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October 23, 2002, 9:00 AM ET, Alert No. 533.
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Powell Addresses DTV

10/22. Federal Communications Commission (FCC) Chairman Michael Powell gave a speech at the Association for Maximum Television's DTV Update Conference.

Michael PowellPowell (at right) stated that "In the five years that I have been on the Commission, I have heard a great deal of grumbling about the DTV transition: ``It is a great government give away;´´ ``Consumers do not want it;´´ ``It is an unnecessary industrial policy;´´ and ``It’s too expensive with little return.´´ The cold truth, however, is that we have no choice -- not just because Congress has mandated it (which is reason enough) but because the trends in technology and the forces of change will ultimately demand it of any provider that hopes to be relevant in the digital future." (Parentheses in original.)

He continued that "We recognized last April that the transition had to be driven forward -- to satisfy the wishes of Congress, to meet the expectations of consumers, and, most importantly, to advance free television's future -- perhaps even to ensure its survival."

He stated that "We began working with Congressman Tauzin and other key members of Congress to re-energize the dialog around solutions that would move things faster. Subsequently, we crafted a voluntary plan to speed the transition and I am proud to say that industry has responded. We called on the top four networks and HBO and Showtime to provide consumers with high definition or value added DTV programming during prime time. We called on broadcast licensees to pass through and promote network DTV programming. We asked cable operators and DBS operators to carry more digital programming services and to market those services, and to allow consumers to access that content. And we called on the equipment manufacturers and retailers to produce the devices that will allow consumers to view digital programming.

He added that "We have used our offices to keep pressure on all segments of the industry to find solutions to clearing DTV roadblocks. We are actively and aggressively engaged in matters involving equipment compatibility, copyright protections, and carriage obligations, just to name a few. Moreover, we have used our power to mandate change when an industry could not -- or would not -- come to a solution."

"There is no turning back and no retreat." said Powell. "At the FCC, we will lead guided by pragmatism, but backed up by regulatory action that we will not hesitate to employ where necessary."

Federal Circuit Rules in Patent Infringement Case

10/22. The U.S. Court of Appeals (FedCir) issued its opinion [MS Word] in Schumer v. Laboratory Computer Systems, vacating the District Court's judgment in a patent infringement case involving tablets.

Background. Alfred Schumer of Redmond, Washington holds U.S. Patent No. 5,768,492 titled "Digitizer interface". Digitizers are computer peripherals that translate a user’s hand motions or instructions into digital coordinates for use by a computer system. Laboratory Computer Systems (LCS) creates and distributes software drivers to be used with various brands of digitizers distributed by third parties. Wacom makes graphic tablets and interactive pen displays; it is a distributor of digitizers. Wacom was a licensee of LCS software drivers.

District Court. Schumer filed a complaint in 1999 in the U.S. District Court (WDWash) against LCS alleging patent infringement. Wacom then filed a complaint against Schumer seeking a declaratory judgment that its products did not infringe the claims of the ’492 patent and that the asserted claims of the ’492 patent were invalid. The two suits were consolidated. The District Court granted summary judgment to LCS and Wacom. It granted summary judgment of noninfringement of claims 1-10; it also granted summary judgment of invalidity of claims 13 and 14 on the basis of anticipation under 35 U.S.C. § 102(b). Schumer appealed.

Appeals Court. The Appeals Court vacated and remanded. It wrote that "Summary judgment of noninfringement of claims 1-10 should not have been granted because the district court erred in construing the language of the claims. Summary judgment of invalidity of claims 13 and 14 should not have been granted because claim 13 was not shown to be invalid by clear and convincing evidence, and dependent claim 14 was never separately addressed."

FCC Releases UWB Study

10/22. The Federal Communications Commission (FCC) released a report [110 pages in PDF] titled "Measured Emissions Data For Use In Evaluating The Ultra-Wideband (UWB) Emissions Limits in the Frequency Bands Used By The Global Positioning System". See also, FCC public notice [3 pages in PDF].

UWB devices, which use very narrow pulses with very wide bandwidths, have potential applications in both radar and communications technologies. Proponents of its use have argued that UWB devices can use large portions of already allocated spectrum with minimal or no interference to incumbent users. Companies, such as Intel, have argued that UWB is a very promising technology for enabling short distance, high data rate connections that can support new and innovative applications. Incumbent spectrum users have opposed UWB.

On February 14, 2002 the FCC adopted its First Report and Order in ET Docket No. 98-153 to amend Part 15 of the FCC Rules to permit the marketing and operation of certain types of new products incorporating ultra wideband technology.

The FCC seeks comment on this latest report by November 22, 2002. Comments should be filed in ET Docket No. 98-153.

The report was prepared by Stephen Jones of the FCC's Office of Engineering and Technology. He can be contacted at 301 362-2054 or

GAO Reports on Grants Funded by H1B Visa Fees

10/22. The General Accounting Office (GAO) released a report [PDF] titled "Hill Skill Training: Grants from H-1B Visa Fees Meet Specific Workforce Needs, but at Varying Skill Levels".

Recent legislation raised the annual limits on the number of high skilled foreign workers who may obtain H1B visas to work in the U.S. High tech companies had argued that there was a shortage of U.S. workers. The Congress also required employers to pay a $1,000 fee for every foreign worker for whom they applied for an H1B visa. These funds were designated for training of U.S. workers for these jobs. This GAO report examines these educational programs.

The report states that "Fifty-five percent of the funds are provided to the Department of Labor for technical skill grants to increase the supply of skilled workers in occupations identified as needing more workers. Labor awards the skill grants to local workforce investment boards, created under WIA to establish local workforce development policies, thereby linking the skill grant program with the workforce system. The boards use the funds to provide training to employed and unemployed people. The National Science Foundation (NSF) receives 22 percent of the funds to distribute as scholarship grants to post secondary schools that distribute the funds as scholarships for low income students in computer science, engineering, and mathematics degree programs. As of July 1, 2002, about $197 million has been awarded through the skill grant program; as of May 1, 2002, about $72 million has been awarded through the scholarship grant program."

As for the Labor Department grants, the GAO report found that "Information on participants and training outcomes is limited because Labor has not collected consistent data on individual programs."

As for the NSF grants, the GAO report found that "Finding students eligible for the scholarship grant program has proven to be a challenge, as some schools have struggled to fill open slots".

The report was prepared for Rep. James Barcia (D-MI) and Rep. Lynn Rivers (D-MI).

DC Circuit Largely Affirms FCC's Massachusetts 271 Approval
10/22. The U.S. Court of Appeals (DCCir) issued its opinion in WorldCom v. FCC, a petition for review of the FCC's approval of Verizon's application to provide long distance services in Massachusetts.

WorldCom, AT&T and others challenged the Federal Communications Commission's (FCC) April 16 order approving Verizon's Section 271 application to provide in region interLATA services in the state of Massachusetts. The petitioners argued that the FCC's conclusion that Verizon's rates for unbundled network elements (UNEs) complied with the TELRIC standard (total element long run incremental cost). The Appeals Court concluded that it had already upheld the practices of the FCC in two prior challenges to § 271 approvals, Sprint v. FCC, 274 F.3d 549 (D.C. Cir. 2001), and AT&T v FCC, 220 F.3d 607 (D.C. Cir. 2000).

The Court also rejected petitioners' argument that Verizon failed to satisfy checklist item No. 14 (47 U.S.C. § 271(c)(2)(B)(xiv)) because as of the date of its application, it was not offering CLECs DSL and other advanced services at wholesale rates. Verizon was in compliance by the time the FCC issued its approval. The Court rejected this argument in an earlier opinion. However, the opinion, but not the mandate, preceded the date of Verizon's application, and the FCC relied upon this distinction. In its final analysis, the Court concluded that "no matter whether the issue is a matter of standing, mootness or both, we are sure that the complete want of effect in the real world deprives us of jurisdiction over the intriguing question of how the distinction between opinion and mandate might play out in this context."

However, the Appeals Court did remand one issue to the FCC. Petitioners argued that the FCC failed to consider their claim that the ILEC's UNE rates would create a price squeeze -- that is, prices for CLECs' inputs so high as to largely disable them from competing profitably in the local market with the ILEC, the supplier of those inputs. The Court wrote that "Because of the range of TELRIC compliant UNE rates, a set of fully compliant rates might -- under some analyses and policy judgments, not addressed by the Commission in this record -- impede local competition enough to render a § 271 approval in contravention of the ``public interest.´´ Accordingly, we remand the case for further consideration in the light of" the Sprint case."

DOJ Recommends Approval of Qwest Long Distance Application

10/22. The Department of Justice's (DOJ) Antitrust Division filed with the Federal Communications Commission (FCC) its evaluation [23 pages in PDF] of Qwest's application under Section 271 to provide in region interLATA services in the states of Colorado, Idaho, Iowa, Montana, Nebraska, North Dakota, Utah, Washington, and Wyoming. The DOJ recommends approval.

Qwest previously withdrew two applications because of concerns of regulators. In the present application, the DOJ concluded that "With respect to most of the issues about which the Department previously had expressed concern, Qwest’s re-filed application demonstrates improvement. The Department reiterates its deference to the Commission's determination whether Qwest’s pricing is appropriately cost based and whether Qwest complies with Section 272."

However, the DOJ also criticized Qwest for possibly withholding information from regulators. It wrote that "finds troubling an affidavit filed by AT&T in which a former Qwest employee declares that Qwest personnel ``diminish[ed] the visibility´´ of certain information to Commission staff who were visiting the Qwest CLEC Coordination Center. The former employee states that a Mechanized Loop Test (``MLT´´) was run routinely as part of the provisioning process for hot-cut loops but that this fact was hidden from regulators. At that time, CLECs were requesting pre-order access to Qwest's MLT capabilities in order to pre-qualify loops for DSL service and also were expressing concerns that Qwest had collected MLT information that it had not loaded into its Raw Loop Data Tool, to which CLECs submit pre-qualification queries."

The DOJ stated that "The affidavit suggests that Qwest, in its eagerness to protect its position, sought to limit the information available to regulatory decision makers. Qwest has disputed this account ... The Department recommends that the Commission assure itself that it has full and accurate information with regard to this allegation before proceeding to address the remainder of the issues raised by Qwest's re-filed application." (Footnotes omitted.)

This is the FCC's WC Docket No. 02-314. See also, Qwest release.

FCC Receives Comments Regarding CPNI

10/21. Monday, October 21 was the deadline to submit comments to the FCC regarding its request to refresh its record regarding customer proprietary network information (CPNI) implications when a carrier goes out of business, sells all or part of its customer base, or seeks bankruptcy protection. The FCC also sought comment on the Federal Bureau of Investigation's (FBI) request that the FCC regulate foreign storage of CPNI. Telecom companies submitted comments opposing new regulations.

In contrast, the Electronic Privacy Information Center (EPIC) submitted a comment [7 pages in PDF] urging new regulation. It stated that "Considering the current wave of bankruptcies within the telecommunications industry, EPIC urges the Commission to protect the privacy rights of American consumers by implementing an opt-in approach towards telecommunications carriers' use of CPNI, pursuant to section 222 of the Communications Act of 1996, when a carrier goes out of business, or seeks to sell CPNI as an asset."

The FCC has also received substantially identical letters from individuals stating, in part, that "I strongly urge you and the Commissioners to protect my privacy by requiring phone companies to obtain my approval before they sell my customer records."

The Cellular Telecommunications Industry Association (CTIA) submitted a comment [16 pages in PDF]. It opposed the FBI proposal. It wrote that "Section 222 does not require it and indeed permits transfer of CPNI, in the United States or otherwise, for purposes of providing telecommunications services. The FBI and other law enforcement agencies, contrary to their assertions, will not be hindered in gaining access to such CPNI under existing law."

The CTIA also wrote that it "opposes further CPNI rules and restrictions regarding transfer of CPNI as part of a business transaction such as a merger, sale, acquisition, or in bankruptcy. Such rules are unnecessary because CPNI does not lose its character upon such transfers and the Commission has adequate enforcement powers to protect against improvident disclosures."

Nextel submitted a comment [9 pages in PDF]. "First, regarding the FBI’s suggestion for additional Commission regulation of foreign storage of and access to CPNI, such regulation would not significantly improve law enforcement capabilities. Yet, it would prevent companies from pursuing the most cost effective business solutions to serving their customers. Geographic boundaries have little if any relevance in today’s Internet world. The proposed geographic limitations, while interfering with carriers’ efficient operation, would add little protection against entities in cyberspace seeking unauthorized database access."

Nextel also wrote that "with regard to the CPNI implications when a carrier goes out of business, customers’ privacy interests are fully protected by the existing CPNI rules, which would apply to any acquiring carrier to the same extent as to the exiting carrier. The adoption of additional CPNI rules would harm the public interest by imposing unnecessary regulatory costs on the telecommunications industry, particularly the wireless industry, while it is struggling for survival under precarious economic conditions."

Verizon likewise submitted a comment [7 pages in PDF] opposing both regulation regarding foreign storage and new regulations regarding carriers that are going out of business. It wrote that "It is not necessary for the Commission to adopt any new regulations" regarding CPNI or customer proprietary information.

Verizon also submitted a Petition for Reconsideration of the Third Report and Order [26 pages in PDF] in which it requested that the FCC "reconsider it order to make clear that all state regulations of customer proprietary network information (``CPNI´´) that are inconsistent with the federal CPNI rules, including any state rules that adopt an opt-in requirement, are preempted."

In contrast, the Florida Public Service Commission submitted a comment [5 pages in PDF] in which it argued that the states have a separate authority to regulate CPNI, and that the FCC should not preempt this authority.

See also, USTA comment  [6 pages in PDF] and Qwest comment [40 pages in PDF];

This is the FCC's Third Further Notice of Proposed Rulemaking in CC Docket Nos. 96-115, 96-149 and 00-257. See, notice in the Federal Register, September 20, 2002, Vol. 67, No. 183, at Pages 59236 - 59239.

Wednesday, October 23
12:00 NOON - 1:30 PM. The Heritage Foundation will host a panel discussion titled "Pirates and Posses: The Battle Over Digital Copyright". The speakers will be Bruce Mehlman (Commerce Department's Technology Administration), Gary Shapiro (Consumer Electronics Association), Alec French (Minority Counsel, House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property), James Delong (Competitive Enterprise Institute), and James Gattuso (Heritage). See, notice. Location: 214 Massachusetts Ave NE.
Thursday, October 24
The Senate will meet at 10:30 AM in pro forma session only.

12:15 PM. The FCBA's Cable Practice Committee will hold a brown bag lunch. The speaker will be Susan Eid, Legal Advisor to FCC Chairman Michael Powell. RSVP to Wendy Parish. Location: NCTA, 1724 Mass Ave., NW.

12:15 PM. The FCBA's Young Lawyers Committee will hold a brown bag lunch. The topic will be "The Role of Industry Associations in Advocacy at the FCC and Congress". The speakers will include Mike Altschul (CTIA), Dan Brenner (NCTA), and others. RSVP to rwallach Location: Willkie Farr & Gallagher, 1875 K St., NW, 2nd Floor.

3:00 PM. Jessica Litman (Wayne State University Law School) will present a draft of a paper titled "Digital Networks in the Public Domain". The lecture is sponsored by the George Washington University (GWU) Law School's Dean Dinwooodey Center for Intellectual Property Studies. For more information, contact Prof. Robert Brauneis at 202 994-6138 or by email. Location: GWU Law School, Burns Building, 5th Floor, Faculty Conference Center, 720 20th St., NW.

3:30 PM. Gideon Parchomovsky will give a lecture titled "Toward an Integrated Theory of Intellectual Property". For more information, contact Prof. Julie Cohen at jec@law. Location: Georgetown University Law Center, Faculty Lounge, 600 New Jersey Ave., NW.

6:00 - 8:00 PM. The FCBA's will host an Oktoberfest reception featuring the FCC's Bureau Chiefs.

Friday, October 25
8:00 AM - 3:15 PM. The National Science Foundation's Advisory Committee for Computer and Information Science and Engineering will hold a meeting. For more information, contact Gwen Blount at 703 292-8900. See, notice in Federal Register, October 8, 2002, Vol. 67, No. 195, at Page 62834. Location: Hilton Arlington and Towers, Master Ballroom, 950 N. Stafford Street, Arlington, VA.

10:00 AM - 12:30 PM and 2:00 - 4:00 PM. The FTC and the DOJ's Antitrust Division will hold the final workshops in their joint series titled "Competition and Intellectual Property Law and Policy in the Knowledge Based Economy" on October 25 and 30 and November 6. The October 25 event is titled "Competition, Economic, and Business Perspectives on Patent Quality and Institutional Issues: Competitive Concerns, Prior Art, Post Grant Review, and Litigation". Location: FTC, Room 432, 600 Pennsylvania Ave., NW.

Deadline for the DOJ's Antitrust Division to release its evaluation of BellSouth's Section 271 application with the FCC to provide in region interLATA service in the states of Florida and Tennessee. This is WC Docket No. 02-307.

Monday, October 28
The Senate will meet at 10:30 AM in pro forma session only.
Tuesday, October 29
TIME? The Securities and Exchange Commission (SEC) will hold a full day hearing on issues relating to the structure of the U.S. equity securities markets. The SEC stated in a release that the topics will include "the collection, consolidation and dissemination of market data through intermarket plans; broker dealers' duty of best execution and corresponding marketplace rules relating to intermarket access, trade throughs, and price protection; the role of national securities exchanges, electronic communications networks (ECNs), and alternative trading systems; and the self regulatory system". Location: SEC.

8:45 AM - 3:45 PM. The National Institute of Standards and Technology's (NIST) Advanced Technology Program (ATP) Advisory Committee will hold a partially closed meeting. The agenda includes a review of ATP policy, organization, and budget, and an update from an international community panel on technology programs. Pre-registration is required to attend; contact Carolyn Peters by Thursday, October 24, at carolyn.peters or 301 975-5607. See, notice in Federal Register. Location: NIST, Administration Building, Lecture Room B, Gaithersburg, MD.

12:15 PM. The FCBA's Common Carrier Committee will host a brown bag lunch. The speaker will be Bill Maher, Chief of the FCC's Wireline Competition Bureau. Location: Willkie Farr & Gallagher, 1875 K Street, 2nd Floor, NY conference Room.

Deadline for the DOJ's Antitrust Division to release its evaluation of SBC's Section 271 application with the FCC to provide in region interLATA service in the state of California. This is WC Docket No. 02-306.

BIS Announces ISTAC Meeting

10/22. The Commerce Department's Bureau of Industry and Security (formerly known as the Bureau of Export Administration) announced that its Information Systems Technical Advisory Committee (ISTAC) will meet on November 13 & 14. The ISTAC advises the BIS on technical questions that affect the level of export controls applicable to information systems equipment and technology.

The meeting will be partly open, and partly closed. The agenda for the open portion of the meeting includes a presentation on China's high performance computing market and a presentation on semiconductor manufacturing trends. The agenda for the closed portion of the meeting is secret.

The meeting will be held at 9:00 AM each day in Room 3884, Hoover Building, 14th Street between Pennsylvania and Constitution Avenues, NW. See, notice in the Federal Register, October 22, 2002, Vol. 67, No. 204, at Page 64868.

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