Tech Law Journal Daily E-Mail Alert
March 22, 2002, 9:00 AM ET, Alert No. 394.
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Sen. Hollings Introduces Copy Protection Bill
3/21. Sen. Ernest Hollings (D-SC) introduced S 2048, the "Consumer Broadband and Digital Television Act", a bill that would require software and electronic equipment makers to build copy protection technology into their products.
The bill states that the FCC "in consultation with the Register of Copyrights, shall make a determination, not more than 12 months after the date of enactment of this Act, as to whether (A) representatives of digital media device manufacturers, consumer groups, and copyright owners have reached agreement on security system standards for use in digital media devices and encoding rules; and (B) the standards and encoding rules conform to the requirements of" the bill.
The bill further states that if such an agreement is reached, then the FCC shall initiate a rule making proceeding to codify the agreement. However, if such an agreement is not reached, then the FCC shall initiate a rule making proceeding "to adopt security system standards and encoding rules that conform" with the standards and encoding rules of the bill.
Security System Standards. The bill requires that "the security system standards shall ensure, to the extent practicable, that (1) the standard security technologies are (A) reliable; (B) renewable; (C) resistant to attack; (D) readily implemented; (E) modular; (F) applicable to multiple technology platforms; (G) extensible; (H) upgradable; (I) not cost prohibitive; and (2) any software portion of such standards is based on open source code".
Encoding Rules. The bill requires that "In achieving the goal of promoting as many lawful uses of copyrighted works as possible, while preventing as much infringement as possible, the encoding rules shall take into account the limitations on the exclusive rights of copyright owners, including the fair use doctrine." It further requires that "No person may apply a security measure that uses a standard security technology to prevent a lawful recipient from making a personal copy for lawful use in the home of programming at the time it is lawfully performed, on an over the air broadcast, premium or non-premium cable channel, or premium or non-premium satellite channel, by a television broadcast station ... , a cable system ... , or a satellite carrier ..." (Citations to the U.S. Code omitted.)
The bill prohibits a "manufacturer, importer, or seller of digital media devices" from selling, or offering for sale, in interstate commerce, "a digital media device unless the device includes and utilizes standard security technologies that adhere to the security system standards" required by this bill.
Hillary Rosen, P/CEO of the Recording Industry Association of America (RIAA), stated that "The introduction of the 'Consumer Broadband Act' sends an unmistakable signal about the importance of protecting digital music and other content from piracy. Without stringent protections, online piracy will continue to proliferate and spin further out of control."
"We appreciate that Senators Hollings, Stevens, Inouye, Breaux, Nelson and Feinstein have sent a wake up call to the information technology and consumer electronics industries that the time has come to achieve a voluntary marketplace solution to the growing threat of online piracy. We have been, and continue to be, eager to work out a voluntary solution, for that is in the best interests of everyone involved, especially the American consumer. We look forward to working with the Senate and House Commerce and Judiciary Committees on combating the digital piracy that threatens the development of the legitimate marketplace for music," said Rosen.
Sen. Leahy Reintroduces Bill to Close 11th Amendment Loophole to IPR
3/19. Sen. Patrick Leahy (D-VT) and Sen. Sam Brownback (R-KS) introduced S 2031, the Intellectual Property Protection Restoration Act of 2002. This is the latest version of Sen. Leahy's proposal to stop states from evading liability for infringing intellectual property rights by asserting 11th Amendment immunity.
The bill states that its purpose is to "eliminate the unfair commercial advantage that States and their instrumentalities now hold in the Federal intellectual property system because of their ability to obtain protection under the United States patent, copyright, and trademark laws while remaining exempt from liability for infringing the rights of others."
Supreme Court Cases. The problem addressed by this bill arose in 1996 when the Supreme Court of the U.S. ruled in Seminole Tribe of Florida v. Florida that the Congress lacks authority under Article I of the Constitution to abrogate the States' 11th Amendment immunity from suit in federal courts. See also, the 1999 opinions of the Supreme Court in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank (invalidating the Patent and Plant Variety Protection Remedy Clarification Act) and College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board (invalidating the Trademark Remedy Clarification Act).
Eleventh Amendment. "The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State."
Huge Loophole. Sen. Leahy stated in the Senate on March 19 that "the decisions opened up a huge loophole in our Federal intellectual property laws. If we truly believe in fairness, we cannot tolerate a situation in which some participants in the intellectual property system get legal protection but need not adhere to the law themselves. If we truly believe in the free market, we cannot tolerate a situation where one class of market participants have to play by the rules and others do not." Cong. Rec., March 19, 2002, at S2079.
Related Bills. Sen. Leahy previously introduced S 1611, the Intellectual Property Protection Restoration Act of 2001, on November 1, 2001. The Senate Judiciary Committee, which Sen. Leahy chairs, held a hearing on that bill on February 27, 2002. S 2031 revises the previous bill in light of hearing testimony. Sen. Leahy also sponsored similar legislation in the 106th Congress. The related bill in the House is HR 3204, sponsored by Rep. Howard Coble (R-NC) and Rep. Howard Berman (D-CA).
Summary of S 2031. This bill would prevent states from recovering damages for infringement of state owned intellectual property, unless they have first waived their 11th Amendment sovereign immunity from suits against them for their infringement of the intellectual property of others. This bill would also provide that states that violate intellectual property rights "in a manner that deprives any person of property in violation of the fourteenth amendment of the United States Constitution, shall be liable to the party injured in a civil action in Federal court for compensation for the harm caused by such violation." The bill contains similar language for violations which constitute takings under the 5th Amendment.
Senate Committee Approves E-Gov Bill
3/21. The Senate Governmental Affairs Committee amended and approved S 803, the "E-Government Act of 2001". The bill is sponsored by Sen. Joe Lieberman (D-CT), the Chairman of the Committee.
The bill would establish an Office of Electronic Government headed by a Senate confirmed administrator within the Office of Management and Budget, authorize the appropriation of $345 Million over four years for an e-government fund to support interagency e-government projects, establish an online directory of federal web sites, require federal courts to publish opinions online, and fund a federal training center to recruit and train information technology professionals. See, Committee release.
State Department Official Addresses Worldwide IT Development
3/21. David Gross gave a speech at Third World Telecommunications Development Conference, in Istanbul, Turkey, in which he addressed promoting information technologies around the world.
He stated that "While advances of democracy and free markets have brought prosperity to billions of people, too many people are being left behind." He added that "information based technologies are fundamental to meeting basic development objectives".
Gross also offered several recommendations: "Build human capacity through training, education, and knowledge creation initiatives. Ensure the participation of local communities and the development of local content. Promote private sector leadership and regulate only when necessary. Establish administrative and economic systems based on predictable and transparent rules, and especially good governance."
Gross is the Deputy Assistant Secretary of State for International Communications and Information Policy. He is the head of the U.S. Delegation to the conference.
Cal App Rules on Malicious Prosecution of Trademark Claims
3/20. The California Court of Appeal (2/7) issued its opinion [PDF] in Vanzandt v. Daimler Chrysler, a case regarding malicious prosecution involving trademark claims.
Ted Vanzandt filed a complaint in Superior Court in Los Angeles County, California, against Daimler Chrysler, its law firms, and individual attorneys, alleging malicious prosecution. In a previous action, Daimler Chrysler filed a complaint in U.S. District Court against Vanzandt alleging trademark infringement, trademark dilution, and unfair competition in connection with Vanzandt's production and sale of radiator grille overlays for Daimler Chrysler Jeep vehicles. The District Court initially granted Daimler Chrysler partial summary judgment. However, the U.S. Court of Appeals reversed, and Vanzandt ultimately prevailed in that action. In the present action, the Superior Court held that the complaint was barred because Vanzant could not demonstrate that the defendants lacked probable cause to prosecute the previous action.
The Court of Appeal affirmed. It wrote that "The tort of malicious prosecution recognizes the right of an individual to be free from unjustifiable litigation or criminal prosecution." However, it cautioned that "the action has traditionally been regarded with disfavor and the tort's elements have been strictly construed and carefully circumscribed."
The Court of Appeals listed the elements of a malicious prosecution claim: "the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in the plaintiff’s favor; (2) was brought without probable cause; and (3) was initiated with malice."
This case focused on the element of probable cause. The Court of Appeal elaborated that "A plaintiff has probable cause to bring a civil suit if the claim is legally tenable. This issue is considered objectively, without regard to the mental state of the plaintiff or counsel; and the trial court determines as a question of law whether probable cause exists. ... Probable cause may be found even where a suit lacks merit."
The Court of Appeal concluded that since the U.S. District Court had initially ruled in Daimler Chrysler's favor, there was probable cause. It wrote, "Where a plaintiff in the underlying action obtains a favorable judgment on the merits, such ruling is, unless procured by fraud, conclusive proof the proceedings were prosecuted with probable cause, notwithstanding the fact the decision is reversed on appeal."
The opinion provides little guidance where the defendant in a malicious prosecution action did not obtain a favorable judgment.
More News
3/21. The House Financial Services Committee held a hearing titled "The Effects of the Global Crossing Bankruptcy on Investors, Markets, and Employees". See, prepared testimony of witnesses: John Legere (Global Crossing), Dan Cohrs (Global Crossing), Afshin Mohebbi (Qwest), Michael Salsbury (WorldCom), Andrew McGrath (Cable and Wireless Global), John Morrissey (SEC), Scott Cleland (Precursor Group), and Will McNamara (Scientech).
3/21. The General Accounting Office (GAO) released a report [PDF] titled "Information Technology: OMB Leadership Critical to Making Needed Enterprise Architecture and E–government Progress". The report was prepared as testimony for the House Government Reform Committee's Technology and Procurement Policy Subcommittee hearing on March 21 titled "How The Federal Government Can Transition From Old Economy Speed to Become A Model for Electronic Government".
3/21. President Bush signed an Executive Order establishing the President's Homeland Security Advisory Council.
High Tech v. High Touch Banking
3/21. Federal Reserve Board Governor Susan Bies gave a speech titled "Current Challenges of Community Banks" to the Ohio Bankers Day Conference in Columbus, Ohio. She stated that "The surprisingly strong and persistent growth in the number of branch offices also suggests that the personal touch, which plays to the strength of community banks, remains an important element of banking in the age of the Internet."
DOJ Recommends Approval of BellSouth's GA & LA Long Distance Applications
3/21. The Department of Justice (DOJ) submitted to the Federal Communications Commission (FCC) its evaluation [31 pages in PDF] of BellSouth's Section 271 application to provide in region interLATA services in the states of Georgia and Louisiana. The DOJ "recommends that the FCC approve BellSouth's application." This is CC Docket No. 02-35.
Herschel Abbott, BellSouth's VP for governmental affairs, stated in a release that "Competition is flourishing throughout the BellSouth region, with close to 300 competitors offering local service to more than four million lines in the region -- approximately 1.3 million of those in Georgia and Louisiana."
Friday, March 22
The House will not be in session.
The "Managing the New Privacy Revolution" conference will meet regarding "Internet and Global Issues". The program includes panel discussions and speeches on Biometrics and Privacy on the Internet (9:10 - 10:15); Online Marketing: CRM, Permissions and SPAM (10:45 - 11:45); Safe Harbor (11:45 - 12:45); Japan, U.S. and Worldwide Patterns of Data Protection (12:45 - 2:00); and Alternative Strategies for Adopting Global Privacy Policies (2:00 - 3:30). See, agenda. Location: Omni Shoreham Hotel, 2500 Calvert Street, NW.
9:00 AM. The House Government Reform Committee's District of Columbia Subcommittee will hold a hearing titled "Privacy v. Security: Electronic Surveillance in the Nation's Capital". Location: Room 2154, Rayburn Building.
10:00 AM - 1:00 PM. The Network Reliability and Interoperability Council (NRIC) will hold a meeting. See, FCC notice [PDF] of March 14, and notice in Federal Register. Location: Room TW-C305, FCC, 445 12th St. SW.
Monday, March 25
The House and Senate will be in recess for the Spring District Work Period. They will return on Monday, April 8.
9:15 AM - 12:25 PM. The Department of Commerce will host a roundtable titled "Understanding Broadband Demand: Broadband & Business Productivity". The event will be chaired by Phil Bond (Under Secretary for Technology), Kathleen Cooper (Under Secretary for Economic Affairs), and Bruce Mehlman (Assistant Secretary for Technology Policy). See, agenda. Location: Room 4830, U.S. Department of Commerce, 14th & Constitution Avenue, NW.
Tuesday, March 26
8:00 AM - 5:15 PM. The Michigan State University Quello Communications Law and Policy Symposium will host its Third Annual Rethinking Access conference. See, schedule of speakers. Location: Willard Intercontinental Hotel.
Wednesday, March 27
11:00 AM. The Cato Institute will host a panel discussion on spam. The speakers will be Howard Beales (FTC), Rebecca Richards (TRUSTe), Chris Hoofnagle (Electronic Privacy Information Center), and Jerry Cerasale (Direct Marketing Association). See, online registration page. Lunch will follow the program. Location: Cato, 1000 Massachusetts Ave., NW.
12:15 PM. The FBCA's Telecom Competition Committee will host a brown bag lunch. The speakers will be Jim Bird, head of the FCC's transactions team, and other FCC representatives. RSVP to Wendy Parish at wendy Location: FCC, 445 12th Street, SW, Eighth Floor, Conference Room 1.
12:30 PM. Larry Thompson, Deputy Attorney General of the U.S., will speak at the Heritage Foundation. See, notice. Location: 214 Massachusetts Ave NE.
Thursday, March 28
Passover begins.
12:15 PM. The FCBA's Young Lawyers Committee will host a brown bag luncheon. The topic will be "Putting the ``Mass´´ Back in Media -- A First Amendment Right to Bulk Up." The speaker will be Paul Gallant, Special Advisor to Kenneth Ferree, Bureau Chief of the Cable Services Bureau, and a member of the Media Ownership Working Group. RSVP to rwallach Location: Willkie Farr & Gallagher, 1155 21st Street, NW (between L & M), 6th Floor.
4:00 PM. John Duffy (Marshall Wythe School of Law) will give a lecture titled "The Puzzling Persistence of the Ideal of Marginal Cost Pricing in the Economic Analysis of Patents". For more information, contact Robert Brauneis at rbraun or 202 994-6138. Location: George Washington University Law School, 2000 H Street, NW.
Deadline to submit comments to the FCC regarding ways to improve its electronic licensing systems. See, FCC notice [PDF].
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