Tech Law Journal Daily E-Mail Alert
March 8, 2002, 9:00 AM ET, Alert No. 384.
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NTIA Urges FCC to Permit Limited Secondary Markets for Spectrum
3/7. The National Telecommunications and Information Administration (NTIA) submitted a comment to the Federal Communications Commission (FCC) in its long running rule making proceeding regarding taking tentative steps towards creating secondary markets for spectrum. The NTIA submitted its comment in the form of a letter from NTIA Director Nancy Victory to FCC Chairman Michael Powell. She urged the FCC "to move expeditiously to permit leasing and eliminate other barriers to the development of secondary markets for spectrum".
The FCC announced its Notice of Proposed Rule Making [61 pages in PDF] at its open meeting of November 9, 2000. Victory also urged the FCC to "act promptly".
This proceeding is titled "In the Matter of Promoting Efficient Use of Spectrum Through Elimination of Barriers to the Development of Secondary Markets". It is WT Docket No. 00-230. See also, TLJ story titled FCC Discusses Secondary Markets for Wireless Spectrum, and TLJ news analysis titled Mobile Internet Access Devices and the Internet, both dated November 10, 2000. See also, DOC release of March 7, 2002.
Victory wrote that "Leasing and other secondary market activities promise to increase spectrum efficiency by allowing radio frequencies to be used in ways that more closely follow changing demand. Private sector leasing arrangements would not only provide opportunities and incentives for licensees to ensure full use of their spectrum, but also would address changes or spikes in spectrum demand faster and more effectively than the government licensing process."
She stated further that the FCC "should not attempt to regulate or micromanage the leasing process or require secondary user registration or secondary filings."
However, she stated that the FCC "should initially limit secondary arrangements to spectrum allocated on an exclusive basis for wireless radio services".
She also offered several terms and conditions that should apply to secondary arrangements. She wrote that "In any leasing or secondary market relationship, the licensee must remain ultimately responsible for adhering to the obligations of its license". She also wrote that "a lessee should have no greater rights to use the spectrum than does the licensee". Moreover, spectrum aggregation limits should also be applied to spectrum used under secondary arrangements. Finally, she wrote that "Other rules that restrict the types of entities that can use particular spectrum or the uses that can be provided in a set of frequencies should apply to secondary market arrangements".
Bush Addresses Post Enron Corporate Responsibility
3/7. President Bush gave a speech in Washington DC on corporate responsibility. He stated that "To properly inform shareholders and the investing public we must adopt better standards of disclosure and accounting practices for all of corporate America." He then enumerated his recommendations, some of which would require either Congressional legislation, or Securities and Exchange Commission (SEC) rule making.
For example, he stated that "to further ensure that information is reliable, we will need reforms within the accounting profession. Auditors are a critical external check on management, and we must ensure that the integrity of their work is never compromised. Accounting is one of the most and one of the most respected professions in our country, and it can help protect its own integrity by developing and enforcing clear standards of conduct. The profession also needs an independent regulatory board to hold accounting firms to the highest ethical standards. And the SEC should exercise more effective and broad oversight of accounting standards. The SEC should also do more to guard against conflicts of interest, requiring, for example, that an external auditor not be permitted to provide internal audits to the same client."
Bush also stated that "It is important to provide sound regulation and remedies where needed, without inviting a rush of new lawsuits that exploit new problems instead of solving them." However, he did not specifically reference the Private Securities Litigation Reform Act (PSLRA) or the Securities Litigation Uniform Standards Act (SLUSA), or class action litigation generally, or any pending bills.
Technology companies may take comfort in the items not included in President Bush's list of recommendations. For example, he did not address proposed legislation that would affect the tax treatment of stock options. S 1940, sponsored by Sen. Carl Levin (D-MI), Sen. John McCain (R-AZ), and others, would provide that corporate tax benefits from stock option compensation expenses would be allowed only to the extent such expenses are included in a corporation's financial statements.
Greenspan Addresses Economy and Technology
3/7. Federal Reserve Board Chairman Alan Greenspan delivered his semi annual report on monetary policy to the Senate Banking Committee. He stated that "The recent evidence increasingly suggests that an economic expansion is already well under way, although an array of influences unique to this business cycle seems likely to moderate its speed." See, prepared testimony.
Greenspan also restated several themes regarding the effects of technology and the technology sector on the economy. He stated that "The retrenchment in capital spending over the past year and a half was central to the sharp slowing we experienced in overall activity. The steep rise in high tech spending that occurred in the early post Y2K months was clearly not sustainable. The demand for many of the newer technologies was growing rapidly, but capacity was expanding even faster, and that imbalance exerted significant downward pressure on prices and the profits of producers of high tech goods and services."
"New orders for equipment and software hesitated in the middle of 2000 and then fell abruptly as firms re-evaluated their capital investment programs. Uncertainty about economic prospects boosted risk premiums significantly, and this rise, in turn, propelled required, or hurdle, rates of return to markedly elevated levels. In most cases, businesses required that new investments pay off much more rapidly than they had previously. For much of last year, the resulting decline in investment outlays was fierce and unrelenting. Although the weakness was most pronounced in the technology area, reductions in capital outlays were broad based."
He added that "Inventories, especially among producers and purchasers of high tech products, did run to excess over the past year, as sales forecasts went badly astray; alas, technology has not allowed us to see into the future any more clearly than we could previously. But technology did facilitate the quick recognition of the weakening in sales and backup of inventories. This enabled producers to respond forcefully, as evidenced by output adjustments that have resulted in the extraordinary rate of inventory liquidation we experienced late last year."
House Judiciary Committee Approves Class Action Fairness Act
3/7. The House Judiciary Committee amended and approved HR 2341, the Class Action Fairness Act of 2001, by a vote a 16 to 10. The bill is sponsored by Rep. Bob Goodlatte (R-VA), Rep. Rick Boucher (D-VA), and others. It may come up for a vote in the full House next week.
The bill would add new sections to Title 28 of the U.S. Code pertaining to procedures governing interstate class actions brought pursuant to Rule 23 of the Federal Rules of Civil Procedure to ensure that the class members are treated fairly in settlements. For example, if a settlement provides that the class members would receive non cash benefits, the court must make "a written finding that, the settlement is fair, reasonable, and adequate for class members". This provision is designed to limit the ability of class action lawyers to negotiate settlements that provide the lawyers with attorneys fees in cash, while leaving the class members with no cash recovery.
The bill would also amend 28 U.S.C. 1332, regarding diversity of citizenship. It would provide federal jurisdiction in certain class actions where "any member of a class of plaintiffs is a citizen of a State different from any defendant" and the aggregated claims exceed $2 Million. However, it would also provide an exception when "the substantial majority of the members of the proposed plaintiff class and the primary defendants are citizens of the State in which the action was originally filed". This provision is designed to limit the ability of class action lawyers to bring suits in distant forums that are particularly friendly to the class action bar.
See also, March 7 policy statement released by the Republican House Policy Committee in support of the bill.
6th Circuit Rules on Jurisdiction in Web Related Trademark Infringement Case
3/6. The U.S. Court of Appeals (6thCir) issued its opinion in Neogen v. Neo Gen, a trademark infringement case involving the issue of personal jurisdiction over an out of state defendant.
Background. Neogen is in the business of developing and marketing a health care, food, and animal related products and services, including diagnostic test kits. Neo Gen (also known as NGS) performs diagnostic testing of blood samples. Neo Gen both advertises and distributes test results through its web site. It is a a Pennsylvania corporation with its sole physical place of business in Pittsburgh.
District Court. Neogen filed a complaint in U.S. District Court (WDMich) against Neo Gen alleging trademark infringement, federal dilution and unfair competition, violation of the Michigan Consumer Protection Act, violation of the Michigan Pricing and Advertising Act, and unjust enrichment. The District Court dismissed for lack of personal jurisdiction over Neo Gen.
Appeals Court. The Appeals Court applied International Shoe, and reversed. It wrote that "Because NGS knew that it was doing business with Michigan customers, and performed part of its services in Michigan by mailing test results there and providing special passwords to Michigan customers, NGS could reasonably anticipate being haled into a court in Michigan. Neogen has therefore overcome NGS's due process challenge by establishing a prima facie case that the exercise of personal jurisdiction over NGS by a court in Michigan does not offend ``traditional notions of fair play and substantial justice. " See, International Shoe v. Washington,
326 U.S. 310 (1945).
1st Circuit Rules in Trademark Case
3/7. The U.S. Court of Appeals (1stCir) issued its opinion in Tamko Roofing Products v. Ideal Roofing Company, a trademark infringement dispute involving roofing products manufacturers. Plaintiff, Tamko, obtained an injunction and monetary relief in the District Court. Defendant, Ideal, appealed the award of attorneys fees, the award of damages based on its profits, and the permanent injunction. The Appeals Court affirmed in full.
7th Circuit Rules on Insurers' Duty to Defend Trademark Infringement Cases
3/7. The U.S. Court of Appeals (7thCir) issued its opinion in Platinum Technology v. Federal Insurance, a case involving an insurer's duty to defend. Platinum Technology sued Federal Insurance for failure to defend it in a trademark infringement suit with Platinum Software Corporation. Platinum Technology settled with Platinum Software, and then filed a complaint against Federal Insurance to recover the settlement amount. Platinum Technology prevailed in the District Court. The Appeals Court reversed.
Registration of Copyright
3/7. The Copyright Office (CO) published a notice in the Federal Register announcing that it has amended its Rule 202.3, regarding registration of copyrights. The CO did not invite public comment. The changes pertain only to registering a group of contributions to a periodical. See, Federal Register, March 7, 2002, Vol. 67, No. 45, at Pages 10329.
37 CFR 202.3 remains obsolete for registering works written for, and published in, new media. It continues to reference print newspapers, textbooks, and other old media, but not the Internet, web sites, e-mail, and other new media.
WCT and WPPT Treaties Enter into Force
3/6. The World Intellectual Property Organization (WIPO) released a statement regarding the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT). The WCT and WPPT, which pertain to protecting copyrights in cyberspace, were negotiated in 1996. They each become effective three months after ratification by 30 nations. Gabon became the 30th country to join the WCT last December. Honduras became the 30th state to join the WPPT on February 20, 2002. Hence, the WCT entered into force on March 6, and the WPPT will enter into force on May 20, 2002.
WIPO Director General Kamil Idris stated that "While we have reached the key number of 30 countries required for entry into force, I urge all other countries to follow suit and to incorporate the provisions of the WCT and WPPT into their national legislation. This will create the conditions necessary for the broad-based and legitimate distribution of creative works and recordings on the Internet".
More News
3/7. The House passed HR 3090, the "Job Creation and Worker Assistance Act" by a vote of 417 to 3. See, Roll Call No. 52. The Senate will likely vote on the bill on Friday morning, March 8. The bill would extend regular 26 week jobless benefits by 13 weeks.
3/7. World Trade Organization (WTO) Director General Mike Moore commented on President Bush's decision to impose a tariff on certain steel imports. He stated that "It is not appropriate for me to comment on issues or negotiate in public ... Our rules and good offices are always available. I have a policy of not commenting on individual disputes, no matter how large or small ... Of course, it is always preferable if issues are settled between Members. That applies to each and every matter of difference between Members". See, WTO release.
House Subcommittee Approves Dot Kids Domain Bill
3/7. The House Commerce Committee's Subcommittee on Telecommunications and the Internet approved HR 3833 [PDF] without amendment by a unanimous voice vote. The bill is titled the "Dot Kids Implementation and Efficiency Act of 2002". It is sponsored by Rep. John Shimkus (R-IL) and Rep. Ed Markey (D-MA).
This bill provides that "The NTIA shall require the registry selected to operate and maintain the United States country code Internet domain to establish, operate, and maintain a second level domain within the United States country code domain that provides access only to material that is suitable for minors and not harmful to minors".
An earlier version of the bill, HR 2417, would have required a "top-level, International domain". The Subcommittee held a hearing on HR 2417 on November 1, 2001. See, TLJ Daily E-Mail Alert No. 300, Nov. 2, 2001.
Friday, March 8
The House will not be in session.
10:00 PM. Secretary of Commerce Donald Evans will speak at the U.S. Patent and Trademark Office (USPTO) regarding the hiring of additional patent examiners. Press must arrive by 9:45 AM. See, notice. Location: USPTO, Patent and Trademark Theatre, 2121 Crystal Drive, 2nd Floor, Arlington, VA.
12:15 PM. The Federal Communications Bar Association's (FCBA) 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.
12:30 - 2:00 PM. The New American Foundation will host a panel discussion titled "Unwired Security: Is a National Wireless Emergency Network Necessary?" The speakers will be Reed Hundt (McKinsey & Co.), Thomas Wheeler (P/CEO of the Cellular Telecommunications & Internet Association), and Robert Gurss (Shook Hardy & Bacon). RSVP to Laura Gillespie at gillespie @newamerica.net or 202 986-4901. Location: 1630 Connecticut Ave., NW, 7th Floor.
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
The House will meet at 2:00 PM.
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 vrodman @aei.org. 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 @itaa.org. See, ITAA notice. Location: CSIS, B1 Conference Center, 1800 K Street, NW.
11:00 AM. Howard Beales, Director of the FTC's Bureau of Consumer Protection, will hold a press conference to announce a law enforcement initiative targeting deceptive spam that appealed to post 9-11 patriotism to sell worthless products. See, FTC notice. Location: FTC, Room 481, 600 Pennsylvania Avenue, 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.
Tuesday, March 12
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in USTA v. FCC, No. 01-1085. Judges Ginsburg, Rogers and Garland 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 administration's proposed budget estimates for FY 2003 for the Department of State. Location: Room 138, Dirksen Building.
1:30 PM. The U.S. International Telecommunication Advisory Committee (ITAC) will hold a meeting. See, notice in Federal Register. Location: State Department.
Wednesday, March 13
10:00 AM. The Senate Appropriations Subcommittee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the administration's proposed budget estimates for FY 2003 for the Department of Commerce. Location: Room 116, Dirksen Building.
10:30 AM. The Senate Appropriations Subcommittee's Subcommittee on the Legislative Branch will hold hearings on the proposed budget estimates for FY 2003 for the Library of Congress (LOC) and the Congressional Research Service. The Copyright Office is a part of the LOC. Location: Room 124, Dirksen Building.
Thursday, March 14
9:30 AM. The FCC will hold a meeting. See, agenda. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).
10:00 AM. The Senate Judiciary Committee will hold a hearing to examine competition, innovation, and public policy concerning digital creative works. Location: Room 226, Dirksen Building.
10:00 AM - 12:00 NOON. The House Science Committee's Subcommittee on Environment, Technology, and Standards will hold a hearing titled "Technology Administration: Review and Reauthorization". Location: Room 2318, Rayburn Building.
12:00 PM. The FCBA will host a luncheon. The speaker will be Craig McCaw, Ch/CEO of Teledesic. Location: Capital Hilton Hotel, 16th and K Streets, NW, Washington DC. A reception will begin at 12:00 NOON, followed by lunch at 12:30 PM. RSVP to Wendy Parish at wendy @fcba.org by 12:00 NOON on Tuesday, March 12.
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