted to electronic money -- e-money -- using
card based and computer based products (often referred to as
stored value cards and network money, respectively) that
consumers might use as a general means of payment in both the
physical and the virtual worlds." He added that
"this first generation of e-money products was not widely
adopted in the United States", but pointed out that other
technologies, such as the ATM and debit cards took years to
Meyer reviewed the long history of money over the millennia,
and then focused on some recent developments. "Banks and
technology providers are attempting to develop new payment
methods, in many cases building upon the underlying the
automated clearing house (ACH), debit card, and credit card
networks to find more convenient and secure ways to make
purchases, pay bills, settle debts, and post credits,
especially over the Internet. "On-line" banking
involves electronic access to information over the Internet
about accounts and loans -- including current balances and
transactions history -- as well as providing the ability to
carry out payment related transactions -- including transfers
among accounts, receiving and paying bills, applying for bank
credit cards, and reordering checks. Some so-called virtual
banks have been set up to service customers exclusively
through electronic channels, but an increasing number of
traditional "bricks and mortar" banks see the
Internet as another delivery channel that improves convenience
for some of their customers. Similarly, the emergence of
e-money reflects the attempt to develop new payment methods as
a more efficient alternative to existing electronic payment
Finally, Meyer addressed some of the implications of e-money
for financial stability, monetary policy, and the possibility
of privately issued currencies.
|12/5. The U.S. District Court (NDCal)
sentenced Malcolm Wittenberg on one count of insider trading
in violation of Section 10 of the Securities Exchange Act of
1934, 15 U.S.C. § 78j. See, USAO
release. The Plea
Agreement [PDF] states that Wittenberg learned of a
pending merger of Sun
Microsystems and Forte Software in the course of his
representation of Forte. He then traded in Forte Software
stock. Wittenberg admitted that he used material, non public
information when he purchased stock in Forte Software. The
plea agreement also states that Wittenberg at all relevant
times was an attorney and partner in the San Francisco office
of the Oakland law firm of Crosby Heafey Roach &
|FTC Commissioner Addresses
|12/4. FTC Commission Thomas
Leary gave a speech
on antitrust law to the New York City bar association titled
"Three Hard Cases and Controversies: The FTC Looks at
Baby Foods, Colas and Cakes". He discussed three recent
antitrust cases -- FTC v. H.J. Heinz, PepsiCo / The
Quaker Oats Company (Gatorade), and General Mills /
Pillsbury. None of these three cases involved technology.
However, the antitrust analysis may be pertinent beyond food.
|30th Nation Accedes to WIPO
|12/6. The nation of Gabon acceded to the World Intellectual
Property Organization (WIPO) Copyright
Treaty (WCT). Gabon is only the 30th nation to do so.
However, this accession means that the WCT will enter into
force in three months -- on March 6, 2002. The other nations
which have acceded are Argentina, Belarus, Bulgaria, Burkina
Faso, Chile, Colombia, Costa Rica, Croatia, Czech Republic,
Ecuador, El Salvador, Gabon, Georgia, Hungary, Indonesia,
Japan, Kyrgyzstan, Latvia, Lithuania, Mexico, Panama,
Paraguay, Peru, Republic of Moldova, Romania, Saint Lucia,
Slovakia, Slovenia, Ukraine, and U.S. See, WIPO
release and State
|Monday, Dec 10
|The House will meet at 2:00 PM in pro forma session. The
Senate will meet at 3:00 PM, and will consider S 1731,
the Agriculture, Conservation, and Rural Enhancement Act of
9:00 AM. The National Telephone
Cooperative Association (NTCA) will host a press breakfast
at which it will discuss the various technologies currently
deployed by NTCA members, including broadband based
applications. RSVP to Donna Taylor at 703 351-2086 or email@example.com. Location:
NTCA Headquarters, Conference Room, 4121 Wilson Blvd., 10th
floor, Arlington, VA.
12:15 PM. The Federal
Communications Bar Association's (FCBA) Legislative
Practice Committee will host a discussion of the Congressional
budget process and its influence on spectrum policy. The
speakers will be Jim Hearn (Senate Budget Committee
staff) and David Moore (Congressional
Budget Office). RSVP to Liz Henderson.
Location: Wilmer Cutler &
Pickering, 2400 N St. NW.
1:30 - 3:30 PM. The American
Enterprise Institute (AEI) will host a panel discussion
titled "Should the WTO Determine U.S. Tax Policy?"
The speakers will be Michael Finger
(AEI), Gary Hufbauer (Institute for International Economics),
Dave Brumbaugh (Congressional Research Service), John Meagher
(PriceWaterhouse Coopers), and Kevin Hassett
(AEI). See, online
information and registration page. Location: Wohlstetter
Conference Center, AEI, 1150 17th Street, NW.
|Tuesday, Dec 11
|The House will meet at 12:30 PM for morning hour and at 2:00
PM for legislative business. No recorded votes are expected
before 6:30 PM. The House will consider a number of measures
under suspension of the rules.
Day one of a two day conference hosted by the Information
Technology Association of America (ITAA) titled Developing
Cyber Security Solutions in the e-Gov Era. This is an
invitation only event. For information, contact Shannon
Kellogg at firstname.lastname@example.org.
The press contact is email@example.com.
Location: Executive Briefing Center, Computer Sciences
Corporation, 3170 Fairview Park Drive, Falls Church, VA.
11:45 AM - 12:45 PM. Ken Feree, Chief of the FCC's Cable Services Bureau, will
be the luncheon speaker at the Power Line Communications
Conference. Location: Troutman Sanders, Washington DC.
POSTPONED TO DECEMBER 18.
PM. The Federal Communications
Bar Association's (FCBA) Young Lawyers Committee will host
a brown bag lunch. The speakers will be Commissioner Michael
Copps' Legal Advisors: Jordan Goldstein, Paul Margie, and
Susanna Zwerling. For more information contact Chris Moore at
202 224-9584 or firstname.lastname@example.org
or Yaron Dori at 202 637-5458 or email@example.com.
3:00 PM. The House
Commerce Committee's Subcommittee on Telecommunications
and the Internet will hold a hearing for on the proposed
settlement between the U.S. and Nextwave over spectrum
licenses. Room 2123, Rayburn Building.
|Wednesday, Dec 12
|9:00 AM. - 2:30 PM. The American
Enterprise Institute (AEI) will host a program titled
"Telecommunications Policy as Trade Policy: Negotiations
with Japan over Interconnection Pricing". See, online information and
registration page. Location: Wohlstetter Conference
Center, AEI, 1150 17th Street, NW.
9:30 AM. The FCC will hold a meeting. The agenda
includes the following: (1) a Notice of Proposed Rule Making (NPRM)
initiating a comprehensive examination of the appropriate
regulatory framework for incumbent local exchange carriers' (ILECs')
provision of broadband services; (2) a NPRM to initiate
the FCC's triennial review of the definitions of and rules
concerning access to ILEC unbundled network elements; (3) an
order in regarding the FCC's plans for nationwide thousands
block number pooling (CC Docket No. 96-98 and CC Docket No.
99-200); (4) a second NPRM concerning new equal employment
opportunity rules for broadcast licensees and cable entities;
(5) a Report and Order concerning allocation and service rules
to reallocate television channels 52-59; and (6) a First
Report and Order to provide for new ultra wideband (UWB)
devices (ET Docket No. 98-153). Location: Commission Meeting
Room, FCC, 445 12th Street, SW, Room TWC305.
Location Change. 10:00 AM.
Judiciary Committee will hold a hearing on the future of
the Microsoft settlement. Location: Room 106, Dirksen
TIME? The House
Judiciary Committee's Subcommittee on Courts, the Internet
and Intellectual Property will hold the first part of a
hearing on proposed changes to the Copyright Act.
|Thursday, Dec 13
|Day one of a two day conference titled the "19th Annual
Institute on Telecommunications Policy & Regulation".
Location: International Trade Center.
9:15 AM - 4:30 PM. The International
Trademark Association will host a CLE program titled
"Trademark Trial and Appeal Board (TTAB) Practice for
Advanced Practitioners Forum." The price to attend is
$395. See, brochure
Location: Crystal Gateway Marriott, 1700 Jefferson Davis
Highway, Arlington, VA.
10:00 AM. The Senate
Judiciary Committee will hold a business meeting.
Location: Room 226, Dirksen Building.
TIME? The House
Judiciary Committee's Subcommittee on Courts, the Internet
and Intellectual Property will hold the second part of a
hearing on proposed changes to the Copyright Act.
6:00 PM. The Federal
Communications Bar Association (FCBA) will hold its 15th
Annual FCBA Chairman's Dinner. The reception begins at 6:00
PM; dinner begins at 7:30 PM. Location: Washington Hilton
& Towers, 1919 Connecticut Ave., NW.
|Friday, Dec 14
|8:30 - 10:00 AM. The American
Enterprise Institute (AEI) will host a press breakfast on
"The Role of the FCC in Restricting the Ownership of
Licenses". Harold Furchtgott Roth and other AEI scholars
will speak. RSVP to Veronique Rodman at 202 862-4871 or firstname.lastname@example.org. Location:
AEI, 1150 17th Street, NW, 11th Floor Conference Room.
Day two of a two day conference titled the "19th Annual
Institute on Telecommunications Policy & Regulation".
Location: International Trade Center.
|Starting on January 1, 2002, the Tech Law Journal Daily
E-Mail Alert will be a subscription based service. All persons
who have already subscribed, or who subscribe before December
31, 2001, will be kept on the subscription list until December
31, 2001. The basic rate for a subscription is $250 per year.
However, there are discounts for entities with multiple
subscribers. Free one month trial subscriptions are available.
Also, free subscriptions are available for law students,
journalists, elected officials, and employees of the Congress,
courts, executive branch. The TLJ web site will remain a free
access web site. No hyperlinks will be broken. However, copies
of the TLJ Daily E-Mail Alert and news items will not be
published in the web site until one month after writing. See, subscription
|About Tech Law Journal
|Tech Law Journal is a free access web site and e-mail alert
that provides news, records, and analysis of legislation,
litigation, and regulation affecting the computer and Internet
industry. This e-mail service is offered free of charge to
anyone who requests it. Just provide TLJ an e-mail address.
Number of subscribers: 2,244.
Contact: 202-364-8882; E-mail.
P.O. Box 4851, Washington DC, 20008.
Copyright 1998 - 2001 David Carney, dba Tech Law Journal. All