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November 9, 2004, 9:00 AM ET, Alert No. 1,014.
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Microsoft Reaches Agreements with Novell and CCIA

11/8. Microsoft reached agreements with more entities that have complained to courts and regulatory agencies that Microsoft has violated competition laws. Microsoft reached a partial settlement of claims asserted by Novell, a competitor in the sale of software. Microsoft also reached an agreement with the Computer and Communications Industry Association (CCIA), a Washington DC based interest group.

Novell. Novell stated in a release that it reached "an agreement with Microsoft to settle potential antitrust litigation related to Novell's NetWare operating system in exchange for $536 million in cash." Novell also stated that "by the end of this week it will file an antitrust suit against Microsoft in the United States District Court in Utah seeking unspecified damages in connection with alleged harm to Novellís WordPerfect application software business in the mid-1990s."

Novell elaborated that "Under terms of the settlement, in exchange for the cash payment, Novell has agreed to a general release of claims that it has as of the date of the agreement, with certain exclusions that include patent claims and claims associated with Novell's WordPerfect business. The agreement also includes a release by Microsoft of claims that would have been compulsory counterclaims to the NetWare claims asserted by Novell. Finally, Novell has agreed to withdraw its intervention in the European Commissionís case with Microsoft."

Novell also described the forthcoming lawsuit. "The WordPerfect suit that Novell will file seeks unspecified damages arising from Microsoft's efforts to eliminate competition in the office productivity applications market during the time that Novell owned the WordPerfect word-processing application and the Quattro Pro spreadsheet application. The suit is based in part on facts proved by the United States Government in its successful antitrust case against Microsoft. In that suit, Microsoft was found to have unlawfully maintained a monopoly in the market for personal computer operating systems by eliminating competition in related markets."

Microsoft added in its release that "Novell will also withdraw from participation in the European Commission's case with Microsoft and will no longer participate as an intervener on behalf of the European Commission in Microsoft's appeal of the Commission's March 24 ruling."

Brad SmithBrad Smith, General Counsel of Microsoft, stated at a press conference that "Our settlement with Novell covers all of the antitrust issues relating to Novell's Netware products as of today, as well as all of Novell's other current businesses as of today. This means that we have resolved Novell's claims under U.S. antitrust law."

He added that "While the parties were able to resolve all antitrust claims related to Novell's current businesses, including NetWare, they have not been able to reach agreement concerning Novell's antitrust claims related to its ownership of WordPerfect between June 1994 and March 1996. Novell retains the right to pursue those claims. In addition, both parties retain the right to pursue past or future patent claims." See, transcript.

CCIA. Microsoft stated in a release that it will give money to the CCIA. Microsoft stated that "The company will compensate the CCIA for certain legal-related expenditures it has incurred, in some cases over the past decade, and provide substantial institutional support for new and important policy undertakings on which CCIA will take a leadership role."

However, Microsoft did not disclose how much it will pay the CCIA. It stated that "Specific financial terms of the agreement are confidential."

Microsoft stated that, in return, the CCIA "agreed not to seek certiorari to the Supreme Court in its challenge to the District Court's Final Judgment in the United States v. Microsoft antitrust case. The Washington, D.C. based trade association has also agreed that it will no longer participate as an intervener on behalf of the European Commission in Microsoft's appeal of the Commission's March 24 Decision, and it will also withdraw its complaint with the European Commission filed in February 2003 on issues related to Microsoft Windows XP."

See also, CCIA release.

PFF Urges Supreme Court to Grant Certiorari in MGM v. Grokster

11/8. The Progress and Freedom Foundation (PFF) filed an amicus curiae brief [12 pages in PDF] with the Supreme Court in MGM v. Grokster, urging the Court to grant certiorari.

The PFF wants the Supreme Court to reverse the August 19, 2004 opinion [26 pages in PDF] of the U.S. Court of Appeals (9thCir) which affirmed the District Court's judgment that Grokster's and Streamcast's peer to peer (P2P) file copying networks do not contributorily or vicariously infringe the copyrights of the holders of music and movie copyrights.

See also, April 25, 2003, opinion of the U.S. District Court (CDCal), which the Appeals Court followed and praised.

The PFF argues in its brief that "Consumers have two strong interests: (1) Avoiding inhibitions on technological progress; and (2) Fostering the production of content by providing incentives to creators."

"These are complementary, not conflicting, because each is necessary to the other. Technological devices are useless without content, and content is pointless without means of delivery. But they must be reconciled, because, each taken to the limit of its logic, can do serious harm to the other."

It continues that "The Ninth Circuit focused totally on the need to avoid any inhibition on technology, and in so doing it lost sight of the other, equally important consumer interest in promoting content. It failed to recognize that no group of consumers, interested in maximizing its long-term enjoyment of music, would select a legal regime that allows the untrammeled operation of Grokster and similar programs. Such a regime would quickly distribute the existing stock of music, but would provide no incentives for future production, and would destroy any hope for the creation of legitimate Internet distribution systems that can provide continuing incentives to the creative community."

The PFF argues that this is an example of what economists and game theorists call the prisoner's dilemma [Wikipedia]. "Each consumer is better off if he or she has total access to unauthorized file-sharing while every other consumer pays for the music. But when everyone tries to free ride on everyone else, the whole system collapses."

The solution, writes the PFF, is for the Supreme Court to grant certiorari, and then solve the prisoner's dilemma that consumers face, by creating a new legal regime.

The brief does not site any authority for the proposition that the judiciary has the responsibility or power to solve prisoner's dilemmas.

The PFF's brief was written by James DeLong and Solveig Singleton. See also, PFF release.

On October 8, 2004, movie and music industry entities filed their petition for writ of certiorari. The petitioners include Metro Goldwyn Mayer Studios Inc., other movie studios, record companies, and music publishers and songwriters. The respondents are Grokster, Ltd. and StreamCast Networks, Inc. See, story titled "Movie and Music Industry Entities File Cert Petition in MGM v. Grokster" in TLJ Daily E-Mail Alert No. 994, October 11, 2004.

This case is Metro-Goldwyn-Mayer Studios Inc., et al. v. Grokster, Ltd., et al., Sup. Ct. No. 04-480, on petition for writ of certiorari to the U.S. Court of Appeals for the 9th Circuit.

Supreme Court Denies Cert in Larimer v. IBM

11/8. The Supreme Court denied certiorari in Larimer v. IBM, an ADA and ERISA case involving association disability. Thomas Larimer was employed by IBM as a salesman. IBM fired him shortly after his twin daughters were born, prematurely, and suffering serious medical conditions.

Larimer did not assert that he was disabled. Rather, he asserted that his daughters were disabled, and that he was fired because their disability would cause IBM to incur greater medical expenses. IBM asserted that he was fired because he did not sell enough Lotus software.

The Americans with Disability Act (ADA) provides, at 42 U.S.C. ß 12112(b)(4), that employers are prohibited from discriminating against "a qualified individual because of the known disability of an individual with whom the qualified individual is known to have a relationship or association."

The U.S. District Court (NDIll) granted summary judgment for IBM. The U.S. Court of Appeals (7thCir) issued its opinion [9 pages in PDF] on June 3, 2004 affirming the District Court. See, 370 F3d 698. The Supreme Court's denial of certiorari lets stand the judgment for IBM.

Judge Richard Posner, writing for the three Judge panel of the Court of Appeals, reasoned that association disability can arise in one of three ways, "disability by association", "distraction", or "expense".

He wrote that "disability by association" exists in situations such as where an employee associates with a person with HIV and the employer fears that the employee too may become infected. But, Judge Posner concluded that premature birth is not communicative to the father, so there cannot be "disability by association".

Second, he wrote that "distraction" disability exists where an employee is distracted by the disability of another. But, he concluded that this is not present in this case because there is no evidence that Larimer was absent from, or distracted at, work.

Finally, he wrote that "expense" disability exists, for example, where the spouse of an employee has a disability that is expensive to the employer. But, Judge Posner concluded that this basis for association disability was not present because there was "no evidence that health benefits are in the budget of the unit of IBM that employed and discharged Larimer".

The District Court, and the Court of Appeals, also rejected Latimer's claims of prima facie employment discrimination and violation of the ERISA.

See, Order List [7 pages in PDF] at page 5. This case is Thomas Larimer v. International Business Machines, Corp., Sup. Ct. No. 04-330, a petition for writ of certiorari to the U.S. Court of Appeals for the 7th Circuit, App. Ct. No. 03-2256.

People and Appointments

11/8. The Department of the Treasury announced the departure of Brian Roseboro . He was Under Secretary of the Treasury for Domestic Finance. Before that, he was Assistant Secretary of the Treasury for Financial Markets. See, statement by Treasury Secretary John Snow.

11/8. Jill Luckett was promoted to SVP -- Program Network Policy at the National Cable and Telecommunications Association (NCTA). Luckett has worked on digital carriage issues and a la carte pricing. Also, William Check was promoted to SVP -- Science and Technology. Check is responsible for analysis and evaluation of technical issues, and worked on the 2002 plug and play digital TV agreement. See, NCTA release.

11/4. Novell announced in a release that "Chris Stone, Vice Chairman, Office of the CEO, has left the Company to pursue other opportunities. Stone had responsibility for engineering, product management, and alliances. No successor has been named. On an interim basis, Stone's responsibilities will be overseen by Jack Messman, Chairman and CEO of Novell."

More News

11/8. The Supreme Court issued an order in two consolidated cases, Veneman v. Livestock Marketing Association (No. 03-1164 ) and Nebraska Cattlemen v. Livestock Marketing Association (No. 03-1165 ). The order states only that "The motion of the Acting Solicitor General for divided argument is granted." See, Order List [7 pages in PDF] at page 1. Oral argument in this case is scheduled for Wednesday, December 8, 2004. See, oral argument calendar [PDF]. These cases involve whether the Beef Promotion and Research Act of 1985 provision that requires that beef producers pay for generic advertising of beef and beef products violates the First Amendment. These cases involve beef and the Agriculture Department. However, the concept of compelled speech is also present in various debates over communications and technology related issues, such as forced access to cable facilities, must carry, equal time, free time for candidates, election campaign advertising disclosures, and truth in billing.

Washington Tech Calendar
New items are highlighted in red.
Tuesday, November 9

The House is in recess until November 16, 2004. See, Republican Whip Notice.

The Senate is in recess until November 16, 2004.

8:30 AM - 5:30 PM. Day one of a two day event hosted by the Federal Trade Commission (FTC) and the National Institute of Standards and Technology (NIST) titled "Email Authentication Summit". The FTC's interest in this issue is dealing with spam and fraudulent e-mail. The Simple Mail Transfer Protocol (SMTP) for the email system allows information to travel freely with relative anonymity and ease, thereby enabling cheap bulk unsolicited distribution, and fraud. The purpose of this summit is to encourage the development, testing, evaluation and implementation of domain level authentication systems. Written comments are due by September 30, 2004. Written requests to participate are due by September 30, 2004. See, FTC notice and notice in the Federal Register, September 15, 2004, Vol. 69, No. 178, at Pages 55632 - 55636. Location: FTC Satellite Building, 601 New Jersey Ave., NW.

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

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in James A. Kay v. FCC, No. 04-1014. Judges Edwards, Henderson and Garland will preside. Location: Prettyman Courthouse, 333 Constitution Ave., NW.

CANCELLED. 9:30 AM - 12:00 NOON. The Department of Homeland Security's (DHS) Telecommunications Service Priority (TSP) System Oversight Committee will hold a meeting. See, notice in the Federal Register, October 8, 2004, Vol. 69, No. 195, at Page 60415. Location: NCS, 2nd floor conference room, 701 South Courthouse Road, Arlington, VA. See, notice of cancellation in the Federal Register, November 3, 2004, Vol. 69, No. 212, at Page 64091.

RESCHEDULED FOR NOVEMBER 10. 12:15 PM. The Federal Communications Bar Association (FCBA) Mass Media Practice Committee will host a brown bag lunch.

6:00 - 8:15 PM. The Federal Communications Bar Association (FCBA) will host a continuing legal education (CLE) program titled "Potential of Alternative Dispute Resolution for Enhancing Communications Practices and Clients' Business Objectives". Location: Wiley Rein & Fielding, 1776 K St., NW.

Wednesday, November 10

8:30 AM - 5:30 PM. Day two of a two day event hosted by the Federal Trade Commission (FTC) and the National Institute of Standards and Technology (NIST) titled "Email Authentication Summit". The purpose of this summit is to encourage the development, testing, evaluation and implementation of domain level authentication systems. See, FTC notice and notice in the Federal Register, September 15, 2004, Vol. 69, No. 178, at Pages 55632 - 55636. Location: FTC Satellite Building, 601 New Jersey Ave., NW.

10:00 AM - 12:00 NOON. The Federal Communications Commission's (FCC) Advisory Committee for the 2007 World Radiocommunication Conference (WRC-07 Advisory Committee) will meet. See, original notice in the Federal Register, July 6, 2004, Vol. 69, No. 128, at Pages 40637 - 40638, and rescheduling notice in the Federal Register, August 10, 2004, Vol. 69, No. 153, at Pages 48493. See also, FCC notice of rescheduling to November 10. Location: FCC, 445 12th Street, SW., Room TW-C305.

12:00 NOON. The Cato Institute will host a discussion of the book titled Shakedown: How Corporations, Government, and Trial Lawyers Abuse the Judicial Process [Amazon]. The speakers will be Robert Levy (author), Walter Olson (Manhattan Institute), and Edward Crane (Cato). See, notice and registration page. Lunch will follow the program. Location: 1000 Massachusetts Ave., NW.

12:00 NOON. The Federal Communications Bar Association's (FCBA) Foundation Board of Trustees will meet. Location: Wiley Rein & Fielding, 1776 K St., NW.

12:15 PM. The Federal Communications Bar Association (FCBA) Access to Records and Mass Media Practice Committees will host a brown bag lunch. Renee Licht (FCC's Office of Managing Director), Mark Reger (FCC Chief Financial Officer), and other FCC personnel will discuss the Debt Collection Improvement Act of 1996 and the FCC's red light rule. RSVP to Rebecca Cunningham at rcunningham@lsl-law.com. Location: NAB, 1771 N St. NW.

3:00 - 6:30 PM. The American Enterprise Institute (AEI) will host a program titled "Federalism under the Influence: Dope, Booze, and the Commerce Clause". There will be three panel discussions. The first, titled "Uncorking the Commerce Clause", will address Swedenburg v. Kelly and consolidated cases, which involve Commerce Clause challenges to state barriers to internet sales, and other direct sales, of alcoholic beverages. The speakers on this panel include Brannon Denning (Cumberland School of Law), Todd Zywicki (George Mason University Law School), and Hewitt Pate (Department of Justice). The Supreme Court will hear oral argument in Swedenburg v. Kelly on December 7, 2004. See, 2002 paper [47 pages in PDF] by Denning titled "Smokey and the Bandit in Cyberspace: The Dormant Commerce Clause, the Twenty-First Amendment, and the State Regulation of Internet Alcohol Sales". See, notice. Location: AEI, 12th floor, 1150 17th St., NW.

Thursday, November 11

Veterans Day. The Federal Communications Commission (FCC) and other federal offices will be closed. See, Office of Personnel Management's (OPM) list of federal holidays.

12:30 PM. Dan Glickman, Ch/CEO of the Motion Picture Association of America (MPAA), will give a luncheon address titled "The Motion Picture Industry in the 21st Century -- A New Golden Age?". He will discuss the digital delivery of content, and internet piracy of movies. For reservations, call 202 662-7501. Location: National Press Club, 529 14th St. NW, 13th Floor.

Friday, November 12

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in AT&T Corp v. FCC, No. 03-1431. This is a petition for review of a final order of the FCC regarding AT&T's tarriffs and resellers 800 service plans. See, FCC brief [37 pages in PDF]. Judges Ginsburg, Tatel and Roberts will preside. Location: Prettyman Courthouse, 333 Constitution Ave., NW.

9:30 - 11:30 PM. The American Enterprise Institute (AEI) will host a program titled "Success Taxes, Entrepreneurial Entry, and Innovation". The speakers will be William Gentry (Williams College), William Randolph (Department of the Treasury), Kevin Hassett (AEI), and Eric Engen (AEI). Gentry and Glenn Hubbard (Columbia University) are the authors of a paper [30 pages in PDF] with the same title as the program. They find that "while the level of the marginal tax rate has a negative effect in entrepreneurial entry, the progressivity of the tax also discourages entrepreneurship". See, notice. Location: AEI, 12th floor, 1150 17th St., NW.

10:30 AM. Public Knowledge (PK) will host an event that its describes as a "a press conference ... to discuss copyright legislation in the upcoming lame duck session". The participants will be Gigi Sohn (PK), Gary Shapiro (Consumer Electronics Association), Ed Black (Computer and Communications Industry Association), James Burger (TiVo), and Sarah Deutsch (Verizon). Location: PK, Suite 650, 1875 Connecticut Ave., NW, at Connecticut and T Streets.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) to examine the proper number of end user common line charges that carriers may assess upon customers that obtain derived channel T-1 service where the customer provides the terminating channelization equipment and upon customers that obtain Primary Rate Interface (PRI) Integrated Service Digital Network (ISDN) service. This NPRM is FCC 04-174 in WC Docket No. 04-259 and RM-10603. See, notice in the Federal Register, August 13, 2004, Vol. 69, No. 156, at Pages 50141 - 50146.

Deadline for licensees of all site specific licenses operating under part 22, Paging and Radiotelephone Service with "CD" radio service code and all site specific licenses operating in the 929-930 MHz band on exclusive
private carrier paging channels with "GS" radio service to respond to the Federal Communications Commission's (FCC) Wireless Telecommunications Bureau's (WTB) audit letter. See, Public Notice DA 04-3050, and notice in the Federal Register, October 12, 2004, Vol. 69, No. 196, at Page 60626.

Deadline to submit comments to the Department of Commerce's Bureau of Industry and Security (BIS/BXA) in response to its notice of proposed rulemaking (NPRM) regarding amendments to the Export Administration Regulations (EAR). The BIS proposes to amend its EAR to revise the definition of knowledge to incorporate a reasonable person standard, and to replace the phrase "high probability" with "more likely than not". The BIS also proposes to revise the red flags guidance, and provide a safe harbor from liability arising from knowledge under that definition. See, notice in the Federal Register, October 13, 2004, Vol. 69, No. 197, at Pages 60829 - 60836.

Monday, November 15

The Supreme Court will begin a recess. It will return on Monday, November 29, 2004. See, Order List [14 pages in PDF] at page 14.

6:00 - 9:15 PM. The DC Bar Association will host a continuing legal education (CLE) program titled "How to Litigate an Intellectual Property Case Series, Part 2: How to Litigate a Trademark Case". The speakers will be Shauna Wertheim (Roberts Abokhair & Mardula) and Steven Hollman (Hogan & Hartson). See, notice. Prices vary from $70 to $115. For more information, call 202 626-3488. Location: D.C. Bar Conference Center, B-1 Level, 1250 H Street, NW.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) Professional Responsibility Committee will host a brown bag lunch. This is an organizational meeting. Location: Paul Hastings, 1299 Pennsylvania Ave., NW, 10th Floor.

Extended deadline to reply submit comments to the Federal Communications Commission (FCC) in response to its Notice of Inquiry (NOI) [15 pages in PDF] regarding "issues relating to the presentation of violent programming on television and its impact on children." This NOI is FCC 04-175 in MB Docket No. 04-261. See, story titled "FCC Issues NOI on Violent TV Programming" in TLJ Daily E-Mail Alert No. 950, August 2, 2004. See also, Order [PDF] extending the deadlines.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding "Internet Protocol (IP) Relay and Video Relay Service (VRS), including the appropriate cost recovery methodology for VRS, possible mechanisms to determine which IP Relay and VRS calls are intrastate and which are interstate for purposes of reimbursement, whether IP Rely and VRS should become mandatory TRS services, whether IP Relay and VRS should be required to be offered 7 days a week, 24 hours a day, and whether, when, and how we should apply the speed of answer rule to the provision of VRS." See, notice in the Federal Register, September 1, 2004, Vol. 69, No. 169, at Pages 53382 - 53385. The FCC adopted this NPRM on June 10, 2004, and released it on June 30, 2004. It is FCC 04-134 in CG Docket No. 03-123. Comments are due by October 18, 2004.

Deadline to submit comments for, or requests to participate in, the Federal Trade Commission's (FTC) workshop titled "Peer to Peer File-Sharing Technology: Consumer Protection and Competition Issues". See, FTC release and notice [13 pages in PDF] to be published in the Federal Register.

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