The founder of large illegal offshore sports wagering business BetonSports was sentenced to 51 months in prison on multiple charges, Acting U.S. Attorney Michael Reap announced Monday night. Gary Stephen Kaplan, 50, entered a guilty plea to charges of conspiracy to violate the racketeering statute, conspiring to violate the Wire Wager Act and violating the Wire Wager Act. He was sentenced by a federal judge in St. Louis, Mo.
As part of the plea, Kaplan forfeited to the U.S. government more than $43 million in proceeds and an additional $7 million in related earnings. Kaplan admitted that he launched an enterprise in Aruba, Antigua and eventually Costa Rica to provide sportsbook services to U.S. residents through Internet sites and toll-free phone numbers. Technologically, BetonSports phone lines terminated in Houston, Texas or Miami, Florida and were forwarded to Costa Rica by satellite transmitter or fiber-optic cable.
Kaplan's business became successful over several years and by 2004, BetonSports's principal base of operations in Costa Rica employed approximately 1,700 people. That year, BetOnSports had close to one million registered customers, accepted over 10 million sports bets in a cumulative gross amount that exceeded $1 billion. In mid-2004, Kaplan made a successful public offering of the stock of BetOnSports in the U.K. that netted him over $100 million.
"This case should serve as a warning to others who might choose to defy the laws of the United States on such a grand scale," Reap said. "Kaplan's business model itself was built on a wager that the U.S. could not and would not enforce its anti-sports book laws to reach Kaplan. Today, Kaplan lost that wager."
The New York judge overseeing Google's pending $125 million settlement in a class-action lawsuit involving book authors and publishers has set Nov. 9 as the date by which the parties must provide a revised proposal for the court's preliminary approval. U.S. District Judge Denny Chin, who was nominated by President Obama on Tuesday for a spot on the U.S. Court of Appeals for the Second Circuit, acknowledged at a Wednesday hearing that the original deal was not longer viable.
The arrangement agreed to by the Google, the Authors Guild and the Association of American Publishers was criticized by Internet industry competitors, librarians and public interest groups. It also got the Justice Department's attention and was the focus of a congressional hearing. The Internet Archive's Peter Brantley, who co-founded the Open Book Alliance to oppose the initial Google settlement, said whatever the parties offer up next month must be subject to "full review and scrutiny" by those who have spoken out.
Publishing giants like Reed Elsevier, Dow Jones and the New York Times will face off against freelance authors Wednesday as the Supreme Court considers whether federal judges have the power to approve settlements in copyright fights, CongressDaily reports. The case stems from a New York court's approval of an $18 million settlement of a class-action brought by writers who argued their work was improperly reproduced for electronic distribution.
Absent from the bench will be Associate Justice Sonia Sotomayor, who gave no reason for her recusal. As a district court judge in 1997, she heard a similar case brought by individual freelancers. Sotomayor sided with publishers, but the 2nd U.S. Circuit Court of Appeals for the reversed her decision on the basis that the trial court lacked jurisdiction over claims relating to unregistered works. The Supreme Court upheld the appellate ruling, 7-2.
In the current case, a district court approved the settlement, but the 2nd Circuit, citing federal law limiting copyright lawsuits to those who have registered their works, ruled that the lower court had no jurisdiction and should not have approved the deal. Publishers want a reversal of the appellate court's ruling, and the American Intellectual Property Law Association filed a brief supporting the publishers. Read the full preview story here (subscription required) and look for more coverage in CongressDaily later in the day.
The New York judge overseeing Google's pending $125 million settlement in a copyright-related class-action lawsuit was tapped by President Obama on Tuesday for a spot on the U.S. Court of Appeals for the Second Circuit. U.S. District Judge Denny Chin, who requires Senate confirmation, is also known for ruling that Cablevision's planned remote storage digital video recorder would violate copyright. Cablevision appealed and the Second Circuit agreed with the cable operator. Programmers petitioned the Supreme Court to take the case but they were rebuffed this summer. The high court's refusal to hear the case was considered a big win for cable industry innovation.
Meanwhile, Chin has scheduled a Wednesday status hearing on the Google case, which stems from the company's plan to create the world's largest digital library and bookstore. The effort -- and the deal Google reached with authors and publishers -- has raised eyebrows within industry, at the Justice Department and on Capitol Hill. In advance of the hearing, the Open Book Alliance, a group whose members include Amazon.com, Microsoft, the Internet Archive, Yahoo and others, called on Google and its partners to detail how they expect to remedy perceived flaws the original settlement.
The final round of friend-of-the-court briefs have been filed in a case pending before the Supreme Court that will mark the first time since 1981 the panel has ruled on the types of innovations covered by the U.S. Patent Act. The high court agreed in June to consider what types of business methods qualify for patent protection after the Federal Circuit Court of Appeals upheld a decision by the Patent and Trademark Office's appeals board. The case has sweeping ramifications for the software, biotechnology and financial services sectors.
At issue is the PTO's rejection of an application by inventor Bernard Bilski, who tried to patent what some believe is an abstract idea to reduce risk in buying and selling commodities. The case has generated immense interest in the high-tech and intellectual property communities. Among those submitting briefs were the Electronic Frontier Foundation, Computer and Communications Industry Association, American Bar Association, Bloomberg, and Microsoft. Click here to read the Patently-O blog's summaries of amicus briefs.
The Justice Department weighed in on Google's plan to create the world's largest digital library and bookstore late Friday, telling a New York federal court that it should press for changes to a pending $125 million deal in a class-action lawsuit involving the Internet giant, authors and publishers. The government said it has concerns about the arrangement, which stemmed from a 2005 suit, but a properly structured deal could have societal benefits.
DOJ told U.S. Judge Denny Chin who has scheduled a hearing for Oct. 7, that the parties should consider the following changes: imposing limitations on open-ended provisions for future licensing; eliminating potential conflicts among class members; providing additional protections for unknown rights holders; addressing concerns of foreign authors and publishers; eliminating joint-pricing mechanisms among publishers and authors; and providing a way for Google's competitors to gain comparable access.
The U.S. government's top copyright official warned last week that the settlement would encroach on Congress' role in setting copyright policy and would let Google "engage in a number of indisputable acts of copyright infringement." Register of Copyrights Marybeth Peters testified alongside fans and foes of the proposal during a House Judiciary Committee hearing. Google Chief Legal Officer David Drummond said the deal complies with copyright law and will lower barriers to entry for competitors.
A computer hacker who infiltrated the networks of numerous major U.S. retailers including TJX Companies, BJ's Wholesale Club, OfficeMax, and Barnes & Noble, pleaded guilty Friday to multiple charges relating to hacking activity and credit card fraud. Albert Gonzalez, 28, of Miami, faces a minimum of 15 years and a maximum of 25 years in prison, plus hundreds of thousands of dollars in fines, the Justice Department said. His sentencing is scheduled for Dec. 8. More than 40 million credit and debit card numbers were stolen from stores as a result of the hacking.
"Consumers must be able to trust that the credit and debit cards they use everyday in thousands of stores around the world are safe from unlawful access," Assistant Attorney General Lanny Breuer said in a statement. Acting U.S. Attorney for the District of Massachusetts Michael Loucks added that in the past 10 years, there has been a dramatic growth in the transfer and storage of credit and debit card data on computer networks and it is critical that law enforcement works hard to investigate and prosecute the theft of personal identity data.
In addition to his plea agreement, Gonzalez also consented to an order of restitution for the loss suffered by his victims, and forfeiture of more than $2.7 million as well as multiple items of real estate and personal property, including a condo in Miami, a 2006 BMW 330i, a Tiffany diamond ring and Rolex watches. Included in the forfeited currency is more than $1 million in cash, which Gonzalez had buried in a container in his backyard.
The Obama administration and watchdog group Citizens for Responsibility and Ethics in Washington on Wednesday settled four ongoing cases regarding public access to White House visitor records. The most significant development, CREW said early Thursday, is the commitment by the administration to affirmatively post visitor records online on an ongoing basis, bringing a historic level of transparency to the White House. Visitor records are created by the Secret Service as part of its statutory responsibility to protect the president, vice president, their residences, and the White House generally.
"The Obama administration has proven its pledge to usher in a new era of government transparency was more than just a campaign promise," CREW Executive Director Melanie Sloan said in a statement. "The Bush administration fought tooth and nail to keep secret the identities of those who visited the White House. In contrast, the Obama administration - by putting visitor records on the White House Web site - will have the most open White House in history." Because of the policy change, CREW dismissed its lawsuits, which were filed after the Bush and later the Obama administration refused to provide White House visitor records in response to Freedom of Information Act requests.
In the Bush era, CREW wanted to review the log of visits by Christian conservative leaders and lobbyist Stephen Payne. The administration argued the records were presidential records, not agency records of the Secret Service, and therefore exempt from the FOIA's mandatory disclosure requirements. U.S. District Court Judge Royce C. Lamberth disagreed, ruling twice that the records are subject to the FOIA and not within any of the claimed exemptions. After Obama took office, CREW sought records of visits to the White House by health care and coal executives. The government initially refused to turn over those records.
Internet radio company Live365 has filed a lawsuit in the U.S. District Court for the District of Columbia seeking an injunction to prevent any further proceedings by a three-judge panel that determines music royalty rates, officials said late Monday. In the complaint Live365, which has 5 million monthly listeners and more than 270 diverse genres, questions the constitutionality of the Copyright Royalty Board and whether its judges were appointed in violation of the Constitution's separation of powers.
The U.S. Court of Appeals for the District of Columbia recently refused to rule on the CRB's constitutionality in a case brought by licensing firm Royalty Logic. The company had argued the CRB should be forced to vacate its decision in high-profile a proceeding that set the fee structure for webcasters. The panel has convened yet another rate-setting proceeding and music labels, licensing entities, artists, broadcasters and others are expected to spend millions of dollars presenting their cases, Live365 said.
"The constitutional issue is the elephant in the room at the CRB," Live365 CEO Mark Lam said in a statement. "Before any hard-earned artists' royalties and webcaster investments are spent on a potentially invalid royalty setting court, we are just requesting, for the benefit of all parties, to have this significant concern addressed and answered. The National Music Publishers' Association wrote to House Judiciary Chairman John Conyers recently calling for legislation that would make moot any constitutional challenges to the CRB.
The U.S. Court of Appeals for the District of Columbia Circuit on Friday sided with Comcast Corp., in the cable television giant's appeal of the FCC's 30 percent horizontal ownership cap for cable operators. According to the court, the FCC failed to fully weigh competition from satellite TV providers such as Dish Network and DirecTV. The court called the FCC's action "arbitrary and capricious" and vacated the rule. "This important decision affirms that rules must reflect the changing realities of the dynamic video marketplace where today consumers have more choice in video providers and channels than ever before," Comcast spokeswoman Sena Fitzmaurice said.
Randolph May, a former FCC associate general counsel and head of the Free State Foundation, said the ruling was not unexpected. "There are commissioners who have persisted in wanting to take an overly constrained view of competition in the communications marketplace," he said, noting this is the second time in recent months the court has reversed an FCC policy. Progress and Freedom Foundation President Ken Ferree said he was glad the D.C. Circuit is there to serve "as a backstop of rationality when the administrative agencies run amok."
Media Access Project President Andrew Jay Schwartzman said he was disappointed but surprised with the ruling. "Although Congress directed the FCC to establish limits on cable ownership in 1992, the D.C. Circuit Court of Appeals has been disinclined to approve such regulations. It is hard to imagine that any rule the FCC could devise would ever withstand review under the standards established in today's decision," he said.
Continue reading Court Rejects FCC's Cable Market Share Cap.
The American Civil Liberties Union wants federal government records pertaining to the U.S. Customs and Border Protection's policy of searching travelers' laptops without suspicion of wrongdoing. The watchdog group filed a Freedom of Information Act lawsuit Wednesday in a New York federal court to learn how the agency's policy, issued last year, has impacted the civil liberties of travelers during the first year of its implementation. The ACLU made an initial FOIA request for CBP records in June.
"Traveling with a laptop shouldn't mean the government gets a free pass to rifle through your personal papers," ACLU staff attorney Catherine Crump said. "This sort of broad and invasive search is exactly what the Fourth Amendment's protections against unreasonable searches are designed to prevent." According to the ACLU, the CBP policy permits agents to read the information on travelers' laptops "absent individualized suspicion" including personal financial information, photographs and lists of Web sites travelers visited.
CBP's policy extends to suspicionless searches of "documents, books, pamphlets and other printed material, as well as computers, disks, hard drives and other electronic or digital storage devices," the ACLU said. The policy covers all persons, whether or not they are U.S. citizens, crossing the border. Homeland Security Secretary Janet Napolitano announced in January that she was reviewing a range of immigration and border security policies and in May said clarification is needed with respect to the laptop issue. She said a team at DHS will "issue pretty firm guidance and protocol for how you conduct a laptop search."
Two Russians and a Florida man were charged Monday in what the Justice Department said was the largest alleged credit card and debit card breach ever. The indictment names 28-year-old Albert Gonzalez of Miami, Fla., and two unnamed co-conspirators based in Russia with hacking New Jersey-based Heartland Payment Systems, Texas-based 7-Eleven, and the Maine-based Hannaford Brothers supermarket chain. They allegedly stole data pertaining to more than 130 million credit and debit cards, officials said.
In the two-count indictment alleging conspiracy and conspiracy to engage in wire fraud, Gonzalez, AKA "segvec," "soupnazi" and "j4guar17" and the two others are charged with using a sophisticated hacking technique called an "SQL injection attack," which seeks to exploit computer networks by finding a way around the network's firewall to steal sensitive information. Gonzalez had previously been charged with swiping data related to 40 million credit cards from retailers including TJ Maxx.
The indictment alleges that beginning in October 2006, Gonzalez and his co-conspirators researched the credit and debit card systems used by their victims; devised a sophisticated attack to penetrate their networks and steal credit and debit card data; and sent that data to computer servers they operated in California, Illinois, Latvia, the Netherlands and Ukraine. If convicted, Gonzalez could face up to 20 years in prison for wire fraud conspiracy and an additional five years on the conspiracy charge, as well as a hefty fine. Gonzalez is currently in federal custody, DOJ said.
The Justice Department under the Obama administration believes that a digital download of a sound recording does not constitute a performance or a public performance, and thus does not justify the imposition of public performance royalties. The government asserted its position in a federal appeals court's review of a 2007 district court decision that rejected the royalty claim by performance rights organization ASCAP.
Digital Media Association Executive Director Jonathan Potter issued a statement Monday saying he was pleased that DOJ has sided with his group, which represents online entertianment services. He argued that PROs have long sought "to stretch current law by asserting that every transmission of a copyrighted musical work is a 'public performance' under the Copyright Act, regardless of whether that work is ever publicly, or even physically, performed."
The court activity comes as PROs along with composers and songwriters urge Congress to legislate the application of public performance rights to downloads of audiovisual works. The groups recently wrote to lawmakers asking for the change as they consider separate proposals to reauthorize expiring provisions of the Satellite Home Viewer Act and bring AM and FM radio in line with Internet, cable and satellite music platforms that pay performers. Read CongressDaily's recent coverage of this topic here (subscription required).
A high-profile case involving a dispute over Patent and Trademark Office rules announced last fall aimed at increasing patent system efficiency could soon come to a close. The Justice Department on Friday filed a motion with the court handling the case to stay proceedings for the purpose of permitting the new Patent and Trademark Office director to reconsider implementation of the rules, which limit applicants to filing two new continuing applications and one request for continued examination. The change was challenged by drug manufacturer GlaxoSmithKline and an independent inventor, Triantafyllos Tafas.
Since all parties consented to the motion, it is expected to be granted, Foley & Lardner intellectual property attorney Hal Wegner said in a memo. Even if the case is not settled, oral arguments before the U.S. Court of Appeals for the Federal Circuit are scheduled for Oct. 7, prior to which the new PTO chief could take other actions. IBM executive David Kappos, President Obama's pick to head the PTO, will appear before the Senate Judiciary Committee on Wednesday then has to be confirmed by the panel and the full Senate. It is uncertain whether the confirmation process could be complete before Congress is scheduled to leave town for August recess next Friday.
Google should commit to a strong privacy regime as part of its effort to digitize mass quantities of books before a fairness hearing this fall on a $125 million settlement the company reached with publishers, the Center for Democracy and Technology said in a Monday report. The paper asks the court to approve the Google Book Search settlement but to retain oversight in order to monitor implementation of a privacy plan. U.S. District Judge Denny Chin has scheduled a hearing for Oct. 7 and the Justice Department formally acknowledged an investigation into Google's settlement earlier this month.
"The new service will considerably increase public access to millions of books containing much of the world's written knowledge and ideas and will transform how the public conducts research, interacts with written text and shares information and ideas with others," CDT President Leslie Harris said in a press release. Libraries have a long history of protecting reader privacy and safeguarding the right to read anonymously; the report highlights how Google -- which helps fund CDT's work -- can best adapt to its new role as traditional library functions are centralized and moved online, the analysis stated. Read the report here (PDF).
Sen. Al Franken (D-Minn.) began his questioning of Supreme Court nominee Sonia Sotomayor (see video above) by raising questions about Internet service providers' ability to speed up and slow down Web traffic. He asked whether there is a "compelling First Amendment interest in ensuring this can't happen and the Internet stays open and accessible." Sotomayor responded that the Internet is "revolutionary" and it affects all areas of the economy and society. But the role of the court is never to make the policy. It's to wait until Congress acts," she added.
Supreme Court nominee Sonia Sotomayor fielded questions from Sen. Amy Klobuchar, D-Minn., during the continuation of her confirmation hearing Wednesday about her perspectives on U.S. v. Falso, a recently decided case in the U.S. Court of Appeals for the Second Circuit involving the legality of evidence obtained in a home search -- specifically the search of a defendant's computer. Sotomayor, who was on the panel, held that police did not have probable cause because there were no allegations that the defendant, Jon David Falso, actually possessed child pornography or subscribed to any such Web site. Concerning Falso's past crimes, the court held that the correlation was not strong enough.
Sotomayor said the case "presented a very complicated question" because there had been two cases addressing how much information a warrant had to contain in order for the police to search a defendant's computer. "I was looking at it in the backdrop of the conflict that it appeared to contain in our case law, and what our case law said was important for a police officer to share with a judge," she said. "I held that the acts violated the Constitution, but that the evidence could still be used, because the officers had -- there was in law a good-faith exception to the error in the warrant."
Read a longer summary about U.S. v. Falso written by the Electronic Privacy Information Center here and view the actual opinion here.
*Updated* The U.S. Court of Appeals for the District of Columbia on Friday refused to rule on the constitutionality of a federal panel that sets copyright royalties. Licensing firm Royalty Logic claimed the Copyright Royalty Board is unconstitutional because the Librarian of Congress, who is not technically the head of a government department, appoints its judges. As such, the complaint argued the CRB should be forced to vacate its decision in a proceeding that set the fee structure for webcasters.
National Music Publishers' Association President David Israelite wrote to House Judiciary Chairman John Conyers and ranking member Lamar Smith recently urging them to consider introducing legislation that would make moot any constitutional challenges to the CRB. Israelite argued that Royalty Logic's lawsuit could have meant the unraveling of all the panel's decisions since its judges (pictured) were appointed in 2006. He said Friday's ruling was a "sigh of relief" for the music industry. David Oxenford, an attorney who represents small webcasters in CRB proceedings, said the decision "really just delays the consideration of the issue of the constitutionality of the CRB. Now that this issue is on the table, it is bound to be raised by other parties in other CRB proceedings."
As the CRB embarks on its consideration of webcasting rates for 2011-2015, "there is a cloud hanging over its existence -- one that may take another Court decision, or some corrective action by Congress, to remedy," he wrote on his blog. Royalty Logic's attorney Kenneth Freundlich said he was surprised at the court's failure to address what he called a "fundamental issue." At the hearing, the judges pondered whether there should be further briefings on the matter but never followed up. Instead they cited "'inadequate briefing' as a basis for ducking the issue," he said, noting the ruling cites two cases that support his arguments. "Let this decision be a warning to all concerned and a message to Congress to fix this mess," Freundlich said.
The Justice Department has formally acknowledged an investigation into Google's settlement with publishers over its effort to digitize mass quantities of books. The New York Times and others have reported that Deputy Assistant Attorney General William Cavanaugh wrote to the federal judge administering the settlement, stating: "The United States has reviewed public comments expressing concern that aspects of the settlement agreement may violate the Sherman Act... At this preliminary stage, the United States has reached no conclusions as to the merit of those concerns or more broadly what impact this settlement may have on competition. However, we have determined that the issues raised by the proposed settlement warrant further inquiry."
The $125 million agreement was signed in October to resolve a 2005 class action lawsuit filed by the Authors Guild and the Association of American Publishers against the Internet giant. In the complaint, the authors and publishers said Google's plan to digitize millions of books from libraries and make them available in its Book Search service amounted to a whopper of a copyright violation. The settlement would let Google display books online and profit from them by selling access to titles and by selling subscriptions to its collection. Authors and publishers would get a chunk of the revenue. U.S. District Judge Denny Chin set a Sept. 18 deadline for the government to offer its views in writing. He has scheduled an Oct. 7 hearing on the settlement.
High-tech advocacy groups this week filed a friend-of-the-court brief opposing efforts by music licensing organization ASCAP to impose additional licensing payments on providers of musical ringtones for mobile phones. The Center for Democracy and Technology, the Electronic Frontier Foundation, and Public Knowledge urged a New York federal court to reject ASCAP's claim that ringtones are "public performances" under copyright law simply because a phone may ring when the user is in a public place. ASCAP's position implies that mobile phone users are copyright infringers and would expand liability in ways that could chill innovation in products far beyond the relatively narrow context of ringtones, the groups argued.
ASCAP, which has about 360,000 members, recently released a memo in support of its legal battle against AT&T and Verizon that argues wireless carriers make billions of dollars from ringtones including per tone charges and multiple additional charges surrounding the transmission of ringtones. The revenue generated is "more than sufficient to cover a reasonable payment to ASCAP members," the organization said. Additionally, ASCAP stressed that it seeks to license carriers' transmissions of music and is not trying to charge consumers. EFF attorney Fred von Lohmann called ASCAP's an "outlandish argument," noting that under its reasoning, someone playing a car radio with the window down would be violating copyright law.
A related debate could play out on Capitol Hill. In a recent recent letter, songwriter and music publisher representatives requested legislation to expand the scope of the public performance right so that it will apply to digital downloads of audiovisual works. Trade groups representing Internet music providers, e-commerce firms and electronics manufacturers claim the effort would "impose a licensing obligation and potentially significant royalties on activities that are unequivocally unrelated to public performance." House Judiciary Chairman John Conyers is planning a hearing on the issue while Senate Judiciary Chairman Patrick Leahy has begun talking with stakeholders.
The Supreme Court on Monday said it would not hear a case in which Hollywood studios and some cable networks sued Cablevision for providing a remote digital video recorder service where the copy of the recorded program resides on the cable operator's servers rather than on a hard drive in the home. The studios alleged that the so-called "buffer copies" and the copies residing on Cablevision's servers were a violation of its right to reproduce the program and that the recordings sent to the customer infringed on its public performance right. A lower court in New York City sided with the studios but an appeals court reversed that decision.
Since there is no further litigation pending in this case, Cablevision is now free to implement the remote DVR service and other providers will likely follow suit, Stifel Nicolaus analysts said in an e-mail. The remote functionality saves Cablevision storage costs, reduces expensive truck rolls, and allows their customers greater flexibility, they wrote. The issue could arise again in a later suit by the content owners against another cable company that implements its own remote DVR and could wind up back at the Supreme Court, the analysts added. Consumer Electronics Association President Gary Shapiro lauded the ruling, saying it was a "slam dunk" from a common sense standpoint.
Cablevision Chief Operating Officer Tom Rutledge called the action "a tremendous victory" but said he remains mindful of the potential implications for ad skipping and the concerns this has raised in the programming community. "We believe there are ways to take this victory and work with programmers to give our customers what they want -- full DVR functionality through existing digital set-top boxes -- and at the same time deliver real benefits to advertisers," he said in a statement. Copyright Alliance Executive Director Patrick Ross said the high court's ruling "is unfortunate and potentially harmful to creators and creative enterprises across the spectrum of copyright industries."
Five individuals pleaded guilty in a Detroit, Mich., federal court Monday for their roles in a wide-ranging international stock fraud scheme involving the illegal use of bulk commercial e-mails, or spamming, Assistant Attorney General Lanny Breuer and U.S. Attorney for the Eastern District of Michigan Terrence Berg announced. Alan Ralsky faces up to 87 months in prison and a $1 million while his son-in-law Scott Bradley faces up to 78 months in prison and a $1 million fine. Berg said Ralsky was at one time the world's most notorious spammer. He, Bradley and three co-conspirators stand convicted for an operation that sent billions of illegal e-mail advertisements to pump up Chinese "penny" stocks and then reap profits by causing trades in these same stocks while others bought at the inflated prices.
"Using the Internet to manipulate the stock market through spam e-mail campaigns is a serious crime, and this case serves notice that federal law enforcement has the both the capability and the will to successfully investigate, prosecute and punish such cybercrimes," Berg said. The pair's cohorts -- John Bown and William Neil -- also face stiff penalties. Under the terms of his plea agreement, Bown acknowledged he faces up to 63 months in prison and a $75,000 fine. Neil faces up to 37 months in prison and a $30,000 fine under the federal sentencing guidelines. A fifth man, James Fite, faces up to two years in prison and a $30,000 fine. The group is scheduled to be sentenced on Oct 29. Breuer said the prosecution is the largest to date under the CAN-SPAM Act and it underscores the agency's "strong and steadfast commitment to ridding our financial markets and cyberspace of e-fraudsters looking to prey on innocent victims."
Two high-tech watchdog groups that filed a Freedom of Information Act lawsuit in 2008 against the U.S. government over a perceived lack of transparency in Anti-Counterfeiting Trade Agreement negotiations have reluctantly dropped their complaint. The Electronic Frontier Foundation and Public Knowledge said Wednesday that the Obama administration's decision to support Bush-era concealment policies prompted the move. Federal judges have very little discretion to overrule Executive Branch decisions to classify information on national security grounds and government lawyers recently informed the court that they intend to defend the classification claims on those grounds, officials said.
Negotiating texts and background documents for the trade deal have been made available to representatives of major media copyright owners and pharmaceutical companies yet private citizens have had to rely on unofficial leaks for substantive information about the treaty, EFF International Policy Director Gwen Hinze said in a press release. "This can hardly be described as transparent or balanced policy-making," she said. U.S. Trade Representative Ron Kirk on Friday announced that representatives from the United States, Canada, the European Union, Japan, Mexico and other countries will meet in Morocco next month to resume ACTA discussions with an eye for completion in 2010.
Read related CongressDaily coverage here (subscription required).
France's Constitutional Court on Wednesday struck down a key portion of a recently enacted law that gave the government the ability to disconnect Internet users who illegally download music and movies. Under the so-called "three strikes" regime, which President Nicolas Sarkozy endorsed and lawmakers approved in May, users who download content without paying for it would get an e-mail from the government followed by a letter and a third warning before their Web connectivity is cut off for as long as one year. Concerns about a similar proposal permeated talks between the United States and a handful of trading partners as they work toward completion of an Anti-Counterfeiting Trade Agreement.
The high court also found that access to the Internet in is among citizens' fundamental freedoms that cannot be curtailed or interrupted without intervention from a judge. The ruling came as a number of foreign entertainment industry executives gathered in Washington for the World Copyright Summit. French Minister of Culture and Communication Christine Albanel was scheduled to speak Tuesday but she canceled due to the likelihood that the court would rule this week. International Confederation of Societies of Authors and Composers Secretary General Eric Baptiste broke the news to attendees, saying his group was disappointed with the decision.
Sarkozy's supporters are not wasting time formulating a new plan. International Federation of the Phonographic Industry Executive Vice President Shira Perlmutter told the conference that policymakers are already crafting a modified bill that will maintain the same graduated response approach but transfer some powers to a special court. The French movement was an important step forward in recognizing that music stakeholders need to work with Internet service providers, Perlmutter said during a session about the role of ISPs, which lacked a broadband provider representative. "It put in place a system that would be more effective and less draconian than having to sue a lot of individuals," she said.
A California appeals court's reinstatement of an antitrust lawsuit against a firm that administers the .com and .net domain name registration systems could add a new wrinkle to the ongoing debate in Washington over the future of the Internet Corporation for Assigned Names and Numbers and its relationships with various entities that have a stake in the security and stability of the World Wide Web. The unanimous 9th U.S. Circuit Court of Appeals ruling last Friday will allow an Internet industry trade group to proceed to trial on claims that Mountain View-based VeriSign inflated the cost of domain names by engaging in predatory and monopolistic behavior. The court reversed an earlier ruling by U.S. District Judge Ronald Whyte, who dismissed the suit brought by the Coalition for ICANN Transparency (CFIT) four years ago.
The lawsuit alleged VeriSign secured the ICANN contract through 2012 without a competitive bidding process. After solidifying its control of Internet addresses ending in .com, VeriSign has incrementally increased registration fees. At a hearing of the House Energy and Commerce Communications Subcommittee last week, Rep. John Dingell, D-Mich., asked VeriSign Chief Technology Officer Ken Silva whether his firm planned to raise rates again in 2009. Silva could not answer. At the same hearing, an executive at Web hosting firm GoDaddy argued the manner in which the VeriSign-ICANN deal was negotiated lacked transparency and an official from the National Telecommunications and Information Administration pledged to conduct "a fulsome review" involving the Justice Department and others when the contract's expiration nears.
The Supreme Court agreed Monday to consider what types of business methods qualify for patent protection in a case with ramifications for the software, biotechnology and financial services industries, Bloomberg News reported. The justices said they will review a lower court decision that narrowed the class of patentable inventions, excluding some innovations that do not have a physical component. Because it came from the federal appeals court that handles all patent appeals, the ruling had marked a watershed in U.S. intellectual property law. The case (Bilski v. Doll) will mark the first time since 1981 the Supreme Court has ruled on the types of innovations covered by the U.S. Patent Act.
Computer and Communications Industry Association President Ed Black said he was pleased with the additional opportunity the case provides for legal clarity. "The lack of limits on patentable subject matter as a result of the State Street decision has created chaos in the marketplace and provided fertile breeding ground for patent trolls," he said. "We are pleased by the federal circuit decision in Bilski because it cuts back on what has been an extremely problematic area in the patent system that stems from granting patents on abstract subject matter. We hope the Supreme Court will return to the wisdom of its earlier rulings and affirm strong principles about the limits of patentable subject matter."
More details about the case: Patently-O Blog, SCOTUS Blog, The 271 Patent Blog.
President Obama hopes he can utilize the Internet as successfully to build support for his pick for the Supreme Court as he did during his campaign for the White House. The Democratic National Committee's "Organizing For America" initiative has launched an online action center at MyBarackObama.com to generate favorable buzz around 2nd U.S. Circuit Court of Appeals Judge Sonia Sotomayor amid criticism from conservatives. On the site, citizens can add their names to a public list of supporters; write a letter to newspaper editors; look up numbers for senators; download posters and more.
Read more here.
U.S. Appeals Court Judge Sonia Sotomayor, whom President Obama named as his nominee for the Supreme Court on Tuesday morning, has a background in intellectual property litigation -- as an associate and partner at the Manhattan law firm Pavia & Harcourt and as a judge on the U.S. District Court for the Southern District of New York. As a district court judge in 1997, Sotomayor heard a case brought by a group of freelance journalists who claimed various news outlets including the New York Times and Time Inc. violated copyright laws by reproducing their work on electronic databases and archives such as Lexis-Nexis without first obtaining their permission. Sotomayor ruled against the freelancers, arguing that the publishers were within their rights under the Copyright Act.
The appeals court reversed Sotomayor's decision, siding with the freelancers, and the Supreme Court upheld the appellate ruling 7-2. Justices John Paul Stevens and Stephen Breyer dissented, siding with Sotomayor's position. Justice Ruth Bader Ginsburg wrote the majority's opinion, saying: "If there is demand for a freelance article standing alone or in a new collection, the Copyright Act allows the freelancer to benefit from that demand; after authorizing initial publication, the freelancer may also sell the article to others. It would scarcely "preserve the author's copyright in a contribution" as contemplated by Congress... if a newspaper or magazine publisher were permitted to reproduce or distribute copies of the author's contribution in isolation or within new collective works."
NationalJournal.com's new blog, The Ninth Justice, reports....
It's the calm before the Internet storm. Interest groups, influential bloggers and others are anxiously waiting to see who President Obama will pick as his first Supreme Court nominee after Justice David Souter announced his retirement May 1. Once the news is out, they will rally their online supporters and rake through the nominee's court decisions on controversial topics like gay marriage, abortion and affirmative action to speculate on how he or she will influence the high court for decades to come. "Every chink in the armor, every flaw, gets magnified" on the Internet, said Tony Mauro, a reporter with the National Law Journal who has covered the Supreme Court for nearly 30 years. The Web makes what would otherwise be normal criticism or flaws seem "like deal breakers," he said.
In the last battle over a Supreme Court nominee, conservatives roundly criticized President Bush's choice of Harriet Miers and forced her to withdraw; liberals then attempted to filibuster Samuel Alito's nomination, charging that he was too far to the right. As the legal and political blogs have grown in influence since 2005, Mauro said, the mainstream media, in turn, has acknowledged their higher profile. It only seems natural that the process will be much more intense this time around, he said. Indeed, the Web has woven itself into nearly every part of politics and policy since the 2008 presidential campaign.
Read the full post by Amy Harder here.
When it comes to congressional passage of a patent reform bill, the devil will be in the details, the chief judge for the U.S. Court of Appeals for the Federal Circuit told the Intellectual Property Owners Association international judges conference Monday. If a bill passes the House and Senate, Judge Paul Michel said he would expect it to include language that would change the United States from a "first to invent" to a "first to file" patent system. That modification is one of many proposed in legislation sponsored by Senate Judiciary Chairman Patrick Leahy and House Judiciary Chairman John Conyers. "On the other details stay tuned and stay involved," Michel said. Leahy's panel passed its patent bill before Easter recess and the senator's staff will soon start looking to secure floor time for a vote. But leadership aides have warned that this work period is a busy one and the legislation may have to wait. The House has not yet begun work on its bill. Michel said he believes there is a "substantial likelihood" some version of a patent bill will clear this year, potentially by the end of the summer.
During his talk, Michel pointed out several key intellectual property positions that are vacant. The Patent and Trademark Office, which he called a "highly stressed institution," still lacks a director and the newly created job of IP enforcement coordinator within the White House has not been filled. Both will be extremely important posts going forward, Michel said. On the international front, The World Intellectual Property Organization is in search of a deputy director. "It is conceivable that job could be filled by an American," the judge said. "Even in my own court, there is the prospect of a considerable changeover of membership," Michel added. Of the 12 active fulltime judges, four are already eligible to retire or assume senior status and within two years an additional four will fall into that category. Meanwhile, his court and others are struggling to keep pace with IP lawsuits and the PTO and its counterparts around the world are dealing with huge application backlogs and long pendency times. "It's ironic that in a world where the pace of commerce and news and innovation keep getting faster, the patent offices are getting slower," Michel said.
An issue brief put out by the American Constitution Society for Law and Policy Friday holds that the public should be concerned about Google's online library of books it has been acquiring from the collections of many university libraries. Currently, there is a proposed settlement of a class action lawsuit brought by authors and publishers against Google over copyright infringement. Google has denied the claims of the lawsuit. James Grimmelmann, the New York Law School professor who wrote the ACS report, argued the settlement would let Google sell books under copyright whose copyright owners cannot be found. He warned this turns Google "into a dominant platform with control over a huge catalog of books that no one else has access to."
Grimmelmann further claims the issue should be resolved through the legislative process and Google's competitors could also file antitrust lawsuits on the orphan works issue. Google has held that the settlement "promises to benefit readers and researchers, and enhance the ability of authors and publishers to distribute their content in digital form, by significantly expanding online access to works through Google Book Search, an ambitious effort to make millions of books searchable via the Web." "The agreement acknowledges the rights and interests of copyright owners, provides an efficient means for them to control how their intellectual property is accessed online and enables them to receive compensation for online access to their works," Google said.
Readers of Grimmelmann's brief might want to note the footnotes on the bottom of the first page. Grimmelmann has significant ties to Google competitor Microsoft. He has headed the Public Interest Book Search Initiative, which has received funding from Microsoft and previously worked as computer programmer for Microsoft. Microsoft spokesman Jack Evans wrote in an email that his company has provided funding to the institute and dozens of other institutions. "We do so with the clear understanding that the work done is to be independent," he said. Evans added the company funded this proposal because "we believe it's an important public policy matter regarding a copyright subject (orphan works) that we have a history of interest in and have spoken about many times publicly as far back as four years ago." -- Winter Casey
Intellectual property rights enthusiasts lauded a Swedish jury's decision Friday to hold the two founders and two operators of the infamous Pirate Bay Web site guilty of criminal copyright infringement. The court levied jail sentences and civil damage awards worth about $3.6 million against the defendants whose BitTorrent site attracted an estimated 22 million users worldwide. The Progress and Freedom Foundation's Tom Sydnor said the outcome delivered a simple message about the activities of the Pirate Bay: "Good riddance to bad rubbish." He commended Sweden for upholding the rule of law and urged the government to act swiftly to end the site's illegal activities.
Syndor also said the ruling was "an affirmation of the rights of the hard-working, law-abiding creators" whose efforts to stem the global recession were hampered by "socially destructive freeloading" by sites and distributors of piracy-adapted file-sharing programs. Business Software Alliance President Robert Holleyman also commented on the ruling, saying it "serves as a clear warning to other Web site operators who are knowingly offering illegal content, or enabling the illegal distribution of content, that their operations are immoral and punishable by law." The trade group executive called the case "a victory for copyright holders, who deserve to be rewarded for their creativity and hard work." Internet-based software piracy is a huge problem with serious consequences for consumers, the economy, and society, Holleyman said.
The Justice Department wants to extend the term of certain portions of Microsoft's final antitrust judgment by at least 18 months, according to documents submitted Thursday to the U.S. District Court for the District of Columbia. The agency said an extension is necessary to ensure the quality of the technical documentation Microsoft provides to licensees. The agency made its views known as part of its joint status report to Judge Colleen Kollar-Kotelly who has been handling the high-tech giant's case. The DOJ antitrust division is charged with enforcing the final judgment in conjunction with officials from 17 states and the District of Columbia, which along with Microsoft joined in the filing.
In 2006, Microsoft agreed to a two-year extension of the communications protocol licensing program contained in a section of the final judgment, along with all of the final judgment's enforcement provisions. The company also agreed that the department and state antitrust enforcement agencies could ask for an additional extension of all or part of the extended provisions of the final judgment for a period of up to three additional years, through November 2012, according to DOJ. In the filing, the Obama is exercising its right to seek an extension of a certain section through May 12, 2011. Otherwise, the final judgment would have expired on Nov. 12, 2009.
The section in question requires that Microsoft make available to competing server software developers, on reasonable and non-discriminatory terms, certain technology used by Microsoft to make its server operating systems interoperate with client PCs running the Windows operating system, DOJ said. Microsoft also must provide licensees with technical documentation to help them to use the technology. In past status reports, the department raised concerns with the quality of the documentation Microsoft was providing and the length of time it was taking to improve that documentation. In 2008, National Journal's Technology Daily ran a series of stories examining the impact of Microsoft's epic antitrust battle nearly a decade after it began. View a PDF of that special coverage here.
The Supreme Court said Monday it will not consider restoring Virginia's anti-spam law, which is one of the nation's most aggressive state statutes aimed at banning unsolicited e-mail. The high court's decision to reject the case leaves in place a ruling by the Virginia Supreme Court that the law was unconstitutional because it prohibited political, religious and other messages in addition to commercial solicitations. Virginia was the only state to ban noncommercial bulk e-mail. State Attorney General Bill Mims said he plans to draft legislation in the next General Assembly session that addresses constitutional concerns posed by the spam law.
The Supreme Court's decision ensures the reversal of the conviction of Jeremy Jaynes, who in 2004 became the first person ever convicted of a felony for sending spam without allegations of any accompanying illegal conduct. Under a variety of aliases, Jaynes was accused of using T1 Internet connections to send hundreds of thousands of e-mails per day, using e-mail lists later reported stolen from AOL and eBay, among others. He was sentenced to nine years in jail but is serving time in federal prison on an unrelated conviction for securities fraud.
U.S. Internet Service Provider Association Executive Director Kate Dean said her group was disappointed the court chose not to hear the case. "While we believe the lower court's ruling to be flawed, the absence of a Virginia state law does not permit criminals to use ISPs' networks to transmit unsolicited commercial e-mail," she said. The Criminal Justice Legal Foundation's Kent Scheidegger was also displeased. "The premise that this law prevents people from sending e-mails without revealing their identity is wrong," he said. Both U.S. ISPA and Scheidegger's group filed friend-of-the-court briefs in the case.
The European Court of Justice ruled this week that a data retention directive, which the European Council passed in 2006, is legal. The Court did not address any privacy concerns related to the directive and found that the provisions of the directive are limited to the activities of service providers.
"The Court notes at the outset that the action brought by Ireland relates solely to the choice of legal basis and not to any possible infringement by the directive of fundamental rights resulting from interference with the exercise of the right to privacy," according to a government statement. "Finally, the Court finds that the provisions of the directive are essentially limited to the activities of service providers and do not govern access to data or the use thereof by the police or judicial authorities of the member states."
TJ McIntyre, a lecturer at the University College Dublin, said the court found the directive doesn't regulate access to data based on the seriousness of the crime. He holds that this decision undermines all of the previous justifications promised to privacy advocates who were told that access to data would be limited to serious crimes. McIntyre, who chairs a group that challenged the EU directive, said the case brought by Ireland was the first challenge to the directive that has been heard by the European Court of Justice. His group has asked Ireland's High Court to refer the case to the Court of Justice.
Cyber crime expert Susan Brenner penned a blog entry last week on an upcoming Supreme Court case concerning whether an individual setting up drug purchases by cellphone, the Internet, or even land-line telephone can be charged with a felony. The case, Abuelhawa v. United States, hinges on judicial interpretation of the decades-old Comprehensive Drug Abuse Prevention and Control Act. The 1970 statute outlaws the use of a "communication facility" to carry out "any act or acts constituting a felony." Law enforcement agencies have usually applied this law to drug dealers and not personal-use buyers, who are commonly charged with a misdemeanor or no crime at all.
In the new case, Salman Khade Abuelhawa used his cellphone to purchase a small amount of cocaine for personal use and was arrested by the FBI, which had tapped the dealer's phone. The federal government saddled Abuelhawa with a felony and the U.S. Court of Appeals for the 4th Circuit upheld the charge. For more on the case, click here to read a National Journal magazine story and here here for an audio slideshow.
Continue reading High Court To Consider Communications Case.
The Justice Department on Friday will launch an Internet-based system to help protect states and consumers from automobile fraud and to provide law enforcement with new tools to investigate fraud, theft, and other crimes involving vehicles. The National Motor Vehicle Title Information System, or NMVTIS, will be available for consumers and will be accessible through third party, fee-for-service Web sites. Watchdog group Public Citizen has complained the system is many years overdue since Congress first ordered the federal government to create it in 1992.
Public Citizen, Consumers for Auto Reliability and Safety, and Consumer Action, sued the Justice Department over the delayed implementation and a court ordered that the government issue regulations and make the data available by Jan. 31, with data from private sources by March 31. Under the new system, car buyers will be able to instantly check the validity of a vehicle's title, verify its mileage and learn whether it had been stolen or deemed junked or salvaged. Public Citizen, however, pointed out that some states - including New York, California and Pennsylvania -are refusing to allow their vehicle data to be made public and other states are not reporting data at all.
Since 1997, Justice has committed over $15 million to assist states and other stakeholders in NMVTIS implementation. Currently, NMVTIS has the participation, or partial participation, of 36 states, according to a department press release. Along with implementing the system, the agency has outlined various responsibilities and reporting requirements for states, auto recyclers, junk yards and salvage yards, and insurance carriers. The agency has designed the system consistent with federal law that requires that the system be paid for through user fees and not dependent on federal funding.
Rep. Spencer Bachus, R-Ala., decried the Supreme Court's decision Wednesday not to revive an Internet child safety law that lower courts have struck down as unconstitutional. The Child Online Protection Act, which would have prohibited Web sites from making harmful content available to minors, passed Congress in 1998. Bachus, who sponsored and voted for the law, wrote a letter cosigned by Rep. Joe Pitts, R-Pa., urging the Justice Department to make a final attempt to save the statute.
A challenge brought by the American Civil Liberties Union has tied COPA up in hearings for more than 10 years, preventing it from ever being enforced, he said. The law required commercial pornographers to put a filter on their teaser pages - the electronic equivalent of a "brown paper bag" - to prevent accidental access by minors. Bachus said the law statute is "a commonsense way to help parents protect their kids from the corrupting influence of graphic pornography on the Internet."
Bachus, who serves as the top Republican on the House Financial Services Committee, said it is "outrageous to think that pornographers have a right to force this in front of the eyes of our impressionable children and grandchildren. Families across our nation are at greater risk today because of the ACLU's determination to protect pornographers." The ACLU and Center for Democracy and Technology hailed the high court's action, saying it killed what they believe is a bad law, once and for all. Read more here.
The Supreme Court said Wednesday it will not consider reviving a controversial Internet child safety law that lower courts have struck down as unconstitutional. The Child Online Protection Act, which would have prohibited Web sites from making harmful content available to minors, passed Congress in 1998 but has never taken effect. Sites would have been expected to require a credit card number or other proof of age. Penalties for noncompliance included a $50,000 fine and up to six months in prison.
A Philadelphia federal judge in 2007 rejected an attempt by the Justice Department to renew the ban, stating that parents can protect their children through software filters and other less restrictive means that do not limit the rights of adults to free speech. That ruling was upheld by an appeals court last year. The justices offered no comment on their decision to reject the Bush administration's appeal.
First Amendment advocates cheered the news. "This finally puts a nail in the coffin of the government's quixotic effort to censor content on the Internet," Center for Democracy and Technology President Leslie Harris said. American Civil Liberties Union attorney Aden Fine added that the court's decision not to hear the case "reinforces that government should not be deciding what people can look at on the Internet -- those decisions should be made by individual and their families." "We're hopeful that Congress will not try to enact a new federal law censoring protected speech on the Internet," Fine said. "If Congress does [act], the ACLU will obviously take a close look at it."
A traditionally secret federal intelligence court issued a rare public ruling Thursday that validated the power of the president and Congress to wiretap international phone calls and intercept e-mail messages without a court order. The ruling [opinion/order] was initially made by the Foreign Intelligence Surveillance Court of Review in August and was then released in unclassified, redacted form. The decision marks the first time since the disclosure of the National Security Agency's warrantless surveillance program three years ago that an appellate court has tackled the constitutionality of the government's wiretapping powers. It is only the second public ruling by the panel in its 30 year history.
Justice Department spokesman Dean Boyd said the agency was pleased with the ruling, saying the court upheld the lawfulness of directives issued under 2007's Protect America Act, concluding that the surveillance at issue fell within the foreign intelligence exception to the warrant requirement and was otherwise reasonable under the Fourth Amendment. The case involved a challenge by a private party to directives that were issued under the law to assist the government in conducting foreign intelligence surveillance against targets reasonably believed to be located outside the United States.
If Harvard Law School Dean Elena Kagan is confirmed as President-elect Barack Obama's Solicitor General, she will have the opportunity early in her tenure to weigh in on a major copyright case pending before the Supreme Court. On Monday, the court asked for the views of the federal government's top litigator on new technology for downloading cable television programs but did not specify a timeline for the advice. With eight days left in President's Bush term, the duty will most likely fall to the new administration.
The case in question -- Cable News Network, et al., v. CSC Holdings - was originally brought by several audio-visual content creators against Cablevision, which has developed a service used to make numerous copies of copyrighted programming and re-transmit them to customers without licensing that delivery from copyright owners. A lower court found the service to be a violation of copyright law but an appeals court overturned that decision. An array of copyright holders offered briefs on the matter.
The SCOTUS Blog called the case "a modern sequel to the breakthrough for consumers that originated in 1976 when Sony Corp. introduced Betamax, allowing users to use time-shifting devices to record TV programs for later viewing." The Supreme Court, in Sony v. Universal City Studios in 1984, ruled that consumer time-shifting does not infringe copyright in the programs. Since then, there have been two generations of successor technology. The latest of those is at issue in the new case, the blog stated.
The Federal Judiciary may be steeped in history, but it is not tied to the past, according to Supreme Court Chief Justice John Roberts' year-end report. "We have increased efficiency through the use of information technology, which accounted for 5 percent of the Judiciary's 2004 budget," he wrote. "The courts now routinely use computers to maintain court dockets, manage finances, and administer employee compensation and benefits programs."
The Judiciary has achieved significant savings through more cost-effective approaches in deploying those systems, he wrote. For example, the courts have found they can employ new technology in tandem with improvements in their national data communications network to consolidate local servers and other information technology infrastructure. The Judiciary's consolidation of its jury management program resulted in a savings of $2 million in the first year and an expected annual savings of $4.8 million through 2012, the report stated. A similar consolidation of the probation case management system is projected to save $2.6 million over the same period.
Meanwhile, the Judiciary is currently undertaking a consolidation of technology in its national accounting system, which is expected to achieve savings and cost avoidances totaling $55.4 million through 2012. Those at the Office of Management and Budget or the Congressional Budget Office may not be impressed by these numbers, Roberts added, but the entire Judicial Branch accounts for only 0.2 percent of the nation's budget. "For us, these are real savings," he wrote.
A Chinese court on Wednesday sentenced 11 ringleaders of the world's largest software counterfeiting syndicate to prison sentences ranging from 1.5 to 6.5 years -- the longest sentences handed down in China's history for this type of crime. Those sentenced by the Futian People's Court were arrested in July 2007 following an international investigation led by China's Public Security Bureau and the FBI, and assisted by information provided by Microsoft and hundreds of its customers and partners.
The group manufactured and distributed upwards of $2 billion worth of high-quality counterfeit Microsoft software, the high-tech giant said in a press release. The counterfeit content -- found in 36 countries and on five continents -- contained fake versions of 19 of Microsoft's most popular products and was produced in at least 11 languages. "This case is a testament to the importance of Microsoft's commitment to close collaboration with government bodies and local law enforcement agencies around the world to bring these criminals to justice, wherever they may be," Microsoft anti-piracy chief David Finn said.
Moving forward, Microsoft will continue to work with Chinese authorities to ensure that counterfeit software does not undermine the development of China's knowledge economy, said Fengming Liu, vice president of Microsoft Greater China Region. "This case is also a strong demonstration of the improvement in criminal law legislation and enforcement of intellectual property rights in China," added Zhao Bingzhi, president of the Criminal Law Research Committee of the China Law Society and vice president of the China Group of the International Association of Penal Law.
The U.S. Chamber of Commerce on Tuesday challenged the legality of requiring federal contractors and subcontractors to use the Homeland Security Department's E-Verify system, a free Web-based tool that uses Social Security Administration files to ensure that employees are legal immigrants or citizens eligible to work in the United States. Joining the Chamber as co-plaintiffs in the lawsuit are the Associated Builders and Contractors, the Society for Human Resources Management, the American Council on International Personnel, and the HR Policy Association.
The complaint, which was filed in a Maryland federal court, challenges the government's use of an executive order coupled with federal procurement law to make E-Verify mandatory for federal contractors with projects exceeding $100,000 and for sub-contractors with projects exceeding $3,000. The Chamber also challenged expanding E-Verify to require the reauthorization of existing workers. "This massive expansion of E-Verify is not only bad policy, it's unlawful," the National Chamber Litigation Center's Robin Conrad said in a press release. Read more here.
Three individuals were sentenced to prison Friday for their roles in an online copyright infringement scheme involving the sale of counterfeit software worth $2.5 million, Acting Assistant Attorney General Matthew Friedrich said in a press release. The case is part of the Justice Department's ongoing initiative to combat the commercial distribution of pirated and counterfeit goods through online auction sites and other Web sites. The defendants: Thomas Rushing of Wichita Falls, Texas; Brian Rue of Denton, Texas; and William Partridge of Royse City, Texas, were sentenced by U.S. District Judge Sam Sparks in Austin.
Rushing was sentenced to three years behind bars, threes years of supervised release and a $10,000 fine. In addition to the prison term, Rushing also was ordered to forfeit his 2006 Porsche Cayenne purchased with illegal proceeds and about $40,000 seized from bank accounts. Rue and Partridge were each sentenced to 12 months and one day in prison, three years of supervised release and a fine of $3,600. Rue was also ordered to forfeit roughly $17,000 seized from a bank account he controlled and Partridge was ordered to forfeit a 46" high-definition TV purchased with illicit funds.
According to court documents, the trio operated Web sites that sold a large volume of downloadable counterfeit software without authorization from copyright owners. The defendants also promoted their illicit scheme by purchasing advertising for their Web sites from major Internet search engines. As part of his ruling, Judge Sparks ordered the forfeiture of the Web site domain names --"valuesoftwaresales.com," "allsoftwaredownload.com," "esoftwarevalue.com" and "priceslashsoftware.com" -- used in the sale of pirated software.
The Recording Industry Association of America will drop its campaign of lawsuits against people allegedly sharing music online illegally, according to the Wall Street Journal. Instead, the trade group for major music labels said it will try to rely on Internet service providers to make a dent in file-sharing through graduated responses. The RIAA said it has arrived at preliminary agreements with ISPs under which it will send an e-mail to the provider when it finds a provider's customers making music available online for others to take, the newspaper reported. The RIAA does, however, plan on continuing with outstanding lawsuits.
RIAA Chairman Mitch Bainwol believes the new strategy will reach more people, which itself is a deterrent. "Part of the issue with infringement is for people to be aware that their actions are not anonymous," he told the newspaper, noting that the marketplace has changed in recent years. Litigation was successful in raising public awareness that file-sharing is illegal, but now he wants to try a strategy he thinks could be more successful. Public Knowledge President Gigi Sohn lauded the news but noted RIAA's work with ISPs must ensure "customers are not cut off from their Internet service or have their service altered solely on the basis of a claim by a copyright holder that file-sharing is taking place."
The Justice Department on Thursday filed a civil antitrust lawsuit against Microsemi Corp. alleging that through its acquisition of Semicoa assets, the firm eliminated or reduced competition in the development, manufacture and sale of certain semiconductor devices used in military and space programs essential to U.S. security. The department alleges that as a result of the transaction, prices for these products have increased and there is likely to be lower quality service. The complaint asks that a court require the Irvine, Calif.-based company to undo the transaction by selling off the assets it acquired in July.
Government lawyers argued that the acquisition created a monopoly for small signal transistors used by the Defense Department and reduced from three to two the number of likely competitors for ultrafast recovery rectifier diodes also used by the military. Transistors and diodes are semiconductor devices used to control the flow of electric current. While consolidation in the defense industry in certain circumstances may be beneficial, this transaction was not, Acting Assistant Attorney General Deborah Garza said in a statement.
Anurag Dikshit, a founder and former executive at PartyGaming, pleaded guilty in a New York federal court Tuesday to illegal Internet gambling and agreed to cooperate with the U.S. law enforcement officials in an investigation of the Gibraltar-based online gaming company. He entered the plea to one count of online gambling in violation of the Wire Act and will forfeit $300 million, the Justice Department said. Dikshit, 37, faces up to two years in prison and a fine of $250,000, or twice the gross gain or loss from the offense.
From about 1997 through October 2006, PartyGaming operated a business that offered casino and poker games, among other games of chance, to customers around the world, including to individuals in the United States. During that time a majority of PartyGaming's users -- accounting for roughly 85 percent of PartyGaming's revenue in 2005 -- were located in the United States. Dikshit developed a proprietary software platform for PartyGaming, directed the firm's IT operations and was a principal shareholder for much of the time period.
German engineering conglomerate Siemens AG and three of its subsidiaries, which did businesses across the globe, pled guilty Monday to violations of the Foreign Corrupt Practices Act -- a law that makes it illegal to bribe a foreign official to get business. More than $800 million in bribes were paid by Siemens and its various entities from 2001 to 2007, the Justice Department said. The firm will pay a $450 million criminal fine to the U.S. government and will retain an independent monitor for four years, officials said.
"These penalties are strong medicine, but they are commensurate with the conduct at issue here, which can only be described as egregious," Acting Assistant Attorney General Matt Friedrich said at a briefing, noting they are necessary to ensure that all companies, domestic and foreign, large and small, have equal access to the globalized markets. According to court documents, Siemens executives used off-the-books slush fund accounts and shell companies to facilitate bribes and made false entries on the company's books.
"Siemens is closing a painful chapter in its history," Siemens' Supervisory Board Chairman Gerhard Cromme said in a release. "Today marks the end of an unprecedented two-year effort to resolve extremely serious matters for the company. Based on robust leadership processes, Siemens has established a sustainable culture of compliance."
Read more details of the DOJ/SEC press conference here.
A subsidiary of L-3 Communications Corp. has paid the U.S. government $4 million to settle allegations that the company submitted false and inflated claims to the Army for hours worked by the firm’s employees on a contract supporting military operations in Iraq, the Justice Department announced Monday. Madison, Miss.-based L-3 Vertex Aerospace has an ongoing contract with the Pentagon to provide helicopter maintenance services at Camp Taji, Iraq.
The settlement resolves a lawsuit filed on behalf of the U.S. government by former L-3 employee Henry Roderigas, who received $720,000 as his share of the recovery in the case. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery obtained by the government. U.S. Attorney David Nahmias said the resolution "demonstrates our commitment to protect public funds that support the operations of our armed forces from fraud and abuse." The case was prosecuted as part of a larger National Procurement Fraud Initiative, which began in October 2006.
The Supreme Court on Monday will hear a case that involves so-called "price-squeeze" claims under Section 2 of the Sherman Antitrust Act, which makes it unlawful for a company to monopolize, or attempt to monopolize, trade or commerce. Pacific Bell Telephone Co. v. linkLine Communications stems from a 2003 lawsuit by several Internet service providers, including linkLine, against Pacific Bell who complained the AT&T unit unfairly dominated a particular high-speed Internet market by charging them a high wholesale price in relation to the price at which the defendants were providing retail services. The U.S. District Court for the Central District of California sided with the ISPs and the U.S. Court of Appeals for the Ninth Circuit affirmed the ruling last year. Read more about the case at the SCOTUSWiki here.
Microsoft on Thursday announced 63 legal actions in 12 countries against online auctioneers who allegedly orchestrated international marketing schemes and sold counterfeit software to unsuspecting customers. Of the actions, 16 were taken in the United States; 12 in Germany; 12 in France; and seven in the United Kingdom as well as proceedings in Argentina, Brazil, Canada, Colombia, the Dominican Republic, Japan, Mexico and New Zealand. Most of the cases involved counterfeit Windows XP software -- a product line that is coming to the end of its sales cycle but genuine XP products are still available through some channels.
In recent months, Microsoft received complaints from victims of a new online auction scheme by auctioneers selling discounted software from a fabricated marketing program dubbed “Blue Edition.” The entirely fictional “Blue Edition” scheme fools unsuspecting consumers into purchasing low-quality counterfeit software burned onto a compact disc, the company said. Certain online auction sites like eBay proactively cooperated with Microsoft in its investigations and none of the latest actions were brought against the sites themselves. The lawsuits were part of Microsoft's Genuine Software Initiative, a program intended to advance antipiracy education within the software ecosystem.
The National Highway Traffic Safety Administration is unlawfully withholding records that detail the relationship between driver cell phone use and traffic fatalities, Public Citizen claimed late Monday in a lawsuit filed under the Freedom of Information Act in the U.S. District Court for the District of Columbia. The nonprofit Center for Auto Safety first requested the documents in March but NHTSA attorneys rejected the request, saying the records were exempt from disclosure.
After a follow-up demand, NHTSA turned over some files but did not release what are believed to be the most important of those requested, claiming the records are “internal briefing documents” not subject to release. Public Citizen's complaint asks the court to order NHTSA to release the records. The analysis stems from a 2003 letter from then-Transportation Secretary Norman Mineta urging governors to take action against hand-held and hands-free cell phones.
The Center for Auto Safety claims the letter was never sent and the study on which it was based was buried. “Driving and talking is as deadly as drinking and driving,” Center executive director Clarence Ditlow said in a statement. “Release of this study will destroy the myth that hands-free cell phones are safe.” To read the complaint, click here. An agency spokeswoman would not comment on the lawsuit.
A high-tech watchdog group will head to court Tuesday to challenge the constitutionality of a federal law aimed at granting immunity to telecommunications companies participating in illegal domestic surveillance. At the hearing before U.S. District Chief Judge Vaughn Walker in San Francisco, the Electronic Frontier Foundation will argue that amendments to the Foreign Intelligence Surveillance Act improperly take away Americans' claims arising out of the First and Fourth Amendments; violates the government's separation of powers; and robs telecom customers of their rights without due process of law.
Signed by President Bush earlier this year, the law allows for the dismissal of the lawsuits over the telecoms' participation in the warrantless surveillance program if the government secretly certifies to the court that the surveillance did not occur, was legal, or was authorized by the president. Attorney General Michael Mukasey filed that classified certification with the court in September and is demanding that the cases be dismissed, according to EFF.
The watchdog group is representing the plaintiffs in Hepting v. AT&T, a class action suit brought on behalf of millions of AT&T customers whose communications and records were given to the National Security Agency. EFF was appointed co-coordinating counsel along with the American Civil Liberties Union for all 46 outstanding lawsuits concerning the government's warrantless wiretapping activities. Also Tuesday, the court will hear arguments on the future of Al-Haramain Islamic Foundation v. Bush, a case alleging that the government illegally spied on the charity and its lawyers.
On Monday, Walker issued some questions about the constitutionality of the immunity provisions that he wants the parties to address. His questions can be found here.
The U.S. Court of Appeals for the Federal Circuit, the panel that hears patent disputes from around the country, is slated to examine a high-profile case on Friday involving a dispute over Patent and Trademark Office rules announced last fall aimed at increasing patent system efficiency. The PTO's regulations, which limit applicants to filing two new continuing applications and one request for continued examination, were challenged by drug manufacturer GlaxoSmithKline and an independent inventor, Triantafyllos Tafas. Read CongressDaily's recent coverage here and here.
U.S. District Judge James Cacheris of the Eastern District of Virginia decided in April that the rules were an improper expansion of the PTO's statutory authority and the agency took its case to the appellate panel. At the time of the decision, GlaxoSmithKline, which complained that about 100 of its pending applications would be jeopardized, said the lower court's judgment was "in support of innovation across all industries." The PTO believes that its rules are consistent with existing statutes and would strengthen the U.S. patent system for all, an agency spokeswoman said.
The Federal Trade Commission on Monday asked the Supreme Court to review the U.S. Court of Appeals for the District of Columbia Circuit’s April decision in the agency's case against Rambus. The FTC had determined that computer memory manufacturer engaged in unlawful market monopolization. Judge Stephen Williams wrote that the FTC “failed to sustain its allegation” that Rambus, while participating in a standards-setting process for dynamic random access memory deceptively hid the fact that four of its technologies were incorporated into the standard.
Commissioners voted unanimously in August 2006 that Rambus distorted the standards process and engaged in an anticompetitive “hold up” of the computer memory industry. The agency charged Rambus with the antitrust violation in June 2002. In its request to the Supremes, the FTC argued that the appeals court erred in its conclusions respecting causation; the court of appeals took an improperly narrow view of competitive effects; and review is needed to clarify and ensure uniformity on fundamental issues of antitrust jurisprudence.
Three public interest groups have filed a friend-of-the court brief urging a Kentucky appeals court to overturn a lower court ruling that authorized the seizure of more than 100 Internet domain names associated with Web sites operating around the globe. The Center for Democracy and Technology, Electronic Frontier Foundation and American Civil Liberties Union argue that if the ruling stands, it would wreak havoc on Internet free speech and governance. "No speech that conflicts with any law, anywhere in the world, would be safe from censorship," CDT's John Morris said.
In a move to combat what it viewed as illegal online gambling, Kentucky regulators convinced a state court to "seize" 141 domain names because the names allegedly constituted "gambling devices" that are banned under state law -- even though the sites were owned and operated by individuals outside of the state, and in many cases even outside of the country, EFF said in a release. Unless the sites screened out Kentucky users, the court held, the seizure order was proper. The groups' brief argues the seizure order was invalid because it threatened to impede access to a range of materials protected by the First Amendment.
"The court's theory -- that a state court can order the seizure of Internet domain names regardless of where the site was registered -- is not only wrong but dangerous," EFF attorney Matt Zimmerman said. "If the mere ability to access a Web site gives every court on the planet the authority to seize a domain name if a site's content is in some way inconsistent with local law, the laws of the most world's most repressive regimes will effectively control cyberspace."
A trade group representing NBC, News Corp., Time Warner, and other copyright industry interests urged the Supreme Court on Wednesday to review a lower court's decision that they believe threatens to upend the market for creative works and undermine years of legal precedent. The Copyright Alliance's friend-of-the-court brief in Cartoon Network v. CSC Holdings is the first such paperwork ever filed by the group, which was "impelled to do so in this case because the decision below could be so detrimental to the health of our copyright system."
The case was originally brought by several audio-visual content creators against Cablevision, which has developed a service used to make numerous copies of copyrighted programming and re-transmit them to customers without licensing that delivery from copyright owners. A lower court found the service to be a violation of copyright law but an appeals court overturned that decision. The alliance brief argues that even though the case arose in the context of reproduction and public performance of audio-visual works by a cable systems operator, "its potential impact across copyright industries is much broader."
The appeals court's ruling "suggests one can circumvent copyright law by implementing an absurdly complex and woefully inefficient delivery system that would have made the late Rube Goldberg proud," alliance executive director Patrick Ross said. "If this decision stands, it could cause harm across the copyright industries. It runs counter to the very heart of copyright as an incentive system that has made America’s creative works the most vibrant and sought after in the world." The court could decide whether to hear the case between now and June.
On Tuesday morning, while most of the country focused on voter turnout and predicting how the chips may fall for Sens. John McCain and Barack Obama, the Supreme Court heard arguments in the hotly debated case, FCC v. Fox Television Stations. At issue was whether the commission provided an adequate explanation or acted arbitrarily and capriciously, in changing its policy to permit isolated uses of expletives on broadcast TV to be considered "indecent" under federal law. The transcript of the argument is available here [PDF].
It has been 30 years since the Supreme Court ruled for the first time that the Constitution allowed the government to ban the broadcast, on radio and TV, of vulgar words that were indecent, though not obscene, according to an overview of the case on the SCOTUS Blog. That was the ruling in FCC v. Pacifica Foundation. Justice John Paul Stevens, the author of the main Pacifica opinion, is the only member of the court still serving. This time, the FCC is back, seeking to enforce a more restrictive policy after a lower court ruled the FCC lacked grounds to target so-called "fleeting expletives." The case involves the single use of a vulgar word -- specifically, two four-letter words, one a sexual epithet, the other a bit of barnyard or toilet slang.
According to the SCOTUS Blog's analysis, the Supremes "spent a spirited hour Tuesday talking about dirty words, but nobody ever uttered one of them." Chief Justice John Roberts and Justice Antonin Scalia appeared to be the only ones to tip their hand by enthusiastically promoting government authority to ban “fleeting expletives” while the other members "wandered somewhat randomly through alternative legal principles," the blog said. The “big elephant in the room,” as Justice Ruth Bader Ginsburg referred to the possible First Amendment implications of the FCC’s indecency policy, did not appear likely to emerge as the basis for a ruling against the Commission and in favor of broadcasters, the blog said.
Continue reading Supreme Court Hears FCC 'Fleeting Expletive' Case.
The Federal Circuit Court of Appeals on Thursday upheld a decision by the Patent and Trademark Office's appeals board in a high-profile “business methods patent” dispute. At issue was PTO's rejection of an application by inventor Bernard Bilski, who tried to patent what some believe is an abstract idea to reduce risk in buying and selling commodities. The case generated immense interest in the high-tech and intellectual property communities with amicus briefs filed by the American Intellectual Property Law Association, Business Software Alliance, Computer and Communications Industry Association and a number of individual firms.
The 9-3 ruling largely rejected State Street Bank & Trust v. Signature Financial Group, a decade-old case that established a test that helped pave the way for business method patents. Chief Judge Paul Michel, who wrote the majority opinion in the Bilski case, explained that "because the applicable test to determine whether a claim is drawn to a patent-eligible process under § 101 is the machine-or-transformation test set forth by the Supreme Court and clarified herein, and Applicants' claim here plainly fails that test." Michel has repeatedly criticized State Street but court watchers were unsure of which way the wind would blow.
The case has significance far beyond whether the inventor in question ought to be granted a patent, Accenture Intellectual Property Director Wayne Sobon said earlier this year. The judges acknowledged that impact by focusing on the possible effects of "any kind of a bright-line rule on our new economy," which is largely information-driven. At an April briefing, Foley & Lardner attorney Pavan Agarwal predicted the case would be sent to the Supreme Court, regardless of who won since the justices have shown more interest in hearing patent cases in recent years. Read a more detailed analysis on the Patently-O blog.
A federal judge in Los Angeles last week issued a $371,000 judgment against the Web site Pullmylink.com for the infringement of popular copyrighted movies and television shows owned by Paramount Pictures and Warner Brothers, two member companies of the Motion Picture Association of America. The judgment "affirms yet again that the legal system will not tolerate these Web sites that focus on linking to stolen content,” MPAA Executive Vice President John Malcolm said in a Wednesday press release.
The court found that the operator of Pullmylink engaged in contributory copyright infringement and inducement of copyright infringement by actively searching for, identifying, collecting, organizing, indexing, and posting on the site links to infringing material, which had been posted on various third party sites, allowing Internet users to easily locate and view the content in one place. The decision bans the Web site from further engaging in any activity that would infringe studios’ copyrighted works. There are more than 275 legal sites that provide high quality, digital content online, MPAA said.
The Motion Picture Association of America filed a lawsuit Tuesday asking a federal court in Los Angeles to stop RealNetworks from distributing the company’s RealDVD software, which studios argue allow movies to be copied illegally. In the complaint and motion for a temporary restraining order, the studios said RealDVD violates the Digital Millennium Copyright Act because it bypasses the copyright protection built into DVDs that protect movies against theft.
"RealNetworks knows its product violates the law and undermines the hard-won trust that has been growing between America’s movie makers and the technology community. The major motion picture studios have been making major investments in technologies that allow people to access entertainment in a variety of new and legal ways," the MPAA said. "We will vigorously defend our right to stop companies from bringing products to market that mislead consumers and clearly violate the law.”
In response to the studio's threat, RealNetworks said it planned to file an action for a declaratory judgment against DVD Copy Control Association, Disney Enterprises, Paramount Pictures Corp., Sony Pictures Entertainment, Twentieth Century Fox Film Corp., NBC Universal, Warner Bros. Entertainment, and Viacom. The suit asks the court to rule that RealNetworks' software fully complies with the DVD Copy Control Association's license agreement.
"We are disappointed that the movie industry is following in the footsteps of the music industry and trying to shut down advances in technology rather than embracing changes that provide consumers with more value and flexibility for their purchases," the company said. "We expect to successfully defend our right to make RealDVD available to consumers and consumers' rights to use it."
A former Alcatel CIT executive was sentenced Tuesday to 30 months in prison for engaging in an elaborate bribery scheme to obtain a mobile telephone contract from the state-owned telecommunications authority in Costa Rica, the Justice Department announced. Christian Sapsizian, a French citizen who was most recently worked for the vice president of the firm's Latin America division, made more than $2.5 million in corrupt payments to Costa Rican officials. He pleaded guilty to two counts of violating the Foreign Corrupt Practices Act in March 2007.
Sapsizian, a 20-year employee of the telecom company, was also ordered by U.S. District Judge Patricia Seitz in Miami, Fla., to forfeit $261,500; to serve three years of supervised release; and to pay a $200 special assessment. As part of his plea, Sapsizian agreed to cooperate with U.S. and foreign law enforcement officials in the ongoing investigation. He admitted in court that between February 2000 and September 2004, he conspired with a Costa Rican citizen who was Alcatel’s senior country officer in that country, and others to set up the bribe payments.
The money was given to a director for Instituto Costarricense de Electricidad, the state-run telecom authority in Costa Rica. According to plea documents, Alcatel was awarded a mobile phone contract by ICE in August 2001 valued at $149 million.
The Electronic Frontier Foundation, Public Citizen, Public Knowledge and the Citizen Media Law Project urged a federal judge in Chicago Friday to dismiss a law firm's trademark claims apparently aimed at quashing speech by an online news site. The firm of Jones Day filed the suit against Blockshopper.com, alleging that using its trademark to refer to the firm in a headline and linking to the Jones Day site could lead to confusion over the sponsorship of the site.
In its friend-of-the-court brief, the watchdog groups argue that routine references to Jones Day are well-established fair uses of a trademark and are protected by the First Amendment. "That reporting is protected under trademark and free speech law, and Jones Day should know that," EFF's Corynne McSherry said. The amicus brief is part of EFF's "No Downtime for Free Speech Campaign," which works to protect online expression.
The Justice Department released a joint status report Thursday on Microsoft's compliance with the final judgments pertaining to the U.S. government's landmark antitrust case against the high-tech giant. Microsoft has been working with plaintiffs in a handful of states known as “New York Group” and another group known as the “California Group.”
A few highlights:
Work on the Microsoft Communications Protocol Program (MCPP) continues to center on efforts to improve the technical documentation provided to licensees. Microsoft is continuing to work with a technical committee (TC) to finalize a system document template, which is taking longer than anticipated. Microsoft estimated it will complete the documents on March 30, 2009. To date, 28 licensees have signed up to receive free technical support and seven licensees have signed up for Windows source code access.
Plaintiff states and the TC continue to monitor developments regarding Windows XP and Windows Vista to assure compliance with the final judgments. This includes ongoing testing by the TC of Windows Vista, Vista Service Pack 1, XP SP 3, Windows Media Player 11, Internet Explorer 7 and beta versions of IE 8, to discover any remaining middleware-related issues. The TC’s review of early builds of Windows 7 continues.
The plaintiff states' interim status report filed in December 2007 informed the court of two complaints -- one of which was resolved earlier this year and the other remains under investigation. The New York and California Groups don't believe they have received any additional substantive complaints since the prior full status report. As of Sept. 12, Microsoft has received nine complaints or inquiries since the last joint status report in June. None were related to Microsoft’s compliance obligations under the final judgment.
Some interesting stats: Over 800 Microsoft employees and contingent staff are involved in work on the MCPP documentation. Of these, about 320 product team engineers and program managers are actively involved in creating and reviewing technical content. There are about 30 full-time employees and 50 contingent staff working as technical writers, editors, and production technicians. As testing continues, about 40 full-time employees and 425 contingent and vendor staff will work as software test designers, test engineers, and test architects.
The American Civil Liberties Union will urge a federal appeals court on Wednesday to uphold a decision striking down the so-called "national security letter" provision of the Patriot Act. The provision gives the FBI the authority to issue letters demanding private information about people within the United States and to place the recipients of the letters under indefinite gag orders. The issue has also been repeatedly scrutinized on Capitol Hill in the 110th Congress.
The ACLU and New York Civil Liberties Union filed a lawsuit in April 2004 on behalf of an Internet Service Provider that received an NSL. Because the FBI imposed a gag order, the suit was filed under seal and the ACLU is banned from disclosing its client’s identity. The ACLU initially challenged both the FBI’s power to demand records without judicial oversight and its power to impose gag orders on NSL recipients.
In September 2004, U.S. District Judge Victor Marrero struck down the statute. The government appealed the ruling but Congress amended the NSL provision before a decision was issued. The ACLU brought a new challenge to the amended version, and in September 2007, Marrero again found the statute unconstitutional. The government appealed that ruling and the parties will now face off before the U.S. Court of Appeals for the Second Circuit in New York City.
A civil forfeiture complaint was filed in the U.S. District Court for the District of Columbia against two homes located in Florida and South Carolina and about $53 million, the Justice Department announced on Tuesday. According to the complaint, the property constitutes proceeds of a sweeping Web-based wire fraud scheme that several individuals allegedly operated out of a former flower shop located in Quincy, Fla.
Thomas Bowdoin Jr., through his company, AdSurfDaily Inc., which operates on the online at www.adsurfdaily.com, www.asdcashgenerator.com, www.lafuentedinero.com, and www.goldenpandaadbuilder.com (collectively referred to as ASD), operated a Ponzi scheme that he masked as an advertising company.
The government’s complaint alleges that for more than a year, ASD operated a “paid auto-surf program” -- a so-called online advertising program that purportedly generated ad revenue by automatically rotating advertised Web sites into its investors’ Internet browsers. But ASD did not operate as a seller of ad services and there was no legitimate product being sold, the complaint alleges.
The Center for Democracy and Technology, Electronic Frontier Foundation, Public Citizen and a group of 14 law professors filed a joint friend-of-the-court brief arguing that violating an Internet service's “terms of service” agreement isn't a criminal offense under the Computer Fraud and Abuse Act. The brief submitted in United States v. Lori Drew explains the legal theory behind the government's indictment of Drew would effectively criminalize the actions of millions of Web users.
The suburban St. Louis mother allegedly created a false profile on the popular social networking site MySpace, posing as a teenage boy, to engage a 13-year-old neighborhood girl, Megan Meier, in conversation. Drew's conversations with Meier were allegedly cruel and harassing and Meier hanged herself.
“The Justice Department has blundered terribly in this case. By reaching for the same statute used to prosecute computer hackers, this indictment has turned the law into a blunt legal instrument that turns every violation of a site's terms of service into a federal crime,” CDT’s Leslie Harris wrote in an opinion column earlier this year. A case like Drew's would typically be handled under state or local law, but Missouri did not have a criminal statute that would reach her conduct and DOJ jumped in.
In other legal news…
The Second Circuit Court of Appeals on Monday reversed a lower court decision that many, including CDT, argued had the potential to chill innovation. The lower court ruling had blocked Cablevision from rolling out a digital video recorder system that stores recorded TV programs on remote servers instead of in set-top devices in customers' homes. The appeals court's ruling found that providing a remote DVR does not constitute direct copyright infringement.
The AARP, Computer & Communications Industry Association, Public Patent Foundation and a handful of other nonprofit and public interest groups filed a joint friend-of-the-court brief in a lawsuit involving the Patent and Trademark Office's plans to implement new rules aimed at improving patent quality and reducing abuse of the system.
The PTO's regulations, which limit applicants to filing two new continuing applications and one request for continued examination, were challenged by drug manufacturer GlaxoSmithKline and an independent inventor, Triantafyllos Tafas. The case is on appeal before a federal appeals court after a district judge decided not to allow the PTO to move forward.
“The patent office has a duty to protect the public interest," CCIA President Ed Black said. "It should be allowed to close procedural loopholes being exploited by some patent applicants to game the system into awarding them broad, vague patents." Read the amicus brief here.
A computer whiz-kid who used his smarts to pirate and sell software on popular auction site eBay was sentenced to 48 months in federal prison, three years supervised release and 150 hours of community service per year. Jeremiah Mondello of Eugene, Ore., was charged in federal court with identity theft, mail fraud and selling counterfeit programs. His personal computers and $220,000 in cash were also seized.
The Software & Information Industry Association, which initiated the action against the eBay pirate applauded the Justice Department and Homeland Security Department for tracking down the 23-year-old. “We are fortunate that he has been stopped, but there are hundreds more like him running illegal operations on eBay and other sites," SIIA Senior Vice President Keith Kupferschmid said.
On the heels of the Mondello news, SIIA announced six new lawsuits against Web-based sellers of illegal software. The trade group has filed 32 lawsuits in 2008 as part of its ramped-up effort to stop software piracy.
A New York federal judge on Monday ruled that Tiffany and Co. could not prevent eBay customers from buying and selling the company's high-end jewelry (which typically comes in a light blue box) on the popular online auction Web site. The ruling was seen by NetChoice Coalition's Steve DelBianco as a victory for the Internet and for consumers. EBay, which boasted 1,017 Tiffany items for sale on the day of the decision, is a member of DelBianco's trade group.
In rejecting Tiffany's claims U.S. District Judge Richard Sullivan pointed out that eBay had consistently removed listings of counterfeit Tiffany goods and had banned sellers found distributing them. Sullivan recognized that the case was never about counterfeits, DelBianco said. "This is about a luxury goods manufacturer wanting to control every marketplace in which its products are sold -- even at the expense of loyal and law-abiding consumers," he added.
I'm at jury duty today, which couldn’t have come at a better time. Congress is not in session and there's not much "news" going on. But, just in case, I've set up my mobile office in the waiting room (see photo). My lengthier-than-expected stay at the Moultrie Courthouse in scenic downtown Washington, DC inspired me to search for some hot high-tech legal news. Here's a rundown:
C2 Technologies Settles Lawsuit Against Sprint
Typhoon Hits Apple with Touch-Technology Lawsuit
SAP To Pay i2 $83M To Settle Patent Suit
Acer, Apple, Dell, HP Sued For Patent Infringement
Company Snoops Ex-CEO's Yahoo Mail Account, Faces Suit
A federal jury in Big Stone Gap, Va., has convicted the administrator for EliteTorrents.org, an Internet piracy site that, until May 2005, was a source of infringing copyrighted works, specifically pre-release movies, the Justice Department announced Friday. Daniel Dove, 26, was convicted on one count each of conspiracy and felony copyright infringement. EliteTorrents used BitTorrent peer-to-peer technology to distribute pirated works to thousands of members around the world, the agency said.
Evidence presented to the jury showed that Dove recruited members who had very high-speed Internet connections, usually at least 50 times faster than a typical high-speed residential Internet connection, to become uploaders. Evidence also showed that Dove operated a high-speed server, which he used to distribute pirated content. The case is the first criminal conviction after jury trial for P2P copyright infringement and the eighth conviction resulting from a nationwide sting against illegal P2P activity.
The jury in this case was presented with evidence that, at its height, EliteTorrents attracted more than 125,000 members and facilitated the illegal distribution of approximately 700 movies, which were downloaded more than 1.1 million times. Evidence presented to the jury also established that massive amounts of high-value software, video games and music were made available to members of the EliteTorrents group. Dove's sentencing is scheduled for Sept. 9, 2008. He faces a maximum of 10 years in prison.
Jammie Thomas, a single mother who was fined $220,000 by a federal jury in Minnesota for allegedly sharing 24 music tracks on the Kazaa file-swapping application, might get a another day in court. The Computer & Communications Industry Association, Electronic Frontier Foundation, Public Knowledge, and the U.S. Internet Industry Association filed a brief on Friday pushing for her to be given a new trial.
Thomas was found liable for unlawfully distributing music on Kazaa, notwithstanding the lack of evidence that she had in fact done so, CCIA said in a press release. Liability was based upon a jury instruction that the plaintiff record labels need not have proved that she actually distributed any music on the Internet to hold her liable. Hers was the first file-sharing case to be tried to a jury.
"If this outcome were allowed to stand, it would set a dangerous precedent for copyright law," CCIA President Ed Black said. "Before you hold someone responsible for an offense, in this case distributing protected songs, it’s probably a good idea to prove they actually committed the offense." The groups did not take a position on the merits Thomas's liabilities and defenses. Instead, the brief argues that the jury instruction had no basis in the Copyright Act.
The Electronic Frontier Foundation and the Association of Corporate Travel Executives urged an appeals court last week to review a decision allowing random and alleged invasive searches of travelers' computers at the U.S. border. The action comes as the Senate Judiciary Committee prepares to hold a hearing on the topic.
In a typical search, U.S. border officials will turn on the computer and then open and review files, EFF said. If agents see something of interest, they may confiscate the computer, copy its contents, and sometimes provide a copy to the Justice Department -- even when the traveler is not suspected of criminal activity. In some cases, travelers have never gotten their computers back from the government.
EFF and ACTE asked the full 9th U.S. Circuit Court of Appeals to rehear and reverse an appeals panel decision in United States v. Arnold, which upheld this blanket search and seizure power. The Supreme Court has ruled that customs and border agents can perform "routine" searches at the border without a warrant or even reasonable suspicion. Senate Judiciary's Constitution Subcommittee hearing will take place Wednesday, June 25.
The Electronic Frontier Foundation asked a federal court on Monday to protect the free speech rights of an animal welfare group after its video critiques of animal treatment at rodeos were removed from YouTube due to copyright claims.
The group Showing Animals Respect and Kindness (SHARK) videotapes and photographs rodeos in order to expose animal abuse, EFF said in a press release. SHARK posted more than two dozen videos to YouTube but the Professional Rodeo Cowboys Association filed takedown demands for 13 clips and they were stripped from the video-sharing site.
EFF Staff Attorney Corynne McSherry called the copyright claim "completely baseless" and said the complaint was made simply to block the public from seeing SHARK's controversial videos. Read more here.
The Electronic Frontier Foundation asked a judge in Illinois Wednesday to reject an attempt to identify an anonymous MySpace user who allegedly posted fake profiles of a government official because the request would violate both the First Amendment and federal statute.
In May, Cicero Town President Larry Dominick asked a Cook County Circuit Court to order the disclosure of the identities of the author of two MySpace "spoof" profiles that allegedly included defamatory comments and unnamed privacy violations. In its amicus brief, EFF argued the petition violates the First Amendment right to remain anonymous until a litigant can demonstrate a viable legal claim.
If Dominick's claims are genuine, he may be able to obtain the information that he seeks, EFF said in a press release, but until he meets his burden, the court should not grant his request. The First Amendment requires courts to guard against attempts to unmask critics who have simply made statements litigants don't like, especially when such requests are made by elected officials, the group said. Read more about the case here.
The Supreme Court said Monday that it will not hear a case involving an online publisher known as Perfect 10 that claims credit card companies are enabling the Internet piracy of its pictures of nude models. The firm said in court filings that its business has been harmed by pirate sites, many of them overseas, which have used its images without permission.
Perfect 10 sued several intermediaries, including Google, Amazon.com, MasterCard and the Visa International Service Association. The lawsuit against Visa and MasterCard was previously dismissed by a district court and the U.S. 9th Circuit Court of Appeals.
The financial firms argued in their brief that Perfect 10's claims of infringement would further "a radical new theory that would impose substantial liabilities on a wide variety of enterprises for providing services that may be described as 'critical support' to infringers, regardless of whether the services specifically involve or promote the infringing conduct."
High-tech accessory manufacturer Man & Machine filed a lawsuit this week against Apple Inc. and CBS, claiming the companies' use of the term "Mighty Mouse" infringes its trademark. The firm brought its case Tuesday in the U.S. District Court for the District of Maryland.
Apple has been selling a Mighty Mouse product for some time and CBS is involved because the company owns the trademark for the animated superhero Mighty Mouse. A blurb on Man & Machine's Web site said the company "declines to discuss its trademark-infringement complaint… the underlying merits of the case, or any related settlement discussions, since the litigation remains pending."
NextGov.com reports:
After working for more than six years under a court ruling not allowing certain Interior Department employees to use the Internet, a U.S. District judge ruled this week that the affected departmental agencies could get back online.
District Judge James Robertson granted on May 14 motions filed by Interior requesting that the Bureau of Indian Affairs, the Office of Hearings and Appeals, the Office of the Special Trustee, and the Office of Historical Trust Accounting be allowed to reconnect their networks to the Internet.
In December 2001, U.S. District Court Judge Royce Lamberth ordered Interior to disconnect from the Internet all information technology systems that had access to Indian trust data managed by Interior's Bureau of Indian Affairs. The ruling was part of a class action lawsuit accusing the government of mismanaging thousands of Indian trust accounts.
Monday's big legal story was the Supreme Court's codification of a 2003 federal law aimed at combatting child pornography. The high court concluded in a 7-to-2 opinion that a federal appeals court was wrong to find the law unconstitutionally vague.
Some selected coverage:
WaPo: Court Upholds Law That Prohibits Promotion of Child Pornography
NYT: Supreme Court Upholds Law Aimed at Child Pornography
SCOTUS Blog: Analysis
ScotusWiki: U.S. v Williams case page
A federal judge in Los Angeles on Wednesday handed down a $110 million judgment for the infringement of thousands of copyrighted motion pictures and television shows and issued a permanent injunction banning the defendant TorrentSpy from further infringement actions.
The win for big Hollywood studios was the second defeat for TorrentSpy in the case. Last year the same court entered a default order and found the Web site's operators liable for copyright infringement. TorrentSpy was shut down in March. A message on the site said it was closed down because "the legal climate in the USA for copyright, privacy of search requests, and links to torrent files in search results is simply too hostile."
“This substantial money judgment sends a strong message about the illegality of these sites,” said Motion Picture Association of America chief Dan Glickman. "The demise of TorrentSpy is a clear victory for the studios and demonstrates that such pirate sites will not be allowed to continue to operate without facing relentless litigation by copyright holders."
Watchdog group Public Citizen will argue in federal court in Detroit on Friday that a Michigan court should dismiss a lawsuit against a Web site operator who provided a forum for consumers of infomercial products. Arizona resident Justin Leonard created InfomercialScams.com, which allows users to read and post reviews.
One of the companies reviewed on the site, a Michigan-based cosmetic surgery company known as Lifestyle Lift Holding Inc., claimed Leonard’s site violates trademark law by using the firm's name to identify reviews of its cosmetic procedure. Public Citizen attorney Paul Alan Levy will urge the court to dismiss Lifestyle Lift's case because the First Amendment protects the mention of the company’s trademark on Leonard’s site.
One of the 50+ reviewers complained: "I just wanted my jowls done, but the doctor recommended my neck also. My jowls were improved slightly, my neck is more wrinkled than it ever was." Another said: "I lost my hearing in my right ear. I called and they said it was just some swelling and would eventually go down. Well, it has been 6 months now, and I still can't hear out of my right ear." Wowza!
The Supreme Court was scheduled to hear oral argument on Monday morning in Sprint Communications v. APCC Services, a case involving a dispute over pay phone fees. Last year, the court ruled in Global Crossing Telecommunications v. Metrophones Telecommunications that pay phone operators could sue for greater compensation. Yes! Pay phones. We might as well be talking about 8-track tapes or Johannes Gutenberg's printing press. For those of you who might have forgotten, since we now live in a mobile device-driven world, a pay phone is a coin-operated public telephone (see adjacent photo). A case preview written for the SCOTUS Blog by Akin Gump's Steven Wu is available here.
(Photo Credit: macroninja via Flickr)
A federal court in New York on Monday will hear opening arguments over whether an independent book publisher has the right to publish the Harry Potter Lexicon, an unofficial reference guide to the Harry Potter series of books and movies. The trial is expected to last several days.
Attorneys from the Fair Use Project of Stanford Law School's Center for Internet and Society will argue that their client, RDR Books, has the right to publish the guidebook under the "fair use" doctrine, which safeguards the use of copyrighted material so long as it is used transformatively and does not damage the market value of the original work.
The suit began last October when Warner Bros., which owns the film rights to the Harry Potter books, and Harry Potter author J.K Rowling filed a lawsuit to block the Lexicon's publication. The 400-word book is a print counterpart to a fan-created Web site, which includes information on the series' characters, places, animals and magic spells. Read more here.
The SCOTUS Blog reminded me that I failed to mention the fate of one high-tech case during Monday's Supreme Court coverage. Justices will not hear Microsoft v. Novell. At issue is whether a company is barred from filing a lawsuit claiming antitrust violations in a market if it does not take part in that market, either as a consumer or as a competitor.
The appeal was an attempt by Microsoft "to head off a nearly four-year-old triple damages lawsuit against it by Novell, claiming that Microsoft harmed rival software programs for office applications such as word-processing and spreadsheet display, by its actions in the market for computer operating systems — a market in which Novell did not participate," according to the blog. Chief Justice John Roberts did not take part in the order in the case.
The Supreme Court on Monday refused to hear a copyright infringement case involving footage that circulated on the Internet of an Ohio television anchorwoman taking part in a wet t-shirt contest while on vacation with her husband in Key West, Fla.
The case involved Catherine Bosley, who previously served as a morning and noontime anchor on Youngstown's WKBN-TV. She resigned from the station after a wave of negative publicity and is now an anchor/reporter for WOIO-TV in Cleveland. In the lawsuit, Bosley accused staff at WFMJ, her former station's rival, of copying and distributing copyrighted works (the racy video).
A 2007 federal appeals court ruling in the case described the proceedings as "extensive and rancorous." Read that opinion here. Speaking of topics that get the FCC fired up, the Supreme Court agreed to hear a case involving the commission's policy on "fleeting expletives." Check CongressDaily's PM edition for details.
The Patent Troll Tracker, whose identity only recently came to light as Cisco Systems IP Director Rick Frenkel, is now facing a lawsuit. The frequently cited compiler of patent stats, who remained anonymous for some time, is being sued for defamation by a pair of Texas patent lawyers who appeared in the blog, according to the Prior Art blog.
Peter Zura's 271 Blog got this statement from Cisco: "The parties have mutually agreed to make no comment on the lawsuit in question at this time. That said, we would like to underscore that the comments made in the employee's personal blog represented his own opinions and several of his comments are not consistent with Cisco's views."
FYI: It looks like Frenkel's blog is now accessible to invited readers only.
The Electronic Frontier Foundation will urge a federal judge in Phoenix on Wednesday to block the Recording Industry Association of America's lawsuit against two Arizona residents for having music files in a "shared" folder on their computer.
The RIAA is seeking thousands of dollars in damages from the defendants, Pamela and Jeffery Howell, EFF says. But rather than proving the Howells distributed the files, the RIAA claims only that they had songs in a shared folder for file-sharing software Kazaa (without proof that anyone other than their own investigators downloaded songs from them).
"This amounts to suing someone for attempted copyright infringement -- something the Copyright Act simply does not allow," EFF Senior Staff Attorney Fred von Lohmann said. "It's not enough to say the law could have been broken. The RIAA must prove it actually was broken."
The Electronic Frontier Foundation, the American Civil Liberties Union, and the Project on Government Oversight on Tuesday filed a motion to intervene in a lawsuit where a federal judge ordered the disabling of a domain name associated with "Wikileaks," a Web site that gives whistleblowers a public online forum for posting materials of concern.
In early February, Swiss bank Julius Baer filed suit against Wikileaks for hosting 14 allegedly leaked documents regarding personal banking transactions of the company's customers. Wikileaks' domain name registrar Dynadot was also sued. Later in the month, the court issued a permanent injunction, disabling wikileaks.org.
"Dynadot's private agreement to disable access to its customer's domain name -- and the court's endorsement of that agreement -- raise serious First Amendment concerns," EFF's Matt Zimmerman said in a press release. The injunction "should remind everyone who hosts critical information on the Web that such information may only remain accessible as long as your service provider or registrar is willing to stand up for you."
The EFF, ACLU, POGO, and a Wikileaks user asked the court for permission to intervene in order to dissolve the injunction disabling the wikileaks.org domain name. A San Francisco judge will hear arguments Friday regarding a related issue: whether to extend a temporary restraining order aimed at preventing the distribution of the disputed Julius Baer documents.
The Center for Democracy and Technology, Public Citizen and the California First Amendment Coalition also weighed in on the case. "A court order disabling access to an entire Web site goes far beyond what the First Amendment permits," CDT General Counsel John Morris said.
This is going to sound like a bad joke but soul sensation Prince and costumed crooners The Village People are teaming up… to sue the popular torrent site Pirate Bay, Slashdot reported on Sunday.
The Web Sheriff law firm, which specializes in protection of copyrights and trademarks, has also asked the Swedish glam band ABBA to join the action. The suit is seeking "millions of dollars" in damages, although it is still uncertain to whom the charges will be directed, Slashdot said.
What's next? Perhaps ABBA, Prince and The Village People will come together to do a benefit concert to raise funds for their legal battle. Now that would be something to see.
From a National Music Publishers' Association press release:
Several members of the National Music Publishers’ Association today filed a class action lawsuit on behalf of music copyright owners against MediaNet, which operates an online music service, seeking damages, a declaratory judgment and injunctive relief to put an end to MediaNet's willful and ongoing copyright infringement.
“It is critical to the future of music that creators take a stand against free riders such as MediaNet that earn profits on the backs of others’ work,” said NMPA President and CEO David Israelite. “The case of MediaNet is particularly egregious because it offers copyrighted musical works to its partners and consumers knowing that it does not have permission to do so and that it is not compensating the copyright owners.” [Read more]
Update: Digital Media Association chief Jon Potter, whose trade group represents MediaNet, issued the following statement in reaction to the lawsuit: “Music publishers are suing a company that lawfully distributes music to consumers and pays millions of dollars to creators. This strategy will eventually leave only illegal music services available. How does that benefit publishers and songwriters?”
High-tech activist Carl Malamud, who wants to force the federal government to make government information widely available to the public, has partnered with the Creative Commons to put 1.8 million pages of U.S. case law online.
The files are all marked with the new Creative Commons "CCØ" label, indicating that the contents are works of the federal government and are free of copyright or other restrictions for dissemination and reuse. The papers had previously only been accessible in law libraries or through subscriptions to Thomson and LexisNexis.
Monday's release covers all Supreme Court decisions and all federal appeals court decisions from 1950 through the present. The release is equivalent to 1,858 volumes of case law in book form, a stack of books 348 feet tall, according to a press release on Malamud's public.resource.org Web site.
Former Justice Department special trial counsel David Boies, who supported the project, said "practical access for all Americans to legal cases and material is essential to the rule of law." The initiative is "an important step in reducing the barriers to effective representation of average citizens and public interest advocates," he said.
Continue reading 1.8 Mil. Pages Of Case Law Put Online For Public Use.
When you've been a Supreme Court justice for more than a decade and you've heard all sorts of interesting (and not so interesting) cases, sometimes it helps to shake things up. That's what happened on Wednesday when Justice Stephen Breyer -- who his known for his pragmatism -- attempted to get his arms around a high-tech patent spat.
The case, which you can read about in Technology Daily's PM Edition, involves the complex "patent exhaustion" doctrine, which holds that a patentee or licensee cannot assert patent rights after the first sale or license to sell an article that embodies the patented invention.
In questioning attorneys for the companies at odds in the litigation, Breyer used the manufacturing, selling and repurposing of bicycle parts as an easier to understand example. He explained that he knows how a bicycle works but does not have a detailed knowledge of the inner workings of a computer chip.
At one point, Breyer's thought-provoking illustration elicited a wave of laughter from the chamber when he painted a mental picture of 90 patent examiners giving chase to the black robed one perched atop a Huffy or BMX. I started to zone out when Carter Phillips, one of the attorneys arguing the case, tried to change up the bicycle model for that of a StairMaster®.
House Judiciary Committee Chairman John Conyers responded to the Supreme Court's decision in the high-profile securities law case known as Stoneridge Investment v. Scientific Atlanta on Tuesday, calling the justices' majority opinion "wrong-headed."
In the 5-3 decision, the court found that investors seeking relief from third parties in corporate fraud cases cannot bring private lawsuits unless their investment decisions specifically relied on the "deceptive acts" of those parties. Read more about the case here.
"This is a sad day for those who believe perpetrators of fraud should be held accountable under the law to their victims," the Michigan Democrat said in a statement. Conyers said he was "particularly saddened" that the court ruled "without the benefit of hearing from the Solicitor General, who had been urged by SEC Chairman [Christopher] Cox to intervene on the side of the defrauded investors."
The Supreme Court handed down a verdict in one of the most important securities law cases in recent history on Tuesday [Stoneridge Investment v. Scientific Atlanta] and it involved allegations against two major high-tech firms. See Technology Daily's PM Edition for all the details.
The split ruling elicited a flurry of reactions, including an interesting one from the American Enterprise Institute's Theodore Frank. He told us that he did not find the majority opinion surprising and it was "good news for investors" -- but Justice John Paul Stevens' dissent was worth noting.
Stevens' disagreement "is a stirring defense of judicial activism and a call for judges to act even when the legislature has not given them the authority to do so," Frank argued. The justice's commentary speaks to the "central issue of our times in terms of the role of the judiciary," he said.
The larger question posed, according to Frank is: "What role do we want the Supreme Court to have -- judge as arbiter or judge as lawmaker?" "This really does a lot to emphasize the difference between [Chief Justice John] Roberts and Stevens," he said.
Meanwhile, the U.S. Chamber of Commerce said the decision, "coupled with last year's indictment of some of America's biggest class action trial lawyers for large-scale fraud and corruption charges, is a positive step for investors and all those concerned about America's competitive disadvantage in the global marketplace."
The American Association for Justice said it found the decision "surprisingly much narrower than expected." AAJ President Kathleen Flynn Peterson said the court "clearly stated that defrauded investors still have an avenue for recourse under this country’s securities laws."
Reprinted from the Nov. 26, 2007 edition of National Journal's Technology Daily
Tech Case May Shape Rule On Patent 'Exhaustion'
By Andrew Noyes
The Supreme Court will usher in 2008 with a high-profile technology case involving a major patent dispute between a group of Taiwanese computer manufacturers and their South Korean competitor. Oral argument is scheduled for Jan. 16.
The plaintiffs, led by Quanta Computer, want the court to upend a 2006 ruling by the Federal Circuit Court of Appeals that they claim would let patent holders -- like rival LG Electronics -- inappropriately seek royalties from multiple companies.
Consumers Union, the Electronic Frontier Foundation and Public Knowledge recently filed a brief arguing that the court incorrectly interpreted a principle that says patent owners "exhaust" their rights after a product is sold and cannot continue imposing post-sale conditions or filing infringement suits.
The watchdog groups, and numerous other Quanta supporters, claim that letting patent owners impose such use restrictions could harm consumers. They say contract law is the proper tool for protecting a patentee's legitimate interest in restricting post-sale uses.
The brief, authored by EFF staffers Fred von Lohmann and Jason Schultz and outside counsel Marc Bernstein, argues that failing to rule in Quanta's favor could lead to "increased information costs when trying to ascertain restrictions on patented goods."
Cisco Systems, Dell, Hewlett-Packard and the online auction site eBay filed their own brief that elaborates on perceived problems with the current regime. The American Antitrust Institute and Computer and Communications Industry Association also weighed in, urging the justices to overturn the appeals court.
Continue reading Supreme Court To Hear Quanta Case This Week.
The Supreme Court this week declined to hear an appeal of a trademark case brought against the media company Viacom by a small California software firm called M2. Read the full story in Technology Daily's PM Edition.
M2's owner Dave Escamilla sent us a statement after deadline emphasizing that his is a "federally-registered trademark, brand, and core corporate identity." "For a major conglomerate like Viacom to come along and steal our identity is not right," he charged.
Escamilla also took a swing at the 9th U.S. Circuit Court of Appeals, which previously refused to give M2 a cut of Viacom's revenues. A small shop battling a behemoth "is faced with a Hobson's choice" of either spending serious money on a suit or giving up its trademark, he said.
M2 Software is reviewing its options for rehearing. "We hope that, at minimum, we are raising recognition of the value of the trademark intellectual property rights of smaller companies," Escamilla added.
The U.S. Court of Appeals for the D.C. Circuit has set the briefing dates on a case filed by the Digital Media Association, National Public Radio and small commercial webcasters. The parties are seeking a review of the Copyright Royalty Board's controversial Internet radio rate-setting.
According to the Broadcast Law Blog, briefs from the webcasting groups who appealed are due Feb. 25 and the brief by the CRB (represented by the Justice Department) is due April 25. Digital royalty collector SoundExchange has to submit its filing on May 15. Replies are due June 12 and oral arguments have not been scheduled.
Blog author David Oxenford, who represents small commercial webcasters in the proceeding, said the court takes a summer break in July and August, the argument is likely to be held next fall. A decision could come very late in 2008 or early in 2009.
Technology Daily's original coverage of the groups' request for court intervention can be found here.
President Bush's homeland security adviser Frances Townsend on Monday urged Congress to permanently pass controversial foreign intelligence reforms that are set to expire in February.
In a Roll Call editorial, Townsend wrote: "The administration's goal can be summed up easily: We want our intelligence professionals to have the tools and flexibility needed to prevent a terrorist attack, while protecting the rights of Americans here at home."
She said lawmakers must "keep a critical intelligence gap closed" by making the temporary statute permanent and providing "meaningful liability protection" to telecommunications firms that may have helped the government eavesdrop.
Technology Daily's AM Edition reports that the House is scheduled to consider a new Democratic measure this week. Critics believe that version does not provide strong enough protections.
Technology Daily did not publish Tuesday due to an office move but the story below is reprinted from CongressDaily. Look for more coverage of Stoneridge v. Scientific-Atlanta in Wednesday's PM Edition.
Securities Fraud Case Arguments Made To Supreme Court
By Andrew Noyes
Supreme Court justices today heard arguments in what many believe to be the most critical securities fraud case in a decade as they were asked whether defrauded investors can recover money from third parties. In Stoneridge Investment v. Scientific Atlanta, shareholders of cable television provider Charter Communications want to sue business partners Motorola and Scientific Atlanta.
The firms, which manufacture set-top boxes, allegedly engaged in sham transactions that inflated Charter's revenue by $17 million. The 8th U.S. Circuit Court of Appeals and a lower federal court dismissed the claim but stated that Motorola and Scientific Atlanta, which was acquired by Cisco Systems in 2005, aided and abetted the fraud.
During oral arguments, Justice Ruth Bader Ginsburg asked Scientific-Atlanta attorney Stephen Shapiro whether there could be a "middle ground" between one's status as a principal in such a case and a party that aids and abets. Justice David Souter also asked whether there could be "an overlap" between the two camps.
Justice Antonin Scalia questioned Stanley Grossman, who represented the investors, whether any aider and abettor that engages in a deceptive act should be considered a principal in the fraud and therefore be held liable.
Staffers over at the Recording Industry Association of America may still be doing a victory dance at their posh downtown Washington headquarters after Thursday's triumph against illegal music-downloading.
A federal jury found a Minnesota woman liable for damages for sharing music online and ordered Jammie Thomas to pay record labels $220,000 -- or $9,250 for each of 24 songs for which the companies sought damages. It was the first file-sharing case to go to trial.
Thomas Sydnor, who heads the Progress and Freedom's Center for the Study of Digital Property, issued a statement saying the jury in Capitol Records v. Thomas "voted in favor of both the plaintiffs and the rule of law."
By rejecting the defendant's "a-neighbor-could-have-done-it defense," the jury indicated that the holder of an Internet account is responsible for illegal uses of their account, he said. By awarding well above the $750-per-song minimum, "the jury spoke to both the illegality and immorality of unauthorized downloading."
The RIAA released a statement welcoming the jury's decision. "The law here is clear, as are the consequences for breaking it. As with all our cases, we seek to resolve them quickly in a fair and reasonable manner." The trade group also pledged to keep filing lawsuits against copyright infringers.
"This program is important to securing a level playing field for legal online music services and helping ensure that record companies are able to invest in new bands of tomorrow," RIAA said.
An attorney involved in an upcoming Supreme Court case involving Charter Communications, Motorola and Scientific-Atlanta is reaching out to bloggers, hoping to generate some buzz online before the case is heard on Tuesday.
Ted Frank, director of the Legal Center for the Public Interest at the America Enterprise Institute, was scheduled to speak with Web scribes for an hour on Friday afternoon about Stoneridge v. Scientific-Atlanta, a securities fraud case.
Earlier in the day, Frank and a handful of other legal experts held a briefing at AEI to discuss the potential impact of the case that some have called the Roe v. Wade of securities law. Read Technology Daily's PM Edition for more.
In other Supreme Court news, the Oyez Project just put audio files of all the oral arguments from the October 2006 term online. The files are available at this page under the respective case names in the right-hand column (Thanks SCOTUSblog).
Former Patent and Trademark Office chief Q. Todd Dickinson, who now heads General Electric's intellectual property shop, told a roomful of lawyers on Monday that the Supreme Court's decision in KSR v. Teleflex suggets that the body has become "much more skeptical of the patent system."
The high court's unanimous ruling last spring found that the so-called "teaching, suggestion and motivation" standard for determining prior art was too rigid and must be applied more flexibly. A conference sponsored by BNA and the American Bar Association examined the rules of the road in the wake of KSR.
Dickinson said it is "too soon to tell what the impact [of KSR] will be on prosecution." The decision will likely lead to fewer filings, which is "not a bad thing," he said. The case could also prompt harder fought PTO actions, more patent rejections and more appeals.
GE, which filed a brief in the KSR case, will not change its legal strategy in the near term, he told the group. The company is going to "wait and see how it plays out," but Dickinson said he will "probably pay more attention to searching [for prior art]."
The Supreme Court's new term began Monday and in honor of the occasion, Tech Daily Dose takes a look back at the technology-oriented cases heard by the justices during their last sitting. The following is reprinted from the July 6, 2007 edition of National Journal's Technology Daily.
High Court Term Sees Wins For Tech Industry
By Andrew Noyes
The Supreme Court finished its first full term under Chief Justice John Roberts last month after having made a handful of rulings in the patent and antitrust arenas of substantial interest to technology policy watchers.
During his short tenure, Roberts has outdone his predecessor, the late Chief Justice William Rehnquist, with his focus on industry-oriented cases, despite an ever-shrinking docket, Latham & Watkins partner Maureen Mahoney said at a recent U.S. Chamber of Commerce briefing.
At the same event, Morrison & Foerster attorney Beth Brinkmann pointed to another sign that the court is business-friendly - the fact that there is little division among justices when issuing opinions. In the patent arena, there was "virtual unanimity" and in antitrust, there were "solid victories" as well, she said.
Here is a quick roundup of pertinent cases argued before the court.
--KSR v. Teleflex: The court unanimously found that the Federal Circuit Court of Appeals was wrong to reject a claim by the gas-pedal manufacturer KSR that its product, similar to that of rival Teleflex, was too simple to warrant a patent. The high court said that the so-called "teaching, suggestion and motivation" standard for determining prior art was too rigid and must be applied more flexibly.
A posting on the social networking site MySpace that appeared to threaten the judge in music producer Phil Spector's murder trial has become the latest twist in the lengthy case, the AP reported.
On Tuesday, court officials disclosed the posting, which stated "I love Phil Spector" and "The Evil Judge should die!" The message was on a MySpace page called "Team Spector" and was taken down, officials said. The judge in the case is Larry Fidler.
Sheriff's investigators were looking into the messages, which were signed "xoxo Chelle," AP reported. Spector's wife is named Rachelle, but one of his defense attorneys, said she denied having anything to do with the notes.
Specter is charged with second-degree murder in the February 2003 death of actress Lana Clarkson. The case went to the jury on Sept. 10 and the jury could not reach a decision.
A securities fraud case before the Supreme Court this term could have repercussions for those harmed in the 2001 collapse of the Enron energy firm and other "mega-cases," Georgetown University law professor Donald Langevoort said at a Monday briefing.
In Stoneridge Investment v. Scientific-Atlanta, the court is asked to determine whether defrauded investors can recover money from third parties (read more in Technology Daily's PM Edition). It's not a stretch to call this "securities law's Roe v. Wade," he said.
The case involves a group of Charter Communications investors who want to sue the cable television provider's business partners Motorola and Scientific-Atlanta. The firms reportedly engaged in sham transactions to inflate Charter's revenue by $17 million.
Here's how it all went down, according to Langevoort: The two vendors sold set-top boxes to Charter at inflated prices; the extra money was used to buy additional advertising airtime; the ad sales helped Charter's revenue grow. Pretty clever, eh?
The Supreme Court is gearing up for its new term, which begins next week, and Technology Daily's PM Edition will have a preview story. But during my weekend review of the cases that have been granted certiorari, I couldn’t help longing for last fall.
The court's previous calendar had a number of cases that were closely watched by the high-tech community, thus requiring me to be in the historic chamber pretty frequently. They included KSR v. Teleflex, Microsoft v. AT&T, MedImmune v. Genentech, Bell Atlantic v. Twombly and Credit Suisse Securities v. Billing (Read my round-up here).
But the upcoming term looks like it could be a sleepier one for us (with a few exceptions that you can read about in my coverage). I'm banking on the court's Monday closed-door conference where new cases could be added to the docket. A few more tech-centric ones would be appreciated.
Alas, there are some compelling cases outside of my bailiwick. The court plans to consider whether Guantanamo prisoners may bring habeas actions in U.S. civilian courts; whether the White House can direct Texas courts to engage in additional review of a murder conviction; and whether a judge can diverge from U.S. sentencing guidelines' rules for crack and powder cocaine cases.
In an effort to make federal case law fast and easy to search, more accessible to the public and free, Columbia Law School and the University of Colorado Law School have launched a new Web site called AltLaw.org. The site has the potential to dramatically change the landscape of case law resources, according to a Columbia press release distributed on Thursday.
AltLaw.org contains nearly 170,000 decisions dating back to the early 1990s from the Supreme Court and federal appellate courts. The site’s creators, Timothy Wu, Stuart Sierra and Paul Ohm, said the site’s database will grow over time.
"It’s been more than 10 years since the start of the Internet revolution, and case law is one area that has not budged. Somebody has to take the initiative. We want to open the law to the public," Wu. said. He envisions the site being used by many who want to avoid hundreds of dollars per hour in fees for proprietary law databases and legal scholars.
Technology Daily's AM Edition on Thursday reports on the legal battle that played out in the 9th U.S. Circuit Court of Appeals a day earlier between critics of the Bush administration's anti-terror surveillance programs and government lawyers who cited national security risks to try to get the cases thrown out.
Writers for Wired News' Threat Level live-blogged the hearing in San Francisco. The money quote, according to BoingBoing.net, was from Judge M. Margaret McKeown: "I feel like I'm in Alice and Wonderland."
When the lawyer for the Electronic Frontier Foundation, which claims AT&T has collaborated with the government on electronic eavesdropping, attempted to argue the existence of a secret AT&T room is enough to prove dragnet Internet surveillance, McKeown offered more colorful commentary. "There's a Las Vegas quality to your argument," she said, alluding to the "What Happens in Vegas, Stays in Vegas" commercials.
The event was well attended too. Threat Level reported that the courtroom filled "quickly with more than 20 attorneys" as well as 80 spectators seated and standing. Another 40 filed into an overflow room. Read our preview story from earlier in the week here.
Atlanta Falcons quarterback Michael Vick would spend less than a year in prison if he accepts the plea agreement offered to him by the federal prosecutors pursuing dogfighting charges against him.
But if a South Carolina inmate gets his way in a separate federal lawsuit filed against Vick this summer, the Virginia Tech alum would be forced to fork over $63 billion. Vick also would be required to be more considerate of the plaintiff's feelings.
Jonathan Lee Riches has accused Vick of stealing pit bulls from him, selling the dogs on eBay and attempting to use the profits to purchase missiles from the Iranian government. The complaint, which was handwritten because Riches did not have access to a typewriter in jail, also includes federal tort claims including, but not limited to, "injury to wildlife, conspiracy, illegal dogfighting, extortion, racketeering, gambling, copyright infringement, identity theft, fraud, threats to commit violent acts" and brutality.
According to Riches, Vick damaged the radio frequency identification chips in his dogs' collars so that he would not be able to track them after they were stolen. He also has accused Vick of violating copyright law by putting his name on his "personal football outfit and casual clothing" without compensating him accordingly and selling t-shirts, mugs and hats with Riches' name on them.
The Federal Circuit Court of Appeals heard a patent infringement feud involving cable giant Comcast on Friday and I was psyched to attend. Why? Because the cases I regularly cover don't typically make for sparkling cocktail party conversation.
Intellectual property legal battles frequently involve high-profile tech and telecom firms but are obscure and technologically sophisticated. This morning's case, while incredibly dense, focused on Comcast Digital Voice, the company's Internet telephony offering.
The two-year-old service, which recently surpassed three million subscribers, is the focus of a nationwide TV advertising blitz. The witty commercials, like the one shown above, air relentlessly in Washington. So, folks will "get" what I'm talking about -- at least in part. Plus, I couldn’t resist posting video of a goofy looking guy tattooed like a tiger.
See Technology Daily's PM Edition for coverage of the case.
A prominent celebrity lawyer representing a doctor accused of being a sexual predator slammed "Dateline NBC" on Tuesday in a California courtroom, gossip site TMZ.com reported. Blair Berk, whose clients include Lindsay Lohan and Mel Gibson, is currently working for Dr. Maurice Wolin, an oncologist who was taken down by cops last year as part of Dateline's "To Catch a Predator" series.
Prosecutors argue that Wolin made plans to have a sexual encounter with someone on the Internet who he thought was a 13-year-old girl. In reality, the computer user was Xavier Von Erck, founder of Perverted Justice.
According to TMZ, Berk grilled a police officer whose department worked with the gotcha group and the NBC show during a preliminary hearing in Santa Rosa, Calif. Berk maintained that Perverted Justice got money for snagging alleged predators and therefore entrapped her client.
Read more at TMZ.com.
The Federal Circuit Court of Appeals earlier this month heard oral arguments in a case involving feuding Internet-based dispute-resolution providers Cybersettle and the National Arbitration Forum. At issue was a complex Cybersettle patent that pertains to various methods and computer systems for performing online dispute resolution.
The three-judge panel this week remanded the case. On appeal, the court found that a claimed method requires actual practice of the method -- not simply the capability, according to Dennis Crouch's Patently-O blog. Now, the lower court will need to determine what portion of NAF's infringing actions included multiple offers and demands, he said.
For added insight, read our original coverage of the case after the jump.
- - - - - - - - - - - - - - - - - - - - - - - -
The Supreme Court handed down two major patent-related opinions on Monday -- KSR International v. Teleflex and Microsoft v. AT&T. Technology Daily's PM edition has one story on the rulings and another with reaction from the high-tech sector and attorneys.
But here's what more court watchers had to say…
Solveig Singleton of the Progress & Freedom Foundation said the court, which ruled in favor of KSR, "reached the right result." "The case is on the right track in paving the road for a more stringent standard of non-obviousness," she said.
Congress should exercise caution in the wake of the decision, Singleton said. "Rather than tackling the statutory standard of obviousness directly, address the better-understood institutional and legal process issues," she said. More circuit courts should hear patent appeals to give the U.S. Appeals Court for the Federal Circuit some feedback, she said.
The Computer and Communications Industry Association also hailed the KSR ruling. The "non-obviousness" standard had been eroded by lower courts and, as a result, "junk patents" thrive, the group said. According to CCIA President Ed Black, the ruling reaffirms what his group has long insisted -- that "the patent system’s purpose is to promote innovation, not patents."
A jury decided Friday in Internet portal Yahoo's favor, ending a six-year legal battle in which Sony-BMG Music and the recording industry had sought damages of more than $1 billion. They claimed that Yahoo Radio was an interactive service and therefore was infringing sound recording copyrights.
Digital Media Association Executive Director Jonathan Potter called the ruling "a huge win for music innovators and listeners." "Consumer-influenced radio is a fabulous marriage of music, technology and fans," he said in a statement. DiMA represents Yahoo and other online content providers in Washington.
Meanwhile, a Bridge Ratings study released earlier in the week showed the most popular Internet radio service was America Online's, with those surveyed spending 15.25 hours per week listening to the service. Yahoo and Live 365 were the runners-up with 10.25 and 10.6 hours respectively.
According to the study, the number of monthly Web radio listeners jumped 26 percent last year bringing the average monthly listening audience to 72 million in 2006, up from 45 million in 2005.
New Media
Online Politics
Tech Policy
