After setback in federal court, video and record retailers are pressing Congress to tinker with U.S. copyright law to clarify that online stores can use unauthorized or “home brew” trailers to promote sale and rental of copyrighted movies. In letters dated April 8, VSDA and NARM asked members of House Judiciary Committee to enlarge section of proposed Music Online Competition Act (MOCA) to cover in-store and online display of movie clips compiled by sources other than content owners. MOCA in present form would permit stores and online retailers to play music previews only.

Pegasus is seeking shareholder approval for reverse 1- for-10 stock split of Class A and Class B common stock, it said in preliminary proxy filed Tues. with SEC. Board said current low price of Class A shares could have negative effect on outstanding shares and on transaction costs paid by stockholders as well as potential to raise capital by issuing more Class A stock in future.

SEC opened formal investigation against Adelphia, company said Wed. in brief statement. Until now, inquiry by SEC staff had been informal. Formal decision by SEC to move into new phase of investigation gives agency power to subpoena company documents and compel executives, including members of founding Rigas family, to testify during depositions. Adelphia twice has missed deadline to file its annual 10-K report to SEC (CD April 17 p2), saying it was working on its own review with auditors Deloitte & Touche. Questions center on Adelphia’s handling of $2.3 billion in off-balance sheet loans to entities controlled by Rigas family. Adelphia executives have called them “co-borrowing” agreements and said at least some of money was used by Rigases to buy company stock. However, company itself still would be responsible for loans should family default. Analysts have openly criticized family members, accusing them of concealing loans for personal gain. Stock has lost more than half its value since March 27, when loans became public. Adelphia and Rigases, meanwhile, have said little publicly, and stockholders filed class-action lawsuits.

Private wireless operators asked FCC Chmn. Powell Tues. to delay June 19 start of 700 MHz auction, citing proceeding at Commission to eliminate interference at 800 MHz. FCC Wireless Bureau turned down CTIA request last week to delay auction for upper and lower bands at 700 MHz (CD April 11 p1). Letter by 8 representatives of private land mobile radio services (PLMRS) cited comment period that Commission had opened for notice of proposed rulemaking that addressed interference experienced by public safety operators at 800 MHz. Private wireless community said several proposals “under preliminary discussion” involved retuning some incumbents 800 MHz licensees to 700 MHz band, including licenses covered by Ch. 60-69 auction. “While it is premature to assume that one of these proposals is the best course of action available, or the course of action the Commission ultimately will follow, it is equally premature to eliminate such proposals from consideration by going forward with the auctions on the scheduled date,” letter said. Groups said comment period for NPRM ends May 6, 2 days before short forms from auction participants are due at Commission. “It would be a disservice to thousands of 800 MHz incumbent licensees, and to the nation’s public safety needs, to allow the 700 MHz auction to proceed after interested PLMRS parties have expended extensive time and resources to devise a workable solution dependent on the availability of that spectrum,” letter said. Filing was signed by Aeronautical Radio Inc., American Assn. of Railroads, Forest Industries Telecommunications, Industrial Telecommunications Assn., frequency coordinator MRFAC, National Assn. of Mfrs., Small Business in Telecommunications, United Telecom Council. Groups said FCC appeared “eager to consider any and all reasonable solutions to 800 MHz public safety interference.” Saying that that was among themes raised at recent NTIA Spectrum Summit, letter said holding auction on current timeline could compromise “the Commission’s ability to meet that imperative.”

Comptroller of N.Y.C. is latest to urge SEC Chmn. Harvey Pitt to stop AT&T and Comcast from creating new corporate governance for their proposed merger of AT&T Broadband unit and Comcast. Comptroller William Thompson, trustee of 4 and investment adviser to 5 N.Y.C. pension funds, told Pitt he objects to preliminary proxy statements to shareholders that show companies want to keep new board of directors in place for 3 years and disallow any challenges by shareholders and new company wouldn’t hold annual shareholders meeting until 2005. “The proposed broadband spinoff/merger transaction is bundled with a number of new, significant corporate governance changes, which, in their totality, would deal a crippling blow to shareholder rights, while insulating [the] AT&T Comcast board of directors from accountability to the shareholders,” Thompson wrote in April 10 letter. He argued that bundling merger deal with corporate governance changes would violate Securities Exchange Act of 1934, which limited companies’ ability to group related matters into single proposal.

Sega of America (SOA) and its ad agency Leagas Delaney settled copy infringement suit filed by Nike in Feb. Suit contended ad for new Sega game NBA 2K2 that aired for first time in Jan. was nothing more than “virtual scene-by-scene reenactment” of Nike’s “Frozen Moment” 1996 TV ad depicting Chicago Bulls-L.A. Lakers NBA basketball game sequence featuring Michael Jordan (CED Feb 11 p2). Nike said SOA agreed to not run ad again, pay Nike’s legal fees and donate $100,000 in Nike’s name to Boys & Girls Clubs of Portland, Ore., and Memphis, Tenn., with each chapter receiving $50,000.

Alcatel signed separate agreements with SES Global and Gilat Satellite Networks to implement 2-way global satellite system. Plans call for Alcatel to use SES’ Broadband Interactive System (BBI) technology. SES will transfer industrial responsibility for technological development of BBI to Alcatel. Alcatel will endorse SES’ DVB-RCS standard for large-scale implementation of 2-way broadband system. SES developed DVB-RCS standard to provide 2-way satellite broadband access to professional users. Alcatel also promised to continue development of system and is guaranteeing supply of gateway and terminal products. Company’s name, board of directors and management team will be announced in coming weeks. Project will be funded by $43.8 million cash and $175 million of in-kind contributions. Gilat and SES will own 40%, Alcatel 20%.

Microsoft asked U.S. Dist. Court, Seattle, to reconsider preliminary injunction against Lindows.com. Judge John Coughenour last month denied request by Microsoft to block San Diego software company from calling itself Lindows.com and its Linux-based programs LindowsOS. Microsoft’s complaint charged Lindows.com with trademark infringement and unfair competition under Lanham Act. Software giant argued use of names Lindows.com and LindowsOS traded off goodwill of Windows trademark and would cause confusion among prospective buyers of Windows products and dilute ability of Microsoft’s trademark to distinguish its products from competing products. But Coughenour said “at most, Microsoft has raised serious questions about the validity of its trademark, but has fallen short” of showing Lindows.com should be prevented from using names as part of its business. He also said “there is indirect evidence that Microsoft considered Windows to be generic at the time it began using the trademark” -- so much so that when company first released Windows in 1985 it referred to operating system as “Microsoft Windows 1.0.” In asking court to reconsider decision, Microsoft said “a fundamental misapprehension of the test for ‘genericness’ led the court to conclude ‘Lindows.com has presented sufficient evidence [of genericness] to rebut the presumption of validity of the Windows [trademark].’ Whether the term ‘windows’ was generic in the mid- 1980s for one of many features shared by different software products is not the question the court must reconsider. Rather, the appropriate question is whether ‘Windows’ is generic for operating system software.”

Videogame maker Bam Entertainment, San Jose, announced Mon. what it admitted was “a significant reduction” in its revenue expectation for 3rd quarter ended March 31. Bam said it now expected to report revenue of $6.5-$8.5 million, down from $18- $20 million it announced in Jan. when posting 2nd quarter results (CED Jan 23 p5).

Napster judge laid out schedule Tues. for extensive discovery, going into 2003, on whether major record labels had misused copyrights anticompetitively. U.S. Dist. Judge Marilyn Patel, San Francisco, imposed some constraints, although Napster lawyer Celia Barenholtz argued against any, mainly in limiting Internet company to depositions of 2 executives from each of 5 plaintiff record companies. But Patel generally rejected pleas by industry lawyer Russell Frackman to expedite discovery, and by extending issue into next Jan. prolonged case even further than Napster had asked. Judge said she was taking cognizance of inevitable delays and taking care that depositions be done properly to avoid recalling witnesses and in recognition of fact that pretrial misuse question could turn into issue at any trial on record companies’ copyright infringement claims.