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March 25, 2008, Alert No. 1,736.
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DOJ Won't Challenge XM Sirius Merger

3/24. The Department of Justice's (DOJ) Antitrust Division announced that it will not challenge the merger of XM and Sirius. The Federal Communications Commission (FCC) has yet to approve the transaction. See also, XM release and release.

The DOJ stated in a release that "the evidence does not demonstrate that the proposed merger of XM and Sirius is likely to substantially lessen competition, and that the transaction therefore is not likely to harm consumers. The Division reached this conclusion because the evidence did not show that the merger would enable the parties to profitably increase prices to satellite radio customers for several reasons, including: a lack of competition between the parties in important segments even without the merger; the competitive alternative services available to consumers; technological change that is expected to make those alternatives increasingly attractive over time; and efficiencies likely to flow from the transaction that could benefit consumers."

The DOJ release explains its conclusion regarding current lack of competition between XM and Sirius. It wrote first that "Because customers must acquire equipment that is specialized to the satellite radio service to which they subscribe, and which cannot receive the other provider's signal, there has never been significant competition for customers who have already subscribed to one or the other service."

Thomas BarnettThomas Barnett (at right), the Assistant Attorney General in charge of the Antitrust Division, added in a news teleconference on March 24 that the data shows that there is very little switching.

Second, the DOJ release states that "For potential new subscribers, past competition has resulted in XM and Sirius entering long-term, sole-source contracts that provide incentives to all of the major auto manufacturers to install their radios in new vehicles. The car manufacturer channel accounts for a large and growing share of all satellite radio sales; yet, as a result of these contracts, there is not likely to be significant further competition between the parties for satellite radio equipment and service sold through this channel for many years."

Barnett added in his teleconference that by the time these contracts expire, advances in technology will provide more alternatives to satellite radio, such as mobile broadband internet devices.

The DOJ release also states that "In the retail channel, where the parties likely would continue to compete to attract new subscribers absent the merger, the Division found that the evidence did not support defining a market limited to the two satellite radio firms that would exclude various alternative sources for audio entertainment, and similarly did not establish that the combined firm could profitably sustain an increased price to satellite radio consumers."

The DOJ also concluded that the merged entity will realize efficiencies.

The DOJ concluded that the transaction will not create a satellite radio monopoly because there is not a relevant market comprised of XM and Sirius.

The DOJ did not impose any conditions on the merger.

Barnett stated also that the Antitrust Division has been "very vigilant in enforcing the antitrust laws".

Reaction. Rep. Rick Boucher (D-VA) released a statement in which he praised the DOJ, and urged the FCC to expeditiously approve the merger. He wrote that the DOJ "appropriately defined the relevant market for competitive purposes as the entire marketplace for audio entertainment, including terrestrial radio, Internet radio, and consumer devices, such as iPods. In that broader market, the merged company will have limited ability to raise consumer prices."

He also wrote that XM and Sirius "have announced an intention to offer eight different program packages post-merger, including several options that will enable consumers to select channels on an ŕ la carte basis and pay substantially less than the current subscription price for some of the offerings. This unprecedented approach will provide subscribers with more choices and lower prices and will pave the way for a form of content acquisition based on the individual programming preferences of listeners."

The National Association of Broadcasters (NAB) has endeavored to have the merger blocked. The NAB's Dennis Wharton stated in a release that "We are astonished that the Justice Department would propose granting a monopoly to two companies that systematically broke FCC rules for more than a decade. To hinge approval of this monopoly on XM and Sirius's refusal to deliver on a promise of interoperable radios is nothing short of breathtaking."

The Recording Industry Association of America (RIAA) used this occasion to urge the Congress to extend the performance right to terrestrial radio broadcasters. That is, in the U.S. terrestrial radio broadcasters are currently exempt from paying royalties to recording artists (the rights of songwriters are different) for broadcasting their copyrighted works. There are bills pending in the Congress that would end broadcasters' performance rights exemption. See, HR 4789 [LOC | WW]  and S 2500, [LOC | WW] both of which were introduced on December 18, 2007, and are titled "Performance Rights Act".

Mitch Bainwol, head of the RIAA, stated in a release that "The merger's approval serves as a powerful validation that competitors should play by the same set of rules. On the heels of this decision, the logic for a performance right for terrestrial radio has never been clearer. Terrestrial radio -- unlike satellite, Internet and cable radio -- continues to reap special interest subsidies in the form of free government spectrum and an outdated exemption from compensating artists and record companies. It’s time for that to change and for Congress to provide an economic marketplace where there is parity amongst all delivery platforms."

The Consumer Electronics Association (CEA) praised the DOJ decision in a release. It wrote that "To the extent consumers have been awaiting a decision on this merger to purchase satellite radio systems, they can now move forward with confidence. Now that the DOJ has approved this merger without conditions, we urge the FCC to move quickly to a decision."

Gigi Sohn, head of the Public Knowledge, urged the FCC to impose conditions upon its approval of the merger. She wrote in a release that the merged entity should be required to "make the technical specifications of its devices and network open and available to allow device manufacturers to develop, and consumers to use, any device they choose without interference".

She also urged the FCC to require the new entity to "make available pricing choices such as a la carte or tiered programming", to "make 5% of its channel capacity available to noncommercial educational and informational programming over which it has no editorial control", and "not to raise prices for its combined programming package".

Sohn also urged the FCC to reject certain other proposed conditions, including a broadcast flag mandate, and a prohibition on local programming.

Supreme Court Denies Cert in Intel Patent Case

3/24. The Supreme Court denied certiorari in Maurice Mitchell Innovations v. Intel, a patent infringement action involving CPU technology. See, Orders List [11 pages in PDF] at page 9.

This lets stand the September 24, 2007, nonprecedential opinion [10 pages in PDF] of the U.S. Court of Appeals (FedCir).

Maurice Mitchell Innovations (MMI) is the holder of U.S. Patent No. 4,875,154 titled "Microcomputer with Disconnected, Open, Independent, Bimemory Architecture, Allowing Large Interacting, Interconnected Multi-microcomputer Parallel Systems Accomodating Multiple Levels of Programmer Defined Heirarchy". (Typographical errors in original.)

MMI filed a complaint in the U.S. District Court (EDTex) alleging patent infringement. The District Court held that Claim 1 of this patent is invalid as indefinite pursuant to 35 U.S.C. § 112. The Court of Appeals affirmed.

The Supreme Court wrote that "The petition for a writ of certiorari is denied. The Chief Justice and Justice Alito took no part in the consideration or decision of this petition."

This case is Maurice Mitchell Innovations, L.P. v. Intel Corp., Supreme Court of the U.S., Sup. Ct. No. 07-965, a petition for writ of certiorari to the U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 2007-1108. The Court of Appeals heard an appeal from the U.S. District Court for the Eastern District of Texas, D.C. No. 2:04-CV-450.

CEI Condems EMI Suit Against MP3tunes

3/24. The Competitive Enterprise Institute (CEI) published a short essay titled "The New War on MP3s: EMI's Push to Ban Remote Music Storage". The author is the CEI's Ryan Radia.

On November 9, 2007, various EMI companies filed a complaint [23 pages in PDF] in U.S. District Court (SDNY) against MP3tunes and its CEO, Michael Robertson, alleging copyright infringement.

The complaint alleges that "MP3tunes engages in these acts of willful infringement through its operation of two Internet websites, www.sideload.com and www.mp3tunes.com. Through these websites, Defendant MP3tunes provides its users with an integrated music service through which they can listen to music over their computers, obtain permanent copies of music stored in online ``lockers´´ provided by MP3tunes, transfer music from their MP3tunes lockers to their computers or other portable devices, and further distribute that music to others."

It adds that "the vast majority of the music available through the MP3tunes service is infringing" and that "MP3tunes unlawfully enables, encourages and profits from massive copyright infringement by MP3tunes users. Under established theories of inducement, contributory infringement, and vicarious infringement, Defendants are liable for the infringing acts of their users."

In contrast, the CEI states that the MP3tunes service "lets users store digital music files in a secure, Web-based locker they can access from anywhere. MP3Tunes lets listeners access only music they have uploaded themselves. Like a handheld MP3 player, MP3Tunes frees music lovers from dragging around massive album collections on physical discs."

The CEI argues that "EMI’s argument seems tenuous. MP3Tunes doesn’t ``share´´ files with anybody but the original owner, and paying a third party to act as a custodian does not imply a transfer of ownership. Individuals can already store digital files online using myriad services from Flickr to Mozy. We increasingly back up our entire lives to online repositories, and the individual, not the website, remains the owner."

This case is Capitol Records, Inc., et al. v. MP3tunes, LLP and Michael Robertson, U.S. District Court for the Southern District of New York, D.C. No. 07-CV-9931, Judge Pauley presiding.

Supreme Court Delays Consideration of Cert Petition of Microsoft Counterfeiter

3/24. The Supreme Court issued an order in Rechanik v. Microsoft. It wrote, in full, that "The motion of petitioner for leave to proceed in forma pauperis is denied. Petitioner is allowed until April 14, 2008, within which to pay the docketing fee required by Rule 38(a) and to submit a petition in compliance with Rule 33.1 of the Rules of this Court. The Chief Justice took no part in the consideration or decision of this motion." See, Orders List [11 pages in PDF] at page 2.

Microsoft filed a complaint in the U.S. District Court (NDIll) against Aleks Rechanik and his corporation, Era Soft, alleging trademark infringement, copyright infringement and other claims in connection with the sale of counterfeit Microsoft products. The District Court granted summary judgment to Microsoft. Rechanik, but not Era Soft, appealed.

The U.S. Court of Appeals (7thCir) affirmed on October 2, 2007, in a nonprecedential opinion [5 pages in PDF]. Alek Rechanik filed a petition for writ of certiorari. The Supreme Court has not yet decided whether or not to take the case. However, the granting of certiorari would appear unlikely.

This case is Aleks Rechanik v. Microsoft Corp., Supreme Court of the U.S., Sup. Ct. No. 07-9250, a petition for writ of certiorari to the U.S. Court of Appeals for the 7th Circuit, App. Ct. No. 06-4343. The Court of Appeals heard an appeal from the U.S. District Court for the Northern District of Illinois, Eastern Division, D.C. No. 04 C 7687, Judge James Moran presiding.

More Intellectual Property News

3/25. The Copyright Royalty Judges published a notice in the Federal Register that announces that they have received from SoundExchange "a notice of intent to audit the 2006 and 2007 statements of account submitted by Last.fm, Ltd. concerning the royalty payments made under two statutory licenses". See, Federal Register, March 25, 2008, Vol. 73, No. 58, at Page 15778.

3/21. The International Intellectual Property Alliance (IIPA) submitted a comment [3 pages in PDF] to the Intellectual Property Office of Singapore (IPOS) in response to its request for public comments [6 pages in PDF] regarding several issues, including expanding the jurisdiction of the IPOS's Copyright Tribunal. The IIPA argued that the Copyright Tribunal "should not be granted unprecedented authority to intervene in private licensing disputes regarding fundamental exclusive rights such as the reproduction right and the making available right." The IIPA elaborated that "A government tribunal should be authorized to interfere with such voluntary licensing, and in effect to dictate contractual terms between private parties, only in narrowly defined circumstances, and only when market mechanisms have demonstrably failed to function. Any broader interference with voluntary licensing of exclusive rights also inevitably gives rise to questions about whether Singapore is in full compliance with its obligations under a wide range of international copyright agreements." The IIPA represents the Association of American Publishers (AAP), Business Software Alliance (BSA), Entertainment Software Association (ESA), Independent Film and Television Alliance (IFTA), Motion Picture Association of America (MPAA), National Music Publishers’ Association (NMPA), and the Recording Industry Association of America (RIAA).

3/17. The Association of American Publishers (AAP) submitted a comment [PDF] to the National Institutes of Health (NIH) regarding the negative impact upon copyright of a NIH policy regarding public access to NIH funded research. The AAP wrote that the NIH is "taking liberties with copyrighted content in a fashion that competes with the activities of independent publishers and that undermines their rights in copyright. Specifically, by reprocessing and enriching manuscript submissions and expropriating publishers' value-added investments in peer-reviewed content, NIH is creating enhanced, derivative publications that go beyond the congressional mandate of posting researchers’ documents that report on the results of federally funded research. Rather than just posting what it receives, be it an author’s version (after peer review) or a publisher’s submission (in a PDF or other fixed format), NIH has embarked upon XML-reformatting and tagging procedures to create alternative versions of published works that, when made freely available, substitute for the definitive articles in which publishers have already invested. In effect, NIH is entering the publishing business (and enabling other international mirror locations of its database to do so as well) by creating these enhanced derivative versions. As a result, the integrity of the scientific literature is compromised." (Parentheses in original.)

3/14. The U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register that announces, describes, recites, and sets the effective date (May 13, 2008) for, its changes to its Rules of Practice in Trademark Cases to require a description of the mark in all applications to register a mark not in standard characters. See, Federal Register, March 14, 2008, Vol. 73, No. 51, at Pages 13780-13784.

Washington Tech Calendar
New items are highlighted in red.
Tuesday, March 25

The House will not meet.

The Senate will not meet.

8:00 - 10:00 AM. The Federal Communications Bar Association (FCBA) will host a breakfast and tour of the Newseum. Prices vary. See, registration form [PDF]. Registrations and cancellations are due by 5:00 PM on March 17. Location: 555 Pennsylvania Ave., NW.

12:00 NOON - 2:00 PM. The Federal Communications Bar Association's (FCBA) FCC Enforcement and International Telecommunications Practice Committees will host a brown bag lunch titled "Birds, Back-up Power and RF Safety: New Challenges in Antenna and Cell Site Compliance and Enforcement". The speakers will be Jeff Steinberg (FCC's Wireless Bureau), Bob Curtis (RF Check), and Christopher Guttman-McCabe (CTIA). For more information, contact Julia Pontecorvo at jpontecorvo at harriswiltshire dot com. Location: Verizon, Suite 400 West, 5th floor, 1300 I St., NW.

1:00 - 4:00 PM. The Architectural and Transportation Barriers Compliance Board's (ATBCB) Telecommunications and Electronic and Information Technology Advisory Committee (TEITAC) will meet by conference call. See, notice in the Federal Register, January 24, 2008, Vol. 73, No. 16, at Page 4132.

Wednesday, March 26

The House will not meet.

The Senate will not meet.

8:30 AM. Day one of a two day partly closed meeting of the National Science Foundation's (NSF) National Science Board. The agenda includes, among other items, discussions of science and engineering indicators, "Next Generation STEM Innovators", and high performance computing". See, notice in the Federal Register, March 21, 2008, Vol. 73, No. 56, at Pages 15222-15223. Location: NDF, Room 1235, 4201 Wilson Blvd., Arlington, VA.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) HLS/Emergency Communications Committee will host a brown bag lunch titled "The 700 MHz D-block Auction: Where Do We Go From Here?" The speakers will be Jessica Zufolo (Medley Global Advisors). Location: Wilmer Hale, 1875 Pennsylvania Ave., NW.

6:30 - 8:00 PM. The Federal Communications Bar Association's (FCBA) Young Lawyers Committee will host an event titled "Happy Hour". For more information, contact: Stefanie Zalewski at sazalewski at mintz dot com, Chris Bjornson at crbjornson at mintz dot com, Angela Collins at afcollins at mintz dot com, Tarah Grant at tsgrant at hhlaw dot com. Location: Bar Louie, 701 7th St., NW.

Day one of a three day conference of the ABA Section of Antitrust Law. See, conference web site and brochure [3 MB in PDF]. Locations: JW Marriott Hotel and National Press Club.

Deadline to submit reply comments to the Copyright Office (CO) in response to its Notice of Inquiry (NOI) regarding the meaning of the Copyright Act's term "cable system", and issues related to the phantom signal phenomenon. See, notice in the Federal Register, December 12, 2007, Vol. 72, No. 238, at Pages 70529-70540, and story titled "Copyright Office Issues Notice of Inquiry Regarding Cable Systems" in TLJ Daily E-Mail Alert No. 1,688, December 13, 2007.

Thursday, March 27

The House will not meet.

The Senate will not meet.

8:30 AM. Day two of a two day partly closed meeting of the National Science Foundation's (NSF) National Science Board. The agenda includes, among other items, discussions of science and engineering indicators, "Next Generation STEM Innovators", and high performance computing". See, notice in the Federal Register, March 21, 2008, Vol. 73, No. 56, at Pages 15222-15223. Location: NDF, Room 1235, 4201 Wilson Blvd., Arlington, VA.

Day two of a three day conference of the ABA Section of Antitrust Law. See, conference web site and brochure [3 MB in PDF]. Locations: JW Marriott Hotel and National Press Club.

Deadline to submit nominations to National Institute of Standards and Technology (NIST) for appointment to the NIST's Technology Innovation Program Advisory Board. See, notice in the Federal Register, March 12, 2008, Vol. 73, No. 49, at Page 13209.

Friday, March 28

The House will not meet.

The Senate will not meet.

12:00 NOON - 2:00 PM. The Federal Communications Bar Association's (FCBA) Judicial Practice Committee will host a brown bag lunch titled "Meet the New FCC General Counsel". The speaker will be Matthew Berry (General Counsel of the Federal Communications Commission). Location: Wiley Rein, 1776 K St., NW.

Day three of a three day conference of the ABA Section of Antitrust Law. See, conference web site and brochure [3 MB in PDF]. Locations: JW Marriott Hotel and National Press Club.

Monday, March 31

The House will return from its two week March recess. Votes will be postponed at least until 6:30 PM. See, Rep. Hoyer's 2008 calendar [4.25 MB PDF].

The Senate will return from its March recess. See, Senate 2008 calendar.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) Young Lawyers Committee will host a brown bag lunch titled "The Role of In-House Counsel". The speakers will be Anna Gomez (VP for Government Affairs of Sprint Nextel), Byron Marchant (EVP/GC of BET Networks), Tom Nathan (SVP and Deputy GC of Comcast Cable Communications), and Mike Plantamura (VP/GC of Radio One). RSVP to Micah Caldwell at mcaldwell at fh-law dot com. For more information, contact Micah Caldwell, Chris Fedeli at chrisfedeli at dwt dot com or Tarah Grant at tsgrant at hhlaw dot com). Location: Davis Wright Tremaine, 2nd floor, 1919 Pennsylvania Ave., NW.

TIME? The Information Technology Association of America (ITAA) will host an event titled "Beyond the Beltway 2008: State & Local Government IT Market Watch". See, notice. For more information, contact Michael Kerr at mkerr at itaa dot org or 703-284-5324. Location: The Ritz-Carlton, Tysons Corner, VA.

The Office of the US Trade Representative (OUSTR) is scheduled to conclude it review of compliance with telecommunications trade agreements. See, notice in the Federal Register, November 19, 2007, Vol. 72, No. 222, at Pages 65109-65111.

Effective date of the Department of Homeland Security (DHS) REAL ID Act regulations. The DHS released its REAL ID Act rules on January 11, 2008. The DHS published its notice in the Federal Register announcing, describing, and reciting these rules on January 29, 2008. See, Federal Register, January 29, 2008, Vol. 73, No. 19, at Pages 5271-5340. See also, story titled "DHS Releases REAL ID Regulations" in TLJ Daily E-Mail Alert No. 1,699, January 14, 2008.

First of three deadlines for the Federal Communications Commission (FCC) and National Telecommunications and Information Administration (NTIA) to comply with the request of Rep. John Dingell (D-MI), Chairman of the House Commerce Committee (HCC), and Rep. Ed Markey (D-MA), Chairman of the HCC's Subcommittee on Telecommunications and the Internet, for a series of three written status reports on whether the FCC and NTIA anticipate that additional funds will be needed for the DTV transition converter box coupon program. See, March 5, 2008, letter [3 pages in PDF].

Tuesday, April 1

9:00 AM - 1:00 PM. The Federal Trade Commission's (FTC) Bureau of Consumer Protection will host a roundtable discussion on phishing education. See, notice. Location: FTC: Conference Center, 601 New Jersey Ave., NW.

9:00 AM - 12:00 NOON. The Federal Communications Commission (FCC) will host an event titled "Digital Television (DTV) Consumer Education Workshop". The FCC notice [PDF] states also that this event will focus on "low-income consumers". Location: FCC, Commission Meeting Room, 445 12th, St., SW.

1:00 - 4:00 PM. The Architectural and Transportation Barriers Compliance Board's (ATBCB) Telecommunications and Electronic and Information Technology Advisory Committee (TEITAC) will meet by conference call. See, notice in the Federal Register, January 24, 2008, Vol. 73, No. 16, at Page 4132.

6:00 - 9:15 PM. The DC Bar Association will host part one of a two part program titled "Preserving Intellectual Property Rights in Government Contracts Series: A Beginner's Guide". The price to attend ranges from $80 to $115. For more information, contact 202-626-3488. See, notice. This event qualifies for continuing legal education (CLE) credits. Location: DC Bar Conference Center, B-1 Level, 1250 H St., NW.

Deadline to submit to the Internal Revenue Service (IRS) applications for membership on the IRS's Electronic Tax Administration Advisory Committee (ETAAC). See, notice in the Federal Register, February 8, 2008, Vol. 73, No. 27, at Pages 7630-7631.

CDT Releases Collection of Definitions Related to Online Behavioral Targeting

3/24. The Center for Democracy and Technology (CDT) released a document [24 pages in PDF] titled "Compendium of ``Sensitive´´ Information Definitions".

In December of 2007, the Federal Trade Commission (FTC) released a document [7 pages in PDF] titled "Online Behavioral Advertising: Moving the Discussion Forward to Possible Self-Regulatory Principles". It proposes "some governing principles for behavioral advertising" and seeks comments on them. See also, story titled "FTC Proposes and Seeks Comments on Voluntary Principles for Online Behavioral Advertising" in TLJ Daily E-Mail Alert No. 1,691, December 19, 2007.

The CDT document lists, describes and explains definitions collected from various federal, state and foreign statutes, regulations and directives, as well as from groups' voluntary programs and policy proposals.

SEC Suspends Trading in Stocks Touted by YouTube Videos

3/20. The Securities and Exchange Commission (SEC) adopted and released an order [2 pages in PDF] that suspends trading in the securities of three companies subject to promotional videos on YouTube and e-mail spam.

The order states that for each of the three companies, "Questions have arisen regarding the adequacy and accuracy of statements in the company's press releases and promotional videos concerning the company’s management, operations, current financial condition, transactions involving the issuance of the company’s shares, and concerning stock promoting activity."

Mark Schonfeld, Director of the SEC's New York Regional Office, stated in a release that "Whether it's boiler rooms, blast faxes, e-mail spam, or Internet videos -- as promoters have exploited new channels of communication, the SEC has been there to stop them."

The SEC release adds that "Through its Anti-Spam Initiative, the SEC has suspended trading in the securities of 50 companies and has brought several enforcement actions against spammers, promoters, and insiders."

The three companies are NeoTactix Corporation, Graystone Park Enterprises, Inc., and Younger America, Inc.

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