Tech Law Journal Daily E-Mail Alert
September 10, 2002, 9:00 AM ET, Alert No. 505.
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Copyright Holders Move for Summary Judgment Against Peer to Peer Services
9/9. Members of the Motion Picture Association of America (MPAA), Recording Industry Association of America (RIAA) and National Music Publishers Association (NMPA) filed a motion for summary judgment, and supporting pleadings, under seal, with the U.S. District Court (CDCal) in MGM v. Grokster. The MPAA, RIAA and NMPA member companies allege contributory and vicarious copyright infringement by the peer to peer services Kazaa, Grokster and MusicCity.
The RIAA stated in a release that "In deference to the confidential evidence designated by defendants, the plaintiffs' summary judgment brief has been filed confidentially, under seal."
However, the RIAA summarized its arguments as follows. First, the defendants "built their networks to emulate Napster in almost every respect. They succeeded beyond their wildest dreams. Having begun with Napster technology and a Napster business model, they have marketed their service to Napster users and argued the same legal defenses as Napster".
Second, the defendants "have built their networks into candy stores of infringement that allow a user to find the most popular music and movies of our time without paying any of the rights holders". Third, the defendants "are earning millions of dollars from the service".
Fourth, the defendants "are acutely aware that the services are being used to facilitate copyright infringement on a massive scale for movies and music". Fifth, the defendants "built and controlled the networks in a way that they could easily prevent the copyright infringements from occurring. The defendants' principal defense that they have no ability to control the network is belied by a myriad of facts, including the fact that Kazaa demonstrated its ability to turn off the Morpheus system at whim".
And finally, the copyright holders' brief argues that the defendants "have been engaged in much more activity than merely distributing software as they claim. Rather, they were the genesis of and continue to be the sustainer of their networks."
EPIC Comments on FTC's Proposed Consent Order Affecting Microsoft's Privacy Practices
9/9. The Electronic Privacy Information Center (EPIC) and other groups submitted a comment to the Federal Trade Commission (FTC) regarding the FTC's proposed consent order [8 pages in PDF] settling an administrative complaint [6 pages in PDF] against Microsoft alleging violation of Section 5(a) of the Federal Trade Commission Act (FTCA) in connection with Microsoft's privacy and security practices. The complaint and consent order focus on Microsoft's sign-on and online wallet services named Passport and Passport Express Purchase.
The EPIC comment states that "We believe that the Consent Order will go far in improving security and privacy practices associated with the Microsoft Passport Service. However, privacy hazards continue to remain in the Passport system."
The EPIC recommends four changes. Its want the FTC to "require more transparency from Microsoft", "examine authentication systems that are deployed and under development", "ensure that Microsoft is complying with the EU-US Safe Harbor, and that specifically, access to the entire Passport profile for correction and deletion is possible", and "strengthen the security program for Microsoft by limiting the Passport system".
The EPIC and other groups filed a pair of complaints last year with the FTC that preceded the FTC's action. The EPIC and others submitted their original complaint [PDF] on July 26, 2001, and an updated complaint [PDF] on August 15, 2001. Both complaints pertained to Microsoft's Passport and privacy, and alleged violation of Section 5 of the FTCA. See, story titled "EPIC Complains about Microsoft Passport" in TLJ Daily E-Mail Alert No. 250, August 16, 2001, and story titled "EPIC Complains to FTC About Windows XP" in TLJ Daily E-Mail Alert No. 236, July 27, 2002.
On August 8 of this year the FTC brought and settled an administrative complaint. The complaint alleged that Microsoft "represented, expressly or by implication, that it maintained a high level of online security by employing sufficient measures reasonable and appropriate under the circumstances to maintain and protect the privacy and confidentiality of personal information obtained from or about consumers in connection with the Passport and Passport Wallet services", whereas, in fact, Microsoft "did not maintain a high level of online security ..."
The FTC and Microsoft simultaneously entered into an Agreement Containing Consent Order. Microsoft admitted to no violations of federal law. Microsoft will pay no fine. However, the agreement, which has a twenty year duration, imposes numerous requirements for Microsoft's information security program. See also, story titled "FTC Files and Settles Complaint Against Microsoft", August 8, 2002.
The Computer & Communications Industry Association (CCIA), a long time Microsoft critic, also submitted a comment. It wrote that "we are disturbed that the proposed consent order does nothing to address the root causes of the problems identified by the Commission and will allow Microsoft to continue to abuse its illegal monopoly to the detriment of consumers and their privacy."
The CCIA wrote that "Passport is merely one of the more recent outgrowths of Microsoft's dominance in desktop computing, and is integral in Microsoft's strategy to perpetuate its monopoly power on the Internet. Microsoft has ensured that Passport will become the dominant authentication and sign-on service by requiring or inducing users of other dominant Microsoft applications and services to obtain Passport accounts."
The CCIA also  wrote that the consent order is flawed because "commitments made by Microsoft to remedy its conduct are ultimately dependent on Microsoft’s willingness to stand by them. Microsoft has shown time and again that it is fundamentally incapable of living up to obligations that have been imposed on it by government authorities."
The CCIA urges the FTC to "withdraw from the proposed consent order, to continue its investigation into the lawfulness of Microsoft's anticompetitive use of Passport and related technologies, and take steps to address the fundamental causes of Microsoft’s ongoing unlawful behavior, which harms consumers, thwarts competition, and impedes innovation."
People and Appointments
9/9. The U.S. Attorney for the Northern District of California, Kevin Ryan, announced the new organization and management of his office. Ross Nadel will remain Chief of the Computer Hacking and Intellectual Property (CHIP) Unit. He has held the position since the unit was created in 2000. Elizabeth De La Vega will remain as Chief of the San Jose Branch Office, with Eumi Choi as Deputy Chief. Hannah Horsley will be Chief of the Appellate Section. Patrick Robbins will be Chief of the Securities Fraud Section. Martha Boersch will be Chief of the Organized Crime Strike Force. Miranda Kane will be Chief of the White Collar Crime Section. Steven Gruel will be Chief of the Major Crimes (formerly General Crimes) Section. See, USAO release.
9/9. Qwest Communications announced that Janet Cooper has rejoined the company as SVP and Treasurer. See, Qwest release.
FTC Opposes State Restraint on Internet Casket Sales
8/29. The Federal Trade Commission (FTC) filed an amicus curiae brief [17 pages in PDF] with the U.S. District Court (WDOkla) in Powers v. Harris, a case regarding state regulation that affects the sale of caskets over the Internet.
The plaintiffs sell caskets over the Internet. They filed a complaint in the District Court against the Oklahoma State Board of Embalmers and Funeral Directors and others alleging that Oklahoma's Funeral Services Licensing Act (FSLA), which requires sellers of funeral goods to be licensed funeral directors, violates the Commerce Clause.
The FTC's amicus brief states that "While the Commission does not take a position on whether the FSLA ultimately violates the Commerce Clause, it is filing this amicus brief because defendant's characterization of the Funeral Rule conflicts with the actual purpose of the Rule and has the unfortunate effect of turning the Rule against its objective of enhanced competition and consumer welfare."
The FTC brief states that "The fundamental purpose of the Rule is to protect consumers by giving them full information in order to promote greater competition." However, "Rather than promote competition, the FSLA prohibits it. Rather than protect consumers by exposing funeral directors to meaningful competition, the FSLA protects funeral directors from facing any competition from third party casket sellers. Rather than promote consumer choice, the FSLA forces consumers to purchase caskets from funeral directors."
GAO Reports on Control of Deemed Exports
9/9. The General Accounting Office (GAO) released a report [34 pages in PDF] titled "Export Controls: Department of Commerce Controls over Transfers of Technology to Foreign Nationals Need Improvement".
The report focuses on "deemed exports". It begins by explaining that the U.S. "controls exports of certain civilian technologies that have military uses. U.S. firms may be required to obtain a license from the Department of Commerce before exporting these ``dual-use´´ technologies from the United States to many other countries, including countries of concern. Commerce regulations also deem domestic transfers of controlled dual-use technologies to citizens of these countries to be exports. As a result, Commerce may require firms that employ foreign nationals working with these technologies in this country to obtain ``deemed´´ export licenses.
The report notes that "In fiscal year 2001, Commerce approved 822 deemed export license applications and rejected 3. Most of the approved licenses allowed foreign nationals from countries of concern to work with advanced computer, electronic, or telecommunication and information security technologies in the United States. China accounted for 73 percent of licenses approved in fiscal year 2001. Russia, Iran, India, Syria, Israel, Iraq, and Pakistan accounted for another 14 percent, collectively."
The report identifies weaknesses in the Depart of Commerce's efforts to detect possible unlicensed deemed exports. It states: "First, Commerce did not screen thousands of H-1B change of status applications submitted domestically to INS for foreign nationals already in the United States. We found that in fiscal year 2001 about 15,000 individuals from countries of concern changed their immigration status to obtain jobs that could have involved controlled technology. Second, Commerce could not readily track the disposition of the 160 cases referred to field offices for follow-up because it lacks a system for doing so. As a result of these shortcomings, Commerce may be missing opportunities to detect firms that should have applied for deemed export licenses."
The report was prepared for Rep. Christopher Shays (R-CT), Chairman of the House Government Reform Committee's Subcommittee on National Security, Veterans Affairs, and International Relations.
FBI Announces Meetings on Criminal Information Sharing and Privacy
9/9. The Federal Bureau of Investigation (FBI) published a notice in the Federal Register announcing a series of meetings on October 8-10 of the Compact Council created by the National Crime Prevention and Privacy Compact Act of 1998 regarding the sharing of law enforcement information among government entities.
The notice states that "the federal government and sixteen states are parties to the Compact which governs the exchange of criminal history records for licensing, employment, and similar purposes. The Compact also provides a legal framework for the establishment of a cooperative federal state system to exchange such records."
The notice states that the agenda for the meetings includes "(1) United States Customs Service Request for Access to the Interstate Identification Index (III) for NonCriminal Justice Purposes, (2) Immigration and Naturalization Service (INS) Request to Allow State Repository Criminal History Maintenance and Dissemination, (3) Standards/ Procedures for Identity Verification, (4) Proposed Sanctions Rule, (5) National Applicant Database Requests, (6) Use of the III for Background Checks on Applicants' References, Relatives, Friends, and Associates, (7) Revised Rule to Allow INS Use of III for Emergency Child Placement, (8) Qualification Requirements and Audit Criteria, (9) United States Department of Justice Requirement for System Use, and (10) A Safer Nation -- Proposed Briefing Document."
The meetings will be held on the evening of October 8, and all day on October 9-10, at the Wyndham Washington. See, Federal Register, September 9, 2002, Vol. 67, No. 174, at Page 57245.
More News
9/9. The National Telecommunications and Information Administration (NTIA) published in its web site an amendment to its contract with NeuStar regarding the management of the .us top level domain.
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Tuesday, September 10
The House will meet at 9:00 AM for morning hour and at 10:00 AM for legislative business. The House will consider HR 5011, the Military Construction Appropriations Act for FY 2003, and HR 5010, the Department of Defense Appropriations Act for FY 2003. See, Whip Notice.
The Senate is scheduled to consider HR 5093, the Interior Appropriations bill, and to continue its consideration of HR 5005, the Homeland Security Bill.
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in AT&T v. FCC, No. 01-1188. Judges Ginsburg, Sentelle and Silberman will preside. Location: 333 Constitution Ave., NW.
10:00 AM. The House Judiciary Committee will hold a meeting to mark up several bills. The last item on the agenda is HR 4561, the Federal Agency Protection of Privacy Act, sponsored by Rep. Bob Barr (R-GA). The bill would require federal agencies to the agency shall prepare and make available for public comment an initial privacy impact analysis when it proposes new regulations. This item was held over from last week. Audio web cast. Location: Room 2141, Rayburn Building.
10:00 AM. The Senate Judiciary Committee will hold a hearing to examine the implementation of the USA PATRIOT Act, focusing on the expansion of the Foreign Intelligence Surveillance Act (FISA). See, notice. Location: Room 226, Dirksen Building.
12:00 NOON. The FCBA's Engineering and Technical Practice Committee will host a brown bag lunch titled "Spectrum Management Reform: Preliminary Perspectives". The scheduled speakers are Paul Kolodzy (FCC Senior Spectrum Policy Advisor) and Mike Gallagher (NTIA). RSVP to Lisa Gaisford. Location: FCC, 445 12th St., SW, Courtyard Level, Conference Rooms B418 & B511.
12:00 NOON. Deadline to submit written comments to the Office of the USTR in response to its notice in the Federal Register requesting comments on China's compliance with the commitments it made in connection with its accession to the World Trade Organization (WTO).
Day two of a two day conference on patent interference law, hosted by the Intellectual Property Owners Association (IPO). For more information, call 202 466-2396. Location: Ronald Reagan International Trade Center.
The Intellectual Property Owners Association (IPO) Board of Directors will hold a meeting.
Wednesday, September 11
Anniversary of the terrorist attacks of September 11, 2001.
The House will meet at 12:00 NOON for legislative business. No votes are expected before 5:00 PM. The House will consider The Patriot Day Resolution. See, Whip Notice.
Thursday, September 12
The House will meet at 10:00 AM for legislative business. The House is scheduled to consider HR 5193, the Back to School Tax Relief Act of 2002.
8:00 AM - 5:30 PM. Day one of a two day conference hosted by the International Intellectual Property Institute (IIPI) titled "Specialized Intellectual Property Courts". See, IIPI release and online registration form. Location: George Washington University Law School, Moot Court Room, 2000 H Street, NW.
9:30 AM. The FCC will hold a meeting. The FCC will consider a Notice of Proposed Rulemaking (NPRM) concerning its media ownership rules, pursuant to Section 202(h) of the Telecommunications Act of 1996. It will also consider a NPRM and Memorandum Opinion and Order concerning possible revisions to the rules on unsolicited advertising over the telephone and facsimile machine and the possible establishment of a national do not call list. This is CC Docket No. 92-90. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).
10:00 AM. Federal Reserve Board Chairman Alan Greenspan will testify to the House Budget Committee. Location: Room 210, Cannon Building.
10:00 AM. The House Judiciary Committee's Subcommittee on the Constitution will hold an oversight hearing titled "Privacy Concerns Raised by the Collection and Use of Genetic Information by Employers and Insurers". Audio web cast. Location: Room 2237, Rayburn Building.
12:30 - 2:00 PM. The American Society of International Law (ASIL) will host a panel discussion titled "International Cyberspace: Convergence or Conflict?". RSVP by 5:00 PM on September 10 to cborgen or by fax to 202 797-7133, attn: Chris Borgen. Lunch will be served. Location: ASIL, 2223 Massachusetts Avenue, NW.
2:00 PM. The Senate Banking Committee will hold a hearing on the nomination of Wayne Abernathy to be Assistant Secretary of the Treasury for Financial Institutions. Location: Room 538, Dirksen Building.
2:30 PM. The Senate Commerce Committee's Subcommittee on Science, Technology, and Space will hold a hearing on S 2537, the Dot Kids Implementation and Efficiency Act of 2002, and HR 2417, the Dot Kids Domain Name Act of 2001. These bills would facilitate the creation of a new second level domain within the U.S. country code domain that would provide a safe online environment for children. The House has already passed another version -- HR 3833. Location: Room 253, Russell Building.
Deadline to submit comments to the FCC regarding WorldCom's August 8, 2002, petition for a declaratory ruling pursuant to 47 C.F.R.§ 1.2, that requesting carriers are entitled to access ILEC Line Information Database data at cost based rates when they use such data to provide interexchange and exchange access service. This is CC Docket No. 01-338. See, FCC notice [PDF].
Friday, September 13
The House will meet at 9:00 AM for legislative business. No votes are expected past 2:00 PM.
9:00 AM - 5:00 PM. Day two of a two day conference hosted by the International Intellectual Property Institute (IIPI) titled "Specialized Intellectual Property Courts". See, IIPI release, online registration form, and agenda at right. Location: Markey National Courts Bldg., 717 Madison Place, NW.
10:45 AM. Press conference associated with the International Intellectual Property Institute's conference titled "Specialized Intellectual Property Courts". Location: Court Room 203, Markey National Courts Bldg., 717 Madison Place, NW.
10:00 AM. The FCC's Network Reliability and Interoperability Council will hold a meeting. Location: FCC, 445 12th Street, SW, Commission Meeting Room.
Deadline to submit comments to the FTC regarding its proposed consent agreement with MSC Software Corporation. See, Agreement Containing Consent Order [22 pages PDF]. See, notice in Federal Register.
Monday, September 16
Yom Kippur.
Deadline to submit comments and notices of intention to participate to the Copyright Office in response to its notice in the Federal Register directing "all claimants to royalty fees collected in 1999, 2000 and 2001 for the distribution of digital audio recording devices and media to submit comments as to whether a controversy exists as to the distribution of the royalty fees in the 1999, 2000 and 2001 Musical Works Funds."
Deadline to register for the FCC's September 18 auction seminar for Auction No. 46. This is for the 1670-1675 MHz band auction, scheduled for October 30, 2002. See, notice with registration form [PDF].