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January 16, 2004, 9:00 AM ET, Alert No. 817.
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Court Rules That Search Engines Use of Trademarks to Display Banner Ads May Infringe Trademarks

1/14. The U.S. Court of Appeals (9thCir) issued its opinion [28 pages in PDF] in Playboy v. Netscape, a trademark case involving the use of trademarked terms to displays ads with search results.

Playboy Enterprises, Inc. (PEI) has trademarked the terms "playboy" and "playmate". Netscape and Excite operated web based search engines. They sold advertising space to pormographic website operators. In particular, Netscape and Excite sold the display of banner ads on search results pages that were produced after users entered the trademarked terms. That is, users who typed either of the trademarked terms were given results pages with banner ads for the porm sites.

PEI filed complaint in the U.S. District Court (CDCal) against Netscape and Excite alleging trademark infringement and trademark dilution. The District Court granted summary judgment to Netscape and Excite on both claims. PEI appealed.

On the infringement claim, PEI argued that there is initial interest confusion. That is, by keying adult oriented ads to PEI's trademarks, so that the ads appear immediately after the user enter PEI's trademark, Netscape and Excite actively created confusion regarding the sponsorship of those ads. The Court of Appeals, relying on Brookfield Communications, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036 (9th Cir. 1999), reversed and remanded, holding that there are genuine issues materials issues of fact.

The Appeals Court also reversed and remanded on the trademark dilution claim, holding that there are genuine issues of material fact regarding both the famousness of the marks and the defendants' commercial use of the marks.

This case is Playboy Enterprises, Inc. v. Netscape Communications Corporation, and Playboy Enterprises International, Inc. v. Excite, Inc., Nos. 00-56648 and 00-56662, appeals from the U.S. District Court for the Central District of California, Judge Alicemarie Stotler presiding, D.C. Nos. CV-99-00320-AHS and CV-99-00321-AHS-02

6th Circuit Rules in Cell Tower Case

1/15. The U.S. Court of Appeals (6thCir) issued its opinion in Omnipoint v. City of Southfield, a cell tower location case. The Appeals Court affirmed the District Court's summary judgment for Southfield based upon failure to file suit within the 30 day statute of limitations.

Omnipoint (VoiceStream) provides personal communications systems in southeastern Michigan. It sought a special use permit from the City of Southfield to build a 150 foot monopole antenna tower to cover a gap in its coverage. Southfield denied the application.

47 U.S.C. § 332 provides, at § 332(c)(7)(A) that "Except as provided in this paragraph, nothing in this chapter shall limit or affect the authority of a State or local government or instrumentality thereof over decisions regarding the placement, construction, and modification of personal wireless service facilities." § 332(c)(7)(B) then provides limitations to this general rule. § 332(c)(7)(B)(ii) prevents state and local governments from unreasonably discriminating among providers, and from prohibiting the provision of service. § 332(c)(7)(B)(iii) provides that "Any decision by a State or local government or instrumentality thereof to deny a request to place, construct, or modify personal wireless service facilities shall be in writing and supported by substantial evidence contained in a written record."

Finally, there is a statute of limitations in the statute. § 332(7)(B)(v) provides that "Any person adversely affected by any final action or failure to act by a State or local government or any instrumentality thereof that is inconsistent with this subparagraph may, within 30 days after such action or failure to act, commence an action in any court of competent jurisdiction."

VoiceStream filed a complaint in U.S. District Court (EDMi) against Southfield alleging violation of Section 332. The District Court granted summary judgment to Southfield on the grounds that the complaint was filed after the running of the statute of limitations.

The Appeals Court affirmed. VoiceStream filed its complaint on July 3, 2001. The Court ruled that the 30 days began to run on April 9, 2001, which was the date that the minutes of the city council meeting at which the application was denied were approved.

This case is Omnipoint Holdings, Inc. dba VoiceStream Wireless v. City of Southfield, Southfield City Council, U.S. Court of Appeals for the 6th Circuit, No. 02-1713, an appeal from the U.S. District Court for the Eastern District of Michigan, at Detroit, D.C. No. 01-72482, Judge Denise Hood presiding.

GAO Reports on Use of Public Key Infrastructure at Federal Agencies

1/15. The General Accounting Office (GAO) released a report [58 pages in PDF] titled "Information Security: Status of Federal Public Key Infrastructure Activities at Major Federal Departments and Agencies"

The report, which was prepared for the House Government Reform Committee, and its Subcommittee on Technology, Information Policy, Intergovernmental Relations and the Census, states that "Increasingly, the federal government is using the World Wide Web and other Internet-based applications to provide online public access to information and services as well as to improve internal business operations."

"To properly conduct communications and transactions with the government over the Internet may require security assurances that go beyond simple security measures -- such as passwords -- to properly safeguard sensitive, personal, and financial data. Public key infrastructure (PKI) offers many of the security assurances that, when fully and properly implemented, can protect online communications and transactions", states the GAO.

This report is a follow up to a similar report by the GAO conducted in 2001. The present report is based upon an examination of up to date information on PKI initiatives at 24 federal departments and agencies. This report specifically examines the Federal Bridge Certification Authority (FBCA) and Access Certificates for Electronic Services (ACES) programs.

The GAO found that "24 agencies involved in our query, 20 are pursuing a total of 89 PKI initiatives. The 89 initiatives are at various stages of development, and collectively they represent a significant investment, estimated at about $1 billion. In addition, the governmentwide FBCA and ACES programs continue to promote the adoption and implementation of PKI, but these programs have seen mixed progress and results. The level of participation in the FBCA, which provides a means to link independent agency PKIs into a broader network, is the same as in 2001 -- four agencies are certified to operate through the network. Additional agencies are planning to participate in the future, as well as nonfederal organizations, such as the state of Illinois, the Canadian government, and educational consortiums. Similarly, the ACES program, which offers agencies various PKI services through a General Services Administration (GSA) contract, has garnered lower than expected participation among federal agencies."

USPTO Announces Top Ten Patent Companies

1/12. The U.S. Patent and Trademark Office (USPTO) released its preliminary list of the entities receiving the most patents in 2003. IBM tops the list for the 11th consecutive year. See, USPTO release and summary table below.

Rank Company Patents
1 IBM 3,415
2 Canon 1,992
3 Hitachi 1,893
4 Matsushita 1,786
5 HP 1,759
6 Micron 1,707
7 Intel 1,592
8 Phillips 1,353
9 Samsung 1,313
10 Sony 1,311

Hewlett Packard boasted in a release that it moved up from No. 9 in 2002 to No. 5 in 2003, with a 27 % increase. HP also announced that "it has formed an intellectual property (IP) licensing organization designed to increase revenue and improve technical collaborations with partners."

Steve Fox, HP VP and Deputy General Counsel, Intellectual Property, stated that "we launched a major effort to increase our intellectual property portfolio ... We have been holding 'innovation' workshops designed to encourage the technical workforce to disclose more inventions."

Joe Beyers, VP, Intellectual Property Licensing, stated that "Historically, HP's intellectual property has provided value to the company in the form of innovative products and protection from our competitors ... This approach has served us well, but in many cases we have missed out on the opportunity to gain additional value from HP's inventions beyond product revenue. Capturing these additional opportunities is important to HP as the competitive environment in which we operate continues to intensify. Also, by making HP's intellectual property more broadly available, we can improve our collaboration with other companies."

IBM also touted its first place in the patent ranking. It stated in a release that its extended "its run as the world's most innovative company to eleven consecutive years. Led by growth in patents that fuel the company's latest on demand computing and services offerings, IBM eclipsed the nearest company by more than 1,400 patents."

Nick Donofrio, IBM SVP, Technology and Manufacturing, stated that "IBM's commitment to research and development has driven more than a decade's worth of patent leadership and is a major factor in our emergence as the world's leading IT, services and consulting company ... That said, we consider patents a starting point on the path to true innovation. What differentiates IBM from other companies is our ability to rapidly apply these inventions to new products and offerings that solve the most pressing business challenges of our clients."

Although IBM leads all other companies in new patents every year, its Chairman and CEO recently gave a speech in which he expressed a lack of enthusiasm for the patent system.

Sam Palmisano, the Chairman and CEO of IBM, gave a lengthy speech in Washington DC on October 30, 2003 to the Council on Competitiveness in which he discussed innovation. What was notable about Palmisano's speech was what he did not say. He never argued that according legal protections to inventors incents innovation and investment in innovative endeavors.

Palmisano mentioned patents only once -- to state that IBM gets more than anyone else. He mentioned "intellectual property" only once -- to ask rhetorically, "How can we go beyond traditional notions of ``R&D´´ and intellectual property ..."

A common denominator of most speeches, papers, reports, and books regarding innovation is the argument that giving patent protection to inventors incents innovation. See, related story below, titled "IBM CEO Advocates Government Support for Innovation Ecosystem".

IBM CEO Advocates Government Support for Innovation Ecosystem

1/12. Sam Palmisano, the Chairman and CEO of IBM, gave a speech in Washington DC on October 30, 2003 to the Council on Competitiveness in which he discussed innovation. He stated at the outset that he would address "How it happens, where it happens, and why."

It was a CEO speech -- polished and practiced, and packed with eloquent phrases -- but maddeningly vague on key points. But, he was clear on the many points.

Like many others who have examined innovation, he believes that the study of history is important for understanding this subject. He did not, however, cite any historical works that pertain to innovation. Moreover, most of his few references to history were recent developments in information and bio technology.

He concludes that "There are times and places and certain conditions under which innovation absolutely flourishes." But, he rejects the notion that innovation is "just human genius". He said that "if we study human history, we know that that's simply not true."

Sam PalmisanoIndeed, for Palmisano (at right), there isn't much human about innovation. His speech is about corporations, research universities and governments. And, altogether, in collaboration, and interconnected by networks, they form an "innovation ecosystem". People are merely employees and workers who have skills and hold jobs within the ecosystem.

In listing the numerous factors that have made the U.S. an "engine of innovation", he lists in one bullet point "access to natural resources and labor". Apparently, people come with the land, like serfs.

But, innovations "emerge from this ecosystem". He never precisely defines this "ecosystem". But, perhaps its meaning is captured in his phrase "a unique sort of cooperation and collaboration among the federal government, national and military labs, private sector R&D efforts, research universities and entrepreneurs."

He also states that "innovations ... require -- not just on invention or discovery -- but the fusion of developments across multiple industries and fields." Moreover, innovation involves "application and exploitation across multiple industries".

Then, he also states that governments can and should endeavor to create conditions that lead to innovation.

So, what can a government do to become more innovative? He lists several items, including "investing in education and job skills", "teaching their citizens the language of modern commerce ... software", building "modern network infrastructures", and entering into "multilateral trade agreements".

He later adds that the U.S. government's role in creating the conditions for innovation includes "basic research", nurturing "strategic partnerships among the private and public sectors, universities and labor", and "building the national infrastructure necessary to participate in the global innovation ecosystem".

What is also notable about his speech is what he left out. First, unlike many others who have examined innovation, he does not identify freedom or democracy as being conditions that support innovation.

Second, while he references "businesses", "company", "business investment", "capital markets", "private sector", and "rule of law", he leaves out many of the topics addressed by those he argue that free markets are essential for innovation. He makes no reference to competitive markets, creative destruction, deregulation, or government transparency. He never makes a statement to the effect that free markets are a necessary condition for innovation.

Third, he did not say the intellectual property rights (IPR) protections promote innovation. He mentioned IPR only twice. In both instances, he diminished its importance. For example, he asked rhetorically, "How can we go beyond traditional notions of "R&D" and intellectual property and identify and nurture the intersections that lead to innovation?" He seems to be saying that traditional notions of intellectual property do not promote innovation.

He also states at one point that IBM receives more patents than any other company. But, he makes no comments about the importance of patent protection, or the value of patents to IBM.

Nor did not state that SCO filed a complaint against IBM in state court in Utah last year alleging misappropriation of trade secrets, tortious interference, unfair competition and breach of contract in connection with IBM's alleged use of proprietary UNIX code.

Tech Law Journal began a series of articles innovation and public policy before the holidays. The article continues this series.

House Commerce Committee Seeks Chicago School Records in Investigation of E-Rate Waste, Fraud and Abuse

1/15. Rep. Billy Tauzin (R-LA) and Rep. James Greenwood (R-PA) wrote a letter to the Chicago Public Schools requesting records relevant to a House Commerce Committee investigation into the Federal Communications Commission's (FCC) e-rate subsidy program.

James GreenwoodRep. Tauzin is the Chairman of the House Commerce Committee. Rep. Greenwood (at right) is the Chairman of its Subcommittee on Oversight and Investigations.

The letter requests "Copies of all audits of E-rate related work at Chicago Public Schools (CPS) conducted for CPS, including, but not limited to, the internal audits conducted by KPMG", "Copies of reviews, assessments, or memoranda regarding E-rate related work or performance of such work for CPS, including, but not limited to, memoranda prepared for the Chicago Board of Education or members of the Board", and other records.

The letter does not reference the problem of waste, fraud and abuse in the e-rate program. However, the House Commerce Committee has been conducting an investigation into waste, fraud and abuse.

See, related stories: "Reps. Tauzin & Greenwood Request GAO Report on E-Rate Waste, Fraud & Abuse" in TLJ Daily E-Mail Alert No. 791, December 3, 2003; "House Commerce Committee Requests Information from IBM in E-Rate Fraud Investigation" in TLJ Daily E-Mail Alert No. 698, July 15, 2003; "House Commerce Committee Subpoenas USAC for E-Rate Records" in TLJ Daily E-Mail Alert No. 652, April 30, 2003; and "Rep. Tauzin Writes Powell Re Waste Fraud & Abuse In E-Rate Program" in TLJ Daily E-Mail Alert No. 624, March 17, 2003.

Cato Paper Criticizes Compulsory Licensing

1/15. The Cato Institute released a paper [15 pages in PDF] titled "Compulsory Licensing vs. the Three "Golden Oldies" Property Rights, Contracts, and Markets", by Robert Merges.

Merges, a law professor at the University of California at Berkeley, writes that "Rather than allowing musicians, artists, and other copyright owners to negotiate licensing terms for use of their works, a compulsory license forces copyright owners to allow use of their works under legislatively set prices and restrictions on use."

He argues that today, "markets for digitized works do not suffer from market failures. Furthermore, the Internet has reduced the transaction costs that once served as a key rationale for compulsory licensing. Recent developments suggest that fears of excessive control of digital content are overblown. Without enhancing compulsory licensing, the digital landscape is diverse, as the case of music demonstrates. There is free music, temporarily free music, and low-cost music online. Offline, music companies are lowering the prices of CDs."

He recommends repealing the digital public performance right compulsory license, and letting "Sound-Exchange and any competitors that may arise deal directly with webcasters." He also recommends resisting appeals to legislate more compulsory licenses."

Microsoft Agrees to Modify Windows XP Feature At Request of DOJ

1/15. The Department of Justice's (DOJ) Antitrust Division released a statement titled "Microsoft Consent Decree Compliance Advisory" that pertains to the "Shop for Music Online" feature in Microsoft's Windows XP operating system.

The DOJ stated that "Section III.H of the Final Judgment requires Microsoft to allow end users and OEMs to specify a non-Microsoft middleware product -- such as a web browser, e-mail client, or media player -- as the default middleware product to be launched in place of Microsoft's corresponding middleware product."

The DOJ continued that "As part of the Department's ongoing review of Microsoft's compliance with Section III.H, the Department has investigated a feature within Windows XP called ``Shop for Music Online,´´ which allows a user to go online to purchase music compact discs from retailers. The Department was concerned that the ``Shop for Music Online´´ feature invokes Microsoft's Internet Explorer even when the user has chosen a different default web browser, such as Netscape, Opera or Mozilla. The Department concluded that the invocation of Internet Explorer by the 'Shop for Music Online' feature violated Section III.H of the Final Judgment. The Department discussed its concerns with Microsoft."

The DOJ added that "Without necessarily agreeing with the Department's position, Microsoft has agreed to remove the override of the user's default browser contained in ``Shop for Music Online.´´ Microsoft expects to have this modification to Windows XP available to consumers in February or March, through a ``Windows Update´´ download."

Washington Tech Calendar
New items are highlighted in red.
Friday, January 16

The House is in adjournment. (It will convene on January 20, 2004.)

The Senate is in adjournment. (It will convene on January 20, 2004.)

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Advanced Communications Corp. v. FCC, No. 03-1082. Judges Rogers, Garland and Williams will preside. Location: 333 Constitution Ave. NW.

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) in response to its Change Notice [2 pages in PDF] regarding Federal Information Processing Standard (FIPS) 180-2, the Secure Hash Standard. Comments should be addressed to See also, FIPS 180-2 [75 pages in PDF], released on August 1, 2002.

Monday, January 19

Martin Luther King Day.

Iowa Presidential Caucuses.

Tuesday, January 20

The House will return from recess.

The Senate will return from recess. It will resume consideration of HR 2673, the omnibus appropriations bill for Fiscal Year 2004.

9:30 AM - 5:00 PM. The Federal Communications Commission's (FCC) Federal Advisory Committee on Diversity for Communications in the Digital Age's Financial Subcommittee will hold a meeting. The meeting will address "regulatory initiatives and the availability and access to capital for women and minorities in the telecommunications industry". See, FCC notice. Location: FCC, Commission Meeting Room, 445 12th St., SW.

Wednesday, January 21

12:00 NOON - 1:45 PM. The AEI-Brookings Joint Center for Regulatory Studies will host a panel discussion titled "What's Right and What's Wrong with Corporate Finance Governance in the U.S. Today?". The speakers will be Robert Hahn (AEI-Brookings), Randall Kroszner (University of Chicago), Paul Atkins (SEC Commissioner), and Steven Kaplan (University of Chicago). See, notice. Location: American Enterprise Institute, Twelfth floor, 1150 17th St., NW.

12:00 NOON. The Federal Communications Bar Association's (FCBA) Transactional Practice Committee will host a brown bag lunch. The topic will be contract enforceability and dispute resolution provisions, including arbitration versus judicial resolution, choice of law, and choice of forum. For more information, contact Laurie Sherman at or 703 216-3150. Location: Skadden Arps, 1440 New York Ave., 11th floor.

Thursday, Jan. 22

8:30 AM - 6:00 PM. The Catholic University School of Law and the Federal Communications Commission (FCC) will host a one day conference titled "The Journey to Convergence". Advance registration is required. See, conference web site. Location: Columbus School of Law, The Catholic University of America, 3600 John McCormack Rd., NE.

Friday, January 23

10:00 AM - 3:00 PM. The Federal Communications Commission's (FCC) Technological Advisory Council will meet. See, notice in the Federal Register, December 19, 2003, Vol. 68, No. 244, at Pages 70796 - 70797. Location: FCC, 445 12th St., SW, Room TW-C305.

12:15 PM. The Federal Communications Bar Association's (FCBA) Young Lawyers Committee will host a brown bag lunch. The topic will be "Hot Communications Issues on the Hill". The speakers will be Neil Fried (Republican Counsel, House Commerce Committee), Gregg Rothschild (Democratic Counsel, House Commerce Committee), Lee Carosi (Republican Counsel, Senate Commerce Committee), and Paul Nagle (Attorney-Advisor, FCC Office of Legislative Affairs). For more information, contact Jason Friedrich at 202 354-1340 or or Pam Slipakoff at 202 418-7705 or Location: Drinker Biddle & Reath, 1500 K Street, 11th Floor.

Deadline to submit reply comments to the Office of the U.S. Trade Representative (USTR) regarding the operation and effectiveness of, and the implementation of and compliance with, the World Trade Organization (WTO) Basic Telecommunications Agreement, other WTO agreements affecting market opportunities for U.S. telecommunications products and services, the telecommunications provisions of the North American Free Trade Agreement (NAFTA), Chile FTA and Singapore FTA, and other telecommunications trade agreements. See, notice in the Federal Register, December 8, 2003, Vol. 68, No. 235, at Pages 68444 - 68445.

Extended deadline to submit comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking [35 pages in PDF] regarding unlicensed devices. See, notice in the Federal Register, December 10, 2003, Vol. 68, No. 237, at Pages 68823 - 68831. The FCC adopted this NPRM on September 10, 2003. See, FCC release [PDF]. The FCC released the NPRM [35 pages in PDF] on September 17, 2003. This NPRM is FCC 03-223 in ET Docket No. 03-201. See also, stories titled "FCC Announces NPRM Regarding Unlicensed Devices" in TLJ Daily E-Mail Alert No. 739, September 15, 2003, and "FCC Announces Deadlines for Comments on Unlicensed Devices NPRM" in TLJ Daily E-Mail Alert No. 800, December 16, 2003. See also, FCC order [PDF] extending the deadline from January 9 to January 23.

People and Appointments

1/15. Paula Blizzard and Patricia Brink were named Special Counsel for Microsoft Decree Enforcement by the Department of Justice's (DOJ) Antitrust Division. See, Microsoft Consent Decree Compliance Advisory.

More News

1/15. The Federal Communications Commission (FCC) held a meeting to hear presentations from FCC officials regarding implementation of the FCC's strategic plan and a review of FCC's policies and procedures. See, presentation outlines in PDF.

1/15. The Federal Communications Commission (FCC) issued a Notice of Apparent Liability for Forfeiture that, in effect, fines World Communications Satellite Systems, Inc. $560,000 for willful and repeated violations of Section 258 of the Communications Act and FCC rules. The NAL states that it submitted changes of the preferred carriers of consumers without their authorization and verification. That is, it slammed consumers. See also, FCC release.

1/15. The Office of Personnel Management (OPM) published a notice in the Federal Register that summarizes, and provides a comment deadline for, the OPM's proposed rule implementing provisions in the E-Government Act of 2002 that authorize the temporary assignment of employees in the field of information technology management (IT) between the federal government and private sector organizations. Comments are due by March 15, 2004. See, Federal Register, January 15, 2004, Vol. 69, No. 10, at Pages 2308 - 2311.

Rep. Tom Davis1/15. Rep. Tom Davis (R-VA) (at right), Chairman of the House Government Reform Committee, issued a release in which he outlined the agenda for the Committee for 2004. Several agenda items are technology related, including oversight of the General Services Administration's (GSA) reorganization of the Federal Technology Service (FTS). See, story titled "GSA Audit Faults Government Contracting for Information Technology" in TLJ Daily E-Mail Alert No. 816, January 15, 2004. The agenda also includes implementation of the E-Government Act of 2002, including a review of the Digital Tech Corps, Cooperative Purchasing, and Share-in-Savings contracts. The agenda also includes oversight of agency compliance with the Federal Information Security Management Act (FISMA). The agenda also includes oversight of the Department of Homeland Security (DHS), including the US-VISIT program, and a review of all Transportation Security Administration (TSA) operations, including airline passenger screening and air cargo security.

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