|House Passes Class Action Fairness Act
6/12. The House amended and passed
the "Class Action Fairness Act", by a vote of 253-170. See,
Roll Call No. 272. This bill amends
28 U.S.C. § 1332,
regarding diversity of citizenship. It provides federal jurisdiction in
certain class actions with a minimum total of aggregated claims where any member
of a class of plaintiffs is a citizen of a state different from any defendant.
This bill is
sponsored by Rep. Bob Goodlatte (R-VA)
(at right), Rep. Rick Boucher (D-VA), and
many other members of the House.
The House approved an amendment [3
pages in PDF] offered by Rep. James
Sensenbrenner (R-WI), Rep. Boucher, Rep. Goodlatte, Rep. Jim Moran (D-VA), Rep.
Cal Dooley (D-CA), Rep. Charles Stenholm
(D-TX) and Rep. Lee Terry (R-NE). It broadens the category of class action that would
remain in state court. First, this amendment raises the amount in
controversy required for federal court jurisdiction from $2 Million to $5
Million. Second, it allows federal courts to return some intrastate class
actions in which the law of that state governs to the courts of that state.
The bill would also require increased judicial scrutiny of class action
settlements that provide for coupon and other non-cash settlement payments to
plaintiffs. It would also prohibit geographic discrimination in awards to
Rep. Goodlatte stated in a release that "With the House passage of this critical
legislation we move one step closer
to streamlining the ability of the courts to deal with class action lawsuits by
making it easier for those involved in the case to transfer large multistate
suits from the state courts to the federal courts ... Federal
courts were actually designed by the Framers of the Constitution to handle large
cases that crossed state boundaries. Neither federalism nor common sense
support the current system’s handling of interstate class actions."
Rep. Goodlatte added that "This bill will help end the forum shopping abuses
and resultant extortionate settlements that plague class action litigation today
... Presently, the only winners are the lawyers who may get a half-billion
dollar payday. The Class Action Fairness Act will help ensure that real
plaintiffs with real grievances are protected against settlements that give the
lawyers millions and mere coupons to the consumers."
The House rejected three amendments offered by Democrats. See,
amendment [2 pages in PDF]
offered by Rep. Sheila Lee (D-TX),
amendment [PDF] offered by Rep. Zoe
Lofgren (D-CA) and Rep. Linda
Sanchez (D-CA), and
amendment [14 pages in PDF]
offered by Rep. Max Sandlin (D-TX) and
Rep. John Conyers (D-MI).
This bill has yet to pass the Senate. Rep. Goodlatte also stated that "We are
optimistic that this legislation will pass in the Senate, and the President has
indicated that he will sign it into law".
This bill is a re-introduction of
(107th), which passed in the House by a vote of 233-190. See, story titled
"Reps. Goodlatte and Boucher Re-Introduce Class Action Fairness Act" in
TLJ Daily E-Mail
Alert No. 619, March 10, 2003. However, the Senate did not pass that bill.
|Rep. Smith Addresses Intellectual Property
6/10. Rep. Lamar Smith
(R-TX), the Chairman of the House Judiciary
Committee's Subcommittee on Courts, the Internet and Intellectual Property (CIIP), gave
in Washington DC regarding intellectual property rights. He spoke at a
conference hosted by the Progress and Freedom
Foundation (PFF) and the George Mason University
Tech Center titled "Promoting Creativity:
Copyright in the Internet Age"
Rep. Smith (at right)
began with the observation that "There is a good reason
why those who wrote the Constitution embraced the concept of intellectual
property protection. The Founding Fathers realized that if creators cannot gain
from their creations, they won't bother to create."
"In looking for ways to protect both intellectual property and free exchange
in the marketplace, there are currently a number of critical issues Congress
must consider: piracy, the broadcast flag, patent rights, counterfeiting in the
software industry, and a standard of ``fair use´´ that protects consumer rights",
said Rep. Smith.
He criticized universities for their inconsistent conduct on intellectual
property. He stated, "Look at what is happening on our university campuses. University students
illegally download music, sometimes on publicly supported computers. When
encouraged to exercise disciplinary measures, too many university administrators
react with relative indifference: kids will be kids, they say. Yet these same
university administrators pursue research and development projects as champions
of a strong patent law. It's a curious inconsistency."
Earlier in the day, Rep. Smith's CIIP Subcommittee held a hearing on Rep.
Smith's bill (HR 2391)
to amend patent law to protect and encourage collaborative research at
universities and elsewhere. A representative of Yale University (Rep. Smith's
alma mater) testified at the hearing. See, following story, titled "Representatives
Introduce Patent Bill to Encourage Collaborative Research".
He also addressed software piracy. "The software industry is under siege by
professional pirates primarily due to
the counterfeiting of authentication features on software, like the certificates
of authenticity, or COAs. Thieves steal or counterfeit these COAs and affix them
to pirated products to deceive consumers into thinking they are getting the real
product." However, he did not elaborate on legislative proposals.
Broadcast Flag. Rep. Smith discussed the DTV transition and the
broadcast flag. He stated that "We are in the midst of a transition to digital
television. As early as 2006, all broadcasts must be aired in digital format.
This presents opportunities for American consumers, businesses, and copyright
owners. As with many technological advances, the DTV transition has been
frustrated by both technological and legal hurdles."
"There is a great danger of massive piracy of unprotected broadcasts once the
transition to DTV is complete", said Rep. Smith. "Pirates can easily copy and
redistribute millions of digital files in a matter of seconds. In the absence of
protection against unauthorized redistribution, it is unlikely that content
owners will make high-value programming available to broadcasters."
He added that "Last August, the Federal
Communications Commission adopted a notice of proposed rulemaking on digital
broadcast copy protection. My Subcommittee has great interest in the FCC's
action because the agency might issue rules that impact the Copyright Act and
therefore involve my Subcommittee's jurisdiction."
On August 8, 2002, the FCC adopted a
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, stories titled "FCC Issues
NPRM on Broadcast Flag" and "FCC Debates Its Authority to Promulgate Broadcast
Flag Rule" in TLJ
Daily E-Mail Alert No. 489, August 12, 2003.
Fair Use. Rep. Smith continued that "I know controversy continues over
what the broadcast flag will and will not do. And whether it will have an
adverse affect on the ability of consumers to make ``fair use´´ of copyrighted broadcast
"We know fair use is a defense that may limit any of the copyright owner's
exclusive rights. The Copyright Act states that fair use of a copyrighted work
for purposes such as criticism, comment, news reporting, teaching, scholarship,
or research does not constitute infringement. Fair use is determined on a
case-by-case basis" said Rep. Smith. "For example, in
v. Universal City Studios, the Supreme Court held that the practice of
taping free television broadcasting for later viewing was a fair use." (Sony
is reported at 464 U.S. 417.)
He stated that "It is important that the transition to DTV and any
implementation of rules requiring the use of the broadcast flag technology does
not have an adverse affect on how consumers may legitimately use lawfully
acquired entertainment products.
Rep. Smith also addressed fair use rights in the context of licensing
restrictions and technological protection measures. He said that "some believe
the profitability of intellectual property can be
protected using extended private licensing strategies. But we must be careful
that such licensing agreements do not improperly assert intellectual property
and thus have a negative effect on the markets or consumer interests."
He also stated that "my Subcommittee seeks to ensure that new technologies
designed to prevent piracy do not limit the public's ability to make fair use of
|Representatives Introduce Patent Bill to
Encourage Collaborative Research
6/10. Rep. Lamar Smith (R-TX)
and others introduced
the "Cooperative Research and Technology Enhancement (CREATE) Act of 2003",
on June 9, 2003. On June 10, the House Judiciary
Committee's Subcommittee on Courts, the
Internet, and Intellectual Property held a hearing on the bill. See,
of HR 2391.
Amendments to the Patent Act. Section 103(c), codified at
35 U.S.C. § 103,
pertains to conditions for patentability, and non-obviousness. It currently provides
that "Subject matter developed by another person,
which qualifies as prior art only under one or more of subsections (e), (f), and
(g) of section 102 of this title, shall not preclude patentability under this
section where the subject matter and the claimed invention were, at the time the
invention was made, owned by the same person or subject to an obligation of
assignment to the same person."
HR 2391 would amend Section 103(c) to read "Subject matter developed by
another person, which qualifies as prior art only under one or both of
subsections (e) and (g) of section 102 of this title, shall not preclude
patentability under this section where the subject matter and the claimed
invention were, at the time of the earliest filing date for which a benefit is
sought under this title, owned by the same person or subject to an obligation of
assignment to the same person."
Section 102(f), codified at
35 U.S.C. § 102,
pertains to conditions for patentability, and novelty and loss of right to
patent. It currently provides, in part, that "A person shall be entitled to a
patent unless ... (f) he did not himself invent the subject matter sought to be
HR 2391 would amend Section 102(f) by inserting after the word "patented" the
following: "‘except that subject matter under this subsection shall not be
considered prior art or as evidence of obviousness under section 103 of this
Rep. Smith's Explanation. Rep. Smith, the Chairman of the Subcommittee,
explained the context of this bill in a
statement. He stated that "Congress enacted a series of Patent Law
Amendments in 1984. One of these amendments, codified at 35 USC § 103 (c),
created a ``safe harbor´´ for inventions that were the product of a
collaboration involving co-inventors within a single company. The
amendment changed the U.S. patent system to reflect the manner in which
companies actually conduct their internal research activities." (Emphasis in
Rep. Smith continued that "The legislative history makes clear that Congress
intended to discourage
individuals from attempting to use nonpublic information, also known as
``secret prior art,´´ to challenge the issuance or validity of a patent where co-inventors
voluntarily exchanged confidential information concerning a prior invention
developed by one or more of the research partners."
"What the legislative history leaves unclear and significantly, what we are
here to explore today, are the arguments for and against expanding the secret
prior art exception to collaborations involving researchers at more than one
"Unlike 1984, today's biotech, pharmaceutical, and nano-technology companies
conduct much of their research with partners such as universities or other
public or private organizations."
Rep. Smith stated that the bill's purposes are "to promote communication
among ``team researchers´´ located at multiple organizations", "to discourage
those who would use the discovery process to harass co-inventors who voluntarily
collaborated on research resulting in a patentable invention", "to increase
public knowledge", and "to accelerate the commercial availability of new
Thomas of the Georgetown University Law
Center wrote in his
that this bill "provides that prior art available under
35 U.S.C. § 102(f) may not be considered as evidence of obviousness under 35
U.S.C. § 103. The effect of the Act is to overturn the 1997 holding of the U.S.
Court of Appeals for the Federal Circuit in OddzOn Products, Inc. v. Just Toys,
Inc., which ruled that derived prior art may serve as evidence of obviousness."
See, August 8, 1997
the U.S. Court of Appeals (FedCir), reported at 122 F.3d 1396.
Director of Technology Transfer at Yale
University, elaborated in his
regarding the significance of the OddzOn case for collaboration research.
He wrote that "In spite of the trend toward scientific collaboration and the
economic and practical necessity for such collaborations," the OddzOn case
"threatens to discourage such collaborative activity."
He continued that "In OddzOn, the Federal Circuit interpreted subsection
103(c)of the Patent Act to hold that prior art under subsections 102(f) or (g)
could be used to determine the obviousness of an invention in situations where:
(a) there was no common ownership or assignment of the invention and information
being shared among the collaborators, and (b) the information exchanged was not
"Prior to the OddzOn decision, it was uncertain whether information under
102(f) and (g) of the U.S. Patent Act (35 U.S.C.) that was shared among
collaborators, but was not published or generally known, would qualify as prior
art in determining whether an invention was obvious under section 103. Thus,
there was some doubt as to whether courts would interpret 103(c) to distinguish
collaborations involving one entity from those involving more than one entity."
Soderstrom called OddzOn a "a wake-up call to the patent community that
information under 102(f) or (g) could invalidate a patent in the circumstances
of a collaborative research effort. The OddzOn decision creates a significant
threat for the loss of intellectual property rights for inventors who engage in
joint research and development projects with scientists not employed by the same
company or institution."
He concluded that "The OddzOn decision creates significant problems due to
the very nature of collaborative research and development projects among
universities, government labs, and industry. The unhindered flow of information
among researchers within these collaborations is essential to the conduct of
research and crucial to a successful outcome. Laws and policies that have the
effect of impeding the flow of information among researchers will, for obvious
reasons, have a stifling effect on the progress and success of such projects. We
support efforts that will help to remedy undesirable impediments to
collaborative research created by the OddzOn decision. This could readily result
in more efficient development of products utilizing tax supported research
results, and an increase in the transfer of technology for the public good."
See also, prepared testimony of other witnesses:
Eric Steffe (Sterne
Kessler Goldstein & Fox) and
Jeffrey Kushan (Sidley
Austin, for Genentech).
Cosponsors. The bill is has broad bipartisan support on the Subcommittee. It is
cosponsored by Rep. Howard Berman (D-CA), the ranking Democrat on the
Subcommittee, and Rep. John Conyers (D-MI), the ranking Democrat on the full
Committee. It is also cosponsored by Rep. Rick Boucher (D-VA), Rep. Bob
Goodlatte (R-VA), Rep. Howard Coble (R-NC), Rep. Mark Green (R-WI), Rep. Tammy
Baldwin (D-WI), Rep. Melissa Hart (R-PA), Rep. Zoe Lofgren (D-CA), and Rep.
Robert Wexlar (D-FL).
|Legislators Re-Introduce Bills to Address
State IPR Sovereign Immunity
6/5. Sen. Patrick Leahy (D-VT)
introduced S 1191
the "Intellectual Property Protection Restoration Act of 2003" on June
5, 2003. Rep. Lamar Smith (R-TX)
and Rep. Howard Berman (D-CA)
introduced the companion bill in the House, HR 2344, also titled the
"Intellectual Property Protection Restoration Act of 2003".
Eleventh Amendment. "The Judicial power of the United States shall not
be construed to extend to any suit in law or equity, commenced or prosecuted
against one of the United States by Citizens of another State, or by Citizens or
Subjects of any Foreign State."
Supreme Court Cases. The problem addressed by these bills results from
the recent Supreme Court opinions interpreting the 11th Amendment. For example, in
v. Florida the Court held that the Congress lacks authority under Article I
of the Constitution to abrogate the States' 11th Amendment immunity from suit in
federal courts. The Court extended this to the context of intellectual property
in the 1999 rulings in
v. College Savings Bank (invalidating the Patent and Plant Variety
Protection Remedy Clarification Act) and
Bank v. Florida Prepaid (invalidating the Trademark Remedy Clarification
S 1191 and HR 2344. S 1191 and HR 2344 state that one of the purposes
is to "help eliminate the unfair commercial advantage that States and their
instrumentalities now hold in the Federal intellectual property system because
of their ability to obtain protection under the United States patent, copyright,
and trademark laws while remaining exempt from liability for infringing the
rights of others".
Sen. Leahy (at right)
stated in the Senate that "I believe that there is an
urgent need for Congress to respond to the Florida Prepaid decisions, for two
reasons. First, the decisions opened up a huge loophole in our Federal
intellectual property laws. If we truly believe in fairness, we cannot tolerate
a situation in which some participants in the intellectual property system get
legal protection but need not adhere to the law themselves. If we truly believe
in the free market, we cannot tolerate a situation where one class of market
participants have to play by the rules and others do not."
Second, said Sen. Leahy, these were 5-4 decisions. He said that "Over the
past decade, in a series of five-to-four decisions that might be called examples
of ``judicial activism,´´ the current Supreme Court majority has overturned
Federal legislation with a frequency unprecedented in American constitutional
history. In doing so, the Court has more often than not relied on notions of
State sovereign immunity that have little if anything to do with the text of the
Constitution. ... We are faced with a choice. We can respond -- in a careful and
measured way -- by reinstating our democratic policy choices in legislation that
is crafted to meet the Court's stated objections. Or we can run away, abdicate
our democratic policy-making duties to the unelected Court, and go down in
history as the incredible shrinking Congress." See, Congressional Record,
June 5, 2003, at Page S7479-80.
This bill would do several things. First, it would prevent states from
recovering damages for infringement of state owned intellectual property (either
patent, copyright or trademark), unless they have first waived their 11th
Amendment sovereign immunity from suits against them for their infringement of
the intellectual property of others.
Second, it would provide that states that violate intellectual property
rights "in a manner that deprives any person of property in violation of the
fourteenth amendment of the United States Constitution, shall be liable to the
party injured in a civil action in Federal court for compensation for the harm
caused by such violation." The bill contains similar language for violations
which constitute takings under the 5th Amendment.
Legislative History. Sen. Leahy has been trying for many years,
without success, to pass legislation addressing this problem. He sponsored
similar legislation in the 107th Congress --
S 2031, the
"Intellectual Property Protection Restoration Act of 2002".
Sen. Sam Brownback (R-KS) was a
cosponsor. However, at the beginning of the 108th Congress, he gave up his seat
on the Judiciary Committee, and is not longer active on this issue.
S 2031 (107th), in turn, was a revised version of
S 1611 (107th),
the "Intellectual Property Protection Restoration Act of 2001, introduced on
November 1, 2001.
The related bill in the House was
(107th), sponsored by Rep. Howard Coble
(R-NC) and Rep. Howard Berman (D-CA).
Rep. Coble was the Chairman of the House Subcommittee on Courts, the Internet,
and Intellectual Property in the 107th Congress. Rep. Smith is now the Chairman.
Sen. Dianne Feinstein (D-CA), who
is also a member of the Senate Judiciary Committee, is the main obstacle to passage of
this legislation. She represents UC Berkeley and other California institutions
that do not want to give up their immunity.
See also, story titled "Senate Judiciary Committee Considers Federalism and
Intellectual Property" in
TLJ Daily E-Mail
Alert No. 522, October 3, 2002, and "Sen. Leahy Reintroduces Bill to Close
11th Amendment Loophole to IPR" in
TLJ Daily E-Mail
Alert No. 394, March 22, 2002.
|People and Appointments
6/12. President Bush announced his intent to nominate
Harbour to be a Commissioner of the
Federal Trade Commission (FTC) for the remainder of a seven year term
expiring September 25, 2009. She is a partner in the New York City office of the
law firm of Kaye Scholer. Previously,
she worked for 11 years in the Office of the Attorney General of the State of
New York. She was Deputy Attorney General and Chief of the Public Advocacy
Division. She was also Assistant First Deputy to Attorney General Eliot Spitzer.
If confirmed, she will replace Sheila Anthony. See, White House
release and second
6/11. The Senate confirmed
Richard Wesley to be a Judge of the U.S. Court of Appeals for the Second
Circuit by a vote of 96-0. See,
Roll Call No. 215. Wesley is currently an Associate Justice of the
Court of Appeals of New York.
6/11. The Senate confirmed Mark Kravitz to
be a Judge of the U.S. District Court for the District of Connecticut by a vote
of 97-0. See,
Roll Call No. 217.
6/11. The Senate confirmed Ronnie Greer to be a Judge of the U.S. District
Court for the Eastern District of Tennessee by a vote of 97-0. See,
Roll Call No. 216.
6/12. The Senate confirmed Clay Johnson to be Deputy Director for Management at the
Office of Management and Budget
(OMB). See, OMB
|J.D. Edwards Files Complaint Against
6/12. J.D. Edwards filed a
[12 pages in PDF] in state court in Denver, Colorado, against
Oracle in connection with Oracle's hostile
offer to acquire PeopleSoft.
On June 2, J.D. Edwards and PeopleSoft announced a
definitive agreement under which
PeopleSoft will acquire J.D. Edwards. See, PeopleSoft
[4 pages in PDF] and J.D. Edwards
On June 6, Oracle made a hostile bid for PeopleSoft. Oracle stated in a
release [PDF] that it will "commence a cash tender offer to purchase all of
the outstanding shares of PeopleSoft ... for $16 per share, or
approximately $5.1 billion." See also, Oracle
document [PDF] titled "Frequently Asked Questions Document". See, story
titled "Oracle Makes Hostile Bid for PeopleSoft" in TLJ Daily
E-Mail Alert No. 676, June 9, 2003.
The three count complaint alleges intentional interference with contract,
intentional interference with prospective business relations of J.D. Edwards,
and intentional interference with prospective business relations of PeopleSoft.
PeopleSoft is not a plaintiff. However, J.D. Edwards alleges that since it is
has a binding contract to merge with PeopleSoft, economic benefits to PeopleSoft
will accrue to it.
J.D. Edwards seeks declaratory relief, $1.7 Billion in compensatory damages,
unspecified punitive damages, and cost and attorneys fees.
Bob Dutkowsky, Ch/P/CEO of J.D. Edwards, stated in a
release that "Oracle's sole aim is to disrupt a merger that will
create value for the key stakeholders of J.D. Edwards and
PeopleSoft ... Oracle’s unsolicited offer for PeopleSoft will only destroy value
for our companies' shareholders, customers and employees and the technology
community overall. We will not sit by idly while Oracle pursues this arrogant,
unlawful and destructive course of action."
Also named as defendants are Pepper Acquisition Corporation and John Does
1-50. The complaint alleges that Pepper is a wholly
owned subsidiary of Oracle "formed for the sole purpose of making a tender offer
for the Common Stock of PeopleSoft." The complaint alleges that "Does 1 through
50 participated in or caused the tortious conduct identified in this Complaint."
The complaint alleges that "Oracle's purpose in this effort is to prevent the
competition it would face
if the J.D. Edwards/PeopleSoft Contract is consummated, while its chosen method
for achieving its objective is an illusory offer to acquire PeopleSoft. Oracle's
so-called offer is conditioned upon PeopleSoft breaching the Contract with J.D.
J.D. Edwards has its headquarters in Denver, Colorado. It is represented by
David Berger of
the Silicon Valley law firm of Wilson Sonsini.
Local counsel in Denver is Stephen Baity of the law firm of Godin Baity.
|Friday, June 13
10:00 AM. The Senate Banking
Committee will hold a hearing on several pending nominations, including
that of Greg Mankiw to be a member of the President's Council of Economic
Advisors. Location: Room 538, Dirksen Building.
12:00 NOON. The Cato Institute will
host a panel discussion titled "Canning Spam: Can We Shift the Cost of
Unsolicited E-mail Back to Spammers?". The speakers will be Orson Swindle
(Commissioner of the Federal Trade Commission),
Wayne Crews (Cato), and Dave Baker (Earthlink). See,
notice and online
registration page. Lunch will be served. Location: Room B-369, Rayburn
2:00 - 3:00 PM. The Information Technology
Association of America (ITAA) will host a webcast program titled "The
Do's and Don'ts of Workplace Email and Web Monitoring". The presenters
will be Cathy Bissoon, (Reed Smith) and Susan Getgood (Surf Control). See,
Federal Communications Commission's (FCC)
Network Reliability and Interoperability Council (NRIC) will hold a meeting.
The NRIC will next meet on September 15, 2003 from 1:00 - 4:00 PM. See,
notice of cancellation [PDF].
|Monday, June 16
The House will meet at 12:30 PM.
The Supreme Court will return from
a one week recess.
Deadline to submit comments to the Federal
Communications Commission (FCC) regarding News Corp.' proposed acquisition
of an interest in DirecTV. See, FCC
notice [7 pages in PDF], and story titled "FCC Sets Deadlines for Comments
on News Corp.'s DirecTV Deal" in TLJ Daily E-Mail Alert No. 664, May 19, 2003.
This is MB Docket No. 03-124. For more information, contact Marcia Glauberman at
firstname.lastname@example.org or 202 418-7046 or Linda
Senecal at email@example.com or 202 418-7044.
Deadline to submit comments to the Bureau of
Industry and Security (aka Bureau of Export Administration) regarding its proposal
titled "Best Practices for Exporters/Re-exporters and Trade Facilitation/Freight
Forwarding Companies Regarding the Transit, Transshipment, and Reexport of
Dual-Use Items".For more information, contact Rick Cupitt
at firstname.lastname@example.org or 202 482-1459.
notice in Federal Register, May 16, 2003, Vol. 68, No. 95, at Pages 26567 - 26569.
|Tuesday, June 17
10:00 AM. The Senate Finance
Committee will hold a hearing titled "The Implementation of U.S.
Bilateral Free Trade Agreements With Singapore and Chile". Location: Room
215, Dirksen Building.
RESCHEDULED FOR JUNE 24.
12:15 PM. The Federal Communications Bar
Association's (FCBA) Cable Practice Committee will host a brown bag lunch.
The speaker will be Kyle Dixon, Deputy Bureau Chief of the Federal
Communications Commission's (FCC) Media
Bureau, and Special Counsel to the Chairman for Broadband. RSVP to Wendy
Parish at email@example.com. Location:
National Cable & Telecommunications Association
(NCTA), 1724 Massachusetts Ave., NW, 2nd Floor Conference Room.
12:15 PM. The
Federal Communications Bar
Association's (FCBA) Mass Media Practice Committee will host a brown bag
lunch on "current issues". RSVP to
moconnell @newscorp.com. Location: NAB, 1771 N Street, NW.
2:00 PM. The Senate Judiciary
Committee will hold a hearing to examine whether personal and national
security risks compromise the potential of P2P networks. Press contact:
Margarita Tapia at 202 224-5225. Location: Room 226, Dirksen Building.
Deadline to submit reply 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 17. See,
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.
|Wednesday, June 18
2:30 PM. The Senate Judiciary
Committee's Antitrust, Competition Policy and Consumer Rights Subcommittee will
hold a hearing on the proposed NewsCorp DirecTV transaction, focusing on global
distribution. Press contact: Margarita Tapia at 202 224-5225. Location: Room 226,
Scheduled completion of voting by the Media
Security and Reliability Council's (MSRC) Advisory Committe on the MSRC's
Best Practices Recommendations [5 pages in MS Word] to ensure effective
delivery of emergency information to the public during terrorist attacks,
natural disasters, and other emergencies. The MSRC provides recommendations to the
Federal Communications Commission (FCC) and
industry. See, story titled "Media Security and Reliability Council
Considers Recommendations" in TLJ Daily E-Mail Alert No. 669, May 29, 2003.
The Federal Trade Commission (FTC) will host
a workshop titled "Information Flows: The Costs and Benefits to Consumers and
Businesses of the Collection and Use of Consumer Information". It will
address the issue of the costs and benefits to consumers and businesses of
consumer information collection and use. It will explore how consumer
information is collected and used by businesses to facilitate commercial
transactions, as well as how it can be used to fight fraud. See,
agenda. The FTC states that "preregistration will be required for the
press". Location: FTC Conference Center, 601 New Jersey Ave., NW.
|Thursday, June 19
Commerce Committee will meet to mark up
S 877, the "Controlling the Assault of Non-Solicited
Pormography and Marketing Act of 2003", or "CAN-SPAM Act",
sponsored by Sen.
Conrad Burns (R-MT) and
Sen. Ron Wyden (D-OR). Location: Room 253, Russell Building.
9:00 AM - 5:00 PM. The Department of
Defense's (DOD) Technology and Privacy Advisory Committee (TAPAC) will
hold a public meeting. The TAPAC is a Total
Information Awareness Project oversight board. The notice states that "The
purpose of the meeting is for presentations of interest and discussion
concerning the legal and policy considerations implicated by the application
of advanced information technologies to counter-terrorism and
counter-intelligence missions." For more information, contact Lisa Davis,
TAPAC Executive Driector, at 703 695-0903. See,
notice in the Federal Register, June 11, 2003, Vol. 68, No. 112, at Page
34909. Location: Hyatt Arlington,
1325 Wilson Blvd., Arlington, VA.
9:30 AM. The Federal Communications
Commission (FCC) will hold a meeting. Location: FCC, 445 12th Street, SW,
Room TW-C05 (Commission Meeting Room).
Deadline to submit comments to the
Copyright Office (CO) in response to its
notice in the Federal Register "requesting comment on proposed regulations
that set rates and terms for the use of sound recordings in eligible
nonsubscription transmissions and new subscription services, other than
transmissions made by certain noncommercial entities, together with related
ephemeral recordings. The rates and terms are for the 2003 and 2004 statutory
licensing period, except in the case of new subscription services in which
case the license period runs from 1998 through 2004." This notice also states
that "The agreement published herein supersedes the agreement published in the
Federal Register on May 1, 2003, and parties should only comment on the
proposed rates and terms set forth in this notice." See, Federal Register, May
20, 2003, Vol. 68, No. 97, at Pages 27506 - 27513. See also,
superseded notice in the Federal Register, May 1, 2003, Vol. 68, No. 84,
at Pages 23241 - 23249. For more information, contact David Carson (CO General
Counsel) or Tanya Sandros (Senior Attorney, CARP) at 202 707-8380.
|4th Circuit Declines to Rule on Scienter
Requirements of PSLRA
6/12. The U.S.
Court of Appeals (4thCir) issued its unpublished
pages in PDF] in Svezzese
v. Duratek. This is a class action securities fraud suit against
a radioactive waste management services company, and several of its officers.
The issue before the Court is the scienter requirements of
the Private Securities Litigations Reform Act (PSLRA). The District Court
dismissed the complaint. The Court of Appeals affirmed.
It is a nine page opinion on an important issue that explains the basis for
the disposition. Yet, the Court designated it as nonprecedential.
The Appeals Court noted that "Under the 1995 Private Securities
Litigation Reform Act (PSLRA), a securities fraud complaint must also meet
heightened pleading standards, particularly with respect to scienter.
See 15 U.S.C.A. § 78u-4(b)". The
Appeals Court reviewed the various standards adopted by other federal circuits,
but stated that "We have not yet adopted a specific standard as to what
precisely a plaintiff must plead in order to meet the PSLRA's scienter
Following a review of the
facts of the case, it concluded that "all of the allegations in the complaint,
whether considered individually or collectively, fail to provide a sufficient
basis to meet even the most lenient PSLRA pleading standard." Hence, the 4th
Circuit has yet to interpret the meaning of the scienter requirement under the
PSLRA. Most of the other circuits have weighed in, and adopted one of three
|SEC and U.S. Atty. Charge Former
Network Associates Controller
6/12. The Securities and Exchange Commission
(SEC) filed a civil
in U.S. District Court (NDCal)
against Terry Davis, a former VP and Controller of Network
Associates, alleging violation of federal securities laws in connection with a scheme to
overstate Network Associates' revenues and earnings and thereby inflate its
stock price. Also, on June 11, the
U.S. Attorneys Office
(NDCal) charged Davis by criminal
[PDF] with securities fraud in violation of 15 U.S.C. § 78j(b) and § 78ff, 17 C.F.R. §
240.10b-5, and aiding and abetting under 18 U.S.C. § 2.
The SEC's civil complaint alleges that he "filed false and misleading financial
statements with the Commission from at least the second quarter of fiscal 1998
through at least the fourth quarter of fiscal 2000". Moreover, the complaint
alleges that while Davis knew of the fraud, he sold shares of Network
The four count SEC complaint alleges fraud in violation of Section 10(b) of the
Exchange Act Section 10(b) and Rule 10b-5 thereunder; insider trading in
violation of Section 17(a) of the Securities Act, Section 10b of the Exchange
Act, and Rule 10b-5 thereunder; falsifying books and records and making
false statements to auditors in violation of Section 13(b)(5) Exchange Act
and Rules 13b2-1 and 13b2-2 thereunder; and aiding and abetting violations in
violation of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1,
and 13a-13. See also, SEC
Davis entered a plea of guilty to the criminal charges in U.S. District Court.
See also, USAO
6/12. The House passed
the "ORBIT Technical Corrections Act of 2003". The bill was introduced on
June 3, 2003 by Rep. John Shimkus (R-IL).
The bill states that it would "amend the Communications Satellite of 1962 to
provide for the orderly dilution of the ownership interest in Inmarsat by former
signatories to the Inmarsat Operating Agreement." Specifically, it provides that
"Clause (ii) of section 621(5)(A) of the
Communications Satellite Act of 1962 (47 U.S.C. 763(5)(A)) is amended -- (1) by
striking `December 31, 2002' and inserting `June 30, 2004'; and (2) by striking
`June 30, 2003' and inserting `December 31, 2004'."
6/12. The Federal Communications Commission
(FCC) released an
order regarding Cingular Wireless's possible violations of the enhanced 911
(E911) Phase II provisions of the FCC's Rules for its Global
System for Mobile Communications (GSM) network and the FCC Order granting
Cingular a waiver of the E911 Phase II rules for its GSM network. The order
adopts and attaches a consent decree under which Cingular is fined (the order
designates this as a "voluntary contribution") $675,000. See also, FCC
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