8/12. The Bay Area Rapid Transit (BART) in the San Francisco, California area, announced that it cut off electrical power for cellular telephone sites along some of its lines on August 11, 2011.

It explained in an August 12 release that it "temporarily interrupted service at select BART stations" because of planned protests in BART stations.

It elaborated that "Organizers planning to disrupt BART service on August 11, 2011 stated they would use mobile devices to coordinate their disruptive activities and communicate about the location and number of BART Police. A civil disturbance during commute times at busy downtown San Francisco stations could lead to platform overcrowding and unsafe conditions for BART customers, employees and demonstrators."

The BART added that "Cell phone service was not interrupted outside BART stations. In addition, numerous BART Police officers and other BART personnel with radios were present during the planned protest, and train intercoms and white courtesy telephones remained available for customers seeking assistance or reporting suspicious activity."

The BART may or may not have violated one or more state or federal statutory prohibitions.

First, California Penal Code, Section 591, provides that "A person who unlawfully and maliciously takes down, removes, injures, or obstructs any line of telegraph, telephone, or cable television, or any other line used to conduct electricity, or any part thereof, or appurtenances or apparatus connected therewith, or severs any wire thereof, or makes any unauthorized connection with any line, other than a telegraph, telephone, or cable television line, used to conduct electricity, or any part thereof, or appurtenances or apparatus connected therewith, is punishable by imprisonment in the state prison, or by a fine not exceeding five hundred dollars ($500), or imprisonment in the county jail not exceeding one year."

The California courts have upheld the application of this statute for an act as minor as removing a battery from a hand held phone. See, People v. Michael Tafoya, Court of Appeal of California, Fourth District, Division Two, App. Ct. No. E029271, an appeal from the Superior Court of San Bernardino County, Super. Ct. No. MBA008176. See also, story titled "California Upholds Conviction for Removing Battery from Cordless Phone" in TLJ Daily E-Mail Alert No. 267, September 13, 2001.

There are also federal statutes. First, 47 U.S.C. § 333 provides in full that "No person shall willfully or maliciously interfere with or cause interference to any radio communications of any station licensed or authorized by or under this chapter or operated by the United States Government."

Neither Section 333, nor 47 U.S.C. § 153, provide a definition of "interference". The BART may rely on the interpretation that "interference" means only radio frequency jamming, and does not include sabotage or disabling of wireless communications by power shutdown.

In addition, 18 U.S.C. § 1362 provides in part that "Whoever willfully or maliciously injures or destroys any of the works, property, or material of any radio, telegraph, telephone or cable, line, station, or system, or other means of communication, operated or controlled by the United States, or used or intended to be used for military or civil defense functions of the United States, whether constructed or in process of construction, or willfully or maliciously interferes in any way with the working or use of any such line, or system, or willfully or maliciously obstructs, hinders, or delays the transmission of any communication over any such line, or system, or attempts or conspires to do such an act, shall be fined under this title or imprisoned not more than ten years, or both."

The BART may rely on the interpretation that this statute is inapplicable because the disabled cell sites were not operated or controlled by the federal government, or used for military purposes.

8/9. HR 1981 [LOC | WW], the data retention bill passed by the House Judiciary Committee (HJC) on July 27-28, 2011, if enacted into law, would result in the retention of data by internet access service providers, and other companies.

Previous TLJ articles have stated that HR 1981 is not clear regarding what entities are covered, or what data must be retained. See, stories titled "House Judiciary Committee Approves Data Retention Bill", "Amendment by Amendment Summary of the Mark Up of HR 1981, the Data Retention Bill", "Roll Call Votes on Data Retention Bill" and related stories in TLJ Daily E-Mail Alert No. 2,278, August 3, 2011.

In addition, neither the Department of Justice (DOJ), which seeks this bill, nor Rep. Lamar Smith ((R-TX), who pushed this bill through the HJC, have been forthcoming regarding why they want this bill, or for what purposes retained data would be used.

This article identifies one of many likely uses of retained data -- to identify persons with the requisite scienter for securities fraud. This article discusses a case initiated this week that rests in part on internet search data.

Leslie Harris, head of the Center for Democracy and Technology (CDT), wrote an opinion piece published by ABC News on August 8, 2011, titled "The Just in Case You Are A Criminal Someday Act".  She argues that web browsing data would be collected and used if HR 1981 were enacted.

Harris wrote, "Imagine a world in which your Internet service provider stores information that would make it trivial for every website you visit, every blog you read and each purchase you make online to be made available to the cops … just in case you commit a crime someday. This is no casual reference to the ``Big Brother is Watching You´´ dystopian world of George Orwell's ``1984;´´ it is the reality of H.R. 1981, a bill in Congress that orders Internet companies to build vast digital warehouses that record and store information that links your online activities to your name and address."

On August 11, the Securities and Exchange Commission (SEC) filed a securities fraud action that discloses that the collections of data, including web browsing activity, retained pursuant to HR 1981 may be used to investigate and prove securities law violations.

The SEC filed a civil complaint [17 pages in PDF] in the U.S. District Court (CDCal) against Toby Scammell alleging 10b5 securities fraud in connection with his trading based upon insider information.

The complaint does not allege that he was an insider, or even held employment with any business that possessed inside information regarding the trades that he made.

It alleges in detail his trades. He purchased short term options to buy stock, also known as call options, in Marvel Entertainment, Inc. His timing was fortunate. The Walt Disney Company soon after announced plans to acquire Marvel, and Scammel made lots of money from his call options.

The complaint states that he had a girlfriend who worked for Disney and that she knew of the acquisition in advance. But, the complaint does not allege that she told him. It does speculate that he may have learned about Marvel "through overhearing" one of her conversations.

Purchasing call options is not illegal. It is only illegal if also combined with the requisite scienter.

The SEC complaint discloses that the SEC relies upon Scammel's internet searches to prove what he knew, and when he knew it.

It alleges that "Scammell acted with scienter". It states that before the acquisition was publicly announced, and before he purchased the call options, "Scammell began searching the internet regarding call options", and "Scammell researched the law regarding insider trading prior to making most of his Marvel trades".

The complaint also alleges that "On or about August 16, 2009, before Scammell purchased the majority of the Marvel options, Scammell searched the internet for the terms ``insider trading´´, ``tender offer´´, ``Williams Act´´, ``Rule 10b-5´´ and ``material, non-public information´´ and read several articles on Wikipedia regarding those topics."

The complaint does not state whether the SEC obtained this data from a search provider, from an internet access service provider, from Scammell's computer, or from some other repository of retained data.

Nevertheless, this case demonstrates a use of retained data in SEC actions for insider trading. It also suggests that if HR 1981 were enacted into law, retained data would become a feature of investigations in which the SEC seeks to discover targets' knowledge or mental state.

Retained data would likely be used by the SEC in other types of fraud cases in which the SEC must prove what the defendant knew but did not disclose, or that the defendant knew that statements made were false. In addition, the DOJ, which brings criminal securities fraud actions, would also find parallel uses for retained data.

The SEC, DOJ and state securities agencies might also use retained data to enhance their ability to identify suspects. For example, there is a potential for profiting from insider trading if a stock rises in value as a result of a transaction, such as Disney's acquisition of Marvel, of which insiders have advance knowledge. The government can build data sets of the traders who profited from trades around the time of the disclosure of the transaction. But, this does not demonstrate knowledge of inside information. It can also build data sets of persons who had insider information, by asking the companies and their legal and financial advisors. But, this does not prove that they assisted anyone in making trades based upon inside information. However, the government could use data collected as a result of enactment of HR 1981 to build data sets of web searches and web sites visited by these traders and insiders to identity Scammel like web activity. The government could also use retained "telephone connection records", which are covered by HR 1981, and other retained data to identify lines of communication between these traders and insiders.

By using these collections of data, government investigators may be better able to identify, by automated processes, possible cases of securities trading based upon inside information. Moreover, such data may enable the government to identify some suspected decisions not to make trades that would have been made but for use of inside information.

Also, laws firms that bring private 10b5 lawsuits would find retained data useful. One might expect that class action securities law firms would seek court subpoenas or discovery orders directing service providers to turn over data on the directors and officers at the companies that they target.

The above referenced case is SEC v. Toby G. Scammell, U.S. District Court for the Central District of California, D.C. CV11-6597-DSF (MRWx).

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8/12. The Office of the U.S. Trade Representative (OUSTR) published a notice in the Federal Register (FR) requesting comments to assist it in preparing its annual report titled "National Trade Estimate Report on Foreign Trade Barriers".

The OUSTR seeks comments, by October 4, 2011, regarding "significant barriers to U.S. exports of goods, services, and U.S. foreign direct investment", including lack of intellectual property protection, technology transfer requirements, limitations on cross-national data flows, and e-commerce restrictions.

This notice requests comments on "Lack of intellectual property protection (e.g., inadequate patent, copyright, and trademark regimes)". (Parentheses in original.)

It also requests comments regarding "Investment barriers (e.g., limitations on foreign equity participation and on access to foreign government-funded R&D consortia, local content, technology transfer and export performance requirements, and restrictions on repatriation of earnings, capital, fees, and royalties." (Parentheses in original.)

It also seeks comments on "Services barriers", including "regulation of international data flows, restrictions on the use of data processing, quotas on imports of foreign films", and on "Trade restrictions affecting electronic commerce".

See, FR, Vol. 76, No. 156, Friday, August 12, 2011, at Pages 50287-50289.

The OUSTR released its 2011 report [391 pages in PDF] on March 30, 2011. See, stories titled "OUSTR Release Annual Report of Foreign Barriers to Trade" and "OUSTR Reports on PRC's Rare Earths Export Restraints" in TLJ Daily E-Mail Alert No. 2,216, April 4, 2011.

8/12. The Office of the U.S. Trade Representative (OUSTR) published a notice in the Federal Register (FR) that announces a hearing, and requests public comments, to assist it in preparing its annual report to the Congress on the People's Republic of China's (PRC) compliance with the commitments made in connection with its accession to the World Trade Organization (WTO).

The OUSTR seeks comments on "intellectual property rights (including intellectual property rights enforcement)", "standards and technical regulations", and "trade-related investment measures", among other topics.

The hearing will be held in Room 1, 1724 F Street, NW, on October 5, 2011.

The deadline to submit notifications of intent to testify, and prepared testimony, is 12:00 NOON on September 21, 2011.

The deadline to submit comments is 12:00 NOON on September 26, 2011.

See, FR, Vol. 76, No. 156, Friday, August 12, 2011, at Pages 50286-50287.

The House will not meet. It is in recess until 2:00 PM on September 7. However, it will hold pro forma sessions twice per week until then.

The Senate will not meet. It is in recess until 2:00 PM on September 6. However, it will hold pro forma sessions twice per week until then.

11:00 AM - 12:30 PM. The Heritage Foundation (HF) will host a panel discussion titled "National EMP Recognition Day: The Threat That Can't Be Ingnored". The speakers will be Rep. Roscoe Bartlett (R-MD), Peter Pry (EMPact America), Frank Gafney (Center for Security Studies), Drew Miller, and James Carafano (HF). This event is free and open to the public. See, notice. Location: HF, 214 Massachusetts Ave., NE.

Deadline to submit reply comments to the Federal Communications Commission (FCC) regarding the report submitted to the FCC on June 30, 2011, by the technical working group co-chaired by LightSquared and the U.S. Global Positioning System Industry Council (USGIC). See, FCC International Bureau's (IB) order dated June 30, 2011. It is DA 11-1133 in DA 11-1133. See also report, part 1, part 2, part 3, part 4, part 5, part 6, and part 7.

EXTENDED FROM AUGUST 8. Extended deadline to submit comments to the Federal Trade Commission (FTC) in response to its notice in the Federal Register regarding the proposed self-regulatory guidelines submitted to the FTC by Aristotle International, Inc. under the safe harbor provision of the Children's Online Privacy Protection Act (COPPA) Rule. See, Federal Register, Vol. 76, No. 123, Monday, June 27, 2011, at Pages 37290-37291. See, notice of extension.

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) regarding its draft NIST IR-7275 Rev. 4 [77 pages in PDF] titled "Specification for the Extensible Configuration Checklist Description Format (XCCDF) Version 1.2".

The House will meet in pro forma session at 11:30 AM.

The Senate will meet in pro forma session at 11:00 AM.

12:30 - 1:30 PM. The American Bar Association (ABA) will host a webcast panel discussion titled "Tax Aspects of Technology Transactions". The speakers will be Roger Royse (Royse Law Firm) and Kenneth Appleby (Foley & Lardner). Prices vary. CLE credits. See, notice.

TIME? The American Bar Association (ABA) will host a webcast panel discussion titled "LinkedIn for Lawyers".

1:00 PM. The US Telecom will host a webinar titled "Navigating the Rising Tide of Cyber Crime". The speaker will be Tom Dotson (CIO of SureWest). Free. See, notice.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking (NPRM) [36 pages in PDF] regarding removing the International Settlements Policy (ISP) from all U.S. international routes except Cuba. The FCC adopted this NPRM on May 12, 2011, and released the text on May 13, 2011. This item is FCC 11-75 in IB Docket No. 11-80. See, notice in the Federal Register, Vol. 76, No. 138, Tuesday, July 19, 2011, at Pages 42625-42631.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking (NPRM) [82 pages in PDF] regarding reporting requirements for providers of international telecommunications services. The FCC adopted this NPRM on May 12, 2011, and released the text on May 13, 2011. This item is FCC 11-76 in IB Docket No. 04-112. See, notice in the Federal Register, Vol. 76, No. 138, Tuesday, July 19, 2011, at Pages 42613-42625.

The House will meet in pro forma session at 1:00 PM.

The Senate will meet in pro forma session at 10:00 AM.

1:00 - 2:30 PM. The American Bar Association (ABA) will host a webcast panel discussion titled "Ownership of Digital Media and Electronic Privacy". The speakers will be Ben Kleinman (Manatt Phelps), Sharra Brockman (Verv), Eric Crusius (Centre Law Group), and Paul Roberts (Hogan Lovells). Prices vary. CLE credits. See, notice.

10:00 AM - 12:00 NOON. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will meet to discuss the consultation of International Telecommunication Union's (ITU) Telecommunication Standardization Sector Study Group 15 regarding whether draft Recommendation G.tp-oam (Operations, Administration and Maintenance mechanism for MPLS-TP in Packet Transport Network (PTN)) should be approved as a policy-level document, and what policy position the US should take at the December 2011 Study Group 15 meeting on this issue. See, notice in the Federal Register, Vol. 76, No. 153, Tuesday, August 9, 2011, at Page 48939. Location: DOS, 2201 C St., NW.

Deadline to submit oppositions to petitions for reconsideration of the Federal Communications Commission's (FCC)'s Report and Order and Order on Reconsideration [144 pages in PDF] regarding pole attachments. That order is FCC 11-50 in WC Docket No. 07-245 and GN Docket No. 09-51. The FCC adopted and released it on April 7, 2011. The National Cable & Telecommunications Association (NCTA), COMPTEL, and tw telecom filed a petition for reconsideration on June 8, 2011. The Coalition of Concerned Utilities also filed a petition for reconsideration on June 8, 2011. See, June 20, 2011 Public Notice and notice in the Federal Register, Vol. 76, No. 143, Tuesday, July 26, 2011, at Pages 44495-44496.