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July 6, 2006, Alert No. 1,405.
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SEC's Atkins Discusses E-Proxies, XBRL and 404 Reform

6/29. Securities and Exchange Commission (SEC) Commissioner Paul Atkins gave a speech in Philadelphia, Pennsylvania. He discussed the SEC's e-proxy proceeding, its interactive data initiative, and reform of its Section 404 rules, which particularly burden small publicly traded technology companies.

Paul Atkins

Atkins (at right) said that an "important rulemaking under consideration at the Commission is the proposal to allow for the Internet delivery of proxy materials. This proposal would allow issuers to take advantage of the Internet, a cost-effective medium with which increasing numbers of shareholders are increasingly familiar. Shareholders who prefer paper would be able to continue to receive proxy materials in paper form. Because of the convenience and interactive potential of the Internet, the proposal could enhance shareholders' familiarity with the companies in which they invest."

See also, story titled "SEC Proposes to Allow Internet Delivery of Proxy Materials" in TLJ Daily E-Mail Alert No. 1,263, December 1, 2006.

He next discussed interactive data. "In another attempt to take advantage of the opportunities afforded to us by the Internet, Chairman Cox has spearheaded an initiative on the use of interactive data. Earlier this month, the SEC conducted an Interactive Data Roundtable. Interactive data offers the promise of faster, more accurate and cost effective financial reporting that enables professional and retail investors and analysts to collect, compare and analyze information better. Twenty companies have volunteered to take part in a test group. In exchange for benefits such as expedited reviews of their SEC registration statements and annual reports, these companies will agree to furnish for one year the financial data in their periodic reports to the SEC using the XBRL data-tagging format. I will be interested to hear their experiences."

See also, the SEC's February 2005 rule changes that initiated the SEC's XBRL Voluntary Program, and its web page summary of the program.

SEC Chairman Chris Cox has frequently spoken about the XBRL program. See for example, speech of November 7, 2005, in Tokyo, Japan, and speech of November 11, 2005, in Boca Raton, Florida. See also, story titled "SEC Chairman Cox Discusses Use of Interactive Data in Corporate Reporting" in TLJ Daily E-Mail Alert No. 1,250, November 9, 2005.

Finally, Atkins discussed Section 404 reform. See also, Atkins speech of June 15, 2006, and story titled "Atkins Says SEC Seeks More Rational Approach to Section 404" in TLJ Daily E-Mail Alert No. 1,395, June 20, 2006.

He said that "the implementation of Section 404 of the Sarbanes-Oxley Act has been the cause of particular concern. ... I have had the opportunity to speak with a number of issuers on this subject. The stories that I hear are, frankly, frightening. For large companies, the expenses far outpace everyone's estimates. For small companies, the money and time diverted to Section 404 implementation are having a tangible effect. In the real world, of course, resources are limited. The more that companies spend on things like internal controls, the less they can invest in developing and marketing products, hiring and retaining talent, and embracing new technologies. That does not mean that internal controls and other organizational costs are not important. They are; but, there must be a balance."

He added that "The burden of these rules also can affect business opportunities. Some companies have avoided new acquisitions, delayed or cancelled upgrading their computer systems, or not added a new product line lest they set off a new flurry of internal control documentation."

On May 8, 2006, the Government Accountability Office (GAO) released a report [93 pages in PDF] titled "Sarbanes-Oxley Act: Consideration of Key Principles Needed in Addressing Implementation for Smaller Public Companies". The report found that smaller public companies face disproportionately higher costs of compliance than do larger companies, and that the Act creates other difficulties for smaller companies. See, story titled "GAO Reports that Section 404 of Sarbanes Oxley Burdens Small Public Companies" in TLJ Daily E-Mail Alert No. 1,366, May 9, 2006.

Atkins concluded that "I am optimistic, however, that real changes will be made for small and large companies. In the aftermath of last month's Section 404 Roundtable at the SEC, both the Commission and the PCAOB have pledged to take steps to streamline Section 404 implementation. Not only do we have a new chairman at the SEC, but now we have new leadership at the Public Company Accounting Oversight Board. Changes are long overdue. I am confident that, if such steps are taken, Section 404 can achieve its intended and laudable purpose of improving the integrity of financial information and providing shareholders with additional insight into the credibility of financial statements."

English Professor Raises Copyright Misuse in Complaint Against Estate of James Joyce

6/12. Stanford English professor Carol Shloss filed a complaint [24 pages in PDF] in U.S. District Court (NDCal) against Sean Sweeney and the estate of James Joyce seeking declaratory relief pursuant to copyright law. She requests, among other things, a declaratory judgment that copyright misuse prohibits copyright enforcement against her.

Introduction. Shloss alleges that she wrote a book, from which over thirty pages were deleted because of litigations threats to her publisher and employer from the estate of James Joyce. She wants to publish the deleted pages on the internet, but the estate still objects. She therefore seeks a court judgment that she may do so.

This 139 paragraph complaint contains numerous factual allegations, four multipart claims, and nine items in the prayer for relief. Much of what is in this complaint is common to many other copyright actions involving literary works.

Stanford law professor Lawrence Lessig, who is one of Shloss's attorneys, wrote in his blog on June 13, 2006, that "This is the first in what we expect will be a series of cases defending the boundaries of fair use." However, what may prove to be more significant is that one of the claims for relief is based on the emerging doctrine of copyright misuse.

The complaint makes numerous factual allegations in support of its misuse claim, such as frivolous assertion of the copyright. In addition, the complaint alleges that the defendants have used copyright's right of exclusion to limit commentary on and criticism of the underlying copyrighted works.

The plaintiff is an academic who writes about James Joyce. Lessig and a group of student lawyers from the Stanford University Law School represent her. They are likely acting both to enable Shloss to publish her online supplement, and to make new law that will impact a broad range of copyright practices. The other counsel for Shloss is Robert Spoo, an attorney with the Oklahoma law firm of Doerner Saunders. Before becoming an attorney, he was a professor in the English Department at the University of Tulsa, and Editor of the James Joyce Quarterly. He is now also Legal Counsel to the International James Joyce Foundation.

Judge Richard Posner, for whom Lessig once clerked, wrote the following dicta in his 2002 opinion in Ty v. Publications International: "ownership of a copyright does not confer a legal right to control public evaluation of the copyrighted work." See also, story titled "Posner Addresses Copyright Misuse" in TLJ Daily E-Mail Alert No. 788, November 28, 2003. This case may convert this principle from dicta into law.

Similarly, Judge Thomas Ambro wrote in Video Pipeline v. Buena Vista Home Entertainment that "A copyright holder's attempt to restrict expression that is critical of it (or of its copyrighted good, or the industry in which it operates, etc.) may, in context, subvert -- as do anti-competitive restrictions -- a copyright's policy goal to encourage the creation and dissemination to the public of creative activity." (Parentheses in original.) Although, in Video Pipeline the Court found no copyright misuse.

TLJ published a story that summarizes the history of the doctrine of misuse, its application in Ty v. Publications International, its application in Video Pipeline, and some other possible applications. See, story titled "3rd Circuit Breaks New Ground on Copyright Misuse" in TLJ Daily E-Mail Alert No. 727, August 27, 2003. (See also, story titled "3rd Circuit Addresses Fair Use and Copyright Misuse" in Alert No. 727, and story titled "Supreme Court Denies Cert in Video Pipeline v. Buena Vista" in TLJ Daily E-Mail Alert No. 842, February 24, 2004.)

Spoo told TLJ that the doctrine of copyright misuse is still in the formation process. He said that he expects this case has "the makings of a very interesting opinion", and that whichever side loses in the District Court will likely appeal to the U.S. Court of Appeals (9thCir).

Also, the Stanford Law Review published an article titled "Rethinking Copyright Misuse", by Katherine Judge, in its December 2004 issue. See, 57 Stan. L. Rev. 901. Judge is another former clerk of Judge Posner.

Factual Background in Shloss v. Sweeney. James Joyce was an early 20th Century author of fictional literary works. He wrote a collection of short stories titled Dubliners [Amazon] (published in 1914), and the novels titled A Portrait of the Artist as a Young Man [Amazon] (1916), Ulysses [Amazon] (1922), and Finnegans Wake [Amazon] (1939).

James Joyce had an emotionally troubled daughter, Lucia Joyce, who was institutionalized. She died in 1982. James Joyce died in 1941, but there remain claims of copyrights in both published and unpublished works. Stephen Joyce, a grandson of James Joyce, aggressively asserts copyright claims.

Sean Sweeney is the trustee of the estate of James Joyce, which estate asserts ownership and control of copyrights in the works of James Joyce.

Carol Shloss is the author of a book, one version of which was published by Farrar, Straus & Giroux in 2003 as Lucia Joyce: To Dance in the Wake [Amazon]. This 576 page version does not include over 30 pages of material removed because of demands and litigation threats made to Shloss's publisher and employer.

Shloss argues in her book that Lucia Joyce influenced the work of her father. The deleted materials focus on the life of Lucia Joyce. Hence, the complaint alleges that as a result of the deletions book reviewers "found her documentary support lacking".

The complaint states that Shloss wants to publish the deleted pages on the internet as an "Electronic Supplement", but needs a declaratory judgment from the Court that such publication would not infringe copyrights.

There are a variety of items at issue in this case. For example, there are the published literary works of James Joyce, such as Finnegans Wake. There are also letters and other unpublished works of James Joyce. These are available in the collections of various libraries, which own the original copies. Nevertheless, the estate asserts ownership of the copyrights in these items. There are also items, such as medical records, and works of of Lucia Joyce, that are not authored by James Joyce.

Misuse Allegations. The complaint alleges that "Defendants are using threats of copyright infringement to unlawfully secure an exclusive right or limited monopoly not granted by the copyright laws ... that Defendants knew or should have known that Shloss' quotations in the planned Electronic Supplement constitute a fair use ... that the Estate is using threats of copyright infringement to restrain Shloss's free speech and artistic expression in order to illegally extend the scope of Defendants' copyright ..."

The complaint further alleges that "Defendants' demand that Shloss not use Lucia Joyce's works and letters, along with her medical records and uncopyrighted information contained in those works, letters, and records, was an effort to secure an exclusive right or limited monopoly not granted by the copyright laws."

The complaint further alleges that "Defendants and Stephen Joyce have used their limited copyright monopoly to exact punishment or to gain leverage with respect to matters unrelated to the copyrights in James Joyce's writings."

The complaint concludes that "Shloss is entitled to a declaratory judgment that Defendants' copyright misuse prohibits copyright enforcement by Defendants against Shloss."

The prayer for relief requests that the Court enter judgment "Declaring that due to Defendant's copyright misuse they cannot assert copyrights they control against Shloss."

Parties, Jurisdiction and Venue.  Lessig wrote in his blog on June 13 that the action was filed against Stephen Joyce. However, the complaint does not name Stephen Joyce as a defendant. Rather, it names two defendants other than Stephen Joyce.

The complaint names Sean Sweeney as a defendant, and alleges that he resides in New York. It alleges that he is the executor of the estate of James Joyce. The complaint also names the estate as a defendant, and alleges that it is organized under the laws of Great Britain.

Most factual allegations in the complaint regarding the actions of the estate concern Stephen Joyce, who is a alleged to be an agent of the estate.

Shloss is a resident of the Northern District of California.

The complaint was filed on June 12. The defendants have not yet filed answers. Shloss's attorneys have granted the estate an extension of time to file its answer until the end of July.

This case is Carol Shloss v. Sean Sweeney in his capacity as trustee of the Estate of James Joyce, and the Estate of James Joyce, U.S. District Court for the Northern District of California, D.C. No. 06-3718.

In addition, The New Yorker published an article titled "The Injustice Collector: Is James Joyce's grandson suppressing scholarship?" by D.T. Max on June 19, 2006.

Washington Tech Calendar
New items are highlighted in red.
Thursday, July 6

The House will not meet on Monday, July 3, through Friday, July 7. It will next meet on Monday, July 10, at 2:00 PM. See, Republican Whip Notice.

The Senate will not meet on Monday, July 3, through Friday, July 7. It will next meet on Monday, July 10, at 2:00 PM, when it will begin consideration of HR 5441, the homeland security appropriations bill. See, 2006 Senate calendar.

12:00 NOON. George Foresman, Under Secretary for Preparedness at the Department of Homeland Security (DHS), will host a pen and pad discussion on DHS fiscal year 2006 critical infrastructure grants. The DHS notice states that this event is for "Writers and Correspondents Only". Location: Building 21, DHS, Nebraska Avenue Complex, 3801 Nebraska Ave., NW.

4:00 - 6:00 PM. The American Enterprise Institute (AEI) will host a panel discussion on trade disputes between the US and EU arising out of competition between, and government support for, Boeing and Airbus. See, notice. Location: AEI, 2th floor, 1150 17th St., NW.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding creation of broadband channels in the 700 MHz public safety band. The FCC adopted this NPRM on March 17, 2006. See, story titled "FCC Adopts NPRM Re Public Safety Communications in the 700 MHz Band" in TLJ Daily E-Mail Alert No. 1,332, March 20, 2006. The FCC released the text [30 pages in PDF] of this NPRM on March 21, 2006. This NPRM is FCC 06-34 in WT Docket No. 96-86. See, notice in the Federal Register, April 7, 2006, Vol. 71, No. 67, at Pages 17786-17790.

Friday, July 7

Deadline to submit comments to the National Telecommunications and Information Administration (NTIA) in response to its Notice of Inquiry (NOI) regarding management of the internet domain name and addressing system. See, notice in the Federal Register, Federal Register, May 26, 2006, Vol. 71, No. 102, at Pages 30388-30389.

Deadline to submit comments to the National Institute of Standards and Technology (NIST) regarding its Draft Special Publication 800-97 [huge PDF] titled "Guide to IEEE 802.11i: Robust Security Networks".

Monday, July 10

The House will return from its Independence Day recess at 2:00 PM. See, Majority Whip's calendar and Republican Whip Notice.

The Senate will return from its Independence Day recess at 2:00 PM. It will begin consideration of HR 5441, the homeland security appropriations bill.

8:30 AM - 5:00 PM. The Intellectual Property Owners Association (IPO) will host a day long conference titled "Demystifying §337 Investigations at the ITC". For more information, contact Clara Stanfield at cstanfield at ipo dot org or 202- 466-2396. See, notice and brochure [PDF]. Location: Ronald Reagan Building & International Trade Center.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Action Gaming, Inc. v. Alliance Gaming Corp., a patent infringement case involving computer gambling technology. This is App. Ct. No. 2005-1287, an appeal from the U.S. District Court (DNev). See, December 8, 2004 release. Location: Courtroom 201, 717 Madison Place, NW.

Deadline to submit comments to the National Telecommunications and Information Administration (NTIA) in response to its notice of inquiry (NOI) regarding "implementation of the Spectrum Sharing Innovation Test-Bed (Test-Bed) where Federal and non-Federal users can study the feasibility of increasing the efficient use of the spectrum". See, notice in the Federal Register, June 8, 2006, Vol. 71, No. 110, at Pages 33282-33284.

Deadline to submit comments to the Antitrust Modernization Commission (AMC) regarding any topic related to the AMC's study. See, notice in the Federal Register, June 15, 2006, Vol. 71, No. 115, at Pages 34590-34591.

Deadline to submit comments to the Federal Trade Commission (FTC) regarding the proposed consent agreement with Take-Two Interactive Software, Inc. and Rockstar Games, Inc. This pertains to the alleged deceptive representations in advertising and on product packaging concerning the content in the video game named "Grand Theft Auto: San Andreas". See, notice in the Federal Register, June 15, 2006, Vol. 71, No. 115, at Pages 34620-34621.

Tuesday, July 11

10:00 AM. The House Financial Services Committee will hold a hearing titled "The Terror Finance Tracking Program". Location: Room 2128, Rayburn Building.

12:00 NOON - 2:00 PM. The DC Bar Association will host a panel discussion titled "The Supreme Court: The View from the Press Gallery". The speakers will include Joan Biskupic (USA Today), Charles Lane (Washington Post), Tony Mauro (Legal Times and American Lawyer Media), David Savage (Los Angeles Times), and Stuart Taylor (National Journal and Newsweek). The price to attend ranges from $15-$35. For more information, call 202-626-3463. See, notice. Location: Arnold & Porter, 555 12th Street, NW.

POSTPONED. 2:30 PM. The Senate Homeland Security and Governmental Affairs Committee's Subcommittee on Federal Financial Management, Government Information, and International Security will hold a hearing titled "Cyber Security: Recovery and Reconstitution of Critical Networks". See, notice. Location: Room 342, Dirksen Building.

Deadline to submit initial comments to the Copyright Office regarding its proposal to amend its rules governing the submission of royalty fees to the Copyright Office to require such payments to be made by electronic funds transfer. See, notice in the Federal Register, April 27, 2006, Vol. 71, No. 81, at Pages 24829-24831.

Wednesday, July 12

10:00 AM. The Senate Finance Committee will hold a hearing on S 3495, a bill to authorize the extension of nondiscriminatory treatment (normal trade relations treatment) to the products of Vietnam. See, notice. Location: Room 215, Dirksen Building.

10:30 AM. The House Ways and Means Committee will hold a hearing titled "Implementation of the United States-Peru Trade Promotion Agreement". See, notice. Press contact: 202- 225-1721. Location: Room 1100, Longworth Building.

12:15 PM. The Federal Communications Bar Association's (FCBA) Mass Media Practice Committee will host a brown bag lunch. Andrew Cotlar (Associate General Counsel of the Association of Public TV Stations) will speak on public broadcasting in the US. For more information, contact Robert Rini at rrini at rinicoran dot com or 202-463-4301. Dial-In Information: 1-866-443-4185, participant code #31665. Location: Sheppard Mullin, 1300 I Street, NW, 11th Floor.

12:30 PM. Sen. Arlen Specter (R-PA) will give a speech. Location: National Press Club, 529 14th St. NW, 13th Floor.

The calendar for the U.S. Court of Appeals (FedCir) states that it will consider, on the briefs, Eolas Technologies v. Microsoft. This is App. Ct. No. 2006-1238.

Thursday, July 13

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

9:30 AM - 5:30 PM. The Antitrust Modernization Commission (AMC) will hold a meeting to deliberate on possible recommendations regarding the antitrust laws to Congress and the President. The meeting is open to the public, but registration is required. See, notice in the Federal Register, June 23, 2006, Vol. 71, No. 121, at Page 36059. Location: Morgan Lewis, main conference room, 1111 Pennsylvania Ave., NW.

10:30 AM. The House Ways and Means Committee's Subcommittee on Select Revenue Measures will hold a hearing titled "Issues Relating to the Patenting of Tax Advice". See, notice. Location: Room B-318, Rayburn Building.

12:00 NOON - 2:00 PM. The Alliance for Public Technology (APT) will host a brown bag lunch titled "Preemption of State Wireless Regulation: Where Do Consumers Fit In?". The speakers will be Brian Fontes (Cingular) and Dane Snowden (CTIA). RSVP to apt at apt dot org or 202-263-2970. Location: 919 Eighteenth Street, NW, 10th Floor Conference Room. 

2:30 PM. The Senate Commerce Committee (SCC) will hold a hearing titled "Unmanned Aerial Systems in Alaska: A Framework for the Nation". Sen. Ted Stevens (R-AK) will preside. See, notice. Location: Room 562, Dirksen Building.

TIME? The Board of Directors of the American Intellectual Property Law Association (AIPLA) will meet. Location: AIPLA, Headquarters Board Room, Arlington, VA.

6:00 - 9:15 PM. The DC Bar Association will host a continuing legal education (CLE) seminar titled & "Antitrust Investigations: Tactical and Ethical Issues". The speakers will include Ray Hartwell (Hunton & Williams), Kathryn Fenton (Jones Day), Donald Klawiter (Morgan Lewis & Bockius), Ann Marie O’Brien (Antitrust Division). The price to attend ranges from $70-$125. For more information, call 202-626-3488. See, notice. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 Level.

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