News from January 6-10, 2004

Supreme Court Grants Cert in Trademark Case

1/9. The Supreme Court granted certiorari in KP Permanent Make-Up v. Lasting Impressions. See, Order List [PDF]. This is a a trademark dispute involving companies that sell permanent makeup.

KP Permanent Make-Up and Lasting Impressions are competitors in the permanent make-up business. Permanent make-up involves injecting pigment into the skin. Lasting Impressions registered a trademark with the U.S. Patent and Trademark Office that consists of the term "micro colors" set in white within a black box. This is Registration No. 1,769,592. KP also uses the term "micro colors" on its products and brochures.

KP filed a complaint in U.S. District Court (CDCal) against Lasting Impressions seeking a declaratory judgment that it did not infringe. Lasting Impressions counterclaimed alleging trademark infringement.  The District Court concluded that the term "micro colors" is generic, or if not generic, descriptive. It further held that neither party had acquired secondary meaning in the term "micro color." Finally, it held that that KP's use was protected under the "fair use" defense, 15 U.S.C. § 1115(b)(4).

On April 30, 2003, the U.S. Court of Appeals (9thCir) issued its opinion [20 pages in PDF] reversing and remanding.

On the genericness issue, the Appeals Court held that "A reasonably minded jury could not conclude from the evidence produced that ``micro colors´´ is a generic term" and "KP's motion for summary judgment cannot be upheld on this ground. Furthermore, Lasting’s motion for summary adjudication on the issue of genericness should be granted."

On the issue of descriptiveness, the Appeals Court held that "Lasting's incontestable registration is conclusive evidence that the mark is non-descriptive or has acquired secondary meaning, and there is no need to require a showing of secondary meaning in the term ``micro colors´´ apart from the mark. Therefore, KP’s motion for summary judgment cannot be upheld on this ground."

Finally, on the fair use issued, the Appeals Court held that "the fair use defense claimed by KP is a classic fair use defense that requires that there not be a likelihood of confusion. Because there are genuine issues of material fact concerning the likelihood of confusion, KP’s motion for summary judgment cannot be upheld on this ground."

This case is KP Permanent Make-Up, Inc. v. Lasting Impressions, Inc. et al, Supreme Court No. 03-409, on petition for writ of certiorari to the U.S. Court of Appeals for the 9th Circuit, No. 01-56055.

Court of Appeals Dismisses KERM Petition for Review for Lack of Standing

1/9. The U.S. Court of Appeals (DCCir) issued its opinion [8 pages in PDF] in KERM v. FCC, a case regarding standing to challenge enforcement orders of the Federal Communications Commission (FCC). The Appeals Court dismissed KERM's petition for review for lack of standing.

KERM filed a complaint with the FCC alleging that KAYH-FM, a non-commercial educational broadcaster, unlawfully aired 11 announcements that constituted commercial advertisements in violation 47 U.S.C. § 399b(b)(2). The FCC found that 10 of the 11 announcements did not violate the statute, and that no enforcement action was warranted with respect to the single remaining announcement. KERM then filed the present petition for review with the Court of Appeals.

The Court of Appeals did not address the merits of the FCC enforcement decision. Rather, it found that KERM lacked standing to challenge the order under Article III of the Constitution, and therefore dismissed the petition for review.

The Court of Appeals wrote that "KERM describes itself as a ``listener´´ and ``competitor´´ of KAYH, suggesting that it has standing on these bases. There is no doubt that both listeners and competitors may, in appropriate cases, demonstrate standing to challenge actions of the FCC under the Communications Act."

However, the Court wrote that "KERM cannot prevail on a theory of listener standing because it challenges only a discrete, past injury and alleges no continuing violations." Also, "KERM fares no better under a theory of competitor standing. A party seeking to establish standing on this basis must demonstrate that it is ``a direct and current competitor whose bottom line may be adversely affected by the challenged government action.´´" (Citations omitted.)

The Court added that "KERM might have satisfied the requirements of competitor standing if it had introduced evidence that KAYH’s broadcast of the disputed announcements resulted in lost advertising revenues for KERM or otherwise adversely affected KERM's financial interests. KERM offered no such evidence."

This case is KERM, Inc. v. FCC and USA, No. 03-1028, a petition for review of a final order of the FCC.

7th Circuit Opinion Addresses Number Portability

1/9. The U.S. Court of Appeals (7thCir) issued its opinion [11 pages in PDF] in In the Matter of StarNet, Inc., a case regarding number porting obligations. The Appeals Court referred the matter to the Federal Communications Commission (FCC) with a request for guidance.

StarNet, which is in bankruptcy, is an intermediary between local telephone networks and the internet. It contracts with internet service providers (ISPs) to maintain a network that will accept local calls and transfer the data to the ISPs over high-speed lines that StarNet owns or maintains. ISPs then publish local access numbers at which their customers may connect without incurring long distance charges. StarNet in turn contracts with competitive local exchange carriers (CLECs), such as Global Naps, for phone lines and numbers at which the calls may be received and transferred to the high-speed network.

StarNet has exercised its option under 11 U.S.C. § 365(a) to escape high priced contracts with Global NAPs for local-access service in three markets. However, StarNet also wants Global Naps to port existing numbers to its new CLECs. Global Naps refuses.

Bankruptcy Judge Squires issued an injunction compelling Global Naps to port the local numbers to other CLECs, pursuant to 47 U.S.C. § 251(b)(2), which requires carriers "to provide ... number portability in accordance with requirements prescribed by the Commission."

In addition, 47 U.S.C. § 153(30) provides that "number portability" is "the ability of users of telecommunications service to retain, at the same location, existing telecommunications numbers without impairment of quality, reliability, or convenience when switching from one telecommunications carrier to another." .

The Appeals Court concluded that "We therefore refer this matter to the FCC with a request that it inform us how the ``same location´´ restriction applies to a local exchange carrier that hands off traffic to a modem pool at a collocation facility, when the customer wants to change local exchange carriers and move the modems. This matter is referred to the FCC so that it may address the meaning of the word ``location´´ for purposes of wireline-to-wireline portability."

This case is In the Matter of StarNet, Inc., No. 03-2990., an appeal from the U.S. District Court for the Northern District of Illinois, Eastern Division, D.C. No. 03 C 4835, Judge Milton Shadur presiding.

7th Circuit Addresses Market Power and Distinct Markets

1/9. The U.S. Court of Appeals (7thCir) issued its opinion [10 pages in PDF] in Menasha v. New America Marketing In-Store, an antitrust case involving the question of whether at the shelf coupon dispensers in stores constitute a distinct market.

New America makes at the shelf coupon dispensers, and enters into exclusive contracts with retailers. Menasha, which also dispenses at the shelf coupons, filed a complaint in U.S. District Court (NDIll) against New America alleging violation of federal antitrust laws. The District Court granted summary judgment to New America, and the Appeals Court affirmed. New America does not have market power because at the shelf coupon dispenses are not a distinct market. There are many substitutes for at the shelf dispensers.

This case is Menasha Corporation v. New America Marketing In Store, Inc. and New America Marketing In-Store Services, Inc., U.S. Court of Appeals for the 7th Circuit, No. 03-1302, an appeal from the U.S. District Court for the Northern District of Illinois, Eastern Division, D.C. No. 00 C 1895, Judge Harry Leinenweber presiding.

People and Appointments

1/9. Rep. Jim Turner (D-TX) announced that he will not run for re-election. He is currently the ranking Democrat on the House Select Committee on Homeland Security.

1/9. President Bush named Matthew Kirk Deputy Assistant to the President for Legislative Affairs -- Senate. He replaces Ziad Ojakli who will be leaving the White House for the private sector. See, White House release.

1/9. Nancy Jardini was named Chief of Criminal Investigation (CI) at the Internal Revenue Service (IRS). She replaces David Palmer, who just retired. See, IRS release.

1/9. James McCue was named President of Comcast Capital Corporation. He replaces Abram Patlove. See, Comcast release.

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1/9. The Joe Lieberman for President campaign released a campaign statement regarding protecting personal privacy.

1/9. The Progress and Freedom Foundation (PFF) released a paper [18 pages in PDF] titled "Principles for Texas Communications Law". It was written by Raymond Gifford and Adam Peters of the PFF. The paper argues that "In its aims, state law reflects the legacy purposes of regulation: to protect, and then control a franchised monopoly carrier through pervasive oversight of the rates, terms and service packages that are offered. While this legal legacy served its purpose, its remnants now often impede the current aim of communications law: to transition from a regulated monopoly to an open, competitive environment." The paper focuses on the state of Texas. It urges the Texas PUC to allow retail rates to "gravitate towards their true price, with accompanying reductions in intrastate access (and long-distance), vertical service, and business rates."

1/9. The Recording Industry Association of America (RIAA) announced in a release "a $200,000 settlement of claims involving the unauthorized pressing of vinyl by United Record Pressing LLC that allegedly infringed copyrights owned by RIAA members."

1/9. The Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) published a notice in the Federal Register that contains President Bush's memorandum titled "Memorandum for the Heads of Executive Departments and Agencies" regarding "Spectrum Policy for the 21st Century". President Bush issued the memorandum on May 29, 2003, and the White House Press Office released it on June 5, 2003. See, stories titled "Bush Issues Spectrum Policy Memorandum" and "Reaction to the President's Spectrum Memorandum" in TLJ Daily E-Mail Alert No. 675, June 6, 2003. The May 29, 2003 memorandum directs the Secretary of Commerce to publish the memorandum in the Federal Register.

1/9. The Federal Communications Commission (FCC) filed its brief [60 pages in PDF] with the U.S. Court of Appeals (DCCir) in SBC Communications v. FCC. This is a petition for review of an FCC forfeiture order regarding requirements that incumbent local exchange carriers (ILECS) provide competitive carriers access to the incumbents' shared network transmission facilities -- or shared transport. This is Appeals Court No. 03-1118.

FCC Releases Agenda for January 15 Meeting

1/8. The Federal Communications Commission (FCC) released the agenda for its meeting of Thursday, January 15. The agenda does not include consideration of any actions in rule making proceedings. Rather, the meeting "will focus on presentations by senior agency officials regarding implementations of the agency’s strategic plan and a comprehensive review of FCC policies and procedures."

There will be five panel presentations. The first panel will be the Managing Director and the Chief of the Office of Strategic Planning and Policy Analysis.

The second panel will include the Chiefs of the Enforcement Bureau (EB) and the Consumer and Governmental Affairs Bureau (CGAB). The third panel will include the Chiefs of the Office of Engineering and Technology (OET), the Wireless Telecommunications Bureau (WTB), and the International Bureau (IB).

The fourth panel will include the General Counsel and the Director of the Office of Communications Business Opportunities (OCBO). The fifth panel will include the Chiefs of the Wireline Competition Bureau (WCB) and the Media Bureau (MB).

The meeting will be at 9:30 AM in the FCC's Commission Meeting Room, TW-C305, at 445 12th Street, SW. The meeting will be open to the public and webcast.

Verizon's Seidenberg Addresses Broadband

1/8. Ivan Seidenberg, Ch/CEO of Verizon Communications, gave a speech at the Consumer Electronics Show in Las Vegas, Nevada. He mostly addressed Verizon's plans, investments, and products. But, he also touched on regulatory issues.

He stated that "Of course, for broadband to reach its full potential, lots of things have to go right. We've gotten it pretty much right in the wireless world, where -- for the most part -- government has stayed out of the way of capital formation and innovation. We've gotten it more or less right for the large business market, where Enterprise customers have lots of competitors vying to deliver the latest technology."

He continued that "And we can get it right in the consumer market, too, if we put the customer in the center of the picture. As the Consumer Electronics Association has noted, Verizon's recent legal victory against the Recording Industry Association of America is one example of ``getting it right´´ by standing up for consumer rights and technological innovation."

That is, on December 19, 2003 the U.S. Court of Appeals (DCCir) issued its opinion [16 pages in PDF] in RIAA v. Verizon, reversing the District Court, and holding that a Section 512(h) subpoena may only be issued to an ISP that is engaged in storing on its servers material that is infringing or the subject of infringing activity. This opinion deprives the RIAA and copyright holders of an expeditious and inexpensive means for acquiring the names of P2P infringers from their ISPs. See, story titled "DC Circuit Reverses in RIAA v. Verizon", also published in TLJ Daily E-Mail Alert No. 804, December 22, 2003.

Seidenberg then added, "And the federal government can take another big step by clearing the path, once and for all, for broadband investment -- as urged by the High-Tech Broadband Coalition and the C.E.A. -- so we can get this vital technology in customers' hands."

The High Tech Broadband Coalition (HTBC), of which the CEA is a member, has filed many comments with the FCC on this subject. See especially, comment [79 pages in PDF] filed on April 5, 2002, and related TLJ story titled "Broadband Coalition Advocates Relief from Unbundling Requirements" in TLJ Daily E-Mail Alert No. 403, April 4, 2002. See also, comment [16 pages in PDF] submitted on November 6, 2003.

IBM Receives Wells Notice from SEC

1/8. IBM stated in a release that "it has received a ``Wells Notice´´ from the staff of the U.S. Securities and Exchange Commission (SEC) in connection with the SEC's investigation of a customer of IBM's Retail Stores Solutions unit, which sells point-of-sale products." IBM added that the IBM customer is Dollar General Corporation.

IBM offered this explanation of a Wells notice. "The Wells Notice notifies IBM that the SEC staff is considering recommending that the SEC bring a civil action against IBM for possible violations of the U.S. securities laws relating to Dollar General's accounting for a specific transaction, by participating in and aiding and abetting Dollar General's misstatement of its 2000 results. In that transaction, IBM paid Dollar General $11M for certain used equipment as part of a sale of IBM replacement equipment in Dollar General's 2000 fourth fiscal quarter."

IBM elaborated that "Under the SEC's procedures, IBM has the opportunity to respond to the SEC staff before the staff makes a formal recommendation regarding whether any action should be brought against IBM by the SEC."

US and EC to Hold Discussions on GPS/Galileo Issues

1/8. The State Department issued a statement regarding negotiations between the U.S. and the European Commission (EC) regarding the U.S.'s Global Positioning System (GPS) and the EU's Galileo.

Both GPS and Galileo are satellite based radionavigation systems. The GPS currently uses at least 24 satellites. Galileo is currently being planned. It may use 30 medium orbit satellites.

The State Department wrote that "During the last year the United States and the European Commission (EC) have had productive policy and technical discussions that have moved both sides closer to agreement regarding GPS and Galileo cooperation. At talks in November 2003 in The Hague, Netherlands, the European Commission proposed a signal structure for Galileo's Public Regulated Service that would resolve U.S. concerns relating to adverse impacts to allied military operations."

The State Department added that "The next round of discussions, scheduled for the end of January in Washington, will address similar factors concerning Galileo's Open Service (OS) signal structure, as well as other related civil use issues."

It concludes that the U.S. and the EC "are engaged in negotiations on an agreement to establish a mutually beneficial cooperative relationship between the U.S. Global Positioning System (GPS) and Europe's planned Galileo satellite navigation system. The United States hopes to ensure that GPS and Galileo are compatible and that their civil services are interoperable, thereby maximizing potential benefits for all civil users of satellite navigation services. An agreement on GPS/Galileo cooperation should also allow the Galileo program to meet its performance requirements while protecting U.S. and NATO national security requirements through signal separation between Galileo's services and the GPS military service (M-Code)."

People and Appointments

1/8. Robert Tanner was named was named Legal Counsel to the Bureau Chief of the Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB). He will advise the Bureau Chief, William Maher, on competition, broadband deployment and advanced services issues. Tanner was previously an Attorney-Advisor in the WCB's Competition Policy Division where he was a team leader for the Triennial Review Order and the Verizon Pennsylvania Section 271 Order. He also worked on proceedings examining the regulatory treatment of interexchange services provided by incumbent local exchange carriers (ILECs). Tanner also previously worked for the law firm of Davis Wright Tremaine. See, FCC release [PDF].

1/8. Paul Garnett was named Legal Counsel to the Bureau Chief of the Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB). He will advise the Bureau Chief, William Maher, on universal service, numbering, and other matters. Garnett was previously the WCB's Acting Assistant Chief of the Telecommunications Access Policy Division, with responsibility for issues relating to the receipt of universal service support in competitive areas, the payment of universal service contributions, and the high-cost universal service support mechanisms.

1/8. Bobby Franklin was named Vice President of Government Affairs for the Cellular Telecommunications & Internet Association (CTIA), effective January 20. He was previously Vice President, Federal Government Affairs and head of ALLTEL's Washington DC office. See, CTIA release.

1/8. John Walls was named Vice President of Communications for the Cellular Telecommunications & Internet Association (CTIA), effective February 23, 2004. Walls is currently a television news anchor for the NBC affiliate KJRH-TV in Tulsa, Oklahoma. Before that, he was an anchor for Fox Sports Net in Los Angeles from 1996 to 2000. He has worked in broadcasting since 1978. See, CTIA release. Steve Largent, the P/CEO of the CTIA, previously represented Tulsa in the House of Representatives.

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1/8. The Office of the U.S. Trade Representative (USTR) announced that Korea will be elevated from the Watch List to the Priority Watch List as a result of the findings of the Special 301 Out-of-Cycle Review. The USTR stated that this review "found that growth of online music piracy has caused serious economic damage to both domestic and foreign recording companies, and continued piracy of U.S. motion pictures in Korea has resulted in millions of dollars in lost revenues for U.S. and Korean copyright holders." See, USTR release [PDF].

1/8. The National Telecommunications and Information Administration (NTIA) announced that it will hold a two two conference on February 10-11, 2004 titled "Public Safety Spectrum Management Forum". See, notice.

1/8. The Software and Information Industry Association (SIIA) wrote a letter [3 pages in PDF] to Secretary of Education Ron Paige regarding implementation of the No Child Left Behind Act. The SIIA argues that "many NCLB goals and requirements can not be adequately achieved without technology tools."

1/8. Adrian Lamo pled guilty in U.S. District Court (SDNY) to one count of hacking into a computer system. The Department of Justice stated in a release that the one count information, filed on January 8, alleges that "on February 26, 2002, LAMO hacked into the New York Times' internal computer network and accessed a database containing personal information (including home telephone numbers and Social Security numbers) for more than 3,000 contributors to the New York Times' Op-Ed page." Lamo did not try to conceal his entry. Rather, he added his name and phone number to the database, listing his expertise as "computer hacking, national security, communications intelligence". The previously filed criminal complaint recites the New York Times intrusion. It also alleges intrusions into the computer systems of Yahoo, Microsoft, MCI WorldCom, SBC, and Cingular.

FRB Governor Kohn Addresses Role of Technological Change in Global Economy

1/7. Federal Reserve Board (FRB) Governor Donald Kohn gave a speech in Atlanta, Georgia titled "The United States in the World Economy". He addressed the global economy, job restructuring, trade and current accounts deficits, and the merits of unregulated markets.

He stated, among other things, that there has been a "major increase in global productivity", for two reasons. First, there is "the spreading recognition in recent decades, reinforced by the collapse of the Soviet Union, that market economies work best". Second, there is "a heightened pace of technological change, especially the declining cost of generating and transmitting information."

Donald Kohn"Globally, cheaper access to more information has eased the integration and coordination of geographically diverse production processes. This development has opened up opportunities to transfer production to locations in which the work can be accomplished less expensively, and the trend toward market-based economies has multiplied the number of feasible locations", said Kohn (at right).

He continued that "because of the new applications of information technology and telecommunications, an increasing variety of services that used to be attached to a particular business location can be carried out anywhere in the world. For example, call centers have moved to India and elsewhere. Routine back office accounting work such as handling accounts receivable is also shifting overseas and becoming centralized for global corporations. Many types of routine programming can be carried out around the clock, handed off from time zone to time zone by e-mail."

He also stated that "Workers in the United States and other advanced economies will need to shift toward industries specializing in the types of goods and services we produce relatively more efficiently. Typically, production of these goods and services involve more complex processes, often those that are more rooted in the higher knowledge and skills of our workers. As workers shift to higher value-added employment, real wages will rise commensurately."

He went on to argue for free markets and free trade. He stated that protectionism, including "in exchange rates, in labor and product markets, in quotas and tariffs on international trade" could disrupt markets, impede market resiliency, limit productivity, and ultimately, affect standards of living.

People and Appointments

1/7. Meredith Attwell was named Senior Advisor to Michael Gallagher, the acting head of the National Telecommunications and Information Administration (NTIA). She previously worked at Williams Mullen Strategies. From June 2000 to April 2002, she was Senior Counsel to Covad Communications. From January 1998 to June 2000, she was Director of Congressional Affairs at the Cellular Telecommunications Industry Association (CTIA). See, NTIA release.

1/7. Brian Kidney was named Chief Operating Officer for the Cellular Telecommunications & Internet Association (CTIA). See, release.

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1/7. The Department of Transportation (DOT) published a notice in the Federal Register that lists and describes changes to its rules governing airline computer reservations systems. See, Federal Register, January 7, 2004, Vol. 69, No. 4, at Pages 975 - 1033. See also, story titled "DOT To Allow Most Airline Computer Reservation Systems Rules to Sunset" in TLJ Daily E-Mail Alert No. 809, January 5, 2004.

1/7. MCI (formerly known as WorldCom) stated in a release that "the U.S. General Services Administration (GSA) announced it has lifted the proposed debarment of MCI and the company is again eligible to receive new government business and contract extensions."

People and Appointments

1/6. President Bush announced his intent to appoint Andrew Maner to be the Chief Financial Officer of the Department of Homeland Security (DHS). See, White House release.

1/6. Jan Jaferian was named Intellectual Property Business President of Lucent Technologies, effective immediately. She was previously Vice President and General Manager of Xerox Corporation's Intellectual Property Operations. See, Lucent release.

1/6. The law firm of Arnold & Porter announced that Leslie Jacobs was elevated from associate to partner. He is a member of the intellectual property/technology group in the Washington DC office. His practice includes patent procurement and litigation, licensing, and client counseling on intellectual property issues. He has a BS in Electrical Engineering. See, release.

1/6. The law firm of Arnold & Porter announced that Robert Jones Worrall, was elevated from counsel to partner. He is a member of the intellectual property/technology group in the Washington DC office. He focuses on patent litigation and collateral litigation issues pertaining to technology, and has represented clients on patent matters involving semiconductors, computer systems, wireless technologies, voice and data communication systems, photo imaging, software, and mechanical systems. He has a BS in Electrical Engineering. See, release.

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1/6. The Office of the U.S. Trade Representative (USTR) published a notice in the Federal Register requesting public comments regarding foreign countries that deny adequate and effective protection of intellectual property rights or deny fair and equitable market access to U.S. persons who rely on intellectual property protection. The USTR is required under Section 182 of the Trade Act of 1974, codified at 19 U.S.C. § 2242, to identify which countries should be identified as Priority Foreign Countries. This section is also know as "Special 301". The deadline to submit comments is 12:00 NOON on February 13, 2004.

1/6. The Copyright Office published a notice in the Federal Register announcing "the initiation of the voluntary negotiation period for determining reasonable rates and terms for two compulsory licenses, which in one case, allows public performances of sound recordings by means of eligible nonsubscription transmissions, and in the second instance, allows the making of an ephemeral phonorecord of a sound recording in furtherance of making a
permitted public performance of the sound recording for the period beginning January 1, 2005 and ending on December 31, 2006." See, Federal Register, January 6, 2004, Vol. 69, No. 3, at Pages 689 - 690.

1/6. SBC Communications announce the acquisition of Callisma, a Palo Alto, California based network consulting company. See, SBC release.

Go to News from January 1-5, 2004.