Tech Law Journal Daily E-Mail Alert
July 1, 2002, 9:00 AM ET, Alert No. 462.
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Online News Media Sue Gator for Copyright Infringement
6/25. The Washington Post and others major news media that publish content online filed a complaint [99 pages in PDF] in the U.S. District Court (EDVa) against Gator Corporation alleging copyright infringement and related claims.
The plaintiffs, which include the Washington Post Newsweek Interative Company, Washington Post Company, New York Times Company, Gannett Satellite (USA Today), Globe Newspaper Company (Boston Globe), Dow Jones & Company (Wall Street Journal), Smart Money, Tribune Interactive (LA Times and Chicago Tribune), and Knight Ridder Digital (Miami Herald and Philadelphia Inquirer), publish news stories and other original content. Defendant Gator operates a web site that displays content from plaintiffs' web sites. It also sells advertising to run on its web pages.
The complaint states that Gator is "a parasite on the Web that free rides on the hard work and investments of Plaintiffs and other website owners. Gator makes money by placing advertisements for third parties on the Plaintiffs' websites without Plaintiffs' authorization."
The complaint continues that "Gator Corp. free rides on the valuable intellectual property rights of the Plaintiffs and the substantial investment Plaintiffs have made, and continue to make, to draw millions of visitors to their websites."
Plaintiffs plead trademark infringement, unfair competition, trademark dilution, copyright infringement, contributory copyright infringement, misappropriation, interference with prospective economic advantage, unjust enrichment, and violation of the Virginia Business Conspiracy Act.
Plaintiffs seek injunctive and monetary relief. They seek, among other things, an order prohibiting Gator from "continuing to perpetrate its pop-up advertising scheme against, or display any other advertising on any website owned by or affiliated with the Plaintiffs without the express consent of the Plaintiffs". They also seek an accounting, restitution, damages, and corrective advertising by Gator.
Plaintiffs also filed a motion for a preliminary injunction. See, Memorandum in Support of Plaintiffs' Motion for Preliminary Injunction [35 pages in PDF]. The Court has scheduled a hearing for July 12 on this motion.
Judge Claude Hilton has been assigned to this case. Plaintiffs are represented by the law firm of Gibson Dunn & Crutcher. Lead counsel is Terence Ross. He stated on Friday, June 28, that he had not yet received an entry of appearance from opposing counsel. This is D.C. No. 02-904-A.
Gator issued a release in which it stated that it "will vigorously defend itself against, and may counter-sue". Gator did not assert authorship, license or fair use in its release. Rather, it asserted that the suit "flies in the face of the very nature of the Windows operating system, and is ridiculous."
Gator further asserted that it "is a well capitalized, profitable company, and has spent the last six months doubling its revenue, more than doubling its audience size, doubling its customer base, and -- most tellingly -- winning significant contracts in lucrative vertical markets that have traditionally spent advertising dollars with the plaintiffs and other, traditional media companies."
Editor's Note. Tech Law Journal is an intellectual property owner. Its works of authorship are infringed. Readers may wish to take this into consideration is assessing the objectivity of its coverage of this case.
Rep. Thomas Plans to Introduce FSC Bill
6/28. Rep. Bill Thomas (R-CA), the Chairman of the House Ways and Means Committee, released a summary of the American Competitiveness Act of 2002, a bill to be introduced after the July 4 recess. It would address the foreign sales corporation, and successor, tax regime, which the World Trade Organization (WTO) has ruled to constitute an illegal trade subsidy.
Rep. Thomas issued a release which states that the "current Extraterritorial Income (ETI) regime was designed to level the playing field between U.S. companies and their foreign competitors. Both ETI and its predecessor, the Foreign Sales Corporation (FSC), have been repeatedly ruled to be ``export subsidies´´ that violate our treaty obligations."
The release continues that "If we repeal ETI, U.S. businesses will be placed at an even greater competitive disadvantage relative to their foreign competitors. If we don't repeal ETI, U.S. companies may be hit with billions of dollars of retaliatory trade sanctions. An arbitration panel will set the level of authorized trade sanctions in July."
EU representatives have stated that retaliatory sanctions would target U.S. technology exports.
Rep. Thomas' release states that the American Competitiveness Act would amend the Internal Revenue Code by "Simplifying the complex foreign tax credit rules designed to prevent double taxation, Increasing expensing for small businesses, Reforming complex interest allocation rules, and Removing punitive rules which reduce companies ability to defer taxes on active income earned abroad."
The bill would also seek to limit corporate inversions, the relocation of companies' nation of incorporation from the U.S. to countries with more favorable tax laws.
Pascal Lamy Holds Online Chat Regarding Trade
6/28. EU Commissioner for Trade Pascal Lamy held an online chat regarding trade issues. See, rough transcript [41 pages in PDF].
He was asked "Is the Doha Round dead, after the EU-US steel conflict, the New Farm Bill and the TPA with poison pill?" Lamy stated that "steel, the farm bill are clearly irritants, but they will not in themselves prevent the round to go ahead; TPA is a bigger problem, but we are confident that the TPA will in the end come out without poison pills".
He also stated that "The new American administration under G. W. Bush has advertised a 'more active' trade policy for the US both in multilateral arenas and in bilateral negociations (FTAA or other free trade agreement). Fine with that. But, at this stage, we have seen more protection than openess. Optimists here say that this is the price to pay for the administration to get negociating authority from the Congress."
He was also asked "What steps is the EU taking to secure a liberalisation of trade in legal services"?  He responded that "the EU will participate actively in the on-going services negotiations in the WTO with a view to secure inter alia improved market access for lawyers in foreign markets, provided they have proper qualifications."
He was asked again, "How can the EU expect  other countries to liberalise their trade restrictions when its own Member States won't even comply with Community Directives aimed at achieving the same purpose (e.g. Lawyers' Establishment Directive)?" To this, he responded, "as far as far Community internal measures are concerned, the Commission has the power to pursue Member States to the Cour of Justice and does so when necessary. We do not hesitate to remind Member States of their duties and we have no difficulties in asking third countries to take commitments in areas covered by an EC directive, if we deem it in the EU interest."
He was also asked if he meets with the U.S. Congress. He stated that "Each time I am in Washington (approx. 4 times a year) I spend half of my time on the hill and the other half with the administration, various constituencies and communication. I have regular contacts down there or on the phone with a number of trade stars: chairman of ways and means in the house, of finance in the Senate. Our delegation in Washington and our people here interact permanently with staffers." 
Court Issues Order in SEC v. WorldCom
6/28. The U.S. District Court (SDNY) ordered WorldCom to preserve records relating to its financial reporting obligations, prohibiting WorldCom from making any extraordinary payments to any present or former director, officer, or financial reporting personnel, and providing for the appointment by the Court of a monitor. See, SEC release. The Securities and Exchange Commission (SEC) filed its original complaint on June 26.
Bush Addresses Addresses Financial Reporting
6/28. President Bush gave a speech at a campaign event for Rep. Connie Morella (R-MD) in Washington DC at which he also addressed corporate governance and financial reporting. He stated that "We can have all kinds of rules, and we will. I laid out some initiatives in March of this year that will hold people accountable. And our Justice Department will hold people accountable. But corporate America has got to understand there's a higher calling than trying to fudge the numbers, trying to slip a billion here or a billion there and may hope nobody notices -- that you have a responsibility in this country to always be aboveboard."
6/29. President Bush also addressed financial reporting in his weekly radio address on Saturday, June 29. He stated that "Despite recent abuses of the public's trust, our economy remains fundamentally sound and strong, and the vast majority of businesspeople are living by the rules. Yet, confidence is the cornerstone of our economic system, so a few bad actors can tarnish our entire free enterprise system. We must have rules and laws that restore faith in the integrity of American business. The government will fully investigate reports of corporate fraud, and hold the guilty parties accountable for misleading shareholders and employees. Executives who commit fraud will face financial penalties, and, when they are guilty of criminal wrongdoing, they will face jail time."
Bush also said that "the SEC ordered the CEOs and CFOs of the 1,000 largest public companies to certify that the financial information they submitted in the last year was fair and accurate."
SEC Orders CEOs & CFOs to Certify Accuracy of Reports Under Oath
6/28. The Securities and Exchange Commission (SEC) published a list of 945 companies whose chief executive and chief financial officers are now required to personally certify -- in writing, under oath, and for publication -- that their most recent reports filed with SEC are complete and accurate. See, SEC release.
The list of technology related companies on the list includes 3Com, Adobe, AMD, Agilent, AllTel, Amazon, AOL, AT&T, Atmel, BellSouth, Cadence Design Systems, CDW Computer Centers, CenturyTel, Charles Schwab, Charter Communications, Ciena, Circuit City, Cisco, Comcast, Comdisco, Computer Associates International, Computer Sciences Corp., Compuware, Comverse Technology, Corning, Convergys, Cox Communications, Dell, DST Systems, E*Trade, Earthlink, Eastman Kodak, Echostar, EDS, Electronic Arts, First Data, Gemstar-TV Guide International, Gateway, General Cable, Ingram Micro, Intel, Integrated Electrical Services, IBM, Intuit, JDS Uniphase, L-3 Communications, Level 3 Communications, Lockheed Martin, LSI Logic, Lucent, MasTec, Maxim Integrated Products, Micron, Microsoft, Motorola, National Rural Utilities Cooperative Finance Corporation, National Semiconductor, NCR, Nextel, Northrop Grumman, Novellus, Nvidia, Office Depot, OfficeMax, On Semiconductor, Oracle, PeopleSoft, PEPCO, Perot Systems, Qualcomm, Quantum, Qwest, Radio Shack, Raytheon, Sabre Holdings, SBC, Siebel Systems, Silicon Graphics, Sprint, Staples, Storage Technology, Sun Microsystems, SunGard Data Systems, Tech Data Corporation, Tektronix, Telephone & Data Systems, Tellabs, Texas Instruments, TRW, Unisys, Veritas Software, Verizon, Viacom, Viasystems Group, Vishay Intertechnology, Visteon, Volt Information Sciences, Wallace Computer Services, Walt Disney, Western Digital, WorldCom, Xerox, Xilinx, and XO Communications.
Xerox Restates Revenues
6/28. Xerox stated that "it expects to file today the company's 2001 10-K, which includes a restatement for the years 1997 through 2000 as well as adjustments to previously announced 2001 results." It further stated that "Approximately $1.9 billion of revenue that was recognized over past years has been reversed". See, Xerox release.
Senate Passes E-Government Act
6/27. The Senate passed S 803, the E-Government Act of 2002, sponsored by Sen. Joe Lieberman (D-CT). The bill seeks to promote electronic Government services and processes. It would establish an Office of Electronic Government within the Office of Management and Budget. This version of the bill does not include earlier language creating the position of Chief Information Officer.
NIST Study Estimates Costs of Software Bugs
6/28. The National Institute of Standards and Technology (NIST) released a report [309 pages in PDF] titled "The Economic Impacts of Inadequate Infrastructure for Software Testing". See also, NIST release.
The report states that "The objective of this study is to investigate the economic impact of an inadequate infrastructure for software testing in the U.S." It concludes that "Based on the software developer and user surveys, the national annual costs of an inadequate infrastructure for software testing is estimated to range from $22.2 to $59.5 billion. Over half of these costs are borne by software users in the form of error avoidance and mitigation activities."
The report also concludes that $22.2 Billion of these costs could be eliminated by an improved testing infrastructure that enables earlier and more effective identification and removal of software defects.
FTC Updates Report on the Marketing of Violent Electronic Games to Children
6/28. The Federal Trade Commission (FTC) released another followup report [62 pages in PDF] to its September 2000 report titled "Marketing Violent Entertainment to Children: A Review of Self-Regulation and Industry Practices in the Motion Picture, Music Recording and Electronic Game Industries". See also, FTC release.
With respect to electronic games, this latest report finds "widespread compliance with industry standards limiting ads for M-rated games where children under 17 constitute a certain percentage of the audience -- 35 percent for television and 45 percent for print. At the same time, the Commission found several examples of advertisements on popular teen television programs, and continued placement of advertising in youth-oriented game enthusiast magazines. As the Commission noted in its December 2001 Report, the industry’s anti-targeting standards diminish -- but do not eliminate -- placements in media with large teen audiences."
The report continues that "The electronic game industry continues to provide rating information prominently in most forms of advertising, which likely reflects its enforcement program. Although some areas still could be improved (e.g., including content descriptors in television advertising), there is much in the game industry’s rating disclosure requirements that merits duplication by others."
FTC Commissioner Orson Swindle issued a concurring statement. He wrote that "the First Amendment appropriately limits what the government can do. Despite our scrutiny, the music industry continues to target young people explicitly in its advertising and, for the most part, refuses to provide content-based information that could help consumers. The motion picture and electronic game industries have acted far more responsibly in improving their self-regulatory programs, yet continue to allow advertising of R-rated movies and M-rated games in venues that attract large numbers of teens."
Rep. Billy Tauzin (R-LA) stated in a release that "The movie and video game industries should be commended for their continued commitment to responsible marketing of violent material. Since the inception of the FTC's reports, these industries have made vast improvements to their marketing practices. However, I continue to be deeply disappointed by the recording industry's lack of response to the shortcomings noted in these FTC reports." Rep. Tauzin is Chairman of the House Commerce Committee, which oversees the FTC.
Supreme Court Recesses Until October
6/28. The Supreme Court completed the work of its current term with the release of opinions and order list on Friday, June 28. It will be in recess until Monday, October 7, 2002.
Publication Schedule
The Tech Law Journal Daily E-Mail Alert will not be published on July 3, 4, or 5.
Monday, July 1
Neither the House nor the Senate will meet Monday July 1 through Friday July 5, due to the Independence Day work period.
8:30 AM - 5:00 PM. The American Antitrust Institute will hold a meeting. FTC Commissioner Thomas Leary will speak at 8:50 AM. FTC Chairman Timothy Muris and incoming EU Director General of Competition Phillip Lowe will speak at the luncheon, held from 12:30 - 2:00 PM. See, agenda and registration page. The price to attend is $600. For more information, contact Sarah Leer at 703 299-8268. Location: Ballroom, National Press Club, 529 14th St. NW, 13th Floor.
9:30 AM - 12:00 NOON. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will hold a meeting to address preparations for the CITEL Assembly. For more information, and security requirements, see notice in the Federal Register.
Copyright Office fee increases to into effect. Basic registration fees remain unchanged. However, renewal registrations, group registrations, supplementary registrations, and fees for services, all go up.
Extended deadline to submit reply comments to the FCC in response to its Notice of Proposed Rulemaking titled "In the Matter of Appropriate Framework for Broadband Access to the Internet over Wireline Facilities". This is CC Docket No. 02-33. See, May 29 notice [PDF] extending deadline from June 3 to July 1. See also, Order [PDF] extending deadline from May 14 to June 3, and original notice in Federal Register.
Deadline to submit nominations to the NIST for appointment to the Advanced Technology Program Advisory Committee. See, notice in Federal Register.
Deadline to submit nominations to the NIST for appointment to the Visiting Committee on Advanced Technology. See, notice in Federal Register.
Tuesday, July 2
President's Homeland Security Advisory Council (PHSAC) will meet. The meeting is closed to the public. However, written comments may be submitted Fred Butterfield at fred.butterfield See, notice in the Federal Register. See also, order establishing the PHSAC. Location: undisclosed.
Wednesday, July 3
The Tech Law Journal Daily E-Mail Alert will not be published
Thursday, July 4
Independence Day. The FCC and other government offices will be closed. The National Press Club will be closed.
The Tech Law Journal Daily E-Mail Alert will not be published
Friday, July 5
The Tech Law Journal Daily E-Mail Alert will not be published
GAO Reports on Telecommunications at DOD
6/28. The General Accounting Office (GAO) released a report [101 pages in PDF] titled "Information Technology: DOD Needs to Improve Process for Ensuring Interoperability of Telecommunications Switches".
The report concluded that the Department of Defense (DOD) "does not have a well defined process, including clear requirements, for certifying and authorizing telecommunications (telecom) switches. DOD's process is not fully documented, current, or complete. Additionally, the process lacks an effective enforcement mechanism. As a result, DOD is increasing the risk that its certification and authorization process will be applied inconsistently and that the department's telecommunications will experience future interoperability problems. DOD attributed these weaknesses to the fact that the process is relatively new and still evolving."
People and Appointments
6/28. The White House press office announced the list of appointments for White House Fellows for 2002-03. The list includes Cesar Conde, of Coral Gables, Florida. The White House release states that he "Led the strategic development of the first full service Internet portal geared exclusively towards the U.S. Hispanic market."
6/28. Kevin English, Ch/CEO/P of Covisint announced his resignation. Harold Kutner will replace him as Ch/CEO. Bruce Swift will become P/COO. Covisint is an automotive industry B2B. See, Covisint release.
More News
6/28. The Federal Communications Commission (FCC) announced that it signed an Interim Arrangement with Industry Canada pertaining to spectrum sharing for the development of Multipoint Distribution Systems near the U.S. Canada border. The arrangement covers operations in the 2150-2162 MHz and 2500-2690 MHz bands. See, FCC release [PDF].
6/28. The Department of Justice's (DOJ) Antitrust Division filed its appeal brief with the U.S. Court of Appeals (2ndCir) in USA v. Visa, an antitrust case involving the governance practices of Visa and MasterCard.
6/28. Tren Griffin, Pierre De Vries, and Marc Berejka of Microsoft, along with Microsoft attorney Scott Harris, met with Federal Communications Commission (FCC) Commissioner Michael Copps, Paul Margie (Legal Advisor to Copps), and Matt Brill (Legal Advisor to Commissioner Kathleen Abernathy) regarding the future of broadband wireless technology and networking. Microsoft noted in a disclosure letter [PDF] that Microsoft suggested the "the growth of the Internet has been characterized by the ability of consumers to reach an unprecedented array of content, services, and applications through an ever increasing diversity of consumer owned devices. Microsoft suggested that the Commission should remain mindful of the importance of assuring that consumers continue to enjoy that ability in the broadband future."
6/28. The Supreme Court issued an order in the NextWave case. It states that "The motion of the Acting Solicitor General for divided argument is granted. The motion of Creditors of NextWave Personal Communications, Inc., for leave to participate in oral argument as amici curiae and for divided argument is granted." See, Order List [PDF] at page 4.
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