|FTC Files Complaint Against Staples Alleging
False Statements in Web Site
5/22. The Federal Trade Commission (FTC)
filed a civil complaint
[8 pages in PDF] in U.S. District Court
(DMass) against Staples alleging violation of the Federal Trade Commission
Act (FTCA) and the FTC's Mail Order Rule in connection with its
misrepresentations regarding one day delivery and website access to its "realtime
Staples sells office supplies, furniture,
technology products, and other items by catalog, telephone, and the internet.
The complaint alleges that "Prior to May 4, 2002, on its www.staples.com
website, Defendant made ``one day´´ delivery representations to all United
States customers who viewed the website. ... Defendant’s policy, however, is to
deliver products that are promised for one-day delivery in one business
day." (Emphasis in original.)
The complaint also alleges that "First-time
visitors to Defendant's website are required to submit their U.S. ZIP code
before they can browse the website for items to purchase. Defendant’s website
states, ``To view realtime inventory availability, please enter the ZIP code where
products will be shipped.´´ ... Prior to May 4, 2002, customers who entered
their ZIP code on Defendant’s website as requested did not actually view
Defendant’s real time inventory. The website was not updated in real time."
The FTC also announced that it reached a settlement with Staples, under which
Staples will pay a $850,000 fine. See also, proposed
[10 pages in PDF], which was also filed on May 22. See also,
|4th Circuit Rules in Cyber
5/19. The U.S.
Court of Appeals (4thCir) issued its split
pages in PDF] in International
Bancorp v. SBM,
a cyber squatting case. The Appeals Court affirmed a District Court summary
judgment that the use of forty-three domain addresses
infringe a foreign corporation's rights under the Lanham Act and violate the
The Societe Des Bains De Mer Et Du Cercle Des Etrangers A Monaco (SBM)
operates resorts and casinos in Monte Carlo, Monaco, including the "Casino de
Monte Carlo". It registered a trademark in 1863 in Monaco. It has not registered
a trademark in the U.S. Although, it does have some operations in the U.S., such
as advertising and marketing.
International Bancorp others operate internet gambling web sites. Fifty three
of their web sites have domain names that incorporate some portion of the
SBM first challenged the gambling operations' use of its trademark before the
World Intellectual Property Organization (WIPO).
A WIPO panel ruled in SBM's
favor, and ordered the transfer of the domain names to SBM.
The gambling operations then filed a complaint in
U.S. District Court (EDVa)
against SBM seeking declaratory judgment that they are entitled to keep the
disputed domain names. SBM counterclaimed under the Lanham Act, 15 U.S.C. § 1111
et seq., for trademark infringement under § 1125(a), trademark dilution under
§ 1125(c), cybersquatting under § 1125(d)(1), and unfair competition in violation
of § 1126(h).
The District Court ruled against SBM on its § 1125(c) trademark dilution
claim, because SBM did not show actual economic harm, and on its § 1126(h)
unfair competition claim. However, the Court ruled in favor of SBM on its
trademark infringement claim and on its cybersquatting claim. The Court also
awarded SBM $51,000 in statutory damages and ordered the transfer of 43 of the 53 contested
The Appeals Court affirmed. Judge Diana Motz dissented. She wrote that "The
majority reaches the
unprecedented conclusion that an entity's use of its foreign trademark solely to
sell services in a foreign country entitles it to trademark protection under
United States law, even though the foreign mark holder has never used or
registered its mark in the United States."
|6th Circuit Adopts Standard for Substantial
Similarity in Copyright Infringement Cases
5/20. The U.S.
Court of Appeals (6thCir) issued its
Kohus v. Mariol,
a copyright infringement case involving the alleged copying of a design drawing.
The Appeals Court adopted a standard for determining whether substantial
similarity exists in copyright infringement cases. Basically, it modified the
"ordinary observer" approach. It held that the Court should
focus on the perspective of the intended audience, which usually means ordinary
consumers, but, in a few cases, such as the present one, means persons with
expertise in the field. Moreover, the Court held that where the target audience
of the expression is persons with expertise, admission of expert testimony may
While the facts of this case involve designs for latches on portable
children's playyards, the standard announced by the Appeals Courts' for
determining whether there is substantial similarity in cases where the audience
is persons with special expertise, would be applicable in cases involving, for
example, copyrighted computer program code.
Background. Louis Kohus designs and invents consumer products.
Previously, Kohus and John Mariol formed a corporation. This corporation
developed a portable children's playyard. At issue in this case is a design
drawing for a latch on this item. Kohus and Mariol had disagreements, which they
litigated. Eventually, they settled. In the settlement Kohus was assigned "all
rights, title and interest ... in ... design drawings".
Subsequently, Mariol, as a contractor for another company, developed another
portable playyard. He also obtained two patents. However, his claims regarding
the latch were rejected, on the grounds that it was anticipated by the original
design drawing (that had been assigned to Kohus).
District Court. Kohus filed a complaint in U.S. District Court (SDOhio)
against Mariol and others alleging copyright infringement. The District Court
granted summary judgment to Mariol. Applying the ordinary observer test,
it found that substantial similarity was lacking. This appeal followed.
Court of Appeals. The Court of Appeals vacated the District Court
judgment, articulated a standard for substantial similarity, and remanded to the
District Court for further proceedings.
The Court wrote that there is a two step test. First, filter out unprotected
elements. Second, determine whether there is substantial similarity to the
The Court wrote that "The essence of the first
step is to filter out the unoriginal, unprotectible elements -- elements that were
not independently created by the inventor, and that possess no minimal degree of
creativity, see Feist, 499 U.S. at 345 -- through a variety of analyses."
The Court also elaborated on this filtering process.
Then, "Once the unprotectible elements have been
filtered out, the second step is to determine whether the allegedly infringing
work is substantially similar to the protectible elements of the original." The
Court continued that courts should apply the "ordinary reasonable person"
standard. However, it added that "The test was designed for cases where the lay
audience purchases the product at issue, and where the lay audience's untutored
judgment determines whether the product will sell."
The Court elaborated, "In cases where the target
audience possesses specialized expertise, however, the specialist's perception
of similarity may be much different from the lay observer's, and it is
appropriate in such cases to consider similarity from the specialist's
perspective. The larger principle here is that the inquiry in the second prong
of the substantial similarity test should focus on the intended audience.
This will ordinarily be the lay public, in which case the finder of fact's
judgment should be from the perspective of the lay observer or, as Monogram
Models put it, the ordinary reasonable person. But in cases where the
audience for the work possesses specialized expertise that is relevant to the
purchasing decision and lacking in the lay observer, the trier of fact should
make the substantial similarity determination from the perspective of the
intended audience. Expert testimony will usually be necessary to educate the
trier of fact in those elements for which the specialist will look."
The Appeals Court concluded: "The first prong of
the inquiry will almost certainly require expert testimony, because the drawings
are technical in nature and a lay person is unlikely to understand what
constitutes creativity in this area, which elements are standard for the
industry, and which elements are dictated by efficiency or by external
standards. In conducting the second prong, the district court should consider
substantial similarity from the viewpoint of the intended audience, the nature
of which the court must determine. This appears to be one of those rare cases
where the intended audience is not the lay public: the drawings are technical
and are appropriate for patent treatment; interpretational guidance is needed
for the lay viewer to imagine the structure and function of the device that the
drawings depict; and the initial purchasers of the device would probably be
trained engineers, capable of discerning technical niceties that the ordinary
person would not detect, and likely to base their purchasing decision on such
|Representatives Address FCC's Failure to
Produce Triennial Review Order
5/22. Rep. Charles Bass (R-NH) and
Rep. Leonard Boswell (D-IA) spoke in
the House regarding the Federal Communications
Commission's (FCC) triennial review order. The FCC announced this order in
February, but has yet to release the text of the order. See,
TLJ story titled "FCC
Announces UNE Report and Order", February 20, 2003.
Rep. Boswell stated that "Three months ago, the FCC adopted its Triennial
Review order. I believe the economic implications of this action will be of
great benefit throughout our Nation. However, the FCC has had 3 months to issue
rules on this action and has done nothing. Meanwhile the companies are held
hostage because, quite frankly, their hands are tied."
He asked, "how is it possible the United States can ship a large piece of
military equipment halfway around the world in a shorter period of time than it
takes the FCC to send its rules up a flight of stairs?"
He urged the FCC "to complete its work and bring some certainty to the
telecommunications industry". See, Congressional Record, May 22, 2003, at
Rep. Bass stated that "the United States is the most technologically advanced
country in the world. One measure, however, where the U.S. is sorely lacking
behind other industrialized nations is high-speed Internet access for citizens
and small businesses alike. The United States is not even among the top five
countries in these broadband access rates. In fact, we are behind South Korea,
Canada, Taiwan and Sweden, just to name a few. The statistics for DSL, a form of
broadband that uses the telephone infrastructure, are even worse. The U.S. is
not even in the top 10."
He continued that the FCC "has begun to see that regulation of DSL harms the
ability of companies to deploy that technology. Part of the FCC's Triennial
Review, adopted this past February, improved some of the DSL regulations. That
should help make DSL deployment easier. However, there are two problems. The
first is that the FCC has yet to actually issue these rules agreed upon in
February, and the second is that action in February is just a start."
He added that "The FCC is looking at whether or not to regulate DSL as a
telephone service. The broadband provided over cable, satellite or wireless is
not as regulated as telephone." See, Congressional Record, May 22, 2003,
at page H4532.
Rep. Bass is a member of the House
Commerce Committee, and its Telecommunications and Internet Subcommittee.
|FRB Governor Addresses Prospects for
5/22. Federal Reserve Board
(FRB) Governor Mark Olson
speech in Minnesota titled "Assessing Prospects for Economic Growth in the
He stated that "the economy will probably remain soft in the near future and
that inflation will remain low. Nonetheless, I continue to believe that the
pieces are in place for future robust growth." Also, FRB Chairman Alan Greenspan
testified before the Joint Economic Committee on May 21. He stated in his
prepared testimony that "the consensus expectation for a pickup in economic
activity is not unreasonable, though the timing and extent of that improvement
continue to be uncertain". Olson also focused on trends in the technology and
Olson said that "By late 2000, the boom had come to an end. The stock market
began to retreat in early 2000, and by the end of the year, analysts were
revising down their expectations for future earnings. Many businesses were
cutting back sharply on capital investment -- particularly in high-tech
equipment -- as demand and profits weakened and many companies, such as those in
the telecommunications industry, found that they had overspent on equipment
during the boom."
Olson continued that "the fundamentals look favorable" for the business
sector. "In the near term, lower oil prices should reduce the costs of
production for many businesses and free funds for other uses. Also, with
interest rates low, the incentives for capital expenditure in the tax code in
place until late 2004, and prices for high-tech goods still falling, the cost of
capital should remain low."
He added that "Over the longer run, the continuing rapid pace of
technological innovation implies that there are many potential investments that
offer attractive returns. In the uncertain business environment that has
prevailed for some time, many businesses have probably been making do with their
existing equipment, stretching out their normal replacement cycles, especially
for rapidly depreciating high-tech equipment. Overall, though shifts in business
attitudes are difficult to measure, I believe that markets reward businesses
that outperform their competitors and that, as demand picks up, companies will
respond to opportunities to incorporate technological advances in production,
communication, and organization."
|The Tech Law Journal Daily E-Mail Alert will not be
published on Monday, May 26, Tuesday, May 27, or Wednesday, May
28, for a Memorial Day break.
|People and Appointments
5/22. Dan Brouillette was named Staff Director for the
Committee. He previously was Assistant Secretary of Energy for Congressional
and Intergovernmental Affairs. From 1989 to 1996 he worked on the personal staff
of Rep. Billy Tauzin (R-LA), who is
now the Chairman of the Committee.
5/22. President Bush announced his intent to nominate Joshua Bolten to
be Director of the Office of Management and Budget (OMB), replacing Mitch
Daniels. Bolten is currently Assistant to the President and Deputy Chief of
Staff for Policy at the White House. Before that, he worked on the Bush Cheney
campaign and transition. Before that, he worked for Goldman Sachs International.
And before that, he was General Counsel to the
U.S. Trade Representative (USTR) during the administration of the elder
George Bush. From 1985 to 1989, he was International Trade Counsel to the
Senate Finance Committee. He has
also worked for the law firm of O'Melveny & Myers.
White House release. Bolton stated at a White House ceremony that he would
be a "tight-fisted custodian of the people's money". See,
5/22. The Senate confirmed Consuelo Maria Callahan to be a Judge of
the U.S. Court of Appeals (9thCir) by
a vote of 99-0. See,
Roll Call No.195.
5/22. The Senate confirmed Scott Coogler to be a Judge of the U.S.
District Court for the Northern District of Alabama.
5/22. The Senate confirmed Gregory Mankiw to be a Member of the
Council of Economic Advisers.
|FCC Sets Deadlines for Comments in Broadband
Over Powerline Inquiry
5/22. The Federal Communications Commission
(FCC) published a
notice in the Federal Register that describes the FCC's
Notice of Inquiry [21 pages in PDF] in its proceeding titled "In the Matter
of Inquiry Regarding Carrier Current
Systems, including Broadband over Power Line Systems". This notice also
sets deadlines for public comments. Comments are by August 6, 2003, and reply
comments are due by September 5, 2003.
The FCC announced, but did not release, this Notice of Inquiry (NOI) at its
April 23, 2003, meeting. It released the text of the NOI on May 6, 2003. See,
story titled "FCC Announces NOI Regarding Broadband Over Powerlines" in TLJ
Daily E-Mail Alert No. 628, April 24, 2003, and story titled "FCC Releases NOI
on Broadband Over Power Lines" in TLJ Daily E-Mail Alert No. 656, May 7, 2003.
This NOI states that broadband over power
line (BPL) "systems use existing electrical power lines as a transmission medium
to provide high-speed communications capabilities by coupling RF energy onto the
power line. Because power lines reach virtually every community in the country,
BPL could play an important role in providing additional competition in the
offering of broadband infrastructure to the American home and consumers. In
addition, BPL could bring Internet and high-speed broadband access to rural and
underserved areas, which often are difficult to serve due to the high costs
associated with upgrading existing infrastructure and interconnecting
communication nodes with new technologies."
This NOI requests "information and technical data so that we may
evaluate the current state of BPL technology and determine whether changes to
Part 15 of the Commission’s rules are necessary to facilitate the deployment of
See, Federal Register, May 23, 2003, Vol. 68, No. 100, at Pages 28182 - 28186.
This is ET Docket No. 03-104.
For more information, contact Anh Wride at 202 418-0577 or
|Friday, May 23
The House will meet at 9:00 AM for legislative business.
10:00 - 11:30 AM. The Federal Communications
Commission's (FCC) Media Security and Reliability Council will hold a
notice in Federal Register: November 19, 2002, Vol. 67, No. 223, at Page
69742. For more information, contact Barbara Kreisman at 202-418-1600.
Location: FCC, 445 12th St. SW Room TW-C305.
Deadline to submit to the Department of
Commerce (DOC) nominations for award of the
National Medal of Technology.
notice in the Federal Register, February 14, 2003, Vol. 68, No. 31, at
|Monday, May 26
Memorial Day. The House and Senate will be in recess for the Memorial Day District
Work Period from May 26 through May 30. The Supreme Court is in recess.
|Tuesday, May 27
Deadline to submit comments to the U.S.
Patent and Trademark Office (USPTO) regarding its notice of proposed rulemaking (NPRM)
to amend its regulations to implement the Madrid Protocol Implementation Act of
2002 (MPIA). See,
notice in the Federal Register, March 28, 2003, Vol. 68, No. 60, at Pages
15119 - 15138.
|Thursday, May 29
12:15 PM. The Federal Communications Bar
Association's (FCBA) Cable Practice Committee will host a brown bag lunch.
The speaker will be Ken Ferree, Bureau Chief of the Federal
Communications Commission's (FCC) Media
Bureau. RSVP to Wendy Parish at
firstname.lastname@example.org. Location: National Cable &
Telecommunications Association (NCTA), 1724 Massachusetts Ave., NW, 2nd
Floor Conference Room.
12:15 PM. The Federal Communications Bar
Association's (FCBA) Young Lawyers Committee (YLC) will host a brown bag
lunch. The topics will be "YLC Year in Review, Planning Meeting 2003, and
Elections". For more info contact Yaron Dori at
email@example.com or Ryan Wallach at
Willkie Farr & Gallagher, 1875 K St.,
Deadline to submit to the National
Institute of Standards and Technology (NIST) the 2003 Award Applications
for the Malcolm Baldrige awards.
Application Form [MS Word].
|Friday, May 30
10:00 AM. The U.S. Patent and Trademark Office
(USPTO) will a public hearing its notice of proposed rulemaking (NPRM)
to amend its regulations to implement the Madrid Protocol Implementation Act of
2002 (MPIA). See,
notice in the Federal Register, March 28, 2003, Vol. 68, No. 60, at Pages
15119 - 15138. Location: USPTO, Patent Theater, 2121 Crystal Drive, Room 200,
10:00 AM - 12:00 NOON. The Federal
Communications Commission's (FCC) Office
of Engineering and Technology (OET) will host a tutorial titled "Radio
Noise Measurement and Related Standards". The speaker will be Akira Sugiura, a
professor at Tohoku University. Location: FCC, Commission Meeting Room
(TW-C305), 445 12th Street, SW.
|Monday, June 2
Likely date for the Federal Communications
Commission (FCC) to take action in its review of media ownership rules.
Deadline to submit comments to the National
Institute of Standards and Technology (NIST) regarding its proposal
to withdraw seventeen Federal Information Processing Standards (FIPS). The
list of FIPS publications proposed for withdrawal includes FIPS 73, Guidelines
for Security of Computer Applications; FIPS 83, Guideline on User
Authentication Techniques for Computer Network Access Control; FIPS 102,
Guideline for Computer Security Certification and Accreditation; FIPS 112,
Password Usage; and FIPS 127-2, Database Language SQL (ANSI X3.135-1992). See,
notice in the Federal Register, March 4, 2003, Vol. 68, No. 42, at Pages
Deadline to submit comments to the
Federal Communications Commission (FCC) in response to its notice of
proposed rulemaking (NPRM) regarding its slamming rules. Slamming is the
unauthorized changing of subscriber's
selection of a provider of telephone exchange service or telephone toll service.
The FCC adopted this NPRM on February 28, 2003, and released it on March
Third Order on Reconsideration and Second Further Notice of Proposed Rulemaking
[63 pages in PDF]. This is FCC Docket No. 94-129. See also,
release [PDF]. For more information, contact Kelli Farmer at 202 418-7057.
submit comments to the Copyright Office
(CO) in response to its request for public comments on "proposed regulations
that set rates and terms for the use of sound recordings in eligible
nonsubscription transmissions for the 2003 and 2004 statutory licensing
period, and for the use of sound recordings in transmissions made by new
subscription services from 1998 through December 31, 2004, in addition to the
making of ephemeral recordings necessary for the facilitation of such
notice in the Federal Register, May 1, 2003, Vol. 68, No. 84, at Pages 23241 - 23249.
notice in the Federal Register, which also sets June 19, 2003, as the
deadline for public comments.
5:00 PM. Deadline to submit nominations to the Department of Commerce's
Technology Administration for appointment
to the Joint High Level Advisory Panel of the United States Israel Science and
Technology Commission. See,
notice in the Federal Register, May 2, 2003, Vol. 68, No. 85, at Pages
23443 - 23444.
|Rep. Meeks Addresses MCI WorldCom Bankruptcy
5/20. Rep. Gregory Meeks (D-NY)
spoke in the House about the MCI WorldCom bankruptcy. He stated that "After
recording the largest corporate fraud in United States history, costing
thousands of jobs and $176 billion in losses to investors, representing three
times that of Enron, WorldCom is back, just rebranding themselves to their
former name MCI."
Meeks, who is a member of the
House Financial Services
Committee, continued that "As a supporter of reforming our bankruptcy laws,
I am shocked how MCI or any other company can be rewarded for cooking the books,
cheating and stealing, and stand to gain by their criminal behavior.
Reorganization under the bankruptcy laws should not apply when the assets are
the product of criminal activities. Bankruptcy should not be the vehicle for
laundering stolen goods. This is the case with MCI, even though they have
changed their name and recently rolled out a new marketing campaign to distance
themselves from their ``criminal stigma.´´ What an artificial advantage for MCI,
our bankruptcy laws."
He also joked, "here is an idea how MCI can market themselves. They can
market by saying: MCI stands for massive corporate indiscretions." See,
Congressional Record, May 20, 2003, at page H4263.
5/21. The Commerce Department's
Technology Administration (TA) released a
[9 pages in PDF] titled "A National Benchmarking Analysis of Technology Business
Incubator Performance and Practices", and a
[PDF] titled "Business Incubation: Emerging Trends for Profitability and
Economic Development in the US, Central Asia and the Middle East".
5/22. The Securities and Exchange Commission
(SEC) issued an Order
Instituting Public Administrative Proceedings against
PricewaterhouseCoopers alleging improper
professional conduct in connection with its audit of SmarTalk TeleServices, a
bankrupt provider of prepaid telephone cards and wireless services. See also,
5/21. The Office of the U.S. Trade
Representative (USTR) announced that the U.S. and
intend to seek to negotiate a free trade agreement. The USTR stated in a
release that "The
proposed free trade agreement would support Bahrain's commitment to
transparency, openness and the rule of law, and would include increased
protection for intellectual property and specific provisions to encourage the
development of e-commerce."
5/22. The Senate Commerce
Committee held another hearing on media ownership. See,
statement of Sen. Ernest Hollings
(D-SC), the ranking Democrat on the Committee, and
statement of Sen. Wayne Allard
(R-CO). See also, prepared testimony of witnesses:
Rupert Murdoch (Ch/CEO of News Corporation),
Tom Fontana (Writers Guild),
Gene Kimmelman (Consumers Union), and
Kent Mikkelsen (Economists, Inc.).
5/22. The Senate Indian Affairs
Committee held a hearing on telecommunications in Indian country. See,
testimony of Kelly Levy of the National
Telecommunications and Information Administration (NTIA).
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