TLJ Daily E-Mail Alert No. 380, March 4, 2002.

Tech Law Journal Daily E-Mail Alert

March 4, 2002, 9:00 AM ET, Alert No. 380.
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RIAA Defends CD Copy Protection

2/28. Hillary Rosen, P/CEO of the Recording Industry Association of America (RIAA), wrote a letter [PDF] to Rep. Rick Boucher (D-VA) regarding CD copy protection. She wrote that "record companies have both a legal right and a responsibility to utilize technology to protect their companies' revenues and jobs, and their artist's income and careers."

Rep. Boucher wrote a letter to the RIAA and the International Federation of the Phonographic Industry (IFPI)
on January 4, 2002, in which he asked, among other things, "What methods have been used or are planned for use by your member companies to alter CD content or ancillary encoding so as to constrain functions of personal computers or other devices?" He also questioned whether CD copy protection violates the Audio Home Recording Act (AHRA). See, 17 U.S.C. 壯 1001, et seq.

CD Copy Protection Technology. Rosen provide little information about CD copy protection methods. Rather, she defended it use. She wrote that "the ease with which CDs can be copied has resulted in mass distribution for which the creators get no reward. The evidence of the problem is everywhere. Internet piracy and file swapping services continue to proliferate."

She added that "If technology can be used to pirate copyrighted content, shouldn't technology likewise be used to protect content? Isn't it incumbent on copyright owners to do whatever they can to protect the economic value of their works and the jobs and careers of the hundreds of thousands of individuals who create, produce, market and distribute music?"

She wrote little about copy protection technologies. She stated that "There are a multitude of technologies available that offer some form of copy protection for CDs. Each of them has different characteristics and performs differently."

However, she continued that "Copy protection technologies are constantly evolving ..." She also wrote that "Decisions on CD copy protection are being made by record companies individually, on a company by company basis. ... RIAA is not privy to their individual plans." Moreover, "The particular methods by which each technology operates are proprietary to its owner, and are confidential".

AHRA. Rep. Boucher wrote in his January 4 letter: "I am particularly concerned that some of these technologies may prevent or inhibit consumer home recording using recorders and media covered by the Audio Home Recording Act of 1992 (AHRA). As you know from your personal involvement in its drafting, the AHRA clearly requires content owners to code their material appropriately to implement a basic compromise: in return for the receipt of royalties on compliant recorders and media, copyright owners may not preclude consumers from making a first generation, digital to digital copy of an album on a compliant device using royalty-paid media. Under the AHRA, any deliberate change to a CD by a content owner that makes one generation of digital recording from the CD on covered devices no longer possible would appear to violate the content owner𠏋 obligations under the statute."

Rosen rejected this argument in her letter of February 28. She wrote: "Your letter suggests that the use of CD copy protection technology might somehow violate the terms of the Audio Home Recording Act (``AHRA斐). In fact, however, this is clearly not the case. The devices primarily used to rip CDs are general purpose computer devices, which are explicitly excluded from the coverage of the AHRA. Moreover, the AHRA was a legislative compromise reached years before the development of peer to peer systems and the resultant massive infringements they facilitate. The AHRA primarily imposes obligations on manufacturers of ``digital audio recording devices,斐 ..."

Rosen added that "The only requirement imposed on distributors of recorded music is that they encode accurately the information used by SCMS" (Serial Copy Management System). "Nothing in the AHRA affirmatively requires that a CD be copiable, let alone recordable in any particular device. Certainly, there is not policy justification for ... some kind of broad affirmative right to copy CDs," wrote Rosen.

Sen. Biden Addresses Digital Divides

2/27. Sen. Joe Biden (D-DE) spoke in the Senate regarding digital divides. He stated that "the widening gap between those Americans who use or have access to telecommunications technologies, like computers and the Internet, and those who do not. Surprisingly, there are those naysayers who suggest that the ``digital divide斐 does not exist, that it is a myth or fabrication of consumer and civil rights advocates. ... No matter the reason for these naysayers' doubt, the unequivocal answer to their question ``is there really a digital divide斐 is a resounding ``YES.斐 "

He also stated that "I am shocked by the Bush administration's apparent efforts to dismantle many programs designed to eliminate the inequality of access to technology. These programs, including the popular E-Rate Program, have a demonstrated record of success connecting roughly 1 million public school classrooms and 13,000 community libraries to modern telecommunications networks." See, Cong. Rec., Feb. 27, 2002, at page S1244.

Bills Introduced

2/28. Rep. Saxby Chambliss (R-GA), Rep. Jane Harman (D-CA), and others introduced HR 3825 [PDF], the Homeland Security Information Sharing Act, a bill to provide for the sharing of homeland security information by federal intelligence and law enforcement agencies with state and local entities. Rep. Chambliss and Rep. Harman are the Chairman and ranking Democrat on the House Intelligence Subcommittee on Terrorism and Homeland Security. The bill was referred to the House Intelligence Committee, the House Judiciary Committee, and the House Government Reform Committee. See also, Harman release.

2/28. Rep. Bart Stupak (D-MI) and Rep. John LaFalce (D-NY) introduced HR 3829, a bill to repeal the provisions of the Private Securities Litigation Reform Act (PSLRA) and the Securities Litigation Uniform Standards Act (SLUSA) that limit private securities actions. The bill was referred to the House Financial Services Committee and the House Judiciary Committee.

2/28. Sen. Patrick Leahy (D-VT) and Sen. Charles Grassley (R-IA) introduced S 1974, the FBI Reform Act of 2002. It was referred to the Senate Judiciary Committee. See, Leahy and Grassley's summary.

2/27. Rep. Greg Meeks (D-NY) introduced HR 3809, the Economic Development and Technology Workforce Enhancement Act of 2002. This bill would amend the Internal Revenue Code with respect to small issue bonds. It was referred to the House Ways and Means Committee.

FCC Receives Comments on Regulatory Treatment of ILECs Provision of Broadband

3/1. Friday, March 1, was the deadline to submit comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding the appropriate regulatory requirements for incumbent local exchange carriers' (ILECs') provision of broadband telecommunications services. The FCC adopted this NPRM at its December 12 meeting. This is CC Docket No. 01-337. See, notice in the Federal Register, January 15, 2002, Vol. 67, No. 10, at Pages 1945 - 1947.

The Information Technology Association of America (ITAA) submitted a comment [PDF] in which it stated that the FCC "should continue to classify ILECs as dominant in the provision of wholesale mass market broadband telecommunications services. Rather than eliminating existing regulations, the Commission should take action to promote competitive entry by Data CLECs, while enforcing the still effective Computer II requirement that the BOCs separate the provision of telecommunications services (both narrowband and broadband) from the provision of information services. If the Commission chooses to deregulate the ILECs' broadband services, however, it should, at the very least, require the ILECs to provide ``advanced telecommunications services斐 through an affiliate that is structurally separate from their local exchange service operations."

WorldCom submitted a comment [PDF] in which argued that the FCC "should consider the issues that arise when a carrier is dominant in an upstream market (local exchange and exchange access), but faces some competition in the downstream market (broadband services). The Commission must consider what level of regulation to apply to the downstream market, and what safeguards are necessary to prevent a carrier from leveraging its power in the upstream market to affect competition in the downstream market. Consistent with FCC precedent, most recently the LEC Classification proceeding, the Commission should not declare a carrier with market power in the upstream market non-dominant in the downstream market unless there is sufficient evidence of irreversible and meaningful competition in the downstream market."

Time Warner submitted a comment [PDF] in which it stated that "there is no need for the Commission to alter the current regulation of ILEC broadband services provided to medium and large business customers, except to require ILECs to comply with special access service quality performance measurements, standards, reporting requirements and penalties."

Sprint submitted a comment [PDF] in which it argued that "The broadband services market should be divided into two relevant product markets -- mass market and larger business. In both of these markets there is a demonstration of existing competition that justifies some degree of pricing flexibility and tariff filing flexibility, but only if the ILEC Section 251 UNE, collocation, and resale obligations continue."

Back in January, SBC filed a petition [PDF] with the FCC seeking a ruling that it is non dominant in its provision of advanced services, and to forbear from dominant carrier regulation of those services.

People and Appointments

2/26. The Senate confirmed Robert Blackburn to be a U.S. District Court Judge for the District of Colorado, and Cindy Jorgenson to be a U.S. District Court Judge for the District of Arizona.

2/25. Texas Instruments (TI) named Beth Bull Treasurer, and Kevin March Controller. Both will report to TI's CFO, Bill Aylesworth. See, TI release.

2/28. The U.S. Telecom Association (USTA), a group that represents the baby Bells, gave a "Lifetime Achievement Award" to Rep. John Dingell (D-MI) at a conference on February 28. On February 27, the House passed the Tauzin Dingell bill, which would provide regulatory relief for the baby Bells. See, USTA release.

3/1. The National Telecommunications Cooperative Association (NTCA) board of directors elected John Metts President, Norman Walker Vice President, and Tom Rowland Secretary Treasurer. Metts is CEO and General Manager of Penasco Valley Telephone Cooperative in Artesia, New Mexico. Welker is CEO and General Manager of McDonough Telephone Cooperative in Colchester, Illinois. Rowland is P/CEO of North Central Telephone Cooperative in Lafayette, Tennessee.

More News

3/1. The Federal Trade Commission (FTC) extended the deadline for submitting public comments to the FTC regarding the use of disgorgement as a remedy for competition violations, including those involving the Hart Scott Rodino Premerger Notification Act, FTC Act, and Clayton Act. See, original FTC release and Federal Register notice setting a deadline of March 1, and FTC release extending deadline to March 29.

3/1. The Federal Trade Commission (FTC) approved a notice to be published in the Federal Register regarding proposed new Privacy Act system of records. This system, if adopted, would include telephone numbers and other information pertaining to individuals who have informed the Commission that they do not wish to receive telemarketing calls. Public comments on this proposal are due by March 29, 2002.

3/1. The Federal Trade Commission (FTC) release a report [41 pages in PDF] titled "Public Workshop: The Mobile Wireless Web, Data Services and Beyond: Emerging Technologies and Consumer Issues". This report pertains to a workshop held by the FTC on December 11-12, 2000, on new wireless technologies, and the consumer protection issues that they raise.

3/1. The U.S. Court of Appeals (FedCir) issued its opinion in Hewlett Packard v. Packard Press. The U.S. Patent and Trademark Office (USPTO) Trademark Trial and Appeal Board dismissed Hewlett Packard's opposition to Packard Press's application for registration of the mark PACKARD TECHNOLOGIES for data processing and data transmission services. HP appealed. The Appeals Court ruled that there is a likelihood of confusion, and reversed.

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Monday, March 4

The House will meet at 2:00 PM in pro forma session only. The Senate will meet at 4:00 PM, and resume consideration of S 565, the campaign spending bill.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in ACS Anchorage Inc v. FCC, 01-1059. Judges Edwards, Randolph and Williams will preside. Location: 333 Constitution Ave. NW.

Tuesday, March 5

The House will meet at 12:30 PM for morning hour and 2:00 PM for legislative business. No votes are expected before 6:00 PM. The House will consider a number of bills under suspension of the rules.

9:00 AM - 5:00 PM. The National Institute of Standards and Technology's (NIST) Computer System Security And Privacy Advisory Board (CSSPAB) will meet to discuss computer security legislation, privacy issues, critical infrastructure protection, the USPS's electronic postmark products, and other matters. This is the first day of a three day meeting. See, notice in Federal Register, February 20, 2002, Vol. 67, No. 34, at Page 7671. Location: General Services Administration, 7th and D Streets, SW, Room 5700.

10:00 AM. The Senate Appropriations Subcommittee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing regarding the Department of Justice (DOJ) budget request for Fiscal Year 2003. Location: Room 138, Dirksen Building.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Marketel International v. Priceline.com, No. 01-1279, an appeal from the U.S. District Court (NDCal). Marketel filed a complaint against Priceline alleging misappropriation of trade secrets, misappropriation of business model, conversion, false advertising, and entitlement to a correction of inventorship of Priceline's U.S. Patent No. 5,794,207. Marketel appeals the District Court's dismissal of some of its claims. Location: Courtroom 203, LaFayette Square, 717 Madison Place, NW.

10:30 AM - 4:30 PM. The President's Council of Advisors on Science and Technology (PCAST) will hold a meeting to discuss the science and technology of combating terrorism, federal spending on science and technology research and development, demand issues related to deployment of broadband infrastructure, and other topics. See, notice in Federal Register. Location: Board Room, American Institute of Architects, 1735 New York Ave., NW.

6:00 - 8:15 PM. The FCBA will host a CLE seminar titled "U.S. Spectrum Policy: Convergence or Co-Existence?" This is Part I of a two part series. Part II will be on April 16. See, program agenda.

Wednesday, March 6

The House will meet at 10:00 AM for legislative business. It is scheduled to take up the Federal Information Technology Workforce and Acquisition Improvement Act.

9:00 AM - 5:00 PM. The NIST's Computer System Security And Privacy Advisory Board (CSSPAB) will meet. This is the second day of a three day of meeting. See, notice in Federal Register. Location: GSA, 7th and D Streets, SW, Room 5700.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in NeoMagic v. Trident MicroSystems, No. 01-1631, an appeal from the U.S. District Court (DDel) in a patent infringement and antitrust case involving embedded memory semiconductors. The District Court granted summary judgment of non infringement to Trident MicroSystems. Location: Courtroom 201, LaFayette Square, 717 Madison Place, NW.

10:00 AM - 4:00 PM. The SEC will hold a roundtable meeting to examine proposals for better protecting investors by reforming financial disclosure and auditor oversight. The morning session (10:00 AM - 12:00 NOON) will focus on financial disclosure. The afternoon session (2:00 - 4:00 PM) will focus on auditor oversight. See, SEC notice. Location: Douglas Room, Basement, SEC.

10:00 AM. The House Appropriations Committee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the proposed budget for FY 2003 for the State Department. Location: Room 2359, Rayburn Building.

10:30 AM. The Senate Judiciary Committee's Subcommittee on Antitrust, Competition, and Business and Consumer Rights will hold a hearing titled "Dominance in the Sky: Cable Competition and the Echostar Direct TV Merger". Sen. Herb Kohl (D-WI) will preside. The scheduled witnesses include Charlie Ergen (CEO of Echostar), Eddy Hartenstein (CEO of DirecTV), Gene Kimmelman (Consumers Union), Robert Pitofsky (Arnold & Porter), and Jay Nixon (Attorney General of Missouri). Location: Room 226, Dirksen Building.

12:15 PM. The FCBA's Online Committee will host a brown bag lunch. The speaker will be Anthony Rutkowki, VP Internet Strategy, Verisign. He will address "Broadband, When? -- Verisign's' View." RSVP to Scott Harris at sharris@harriswiltshire.com. Location: Lampert & O'Connor, 5th Floor, 1750 K Street, NW.

2:00 PM. The House Appropriations Committee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the proposed budget for FY 2003 for the Federal Bureau of Investigation. Location: Room 2359, Rayburn Building.

2:30 PM. The Senate Commerce Committee's Subcommittee on Communications will hold a hearing on wireless communications infrastructure. Location: Room 253, Russell Building.

Thursday, March 7

9:00 AM - 5:00 PM. The NIST's Computer System Security And Privacy Advisory Board (CSSPAB) will meet. This is the third day of a three day of meeting. See, notice in Federal Register. Location: GSA, 7th and D Streets, SW, Room 5700.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in USTA v. FCC. Judges Edwards, Randolph and Williams will preside. Location: 333 Constitution Ave. NW.

10:00 AM. The Senate Appropriations Subcommittee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the proposed budget for FY 2003 for the SEC and the FCC. SEC Chairmam Harvey Pitt and FCC Chairman Michael Powell will testify. See, CJS release. Location: Room 253, Russell Building.

10:00 AM. The Senate Banking Committee will hold a hearing. Federal Reserve Chairman Alan Greenspan will deliver his semi annual report on monetary policy. Location: Room 106, Dirksen Senate Office Building.

Friday, March 8

12:15 PM. The FCBA's Transactional Practice Committee will host a brown bag lunch on mass media transactions. RSVP to Sue Fischer at (202) 776-2491. Location: Dow Lohnes & Albertson, 1200 New Hampshire Ave.

Extended deadline for submitting comments to the FCC in response to its Further Notice of Proposed Rulemaking regarding the current state of the market for local and advanced telecommunications services in multi tenant environments. See, FCC notice of extension of deadline [PDF]. This is WT Docket No. 99-217.