News Briefs from September 16-20, 2001

Joint Status Report in Microsoft Case
9/20. Microsoft and the Justice Department filed their Joint Status Report [MS web site] with the U.S. District Court (DDC) in USA v. Microsoft, the antitrust case on remand. See also, copy in DOJ site.
Groups File Amicus Brief in COPA Case
9/20. The U.S. Chamber of Commerce, ITAA, and the CCIA filed an amicus Curiae brief with the Supreme Court of the United States in Ashcroft v. ACLU, the case challenging the constitutionality of the Child Online Protection Act (COPA). The Congress passed, and President Clinton signed, the COPA in 1998. This bill bars commercial web sites from distributing to minors over the Internet material that is "harmful to minors".
These amici argue that the COPA is a content based regulation of speech subject to strict scrutiny, and that the COPA fails to pass the strict scrutiny test because it is not the least restrictive means of achieving government objectives.
Rep. Smith Introduces Electronic Surveillance Bill
9/20. Rep. Lamar Smith (R-TX) introduced HR 2915, the "Public Safety and Cyber Security Enhancement Act of 2001". The bill was referred to the House Judiciary Committee, of which Rep. Smith is a senior member.
The bill contains several provisions pertaining to surveillance of electronic communications. It would amend the pen register and trap and trace sections of Title 18, which currently allow law enforcement agencies (LEAs) to obtain orders to obtain incoming and outgoing telephone numbers. The bill would extend the information obtainable under pen register and trap and trace orders to include Internet routing and addressing information.
It would also expand LEAs' authority to intercept computer trespasser information. Current law does not allow victims of computer trespassing to request LEA assistance in monitoring unauthorized attacks as they occur. This bill would change this.
This bill would also define "computer trespasser" as "a person who is accessing a protected computer without authorization and thus has no reasonable expectation of privacy in any communication transmitted to, through, or from the protected computer".
This bill includes some of the same language that is in the Bush Administration's draft [PDF] of the "Anti Terrorism Act of 2001," which is a much larger and more comprehensive bill than HR 2915. The House Judiciary Committee held a hearing on the Administration's proposal on Monday, September 24. Committee Chairman James Sensenbrenner (R-WI) announced at the conclusion of that hearing that the Committee would mark up that bill some time next week.
GAO Releases Gloomy Report on Cyber Terrorism
9/20. The GAO released a report [217 pages in PDF] titled "Combating Terrorism: Selected Challenges and Related Recommendations". See, Chapter 6, at pages 108-130, subtitled "Limited Progress in Implementing a Strategy to Counter Computer Based Threats".
The report concludes that "independent audits continue to identify persistent, significant information security weaknesses at virtually all major federal agencies that place their operations at high risk of tampering and disruption." It further states that cyber attacks "could severely disrupt computer- supported operations, compromise the confidentiality of sensitive information, and diminish the integrity of critical data." It also identified several reasons for lax security, including "funding and staffing constraints", "senior officials do not fully understand the importance of their agency’s assets to the nation’s critical infrastructures and the magnitude of the related risks", and "agency staff did not have the skills needed to carry out their computer security responsibilities".
The report also states that while "no devastating instances of 'cyber-terrorism' have occurred ... government officials are increasingly concerned". It elaborates that "the Director of Central Intelligence has stated that some terrorists groups are acquiring rudimentary cyber-attack tools. Further, according to the National Security Agency, foreign governments already have or are developing computer attack capabilities and potential adversaries are developing a body of knowledge about U.S. systems and methods to attack these systems."
Fed Circuit Rules in Exxon v. Phillips
9/20. The U.S. Court of Appeals (FedCir) issued its opinion in Exxon v. Phillips a patent infringement case. Exxon is the hold of U.S. Patent No. 5,324,800, which is titled "Process and catalyst for polyolefin density and molecular weight control". Exxon filed a complaint in U.S. District Court (SDTex) against Phillips alleging patent infringement. The District Court granted judgment of invalidity on the grounds of anticipation. Exxon appealed. Phillips filed a conditional cross appeal on the issue of interference estoppel. The Appeals Court reversed the judgment of invalidity, affirmed the ruling on the cross appeal, and remanded.
International Trademark Classification Changes
9/20. The USPTO published a notice [PDF] in the Federal Register that it has adopted a final rule to incorporate classification changes adopted by the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks. These changes take effect January 1, 2002. See, Federal Register, September 20, 2001, Vol. 66, No. 183, Pages 48338 - 48340.
9/21. See also, testimony [12 pages in PDF] of David Walker, Comptroller General of the United States, to the Senate Committee on Governmental Affairs titled "Homeland Security: A Framework for Addressing the Nation's Efforts", at pages 8-9. He added that there is a "lack of a national plan that fully defines the roles and responsibilities of key participants and establishes interim objectives."
Cyber Securities Fraud
9/20. The SEC instituted an administrative proceeding against Michael Furr pursuant to § 15(b)(6) of the Securities Exchange Act of 1934. The SEC seeks an order barring Furr from participating in any offering of a penny stock. Furr touted penny stocks in a free website, email, and printed material. He previously consented to an order in a civil action brought in U.S. District Court (CDCal) for violation of § 17(b) of the Securities Act of 1933 and § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. See, SEC release.
FCC Releases CALEA Order
9/19. The FCC released an Order [PDF] granting a temporary suspension of certain compliance dates in its CALEA implementation proceeding. (CC Docket No. 97-213.)
Congress passed the Communications Assistance for Law Enforcement Act in 1994 to allow law enforcement authorities to maintain their existing wiretap capabilities in new telecommunications devices. It provides that wireline, cellular, and broadband PCS carriers must make their equipment capable of certain surveillance functions. The CALEA also provides that its provisions do not apply to "information services". The FBI and the Telecommunications Industry Association (TIA) have since sought an expansive implementation of the CALEA. The FCC sided with the FBI on most points when it adopted its Third Report and Order [huge WP file] in August 1999.
In this most recent Order, the FCC rules on a request by the Cellular Telecommunications Industry Association (CTIA). The order states that "we are temporarily suspending the September 30, 2001 compliance date for wireline, cellular, and broadband Personal Communications Services ("PCS") carriers to implement two Department of Justice ("DoJ")/Federal Bureau of Investigation ("FBI") "punch list" electronic surveillance capabilities mandated by the Third Report and Order ("Third R&O") in this proceeding.  We deny CTIA’s request for a blanket extension of the September 30, 2001 compliance deadline for these carriers to implement a packet-mode communications electronic surveillance capability, also mandated by the Third R&O. However, given the imminence of the packetmode compliance deadline, we grant these carriers until November 19, 2001 either to come into compliance or to seek individual relief."
Commissioner Michael Copps wrote in a separate statement that "The events of the past week cogently demonstrate the imperative of bringing these capabilities on line as soon as possible. This is no time for "business as usual" on this issue in either the private or public sectors."
The TIA, which represents equipment manufacturers, praised the order. See, TIA release. The CTIA, which represents carriers and wireless Internet providers, criticized the order. CTIA President Tom Wheeler stated that "The technical evidence in our submission to the FCC was clear: there is no commercially available solution that meets the FCC's packet mode surveillance requirements. We understand what they want to accomplish and why, but as of now the commercially available systems simply don't exist."
Section 271 News
9/19. The FCC approved Verizon's Section 271 application to provide in-region, interLATA service originating in Pennsylvania. It was a 3 to 1 vote. Commission Michael Copps dissented. One seat has been vacant since the departure of Gloria Tristani. This is the seventh state for which the FCC has approved a 271 application. See, FCC release, Verizon release, AT&T release, and CompTel release.
9/19. The Louisiana Public Service Commission endorsed BellSouth's Section 271 application to provide intraLATA service in Louisiana. See, BellSouth release.
Cyber Securities Fraud
9/19. The SEC filed a civil complaint in U.S. District Court (WDPenn) against Dennis Ciccone alleging violation of § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder in connection with insider trading in Teligent, Inc., securities. The SEC seeks a permanent injunction, disgorgement, prejudgment interest and a monetary penalty. Ciccone simultaneously consented to entry of judgment, but without admitting or denying the facts alleged in the complaint. Ciccone was managing director of a venture capital fund involved in the transaction. Teligent is a company based in Vienna, Virginia, that provides telecommunications and Internet access services. (Civil Action No. 01-1757.) See, SEC release.
People and Appointments
9/19. President Bush nominated Patrick Fitzgerald to be U.S. Attorney for the Northern District of Illinois. He is currently Interim U.S. Attorney for the Northern District of Illinois. He has also been an Assistant U.S. Attorney for the Southern District of New York since 1988. He replaces Scott Lassar. See, White House release.
9/19. President Bush nominated John McKay to be U.S. Attorney for the Western District of Washington. He has been President of the Legal Services Corporation since 1997. He previously worked in the Seattle offices of the law firms of Caincross & Hempelmann and Lane Powell. He replaces Katrina Pflaumer. See, White House release.
FCC Releases SDR Order
9/18. The FCC released its First Report and Order [PDF] creating new rules for software defined radios (SDRs). This order was adopted and announced at the FCC meeting of September 13. This order amends FCC equipment authorization rules to permit equipment manufacturers to make changes in the frequency, power and modulation parameters of such radios without the need to file a new equipment authorization application with the FCC. (ET Docket No. 00-47.)
FCC Releases Broadcast Ownership NPRM
9/18. The FCC released its Order and Notice of Proposed Rulemaking [PDF] regarding its broadcast ownership rules. This order was adopted and announced at the FCC meeting of September 13. The FCC seeks comments on "whether and to what extent we should revise our cross ownership rule that bars common ownership of a broadcast station and a daily newspaper in the same market." (MM Docket No. 01-235 and MM Docket No. 96-197.)
Federal Circuit Rules in Y2K Patent Case
9/18. The U.S. Court of Appeals (FedCir) issued its split opinion in Brown v. 3M, a patent infringement case involving Y2K inventions. Brown holds U.S. Patent No. 5,852,824, which pertains to the Year 2000 conversion problem. The District Court ruled that Brown's patent is invalid on the grounds that it was anticipated by U.S. Patent No. 5,600,836, also known at the Turn of the Century Systems, or TOCS, patent. Judge Mayer dissented, writing that "the Brown patent teaches an apparatus with additional functionality not disclosed in the allegedly anticipating TOCS patent."
9/18. John Barker joined the Washington DC office of the law firm of Arnold & Porter as Of Counsel. He will focus on export control, international technology transfer, and trade sanction issues. He previously was Deputy Assistant Secretary for Nonproliferation Controls at the State Department. Before that, he was Deputy Assistant Secretary for Export Controls. See, A&P release.
Federal Circuit Rules in Hilgraeve v. Symantec
9/17. The U.S. Court of Appeals (FedCir) issued its opinion in Hilgraeve v. Symantec, a patent infringement case involving computer virus detection software. The Appeals Court vacated in part, affirmed in part, and remanded.
Hilgraeve is the holder of U.S. Patent No. 5,319,776, titled "In transit detection of computer virus with safeguard". Symantec provides Internet security products, including anti virus protection products. Hilgraeve filed a complaint in U.S. District Court (EDMich) against Symantec alleging that its PCAnywhere and Norton Anti Virus products infringe its '776 patent.
This patent describes a program that scans for computer viruses. It scans a body of data during its transfer, and before storage of the data with potential viruses on the destination storage medium. If the program detects signs of a virus during the scan, and the program automatically blocks storage. Hilgraeve argued that Symantec's products screen incoming digital data for viruses during transfer and before "storage" on the destination storage medium. Symantec argued its products do not infringe because they screen the incoming digital data only after it has been transferred and "stored" on the destination storage medium.
Hilgraeve also filed a separate complaint against McAfee. The case also resulted in an appeal to the Federal Circuit. The Court issued its opinion in August, 2000. Citations: Hilgraeve v. McAfee, 70 F. Supp. 2d 738 (E.D. Mich. 1999) and Hilgraeve v. McAfee, 224 F.3d 1349 (Fed Cir 2000).
Two issues were involved in the present appeal: claim construction (and particularly, the meaning of the word "storage"), and the defense that Symantec holds a license to the '776 patent.
The District Court granted Hilgraeve's motion for summary judgment that Symantec did not have a license to the '776 patent. The District Court granted Symantec's motion for summary judgment of non-infringement. Hilgraeve appealed; and Symantec cross appealed. The Federal Circuit vacated the grant of summary judgment of non-infringement, and generally affirmed the grant of summary judgment that Symantec did not license the patent.
Federal Circuit Rules on Personal Jurisdiction in Patent Cases
9/17. The U.S. Court of Appeals (FedCir) issued its opinion in Pieczenik v. Dyax, a patent infringement case in which the issue on appeal was whether the defendant had sufficient contacts with New York to give the U.S. District Court (SNDY) personal jurisdiction under the applicable New York long-arm statute.
Dyax's only contact with the State of New York was that it had entered into a licensing agreement with a corporation domiciled in New York. The District Court dismissed for lack of jurisdiction. The Court of Appeals affirmed.
7th Circuit Rules on Copyright and Offers of Judgment
9/17. The U.S. Court of Appeals (7thCir) issued its opinion in Harbor Motor Company v. Arnell Chevrolet Geo, a case involving copyright infringement, and awards of costs and attorneys fees following rejections of offers of judgment.
One car dealer (Arnell) copied the newspaper ad of another car dealer (Harbor). Harbor filed a complaint in U.S. District Court (NDInd) against Arnell and the newspaper alleging copyright infringement. The two defendants jointly made an offer of judgment of $21,000. Harbor rejected this. The District Court granted judgment as a matter of law to the newspaper. The jury awarded Harbor $12,500 for its claim against Arnell. The District Court awarded defendants costs and attorneys fees totaling $175,000.
The Appeals Court reversed the judgment as a matter of law for the newspaper, and hence, its award of costs and attorneys fees. The Appeals Court also reversed the order awarding Arnell costs and attorney's fees as the prevailing party under FRCP 68. The Appeals Court further remanded the case to the District Court with instructions to award Harbor its costs.
District Court Rules in Corel v. US
9/17. The U.S. District Court (DDC) issued it opinion [PDF] in Corel v. USA, a case involving government procurement of software. Corel filed a complaint in U.S. District Court against the U.S. seeking declaratory and injunctive relief to enjoin the U.S. Department of Labor (DOL) from implementing its decision to standardize its software to Microsoft products. The District Court denied Corel's motion for summary judgment. It held that the DOL's procurement of Microsoft software neither violated the applicable federal procurement statute nor was unreasonable.
FBI's NIPC Warns of Cyber Attacks
9/17. The FBI's National Infrastructure Protection Center (NIPC) issued its Advisory 01-020 on September 14 stating that it "expects to see an upswing in incidents as a result of the tragic events of September 11, 2001. Increased hacking attacks are likely to have two motivations: Political hacktivism by self-described "patriot" hackers targeted at those perceived to be responsible for the terrorist attacks. NIPC has already received reports of individuals encouraging vigilante hacking activity. Virus propagation in which old viruses are renamed to appear related to recent events."
On September 17 the NIPC issued its Advisory 01-021 stating that it "expects an increase in Distributed Denial of Service (DDoS) attacks." The advisory continued that "On September 12, 2001, a group of hackers named the Dispatchers claimed they had already begun network operations against information infrastructure components such as routers. The Dispatchers stated they were targeting the communications and finance infrastructures. They also predicted that they would be prepared for increased operations on or about Tuesday, September 18, 2001." The NIPC added that "The Dispatchers claim to have over 1,000 machines under their control for the attacks. It is likely that the attackers will mask their operations by using the IP addresses and pirated systems of uninvolved third parties."
The NIPC concluded that "There is the opportunity for significant collateral damage to any computer network and telecommunications infrastructure that does not have current countermeasures in place." The NIPC also said that "System administrators are encouraged to check their systems for zombie agent software and ensure they institute best practices such as ingress and egress filtering." The NIPC provides such software.
Intel and Rambus Sign Cross License Agreement
9/17. Intel and Rambus released substantially identical statements that the two companies "signed a comprehensive patent cross-license agreement that supersedes the prior agreement between the companies. The new cross-license provides complete patent coverage to Intel for all patents while providing Rambus license coverage necessary for Rambus' high-speed interface businesses." See, Intel release and Rambus release.
9/17. Paul Gallant was named Special Advisor to Kenneth Ferree, chief of the FCC's Cable Services Bureau. He was previously a Legal Advisor on cable and broadcast issues to former FCC Commissioner Gloria Tristani who left earlier this month. on cable and broadcasting issues. He has also previously he worked for Qwest Communications International, BroadBand Office, Inc., and former Commissioner James Quello. See, FCC release.
9/17. Stellman Keehnel joined the Seattle office of the law firm of Gray Cary. He focuses on securities class action defense and intellectual property litigation. See, GC release.

Go to News Briefs from September 11-15, 2001.