1. Legal Training for INC Committee Leadership October 1, 2007

2. 2 Disclaimer This presentation was developed for the ATIS ® committee leadership to facilitate a discussion of legal considerations that come into play in an industry forum setting. This presentation does not address every potential antitrust, intellectual property or other legal risk and is not intended to serve as standalone legal advice. Legal counsel should always be consulted when dealing with any antitrust, intellectual property or otherwise legal issues in the context of ATIS work. ® ATIS is a registered trademark of the Alliance for Telecommunications Industry Solutions.

3. 3 Legal Considerations Authority to Act Antitrust Intellectual Property (Copyrights) Appropriate Use of Electronic Mail Meeting Notes Content and Format

4. 4 Authority to Act Important to understand legal implications of acting: (1) as a member representative/committee member/participant (2) as a leader Even unauthorized actions, can create liability (apparent authority) –Hydrolevel Case. Association volunteers can bind an association to antitrust liability based on actions and assertions, even if those assertions are not authorized by the association and do not benefit it.

5. 5 Sherman Act (15 U.S.C.§ 1-7) Sherman Act (15 U.S.C.§ 1-7) Prohibits contracts, combinations or conspiracies in restraint of trade. Elements: –Combination, contract or conspiracy (industry committees are, by their nature, combinations of competitors); and –Unreasonable restraint of trade. Parties subject to the Act include participants, individual members, corporate members and associations Enforcement: –Civil Action: recovery of treble damages, costs, attorney fees –Criminal Action: individuals may be fined up to $350,000 and/or jailed for 3 years; corporations may be fined up to $10,000,000 or twice the offender’s gain or victim’s loss

6. 6 Sherman Act – Standards of Liability Sherman Act – Standards of Liability Per se Unlawful: certain activities are regarded by the courts as so lacking in pro-competitive benefits that presumed to be unreasonable and illegal per se – Price-fixing; – Certain types of boycotts; and – Allocation of territories of markets. Rule of Reason: balancing the perceived threat of harm to competition against the likelihood that it will yield pro-competitive efficiencies. Is the act an unreasonable restraint on competition? The reasonableness depends upon all of the facts and circumstances of a particular situation – the particular business, effect of restraint, purpose of restraint.

7. 7 The Federal Trade Commission Act (15 U.S.C. §§41-77) Prohibits unfair methods of competition and deceptive practices that affect commerce. Parties subject to the Act include: persons, partnerships and corporations Enforcement: –Civil Actions: recovery of treble damages, costs and attorney fees –Criminal Actions: none

8. 8 Standards Development Act Limits liability to actual damages, rather than treble damages, in federal or state civil antitrust actions for standards development organizations that use an open, transparent, and voluntary consensus-based approach to adopting standards. Requires that the rule of reason be used to evaluate antitrust claims for “standards development activity.” Provides that standards setting organizations that prevail in a civil action may recover attorney’s fees if the court determines that the plaintiff’s conduct “was frivolous, unreasonable, without foundation, or in bad faith.”

9. 9 Importance of Proper Procedures The following mitigate the risks of industry activities: There must be openness with no barriers to participation. There must be timely and adequate notice of the initiation and development of the Issues and Resolutions. The resolution process should have a balance of interests. The interest categories should be clearly and fairly defined. There should be appropriate notification of the various steps of the development of the resolution. There should be careful consideration of all the views and objections, and these should be properly answered or addressed. Unresolved objections should be reported to the members/participants of the industry committee. Careful meeting records should be kept. There should be an appeals process in place.

10. 10 Sensitive Discussion Topics A prudent rule is to avoid the most sensitive discussion topics – whether during the official committee meeting or “off the record” during the coffee break: Price or any element of price or pricing policies, including costs, discounts, etc. Contractual terms to offer products or services including, commercial liabilities, warranties, guarantees, or the particular terms and conditions of sales. Sales or production quotas, territories, allocations, boycotts or market share (e.g., geographic areas or territories in which competitors will or will not offer products/services).

11. 11 Sensitive Discussion Topics Confidential or proprietary information. Individual company statistics, inventories, merchandising or marketing methods/plans. Particular competitors or customers, particularly customers to whom services will or will not be offered. Anything dealing with “arm-twisting”, trade abuses, exclusion or controlling competition (e.g., agreements to purchase only from certain suppliers, refusal to deal with certain competitors, customers, or suppliers).

12. 12 Intellectual Property – Copyright ATIS’ policy is that the work of its committees should respect the legitimate property rights of intellectual property owners. Copyright protects “original works of authorship” that are fixed in a tangible form of expression. Copyright owners have the exclusive right to: –Reproduce; –Distribute; –Create derivative works; and –Authorize others to do the same. Copyright works (published since 3/1/89) need not bear a copyright notice © to be protected under the law.

13. 13 Intellectual Property – Copyright All ATIS standards or other ATIS deliverables are copyrighted by ATIS. Except as expressly permitted by ATIS, no ATIS standard or other deliverable, or any portion thereof, may be reproduced or distributed in any form, without the prior express written permission of ATIS. The following copyright notice shall be included in all ATIS standards or other ATIS deliverables: –“Copyright © [date of publication] by the Alliance for Telecommunications Industry Solutions. All Rights Reserved.”

14. 14 Intellectual Property – Copyright For the reproduction/distribution of Documents for purposes of internal company use. For the reproduction/distribution of forms to third parties if: –(i) distribution is limited to the primary business of the ATIS Member; –(ii) the appropriate legend is maintained on the form. For customized forms, which may be reproduced, distributed and used by an ATIS Member provided that the appropriate legend is maintained on customized forms. –“Customized” means the modification of a form to be issued to a trading partner to make it company-specific by, for example by adding company logo, graying-out optional fields, etc.

15. 15 General Rule: neither ATIS nor its Forums or Committees will consider any contributions, presentations or other documentation that is subject to any requirement of confidentiality or any restriction on dissemination. –Exceptions made on case-by-case basis when necessary. To facilitate, promote and disseminate the work of its Forums and Committees, it is necessary that each contributor grant ATIS the rights necessary to adapt, copy, and publicly distribute any contribution. Intellectual Property – Patents

16. 16 Intellectual Property – Patents ATIS Forums and Committees may develop guidelines, standards or other ATIS deliverables that refer to or require the use of patented inventions. –No discussion of license terms may occur within ATIS Forums or Committees; all such discussion must occur directly between the owner of the patented invention and prospective licensees. –ATIS encourages the disclosure of patents as early as possible in the standard process. –In connection with the development of American National Standards (ANS), or other deliverables that require use of patented inventions, the use of patented inventions are governed by the ANSI Patent Policy as adopted by ATIS.

17. 17 Appropriate Use of Electronic Mail ATIS e-mail distribution lists should be used for ATIS business purposes only. E-mail messages should never include: –Libelous statements. A libelous statement is one that contains: (1) false information; (2) malicious information; (3) statements that are injurious to the reputation of another. –Copyrighted information without prior written consent to distribute. –Antitrust sensitive issues.

18. 18 Meeting Note Content & Format Meeting notes should contain, at a minimum: –Attendee List, Agenda, Points Noted, Agreements Reached, Action Items and Attachments Format of notes: –Follow Agenda (or note divergence) and use Agenda Items as heading Example of divergence – organize notes by issues discussed –Distinguish Agreements Reached & Action Items for easy identification –Use headers/footers to identify dates, version numbers, draft/final, etc.

19. 19 Things to avoid in Meeting Notes: Ambiguities (especially in Agreements Reached). Action Items without specifics (always note who is responsible and the due date). Verbatim Phrases (these are meeting notes, not meeting minutes) Meeting Note Content & Format

20. 20 Questions, Comments? Thomas Goode General Counsel tgoode@atis.org (202) 434-8830 Deirdre Cheek Attorney dcheek@atis.org (202) 434-8847