Tech Law Journal Daily E-Mail Alert
September 24, 2001, 9:00 AM ET, Alert No. 271.
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Letter from the Publisher
Dear readers,
The Tech Law Journal did not publish a Daily E-Mail Alert on Wednesday, September 19, Thursday, September 20, or Friday, September 21, because of problems associated with an infection by the NIMDA worm. There was a Daily E-Mail Alert for Tuesday, September 18. However, it was not e-mailed to most subscribers. It is in the TLJ web site. See, Alert No. 270. I apologize for the interruption.
   Best Regards,
   David Carney
People and Appointments
9/21. The Senate confirmed Sharon Prost to be a United States Circuit Judge for the Federal Circuit by a vote of 97 to 0. She was previously a long time assistant to Sen. Orrin Hatch (R-UT) on the Senate Judiciary Committee, and before that, on the Senate Health, Education, Labor and Pensions Committee.
9/21. The Senate confirmed Reggie Walton to be United States District Judge for the District of the District of Columbia by a vote of 97 to 0. He was previously a Judge of the Superior Court of the District of Columbia. He was also a deputy drug czar under the elder George Bush. He was also an Assistant United States Attorney for the District of Columbia before becoming a judge.
9/21. The Senate confirmed Deborah Daniels to be an Assistant Attorney General for the Office of Justice Programs.
9/21. President Bush selected John Marburger to be Director of the Office of Science and Technology Policy. See, White House release.
9/19. President Bush nominated Patrick Fitzgerald to be U.S. Attorney for the Northern District of Illinois. He is currently Interim U.S. Attorney for the Northern District of Illinois. He has also been an Assistant U.S. Attorney for the Southern District of New York since 1988. He replaces Scott Lassar. See, White House release.
9/19. President Bush nominated John McKay to be U.S. Attorney for the Western District of Washington. He has been President of the Legal Services Corporation since 1997. He previously worked in the Seattle offices of the law firms of Caincross & Hempelmann and Lane Powell. He replaces Katrina Pflaumer. See, White House release.
GAO Releases Gloomy Report on Cyber Terrorism
9/20. The GAO released a report [217 pages in PDF] titled "Combating Terrorism: Selected Challenges and Related Recommendations". See, Chapter 6, at pages 108-130, subtitled "Limited Progress in Implementing a Strategy to Counter Computer Based Threats".
The report concludes that "independent audits continue to identify persistent, significant information security weaknesses at virtually all major federal agencies that place their operations at high risk of tampering and disruption." It further states that cyber attacks "could severely disrupt computer- supported operations, compromise the confidentiality of sensitive information, and diminish the integrity of critical data." It also identified several reasons for lax security, including "funding and staffing constraints", "senior officials do not fully understand the importance of their agency’s assets to the nation’s critical infrastructures and the magnitude of the related risks", and "agency staff did not have the skills needed to carry out their computer security responsibilities".
The report also states that while "no devastating instances of 'cyber-terrorism' have occurred ... government officials are increasingly concerned". It elaborates that "the Director of Central Intelligence has stated that some terrorists groups are acquiring rudimentary cyber-attack tools. Further, according to the National Security Agency, foreign governments already have or are developing computer attack capabilities and potential adversaries are developing a body of knowledge about U.S. systems and methods to attack these systems."
9/21. See also, testimony [12 pages in PDF] of David Walker, Comptroller General of the United States, to the Senate Committee on Governmental Affairs titled "Homeland Security: A Framework for Addressing the Nation's Efforts", at pages 8-9. He added that there is a "lack of a national plan that fully defines the roles and responsibilities of key participants and establishes interim objectives."
GAO Reports on IT Practices At SSA
9/21. The GAO released a report [93 pages in PDF] titled "Information Technology Management: Social Security Administration Practices Can Be Improved". The report examines the SSA's IT practices in five areas, investment management, enterprise architecture, software acquisition and development, information security, and human capital. It found "weaknesses" in all five areas. In the area of information security, the report offered three recommendations: (1) strengthen the entitywide security framework by completing policy/risk models and technical system standards (security settings) for SSA's major systems platforms", (2) "develop monitoring techniques and corrective actions for noncompliance for the major systems platforms", and (3) "use the platform security settings to strengthen security for each application utilizing these platforms." The report was written by David McClure, Director of Information Technology Management Issues for the GAO, for Rep. Clay Shaw (R-FL), Chairman of the Ways and Means Committee's Subcommittee on Social Security.
Fed Circuit Affirms in EMI v. Cypress
9/21. The U.S. Court of Appeals (FedCir) issued its opinion in EMI v. Cypress Semiconductor, a patent infringement case involving semiconductor chip manufacturing. The Appeals Court upheld the judgment of non infringement for Cypress Semiconductor on the grounds of impossibility.
EMI owns two patents at issue in this case. Both pertain to the technology for manufacturing semiconductor chips, and in particular, for disconnecting the dysfunctional portions of chips. To disconnect a dysfunctional portion of the semiconductor chip, manufacturers sever the fuses that connect the dysfunctional portion to the rest of the chip, using lasers. EMI owns U.S. Patent No. 4,935,801, which claims a structure for a metallic fuse with an optically absorptive upper layer, and U.S. Patent No. 4,826,785, which claims a method for fabricating and blowing such a fuse.
EMI filed a complaint in U.S. District Court (DDel) against Cypress in 1998 alleging infringement of these two patents. Cypress argued that the mechanism recited in the asserted claims is impossible, or in the alternative, if the mechanism were possible, it would be inherent in all similar prior art fuses. The jury found that the patents describe a mechanism that is physically impossible. It also found, that, even if not impossible, the patents describe an inherent property, law of nature, natural phenomenon, or a new use for an old structure. The jury also found that Cypress did not infringe EMI's patents. EMI moved for judgment as a matter of law (JMOL), and for a new trial. The District Court denied the motion for a new trial, denied the motion for JMOL as to impossibility, but granted the motion for JMOL as to anticipation or obviousness. The Appeals Court affirmed.
Fed Circuit Affirms CIT in SRAMs Import Case
9/21. The U.S. Court of Appeals (FedCir) issued its opinion in Taiwan Semiconductor Industry Association v. ITC, an appeal from the U.S. Court of International Trade (CIT) pertaining to the importation of static random access memory chips (SRAMs) from Taiwan. The U.S. International Trade Commission (ITC) initially found that Taiwanese imports of static random access memory chips (SRAMs) at less than fair value (LTFV) injured the domestic industry. However, after a second remand from the CIT, the ITC determined that there was no material injury, or threat thereof, to the domestic industry by reason of imported Taiwanese SRAMs. The CIT affirmed. The Court of Appeals also affirmed, stating that "the record contains substantial evidence that factors other than LTFV Taiwanese imports caused the material injury to domestic industry".
Fed Circuit Rules in Exxon v. Phillips
9/20. The U.S. Court of Appeals (FedCir) issued its opinion in Exxon v. Phillips a patent infringement case. Exxon is the hold of U.S. Patent No. 5,324,800, which is titled "Process and catalyst for polyolefin density and molecular weight control". Exxon filed a complaint in U.S. District Court (SDTex) against Phillips alleging patent infringement. The District Court granted judgment of invalidity on the grounds of anticipation. Exxon appealed. Phillips filed a conditional cross appeal on the issue of interference estoppel. The Appeals Court reversed the judgment of invalidity, affirmed the ruling on the cross appeal, and remanded.
Federal Circuit Rules in Y2K Patent Case
9/18. The U.S. Court of Appeals (FedCir) issued its split opinion in Brown v. 3M, a patent infringement case involving Y2K inventions. Brown holds U.S. Patent No. 5,852,824, which pertains to the Year 2000 conversion problem. The District Court ruled that Brown's patent is invalid on the grounds that it was anticipated by U.S. Patent No. 5,600,836, also known at the Turn of the Century Systems, or TOCS, patent. Judge Mayer dissented, writing that "the Brown patent teaches an apparatus with additional functionality not disclosed in the allegedly anticipating TOCS patent."
House to Hold Hearing on Anti Terrorism Bill
9/24. The House Judiciary Committee will hold a hearing today at 2:00 PM on the Bush Administration's draft [PDF] of the "Anti Terrorism Act of 2001." The bill contains many major revisions of criminal law and procedure, as well as some revisions to immigration and trade law. In particular, it expands the authority of law enforcement agencies to conduct surveillance of both old fashioned telephone service, and newer forms of Internet communications. Attorney General John Ashcroft will be the sole witness.
§ 101 of the bill expands the authority of enforcement agencies (LEAs) with respect to the use of trap and trace devices and pen registers. These are both old fashioned telephone industry concepts. The bill brings these concepts into the world of Internet communications. § 101 of the bill also expands the geographic scope of such orders. Currently, investigators typically, get orders for each jurisdiction. The bill provides that "The order shall ... apply to any entity providing wire or electronic communication service in the United States whose assistance is required to effectuate the order."
§ 102 of the bill allows LEAs to seize voice mail messages with a warrant.
§ 105 provides that U.S. prosecutors may use wiretap information collected by foreign governments against U.S. citizens, even if such surveillance would have violated the 4th Amendment if conducted by U.S. LEAs.
§ 106 expands LEAs' authority to intercept computer trespasser communications. It provides that "It shall not be unlawful ... for a person acting under color of law to intercept the wire or electronic communications of a computer trespasser, if (A) the owner or operator of the protected computer authorizes the interception ... (B) the person acting under color of law is lawfully engaged in an investigation; (C) the person acting under color of law has reasonable grounds to believe that the contents of the computer trespasser's communications will be relevant to the investigation; and (D) such interception does not acquire communications other than those transmitted to or from the computer trespasser."
§ 107 expands the scope of information that can be obtained by LEAs from communications providers with a subpoena. Currently LEAs can obtain the name, address and length of service. This bill would expand the list to include include method of payment, including credit card numbers, and other information.
§ 108 provides that search warrants to compel a service provider to disclose unopened e-mail, which currently apply only in the district where they are issued, will be expanded to cover the entire U.S.
§ 109 provides that LEA's electronic surveillance authorities extend to Cable companies. However, this does not extend to records of customers' TV viewing activity.
§ 110 expands emergency disclosures of electronic communications.
§§ 151-159 contain significant revisions to the Foreign Intelligence Surveillance Act (FISA), pertaining to surveillance of persons employed by foreign governments, and members of international terrorist groups.
§ 306 expands the prohibition against providing material support or resources to terrorists. It would add providing "expert advice or assistance". It does not specify whether or not legal advice would be covered.
See also, the Bush Administration's summary [PDF] of the bill.
The Senate Intelligence Committee will also hold a hearing to counter terrorism proposals, at 3:00 PM.
The House Judiciary Committee will also meet at 4:30 PM with representatives of several groups that advocate civil liberties. The speakers will include Jim Demspey (Center for Democracy and Technology), who will focus on electronic surveillance issues, David Cole (Georgetown University Law School), who will focus on immigration issues, Brad Jansen (Free Congress Foundation), who will focus on money laundering and forfeiture issues, and a representative of the ACLU, who will focus on criminal issues.
Section 271 News
9/19. The FCC approved Verizon's Section 271 application to provide in-region, interLATA service originating in Pennsylvania. It was a 3 to 1 vote. Commission Michael Copps dissented. One seat has been vacant since the departure of Gloria Tristani. This is the seventh state for which the FCC has approved a 271 application. See, FCC release, Verizon release, AT&T release, and CompTel release.
9/19. The Louisiana Public Service Commission endorsed BellSouth's Section 271 application to provide intraLATA service in Louisiana. See, BellSouth release
FCC Releases SDR Order
9/18. The FCC released its First Report and Order [PDF] creating new rules for software defined radios (SDRs). This order was adopted and announced at the FCC meeting of September 13. This order amends FCC equipment authorization rules to permit equipment manufacturers to make changes in the frequency, power and modulation parameters of such radios without the need to file a new equipment authorization application with the FCC. (ET Docket No. 00-47.) 
FCC Releases Broadcast Ownership NPRM
9/18. The FCC released its Order and Notice of Proposed Rulemaking [PDF] regarding its broadcast ownership rules. This order was adopted and announced at the FCC meeting of September 13. The FCC seeks comments on "whether and to what extent we should revise our cross ownership rule that bars common ownership of a broadcast station and a daily newspaper in the same market." (MM Docket No. 01-235 and MM Docket No. 96-197.)
FCC Releases CALEA Order
9/19. The FCC released an Order [PDF] granting a temporary suspension of certain compliance dates in its CALEA implementation proceeding. (CC Docket No. 97-213.)
Congress passed the Communications Assistance for Law Enforcement Act in 1994 to allow law enforcement authorities to maintain their existing wiretap capabilities in new telecommunications devices. It provides that wireline, cellular, and broadband PCS carriers must make their equipment capable of certain surveillance functions. The CALEA also provides that its provisions do not apply to "information services". The FBI and the Telecommunications Industry Association (TIA) have since sought an expansive implementation of the CALEA. The FCC sided with the FBI on most points when it adopted its Third Report and Order [huge WP file] in August 1999.
In this most recent Order, the FCC rules on a request by the Cellular Telecommunications Industry Association (CTIA). The order states that "we are temporarily suspending the September 30, 2001 compliance date for wireline, cellular, and broadband Personal Communications Services ("PCS") carriers to implement two Department of Justice ("DoJ")/Federal Bureau of Investigation ("FBI") "punch list" electronic surveillance capabilities mandated by the Third Report and Order ("Third R&O") in this proceeding.  We deny CTIA’s request for a blanket extension of the September 30, 2001 compliance deadline for these carriers to implement a packet- mode communications electronic surveillance capability, also mandated by the Third R&O. However, given the imminence of the packetmode compliance deadline, we grant these carriers until November 19, 2001 either to come into compliance or to seek individual relief."
Commissioner Michael Copps wrote in a separate statement that "The events of the past week cogently demonstrate the imperative of bringing these capabilities on line as soon as possible. This is no time for "business as usual" on this issue in either the private or public sectors."
The TIA, which represents equipment manufacturers, praised the order. See, TIA release. The CTIA, which represents carriers and wireless Internet providers, criticized the order. CTIA President Tom Wheeler stated that "The technical evidence in our submission to the FCC was clear: there is no commercially available solution that meets the FCC's packet mode surveillance requirements. We understand what they want to accomplish and why, but as of now the commercially available systems simply don't exist."
Copyright Office Extends Deadline
9/21. The Copyright Office published a notice [PDF] in the Federal Register that it is extending the deadline for filing comments on proposed regulations that will govern the Recording Industry Association of America (RIAA) collective when it functions as the designated agent receiving royalty payments and statements of accounts from nonexempt, subscription digital transmission services which make digital transmissions of sound recordings, pursuant to 17 U.S.C. § 114. Under this extension, both comments and notices of intent to participate in a copyright arbitration royalty panel proceeding are due by September 28, 2001. See, Federal Register, September 21, 2001, Vol. 66, No. 184, at page 48648.
International Trademark Classification Changes
9/20. The USPTO published a notice [PDF] in the Federal Register that it has adopted a final rule to incorporate classification changes adopted by the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks. These changes take effect January 1, 2002. See, Federal Register, September 20, 2001, Vol. 66, No. 183, Pages 48338 - 48340.
Monday, Sept 24
The House will meet at 12:30 PM for morning hour, and at 2:00 PM for legislative business. No recorded votes are expected before 6:00 PM. The House will consider a number of measures under suspension of the rules, and a House Joint Resolution making further continuing appropriations for the FY 2002, through October 16, 2001.
2:00 PM. The House Judiciary Committee will hold a hearing on the Bush Administration's draft [PDF] of the "Anti Terrorism Act of 2001." See, story at left. Location: Room 2141, Rayburn Building.
3:00 PM. The Senate Intelligence Committee will hold a hearing to examine the Department of Justice counter terrorism proposal. Location: Room 216, Hart Building.
4:30 PM. The House Judiciary Committee will meet with representatives of several groups that advocate civil liberties regarding anti terrorism legislation.
6:00 - 8:00 PM. The Federal Communications Bar Association (FCBA) will host a reception featuring new FCC Commissioners. There is a price for admission. To receive a registration form by fax, email Wendy Parish at Location: Grand Ballroom, Mayflower Hotel, 1127 Connecticut Ave., NW, Washington DC.
Opening conference of the October Term 2001 of the Supreme Court of the United States.
Deadline for Department of Justice Evaluation to the FCC regarding SBC's Section 271 application to provide interLATA service in the states of Arkansas and Missouri. (CC Docket No. 01-194.) See, FCC notice [PDF].
Deadline to file comments with the FCC in its third inquiry into whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion, pursuant to Section 706 of the Telecom Act of 1996. This notice of inquiry was adopted by the FCC at its August 9, 2001, meeting. See, Aug. 9 FCC release. See also, notice in Federal Register, August 24, 2001, Vol. 66, No. 165, at Page 44636. (CC Docket No. 98-146.)
First day of a three day conference of the Association for Local Telecommunications Services (ALTS). See, ALTS brochure [PDF]. Location: The Crystal Gateway Marriott, 1700 Jefferson Davis Highway, Arlington, Virginia. The agenda for September 24 includes:
  • 10:30 - 11:30 AM. Panel discussion by FCC staff: Dorothy Attwood (Chief of the Common Carrier Bureau), Matt Brill (Legal Advisor to Commissioner Abernathy), Kyle Dixon (Legal Advisor to Chairman Powell), and Sam Feder (Legal Advisor to Commissioner Martin),
  • 11:30 AM - 12:15 PM. Sen. Ernest Hollings (D-SC), Chairman of the Senate Commerce Committee.
Tuesday, Sept 25
The House will meet at 9:00 AM for morning hour, and at 10:00 AM for legislative business.
10:00 AM. The Senate Judiciary Committee will hold hearings to examine homeland defense matters. Sen. Patrick Leahy (D-VT) will preside. Location: Room 226, Dirksen Building.
12:00 NOON - 2:00 PM. The FCC's North American Numbering Council will hold a meeting. Location: FCC, 445 12th Street, SW, Room 8-C245, Washington, DC.
12:15 PM. The Federal Communications Bar Association's (FCBA) Professional Responsibility Committee will host a brown bag lunch. Location: Arnold & Porter, 555 12th Street, NW, Washington DC.
Second day of a three day conference of the Association for Local Telecommunications Services (ALTS). See, ALTS brochure [PDF]. Location: The Crystal Gateway Marriott, 1700 Jefferson Davis Highway, Arlington, Virginia. The agenda for September 25 includes:
  • 3:15 - 4:00 PM. Speech by FCC Chairman Michael Powell.
Deadline to submit reply comments to the FCC in its notice of proposed rule making to amend the FCC's rules to improve spectrum sharing by unlicensed devices operating in the 2.4 GHz band, to provide for introduction of new digital transmission technologies, and to eliminate unnecessary regulations for spread spectrum devices. See, NPRM and notice in Federal Register: June 12, 2001, Vol. 66, No. 113, at Pages 31585 - 31589.
Wednesday, Sept 26
9:30 AM. The Senate Governmental Affairs Committee will continued its hearing on the security of critical governmental infrastructure. (It began this hearing on September 12, 2001.) Location: Room 342, Dirksen Building.
9:30 AM. The Senate Energy and Natural Resources Committee will hold a closed hearing to examine critical energy infrastructure security and the energy industry's response to the events of September 11. Location: unannounced.
12:15 PM. The Federal Communications Bar Association's (FCBA) Common Carrier Committee will host a brown bag lunch titled the "The Upcoming Common Carrier Agenda." The speakers will be FCC Legal Advisors Kyle Dixon (Powell), Deena Shetler (Tristani), Matthew Brill (Abernathy), Jordan Goldstein (Copps), and Sam Feder (Martin). RSVP to Rhe Brighthaupt at rbrighthaupt@wrf. Location: Wiley Rein & Fielding, 1750 K Street, 10th Floor Conference Room.
Third day of a three day conference of the Association for Local Telecommunications Services (ALTS). See, ALTS brochure [PDF]. Location: The Crystal Gateway Marriott, 1700 Jefferson Davis Highway, Arlington, Virginia. The agenda for September 26 includes:
  • 9:00 - 9:45 AM. Bruce Mehlman, Assistant Secretary of Commerce.
  • 9:45 - 10:30 AM. Rep. Heather Wilson (R-NM), member of the House Telecom Subcommittee.
Joint Status Report in Microsoft Case
9/20. Microsoft and the Justice Department filed their Joint Status Report [MS web site] with the U.S. District Court (DDC) in USA v. Microsoft, the antitrust case on remand. See also, copy in DOJ site.
Groups File Amicus Brief in COPA Case
9/20. The U.S. Chamber of Commerce, ITAA, and the CCIA filed an amicus Curiae brief with the Supreme Court of the United States in Ashcroft v. ACLU, the case challenging the constitutionality of the Child Online Protection Act (COPA). The Congress passed, and President Clinton signed, the COPA in 1998. This bill bars commercial web sites from distributing to minors over the Internet material that is "harmful to minors".
These amici argue that the COPA is a content based regulation of speech subject to strict scrutiny, and that the COPA fails to pass the strict scrutiny test because it is not the least restrictive means of achieving government objectives.
Cyber Securities Fraud
9/21. The SEC announced that it filed a civil complaint in U.S. District Court (EDWisc) against, Inc. and John Luers, its President, alleging violation of § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint alleges that defendants provided false and misleading information through the web site, See, SEC release. (Civil Action No. 01-CV-949.)
9/19. The SEC filed a civil complaint in U.S. District Court (WDPenn) against Dennis Ciccone alleging violation of § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder in connection with insider trading in Teligent, Inc., securities. The SEC seeks a permanent injunction, disgorgement, prejudgment interest and a monetary penalty. Ciccone simultaneously consented to entry of judgment, but without admitting or denying the facts alleged in the complaint. Ciccone was managing director of a venture capital fund involved in the transaction. Teligent is a company based in Vienna, Virginia, that provides telecommunications and Internet access services. (Civil Action No. 01-1757.) See, SEC release.
9/20. The SEC instituted an administrative proceeding against Michael Furr pursuant to § 15(b)(6) of the Securities Exchange Act of 1934. The SEC seeks an order barring Furr from participating in any offering of a penny stock. Furr touted penny stocks in a free website, email, and printed material. He previously consented to an order in a civil action brought in U.S. District Court (CDCal) for violation of § 17(b) of the Securities Act of 1933 and § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. See, SEC release.
Computer Crime
9/14. Melissa Brown plead guilty in U.S. District Court (NDOhio) to a one count indictment charging her with computer fraud in violation of 18 U.S.C. § 1030(a)(5)(A). Without authority from her employer, Brown used a company laptop to access the company's network, and change the password of the company's CIO, who was out of town at the time. See, CCIPS release.
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