|SEC Chairman Warns Legal
Profession to Avoid Mistakes of Accounting Profession
|8/12. Securities and Exchange
Commission (SEC) Chairman Harvey
Pitt gave a speech
in Washington DC to a bar group. He talked about his
experiences in his first year in office, and new parameters
for the way lawyers representing public companies appear and
practice before the SEC. He stated that lawyers must represent
corporate and shareholder interests, not the interests of
He stated that "The Sarbanes Oxley Act should alert this
group that, in addition to auditors and corporate leaders,
Congress believes lawyers representing public companies also
have responsibilities requiring governmental definition. Most
lawyers blanch at that notion. The relationship between
lawyers and clients is often intensely personal, similar in
some respects to the relationship between priest and penitent
in the confessional. Lawyers are zealously supposed to guard,
defend and promote the interests of their clients. To do that,
clients must feel comfortable confiding in their lawyers.
Efforts to impose governmental controls on how lawyers fulfill
their responsibilities, some argue, can infringe upon the
willingness of clients to confide in their lawyers, and
curtail their ability to receive the benefits that flow from
an unfettered lawyer client dialogue."
Pitt continued, "But, the merits of that concern, if any,
apply to individual representations, not the representation of
public companies. Lawyers for public companies represent the
company as a whole and its shareholder wners, not the managers
who hire and fire them. This should be self evident, but
recent events indicate some corporate lawyers have lost sight
of this axiom, a form of professional blindness that isn't
Pitt concluded that "lawyers who represent public
companies must use their legal acumen to pursue only those
goals whose sole purpose is to further legitimate corporate
interests, not the interests of individual managers -- even if
management's individual goals arguably are supportable by a
literal reading of the law."
Pitt stated that this means that "When a corporation
hires a lawyer, the lawyer represents the corporation and its
shareholders. Being ever mindful of this answer can help
protect lawyers from the fate visited upon the accounting
profession. While management has the power to hire or fire
lawyers who represent a corporation, lawyers must ask
themselves -- as well as management -- how what they're being
asked to do is intended to further the company's and
shareholders' interests. Corporate lawyers must be vigilant
and protect against conflicts arising between management and
shareholders. Most corporate lawyers recognize and fulfill
that duty -- but the profession, as a whole, must hold this
|Sens. Baucus and Grassley
Propose Working Group on ETI/FSC
|8/12. Sen. Max Baucus
(D-MT) and Sen. Charles
Grassley (R-IA) wrote a letter
[PDF] to U.S. Trade
Representative (USTR) Robert
Zoellick and Deputy Secretary of the Treasury Kenneth
Dam regarding the Extraterritorial Income Exclusion Act (ETI).
The two Senators, who are the Chairman and ranking Republican
on the Senate
Finance Committee (SFC), asked the two administration
officials to join them in a "legislative executive,
bicameral, bipartisan working group" to address the ETI
issue in September.
The World Trade Organization
(WTO) has ruled that the ETI, and its predecessor, the Foreign
Sales Corporation Act (FSC), constitute illegal export
subsidies. These tax regimes greatly benefit U.S. companies
that export their products, including high tech exporters. The
U.S. unsuccessfully argued to the WTO that the U.S. has a
global tax system, while European nations have territorial tax
systems, that this puts U.S. exporters at a competitive
advantage, and that tax regimes such as ETI and FSC that
exempt certain foreign source income from taxation merely
level the playing field.
Sens. Baucus and Grassley wrote that "we appreciate that
you believe we need to promptly advance legislation which has
a high probability of enactment. Since the European Union may
be authorized to impose substantial retaliatory duties against
American exports, a failure to resolve this issue could prove
costly for the American workers, farmers, businesses, and
consumers. Given the legislative and dispute settlement
posture of this matter, we believe it is important to show
progress toward compliance."
Both Dam and Zoellick testified before a SFC hearing on ETI/FSC
on July 30. See, Dam's prepared testimony [PDF
and Zoellick's prepared testimony [PDF
|Federal Circuit Rules in
Patent Case Involving Surfing the Web by Voice
|8/9. The U.S.
Court of Appeals (FedCir) issued its opinion in In
re Thrift, an appeal from a U.S. Patent and
Trademark Office (USPTO) Board of
Patent Appeals and Interferences (BPAI) decision. The BPAI
affirmed a patent examiner's rejection of claims of Philip
Thrift and Charles Hemphill in U.S. Patent Application No.
08/419,229, titled "Voice Activated HyperMedia Systems
Using Grammatical Metadata." The Appeals Court vacated
the BPAI decision on certain claims.
This appeal involves a 1995 patent application that pertains
to surfing the web with voice commands. The patent examiner
rejected the application, and the BPAI affirmed. The Court of
Appeals affirmed as to certain claims contained in the
application, but vacated as to others.
Thrift and Hemphill, who have assigned their rights under this
patent application to Texas
Instruments, filed their '229 application in 1995. In
1996, the patent examiner rejected their claims for
obviousness, in light of prior art, pursuant to 35 U.S.C.
§ 103. Thrift and Hemphill amended their claims, and the
examiner again rejected all of their claims for obviousness,
in 1997. The BPAI then affirmed the examiner's rejection, as
to all claims.
The '229 application included as its first claim "A voice
activated Hypermedia system using grammatical metadata, said
system comprising: a. a speech user agent; b. a network
browsing module; and c. an information resource located on a
computer network wherein said speech user agent facilitates
voice activation of said network browsing module to access
said information resource."
That it, this claim is comprised of a speech interface that
allows users to access information located on a computer
network using a network browsing module. The patent examiner
rejected this claim, and others that were dependent upon it.
This was affirmed by the BPAI, and again by the Court of
However, another claim (Claim 11) added the ability to create
a grammar, or established set of standard query words.
Furthermore, under this claim, each user can construct a
grammar and associate its terms with a uniform resource
locations (URL), thus allowing users to access URLs by
reciting phrases. The patent examiner rejected this claim, and
others dependent upon it. This was affirmed by the BPAI.
However, the Court of Appeals vacated as to these claims.
The Appeals Court wrote that the BPAI's "rejection is
simply inadequate on its face. The Board sustained the
examiner's very general and broad conclusion of obviousness
based on his finding that ``[t]he use of grammar is old and
well known in the art of speech recognition as a means of
optimization which is highly desirable.´´"
The Appeals Court continued that "Although this statement
is likely true, it fails to address the grammar creation
capability limitations of claim 11. While the examiner's
statement generally addresses the use of grammar, it does not
discuss the unique limitations of extracting, modifying, or
processing the grammar to interact with hypermedia sources.
The Board's decision is not supported by substantial evidence
because the cited references do not support each limitation of
The Appeals Court also vacated as to a similar claim (Claim
14) on the basis that its rejection too was "not
supported by substantial evidence".
The matter is now remanded to the Patent Office for further
|Federal Circuit Upholds
Validity of Cipro Patent
|8/9. The U.S.
Court of Appeals (FedCir) issued its opinion in Bayer
v. Schein, a patent infringement case involving
the drug know as Cipro. The Court found Bayer's patent valid
against a Section 102(d) challenge.
Bayer AG is the assignee of U.S.
Patent No. 4,670,444 and Reexamination Certificate B1
4,670,444, which are directed towards a class of chemical
compounds that includes the broad spectrum antibiotic
ciprofloxacin. Bayer filed four complaints in U.S. District
Court (DNJ) against Schein Pharmaceuticals and others alleging
patent infringement. The District Court consolidated these
Schein raised the affirmative defense of invalidity under 35 U.S.C.
§ 102(d), which provides that "A person shall be
entitled to a patent unless ... (d) the invention was first
patented or caused to be patented, or was the subject of an
inventor's certificate, by the applicant or his legal
representatives or assigns in a foreign country prior to the
date of the application for patent in this country on an
application for patent or inventor's certificate filed more
than twelve months before the filing of the application in the
The District Court held that the '444 patent was entitled to
the filing date of its U.S. parent, Application No. 292,560
and thus was not invalid under Section 102(d). The Court
granted Bayer's motion for summary judgment on validity.
Schein and other defendants appealed. They argued on appeal
that the '444 patent cannot claim the benefit of the parent
application because the parent is invalid for failure to
satisfy the best mode requirement of 35 U.S.C.
The Court of Appeals affirmed. However, it split in its
analysis of the best mode requirement. Judge Clevenger wrote
the opinion of the Court, in which Judge Dyk joined. Judge
Rader wrote a concurring opinion.
Rader wrote that "this court purports to use this easy
case to erect a new best mode test. Fortunately, both this
court's failure to find a best mode in this case and the
wealth of prior case law render this Bayer case mostly
|Tuesday, August 13
|Day six of six of the American Bar Association's annual
meeting. See, TLJ's
complete listing of technology law related events.
Location: various hotels across Washington DC. Highlights
include the following:
• 8:30 AM. Program titled "The Antitrust Year
in Review". Location: Ritz-Carlton, The Plaza
Ballroom, Lobby Level.
• 9:00 AM. Program titled "Cyber-Sleuthing: A
Guide to Level Computer Assisted Discovery and Collection of
Electronic Data". Location: Hilton Washington,
Jefferson Ballroom East, Concourse Level.
• 12:00 PM. Event titled "Antitrust Luncheon:
Developments in Federal Antitrust Enforcement 2002". Charles James,
Assistant Attorney General for Department of Justice's Antitrust Division will
speak. Location: Ritz-Carlton, The Ritz-Carlton Ballroom,
Salon III, Lobby Level.
• 2:00 PM. Program titled "Developments in
Merger Law and Policy 2002". Location: Ritz-Carlton,
The Plaza Ballroom, Lobby Level.
10:00 AM. The U.S.
District Court (DC) will hold a status hearing in USTA
v. FBI, D.C. No. 1:1998cv2010. Judge Hogan will preside.
Location: Courtroom 8, 333 Constitution Ave., NW.
10:00 AM - 12:00 NOON. The State Department's International
Telecommunication Advisory Committee (ITAC) will meet. See, notice
in Federal Register. Location: Room 1105, State Department.
|Wednesday, August 14
|1:00 - 5:00 PM. The Department of Commerce's (DOC) National Telecommunications
and Information Administration (NTIA) will host a
roundtable meeting regarding the convergence of communications
technologies, including the Telephone Number Mapping (ENUM)
Protocol that facilitates convergence between the Internet and
the public switched telephone network. See, NTIA
in the Federal Register. For more information, contact Wendy
Lader, NTIA Office of Policy Analysis and Development, at 202
482-1150 or wlader @ntia.doc.gov.
Location: Room 4830, DOC, 1401 Constitution Ave., NW.
|People and Appointments
|8/12. California Gov. Gray Davis appointed James
Kleinberg to be a Judge of the Santa Clara County
Superior Court. Kleinberg is a partner in the Silicon Valley
office of the law firm of Bingham
McCutchen (formerly McCutchen, Doyle Brown & Enersen).
He is a trial lawyer who focuses on intellectual property,
securities, antitrust, and trade regulation. His intellectual
property cases have involved the Internet, web design and
filtering technologies, semiconductors, security systems for
automated teller machines, computer disk drives, and market
8/12. James Gilmore joined the law firm of Kelley Drye & Warren
as a partner in the firm's Washington DC office. He will focus
on corporate and technology law. Gilmore is a former Governor
and Attorney General of the state of Virginia, and a former
Republican National Committee Chairman. He is also the
Chairman of the Advisory
Panel to Assess Domestic Response Capabilities for Terrorism
Involving Weapons of Mass Destruction, which is also known
as the Gilmore Commission.
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