Tech Law Journal Daily E-Mail Alert
October 28, 2008, Alert No. 1,848.
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Jury Returns Guilty Verdict in Sen. Stevens' Case

10/27. A trial jury of the U.S. District Court (DC) return a verdict of guilty against Sen. Ted Stevens (R-AK) on seven counts of violation of 18 U.S.C. § 1001 in connection with his filing of annual Senate Financial Disclosure Forms (SFDF) for the years 1999 through 2006 containing incomplete information.

The indictment contained no tax, bribery, graft, conflict of interest, or corruption charges.

Sen. Stevens was, until the release of the indictment, the ranking Republican on the Senate Commerce Committee (SCC). Sen. Kay Hutchison (R-TX) is the current ranking Republican.

Sen. Ted StevensSen. Stevens (at right), who is running for re-election, stated in a release that "I am obviously disappointed in the verdict but not surprised given the repeated instances of prosecutorial misconduct in this case. The prosecutors had to report themselves to the Justice Department's Office of Professional Responsibility during the trial for ethical violations. Exculpatory evidence was hidden from my lawyers. A witness was kept from us and then sent back to Alaska. The Government lawyers allowed evidence to be introduced that they knew was false. I will fight this unjust verdict with every ounce of energy I have."

He added that "I am innocent. This verdict is the result of the unconscionable manner in which the Justice Department lawyers conducted this trial. I ask that Alaskans and my Senate colleagues stand with me as I pursue my rights. I remain a candidate for the United States Senate."

Sen. Stevens' opponent in the November 4, 2008, election is Mark Begich, Mayor of Anchorage.

See also, stories titled "DOJ Obtains Indictment of Sen. Stevens in DC" in TLJ Daily E-Mail Alert No. 1,802, July 29, 2008, and "Judge Sullivan Denies Several of Sen. Stevens' Pre-Trial Motions" in TLJ Daily E-Mail Alert No. 1,823, September 29, 2008.

Disclosure. David Carney, author of this story, is an ex-Alaskan who voted for Sen. Stevens in the 1984 Senate election.

6th Circuit Opinion Impacts Internet Wine Sales

10/27. The U.S. Court of Appeals (6thCir) issued its opinion [8 pages in PDF] in Jelovsek v. Bredesen, a commerce clause challenge to the state of Tennessee's statutes restricting direct sales of alcoholic beverages, including internet wine sales.

The plaintiffs are wine drinkers and wineries who wish to make direct purchases and sales of wine, respectively. The defendants are the Governor of Tennessee (Phil Bredesen), Attorney General of Tennessee (Paul Summers), and Executive Director of the Tennessee Alcoholic Beverage Commission (Shari Elks). The Wine and Spirits Wholesalers of Tennessee intervened in support of Tennessee.

Hypothetically, one might argue that internet wine sales ought not be prohibited, and that such prohibition would violate the commerce clause of the Constitution. However, this is not the conclusion of this opinion, or of the Supreme Court.

On May 16, 2005, the Supreme Court issued its 5-4 opinion in Granholm v. Heald, and consolidated cases, holding that Michigan's and New York's regulatory schemes that permited in-state wineries directly to ship alcohol to consumers, but restricted the ability of out of state wineries to do so, violate the dormant commerce clause. That opinion is reported at 544 U.S. 460.

Following the Supreme Court's holding, some states revised their statutes, and/or other their legal arguments, to maintain their regulatory regimes in the post Granholm v. Heald legal environment.

In another post Granholm case, Baude v. Heath, the U.S. Court of Appeals (7thCir) upheld Indiana's statute. See, story titled "7th Circuit Rules in Wine Sales Case" in TLJ Daily E-Mail Alert No. 1,811, August 12, 2008. In that case, the Court of Appeals upheld an Indiana state statute that prohibits shipping wine to a customer without a face to face meeting. This has the effect of prohibiting Indiana residents from purchasing wine over the internet from west coast wineries.

In the present case, Tennessee maintains that its statute prohibits direct sales by both wineries in Tennessee, and outside of Tennessee, and hence, does not discriminate against interstate commerce, and is therefore permissible under Granholm v. Heald.

The District Court agreed, and upheld Tennessee's ban on direct sales in an opinion reported at 482 F. Supp. 2d 1013.

However, Tennessee's statutes are actually more complicated. In the words of the Court of Appeals, "These statutes seem to contradict each other, which creates a confusing web of seemingly applicable laws, and in its briefing and argument to the court the state did little to unravel the mystery."

For example, the Court of Appeals wrote that "a Tennessee resident may transport a greater quantity of wine purchased from a Tennessee winery as compared to wine purchased in another state". It continued that wineries are "afforded some exceptions from the general liquor control statutes, through Tennessee’s Grape and Wine Law" (TGWL).

The Court elaborated that the TGWL "restricts winery licenses to individuals who have been Tennessee residents for at least two years, or to corporations whose stock is wholly owned by Tennessee residents of at least two years; and permits Tennessee wineries which use a sufficient percentage of Tennessee-grown grapes in their wine production to serve complimentary samples to patrons, and to sell at retail directly to customers without any additional license. ... The Grape and Wine Law also provides that, notwithstanding the transportation restrictions in other statutes, wine purchased at a Tennessee winery may be transported within the state of Tennessee." (Citations to statute sections omitted.)

That is, while Tennessee has a statute that regulates both in state and out of state direct sales, it then provides exceptions and protections to in state wineries.

The Court of Appeals affirmed the judgment of the District Court as to the general prohibition of direct sales, but held that the TGWL is facially discriminatory in violation of the commerce clause, and therefore vacated the District Court's "judgment to the contrary", and remanded to the District Court for further proceedings.

This case is Frederick Jelovsek, et al. v. Phil Bredesen, Paul Summers, Shari Elks, and the Wine and Spirits Wholesalers of Tennessee, U.S. Court of Appeals for the 6th Circuit, App. Ct. Nos. 07-5443 and 07-5524, appeals from the U.S. District Court for the Eastern District of Tennessee, at Greeneville, D.C. Nos. 05-00181 and 06-00149, Judge Curtis Collier presiding. Judge Alan Norris wrote the opinion of the Court of Appeals, in which Judges Gibbons and Griffin joined.

International Trade. This case involves interstate and intrastate trade in the U.S. However, state laws also affect international wines sales.

The European Union has complained, post Granholm, that state laws regulating direct sales of wine, present a non-tarriff barrier to the export of wine to the U.S. See for example, April 2008, European Commission (EC) report [68 pages in PDF] titled "United States Barriers to Trade and Investment".

It states that "Some state legislation ... prohibit EU exporters from distributing, rebottling, or retailing their own wine; require duplicate label approvals; levy fees and charges; and other procedures. Direct distribution is becoming an increasingly important issue. Certain states allow in-state wineries to ship directly to retailers and restaurants, bypassing the traditional three-tier system." Moreover, while state laws provide some exceptions, "foreign wines are not allowed to be distributed directly to retailers."

The EU report continues that "In addition some state regulations on direct to consumer shipment are changing due to the U.S. Supreme Court's Granholm ruling. As a result certain states are now allowing shipments of wine directly to consumers if the winery obtains a permit from the state they wish to ship to. However, in most of the cases only domestic wineries are eligible to obtain the permit. In both cases, direct to consumers' shipment and direct distribution, state legislators do not take imported products into account when establishing regulations and appear to discriminate against foreign wines."

GAO Reports on Regulation of Export of Semiconductor Equipment to PR China

10/27. The Government Accountability Office (GAO) released a report [51 pages in PDF] titled "Export Controls: Challenges with Commerce's Validated End-User Program May Limit Its Ability to Ensure That Semiconductor Equipment Exported to China Is Used as Intended".

This report states that "Since 2002, China’s ability to manufacture semiconductors has steadily advanced, but semiconductors produced commercially in China remain approximately one generation, or about 1 to 2 years, behind state-of-the-art semiconductors produced in the United States."

The U.S. regulates the export of semiconductor equipment because of potential military uses.

The report adds that "weapons systems are generally designed around older technology".

The report continues that U.S. export controls "have become increasingly focused on the recipients or ``end-users´´ of items, resulting in the introduction of the Validated End-User (VEU) program in June 2007", by the Department of Commerce (DOC) Bureau of Industry and Security (BIS).

The report finds that "The introduction of the VEU program has yet to produce the advantages anticipated by Commerce, and challenges with program implementation may hinder Commerce's ability to ensure that items are being used as intended."

For example, "problems with Commerce's implementation of the VEU program limit its ability to ensure that semiconductor equipment and materials exported to China are used as intended. Specifically, although negotiations are ongoing, Commerce has not reached a VEU-specific agreement with the Chinese government for conducting on-site reviews of validated end-users, a mechanism cited by Commerce as critical for ensuring program compliance."

The report recommends that the DOC "suspend the VEU program to China until Commerce negotiates a VEU-specific agreement with China or the 2004 End Use Visit Understanding (EUVU) is amended to include the VEU program, and develops operating procedures for selecting and conducting on-site reviews that are applicable to all validated end-users."

The report also lists the areas in which DOC representatives disagree with this report.

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In This Issue

This issue includes the following items:
 • Jury Returns Guilty Verdict in Sen. Stevens' Case
 • 6th Circuit Opinion Impacts Internet Wine Sales
 • GAO Reports on Regulation of Export of Semiconductor Equipment to PR China
 • More News (including a settlement of the Google books cases)
The next issue will cover the Google books settlement.

More News

10/28. Google, the Association of American Publishers (AAP), and the Authors Guild (AG) announced the settlement of two copyright infringement cases against Google in connection with its book search program. This class action settlement, if approved by the U.S. District Court (SDNY), will establish a regime governing digitization and online display of books subject to U.S. copyright. The AAP and AG filed a pleading [348 pages in PDF] with the District Court that contains the "Settlement Agreement", and a pleading [48 pages in PDF] titled "Memorandum of Law in Support of Plaintiff's Motion for Preliminary Settlement Approval".

10/27. The Information Technology Association of America (ITAA) announced in a release that "Spending by the federal government on information technology will increase gradually over the next five years as most departments and agencies focus on replacing and refreshing necessary operational IT infrastructure systems". The ITAA added that "Most of this growth is predicted to come in later years and will be concentrated in a few departments including Health and Human Services, Homeland Security, Treasury and Veterans Affairs".

10/27. The Public Knowledge (PK) published a short piece regarding the Digital Millennium Copyright Act (DMCA). The author is the PK's Rashmi Rangnath. She wrote that the anti-circumvention provisions codified at 17 U.S.C. § 1201, et seq.  prevent fair uses of covered works. Moreover, she asserted that the Copyright Office's triennial rulemaking procedure "which is supposed to mitigate the adverse effects of the anti-circumvention provisions on lawful uses, is ineffective". She also argued that the notice and take down provisions codified at 17 U.S.C. § 512 "have resulted in users' content being taken down unfairly", and "Users have also been exposed to the possibility that ISPs will cut off their Internet access without verifying allegations of infringement".

Washington Tech Calendar
New items are highlighted in red.
Tuesday, October 28

The House will not meet. Its next scheduled meeting is at 11:00 AM on January 3, 2009. See, HConRes 440.

The Senate will not meet.

9:00 AM - 5:15 PM. The Department of Energy's (DOE) Advanced Scientific Computing Advisory Committee (ASCAC) will meet. See, notice in the Federal Register, October 16, 2008, Vol. 73, No. 201, at Page 61412. Location: Hilton Washington DC North, 620 Perry Parkway, Gaithersburg, MD.

10:00 AM. The Federal Communications Commission's (FCC) Advisory Committee on Diversity for Communications in the Digital Age will meet. See, notice in the Federal Register, October 16, 2008, Vol. 73, No. 201, at Pages 61419-61420. Location: FCC, Commission Meeting Room, 445 12th St., SW.

6:00 - 8:00 PM. The Federal Communications Bar Association's (FCBA) Mass Media and Engineering and Technical Practice Committees will host a seminar titled "The Final 100 Days Until the DTV Transition: Ready? Set? Go!!!". The speakers will be David O'Connor (Wilkinson Barker Knauer), John Burgett (Wiley Rein), Jack Goodman (Wilmer Hale), Eloise Gore (FCC), Dianne Smith (Fox Television Stations), Parul Desai (Media Access Project), Jonathan Collegio (National Association of Broadcasters), Mark Lloyd (Leadership Conference on Civil Rights), Cathy Seidel (FCC), and Dennis Wallace (Meintel Sgrignoli & Wallace). This event qualifies for continuing legal education credits. Prices vary. See, notice. Location: Wilmer Hale, 1875 Pennsylvania Ave., NW.

Wednesday, October 29

9:00 AM - 12:00 NOON. The Department of Energy's (DOE) Advanced Scientific Computing Advisory Committee (ASCAC) will meet. See, notice in the Federal Register, October 16, 2008, Vol. 73, No. 201, at Page 61412. Location: Hilton Washington DC North, 620 Perry Parkway, Gaithersburg, MD.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) FCBA Foundation Scholarship Committee will host a brown bag lunch to plan. For more information, contact Erin Dozier at edozier at nab dot org or 202-775-4970. Location: National Association of Broadcasters (NAB), 1771 N St., NW.

Thursday, October 30

8:00 AM. The Federal Aviation Administration's (FAA) Commercial Space Transportation Advisory Committee will meet. See, notice in the Federal Register, September 16, 2008, Vol. 73, No. 180, at Page 53477. Location: FAA headquarters building, Bessie Coleman Conference Center, 2nd floor, 800 Independence Ave., SW.

9:00 AM. The CompTIA will host an event titled "Tech Policy and the '08 Presidential Elections -- the Campaigns Debate". For more information, contact Tom Liszka at 202-543-3003 or TLiszka at comptia dot org. Location: Murrow Room, National Press Club, 13th Floor, 529 14th St., NW.

12:30 - 2:00 PM. The Federal Communications Bar Association's (FCBA) International Telecommunications Practice Committee will host a brown bag lunch titled "International Undersea Cables -- A Global Market Update/Overview (What’s Behind the New Wave of Planned Construction?)". The speaker will be Timothy Stronge (TeleGeography). For more information, contact Susan O'Connell at susan dot oconnell at fcc dot gov or 202-418-1484. RSVP by October 24 to Jennifer Ullman at Jennifer dot ullman at verizon dot com or 202-515-2432. Location: Verizon, 5th floor, Suite 400 West, 1300 I St., NW.

12:30 - 1:45 PM. The New America Foundation (NAF) will host an event titled "McCain v. Obama: The Technology Policy Smackdown". The speakers will be Douglas Holtz-Eakin (McCain campaign), Reed Hundt (Obama campaign), and Nicholas Thompson (NAF moderator). See, notice and registration page. Lunch will be served. Location: NAF, 7th floor, 1630 Connecticut Ave., NW.

Friday, October 31

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) regarding its SP 800-70 Rev. 1 [66 pages in PDF] titled "DRAFT National Checklist Program for IT Products -- Guidelines for Checklist Users and Developers".

Deadline to submit comments to the Copyright Royalty Judges regarding its proposed regulations that set the rates and terms for the use of musical works in limited downloads, interactive streaming and incidental digital phonorecord deliveries. See, notice in the Federal Register, October 1, 2008, Vol. 73, No. 191, at Pages 57033-57040.

Deadline for the Federal Communications Commission (FCC) to respond to Rep. John Dingell's (D-MI) interrogatories regarding unlicensed use of the TV white space. See, Rep. Dingell's letter [PDF], and story titled "Rep. Dingell Writes FCC Regarding Unlicensed Devices in the White Space" in TLJ Daily E-Mail Alert No. 1,847, October 27, 2008.

Monday, November 3

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in ClearValue v. Pearl River Polymers, Inc., App. Ct. No. 2007-1487, a patent infringement case. See, Federal Circuit oral argument calendar. Location: Courtroom 201, Federal Circuit courthouse, LaFayette Square, 717 Madison Place, NW.

Deadline to submit to the Office of the U.S. Trade Representative's (OUSTR) post hearing briefs in connection with the 2008 Generalized System of Preferences (GSP) Annual Review. See, notice in the Federal Register, September 12, 2008, Vol. 73, No 178, at Pages 53054-53056.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Third Further Notice of Proposed Rulemaking (3rdFNPRM) regarding its failed D block auction and its efforts to facilitate a nationwide interoperable broadband wireless network for public safety entities. The FCC adopted and released this 3rdFNPRM [237 pages in PDF] on September 25, 2008. See, story titled "FCC Adopts Further NPRM Regarding Public Safety Broadband Network" in TLJ Daily E-Mail Alert No. 1,832, September 25, 2008. This item is FCC 08-230 in WT Docket No. 06-150 and PS Docket No. 06-229. See, notice in the Federal Register, October 3, 2008, Vol. 73, No. 193, at Pages 57749-57851.

Tuesday, November 4

Election Day.

The Supreme Court will hear oral argument in FCC v. Fox Television Stations, Sup. Ct. No. 07-582. See, story titled "Supreme Court Grants Certiorari in FCC Fleeting Expletives Case" in TLJ Daily E-Mail Alert No. 1,732, March 18, 2008. This is a petition for writ of certiorari to the U.S. Court of Appeals (2ndCir). On June 4, 2007, Court of Appeals issued its divided opinion [53 pages in PDF], which is also reported at 489 F.3d 444, holding that the FCC's new policy sanctioning "fleeting expletives" is arbitrary and capricious. See, story titled "2nd Circuit Vacates and Remands FCC Profanity Order" in TLJ Daily E-Mail Alert No. 1,590, June 4, 2007. See also, Supreme Court docket. Location: Supreme Court, 1 First St., NW.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Sumitomo Mitsubishi Silicon Corporation v. Memc Electronic Materials, Inc., App. Ct. No. 2007-1578. See, Federal Circuit oral argument calendar. Location: Courtroom 201, Federal Circuit courthouse, LaFayette Square, 717 Madison Place, NW.

Events Outside of Washington
Wednesday, October 29

8:00 AM - 12:30 PM. The National Institute of Standards and Technology's (NIST) Visiting Committee on Advanced Technology will meet. See, notice in the Federal Register, September 30, 2008, Vol. 73, No. 190, at Page 56797. Location: Building 1, Room 1107, NIST, Boulder, Colorado.

4:00 - 6:00 PM. Pascal Lamy, Director General of the World Trade Organization (WTO), will give a speech titled "The Case for Trade: Why the Multilateral Trading System is More Important Than Ever for the U.S.". For more information, contact Emily Best at ebest at law dot berkeley dot edu or 510-642-7830. See, notice and registration page. Location: University of California at Berkeley law school, Berkeley, California.

6:00 - 9:00 PM. The New York City Bar Association will host an event titled "The Internet and Copyright:  Public Policies Collide". The speakers will be Robert Bernstein (moderator), Jonathan Zittrain (Harvard Law School), David Carson (Associate Register for Policy and International Affairs, Copyright Office), Jeffrey Mausner (attorney for Perfect 10), Andrew Bridges (Winston & Strawn), Alexander Macgillivray (Google), and Stanley Pierre-Louis (Viacom). This event is free and open to the public. For more information, contact Eric Friedman at 212-382-6754 or efriedman at nycbar dot org. Location: New York City Bar, 42 West 44th St., New York, New York.

6:30 - 8:30 PM. There will be a book release party for the book [Amazon] titled "Remix: Making Art and Commerce Thrive in the Hybrid Economy", by Lawrence Lessig. See, Lessig's Remix web site, and Stanford University law school's notice of this event. For more information, contact 650-723-2730 or alumni dot relations at law dot stanford dot edu. Location: W Hotel San Francisco, 181 3rd St., San Francisco, California.

Day one of a four day event titled "Digital Hollywood Fall". See, event web site. Location: Grand Ballroom at Hollywood and Highlands, and the adjacent Renaissance Hollywood Hotel, 1755 N. Highland Ave., Hollywood, California.