|Sen. Leahy and Sen. Lee Introduce
Bill to Require Warrant to Access Cloud Stored E-Mail
3/19. Sen. Patrick Leahy (D-VT)
and Sen. Mike Lee (R-UT) introduced S
607 [LOC |
"Electronic Communications Privacy Act Amendments Act of 2013" a
bill to require that the government obtain a court warrant to access the content
of e-mail held by a service provider.
Sen. Leahy (at right)
said that "the bill requires that the government obtain a search warrant based
on probable cause to obtain the content of Americans' email and other electronic
communications, when those communications are requested from a third-party service
provider." See, Congressional Record, March 19, 2013, at Page S1951.
He added that "the bill requires that the government promptly notify any
individual whose email content has been accessed via a third-party service
provider, and provide that individual with a copy of the search warrant and
other details about the information obtained. The bill permits the government to
seek a court order temporarily delaying such notice in order to protect the
integrity of ongoing government investigations. In addition, the bill permits
the government to ask a court to temporarily preclude a service provider from
notifying a customer about the disclosure."
This is a revised version of language adopted by the SJC late in the 112th
Congress. The SJC approved a version of HR 2471
TLJ], a bill to revise the
Video Privacy Protection Act to facilitate practices of social media web sites,
with a section that required a warrant for accessing cloud stored e-mail. See,
story titled "Senate Judiciary Committee Approves Leahy Bill to Require
Warrant for Accessing Cloud Stored E-Mail" in
TLJ Daily E-Mail
Alert No. 2,479, November 30, 2012. However, the Congress later enacted a
version of the bill without the e-mail section.
The just introduced bill provides that "A governmental entity may require
the disclosure by a provider of electronic communication service or remote computing
service of the contents of a wire or electronic communication that is in
electronic storage with or otherwise stored, held, or maintained by the provider
only if the governmental entity obtains a warrant issued using the procedures
described in the Federal Rules of Criminal Procedure (or, in the case of a State
court, issued using State warrant procedures) that is issued by a court of
competent jurisdiction directing the disclosure." (Parentheses in original.)
This bill was referred to the
Senate Judiciary Committee (SJC). Sen. Leahy is the Chairman. Sen. Lee is a
Greg Nojeim of the Center for Democracy and
Technology (CDT) stated in a
release that "This common sense reform, which has strong support across the
political spectrum, would help extend Fourth Amendment rights in the Internet
However, the law enforcement agencies that would be required to obtain court
approval to access stored e-mail do not Nojeim's enthusiasm for extending 4th
Amendment rights. Moreover, many Senators and Representatives often follow the
recommendations of these law enforcement officials. For these reasons, this bill
is likely to face significant opposition in the Congress.
|Sen. Grassley Seeks Information
on Caproni's Involvement in FBI Violations of Surveillance Law
3/19. Sen. Charles Grassley
(R-IA) sent a
letter to Michael
Horowitz, the Inspector General of the
Department of Justice (DOJ), requesting copies of documents of the DOJ's
Office of the Inspector General (OIG)
regarding Valerie Caproni's involvement in Federal Bureau of Investigation's
(FBI) violation of federal laws governing the use of National Security Letters
(NSLs) and other surveillance laws.
Sen. Grassley noted that he first requested DOJ OIG documents related to
Caproni on January 17, 2013, but that the DOJ OIG has so far refused. In
particular, Sen. Grassley seeks the OIG's transcripts of its interviews of
Caproni and her assistant, Julie Thomas.
The DOJ OIG released a series of reports in 2007, 2008 and 2010 that found
that the FBI engaged in widespread illegal surveillance activities. Caproni was
General Counsel of the FBI from 2003 through 2011. She presided over the FBI's
Office of General Counsel (OGC)
while the FBI engaged in the illegal surveillance activities that the DOJ OIG
disclosed in its three reports.
However, these reports did not disclose the extent of Caproni's involvement.
Caproni's involvement is now pertinent, because on November 14, 2012,
President Obama nominated her to be a Judge of the
U.S. District Court for the Southern
District of New York. See,
"Obama Nominates Caproni for District Court" in TLJ
Daily E-Mail Alert
No. 2,474, November 19, 2012.
Obama re-nominated Caproni (at left)
in the 113th Congress on January 3, 2013. See, story titled "Obama Re-Nominates
33 for Federal Courts" in
TLJ Daily E-Mail
Alert No. 2,503, January 3, 2013.
The Senate Judiciary Committee
(SJC), of which Sen. Grassley is the ranking Republican, reviews all federal
Grassley's letter to Horowitz (at right) states that the refusal to produce
documents is "unjustified", and raises questions about the OIG's
supposed independence from the DOJ.
Sen. Grassley commented on the OIG's assertion that the documents are
"internal DOJ communications". He wrote that "Communications between
the agency's counsel and the OIG are emphatically not ``internal.´´"
The DOJ OIG surveillance reports are as follows:
- January 20, 2010 redacted
report [306 pages
in PDF] titled "A Review of the Federal Bureau of Investigation's Use of
Exigent Letters and Other Informal Requests for Telephone Records".,
- March 13, 2008,
titled "A Review of the FBI's Use of National Security Letters: Assessment of
Corrective Actions and Examination of NSL Usage in 2006".
- March 9, 2007,
report [PDF] titled "A Review of the Federal Bureau of Investigation's Use
of National Security Letters".
|SEC Releases Guidance for Mutual Funds and
Investment Companies On Use of Social Media
3/15. The Securities and Exchange Commission
(SEC) released a staff
document titled "IM Guidance Update" and subtitled "Filing
Requirements for Certain Electronic Communications". See also, SEC
This document states that SEC "staff has received inquiries regarding whether
certain interactive content posted in a real-time electronic forum (i.e., chat
rooms or other social media) (“interactive content”) should be filed under the
filing requirements of Section 24(b) of the Investment Company Act of 1940
(“1940 Act”) or Rule 497 under the Securities Act of 1933 (“1933 Act”) if it is
not required to be filed under Financial Industry Regulatory Authority (“FINRA”)
Rule 2210." (Parentheses in original. Footnote omitted.)
This document states that "staff believes that certain interactive content
need not be filed. Whether a communication need be filed depends on the content,
context, and presentation of the particular communication or set of
communications and requires an examination of the underlying substantive
information transmitted to the social media user and consideration of any other
facts and circumstances, such as whether the interactive communication is merely
a response to a request or inquiry from the social media user or is forwarding
|SEC & DOJ Charge Man Who Misrepresented to
Investors the Acquisition of Pre-IPO Shares of Tech Companies
3/19. The Securities and Exchange Commission
(SEC) instituted an administrative proceeding against Craig Berkman, John B. Kern
and various entities that alleges violation of federal securities laws in
connection with a fraudulent investment scheme in which Berkman misrepresented
to investors that he would acquire pre-IPO shares of Facebook, LinkedIn and
other technology companies.
The SEC stated in a
release that Berkman "touted to investors that he had special access to
scarce sources of pre-IPO stock in Facebook, LinkedIn, Groupon, and Zynga.
Instead of purchasing shares on investors’ behalf as promised, Berkman misused
their investments to make Ponzi-like payments to earlier investors, fund
personal expenses, and pay off claims against him in a bankruptcy case."
Simultaneously, the Office of the U.S. Attorney (OUSA) for the Southern
District of New York announced that the arrest of Berkman on March 19, and the
filing a sealed
criminal complaint [20 pages in PDF] against Berkman in the
U.S. District Court (SDNY) on March
15, which was unsealed on March 19. See also, OUSA
order [15 pages in PDF] instituting the administrative proceeding states
that Berkman "raised at least $13.2 million from approximately
120 investors by selling membership interests in limited liability companies ...
that Berkman controlled".
The order continues that "Berkman told investors" in several ventures
"that their funds would be used to acquire highly coveted, pre-initial public
offering ... shares of Facebook, Inc., LinkedIn, Inc., Groupon, Inc., and Zynga Inc.
In another offering, Berkman told investors in Face Off Acquisitions that their
money would be used either to purchase pre-IPO shares of Facebook or to acquire
a company that held pre-IPO Facebook shares. In a third offering, Berkman told
investors in Assensus Capital that he would use their money to fund various new,
large-scale, technology ventures."
However, "Instead of using the investor funds to acquire pre-IPO shares or
fund technology ventures, Berkman misappropriated most of the offering
The order adds that Kern is a lawyer for the LLCs and Face Off Acquisitions
who "made certain material misstatements to investors that he knew or recklessly
disregarded were false and misleading".
The DOJ complaint charges criminal securities fraud in violation of Section
10b of the Securities Exchange Act in violation of 15 U.S.C. §§ 78j(b) and 78ff,
and Rule 10b5 thereunder, and wire fraud in violation of 18 U.S.C. §§ 1342 and
The criminal case is U.S. v. Craig L. Berkman, U.S. District Court for
the Southern District of New York, D.C. No. 13 MAG 0732.
|District Court Grants Summary Judgment
3/20. The U.S. District Court (SDNY)
granted summary judgment of infringement to the Associated Press in AP v.
This is a victory for businesses that engage in actual news reporting --
those that hire reporters and editors, and write and publish their own stories.
Also, to the extent that this opinion does not remove financial incentives to
conduct actual news reporting, it will not tend to reduce news reporting. An
opinion to the contrary -- allowing news story free riding as fair use -- would
have reduced financial incentives to conduct actual reporting, reduced the
quantity and quality of news available to the public, and thereby reduced
consumer welfare. However, the District Court decided on the basis of the
language of the statute, and applicable precedent.
The AP filed its
complaint on February 14, 2012 alleging copyright infringement
(17 U.S.C. § 106) and
hot news misappropriation by Meltwater,
which asserted fair use
(17 U.S.C. § 107),
equitable estoppel, laches and copyright abuse.
The District Court found infringement, and rejected all of Meltwater's
affirmative defenses in a 91 page opinion.
Gary Pruitt, P/CEP of AP stated in a
release that "This ruling makes it crystal clear that Meltwater wrongly used
news content from AP to create its own content, while paying none of the costs
associated with creating original news content ... This is an important ruling
for AP and others in the news business who work so hard to provide high-quality
original news reports on which the public relies."
The AP hires at great expense an army of reporters who engage in the labor
intensive and time consuming process of collecting, researching, writing, and
editing news stories. It licenses its works for fees. Meltwater does not license
from AP. Rather it copies excerpts from AP's works, and sells its product to its
The key issue was whether Meltwater's free riding is protected
fair use. Meltwater attempted to portray itself to the District Court as a
search engine that provided a transformative use. The District Court rejected
the fair use defense.
Meltwater stated in a
release on March 21 that it "believes the ruling misapplies the fair use
doctrine and is at odds with a variety of prior decisions that have paved the
way for today’s Internet. Meltwater is especially troubled by the implications
of this decision for other search engines and services that have long relied on
the fair use principles for which Meltwater is fighting."
Jorn Lyseggen, CEO of Meltwater, stated in this release that "we look forward
to having this decision reviewed by the Court of Appeals, which we are confident
will see the case a different way."
On January 17, 2013, the Public
Knowledge (PK) and Electronic Frontier
Foundation (EFF) filed an
amicus curiae brief [16 pages in PDF] in support of Meltwater. See story
titled "PK & EFF Argue Fair Use in AP v. Meltwater" in
TLJ Daily E-Mail
Alert No. 2,514, January 22, 2013.
On February 25, 2013, the New York Times, Gannett, McClatchy, and others filed an
amicus curiae brief [27 pages in PDF] in support of the AP.
This case is Associated Press v. Meltwater U.S. Holdings, Inc., et al.,
U.S. District Court for the Southern District of New York, D.C. 2:12-cv-1087-DLC-FM.
The AP is represented by the law firm of
Davis Wright Tremaine. Meltwater is
represented by the law firm of Wilson Sonsini.
|US China Commission Reports
on Trade Between US and PRC
3/8. The U.S.-China Economic and Security
Review Commission released a
paper [16 pages in PDF] titled "Staff Report on Monthly Trade Data with
This report states that "The U.S. trade deficit in goods with China in
January 2013 was $27 billion, $1.7 billion higher than at the same point a year
earlier. At this rate, the bilateral trade deficit will set a new record.
However, the rise in the U.S. trade deficit with China is slower than a year
ago, when the deficit increased by nearly $3 billion in January year-on-year.
Exports to China in January grew by 12.1 percent over the previous year,
compared to 4.4 percent in 2011- 2012. Even as export growth accelerated, the
rise in imports from China dampened."
This report also states that "Computer and electronics products, as well as
electrical equipment, exhibited the strongest growth among top U.S. imports from
This report includes data on the balance of trade in many categories. There
is a huge imbalance in the category of "Information & Communications".
For the month of January 2013 the US imported from the PRC $10,790,000,000, and
exported to the PRC $336,000,000, for a deficit of $10,454,000,000. This is an
increase of about $1.5 Billion from January 2012, when the deficit for this
category was $8,400,000,000.
|This issue contains the following items:
• Sen. Leahy and Sen. Lee Introduce Bill to Require Warrant to Access
Cloud Stored E-Mail
• Sen. Grassley Seeks Information on Caproni's Involvement in FBI Violations
of Surveillance Law
• SEC Releases Guidance for Mutual Funds and Investment Companies On Use
of Social Media
• SEC & DOJ Charge Man Who Misrepresented to Investors the Acquisition
of Pre-IPO Shares of Tech Companies
• District Court Grants Summary Judgment to AP
• US China Commission Reports on Trade Between US and PRC
• More Trade News
New items are highlighted in
|Thursday, March 21
The House will meet at 9:00 AM for legislative business.
See, Rep. Cantor's schedule.
The Senate will meet at 9:30 AM.
It will resume consideration of
SConRes 8, a budget resolution.
8:30 AM - 3:15 PM. The
Free State Foundation (FSF) will host an event titled "Fifth Annual
Telecom Policy Conference". The keynote speakers will be
Sen. Marco Rubio (R-FL) and
Ajit Pai (FCC Commissioner). Robert McDowell (FCC Commissioner),
Gary Epstein (Chair of the FCC's Incentive Auction Task Force), and
William Lake (Chief of the FCC's Media Bureau) will be panelists. The
other speakers will be Rebecca Arbogast (Comcast), Jeffrey Campbell (Cisco
Systems), Michelle Connolly (Duke University), Steve Davis (CenturyLink),
Stacy Fuller (Directv), Donna Gregg (Columbus School of Law), Rick Kaplan
(NAB), Steve Largent (CTIA), Blair Levin (Aspen Institute), Daniel Lyons
(Boston College Law School), Michael Powell (NCTA), Robert Quinn (AT&T), Gigi
Sohn (Public Knowledge), Deborah Tate, Tom Tauke (Verizon), Steven Teplitz
(Time Warner Cable), Richard Whitt (Google's Motorola Mobility), and Richard
Wiley (Wiley Rein). Location: National
Press Club, 13th Floor, 529 14th St., NW.
9:00 AM. The House
Foreign Affairs Committee (HFAC) Subcommittee on on Europe, Eurasia, and
Emerging Threats will hold a hearing titled "Cyber Attacks: An
Unprecedented Threat to U.S. National Security". The witnesses will
be Chris Painter (Department of State), Michael Mazz
(American Enterprise Institute), Martin Libicki (RAND Corporation),
Richard Bejtlich (Mandiant Corporation) and Greg Autry
(Coalition for a Prosperous America). See,
notice. See also, story titled "Mandiant Releases Report on Cyber
Espionage by People's Liberation Army" in TLJ Daily E-Mail Alert No. 2,532,
March 7, 2013. Location: Room 2172, Rayburn Building.
9:00 AM. The House
Commerce Committee's (HCC) Subcommittee on Oversight and Investigations
will hold a hearing titled "Health Information Technologies:
Administration Perspectives on Innovation and Regulation". The witnesses
will be Farzad Mostashari (Department of Health and Human Services) and
Christy Foreman (Food and Drug Administration). See,
notice. Location: Room 2322, Rayburn Building.
9:00 AM. The House Intelligence
Committee will hold a closed hearing titled "Ongoing Intelligence
notice. Location: Room HVC-304, Capitol Visitor Center.
10:00 AM. The House
Small Business Committee (HSBC) will hold a hearing titled
"Protecting Small Businesses Against Emerging and Complex Cyber-Attacks".
The witnesses will be William Weber (Cbeyond, testifying on behalf of the COMPTEL),
Justin Freeman (Rackspace, testifying on behalf of the Application Developers
Alliance), and Phyllis Schneck (McAfee). See,
notice. Location: Room 2360, Rayburn Building.
10:00 AM. The Senate
Judiciary Committee (SJC) will hold an executive business meeting. The
agenda again includes consideration of the nominations of Jane Kelly
(USCA/8thCir) and Kenneth Gonzales (USDC/DNMex). See,
notice. Webcast. Location: Room 226, Dirksen Building.
1:00 - 2:30 PM. The
American Bar Association (ABA) will
host a webcast and teleconferenced presentation titled "Social Media
and Local Governments". The speaker will be Julie Tappendorf (Ancel
Glink). Prices vary. CLE credits. See,
2:30 PM. The
Federal Trade Commission's (FTC) Bureau of Economics will host a
presentation titled "Switching Costs and Equilibrium Prices". See,
[PDF] with the same title. The speaker will be the author
Luis Cabral (New
York University business school). This is an economics paper that does not
discuss wireless or other services. However, it is pertinent to policy debates
regarding wireless services. For more information, contact Christopher
Metcalf at cmetcalf at ftc dot gov or Tammy John at tjohn at ftc dot gov.
Location: FTC, 601 New Jersey Ave., NW.
|Friday, March 22
Rep. Cantor's schedule
states that no votes are expected in the House.
Supreme Court conference day. See, Supreme Court
12:00 NOON - 1:00 PM. The
American Bar Association (ABA) will
host a teleconferenced panel discussion titled "Associates under the New
HSR Rules". The speakers will be Jeffrey Ayer (WilmerHale), Kathryn Walsh
(FTC Premerger Notification Office), John Ingrassia (Proskauer), and Nadia
Murad (Kirkland & Ellis). Free. No CLE credits. See,
2:00 - 3:00 PM. The Brookings
Institute will host an event titled "What Lies Ahead for Japan and
the United States". Kenichiro Sasae (Ambassador of Japan to the
United States) will speak and answer questions. Free. Open to the public. See,
Location: Brookings, 1775 Massachusetts Ave., NW.
|Monday, March 25
The House will not meet the week of March 25 through
March 29, or the week of April 1 through April 5. The
House will return on Tuesday, April 9. See, House
for 113th Congress, 1st Session.
12:15 - 1:30 PM. The Federal
Communications Bar Association's (FCBA) Intellectual Property Committee and
Video Programming and Distribution Committee will host a brown bag lunch regarding
the FCC’s encoding rules for cable and satellite providers. The speakers will be
(Steptoe & Johnson),
Schwartz (Constantine & Cannon), and
Paul Glist (Davis Wright &
Tremaine). Location: Wiley Rein,
1776 K St., NW.
Deadline to submit initial comments to the Federal
Communications Commission (FCC) in response to its
Notice of Proposed Rulemaking (NPRM) [34 pages in PDF] regarding rates
for telecommunications services in prisons. The FCC adopted this NPRM on
December 24, 2012, and released the text on December 28. It is FCC 12-167 in
WC Docket No. 12-375. See,
notice in the Federal Register, Vol. 78, No. 14, January 22, 2013, at
|Tuesday, March 26
10:00 AM. The U.S.
Court of Appeals (FedCir) will hear oral argument in Apple v.
Samsung, App. Ct. No. 2012-1600, an appeal from the
U.S. District Court (NDCal) in
a patent infringement case involving technology for smart phones and
tablets. The District Court case is 11-CV-1846-LHK, Judge Lucy Koh presiding.
See also, stories titled "Trial Jury Returns Verdict In Apple v. Samsung"
in TLJ Daily E-Mail
Alert No. 2,437, August 25, 2012, and "Apple Files Patent
Infringement Complaint Against Samsung" in
TLJ Daily E-Mail
Alert No. 2,222, April 18, 2011. Location: Courtroom 201.
12:00 NOON - 1:30 PM. The
American Bar Association (ABA) will
host a webcast and teleconferenced panel discussion titled "The iPad for
Lawyers: Incorporating Tablet Computing Into Your Practice". Prices vary.
CLE credits. See,
4:30 - 6:00 PM. The American Enterprise
Institute (AEI) will host an event titled "Arbitration and the
Constitution". The speakers will be Lee Otis, Peter Rutledge
(University of Georgia School of Law), Paul Bland (Public Justice),
James Chen (Brandeis School of Law), and Michael Greve (George Mason
University School of Law). See,
notice. Location: AEI, 1150 17th St., NW.
|Wednesday, March 27
6:00 - 8:00 PM. The
Federal Communications Bar Association (FCBA) will host an event titled
"Why Every Lawyer Should Understand The Basic Concepts Of Enterprise
Risk Management (ERM) -- 2013". Prices vary. CLE credits. Registrations
and cancellations are due by 12:00 NOON on March 26. See,
notice. Location: Bingham
McCutchen, 2020 K St., NW.
Deadline to submit reply comments to the Federal
Communications Commission (FCC) in response to its
Notice of Proposed Rule Making (NPRM) regarding implementing allocation
decisions from the World Radiocommunication Conference held in Geneva in 2007
(WRC-07) regarding spectrum between 108 MHz and 20.2 GHz, and changing service
rules for this spectrum. The FCC adopted this NPRM on November 15, 2012, and
released the text on November 19. It is FCC 12-140 in ET Docket No. 12-338.
notice in the Federal Register, Vol. 77, No. 248, December 27, 2012, at
|Thursday, March 28
2:30 PM. The Federal Trade
Commission's (FTC) Bureau of Economics will host a presentation titled
"Monopoly Differential Pricing and Welfare". See,
[30 pages in PDF] with the same title by
Yongmin Chen (University of
Colorado at Boulder) and
Schwartz. The speaker will be Chen. Differential pricing is employed, for
example, when producers of intellectual property based products such as books sell
at different prices in different countries or to different classes of consumers.
It is the practice that the Supreme Court undermined in its March 19, 2013
[74 pages in PDF] in John Wiley & Sons v. Supap Kirtsaeng. See, story
titled "Supreme Court Holds First Sale Doctrine Applies Regardless of
Location" in TLJ Daily E-Mail Alert No. 2,536, March 19, 2013. Also,
geographically based differential pricing in telecommunications is barred by
regulation. For more information, contact Christopher Metcalf at cmetcalf at ftc
dot gov or Tammy John at tjohn at ftc dot gov. Location: Room 8089, 1800 M
5:30 - 7:30 PM. Deborah Cohn, Commissioner for
Trademarks at the U.S. Patent and Trademark
Office (USPTO) and Gerard Rogers, Chief Administrative Trademark Judge
of the Trademark Trial and Appeal Board, will speak at an event titled "The
Trademark Office Speaks". The USPTO states that this is a
DC Bar Association event. The DC Bar bars
reporters from this event. No webcast. Prices vary. No CLE credits. See,
notice. Location: Hotel Monaco, 700 F. St., NW.
|More Trade News
3/14. The European Commission (EC) released a
report [19 pages in PDF] titled "Trade and Investment Barriers Report
2013". It identifies barriers to investment in the People's Republic of
China (PRC), the PRC's national security review mechanism for mergers and
acquisitions involving foreign investors, the PRC's barriers in the information
security sector based upon regulation on commercial encryption, the PRC's export
financing conditions and subsidies, and India's telecoms security clearance
requirements and new policy framework on telecoms, among other barriers.
3/14. The White House news office issued a
release regarding President Obama's telephone conversation with People's
Republic of China (PRC) President Xi Jinping on March 14, 2013. It states
that the two discussed "the future of the U.S.-China relationship." This
release also states that "President Obama welcomed China's G-20 commitment to
move towards a more flexible exchange rate, and he underscored the importance of
working together to expand trade and investment opportunities and to address issues
such as the protection of intellectual property rights. In this context, the
President highlighted the importance of addressing cyber-security threats, which
represent a shared challenge."
3/13. The U.S.-China Economic and Security
Review Commission released a
paper [10 pages in PDF] titled "China's New Income Inequality Reform Plan
and Implications for Rebalancing". The author is the USCESRC's Nargiza
Salidjanova. This paper states that "China faces an already large
and steadily growing gap in income between its urban and rural populations, and
between its richest and poorest individuals. This inequality lies at the heart
of much of the social unrest in China, and poses significant risks for the new
Chinese Communist Party (CCP) leadership as it seeks to maintain a grip on
power. The Party and the central government in Beijing have historically relied
on strong economic growth to justify their authoritarian rule, but unless the
benefits of economic reform are distributed beyond the urban elite, popular
dissatisfaction with the Party and the government will grow."
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