TLJ News from February 26-29, 2008

Bush Executive Order Changes Intelligence Oversight Bodies

2/29. President Bush signed an executive order that creates a new President's Intelligence Advisory Board (PIAB) and a new Intelligence Oversight Board (IOB).

The new PIAB and IOB will replace the old PIAB and IOB created by Executive Order 12333 on December 4, 1981. The PIAB will have 16 members. The IOB will have five members selected by the President from the members of the PIAB. Current members of the old entities will continue as members of the new entities.

The new PIAB shall "assess the quality, quantity, and adequacy of intelligence collection, of analysis and estimates, and of counterintelligence and other intelligence activities, assess the adequacy of management, personnel and organization in the intelligence community, and review the performance of all agencies of the Federal Government that are engaged in the collection, evaluation, or production of intelligence or the execution of intelligence policy and report the results of such assessments or reviews ..."

The just signed executive order does not reference either "privacy" or "civil liberties". Nor does it not reference the Constitution, except to state that the authority for this executive order is "the authority vested in me as President by the Constitution and the laws of the United States of America".

However, it does provide that the IOB "shall ... inform the President of intelligence activities that the IOB believes ... may be unlawful ... and ... are not being adequately addressed by the Attorney General, the DNI, or the head of the department concerned ..."

The 1981 order does provide that surveillance and search "procedures shall protect constitutional and other legal rights", and enumerated specific limitations. The just signed order does not state that it revokes the 1981 order.

However, it does revoke Executive Order 12863, signed by former President Bill Clinton on September 13, 1993, which also pertains to these intelligence, surveillance and search oversight bodies.

Barnett Discusses Foreign Application of Antitrust Law

2/29. Thomas Barnett, Assistant Attorney General in charge of the Antitrust Division, gave a speech in Washington DC titled "Antitrust Update: Supreme Court Decisions, Global Developments, and Recent Enforcement".

Thomas BarnettBarnett (at left) stated that there are "significant differences between U.S. antitrust law and some aspects of other jurisdictions' competition regimes", such as in Europe, and that "it remains to be seen whether we can forge a consensus on the antitrust rules for judging the activity of individual firms".

Enforcement based upon individual firm conduct, as opposed to mergers or collusive activity, encompasses the EC's pending actions against Microsoft and Intel. The U.S. has initiated no related or parallel actions.

Barnett said that "we live in a global economy and that antitrust enforcement action in one jurisdiction can impact economic activity in another jurisdiction".

"Whereas 20 years ago only a handful of countries made any serious attempt to enforce antitrust laws, there are now over 100 antitrust enforcement regimes around the world, including China, which will begin enforcing its new Antimonopoly Law in August of this year", said Barnett.

He continued that there are "significant challenges presented by multiple antitrust enforcement regimes. In antitrust, as in other areas of law, companies having to comply with multiple regimes can face burdensome requirements. These concerns are increased if procedures and substantive antitrust analysis diverge across countries, which can lead to inconsistent or even incompatible results."

He argued that "antitrust enforcement should focus on protecting the competitive process and consumer welfare, not on protecting individual competitors or on other social goals, and that the analysis should be based on sound economic principles", and that "aggressive enforcement against price-fixing and other cartels -- naked agreements among competitors not to compete -- should be a top priority".

He did not reference the European Commission's proceedings against Microsoft or Intel in the prepared text of this speech. However, he said that "There remain significant differences between U.S. antitrust law and some aspects of other jurisdictions' competition regimes".

He also said that "it remains to be seen whether we can forge a consensus on the antitrust rules for judging the activity of individual firms -- governed in U.S. law by section 2 of the Sherman Act. Such challenges and differences are important to note but they should not be exaggerated."

2nd Circuit Affirms in Ehrenfeld v. Mahfouz

2/29. The U.S. Court of Appeals (2ndCir) issued its opinion [10 pages in PDF] in Ehrenfeld v. Mahfouz, affirming the judgment of the District Court, which dismissed the complaint for lack of personal jurisdiction over the defendant, Khalid Salim Bin Mahfouz.

Rachel Ehrenfeld is the author of the book [Amazon] titled "Funding Evil: How Terrorism Is Financed -- and How to Stop It" in which she alleged that Mahfouz financially supported terrorism. She is also Director of the American Center of Democracy.

The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) does not list a "Khalid Salim Bin Mahfouz" on its list of Specially Designated Nationals and other persons whose property is blocked.

In an earlier action, Mahfouz filed a complaint against Ehrenfeld in London, United Kingdom, alleging libel. He obtained a default judgment that enjoined the further publication of the statements about Mahfouz in England and Wales.

In the present action, Ehrenfeld filed a complaint in U.S. District Court (SDNY) against Mahfouz seeking a declaratory judgment under the Declaratory Judgment Act, which is codified at 28 U.S.C. § 2201, that the foreign judgment is not enforceable in the U.S. for violating the First Amendment.

Mahfouz moved to dismiss for lack of personal jurisdiction over him. The District Court dismissed. This appeal followed.

The Court of Appeals certified to the New York Court of Appeals the question of whether New York's long arm jurisdiction statute, at N.Y.C.P.L.R. §§ 302(a)(1) and 302(a)(3), confers personal jurisdiction over Mahfouz. The NY Court of Appeals opined that personal jurisdiction cannot be obtained over Mahfouz under the NY statute.

The Court of Appeals then affirmed the District Court's dismissal of the complaint, for lack of personal jurisdiction, based upon the NY statute.

There is also legislation pending in the New York legislature that is a reaction to this case. See, related story in this issue titled "New York Senate Passes Libel Terrorism Protection Act".

The Court of Appeals added that "If the new bill is signed into law, plaintiff may file a new action in the district court or move to reopen the judgment and amend the complaint, and the court will have the chance to properly address, in the first instance, the question of personal jurisdiction over defendant."

This case is Rachel Ehrenfeld v. Khalid Salim Bin Mahfouz, U.S. Court of Appeals for the 2nd Circuit, App. Ct. No. 06-2228-cv, an appeal from the U.S. District Court for the Southern District of New York.

New York Senate Passes Libel Terrorism Protection Act

2/29. The State Senate of New York passed Senate bill S 6687, the "Libel Terrorism Protection Act". The other house of the New York legislature, the State Assembly, has not yet passed its version of the bill, Assembly bill 9652. These bills are reactions to Ehrenfeld v. Mahfouz.

The Ehrenfeld case is a declaratory judgment action brought in federal court in the U.S. regarding a libel action brought in the United Kingdom. See, related story in this issue titled "2nd Circuit Affirms in Ehrenfeld v. Mahfouz". These cases pertain to allegations of libel contained in printed versions of a book. However, jurisdictional issues are also of importance in actions involving internet publication. These New York bills may also impact litigation affecting internet speech.

NY Senate Deputy Majority Leader Dean Skelos (R-Long Island), lead sponsor of the Senate bill, explained his reason for introducing this bill in a January 14, 2008, release. He stated that "These foreign courts are trampling the First Amendment protections guaranteed to American writers and journalists by our Constitution and this legislation will ensure that they cannot infringe upon our freedom."

NY State Assemblyman Rory Lancman (D-Queens), lead sponsor of the Assembly bill, stated in the same release that "When American journalists and authors can be hauled into kangaroo courts on phony-baloney libel charges in overseas jurisdictions who don't share our belief in freedom of speech or a free press, all of us are threatened and our war effort is weakened".

Lancman added that "This legislation will give New York's journalists, authors and press the protection and tools they need to continue to fearlessly expose the truth about terrorism and its enablers, and to maintain New York's place as the free speech capital of the world".

Bill Summary. The bills, as introduced, both limit the enforceability of foreign libel judgments, and extend the New York long arm jurisdiction statute to include certain declaratory judgment actions regarding foreign libel judgments. See, A 9652.

The bills, as introduced, provide that "Section 5304 of the civil practice law and rules ... is amended to read as follows: ... Grounds for non-recognition. (a) No recognition. A foreign country judgment is not conclusive if: ... the foreign court did not have personal jurisdiction over the defendant ... the foreign court was a seriously inconvenient forum for the trial of the action ..." or "the cause of action resulted in a defamation judgment obtained in a jurisdiction outside the United States, unless a court sitting in this state first determines that the defamation law applied in the foreign jurisdiction provides at least as much protection for freedom of speech and press as provided for by both the United States and New York Constitutions."

The bills, as introduced, also amend Section 302, the section relied upon by the U.S. Court of Appeals (2ndCir) in its February 29, 2008, opinion.

These bills would add a new subsection that provides as follows:

These bills also provide for retroactive application of the personal jurisdiction amendment: "The provisions of this subdivision shall apply to persons who obtained judgments in defamation proceedings outside the United States prior to and/or after the effective date of this subdivision."

Analysis. On their face, these bills, as introduced, would give state or federal courts in New York personal jurisdiction over certain declaratory judgment actions involving foreign libel judgments, such as Ehrenfeld's against Mahfouz.

Moreover, these bills would provide for non-recognition of certain foreign libel judgments. Also, since the U.S. stands above almost all other nations in the "protection for freedom of speech and press", few foreign libel judgments would not be subject to non-recognition under these bills.

Jack Goldsmith, a former Assistant Attorney General in charge of the Office of Legal Counsel, wrote in his 2006 book, Who Controls the Internet: Illusions of a Borderless World [Amazon], that "the First Amendment does not reflect universal values; to the contrary, no other nation embraces these values, and they are certainly not written into the Internet's architecture."

Even if another nation were to offer comparable protection for speech, New York courts might still exercise jurisdiction over a declaratory judgment action if "the foreign court did not have personal jurisdiction over the defendant" or "the foreign court was a seriously inconvenient forum for the trial of the action".

In addition, the reach of these bills may be less than intended by their backers. This is state legislation. It may be limited by treaty obligations of the U.S. to recognize foreign judgments, and/or by federal statutory preemption.

Moreover, there is the matter that the U.S. Constitution states that it "shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding". This matter is critical because much of the federal law regarding personal jurisdiction is Constitutional law. That is, much of the limitation on the exercise of personal jurisdiction derives from the federal courts' interpretation of due process.

For the purpose of analyzing the due process limitations upon the exercise of personal jurisdiction by courts in New York, Mahfouz is the person with the due process rights. New York cannot deprive him of his due process rights.

The Supreme Court of the U.S. (SCUS) has long held that the due process clause imposes limitations upon the exercise of jurisdiction over out of state defendants. The SCUS held in International Shoe v. Washington, 326 U.S. 310 (1945), that "For due process to be satisfied, a defendant, if not present in the forum, must have ``minimum contacts´´ with the forum state such that the assertion of jurisdiction ``does not offend traditional notions of fair play and substantial justice.´´"

States, as well as foreign countries, tend to write very broad jurisdiction statutes. Due process is applied by the federal courts to protect defendants from being hauled into distant courts in places with which they have little if any connection.

In the Ehrenfeld case, the Court of Appeals did not reach reach due process analysis. The first question for the courts in a challenge to personal jurisdiction is whether the applicable long arm jurisdiction statute reaches the defendant. Only if the court finds that the defendant is covered by the jurisdictional statute does the court then analyze whether the exercise of jurisdiction would be inconsistent with the due process rights of the defendant. In the Ehrenfeld case, the Court of Appeals did not decide the due process question because it ruled on the basis of the state jurisdictional statute.

If New York enacts it pending bills into law, then New York's long arm jurisdiction statute will reach Mahfouz, and the Court of Appeals' February 29 opinion will offer him no protection. However, Mahfouz can still argue due process. The Court of Appeals may then rule again that the U.S. declaratory judgment action must be dismissed -- on due process grounds.

Young v. New Haven Advocate and Dow Jones v. Gutnick. The New York bills contain aggressive assertions of jurisdiction in the context of publishing. First Amendment advocates have praised the bills.

In other fora, First Amendment advocates, writers, and publishers, and especially those concerned about internet speech, have criticized aggressive jurisdiction laws. Aggressive long arm jurisdictional rules enable censors and subjects of news reporting to sue anywhere. It enhances their capacity to forum shop, and to select courts inconvenient for the speakers.

The 2002 opinion [12 pages in PDF] of the U.S. Court of Appeals (4thCir) issued in Young v. New Haven Advocate represents a model of judicial limitation of distant libel actions. In that case the Court of Appeals held that a court in Virginia does not have jurisdiction over two small newspapers, and their editors and reporters, located in Connecticut, who wrote allegedly defamatory stories about a Virginia prison warden and published them on the internet. The Court of Appeals held that the web publication did not establish minimum contacts because the newspapers are not directed at a Virginia audience.

See, story titled "4th Circuit Rules in Internet Jurisdiction Case" in TLJ Daily E-Mail Alert No. 568, December 16, 2002. See also, story titled "Supreme Court Denies Cert in Case Involving Personal Jurisdiction in Internet Defamation Suit" in TLJ Daily E-Mail Alert No. 665, May 20, 2003.

In contrast, the 2002 opinion of the High Court of Australia in Dow Jones v. Gutnick, represents a model of judicial overreaching to impose libel liability on distant speakers. The plaintiff in that case sued in Australia for an allegedly defamatory news story published on the internet by Dow Jones, a U.S. publisher. The Court held that because of publication on the internet, the Australian courts have jurisdiction, that Australian law applies, and that the case should proceed in the trial court in the Australian state of Victoria. In the end, Gutnick and the Australian courts were able to coerce the speech of a U.S. publisher located in the U.S.

See, story titled "High Court Rules Australia Has Jurisdiction Over Dow Jones Based on Web Publication" in TLJ Daily E-Mail Alert No. 564, December 10, 2002.

The New York bills, like the holding in Gutnick, contain aggressive assertions of jurisdiction for the home jurisdiction. However, while the court in Gutnick asserted jurisdiction for the purpose of enabling anyone in the home jurisdiction (Australia) to coerce or suppress speech anywhere in the world, New York would assert jurisdiction for the purpose of undoing some of the speech suppressing consequences of libel litigation. New York's bills would leave Mahfouz free to intimidate speakers everywhere but New York. Also, while the court in Gutnick asserted jurisdiction for the purpose of imposing financial judgments on persons for engaging in speech, New York would assert jurisdiction for the purpose of rendering declaratory relief regarding enforceability. New York would not create, for example, a cause of action for abusive foreign libel litigation.

Although, the question remains, if New York enacts a statute, whether, once a New York court has personal jurisdiction over a foreign defendant for a declaratory judgment claim, the court might also then exercise jurisdiction over that same foreign defendant for other claims added to the same complaint. Publishers and writers might plead claims in the nature of tortious interference with business opportunities and/or malicious prosecution.

More News

2/29. President Bush signed into law HR 5264 [LOC | WW], the "Andean Trade Preference Extension Act of 2008". See, White House release.

2/29. The U.S. Court of Appeals (DC) announced that it will hear oral argument in Comcast v. FCC, App. Ct. No. 07-1445, on Tuesday, April 8, 2008, at 9:30 AM. This is Comcast's petition for review of the Federal Communications Commission's (FCC) Memorandum Opinion and Order (MO&O) [20 pages in PDF] released on September 4, 2007, denying Comcast's request for a waiver of the integration ban for set top boxes. See, story titled FCC Denies Comcast's Request for Waiver of Integration Ban in TLJ Daily E-Mail Alert No. 1,636, September 7, 2007. Also, on February 29, the FCC filed its brief [103 pages in PDF]. Section 629 of the Telecommunications Act of 1996, which is codified at 47 U.S.C. § 549(a), provides, in part, that the FCC "shall ... adopt regulations to assure the commercial availability, to consumers of multichannel video programming and other services offered over multichannel video programming systems, of converter boxes, interactive communications equipment, and other equipment used by consumers to access multichannel video programming and other services offered over multichannel video programming systems, from manufacturers, retailers, and other vendors not affiliated with any multichannel video programming distributor." On August 18, 2006, the Court of Appeals issued its opinion [22 pages in PDF] in Charter Communications v. FCC, 460 F.3rd 31, in which it rejected other arguments of the cable industry regarding the FCC's implementation of the integration ban. See also, story titled "DC Circuit Upholds FCC Order Re Separable Security for Cable Set-Top Boxes" in TLJ Daily E-Mail Alert No. 1,434, August 18, 2008. This MO&O is FCC 07-127 in CS Docket No. 97-80. Judges Ginsburg, Griffith and Silberman will preside. This is the first of three cases on the agenda.

9th Circuit Overturns Criminal Sentence Not to Use Computers

2/28. The U.S. Court of Appeals (9thCir) issued its opinion in USA v. Barsumyan, overturning a criminal sentencing provision banning use of computers.

Aram Barsumyan was prosecuted for, plead guilty to, and sentenced for, illegal possession of device making equipment in violation of 18 U.S.C. § 1029(a)(4), in connection with his production for forged credit cards. He appealed his sentence, which included a ban on accessing or using "any computer or computer-related devices in any manner".

As part of his scheme, he provided a scanning device to a woman (a federal undercover agent) to scan actual credit cards at a hotel. She later returned the scanner to him with credit card data. He then downloaded the data to a computer.

The Court of Appeals upheld his jail time (only 21 months) but vacated the computer use condition. It wrote that "one can only speculate as to the outer limits of this proscription -- cellular phones? ATMs? Driving a modern car? Checking out groceries using a bar code scanner?" It concluded that the condition is "sweeping and inappropriate".

This case is U.S.A. v. Aram Barsumyan, U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 07-50251, a appeal from the U.S. District Court for the Central District of California, D.C. No. CR-06-00867-GAF-1, Judge Gary Feess presiding. Judge Milan Smith wrote the opinion of the Court of Appeals, in which Judges Jerome Farris and Russell Holland (DCAK), sitting by designation, joined.

HCC Democrats Comment on Telecom Provisions of Bush's Budget

2/28. Rep. John Dingell (D-MI), the Chairman of the House Commerce Committee (HCC), sent a letter [PDF] to the House Appropriations Committee (HAC) and the House Budget Committee (HBC) that expresses the positions of the HCC Democrats on President Bush's proposed budget for Fiscal Year 2009.

President Bush announced and released his FY 2009 budget proposal on February 4, 2008. See, stories titled "Bush Releases FY 2009 Budget Proposal" and "Bush Releases Proposed Budget and Legislative Proposals for FCC" in TLJ Daily E-Mail Alert No. 1,711, February 5, 2008.

Rep. Dingell's letter addresses several telecommunications related items, including federal subsidies for the Corporation for Public Broadcasting (CPB), spectrum management by the Federal Communications Commission (FCC), the digital television (DTV) transition, and increased funding for the FCC Office of the Inspector General (OIG) to deal with rampant waste, fraud and abuse in the FCC's universal service subsidy programs.

CPB. Rep. Dingell wrote that the CPB "customarily receives appropriations two years in advance. In 2007, Congress provided CPB with advance appropriations for FY2009 of $400 million. The budget proposes to rescind $200 million of that advance appropriation."

He argued that "The practice of advance appropriations imposes no financial burden on the Treasury but provides certainty for local stations as they develop programming and raise funding from other sources."

DTV Transition. Rep. Dingell welcomed the President's proposal for "an additional $20 million for the FCC to conduct consumer education about the digital television (DTV) transition.

However, he also express concern about "the Federal Government’s efforts in preparing 300 million consumers for the transition." He also reiterated his proposal that the Bush administration create an interagency task force.

Rep. Dingell also noted that Bush's budget proposes no additional funding for public television and radio digital conversion or upgrades to the Public Radio Satellite System. He wrote that "Denying separate additional funds for the digital television conversion is of particular concern given that Congress set a firm date of February 17, 2009, for the end of analog television. Additional funding for the digital television conversion could assist public television in making a smooth transition and continuing its investment in digital content."

Spectrum Management. Rep. Dingell wrote that Bush's budget contains several spectrum management proposals, such as extending indefinitely the authority of the FCC to auction spectrum licenses, which is set to expire in September of 2011.

He wrote that the HCC "believes that all telecommunications policy matters, including rules regarding spectrum management, are best determined by the Committee through the normal legislative process. The telecommunications sector presents some of the most complex technical and public policy questions that Congress confronts."

He argued that "Creating sound policy in this area requires a level of expertise that the Committee is best able to provide. The Committee will work to ensure that the United States maintains a comprehensive and forward-looking spectrum management policy that inures to the maximum benefit of the American public."

FCC OIG. Rep. Dingell wrote that the "Congress provided that the FCC may transfer $21,480,000 from the Universal Service Fund in FY2009 to the Office of the Inspector General to prevent and remedy waste, fraud, and abuse in the Universal Service Fund program. The budget increases this amount by $4 million. These funds, used appropriately for audits and oversight of the Universal Service Fund, will help identify areas for improvement and reduce waste, fraud, and abuse."

Bush's budget proposes to terminate the Telecommunications Development Fund (TDF). Rep. Dingell stated that the HCC "continues to support the goals underlying the fund". See also, 47 U.S.C. § 614.

eBay Settles with MercExhange

2/28. eBay announced in a release that "it has agreed to a settlement with MercExchange, L.L.C. to dismiss all claims and appeals stemming from the patent lawsuit filed by MercExchange in September of 2001".

eBay added that it "will purchase all three patents involved in the lawsuit, as well as some additional related technology and inventions and a license to another search-related patent portfolio that was not asserted in the lawsuit". eBay did not disclose the purchase price or other financial terms.

This litigation culminated in the landmark Supreme Court opinion [12 pages in PDF] in eBay v. MercExchange, which held that the traditional four factor framework that guides a court's decision whether to grant an injunction applies in patent cases.

See also, story titled "Supreme Court Rules on Availability of Injunctive Relief in Patent Cases" in TLJ Daily E-Mail Alert No. 1,371, May 16, 2006. This opinion is also reported at 547 U.S. 206.

People and Appointments

Meredith Baker2/28. Meredith Baker (at right), acting head of the National Telecommunications and Information Administration (NTIA), will leave the NTIA. Rep. John Dingell (D-MI), Chairman of the House Commerce Committee, stated in a release that "I'm pleased Ms. Baker is committed to remaining at NTIA until a replacement is confirmed and urge the President to nominate a well-qualified replacement who is knowledgeable" about the DTV transition.

9th Circuit Holds that Licensed Karaoke Producer Has No Claims for Competitive Injuries Stemming From Infringement by Unlicensed Karaoke Producers

2/27. The U.S. Court of Appeals (9thCir) issued its opinion [28 pages in PDF] in Sybersound Records v. UAV, a dispute between karaoke record producers. The Court of Appeals affirmed the judgment of the District Court, which dismissed Sybersound's complaint.

This case is not a dispute between copyright holders and karaoke related entities. Other opinions address the rights of copyright holders in this context. See for example, January 2, 2008, opinion [PDF] of the 9th Circuit in Leadsinger v. BMG Music Publishing, and story titled "9th Circuit Rules in Karaoke Copyright Case" in TLJ Daily E-Mail Alert No. 1,694, January 3, 2008. See also, June 26, 2007, opinion [12 pages in PDF] of the U.S. Court of Appeals (6thCir) in Zomba v. Panorama Records, which is also reported at 491 F.3d 574, and ABKCO Music, Inc. v. Stellar Records, Inc., 96 F.3d 60 (2d Cir. 1996).

Sybersound Records is a karaoke record producer that asserts that it complies with copyright law, and obtains all required licenses from copyright holders. It further alleges that some of its competitors do not, but nevertheless falsely advertise that their products are fully licensed. Thus, in the case of most music, Sybersound does not allege that its copyrights have been infringed. It therefore has no standing to bring an action for copyright infringement with respect to this music.

That is, a karaoke record producer with a legitimate business model is trying to shut down what it alleges are illegitimate karaoke record producers. (The District Court disposed of this case on a motion for failure to state a claim, so the District Court made no findings of fact.)

However, Sybersound also entered into an agreement with one music publisher (TVT) that provides that Sybersound is the "exclusive assignee and licensee of TVT’s copyrighted interests for purposes of karaoke use, and also the exclusive assignee of the right to sue to enforce the assigned copyright interest." Sybersound asserts that its copyright interests under this agreement have been infringed.

Sybersound filed a complaint against various other karaoke producers alleging copyright infringement, violation of the Lanham Act, intentional interference with prospective economic relations, unfair competition under the California Business and Professions Code (CBPC), common law unfair competition, and unfair trade practices under the CBPC.

The District Court dismissed the complaint. Sybersound brought the present appeal.

The Court of Appeals affirmed. This is a long and detailed opinion that addresses numerous claims. The following is a summary of some of the highlights of the opinion.

The Court of Appeals wrote that "we determine whether a party lacking standing to bring a copyright infringement suit under the Copyright Act, but who complains of competitive injury stemming from acts of alleged infringement, may bring a Lanham Act claim, Racketeer Influenced and Corrupt Organizations Act (RICO) claim, or related state law unfair competition claims, whose successful prosecution would require the litigation of the underlying infringement claim. We hold that it cannot."

The Court of Appeals determined that the Lanham Act claim, under 15 U.S.C. § 1125(a)(1), is similar to the Lanham Act claim in Dastar v. Twentieth Century Fox Film Corporation, 539 U.S. 23, which the Supreme Court rejected. See also, story titled "Supreme Court Reverses in Dastar v. Fox" in TLJ Daily E-Mail Alert No. 672, June 3, 2003.

The Court of Appeals wrote that "Construing the Lanham Act to cover misrepresentations about copyright licensing status as Sybersound urges would allow competitors engaged in the distribution of copyrightable materials to litigate the underlying copyright infringement when they have no standing to do so because they are nonexclusive licensees or third party strangers under copyright law, and we decline to do so."

It also wrote that "third party strangers and nonexclusive licensees cannot bring suit to enforce a copyright, even if an infringer is operating without a license to the detriment of a nonexclusive licensee who has paid full value for his license".

The Court of Appeals also held that the state law claims that necessarily depend on a showing of copyright infringement are preempted by 17 U.S.C. § 301(a). This section provides, in part, that "all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright ... are governed exclusively by this title" and that "no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State".

With respect to the infringement claim, the Court of Appeals wrote that "We also consider whether the transfer of an interest in a divisible copyright interest from a copyright co-owner to Sybersound, unaccompanied by a like transfer from the other copyright co-owners, can be an assignment or exclusive license that gives the transferee a co-ownership interest in the copyright. We hold that it cannot."

Hence, the Court of Appeals affirmed the judgment of the District Court.

Other than the ruling regarding transfers of divisible interests from copyright co-owners, this opinion does not address the rights of copyright holders to enforce their copyright against infringing karaoke record makers.

This case is Sybersound Records, Inc. v. UAV Corporation, et al., U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 06-55221, an appeal from the U.S. District Court for the Central District of California, D.C. No. CV-05-05861-JFW, Judge John Walter presiding. Judge Milan Smith wrote the opinion of the Court of Appeals, in which Judges Diarmuid O'Scannlain and Michael Mosman (DOre), sitting by designation, joined.

Paper Advocates Performance Right for Recording Artists

2/27. The Progress & Freedom Foundation (PFF) released a paper [15 pages in PDF] titled "A Performance Right for Recording Artists: Sound Policy at Home and Abroad" that argues that "Denying a public-performance right in sound recordings is bad copyright policy and bad technology policy, and it undermines both the international and economic interests of the United States."

In the U.S. terrestrial radio broadcasters are currently exempt from paying royalties to recording artists (the rights of songwriters are different) for broadcasting their copyrighted works, and hence, vehemently oppose proposals to extend the performance right.

There are bills pending in the Congress that would end broadcasters' performance rights exemption. See, HR 4789 [LOC | WW]  and S 2500, [LOC | WW] both of which were introduced on December 18, 2007, and are titled "Performance Rights Act".

The exclusive rights of copyright holders are set out in 17 U.S.C. § 106. Section 106(6) extends the performance right for sound recordings only to digital audio transmissions, thus exempting broadcasts by terrestrial radio broadcasters. Section 106(6) currently provides that "the owner of copyright under this title has the exclusive rights to do and to authorize ... in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission".

HR 4789 and S 2500 would amend this by deleting the word "digital". Thus, the rights of recording artists in all audio transmissions would be protected by copyright. Currently, the exclusive rights of recording artists extend to audio transmissions by internet streaming, satellite radio, and via social networking sites.

However, both HR 4789 and S 2500 would provide special treatment for small, noncommercial, educational, and religious radio stations.

The author of the paper is the PFF's Thomas Sydnor.

Bush Nominates Members of New Privacy and Civil Liberties Oversight Board

2/27. President Bush nominated Daniel Sutherland, Ronald Rotunda, and Francis Taylor to be members of the recently reconstituted Privacy and Civil Liberties Oversight Board (PCLOB). See, White House release and release.

Daniel Sutherland

Bush also nominated Sutherland (at left) to be Chairman. These terms are staggered. Bush nominated Sutherland for a term of six years expiring January 29, 2014. Bush nominated Rotunda for a term of four years expiring January 29, 2012. Bush nominated Taylor for a term of two years expiring January 29, 2010.

Sutherland currently works at the Department of Homeland Security (DHS) as Officer for Civil Rights & Civil Liberties. Rotunda is a long time law professor specializing in Constitutional law.

See, full story.

EC Demands More Money From Microsoft

2/27. The European Commission (EC) demanded more money from Microsoft. This time, it wants 899 Million Euros. The EC again asserted that Microsoft is violating European competition laws.

The EC alleged in a release that this action is a "fine" for Microsoft for it "non-compliance with its obligations under the Commission’s March 2004 Decision"

See, full story.

People and Appointments

Sam Feder2/27. Sam Feder (at left) "is leaving the Commission", stated Federal Communications Commission (FCC) Chairman Kevin Martin in a statement [PDF] released on February 27, 2008. Feder was, until January, General Counsel of the FCC. His replacement is Matthew Berry. Previously, Feder was Martin's legal advisor for spectrum and international issues. Before that, he was Martin's legal advisor for wireline matters. And before that, he was a legal advisor to former FCC Commissioner Harold Furchgott-Roth. Before joining the FCC, Feder worked for the Washington DC law firms of Harris Wiltshire & Grannis and Kellogg Huber.

People and Appointments

2/26. President Bush announced his intent to nominate Paul Schneider to be Deputy Secretary of Homeland Security. He is currently acting Deputy Secretary and Under Secretary for Management at the Department of Homeland Security (DHS). See, White House release.

Go to News from February 21-25, 2008.