| House Passes Class Action
Reform Bill |
3/13. The House amended and passed HR 2341,
the Class Action Fairness Act of 2001, on a largely party line
vote of 233 to 190. See, Roll
Call No. 62.
The House agreed to an amendment [PDF]
offered by Rep. Melissa
Hart (R-PA) which requires the Judicial Conference of the
U.S. to write a report on class action settlements in the
federal courts. The House also agreed to an amendment
[PDF] offered by Rep.
Ric Keller (R-FL) which requires disclosure of the full
amount of attorney's fees charged by the plaintiffs'
attorneys.
The bill would add new sections to Title 28 to ensure that
class members are treated fairly in settlements. It provides
that 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".
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".
The bill is opposed by plaintiffs' trial lawyers. It faces
stronger opposition in the Senate. |
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| 7th Circuit Comments on
Jury Verdict in mySimon Trademark Case |
3/13. The U.S.
Court of Appeals (7thCir) issued its opinion
in Simon
Property Group v. mySimon, a Lanham Act case
brought by a bricks and mortar real estate manager against a
comparison shopping web site. The Appeals Court dismissed an
appeal brought by the real estate manager on the grounds that
the matter appealed is not yet final. However, the Appeals
Court discussed in detail the facts of the case. It referred
to the weakness of the plaintiff's case, and the strength of
the defendant's case. It added that the plaintiff's lawyer did
"a whale of a selling job" to the jury.
Background. Simon
Property Group (SPG) is a Delaware corporation based in
Indianapolis, Indiana. It is a real estate investment trust
that owns and manages retail real estate, primarily shopping
malls. mySimon is a
California corporation based in San Francisco. It is now owned
by CNET Networks. It provides web based comparison shopping.
District Court. SPG filed a complaint in U.S. District Court (SDInd)
against mySimon alleging violation of the Lanham Act and
various state statutes. SPG alleges that it owns exclusive
rights to the "Simon" name, and that "mySimon",
mysimon.com, and a cartoon character named "Simon"
infringe its rights. SPG initially sought a temporary
restraining order (TRO), and preliminary injunction, barring
defendant's use of the "Simon" names.
The District Court denied the motion for TRO at the outset,
and SPG did not pursue the matter. The Indianapolis jury
returned a verdict in favor of the Indianapolis based SPG on
liability under the Lanham Act. It also awarded SPG $11.5
Million in profits, $5.3 Million in corrective advertising,
and $10 Million in state law punitive damages.
SPG then sought a permanent injunction. mySimon moved for
judgment as a matter of law and a new trial. The District
Court reduced damages to $10 in nominal damages, and $50,000
in punitive damages. The District Court ordered a new trial on
the corrective advertising issue. However, the District Court
did not overturn the verdict on liability. The District Court
crafted an injunction order that required mySimon, after one
year, to transfer its domain name to SPG and to stop using the
"Simon" name. However, the District Court also
stated that the injunction would not issue until entry of
final judgment (which has not taken place, because the new
trial has yet to held).
SPG promptly appealed the District Court's non entry of a
permanent injunction, and the one year delay regarding the use
of the name "Simon".
Appeals Court. A unanimous three judge panel dismissed
the appeal on the grounds that there was no final order to
appeal. It held that the District Court had merely postponed
the relief requested, not denied it. The Appeals Court also
noted that SPG had abandoned its motion for a preliminary
injunction after it had lost its motion for a TRO, and that
therefore, SPG could not show the requisite element of
irreparable harm.
However, the Court of Appeals also discussed the facts of the
case in some detail, and commented upon the jury verdict. This
unusual dicta may portend how the Appeals Court may rule if
the case is properly brought before it on all issues.
The Appeals Court noted of SPG, that "Unlike mySimon, it
does not offer comparison shopping services on the
Internet." It also noted that "no other American
property management company had ever attempted to ``brand´´
any of its shopping malls", and that SPG did not attempt
to brand its name until after mySimon began operations. It
also wrote that "SPG's advertising agency reported that
brand recognition for the ``Simon´´ name was ``almost
nonexistent´´ before 1999."
The Appeals Court further reviewed the evidence. It wrote that
"SPG won a verdict despite presenting relatively weak
evidence that its ``Simon´´ name had attained secondary
meaning or that consumers were likely to confuse SPG with
mySimon. For example, the vast majority of SPG's ``consumer´´
witnesses who testified that they had heard of SPG were
professionals whose jobs required them to be aware of the
company. They included employees of SPG's advertising agency,
real estate analysts who covered SPG, executives of the
National Association of Real Estate Investment Trusts (of
which SPG is a member), and members of a law firm that
represents SPG. Indeed, because SPG's witnesses were so
unrepresentative of the average consumer, the district court
termed their testimony regarding secondary meaning ``so slight
as to amount to almost nothing.´´ Additionally, the district
court noted, ``Simon´´ is an extremely common first name and
surname, weakening SPG's argument that mySimon's use of the
name is likely to confuse consumers. In contrast, mySimon
presented substantial survey evidence demonstrating that there
was no likelihood of confusion between mySimon and SPG."
(Parentheses in original.)
The Appeals Court also wrote that "Despite the relative
strength of mySimon's evidence and the relative weakness of
SPG's, SPG's lawyer must have done a whale of a selling job as
the jury awarded the company $11.5 million in mySimon's
``profits´´ (although mySimon had not yet earned any
profits), $5.3 million in corrective advertising (although SPG
had not engaged in any corrective advertising) ..."
(Parentheses in original.)
The Appeals Court, in conclusion, stated that the item being
appealed was not a definitive disposition of the matter
because, "The judge, as the case continues, is free to
revise his ruling at any time before entering final
judgment." Perhaps, the District Court judge is also free
to revise his ruling in light of the Appeals Court's comments. |
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| GAO Reports on IT at
Veterans Administration |
3/13. The General Accounting
Office (GAO) released a report [PDF]
titled "VA Information Technology: Progress Made, but
Continued Management Attention Is Key to Achieving
Results". The report, which was prepared for the House Veterans' Affairs
Committee's Subcommittee on Oversight and Investigations,
concludes that "many aspects of VA's IT environment
remain troublesome".
The report states that "Significant work, nonetheless, is
still required before the department will have a functioning
enterprise architecture in place for acquiring and utilizing
information systems across VA in a cost effective and
efficient manner."
The report states further that the Veterans Administration
"continues to report pervasive and serious information
security weaknesses. Thus far, its actions toward establishing
a comprehensive computer security management program have not
been sufficient to ensure that the department can protect its
computer systems, networks, and sensitive veterans health care
and benefits data from unnecessary exposure to vulnerabilities
and risks." |
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| Compuware Sues IBM |
3/13. Compuware
filed a complaint
[50 pages in PDF] in U.S.
District Court (EDMich) against IBM alleging copyright
infringement, violation of federal and state antitrust laws,
and other claims.
Compuware is a Michigan corporation with its principle place
of business in Farmington Hills, Michigan. It provides
software products and services for the testing, development,
and management of mainframe computers, distributed computer
networks, and Web based systems. In particular, Compuware
develops and sells software tools that work with IBM's
mainframes and software.
The complaint alleges that "IBM has copied and
misappropriated portions of Compuware's mainframe software
tools, and wrongfully used Compuware's technology to develop
competing products, including, among other things, File
Manager."
The complaint further alleges that "IBM is also using its
monopoly power in the sale of mainframe computers and related
software to subvert competition on the merits. In particular,
IBM is (a) denying critical information to Compuware and
others in an effort to undermine their development efforts,
(b) tying the licensing of its monopoly software to mainframe
software tools licensed in competition with Compuware and
other ISVs so that customers are forced to obtain mainframe
software tools from IBM, and (c) using its position operating
the information technology departments of thousands of major
corporations to steer their purchases of the mainframe
software tools."
Count 1 alleges direct and contributory copyright
infringement under 17 U.S.C.
§ 101 et seq. Compuware alleges, for example, that
"IBM knowingly and willfully copied both the object code
and source code of Compuware's mainframe software tools,
namely, the File-AID and Abend-AID IMS computer programs in
order to develop IBM's new product line. IBM's File Manager
program includes several modules that appear to have been
literally copied from Compuware's source code or are
substantially similar thereto." Compuware adds that IBM
even copied its "bugs".
Count 2 alleges misappropriation of trade secrets under
Michigan state law. Count 3 alleges intentional
interference with contractual relations.
Count 4 alleges unlawful tying in violation of § 1 of
the Sherman Act, 15 U.S.C.
§ 1. Count 5 alleges monopoly leveraging in
violation of § 2 of the Sherman Act, 15 U.S.C.
§ 2. Count 6 alleges attempts to monopolize in
violation of § 2 of the Sherman Act.
Count 7 alleges tortious interference with business
expectancy.
Counts 7 through 15 allege unfair competition under the
laws of the states of California, Connecticut, Nebraska, North
Carolina, South Carolina, Tennessee, Utah, and Washington.
Compuware is represented by the Palo Alto law firm of Fenwick & West, and by
the Detroit law firm of Honigman Miller
Schwartz & Cohn. This is D.C. No. Case No. 02-70906.
See also, Compuware
release. |
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| 1st Circuit Rules in Cable
Franchising Case |
3/13. The U.S.
Court of Appeals (1stCir) issued its opinion
in Nepsk
v. Town of Houlton, a case regarding a cable
franchising authority's refusal to renew a cable TV franchise.
Background. Nepsk filed an application to renew its
cable television franchise -- late. The Town of Houlton,
Maine, decided not to renew the franchise, in part because
Nepsk did not plan to offer Internet access services. Rather,
Houlton decided to solicit competitive bids. It awarded the
franchise to a competitor of Nepsk.
Complaint. Nepsk filed a complaint in U.S.
District Court (DMaine) alleging violation of the Cable
Communications Policy Act of 1984, as amended by the Cable
Television Consumer Protection and Competition Act of 1992 and
the Telecommunications Act of 1996.
Count I of the complaint alleged violation of the renewal
procedures set forth at 47 U.S.C.
§§ 546(a)-(g). Count II alleged that Houlton had
conditioned the renewal of Nepsk's franchise on its
willingness to provide high speed internet service to its
subscribers in violation of 47 U.S.C.
§ 541(b)(3)(D), which prohibits franchising
authorities from requiring cable operators to provide certain
"telecommunication service[s]" as a condition of a
franchise award, and 47 U.S.C.
§ 544(e), which states that "[n]o State or
franchising authority may prohibit, condition, or restrict a
cable system's use of any type of ... transmission
technology." Count III alleged that Houlton unreasonably
refused to award Nepsk's franchise in violation of 47 U.S.C.
§ 541(a)(1).
District Court Decisions. The District Court granted
judgment on the pleadings to Houlton on Counts I and II. It
granted summary judgment to Houlton on Count III. Nepsk
appealed.
Court of Appeals. The Court of Appeals affirmed.
However, the Appeals Court's opinion, as well as the decisions
of the District Court, were based, in part on procedural facts
peculiar to this case. Nepsk filed its franchise renewal
application late, and failed to file a timely opposition to
the motion for judgment on the pleadings. |
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| Greenspan Addresses High
Tech Investment |
3/13. Federal
Reserve Board Chairman Alan
Greenspan electronically delivered a speech
to the Independent Community Bankers of America in Honolulu,
Hawaii, titled "The U.S. Economy". He addressed,
among other things, investment in high tech, and its effect on
the economy.
He stated that "firms' choices about the types of
investments to make matter crucially for how much labor
productivity ultimately is boosted. In the late 1990s, for
example, businesses allocated much more of their investment
dollars toward high tech, higher return capital than they did
in earlier years. Businesses made this shift and are
continuing to move further in that direction in response to
the extremely rapid decline in the prices of high tech assets
and the new opportunities that these assets have afforded.
According to one set of calculations, of the roughly 2-1/2
percent annual rate of increase in output per hour, or labor
productivity, between 1995 and 2001, perhaps a quarter of that
growth could be attributed to on-going shifts in the
composition, as distinct from the dollar level, of
capital."
Greenspan also stated that "Improvements in the quantity
and quality of our workforce’s education enhance workers'
skills and contribute importantly to the growth of labor
productivity. But far more important over the past six years
have been the gains in output attributable to technological
innovation, especially information technology and improved
managerial organization ..." |
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| PPI Rates States on Laws
Affecting Internet |
3/13. The Progressive
Policy Institute (PPI), a Democratic think tank, released
a report
[33 pages in PDF] titled "The Best States for
E-Commerce". The report measures how state laws,
regulations, and administrative actions support or hinder
Internet use. It found that the best states are Oregon, Utah,
Indiana, Louisiana, and Iowa. It found that the worst states
are California, Alabama, New Mexico, and South Carolina.
The report states that "state government policies can
have a significant positive or negative impact on the growth
of the Internet in their states. Through their regulations on
individuals, industry sectors, or professions, states regulate
the ease, and in some cases, the ability of Internet users to
buy certain goods and services online. States control tax
rates on Internet access. Through their own actions to
digitize state government, they control how much and how easy
it is for Internet users to conduct online transactions with
their government. And finally, they determine if state
residents can engage in legally binding online transactions by
whether the state recognizes the legal validity of digital
signatures."
The report scored each state on several criteria, including
their laws affecting Internet sales and transactions involving
contact lenses, prescription drugs, wine, mortgages
auctioneering, insurance, and cars. The report also rated
states on access taxes, e-government, telemedicine, and the
Uniform Electronic Transactions Act.
The report states that "We hope our findings encourage
states to examine carefully their laws, particularly those
designed to protect incumbent bricks and mortar companies
against e-commerce competitors, with an eye toward giving
their citizens more choices and options as Internet
users."
The report was written by Robert Atkinson and Thomas Wilhelm.
See also, PPI
release. |
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| Thursday, March 14 |
The House will meet at 10:00 AM for legislative business.
9:00 AM. The House
Judiciary Committee's Subcommittee on Courts, the
Internet, and Intellectual Property will hold a hearing titled
"Patent Law and Non-Profit Research Collaboration."
Location: Room 2141, Rayburn Building.
9:30 AM. The FCC will hold a
meeting. See, agenda.
Location: FCC, 445 12th Street, SW, Room TW-C05.
10:00 AM. The Senate
Judiciary Committee will hold a hearing titled
"Competition, Innovation, and Public Policy in the
Digital Age: Is the Marketplace Working to Protect Digital
Creative Works? "The witnesses will be Richard Parsons
(AOL TW), Craig Barrett (Intel), Jonathan Taplin (Intertainer),
Joe Kraus, and Justin Hughes (UCLA Law School). 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". The witnesses will be Phillip Bond
(Under Secretary of Commerce for Technology), Arden Bement
(Director of the NIST),
Michael Wojcicki (Modernization Forum), Birgit Klohs (Right
Place Program), and Christopher Hill (George Mason Univ.).
Location: Room 2318, Rayburn Building.
11:00 AM. FTC Chairman Timothy
Muris will speak at the 6th Annual Georgetown University
Law Center (GULC) Corporate Counsel Institute. Location: GULC,
600 New Jersey Avenue, NW.
12:00 PM. The FCBA will
host a luncheon. The speaker will be Craig McCaw,
Ch/CEO of Teledesic. 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. Location:
Capital Hilton Hotel, 16th and K Streets, NW.
2:00 PM. The Senate
Judiciary Committee will hold a business meeting. See, agenda.
Location: Room 106, Dirksen Building. |
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| Friday, March 15 |
The House will not be in session.
9:00 AM. The AFL-CIO's
Department for Professional Employees will host a panel of
speakers who will advocate retention of the FCC's newspaper
and broadcast cross ownership rules. FCC Commission Michael
Copps will speak. See, AFL-CIO
notice. For more information, contact Leandra Kennedy at lkennedy @aflcio.org or
202 638-0320. Location: National
Press Club, Holeman Lounge, 529 14th St. NW, 13th Floor.
9:30 - 11:00 AM. The Progressive
Policy Institute (PPI) will host a panel discussion on the
impact of new homeland security efforts on privacy issues. The
panelists will be Robert Atkinson (PPI), Shane Ham (PPI), and
Jim Dempsey (Center for Democracy and Technology). RSVP to 202
547-0001. Location: PPI, 600 Pennsylvania Ave., SE, Suite 400.
11:00 AM. FTC Chairman Timothy
Muris will give the keynote address at the Consumer Federation of
America's Assembly. Location: Washington Plaza Hotel, 10
Thomas Circle, NW.
Deadline to submit comments to the FCC on the World
Radiocommunication Conference Advisory Committee's (WRC-03
Advisory Committee) recommendations of February 6, 2002,
regarding the 2003 World Radiocommunication Conference
(WRC-03). See, notice
[PDF]. |
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| Monday, March 18 |
9:30 AM. The U.S. Court of Appeals
(DCCir) will hear oral argument in Costa de Oro TV v.
FCC, No. 01-1153. Judges Ginsburg, Henderson and Tatel
will preside. Location: 333 Constitution Ave. NW.
12:00 NOON. Deadline to submit requests to USTR to
testify orally at its April 1 hearing negotiation of a U.S.
Singapore Free Trade Agreement. See, notice
in the Federal Register.
Deadline to submit comments to the FCC in response
to its notice of proposed rulemaking (NPRM) regarding its
unbundling analysis under § 251
of the Communications Act and the identification of specific
unbundling requirements for incumbent local exchange carriers
(ILECs). The FCC adopted this NPRM at its December 12 meeting.
This is CC Docket No. 01-338. See, notice
in the Federal Register. Note: SBC submitted a request
for extension of deadline [PDF] on March 11. |
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| Tuesday, March 19 |
9:30 AM - 4:30 PM. The Federal
Trade Commission (FTC) and the Department of Justice (DOJ)
Antitrust Division will
continue their joint hearings titled "Competition and
Intellectual Property Law and Policy in the Knowledge Based
Economy." From 9:30 AM until 12:00 NOON, there will be
presentations on "Business Perspectives on Patents".
From 1:30 until 4:30 PM, there will be presentations on
"Business Perspectives on Patents: Biotech and
Pharmaceuticals. See, agenda.
Location: Room 432, FTC, 600 Pennsylvania Ave., NW.
10:00 AM. The Senate
Appropriations Committee's Subcommittee on Commerce,
Justice, State, and the Judiciary will hold a hearing on the
proposed budget estimates for Fiscal Year 2003 for the FTC,
and other agencies. Location: Room 138, Dirksen Building. |
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| Wednesday, March 20 |
9:30 AM. The Senate
Commerce Committee will hold a hearing on
"competition in the local telecommunications
marketplace". Sen.
Ernest Hollings (D-SC) will preside. Location: Room 253,
Russell Building.
9:30 AM - 4:30 PM. The Federal
Trade Commission (FTC) and the Department of Justice (DOJ)
Antitrust Division will
continue their joint hearings titled "Competition and
Intellectual Property Law and Policy in the Knowledge Based
Economy." From 9:30 AM until 12:00 NOON, there will be
presentations on "Business Perspectives on Patents:
Hardware and Semiconductors". From 1:30 until 4:30 PM
there will be presentations on "Business Perspectives on
Patents: Software and the Internet". See, agenda.
Location: Room 432, FTC, 600 Pennsylvania Ave., NW.
10:00 AM. The Senate
Judiciary Committee's Subcommittee on Technology,
Terrorism, and Government Information Subcommittee will hold
hearings to examine identity theft and information protection.
Sen. Dianne Feinstein
(D-CA) will preside. Location: Room 226, Dirksen Building.
CANCELLED. 10:00
AM. The FCC's
Technological Advisory Council will hold a meeting. See, notice
in Federal Register, February 26, 2002. See, cancellation
notice in Federal Register. The next meeting is April 26;
see, FCC
notice of March 12.
12:15 PM. The FCBA's
Cable Committee will host a luncheon. The speaker will be
Catherine Bohigian, Legal Advisor to FCC Commissioner Kevin
Martin. The price to attend is $15. RSVP to Wendy Parish at wendy @fcba.org by 5:00 PM on
March 18.
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 USTR.
6:00 - 8:00 PM. The FCBA's
will host a Continuing Legal Education (CLE) seminar titled
"Telecommunications 201". Location: Capital Hilton
Hotel, 16th and K Streets, NW. |
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| People and Appointments |
3/13. Federal Trade Commission
(FTC) Commissioner Mozelle Thompson was elected Chair
of the OECD's Committee on Consumer Policy. See, FTC release.
3/13. President Bush nominated David Gross for the rank
of Ambassador during his tenure of service as Deputy Assistant
Secretary for International Communications and Information
Policy in the Bureau of Economic and Business Affairs and U.S.
coordinator for International Communications and Information
Policy. See, White
House release.
3/12. The Senate confirmed Ralph Beistline to be a U.S.
District Judge for the District of Alaska. |
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