Verizon Challenges FCC’s Open Internet Order
By Andrew Crocker — Edited by Heather Whitney

Brief for Appellants, Verizon v. FCC, No. 11-1355 (D.C. Cir. July 2, 2012)
Brief hosted by GigaOm

On July 2, Verizon, joined in part by MetroPCS, filed a brief in the United States Court of Appeals for the District of Columbia Circuit in an appeal of the FCC’s final order adopting its 2010 Open Internet Order, also known as the network neutrality rules. In the brief, the telecommunications providers argue that the FCC rules are in excess of the Commission’s statutory authority, that they violate the First and Fifth Amendments, and that they are arbitrary and capricious under the standards of the Administrative Procedure Act (“APA”), 5 U.S.C. § 706.

Both PC World and journalist Jeff Jarvis, writing in the Huffington Post, criticize Verizon, taking particular issue with its constitutional arguments and cautioning that an ISP’s free speech rights should not trump those of its users.

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Supreme Court Upholds the Individual Mandate of the Affordable Care Act
By Jie Zhang – Edited by Michael Hoven

National Federation of Independent Business v. Sebelius, Nos. 11–393, 11–398 and 11–400 (U.S. June 28, 2012)
Slip opinion

The Supreme Court partially reversed the Court of Appeals for the Eleventh Circuit, which had held that the individual mandate of the Patient Protection and Affordable Care Act (“ACA”) was unconstitutional but severable from other provisions of the act, and that the Medicaid expansion of the ACA was constitutional.

A five-justice majority held that the individual mandate was a valid exercise of Congress’s taxing power, although four justices would have upheld the individual mandate under the Commerce Clause. On the other hand, seven justices found that the Medicaid expansion was unconstitutional because it exceeded Congress’s spending power by coercing the states to accept the expanded Medicaid coverage. The majority, however, held that the unconstitutional application of the Medicaid expansion could be severed from the remainder of the ACA, and thus left the ACA largely intact.

The Wall Street Journal reported on the case and commented on its impact on all aspects of  health care. The Economist noted that states have been slow to implement the health exchanges that the ACA requires, partly because of political opposition to the ACA. The New York Times reported that the decision place limits on the power of the federal government and that, without the Medicaid expansion, many Americans may still be left without health care.

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Judge Posner Dismisses Apple v. Motorola Patent Suit in its Entirety
By Charlie Stiernberg – Edited by Jeff Habenicht

Apple, Inc. v. Motorola, Inc., No. 1:11-cv-08540, 2012 WL 2376664 (N.D. Ill. June 22, 2012).
Slip Opinion (Hosted by Electronic Frontier Foundation)

The United States District Court for the Northern District of Illinois dismissed with prejudice the suit between Apple, Inc. and Motorola, Inc. in its entirety.  The court had previously excluded testimony from the parties’ damages experts and cancelled the jury trials on liability.  Before deciding whether to dismiss the case, however, the court requested briefs and heard oral arguments from the parties regarding each other’s damages claims, declaratory relief, injunctive relief, and reasonable royalties.

Following the hearing, Circuit Judge Posner, sitting by designation, held that: (1) neither party had presented sufficient evidence to withstand summary judgment on damages, (2) neither party was entitled to injunctive relief, (3) neither party could establish a reasonable royalty rate for a compulsory license, and (4) declaratory judgment in favor of either party would confer no tangible benefit on the victor.  Judge Posner concluded by dismissing the case with prejudice, reasoning that, “It would be ridiculous to dismiss a suit for failure to prove damages and allow the plaintiff to refile the suit so that he could have a second chance to prove damages.”  Apple v. Motorola, No. 1:11-cv-08540, slip op. at 38.

Forbes provides a high-level overview of the outcome.  Ars Technica places the case in the context of related litigation between Apple and Motorola.   FOSS Patents provides an in-depth analysis of Judge Posner’s reasoning and its potential precedential effect.

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Supreme Court Rules Against the FCC, but Avoids First Amendment Issues
By Sarah Jeong – Edited by Jennifer Wong

Federal Communications Commission v. Fox Television Stations, Inc., No. 10-1293 (U.S. June 21, 2012)
Slip Opinion

The Supreme Court ruled last week that the Federal Communication Commission’s (“FCC”) rules on “fleeting expletives” did not give fair notice to networks like Fox and ABC, and were therefore unconstitutionally vague. While all eight justices (Justice Sotomayor recused herself) were unanimous in a judgment against the FCC, Justice Ginsburg split away from the majority opinion, arguing in a separate concurrence that the Supreme Court should overturn its 1978 decision in FCC v. Pacifica Foundation.

The Los Angeles Times reports on the ruling. Forbes and Ars Technica chided the Supreme Court for avoiding the pivotal First Amendment question.

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By Susanna Lichter

Fair Use Defense Bolstered by 7th Circuit Decision in South Park Viral Video Lawsuit

In a victory for fair use proponents, the Seventh Circuit Court of Appeals upheld a District Court’s grant of a motion to dismiss based on fair use before any discovery took place in a lawsuit between the makers of the South Park television show and plaintiff Brownmark Films, LLC. Judge Cudahy found South Park’s substantial recreation of Brownmark Films’ viral video “What What (In the Butt)” to be clearly fair use based solely on the two videos, allowing the defendants to avoid costly discovery and trial expenses, Ars Technica reports. South Park’s near shot-for-shot rendition substituted the flamboyant star of the original with a young boy and was considered by the court to be an “obvious” example of parody. The court further commented that Brownmark Films’ broad discovery request gave the plaintiffs the appearance of a “copyright troll.”

24 Arrested by FBI in Global Cyber Crime Sting Operation

“Operation Card Shop,” a two-year FBI investigation into the buying and selling of credit card data, identity theft, and counterfeit documents culminated earlier this week in the arrest of twenty-four people around the globe. The sting was announced in a statement by the U.S. Attorney’s office for the Southern District of New York and involved the apprehension of eleven suspects located in the United States, thirteen located abroad, and the execution of more than thirty search warrants. According to a report by Wired, the FBI facilitated the bust by setting up a phony web forum to monitor hackers’ online exchange of stolen financial data. Among the suspects arrested was Mir Islam, aka “JoshTheGod,” a self proclaimed founder of the online carding forum Carders.org and member of the hacking group UGNazi.

NZ Court Rules Search of Megaupload Founder’s Mansion Illegal

The High Court of New Zealand found the search and seizure of the infamous Megaupload founder Kim Dotcom’s electronic data, automobiles, and bank accounts performed by New Zealand police to be invalid and illegal. New Zealand police issued warrants and stormed Dotcom’s mansion earlier this year pursuant to an official request for legal assistance by the United States as part of an extradition treaty between the two countries. The High Court’s 56-page decision may prove to be crucial to Dotcom’s effort to avoid extradition to the United States on charges of copyright infringement and money laundering. In their coverage of the ruling, Ars Technica expressed uncertainty that Dotcom will be able to retrieve his unlawfully retained data since the FBI has already returned to the United States with copies of the data.