News Briefs from September 21-25, 2001

Bush and Ashcroft Promote Anti Terrorism Bill
9/25. President Bush and Attorney General John Ashcroft both made forceful statements on Tuesday, September 25, in support of passage of the Administration's draft [PDF] of the "Anti Terrorism Act of 2001". This is a large collection of provisions that would increase the authority of law enforcement and intelligence agencies to investigate and prosecute terrorists.
The bill stalled on Monday when the House Judiciary Committee postponed its mark up of the bill, which had been scheduled for Tuesday, and when Sen. Patrick Leahy (D-VT), the Chairman of the Senate Judiciary Committee, offered his own set of proposals, and said his Committee could take weeks. Legislators have advocated watering down the administration's bill in order to protect civil liberties.
President Bush, Attorney General John Ashcroft, and other administration officials, advocated prompt passage of the bill. President Bush stated that "I hope Congress will listen to the wisdom of the proposals that the Attorney General brought up, to give the tools necessary to our agents in the field to find those who may think they want to disrupt America again." He added that "in order to win the war, we must make sure that the law enforcement men and women have got the tools necessary, within the Constitution, to defeat the enemy." See, story: "Bush Speaks to FBI Employees About Anti Terrorism Bill."
AG Ashcroft asked the Senate Judiciary Committee to "give law enforcement the tools we need to fight terrorism." He explained that "terrorism is a clear and present danger", that there is the "potential for additional terrorist incidents", and that this includes the use of crop dusting planes to spread hazardous materials. See, story: "Ashcroft Testifies Before Senate Judiciary Committee."
Bush Speaks to FBI Employees About Anti Terrorism Bill
9/25. President George Bush gave a speech at the FBI Headquarters in Washington DC in which he advocated passage of his anti terrorism bill. He said that "in order to win the war, we must make sure that the law enforcement men and women have got the tools necessary, within the Constitution, to defeat the enemy."
Bush specifically addressed the electronic surveillance provisions of the bill. He stated that "what we've seen is these terrorists are very sophisticated, and so are their communications. They must -- their calls must be penetrated when we feel there's a threat to America. We've got to know what's on their mind. And so, therefore, we must give the FBI the ability to track calls when they make calls from different phones, for example." Under current law prosecutors obtain wiretap orders that are specific to phones, not persons. The FBI seeks new authority to obtain orders specific to individuals, regardless of their location or communication device.
President Bush continued that "Now, this is what we do for drug dealers and members of organized crime, and it seems like to make sense to me, if it's good enough for the FBI to use these techniques for facing down those threats to America, that now that we're at war, we ought to give the FBI the tools necessary to track down terrorists."
Bush also addressed the provisions of the bill pertaining to detention of terrorists, and the sharing of information between intelligence and law enforcement. Both have run into sharp criticism from some Democrats on Capitol Hill.
The President concluded that "I want you to know that every one of the proposals we've made on Capitol Hill, carried by the Attorney General, has been carefully reviewed. They are measured requests, they are responsible requests, they are constitutional requests. Ours is a land that values the constitutional rights of every citizen. And we will honor those rights, of course."
Ashcroft Testifies Before Senate Judiciary Committee
9/25. Attorney General John Ashcroft testified before the Senate Judiciary Committee in support of the Administration's draft [PDF] of the "Anti Terrorism Act of 2001." He assured the Committee that "this Justice Department will never waiver in our defense of the Constitution nor relent our defense of civil rights."
Ashcroft then said that law enforcement needs new tools to fight terrorism. He summed up his proposals: "First, our laws fail to make defeating terrorism a national priority. Indeed, we have tougher laws against organized crime and drug trafficking than terrorism. Second, technology has dramatically outpaced our statutes. Law enforcement tools created decades ago were crafted for rotary telephones - not email, the internet, mobile communications and voice mail."
He also went into some specifics of the electronic, including Internet, surveillance provisions. "Terrorist organizations have increasingly used technology to facilitate their criminal acts and hide their communications from law enforcement. Intelligence gathering laws that were written for the era of land-line telephone communications are ill-adapted for use in communications over multiple cell phones and computer networks."
He continued that "Our proposal creates a more efficient, technology neutral standard for intelligence gathering, ensuring law enforcement’s ability to trace the communications of terrorists over cell phones, computer networks and new technologies that may be developed in the coming years."
He added that "the information captured by the proposed technology neutral standard would be limited to the kind of information you might find in a phone bill. The content of these communications would remain off limits to monitoring by intelligence authorities, except for under current legal standards."
He concluded that "Our proposal would allow a federal court to issue a single order that would apply to all providers in a communications chain, including those outside the region where the court is located. We need speed in identifying and tracking down terrorists. Time is of the essence. The ability of law enforcement to trace communications into different jurisdictions without obtaining an additional court order can be the difference between life and death for American citizens."
Sen. Hatch said, in a statement which he submitted for the record, that "Electronic surveillance, conducted under the supervision of a federal judge, is one of the most powerful tools at the disposal of our law enforcement community. It is simply unfortunate that the laws currently on the books which govern such surveillance were enacted before the fax machine came into common usage, and well before the advent of cellular telephones, e-mail, and instant messaging. All of these modern modes of communication we now know were principal tools used by the terrorists to coordinate their deadly attacks. The Department of Justice has asked us for years to update these laws to reflect the new technologies, but there has always been a reason to go slow, to seek more information, to order further studies. We simply cannot afford to wait anymore!"
The Chairman of the Committee, Sen. Leahy, remains skeptical. He said that "we are making progress with respect to a number of areas of law". However, he added that "we cannot allow terrorism to prevail by curtailing our Constitutional democracy or constricting our freedoms." He has floated his own counter proposal. See also, prepared statement of Sen. Leahy.
Several members of the Committee defended the entirety of the Administration's proposal. Sen. Orrin Hatch (R-UT), the ranking Republican on the Committee, said that "I have reviewed the Attorney General's proposal, and I can say without reservation, that the Administration's requested authorities reflects the measured and cautious response to the events of the last couple of weeks." He also defended the wiretap and pen register and trap and trace provisions specifically. Sen. Strom Thurmond (R-SC), a former Chairman of the Committee, said "the Attorney General's proposals are reasonable, and entirely consistent with the Constitution," and that the Congress should not delay.
Every member of the Committee was present for all or part of the hearing. Ashcroft was accompanied at the hearing by Michael Chertoff (Assistant Attorney General for the Criminal Division, Larry Thompson (Deputy Attorney General), Viet Dinh (Assistant Attorney General for Legal Policy, Chris Painter (of the Computer Crime and Intellectual Property Section), and others. However, Ashcroft was the sole witness. The hearing lasted about one and one half hours. Junior members of the Committee who were not able to ask questions asked that the hearing been continued on another date. The Committee has scheduled another hearing for Tuesday, October 2.
John Ashcroft and the Senate Judiciary Committee
9/25. The events of September 11 changed everything in Washington DC, including the relationship between the Attorney General and the Senate Judiciary Committee. When President Bush nominated Ashcroft to be Attorney General early this year, many of the Democrats on the Committee, including the Chairman, Sen. Patrick Leahy (D-VT) tried to block his confirmation. Some of the attacks were partisan, personal, and ugly.
On September 25, Ashcroft was welcomed back. Sen. Leahy stated that "I have been very very pleased that you have been there ... leading this effort." Sen. Dianne Feinstein (D-CA) told Ashcroft that "I think you have done a very fine job."
Anti Terrorism Bill Is Vague on Surveillance of Internet Communications
9/25. John Ashcroft and other advocates of the Administration's draft [PDF] of the "Anti Terrorism Act of 2001" state that it brings electronic surveillance laws that were written for analog phone communications over the public switched telephone network (PSTN) into the age of digital packet switched communications over the Internet. The bill's language regarding pen register and trap and trace devices is one way that the bill seeks to accomplish this. Yet, the language in the Administration draft leaves much for future interpretation.
A pen register records the numbers that are dialed or punched into a telephone. Current law covers "wire" communications only. A pen register is "a device which records or decodes electronic or other impulses which identify the numbers dialed or otherwise transmitted on the telephone line to which such device is attached ..." See, 18 U.S.C. § 3127(3).
Under the Administration's proposal (at Section 101), this would be expanded from merely capturing phone numbers, to capturing routing and addressing information in any electronic communications. Specifically, as amended, the statutory definition of pen register would read, "a device or process which records or decodes dialing, routing, addressing, or signalling information transmitted by an instrument or facility from which a wire or electronic communication is transmitted ..." The proposal would similarly expand the concept of trap and trace, which currently captures incoming phone numbers. Under current law, this is "a device which captures the incoming electronic or other impulses which identify the originating number of an instrument or device from which a wire or electronic communication was transmitted." See, 18 U.S.C. § 3127(4).
There are currently two different standards for obtaining surveillance orders -- one for obtaining pen register and trap and trace orders, and another for wiretap orders under Title III (which allow the government to obtain the content phone conversations). The former is a very low standard. The current statute reads, "the court shall enter an ex parte order authorizing the installation and use of a pen register or a trap and trace device ..." if the government "has certified to the court that the information likely to be obtained by such installation and use is relevant to an ongoing criminal investigation." Issuance of the order is mandatory, and the standard -- mere relevance - is low. In contrast, wiretap orders are within the discretion of the Judge, and require a showing of probable cause.
E-mail or web "routing" or "addressing" information might be interpreted to mean subject lines, CCs, search terms, query strings, and other information not collected from telephone communications. Hence, what is at issue is not just expanding the scope of pen register and trap and trace orders to Internet communications, but also whether some information in the nature of content will become available to the government without an order based upon probable cause.
The statements by Senators and Ashcroft indicate that they understand that this language means that pen register and trap and trace authority would be extended to Internet communications. Their statements also suggest that they do not intend for statute to cover content. But, nowhere would the statute, if it is so amended, elaborate any details. The words Internet, e-mail, web, instant message, subject line, are all absent. ISP, mail service provider, mail servers, web servers, are also not mentioned. The statute would not address the technological methods to be used for collecting pen register and trap and trace information in the context of email or web browsing. It would not address the structure of Internet communications, and which parts would be covered and which parts would be excluded from collection under pen register and trap and trace orders. The statute would merely state that, henceforth, "routing and addressing" information in an "electronic communication" is covered.
While the statutory language is not specific on this issue, Ashcroft has offered some of his interpretation. The following is the entire exchange between Sen. Charles Grassley (R-IA) and Ashcroft on this matter at the September 25 hearing before the Senate Judiciary Committee.
Grassley: "As I recall, you stated that e-mail routers should be treated the same as the telephone numbers that are captured by a pen register or a trap and trace. The fact is, there are not the same. Doesn't the e-mail router contain some information about what is contained within, and then really go further, than what it seems to me you want to go. Because you want to know who is communicating, but you do not know what the message is."
Ashcroft: "We are very cognizant of the need for the different standards for the content, any indication of the content of the call. Though the only thing that we seek to discovery, based on the trap and trace, and the pen registry, is the address of the sender, and the address of the recipient."
Grassley: "Since that information also includes some information about the message contained, don't you then go a little bit further, than what you anticipate going? And I am not questioning your veracity. I just want to understand, understand that you might be going further than you intend to go there, based upon your statement."
Ashcroft: "Our view is that the subject line, which requires us to have a Title III, or the higher level authority, and we do not want that line as a result of our pen register or trap and trace. We want this to be technology neutral. We don't think that there should be a competitive advantage to people using the digital circumstance that gives them an impunity that they didn't have in the analog world. But, we are not seeking, and I don't believe legislation -- I would be happy to confer on this -- and if there are ways that we need to adjust it, we will. We are not asking that we get content, or an identification of the possible content, or even the titling of the message. We want to know the instrument from which it was made, and the instrument to which it was directed."
Neither Sen. Grassley, nor any other Senator, asked Ashcroft about the application of the draft bill to web based communications, such as the entry of URLs in browsers, the use of search engines, or web forms.
Sen. Enzi Promotes EAA
9/25. Sen. Mike Enzi (R-WY) gave a speech in Washington DC in which he promoted S 149, the Export Administration Act of 2001 (EAA), of which he is the sponsor. He participated in a program sponsored by the Center for Strategic and International Studies titled "European Defense Industrial Consolidation Conference."
The bill passed the Senate early this month, but has yet to pass the House. He stated that the goal of the bill "is to eliminate unnecessary trade barriers, while focusing controls on the items most sensitive to our national security." He added that "the bill recognizes that the U.S. is rarely the only producer of militarily useful high tech products, and items available from foreign sources or available in mass market quantities cannot be effectively controlled."
He also addressed the bill's termination of MTOPs controls. He stated that "In the case of high performance computers, the 2001 EAA greatly enhances the President's ability to respond to rapidly changing technology. Specifically, the bill repeals a provision in the Fiscal Year 1998 National Defense Authorization Act, which locked into statute a metric for measuring the performance of computers." He added that "This does not mean that computers will not be controlled. Instead, it means that the President may control computer exports in a way that is more responsive and effective."
FTC Files Suit Against Page Jacking and Mouse Trapping Scammer
9/25. The Federal Trade Commission (FTC) filed a civil complaint [PDF] in U.S. District Court (EDPenn) against John Zuccarini, an Internet scam artist who operates a page jacking and mouse trapping operation on the web. The Court issued a Temporary Restraining Order [PDF] on September 25. However, the defendant continues to operate in violation of the TRO. See also, FTC release.
The Complaint states that "Defendant redirects unsuspecting consumers to his sites and then traps them in a barrage of Web pages and pop-up windows. Defendant places Web pages on the World Wide Web with domain names that are misspellings of other domain names; transpose or invert words, terms, or phrases in other domain names; or are confusingly similar to others' famous trademarks, service marks, or names. When consumers type one of Defendant's domain names in to their browser's address bar, they are immediately redirected to Defendant's Web sites. ... Once Defendant redirects consumers to his Web sites, he traps them there using a variety of tactics that obstruct consumers' ability to exit Defendant's sites. These practices force consumers, including children, to navigate through multiple windows displaying solicitations for online gambling ... or pormography."
The complaint alleges violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45(a), which provides that "Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful."
The District Court entered a temporary restraining order (TRO), in effect until October 9, that bars defendant from "both (1) the combined practice of redirecting and obstructing consumers on the Internet or World Wide Web and (2) obstructing consumers on the Internet or World Wide Web." The TRO also bars defendant "from registering any new domain names ... without notifying counsel for the Commission within 24 hours." Finally, the TRO orders both the defendant, and web hosting companies, to take down several web pages that enable the mouse trapping aspect of the scam.
Speaking at a press conference on October 1 in the FTC's Internet Lab, FTC Chairman Timothy Muris stated that "this scheme prevents consumers from controlling their internet browsers, invades their privacy, robs them of their time, exposes kids to ads for pornography, and violates trademark rights. And this scam, and ones like it, undermine consumer confidence in the Internet. That's why the FTC brought this action." See, Muris statement.
This scam is a variation on a page jacking and mouse trapping scam that the FTC shut down in FTC v. Pereira, U.S. District Court Case No. 99-1367, filed on September 14, 1999. See, TLJ stories, FTC Obtains Injunction of Page Jacking and Mouse Trapping Scam, September 24, 1999; How the "Page Jacking" and "Mouse Trapping" Web Scam Works, September 24, 1999; and Page Jacking and Mouse Trapping, December 8, 1999.
Marc Groman is the lead attorney on this case. (D.C. No. 01-CV-4854, E.D. Penn.)
PPI Advocates Use of New Technologies at Airports
9/25. The Progressive Policy Institute issued a paper [PDF] in which it argued that the "Congress should also give serious consideration to significantly expanding the use of cutting-edge, advanced information technologies to help make our airports more secure." It advocates the use of biometric authentication technologies, such as finger print or automatic facial recognition, radio frequency tags for baggage, and luggage and passenger scanning technologies. The PPI is a Washington DC based Democratic Party think tank. Robert Atkinson wrote the report. See also, executive summary [HTML].
Spread Spectrum Devices
9/25. Tuesday, September 25, was the deadline to submit reply comments to the FCC in its notice of proposed rule making to amend the FCC's rules to improve spectrum sharing by unlicensed devices operating in the 2.4 GHz band, to provide for introduction of new digital transmission technologies, and to eliminate unnecessary regulations for spread spectrum devices. See, comment [PDF] submitted by 3Com and others, comment [PDF] submitted by Agere Systems, and comment [PDF] submitted by Texas Instruments. ( ET Docket No. 99-231.) See, NPRM and notice in Federal Register: June 12, 2001, Vol. 66, No. 113, at Pages 31585 - 31589.
5th Circuit Rules on Scienter Under PSLRA
9/25. The U.S. Court of Appeals (5thCir) issued its opinion in Nathenson v. Zonagen a class action securities suit in which the 5th Circuit construed the scienter requirement under the PSLRA.
The plaintiffs' complaint alleged violation of §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b5 thereunder. Plaintiffs alleged fraud by Zonagen, a biopharmaceutical company, and several of its officers and directors. Defendants moved to dismiss the complaint for failure to state a claim pursuant to FRCP 12(b)(6), and the Private Securities Litigation Reform Act (PSLRA). The District Court dismissed with prejudice. The Appeals Court reversed and remanded.
This is another in the series of federal Appeals Court opinions construing the scienter requirements for class action securities litigation, following passage of the PSLRA. This Appeals Court followed the rulings of several other circuits that recklessness still constitutes scienter for purposes of 10b5 claims.
Congress passed the PSLRA, 15 U.S.C. § 78u-4, to insulate defendants, and especially info and bio tech companies, from abusive class action law suits. The PSLRA creates both a safe harbor for forward looking statements, and a heightened pleading requirement. Plaintiffs must "state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind." See, 15 U.S.C. § 78u-4(b)(2).
See also, opinions of other circuits: Janas v. McCracken (In re Silicon Graphics Sec. Litig.), 183 F.3d 970 (9th Cir 1999); Novak v. Kasaks, 216 F.3d 300 (2d Cir); In re Advanta Corp. Sec. Litig., 180 F.3d 525 (3d Cir 1999); Bryant v. Avado Brands, 187 F.3d 1271 (11th Cir 1999); Greebel v. FTP Software, 194 F.3d 185 (1st Cir 1999); Helwig v. Vencor, (6th Cir 2001); and Philadephia v. Fleming (10th Cir, 2001).
Gov. Davis Signs California Internet Tax Freedom Act Extension
9/25. California Gov. Gray Davis signed into law SB 394, a bill to extend the California Internet Tax Freedom Act (CITFA). This act extends California's current moratorium on new and discriminatory taxes, taxes on Internet access, and bandwidth taxes; the previous act was scheduled to expire on January 2, 2002. Under this act, the CITFA will expire on January 1, 2003, or January 1, 2004, depending on whether certain conditions are met. SB 394 was sponsored by Sen. Byron Sher (D-Palo Alto).
More News
9/25. Nancy Victory, head of the NTIA, gave a speech in Washington DC in which she touched on her policy priorities. She stated that the "NTIA will be continuing our interagency project assessing the viability of various frequency options for third generation wireless services." She also stated that "another of my priorities is to stimulate the deployment throughout the country of broadband communications networks that support high-speed, two-way data transfers."
9/25. WorldCom announced that it received approval from the U.S. Bankruptcy Court (SDNY) to acquire DSL assets of Rhythms. See, WC release.
9/25. David Horne plead guilty in U.S. District Court (NDTex) to knowingly possessing child pormography on his PC, which he downloaded from the Internet. He faces a maximum term of imprisonment of five years and a $250,000 fine. See, USAO release.
Administration Anti Terrorism Bill Delayed
9/24. The Bush Administration's efforts to rapidly pass its far reaching "Anti Terrorism Act of 2001" were set back on Monday afternoon when the House Judiciary Committee moved back its mark up session from Tuesday morning, September 25, until an unspecified day next week. Committee members balked a the idea of such rapid passage of major legislation affecting civil liberties.
Meanwhile, Sen. Patrick Leahy (D-VT), Chairman of the Senate Judiciary Committee, has already indicated that his Committee may take several weeks to pass a bill. His Committee is scheduled to hold a hearing on Tuesday, September 25.
The administration's bill, a draft [PDF] of which was sent to Capitol Hill on Wednesday, September 19, would update and greatly expand the authority of law enforcement agencies, and the intelligence community, to conduct electronic surveillance of telephone and Internet communications. It would also make major revisions to criminal, criminal procedure, immigration, and trade law. Many of its provisions apply specifically to terrorism. However, many others have broad applicability a wide range of crimes and procedures.
Attorney General John Ashcroft, and other Justice Department officials, had sought to expedite the process of passing this legislation, with the assitance of Rep. James Sensenbrenner (R-WI), Chairman of the House Judiciary Committee. Rep. Sensenbrenner's plan was to hold hearings on Monday, hold a mark up session on Tuesday, and then take the bill to the House floor for final passage before the House breaks for the Yom Kippur holiday on Thursday. However, at the Committee hearing on Monday afternoon all Committee Democrats who spoke expressed opposition to this schedule, while some Republicans also complained. By the end of the hearing Rep. Sensenbrenner agreed to postpone mark up until next week.
Rep. Sensenbrenner stated that "there is an unquestionable need for such legislation -- in fact, I am convinced that our homeland depends on it." He also stated that "such legislation must ... provide process changes and updates to investigative definitions in order to address new technology such as voice mail and disposable cell phones."
Attorney General John Ashcroft was the lead witness at the packed, standing room only, hearing. He stated that "terrorism is now the highest priority of the Department of Justice." He also said that criminal law and procedure has not kept up with changes in communications technology, and laws must therefore be updated. AG Ashcroft also stated, in response to questions from Rep. Howard Coble (R-NC), that had the provisions of this bill been passed previously, "there is no guarantee that these safeguards would have avoided the events of September 11."
Rep. John Conyers (D-MI), the ranking Democrat on the Committee, stated that there are provisions "that give us constitutional trouble." However, most of the Democrats who criticized the bill focused on the immigration and detention provisions, and not the electronic surveillance provisions.
Rep. Coble and Rep. Howard Berman (D-CA), who are the Chairman and ranking Democrat on the Courts, Internet, and Intellectual Property Subcommittee, both questioned AG Ashcroft about cyber terrorism. Ashcroft stated that the bill "is broad enough to include assaults on computers."
Anti Terrorism Bills Proliferate
9/24. There are now many major bills in draft form that would make significant changes to law enforcement and intelligence agencies' authority to conduct electronic surveillance, conduct investigations, prosecute criminals, and detain and deport aliens.
Three draft bills have been circulated. However, hearings and discussions are being held at a rapid pace, and supporters of each of these bills have already determined to make major modifications to these drafts.
Administration Bill. On Wednesday, September 19, the Justice Department sent the Administration's draft [PDF] of the "Anti Terrorism Act of 2001" to Congressional leaders. See also, the Administration's summary [PDF]. Attorney General John Ashcroft, Assistant Attorney General (Criminal Division) Michael Chertoff, Deputy Attorney General Larry Thompson, and Assistant Attorney General (Legal Policy) Viet Dinh, have been working for its passage.
Leahy Bill. On September 21, Sen. Patrick Leahy (D-VT), the Chairman of the Senate Judiciary Committee, released his own proposal. The Leahy bill [PDF] is 165 pages in its first draft. See also, Sen. Leahy's summary [HTML]. Sen. Leahy's bill is more protective of civil liberties than is the Administration's bill. The Senate Judiciary Committee will hold a hearing on this bill on Tuesday morning, September 25, at 11:00 AM.
Graham Bill. Sen. Bob Graham (D-FL), the Chairman of the Senate Intelligence Committee also released a bill in rough form on September 23. See, section by section summary of Sen. Graham's bill. His Committee held a hearing on Monday, September 24.
CJS Bill. The Senate has already passed one anti terrorism bill. On September 13 it passed the Appropriations bill for FY 2002 for the Departments of Commerce, Justice, and State, and for the Judiciary. It also passed Senate Amendment 1562 to this bill, which contains a more limited set of revisions to criminal law and procedure.
Other Bills. There are also other specific and narrowly targeted anti terrorism bills. For example, on September 24, Sen. Bob Bennett (R-UT) introduced the Critical Infrastructure Information Security Act (CIISA), a bill to give companies incentives to share information in order to help defend against cyber attacks. It contains Freedom of Information Act (FOIA) and antitrust exemptions. See, Bennett release.
House Judiciary Committee Hears from Civil Liberties Groups
9/24. The House Judiciary Committee also held an event with representatives of civil liberties groups regarding the Anti Terrorism Act of 2001. The Committee named the event a "briefing". However, it had all of the characteristics of a legislative hearing. It began almost immediately after the conclusion of the "hearing." Rep. Sensenbrenner did not wish to call it a hearing. Doing so would have given the Attorney General and the ACLU equal status.
Critics of the Administration's draft bill raised concerns about the bill's affect on civil liberties. James Dempsey (CDT) addressed the proposed changes to the Foreign Intelligence Surveillance Act (FISA), and electronic surveillance procedures. Greg Nojeim (ACLU) also addressed electronic surveillance issues. David Cole (Georgetown University Law Center) covered immigration issues. Brad Jansen (Free Congress Foundation) addressed money laundering and forfeiture issues. Rachel King (ACLU) addressed criminal law. See, prepared statement of King. Morton Halperin also addressed the FISA.
Electronic Surveillance
9/24. The electronic surveillance provisions of the administration's "Anti Terrorism Act of 2001" were one of the topics addressed at the House Judiciary Committee's hearing and meeting on September 24. This bill, for example, expands law enforcement agencies' authority with respect to the use of trap and trace devices and pen registers. These are both old telephone industry concepts. Justice Department witnesses, and Committee members, concurred that these provisions need to be updated to take into consideration Internet based communications. However, there were differences as to how the amendments should be worded.
A pen register records the numbers that are dialed or punched into a telephone. The current law covers "wire" communications only. Specifically, a pen register is "a device which records or decodes electronic or other impulses which identify the numbers dialed or otherwise transmitted on the telephone line to which such device is attached ..." See, 18 U.S.C. § 3127(3). Under the Anti Terrorism Act of 2001, the concept of a pen register would be expanded from merely capturing phone numbers, to capturing routing and addressing information in any electronic communications, including Internet communications.
The bill similarly expands the concept of trap and trace devices. Under current law, this is "a device which captures the incoming electronic or other impulses which identify the originating number of an instrument or device from which a wire or electronic communication was transmitted." See, 18 U.S.C. § 3127(4).
Rep. Bob Goodlatte (R-VA) questioned Assistant AG Chertoff about these provisions. He questioned whether expanding the scope of pen registers and trap and trace from phone to Internet communications would also expands the scope and quantity of information collected. In the context of telephones, the information obtained is only the phone number, not the content of the phone call. Rep. Goodlatte asked whether "routing, addressing, and signalling" information would include e-mail header information, including subject lines, and urls. Chertoff responded that the intent of this section is to provide technology neutrality, and not to obtain content or subject line information. Rep. Rick Boucher (D-VA) suggested during the "briefing" with civil liberties groups that he and Rep. Goodlatte should work on language that would have the effect of codifying the intent of the Justice Department. Rep. Boucher also said that he was concerned about the lack of a probable cause requirement for the issuance pen register or trap and trace orders affecting Internet communications.
Rep. Chris Cannon (R-UT) stated at the hearing that this is not simply a matter of providing for technology neutrality in the statute. He said that "there are differences between emails and telephone conversations." He suggested that perhaps the Congress should pass the recommended changes, but with a "sunsetting provision."
Rep. Cannon also questioned the language in the bill that would allow law enforcement agencies to obtain a single pen register or trap and trace order that would apply nationwide. Rep. Cannon suggested that this raises forum shopping questions. Currently, an order is only effective in the district in which it is issued.
Sen. Bennett Introduces Cyber Security Bill
9/24. Sen. Robert Bennett (R-UT) and Sen. Jon Kyl (R-AZ) introduced S 1456, the "Critical Infrastructure Information Security Act of 2001." One of the main purposes of the bill to encourage information sharing pertaining to cyber security issues, by removing legal disincentives for such actions.
The bill would provide a Freedom of Information Act exemption for certain cyber security information provided to certain federal agencies, including the NIPC, FCC, Justice Department, Defense Department, and Commerce Department. The bill would also provide an antitrust exemption for certain collaboration on cyber security issues. The bill was referred to the Senate Governmental Affairs Committee, of which Sen. Bennett is a member. See also, Bennett release.
FCC Announces Order Affecting 3G Wireless
9/24. The FCC announced that back on September 6 it adopted an order pertaining to use of the 2500 - 2690 MHz band. This is one spectrum band that has been identified for possible reallocation for use for Third Generation (3G) wireless services. 3G is intended to bring broadband Internet access to portable devices. The  FCC stated that it will not reallocate this band for 3G purposes. The FCC also released this document, titled First Report and Order and Memorandum Opinion and Order [PDF]. (ET Docket No. 00-258.) See also, FCC release.
The FCC explained in the order that "we are adding a mobile allocation to the 2500 - 2690 MHz band to provide additional near-term and long-term flexibility for use of this spectrum, thereby making this band potentially available for advanced mobile and fixed terrestrial wireless services, including third generation ("3G") and future generations of wireless systems. However, because the 2500 - 2690 MHz band is extensively used by incumbent ITFS and MMDS licensees, and in order to preserve the viability of the incumbent services, we are not relocating the existing licensees or otherwise modifying their licenses. Building upon our prior decisions to expand the potential uses of this band, adding a mobile allocation to the band will provide additional near-term and long-term flexibility without forcibly displacing incumbent operators." The FCC added that it was relying "on market forces rather than making regulatory judgments about the best use of the band ..."
The Cellular Telecommunications Industry Association (CTIA) criticized the order. Tom Wheeler, P/CEO of the CTIA, stated that "We are disappointed the Commission would limit its flexibility at this time as it seeks a solution to the spectrum shortage. This action tries to have it both ways -- removing the 2500 - 2690 MHz band from consideration for advanced wireless services, while simultaneously suggesting its licensees might someday permit that spectrum to be used for wireless applications." See, CTIA release.
The other major spectrum band being considered for reallocation for use by 3G services is currently being used by the Defense Department for, among other things, satellite communications and precision guided munitions. The events of September 11, and ongoing military operations against terrorism, may decrease the likelihood that this spectrum will be reallocated in the near future.
Comments Filed in FCC's Section 706 Inquiry
9/24. Monday, September 24, was the deadline to file comments with the FCC in its third inquiry into whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion, pursuant to Section 706 of the Telecom Act of 1996. This notice of inquiry was adopted by the FCC at its August 9, 2001, meeting. See, Aug. 9 FCC release. See also, notice in Federal Register, August 24, 2001, Vol. 66, No. 165, at Page 44636. (CC Docket No. 98-146.)
Commenters took this opportunity to address whether advanced telecommunications capability is being deployed, as well as to address a range of issues pertaining to broadband Internet access. See for example, comment submitted by the Progress and Freedom Foundation, comment submitted by Sprint, comment submitted by Qwest, comment submitted by BellSouth, and comment submitted by the National Rural Telecommunications Cooperative. (All comments are PDF documents in the FCC web site, and may download slowly.)
Antitrust News
9/24. The Antitrust Division of the Department of Justice issued its evaluation for the FCC regarding SBC's Section 271 application to provide in region interLATA service in Arkansas and Missouri. The Antitrust Division concludes that several issues "merit careful consideration by the Commission and preclude the Department from supporting this joint application on the basis of the current record." The FCC has previously approved SBC's applications to offer long distance service in Texas, Kansas, and Oklahoma. This evaluation is required by 47 U.S.C. § 271(d)(2)(A). (This is the FCC's CC Docket No. 01-194.)
9/24. Charles James, Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice, Timothy Muris, Chairman of the FTC, and Mario Monti, European Union Competition Commissioner, held a day long working session in Washington DC. See, FTC release.
Senate Approves U.S. Jordan FTA
9/24. The Senate passed HR 2603, a bill implementing the the U.S. Jordan Free Trade Agreement (FTA) [PDF], by a voice vote. The House passed this bill on July 31. President Bush stated that he will promptly sign the bill. Jordan is only the fourth country with which the U.S. has negotiated a free trade agreement. The others are Canada, Mexico, and Israel.
Labor and Environment Provisions. There has been no dispute that a FTA with Jordan is appropriate for political reasons. However, this FTA, which was negotiated by the Clinton administration, has been controversial because it includes labor and environmental (L&E) provisions. They provide that neither party "shall fail to effectively enforce its" L&E laws. Trade with Jordan is minimal. Neither Jordan nor the U.S. cares about the other's L&E records. Rather, the Clinton administration insisted on these provisions with the idea that this FTA would serve as a model for all future FTAs. Sen. Phil Gramm (R-TX) had opposed this FTA for this reason, but recently dropped his opposition due to changed circumstances following the events of September 11.
Intellectual Property and E-Commerce. The U.S. Jordan FTA is also significant because it contains extensive language pertaining to intellectual property and e-commerce that may serve as guidance for future FTAs. The FTA addresses patents, trademarks, copyright, and enforcement of IPR. Jordan agreed to ratify and implement the WIPO's Copyright Treaty and WIPO Performances and Phonograms Treaty within two years. The FTA also provides that "each Party shall seek to refrain from: (a) deviating from its existing practice of not imposing customs duties on electronic transmissions; (b) imposing unnecessary barriers on electronic transmissions, including digitized products; and (c) impeding the supply through electronic means of services ..."
President Bush: "I commend the Congress for advancing trade and relations with Jordan, a valued friend and partner. The U.S. – Jordan Free Trade Agreement will promote peace and security in the region, while creating jobs and new investment opportunities in both countries. The agreement demonstrates Jordan's strong commitment to economic reform and sends a strong signal to Jordan, as well as other countries in the region, that support for peace and economic reform yields concrete benefits. I look forward to signing this important legislation." See, White House release.
King Abdullah of Jordan will visit Washington on September 28. See, White House release. See also, State Department release.
House to Hold Hearing on Anti Terrorism Bill
9/24. The House Judiciary Committee will hold a hearing today at 2:00 PM on the Bush Administration's draft [PDF] of the "Anti Terrorism Act of 2001." The bill contains many major revisions of criminal law and procedure, as well as some revisions to immigration and trade law. In particular, it expands the authority of law enforcement agencies to conduct surveillance of both old fashioned telephone service, and newer forms of Internet communications. Attorney General John Ashcroft will be the sole witness.
§ 101 of the bill expands the authority of enforcement agencies (LEAs) with respect to the use of trap and trace devices and pen registers. These are both old fashioned telephone industry concepts. The bill brings these concepts into the world of Internet communications. § 101 of the bill also expands the geographic scope of such orders. Currently, investigators typically, get orders for each jurisdiction. The bill provides that "The order shall ... apply to any entity providing wire or electronic communication service in the United States whose assistance is required to effectuate the order."
§ 102 of the bill allows LEAs to seize voice mail messages with a warrant.
§ 105 provides that U.S. prosecutors may use wiretap information collected by foreign governments against U.S. citizens, even if such surveillance would have violated the 4th Amendment if conducted by U.S. LEAs.
§ 106 expands LEAs' authority to intercept computer trespasser communications. It provides that "It shall not be unlawful ... for a person acting under color of law to intercept the wire or electronic communications of a computer trespasser, if (A) the owner or operator of the protected computer authorizes the interception ... (B) the person acting under color of law is lawfully engaged in an investigation; (C) the person acting under color of law has reasonable grounds to believe that the contents of the computer trespasser's communications will be relevant to the investigation; and (D) such interception does not acquire communications other than those transmitted to or from the computer trespasser."
§ 107 expands the scope of information that can be obtained by LEAs from communications providers with a subpoena. Currently LEAs can obtain the name, address and length of service. This bill would expand the list to include include method of payment, including credit card numbers, and other information.
§ 108 provides that search warrants to compel a service provider to disclose unopened e-mail, which currently apply only in the district where they are issued, will be expanded to cover the entire U.S.
§ 109 provides that LEA's electronic surveillance authorities extend to Cable companies. However, this does not extend to records of customers' TV viewing activity.
§ 110 expands emergency disclosures of electronic communications.
§§ 151-159 contain significant revisions to the Foreign Intelligence Surveillance Act (FISA), pertaining to surveillance of persons employed by foreign governments, and members of international terrorist groups.
§ 306 expands the prohibition against providing material support or resources to terrorists. It would add providing "expert advice or assistance". It does not specify whether or not legal advice would be covered.
See also, the Bush Administration's summary [PDF] of the bill.
The House Judiciary Committee will also meet at 4:00 PM with representatives of several groups that advocate civil liberties. The speakers will include Jim Demspey (Center for Democracy and Technology), who will focus on electronic surveillance issues, David Cole (Georgetown University Law School), who will focus on immigration issues, Brad Jansen (Free Congress Foundation), who will focus on money laundering and forfeiture issues, and a representative of the ACLU, who will focus on criminal issues.
More News
9/24. Sen. Fred Thompson (R-TN) announced that he will run for re-election in 2002. He had previously considered stepping down. He is the ranking Republican on the Senate Governmental Affairs Committee. He is also one of the Senate's leading advocates of imposing restraints on the export of computer hardware, encryption products, and other software, for national security reasons.
9/24. Napster announced that it has reached a preliminary settlement agreement with American songwriters and music publishers who filed a class action complaint in U.S. District Court (NDCal) against Napster alleging copyright infringment. See, Napster release.
9/24. The European Commission announced that it approved Cendant Corporation's acquisition of Galileo International Inc. See, EU release and Cendant release.
9/24. Brian West plead guilty in U.S. District Court (EDOkla) to intentionally accessing and obtaining information from a protected computer without authorization through the use of an interstate communication in violation of Title 18 U.S.C. § 1030(a)(2)(C). See, CCIPS release.
Sen. Graham Introduces FISA Bill
9/21. Sen. Bob Graham (D-FL) and four other Democrats introduced S 1448, the "Intelligence to Prevent Terrorism Act of 2001". The bill would amend the electronic surveillance authority under the Foreign Intelligence Surveillance Act (FISA). The bill was referred to the Senate Intelligence Committee, of which Sen. Grahm is the Chairman.
Sen. Enzi Introduces Internet Education Bill
9/21. Sen. Mike Enzi (R-WY) and others introduced S 1445, the Internet Equity and Education Act of 2001, a bill to make it easier to obtain federal financial aid for web based education programs. The bill was referred to the Senate Committee on Health, Education, Labor, and Pensions, of which Sen. Enzi is a member.
The bill would amend the Higher Education Act of 1965 (HEA) to expand the opportunities for higher education via the Internet. Currently, the HEA limits the amount of aid a student enrolled in distance education courses delivered via telecommunications may receive if the institution offers half or more of its courses by correspondence or telecommunications. S 1445 would remove this limitation for postsecondary institutions that are already participating in the federal student loan programs with student loan default rates under 10%. The bill would also repeal the 12-hour rule with respect to non-standard term programs. This rule governs the amount of "seat-time" students must spend in class per week. Finally, the bill addresses incentive compensation.
The House Education and Workforce Committee passed a similar bill, HR 1992, sponsored by Rep. Johnny Isakson (R-GA), on August 1, by a vote of 31 to 10. Opponents, such as Rep. Patsy Mink (D-HI), argued that the changes contained in this legislation would invite abuse of student loan programs, and increase the student loan default rates.
"The Internet is a valuable tool that can be used to improve learning opportunities. Further increasing the flexibility of distance education programs through the Internet would benefit students, especially those in rural areas," said Sen. Enzi in a release.
Fed Circuit Affirms CIT in SRAMs Import Case
9/21. The U.S. Court of Appeals (FedCir) issued its opinion in Taiwan Semiconductor Industry Association v. ITC, an appeal from the U.S. Court of International Trade (CIT) pertaining to the importation of static random access memory chips (SRAMs) from Taiwan. The U.S. International Trade Commission (ITC) initially found that Taiwanese imports of static random access memory chips (SRAMs) at less than fair value (LTFV) injured the domestic industry. However, after a second remand from the CIT, the ITC determined that there was no material injury, or threat thereof, to the domestic industry by reason of imported Taiwanese SRAMs. The CIT affirmed. The Court of Appeals also affirmed, stating that "the record contains substantial evidence that factors other than LTFV Taiwanese imports caused the material injury to domestic industry".
Federal Circuit Reverses in Loral v. Matsushita
9/21. The U.S. Court of Appeals (FedCir) issued its opinion in Loral Fairchild v. Matsushita Electrical, a patent infringement case involving invalidity for obviousness.
Loral filed a complaint in U.S. District Court (EDNY) against Japanese electronics manufacturers and their U.S. distributors alleging infringement of claim 1 of its U.S. Patent No. 3,931,674, titled "Self aligned CCD element including two levels of electrodes and method of manufacture therefor". CCDs, or charge-coupled devices, are used in electronic cameras to produce an electrical signal representing the image that is focused in it, which signal is then processed and displayed on a video monitor.
Defendants moved for summary judgment on the grounds that claim 1 is invalid as obvious for having been disclosed in a journal article authored by Darrel Erb in 1973. The District Court held that there was no genuine issue as to the status of the Erb reference as prior art, and that claim 1 was obvious in light of it.
The Appeals Court held that the grant of summary judgment was improper because the evidence raised a genuine issue as to whether those at Loral reduced the claimed invention to practice prior to the publication of the Erb article. It reversed and remanded.
Fed Circuit Affirms in EMI v. Cypress
9/21. The U.S. Court of Appeals (FedCir) issued its opinion in EMI v. Cypress Semiconductor, a patent infringement case involving semiconductor chip manufacturing. The Appeals Court upheld the judgment of non infringement for Cypress Semiconductor on the grounds of impossibility.
EMI owns two patents at issue in this case. Both pertain to the technology for manufacturing semiconductor chips, and in particular, for disconnecting the dysfunctional portions of chips. To disconnect a dysfunctional portion of the semiconductor chip, manufacturers sever the fuses that connect the dysfunctional portion to the rest of the chip, using lasers. EMI owns U.S. Patent No. 4,935,801, which claims a structure for a metallic fuse with an optically absorptive upper layer, and U.S. Patent No. 4,826,785, which claims a method for fabricating and blowing such a fuse.
EMI filed a complaint in U.S. District Court (DDel) against Cypress in 1998 alleging infringement of these two patents. Cypress argued that the mechanism recited in the asserted claims is impossible, or in the alternative, if the mechanism were possible, it would be inherent in all similar prior art fuses. The jury found that the patents describe a mechanism that is physically impossible. It also found, that, even if not impossible, the patents describe an inherent property, law of nature, natural phenomenon, or a new use for an old structure. The jury also found that Cypress did not infringe EMI's patents. EMI moved for judgment as a matter of law (JMOL), and for a new trial. The District Court denied the motion for a new trial, denied the motion for JMOL as to impossibility, but granted the motion for JMOL as to anticipation or obviousness. The Appeals Court affirmed.
Copyright Office Extends Deadline
9/21. The Copyright Office published a notice [PDF] in the Federal Register that it is extending the deadline for filing comments on proposed regulations that will govern the Recording Industry Association of America (RIAA) collective when it functions as the designated agent receiving royalty payments and statements of accounts from nonexempt, subscription digital transmission services which make digital transmissions of sound recordings, pursuant to 17 U.S.C. § 114. Under this extension, both comments and notices of intent to participate in a copyright arbitration royalty panel proceeding are due by September 28, 2001. See, Federal Register, September 21, 2001, Vol. 66, No. 184, at page 48648.
GAO Reports on IT Practices At SSA
9/21. The GAO released a report [93 pages in PDF] titled "Information Technology Management: Social Security Administration Practices Can Be Improved". The report examines the SSA's IT practices in five areas, investment management, enterprise architecture, software acquisition and development, information security, and human capital. It found "weaknesses" in all five areas. In the area of information security, the report offered three recommendations: (1) strengthen the entitywide security framework by completing policy/risk models and technical system standards (security settings) for SSA's major systems platforms", (2) "develop monitoring techniques and corrective actions for noncompliance for the major systems platforms", and (3) "use the platform security settings to strengthen security for each application utilizing these platforms." The report was written by David McClure, Director of Information Technology Management Issues for the GAO, for Rep. Clay Shaw (R-FL), Chairman of the Ways and Means Committee's Subcommittee on Social Security.
Cyber Securities Fraud
9/21. The SEC announced that it filed a civil complaint in U.S. District Court (EDWisc) against, Inc. and John Luers, its President, alleging violation of § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint alleges that defendants provided false and misleading information through the web site, See, SEC release. (Civil Action No. 01-CV-949.)
AAG James Gives Speech on Antitrust
9/21. Charles James, Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice, gave a speech in Ottawa, Canada, to the Canadian Bar Association titled "International Antitrust in the Bush Administration".
People and Appointments
9/21. The Senate confirmed Sharon Prost to be a United States Circuit Judge for the Federal Circuit by a vote of 97 to 0. She was previously a long time assistant to Sen. Orrin Hatch (R-UT) on the Senate Judiciary Committee, and before that, on the Senate Health, Education, Labor and Pensions Committee.
9/21. The Senate confirmed Reggie Walton to be United States District Judge for the District of the District of Columbia by a vote of 97 to 0. He was previously a Judge of the Superior Court of the District of Columbia. He was also a deputy drug czar under the elder George Bush. He was also an Assistant United States Attorney for the District of Columbia before becoming a judge.
9/21. The Senate confirmed Deborah Daniels to be an Assistant Attorney General for the Office of Justice Programs.
9/21. President Bush selected John Marburger to be Director of the Office of Science and Technology Policy. See, White House release.

Go to News Briefs from September 16-20, 2001.