News from December 26-31, 2003

Sir Tim Berners-Lee

12/31. Queen Elizabeth II announced her annual New Year's Honours List. She made Tim Berners-Lee a Knight Commander of the Order of the British Empire. He is a British citizen, and the inventor of the world wide web.

He is currently a professor at the Laboratory for Computer Science (LCS) at the Massachusetts Institute of Technology (MIT). He also directs the World Wide Web Consortium (W3C) at MIT. And, he is the author of Weaving the Web: The Original Design and Ultimate Destiny of the World Wide Web.

Posner Opines on Copyright and Fair Use

12/31. The U.S. Court of Appeals (7thCir) issued its opinion [14 pages in PDF] in Chicago Board of Education v. Substance, Inc., a copyright case involving the defense of fair use.

Judge Richard Posner wrote the opinion, in which Judges Easterbrook and Rovner joined. Posner just published a book titled The Economic Structure of Intellectual Property Law. Although, the present opinion contains little economic analysis.

Background. The Chicago Board of Education (CBE), which governs the city of Chicago, Illinois' public school system, created and copyrighted a series of standardized tests named "Chicago Academic Standards Exams" (CASE). These tests are administered under supervision at specified centers on specific dates. All copies of the test are then accounted for and either destroyed or returned to restricted locked storage. By keeping the tests secure, and unmarketed, test questions case be reused.

George Schmidt is a school teacher who owns Substance, Inc., which publishes a newspaper directed at school teachers. He published six CASE tests without permission from the CBE. He did so because he thought that they were bad tests.

District Court. The CBE filed a complaint in U.S. District Court (NDIll) against Substance, Inc. and Schmidt alleging copyright infringement. The defendants asserted the affirmative defense of fair use. The District Court ruled in favor of the CBE on fair use, and granted judgment to the CBE.

Appeals Court. The Appeals Court affirmed in part and vacated in part. However, the Court was clear that the fair use defense fails in this case. Posner roasted the the Magistrate Judge for writing an "an appallingly bad injunction". (Emphasis in original.) He sent the injunction back for redrafting.

"It may seem paradoxical to allow copyright to be obtained in secret documents, but it is not", Posner began. "For one thing, the tests are not secret from the students taking them. For another, federal copyright is now available for unpublished works that the author intends never to see the light of day." He added the "Most important, tests are expressive works that are not costlessly created, and the costs are greater and so the incentive to create the tests diminished if the tests cannot be reused. ... There is no analytical difference between destroying the market for a copyrighted work by producing and selling cheap copies and destroying the subsequent years’ market for a standardized test by blowing its cover." (Citatitions omitted.)

Posner then turned to the purpose of the fair use defense. He wrote that it is "to facilitate criticism of copyrighted works by enabling the critic to quote enough of the criticized work to make his criticisms intelligible. Copyright should not be a means by which criticism is stifled with the backing of the courts."

He continued that "the fact that the CASE tests were quasi-secret does not exclude the possibility of a fair use defense." Schmidt "was entitled to criticize the tests and to do that effectively he had to be able to quote from them, just as a parodist has to be able to quote, sometimes very extensively, from the parodied work in order to make the criticism of it that is implicit in parodying it comprehensible."

"So where to draw the line?", asked Posner. He answered that "the fair use copier must copy no more than is reasonably necessary (not strictly necessary -- room must be allowed for judgment, and judges must not police criticism with a heavy hand) to enable him to pursue an aim that the law recognizes as proper, in this case the aim of criticizing the copyrighted work effectively."

Posner concluded that in the present case, copying entire tests was too much. "Granted that he had to quote some of the test questions in order to substantiate his criticisms, why entire tests?"

Posner suggested that Schmidt believes that he has the right to "destroy the tests by publishing them indiscriminately". Posner added that "such tests can make teachers look bad if their students don't do well on them".

Posner offered this cynical explanation of Schmidt and other public school teachers. "So if Schmidt can publish six tests, other dissenters can each publish six other tests, and in no time all 44 will be published. The board will never be able to use the same question twice, and after a few years of Schmidtian tactics there will be such difficulty in inventing new questions without restructuring the curriculum that the board will have to abandon standardized testing. Which is Schmidt's goal."

A Fifth Fair Use Factor? Posner added this. "And this suggests another fair use factor that supports the school board: the aspect of academic freedom that consists of the autonomy of educational institutions".

Posner added that "If Schmidt wins this case, it is goodbye to standardized tests in the Chicago public school system; Schmidt, his allies, and the federal courts will have wrested control of educational policy from the Chicago public school authorities."

However, Posner did not explain what he meant by "academic freedom that consists of the autonomy of educational institutions", or how it might apply in other cases. For example, Posner did not elaborate on whether this factor should only be available to educational institutions to defeat a claim of fair use copying of their works, or whether it should also be available to educational institutions to advance a fair use claim when they copy the works of others.

This case is Chicago Board of Education v. Substance, Inc. and George Schmidt, U.S. Court of Appeals for the 7th Circuit, No. 03-1479, an appeal from the U.S. District Court for the Northern District of Illinois, Eastern Division, D.C. No. 99 C 440, Magistrate Judge Edward Bobrick presiding.

DOD Releases Report on DARPA's Total Information Awareness Program

12/31. The Department of Defense's (DOD) Office of Inspector General (OIG) released a report [42 pages in PDF], titled "Information Technology Management: Terrorism Information Awareness Program", and dated December 12, 2003.

The report concludes that DOD's Defense Advanced Research Projects Agency's (DARPA) Terrorism Information Awareness (TIA) Program, which was previously named "Total Information Awareness", "could prove valuable in combating terrorism", but "DARPA could have better addressed the sensitivity of the technology to minimize the possibility of any Governmental abuse of power and could have assisted in the successful transition of the technology into the operational environment."

The report recommends that Undersecretary of Defense for Acquisition, Technology and Logistics (ATL) and the Director of the DARPA "should perform a privacy impact assessment before TIA type technology research continues". The report also recommends that the Undersecretary "should appoint a Privacy Ombudsman". See, full story.

DOT To Allow Most Airline Computer Reservation Systems Rules to Sunset

12/31. The Department of Transportation (DOT) released a notice (that is to be published in the Federal Register) that announces and describes changes to its regulations governing computer reservations systems (CRS) for airlines. The notice states that "most of the rules should be allowed to sunset on January 31, 2004".

The notice adds, "We believe, however, that we should adopt the rules prohibiting display bias and certain rules barring unreasonably restrictive requirements in the contracts between systems and their airline customers for a six-month transition period to provide an opportunity for the affected parties to prepare for complete deregulation of computer reservation systems."

The DOT adopted these regulations in 1984 to limit the potential for anti-competitive behavior arising out of the circumstance that these systems were owned by airlines. The DOT now finds that the rules are no longer necessary because airline divestiture of their ownership interests has eliminated the basis for the rules.

"Airlines use several distribution methods: direct sales through their reservations agents, sales through ``brick-and-mortar´´ travel agencies, sales through individual airline websites, and sales through on-line travel agencies. In the past, the ``brick-and-mortar´´ travel agency channel produced the great majority of airline revenues for almost all airlines", the notice states. But recently, "the Internet has become an increasingly important distribution channel."

There are four systems operating in the U.S.: Sabre, Galileo, Worldspan, and Amadeus. The report states that "Each of them was originally developed by one or more U.S. airlines (Amadeus entered the U.S. market by acquiring a U.S. system). Two of the systems -- Sabre and Galileo -- were no longer owned or controlled by any U.S. airlines when we issued the notice of proposed rulemaking. At that time, three U.S. airlines -- American, Delta, and Northwest -- owned Worldspan. Amadeus was then owned by three European airlines -- Air France, Iberia, and Lufthansa -- as well as by public shareholders (and has the same ownership today). Worldspan's airline owners sold that system to two private venture capital firms on June 30, 2003, after the issuance of our notice of proposed rulemaking. As part of that sale, the airline owners agreed to certain parity clauses and marketing commitments. ... Amadeus is now the only system with any airline ownership."

However, the notice states that "The systems that have no airline owners have marketing ties with their former owners. United markets Galileo, American markets Sabre, and Delta and Northwest have agreed to market Worldspan for several years following the closing of the system's sale."

The DOT also stated that "Since 1999 the shares of Galileo and Amadeus have been declining, while Worldspan's share has risen sharply, from 19.3 percent to 26.5 percent. The growth in Worldspan’s share in large part reflects its status as the booking engine for two of the three largest on-line travel agencies, Expedia and Orbitz."

The DOT explained the reason for sunsetting most of its rules. "When these rulemakings were held, one or more airlines or airline affiliates owned or controlled each system, airlines depended heavily on travel agencies for distribution, travel agents used a system to research airline service options and to make bookings, and each travel agency predominantly relied on one system to perform these tasks. Systems therefore did not need to compete for airline participants (a ``participant´´ is an airline that agrees to make its services saleable through a system). The airlines that controlled the systems had the incentive and ability to use them to prejudice the competitive position of non-owner airlines and to provide information on airline services through the systems to travel agents that gave an undue preference to the services operated by the owner airlines. Competitive market forces did not discipline the prices and terms for services offered by systems to participating airlines."

But now, the DOT states, "All of the U.S. airlines that had controlled a system have divested their CRS ownership interests. As a result, none of the four systems now operating in the United States is owned or controlled by any U.S. airline or airline affiliate. Furthermore, airlines are selling an increasingly large share of their tickets through their Internet websites and a diminishing share through travel agencies using a system. The airlines' control over access to their webfares, the discounted fares originally offered only through individual airline websites, has enabled them to obtain lower fees from two of the systems. And travel agencies are increasingly demanding -- and winning -- contracts from the systems that give them more freedom to use alternative booking channels and to switch systems periodically."

Sabre stated in a release that "We applaud the Bush Administration's embrace of full deregulation of the CRS industry, a victory for consumers and the entire travel industry. This move will enhance competition and innovation in the travel industry." It added that "The existing and proposed pre-Internet computer reservation system rules were obsolete and barriers to innovation and growth in today’s travel distribution industry. The proposed rules would have negatively affected some consumers preferred choice of bookings, in particular, weakening the travel agency network, upon which many consumers rely. Free of government restrictions, travel distribution industry participants will have more opportunities to form partnerships and alliances for special traveler offerings, and more opportunities to bring new products to the marketplace."

The DOT stated in a release that "After extensive analysis and an exhaustive dialogue with the travel community, the Department concluded that the existing CRS rules are no longer necessary given the dramatic changes that have taken, and continue to take, place in how airline tickets are bought and sold. However, the department retains its statutory authority to pursue future regulatory or enforcement action as necessary."

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12/31. The U.S. Court of Appeals (3rdCir) issues its opinion [39 pages in PDF] in Gucci America v. Daffy, a trademark case involving counterfeit Jackie-O handbags. The District Court denied Gucci America's request for an order compelling Daffy to recall counterfeit Jackie-O handbags, and for an accounting. The Appeals Court affirmed. This case is Gucci America, Inc. v. Daffy, Inc. and John Does 1-10, U.S. Court of Appeals for the 3rd Circuit, No. 02-4046, an appeal from the U.S. District Court for the District of New Jersey, Judge Alfred Wolin presiding, D.C. No. 00-cv-04463.

12/31. The U.S. Court of Appeals (7thCir) issued its opinion [10 pages in PDF] in Eco v. Honeywell, a case in which a company whose patent protection has run out has sought continuing protection under trademark law. Honeywell and Eco both make thermostats. Honeywell obtained patents, but they expired long ago. Honeywell then sought, and eventually obtained, trademark protection, based upon the shape of its thermostat. Eco filed a complaint in U.S. District Court (SDInd) against Honeywell seeking a declaratory judgment that its product would not infringe Honeywell's intellectual property rights. Honeywell filed a counterclaim seeking equitable relief. This appeal is from the District Court's order declining to issue a preliminary injunction that would block Eco from bringing its product to market. The Appeals Court affirmed. This case is Eco Manufacturing, LLC v. Honeywell International, Inc., U.S. Court of Appeals for the 7th Circuit, No. 03-2704, an appeal from the U.S. District Court for the Southern District of Indiana, Indianapolis Division, D.C. No. 1:03-CV-0170-DFH, Judge David Hamilton presiding.

12/31. The U.S. Court of Appeals (5thCir) issued its opinion [21 pages in PDF] in DP Solutions v. Rollins, a breach of contract and tortious interference with contract case involving the development of a new computer system. The Court of Appeals affirmed in part, vacated in part, and remanded in part. This case is DP Solutions, Inc. v. Rollins, Inc., U.S. Court of Appeals for the 5th Circuit, No. 02-41357, an appeal from the U.S. District Court for the Eastern District of Texas.

FCC Releases Cognitive Radio Technology NPRM

12/30. The Federal Communications Commission (FCC) released its Notice of Proposed Rule Making and Order [53 pages in PDF] in its proceeding titled "In the Matter of Facilitating Opportunities for Flexible, Efficient, and Reliable Spectrum Use Employing Cognitive Radio Technologies". The FCC adopted, but did not release, this item at its December 17 meeting. This is FCC 03-322 in ET Docket No. 03-108.

Comments will be due 75 days after publication of a notice in the Federal Register; reply comments will be due within 105 days. The FCC has not yet published this notice in the Federal Register.

The NPRM states that "cognitive radio technologies ... include, among other things, the ability of devices to determine their location, sense spectrum use by neighboring devices, change frequency, adjust output power, and even alter transmission parameters and characteristics. Cognitive radio technologies open spectrum for use in space, time, and frequency dimensions that until now have been unavailable."

The NPRM elaborates that "Cognitive radio technologies can be used to improve spectrum access and efficiency of spectrum use under at least four possible scenarios. First, a licensee can employ cognitive radio technologies internally within its own network to increase the efficiency of use. Second, cognitive radio technologies can facilitate secondary markets in spectrum use, implemented by voluntary agreements between licensees and third parties."

"Third, cognitive radio technologies can facilitate automated frequency coordination among licensees of co-primary services. Such coordination could be done voluntarily by the licensees under more general coordination rules imposed by Commission rules, or the Commission could require the use of an automated coordination mechanism. Fourth, cognitive radio technologies can be used to enable non-voluntary third party access to spectrum, for instance as an unlicensed device operating at times or in locations where licensed spectrum is not in use."

The FCC seeks comment "on how our rules and enforcement policies should address possible regulatory concerns posed by authorizing spectrum access based on a radio frequency (RF) device’s ability to reliably gather and process real-time information about its RF environment or on the ability of device and/or users to cooperatively negotiate for spectrum access. We propose and seek comment on rules intended to allow a full realization of the potential of these technologies under all our regulatory models for spectrum based services."

The order portion of this item closes ET Docket No. 00-47, titled "In the Matter of Authorization and Use of Software Defined Radios".

Steve Largent, P/CEO of the Cellular Telecommunications & Internet Association (CTIA), stated in a release that "it is incumbent on the FCC to ensure that the adoption of new rules for these emerging technologies will not create the potential for interference to existing licensees upon which millions of American consumers already depend." He added that "The FCC should consider the technical and economic feasibility of cognitive radios -- and confirm through actual testing that they will not interfere with other consumer services -- before adopting any final rules in this proceeding".

DOJ Settles Case Against Interactive Computer Service

12/30. The Department of Justice's (DOJ) Civil Rights Division (CRD) announced that it settled a civil lawsuit that it filed earlier this year against the operator of an interactive website that allows landlords, leaseholders and property managers to post notices of apartments and rooms for rent. Under the terms of the settlement, the web site operator must pay $15,000 and "adopt adopt a non-discrimination policy". See, DOJ release.

The DOJ filed a civil complaint in the U.S. District Court (DNJ) against Spyder Web Enterprises, LLC, the operator of the web site, alleging violation of the Fair Housing Act, which is codified at 42 U.S.C. §§ 3601, et seq.

The complaint alleges that there are advertisements posted in the website that "indicate preferences, limitations, and discrimination based on race, sex, familial status, and national origin".

The CRD brings many enforcement actions. What is notable about this action is that the advertisements that the CRD alleges are a violation of the Act are posted by the users of the web site, but the legal action is against the operator of the web site.

The complaint describes how advertisements are posted to the website: "The website lists private apartments and houses for rent. A landlord or person seeking to sublet an apartment can post the advertisement for a rental unit in any region throughout the country free of charge; the fee is paid by the individual looking for housing." Similarly, the web site states that "Landlords, leaseholders and property managers post their apartment rentals and rooms for rent ..."

The Congress has passed legislation giving immunity to interactive computer service providers for material posted by others. Specifically, the Telecom Act of 1996, at 47 U.S.C. § 230(c)(1), provides that "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider".

Section 230 further states that "It is the policy of the United States ... to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation".

The CRD has a history of pursuing regulation that would impede the use and development of the internet. For example, former Assistant Attorney General in charge of the CRD, Deval Patrick, wrote a letter on September 9, 1996 to Sen. Tom Harkin (D-IA) in which he stated that "The Americans with Disabilities Act (ADA) requires ... places of public accommodation to furnish appropriate auxiliary aids and services where necessary to ensure effective communication with individuals with disabilities ... Covered entities under the ADA are required to provide effective communication, regardless of whether they generally communicate through print media, audio media, or computerized media such as the Internet. Covered entities that use the Internet for communications regarding their programs, goods, or services must be prepared to offer those communications through accessible means as well." Patrick wrote that web site operators could comply with the ADA by providing audio tapes and braille copies of their web sites.

See also, TLJ story titled "Do Web Sites Violate the Americans with Disabilities Act?", February 10, 2000. And see, TLJ story titled "District Court Holds ADA Does Not Apply to Web Site", October 18, 2002, which pertains to the U.S. District Court (SDFl) Order Granting Defendant's Motion to Dismiss in Access Now v. Southwest Airlines (also published at 227 F.Supp.2d 1312.)

TLJ placed numerous telephone calls to the Civil Rights Division, the U.S. Attorney's Office for the District of New Jersey, and the Office of Public Affairs on December 30 and 31 to discuss the DOJ's understanding of the relationship of Section 230 to the various laws that the CRD enforces. No calls were returned.

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12/30. President Bush issued a Proclamation regarding implementation of the United States-Chile Free Trade Agreement, and a second Proclamation regarding implementation of the U.S. Singapore Free Trade Agreement.

12/30. Various federal agencies published a notice in Federal Register setting a deadline of March 29, 2004 for submitting comments regarding whether these agencies agencies should consider amending existing regulations that implement sections 502 and 503 of the Gramm Leach Bliley Act (GLB) to allow or require financial institutions to provide alternative types of privacy notices. The agencies are the Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corporation (FDIC), Federal Trade Commission (FTC), National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and the Securities and Exchange Commission (SEC). See, Federal Register, December 30, 2003, Vol. 68, No. 249, at Pages 75164 - 75174.

12/30. The National Archives and Records Administration (NARA) published a notice in the Federal Register stating that it proposes to dispose of 27,866 magnetic tape cartridges containing copies of e-mail records of the Clinton administration created from July 15, 1994 through December 1999. February 13, 2004 is the deadline to submit comments to the NARA regarding this proposed disposition. See, Federal Register, December 30, 2003, Vol. 68, No. 249, at Pages 75286 - 75287.

12/30. The U.S. Patent and Trademark Office (USPTO) announced that it will hold a public round table meeting on the effectiveness of inter partes reexamination proceedings. The USPTO stated in a notice in the Federal Register that it "seeks comments from former, current and prospective participants and other interested parties on whether inter partes reexamination proceedings are believed to be inequitable to any of the parties in interest and, if so, what changes are suggested to remove such inequities". The round table meeting is tentatively scheduled for February 17, 2004 at the USPTO offices in Arlington, Virginia. Requests to participate in the round table meeting must be received by January 28, 2004. Comments must be received by February 20, 2004. See, notice in the Federal Register, December 30, 2003, Vol. 68, No. 249, at Pages 75217 - 75218.

12/30. The Federal Communications Commission's International Bureau (IB) and Office of Engineering and Technology (OET) announced the International Telecommunication Union -- Radiocommunication Sector (ITU-R) Task Group (TG) will hold a meeting on compatibility between ultrawideband and radiocommunication services on June 9-18, 2004 in Boston, Massachusetts. See, notice [PDF].

Circuit Courts Issue Opinions in Intellectual Property Cases Involving Toys

12/29. Three three judge panels have issued opinions recently in intellectual property cases involving famous toys. Two cases involve Barbie Dolls made by Mattel. These cases, like numerous other Barbie cases, were decided by the U.S. Court of Appeals (9thCir). The third case involves Beanie Babies made by Ty. Like other Beanie Baby cases, this one was decided by the U.S. Court of Appeals (7thCir).

See, December 29 opinion [40 pages in PDF] in Mattel v. Walking Mountain Productions, December 22 opinion [16 pages in PDF] in Ty v. Softbellies, and December 22 opinion [22 pages in PDF] in Mattel v. Greiner and Hausser,

Mattel v. Greiner and Hausser. The Greiner and Hausser (G&H) case deals with procedural issues of personal jurisdiction, venue and forum non conveniens in multijurisdictional litigation involving patent claims. G&H sued Mattel in Germany, and Mattel sued G&H in California.

Mattel filed a complaint in U.S. District Court (CDCal) seeking to enforce a settlement entered into by Mattel and G&H 40 years ago, and to enjoin G&H's prosecution of its case in Germany. The District Court ruled that the present action does not relitigate issues settled in a case brought in 1961 in the U.S. District Court, and dismissed the U.S. District Court action for lack of personal jurisdiction over the defendants, improper venue, forum non conveniens, and the impropriety of using the Declaratory Judgment Act, 28 U.S.C. § 2201, to adjudicate issues that Mattel might assert as affirmative defenses in the German action.

The 9th Circuit reversed. It held that the present action is sufficiently related to the 40 year old action to support a finding of personal jurisdiction over the defendants. Basically, the Court held that the exercise of personal jurisdiction over G&H today is appropriate because G&H purposefully availed itself of the privilege of conducting activities in California when it filed the lawsuit in California against Mattel in 1961.

Mattel v. Walking Mountain Productions. The Walking Mountain Productions case deals with issues arising out of taking and selling photographs (that include Barbie Dolls) for the purposes of social commentary. Hence, the opinion discusses at length the fair use and parody defense to claims of infringement of copyrights, trademarks, and trade dress.

Thomas Forsythe, who does business as Walking Mountain Productions, takes and sells pictures of nude Barbie dolls juxtaposed with vintage kitchen appliances. Forsythe asserts that his pictures are an artistic critique of the objectification of women, and a criticism of the "conventional beauty myth and the societal acceptance of women as objects because this is what Barbie embodies."

Some of the titles of his pictures are "Fondu a la Barbie", "Barbie Enchiladas", and "Malted Barbie". The Appeals Court observed that Forsythe's Barbies are often depicted in "sexualized positions".

Says Forsythe, "Barbie is the most enduring of those products that feed on the insecurities of our beauty and perfection-obsessed consumer culture."

Mattel is neither amused by Forsythe's sense of humor, nor intellectually curious about the sociological interpretation of its products. It filed complaints in the U.S. District Courts for both the Northern and Central Districts of California alleging copyright, trademark and trade dress infringement and dilution.

When an art historian and curator of photography at the San Francisco Museum of Modern Art (SFMOMA) prepared an expert witness report in support of Forsythe, Mattel sought burdensome discovery unrelated to the litigation from the SFMOMA. (The Appeals Court affirmed the District Court's order quashing the subpoena, and awarding SFMOMA its counsel fees and expenses.)

The District Court granted summary judgment to Forsythe on all of Mattels claims. The Appeals Court affirmed. It also vacated the District Court's denial of Forsythe's request for attorneys fees.

The Court wrote a lengthy analysis of the purpose of copyright protection, the four prong test of fair use codified at 17 U.S.C. § 107, and the nature of parody. It concluded that "Having balanced the four § 107 fair use factors, we hold that Forsythe’s work constitutes fair use under § 107’s exception. His work is a parody of Barbie and highly transformative. The amount of Mattel’s figure that he used was justified. His infringement had no discernable impact on Mattel's market for derivative uses. Finally, the benefits to the public in allowing such use -- allowing artistic freedom and expression and criticism of a cultural icon -- are great. Allowing Forsythe’s use serves the aims of the Copyright Act by encouraging the very creativity and criticism that the Act protects."

On the trademark infringement claim, the Appeals Court applied a balancing test, and concluded that "the public interest in free and artistic expression greatly outweighs its interest in potential consumer confusion about Mattel's sponsorship of Forsythe's works."

Mattel also alleged that Forsythe infringed Barbie's trade dress. The Appeals Court held that Forsyth's use of undressed Barbies constituted nominative fair use. The Court wrote that "Barbie would not be readily identifiable in a photographic work without use of the Barbie likeness and figure. Forsythe used only so much as was necessary to make his parodic use of Barbie readily identifiable, and it is highly unlikely that any reasonable consumer would have believed that Mattel sponsored or was affiliated with his work."

And finally, the Appeals Court also affirmed the District Court's grant of summary judgment to Forsythe on the trademark and trade dress dilution claims.

Ty v. Softbellies. In the Beanie Baby case, the maker of Beanie Babies (Ty) filed a complaint in U.S. District Court (NDIll) against Softbellies alleging trademark infringement.

Beanie Babies made by Ty are toys made by putting bean pellets inside of bags, that are designed to resemble animals. Screenie Beanies made by Softbellies have chamois bellies and are sold to the public through computer stores for use in wiping computer screens.

Ty is a frequent plaintiff in Northern District of Illinois. Moreover, a disproportionate number of the opinions on appeal in Ty cases are written by Judge Richard Posner. Judge Posner has also just co-authored a book titled The Economic Structure of Intellectual Property Law.

Much of the opinion addresses when trademark terms become generic terms. The opinion also addresses procedural issues pertaining to expert witnesses and evidence in trademark cases.

The Softbellies case may be of limited interest to the technology sector. However, Judge Posner's future opinions in other Ty cases may have an impact on the tech sector as well as the toy sector. For example, Judge Posner has already hinted at extending the doctrine of misuse to copyright licensing practices and litigation strategies intended to suppress critical reviews of its products. See, May 30, 2002 opinion in Ty v. Publications International. This case, and the doctrine of misuse, are covered in story titled "3rd Circuit Breaks New Ground on Copyright Misuse" in TLJ Daily E-Mail Alert No. 727, August 27, 2003.

These cases are:

FCC News

12/29. The Federal Communications Commission (FCC) fined A-O Broadcasting, Inc., the former licensee of FM radio station KTMN, in Cloudcroft, New Mexico, $25,000 for violations of the radiofrequency radiation (RFR) exposure limits applicable to transmitters on towers, and for other rule violations. Specifically, the FCC released a Forefeiture Order for "willful and repeated  violation of Sections 1.1310, 11.35, 73.1125,  and 73.1400" of the FCC's rules. This item is FCC 03-332. The FCC also stated that this is the first fine for a violation of the RFR exposure limits. See, FCC release.

12/29. The Federal Communications Commission (FCC) issued a release [PDF] regarding number portability complaints. It states that "Since wireless phone number porting began on November 24, 2003, the FCC has received 2,394 informal complaints about wireless local number portability as of December 24."

People and Appointments

12/29. The law firm of Wiley Rein & Fielding announced the selection of new partners, including Helgi Walker and Jennifer Hindin. Walker was of counsel to the firm. Before that, she was an Associate Counsel in the Office of White House Counsel. Before that she an election attorney in Florida for the Bush Cheney campaign. Prior to that, she was Senior Legal Advisor and Chief of Staff to former FCC Commissioner Harold Furchtgott-Roth, the FCC's free market economist. Walker's background also includes working as an aide to Sen. Strom Thurmond (R-SC), a clerk to Judge Harvey Wilkerson (USCA, 4th Cir), a clerk to Justice Clarence Thomas, and an associate at Gibson Dunn and Crutcher. Hindin focuses on regulatory, policy and transactional matters before the FCC and International Telecommunication Union (ITU), particularly for satellite.

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12/29. The Internal Revenue Service (IRS) published a notice in the Federal Register stating that it "will provide the ability for IRS e-file program participants to use approved encryption methods for the 2005 and later filing seasons, beginning with the Acceptance Testing System (ATS) in late 2004. For the 2005 filing season, IRS intends to begin discontinuing support of non-encrypted transmissions whether by dedicated or dial-up links on the Public Switched Telephone Network (PSTN)." This is neither a notice of proposed rulemaking, nor a notice of inquiry. However, the IRS is accepting "questions or concerns" through January 31, 2004. See, Federal Register, December 29, 2003, Vol. 68, No. 248, at Pages 75022 - 75023.

People and Appointments

12/26. President Bush made several recess appointments, which will be effective until the next Congress convenes in January of 2005. He nominated Clark Kent Ervin to be Inspector General of the Department of Homeland Security. He previously nominated Ervin on January 10, 2003, but the Senate did not confirm or reject his nomination. See, White House release.

Go to News from December 21-25, 2003.