News Briefs from May 26-31, 2001

Divided 6th Circuit Addresses Pleading Standards in Securities Class Actions
5/31. The U.S. Court of Appeals (6thCir) issued its opinion in Helwig v. Vencor, a case regarding pleading standards in class action securities suits under the Private Securities Litigation Reform Act (PSLRA). The Court, sitting en banc, was split seven to six. There are also conflicting interpretations by the various circuits that have examined this issue. See, TLJ story.
Beales May Head FTC Consumer Protection Bureau
5/31. The Wall Street Journal reported that incoming FTC Chairman Timothy Muris will appoint Howard Beales head of the FTC's Consumer Protection Bureau.
The FTC's Consumer Protection Division is involved in both fighting online fraud and promoting online privacy. Howard Beales is a "Chicago school" economist who is a professor at the business school at George Washington University in Washington DC. He is an Associate Professor of  Strategic Management & Public Policy in the School of Business and Public Management. He specializes in consumer research, contract law, economics of commercial free speech, applied macro-economics, advertising, public policy toward business, safety and health regulations.
Beales and Muris worked together at the FTC in the 1980s. They have also co-authored academic works. See, Howard Beales and Timothy Muris, State and Federal Regulation of National Advertising, The AEI Press, Washington DC, 1993. See, Amazon listing (out of print), and AEI order form.
Privacy Advocates Write to Muris
5/31. A collection of groups that engage in advocacy regarding online privacy sent a letter to Timothy Muris, the incoming Chairman of the FTC, in which they advocated that Muris "make the protection of privacy a top priority for the FTC." They listed among their requests that the FTC "Revisit the effectiveness of the "unfair and deceptive trade practices" regime to protect consumer privacy ..."
More People and Appointments
5/31. Michael Copps was sworn in as a Commissioner of the FCC. He is a Democrat, and a former aide to Sen. Ernest Hollings (D-SC). His term runs until runs until June 30, 2005. See, FCC release.
5/31. Kathleen Abernathy was sworn in as a Commissioner of the FCC. She is a Republican. Her term expires June 30, 2004. See, FCC release.
5/31. Valerie Caproni, Director of the SEC's Pacific Regional Office, will leave her position at the end of July to join the law firm of Simpson Thacher & Bartlett. See, SEC release.
New IP Suits
5/31. Agere Systems filed a complaint in U.S. District Court (DDel) against Proxim alleging patent infringement. The three patents in suit relate to wireless local area networking products. See, Agere release.
5/31. Motorola filed a complaint in U.S. District Court against e-mail spammer Paging America alleging trademark infringement and unfair competition. Motorola stated that Paging America sent unsolicited e-mail messages that misled consumers into believing that Motorola was affiliated with Paging America, which contained Motorola trademarks, and which referenced free Motorola pagers that were neither free nor made by Motorola. See, Motorola release.
Antitrust News
5/31. The U.S. Court of Appeals (5thCir) issued its opinion in Spectators' Communication Network v. Colonial Country Club, a Sherman Act antitrust case. Plaintiff, Spectators' Communication Network, alleged that it was excluded from broadcasting professional golf tournaments. The District Court granted summary judgment to Defendant. The Appeals Court reversed.
More News
5/31. BellSouth requested permission from the Florida Public Service Commission to provide long distance service in Florida. See, release.
5/31. President Bush extended the life of the President's Information Technology Advisory Committee for two more years. See, release.
5/31. Lynn Turner, Chief Accountant of the SEC gave a speech on revenue recognition.
Invasion of Privacy v. Freedom of Speech
5/30. The California Court of Appeal (4/2) issued its opinion [PDF] in M.G. v. Time Warner, a case involving privacy rights and the California SLAPP statute. This is a case involving old media -- magazines and TV -- not Internet technology; however, the legal issues involved also pertain to Internet media and speakers. Time Warner (now AOL Time Warner) published stories in a print publication (Sports Illustrated) and in a TV program about a child molester who coached little league baseball. The stories included a photograph of a team which he had coached. Some of the children in the picture had been molested by him. The Appeals Court held that the invasion of privacy claim survives a SLAPP motion. See, TLJ story.
Trade Groups Release White Papers on Antitrust
5/30. The Association for Competitive Technology (ACT) and the Computing Technology Industry Association (CompTIA) released a report [PDF] which rebutes a report [PDF] issued by ProComp on May 15, and an earlier report. ProComp, which is funded by Microsoft's competitors, alleged that "Microsoft has ... introduced a series of business initiatives that put Microsoft in a position to extend its monopoly to the Internet itself." The trade groups supporting Microsoft responded that this is "yet another effort by Microsoft rivals to misuse the antitrust laws to stifle the very competition and innovation these laws are designed to promote. The actions of Microsoft which were attacked in the ProComp white papers violate neither the antitrust laws nor the 1995 consent decree." Boyden Gray, a partner at the Washington DC law firm of Wilmer Cutler & Pickering, and a contributor to the ACT CompTIA report, stated in a release that "Not surprisingly, the beneficiaries of a breakup would be Microsoft rivals Oracle and Sun, but those who would be harmed most by a breakup are the ones that antitrust law is designed to protect -- consumers."
E-Rate Subsidies
5/30. May 30 was the deadline to file reply comments with the FCC in response to its Notice of Proposed Rulemaking (NPRM) regarding revisions to the method of subsidizing schools and libraries under its e-rate program when there is insufficient funding to support all requests. See, reply comments in PDF submitted by Funds for Learning, Council of the Great City Schools, and Education and Library Networks Coalition.
Public Participation in the ICANN
5/30. The NGO and Academic ICANN Study (NAIS) group released its interim report on elections and public participation in the ICANN. See, executive summary [HTML] and full report [540 KB in PDF]. The report states that "the legitimacy of ICANN's structure and policies have been questioned by various players in the Internet community. The central plank of this criticism is that ICANN's organizational structures and activities do not comply with the ethos of good and democratic governance." The 107 page report concludes that "If ICANN is a public entity formulating policy about the Internet, with broad impact on the public globally, then the legitimacy of ICANN will depend on public representation. If ICANN is viewed as a private business engaged in narrow technical work, the case for public participation in its decisions or selection of its directors is weaker."
Privacy: Government Web Site Cookies
5/30. The GAO released a report [PDF] titled "Internet Privacy: Implementation of Federal Guidance for Agency Use of "Cookies" ". The report was written at the request of Sen. Fred Thompson (R-TN), Chairman of the Senate Governmental Affairs Committee. It reviewed federal agencies' compliance with the June 2000 Office of Management and Budget (OMB) guidance that established a presumption that persistent (as opposed to session) cookies will not be used on federal Web sites. The report found that "Of the 65 sites we reviewed, 57 did not use persistent cookies on their Web sites. However, of the eight sites that were using persistent cookies, four did not disclose such use in their privacy policies, as required by OMB. The remaining four sites using persistent cookies did provide disclosure but did not meet OMB's other conditions for using cookies. In addition, four other sites -- that did not use cookies -- did not post privacy policies on their home pages."
DOC Issues Request for Quotations for .us Top Level Domain
5/30. The Department of Commerce published in its web site a notice that it intends to issue a written solicitation (Request for Quotations) on behalf of the NTIA for services to establish centralized management and coordination of the registry, registrar, database, and information services for the .us top level domain (usTLD).
E-SIGN and SEC Record Keeping Rules
5/30. The SEC published in the Federal Register a final rule regarding electronic storage of required records. The SEC adopted amendments to its rules, which are effective May 30, 2001, that permit registered investment companies and registered investment advisers to preserve required records using electronic storage media such as magnetic disks, tape, and other digital storage media. This rule change is made pursuant to the Electronic Signatures in Global and National Commerce Act (E-SIGN). See, Federal Register, May 30, 2001, Vol. 66, No. 104, at Pages 29224 - 29229.
5/30. XtremeSpectrum submitted to the FCC a presentation outline [PDF] regarding ultrawideband (UWB) transmission systems, and in particular, their interference with existing systems. UWB operates across a wide range of spectrum frequencies at low power levels using very narrow pulses. Hence, there is the potential for interference. It is a promising technology that can be used for wireless networks, remote sensing or tracking, and ground penetrating radars.
Bush Addresses Trade and Fast Track
5/29. President Bush gave a speech in California to the Los Angeles World Affairs Council in which he addressed trade and fast track trade negotiating authority. He stated that "I'm asking the United States Congress to approve U.S. trade promotion authority this year. And because trade creates prosperity, and prosperity promotes democracy, I will notify Congress on June 1st that I intend to extend normal trade relation status with China for another year."
President Bush also stated that free trade will promote democracy in the PRC. "Open trade is a force for freedom in China, a force for stability in Asia, and a force for prosperity in the United States. And this is not just my personal view; the institutions and individuals in China who are the least friendly to freedom are often the least friendly to trade. The institutions and individuals most sympathetic to freedom are often the most friendly to trade. They know what I know: Free trade supports and sustains freedom in all its forms. Free trade has expanded the portion of China's economy that is independent of the state. Free trade has swelled the ranks of independent businessmen. Free trade has introduced new technologies that offer Chinese people access to uncensored information and democratic ideas. When we open trade, we open minds. We trade with China because trade is good policy for our economy, because trade is good policy for democracy, and because trade is good policy for our national security."
Bush also stated that "we will secure our nation's energy future by generating clean and reliable power on which high-tech economy depends."
Pitofsky Resigns, Effective May 31
5/29. Robert Pitofsky, the outgoing Chairman of the FTC, wrote a letter to President Bush in which he stated, "I tender my resignation as Commissioner and Chairman of the Federal Trade Commission, effective May 31, 2001." President Bush has nominated, and the Senate has confirmed, Timothy Muris to replace him.
R&D Tax Credit
5/29. The Conference Report on HR 1836, the Economic Growth and Tax Relief Reconciliation Act, which passed the House on May 25, and the Senate on May 26, does not contain language making the research and development tax credit permanent. An earlier Senate version of the bill did include this provision. There are also stand alone bills pending in the House and Senate that would permanently extend the R&D tax credit. See, S 41 and HR 41, so numbered because they would amend Section 41 of the Internet Revenue Code. See also, S 515 and HR 1137.
Computer and Internet Crime
5/29. A grand jury of the U.S. District Court (NDCal) returned an indictment [PDF] against Robert Robb charging 10 counts of wire fraud in violation of 18 U.S.C. 1343 and one count extortion in violation of 18 U.S.C. 875(b). The indictment states that Robb made false statements to investors regarding his online gambling companies, and Millennium Networks, which made multplayer gambling games that could be played at casinos, or over the Internet. Among the false representations was that Microsoft President Steve Ballmer had agreed to pay $50 Million for patents to the games. The false statements were made "by means of wire communication in interstate commerce" -- i.e., by e-mail. AUSA David Callaway is the Assistant U.S. Attorney prosecuting the case. See, release.
Appeals Court Rules in ASC v. IBM
5/29. The U.S. Court of Appeals (8thCir) issued its opinion in American Shizuki Corp. v. IBM, a case involving a dispute over IBM's purchase from ASC of plastic film capacitors to be used by IBM in its mainframe computers. ASC wanted IBM to purchase more capacitors manufactured by ASC. However, IBM never promised that it would purchase any specific quantity of capacitors. ASC filed a complaint in U.S. District Court (DNeb) in June 1997 against IBM based upon diversity jurisdiction, in which it sought $8.5 Million in damages under three theories of relief: promissory estoppel, negligent misrepresentation, and fraudulent misrepresentation. The District Court granted IBM's motion for summary judgment. The Appeals Court affirmed, two to one.
Software Defined Radio
5/29. The NTIA submitted a reply comment to the FCC in response to its Notice of Proposed Rulemaking [PDF] titled "In the Matter of Authorization and Use of Software Defined Radios". (See, ET Docket No. 00-47.)
Internet and E Funds Transfers Facilitate Global Corruption
5/29. A conference titled "Global Forum on Fighting Corruption and Safeguarding Integrity" is being held from May 28 through 31 at the Ministry of Justice in Hague, Netherlands. U.S. Ambassador Victor Jackovich gave a speech on May 29 in which he addressed the role of globalization, the Internet and electronic funds transfers in government corruption.
Jackovich stated that globalization, which he defined as "more rapid communication, easier international travel and more technological innovation -- has given the purveyors of crime and corruption some potent tools. For this reason, corruption and criminality can permeate an entire state apparatus and present formidable cross-border threats." He continued that "the stability and security of the most vulnerable of states is of vital interest to the stability and security of the entire international community. We are only as strong as our weakest link. In our modern age of instant transference of funds and rapid exchange of information via the Internet, the world's inter- connectivity has grown and developed at a pace never before experienced. Even if we wanted, we could not consign criminality and corruption to certain states or societies and give as the excuse that these problems are endemic or natural in those parts of the world. Under these circumstances, it is clear that we must work together ..."
Jackovich is the Associate Director of the George Marshall European Center for Security Studies in Garmisch- Partenkirchen, Germany. See also, statement by President Bush and statement by Paula Dobriansky, Under Secretary of State for Global Affairs.
SEC Selects New Office Location
5/29. The SEC announced that it selected a new location for its Washington DC headquarters. The new site will be on the corner of F and 2nd Streets, NE, adjacent to Union Station and the Thurgood Marshall Building. The building, named Station Place, is not yet under construction. It is scheduled for occupancy in approximately three years. See, SEC release.
Radio Spirits v. Napster
5/29. Radio Spirits Inc. filed a complaint in U.S. District Court (NDCal) against Napster alleging contributory and vicarious copyright infringement and unfair competition. Radio Spirits is the old-time radio and classic video subsidiary of MediaBay, Inc. (Case No. 01-02090.) See, MediaBay release.
5/28. The ICANN published in its web site a document titled "Discussion Draft: A Unique, Authoritative Root for the DNS."
Bush Tax Package Passes
5/26. The House adopted the Conference Report on HR 1836, the Economic Growth and Tax Relief Reconciliation Act, by a vote of 240 to 154, on May 25. See, Roll Call No. 149. This is President Bush's tax relief package. The Senate approved the bill on Saturday, May 26, by a vote of 58 to 33. The conference report does not contain language making the research and development tax credit permanent. (An earlier Senate version of the bill did.)
USTR Nominees Confirmed
5/26. The Senate confirmed the nominations of Peter Allgeier and Linnet Deily to be Deputy U.S. Trade Representatives.

Go to News Briefs from May 21-25, 2001.