nysba spring/summer 2000 | volume 9 | no. 1 bright ideas

This is my last message asChair of the Section. In my firstmessage I noted with enthusiasmthat it was a wonderful time to bepracticing intellectual propertylaw. Nothing has changed.Indeed, intellectual propertyrights are now appreciated,respected and used more thanever before in protecting andenhancing the value of compa-nies, especially the new Internetcompanies. Our Section, now over 1900 membersstrong, is well situated to participate in the intellectualproperty Internet revolution, in no small part due to theefforts of the Section’s Executive Committee, who Ithank for their hard work in helping make this Sectionwhat it is today. I want to especially thank VictoriaCundiff, our new Section Chair, and wish her the best.

Our Annual Meeting in New York City in Januarywas once again sold out with 245 registered attendees.

Michael leaves the Section aneven stronger, more vital place tolearn, share ideas, and push theintellectual property envelopethan it was before. As an earlymember of the Section under itsfirst Chair, Rory Radding, I haveseen each successive Chair leavea lasting imprint on the Sectionand its members. Each has left animportant new tradition. Thanksto our prior Chairs and Michael,the Section has embraced participation by legal lumi-naries, by the government officials charged with admin-istering the intellectual property laws, and by judgescharged with interpreting and enforcing them. Evenbefore mandatory CLE, the Section was conductingtraining programs throughout the state, a process whichhas only intensified with required CLE. We now havethree annual CLE events, including our annual LakeGeorge Conference, and our “Bridging the Gap” pro-gram will be repeated throughout the state. And thanks

InsideDidn’t I Read That Somewhere?:

The Practical Impact of Tasini v. The New York Times . . . . . . . . 3(Mark S. Kaufman)

Second Circuit First Appellate Court to ApplyAnticybersquatting Consumer Protection Act . . . . . . . . . . . . 10(Lawrence R. Miller)

The Use of ADR in Intellectual Property Disputes . . . . . . . . . . . 13(Rosemary A. Townley)

Scenes from the Intellectual Property Section’sAnnual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Message from theOutgoing Chair

SPRING/SUMMER 2000 | VOLUME 9 | NO. 1NYSBA

A publication of the Intellectual Property Law Sectionof the New York State Bar Association

Bright Ideas

European Directive on Processing of Personal Data and FreeMovement of Such Data: Impact on U.S. Businesses. . . . . . . 21(Astrid R. Baumgardner)

Trade Winds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Annual Law Student Writing Contest . . . . . . . . . . . . . . . . . . . . 31

Membership Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Committee Assignment Request . . . . . . . . . . . . . . . . . . . . . . . . 33

Section Committees and Chairs . . . . . . . . . . . . . . . . . . . . . . . . . 34

Section Activities and Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Message from theIncoming Chair

Continued on page 2 Continued on page 2

It was certainly an interesting way to begin the newmillennium, having our Annual Meeting coincide withthe first major snow storm in New York City of the mil-lennium. For the 200 of you who attended, you weretreated to a wonderful program including our first evervideoconferenced speaker, the Honorable Commission-er of Patents and Trademarks, Q. Todd Dickinson. Alsoattending and really putting forth a wonderful effortwas the Register of Copyrights, Marybeth Peters, andall our other wonderful speakers, some of whom filledin on a moment’s notice like the real pros that they are.By the time you receive this issue the Section will haveheld a sold-out “Bridging the Gap” intellectual propertyprogram directed to providing new attorneys (thoseless than two years out of law school) with necessaryCLE credit as well as affording those more experiencedattorneys with refresher programs.

Finally, in what I hope will be an ongoing tradition,my last message includes a message from the incomingChair, Victoria Cundiff. Please give Vicki all your sup-port; I know she will give the Section all of hers. Thankyou for allowing me to serve as your Chair. I am look-ing forward to participating as a “regular” member inthe future.

Michael I. ChakanskyChair (1998-2000)

to the efforts of Michael, the Executive Committee, andcorporate sponsorship, we now have a Section writingcontest to encourage law student scholarship in intellec-tual property law.

Looking forward, we will build on these fineachievements. Two priorities we will be turning toinclude actively involving in-house legal departmentsand business people in our Section and in the Section’sprograms, and using new technologies to make legaltraining more user-friendly. Intellectual property lawserves not lawyers, but those who create and use intel-lectual property. We need to maintain an active dia-logue with the clients of our legal system to make sureit is satisfying their evolving needs. And in the future,look for on-line seminars and other “new media”approaches to sharing ideas about intellectual propertylaw.

Thank you Michael, Rory, Trish Semmelhack, andBob Hallenbeck, past Chairs of our Section, for layingstrong foundations. And don’t be strangers! We needyou around.

Victoria Cundiff

2 NYSBA Bright Ideas | Spring/Summer 2000 | Vol. 9 | No. 1

Message from the Incoming ChairContinued from page 1

Message from the Outgoing ChairContinued from page 1

Thank YouThe Intellectual Property Law Section extends its gratitude to the following law firms andTHOMSON & THOMSON, INC. for their significant sponsorship over the past year:

• Pennie & Edmonds LLP

• Jacobs, DeBrauwere & Dehn

• Kirkpatrick & Lockhart

• Ostrolenk, Faber, Gerb & Soffen, LLP

• Paul, Hastings, Janofsky & Walker LLP

• Sills, Cummis, Radin, Tischman, Epstein & Gross, PA

• White & Case LLP

• THOMSON & THOMSON, INC.

NYSBA Bright Ideas | Spring/Summer 2000 | Vol. 9 | No. 1 3

Didn’t I Read That Somewhere?:The Practical Impact of Tasini v. The New York TimesBy Mark S. Kaufman

Plaintiffs commenced an action in the Southern Dis-trict of New York against the publishers and the ownersof the electronic databases for infringement of theircopyrights in a total of 21 articles sold for publicationbetween 1990 and 1993. While the parties conceded thatthe newspaper and magazines in questions were “col-lective works” under the Copyright Act,3 the authorscomplained that the electronic media do not merely“revise” defendants’ collective works but insteadexploit plaintiffs’ individual articles.4 Some of thedefendants argued that the plaintiffs had “expresslytransferred” electronic rights in their articles,5 and allpublishers argued that § 201(c) of the Copyright Actauthorizes electronic reproductions of the articles as“revisions of collective works.”

Section 201(c) of the Copyright Act provides in part:

In the absence of an express transfer ofthe copyright or of any rights under it,the owner of copyright in the collectivework is presumed to have acquiredonly the privilege of reproducing anddistributing the contribution as part ofthat particular collective work, anyrevision of that collective work, andany later collective work in the sameseries.6

In an opinion by Judge Sonia K. Sotomayor issuedon August 13, 1997, which noted that this was a case offirst impression,7 the district court addressed the par-ties’ respective motions for summary judgment.8

The court noted that certain terms in § 201(c) didnot limit the publishers’ right to make “revisions.” First,the “privilege” to engage in revisions of collectiveworks is transferable from publishers to database own-ers. “Thus, to the extent that the electronic reproduc-tions qualify as revisions under § 201(c), the defendantpublishers were entitled to authorize the electronicdefendants to create those revisions.”9 Next, if the pub-lishers had the right to “reproduce and distribute” anysuch “revisions” under § 201(c), they also would havethe incidental right to “display the copyrighted workspublicly” under § 106(5)—including the right to displaythem on a computer screen.10

As to the critical issue of whether the electronicdatabases and CD-ROMS constituted “revisions,” thedistrict court held that “revisions” are not limited to theencyclopedia example set forth in the statutory defini-

I. IntroductionIn Tasini v. The New York

Times Co., Inc.,1 the Second Cir-cuit held that defendant newspa-per and magazine publisherscould not republish, in onlinedatabases or CD-ROMs, articleswritten for their publications byfreelance writers unless eachwriter had expressly licensed ortransferred such electronic rightsto the newspaper or magazine that initially publishedthe article. At first blush, Tasini seems like a victory forwriters, and for the copyright in an individual articleover the copyright in a collective work. Upon closerscrutiny, however, it is not clear whether Tasini repre-sents a Pyrrhic victory that actually hurts writers, pub-lishers, and the public alike.

II. Factual Background and District CourtProceedings

Plaintiffs were six freelance writers who wrote arti-cles for publication in newspapers and magazines,including The New York Times, Newsday, and Time Maga-zine. The publishers, in turn, sold the contents of theirpublications for inclusion in assorted electronic data-bases. The database defendants included Mead DataCentral, owner of the electronic database NEXIS, andUniversity Microfilms International (UMI), which pro-vides CD-ROM database products. Except for oneauthor (whose alleged transfer of rights was held inade-quate), none of the authors had agreed to transfer anyrights to a publisher or electronic database.

NEXIS and the “New York Times OnDisc” did notcopy the physical layout of the publications; photo-graphs, advertisements, and the column format of thenewspaper were not retained.2 Articles could beretrieved individually from the databases, but a usercould search for all articles that appeared in a particularpublication on a particular day. In contrast, “GeneralPeriodicals OnDisc,” an image-based CD-ROM product,carried only The New York Times Sunday Magazine andBook Review and consisted of a digital scanning of theentire periodical, including photographs, captions andadvertisements. Unlike the other databases, the “Gener-al Periodicals OnDisc” did not employ Boolean search-ing but could be accessed by searches of text-basedabstracts of the articles.

tion of “collective work,”11 as plaintiffs argued. Rather,the Copyright Act does not expressly limit the mediumin which a revision might be created. “As defendantsemphasize, the 1976 Act was plainly crafted with thegoal of media neutrality in mind.”12 In addition, in thedistrict court’s view, a “revision” need not be nearlyidentical to the original. For example, a new derivativework could result from “editorial revisions” to a preex-isting work. Even a revised encyclopedia could be sub-stantially different from its predecessor. By definition,“collective works” may be significantly altered, as longas the individual contributions themselves are notrevised.13

Applying § 201(c) to the facts at hand, the districtcourt held that NEXIS and the disputed CD-ROMsmaintained the requisite “originality” in the collectiveworks because they electronically preserved the original“selection or arrangement of materials.”14 The districtcourt noted that one of the most creative aspects of anewspaper or magazine is the selection of articles.Because the disputed technologies copy the vast majori-ty of the articles selected by defendants, the collectivework is preserved and, at most, is permissibly “revised”electronically. Indeed, each electronically produced arti-cle refers to the page where it originally appeared in theprint medium.15

Except for the image-based CD-ROM defendant—which preserved the advertisements and layout of theoriginal newspaper—the district court noted that “[t]hequestion for the Court is whether the electronic repro-ductions retain enough of defendants’ periodicals to berecognizable as versions of those periodicals.”16 Thecourt concluded that they did. A “revised” collectivework, the court reasoned, must include changes to itsselection or arrangement of materials. Despite such nec-essary changes, the court noted, the databases still pre-served the originality of the collective works and wererecognizable versions of the publishers’ collectiveworks. The court concluded that had NEXIS includedthe publishers’ periodicals without the publishers’ per-mission, the publishers would have had valid copyrightinfringement claims. If these electronic versions wouldbe substantially similar for infringement purposes, theytherefore must qualify as “revisions” of those works.17

As a policy matter, the district court concluded, itwas not depriving freelance authors of copyright pro-tection. The publishers could not, for example, transferarticles from one periodical to another. “The Court doesnot take lightly that its holding deprives plaintiffs ofcertain important economic benefits associated withtheir creations. This does not result from any misappli-cation of § 201(c), however, but from modern develop-ments which have changed the financial landscape inpublishing.”18 At the time Congress passed the Copy-right Act, the right to revise collective works may havebeen perceived

to have only limited economic value,but [it is now] a right that time andtechnology have since made precious.. . . In other words, though plaintiffscontend mightily that the disputedelectronic reproductions do not pro-duce revisions of defendants’ collectiveworks, plaintiffs’ real complaint lies inthe fact that modern technology hascreated a situation in which revisionrights are much more valuable thananticipated as of the time that the spe-cific terms of the Copyright Act werebeing negotiated.19

III. The Second Circuit’s RulingOn appeal, the Second Circuit, in a unanimous

opinion written by Chief Judge Ralph K. Winter, dis-agreed with the district court’s conclusion that the elec-tronic versions of the defendants’ publications consti-tuted “revisions” within the meaning of § 201(c). Inreversing the district court, the Second Circuit empha-sized that the articles could be retrieved individually orin combination with other pieces originally publishedin different editions of the different periodicals. Thecourt agreed with the authors’ contention that as theresult of such individual retrieval, electronic versions ofthe periodicals were not “revisions” but insteadamounted to unauthorized new publication of the arti-cles—a use that infringed the copyright in each article.

Section 201(c) of the Copyright Act generally pro-vides that “[c]opyright in each separate contribution . . .is distinct from copyright in the collective work as awhole, and vests initially in the author of the contribu-tion.”20 Without any other provision, the court noted,every publisher of a collective work would need alicense or an express transfer of rights to use an individ-ually copyrighted article in the collective work.21 How-ever, as noted, § 201(c) also provides to authors of col-lective works “a privilege of reproducing anddistributing the contribution as part of that particularcollective work, any revision of that collective work,and any later collective work in the same series.”22 TheSecond Circuit reasoned that “[t]he most natural read-ing of the ‘revision’ of ‘that collective work’ clause isthat the Section 201(c) privilege protects only later edi-tions of a particular issue of a periodical, such as thefinal edition of a newspaper.”23 That is, articles in finaleditions of periodicals may be different from the morn-ing edition, to incorporate updated events. In contrastwith anthologies or encyclopedias, which are some-times updated by the release of a new version, the courtheld that later edition periodicals are not “later” worksin the “same series.” Rather, the court reasoned, theevening edition is virtually the only type of “revision”of the original collective work that can be gleaned fromthe statute.24



database comprising thousands or mil-lions of individually retrievable articlestaken from hundreds or thousands ofperiodicals. It can hardly be deemed a“revision” of each edition of every peri-odical that it contains.29

The court further concluded that reproduction of a peri-odical as part of a database does not preserve the copy-rightable aspects of the collective work, namely, theselection, coordination and arrangement of the preexist-ing materials, as required by Feist.30 Rather, only the“selection” of the authors’ works, not the coordinationor arrangement, were preserved in a database. In thecourt’s opinion, the database is more like an “antholo-gy” than a revision and therefore does not enjoy the §201(c) privilege.

The court emphasized that its ruling onlyaddressed situations where the parties had not enteredinto an express agreement. Absent an agreement, the“default” provisions of the Copyright Act would pro-hibit collective work authors—that is, the publishers—from relicensing such works. However, “publishers andauthors are free to contract around the statutory frame-work.”31

The court also reversed the district court withrespect to the only author-publisher agreement at issuein the case. “Given the district court’s previouslyexpressed broad view of the Section 201(c) privilege,[publisher] Time prevailed [in the lower court], notbecause the agreement authorized the licensing of[author] Whitford’s article to Mead but because theagreement did not forbid it.”32 In its amended opinion,the Second Circuit added: “The district court is mistak-en. As discussed above, Section 201(c) creates only apresumption by the parties as to what an author meansto convey by giving consent to inclusion of an article ina collective work.”33 In view of the Second Circuit’s nar-rower reading of the rights transferred to the owner of acollective work, a collective work’s owner needs theindividual article owner’s affirmative authorization toinclude the article in a database.34

IV. How Tasini May Affect Writers,Publishers, and the Public

The defendants have filed a petition for rehearingin the Second Circuit. As of April 17, 2000, the SecondCircuit had not yet ruled on the petition. Pending a rul-ing on the petition, the Second Circuit’s mandate isstayed, and any appeal is barred, thus leaving theapplicable legal standard somewhat in limbo. Bruce P.Keller of the New York City office of Debevoise &Plimpton, counsel to the defendants, indicated that ifthe petition were denied, the publishers would proba-bly seek review by the U.S. Supreme Court.35

The panel thus rejected the publishers’ argumentthat the electronic databases, as digital copies of theperiodicals, also were “revisions” of those collectiveworks. First, the court held that such a reading of “revi-sion” would render superfluous § 201(c)’s privilege for“later collective works in the same series.” In otherwords, if a database that contains many newspapers,magazines, anthologies and encyclopedias merely“revised” those collective works, a “later collectivework[] in the same series” also could be merely a “revi-sion.” Basic statutory construction requires that anyinterpretation that would render part of a statute super-fluous must be an erroneous interpretation.25 (The courtcould have reasoned that “later collective work” meansany collective work “in the same series” that incorpo-rates additional individual articles or information, andthat “revision” means a collective work where the lay-out or format has been changed.)

Second, the court continued, “Reading ‘revision ofthat collective work’ as broadly as appellees suggestwould cause the exception to swallow the rule.”26 Thegeneral rule set forth in § 201(c) is that copyright vestsinitially in the author of the individual contribution; theprivilege set forth in § 201(c) is an exception to thatrule. If the Copyright Act incorporated the publishers’interpretation of “revision,” the court reasoned, itwould allow a publisher to sell or otherwise provideany individual article, as long as the publisher alsomade available all the other articles—the remainder ofthe purportedly “revised” collective work. However,the Copyright Act would not allow the publishers tosell hard copies or broad sheets of individual articles asthey appeared in any given newspaper or other periodi-cal. The court held that publishers cannot achieve thesame result by providing individual articles electroni-cally.27

Third, the court stated that under the publishers’theory, a copyright owner who allowed an article to beincluded in a collective work also would transfer all ofthe owner’s otherwise “exclusive” rights in the work.Copyright under the 1976 Act consists of a bundle ofsubdivided rights—including, among others, the rightto make copies, make derivative works, or distributethe work in a variety of media—which “may be trans-ferred in whole or in part . . . and owned separately.”28

If inclusion in a news periodical automatically subjectedan article to inclusion in a database, where it could beretrieved individually by a consumer, inclusion in a col-lective work would eviscerate the author’s other subdi-vided rights, including the right to distribute the articleindividually. The court concluded:

In light of this discussion, there is nofeature peculiar to the databases atissue in this appeal that would cause usto view them as “revisions.” NEXIS is a

While the ultimate outcome of Tasini remains uncer-tain, the periodical publishing industry must grapplewith the practical impact of the Second Circuit’s ruling.In contrast, the decision may have little impact on bookpublishing, per se, which has always been governed bywritten contracts. Book publishers have typically, andwith varying degrees of success, sought to purchaserights to reproduce a work in print, electronic and othermedia “now known or later developed.” As a result,book publishers and literary agents have had severalyears to speculate and negotiate the value of electronicrights in an original work. Tasini is novel because it mayrequire newspaper publishers and writers—who oftenare interacting, writing, and publishing on tighter dead-lines than many book publishers and writers—to con-sider and potentially to negotiate electronic rights as ifthey were engaging in book deals.

A. Writers

Freelance writers for periodicals formerly mayhave enjoyed a degree of autonomy by maintainingcopyright in their contributions and republishing theirworks in other fora. However, it is easy to imagine thatafter Tasini, every major publisher (if not every publish-er) will require its authors to give up ownership of theircontributions prior to publication. In theory, writerswould need only transfer to the periodical’s publisher anarrow portion of the rights included in a copyright—specifically, the right for the article to be included inelectronic databases containing other articles and issuesof the periodical. More likely, any publisher that wouldbother to require its authors to enter into contractstransferring some of their rights would also require theauthors to transfer all of such rights to avoid similarproblems in the future. Thus, a newspaper or magazinemight compel a prospective contributor (a) to deemeach article a “work made for hire” or (b) if a courtfinds that the article did not meet the criteria for a“work made for hire,” to assign any and all copyrightsto the publisher. Indeed, soon after the Tasini case wasfiled, The New York Times “updated its policy to requirefreelance writers to execute an express transfer of theircopyrights.”36

Emily Bass, counsel to the Tasini plaintiffs, charac-terizes the decision as being based on a straightforwardreading of the statute, and stated that its impact is posi-tive.37 She understands that while publishers like TheNew York Times generally may require authors to trans-fer “all rights” in individual articles to the publisher,those publishers also may be willing to negotiate suchagreements with respect to digital rights in the copy-right. Bass continues that whether the publisher wouldengage in such negotiations “depends on the writer’sclout.”

Bass says that writers have always wanted theirworks to be published, so they had— and still have—

cause to be “reasonable” during any negotiations. Withthe Tasini decision, the publisher should be flexible, too,and should provide additional compensation for reuseof each author’s articles in electronic media—particular-ly where such reuse is virtually perpetual. Each pub-lisher, Bass says, may not have to obtain agreementsfrom each contributor prior to publication but couldnegotiate after the fact when preparing to include thatissue of the periodical in a digital archive. Except forwell-known columnists, authors and publishers couldprobably negotiate these contracts without requiringlawyers, she adds. Overreaching attempts to make allarticles “works for hire” are unlikely to succeed, Basssuggests, and she notes that independent writers—asopposed to employed reporters—add a distinct andimportant voice to publications.

According to Bass, under Tasini any unauthorizedparty who makes an article individually available byCD-ROM or an online database would infringe theauthor’s copyright. Essentially, in her view, the SecondCircuit merely held that a publisher cannot do electroni-cally what it is not permitted to do in print. However,Bass continues, publishers have retained the criticalprivilege that they need under the § 201(c): later edi-tions may be “revised” to incorporate necessarychanges, so that an article provided in a morning edi-tion newspaper could be included (and updated) forthe evening edition.

At a D.C. Bar luncheon held in December 1999,Susan Chertkof Munsat, the plaintiffs’ D.C. counsel,defended a proposal by the National Writers Union.38

Under the proposal, a “publication rights clearing-house” could issue to publishers blanket licenses to usefreelance works, similar to ASCAP and BMI’s blanketlicenses to perform musical works. In this way, ChertkofMunsat argued, writers would share in the additionalincome that the publishers enjoy (or may enjoy) fromelectronic reuse of the writers’ works. Writers nowreceive only about $250 for the first use of their worksand, as successfully argued in the Second Circuit, elec-tronic reproduction must be considered in addition tothe “first use” rights granted for such a small fee.

B. Publishers

Keller, counsel for the publishers, argues that Tasiniis a bad decision for everyone: the publishers, who lostthe case; writers, whose works will be taken off theInternet and CD-ROM databases; and the public, whichwill not have access to complete copies of the periodi-cals, whether archived or current. According to Keller,the legislative history of the Copyright Act indicatesthat a collective work can undergo a substantial num-ber of “revisions” without infringing copyright of theindividual contributions.39 In this case, including peri-odicals in a database involved minimal “revision”: vir-tually all of each collective work was faithfully repro-



More problematic, Rayman noted, is that any publi-cation must make its articles available on some kind ofdatabase if the publication is to be a paper of record,with back issues available to the public on a currentbasis. Libraries simply do not keep reams of backpapers anymore—they take up too much space and area fire hazard. “There’s an overwhelming public interestin keeping the material available which the Tasini courtsimply didn’t consider sufficiently,” Rayman said. Cer-tainly, Rayman said, there was a time when everyauthor could have assumed that his or her work wouldbe made available by microfiche in public libraries. Thesame principle should apply today, even if such infor-mation is available on the Internet or on CD-ROMrather than only in a library.

C. Librarians

Miriam Nisbet, Legislative Counsel to the AmericanLibrary Association (ALA), agrees that the general prac-tice has changed: libraries no longer are storing news-papers, because storage and retrieval is much easierelectronically.43 Users, including library patrons, havebecome accustomed to doing research electronically.Tasini apparently will prevent publishers from provid-ing accurate reproductions of back issues. If the deci-sion is enforced to its fullest extent, Nisbet postulates,there will be a substantial gap in coverage; virtually allof the currently available CD-ROMs, containing hun-dreds of thousands of articles without the now neces-sary express transfers of rights, may have to be discard-ed. After libraries have expended funds to “gear up”for the new research technology, the decision mayrequire libraries to “gear down” back to older technolo-gy, like microfiche. Older technology may literally havebecome obsolete because, Nisbet conjectured, somelibraries may not have the means of making microficheanymore.

Nisbet stressed that the impact of Tasini on librarypolicies is being explored in depth by the ALA. Prior tothe case “working through the courts” and the ALA’sreaching an official position, Nisbet could only statethat the library community must appreciate what theSecond Circuit was trying to achieve in deciding Tasini:to strike the balance set forth in the Copyright Actbetween protecting the rights of the copyright owners(that is, the owners of individual articles) and the rightsof users—particularly the “good users” like libraries.Although Tasini may have a potentially negativeimpact, Nisbet noted that it also may create additionalcompensation for individual authors.

Section 108 of the Copyright Act provides thatlibraries may make photocopies and other facsimiles ofworks that are damaged, stolen or otherwise unavail-able for archival and research purposes.44 It is unclearwhether this narrow exception applies to digital repro-ductions, and it is difficult to determine under Tasini

duced, except for deletion of some photographs andadvertisements.

Keller also believes that the decision is overlybroad: according to the court, when individual worksthat are part of a collective work can be retrieved indi-vidually, the collective work becomes a mass of individ-ually copyrighted works and loses its status as a collec-tive work. This effectively defines copyright status notby how a work is created, but how the end-user canretrieve it. This reasoning could negatively impact notonly news publishing, but other industries like softwaredistribution, where any bundled software could lose itsstatus as a collective work if it allows retrieval of anyindividual program or data. The decision, Keller adds,would encourage third-party infringement actionsagainst any database provider.

At the D.C. Bar Association’s luncheon discussion,40

Jeffrey Cunard of Debevoise, Plimpton’s Washington,D.C. office questioned whether plaintiffs brought thecase to establish legitimacy for Tasini and the writer’sunion he represents. Cunard said that the Second Cir-cuit was “dead wrong” to characterize the electronicversion of a work as a new anthology. Such a viewwould mean that libraries, including the Library ofCongress, create new anthologies when they storeworks on disks or hard drives for archival purposes.That interpretation is contrary to the copyright princi-ple of media neutrality because it implies that a work istransformed when moved from one medium to another.More important than whether individual articles can beretrieved from the databases, Cunard insisted, is thatelectronic versions of the periodicals “maintained theirintegrity” as collective works by maintaining the pro-tectable selection of articles. He stated that the SecondCircuit misinterpreted Feist when it held that a collec-tive work must maintain the selection, coordination andarrangement of preexisting materials. Feist and thestatute indicate that any, not all, of those elements arenecessary.41 Cunard continued that if the decision isupheld, print and electronic publishers must exercise“due diligence” and delete all the freelance writers’works from existing databases. Also, publications likeThe New York Times will require the express transfer offreelancers’ copyrights.

Eric Rayman, in-house counsel to The New Yorker,believes the Second Circuit’s decision “doesn’t reflectthe reality of how lots of publications handlecontracts.”42 As a practical matter, he said, a dailypaper, a weekly magazine, or even a monthly maga-zine, does not have time or opportunity to obtainsigned contracts for every article. Somewhat jokingly,Rayman suggested that the decision is “good forlawyers,” as it could require publications to increasetheir legal staffs to keep contracts in order. The need formore in-house counsel, in turn, would give an advan-tage to the better-funded publications.

whether the library could provide on-line access to itsarchival database without risking third-party infringe-ment actions by authors who did not transfer their elec-tronic rights upon publication. Arguably, if the currentperiodical in printed media can be obtained “at a fairprice,” § 108 would not justify a library’s owning andproviding access to a CD-ROM that, under Tasini,would otherwise infringe copyrights. Nevertheless, per-haps libraries under the § 108 exception could continueto provide access to CD-ROMs with complete reproduc-tions of back issues, including articles that were notsubject to express transfers of electronic rights. After all,such future “collector’s item” disks will no longer be“in print.” The privilege would allow librarians tomaintain scholarly access to databases that a publishercould not make available to any other third party—provided the would-be scholar actually visits thelibrary.

In addition, prior to any potential Supreme Courtreview of the decision, any library outside of the Sec-ond Circuit’s jurisdiction theoretically could continue touse any CD-ROMs that presently include complete backissues of periodicals, despite lack of any agreementwith individual freelance authors. However, becauseany CD-ROM sellers or Internet databases inevitablyare likely to provide such material within the SecondCircuit, anyone other than a library who providedaccess to such materials would risk a copyrightinfringement action.

On the one hand, this scenario fits within the com-promise traditionally embodied in the Copyright Act:access to accurate collections of historical informationbeing limited to the public library computer terminals,and private access to the same information being sub-ject to the distributor’s obtaining (and perhaps purchas-ing) the author’s consent. On the other hand, it seemsunlikely that libraries will have the funding to createtheir own databases of the periodicals and magazinesthat become “out-of-print” when the next issue is pub-lished. Rather, the primary if not only electronic sourceof back issues would be through the Internet or CD-ROM products provided by or through the publisher. Ifpublic libraries are the only legitimate purchasers ofcomplete electronic collections of a periodical, publish-ers may not bother to manufacture such a product for arelatively limited audience. Paradoxically, even suchlimited manufacturing might remove the CD-ROMproduct from the “out-of-print” exception for archivalcopies.

V. ConclusionNotwithstanding Bass’s optimism and Chertkof

Munsat’s suggestions, it seems doubtful that publisherswill allow any author to retain digital rights in his or

her article at the expense of having to edit those articlesout of any future CD-ROM or online products. At best,publishers will provide additional compensation forthose additional rights. Arguably, regardless of theTasini plaintiffs’ success, publishers always have hadreason to negotiate agreements with and pay more toauthors with more clout. Conversely, after Tasini,authors with less notoriety seem likely to continue to be“reasonable” for the same compensation they have his-torically received, but without the benefit of retainingrights in their writings. At best, lesser known authorscould license back from the publisher the right to reusetheir own work in some other forum, such as a collec-tion of editorials.

The impact of the Second Circuit’s decision is prob-lematic: under Tasini, publishers of newspapers, maga-zines and other periodicals do not have all the rightsthey need. Rather, with the new media availabletoday—and arguably not contemplated when § 201(c)was originally drafted—publishers now need more thanthe opportunity to provide factual revisions betweenthe “morning” and “evening” news; they also need theopportunity to distribute and archive electronically, orthey will be left behind on the information superhigh-way. It is unlikely that publishers will be able to diginto the past and collect transfers from each freelanceauthor in order to make their historical issues compliantwith Tasini. As a result, the public will not have accessto historical issues of periodicals—except perhaps inlibraries.

As for the future under Tasini, news publishersmust insure that every freelance article is the subject ofa contract. Assuming that the future of publishingrequires electronic access to historical information, dis-tribution of an accurate database version of any publi-cation poses a litigation hazard. The writer who failsexpressly to transfer electronic rights in each contribu-tion will either be unpublished or a potential copyrightinfringement plaintiff.

As a result, Tasini seems to pose unfortunateHobson’s choices between the author’s negotiating andpolicing his or her copyright, the publisher’s due dili-gence perils, and the public’s limited access to historicalcontent. Pending any reversal or modification of thedecision, Tasini might foster greater compensation forwriters with greater clout, diminished control overcopyrights for writers with lesser clout, detailed record-keeping and contractual diligence for publishers, andpublic access only to so-called “selected” articles in anyperiodical issue—that is, those remaining after thepotentially infringed articles have been excised.Whether or not the decision is well-reasoned, its overallimpact is likely to be negative.



23. Id. at *5.

24. Id.

25. Id.

26. Id. at *6.

27. Id.

28. 17 U.S.C. § 201(d).

29. Tasini, 1999 WL 753966, at *7.

30. Id. at *7 (citing Feist, 499 U.S. at 349).

31. Id. at *8.

32. Id. at *9-10. The express licensing agreement granted, in perti-nent part, to Time:

(a) the exclusive right first to publish the Story inthe Magazine;

(b) the non-exclusive right to license the republica-tion of the Story . . . provided that the Magazineshall pay to [him] fifty percent [ ] of all net pro-ceeds it receives for such republication; and

(c) the right to republish the Story or any portionsthereof in or in connection with the Magazine orin other publications published by [Time], provid-ed that [he] shall be paid the then prevailing ratesof the publication in which the Story is repub-lished.

Id. at *8.

33. The amended opinion can be found on the Second Circuit Website maintained by the Pace University School of Law Libraryand the Touro Law Center at www.law.pace.edu/lawlib/legal/us-legal/judiciary/second-circuit.html.

34. In its amended opinion, the Second Circuit also added a newfootnote 2: “We also do not consider the issue of assignability.Rather, we assume for purposes of this decision only, that thePublishers had the right to assign the articles in question toMead [the owner of NEXIS] and UMI [the owner of the CD-ROMs at issue].”

35. Telephone conversation with Bruce P. Keller, November 30,1999.

36. Tasini, 1999 WL 753966, at *1 n.1; 972 F. Supp. at 807 n.2.

37. Telephone conversation with Emily Bass, December 13, 1999.

38. See 59 Pat. Trademark & Copyright J. (BNA) No. 1454 (Dec. 17,1999) at 381.

39. See Tasini, 972 F. Supp. at 819.

40. See 59 Pat. Trademark & Copyright J. No. 1454 (Dec. 17, 1999) at381.

41. See Feist, 499 U.S. at 349.

42. Telephone conversation with Eric Rayman, November 22, 1999.

43. Telephone conversation with Miriam Nisbet, December 13, 1999.

44. 17 U.S.C. § 108. Subsection (c) provides: “The right of reproduc-tion under this section applies to a copy or phonorecord of apublished work duplicated in facsimile form solely for the pur-pose of replacement of a copy or phonorecord that is damaged,deteriorating, lost or stolen, if the library or archives has, after areasonable effort determined that an unused replacement cannotbe obtained at a fair price.”

Mr. Kaufman maintains a law practice in NewYork City focusing on copyright and trademark issuesand commercial litigation.

Endnotes1. Docket Nos. 97-9181, 97-9650, 1999 WL 753966 (2d Cir. Sept. 24,

1999). Although initially to be reported at 192 F.3d 356, the opin-ion was withdrawn from the bound volume at the court’srequest, with an indication that it might be superseded by asubsequent opinion. On February 25, 2000, the opinion wasamended, as discussed below. See 59 Pat. Trademark & Copy-right J. (BNA) No. 1465 (March 10, 2000) at 646.

2. Tasini v. The New York Times Co., Inc., 972 F. Supp. 804 (S.D.N.Y.1997).

3. Section 101 of the Copyright Act of 1976 states that “[t]he term‘compilation’ includes collective works.” 17 U.S.C. § 101. It fur-ther defines “collective work” as “a work, such as a periodicalissue, anthology, or encyclopedia, in which a number of contri-butions, constituting separate and independent works in them-selves, are assembled into a collective whole.” Id.

4. Tasini, 972 F. Supp. at 809.

5. Newsday’s checks to its writers had a legend authorizing thepublisher to include the articles in “electronic library archives.”The district court held that Newsday’s check legends were“ambiguous” and did not reflect an express transfer of electron-ic rights in the articles. Tasini, 972 F. Supp. at 811. Time/SportsIllustrated’s written contract with one writer, plaintiff Whitford,provided that the publisher had the “right to first publish” thearticles at issue. Id. at 809. But the district court held that theright to publish an article “first” cannot reasonably be stretchedinto a right to be the first to publish an article in any and allmediums. Id. at 812.

6. 17 U.S.C. § 201(c).

7. Tasini, 972 F. Supp at 812 (“There is virtually no case law parsingthe terms of Section 201(c) [of the Copyright Act], and certainlyno precedent elucidating the relationship between that provi-sion and modern electronic technologies.”).

8. Id. at 806.

9. Id. at 816.

10. Id. at 816-17.

11. See supra note 3.

12. Tasini, 972 F. Supp. at 818.

13. Tasini, 972 F. Supp. at 819-20. “The copyright in a compilation orderivative work extends only to the material contributed by theauthor of such work, as distinguished from the preexistingmaterial employed in the work, and does not imply any exclu-sive right in the preexisting material.” 17 U.S.C. § 103(b).

14. See Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S.340, 345 (1991). As discussed below, the Second Circuit held thatthe electronic versions failed to preserve the collective work’s“selection, coordination and arrangement” of materials.

15. Tasini, 972 F. Supp. at 823-24.

16. Id. at 824.

17. Id. at 826.

18. Id. at 827.

19. Id.

20. 17 U.S.C. § 201(c).

21. Tasini, 1999 WL 753966, at *3.

22. Id. In its amended opinion, the court replaced its references tothe Section 201(c) “privilege” with “presumptive privilege.”This change more closely tracks the statutory language to clarifythat the privilege is qualified. The court changed other refer-ences to “privilege” to “permissible uses.”

Second Circuit First Appellate Court to ApplyAnticybersquatting Consumer Protection ActBy Lawrence R. Miller

In Sporty’s Farm L.L.C. v.Sportsman’s Market, Inc.,1 the Sec-ond Circuit became the first fed-eral appeals court to apply theAnticybersquatting ConsumerProtection Act of 1999 (ACPA)2

when it affirmed an injunctionissued by the district court thatrequired the defendant to relin-quish the domain name“sportys.com.” Although the dis-trict court based its ruling on theFederal Trademark Dilution Act (FTDA),3 the SecondCircuit, in an opinion by Judge Guido Calabresi,affirmed the lower court’s ruling under the ACPA,which was enacted during the pendancy of the appeal,and concluded that the defendant had registered thedomain name “sportys.com” with a bad-faith intent toprofit from the plaintiff’s distinctive mark, “Sporty’s.”In addition, the court rejected the defendant’s con-tention that retroactive application of the FTDA andACPA was impermissible.

The plaintiff, Sportsman’s Market, Inc., is a mailorder catalogue company that caters to pilots and avia-tion enthusiasts, although in recent years it has expand-ed its offerings to tools and home accessories. It distrib-utes approximately 18 million catalogues throughoutthe United States and enjoys nearly $50 million in annu-al revenues. In 1985, Sportsman’s received a federaltrademark registration for the mark “Sporty’s” for itsretail mail order services based on first use in 1961.Sportsman’s mark subsequently obtained incontestablestatus. Sportsman’s spends about $10 million each yearon advertising containing the “Sporty’s” logo, and usesthe mark as part of its domestic and international toll-free telephone numbers, e.g., 1-800-SPORTYS.

The defendants in the action were Omega Engineer-ing, Inc. and its wholly owned subsidiary, Sporty’sFarm L.L.C. Omega is a mail order catalogue companythat sells scientific process measurement equipment.Omega’s owner, Arthur Hollander, a pilot who receivesSportsman’s catalogue, decided in late 1994 or early1995 to enter the aviation catalogue business. In April1995, shortly after making the decision to competedirectly with Sportsman’s, Omega registered thedomain name “sportys.com.” Nine months later,Omega sold the rights to the domain name to Sporty’sFarm, which Hollander formed after Omega registeredthe “sportys.com” domain name. Sporty’s Farm grows

and sells Christmas trees. Shortly after acquiring thedomain name from Omega, Sporty’s Farm launched aWeb site located at “sportys.com” for its Christmas treebusiness. Before Sportsman’s could take action againstSporty’s Farm, the latter commenced a declaratoryjudgment action in Connecticut district court seeking adeclaration of its continued right to use the“sportys.com” domain name. Sportsman’s counter-claimed, alleging trademark infringement, dilution, andstate law unfair competition against both Sporty’s Farmand Omega.

After a bench trial, the district court rejected Sports-man’s trademark infringement and state unfair compe-tition claims but held that Sportsman’s trademark was“famous” and that Omega’s registration and Sporty’sFarm’s use of the “Sporty’s” mark in the domain name“sportys.com” diluted that mark under the FTDA bypreventing Sportsman’s from using its trademark as adomain name. The district court ordered Sporty’s Farmto relinquish the domain name, which subsequentlywas acquired by Sportsman’s, but the court refused toaward any damages, rejecting Sportsman’s claim thatthe defendants had engaged in willful dilution. Sporty’sFarm appealed the district court’s injunction, andSportsman’s appealed the court’s refusal to award dam-ages.4

On November 29, 1999, while the appeal was pend-ing, the ACPA, which provides a new federal remedyfor cybersquatting, was enacted. The ACPA, whichadds a new § 43(d) to the Lanham Act, provides that

[a] person shall be liable in a civilaction by the owner of a mark . . . if,without regard to the goods or servicesof the parties, that person—(i) has abad faith intent to profit from that mark. . . and (ii) registers, traffics in, or usesa domain name that—(I) in the case of amark that is distinctive at the time ofregistration of the domain name, isidentical or confusingly similar to thatmark; (II) in the case of a famous markthat is famous at the time of registra-tion of the domain name, is identical orconfusingly similar to or dilutive ofthat mark. . . .5

After requesting additional briefing from the par-ties, the court held that the ACPA properly could beapplied on appeal and observed that “the new law was



the domain name “sportys.com” in an apparent effortto keep it from Sportsman’s.20 Not only did Hollanderregister “sportys.com” as a domain name, the courtobserved, but in order to insulate himself against aclaim by Sportsman’s that use of the domain name byOmega would result in a likelihood of confusion, Hol-lander formed a company conveniently named Sporty’sFarm, sold it the domain name, and began sellingChristmas trees online.21 The court had little troubledismissing as “more amusing than credible” the expla-nation provided by Ralph Michael, manager of Sporty’sFarm, that the term “Sporty’s” in the company’s namewas derived from “Spotty,” the name of his childhooddog, particularly given the absence of any “evidence . . .that Hollander was considering starting a Christmastree business when he registered ‘sportys.com’ or thatHollander was ever acquainted with Michael’s dogSpotty.”22

The court proceeded to affirm the district court’schoice of remedy—forfeiture of the domain name bySporty’s Farm—and observed that such a remedy isexpressly authorized by the ACPA.23 The district court’srefusal to award Sportsman’s damages under the FTDAor Connecticut unfair competition law did not, accord-ing to the appeals court, constitute “clear error,” anddamages were not available under the ACPA because,as the court noted, damages are not available underthat statute “with respect to the registration, trafficking,or use of a domain name that occurs before the date ofenactment” of the ACPA.24

The Second Circuit’s conclusion that Sporty’s Farmviolated Sportsman’s rights under the ACPA is not like-ly to generate much controversy, as the defendant’sconduct appears to fit squarely within the spectrum ofconduct that the ACPA was intended to remedy. Whatis notable, however, is the court’s willingness to stepoutside of the boundaries set by the nine statutory fac-tors in evaluating the defendant’s “bad faith intent toprofit” from the plaintiff’s mark. It is true that thestatute states merely that courts “may consider suchfactors as, but not limited to,” the nine statutoryfactors,25 but the same “non-exclusivity” applies to theeight statutory factors for evaluating the fame of a markunder the FTDA,26 and yet courts rarely look beyondthe eight factors in evaluating the fame of a mark. It fol-lows that in assessing the merits of a claim under theACPA, counsel is well advised to look not just at thefactors set forth in the statute but more broadly at thefacts of the case in light of the purpose of the ACPA.

After disposing of the issues of the defendant’s lia-bility and the proper remedy, the court did not hesitateto reject Sporty’s Farm’s contention that application ofthe FTDA or ACPA to this case was impermissiblyretroactive.27 Because the injunction issued by the dis-trict court “provided only prospective relief to Sports-

adopted specifically to provide courts with a preferablealternative to stretching federal dilution law when deal-ing with cybersquatting cases.”6 Moreover, the courtconcluded that it was appropriate to apply the ACPA,rather than remand the case to the district court toallow that court to apply the new law in the firstinstance, because the district court’s findings combinedwith the record developed below permitted easy appli-cation of the new law by the appellate court.7

The court proceeded to find that Sportsman’s satis-fied all of the elements of a claim under the ACPA.First, the court found that Sportsman’s mark was “dis-tinctive.”8 Acknowledging that the district court hadconcluded, in its dilution analysis, that the mark wasboth “famous” and “distinctive,” the Second Circuitfound it unnecessary to reach the issue of fame inaffirming the district court’s order.9 Next, the court con-cluded that the domain name “sportys.com,” althoughnot “precisely identical” to Sportsman’s mark because“apostrophes cannot be used in domain names,” wasnevertheless “indistinguishable” from Sportsman’smark and therefore easily satisfied the “confusinglysimilar” requirement.10 Finally, the court held thatSporty’s Farm had acted with a “bad faith intent toprofit” from the mark “Sporty’s” through its use of thedomain name “sportys.com.”11

Applying six of the nine nonexclusive factors setforth in the ACPA for evaluating whether a defendantacted in bad faith,12 the court determined that evidenceof Sporty’s Farm’s bad faith was so strong that “no rea-sonable factfinder could return a verdict against Sports-man’s.”13 Among the facts noted by the court in sup-port of its conclusion were the following: (1) neither ofthe defendants had any intellectual property rights tothe “sportys.com” mark at the time Omega registeredthe domain name;14 (2) the domain name was not thelegal name of the entity that registered it, Omega, andSporty’s Farm did not even exist at the time of registra-tion;15 (3) Sporty’s Farm did not use the Web site locat-ed at “sportys.com” to offer any goods or services untilafter the litigation began;16 (4) Sporty’s Farm did notclaim that its use of the domain name constituted “fairuse” or “noncommercial use”;17 (5) Omega sold thedomain name to Sporty’s Farm under “suspicious cir-cumstances”;18 and (6) the “Sporty’s” mark is distinc-tive.19

The Second Circuit did not, however, limit itsanalysis of Sporty’s Farm’s intent to the factors listed inthe ACPA. Demonstrating that the factors truly arenonexclusive, the court found that its decision wasinfluenced most not by an analysis of the statutory fac-tors but by the unique circumstances of the case, i.e.,the fact that Omega’s owner, Hollander, who admittedthat he was familiar with Sportsman’s catalogue, decid-ed to compete directly with Sportsman’s and registered

man’s,” the Second Circuit reasoned, application of thestatutes to events that took place before their enactmentwas appropriate under the Supreme Court’s decision inLandgraf v. USI Film Prods.28 In sanctioning retroactiveapplication of the FTDA, the Second Circuit adoptedthe position staked out by the Eighth Circuit in ViacomInc. v. Ingram Enterprises, Inc.,29 in which the court con-cluded that because trademark dilution was a continu-ing wrong, application of the FTDA to events that com-menced prior to the enactment of the statute wasproper because the relief sought was prospective.30 Insanctioning retroactive application of the ACPA, theSecond Circuit became the first court to rule on theissue.

In light of this ruling, practitioners, particularlythose in the Second Circuit, will need to reevaluate themerits of any pending or potential domain name-relat-ed trademark infringement/dilution suits under theACPA, regardless of whether the conduct giving rise tothose claims occurred prior to enactment of the statute.While the Second Circuit’s decision is but the first inwhat promises to be a long line of cases applying theACPA, it lays a solid foundation for the statute’s appli-cation by future courts.

Endnotes1. Nos. 98-7452(L), 98-7538 (XAP), 2000 WL 124389 (2d Cir. Feb. 2,

2000).

2. 15 U.S.C. § 1125(d).

3. 15 U.S.C. § 1125(c).

4. Omega did not appeal from the district court’s ruling.

5. 15 U.S.C. 1125(d).

6. 2000 WL 124389, at *6.

7. Id.

8. Id.

9. Id.

10. Id. at *7.

11. Id.

12. See 15 U.S.C. § 1125(d)(1)(B)(i)(I)-(IX).

13. 2000 WL 124389, at *7.

14. Id. at § 1125(d)(1)(B)(i)(I).

15. Id. at § 1125(d)(1)(B)(i)(II).

16. Id. at § 1125(d)(1)(B)(i)(III).

17. Id. at § 1125(d)(1)(B)(i)(IV).

18. Id. at § 1125(d)(1)(B)(i)(VI).

19. Id. at § 1125(d)(1)(B)(i)(IX).

20. 2000 WL 124389, at *8.

21. Id.

22. Id. at *3, *8.

23. Id. at *9. See 15 U.S.C. § 1125(d)(1)(C).

24. 2000 WL 124389, at *9-*10. See Pub. L. 106-113, § 3010.

25. 15 U.S.C. § 1125(d)(1)(B)(i).

26. 15 U.S.C. § 1125(c)(1)(A)-(H).

27. 2000 WL 124389, at *11.

28. 511 U.S. 244, 273 (1994).

29. 141 F.3d 886, 889 (8th Cir. 1998).

30. But see Circuit City Stores, Inc. v. Officemax, Inc., 949 F. Supp. 409(E.D. Va. 1996) (rejecting as “manifestly inequitable” applicationof FTDA to mark adopted by defendant prior to statute’s enact-ment).

Lawrence R. Miller is an associate in the NewYork office of Weil, Gotshal & Manges LLP.


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The Use of ADR in Intellectual Property DisputesBy Rosemary A. Townley

ters such as the production of documents and the iden-tification of witnesses. At the conference, a hearing andbriefing schedule typically is established, as well as anyscheduling for the accomplishment of discovery mat-ters, if the latter is agreed to by the parties or is provid-ed for in a stipulation or agreement.

An arbitration hearing includes many of the sameelements of a trial: opening statements are presented;witnesses are examined; documentary evidence isoffered into the record; objections are raised and ruledupon by the arbitrator; and a record is maintained,either by a court stenographer or by the arbitrator. Clos-ing statements are made, either orally or in a writtenbrief.

The arbitrator’s decision usually is issued as a writ-ten opinion and award within 30 days after the close ofthe hearing, unless the parties agree to another formator deadline. As a general rule, review of an arbitrator’saward is narrow. That is, an award will not be vacatedby a court except upon certain limited grounds, such as“where the award was procured by corruption, fraud orundue means” or where there was “evident partiality orcorruption in the arbitrators or either of them.”7

One exception to this general rule was set forth bythe Second Circuit in Halligan v. Piper-Jaffray, Inc.8 Halli-gan involved an age discrimination claim9 filed by abroker pursuant to a Form U-410 which was rejected byan National Association of Securities Dealers arbitrationpanel. Judge Kimba M. Wood of the Southern District ofNew York confirmed the arbitration award in favor ofthe defendant, Piper-Jaffray, Inc. In a ruling that mayserve to expand the scope of appellate review of arbitra-tion awards in the Second Circuit, the court of appealsfound that the arbitration award reflected a “manifestdisregard of the law” and held, in relevant part:

In view of the strong evidence that Hal-ligan was fired because of his age andthe agreement of the parties that thearbitrators were correctly advised of theapplicable legal principles, we areinclined to hold that they ignored thelaw or the evidence or both. Moreover,the arbitrators did not explain theiraward. It is true that we have statedrepeatedly that arbitrators have no obli-gation to do so . . .

When a reviewing court is inclined tohold that an arbitration panel manifest-ly disregarded the law, the failure of the

The use of Alternate DisputeResolution (ADR)1 is growing inacceptance among intellectualproperty practitioners. The Amer-ican Arbitration Association(AAA) reports an increasing case-load in this area. For example,approximately 350 cases involv-ing copyright, patent, and trade-mark issues were either mediatedor arbitrated under the auspicesof the AAA in 1997, while in 1996approximately 223 cases were filed.2

Brief definitions of the two major forms of ADR—arbitration and mediation—might be of aid to the read-er unfamiliar with the processes. The two forms are dis-tinct in nature, and each is uniquely suited to differenttypes of subject matter disputes.3

“Arbitration” generally is defined as “a simple pro-ceeding voluntarily chosen by parties who want a dis-pute determined by an impartial judge of their ownmutual selection, whose decision, based upon the mer-its of the case, they agree in advance to accept as finaland binding.”4 Arbitration is most similar to a trialbefore a judge. Unlike a trial, an arbitration proceedingis private and confidential and does not require strictadherence to the formal rules of evidence. The proceed-ing can be conducted relatively quickly and economi-cally.

The parties may develop the terms of their ownarbitration stipulation or agreement if they are not pro-vided for in a contract. This agreement can be tailoredso as to provide for litigation-type processes, such asmotions in limine, limited discovery, or bifurcation ofthe hearing for liability and damages issues.5 In somecases, the parties add a clause to the stipulation oragreement providing for the review of an award by astandard which may be more or less demanding thanthat provided under § 10 of the Federal ArbitrationAct.6 An arbitrator, or a panel of three arbitrators, ismutually selected by the parties, either directly or withthe assistance of an independent organization thatmaintains rosters and biographies of qualified arbitra-tors.

A commercial arbitration hearing usually will com-mence with a pre-hearing administrative conferencebetween the arbitrator and the representatives of theparties. The purpose of the conference is to review thegoverning rules of the proceeding and to address mat-

arbitrators to explain the award can betaken into account. Having done so, weare left with the firm belief that thearbitrators here manifestly disregardedthe law or the evidence or both.11

While it may be premature to toll the death knellfor the finality of an arbitration award, mediation maybe better suited for resolving intellectual property dis-putes prior to attempting to arbitrate the matter.

“Mediation” is a process in which a neutral media-tor assists the parties in reaching their own settlementbut does not have the authority to make a binding deci-sion.12 A less formal process than arbitration, a media-tor meets with the disputing parties and their represen-tatives in a series of informal conferences, includingjoint meetings and caucuses. The mediator will attemptto hear all facts and issues and will offer suggestions toaid the parties in identifying common ground. Themediator does not decide who is right or wrong in thematter.13 Rather, the mediator attempts to facilitate dis-cussion in order to reach what is essentially a negotiat-ed settlement.

Mediators are selected through an independentadministrative agency or by direct appointment by theparties based on their knowledge of the individual. Themediator’s expertise in the subject matter of the disputecan be an important factor in the selection process,depending upon the technical issues involved, but maynot be the primary one. As noted in an observation bytwo commentators in the area of international intellec-tual property law:

Process skills are paramount to subjectmatter expertise. Whether [the media-tor with subject matter expertise] willbe a hindrance or an advantagedepends upon just how technical thesubject matter of the dispute is. There isno ready answer, but the issue must beconsidered.

Many practitioners believe that previ-ous knowledge in issues related to thefield of dispute by the mediator canspeed the process and save consider-able time. But most experienced practi-tioners in mediation would probablyagree that it is better to have a skilledmediator without expertise in the areaof the dispute, than to have an expert inthe field with marginal or no mediationprocess skills.14

In certain cases, the “co-mediator” model may bepreferred. This involves two mediators with comple-mentary skills working together to achieve a settlement

with the parties. For example, a subject matter expert,such as a design engineer, could be paired with anexperienced mediator who has the process skills toguide the parties.15 As a rule, a mediation conferencecan be scheduled relatively quickly and requires lesspreparation than would be needed for litigation or arbi-tration.

A 1998 study of general and deputy counsel andchief litigators of Fortune 1,000 corporations, conductedby researchers at Cornell University and Pricewater-houseCoopers, LLP, showed that ADR techniques, espe-cially arbitration and mediation, are widely used.16

Most firms reported a preference for mediation as ameans of dispute resolution. The study also reportedthat of those disputes that dealt with intellectual prop-erty issues, 28.6% were referred to mediation and 21%to arbitration.17

In the study, the respondents indicated that one ofthe most significant reasons for using ADR is that it isless expensive than litigation and provides a means toreach a settlement in a more expeditious manner. Medi-ation was considered by the respondents to be a moresatisfactory process than litigation because theybelieved that it provided an opportunity for the partiesto exercise more control over the resolution of a dis-pute.18

In addition, the study found that 70% of those par-ties that utilized arbitration and mediation techniqueswere “very likely” to use these techniques in thefuture.19 However, 93% of the respondents noted that asignificant barrier preventing the more frequent use ofADR is the inability to convince the opposing side toagree to its use in resolving disputes.20

One frequently published commentator who urgesthe use of ADR methods to resolve intellectual propertydisputes, David W. Plant, Esq., a partner at Fish &Neave in New York City, reports that “the anecdotaltrack record” of mediation shows that it is successful inresolving 70% to 80% of intellectual property disputes.21

He encourages the use of mediation to resolve thesedisputes, especially as an alternative to the unpre-dictable Markman22 hearings in patent infringementcases. Plant describes some of the reasons why practi-tioners should consider the use of mediation:

Whether parties and their counselbelieve mediation will guarantee a set-tlement of a particular dispute (it willnot), given the (anecdotal track record. . .) of intellectual property disputes(either before or during litigation wherethe parties have been locked in mortalcombat), it is good business for parties,and it is professionally responsible forcounsel, to give mediation a good-faith



cific language setting forth confidentiality protectionsfor the information disclosed in a mediation session,unless the parties agree to the contrary. In addition,mediators usually insist on a clause within the media-tion agreement precluding either party from subpoe-naing the mediator to testify about any discussions thatoccurred during the sessions.

The New York Law Journal reported recently that theAmerican Bar Association and the National Conferenceof Commissioners on Uniform State Laws released thefirst draft of a proposed Uniform Mediation Act forpublic comment. The stated intent of this project is toclarify the mediation process and to add protections forthe participants.28

In 1994, three major associations that are closelyinvolved in mediation matters—the American Bar Asso-ciation, the American Arbitration Association, and theSociety of Professionals in Dispute Resolution—issuedthe results of a joint project that was designed to devel-op a general framework for mediation practice and topromote public confidence in the process. The “ModelStandards of Conduct For Mediators”29 deals withissues such as the principle of self-determination by theparties, the confidentiality of the process, the impartiali-ty of a mediator, the need for a mediator to disclose anypotential conflicts of interests, and the competence of amediator.

This article offers only the broadest overview of theliterature on the topic of ADR and intellectual property.The materials cited in the endnotes contain a wealth ofmore detailed information from practitioners, media-tors, and arbitrators who have used ADR procedureswith varying degrees of success and/or satisfaction.The reader is urged to take a closer look at this materialin order to become more fully aware of the scope ofADR procedures and their efficacy in resolving intellec-tual property disputes.

Endnotes1. ADR methods include mediation, arbitration, neutral evalua-

tion, fact-finding, mini-trials, and other hybrid forms of resolu-tion, such as “med-arb” or mediation-arbitration.

2. See Christine Lepera, What The Business Lawyer Needs to KnowAbout ADR, New York State Bar Association Entertainment, Artsand Sports Law Section and the American Arbitration Associa-tion: Mediation (1999) (citing George H. Friedman, High-TechRevolution Spurs Use of ADR, The Metropolitan Corporate Coun-sel (Greater New York Metro ed. Sept. 1997), at 33).

3. See Julie A. Klein, Researching Results of Alternative Dispute Reso-lution, N.Y.L.J., July 1, 1999, at 3-4. Klein notes that there is nosingle entity which has, over a consistent period of time, “col-lected, maintained, analyzed, tracked and disseminated researchdata covering various aspects of alternative dispute resolutionin business related transactions.” Ms. Klein also reports that theAAA announced on June 10, 1999, that it is sponsoring the“Global Center for Dispute Resolution Research,” anautonomous, self-governing organization which will “examine

try. It is a no-risk, trivial-cost alternativeto highly unpredictable and high-costlitigation. It makes sense for the partiesto take charge of their own destinies,and to resolve for themselves theirintellectual property problems.23

Similarly, mediation is favored by practitioners ofintellectual property law in the international arena.Their reasons include the practicality of lower costs,time-saving features, confidentiality, control by the par-ties, the avoidance of precedence, the satisfaction by theparties with the outcome, and the preservation of rela-tionships between the parties. In an article that firstappeared in the Journal of World Intellectual Property,Carmen Collar Fernandez and Jerry Spolter urge thatparties consider this ADR mechanism of mediation forthe following reasons:

The world of intellectual property lawcalls for dispute resolution mechanismsas fast-paced and efficient as the evolu-tion of the underlying technology andideas which are the subject of the dis-putes.

International, multibillion-dollar corpo-rations engaged in the pursuit of busi-ness profits derived from intellectualproperty simply cannot afford the timeand resources to sit around with a pha-lanx of attorneys waiting years andspending millions to resolve disputespertaining to trademarks, copyrights,patents, and trade secrets.24

Many of the commentators emphasize the impor-tance of the confidentiality of the process, which is oneof the most critical elements of mediation. This concernfor and interest in confidentiality has also been recog-nized by the Second Circuit. In Lake Utopia Paper Ltd. v.Connelly Containers, Inc.,25 the court noted:

If participants cannot rely on confiden-tial treatment of everything that tran-spires during these sessions, then coun-sel of necessity will feel constrained toconduct themselves in a cautious, tight-lipped, non-committal manner moresuitable to poker players in a highstakes game than adversaries attempt-ing to arrive at a just solution of a civildispute.26

Certain states, such as California, Massachusetts,Indiana, Michigan, Texas, Oklahoma, Colorado, Florida,Utah, Washington, and Oregon, have codified the confi-dentiality protections of the mediation process.27 At aminimum, a mediation agreement should contain spe-

the use and effectiveness of dispute resolution on a worldwidebasis.”

4. Frank Elkouri & Edna Elkouri, How Arbitration Works 2 (Mar-lin M. Volz & Edward P. Goggin, eds., 5th ed. 1997).

5. Some critics have charged that arbitration proceedings havecome to resemble court hearings to the point that arbitration“has become a substitute courtroom.” See Gail Diane Cox, Arbi-tration Is No Simple Matter, Nat’l L.J., June 28, 1999, at A1.

6. 9 U.S.C. § 10. For a discussion of various standards used bycourts in reviewing arbitration awards, see Olivier Antoine,Judicial Review of Arbitral Awards, Dispute Resolution J., Aug.1999, at 23-32. One frequent commentator on arbitration trends,Carroll E. Neesemann of San Francisco’s Morrison & FoersterL.L.P., argues that parties should be encouraged to includeappeals procedures into their arbitration contracts, which heviews as “an opportunity to maximize the benefits of arbitra-tion.” See Cox, supra note 5, at A10.

7. Federal Arbitration Act, 9 U.S.C. § 10. For comparable languageapplicable under New York State law, see N.Y. Civ. Prac. L. & R.§§ 7510-11.

8. 148 F.3d 197 (2d Cir. 1998).

9. The U.S. Supreme Court has ruled that federal statutoryemployment-related claims, which are raised pursuant to theAge Discrimination in Employment Act (ADEA), or Title VII ofthe Civil Rights Act of 1964, or the Americans with DisabilitiesAct (ADA), are subject to arbitration. See Gilmer v. Interstate/John-son Lane Corp., 500 U.S. 20 (1991).

10. The standardized form that must be completed by brokers in thesecurities industry is known as the Form U-4 (Uniform Applica-tion for Securities Industry Registration). The signing of thisform by a broker constitutes an agreement to arbitrate any dis-pute, claim or controversy between the broker and the firm, cus-tomer or any person, that is required to be arbitrated under therules or by-laws of the organizations listed, including theNational Association of Securities Dealers. See Williams v. CignaFinancial Advisors, Inc., 56 F.3d 656, 660-61 (5th Cir. 1995).

11. Halligan, 148 F.3d at 210. The “manifest disregard of the law”standard was first enunciated in dicta by the U.S. SupremeCourt in Wilko v. Swan, 346 U.S. 427 (1953).

12. See generally American Arbitration Association, A Guide toMediation and Arbitration for Business People 3 (1998).

13. One commentator characterizes this notion of “no winners” asone which is “alien” to Western lawyers, who are taught to dealonly with the goal of victory. She notes that in China, there “are10 million mediators compared with 15,000 lawyers.” See SheilaM. Johnson, A Medical Malpractice Litigator Proposes Mediation,Dispute Resolution J., Spring 1997, at 48-49.

14. See Carmen Collar Fernandez & Jerry Spolter, International Intel-lectual Property Dispute Resolution: Is Mediation a Sleeping Giant?,Dispute Resolution J., Aug. 1998, at 66.

15. See id.

16. See David B. Lipsky & Ronald L. Seeber, Patterns of ADR Use inCorporate Disputes, Dispute Resolution J., Feb. 1999, at 66.

17. See id. at 69.

18. See id. at 71.

19. See id.

20. See id.

21. See David W. Plant, The Lessons of Markman’s Progeny: The Virtuesof ADR in Resolving Intellectual Property Disputes, ADR Currents(Dec. 1998), at 12-13.

22. See Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996).

23. See Plant, supra note 21, at 13.

24. See Fernandez & Spolter, supra note 14, at 53.

25. 608 F.2d 928 (2d Cir. 1979), cert. denied, 444 U.S. 1076 (1980). SeeDennis Sharp, The Many Faces of Mediation Confidentiality, Dis-pute Resolution J., Nov. 1998, at 56.

26. Lake Utopia Paper Ltd., 608 F.2d at 930.

27. See Sharp, supra note 25, at 58. See also Edward Costello, Jr. andCynthia Archuleta, Mediation Confidentiality: A Look at StatutoryLaw and Rules, ADR Currents, Mar. 1999, at 20.

28. See Today’s News: Update, N.Y.L.J., Sept. 14, 1999, at A1. Thereport also notes that copies of the act and information concern-ing commenting upon it are available online at “www.pon.harvard.edu/guests/uma.”

29. Copies of this pamphlet are available from any of the three par-ticipating organizations.

Rosemary A. Townley, Esq., Ph.D., Member,National Academy of Arbitrators; American Arbitra-tion Association’s Commercial, Labor and NationalEmployment Panels; Chair, New York State Bar Asso-ciation, Labor and Employment Law Section; andAdjunct Professor of Law, St. John’s University Schoolof Law.

Copyright © 1999, Rosemary A. Townley. Allrights reserved.



Scenes from theIntellectual Property Section’s

AnnualAnnualMeetingMeeting

Tuesday,January 25, 2000

New YorkMarriott Marquis

New York City


Next Intellectual Property Section Meeting

2000 FALL MEETINGOctober 12-15, 2000

The Sagamore • Bolton Landing, New York

The Section plans to offer a full day of MCLE credits


European Directive on Processing of Personal Dataand Free Movement of Such Data:Impact on U.S. BusinessesBy Astrid R. Baumgardner

However, despite the similarity of many provisionsof the national data protection laws, there were a num-ber of differences among these laws concerning thelevel of protection granted to individuals.5 Moreover, atthe time that the Commission decided to adopt theDirective, Italy and Greece had no legislation protectingthe privacy of personal data. This situation created apotential obstacle to the free flow of information andimposed burdens on economic entities and citizenswithin the EU, such as the need to register to be author-ized to process data by supervisory authorities in differ-ent Member States, the need to comply with differentstandards, and the possibility of being restricted fromtransferring data in other Member States of the EU.

Moreover, the situation was inconsistent with theobjective of the EU to create a border-free internal mar-ket, as well as with the realities of the “informationsociety” whereby data concerning citizens in one Mem-ber State were increasingly being processed in anotherMember State. Without the Directive, different nationalapproaches to data protection would create barrierswithin the single market, and the free movement of per-sonal information would be impaired. Accordingly, in1990, the European Commission decided to enact aDirective to create a uniform regulation that also pro-tected a fundamental right to individual privacy.6

B. Status of Directive

The Directive was supposed to have been imple-mented by each of the Member States on or beforeOctober 28, 1998. At present, the Directive has beenimplemented in Belgium, Greece, Italy, Austria, Portu-gal, Finland, Denmark, Spain, Sweden, and the UnitedKingdom. However, France, Ireland, Luxembourg, Ger-many, and the Netherlands have not yet implementedthe Directive, although legislation to transpose theDirective is pending in those States.7 It should be notedthat these five Member States have previously enactednational privacy legislation, so that even if the Directivehas not been transposed into their national laws, all 15Member States of the European Union now have lawsprotecting the privacy of personal information.8

Moreover, the Directive has a “direct effect” in theMember States that have not finally implemented itsprovisions, meaning that:

I. IntroductionThe ease of electronic com-

munication of information has asignificant potential for invasionof personal privacy. Whereas theUnited States has not enactedomnibus legislation to protect theprivacy of personal information,the Member States of the Euro-pean Union (EU) have adoptedthe Directive 95/46/EC datedOctober 24, 1995 on the Protection of Individuals withregard to the Processing of Personal Data and on theFree Movement of such Data (the “Directive”), whichbecame effective on October 28, 1998.1 This Directive isof interest to U.S. businesses for two reasons. First, it israising the public awareness of the need to protect pri-vacy in our new age of electronic information. Second,the Directive contains a provision that prohibits theexport of personal data to third countries that do notprovide an adequate level of protection to such data(with certain exceptions). Because the United States iscurrently viewed as not providing an adequate level ofprotection, there is a risk that personal information can-not be transmitted from the EU to the United States,although the United States and the EU are currentlydiscussing safe harbor principles that would permit theexport of such data. Accordingly, it is important to beaware of the main provisions of the Directive (Point I),as well as the implications of the Directive for U.S. busi-nesses (Point II).

I. The Data Protection Directive

A. Background

In Europe, individual privacy is recognized as afundamental human right.2 Since the 1970s, with thedevelopment of computer networks, individual Mem-ber States of the EU have passed laws protecting thefundamental rights of individuals and their right to pri-vacy from abuses resulting from the collection, use, andstorage of personal data. For example, France enacted alaw in 1978 on the Processing of Personal Data Files(the “1978 Law”).3 In addition, international institutionssuch as the United Nations, the Organization for Eco-nomic Cooperation and Development, and the Councilof Europe have adopted legal texts on this issue.4

• the national courts must construe their nationallaws in the area of privacy pursuant to the Direc-tive;

• a private entity can exercise a right granted underthe Directive against the State, provided that therelevant provision is sufficiently clear and unam-biguous;

• a private entity may not be prosecuted on thegrounds of non-compliance with the Directiveuntil the Directive is implemented into nationallaw; and

• private entities may not bring suit for violationsof the Directive until it is implemented intonational law.

C. Processing of Data and Rights of Data Subjects

The Directive is intended to protect individual pri-vacy by prohibiting the improper collection, use, andtransfer of data relating to individuals, while at thesame time encouraging the free movement of personaldata among the EU Member States. It covers all facetsinvolved in the processing of personal information.Thus, the Directive limits the uses for which data maybe collected and provides individuals with the right toadvance notice of the intent to collect and use personaldata, the right to access and correct data collected aboutthem, and the right to object to certain data transfers.

1. Scope of Application

Article 3 provides that the Directive applies to theprocessing of personal data by automatic means (i.e., acomputer database of customers), as well as by non-automatic means (i.e., traditional paper files). Process-ing of personal data includes collection, storage, anddisclosure of data. Personal data is defined as informa-tion relating to an identified or identifiable natural per-son (known as the “data subject”).9 It should be notedthat the processing of data about corporations is notaffected by the Directive.

Article 3 further provides that the Directive doesnot apply to the processing of data by individuals in thecourse of purely personal or household activities, nor toareas such as public security, defense, or criminal lawenforcement, which are outside the EU’s jurisdictionand remain a national prerogative.10 Because the rightto privacy may conflict with freedom of expression andfreedom of the press, the Directive instructs the Mem-ber States to establish exceptions from data protectionprovisions in order to strike the necessary balanceamong these rights. National laws may also provide forother exceptions when necessary on grounds of nation-al security, defense, crime detection, enforcement ofcriminal law, and for protection of the data subjects orthe rights and freedom of others.11

2. Persons Subject to the Directive

The Directive imposes obligations on the data “con-troller,” defined as the person or body which deter-mines the purposes and means of the data processing.12

Thus, a medical practitioner is the controller of datarelating to his patients, and a company is the controllerof data processing relating to its clients and employees.It should be noted that the Directive covers data con-trollers in both the public and the private sectors.

3. Governing Law

Under article 4 of the Directive, each data controllermust comply with the provisions of the Member Statein which it is established, even if the personal datarelate to data subjects established in other MemberStates. If the data controller is established in more thanone Member State, the law of each Member Stateapplies. If the data controller is not established in theEU (i.e., a foreign company), such entity must complywith the laws of the Member State where its data pro-cessing equipment is located. Controllers establishedoutside the EU are required to appoint a representativewithin the EU in order to comply with their obligationof disclosure to data processing authorities and noticeand information to data subjects.

4. Processing of Personal Data

Article 6 of the Directive sets forth the rules on howdata must be processed. Thus, personal data, when col-lected, may only be used as follows:

• data must be processed fairly and lawfully;

• data must be collected for specified, explicit, andlegitimate purposes and used accordingly;

• data should be adequate, relevant, and not exces-sive in relation to the purposes for which it is col-lected;

• data should be accurate and where necessarykept up to date;

• data should be kept in a form which permitsidentification of subjects for no longer than is nec-essary.

These principles may be illustrated in the context ofhidden processes for collecting information, such ascookies.13 The French CNIL considers that under theFrench data privacy law, which is very similar to theDirective, such processes might violate the principles offair and legal collection of information and the right ofthe individual to access the information. Accordingly,persons accessing Web sites must be informed of theexistence of Internet cookies.14

Moreover, under article 7, personal data can only beprocessed as follows:



5. Rights of the Data Subject

The Directive instructs the Member States to pro-vide the data subject with certain rights with respect topersonal data: (1) a right of notice and information; (2)a right of access and correction; and (3) a right to objectto use of the data.

a. Information to the Data Subject

The data controller must provide certain informa-tion to data subjects whenever it processes personaldata, unless the data subjects already have this informa-tion. Data subjects must be informed of the identity ofthe controller and of the purposes of the processing, aswell as the categories of the data, the recipients of thedata, and the specific rights of data subjects. Data sub-jects must receive this information both if the informa-tion has been obtained directly from the data subject(article 10) and from third parties (article 11).15

The best way to comply with this requirement is tonotify the person at the moment that the information iscollected as to how the information will be used. Thiscan be done directly on a Web site or on a paper appli-cation. If the use is not apparent at the time of the col-lection, then the person must be notified at the time thatthe information is to be processed. It is interesting tonote that the French CNIL has indicated that wheninformation is obtained in the course of an online forumor chat room, such information may not be used forcommercial purposes.16 The CNIL recommends thatWeb sites post a notice on the welcoming page of theforum advising users that use of such information forcommercial purposes is prohibited. The CNIL has fur-ther emphasized that the Web site owner should informpersons participating in on-line discussions of theirright to access and correct personal data as well as theirright to demand at any time the removal of any identi-fying information disclosed in the course of such dis-cussions.

To insure that the public is properly informed aboutdata processing operations and in order to allow thenatural data protection authorities to perform their obli-gations, the Directive sets up a system of notificationfor processing operations. National data protectionauthorities are required to keep a public register indi-cating the details of the data controllers and of the pro-cessing undertaken.17

b. The Data Subject’s Right to Access and CorrectData

All persons are entitled to approach any data con-troller to know whether he possesses personal datarelating to him, to receive a copy of the data and, if nec-essary, to request correction or erasure of the data. Insuch cases, the data subject may also require the data

• the data subject has given his unambiguous con-sent (i.e., he or she has agreed freely and specifi-cally to use of such data after being adequatelyinformed); or

• data processing is necessary for the performanceof a contract or in order to enter into a contractrequested by the data subject (e.g., processing ofdata for billing purposes, or processing of datarelating to an applicant for a job or for a loan); or

• processing is necessary for compliance with alegal obligation; or

• processing of data is necessary to protect the vitalinterests of the data subject; or

• processing is necessary in the performance oftasks carried out in the public interest or by offi-cial authorities (such as the government, the taxauthorities, the police) where it is necessary forperformance of their duties; or

• data can be processed whenever the controller ora third party has a legitimate interest in doing soand, this interest is not overridden by the interestof protecting the fundamental rights of the datasubject, particularly the right to privacy (e.g., inthe context of legitimate ordinary business activi-ties of companies or entities).

More stringent rules apply to the processing of sen-sitive data relating to racial or ethnic origin, politicalopinions, religious or philosophical beliefs, trade unionmembership, and the processing of data concerninghealth or sex life. Such data cannot be processed unlessthe data subject gives his or her explicit consent (article8). There are a number of exceptions including:

• where the processing of data is mandated bynational employment law, which is the case incountries whose laws provide for employer with-holding of tax or social welfare contributions; or

• where processing is necessary to protect vitalinterests of the data subject and it is impossiblefor the data subject to consent (e.g., blood testingof the victim of a road accident or files of human-itarian organizations on arrested or missing per-sons); or

• the processing of data which has been made pub-lic; or

• the processing of data is necessary for establish-ing, exercising or defending legal claims (e.g., lawfirm files); or

• data processing in the public interest such as pub-lic health and safety, scientific research, or statisti-cal information.

controller to notify third parties who had previouslyconsulted the incorrect data, unless this proves to beimpossible.18

c. The Data Subject’s Right to Object

The Member States are directed in article 14 to givethe data subject the right to object to the processing ofdata relating to him at least in cases referred to in arti-cles 7(e) and (f) of the Directive, i.e., where processing isnecessary for performance of a task in the public inter-est or in the exercise of official authority for the purpos-es of the legitimate interests of the data controller. Thedata subject can also object to the processing of person-al data relating to him for the purposes of direct mar-keting or be informed before personal data are dis-closed for the first time to third parties for suchpurposes.

The Directive also has a specific provision for deci-sions based solely on automated processing of data(such as granting a loan or issuing insurance). This canbe done only in the course of entering or performing acontract provided that the request for entering into orperformance of the contract, lodged by the data subject,has been satisfied or that there are suitable measures tosafeguard his legitimate interests, such as arrangementsallowing him to input his point of view. In such a case,the data controller must adopt suitable safeguards, suchas giving the data subject the possibility of expressinghis point of view if his requests are not satisfied. Deci-sions based solely on automated processing of data canalso be authorized by a law which provides measures tosafeguard the data subject’s legitimate interests.19

6. Confidentiality and Security of Data Processing

Article 16 insures the confidentiality of data by pro-viding that any person acting under the authority of thedata controller and the data processor may not processdata except upon the instructions from the controller,unless required to do so by law. The Directive alsorequires the data controller to implement appropriatemeans to guarantee the security of personal data to pro-tect against accidental or unlawful destruction or loss,alteration, unauthorized disclosure or access of data,especially where processing involves the transmissionof data over a network.20

D. Transfer of Data to Third Countries

1. Limitations and Exceptions

In the age of computer networks and the Internet,one obvious way to avoid compliance with the Direc-tive would be to export data to countries outside theEU which do not have similar laws. The Directive antic-ipates this situation and makes provision for the trans-fer of personal data outside the EU. Article 25 of theDirective instructs Member States to limit personal dataflow to third countries which do not provide an “ade-

quate level of protection” for personal data. Thus, thesupervisory authority of a Member State is authorizedto assess the adequacy of the level of protection afford-ed by a third country in light of the circumstances sur-rounding a data transfer operation on a case-by-casebasis. The circumstances include but are not limited to:

• the nature of the data;

• the purpose and duration of the proposed pro-cessing operation;

• the country of origin and the country of final des-tination;

• the rules of law in force in the third country inquestion;

• the professional rules and security measureswhich are complied with in that country.21

It should be noted that adequacy of protection ismeasured not only by the legislation in force in a partic-ular country but also by industry rules, which leavesopen the possibility for contractual and self-regulatorymechanisms to protect personal data. This actually ismore flexible than the typical European approach ofadopting legislative solutions as opposed to the Ameri-can approach to privacy protection, which is largelybased on self-regulation (See Point II, infra). The Com-mission may also assess whether a third country pro-vides an adequate level of protection of personal data,in which case the Member States are bound by its opin-ions.

From the standpoint of U.S. organizations, the mostcontroversial part of the Directive is the provisionauthorizing a Member State to prevent the transfer ofdata to a third country if there has been a finding thatthe third country does not insure an adequate level ofprotection. Moreover, the data protection authorities ofthe Member States are authorized to consult and com-municate their decisions to each other.22

However, even if a country does not provide “ade-quate protection,” the Directive permits transfers totake place to third countries in specific circumstancesset forth in article 26. These situations, based on theprinciples of article 7 of the Directive, include the fol-lowing:

• the individual has given his unambiguous con-sent to the transfer (e.g., a French citizen whoapplies for a loan to a U.S. bank for purchase of aU.S. vacation home and requests his French bankto send a credit report to the U.S. bank); or

• the transfer is necessary for the performance of acontract with the individual concerned (employ-ment contract), the implementation of pre-con-tractual measures taken in response to his or her



II. Safe Harbor Principles

A. Background

Privacy protection in the United States is primarilysectoral and self-regulatory, as opposed to the omnibuslegislative approach exemplified by the Directive. In thepublic sector, the Privacy Act of 197724 provides for fairinformation practices with respect to the federal gov-ernment’s collection and use of personal data. As forthe private sector, legislation exists in particular areas,such as the financial sector,25 bank records,26 and videorental records.27 The EU considers that the United Statesdoes not possess the same level of data protection andtherefore has not yet achieved the adequacy standardthat is in force in the EU.28 The European authorities areconcerned by the absence of omnibus privacy legisla-tion in the United States, particularly with respect to (1)the lack of an agreed benchmark standard of protectionof personal data; (2) the need to make compliance withthe standards compulsory; (3) the need for independentmonitoring to assure compliance with the privacy stan-dards; and (4) the need for an independent mechanismto enforce breaches of privacy standards.29

Accordingly, many U.S. organizations have beenuncertain about the impact of the “adequacy” standardon personal data transfers from EU to the United States,since full enforcement of the Directive would preventthe cross-border transfer of such data from the EU tothe United States. In order to address the concerns ofthe EU, diminish uncertainty in the area of transfers ofpersonal data, and provide a framework for data trans-fers from the EU to the United States, the U.S. Depart-ment of Commerce has proposed a set of “InternationalSafe Harbor Privacy Principles.” U.S. companies wouldvoluntarily choose to adhere to the privacy principlesset forth in the safe harbor principles and would thenbe bound to comply with the principles. Adherence tothese principles would constitute “adequate” protectionof personal data under article 25.6 of the Directive.Thus, the safe harbor principles would enable U.S. com-panies to comply with the Directive while keeping theU.S. system of self-regulation in place.

The EU and U.S. authorities have been negotiatingthese principles since September 1998. The CommerceDepartment announced the first set of principles inNovember 1998 and issued a revised set dated as ofApril 19, 1999, along with new FAQs. The authoritieswere hoping to adopt a solution before the EU/U.S.Summit on June 21, 1999. However, that deadlinepassed without a resolution of the issue, and new safeharbor principles and FAQs were issued on November15, 1999. A revised set of principles and FAQs wereissued on March 17, 2000, with an April 15, 2000 dead-line for public comments.

request (an application for a job), or the conclu-sion or performance of a contract involving thedata subject between the data controller and athird party (reporting of financial informationfrom a bank to tax or other public authorities); or

• the transfer is necessary or legally required forthe establishment, exercise or defense of legalclaims; or

• the transfer is necessary to protect the vital inter-ests of the individual (transfer of medical dataconcerning an individual hospitalized in a non-EU country); or

• the transfer is made from a public register.

Furthermore, article 26 recognizes that even if acountry itself does not ensure an adequate level of pro-tection, data may be transferred if an organization itselfprovides adequate safeguards. Such safeguards mayresult from appropriate contract clauses. The contractu-al clauses are assessed using the same criteria as thoseused to assess the general level of adequacy in a thirdcountry.

2. Contractual Solutions

The Commission has set forth its views on the useof contractual provisions in the context of transfers ofpersonal data to third countries. Thus, the contractualprovisions must encompass all of the basic data protec-tion principles set forth in the Directive and providesmeans by which the principles can be enforced.23 Con-cretely, this means that the contract should set out:

• the purposes, means and conditions of processingof the transferred data;

• the way in which the basic data protection princi-ples will be implemented to insure a good levelof compliance with the rules, provide support tothe individual data subjects in the exercise oftheir rights, and provide appropriate redress pro-viding for impartial judgments and compensationand sanctions where appropriate (e.g., arbitra-tion).

Such contractual solutions are probably best adapt-ed to large international networks, such as credit cardsand airline reservations systems. These typicallyinvolve large quantities of repetitive data networktransfers of a similar nature and a relatively small num-ber of large operators in industries already subject tosignificant public scrutiny and regulation. Contractualsolutions also will be useful with respect to inter-com-pany data transfers between different branches of thesame company group in another area.

The authorities are now close to an agreement onthe safe harbor principles, although they are continuingto discuss the financial services sector in view of thefact that the privacy regulations under the FinancialServices Modernization Act are not yet complete.30 It isanticipated that the principles will be adopted at theJune 2000 EU/U.S. Summit in Portugal and will becomeeffective this summer. The safe harbor principles areexpected to be implemented by mid-2001 in order togive U.S. companies sufficient time to adopt adequateprivacy policies.31

As a result of the safe harbor proposals, the EUannounced its intention to avoid disrupting data flowsto the United States as long as the United Statesengaged in good-faith negotiations with the EuropeanCommission. That standstill remains in effect. Thismeans that at present, until the authorities are able toagree upon a set of privacy principles, entities in the EUmay transfer data to the United States despite theabsence of adequate protection of personal data.

B. The Principles

There are seven basic safe harbor principles whichhave been elaborated and explained in a series of 15FAQs issued by the Department of Commerce.32 Theprinciples are:

1. Notice: Organizations must inform individualsabout the purposes and use of the information, how tocontact the organization, the types of third parties towhich it discloses information, and the choices andmeans the organization offers to individuals for limitingits use and disclosure. The notice must be clearly andconspicuously disclosed.

2. Choice: Individuals must be given the right to optout of disclosure of personal information where disclo-sure is incompatible with the purposes for which it wasoriginally collected. Moreover, individuals must havethe right to opt in for sensitive information (medical orhealth conditions, racial or ethnic origin, political opin-ions, religious or philosophical beliefs, trade unionmembership, or information specifying sex life). Anorganization must treat as sensitive information anyinformation received from third parties and identifiedas sensitive.

3. Onward Transfer: Disclosure to third parties mustbe consistent with the principles of notice and choice.

4. Security: Organizations must take reasonable pre-cautions to protect personal information from loss, mis-use and unauthorized access, disclosure, alteration, anddestruction.

5. Data Integrity: Organizations must assure thatdata is relevant, accurate, complete, and current.

6. Access: Individuals should have access to infor-mation that an organization holds about them andshould be able to correct, amend, or delete informationwhere it is inaccurate.

7. Enforcement: Organizations must provide an effec-tive mechanism of recourse for individuals. Such mech-anism must be readily available and affordable, inde-pendent, and provide sufficiently rigorous sanction toensure compliance.

The safe harbor will create not simply a presump-tion of adequacy for companies in the safe harbor, but afinding of adequacy.33

The operation of the safe harbor principles can beillustrated as follows in the context of personal informa-tion gathered in the context of the employment relation-ship. A company in the EU could transfer personalinformation about its employees collected in the contextof the employment relationship to a U.S. parent, affili-ate, or unaffiliated service provider in the United Statesif the U.S. company has chosen to qualify for the safeharbor. It should be noted that the collection of theinformation and its processing prior to transfer wouldbe subject to the law of the EU country where it wascollected. The safe harbor principles would come intoeffect only when information concerning an individualwas transferred to or accessed in a third country. Thus,notice of use of the information and the data subject’schoice as to whether to allow the information to beused would be necessary only when the U.S. organiza-tion receives employee information and intends to dis-close it to third parties or use it for different purposes.This would be the case of personal information collect-ed through the employment relationship which the U.S.organization intended to use for marketing communica-tions.34

C. Compliance with Safe Harbor Principles

A U.S. organization’s decision to adhere to the prin-ciples would be entirely voluntary. In order to obtainand retain the benefits of the safe harbor, organizationsthat decide to adhere to the principles would have tocomply with the principles of the safe harbor and pub-licly declare their compliance.

There are a number of ways to qualify for a safeharbor.

1. Self-Regulatory Privacy Program

An organization could qualify by joining a self-reg-ulatory privacy program that adheres to the safe harborprivacy principles. Such programs currently includeOnline Privacy Alliance and third-party privacy sealprograms such as TRUSTe and BBBOnLine of the BetterBusiness Bureau. Under these programs, organizationsmust agree to comply with a series of privacy principles



certification must be done annually. Then, the Depart-ment of Commerce would have a list of companies thatagree to adhere to the principles. This list would serveas notice to European organizations and consumers thatthe companies meet all the requirements of adequateprivacy protection and that they are found to provideadequate protection of privacy.

D. What U.S. Companies Can Do in Order toReceive Personal Data from the EU

For the time being, while good-faith negotiationsare continuing, there is a standstill so that European-based companies can transfer personal data to organi-zations in the United States. If, however, no agreementis reached on the safe harbor principles, a U.S. organi-zation will have to negotiate with each of the 15 dataprotection authorities in the various Member Stateswhenever it wishes to receive data from the EU.38 Theorganization will then have to demonstrate that thetransfer falls within the exceptions of article 26. Thus, itwill have to show that either: (1) the transfer is neces-sary for the performance of a contract between the datasubject and the transferring entity of the Directive (arti-cle 26(2)) or that the data subject has consented to thetransfer (article 26(1)); or (2) the organization contractu-ally guarantees adequate protection for data subjects. Inthis respect, contracts should make adequate provisionfor protection of the data, insure that data will be prop-erly handled, and further provide a means of redressfor aggrieved individuals, including arbitration.

Moreover, in order to reinforce its commitment todata privacy, U.S. organizations can voluntarily take thefollowing steps to assure the protection of personalinformation:

1. They should adopt effective privacy policieswhich incorporate the principles of the safe har-bor, i.e., provisions requiring entities to notifycustomers and employees conspicuously of theentity’s information handling procedures,including how and when personal information iscollected and how it will be used.

2. They should obtain consent of customers andpersonalize data collection practices, giving indi-viduals a choice of how their data will be used,and protect customer data.

3. They should designate a data protection officerto handle all privacy concerns of customers.

4. U.S. organizations also are advised to conduct aprivacy audit wherein they should analyze thecollection, use, transfer, storage, and seal of per-sonal data in every aspect of a business, includ-ing suppliers and third-party vendors, so as toidentify potential areas of liability arising from

of disclosure, choice, access, and security. They mustalso agree to adhere to the continuing oversight of theprogram as well as to the program’s enforcement mech-anisms. The organization is then granted a privacy sealwhich is posted on the organization’s Web site so thatusers can access the privacy policy directly.35 The ADRmechanisms provided by such programs are attractiveto the European authorities, since they are one means ofassuring effective enforcement of privacy policies.

2. Self-Regulatory Privacy Policy

Another way that an organization can qualify forthe safe harbor is to develop its own self-regulatory pri-vacy policies that conform to the safe harbor principles.The European authorities are particularly concernedabout effective enforcement of violations of privacypolicies, and they look to the existence of judicial oradministrative bodies with jurisdiction to regulateunfair trade practices. In this respect, if a company self-certifies that it is in compliance with the safe harborprinciples and then violates the principles, this consti-tutes an unfair and deceptive practice under the juris-diction of the Federal Trade Commission (FTC) whichcan be investigated and sanctioned under § 5 of theFTC Act.36

To self-certify that it adheres to the safe harbor prin-ciples, the company must notify the U.S. Department ofCommerce of its privacy policy, including:

• where it is available for viewing by the public;

• its effective date of implementation;

• the contact person for handling complaints andrequests to investigate;

• the statutory bodies that have jurisdiction to hearany claims against the organization regardingpossible unfair or deceptive practices;

• any privacy programs to which the organizationis a member;

• the method of verifying the truth of the attesta-tions and assertions (in-house or third-party); and

• independent recourse mechanism to investigateunresolved complaints.37

3. Effect of Certification

U.S.-based organizations that self-certify theiradherence to the safe harbor principles and FAQs andare subject to the jurisdiction of the FTC or other bodywith similar statutory powers for the purposes ofenforcement and investigation would be entitled to afinding of adequacy of protection of personal data. Thesafe harbor would become effective from the date thatthe U.S. organization notifies the Department of Com-merce of its adherence to the safe harbor principles. The

external security breaches, internal misuse ofdata, or lack or regulatory compliance.

5. Finally, Web site owners, even if they do notactually transact business with Europeans,should also pay attention to the Directive andpost a privacy statement and/or participate in aself-regulatory privacy program.

Such practices, if widely adopted, can make animportant contribution to protecting personal data andassuring a level of comfort in our emerging electronicinformation era.

Endnotes1. The Directive can be found at www.europa.eu.int/comm/dg15/

en/media/dataprot/law/ind.

2. European Human Rights Convention, article 8, entitled “Rightto Respect of Privacy and Family Life” provides that all personshave a right of respect of their personal and private life, theirdomicile and correspondence, and prohibits public authoritiesfrom infringing this right except where permitted by law to pro-tect national security, public safety, economic well-being of acountry, defense of order and prevention of crime, protection ofhealth and morals, or the protection of the freedom and rights ofothers.

3. The law established a data protection authority known as the“Commission Nationale d’Informatique et Liberté” (CNIL) whoserole is to insure compliance with the provisions of the 1978 Law.The highlights of the law are: (1) prior notification of data pro-cessing to the CNIL; (2) a requirement to provide certain infor-mation to individuals at the time of collection, particularly withrespect to persons receiving such information, and the right ofindividuals to access and, where necessary, correct the informa-tion in question; (3) a requirement that collected data must beexact, kept up-to-date, be collected and/or processed faithfullyand only for a specific and legitimate purpose; and (4) obliga-tions on the part of the persons processing the information tokeep the information secure and to obtain express consent forthe processing of sensitive data (i.e., data concerning racial ori-gin, political, philosophical or religious information, unionmembership, or personal habits). It should be noted that theCNIL has indicated that the principles of the 1978 Law apply tothe Internet. Thus, data may not be collected and/or processedwithout the knowledge of Web site visitors, and Web sites mustpost notices of use and rights with respect to data.

4. See United Nations Resolutions Guideline No. 45/95 datedDecember 14,1990; OECD Guidelines on the protection of priva-cy and trans-border flow of personal data dated September 23,1980; Council of Europe Convention No. 108 for the protectionof persons with regard to automated processing of personaldata of January 28, 1981.

5. For example, German law had no concept of “sensitive” infor-mation, whereas other Member States have special protectionfor such data. See, e.g., the French 1978 law, supra note 3.

6. It should be noted that the Directive instructs the Member Statesto enact legislation that is minimally consistent with its provi-sions. Under the European system, the national laws of eachMember State will govern the issue of data privacy, and theirlaws must be based on the Directive.

7. The European Commission decided in January 2000 to bringlegal proceedings against these Member States for failure tonotify the measures of transposition into national law.

8. In the case of French legislation, the level of protection is insome instances even greater than that provided by the Directive.For example, the Directive allows the Member States to deter-mine the conditions under which identifying information suchas a national social security number can be processed, whereasunder French law, use of national identification information issubject to prior authorization.

9. Directive, art. 2(b).

10. Id., art. 3.2.

11. Id., art. 13.

12. Id., art. 2(d).

13. A cookie is a small computer file that a Web server sends to aWeb browser for storage so that the browser can remember spe-cific information such as a password. This device makes it possi-ble to monitor online habits of Internet users, often withouttheir knowledge or informed consent.

14. In the file issued by the CNIL entitled “Je monte un site Internet”and accessible on-line at www.cnil.fr (“CNIL File”), the CNILrecommends the following measures: (i) Web visitors should beinformed about the existence of cookies or any other hiddenprocesses intended to collect personal data and about the pur-pose of such processes before they are implemented; and (ii)Web site visitors should also be informed that their browserapplication may be able to disable these processes if they wish.

15. When the information has not been obtained from the data sub-ject, the data controller is not required to provide informationwhere processing is for statistical purposes, historical or scientif-ic research, or where it is impossible or is proportionately diffi-cult to do so (Directive, art. 11(2)).

16. See CNIL File, supra note 14.

17. Directive, arts. 18-21. In principle, under article 18, the data con-troller is required to notify the supervisory authority in a Mem-ber State before carrying out any automatic data processingoperation. However, each Member State may provide for simpli-fied notification or an exemption from notification in caseswhere the processing operations are unlikely to “affect adverse-ly the rights and freedom of data subjects.” This provision isbased on article 17 of the French Law of 1978 which makes adistinction based on “objective” and “subjective” data. Thus,“objective” data, such as salary information, a list of suppliersor client lists, do not violate personal freedom and therefore aresubject only to a simple declaration to CNIL. Similarly, underthe Directive, such data would be subject to simplified declara-tion or exempt from declaration. However, data which involve asubjective assessment of an individual (such as job performancereviews) are more sensitive and would require a more elaboratedeclaration to the national data protection authority.

18. Id., art. 12.

19. Id., art. 15.

20. Id., art. 17.

21. Id., art. 25(2).

22. Id., art. 25(3)-(4).

23. See Preliminary views on the use of contractual provisions inthe context of transfer of personal data to third countries, foundat www.europa.eu.int/com/dg15/en/media/dataprot/wpdocs/wp9en.htm.

24. 5 U.S.C.A. §§ 552 et seq.

25. Fair Credit Reporting Act, 15 U.S.C.A. §§ 1681 et seq.; the Finan-cial Services Modernization Act (a/k/a the Gramm-Leach-BlileyAct) (the “GLB Act”). The GLB Act requires federal financialregulators to adopt regulations implementing its provisions byMay 12, 2000. On March 2, 2000, the SEC issued RegulationS-P governing Privacy of Consumers’ Nonpublic Personal Infor-



who are charged with enforcement of the national privacy laws.

35. See, e.g., TRUSTe program (www.truste.org).

36. 15 U.S.C.A. §§ 45 et seq. In the most recent meetings between theU.S. and European authorities on February 21-22, 2000, the par-ties reported a breakthrough on the issue of enforcement, sincethe European Commission is now reported to be more comfort-able with the fact that the U.S. has statutory powers to insureenforcement of self-regulation in view of the possibility of sanc-tioning breaches of voluntary obligations by U.S. regulatoryand/or law enforcement agencies at both the federal and statelevel. See Data Protection News www.europa.eu.int/com/dg15/en/media/dataprot/news/talks.htm.

37. FAQ6, www.ita.doc/td/ecom/FAQ6self-certif1199.htm.

38. It should be emphasized that if in a particular case the Commis-sion decides that the U.S. does not provide an adequate level ofprotection, no transfer will be made.

Astrid R. Baumgardner is the New York Partner ofthe Paris-based law firm of Gide, Loyrette, Nouel. Sheis a member of the Internet Law Committee of theNYSBA Intellectual Property Law Section. The authorwishes to thank Maître Nadia Vivien, a member of theParis bar and an associate in the firm’s Media andInformation Technology Department in Paris, for herassistance in the preparation of this article.

© 2000 Astrid R. Baumgardner

mation containing the privacy rules mandated by the GLB Act.(Release Nos. 34-32484 1C-24326 and 1A-1856). Comments onthe proposal were due on March 31, 2000.

26. Right to Financial Privacy Act, 12 U.S.C.A., §§ 3401 et seq.

27. Video Privacy Act, U.S.C.A., §§ 2710 et seq.

28. See Opinion 1/99 concerning the level of data protection in theUnited States and the ongoing discussions between the Euro-pean Commission and the United States Government issuedJanuary 26, 1999, DGXV 5092/98 (“Opinion 1/99”) found atwww.europa.eu.int/com/dg15/en/media/dataprot/wpdocswp15en.htm. As the European Working Party observed, “thecurrent patchwork of narrowly-focused ectoral laws and volun-tary self-regulation cannot at present be relied upon to provideadequate protection in all cases for personal data transferredfrom the European Union.”

29. Opinion 1/99, supra note 28.

30. See supra note 25.

31. See cover letter from ambassador David L. Aaron to U.S. organi-zations requesting comments on the newly posted draft docu-ments dated March 17, 2000, found at www.ita.doc.gov./td/ecom/menu1.html.

32. The principles are set forth at www.ita.doc.gov./td/ecom/RedlinedPrinciples31600.htm.

33. Letter from Ambassador David L. Aaron dated November 15,1999, at www.ita.doc.gov/td/com/aaronmemo11/99.htm.

34. See FAQ 9, www.ita.doc/gov/td/ecom/RedlinedFAQ9HR300.htm. This FAQ is subject to review by one of the two EU Work-ing Parties composed of the national data protection authorities

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Trade Winds

Welcome New Members:

Trade Winds offers Section members a way to keep up on the comings and goings of their colleagues and upcoming eventsof interest. Has there been a change in your practice? Any recent or forthcoming articles or lecture presentations? Won any awardsrecently? Please e-mail submissions to Jonathan Bloom at [email protected].

John A. DeMaroAnna M. DePaloRosario DeVitoGerard Patrick DevineAxel DiazKarina J. DimidjianMichael Dinh-CohenJeffrey DodesKieran G. DoyleJennifer A. DraffenPhilip I. DropkinJohn DuSiddharth G. DubalRichard S. EgosiAvi FaskowitzPatrick J. FayErik FeigAliza E. FischJo Ann FordPaulette FoxApril Ann FredlundMichael French-MerrillMarianne FuiererToshiyuki FukaiPatricia GabelPeter J. GannonLawrence J. GermanoStephen GiganteRon GillerChristopher J. GlancyJeffrey M. GoldJeffrey S. GoldsteinKaren P. GordonFrederick GothaStefan GrantRobert L. GreenerThomas GrenvilleAntonio S. GrilloMichael T. HagerMichael HartmereAshley D. HayesRandi B. HeitzmanMichael R. HermanJessica A. HeslopBarry HeymanDouglas C. HollmannAlysse D. HopkinsDavid Ken HouWilliam Chao-Hui HwangShiho IgarashiMassimo E. IoriRaymond K. JavdanFelice A. JavitGrace S. JeanNoreen C. JohnsonBhavana JonejaM Alexander JurkatMichael KahnKenneth Marc KaplanDiane Judith KasselmanPaul B. KellerChristopher P. KellySeema Azhar KhanKazunori Kirihara

Eliot AbolafiaMuna Abu-ShaarStephanie A. AcevedoKenneth E. AckermanJanet K. AdachiRachel B. AdlerAnn Marie AgostiAndrew S. AlitowskiAmr AlyMark G. AndersonRobert W. AndersonMariam AnwarzaiScott AsmusGilles AugustJeffrey A. AumellRichard BaderKenneth T. BaileyDaphna Bar-ZuriDa’ Tekena Barango-TariahAndrea D. BarzviAstrid R. BaumgardnerCarl BeckwithWyatt B. BellmanAmy BernsteinJames J. BitettoUrsula B. BonarRobert BraunNeil BrownMichael V. BuonaspinaKlara BurianovaZisca R. BurkleyBernardo BursteinEmily CampbellJohn R. CardonaMartin F. CaseyWilliam J. CastilloMatthew CaudillAlex ChachkesRoy ChanJane ChangWei-Hung ChaoArlene ChaseDavid A. ChecchioMorry ChengNicholas M. CherotShun-Yi ChiangStephen M. ChinElsie ChunAnthony R. CiampiSophia ClarkGina ClementsJoseph ConleyJared A. CooperAndre J. CorrealeCecilia E. CoscaSteven CrosbyJennifer CulverDaniel J. CurryAnthony V. CurtoDanielle D. CyrJames D. DatiBrian T. DavisHarry S. DavisVadim Daynovsky

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ANNOUNCING THEIntellectual Property Law Section’s

ANNUAL LAW STUDENT WRITING CONTEST

Sponsored by THOMSON & THOMSON

To be presented at The Annual Fall Meeting of the Intellectual Property Law Section, October 12-15, 2000, Lake George, NY to the author of the best article on a subject relating to the protection of intel-lectual property not published elsewhere.

First Prize: $2,000 Second Prize: $1,000

CONTEST RULES

To be eligible for consideration, the paper must have been written solely by a student or students in full-timeattendance at a law school (day or evening) located in New York State or by out-of-state law students whoare members of the Section. The paper must be submitted to the Intellectual Property Law Section on orbefore June 15, 2000 (postmark deadline). Papers should be no longer than 25 pages, double-spaced, includ-ing footnotes. Submissions must include the submitter’s name; law school and expected year of graduation;mailing address; e-mail address; telephone number; and employment information, if applicable. Contestantsmust submit two copies of their papers in hard copy as well as two copies on 3.5" high-density disks in Word-Perfect or Word format.

Reasonable expenses will be reimbursed to the author of the winning paper for travel and lodging at the FallMeeting to receive the Award. Send entries by June 15, 2000 to:

Walter J. Bayer, IICo-Chair, Technology Transfer& Licensing Law Committee

GE LicensingOne Independence Way

Princeton, NJ 08540(609) 734-9413

(e-mail: [email protected])

with a copy to:Victoria A. Cundiff

Chair, Intellectual Property Law SectionPaul, Hastings, Janofsky & Walker, LLP

399 Park Avenue, 30th FloorNew York, NY 10022

(212) 318-6030e-mail:[email protected]

Please direct any questions to Walter Bayer.

The winners of the Law Student Writing Contest for 1999 are:

First Prize ($1,000): Penelope J. Flynn Second Prize ($500): Juan C. Gonzalez

The winning entries were published in Bright Ideas, Vol. 8, No. 3 (Winter 1999)


Membership in the New York State Bar Association’s Intellectual Property Law Section is a valuable way to:

• enhance professional skills;• keep up-to-date with important developments in the legal profession;

• join colleagues in exciting Section events.

OPPORTUNITIES FOR EDUCATION

The Intellectual Property Law Section offers both the experienced and novice practitioner excellent opportu-nities to enhance their practical and legal knowledge and expertise. Through Section activities, including con-ferences on intellectual property (an annual fall event), members may examine vital legal developments in in-tellectual property law. The Section’s Web site provides current information regarding Section events and offers“members only” access to current issues of Bright Ideas and current Committee bulletins providing updates onintellectual property law. The Section plans to sponsor continuing legal education (CLE) credit-bearing pro-grams for Section members at reduced rates. Recent programs offered by the Section related to computer soft-ware and biotechnology protection, conducting intellectual property audits, and practical considerations intrade secret law. The Section sponsors an annual Intellectual Property Law writing contest for New York StateLaw Students.

OPPORTUNITIES FOR PROFESSIONAL DEVELOPMENT

Intellectual Property Law Section committees address unique issues facing attorneys, the profession and thepublic. The Section offers opportunities to serve on committees such as Patent Law; Trademark Law; CopyrightLaw; Internet Law; Trade Secrets; Technology, Transfer and Licensing; Young Lawyers and the Special Commit-tee on the Impact of the Uniform Computer Information Transaction Act on Intellectual Property Law.

Committees allow you to network with other attorneys from across the state and give you the opportunityto research issues and influence the laws that can affect your practice. Committees are also an outstanding wayto achieve professional development and recognition. Law students are automatically members of the YoungLawyers Committee. Section members may join more than one committee.

A VOICE IN THE ASSOCIATION

The Intellectual Property Law Section takes positions on major professional issues that affect practitionersand advocates those positions within the New York State Bar Association, the legislature and the public.

See page 33 to become a member of the Intellectual Property Law Section

MEMBERSHIP APPLICATIONNew York State Bar Association:

INTELLECTUAL PROPERTY LAW SECTION


COMMITTEE ASSIGNMENT REQUEST

Please designate from the list below, those committees in which you wish to participate. For a list of com-mittee chairs and their e-mail addresses, please refer to page 34 of this issue.

___ Copyright Law (IPS1100)

___ Internet Law (IPS1800)

___ Patent Law (IPS1300)

___ Technology, Transfer and Licensing (IPS1400)

___ Trade Secrets (IPS1500)

___ Trademark Law (IPS1600)

___ Young Lawyers (IPS1700)

___ Special Committee on Computer Law andInformation Technology (IPS2000)

___ Special Committee on the Impact of the Uni-form Computer Information Transaction Acton Intellectual Property Law (IPS1900)

Please e-mail your committee selection(s) to Naomi Pitts at: [email protected]

* * *To be eligible for membership in the Intellectual Property Law Section, you first must be a member of the

NYSBA.

❐ As a member of the NYSBA, I enclose my payment of $30 for Intellectual Property Law Section dues. (Lawstudent rate: $15)

❐ I wish to become a member of the NYSBA and the Intellectual Property Law Section. I enclose both an Association and Section application with my payment.

❐ Please send me a NYSBA application. No payment is enclosed.

Name __________________________________________________________________________________________

Office __________________________________________________________________________________________

Office Address __________________________________________________________________________________

Home Address __________________________________________________________________________________

E-mail Address ________________________________________________________________________________

Office Phone No. ________________________________________________________________________________

Office Fax No. __________________________________________________________________________________

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Please return payment and application to:

Membership DepartmentNew York State Bar Association

One Elk StreetAlbany, New York 12207Telephone: 518/487-5577

FAX: 518/487-5579http://www.nysba.org


Section Committees and Chairs

Committee on Copyright LawJeffrey Barton Cahn (Co-Chair)Sills Cummis et al.The Legal CenterNewark, NJ 07102Tel: (973) 643-5858Fax: (973) 643-6500e-mail: [email protected]

Miriam M. Netter (Co-Chair)MapInfoOne Global ViewTroy, NY 12180Tel.: (518) 285-7120Fax: (518) 285-7060e-mail: [email protected]

Committee on Internet LawRory J. Radding (Co-Chair)Pennie & Edmonds LLP1155 Avenue of the Americas,22nd FloorNew York, NY 10036Tel: (212) 790-6511Fax: (212) 869-8864e-mail: [email protected]

Richard L. Ravin (Co-Chair)Ravin Sarasohn et al.103 Eisenhower ParkwayRoseland, NJ 07068Tel: (973) 228-9600Fax: (973) 618-2555e-mail: [email protected]

Committee on Patent LawPhilip A. Gilman (Co-Chair)Kramer, Levin et al.34-35 76th Street, Apt. 2JJackson Heights, NY 11372Tel.: (212) 715-9216Fax: (212) 715-8216e-mail: [email protected]

Charles E. Miller (Co-Chair)Pennie & Edmonds LLP1155 Avenue of the AmericasNew York, NY 10036Tel: (212) 790-9090Fax: (212) 869-9741e-mail:[email protected]

Committee on Technology, Transfer& LicensingWalter J. Bayer, II (Co-Chair)One Independence WayPrinceton, NJ 08540Tel.: (609) 734-9413Fax: (609) 734-9899e-mail:[email protected]

Neil Baumgarten (Co-Chair)1885 Cynthia LaneMerrick, NY 11566Tel: (516) 868-6617Fax: (516) 868-7666e-mail: [email protected]

Committee on Trade SecretsVictoria A. Cundiff (Co-Chair)Paul Hastings et al.399 Park Avenue, 30th FloorNew York, NY 10022Tel: (212) 318-6030Fax: (212) 319-4090e-mail: [email protected]

Michael B. Carlinsky (Co-Chair)Orrick Herrington & Sutcliffe, LLP666 Fifth AvenueNew York, NY 10103Tel: (212) 506-5172Fax: (212) 506-5151e-mail: [email protected]

Committee on Trademark LawPeter S. Sloane (Co-Chair)Ostrolenk Faber et al.1180 Ave. of the Americas, 7th FloorNew York, NY 10036Tel.: (212) 382-0700Fax: (212) 382-0888e-mail: [email protected]

The Intellectual Property Law Section encourages members to participate in its programs and to contact the Sectionofficers or Committee Chairs for information.

Carol A. Witschel (Co-Chair)White & Case1155 Avenue of the AmericasNew York, NY 10036Tel: (212) 819-8200Fax: (212) 354-8113e-mail:[email protected]

Committee on Young LawyersMarie-Eleana First (Co-Chair)Law Office of Theodore N. Cox179 Bennett Avenue, Apt. 1DNew York, NY 10040Tel.: (212) 925-1208e-mail: [email protected]

Kelly M. Slavitt (Co-Chair)Skadden, Arps et al.919 Third AvenueNew York, NY 10022Tel.: (212) 735-3000Fax: (212) 451-7181e-mail: [email protected]

Special Committee on ComputerLaw and Information TechnologyKenneth A. Adler (Chair)Brown Raysman et al.120 West 45th StreetNew York, NY 10036Tel: (212) 703-1311Fax: (212) 840-2429e-mail: [email protected]

Special Committee on the Impactof the Uniform ComputerInformationTransaction Act onIntellectual Property LawRobert Raney Kiesel (Chair)Schulte Roth & Zabel LLP900 Third AvenueNew York, NY 10022Tel: (212) 756-2008Fax: (212) 593-5955e-mail: [email protected]


SECTION ACTIVITIES AND NOTICES

Young Lawyers CommitteeKelly Slavitt has resigned as Co-Chair of the Young Lawyers Committee, as she will be moving to Arthur, Robinson

& Hedderwicks in Melbourne, Australia for two years. Randi Rosen, an associate at Orrick, Herrington & Sutcliffe LLP,has been appointed to carry out Kelly’s term.

On November 2, 1999, the Committeesponsored a program titled “A Look atSome of the Different Ways to Practice IPLaw” at Cardozo School of Law with theschool’s IP Society, Internet Committee,and Center for Professional Development.The panel included Lillian Laserson, Man-ager of Legal Affairs at DC Comics; TeriBrennan, Vice President and GeneralCounsel at BMG Administration; MichelleLee, associate at Rogers & Wells LLP; andElissa Hecker, Associate to the Counsel atHarry Fox Agency Inc.

On November 8, 1999, the Committee sponsored a program titled “Marketing Your Interest in IP Law” at BrooklynLaw School with the school’s IP Law Association. The panel was moderated by Ariel Aminov, President of the BrooklynLaw School IP Law Association. Panelists were Marcus Millet, Partner at Lerner, David, Littenberg, Krumholz & Mentlik;Georges Nahitchevansky, associate at Fross, Zelnick, Lehrman & Zissu; Dr. Susie S. Cheng, associate at Pennie &Edmonds; and Kelly Slavitt, associate at Skadden, Arps, Slate, Meagher & Flom. Marcus Millet spoke about the rewards ofIP patent practice. Georges Nahitchevansky discussed his experience of switching to intellectual property from a differentpractice area, the different areas within IP, the differences between firm and in-house practices, and whether one needs atechnical background to practice IP law. Dr. Susie S. Cheng spoke specifically about patent law. Kelly Slavitt spoke abouther job-searching experiences and the need for an aggressive commitment to the field (or any other) through exploration,academic dedication, and writing. A video of the event can be viewed at http://www.brooklaw.edu/stuorgs/blsipla/.

The Committee held its first upstate law school event on Wednesday, March 8, 2000 at Albany Law School. The event,co-sponsored with the Albany Law School’s Career Planning Office and the Albany Law School Science & TechnologyLaw Center, was designed to inform students about the opportunities in intellectual property law practice in New Yorkand beyond. Nearly 60 students gathered to talk with attorneys who practice in IP law. David Miranda of Rowley, Forrest,O’Donnell & Beaumont in Albany and the Young Lawyers Section delegate to the ABA House of Delegates spoke onInternet law and the impact of the Web on the IP needs of business clients. Paul Rapp of Cohen, Dax & Koenig in Albanyand an adjunct professor in Arts & Entertainment Law at Albany Law School, spoke about IP opportunities in the repre-sentation of artists and authors. Professor Frederick Provorny, the director of the Science & Technology Law Center,described the intellectual property needs of startup firms.

Kelly M. Slavitt, Co-ChairDarryll Towsley, Albany Law School Liaison

* * *

Internet Law CommitteeThe Internet Law Committee has received MCLE credit for the first two meetings of the new millennium. The Com-

mittee continues to hold regular monthly meetings on Internet and e-commerce legal issues on the third Tuesday of eachmonth in New York City.

The topics of the January and February meetings were the new Anticybersquatting Consumer Protection Act, theICANN Uniform Dispute Resolution Policy, European Union Privacy Directive, and Child On-line Privacy Protection Act.

Our membership has grown to more than 50 members, and welcomes all newcomers (simply e-mail Naomi Pitts([email protected]) at the NYSBA).

Rory J. Radding and Richard L. RavinCo-Chairs

NON PROFIT ORG.U.S. POSTAGE

PAIDALBANY, N.Y.

PERMIT NO. 155

Submission of ArticlesAnyone wishing to submit an article, announcement,

practice tip, etc., for publication in an upcoming issue ofBright Ideas is encouraged to do so. Articles should beworks of original authorship on any topic relating to in-tellectual property. Initially, submissions may be of anylength.

Submissions should preferably be sent on a 3.5" disk(double or high-density) which clearly indicates the wordprocessing program and version used, along with a hardcopy to Jonathan Bloom, Executive Editor, at the addressindicated on this page. Submissions for the Fall 2000 issuemust be received by July 17, 2000.

Visit Uson

Our Web site:

http://www.nysba.org/sections/ipl

Intellectual Property Law SectionNew York State Bar AssociationOne Elk StreetAlbany, NY 12207

BRIGHT IDEASEditor-in-ChiefRory J. RaddingPennie & Edmonds LLP1155 Avenue of the Americas, 22nd FloorNew York, NY 10036e-mail: [email protected]

Executive EditorJonathan BloomWeil, Gotshal & Manges LLP767 Fifth AvenueNew York, NY 10153e-mail: [email protected]

Assistant EditorWalter J. Bayer, IIGE LicensingOne Independence WayPrinceton, NJ 08540e-mail: [email protected]

Section Officers

ChairMichael I. ChakanskySills Cummis et al.712 Fifth AvenueNew York, NY 10019e-mail: [email protected]

Vice ChairVictoria A. CundiffPaul Hastings et al.399 Park Avenue, 30th FloorNew York, NY 10022e-mail:[email protected]

TreasurerMarc Ari LiebersteinOstrolenk Faber et al.1180 Avenue of the Americas, 7th FloorNew York, NY 10036e-mail:[email protected]

SecretaryJonathan BloomWeil, Gotshal & Manges LLP767 Fifth AvenueNew York, NY 10153e-mail: [email protected]

Bright Ideas is a publication of the Intellectual Property Law Sectionof the New York State Bar Association. Members of the Sectionreceive a subscription to the publication without charge. Each articlein this publication represents the author’s viewpoint and not that ofthe Editors, Section Officers or Section. The accuracy of the sourcesused and the cases, statutes, rules, legislation and other referencescited is the responsibility of the respective authors.© 2000 by the New York State Bar Association.ISSN 1530-3934

nysba spring/summer 2000 | volume 9 | no. 1 bright ideas

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