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April 5, 2002, 9:00 AM ET, Alert No. 404.
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FCC Declares that EchoStar's Two Dish Plan Violates Statute and Rules
4/4. The Federal Communications Commission (FCC) issued a Declaratory Ruling and Order [21 pages in PDF] in which it declared that EchoStar's two dish plan violates both the Satellite Home Viewer Improvement Act of 1999 (SHIVA) and the FCC's regulations.
EchoStar, which is also known as the Dish Network, provides direct broadcast satellite (DBS) television service. EchoStar has placed some local stations in particular markets on ``wing slot´´ satellites. As a result, some EchoStar subscribers are required to use a second satellite dish antenna to receive and view these local stations.
The FCC wrote that "The SHVIA grants satellite carriers a royalty free copyright license that enables satellite carriers to make secondary transmissions of a broadcast station’s signal into that station's local designated market area (``DMA´´) without obtaining the authorization of those holding copyrights in the individual programs broadcast by that station. In exchange, the law requires that, by January 1, 2002, if a satellite carrier carries one local broadcast station in a local market pursuant to this license, it must carry all qualified local broadcast stations in the market upon request. This requirement is also known as the ``carry one, carry all´´ rule." (Footnotes omitted.)
The SHIVA also provides, at 47 U.S.C. § 338(d), that "the satellite carrier shall retransmit the signal of the local television broadcast stations to subscribers in the stations' local market on contiguous channels and provide access to such station's signals at a nondiscriminatory price and in a nondiscriminatory manner on any navigational device, on-screen program guide, or menu."
The FCC did not amend its rules, or initiate a rule making proceeding. Nor did it interpret its rules to prohibit the use of a second dish antenna. Rather, it issued a declaratory ruling that "EchoStar's ``two-dish plan,´´ as implemented, violates Section 338(d) of the Act and Section 76.66(i) of the Commission's rules."
The FCC continued that "we find that EchoStar's offer of a ``free´´ dish has not been implemented as such and, in these instances, constitutes a violation of the statutory and regulatory prohibition of providing access to certain stations at a discriminatory price. In addition, we find that EchoStar does not, as required, retransmit the signal of local television broadcast stations to subscribers on contiguous channels and provide access to local television broadcast station signals in a nondiscriminatory manner on its on-screen program guide or menu. In essence, although it may be possible to offer certain local stations by use of a second antenna without engaging in prohibited conduct, we find that EchoStar has not done so in this case."
Ken Ferree, Chief of the FCC's Media Bureau, said in a release that "we took an important and necessary action to ensure that all broadcast stations are carried in a non- discriminatory manner. EchoStar's two dish plan was implemented in such a way as to make some stations unavailable to subscribers as a practical matter."
9th Circuit Rules in Post Sale Trademark Case
4/4. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in Karl Storz Endoscopy v. Surgical Technologies, a post sale trademark case involving rebuilt surgical endoscopes.
Background. Karl Storz Endoscopy (Storz) makes endoscopes. Endoscopes are fiber optic based surgical instruments used in minimally invasive surgical and diagnostic procedures, such as arthroscopy, urology and gynecology, to obtain a focused and illuminated view inside the body. Surgical Technologies (Surgi Tech) repairs endoscopes, including complete rebuilds. Storz asserts that Surgi Tech's rebuilds replaced "essentially all of the endoscope's functional parts," retaining only the block element bearing Storz's trademarks. Surgi Tech did not put its own mark on these rebuilt endoscopes. Pacific Medical Repair acts as an intermediary between hospitals and endoscope repairers.
District Court. Storz filed a complaint in U.S. District Court (SDCal) against Surgi Tech and Pacific alleging trademark and trade dress infringement, unfair competition and passing off in violation of the Lanham Act, 15 U.S.C. § 1051 et seq., and unfair trade practices in violation of California Business and Professions Code § 17200 et seq. The District Court granted summary judgment to Pacific and summary judgment in part to Surgi Tech. Storz appealed.
Appeals Court. The Appeals Court held both that Surgi Tech's rebuilding of endoscopes involved the use of marks in commerce. It also held that there were material issues of fact regarding the likelihood of post sale confusion. Hence, it reversed and remanded.
Commerce Dept. Official Addresses Technology Policy
4/4. Bruce Mehlman, of the Department of Commerce's Technology Administration, gave a speech titled "Technology Led Economic Development in the Post Bubble, Post 9/11, Post Enron America" at the National Governors' Association Regional Competitiveness Forum in Denver, Colorado.
Mehlman stated that "State and regional public policies directly impact the pace of economic growth, high wage job creation, and global investment. Decisions made at the local level play a critical role in establishing the environment needed to let innovators innovate and entrepreneurs create jobs, companies, and community wealth." He continued that there are "four basic steps community leaders can take to help set the business climate to sustain technology growth", promote innovation, support entrepreneurship, improve infrastructure and empower people.
With respect to innovation, he advocated "Supporting research excellence, at universities, federal labs and industry; protecting intellectual property rights and encouraging technology transfer; providing a certain and navigable regulatory framework that prioritizes innovation; and encouraging linkages and consortia between knowledge creators and commercializers".
With respect to entrepreneurship, he advocated "pursuing tax policies that encourage investment and risk capital; supporting trade inside and outside the cluster, encouraging entrepreneurship education at all levels; and supporting business incubators".
With respect to infrastructure, he stated that "the telecommunications infrastructure is particularly critical in the information age, with broadband networks holding a key to enterprise efficiency and cross cluster productivity. Communities around the country are beginning to employ a number of strategies to boost broadband deployment and usage. The localities that create the most broadband friendly environments may be like the localities that attracted railroads in the last century, while the localities that don't prioritize bandwidth may end up like the towns by-passed by the railroads."
He also reviewed policies of the Bush administration related to technology, including proposals for increased research and development funding and increased funding for the U.S. Patent and Trademark Office, support for trade promotion authority legislation, support of amending the Export Administration Act, cybersecurity initiatives, and promoting e-government.
Mehlman is Assistant Secretary for Technology Policy at the U.S. Department of Commerce.
More News
4/4. The Department of Commerce's National Telecommunications and Information Administration (NTIA) began its two day "Spectrum Summit". The summit is addressing spectrum allocation and efficiency, the spectrum requirements of new technologies, and regulatory processes. It continues on Friday, April 5, in the Ronald Reagan International Trade Center, 1300 Pennsylvania Avenue, NW. See, keynote speech by Commerce Secretary Donald Evans.
4/4. Qwest stated in a release that "it has been informed by the U. S. Securities and Exchange Commission (SEC) that it has approved a formal order of investigation of the company. The order covers the same subject matters as the SEC's informal investigation that Qwest previously disclosed."
4/4. The U.S. Patent and Trademark Office (USTR) published a notice in its web site regarding "Processing of Papers Filed After Allowance of an Application".
President Bush Addresses Trade Promotion Authority
4/4. President Bush gave a speech on trade promotion authority at the Department of State in Washington DC. He called on the Senate to pass a bill by April 22.
Trade promotion authority, which is also known as fast track, would give the President authority to negotiate trade agreements that could only be approved or rejected, but not amended, by the Congress. The House passed its version of the bill, HR 3005, on December 6, 2001. The Senate Finance Committee approved a Senate version of the bill later in December.
President Bush stated, "I believe strongly in trade. I believe not only is trade in my nation's interests, I think trade is in the interest of those nations who struggle with poverty, that desire a route out of poverty."
He continued that "trade is important for American workers, too. Lost in the debate on trade here at home is the fact that many people are able to find better jobs as the result of an active trade policy in the United States. And so we're here to talk about a way to make sure that our nation trades and our nation works with other countries in the world to trade. In order for that to do so, the United States Senate must past trade promotion authority. I need that authority. Every day we go by without the authority is another day we are missing opportunities to help our economy, to help our workers, to help our country, to relate to our friends around the world. If the Senate acts to give me trade promotion authority -- and I expect them to do so -- I will use it to expand commerce and work for higher-paying jobs for American workers. And so today, I urge the Senate leadership to lead, to act, and to get this bill to my desk."
Bush also stated that "In eight years since the TPA, the trade promotion authority, expired, we have missed a lot of opportunity in America. And it's cost -- and when you miss opportunity, it tends to affect the average worker in our country. More than 150 regional free trade and customs agreements exist throughout the world; the European Union is party to 31 of them; Mexico is party to 10; the world's largest economy is party to three. While we've been marking time, our competitors have been working, and they've been signing agreements. While we have been delaying, they've been trading."
President Bush also reviewed recent trade accomplishments and pending trade negotiations.
President Bush concluded: "The United States Senate needs to affirm America's trade leadership, and bring both measures I've talked about today -- the trade promotion authority, and the Andean trade preference act -- to the floor by April 22nd."
Sen. Charles Grassley (R-IA), the ranking Republican on the Senate Finance Committee, responded that "The President's right. Every day without Trade Promotion Authority is another day the United States can't fully advance the interests of its farmers, workers and businesses at the negotiating table." See, Grassley release [PDF]. 
Professor Advocates Application of Doctrine of Misuse to Anti Circumvention Rights
4/4. Dan Burk, a law professor at the University of Minnesota, gave a lecture at the George Washington University Law School on the topic of anti circumvention misuse. He argued that the anti circumvention provisions of the DMCA create a new form of intellectual property right, that this right is ripe for abuse, and that it should be subject to the equitable doctrine of misuse, as applied in patent and copyright cases.
The Digital Millennium Copright Act (DMCA), 17 U.S.C. § 1201, was enacted by the Congress in 1998. It provides at § 1201(a)(1) that "No person shall circumvent a technological measure that effectively controls access to a work protected under this title." It further provides at § 1201(a)(2) that "No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that (A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title; (B) has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under this title; or (C) is marketed by that person or another acting in concert with that person with that person's knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title."
Prof. Burk noted that, unlike the exclusive rights in copyrighted works provided by 17 U.S.C. § 106, the anti circumvention provisions of the DMCA are not subject to the fair use limitations of 17 U.S.C. § 107. However, Prof. Burk focused -- not on possible legislative amendment of the DMCA -- but rather on possible court imposed limitations on the exercise of DMCA rights based upon competition law principles and the doctrine of misuse, such as have been applied to a limited extent in patent and copyright cases.
Burk argued that the anti circumvention rights of the DMCA may be used for purposes other than preventing unauthorized copying or distribution of copyrighted works. He elaborated that the DMCA has provided new licensing opportunities. That is, the DMCA gives the holder of the access control technology a private right of action against someone who traffics in a circumvention technology. This holder may bring suit to enjoin the trafficker. Alternatively, the holder may contract not to bring suit, subject to an agreement by the trafficker to make payments.
Hence, argues Burk, the DMCA creates a right to exclude, analogous to that of the Patent Act, and allows parties to enter into agreements that are in the nature of licensing agreements, as the Patent Act contemplates. This licensing process may be used, for example, to impose anti competitive licensing terms, or to suppress competing technologies. And, some leveraging of the DMCA, says Prof. Burk, should be judicially interpreted to be an abuse of intellectual property rights under the doctrine of misuse.
He cited the case of Brulotte v. Thys, 379 U.S. 29 (1964), in which the Supreme Court held that a patent holder's attempt to collect royalties beyond the term of the patent constituted misuse of the patent. Prof. Burk acknowledged that the U.S. Court of Appeals (FedCir), which has jurisdiction over appeals from patent cases, views the misuse doctrine with disfavor, and will apply it only in clear cases, such those matching the facts of Brulotte. However, he stated that other circuit courts have been more willing to apply the doctrine of misuse in copyright cases.
While Prof. Burk did not focus on legislative changes, some Members of Congress, such as Rep. Rick Boucher (D-VA), have advocated amending the DMCA. See, for example, speech of March 6, 2001, in which he stated that "Several of us made an effort in 1998 to limit the new crime under Section 1201 to circumvention for the purpose of infringement. But in the momentum to enact the measure, essentially unamended, we were not able to have that change adopted. With the growing realization on the part of the education community, and supporters of libraries, of the threat to fair use rights which Section 1201 poses, perhaps the time will soon come for a Congressional reexamination of this provision. Perhaps the only conduct that should be declared criminal is circumvention for the purpose of infringement. Perhaps a more limited amendment could be crafted to ensure the continued exercise of fair use rights of libraries, and in scholastic settings, notwithstanding the provisions of Section 1201."
Burk spoke to a group of faculty, students, and others at The George Washington University Law School, as part of a lecture series sponsored by The Dean Dinwoodey Center for Intellectual Property Studies.
Burk has also written a draft paper. However, it is not sited or quoted herein because it is subject to a "do not site or quote without author's permission" restriction. Prof. Burk can be reached at burkx006@umn.edu.
Harvey Pitt Addressed Corporate Governance
 4/4. Securities and Exchange Commission (SEC) Chairman Harvey Pitt gave a speech to the Kellogg Graduate School of Management and Northwestern Law School in Chicago, Illinois. He stated that "we need to revisit whether our system of corporate governance is set up to assist corporate leaders in making rational determinations about what the right thing to do is".
He continued that "There are a number of ways current corporate governance standards can be improved to strengthen the resolve of honest managers and the directors who oversee management's actions and make them more responsive to the public's expectations and interests. We think the best way to do that is a two fold approach: first, make certain that officers and directors have a clear understanding of what their roles are, and second, apply serious consequences to those who do not live up to their fiduciary obligations."
Friday, April 5
The House and Senate are both in recess for the Spring District Work Period.
The Supreme Court of the U.S. is on recess until Monday, April 15.
8:30 AM - 4:15 PM. Day two of a two day event hosted by the Department of Commerce'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: 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.
11:00 AM. There will be a press conference on government waste. The Computer & Communications Industry Association's P/CEO Ed Black, will discuss the Postal Service's ongoing e-commerce activities and Transformation Plan. The other participants will be Leslie Paige (CAGW), Rick Merritt (PostalWatch), Pete Sepp (National Taxpayers Union), Rob Fike (Americans for Tax Reform), Ed Hudgins (Objectivist Center), and Jason Thomas (Citizens for a Sound Economy). Location: Lisagor Room, National Press Club, 529 14th St., 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 Senate will return from its Spring District Work Period. It is scheduled to meet at 3:00 PM. The House will not be in session.
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
The House will return from its Spring District Work Period. It will meet at 2:00 PM for legislative business to consider a number of measures under suspension of the rules.
8:30 AM. The Global Information Infrastructure Committee (GIIC) will hold a meeting regarding Internet use in China. For more information, contact Robert Rogers at rrogers @giic.org or 202 261-6572. Location: Winner's Room, National Press Club, 529 14th St. NW, 13th Floor.
4:00 PM. Margo Bagley (Emory University School of Law) will give a lecture titled "Patently Unconstitutional: Geographic Limitations on Prior Art in a Small World". For more information, contact Robert Brauneis at rbraun @main.nlc.gwu.edu or 202 994-6138. Location: George Washington University Law School, 2000 H Street, NW.
Wednesday, April 10
The House will meet at 10:00 AM for legislative business. It may take up HR 3925, The Digital Technology Corps Act of 2002.
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 Federal Trade Commission (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 RSVP @netcaucus.org or call Danielle at 202 637-4370. Location: Reserve Officers Association, First and Constitution Ave., NW.
Thursday, April 11
The House will meet at 10:00 AM for legislative business.
9:30 AM. The House Financial Services Committee will hold a meeting to mark up several bills, including HR 3763, the Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002, and HR 3764, a bill to authorize appropriations for the Securities and Exchange Commission (SEC). Location: Room 2128, Rayburn House Office Building.
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 Office of Homeland Security. Location: Room 2359, Rayburn House Office Building.
10:00 AM. The House Ways and Means Committee's Subcommittee on Trade will hold a hearing on normal trade relations with Russia. Location: Room 1100, Longworth House Office Building.
11:00 AM. The Cato Institute will host a book forum on Free Trade under Fire [Amazon], by Douglas Irwin, Professor of Economics at Dartmouth College. The speakers will be Irwin, Robert Litan (Brookings) and Steve Clemons (New America Foundation). Lunch will follow. See, CATO notice. Location: 1000 Massachusetts Avenue, NW.
12:00 NOON - 1:30 PM. The Business Software Alliance will host its 5th Annual "Talking Technology" forum luncheon. Mark Forman, Associate Director for Information Technology and E-Government with the Office of Management and Budget, will speak. RSVP to Jeri Clausing at 202 530-5127 or jeric @bsa.org. Location: Reserve Officers Association, One Constitution Avenue, NE.
People and Appointments
4/4. Enrique Fiallo resigned as Ch/CEO of Enterasys. Vice Chairman J.E. Riddle and COO Jerry Shanahan resigned as well. Enterasys announced that William O'Brien will be interim CEO and Director, and Yuda Doron will be President. See, Enterasys release.
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