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June 3, 2002, 9:00 AM ET, Alert No. 442.
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District Court Holds Part of Children's Internet Protection Act Unconstitutional
5/31. A three judge panel of the U.S. District Court (EDPenn) issued its opinion in American Library Association v. U.S., finding unconstitutional library related provisions of the Children's Internet Protection Act (CIPA). The Act requires, among other things, that schools and libraries receiving e-rate subsidies certify that they are using a "technology protection measure" that prevents library users from accessing "visual depictions" that are "obscene," "child pormography," and in the case of minors, "harmful to minors." The Court, applying strict scrutiny First Amendment free speech analysis, held that the portion of the statute affecting libraries receiving e-rate subsidies is unconstitutional. However, the CIPA, as it applies to schools, remains unaffected by this opinion. The Court also held unconstitutional language in the CIPA amending the Museum and Library Services Act. The Court issued its findings of fact, legal analysis, and order in one lengthy release.
E-Rate. The e-rate is an two and a half billion dollar per year program controlled by the Federal Communications Commission (FCC) under its universal service mandate. See, 47 U.S.C. § 254, and the FCC's schools and libraries web page. As implemented by the FCC, the e-rate program provides subsidies to schools, libraries and rural health clinics for telecommunications services, Internet access, and internal connections. The CIPA was passed by the Congress as a result of efforts by Sen. John McCain (R-AZ), Sen. Ernest Hollings (D-SC), and others. It conditions receipt of e-rate subsidies on efforts to restrict access to Internet porm.
Relevant Provisions of the Statute. Section 1721 of the CIPA pertains to the e-rate program. Section 1721(b) provides that "a library having one or more computers with Internet access may not receive services at discount rates under paragraph (1)(B) unless the library --- (I) submits to the Commission the certifications described in subparagraphs (B) and (C); and (II) submits to the Commission a certification that an Internet safety policy has been adopted and implemented for the library under subsection (l); and (III) ensures the use of such computers in accordance with the certifications." Subsection B, in turn, addresses the "Certification With Respect to Minors". The library must certify that it "is enforcing a policy of Internet safety that includes the operation of a technology protection measure with respect to any of its computers with Internet access that protects against access through such computers to visual depictions that are --- (I) obscene; (II) child pornography; or (III) harmful to minors". The library must also certify that it "is enforcing the operation of such technology protection measure during any use of such computers by minors." Subsection C, in turn, addresses "Certification With Respect to Adults". It parallels Subsection B. However, it omits the reference to materials that are harmful to minors. Section 1712 of the CIPA pertains to the Museum and Library Services Act.
Analysis of the Court. The Court found as fact that "thousands of Web pages containing protected speech are wrongly blocked by the four leading filtering programs, and these pages represent only a fraction of Web pages wrongly blocked by the programs." The Court concluded that the strict scrutiny test applies. That is, "a public library's use of filtering software is permissible only if it is narrowly tailored to further a compelling government interest and no less restrictive alternative would serve that interest." Applying this test, the Court concluded that "Because the filtering software mandated by CIPA will block access to substantial amounts of constitutionally protected speech whose suppression serves no legitimate government interest, we are persuaded that a public library's use of software filters is not narrowly tailored to further any of these interests."
The Court held that "the library plaintiffs must prevail in their contention that CIPA requires them to violate the First Amendment rights of their patrons, and accordingly is facially invalid ... In view of the limitations inherent in the filtering technology mandated by CIPA, any public library that adheres to CIPA's conditions will necessarily restrict patrons' access to a substantial amount of protected speech, in violation of the First Amendment. Given this conclusion, we need not reach plaintiffs' arguments that CIPA effects a prior restraint on speech and is unconstitutionally vague. Nor do we decide their cognate unconstitutional conditions theory ..."
Order of the Court. The Court also issued an order which states that "(1) judgment is entered in favor of the plaintiffs and against the defendants, declaring that §§ 1712(a)(2) and 1721(b) of the Children's Internet Protection Act, 20 U.S.C. § 9134(f) and 47 U.S.C. § 254(h)(6), are facially invalid under the First Amendment to the United States Constitution; and (2) the United States, Michael Powell, in his official capacity as Chairman of the Federal Communications Commission, the Federal Communications Commission, Beverly Sheppard, in her official capacity as Acting Director of the Institute of Museum and Library Services, and the Institute of Museum and Library Services are permanently enjoined from withholding federal funds from any public library for failure to comply with §§ 1712(a)(2) and 1721(b) of the Children's Internet Protection Act, 20 U.S.C. § 9134(f) and 47 U.S.C. § 254(h)(6)."
Direct Appeal to the Supreme Court. As required by the CIPA, at Section 1741, the case was heard on an expedited basis by a three judge panel of the U.S. District Court. Plaintiffs filed a complaint in the U.S. District Court for the Eastern District of Pennsylvania, a venue disposed to finding Congressional statutes unconstitutional on First Amendment grounds. Judges Becker, Fullam and Bartle presided. Judge Becker wrote the opinion. The CIPA further provides that a holding by the three judge panel that any part of the CIPA is unconstitutional "shall be reviewable as a matter of right by direct appeal to the Supreme Court".
Reaction. The American Civil Liberties Union praised the opinion in a release. The Family Research Council (FRC) lamented the opinion in a release.
The Information Technology Association of America (ITAA) President Harris Miller stated in a release that "The court's decision voids the proscriptive approaches that would have placed the Federal government squarely in the role of determining Internet content management for libraries ... Many organizations, including schools and libraries, have already voluntarily deployed software filtering tools to block out objectionable content and to improve productivity. We continue to believe that burdensome regulations from Washington, D.C. are not needed by software filter buyers or sellers, and this decision advances that belief."
More Court Opinions
5/29. The U.S. Court of Appeals (FedCir) issued its opinion in Berman v. Housey, affirming the U.S. Patent and Trademark Office Board of Patent Appeals and Interferences judgment in favor of Housey, and dismissing Berman's unpatentability motion as moot.
5/31. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in United Computer Systems v. AT&T, a case involving an arbitration clause in a software licensing agreement. The Appeals Court affirmed in part, reversed in part, and remanded to the District Court with instructions to compel arbitration.
5/31. The U.S. Court of Appeals (4thCir) issued its opinion in Baltimore Gas & Electric v. U.S., dismissing for lack of jurisdiction an appeal from a District Court opinion regarding a state public utilities commission's regulatory authority over contracts awarded by the U.S. Army. The Maryland Public Service Commission (MPSC), an intervenor in this action, challenged the U.S. Army's solicitation of bids for the right to purchase and operate the electricity and natural gas distribution systems at Fort Meade, Maryland, without providing in its solicitation that any successful bidder would be required to submit to the MPSC's regulatory authority. The U.S. District Court (DMd) held that such a provision is not required. The MPSC appealed. The Court of Appeals dismissed the appeal on the grounds that the MPSC lacks standing because it is not an interested party under the statute that governs bid protest actions, 28 U.S.C. § 1491.
Internet Crime
5/31. The U.S. District Court (DC) sentenced Yaroslav Suris to two months incarceration for one felony count of criminal copyright infringement in violation of 17 U.S.C. § 506(a)(1) and 18 U.S.C. § 2319(b)(1). Suris made duplicate copies of software, and then sold them over the Internet at prices far below retail prices. The infringed software included Adobe's Acrobat 4.0, Page Mill, and Photoshop, Corel's Draw 9, and Macromedia's Flash 9, Freehand 8.0, and Autocad 2000. In addition to the two month in jail, Judge Thomas Jackson sentenced Suris to an additional 14 months of home detention -- which is where he duplicated the software. See, CCIPS release and SIIA release.
5/29. The U.S. District Court (WDOkla) sentenced Ricky Joe Nelson to two concurrent 51 month prison terms for conspiracy to distribute controlled drugs through giving prescriptions over the Internet to patients he had never examined, and conspiracy to launder the proceeds. See, CCIPS release.
5/28. A trial jury of the U.S. District Court (WDWash) returned a guilty verdict against Michael Prime on one count of conspiracy to commit wire fraud, one count of conspiracy to make, possess and utter counterfeit securities and three counts of making, possessing and uttering counterfeit securities. Prime operated three fraudulent schemes on eBay. First, he auctions items, such as lap top computers, which he did not have. Second, he sold pirated software that he falsely claimed was authentic. Third, he purchased items in auctions that he paid for with counterfeit money orders created with computers, scanners, and printers. See, USAO release.
EPA Proposes Rule Change Affecting Computer Monitors
5/31. The Environmental Protection Agency (EPA) announced that it is proposing changes to its rules regarding computer monitors and televisions that contain lead. On May 29, the EPA issued a release and a draft of a notice [101 pages in PDF] to be published in the Federal Register.
The EPA draft notice states that "Many used cathode ray tubes (CRTs) and items of mercury-containing equipment are currently classified as characteristic hazardous wastes under the Resource Conservation and Recovery Act (RCRA). They are therefore subject to the hazardous waste regulations of RCRA Subtitle C unless they come from a household or a conditionally exempt small quantity generator. Today, the Environmental Protection Agency (EPA) proposes and seeks comment on an exclusion from the definition of solid waste which would streamline RCRA management requirements for used cathode ray tubes (CRTs) and glass removed from CRTs sent for recycling. In today's notice, the Agency also clarifies the status of used CRTs sent for reuse. In addition, EPA proposes and seeks comment on streamlining management requirements for used mercury containing equipment by adding it to the federal list of universal wastes."
The EPA release states that "A typical computer monitor may contain up to eight pounds of lead. EPA estimates that over 250 million computers in this country will be retired from use over the next five years. The EPA proposal would encourage more reuse and recycling of these computers."
As of Friday, May 31, the EPA had not yet published a notice of this proposed rule in the Federal Register. Public comments on the proposed rule will be due 60 days after publication in the Federal Register.
The Electronics Industry Association (EIA) commended the EPA action. It stated in a release dated May 31 that "This proposed rule is a key step in the right direction. By removing used electronics containing CRTs and mercury lamps from certain hazardous waste regulations when they are recycled, the EPA is providing a strong economic incentive that will promote the development of more collection and recycling opportunities for used electronics within the United States."
The EIA added that "Under the proposed rule, facilities that collect and transport used electronics will benefit from reduced transportation costs and reduced permitting requirements -- both of which will reduce overall recycling costs, providing economic incentives for the collection and siting of recycling facilities. The net benefit is that consumers will have more opportunities to recycle used electronics."
Economists File Amicus Brief in Opposition to CTEA
5/20. A group of free market economists filed an amicus curiae brief [PDF] with the Supreme Court in Eldred v. Ashcroft, a constitutional challenge to the Copyright Term Extension Act of 1998 (CTEA). The 105th Congress passed the CTEA to extend the maximum duration of both new and existing copyrights from 75 to 95 years.
Case Background. The late Rep. Sonny Bono (R-CA) sponsored the House version of the bill in 1997. Hence, the statute is also known by his name. (See, P.L. 105-298, 112 Stat. 2827. It amends 17 U.S.C. § 304(b).) On January 11, 1999 the plaintiffs filed their original complaint in the U.S. District Court (DC). (See also, TLJ story.) On June 28, 1999, the plaintiffs filed their Second Amended Complaint. Plaintiffs allege, among other claims, that the CTEA violates the First Amendment and the copyright clause of the Constitution. On October 27, 1999, the District Court ruled that the CTEA does not violate the Constitution. See, Memorandum of the Court. (See also, TLJ story.) On February 16, 2001, the The U.S. Court of Appeals (DCCir) issued its opinion affirming the District Court. On July 13, 2002, the Court of Appeals issued an order and opinion denying plaintiffs' petition for a rehearing en banc. The Supreme Court granted certiorari on February 19, 2002. Its review is limited to the constitutionality of the CTEA.
Constitution, Art. I, Sec. 8. The Constitution provides, in relevant part, that "Congress shall have the Power... To regulate Commerce ... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries ... To make all Laws which are necessary and proper for carrying into Execution the foregoing Powers ..."
Argument of Amici. The brief provides an economic analysis of the twenty year copyright term extension for existing and future works. It argues that "The longer term for new works provides some increase in anticipated compensation for an author. Because the additional compensation occurs many decades in the future, its present value is small, very likely an improvement of less than 1% compared to the pre-CTEA term. This compensation offers at most a very small additional incentive for an economically minded author of a new work. The term extension for existing works makes no significant contribution to an author's economic incentive to create, since in this case the additional compensation was granted after the relevant investment had already been made."
Amici conclude that "Taken as a whole, it is highly unlikely that the economic benefits from copyright extension under the CTEA outweigh the additional costs. Moreover, in the case of term extension for existing works, the sizable increase in cost is not balanced to any significant degree by an improvement in incentives for creating new works. Considering the criterion of consumer welfare instead of efficiency leads to the same conclusion, with the alteration that the CTEA’s large transfer of resources from consumers to copyright holders is an additional factor that reduces consumer welfare."
Amici include Milton Friedman, Ronald Coase, Kenneth Arrow, and 14 other economists. See also, TLJ Summary of Eldred v. Ashcroft.
Amicus Brief of Writers and Tech Groups. On May 23 a collection of writers' groups and technology groups also filed an amicus curiae brief [PDF] with the Supreme Court. Their brief argues that "The Framers of the Constitution understood that the creation of new works and subsequent public access to those works were vital to society; thus, they limited the copyright monopoly's duration to assure the development of a healthy public domain." The 38 page brief does not, however, cite any of the delegates to the Constitutional convention, any member of any state legislature that ratified the Constitution, or any sources contemporaneous to the drafting or ratification of the Constitution.
The brief concludes that the "Congress failed the American people by not performing its constitutional duty to balance the speculative and questionable benefits of copyright term extension against the certain harms to the public domain. This failure is reflected in the lack of any rationale for the legislation that is supported by a legitimate constitutional purpose. ... This Court must ensure that Congress, in exercising power over copyrights, fulfills its constitutional duty to consider with great care the effect of copyright protection on the progress of ``Science and the useful Arts.´´ Protections that do not promote this progress should be struck down."
Amici include the National Writer's Union, Consumer Electronics Association, and Computer and Communications Industry Association.
The CTEA is supported by holders of entertainment industry copyrights, and their trade associations, such as the Association of American Publishers, Motion Picture Association of America (MPAA), National Music Publishers' Association (NMPA), and Recording Industry Association of America (RIAA). 
More News
5/31. The Copyright Office published a notice in the Federal Register regarding a final rule changing fees charged by the Copyright Office. See, Federal Register, May 31, 2002, Vol. 67, No. 105, at Pages 38003 - 38006.
5/31. Qwest announced that it retained KPMG as its independent auditor for 2002. Its previous auditor was Arthur Andersen. See, Qwest release.
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Monday, June 3
The House is in recess until Tuesday, June 4.
The Senate will meet at 1:00 PM for morning business. At 2:00 PM the Senate may begin consideration of the Supplemental Appropriations Act.
The Supreme Court is in recess until June 4.
10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Rambus v. infineon Technologies, No. 01-1449, an appeal from the U.S. District Court (EDVa) in a patent infringement case involving semiconductor memory devices. At issue is the existence and scope of the patent disclosure obligations that arise as a result of participation in a standard setting body. This is D.C. No. 3:00CV524; the District Court opinion of August 9, 2001 is at 2001 WL 913972. Location: LaFayette Square, at 717 Madison Place, NW.
10:00 AM. USPTO Director James Rogan will hold a press conference call to announce and discuss a USPTO restructuring proposal. For more information, contact Brigid Quinn at 703 305-8341or brigid.quinn Reporters should call 1 800 857-4864, code 26864 by 9:55 AM to participate. See, USPTO release.
2:00 - 3:30 PM. The FTC's Bureau of Competition will hold a public workshop on merger investigation best practices. This is the first workshop of a seven part, five city, series. This event will focus on electronic records. See, FTC release. Location: FTC, Room 332, 600 Pennsylvania Avenue NW.
EXTENDED TO JULY 1. Extended deadline to submit reply comments to the FCC in response to its Notice of Proposed Rulemaking (NPRM) titled "In the Matter of Appropriate Framework for Broadband Access to the Internet over Wireline Facilities". This is CC Docket No. 02-33. See, May 29 notice [PDF] extending deadline from June 3 to July 1. See also, Order [PDF] extending deadline from May 14 to June 3, and original notice in Federal Register.
Tuesday, June 4
The House will meet 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.
POSTPONED TO JUNE 5. 10:00 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing titled "The FCC's UWB Proceeding: An Examination of the Government's Spectrum Management Process." Webcast. Press contact: Ken Johnson or Jon Tripp at 202 225-5735.
10:00 AM. The Senate Health, Education, Labor, and Pensions Committee will hold a hearing on legislation to authorize funding for the National Science Foundation. Location: Room 430, Dirksen Building.
10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Insight Development v. Hewlitt Packard, No. 01-1459, an appeal from the U.S. District Court (NDCal) in a patent infringement case involving web imaging technology. Location: LaFayette Square, at 717 Madison Place, NW.
2:00 - 4:00 PM. The FCC's Advisory Committee for the 2003 World Radiocommunication Conference (WRC-03 Advisory Committee) will meet. See, notice and agenda [PDF]. Location: FCC, Commission Meeting Room, Room TW-C305, 445 12th Street, SW.
4:00 PM. The House Judiciary Committee's Subcommittee on Crime will hold a hearing and a mark up session for HR 4598, the Homeland Security Information Sharing Act, sponsored by Rep. Saxby Chambliss (R-GA). Audio webcast. Location: Room 2141, Rayburn Building.
Wednesday, June 5
The House will meet at 10:00 AM for legislative business.
8:30 AM - 5:00 PM. Day one of a three day public workshop hosted by the FTC on proposed amendments to the Telemarketing Sales Rule (TSR), including the potential development and implementation of a national do not call list. See, FTC release and agenda. Location: Marriott Wardman Park Hotel, 2600 Woodley Road, NW.
9:30 AM. The National School Boards Foundation will host a breakfast (9:00 AM) and media briefing on it release of a national survey titled "Are We There Yet? Research and Guidelines on Schools Use of the Internet". For more information, contact Renee Hockaday at 703 838-6717 or rhockaday Location: Corporation for Public Broadcasting, 2nd Floor, 401 9th St., NW.
10:00 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing titled "The FCC's UWB Proceeding: An Examination of the Government's Spectrum Management Process." Webcast. Press contact: Ken Johnson or Jon Tripp at 202 225-5735. Location: Room 2123, Rayburn Building.
12:15 PM. The FCBA's Global Telecommunications Development Committee will host a brown bag lunch. The topic will be "Caribbean Telecom -- Challenges in Bringing Competition to Monopoly Markets". The speakers will be William Garrison (The Frank Hawkins Kenan Institute of Private Enterprise), Judy Kilpatrick (NTIA), and Joanna Lowry (Cable & Wireless). RSVP to Jonathan Cohen at joncohen or to LaVon Stevens at 202 628-9577. Location: Suite 700, Wilkinson Barker Knauer, 2300 N St., NW (entrance at 24th and N Streets).
2:00 PM. The House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property will hold a hearing titled "DRM: The Consumer Benefits of Today's Digital Rights Management Solutions." Audio webcast. Location: Room 2141, Rayburn Building.
EXTENDED TO JULY 17. Extended deadline to submit reply comments to the FCC in response to its notice of proposed rulemaking regarding its unbundling analysis under § 251 of the Communications Act and the identification of specific unbundling requirements for incumbent local exchange carriers. See, May 29 order [PDF] extending deadline from June 5 to July 17. See also, notice in the Federal Register. This is CC Docket No. 01-338.
Thursday, June 6
The House will meet at 10:00 AM for legislative business.
8:30 AM - 5:00 PM. Day two of a three day public workshop hosted by the FTC on proposed amendments to the Telemarketing Sales Rule (TSR), including the potential development and implementation of a national do not call list. See, FTC release and agenda. Location: Marriott Wardman Park Hotel, 2600 Woodley Road, NW.
10:00 AM. The House Judiciary Committee will meet to mark up several bills, including HR 3215, the Combatting Illegal Gambling Reform and Modernization Act (Goodlatte Internet gambling bill), and HR 4623, the Child Obscenity and Pormography Prevention Act of 2002. Audio Webcast. Press contact: Jeff Lungren or Terry Shawn at 202 225-2492. Location: Room 2141, Rayburn Building.
TIME? The Senate Commerce Committee's Subcommittee on Communications will hold a hearing titled Universal Service Fund. Press contact: Andy Davis 224-6654. Location: Room 253, Russell Building.
10:30 AM. The House International Relations Committee's Subcommittee on International Operations and Human Rights will hold a hearing on titled "An Assessment of Cuba Broadcasting -- The Voice of Freedom". Location: Room 2172, Rayburn Building.
8:00 AM - 5:00 PM. The Institute for International Research (IIR) and ComCare will host a conference titled e-SAFETY: Delivering Communications & Information Technology Solutions for 21st Century Public Safety. Sen. Conrad Burns (R-MT) will give a keynote address at 8:30 AM. The price to attend is $695. See, IIR notice. Location: Ronald Reagan Building, 1300 Pennsylvania Ave., NW.
Deadline to submit comments to the SEC regarding its proposed rule amending the Investment Advisers Act of 1940 to exempt certain investment advisers that provide advisory services through the Internet from the prohibition on SEC registration set out in § 203A of the Act. The amendments would permit these advisers to register with the SEC instead of with state securities authorities. See, notice in the Federal Register.
Friday, June 7
8:30 AM - 5:00 PM. Day three of a three day public workshop hosted by the FTC on proposed amendments to the Telemarketing Sales Rule (TSR), including the potential development and implementation of a national do not call list. See, FTC release and agenda. Location: Marriott Wardman Park Hotel, 2600 Woodley Road, NW.
12:00 NOON - 1:30 PM. The Federalist Society will host a debate on judicial nominations. the participants will be Douglas Kmiec (Dean of the Columbus School of Law) and Elliot Mincberg (General Counsel of People for the American Way). For more information, call Joel Pardoe at 202 822-8138. See, release. Location: Holeman Lounge, National Press Club, 529 14th St. NW, 13th Floor.
12:15 PM. The FCBA's Wireless Telecommunications and International Practice Committees will host a luncheon. The topic will be International Wireless Developments. The price to attend is $15. RSVP to wendy Location: 1750 K Street, NW.