News Briefs from October 26-31, 2001

House Committee Passes Internet Gambling Bill
10/31. The House Financial Services Committee amended and approved HR 556, the Unlawful Internet Gambling Funding Prohibition Act, by vote of 34 to 18. The bill would attempt to stem illegal Internet gambling by preventing the use of credit cards, wire transfers, and other financial instruments in connection with illegal Internet gambling.
Rep. Mike Oxley (R-OH), the Chairman of the Committee, offered an amendment in the nature of a substitute that was approved. It provides that "No person engaged in the business of betting or wagering may knowingly accept, in connection with the participation of another person in unlawful Internet gambling (1) credit ... (including credit extended through the use of a credit card); (2) an electronic funds transfer ... ; (3) any check ...; or (4) the proceeds of any other form of financial transaction as the Secretary may prescribe by regulation ..."
The bill further provides the "district courts of the United States shall have original and exclusive jurisdiction to prevent and restrain violations". It allows both the U.S. and states to bring actions under the act for injunctive relief. However, the bill states that "No provision of this section shall be construed as authorizing an injunction against an interactive computer service ... unless such interactive computer service is acting in concert or participation with a person who violates this section ..."
Then, the bill provides that "any appropriate Federal banking agency" may issue an order directed to "any insured depository institution" to stop extending credit, electronic funds transfers, or money transmitting service, and to stop paying, transferring, or collecting any check, draft or other instrument, if it has "actual knowledge" of the violation of this act.
Rep. Oxley offered this explanation: "This bill makes nothing legal now that isn't currently so, nor does it make illegal anything that law enforcement does not currently consider unlawful. What it does is make it a crime to accept payment by credit card, check or electronic funds transfer for unlawful Internet gambling transactions, and requires a bank, credit card company or EFT entity to stop payment to a particular named site when ordered by a court to do so."
He continued that "No dramatic shift in business practices is mandated or authorized under this legislation. This bill does not require that banks or credit card companies stop processing all Internet gambling transactions. Rather, institutions must only make a good faith effort to discontinue processing transactions to or from specific unlawful Internet gambling businesses that have been singled out in court orders."
Rep. Michael Castle (R-DE) spoke in opposition to the bill. He stated that it would place too much burden on financial institutions, and not enough on the Justice Department. Rep. Barney Frank (D-MA) opposed the bill on other grounds. He stated that the federal government should not be regulating gambling. "People often spend their money unwisely," said Rep. Frank. "I don't think we should set ourselves up as the household budget manager." Rep. Maxine Waters (D-CA) and Rep. Mel Watt (D-NC) also argued against passage of the bill.
Rep. Jim Leach (R-IA), the sponsor of the bill, stated that "Internet gambling is the single easiest way to launder money". He also made the point that "this is the single biggest privacy vote this committee will ever take". He said the online gamblers give their credit card information to illegal businesses, and do not know what use those entities will make of this information.
Rep. John LaFalce (D-NY) also spoke in favor of the bill. He said that this bill "falls short of providing a definitive prohibition, it offers a number of improvements to current law and may be the strongest bill we can achieve at this time."
Bill Limits Collection of Personal Data by Government Web Sites
10/31. The House passed the conference report on HR 2590, the appropriations bill for the Treasury Department, U.S. Postal Service, the Executive Office of the President, and certain Independent Agencies for FY 2002. Section 638 of the bill contains a limitation on the use of web sites by government agencies to collect personally identifying information. The vote was 339 to 85.
It provides that "None of the funds made available in this or any other Act may be used by any Federal agency (1) to collect, review, or create any aggregate list, derived from any means, that includes the collection of any personally identifiable information relating to an individual's access to or use of any Federal Government Internet site of the agency; or (2) to enter into any agreement with a third party (including another government agency) to collect, review, or obtain any aggregate list, derived from any means, that includes the collection of any personally identifiable information relating to an individual's access to or use of any nongovernmental Internet site."
However, this section also provides exceptions for "any voluntary submission of personally identifiable information", "any action taken for law enforcement, regulatory, or supervisory purposes, in accordance with applicable law" and "any ... system security action taken by the operator of an Internet site and is necessarily incident to the rendition of the Internet site services or to the protection of the rights or property of the provider of the Internet site."
Rep. Armey Says House Will Insist on Two Year Extension of Net Tax Ban
10/31. House Majority Leader Dick Armey (R-TX) released a statement regarding legislation to extend the Internet tax moratorium. The House passed HR 1552, a bill that provides a two year extension, on October 10, 2001. The Senate has not acted. The moratorium expired on October 21.
Rep. Armey stated that "The Senate should immediately take up and pass the two-year extension passed by the House." He added that the House bill already marks a significant compromise. We will not consider anything less than the clean, two-year extension we passed."
"If the Senate continues to refuse to take up and pass the House bill as-is, the conclusion is obvious," said Rep. Armey. "The Senate wants to tax the Internet."
Surveillance of Cable Subscribers Under the Anti Terrorism Bill
10/31. Rep. Billy Tauzin (R-LA), Chairman of the House Commerce Committee, submitted a statement for the Congressional Record regarding the meaning and intent of Section 211 of HR 3162, the anti terrorism bill, which President Bush signed into law on October 26.
Section 211 of the anti terrorism act amends Section 631 of the Communications Act of 1934 (47 U.S.C. § 551), which prohibits cable companies from disclosing certain customer information. Section 211 was included in the bill to clarify that laws regarding interception and disclosure of wire and electronic communications apply to cable service providers when they provide telephony or Internet access services. Without this new provision, terrorists and other criminals could have avoided surveillance by obtaining telephone service from cable operators. However, this section still excepts "records revealing cable subscriber selection of video programming from a cable operator."
Rep. Tauzin's statement articulates this purpose. However, he offers further information about the underlying intent of the Congress. For example, he states that under Section 211 the government can obtain a "cable subscriber's name, address, or the means of payment" but not what programs he watched. Second, he stated that the privacy protection for cable video programming does not extend to "streaming of content over the Internet".
Rep. Tauzin stated that section 211 "clarifies that cable television subscribers continue to enjoy certain privacy protections, while also ensuring that law enforcement officials have the same ability to gain access to cable subscriber Internet and telephony information as they do with conventional telephone service. The drafters of this language intend the phrase 'records revealing cable subscriber selection of video programming from a cable operator' to mean information about which video programming service or services a cable subscriber has purchased from a cable company. It does not include information such as a cable subscriber's name, address, or the means of payment. Importantly, this language does not impose any new requirements on cable companies to maintain or collect additional records containing subscriber information."
Rep. Tauzin continued that " 'Video programming' is intended to refer to traditional video programming services comparable to broadcast television ... as opposed to the emerging types of video programming services that enable subscribers to communicate with other viewers or subscribers. Nor does 'video programming' include streaming of content over the Internet."
Rep. Tauzin also stated that "to the extent a cable company enables its subscribers to communicate with other persons through the provision of telephone service or Internet access service, it must comply with the same laws, found in title 18, governing the interception and disclosure of wire and electronic communications that apply to any other telephone company or Internet service provider. In these instances, Section 631 simply would not apply."
See, Congressional Record, October 31, 2001, at page  E1969.
DOJ Authorizes Monitoring of AC Communications Used to Further Terrorist Acts
10/31. The Department of Justice's Bureau of Prisons (BOP) published a notice in the Federal Register stating that it has adopted an interim rule regarding monitoring of communications by detainees of the Bureau of Prisons. It provides that the Attorney General may order the monitoring of attorney client communications of detainees whom he suspects are using those communications to further a terrorist act. See, Federal Register, October 31, 2001, Vol. 66, No. 211, at Pages 55061 - 55066.
The BOP interim rule provides, in part, that "In any case where the Attorney General specifically so orders, based on information from the head of a federal law enforcement or intelligence agency that reasonable suspicion exists to believe that a particular inmate may use communications with attorneys or their agents to further or facilitate acts of terrorism, the Director, Bureau of Prisons, shall, in addition to the special administrative measures imposed under paragraph (a) of this section, provide appropriate procedures for the monitoring or review of communications between that inmate and attorneys or attorneys' agents who are traditionally covered by the attorney client privilege, for the purpose of deterring future acts that could result in death or serious bodily injury to persons, or substantial damage to property that would entail the risk of death or serious bodily injury to persons."
The interim rule further requires notice to both the detainee and his attorney that communications are being monitored, and a statement that "communications between the inmate and attorneys or their agents are not protected by the attorney client privilege if they would facilitate criminal acts or a conspiracy to commit criminal acts, or if those communications are not related to the seeking or providing of legal advice".
The DOJ also requests public comments on this interim rule. Comments are due by December 31, 2001. Send comments to: Rules Unit, Office of the General Counsel, Bureau of Prisons, HOLC Room 754, 320 First Street, NW., Washington, DC 20534.
Colin Powell Addresses Trade and Technology
10/31. Secretary of State Colin Powell gave a speech in Washington in which he praised the benefits of trade, trade promotion authority, and technology.
He stated that "in this new century, we have the potential to lift tens of millions of people out of poverty, to help them give voice to their aspirations for a better life, and to free the human spirit within them. I believe in the power of trade and technology, because I have seen it here in America, I have seen how it works. Our country has the world's highest standard of living and the largest and most innovative economy, in large part thanks to you, the manufacturers of America, willing to take advantage of technology and the new open trading opportunities that exist."
Benefits of World Trade. Powell stated that trade and investment "lift people out of poverty and expand the global middle class", "create conditions for expanded personal freedom", "support rule by law, not by political whim", "promotes international responsibility", and "are the keys to open and vibrant societies that are receptive to new ideas".
Trade Promotion Authority. Powell also argued that "most important of all, we need Trade Promotion Authority, TPA. Because for the United States to be credible at the negotiating table, our trading partners need to know that there will be no further negotiation on an agreement once we have reached an agreement with them. And that is what TPA does. It gives us credibility in the negotiating process and paves the way for US leadership."
Technology at the State Department. Powell stated that "We are all on the same web page, so to speak. For I believe that trade and technology -- my children are trying to make me literate in all this stuff -- I've gotten pretty good. In fact, I scare the devil out of the guys at the State Department. Because I say, we're all going to be on the Web at State, all 30,000 computers that we have around the world, I want everyone to have Internet access immediately. And that's costing us a bunch of money, and it's causing people to change the way we think about doing things."
USTR Announces Out of Cycle Special 301 Reviews
10/31. U.S. Trade Representative (USTR) Robert Zoellick announced the outcome of "out-of-cycle" Special 301 reviews for the adequacy and effectiveness of intellectual property protection in Malaysia, Costa Rica, and Lithuania. Malaysia was moved from the Priority Watch List to the Watch List. Costa Rica was maintained on Priority Watch List. Lithuania was maintained on the Watch List. See, USTR release.
Section 301 is the statutory means by which the United States asserts its international trade rights, including its rights under WTO Agreements. In particular, under the "Special 301" provisions of the Trade Act of 1974, the USTR identifies trading partners that deny adequate and effective protection of intellectual property or deny fair and equitable market access to U.S. artists and industries that rely upon intellectual property protection. Placement on the Watch List or Priority Watch List indicates that a country does not provide an adequate level of protection.
Zoellick stated that "Pirating U.S. intellectual property is theft. It cheats Americans and hurts those countries that need strong IP protection to promote investment, innovation, and technology in the marketplace." He added that "We are gratified that some countries have made progress and are showing a commitment to sustained enforcement. For example, in the last year pirated products are harder to find in Malaysia, and the thieves are moving out. Strong legislation regarding optical disks has been passed and is being implemented largely on schedule. The Malaysian Government campaign to stamp out piracy has been steady, and they have given us no reason to believe that the progress will not continue."
See also, International Intellectual Property Alliance release [PDF].
More Trade News
10/31. Rep. Henry Hyde (R-IL) introduced HR 3189, a bill to extend the Export Administration Act until April 20, 2002.
10/31. Rep. Marcy Kaptur (D-OH) stated in the House, again, that Doha, Qatar, is not an appropriate site for the WTO ministerial." She cited Qatar's opposition to U.S. actions in Afghanistan, Qatar's record on human rights, and Qatar's treatment of women. Kaptur is also a leading protectionist on trade issues. See, Congressional Record, October 31, 2001, at page H7563-4.
10/31. Rep. Joe Knollenberg (R-MI) also spoke in the House about trade and granting the President trade promotion authority. He stated that "we have to pass trade promotion authority now. If we do not, we will let down America's world class workers, farmers and businesses. The global marketplace is increasingly competitive. Without TPA, America will lag behind. Our foreign competitors have negotiated some 130 preferential agreements while we, absent TPA, have negotiated exactly three. We need to get back in the game." See, Congressional Record, October 31, 2001, at page H7534.
DOJ Files Amicus Brief in NARM v. Sony
10/31. The U.S. Department of Justice filed an amicus curiae brief in NARM v. Sony, a case involving antitrust law. The National Association of Recording Merchandisers (NARM) filed an eleven count complaint [PDF] in U.S. District Court (DDC) against Sony alleging violation of Sherman Act (illegal tying, reciprocal dealing, and exclusive dealing), the Robinson Patman Act, the Lanham Act, and other laws. NARM complained about Sony's bundling of products and services on digital sound recordings sold to NARM members.
The DOJ brief addresses only the antitrust and Robinson Patman Act issues. The DOJ wrote that "it is our view that the complaint fails to provide an adequate factual predicate for NARM's claims that Sony has violated the federal antitrust laws through its inclusion of hyperlinks and related products and services in the music CDs that it sells to NARM retailers or through its relationships with record clubs such as Columbia House." The DOJ also wrote that "the Robinson Patman Act does not apply to the transactions alleged."
The brief was prepared by David Seidman of the DOJ's Antitrust Division.
Rep. Boehlert Discusses Computer Security
10/31. Rep. Sherwood Boehlert (R-NY), Chairman of the House Science Committee, moderated a "webchat" with representatives of companies that address computer security. The participants were Paul Kurtz (National Security Council), John Conlin (Vericept), Peter Tippett (TruSecure Corp.), Bob Brennan (Connected Corp.), Randy Sandone (Argus Systems Group), Buky Carmeli (SpearHead Security Technologies), and Joe Magee (Top Layer Networks, Inc.).
Rep. Boehlert stated that "What the recent anthrax attacks and the attacks of September 11 have in common is that they turn our own basic systems of daily connections against us -- in those cases, our postal system and our transportation system. Turning our computer systems against us would seem to be a logical extension of that mode of operation. And, as we noted last week, we are more and more reliant on those computer networks."
FCC Common Carrier Bureau Announces Appointments
10/31. Eric Einhorn was named Deputy Division Chief of the Accounting Policy Division of the FCC's Common Carrier Bureau. Before joining the FCC in 1999, he was an associate at the law firms of Swidler Berlin and Cadwalader Wickersham & Taft. See, FCC release.
10/31. John Stanley was named Assistant Division Chief of the Policy and Program Planning Division of the FCC's Common Carrier Bureau. Before joining the FCC in 1999, he worked at the law firm of Wiley, Rein & Fielding. See, FCC release.
10/31. Tamara Preiss was named Chief of the Competitive Pricing Division of the FCC's Common Carrier Bureau. Before joining the FCC in 1997, she worked for the law firm of Sidley & Austin. See, FCC release.
10/31. Deena Shetler was named Deputy Chief of the Competitive Pricing Division of the FCC's Common Carrier Bureau. Most recently, she was a Legal Advisor to former Commissioner Gloria Tristani on common carrier matters. Before joining the FCC in 1996, she was an antitrust and commercial litigation associate at the law firm of Howrey & Simon. See, FCC release.
10/31. Jack Zinman was named Deputy Chief of the Competitive Pricing Division of the FCC's Common Carrier Bureau. See, FCC release.
People and Appointments
10/31. Thomas Pickard, the Deputy Director of the FBI, will retire at the end of November. Pickard, 50, has been overseeing the investigations into the "Pentbom" terrorist attacks of September 11 and the anthrax mailings. See, FBI release.
10/31. Richard Smith, CTO of the Privacy Foundation, will leave, effective November 1, to become an independent security consultant.
10/31. Peter Bonfield, Chief Executive of BT Group, will stand down at the end of January 2002. See, BT release.
10/31. The Board of Directors of Qwest Communications extended the employment contract of Chairman and CEO Joseph Nacchio through December 31, 2005. See, Qwest release.
10/31. Richard Cook was named Vice Chairman of the American Electronic Association. He is P/CEO of MAPICS. See, AEA release.
More News
10/31. U.S. Secretary of Commerce Don Evans met with Romanian Prime Minister Adrian Nastase. Afterwards Sec. Evans released a statement in which he said that "I fully support the new partnership between Qualcomm, of San Diego, California, and the Government of Romania for the standardization and implementation of Code Division Multiple Access (CDMA) wireless technology in that country."
10/31. The U.S. Court of Appeals (10thCir) issued its opinion in Craig Neon Inc. v. Trent McKenzie, a case involving the Oklahoma Uniform Trade Secrets Act.
9th Circuit Rules on Implied Licenses to Copy
10/30. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in Foad v. MGA, a copyright case involving a project plan for a shopping center, which turned on the Appeals Court's interpretation of whether an implied license to copy existed.
Foad Consulting Group prepared a preliminary and revised plot plan for a proposed 45.5 acre shopping center in Arroyo Grande, California, pursuant to contracts with a developer, GenCom. GenCom then transferred its rights to develop the project to Claire Enterprises, which in turn, hired Musil Govan Azzalino (MGA), another architectural and engineering firm. MGA used and copied much of Foad's prior plans. Foad registered a copyright in its work.
Foad filed a complaint in the U.S. District Court (CDCal) against MGA alleging infringement of its copyright in the shopping center project plans that it had prepared. The District Court granted summary judgment to MGA. It based its decision upon the merger doctrine (i.e., that courts will not protect a copyrighted work from infringement if the idea underlying the copyrighted work can be expressed in only one way, lest there be a monopoly on the underlying idea). Foad appealed. MGA argued the merger doctrine and fair use on appeal. The Appeals Court affirmed, on grounds not raised by the parties -- implied license to copy.
The Appeals Court wrote that "The Copyright Act permits copyright holders to grant nonexclusive copyright licenses by implication. But whether a copyright holder has properly granted another a nonexclusive license by implication is a matter of state contract law, provided that the state law does not conflict with the Copyright Act or its underlying policies. In this case, the February 1996 contract granted GenCom an implied license to copy and adapt Foad's revised plot plan and to publish the resulting derivative work in aid of constructing the project for which it was designed."
While this is a copyright case, the opinion of the Appeals Court is largely a discussion of contract law. The Appeals Court stated the issue as follows: "Which law, state or federal, governs the creation of an implied, nonexclusive copyright license?" It concluded that "while federal law answers the threshold question of whether an implied, nonexclusive copyright license can be granted (it can), state law determines the contract question: whether a copyright holder has, in fact, granted such a license."
Judge Betty Fletcher wrote the opinion of the Appeals Court. An incensed Judge Alex Kozinski wrote a separate opinion in which he concurred in the result, but not the implied license analysis. He wrote that it is "dangerous" to base an opinion on an argument not raised by the parties. He also disputed the majority's analysis of contract law.
USTR Zoellick Addresses WTO Round and Tech
10/30. USTR Robert Zoellick gave a speech in Washington DC to the Council on Foreign Relations titled "The WTO and New Global Trade Negotiations: What's at Stake". He advocated a new round of World Trade Organization (WTO) negotiations, and addressed provisions regarding electronic commerce, information technology, and intellectual property rights.
E-Commerce. Zoellick stated that "The WTO rules also need to be updated to tap the potential of high tech innovations and e-commerce. Transactions over networks are providing enormous growth opportunities for any service that can reach customers electronically -- be it retailing, financial, information, or entertainment services. The opportunity for developing countries is vast -- providing them with new, more efficient means to reach global markets for products and services in which they have a competitive advantage."
Information Technology and Developing Nations. "One of our primary objectives in launching a new global negotiation is to use trade and openness to bring new opportunities and new hope to the poorest among us," said Zoellick. "The flagging fortunes of so many developing nations, coupled with the difficult economic times, underscores the importance of launching new global trade negotiations. The trade liberalization ushered in by the Uruguay Round highlights the potential of more trade for developing nations. In the six years following the round's completion, exports from developing nations grew by nearly $1 trillion, to a level of $2.4 trillion. Last year, developing countries exported $73 billion worth of information technology to the United States -- a 43 percent increase since 1996, the year before the multilateral Information Technology Agreement had been implemented."
TRIPS and Pharmaceutical Patents. Zoellick stated that "the Bush Administration is implementing a flexible policy on intellectual property as it relates to medicines to treat HIV/AIDS and other pandemics. This flexibility ... enables countries and companies to help deal with this tragic pandemic by encouraging low-cost access to critical medicines. At the same time, the preservation of intellectual property rules ensures incentives to develop medicines and biotechnology that can help us cure and treat diseases that have plagued humankind since our origin. I recognize that some of the least developed countries in the WTO find it difficult to fully comply with the pharmaceutical patent rules governing world trade. In response to these difficulties, the United States has proposed granting the least developed countries a 10-year extension, to 2016, to come into full compliance with all pharmaceutical related patent obligations under the TRIPs agreement."
Japan. After delivering his prepared speech, Zoellick said that he is "extremely disappointed" by Japan's lack of effort in building support for launch of a WTO round of negotiations. See, State Department release.
10/30. AOL Time Warner named Iris Knobloch its SVP for international relations and strategic policy in Europe. She will be based in London. She was previously worked for the law firms of Norr Stiefenhofer & Lutz and O'Melveny & Myers. See, AOLTW release.
More News
10/30. The Copyright Office published a notice in the Federal Register regarding royalty payments for retransmission of over the air broadcast signals. The notice "directs all claimants to royalty fees collected under the section 119 statutory license in 2000 to submit comments as to whether a Phase I or Phase II controversy exists as to the distribution of those fees, and a Notice of Intention to Participate in a royalty distribution proceeding." Comments and Notices of Intention to Participate are due by November 29, 2001. Reply comments are due by December 31, 2001. See, 17 U.S.C. § 119. See also, Federal Register, October 30, 2001, Vol. 66, No. 210, at Pages 54789 - 54791.
10/30. Sen. Larry Craig (R-ID) and others introduced S 1588, a bill to provide a one year extension of the date for compliance by certain covered entities with the administrative simplification standards for electronic transactions and code sets issued in accordance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Sen. Craig stated in the Senate that this bill "includes language to clearly differentiate between this provision and the privacy provision of HIPAA. It was our intention all along that the medical privacy regulations not be affected by our legislation, and we believe this bill accomplishes that goal."
10/30. The U.S. Court of Appeals (FedCir) issued opinions in Special Devices v. OEA (Nos. 01-1053 and 01-1078) and Special Devices v. OEA (No. 01-1201). In the former opinion, issued on October 26, the Appeals Court held that OEA's U.S. Patent 5,404,263 is invalid under the on-sale bar of 35 U.S.C. § 102(b). In the later opinion, issued on October 30, the Appeals Court dismissed for lack of jurisdiction appeals from the District Court's holding that the underlying patent infringement suit was exceptional, thus justifying an award of attorney fees. These are both appeals from the U.S. District Court for the Central District of California, Judge Dickran Tevrizian presiding.
President Bush Issues Directive on Student Visas
10/29. President Bush issued his Homeland Security Presidential Directive-2, which pertains to "Combating Terrorism Through Immigration Policies". The purpose of the directive is to diminish abuse of student visas by aliens in the U.S. It also addresses the use of databases, merging of databases, and data mining, to identify potential terrorists.
The Directive states that the U.S. "benefits greatly from international students who study in our country. The United States Government shall continue to foster and support international students." However, the "Government shall implement measures to end the abuse of student visas and prohibit certain international students from receiving education and training in sensitive areas, including areas of study with direct application to the development and use of weapons of mass destruction."
Database Technology. The Directive also instructs the Director of the Office of Science and Technology Policy (OSTP) to "make recommendations about the use of advanced technology to help enforce United States immigration laws, to implement United States immigration programs, to facilitate the rapid identification of aliens who are suspected of engaging in or supporting terrorist activity, to deny them access to the United States, and to recommend ways in which existing government databases can be best utilized to maximize the ability of the government to detect, identify, locate, and apprehend potential terrorists in the United States."
The Directive continues that "Databases from all appropriate Federal agencies, state and local governments, and commercial databases should be included in this review. The utility of advanced data mining software should also be addressed. To the extent that there may be legal barriers to such data sharing, the Director of the OSTP shall submit to the Director of the Office of Management and Budget proposed legislative remedies."
Supreme Court Denies Certiorari in Spam Case
10/29. The Supreme Court of the United States denied certiorari in Heckel v. Washington, No. 01-469. This is a petition for writ of certiorari seeking review of a Supreme Court of Washington opinion upholding Washington's anti spam statute against a Commerce Clause challenge.
At issue is Washington State's Commercial Electronic Mail Act, Chapter 19.190 Revised Code of Washington. RCW 19.190.020 provides, in part: "(1) No person may initiate the transmission, conspire with another to initiate the transmission, or assist the transmission, of a commercial electronic mail message from a computer located in Washington or to an electronic mail address that the sender knows, or has reason to know, is held by a Washington resident that: (a) Uses a third party's internet domain name without permission of the third party, or otherwise misrepresents or obscures any information in identifying the point of origin or the transmission path of a commercial electronic mail message; or (b) Contains false or misleading information in the subject line."
Jason Heckel is a spammer who repeatedly sent unsolicited commercial e-mail to Washington state residents that contained false subject line and transmission information. Washington filed a complaint against him in King County Superior Court, in Washington. The Superior Court ruled on summary judgment that the statute violates the dormant Commerce Clause of the U.S. Constitution. The Supreme Court of Washington reversed on June 7, 2002, holding the statute does not unconstitutionally burden interstate commerce. The Supreme Court of the U.S. declined to hear the case, without opinion, on October 29, 2001.
Representatives Seek Tax Credits for Broadband Deployment
10/29. House Minority Leader Dick Gephardt (D-MO), Rep. Anna Eshoo (D-CA), and others sent a letter to Senate Majority Leader Tom Daschle (D-SD) and Sen. Max Baucus (D-MT) urging them to include language from HR 267 and S 88, the Broadband Internet Access Act, in the economic stimulus package. The House has already passed an economic stimulus bill, without the Broadband Internet Access Act. The Senate has yet to pass its version of the bill.
HR 267 is sponsored by Rep. Phil English (R-PA), Rep. Bob Matsui (D-CA), and almost 200 other Representatives. S 88 is sponsored by Sen. Jay Rockefeller (D-WV), and 62 other Senators. These companion bills would provide tax credits for deployment of broadband facilities in rural and underserved areas. Specifically, they provide a credit of 10% of the qualified expenditures incurred by the taxpayer with respect to qualified equipment with which "current generation" broadband services are delivered to subscribers in rural and underserved areas. They also provide a credit of 20% of the qualified expenditures incurred by the taxpayer with respect to qualified equipment with which "next generation" broadband services are delivered to subscribers in rural areas, underserved areas, and to residential subscribers.
"Current generation" broadband services is defined in the bills as the transmission of signals at a rate of at least 1.5 Mbps downstream, and at least 200 Kbps upstream. "Next generation" broadband services is defined as at least 22 Mbps downstream and 5 Mbps upstream.
In addition to the traditional arguments for spurring broadband deployment, Reps. Gephardt, Eshoo, and others, also added the post September 11 argument that "As the U.S. Postal System has become the target of terrorist attacks, electronic mail has become increasingly important. To quickly deliver large documents and images, however, more bandwidth is necessary."
NTIA Awards Contracts for Management of .us and .edu Domains
10/29. The National Telecommunications and Information Administration (NTIA) awarded a four year contract to NeuStar to manage the .us top level domain. See, NTIA release and NeuStar release.
The NTIA also announced a five year agreement with Educause to manage the .edu top level domain. VeriSign currently manages the .edu domain; that contract expires on November 10, 2001. Educause will operate the registry and registrar services at no cost to the government. It will not charge a registration fee for its services, but may propose a fee in the future to recover costs, subject to government approval. See, NTIA release and Educause release.
FCC Creates Media Ownership Working Group
10/29. FCC Chairman Michael Powell announced the creation of a Media Ownership Working Group at the FCC. Its members will include Kenneth Ferree (Chief of the Cable Services Bureau), Paul Gallant (Special Advisor to the Chief of the Cable Services Bureau), Nandan Joshi (Attorney Advisor in the Office of General Counsel), Jonathan Levy (Deputy Chief of the Office of Plans and Policy), Robert Ratcliffe (Deputy Chief of the Mass Media Bureau), David Sappington (Chief Economist), Royce Sherlock (Deputy Chief of the Policy Division of the Cable Services Bureau). See, FCC release.
10/29. Nokia's Board of Directors extended the contract of Jorma Ollilaas as Chairman and CEO through 2006. See, Nokia release.
10/29. David Cohen joined the Washington DC law firm of Wilmer Cutler & Pickering as counsel in the firm's Litigation Section. He was previously Acting Deputy General Counsel and Associate Deputy General Counsel with the Department of the Treasury. He will specialize in complex civil and white collar criminal defense, including representing financial institutions in enforcement matters, money laundering issues, and internal and congressional investigations. See, release [PDF].
10/29. The law firm of McDermott Will & Emery will open an office in Munich, Germany, on January 2, 2002. Ralf Eckert, Martin Kock, Jörg Kretschmer, Christian von Sydow and Ralf Weisser will launch this office. It will focus on corporate, M&A, taxation, media and telecommunications law. See, MWE release.
More News
10/29. The NTIA published in its web site the fall issue of the NTIA Spectrum News.
Bush Signs Anti Terrorism Bill
10/26. President Bush signed HR 3162, the "anti terrorism bill". It contains many provisions that will increase the ability of law enforcement, intelligence, and other government agencies to combat terrorism, including expanded authority to conduct electronic surveillance of phone and Internet communications. Bush said at a signing ceremony at the White House that "These terrorists must be pursued, they must be defeated, and they must be brought to justice. And that is the purpose of this legislation." See, transcript.
Bush Summarizes Anti Terrorism Bill
10/26. President Bush stated at the signing ceremony for the anti terrorism bill (HR 3162) that "We're dealing with terrorists who operate by highly sophisticated methods and technologies, some of which were not even available when our existing laws were written. The bill before me takes account of the new realities and dangers posed by modern terrorists. It will help law enforcement to identify, to dismantle, to disrupt, and to punish terrorists before they strike."
Bush continued that "Surveillance of communications is another essential tool to pursue and stop terrorists. The existing law was written in the era of rotary telephones. This new law that I sign today will allow surveillance of all communications used by terrorists, including e-mails, the Internet, and cell phones. As of today, we'll be able to better meet the technological challenges posed by this proliferation of communications technology. Investigations are often slowed by limit on the reach of federal search warrants. Law enforcement agencies have to get a new warrant for each new district they investigate, even when they're after the same suspect. Under this new law, warrants are valid across all districts and across all states." See, transcript.
Pen Registers and Trap and Trace Devices
10/26. § 216 is one of the key sections of the anti terrorism bill, HR 3162. It expands law enforcement agencies' (LEAs') authority with respect to the use of pen registers and trap and trace devices (PR&TTs). These are both old telephone industry concepts. 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). § 216 provides that 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. § 216 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).
§ 216 extends PR&TT authority to addressing and routing information. It also provides that a single order shall apply nationwide. This section will serve as the legal authority for technologies that monitor e-mail systems, such as the FBI's Carnivore.
There are three different standards for obtaining surveillance orders -- one for obtaining PR&TT orders, another for wiretap orders under Title III (which allow the government to obtain the content phone conversations), and a third for orders under the Foreign Intelligence Surveillance Act (FISA). The standard for PR&TT orders is a very low standard. § 216 provides that "the court shall enter an ex parte order authorizing the installation and use of a pen register or trap and trace device anywhere within the United States, if the court finds that the attorney for 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. Hence, it is critical whether the information sought by LEAs can be obtained by a mere PR&TT order, or requires a full blown Title III order.
Routing and Addressing v. Content. Much of the debate over the extension of PR&TT authority focused on what information in an Internet communication can be obtained under a PR&TT order, and what information requires a Title III order. § 216 provides that the following can be obtained under a PR&TT order: "dialing, routing, addressing, or signaling information transmitted by an instrument or facility from which a wire or electronic communication is transmitted, provided, however, that such information shall not include the contents of any communication".
House Committee Report. To the extent that legislative history may be pertinent, the House Judiciary Committee's report elaborates on this point. House Report 107-236 states that: "This section updates the language of the statute to clarify that the pen/register authority applies to modern communication technologies. Current statutory references to the target `line,' for example, are revised to encompass a 'line or other facility.' Such a facility includes: a cellular telephone number; a specific cellular telephone identified by its electronic serial number (ESN); an Internet user account or e-mail address; or an Internet Protocol (IP) address, port number, or similar computer network address or range of addresses. ... Moreover, the section clarifies that orders for the installation of pen register and trap and trace devices may obtain any non-content information -- 'dialing, routing, addressing, and signaling information' -- utilized in the processing or transmitting of wire and electronic communications. [Footnote 1: Thus, for example, non-content information contained in the 'options field' of a network packet header constitutes 'signaling' information and is properly obtained by an authorized pen register or trap and trace device.] Thus, for example, an order under the statute could not authorize the collection of email subject lines, which are clearly content. Further, an order could not be used to collect information other than 'dialing, routing, addressing, and signaling' information, such as the the portion of a URL (Uniform Resource Locator) specifying Web search terms or the name of a requested file or article."
Technology Mandates. § 222 is also relevant to § 216. It provides that "Nothing in this Act shall impose any additional technical obligation or requirement on a provider of a wire or electronic communication service or other person to furnish facilities or technical assistance. A provider of a wire or electronic communication service, landlord, custodian, or other person who furnishes facilities or technical assistance pursuant to section 216 shall be reasonably compensated for such reasonable expenditures incurred in providing such facilities or assistance." Rep Bob Goodlatte (R-VA) and Rep. Rick Boucher (D-VA) had this language inserted because of their concern about the history of the Communications Assistance for Law Enforcement Act (CALEA). Congress passed this Act in 1994 to enable law enforcement authorities to maintain their existing wiretap capabilities in new telecommunications devices. The Congress had cell phones in mind. It provides that wireline, cellular, and broadband PCS carriers must make their equipment capable of certain surveillance functions. However, the FBI has since sought an implementation of CALEA that expands surveillance capabilities beyond those provided in the statute. This has imposed a financial burden upon service providers, and hence, their customers.
Key Tech Related Provisions of the Anti Terrorism Bill
10/26. HR 3162 is named the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT ACT). It is a huge and broad bill that covers immigration, money laundering, relief for victims of terrorism, and foreign intelligence. It also affects surveillance of Internet communications. See, article titled "Pen Registers and Trap and Trace Devices," above. However, there are numerous other tech related provisions. Some of the key provisions are summarized below.
Predicate Offenses for Wiretaps. HR 3126 expands the list of crimes which can serve as the basis for issuance of Title III wiretap orders. § 201 adds crimes relating to terrorism to the list of predicate offenses for the issuance of a wiretap order. § 202 adds crimes relating to computer fraud and abuse to the list of predicate offenses for the issuance of a wiretap order.
Voice Mail. § 209 allows the seizure of voice mail messages pursuant a warrant.
Subpoenas to Electronic Communications Service Providers. § 210 expands the types of records that law enforcement agencies (LEAs) may obtain, pursuant to a subpoena, from electronic communications service providers. It requires service provides to produce "name", "address", "local and long distance telephone connection records, or records of session times and durations", "length of service (including start date) and types of service utilized", "telephone or instrument number or other subscriber number or identity, including any temporarily assigned network address", and "means and source of payment for such service (including any credit card or bank account number)". Currently, users can register with ISPs with false names. This section enables LEAs to establish a user's identity through his method of payment.
Cable is Covered. § 211 provides that laws regarding interception and disclosure of wire and electronic communications apply to cable service providers when they provide telephony or Internet access services. However, this section still excepts "records revealing cable subscriber selection of video programming from a cable operator."
Computer Trespassers. § 217 expands LEAs' authority to intercept computer trespasser communications. It provides that "It shall not be unlawful under this chapter for a person acting under color of law to intercept the wire or electronic communications of a computer trespasser transmitted to, through, or from the protected computer, if (I) the owner or operator of the protected computer authorizes the interception of the computer trespasser's communications on the protected computer; (II) the person acting under color of law is lawfully engaged in an investigation; (III) 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 (IV) such interception does not acquire communications other than those transmitted to or from the computer trespasser." This section is intended to enable LEAs to come to the assistance of companies, universities, and other entities that are subject to distributed denial of service, or other, attacks.
Four Year Sunset. § 224 provides a four year sunset that applies to some, but not all, sections of the bill. It does apply to §§ 201 and 202 (expanding the list of predicate offenses for wiretaps), 209 (voice mail), 210 (scope of subpoenas for electronic communications service providers), and 217 (computer tresspasser information). The sunset provision does not apply to § 216 (expansion of pen register and trap and trace authority), § 211 (cable services), or § 222 (no technology mandates).
More Anti Terrorism Act News
10/26. The Department of Justice released a redacted copy of a document [PDF] titled "Field Guidance on New Authorities: Enacted in the 2001 Anti Terrorism Legislation". This is a detailed summary of HR 3162, the USA PATRIOT Act, which was signed into law by President Bush on October 26. The Department of Justice put out a short release.
Others have written summaries and commentaries. Sen. Patrick Leahy (D-VT), Chairman of the Senate Judiciary Committee, has a section by section summary of the entire bill. See also, short CDT criticism and summary and ACLU criticism and summary of the electronic surveillance provisions.
Free Trade and Trade Promotion Authority
10/26. The Progressive Policy Institute (PPI), a New Democrats think tank, released a report [PDF] titled "The Facts About American Trade and a Debate That Misses the Point". The report states that during the 1950s and 1960s natural resource products and basic manufactures made up the majority of U.S. imports and exports. However, by the 1990s, information technologies led U.S. exports. The report states that "semiconductors, computers, and high tech services dominate our world trade." The report concludes that the current debate over the appropriate place of labor and environmental standards in trade agreements fails to grasp the basic questions -- how to "give Americans the education, training and other tools necessary to compete in such an economy" and "how to best develop the infrastructure of rules and agreements that will fit a world economy in which America's greatest opportunities and advantages lie in newly emerging industries." The report was written by Edward Gresser and Sarah West.
FTC Announces NPRM to Extend Children's Online Privacy Protection Rule
10/26. The Federal Trade Commission (FTC) announced a notice of proposed rulemaking (NPRM) regarding its Children's Online Privacy Protection Rule. It proposes to extend the time period during which web site operators may use an e-mail message from the parent, coupled with additional steps, to obtain verifiable parent consent for the collection of personal information from children for internal use by the web site operator. The current rule expires on April 21, 2002. The FTC proposes to extend this until April 21, 2004. The deadline to submit comments to the FTC is November 30, 2001. See, FTC release and notice to be published in the Federal Register.
FCC Commissioner Martin Addresses Broadband Policy
10/26. FCC Commissioner Kevin Martin gave a speech titled "Framework for Broadband Deployment" at a NARUC convention in northern Virginia. He advocated facilities based competition, less taxation of broadband, a rocket docket for enforcement proceedings, and fewer state, local and federal regulations.
Martin stated that "Encouraging broadband deployment should be a fundamental priority of the Commission and government in general." But, he said, "I am not speaking of making industrial policy. Rather, I think the government should be focusing on eliminating disincentives to broadband deployment that already exist."
Facilities Based Competition. He argued that facilities based competition, rather than requiring sharing of facilities, is the best way to promote broadband deployment. He stated that "In the past, the Commission adopted a framework that may have discouraged facilities based competition, allowing competitors to use every piece of the incumbents' network at super efficient prices. This regime creates significant disincentives for the deployment of new facilities that could be used to provide broadband. Under such a regime, new entrants have little incentive to build their own facilities, since they can use the incumbents' cheaper and more quickly. And incumbents have some disincentive to build new facilities, since they must share them with all their competitors. The goal of the Telecommunications Act was to establish a competitive and deregulated environment. But to get to true deregulation, we need facilities based competition."
Taxation of Broadband. Martin stated that "at every level, government too often sees broadband deployment and telecommunications more generally as a potential revenue stream." He cited federal and state excise taxes, as well as local franchise fees.
Unnecessary Regulation. Martin stated that "At every level of government, we ought to work to remove regulatory underbrush -- burdensome regulations that may be impeding deployment. For competitive carriers, many of these hurdles occur at the state and local levels. These include local rights of way, permits for zoning and tower siting, and franchise fees that I have already discussed. Many of these local restrictions are the most cumbersome and difficult for broadband providers to navigate through. Some state and local governments -- and the federal government with respect to federal lands -- could be more proactive in facilitating deployment by streamlining these permitting processes."
Open Access Proceeding. Martin also referenced the FCC's cable open access proceeding. The FCC issued a Notice of Inquiry on September 28, 2001, regarding whether the FCC should require providers of broadband Internet access over cable facilities to provide access to competing ISPs. Martin stated that "we ought to complete the cable open access proceeding. Personally, I would be very cautious about applying that type of legacy regulatory regime to a new and innovative service. I believe that we should be striving to achieve regulatory parity by providing deregulatory relief."
Enforcement Rocket Docket. Martin also stated that "We should also consider changing our enforcement procedures to make an effective and reliable rocket docket -- that all parties can use to resolve disputes quickly."
Bruce Mehlman Addresses Broadband
10/26. Bruce Mehlman gave a speech titled "Building Our Broadband Future". He is Assistant Secretary for Technology Policy at the Department of Commerce. He spoke at a NARUC convention.
Regulatory Barriers. He cited a number of state, local and federal government obstacles to broadband deployment, including the expense of obtaining access to rights of way, licensing fees, tower siting restrictions, building codes and zoning regulations. He also cited government regulatory barriers to broadband content, such as local licensing laws and prohibitions on interstate practice of medicine.
Copyright and Broadband. Mehlman stated that "Until industry can resolve concerns over digital rights management and copyright protection for movies, music and games, the biggest drivers of commercial broadband adoption will remain on the sidelines."
Spectrum Management. He also identified spectrum management as an issue, but merely stated that "the FCC and NTIA can lead careful examinations of federal spectrum policies to maximize the efficiency with which we manage this precious resource."
However, Mehlman concluded that "I look to technology solutions more than policy fixes to get broadband to all Americans."
4th Circuit Affirms in Boyle v. USPTO
10/26. The U.S. Court of Appeals (4thCir) issued its short unpublished opinion in Boyle v. USPTO, a trademark case. The Solicitor of the USPTO denied John Boyle's request to depose a trademark examiner as a third party witness. Boyle filed a complaint in the U.S. District Court (EDVa) against the USPTO. The District Court dismissed his action. He appealed. The Court of Appeals affirmed.
7th Circuit Rules in Identity Theft Case
10/26. The U.S. Court of Appeals (7thCir) issued its opinion in USA v. Monteiro, an appeal from a sentencing condition in an identity theft case. Joel Monteiro is a career fraud artist. He used the identities of numerous other persons to fraudulently obtain credit accounts. He then made purchases, including computers from Sears, equipment from Ameritech, and services from MCI WorldCom. He was indicted on four counts of mail fraud in violation of 18 U.S.C. § 1341 and one count of access device fraud in violation of 18 U.S.C. § 1029(a)(2) and (c)(1)(b). However, he was allowed to plead to only one count of access device fraud. The District Court sentenced him to 33 months of imprisonment. It also sentenced him to serve a three year term of supervised release, with the condition that his "person, residence, and vehicle shall be subject to search and seizure upon demand of any law enforcement officer." He appealed the condition. The Appeals Court vacated and remanded.
People and Appointments
10/26. President Bush announced his intent to nominate Richard Russell to be Associate Director of the Office of Science and Technology Policy (OSTP). Russell has been Chief of Staff of the OSTP since January. He previously worked for the House Science Committee. The OSTP is a part of the Executive Office of the President. See, White House release.
10/26. Michael Robinson was named Director of the SEC's Office of Public Affairs, Policy Evaluation, and Research. Previously, he was Vice President of Corporate Communications at the investment firm of Friedman Billings Ramsey. Before that, he was a spokesman for Mobil, and the National Association of Securities Dealers. See, SEC release.
10/26. The USPTO published a notice [PDF] in the Federal Register announcing appointments to its Performance Review Board. See, Federal Register, Vol. 66, No. 208, October 26, 2001, at page 54234.

Go to News Briefs from October 21-25, 2001.