Tech Law Journal Daily E-Mail Alert
January 11, 2002, 9:00 AM ET, Alert No. 344.
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SEC Official Addresses Data Backup, Communications, and Terrorism
1/8. Annette Nazareth, Director of the Securities & Exchange Commission's (SEC's) Division of Market Regulation, gave a speech to The Bond Market Association Legal and Compliance Conference. She addressed the necessity of frequent off site data backup and redundant communications for securities market participants in light of new terrorist threats.
She stated that "my sense is that most now recognize the need for more rigorous plans that address problems of wider geographic scope and longer duration. For many, the September 11 attacks made clear the possibility of a large scale regional disaster. Thus, there seems to be consensus that business continuity planning needs to adapt -- to plan for events of wider scope and, in general, become more robust and resilient."
She stated that it is important for securities market participants to maintain "an adequate ``desktop´´ recovery strategy -- one that contemplates the movement of, at minimum, core employees to fully functional backup office space ..."
She also addressed data backup strategies. "Market participants also realized the importance of maintaining current copies of records and software at their backup facilities (or other secure location). Some firms had been in the practice of sending records offsite only at weekly or monthly intervals. As a result, when they lost their primary offices, they had to devote substantial resources to reconstruct records that had not yet been transferred to their backup facilities. Many of these firms now intend to ship records offsite more frequently, perhaps daily or even several times per day."
Nazareth also stressed the importance of redundant communications facilities. "A crucial lesson learned from the events of September 11 -- but one not entirely within the control of the securities industry -- is the importance of connectivity and the need to ensure that an organization has truly redundant telecom arrangements."
She continued that "Many firms thought they had achieved redundancy in their communications systems, by making arrangements with multiple telecom providers, only to discover that the lines of all those providers went through the same Verizon switching facility -- which happened to be located next to the World Trade Center. Others had taken the time to map their telecom lines to assure diverse routing, only to find out that their telecom providers had rerouted some of those lines - and eliminating that diversity -- without telling them, or contracted out the service to other providers already in use by the firm. Going forward, the securities industry must assure that diverse routing is acquired and maintained, so that truly redundant communications systems are created."
Fourth Circuit Dismisses Domain Name Appeal as Moot
1/10. The U.S. Court of Appeals (4thCir) issued its opinion in Heathmount v., a domain name dispute. The plaintiff is Heathmount, a Canadian corporation. It filed a complaint in U.S. District Court (EDVa) in which it plead an in rem action against two domain names pursuant to the Anticybersquatting Consumer Protection Act, 15 U.S.C.A. § 1125(d). It alleged bad faith registration of domain names that included its trademarks. This is an interlocutory appeal on jurisdictional and constitutional issues. However, the plaintiff has since abandoned the trademarks, and moved to dismiss the complaint. The Appeals Court dismissed the appeal as moot.
Novell Settles with Infringers
1/10. Novell announced that it settled its lawsuit against Cableware Technology, Inc. and MJ Systems, Inc. Novell filed a complaint in U.S. District Court (CDCal) against these defendants alleging that they produced counterfeit Novell software and labels, illegally repackaged Novell software, and distributed stolen software. Novell stated that the terms of the settlement include a permanent injunction, and a cash payment of $750,000, which it has received. See, Novell release.
More News
1/10. Motient Corporation filed a Chapter 11 bankruptcy petition with the U.S. Bankruptcy Court (EDVa). Motient operates a two way wireless packet data network that is used by Blackberry devices. See, Motient release.
1/10. The USPTO announced that it will launch a television and radio ad campaign in five media markets to counter the flood of deceptive advertising aimed at independent inventors. It will also run ads in print magazines. See, USPTO release.
Andersen Destroyed Enron Electronic Records
1/10. Andersen stated that it "has notified the U.S. Securities and Exchange Commission and the U.S. Department of Justice, and is also notifying congressional committees and other agencies investigating the Enron collapse, that in recent months individuals in the firm involved with the Enron engagement disposed of a significant but undetermined number of electronic and paper documents and correspondence relating to the Enron engagement." See, Andersen release.
Rep. Billy Tauzin (R-LA), Chairman of the House Energy and Commerce Committee, stated in a release that "This is a deeply troubling development. It should never have happened. While Andersen has assured the Committee that it will work vigorously to retrieve all electronic documents, we may never know if all of the relevant records were recovered. ... our Committee will get to the bottom of this debacle."
See also, transcript of press conference of President Bush.
Attorney General John Ashcroft stated in a release that he and his Chief of Staff, David Ayres, "have recused themselves in all matters arising out of allegations of misconduct by Enron Corporation ..."
USPTO Announces Top 10 Patent Recipients
1/10. The U.S. Patent and Trademark Office (USPTO) announced the top ten private sector recipients of patents in 2001. They are, in order, IBM, NEC, Canon, Micron, Samsung, Matsushita, Sony, Hitachi, Mitsubishi, and Fujitsu. IBM was issued 3,411 patents -- up from 2,886 in 2000. See, USPTO release.
Nick Donofrio, IBM's SVP for technology and manufacturing, stated that "One of the biggest myths of 2001 was that innovation was dying along with the bust ... The fact is that innovation is thriving in the research and development labs of corporate America and companies around the world, as this year's patent results confirm," See, IBM release.
Securities Fraud
1/10. The SEC filed a civil complaint in U.S. District Court (SDFl) against Global Datatel, Inc., Richard Baker (Global's CEO), Mario Habib (President of Global's subsidiary, eHOLA), and Stuart Bocker, alleging violation of federal securities laws. The complaint alleges that Global, Baker and Habib disseminated false and misleading information about Global and eHOLA via the Internet, and by other methods. Global is a Nevada Corporation located in Delray Beach, Florida. It was a computer systems integrator and Internet service provider operating in Central and South America. It filed a Chapter 7 bankruptcy petition on October 2, 2001. eHOLA purported to provide Internet service in Central and South America. See, SEC release.
1/9. The SEC filed a civil complaint in U.S. District Court (DNeb) against David Guenthner and Jay Samuelson alleging violation of federal securities laws. The complaint alleges that David Guenthner, the CFO of InaCom Corp., and Jay Samuelson, InaCom's assistant controller, submitted SEC 10-Q forms that improperly accrued unallocated, general reserves, then reversed $7.1 million of these reserves into income. InaCom was a computer reseller, specializing in purchasing computers from major manufacturers and customizing them for corporate end users. It filed a Chapter 11 bankruptcy petition on June 16, 2000, and ceased its operations.
GAO Releases Report on Delays in Export Licensing
1/10. The General Accounting Office (GAO) released a report [PDF] titled "Export Controls: Reengineering Business Processes Can Improve Efficiency of State Department License Reviews". This report concluded that "License applicants have long complained that they cannot predict how long a license review may take and are frustrated by delays. Although licensing officers and license reviewers require time to deliberate and ensure that license decisions are appropriate, a substantial number of applications become stalled between reviews by licensing officers and reviewers. Improving efficiency, predictability, and timeliness of the process may be achieved with relatively small changes in guidelines and procedures." The report was prepared at the request of Sen. Daniel Akaka (D-HI) and Sen. James Inhofe (R-OK), the Chairman and ranking Republican on the Senate Armed Services Committee's Subcommittee on Readiness and Management Support.
People and Appointments
1/10. The U.S. Telecom Association (USTA) today announced that it has hired three people: Daniel Phythyon, John Abel, and Patricia Cole. Daniel Phythyon will be SVP, Law and Policy. He was previously an attorney with the Washington DC law firm of Wilmer Cutler & Pickering. Before that he was Chief of the FCC's Wireless Telecommunications Bureau. Before that, he was Director of the FCC's Office of Legislative and Intergovernmental Affairs. He has also worked as the National Association of Broadcasters' top Congressional lobbyists, and as Majority Staff Counsel to the Senate Commerce Committee's Communications Subcommittee. John Abel will be SVP, Membership, Marketing and Business Development. Patricia Cole will be SVP, Chief Financial Officer. In addition, Tom Amontree, who joined the USTA last summer, was named SVP, Strategic Communications. See, USTA release.
1/10. Michael Ferrante was named Chief of the FCC's Wireless Telecommunications Bureau's Commercial Wireless Division's Licensing & Technical Analysis Branch. This branch is responsible for processing and issuing the licenses for all commercial mobile radio services (CMRS). See, FCC release [PDF].
Monday, Jan 14
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Sinclair Broadcast Group v. FCC, No. 01-1079. Judges Sentelle, Rogers and Williams will preside.
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in COMSAT Corp v. FCC, No. 00-1458. Judges Sentelle, Rogers and Williams will preside.
Tuesday, Jan 15
8:30 AM - 5:00 PM. The North American Numbering Council (NANC) will meet. Location: FCC, 445 12th Street, SW, Room TW-C305 (Commission Meeting Room).
9:30 AM. The Communications for Coordinated Assistance and Response to Emergencies Alliance (Comcare) will hold a press conference to release a report titled "The E-Safety Program -- Making Americans Safer". For more information contact Alan Kitey at or 202 429-0574. See, Comcare release. Location: Zenger Room, National Press Club, 529 14th St. NW, 13th Floor.
1:30 PM. The U.S. International Telecommunication Advisory Committee (ITAC) will hold a meeting. See, notice in Federal Register, October 17, 2001, Vol. 66, No. 201, Page 52825. Location: State Department.
Wednesday, Jan 16
8:30 AM - 5:00 PM. The North American Numbering Council (NANC) may continue its meeting of January 15, if necessary. Location: FCC, 445 12th Street, SW, Room TW-C305 (Commission Meeting Room).
11:00 AM. The Cato Institute will host a panel discussion titled "Closing 'Windows' on Antitrust or Opening a New Era of Intervention? Competition Policy after the Microsoft Settlement". The participants will be Jeffrey Eisenach (Progress and Freedom Foundation), Robert Levy (Cato), Kenneth Starr (Kirkland & Ellis), Jonathan Zuck (Association for Competitive Technology), and James Miller (Citizens for a Sound Economy). A luncheon will follow. See, online registration page. Location: Cato Institute, 1000 Massachusetts Avenue, NW.
Thursday, Jan 17
9:30 AM. The Federal Communications Commission (FCC) will hold a meeting that will focus on a review of FCC policies and procedures by the Commissioners and senior agency officials. There will be three panel presentations. Panel One will include Chiefs of the Mass Media Bureau, Cable Service Bureau and Common Carrier Bureau. Panel Two will include the Chiefs of the Consumer Information Bureau and the Enforcement Bureau. Panel Three will include the Chiefs of the Office of Engineering and Technology, the International Bureau, and the Wireless Telecommunications Bureau. Location: FCC, Commission Meeting Room (Room TW-C305), 445 12th Street, SW.
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