Federal appeals court Mon. let stand lower court ruling shutting down Napster. In unanimous decision, 3-judge panel of 9th U.S. Appeals Court, San Francisco, said Chief U.S. Dist. Court Judge Marilyn Patel’s preliminary order requiring Napster to police its file-sharing system for copyrighted songs and, later, her order closing service for failure to comply, were proper. They said modified preliminary injunction “correctly reflects the legal principles of contributory and vicarious copyright infringement that we previously articulated.”

Consumer intentions on buying TV sets fell significantly in March from Feb. for 2nd straight month, according to preliminary data in Conference Board monthly survey. Of 5,000 households polled, 6.1% said they planned to buy TV set in next 6 months, vs. 6.8% in Feb., 7.4% in Jan., 7.3% in March 2001 . Nevertheless, Consumer Confidence Index rose more than 15 points in March, bolstered by improvement in business and labor market conditions, Conference Board said: “This new boom in confidence should translate into increased consumer spending and stronger economic growth ahead.”

Assuming FCC will declare Thurs. how cable modem service should be classified, Commission also is poised to adopt Notice of Proposed Rulemaking (NPRM) examining who has jurisdiction to regulate service. Question is important because, if FCC classifies cable modem service as “information service,” as is widely expected, cable operators could be vulnerable to additional demands from local franchising authorities (LFAs) for new taxes, fees, etc., Cable Bureau Chief Kenneth Ferree, who soon will head up new Media Bureau, said in interview Mon. He said NPRM would take “granular” look at implications of particular classification, whether it be as “information service,” “telecom service,” “cable service” or some other animal. He declined to say which it would be, but gave some insight into NPRM that’s expected at FCC’s agenda meeting: “The second step is, well, what does that [classification] mean? What are the implications?” Specifically, NPRM will seek to determine who has jurisdiction and what role FCC and LFAs will have in overseeing cable modem service. Ferree said he would like to see issue resolved before end of 2002.

EchoStar’s “I Like 9” promotion won’t be resumed. Promotion, which offered 100 channels of video for $9 monthly, wasn’t attractive to customers who wanted service for multiple TVs because it lacked equipment subsidy, CEO Charles Ergen said. Package appeared cheaper than cable’s typical $30-$40 monthly fee for enhanced programming packages but it didn’t prove to be less expensive than even some of EchoStar’s other program packages, largely because it didn’t offer $200 subsidy on dish and receiver. Promotion ended Jan. 31… Temporary restraining order has been issued barring DirecTV from taking action against retailers that don’t sign new dealer agreement by March 4 deadline, said Allen Stewart, attorney for retailers. Dealers filed suit in L.A. Superior Court last fall alleging that DirecTV was withholding compensation from them by using accounting methods “designed to underpay or overcharge,” Stewart said. Superior Court Judge Victoria Chaney, who issued temporary order Feb. 28, set hearing for March 8 on request for preliminary injunction. Stewart said DirecTV agreed to pay dealers commission on new subscriber installations and residual on monthly fee charged to customers. Suit seeks more than $300 million in damages. DirecTV, in effort to cut down on subscriber churn, has moved in recent months to pay retailers based on activations rather than sales. DirecTV officials weren’t available for comment.

Ubi Soft Entertainment claimed victory Fri. in first part of its legal dispute with competitor Take-Two Interactive. Paris- based Ubi Soft said that “in a critical legal development” in case involving its Red Storm division and Take-Two Interactive Software Europe, only 2 weeks before preliminary issues were to be taken up by High Court, Take-Two conceded certain “crucial issues.” Dispute involves distribution rights Take-Two received from Red Storm for games in Europe and other markets outside U.S. before Ubi Soft’s purchase of Red Storm.

Deutsche Telekom said it had been notified by Germany’s Federal Cartel Office that it had made final decision against approving announced sale of Deutsche Telekom’s cable TV businesses to Liberty Media. Cartel Office had issued warning in its preliminary assessment Jan. 31. Deutsche Telekom said it was “open to new negotiations with interested parties” and would continue its quest to reduce company’s debt. Liberty Media had been notified of Cartel Office’s objections but chose not to make concessions (CD Feb 19 p7). Liberty said it wouldn’t appeal decision. In addition to 6 Deutsche Telekom systems, Liberty Media said it would give up its bid to acquire 4 cable systems from TeleColumbus GmbH. That acquisition was conditioned on completion of Deutsche Telekom deal.

FTC obtained stipulated preliminary injunction against promoters of “Miss Cleo” psychic services. FTC filed complaint against Florida-based Access Resource Services (ARS) and Psychic Readers Network (PRN) in U.S. Dist. Court, Ft. Lauderdale, on charges of: (1) Cost misrepresentation. (2) Billing for services not purchased. (3) Deceptive collection practices. FTC said defendants also harassed consumers with telemarketing calls that persons couldn’t stop and often were abusive, threatening and vulgar. Defendants stipulated to preliminary injunction entered by judge that prevents them from: (1) Falsely advertising that “reading” will be no cost. (2) Misrepresenting cost of calls. (3) Telemarketing consumers “frequently and repeatedly.” (4) Representing that consumers are legally required to pay for services. Injunction requires defendants to disclose in advertisements cost of pay-per call service. Injunction also appoints auditor to monitor activities.

DeCSS case in Cal. will be heard by state’s Supreme Court. Announcement of review of DVD Copy Control Assn. v. Bunner (S102588) came late Wed. and was setback for Electronic Frontier Foundation (EFF). In Dec., EFF argued that Cal. Supreme Court shouldn’t grant DVD CCA’s request to review case after Cal. 6th Dist. Court of Appeal overturned lower court injunction ordering defendant Andrew Bunner to remove DeCSS hack for DVDs from his Web site. DVD CCA had sued under Cal. Uniform Trade Secrets Act, but appeals court said preliminary injunction was prior restraint under First Amendment. Following appeals court’s reversal in Nov., DVD CCA charged that “intermediate scrutiny” test of First Amendment should have been applied. EFF challenged DVD CCA’s petition to Cal. Supreme Court on grounds that DVD CCA was raising new legal and factual arguments at Supreme Court level, which EFF said was improper. Cal. Supreme Court didn’t comment on case or set date for hearing.

Mich. Senate passed 3 broadband-related bills critical to high-speed Internet access development plan of Gov. John Engler (R). Meanwhile, group that conducted recent dial-up modem speed tests in Mich. (CD Feb 15 p12), which found actual throughput to be about half of what 56 kbps modems are capable of, said Mich. wasn’t only state where actual dial-up speeds fell well below modems’ top designed speed.

U.S. Trade Representative Robert Zoellick said Wed. he was asking World Trade Organization (WTO) for dispute settlement panel on complaint that Mexico hadn’t opened its cross-border telecom market to competitors. Bush Administration has said in last year that Mexico has made some progress in areas such as ensuring that competitors obtain local interconnection from incumbent Telmex. But serious concerns on international interconnection issues have remained unresolved. Request marks first time USTR under Zoellick has made such request to WTO. In Nov. 2000, U.S. asked WTO to convene dispute settlement panel on complaints about Mexico, process that wasn’t pursued when some progress was made. But USTR said its latest WTO request was focused on unresolved issue of U.S. carriers’ paying inflated charges because “Mexico has still not begun to dismantle its anticompetitive cross-border telecommunications regime.” Panel request is expected to be brought up at March 8 meeting of WTO’s dispute settlement body.