TLJ News from June 1-5, 2006

NAB Wants FCC to Investigate Availability of Indecent Satellite Radio Content to Nonsubscribers

6/5. David Rehr, P/CEO of the National Association of Broadcasters (NAB), sent a letter [PDF] to Federal Communications Commission (FCC) Chairman Kevin Martin in which he argued that the different regulatory treatment of terrestrial radio and satellite radio "appears increasingly unjustifiable, particularly in light of the availability of satellite radio content to nonsubscribers". He asked the FCC to "open an investigation".

He wrote that satellite radio is available to nonsubscribers "in many cars from major rental car companies". He added that satellite radios are installed in some new cars, with free trial subscriptions provided to car purchasers.

He also wrote that "interference from satellite radio devices is causing ``bleed through´´ so that nonsubscribers listening to FM radio, especially in their cars, receive satellite radio programming via FM frequencies, at least for limited periods of time. According to some reports, this interference can affect car radios at distances of one quarter mile or more from the satellite radio device. Consumers listening to National Public Radio and Christian programming on noncommercial stations at the lower end of the FM spectrum have been particularly subject to the receipt of unwelcome satellite programming that could clearly fall within the FCC’s definition of indecent material."

He said that because of this, "radio broadcasters are concerned that this interference problem may subject them to indecency complaints and investigations."

See also, NAB release.

Full House Scheduled to Consider COPE Act

6/5. The House Republican leadership has scheduled consideration of HR 5252, the "Communications Opportunity, Promotion, and Enhancement Act of 2006" (COPE Act), by the full House for later this week. See, Republican Whip Notice.

In addition, the House Rules Committee will meet at 3:30 PM on Wednesday, June 7, to adopt a rule for consideration of the COPE Act.

On Monday, June 5, Rep. John Dingell (D-MI), the ranking Democrat on the House Commerce Committee (HCC), and Rep. Ed Markey (D-MA), the ranking Democrat on the HCC's Subcommittee on Telecommunications and the Internet, sent a letter [2 pages in PDF] to members of the House in which they rebut arguments advanced by proponents of the COPE Act.

This bill would, among other things, establish a national cable franchise, provide that the Federal Communications Commission (FCC) is authorized to enforce its August 2005 policy statement [3 pages in PDF] regarding network neutrality through case by case adjudicatory proceedings, extend the E-911 regulatory regime, and other legacy regulatory regimes, to voice over internet protocol (VOIP) service, and provide that state and local entities may provide any telecommunications, information or cable service.

See also, story titled "Commerce Committee Democrats Write Statement on COPE Act" in TLJ Daily E-Mail Alert No. 1,364, May 5, 2006; story titled "Amendment by Amendment Summary of Full Committee Mark Up of COPE Act" in TLJ Daily E-Mail Alert No. 1,360, April 28, 2006; and stories titled "House Subcommittee Approves COPE Act", "House Subcommittee Rejects Network Neutrality Amendment", and "Amendment by Amendment Summary of Subcommittee Mark Up of COPE Act" in TLJ Daily E-Mail Alert No. 1,344, April 6, 2006.

McDowell Names Acting Legal Advisors

6/5. The Federal Communications Commission's (FCC) newest Commissioner, Robert McDowell, named Dana Shaffer, Angela Giancarlo, and Cristina Pauzé to be his acting Legal Advisors. See, FCC release [PDF].

Robert McDowellMcDowell (at left) was confirmed by the Senate on May 26, and took the oath of office on June 1.

Shaffer will be his acting advisor on wireline issues. She was previously an interim legal advisor for Commissioner Deborah Tate. Before that she was a Deputy Bureau Chief in the FCC's Wireline Competition Bureau. She has also been President of the Southeastern Competitive Carriers Association and President of the Tennessee Telecommunications Association.

Giancarlo will be his acting advisor on wireless issues. She was previously Associate Chief for Spectrum Policy in the FCC's Wireless Telecommunications Bureau's Public Safety and Critical Infrastructure Division. Before that, she worked for the law firm of Hogan & Hartson.

Pauzé will be his acting advisor on media issues. She was previously an Associate Bureau Chief in the FCC's Media Bureau. Before that she worked for the Washington DC office of the law firm of Morrison & Foerster, the National Telecommunications and Information Administration (NTIA), and Teleglobe USA.

Supreme Court Denies Cert in Trade Protectionism Case

6/5. The Supreme Court denied certiorari in Tokyo Kikai Seisakusho, Ltd. v. Goss International Corp., a case involving trade protectionism in the U.S. in the market for newspaper printing presses. See, Order List [10 pages in PDF] at page 2.

Tokyo Kikai Seisakusho (TKS), a Japanese corporation, and Goss International, a Delaware corporation, are competitors that both sell large printing presses to newspaper publishers. TKS sold presses at lower prices than Goss. TKS's customers have included the Wall Street Journal and the Washington Post.

Goss filed a complaint in U.S. District Court (NDIowa) against TKS and other foreign companies alleging violation of the Antidumping Act of 1916, which is codified at 15 U.S.C. § 72. Following a jury trial, the District Court entered judgment for Goss.

The U.S. Court of Appeals (8thCir) issued its opinion [32 pages in PDF] on January 23, 2006, affirming the District Court. And, the Supreme Court has now denied TKS's petition for writ of certiorari. This lets stand the judgment of the Court of Appeals.

This case is App. Ct. No. 04-2604, and Supreme Court No. 05-1358. See also, Supreme Court docket.

Supreme Court Denies Cert in Cingular v. Mendoza

6/5. The Supreme Court denied certiorari in Cingular Wireless v. Mendoza, a case involving the enforceability of arbitration clauses in consumer contracts. Cingular sought review of a ruling of an appellate court in California that held that for a contractual arbitration clause to be enforceable, class relief must be available, as must injunctive relief on behalf of the general public.

Had the Supreme Court granted certiorari, it could have ruled on whether the Federal Arbitration Act (FAA), which is codified at Title 9, Chapter 1, §§ 1-16, preempts state laws and rulings affecting arbitration provisions in consumer contracts., which uses arbitration clauses in a variety of online contracts, filed an amicus brief with the U.S. Supreme Court in which it argued that if California's ruling is not overturned, this will end the use of consumer arbitration in California.

The U.S. Supreme Court denied a petition for writ of certiorari to the California Court of Appeal (1/5), which issued the opinion at issue on October 3, 2005. The Court of Appeal followed the California Supreme Court opinion in Discover Bank v. Superior Court, 113 P.3d 1100 (Cal. 2005). See also, the Court of Appeal's opinion [MS Word] in Parrish v. Cingular Wireless of May 18, 2005.

The Cingular case involves arbitration clauses in wireless telephone service agreements. However, several amicus briefs submitted to the Supreme Court reveal that the California ruling also impacts a wide range of other consumer contracts.

The U.S. Chamber of Commerce submitted an amicus brief [27 pages in PDF] arguing the interests of businesses generally. The American Bankers Association and the Pacific Legal Foundation also submitted amicus briefs., RealNetworks, and Directv filed a joint amicus brief in which they too urged the Supreme Court to grant Cingular's petition for writ of certiorari.

This brief explains that " relies on arbitration clauses in a variety of online contracts that govern its relationships with both businesses and consumers. Examples include the Marketplace Participation Agreement, which governs the activities of more than one million active sellers on the website; the Associates Program Operating Agreement, which governs’s relationship with hundreds of thousands of third-party websites that feature hyperlinks to in return for a share of revenue generated from purchases made using those hyperlinks; and’s website Conditions of Use, which generally applies to the online shopping activities of more than 50 million active customer accounts at"

This brief adds that "RealNetworks relies on arbitration clauses in its End-User License Agreements for both software products and subscription services."

These three amici argued that arbitration is "faster, simpler and less expensive than litigation", and that this is reflected in lower prices for consumers.

Amazon, RealNetworks and Directv argued that "By conditioning the enforceabilty of arbitration agreements on a defendant’s amenability to class proceedings, Parrish (and the California decisions on which it relies) effectively destroys the utility of arbitration and rewrites tens of millions of arbitration contracts without consent of the contracting parties." (Parentheses in original.)

They added that "If Parrish and the California precedent on which it relies are not reviewed and reversed by the Court, Amici curiae will have little option but to reconsider their reliance on arbitration as an alternative to litigation."

The U.S. Chamber wrote in its brief that "superimposing a class-action requirement onto contractual agreements to arbitrate individually will effectively eliminate the virtues of arbitration, while multiplying the stakes exponentially. The risk to businesses of litigating a class action in the arbitral forum is simply too high, while the benefits of doing so are non-existent. Hence, if allowed to stand, the California Supreme Court’s class-arbitration requirement may result in the wholesale abandonment of arbitration in a huge swath of consumer-business transactions, driving up costs, and hence prices, accordingly."

This case is Cingular Wireless v. Astrid Mendoza, et al., Sup. Ct. No. 05-1119, a petition for writ of certiorari to the Court of Appeal of the State of California, First Appellate District, Division Five. The Court of Appeals number is A105518. See also, U.S. Supreme Court docket.

On March 27, 2006, the Institute for Legal Reform published a ranking [PDF] of state judicial systems based on a telephone survey of 1,456 attorneys at large companies. This study was conducted by The Harris Poll for the U.S. Chamber Institute for Legal Reform. California ranked 44th. See, full report [113 pages in PDF] titled "2006 U.S. Chamber of Commerce State Liability Systems Ranking Study", U.S. Chamber release, and story titled "U.S. Chamber of Commerce Study Ranks State Court Systems" in TLJ Daily E-Mail Alert No. 1,338, March 29, 2006.

People and Appointments

6/5. Andrew Vollmer was named Deputy General Counsel of the Securities and Exchange Commission (SEC). He is currently a partner in the Washington DC office of the law firm of Wilmer Hale. He replaces Meyer Eisenberg. Also, Brian Cartwright remains General Counsel. See, SEC release.

6/5. Jeffrey Risinger was named acting Executive Director of the Securities and Exchange Commission (SEC). See, SEC release.

More News

6/5. The Supreme Court denied a petition for writ of certiorari in Technology Licensing Corp. v. U.S. District Court for the Northern District of California, a case regarding the right to a jury trial in patent cases. The U.S. Court of Appeals (FedCir) issued its divided opinion [22 pages in PDF] on September 12, 2005, denying a petition for writ of mandamus from the U.S. District Court (NDCal), which had denied a request for a jury trial. This case is Sup. Ct. No. 05-1248  See, Order List [10 pages in PDF] at page 2, and docket.

6/5. The U.S. Court of Appeals (2ndCir) issued its opinion [33 pages in PDF] in Kirch v. Liberty Media, affirming in part, and vacating in part, the District Court's judgment dismissal of all of Leo Kirch's complaint, for failure to state a claim.

6/5. Federal Reserve Board (FRB) Chairman Ben Bernanke gave a speech in Washington DC.  He stated that "the U.S. economy is entering a period of transition.  For the past three years or so, economic growth in the United States has been robust, reflecting both the ongoing re-employment of underutilized resources as well as the expansion of the economy’s underlying productive potential, as determined by factors such as productivity trends and the growth of the labor force." He added that "It bears emphasizing that productivity growth seems likely to remain strong, supported by the diffusion of new technologies, capital investment, and the creative energies of businesses and workers."

6/5. The National Institute of Standards and Technology (NIST) released its Draft Special Publication 800-97 [huge PDF] titled "Guide to IEEE 802.11i: Robust Security Networks". The deadline to submit comments is July 7, 2006.

People and Appointments

Rep. Rick Boucher6/3. Rep. Rick Boucher (D-VA) (at right) and Amy Houslohner were joined in holy matrimony. See, Rep. Boucher's release. Rep. Boucher is a member of the House Commerce Committee and its Subcommittee on Telecommunications and the Internet, and the House Judiciary Committee and its Subcommittee on Courts, the Internet and Intellectual Property. He is a sponsor of many technology related bills, including HR 5417, the "Internet Freedom and Nondiscrimination Act of 2006". Houslohner is news editor of the The Galax Gazette, a newspaper based in Galax, a small town in western Virginia.

Music Licensing, Satellite Radio, and Perform Act Debated

6/2. The Progress and Freedom Foundation (PFF) hosted a panel discussion titled "The Role of Music Licensing in the Digital Age" on Capitol Hill.  The speakers were Michael Petricone (Consumer Electronics Association), Mitch Glazier (Recording Industry Association of America), Christian Castle, and Lee Knife (Digital Media Association). Patrick Ross (PFF) moderated. The audience included Congressional staffers and many of the senior attorneys from the Copyright Office (CO).

Much of the discussion focused on satellite broadcasting, the lawsuit brought last month by the members of the RIAA against XM Satellite Radio, and pending bills known as the Perform Act.

See also, related stories in this issue titled "Summary of the Sen. Feinstein's Perform Act" and "Summary of the RIAA Lawsuit Against XM Satellite Radio".

See, full story.

Summary of the Sen. Feinstein's Perform Act

6/2. On April 25, 2006, Sen. Dianne Feinstein (D-CA), Sen. Lindsay Graham (R-SC), and Sen. Bill Frist (R-TN) introduced S 2644, the "Platform Equality and Remedies for Rights Holders in Music Act of 2006".

The bill's title produces the acronym of PEARFRHIM, which is vaguely similar to PERFORM. Hence, Sen. Feinstein has also named this bill the "Perform Act of 2006".

On May 11, 2006, Rep. Howard Berman (D-CA) and Rep. Mary Bono (R-CA) introduced HR 5361, a similar, but not identical, bill in the House, also named the Perform Act. There is also language in the large telecom reform bill sponsored by Sen. Ted Stevens (R-AK) and Sen. Daniel Inouye (D-HI) that addresses this topic.

Sen. Feinstein's bill would amend 17 U.S.C. § 112, regarding ephemeral recordings, and 17 U.S.C. § 114, regarding exclusive rights in sound recordings. It addresses content protection, and the collection of statutory licenses under Section 114.

Sen. Diane FeinsteinSen. Feinstein (at right) stated on April 25 that this legislation is needed because there are now new technologies for "music radio programs provided over the Internet, cable, and satellites", yet the existing intellectual property laws do not provide for the same payments in all media. She said that there is now a problem of "outdated music licensing laws". See, Congressional Record, April 25, 2006, at Pages S3509-S3510.

She said that "as these new business models and technologies are developed we must ensure that the artists and musicians who create and perform the music continue to be fairly compensated for their works. Unfortunately, some of the new innovations have been used to supplant music sales and avoid fair compensation to the songwriters and performers."

Sen. Feinstein continued that "a radio service simply allowed music to be performed and listened to by an audience. However, many new services using the new digital transmissions and new technological devices have allowed consumers to also record, manipulate, and collect individual music play-lists off their radio-like services".

She added that "The government granted a compulsory license for radio-like services by Internet, cable, and satellite providers in order to encourage competition and new products. However, as new innovations alter their services from a performance to a distribution the law must respond."

In addition, the Senate Judiciary Committee (SJC) held a hearing April 26, 2006, titled "Parity, Platforms, and Protection: The Future of the Music Industry in the Digital Radio Revolution". See, prepared statement of Sen. Patrick Leahy (D-VT) and prepared statement of Sen. Feinstein. For hyperlinks to the prepared testimony of witnesses, see the SJC's web page for this hearing.

Sen. Leahy wrote in his statement that "The statutory license in Section 114 is complicated. Nobody would deny that. Maybe it is too complicated, and maybe it is outdated. Maybe we in Congress should take a new approach to this whole situation. Congress has legislated in a piecemeal fashion, trying to work reasonable and effective changes to the licensing scheme when new technologies have changed the music marketplace. Maybe it is time for all of us, both those of us up here on the dais and those of you at the witness table, to step back and try to consider music licensing from its first principles. Maybe we should primarily focus not on the technologies that are delivering music today, but on the rights at stake."

Rep. Howard BermanRep. Berman (at left) issued a release at the time of the introduction of his bill. It states that "Cable, satellite, and Internet radio services are granted a compulsory license to broadcast (perform) music as long as they pay the statutorily defined fee (or another negotiated rate) and abide by the terms and conditions of the government license. However, the terms of the license are different. This bill is designed to create parity among the technologies so they may compete on the same playing field to provide consumers their choice of music, anytime, in any place, in any format." (Parentheses in original.)

Rep. Berman's release adds that "Certain features of the new devices bypass the marketplace by allowing consumers to turn broadcasts into downloads, creating an unlicensed music library without adequately paying the artist." He stated that "To preserve the legitimate music marketplace, we must reserve downloading capability for those services that appropriately pay for it."

Exclusive Rights, Limitations, and Fees. 17 U.S.C. § 106, titled "Exclusive rights in copyrighted works", provides that "the owner of copyright ... has the exclusive rights to do and to authorize any of the following:
(1) to reproduce the copyrighted work in copies or phonorecords;
(2) to prepare derivative works based upon the copyrighted work;
(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;
(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;
(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and
(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

Then, Sections 112 and 114 provide limitations upon the exclusive rights of Section 106 that are relevant to the Perform Act, and debates over music licensing.

17 U.S.C. § 112 is titled "Limitations on exclusive rights: Ephemeral recordings".

17 U.S.C. § 114, titled "Scope of exclusive rights in sound recordings", provides many limitations to the exclusive rights provided by Section 106. It exempts certain public performances of sound recordings by radio broadcasters. It also provides for a collection of statutory licenses for subscription radio satellite services, interactive services, and cable services.

Sen. Feinstein's bill deletes Subsection 114(f)(1), which pertains to "determining reasonable terms and rates of royalty payments for subscription transmissions by preexisting subscription services and transmissions by preexisting satellite digital audio radio services".

The bill also makes numerous other changes. Sen. Feinstein summed up their effect. First, "all companies covered by the government license created in Section 114 would be required to pay a fair market value for use of music libraries rather than having different rate standards apply based on what medium is being used to transmit the music". Second, "if a company wants to change its service from a performance to a distribution then they no longer are covered by the government license and must go to the record companies directly to negotiate a licensing agreement through the market."

The bill does not affect the performance of sound recordings by terrestrial radio broadcasters. Sen. Feinstein added that "The only application to broadcasters would be if they were to act as webcasters and simulcast their programs over the Internet, in which case they would be treated the same as all other Internet radio providers."

Content Protection. Sen. Feinstein's bill would add to 17 U.S.C. § 114(d)(2)(A) a new subsection (iv) that provides that certain transmissions that do not take steps to protect content are not subject to statutory licensing. That is, without the statutory license, a service provider would have to negotiate a contract with the music companies for the licensing of their works.

Sen. Feinstein said that her bill would also "establish content protection -- all companies would be required to use reasonably available, technologically feasible, and economically reasonable means to prevent music theft. In addition, a company may not provide a recording device to a customer that would allow him or her to create their own personalized music library that can be manipulated and maintained without paying a reproduction royalty. This does not mean such devices cannot be made or distributed. It simply means that the business must negotiate the payment for the music through the market rather than under the statutory license."

And, she said that "any recording the consumer chooses to do manually will still be allowed".

The current language of the statute provides that "The performance of a sound recording publicly by means of a subscription digital audio transmission not exempt under paragraph (1), an eligible nonsubscription transmission, or a transmission not exempt under paragraph (1) that is made by a preexisting satellite digital audio radio service shall be subject to statutory licensing, in accordance with subsection (f) if ..."

The statute then enumerates three circumstances. Sen. Feinstein's bill would add a fourth, related to content protection: "the transmitting entity takes no affirmative steps to authorize, enable, cause or induce the making of a copy or phonorecord by or for the transmission recipient and uses technology that is reasonably available, technologically feasible, and economically reasonable to prevent the making of copies or phonorecords embodying the transmission in whole or in part, except for reasonable recording as defined in this subsection".

Sen. Feinstein's bill would also add to 17 U.S.C. § 114(d)(2) the following language that elaborates on the meaning of this new subsection 114(d)(2)(A)(iv). "For purposes of subparagraph (A)(iv), the mere offering of a transmission and accompanying metadata does not in itself authorize, enable, cause, or induce the making of a phonorecord. Nothing shall preclude or prevent a performing rights society or a mechanical rights organization, or any entity owned in whole or in part by, or acting on behalf of, such organizations or entities, from monitoring public performances or other uses of copyrighted works contained in such transmissions. Any such organization or entity shall be granted a license on either a gratuitous basis or for a de minimus fee to cover only the reasonable costs to the licensor of providing the license, and on reasonable, nondiscriminatory terms, to access and retransmit as necessary any content contained in such transmissions protected by content protection or similar technologies, if such licenses are for purposes of carrying out the activities of such organizations or entities in monitoring the public performance or other uses of copyrighted works, and such organizations or entities employ reasonable methods to protect any such content accessed from further distribution."

Summary of the RIAA Lawsuit Against XM Satellite Radio

6/2. On May 16, 2006, members of the Recording Industry Association of America (RIAA) filed a complaint in U.S. District Court (SDNY) against XM Satellite Radio alleging various copyright related claims.

The nine count complaint alleges direct infringement of distribution rights, unauthorized digital phonorecord delivery, direct infringement of reproduction rights, and ephemeral recordings infringement. It also alleges inducement of infringement, and contributory and vicarious infringement. Finally, it alleges state law claims of common law copyright infringement and unfair competition for pre-1972 claims.

The complaint requests declaratory and injunctive relief, as well as statutory, compensatory and punitive damages, and attorneys fees.

The complaint alleges that XM's services are not like traditional terrestrial broadcast rather. The complaint alleges that XM provides a "digital download subscription service that obliterates the careful limits Congress imposed in Section 114".

The complaint states that "This new service distributes perfect digital copies of Plaintiffs' sound recordings to XM subscribers and allows subscribers to store those copies for unlimited replay for as long as they maintain their XM subscription. XM refers to its new tethered download service as ``XM + MP3,´´ a reference to its combination of XM radio broadcasts with the ability to receive and store permanent digital downloads. The XM + MP3 service thus goes far beyond the traditional radio broadcast licensed in § 114, and effectively provides a digital download service as well. Indeed, far from the ``radio-like´´ service for which XM enjoys a statutory license, XM promises its subscribers that this new service ``delivers new music to you everyday and lets you choose tracks to create your own custom playlists´´ ..."

Count I alleges direct infringement of plaintiffs' distribution right in violation of 17 U.S.C. §§ 106(3) and 501.

17 U.S.C. § 106(3) provides that "the owner of copyright ... has the exclusive rights to do and to authorize any of the following: ... to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending".

The complaint states that "distribution of permanent copies of sound recordings to XM + MP3 subscribers, constitutes infringement of Plaintiffs' registered copyrights and the exclusive rights under copyright in violation of 17 U.S.C. §§ 106(3). Defendant's limited statutory right to perform publicly Plaintiffs' copyrighted sound recordings does not include the right to distribute those recordings."

Similarly, Count II alleges unauthorized digital phonorecord delivery in violation of 17 U.S.C. §§ 115 and 501.

Count III alleges direct infringement of plaintiffs' reproduction right in violation of 17 U.S.C. §§ 106(1) and 501.

17 U.S.C. § 106(1) provides that "the owner of copyright ... has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords".

The complaint states that XM "is making and causing to be made, unauthorized buffered copies of Plaintiffs' copyrighted sound recordings ... Defendant operates the XM + MP3 service so that a subscriber's receipt of XM satellite transmissions simultaneously and automatically, without user interface, creates infringing copies of the sound recordings received in the transmission. Such copies serve no purpose other than to facilitate the users' saving and librarying of massive unlawful collections of Plaintiffs' copyrighted sound recordings."

Count IV alleges ephemeral recordings infringement of plaintiffs' exclusive reproduction right in violation of 17 U.S.C. §§ 106(1), 112(e), and 501. The complaint states that "the parties' license agreement permits Defendant the limited right to make reproductions consistent with Section 112(e) of the Copyright Act. That section grants to Defendant and others a very limited statutory license to make what is known as an "ephemeral recording" of Plaintiffs' copyrighted sound recordings.

The complaint adds that "To come within the ambit of this very narrow statutory license, such ephemeral recordings may be retained and used only by the radio broadcaster that made them, solely for the purpose of facilitating the broadcaster's transmissions. 17 U.S.C. § 112(e)(l). Notably, an express condition of the statutory license is that "no further phonorecords are reproduced from" each ephemeral copy made by the broadcaster. Id. § 112(e)(l)(A)."

The complaint alleges that XM "is violating, and continues to violate on a daily basis, the narrow scope of its Section 112(e) license. Because Defendant uses its ephemeral recordings not simply to enable the transmission of a radio broadcast, but instead to reproduce further phonorecords and to effect a distribution, Defendant is violating the conditions set forth in Sections 112(e)(l)(A) and (B)."

Counts V, VI, and VII allege that the subscribers of the XM + MP3 service are direct infringers. However, none are named as defendants in this complaint. Rather, these counts allege that XM is liable for its actions with respect to their infringement.

Count V alleges inducement of copyright infringement. The complaint alleges that XM is liable for the infringement of its XM + MP3 subscribers because it is inducing them to create unauthorized reproductions of copyrighted sound recordings.

The complaint states that XM is "aware that Plaintiffs' sound recordings are copyrighted and authorized for purchase through various outlets, including numerous lawfully authorized online digital download services. Indeed, XM + MP3 subscribers who also are customers of the Napster download service can purchase individual songs from Napster directly through their XM + MP3-compatible radios. Defendant is equally aware -- and intends -- that its XM + MP3 subscribers are using the radios' librarying function to create permanent infringing copies of Plaintiffs' copyrighted sound recordings obtained directly from XM. In fact, Defendant actively markets and advertises this capability as one of the radios' most attractive features, thereby actively encouraging its XM + MP3 subscribers to commit copyright infringement."

Count VI alleges contributory copyright infringement. The complaint states that "Defendant is liable as a contributory copyright infringer for the infringing acts of its XM + MP3 subscribers. XM enables, facilitates, and materially contributes to each act of infringement by XM + MP3 subscribers."

Count VII alleges vicarious copyright infringement. The complaint states that "Defendant has both the right and the ability to supervise its subscribers' infringing conduct, and to prevent its XM + MP3 subscribers from infringing Plaintiffs' copyrighted sound recordings."

It adds that XM "at any time it desired, could terminate infringing XM + MP3 subscribers. Moreover, the fact that Defendant has the ability to erase all of a subscriber's recorded songs upon termination of her subscription indicates that Defendant is capable of erasing infringing songs from a subscriber's device at any point, should it choose to do so." And, it alleges that XM "has refused to take any action to prevent the widespread infringement by its XM + MP3 subscribers because Defendant receives a significant financial benefit directly attributable to the infringement by its XM + MP3 subscribers."

Count VIII alleges common law copyright infringement of pre-1972 sound recordings under the law of the state of New York.

Count IX alleges unfair competition as to pre-1972 sound recordings under the law of the state of New York.

This case is Atlantic Recording Corporation, et al. v. XM Satellite Radio, Inc., U.S. District Court for the Southern District of New York. The plaintiffs are represented by Donald Verrilli, Michael DeSanctis, and other attorneys in the law firm of Jenner & Block. Verrilli also represented the music industry in MGM v. Grokster, the copyright case involving peer to peer systems.

PRC Minister of Commerce Defends Lack of IPR Enforcement

Bo Xilai6/2. Bo Xilai (at right), the Minister of Commerce (MOC) of the Peoples Republic of China, gave a speech regarding intellectual property in the PRC at the APEC Ministerial Meeting. The MOC published a summary of the speech in awkward English.

This summary states that "IPR protection of all countries would be affected by the economic development level", and that for "developing countries ... to ask for high level IPR protection in the countries was unpractical". It also states that the PRC government hopes that "developed members would not excessively condemn developing countries on issue of IPR any more, would extend more understanding".

However, the summary adds that "in the coming 10 or 20 years, China would have more self-initiated intellectual property rights". It states that this will have "resulted from the inner demand of China's economic development not the outside pressure".

Perhaps the gist of his message is that undeveloped and developing countries create little IP, and hence have little incentive to protect IPR. And hence, developed countries that create IP, and export IP based products, should not expect these other countries to enforce IPR. However, the PRC hopes to advance economically and technologically. As it does, it will become a major producer of IP, and will then find it to be in its self interest to enforce an IPR regime.

More News

6/2. The Federal Communications Commission (FCC) concluded, and announced results of, its Auction No. 65, regarding air-ground spectrum licenses in the 800 MHz band. This spectrum can be used for, among other things, providing passengers broadband internet access services. See, FCC release.

6/2. The Federal Communications Commission (FCC) released an Order on Reconsideration of the Second Report and Order [28 pages in PDF] in its proceeding titled "In the Matter of Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission’s Competitive Bidding Rules and Procedures". This order addresses petitions for reconsideration of the FCC's April 2006 order regarding the FCC's designated entities rules and the upcoming Auction No. 66. This item is FCC 06-78 in WT Docket No. 05-211. Auction No. 66, which is scheduled to begin on August 9, 2006, will provide spectrum for advanced wireless services (AWS). Commissioner Michael Copps wrote in a statement [PDF] that "some of our prior auctions were tainted" by "unjust enrichment or fraud" in the designated entity program. See also, FCC release [PDF].

Copyright Office Raises Fees

6/1. The Copyright Office (CO) published a notice in the Federal Register that recites, explains, comments on, and sets the effective date (July 1, 2006) for, its final rule regarding fee increases. The rule raises the basic registration fee from $30 to $45 per work.

The CO's current fee schedule has precluded many individual creators, and small businesses, from availing themselves of the protections afforded by the Copyright Act and Article I, Section 8, Clause 8 of the U.S. Constitution. These fee increases will exclude more.

The rule also raises the fee for group registration of photographs from $30 to $45. A CO attorney told TLJ that while the CO received many comments from photographers objecting to this increase, it received no comments from bloggers.

The final rule also eliminates the proposed fee increase for preregistration.

The CO wrote that "The basic registration fee of $45 is less than the actual cost of providing the service. The Copyright Office is currently collecting 56.7% of its total expenditures from fees. This shortfall is largely due to the reality that the current $30 fee does not come close to recovering costs of current operations."

While the CO has updated it rules regarding fees for registration of works, it has not updated its rules regarding how to register works. In particular, Chapter 4 [PDF] of the Copyright Act and 37 CFR § 202.3 remain obsolete for registering works created for, and published in, new media. The statute and regulations continue to reference print newspapers, textbooks, and other old media, but not the internet, web sites, e-mail, blogs, and other new media.

However, there is some non-authoritative guidance in the CO's Circular 66 [PDF] titled "Copyright Registration for Online Works".

11th Circuit Holds that Stored Communications Act Does Not Apply to Password Protected Discussion Web Site

6/1. The U.S. Court of Appeals (11thCir) issued its opinion [17 pages in PDF] in Snow v. Directv, a civil case alleging violation of the Stored Communications Act (SCA), at 18 U.S.C. § 2701, and password protected online discussion groups. The Court of Appeals affirmed the judgment of the District Court, which dismissed the complaint for failure to state a claim.

The Court of Appeals largely ignored the phrases "intentionally accesses without authorization" and "intentionally exceeds an authorization" in Section 2701, and focused on the phrase "readily accessible to the general public" in 18 U.S.C. § 2511. This opinion is barely distinguishable from that of the 9th Circuit in Konop v. Hawaiin Airlines, which held that accessing a password protected web based discussion group does violate Section 2701.

See, full story.

People and Appointments

6/1. Brett Kavanaugh took the oath of office to be a Judge of the U.S. Court of Appeals (DCCir) at a ceremony at the White House. The event was attended by, among others, President Bush, Vice President Cheney, Attorney General Gonzales, former Attorney General Ashcroft, and Justice Anthony Kennedy. See, transcript.

6/1. Robert McDowell took the oath of office to be a member of the Federal Communications Commission (FCC). See, FCC release [PDF].

More News

6/1. The Internal Revenue Service (IRS) published a notice in the Federal Register announcing that it will hold a public hearing on August 29, 2006, at 10:00 AM, regarding its notice of proposed rule making (NPRM) pertaining to the application of 26 U.S.C. § 199, which provides a deduction for income attributable to domestic production activities, to certain transactions involving computer software. In addition, August 30 is the deadline to submit comments. And, any persons who wish to make presentations at the meeting must submit copies by August 8. This notice also recites the proposed rules changes. See, Federal Register, June 1, 2006, Vol. 71, No. 105, at Pages 31128-31129. The IRS also published a separate notice that announces, describes, and recites, temporary rules changes on the same subject. See, Federal Register, June 1, 2006, Vol. 71, No. 105, at Pages 31074-31077. Finally, the IRS published a third notice that announces, describes, and recites, rules changes pertaining to Section 199 generally. See, Federal Register, Federal Register, June 1, 2006, Vol. 71, No. 105, at Pages 31267-31333.

Go to News from May 26-31, 2006.