News from February 21-25, 2002

Supreme Court Limits Scope of Review in Eldred Case
2/25. The Supreme Court issued an order in Eldred v. Ashcroft limiting the issues to be reviewed by the Supreme Court. This is a constitutional challenge to the Copyright Term Extension Act, which retroactively extended the maximum duration of copyrights from 75 to 95 years. The Supreme Court granted certiorari on February 19, without limiting the scope of the Court's review. See, February 19, 2002, Order List [PDF], at page 3. Then, on February 25, the Court released a second order that states that "The order granting the petition for a writ of of certiorari is amended to read as follows: The petition for a writ of certiorari is granted limited to Questions 1 and 2 presented by the petition." See, February 25, 2002, Order List [PDF], at page 2.
Scope of Review. The Petition for Writ of Certiorari lists three questions: "Did the D.C. Circuit err in holding that Congress has the power under the Copyright Clause to extend retrospectively the term of existing copyrights? Is a law that extends the term of existing and future copyrights “categorically immune from challenge[] under the First Amendment”? May a circuit court consider arguments raised by amici, different from arguments raised by a party, on a claim properly raised by a party?" Hence, the Court will review the constitutional questions, but not the procedural question regarding amicus curiae briefs.
Background. Plaintiffs filed a complaint (see, Second Amended Complaint) in U.S. District Court (DC) against former Attorney General Janet Reno seeking a declaration that the Copyright Term Extension Act (CTEA) is unconstitutional, and an injunction against enforcement of the No Electronic Theft Act (NET ACT) against violators of the CTEA. The CTEA, passed in the 105th Congress (1997-1998), retroactively extended the maximum duration of copyrights from 75 to 95 years. The U.S. District Court (DC) granted summary judgment denying relief to the plaintiffs. The Court wrote a short memorandum explaining its ruling.
The U.S. Court of Appeals (DCCir) issued its opinion affirming the District Court on February 16, 2001. Chief Judge Douglas Ginsburg wrote the opinion; Karen Henderson joined; and David Sentelle dissented. The Court of Appeals denied plaintiffs' petition for rehearing en banc on July 13, 2001. Sentelle and David Tatel dissented. See, opinion. See also, brief [PDF] of the government opposing certiorari, and plaintiffs' reply brief. See also, Berkman Center case summary and TLJ case summary.
Supreme Court Denies Cert in Zoning Case Involving Webcasting
2/25. The Supreme Court denied a petition for writ of certiorari in Tampa v. Voyeur Dorm, a municipal zoning case involving the operation of a pormographic web site. Voyeur Dorm operates a web site that webcasts the activities of five women in a house located in the City of Tampa. Tampa alleged that this violates the Tampa City Code prohibition on the operation of an adult entertainment establishment in a residential neighborhood. The U.S. District Court (MDFl) held for Tampa. The U.S. Court of Appeals (11thCir) reversed. The Supreme Court denied certiorari, without opinion. See, February 25, 2002, Order List [PDF], at page 2.
Senate to Hold Hearing on Digital Divide
2/25. The Senate Commerce Committee's Science, Technology, and Space Subcommittee will hold hearing on February 27 on S 414, the NTIA Digital Network Technology Program Act. This bill would authorize $250 Million per year for five years for a grant program to promote digital network technologies. It would be administered by the National Telecommunications and Information Administration (NTIA).
The bill is sponsored by Sen. Max Cleland (D-GA), a member of the Committee. It is cosponsored by Sen. Ernest Hollings (D-SC), the Chairman of the Committee, and by others. It would amend the National Telecommunications and Information Administration Organization Act, 47 U.S.C. § 901, et seq.
Sen. Cleland stated in the Senate on February 28, 2001 that "last October the U.S. Department of Commerce published its latest report on Internet access in the United States. According to the Department's Falling Through the Net: Toward Digital Inclusion, more Americans than ever are connected to the Internet and groups that have traditionally been digital ``have nots´´ are making significant gains. Although a record number of Americans have Internet access, the report concludes that a ``digital divide´´ still exists ``between those with different levels of income and education, different racial and ethnic groups, old and young, single and dual-parent families, and those with and without disabilities.´´ "
Sen. Cleland continued that "Now more than ever it is critical that all Americans have the tools necessary for full participation in the Information Age economy. However, the Commerce report finds that in some cases, the digital divide has expanded over the last 20 months." See, Cong. Rec., Feb. 28, 2001, at S1705.
Adam Theier and Lucas Mast of the Cato Institute wrote in a commentary to be released on February 27 that "the current story of computer use and Internet diffusion continues to be nothing short of amazing" when compared to the much slower adoption of other technologies, such as telephones, electricity, and radio. They state that the NTIA's annual Falling Through the Net reports are the "silliest Chicken Little crusade of all time".
FCC Seeks Public Comment on WRC-03 Recommendations
2/25. The Federal Communications Commission (FCC) issued a notice [16 pages in PDF] requesting public comments on the World Radiocommunication Conference Advisory Committee's (WRC-03 Advisory Committee) recommendations of February 6, 2002, regarding the 2003 World Radiocommunication Conference (WRC-03). (The recommendations are attached to this notice.) The deadline for comments is March 15, 2002.
Company Fined for Illegal Encryption Exports
2/25. The Commerce Department's Bureau of Export Administration (BXA) announced that it imposed a $95,000 civil penalty on Neopoint, Inc. to settle allegations that it exported encryption software to South Korea in violation of U.S. export control laws. The BXA stated in a release that "on ten occasions between March 1998 and June 1999, Neopoint exported 128-bit encryption software to two firms in South Korea without the required export licenses. In all but one of these shipments, BXA alleged that Neopoint knew that an export license was required."
Insider Trading
2/25. The Securities and Exchange Commission (SEC) filed a complaint in U.S. District Court (CDCal) against John Cassese alleging violation of federal securities laws in connection with his insider trading in the securities of Data Processing Resources Corporation (DPRC). Cassese is the Chairman and President of Computer Horizons Corporation, which provides temporary staffing of computer and information technology personnel.
Compuware acquired DPRC in 1999. The complaint states that "After learning of Compuware's intention to acquire DPRC, Cassese, on June 22, 1999, purchased 15,000 shares of DPRC stock. On June 24, 1999, Compuware and DPRC publicly announced the tender offer in a press release. Later that day, Cassese sold the 15,000 shares realizing a profit of $150,937.50."
The SEC simultaneously settled the case. It stated in a release that "Without admitting or denying the allegations in the complaint, Cassese consented to the entry of a final judgment that would permanently enjoin him from future violations of Section 14(e) of the Exchange Act and Rule 14e-3 thereunder. Cassese also agreed to disgorge $150,937.50 in ill gotten gains, plus prejudgment interest, and will pay a civil penalty of $150,937.50."
Groups Criticize Export of Electronic Waste
2/25. A group named the Basel Action Network (BAN) released a report [caution: this PDF file is a very long download] condemning the practice of exporting old computer equipment to Asian countries for recycling.
The reports asserts that "Electronic waste or E-waste is the most rapidly growing waste problem in the world. It is a crisis not only of quantity but also a crisis born from toxic ingredients -- such as the lead, beryllium, mercury, cadmium, and brominated flame retardants that pose both an occupational and environmental health threat. But to date, industry, government and consumers have only taken small steps to deal with this looming problem."
The report further states that "Rather than having to face the problem squarely, the United States and other rich economies that use most of the world's electronic products and generate most of the E-Waste, have made use of a convenient, and until now, hidden escape valve -- exporting the E-waste crisis to the developing countries of Asia.
The report recommends that the U.S. ban "exports of E-wastes that are hazardous wastes including computer monitors, whole computers, and circuit boards." It also recommends that "all computer monitors, television sets, and other electronic devices containing hazardous materials must be clearly labeled to identify environmental hazards and proper materials management." It also recommends that equipment manufacturers be required to "take back" their products, free of charge.
BAN describes itself as an "international network of activists seeking to put an end to economically motivated toxic waste export and dumping -- particularly hazardous waste exports from rich industrialized countries to poorer, less industrialized countries". It seeks to end "toxic colonialism". BAN stated also that the report was prepared by BAN and the Silicon Valley Toxics Coalition, with contributions from Toxics Link India, a Pakistani group called SCOPE, and Greenpeace China.
Trade News
2/25. The Progressive Policy Institute (PPI) a Democratic think tank released a memorandum titled "Trade Debate in the Senate". The memo, which discusses issues faced by the Senate in its upcoming consideration of fast track legislation, was written by Edward Gresser.
2/25. President Bush announced that Commerce Secretary Donald Evans will lead a trade delegation to Beijing and Shanghai, PR China, on April 21-25, 2002. See, DOC release.
House to Vote on Tauzin Dingell Bill
2/25. The House of Representatives is scheduled to vote this week on HR 1542, titled the "Internet Freedom and Broadband Deployment Act of 2001". The bill is better known as the Tauzin Dingell bill, for its lead sponsors, Rep. Billy Tauzin (R-LA) and Rep. John Dingell (D-MI), the Chairman and ranking Democrat of the House Commerce Committee.
The House Rules Committee set a deadline of 4:00 PM on Monday, February 25, for Members of the House to submit proposed amendments to the bill. (See, Cong. Rec., Feb. 7, 2002, at H217.) Floor debate on the bill has been scheduled for Wednesday and Thursday, February 27-28.
The House Commerce Committee's Telecom Subcommittee marked up the bill on April 26, 2001. See, TLJ Alert No. 175. The full Commerce Committee marked up the bill on May 9, 2001. See, TLJ Alert No. 184. The House Judiciary Committee reported the bill unfavorably on June 13, 2001. See, TLJ Alert No. 208. All hearings and markups were contentious.
The bill would change the regulatory environment in which the Baby Bells operate. It would, among other things, exempt interLATA data from Section 271 requirements. Supporters of the bill argue that it will incent the Baby Bells to deploy broadband Internet access services, particularly digital subscriber line (DSL) service. Supporters also argue that the bill will increase the Bells' ability to compete with broadband cable service providers.
Opponents argue that the bill will end competition in local phone markets, revert the Bells to monopoly status, kill off many of the CLECs, and reduce innovation and investment in new technologies and companies.
People and Appointments
2/25. Federal Bureau of Investigation (FBI) Director Robert Mueller announced the appointment of Special Agents in Charge of FBI field offices in Columbia (SC), Jacksonville (FL), Los Angeles, Milwaukee, New York, Philadelphia, Springfield (IL), and Tampa. See, FBI release.
2/25. Texas Instruments (TI) named Beth Bull Treasurer, and Kevin March Controller. Both will report to TI's CFO, Bill Aylesworth. See, TI release.
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2/25. The U.S. Court of Appeals (3rdCir) issued its opinion in Citizens Financial Group v. Citizens National Bank, a case involving allegations of trademark infringement and unfair competition under the Lanham Act. The Appeals Court affirmed the District Court's denial of Citizens National Bank's motion for a preliminary injunction. The Appeals Court designated its opinion not precedential.
2/25. The U.S. Court of Appeals (8thCir) issued its opinion [PDF] in Pamida v. E.S. Originals, a suit seeking indemnification for costs and attorneys fees incurred in the defense and settlement of an earlier patent infringement action. At issue is pre-trial discovery from attorneys. The District Court refused to quash subpoenas in their entirety. The Court of Appeals affirmed.
2/25. Deutsche Telekom stated in a release that it "has today been informed by the Federal Cartel Office in Bonn of its final decision not to grant approval for the announced sale of Deutsche Telekom's cable TV businesses to the Liberty Media Corporation. ... The Federal Cartel Office had already issued a warning in its preliminary assessment on 31 January 2002."
Cal App Rules on Employer's Access to Employer Provided Home PC of Employee
2/22. The Court of Appeal of California (2/1) issued its opinion [PDF] in TBG v. Zieminski, a wrongful termination case involving the issue of pre-trial discovery of the contents of a computer hard drive. The Court of Appeal reversed a trial court order denying an employer's motion to compel production of a home computer in a wrongful termination case, where the alleged misuse of computers was the basis for the termination.
Background. Robert Zieminski was a senior executive at TBG Insurance Services Corporation. TBG provided him with two computers -- one for use at work, and the other for use at home. Zieminski signed an agreement that provided that he would use the PCs "for business purposes only and not for personal benefit or non-Company purposes, unless such use [was] expressly approved. Under no circumstances [could the] equipment or systems be used for improper, derogatory, defamatory, obscene or other inappropriate purposes."
Zieminski also consented to have his computer "use monitored by authorized company personnel" on an "as needed" basis, and agreed that communications transmitted by computer were not private. TBG terminated Zieminski -- three days before a large block of stock options were to vest -- alleging that he "had violated TBG's electronic policies by repeatedly accessing pormographic sites on the Internet while he was at work."
Trial Court. Zieminski filed a complaint against TBG in Superior Court for Los Angeles County, California, alleging wrongful termination. He alleged that improper computer use was a pretext for preventing him from exercising stock options. TBG demanded return of the home PC. Zieminski refused, citing a right to privacy found in the California Constitution. TBG filed a motion to compel production of the home computer. The trial court denied TBG's request, although, not on privacy grounds. It wrote that the evidence on the home PC would be "merely corroborative of facts already in [TBG's] possession; since [TBG] already has extensive evidence, any additional evidence that the [home computer] may disclose does not outweigh the fact that the computer contains personal information." This appeal followed.
Court of Appeal. The Court of Appeal reversed and remanded. The Court first rejected the trial court's rationale. It cited the basic discovery rule that a "party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action . . . if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence." (See, Calif. Code Civ. Proc. § 2017.) The Court then concluded that "the home computer is indisputably relevant (Zieminski does not seriously contend otherwise), and the trial court's finding that TBG already has other "extensive evidence" misses the mark. TBG is entitled to discover any nonprivileged information, cumulative or not ... The issue, therefore, is whether he has a protectible privacy interest in the information to be found on the computer."
Article I, Section I, of the California Constitution provides that "All people are by nature free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety, happiness, and privacy."
The Court continued that "to prevent a constitutionally prohibited invasion of privacy, the plaintiff must establish ``(1) a legally protected privacy interest; (2) a reasonable expectation of privacy in the circumstances; and (3) conduct by defendant constituting a serious invasion of privacy.´´ " (Citation omitted.) The Court assumed a legally protected privacy interest, but found that Zieminski had no reasonable expectation of privacy, because he has signed an agreement not to use the PC for personal use, and to allow his employer to monitor its use. The Court wrote that "By any reasonable standard, Zieminski fully and voluntarily relinquished his privacy rights in the information he stored on his home computer, and he will not now be heard to say that he nevertheless had a reasonable expectation of privacy."
However, the Court also wrote that it assumes "the existence of an abstract privacy interest in Zieminski's financial and other personal information", and added that "the trial court may in any event make such orders as are necessary to minimize TBG's intrusion."
District Court Rules in Cybersquatting Dispute
2/22. The U.S. District Court (EDVa) issued an order and memordum opinion [PDF] in v. Excelentisimo Ayuntamiento de Barcelona, a domain name dispute involving the Anticybersquatting Consumer Protection Act (ACPA).
Background. In 1996 Joan Nogueras Coba registered the domain name in the name of his wife, Concepcio Riera Llena, with the domain name registrar, Network Solutions. In 1999, the Nogueras couple incorporated Inc., under the laws of Delaware, and transferred the domain name to their corporation. It listed an address in New York City. Neither party has a U.S. or Spanish trademark for the name Barcelona. However, the City of Barcelona holds multiple Spanish trademarks for phrases that include the name Barcelona. Plaintiff attempted to sell the domain name to the City.
Dispute Resolution Panel. In 2000, the defendant, the City Council of Barcelona, filed a complaint with the World Intellectual Property Organization (WIPO), under the Uniform Dispute Resolution Policy (UDRP), contesting plaintiff's registration of the domain name. A WIPO panel ruled in favor of the City, and ordered transfer of the domain name to the City, on the grounds that the City owned a trademark upon which the domain name infringed.
District Court Complaint. Plaintiff then filed a complaint in U.S. District Court (EDVa) against the City of Barcelona seeking a declaratory judgment that the registration of the domain name was not unlawful. The City filed a counterclaim under the ACPA.
Holding. The District Court first addressed plaintiff's claim. It held that the domain name is confusingly similar to trademarks held by the City of Barcelona. The Court further found that the circumstances surrounding the incorporation of, and the attempt to sell the domain name, "evidence a bad faith intent to profit from the registration". The Court thus concluded that plaintiff's use of the trademark was not "not unlawful". Hence, the District Court found that "the Plaintiff's request for a declaratory judgment ruling that the registration of the domain name was not unlawful should be denied."
The Court next turned to Barcelona's counterclaim under the ACPA. It first addressed whether the ACPA applies to foreign trademarks. It held that it does. It wrote that "It is untenable to suppose that the Congress, aware of the fact that the Internet is so international in nature, only intended for U.S. trademarks to be protected under the Anticybersquatting statute." Second, the Court addressed whether plaintiff's actions constituted a bad faith intent to profit from the registration of the trademark. It applied the nine factors set out in 15 U.S.C. §§ 1125(2)(d)(1)(B). It found bad faith. Finally, the Court found that the registered domain name is confusingly similar to the City's trademark. Hence, the Court found for the City of Barcelona on its counterclaim under the ACPA.
This is Civil Action 00-1412-A. The City of Barcelona is represented by the law firm of Oblon Spivak. See also, Oblon release.
FCC Approves Verizon's Rhode Island Long Distance Application
2/22. The Federal Communications Commission (FCC) issued an order [101 pages in PDF] approving Verizon's Section 271 application to provide in region interLATA services originating in the state of Rhode Island. See also, FCC release.
Bush Addresses China WTO Membership
2/22. President Bush gave a speech at Tsinghua University, in Beijing, PR China. He stated that "China has joined the World Trade Organization, and as you live up to its obligations, they inevitably will bring changes to China's legal system. A modern China will have a consistent rule of law to govern commerce and secure the rights of its people. The new China your generation is building will need the profound wisdom of your traditions. The lure of materialism challenges our society -- challenges society in our country, and in many successful countries. Your ancient ethic of personal and family responsibility will serve you well."
NAB Comments on Webcasting Royalty Payments
2/22. National Association of Broadcasters P/CEO Edward Fritts released a statement on the Copyright Arbitration Royalty Panel's (CARP) recommendations regarding royalties and webcasting.
He stated that "The ruling from the Copyright Arbitration Royalty Panel may have the effect of unintended consequences, in that many radio broadcasters may reevaluate their streaming strategies. If the powerful record company interests' goal was to strangle a fledgling new service to radio listeners, it may have succeeded beyond its own expectations."
On February 20, the CARP released its report [1 page in PDF] recommending rates, and its report [29 pages in PDF] recommending terms, for the statutory license for eligible nonsubscription services to perform sound recordings publicly by means of digital audio transmissions, also known as webcasting, pursuant to 17 U.S.C. § 114, and to make ephemeral recordings of sound recordings for use of sound recordings under the statutory license set forth in 17 U.S.C. § 112.
Judge Orders Palm to Post $50 Million Bond for Patent Appeal
2/22. The U.S. District Court (WDNY) ordered Palm to post a $50 Million bond with the court to "ensure that Xerox is able to collect at least some, if not all, of the damages it will suffer as a result of 3Com's infringement during the appeal period".
Xerox is the assignee of U.S. Patent No. 5,596,656, which is titled "Unistrokes for Computerized Interpretation of Handwriting." Xerox filed a complaint in federal Court in Rochester, New York, against 3Com Corporation, U.S. Robotics Corporation, U.S. Robotics Access Corporation, and Palm Computing, Inc. claiming that the Graffiti software in the PalmPilot line of hand held computers infringed its unistrokes patent. On December 20, 2001, the District Court ruled that Palm's Graffiti handwriting technology for hand held computers infringes a Xerox patent. Palm has appealed.
Eric Benhamou, Ch/CEO of Palm, stated in a release that "We intend to pursue our appeal vigorously and have excellent arguments to support our view ... For thousands of years, people have been creating writing symbols. Xerox doesn't own the alphabet." See also, Xerox release.
Xerox, which was founded in Rochester, New York, as the Haloid Corporation, has the home court advantage in the District Court in Rochester.
People and Appointments
2/22. Clifford Hyatt joined the San Diego office of the law firm of Gray Cary as a special counsel in the firm's securities litigation practice. He was previously Deputy Assistant Regional Director of the Securities and Exchange Commission's (SEC) Pacific Regional Office. He handled the case SEC v. Mark Jakob, an Internet fraud case involving a fake press release regarding Emulex. He will focus on SEC investigations and defense, securities class action defense, corporate internal investigations, NASD arbitrations, and broker dealer, investment company and investment adviser compliance. See, GC release.
2/22. Janis Kestenbaum joined the Washington DC office of the law firm of Wilmer Cutler & Pickering as counsel in the firm's Communications and Electronic Commerce practice. She previously worked at the law firm of Jenner & Block. Before that, she was a trial attorney at the Department of Justice's Federal Programs Branch. See, WCP release.
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2/22. Securities and Exchange Commission (SEC) Commissioner Isaac Hunt gave a speech in which he offered numerous recommendations for Congressional legislation. For example, he recommended a ban on accounting firms providing consulting services to their audit clients.
2/22. Securities and Exchange Commission (SEC) Chairman Harvey Pitt gave a speech regarding the legal and accounting professions.
2/22. Thomas Hazlett and Bruno Viani co-authored a study [40 pages in PDF] titled "Legislators v. Regulators: The Case of Low Power FM Radio".
FTC Issues Opinion Letter Re Web Based Physician Joint Venture
2/21. The Federal Trade Commission's (FTC) Bureau of Competition (BOC), which enforces federal antitrust laws, issued a non binding opinion letter to MedSouth Inc. regarding its plan to operate a nonexclusive physician network joint venture. The joint venture will include an extensive web based clinical data record system. The letter states that the BOC sees no reason to challenge the program. See also, FTC release.
MedSouth. MedSouth is a multi specialty physician practice association located in the southern part of Denver, Colorado. It has formed a joint venture with consultants, a health care information technology service provider, and a national clinical laboratory.
Joint Venture. The opinion letter describes the program: "It will have two major parts: (1) a web based electronic clinical data record system that will permit MedSouth physicians to access and share clinical information relating to their patients; and (2) the adoption and implementation of clinical practice guidelines and performance goals relating to the quality and appropriate use of services provided by MedSouth physicians. All physicians contracting through MedSouth will be required to participate in these activities. With these systems, MedSouth believes it will be able to improve and standardize members' treatment of specific diagnoses and their fulfillment of standards of care; reduce medical errors and improve patient care outcomes; permit its members to provide their services more efficiently and to reduce the aggregate long-term cost of physician services; and demonstrate to payers, employers, and others that the integrated and coordinated delivery of services by primary care and specialist physicians can improve the quality and delivery of physician services.
Data System. The letter also elaborates on the data system: "The web based clinical data record system is intended to permit MedSouth members rapidly to access and exchange clinical information relating to patients, including lab and radiological reports, transcribed patient records and office visit information, treatment plans, and prescription information. The doctors will be able to order prescriptions on line, and at a future time will be able to determine whether the patient filled the prescription. The system can aggregate data from multiple doctors to show, for example, the trend of results on tests done at different times and places. In the future, data relating to hospital discharges and procedures also may be included. MedSouth expects this system to reduce duplicative testing and procedures, speed up treatment, decrease medical errors and adverse drug interactions, and facilitate communication and coordination of services among referring and referral physicians. Each practice will acquire the hardware necessary to use the system."
Sale of Services to Health Plans. The letter also states that "MedSouth proposes to offer the medical services of its participating members pursuant to this program to commercial third party payers, and to negotiate and execute contracts under which MedSouth members would provide services to health plan enrollees."
Nonexclusive Network. MedSouth will operate as a nonexclusive network. Its physicians will be available individually to negotiate and contract with customers not wishing to purchase the network services.
BOC Conclusion. The BOC concluded that "the proposed program appears to have the potential to improve the quality and effectiveness of health care services that are delivered to patients, and thus to provide important benefits to consumers. ... we have concluded that we would not recommend a challenge to MedSouth fully implementing the program and then offering it to payers on a collective basis. As long as doctors are, in fact, willing to deal individually on competitive terms with payers who do not want the package product, as you represent will be the case, significant anticompetitive effects appear unlikely."
DOJ Recommends Approval of Verizon's Vermont 271 Application
2/21. The Department of Justice's (DOJ) Antitrust Division submitted an evaluation [PDF] to the Federal Communications Commission (FCC) recommending that the FCC approve Verizon's application to provide in region interLATA services in the state of Vermont, pursuant to 47 U.S.C. § 271.
The DOJ wrote that "Verizon has generally succeeded in opening its local markets in Vermont to competition and recommends approval of Verizon's application for Section 271 authority in Vermont ..." However, the DOJ urged the FCC to look carefully at Verizon's pricing of unbundled network elements, to determine whether they are cost based.
Verizon has already obtained FCC approval to provide long distance services in Massachusetts, Pennsylvania, Connecticut, and New York. This is CC Docket No. 02-7. See also, DOJ release and Verizon release.
SEC Files Insider Trading Suit
2/21. The Securities and Exchange Commission (SEC) filed a civil complaint in U.S. District Court (NDGa) against John Fitzgerald alleging violation of federal securities laws. The complaint alleges that Fitzgerald engaged in insider trading in CheckFree Holdings Corporation securities, in violation of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. 240.10b-5.
The complaint alleges that "On February 2, 2000, an executive officer of CheckFree told Fitzgerald that CheckFree had agreed to merge with TransPoint, a joint venture of Microsoft Corporation, First Data Corporation, and Citibank". The complaint further alleges that "Between February 9, 2000, and February 15, 2000, Fitzgerald purchased a total of 5,857 shares of CheckFree stock on three separate days, including the day of the merger announcement, at an average price of $64.54 per share. ... On February 18, 2000, the third day after the merger was announced, Fitzgerald sold 5,000 shares at an average price of $82.085 per share."
This is D.C. No. 1:02-CV-489. See also, SEC release.
George Bush and Jiang Zemin Talk Trade
2/21. President Bush and Chinese President Jiang Zemin held a joint press conference in Beijing, PR China. They addressed many topics, including trade. See, transcript.
President Jiang stated that "We have agreed to vigorously carry out bilateral exchanges and cooperation in such areas as economy and trade, energy, science and technology, environmental protection, the prevention of HIV/AIDS, and law enforcement, conduct strategic dialogue on regional economic and financial matters, and hold within the year meetings of the Joint Economic Commission, Joint Commission on Commerce and Trade, and Joint Commission on Science and Technology."
President Bush stated that "China as a full member of the WTO will now be a full partner in the global trading system, and will have the right and responsibility to fashion and enforce the rules of open trade. ... I believe equally dramatic changes lie ahead. These will have a profound impact not only on China itself, but on the entire family of nations. And the United States will be a steady partner in China's historic transition toward greater prosperity and greater freedom."
Economist Estimates Costs of Nine States' Microsoft Remedy
2/21. Stan Liebowitz, Professor of Economics at the Management School of the University of Texas at Dallas, released a study [PDF] titled "Swiss Cheese Windows: Estimating Some Costs of the Nine State Remedy". He assesses the affect of the proposal of the nine states that have not joined in the Microsoft antitrust settlement. He asserts that requiring Microsoft to remove middleware code from Windows operating system could cost software producers as much as $80 Billion over three years.
Liebowitz wrote that "While these nine states have dropped the proposal to break-up Microsoft, they have instead proposed a remedy that pokes enough holes in the Windows platform to suggest the Swiss cheese analogy. One key element of their proposed remedy relates to the replacement of middleware components of the Windows operating system. These states would have Microsoft completely remove its middleware code from Windows at the request of a computer manufacturer or third party licensee. The effects of this proposed remedy, if it were implemented, would be felt by many in the information technology (IT) industry -- software developers, service firms, resellers, business users and consumers."
He concluded that "PC software producers would incur as much as $30 billion to $80 billion over the next three years in development, testing, marketing, and support costs. This extra cost is due to software developers having to adapt their software to new middleware they might not prefer because there is no safety net middleware they can always count on being available to all Windows computer users." Moreover, wrote Liebowitz, "Consumers pay either way -- higher prices, fewer choices of software, less certainty that software they buy will run properly."
People and Appointments
2/21. The AT&T Board of Directors named two additional Board members: David Dorman, President of AT&T, and Charles Noski, the CFO. See, AT&T release.
2/21. Intel named both Douglas Busch and Sandra Morris to the position of Chief Information Officer. See, Intel release.
More News
2/21. Treasury Secretary Paul O'Neill gave a speech at the U.S. Chamber of Commerce in Washington DC regarding the administration's economic and budget priorities.
2/21. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in US Cellular v. GTE Mobilnet, a case regarding interpretation of a 1982 limited partnership agreement pertaining to cellular telephone service in the Los Angeles area. The District Court held that the agreement had not been breached. The Appeals Court affirmed.

Go to News Briefs from February 16-20, 2002.