Tech Law Journal Daily E-Mail Alert
November 4, 2002, 9:00 AM ET, Alert No. 541.
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District Court Approves Microsoft Settlement

11/1. The U.S. District Court (DC) released its rulings on the proposed settlement in the Microsoft cases, and the non-settling states requests for further remedies. The Court largely approved the proposed settlement, and rejected the requests for further remedies. The Court also issued a 22 page Executive Summary [PDF] of its rulings.

The District Court, Judge Colleen Kotelly presiding, issued its Order [2 pages PDF] and Memorandum Opinion [97 pages PDF] conditionally approving the proposed settlement reached by the Department of Justice (DOJ) and Microsoft. This is D.C. No. 98-1232. See also, Order [2 pages PDF] and Memorandum Opinion [101 PDF] approving the settlement as to the nine settling states. This is D.C. No. 98-1233. The two cases were consolidated shortly after filing in 1998.

Following trial, judgment, and partial reversal by the U.S. Court of Appeals (DCCir), the parties reached a settlement last November. They submitted a revised settlement agreement in February of this year. See, Second Revised Proposed Final Judgment, filed on February 27, 2002.

The Court wrote in its Order that pursuant to the Tunney Act, "with the exception of § VII of the proposed judgment ("SRPFJ"), entry of the SRPFJ as the final judgment is this action is in the public interest, as set forth in the accompanying Memorandum Opinion ..." The Court added that "in order to obtain final approval of the SRPFJ, Plaintiff and Microsoft shall submit to the Court a proposed amendment to § VII ... not later than November 8, 2002"

The Memorandum Opinion provides that the Court requires further amendment of the settlement regarding "retention of the Court's jurisdiction". § VII currently provides for retention of jurisdiction. The Court now requires that this be amended to give the Court authority "to take action sua sponte in conjunction with the enforcement of the decree". Sua sponte is Latin for "of one's self". In this context, it means that the Court can act on its own motion, without being prompted or requested by the parties.

The Memorandum Opinion continues that "The Court considers it imperative, in this unusually complex case, for the Court's retention of jurisdiction to be clearly articulated and broadly drawn. Such clarity and broad reservation of powers are necessary to ensure that the Court may require action of the parties when it deems appropriate and need not wait for the partes to file a motion before action is taken."

This would include "the power to sua sponte issue orders or directions regarding to the final judgment, including, but not limited to orders regarding the construction or carrying out of the final judgment, the enforcement of compliance therewith, and the punishment of any violation thereof."

The Court wrote, in conclusion, that "While the proposed final judgment, in general, is appropriately crafted to address the anticompetitive conduct, as well as conduct related thereto, the Court regards the document as laudable not for these traits alone, but for the clear, consistent, and coherent manner in which it accomplishes its task. Far from an amalgam of scattered rules and regulations pieced and patched together to restrict Microsoft's anticompetitive business conduct, the proposed final judgment adopts a clear and consistent philosophy such that the provisions form a tightly woven fabric. The proposed final judgment takes account of the theory of liability advanced by Plaintiffs, the actual liability imposed by the appellate court, the concerns of the Plaintiffs with regard to future technologies, and the relevant policy considerations. The product, although not precisely the judgment the Court would have crafted, with the exception of the reservation of jurisdiction, does not stray from the realm of the public interest."

The Court also released its Final Judgment [14 PDF] and Memorandum Opinion [344 PDF] regarding the requests for further remedies.

Attorney General John Ashcroft said in a release that the DOJ "is pleased with the court's decision approving the Department's settlement with Microsoft. That decision confirms that the Final Judgment furthers the public interest by fully and effectively addressing Microsoft's unlawful conduct and restoring the competitive conditions in the computer software industry."

Ashcroft continued that "The court's decision is a major victory for consumers and businesses who can immediately take advantage of the Final Judgment's provisions. The Final Judgment provides certainty and stability to the vital computer sector of our economy and creates an environment where companies will be encouraged to develop and deploy new middleware technologies with full confidence that their efforts will not be impeded by anticompetitive practices. In fact, Microsoft has already modified its licensing practices to permit computer manufacturers to substitute competing middleware products for those provided as part of its operating system, modified its new XP operating system, and begun to release important interfaces and protocols that will enable third-parties to develop products and services that will interoperate with Windows."

He added that the DOJ "is strongly committed to ensuring that Microsoft complies with the Final Judgment and will continue to closely monitor Microsoft's implementation of its terms."

Bill Gates spoke at a news conference on November 1. He stated that "We believe that today's ruling, largely affirming the settlement we reached with the Department of Justice and the nine states represents a fair resolution of this case. It's a major milestone. We thank the mediator, the federal government and the nine states that helped forge the settlement, and we appreciate the court's extensive work. This settlement puts new responsibilities on Microsoft, and we accept them. We recognize that we will be closely scrutinized by the government and our competitors. We will devote the time, energy and resources needed to meet these new rules. I am personally committed to full compliance." See, transcript.

Reactions to the Microsoft Rulings
11/1. Various entities and individuals offered their praise or criticism for the District Court's rulings in the Microsoft antitrust cases. The following is a sampling.

Jeffrey Eisenach and Thomas Lenard of the Progress & Freedom Foundation stated in a release that "Today’s decision threatens to shatter 20 years of broad consensus among antitrust scholars and jurists.  Until today, it was generally agreed that companies that possess market power were prohibited from engaging in a limited and well defined set of behaviors that harm consumers, slow innovation and restrict competition. Further, when such behaviors occurred, it was understood that the antitrust authorities and the courts would impose remedies designed to (a) restore competition, (b) deprive the violator of ill-gotten gains and (c) prevent similar conduct going forward. Indeed, these are precisely the principles embodied in the Appeals Court decision that set the stage, and which should have formed the basis for, today’s ruling."

Eisenach and Lenard continued that "In adopting the Justice Department’s proposed settlement, Judge Kollar Kotelly’s decision not only flaunts the guidance offered by the Court of Appeals, but eviscerates the modern antitrust consensus. In so doing, it signals to firms in every industry that it is permissible to engage in heretofore illegal conduct -- or, at the very least, that the gains from doing so are likely to exceed the costs, even if you get caught."

Jonathan Zuck of the Association for Competitive Technology (ACT) stated in a release that "The Department of Justice and these state attorneys general have fundamentally changed the way Microsoft has to do business, and consumers and the industry have already started to see the benefits. For the past year, Microsoft has been living up to this tough but fair settlement, which goes far beyond the Court of Appeals ruling. This case has hung like a dark cloud over the industry for four years: slowing investment, innovation and economic growth. We, like the majority of the industry, hope it is finally over."

Ken Wasch of the Software & Information Industry Association (SIIA) stated in a release that the SIIA " is disappointed in today's decisions by Judge Kollar Kotelly. We believe that she sorely overestimates the value of the Proposed Settlement. In our opinion, it will prove an ineffective remedy to Microsoft's anti-trust violations. Her ruling gives consumers and competitors little assurance that Microsoft will refrain from using its monopoly power to gain unfair market advantages, which ultimately hurt all consumers."

Wasch added that "The nine non-settling states should be thanked for their vision and foresight in declining to sign onto the weak settlement entered into a year ago by the U.S. Department of Justice, Microsoft and nine settling states. We hope that the non-settling states will consider an Appeal ..."

The Computer and Communications Industry Association (CCIA) issued a release in which it stated that "The decision by Judge Kollar Kotelly to not overturn the flimsy and inadequate remedy, which a newly elected and politically beholden Justice Department reached with Microsoft, is very disappointing and yet not totally surprising."

The CCIA continued that "Once the Justice Department, which started out as a diligent prosecutor of a lawbreaking monopolist, switched sides and became the virtual ally of the convicted monopolist, the dynamics of the case were transformed. The Judge, who missed hearing the trial evidence firsthand, decided to give great deference to the judgment of the Justice Department under the Tunney Act. That resulted in bestowing unwarranted credibility upon both Justice, and by association, Microsoft. The remedy therefore assumes a sincere change in behavior and attitude by Microsoft, but their actual current practices reveal a continuation of and expansion of monopoly abuse."

IIPA Submits Special 301 Out of Cycle Recommendations to USTR
10/30. The International Intellectual Property Association (IIPA) filed its recommendations [in PDF] with the Office of the U.S. Trade Representative (USTR) regarding its Special 301 out of cycle reviews for Indonesia, Israel, Mexico, Philippines Poland, and Thailand and on the U.S.'s  Memorandum of Understanding on IPR matters with Paraguay (MOU).

Section 301 is the statutory means by which the United States asserts its international trade rights, including its rights under WTO Agreements. In particular, under the "Special 301" provisions of the Trade Act of 1974, the U.S. Trade Representative identifies trading partners that deny adequate and effective protection of intellectual property or deny fair and equitable market access to U.S. artists and industries that rely upon intellectual property protection.

IIPA recommended that Israel, Indonesia and the Philippines be kept on the Priority Watch List at this time.

It recommended that Mexico be placed on the Special 301 Watch List. The IIPA wrote that "the piracy situation in Mexico has not improved and the government clearly needs to improve its performance in order to provide the kind of effective enforcement required under its international obligations."

The IIPA also recommended that Poland and Thailand be elevated to the Special 301 Priority Watch List.

Finally, the IIPA stated that the MOU with Paraguay should "remain in effect", but that, "Unfortunately, key elements of the 1998 MOU have not yet been effectively implemented. As a result, piracy levels in Paraguay remain high, and estimated losses due to copyright piracy rose to $262 million in 2001."

District Court Enjoins Aimster
10/31. The U.S. District Court (NDIll) issued its Preliminary Injunction Order [4 pages in PDF] in the multidistrict litigation titled "In Re: Aimster Copyright Litigation".

Cary Sherman, President of the Recording Industry Association of America (RIAA), stated in a release that "As Judge Aspen highlighted in his order, the technology to filter copyrighted works exists and should be used. Other unauthorized peer to peer networks should take note of this decision.  Those other companies involved in illegal trafficking of copyrighted works should also take advantage of these technologies and prevent illegal trading of copyrighted works on their systems."

The Order provides that "Aimster is preliminarily enjoined from directly, indirectly, contributorily, or vicariously infringing in any manner any and all sound recordings and musical compositions (or portions thereof) protected by federal or state law, whether now in existence or later created, in which Plaintiffs (and any parents, subsidiaries, or affiliates or Plaintiffs) own or control and exclusive right to reproduce, distribute, or transmit ("Plaintiffs' Copyrighted Works").

The Order continues that "Aimster shall immediately disable and prevent any and all access by any person or entity ("User") to any of Plaintiffs' Copyrighted Works available on, over, through, or via any website, server, hardware, software, or any other system or service owned or controlled by Aimster  (the "Aimster System and Service"), including, if necessary, preventing any and all access to the Aimster System and Service in its entirety, until such time that Aimster implements measures that prevent any and all copying, downloading, distributing, uploading, linking to, or transmitting of Plaintiff's Copyrighted Works on, over, through, or via the Aimster System and Service."

The Order further requires that "Upon implementing measures to ensure that the Aimster System and Service prevents any and all copying, downloading, distributing, uploading, linking to, or transmitting of Plaintiffs' Copyrighted Works, Aimster may provide public access to the Aimster System and Service except that Aimster shall be enjoined from the following: (a) copying, downloading, distributing, uploading, linking to, or transmitting Plaintiffs' Copyrighted Works; (b) enabling, facilitating, permitting, assisting, soliciting, or encouraging any User to make Plaintiffs' Copyrighted Works available for copying, downloading, distributing, uploading, linking to, or transmitting; (c) enabling, facilitating, permitting, assisting, soliciting, or encouraging any User to copy, download, distribute, upload, link to, or transmit, Plaintiffs' Copyrighted Works."

Finally, the Order mandates that "Aimster shall affirmatively monitor and patrol for, and preclude access to, Plaintiffs' Copyrighted Words (sic) on, over, through, or via the Aimster System and Service, including, without limitations, by employing such technological tools and measures that are reasonably available to carry out such obligations."

Aimster is now also known as Madster.

President Signs Bill Containing Tech Related Provisions
11/2. President Bush signed HR 2215, the 21st Century Department of Justice Appropriations Authorization Act. See, White House release.

This massive bill contains far more than just an authorization for appropriations of the Department of Justice. It contains many tech related provisions.

The bill amends the Copyright Act to facilitate distance learning. This is also known as the TEACH Act. It amends the Patent Act regarding inter partes reexamination, and other matters. It also includes the Madrid Protocol Implementation Act.

The bill also requires the DOJ to annually report certain information to the Congress regarding use of the Carnivore e-mail surveillance system. It also changes the procedure for serving certain search warrants upon ISPs. It also modifies the process for extending H1B visas for high tech workers.

See, stories titled "DOJ Authorization Bill Changes Procedure for Service of Search Warrants on ISPs", "DOJ Authorization Bill Includes Carnivore Reporting Provisions", and "DOJ Authorization Bill Modifies Extension Procedure for H1B Visas" in TLJ Daily E-Mail Alert No. 519, September 30, 2002.

Monday, November 4
The Senate will meet at 10:30 AM in pro forma session only.

The Supreme Court will return from its recess, which it began on October 22.

8:30 - 11:00 AM. The Alliance for Public Technology (APT) & the High Tech Broadband Coalition (HTBC) will host an event titled "From Debate to Deployment: Demonstrating the Power of Broadband." FCC Commissioner Michael Copps will deliver the opening keynote address. For more information, contact Matt Bennett at 202 263-2972 or Location: The Hotel Washington, 515 15th Street NW.

12:15 PM. The FCBA's Wireless Telecommunications Committee and International Practice Committee will host a brown bag lunch. The title is "How Should MSS Spectrum be Handled?" (MSS is mobile satellite service.) The speakers will be Diane Cornell (CTIA) and Gerry Salemme (ICO). For more information, call Laurie Sherman at 703 216-3150 or David Don at 202 303-1133. No RSVP required. Location: Wiley Rein & Fielding, 10th Floor, 1750 K Street, NW.

Deadline to submit comments to the NTIA in response to its request for comments on two of the nine exceptions to the Electronic Signatures in Global and National Commerce (E-SIGN) Act. The E-SIGN Act provides for the acceptance of electronic signatures in interstate commerce, with certain enumerated exceptions. The two categories of exempt documents that are the subject of this request for comments are court records and hazardous materials notices. The Act tasks the NTIA with studying these exemptions, and providing reports to Congress. See also, NTIA release, notice in Federal Register, regarding court records, and notice in Federal Register, regarding hazardous materials notices.

Deadline to submit reply comments to the FCC regarding 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. See, FCC notice [PDF].

Tuesday, November 5
Election Day.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in 21st Century Telesis v. FCC, No. 01-1435. Judges Randolph, Rogers and Williams will preside. Location: Courtroom 20, 333 Constitution Ave., NW.

Deadline to submit applications to the Agriculture Department's Rural Utilities Service for grants under its pilot program for the provision of broadband transmission service in rural America for fiscal year 2002. See, notice in the Federal Register.

Wednesday, November 6
9:00 AM. FTC Commissioner Orson Swindle will give a speech titled "Promoting a Culture of Security" at a Cross Sectoral Industry Association meeting regarding the role of business in promoting a culture of security. Location: 2000 Pennsylvania Avenue, NW, Suite 5500.

9:30 - 11:30 AM 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 November 6 event is titled "Antitrust Law and Patent Landscapes". The 9:30 AM program is titled "Standard Setting Organizations: Evaluating the Anticompetitive Risks Of Negotiating IP Licensing Terms and Conditions Before A Standard Is Set". The 2:00 PM program is titled "Relationships Among Competitors and Incentives to Compete: Cross Licensing of Patent Portfolios, Grantbacks, Reach Through Royalties, and Non- Assertion Clauses". Location: FTC Room 432, 600 Pennsylvania Ave., NW.

10:00 - 11:30 AM. Media Security and Reliability Council (MSRC) will hold a meeting. FCC's Chairman Michael Powell will participate. The MSRC is a federal advisory committee formed after the terrorist attacks of September 11, 2001, to study ways to secure and maintain broadcast and multichannel video programming distribution (MVPD) in the face of terrorist attacks, natural disasters and other threats. See, FCC release [PDF]. Location: FCC, Commission Meeting Room (TW-C305), 445 12th Street, SW.

12:15 PM. The FCBA's Global Telecommunications Development Committee and International Practice Committee will host an event titled "What Happened in Marrakesh? A Debriefing on the 2002 ITU Plenipot". The speakers will be David Gross, Coordinator of International Communications and Information Policy at the State Department. RSVP to jhindin Location: Wiley Rein & Fielding, 1750 K St, 10th Floor.

Thursday, November 7
The Senate will meet at 10:30 AM in pro forma session only.

Day one of a two day conference hosted by the American Bar Association's Section of Antitrust Law. See, program. The basic price to attend is $875. Location: National Press Club, 529 14th St NW.

9:30 AM. The FCC will hold a meeting. The agenda includes a number of spectrum related items. The Spectrum Policy Task Force will report on its findings and recommendations. The FCC's International Bureau will report on the outcome of the International Telecommunication Union Plenipotentiary Conference. The FCC will consider a Second Report and Order that would allocate spectrum in the 1.7 and 2.1 GHz bands that can be used to provide advanced wireless services (AWS), such as 3G or IMT-2000. The FCC will consider a Notice of Proposed Rulemaking (NPRM) concerning service rules for (AWS) in the 1.7 GHz and 2.1 GHz bands. And, the FCC will consider a NPRM and Order concerning allocation and service rules for the Dedicated Short Range Communication Services in the 5.850-5.925 GHz band. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).

RESCHEDULED FOR DECEMBER 2. 10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Altiris v. Symantec, No. 02-1137. This is a patent infringement case involving technology for remotely controlling the boot process of a computer. Location: 717 Madison Place, NW.

Friday, November 8
The Senate will meet at 10:30 AM in pro forma session only.

Day two of a two day conference hosted by the American Bar Association's Section of Antitrust Law. See, program. The basic price to attend is $875. Location: National Press Club, 529 14th St NW.

8:30 - 10:00 AM. The American Enterprise Institute (AEI) will host an event titled "Post Election Review of Telecommunications Policy". The speakers will be former FCC Commissioner Harold Furchtgott Roth and Greg Sidak. RSVP to Veronique Rodman at 202 862-4871 or vrodman Location: AEI, 11th Floor, Conference Room, 1150 17th Street, NW.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in AT&T v. FCC, No. 01-1511. Judges Ginsburg, Edwards and Garland will preside. Location: 333 Constitution Ave., NW.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Cygnus Telecommunications Technology v., No. 02-1325. This is a consolidated patent case appealed from the U.S. District Court (NDCal). Location: 717 Madison Place, NW.

EPIC Report Criticizes P3P
11/1. The Electronic Privacy Information Center (EPIC) released a report [8 pages in PDF] titled "Why is P3P Not a PET?" It argues that the World Wide Web Consortium's (W3C) Platform for Privacy Preferences Project (P3P) is not a privacy enhancing technology (PET).

The EPIC report defines PETs as "protocols, standards, and tools that directly assist in protecting privacy, minimizing the collection of personally identifiable information, and when possible, eliminating the collection of personally identifiable information." (Footnotes omitted.)

It argues that "P3P fails as a privacy enhancing mechanism because P3P does not aim at protecting personal identity, does not aim at minimizing the collection of personally identifiable information, and is on a completely different trajectory than the one prescribed by the definition of PETs. P3P provides no genuine privacy protection: instead of being used to minimize the collection of personally identifiable information, P3P can easily be used to obtain data from consumers by facilitating the collection of personal information through the guise of notice and choice." (Footnotes omitted.)

The report was written by Ruchika Agrawal for the conference titled "W3C Workshop on the Future of P3P", to be held on November 12-13 at AOL in Dulles, Virginia.

People and Appointments
11/1. Jana Monroe was named Assistant Director of the Federal Bureau of Investigation (FBI) for the Cyber Division. She was previously Special Agent in Charge of the Los Angeles field office. She replaces Larry Mefford, who was named Assistant Director of the FBI's for the Counterterrorism Division. Mefford, in turn, replaces Pasquale D'Amuro, who was named Executive Assistant Director for Counterterrorism / Counterintelligence. All three are career FBI officials. See, FBI release.
More News
11/1. The U.S. Patent and Trademark Office (USPTO) announced that it has implemented an electronic bulk mailing system in cooperation with the U.S. Postal Service (USPS). Under this new Trademark Postal System the USPTO will send information to the USPS via the Internet. The USPS will then print, stamp and mail postcards containing the information.

11/1. Jonathan Rubin of the American Antitrust Institute published a paper titled "Why the EchoStar Hughes Merger Can't be Fixed".

Two Columns?
This edition of the TLJ Daily E-Mail Alert is laid out in two columns, rather than the usual three. TLJ requests comments from readers regarding whether two or three columns is a better format.
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