News from January 11-15, 2004

6th Circuit Rules in Cell Tower Case

1/15. The U.S. Court of Appeals (6thCir) issued its opinion in Omnipoint v. City of Southfield, a cell tower location case. The Appeals Court affirmed the District Court's summary judgment for Southfield based upon failure to file suit within the 30 day statute of limitations.

Omnipoint (VoiceStream) provides personal communications systems in southeastern Michigan. It sought a special use permit from the City of Southfield to build a 150 foot monopole antenna tower to cover a gap in its coverage. Southfield denied the application.

47 U.S.C. § 332 provides, at § 332(c)(7)(A) that "Except as provided in this paragraph, nothing in this chapter shall limit or affect the authority of a State or local government or instrumentality thereof over decisions regarding the placement, construction, and modification of personal wireless service facilities." § 332(c)(7)(B) then provides limitations to this general rule. § 332(c)(7)(B)(ii) prevents state and local governments from unreasonably discriminating among providers, and from prohibiting the provision of service. § 332(c)(7)(B)(iii) provides that "Any decision by a State or local government or instrumentality thereof to deny a request to place, construct, or modify personal wireless service facilities shall be in writing and supported by substantial evidence contained in a written record."

Finally, there is a statute of limitations in the statute. § 332(7)(B)(v) provides that "Any person adversely affected by any final action or failure to act by a State or local government or any instrumentality thereof that is inconsistent with this subparagraph may, within 30 days after such action or failure to act, commence an action in any court of competent jurisdiction."

VoiceStream filed a complaint in U.S. District Court (EDMi) against Southfield alleging violation of Section 332. The District Court granted summary judgment to Southfield on the grounds that the complaint was filed after the running of the statute of limitations.

The Appeals Court affirmed. VoiceStream filed its complaint on July 3, 2001. The Court ruled that the 30 days began to run on April 9, 2001, which was the date that the minutes of the city council meeting at which the application was denied were approved.

This case is Omnipoint Holdings, Inc. dba VoiceStream Wireless v. City of Southfield, Southfield City Council, U.S. Court of Appeals for the 6th Circuit, No. 02-1713, an appeal from the U.S. District Court for the Eastern District of Michigan, at Detroit, D.C. No. 01-72482, Judge Denise Hood presiding.

NTIA and NIST Request Comments on IPv6

1/15. The National Telecommunications and Information Administration (NTIA) and the National Institute of Standards and Technology (NIST) published a notice requesting public comments regarding Internet Protocol version 6 (IPv6).

The Internet Protocol (IP) is a technical standard that enables computers and other devices to communicate with each other over networks. The current generation of IP, version 4 (IPv4), has been in use for more than twenty years.

The notice states that the NTIA and NIST "invite interested parties to comment on a variety of IPv6-related issues including: (1) the benefits and possible uses of IPv6; (2) current domestic and international conditions regarding the deployment of IPv6; (3) economic, technical and other barriers to deployment of IPv6; and (4) the appropriate role for the U.S. government in the deployment of IPv6."

Comments are due within 45 days of publication in the Federal Register, which has not yet occurred.

Arden BementArden Bement (at right), the Director of the NIST, stated in a release that "The interoperability among technologies is a critical element both for national competitiveness and for national security ... Our task force can play a valuable role in developing an understanding of the merits of, and obstacles to, moving to IPv6. One of the objectives of our task force is to measure the current status of deployment and assess alternative future deployment scenarios, which is vitally important for policy makers."

Michael Gallagher, the acting head of the NTIA, stated that "Before we make any policy decisions, we must fully understand the degree to which the new standard will enable direct connectivity among wireless devices, boost the productivity of the American worker and enrich the experience of the American consumer ... We also must fully explore the costs and technical impacts of large-scale deployment."

Cato Paper Criticizes Compulsory Licensing

1/15. The Cato Institute released a paper [15 pages in PDF] titled "Compulsory Licensing vs. the Three "Golden Oldies" Property Rights, Contracts, and Markets", by Robert Merges.

Merges, a law professor at the University of California at Berkeley, writes that "Rather than allowing musicians, artists, and other copyright owners to negotiate licensing terms for use of their works, a compulsory license forces copyright owners to allow use of their works under legislatively set prices and restrictions on use."

He argues that today, "markets for digitized works do not suffer from market failures. Furthermore, the Internet has reduced the transaction costs that once served as a key rationale for compulsory licensing. Recent developments suggest that fears of excessive control of digital content are overblown. Without enhancing compulsory licensing, the digital landscape is diverse, as the case of music demonstrates. There is free music, temporarily free music, and low-cost music online. Offline, music companies are lowering the prices of CDs."

He recommends repealing the digital public performance right compulsory license, and letting "Sound-Exchange and any competitors that may arise deal directly with webcasters." He also recommends resisting appeals to legislate more compulsory licenses."

House Commerce Committee Seeks Chicago Records in Investigation Into E-Rate Waste, Fraud and Abuse

1/15. Rep. Billy Tauzin (R-LA) and Rep. James Greenwood (R-PA) wrote a letter to the Chicago Public Schools requesting records relevant to a House Commerce Committee investigation into the Federal Communications Commission's (FCC) e-rate subsidy program.

James GreenwoodRep. Tauzin is the Chairman of the House Commerce Committee. Rep. Greenwood (at right) is the Chairman of its Subcommittee on Oversight and Investigations.

The letter requests "Copies of all audits of E-rate related work at Chicago Public Schools (CPS) conducted for CPS, including, but not limited to, the internal audits conducted by KPMG", "Copies of reviews, assessments, or memoranda regarding E-rate related work or performance of such work for CPS, including, but not limited to, memoranda prepared for the Chicago Board of Education or members of the Board", and other records.

The letter does not reference the problem of waste, fraud and abuse in the e-rate program. However, the House Commerce Committee has been conducting an investigation into waste, fraud and abuse.

See, related stories: "Reps. Tauzin & Greenwood Request GAO Report on E-Rate Waste, Fraud & Abuse" in TLJ Daily E-Mail Alert No. 791, December 3, 2003; "House Commerce Committee Requests Information from IBM in E-Rate Fraud Investigation" in TLJ Daily E-Mail Alert No. 698, July 15, 2003; "House Commerce Committee Subpoenas USAC for E-Rate Records" in TLJ Daily E-Mail Alert No. 652, April 30, 2003; and "Rep. Tauzin Writes Powell Re Waste Fraud & Abuse In E-Rate Program" in TLJ Daily E-Mail Alert No. 624, March 17, 2003.

Microsoft Agrees to Modify Windows XP Feature At Request of DOJ

1/15. The Department of Justice's (DOJ) Antitrust Division released a statement titled "Microsoft Consent Decree Compliance Advisory" that pertains to the "Shop for Music Online" feature in Microsoft's Windows XP operating system.

The DOJ stated that "Section III.H of the Final Judgment requires Microsoft to allow end users and OEMs to specify a non-Microsoft middleware product -- such as a web browser, e-mail client, or media player -- as the default middleware product to be launched in place of Microsoft's corresponding middleware product."

The DOJ continued that "As part of the Department's ongoing review of Microsoft's compliance with Section III.H, the Department has investigated a feature within Windows XP called ``Shop for Music Online,´´ which allows a user to go online to purchase music compact discs from retailers. The Department was concerned that the ``Shop for Music Online´´ feature invokes Microsoft's Internet Explorer even when the user has chosen a different default web browser, such as Netscape, Opera or Mozilla. The Department concluded that the invocation of Internet Explorer by the 'Shop for Music Online' feature violated Section III.H of the Final Judgment. The Department discussed its concerns with Microsoft."

The DOJ added that "Without necessarily agreeing with the Department's position, Microsoft has agreed to remove the override of the user's default browser contained in ``Shop for Music Online.´´ Microsoft expects to have this modification to Windows XP available to consumers in February or March, through a ``Windows Update´´ download."

GAO Reports on Use of Public Key Infrastructure at Federal Agencies

1/15. The General Accounting Office (GAO) released a report [58 pages in PDF] titled "Information Security: Status of Federal Public Key Infrastructure Activities at Major Federal Departments and Agencies"

The report, which was prepared for the House Government Reform Committee, and its Subcommittee on Technology, Information Policy, Intergovernmental Relations and the Census, states that "Increasingly, the federal government is using the World Wide Web and other Internet-based applications to provide online public access to information and services as well as to improve internal business operations."

"To properly conduct communications and transactions with the government over the Internet may require security assurances that go beyond simple security measures -- such as passwords -- to properly safeguard sensitive, personal, and financial data. Public key infrastructure (PKI) offers many of the security assurances that, when fully and properly implemented, can protect online communications and transactions", states the GAO.

This report is a follow up to a similar report by the GAO conducted in 2001. The present report is based upon an examination of up to date information on PKI initiatives at 24 federal departments and agencies. This report specifically examines the Federal Bridge Certification Authority (FBCA) and Access Certificates for Electronic Services (ACES) programs.

The GAO found that "24 agencies involved in our query, 20 are pursuing a total of 89 PKI initiatives. The 89 initiatives are at various stages of development, and collectively they represent a significant investment, estimated at about $1 billion. In addition, the governmentwide FBCA and ACES programs continue to promote the adoption and implementation of PKI, but these programs have seen mixed progress and results. The level of participation in the FBCA, which provides a means to link independent agency PKIs into a broader network, is the same as in 2001 -- four agencies are certified to operate through the network. Additional agencies are planning to participate in the future, as well as nonfederal organizations, such as the state of Illinois, the Canadian government, and educational consortiums. Similarly, the ACES program, which offers agencies various PKI services through a General Services Administration (GSA) contract, has garnered lower than expected participation among federal agencies."

People and Appointments

1/15. Paula Blizzard and Patricia Brink were named Special Counsel for Microsoft Decree Enforcement by the Department of Justice's (DOJ) Antitrust Division. See, Microsoft Consent Decree Compliance Advisory.

1/15. Texas Instrument's (TI) Board of Directors selected Richard Templeton to be P/CEO of TI, effective May 1. Tom Engibous, the current P/CEO, will remain as Chairman. Templeton currently is TI's chief operating officer. See, TI release.

More News

1/15. The Federal Communications Commission (FCC) held a meeting to hear presentations from FCC officials regarding implementation of the FCC's strategic plan and a review of FCC's policies and procedures. See, presentation outlines in PDF.

1/15. The Federal Communications Commission (FCC) issued a Notice of Apparent Liability for Forfeiture that, in effect, fines World Communications Satellite Systems, Inc. $560,000 for willful and repeated violations of Section 258 of the Communications Act and FCC rules. The NAL states that it submitted changes of the preferred carriers of consumers without their authorization and verification. That is, it slammed consumers. See also, FCC release.

1/15. The Office of Personnel Management (OPM) published a notice in the Federal Register that summarizes, and provides a comment deadline for, the OPM's proposed rule implementing provisions in the E-Government Act of 2002 that authorize the temporary assignment of employees in the field of information technology management (IT) between the federal government and private sector organizations. Comments are due by March 15, 2004. See, Federal Register, January 15, 2004, Vol. 69, No. 10, at Pages 2308 - 2311.

Rep. Tom Davis1/15. Rep. Tom Davis (R-VA) (at right), Chairman of the House Government Reform Committee, issued a release in which he outlined the agenda for the Committee for 2004. Several agenda items are technology related, including oversight of the General Services Administration's (GSA) reorganization of the Federal Technology Service (FTS). See, story titled "GSA Audit Faults Government Contracting for Information Technology" in TLJ Daily E-Mail Alert No. 816, January 15, 2004. The agenda also includes implementation of the E-Government Act of 2002, including a review of the Digital Tech Corps, Cooperative Purchasing, and Share-in-Savings contracts. The agenda also includes oversight of agency compliance with the Federal Information Security Management Act (FISMA). The agenda also includes oversight of the Department of Homeland Security (DHS), including the US-VISIT program, and a review of all Transportation Security Administration (TSA) operations, including airline passenger screening and air cargo security.

Powell Addresses Regulation of VOIP

1/14. Federal Communications Commission (FCC) Chairman Michael Powell gave a speech [10 pages in PDF] in Washington DC titled "The Age of Personal Communications: Power to the People". He discussed new and forthcoming digital communications technologies, and offered his broad recommendations regarding appropriate policies for promoting new technologies. He discussed the appropriate regulatory framework for voice over internet protocol (VOIP) applications at some length, but without specificity.

Michael PowellPowell (at right) was clear that he does not want VOIP applications to be regulated like PSTN communications. However, he spoke in vague terms about continuing several categories of mandates, cross subsidies, and regulation from legacy phone to VOIP communications. He suggested that these might include CALEA, E911, contribution to universal service, making digital communications eligible for universal service support, and further expanding the scope of the schools and libraries program into information services.

He did not suggest applying old notions of price regulation, interconnection, facilities sharing, or access charges to VOIP applications. He did not expressly state that these should not be applied to VOIP. He simply left them out of his speech.

Powell stated that "We are starting to see the tools of the information age making their way into the hands of the people. The benefits to our citizens are enormous. They have more choices, they have better value and they have more control to tailor how they talk to friends and family." He said that "Credit for these successes rest primarily with entrepreneurs, but government's commitment to focus on innovation in its regulatory policies, remove unnecessary regulatory chains, place faith in the free market, and promote technology solutions has paid dividends."

He said that the FCC should "First Do No Harm. Government can make things better, but Government, too, can make a mess of things. It is particularly prone to the latter when addressing budding technology developments that it does not yet fully understand or appreciate. Regulation can smother the risk-taking oxygen young entrepreneurs need to survive. They can weigh down innovation with forms and filings and drain capital by adding significantly to the costs of the service. And the cost of government compliance can mean higher, less competitive, prices for consumers."

He continued that "there will be issues as Internet Voice becomes more widely adopted. We will need to ensure the legitimate concerns of public safety and law enforcement are addressed. And we will need to ensure our universal service goals are protected. It is important to have a government-industry partnership to keep an eye on these concerns."

He added that "But such issues are still far from being problems that demand hasty government action. Responsible policy will identify issues, study them and stay vigilant, but not jump in to regulate without clear and persistent evidence of harm."

The FCC has not yet initiated a rule making proceeding devoted to VOIP issues. However, there are several pending petitions filed by providers are various VOIP services and applications. See, story titled "Level 3 Files VOIP Petition With FCC" and "Summary of Other VOIP Proceedings at the FCC" in TLJ Daily E-Mail Alert No. 815, January 14, 2004.

Powell also stated that "We cannot contort the character of the Internet to suit our familiar notions of regulation. Do not dumb down the genius of the net to match the limited vision of a regulator. The Internet has characters and attributes that should be recognized and accepted, not ignored or brushed aside as inconvenient, or irrelevant. To regulate the Internet in the image of a familiar phone service is to destroy its inherent character and potential. Governments are almost always about geography, jurisdiction and centralized control. The Internet is unhindered by geography, dismissive of jurisdiction, and decentralizes control.

He offered more specificity on universal service issues. He said that "We should actively promote a society where every single American can affordably connect everywhere -- giving them more choices and more control."

"So much of the ultimate promise of the connected society depends on saturating the country with broadband access, whether it be wired connections such as DSL and Cable Broadband or wireless services such as WiFi hot spots, or licensed broadband services like the 3G broadband network that Verizon is investing a billion dollars to deploy. The Commission will continue to support the growth and diversity of the network economy", said Powell.

He added that "I believe it a sacred duty to continue to protect important social values through the great digital migration. First among equals is the unflinching commitment to universal service. We must make sure that the digital migration brings the technologies of today and tomorrow to every single American at affordable prices."

He also stated that "Our schools and libraries and rural health funding efforts must continue to be modernized for this age, so that every community can reap the full benefits of this migration."

Powell also said that the FCC will hold another meeting. He stated that "this year, I will convene a Solutions Summit in which leaders in government and industry can come together to talk about creative ways to address some of these issues." The FCC held one meeting on December 1, 2003. See, story titled "FCC Holds VOIP Forum", December 1, 2003, also published in TLJ Daily E-Mail Alert No. 790, December 2, 2003.

FCC Releases MOO Approving News Corp.'s Acquisition of DirecTV

1/14. The Federal Communications Commission (FCC) released its Memorandum Opinion and Order [228 pages in PDF] in its proceeding titled "In the Matter of General Motors Corporation and Hughes Electronics Corporation, Transferors, And The News Corporation Limited, Transferee, For Authority to Transfer Control".

This item approves News Corporation's acquisition of a de facto controlling interest in Hughes Electronics, and hence, its subsidiary, DirecTV Holdings, which provides direct broadcast satellite service (DBS) in the U.S. The FCC announced this order on December 19, 2003. At that time it released a document [29 pages in PDF] titled "Public Notice" that summarizes the MOO.

However, the FCC but did not release the text until January 14, 2004. This proceeding is MB Docket No. 03-124.

See also, story titled "FCC Approves News Corps.' Acquisition of DirecTV, With Conditions" in TLJ Daily E-Mail Alert No. 804, December 22, 2003.

6th Circuit Rules in Trademark Dispute Involving Term LawOffice

1/14. The U.S. Court of Appeals (6thCir) issued its opinion in DeGidio v. West Group, a trademark case involving the term lawoffices.

Anthony DeGidio registered the domain name He operates a web site at this domain that contains some information about law offices, cyber law issues, and other matters. He did not obtain a trademark registration for the term "" from either the U.S. Patent and Trademark Office (USPTO) or the state of Ohio.

The West Group Corporation, The Thompson Corporation, and West Licensing Corporation (defendants) use the domain name to market the West Legal Directory.

DeGidio filed a complaint in U.S. District Court (NDOhio) against the defendants alleging:
1. violations of the Ohio Deceptive Trade Practices Act,
2. unauthorized use of trademark pursuant to Ohio law,
3. common law unfair competition,
4. false designation of origin under 15 U.S.C. § 1125(a),
5. federal trademark dilution,
6. common law dilution, and
7. the tort of misappropriation.

The District Court ruled on cross motions for summary judgment that the term lawoffices is not a protectible mark because it is descriptive and has not acquired a secondary meaning. The Court dismissed all claims. This appeal followed.

The Court of Appeals affirmed. Like the District Court, it concluded that DeGidio's mark is descriptive and that it has not acquired secondary meaning.

The Appeals Court reasoned that the Lanham Act offers protection against infringement of both registered and unregistered marks. But, for unregistered marks to receive protection, they must be distinctive. However, the Appeals Court concluded that the term is merely descriptive.

The Appeals Court further wrote that secondary meaning is used generally to indicate that a mark or dress has come through use to be uniquely associated with a specific source. The claimant must show that a mark has acquired secondary meaning, through such evidence as consumer surveys; exclusivity, length and manner of use; amount and manner of advertising; amount of sales and number of customers; established place in the market; and proof of intentional copying. The Appeals Court held that DeGidio failed to meet this burden.

This case is Anthony DeGidio v. West Group Corporation; The Thomson Corporatioin; West Licensing Corporation, U.S. Court of Appeals for the 6th Circuit, No. 02-3739, an appeal from the U.S. District Court for the Northern District of Ohio at Toledo, D.C. No. 99-07510, Judge David Katz presiding.

Court Rules That Search Engines Use of Trademarks to Display Banner Ads May Infringe Trademarks

1/14. The U.S. Court of Appeals (9thCir) issued its opinion [28 pages in PDF] in Playboy v. Netscape, a trademark case involving the use of trademarked terms to displays ads with search results.

Playboy Enterprises, Inc. (PEI) has trademarked the terms "playboy" and "playmate". Netscape and Excite operated web based search engines. They sold advertising space to pormographic website operators. In particular, Netscape and Exicte sold the display of banner ads on search results pages that were produced after users entered the trademarked terms. That is, users who typed either of the trademarked terms were given results pages with banner ads for the porm sites.

PEI filed complaint in the U.S. District Court (CDCal) against Netscape and Excite alleging trademark infringement and trademark dilution. The District Court granted summary judgment to Netscape and Excite on both claims. PEI appealed.

On the infringement claim, PEI argued that there is initial interest confusion. That is, by keying adult oriented ads to PEI's trademarks, so that the ads appear immediately after the user enter PEI's trademark, Netscape and Excite actively created confusion regarding the sponsorship of those ads. The Court of Appeals, relying on Brookfield Communications, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036 (9th Cir. 1999), reversed and remanded, holding that there are genuine issues materials issues of fact.

The Appeals Court also reversed and remanded on the trademark dilution claim, holding that there are genuine issues of material fact regarding both the famousness of the marks and the defendants' commercial use of the marks.

This case is Playboy Enterprises, Inc. v. Netscape Communications Corporation, and Playboy Enterprises International, Inc. v. Excite, Inc., Nos. 00-56648 and 00-56662, appeals from the U.S. District Court for the Central District of California, Judge Alicemarie Stotler presiding, D.C. Nos. CV-99-00320-AHS and CV-99-00321-AHS-02.

People and Appointments

1/14. Carolyn Brandon was named VP for Policy of the Cellular Telecommunications & Internet Association (CTIA), effective February 2, 2004. She currently is a partner in the Washington DC office of the law firm of Wilkinson Barker & Knauer. She has also worked for the Federal Communications Commission (FCC) and the House Commerce Committee. See, CTIA release.

1/14. Bob Bolster was named Director for Congressional Affairs at the Cellular Telecommunications & Internet Association (CTIA), effective January 20, 2003. He has worked for the House Financial Services Committee, the General Services Administration, Rep. Lee Terry (R-IA), who is a member of the House Commerce Committee and its Subcommittee on Telecommunications and the Internet, and former Rep. Steve Largent (R-OK), who is now the P/CEO of the CTIA. See, CTIA release.

1/14. Corey Booth was named Chief Information Officer and Director of the Office of Information Technology at the Securities and Exchange Commission (SEC). The SEC stated in a release that Booth "will oversee a comprehensive review of all information technology (IT) efforts and lead the development of a comprehensive, multi-year strategic plan. The IT strategic plan will be designed to support the many new initiatives needed to enhance the agency's programs."

1/14. Mark Stone was named Deputy Chief of the Federal Communications Commission's (FCC) Enforcement Bureau's (EB) Telecommunications Consumers Division. See, FCC release.

1/14. Elizabeth Mumaw was named legal advisor to the Chief of the Federal Communications Commission's (FCC) Enforcement Bureau (EB). She was previously an attorney advisor in the Wireline Competition Bureau's (WCB) Telecommunications Access Policy Division. Before that, she worked in the WCB on common carrier matters such as mergers, Section 271 applications, and the Triennial Review. She has also worked at MCI WorldCom on federal law and public policy issues. See, FCC release.

1/14. Christopher Olsen was named Deputy Chief of the Federal Communications Commission's (FCC) Enforcement Bureau (EB). He will oversee the common carrier enforcement activities of the EB's Market Disputes Resolution Division, Telecommunications Consumers Division and Investigations and Hearings Division. He was previously Assistant Chief of the Market Disputes Resolution Division of the EB. He also previously was a partner in the Washington DC office of the law firm of Howrey Simon Arnold & White. See, FCC release.

More News

1/14. President Bush gave a speech at NASA headquarters in Washington DC in which he outlined his proposals for space exploration. He also argued that space programs lead to technological innovation. He put it this way. "We have undertaken space travel because the desire to explore and understand is part of our character. And that quest has brought tangible benefits that improve our lives in countless ways. The exploration of space has led to advances in weather forecasting, in communications, in computing, search and rescue technology, robotics, and electronics. Our investment in space exploration helped to create our satellite telecommunications network and the Global Positioning System. Medical technologies that help prolong life -- such as the imaging processing used in CAT scanners and MRI machines -- trace their origins to technology engineered for the use in space."

Rep. Rick Boucher1/14. Rep. Rick Boucher (D-VA) (at right), a senior member of the House Commerce Committee and its Subcommittee on Telecommunications and the Internet, commented on the Supreme Court's January 13 opinion [22 pages in PDF] in Verizon v. Trinko. The Supreme Court held that a claim alleging a breach of an ILEC's duty under the 1996 Telecom Act to share its network with competitors does not state a violation of Section 2 of the Sherman Act. See, story titled "Supreme Court Holds That There is No Sherman Act Claim in Verizon v. Trinko", also published in TLJ Daily E-Mail Alert No. 815, January 14, 2003. Rep. Boucher stated in a release that "I applaud the Supreme Court's Trinko decision, in which the Court recognized that violations of the facilities sharing requirements of the Telecommunications Act are not grounds for antitrust claims. To have decided otherwise would have dramatically expanded antitrust law in a manner never intended by Congress. Congress enacted the landmark Telecommunications Act to open local markets to competition, and, as the Court recognized, the comprehensive regulatory scheme administered under the Act is more than adequate to accomplish that objective. Adding a new layer of antitrust liability for regulatory infractions would be inappropriate. Telecommunications companies that violate established antitrust doctrine will continue to be subject to liability under the antitrust laws, but the Court wisely recognized that nothing in the Telecommunications Act creates new antitrust causes of action." Rep. Boucher is also a member of the House Judiciary Committee, which would have jurisdiction over any legislative proposal to create an antitrust remedy for plaintiffs such as Trinko.

Supreme Court Holds That There is No Sherman Act Claim in Verizon v. Trinko

1/13. The Supreme Court issued its opinion [22 pages in PDF] in Verizon v. Trinko, reversing the U.S. Court of Appeals (2ndCir). The Supreme Court held that a claim alleging a breach of an ILEC's duty under the 1996 Telecom Act to share its network with competitors does not state a violation of Section 2 of the Sherman Act. This is a significant victory for the ILECs. See, full story.

Lamy Addresses Doha Development Agenda

1/13. EU Commissioner for Trade Pascal Lamy gave a speech regarding the Doha Development Agenda.

The World Trade Organization (WTO) launched a new round of trade negotiations in Doha, Qatar in 2001. The Fifth Ministerial Conference of the WTO in Cancun, Mexico concluded without reaching a consensus. It met from September 10-14, 2003. The Cancun ministerial meeting was to have specified the negotiating frameworks for attaining the Doha Development Agenda by 2005.

The U.S. State Department has stated that the Cancun ministerial "collapsed" because of an impasse over whether to move ahead on negotiations involving what are called the "Singapore issues": investment, competition, transparency in government procurement, and trade facilitation. See, story titled "WTO Negotiations Collapse in Cancun" in TLJ Daily E-Mail Alert No. 739, September 15, 2003.

Pascal LamyLamy (at right) stated that "In line with the Union's stance in other areas of foreign policy, we remain firmly attached to multilateralism in trade matters. At the same time we pursue bilateral agreements in so far as they are consistent with the priority we accord to multilateral progress at the WTO."

Lamy continued that "We are ready to modify our approach on, for instance, the Singapore issues. We are now offering much greater flexibility for WTO members. Indeed we are ready to remove as many as four of these issues from the single undertaking and leave other WTO members completely free to decide whether they negotiate and sign such agreements. We have also adopted a much more flexible approach on geographical indications and the environment in order to facilitate continued negotiations on these issues."

"We are now in far better shape than at the end of the Cancún conference. All WTO members have publicly expressed clear and firm support for the continuation of the negotiating process."

"That said, though the WTO members have gone a long way to getting the negotiations back on track, we are not yet at the stage of the formal resumption of negotiations. And the Union is almost alone in showing signs of flexibility on matters of substance. Unless all WTO members display true flexibility, there can be no real negotiations. It is simply not enough for one or a few members to be flexible", said Lamy.

On January 12, 2004, the Office of the U.S. Trade Representative (USTR) released a statement [PDF] regarding the Doha Development Agenda. See, story titled "USTR Releases Statement on Doha Development Agenda" in TLJ Daily E-Mail Alert No. 814, January 13, 2004.

Level 3 Files VOIP Petition With FCC

1/13. On December 23, 2003, Level 3 Communications filed a petition with the Federal Communications Commission (FCC) requesting that it forebear from applying the requirements of Section 251(g) and FCC rules to the extent that they might be interpreted to allow local exchange carriers (LECs) to impose interstate or intrastate access charges on internet protocol (IP) traffic that originates or terminates on the public switched telephone network (PSTN), or on PSTN-PSTN traffic incidental thereto.

The Level 3 petition is published in the FCC web site in five parts in PDF. See, part 1, part 2, part 3, part 4, and part 5.

On January 13, 2004, the FCC published a notice in the Federal Register summarizing the petition and setting deadlines for public comments. The FCC notice is published at Federal Register, January 13, 2004, Vol. 69, No. 8, at Pages 1983 - 1984. Comments are due by March 1, 2004. Reply comments are due by March 31, 2004. This is WC Docket No. 03-266.

Level 3's petition states that it "files this petition requesting that the Commission forbear from enforcing its governing statute and rules to the extent that they could be interpreted to permit Local Exchange Carriers (``LECs´´) to impose interstate or intrastate access charges on Internet Protocol (``IP´´) -- Public Switched Telephone Network (``PSTN´´) traffic and on certain PSTN-PSTN traffic that is incidental thereto. The requested forbearance would extend not just to Level 3, but also to all other carriers handling Voice-embedded IP communications that originate or terminate on the PSTN. Level 3 excludes from this forbearance request areas other than those served by an incumbent local exchange carrier (``ILEC´´) that is exempt from Section 251(c) pursuant to Section 251(f)(l)." (Footnotes omitted.)

Level 3 added that "Forbearing, and ending the current legal uncertainty regarding access charges, will ensure that Voice-embedded IP applications and services can develop without needing to retrofit to accommodate the piecemeal and obsolete interstate and intrastate access charge systems. Forbearance will allow innovative Voice-embedded IP applications to continue to blossom and flourish, increase investment, spur product and technological innovation, and drive deployment and demand for advanced services."

James Crowe, CEO of Level 3, stated in a release that "In granting this petition, the FCC would foster development and growth of new VoIP applications by reducing the regulatory uncertainty that currently surrounds Voice over IP". He added that "The existing intercarrier compensation regime is based on implicit subsidies and obsolete conceptions of network architecture and technology ... Indeed, the FCC has already recognized that we need to reform today’s incoherent patchwork of interconnection rules, which treat various carriers differently and which have little basis in underlying costs. It simply does not make sense to compound that system's complexity by forcing VoIP into an already illogical regulatory framework."

Summary of Other VOIP Proceedings at the FCC

1/13. In addition to the Level 3 Communication petition, there are other proceedings currently pending at the Federal Communications Commission (FCC) regarding voice over internet protocol (VOIP), including an AT&T petition, a petition, and a Vonage petition.

Vonage seeks a ruling that its service is an "information service" and that federal policy preempts state action in this area. Vonage filed its petition on September 22, 2003. See, part 1, part 2, part 3, part 4, part 5, and part 6. This is WC Docket No. 03-211.

Vonage has also litigated this issue. On October 16, 2003, the U.S. District Court (DMinn) issued its Memorandum and Order [PDF] in Vonage v. Minnesota Public Utilities Commission, holding that Vonage is an information service provider, and that the MPUC cannot apply state laws that regulate telecommunications carriers to Vonage. The Court wrote that "State regulation would effectively decimate Congress's mandate that the Internet remain unfettered by regulation."

See, story titled "District Court Holds that Vonage's VOIP is an Information Service" in TLJ Daily E-Mail Alert No. 760, October 17, 2003.

AT&T seeks a ruling that access charges do not apply to its service in which calls originate and terminate on circuit switched PSTN facilities, but are routed on internet backbone. AT&T filed its petition [37 pages PDF] on October 18, 2002. This is WC Docket No. 02-361's Free World Dialup (FWD) is a closed network that uses specialized equipment. Traffic is carried by the users' ISPs using broadband connections. seeks a ruling that its service is neither "telecommunications" nor a "telecommunications service". It filed its petition [11 pages in PDF] on February 5, 2003. This is WC Docket No. 03-45.

The FCC may also soon initiate a VOIP related rule making proceeding. The FCC held a one day forum on VOIP on December 1, 2003. At that event, FCC Chairman Michael Powell again stated that the FCC will issue a Notice of Proposed Rulemaking (NPRM) "to inquire about the migration of voice services to IP-based networks and gather public comment on the appropriate regulatory environment for these services". See also, FCC release of November 6, 2003. However, he declined to offer a prediction about when the FCC will release this NPRM.

The FCC has released the agenda for its January 15, 2004 meeting. It does not list consideration of a VOIP related NPRM.

See also, story titled "FCC Holds VOIP Forum", December 1, 2003, also published in TLJ Daily E-Mail Alert No. 790, December 2, 2003.

GSA Audit Faults Government Contracting for Information Technology

1/13. The General Services Administration's (GSA) Regional Inspector General for Auditing, Great Lakes Region, released a memorandum [61 page PDF scan] dated January 8, 2004 and titled "Audit of Federal Technology Service's Client Support Centers."

This audit states that it "identified numerous improper task order and contract awards. In making these awards, CSC officials breached Government procurement laws and regulations, and on a number of occasions, processed procurement transactions for goods and services through the Information Technology Fund that were well outside the fund's legislatively authorized purposes."

Sen. Charles Grassley (R-IA), the Chairman of the Senate Finance Committee, wrote a letter [2 pages in PDF] to Stephen Perry, Administrator of the GSA, regarding this audit.

Sen. Grassley wrote that "I understand that FTS is responsible for contracting for information technology equipment, software and related services for the federal government. Instead, however, the three CSCs examined give every appearance of having run virtually unchecked and amuck, and have committed almost every conceivable contracting irregularity. Incredibly, many of these violations were neither onetime, nor isolated to just a single office. Instead, they seem to reflect an endemic and epidemic pattern of gross mismanagement, failed oversight, a flawed rewards system, and potential malfeasance by some FTS managers and staff."

"As I see it, a thorough housecleaning of FTS is in order -- from top to bottom", concluded Sen. Grassley.

People and Appointments

1/13. Donna Hansberry was named an Assistant to the Commissioner at the Internal Revenue Service (IRS). See, IRS release.

1/13. Richard Speier was named Deputy Chief, Criminal Investigation at the Internal Revenue Service (IRS). See, IRS release.

Supreme Court Returns from Recess

1/12. The Supreme Court returned from the recess that it began on December 15, 2003. It heard oral arguments in pending cases, and released a 29 page order list that announces the denial of petitions for writ of certiorari in several communications and technology related cases.

The Supreme Court heard oral argument in Nixon v. Missouri Municipal League, regarding 47 U.S.C. § 253(a) and state statutes that prohibit political subdivisions from offering telecommunications services. See, story titled "Supreme Court Grants Certiorari in Nixon v. Missouri Municipal League" in TLJ Daily E-Mail Alert No. 687, June 25, 2003, and "Briefs Filed With Supreme Court in Nixon v. Missouri Municipal League" in TLJ Daily E-Mail Alert No. 776, November 11, 2003.

The Supreme Court denied certiorari  in WorldCom, Inc. v. Wisconsin Bell, Inc., No. 03-603, and Bie v. Wisconsin Bell, Inc., No. 03-656. See, Order List [29 pages in PDF] at page 23. These petitions involved the interconnection provisions of §§ 251 and 252 of the Communications Act. The U.S. Court of Appeals (7thCir) issued its split opinion [18 pages in PDF] on August 12, 2003. See, story titled "7th Circuit Holds State Cannot Substitute Tariff Filings for Negotiations to Set Prices and Terms for Interconnection" in TLJ Daily E-Mail Alert No. 717, August 13, 2003.

The Supreme Court denied certiorari in Omnipoint Communications Enterprises v. Zoning Hearing Board, Easttown, No. 03-666. See, Order List [29 pages in PDF] at page 5. This is a cell tower citing case involving application of 47 U.S.C. § 332(c)(7)(B)(i). See, story titled "Third Circuit Rules in Cell Tower Section 332 Dispute" in TLJ Daily E-Mail Alert No. 605, February 17, 2003.

The Supreme Court denied certiorari  in, Inc. v. Missouri, ex rel Nixon, No. 03-507. See, Order List [29 pages in PDF] at page 4.

The Supreme Court also denied certiorari in Charter Communications v. Santa Cruz. See, story below.

Supreme Court Denies Certiorari in Case Involving LFAs and Cable Franchise Transfers

1/12. The Supreme Court denied certiorari in Charter Communications, Inc. v. Santa Cruz County, California, No. 02-1267. See, Order List [29 pages in PDF] at page 21. This case involves the authority of local franchising authorities over cable franchise transfers.

Santa Cruz County refused to consent to the transfer of a cable franchise. Charter Communications then filed a complaint in U.S. District Court (NDCal), and prevailed. (See, 133 F.Supp. 2d 1184.) Santa Cruz County appealed. On September 20, 2002, the U.S. Court of Appeals (9thCir) issued its opinion [13 pages in PDF] reversing the District Court.

The Solicitor General submitted an amicus brief in November urging the Supreme Court to deny the petition for writ of certiorari. The Solicitor General argued that the Ninth Circuit erred, and that "The Ninth Circuit's error in this case could threaten to undermine important federal restrictions on local cable regulation."

However, the Solicitor General reasoned that "The question presented in this case does not appear to have arisen yet in any other appellate case. If the issue is one of genuine significance, it can be expected to arise in other circuits and in other factual settings in the future. This Court might benefit from further analysis by the courts of appeals of cases, like this one, in which a cable franchising authority is found to have acted with mixed motives, some of which are lawful under federal law and some of which are not."

Cato Study Opposes FCC Imposition of Network Neutrality

1/12. The Cato Institute released a study [28 pages in PDF] titled "``Net Neutrality´´ Digital Discrimination or Regulatory Gamesmanship in Cyberspace?" This report is a rebuttal of the network neutrality arguments that have been submitted to the Federal Communications Commission (FCC) by an ad hoc group named the "Coalition of Broadband Users and Innovators" and by academics such as Lawrence Lessig and Timothy Wu.

The CBUI wants the FCC to adopt a rule that prohibits broadband network operators (and particularly cable broadband and DSL service providers) from discriminating. It wants the FCC to mandate that "A broadband network operator shall not, on a discriminatory or unreasonable basis, interfere with or impair subscribers' ability to use their broadband service to access lawful Internet content or services, use applications or services in connection with their broadband service, or attach nonharmful devices to the network."

The Cato report argues that this would be bad policy. See, full story.

USTR Releases Statement on Doha Development Agenda

1/12. The Office of the U.S. Trade Representative (USTR) released a statement [PDF] regarding the Doha Development Agenda.

It states that "The U.S. does not want 2004 to be a lost year for the Doha Development Agenda of World Trade Organization (WTO) negotiations. U.S. Trade Representative Robert B. Zoellick has written to the WTO Ministers responsible for trade (over 140) to suggest a "common sense" approach to advancing negotiations this year."

Robert ZoellickIt further states that the letter of Robert Zoellick (at right) "proposes a WTO Ministerial meeting before the end of this year in Hong Kong. Zoellick plans a round-the-world tour of key capitals in February to meet with Ministers, listen to ideas, and work for progress."

The USTR statement also provides that "With regard to the ``Singapore Issues´´, the letter suggests proceeding with negotiations on trade facilitation, further exploring interest in negotiations on transparency in government procurement, and dropping -- or developing a plan of further study for -- the issues of competition and investment."

Sen. Charles Grassley (R-IA), the Chairman of the Senate Finance Committee, responded in a release. "I appreciate any efforts to move the WTO talks forward, so Ambassador Zoellick's proposals for WTO negotiations in 2004 are very welcome. Negotiations within the World Trade Organization are clearly where U.S. farmers and workers have the most to gain from trade negotiations. But WTO negotiations are complicated. If we want to complete these negotiations within the timeframe established by the Trade Act of 2002, we don't have a lot of time to waste. Trade Promotion Authority must be renewed in 2005. Once renewed, it terminates in 2007. Ambassador Zoellick is right -- we can't afford to make 2004 a lost year. If we want to negotiate a solid agreement and get it passed by the U.S. Congress, we need to get these negotiations moving again. I hope all of our trading partners will seize the opportunity to engage in a realistic way at the negotiating table. If so, we can start making some real progress at the WTO that will benefit Iowa's farmers, workers, and consumers."

USPTO Announces Top Ten Patent Companies

1/12. The U.S. Patent and Trademark Office (USPTO) released its preliminary list of the entities receiving the most patents in 2003. IBM tops the list for the 11th consecutive year. See, USPTO release and summary table below.



1 IBM 3,415
2 Canon 1,992
3 Hitachi 1,893
4 Matsushita 1,786
5 HP 1,759
6 Micron 1,707
7 Intel 1,592
8 Phillips 1,353
9 Samsung 1,313
10 Sony 1,311

Hewlett Packard boasted in a release that it moved up from No. 9 in 2002 to No. 5 in 2003, with a 27 % increase. HP also announced that "it has formed an intellectual property (IP) licensing organization designed to increase revenue and improve technical collaborations with partners."

Steve Fox, HP VP and Deputy General Counsel, Intellectual Property, stated that "we launched a major effort to increase our intellectual property portfolio ... We have been holding 'innovation' workshops designed to encourage the technical workforce to disclose more inventions."

Joe Beyers, VP, Intellectual Property Licensing, stated that "Historically, HP's intellectual property has provided value to the company in the form of innovative products and protection from our competitors ... This approach has served us well, but in many cases we have missed out on the opportunity to gain additional value from HP's inventions beyond product revenue. Capturing these additional opportunities is important to HP as the competitive environment in which we operate continues to intensify. Also, by making HP's intellectual property more broadly available, we can improve our collaboration with other companies."

IBM also touted its first place in the patent ranking. It stated in a release that its extended "its run as the world's most innovative company to eleven consecutive years. Led by growth in patents that fuel the company's latest on demand computing and services offerings, IBM eclipsed the nearest company by more than 1,400 patents."

Nick Donofrio, IBM SVP, Technology and Manufacturing, stated that "IBM's commitment to research and development has driven more than a decade's worth of patent leadership and is a major factor in our emergence as the world's leading IT, services and consulting company ... That said, we consider patents a starting point on the path to true innovation. What differentiates IBM from other companies is our ability to rapidly apply these inventions to new products and offerings that solve the most pressing business challenges of our clients."

Although IBM leads all other companies in new patents every year, its Chairman and CEO recently gave a speech in which he expressed a lack of enthusiasm for the patent system.

Sam Palmisano, the Chairman and CEO of IBM, gave a lengthy speech in Washington DC on October 30, 2003 to the Council on Competitiveness in which he discussed innovation. What was notable about Palmisano's speech was what he did not say. He never argued that according legal protections to inventors incents innovation and investment in innovative endeavors.

Palmisano mentioned patents only once -- to state that IBM gets more than anyone else. He mentioned "intellectual property" only once -- to ask rhetorically, "How can we go beyond traditional notions of ``R&D´´ and intellectual property ..."

A common denominator of most speeches, papers, reports, and books regarding innovation is the argument that giving patent protection to inventors incents innovation. See, related story below, titled "IBM CEO Advocates Government Support for Innovation Ecosystem".

IBM CEO Advocates Government Support for Innovation Ecosystem

1/12. Sam Palmisano, the Chairman and CEO of IBM, gave a speech in Washington DC on October 30, 2003 to the Council on Competitiveness in which he discussed innovation. He stated at the outset that he would address "How it happens, where it happens, and why."

It was a CEO speech -- polished and practiced, and packed with eloquent phrases -- but maddeningly vague on key points. But, he was clear on the many points.

Like many others who have examined innovation, he believes that the study of history is important for understanding this subject. He did not, however, cite any historical works that pertain to innovation. Moreover, most of his few references to history were recent developments in information and bio technology.

He concludes that "There are times and places and certain conditions under which innovation absolutely flourishes." But, he rejects the notion that innovation is "just human genius". He said that "if we study human history, we know that that's simply not true."

Sam PalmisanoIndeed, for Palmisano (at right), there isn't much human about innovation. His speech is about corporations, research universities and governments. And, altogether, in collaboration, and interconnected by networks, they form an "innovation ecosystem". People are merely employees and workers who have skills and hold jobs within the ecosystem.

In listing the numerous factors that have made the U.S. an "engine of innovation", he lists in one bullet point "access to natural resources and labor". Apparently, people come with the land.

But, innovations "emerge from this ecosystem". He never precisely defines this "ecosystem". But, perhaps its meaning is captured in his phrase "a unique sort of cooperation and collaboration among the federal government, national and military labs, private sector R&D efforts, research universities and entrepreneurs."

He also states that "innovations ... require -- not just on invention or discovery -- but the fusion of developments across multiple industries and fields." Moreover, innovation involves "application and exploitation across multiple industries".

Then, he also states that governments can and should endeavor to create conditions that lead to innovation.

So, what can a government do to become more innovative? He lists several items, including "investing in education and job skills", "teaching their citizens the language of modern commerce ... software", building "modern network infrastructures", and entering into "multilateral trade agreements".

He later adds that the U.S. government's role in creating the conditions for innovation includes "basic research", nurturing "strategic partnerships among the private and public sectors, universities and labor", and "building the national infrastructure necessary to participate in the global innovation ecosystem".

What is also notable about his speech is what he left out. First, unlike many others who have examined innovation, he does not identify freedom or democracy as being conditions that support innovation.

Second, while he references "businesses", "company", "business investment", "capital markets", "private sector", and "rule of law", he leaves out many of the topics addressed by those he argue that free markets are essential for innovation. He makes no reference to competitive markets, creative destruction, deregulation, or government transparency. He never makes a statement to the effect that free markets are a necessary condition for innovation.

Third, he did not say that intellectual property rights (IPR) protections promote innovation. He mentioned IPR only twice. In both instances, he diminished its importance. For example, he asked rhetorically, "How can we go beyond traditional notions of "R&D" and intellectual property and identify and nurture the intersections that lead to innovation?" He seems to be saying that traditional notions of intellectual property do not promote innovation.

He also states at one point that IBM receives more patents than any other company. But, he makes no comments about the importance of patent protection, or the value of patents to IBM.

Nor did not state that SCO filed a complaint against IBM in state court in Utah alleging misappropriation of trade secrets, tortious interference, unfair competition and breach of contract in connection with IBM's alleged use of proprietary UNIX code.

Tech Law Journal began a series of articles innovation and public policy before the holidays. The article continues this series.

People and Appointments

Jon Dudas1/12. Jon Dudas (at right) became acting Under Secretary of Commerce for Intellectual Property and Acting Director of the U.S. Patent and Trademark Office (USPTO). He replaces the former Under Secretary and Director, James Rogan. Dudas has been Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the USPTO for two years. Previously, he worked for the House Judiciary Committee and its Subcommittee on Courts, the Internet and Intellectual Property. See, USPTO release.

More News

1/12. The Brookings Institution announced the forthcoming publication a book titled Point, Click, and Vote
The Future of Internet Voting
, by Michael Alvarez and Thad Hall. See, Amazon and Brookings order pages. Amazon states that "This item has not yet been released. You may order it now and we will ship it to you when it arrives."

1/12. The Department of Commerce's (DOC) Bureau of Industry and Security (BIS) extended the deadline to submit comments regarding its notice of proposed rulemaking (NPRM) regarding amending the Export Administration Regulations (EAR) to implement a revised version of the BIS's Simplified Network Application Processing (SNAP+) system. This proposed rule also would mandate use of SNAP+ for all filings of Export License applications (except Special Comprehensive Licenses), Reexport Authorization requests, Classification requests, Encryption Review requests, and License Exception AGR notifications, unless the BIS authorizes paper filing for a particular user or transaction. See, notice in the Federal Register, November 12, 2003, Vol. 68, No. 218, at Pages 64009-64023 (setting January 12, 2003 deadline), and notice in the Federal Register January 12, 2004, Vol. 69, No. 7, at Page 1685 (extending deadline to February 12).

1/12. The Electronic Privacy Information Center (EPIC) submitted a comment [9 pages in PDF] to the Department of Homeland Security (DHS) regarding a DHS announcement regarding the Arrival Departure Information System (ADIS). See, DHS's notice in the Federal Register, December 12, 2003, Vol. 68, No. 239, at Pages 69412 - 69414. This DHS stated that "This notice addresses the previously established ADIS system, a portion of which is the U.S. Visitor and Immigrant Status Indicator Technology (US-VISIT) program. This notice allows the ADIS system to collect biometric and biographic data for US-VISIT." The EPIC submitted its comment "to ask that DHS not exempt ADIS from any Privacy Act requirements, to urge the agency to reduce its 100-year data retention proposal, and to consider the significance of international privacy standards in the collection and use of personal information by U.S. agencies on non-U.S. citizens."

Go to News from January 6-10, 2004.