TLJ News from March 26-31, 2007

House Subcommittee Questions Google Regarding Publication of Satellite Imagery

3/30. Rep. Brad Miller (D-NC), the Chairman of the House Science Committee's (HSC) Subcommittee on Investigations and Oversight sent a letter [PDF] to Google Ch/CEO Eric Schmidt requesting that "Google provide a full briefing to the Subcommittee staff within the next week" regarding Google's online publication of satellite photographs of the New Orleans area created prior to Hurricane Katrina.

Rep. Miller asked numerous questions, including "What criteria were used by Google to determine that pre-Katrina satellite images would replace post-Katrina images on the Google Web site?"

Rep. Miller also asked "Was Google contacted by the Federal Emergency Management Agency, the United States Geological Survey or any other entity of the federal government concerning any changes or revisions of the satellite imagers for the New Orleans region? If so, when were those requests received, and from whom?"

Rep. Miller wrote that Google's publication of this imagery is "fundamentally dishonest" and a "great injustice". However, he sited no federal statute or regulatory regime that is implicated by Google's actions.

Rep. James Sensenbrenner (R-WI), the ranking Republican on this Subcommittee, did not join in the letter.

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3/30. The U.S. Court of Appeals (6thCir) issued an opinion in Bridgeport Music v. Universal-MCA Music Publishing, a copyright infringement case. The Court of Appeals vacated and remanded. This case is Bridgeport Music, Inc., et al. v. Universal-MCA Music Publishing, Inc. et al., U.S. Court of Appeals for the 6th Circuit, appeals from the U.S. District Court for the Middle District of Tennessee, at Nashville.

3/30. The U.S. Court of Appeals (4thCir) issued its opinion [21 pages in [PDF] in Renaissance Greeting Cards v. Dollar Tree Stores, as trademark infringement case. The Court of Appeals affirmed the judgment of the District Court. This is an unpublished opinion, and the Court of Appeals wrote that "Unpublished opinions are not binding precedent in this circuit." Nevertheless, this opinion includes a lengthy application of the seven factors used in evaluating whether a competing mark creates a likelihood of confusion to the facts of this case. This case is Renaissance Greeting Cards, Inc. v. Dollar Tree Stores, Inc., U.S. Court of Appeals for the 4th Circuit, App. Ct. No. 06-1131, an appeal from the U.S. District Court for the Eastern District of Virginia, at Alexandria, D.C. No. 1:05-cv-00341-TSE, Judge T.S. Ellis presiding. Judge Faber wrote the opinion of the Court of Appeals, in which Judges Widener and Wilkinson joined.

Microsoft Still Owns the Windows Mark

3/29. The U.S. Court of Appeals (4thCir) issued its unpublished opinion [2 pages PDF] in Lewis v. Microsoft, affirming the judgment of the District Court, which dismissed the plaintiffs' trademark infringement claims.

This short per curiam opinion is yet another victory for Microsoft in a series of proceedings before the U.S. Patent and Trademark Office's (USPTO) Trademark Trial and Appeal Board (TTAB) and in the federal courts regarding the Windows trademark.

This case is Brenda Powers and William Flowers v. Microsoft Corporation, U.S. Court of Appeals for the 4th Circuit, App. Ct. No. 06-1354, an appeal from the U.S. District Court for the Eastern District of North Carolina, at Greenville, D.C. No. 5:05-cv-00343-H, Judge Malcolm Howard presiding.

People and Appointments

3/29. George Foresman, Under Secretary at the Department of Homeland Security (DHS), announced his resignation, which is not yet effective. See, statement by Michael Chertoff.

3/29. Federal Communications Commission (FCC) Commissioner Michael Copps named Rick Chessen to be a Senior Legal Adviser, effective April 5, 2007. Chessen is currently Associate Chief of the FCC's Media Bureau. He has worked for the FCC since 1994. From 2001 through 2005 he chaired the FCC's Digital Television Task Force. See, FCC release [PDF].

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3/29. Eight federal regulatory agencies published a notice in the Federal Register that proposes to amend their rules implementing the privacy provisions of the Gramm Leach Bliley Act. This notice of proposed rulemaking contains a safe harbor model privacy form that financial institutions may use to provide disclosures under the privacy rules. The eight agencies are the Department of the Treasury's Office of the Comptroller of the Currency (OCC), Office of Thrift Supervision (OTS), Federal Reserve System (FRS), Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), Federal Trade Commission (FTC), Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC). Comments are due by May 29, 2007. See, Federal Register, March 29, 2007, Vol. 72, No. 60, at Pages 14939-15000.

3/29. The Department of State announced that it has renewed the charter of the Advisory Committee on International Economic Policy. See, notice in the Federal Register, March 29, 2007, Vol. 72, No. 60 at Page 14848.

GAO Finds Information Security Weaknesses at SEC

3/28. The Government Accountability Office (GAO) released a report [25 pages in PDF] titled "Information Security: Sustained Progress Needed to Strengthen Controls at the Securities and Exchange Commission".

It states that the "SEC has not consistently implemented key controls to effectively safeguard the confidentiality, integrity, and availability of its financial and sensitive information and information systems".

As a result, the GAO report finds, the SEC's "financial and sensitive data are at increased risk of unauthorized disclosure, modification, or destruction."

The SEC receives various types of electronic documents, including registration statements, periodic reports, and other disclosure statements, which are stored and made available to the public through the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. The EDGAR online database enables investors to use information contained in this database to make investment decisions.

The GAO report is does not elaborate, for example, on whether there are information security weaknesses at the SEC that might render documents in the EDGAR database vulnerable to modification. Nor does the report speculate on the potential for attacks on SEC information systems to be used to perpetrate securities fraud. Nor does that report speculate on the potential for malicious attacks on SEC information systems to disrupt the efficient operation of securities markets, or to diminish investor confidence in securities markets.

The report also states that the GAO prepared a second non-public report that details additional information security weaknesses at the SEC.

The report adds that the SEC has made progress in addressing previously identified weaknesses. Moreover, it states that the "SEC's senior management was actively engaged in implementing information security related activities, including establishing policies and procedures for risk management, ensuring that all users complete security training, and developing an incident response program."

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3/28. Hill Wellford, Counsel to the Assistant Attorney General in charge of the Department of Justice's (DOJ) Antitrust Division, gave a speech in Beijing, China, titled "Antitrust Issues in Standard Setting". He discussed how the DOJ applies antitrust law to ex ante patent policies within standards development organizations (SDOs), including the DOJ's October 30, 2006 business review letter to the VMEbus International Trade Association (VITA). See also, story titled "DOJ Approves VITA Patent Policy" in TLJ Daily E-Mail Alert No. 1,479, October 31, 2006.

3/28. The Federal Communications Commission (FCC) published a notice in the Federal Register that sets comment deadlines for its request to update the record in its equal access and nondiscrimination proceeding. The FCC issued its original Notice of Inquiry (NOI) in February of 2002. The FCC released a Public Notice (DA 07-1071) [PDF] on March 7, 2007. See, notice in the Federal Register, March 28, 2007, Vol. 72, No. 59, at Pages 14554-14555. This proceeding is CC Docket No. 02-39. The notice states that "there have been a number of intervening developments that may have rendered the record developed in this proceeding stale. In particular, the market appears to be shifting from competition between stand-alone long distance services to competition between service bundles including both local exchange and long distance services. The industry structure has also changed with the mergers of local and long distance providers."


3/27. The Federal Communications Commission (FCC) released the text [19 pages in PDF] of its Notice of Proposed Rulemaking (NPRM) regarding FCC regulation of exclusive contracts for the provision of video services to multiple dwelling units (MDUs) and other real estate developments.

The FCC adopted, but did not release, this NPRM on March 22, 2007. See, story titled "FCC Adopts MDU Forced Access NPRM" in TLJ Daily E-Mail Alert No. 1,556, March 26, 2007.

This NPRM states that "We tentatively conclude that the Commission has authority to regulate exclusive contracts for the provision of video services to MDUs or other real estate developments where we find that such contracts may impede competition and impair deployment of those services."

The NPRM seeks comments on these exclusive contracts, and "how we should regulate such contracts."

This NPRM also seeks comment on the FCC's authority to engage in such regulation. It identifies the statutory sections that may provide such authority -- Sections 623 and 706, as well as 1, 4(i) and 303(r),  of the Communications Act.

Subsection 623(b), which is codified at 47 U.S.C. § 548(b), provides that "It shall be unlawful for a cable operator, a satellite cable programming vendor in which a cable operator has an attributable interest, or a satellite broadcast programming vendor to engage in unfair methods of competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly or to prevent any multichannel video programming distributor from providing satellite cable programming or satellite broadcast programming to subscribers or consumers." Section 623(c) gives the FCC authority to write implementing regulations.

Section 706, which is codified at 47 U.S.C. § 157, note, states that the FCC and state regulators "shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans (including, in particular, elementary and secondary schools and classrooms) by utilizing, in a manner consistent with the public interest, convenience, and necessity, price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment."

It also gives the FCC authority to conduct inquiries. It adds that if the determination of such an inquiry is negative, then the FCC "shall take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market."

47 U.S.C. at §§ 151 and 154(i) state in brief and general terms the purpose of the FCC. 47 U.S.C. § 543 pertains to the regulation of cable rates.

None of these provisions give the FCC sectoral regulatory authority over real estate owners.

This NPRM also sets comment deadlines. The deadline to submit initial comments is June 18, 2007. The deadline to submit reply comments is July 18, 2007.

This NPRM is FCC 07-33 in Docket 07-51.

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3/27. The Department of Justice (DOJ) announced that a grand jury of the U.S. District Court (WDVa), Roanoke Division, returned an indictment that charges ITT Corporation with violation of the federal export control regime. The DOJ also announced that ITT agreed to plead guilty and pay a fine of $100 Million. ITT did not physically export the underlying product, night vision equipment. Rather, it transferred data outside of the U.S. without a license, and omitted information from its export reports. The DOJ stated in a release that "ITT Corporation exported or caused to be exported defense-related technical data to the People’s Republic of China, Singapore, and the United Kingdom without having first obtained a license or written authorization from the U.S. Department of State. The technical data included information about a laser counter measure known as a ``light interference filter´´ for military night vision goggle systems." U.S. Attorney John Brownlee added in this release that this will "send a clear message that any corporation who unlawfully sends classified or export-controlled material overseas will be prosecuted and punished."

3/27. The Federal Communications Commission (FCC) announced in its web site that "The FCC website and related electronic filing systems and documents will be unavailable between 9:00 pm EDT Friday, March 30 and 6:00 am EDT Monday, April 2 for scheduled maintenance."

3/27. The Senate Judiciary Committee (SJC) held a hearing titled "Oversight of the Federal Bureau of Investigation". See, opening statement of Sen. Patrick Leahy (D-VT) and prepared testimony of FBI Director Robert Mueller, addressing the use of national security letters (NSLs).

Federal Circuit Rules on Case or Controversy Requirement in Patent DJ Actions

3/26. The U.S. Court of Appeals (FedCir) issued its opinion [26 pages in PDF] in SanDisk v. STMicroelectronics, a patent infringement case involving flash memory storage products. The Court of Appeals vacated the judgment of the District Court, which had dismissed SanDisk's claims relating to declaratory judgment of noninfringement and invalidity for failure to present an actual controversy. The declaratory judgment claims will proceed in the District Court.

Overview. The Supreme Court of the United States (SCUS) recently addressed the case or controversy requirement in the context of an existing patent license. It held in its January 9, 2007, opinion [30 pages in PDF] that the Article III case or controversy requirement, and the Declaratory Judgment Act, which is codified at 28 U.S.C. § 2201, do not require a patent licensee to terminate, or be in breach of, its license agreement before it can seek a declaratory judgment that the underlying patent is invalid, unenforceable, or not infringed. See also, story titled "Supreme Court Rules on Case or Controversy Requirement in Patent Litigation" in TLJ Daily E-Mail Alert No. 1,516, January 9, 2007.

However, there are no patent licenses in the present case. Patent holder STMicroelectronics (ST) approached SanDisk and presented detailed analyses that SanDisk was infringing its patents. ST sought money from SanDisk through licensing. However, when SanDisk sought a declaratory judgment (DJ) of noninfringement from the District Court, ST asserted there is no Article III case or controversy.

ST wants to be able to assert infringement, demand licensing and royalties, but prevent SanDisk from litigating the merits of these infringement assertions.

The Court of Appeals ruled, in effect, that ST could not have it both ways. Its actions gave rise to a justiciable case or controversy. Patent holders that engage in scare and run demands for royalties cannot hide behind Article III. The Court of Appeals vacated the judgment of the District Court. SanDisk can now proceed with its DJ claims.

See, full story.

Supreme Court Grants Cert in Stoneridge Investment v. Scientific-Atlanta

3/26. The Supreme Court of the United States (SCUS) granted certiorari in Stoneridge Investment v. Scientific-Atlanta, a securities fraud case involving the purchase of stock in Charter Communications, a cable television provider. At issue is the liability of secondary of actors Scientific Atlanta and Motorola, which had entered into contracts with Charter. See, order list [10 pages in PDF] at page 2.

The plaintiff in the District Court, appellant to the Court of Appeals, and petitioner to the SCUS is Stoneridge Investment Partners.

Stoneridge filed a complaint in U.S. District Court (EDMo) against Charter Communications, Scientific-Atlanta, Inc., Motorola, Inc., and others alleging Section 10b securities fraud. Scientific Atlanta and Motorola were equipment vendors to Charter.

Stoneridge alleged that Charter engaged in a pervasive and continuous fraudulent scheme intended to artificially boost its reported financial results by deliberately delaying the disconnecting of customers no longer paying their bills, improperly capitalizing labor costs, and entering into sham transactions with the two equipment vendors that improperly inflated Charter's reported operating revenues and cash flow.

The District Court dismissed the Section 10b claims against Scientific Atlanta and Motorola, relying on the 1994 SCUS opinion in Central Bank of Denver v. First Interstate Bank of Denver. The U.S. Court of Appeals (8thCir) affirmed. See, April 11, 2006, opinion [PDF], which is also reported at 443 F3d 987

The question presented [PDF] to the SCUS is "Whether this Court’s decision in Central Bank, N.A. v. First Interstate Bank, N.A., 511 U.S. 164 (1994), forecloses claims for deceptive conduct under § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5(a) and (c), 17 C.F.R. 240.l0b-5(a) and (c), where Respondents engaged in transactions with a public corporation with no legitimate business or economic purpose except to inflate artificially the public corporation’s financial statements, but where Respondents themselves made no public statements concerning those transactions."

The Supreme Court added that Chief Justice Roberts and Justice Breyer took no part in the decision to grant certiorari.

This case is Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., et al., Sup. Ct. No. 06-43, a petition for writ of certiorari to the U.S. Court of Appeals for the 8th Circuit, App. Ct. No. 05-1974. The Court of Appeals heard an appeal from the U.S. District Court for the Eastern District of Missouri. See also, Supreme Court docket.

FCC Releases AT&T BellSouth Merger Review Orders

3/26. The Federal Communications Commission (FCC) released the text [181 pages in PDF] of a document titled "Memorandum Opinion and Order" (MO&O) that approves, and imposes conditions upon, the merger of AT&T and BellSouth. The FCC simultaneously released a second document [5 pages in PDF] titled "Order on Reconsideration" (OR).

On December 29, 2006, the FCC asserted that it adopted this MO&O in concept. However, it did not then release any MO&O. See, story titled "FCC to Approve AT&T BellSouth Merger with Conditions" in TLJ Daily E-Mail Alert No. 1,512, January 2, 2007. This just released OR modifies this heretofore non-existent MO&O.

This OR states that the FCC acted "sua sponte" in issuing this OR. However, it addresses and responds to filings by Verizon, Qwest and AT&T. The OR also states that the conditions imposed by the MO&O and OR are "voluntary".

The OR states that "we revise Special Access Condition 6 in two salient respects. First, we require AT&T post-merger to comply with the pricing obligations of Special Access Condition 6 regardless of the pricing decisions of other incumbent local exchange carriers (LECs). Second, we reduce the duration of Special Access Condition 6 from 48 months to 39 months."

The OR elaborates that Special Access Condition 6 "sets a cap for the prices, terms and conditions at which AT&T may offer DS1 and DS3 channel termination services, DS1 and DS3 mileage services, and Ethernet services."

It states that under the December 29 concept MO&O "the cap would not apply to AT&T’s provision of such services to other price cap incumbent LECs or their affiliates that had obtained Phase II pricing flexibility for price cap services unless the other incumbent LEC offered comparable discounts for its own DS1, DS3 and price cap Ethernet services in Metropolitan Statistical Areas where it has received Phase II pricing flexibility and reciprocal discounts for Ethernet services offered outside of price cap regulation".

The OR eliminates this reciprocity limitation. The OR continues that "by eliminating the Reciprocity Limitation, AT&T will be required to extend the discount set forth in Special Access Condition 6 to all of its customers of DS1 and DS3 channel termination services, DS1 and DS3 mileage services, and Ethernet services, which should result in lower prices for many more end users."

It adds that "In light of the expanded application of Special Access Condition 6, we believe it is appropriate to shorten the time period under which Special Access Condition 6 applies to 39 months."

The MO&O is FCC 06-189 in WC Docket No. 06-74. The OR is FCC 07-44.

FreeConference Alleges Blocking of Calls by AT&T

3/26., Inc. filed a complaint in U.S. District Court (DC) against AT&T alleging violation of federal antitrust law and the Communications Act in connection with AT&T's alleged blocking of calls to FreeConference, and AT&T's alleged termination of access fees from local exchange carriers (LECs) to which FreeConference is a subscriber. See, full story.

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3/26. Securities and Exchange Commission (SEC) Commissioner Paul Atkins gave a speech in Dublin, Ireland, in which he noted that recent studies by the U.S. Chamber of Commerce and others have recommended, among other things, "quick and substantial changes to the rules and guidance implementing section 404 of the Sarbanes-Oxley Act". Atkins said that "We must clear the cobwebs and incorporate how the world has changed through technology and innovation when we consider whether to shed some of our weighty regulatory precedent."

Go to News from March 21-25, 2007.