|News from May 26-31,
District Court Holds Part of Children's Internet Protection
5/31. A three judge panel of the U.S.
District Court (EDPenn) issued its opinion
in American Library Association v. U.S., finding
unconstitutional library related provisions of the Children's Internet Protection Act (CIPA).
The Act requires, among other things, that schools and libraries receiving
e-rate subsidies certify that they are using a "technology protection
measure" that prevents library users from accessing "visual
depictions" that are "obscene," "child pormography,"
and in the case of minors, "harmful to minors." The Court, applying
strict scrutiny First Amendment free speech analysis, held that the portion of
the statute affecting libraries receiving e-rate subsidies is unconstitutional.
However, the CIPA, as it applies to schools, remains unaffected by this opinion.
The Court also held unconstitutional language in the CIPA amending the Museum
and Library Services Act. The Court issued its findings of fact, legal analysis,
and order in one lengthy release.
E-Rate. The e-rate is an two and a half billion dollar per year program
controlled by the Federal Communications
Commission (FCC) under its universal service mandate. See, 47 U.S.C. § 254,
and the FCC's schools and
libraries web page. As implemented by the FCC, the e-rate program provides
subsidies to schools, libraries and rural health clinics for telecommunications
services, Internet access, and internal connections. The CIPA was passed by the
Congress as a result of efforts by Sen. John
McCain (R-AZ), Sen. Ernest Hollings
(D-SC), and others. It conditions receipt of e-rate subsidies on efforts to
restrict access to Internet porm.
Relevant Provisions of the Statute. Section 1721 of the CIPA pertains to
the e-rate program. Section 1721(b) provides that "a library having one or
more computers with Internet access may not receive services at discount rates
under paragraph (1)(B) unless the library --- (I) submits to the Commission the
certifications described in subparagraphs (B) and (C); and (II) submits to the
Commission a certification that an Internet safety policy has been adopted and
implemented for the library under subsection (l); and (III) ensures the use of
such computers in accordance with the certifications." Subsection B, in
turn, addresses the "Certification With Respect to Minors". The
library must certify that it "is enforcing a policy of Internet safety that
includes the operation of a technology protection measure with respect to any of
its computers with Internet access that protects against access through such
computers to visual depictions that are --- (I) obscene; (II) child pornography;
or (III) harmful to minors". The library must also certify that it "is
enforcing the operation of such technology protection measure during any use of
such computers by minors." Subsection C, in turn, addresses
"Certification With Respect to Adults". It parallels Subsection B.
However, it omits the reference to materials that are harmful to minors. Section
1712 of the CIPA pertains to the Museum and Library Services Act.
Analysis of the Court. The Court found as fact that "thousands of
Web pages containing protected speech are wrongly blocked by the four leading
filtering programs, and these pages represent only a fraction of Web pages
wrongly blocked by the programs." The Court concluded that the strict
scrutiny test applies. That is, "a public library's use of filtering
software is permissible only if it is narrowly tailored to further a compelling
government interest and no less restrictive alternative would serve that
interest." Applying this test, the Court concluded that "Because the
filtering software mandated by CIPA will block access to substantial amounts of
constitutionally protected speech whose suppression serves no legitimate
government interest, we are persuaded that a public library's use of software
filters is not narrowly tailored to further any of these interests."
The Court held that "the library plaintiffs must prevail in their
contention that CIPA requires them to violate the First Amendment rights of
their patrons, and accordingly is facially invalid ... In view of the
limitations inherent in the filtering technology mandated by CIPA, any public
library that adheres to CIPA's conditions will necessarily restrict patrons'
access to a substantial amount of protected speech, in violation of the First
Amendment. Given this conclusion, we need not reach plaintiffs' arguments that
CIPA effects a prior restraint on speech and is unconstitutionally vague. Nor do
we decide their cognate unconstitutional conditions theory ..."
Order of the Court. The Court also issued an order which states that
"(1) judgment is entered in favor of the plaintiffs and against the
defendants, declaring that §§ 1712(a)(2) and 1721(b) of the Children's
Internet Protection Act, 20 U.S.C. § 9134(f) and 47 U.S.C. § 254(h)(6),
are facially invalid under the First Amendment to the United States
Constitution; and (2) the United States, Michael Powell, in his official
capacity as Chairman of the Federal Communications Commission, the Federal
Communications Commission, Beverly Sheppard, in her official capacity as Acting
Director of the Institute of Museum and Library Services, and the Institute of
Museum and Library Services are permanently enjoined from withholding federal
funds from any public library for failure to comply with §§ 1712(a)(2)
and 1721(b) of the Children's Internet Protection Act, 20 U.S.C. § 9134(f)
and 47 U.S.C. § 254(h)(6)."
Direct Appeal to the Supreme Court. As required by the CIPA, at Section
1741, the case was heard on an expedited basis by a three judge panel of the U.S.
District Court. Plaintiffs filed a complaint in the U.S. District Court for the
Eastern District of Pennsylvania, a venue disposed to finding Congressional
statutes unconstitutional on First Amendment grounds. Judges Becker, Fullam and
Bartle presided. Judge Becker wrote the opinion. The CIPA further provides that
a holding by the three judge panel that any part of the CIPA is unconstitutional
"shall be reviewable as a matter of right by direct appeal to the Supreme
Reaction. The American Civil Liberties Union praised the opinion in a release. The Family Research Council (FRC) lamented the
opinion in a release.
The Information Technology Association of America
(ITAA) President Harris Miller stated in a release
that "The court's decision voids the proscriptive approaches that would
have placed the Federal government squarely in the role of determining Internet
content management for libraries ... Many organizations, including schools and
libraries, have already voluntarily deployed software filtering tools to block
out objectionable content and to improve productivity. We continue to believe
that burdensome regulations from Washington, D.C. are not needed by software
filter buyers or sellers, and this decision advances that belief."
More Court Opinions
5/31. The U.S.
Court of Appeals (9thCir) issued its opinion
[PDF] in United Computer
Systems v. AT&T, a case involving an arbitration clause in a
software licensing agreement. The Appeals Court affirmed in part, reversed in
part, and remanded to the District Court with instructions to compel
5/31. The U.S.
Court of Appeals (4thCir) issued its opinion
Gas & Electric v. U.S., dismissing for lack of jurisdiction
an appeal from a District Court opinion regarding a state public utilities
commission's regulatory authority over contracts awarded by the U.S. Army. The Maryland Public Service Commission (MPSC),
an intervenor in this action, challenged the U.S. Army's solicitation of bids
for the right to purchase and operate the electricity and natural gas
distribution systems at Fort Meade, Maryland, without providing in its
solicitation that any successful bidder would be required to submit to the
MPSC's regulatory authority. The U.S. District Court (DMd) held that such a
provision is not required. The MPSC appealed. The Court of Appeals dismissed the
appeal on the grounds that the MPSC lacks standing because it is not an
interested party under the statute that governs bid protest actions, 28 U.S.C. § 1491.
Suris Sentenced for Criminal Copyright Theft
5/31. The U.S. District
Court (DC) sentenced Yaroslav Suris to two months incarceration for one
felony count of criminal copyright infringement in violation of 17 U.S.C. § 506(a)(1)
and 18 U.S.C. §
2319(b)(1). Suris made duplicate copies of software, and then sold them over
the Internet at prices far below retail prices.
The infringed software included Adobe's Acrobat 4.0, Page Mill, and Photoshop,
Corel's Draw 9, and Macromedia's Flash 9, Freehand 8.0, and Autocad 2000. In
addition to the two month in jail, Judge Thomas Jackson sentenced Suris to an
additional 14 months of home detention -- which is where he duplicated the
software. See, CCIPS
release and SIIA release.
EPA Proposes Rule Change Affecting Computer Monitors
5/31. The Environmental Protection Agency
(EPA) announced that it is proposing changes to its rules regarding computer
monitors and televisions that contain lead. On May 29, the EPA issued a release
and a draft
of a notice [101 pages in PDF] to be published in the Federal Register.
The EPA draft notice states that "Many used cathode ray tubes (CRTs) and
items of mercury-containing equipment are currently classified as characteristic
hazardous wastes under the Resource Conservation and Recovery Act (RCRA). They
are therefore subject to the hazardous waste regulations of RCRA Subtitle C
unless they come from a household or a conditionally exempt small quantity
generator. Today, the Environmental Protection Agency (EPA) proposes and seeks
comment on an exclusion from the definition of solid waste which would
streamline RCRA management requirements for used cathode ray tubes (CRTs) and
glass removed from CRTs sent for recycling. In today's notice, the Agency also
clarifies the status of used CRTs sent for reuse. In addition, EPA proposes and
seeks comment on streamlining management requirements for used mercury
containing equipment by adding it to the federal list of universal wastes."
The EPA release states that "A typical computer monitor may contain up to
eight pounds of lead. EPA estimates that over 250 million computers in this
country will be retired from use over the next five years. The EPA proposal
would encourage more reuse and recycling of these computers."
As of Friday, May 31, the EPA had not yet published a notice of this proposed
rule in the Federal Register. Public comments on the proposed rule will be due
60 days after publication in the Federal Register.
The Electronics Industry Association (EIA)
commended the EPA action. It stated in a release
dated May 31 that "This proposed rule is a key step in the right direction.
By removing used electronics containing CRTs and mercury lamps from certain
hazardous waste regulations when they are recycled, the EPA is providing a
strong economic incentive that will promote the development of more collection
and recycling opportunities for used electronics within the United States."
The EIA added that "Under the proposed rule, facilities that collect and
transport used electronics will benefit from reduced transportation costs and
reduced permitting requirements -- both of which will reduce overall recycling
costs, providing economic incentives for the collection and siting of recycling
facilities. The net benefit is that consumers will have more opportunities
to recycle used electronics."
5/31. The Copyright Office published
a notice in
the Federal Register regarding a final rule changing fees charged by the
Copyright Office. See, Federal Register, May 31, 2002, Vol. 67, No. 105, at
Pages 38003 - 38006.
5/31. Qwest announced that it retained KPMG
as its independent auditor for 2002. Its previous auditor was Arthur Andersen.
New DOJ Investigation Guidelines Address Data Mining and
5/30. The Department of Justice (DOJ)
released new investigative guidelines to be used by the Federal Bureau of Investigation (FBI) in
terrorist related, and other, matters. These guidelines cover many topics,
including information systems, data mining, and Internet searching.
Attorney General John Ashcroft announced the guideline changes on May 30. See, Ashcroft
statement. See also, DOJ memorandum [PDF]
titled "Attorney General's Guidelines: Detecting and Preventing Terrorist
Attacks", and DOJ memorandum
[PDF] titled "Shifting from Prosecution to Prevention: Redesigning the
Justice Department to Prevent Future Acts of Terrorism".
He stated that these revised guidelines have four overriding principles. First,
"the war against terrorism is the central mission and highest priority of
the FBI". Second, "terrorism prevention is the key objective under the
revised guidelines". Third, "unnecessary procedural red tape must not
interfere with the effective detection, investigation, and prevention of
terrorist activities". Fourth, "the FBI must draw proactively on all
lawful sources of information to identify terrorist threats and
Ashcroft elaborated that "Under the current guidelines, FBI investigators
cannot surf the web the way you or I can. Nor can they simply walk into a public
event or a public place to observe ongoing activities. They have no clear
authority to use commercial data services that any business in America can use.
These restrictions are a competitive advantage for terrorists who skillfully
utilize sophisticated techniques and modern computer systems to compile
information for targeting and attacking innocent Americans."
He also stated that "The guidelines defining the general rules for FBI
investigations, for example, were first issued over 20 years ago. They derive
from a period in which Soviet communism was the greatest threat to the United
States, in which the Internet did not exist, and in which concerns over
terrorist threats to the homeland related mainly to domestic hate groups."
The DOJ also released the text of new guidelines. See, for example, The Attorney General's
Guidelines on General Crimes, Racketeering Enterprise and Terrorism Enterprise
This document provides that "In order to carry out its central mission of
preventing the commission of terrorist acts against the United States and its
people, the FBI must proactively draw on available source of information to
identify terrorist threats and activities."
The new guidelines continue that "The FBI is authorized to operate and
participate in identification, tracking, and information systems for the purpose
of identifying and locating terrorists, excluding or removing from the United
States alien terrorists and alien supporters of terrorist activity as authorized
by law, assessing and responding to terrorist risks and threats, or otherwise
detecting, prosecuting, or preventing terrorist activities. Systems within the
scope of this paragraph may draw on and retain pertinent information from any
source permitted by law, including information derived from past or ongoing
investigative activities; other information collected or provided by
governmental entities, such as foreign intelligence information and lookout list
information; publicly available information, whether obtained directly or
through services or resources (whether nonprofit or commercial) that compile or
analyze such information; and information voluntarily provided by private
entities." (Parentheses in original.)
The new guidelines also state that the "The FBI is authorized to carry out
general topical research, including conducting online searches and accessing
online sites and forums as part of such research on the same terms and
conditions as members of the public generally. ``General topical research´´
under this paragraph means research concerning subject areas that are relevant
for the purpose of facilitating or supporting the discharge of investigative
responsibilities. It does not include online searches for information by
individuals' names or other individual identifiers, except where such searches
are incidental to topical research, such as searching to locate writings on a
topic by searching under the names of authors who write on the topic, or
searching by the name of a party to a case in conducting legal research."
Finally, these guidelines state that "For the purposes of detecting or
preventing terrorism or other criminal activities, the FBI is authorized to
conduct online search activity and to access online sites and forums on the same
terms and conditions as member of the public generally."
The DOJ also released new guidelines with the following titles: FBI Undercover Operations [PDF], Confidential Informants [PDF], and Lawful,
Warrantless Monitoring of Verbal Communications [PDF].
Sen. Charles Grassley (R-IA), a member
of the Senate Judiciary Committee,
had this reaction: "Some of the current restrictions on investigations
don't make sense. So, as Congress did with the Patriot Act last fall, it's
logical to make some changes and especially those changes that empower field
agents. That said, any time more power is given, Congress needs to be all the
more vigilant in exercising its constitutional responsibility of oversight.
Along with greater authority there must be greater scrutiny. Congress for too
long has given the FBI too long a leash. The FBI should be prepared for tough
questions from Capitol Hill about its use of all the new tools it's been
The Center for Democracy and Technology (CDT)
released its analysis
of the new guidelines. It stated that "The FBI is using the terrorism
crisis as a cover for a range of changes, some of which have nothing to do with
It also stated that "The online surfing provisions, for example, relate not
only to terrorism cases, but to all other investigation -- drugs, white collar
crime, public corruption, and copyright infringement."
The CDT argued that "The expanded surveillance and use of data mining could
be written off as just a waste of money, but for two paramount problems: the
changes are likely to make the FBI less efficient in preventing terrorism, by
diverting resources down rat-holes of fruitless investigations; and the DOJ has
proven its determination since September 11 to arrest people based on innocent
The CDT also stated that "The FBI was never prohibited from surfing the
Internet or using commercial data mining services - the FBI has long been a
major customer of many private information systems. But in the past, the search
had to be related to some investigation. ... The new changes allow the data
mining technique ... as the basis for generating the suspicion of criminal
conduct in the first place."
The ACLU condemned the new guidelines. See, release.
7th Circuit Rules in Copyright and Fair Use Case
5/30. The U.S.
Court of Appeals (7thCir) issued its opinion
v. Publications International, a copyright infringement and fair
use case involving Beanie Babies.
Ty Inc. manufactures Beanie Babies. It holds
copyrights to these as "sculptural works". Publications International,
Ltd. (PIL) publishes books, including For the Love of Beanie Babies and Beanie
Babies Collector's Guide, which contain pictures of Beanie Babies.
Ty filed a complaint in U.S.
District Court (NDIll) against PIL alleging copyright and trademark
infringement. PIL conceded that the Beanie Babies are copyrighted, and that its
books are derivative works, but asserted the affirmative defense of fair use.
The District Court ruled on summary judgment that the copying was not fair use,
and granted Ty an injunction on the copyright claim.
The Appeals Court reversed and remanded. Judge Richard Posner wrote
the opinion, which included an application of legal precedent on fair use, and
the distinction between complementary and substitutional copying, to the facts
of this case. In addition, the opinion provides an economic analysis of
copyright protection and the fair use doctrine. The Court concluded that the
issue was not appropriate for summary judgment, reversed, and remanded for
further proceedings in light of its opinion.
The Court also addressed the issue of whether it could hear an interlocutory
appeal of an injunction on a copyright infringement claim, when the District
Court had not yet decided a related trademark claim arising under the same set
of facts. It concluded that it could, noting that the only issue on appeal was
the fair use defense.
Panel Debates ROW Obstacles to Broadband Deployment
5/30. The Congressional Internet Caucus
Advisory Committee hosted a panel discussion titled "Speeding Broadband
Deployment By Balancing of Rights of Way Interests" on Capitol Hill.
The speakers were Martin Stern of the Telecommunications Industry Rights of Way
Working Group (I-ROW), Marilyn Praisner, a member of the Montgomery County Council, Robert
Nelson, a Commissioner on the Michigan
Public Service Commission, and Sandy Wilson, VP of Public Policy at Cox Enterprises.
Stern stated that some local government entities are obstructing broadband
deployment by delaying approval of access to rights of way by service providers,
by demanding unreasonable fees, and by demanding concessions unrelated to the
right of way. He advocated federal action to limit local authority, either
through Congressional legislation, or a Federal
Communications Commission (FCC) proceeding.
In contrast, Praisner argued that local governments have a legitimate role to
play in the management of public rights of way, and their authority should not
be preempted or limited by state or federal legislation or other proceedings.
Nelson discussed the recently enacted Michigan bill to streamline the process
for authorizing access to rights of way. It is titled the "Metropolitan
Extension Telecommunications Rights of Way Oversight Act". See also,
Michigan Legislature's bill
He stated that the Michigan statute sets a uniform per linear foot right of way
fee that limits all local government entities. The fee is constant regardless of
how many lines the provider has. Government entities must act within 45 days on
Stern stated that "there are situations where government entities go beyond
management, and seek unrelated concessions, particularly, given their leverage
over providers." He stated that local governments have leverage because
time is critical in deploying broadband networks, because "rights of way
and public lands access is an essential input to which there is no
He continued that "what we have found is that a sufficient number of these
entities have really held up deployment, or have tried to extract unreasonable
fees, or have tried to impose an additional level of regulation unrelated to the
user rights of way, that has actually had a demonstrable impact on
Stern also addressed 47
U.S.C. § 253, which provides in part that "No State or local statute
or regulation, or other State or local legal requirement, may prohibit or have
the effect of prohibiting the ability of any entity to provide any interstate or
intrastate telecommunications service." However, it also provides that
"Nothing in this section affects the authority of a State or local
government to manage the public rights-of-way or to require fair and reasonable
compensation from telecommunications providers ..."
Stern said that "it is difficult to get an injunction under Section
253". He continued that there are ambiguities in the statute that have been
exploited by local governments, such as what constitutes "fair and
reasonable", and whether broadband data networks are covered. He suggested
that either Congress amend the statute, or that the FCC initiate a proceeding to
amend its rules, or to issue a guidance. He concluded that "it is an issue
of national scope that demands a national answer".
The luncheon was held in the Capitol Building. The House and Senate are in
recess. Many members of the audience were Congressional staff.
People and Appointments
5/30. Antonia Chion was named Associate Director of the Division of
Enforcement of the Securities and Exchange
Commission (SEC). She succeeds Linda Thomsen. See, SEC release.
5/30. John Morrissey, Deputy Chief Accountant of the Securities and Exchange Commission (SEC), will
leave the SEC. See, SEC
5/30. The European
Parliament voted to approve a directive
[PDF] concerning the processing of personal data and the protection of privacy
in the electronic communications sector. See, EU release.
5/30. The Securities and Exchange Commission
(SEC) announced that its web site now provides free, real time access to its
EDGAR database of corporate filings. See, SEC release.
JEC Releases Cyber Security Report
5/29. The Joint Economic Committee
released a report [134 pages
in PDF] titled "Security in the Information Age: New Challenges, New
Strategies". The report was produced at the request of Sen. Bob Bennett (R-UT). Sen. Bennett also
sent a copy of the report, and a letter, to Tom Ridge, Director
of the Office of Homeland Security, urging that cyber security must be a part of
national security. See also, Bennett
release and JEC
Federal Circuit Rules on Federal Jurisdiction in Patent
5/29. The U.S.
Court of Appeals (FedCir) issued its opinion in Pixton
v. B&B Plastics, a case regarding federal jurisdiction in
Dennis Pixton holds U.S. Patent Nos. 5,025,586
both of which pertain to plastic fishing lures. Pixton granted B&B Plastics
an exclusive license to the patents. The license agreement provided for royalty
payments, and that if sales dropped to such a level that the minimum royalty
would not be met, B&B could cover the shortfall, and if B&B chose not to
cover the shortfall, Pixton could either make the agreement non-exclusive or
terminate it. Pixton alleged breach of the agreement, notified B&B of its
termination, and demanded that B&B cease infringing activity. B&B argued
that the agreement was still in effect.
Pixton filed a complaint in U.S.
District Court (SDFl) against B&B and others alleging patent
infringement. The District Court dismissed for lack of federal jurisdiction,
holding that the complaint sounded in contract law, and did not arise under the
The Appeals Court reversed. Relying on Air Products & Chemicals v. Reichhold
Chemicals, 755 F.2d 1559, (Fed. Cir. 1985), the Court wrote that "Pixton's
well- pleaded complaint expressly sets out an action for patent infringement.
The issue is not ownership; this is an action for patent infringement in which
the defendant has asserted the defense of license. Jurisdiction in the federal
courts is not lost simply because the most efficient approach at trial may be to
address the license defense first." The Court of Appeals vacated, and
remanded to the U.S. District Court.
NTIA Director Discusses Spectrum Policy
5/29. National Telecommunications and
Information Administration (NTIA) Director Nancy Victory gave a speech
titled "Migrating to Advanced Wireless Systems Environments" at an
Asia Pacific Economic Cooperation (APEC) meeting in Shanghai, China.
She offered several broad policy recommendations. "First, spectrum policies
must be flexible to allow service growth and evolution. Technology changes much
too fast for government to timely modify its regulations with every nuance.
Moreover, it is impossible for government always to predict the direction of
technological development or of consumer demand. Rather, government should
strive to set minimal technical standards -- only those needed to minimize
interference or permit necessary interoperability."
"Second, government should continually review its existing spectrum
policies to ensure they are still necessary and appropriate, given changes in
technology and market demands", said Victory. "Third, transparency and
predictability of regulation is essential to create the right environment for
investment in wireless technology. The acquisition of spectrum and the
deployment of wireless facilities generally require substantial investment prior
to the time revenue can begin to be collected. In order to make this up-front
commitment, spectrum users -- whether they be private sector or government users
-- need to be comfortable that they know the rules of the road and that any
changes in policy will not be precipitous, but rather preceded by broad
information gathering and open debate."
Finally, she stated that "spectrum policies should be designed as much as
possible to minimize impediments to competition and market entry, consistent of
course with interference protection objectives. Competition and the influx of
new market participants is a significant factor in driving innovation, variety,
and lower costs to customers -- things that are beneficial to all of our
citizens. For this reason, it is important to ensure that market entry and
rights of way use policies are open and non-discriminatory."
BSA Releases Survey of Attitudes on Software Piracy
5/29. The Business Software Alliance (BSA)
announced that it commissioned a survey of Internet software piracy attitudes
and experiences. The BSA stated that "The results uncover a disturbing
consumer trend toward piracy and the use of ``situational ethics´´ in
determining whether or not to download pirated software."
The BSA stated that the survey shows that "95 percent of Internet users
agree that software developers deserve to be rewarded for their efforts"
and that "85 percent of users agree that intellectual property rights must
be protected so companies continue to invest in research and development".
Yet, the BSA stated that the survey found that 25% of Internet users never pay
for downloaded software, and 32% seldom pay.
Robert Holleyman, P/CEO of BSA, stated in a release that "This is the first
time we've identified end user attitudes about online theft, ... And what we
found is a disturbing behavioral trend that violates copyright laws and costs
billions of dollars and hundreds of thousands of jobs every year."
The BSA stated that Ipsos Public
Affairs conducted the survey. The BSA stated that Ipsos conducted an
"online survey of 1,026 Internet users" that was "conducted among
a national cross- section of U.S. households". However, neither the BSA's report [2 pages in
PDF] nor release
asserted that the respondents were randomly selected by the surveyor. Also,
neither document produced the text of the questions posed to respondents.
People and Appointments
5/29. Alan Scrime was named Chief of the Office of Engineering and Technology's (OET)
Policy and Rules Division (PRD) at the Federal
Communications Commission (FCC). The PRD is responsible for promulgating
rules pertaining to the allocation of spectrum and technical issues pertaining
to radio equipment and electronic devices. The PRD also handles the coordination
of all spectrum issues with other federal government entities. See, FCC
5/29. The Federal Trade Commission (FTC)
published a notice
in the Federal Register that it has issued a Notice of Proposed Rulemaking (NPRM)
to amend its Telemarketing Sales Rule (TSR). The new rule would impose user fees
on telemarketers, and their seller or telemarketer clients, for their access to
the national do not call registry, if one is implemented. Comments are due
by June 28, 2002. See, Federal Register, May 29, 2002, Vol. 67, No. 103, at
Pages 37362 - 37369. See also, FTC release.
5/29. The National Telecommunications and
Information Administration (NTIA) published a notice
in the Federal Register requesting comments on the effectiveness of Internet
blocking and filtering technologies. § 1703 of the Children's
Internet Protection Act (CIPA) [PDF] directs NTIA to initiate a notice and
comment proceeding to evaluate whether currently available Internet blocking or
filtering technology protection measures and Internet safety policies adequately
address the needs of educational institutions. It also directs NTIA to make
recommendations to Congress on how to foster the development of technology
protection measures that meet these needs. Comments are due by August 27, 2002.
See, Federal Register, May 29, 2002, Vol. 67, No. 103, at Pages 37396 - 37398.
5/29. Quantum Corp and Imation announced that "have settled all
legal claims between the companies over the qualification, production and sale
of DLTtape media products. As a result of the settlement, Imation has dismissed
its antitrust lawsuit against Quantum and Maxell, and Quantum has dismissed its
trade secrets lawsuit against Imation. Quantum and Imation also have committed
to completing qualification of Imation as a manufacturer of DLTtape media."
release and Imation
5/29. The U.S.
Court of Appeals (FedCir) issued its opinion in Berman
v. Housey, affirming the U.S. Patent and Trademark Office Board
of Patent Appeals and Interferences judgment in favor of Housey, and dismissing
Berman's unpatentability motion as moot.
5/29. The U.S. District Court (WDOkla) sentenced
Ricky Joe Nelson to two concurrent 51 month prison terms for conspiracy to
distribute controlled drugs through giving prescriptions over the Internet to
patients he had never examined, and conspiracy to launder the proceeds. See, CCIPS
FBI Releases Carnivore Records
5/28. The Electronic Privacy Information Center
(EPIC) stated in a release that
"Documents obtained by EPIC under the FOIA show that an FBI anti-terrorism
investigation possibly involving Usama bin Laden was hampered by technical flaws
in the Bureau's controversial Carnivore Internet surveillance system."
Specifically, one internal FBI memo obtained by
the EPIC states that "The software was turned on and did not work
correctly. The FBI software not only picked up the E-Mails under the electronic
surveillance of the FBI's target, [redaction] but also picked up E-Mails on
non-covered targets." As a result, the FBI "destroyed all the E-Mail
take, including the take on [redaction]". (The FBI heavily redacted this
document before producing it to the EPIC.)
David Sobel, General Counsel
of EPIC, submitted a request pursuant to the Freedom of Information Act (FOIA), 5 U.S.C. § 552, to the
Department of Justice (DOJ) and Federal Bureau of Investigation (FBI) on July 12,
2000, seeking "the release of all FBI records concerning the system known
as 'Carnivore' and a device known as 'EtherPeek' for the interception and/or
review of electronic mail (e-mail) messages."
The EPIC filed a complaint
in U.S. District
Court (DC) against the DOJ and FBI on July 31, 2000, seeking documents
pursuant to the FOIA. Sobel is also the lead counsel for EPIC in that suit.
Friday, May 24, was a court imposed deadline for production of certain records.
Sobel stated that he received over 500 pages in this production round, much of
which was newspaper clippings and congressional testimony. However, he found
three pertinent documents, which he published in the EPIC web site as JPG format
First, there is an FBI
memo dated April 5, 2000, that describes the failure of the software. (This
memo is also set out in full below.) Second, there is an April 11 memo posing
legal questions pertaining to the "improper capture of data". Third,
there is an April 12 memo in response.
See also, EPIC's Carnivore page
and May 28
The memo does not reference Carnivore. However, it does describe software used
by the FBI for e-mail surveillance. The FBI has not publicly stated that it uses
any other software for this purpose. Moreover, the FOIA request requested
documents pertaining to Carnivore. The memo also does not reference Usama bin
Laden. It does, however, reference the "UBL Unit", and its "FISA"
The Foreign Intelligence Surveillance Act (FISA) is codified in Title 50 of the
U.S. Code (pertaining to "War and National Defense"). See, 50 U.S.C. § 1801 et
seq. There are currently three different standards for obtaining different types
of court orders authorizing electronic surveillance. A ordinary wiretap order,
which enables law enforcement agencies to obtain the content of a phone call or
Internet communication, is issued by a judge upon a showing of probable cause.
This is often referred to as a Title III order, although, it is covered in Title
18 of the U.S. Code (pertaining to "Crimes and Criminal Procedure").
In contrast, FISA warrants have a much lower standard, but are restricted to
foreign intelligence information. Moreover, it extends to "a group engaged
in international terrorism". Hence, Al Qaeda is subject to FISA
These documents may be relevant to two ongoing debates. First, it may relate to
the debate over efforts undertaken by the FBI to investigate terrorist threats
prior to September 11, 2001. Second, it may relate to the debate between privacy
advocacy groups, such as the EPIC, and the FBI regarding threats to privacy
posed by Carnivore.
For example, a FBI web
page states that "The Carnivore device provides the FBI with a
``surgical´´ ability to intercept and collect the communications which are the
subject of the lawful order while ignoring those communications which they are
not authorized to intercept."
Similarly, Kevin DiGregory, a Deputy Assistant Attorney General in the Clinton
administration, stated in his prepared testimony before
the House Judiciary Committee's
Subcommittee on the Constitution on July 24, 2000, that "Carnivore is, in
essence, a special filtering tool that can gather the information authorized by
court order, and only that information. ... Carnivore is a minimization
tool that permits law enforcement strictly to comply with court orders, strongly
to protect privacy, and effectively to enforce the law to protect the public
In contrast, EPIC's Sobel stated in a release that
"These documents confirm what many of us have believed for two years --
Carnivore is a powerful but clumsy tool that endangers the privacy of innocent
American citizens. ... As we suggested when it first became public, Carnivore's
use should be suspended until the questions surrounding it finally can be
Meanwhile, Donald Kerr, Director of the Lab Division at the Federal Bureau of
Investigation, also testified at the July 24, 2000, hearing. He stated in his prepared testimony that
"terrorist bombers plan their strikes using the Internet".
FBI Memo Re Carnivore Failure
To: BOWMAN, SPIKE (MARION) [redaction]
Date: 4/5/00 5:29 PM
I just received a call from [redaction] at OIPR. To state that she is unhappy
with ITOS and the UBL Unit would be an understatement of incredible proportions.
I will try to relate what [redaction] thinks has happened with the above named
[redaction] secured an ELSUR FISA very quickly on [redaction] at the request of
[redaction] states that she was assured that the FBI had special software which
could do what the FBI said it could do. In fact [redaction] states that the
technical people in Quantico approved the FISA language.
The FBI technical people went to install the FBI software a [redaction] to
accomplish the electronic surveillance on March 16.
The software was turned on and did not work correctly. The FBI software not only
picked up the E-Mails under the electronic surveillance of the FBI's target,
[redaction] but also picked up E-Mails on non-covered targets. The FBI technical
person was apparently so upset that he destroyed all the E-Mail take,
including the take on [redaction] is under the impression that no one from the
FBI [redaction] was present to supervise the FBI technical person at the time.
Now the FBI technical people want to run a new software experiment at the
carrier to see if it works.
[redaction] states that OIPR was never told that the FBI software was
experimental. OIPR was informed that it would work. The FBI technical people are
still trying to make it work in [redaction], and want to resume the electronic
surveillance. The FBI people in [redaction] also want a physical search warrant
to pick up the E-Mails from the carrier, which the FBI picked up on the target,
[redaction] informed me that the FBI does not have the authority to resume
electronic surveillance until she receives a written explanation of what has
happened and she files something with the court. Obviously, she has no intention
of securing a search warrant either until this is straightened out.
When you add this story to the FISA mistakes covered in the E.C. I have prepared
to go to the field, and which is in NSLU for signature before it goes to
[redaction] for his signature, you have a pattern of occurrences which indicate
to OIPR an inability on the part of the FBI to manage its FISAs.
[redaction] and [redaction] please see me ASAP.
Sen. Lieberman to Introduce Broadband Legislation
5/28. Sen. Joe Lieberman (D-CT)
gave a speech
on developing a national broadband strategy. He stated that he will introduce
legislation next week. He spoke at Wind
River Systems in Alameda, California.
He stated that "we in government can't let this potentially fertile field
of technology lie fallow. We need to make the most of this moment, in which the
high speed Internet is on the cusp of catalyzing a quantum leap in our economy.
Which is to say, we need to lead, and seed."
He continued that "Unfortunately, the case for making broadband deployment
a priority of a national economic strategy has yet to be understood adequately
by government. The broadband buck is still stuck on the government's desk -- and
with it, thousands of new opportunities and millions of new jobs. Decisions are
piling up: on spectrum, competition, rights management, spam, privacy, child
protection, and more. These are important issues that need to be resolved, and
they need to be resolved comprehensively, with an overarching vision."
He also stated that he will introduce a bill in the Senate "next week"
that would require "the Administration to develop a national broadband
strategy within six months of passage". He stated he would introduce more
legislation in coming months.
He stated that "The follow up legislation I'll propose in the coming months
will call on the FCC to develop a regulatory framework to meet the challenges of
the next generation Net … propose tax credits for the deployment of advanced
broadband … encourage research and development on advanced broadband
infrastructure that will enable this technology to reach into all the corners
and crevices of the country … and present a program to incentivize research
and development on major applications in areas where government plays a central
role, including education, healthcare, and e-government." (Dots in original
SEC Sues Operators of Investment Web Site
5/28. The Securities and Exchange Commission
(SEC) filed a civil complaint in
District Court (NDGa) against Gold- Ventures Club and Alexander Khamidouline,
dba www.gold-ventures.net, alleging violation of federal securities laws in
connection with the operation of an Internet investment scam.
The complaint states that "Since at least March 2002, the Defendants have
offered an investment program through the Gold- Ventures Website, located on the
Internet at (www.gold-ventures.net). The Defendants' short-term investment
program promises an exorbitant 200% return on principal investments of $250.00
to $5000.00 in only 14 days. The Defendants claim to remit a 200% return on the
principal invested in a single payment at the end of each 14-day investment
The complaint also alleges that defendants used spam to promote their investment
scam. The complaint also states that defendants of impersonated an SEC attorney.
The only individual named in the complaint, Khamidouline, is alleged to be a
resident of Irkutsk, Russia. The web site is hosted by Earthlink, in Atlanta,
The first count of the complaint alleges violation of Sections 5(a) and 5(c) of
the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c). The second count alleges
violation of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), Section
10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. §
The complaint seeks an injunction against further violation of federal
securities laws, an asset freeze, an accounting, disgorgement, and return of
investments. It does not seek take down of the web site, or transfer of domain
The SEC also announced that it obtained an ex parte temporary restraining order,
asset freeze and other relief. See, SEC release.
5th Circuit Affirms in Hugh Symons Group v. Motorola
5/28. The U.S.
Court of Appeals (5thCir) issued its opinion
Symons Group v. Motorola, affirming the District Court's summary
judgment in favor of Motorola.
Plaintiff filed a complaint in U.S.
District Court (WDTex) against Motorola alleging violation of Texas's Deceptive
Trade Practices Act (DTPA) in connection with allegations that Motorola
breached an oral contract, and acted fraudulently and with negligent
misrepresentation regarding the quality, grade, and characteristics of its MPC
821 microprocessor. Plaintiff had considered using the MPC 821 in the
production of a hand held computer. Federal jurisdiction was based upon
diversity of citizenship.
The District Court granted summary judgment to Motorola on the grounds that
plaintiff was not a consumer within the meaning of the DTPA because it had over
$25 million in gross assets (see, § 17.44 of the DTPA), that plaintiff
failed to satisfy the statute of frauds, and that the tort claims sounded in
contract and failed because there was no breach of contract. The Court of
Supreme Court Reverses in Festo
5/28. The Supreme
Court issued its opinion
[PDF] in Festo
v. Shoketsu Kinzoku Kogyo Kabushiki, a patent case regarding the
doctrine of equivalents and the rule of prosecution history estoppel. The
unanimous Supreme Court reversed the Court of Appeals and remanded. The Court
again affirmed the doctrine of equivalents, articulated its purpose, held that
the narrowing of a patent claim may give rise to prosecution history estoppel
(but that it does not absolutely bar application of the doctrine of
equivalents), and listed circumstances under which it might or might not operate
as a bar.
This is a nearly decade old legal dispute over the extent of patent protection
to be afforded to the holder of two patents pertaining to magnetic cylinder
technology. However, there are broad ramifications for many other patent
holders, and producers of items similar to those described in these patents.
Complaint. The Festo Corporation is
the owner of U.S.
Patent No. 4,354,125 and U.S. Patent No. B1 3,779,401. During the
prosecution of these patents before the U.S.
Patent and Trademark Office (USPTO), Festo amended its applications.
Shokestsu later sold products similar, but not identical, to those disclosed in
Festo's patents. Festo filed a complaint in the U.S.
District Court (DMass) against Shoketsu alleging infringement of its two
patents, under the doctrine of equivalents.
Doctrine of Equivalents. The doctrine of equivalents provides that a
product or process that does not literally infringe upon the express terms of a
patent claim may nevertheless be found to infringe if there is an equivalence
between the elements of the accused product or process and the claimed elements
of the patented invention. That is, as the Supreme Court stated, "a patent
protects its holder against efforts of copyists to evade liability for
infringement by making only insubstantial changes to a patented invention."
The Supreme Court recently affirmed the doctrine. Justice Thomas wrote in Warner Jenkinson
v. Hilton Davis Chemical, 520 U.S. 17 (1997), that this doctrine provides
that "a product or process that does not literally infringe upon the
express terms of a patent claim may nonetheless be found to infringe if there is
``equivalence´´ between the elements of the accused product or process and the
claimed elements of the patented invention." See also, Graver
Tank v. Linde Air Products, 339 U.S. 605 (1950).
The doctrine of equivalents is not codified in the Patent Act. However, as the
Court noted in Warner Jenkinson, "Congress can legislate the doctrine of
equivalents out of existence any time it chooses."
Prosecution History Estoppel. The rule of prosecution history estoppel
provides that in determining the range of equivalents, the Court may consider
the history of the patent application before the USPTO. That is, as the Supreme
Court stated, the USPTO "may have rejected an earlier version of the patent
application on the ground that a claim does not meet a statutory requirement for
patentability. ... When the patentee responds to the rejection by narrowing his
claims, this prosecution history estops him from later arguing that the subject
matter covered by the original, broader claim was nothing more than an
Case History. The District Court found infringement. The U.S. Court of Appeals (FedCir)
affirmed the judgment of the District Court. The Supreme Court granted
certiorari, vacated, and remanded to the Court of Appeals decision in light of
Warner Jenkinson. A three judge panel of the Appeals Court affirmed in part and
vacated and remanded in part the judgment of the District Court. An en banc
panel of the Appeals Court issued its divided opinion
on November 20, 2000, reversing the District Court judgment of infringement. The
Appeals Court en banc held that an estoppel arises from any amendment that
narrows a claim to comply with the Patent Act, not only from amendments made to
avoid prior art. In addition, it held that when estoppel applies, it stands as a
complete bar against any claim of equivalence for the element that was amended.
The Supreme Court again granted certiorari. The Solicitor General submitted an amicus
curiae brief arguing that the Appeals Court correctly ruled that a patent
claim amendment that narrows the scope of a claim gives rise to prosecution
history estoppel, but the Court erred in holding that prosecution history
estoppel completely precludes application of the doctrine of equivalents. The
Supreme Court heard oral argument on January 7, 2002. See, transcript
Supreme Court. Justice Anthony Kennedy wrote the opinion for a unanimous
Court. He began by observing that "The language in the patent claims may
not capture every nuance of the invention or describe with complete precision
the range of its novelty. If patents were always interpreted by their literal
terms, their value would be greatly diminished. Unimportant and insubstantial
substitutes for certain elements could defeat the patent, and its value to
inventors could be destroyed by simple acts of copying."
The Court acknowledged that "the doctrine of equivalents renders the scope
of patents less certain. It may be difficult to determine what is, or is not, an
equivalent to a particular element of an invention." However, it added that
these concerns "are not new", and the Court has continuously upheld
The Court held that "Prosecution history estoppel requires that the claims
of a patent be interpreted in light of the proceedings in the PTO during the
application process. Estoppel is a ``rule of patent construction´´ that
ensures that claims are interpreted by reference to those ``that have been
cancelled or rejected.´´ ... The doctrine of equivalents allows the patentee
to claim those insubstantial alterations that were not captured in drafting the
original patent claim but which could be created through trivial changes. When,
however, the patentee originally claimed the subject matter alleged to infringe
but then narrowed the claim in response to a rejection, he may not argue that
the surrendered territory comprised unforeseen subject matter that should be
deemed equivalent to the literal claims of the issued patent." (Citations
The Court reasoned that "A rejection indicates that the patent examiner
does not believe the original claim could be patented. While the patentee has
the right to appeal, his decision to forgo an appeal and submit an amended claim
is taken as a concession that the invention as patented does not reach as far as
the original claim."
The Court then addressed what kinds of amendments that may give rise to estoppel.
It held that "Estoppel arises when an amendment is made to secure the
patent and the amendment narrows the patent's scope. If a § 112 amendment
is truly cosmetic, then it would not narrow the patent's scope or raise an
estoppel. On the other hand, if a § 112 amendment is necessary and narrows
the patent's scope -- even if only for the purpose of better description --
estoppel may apply. A patentee who narrows a claim as a condition for obtaining
a patent disavows his claim to the broader subject matter, whether the amendment
was made to avoid the prior art or to comply with § 112. We must regard the
patentee as having conceded an inability to claim the broader subject matter or
at least as having abandoned his right to appeal a rejection. In either case
estoppel may apply."
The Court next addressed whether an estoppel bars the inventor from asserting
infringement against any equivalent to the narrowed element or might some
equivalents still infringe. The Court rejected the complete bar approach of the
en banc Court of Appeals.
The Court wrote that the prosecution history estoppel "requires an
examination of the subject matter surrendered by the narrowing amendment. ...
The narrowing amendment may demonstrate what the claim is not; but it may still
fail to capture precisely what the claim is. There is no reason why a narrowing
amendment should be deemed to relinquish equivalents unforeseeable at the time
of the amendment and beyond a fair interpretation of what was surrendered. Nor
is there any call to foreclose claims of equivalence for aspects of the
invention that have only a peripheral relation to the reason the amendment was
submitted. The amendment does not show that the inventor suddenly had more
foresight in the drafting of claims than an inventor whose application was
granted without amendments having been submitted. It shows only that he was
familiar with the broader text and with the difference between the two. As a
result, there is no more reason for holding the patentee to the literal terms of
an amended claim than there is for abolishing the doctrine of equivalents
altogether and holding every patentee to the literal terms of the patent."
In the end, the Court did rule as to whether Shoketsu infringed Festo's patents.
Rather, it merely vacated the Appeals Court, and remanded for proceedings
consistent with its opinion.
VeriSign Sued Over Domain Name Marketing
5/28. Marc Luxenberg filed a complaint
in the Superior Court for the State of California, Los Angeles County, against VeriSign alleging that it sent misleading
domain name renewal notices that "seek to trick domain- name owners into
unwittingly transferring their accounts to VeriSign".
The complaint alleges that "on or about April 25, 2002, Verisign began
sending a ``Domain Name Expiration Notice´´ to thousands of consumers of its
competitors" that "carried an artificial ``deadline´´ for reply of
May 15, 2002, and thereby has implied that certain domain names of targeted
potential costumers are about to expire." The complaint continues that
"there is no necessary relation between the reply deadline noted in
the" notice "and the actual expiration date of the domain name."
The complaint also states that "at the bottom of the reverse side" the
notice "authorizes VeriSign to transfer the domain name(s) from the
consumer's current registrar to VeriSign, and to extend the term of (i.e.,
``renew´´) the domain name."
The complaint alleges that these notices are "deceptive", and have
caused domain name owners to transfer their domain names to VeriSign.
The complaint contains four counts: unlawful, unfair and deceptive business
practices in violation of California Business & Professions Code § 17200
et seq., false and misleading advertising in violation of California Business
& Professions Code § 17500 et seq., violation of the Consumers Legal
Remedies Act, California Civil Code § 1750 et seq., and common law fraud
Luxenberg seeks class action status. He is represented by the law firm of Weiss & Yourman. Previously, BulkRegister filed a complaint against
VeriSign for the same marketing tactics.
5/28. The Federal Communications Commission
(FCC) entered into a Consent Decree
with SBC under which SBC agrees to make a $3.6 million payment to the United
States Treasury. The FCC stated that this is for "inaccurate information
SBC submitted to the FCC in affidavits supporting two separate section 271
applications to provide long distance service in Missouri, Oklahoma and
Kansas". See, FCC release.
5/28. The Cellular Telecommunications and
Internet Association (CTIA) wrote a letter to
the Office of Management and Budget
(OMB) containing its comments on the OMB's Draft Report to Congress on the Costs
and Benefits of Federal Regulations. The letter lists regulations that the CTIA
argues should be eliminated, such as those pertaining to wireless local number
portability. The letter was sent from Michael Altschul, SVP and General Counsel
of the CTIA, to John Morrall of the OMB's Office of Information and Regulatory
Affairs. See also, CTIA release.
5/28. A trial jury of the U.S. District Court (WDWash)
returned a guilty verdict against Michael Prime on one count of conspiracy to
commit wire fraud, one count of conspiracy to make, possess and utter
counterfeit securities and three counts of making, possessing and uttering
counterfeit securities. Prime operated three fraudulent schemes on eBay. First,
he auctions items, such as lap top computers, which he did not have. Second, he
sold pirated software that he falsely claimed was authentic. Third, he purchased
items in auctions that he paid for with counterfeit money orders created with
computers, scanners, and printers. See, USAO release.
5/28. The Supreme Court denied certiorari in Illinois Bell Telephone Co. v.
WorldCom, No. 00-921. See, Order
List [PDF] at page 10.
5/28. The Supreme Court granted certiorari in BellSouth v.. North Carolina
Utilities Commission, No. 00-1699. It wrote that "The petition for a writ
of certiorari is granted. The judgment is vacated and the case is remanded to
the United States Court of Appeals for the Fourth Circuit for further
consideration in light of Verizon
Maryland Inc. v. Public Service Commission of Maryland, 535 U.S. ___ (2002).
List [PDF] at page 1.
5/28. The Supreme Court went back on recess until Monday, June 3, 2002.
Go to News Briefs from May 21-25, 2002.