Tech Law Journal Daily E-Mail Alert
June 10, 2002, 9:00 AM ET, Alert No. 447.
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PPI Releases 2002 State New Economy Index
6/10. The Progressive Policy Institute (PPI) released a report titled "The 2002 State New Economy Index: Benchmarking Economic Transformation in the States". This is another in a series of reports by the PPI on the extent to which each state has embraced the New Economy. See also, PPI summary.
The report ranks each state according to 21 economic indicators, and provides a cumulative ranking. This report updates data from the last such report in 1999, and includes several new indicators, including a measure of broadband Internet access.
The top five states, in order, are Massachusetts, Washington, California, Colorado and Maryland. Virginia ranks 8th. New York ranks 10th. Texas ranks 14th. Illinois ranks 17th. The bottom five states are West Virginia, Mississippi, Arkansas, Alabama and Wyoming. Most of the states in the bottom half of the ranking are in the south, plains and mountain states.
The index is based upon 21 indicators. Several pertain to the knowledge jobs: employment of IT professionals; jobs held by managers, professionals, and technicians; the educational attainment of the entire workforce; and the education level of the manufacturing workforce. Several indicators pertain to economic dynamism, including the number of fast growing companies (20% or more for four straight years), the rate of economic churn, and the value of IPOs.
Other indicators measure digital transformation, including the percentage of the population online, the number of .com domain name registrations, technology in schools, the degree to which state and local governments use information technologies to deliver services, Internet and computer use by farmers, Internet use by manufacturers, and access by residents and businesses to broadband telecommunications.
The index also includes measures of the number of jobs in technology producing industries, the number of scientists and engineers in the workforce, the number of patents issued; industry R&D, and venture capital activity.
The report was written by Robert Atkinson, with research assistance by Rick Coduri.
Commission Holds Hearing on China's Compliance with WTO Obligations
6/6. The Congressional Executive Commission on China held a hearing titled "WTO: Will China Keep its Promises? Can it?" Participants addressed, among other things, China's compliance with intellectual property rights (IPR) related obligations associated with membership in the World Trade Organization (WTO).
Chris Murck, Chairman of the American Chamber of Commerce in Beijing, addressed intellectual property rights at length in his prepared statement. He stated "We thus see a mixed picture: progress with respect to IPR law and policy, but continued failure to make enforcement effective. AmCham China is convinced that this problem will eventually be brought under control, because there are strong local interests in doing so. Chinese companies are damaged more than foreign companies by IPR violations and they know it. The Chinese government finds its economic ambitions hindered by its IPR environment and it is trying to change it."
He explained that "Intellectual property rights were not recognized in Chinese law in 1979, and a pattern of rampant violations of copyrights, trademarks and patents soon became a problem for foreign investors. Pressure from the United States, the European Union and others had some effect in changing Chinese policy statements, but these were somewhat grudging and were not reflected in changes on the ground. In the last three years, however, the policy debate on this question has been won. A study by the Ministry of Information Industry identified copyright violations as the single biggest obstacle to the development of a Chinese software industry. This was followed by State Council regulations in 1999 requiring all government offices to use legal software and again in 2000 requiring all entities, including enterprises, to do the same and demanding enhanced, coordinated enforcement of the law."
"Substantial revisions have been made in copyright, trademark and patent laws. While further improvements could be suggested, in general the legal framework is close to international standards and capacity building continues, often with foreign assistance," wrote Murck.
He continued that "There have been recent court victories in copyright cases as well, such as a case involving an internet domain name squatter where the rights of the foreign company were firmly upheld."
He cautioned, however, that "these positive examples do not reflect the general situation. China is not a single economy; it is a group of large, disparate regional economies. Although the central government can be described as authoritarian, its ability to control what happens in local areas is limited." And, he added, "In response, our member companies are shifting their focus from the content of the laws to problems of enforcement."
Murck also stated that "One of the unanticipated consequences of WTO accession is likely to be an increase in the export of counterfeit goods manufactured in China to the rest of the world."
Donald Clarke, a Professor of Law, University of Washington, pointed out in his prepared statement that "the requirements of the WTO agreements for fairness and transparency are in fact surprisingly limited." However, he added that "The only WTO agreement that comes close to a general requirement of fairness in the operation of the legal system is the TRIPS Agreement. This agreement does indeed set forth in Part III (``Enforcement of Intellectual Property Rights´´) a number of requirements for fair judicial proceedings for the protection of intellectual property rights."
He also stated that "The area of the Chinese legal system that will probably cause the most difficulty is its present inability to provide, at least on a consistent basis, truly independent review of administrative actions. The financial dependence of courts on local government is compounded first by the lower political status of judges relative to many of the officials whose actions they will be called upon to judge, and second simply by the tradition of judicial deference to administration."
Sen. Max Baucus (D-MT), Chairman of the Commission, said in his prepared statement that "We are at an early stage in China's process of WTO adherence and commercial law transformation. Clearly, senior Chinese leaders are committed. National bodies have begun to reform and adjust thousands of laws, regulations, and judicial decisions that are not WTO compliant."
However, Sen Baucus added that "there have been mixed signals as to whether the Chinese government is willing, or able, to adhere to all of the commitments it has made. For example, while tariffs have been reduced and quotas have been eliminated in some industries, there are reports that equally protective non-tariff barriers have been erected in their place. Sanitary and phyto sanitary standards have still been used in some areas with no scientific basis. Regulations that were supposed to be in effect at accession have not been promulgated."
Susan Westin, of the General Accounting Office (GAO), provided a report [PDF] titled "World Trade Organization: Observations on China's Rule of Law Reforms". The GAO has conducted a survey of U.S. businesses. The report states that "According to the preliminary results of our survey, U.S. businesses in China consider rule of law related WTO commitments to be important to them, especially the consistent application of laws, regulations, and practices in China, and enforcement of intellectual property rights. However, a majority of businesses answering our survey anticipated that these rule of law commitments would be difficult for the Chinese to implement, and they identified some concerns over specific implementation issues. U.S. businesses told us in interviews that they expected WTO reforms, including those related to the rule of law, to be part of a long term process. Nevertheless, they believe the Chinese leadership is dedicated to living up to their WTO commitments."
Jon Huntsman, Deputy U.S. Trade Representative (USTR), said in his prepared testimony that "we have seen China take a good faith approach to its WTO membership and make significant efforts to implement its commitments. China has made substantial tariff reductions on industrial and agricultural goods of importance to U.S. businesses and farmers. It has begun to take concrete steps to remove non-tariff trade barriers in virtually every product sector. It has begun to implement far reaching services commitments that should substantially increase market access for U.S. services suppliers. It has also repealed hundreds of trade related laws, regulations and other measures and modified or adopted numerous other ones in an effort to become WTO compliant in areas such as import and export administration, standards and intellectual property rights, among many others." However, he added that "There have also been some bumps in the road", such as biotechnology regulations.
Grant Aldonas, Under Secretary of Commerce for International Trade, said in his prepared statement, "Yes, I believe that China can and will seek to keep its promises, and we should do whatever we can to help." He also provided an IPR anecdote. He said that "We met with representatives of the Shanghai Film Studio, where we were told that piracy of optical disks was hurting their sales in China. It was fascinating to discover that we have a new ally in our work to enhance enforcement of intellectual property rights (IPR) protection in China and elsewhere. We saw the Shanghai Model Port Project -- an APEC initiative that demonstrates how Customs officials can use technology to facilitate trade and protect IPR."
See also, prepared statements of Jeff Fiedler (Food and Allied Service Trades Department, AFL-CIO), and Rep. Marcy Kaptur (D-OH).
9th Circuit Interprets Contract to Publish Legal Treatise
6/7. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in Chodos v. West Publishing Company, a dispute regarding a contract to publish a legal treatise. The Appeals Court reversed the District Court's summary judgment for West.
Background. Rafael Chodos is a software engineer turned attorney who wrote a lengthy book on the law of fiduciary duty in electronic format. In 1995 Bancroft Whitney Corporation and Chodos entered into a standard Author Agreement, which provided for no payments to Chodos prior to publication, and a 15% share of the gross revenues from sales of the work. The Agreement gave Bancroft "the right in its discretion to terminate" the publishing relationship after receiving the manuscript and determining that it is unacceptable.
In 1996 West Publishing Group purchased Bancroft. West's editors continued to work with Chodos. In 1999 West notified Chodos that it had decided not to publish the book because it did not "fit within [West's] current product mix" and because of concerns about its "market potential." West admitted that the manuscript was of "high quality" and that its decision was not due to any literary shortcomings. Chodos's product for West was 1247 pages long. He spent three years and over 3,000 hours working on it.
Proceedings Below. Chodos filed a complaint in California state court (Los Angeles Superior Court). West removed the action to the U.S. District Court (CDCal) based upon diversity of citizenship. Chodos sought recovery in quantum meruit. The District Court granted summary judgment to West. Chodos appealed.
Appeals Court. The Appeals Court stated that the issue is whether "a publisher retains the right to reject an author's manuscript written pursuant to a standard industry agreement, even though the manuscript is of the quality contemplated by both parties." The Court held that a publisher does not.
Chodos raised two alternative theories. First, he argued that the contract was illusory, on the grounds that it violated the doctrine of mutual obligation. Second, he argued in the alternative, that if the contract is valid, West breached it.
The Court held that the contract was not illusory. Applying California law (pursuant to choice of law clause in the agreement), the Court stated that "a covenant of good faith and fair dealing is an implied term in every contract", and that "a court will not find a contract to be illusory if the implied covenant of good faith and fair dealing can be read to impose an obligation on each party". The Court held that "because the standard Author Agreement obligates the publisher to make a judgment as to the quality or literary merit of the author's work -- to determine whether the work is ``acceptable´´ or ``unacceptable´´ -- it must make that judgment in good faith, and cannot reject a manuscript for other, unrelated reasons."
Having held the contract to be valid, the Court further held that West breached it. The Court articulated that Chodos "was induced by an agreement that permitted rejection of the completed manuscript only for deficiencies in ``form and content.´´ Chodos thus labored to complete a work of high quality with the expectation that, if he did so, it would be published. He devoted thousands of hours of labor to the venture, and passed up substantial professional opportunities, only for West to decide that due to the vagaries of its internal reorganizations and changes in its business strategies or in the national economy or the market for legal treatises, his work, albeit admittedly of high quality, was for naught. It would be inequitable, if not unconscionable, for an author to be forced to bear this considerable burden solely because of his publisher's change in management, its poor planning, or its inadequate financial analyses at the time it entered into the contract, or even because of an unexpected change in the market place."
And, the Court held that "to allow a publisher to escape its contractual obligations for these reasons would be directly contrary to both the language and the spirit of the standard Author Agreement."
Hence, the Appeals Court reversed, and remanded to the District Court with instructions to allow Chodos to proceed in quantum meruit if damages are not determinable under the contract.
Epilogue. Chodos's book, The Law of Fiduciary Duty, has been published, but not by a major legal book publisher.
Senate Committee Holds Hearing on Export Controls in Russia and China
6/6. The Senate Governmental Affairs Committee's Subcommittee on International Security, Proliferation, and Federal Services held a hearing titled "Russia and China -- Non-proliferation Concerns and Exports Controls". The hearing addressed how well Russia and China comply with nonproliferation agreements and enforce export controls, particularly with respect to weapons of mass destruction.
See, prepared statements in PDF of witnesses: James Wolf (Assistant Secretary, Bureau of Non-proliferation
Department of State), Matthew Borman (Deputy Administrator, Bureau of Industry and Security, Department of Commerce), Leonard Spector (Monterey Institute for International Studies), David Albright (Institute for Science and International Security), and Gary Milholin (Wisconsin Project for Nuclear Arms Control). See also, opening statement [PDF] and closing statement of Sen. Daniel Akaka (D-HI).
Borman stated that "Russia enacted an export control law in 1999. This law authorizes control over the export of all items (commodities, software, and technology) on the lists of the four multilateral export control regimes and chemicals covered by the Chemical Weapons Convention." However, he said that "Russia's most significant weakness is its ability to enforce its export control system."
People and Appointments
6/6. David Krone will join the National Cable & Telecommunications Association (NCTA) as Executive Vice President, effective July 1. See, NCTA release.
6/6. Dan Moloney, Motorola's SVP and General Manager of the IP Systems Group for the Broadband Communications Sector (BCS), will become EVP and President of BCS. He will replace Dave Robinson. See, Motorola release.
More News
6/7. The Customs Service published a notice in the Federal Register regarding a notice of proposed rulemaking (NPRM) to amend the Customs Regulations pertaining to the importation of merchandise bearing a counterfeit mark to clarify the limit on the amount of a civil fine which may be assessed. Comments are due by August 6, 2002. See, Federal Register, June 7, 2002, Vol. 67, No. 110, at Pages 39321 - 39322.
6/7. The Federal Communications Commission (FCC) released its Order on Reconsideration [PDF] in its preceding titled "In the Matter of Preemption of Local Zoning Regulation of Satellite Earth Stations", dismissing nine petitions for reconsideration of the FCC's 1996 Antenna Report and Order. This order amended FCC rules to create a rebuttable presumption that local regulations that impose restrictions affecting the installation, use and maintenance of satellite earth station antennas one meter or less in any area or two meters or less in commercial or industrial areas, were unreasonable and would be preempted. Subsequently, the FCC's OTARD Order eliminated provisions regarding satellite antennas that are one meter or smaller and used to receive video programming. This is IB Docket No. 95-59.
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Notices & Disclaimers
Copyright 1998 - 2002 David Carney, dba Tech Law Journal. All rights reserved.
Monday, June 10
The House will meet at 2:00 PM in pro forma session only.
The Senate will meet 2:00 PM for morning business. At 3:00 PM the Senate will resume consideration of S 625, the Hate Crimes Act.
The Supreme Court will return from recess.
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.
12:00 NOON. The House Science Committee will hold a field hearing on homeland security efforts at the NIST and the NIH, including cyber security, bioterrorism, and first responder needs. Rep. Connie Morella (R-MD) will preside. Location: Large Hearing Room, Stella Werner Council Office Building, 100 Maryland Ave., Rockville, MD.
3:30 PM. Commerce Secretary Donald Evans and Sen. John Warner (R-VA) will participate in a town hall meeting with the employees of Information Management Consultants (IMC), and northern Virginia IT companies, to discuss the President's high tech agenda and expanding trade. See, DOC release.
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 12th 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 funds. See, notice in Federal Register.
Tuesday, June 11
The House will meet at 12:30 PM for morning hour and 2:00 PM for legislative business. No votes are expected before 6:30 PM. The House will consider a number of measures under suspension of the rules.
Day two 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). See, information page.
Day three of a three day conference hosted by George Mason University titled Networked Economy Summit. See, event web site.
7:00 AM - 4:00 PM. Day one of a two day conference titled Current and Emerging Solutions to Public Safety Communications Interoperability hosted by the NTIA and the Public Safety Wireless Network Program. Audio webcast. See, agenda. See also, notice in the Federal Register. Location: Reagan International Trade Center, 1300 Penn. Ave., NW.
9:00 AM - 4:00 PM. Day one of a three day meeting of the NIST's Computer System Security and Privacy Advisory Board. See, notice in Federal Register. Location: National Security Agency's National Cryptologic Museum, Colony 7 Road, Annapolis Junction, MD.
9:00 AM - 2:00 PM. The American Enterprise Institute (AEI) will host a conference titled The Future of Telecom Regulation. See, agenda and registration page. Location: AEI, 12th floor, 1150 17th St., NW.
9:30 AM. The Senate Commerce Committee's Subcommittee on Communications will hold a hearing titled Spectrum Management. Press contact: Andy Davis 224-6654. Location: Room 253, Russell Building.
2:00 PM. There will be a press conference to release a report titled International Music Piracy Report 2002. For more information, contact Amanda Collins at 202 857-9625 or acollins Location: National Press Club, Murrow Room, 529 14th St. NW, 13th Floor.
Wednesday, June 12
The House will likely consider a motion to go to conference on HR 3005, the Bipartisan Trade Promotion Authority Act of 2002.
7:00 AM - 3:30 PM. Day two of a two day conference titled Current and Emerging Solutions to Public Safety Communications Interoperability hosted by the NTIA and the Public Safety Wireless Network Program. Audio webcast. See, agenda and notice in the Federal Register.
8:30 AM - 4:00 PM. Day two of a three day meeting of the NIST's Computer System Security and Privacy Advisory Board. See, notice in Federal Register.
9:00 AM - 1:00 PM. The President's Council of Advisors on Science and Technology (PCAST) will hold a public meeting. The agenda includes four items: (1) the science and technology of combating terrorism, (2) policies and technologies to improve energy efficiency, (3) the federal investment in science and technology research and development, and (4) demand issues that can speed the deployment of a 21st Century broadband infrastructure. See, notice in Federal Register. Location: Colonial Room, Renaissance Mayflower Hotel, 1127 Connecticut Ave., NW.
11:00 AM. The Cato Institute will host a panel discussion titled Digital Copy Protection: Mandate It? Ban It? Or Let the Market Decide?. The speakers will be Rick Lane (News Corporation), Jonathan Potter (DiMA), Sarah Deutsch (Verizon), Stewart Verdery (Vivendi Universal), and Jonathan Zuck (ACT). Lunch will follow. Webcast. See, online registration page. Location: Cato, 1000 Massachusetts Ave., NW.
12:30 PM. The FCBA's Global Telecommunications Development Committee and the International Practice Committee will host a luncheon seminar titled Three Principles for the Liberalization of Telecommunications in Latin America: Competition, Competition and Competition. The speakers will be Henoch Aguiar, a former Secretary of Telecommunications of Argentina. This program is free and lunch will be provided. RSVP by faxing or e-mailing your name, affiliation, and contact information to Javier Miguel Tizado at 202 639-9355 or jtizado by June 10th. Location: White & Case, 601 13th St., NW, Suite 600.
2:30 The Senate Judiciary Committee's Subcommittee on Technology, Terrorism, and Government Information Subcommittee will hold a hearing on S 2541, the Identity Theft Penalty Enhancement Act. Sen. Dianne Feinstein (D-CA) will preside. See, notice. Press contact: Mimi Devlin at 202 224-9437. Location: Room 226, Dirksen Building.
2:30 PM. The Senate Commerce Committee's Subcommittee on Science, Technology, and Space Subcommittee will hold a hearings to examine the ICANN. Press contact: Andy Davis at 202 224-6654. Location: Room 253, Russell Building.
Thursday, June 13
The House will meet at 10:00 AM for legislative business. No votes are expected after 6:00 PM. The House will likely consider HR 4019, the Permanent Marriage Penalty Relief Act of 2002.
8:30 AM - 3:00 PM. Day three of a three day meeting of the NIST's Computer System Security and Privacy Advisory Board. See, notice in Federal Register.
9:30 AM. The FCC will hold a meeting. See, agenda. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).
10:00 AM. The House Ways and Means Committee will hold a hearing on the extraterritorial income regime. Location: Room 1100, Longworth Building.
10:00 AM. The House Judiciary Committee has scheduled a meeting to mark several bills, including HR 4598, the Homeland Security Information Sharing Act, 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. Location: Room 2141, Rayburn Building.
2:00 - 4:00 PM. The American Enterprise Institute (AEI) will host a panel discussion titled The Future of the Distribution of Video Programming. The speakers will be Harold Furchtgott Roth (AEI), James Ramo (Movielink), Jerald Fritz (Albritton Communications), Michael Kupinski (A.G. Edwards), Jonathan Potter (DiMA), and Donald Whiteside (Intel). See, agenda and registration page. Location: AEI, 12th floor, 1150 17th St., NW.
2:00 PM. The Senate Judiciary Committee will hold a hearing on pending judicial nominations. See, notice. Press contact: Mimi Devlin at 202 224-9437. Location: Room 226, Dirksen Building.
Friday, June 14
Flag Day.
CANCELLED. The FCC's Network Reliability and Interoperability Council (NRIC) will hold a meeting. The next meeting of the NRIC will be on Friday, September 13. See, cancellation notice [PDF].