News from August 11-15, 2004

FCC Reports Another Decline in Telephone Subscribership

8/13. The Federal Communications Commission's (FCC) Wireline Competition Bureau's (WCB) Industry Analysis and Technology Division (IATD) released its statistical report [53 pages in PDF] titled "Telephone Subscribership in the United States (Data Through March 2004)".

This report states that the percentage of households subscribing to telephone service is 94.2%. This data is based upon a question asked by the Census Bureau: "Is there a telephone in this house/apartment?". This is down .5% from the November 2003 survey. Moreover, this is the third straight decline. In addition, given the large sample sizes of Census Bureau surveys, this .5% decline is statistically significant.

The FCC report (see Table 1 and Chart 1) shows that from the early 1980s through about 2002 or 2003 telephone subscribership grew steadily from 91.4% to 95.5%.

However, neither the data in this report, nor the text that accompanies it, provide an explanation for the recent downward trend.

The report does not attempt to correlate individuals' decisions whether or not to subscribe to telephone service with their decisions whether or not to subscribe to or use other communications technologies. In fact, the report contains no data on subscription to or use other communications services or applications, such as broadband internet access via cable modem, VOIP applications, pagers, blackberries, or wireless devices with internet access.

In contrast, this report, like the reports that have preceded it, contain considerable statistical detail on telephone subscribership by income level, race, and region. Thus, the data collected and reported by the Census Bureau and the FCC examine the effects of income, race, and regional and urban/rural variations upon telephone subscribership, but not the effect of fungible or subsitutional technologies.

The Census Bureau and FCC data and reports once provided an accurate measure of the extent to which the U.S. population has access to easy to use, inexpensive, real time communications. With the deployment and uptake of other communications technologies, the Census Bureau and FCC methodology is likely to become increasingly obsolete and irrelevant as a measure of access to communications.

See also, FCC release [2 pages in PDF].

District Court Finds No Federal Jurisdiction in Contract Claim Pertaining to Ownership of Copyright

8/13. The U.S. District Court (DMass) issued its Memorandum & Order [7 pages in PDF] in RMB Technologies v. Lash, a case involving whether there is federal jurisdiction, based upon the Copyright Act, in a suit for breach of contract, and other state law claims, that is based upon a dispute over ownership of a software program. The District Court held that there is federal jurisdiction, and remanded the case to the state court.

RMB Technologies develops marketing and sales management solutions for retail banks and financial institutions. RMB hired Robert Lash to work on the development of a software program that would enable branch banks to communicate with each other. RMB and Lash entered into an employment contract that provided that any work performed by Lash while under the agreement, whether copyrightable, patentable or not, would be the exclusive property of RBM. Lash asserts that he wrote the source code for the program. Lash and RMB quarreled, and he terminated his employment with RMB. He asserted that RMB breached the employment contract. He also asserted ownership of the copyright in the program, and demanded compensation for the sale or use of the program.

RMB filed a complaint in Middlesex Superior Court in the state of Massachusetts alleging five state law causes of action -- breach of contract, conversion, misappropriation of trade secrets and confidential information, declaratory judgment, and for violation of Mass. Gen. Laws ch. 272, § 99(Q) regarding wire communications.

Lash removed the action to the District Court, and asserted numerous counterclaims, including that the contract is void, breach of contract, copyright infringement, and declaratory judgment that he owns the copyright.

Lash simultaneously filed a separate action in the District Court against RMB alleging copyright infringement, seeking an accounting, and seeking a declaratory judgment that he is the owner of the copyright.

The federal courts have subject matter jurisdiction over claims that arise under the Constitution or federal law, including the Copyright Act. The Court wrote that "Whether the claim arises under federal law is determined by reference to the complaint alone; the existence of a potential defense based on federal law does not confer a right to remove."

The Court continued that "On its face, RBM's complaint does not state a federal question. Although RBM's breach of contract claim is related to copyright law insofar as the contract RBM alleges Lash breached purportedly allocated ownership of a copyrighted program, this is not enough to satisfy the ``arising under´´ requirement."

The Court reasoned that "the crux of RBM's claim is whether a valid contract existed between the parties and whether Lash breached that contract. RBM asserts that because the contract is valid, Lash's work product is the exclusive property of RBM and he does not have the right to claim ownership of the copyright to ``Merchandising Manager.´´ In opposition, Lash asserts that if he were properly exercising ownership rights over the software then there can be no breach of contract. Lash's reasoning is circular because he ignores the fact that his right to claim ownership depends on an initial resolution of the underlying contract issue."

The Court added that "If, after resolving the essential contract issue, the state court finds it necessary to examine federal copyright law to resolve the dispute, it would certainly be within the court’s purview to do so."

The Court also rejected Lash's argument that federal copyright law preempts RMB's claims of misappropriation of trade secrets and confidential information cause of action, and that this provides a basis for federal jurisdiction.

This case is RMB Technologies, Inc. v. Robert Lash, D.C. No. 04-10062-GAO, Judge George O'Toole presiding.

Pinkos Named USPTO Deputy Director

8/13. Stephen Pinkos was named Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the U.S. Patent and Trademark Office (USPTO).

Like the recently appointed USPTO Director, Jon Dudas, he is very young, from Chicago, and has spent most of his short professional career on Capitol Hill. Neither Dudas nor Pinkos is an engineer, scientist, or technologist.

Pinkos graduated from Miami University in Ohio in 1992 with a degree in political science, and from DePaul University College of Law in Chicago, Illinois in 1995. From 1995 through 1998 he worked for Rep. James Sensenbrenner (R-WI) as Legislative Assistant and then Legislative Director. At the time, Rep. Sensenbrenner was a senior member of the House Judiciary Committee. He became Chairman in 2001. From 1998 through 2001 Pinkos worked for Rep. Henry Hyde (R-IL) as Counsel. Rep. Hyde was the Chairman at that time. Pinkos then worked as Staff Director and Deputy General Counsel of the Committee.

See also, story titled "Senate Judiciary Committee Holds Hearing on Nomination of Dudas to Head the USPTO" in TLJ Daily E-Mail Alert No. 894, May 10, 2004. See also, USPTO release.

More FCC News

8/13. The Federal Communications Commission (FCC) published a notice in the Federal Register that describes, and sets comment deadlines for, its its Notice of Inquiry (NOI) [15 pages in PDF] on issues relating to the presentation of violent programming on television and its impact on children. Comments due by September 15, 2004 and reply comments are due by October 15, 2004. This NOI is FCC 04-175 in MB Docket No. 04-261. See, Federal Register, August 12, 2004, Vol. 69, No. 155, at Pages 49899 - 49904.

8/13. The Federal Communications Commission (FCC) published a notice in the Federal Register that describes, and sets comment deadlines for, its notice of proposed rulemaking (NPRM) to examine the proper number of end user common line charges that carriers may assess upon customers that obtain derived channel T-1 service where the customer provides the terminating channelization equipment and upon customers that obtain Primary Rate Interface (PRI) Integrated Service Digital Network (ISDN) service. Comments due by October 12, 2004 and reply comments are due by November 12, 2004. This NPRM is FCC 04-174 in WC Docket No. 04-259 and RM-10603. See, Federal Register, August 13, 2004, Vol. 69, No. 156, at Pages 50141 - 50146.

More News

8/13. The National Telecommunications and Information Administration (NTIA) published in its web site transcripts, pictures, and video of its July 14, 2004 meeting titled " Forum: Developing a Safe Place on the Internet for Children".

8/13. The Department of Justice's (DOJ) Office of the Solicitor General filed its brief in opposition to granting certiorari with the Supreme Court in Visa v. USA, an antitrust case involving the membership rules of Visa and Mastercard's payment card networks. The U.S. District Court (SDNY) held that Visa and Mastercard's exclusionary rules violate Section 1 of the Sherman Act. Visa and Mastercard appealed. See, DOJ brief. The U.S. Court of Appeals (2ndCir) affirmed. See, opinion. Visa and Mastercard petitioned the Supreme Court for writ of certiorari. This case is Supreme Court No. 03-1521. See also, Mastercard's case summary.

8/13. The Federal Trade Commission (FCC) published a notice in the Federal Register that describes, and sets the comment deadline for, its notice of proposed rulemaking (NPRM) to implement the Controlling the Assault of Non-Solicited Pormography and Marketing Act of 2003 (CAN-SPAM Act). Comments due by September 13, 2004. There is no reply comment period. See, Federal Register, August 13, 2004, Vol. 69, No. 156, at Pages 50091 - 50107.

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8/12. The Federal Communications Commission (FCC) released an Order and Consent Decree that fines Emmis Communications Corporation $300,000 in connection with citizen complaints about its broadcast of obscene, indecent or profane material, in violation of 47 C.F.R. § 73.3999 and 18 U.S.C. S 1464. In FCC nomenclature, the fine is a "voluntary contribution". Emmis also agreed to "conduct training on obscenity and indecency for all on-air TV and radio talent and employees who materially participate in programming decisions". The FCC dismissed all pending complaints with prejudice. FCC Commissioner Michael Copps wrote in a separate statement that "I am most concerned about the effect of today's decision on the Commission's license renewal process. The totality of a broadcasters' record is pertinent and should be considered when licenses are renewed. Today's decision takes an entire part of the record off the table." See also, FCC release.

Blaster Worm Defendant Pleads Guilty

8/11. Jeffrey Lee Parson plead guilty in U.S. District Court (WDWash) to intentionally causing and attempting to cause damage to a protected computer in violation of 18 U.S.C. §§ 1030.

The Office of the U.S. Attorney for the Western District of Washington stated in a release [PDF] that "According to the plea agreement, PARSON admitted that he created his worm by modifying the original MS Blaster worm and adding a mechanism that allowed him to have complete access to infected computers. PARSON then infected approximately fifty computers that he had previously hijacked with his worm. From those fifty computers, PARSON's worm spread to other individual computers. PARSON's worm then directed those infected computers to launch an attack against a Microsoft web site."

See also, criminal complaint filed on August 28, 2003, and story titled "FBI Makes Arrest In Connection With Variant of Blaster Worm" in TLJ Daily E-Mail Alert No. 730, September 2, 2003.

People and Appointments

8/11. Federal Trade Commission (FTC) Commissioner Mozelle Thompson released a statement. He wrote that "On Friday, August 6, 2004, I submitted my resignation as Commissioner of the Federal Trade Commission, effective August 31st." He will be replaced by Jonathan Liebowitz.

8/11. D'wana Terry was named Chief of Staff and Associate Bureau Chief of the Federal Communications Commission's (FCC) Wireless Telecommunications Bureau (WTB). She had been the Chief of the WTB's Public Safety and Critical Infrastructure Division (PSCID). The FCC stated in a release [PDF] that she will "oversee strategic and long-range planning, assist in Bureau management, provide staffing and support for the Bureau Chief, and advise the Bureau Chief on key policy initiatives". Michael Wilhelm was named the new Chief of the PSCID. The FCC stated in a release [PDF] that he will "oversee policy, regulatory and licensing matters related to public safety entities, the Nation’s critical infrastructure industries, and private wireless radio services". Before joining the FCC, Terry worked for the law firm of Dow Lohnes & Albertson, and Wilhelm worked for the law firm of Verner Liipfert, which is now a part of Piper Rudnick.

8/11. Kevin Brock was named Assistant Director for the Office of Intelligence at the Federal Bureau of Investigation (FBI). He was previously the Special Agent in Charge of the Cincinnati Division. He has worked for the FBI since 1983. See, FBI release.

More News

8/11. President Bush spoke at an event in Albuquerque, New Mexico. One of the topics that he discussed was computer programs that assist visually impaired users. He said that "one of the great advances of our era is technology. There's fantastic technological opportunities for the visually-impaired to be able to have a computer that speaks to them." He continued that "one thing we can do is help members of our community who need this kind of program. We can help them with financial aid to buy them." He added that "the role of government is to help people help themselves." See, transcript.

8/11. The Department of Justice's (DOJ) Antitrust Division announced that it has, along with BellSouth and SBC, "reached an agreement to seek a modification to a consent decree that currently prohibits the companies from reacquiring previously divested spectrum licenses in California and Indiana. The proposed modification would allow SBC and BellSouth, through their joint venture Cingular Wireless LLC, to reacquire certain of the divested spectrum licenses as part of their planned acquisition of AT&T Wireless Services Inc., which is currently under separate investigations by the Department and the Federal Communications Commission. The requested modification, which was filed today in the U.S. District Court in Washington, D.C. and which must be approved by the court, is subject to the condition that the companies not acquire control over other spectrum currently being used by AT&T Wireless in five of the license areas in Indiana." See, DOJ release.

8/11. The Federal Communications Commission (FCC) filed its opposition to the petition for writ of mandamus [14 pages in PDF] with the U.S. Court of Appeals (DCCir) in In re Mid-Rivers Telephone Cooperative. Mid-Rivers is a local exchange carrier (LEC) in the state of Montana. US West is also a LEC. In February of 2002 Mid-Rivers filed a petition with the FCC in which it asserted that it is entitled to be reclassified as the incumbent local exchange carrier (ILEC), within the meaning of 47 U.S.C. § 251(h)(2), in Terry, Montana. The FCC has not yet acted on Mid-Rivers' petition. Mid-Rivers filed a petition for writ of mandamus with the Appeals Court to compell the FCC to act. The outcome of these proceedings has consequences for the FCC's universal service subsidy system. The case is App. Ct. No. 04–1163.

Go to News from August 6-10, 2004.