|News from July 21-25,
Rep. Berman Introduces Bill to Legalize Self Help Technologies
to Disable P2P Piracy
7/25. Rep. Howard Berman (D-CA)
introduced a bill that would permit copyright owners to employ self help
technologies when their copyrighted works are infringed on peer to peer (P2P)
networks. The bill is intended to enable the music and movie industries to
legally engage in interdiction, decoys, redirection, file blocking, spoofs, or
other technological tools, to prevent P2P piracy. See, text
of bill [HTML], text of bill
[PDF], and Rep. Berman's section
by section summary.
Rep. Berman is the ranking Democrat on the House Judiciary Committee's
Subcommittee on Court, the Internet and Intellectual Property. He also
represents a Los Angeles area district. The bill's initial cosponsors are Rep. Howard Coble (R-NC), the Chairman of
the Subcommittee, Rep. Lamar Smith
(R-TX), and Rep. Robert Wexler
The bill would add a new Section 514 to Chapter 5 (pertaining to copyright
infringement and its remedies) of Title 17 (the Copyright Act).
The bill provides, in its subsection (a), that "Notwithstanding any State
or Federal statute or other law, ... a copyright owner shall not be liable
in any criminal or civil action for disabling, interfering with, blocking,
diverting, or otherwise impairing the unauthorized distribution, display,
performance, or reproduction of his or her copyrighted work on a publicly
accessible peer-to-peer file trading network, if such impairment does not,
without authorization, alter, delete, or otherwise impair the integrity of any
computer file or data residing on the computer of a file trader."
To qualify for this immunity, the copyright owner must notify the Department of Justice (DOJ) "of the
specific technologies the copyright owner intends to use to impair the
unauthorized distribution, display, performance, or reproduction". However,
such information is exempt from release under the Freedom of Information Act (FOIA),
5 U.S.C. § 552.
There is no requirement that the copyright owner provide advance notice to its
target that it will employ self help technologies against it. Nor must the
copyright owner notify its target afterwards. The bill does provide that
"At the request of an affected file trader ... a copyright owner shall
provide notice to the affected file trader or assignee ..." However, since
the bill defines copyright owner as the owner of "an exclusive right under
section 106 and any party authorized to act on the owner's behalf" the
target may not know whom to request for information.
The bill provides for a very limited cause of action against a copyright owner
who engages in self help remedies described by the bill. The bill provides, in
subsection (d), that "If ... a copyright owner knowingly and
intentionally impairs the distribution, display, performance, or reproduction of
a particular computer file or data, and has no reasonable basis to believe that
such distribution, display, performance, or reproduction constitutes an
infringement of copyright, and an affected file trader suffers economic loss in
excess of $250 as a result of the act by the copyright owner, the affected file
trader may seek compensation for such economic loss ..."
The bill provides no injunctive remedy. The bill further defines "economic
loss" as "monetary costs only". Before bringing suit, the
affected file trader must first file an administrative complaint with the DOJ,
and comply with its requirements. Moreover, the act of engaging in self help
technologies to interfere with file trading alone cannot serve as the basis a
legal action; the bill provides that "The cause of action established by
this subsection shall only be available as a remedy against impairing actions
that would not be lawful but for subsection (a)."
Rep. Berman explained his bill in a floor statement. He said
that "the primary current application of P2P networks is unbridled
copyright piracy. P2P downloads today consist largely of copyrighted
music, and as download speeds improve, there has been a marked increase in P2P
downloads of copyrighted software, games, photographs, karaoke tapes, and
Berman also stated that "The massive scale of P2P piracy and its growing
breadth represents a direct threat to the livelihoods of U.S. copyright
creators, including songwriters, recording artists, musicians, directors,
photographers, graphic artists, journalists, novelists, and software
programmers. It also threatens the survival of the industries in which these
creators work, and the seamstresses, actors, Foley artists, carpenters,
cameramen, administrative assistants, and sound engineers these industries
employ. As these creators and their industries contribute greatly both to the
cultural and economic vitality of the U.S., their livelihoods and survival must
The bill does not address what technological measures are permissible. However,
Rep. Berman commented on this subject. He said that "Technological
innovation, as represented by the creation of P2P networks and their subsequent
decentralization, has been harnessed to facilitate massive P2P piracy. It is
worth exploring, therefore, whether other technological innovations could be
harnessed to combat this massive P2P piracy problem. Copyright owners could, at
least conceptually, employ a variety of technological tools to prevent the
illegal distribution of copyrighted works over a P2P network. Using
interdiction, decoys, redirection, file blocking, spoofs, or other technological
tools, technology can help prevent P2P piracy."
Rep. Berman argued that this legislation is made necessary because
"technological self-help measures may not be legal due to a variety of
state and federal statutes, including the Computer Fraud and Abuse Act of 1986.
In other words, while P2P technology is free to innovate new, more efficient
methods of P2P distribution that further exacerbate the piracy problem,
copyright owners are not equally free to craft technological responses to P2P
piracy." See also, Berman
Reaction to Berman Bill
7/25. Rep. Howard Berman's (D-CA) bill
to permit copyright owners to employ self help technologies when their
copyrighted works are infringed on peer to peer (P2P) networks has drawn praise
from some groups representing copyright owners, but harsh criticism from some
Hilary Rosen, Ch/CEO of the Recording Industry
Association of America (RIAA), praised the Rep. Berman's bill in a release. She said that
"We applaud Congressman Berman for introducing bipartisan legislation that
takes an innovative approach to combating the serious problem of Internet
piracy. Online piracy undermines the growth of legitimate music sites and hurts
all consumers in the long run -- every dollar lost to piracy is a dollar that
cannot be invested in the fresh, new artists we have all come to expect and
Rosen continued that "The current landscape for online music is dangerously
one-sided, with the peer-to-peer pirates enjoying an unfair advantage. It makes
sense to clarify existing laws to ensure that copyright owners -- those who
actually take the time and effort to create an artistic work -- are at least
able to defend their works from mass piracy. We look forward to working with
Congressman Berman, Chairman Coble and other members of Congress on this
Similarly, Jonathan Zuck, P/CEO of the Association
for Competitive Technology (ACT), wrote a letter to Rep. Berman and other
leaders of the House Judiciary Committee expressing support for the bill. He
wrote that "Piracy is a significant challenge for the digital media and IT
industry and we applaud your effort to promote technological rather than
regulatory solutions. I must qualify this support by pointing out that when
crafting copyright legislation, we should maintain a dialogue to avoid untended
consequences that could harm small IT companies."
In contrast, Ed Black, P/CEO of the Computer
& Communications Industry Association (CCIA) said in a release that "We
reject the premise of this bill that content owners should be entitled to
‘vigilante justice’ for suspected copyright violations ... Hollywood moguls
have long railed against illicit tampering with their protected content by
‘hackers’ and ‘Internet pirates.’ Now the Hollywood studios and the
recording industry seek statutory authority for their own hacking, spoofing, and
virus attacks, with the capability to shut down many Internet websites and
services at their discretion."
"The breadth of the safe harbor provisions, combined with the severe
limitations on suits by aggrieved parties, are really tantamount to license for
content owners to strike wherever they see fit ... Our industry has recently
experienced a rapid rise in cyber-attacks against our networks and secure
systems, and the last thing we need is to create a protected group of hackers.
No other industry has been deputized to prosecute its own enforcement actions,
and we see no compelling reason to provide this enormous grant of power to
News Analysis: Breadth of the Berman Bill
7/25. Rep. Howard Berman's (D-CA) bill
to permit copyright owners to employ self help technologies when their
copyrighted works are infringed on peer to peer (P2P) networks is clearly
intended to enable the music and movie industries to shut down the sorts of
rampant copying that the Court in the Napster case found to constitute
infringement. However, the bill is written with language broad enough to
encompass a variety of other scenarios. The bill also provides the party
engaging in self help remedies with wide discretion, and offers the target of
the self help remedies very little recourse.
While Rep. Berman referred to films, music recordings, photographs, and karaoke
tapes in his floor
statement, there is nothing in the bill that restricts the right of self
help to infringement of copyrights in these media. For example, other content
may be made available on a peer to peer network, such as political expression,
religious discourse, educational materials, social commentary, and news
coverage. These also may be subject to claims of copyright. And hence, P2P
trading of these could be interfered with by the self help remedies legalized
under this bill.
Also, while Rep. Berman referred to the "massive scale of P2P piracy"
by networks such as Napster, the Berman bill provides a very minimal definition
of what constitutes a peer to peer network. It could be something as small as
two networked computers running file transfer software that are publicly
Moreover, while Rep. Berman referred to loss of compensation by copyright
holders as a result of P2P piracy, there is nothing in the bill that restricts
this right of self help to copyright holders who have lost compensation. That
is, the right of self help could be exercised by a copyright holder to stop the
dissemination of content that the copyright owner has not sold, and does not
intend to sell. Hence, the self help technologies legalized by this bill could
be used to prevent the dissemination of expression, rather than to prevent
economic loss. Ford Motor Company, The Church of Jesus Christ of Latter Day
Saints, or government entities might exercise the right of self help created by
the Berman bill to suppress criticism.
Next, while the Berman bill provides for a private right of action for wrongful
interference, in subsection (d), it is a very limited right of action. The bill
requires that the party engaging in self help technological remedies must be a
copyright owner, and have a "reasonable basis to believe" that there
is an infringement, in order to avoid being held liable for wrongful conduct.
Notably, many things that are required to prevail in a copyright infringement
action, or to obtain certain remedies in infringement actions, are not required
to obtain immunity from liability under this bill.
For example, there is no requirement of registration of copyright.
Second, negligent or unintentional interference is not actionable under the
private right of action provided for in the bill. The Berman bill requires that
the "copyright owner knowingly and intentionally impairs the
distribution" to be held liable under subsection (d).
Third, there is no requirement of actual infringement to avoid liability. The
"copyright owner" need only own one of the six exclusive rights of
copyright, and have a "reasonable basis to believe" that there is an
infringement. The "reasonable basis to believe" standard is a very low
Furthermore, the "reasonable reason to believe" test would appear to
eliminate or weaken defenses to infringement available in a suit for
infringement. At least, one might expect the parties engaging in self help
remedies to assert that it does. For example, notwithstanding infringement of an
exclusive right of copyright under Section 106, there are
the rights of fair use (Section
107), rights of libraries (Section 108), and
rights of teachers (Section
110). In a legal action for infringement, a defendant may raise any of
these, and the court would engage in an analysis of the requirements of these
However, under the Berman proposal, in an action against a party engaging in
self help remedies, the "reasonable basis to believe" standard might
displace an analysis under Sections 107, 108 or 110. For example, the self help
party might argue that it can avoid Section 110 consequences by asserting,
"I did not know that the computer I hacked was being used by an educational
institutional for distance learning purposes." Likewise, the self help
party might argue that Section 107 analysis is irrelevant, provided that it had
a "reasonable basis to believe" that infringement occurred. Similarly,
the defenses of fraud on the Copyright Office, misuse of copyright, limitations,
laches, estoppel, and unclean hands might not be available.
It is perhaps also notable that the Berman bill, which adds a new section to the
Copyright Act, defines "copyright owner". The Copyright Act already
defines this term, at Section
101. The two definitions are different. The Berman bill states that
"the term 'copyright owner' means a legal or beneficial owner of an
exclusive right under section 106 and any party authorized to act on the owner's
behalf." The Copyright Act states that a " ``Copyright owner´´,
with respect to any one of the exclusive rights comprised in copyright, refers
to the owner of that particular right."
The difference may be substantial. There are six enumerated exclusive rights of
copyright in Section
106. Under the Berman bill, anyone who holds any exclusive right in a
copyrighted work is a copyright owner, and can exercise the self help remedies
against anyone who has infringed the copyrighted work. The infringement need not
be of the exclusive right owned by the party engaging in self help.
The bill also provides for no effective notice to the party whose computer is
interfered with, either before or after the interference. The copyright owner
must give the Department of Justice advance notice, but this information is
confidential. The copyright owner must give its target notice, but only if the
target first asks for notice. But then, anyone who is able to ask for notice,
does not need notice. Some parties who have been subjected to wrongful self help
technological measures may find it difficult simply to establish whom to sue.
Finally, if a victim of interference succeeds in bringing and prevailing in an
action against someone who has wrongfully interfered with his computer, the bill
limits damages to "monetary costs only", and does not allow him to
obtain an injunction against further wrongful interference.
Legislators Urge DOJ to Use Intellectual Property Laws Against
7/25. Rep. Lamar Smith (R-TX), Sen. Joe Biden (D-DE), and other
Representatives and Senators, wrote a letter
to Attorney General John Ashcroft urging the Department of Justice to
"vigilantly enforce intellectual property laws on the Internet to punish
online theft of our copyrighted works and to deter such conduct.
They elaborated that "Such an effort is increasingly important as online
theft of our nation's creative works is a growing threat to our culture and
economy." They cited the "staggering increase in the amount of
intellectual property pirated over the Internet through peer to peer
They offered three
recommendations. First, "Prosecute operators of peer to peer systems who
intentionally facilitate mass piracy". Second, "Prosecute individuals
who intentionally allow mass copying from their computer over peer to peer
networks". And third, "Create more Computer Hacking and Intellectual
Property (CHIPs) units around the country with expanded authority to prosecute
Rep. Smith and Sen. Biden are the Chairmen of the Crime Subcommittees in the
House and Senate.
Rep. Boucher Writes FCC re DTV Transition
7/25. Rep. Rick Boucher (D-VA) wrote
to Federal Communications Commission (FCC)
Chairman Michael Powell
regarding transition to digital television. He urged the FCC to deal with both
DTV tuners and digital cable signals.
Rep. Boucher wrote that "I am among those who have urged action with
respect to mandatory inclusion of DTV tuners in larger screen size television
receivers, where enhanced resolution would be evident to consumers. Taking
this action alone, however, would confer a benefit, at most, on the
fifteen percent of consumers who do not rely on cable or satellite for signal
acquisition, while imposing significant, redundant costs on all other
purchasers. This is why I have also urged you, twice, to take steps to
resolve obstacles to the use of DTV receivers to tune digital cable
signals as well."
Rep. Boucher also stated that "I further understand that, while technical
obstacles toward joint inclusion of cable and broadcast DTV tuners have been
substantially overcome, the ``PHILA´´ license issues, as to which I have
written you twice before, are no closer to resolution."
He urged the FCC to "use its jurisdiction to call the parties together, to
hammer out acceptable license terms plus any proposed amendments to FCC
regulations, to assure that the final license provisions exert only such
licensee powers as FCC rules allow."
Microsoft Hires Law Firm to Lobby for Allocation of Unlicensed
7/25. The Washington DC law firm of Harris
Wiltshire filed a Lobbying Registration form with the Clerk of the U.S.
House of Representatives which lists Microsoft
as its client, and lists as the specific lobbying issues "Use and
allocation of unlicensed spectrum; H.R. 4641 Wireless Technology Investment and
Digital Dividends Act of 2002; Future legislation pertaining to spectrum
allocation reform." The form was signed by Scott Harris.
was introduced on May 2, 2002 by Rep. Ed
Markey (D-MA), the ranking Democrat on the House Telecom Subcommittee. The
bill has only two co-sponsors, Rep.
Karen McCarthy (D-MO) and Rep. John
The bill would require that the National
Telecommunications and Information Administration (NTIA) "shall, not
later than January 1, 2003, prepare, make publicly available, and submit to the
President, the Congress, and the Commission a report that ... designates a
20-megahertz band of contiguous frequencies located below 2 gigahertz, and a
band of between 3 and 500 megahertz of contiguous frequencies above 2 gigahertz
and below 6 gigahertz, for reallocation to the public for unlicensed use".
Rep. Markey wrote in his summary of the
bill that "An unlicensed area of the airwaves will permit the public,
through the use of ``smart´´ radio technology and better receiver equipment,
to harness the airwaves for countless applications if the government is willing
to give back to the public a portion of its own airwaves in such an unlicensed
format. From ``wi-fi´´ technology and low power ``Bluetooth´´ wireless
connections, to so-called ``802.11b´´ protocols, wireless local area networks
and Net connections, utilization of publicly available airwaves can help connect
people and businesses in cost effective and spectrum efficient ways. The
``Spectrum Commons´´ will also help to propel economic growth and innovation
by opening up the airwaves to new marketplace entry by individuals and entities
unaffiliated with established network providers."
However, providing for the allocation of unlicensed spectrum is only one small
part of Rep. Markey's bill. The bill would also create a new trust fund, to be
named the "Digital Dividends Trust Fund". It would be financed with
the proceeds from the auction of spectrum licenses. This trust fund would then
be used for teacher training, research and development, digitizing content for
libraries, and other purposes.
This bill would also require the Federal
Communications Commission (FCC) to take action to achieve the timely
transition to digital television by establishing rules governing must carry
issues, minimum programming and broadcasting requirements, and digital
television receiver benchmarks. It would also require the FCC and NTIA to take
action to secure additional spectrum for advanced wireless services -- including
Third Generation (3G) services.
House Begins Consideration of Homeland Security Bill
7/25. The House began its consideration of HR 5005,
the Homeland Security Act of 2002, a bill to create a new Department of Homeland
Security. The House is scheduled to complete its consideration of the bill on
Friday, July 26.
On July 24, the House Rules Committee
adopted a rule for
consideration of the bill that allows certain enumerated amendments to be
offered. The full House approved this rule Thursday evening, July 25.
The House also agreed late on July 25 to the Cox Amendment [PDF], which
provides specific examples of the types of critical cyber security
infrastructure which the Undersecretary for Information Analysis and
Infrastructure Protection must develop a plan to protect, the Israel Amendment [PDF], which
establishes within the Department a Homeland Security Science and Technology
Advisory Committee, and the Woolsey
Amendment [PDF], which adds a new section to the bill creating a Homeland
Security Institute as a federally funded research and development center.
See, Rules Committee summary
of amendments that are in order. See also, texts of all amendments in PDF: Oberstar Costello Roemer
Amendment, Young Amendment,
Waxman Amendment, Cox Amendment, Israel Amendment, Rivers Amendment, Woolsey Amendment, Cardin Amendment, Hunter Amendment, Ose Amendment, Velazquez Issa Wilson Amendment,
Hastings Amendment, Kingston Amendment, Rogers Amendment, Rush Amendment, Shays Watson Amendment, Shays Amendment, Morella Amendment, Quinn Amendment, Waxman Frost Amendment, Armey Amendment, Turner Amendment, Oberstar Menendez Amendment, Schakowsky Kucinich Mink
Amendment, Tom Davis
Amendment (which expands the existing FOIA exemption in the bill to other
federal agencies as the Secretary of Homeland Security determines as
Harman Shays Menendez Amendment, and Weldon Amendment.
Eli Lilly Punished Again for Accidental Privacy Violation
7/25. The states of California, New York, Connecticut, Idaho, Iowa,
Massachusetts, New Jersey, and Vermont entered into a settlement agreement with Eli Lilly, in connection with Eli Lilly's
accidental disclosure of personal information of subscribers to an e-mail
Eli Lilly is a pharmaceutical company. It offered an e-mail reminder service
regarding use of the drug Prozac. On one occasion it sent an e-mail reminder to
669 subscribers to the service using the "To:" method of addressing
the e-mail, rather than the "BCC:" method.
The state of New York stated in a release [PDF]
that "The settlement agreement requires Lilly to strengthen its internal
standards relating to privacy protection, training, and monitoring. Lilly will
also institute automated checks for any of its software that accesses consumer
information databases. ... The company will also undergo annual, independent
compliance reviews over the next five years and report the findings of those
reviews to the states. ... Lilly has also agreed to pay $160,000 to the states
to settle the case."
Eli Lilly was previously the subject of an administration proceeding brought by
the federal government. The ACLU submitted a letter complaint to the Federal Trade Commission (FTC). Then, on January
18, 2002, the FTC initiated, and simultaneously settled, an administrative
proceeding against Eli Lilly alleging violation of the Federal Trade Commission
Act (FTCA). See, administrative
complaint [PDF]. In that proceeding Eli Lilly agreed to "establish and maintain an information security program
for the protection of personally identifiable information". See, Agreement Containing Consent
Thus, on January 18, the federal government penalized Eli Lilly for
inadvertently disclosing a customer list. On July 25, several state governments
penalized Eli Lilly for the same disclosure.
Meanwhile, on July 30, in another proceeding, the U.S.
Court of Appeals (9thCir) permitted the federal government to seize a
group's membership list. See also, story titled "9th Circuit Rejects
Privacy of Association" in TLJ Daily E-Mail Alert No. 481, July 31, 2002.
Edelman Sues N2H2
7/25. Benjamin Edelman
filed a complaint [PDF] in U.S. District Court (DMass) against N2H2, Inc. seeking various declaratory and
injunctive relief pertaining to copyright law.
This is essentially a policy oriented law suit brought by Edelman, and his ACLU
attorneys, seeking broad declarations from the court that would have the effect
of altering various aspects of copyright law, including the Digital Millennium
Copyright Act (DMCA). They seek new and novel interpretations of the First
Amendment and fair use. They also seek to generally make life miserable for the
companies that make blocking software, and the schools and libraries that use
Edelman is a first year law student at Harvard Law School, and a Technology
Analyst at the Berkman Center for
Internet and Society. He does research on Internet blocking programs, such
as those made by N2H2. He is concerned about the erroneous over blocking of web
sites. N2H2 encrypts its block lists; so he seeks to decrypt them, and then
He is represented by the ACLU. The attorneys listed on the complaint are Ann
Beeson, Christopher Hansen, Kevin Bankston, and Sarah Wunsch. Beeson and Hansen
have long been active in policy oriented litigation directed against the use
blocking software by schools and libraries.
N2H2 makes software products that enable the blocking of web sites based upon
certain criteria. Its product named Bess is sold to
schools and libraries. Its product named Sentian is
sold to businesses and government. These programs employ lists of web site URLs,
based upon type of content, that can be blocked. There are block lists, for
example, for pormography and gambling.
N2H2 states in its web site that it is a "a global Internet content
filtering company. N2H2 software helps customers control, manage and understand
their Internet use by filtering Web content, monitoring Internet access and
delivering concise reports on user activity. These safeguards enable
organizations of any size to limit potential legal liability, increase user
productivity and optimize network bandwidth. N2H2's Bess and Sentian product
lines are powered by N2H2's premium quality filtering database -- a list
consistently recognized by independent and respected third-parties as the most
effective in the industry."
The complaint states that "N2H2 refused Mr. Edelman's direct request for a
copy of the block list. Thus, in order to conduct his research, Mr. Edelman must
``reverse engineer´´ N2H2's blocking program. ``Reverse engineering´´ is a
process used to gain access to the functional elements of a software program in
order to learn how it works." The complaint further states that his
research will "consist of five primary steps: (1) reverse engineering a
licensed copy of the blocking program in order to discover what measures prevent
access to and copying of the block list; (2) creating and using a software tool
(``the circumvention tool´´) to circumvent those measures and access the block
list; (3) analyzing the block list to determine its accuracy; (4) publishing the
results of his analysis and the block list; and (5) distributing his
circumvention tool to facilitate other fair and non- infringing uses of the
The complaint also states that "Using information derived through reverse
engineering, Mr. Edelman intends to create a software tool to circumvent the
block list’s protection measures. The sole function of this circumvention
tool, when executed, will be to interoperate with the N2H2 blocking program in
an attempt to circumvent the measures preventing access to and copying of the
encrypted block list." Then, "After using his circumvention tool to
create a readable copy of the block list, Mr. Edelman intends to use a variety
of manual and automated systems to identify URLs on the list that have been
miscategorized and therefore erroneously blocked by the program." Finally,
the complaint states that he intends to publish analyzes of erroneous web site
blocking by N2H2, publish N2H2's block lists, and disseminate his circumvention
However, Edelman goes on to assert that N2H2 holds copyrights on its programs,
and claims trade secrets. He asserts that he fears that his research could
violate software license terms, the DMCA, and trade secrets, unless the Court
declares that his planned research activities are protected by the free speech
clause of the First Amendment, the fair use doctrine, and other legal theories.
The DMCA, 17 U.S.C. §
1201, was enacted by the Congress in 1998. It provides at § 1201(a)(1)
that "No person shall circumvent a technological measure that effectively
controls access to a work protected under this title." It further provides
at § 1201(a)(2) that "No person shall manufacture, import, offer to
the public, provide, or otherwise traffic in any technology, product, service,
device, component, or part thereof, that (A) is primarily designed or produced
for the purpose of circumventing a technological measure that effectively
controls access to a work protected under this title; (B) has only limited
commercially significant purpose or use other than to circumvent a technological
measure that effectively controls access to a work protected under this title;
or (C) is marketed by that person or another acting in concert with that person
with that person's knowledge for use in circumventing a technological measure
that effectively controls access to a work protected under this title."
Edelman seeks a wide range of declaratory relief. For example, he claims that
"proposed circumvention of the access and/or copy control of N2H2's block
list does not violate 17 U.S.C. § 1201(a)(1)" of the DMCA because it is
protected fair use. He also claims that his "proposed creation and
distribution of a software tool, for the purposes of achieving the circumvention
... does not violate 17 U.S.C. § 1201(a)(2) or 17 U.S.C. § 1201(b) of the DMCA,
because" it is fair use, it enables the public to make fair use of the
block lists, and because the tool will be capable of substantial non-infringing
He also seeks a declaration that his actions would not violate N2H2's software
license, on several grounds, including preemption by federal copyright law,
unconscionability, misuse of copyright, and enforcement would be contrary to
He also seeks a declaration that he would not be liable for direct copyright
infringement for any intermediate copying of the N2H2 program or the N2H2 block
list because such copying is constitutionally protected by the First Amendment
and or constitutes a fair use. See also, ACLU release.
Intellectual Property Decisions
7/25. The U.S.
Court of Appeals (7thCir) issued its opinion
[PDF] in TE
TA MA Truth Foundation v. World Church of the Creator, a
7/25. The U.S.
Court of Appeals (9thCir) issued its opinion
[PDF] in Mackie
v. Rieser, a copyright case regarding the quantum of causation
necessary to obtain indirect profits damages.
Bush Makes Judicial Appointments a Campaign Issue
7/25. President Bush gave a speech
at an Elizabeth Dole for Senate
dinner in Greensboro, North Carolina. He argued that judicial appointments is a
reason why voters should elect Republican Senators, and thus return control of
the Senate to the Republicans.
He said this. "You know else why I need Elizabeth Dole? I want my judges to
get a fair hearing. I picked -- I nominated good people to serve on the bench,
good, qualified, distinguished Americans -- like Terry Boyle. I put his name out
there. I put his name out there 14 months ago, and he can't get a hearing. I
nominated a fabulous woman from Texas named Pricilla Owen, a great jurist ranked
at the highest rating by the ABA, ran twice statewide in Texas and won. And yet,
when you listen to the rhetoric up there, it's all politics in Washington, D.C.
They're not willing to give these judges their fair shake and a fair due. It's
time to get the Senate in the hands of people who will approve the good jurists
I send, so we can have a federal bench that will not -- that will strictly
interpret the Constitution of the United States of America."
People and Appointments
7/25. President Bush nominated Jeffrey
White to be a Judge of the U.S.
District Court (NDCal). White is a partner in the San Francisco office of Orrick Herrington & Sutcliffe. He is a
litigator who focuses on employment trials, fraud, white collar crime, SEC
investigations, antitrust, and other issues. He has represented Siebel Systems,
Oracle and Lucent. See, White
7/25. President Bush nominated Sandra Feuerstein to be a Judge of the
U.S. District Court (EDNY). See, White
7/25. President Bush nominated Kent Jordan to be a Judge of the U.S.
District Court (DDel). See, White
7/25. The Senate Banking Committee
approved the nominations of Paul Atkins, Harvey Goldschmid, Cynthia
Glassman, and Roel Campos to be a members of the Securities and Exchange Commission (SEC) on
Thursday morning, July 25. The full Senate approved their nominations Thursday
7/25. Rep. Adam Schiff
(D-CA) introduced HR 5233,
a bill to amend title XXI of the Social Security Act to encourage the use of web
based enrollment systems in the State children's health insurance program (SCHIP).
9th Circuit Addresses Trademarks and Parody
7/24. The U.S.
Court of Appeals (9thCir) issued its opinion
[PDF] in Mattel
v. MCA, a trademark and defamation case involving Mattel's Barbie
doll. Judge Alex Kozinski, who wrote the opinion, described this case as
"Speech-Zilla meets Trademark Kong". In the end, speech won.
Background. Aqua, a Danish techno pop band, wrote a song titled
"Barbie Doll" for its 1997 album titled "Aquarium". MCA
Records, and other companies, produced, marketed and sold the music. Mattel
makes and sells Barbie dolls for girls.
In April, Judge Margaret McKeown of the 9th Circuit wrote that Barbie is
"so perfect in her sculpture and presentation, and so comfortable in every
setting, from ``California girl´´ to ``Chief Executive Officer Barbie,´´".
[PDF] in Christian
v. Mattel. In the present case, Judge Kozinski noted that Barbie
began her career in the 1950s as a "German street walker"; she was an
"adult collectors item". Aqua's comic lyrics present
her in this light. The song became a top 40 hit. However, Mattel was not amused.
District Court. Mattel filed a complaint in U.S.
District Court (CDCal) against MCA Records and others alleging, among other
things, violation of the Lanham Act. MCA, in turn, counterclaimed against Mattel
alleging defamation for accusing MCA of piracy. The District Court granted MCA's
motion for summary judgment on Mattel's claims for trademark infringement and
dilution on the grounds that the use was a parody and nominative fair use. The
District Court also granted Mattel's motion for summary judgment on MCA's
Appeals Court. The Court of Appeals, in a lengthy analysis of freedom of
speech, trademark infringement, and trademark dilution, affirmed the grant of
MCA's motion for summary judgment. The Court ruled on the infringement issue on
First Amendment grounds. The Court did not address nominative fair use. The
Court affirmed the dilution ruling on the grounds that the song falls within the
noncommercial use exemption to the Federal Trademark Dilution Act (FTDA). The
Court also affirmed the summary judgment on the defamation claim.
Judge Kozinski also concluded that "The parties are advised to chill."
Senate Approps Rejects Bush Proposals for Increased Funding
for Tech Related Agencies
7/24. The Senate Appropriations
Committee (SAC) reported and released its Commerce Justice State (CJS) FY
2003 appropriations bill. This bill includes appropriations for most of the
technology related departments and agencies of the federal government, including
the USPTO, FCC, FTC, and Antitrust Division. President Bush's proposal, released
back in February, called for significant increases for these entities. The
Senate bill provides for no increase, or very small increases, at most agencies.
However, it would reinstate the NTIA's TOP grant program which Bush seeks to
eliminate. See, full story.
MIT Media Lab Profs Offer Vision for Future of the Internet
7/24. A trio of professors from the Massachusetts Institute of Technology (MIT) Media Laboratory spoke at a luncheon on
Capitol Hill. They offered a vision for the future of the Internet that is
egalitarian and communitarian.
Nicholas Negroponte, Andrew Lippman, and Walter Bender spoke at a luncheon
hosted by the Congressional Internet Caucus
Advisory Committee. Lippman also handed out a very brief, but wide ranging,
paper titled "Scaling the Internet". A Co-Chair of the Internet
Caucus, Sen. Conrad Burns (R-MT), and a
Congressman from Boston, Rep. Michael
Capuano (D-MA), gave introductory remarks.
The three described and promoted the Media Lab. Negroponte said that "we
are looking at the moment to work much more closely with the federal
The three idealistic academics also related a eclectic collection of anecdotes
and one liners about the history, current use, and future of the Internet.
The speakers barely addressed many of broadband issues that other people think
are important, such as those pertaining to open access to cable facilities, line
splitting, unbundled network elements, and the regulatory classification of
wireline broadband services as information services. Lippman explained that
"the battle in the wires" has already been lost, so it is best to
focus on the future -- wireless.
The three panelists praised dumb networks with intelligent nodes, 802.11, viral
networks, interference, and innovative device makers. The derided the
centralized ownership models of the cable, broadcast and music industries. The
also criticized developments in copyright law, and FCC spectrum management.
Negraponte stated that "Many years ago we thought of unlicensed spectrum
that we would use for all of the garbage things -- the things like garage door
openers, cordless telephones, stuff like that, microwave ovens. And, sort of, we
park the world's junk in these different places in the spectrum. That is indeed
how it started."
He continued that "while the telecommunications industry is struggling
today to find a next generation -- particularly a wireless -- a next generation
of telecommunications technologies and applications and so called broadband --
the computer industry, just like it did with the Internet, is doing something
viral on the side. And that goes by the name of 802.11, WiFi, whatever you want
to call it."
"This was an effort that people made just to have computers wirelessly talk
in local area networks, and offices, homes, whatever. And, as this progressed,
it progressed very much like the Internet progressed."
Negraponte stated that spectrum is currently treated like real property. He
wants a new approach. He wants there to be more spectrum "commons".
Lippman said that spectrum should be treated like the sea -- open to all, but
subject to rules.
Lippman also stated that "the Internet was built by building a network that
had no intelligence in it. And, all of the intelligence was at the nodes. The
basic founding principle was end to end design. Now, how did they get away with
that?" He answered that "there was no adult supervision. Put another
way, there was no commercial interest involved in it. It was just a bunch of
hackers, and just a bunch of people. And, it was fundamentally good for nothing.
And because it was good for nothing, they built a network that would become good
But, said Lippman, "we have lost the battle in wires. We fundamentally lost
the battle that caused the Internet to get started." He elaborated that
"what is gradually creeping into the way the network is being constructed
is a fundamental asymmetry. And, that is hidden in the word broadband, and
hidden in the word access, is control over the bits that are flowing through
that wire. And, the end to end nature of the Internet is indeed being lost. If I
tie into the net with my cable modem, there is no way for me to send bits to my
neighbor. There is no way for me to be a wireless provider in my house. ... All
of the bits that come from my house go up to the head end, get looked at and
filtered, and then go back down again. And the situation is only marginally
better with DSL."
Lippman offered his recommendations regarding government regulation of spectrum
and interference. He said that "the fundamental thing that you have to
think about is that interference doesn't exist in the airwaves, O.K., any more
than two waves that cross in an ocean or in a sink would interfere with each
other. Interference only exists in the receiver. In the past, it has been
expensive to build a receiver that was qualified enough to reject other kinds of
interference. That is why in any locality, like Washington and New York, you
have TV channels 2, 4, 7, 9, 11, and 13, because it is more expensive to build a
TV set that would reject channel 8 while we're trying to watch channel 9. ...
So, what you want to do, therefore, is put, in a sense, a different set of
constraints on the radio, but not on the spectrum. So, if you want to build it,
you have to build it in a way that is cooperative, and sort, ecological, and
friendly to the environment, as opposed to building it with a grant of
The panel was asked about security. Negraponte said that "while there are
certainly some technologies that are emerging in this space, these are are
fundamentally societal problems."
Lippman added that "a lot of the work that we are doing is very security
neutral, in the sense that one can embed as much security into the system as you
want. Or, you can leave it as free as you want. But, there is a little bit of a
hidden quirk that also makes it interesting. One of the ways that you
communicate, by all of these multiple hops, is you sort of pass messages to
people at a level that is so low that they can't even really decode the message
themselves. But, by cooperating, O.K., by passing bits and pieces over the long,
it can be decoded by the person who is ultimately supposed to receive it. And
so, there is an opportunity to embed a kind of security in these kinds of ad hoc
and, call them viral, networks, that you didn't have before, in the sense that
there really isn't any central authority that had the whole picture."
The panel was also asked about problems relating to spam. Negraponte again said
that "the best way of dealing with that phenomenon, is in fact a social
phenomenon." He added that the worst spam is not the pormographic variety.
Rather, it is "your own colleagues sending you gratuitous cc:s".
The panel was also asked for their views on intellectual property. Negraponte
said that "These are really changing, and they are going to change very
fast. The only remark that I would like to make is that copyright was invented
to protect the artist. That is what it was invented for. Not to protect the
channel. And all of the arguments and debates that we see today are about the
damn channel complaining. It is not so much the artists. The artists, maybe it
is the Grateful Dead, want to have it copied and recorded, and they are going to
make their money on performance. ... So, suddenly, it was the channel, not the
artist. And I think if we revisit the original purpose, we are going to find
some much more flexibility in some of the copyright issues."
Lippman, addressing peer to peer networks, such as Napster, stated that
"these new structures for distribution don't necessarily threaten the
relationship the artist has with the end user. And they may not even threaten
the channel. But they do threaten the historical centralized business
The Congressional Internet Caucus Advisory
Committee's regularly hosts Internet policy luncheons on Capitol Hill. These
events double as a free lunch program for Congressional staffers and
Third Circuit Interprets Dormant Commerce Clause
7/24. The U.S.
Court of Appeals (3rdCir) issued its opinion [PDF] in
v. Pennsylvania. This is not a technology case. It involves
Pennsylvania's milk price supports. However, the Appeals Court opinion includes
a lengthy analysis of the dormant commerce clause.
Article I, Section 8, of the Constitution provides that "The Congress shall
have Power ... to regulate Commerce with foreign Nations, and among the several
States ..." The dormant commerce clause is the judicial concept that the
Constitution, by delegating certain authority to the Congress to regulate
commerce, thereby bars the states from legislating on certain matters that
affect interstate commerce, even in the absence of Congressional legislation. It
is applied to block states from regulating in a way that materially burdens or
discriminates against interstate commerce. The analysis in Cloverland v.
Pennsylvania may be pertinent to some challenges to state e-commerce restraints.
FCC Declines to Commence NPRM on Location Privacy
7/24. The Federal Communications Commission
(FCC) released an order
[9 pages in PDF] in which it stated that "we decline to commence a
rulemaking to adopt rules to implement the wireless location information privacy
amendments to Section 222 of the Communications Act of 1934 ..."
The FCC reasoned that "precisely because of the nascent state of these
services, we do not wish inadvertently to constrain technology or consumer
choices via our rules. At this point, any commercial location based services
being offered are clearly at an early stage and the full nature and extent of
the commercial services that will be offered is unknown."
The FCC added that it "will continue to monitor location privacy issues as
these services are deployed and will take regulatory action if the need is
47 U.S.C. § 222
provides, in part: "Except as required by law or with the approval of the
customer, a telecommunications carrier that receives or obtains customer
proprietary network information by virtue of its provision of a
telecommunications service shall only use, disclose, or permit access to
individually identifiable customer proprietary network information in its
provision of (A) the telecommunication service from which such information is
derived, or (B) services necessary to, or used in, the provision of such
telecommunications service, including the publishing of directories."
The 106th Congress enacted, and President Clinton signed, the Wireless
Communications and Public Safety Act of 1999. This bill was S 800,
sponsored by Sen. Conrad Burns (R-MT),
and HR 438, sponsored by Rep. John
Shimkus (R-IL). It designated 911 as the universal emergency service number,
and promoted wireless 911 service. The bill also amended § 222 to include cell
phone call location information in the definition of customer proprietary
network information (CPNI).
§ 222 covers only telecommunications carriers. However, with the development of
PDAs, in car map and traffic services, wireless tollbooth collection systems, Blackberry e-mail pagers, Bluetooth enabled devices, and anything
else that can be embedded with a GPS chip, or other technology, location data
can be collected by entities which are not telecommunications carriers.
The Cellular Telecommunications & Internet
Association (CTIA) had requested a rulemaking proceeding. This is the FCC's
proceeding titled "In the Matter of Request by Cellular Telecommunications
and Internet Association to Commence Rulemaking to Establish Fair Location
Information Practices", and numbered WT Docket No. 01-72.
CTIA President Tom Wheeler stated in a release
that "This decision can only be characterized as a fumble ... Two years ago
CTIA took the lead on this important consumer issue and proposed to the
Commission a uniform methodology, based on our own voluntary program.
Unfortunately, the FCC has chosen to reject our proposal ... Congress sent a
clear message when it passed the 911 legislation -- that location information
was a uniquely sensitive matter of privacy. The industry responded to Congress,
but it appears as though the FCC has dropped the ball."
FCC Commissioner Michael Copps
wrote a separate dissent
[PDF]. He stated that "our failure to act will result in American’s
privacy being threatened and adoption of location enabled devices and E911
phones being slowed." He reasoned that "Customers will shy away from
services if they think that the privacy of something as sensitive as their
location is up for grabs. And carriers and equipment makers will avoid being
burned by consumer fear and will thus under-invest in location devices."
"The Commission should issue a Notice of Proposed Rulemaking that proposes
rules to implement Congress's mandate," wrote Copps. "Instead, the
majority chooses to do nothing -- inaction -- a course that is antiprivacy, anti
consumer, and will slow the growth of the wireless industry."
FCC Seeks Comment on NTIA 3G Viability Assessment
7/24. The Federal Communications Commission
(FCC) issued a public
notice [PDF] in which it requests comment on the National Telecommunications and Information
Administration's (NTIA) July 23 document
titled "An Assessment of the Viability of Accommodating Advanced Mobile
Wireless (3G) Systems in the 1710-1770 MHz and 2110-2170 MHz Bands". Comments
are due by August 8.
On July 23, officials from the Federal
Communications Commission (FCC), Department of
Commerce (DOC), and Department of Defense (DOD), along with the heads of the
CTIA and TIA, announced a plan for the reallocation of 90 MHz of spectrum for
use by Third Generation (3G) wireless services. The DOC's NTIA released the
Viability Assessment at this time. The participants also called for legislation
amending the spectrum auction process. In particular, the administration
proposes creating a trust to be funded out of the proceeds of auctions of the
reallocated spectrum; this trust would then provide payments to federal entities
that must relocate to other spectrum.
The FCC's notice also states that this viability assessment "has also been
incorporated into the record of the Commission’s Advanced Wireless Services
proceeding in ET Docket No. 00-258".
Senate Committee Approves FOIA Exemption Amendment to DHS Bill
7/24. The Senate Governmental
Affairs Committee held a business meeting to consider amendments to S 2452 [273
pages in PDF], the National Homeland Security and Combatting Terrorism Act of
2002. The Committee unanimously approved an amendment [PDF]
offered by Sen. Bob Bennett (R-UT) and
others regarding public access under the Freedom of Information Act
(FOIA) to information about critical infrastructure voluntarily shared with the
The amendment creates a new Section 195 that provides, in part, that
"Notwithstanding any other provision of law, information that is furnished
voluntarily to the Department shall not be made available pursuant to section
552 of title 5, United States Code, provided that (1) the provider would not
customarily make the information available to the public; and (2) the
information is designated and certified by the provider, in a manner specified
by the Department, as information that the provider would not customarily make
available to the public."
The Bennett amendment also provides that "Nothing in this section shall
prohibit any agency from making available, pursuant to section 552 of title 5,
United States Code, information that it received independently of the
Department, regardless of whether the Department has similar or identical
This amendment further provides that "Nothing in this section shall be
construed as preempting or otherwise modifying state or local law concerning the
disclosure of any information that a state or local authority received
independently of the Department."
On July 23, the ACLU wrote a letter to Sen. Joe Lieberman (D-CT), the Chairman
of the Committee, stating that "we urge you to oppose a misguided proposal
to exempt so-called ``critical infrastructure´´ information submitted to the
new Department from the Freedom of Information Act (FOIA). Such ``critical
infrastructure´´ legislation, which was attached to the H.R. 5005 as
reported at section
724, could have a devastating effect on the public’s right to know, muzzle
whistleblowers, and undermine national security."
The ACLU added that "Such legislation is entirely unnecessary. The FOIA
does not require the disclosure of national security information (exemption 1),
sensitive law enforcement information (exemption 7), or confidential business
information (exemption 4)."
The Committee also approved an amendment [3 pages in
PDF] offered by Sen. Richard Durbin
(D-IL) and Sen. Lieberman pertaining to homeland security information technology
SEC Files Complaint Against Adelphia
7/24. The Securities and Exchange Commission
(SEC) filed a civil complaint in
U.S. District Court (SDNY) against Adelphia Communications Corporation, its
founder John Rigas, his three sons, Timothy Rigas, Michael Rigas, and James
Rigas, and two executives at Adelphia, James Brown and Michael Mulcahey,
alleging Section 10b fraud, and other violations of federal securities laws. See
also, SEC release.
The complaint alleges that "This case concerns one of the most extensive
financial frauds ever to take place at a public company. From at least 1998
through March 2002, Adelphia -- the nation's sixth largest cable television
company -- systematically and fraudulently excluded billions of dollars in
liabilities from its consolidated financial statements by hiding them on the
books of off balance sheet affiliates. It also inflated earnings to meet Wall
Street's expectations, falsified operations statistics, and concealed blatant
self dealing by the family that founded and controlled Adelphia, the Rigas
The complaint alleges three categories of fraud. First, "Adelphia
fraudulently excluded from the Company's annual and quarterly consolidated
financial statements over $2.3 billion in its bank debt by systematically
recording those liabilities on the books of unconsolidated affiliates".
Second, "Adelphia and the other Defendants regularly misstated in press
releases, including earnings reports, and Commission filings, Adelphia's
reported performance in three aspects that are crucial to the ``metrics´´ used
by Wall Street to evaluate cable companies: (i) the number of its ``basic cable
subscribers,´´ (ii) the extent of its cable plant ``rebuild,´´ or upgrade,
and (iii) its earnings ...". And third, "Adelphia used fraudulent
misrepresentations and omissions of material fact to conceal rampant
self-dealing by the Rigas Family ..."
GAO Reports on Critical Infrastructrure Protection
7/24. The General Accounting Office (GAO)
released a report [PDF]
titled "Critical Infrastructure Protection: Significant Challenges Need to
This report was written as prepared testimony for the House Government Reform Committee's
Subcommittee Government Efficiency, Financial Management, and Intergovernmental
Relations hearing on cyber terrorism on July 24. The report's author, Robert
Dacey, Director of Information Security Issues at the GAO, summarized this
report at the hearing.
The report makes several recommendations, including:
"Developing a national CIP strategy. A more complete strategy is needed
that will address specific roles, responsibilities, and relationships for all
CIP entities; clearly define interim objectives and milestones; set time frames
for achieving objectives; establish performance measures; and include all
"Improving analysis and warning capabilities. More robust analysis and
warning capabilities, including an effective methodology for strategic analysis
and framework for collecting needed threat and vulnerability information, are
still needed to identify threats and provide timely warnings. Such capabilities
need to address both cyber and physical threats."
"Improving information sharing on threats and vulnerabilities. Information
sharing needs to be enhanced both within the government and between the federal
government and the private sector and state and local governments."
"Addressing pervasive weaknesses in federal information security. Because
of our government’s and our nation’s reliance on interconnected computer
systems to support critical operations and infrastructures, poor information
security could have potentially devastating implications for our country."
FOIA Exemption Debated at House Subcommittee Hearing
7/24. The House Government Reform
Committee's Subcommittee Government Efficiency, Financial Management, and
Intergovernmental Relations hearing on cyber terrorism served as a forum for
debate over the the Freedom
of Information Act (FOIA).
The bill to create a new Department of Homeland Security, HR 5005,
which will be considered by the full House on starting on July 24, creates a new
exemption for critical infrastructure information voluntarily shared with the
federal government. See, Sections
721-724 of the bill as approved on July 19 by the House Select Committee on Homeland Security.
Rep. Jan Schakowsky (D-IL) spoke
in opposition to the exemption. She stated that "the fourth exemption to
the Freedom of Information Act protects information, which is a trade secret, or
information, which is commercial and privileged or confidential. This
information is considered confidential if disclosure of the information is
likely to impair the government's ability to obtain the necessary information in
the future, or to cause substantial harm to the competitive position of the
business from which the information was obtained."
The FOIA currently contains a list of exemptions, at 5 U.S.C. § 552(b).
Subsection (b)(4) exempts "trade secrets and commercial or financial
information obtained from a person and privileged or confidential".
Rep. Schakowsky continued that "the damage this exclusion could do is
legion. The language included in the Homeland Security Bill would allow
businesses and agency officials to hide lobbying activities under this
exclusion. Officials from energy companies could meet with federal officials to
craft government energy policy, and all of those conversations could be hidden
from public view."
James Dempsey of the Center for Democracy and Technology wrote a
letter to Rep. Horn and Rep. Schakowsky arguing against the exemption contained
in HR 5005. He did not testify at the hearing, but Rep. Horn made his
letter a part of the record. He wrote that "some FOIA disclosures can help
improve infrastructure security, by ensuring governmental accountability
and by bringing public pressure on owners and operators of those facilities to
correct safety defects. Keeping vulnerabilities secret may aid only the hackers
Dempsey also argued that the Section 721-724 exemption "is not narrowly
focused and may have the unintended consequence of reducing accountability for
critical infrastructure vulnerabilities."
In contrast, Scott
Charney, Chief Security Strategist for Microsoft,
testified that "Information sharing is indeed a key aspect to public
private partnerships, and progress is being made, but there remain obstacles to
the greater sharing of information concerning cyber vulnerabilities with the
government. We support legislation to facilitate cyber security information
sharing by granting an exemption from the Freedom of Information Act (FOIA) for
information about cyber vulnerabilities voluntarily shared with the government.
This legislation will lead many companies to answer the Government's call that
they provide it with more cyber security data."
7/24. The Senate Commerce Committee's
Subcommittee on Science, Technology, and Space held a hearing on women in
science and technology. See, prepared testimony of witnesses: Kristina M. Johnson
(Pratt School of Engineering, Duke University), Kay Koplovitz
(Koplovitz and Company), Nancy Stueber
(Oregon Museum of Science and Industry), and Ana Marie Boitel
(Women in Technology).
7/24. The Business Software Alliance (BSA) released
[PPS] of information technology professionals regarding cyber security. The BSA
reported that 60 percent of those surveyed who are directly responsible for
their company's network security believe that U.S. businesses are at risk for a
major cyber attack in the next 12 months. See also, BSA
Privacilla Paper Addresses Privacy Torts
7/23. Privacilla.org published a paper [PDF]
titled "The Privacy Torts: How U.S. State Law Quietly Leads the Way in
The paper states that "During the last century, American common law
developed a body of privacy protecting theories that give people whose privacy
has been invaded the right to sue and collect damages." The paper goes on
to review the nature of tort law, the history of privacy torts, and the elements
of causes of action based on privacy tort law. The paper also includes state by
state list of court opinions that address privacy.
The paper also discusses the policy implications of the availability of tort
remedies for invasions of privacy. It states that "in Washington, D.C.,
U.S. state capitols, and internationally, many politicians and bureaucrats are
seeking to protect privacy without knowledge of fundamental protections for
privacy in the United States: the state privacy torts."
The paper does not criticize legislators. Rather, it focuses on the privacy
advocates who inform them. It states that "Many pro-regulation privacy
activists and so-called consumer advocates have disinformed Congress and the
public about the existence of privacy protections for consumers. They have
fostered a degree of hysteria by encouraging the impression that consumers are
completely unprotected by existing law. For example, the Electronic Privacy Information Center's 2000
Privacy and Human Rights book states flatly ``The U.S. has no comprehensive
privacy protection law for the private sector.´´"
Moreover, the report asserts, state privacy litigation is superior to
prescription regulation as a means of protecting individual privacy. Citing the
privacy regulations contained in the Gramm Leach Bliley Act, the report
concludes that "Attempting to refine ``notice and choice´´ is a
technocratic approach that can not succeed."
The paper also cautions that "federal preemption of the state privacy torts
would be a significant and objectionable retreat for privacy protection in the
United States. Any preemption should be limited to regulatory statutes -- not
the baseline privacy protections provided by the state privacy torts."
Also, states should be cautious about legislating regarding privacy.
The paper's conclusion is that "Legislators, bureaucrats, the press, and
the public should be better aware of the explicit privacy protection available
in the United States through the privacy torts. This knowledge will help
consumers know better when their privacy is threatened and when it is safe. And
it will help dissuade legislators from experimental legislation clumsily aimed
at delivering privacy by dictating information policy."
The paper does not name its author. It states only that it is "Issued by
Harper is the Editor of the Privacill.org, as well as the Principal of Policy Counsel and an Adjunct Fellow at
the Progress and Freedom Foundation.
DOJ Recommends Approval of Qwest Long Distance Application
7/23. The Department of Justice (DOJ) issued
analysis [49 pages in PDF] of the Section 271
application of Qwest Communications to
provide in region interLATA services in the states of Colorado, Idaho, Iowa,
Nebraska, and North Dakota. The DOJ recommends that the Federal Communications Commission (FCC) approve
The FCC concluded that "Qwest's application demonstrates that it has
succeeded in opening its local markets in Colorado, Idaho, Iowa, Nebraska, and
North Dakota in most respects. However, Qwest's application as filed does not
demonstrate that it provides CLECs with electronically auditable wholesale bills
for the UNE platform nor does it adequately address issues relating to Qwest's
manual processing of wholesale orders. Thus, the Department cannot support
Qwest's application as filed. However, Qwest has since submitted substantial
additional evidence which, if sufficiently meaningful and reliable for the
Commission to assure itself that Qwest is providing electronically auditable
wholesale bills and manually processing wholesale orders timely and accurately,
would justify the granting of long distance authority in Colorado, Idaho, Iowa,
Nebraska, and North Dakota."
Qwest issued a release
in which it stated that "Qwest filed a second application for four more
states -- Washington, Utah, Montana and Wyoming -- on July 12. The DOJ is
scheduled to make its recommendation to the FCC on Qwest’s second application
on August 16."
This is WC Docket No. 02-148. See also, DOJ release.
Government Officials Announce 3G Spectrum Plan
7/23. Officials from the Federal Communications
Commission (FCC), Department of Commerce
(DOC), and Department of Defense (DOD), along with the heads of the CTIA and TIA,
announced a plan for the reallocation of 90 MHz of spectrum for use by Third
Generation (3G) wireless services at a press conference in Washington DC. The
identified spectrum is located at 1710-1755 MHz and 2110-2155 MHz.
The participants also called for legislation amending the spectrum auction
process. In particular, the administration proposes creating a trust to be
funded out of the proceeds of auctions of the reallocated spectrum; this trust
would then provide payments to federal entities that must relocate to other
spectrum. See, full story.
Administration Proposes Legislation to Create Spectrum
7/23. Theodore Kassinger, General Counsel of the Department
of Commerce (DOC), wrote a letter
to House and Senate leaders, and Chairmen and ranking members of the relevant
oversight committees, enclosing a draft
bill titled the "Federal Spectrum Relocation Payment Procedures
Act". The proposed legislation is a part of the administration's overall
plan for reallocating spectrum for Third Generation (3G) wireless services.
He wrote that "Under current law, commercial entities must reimburse
Federal entities for the costs of relocating from reallocated spectrum, and
agencies are not authorized to accept these payments, but the spending of the
payments must be appropriated. This proposal would not only change the mechanism
for payment to the agencies from direct payments by the commercial entities to
payments from a central Spectrum Relocation Fund funded by auction receipts, it
would also authorize the Federal entities to spend the payments without further
Mike Gallagher of the DOC's National
Telecommunications and Information Administration (NTIA) stated at a press
conference on July 23 that the administration has been in close contact with
congressional staff, but that it does not have any Senator or Representative who
is prepared to introduce this proposed bill.
Sen. Sen. Ernest Hollings (D-SC), the
Chairman of the Senate Commerce
Committee, and Sen. Daniel Inouye
(D-HI), the Chairman of the Communications Subcommittee, stated on July 23 that
"we plan to introduce bipartisan legislation".
Powell Comments on 3G Plan
7/23. Federal Communications Commission (FCC)
Chairman Michael Powell
did not attend the meeting at the Department of Commerce. However, he released a
[PDF]. "I am pleased that 90 MHz of prime spectrum can be made available
for advanced wireless services in the United States. This spectrum should
provide wireless carriers with sufficient capacity to keep pace with consumer
demand for new and innovative services. In the future, as events warrant, the
Commission will consider making additional spectrum available for wireless
"I would like to laud the National Telecommunications and Information
Administration (NTIA) role in this successful interagency effort, as well as the
hard working staff from the Federal Communications Commission, (FCC) the
Department of Defense (DOD) and other agencies. Together with DOD, NTIA has been
able to achieve significant and positive results – for government, for
industry, and for American consumers."
"Throughout the past year, an interagency working group with staff from the
FCC, NTIA, DOD, and other executive branch agencies, has been working diligently
to identify spectrum for advanced wireless services. The interagency effort
examined existing federal operations in spectrum already earmarked for transfer
to non-federal use -- specifically, the 1710-1755 MHz band. The terms of the
transfer would have allowed certain federal operations -- both military and
non-military to continue indefinitely. Permissible, grandfathered operations at
16 military facilities would have particularly impeded the development of new
nationwide services. The interagency working group developed a creative plan for
relocating these operations to other bands and thus clearing the band for
commercial use," said Powell.
Sen. Hollings Comments on 3G Plan
7/23. Sen. Ernest Hollings (D-SC), the
Chairman of the Senate Commerce
Committee, and Sen. Daniel Inouye
(D-HI), the Chairman of the Communications Subcommittee, released the following
joint statement: "In the Senate Commerce Committee, we have tirelessly
promoted the need for additional spectrum for third generation wireless service
as an issue requiring resolution by federal regulators. In the past two years,
we have had hearings on this very issue in which we have encouraged all stake
holders to identify and allocate additional spectrum for third generation
wireless service. Therefore, it is with satisfaction that we receive the news
that both DoD and industry working with the FCC and NTIA have resolved the
sharing issues and identified additional spectrum for third generation wireless
The two also stated that "In the near future, we plan to introduce
bipartisan legislation that will supplement these positive steps by addressing a
number of spectrum management issues, including the reimbursement of government
users when they are required to relocate their facilities to make spectrum
available for commercial purposes."
People and Appointments
7/23. The Senate Commerce Committee
(SCC) approved the nomination of Jonathan Adelstein to be a Commissioner
of the Federal Communications Commission. See,
7/23. The Senate Commerce Committee
(SCC) approved the nominations of Kathie Olsen and Richard Russell
to be Associate Directors of the Office of
Science and Technology Policy. See, SCC release.
House to Consider Homeland Security Bill
7/22. The House will likely take up HR 5005,
the Homeland Security Act of 2002, later this week. The House Select Committee on Homeland Security
amended and approved the bill on Friday, July 19 by a vote of 5-4 after a day
long meeting. See, HR 5005
[232 pages in PDF] as reported by the Select Committee.
The House Rules Committee has
scheduled a meeting for Wednesday at 4:00 PM to adopt a rule for its
consideration. See also, Rules Committee's notice regarding the amendments process
for HR 5005.
President Bush gave a speech
Monday morning in which he addressed progress on this bill. He said that
"We are making progress in Washington. I appreciate so very much the House
Select Committee getting a bill out, and it's going to get to the floor. And the
Speaker was telling me today that it looks like they may get a vote this week.
And the Senate is working hard on it, both Republicans and Democrats are working
hard to reconcile any differences that may be had."
Bush Addresses Technology and Homeland Security
7/22. President Bush gave a speech
at the Argonne National Laboratory in
Illinois. He said that "Our scientific community is serving on the front
lines of this war, by developing new technologies that will make America
He also stated that "We will harness our science and our technology in a
way to protect the American people. We will consolidate most federally funded
homeland security research and development, to avoid duplication, and to make
sure all the efforts are focused."
President Bush also used the occasion to promote HR 5005,
his proposed legislation to create a new Department of Homeland Security (DHS).
The Argonne National Laboratory, which is a part of the Energy Department,
states in its web site that its "scientists are adapting existing
technologies to solve homeland security challenges. Relying on expertise in
nuclear power, infrastructure technology and ``lab-on-a-chip´´ sensors,
Argonne has developed a neutron detector, an early warning and crisis management
computer simulator for mass transportation and sensors for detecting biological
and chemical agents."
President Bush stated in his address
to the nation on June 6 that the new DHS "will bring together our best
scientists to develop technologies that detect biological, chemical, and nuclear
weapons, and to discover the drugs and treatments to best protect our
Argonne is not listed as one of the laboratories to be transferred to the DHS in
either in the President's original bill, or in the version approved by the House
Select Committee on Homeland Security on Friday, July 19.
GAO Reports on Multitude of Critical Infrastructure Protection
7/22. The General Accounting Office (GAO)
released a report [84
pages in PDF] titled "Critical Infrastructure Protection: Federal Efforts
Require a More Coordinated and Comprehensive Approach for Protecting Information
The report found that "At least 50 federal organizations are involved in
national or multiagency cyber CIP activities that include setting policy,
analyzing vulnerabilities and intelligence information, disseminating alerts and
warnings on potential and actual infrastructure attacks, developing remediation
plans, responding to incidents, and performing research and development. These
organizations are primarily located within 13 major departments and agencies
mentioned in Presidential
Decision Directive 63."
The report also found that "relationships among all organizations
performing similar activities (e.g., policy development or analysis and warning)
were not consistently established. The President’s Critical Infrastructure
Protection Board is intended to coordinate federal efforts and programs related
to protecting critical infrastructures. However, an underlying challenge
in this coordination is that a detailed strategy is still being developed."
The report concluded that "Without a strategy that identifies
responsibilities and relationships for all cyber CIP efforts, our nation risks
not knowing whether we have the appropriate structure to deal with the growing
threat of computer based attacks on its critical infrastructure. The President's
Critical Infrastructure Protection Board is currently developing a proposed
national strategy in coordination with the private sector. It is essential that
this strategy define the roles, responsibilities, and relationships among the
various federal organizations involved in cyber CIP activities."
The report was prepared for the Senate
Governmental Affairs Committee, chaired by Sen. Joe Lieberman (D-CT). On July 24,
the House Government Reform Committee's
Subcommittee Government Efficiency, Financial Management, and Intergovernmental
Relations is scheduled to hold a hearing titled "Cyber Terrorism: Is the
Nation's Critical Infrastructure Adequately Protected?"
Powell Writes WorldCom Re Bankruptcy and Continuity of Service
7/22. Federal Communications Commission (FCC)
Chairman Michael Powell
wrote a letter
[PDF] to WorldCom P/CEO John Sidgmore
regarding bankruptcy and continuity of service. He wrote that "Because of
WorldCom's size and scope, it is particularly important, both to millions of
consumers and to the integrity of the nation's communications network, that
WorldCom integrate its regulatory requirements into its planning during the
bankruptcy process, and that it take these requirements seriously."
Powell made two main points. First, he asserted that "If WorldCom's
bankruptcy proceeding results in a restructuring or acquisition of WorldCom or
its assets, such a restructuring or acquisition could only take place after the
Commission granted required approvals to transfers of control over licenses or
authorizations granted by the Commission."
Second, Powell stated that "If WorldCom's bankruptcy proceeding leads to a
discontinuance of services, then, to the extent WorldCom provides services
reached under section
214(a) of the Act, such a discontinuance could only take place if WorldCom
first meets the notice requirements of the Commission's rules." However,
Powell's letter is silent as to which services he asserts are "reached
under section 214(a)".
Section 214, which applies only to common carrier regulation, provides, in part,
that "No carrier shall discontinue, reduce, or impair service to a
community, or part of a community, unless and until there shall first have been
obtained from the Commission a certificate that neither the present nor future
public convenience and necessity will be adversely affected thereby; except that
the Commission may, upon appropriate request being made, authorize temporary or
emergency discontinuance, reduction, or impairment of service, or partial
discontinuance, reduction, or impairment of service, without regard to the
provisions of this section. As used in this section the term ``line´´ means
any channel of communication established by the use of appropriate equipment,
other than a channel of communication established by the interconnection of two
or more existing channels ..."
Sidgmore Addresses WorldCom's Bankruptcy Filing
7/22. John Sidgmore, P/CEO of WorldCom,
held a press conference in New York City in which he discussed WorldCom's
Chapter 11 bankruptcy filing, WorldCom's accounting problems, debtor in
possession financing, new board members, and other issues.
He stated that a Chapter 11 proceeding is the "only way to provide for the
company's future". He added that he hopes that WorldCom will "emerge
on the other side of the process as a stronger and much healthier
He was asked about an exodus of suppliers and customers. He responded that
"I think the worst possible period ... was the last three months. ... Now,
you know, in a strange way, under Chapter 11, we will be stabilized." He
added that "we still have not lost any substantial customers".
He also addressed his hope that WorldCom will emerge from bankruptcy intact. He
stated that "I think, if our plan is successful, I think our plan is
essential going to be, essentially to keep the company intact. That doesn't mean
that we won't have some assets that are restructured."
Sidgmore continued that "It doesn't mean that we won't get out of some
businesses. We have already announced that we are going to get out of the
wireless resale business. We announced that we have got some other assets for
sale. But, these are all pieces that are on the fringe of the core of
He stated that "I suspect that our plan will include keeping the core, the
center pieces, of WorldCom intact. And, that would include the UUNet business,
the Internet business, the long distance business in the United States, both for
consumers, and for corporations, the data business around the world, the
provision of service to global accounts, the major attention we pay to the
European account. All of those things are clearly going to be a piece of our
future. And so, I guess what I am saying is, the reorganization here is not
going to be a reorganization ... where you jump in and you sell off all of the
assets. It is not going to be a liquidation, in my opinion. And the courts and
the creditors may decide differently.
He also stated that "The value in WorldCom is not in the switches and the
pipes that we have underground and the hard assets. The value in WorldCom is the
twenty million customers, the brands, you know, like WorldCom, MCI, UUNet, et
cetera. The customer relationships ... that is what creates the value here.
Breaking it apart, I think, is not going to help."
In response to a question about the status of UUNet, he said this: "But, I
think the more important thing, which has been discussed several times, is, you
know, what is the separability of those organizations. And, frankly, the UUNet
organization is pretty well integrated, particularly on the sales and marketing
side, and customer service as well, for that matter, into the rest of WorldCom.
So these are not separate business units in the traditional sense anymore."
Sidgmore has been CEO of WorldCom since April. Before that, he was Vice
Chairman. He also served as an advisor on Internet and technology matters. He
came to WorldCom in 1996, when it purchased UUNet.
WorldCom filed a Chapter 11 petition
[PDF] in the U.S. Bankruptcy Court (SDNY)
on Sunday, July 21. WorldCom is represented in the proceeding by the law firm of
USTA Seeks Protections for LECs
7/22. Walter McCormick, P/CEO of the U.S. Telecom
Association (USTA), wrote a letter
[PDF] to Federal Communications Commission
(FCC) Chairman Michael Powell,
and the other FCC Commissioners, regarding the WorldCom bankruptcy proceeding.
The USTA is a group that represents incumbent local exchange carriers (ILECs).
McCormick wants the FCC to take steps to minimize service disruptions and
financial loss to the ILECs resulting from WorldCom's bankruptcy proceeding. He
also wants the FCC to continue to move ahead with various of its deregulatory
proceedings, notwithstanding WorldCom's bankruptcy.
McCormick argued that "it is imperative for the FCC to resist suggestions
... that it set aside proceedings that are equally important to the continued
health and stability of the telecommunications industry, including the UNE
Triennial Review, its Broadband dockets, and pending and future section 271
applications. The FCC must bring such proceedings to a close as quickly as
He also stated that "any actions by the FCC should be designed to serve two
equally important goals. First, any customer disruptions as a result of this or
other bankruptcy filings should be kept to a minimum. Second, and equally
important, the FCC should take affirmative steps to ensure that WorldCom’s
impending bankruptcy does not undermine the financial stability of other
carriers that provide services to it, and that such supplying carriers have
adequate assurances that they will be paid for those services."
He elaborated that the "ILECs intend to fulfill their obligations to
continue providing services under the bankruptcy laws. They should not, however,
collectively be forced to absorb hundreds of millions of dollars of costs each
month for interstate access, intrastate access, and the provision of UNEs, in
order for WorldCom to continue to provide service, without adequate assurance of
payment." McCormick also said that "the FCC will need to find a
mechanism to address the impact of WorldCom's potential unpaid contribution to
McCormick asked the FCC to do several things. He wrote that the FCC should
advocate "payment to carriers that provide service to a carrier debtor in
bankruptcy." He wrote that the FCC should allow WorldCom's suppliers to
pass on to their customers a portion of the costs of unpaid WorldCom debts. He
wrote that "the FCC should provide a clear mechanism for the recovery of
non-collectible charges as a result of the bankruptcy. For example, the FCC
could allow recovery through the exogenous cost mechanism in its price cap rules
or through a limited waiver of those rules."
McCormick also wrote that "the FCC should make clear that its pricing rules
require that carriers providing unbundled elements be allowed to include a
compensatory factor to recover non-collectible UNE charges."
Finally, he wrote that "the FCC should make clear that that the
Communications Act of 1934, as amended (Act), does not preempt the Bankruptcy
Code, and that carrier suppliers have the same rights as all other service
providers to a ``cure´´ of outstanding indebtedness on existing service
arrangements that are assumed (and assigned) during the course of the
bankruptcy." (Parentheses in original.)
7th Circuit Construes ECPA and 11th Amendment
7/22. The U.S.
Court of Appeals (7thCir) issued its opinion
[PDF] in Ameritech
v. McCann, a case holding that the 11th Amendment does not bar an
electronics communications provider from suing a state law enforcement agency in
federal court for prospective injunctive relief for an ongoing violation of the
Electronic Communications Privacy Act (ECPA).
Background. Ameritech (now SBC) is an
incumbent local exchange carrier in the state of Wisconsin. Michael
McCann has been the District
Attorney of Milwaukee County for 33 years. The DA's office requests and
receives electronic data from Ameritech pursuant to the ECPA, which is codified
at 18 U.S.C. § 2510,
The ECPA provides, among other things, that electronic communications providers
shall provide government entities certain electronic records pertaining to
communications. The ECPA also provides that such government entities shall
"pay the person or entity assembling or providing such information a fee
for reimbursement for such costs as are reasonably necessary and which have been
directly incurred in searching for, assembling, reproducing, or otherwise
providing such information." McCann requests data from Ameritech under the
ECPA, but refuses to pay for it.
District Court. Ameritech filed a complaint in U.S. District Court (EDWisc) against
McCann, in his capacity as the DA of Milwaukee County, seeking a declaratory
judgment that McCann must comply with the ECPA. McCann did not dispute that he
requests and receives, but does not pay for, electronic data. Rather, the
deadbeat DA argued that this is a collection action brought in federal court
against a state, and is hence barred by the 11th Amendment. The District Court
granted McCann's motion to dismiss, holding that suit is barred by the 11th
11th Amendment. "The judicial power of the United States shall not
be construed to extend to any suit in law or equity, commenced or prosecuted
against one of the United States by Citizens of another State, or by Citizens or
Subjects of any Foreign State."
Appeals Court. The Appeals Court reversed. The Court reasoned that while
the state will be financial affected by the requested declaratory judgment, this
is not an action for payment of a debt incurred in the past, which would be
barred by the 11th Amendment. Rather, it is a suit which seeks prospective
injunctive relief, which is not barred by the 11th Amendment.
The Court relied on the seminal case of Ex Parte Young, 209 U.S. 123
(1908). The Court also relied upon the Supreme Court's decision in May in Verizon
Maryland v. Public Service Comm. of Maryland [PDF], in which the Court
wrote that "In determining whether the doctrine of Ex Parte Young avoids
an Eleventh Amendment bar to suit, a court need only conduct a straightforward
inquiry into whether [the] complaint alleges an ongoing violation of federal law
and seeks relief properly characterized as prospective."
WorldCom Files Chapter 11 Bankruptcy Petition
7/21. WorldCom filed a Chapter 11
petition for bankruptcy in U.S.
Bankruptcy Court (SDNY). WorldCom stated in a release
that "WorldCom and substantially all of its active U.S. subsidiaries filed
voluntary petitions for reorganization under Chapter 11".
Federal Communications Commission (FCC)
Chairman Michael Powell
stated in a release that "While I am deeply concerned by this development,
I want to assure the public that we do not believe this bankruptcy filing will
lead to an immediate disruption of service to consumers or threaten the
operation of WorldCom's Internet backbone facilities. It is my understanding
that WorldCom has obtained funding necessary to continue operations during the
pendency of its bankruptcy proceeding."
Powell continued that "This Commission will act vigilantly, and to the full
extent of its statutory authority, to protect the integrity of the
telecommunications network and protect consumers against any abrupt termination
of service. To that end, I am contacting WorldCom to reiterate that the
company's regulatory obligations will continue to apply. We will continue to
gather information relevant to WorldCom's operations and advise the company of
its regulatory obligations to its customers. This Commission stands ready to
intervene in bankruptcy proceedings as necessary to ensure that the bankruptcy
court is aware of and considers our public interest concerns."
Powell also addressed the subject of continuity at WorldCom, and related issues,
at a press
briefing on July 16, and in his responses
[PDF] to a letter from Rep. Ed Markey
Go to News from July 16-20, 2002.