2nd Circuit Affirms Denial of
PPT Franchises to Organized Crime
4/8. The U.S. Court of Appeals
(2ndCir) issued its opinion
[14 pages in PDF] in Global Network Communications v. City of New
York, a case regarding a municipal denial of an application for a
franchise to operate public pay telephones (PPTs) on public property. The
Court of Appeals affirmed the District Court's grant of summary judgment
to the City of New York.
The Court of Appeals held that nothing in Section 253 requires franchising
authorities to give PPT franchises to entities owned by convicted
criminals with organized crime connections who use threats and
intimidation to secure PPT locations.
U.S.C. § 253, at Subsection (a) provides that "No State or local
statute or regulation, or other State or local legal requirement, may
prohibit or have the effect of prohibiting the ability of any entity to
provide any interstate or intrastate telecommunications service."
Subsection (c) then provides that "Nothing in this section
affects the authority of a State or local government to manage the public
rights-of-way or to require fair and reasonable compensation from
telecommunications providers, on a competitively neutral and
nondiscriminatory basis, for use of public rights-of-way on a
nondiscriminatory basis, if the compensation required is publicly
disclosed by such government."
The city denied the application on the basis of the applicant's
connection to organized crime, and history of fraud. Global Network
Communications (GNC) filed a complaint in the U.S. District Court (SDNY)
alleging violation of Section 253, and federal preemption of the local
franchising regime. The District Court dismissed the complaint pursuant
to FRCP Rule 12(b)(6) for failure to state a claim upon which relief may
The Court of Appeals affirmed. It wrote that GNC's "CEO and sole
shareholder, Ronald Massie, is an associate of the Bonnano organized
crime family accused of loan sharking and money laundering through the
company. Massie subsequently pleaded guilty to a federal indictment
charging him with loan sharking, mail fraud, and bank fraud. He later
testified that Global derived 20 to 30 percent of its business from
locations that were chosen or secured by members of the Bonnano crime
family. He admitted to using connections to the Bonnano crime family in
order to secure PPT locations, and property owners reported that these
individuals threatened and intimidated them into accepting the
The Court reasoned that Section 253 "does not altogether deny
states and localities the ability to regulate telecommunication
It continued that "The statutory grant of authority to ``manage
the public rights-of-way´´ encompasses the right to reject an applicant
on the basis of its affiliation with organized crime, especially upon a
demonstrated record of operating the facilities fraudulently, or otherwise
in violation of law, with reliance on organized crime to further its
It concluded that "the City's refusal to grant Global a franchise
to operate on public rights-of-way on the basis of this past history is
fully within the scope of the authority provided by Section 253(c)."
Moreover, "the authority under § 253(c) to collect fair and
reasonable compensation from telecommunications service providers
operating on City property implies authority to deny a permit to entities
which have demonstrated lack of financial responsibility and have
practiced fraud to evade their financial obligations."
Other companies, or their employees, that receive state or local
communications licenses or franchises, have been convicted of crimes. The
Court of Appeals added that the denial was "nondiscriminatory"
in this case because of the "different and more serious order"
of the crimes. It did not provide an explanation of this phrase.
This case is Global Network Communications, Inc. v. City of New
York and City of New York Department of Information Technology and
Telecommunications, U.S. Court of Appeals for the 2nd Circuit, App.
Ct. No. 07-5184-cv, an appeal from the U.S. District Court for the
Southern District of New York. Judge Leval wrote the opinion of the Court
of Appeals, in which Judge McLaughlin and Pooler joined.
Releases Annual § 1377 Telecom Report
4/6. The Office of the U.S. Trade
Representative (OUSTR) announced the results of its annual review of
the operation and effectiveness of telecommunications trade agreements,
pursuant to Section 1377 of the Omnibus Trade and Competitiveness Act of
This report addresses barriers to U.S. entities imposed by foreign
governments, but not barriers to foreign entities imposed by the U.S.
Ron Kirk, the USTR, stated in a release
that "Barriers to telecommunications services and equipment make it
harder for the U.S. to compete in the in the global marketplace, and
harder for us to evolve efficient and innovative communications
infrastructure here at home".
PRC. The report notes the lack of transparency in the People's
Republic of China (PRC). It states that "China’s longstanding effort
to license 3G wireless networks has been characterized by a lack of
transparency and is replete with evidence of policies favoring a domestic
It continues that "China initially delayed licensing, apparently
due to a desire first to see a domestic technology (TD-SCDMA) mature and
then be deployed in conjunction with a restructuring plan for the
government-owned operators that dominate the industry. This highlights
the government's extensive involvement in the sector, and its
unwillingness to let commercial judgments drive the development of the
market -- often at the expense of foreign suppliers."
It adds that while the PRC has issued licenses, "persistent
questions remain about how additional spectrum will be assigned, how
ongoing policies to promote this domestic technology will be developed,
and lack of clarity on whether new competing technologies (e.g., WiMax)
and services will be authorized." (Parentheses in original.)
It adds that "Other areas in which a lack of transparency has
seriously hampered foreign suppliers include the unwritten prohibition on
offering 802.11 technologies (known as WiFi) on mobile handsets and lack
of clarity on the scope of services foreign-affiliated value-added
service suppliers are permitted to offer." (Parentheses in
It also states that "as China rolls out 3G networks nationwide,
U.S. companies are increasingly concerned about China’s existing
prohibition on marketing mobile phones with WLAN (wireless local area
network) capability such as 802.11 (also known as ``Wi-Fi´´). This
current prohibition has no obvious legitimate policy justification, and
MIIT’s own regulations do not appear to address the issue -- equipment
approvals for this technology are simply not granted." (Parentheses
The report also raises concerns about "proposed technical
regulations relating to information technology security for various IT
products, including routers, smart cards, and secure databases and
Mobile Termination Rates in Japan. The OUSTR report states that
"In Japan, where the regulator does not set mobile termination
rates, a proceeding is under way to reconsider that policy, given persistently
high rates. In that proceeding, at least one operator has advocated
introducing a ``bill and keep´´ system for compensation (whereby
operators do not charge each other for terminating each others’ calls),
which is widely used by U.S. mobile operators."
It states that the OUSTR "will monitor this proceeding and
continue to urge the regulator to put in place a transparent system for
better evaluating whether rates imposed by operators are truly
reasonable." (Parentheses in original.)
The report also addresses numerous other issues in other countries,
including anti-competitive practices by Telmex and Telcel in Mexico, and
Singtel's failure to offer competitors access to leased lines at
efficient aggregation points.
Summary of Proposed ACTA
4/6. The Office of the U.S. Trade
Representative (OUSTR) released a
[6 pages in PDF] titled "The Anti-Counterfeiting Trade Agreement --
Summary of Key Elements Under Discussion".
The USTR did not release the text of any proposed Anti-Counterfeiting
Trade Agreement (ACTA). Rather, this just released document describes the
This document states that "The intended focus is on
counterfeiting and piracy activities that significantly affect commercial
interests, rather than on the activities of ordinary citizens."
The document's discussion of border measures states that the "Elements
under discussion ... include ... a de minimis exception that could permit
travelers to bring in goods for personal use". This suggests that
the U.S. does not seek to have travellers' iPods searched for infringing
works, or seized by customs inspectors.
The document states that Section 4 of the ACTA addresses "new
technologies" and "the possible role and responsibilities of
internet service providers in deterring copyright and related rights
piracy over the Internet."
It adds that "No draft proposal has been tabled yet, as
discussions are still focused on gathering information on the different
national legal regimes to develop a common understanding on how to deal
best with these issues."
However, the document does not reference the imposition of secondary
liability, or limitations upon such liability. It does it reference the
Supreme Court's 2005 opinion
[55 pages in PDF] in MGM v. Grokster, 545 U.S. 913. See, story
titled "Supreme Court Rules in MGM v. Grokster" in TLJ Daily
E-Mail Alert No. 1,163, June 28, 2005. Nor does it reference the 1984
in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S.
This OUSTR document states that "The ACTA initiative aims to
establish international standards for enforcing intellectual property
rights in order to fight more efficiently the growing problem of
counterfeiting and piracy. In particular, the ACTA is intended to
establish, among the signatories, agreed standards for the enforcement of
intellectual property rights that address today’s challenges by
increasing international cooperation, strengthening the framework of
practices that contribute to effective enforcement of intellectual
property rights, and strengthening relevant enforcement measures."
It adds that the "ACTA is not intended to interfere with a
signatory’s ability to respect its citizens’ fundamental rights and civil
liberties, and will be consistent with the WTO Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS Agreement) and will
respect the Declaration on TRIPS and Public Health."
See also, stories titled "Senators Ask USTR Not to Negotiate Too
Broad an ACTA" in TLJ Daily
E-Mail Alert No. 1,837, October 2, 2008, "OUSTR Holds Meeting
Regarding ACTA" in TLJ Daily
E-Mail Alert No 1,830, September 23, 2008, and "OUSTR to Hold
Meeting on Anti-Counterfeiting Trade Agreement" in TLJ Daily
E-Mail Alert No 1,828, September 19, 2008.
4/8. President Obama announced his intent to nominate Rand Beers
to be Under Secretary for the National Protection and Programs
Directorate (NPPD) at the Department of
Homeland Security (DHS). The responsibilities of this directorate
include, among other things, cybersecurity, communications security, and
the US-VISIT program. See, DHS release
and White House press office release.
4/8. President Obama announced his intent to nominate Mary Smith to
be Assistant Attorney General in charge of the Department of Justice's
(DOJ) Tax Division. The Tax
Division has litigation responsibilities with respect to technology and
communications related tax issues. For example, during the Bush
administration it continued to litigate the 26
U.S.C. § 4251 3 percent excise tax on some but not all communications
services long after the Courts of Appeals held that its position was wrong.
She is currently a partner in the Chicago, Illinois, office of the law
firm of Schoeman Updike Kaufman &
Scharf. She previously worked for the law firm of Skadden Arps. She
also was an Associate Counsel to the President during the Clinton
administration. See, White House press office release.
4/8. Attorney General Eric Holder announced his appointment of Marshall
Jarrett to be head of the Department of Justice's (DOJ) Executive Office for United States
4/8. Attorney General Eric Holder announced his appointment of Mary
Patrice Brown to be acting head of the Department of Justice's (DOJ) Office of Professional Responsibility
|About Tech Law
Tech Law Journal publishes a free access web site and
a subscription e-mail alert. The basic rate for a subscription
to the TLJ Daily E-Mail Alert is $250 per year for a single
recipient. There are discounts for subscribers with multiple
Free one month trial subscriptions are available. Also,
free subscriptions are available for journalists, federal
elected officials, and employees of the Congress, courts, and
executive branch. The TLJ web site is free access. However,
copies of the TLJ Daily E-Mail Alert are not published in the
web site until two months after writing.
For information about subscriptions, see
subscription information page.
Tech Law Journal now accepts credit card payments. See, TLJ
card payments page.
TLJ is published by
carney at techlawjournal dot com
P.O. Box 4851, Washington DC, 20008.
Copyright 1998-2009 David Carney. All rights reserved.
|This issue contains the following items:
• 2nd Circuit Affirms Denial of PPT Franchises to Organized Crime
• OUSTR Releases Annual § 1377 Telecom Report
• OUSTR Releases Summary of Proposed ACTA
New items are highlighted in
The House will not meet the week of April 6-10 or 13-17. It will next
meet at 2:00 PM on April 21, 2009. See, HConRes 93.
The Senate will not meet the week of April 6-10 or 13-17. It will next
meet on April 20, 2009, at 2:00 PM, at which time it may begin
consideration of S 386 [LOC | WW],
the "Fraud Enforcement and Recovery Act".
9:00 AM - 12:30 PM. The American
Enterprise Institute (AEI) will host an event titled "Promoting
Peace and Prosperity in Asia: The Taiwan Relations Act at Thirty".
The speakers will be C.J. Chen (former foreign minister of the Republic
of China), Arthur Brooks (AEI), John Bolton (AEI), Paul Wolfowitz (AEI),
Danielle Pletka (AEI), Louisa Greve (National
Endowment for Democracy), Christopher Griffin (office of Sen. Joe Lieberman (D-CT), Rupert
Business Council), and Dan Blumenthal (AEI). See, notice.
Location: AEI, 12t floor, 1150 17th St., NW.
Deadline to submit comments to the National
Telecommunications and Information Administration (NTIA) and the
Rural Utilities Service (RUS) regarding the broadband grant programs
created by HR 1 [LOC | WW], the
huge spending bill enacted in February, which programs are also known as
the Broadband Technology Opportunities Program (BTOP). See, notice in the
Federal Register, March 12, 2009, Vol. 74, No. 47, at Pages 10716-10721,
in the Federal Register, March 18, 2009, Vol. 74, No. 51, at Page 11531.
Deadline to submit comments to the Federal Communications Commission
(FCC) in response to its Public
Notice [4 pages in PDF] regarding the FCC's consultative role in
implementing the broadband grants and loans provisions of
HR 1, the huge spending bill enacted in February. This PN is DA
09-668 in GN Docket No. 09-40.
12:00 NOON - 2:00 PM. The DC Bar
Association will host a closed event titled "Posters,
Pictures and Portraits: Hot Issues Involving Copyrights in Images".
The speakers will include James Astrachan (Astrachan Gunst & Thomas)
and Victor Perlman (American Society of
Media Photographers). The price to attend ranges from $25 to $50.
For more information, call 202-626-3463. Location: D.C. Bar Conference
Center, B-1 Level, 1250 H St., NW.
2:00 - 3:30 PM. The Department of Justice's (DOJ) Antitrust Division will host a
seminar conducted by Catherine
de Fontenay (University of Melbourne) on her paper,
co-authored with Joshua Gans, titled "Bilateral Bargaining with
Externalities". This is a game theoretical paper about bargaining
between agents in a network, including patent holders' negotiations with
several potential licensors. To request permission to attend, contact
Patrick Greenlee at 202-307-3745 or atr dot eag at usdoj dot gov.
Location: Bicentennial Building, 600 E St., NW.
12:00 NOON - 1:30 PM. The Disruptive
Women in Health Care (DWINC) will host a panel discussion titled
"Health eGaming, Healthy Patients". The topic is the use
of video games to inform patients about health topics, such as diabetes,
nutrition, and weight loss. The speakers will include former Rep. Nancy
Johnson (R-CT). Lunch will be served. RSVP to 202-263-2926. Location:
Room B339, Rayburn Building, Capitol Hill.
2:30 PM. The Federal Trade Commission's
(FTC) Bureau of Economics will host an untitled seminar by Ken Hendricks (University
of Texas). He is an economist who has written extensively about
competition, collusion, mergers, the Hirschmann Herfindahl Index (HHI),
the computational bilateral oligopoly (CBO) model, and government merger
reviews. See, paper
[PDF] titled "Evaluating the Likely Effects of Horizontal and
Vertical Mergers". He has also written about product discovery in
the market for recorded music. See, paper
[PDF] titled "Information and the Skewness of Music Sales".
Location: FTC, New Jersey Ave. Building, Room 4100.
9:30 AM. The U.S. Court of
Appeals (DCCir) will hear oral argument in NCTA v. FCC,
App. Ct. No. 08-1016 and 08-1017. Judges Tatel, Garland and Silberman
will preside. This is the challenge by the NCTA and apartment owners to
the FCC's MDU order, that asserts regulatory authority over the
content of contracts negotiated by owners of multiple dwelling units
(MDUs), such as apartment buildings, and cable companies. The FCC
asserted authority under Subsection 628(b) of the Communications Act,
which is codified at 47
U.S.C. § 548(b). The order, adopted on October 31, 2007, is FCC
07-189 in MB Docket No. 07-51. See, stories titled "FCC Adopts
R&O Abrogating Contracts Between MDU Owners and Cable Companies"
and "Commentary on FCC's R&O Regarding MDU Owners and Cable
Companies" in TLJ Daily
E-Mail Alert No. 1,669, November 5, 2007. See, FCC's brief
[68 pages in PDF]. Location: Courtroom 11, 333 Constitution Ave.
9:30 AM. The U.S. Court of
Appeals (DCCir) will hear oral argument in Alvin Lou Media,
Inc. v. FCC, App. Ct. No. 08-1067. Judges Ginsburg, Rogers and
Kavanaugh will preside. See, FCC's brief
[80 pages in PDF]. Location: 333 Constitution Ave.
Deadline to submit initial comments to the The Federal Communications
Commission (FCC) in response to its Public
Notice [4 pages in PDF] regarding its implementation of Subsections
103(b) and 103(c)(1) of the Broadband Data Improvement Act (BDIA).
President Bush signed S 1492 [LOC | WW],
the BDIA, into law on October 10, 2008. It is now Public Law No. 110-385.
Deadline to submit initial comments to the Federal Communications
Commission (FCC) in response to its notice
of proposed rulemaking [25 pages in PDF] regarding extending until
June 30, 2010, the freeze of Part 36 category relationships and
jurisdictional cost allocation factors used in jurisdictional
separations. This freeze is set to expire on June 30, 2009. This NPRM is
FCC 09-24 in CC Docket No. 80-286. See, notice in the
Federal Register, April 3, 2009, Vol. 74, No. 63, at Pages 15236-15239.
The House will not meet.
12:00 NOON - 2:00 PM. The Federal
Communications Bar Association's (FCBA) Intellectual Property and
Legislative Practice Committees, and the DC Chapter of the Copyright
Society of the U.S.A. will host a brown bag lunch titled "Communications
and Copyright in the 111th Congress". The FCBA has a history of
excluding persons from its lunches. Location: NCTA, 25 Massachusetts
6:00 - 9:15 PM. The DC Bar Association
will host the first part of a three part series titled "Preserving
Intellectual Property Rights in Goverment Contracts". The
speakers will include David Bloch (Winston & Strawn), Richard Gray
(Department of Defense), John Lucas (Department of Energy), and James
McEwen (Stein McEwen). The price to attend ranges from $89 to $129 per
part, or $169 to $299 for the series. See, notice.
This event qualifies for continuing legal education credits. The DC Bar
Association has a history of excluding persons from its events. For more
information, call 202-626-3488. Location: D.C. Bar Conference Center, B-1
Level, 1250 H St., NW.
4/9. The U.S. Court of Appeals
(9thCir) issued an order
[PDF] in Linkline v. Pacific Bell, vacating its September
11, 2007, opinion, and remanding to the District Court. On February 25,
2009, the Supreme Court
issued its opinion
[24 pages in PDF] reversing the judgment of the Court of Appeals. See,
stories titled "Supreme Court Reverses in Pacific Bell v.
Linkline", "Supreme Court: There Is Robust Competition in the
Broadband Market", and "Commentary: Impact of Pacific Bell v.
LinkLine" in TLJ Daily
E-Mail Alert No. 1,907, February 27, 2009. The DC Bar Association
will host a panel discussion titled "Alleged Anticompetitive
Wholesale and Retail Pricing After linkLine" on May 5, 2009. See,
4/9. The U.S. Court of Appeals
(5thCir) issued its opinion
[65 pages in PDF] in Lormand v. US Unwired, a 10(b)(5)
putative class action dating back to events that occurred in 2000-2002,
and US Unwired's affiliate relationship with Sprint. The Court of Appeals
affirmed in part and reversed in part the District Court dismissal for
failure to state a claim pursuant to FRCP Rule 12(b)(6) and the pleading
requirements of the Private Securities Litigation Reform Act (PSLRA).
This case is Billy Lormand v. US Unwired, Inc., et al., U.S. Court
of Appeals for the 5th Circuit, App. Ct. No. 07-30106, an appeal from the
U.S. District Court for the Eastern District of Louisiana.
4/9. Rep. Henry Waxman (D-CA)
and Rep. Rick Boucher (D-VA)
sent a letter
[PDF] to Best Buy and other consumer electronics retailers and
manufacturers that propounds interrogatories regarding the supply of
coupon eligible converter boxes. The two are the Chairman of the House Commerce Committee
(HCC), and its Subcommittee on Communications, Technology and the
4/9. The Progress & Freedom
Foundation announced that it will not hold its annual Aspen
Conference this August. This would have been the 15th conference. Ken
Ferree, head of the PFF, stated in a release
that "In light of the current economic environment, we do not think
it prudent to spend our supporters' money, or ask others to spend scarce
dollars, on a lavish conference at a remote facility. We intend to
reschedule the event when economic conditions improve, and in the interim
use our resources as efficiently as possible on local events and
4/9. Ron Kirk, head of the Office of
the U.S. Trade Representative (OUSTR), stated in a release
that the "USTR is working with our trading partners and with
Congress to open markets to American goods and services". One
obstacle to OUSTR success in this endeavor is that the Congress and
President Obama are working to close certain U.S. markets to foreign
goods and services.
4/8. The Department of Commerce's (DOC) National Telecommunications and
Information Administration (NTIA) published a notice in the
Federal Register that announces a new deadline for submitting
applications for grants under the Public Telecommunications Facilities
Program (PTFP). The old deadline was December 18, 2008. The new
deadline is 5:00 PM on May 18, 2009. See, Federal Register, April 8,
2009, Vol. 74, No. 66, at Page 15943. The Omnibus Appropriations Act,
2009, appropriated $18 Million for the PTFP. Pub. L. No. 111-8.
4/7. The Securities and Exchange
Commission (SEC) published a notice in the
Federal Register that announces, describes, recites, and sets the
effective date (April 13, 2009) for, extensive "technical
corrections" to its rules requiring certain public companies to
provide financial information to the SEC in interactive data
format using the eXtensible Business Reporting Language (XBRL). See,
Federal Register, April 7, 2009, Vol. 74, No. 65, at Pages 15666-15669.
The SEC published these rules in a notice in the
Federal Register, February 10, 2009, Vol. 74, No. 26, at Pages 6775-6821.
4/3. The U.S. Court of Appeals
(8thCir) issued its opinion
[12 pages in PDF] in Cedar Rapids Television v. MCC Iowa,
affirming the judgment of the District Court. This is a case regarding
termination of a retransmission consent agreement between a
television broadcaster and a cable company, Mediacom. This case is Cedar
Rapids Television Company v. MCC Iowa LLC and MCC Illinois LLC, U.S.
Court of Appeals for the 10th Circuit, App. Ct. No. 07-3899, an appeal
from the U.S. District Court for the Northern District of Iowa, Judge
Linda Reade presiding.
4/3. The Department of Justice's (DOJ) Antitrust Division published a notice in the
Federal Register, pursuant to the National Cooperative Research and
Production Act of 1993, of the National Institute of Standards and Technology
(NIST) Joint Venture on Cyber-Enabled Smart Infrastructure. This
notice identifies the parties to, and objectives of, this venture. See,
Federal Register, April 3, 2009, Vol. 74, No. 63, at Page 15304.
4/2. The U.S. Court of Appeals
(9thCir) issued its opinion
[23 pages in PDF] in Dream Games of Arizona v. PC Onsite, a
copyright infringement case involving an electronic video bingo
game. The Court of Appeals affirmed the judgment of the District Court in
its entirety. The plaintiffs, including Dream Games, obtained a judgment
of direct infringement, injunctive relief, and an award of statutory
damages of $25,000. The opinion contains some discussion of secondary
liability, vicarious liability, contributory liability, and inducement,
and the 9th Circuit's 2007 opinion in Perfect 10 v. Visa, 494 F.3d
788. However, the Court of Appeals held that Dream Games cannot argue
secondary liability on appeal, because it did not plead it in its
complaint. This case is Dream Games of Arizona, Inc., et al. v. PC
Onsite, et al., U.S. Court of Appeals for the 9th Circuit, App. Ct.
No. 07-15919, an appeal from the U.S. District Court for the District of
Arizona, D.C. No. CV-03-00433-PHX-ROS.