News from May 26-31, 2002

District Court Holds Part of Children's Internet Protection Act Unconstitutional
5/31. A three judge panel of the U.S. District Court (EDPenn) issued its opinion in American Library Association v. U.S., finding unconstitutional library related provisions of the Children's Internet Protection Act (CIPA). The Act requires, among other things, that schools and libraries receiving e-rate subsidies certify that they are using a "technology protection measure" that prevents library users from accessing "visual depictions" that are "obscene," "child pormography," and in the case of minors, "harmful to minors." The Court, applying strict scrutiny First Amendment free speech analysis, held that the portion of the statute affecting libraries receiving e-rate subsidies is unconstitutional. However, the CIPA, as it applies to schools, remains unaffected by this opinion. The Court also held unconstitutional language in the CIPA amending the Museum and Library Services Act. The Court issued its findings of fact, legal analysis, and order in one lengthy release.
E-Rate. The e-rate is an two and a half billion dollar per year program controlled by the Federal Communications Commission (FCC) under its universal service mandate. See, 47 U.S.C. § 254, and the FCC's schools and libraries web page. As implemented by the FCC, the e-rate program provides subsidies to schools, libraries and rural health clinics for telecommunications services, Internet access, and internal connections. The CIPA was passed by the Congress as a result of efforts by Sen. John McCain (R-AZ), Sen. Ernest Hollings (D-SC), and others. It conditions receipt of e-rate subsidies on efforts to restrict access to Internet porm.
Relevant Provisions of the Statute. Section 1721 of the CIPA pertains to the e-rate program. Section 1721(b) provides that "a library having one or more computers with Internet access may not receive services at discount rates under paragraph (1)(B) unless the library --- (I) submits to the Commission the certifications described in subparagraphs (B) and (C); and (II) submits to the Commission a certification that an Internet safety policy has been adopted and implemented for the library under subsection (l); and (III) ensures the use of such computers in accordance with the certifications." Subsection B, in turn, addresses the "Certification With Respect to Minors". The library must certify that it "is enforcing a policy of Internet safety that includes the operation of a technology protection measure with respect to any of its computers with Internet access that protects against access through such computers to visual depictions that are --- (I) obscene; (II) child pornography; or (III) harmful to minors". The library must also certify that it "is enforcing the operation of such technology protection measure during any use of such computers by minors." Subsection C, in turn, addresses "Certification With Respect to Adults". It parallels Subsection B. However, it omits the reference to materials that are harmful to minors. Section 1712 of the CIPA pertains to the Museum and Library Services Act.
Analysis of the Court. The Court found as fact that "thousands of Web pages containing protected speech are wrongly blocked by the four leading filtering programs, and these pages represent only a fraction of Web pages wrongly blocked by the programs." The Court concluded that the strict scrutiny test applies. That is, "a public library's use of filtering software is permissible only if it is narrowly tailored to further a compelling government interest and no less restrictive alternative would serve that interest." Applying this test, the Court concluded that "Because the filtering software mandated by CIPA will block access to substantial amounts of constitutionally protected speech whose suppression serves no legitimate government interest, we are persuaded that a public library's use of software filters is not narrowly tailored to further any of these interests."
The Court held that "the library plaintiffs must prevail in their contention that CIPA requires them to violate the First Amendment rights of their patrons, and accordingly is facially invalid ... In view of the limitations inherent in the filtering technology mandated by CIPA, any public library that adheres to CIPA's conditions will necessarily restrict patrons' access to a substantial amount of protected speech, in violation of the First Amendment. Given this conclusion, we need not reach plaintiffs' arguments that CIPA effects a prior restraint on speech and is unconstitutionally vague. Nor do we decide their cognate unconstitutional conditions theory ..."
Order of the Court. The Court also issued an order which states that "(1) judgment is entered in favor of the plaintiffs and against the defendants, declaring that §§ 1712(a)(2) and 1721(b) of the Children's Internet Protection Act, 20 U.S.C. § 9134(f) and 47 U.S.C. § 254(h)(6), are facially invalid under the First Amendment to the United States Constitution; and (2) the United States, Michael Powell, in his official capacity as Chairman of the Federal Communications Commission, the Federal Communications Commission, Beverly Sheppard, in her official capacity as Acting Director of the Institute of Museum and Library Services, and the Institute of Museum and Library Services are permanently enjoined from withholding federal funds from any public library for failure to comply with §§ 1712(a)(2) and 1721(b) of the Children's Internet Protection Act, 20 U.S.C. § 9134(f) and 47 U.S.C. § 254(h)(6)."
Direct Appeal to the Supreme Court. As required by the CIPA, at Section 1741, the case was heard on an expedited basis by a three judge panel of the U.S. District Court. Plaintiffs filed a complaint in the U.S. District Court for the Eastern District of Pennsylvania, a venue disposed to finding Congressional statutes unconstitutional on First Amendment grounds. Judges Becker, Fullam and Bartle presided. Judge Becker wrote the opinion. The CIPA further provides that a holding by the three judge panel that any part of the CIPA is unconstitutional "shall be reviewable as a matter of right by direct appeal to the Supreme Court".
Reaction. The American Civil Liberties Union praised the opinion in a release. The Family Research Council (FRC) lamented the opinion in a release.
The Information Technology Association of America (ITAA) President Harris Miller stated in a release that "The court's decision voids the proscriptive approaches that would have placed the Federal government squarely in the role of determining Internet content management for libraries ... Many organizations, including schools and libraries, have already voluntarily deployed software filtering tools to block out objectionable content and to improve productivity. We continue to believe that burdensome regulations from Washington, D.C. are not needed by software filter buyers or sellers, and this decision advances that belief."
More Court Opinions
5/31. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in United Computer Systems v. AT&T, a case involving an arbitration clause in a software licensing agreement. The Appeals Court affirmed in part, reversed in part, and remanded to the District Court with instructions to compel arbitration.
5/31. The U.S. Court of Appeals (4thCir) issued its opinion in Baltimore Gas & Electric v. U.S., dismissing for lack of jurisdiction an appeal from a District Court opinion regarding a state public utilities commission's regulatory authority over contracts awarded by the U.S. Army. The Maryland Public Service Commission (MPSC), an intervenor in this action, challenged the U.S. Army's solicitation of bids for the right to purchase and operate the electricity and natural gas distribution systems at Fort Meade, Maryland, without providing in its solicitation that any successful bidder would be required to submit to the MPSC's regulatory authority. The U.S. District Court (DMd) held that such a provision is not required. The MPSC appealed. The Court of Appeals dismissed the appeal on the grounds that the MPSC lacks standing because it is not an interested party under the statute that governs bid protest actions, 28 U.S.C. § 1491.
Suris Sentenced for Criminal Copyright Theft
5/31. The U.S. District Court (DC) sentenced Yaroslav Suris to two months incarceration for one felony count of criminal copyright infringement in violation of 17 U.S.C. § 506(a)(1) and 18 U.S.C. § 2319(b)(1). Suris made duplicate copies of software, and then sold them over the Internet at prices far below retail prices.
The infringed software included Adobe's Acrobat 4.0, Page Mill, and Photoshop, Corel's Draw 9, and Macromedia's Flash 9, Freehand 8.0, and Autocad 2000. In addition to the two month in jail, Judge Thomas Jackson sentenced Suris to an additional 14 months of home detention -- which is where he duplicated the software. See, CCIPS release and SIIA release.
EPA Proposes Rule Change Affecting Computer Monitors
5/31. The Environmental Protection Agency (EPA) announced that it is proposing changes to its rules regarding computer monitors and televisions that contain lead. On May 29, the EPA issued a release and a draft of a notice [101 pages in PDF] to be published in the Federal Register.
The EPA draft notice states that "Many used cathode ray tubes (CRTs) and items of mercury-containing equipment are currently classified as characteristic hazardous wastes under the Resource Conservation and Recovery Act (RCRA). They are therefore subject to the hazardous waste regulations of RCRA Subtitle C unless they come from a household or a conditionally exempt small quantity generator. Today, the Environmental Protection Agency (EPA) proposes and seeks comment on an exclusion from the definition of solid waste which would streamline RCRA management requirements for used cathode ray tubes (CRTs) and glass removed from CRTs sent for recycling. In today's notice, the Agency also clarifies the status of used CRTs sent for reuse. In addition, EPA proposes and seeks comment on streamlining management requirements for used mercury containing equipment by adding it to the federal list of universal wastes."
The EPA release states that "A typical computer monitor may contain up to eight pounds of lead. EPA estimates that over 250 million computers in this country will be retired from use over the next five years. The EPA proposal would encourage more reuse and recycling of these computers."
As of Friday, May 31, the EPA had not yet published a notice of this proposed rule in the Federal Register. Public comments on the proposed rule will be due 60 days after publication in the Federal Register.
The Electronics Industry Association (EIA) commended the EPA action. It stated in a release dated May 31 that "This proposed rule is a key step in the right direction. By removing used electronics containing CRTs and mercury lamps from certain hazardous waste regulations when they are recycled, the EPA is providing a strong economic incentive that will promote the development of more collection and recycling opportunities for used electronics within the United States."
The EIA added that "Under the proposed rule, facilities that collect and transport used electronics will benefit from reduced transportation costs and reduced permitting requirements -- both of which will reduce overall recycling costs, providing economic incentives for the collection and siting of recycling facilities. The net benefit is that consumers will have more opportunities to recycle used electronics."
More News
5/31. The Copyright Office published a notice in the Federal Register regarding a final rule changing fees charged by the Copyright Office. See, Federal Register, May 31, 2002, Vol. 67, No. 105, at Pages 38003 - 38006.
5/31. Qwest announced that it retained KPMG as its independent auditor for 2002. Its previous auditor was Arthur Andersen. See, Qwest release.
New DOJ Investigation Guidelines Address Data Mining and Internet Searches
5/30. The Department of Justice (DOJ) released new investigative guidelines to be used by the Federal Bureau of Investigation (FBI) in terrorist related, and other, matters. These guidelines cover many topics, including information systems, data mining, and Internet searching.
Attorney General John Ashcroft announced the guideline changes on May 30. See, Ashcroft statement. See also, DOJ memorandum [PDF] titled "Attorney General's Guidelines: Detecting and Preventing Terrorist Attacks", and DOJ memorandum [PDF] titled "Shifting from Prosecution to Prevention: Redesigning the Justice Department to Prevent Future Acts of Terrorism".
He stated that these revised guidelines have four overriding principles. First, "the war against terrorism is the central mission and highest priority of the FBI". Second, "terrorism prevention is the key objective under the revised guidelines". Third, "unnecessary procedural red tape must not interfere with the effective detection, investigation, and prevention of terrorist activities". Fourth, "the FBI must draw proactively on all lawful sources of information to identify terrorist threats and activities".
Ashcroft elaborated that "Under the current guidelines, FBI investigators cannot surf the web the way you or I can. Nor can they simply walk into a public event or a public place to observe ongoing activities. They have no clear authority to use commercial data services that any business in America can use. These restrictions are a competitive advantage for terrorists who skillfully utilize sophisticated techniques and modern computer systems to compile information for targeting and attacking innocent Americans."
He also stated that "The guidelines defining the general rules for FBI investigations, for example, were first issued over 20 years ago. They derive from a period in which Soviet communism was the greatest threat to the United States, in which the Internet did not exist, and in which concerns over terrorist threats to the homeland related mainly to domestic hate groups."
The DOJ also released the text of new guidelines. See, for example, The Attorney General's Guidelines on General Crimes, Racketeering Enterprise and Terrorism Enterprise Investigations [PDF].
This document provides that "In order to carry out its central mission of preventing the commission of terrorist acts against the United States and its people, the FBI must proactively draw on available source of information to identify terrorist threats and activities."
The new guidelines continue that "The FBI is authorized to operate and participate in identification, tracking, and information systems for the purpose of identifying and locating terrorists, excluding or removing from the United States alien terrorists and alien supporters of terrorist activity as authorized by law, assessing and responding to terrorist risks and threats, or otherwise detecting, prosecuting, or preventing terrorist activities. Systems within the scope of this paragraph may draw on and retain pertinent information from any source permitted by law, including information derived from past or ongoing investigative activities; other information collected or provided by governmental entities, such as foreign intelligence information and lookout list information; publicly available information, whether obtained directly or through services or resources (whether nonprofit or commercial) that compile or analyze such information; and information voluntarily provided by private entities." (Parentheses in original.)
The new guidelines also state that the "The FBI is authorized to carry out general topical research, including conducting online searches and accessing online sites and forums as part of such research on the same terms and conditions as members of the public generally. ``General topical research´´ under this paragraph means research concerning subject areas that are relevant for the purpose of facilitating or supporting the discharge of investigative responsibilities. It does not include online searches for information by individuals' names or other individual identifiers, except where such searches are incidental to topical research, such as searching to locate writings on a topic by searching under the names of authors who write on the topic, or searching by the name of a party to a case in conducting legal research."
Finally, these guidelines state that "For the purposes of detecting or preventing terrorism or other criminal activities, the FBI is authorized to conduct online search activity and to access online sites and forums on the same terms and conditions as member of the public generally."
The DOJ also released new guidelines with the following titles: FBI Undercover Operations [PDF], Confidential Informants [PDF], and Lawful, Warrantless Monitoring of Verbal Communications [PDF].
Sen. Charles Grassley (R-IA), a member of the Senate Judiciary Committee, had this reaction: "Some of the current restrictions on investigations don't make sense. So, as Congress did with the Patriot Act last fall, it's logical to make some changes and especially those changes that empower field agents. That said, any time more power is given, Congress needs to be all the more vigilant in exercising its constitutional responsibility of oversight. Along with greater authority there must be greater scrutiny. Congress for too long has given the FBI too long a leash. The FBI should be prepared for tough questions from Capitol Hill about its use of all the new tools it's been given."
The Center for Democracy and Technology (CDT) released its analysis of the new guidelines. It stated that "The FBI is using the terrorism crisis as a cover for a range of changes, some of which have nothing to do with terrorism."
It also stated that "The online surfing provisions, for example, relate not only to terrorism cases, but to all other investigation -- drugs, white collar crime, public corruption, and copyright infringement."
The CDT argued that "The expanded surveillance and use of data mining could be written off as just a waste of money, but for two paramount problems: the changes are likely to make the FBI less efficient in preventing terrorism, by diverting resources down rat-holes of fruitless investigations; and the DOJ has proven its determination since September 11 to arrest people based on innocent coincidences ..."
The CDT also stated that "The FBI was never prohibited from surfing the Internet or using commercial data mining services - the FBI has long been a major customer of many private information systems. But in the past, the search had to be related to some investigation. ... The new changes allow the data  mining technique ... as the basis for generating the suspicion of criminal conduct in the first place."
The ACLU condemned the new guidelines. See, release.
7th Circuit Rules in Copyright and Fair Use Case
5/30. The U.S. Court of Appeals (7thCir) issued its opinion in Ty v. Publications International, a copyright infringement and fair use case involving Beanie Babies.
Ty Inc. manufactures Beanie Babies. It holds copyrights to these as "sculptural works". Publications International, Ltd. (PIL) publishes books, including For the Love of Beanie Babies and Beanie Babies Collector's Guide, which contain pictures of Beanie Babies.
Ty filed a complaint in U.S. District Court (NDIll) against PIL alleging copyright and trademark infringement. PIL conceded that the Beanie Babies are copyrighted, and that its books are derivative works, but asserted the affirmative defense of fair use. The District Court ruled on summary judgment that the copying was not fair use, and granted Ty an injunction on the copyright claim.
The Appeals Court reversed and remanded. Judge Richard Posner wrote the opinion, which included an application of legal precedent on fair use, and the distinction between complementary and substitutional copying, to the facts of this case. In addition, the opinion provides an economic analysis of copyright protection and the fair use doctrine. The Court concluded that the issue was not appropriate for summary judgment, reversed, and remanded for further proceedings in light of its opinion.
The Court also addressed the issue of whether it could hear an interlocutory appeal of an injunction on a copyright infringement claim, when the District Court had not yet decided a related trademark claim arising under the same set of facts. It concluded that it could, noting that the only issue on appeal was the fair use defense.
Panel Debates ROW Obstacles to Broadband Deployment
5/30. The Congressional Internet Caucus Advisory Committee hosted a panel discussion titled "Speeding Broadband Deployment By Balancing of Rights of Way Interests" on Capitol Hill.
The speakers were Martin Stern of the Telecommunications Industry Rights of Way Working Group (I-ROW), Marilyn Praisner, a member of the Montgomery County Council, Robert Nelson, a Commissioner on the Michigan Public Service Commission, and Sandy Wilson, VP of Public Policy at Cox Enterprises.
Stern stated that some local government entities are obstructing broadband deployment by delaying approval of access to rights of way by service providers, by demanding unreasonable fees, and by demanding concessions unrelated to the right of way. He advocated federal action to limit local authority, either through Congressional legislation, or a Federal Communications Commission (FCC) proceeding.
In contrast, Praisner argued that local governments have a legitimate role to play in the management of public rights of way, and their authority should not be preempted or limited by state or federal legislation or other proceedings.
Nelson discussed the recently enacted Michigan bill to streamline the process for authorizing access to rights of way. It is titled the "Metropolitan Extension Telecommunications Rights of Way Oversight Act". See also, Michigan Legislature's bill summary [PDF].
He stated that the Michigan statute sets a uniform per linear foot right of way fee that limits all local government entities. The fee is constant regardless of how many lines the provider has. Government entities must act within 45 days on all applications.
Stern stated that "there are situations where government entities go beyond management, and seek unrelated concessions, particularly, given their leverage over providers." He stated that local governments have leverage because time is critical in deploying broadband networks, because "rights of way and public lands access is an essential input to which there is no substitute."
He continued that "what we have found is that a sufficient number of these entities have really held up deployment, or have tried to extract unreasonable fees, or have tried to impose an additional level of regulation unrelated to the user rights of way, that has actually had a demonstrable impact on deployment."
Stern also addressed 47 U.S.C. § 253, which provides in part that "No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service." However, it also provides that "Nothing in this section affects the authority of a State or local government to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers ..."
Stern said that "it is difficult to get an injunction under Section 253". He continued that there are ambiguities in the statute that have been exploited by local governments, such as what constitutes "fair and reasonable", and whether broadband data networks are covered. He suggested that either Congress amend the statute, or that the FCC initiate a proceeding to amend its rules, or to issue a guidance. He concluded that "it is an issue of national scope that demands a national answer".
The luncheon was held in the Capitol Building. The House and Senate are in recess. Many members of the audience were Congressional staff.
People and Appointments
5/30. Antonia Chion was named Associate Director of the Division of Enforcement of the Securities and Exchange Commission (SEC). She succeeds Linda Thomsen. See, SEC release.
5/30. John Morrissey, Deputy Chief Accountant of the Securities and Exchange Commission (SEC), will leave the SEC. See, SEC release.
More News
5/30. The European Parliament voted to approve a directive [PDF] concerning the processing of personal data and the protection of privacy in the electronic communications sector. See, EU release.
5/30. The Securities and Exchange Commission (SEC) announced that its web site now provides free, real time access to its EDGAR database of corporate filings. See, SEC release.
JEC Releases Cyber Security Report
5/29. The Joint Economic Committee released a report [134 pages in PDF] titled "Security in the Information Age: New Challenges, New Strategies". The report was produced at the request of Sen. Bob Bennett (R-UT). Sen. Bennett also sent a copy of the report, and a letter, to Tom Ridge, Director of the Office of Homeland Security, urging that cyber security must be a part of national security. See also, Bennett release and JEC release.
Federal Circuit Rules on Federal Jurisdiction in Patent License Disputes
5/29. The U.S. Court of Appeals (FedCir) issued its opinion in Pixton v. B&B Plastics, a case regarding federal jurisdiction in patent disputes.
Dennis Pixton holds U.S. Patent Nos. 5,025,586 and 5,129,175, both of which pertain to plastic fishing lures. Pixton granted B&B Plastics an exclusive license to the patents. The license agreement provided for royalty payments, and that if sales dropped to such a level that the minimum royalty would not be met, B&B could cover the shortfall, and if B&B chose not to cover the shortfall, Pixton could either make the agreement non-exclusive or terminate it. Pixton alleged breach of the agreement, notified B&B of its termination, and demanded that B&B cease infringing activity. B&B argued that the agreement was still in effect.
Pixton filed a complaint in U.S. District Court (SDFl) against B&B and others alleging patent infringement. The District Court dismissed for lack of federal jurisdiction, holding that the complaint sounded in contract law, and did not arise under the patent laws.
The Appeals Court reversed. Relying on Air Products & Chemicals v. Reichhold Chemicals, 755 F.2d 1559, (Fed. Cir. 1985), the Court wrote that "Pixton's well- pleaded complaint expressly sets out an action for patent infringement. The issue is not ownership; this is an action for patent infringement in which the defendant has asserted the defense of license. Jurisdiction in the federal courts is not lost simply because the most efficient approach at trial may be to address the license defense first." The Court of Appeals vacated, and remanded to the U.S. District Court.
NTIA Director Discusses Spectrum Policy
5/29. National Telecommunications and Information Administration (NTIA) Director Nancy Victory gave a speech titled "Migrating to Advanced Wireless Systems Environments" at an Asia Pacific Economic Cooperation (APEC) meeting in Shanghai, China.
She offered several broad policy recommendations. "First, spectrum policies must be flexible to allow service growth and evolution. Technology changes much too fast for government to timely modify its regulations with every nuance. Moreover, it is impossible for government always to predict the direction of technological development or of consumer demand. Rather, government should strive to set minimal technical standards -- only those needed to minimize interference or permit necessary interoperability."
"Second, government should continually review its existing spectrum policies to ensure they are still necessary and appropriate, given changes in technology and market demands", said Victory. "Third, transparency and predictability of regulation is essential to create the right environment for investment in wireless technology. The acquisition of spectrum and the deployment of wireless facilities generally require substantial investment prior to the time revenue can begin to be collected. In order to make this up-front commitment, spectrum users -- whether they be private sector or government users -- need to be comfortable that they know the rules of the road and that any changes in policy will not be precipitous, but rather preceded by broad information gathering and open debate."
Finally, she stated that "spectrum policies should be designed as much as possible to minimize impediments to competition and market entry, consistent of course with interference protection objectives. Competition and the influx of new market participants is a significant factor in driving innovation, variety, and lower costs to customers -- things that are beneficial to all of our citizens. For this reason, it is important to ensure that market entry and rights of way use policies are open and non-discriminatory."
BSA Releases Survey of Attitudes on Software Piracy
5/29. The Business Software Alliance (BSA) announced that it commissioned a survey of Internet software piracy attitudes and experiences. The BSA stated that "The results uncover a disturbing consumer trend toward piracy and the use of ``situational ethics´´ in determining whether or not to download pirated software."
The BSA stated that the survey shows that "95 percent of Internet users agree that software developers deserve to be rewarded for their efforts" and that "85 percent of users agree that intellectual property rights must be protected so companies continue to invest in research and development". Yet, the BSA stated that the survey found that 25% of Internet users never pay for downloaded software, and 32% seldom pay.
Robert Holleyman, P/CEO of BSA, stated in a release that "This is the first time we've identified end user attitudes about online theft, ... And what we found is a disturbing behavioral trend that violates copyright laws and costs billions of dollars and hundreds of thousands of jobs every year."
The BSA stated that Ipsos Public Affairs conducted the survey. The BSA stated that Ipsos conducted an "online survey of 1,026 Internet users" that was "conducted among a national cross- section of U.S. households". However, neither the BSA's report [2 pages in PDF] nor release asserted that the respondents were randomly selected by the surveyor. Also, neither document produced the text of the questions posed to respondents.
People and Appointments
5/29. Alan Scrime was named Chief of the Office of Engineering and Technology's (OET) Policy and Rules Division (PRD) at the Federal Communications Commission (FCC). The PRD is responsible for promulgating rules pertaining to the allocation of spectrum and technical issues pertaining to radio equipment and electronic devices. The PRD also handles the coordination of all spectrum issues with other federal government entities. See, FCC release [PDF].
More News
5/29. The Federal Trade Commission (FTC) published a notice in the Federal Register that it has issued a Notice of Proposed Rulemaking (NPRM) to amend its Telemarketing Sales Rule (TSR). The new rule would impose user fees on telemarketers, and their seller or telemarketer clients, for their access to the national do  not call registry, if one is implemented. Comments are due by June 28, 2002. See, Federal Register, May 29, 2002, Vol. 67, No. 103, at Pages 37362 - 37369. See also, FTC release.
5/29. The National Telecommunications and Information Administration (NTIA) published a notice in the Federal Register requesting comments on the effectiveness of Internet blocking and filtering technologies. § 1703 of the Children's Internet Protection Act (CIPA) [PDF] directs NTIA to initiate a notice and comment proceeding to evaluate whether currently available Internet blocking or filtering technology protection measures and Internet safety policies adequately address the needs of educational institutions. It also directs NTIA to make recommendations to Congress on how to foster the development of technology protection measures that meet these needs. Comments are due by August 27, 2002. See, Federal Register, May 29, 2002, Vol. 67, No. 103, at Pages 37396 - 37398.
5/29. Quantum Corp and Imation announced that "have settled all legal claims between the companies over the qualification, production and sale of DLTtape media products. As a result of the settlement, Imation has dismissed its antitrust lawsuit against Quantum and Maxell, and Quantum has dismissed its trade secrets lawsuit against Imation. Quantum and Imation also have committed to completing qualification of Imation as a manufacturer of DLTtape media." See, Quantum release and Imation release.
5/29. The U.S. Court of Appeals (FedCir) issued its opinion in Berman v. Housey, affirming the U.S. Patent and Trademark Office Board of Patent Appeals and Interferences judgment in favor of Housey, and dismissing Berman's unpatentability motion as moot.
5/29. The U.S. District Court (WDOkla) sentenced Ricky Joe Nelson to two concurrent 51 month prison terms for conspiracy to distribute controlled drugs through giving prescriptions over the Internet to patients he had never examined, and conspiracy to launder the proceeds. See, CCIPS release.
FBI Releases Carnivore Records
5/28. The Electronic Privacy Information Center (EPIC) stated in a release that "Documents obtained by EPIC under the FOIA show that an FBI anti-terrorism investigation possibly involving Usama bin Laden was hampered by technical flaws in the Bureau's controversial Carnivore Internet surveillance system."
Specifically, one internal FBI memo obtained by the EPIC states that "The software was turned on and did not work correctly. The FBI software not only picked up the E-Mails under the electronic surveillance of the FBI's target, [redaction] but also picked up E-Mails on non-covered targets." As a result, the FBI "destroyed all the E-Mail take, including the take on [redaction]". (The FBI heavily redacted this document before producing it to the EPIC.)
David Sobel, General Counsel of EPIC, submitted a request pursuant to the Freedom of Information Act (FOIA), 5 U.S.C. § 552, to the Department of Justice (DOJ) and Federal Bureau of Investigation (FBI) on July 12, 2000, seeking "the release of all FBI records concerning the system known as 'Carnivore' and a device known as 'EtherPeek' for the interception and/or review of electronic mail (e-mail) messages."
The EPIC filed a complaint in U.S. District Court (DC) against the DOJ and FBI on July 31, 2000, seeking documents pursuant to the FOIA. Sobel is also the lead counsel for EPIC in that suit. Friday, May 24, was a court imposed deadline for production of certain records.
Sobel stated that he received over 500 pages in this production round, much of which was newspaper clippings and congressional testimony. However, he found three pertinent documents, which he published in the EPIC web site as JPG format images.
First, there is an FBI memo dated April 5, 2000, that describes the failure of the software. (This memo is also set out in full below.) Second, there is an April 11 memo posing legal questions pertaining to the "improper capture of data". Third, there is an April 12 memo in response. See also, EPIC's Carnivore page and May 28 release.
The memo does not reference Carnivore. However, it does describe software used by the FBI for e-mail surveillance. The FBI has not publicly stated that it uses any other software for this purpose. Moreover, the FOIA request requested documents pertaining to Carnivore. The memo also does not reference Usama bin Laden. It does, however, reference the "UBL Unit", and its "FISA" target.
The Foreign Intelligence Surveillance Act (FISA) is codified in Title 50 of the U.S. Code (pertaining to "War and National Defense"). See, 50 U.S.C. § 1801 et seq. There are currently three different standards for obtaining different types of court orders authorizing electronic surveillance. A ordinary wiretap order, which enables law enforcement agencies to obtain the content of a phone call or Internet communication, is issued by a judge upon a showing of probable cause. This is often referred to as a Title III order, although, it is covered in Title 18 of the U.S. Code (pertaining to "Crimes and Criminal Procedure"). In contrast, FISA warrants have a much lower standard, but are restricted to foreign intelligence information. Moreover, it extends to "a group engaged in international terrorism". Hence, Al Qaeda is subject to FISA surveillance.
These documents may be relevant to two ongoing debates. First, it may relate to the debate over efforts undertaken by the FBI to investigate terrorist threats prior to September 11, 2001. Second, it may relate to the debate between privacy advocacy groups, such as the EPIC, and the FBI regarding threats to privacy posed by Carnivore.
For example, a FBI web page states that "The Carnivore device provides the FBI with a ``surgical´´ ability to intercept and collect the communications which are the subject of the lawful order while ignoring those communications which they are not authorized to intercept."
Similarly, Kevin DiGregory, a Deputy Assistant Attorney General in the Clinton administration, stated in his prepared testimony before the House Judiciary Committee's Subcommittee on the Constitution on July 24, 2000, that "Carnivore is, in essence, a special filtering tool that can gather the information authorized by court order, and only that information. ... Carnivore is a minimization tool that permits law enforcement strictly to comply with court orders, strongly to protect privacy, and effectively to enforce the law to protect the public interest."
In contrast, EPIC's Sobel stated in a release that "These documents confirm what many of us have believed for two years -- Carnivore is a powerful but clumsy tool that endangers the privacy of innocent American citizens. ... As we suggested when it first became public, Carnivore's use should be suspended until the questions surrounding it finally can be resolved."
Meanwhile, Donald Kerr, Director of the Lab Division at the Federal Bureau of Investigation, also testified at the July 24, 2000, hearing. He stated in his prepared testimony that "terrorist bombers plan their strikes using the Internet".
FBI Memo Re Carnivore Failure
[redaction] FISA-Denver

From: [redaction]
To: BOWMAN, SPIKE (MARION) [redaction]
Date: 4/5/00 5:29 PM
Subject: [redaction]

I just received a call from [redaction] at OIPR. To state that she is unhappy with ITOS and the UBL Unit would be an understatement of incredible proportions. I will try to relate what [redaction] thinks has happened with the above named FISA.

[redaction] secured an ELSUR FISA very quickly on [redaction] at the request of [redaction] states that she was assured that the FBI had special software which could do what the FBI said it could do. In fact [redaction] states that the technical people in Quantico approved the FISA language.

The FBI technical people went to install the FBI software a [redaction] to accomplish the electronic surveillance on March 16.

The software was turned on and did not work correctly. The FBI software not only picked up the E-Mails under the electronic surveillance of the FBI's target, [redaction] but also picked up E-Mails on non-covered targets. The FBI technical person was apparently so upset that he destroyed all the E-Mail take, including the take on [redaction] is under the impression that no one from the FBI [redaction] was present to supervise the FBI technical person at the time. Now the FBI technical people want to run a new software experiment at the carrier to see if it works.

[redaction] states that OIPR was never told that the FBI software was experimental. OIPR was informed that it would work. The FBI technical people are still trying to make it work in [redaction], and want to resume the electronic surveillance. The FBI people in [redaction] also want a physical search warrant to pick up the E-Mails from the carrier, which the FBI picked up on the target, but destroyed.

[redaction] informed me that the FBI does not have the authority to resume electronic surveillance until she receives a written explanation of what has happened and she files something with the court. Obviously, she has no intention of securing a search warrant either until this is straightened out.

When you add this story to the FISA mistakes covered in the E.C. I have prepared to go to the field, and which is in NSLU for signature before it goes to [redaction] for his signature, you have a pattern of occurrences which indicate to OIPR an inability on the part of the FBI to manage its FISAs.

[redaction] and [redaction] please see me ASAP.


cc: [redaction]
Sen. Lieberman to Introduce Broadband Legislation
5/28. Sen. Joe Lieberman (D-CT) gave a speech on developing a national broadband strategy. He stated that he will introduce legislation next week. He spoke at Wind River Systems in Alameda, California.
He stated that "we in government can't let this potentially fertile field of technology lie fallow. We need to make the most of this moment, in which the high speed Internet is on the cusp of catalyzing a quantum leap in our economy. Which is to say, we need to lead, and seed."
He continued that "Unfortunately, the case for making broadband deployment a priority of a national economic strategy has yet to be understood adequately by government. The broadband buck is still stuck on the government's desk -- and with it, thousands of new opportunities and millions of new jobs. Decisions are piling up: on spectrum, competition, rights management, spam, privacy, child protection, and more. These are important issues that need to be resolved, and they need to be resolved comprehensively, with an overarching vision."
He also stated that he will introduce a bill in the Senate "next week" that would require "the Administration to develop a national broadband strategy within six months of passage". He stated he would introduce more legislation in coming months.
He stated that "The follow up legislation I'll propose in the coming months will call on the FCC to develop a regulatory framework to meet the challenges of the next generation Net … propose tax credits for the deployment of advanced broadband … encourage research and development on advanced broadband infrastructure that will enable this technology to reach into all the corners and crevices of the country … and present a program to incentivize research and development on major applications in areas where government plays a central role, including education, healthcare, and e-government." (Dots in original text.)
SEC Sues Operators of Investment Web Site
5/28. The Securities and Exchange Commission (SEC) filed a civil complaint in U.S. District Court (NDGa) against Gold- Ventures Club and Alexander Khamidouline, dba, alleging violation of federal securities laws in connection with the operation of an Internet investment scam.
The complaint states that "Since at least March 2002, the Defendants have offered an investment program through the Gold- Ventures Website, located on the Internet at ( The Defendants' short-term investment program promises an exorbitant 200% return on principal investments of $250.00 to $5000.00 in only 14 days. The Defendants claim to remit a 200% return on the principal invested in a single payment at the end of each 14-day investment term."
The complaint also alleges that defendants used spam to promote their investment scam. The complaint also states that defendants of impersonated an SEC attorney.
The only individual named in the complaint, Khamidouline, is alleged to be a resident of Irkutsk, Russia. The web site is hosted by Earthlink, in Atlanta, Georgia.
The first count of the complaint alleges violation of Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c). The second count alleges violation of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5.
The complaint seeks an injunction against further violation of federal securities laws, an asset freeze, an accounting, disgorgement, and return of investments. It does not seek take down of the web site, or transfer of domain names.
The SEC also announced that it obtained an ex parte temporary restraining order, asset freeze and other relief. See, SEC release.
5th Circuit Affirms in Hugh Symons Group v. Motorola
5/28. The U.S. Court of Appeals (5thCir) issued its opinion in Hugh Symons Group v. Motorola, affirming the District Court's summary judgment in favor of Motorola.
Plaintiff filed a complaint in U.S. District Court (WDTex) against Motorola alleging violation of Texas's Deceptive Trade Practices Act (DTPA) in connection with allegations that Motorola breached an oral contract, and acted fraudulently and with negligent misrepresentation regarding the quality, grade, and characteristics of its MPC 821 microprocessor. Plaintiff had considered using the MPC 821 in the production of a hand held computer. Federal jurisdiction was based upon diversity of citizenship.
The District Court granted summary judgment to Motorola on the grounds that plaintiff was not a consumer within the meaning of the DTPA because it had over $25 million in gross assets (see, § 17.44 of the DTPA), that plaintiff failed to satisfy the statute of frauds, and that the tort claims sounded in contract and failed because there was no breach of contract. The Court of Appeals affirmed.
Supreme Court Reverses in Festo
5/28. The Supreme Court issued its opinion [PDF] in Festo v. Shoketsu Kinzoku Kogyo Kabushiki, a patent case regarding the doctrine of equivalents and the rule of prosecution history estoppel. The unanimous Supreme Court reversed the Court of Appeals and remanded. The Court again affirmed the doctrine of equivalents, articulated its purpose, held that the narrowing of a patent claim may give rise to prosecution history estoppel (but that it does not absolutely bar application of the doctrine of equivalents), and listed circumstances under which it might or might not operate as a bar.
This is a nearly decade old legal dispute over the extent of patent protection to be afforded to the holder of two patents pertaining to magnetic cylinder technology. However, there are broad ramifications for many other patent holders, and producers of items similar to those described in these patents.
Complaint. The Festo Corporation is the owner of U.S. Patent No. 4,354,125 and U.S. Patent No. B1 3,779,401. During the prosecution of these patents before the U.S. Patent and Trademark Office (USPTO), Festo amended its applications. Shokestsu later sold products similar, but not identical, to those disclosed in Festo's patents. Festo filed a complaint in the U.S. District Court (DMass) against Shoketsu alleging infringement of its two patents, under the doctrine of equivalents.
Doctrine of Equivalents. The doctrine of equivalents provides that a product or process that does not literally infringe upon the express terms of a patent claim may nevertheless be found to infringe if there is an equivalence between the elements of the accused product or process and the claimed elements of the patented invention. That is, as the Supreme Court stated, "a patent protects its holder against efforts of copyists to evade liability for infringement by making only insubstantial changes to a patented invention."
The Supreme Court recently affirmed the doctrine. Justice Thomas wrote in Warner Jenkinson v. Hilton Davis Chemical, 520 U.S. 17 (1997), that this doctrine provides that "a product or process that does not literally infringe upon the express terms of a patent claim may nonetheless be found to infringe if there is ``equivalence´´ between the elements of the accused product or process and the claimed elements of the patented invention." See also, Graver Tank v. Linde Air Products, 339 U.S. 605 (1950).
The doctrine of equivalents is not codified in the Patent Act. However, as the Court noted in Warner Jenkinson, "Congress can legislate the doctrine of equivalents out of existence any time it chooses."
Prosecution History Estoppel. The rule of prosecution history estoppel provides that in determining the range of equivalents, the Court may consider the history of the patent application before the USPTO. That is, as the Supreme Court stated, the USPTO "may have rejected an earlier version of the patent application on the ground that a claim does not meet a statutory requirement for patentability. ... When the patentee responds to the rejection by narrowing his claims, this prosecution history estops him from later arguing that the subject matter covered by the original, broader claim was nothing more than an equivalent."
Case History. The District Court found infringement. The U.S. Court of Appeals (FedCir) affirmed the judgment of the District Court. The Supreme Court granted certiorari, vacated, and remanded to the Court of Appeals decision in light of Warner Jenkinson. A three judge panel of the Appeals Court affirmed in part and vacated and remanded in part the judgment of the District Court. An en banc panel of the Appeals Court issued its divided opinion on November 20, 2000, reversing the District Court judgment of infringement. The Appeals Court en banc held that an estoppel arises from any amendment that narrows a claim to comply with the Patent Act, not only from amendments made to avoid prior art. In addition, it held that when estoppel applies, it stands as a complete bar against any claim of equivalence for the element that was amended.
The Supreme Court again granted certiorari. The Solicitor General submitted an amicus curiae brief arguing that the Appeals Court correctly ruled that a patent claim amendment that narrows the scope of a claim gives rise to prosecution history estoppel, but the Court erred in holding that prosecution history estoppel completely precludes application of the doctrine of equivalents. The Supreme Court heard oral argument on January 7, 2002. See, transcript [PDF].
Supreme Court. Justice Anthony Kennedy wrote the opinion for a unanimous Court. He began by observing that "The language in the patent claims may not capture every nuance of the invention or describe with complete precision the range of its novelty. If patents were always interpreted by their literal terms, their value would be greatly diminished. Unimportant and insubstantial substitutes for certain elements could defeat the patent, and its value to inventors could be destroyed by simple acts of copying."
The Court acknowledged that "the doctrine of equivalents renders the scope of patents less certain. It may be difficult to determine what is, or is not, an equivalent to a particular element of an invention." However, it added that these concerns "are not new", and the Court has continuously upheld the doctrine.
The Court held that "Prosecution history estoppel requires that the claims of a patent be interpreted in light of the proceedings in the PTO during the application process. Estoppel is a ``rule of patent construction´´ that ensures that claims are interpreted by reference to those ``that have been cancelled or rejected.´´ ... The doctrine of equivalents allows the patentee to claim those insubstantial alterations that were not captured in drafting the original patent claim but which could be created through trivial changes. When, however, the patentee originally claimed the subject matter alleged to infringe but then narrowed the claim in response to a rejection, he may not argue that the surrendered territory comprised unforeseen subject matter that should be deemed equivalent to the literal claims of the issued patent." (Citations omitted.)
The Court reasoned that "A rejection indicates that the patent examiner does not believe the original claim could be patented. While the patentee has the right to appeal, his decision to forgo an appeal and submit an amended claim is taken as a concession that the invention as patented does not reach as far as the original claim."
The Court then addressed what kinds of amendments that may give rise to estoppel. It held that "Estoppel arises when an amendment is made to secure the patent and the amendment narrows the patent's scope. If a § 112 amendment is truly cosmetic, then it would not narrow the patent's scope or raise an estoppel. On the other hand, if a § 112 amendment is necessary and narrows the patent's scope -- even if only for the purpose of better description -- estoppel may apply. A patentee who narrows a claim as a condition for obtaining a patent disavows his claim to the broader subject matter, whether the amendment was made to avoid the prior art or to comply with § 112. We must regard the patentee as having conceded an inability to claim the broader subject matter or at least as having abandoned his right to appeal a rejection. In either case estoppel may apply."
The Court next addressed whether an estoppel bars the inventor from asserting infringement against any equivalent to the narrowed element or might some equivalents still infringe. The Court rejected the complete bar approach of the en banc Court of Appeals.
The Court wrote that the prosecution history estoppel "requires an examination of the subject matter surrendered by the narrowing amendment. ... The narrowing amendment may demonstrate what the claim is not; but it may still fail to capture precisely what the claim is. There is no reason why a narrowing amendment should be deemed to relinquish equivalents unforeseeable at the time of the amendment and beyond a fair interpretation of what was surrendered. Nor is there any call to foreclose claims of equivalence for aspects of the invention that have only a peripheral relation to the reason the amendment was submitted. The amendment does not  show that the inventor suddenly had more foresight in the drafting of claims than an inventor whose application was granted without amendments having been submitted. It shows only that he was familiar with the broader text and with the difference between the two. As a result, there is no more reason for holding the patentee to the literal terms of an amended claim than there is for abolishing the doctrine of equivalents altogether and holding every patentee to the literal terms of the patent."
In the end, the Court did rule as to whether Shoketsu infringed Festo's patents. Rather, it merely vacated the Appeals Court, and remanded for proceedings consistent with its opinion.
VeriSign Sued Over Domain Name Marketing
5/28. Marc Luxenberg filed a complaint in the Superior Court for the State of California, Los Angeles County, against VeriSign alleging that it sent misleading domain name renewal notices that "seek to trick domain- name owners into unwittingly transferring their accounts to VeriSign".
The complaint alleges that "on or about April 25, 2002, Verisign began sending a ``Domain Name Expiration Notice´´ to thousands of consumers of its competitors" that "carried an artificial ``deadline´´ for reply of May 15, 2002, and thereby has implied that certain domain names of targeted potential costumers are about to expire." The complaint continues that "there is no necessary relation between the reply deadline noted in the" notice "and the actual expiration date of the domain name."
The complaint also states that "at the bottom of the reverse side" the notice "authorizes VeriSign to transfer the domain name(s) from the consumer's current registrar to VeriSign, and to extend the term of (i.e., ``renew´´) the domain name."
The complaint alleges that these notices are "deceptive", and have caused domain name owners to transfer their domain names to VeriSign.
The complaint contains four counts: unlawful, unfair and deceptive business practices in violation of California Business & Professions Code § 17200 et seq., false and misleading advertising in violation of California Business & Professions Code § 17500 et seq., violation of the Consumers Legal Remedies Act, California Civil Code § 1750 et seq., and common law fraud and deceit.
Luxenberg seeks class action status. He is represented by the law firm of Weiss & Yourman. Previously, BulkRegister filed a complaint against VeriSign for the same marketing tactics.
More News
5/28. The Federal Communications Commission (FCC) entered into a Consent Decree with SBC under which SBC agrees to make a $3.6 million payment to the United States Treasury. The FCC stated that this is for "inaccurate information SBC submitted to the FCC in affidavits supporting two separate section 271 applications to provide long distance service in Missouri, Oklahoma and Kansas". See, FCC release.
5/28. The Cellular Telecommunications and Internet Association (CTIA) wrote a letter to the Office of Management and Budget (OMB) containing its comments on the OMB's Draft Report to Congress on the Costs and Benefits of Federal Regulations. The letter lists regulations that the CTIA argues should be eliminated, such as those pertaining to wireless local number portability. The letter was sent from Michael Altschul, SVP and General Counsel of the CTIA, to John Morrall of the OMB's Office of Information and Regulatory Affairs. See also, CTIA release.
5/28. A trial jury of the U.S. District Court (WDWash) returned a guilty verdict against Michael Prime on one count of conspiracy to commit wire fraud, one count of conspiracy to make, possess and utter counterfeit securities and three counts of making, possessing and uttering counterfeit securities. Prime operated three fraudulent schemes on eBay. First, he auctions items, such as lap top computers, which he did not have. Second, he sold pirated software that he falsely claimed was authentic. Third, he purchased items in auctions that he paid for with counterfeit money orders created with computers, scanners, and printers. See, USAO release.
5/28. The Supreme Court denied certiorari in Illinois Bell Telephone Co. v. WorldCom, No. 00-921. See, Order List [PDF] at page 10.
5/28. The Supreme Court granted certiorari in BellSouth v.. North Carolina Utilities Commission, No. 00-1699. It wrote that "The petition for a writ of certiorari is granted. The judgment is vacated and the case is remanded to the United States Court of Appeals for the Fourth Circuit for further consideration in light of Verizon Maryland Inc. v. Public Service Commission of Maryland, 535 U.S. ___ (2002). See, Order List [PDF] at page 1.
5/28. The Supreme Court went back on recess until Monday, June 3, 2002.

Go to News Briefs from May 21-25, 2002.