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April 14, 2004, 9:00 AM ET, Alert No. 876.
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Appeals Court Rules There is No Cybersquatting Claim When Registered Mark is Held to Be Generic

4/13. The U.S. Court of Appeals (4thCir) issued its opinion [24 pages in PDF] in Retail Services v. Freebies Publishing, a trademark and Anticybersquatting Consumer Protection Act (ACPA) case, in which the Appeals Court affirmed the District Court judgment for the alleged cybersquatter.

The plaintiffs below, and appellees before the Appeals Court, are Retail Services, Inc. and Freebie Inc. (RSI). RSI registered the domain in 1995. RSI provides customer management services to retailers, that profile customers making retail purchases. The Appeals Court wrote that "When a customer makes a purchase from an RSI client, the RSI product enables information to be sent from the point of sale to RSI’s database of customer transactions. The system then instantaneously identifies a potential ``incentive offer,´´ described by RSI as ``a freebie,´´ which is printed out and presented to the customer along with the purchase receipt."

Defendants registered the domain name in 1997. In 1979, the defendants purchased the right to publish a paper periodical titled "Freebies Magazine", which provided information about free mail-order offerings. The previous owner has registered the mark FREEBIES. The defendants allowed the mark to lapse. They latter applied for a new registration, which they ultimately got.

In 2001, defendants demanded that RSI stop using the domain RSI refused. Defendants instituted a proceeding pursuant to the Uniform Domain Name Dispute Resolution Policy (UDRP). The arbitrator, finding bad faith registration, ordered RSI to transfer the domain to defendants.

Retail Services, Inc. and Freebie Inc. (RSI) filed a complaint in U.S. District Court (EDVa) against Freebies Publishing, and others, seeking a declaratory judgment that (1) its use of the domain does not violation the ACPA, (2) its use of freebie in it domain name does not infringe defendants' trademark, and (3) defendant's mark is generic and therefore not protectible as a trademark.

The defendants filed a counterclaim alleging trademark infringement, cybersquatting in violation of the ACPA, unfair competition, trademark dilution, and violation of Virginia law.

The District Court granted summary judgment to RSI on the grounds that freebies is generic, and not entitled to trademark protection.

The Appeals Court affirmed. It provided an extensive analysis of the meaning of generic, and concluded, like the District Court, that freebie is generic.

The Appeals Court also affirmed the District Court's analysis of the Anticybersquatting Consumer Protection Act (ACPA) claims. The ACPA, which is codified at 15 U.S.C.A. § 1125(d)(1), provides the "owner of a mark" a cause of action against anyone who registers, traffics in, or uses a domain name that is identical or confusingly similar to the owner's mark, with a bad faith intent to profit from the goodwill associated with that mark.

The Appeals Court reasoned that "We need go no farther than the district court’s initial conclusion that defendants cannot state a claim under the ACPA without a valid trademark." It continued that "a prerequisite for bringing a claim under the ACPA is establishing the existence of a valid trademark and ownership of that mark. As we have already determined that ``freebies´´ is generic and not entitled to trademark protection, defendants cannot surmount this threshold barrier".

This case is Retail Services, Inc. and Freebie, Inc. v. Freebies Publishing, et al., U.S. Court of Appeals for the 4th Circuit, App. Ct. Nos. 03-1272 and 03-1317, appeals from the U.S. District Court for the Eastern District of Virginia, Judge Leonie Brinkema presiding.

Local Phone Companies Offer Support for DOJ's Petition to Expand CALEA to Cover Information Services

4/13. The Federal Communications Commission (FCC) published in its web site more comments submitted in response to the Department of Justice's (DOJ) March 10 petition for rulemaking [83 pages in PDF] regarding requiring broadband service providers, voice over internet protocol (VOIP) providers, and others, to design and modify their networks, hardware, software, and equipment in a manner that enables the law enforcement agenciers to intercept communications.

April 12 was the deadline for initial comments. The deadline for reply comments is April 27. The DOJ asserts, among other things, that the Communications Assistance for Law Enforcement Act (CALEA), a 1994 statute that provides that a "telecommunications carrier" must design its network to facilitate wiretapping, also applies to information services, including broadband internet access and VOIP services and applications.

Comments reflect that the DOJ's petition is strongly supported by law enforcement agencies and groups that represent them, and by vendors of surveillance and interception products.

In contrast, the petition is widely criticized and/or opposed by most industry sectors, including ISPs (Earthlink and ISP CALEA Coalition), IXCs (MCI WorldCom and AT&T), a VOIP application provider (Skype), a broadband over powerline group (UPL Council), and wireless carriers (Sprint and CTIA). It is also opposed by groups that advocate various broad public interests -- CDT (democracy and technology), EPIC (privacy), (privacy), ACLU (civil liberties), and EFF.

However, the petition has received some support, or at least non-opposition, from one industry sector -- local phone companies.

For example, Verizon submitted a comment [28 pages in PDF] that reveals much agreement with the DOJ petition. Verizon argues that "voice over IP and broadband access services fall within the scope of CALEA." It further argues that they meet the CALEA's definition of "telecommunications carrier".

Moreover, Verizon argues that this is the case "for all of these services, including voice over IP application providers. For example, if a carrier is simply providing the underlying transport service (e.g., DSL) and an application provider is providing the voice over IP, that application provider should have the CALEA obligation to provide law enforcement with information about the calls using its service, including the call-identifying information."

Verizon, which provides broadband access via DSL, also argues that application of the CALEA to broadband access service should extend not only to DSL service providers, but also to "cable companies and other competing providers".

Verizon notes that "The Petitioners suggest that the Commission adopt a ``presumption´´ that any service that ``directly competes´´ against a service already deemed to be covered by CALEA is also subject to CALEA." It states that Verizon "generally agrees that in many instances such services would fall within CALEA because a competing service presumable would meet the statutory substantial replacement standard ..." But, it adds that "An absolute categorical rule to that effect is unnecessary, however, and should not be adopted. Such a standard could stifle innovation ..."

Verizon also addresses the DOJ's request that all new technologies must be pre-approved by the government. Its discussion is vague, but in the final analysis, it supports the DOJ, with qualifications.

On the issue of CALEA compliance cost recovery, Verizon argues that in some situations the government should provide compensate. Otherwise, it argues that companies should be free to pass on costs to customers. (The DOJ argued that there is no government responsibility, and that the FCC should determine which costs companies can recovery from customers.)

SBC, another Regional Bell Operating Company, submitted a comment [21 pages in PDF]. (Both Verizon's and SBC's comments were prepared by attorneys at the law firm of Wilmer Cutler & Pickering.)

SBC does not either oppose, or support, many of the positions taken by the DOJ in its petition. Rather, it urges the FCC to proceed with caution and care, and to develop a full factual record before ruling.

While SBC takes no position on whether VOIP is covered by CALEA, it predicts "the likelihood that the Commission will conclude that CALEA applies to some applications of broadband telephony..."

SBC does oppose the DOJ petition on two key points, that any service that competes with a service that has been deemed to be covered by CALEA is also covered by CALEA, and that all future technologies must be approved by the government. SBC states that the FCC "should reject these proposals".

SBC's arguments regarding cost recovery parallel those of Verizon.

The U.S. Telecom Association (USTA), which represents RBOCs, submitted a comment [19 pages in PDF]. It argues that the FCC must act by NPRM, not by declaratory ruling. It also opposes the DOJ's request that future technologies must be pre-approved by the FCC.

The USTA does not take a position regarding whether or not broadband access service, or VOIP, should be covered by the CALEA.

In contrast, BellSouth submitted a comment [35 pages in PDF] which opposes the DOJ across a wider range of issues. First, it too argues that the FCC should act by NPRM, not declaratory ruling.

BellSouth continues that the DOJ's proposals "are overly broad as written and clearly exceed the limited scope of the CALEA. For example, the Petitioners' proposal to require carriers to comply with benchmarks and strict compliance deadlines is not only inconsistent with the statute but also unnecessary and administratively burdensome".

It also argues that the "CALEA does not permit the Commission to subject information services to the CALEA." It further argues the "authority to designate certain entities as telecommunications carriers under Section 1001(8)(B)(ii) is limited" and that the FCC's "authority under this provision is very narrow, contrary to the suggestions of the Petitioners". This is not an outright opposition to the argument that broadband access and VOIP are subject to CALEA (as advocated by the DOJ and Verizon), or even a neutral position (SBC and USTA); it distinguishes BellSouth from the others.

BellSouth also writes that the DOJ's "attempt to classify all current and future broadband access and broadband telephony as services subject to CALEA significantly overreaches. Moreover, the Petitioners' proposal to require carriers to file petitions for clarification with the Commission to determine whether current or planned equipment, facilities, or services are subject to CALEA is not only inconsistent with the statute but also unreasonable in today's rapidly evolving communications marketplace."

BellSouth adds that "Adoption of the Petitioners's proposals would severely hamper innovation and deprive consumers of new and improved broadband technologies, features and services." On this point, BellSouth states the same position as SBC and the USTA, but does so with more vehemence.

BellSouth also argues that CALEA enforcement lies with the federal courts, not the FCC and FBI.

Sen. Frist Addresses Outsourcing

4/8. Sen. Bill Frist (R-TN), spoke in the Senate about outsourcing, trade, exports and frivolous lawsuits.

Sen. Bill Frist

Sen Frist (at left) stated that "Critics contend that a company's effort to deliver a product or service more cheaply and efficiently to the American consumer is hurting our economy and hurting America's workers. Indeed, this has become fodder for sound bites that I think are not justified and thus want to take a few moments to talk more broadly about what outsourcing is and what it is not."

But, he said, "I should begin by starting with the flip side of outsourcing and that is insourcing. What is ``insourcing´´? What is this phenomenon of insourcing? Well, it has been a company such as Nissan opens a plant in the United States and thereby creates high-paying jobs for American workers to the benefit of those American workers. In fact, that is the very thing that happened in Tennessee when, in 1980, Nissan opened its first plant in Smyrna."

He continued that "There is a second aspect to this whole discussion of world trade that has gotten overlooked in the debate, and that is the growth of American exports. Again, Tennessee has been a major beneficiary of the opening of foreign markets. ... Even more notably, export-supporting jobs paid 13 to 18 percent more on average than nonexport jobs. Our focus should be to expand economic growth and promote higher wages, not to impose sanctions and restrictions on America's job creators."

He then discussed the role of job training programs. Finally, he discussed at great length an issue that he argued is harming the U.S. economy -- "frivolous lawsuits".

He said that "Every day we encourage America's job creators to grow and expand and to compete in this world market. Yet at the same time we are burdening them with unnecessary, and I would argue unfair, litigation practices that ultimately amount to a hefty tax, which makes them less competitive in the world marketplace."

See, Congressional Record, April 8, 2004, at Pages S4006-7.

Sen. Clinton Introduces Bill That Mixes Trade Protectionism and Data Privacy

4/8. Sen. Hillary Clinton (D-NY) and Sen. Mark Dayton (D-MN) introduced S 2312, the "SAFE-ID Act". The bill bears some attributes of a data privacy protection proposal, and some attributes of a proposal to impose protectionist barriers to trade in services.

The bill was referred to the Senate Commerce Committee, which has jurisdiction over data privacy legislation, but not to the Senate Finance Committee, which has jurisdiction over trade bills.

The bill provides that "A business enterprise may transmit personally identifiable information regarding a citizen of the United States to any foreign affiliate or subcontractor located in a country that is a country with adequate privacy protection."

It further states that "A business enterprise may not transmit personally identifiable information regarding a citizen of the United States to any foreign affiliate or subcontractor located in a country that is a country without adequate privacy protection unless-- (1) the business enterprise discloses to the citizen that the country to which the information will be transmitted does not have adequate privacy protection; (2) the business enterprise obtains consent from the citizen, before a consumer relationship is established or before the effective date of this Act, to transmit such information to such foreign affiliate or subcontractor ..."

The bill then defines a "country with adequate privacy protection" as "a country that has been certified by the Federal Trade Commission as having a legal system that provides adequate privacy protection for personally identifiable information". The bill does not define "adequate privacy protection", although the term does have meaning under EU data privacy law.

The bill would require the FTC to write rules of general application regarding "adequate privacy protection". These rules would then have only extraterritorial effect.

A majority of the Commissioners of the FTC have expressed opposition to legislation setting general privacy standards. Also, the FTC has declined to engage in such a rule making proceeding based upon its existing unfair and deceptive trade practices authority.

Moreover, the FTC, both in its consumer protection efforts, and in its competition enforcement efforts, seeks cooperation from foreign governments, and increased international comity. Placing the FTC in the position of writing rules that impose trade barriers, and issuing nation specific determinations of non-compliance with those rules, could undermine its efforts in the areas of consumer protection and antitrust enforcement.

It is unlikely that FTC Chairman Timothy Muris would testify in support of this bill, if any Committee holds a hearing on this bill.

On the other hand, this bill, if enacted, might incent countries that do not have data privacy laws, and that seek trade in services with the U.S., to enact privacy laws.

This bill, in addition to giving the FTC general privacy authority, would give the Department of Health and Human Services industry specific rule making authority with respect to health information privacy.

This bill would also create a private right of action. The language of the bill is both broad and vague. There is no bar on class action lawsuits. The bill does not identify who has standing to sue. Nor is there a requirement that any individual actually be injured by a violation of the statute. Any "improper storage, duplication, sharing, or other misuse of personally identifiable information" would give rise to a private right of action. The bill does not define "improper storage", "duplication" or "misuse".

The bill provides that "A country that has comprehensive privacy laws that meet the requirements of the European Union Data Protection Directive shall be certified" by the FTC. However, the bill also provides an exception: "unless the Federal Trade Commission determines that such laws are not commonly enforced within such country". Hypothetically, this means that the FTC would could decertify an EU nation on the basis that it does not commonly enforce the EU directive.

This bill is a creative combination of privacy and trade issues, that may have been introduced for the purposes of political debate during an election year.

While the bill may receive support from privacy advocates, trade protectionists, trial lawyers, and advocates of exploiting outsourcing concerns during an election year, it may also encounter opposition from advocates of tort reform, advocates of free trade, advocates of rural telemedicine, advocates of lower health care costs, information technology companies, and a variety of industry sectors that have an interest in offshore outsourcing of services, including health care, banking and other financial services, retailers, and others.

Also, the bill would impose barriers to trade with service providers located in other countries, while not also imposing the same restrictions upon transactions with providers in the U.S.. Thus, if enacted into law, it would be vulnerable to attack as a violation of U.S. treaty obligations.

Washington Tech Calendar
New items are highlighted in red.
Wednesday, April 14

The House is in recess until Monday, April 19, 2004.

The Senate is in recess until April 19, 2004.

The Supreme Court is in recess until April 19, 2004.

12:15 PM. The Federal Communications Bar Association's (FCBA) Cable Practice Committee will host a brown bag lunch. The speaker will be Ken Ferree, Chief of the Federal Communications Commission's (FCC) Media Bureau. RSVP to Quyen Truong at Location: Dow Lohnes & Albertson, 1200 New Hampshire Ave., NW, Eighth Floor.

Day three of a three day conference hosted by the National Institute of Standards and Technology (NIST), National Institutes of Health (NIH), Internet2, USENIX, and OASIS titled "Public Key Technology R&D Workshop". See, notice and conference website. The price to attend is $105. Location: NIST, Gaithersburg, MD.

Thursday, April 15

9:30 AM. The Federal Communications Commission (FCC) will hold a meeting. See, agenda [PDF]. The event will be webcast. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).

9:30 AM - 12:00 NOON. The WRC-07 Advisory Committee's Informal Working Group 4: Broadcasting and Amateur Issues will meet. See, FCC notice [PDF]. Location: Shaw Pittman, 2300 N Street, NW.

9:30 AM. The U.S. Court Appeals (DCCir) will hear oral argument in AT&T v. FCC, No. 03-1035. Judges Edwards, Tatel and Sentele will preside. Location: Prettyman Courthouse, 333 Constitution Ave.

12:00 NOON. The Progress & Freedom Foundation (PFF) will host a luncheon titled "Should Spectrum Be Public or Private?". The speakers will be Stuart Benjamin (Duke University Law School), Randolph May (PFF), Peter Pitsch (Intel), and Stuart Buck (Kellogg Huber). See, notice and registration page. Location: Room 192, Dirksen Building, Capitol Hill.

12:00 NOON - 1:30 PM. The Open Source and Industry Alliance (OSAIA) will host a luncheon briefing on open source software. The speakers will be representatives of IBM, Novell, OSAIA, the Open Source Development Lab, and Red Hat. RSVP to Pat Steckler (OSAIA) at 202 783-2942. Location: Room B-354, Rayburn Building, Capitol Hill.

12:30 PM. The Federal Communications Bar Association's (FCBA) Diversity Committee will hold a brown bag lunch. Natalie Ludaway will speak on "the benefits of launching a legal career at a small law firm and establishing and maintaining a diverse client base". For more information, contact Joy Ragsdale at 202 261-1427 or RSVP by April 12, 2004 to Angela Bushnell at at 202 434-9121 or Location: Leftwich & Ludaway, 1401 New York Ave., NW.

2:00 - 4:00 PM. The WRC-07 Advisory Committee's Informal Working Group 2: IMT-2000 and 2.5 GHz Sharing Issues will meet. See, notice [PDF]. Location: FCC, 445 12th Street, SW, South Conference Room (6th Floor, Room 6-B516).

Friday, April 16

8:30 AM - 4:30 PM. The New America Foundation will host a conference titled "Pervasive Connectivity: How Unlicensed Spectrum Will Help The World Go Wireless". The event is free. RSVP to Matt Barranca at or 202 986-2700. See, notice. Location: National Guard Association of the United States, One Massachusetts Ave, NW.

Monday, April 19

The House will return from its Spring/Easter recess.

The Senate will return from its Spring/Easter recess.

The Supreme Court will return from the recess that it began on April 5.

The Intellectual Property Owners Association (IPO) will host an event titled "Patent Quality Conference". For more information, contact 202 466-2396 or Location: Ronald Reagan Building and International Trade Center.

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding whether certain rules should be repealed or modified because they are no longer necessary in the public interest. The FCC released this NPRM on January 12, 2004. This item is FCC 03-337 in WC Docket No. 02-313. See, notice in the Federal Register, March 18, 2004, Vol. 69, No. 53, at Pages 12814-12826.

Tuesday, April 20

The Supreme Court will hear oral argument in Intel v. AMD, a case regarding the availability of a discovery order from a U.S. District Court, pursuant to 28 U.S.C. § 1782, for a complainant in an antitrust matter before the European Commission. See, Order List [8 pages in PDF] at page 1. See, story titled "Supreme Court Grants Certiorari in Intel v. AMD", also published in TLJ Daily E-Mail Alert No. 776, November 11, 2003; and story titled "9th Circuit Rules on Discovery in U.S. for EC Antitrust Proceeding" in TLJ Daily E-Mail Alert No. 446, June 7, 2002.

1:00 - 5:00 PM. The U.S. Patent and Trademark Office's (USPTO) Nanotechnology Customer Partnership will meet. RSVP to Jill Warden at 571 272-1267 or See, notice. Location: Conference Center, Rooms 1D70 and 1D80, Jefferson Building, 500 Dulany Street, Alexandria, VA.

Extended deadline to submit comments to the Federal Trade Commission (FTC) in response to its notice in the Federal Register requesting comments regarding a National Do Not E-mail Registry. Section 9 of S 877, the "Controlling the Assault of Non-Solicited Pormography and Marketing Act of 2003" (CAN-SPAM Act), requires the FTC to write a report to the Congress on establishing a nationwide Do Not E-Mail Registry. It is due by June 16, 2004. See, story titled "FTC Announces CAN-SPAM Act Rulemaking" in TLJ Daily E-Mail Alert No. 855, March 15, 2004. The notice (setting the original comment deadline of March 31, 2004) is published in the Federal Register, March 11, 2004, Vol. 69, No. 48, at Pages 11775-11782. See also, FTC release summarizing the notice. The notice (extending the deadline to April 20, 2004) is published in the Federal Register, April 9, 2004, Vol. 69, No. 69, at Pages 18851 - 18852.

Wednesday, April 21

7:45 AM. The Federal Communications Bar Association (FCBA) will host a breakfast. The speaker will be John Rogovin, General Counsel of the Federal Communications Commission (FCC). Prices vary. The buffet will begin at 7:45 AM. Location: Mayflower Hotel, 1127 Connecticut Avenue, NW.

10:00 AM. The House Financial Services Committee's (HFSC) Subcommittee on Capital Markets will hold a hearing to evaluate the Financial Accounting Standards Board's (FASB) exposure draft on share-based payments, or stock options, and its effects on publicly traded companies. See, HFSC release. Location: Room 2128, Rayburn Building.

12:00 NOON. The Federal Communications Bar Association's (FCBA) Transactional Practice Committee will host a brown bag lunch titled "M&A Opportunities in Telecom & Media". The speakers will be Michael Price (Evercore Partners) and Chuck Wiebe (BIA Capital). RSVP to Ava Smith 202 371-7201 or Location: Skadden Arps, 700 14th St., NW, 11th Floor.

1:00 - 5:00 PM. Day one of a three day meeting of the National Commission on Libraries and Information Science (NCLIS) will hold a meeting. See, notice in the Federal Register, April 12, 2004, Vol. 69, No. 70, at Page 19240. Location: 1110 Vermont Avenue, NW, Suite 820.

Deadline to submit comment to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) regarding its "Pre-Publication Final" draft [67 pages in PDF] of NIST Special Publication 800-37, titled "Guide for the Security Certification and Accreditation of Federal Information Systems". Comments should be addressed to

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