Tech Law Journal Daily E-Mail Alert
January 23, 2003, 9:00 AM ET, Alert No. 589.
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Sen. Grassley Writes FBI Re Ptech Software
1/22. Sen. Charles Grassley (R-IA) wrote a letter to Federal Bureau of Investigation (FBI) Director Robert Mueller regarding Ptech, Inc., the Boston software company raided by federal agents last month in connection with investigation of financial crimes. Sen. Grassley wrote that "I am concerned that the FBI may not have done enough to ensure the computers and networks of the government and private sector are free of vulnerabilities which might arise from using Ptech software."

Sen. Grassley continued that "Until the National Infrastructure and Protection Center (NIPC) moves to the Department of Homeland Security (DHS), it is still the FBI's responsibility, through NIPC, ``to serve as the U.S. government's focal point for threat assessment, warning, investigation, and response for threats or attacks against our critical infrastructures,´´ as NIPC's web site states."

"In the case of Ptech and the potential for widespread vulnerability in government computers and systems, I fear some at FBI Headquarters may be suffering from a ``not my job, not my problem´´ attitude that focuses only on the vulnerability of the FBI itself rather than the federal government at large -- not to mention the private sector", wrote Sen. Grassley.

He concluded, "I urge you to make sure that the FBI and NIPC, rather than only the bureau’s counter-terrorism division, address this issue in a global way. I also urge you to ensure that NIPC's detection, analysis and prevention functions continue during its transfer to the DHS."

Michael Sullivan, the U.S. Attorney for Massachusetts, released a statement on December 6, 2002, in which he said that "Last night a search warrant was executed at the offices of P-Tech located in Quincy, Massachusetts. The search was conducted without incident by investigators from U.S. Customs, FBI, IRS, Secret Service, INS and the Massachusetts State Police. The affidavit filed in support of the search warrant is under a court-ordered seal and at this time, no further information about the search warrant can be disclosed."

He also said that "Due to P-Tech's status as a provider of software to agencies of the U.S. Government, there have been questions raised concerning their products. All of the products provided to the Government were of a non-classified nature. However, out of an abundance of caution, the affected Government agencies, including the FBI, conducted a review of their computer systems. There is no reason to believe that the software has any secondary purpose or malicious code, or that there has been a breach of any kind. There have been no vulnerabilities identified in connection with any of the products provided by P-Tech. There is also no evidence to suggest that the system is susceptible to compromise or poses any security risk."

Sullivan added that "The search was conducted in connection with an on-going financial crime investigation. Media characterizations of this as a terrorist investigation are premature."

For more information, contact Oussama Ziadé at ziade@ptechinc.com.

Commissioner Martin Addresses TV Programming
1/22. Federal Communications Commission (FCC) Commissioner Kevin Martin gave a bully pulpit speech in which he addressed television "family friendly" programming. He stated that the FCC does not have statutory authority in this area. However, Martin said that FCC Commissioners can give bully pulpit speeches.

He stated that the increased diversity in television programming has been accompanied by a "corresponding rise in the amount of programming less suitable for children".

He continued that "We at the FCC need to address these issues. We need to do more. Now, the FCC does not have express statutory authority governing family-friendly programming. But I don’t believe that renders us powerless. At a minimum, we need to use the bully pulpit to persuade broadcasters, cable operators, and satellite providers to re-think their approach to family-friendly programming."

He said that "the time has come for us to call on broadcasters to reinstate the Family Viewing Hour". He also said that "cable operators and satellite providers, too, must rethink their level of responsibility to the viewing public".

Martin also discussed the V-Chip and digital cable. He said that "Blocking technologies such as the V-Chip were once hailed as a potential solution to this problem. Unfortunately, studies have shown that their adoption rate has been very low. Few parents know about these technologies, and of those that do, fewer still can figure out how to make them work. Now some in the industry are heralding digital cable as the new panacea. However, penetration of digital cable is not yet widespread. It is therefore is too soon to tell whether consumers will actually learn about this function once digital cable is more prevalent, whether this capability will prove sufficiently user-friendly to become an effective tool, or whether the blocking mechanism will be too easily circumvented."

Martin did not address Internet content in the prepared text of his speech.

He spoke at the annual conference of National Association of Television Program Executives in New Orleans.

Appeals Courts Discuss Internet Use in Sentencing Cases
1/23. Two U.S. Courts of Appeals recently issued opinions in cases involving appeals from sentences that included post release prohibitions of Internet use. In both cases, the Appeals Courts overturned the conditions. Both cases involved application of the sentencing provisions of the Criminal Code, which provide that special conditions of supervised release must entail "no greater deprivation of liberty than is reasonably necessary" See, for example, 18 U.S.C. § 3583(d)(2). However, the Courts also discussed the nature of the Internet, filtering, hacking, and online copyright infringement.

On January 21, the U.S. Court of Appeals (7thCir) issued its opinion [7 pages in PDF] in USA v. Scott, an appeal of a criminal sentence that included a complete ban on Internet use. The Appeals Court vacated and remanded.

The defendant, Todd Scott, plead guilty in U.S. District Court to fraud. The Court imposed a sentence that included the requirement that "The defendant shall be prohibited from access to any Internet Services without prior approval of the probation officer." The District Court's rationale was that a "search of the computer in Scott's office turned up a few images of child pormography."

Judge Frank Easterbrook wrote the opinion for the three judge panel. He opined that "The district judge might have prohibited Scott from accessing newsgroups, as opposed to the entire Internet. Or the judge might have required Scott to install filtering software that would block access to sexually oriented sites, and to permit the probation officer unannounced access to verify that the filtering software was functional. Filtering software is imperfect and may block access to some sites that lack the attributes sought to be put off limits ... but is less restrictive than blocking the whole Internet -- and reliance on software avoids any problem in giving discretion to a probation officer, whose errors may be greater." (Citations omitted.)

Judge Easterbrook continued that "If Scott had used the Internet extensively to commit the crime of conviction, then perhaps a ban might be justified. ... But here the only justification was misbehavior that neither resulted in a conviction nor was treated as relevant conduct, making an outright ban difficult to justify." Hence, on remand, "the judge should invite the probation officer to recommend restrictions on Internet access designed to ensure that Scott does not use his computer to commit additional crimes while on supervised release."

Scott had argued that "limitations on Internet access cannot be justified at all, given §3583(d)(2) and the first amendment." Judge Easterbrook responded that "That is not a tenable argument. Computers and the Internet may be used to commit crimes, of which child pormography and fraud are only two examples. Inveterate hackers who have used access to injure others may be ordered to give up the digital world. If full access posed an unacceptable risk of recidivism, yet all controls on access were forbidden, then a judge would have little alternative but to increase the term of imprisonment in order to incapacitate the offender. Few defendants would deem that a beneficial exchange; most would prefer the conditional freedom of supervised release, even with restrictions on using the Internet, to the more regimented life in prison."

Judge Easterbrook concluded that "The Internet is a vast repository, offering books, newspapers, magazines, and research tools along with smut. A judge who would not forbid Scott to enter a video rental store (which may have an adult-video section) also should not forbid Scott to enter the Internet, even though Disney’s web site coexists with others offering filthy pictures or audio files circulated in violation of the copyright laws. ... A judge who would not forbid a defendant to send or receive postal mail or use the telephone should not forbid that person to send or receive email or to order books at Amazon.com. Scott does not have a record of extensive abuse of digital communications that could justify an outright ban." (Parentheses in original. Citations omitted.)

On January 6, the U.S. Court of Appeals (3rdCir) issued its opinion [PDF] in USA v. Robb Freeman, another criminal sentencing case involving a no Internet use condition.

In this case, the defendant, Robb Freeman, did plead guilty to a crime involving use of the Internet -- possession of child porm. And, the District Court imposed a post incarceration condition "forbidding him from possessing any computer in his home or using any on-line computer service without the written approval of the probation officer". In this case also, the Appeals Court held that the condition was "overly broad; it involves a greater deprivation of liberty than is reasonably necessary to deter future criminal conduct and to protect the public."

Judge Roth, writing for the three judge panel, reasoned that "a total ban on internet access prevents use of email, an increasingly widely used form of communication, and other common-place computer uses such as getting a weather forecast or reading a newspaper online. ... There is no need to cut off Freeman's access to email or benign internet usage when a more focused restriction, limited to pormography sites and images, can be enforced by unannounced inspections of material stored on Freeman’s hard drive or removable disks." The Court then distinguished using the Internet to contact children with using it to download.

More News
1/22. The Federal Trade Commission (FTC) released its annual report [68 pages in PDF] titled "National and State Trends in Fraud and Identity Theft: January – December 2002". The report states that in 2002 the FTC received 380,103 consumer fraud and identity theft complaints. 43% of these related to identity theft. The rest of the top ten fraud categories were Internet auctions (13%), Internet services and computer complaints (6%), advance fee loans and credit protection (5%), shop at home/catalog sales (5%), foreign money offers (4%), prizes/sweepstakes and lotteries (4%), business opportunity and work at home plans (3%), telephone services (2%), health care (2%), and magazines and buyers clubs (2%). See also, FTC release.
People and Appointments
1/22. Senate voted unanimously to confirm Tom Ridge to be Secretary of Homeland Security. See also, statement by President Bush.

1/21. The Senate Finance Committee published in its web site the questionnaire responses [49 pages PDF scan] of John Snow, President Bush's nominee to be Secretary of the Treasury. He was Chairman of CSX. The responses cover, among other things, the lawsuit CSX Transportation v. Qwest, filed in U.S. District Court in 1999 alleging "breach of the fiber optic placement agreement that governs Qwest's ability to install fiber optic communications facilities along CSXT's railroad right-of-way." The suit was settled in 2002. See, pages 40-41. Snow's confirmation hearing is scheduled for January 28 at 10:00 AM.

1/22. Hilary Rosen, Ch/CEO of the Recording Industry Association of America (RIAA) announced that she will leave the RIAA at the end of 2003. Cary Sherman remains as President. See, RIAA release.

1/22. Howard Fienberg was named Legislative Assistant to Rep. Chris Cox (R-CA). He will handle energy, science, environmental and other issues.

1/22. President Bush nominated Mark Everson to be Commissioner of Internal Revenue for a term of five years. He will replace Charles Rossotti, whose term expired. See release.

1/21. The American Electronics Association (AEA) named Dave Cox, the Republican Leader in the California Assembly, its AeA California High-Tech Legislator of the Year. See, AEA release.

Thursday, January 23
9:00 AM - 12:30 PM. The American Enterprise Institute (AEI) will host a half day conference titled "Have We Overestimated the Importance of Audited Earnings?" The keynote speaker, at 9:15 AM, will be Peter Fisher, Under Secretary of the Treasury for Domestic Finance. There will be a panel at 9:45 AM titled "Cash versus Reported Earnings". The participants will be Richard Bassett (Risktoolz), Robert Eccles (Price Waterhouse Coopers), Alex Porter (Porter Felleman), James Glassman (AEI), and Peter Wallison (AEI). There will be a second panel at 11:15 AM titled "Policy Implications". The participants will be Kevin Hassett (AEI), Peter Wallison, Pippa Malmgren (Canonbury Group), and James Glassman. See, notice and registration page. Location: AEI, 12th Floor, 1150 17th Street, NW.
Friday, January 24
9:30 AM. The Senate Judiciary Committee will hold a hearing on hearings on the nomination of Gordon England to be Deputy Secretary of Homeland Security. Location: Room 226, Dirksen Building.

Deadline to submit comments to the Federal Communications Commission (FCC) regarding the Tier III Coalition's petition to forbear, up to December 31, 2005, from enforcing the E911 accuracy and reliability standards set forth in § 20.18(h) of the FCC’s Rules with respect to Commercial Mobile Radio Service (CMRS) provided by Tier III wireless carriers. See, FCC notice [PDF]. This is WT Docket No. 02-377.

Monday, January 27
2:00 PM. The House will return from a two week adjournment.

12:30 PM. Rep. Nancy Pelosi (D-CA) and Sen. Tom Daschle (D-SD) will speak at a luncheon. Location: National Press Club, 529 14th St. NW, 13th Floor.

The Supreme Court will be in recess from January 27 through February 23.

Day one of a two day conference titled "First International Conference on the Economic
and Social Implications of Information Technology
". The scheduled speakers include Secretary of Commerce Don Evans, John Marburger (President’s Science Advisor), Floyd Kvamme (Co-Chairman of the President’s Council of Advisors on Science and Technology, or PCAST), Sam Bodman (Deputy Secretary of Commerce), Nancy Victory (NTIA Directory), Phil Bond (Under Secretary for Technology), and Bruce Mehlman (Assistant Secretary for Technology Policy). See, notice and schedule. The price to attend is $100, and $60 for government, academic, and nonprofit personnel. Location: Main Auditorium, Department of Commerce, 14th St. and Constitution Ave.

Day one of three day COMNET Conference & Expo. See, conference web site. Location: Washington Convention Center.

Extended deadline to submit comments to the Federal Communications Commission's (FCC) regarding the Report [73 pages in PDF] of the FCC Spectrum Policy Task Force (SPTF). The report recommends that "spectrum policy must evolve towards more flexible and market oriented regulatory models." See, original notice [PDF] and notice of extension [PDF].

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its Notice of Inquiry regarding competition in the Commercial Mobile Services (CMRS) industry. The FCC seeks data and information for its Eighth Annual Report and Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services. This is WT Docket No. 02-379. See, notice in the Federal Register, January 7, 2003, Vol. 68, No. 4, at Pages 730 - 740. For more information, contact Chelsea Fallon at 202 418-7991.

Tuesday, January 28
Day two of a two day conference titled "First International Conference on the Economic
and Social Implications of Information Technology". The scheduled speakers include Secretary of Commerce Don Evans, John Marburger (President’s Science Advisor), Floyd Kvamme (Co-Chairman of the President’s Council of Advisors on Science and Technology, or PCAST), Sam Bodman (Deputy Secretary of Commerce), Nancy Victory (NTIA Directory), Phil Bond (Under Secretary for Technology), and Bruce Mehlman (Assistant Secretary for Technology Policy). See, notice and schedule. The price to attend is $100, and $60 for government, academic, and nonprofit personnel. Location: Main Auditorium, Department of Commerce, 14th St. and Constitution Ave.

Day two of three day COMNET Conference & Expo. See, conference web site. Location: Washington Convention Center.

9:30 AM. The Senate Judiciary Committee will hold a hearing on pending judicial nominations. Location: Room 226, Dirksen Building.

9:30 AM. The Senate Judiciary Committee will hold a hearing on pending judicial nominations. See, notice [PDF]. Location: Room 226, Dirksen Building.

10:00 AM. Region 20 (District of Columbia, Maryland, and Northern Virginia) Public Safety Planning Committees (NPSPAC) on 800 MHz  and 700 MHz will meet. Location: Potomac Community Public Library, Woodbridge, VA.

1:15 - 2:15 PM. Panel discussion titled "The Low Down on High-Tech Communications Policy and Regulation" at the COMNET Conference & Expo. The panelists will be Richard Wiley (Wiley Rein & Fielding), Kevin Kayes (Democratic Staff Director, Senate Commerce Committee), Michael Gallagher (Deputy Director of the NTIA), James Ramsay (General Counsel of NARUC), and Bryan Tramont (Senior Legal Advisor to FCC Chairman Michael Powell). See, conference web site. Location: Washington Convention Center.

Wednesday, January 29
12:15 PM. The FCBA's Online Communications Committee will host a brown bag lunch. The topic will be "Digital Rights Management & Development". For more information, contact Aileen Pisciotta at apisciotta@kelleydrye.com. RSVP to bviera@kelleydrye.com. Location: Cole, Raywid & Braverman, 1919 Pennsylvania Ave., NW, Suite 200.

4:00 PM. The Cato Institute will host a book forum on Rethinking the Network Economy: The True Forces that Drive the Digital Marketplace, by Stan Liebowitz. John Lott (American Enterprise Institute) and Tom Lenard (Progress and Freedom Foundation) will comment. Webcast. A reception will follow. See, Cato notice. Location: Cato, 1000 Massachusetts Ave., NW.

Day three of three day COMNET Conference & Expo. See, conference web site. Location: Washington Convention Center.

Deadline to submit comments to the Federal Trade Commission (FTC) regarding the consent agreement that it entered into with Quicken Loans Inc. On December 30, 2002, the FTC filed an administrative Complaint [8 pages in PDF] against Quicken Loans, an online lender, alleging that it violated the Fair Credit Reporting Act (FCRA). The FTC and Quicken Loans also settled the matter. See, Agreement Containing Consent Order [7 pages in PDF]. See also, story titled "FTC Charges Quicken Loans with Violation of FCRA" in TLJ Daily E-Mail Alert No. 575, January 3, 2003. See, notice in the Federal Register, January 21, 2003, Vol. 68, No.  13, at Pages 2775-2776.

Thursday, January 30
9:30 AM. The Senate Judiciary Committee will hold a business meeting to consider pending calendar business. See, notice. Location: Room 226, Dirksen Building.

10:00 AM. David Dorman, CEO of AT&T, will speak on the future of the telecommunications industry. Location: National Press Club, Zenger Room, 529 14th St. NW, 13th Floor.

4:00 PM. The Cato Institute will host an event titled "Who Are the Real Free Traders in Congress?" to release a study of voting records on trade issues. The speakers will be Rep. Tom Petri (R-WI), Sen. Sam Brownback (R-KS), and Dan Griswold (Cato). See, notice and registration page. Location: Cato, 1000 Massachusetts Ave., NW.
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