|Senate Commerce Committee Approves Bill to
Extend Internet Tax Moratorium
7/31. The Senate Commerce
Committee amended and approved
the "Internet Tax Non-discrimination Act of 2003" by voice vote.
in the nature of a substitute [4 pages in PDF].
The bill would permanently extend the moratorium on internet access taxes and
multiple and discriminatory taxes on electronic commerce. The current moratorium is
set to expire on November 1,
2003. The original moratorium was passed in late 1998, and extended in 2001.
The House Judiciary Committee
approved the House version of the bill,
HR 49, the
"Internet Tax Nondiscrimination Act", on July 16. See,
titled "House Judiciary Committee Approves Internet Tax Bill", July 16, 2003.
George Allen (R-VA) introduced S 150 on January 13, 2003. Sen. Allen (at right)
stated that "If my measure is passed, once and for all time, prohibition on
Internet access and discriminatory taxes will not be held hostage to other
issues surrounding sales and use tax collection. This bill would permanently ban
such Internet taxes and update the definition of Internet access to include
wireless, satellite and new advancements in technology to provide access to
Internet services. This is about the individual consumer's ability to access the
3 Year Phase Out of Grandfather Clause. The bill, as amended, includes
a new provision that sunsets the grandfather clause after three years. The
original 1998 moratorium provided a grandfather clause for those state and local taxes
that existed as of October 1, 1998.
The House version of the bill would immediately repeal the grandfather
Technology Neutrality. The bill, as amended, includes a new provision that
would provide for technology neutrality. It
provides that "The second sentence of section 1104(5), and the second sentence
of section 1101(e)(3)(D), of the Internet Tax Freedom Act (47 U.S.C. 151 note) are
each amended by inserting ‘‘, except to the extent such services are used to provide
Internet access’’ before the period." (Parentheses in original.)
Subsection 1101(e) lists exceptions to the moratorium. Subsection 1101(e)(3)
contains definitions. Subsection 1101(e)(3)(D) defines "Internet access service"
as follows: "The term 'Internet access service' means a service that enables
users to access content, information, electronic mail, or other services offered
over the Internet and may also include access to proprietary content,
information, and other services as part of a package of services offered to
consumers. Such term does not include telecommunications services."
Section 1104 is the general definitions section. Subsection 1104(5) defines
"Internet access" as follows: "The term 'Internet access' means a service that
enables users to access content, information, electronic mail, or other services
offered over the Internet, and may also include access to proprietary content,
information, and other services as part of a package of services offered to
users. Such term does not include telecommunications services."
Thus, the existing moratorium provides a ban on internet access taxes, but
expressly excepts telecommunications services. In 1998 it was more clear what
was "internet access", and what was "telecommunications". Some states now impose
a tax on DSL service when it is sold as part of a package with phone service.
Thus, internet access, when provided by DSL, is taxed, while other technologies
for providing broadband internet access are not taxed. This amendment would
clarify "telecommunications services" are covered by the moratorium "to the
extent such services are used to provide Internet access".
Steve Berry of the Cellular
Telecommunications and Internet Association (CTIA) stated in a
release that "Americans access the Internet in
a myriad of ways; this legislation ensures that no matter the method, that
access will be tax free."
This new language is identical to language that was added to the
House bill on July 16.
Universal Service. The bill, as amended, includes a new provision
pertaining to universal service. It provides that "Nothing in the Internet Tax
Freedom Act shall prevent the imposition or collection of any fees or charges used to
preserve and advance Federal universal service or similar State programs authorized by
section 254 of the Communications Act of 1934."
This provision is not in the House version of the bill, as approved on July 16.
Further Action. Both the House and Senate bills still require passage
by the full House and Senate. Then a conference committee will have to reconcile
differences between the two bills, and the House and Senate will have to approve
that conference report.
Rep. Chris Cox (R-CA), the sponsor of
the House bill, praised the Senate Commerce Committee for approving its bill. He
further stated that "we expect movement on the
House floor in early September." See, Cox
The Bush administration supports the bill.
John Snow and Commerce Secretary
Donald Evans issued a joint
release after the Committee approved the bill. They stated that "A permanent
moratorium means permanent innovation. Keeping the Internet free of
multiple or discriminatory taxes on electronic commerce will help create an
environment for innovation and help ensure that electronic commerce remains a
vital part of our economy. As policy makers, we need to encourage the roll out
of new Internet services and not stifle innovation by imposing new taxes."
See, Treasury release.
|Antitrust Division Closes Orbitz
7/31. The Department of Justice's (DOJ)
Antitrust Division closed its Orbitz
joint venture investigation. Orbitz is owned by several airlines, and sells
airline tickets and other travel services online.
Pate (at right), Assistant Attorney General in charge of the Antitrust Division,
stated in a release
that "After an extensive investigation of the available facts, the Antitrust
Division concluded that the Orbitz joint venture has not reduced competition or
harmed airline consumers. This thorough review involved interviewing numerous
interested parties, reviewing many documents that were produced by Orbitz as
well as by third parties, engaging in extensive empirical analyses of airline
booking data, and examining the analyses suggested by third parties."
Pate added that "The Division considered several theories of harm none of which was
ultimately borne out by the information collected by the Antitrust Division.
These concerns included whether certain Orbitz contract terms would facilitate
coordination among the participating airlines or reduce their incentives to
discount resulting in higher fares and whether those contract terms would make
the Orbitz joint venture dominant in online air travel distribution. The
Division found that those terms did not result in higher fares or make Orbitz
dominant in online air travel distribution."
Jeff Katz, P/CEO of Orbitz, stated in a
that "Today's DOJ's decision is consistent with previous government and
independent examinations of Orbitz. Previously, the Department of Transportation
Inspector General found no evidence of any anti-competitive behavior by Orbitz,
and in fact determined that Orbitz provides a valuable service to consumers and
promotes competition in the travel marketplace."
|FTC Releases Policy Statement on Use of
Equitable Remedies of Disgorgement and Restitution in Competition Cases
7/31. The Federal Trade Commission (FTC)
released a document
titled "Policy Statement on Monetary Equitable Remedies in Competition Cases".
The FTC explained that "Disgorgement is an equitable monetary remedy
"designed to deprive a wrongdoer of his unjust enrichment and to deter others"
from future violations. Depriving the violator of any of the benefits of illegal
conduct has long been accepted as an appropriate, indeed necessary, element of
antitrust remedies. ... Restitution is also an equitable remedy, serving
different but often complementary purposes. Restitution is intended to restore
the victims of a violation to the position they would have been in without the
violation, often by refunding overpayments made as a result of the violation.
The Commission has sought and obtained disgorgement or restitution in a number
of competition cases over the last few decades, most recently in the Mylan
and Hearst matters." (Footnotes and citations omitted.)
The FTC stated its policy that "we do not view monetary disgorgement or
restitution as routine remedies for antitrust cases. In general, we will
continue to rely primarily on more familiar, prospective remedies, and seek
disgorgement and restitution in exceptional cases."
The FTC listed three factors that it will consider: "As a
general matter, the Commission will consider the following three factors in
determining whether to seek disgorgement or restitution in a competition case.
First, the Commission will ordinarily seek monetary relief only where
the underlying violation is clear. Second, there must be a reasonable
basis for calculating the amount of a remedial payment. Third, the
Commission will consider the value of seeking monetary relief in light of any
other remedies available in the matter, including private actions and criminal
proceedings. A strong showing in one area may tip the decision whether to seek
monetary remedies. For example, a particularly egregious violation may justify
pursuit of these remedies even if there appears to be some likelihood of private
actions. Moreover, the pendency of numerous private actions may tilt the balance
the other way, even if the violation is clear."
The Commission approved the statement on July 25, but did not publicly
release it until July 31. See also, FTC
|Tauzin and Upton Request Documents From FCC
Re MCI WorldCom Avoidance of Paying Access Charges
7/30. Rep. Billy Tauzin (R-LA) and
Rep. Fred Upton (R-MI) sent a
Communications Commission (FCC) Chairman
Michael Powell "to
express our serious concern regarding allegations that MCI has engaged in a
deliberate effort to avoid paying access charges by disguising the origin and
routing of telecommunications traffic".
Rep. Tauzin (at right)
is the Chairman of the House Commerce
Committee, while Rep. Upton is the Chairman of its Telecom and Internet Subcommittee.
They continued that "Access charges represent the cornerstone of the relationship between
local exchange carriers (LECs) and inter-exchange carriers (IXCs). Without the
origination and termination of inter-exchange traffic, long-distance calls would
never be connected. Thus, a gross violation of regulations governing the
origination and termination of long-distance calls undermines the basic
telecommunications system of the United States."
They asked that the FCC keep them apprised of actions that it takes regarding
this matter. They also asked for the FCC to produce documents, by August 13,
2003, regarding "actual or alleged violations of the access charge rules by MCI,
any of its affiliates, any entity that purchased or was acquired by MCI, or any
entity acting in concert with MCI."
|House Commerce Committee Leaders Ask FCC to
Revise TELRIC Pricing Rules
7/29. Rep. Billy Tauzin (R-LA),
Rep. John Dingell (D-MI) and
Rep. Fred Upton (R-MI) sent a
Communications Commission (FCC) Chairman
Michael Powell regarding
current TELRIC pricing rules. They argue that the rules undermine investment,
and that the FCC should promptly amend its pricing rules that apply when
incumbent local exchange carriers (ILECs) are required
to provide network
elements to competitive local exchange carriers (CLECs) on an unbundled basis.
They requested that the FCC conduct a rule making proceeding to reform its
pricing rules for unbundled network elements, and to complete it by the end of
2003. They also requested the the FCC "make clear at the time it initiates this
proceeding that it will no longer base prices on hypothetical, imaginary
networks, but rather will base prices on real-world networks that are used to
provide unbundled elements", and that the FCC "will require the states to
re-calculate the existing UNE rates using the
modified pricing methodology promptly after the new rules are adopted."
Finally, the three Commerce Committee leaders stated that the FCC "should
move immediately to take interim steps to begin to limit the most harmful
effects of its existing rules, including the effects of the arbitrage created by
applying the current pricing rules to the UNE-P. It
should stop applying the TELRIC rules to the UNE-P, and make clear that the
resale-pricing standard prescribed by Congress provides the price floor."
is the Chairman of the House Commerce
Committee, Rep. Dingell (at right) is the ranking Democrat, and Rep. Upton is
the Chairman of its Telecom and Internet Subcommittee.
The argument that they advanced in support of these requests is one that they
have made many times in the past. They made the economic argument that "firms
will invest in new facilities only to the extent that they believe that the
financial return over time from those facilities exceeds the cost".
They elaborated that "The primary problem is that the Commission's TELRIC
pricing rules are based
on hypothetical, ideally efficient networks rather than real-world network
elements that must be provided to CLECs on an unbundled basis. By their very
nature, the current rules discourage investment by incumbent telephone
companies, which cannot recover their investment under the TELRIC methodology.
The rules similarly discourage investment by competing carriers, who have little
reason to invest when they can lease the existing network at artificially low
prices and when any investment they do make can be undercut by other carriers
who provide service leasing the incumbent's facilities at TELRIC rates."
They added that "This problem is made much worse by the fact that the same pricing rules are
applied when other carriers provide service entirely over the incumbent's
existing network using what is referred to as the ``unbundled network element
platform´´ (UNE-P). Of course, the 1996 Act did not impose this requirement.
Rather, the 1996 Act allowed other carriers to provide services using the
incumbent's entire local network exclusively under a separate resale pricing
standard. It was the Commission that created the UNE-P after the Act was
passed, and it was the Commission that decided to apply its TELRIC rules rather
than the resale pricing standard mandated by Congress. By doing so, the rules
have created a classic case of regulatory arbitrage."
|Treasury Secretary Addresses Internet Based
7/31. The Senate Banking Committee
held a hearing on measures to enhance the operation of the Fair Credit Reporting Act.
Secretary of the Treasury
John Snow addressed
internet based identity theft in his
testimony. He wrote that "Perhaps the most serious threat to financial
consumers today is identity theft. Identity thieves are clever, adaptable, and
heartless. Indeed, many identity thieves specifically target the most vulnerable
members of society -- families of the recently deceased, seniors, hospital
patients, and men and women serving our nation overseas."
Snow (at right) described
one scheme. "Using a $100 commercially available keystroke
logging program, an identity thief in New York stole over 450 online banking
passwords during a two year period. The scam began with the thief installing a
keyboard sniffing program on public Internet terminals at thirteen locations
scattered throughout Manhattan. Unwitting customers using the terminals then had
their keystrokes logged as they accessed information. With username and password
information in hand, the thief then used the victims' personal and financial
information to open new accounts under their names and transferred money from
the victims' legitimate accounts into the new, fraudulent ones."
He added that "Many Americans have worked hard for years to build and keep
good credit histories. In today’s information driven economy, one of your most
important personal assets is your reputation, your credit history. The
statistics are there -- and have been cited by many. For example, a recent study
reports that identity theft has been seriously under-reported and asserts that 7
million Americans were victims of identity theft last year alone."
|Judge Awards Motorola $4,265,793,811.32 From
Turkish Telecom Deadbeats
7/31. The U.S. District Court (SDNY)
Opinion and Order [172 pages in PDF] in Motorola
and Nokia v. Uzan, holding defendants liable for common law
fraud, promissory fraud, and civil conspiracy to defraud, and awarding Motorola
Credit Corporation (MCC) over $4 Billion in compensatory damages, punitive
damages, and interest.
The District Court, Judge Jed Rakoff
presiding, concluded that the "defendants -- in particular, the members of the
Uzan family -- have perpetrated a huge fraud." He summed up the case as follows:
"Under the guise of obtaining financing for a Turkish telecommunications
company, the Uzans have siphoned more than a billion dollars of plaintiffs'
money into their own pockets and into the coffers of other entities they
control. Having fraudulently induced the loans, they have sought to advance and
conceal their scheme through an almost endless series of lies, threats, and
chicanery, including, among much else, filing false criminal charges against
high level American and Finnish executives, grossly diluting and weakening the
collateral for the loans, and repeatedly disobeying the orders of this Court."
On January 28, 2002, MCC and Nokia
Corporation filed a
complaint in District Court against Kemal Uzan, other members of the Uzan
family, and corporations controlled by the Uzan family, regarding cellular
communications deals in the nation of Turkey.
The complaint states that the defendants, who are politically well connected
in Turkey, were awarded a Global System for Mobile Telephony (GSM) license by
the Turkish government. Motorola then provided defendants loans to obtain base
stations from Motorola, and Nokia provided loans to obtain switching equipment
from Nokia. This equipment was then used to build a GSM and 2.5G wireless
telecommunications system in Turkey. However, Motorola and Nokia did not get
paid up front.
The complaint states that the defendants borrowed from Motorola and Nokia,
and then intentionally and illegally diluted the value of stock pledged as
collateral for the loans. The complaint also alleges that defendants
manufactured transactions to transfer assets from the debtor companies.
The complaint alleges numerous causes of action. In the present opinion and
order they prevail on fraud and constructive trust theories. However, they also
plead RICO, fraud in connection with computers in violation of the Computer
Fraud and Abuse Act,
18 U.S.C. § 1030(a)(4), interception of electronic communications in
violation of the Electronic Communications Privacy Act,
18 U.S.C. § 2511(1)(a),
and unlawful access to stored electronic communications in violation of the
Electronic Communications Privacy Act,
18 U.S.C. § 2701(a)(2).
See also, story titled "Motorola & Nokia Sue Turkish Cellular Company for RICO
Violations and Computer Hacking" in
TLJ Daily E-Mail
Alert No. 357, January 30, 2002.
On July 31, 2003, the Court held that "MCC is
entitled on its fraud claims, taken jointly and severally, to an award of
compensatory damages from the defendants, jointly and severally, in the amount
of $1,803,089,316.57 plus interest", which he found to be $329,807,589.09
through July 31, 2003, thus brining total compensatory damages to
$2,132,896,905.66. The Court also awarded punitive damages in an equal amount, for a
total award of $4,265,793,811.32.
The Court also found for the plaintiffs on
their constructive trust claim. The Court therefore held that "As plaintiffs
have prevailed on their constructive trust claim relating to the original value
of their collateral that defendants stole from them, plaintiffs are hereby
converted into the equitable owners of Telsim shares that are the functional
equivalent of the original collateral, that is, Telsim shares held by any one or
more of the entities controlled by the Uzans that collectively constitute 73.5%
of the ownership, control, and share value of Telsim."
The Court further held that "Since Nokia has no meaningful
remedy for the fraud perpetrated upon it other than the constructive trust
imposed herein on its behalf, therefore, in light of the defendants’ past
contempts, if defendants now fail to transfer or cause to be transferred the
requisite Telsim shares to the Court’s registry on behalf of Nokia within one
week from the entry of judgment, the Court hereby orders that judgment will
automatically then enter requiring defendants (jointly and severally) to pay to
Nokia two times the full amount outstanding on the loans extended by Nokia to
Telsim (i.e., $711,000,977.23), plus pre-judgment interest in the amount of
$142,706,661.90, for a total of $853,707,639.13."
Given the defendants conduct of fraud, deception, lies to the
court, failure to appear at any depositions or trial, and violations of Court
orders, the Court opined that "monetary sanctions will not suffice to bring
defendants into compliance with this these orders." So, the Court ordered that
"that unless and until defendants purge their contempts, the individual
defendants, if found within the jurisdiction of the United States, will be
immediately arrested and held in confinement until such time as they comply with
the" Court's directives.
Galvin, Ch/CEO of Motorola, stated in a
release that "We are extremely pleased with the Court's strong ruling and we
look forward to recouping the billions of dollars that were diverted by the
Uzans and returning it to the rightful owners -- Motorola's shareholders.
Today's ruling is a landmark decision concerning the massive global fraud that
has been perpetrated against Motorola by the Uzans, and the latest in a series
of court judgments throughout the world against the Uzans."
Olli-Pekka Kallasvuo, CFO of Nokia, stated that "Today's judgment confirms
our belief of wrong-doing against Nokia and proves the activities against us were
fraudulent and intentional ... We will now use this ruling as part of our continued
effort of recovering the funds."
This case is Motorola Credit Corporation and Nokia Corporation v. Kemal Uzan,
et al., D.C. No. 02 CV 666.
|Pacific Bell Internet Services Sues RIAA
Over DMCA Subpoenas
7/30. Pacific Bell Internet Services (PBIS) filed a
U.S. District Court (NDCal) against
the Recording Industry Association of America
(RIAA) seeking declaratory and injunctive relief regarding the validity of
subpoenas issued by the U.S. District Court (DC),
Section 512 of the
DMCA, that directs ISPs to provide information about subscribers alleged to be
engaging in P2P copyright infringement over the ISPs networks. The complaint
seeks to relitigate many of the issues raised by Verizon in a case in the District
of Columbia. (Verizon lost on these issues.) However, the complaint also raises
new issues regarding the form of the subpoenas, the manner in which they are
served, and whether the recipient is entitled to compensation for compliance.
Background. The RIAA represents music companies whose copyrights are being
infringed by people using peer to peer file sharing systems. The RIAA possesses
only Internet Protocol (IP) number information on infringers. This does not
reveal the identity of the infringers. However, internet
service providers, which provide internet access for the P2P infringers, possess
information that would associate subscriber information with IP number
information. That is, by obtaining the ISP's information, the RIAA, or its
members, would be able to file complaints alleging infringement against the
individual infringers. The RIAA cannot sue these ISPs for infringement, because
of the safe harbor provisions of the Digital Millennium Copyright Act (DMCA).
The RIAA has obtained numerous subpoenas from the Clerk of the Court of the
U.S. District Court for the District of Columbia, pursuant to § 512(h), and
served them upon many ISPs. In August of 2002, Verizon filed a complaint in the
District Court challenging some of the first of these subpoenas. This matter has
been thoroughly litigated in the District of Columbia, the RIAA has prevailed in
the District Court, and the Appeals Court has declined to issue a stay.
See, stories titled "RIAA Seeks to Enforce Subpoena to Identify Anonymous
Infringer" in TLJ
Daily E-Mail Alert No. 499, August 27, 2002; "Verizon and Privacy Groups
Oppose RIAA Subpoena" in
TLJ Daily E-Mail
Alert No. 501, September 4, 2002; "District Court Rules DMCA Subpoenas
Available for P2P Infringers" in
TLJ Daily E-Mail
Alert No. 588, January 22, 2003; "Law Professor Submits Apocalyptic
Declaration in RIAA v. Verizon" in
TLJ Daily E-Mail
Alert No. 596, February 3, 2003; "DOJ Files Brief in Support of RIAA in
Verizon Subpoena Matter" in
TLJ Daily E-Mail
Alert No. 646, April 22, 2002; "District Court Rules That A DMCA § 512(h)
Subpoena for the Identity of an P2P Infringer Does not Violate the Constitution"
in TLJ Daily E-Mail
Alert No. 649, April 25, 2003; and "Court of Appeals Denies Stay in RIAA v.
Verizon" in TLJ
Daily E-Mail Alert No. 674, June 5, 2003.
Much of the PBIS's complaint essentially seeks to relitigate issues already decided by
the District of Columbia Court. Of course, the District Court for the Northern
District of California is not bound by the opinion of the District Court for the
District of Columbia.
However, the PBIS also raises several new issues regarding the form of
subpoenas, the manner in which they are served, and whether the recipient is
entitled to compensation for compliance.
Statute. § 512 provides ISPs a safe harbor from liability for infringement
based on the activities of their users. There are four specific limitations on
liability. § 512(a) pertains to "transmitting, routing, or providing connections
for, material through a system or network controlled or operated by or for the
service provider, or by reason of the intermediate and transient storage of that
material in the course of such transmitting, routing, or providing connections".
§ 512(b) pertains to "the intermediate and temporary storage of material on a
system or network". § 512(c) pertains to "material that resides on a system or
network controlled or operated by or for the service provider". And, § 512(d)
pertains to "referring or linking users to an online location containing
infringing material or infringing activity, by using information location tools,
including a directory, index, reference, pointer, or hypertext link".
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
statute then provides that the requester should also provide a copy of the
512(c)(3) notice, a proposed subpoena, and a sworn declaration.
Subsection 512(h)(5) then 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."
Conduit Functions. The District Court (DC) previously held that copyright
holders can obtain subpoenas pursuant to § 512(h) that require ISPs to reveal
the identities of their customers who infringe copyrights on peer to peer filing
sharing systems. Verizon had argued in the District Court (DC), unsuccessfully, that
Section 512(h) subpoenas are only available with respect to infringers who
stored infringing content on the servers of the ISP
In the present case, PBIS argues that "The DMCA does not authorize the
issuance of subpoenas or DMCA notices to a service provider such as PBIS based
on services it provides when performing the ``conduit´´ functions described in
17 U.S.C. § 512(a)."
Issuance of Subpoenas in the Absence of a Case. The District Court (DC)
previously held that that issuance of the DMCA subpoena does not violate the justiciability requirements of Article III by authorizing federal courts to
issue binding judicial process outside a pending case or controversy.
In the present case, PBIS argues that "Issuance and enforcement of a subpoena
pursuant to the DMCA seeking information identifying the customers of a service
provider such as PBIS, in the absence of a pending case or controversy arising
under federal law, violates Article III of the Constitution."
Free Speech Rights. The District Court (DC) previously held that the issuance
of a DMCA subpoena does not violate the First Amendment. It wrote that "Section
512(h) merely allows a private copyright owner to obtain the identity of an
alleged copyright infringer in order to protect constitutionally recognized
rights in creative works; it does not even directly seek or restrain the
underlying expression (the sharing of copyrighted material). Thus, the DMCA does
not regulate protected expression or otherwise permit prior restraint of
protected speech. It only requires production of the identity of one who has
engaged in unprotected conduct -- sharing copyrighted material on the Internet."
(Parentheses in original.)
In the present case, PBIS argues that "Issuance and enforcement of a subpoena
seeking information identifying the customers of a service provider such as PBIS
violates the rights guaranteed to PBIS subscribers by the First Amendment and
the Due Process Clause of the Fifth Amendment of the United States
Form and Service of Subpoenas. The PBIS complaint goes into considerable detail on
the technical elements of the subpoenas, including the entity named in the
subpoenas, the address at which they were served, the manner in which they were
served, and the District Court which issued the subpoenas. The complaint alleges
that various subpoenas are defective for various technical reasons. The fourth
and fifth counts of PBIS's complaint raise a number of issues under the DMCA and
Rule 45 of the
Federal Rule of Civil Procedure
For example, the complaint states that "Pacific Bell Internet Services"
(PBIS), which is the plaintiff in this case, is a California corporation, with
its principal place of business in San Francisco, California. The complaint
states that PBIS provides Internet access services and high-speed Internet
connections to its subscribers. It further states that some of the subpoenas ask
for information about PBIS subscribers.
The complaint further states that "SBC Internet Communications, Inc.", which
is named in many of the RIAA's subpoenas, is a holding company that does not
provide Internet access services, and does not have the required custody and
control over the subscriber information sought by the subpoenas. The complaint
states that SBC Internet Communications, Inc. is not a "service provider" within
the meaning of term as used in 17 U.S.C. § 512.
Thus, PBIS argues that these subpoenas are defective because they name the
Similarly, the RIAA served many subpoenas in San Antonio, Texas, the
principal place of business of SBC Communications, Inc. and SBC Internet
Communications, Inc. PBIS argues that these subpoenas should have been served in
San Francisco, where PBIS is located.
PBIS also argues that subpoenas are defective under Rule 45. This rule
provides, in part, that "a subpoena may be served at any place within the
district of the court by which it is issued, or at any place without the
district that is within 100 miles of the place of the deposition, hearing,
trial, production, or inspection specified in the subpoena or at any place
within the state where a state statute or rule of court permits service of a
subpoena issued by a state court of general jurisdiction sitting in the place of
the deposition, hearing, trial, production, or inspection specified in the
PBIS points out, for example, that San Antonio, which is where many subpoenas
were served, is more than 100 from Washington DC, where the subpoenas were
issued. It further points out that service in San Francisco is also outside the
100 mile limit.
PBIS's statements in its complaint regarding service are inconsistent with
statements that it has made to the U.S.
Copyright Office. For example, on June 11, 2003 "SBC Internet
Communications, Inc." filed a
[PDF] with the Copyright Office titled "Amended Interim Designation of Agent to
Receive Notification of Claimed Infringement". In this document, "SBC Internet
Communications, Inc." lists itself as a "service provider". In this document
"SBC Internet Communications, Inc." further lists "Pacific Bell Internet
Services" in the category of "Alternative Name(s) of Service Provider (including
all names under which the service provider is doing business)". Finally, this
document states that service should be made in San Antonio, Texas upon the
General Counsel of "SBC Internet Communications, Inc."
However, whatever the disposition of these claims turns out to be, these
claims are at best delaying tactics. The RIAA can obtain new subpoenas, and
obtain service in a manner that satisfies any requirements imposed by the Court.
Compensation for Compliance. However, PBIS's claim regarding compensation
may have long term ramifications.
PBIS states in its complaint that "Under Fed. R. Civ. P. 45(c)(3)(B)(iii),
the proponent of a subpoena must ``reasonably compensate´´ the recipient of a
subpoena for its expenses. Similarly, Fed. R. Civ. P. 45(c)(2)(B) provides that the
Court ``shall protect any person any person who is not a party or an officer of a
party from significant expense resulting from the inspection and copying
commanded.´´ Defendants have made no provision to compensate PBIS for responding
to the subpoenas issued pursuant to the purported authority of the DMCA. The subpoenas
therefore fail to comply with Fed. R. Civ. P. 45."
PBIS concludes that "PBIS must be
for any compliance with subpoenas issued under the DMCA and, in the alternative,
that if the
provisions of the DMCA do not require compensation of recipients of subpoenas,
provisions are unconstitutional."
Subsection 512(h) of the DMCA provides that "the procedure for issuance and
delivery of the subpoena, and the remedies for noncompliance with the subpoena,
shall be governed to the greatest extent practicable by those provisions of the
Federal Rules of Civil Procedure governing the issuance, service, and
enforcement of a subpoena duces tecum." This subsection does not establish a
blanket rule that Rule 45 applies. Rather, it enumerate situations in which Rule
45 does apply, such as "issuance" and "delivery". It does not enumerate
"procedure for compliance" or "compensation".
The District Court's stamps on the complaint indicate that the case has been
assigned the number C 03 3560 JL. JL is a reference to Magistrate Judge James
PBIS is represented by the law firm of Kekker &
Van Nest. The complaint was signed by
Ragesh Tangri. The complaint also
lists as counsel
Lemley. He is of counsel to the firm, and a professor of
law at Boalt Hall School of Law, at the University of California at Berkeley.
|Monday, August 4
The Senate is scheduled to begin its August recess.
|Tuesday, August 5
10:00 AM - 12:00 NOON. The Department of
State's (DOS) International Telecommunication Advisory Committee (ITAC)
will meet to prepare for the meeting of the International Telecommunications
Union's ITU-D, Study Groups 1 and 2, in Geneva, Switzerland on September 2-11,
notice in Federal Register, July 22, 2003, Vol. 68, No. 140, at Page
43413. Location: DOS, Room 2533-A.
|Wednesday, August 6
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 Federal
Communications Commission (FCC) in response to its
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". See,
notice in the Federal Register, May 23, 2003, Vol. 68, No. 100, at Pages 28182 - 28186.
See also, 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 is ET Docket No. 03-104. For more information, contact Anh Wride at 202
418-0577 or email@example.com.
POSTPONED. The Federal
Communications Commission (FCC) will hold an auction of Direct Broadcast
Satellite (DBS) Service Licenses. This is Auction No. 52. See,
notice of postponement in Federal Register, June 20, 2003, Vol. 68, No.
119, at Page 36989.
|Thursday, August 7
10:00 AM. The U.S. Court of Appeals
(FedCir) will hear oral argument in Microsoft v. Multi-Tech Systems, No. 03-1138,
and Multi-Tech Systems v. Net2Phone, No. 03-1139.
This is an appeal from the U.S.
District Court (DMinn) in a patent infringement case involving data
communications technology. Location: Courtroom 201, 717 Madison Place, NW.
10:00 AM - 12:00 NOON. The Federal Communications
Commission (FCC) Office of Engineering
and Technology (OET) will sponsor a tutorial titled "Fiber to the Home
Technology". Location: FCC, 445 12th Street, SW,
Room TW-C05 (Commission Meeting Room). See,
|Friday, August 8
Deadline to submit comments to the Federal
Communications Commision (FCC) in response to its
notice of proposed rulemaking (NPRM) [7 pages in PDF] regarding the
draft Nationwide Agreement [28 pages in PDF] of the FCC, the Advisory
Council on Historic Preservation, and the National Conference of State
Historic Preservation Officers, regarding undertakings for communications
facilities, including communications towers and antennas, under the
National Historic Preservation Act (NHPA). This proceeding is titled "In the
matter of Nationwide Programmatic Agreement Regarding the Section 106 National
Historic Preservation Act Review Process". It is WT Docket No. 03-128. For
more information, contact Frank Stilwell at 202 418-1892 or
firstname.lastname@example.org. See, story titled
"FCC Announces NPRM Regarding Communications Facilities and the National
Historic Preservation Act" in TLJ Daily E-Mail Alert No. 677, June 10, 2003.
notice in the Federal Register, July 9, 2003, Vol. 68, No. 131, at Pages
40876 - 40887.
|Sunday, August 11
Deadline to submit comments to the General
Services Administration's (GSA) Office of Electronic Government and
Technology regarding its draft policy titled "Draft E -- E-Authentication for
Federal Agencies". See,
notice in the Federal Register, July 11, 2003, Vol. 68, No. 133, at Pages
41370 - 41374.
|People and Appointments
7/31. The Senate confirmed Frank Montalvo to be a Judge of the
U.S. District Court (WDTex) by a
vote of 95-0.
See, Roll Call No. 321.
7/31. The Senate confirmed James Cohn to be a Judge of the
U.S. District Court (SDFl) by a vote
See, Roll Call No. 320.
7/31. The Senate Finance Committee
by unanimous votes, the nominations Josette Shiner to be a Deputy U.S. Trade
Representative, James Jochum to be an Assistant Secretary of Commerce, and
Robert Nichols to be an Assistant Secretary of the
7/31. The Senate Judiciary
Committee favorably reported the nominations of
Steven Colloton (U.S. Court of Appeals for the Eighth Circuit), James
Browning (District of New Mexico), Brent McKnight (Western
District of North Carolina), David Proctor (Northern District of Alabama),
Kevin Castel (Southern District of New York), Sandra Feuerstein (Eastern
District of New York), Richard Holwell (Southern District of New York),
Stephen Robinson (Southern District of New York), Rene Acosta to
be an Assistant Attorney General in charge of the
Civil Rights Division,
and Daniel Bryant to be an Assistant Attorney General in charge of the
Office of Legal Policy.
7/30. Secretary of Commerce
Donald Evans appointed
three new members of the Patent
Public Advisory Committee,
Andrew Dillon, and Howard Klein. Nydegger is an attorney with the
Utah law firm of Workman Nydegger &
Seeley. He is also the President-Elect of the
Property Law Association (AIPLA). Dillon in an attorney in the Austin, Texas
office of the law firm of Bracewell &
Patterson. He focuses on intellectual property matters in the electronics and
software industries. Klein is a lawyer in Irvine, California
who specializes in intellectual property law. See, USPTO
7/30. Secretary of Commerce
Donald Evans appointed
three new members of the Trademark Public Advisory Committee,
Welch. Samuels is a law professor at the University of Akron. Tepper is
a partner in the law firm of Womble Carlyle.
Welch is a partner in the law firm of Pattishall
McAuliffe. See, USPTO
7/30. The Federal Communications Commission
(FCC) released a
Notice of Inquiry (NOI) which solicits "data and information on the status
of competition in the market for the delivery of video programming for our tenth
annual report". Comments are due by September 11, 2003. Reply comments are due
by September 26, 2003.
|About Tech Law Journal
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