|News from April
FBI Selects Sites for Computer Forensic Labs
4/20. The Federal Bureau of Investigation
(FBI) announced the selection of sites for three regional computer forensic
laboratories (RCFL): Kansas City, Chicago, and the San Francisco bay area. See, FBI release.
People and Appointments
4/20. Mark Mershon was appointed as Special Agent in Charge of the Federal Bureau of Investigation's (FBI) San
Francisco Field Office. See, FBI release.
AEI Panel Advocates "Freeing the Chinese Internet"
4/19. The American Enterprise Institute (AEI)
hosted a panel discussion titled "Freeing the Chinese Internet". The
speakers stated that the People's Republic of China uses firewalls to block
access to certain web sites by Internet users in China. The speakers also
asserted that American companies have played a pivotal role in developing the
Chinese government's censorship capabilities. Finally, they advocated freeing
the Chinese Internet by several means, including the use of technologies
designed to evade the blocking by firewalls, industry self restraint, U.S.
government oversight of the technology industry's support of Chinese censorship,
and shareholder lawsuits against U.S. companies.
The moderator of the AEI discussion was Arthur Waldron (a China
scholar at the AEI). The panelists were William Baum (Voice of America), Paul Baranowski (Peekabooty Project), Ethan Gutmann (Project for the New American Century),
and Greg Walton (Human Rights in
William Baum gave the first presentation. As China Branch Chief for Voice of
America (VOA), he has worked to provide news and information in Mandarin and
Cantonese through a web site and other media. He stated that the Chinese
government blocks access to the VOA web site.
"We have had great difficulty getting through. Their blocking has been
quite effective." He said that they have been sending, by e-mail, proxy
server information. However, the Chinese government blocks the proxies within
hours. "It is very clear that there is a very concerted effort within China
to do everything they can to block news," said Baum.
He also pointed out that VOA's proxy servers get many hits from Saudi Arabia.
However, he added that the Saudis mostly use the proxies to access pormography
rather than news and information.
Baranowski, a young software developer, stated that he is currently working, on
his own, and without support, on the Peekabooty application, a peer to peer
application that facilities Internet users' ability to avoid the blocking by
government firewalls. He also stated that he would welcome either foundation or
government financial support for his project.
He added that he is pessimistic for the long run. He stated that "absolute
control of the Internet is possible. Most people in the technical industry, in
the computer industry, and pretty much, sort of, the general view is that it is
not possible to control the Internet. And, and the Chinese have shown so far
that it is quite possible to control it. And, eventually they will control it
completely. And thus, this program I am writing is only a temporary solution to
what is actually a political problem. So, it is just buying us time, I
Ethan Gutmann focused especially on the role of U.S. companies in the
development of the Chinese Internet. He stated that "American business
played a very pivotal in the construction of the construction of the Chinese
Internet." In stated that, in addition, "American companies could play
a role in freeing the Chinese Internet, or at least stop making the situation
He said that China developed the Internet for several reasons. China did want to
be left behind technologically. It wanted to get rich. It wanted to use the
Internet for nationalist propaganda. It wanted to used it for surveillance, and
the tracking down of dissent. Also, it wanted to develop Internet warfare
"How did the Western businesses look at this. Well, they generally
underestimated the Chinese leadership," said Gutmann. "For American
computer engineers, the Internet architecture itself seemed too clever and too
egalitarian ... For U.S. businessmen, the feeling was that our technological
lead was just too great; our financial pace is too fast."
Gutmann then offered his assessment of how the Chinese firewall was built.
"We know that during construction of the first public access web, Global
One in 1996, authorities suddenly became interested in keyword searching. They
wanted to look into the packets," said Gutmann. "We know that the
Chinese wanted to block forbidden web sites, very early -- western news,
democracy sites, Maoist sites, and so on -- but Chinese Internet architecture
was not very standardized, because there was so much excitement surrounding the
building" of the Internet.
He then addressed the role of Cisco.
"Cisco Systems has really been a dominant player -- agreed to build a
special firewall box for the Chinese authorities which blocked the forbidden web
sites on a national scale." He added that he is not aware of Cisco doing
this for any other country.
"They basically solved a great part of the problem for the Chinese
government. When you called up a site that was forbidden, and it would just say,
the operation timed out, which meant that, basically, your request for the site
had been thrown in the electronic equivalent of the trash. Now, we have reason
to suspect that Cisco also gave to the PLA and the state security the ability to
look into the packets, in exchange for market access."
However, Gutmann said that Cisco was not alone. "On the area of content
control, we know the Internet is a dynamic place ... search engines had to be
controlled tool." He asserted that Yahoo "disabled search phrases,
such as ``China democracy´´ and ``Taiwan independence´´."
"Others, such as Sun Microsystems,
Netscape, Sparkice, showed goodwill by
supporting an arm of Chinese propaganda, at the time. And AOL, which has been
moving into the market very fast, has similar arrangements, and is considering
directly informing on dissident's web activity if the PSB, the Public Security
Bureau, requests it," said Gutmann.
In addition to censorship by firewalls, Gutmann addressed surveillance. He
stated that "There are big players at Internet security trade shows in
Beijing -- Motorola, Phillips, DuPont, Siemens -- smaller companies like
NetFront and RSA Security subsist by
their sales of surveillance technology to the Chinese authorities. And, you
know, on the really low end front, but very important front, there are spyware
programs, those little programs that embed themselves in your computer after you
download something. One is made by Radiate. Another is made by Clicktiluwin. In
the U.S. context these report user activity to advertisers. In China, there is
every reason to believe that information is also delivered to state security,
the security bureau. This is very useful for identifying webmasters ... and ...
it identifies users who download proxy servers."
Gutmann also discussed assistance provided by American companies in cyber
warfare. He stated that "it is increasingly relevant that Network Associates, that is, McAfee, and Symantec,
which is Norton AntiVirus, and Trend Micro, gained entry into the Chinese market
by donating 300 live computer viruses to the Public Security Bureau. From the
Chinese perspective, this is significant. They have a Cisco built firewall. They
five pipelines to the outside world. They can shut those down in a crisis."
The panelists also addressed how to free the Internet in China. Panelists
advocated the development and use of proxy servers and applications such as
Gutmann cautioned, "but we should be aware of the likely Chinese response,
which would be, easiest thing to do, is just simply to enlist American companies
who are very eager to curry favor in Beijing ... and ask the American companies
to develop software allowing the Public Security Bureau to kill any system that
we are talking about". Hence, he argued that American companies would have
to cooperate in working to free the Internet in China.
Panelists cited only one example of a company that has stood up to the Chinese
government's demands -- Microsoft. For
example, Gutmann stated that "Chinese authorities at one point ordered
Microsoft, and pretty much every company, to surrender their software's
underlying source code, their encryption source code. Underneath it all,
Microsoft is the one who really chose to fight. They organized a massive
coalition of every Chamber of Commerce that you can think of that is relevant to
Beijing, and they won. The Chinese authorities backed off."
Gutmann also suggested U.S. government oversight of U.S. company's cooperation
with Chinese authorities. He said that "that ideally would be done by the
U.S. China Security Review Commission, by the Congressional Executive Commission
on China, and by elements of the Administration. The stark choice that would be
offered is either to pay penalties, or develop a workable code of conduct."
But, he concluded that "oversight can only go so far".
Waldron advocated shareholder litigation. He said that "in my private
capacity, I would be perfectly happy to buy a share of Cisco stock" in
order to bring a shareholder action.
Waldron waxed philosophically. "It is often said, without reflection, that
of course, the result of this new technology is going to be more freedom, even
though what Orwell thought, it was going to mean less freedom, and more brain
washing. And, I think that there is no better test case of this than the
Internet in China ..." He pointed out that in contrast to Orwell, former
U.S. Secretary of State Madeline Albright has argued that the Internet will lead
to democratization in China.
Technology of Internet Censorship
4/19. The American Enterprise Institute (AEI)
panel discussion titled "Freeing the Chinese Internet" addressed the
technologies of Internet censorship, and countermeasures used to evade
censorship. The following is a brief overview of some of the concepts addressed.
Firewalls. Firewalls may be programs located in a gateway server for a
network. They examine each network packet to determine whether to forward it to
its destination. Firewalls can be used both to prevent malicious outsiders from
accessing private data resources located on the network, and to control what
resources outside of the network users will have access to. This latter function
is used in nations where governments exercise Internet censorship. First, users
are only permitted access to the Internet through government controlled
firewalls. Second, the government uses these firewalls to block access to banned
web sites, such as foreign news sites. The firewalls store lists of URLs of
banned web sites. Then, the firewalls will not forward packets directed to those
URLs, thus blocking the user's requests for those web pages.
Proxy Servers. A proxy server is also an intermediary between a network
and the Internet. It can be used for many purposes, including caching,
administrative control, and security. Proxy servers can be used to evade the
effects of government firewalls that block access to censored sites. Rather than
directing a request to the censored web site, the user sends his request to the
unblocked proxy server. If the requested page is cached at the proxy server, the
proxy server can send it to the user. Alternatively, the proxy server, using one
of its own IP addresses can request the page from the censored web site, and
then forward it on to the user.
Peekabooty. Peekabooty is a
distributed or peer to peer application, as are some music sharing applications.
However, the function of Peekabooty is to have a large number of computers
located in countries other than the ones exercising Internet censorship to act
as a network of intermediaries between the users in the censoring countries and
the banned web sites which they seek to access. The concept is to have too many
computers running Peekabooty in the background for the censoring government to
identify, track and block them. Peekabooty is still in development. However, if
developed, it could provide several advantages over simple proxy server evasion.
First, once launched it would not require organization, maintenance, or funding.
Second, it would present a far more difficult target for blocking. Third, there
is no central server or control to attack to shut down the system.
Feds Arrest 27 for Counterfeit Microsoft Products
4/19. A grand jury of the U.S. District Court (NDCal)
returned 11 indictments against 26 individuals alleging criminal copyright
infringement of Microsoft software products. A 27th person was charged by
complaint. The U.S. Attorneys Office (NDCal)
(USAO) and the Federal Bureau of Investigation
(FBI) also announced the arrest of 27 persons, and the service of 10 search
See for example, indictment
[PDF] of Malinda Chang charging criminal copyright infringement in violation of 17 U.S.C. § 506(a)(1)
and 18 U.S.C. §
2319(b)(1) and trafficking in counterfeit goods in violation of 18 U.S.C. § 2320 in
connection with the sale of counterfeit copies of Microsoft Office 97 and 2000
and Windows NT and 2000.
The arrests and charges were the result of a two year undercover investigation.
See also, USAO
release and Microsoft
FCC Files Petition for Review of Appeals Court Opinion in Fox
4/19. The Federal Communications Commission
(FCC) filed a Petition
for Rehearing En Banc [40 pages in PDF] with the U.S. Court of Appeals (DCCir) in Fox
v. FCC. The FCC seeks review of the February 19, 2002, opinion
of the Court which held that the FCC's national TV station ownership rule (NTSO)
and its cable broadcast cross ownership rule (CBCO) both violate the
Administrative Procedure Act (APA) as arbitrary and capricious, and Section
202(h) of the Telecom Act. The three judge panel vacated the CBCO rule, but
merely remanded the NTSO rule to the FCC. The current Petition for Rehearing
seeks review regarding the standard to be applied to the FCC in challenges to
The FCC is required by statute to conduct biennial reviews of its ownership
rules. The statute requires that it "shall determine whether any of such
rules are necessary in the public interest" and repeal those section that
are no longer in the public interest. The FCC conducted its first biennial
review in 1998, but did not repeal or modify its NTSO or CBCO rules as a result.
Various parties, including Fox, filed
petitions for review with the Court of Appeals. The Appeals Court applied this
statutory language in its plain meaning. The FCC now argues that the term
"necessary" should not necessarily be construed to mean
"necessary"; and, if it is, this "threatens to impose a
continuing and unworkable burden on the agency in carrying out its biennial
The Statute. The statutory provision at issue was enacted by the Congress
in the Telecom Act of 1996. It provides, at Section 202(h), that the FCC
"shall review its rules adopted pursuant to this section and all of its
ownership rules biennially as part of its regulatory reform review under section
11 of the Communications Act of 1934 and shall determine whether any of such
rules are necessary in the public interest as the result of competition. The
Commission shall repeal or modify any regulation it determines to be no longer
in the public interest."
FCC Argument. The FCC wrote that "The panel held in that decision
that under the applicable statutory provision the Commission applied ``too low a
standard´´ in conducting its biennial review of media ownership regulations
and that under the correct standard set forth in Section 202(h) of the 1996
Telecommunications Act, ``a regulation should be retained only insofar as it is
necessary in, not merely consonant with, the public interest.´´ ... This
holding, which can be read to require a higher standard to retain an existing
rule than to adopt it in the first instance, imposes a substantial and
continuing burden on the agency that threatens administrative paralysis. This
result is not compelled by the language of the statute or by its legislative
history." (Citation to Fox omitted.)
The FCC argues for "A less stringent interpretation of the term
``necessary´´ ". It argues that the Court should construe this word in
its "statutory context" rather than "in its most literal
Background. After its 1998 biennial review, the FCC maintained its NTSO
C.F.R. § 73.3555(e)) and its CBCO rule (47
C.F.R. § 76.501(a)). Fox Television Stations and various other TV networks
and cable companies petitioned the Court of Appeals for review of the FCC's
decision not to repeal or modify these two rules. The petitioners asserted that
these rules violate the Administrative Procedure Act (APA), § 202(h) of
the Telecom Act of 1996, and the First Amendment of the Constitution.
The Court rejected the First Amendment argument. However, the Court of Appeals
held: "We conclude that the Commission's decision to retain the rules was
arbitrary and capricious and contrary to law. We remand the national television
station ownership rule to the Commission for further consideration, and we
vacate the cable/ broadcast cross ownership rule because we think it unlikely
the Commission will be able on remand to justify retaining it."
Chief Judge Douglas
Ginsburg, writing for a three judge panel, found that the FCC "has
adduced not a single valid reason to believe the NTSO Rule is necessary in the
public interest, either to safeguard competition or to enhance diversity.
Although we agree with the Commission that protecting diversity is a permissible
policy, the Commission did not provide an adequate basis for believing the Rule
would in fact further that cause. We conclude, therefore, that the 1998 decision
to retain the NTSO Rule was arbitrary and capricious in violation of the APA."
The Court similarly held that the CBCO violates of the APA. It found that the
FCC "failed to consider the increased number of television stations now in
operation, and it is clear that the Commission failed to reconcile the decision
under review with the TV Ownership Order it had issued only shortly before. We
conclude, therefore, that the Commission's diversity rationale for retaining the
CBCO Rule is woefully inadequate."
Michael Powell, who was a
FCC Commissioner in 1998, dissented from the retention of the NTSO and CBCO
rules. He is now Chairman of the FCC, and is joined by two other Republican
Commissioners, Kevin Martin and Kathleen Abernathy, who are skeptical of
The February 19 Fox opinion is published at 280 F.3d 1027. It is No. 00-1222.
WTO DG Moore Addresses Russian Accession to WTO
4/19. World Trade Organization (WTO) Director
General Mike Moore
gave a speech
in London titled "Russia and the WTO: Reintegration into the World
Economy". He said that "Russia's accession is finally entering a
decisive and final phase".
However, Moore also stated that "To complete Russia's accession, we will
need to see the completion of meaningful market access deals in goods and
services and a solid legal and administrative framework in Russia -- which will
guarantee the implementation of the contracted commitments."
He continued that "Our common objective is to build a balanced package
capable of providing Member governments with meaningful access to the Russian
market, on multilaterally enforceable terms. In turn, Russia will receive
guaranteed and predictable access to the markets of its trading partners. Russia
will also take a central place in the management and future development of the
world economic system. In this way Russia's reintegration into the world market
will be completed. No matter how difficult the outstanding problems may be, I
believe there are in Washington, Brussels and Moscow, people with the
horsepower, firepower and willpower to make this accession happen."
Moore concluded that "Accessions, in their final phase, always come back to
such core issues as ... telecommunications."
USTR Announces IPR Agreement with Argentina
4/19. The Office of the U.S. Trade Representative
(USTR) announced that "Intellectual property rights officials from the
United States and Argentina, meeting in Buenos Aires, finalized the elements of
a joint notification to the World Trade
Organization (WTO) regarding intellectual property matters."
The USTR stated that "Argentina clarified how certain aspects of its
intellectual property system, such as those related to its import restriction
regime, operate in conformance with the WTO Agreement on Trade Related Aspects
of Intellectual Property Rights. In addition, Argentina agreed to amend its
patent law to provide protection for products obtained from a process patent and
to ensure that preliminary injunctions are available in intellectual property
court proceedings, among other amendments. Finally, on the outstanding issues
that remain, including that of data protection, the United States retains its
right to seek resolution under the WTO dispute settlement mechanism." See, USTR release.
Secretary Evans Addresses Trade,
Innovation and Entrepreneurship
4/19. Commerce Secretary Donald Evans
gave a speech
to the American Chamber of Commerce in Japan
in Tokyo in which he advocated free trade, innovation, and free enterprise. He
said that emerging sectors should not be stymied by new trade barriers. He also
reviewed the Bush Administration's policies.
Evans stated that among President Bush's legislative accomplishments for
encouraging innovation and entrepreneurship are the recent tax cut, the three
year acceleration of capital expense depreciation contained in the economic
stimulus package, increased government research and development spending, and
education reform. He also stated that the President is advocating personal
retirement accounts, and Trade Promotion Authority (TPA).
Evans also advocated free trade. He stated that "We need to lower trade
barriers: globally (by working together on the Doha Development Agenda),
multilaterally (through APEC), and bilaterally (through our Economic Partnership
and other efforts). I would like to see us make an effort to ensure that our
new, emerging sectors -- where we stand to see the most gain from our
innovations and through our entrepreneurs -- are not stymied through new trade
Evans also advocated the moral virtues of trade. He said that trade
"creates stability and the prospect of a brighter future. Trade compels
governments to bring transparency and clarity to their economic decision making,
and combats the corruption that impedes progress, entrenches self servers, and
He also stated that "trade is inherently democratic. Economic freedom
encourages political freedoms. New enterprises and access to capital lead to the
creation of a merchant class. Middle classes demand greater political
participation." Evans travels to China after his visit to Japan.
Evans Discusses IPR and China
4/19. Commerce Secretary Donald Evans
addressed intellectual property rights (IPR) and the People's Republic of China
at a press conference in Tokyo, Japan. See, transcript.
Evans stated that he will next travel to China. He said that "I'll
congratulate China for becoming a member of the WTO" and "I will
express not only our notes of congratulations, but the importance of compliance.
And offer our support to them to assure that they become in full compliance of
their WTO obligations. Those include obligations that relate to intellectual
property right protection. And so I'm sure the issue will come up as to how
important it is that they have strong intellectual property right laws in place,
and also make sure that they enforce those laws."
He added that "We have teams of people that are working with them in
various areas of the WTO rules so that they will come into compliance as soon as
GAO Reports on PRC Semiconductor Industry
4/19. The General Accounting Office (GAO)
released a report [83
pages in PDF] titled "Export Controls: Rapid Advances in China's
Semiconductor Industry Underscore Need for Fundamental U.S. Policy Review".
The report found that "U.S. policies and practices to control the export of
semiconductor technology to China are unclear and inconsistent", and that
while "export regulations restrict certain sales that would make a direct
and significant contribution to China's military capabilities, the United States
generally approves most exports of semiconductor manufacturing equipment and
materials to China."
The U.S. regulates the export of certain dual use technologies, including
equipment and materials used to make semiconductors, for national security or
foreign policy reasons. The GAO report notes that "Semiconductors, commonly
referred to as computer ``chips,´´ are key components in computers,
communications equipment, and weapons systems. U.S. policy on the export of such
``dual use´´ items -- goods and technologies that have both civilian and
military uses -- is a subject of continuing debate."
The report found that "Since 1986, China's efforts to improve its
semiconductor manufacturing capability have narrowed the gap between U.S. and
Chinese semiconductor manufacturing technology from between 7 to 10 years to 2
years or less. According to our analysis of information obtained from
semiconductor manufacturing facilities in China and industry experts, China’s
most advanced commercial manufacturing facilities can produce chips that are
only one generation behind current, commercial state of the art
The report also found that "U.S. policies and practices to control the
export of semiconductor technology to China are unclear and inconsistent,
leading to uncertainty among U.S. industry officials about the rationale for
some licensing decisions. Under the Export Administration Regulations pertaining
to China, the general licensing policy is to approve applications, except those
items that would make a direct and significant contribution to specific areas of
China's military. We found that the United States approves most licenses for
exports of semiconductor manufacturing equipment and materials to China.
Although U.S. practice has been aimed at keeping China at least two generations
(about 3 to 4 years) behind global state of the art semiconductor manufacturing
capabilities, the regulations make no reference to the level of technology that
can be exported to China relative to the current commercial state of the art.
The report further found that "U.S. agencies have not conducted the
analyses, such as assessing foreign availability of this technology or the
cumulative effects of such exports on U.S. national security interests,
necessary to justify such a practice or serve as the basis for licensing
decisions. Consequently, the executive branch does not have a sound, well
documented basis for making export licensing decisions to China."
The report recommends that the Secretaries of Commerce, Defense and State
"reassess and document U.S. export policy on semiconductor manufacturing
equipment and materials to China. Specifically, we are recommending that these
agencies complete the analyses needed to serve as a sound basis for an updated
policy; develop new export controls, if appropriate, or alternative means for
protecting U.S. security interests; and communicate the results of these efforts
to the U.S. Congress and industry."
The report also notes that the departments involved do not agree with its
The report was prepared at the request of Sen.
Fred Thompson (R-TN), the ranking Republican on the Senate Governmental Affairs Committee.
Sen. Thompson has a long history of opposing on national security grounds the
liberalization of export control laws and regulations pertaining to encryption
products, high performance computers, and other dual use software and equipment.
9th Circuit Applies PSLRA Scienter Requirement to Accountants
4/19. The U.S.
Court of Appeals (9thCir) issued its opinion
Global Value Fund v. Altris Software, a class action case
involving the Private Securities Litigation Reform Act (PSLRA).
District Court. Plaintiffs filed a complaint in U.S. District Court (SDCal) against Altris Software (now renamed Spescom) and Price Waterhouse Coopers (PWC), the
accounting firm hired by Altris to audit its 1996 financial statement, alleging
securities fraud. Plaintiffs alleged that PWC botched the audit. The issue is
whether this satisfies the heightened pleading requirements of the PSLRA, and
the Ninth Circuit's interpretation of the scienter requirements of the PSLRA in In re Silicon Graphics, Inc.
Sec. Litig., 183 F.3d 970. The District Court dismissed the complaint as to
Appeals Court. The Appeals Court affirmed. It held that "the
complaint sets out a compelling case of negligence -- perhaps even gross
negligence -- but does not give rise to a strong inference that the auditor
acted with an intent to defraud, conscious misconduct, or deliberate
recklessness, as is required in a securities fraud case."
SEC Official Addresses Securities Regulation and the Internet
4/19. Paul Roye, Director of the Securities and
Exchange Commission's (SEC) Division of Investment
Management gave a speech
at the Suffolk University School of Law
in Boston, Massachusetts. He discussed, among other topics, securities
regulation and the Internet.
He stated that "The Internet has no borders and the growing importance of
e-commerce in the financial services area, has made it necessary to reconsider
traditional regulatory approaches. As a report of the Internet Task Force to the
Technical Committee of the International Organization of Securities Commissions
("IOSCO") noted: ``Electronic communications and interactivity may not
fit neatly within the parameters of statutes, regulations and directives
originally intended for a telephone and paper based environment, thus creating
unnecessary regulatory burdens or unintended regulatory gaps. Moreover, the very
qualities that make the Internet a valuable tool for investors and the
securities industry may render it a convenient tool to perpetuate securities
fraud and other violations. The Internet also provides for instantaneous cross
border communication and interactivity, which challenge traditional notions of
jurisdiction and territoriality.´´"
He continued that "It is clear that increasing Internet use presents new
challenges for securities regulators and self regulatory organizations.
Recognizing this, IOSCO created an Internet Task Force to examine and provide
guidance on issues relating to the impact of the Internet on securities
regulations, providing a report that identified Internet issues that should be
addressed by each jurisdiction and providing guidance on how to approach these
issues. Efforts like this have been successful in helping shape logical and
consistent approaches to issues raised by the Internet."
People and Appointments
4/19. Martin Dunn was named Deputy Director of the Securities and Exchange Commission's (SEC) Division of Corporation
Finance (DCF). Dunn joined the DCF in 1988 just out of law school. See, SEC release.
Graefe joined the Washington DC office of the law firm of Hunton & Williams' as a senior member of
its Government Relations Team. He was formerly a partner in the Washington DC
office of the law firm of Baker & Hostetler. His practice focuses on several
legislative and regulatory issues, including telecommunications and tax. See, H&W release.
4/19. Microsoft announced that Chairman and Chief Software Architect Bill Gates will
testify on Monday, April 22, in the U.S.
District Court (DC) proceeding on remedies in the long running antitrust
case. See MSFT
4/19. The House Judiciary Committee
announced that it has rescheduled for Wednesday, April 24, its mark up of
several bills, including HR 3482,
the Cyber Security Enhancement Act of 2001, HR 3215,
the Combatting Illegal Gambling Reform and Modernization Act, and HR 1877,
the Child Sex Crimes Wiretapping Act of 2001. These bills had previously been
scheduled for mark up on Thursday, April 18.
4/19. The U.S. Patent and Trademark Office (USPTO)
released its FY 2001
USPTO Performance and Accountability Report.
4/19. The U.S.
Court of Appeals (7thCir) issued its opinion
v. Baronia, a case involving use of a PC, scanner and printer to
counterfeit U.S. currency. The defendant plead guilty. On appeal he argued that
the District Court should not have enhanced his sentence pursuant to
§ 2B5.1(b)(2) of the U.S. Sentencing Guidelines. He argued that he was not
a large scale producer, and his counterfeits were unsophisticated. The Appeals
4/19. The Securities and Exchange Commission
(SEC) published a notice
in the Federal Register requesting comments regarding its proposed rule amending
the Investment Advisers Act of 1940 to exempt certain investment advisers that
provide advisory services through the Internet from the prohibition on SEC
registration set out in § 203A of the Act. The amendments would permit
these advisers to register with the SEC instead of with state securities
authorities. Comments must be received by June 6, 2002. See, Federal Register,
April 19, 2002, Vol. 67, No. 76, at Pages 19499 - 19506.
FCC Holds Open Meeting
4/18. The Federal Communications Commission
(FCC) held a meeting at which it announced the adoption of several items
pertaining to satellite services, subsidies for rural health care providers, and
telecommunications relay services. See, agenda.
The FCC announced that it adopted a Report and Order for licensing new satellite
services in shared Ku-band frequencies, 10.7 GHz - 14.5 GHz. The FCC also
announced that it adopted a Further Notice of Proposed Rulemaking (NPRM) that
proposes a methodology for the licensees to demonstrate, in the aggregate, that
their systems are within a limit on the total power that can be emitted by the
Ku-band NGSO FSS
service. The NPRM also seeks comment on whether the definition of in-line
interference events adopted in the Order should be adjusted with respect to
higher powered transmitters. This is IB Docket No. 01-96. See, FCC
The FCC also announced that it adopted a NPRM seeking comment on how to improve
the rural health care universal service mechanism, which helps rural health care
providers obtain access to telecommunications and information services for
medical and health maintenance purposes. This is CC Docket No. 02-60. See, FCC
The FCC also announced that it adopted a Declaratory Ruling and Second Further
NPRM regarding Telecommunications Relay Services (TRS). The FCC authorized the
recovery of all Internet protocol relay costs from the Interstate TRS Fund, and
asked for pubic comments on whether the FCC should attempt to devise a method
for allocating calls as intrastate or interstate, and, if so, how to accomplish
this goal. See, FCC
House Judiciary Committee Postpones Mark Up of Tech Bills
4/18. The House Judiciary Committee
held a meeting to mark up several bills, including HR 3482,
the Cyber Security Enhancement Act of 2001, and HR 3215,
the Combatting Illegal Gambling Reform and Modernization Act (the Internet
gambling bill). However, it postponed consideration of these two bills.
Senate Judiciary Committee Postpones Mark Up of IPR Bill
4/18. The Senate Judiciary Committee
held a meeting to mark up bills and approve nominees. The agenda included
consideration of S 2031,
Intellectual Property Protection Restoration Act of 2002. This bill would
prevent states from recovering damages for infringement of state owned
intellectual property, unless they have first waived their 11th Amendment
sovereign immunity from suits against them for their infringement of the
intellectual property of others. However, this bill was held over, again.
Evans Writes FCC Re Auction Postponement
4/18. Secretary of Commerce Donald Evans
wrote a letter to Federal Communications
Commission (FCC) Chairman Michael
Powell regarding the FCC's decision not to postpone its auctions in the
upper and lower 700 MHz bands, Auction Numbers 31 and 44..
He wrote "to urge the Commission to postpone the auctions in the Upper and
Lower 700 MHz bands currently scheduled for June 19, 2002. While I applaud your
recent ``Proposal for Voluntary Industry Actions to Speed the Digital Television
Transition´´ as a call to action that I am hopeful industry will heed,
significant uncertainty remains today about the date on which the spectrum in
these bands will become available for new wireless services. Until more
certainty exists about the means for and timing of such spectrum clearing, an
auction of the Upper and Lower 700 MHz bands would be premature and contrary to
The Cellular Telecommunications and Internet
Association (CTIA) praised the Evans letter. It wrote in a release
that "The Administration is sounding its message loud and clear -- again.
The 700 MHz spectrum auction is simply premature at this point. Commerce
Secretary Evans has underscored the reality that conducting this auction now is
inconsistent with efficient spectrum management, and with the Administration’s
efforts to further spectrum reform. We hope the FCC can read the writing on the
Tom Sugrue, Chief of the FCC's Wireless Telecommunications Bureau, sent a letter
[PDF] on April 10 to Tom Wheeler, P/CEO of the CTIA denying the CTIA's request
for an indefinite postponement.
Meanwhile, several members of the House
Commerce Committee may introduce a bill next week to require postponement of
Hollings Introduces Bill to Regulate Online Information
4/18. Sen. Ernest Hollings (D-SC)
introduced S 2201, the Online Personal Privacy Act 2002, a bill that would
impose broad regulation of ISPs, online service providers, and commercial web
site operators in their collection and dissemination of information. See, Sen.
by section summary, and statement
in the Senate.
The provides that before an Internet service provider, online service provider
or commercial website operator could collect or disclose an individual's
sensitive personally identifying information (including health information, race
or ethnicity, political party affiliation, religion, social security number, or
financial information) it would have to first get affirmative consent from the
The bill also requires that individuals be given access to their personally
The bill preempts related state laws.
The bill gives civil enforcement authority to the Federal
Trade Commission (FTC). The bill also allows lawsuits by states and
individuals for injunctive relief and monetary damages.
The bill is cosponsored by nine other Senators, who are mostly Democrats, and
mostly members of the Senate Commerce Committee. The initial cosponsors are
Conrad Burns (R-MT), John Kerry (D-MA), Ted Stevens (R-AK), Jay Rockefeller
(D-WV), Daniel Inouye (D-HI), John Breaux (D-LA), Max Cleland (D-GA), Bill
Nelson (D-FL), and Jean Carnahan (D-MO).
The Hollings bill was quickly condemned by technology and business groups.
Harris Miller, President of the Information
Technology Association of America (ITAA), stated in a release
that "The Hollings bill is a static solution to a problem that is
constantly changing. Such an approach might work if good guys and bad guys all
agreed to play by the same privacy and security rules and the technology itself
never changed. None of these things will ever happen. Instead, this bill would
force online businesses to operate with rules different from their brick and
mortar counterparts and, in the process, creates the best kind of target to
shoot at: one that stands still."
Ed Black, President of the Computer &
Communications Industry Association (CCIA) stated that "this
legislation continues to advocate unworkable, unwise, and extremely onerous
policies that would significantly transform the Internet and e-commerce as we
know it. We also object to the discriminatory nature of the legislation, in that
it subjects Internet companies and websites to harsher treatment than offline
collectors of information".
Bruce Josten, EVP of the U.S. Chamber of
Commerce, stated in a release
that "We must not legislate privacy laws that are ineffective or hinder the
growth of online commerce ... This proposal is nothing more than a solution in
search of a problem."
Sen. Hollings, who is Chairman of the Senate
Commerce Committee, has scheduled a hearing on his bill before his Committee
for Thursday, April 25 at 9:30 AM.
NTIA Director Addresses Spectrum Management
4/18. National Telecommunications and
Information Administration (NTIA) Director Nancy Victory gave a speech
in which she addressed government management of spectrum. She reviewed comments
made at a spectrum summit hosted by the NTIA on April 4-5. She also spoke
vaguely about "issue areas that should figure prominently" in the NTIA
Victory advocated "trust, collegiality and cooperation" among federal
agencies involved in spectrum management. She also advocated "modernizing
spectrum policies" and "forward looking policies". She also
stated that "We need to remove the clouds over spectrum availability"
and that the NTIA will continue to study possible bands for use by 3G services.
She spoke at a conference titled "The Response to Terror: New Laws, Rules
and Strategies for IT and Telecom" that was hosted by the Computer Law
Association and the Federal Communications Bar
Association (FCBA) in Washington DC.
USPTO Director Addresses Copyright
4/18. U.S. Patent and Trademark Office (USPTO)
Director James Rogan gave
in Washington DC titled "Digital Online Content: Creating a Market that
Rogan stated that "To realize the potential of e-commerce for the
distribution of all sorts of information products, from entertainment to
education, from business software to databases for scientific research,
providers must be confident that their products are safe from piracy." He
continued that "Providing this security requires both technological and
legal means to enable copyright owners to protect their works. It also means
that these same technologies and laws need to recognize that fair use means that
some uses that might otherwise be infringing will be permitted."
Section 109. Rogan also addressed proposals to amend 17 U.S.C. § 109. He
stated that "It has been proposed that one who lawfully acquires a digital
version of a copyrighted work should be permitted to pass that copy, without
making another, on to a second person just as that person may now do with a
``hard´´ copy of a work under the first sale doctrine, codified in Section 109
of the Copyright Act. We concur in principle with this interpretation of Section
109. There is, however, a significant difference between traditional acts of
distribution and acts of digital distribution."
He continued that "In a traditional distribution, the work is reproduced
and only subsequently distributed. In a digital distribution, the act of
reproduction is an intrinsic part of the act of distribution. Because of the
present limitations of digital technology and the difficulties in ensuring that
the transmitting party had erased or otherwise destroyed the copy resident in
the sending computer, I have serious reservations about the prudence of amending
Section 109 to grant a blanket exception to digital distribution."
Copy Protection. Rogan also addressed proposed copy protection
legislation. Sen. Ernest Hollings
(D-SC) introduced S 2048,
the Consumer Broadband and Digital Television Promotion Act, on March 21.
Rogan stated that "Negotiations are presently underway among hardware
manufacturers and content owners to develop improved means for protecting
on-line content, which I believe would encourage creativity and promote the
development of a broader range of services for consumers in the Internet and
broadband technologies. Before Congress rushes into the imposition of a
legislative solution, I hope its Members will grant more time for the free
market to find its own middle ground."
People and Appointments
4/18. The Senate Judiciary Committee
approved several pending judicial nominations, including that of Jeffrey
Howard to be a Judge of the U.S.
Court of Appeals (1stCir). The Committee also approved Percy Anderson
(U.S.D.C., Central District of California), John Walter (U.S.D.C.,
Central District of California), Michael Baylson (U.S.D.C., Eastern
District of Pennsylvania), William Griesbach (U.S.D.C., District of
Wisconsin), Joan Lancaster (U.S.D.C., District of Minnesota), and Cynthia
Rufe (U.S.D.C., Eastern District of Pennsylvania). These nominees still
require confirmation by the full Senate.
4/18. The Senate confirmed Legrome Davis to be a judge of the U.S. District Court (EDPenn).
4/18. The Federal Trade Commission (FTC) sent
a warning letter
to fifty companies that have made questionable gas saving and other energy
related advertising claims in their web sites. The letter states that "We
have not yet determined whether your advertising violates the FTC Act. We have,
however, copied and preserved your online advertising because it contains
specific gas savings claims. If your website misrepresents the benefits of your
product, makes claims that lack credible scientific substantiation, or is
otherwise deceptive or fraudulent, you should stop making those claims or revise
them appropriately right away. Otherwise, you may be subject to legal action
that could require you to stop your advertising and to pay money back to
4/18. The U.S. District Court (NDCal)
unsealed a criminal
information [PDF] charging Gary Jones with wire fraud in violation of 18
U.S.C. §§ 1343
and 1346. The
information states that Jones defrauded his employer, software company Sagent Technology, by creating bogus software
sales contracts with federal government agencies, including the Department of
Justice (DOJ), for which he received commissions from Sagent. The Information
was filed on March 25, 2002. The DOJ's Federal Bureau of Investigation (FBI)
arrested Jones on April 17.
4/18. Rep. Ed Markey (D-MA)
introduced HR 4513, a bill regarding the sale and purchase of Social
Security numbers. It was referred to the House Commerce Committee and the House Ways and Means Committee.
4/18. The Bureau of Export Administration
(BXA) was renamed the Bureau of Industry and Security (BIS). This bureau has
historically handled export licensing for dual use items, including computers
and software. Recently, however, it has taken on new responsibilities pertaining
to cyber security; it now includes the Critical
Infrastructure Assurance Office (CIAO). Kenneth Juster, the Under Secretary
of Commerce in charge of this bureau, stated in a release
that "The new name better reflects the breadth of the Bureau's activities
in the spheres of national, homeland, economic, and cyber security".
FCC Official Addresses Broadband Policy
Marcus, Senior Advisor for Internet Technology at the Federal Communications Commission's (FCC) Office of Plans and Policy gave an address
titled "Broadband, When? -- A View from OPP". He stated that the rate
at which broadband services are being adopted by consumers compares favorably
with the historical adoption rates of many other technologies, such as personal
computers, cell phones, and CD players. However, it is being adopted more slowly
than television was adopted.
Marcus also stated that the appropriate role for government is creating a
framework for innovation and investment that eliminates barriers and
disincentives. He stated that the role of government is "not to impose
legacy regulations upon new and emerging services." However, he added that
"at the same time, there are bottlenecks that need to be addressed."
He suggested that government should "structure regulation to emphasize
facilities based competition and encourage new entrants". He also said
government should defer the development of universal service obligations for new
Marcus spoke at a luncheon meeting of the Federal
Communications Bar Association's (FCBA) Online Communications Committee.
Commerce Department Official Addresses Broadband Policy
4/17. The Commerce Department's Chris Israel gave a speech titled
"Prometheans in Alaska -- Education and Technology, the Foundation of our
Future". He spoke at the Educause Networking 2002 Conference in Washington
He praised the use of broadband technologies in education, such as by the Chugach School District in Alaska,
which recently won a Commerce Department Baldridge Award. He
also addressed government policies designed to promote broadband deployment.
He stated that "At the federal level, there are several steps we are
already taking. We have proposed accelerating the depreciation schedules for
business investment in capital equipment, such as broadband equipment, to
improve the business case for investing. We continue to urge Congress to make
the R&D tax credit permanent to incent further investments in cutting edge
technologies, such as broadband enabling technologies, and we pushed to extend
the Internet tax moratorium to support development and adoption of e-commerce
He continued that "The President has also made e-government a top
management priority for his Administration, and we're trying to lead by example
in the use of broadband e-government applications to leverage our resources and
better serve our constituents."
Israel also addressed state and local regulation affecting broadband deployment.
He stated that "The localities that create the most broadband friendly
environments may be like the localities that attracted railroads in the last
century, while the localities that are not broadband friendly may end up like
the towns by-passed by the railroads. Availability of bandwidth should be
prioritized with other considerations such as rights of way, taxes and
application fees, tower siting, zoning, building and construction codes,
building access, franchise agreements, historic preservation and environmental
Israel is Deputy Assistant Secretary for Technology Policy at the Technology Administration of the Department of
WTO DG Moore Addresses New Round of Trade Negotiations
4/17. Mike Moore, Director General of the World
Trade Organization (WTO) gave a speech titled
"To Doha and beyond: a roadmap for successfully concluding the Doha
Development Round" in Montreux, Switzerland.
He stated that the "Success in Doha brought to an end the uncertainty
created by the failure at Seattle. We are back in business. And our business is
trade liberalisation. The momentum since Doha has been equally impressive.
Members have established a Trade Negotiations Committee to oversee the
negotiations. They have appointed the Director-General ex-officio to chair this
body. The structure of the negotiations has been determined and chairpersons of
all the individual negotiating bodies decided upon."
He added, "I believe we can conclude the round within the three year
timeframe agreed by Ministers."
Greenspan Sees Recovery in Some Forms of High Tech Investment
4/17. Federal Reserve Board
Chairman Alan Greenspan testified before the Joint Economic Committee regarding
monetary policy and the economic outlook. See, prepared
He concluded that "The U.S. economy has displayed a remarkable resilience
over the past six months in the face of some very significant adverse shocks.
But the strength of the economic expansion that is under way remains to be
clarified. ... Still, there can be little doubt that prospects have
He stated, among other things, that "Improved profit margins over time and
more assured prospects for rising final demand would likely be accompanied by a
decline in risk premiums from their current elevated levels toward a more normal
range. With real rates of return on high tech equipment still attractive, the
lowering of risk premiums should be an additional spur to new investment.
Reports from businesses around the country suggest that the exploitation of
available networking and other information technologies was only partially
completed when the cyclical retrenchment of the past year began. Many business
managers still hold the view, according to a recent survey of purchasing
managers, that less than half of currently available new and, presumably
profitable, supply chain technologies have been put into use."
Greenspan continued that "Recent evidence suggests that a recovery in at
least some forms of high tech investment is under way. Production of
semiconductors, which in the past has been a leading indicator of computer
production, turned up last fall. Expenditures on computers rose at a double
digit annual rate in real terms in the fourth quarter. But investment
expenditures in the communications sector, where overcapacity was substantial,
as yet show few signs of increasing, and business investment in some other
sectors, such as aircraft, hit by the drop in air travel, will presumably remain
weak in 2002. On balance, the recovery this year in overall spending on business
fixed investment is likely to be gradual."
Wyden Introduces Cyber Security Bill
4/17. Sen. Ron Wyden (D-OR) introduced S
2182, the Cyber Security Research and Development Act, a bill to authorize
funding for computer and network security, research and development, and
research fellowship programs. This is the Senate companion bill to HR 3394,
which the House passed on February 7 by a vote of 400 to 12.
Sen. Wyden stated in the Senate that "This legislation, which has the
widespread support of the Nation's technology sector, would significantly
increase the amount of cyber security research in this country by creating
important new research programs at the National Science Foundation, NSF, and
National Institute of Standards and Technology, NIST. The NSF program would
provide funding for innovative research, multidisciplinary academic centers
devoted to cyber security, and new courses and fellowships to educate the cyber
security experts of the future. The NIST program likewise would support cutting
edge cyber security research, with a special emphasis on promoting cooperative
efforts between government, industry, and academia." See, Cong. Rec., April
17, 2002, at S2832-2833.
See also, story titled "House Passes Cyber Security Research &
Education Bill" in TLJ Daily E-Mail Alert
No. 364, February. 8, 2002.
People and Appointments
4/17. Carolyn Fleming was named Acting Director of the Federal Communications Commission's (FCC) Office
of Communications Business Opportunities (OCBO). See, FCC
4/17. Dwight Adams was named head of the FBI Laboratory. He is a career
FBI special agent who is a biologist with a background in DNA analysis. See, FBI release.
4/17. The Federal Communications Commission
(FCC) published a notice
in the Federal Register regarding its Notice of Proposed Rulemaking (NPRM)
regarding the consequences of the FCC's classification of cable modem service as
an information service. The notice sets deadlines for comments. Comments are due
by June 17, 2002. Reply comments are due by July 16, 2002. This is CS Docket No.
02-52. See, Federal Register, April 17, 2002, Vol. 67, No. 74, at Pages 18848 -
4/17. Hewlett Packard (HP) announced that
"the preliminary vote tally from the March 19 special meeting of HP
shareowners affirms that the proposal was approved. The preliminary vote tally,
prepared by the independent inspectors of election, shows that HP shareowners
voted in favor of the merger by a margin of approximately 45 million shares.
Moreover, shareowners not affiliated with the Hewlett and Packard families and
their foundations voted for the merger by a margin of roughly 2:1. Votes
``FOR´´ the merger totaled approximately 837.9 million. Votes ``AGAINST´´
the merger totaled approximately 792.6 million, of which almost half were
affiliated with the Hewlett and Packard families and foundations. An
insignificant number of votes cast remain unresolved." See, HP release.
4/17. The House Appropriations
Committee's Subcommittee on Commerce, Justice, State, and the
Judiciary held a hearing on the proposed budget for FY 2003 for the Federal Communications Commission (FCC). FCC
Chairman Michael Powell stated in his prepared
testimony [PDF] that "the FCC has requested $278,092,000 and 1,975 FTEs
for Fiscal Year 2003." Powell's written statement outlines the major
activities and proceeding being conducted by the FCC.
4/17. The House Appropriations
Committee's Subcommittee on Commerce, Justice, State, and the Judiciary hold
a hearing on the proposed budget for FY 2003 for the Securities and Exchange Commission (SEC).
4/17. The Federal Communications Commission
(FCC) approved Verizon's Section 271
application to provide in region interLATA services in the state of Vermont.
release [PDF]. This is CC Docket No. 01-07.
Senate Commerce Committee Holds Hearing on TA, NIST and ATP
4/16. The Senate Commerce Committee
held a hearing on the Technology Administration
and the National Institute of Standards and
Technology (NIST), including the Advanced
Sen. Ernest Hollings (D-SC), the
Chairman of the Committee, said in his opening statement
that "we continue to be embroiled in an annual tug of war on funding for
the Advanced Technology Program, known as ATP. I am encouraged that Secretary
Evans and Deputy Secretary Bodman want to stabilize this program."
Samuel Bodman, Deputy Secretary of the Commerce
Department, addressed the ATP in his prepared testimony.
He stated that "our review concluded that some reforms are needed",
including "Offering universities increased incentive to participate in
developing commercially relevant technologies by allowing them to negotiate with
joint venture partners over the rights to hold the intellectual property that
results from research".
Bodman also addressed several NIST computer technology initiatives. For example,
he stated that "NIST is proposing to increase the resources devoted to its
Program for Accelerating Critical Information Technologies. This increase in
emphasis will support the development of networked systems of embedded devices
(``EmNets´´) to detect, prevent, and respond to natural and human caused
disasters. As computing device costs decline and capabilities increase, devices
and sensors will be embedded in buildings, office spaces, manufacturing floors,
transportation medians, and appliances and will be interconnected using wired or
Bodman also addressed NIST's Computer Security Expert Assist Team. He stated
that this team "assists other Federal agencies on a cost reimbursable
basis. Federal agencies are taking action to improve security, but most do not
understand what actions to take or in what order. NIST staff includes world
leaders in all aspects of information security."
See also, prepared testimony of other witnesses, Anne Armstong
(Virginia's Center for Innovative Technology), Lewis Branscomb
(Harvard), and Scott
Donnelly (General Electric).
House Judiciary Committee to Mark Up Tech Bills
4/16. The House Judiciary Committee
announced that it will hold a meeting on Thursday, April 18, to mark up several
bills, including HR 3482,
the Cyber Security Enhancement Act of 2001, and HR 3215,
the Combatting Illegal Gambling Reform and Modernization Act.
Cyber Security. HR 3482, sponsored by Rep. Lamar Smith (R-TX), contains
provisions relating to sentencing guidelines for computer hacking crimes,
authority of Internet service providers (ISPs) and others to voluntarily
disclosure the content of communications to law enforcement and other government
entities, appropriations for the National
Infrastructure Protection Center (NIPC), the creation of an Office of
Science and Technology at the Department of
Justice (DOJ), and other topics.
The bill further amends several sections of the criminal code that were just
recently amended by the USA PATRIOT Act, which is also known as the anti
terrorism bill. On February 26, the House Crime Subcommittee adopted amendment
in the nature of a substitute, and a further amendment
offered by Rep. Sheila Lee
(D-TX). See also, article on the subcommittee markup in TLJ Daily E-Mail Alert
No. 337, Feb. 27, 2002, and article on the subcommittee hearing in TLJ Daily E-Mail Alert
No. 367, Feb. 13, 2002.
Internet Gambling. HR 3215 is Rep.
Bob Goodlatte's (R-VA) latest attempt to pass legislation limiting Internet
gambling. It would amend 18 U.S.C. §§ 1081 and 1084, which contain the
definitions and prohibition, respectively, of the Wire Act. The Wire Act
currently criminalizes the use of "wire communications facilities" in
interstate commerce for gambling. The Wire Act does not ban gambling. This is a
matter of state law. HR 3215 expands the prohibition to cover all
communications between states or with other foreign countries. It maintains the
principle that gambling is otherwise a matter of state law. Hence, under
HR 3215, use of the Internet for gambling purposes would become illegal (if
interstate or foreign).
The criminal prohibition of the Wire Act, 18 U.S.C. §§ 1084,
currently provides that "Whoever being engaged in the business of betting
or wagering knowingly uses a wire communication facility for the transmission in
interstate or foreign commerce of bets or wagers ... shall be fined under this
title or imprisoned not more than two years, or both." Since the current
statute affects only wire communication facilities, and some Internet
communications do not involve wires, it leaves open the possibility that some
Internet gambling may not be illegal under the Wire Act.
HR 3215 provides that "whoever, being engaged in a gambling business,
knowingly (1) for the transmission in interstate or foreign commerce ..."
or between the U.S. and abroad "... of bets or wagers ... shall be fined
under this title or imprisoned not more than five years, or both." Hence,
it pertains to all communications, not just wire communications.
Also, HR 3215 would amend 18 U.S.C. § 1081,
which currently defines ''wire communication facility'' as "any and all
instrumentalities, personnel, and services (among other things, the receipt,
forwarding, or delivery of communications) used or useful in the transmission of
writings, signs, pictures, and sounds of all kinds by aid of wire, cable, or
other like connection between the points of origin and reception of such
transmission." As amended, it would provide that "communications
facility" means "any and all instrumentalities, personnel, and
services (among other things, the receipt, forwarding, or delivery of
communications) used or useful in the transmission of writings, signs, pictures,
and sounds of all kinds by aid of wire, cable, satellite, microwave, or other
like connection (whether fixed or mobile) between the points of origin and
reception of such transmission."
HR 3215 would also criminalize "the transmission of a communication in
interstate or foreign commerce ... which entitles the recipient to receive money
or credit as a result of bets or wagers, or for information assisting in the
placing of bets or wagers".
the Child Sex Crimes Wiretapping Act of 2001, is also scheduled for mark up on
April 18. This bill would amend 18 U.S.C. § 2516(1)(c) to provide that that
certain sezual crimes against children are predicate crimes for the interception
Landrieu Introduces Bill to Create Top Level Domain and
Require E-Mail Labeling
4/16. Sen. Mary Landrieu (D-LA)
introduced S 2137, the Family Privacy Protection Act. The bill would require the
Internet Corporation for Assigned Names and
Numbers (ICANN) to create a new top level domain for pormographic web sites.
It would also require that e-mail advertisements containing sezually oriented
material be clearly labeled as such. Finally, it would criminalize the use of a
camera or similar recording device to record another individual for a lewd or
lascivious purpose without that person's consent. The bill was referred to the Senate Commerce Committee.
Sen. Landrieu explained her bill in the Senate. She stated that "This bill
will make it a Federal crime to film someone in these circumstances without
their consent. The bill provides exceptions for legitimate purposes such as
police investigations and security; but the bottom line is that this legislation
would hold these individuals responsible for their actions."
She continued that "The video voyeurism component, while important, is only
one part of this bill. This bill also contains a provision to protect children
from Internet websites with pormographic material." She elaborated that
"My legislation would instruct the Internet Corporation for Assigned Names
and Numbers to set up a new domain name for pormographic websites. The owners of
these sites would have 12 months to move their sites to the new domain. This is
a very simple yet effective method of protecting our children from these sites.
A new domain would make ``filter´´ programs, which screen out these
pormographic sites, much more effective. It would eliminate mistakes like the
whitehouse dot-gov, dot-com, problem".
As for labelling of e-mail, she added that "I just want to add that I am
hopeful that, in the future, we can take even stronger steps to address the
problem of pormographic e-mails. However, at the moment, this bill will at least
ensure that Internet users, particularly children, know that an e-mail contains
sezually oriented material before opening it."
She added, "this bill passes First Amendment tests for freedom of
speech." See, Cong. Rec., April 16, 2002, at S2729-2730.
Sen. Landrieu is in a tight race for re-election to the Senate from the state of
FTC Commissioner Anthony Addresses Deceptive Sales Via the
4/16. Federal Trade Commission (FTC)
Commissioner Sheila Anthony gave a speech titled
"Combating Deception in Dietary Supplement Advertising" to the Food
and Drug Law Institute 45th Annual Educational Conference in Washington DC.
She stated the the FTC's "law enforcement plate is very full as a result of
the explosion in growth of the dietary supplement industry." She added that
one of the reasons for this is that "The Internet has made it easier for
snake oil salesmen to sell their products because it allows marketers, both
large and small, to go global."
She continued that "One of the ways the Commission attempts to deal with
that is through our ``surfs.´´ Our staff, together with other law enforcement
agencies, conducts Internet surfs by searching for specific disease claims. When
we find a site making dubious therapeutic claims, we send an email advisory to
the website alerting it to the questionable nature of certain claims. The email
also provides links to resources to help the site determine if it is in
compliance with the law. Later, staff checks back and finds one of three things:
the site is gone, the site modified its claims, or the site has ignored us. In
some cases, those that have ignored our warning become law enforcement
State Department Official Addresses International Broadband
4/16. David Gross, a Deputy Assistant Secretary of State, gave a speech
titled "Broadband: An International Perspective" at the luncheon
hosted by The Media Institute in Washington DC.
He stated that "In the areas of the Internet and broadband, we stress the
importance of creating open and competitive global telecom regimes during all of
our bilateral and multilateral activities." He added that "one clear
component to broadband penetration is a national regulatory environment that
rewards innovation and encourages private sector competition. This is a critical
ingredient for sustainable telecommunications development, including
He also reviewed the State Department's activities at recent and upcoming
international meetings and conferences, including the recent meetings of the
World Trade Organization (WTO) in Doha and the International Telecommunication
Union (ITU) meeting. He also reviewed at length the status of broadband
deployment in other countries, such as Korea, Canada, the United Kingdom, and
FTC To Hold Workshops on Merger Investigation Best Practices
4/16. The Federal Trade Commission's (FTC)
Bureau of Competition announced that it will hold a series of public workshops
on merger investigation best practices in June and July. See, FTC release.
The workshops will be held in Washington DC (June 3, June 27, and July 10), San
Francisco (June 5), Los Angeles (June 25), Chicago (June 18), and New York City
(June 12). There will be five workshops with a general agenda, and two with
specialized agendas: electronic records, and accounting and financial data.
Supreme Court Upholds Speech Rights of Child Pormographers
4/16. The Supreme Court issued its opinion
[44 pages in PDF] in Ashcroft v. FSC,
a case involving a constitutional challenge to the Child Pormography Prevention
Act of 1996 (CPPA). The Supreme Court ruled that provisions of the statute
banning computer generated images depicting minors engaging in sezually explicit
conduct is overbroad, and violates the First Amendment.
Statute. The CPPA expanded the federal prohibition on child pormography
to encompass new technologies. 18 U.S.C. § 2256,
the section containing definitions, was amended to provides that child
pormography means "any visual depiction, including any photograph, film,
video, picture, or computer or computer- generated image or picture, whether
made or produced by electronic, mechanical, or other means, of sezually explicit
conduct, where (A) the production of such visual depiction involves the use of a
minor engaging in sezually explicit conduct; (B) such visual depiction is, or
appears to be, of a minor engaging in sezually explicit conduct; (C) such visual
depiction has been created, adapted, or modified to appear that an identifiable
minor is engaging in sezually explicit conduct; or (D) such visual depiction is
advertised, promoted, presented, described, or distributed in such a manner that
conveys the impression that the material is or contains a visual depiction of a
minor engaging in sezually explicit conduct;" (Words misspelled by TLJ.)
Proceedings Below. A trade association of purveyors of pormography, the
Free Speech Coalition (FSC), filed a complaint in U.S. District Court
challenging the constitutionality of the CPPA. The District Court granted
summary judgment to the government. However, the U.S. Court of Appeals (9thCir) reversed.
Four other circuits had upheld the constitutionality of the CPPA.
Supreme Court. Justice Kennedy wrote the opinion of the Court. He wrote
that the CPPA, to the extent that it extends the federal prohibition against
child pormography to sezually explicit images that appear to depict minors but
were produced without using any real children, is substantially overbroad and
violates the First Amendment.
He elaborated that the prohibited conduct is not obscene under the standard
announced in Miller
v. California, 413 U.S. 15 (1973), and it is not child pormography under the
standard announced in New York v.
Ferber, 458 U.S. 747 (1982).
Justice O'Connor wrote a separate opinion, concurring in part, and dissenting in
part, in which Chief Justice Rehnquist and Justice Scalia joined. Rehnquist also
wrote a separate dissent in which Scalia joined. Justice Thomas wrote a
Attorney General John Ashcroft commented on the Supreme Court's opinion. He
stated that the Court "made our ability to prosecute those who produce and
possess child pormography immeasurably more difficult." See, statement.
Editor's Note: Tech Law Journal intentionally misspells certain words,
such as "porm" and "sez". The reason is that some
subscribers' e-mail servers block delivery of the TLJ Daily E-Mail Alert if
these words are spelled correctly.
FCC Arrests Man for Unlicensed Speech
4/16. Agents of the Federal Communications
Commission (FCC), U.S. Marshals Service, and Office of the U.S. Attorney for
the Eastern District of New York arrested one Paul Dorleans for engaging in
unlicensed speech in violation of Section 301 of the Communications Act, 47 U.S.C. § 301.
Dorleans broadcast speech in the FM band without an FCC license. The FCC stated
in a release
[PDF] that Dorleans "may be subject to criminal sanctions, including fines
and imprisonment ($100,000 and up to one year)." (Parentheses in original.)
The Supreme Court does not extend the same level of First Amendment protection
to broadcast speakers that it does to child pormographers. Contrast, for
Broadcasting Company v. United States, 319 U.S. 190 (1943) and Red
Lion v. FCC, 395 U.S. 367 (1969), upholding the Communications Act against
First Amendment challenges, to Ashcroft
v. FSC (S.C.U.S., April 16, 2002), overturning part of the Child Pormography
Prevention Act of 1996 on First Amendment grounds.
FCC Cross Ownership Rules and the Internet
4/16. The Media Access Project (MAP)
submitted a comment
[21 pages in PDF] to the Federal Communications
Commission (FCC) in response to its Notice of Proposed Rule Making (NPRM)
regarding media cross ownership rules, and the appropriateness of either
retaining or eliminating entirely the newspaper broadcast cross ownership
rule." The comment addresses, in part, the role of Internet media.
MAP's comment states that "There is no evidence to indicate that the
Internet and cable pose a competitive threat to independently produced local
news and public affairs content. National cable channels (e.g., ESPN and CNN)
and Internet services (e.g., MSN and Slate) compete for audiences for non-local
content and non-local advertising dollars. At the local level, the Internet and
cable mainly function as delivery systems for existing suppliers of local
The comment was written by Andrew
Calabrese of the University of Colorado at Boulder. This is MM Docket No.
People and Appointments
4/16. Marlene Dortch has been named Secretary of the Federal Communications Commission (FCC),
effective April 18, 2002. See, FCC
4/16. The Software & Information Industry
Association (SIIA) named Karen Billings Vice President of its the
Education Division. See, SIIA release.
4/16. The U.S.
Court of Appeals (3rdCir) issued its opinion in USA
v. $734,578.82, a case involving a forfeiture of funds seized
from an offshore illegal gambling operation. The District Court granted summary
judgment to the government, pursuant to 18 U.S.C. § 1955,
and issued a civil order of forfeiture. The Appeals Court affirmed.
4/16. The General Accounting Office (GAO)
wrote a letter [PDF] to Rep. Steve Horn (R-CA), Chairman of the House Government Reform Committee's
Subcommittee on Government Efficiency, Financial Management and
Intergovernmental Relations regarding federal departments' and agencies'
information security programs.
Go to News Briefs from April 11-15, 2002.