Tech Law Journal Daily E-Mail Alert
August 8, 2002, 9:00 AM ET, Alert No. 487.
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OECD Adopts Information Security Guidelines
8/7. The Organization for Economic Cooperation and Development (OECD) announced that "OECD governments have drawn up" a set of "guidelines" pertaining to information security. See, document [16 pages in PDF] titled "OECD Guidelines for the Security of Information Systems and Networks: Towards a Culture of Security". See also, OECD release.
The OECD Guidelines state that "As a result of increasing interconnectivity, information systems and networks are now exposed to a growing number and a wider variety of threats and vulnerabilities. This raises new issues for security. For these reasons, these Guidelines apply to all participants in the new information society and suggest the need for a greater awareness and understanding of security issues and the need to develop a ``culture of security´´."
The document states that it was "adopted as a Recommendation of the OECD Council at its 1037th Session on 25 July 2002." These guidelines are non-specific, non-controversial, and non-binding.
The nine guidelines are as follows: 1. "Participants should be aware of the need for security of information systems and networks and what they can do to enhance security." 2. "All participants are responsible for the security of information systems and networks." 3. "Participants should act in a timely and co-operative manner to prevent, detect and respond to security incidents." 4. "Participants should respect the legitimate interests of others." 5. "The security of information systems and networks should be compatible with essential values of a democratic society." 6. "Participants should conduct risk assessments." 7. "Participants should incorporate security as an essential element of information systems and networks." 8. "Participants should adopt a comprehensive approach to security management." 9. "Participants should review and reassess the security of information systems and networks, and make appropriate modifications to security policies, practices, measures and procedures."
The fifth principle, regarding democratic society, further provides that "Security should be implemented in a manner consistent with the values recognised by democratic societies including the freedom to exchange thoughts and ideas, the free flow of information, the confidentiality of information and communication, the appropriate protection of personal information, openness and transparency."
Philip Reeker, Deputy Spokesman of the U.S. State Department, released a statement. He said that "These new OECD guidelines, which replace the original guidelines published in 1992, provide a set of principles to help ensure the security of today's interconnected communications systems and networks. They are applicable to all, from those who manufacture, own, and operate information systems to those individual users who connect through home PCs. Importantly, the guidelines call for new ways of thinking and behaving when using information systems.
The Business Software Alliance (BSA) praised the guidelines. Robert Holleyman, P/CEO of the BSA, stated in a release that "These guidelines build on our continuing efforts to educate businesses and governments around the world about the need for an aggressive and cooperative effort to protect our crucial networks from the growing threat of cyber attacks".
The OECD is an international organization of 30 industrialized, market economy countries.
FCC Fines Junk Faxer $5,379,000
8/7. The Federal Communications Commission (FCC) released a Notice of Apparent Liability (NAL) [19 pages in PDF] finding that " is apparently liable for forfeiture in the amount of $5,379,000."
The NAL states that characterizes itself as a "fax broadcaster". The NAL states that it sends unsolicited commercial fax messages in violation of the Telephone Consumer Protection Act of 1991 (TCPA).
The TCPA amended the Communication Act of 1934. It is codified within 47 U.S.C. § 227. Section 227(b)(1), which pertains to "Restrictions on use of automated telephone equipment", provides, in part, that "It shall be unlawful for any person within the United States ... (C) to use any telephone facsimile machine, computer, or other device to send an unsolicited advertisement to a telephone facsimile machine". See also, Section 64.1200(a)(3) of the FCC's rules implementing this statute.
The FCC found that is apparently liable for $11,000 for each of the 489 fax violations, for a total proposed fine of $5,379,000.
FCC Commissioner Kathleen Abernathy wrote a separate statement. She wrote that "I strongly support this Notice of Apparent Liability and hope that other fax broadcasters will take notice that the Commission will strictly enforce the Telephone Consumer Protection Act. As set forth in detail in the NAL, appears to have founded its business on the practice of sending unsolicited faxes in flagrant violation of the TCPA."
This action was taken by the FCC's Enforcement Bureau. The FCC adopted the NAL on August 2, 2002, but did not release it until August 7. The proceeding is titled "In the Matter of, Inc. Apparent Liability for Forfeiture. This is File No. EB-02-TC-120. See also, FCC release.
8th Circuit Rules on PSLRA
8/7. The U.S. Court of Appeals (8thCir) issued its split opinion [45 pages in PDF] in In re K-tel International, Inc. Securities Litigation, a class action securities case involving the heightened pleading requirements of the PSLRA.
Pasquale Migliaccio and others filed a complaint in U.S. District Court (DMinn) against K-Tel International, and some of its officers and directors, alleging securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b5 thereunder. Plaintiffs alleged failure to make certain accounting adjustments in compliance with Generally Accepted Accounting Principles (GAAP), and failure to make a timely disclosure regarding a NASDAQ delisting letter.
The District Court dismissed the complaint for failure to state a claim, pursuant to Rule 12(b)(6) of the FRCP. The Court held that plaintiffs' complaint failed to allege with sufficient particularity either material misrepresentations or facts giving rise to a strong inference of scienter, under the requirements of the Private Securities Litigation Reform Act. The Appeals Court affirmed, 2-1.
SEC Files Alleges Fraud in Sale of Securities in IP Telephony Companies
8/6. The Securities and Exchange Commission (SEC) filed a series of civil complaints against defendants engaged in "unregistered securities offerings and fraudulently diverted the proceeds to pay exorbitant, undisclosed commissions to telemarketers and other unregistered brokers who solicited the investors." See, SEC release.
In one of these actions, the SEC filed a complaint in the U.S. District Court (EDNY) against Ephone, Inc., Webphone, LLP, Newera Communications, LLP, and others alleging violation of federal securities laws in connection with the fraudulent offer and sale of securities in companies purportedly formed to establish long distance telephone service through the Internet. See, SEC release regarding Ephone.
RIAA to Appeal Webcasting Rule
8/7. The Recording Industry Association of America (RIAA) announced its intent to file with the U.S. Court of Appeals (DCCir) a petition for review of the June 20, 2002, final rule of the Librarian of Congress on royalty rates for webcasting music. See, RIAA release.
Hilary Rosen, Ch/CEO of the RIAA stated in the release that "The Librarian's decision was based on a misguided reading of the record. Not only was improper weight given to the testimony of Yahoo! but some 140 separate licensing deals were thrown out by the Librarian. The end result significantly undervalued the music used by Internet radio companies."
On June 20, 2002, the Librarian of Congress issued his final rule providing the terms for the statutory license for eligible nonsubscription services to perform sound recordings publicly by means of digital audio transmissions, also known as webcasting, pursuant to 17 U.S.C. § 114, and to make ephemeral recordings of sound recordings for use of sound recordings under the statutory license set forth in 17 U.S.C. § 112. The Librarian followed the recommendations of the Register of Copyrights, rather than the CARP.
The Librarian also released a summary stating that he "has accepted the recommendation of the Register of Copyrights and rejected the rates and terms recommended by a Copyright Arbitration Royalty Panel (CARP) ... The most significant difference between the CARP's determination and the Librarian’s decision is that the Librarian has abandoned the CARP's two tiered rate structure of 0.14¢ per performance for ``Internet  only´´ transmissions and 0.07¢ for each retransmission of a performance in an AM/FM radio broadcast, and has decided that the rate of 0.07¢ will apply to both types of transmission."
The rule takes effect on September 1, 2002.
On February 2, 2002, the CARP released its report [143 pages in PDF] recommending that both webcasters and commercial broadcasters pay a performance fee of 0.07¢ per performance, and 9% of performance fees due, for simultaneous Internet retransmissions of over the air AM or FM radio broadcasts. It recommended that the performance fee be 0.14¢ per performance and 9% of performance fees due for all other Internet transmissions.
The CARP further recommended that non commercial broadcasters pay a performance fee of 0.02¢ per performance for simultaneous Internet retransmissions of over the air AM or FM radio broadcasts, and 0.05¢ for other Internet transmissions, including up to two side channels of programming consistent with the public broadcasting mission of the station.
On May 21 the Librarian of Congress, at the recommendation of the Register of Copyrights, Marybeth Peters, issued an order rejecting the CARP's February 20 determination.
IRS Buys Computers
8/7. Hewlett Packard (HP) announced that the Internal Revenue Service (IRS) will purchase more than 12,300 Compaq desktop computers and more than 11,000 Compaq laptop computers for a total of more than $35 Million. See, HP release.
HP stated that the IRS will purchase Compaq Evo D500 desktops. The HP web site states that individual units sell for as low as $954. HP stated that the IRS will purchase Compaq Evo N800 laptops. The HP web site states that individual units sell for as low as $1,719.
The taxpayers will pay, on average, about $1,500 per computer for the IRS.
Meanwhile, the Treasury Inspector General for Tax Administration (TIGTA) released a report on November 29, 2001, titled "Management Advisory Report: Review of Lost or Stolen Sensitive Items of Inventory at the Internal Revenue Service". This report stated that "For the past 3 years, the IRS reported approximately 2,300 missing computers". The report did not estimate the number of missing computers, the loss of which went unreported.
See also, letter of January 7, 2002, from Sen. Charles Grassley (R-IA) to Office of Management and Budget (OMB) Director Mitch Daniels, and story titled "Sen. Grassley Condemns IRS for 2,300 Missing Computers" in TLJ Daily E-Mail Alert No. 342, January 9, 2002.
Bush Talks About Judge Picking
8/7. President Bush gave a speech at a Pickering for Congress event in Jackson, Mississippi. Rep. Chip Pickering (R-MS) is a member of the House Commerce Committee and its Telecom and Internet Subcommittee. Bush stated that "it's important that you're represented by this good man. He is what we call and up and comer."
Bush also used the occasion to advocate the election to Republican Senators, to enable him to obtain Senate confirmation of his judicial appointments. The Democratic controlled Senate Judiciary Committee rejected Bush's nomination of Rep. Pickering's father to be a Judge on the U.S. Court of Appeals (5thCir).
Bush said this: "And I want to say something as clearly as I can about why we need to control the United States Senate. I put a good man up named Judge Pickering for a higher court and the people who control the Senate maligned this good man's character. They didn't treat him right. It's not good for America to have this kind of politics -- take a good person and not treat him well, not give him the benefit of the doubt. We need to change the United States Senate, so that we end this kind of politics on the judiciary and allow good people, good, honorable judges to serve our nation. The Senate did wrong by Judge Pickering. I did right by naming him to the bench."
People and Appointments
8/6. John Collingwood, the Federal Bureau of Investigation's (FBI) Assistant Director for the Office of Congressional and Public Affairs, will retire. See, release.
8/7. Lynne Hunt was named Assistant Director of the Inspection Division of the Federal Bureau of Investigation (FBI). The Inspective Division's mission is to provide independent oversight of all FBI investigative and administrative operations. Hunt is a long time FBI employee. See, FBI release.
8/7. BT appointed Hanif Lalani Chief Financial Officer of BT Wholesale. He replaces Russ Houlden, who left to become finance director at the Lovells law firm. See, BT release.
8/6. Jonathan Miller was named Chairman and Chief Executive Officer of AOL Time Warner Inc.'s America Online, Inc. division. He was formerly President and CEO of USA Interactive's USA Information and Services. See, release.
More News
8/2. A grand jury of the U.S. District Court (CDCal) returned indictments against Glenn Cazenave and Amaya Marinella alleging that they unlawfully conspired to enter Commerce One's computer systems and delete a software package that was being developed for a foreign client. See, CCIPS release.
8/8. Qwest announced its financial results for the second quarter of 2002. See, Qwest release.
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Thursday, August 8
Day one of six of the American Bar Association's annual meeting. See, TLJ's complete listing of technology law related events. Location: various hotels across Washington DC.
9:00 AM. Qwest Communications will release its second quarter 2002 results at approximately 6:00 AM EDT. It will host a conference call at 9:00 AM EDT. The participants will include Ch/CEO Richard Notebaert and  VCh/CFO Oren Shaffer. The event will be web cast. See, Qwest release.
9:30 AM. The FCC will hold a meeting. The agenda includes three items: (1) consideration of a NPRM regarding digital broadcast copy protection; (2) consideration of a Second Report and Order and Second Memorandum Opinion regarding its policies and rules for conversion of the broadcast television service to digital technology; this is MM Docket No. 00-39; and (3) consideration of a Report and Order regarding various Part 22 rules that have become outdated due to technological change, increased competition in CMRS, or supervening rules; this is WT Docket No. 01-108. Press contact: Maureen Peratino or David Fiske at 202 418-0500. See, FCC release.
9:45 AM. The U.S. District Court (DC) will hold a conference hearing in EPIC v. DOJ, D.C. No. 2002 cv 0063. The EPIC filed a complaint against the Justice Department and Treasury Department, pursuant to the under the Freedom of Information Act (FOIA), seeking records pertaining to the federal government's purchase of personal information of individuals from private sector database companies. Judge Colleen Kotelly will preside. Location: 333 Constitution Ave. NW, Courtroom 11.
11:00 AM. The Federal Trade Commission (FTC) will hold a press conference to announce a the settlement terms of an undisclosed FTC enforcement action. FTC Chairman Timothy Muris is scheduled to appear. Reporters may also listen via teleconference (the number to call is 1 866 552-7206; the chairperson is Bruce Jennings; and the confirmation number is 13287196). See, FTC release. Location: FTC Main, Room 432, 600 Pennsylvania Ave., NW.
Deadline to submit comment to the FCC regarding the NTIA's 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". The FCC has incorporated this viability assessment into its Advanced Wireless Services proceeding in ET Docket No. 00-258. See, public notice [PDF].
Friday, August 9
Day two of six of the American Bar Association's annual meeting. See, TLJ's complete listing of technology law related events. Location: various hotels across Washington DC.
9:00 AM - 3:00 PM. The FCC's Spectrum Policy Task Force will hold a public workshop titled "Spectrum Rights and Responsibilities". First, Thomas Krattenmaker (Mintz Levin) will give an historical view of spectrum rights and responsibilities. Second, there will be a panel titled "New Technologies and Spectrum Usage Rights". The moderators will be Charla Rath (Verizon Wireless) and Paul Kolodzy (FCC); the panelists will be David Farber (University of Pennsylvania), David Siddall (Paul Hastings), Peter Pitsch (Intel), Victor Tawil (MSTV), Steve Sharkey (Motorola), Bruce Fette (General Dynamics), and Gee Rittenhouse (Lucent). Third, there will be a panel titled "Modeling Licensed and Unlicensed Spectrum Usage Rights". The moderators will be Michele Farquhar (Hogan & Hartson) and David Furth (FCC); the panelists will be Martin Cave (Warwick Business School), Tom Hazlett (Manhattan Institute), Steve Stroh (Focus On Broadband Wireless Internet Access), Michael Calabrese (New America Foundation), Larry Miller (LMCC/ AASHTO), David Wye (AT&T Wireless), Michael Kurtis (Kurtis & Associates), Jennifer Warren (Lockheed Martin), and Joe Gatusso (NTIA). See, FCC notice [PDF]. Webcast. Location: FCC, Commission Meeting Room, 445 12th Street, SW.
Saturday, August 10
Day three of six of the American Bar Association's annual meeting. See, TLJ's complete listing of technology law related events. Location: various hotels across Washington DC.
Sunday, August 11
Day four of six of the American Bar Association's annual meeting. See, TLJ's complete listing of technology law related events. Location: various hotels across Washington DC.
Monday, August 12
Day five of six of the American Bar Association's annual meeting. See, TLJ's complete listing of technology law related events. Location: various hotels across Washington DC.
Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rule Making (NPRM) "regarding the sunset of the statutory requirements under section 272 imposed on Bell Operating Companies (BOCs) when they provide in-region, interLATA services and seeks comment on whether, and if so, under what conditions, the structural and nondiscrimination safeguards established in section 272 should be extended by the Commission either generally or with respect to specific states." See, notice in the Federal Register, June 21, 2002, Vol. 67, No. 120, at Pages 42211 - 42215.
Tuesday, August 13
Day six of six of the American Bar Association's annual meeting. See, TLJ's complete listing of technology law related events. Location: various hotels across Washington DC.
10:00 AM - 12:00 NOON. The State Department's International Telecommunication Advisory Committee (ITAC) will meet. See, notice in Federal Register. Location: Room 1105, State Department.
Wednesday, August 14
1:00 - 5:00 PM. The Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) will host a roundtable meeting regarding the convergence of communications technologies, including the Telephone Number Mapping (ENUM) Protocol that facilitates convergence between the Internet and the public switched telephone network. See, NTIA notice and notice in the Federal Register. For more information, contact Wendy Lader, NTIA Office of Policy Analysis and Development, at 202 482-1150 or wlader Location: Room 4830, DOC, 1401 Constitution Ave., NW.
Highlights of ABA Meeting
Friday, August 9
11:00 AM. Program titled "Justice Department Takes Action Against Credit Card Companies For Unfair Trade Practices". Location: Mayflower, Senate Room, Promenade Level.
2:00 PM. Program titled "Whatever Happened to Broadband?" Location: Marriott Wardman Park, Cotillion Ballroom South, Mezzanine Level.
2:30 PM. Program titled "Antitrust and Intellectual Property for the Transactional Lawyer". Location: Hyatt Regency, Regency Foyer, Ballroom Level.
3:00 PM. Program titled "Adapting the Legal Requirements for Electronic Promissory Notes and Electronic Chattel Paper to Commercial Realities". Location: Hyatt Regency, Regency A, Ballroom Level.
3:45 PM. Program titled "Information Security: The Role of Law and Lawyers". Location: Marriott Wardman Park, Cotillion Ballroom South, Mezzanine Level.