DVD chipmaker ESS Technologies sued Taiwanese chipmaker MediaTek for infringement of copyright on firmware used in ESS’s Swan and Vibratto chips. Suit, in U.S. Dist. Court, San Francisco, seeks damages, preliminary and permanent injunction to stop MediaTek’s chips and DVD players containing them from entering U.S.

Madster P2P service (formerly Aimster) is hardly used for music sharing, its owner said in asking judge for 30-day extension to respond to music industry draft preliminary injunction on file sharing. “I estimate 99% of Aimster messages are simply private messages being exchanged among users, and not downloads at all,” John Deep told court. He also said Madster, unlike Napster, had no central database for filtering, and users encrypted their names and messages, severely limiting company’s ability to control system’s use. Requiring users to install software or provide information about themselves raises legal and financial problems, Deep said. U.S. Dist. Judge Marvin Aspen, Chicago, ruled that music companies were entitled to injunction against contributory copyright infringement and that Madster’s reply to plaintiffs’ proposed language was due previous week. Deep said he told his Boies, Schiller & Flexner attorney, George Carpinello, Sept. 16 that he was considering hiring “alternative counsel.” Carpinello has asked to withdraw. Hearing is set for Tues. (Oct. 1), but Deep said he hadn’t found replacement counsel and needed more time because of case’s complex challenges and need for Madster’s bankruptcy judge to approve hiring counsel. He said in interview that proposed injunction was too harsh under Napster precedents and effectively would shut down Madster.

Gemstar reported preliminary 2nd-quarter loss of $953.8 million after more than $1 billion in asset write-downs as it prepared for Nasdaq delisting hearing. It posted consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) loss of $54.2 million, reversing $108 million profit year ago as revenue slumped to $271.1 million from $320.5 million. Major reason for EBITDA loss was recording of $113.5 million reserve against outstanding receivables from Scientific- Atlanta (SA). Latter had been licensee of Gemstar’s electronic program guide (EPG) technology for cable set-top boxes, but pact expired in late 1990s. Gemstar’s technology and licensing business had EBITDA loss of $83.6 million as revenue fell 24% to $51.4 million. In interactive business, which includes interactive program guide (IPG), Gemstar said it had EBITDA of $2.8 million vs. $455,000 loss year earlier as revenue increased 9% to $22.4 million. Media and services sector dropped $36.2 million in EBITDA to $26.7 million and revenue $34.6 million to $197.8 million. Downturn in EBITDA and revenue was tied to TV Guide Magazine and Superstar/Netlink C-band satellite businesses, Gemstar said. Superstar’s revenue fell to $18.5 million from $56.9 million as subscribers declined 21% from Dec. 31 to 436,000, Gemstar said. TV Guide suffered from decline in newsstand sales as revenue dropped to $101.3 million from $121.1 million year earlier.

Law firm of famed litigator David Boies asked federal judge to let it withdraw from defending music file-sharing service Madster, formerly Aimster. Move cast shadow over bankrupt company’s ability to help shape and to appeal preliminary injunction authorized by U.S. Dist. Judge Marvin Aspen against service.

Australian Competition & Consumer Commission (ACCC) released discussion paper in anticipation of govt.’s release of its telecom legislative package. Paper looks at how ACCC can provide guidance for market participants on prices for access to public switched telephone network (PSTN) originating and terminating services, Unconditioned Local Loop services (ULLS), local carriage services (LCS). Industry comments on how prices should be determined are due Oct. 18. ACCC said comments were part of preparation for pending govt. initiatives that would require it to establish model terms and conditions, including prices, for access to PSTN, ULLS and LCS. Paper doesn’t set prices for those services. ACCC said it planned to develop indicative prices in early 2003 after issues on how such prices should be set were resolved. Commission said indicative prices “would only be used for the purposes of providing information and guidance to the market, and would not be binding in any arbitral processes that may arise.” ACCC Chmn. Allan Fels said he hoped publishing indicative prices would encourage developing more open and transparent telecom industry and let parties reach commercial agreement without need for arbitration: “The ACCC sees indicative prices as being a reference point which will assist parties to resolve any differences encountered when negotiating the terms and conditions of access and will also encourage parties to give undertakings to the ACCC.” He said while any indicative prices published weren’t binding upon parties or ACCC, if disputes were referred to ACCC, they should be resolved more quickly by having published guidelines. Currently, Commission determines PSTN and ULLS access prices on annual basis through use of economic cost modeling. It said undertakings including reasonable terms and conditions could complement establishing of indicative prices by providing long-term certainty and information on pricing of services to marketplace. ACCC said its preliminary approach to setting indicative prices for PSTN and ULLS services would involve using price for first regulatory period, then applying adjustment factor to calculate indicative prices for following 3 regulatory periods.

National Strategy to Secure Cyberspace report due to be released today (Wed.) has fewer details on wireless security and tones down language in earlier version that cautioned that security gaps in 802.11 wireless networks should be plugged before secure systems were deployed. Report stresses user education and continued development of wireless security protocols. But it doesn’t contain recommendation of earlier, printer-ready draft that said while efforts continued to improve security of wireless LAN systems, “federal agencies and other organizations requiring security and privacy on their networks should either disconnect from wireless LANs or strictly limit access in a way that provides security.” Instead, final draft said federal agencies should consider installing systems that “continuously check for unauthorized connections to their networks.” Earlier version recommended federal agencies take that step within 6 months, but latest version didn’t define timeline.

European Commission (EC) intends to clear 3G sharing agreements between T-Mobile and mmO2 in U.K. and Germany, it said Tues. Commission said it anticipated significant cost savings from companies sharing network elements that would benefit consumers without limiting network competition. “Such cooperation can bring benefits for the consumer in terms of a faster introduction of new services, more competition and a lesser impact to the environment,” said Comr. Mario Monti, who is responsible for EU competition policy. Network sharing also should lead to greater network coverage, Commission said.

One year after Sept. 11 terrorist attacks destroyed their transmission facilities atop World Trade Center, N.Y. TV stations are concentrating on N.J. as site for new 2,000- ft. tower. Move comes after N.Y. Mayor Michael Bloomberg rejected site on Governors Island (soon to be turned over to city by federal govt.) sought by stations and other possible locations in city. N.J. cities Bayonne and Jersey City are actively competing for tower and “that’s 100% accurate,” we were told by source close to negotiations. Source said broadcasters had held preliminary discussions with officials of both cities. N.J. Gov. James McGreevey also has become involved and has toured several possible sites with N.Y. broadcasters across Hudson River from Manhattan, source said. Metropolitan TV Alliance (MTVA) was formed by N.Y. TV stations following Trade Center attacks and had planned to have new site approved well before now. One of stumbling blocks has been FCC requirement that tower be located within 3-1/2 miles of Trade Center because of interference and air traffic problems. Stations are transmitting at reduced power from temporary facilities atop Empire State Bldg.

PanAmSat purchase of Eutelsat could complicate EchoStar’s plan to take over DirecTV and further consolidate satellite industry, analysts and industry officials say. Wall St. Journal reported PanAmSat and Intelsat had made separate pitches for Eutelsat. No agreements have been reached and talks reportedly still are in preliminary stages, sources said. Intelsat reportedly has offered $3.5-$4 billion. PanAmSat has yet to make formal bid, report said, but it has war chest of $1 billion, which could “make bidding easier,” satellite analyst said. Talks between PanAmSat and Eutelsat are just beginning, Journal said.

In another legal setback for online music file-sharing networks, federal judge granted preliminary injunction against Madster peer-to-peer (P2) service Wed. in response to copyright infringement suit by RIAA and record labels. In order shuttering P2P network that is to take effect Sept. 11, Judge Marvin Aspen of U.S. Dist. Court, Chicago, said Madster -- formerly called Aimster -- “is a service whose very raison d'etre appears to be the facilitation of and contribution to copyright infringement on a massive scale.” He said defendants “managed to do everything but actually steal the music off the store shelf and hand it to Aimster’s users.”