News from March 21-25, 2003

Bush Issues Executive Order Regarding Classification of Infrastructure Information

3/25. President Bush issued an Executive Order that amends Executive Order 12958, pertaining to "Classified National Security Information".

This order, as amended, "prescribes a uniform system for classifying, safeguarding, and declassifying national security information, including information relating to defense against transnational terrorism".

Section 1.4 lists the categories of information that are subject to classification. It provides, in part, that "Information shall not be considered for classification unless it concerns: ...  (c) ... cryptology; ... (e) scientific, technological, or economic matters relating to the national security, which includes defense against transnational terrorism; ... (g) vulnerabilities or capabilities of systems, installations, infrastructures ..."

The original version of Executive Order 12958, which was issued by former President Clinton on April 17, 1995, included slightly different language. It referenced "vulnerabilities or capabilities of systems, installations, projects or plans relating to the national security". That is, Bush's version adds the term "infrastructures". Bush's order also adds the reference to "transnational terrorism".

This, then, raises the question of what are "infrastructures". The order defines forty-two of its terms, but contains no definition of "infrastructures".

The recently enacted Homeland Security Act contains a provision providing a Freedom of Information Act (FOIA) exemption for "critical infrastructure information". See, HR 5005 (107th Congress), Public Law No. 107-296. This act defines the term as follows:

"The term `critical infrastructure information´ means information not customarily in the public domain and related to the security of critical infrastructure or protected systems -- (A) actual, potential, or threatened interference with, attack on, compromise of, or incapacitation of critical infrastructure or protected systems by either physical or computer-based attack or other similar conduct (including the misuse of or unauthorized access to all types of communications and data transmission systems) that violates Federal, State, or local law, harms interstate commerce of the United States, or threatens public health or safety;  (B) the ability of any critical infrastructure or protected system to resist such interference, compromise, or incapacitation, including any planned or past assessment, projection, or estimate of the vulnerability of critical infrastructure or a protected system, including security testing, risk evaluation thereto, risk management planning, or risk audit; or (C) any planned or past operational problem or solution regarding critical infrastructure or protected systems, including repair, recovery, reconstruction, insurance, or continuity, to the extent it is related to such interference, compromise, or incapacitation."

If the term "infrastructures", as used in President Bush's executive order, is interpreted to have a meaning similar to the term "information infrastructure", as used in the Homeland Security Act, then cyber security information could be classified. This would make it more difficult for the public to obtain information from the government regarding its activities and operations pertaining to cyber security.

The new order also provides, at Section 4.1(f), that "Consistent with law, directives, and regulation, an agency head or senior agency official shall establish uniform procedures to ensure that automated information systems, including networks and telecommunications systems, that collect, create, communicate, compute, disseminate, process, or store classified information have controls that: (1) prevent access by unauthorized persons; and (2) ensure the integrity of the information."

Section 6.1 defines "Automated information system" as "an assembly of computer hardware, software, or firmware configured to collect, create, communicate, compute, disseminate, process, store, or control data or information."

Section 6.1 defines "Telecommunications" very broadly. It is "the preparation, transmission, or communication of information by electronic means".

The amended order also contains a preamble. It states, in part, that "Our democratic principles require that the American people be informed of the activities of their Government. Also, our Nations progress depends on the free flow of information. Nevertheless, throughout our history, the national defense has required that certain information be maintained in confidence in order to protect our citizens, our democratic institutions, our homeland security, and our interactions with foreign nations. Protecting information critical to our Nations security remains a priority."

House Subcommittee Holds Hearing On Commercial Spectrum Enhancement Act

3/25. The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing on HR 1320, the Commercial Spectrum Enhancement Act. This bill would facilitate the relocation of spectrum from federal users, such as the Department of Defenese (DOD), to commercial users, such as Third Generation (3G) wireless service providers. 3G is intended to provide broadband internet access for portable devices. The bill would create a "Spectrum Relocation Fund", funded out of auction proceeds, to pay for relocation costs of federal entities whose spectrum is reallocated. See, full story.

Rules Committee Adopts Rule for HR 1104

3/25. The House Rules Committee adopted a rule for consideration of HR 1104, the Child Abduction Prevention Act. This is a wide ranging bill with a number of technology related provisions. Also, the rule allows introduction of amendments on the House floor that would ban misleading domain names, and amend the Child Pormography Prevention Act of 1996 (CPPA) provisions banning certain computer generated images.

The bill includes the Amber Alert communications network provisions. Also, Section 201 of the bill would amend 18 U.S.C. § 2516 to expand the list of predicate offenses that may serve as the basis for the issuance of a wiretap order. Each new predicate relates to sexual exploitation crimes against children. Section 201 is similar to HR 1877 (107th Congress) which passed the House on May 21, 2002 by a vote of 396-11. See, Roll Call No. 175.

The rule allows for consideration of eight amendments. Several pertain to the Amber Alert communications network. Two others are technology related. First, the rule allows for consideration of an amendment [2 page PDF scan] offered by Rep. Mike Pence (R-IN) regarding misleading domain names. It provides that "Whoever knowingly uses a misleading domain name with the intent to deceive a person into viewing obscenity on the Internet shall be fined under this title or imprisoned not more than 2 years, or both."

The Pence amendment further provides that "Whoever knowingly uses a misleading domain name with the intent to deceive a minor into viewing material that is harmful to minors on the Internet shall be fined under this title or imprisoned not more than 4 years, or both."

Second, the rule allows for consideration of an amendment [28 page PDF scan] offered by Rep. Lamar Smith (R-TX). It is essentially HR 1161, the "Child Obscenity and Pormography Prevention Act of 2003", which addresses the Supreme Court's April 16, 2002, opinion [PDF] in Ashcroft v. Free Speech Coalition, in which the Court held unconstitutional on First Amendment and overbreadth grounds provisions of the Child Pormography Prevention Act of 1996 (CPPA) banning computer generated images depicting minors engaging in sexually explicit conduct. See, story titled "House Subcommittee Holds Hearing on HR 1161", TLJ Daily E-Mail Alert No. 621, March 12, 2003.

See also, copy of bill [25 pages in PDF] as amended and approved by the House Judiciary Committee on March 18, 2003.

AEI Brookings Report Addresses Financial Privacy

3/25. The AEI Brooking Joint Institute published a paper [40 pages in PDF] titled "Financial Privacy, Consumer Prosperity, and The Public Good: Maintaining The Balance." The report, which was written by Fred Cate, Robert Litan, Michael Staten, and Peter Wallison, advocates that the federal preemption provided for by the Fair Credit Reporting Act (FCRA) be continued.

The report states that "For more than 30 years, the Fair Credit Reporting Act has deftly regulated the U.S. credit reporting system. ... Consumers in the U.S. enjoy the ``miracle of instant credit´´ because, under the rules established by the FCRA, sensitive information about a person's credit history is given to credit reporting agencies so that individual creditworthiness can be evaluated quickly and efficiently. In this way, consumers can qualify for credit, insurance and other financial services based on their own past payment experience."

It adds that "Given the inherently national character of credit reporting, its importance in the national U.S. economy, and the significant impediments and costs that state regulation could impose, Congress preempted state laws that would alter this balance."

However, the FRCA, which is codified at 15 U.S.C. § 1681 et seq., also provides that this preemption expires on January 1, 2004.

The AEI Brookings report notes that "Some legislators and privacy advocates are now suggesting that Congress -- or even states and municipalities -- alter the balance established by the FCRA. They propose abandoning federal preemption to give the states the freedom to impose new restrictions on the content and use of consumer credit reports or files."

The report advises that "Such proposals threaten to undo the system that underpins the most dynamic and competitive consumer credit environment in the world. Abandoning preemption would burden the national credit reporting system with the significant costs of having to comply with overlapping, inconsistent, and even contradictory state and local credit reporting rules."

Do Not Call Registry Compliance Required On October 1

3/25. The Federal Trade Commission (FTC) announced that, pursuant to its amended Telemarketing Sales Rule (TSR), "As of October, it will be illegal for most telemarketers to call a number listed on the registry." See, FTC release and FTC "Do Not Call" registry web page.

The FTC released its amended Telemarketing Sales Rule (TSR) on December 18, 2002, which included creation of the do-not-call registry. The Congress passed, and the President signed, the Do-Not-Call Implementation Act (HR 395), earlier this year. It is now Public Law No. 108-10.This bill authorizes the FTC to collect fees for the implementation and enforcement of its "do-not-call" registry. This allows consumers to opt out of receiving unwanted telephone solicitations. It also prohibits telemarketers from calling those telephone numbers listed on the registry.

On March 26, the FTC published a notice in the Federal Register announcing that "the Commission has decided to extend the date by which it will require full compliance with Sec. 310.4(b)(4)(iii) of the Amended Telemarketing Sales Rule (``TSR´´) until October 1, 2003." See, Federal Register, March 26, 2003, Vol. 68, No. 58, at Pages 14659 - 14660.

Also, on March 25 the Federal Communications Commission (FCC) released a Further Notice of Proposed Rulemaking (FNPRM) [PDF] in its proceeding titled "In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991". This is CG Docket No. 02-278. This FNRPM is mandated by the Do-Not-Call Implementation Act.

Tech Crimes

3/25. The U.S. District Court (CDCal) sentenced Bret McDanel to 16 months in federal prison for maliciously bombarding the computer system of a computer messaging company with thousands of email messages, in violation of the Computer Fraud and Abuse Act. See, USAO release and CCIPS release.

3/25. The U.S. District Court (NDTex) sentenced Demeshia Rachel Davis to 41 months in prison, and ordered her to pay $1,776,137.92 in restitution, for violation one count of mail fraud in violation of 18 U.S.C. § 1341, and one count of tax evasion in violation of 26 U.S.C. § 7201. She used the U.S. Mail to steal from Lucent Technologies, and then failed to report the proceeds as income to the IRS. See, USAO release.

People and Appointments

3/25. The Coordination Committee of the World Intellectual Property Organization (WIPO) recommended that Kamil Idris be reappointed as Director General of the WIPO for a second six year term. See, WIPO release.

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3/25. The House Government Reform Committee's Subcommittee on Technology, Information Policy, Intergovernmental Relations and the Census held a hearing titled "Data Mining: Current Applications and Future Possibilities". See, prepared testimony [14 pages in PDF] of Gregory Kutz of the General Accounting Office (GAO), which addresses the GAO's use of data mining in its audits and investigations of federal government credit card programs. See also, letter submitted by the Electronic Privacy Information Center (EPIC) regarding the practice of federal agencies purchasing commercial databases for law enforcement purposes. The EPIC wrote that "It is our view that these activities violate the intent of the Privacy Act and should be suspended."

3/25. The U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register regarding its notice of proposed rulemaking (NPRM) to amend its rules to adapt to a patent electronic image management system. The USPTO stated that the rule changes will "facilitate electronic data capture and processing, streamline the patent application process, and simplify and clarify the pertinent provisions of the rules of practice." Comments are due by April 24, 2003. See, Federal Register, March 25, 2003, Vol. 68, No. 57, at Pages 14365 - 14379.

3/25. Assistant Secretary of the Treasury Pam Olson gave a speech to the Conference on US German Economic Relations regarding the significance of globalization for the U.S. tax system. She stated that "From the vantage point of an increasingly global marketplace, our tax rules appear outmoded, at best, and punitive of U.S. economic interests, at worst. Most other developed countries of the world are concerned with setting a competitiveness policy that permits their workers to benefit from globalization." She also said that "The U.S. tax system should not distort trade or investment relative to what would occur in a world without taxes. Every country makes sovereign decisions about its own tax system, so it is impossible for the U.S. to level all playing fields simultaneously. But we can ensure that our own rules minimize the barriers to the free flows of capital that globalization necessitates." She speaks on this topic regularly.

3/25. Rep. Lamar Smith (R-TX), Rep. Howard Berman (D-CA), and Rep. John Conyers (D-MI) introduced HR 1417, the Copyright Royalty and Distribution Reform Act of 2003, a bill to replace copyright arbitration royalty panels (CARP) with a Copyright Royalty Judge, to be appointed by the Librarian of Congress. It was referred to the House Judiciary Committee. Rep. Smith and Rep. Berman are the Chairman and ranking Democrat on the Courts, the Internet and Intellectual Property (CIIP) Subcommittee. Rep. Conyers is the ranking Democrat on the full Committee. The CIIP Subcommittee is scheduled to hold a hearing on the bill at 2:00 PM on April 1.

Supreme Court Denies Certiorari in WorldCom v. USTA

3/24. The Supreme Court denied certiorari in WorldCom v. USTA, No. 02-858. See, Order List [16 pages in PDF] at page 14. The Supreme Court issued no opinion.

WorldCom, AT&T and Covad filed a Petition for Writ of Certiorari [42 pages in PDF] on December 3, 2002, seeking review of the May 24, 2002 opinion of the U.S. Court of Appeals (DCCir) in USTA v. FCC. The Appeals Court granted petitions for review of an FCC unbundling order and line sharing order.

In the Appeals Court proceeding, incumbent local exchange carriers (ILECs) and the U.S. Telecom Association (USTA), a group that represents them, challenged the Federal Communications Commission's (FCC) order requiring ILECs to lease a variety of unbundled network elements to competitors. They also challenged a FCC line sharing order that requires ILECs to lease only a portion of local copper loops, rather than the whole line, for the purpose of offering DSL service. The Appeals Court granted both petitions. It remanded both rules to the FCC for further proceedings.

The petitioners asserted in their petition for writ of certiorari that the question presented was as follows: "Under AT&T Corp. v. Iowa Utilities Board, 525 U.S. 366 (1999), Verizon Communications Inc. v. FCC, 122 S.Ct. 1646 (2002), and the provisions of the Telecommunications Act of 1996, may the FCC require incumbent telephone monopolists to lease elements of their network to competitors based on the FCC's findings that the ability of hundreds of firms to provide competing services will be materially lessened if they must obtain the elements from sources outside the incumbents' networks, or must the FCC also satisfy extra-statutory requirements in order to address putative adverse effects that the leasing of those elements will have on investment in alternative facilities?"

On February 20, 2003, the FCC adopted, but did not release, a report and order regarding the Section 251 unbundling obligations of incumbent local exchange carriers (ILECs). This report and order will address the Appeals Courts' remand in USTA v. FCC. While the FCC has yet to release the report and order, it has issued a short press release [2 pages in PDF] and an attachment [4 pages in PDF] that describe the contents of the forthcoming report and order.

The report and order eliminates unbundling requirements for certain broadband facilities. It also eliminates line sharing as an unbundled network element. It also provides that ILECs must continue to provide unbundled access to copper loops and copper subloops. Finally, FCC wrote on February 20 that "The Commission finds that switching -- a key UNE-P element -- for business customers served by high-capacity loops such as DS-1 will no longer be unbundled based on a presumptive finding of no impairment. Under this framework, states will have 90 days to rebut the national finding. For mass market customers, the Commission sets out specific criteria that states shall apply to determine, on a granular basis, whether economic and operational impairment exists in a particular market. State Commissions must complete such proceedings (including the approval of an incumbent LEC batch hot cut process) within 9 months. Upon a state finding of no impairment, the Commission sets forth a 3 year period for carriers to transition off of UNE-P."

The Solicitor General had filed an opposition to the petition for writ of certiorari.

See also, stories titled "WorldCom and AT&T Seek Cert in USTA v. FCC" in TLJ Daily E-Mail Alert No. 561, December 5, 2002, and "FCC Announces UNE Report and Order", February 20, 2003.

People and Appointments

3/24. President Bush announced his intent to appoint Robert Ehrlich and Martha Marsh to be Members of the National Infrastructure Advisory Council (NIAC). The NIAC was established by Executive Order 13231. It makes recommendations regarding the security of the cyber and information systems of U.S. national security and economic critical infrastructures. Ehrlich is the Governor of Maryland, and a former member of the House Commerce Committee's Subcommittee on Telecommunications and the Internet. Marsh is P/CEO of Stanford Hospital & Clinics. See, White House release.

3/24. The Senate confirmed Gregory White to be the U.S. Attorney for the Northern District of Ohio.

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3/24. The General Accounting Office (GAO) released a report [13 pages in PDF] titled "Electronic Procurement: Business Strategy Needed for GSA's Advantage System". This report addresses the General Services Administration's (GSA) Advantage internet based ordering system. The report concludes that "GSA Advantage has had only limited success as an on-line market research and ordering tool. Market research has been limited primarily to off-the-shelf office products, and sales through Advantage have never exceeded one–half of 1 percent of overall schedule sales. Because of initial design limitations, Advantage has not been effective in acquiring complex products and services, particularly information technology services that make up most of the growth in schedule sales."

3/24. The General Accounting Office (GAO) released a letter [22 pages in PDF] to Rep. Todd Tiahrt (R-KS) regarding law enforcement technologies that use cameras to identify drivers running red lights or speeding and issue tickets to owners of identified vehicles.

3/24. The U.S. District Court (SDCal) issued an order [PDF scan] in CBS v. EchoStar granting CBS summary judgment on most of EchoStar's counterclaims. In 1998, CBS and others filed a complaint against EchoStar alleging copyright infringement for EchoStar's transmittal of television programs to ineligible households. EchoStar filed a counterclaim. Count II alleged tortious interference; Count III alleged unfair competition; Count IV alleged conspiracy to tortiously interfere with business relationships; and, Count V alleged conspiracy to engage in acts of unfair competition. The order is titled "Order Granting Plaintiffs' Motion for Summary on Counts II-V of Counterclaim".

8th Circuit Upholds TCPA

3/21. The U.S. Court of Appeals (8thCir) issued its opinion [17 pages in PDF] in Missouri v. American Blast Fax, upholding the constitutionality of the fax advertising ban contained in the Telephone Consumer Protection Act of 1991. This case dealt only with application of the fax advertising ban to unsolicited commercial fax messages. However, were the Congress to enact a ban on unsolicited commercial e-mail advertising, the analysis of its constitutionality would be very similar to the analysis in this case. But then, challenges to any such legislation are not likely to be brought in the 8th Circuit. See, full story.

4th Circuit Rules in Copyright Registration Case

3/21. The U.S. Court of Appeals (4thCir) issued its opinion [PDF] in Xoom v. Imageline, a copyright case involving registration of copyright in CD-ROM clip art packages.

Imageline introduced a product in 1994 on CD-ROM named PicturePak SuperBundle. It contained 1,580 individual electronic clip art images. Imageline registered the art, text, and packing design for CD-ROM and diskette media with the Copyright Office. The registration became effective on March 12, 1996. The registration covered the product in its entirety. There was no specific mention of the individual clip-art images. Imageline deposited printed and electronic copies of each clip-art image with its registration application.

Subsequently, in 1997, Xoom introduced a product on CD-ROM and on the web that contained clip art images, including some that were in Imageline's product.

Xoom filed a complaint in U.S. District Court (EDVa) against Imageline alleging copyright infringement and interference with contractual relations. Imageline counterclaimed alleging copyright infringement, false advertising, unfair competition, and business conspiracy.

The District Court made various ruling in favor of Xoom. Imageline appealed.

The Appeals Court wrote that the District Court held that "Imageline had no basis for litigating claims of infringement with respect to the individual images because, as registered, the copyright claims were only in the works as a whole and not in the individual images." Imageline asserted that its copyright registration of its products extended to the individual clip art images contained in both products and in the computer programs used to create those images.

The Appeals Court did not rule on whether the registration of the products covered the individual clip art images. It did, however, rule that Imageline's registration "was sufficient to permit an infringement action on the underlying parts, whether they be new or preexisting." Hence, it reversed the District Court on this issue.

The Appeals Court also addressed the issues of entitlement to statutory damages, false advertising and unfair competition.

U.S. & Australia Complete First Round of FTA Negotiations

3/21. The U.S. and Australia held the first round of negotiations on March 17 through 21 for a free trade agreement (FTA). On March 21, Australia's chief negotiator Stephen Deady and the U.S. chief negotiator Ralph Ives held a press conference. See, transcript [11 pages in PDF].

Deady stated that "We had a very productive start to the negotiations this week with the United States. We covered a wide range of issues across 15 separate negotiating groups over the course of the week. This included ... services, investment, intellectual property, competition policy, ... and technical barriers to trade, and then broad legal administrative arrangements including things like dispute settlement in that context."

He continued that "We also tied down arrangements for discussions over the next couple of weeks, probably through video conferencing, on a number of other areas we did not discuss this week. That includes government procurement, telecommunications, e-commerce and financial services."

Ralph Ives stated that "What we are seeking from this free trade agreement is a comprehensive free trade agreement that covers the full range of areas. Steve very correctly laid out the full range of areas that we see in an FTA -- a good, world-class, comprehensive FTA that covers goods, services, investment, intellectual property, the full range of issues."

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3/21. SonicBlue announced that it, and three subsidiaries, will file Chapter 11 bankruptcy petitions in the U.S. Bankruptcy Court for the Northern District of California, San Jose Division. See, release.

Go to News from March 16-20, 2003.