News from April 11-15, 2004

FCC Announces FNPRM and NOI Regarding Digital Audio Broadcasting

4/15. The Federal Communications Commission (FCC), announced, but did not release, a Further Notice of Proposed Rule Making (FNPRM) and Notice of Inquiry (NOI) regarding digital audio broadcasting (DAB). The FCC issued a short release [PDF] describing the item, and Commissioners Powell, Copps and Adelstein issued their own statements. See, full story.

FCC Announces NPRM Regarding Unlicensed Use in the 3650-3700 MHz Band

4/15. The Federal Communications Commission (FCC), announced, but did not release, a Notice of Proposed Rulemaking regarding unlicensed use of the 3650-3700 MHz band.

The FCC issued a short release describing this NPRM. It states that "unlicensed devices would be allowed to operate in all, or part, of the 3650 MHz band at higher power levels than usually permitted for unlicensed services, which should enhance the utility of unlicensed devices and services in rural areas. These devices also would be subject to smart (or cognitive) requirements and other safeguards designed to prevent interference to the licensed FSS earth stations now resident in the band."

The FCC release adds that wireless internet service providers (WISPs), and others, "have been asking the Commission for additional spectrum for higher power unlicensed devices in order to more economically provide backhaul links to internet gateways as well as broadband access networks serving individual customers in sparsely populated areas."

FCC Chairman Michael Powell wrote in a separate statement [PDF] that "With protected earth stations primarily on the coasts, this band appears particularly promising for extending broadband service in rural areas, such as by wireless internet service providers. Some of these uses could potentially complement unlicensed operations in other bands, such as 2.4 and 5.8 GHz that could allow greater flexibility and continuity in the creation of devices for consumers. This may be another giant step in our effort to bring affordable broadband services to all Americans."

On December 11, 2002, the FCC announced its Notice of Inquiry [MS Word] in ET Docket No. 02-380 titled "Additional Spectrum for Unlicensed Devices Below 900 MHz and in the 3 GHz Band". See also, story titled "FCC Announces Notice of Inquiry Re More Spectrum for Unlicensed Use" in TLJ Daily E-Mail Alert No. 566, December 12, 2002.

This item is FCC 04-100 in ET Docket Nos. 04-151, 02-380, and 98-237. For more information, contact Neal McNeil a 202 418-2408 or Gary Thayer at 202 418-2290.

FCC Announces Report and Order Regarding Use of RFID with Shipping Containers

4/15. The Federal Communications Commission (FCC), announced, but did not release, a Third Report and Order regarding radio frequency identification (RFID) systems for use in conjunction with commercial shipping containers.

The FCC issued a short press release [PDF] that describes the item. It states that "An RFID system consists of a tag mounted on the item to be identified and a device that receives information transmitted from the tag. The Commission's rules permit RFID systems to be operated on a number of frequency bands, subject to limitations on their maximum signal level and transmission duration. These limitations constrain the range and information transfer rates of RFIDs."

The FCC release also states that the Report and Order "increases the maximum signal level permitted for RFID systems operating in the 433.5-434.5 MHz band to facilitate more reliable transmissions with greater range than the rules previously allowed. The 433 MHz band is available for unlicensed operation in many countries around the world, thus enabling manufactures to produce a single model of a device for use in both the United States and other countries. The Order also increases the maximum permitted transmission duration for these RFID systems from one second to 60 seconds, resulting in a sixty-fold increase in the amount of data that can be transmitted, thus facilitating the scanning of the contents of an entire shipping container. To minimize the risk of interference to authorized communication services, operation of RFID systems with higher power and longer transmission duration is limited to commercial shipping containers in commercial and industrial areas."

FCC Chairman Michael Powell wrote in a separate statement [PDF] about several issues, including privacy. He stated that "today’s ruling is narrowly tailored. The technical and operational rules we adopt today allow higher-powered/longer-duration RFID tag use on limited frequencies, and only in commercial and industrial environments."

This item is FCC 04-98 in ET Docket No. 01-278. For more information, contact Hugh Van Tuyl at 202 418-7506 or

NTIA's Gallagher Writes Senate Regarding Reallocating Spectrum for 3G Use

4/15. Michael Gallagher, the acting head of the National Telecommunications and Information Administration (NTIA), wrote a letter to Vice President Dick Cheney, in his capacity as President of the Senate, regarding "further actions needed in the allocation of spectrum to the civilian sector for the effective deployment of third generation (3G) wireless devices in the United States".

Mike GallagherGallagher (at right) wrote that "three major actions that should be taken to complete to make the deployment of 3G services optimally possible: (1) enactment of the President’s proposal to create a spectrum relocation fund; (2) completion of the FCC’s rules to identify spectrum for some Federal operations that must relocate; and (3) an auction scheduled by the FCC."

Spectrum Allocation Fund. HR 1320, the "Commercial Spectrum Enhancement Act", would create a spectrum relocation fund.

Gallagher wrote that "The Administration strongly supports legislation that would change the reimbursement process by creating a relocation fund using auction proceeds. H.R. 1320, as passed by the House, would greatly streamline the reimbursement process, and thus, speed relocation of Federal agencies and private sector access to the spectrum. NTIA urges Congressional enactment of this legislation this year."

The House passed its version of HR 1320, on June 11, 2003. See, stories titled "House Subcommittee Holds Hearing On Commercial Spectrum Enhancement Act" in TLJ Daily E-Mail Alert No. 631, March 26, 2003; "House Subcommittee Approves Spectrum Relocation Fund Bill" in TLJ Daily E-Mail Alert No. 641, April 10, 2003; "House Commerce Committee Passes Spectrum Relocation Bill" in TLJ Daily E-Mail Alert No. 653, May 1, 2003; and "House Passes Commercial Spectrum Enhancement Act" in TLJ Daily E-Mail Alert No. 679, June 12, 2003.

The Senate Commerce Committee passed its version of HR 1320 on June 26, 2003. However, the full Senate has yet to pass a bill. See, story titled "Senate Commerce Committee Approves Commercial Spectrum Enhancement Act" in TLJ Daily E-Mail Alert No. 689, June 27, 2003.

FCC Rules. The Federal Communications Commission (FCC) has an open rulemaking proceeding to make spectrum available to federal users that will be displaced from the 1710-1850 MHz band to make it available for advanced wireless services. See, Fourth Notice of Proposed Rulemaking [49 pages in PDF]. This is FCC 03-134 in ET Docket No. 00-258 and WT Docket No. 02-8. The comment period closed on December 1, 2003.

See also, notice in the Federal Register, September 2, 2003, Vol. 68, No. 169, at Pages 52156 - 52168, and stories titled "FCC Releases NPRM Regarding Allocating Spectrum to DOD to Replace Spectrum Allocated for 3G Services" in TLJ Daily E-Mail Alert No. 694, July 9, 2003, and "FCC Sets Deadlines for Comments Regarding Spectrum Reallocations Relating to 3G Services" in TLJ Daily E-Mail Alert No. 731, September 3, 2003.

Gallagher wrote that "the FCC and NTIA must complete the necessary identification of frequencies in other bands to which Federal government systems can relocate. NTIA has identified frequencies in the 7 and 8 GHz bands for Federal government microwave systems to move. The FCC has also initiated a proceeding to make spectrum available in other bands for certain other Federal systems. The comment period for this rulemaking ended on December 1, 2003. It is anticipated that the FCC will issue final rules shortly."

FCC Auction. Gallagher wrote that "the FCC must schedule an auction to license this spectrum by competitive bidding. NTIA, however, would not support such an action until identification of alternative frequencies for the affected Federal systems has been completed."

More States Join Antitrust Suit Against Oracle

4/15. The Department of Justice's (DOJ) Antitrust Division, and several state plaintiffs, filed an amended complaint [PDF] with the U.S. District Court (NDCal) in US v. Oracle. This amended complaint is substantially identical to the original complaint filed on February 26, 2004. However, the amended complaint adds three additional state plaintiffs: Connecticut, Michigan and Ohio.

In February, the U.S. and seven states filed a complaint against the Oracle Corporation alleging that Oracle's proposed acquisition of PeopleSoft, Inc. would lessen competition substantially in interstate trade and commerce in violation of Section 7 of the Clayton Act, which is codified at 15 U.S.C. § 18. The plaintiffs seek an injunction of the proposed acquisition.

See, related stories: "Antitrust Division Sues Oracle to Enjoin Its Proposed Acquisition of PeopleSoft" in TLJ Daily E-Mail Alert No. 846, March 1, 2004; "DOJ and Oracle Agree on Trial Date in Action to Stop Acquisition of PeopleSoft" in TLJ Daily E-Mail Alert No. 854, March 11, 2004; and "District Court Sets June 7 Trial Date in U.S. v. Oracle" in TLJ Daily E-Mail Alert No. 857, March 17, 2004.

This case is U.S., et al. v. Oracle, U.S. District Court for the Northern District of California, D.C. No: C 04-00807 VRW.

OMB Revises Peer Review Guidelines

4/15. The Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs (OIRA) released a document [36 pages in PDF] titled "Revised Information Quality Bulletin for Peer Review".

The OMB, which is a part of the Executive Office of the President (EOP), released and requested comments upon the first version of this document [14 pages in PDF] titled "Peer Review and Information Quality" in August of 2003. See, story titled "OMB Proposes Peer Review of Scientific Findings of Regulatory Agencies" in TLJ Daily E-Mail Alert No. 731, September 3, 2003.

The OMB received 187 comments during the public comment period. The just released bulletin substantially expands and revises the original.

The revised bulletin states that "agencies must undertake a peer review of influential scientific information before they disseminate the information to the public. Different types of peer review are appropriate for different types of information products, and agencies are granted under this Bulletin appropriate discretion to weigh the benefits and costs of using a particular peer review mechanism for a particular information product. This Bulletin leaves the selection of a peer review mechanism for influential scientific information to the agency's discretion."

It adds that "Based on public and agency comments, we also exempted various types of information products from the requirements of this Bulletin, including time-sensitive medical, health, and safety determinations, in order to ensure that peer review does not unduly delay the release of time-sensitive findings."

The OMB also announced that there is a 30 day comment period on the revised bulletin. See, OMB release [PDF].

On December 15, 2003, Rep. Henry Waxman (D-CA), the ranking Democrat on the House Government Reform Committee, and six other House Democrats, wrote a letter [9 pages in PDF] to Joshua Bolten, Director of the OMB, in which they argued that "The focus of the proposal is misplaced. There is a serious and growing threat to science in federal agencies, but the threat is not insufficient peer review. For political reasons, the Bush Administration has repeatedly distorted scientific data, manipulated scientific advisory committees, gagged scientists, and provided misleading information to Congress and the public. Yet the new OMB proposal ignores this growing politicization of science. In fact, it actually erects new roadblocks to the use of high-quality science in agency decision making."

More News

4/15. The Federal Trade Commission (FTC) published a notice in the Federal Register announcing that it will hold a one day workshop on uses, efficiencies, and implications for consumers associated with radio frequency identification (RFID) technology. The workshop will be held on Monday, June 21, 2004, from 8:30 AM through 5:30 PM at the FTC's Satellite Building, located at 601 New Jersey Avenue, NW. Requests to participate as a panelist are due by Friday, May 7, 2004. Written comments are due by Friday, May 21, 2004. The FTC has also published a web page for this workshop. See, Federal Register, April 15, 2004, Vol. 69, No. 73, at Pages 20523 - 20525.

4/15. Covad stated that it entered into a three year commercial line sharing agreement with Qwest Communications. Covad added that "This marks the first time a competitive communications carrier and a regional Bell operating company have negotiated commercial terms for access to line sharing since the Federal Communications Commission's (FCC) Triennial Review decision." See, Covad release. FCC Chairman Michael Powell issued a statement in which he wrote that "This agreement demonstrates that even without government compulsion, commercial arrangements negotiated in the market are possible." Also on April 15, MCI WorldCom announced in a release that it "has reached an agreement with Qwest on a framework for transparent and mediated negotiations regarding access to the public telephone network." CompTel/ASCENT issued a release praising Qwest, and encouraging BellSouth, SBC and Verizon to do the same. See also, statement [PDF] by FCC Commissioner Kathleen Abernathy.

Appeals Court Rejects Entrapment Argument in Encryption Export Case

4/14. The U.S. Court of Appeals (4thCir) issued its opinion [PDF] in U.S. v. Hsu, affirming the District Court's convictions of Eugene You-Tsai Hsu and David Tzuwei Yang for violation of the Arms Export Control Act (AECA) in connection with the efforts to export a controlled encryption product to the People's Republic of China. Hsu and Yang, who acquired the product from an undercover U.S. Customs Bureau agent, argued that they were entitled to a jury instruction on entrapment.

Hsu and Yang attempted to export an encryption unit manufactured by Mykotronx, Inc. to the PR China. Hsu contacted Mykotronx, which referred him to a sales representative, who was actually an undercover agent of the U.S. Customs Bureau. Both Hsu and Yang had numerous conversations with the Customs agent, who repeatedly stated that the product was on the controlled munitions list, and that export to the PR China was illegal. Hsu and Yang persisted in their efforts to export the product. The Customs Bureau agent shipped  units to Yang, and then had the two arrested.

A jury returned verdicts of guilty for both Hsu and Yang on two counts: conspiracy to export Munitions List articles without a license in violation of the AECA or to make materially false statements to the United States Customs Service in violation of 18 U.S.C. § 371 (2000), and attempt to export items covered by the Munitions List without a license in violation of the AECA.

The Appeals Court affirmed. The bulk of the opinion addressed Hsu and Yang's argument that the District Court erred in refusing to instruct the jury on entrapment.

The Appeals Court also rejected Hsu and Yang's argument that the AECA and its implementing regulations are unconstitutionally vague as applied to them.

The Appeals Court wrote that entrapment exists where there is both "(1) government inducement to commit a crime and (2) the lack of predisposition on the part of the defendant to engage in criminal conduct."

The Court applied the facts to this definition. It noted that Hsu and Yang initiated the contact with the undercover agent, not vice versa, that the agent repeatedly told them that the scheme was illegal, and that Hsu and Yang insisted on continuing. The Court therefore concluded that Hsu and Yang did not satisfy their burden of showing facts in support of an entrapment defense. And hence, they were not entitled to an instruction to the jury regarding entrapment.

This case is U.S.A. v. Eugene You-Tsai Hsu and U.S.A. v. David Tzuwei Yang, consolidated, App. Ct. Nos. 02-4859 and 02-4860, appeals from the U.S. District Court for the District of Maryland, at Baltimore, Judge Andre Davis presiding, D.C. No. CR-01-485-AMD.

Senators Ask TSA for Information about Acquisition of Airline Passenger Data

4/14. Sen. Susan Collins (R-ME) and Sen. Joe Lieberman (D-CT) wrote a letter to Asa Hutchinson, the Under Secretary for Border and Transportation Security at the Department of Homeland Security (DHS) asking for information about the transfer of passenger name record (PNR) data from airlines to the DHS's Transportation Security Administration.

On April 9, American Airlines (AA) stated in a release that "in June 2002, at the request of the Transportation Security Administration (TSA), some passenger travel data was turned over by an American Airlines vendor to four research companies vying for contracts with TSA". See, story titled "American Airlines Gave Passenger Data to TSA and Others" in TLJ Daily E-Mail Alert No. 874, April 12, 2004.

Sen. Susan CollinsSen. Collins (at left) and Sen. Lieberman, who are the Chairman and ranking Democrat on the Senate Governmental Relations Committee, wrote that "We are concerned by potential Privacy Act and other implications of this reported incident. From initial accounts, it appears that TSA requested PNR data from American Airlines for its own research purposes rather than merely requesting that data be provided to another agency, as occurred in the JetBlue matter."

They ask, for example, "Did any TSA official ask American Airlines or its vendor to provide the PNR data to the agency or to any of the four companies?" and "If so, why did TSA ask that data be provided?"

People and Appointments

4/14. Secretary of the Treasury John Snow named Ambassador Paul Speltz to be his "economic and financial emissary to China". Speltz will also remain in his current position as the U.S. Executive Director to the Asian Development Bank. See, Treasury release.

More News

4/14. Microsoft, the Department of Justice, and state plaintiffs filed with the U.S. District Court (DC) their Joint Status Report on Microsoft's Compliance with the Final Judgments [10 pages in PDF]. This report relates to current enforcement activities, including licensing of communications protocols (CP) by Microsoft (technical documentation provided to licensees, and the April 1 settlement and agreement between Microsoft and Sun Microsytems) and original equipment manufacturer (OEM) relations and Windows licensing terms, and the EU's recent (but yet to be released) decision affecting Microsoft.

4/14. The U.S. Court of Appeals (4thCir) issued its split opinion [26 pages in PDF] in Goldstein v. Moatz, a case regarding a disciplinary investigation conducted by the U.S. Patent and Trademark Office's (USPTO) Office of Enrollment and Discipline (OED). The case concerns the immunity accorded officials of the USPTO for their conduct in an attorney disciplinary investigation in a subsequent Bivens suit for damages. The District Court dismissed, holding that all of the defendants have absolute immunity. The Appeals Court affirmed as to the head of the USPTO, but not as to the other defendants. This case is Richard Goldstein v. Harry Moatz, et al., App. Ct. No. 03-1257, an appeal from the U.S. District Court for the Eastern District of Virginia, Judge Leonie Brinkema presiding, D.C. No. CA-02-1734-A.

4/14. released a report [31 pages in PDF] titled "Health Privacy in the Hands of Government: The HIPAA Privacy Regulation -- Troubled Process, Troubling Results", which is critical of the Health Insurance Portability and Accountability Act (HIPAA) privacy regulation.

Appeals Court Rules There is No Cybersquatting Claim When Registered Mark is Held to Be Generic

4/13. The U.S. Court of Appeals (4thCir) issued its opinion [24 pages in PDF] in Retail Services v. Freebies Publishing, a trademark and Anticybersquatting Consumer Protection Act (ACPA) case, in which the Appeals Court affirmed the District Court judgment for the alleged cybersquatter.

The plaintiffs below, and appellees before the Appeals Court, are Retail Services, Inc. and Freebie Inc. (RSI). RSI registered the domain in 1995. RSI provides customer management services to retailers, that profile customers making retail purchases. The Appeals Court wrote that "When a customer makes a purchase from an RSI client, the RSI product enables information to be sent from the point of sale to RSI’s database of customer transactions. The system then instantaneously identifies a potential ``incentive offer,´´ described by RSI as ``a freebie,´´ which is printed out and presented to the customer along with the purchase receipt."

Defendants registered the domain name in 1997. In 1979, the defendants purchased the right to publish a paper periodical titled "Freebies Magazine", which provided information about free mail-order offerings. The previous owner has registered the mark FREEBIES. The defendants allowed the mark to lapse. They latter applied for a new registration, which they ultimately got.

In 2001, defendants demanded that RSI stop using the domain RSI refused. Defendants instituted a proceeding pursuant to the Uniform Domain Name Dispute Resolution Policy (UDRP). The arbitrator, finding bad faith registration, ordered RSI to transfer the domain to defendants.

Retail Services, Inc. and Freebie Inc. (RSI) filed a complaint in U.S. District Court (EDVa) against Freebies Publishing, and others, seeking a declaratory judgment that (1) its use of the domain does not violation the ACPA, (2) its use of freebie in it domain name does not infringe defendants' trademark, and (3) defendant's mark is generic and therefore not protectible as a trademark.

The defendants filed a counterclaim alleging trademark infringement, cybersquatting in violation of the ACPA, unfair competition, trademark dilution, and violation of Virginia law.

The District Court granted summary judgment to RSI on the grounds that freebies is generic, and not entitled to trademark protection.

The Appeals Court affirmed. It provided an extensive analysis of the meaning of generic, and concluded, like the District Court, that freebie is generic.

The Appeals Court also affirmed the District Court's analysis of the Anticybersquatting Consumer Protection Act (ACPA) claims. The ACPA, which is codified at 15 U.S.C.A. § 1125(d)(1), provides the "owner of a mark" a cause of action against anyone who registers, traffics in, or uses a domain name that is identical or confusingly similar to the owner's mark, with a bad faith intent to profit from the goodwill associated with that mark.

The Appeals Court reasoned that "We need go no farther than the district court’s initial conclusion that defendants cannot state a claim under the ACPA without a valid trademark." It continued that "a prerequisite for bringing a claim under the ACPA is establishing the existence of a valid trademark and ownership of that mark. As we have already determined that ``freebies´´ is generic and not entitled to trademark protection, defendants cannot surmount this threshold barrier".

This case is Retail Services, Inc. and Freebie, Inc. v. Freebies Publishing, et al., U.S. Court of Appeals for the 4th Circuit, App. Ct. Nos. 03-1272 and 03-1317, appeals from the U.S. District Court for the Eastern District of Virginia, Judge Leonie Brinkema presiding.

Local Phone Companies Offer Support for DOJ's Petition to Expand CALEA to Cover Information Services

4/13. The Federal Communications Commission (FCC) published in its web site more comments submitted in response to the Department of Justice's (DOJ) March 10 petition for rulemaking [83 pages in PDF] regarding requiring broadband service providers, voice over internet protocol (VOIP) providers, and others, to design and modify their networks, hardware, software, and equipment in a manner that enables the law enforcement agenciers to intercept communications.

April 12 was the deadline for initial comments. The deadline for reply comments is April 27. The DOJ asserts, among other things, that the Communications Assistance for Law Enforcement Act (CALEA), a 1994 statute that provides that a "telecommunications carrier" must design its network to facilitate wiretapping, also applies to information services, including broadband internet access and VOIP services and applications.

Comments reflect that the DOJ's petition is strongly supported by law enforcement agencies and groups that represent them, and by vendors of surveillance and interception products.

In contrast, the petition is widely criticized and/or opposed by most industry sectors, including ISPs (Earthlink and ISP CALEA Coalition), IXCs (MCI WorldCom and AT&T), a VOIP application provider (Skype), a broadband over powerline group (UPL Council), and wireless carriers (Sprint and CTIA). It is also opposed by groups that advocate various broad public interests -- CDT (democracy and technology), EPIC (privacy), (privacy), ACLU (civil liberties), and EFF.

However, the petition has received some support, or at least non-opposition, from one industry sector -- local phone companies.

For example, Verizon submitted a comment [28 pages in PDF] that reveals much agreement with the DOJ petition. Verizon argues that "voice over IP and broadband access services fall within the scope of CALEA." It further argues that they meet the CALEA's definition of "telecommunications carrier".

Moreover, Verizon argues that this is the case "for all of these services, including voice over IP application providers. For example, if a carrier is simply providing the underlying transport service (e.g., DSL) and an application provider is providing the voice over IP, that application provider should have the CALEA obligation to provide law enforcement with information about the calls using its service, including the call-identifying information."

Verizon, which provides broadband access via DSL, also argues that application of the CALEA to broadband access service should extend not only to DSL service providers, but also to "cable companies and other competing providers".

Verizon notes that "The Petitioners suggest that the Commission adopt a ``presumption´´ that any service that ``directly competes´´ against a service already deemed to be covered by CALEA is also subject to CALEA." It states that Verizon "generally agrees that in many instances such services would fall within CALEA because a competing service presumable would meet the statutory substantial replacement standard ..." But, it adds that "An absolute categorical rule to that effect is unnecessary, however, and should not be adopted. Such a standard could stifle innovation ..."

Verizon also addresses the DOJ's request that all new technologies must be pre-approved by the government. Its discussion is vague, but in the final analysis, it supports the DOJ, with qualifications.

On the issue of CALEA compliance cost recovery, Verizon argues that in some situations the government should provide compensate. Otherwise, it argues that companies should be free to pass on costs to customers. (The DOJ argued that there is no government responsibility, and that the FCC should determine which costs companies can recovery from customers.)

SBC, another Regional Bell Operating Company, submitted a comment [21 pages in PDF]. (Both Verizon's and SBC's comments were prepared by attorneys at the law firm of Wilmer Cutler & Pickering.)

SBC does not either oppose, or support, many of the positions taken by the DOJ in its petition. Rather, it urges the FCC to proceed with caution and care, and to develop a full factual record before ruling.

While SBC takes no position on whether VOIP is covered by CALEA, it predicts "the likelihood that the Commission will conclude that CALEA applies to some applications of broadband telephony..."

SBC does oppose the DOJ petition on two key points, that any service that competes with a service that has been deemed to be covered by CALEA is also covered by CALEA, and that all future technologies must be approved by the government. SBC states that the FCC "should reject these proposals".

SBC's arguments regarding cost recovery parallel those of Verizon.

The U.S. Telecom Association (USTA), which represents RBOCs, submitted a comment [19 pages in PDF]. It argues that the FCC must act by NPRM, not by declaratory ruling. It also opposes the DOJ's request that future technologies must be pre-approved by the FCC.

The USTA does not take a position regarding whether or not broadband access service, or VOIP, should be covered by the CALEA.

In contrast, BellSouth submitted a comment [35 pages in PDF] which opposes the DOJ across a wider range of issues. First, it too argues that the FCC should act by NPRM, not declaratory ruling.

BellSouth continues that the DOJ's proposals "are overly broad as written and clearly exceed the limited scope of the CALEA. For example, the Petitioners' proposal to require carriers to comply with benchmarks and strict compliance deadlines is not only inconsistent with the statute but also unnecessary and administratively burdensome".

It also argues that the "CALEA does not permit the Commission to subject information services to the CALEA." It further argues the "authority to designate certain entities as telecommunications carriers under Section 1001(8)(B)(ii) is limited" and that the FCC's "authority under this provision is very narrow, contrary to the suggestions of the Petitioners". This is not an outright opposition to the argument that broadband access and VOIP are subject to CALEA (as advocated by the DOJ and Verizon), or even a neutral position (SBC and USTA); it distinguishes BellSouth from the others.

BellSouth also writes that the DOJ's "attempt to classify all current and future broadband access and broadband telephony as services subject to CALEA significantly overreaches. Moreover, the Petitioners' proposal to require carriers to file petitions for clarification with the Commission to determine whether current or planned equipment, facilities, or services are subject to CALEA is not only inconsistent with the statute but also unreasonable in today's rapidly evolving communications marketplace."

BellSouth adds that "Adoption of the Petitioners's proposals would severely hamper innovation and deprive consumers of new and improved broadband technologies, features and services." On this point, BellSouth states the same position as SBC and the USTA, but does so with more vehemence.

BellSouth also argues that CALEA enforcement lies with the federal courts, not the FCC and FBI.

USTR Reorganizes Asian Affairs

4/13. The Office of the U.S. Trade Representative (USTR) announced plans to "create a separate and expanded Office of China Affairs". This Office will be responsible for trade with the People's Republic of China, Taiwan, Hong Kong, Macau and Mongolia. Charles Freeman will be the Acting Assistant U.S. Trade Representative (AUSTR) for China Affairs.

Previously, there had been one AUSTR for North Asian Affairs, who was responsible for Japan and Korea, in addition to the PR China, Taiwan, Hong Kong, and Mongolia. Wendy Cutler held this position. She will continue as AUSTR, but with responsibility for Japan, Korea, and the Asia Pacific Economic Cooperation (APEC) forum (after the APEC ministerial in June 2004).

Ralph Ives, who is AUSTR for Southeast Asia and Pacific Affairs, will also become the AUSTR for Pharmaceutical Policy.

Deputy USTR Josette Shiner will continue to oversee U.S. trade policy with Asia and Africa.

In addition, Mary Ryckman, who is the Deputy AUSTR for Trade Capacity Building, will be promoted to AUSTR and head a new separate office of Trade Capacity Building. See, USTR release [PDF].

FCC Receives Comments Regarding DOJ Petition to Expand the CALEA to Cover Information Services

4/12. April 12 was the deadline to submit comment to the Federal Communications Commission (FCC) regarding the Department of Justice's (DOJ) March 10 petition for rulemaking [83 pages in PDF] regarding requiring broadband service providers, voice over internet protocol (VOIP) application providers, and others, to design and modify their networks, hardware, software, and equipment in a manner that enables the DOJ to intercept communications.

The DOJ asserts, among other things, that the Communications Assistance for Law Enforcement Act (CALEA), a 1994 statute that provides that a "telecommunications carrier" must design its network to facilitate wiretapping, also applies to information services, including broadband internet access and voice over internet protocol (VOIP) services and applications.

The DOJ petition, which is variously referred to as the CALEA petition, the joint petition, or as the petition in RM-10865, drew praise and support in comments submitted by other law enforcement agencies, groups that support or represent law enforcement agencies, and companies that sell surveillance and intercept products.

The petition was widely criticized by other commenters, including MCI WorldCom, AT&T, Sprint, Covad, ISPs (Earthlink and ISP CALEA Coalition), a VOIP application provider (Skype), an economist, and various Washington DC based groups that advocate various broad public interests -- EPIC (privacy), ACLU (civil liberties) and CDT (democracy and technology).

However, the FCC has yet to publish in its web site all of the comments submitted on April 12. Also, reply comments are not due until April 27.

As of April 12, the FCC had not yet published any comments from the Regional Bell Operating Companies, cable companies, consumer electronics companies, large software companies, or the groups that represent them.

Law Enforcement Entities. The DOJ petition, which is signed by representatives of the DOJ's Criminal Division, the DOJ's Federal Bureau of Investigation, and the DOJ's Drug Enforcement Administration, is summarized in a TLJ article titled "Summary of DOJ Petition for Rulemaking to Expand the CALEA to Cover Information Services" in TLJ Daily E-Mail Alert No. 873, April 9, 2004.

The DOJ petition has been supported by comments submitted by the Tennessee Bureau of Investigation, Texas Department of Public Safety, Police Executive Research Forum, Los Angeles County Regional Criminal Information Clearinghouse, International Association of Chiefs of Police, and the National Sheriffs' Association. Although, these comments reflect some copying or paraphrasing of each other's comments.

The Texas Department of Public Safety (TDPS) submitted a comment [2 pages in PDF] in support of the DOJ petition in which it argues that "law enforcement has been thwarted in its attempts to implement lawfully authorized surveillance intercepts." It also adds that companies, not law enforcement entities, should pay for the costs of making equipment and services more subject to surveillance.

The Tennessee Bureau of Investigation (TBI) submitted a comment [2 pages in PDF]. The TBI and the TDPS make identically worded points in their comments. Either one entity copied from the other, or they both copied from the same source.

The Police Executive Research Forum submitted a comment [2 pages in PDF] in support of the DOJ petition. (It also closely resembles the TDPS and TBI comments.) It states that "Since 1994, many new communications technologies have emerged, including broadband Internet access, voice over IP telephony (VoIP), push-to-talk digital dispatch services, and other packet mode services. These services, currently used by millions of individuals across the nation, pose a great challenge to state and local law enforcement. Many of the service providers have failed to voluntarily adopt currently available CALEA intercept solutions. This hampers law enforcement attempts to implement lawfully authorized surveillance intercepts. Voluntary industry compliance with CALEA is not a feasible option."

See also, brief comment [2 pages in PDF] of the International Association of Chiefs of Police, and brief comment [2 pages in PDF] of the National Sheriffs' Association, both in support of the DOJ.

The Los Angeles County Regional Criminal Information Clearinghouse submitted a comment [7 pages in PDF] in support of the DOJ petition. It reflects authorship separate from the other law enforcement comments. It stated that "Voluntary industry compliance with CALEA does not work." It elaborated that two providers of push-to-talk features are not CALEA compliant. In addition, "two broadband services providers in the greater Los Angles (sic) area market openly admit that their telephony infrastructure is not CALEA-compliant."

Sellers of Surveillance and Interception Products. Two sellers of surveillance and interception products, which stand to receive increased revenues if the relief sought by the DOJ is granted, wrote comments in support of the DOJ.

Top Layer Networks, Inc., which sells surveillance products to government, service providers and enterprise customers, submitted a comment [7 pages in PDF] in which it argued, on behalf of the surveillance products industry, that "unless the FCC acts immediately on the proposed petition, this industry will suffer".

Top Layer also wrote that "The technology to intercept IP (or packet) based communications has advanced significantly in the last 5 years, (because of demand in other countries outside the U.S) and mature products and solutions are widely available today. These solutions have the ability to access and intercept the specific needed call identifying or content information for an IP application such as VoIP. At the same time the Collector systems (Monitoring Centers) that Law Enforcement agencies have been using for decoding intercepted voice calls, now have the capability to decode VoIP calls and other IP applications such as email, and web browsing." (Parentheses in original.)

Top Layer also pointed out that "The capabilities sought by the Joint Petitioners are in large measure extensively used in many other countries worldwide." Russia is one of the seven foreign countries listed in a table provided by Top Layer. Top Layer's table also lists VeriSign as an "Interception Vendor".

VeriSign submitted a comment [15 pages in PDF] in support of the DOJ petition. It stated that "VeriSign provides lawfully authorized electronic surveillance (lawful interception) capability requirements to communication providers globally". It further stated that "VeriSign already provides CALEA services for precisely this kind of broadband telephony" addressed in the DOJ petition.

VeriSign also argued that "dramatic changes in electronic communication network platforms have occurred over the past several years. Indeed, it is not just the emergence of large-scale IP-enabled Services that are involved here. There are a host of other factors. The technologies and market demand for an always-on world of nomadic users and agile access is supported by a complex network self-configuring terminal devices with globally distributed applications and service providers. Criminals and terrorists who are typically rather nomadic themselves, have gravitated to these technologies on a significant scale."

Equipment Manufacturers. The FCC has not yet published comments from any manufacturers of telecommunications, networking, or information technology equipment. It has, however, received a lengthy comment from the Telecommunications Industry Association (TIA). The TIA comment [39 pages in PDF] takes an intermediate position. It criticizes the DOJ petition on many points. However, it does not oppose other parts of the DOJ request.

The TIA is both an industry standards development group, and a group that represents manufacturers of telecommunication and information technology equipment in policy debates. Its members want to sell more equipment. The DOJ would like to compel service providers to buy more equipment. However, the TIA members also do not want regulation that is so onerous that it would impede industry development. This would decrease equipment sales.

Hence, the TIA does not oppose the DOJ petition. Nor does it oppose the DOJ request that broadband internet access and VOIP be subjected to the CALEA. It states, however, that these are questions that should be addressed as part of a notice of proposed rule making, rather than in an initial declaratory ruling.

But, the TIA argues that the DOJ proposal to require government pre-approval of new technologies should be rejected. "If adopted, these proposals would have a devastating impact on industry, particularly on equipment suppliers who would face the cost of building wiretap capabilities for new technologies even before it is clear whether they will succeed. The Commission should reject the proposed rules out of hand, as directly inconsistent with CALEA."

Local Exchange Carriers. The FCC has not published in its web site much in the way of comments from local exchange carriers. There are no comments from any of the Regional Bell Operating Companies (Verizon, BellSouth, SBC or Qwest), or groups, such as the USTA, that represent them.

The FCC has published a comment [8 pages in PDF] from the National Telecommunications Cooperative Association (NTCA), a group that represents rural telecommunications providers . It makes just two arguments that are critical of the DOJ petition.

First, it argues that "forcing carriers to comply with arbitrary deadlines and benchmarks, as proposed by petitioners, may not result in CALEA compliance." Second, it addresses cost recovery. The DOJ wants companies and their customers to bear all of the costs.

The NTCA wrote that "an end user surcharge will disproportionately affect the consumers living and working in rural America and the carriers that serve them. Many of the costs associated with governmental mandates are the same irrespective of the size of the company implementing them. The cost of many switch and software upgrades do not vary no matter how many customers are served by that switch or software." It added that "While the Commission may conclude that an end user charge is appropriate for large carriers, it would be more appropriate for rural carriers to recover their costs in the interstate jurisdiction."

The NTCA comment "does not agree that an end-user charge is appropriate for rural carriers".

Finally, the FCC has published a comment [6 pages in PDF] from Warinner, Gesinger & Associates. It describes itself as "a certified public accounting firm specializing in the provision of accounting and consulting services to local exchange telecommunications carriers". It is highly supportive of the DOJ petition.

It requests that the FCC "find that broadband telephone providers qualify as ``telecommunications carriers´´ under CALEA and subject them to the regulations required under CALEA". It states that there is a problem with two "broadband telephone providers" -- and Skype. Moroever, it argues that one of the problems that these services present is encryption of communications.

It argues that failure by the FCC to apply the CALEA to these "broadband telephone providers" would lead to "regulatory arbitrage".

Internet Companies Oppose DOJ CALEA Petition

4/12. Earthlink, the ISP CALEA Coalition, and VOIP application provider Skype submitted comments to the Federal Communications Commission (FCC) that are critical of many parts of the Department of Justice's (DOJ) March 10 petition for rulemaking [83 pages in PDF].

Earthlink. Internet service provider (ISP) Earthlink, and its attorneys, Sher & Blackwell, submitted a comment [20 pages in PDF] that argues that the FCC should deny the DOJ's request for a declaratory order that broadband internet access and VOIP are subject to the CALEA. Its argument is based upon the CALEA's distinction between "telecommunications carrier" and "information services".

However, Earthlink's argument is nuanced. As an ISP without its own broadband facilities, Earthlink seeks access to the broadband facilities ILECs and cable companies. But, this requires a finding that there is a telecommunications component. Earthlink cannot obtain forced access, or open access, to an information service under the Communications Act. On the other hand, Earthlink also seeks to avoid burdensome regulation and mandates from the DOJ. Only "telecommunications carriers" are subject to the mandates of CALEA. Hence, Earthlink crafts arguments that it can both obtain access to broadband DSL and cable modem facilities, but still not itself be subject to CALEA burdens.

Earthlink provided this analysis. "At the heart of the Joint Petition, however, is one key legal question: Where does CALEA draw the line between the "telecommunications carrier" transmission and switching services that are subject to CALEA and the ``information services´´ that are not? Contrary to the suggestion made by Law Enforcement in the Joint Petition, the Commission cannot decide where to draw that line by looking solely at the definition of ``telecommunications carrier´´. Any determination by the Commission based only on the statutory construction of ``telecommunications carrier´´ is legally unsupportable because Congress affirmatively excluded from the definition of ``telecommunications carrier´´ any person or entity ``insofar as they are engaged in providing information services.´´ Thus, in order to determine whether a person or entity must comply with the assistance requirements of section 103(a) of CALEA, the Commission must first determine to what extent that person or entity is engaged in providing "information services".

Earthlink, which is a party in Brand X v. FCC, argued in it comment that the FCC should follow the opinion of the U.S. Court of Appeals that "broadband Internet access services offered over cable facilities constitute a bundled offering of legally separate "information service" and common carrier transmission service components." (Quotation from Earthlink comment.)

See, October 6, 2003, opinion [39 pages in PDF] of the U.S. Court of Appeals (9thCir) (also published at 345 F.3d 1120), and story titled "9th Circuit Vacates FCC Declaratory Ruling That Cable Modem Service is an Information Service Without a Separate Offering of a Telecommunications Service" in TLJ Daily E-Mail Alert No. 754, October 7, 2003.

Earthlink also argued that the FCC should abandon any efforts to seek a writ of certiorari from the Supreme Court. Earthlink also argued, in passing, that "no meaningful action can be taken on the Joint Petition until the point addressed above is decided ..."

And consequently, Earthlink argued that the FCC should adopt the approach that "broadband transmission used to support Internet service is covered by CALEA", but "Internet access service" is not. Then, Earthlink urged "Leaving broadband telephony for another day ..."

Earthlink further argued that it is "clear that the CALEA requirements with respect to Internet traffic are to be implemented as close to the edges of the network as is operationally feasible. That is, the appropriate intercept point for packet mode Internet traffic is at the first switching facility that the traffic reaches after it leaves the user's premises. In the case of DSL and dial-up services, this typically will be at the first central office of the local exchange carrier that provides the physical connection to the end user's premises. For cable-based communications, this first intercept point typically will be at the Cable Modem Termination System (``CMTS´´) located at the cable headend."

Earthlink therefore opposed the DOJ's argument that the intercept capability requirements extend to all "servers and routers".

In conclusion, Earthlink argued that "Congress did not intend for CALEA to cover ISPs as such. Thus, to the extent that the Joint Petition can be read as an attempt to sweep ISPs lock, stock, and barrel into the definition of "telecommunications carrier" under CALEA, Earthlink object to that approach ..."

ISP CALEA Coalition. The ISP CALEA Coalition submitted a comment [44 pages in PDF] that argued that "CALEA does not apply to ``information services,´´ and that exclusion should be interpreted broadly. The core services provided by the companies in the ISP CALEA Coalition -- including online services; e-mail; and text, voice and video messaging -- are all classic information services. The Commission should reaffirm the scope of the information services exception."

This comment concluded that "the Petition fails to establish a legal basis for regulating broadband access and broadband telephony services under CALEA."

This comment also argued that the DOJ petition "requests the Commission to establish rules and procedures for application of CALEA to future services, and goes so far as to suggest a pre-approval process for new services. This astonishing proposal would cripple innovation on the Internet, quite probably ensuring that new services would always be implemented outside the United States and well beyond the reach of this new regulatory regime. The proposal contradicts Congress's plain intent and should be rejected. No rulemaking on these issues is appropriate."

The ISP CALEA Coalition comment, and the TIA comment, which advance different arguments, were both signed by Stewart Baker of the law firm of Steptoe & Johnson.

Skype. As of April 12, the FCC had published only one comment from a VOIP application provider. Skype Technologies submitted a comment [5 pages in PDF] asking that the FCC rule that the CALEA applies to "underlying transmission networks", but not to applications, such as Skype's, that run on that network.

As of April 12, the FCC had not published comments from (which offers Free World Dialup), SIPphone, or other VOIP application providers.

Skype stated that it is "a Luxembourg company offering peer-to-peer software to consumers throughout the world. By installing this software, users are able to communicate to any other Skype user. At present, 4.5 million people have downloaded Skype’s free software. Though Skype users are currently unable to use Skype to connect to the PSTN, Skype shortly will offer its users a means to make communications to and receive communications from the PSTN."

"Skype is software, not a network", it wrote. "Skype does not provide servers, routers, switches or other transmission facilities that carry, route, or process communications among Skype users. Skype does not ``track´´ users with a central directory. All of these functions are performed, instead, by end-users’ computers, using end-users' Internet access. Because Skype does not carry its users' communications, it is not technically feasible for Skype to offer public safety agencies access to those communications.

It added that "A requirement that Skype and similar application-providers make peer-to-peer communications accessible to the worlds' public safety and law enforcement agencies would effectively eliminate true peer-to-peer networks, which are defined by their decentralization, as well as variants of such networks, such as Skype’s next generation ``one-sided´´ PSTN service."

Consequently, Skype argued that "whenever possible, the Commission should place responsibility for CALEA compliance on PSTN network providers. When reliance on PSTN network providers alone is insufficient, compliance responsibility may also be placed upon broadband transmission providers, as these entities will necessarily have access to the relevant data streams."

The FCC has also received lengthy comments from MCI WorldCom, AT&T, Sprint, Covad, and others that oppose and criticize substantial parts of the DOJ petition. Similarly, the FCC has received lengthy comments in opposition to the DOJ petition from groups that advocate various aspects of the public interest. These comments will be the subject of stories in the next issue of the TLJ Daily E-Mail Alert.

Microsoft and InterTrust Settle DRM Patent Dispute

4/12. Microsoft and InterTrust announced that they have settled all pending patent litigation between the two companies. The dispute involves digital rights management. See, Microsoft release and InterTrust release.

Microsoft stated that it will license "InterTrust's patent portfolio for a one-time payment of $440 million", and that "InterTrust receives rights under Microsoft patents to design and publish InterTrust reference technology specifications related to digital rights management (DRM) and security".

On April 27, 2001, InterTrust filed a complaint in U.S. District Court (NDCal) against Microsoft alleging patent infringement. InterTrust's U.S. Patent No. 6,185,683 discloses systems and techniques for the secure delivery of electronic documents, execution of legal documents, and electronic data interchange. InterTrust alleged that Microsoft's Windows Media Player and other products implementing rights management functions directly and contributorily infringe this patent.

In June of 2001, InterTrust filed its first amended complaint, adding a claim for infringement of its U.S. Patent No. 6,253,193.

In July of 2001, InterTrust filed a second amended complaint in the District Court adding a claim for infringement of InterTrust's U.S. Patent No. 5,920,861, which discloses techniques for defining, using, and manipulating rights management data structures. InterTrust alleged that the infringing products include Microsoft's Reader (application for reading electronic books) and Digital Asset Server.

This case is InterTrust v. Microsoft, U.S. District Court for the Northern District of California, D.C. No. C 01 1640 JL.

People and Appointments

4/12. James Carroll was named Deputy General Counsel of the Treasury Department. He was previously Special Assistant and Associate Counsel to the President for Clearance at the White House. He vetted people under consideration for appointment by the President. See, Treasury release.

More News

4/12. The Federal Communications Commission (FCC) filed its brief [PDF] with the U.S. Court of Appeals (DCCir) in EMR v. FCC, a petition for review of a final order of the FCC promulgating regulations designed to protect individuals from exposure to potentially harmful levels of radiofrequency (RF) radiation. This case is EMR Network v. FCC and USA, U.S. Court of Appeals for the District of Columbia, App. Ct. No. 03–1336.

Go to News from April 6-10, 2004.