|News from February
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
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
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
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."
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
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
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
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
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
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.
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
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
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
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]
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 Barcelona.com 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
barcelona.com in the name of his wife, Concepcio Riera Llena, with the domain
name registrar, Network Solutions. In 1999, the Nogueras couple incorporated
barcelona.com 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 barcelona.com is confusingly similar to trademarks held by
the City of Barcelona. The Court further found that the circumstances
surrounding the incorporation of barcelona.com, 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 barcelona.com was not unlawful should be
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
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
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
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
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
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.
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.
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
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
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
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
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
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.
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
SEC Files Insider Trading Suit
2/21. The Securities and Exchange Commission
(SEC) filed a civil complaint in
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.
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
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
Morris to the position of Chief Information Officer. See, Intel
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,