Tech Law Journal Daily E-Mail Alert
June 6, 2008, Alert No. 1,777.
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FTC Subpoenas Intel

6/6. Intel announced in a release that the Federal Trade Commission (FTC) on June 4 "served a subpoena related to Intel's business practices with respect to competition in the microprocessor market." See also, Intel's Form 8-K filed with the Securities and Exchange Commission (SEC) on June 6, 2008.

Intel's release continues that "Since 2006 Intel has been working closely with the FTC on an informal inquiry into competition in the microprocessor market and has provided the commission staff with a considerable amount of information and thousands of documents. By proceeding to a subpoena, the Commission will be able to obtain not only information that Intel has already committed to provide but also information from other parties. Consistent with its standard practice Intel will work cooperatively with the FTC staff to comply with the subpoena and continue providing information."

Intel added that it "believes its business practices are well within U.S. law. The evidence that this industry is fiercely competitive and working is compelling. For example, prices for microprocessors declined by 42.4 percent from 2000 to end of 2007. When competitors perform and execute the market rewards them. When they falter and under-perform the market responds accordingly."

Al Foer, head of the American Antitrust Institute (AAI), praised the FTC action. He stated in a release that this is a "landmark monopolization case".

The AAI's interests are aligned with those of the plaintiffs' antitrust bar.

Ed Black, head of the Computer and Communications Industry Association (CCIA), stated in a release that "This is a very positive development". He noted that the European Union has also opened and investigation of Intel, and that Korea has recently fined Intel.

Black continued that "Now, the most influential antitrust authorities from North America, Europe and Asia have either opened a formal investigation or already ruled against Intel. It is good to see antitrust agencies from around the world committed to fair competition in the high tech arena."

He also said that "The extremely high start-up and capital expenditure costs associated with the microprocessor market make new entry into this market very difficult if not impossible. It is essential that action be taken while viable competitors still exist."

On July 27, 2007, the European Commission (EC) announced in a release that it "has sent a Statement of Objections (SO) to Intel on 26th July 2007. The SO outlines the Commission's preliminary view that Intel has infringed the EC Treaty rules on abuse of a dominant position (Article 82) with the aim of excluding its main rival, AMD, from the x86 Computer Processing Units (CPU) market." See, story titled "European Commission Initiates Proceeding Against Intel Alleging Anticompetitive Behavior" in TLJ Daily E-Mail Alert No. 1,617, July 27, 2007.

On January 10, 2008, the Office of the Attorney General of the state of New York announced in a release that it has "served a wide-ranging subpoena seeking documents and information on Intel Corporation". See, story titled "New York Announces Investigation of Intel" in TLJ Daily E-Mail Alert No. 1,700, January 15, 2008.

Intel's June 6 SEC Form 8-K also states that the Korea Fair Trade Commission (KFTC) "has ruled that Intel Corporation (`Intel´´) has violated Korean antitrust laws on two counts of ``abuse of dominance.´´ The Commission fined Intel approximately $25.4 million (26 billion Korean won). Intel representatives have stated that the company is extremely disappointed by the decision of the KFTC and believes that the ruling represents an outcome that will dampen, not enhance, the price competition that has resulted in lower prices for customers and consumers."

This Form 8-K adds that Intel "will review the ruling and it is presently expected that Intel will request a further review from the KFTC and, if it proves necessary, an appeal which will permit a Korean court to review the case in its entirety and reach its own decision in the matter."

Barnett Addresses Sherman Section 2 Remedies

6/4. Thomas Barnett, Assistant Attorney General in charge of the Department of Justice's (DOJ) Antitrust Division, gave a speech in Charlottesville, Virginia, titled "Section 2 Remedies: What to Do After Catching the Tiger by the Tail".

The entire speech built upon the metaphor of wild tigers.

Thomas BarnettBarnett (at right) said that "it is in the nature of successful firms, like tigers, to pounce and devour, and to deprive other hunters of their prey. I prefer to watch tigers and successful firms -- even dominant firms -- from a safe distance and without interfering with their natural activities, confident that any harm they visit on competitors will -- in general -- redound to society's benefit."

But, he continued, "Dominant firms also resemble tigers in that powerful animals can inflict great damage that sometimes should be prevented. Economic theory provides a sound basis for believing that firms can injure the competitive process by acquiring or maintaining monopoly power through anticompetitive means. And so we should seek to identify when and how government intervention is justified and will prove beneficial."

He then stated that there are situations where, even though there is a violation, the government should not intervene. For example, "a bad section 2 remedy risks hurting consumers and competition and thus is worse than no remedy at all".

Also, he said that "certain kinds of conduct appearing to harm competition have proven themselves beyond the limits of effective antitrust control".

He identified bundled discounts as one possible example. He did not mention any companies or industry sectors. However, bundled discounts are used in the telecommunications and information technology sectors, such as in triple play offerings of voice, broadband, and video. See, story titled "9th Circuit Rules on Application of Antitrust Law to Bundling Discounts" in TLJ Daily E-Mail Alert No. 1,634, September 5, 2007.

He said that "Because price competition is so close to the heart of the competitive process that our antitrust laws seek to foster, I am not sanguine about section 2's prospects for appropriately remedying other forms of price competition posing theoretical harm to consumers absent clear, cost-based liability standards. In particular, there may be areas of bundled discounting and single-product loyalty discounts where any theoretical harm from above-cost discounting is beyond the practical ability of courts to remedy through antitrust litigation, much as above-cost pricing is in the context of predatory pricing."

Barnett also reiterated points that he has made in other speeches. For example, he said that "it is important always to keep in mind that the goal of catching the tiger is to protect competition, not competitors". Also, citing the Supreme Court's 2004 opinion [22 pages in PDF] in Verizon v. Trinko, he said that "equitable remedies should not interfere with the defendant's innovation incentives going forward". See also, story titled "Supreme Court Holds That There is No Sherman Act Claim in Verizon v. Trinko" in in TLJ Daily E-Mail Alert No. 815, January 14, 2004.

He also used the U.S. Court of Appeals' (DCCir) 2001 opinion in US v. Microsoft, 253 F.3d 34, as the basis for a counseling against remedies that restructure markets. He said that "A finding that section 2 has been violated does not open the door to wholesale restructuring of a market. Instead, the remedy needs to be tied closely to the anticompetitive conduct occasioning it. That means that remedies need to be sufficient but not overbroad, proportional to the offense. Implementing a remedy that is too broad runs the risk of distorting markets, impairing competition, and prohibiting perfectly legal and efficient conduct."

He also said, referencing Microsoft litigation, that the government should consider private litigation. He said that "My final point tonight is that it is worth asking whether anyone else is trying to catch the tiger. Congress has established an overall antitrust regime in which private plaintiffs as well as others have the right to bring section 2 claims in addition to the federal government. Thus, in addressing questions such as whether civil fines should be available for government section 2 cases, it is relevant to consider the complete picture. As one example, I do not have precise figures, but public reports indicate that Microsoft has paid billions of dollars to resolve private litigation involving claims that followed on from the Division's case."

He did not discuss the private litigants' reliance upon the res judicata effects of the judgment in the governments' case against Microsoft.

Section 2 of the Sherman Act, which is codified at 15 U.S.C. § 2, provides in full that "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court."

People and Appointments

6/5. President Bush named Thomas Bossert to be Deputy Assistant to the President for Homeland Security.. See, White House release.

6/5. President Bush named Pete Patterson to be Associate Counsel to the President. See, White House release.

6/5. President Bush announced his intent to appoint Wayne Paugh to be Coordinator for International Intellectual Property Enforcement (CIIPE) at the Department of Commerce (DOC). He is currently Senior Advisor and acting CIIPE. See, White House release.

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Washington Tech Calendar
New items are highlighted in red.
Monday, June 9

The House will meet at 12:30 PM for morning hour debate, and at 2:00 PM for legislative business. Votes will be postponed until 6:30 PM. The House will consider numerous non-technology related items under suspension of the rules. See, Rep. Hoyer's schedule for week of June 9, and schedule for June 9.

The Senate will meet at 3:15 PM. It will resume consideration of the motion to proceed to S 3044 [LOC | WW], the "Consumer-First Energy Act of 2008", a bill regarding taxation and price regulation in the energy sector.

8:30 AM - 5:00 PM. Day one of a two day meeting of the Judicial Conference of the United States' Committee on Rules and Practice and Procedure. See, notice in the Federal Register, March 25, 2008, Vol. 73, No. 58, at Pages 15777-15778. Location: Thurgood Marshall Federal Judiciary Building, Mecham Conference Center, One Columbus Circle, NE.

8:30 - 11:00 AM. The Technology Policy Institute and the Centre for European Policy Studies will host an event titled "Transatlantic Perspectives on Broadband Policy: Inter- versus Intra-Platform Competition". David Gross (Department of State) will speak at 9:00 AM. See, notice. Location: National Press Club, 13th floor, 529 14th St., NW.

11:30 AM. Patrick Ross and Lucinda Dugger (Copyright Alliance) will host a conference call to announce an "initiative for artists and creators". To participate, call 1-800-351-4894. The passcode is 29012. RSVP to Gayle Osterberg at gayle at 133publicaffairs dot com to receive pre-conference copies of releases.

12:00 NOON. Kyle McSlarrow, head of the National Cable and Telecommunications Association (NCTA), will give speech titled "Cable Broadband's Platform: Innovation for the Consumer". RSVP to Pam Ford at 202-222-2356. Lunch will be served. Location: National Press Club, Lisagor Room, 13th floor, 529 14th St., NW.

5:00 PM. Deadline to submit comments to the National Telecommunications and Information Administration (NTIA) in response to it notice of proposed rulemaking regarding its Digital To Analog Converter Box Coupon Program. The NTIA proposes to waive the eligible household and application requirements for individuals residing in nursing homes or other senior care facilities. See, notice in the Federal Register, April 24, 2008, Vol. 73, No. 80, at Pages 22120-22124. See also, NTIA web page with hyperlinks to comments.

Deadline to submit comments to the Department of Homeland Security (DHS) in response to its request for comments regarding its interim final rule [48 pages in PDF] that extends the period of Optional Practical Training (OPT) from 12 to 29 months for qualified F-1 non-immigrant students. This rule change compensates in a limited way for the Congress's failure to enact legislation to increase the annual cap on the number of H1B visas. See, story titled "DHS Extends OPT to 29 Months As Congress Sits on H1B Reform Proposals" in TLJ Daily E-Mail Alert No. 1,742, April 7, 2008, and notice in the Federal Register, April 8, 2008, Vol. 73, No. 68, at Pages 18944-18956.

Tuesday, June 10

The House will meet at 9:00 AM for morning hour debate, and at 10:00 AM for legislative business. The House will consider numerous non-technology related items under suspension of the rules. See, Rep. Hoyer's schedule for week of June 9.

8:00 AM - 5:00 PM. Day one of a two day meeting of the National Institute of Standards and Technology's (NIST) Visiting Committee on Advanced Technology (VCAT) titled "NIST's Roles in the Innovation Ecosystem". See, notice in the Federal Register, May 6, 2008, Vol. 73, No. 88, at Page 24950. Location: NIST, Administration Building, Employees Lounge, Gaithersburg, MD.

8:30 AM - 3:00 PM. There will be a one day conference titled "PointSmart.ClickSafe: Summit on Children’s Online Safety and Literacy". The speakers will include FCC Commissioners Deborah Tate and Jonathan Adelstein and Sen. Mark Pryor (D-AR). Location: L’Enfant Plaza Hotel, 480 L'Enfant Plaza, SW.

8:30 AM - 5:00 PM. Day two of a two day meeting of the Judicial Conference of the United States' Committee on Rules and Practice and Procedure. See, notice in the Federal Register, March 25, 2008, Vol. 73, No. 58, at Pages 15777-15778. Location: Thurgood Marshall Federal Judiciary Building, Mecham Conference Center, One Columbus Circle, NE.

9:00 AM. The House Judiciary Committee's (HJC) Subcommittee on Immigration will hold a hearing titled "Electronic Employment Verification Systems: Needed Safeguards to Protect Privacy and Prevent Misuse". See, notice. The witnesses will include Jonathan Scharfen, acting Director of the U.S. Citizenship and Immigration Services. The HJC will webcast this hearing. Location: Room 2141, Rayburn Building.

9:30 AM. The House Commerce Committee's (HCC) Subcommittee on Telecommunications and the Internet will hold a hearing titled "Status of the DTV Transition: 252 Days and Counting". This hearing will be webcast by the HCC. Location: Rooom 2123, Rayburn Building.

9:30 AM - 12:00 NOON. The Securities and Exchange Commission (SEC) will host an event titled "International Roundtable on Interactive Data for Public Financial Reporting". See, notice. Location: SEC, 100 F St., NE.

10:00 AM. Henry Paulson (Secretary of the Treasury) will give a speech titled "U.S. China Economic Relations". The Department of the Treasury's notice states that "Media must register in advance with Trent Perrotto at 202-939-2372" or tperrotto at ceip dot org." Location: Carnegie Endowment for International Peace, 1779 Massachusetts Ave., NW.

6:00 - 8:15 PM. The Federal Communications Bar Association (FCBA) will host an event titled "Judicial Year in Review". The speakers will be Sam Feder (Jenner and Block), Ian Gershengorn (Jenner & Block), Andrew McBride (Wiley Rein), Joseph Palmore (Federal Communications Commission) and Richard Welch (FCC). This event qualifies for continuing legal education (CLE) credits. See, notice. Location: Wiley Rein, 1776 K St., NW.

CANCELLED. The U.S. Patent and Trademark Office's (USPTO) Trademark Public Advisory Committee (TPAC) will meet.

Wednesday, June 11

The House will meet at 10:00 AM for legislative business. See, Rep. Hoyer's schedule for week of June 9.

9:00 AM - 12:00 NOON and 1:30 - 4:00 PM. The Department of Homeland Security's (DHS) Data Privacy and Advisory Committee will meet. There will be panels on E-Verify and the Information Sharing Environment. See, DHS notice [PDF]. Location: Hilton Arlington Hotel, Galleries I & II, 950 North Stafford St., Arlington, VA.

9:00 - 11:45 AM. Day two of a two day meeting of the National Institute of Standards and Technology's (NIST) Visiting Committee on Advanced Technology (VCAT) titled "NIST's Roles in the Innovation Ecosystem". See, notice in the Federal Register, May 6, 2008, Vol. 73, No. 88, at Page 24950. Location: NIST, Administration Building, Employees Lounge, Gaithersburg, MD.

12:00 NOON - 2:00 PM. The DC Bar Association will host a program titled "Entertainment Law in Review". The price to attend ranges from $20 to $30. The speaker will be Stan Soocher (University of Colorado at Denver). For more information, contact 202-626-3463. See, notice. Location: DC Bar Conference Center, B-1 Level, 1250 H St., NW.

2:00 PM. The Senate Judiciary Committee (SJC) will hold a hearing on four judicial nominations: Paul Gardephe (to be a Judge of the U.S. District Court for the Southern District of New York), Kiyo Matsumoto (U.S.D.C., Eastern District of New York), Cathy Seibel (U.S.D.C., Southern District of New York), and Glenn Suddaby (U.S.D.C., Northern District of New York). See, notice. Location: Room 226, Dirksen Building.

2:00 PM. The House Judiciary Committee's (HJC) Subcommittee on Courts, the Internet and Intellectual Property (SCIIP) will hold a hearing on HR 4789 [LOC | WW], the "Performance Rights Act". See, stories titled "Bills Introduced in House and Senate to End Terrestrial Broadcasters' Performance Right" in TLJ Daily E-Mail Alert No. 1,690, December 18, 2007, and "Paper Advocates Performance Right for Recording Artists" in TLJ Daily E-Mail Alert No. 1,724, February 27, 2008. The HJC will webcast this hearing. See, notice. Location: Room 2141, Rayburn Building.

TIME CHANGE. 3:00 PM. The Senate Commerce Committee (SCC) will hold a hearing titled "Impact and Policy Implications of Spyware on Consumers and Businesses". This hearing will also pertain to S 1625 [LOC | WW], the "Counter Spy Act". The witnesses will be Eileen Harrington (Deputy Director of the FTC's Bureau of Consumer Protection), Benjamin Edelman (Harvard Business School), Marc Rotenberg (Electronic Privacy Information Center), Arthur Butler (Americans for Fair Electronic Commerce Transactions), Vincent Weafer (Symantec, on behalf of the Business Software Alliance), and Jerry Cerasale (Direct Marketing Association). See, notice. Location: Room 253, Russell Building.

6:00 - 8:15 PM. The DC Bar Association will host program titled "Ethics of E-mail". The speaker will be Thomas Spahn (McGuire Woods). 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.

6:00 - 8:00 PM. The Federal Communications Bar Association (FCBA) will host an event titled "FCBA Spring Reception". See, registration form [PDF]. Prices vary. Location: Washington Hilton Hotel, 1919 Connecticut Ave., NW.

EXTENDED FROM APRIL 14. Extended deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Report on Broadcast Localism and Notice of Proposed Rulemaking. The FCC adopted this item on December 18, 2007, and released the text on January 24, 2008. It is FCC 07-218 in MB Docket No. 04-233. See, notice in the Federal Register, February 13, 2008, Vol. 73, No. 30, at Pages 8255-8259. See also, FCC's Public Notice [PDF] (DA 08-393). See also, Public Notice [PDF] (DA 08-515) extending deadlines.

Deadline to submit oppositions to the Federal Communications Commission (FCC) in response to a petition for reconsideration [42 pages in PDF] in the FCC's universal service and access charge reform proceedings (CC Docket No. 96-45, CC Docket No. 96-262, and WC Docket No. 06-122). See, notice in the Federal Register, May 27, 2008, Vol. 73, No. 102, at Page 30393.

Thursday, June 12

9:30 AM. The Federal Communications Commission (FCC) may hold an event titled "Open Meeting". See, FCC notice [PDF]. Location: FCC, Commission Meeting Room, 445 12th St., SW.

10:00 AM. The Senate Judiciary Committee (SJC) may hold an executive business meeting. The agenda includes consideration of Helene White and Raymond Kethledge to be Judges of the U.S. Court of Appeals (6thCir), and Stephen Murphy to be a Judge of the U.S. District Court (EDMich). See, SJC notice and story titled "President Bush and Senate Democrats Reach Compromise on 6th Circuit Nominees" in TLJ Daily E-Mail Alert No. 1,747, April 15, 2008. The SJC rarely follows its published agendas. Location: Room 226, Dirksen Building.

11:00 AM. The House Judiciary Committee's (HJC) Subcommittee on Immigration will hold a hearing titled "The Need for Green Cards for Highly Skilled Workers". The HJC will webcast this hearing. See, notice. Location: Room 2237, Rayburn Building.

2:00 PM. The House Foreign Affairs Committee (HFAC) Subcommittee on Asia, the Pacific, and the Global Environment will hold a hearing titled "U.S. Japan Relations: an Overview". The witnesses will include Alexander Arvizu (Department of State). See, notice. Location: Room 2172, Rayburn Building.

TIME? The House Appropriations Committee's (HAC) Subcommittee on Commerce, Justice, & Science will meet to mark up the Commerce, Justice, and Science appropriations bill. Location?

TIME? The Center for Democracy and Technology's (CDT) Net Caucus will host an event titled "Safe Computing Open House for Constituents". Location?

5:30 - 8:00 PM. The DC Bar Association will host a program titled "The Trademark Office Speaks". The speakers will be Christina Hieber (Associate Solicitor), Lynne Beresford (Commissioner for Trademarks), and David Sams (Chief Administrative Trademark Judge, Trademark Trial and Appeal Board). For more information, contact 202-626-3463. The price to attend ranges from $50 to $65. See, notice. Location: Hotel Monaco, 700 F St, NW.

Friday, June 13

Deadline to submit comments to the National Institute of Standards and Technology's(NIST) Computer Security Division (CSD) regarding its SP 800-123 [54 pages in PDF] titled "Guide to General Server Security (Draft)".

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) regarding its SP 800-66 Rev1 [109 pages in PDF] titled "An Introductory Resource Guide for Implementing the Health Insurance Portability and Accountability Act (HIPAA) Security Rule (Draft)".