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April 4, 2002, 9:00 AM ET, Alert No. 403.
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5th Circuit Rules in Cyber Squatting Case
4/3. The U.S. Court of Appeals (5thCir) issued its opinion in Gallo v. Spider Webs, a cyber squatting case. The Appeals Court affirmed a District Court order that a cyber squatter transfer a domain name under the Anti- Cybersquatting Consumer Protection Act.
Background. The Ernest and Julio Gallo Winery holds a U.S. trademark in the name "Ernest & Julio Gallo." Spider Webs registered about 2,000 domain names, including About 300 of its registrations could be associated with existing businesses. Spider Webs sells its domain names on its web site, and on eBay. However, Spider Webs never offered to sell to Gallo. Spider Webs refused Gallo's requests to transfer the domain name. Once Gallo filed suit, Spider Webs published a web site at this domain which it named the "Whiney Winery" web site; it was critical of Gallo.
District Court. Gallo filed a complaint in U.S. District Court (SDTex) against Spider Webs and several individuals alleging violation of the Anti- Cybersquatting Consumer Protection Act (ACPA), 15 U.S.C. § 1125(d), and federal and Texas anti-dilution, trademark infringement, and unfair competition laws. The District Court granted summary judgment to Gallo under the ACPA and Texas anti- dilution law, and ordered Spider Webs to transfer the domain name to Gallo.
Statute. 15 U.S.C. § 1125(d)(1)(A) provides, in part, that "A person shall be liable in a civil action by the owner of a mark ... if, without regard to the goods or services of the parties, that person (i) has a bad faith intent to profit from that mark, including a personal name which is protected as a mark under this section; and (ii) registers, traffics in, or uses a domain name that -- (I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark; (II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark; or (III) is a trademark, word, or name protected by reason of section 706 of Title 18 or section 220506 of Title 36." The statute lists nine factors to be considered by the Court in determining whether "bad faith" exists.
Appeals Court. Spider Webs conceded that Gallo holds a valid trademark, and that the domain name at issue is confusingly similar to it. The only issue on appeal was whether Spider Webs had a "bad faith intent to profit" within the meaning of ACPA.
The Appeals Court held that an item by item consideration of the "bad faith" factors warranted a ruling in Gallo's favor. One factor (VII) weighed in Spider Webs' favor -- it did not provide false contact information when registering the domain.
The Appeals Court also addressed factor VI, regarding "the person's offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain ..." The Appeals Court wrote that "although Spider Webs has not offered this domain name for sale, it has registered other domain names that are identical or similar to the names of well- known businesses and products, has offered other domain names for sale, and has refused to accept less than $10,000 per name."
The Appeals Court also held that it "is not limited to the consideration of the listed statutory factors, but can consider other factors as well". Quoting from an earlier trademark case involving Gallo, the Appeals Court wrote that when "the senior user's trademark is famous in the marketplace and where the junior user was aware of the trademark and of its fame, a presumption of bad faith arises from the choice of the same name because it is inferrable that the junior user adopted the mark for the purpose of profiting from the aura of goodwill surrounding the senior user's mark." See, E. & J. Gallo Winery v. Gallo Cattle Co., 12 U.S.P.Q.2d 1657, 1675 (E.D. Cal. 1989), aff'd, 967 F.2d 1280 (9th Cir. 1992).
The Appeals Court also affirmed the award of statutory damages under the ACPA.
FCC Grants VoiceStream's Petition for Waiver of PAS Rules
4/3. The Federal Communications Commission (FCC) released its Memorandum Opinion and Order [13 pages in PDF] granting VoiceStream Wireless Corporation's petition for waiver of the FCC's wireless priority access service (PAS) rules. VoiceStream filed its petition [PDF] on November 28, 2001. The National Communications System (NCS) supported the petition. The FCC adopted its order on March 15, 2002, but did not release it until April 3.
The FCC's PAS rules, at Section 64.402, permit commercial mobile radio service (CMRS) operators to voluntarily allow national security and emergency preparedness users in emergencies to access the next available wireless channel to originate a call.
The FCC granted VoiceStream a waiver "until notification by VoiceStream or NCS that the per call invocation feature can be commercially deployed on a global system for mobile communications (GSM) system, upon expiration or termination of the contract between VoiceStream and NCS, DynCorp or any other service integrator acting on behalf of NCS, to provide a wireless priority access capability; or by December 31, 2002, whichever is earliest."
The waiver will allows VoiceStream to immediately deploy PAS.
FCC Commissioner Michael Copps wrote a separate statement in which he supported the granting of the waiver, but dissented to the extent that the FCC order does not require service providers to disclose to their customers the implications of the new PAS system. He wrote that "I would therefore require any carrier that implements a PAS to inform its customers of the creation of the system and the impact on its customers' ability to complete calls in an emergency. With this information our citizens can decide which carrier they are most comfortable with, and how much to rely on their wireless phone in an emergency. ... We must not ``hide the ball´´ when it comes to PAS. Consumer anger will be overwhelming if the first time consumers learn that a PAS has reduced their chance of completing a call is in the aftermath of an emergency. Our citizens deserve to be fully informed ahead of time."
Commissioner Kevin Martin echoed Copps' concerns. He did not dissent, but wrote that "I also encourage PAS carriers to inform their customers when they have entered into such arrangements."
See also, FCC release. This is WT Docket No. 01-333.
Federal Circuit Reverses in Pickholtz v. Rainbow Technologies
4/3. The U.S. Court of Appeals (FedCir) issued its opinion in Pickholtz v. Rainbow Technologies, a patent infringement case involving claim construction.
Pickholtz is the inventor and owner of U.S. Patent 4,593,353, titled "Software protection method and apparatus". It describes an apparatus for the prevention of piracy of computer software. The invention prevents computer software on an external memory device (e.g., a magnetic disc) from executing on a computer unless the software is authorized to do so.
Pickholtz filed a complaint in U.S. District Court (NDCal) against Rainbow Technologies and Software Security alleging patent infringement. The District Court granted summary judgment of non-infringement. Pickholtz appealed.
The Court of Appeals reversed and remanded. The Court held that the District Court improperly construed the terms "computer" and "located in the computer" to exclude peripherals.
Broadband Coalition Advocates Relief from Unbundling Requirements
4/3. A group of six trade associations held a press conference in Washington DC to announce the formation of a group named the High Tech Broadband Coalition (HTBC). One purpose of this coalition is to file a comment with the Federal Communications Commission (FCC).
The HTBC will file a comment with the FCC on Friday, April 5, advocating that the FCC refrain from imposing Section 251 unbundling obligations on new fiber and DSL facilities deployed on the customer side of the central office. The coalition did not make available a copy of the comment to be filed. The unbundling requirement at issue is codified at 47 U.S.C. § 251(c)(3).
The speakers at the event were Robert Holleyman (P/CEO of the Business Software Alliance), Gary Shapiro (P/CEO of the Consumer Electronics Association), Jerry Jasinowski (President of the National Association of Manufacturers), George Scalise (President of the Semiconductor Industry Association), Matthew Flanigan (President of the Telecommunications Industry Association), and Rhett Dawson (ITIC).
The CEA's Shapiro stated that the coalition wants to "advance last mile broadband investment and deployment in the United States." He added that "to get broadband deployed, and to meet the national policy of broadband deployment, requires that our federal government, through the FCC, unshackle some of the regulations which are currently affecting the deployment of broadband." He elaborated that "the best way to reach universal adoption of broadband is through strong broadband facilities based competition. That is competition between cable modems, wireline broadband, like DSL and fiber, satellite, fixed and mobile wireless, and any other new technologies that may be developed."
Shapiro stated that the comment would be filed in the FCC's "triennial review of unbundling obligations". See, Notice of Proposed Rulemaking [PDF] titled "In the Matter of Review of Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers ...". This is CC Docket No. 01-338, announced on December 12, 2001. The FCC also announced on the same date a separate Notice of Proposed Rulemaking [PDF] regarding the current regulatory requirements for incumbent local exchange carriers' (ILECs) broadband telecommunications services. This is CC Docket No. 01-337.
Other technology related groups criticized the HTBC's proposals. For example, the Information Technology Association of America (ITAA) issued a release in which it stated that "vibrant competition rather than special accommodations for monopoly telephone companies is in the best interest of broadband users". Harris Miller, President of the ITAA, stated in this release that "the issue that the HTBC seeks to place before the Federal Communications Commission is whether to trade re-monopolization of the telephone markets for broadband investment by the Bell operating companies ... That's a deal that trades away consumer choice, investment, innovation, and a free market."
Miller elaborated that "Congress makes the laws. The 1996 Telecom Act requires monopoly telephone companies to open their facilities in exchange for access to new markets. Second, the Coalition is mistaken in suggesting that the Act gives the FCC forbearance authority. By suggesting the FCC use such a shaky legal authority, the Coalition risks creating considerable uncertainly to new broadband investment and the prospect of numerous, time consuming challenges in court."
Similarly, CapNet's Executive Director, Tim Hugo, stated in a release that the HTBC "called for the FCC to implement the core elements of H.R. 1542, commonly referred to as the Tauzin Dingell broadband legislation, as part of the agency's triennial review of the Section 251 unbundling rules of the 1996 Telecommunications Act. ... The 1996 Telecommunications Act was passed by Congress, and if need be, can be amended by Congress. As the FCC is not a legislative body, CapNet contends that the appropriate forum for this debate is the United States Congress, not the FCC."
People and Appointments
4/3. Microsoft announced that Rick Belluzzo "will transition out of his role as president and chief operating officer on May 1, although he will continue to work at the company through September to ensure a smooth transition." See, MSFT release.
4/3. Giovanni Prezioso was named General Counsel of the Securities and Exchange Commission (SEC). He  currently is a partner in the Washington DC office of the law firm Cleary Gottlieb Steen & Hamilton, which he joined out of law school in 1982. He will succeed David Becker, who will leave the Commission on May 7, 2002. See, SEC release.
4/3. Hewlett Packard and Compaq named 150 senior managers as a part of their merger integration. See, HP release.
More News
4/3. Adelphia Communications Corporation stated that "the Securities and Exchange Commission (SEC) is conducting an informal inquiry into its previously disclosed co-borrowing agreements and has asked the Company to provide clarification and related documentation." See, Adelphia release [PDF].
4/3. The Securities and Exchange Commission (SEC) initiated an administrative proceeding against David Thatcher, who was previously President and Chief Financial Officer of Critical Path, a provider of Internet messaging infrastructure products and services. The SEC simultaneously issued a consent order in which it suspended Thatcher from appearing or practicing before the SEC as an accountant. The SEC previously filed a civil complaint in U.S. District Court (NDCal) against Thatcher. In that action, the SEC obtained a judgment enjoining him from further violations of federal securities laws, and requiring him to pay a civil penalty of $110,000. Thatcher, among other things, materially overstated Critical Path's revenue, and materially understated its loss, in contravention of Generally Accepted Accounting Principles. See, SEC release.
3/28. Mohsin Mynaf plead guilty in U.S. District Court (EDCal) to six counts of criminal copyright infringement, six counts of trafficking in counterfeit labels, and one count of circumventing a technological measure that protects a copyright work in violation of the Digital Millennium Copyright Act. See, CCIPS release.
Thursday, April 4
The House and Senate are both in recess for the Spring District Work Period. Both bodies will return on Monday, April 8.
The Supreme Court of the U.S. is on recess until Monday, April 15.
8:30 AM - 5:30 PM. Day one of a two day event hosted by the Department of Commerce's (DOC's) National Telecommunications and Information Administration (NTIA) titled Spectrum Summit. The summit will address spectrum allocation and efficiency, the spectrum requirements of new technologies, and regulatory processes. See, NTIA notice and notice in Federal Register. Location: auditorium, Department of Commerce, 1401 Constitution Ave., NW.
2:00 - 4:00 PM. There will be a meeting of the FCC's Advisory Committee for the 2003 World Radiocommunication Conference. See, FCC notice [PDF], and notice in Federal Register. Location: FCC, Commission Meeting Room, Room TW-C305, 445 12th Street, SW.
4:00 PM. Dan Burk (Professor, University of Minnesota Law School) will give a lecture titled "Anti Circumvention Misuse". He will review the history of the equitable misuse doctrine in the context of patents and copyrights, and argue that the DMCA anti circumvention right is a new form of intellectual property that should be subject to the equitable misuse doctrine. For more information, contact Prof. Robert Brauneis at rbraun or (202) 994-6138. Location: The George Washington University Law School 720 20th Street, NW.
Friday, April 5
8:30 AM - 4:15 PM. Day two of a two day event hosted by the NTIA titled "Spectrum Summit". The summit will address spectrum allocation and efficiency, the spectrum requirements of new technologies, and regulatory processes. See, NTIA notice and notice in Federal Register. Location: Ronald Reagan International Trade Center, 1300 Pennsylvania Avenue, NW.
9:00 AM. The FCC's electronic filing systems will be shut down for maintenance purposes. This shut down will last through 1:00 PM on April 7. See, FCC notice.
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Global Naps Inc v. FCC, No. 01-1192. Judges Edwards, Roger and Tatel will preside. Location: 333 Constitution Ave. NW.
Extended 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, original notice in Federal Register, and extension notice in Federal Register.
Monday, April 8
The House and Senate return from the Spring District Work Period. The Senate is scheduled to meet at 3:00 PM.
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Morris Communications v. FCC, No. 01-1123. Judges Edwards, Tatel and Silberman will preside. Location: 333 Constitution Ave. NW.
Tuesday, April 9
4:00 PM. Margo Bagley (Emory University School of Law) will give a lecture titled "Patent First, Ask Questions Later: Morality as a Statutory Component of Patentability". For more information, contact  Robert Brauneis at rbraun or 202 994-6138. Location: George Washington University Law School, 2000 H Street, NW.
Wednesday, April 10
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 FTC. Location: Room H-309, The Capitol.
10:00 AM - 12:00 NOON. The AEI Brookings Joint Center for Regulatory Studies will host a panel discussion titled Microsoft: Making the Punishment Fit the Crime. The participants will be Robert Hahn (AEI Brookings), Robert Litan (AEI Brookings), George Priest (Yale Law School), Steve Salop (Georgetown Law Center), and Richard Schmalensee (MIT Sloan School of Management). See, online registration page. Location: Wohlstetter Conference Center, AEI, 12th Floor, 1150 17th Street, NW.
10:30 AM. The Senate Judiciary Committee's Subcommittee on Antitrust, Competition, and Business and Consumer Rights will hold a hearing titled "Dominance on the Ground: Cable Competition and the ATT Comcast Merger". Sen. Herb Kohl (D-WI) will preside.
12:00 NOON. The Congressional Internet Caucus Advisory Committee will host a luncheon panel discussion on the use of e-learning to train workers. The scheduled participants include Sen. Conrad Burns (R-MT), Rep. Johnny Isakson (R-GA), Jerry Berman (Internet Education Foundation), Rich Moran (Accenture), Daniel Hamburger (Indeliq), Greg Priest (SmartForce), and retired Brig. Gen. Frank Anderson (Defense Acquisition University). RSVP to or call Danielle at 202 637-4370. Location: Reserve Officers Association, First and Constitution Ave., NW.
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