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June 4, 2002, 9:00 AM ET, Alert No. 443.
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Supreme Court Rules on Appellate Jurisdiction of Federal Circuit
6/3. The Supreme Court issued its opinion [PDF] in Holmes Group v. Vornado Air Circulation Systems, a case regarding the appellate jurisdiction of the U.S. Court of Appeals for the Federal Circuit. The Supreme Court held that when a complaint does not allege a claim arising under federal patent law, but the answer contains a counterclaim based upon federal patent law, the Federal Circuit does not have appellate jurisdiction.
Lower Court Proceedings. Holmes Group filed a complaint in U.S. District Court (DKan) against Vornado Air Circulation Systems seeking a declaratory judgment that its products did not infringe Vornado's trade dress and an injunction restraining Vornado from accusing it of trade dress infringement in promotional materials. Vornado's answer asserted a compulsory counterclaim alleging patent infringement.
The District Court granted Holmes the declaratory judgment and injunction it sought. Vornado appealed to the Federal Circuit. Holmes challenged the jurisdiction of the Federal Circuit. However, the Federal Circuit rejected the argument, and vacated and remanded. The Supreme Court granted certiorari on the issue of jurisdiction.
Relevant Statutes. 47 U.S.C. § 1338 provides, in part, that "The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks. Such jurisdiction shall be exclusive of the courts of the states in patent, plant variety protection and copyright cases."
47 U.S.C. § 1295(a), in turn, provides, in part, that "The United States Court of Appeals for the Federal Circuit shall have exclusive jurisdiction (1) of an appeal from a final decision of a district court of the United States ... if the jurisdiction of that court was based, in whole or in part, on section 1338 of this title ..."
Supreme Court. The Supreme Court reversed. It wrote that " Section 1338(a) uses the same operative language as 28 U. S. C. §1331, the statute conferring general federal question jurisdiction, which gives the district courts ``original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States. ... The well- pleaded- complaint rule has long governed whether a case ``arises under´´ federal law for purposes of §1331.´´ ... As ``appropriately adapted to §1338(a),´´ the well- pleaded- complaint rule provides that whether a case ``arises under´´ patent law ``must be determined from what necessarily appears in the plaintiff's statement of his own claim in the bill or declaration. ... The plaintiff's well pleaded complaint must ``establis[h] either that federal patent law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law ...´´ ... Here, it is undisputed that petitioner's well pleaded complaint did not assert any claim arising under federal patent law. The Federal Circuit therefore erred in asserting jurisdiction over this appeal." (Citations omitted.)
The Supreme Court also rejected the argument that it should give different meaning to "arising under" in determining Federal Circuit jurisdiction because of Congress' goal of promoting uniformity of patent law. The Court wrote that "Our task here is not to determine what would further Congress' goal of ensuring patent-law uniformity, but to determine what the words of the statute must fairly be understood to mean."
It added that "It would be an unprecedented feat of interpretive necromancy to say that §1338(a)'s ``rising under´´ language means one thing (the wellpleaded- complaint rule) in its own right, but something quite different (respondent's complaint- or- counterclaim rule) when referred to by §1295(a)(1)." (Justice Antonin Scalia wrote the opinion of the Court.)
The Court concluded that "Not all cases involving a patent-law claim fall within the Federal Circuit's jurisdiction. By limiting the Federal Circuit's jurisdiction to cases in which district courts would have jurisdiction under §1338, Congress referred to a well- established body of law that requires courts to consider whether a patent-law claim appears on the face of the plaintiff's well pleaded complaint. Because petitioner's complaint did not include any claim based on patent law, we vacate the judgment of the Federal Circuit and remand the case with instructions to transfer the case to the Court of Appeals for the Tenth Circuit."
Supreme Court Vacates and Remands in Nine Cases Following Festo
6/3. The Supreme Court granted certiorari in nine cases, following its May 28 landmark opinion [PDF] in Festo v. Shoketsu Kinzoku Kogyo Kabushiki. In each case the Supreme Court merely vacated and remanded to the U.S. Court of Appeals (FedCir).
Festo is a patent case regarding the doctrine of equivalents and the rule of prosecution history estoppel. The unanimous Supreme Court reversed the Court of Appeals and remanded. The Court again affirmed the doctrine of equivalents, articulated its purpose, held that the narrowing of a patent claim may give rise to prosecution history estoppel (but that it does not absolutely bar application of the doctrine of equivalents), and listed circumstances under which it might or might not operate as a bar.
In each of the nine orders granting certiorari, the Supreme Court wrote this: "The petition for a writ of certiorari is granted. The judgment is vacated and the case is remanded to the United States Court of Appeals for the Federal Circuit for further consideration in light of Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. __ (2002)."
The nine cases are Pioneer Magnetics, Inc. v. Micro Linear Corp., No. 00-1765, Instituform Technologies v. Cat Contracting, No. 00-1946, Senior Technologies, Inc. v. R.F. Technologies, Inc., No. 01-35, Creo Products, Inc. v. Dainippon Screen, No. 01-269, Semitool, Inc. v. Novellus Systems, Inc., No. 01-423, Lockheed Martin Corp. v. Space Systems/Loral, Inc., No. 01-506, Accuscan, Inc. v. Xerox Corp., No. 01-541, PTI Technologies, Inc. v. Pall Corp. Techn., Inc., No. 01-677, and Mycogen Plant Science v. Monsanto Company, No. 01-740. See, Order List [PDF].
More Supreme Court News
6/3. The Supreme Court denied certiorari in Hagenbuch v. Compaq, No. 01-1448, and Circuit City Stores v. Adams, No. 01-1460. See, Order List [PDF] at page 6.
6/3. The Supreme Court announced that it will be on recess until Monday, June 10.
FCC Seeks Comments on Study of Horizontal Concentration Among Cable Operators
6/3. The Federal Communications Commission (FCC) published a paper [121 pages in PDF] titled "Horizontal Concentration in the Cable Television Industry: An Experimental Analysis".
The paper examines the effects of changes in horizontal concentration among cable operators on the flow of video programming to consumers. It is based on an experimental economics study in which experiment participants played the roles of actual market participants.
The paper was written by Mark Bykowsky and William Sharkey of the FCC's Office of Plans and Policy, and  Anthony Kwasnica of Pennsylvania State University. The paper is also known as OPP Working Paper Series 35.
In addition, the FCC's Media Bureau announced that it is seeking public comment on the study. Comments are due by July 18. Reply comments are due by August 2. See, notice [PDF].
House to Vote on NSF Authorization Bill
6/4. The House will likely debate and vote on HR 4664, the Investing in America's Future Act, on Wednesday, June 5. The bill is sponsored by Rep. Nick Smith (R-MI) and others. The House Science Committee amended and approved the bill on May 22.
HR 4664 would authorize the appropriation of $5.5 Billion for FY 2003 for the National Science Foundation (NSF). Included in the funding authorization is $704 Million for networking and information technology research, $238 Million for the Nanoscale Science and Engineering Priority Area, and $60 Million for the Mathematical Sciences Priority Area.
The bill authorizes an increase in funding for the NSF of 15% in FY 2003, and similar increases in future years. If the funding authorized by this bill were actually appropriated, it would double the NSF's budget within five years.
See, HR 4664 [PDF], as reported by the Subcommittee on Research on May 9. The full Committee approved one amendment [PDF] on May 22 offered by Rep. Sherwood Boehlert (R-NY). It authorizes the appropriation of $50 Million for the Advanced Technological Education Program established under the Scientific and Advanced Technology Act of 1992, and $30 Million for the Minority Serving Institutions Undergraduate Program.
USPTO Releases Strategic Plan
6/3. The U.S. Patent and Trademark Office (USPTO) released a document titled The 21st Century Strategic Plan [18 pages in PDF]. USPTO Director James Rogan states in the introduction that this plan "is our road map for transformation. It lays out exactly what we will do over the next five years to reduce to 18 months the total time it takes to receive a patent, to make both patent and trademark processes almost paperless, and to work with intellectual property offices around the world to create a global framework for enforceable intellectual property rights."
"The time has come to transform the USPTO from a one size fits all government bureaucracy into a quality focused, responsive, market driven intellectual property institution," wrote Rogan.
The plan states that the USPTO will "Achieve an average time to first action in patent applications that is more than 50 percent lower than the time projected in the 2003 Business Plan ; i.e., 5.8 months in 2008 rather than 12.3 months." It states that the USPTO will "Achieve and maintain 18 months patent pendency by 2008". The plan also states that the USPTO will "Competitively source classification and search functions, and concentrate Office expertise as much as possible on the core government functions."
Electronic Processing of Applications. "As a first priority, we have made electronic end to end processing of both patents and trademarks the centerpiece of our business model." The plan then promises to "Deliver an operational system to process patent applications electronically by October 1, 2004, including electronic image capture of all incoming and outgoing paper documents" and to "Develop an automated information system to support a post grant patent review process."
Pendency. The plan states that it will "ensure a steady 18-month average pendency time in Patents -- by far the fastest in the world -- and a 12-month pendency time in Trademarks. This will be accomplished through a radical redesign of the entire patent search and examination system based upon four examination tracks, greater reliance on commercial service providers, and variable, incentive driven fees."
Four Track Process. The plan states that the USPTO will "Move from a ``one size fits all´´ patent examination process to a four track examination process that leverages search results of other organizations and permits applicants to have freedom of choice in the timing of the processing of their applications. This new process will eliminate duplication of effort, encourage greater participation by the applicant  community and public, permitting lapse of applications when examination is not requested, and improving the quality of our patents and decreasing processing time."
Rocket Docket. It also states that the USPTO will "Offer patent applicants the market driven ``new rocket docket´´ option of choosing an accelerated examination procedure with priority processing and a pendency time of no longer than 12 months."
Fee Schedule. To facilitate these changes, the USPTO will "Seek legislation to restructure the USPTO fee schedule by October 1, 2002, and thereby create incentives and disincentives that contribute to achievement of USPTO goals, for example, the filing fee will be reduced to incentivize applicants to file, and a separate examination fee will be established to permit applicants to choose the timing for examination."
Post Grant Review. The plan states that the USPTO will "Make patents more reliable by proposing amendments to patent laws to improve a post  grant review of patents."
Congressional Action Needed. Implementation of the plan will require changes at the USPTO, including the promulgation of rules. However, it is also contingent upon Congressional action. The plan states that "We will need enactment of legislation by the Congress to adjust certain patent and trademark fees by October 1, 2002. ... We will need enactment of an appropriation for fiscal year 2003 that is consistent with the level of the President’s 2003 budget." Legislation would also be required to change the post grant review process.
SEC Brings and Settles Improper Accounting Charges Against Microsoft
6/3. The Securities and Exchange Commission (SEC) instituted an administrative proceeding against Microsoft alleging violation of federal securities law in connection with its accounting practices from 1995 through 1998.
The Order instituting the proceeding alleges that "During Microsoft's fiscal years ended June 30, 1995, June 30, 1996, June 30, 1997 and June 30, 1998 (the ``relevant period´´), Microsoft maintained undisclosed reserves, accruals, allowances and liability accounts (collectively ``reserves´´ or ``reserve accounts´´) that (a) were not in conformity with generally accepted accounting principles (``GAAP´´) to a material extent, and/or (b) lacked properly documented support and substantiation, as required by the federal securities laws."
The Order also states that "Microsoft failed to maintain internal controls that were adequate under the federal securities laws. Specifically, during the relevant period, Microsoft maintained between approximately $200 million and $900 million in unsupported and undisclosed reserves, a significant portion of which did not comply with GAAP, which resulted in material inaccuracies in filings made by Microsoft with the Commission."
Microsoft and the SEC simultaneously settled the matter. Microsoft admitted no wrongdoing. The SEC imposed no fine or other penalty. Microsoft also stated in a release that "The agreement has no impact on Microsoft’s reported financial results; no restatement of any reported financial results is required and no penalty has been assessed."
Stephen Cutler, Director of the SEC's Division of Enforcement stated in a release that "This case emphasizes that the Commission will act against a public company that issues financial statements with material inaccuracies, even in the absence of fraud charges".
NTIA Seeks Comments on Internet Filtering Technologies
6/3. The National Telecommunications and Information Administration (NTIA) published in its web site a release and a notice [PDF] requesting comments on the effectiveness of Internet blocking and filtering technologies. Comments are due by August 27, 2002.
§ 1703 of the Children's Internet Protection Act (CIPA) [PDF] directs the NTIA to initiate a notice and comment proceeding to evaluate whether currently available Internet blocking or filtering technology protection measures and Internet safety policies adequately address the needs of educational institutions. It also directs NTIA to make recommendations to Congress on how to foster the development of technology protection measures that meet these needs.
The NTIA published a notice in the Federal Register last week regarding this proceeding. See, Federal Register, May 29, 2002, Vol. 67, No. 103, at Pages 37396 - 37398.
On May 31, a three judge panel of the U.S. District Court (EDPenn) issued its opinion in American Library Association v. U.S., finding unconstitutional library related provisions of the CIPA. The Act requires, among other things, that schools and libraries receiving e-rate subsidies certify that they are using a "technology protection measure" that prevents library users from accessing "visual depictions" that are "obscene," "child pormography," and in the case of minors, "harmful to minors." However, the CIPA, as it applies to schools, remains unaffected by this opinion. Also, the Court did not find unconstitutional Section 1703, requiring the NTIA to conduct this evaluation.
People and Appointments
6/3. Jane Cobb was named Director for the Securities and Exchange Commission's (SEC) Office of Legislative Affairs. She replaces Casey Carter. Peter Kiernan was named Deputy Director. See, SEC release.
6/3. Robert Dellinger was named EVP and Chief Financial Officer of Sprint. He replaces Arthur Krause, who retired. See, release.
More News
6/1. President Bush gave a graduation speech at West Point. He stated that "The gravest danger to freedom lies at the perilous crossroads of radicalism and technology."
6/3. Microsoft published in its web site an essay titled "Art & Commerce in the Digital Decade: Protecting intellectual property will take cooperation and innovation". It states that "At stake is the continued growth of the digital economy. Copyright holders -- authors, musicians, filmmakers, software developers and others -- will be able to take full advantage of the Internet as a powerful distribution channel only if their creations are appropriately protected." The essay argues that "a government mandated standard could actually hinder anti-piracy efforts by stifling technical innovation." It concludes that "A more effective solution would be for entertainment companies to invest in digital distribution. Few companies have made much content available online, yet the popularity of file sharing among music fans suggests that the market is large. Making legitimate content available easily and affordably would help to counter the illegal supply."
Tuesday, June 4
The House will meet at 2:00 PM for legislative business. No recorded votes are expected before 6:00 PM. The House will consider a number of measures under suspension of the rules.
The Supreme Court is in recess until June 10.
POSTPONED TO JUNE 5. 10:00 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing titled "The FCC's UWB Proceeding: An Examination of the Government's Spectrum Management Process." Webcast. Press contact: Ken Johnson or Jon Tripp at 202 225-5735. Location: Room 2123, Rayburn Building.
CANCELLED. 10:00 AM. The Senate Health, Education, Labor, and Pensions Committee will hold a hearing on legislation to authorize funding for the National Science Foundation.
10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Insight Development v. Hewlitt Packard, No. 01-1459, an appeal from the U.S. District Court (NDCal) in a patent infringement case involving web imaging technology. Location: LaFayette Square, at 717 Madison Place, NW.
2:00 - 4:00 PM. The FCC's Advisory Committee for the 2003 World Radiocommunication Conference (WRC-03 Advisory Committee) will meet. See, notice and agenda [PDF]. Location: FCC, Commission Meeting Room, Room TW-C305, 445 12th Street, SW.
4:00 PM. The House Judiciary Committee's Subcommittee on Crime will hold a hearing and a mark up session for HR 4598, the Homeland Security Information Sharing Act, sponsored by Rep. Saxby Chambliss (R-GA). Audio webcast. Location: Room 2141, Rayburn Building.
Wednesday, June 5
The House will meet at 10:00 AM for legislative business. The House will likely debate and vote on HR 4664, the Investing in America's Future Act, a bill to authorize and increase appropriations for the National Science Foundation.
8:30 AM - 5:00 PM. Day one of a three day public workshop hosted by the FTC on proposed amendments to the Telemarketing Sales Rule, including the potential development and implementation of a national do not call list. See, FTC release and agenda. Location: Marriott Wardman Park Hotel, 2600 Woodley Road, NW.
9:30 AM. The National School Boards Foundation will host a breakfast (9:00 AM) and media briefing on it release of a national survey titled "Are We There Yet? Research and Guidelines on Schools Use of the Internet". For more information, contact Renee Hockaday at 703 838-6717 or rhockaday Location: Corporation for Public Broadcasting (CPB), 2nd Floor, 401 9th St., NW.
10:00 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing titled "The FCC's UWB Proceeding: An Examination of the Government's Spectrum Management Process." Webcast. Press contact: Ken Johnson or Jon Tripp at 202 225-5735. Location: Room 2123, Rayburn Building.
12:15 PM. The FCBA's Global Telecommunications Development Committee will host a brown bag lunch. The topic will be "Caribbean Telecom -- Challenges in Bringing Competition to Monopoly Markets". The speakers will be William Garrison (The Frank Hawkins Kenan Institute of Private Enterprise), Judy Kilpatrick (NTIA), and Joanna Lowry (Cable & Wireless). RSVP to Jonathan Cohen at joncohen or to LaVon Stevens at 202 628-9577. Location: Suite 700, Wilkinson Barker Knauer, 2300 N St., NW (entrance at 24th and N Streets).
2:00 PM. The House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property will hold a hearing titled "DRM: The Consumer Benefits of Today's Digital Rights Management Solutions." Audio webcast. Location: Room 2141, Rayburn Building.
EXTENDED TO JULY 17. Extended deadline to submit reply comments to the FCC in response to its notice of proposed rulemaking regarding its unbundling analysis under § 251 of the Communications Act and the identification of specific unbundling requirements for incumbent local exchange carriers. See, May 29 order [PDF] extending deadline from June 5 to July 17. See also, notice in the Federal Register. This is CC Docket No. 01-338.
Thursday, June 6
The House will meet at 10:00 AM for legislative business.
8:30 AM - 5:00 PM. Day two of a three day public workshop hosted by the FTC on proposed amendments to the Telemarketing Sales Rule, including the potential development and implementation of a national do not call list. See, FTC release and agenda.
10:00 AM. The House Judiciary Committee will meet to mark up several bills, including HR 3215, the Combatting Illegal Gambling Reform and Modernization Act (Goodlatte Internet gambling bill), and HR 4623, the Child Obscenity and Pormography Prevention Act of 2002. Audio Webcast. Press contact: Jeff Lungren or Terry Shawn at 202 225-2492. Location: Room 2141, Rayburn Building.
? The Senate Commerce Committee's Subcommittee on Communications will hold a hearing titled Universal Service Fund. Press contact: Andy Davis 224-6654. Location: Room 253, Russell Building.
10:30 AM. The House International Relations Committee's Subcommittee on International Operations and Human Rights will hold a hearing on titled "An Assessment of Cuba Broadcasting -- The Voice of Freedom". Location: Room 2172, Rayburn Building.
8:00 AM - 5:00 PM. The Institute for International Research (IIR) and ComCare will host a conference titled e-SAFETY: Delivering Communications & Information Technology Solutions for 21st Century Public Safety. Sen. Conrad Burns (R-MT) will give a keynote address at 8:30 AM. The price to attend is $695. See, IIR notice. Location: Ronald Reagan Building, 1300 Pennsylvania Ave., NW.
Deadline to submit comments to the SEC regarding its proposed rule amending the Investment Advisers Act of 1940 to exempt certain investment advisers that provide advisory services through the Internet from the prohibition on SEC registration set out in § 203A of the Act. The amendments would permit these advisers to register with the SEC instead of with state securities authorities. See, notice in the Federal Register.
Friday, June 7
8:30 AM - 5:00 PM. Day three of a three day public workshop hosted by the FTC on proposed amendments to the Telemarketing Sales Rule (TSR), including the potential development and implementation of a national do not call list. See, FTC release and agenda.
10:00 AM. The House Government Reform Committee's Subcommittee on Technology and Procurement Policy will hold a hearing titled "Coordinated Information Sharing & Homeland Security Technology" Location: Room 2154, Rayburn Building.
12:00 NOON - 1:30 PM. The Federalist Society will host a debate on judicial nominations. the participants will be Douglas Kmiec (Dean of the Columbus School of Law) and Elliot Mincberg (General Counsel of People for the American Way). For more information, call Joel Pardoe at 202 822-8138. See, release. Location: Holeman Lounge, National Press Club, 529 14th St. NW, 13th Floor.
12:15 PM. The FCBA's Wireless Telecommunications and International Practice Committees will host a luncheon. The topic will be International Wireless Developments. The price to attend is $15. RSVP to wendy Location: 1750 K Street, NW.
Sunday, June 9
Day one of a three day conference hosted by George Mason University titled "Networked Economy Summit". See, event web site. Location: Hyatt Regency Reston, Reston, VA.
Monday, June 10
The FCBA will host a luncheon. The speaker will be Brian Roberts of Comcast. The price is $45 for FCBA members, $35 for government and student members, and $55 for non-members. There will be a reception at 12:00 NOON. The luncheon will begin at 12:30 PM. RSVP to Wendy Parish at wendy by June 5. Location: Capital Hilton, 16th & K Streets.
Day one of a two day seminar titled "Managing Trade Compliance In Today's Environment". The seminar is offered by the U.S. Department of Commerce's Bureau of Industry and Security (formerly BXA). The price to attend is $325. See, information page. Location: Marriott at Metro Center, 775 12 Street NW.
Day two of a three day conference hosted by George Mason University titled "Networked Economy Summit". See, event web site. Location: Hyatt Regency Reston, Reston, VA.
First of three deadlines to submit proposals to the NIST for FY 2002 Advanced Technology Program (ATP) funds. See, notice in Federal Register.
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