News from January 1-5, 2003

FRB Governor Addresses Stock Market Bubbles

1/4. Federal Reserve Board (FRB) Governor Edward Gramlich gave a speech titled "Conducting Monetary Policy" in which he addressed the role of the FRB regarding stock market bubbles.

Edward GramlichGramlich stated that "The issue du jour in monetary policymaking is asset price bubbles. Should the Fed have foreseen the stock market bubble of the late 1990s and limited it in some way?" He answered that "Our mandate tells us to stabilize employment and the prices of goods and services, not asset prices."

However, he added that "It may be that stabilizing asset prices is the way to stabilize goods prices and employment, but one can think of many situations in which that does not seem to be the case."

He spoke to the North American Economic and Finance Association and the Allied Social Science Association, in Washington DC on Saturday, January 4.

9th Circuit Punts in Kremen v. Network Solutions

1/3. The U.S. Court of Appeals (9thCir) issued an Order Certifying Question to the Supreme Court of California [39 pages in PDF] in Kremen v. Cohen and Network Solutions, a case in which a person who registered a domain name sued a person who fraudulently caused that domain name registrar to be transferred, as well as the registrar who transferred the domain name.

Gary Kremen registered a domain name in 1994 with Network Solutions, Inc. (NSI). Subsequently, Stephen Cohen forged a letter authorizing NSI to cancel Kremen's registration, and allowing its registration by Cohen.

Kremen sued Cohen and others, as well as NSI. Kremen has won back the domain name, and been awarded a judgment for damages against Cohen. However, Kremen cannot collect on this judgment. At issue in this order is Kremen's claim against NSI alleging fraudulent transfer. Kremen asserts that NSI is liable in tort for conversion and as a bailee. The District Court ruled in favor of NSI. Kremen appealed.

The Appeals Court reasoned that the tort of conversion is a matter of state law, that the ultimate authority is the Supreme Court of California, and that the Supreme Court of California has not yet ruled on whether a domain name is property for the purposes of the tort of conversion.

The Appeals Court could have ruled on this issue, but choose not to. Rather, it certified the question to the state court for its decision.

The Court of Appeals certified the following question: "Is an Internet domain name within the scope of property subject to the tort of conversion? (a) For the tort of conversion to apply to intangible property, is it necessary that the intangible property be merged with a document or other tangible medium? (b) If the answer to Question (a) is "yes," does the tort of conversion apply to an Internet domain name, or, more specifically, is an Internet domain name merged with a document or other tangible medium?"

Judge Alex Kozinski dissented. He wrote that "We are perfectly capable of answering both questions ourselves, and there is no indication that courts are overrun with lawsuits raising the issue. Cyberspace will not implode if the supreme court confronts the majority's questions at some point in the future rather than today".

7th Circuit Applies Ashcroft v. Free Speech Coalition

1/3. The U.S. Court of Appeals (7thCir) issued its opinion [PDF] in USA v. Kelly, a criminal case involving the Supreme Court's recent decision in Ashcroft v. Free Speech Coalition, which held unconstitutional a federal statute banning computer generated images depicting child porm.

George Kelly was convicted in the U.S. District Court (NDIll) of one count of possession of child pormography in violation of 18 U.S.C. 2252A(a)(5)(B). The Appeals Court opinion states that he possessed "traditional child pormography", as opposed to "virtual" material. Kelly appealed, citing the opinion [PDF] of the Supreme Court in Ashcroft v. Free Speech Coalition

On April 16, 2002, the Court held unconstitutional on First Amendment and overbreadth grounds provisions of the Child Pormography Prevention Act of 1996 (CPPA) banning computer generated images depicting minors engaging in sezually explicit conduct.

The CPPA expanded the federal prohibition on child pormography to encompass new technologies. 18 U.S.C. 2256, the section containing definitions, was amended to provide that child pormography means "any visual depiction, including any photograph, film, video, picture, or computer or computer- generated image or picture, whether made or produced by electronic, mechanical, or other means, of sezually explicit conduct, where (A) the production of such visual depiction involves the use of a minor engaging in sezually explicit conduct; (B) such visual depiction is, or appears to be, of a minor engaging in sezually explicit conduct; (C) such visual depiction has been created, adapted, or modified to appear that an identifiable minor is engaging in sezually explicit conduct; or (D) such visual depiction is advertised, promoted, presented, described, or distributed in such a manner that conveys the impression that the material is or contains a visual depiction of a minor engaging in sezually explicit conduct;"

The Appeals Court affirmed the conviction. It wrote that Free Speech Coalition strikes down only the statute's expanded definition of child pornography to encompass virtual material. The Supreme Court of the United States did not disturb longstanding precedent sanctioning Congress' ban on traditional child pornography. Mr. Kelly was convicted of possessing traditional child pornography; accordingly, we affirm the judgment of the district court.

See also, story titled "Supreme Court Upholds Speech Rights of Child Pormographers" in TLJ Daily E-Mail Alert No. 412, April 17, 2002; story titled "House Subcommittee Holds Hearing on Computer Generated Porm" in TLJ Daily E-Mail Alert No. 423, May 2, 2002; story titled "House Judiciary Committee Supports Ban on Computer Generated Child Porm" in TLJ Daily E-Mail Alert No. 454, June 19, 2002; and story titled "Bush Advocates Senate Passage of Bill Regarding Computer Generated Images" in TLJ Daily E-Mail Alert No. 534, October 24, 2002.

Editor's Note: TLJ intentionally misspells words that have caused subscribers' e-mail filtering systems to block delivery of the TLJ Daily E-Mail Alert.

More News

1/3. The U.S. Court of Appeals (FedCir) issued its opinion [MS Word] in Paradise Creations v. U V Sales, a patent infringement case. Paradise filed a complaint in U.S. District Court (SDFl) against UV alleging patent infringement. The District Court granted summary judgment to UV for lack of standing. The Appeals Court affirmed, holding that Paradise lacked standing because it claimed patent rights under a contract executed at a time when its was administratively dissolved.

1/3. The Federal Communications Commission (FCC) once again extended the deadline to submit reply comments to its Notice of Proposed Rulemaking (NPRM) [15 pages in PDF] in its proceeding titled "In the Matter of Digital Broadcast Copy Protection". This NPRM proposes that the FCC promulgate a broadcast flag rule, and seeks comment on this, and related questions. This is MB Docket No. 02-230. See, FCC release [PDF] and Order [PDF] of October 11, 2002 extending deadlines. See also, Order [PDF] of January 3, 2003 further extending the reply deadline.

Go to News from December 26-31, 2002.