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December 4, 2002, 9:00 AM ET, Alert No. 560.
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Adelstein Sworn In as FCC Commissioner
12/3. Jonathan Adelstein was sworn in as a Commissioner of the Federal Communications Commission (FCC) with a term that expires on June 30, 2003.

Jonathan AdelsteinAdelstein (at right) worked for 15 years in various staff positions in the U.S. Senate, with the last seven as an aide to Senate Majority Leader Tom Daschle (D-SD). His nomination had been held up in the Senate by Senate Minority Leader Trent Lott (R-MS) because of Sen. Daschle's role in blocking President Bush's judicial nominees, including a Mississippian supported by Sen. Lott.

Adelstein said in a confirmation statement that "The issues before this agency touch every American in the most basic ways -- their phone services, television, radio, cable and Internet access." He added that "I will work to ensure that Americans have the best possible communications services by enhancing competition, promoting universal access to all communications services, and efficiently managing the public spectrum."

He also announced appointments to his personal staff. Lisa Zaina will be his Senior Legal Advisor and wireline competition advisor. He also named three interim legal advisors: Eric Einhorn (wireline competition), Barry Ohlson (spectrum and international), and Sarah Whitesell (media). Also, Katherine Lapin will be his Confidential Assistant. Kevin Venters will be a Staff Assistant. See, release [MS Word] regarding staff.

Zaina is currently Vice President for Industry and Regulatory Affairs and Corporate Secretary of Shenandoah Telecommunications Company (Shentel) in Edinburg, Virginia. Before that, she worked at Wallman Strategic Consulting. And before that, she worked at the FCC, as Senior Counsel and Deputy Bureau Chief of the Common Carrier Bureau.

Zaina has also worked for the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), and the National Association of Regulatory Utility Commissioners (NARUC).

Einhorn is currently Acting Chief of the Telecommunications Access Policy Division of the Wireline Competition Bureau. Ohlson is currently Chief of the Policy Division of the Wireless Telecommunications Bureau. Whitesell is currently Associate Chief of the Media Bureau. She was also a legal advisor to former Commissioner Gloria Tristani, who just lost a race for the Senate.

WalMart Obtains DMCA Subpoena to Obtain Identity of Poster of Advertised Price Data
12/3. Wal-Mart obtained a subpoena from the U.S. District Court (NDIll) on November 27 directing FatWallet to disclose the identity of an anonymous user who posted Wal-Mart's Thanksgiving advertising circular. Wal-Mart is a retailer. FatWallet operates a web site that, among other things, enables users to post and discuss information about prices and products of consumer goods.

The subpoena was issued by a clerk of the U.S. District Court (NDIll). It is directed to Storm Concepts LLC d/b/a It states that "YOU ARE COMMANDED to produce and permit inspection and copying of the following documents or objects at the place, date, and time specified below (list documents or objects): Information sufficient to identify the alleged infringer who posted the material described in the notification attached hereto, including for example that person's name, address, telephone number, and email address."

The subpoena was obtained on November 27, 2002, by Jeffrey Gitchel, an attorney in the Pittsburgh office of the law firm of Kirkpatrick & Lockhart. See, eight page PDF file in FatWallet web site containing subpoena and legal correspondence. (Wal-Mart did not returned phone calls from TLJ. Its counsel declined to answer questions.)

A demand letter from Wal-Mart's attorney referenced "the illegal posting of our Thanksgiving Circular on the website" and alleged that "the posting of the Circular violates Wal-Mart's intellectual property rights in the Circular".

FatWallet is represented by Megan Gray, a Washington DC based attorney, and Dierdre Mulligan of the Samuelson Law, Technology & Public Policy Clinic at Boalt Hall, at U.C. Berkeley. They assert that this subpoena constitutes "blatant misuse of the Digital Millennium Copyright Act". They intend to quash the subpoena, if Wal-Mart does not withdraw its demand. See, release.

Gray also prepared a brief for amicus curiae privacy groups in RIAA v. Verizon Internet Services, a case pending in the U.S. District Court (DC) involving the subpoena provisions of DMCA. That brief also argued, among other things, misuse of the DMCA. It stated that "the statute never intended to reach a situation in which the allegedly infringing material resides on the user’s own computer rather than a computer owned or controlled by the ISP". See, TLJ story titled "Verizon and Privacy Groups Oppose RIAA Subpoena", August 30, 2002.

In the present matter, if a lawsuit is filed, FatWallet will likely assert that there is misuse of the DMCA because there is no copyrightable subject matter involved in price advertisements.

However, in addition, Gray told TLJ that FatWallet would likely also assert that the subpoena provision of the DMCA is unconstitutional, that the issuance of the subpoena violates anonymity rights, and that First Amendment free speech rights are implicated.

The Statute. The DMCA was passed in 1998 at the end of the 105th Congress. It was HR 2281. It contains many provisions, including sections pertaining to circumvention of copyright protection systems, implementation of WIPO treaties, and protection for vessel hull designs. However, the language at issue in this matter is the section pertaining to the limitation of liability of interactive service providers for copyrighted material placed on its system by users.

It is codified at Section 512 of Title 17. It reflects an attempt at compromise between the goals of protecting copyrights in digital content in movies, music, books, and other media, and promoting electronic commerce. It is an ISP immunity provision. See, for example, House Report 105-551. However, its details have given rise to disputes such as those in the FatWallet and Verizon matters.

Subsection 512(c)(1) provides, in part, that "A service provider shall not be liable for monetary relief ... for injunctive or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider ... (C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity."

In the FatWallet matter, FatWallet did take down the alleged infringing material.

Subsection 512(c)(3) then provides, in part, that "To be effective under this subsection, a notification of claimed infringement must be a written communication provided to the designated agent or a service provider that includes ... Identification of the copyrighted work claimed to have been infringed ..."

Subsection 512(h) then provides, in part, that "A copyright owner or a person authorized to act on the owner's behalf may request the clerk of any United States district court to issue a subpoena to a service provider for identification of an alleged infringer in accordance with this subsection." The requester need only provide a copy of the 512(c)(3) notice, a proposed subpoena, and a sworn declaration.

Subsection 512(h)(5) provides, in part, that "Upon receipt of the issued subpoena, ... the service provider shall expeditiously disclose to the copyright owner or person authorized by the copyright owner the information required by the subpoena, notwithstanding any other provision of law and regardless of whether the service provider responds to the notification."

House Report 105-551 stated that "The Committee intends that such orders be expeditiously issued if the notification meets the provisions of new subsection (c)(3)(A) and the declaration is properly executed. The issuing of the order should be a ministerial function performed quickly for this provision to have its intended effect. After receiving the order, the service provider shall expeditiously disclose to the copyright owner or its agent the information required by the order to the extent that the information is available to the service provider ..."

Copyrightable Subject Matter. A key issue in this dispute is whether the item posted to the FatWallet web site is protected under copyright law. It is a published advertisement listing prices at which items are offered for sale. By posting such information of retailers, the anonymous poster enabled FatWallet users to compare price offers of various retailers. Wal-Mart has asserted that its ad is subject to copyright protection.

FatWallet is likely to assert that it constitutes facts, rather than an original work of authorship, and is therefore not copyrightable under the Supreme Court's opinion in Feist Publications v. Rural Telephone Service, 499 U.S. 340 (1991). In that case the Court held that a collection of phone numbers given to the publisher was not copyrightable subject matter, because it involved no originality.

In contrast, the U.S. Court of Appeals (9thCir) subsequently held, in its opinion in CDN Inc. v. Kapes, 197 F.3d 1256 (1999), that a collection of prices can constitute copyrightable subject matter. It distinguished Feist on the basis that in that case the phone numbers were given to the phone company, while in the CDN case, CDN created the data following a process of analysis of information from other publications, actual trades, and other sources. Its publication also involved arrangement, selection, graphics and organization. See also, opinion of the U.S. Court of Appeals (2ndCir) in CCC Information Services v. Maclean Hunter Market Reports, 44 F.3d 61 (1994), which is also known as the "red book" case.

In CDN and the red book case the publishers received copyright protection for price information. However, they collected and analyzed transaction data to estimate actual market prices. Moreover, they were in the business of selling these price publications. In contrast, Wal-Mart has not evaluated and estimated market prices. Rather, it has published its own price offers. The function of collecting and analyzing various data is being performed by FatWallet and its anonymous users.

Also, Wal-Mart's likely purpose in this matter has not been to prevent dissemination of its price offers. It publicly advertised them. Rather, its purpose is to prevent consumers from efficiently comparing its prices with those of its competitors. That is, its purpose in asserting copyright may be to prevent the efficient operation of the market. One can imagine what would be the outcome, if a complaint were filed, a final judgment were reached, an appeal were made to the Seventh Circuit, and an opinion were written by the Seventh Circuit's Judge Posner, the dean of the law and economics school of thought.

However, the likelihood that this dispute will proceed may be limited. There is less at stake in this matter than in some other DMCA subpoena disputes. FatWallet has an interest in continuing to have users post and discuss prices. However, there may be less at stake for its users. In some other recent anonymous posting matters, the posters have faced the possibility of suffering consequences unrelated to copyright infringement claims. Some face defamation litigation. In the FatWallet case the poster merely republished Wal-Mart's prices. Some face loss of employment for posting information critical of their employer.

In the present matter, perhaps the anonymous poster faces the possibility of being publicly exposed as a Wal-Mart shopper.

SEC Fines Broker Dealers $8,250,000 for Failure to Save E-Mail
12/3. The Securities and Exchange Commission (SEC) initiated, and settled, an administrative proceeding against Deutsche Bank Securities, Goldman Sachs, Morgan Stanley, Salomon Smith Barney, and U.S. Bancorp Piper Jaffray in which it alleged violation of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder, for failure to maintain adequate systems or procedures for the preservation of electronic mail communications.

The SEC's Order instituting the proceeding alleged that the five companies' personnel failed "to preserve copies of electronic mail communications for three years, and/or maintain electronic mail communications for the first two years in an accessible place". It also noted that while companies kept back up tapes, these were for disaster recovery purposes, and were overwritten "often a year or less after back-up occurred".

The five broker dealers settled the matter, without admitting wrongdoing. Each agreed to pay a $1,650,000 fine. Each was censured. Each was also ordered to cease and desist from further violation of Section 17(a). See also, SEC release.

SEC Files Complaint Against Former FVC Executives
11/26. The Securities and Exchange Commission (SEC) filed a civil complaint in U.S. District Court (NDCal) against Ralph Ungermann, Alan McMillan, and James Mitchell, all former officers of First Virtual Communications (FVC), alleging violation of federal securities laws in connection with the overstatement of revenues and earnings of FVC, and subsequent sale of shares of FVC.

FVC is a Santa Clara, California company that makes video and web conferencing products. The complaint alleged that all three violated the antifraud provision of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder, and lying to auditors in violation of Rule 13b2-2 under the Exchange Act. The complaint further alleged that Ungermann and Mitchell violated the record keeping provisions of Section 13(b)(2)(A) of the Exchange Act and Rule 13b2-1 thereunder.

The three also settled with the SEC, without admitting wrongdoing. They agreed to pay $1.3 Million in illegal trading profits, interest, and civil money penalties. This is D.C. No. C 02-05613 RS. See, SEC release.

Wednesday, December 4
9:00 AM - 5:00 PM. Day two of a three day meeting of the National Institute of Standards and Technology's (NIST) Computer System Security and Privacy Advisory Board (CCSPAB). The CCSPAB advises the Secretary of Commerce and the Director of NIST on security and privacy issues pertaining to federal computer systems. The agenda includes (1) GSA update on e-authentication, (2) updates on recent computer security legislation, (3) update by OMB on privacy and security issues, (4) briefing on OMB enterprise architecture effort, (5) briefing on NIST certification and authentication effort. See, notice in Federal Register. Location: North Gaithersburg Hilton Hotel, 620 Perry Parkway, Gaithersburg, MD.

CANCELLED? 10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Bell Communications Research v. Fore Systems, No. 02-1083. This is appeal from the U.S. District Court (DDel) in a patent infringement case involving ATM/SONET technology. Bell Communications Research (aka Bellcore) filed a complaint against Fore Systems (aka Marconi Systems). Fore's counsel is Fish & Richardson. Location: Courtroom 203, 717 Madison Place, NW.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Storage Technology v. Cisco, No. 02-1232. This is a patent infringement case involving communication networks. Location: Courtroom 203, 717 Madison Place, NW.

10:00 AM - 3:00 PM. The FCC's Technological Advisory Council will meet. See, notice in the Federal Register. For more information, contact Jeffery Goldthorp at 202 418-1096 or Location: FCC, Room TW-C305, 445 12th St. SW.

12:00 NOON - 2:00 PM. The DC Bar Association will host a panel discussion titled "Victor/Victoria: The ``Secret´´ to Proving Dilution". The panel will discuss the case Moseley v. V Secret Catalogue (which is pending before the Supreme Court) and the Federal Trademark Dilution Act. The speakers will be John Whealan (amicus USPTO), Jonathan Hudis (Oblon Spivak, for amicus AIPLA), and Jeremy Maltby (O’Melveny & Myers, for Victoria's Secret). The price to attend is $30 for IP Section members, $35 for other DC Bar members, $40 for the public, and free for people with a GWU law school ID. For more information, contact Maureen Britti at or 202-626-3463, or Robert Brauneis at Location: George Washington University Law School, Moot Court Room, 2000 H Street, NW.

12:00 NOON. The U.S. District Court (DC) will hold a status hearing in McConnell v. FEC and related cases. Judge Kotelly will preside. Location: Courtroom 11, 333 Constitution Ave., NW.

Thursday, December 5
9:00 AM - 3:30 PM. Day two of a three day meeting of the National Institute of Standards and Technology's (NIST) Computer System Security and Privacy Advisory Board (CCSPAB). The CCSPAB advises the Secretary of Commerce and the Director of NIST on security and privacy issues pertaining to federal computer systems. The agenda includes (1) GSA update on e-authentication, (2) updates on recent computer security legislation, (3) update by OMB on privacy and security issues, (4) briefing on OMB enterprise architecture effort, (5) briefing on NIST certification and authentication effort. See, notice in Federal Register. Location: North Gaithersburg Hilton Hotel, 620 Perry Parkway, Gaithersburg, MD.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Sprint v. FCC, No. 01-1266. Judges Ginsburg, Rogers and Tatel will preside. Location: 333 Constitution Ave., NW.

9:30 - 11:30 AM. The FCC's WRC-03 Advisory Committee's Informal Working Group 7: Regulatory Issues and Future Agendas will meet. Location: Boeing Company, Arlington, VA.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Resonate v. Alteon Websytems, No. 02-1201. Resonate filed its complaint in U.S. District Court (NDCal) against Alteon Websystems, which has since been acquired by Nortel Networks, alleging infringement of U.S. Patent No. 5,774,660, titled "World Wide Web Server With Delayed Resource Binding For Resource Based Load Balancing On A Distributed Resource Multi Node Network". The District Court issued a a claim construction ruling adverse to Resonate. Location: Courtroom 402, 717 Madison Place, NW.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Intel v. Via Technologies, No. 02-1212. Location: Courtroom 201, 717 Madison Place, NW.

10:00 AM. The Federal Election Commission (FEC) will meet. The agenda includes consideration of the final rules implementing the Bipartisan Campaign Reform Act of 2002 (BCRA) regarding coordinated and independent expenditures. Location: FEC, 9th floor hearing room, 999 E St. NW.

10:15 AM - 3:30 PM. The American Enterprise Institute (AEI) will host a panel discussion titled "The Use of Safeguards as Trade Policy Instruments: Where Have We Been, Where Are We Going?". See, notice and registration page. Location: AEI, 12th floor, 1150 17th St., NW.

2:30 - 5:15 PM. The Department of Commerce's (DOC) Central & East European Business Information Center (CEEBIC) will host a briefing and reception. The speakers will be visiting regulators and officials. For more information, contact Jennifer Gothard (CEEBIC) at 202 482-2645 or

Friday, December 6
10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Apex Computer v. Raritan, No. 02-1303. This is an appeal from the U.S. District Court (SDNY) in a patent infringement case. Location: Courtroom 201, 717 Madison Place, NW.

10:00 AM - 1:00 PM. The FCC's Network Reliability and Interoperability Council (NRIC) will hold a meeting. For more information, contact Jeffery Goldthorp at 202 418-1096 or The meeting, which will be chaired by FCC Chairman Michael Powell and NRIC Chairman Richard Notebaert, will address "recommendations to protect the nation's communications infrastructure -- both physical and cyber -- against attack". See, FCC notice [MS Word]. See also, notice in the Federal Register. Location: FCC, Room TW-C305, 445 12th St. SW.

? 12:15 - 1:30 PM. The FCBA's Wireless Telecommunications Practice Committee will host a luncheon titled "WiFi -- What's all the Buzz About?" The speakers will be Julie Knapp (Deputy Chief of the FCC's Office of Engineering & Technology), Peter Pitsch (Intel), and Rebecca Arbogast (Legg Mason). The price to attends is $15. RSVP to Location: Sidley Austin Brown & Wood, 1501 K St. NW, 6th Floor, Conference Room 6E.

12:30 PM. Rep. Richard Armey (R-TX), the outgoing House Majority Leader, will speak at a luncheon. Location: National Press Club, 529 14th St. NW, 13th Floor.

2:00 - 3:00 PM. Bill Whyman, President of the Precursor Group, will speak at an Information Technology Association of America (ITAA) event. The title of his presentation is "Precursor Group's Tech Demand Model: IT Spending Set to Improve in '03". See, ITAA notice. For more information, contact Madeleine Wickwire at

Extended deadline to submit comments to the FCC in response to its Notice of Proposed Rulemaking (NPRM) [15 pages in PDF] in its proceeding titled "In the Matter of Digital Broadcast Copy Protection". This NPRM proposes that the FCC promulgate a broadcast flag rule, and seeks comment on this, and related questions. This is MB Docket No. 02-230. See also, FCC release [PDF] and Order [PDF] of October 11, 2002 extending deadlines.

Monday, December 9
2:00 PM. The Information Technology Association of America (ITAA) will host a web cast event titled "Protecting Intellectual Property in Federal Government Contract Procurements". The speaker will be Diana Richard of the law firm of Gibson Dunn & Crutcher. See, online registration page. For more information, contact Thomas Vincent at

Extended deadline to submit comments to the FCC in response to its requests for comments regarding whether to revise, clarify or adopt any additional rules in order to more effectively carry out Congress's directives in the Telephone Consumer Protection Act of 1991 (TCPA). This is CG Docket No. 02-278. See, original notice in the Federal Register, and notice of extension [PDF].

Tuesday, December 10
12:15 PM. The FCBA's Cable Practice Committee will host a luncheon. The speaker will be Marsha MacBride (FCC Chief of Staff). The price is $15. No walk-ins. For more information, contact Lisa Cordell at 202 939-7900. RSVP to Location: NCTA, 1724 Massachusetts Ave., NW.

Deadline to submit comments to the National Telecommunications and Information Administration (NTIA) regarding the wills, codicils, and testamentary trusts exception to the E-SIGN Act. The Electronic Signatures in Global and National Commerce (E-SIGN) Act provides, at Section 101, for the acceptance of electronic signatures in interstate commerce, with certain enumerated exceptions. Section 103 of the Act provides that "The provisions of section 101 shall not apply to ... a State statute, regulation, or other rule of law governing the creation and execution of wills, codicils, or testamentary trusts". The Act also requires the NTIA to review, evaluate and report to Congress on each of the exceptions. See, notice in the Federal Register, October 11, 2002, Vol. 67, No. 198, at Pages 63379 - 63381.

Wednesday, December 11
9:30 AM. The FCC will hold a meeting. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).
More News
12/3. The Federal Trade Commission (FTC) announced that it has settled a civil proceeding against the sellers of non-existent domain names. See, Stipulated Final Judment [PDF].

12/3. The U.S. Court of Appeals (9thCir) issued its opinion in Microsoft v. CIR, a tax case involving whether Microsoft could claim as "export property" deductions for commissions it paid to a foreign sales corporation for royalty income from the international distribution of master copies of software. The IRS disallowed the deductions on the grounds that software is not "export property" under the applicable statute. The Appeals Court reversed, and remanded. However, the case arose ten years ago, and the statute construed in this case has since been repealed.

11/28. Michael Gallagher, a NTIA official, gave a speech in Seattle, Washington, titled "Broadband Deployment and Spectrum Policy". Gallagher is Deputy Assistant Secretary for Communications and Information at the Commerce Department's National Telecommunications and Information Administration (NTIA). He spoke at the University of Washington School of Law.

11/25. The Telecommunications Industry Association (TIA) wrote a letter [PDF] to Federal Communications Commission (FCC) Chairman Michael Powell, and the other Commissioners, regarding the lack of research and development at telecommunications companies.

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