Tech Law Journal Daily E-Mail Alert
January 23, 2002, 9:00 AM ET, Alert No. 352.
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AOL Time Warner Files Treble Damages Antitrust Suit Against Microsoft
1/22. AOLTW's Netscape unit filed a complaint in U.S. District Court (DC) against Microsoft alleging violation of the Sherman Antitrust Act, the parallel sections of the District of Columbia Code, and the common law claim of tortious interference. Netscape seeks treble damages and injunctive relief.
Netscape, which is now a subsidiary of AOL Time Warner, relies upon facts and conclusions of law previously adjudicated in the government's antitrust action against Microsoft. See, Judge Thomas Jackson's Findings of Fact [PDF] (November 5, 1999), Conclusions of Law (April 3, 2000), and Final Judgment (June 7, 2000). See also, opinion of the U.S. Court of Appeals (DCCir) (June 28, 2001). In addition, Netscape alleges that Microsoft continues to engage in illegal and anticompetitive conduct.
The twenty page, seven count, complaint reviews the history of web browsers from Netscape's release of Navigator 1.0 in 1994 through Microsoft's Internet Explorer's current 80% share. It also reviews the history and status of the government's antitrust action against Microsoft, which is also pending in the U.S. District Court for the District of Columbia. (See, D.C. Nos. 98-1232 and 98-1233.)
Netscape Communications Corporation is a Delaware corporation with its principal place of business in Mountain View, California. AOL completed its acquisition of Netscape in 1999. AOL subsequently merged with Time Warner. Hence, Netscape is now a wholly owned subsidiary of AOL Time Warner. It is the producer of the browser named Navigator.
The complaint pleads seven causes of action: (1) Sherman Act  2 -- Illegal Monopoly Maintenance of Intel- Compatible PC Operating Systems (see, 15 U.S.C.  2), (2) Sherman Act  2 -- Further Acts of Illegal Monopoly Maintenance, (3) Sherman Act  1 -- Illegal Tying of Windows and Internet Explorer (see, 15 U.S.C.  1), (4) Sherman Act  2 -- Illegal Monopolization of the Web Browser Market, (5) Sherman Act  2 -- Attempted Monopolization of the Web Browser Market, (6) Parallel Violations of District of Columbia Code 28-4502 and 28-4503, and (7) common law liability for intentional interference with contractual relations and intentional interference with prospective economic advantage and/or prospective contractual or business relations.
The complaint seeks treble damages for the alleged antitrust violations, punitive damages for tortious interference, and attorneys fees. It also seeks "injunctive relief sufficient to prevent further antitrust injury to Netscape and to restore competition lost in the market for Web browsers, and to enable middleware platforms to compete with Intel- compatible PC operating systems".
Randall Boe, General Counsel to AOL, stated in a release that "Netscape's lawsuit is a logical extension of the findings entered by the District Court and unanimously affirmed by the Court of Appeals that Microsoft thwarted competition, violated the antitrust laws and illegally preserved its monopoly at Netscape's expense". He added that "There is no question that Microsoft's conduct violated the law and harmed competition and consumers. Netscape's lawsuit seeks not only an award of damages, but for the Court to provide injunctive relief that will help restore competition on the computer desktop. We support the efforts and goals of the non-settling state attorneys general who continue to seek appropriate remedies to end Microsoft's anticompetitive conduct and illegal activities. The aims of Netscape's lawsuit are entirely consistent with their efforts."
The complaint lists Netscape's attorneys as the law firms of Kirkland & Ellis and Cravath Swaine & Moore.
Supreme Court Denies Cert in Mouse Patent Case
1/22. The Supreme Court denied certiorari in Logitech v. Gart, No. 01-710. See, January 22, 2002, Order List [PDF], at page 5.
This is a petition for writ of certiorari from the June 26, 2001 opinion of the U.S. Court of Appeals (FedCir) in Gart v. Logitech, a patent infringement case involving computer mouses. Samuel Gart holds U.S. Patent 4,862,165, which relates to ergonomically shaped computer mouses for reducing muscle fatigue.
Gart filed a complaint against Logitech, a producer of mouses and other computer input devices, in U.S. District Court (CDCal) alleging infringement of this patent. On cross motions for summary judgment, the District Court determined that Logitech did not infringe the patent either literally or under the doctrine of equivalents. The District Court also determined on a motion for summary judgment the starting dates for accrual of damages pursuant to 35 U.S.C. 287(a). The Appeals Court vacated the grant of summary judgment of no infringement, either literally or under the doctrine of equivalents, and remanded for further proceedings. The Appeals Court also reversed in part the  287 determination. The Supreme Court denied certiorari without opinion.
People and Appointments
1/11. Jon Dudas was named Deputy Director of the U.S. Patent and Trademark Office (USPTO). Dudas was previously Senior Floor Director for the Speaker of the House, Rep. Dennis Hastert (R-IL). Prior to that, he served as the Deputy General Counsel and Staff Director for the House Judiciary Committee, and Counsel to the Courts and Intellectual Property Subcommittee. USPTO Director James Rogan was previously a member of these committees.
1/22. President Bush made a recess appointment of Cynthia Glassman to be a Commissioner of the Securities and Exchange Commission (SEC), thereby avoiding the Senate confirmation process. She is currently a principal at Ernst & Young. Before that, she worked at Furash & Company. From 1977 through 1986 she worked at the Federal Reserve System in several positions, including Economist and Senior Economist.
1/22. President also reappointed Isaac Hunt to be a Commissioner of the Securities and Exchange Commission (SEC). He was first appointed to the SEC by former President Clinton in 1996.
1/22. Alison Ritchie was named Chief Executive Officer of BTopenworld, BT's mass market Internet division. See, BT release.
FTC Proposes Changes to Telemarketing Sales Rule
1/22. Federal Trade Commission (FTC) announced that it is proposing numerous changes to its Telemarketing Sales Rule (TSR). The proposals include the creation of a national "do not call" registry, and a prohibition on blocking caller ID systems by telemarketers. In addition, the proposed rule contains several Internet related items.
The TSR, which is codified 16 CFR Part 310, implements the 1994 Telemarketing Consumer Fraud and Abuse Prevention Act, 15 U.S.C. 6101-6108. The TSR prohibits specific deceptive and abusive telemarketing acts or practices, requires disclosure of certain material information, requires express verifiable authorization for certain payment mechanisms, sets record keeping requirements, and specifies those transactions that are exempt from the TSR. The proposed ruled is contained in a notice [150 pages in PDF] to be published in the Federal Register.
The notice states that the proposed rule provides that "facsimile transmissions, electronic mail, and other similar methods of delivery are direct mail for purposes of the direct mail exemption".
The proposed rule also narrows the exemptions to the TSR. For example, it excepts calls involving the sale of Internet services and web services from the business to business exemption. The proposed version of  310.6(g) would provide an exemption for "Telephone calls between a telemarketer and any business, except calls to induce a charitable contribution, and those involving the sale of Internet services, Web services, or the retail sale of nondurable office or cleaning supplies; provided, however, that  310.5 of this Rule shall not apply to sellers or telemarketers of nondurable office or cleaning supplies, Internet Services, or Web services."
Also, since this proposed rule includes the terms "Internet services" and "web services", the proposed rule adds definitions of these terms, at  310.2(m) and  310.2(bb), respectively.
"Internet services" is defined as "the provision, by an Internet Service Provider, or another, of access to the Internet." Moreover, the notice states that the FTC "intends for this term to encompass the provision of whatever is necessary to gain access to the Internet, including software and telephone or cable connection, as well as other goods or services providing access to the Internet. Specifically, the term includes provision of access to the Internet, or any component thereof, such as electronic mail, the World Wide Web, websites, newsgroups, Internet Relay Chat or file transfers."
Similarly, the term "Web services" is defined as "designing, building, creating, publishing, maintaining, providing, or hosting a website on the Internet."
The notice also states that the FTC "has decided not to expand the Rule's coverage to online solicitations."
FTC Commissioner Orson Swindle wrote in a concurring statement that the FTC's "regulatory scheme would be more effective if it covered the entire spectrum of entities engaged in telemarketing. Under the Telemarketing Act and the TSR, however, the Commission lacks jurisdiction in whole or in part over the calls of entities such as banks, telephone companies, airlines, insurance companies, credit unions, charities, political campaigns, and political fund raisers. In addition, the Commission also proposes to exempt from the TSR calls made on behalf of certain religious organizations."
The FTC requests that public comments be submitted by March 29, 2002. Also, FTC staff will conduct a public forum on June 5, 6, and 7, 2002, to discuss the written comments.
Supreme Court Denies Cert in Copyright Preemption Case
1/22. The Supreme Court denied certiorari in Taco Bell v. Wrench,  No. 01-701, a case involving preemption of state law contract and tort remedies by the federal Copyright Act. See, January 22, 2002, Order List [PDF], at page 5.
Background. The plaintiffs, Wrench LLC and its two principals, are the creators of a cartoon character named "Psycho Chihauhua." Following discussions with the plaintiffs, the defendant, Taco Bell, began an ad campaign featuring a Chihuahua dog similar to that developed by plaintiffs, but without plaintiffs' permission.
District Court. Plaintiffs filed a complaint in U.S. District Court (WDMich) against Taco Bell, based upon diversity of citizenship, in which they plead various implied contract and tort causes of action. The trial court issued three opinions. It granted summary judgment to Taco Bell on the grounds that the Copyright Act preempted all of the claims, including those based on breach of an implied in fact contract. The trial court also held that plaintiffs' concept lacked the novelty necessary to sustain their claims. (See, D.C. No. 98-00045, W.D. Mich., 1998 WL 480871, 36 F. Supp. 2d 787, and 51 F. Supp. 2d 840.)
Appeals Court. On June 6, 2001, the U.S. Court of Appeals (6thCir) issued its opinion reversing the District Court. It held that the preemption language of the Copyright Act, found at  301, provides that a state common law or statutory claim is preempted if the work is within the scope of the "subject matter of copyright," as specified in  102 and 103, and, the rights granted under state law are equivalent to any exclusive rights within the scope of federal copyright as set out in  106. The Appeals Court held that neither the subject matter nor equivalency prongs of the test were satisfied, and hence, there is no preemption. It held that since the plaintiffs' claims pertain to intangible ideas and concepts, they do not come within the subject matter of copyright;  102(b) expressly excludes intangible ideas and concepts. It also held that an implied in fact contract claim under Michigan law contains the additional element of expectation of compensation, which is not an element of a  106 claim, and hence, not equivalent. The Appeals Court also held that the Michigan Courts would not impose a novelty requirement in an implied in fact contract claim.
Supreme Court. The Supreme Court denied Taco Bell's petition for writ of certiorari, without opinion.
Wednesday, Jan 23
The House reconvenes at 12:00 NOON. It will then take up two non tech related bills (HR 700 and HR 2234).
The Senate reconvenes at 12:00 NOON. The Senate will recess from 12:30 - 2:15 PM, for the weekly party conferences.
9:00 AM - 5:15 PM. There will be a day long conference titled Broadband Outlook 2002 Conference. Location: Four Seasons Hotel. The scheduled speakers include the following:
  9:15 - 9:45 AM. Nancy Victory, head of the NTIA.
  10:45 - 11:45 AM. Robert Pepper, Chief of the FCC's Office of Plans and Policy.
  11:45 AM - 12:00 NOON. Dorothy Atwood, Chief of the FCC's Common Carrier Bureau.
  12:00 NOON - 1:30 PM. Ken Feree, Chief of the FCC's Cable Services Bureau.
12:15 PM. The FCBA's Global Telecommunications Development Committee will host a brown bag lunch. Doreen McGirr (State Dept.) and John Giusti (FCC International Bureau) will speak about preparations for the ITU World Telecommunications Development Conference. RSVP to Kent Bressie. Location: Wilkinson Barker Knauer, 2300 N Street, NW, 7th floor.
Thursday, Jan 24
The House will meet at 10:00 AM to take up HR 1762, a bill to amend the Higher Education Act.
9:30 AM. The House Commerce Committee's Subcommittee on Oversight and Investigations will hold a hearing the destruction of Enron related documents by Anderson personnel. Location: Room 2322, Rayburn Building.
11:00 AM. The Cato Institute will host a panel discussion titled "Eye in the Sky -- and Everywhere Else:
Do Biometric Technologies Violate Our Rights?" The speakers will be Joseph Atick (Visionics Corp.), Marc Rotenberg (EPIC), Dorothy Denning (Georgetown University), and John Woodward (RAND). A lunch will follow the program. Location: Cato Institute, 1000 Massachusetts Avenue, NW.
12:15 PM. The FCBA's Mass Media Committee will host a brown bag lunch. The speakers will be David Solomon, Chief of the FCC's Enforcement Bureau, and Linda Blair, Deputy Chief of the FCC's Enforcement Bureau. RSVP to Location: NPR, 635 Massachusetts, Ave., NW, 1st Floor.
2:00 PM. The Senate Judiciary Committee will hold a hearing on judicial nominations. Sen. Maria Cantwell (D-WA) will preside. Location: Room 226, Dirksen Building.
Friday, Jan 25
The House will meet at 10:00 AM in pro forma session only.
9:30 AM - 1:00 PM. The National Coalition for Technology in Education and Training (NCTET) will host an event titled "Measuring the Impact: A National Summit on Education Technology". This is an invitation only event. For more information, contact Brenda Kempster at 760 674-8919 or Brenda Location: U.S. Chamber of Commerce, 1615 H Street, NW.
Monday, Jan 28
Day one of the COMNET Conference & Expo. Location: Convention Center.
8:30 - 10:00 AM. The American Enterprise Institute (AEI) will host a press breakfast. AEI scholars will provide as well a retrospective on the first six years under the Telecommunications Act of 1996. RSVP to Veronique Rodman, Director of Public Affairs, at 202 862-4871 or Location: AEI, 1150 17th Street, NW, 11th Floor, Conference Room.
12:00 NOON. Deadline to submit comments to the USTR regarding the operation and effectiveness of the World Trade Organization (WTO) Basic Telecommunications Agreement, the telecommunications provisions of the North American Free Trade Agreement (NAFTA), and other telecommunications trade agreements. This request for comments is pursuant to an annual review of telecom agreements required by Section 1377. See, notice in the Federal Register.
Tuesday, Jan 29
Day two of the COMNET Conference & Expo. Location: Convention Center.
President Bush will deliver the State of the Union Address to a joint session of the Congress.
More News
1/22. The Copyright Office published a notice in the Federal Register directing "all claimants to royalty fees collected under the section 119 statutory license in 2000 to submit comments as to whether a Phase I or a Phase II controversy exists as to the distribution of these fees, and a Notice of Intention to Participate in a royalty distribution proceeding." See, Federal Register, January 22, 2002, Vol. 67, No. 14, at Pages 2912 - 2914.
1/14. The U.S. Attorneys Office for the Eastern District of Virginia formed a Computer Hacking and Intellectual Property (CHIP) unit. The unit will be comprised of six Assistant United States Attorneys. The Eastern District of Virginia includes the tech heavy northern Virginia suburbs of Washington DC. See, release.
1/18. Michael Logan plead guilty in U.S. District Court (NDCal) to unauthorized access to a protected computer causing damage in violation of 18 U.S.C. 1030(a)(5)(C). Logan stated in his written Plea Agreement [PDF] that he "intentionally accessed a computer of Catholic Healthcare West (CHW) without authorization. I thereafter sent electronic mail (e-mail) to approximately 30,000 employees and associates of CHW which purported to be from a named employee of CHW and which contained insulting statements about that named employee and other CHW employees." Sentencing is scheduled for April 26, 2002. See also, September 25, 2001, Indictment, and January 18, 2002, release.
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