Tech Law Journal Daily E-Mail Alert
January 7, 2002, 9:00 AM ET, Alert No. 340.
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Antitrust Division Reorganizes
1/4. The Antitrust Division of the Department of Justice announced a reorganization. Charles James, who was appointed Assistant Attorney General in charge of the Antitrust Division by President Bush early last year, stated in a release that this "positions the Antitrust Division to address the challenges of the New Economy in the 21st Century while strengthening enforcement capability in traditional industries." See also, new organizational chart [PDF].
There will be five Deputy Assistant Attorneys General (DAAGs) for the following areas: Regulatory, Economic, Civil, Criminal, and International.
Regulatory. Hewitt Pate is the DAAG for the Regulatory area who was picked last year. He was previously an antitrust lawyer for the law firm of Hunton & Williams. He will preside over three sections: Network & Technology Section, Telecommunications & Media Section, and Transportation, Energy & Agriculture Section. The Network & Technology Section was previously named the Computers and Finance Section. It will now "focus on increasingly sophisticated high technology, networking, and intellectual property issues." The Telecommunications & Media Section was previously named the Telecommunications Task Force. The DOJ release states that "in this era of technology convergence this section's work extends beyond telecommunications and to reflect the permanent need for a section that concentrates on these industries". The third section is Transportation, Energy & Agriculture. The reorganization eliminates the Health Care Task Force.
Economic. Michael Katz is the DAAG for the Economic area; he was selected for this post last summer. From 1994 through 1996 he was Chief Economist at the FCC. More recently, he was a professor of economics and business at the University of California at Berkeley's Haas School. The Economic area includes three sections: Economic Litigation, Economic Regulation, and Competition Policy.
Civil. Deborah Herman, a former law partner of Charles James at Jones Day, is the DAAG for the Civil area. This area will include Litigation I Section, Litigation II Section, and Litigation III Section. Litigation I and II Sections are being created by splitting up the old Litigation II Section. Litigation III Section is the renamed Civil Task Force. The DOJ release states only that "Each of these sections will be responsible for the full range of civil enforcement -- including merger and non-merger matters -- in their assigned commodities."
Criminal. The former Litigation I Section will be renamed the National Criminal Enforcement Section. It is part of the Criminal area.
International. The International area contains just one section: Foreign Commerce.
People and Appointments
1/4. Joseph Nacchio, Ch/CEO of Qwest Communications, will chair the next term of the Federal Communications Commission's (FCC's) Network Reliability and Interoperability Council (NRIC). The group provides recommendations to the FCC and telecom industry regarding optimal reliability and interoperability of public telecommunications networks. In addition, in July of 2001, President Bush picked Nacchio to be Vice Chairman of the National Security Telecommunications Advisory Committee (NSTAC); he will be Chairman starting in March of 2002.The outgoing chair of the NRIC is James Crowe, P/CEO of Level 3 Communications.
12/21. Ronald Beard retired from the law firm of Gibson Dunn & Crutcher. He was Chairman of the firm from April 1991 until December 2001, and was also its Managing Partner from April 1991 until mid 1997.
1/2. The law firm of Latham & Watkins named eight new partners, including Kenneth Schuler, Raymond Grochowski, and Howard Armstrong. Kenneth Schuler is based in the firm's Chicago office, where he litigates cases involving intellectual property rights. Raymond Grochowski is in the Communications Law Practice Group in the Washington DC office; he focuses on federal regulation of, and purchase, sale and financing of, broadcast stations, satellite earth and space stations and mobile communications services facilities and businesses; he also advises clients in Internet related matters. Howard Armstrong is in the Corporate Department and the Telecommunications and Wireless Practice Group in the San Diego office; he focuses on corporate finance, mergers and acquisitions, commercial transactions, and general company representation for public and private companies. See, L&W release.
1/2. The Venable law firm named five new partners, including Marcia Auberger, of the Washington DC office. She focuses on domestic and international trademark prosecution, including analysis of trademark searches, clearance of marks, preparation of trademark applications, responding to Trademark Office correspondence, maintenance of domestic and international trademark portfolios, and represents client before the Trademark Trial and Appeal Board. See, Venable release.
DOJ Recommends Approval of Verizon RI 271 Application
1/4. The Antitrust Division of the Department of Justice (DOJ) issued its Evaluation [PDF] recommending that the Federal Communications Commission (FCC) approve Verizon's Section 271 application to provide long distance services in the state of Rhode Island. It cited the availability of facilities based competition, especially cable telephony. However, it urged the FCC to examine Verizon's pricing of unbundled network elements (UNEs). See, DOJ release and Verizon release.
Verizon has already gained approval from the FCC under 47 U.S.C. § 271 to provide in region interLATA services in the states of Connecticut, Massachusetts, Pennsylvania, and New York. The DOJ concluded that "Verizon has generally succeeded in opening its local markets in Rhode Island to competition and recommends approval of Verizon’s application for Section 271 authority in Rhode Island, subject to the Commission satisfying itself as to the pricing issues ..."
The DOJ eleborated that "CLECs serve approximately 9.2 percent of all residential lines in Rhode Island. Most CLEC service to residential customers in Rhode Island is facilities based, including that provided over the cable television facilities of Cox Communications. Cox’s cable telephony service is available to between 75 and 95 percent of homes in the state. The wide-spread availability of facilities based competition, which is the type of competitive entry best able to ensure healthy ongoing competition and deregulation, counts heavily in favor of granting Verizon’s application." (Footnotes omitted.)
However, the DOJ added that "Other CLECs serve approximately 1.1 percent of all residential lines through resale, and less than one-tenth of 1 percent of such lines by means of the UNE-platform. ... While there is significantly less competition to serve customers by means of the UNE platform, the Department does not believe there are any material non-price obstacles to competition in Rhode Island." It concluded that the FCC should examine Verizon's UNE pricing in Rhode Island to determine "whether Verizon’s prices are cost-based."
SEC Files Internet Stock Fraud Complaint
1/2. The Securities and Exchange Commission (SEC) filed a civil complaint with the U.S. District Court (NDCal) against Ned Sneiderman alleging violation of federal securities laws in connection with the posting of a fake press release on a Yahoo message board regarding a stock traded on the NASDAQ.
The complaint states that he "posted a phony press release on an Internet stock discussion board in which Extreme Networks ... a Santa Clara technology company, purported to announce a cash tender offer for Viasource Communications ... a small Florida technology company. The fabricated press release caused Viasource stock to double in price on volume nearly seven times that of the previous trading day. The price increase caused Viasource's market capitalization to be artificially inflated by nearly $4.7 million. ... Minutes before posting the false press release, Sneiderman had purchased shares of Viasource stock."
The complaint elaborates that Sneiderman used his home computer to post the phony release to the Yahoo stock discussion board for Viasource, and that he used the same computer to purchase shares of Viasource in his online brokerage account.
The complaint alleges violation of § 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. §§ 240.10b-5, thereunder. The complaint seeks injunctive and monetary relief. This is D.C. No. C-02-0001 JW. See, SEC release.
10th Circuit Rules in § 252 Interconnection Case
1/4. The U.S. Court of Appeals (10thCir) issued its opinion in U.S. West v. Sprint, holding the CLECs, when negotiating interconnection agreements with ILECs, can opt into tariff provisions.
Background. U.S. West (now known as Qwest) is an incumbent local exchange carrier (ILEC) in the state of Colorado. Sprint and MCI, as competitive local exchange carriers (CLECs), sought entry to Qwest's market for local phone service. They each attempted unsuccessfully to negotiate interconnection agreements with Qwest. They each then filed petitions with the Colorado Public Utilities Commission (CPUC), which arbitrated the disputes. Qwest sought judicial review in the U.S. District Court (DColo), which vacated portions of the arbitrations orders. Sprint and MCI then brought the present appeal. The Appeals Court reversed and remanded.
Section 251. § 251, enacted as part of the Telecom Act of 1996, requires ILECs, including the Qwest, to open up their networks to their competitors. 47 U.S.C. § 251(a)(1) provides that "... Each telecommunications carrier has the duty - (1) to interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers ..."
§ 251(c) further provides that ILECs have "The duty to provide, for the facilities and equipment of any requesting telecommunications carrier, interconnection with the local exchange carrier's network -- (A) for the transmission and routing of telephone exchange service and exchange access; (B) at any technically feasible point within the carrier's network; (C) that is at least equal in quality to that provided by the local exchange carrier to itself or to any subsidiary, affiliate, or any other party to which the carrier provides interconnection; and (D) on rates, terms, and conditions that are just, reasonable, and nondiscriminatory, in accordance with the terms and conditions of the agreement and the requirements of this section and section 252 ..."
A competitor can negotiate an agreement with an ILEC. Indeed, 251(c)(1) imposes a duty upon ILECs to negotiate in good faith. Alternatively, if negotiation fails, either party can petition the state commission that regulates local phone service to arbitrate.
Section 252. This section provides procedures for negotiation, arbitration, and approval of agreements. 47 U.S.C. § 252(i) provides that "A local exchange carrier shall make available any interconnection, service, or network element provided under an agreement approved under this section to which it is a party to any other requesting telecommunications carrier upon the same terms and conditions as those provided in the agreement."
CPUC. MCI and Sprint sought provisions in their interconnection agreements with Qwest giving them "most favored nation", or "pick and choose", clauses affording them the right to pick any clause from any other interconnection agreement either agreed to or arbitrated by any other carrier that interconnected with Qwest, and to purchase services from Qwest out of any effective tariffs filed by Qwest with the CPUC. The CPUC required Qwest to "make available any interconnection, service, or network element provided under an agreement approved under Section 252(i) of the Act to which it is a party to Sprint upon the same terms and conditions as those provided in the agreement."
District Court. Qwest filed complaints in the District Court challenging the CPUC's orders. The District Court consolidated these cases. In particular, Qwest challenged the right of CLECs to purchase services out of Qwest's Colorado tariffs. The District Court ruled in favor of Qwest. It held that neither § 252 nor the FCC's implementing regulation permit CLECs to opt into tariff provisions. It wrote that such a requirement "would eviscerate the provisions of 251 and 252 of the Act which require that the parties negotiate the terms of an interconnection agreement and arbitrate those terms that they are not able to agree to".
Appeals Court. The Tenth Circuit reversed. It held that the tariff opt-in provisions of the CPUC orders do not violate either § 252(i) or the FCC regulation. The Court remanded to the District Court with instructions to enter judgment in favor of Sprint and MCI.
Monday, Jan 7
9:15 AM. The U.S. District Court (DC) will hold a hearing on Microsoft' motion to amend the scheduling order (to delay the trial date) in the government antitrust lawsuit. Nine of the state plaintiffs have not joined in the settlement agreement negotiated by Microsoft, the Department of Justice, and the other state plaintiffs. See, order [PDF]. This is Civil Action No. 98-1233 (CKK), Judge Colleen Kotelly presiding.
10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Bowers v. Baystate Technologies, No. 01-1108. Location: Courtroom 402, 717 Madison Place, NW, Washington DC.
5:30 PM. Judge Stephen Williams of the U.S. Court of Appeals (DCCir) will give a lecture titled "Radical Reform: Transitions to Liberal Democracy and the Rule of Law". Location: American Enterprise Institute, twelfth floor, 1150 Seventeenth St., NW, Washington DC.
Deadline to resubmit comments with the U.S. Department of Justice (DOJ) regarding the proposed settlement in the antitrust case titled U.S. v. 3d Systems Corp. and DTM Corp. (D.C. No. 1:01CV01237). The original comment period closed on November 26, 2001. However, because of disruption of the U.S. Mail in Washington DC, the DOJ requests that comments be resubmitted. The deadline is 15 after publication of a notice in the Federal Register on December 21, 2001, which would fall on Saturday, January 5. See, notice in Federal Register, December 21, 2001, Vol. 66, No. 246, at Page 65992.
12:15 PM. The Federal Communications Bar Association's Online Communications Committee will host a brown bag lunch. Bruce Mehlman, Assistant Secretary of Commerce for Technology Policy, will give a talk titled "Broadband, When? A View from the Administration." RSVP to Scott Harris. Location: Lampert & O'Connor, 5th floor, 1750 K Street, NW, Washington DC.
Tuesday, Jan 8
The Supreme Court will hear oral argument in Festo Corporation v. Shoketsu Kinzoku Koygo Kabushiki, No. 00-1543, a case regarding the doctrine of equivalents in patent law.
Wednesday, Jan 9
10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Fantasy Sports v., No. 01-1217, an appeal from the U.S. District Court (EDVa). This is a patent infringement case regarding U.S. Patent 4,918,603, titled "Computerized Statistical Football Game". (D.C. No. 99 CV 2131103; opinion at F. Supp. 2d 886 (E.D.Va. 2000).) Location: Courtroom 402, 717 Madison Place, NW, Washington DC.
10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in ManTech Telecommunications v. US, No. 01-5090. Location: Courtroom 402, 717 Madison Place, NW, Washington DC.
12:15 PM. The Federal Communications Bar Association's Telecom Competition Issues Committee will host a brown bag lunch. Michael Katz, a Deputy Assistant Attorney General for the DOJ's Antitrust Division, and former Chief Economist of the FCC, will speak about his observations on the similarities and differences that characterize the two agencies' approach to competition issues. Location: CTIA, 1250 Connecticut Ave., NW, 8th floor conference room, Washington DC.
Third Circuit Holds Evidence Obtained in Computer Search Inadmissable
1/4. The U.S. Court of Appeals (3rdCir) issued its split opinion in USA v. Zimmerman, reversing a conviction that was based upon evidence found in a computer.
Background. Several parents, students, and former students of the defendant, a high school coach, provided local police with information regarding improper sexual conduct by the coach. Police obtained a search warrant which covered his "Computer and any computer related or attached equipment, including but not limited to hard drives, keyboard, mouse(s), printers, terminals, display screens, modems and connectors, cables, magnetic and optical media storage devices, any sexual materials including photos, ..." Police conducted a search of his computer, and found child pormography.
District Court. A grand jury of the U.S. District Court (WDPenn) returned a one count indictment of Zimmerman alleging possession of child pormography in violation of 18 U.S.C. § 2252A(a)(5)(B). He filed a motion to suppress evidence obtained from the search of his computer. The District Court denied his motion. He entered a conditional plea of guilty, and filed this appeal.
Appeals Court. The Appeals Court reversed, 2-1, pursuant to the Fourth Amendment. Judge Barry opined that police had probable cause to search for adult pormography, but did not have fresh probably cause to search for child pormography; hence, evidence of child pormography is inadmissible under the exclusionary rule. Judge Alito wrote a dissent in which he argued that the good faith exception to the exclusionary rule should be applied in this case.
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