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March 5, 2002, 9:00 AM ET, Alert No. 381.
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Supreme Court Grants Cert in NextWave Case
3/4. The Supreme Court of the United Stated granted certiorari in FCC v. NextWave and Arctic Slope v. Nextwave. See, March 4 Order List [PDF] at page 3. The grant may prolong litigation, and continue to tie up spectrum that could be used to provide wireless phone service and Third Generation (3G) wireless services.
NextWave obtained spectrum licenses at Federal Communications Commission (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. It then proceeded to re-auction the disputed spectrum.
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 then petitioned the Supreme Court for writ of certiorari.
Late last year the FCC, DOJ, NextWave, and re-auction winners negotiated a settlement agreement. However, it required the passage of legislation by Congress by the end of the year. Congress took no action.
FCC Chairman stated in a release that "I am gratified that the Supreme Court has decided to review the D.C. Circuit's decision in the NextWave case. This will allow the Court to clarify the relationship between public spectrum auctions and the U.S. bankruptcy laws."
This is Supreme Court Nos. 01-653 and 01-657.
Supreme Court Denies Cert in Symantec v. Hilgraeve Patent Case
3/4. The Supreme Court of the United Stated denied certiorari in Symantec v. Hilgraeve, a patent infringement case involving computer virus detection software. See, March 4 Order List [PDF] at page 4.
Hilgraeve is the holder of U.S. Patent No. 5,319,776, titled "In transit detection of computer virus with safeguard". Symantec provides Internet security products, including anti virus protection products. Hilgraeve filed a complaint in U.S. District Court (EDMich) against Symantec alleging that its PCAnywhere and Norton Anti Virus products infringe its '776 patent.
This patent describes a program that scans for computer viruses. It scans a body of data during its transfer, and before storage of the data with potential viruses on the destination storage medium. If the program detects signs of a virus during the scan, and the program automatically blocks storage. Hilgraeve argued that Symantec's products screen incoming digital data for viruses during transfer and before "storage" on the destination storage medium. Symantec argued its products do not infringe because they screen the incoming digital data only after it has been transferred and "stored" on the destination storage medium.
The District Court granted Hilgraeve's motion for summary judgment that Symantec did not have a license to the '776 patent. The District Court granted Symantec's motion for summary judgment of non-infringement. Hilgraeve appealed; and Symantec cross appealed. The U.S. Court of Appeals (FedCir) issued its opinion on September 17, 2001. It vacated the grant of summary judgment of non-infringement, and generally affirmed the grant of summary judgment that Symantec did not license the patent. The Supreme Court denied Symantec's petition for writ of certiorari without opinion.
Petition for Rehearing Filed in Kelly v. Arriba Soft
3/1. (formerly known as Arriba Soft) filed a petition for rehearing and/or rehearing en banc with the U.S. Court of Appeals (9thCir) in Kelly v. Arriba Soft, a case involving the fair use exception to copyright infringement in the context of online digital images, hyperlinking and search engines. On February 6, a unanimous three judge panel issued its opinion [PDF] holding that Arriba Soft's display of images constituted copyright infringement.
Background. Leslie Kelly is a professional photographer who has copyrighted and published images of the American west. Arriba Soft, which is now known as, operates an Internet search engine for images. It placed in its web site reduced size copies of images, or thumbnails. This search engine produced thumbnail images, rather than text, in response to queries. Arriba placed thumbnail copies of Kelly's images in its web site, without permission from Kelly. It also used hyperlinks to files on the servers of others to display the full sized pictures.
Arriba operated by using a crawler that copied images from other web sites, including those of Kelly and third parties which published Kelly's pictures under license. Arriba then used these copies to generate reduced size, lower resolution, thumbnail pictures, which it kept in its database. Arriba then deleted the original, full size, images. When someone used Arriba's search engine to search for images on the Internet, Arriba served web pages that included thumbnails, which resided on its servers. Then, if the user clicked on the thumbnail image, a second page was served, which displayed the full sized image, drawn from the server of the originating web site, along with, among other things, advertisements purchased from Arriba. A hyperlink to the originating web site was also displayed.
District Court. Kelly filed a complaint in U.S. District Court (CDCal) against Arriba alleging copyright infringement. Arriba asserted that its actions constituted fair use within the meaning of 17 U.S.C. 107. The District Court held that that Kelly had established a prima facie case of copyright infringement based on Arriba's unauthorized reproduction and display of Kelly's works, but that this reproduction and display constituted a non-infringing fair use. See, opinion at 77 F. Supp.2d 1116 (C.D. Cal. 1999).
Appeals Court. The three judge panel of the Ninth Circuit reasoned that "two distinct actions by Arriba ... warrant analysis. The first action consists of the reproduction of Kelly's images to create the thumbnails and the use of those thumbnails in Arriba's search engine. The second action involves the display of Kelly's images through the inline linking and framing processes when the user clicks on the thumbnails." The Appeals Court applied the four prong analysis of Section 107 for each action.
The Appeals Court concluded: "We hold that Arriba's reproduction of Kelly's images for use as thumbnails in Arriba's search engine is a fair use under the Copyright Act. We also hold that Arriba's display of Kelly's full sized images is not a fair use and thus violates Kelly's exclusive right to publicly display his copyrighted works. The district court's opinion is affirmed as to the thumbnails and reversed as to the display of the full sized images. We remand with instructions to determine damages for the copyright infringement and the necessity for an injunction."
The law firm of Perkins Coie represents Arriba Soft. See, Perkins Coie release. The law firm of Arnold & Porter represents Kelly.
People and Appointments
3/4. President Bush nominated James Comey to be U.S. Attorney for the Southern District of New York. See, WH release.
3/4. President Bush nominated Michael Toner to be a member of the Federal Election Commission (FEC) for a term expiring April 30, 2007. He replaces Darryl Wold, whose term expired. See, WH release.
3/4. The Federal Bureau of Investigation (FBI) announced several new appointments. Roderick Beverly will be Special Agent in Charge of International Operations. Leah Meisel will be Personnel Officer and Deputy Assistant Director for Personnel, Administrative Services Division. James Bernazzanni will be Deputy Chief, Counterterrorist Center, Central Intelligence Agency. Robert Cromwell will be Chief of the Applicant Processing Section, Administrative Services Division. Mary Ann Woodson will be Budget Officer and Chief of the Budget Section, Finance Division. See FBI release.
2/27. David Marchick joined the law firm of Covington & Burling as a Special Counsel in the firm's Washington DC office. He will focus on international trade and transportation issues. He previously worked at Bid4Assets. Before that, he worked in several positions in the Clinton administration. He was Deputy Assistant Secretary for Trade Policy at the State Department, and Principal Deputy Assistant Secretary of Commerce for Trade Development. He also held international trade policy positions at the White House and the Office of the U.S. Trade Representative (USTR). See, CB release.
2/28. Edward Reilly joined the New York office of the law firm of Morgan Lewis as a partner in its Business and Finance Practice. He will focus on advising private equity and venture capital fund investors and emerging growth companies. He was previously a partner at the law firm Brobeck Phleger & Harrison in New York. Before that, he was a partner at LeBoeuf Lamb Greene & MacRae. See, ML release.
District Court Rules in Cybersquatting Dispute
2/22. The U.S. District Court (EDVa) issued an order and memordum opinion [PDF] in v. Excelentisimo Ayuntamiento de Barcelona, a domain name dispute involving the Anticybersquatting Consumer Protection Act (ACPA).
Background. In 1996 Joan Nogueras Coba registered the domain name in the name of his wife, Concepcio Riera Llena, with the domain name registrar, Network Solutions. In 1999, the Nogueras couple incorporated Inc., under the laws of Delaware, and transferred the domain name to their corporation. It listed an address in New York City. Neither party has a U.S. or Spanish trademark for the name Barcelona. However, the City of Barcelona holds multiple Spanish trademarks for phrases that include the name Barcelona. Plaintiff attempted to sell the domain name to the City.
Dispute Resolution Panel. In 2000, the defendant, the City Council of Barcelona, filed a complaint with the World Intellectual Property Organization (WIPO), under the Uniform Dispute Resolution Policy (UDRP), contesting plaintiff's registration of the domain name. A WIPO panel ruled in favor of the City, and ordered transfer of the domain name to the City, on the grounds that the City owned a trademark upon which the domain name infringed.
District Court Complaint. Plaintiff then filed a complaint in U.S. District Court (EDVa) against the City of Barcelona seeking a declaratory judgment that the registration of the domain name was not unlawful. The City filed a counterclaim under the ACPA.
Holding. The District Court first addressed plaintiff's claim. It held that the domain name is confusingly similar to trademarks held by the City of Barcelona. The Court further found that the circumstances surrounding the incorporation of, and the attempt to sell the domain name, "evidence a bad faith intent to profit from the registration". The Court thus concluded that plaintiff's use of the trademark was not "not unlawful". Hence, the District Court found that "the Plaintiff's request for a declaratory judgment ruling that the registration of the domain name was not unlawful should be denied."
The Court next turned to Barcelona's counterclaim under the ACPA. It first addressed whether the ACPA applies to foreign trademarks. It held that it does. It wrote that "It is untenable to suppose that the Congress, aware of the fact that the Internet is so international in nature, only intended for U.S. trademarks to be protected under the Anticybersquatting statute." Second, the Court addressed whether plaintiff's actions constituted a bad faith intent to profit from the registration of the trademark. It applied the nine factors set out in 15 U.S.C. 1125(2)(d)(1)(B). It found bad faith. Finally, the Court found that the registered domain name is confusingly similar to the City's trademark. Hence, the Court found for the City of Barcelona on its counterclaim under the ACPA.
This is Civil Action 00-1412-A. The City of Barcelona is represented by the law firm of Oblon Spivak. See also, Oblon release.
Rep. Goodlatte Addresses Trip to Russia and EU
2/28. Rep. Bob Goodlatte (R-VA) discussed the Congressional delegation trip to Russia and Europe last month to promote the Internet, intellectual property rights, and e-commerce. See, transcript of media roundtable.
The delegation met with members of the Russian Duma, Czech Parliament, German Bundestag, and European Parliament. The delegation, which traveled over the Presidents' Day recess, was made up of Reps. Goodlatte, Rick Boucher (D-VA), Lamar Smith (R-TX), John LaFalce (D-NY), Charles Taylor (R-NC), and James Walsh (R-NY).
Rep. Goodlatte stated that the delegation urged Russia not to mandate encryption restraints, including mandatory key escrow or a key recovery system. The group also urged Russia to enforce intellectual property rights. The Congressmen discussed broadband deployment, privacy, safe harbor provisions, unsolicited e-mail, and other issues with the Europeans.
Encryption in Russia. Rep. Goodlatte stated that "One of the issues we encountered is something that we faced here about four or five years ago, and that is the government's effort to control communications on the Internet, to have a back door key into people's computer programs and their communications." He said that "Even after September 11, with the PATRIOT Act, the administration did not put forward a proposal for key escrow or key recovery. That may in part be do to the fact that Attorney General Ashcroft was the leading proponent of the legislation in the Senate that I was promoting in the House, which garnered a tremendous amount of support here and wound up resulting in the administration doing an almost 180 degree reversal of their position on their issue of government control of encryption. They basically backed away from it and allowed U.S. companies to get into the international marketplace, sell their strongly encrypted products in other countries around the world, because other countries' products were being sold in the United States."
"Now we show up in Moscow and find companies like Oracle and Microsoft confronting exactly the same problem there -- a government intending to move forward on a key escrow or key recovery type of system," said Rep. Goodlatte. "And, so we hope we made some progress in suggesting to them that this type of system would not work, that it would have an effect of hindering people's ability to use the Internet securely, willingness to use the Internet, willingness of foreign companies to do business in Russia, and that would hinder the overall growth of the Internet in Russia, which is starting to grow."
IPR in Russia. Rep. Goodlatte said that the delegation also talked to Russian officials about piracy of intellectual property. He stated that pirate copies Microsoft's Windows XP sells on the streets of Moscow for $2.80.
"In Russia, it seems to be a problem with corruption to which the government seems to turn its head. Sometimes it doesn't take steps. I know that Microsoft, for example, had an office in Russia. It closed the office about a year ago because of their frustration in terms of attempting to combat this."
Goodlatte stated that "we raised these issues with them, from the standpoint not only of it being a concern of the U.S. companies, but really, another hindrance to the ability of Russia to grow their economy in the direction that I presume they want to grow it. They certainly expressed a lot of interest in information technology and growing the Internet and so on. But, the point that we made to them was that, unless you protect intellectual property, people will not create intellectual property in Russia."
He added that "they also have some companies in their infancy creating computer software, programming, and other types of things. But they don't have a tradition of protecting intellectual property. These companies will never get off the ground because their products will be ripped off by their own citizenry. And, I think that concept was well received."
EU and Privacy. Rep. Goodlatte stated that "We basically agreed to continue to work on the safe harbor provisions, because we are nowhere near seeing the United States go for opt in, and I don't see them coming around and changing what they have already put in place." He also pointed out that "Ironically, U.S. companies that operate on the opt out basis have better privacy disclosure rules -- studies have consistently shown this -- than the European companies that are supposedly under these very strict directives."
Goodlatte concluded: "Basically, in one sentence, we don't want to take the information out of the information age. If you can't understand who your customer is, and then provide them with information that is useful to them, in ways that the Internet and computers are far more capable of doing than direct mail or television or telephone calls, or all of the other intrusive ways that people have calling you up and offering you information."
3G Wireless. Rep. Goodlatte also addressed Third Generation wireless services, which are intended to bring broadband Internet access to portable devices. He said that the Europeans "actually got a jump on us by rolling out 3G technology sooner than we did. But, because the government took a leading role in picking the technology that was going to work, they are now finding that it is not the best technology. And the U.S., which is behind, because we don't have access to as much spectrum, seems to be developing better technology."
Goodlatte added that "the problem that we have with roll out on that is government. Government, particularly, in this case, the Defense Department and other governmental sectors, they control big chunks of wireless spectrum. ... The Europeans had more spectrum available because they had less defense and security uses and needs for it. But, because government is a little bit too much dictating how they use it, they got a lead, but may be frittering the advantage away. And, we may catch up with them, if we can free up that spectrum, to apply this better technology."
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. The CSSPAB advises the Secretary of Commerce and the Director of NIST on security and privacy issues pertaining to federal computer systems. This is the first day of a three day meeting. See, notice in Federal Register. 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., 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 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 National Institute of Standards and Technology's (NIST) Computer System Security And Privacy Advisory Board (CSSPAB) will meet. This is the second day of a three day 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 House Judiciary Committee will meet to mark up several bills, including HR 2314, the "Class Action Fairness Act of 2001", sponsored by Rep. Bob Goodlatte (R-VA). Location: Room 2141, 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.
TIME? Ron Sommer, Chairman of the Board of Management of Deutsche Telekom, will deliver a Chamber of Commerce luncheon address titled "The Transformation Into a Global Company: Meeting Market and Regulatory Challenges". The price to attend is $75 for members and $115 for non members. For more information, contact Chris Merida at 202 463-5500. Location: 1615 H Street, NW.
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 Location: Lampert & O'Connor, 5th Floor, 1750 K Street, NW.
2:00 PM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will mark up HR 3833, the Dot Kids Implementation and Efficiency Act of 2002. Rep. Fred Upton (R-MI) will preside. Location: Room 2322, Rayburn Building.
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 FBI. Location: Room 2359, Rayburn Building.
2:30 PM. The Senate Commerce Committee's Subcommittee on Communications will hold a hearing on wireless communications infrastructure. The witnesses will be Agostino Cangemi (NYC Dept. of Info. Tech. and Telecom.), Steve Souder (Montgomery County, Maryland 911 Emergency Communications Center), Ari Wax (NYC Deputy Commissioner of Technological Development), Glen Nash (Assoc. of Public Safety Communications Officials), Paul Crotty (Verizon), Gloria Harris (AT&T Wireless), Larissa Herda (Time Warner Telecom), and Christopher McLean (ComCare Alliance). Sen. Daniel Inouye (D-HI) will preside. Location: Room 253, Russell Building.
Thursday, March 7
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. This is the third day of a three day 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 (CJS) will hold a hearing on the administration's proposed budget estimates for FY 2003 for the SEC and the FCC. SEC Chairman 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 Building.
10:00 AM. The Senate Judiciary Committee has scheduled a business meeting. Location: Room 226, Dirksen 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.
Monday, March 11
8:30 - 10:00 AM. The American Enterprise Institute (AEI) will host a press breakfast on the topic "Taxing Broadband". Harold Furchtgott-Roth and other AEI scholars will speak. RSVP to Veronique Rodman at (202) 862-4871 or Location: AEI, 1150 17th Street, NW, 11th Floor Conference Room.
8:30 AM - 12:00 NOON. The ITAA and the CSIS will co-host a conference titled "Managing Identity and Authentication on the Internet". For more information, contact Shannon Kellogg at skellogg See, ITAA notice. Location: CSIS, B1 Conference Center, 1800 K Street, NW.
Deadline to submit comments to the Copyright Office in response to its Notice of Proposed Rulemaking on "the requirements for giving copyright owners reasonable notice of the use of their works for sound recordings under statutory license and for how records of such use shall be kept and made available to copyright owners." See, notice in Federal Register.
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