News from November 11-15, 2004

People and Appointments

11/15. The White House press office announced that President Bush intends to nominate Jonathan Adelstein to be a Commissioner for the Federal Communications Commission (FCC) for the remainder of a five year term expiring on June 30, 2008. He has been an FCC Commissioner since 2002. See, release.

11/15. Diane Griffin was named Associate Chief of the Federal Communications Commission's (FCC) Wireline Competition Bureau. She has been Assistant Chief since October of 2001. Before that she held other positions in the former Common Carrier Bureau. Before going to work for the FCC she was an attorney in the Washington DC office of the law firm of Kilpatrick & Stockton. See, FCC release.

11/15. Secretary of State Colin Powell announced that he will resign. See, Colin Powell's letter to President Bush stating that he resigns, "effective at your pleasure". See also, statement by President Bush.

11/15. Secretary of Education Rod Paige announced that he will resign. See, Paige's letter to President Bush, and statement by President Bush.

11/15. Secretary of Energy Spencer Abraham announced that he will resign. See, Abraham's letter to President Bush, and statement by President Bush.

11/15. Secretary of Agriculture Ann Veneman announced that she will resign. See, statement by President Bush.

More News

11/15. The Office of the U.S. Trade Representative (USTR) announced that it intends to negotiate free trade agreements (FTAs) with the United Arab Emirates (UAE) and Oman. See, USTR release. USTR Robert Zoellick wrote in a letter [6 pages in PDF] to the Senate that the UAE FTA will address intellectual property rights and electronic commerce, among other topics. See also, similar letter [PDF] to the Senate regarding the Oman FTA.

11/15. The Federal Communications Commission's (FCC) Office of Engineering and Technology (OET) announced several corrections to its Report and Order that amends Part 15 of the FCC's rules for broadband over powerline (BPL) systems. This item is titled "Erratum", but lists four errata. See, Erratum [2 pages in PDF]. On October 28, 2004, the FCC released the text [86 pages in PDF] of its Report and Order. The FCC adopted, but did not release, this Report and Order at its October 14, 2004 meeting. This Report and Order is FCC 04-245 in ET Docket No. 04-37 and ET Docket No. 03-104. See also, story titled "FCC Adopts BPL Report and Order" in TLJ Daily E-Mail Alert No. 997, October 15, 2004.

11/15. The Federal Trade Commission (FTC) extended the deadline to submit comments in connection with its two day workshop titled "Peer to Peer File-Sharing Technology: Consumer Protection and Competition Issues". November 15 was the comment deadline. The new comment deadline is January 18, 2005. See, FTC notice of extension. The conference will be held on December 15-16, 2004 at the FTC Satellite Building, 601 New Jersey Ave., NW.

11/15. The European Commission (EC) published a document [47 pages in PDF] titled "Commission Staff Working Document: Community Rules on State Aide for Innovation: vade mecum". This document states that it "seeks to provide a practitioners' guide, which describes the possibilities Member States currently have outside the specific sectors to promote innovation through State aid without distorting competition to an extent contrary to the common interest." It adds the the EC "intends to produce in 2005 a Communication in which the need and potential to expand the possibilities to aid innovation will be explored." See also, document [27 pages in PDF] titled "Vademecum: Community Rules on State Aid", and dated January 9, 2003. Vademecum, or vade mecum, is a rarely used word, from the Latin, meaning something that one carries for frequent use.

Amicus Brief Argues that Wiretap Act Covers Accessing Stored E-Mail

11/12. A collection of groups filed an amicus curiae brief [23 pages in PDF] with the U.S. Court of Appeals (1stCir) in USA v. Bradford Councilman, a criminal case involving the 1986 Electronic Communications Privacy Act (ECPA) and unauthorized accessing of the content of stored e-mail messages.

Background. On June 29, 2004 the U.S. Court of Appeals (1stCir) issued its split opinion holding that there was no violation of the Wiretap Act, as amended by the ECPA, when stored e-mail was accessed, because, since it was in storage, there was no interception within the meaning of the statute. See, story titled "1st Circuit Holds Wiretap Act Does Not Apply to E-Mail in Storage" in TLJ Daily E-Mail Alert No. 930, July 1, 2004.

The First Circuit, sitting en banc, will rehear the case on Wednesday, December 8, 2004, in Boston, Massachusetts. See, story titled "1st Circuit Grants Rehearing En Banc in Councilman Case" in TLJ Daily E-Mail Alert No. 992, October 7, 2004.

The defendant, Bradford Councilman, was an officer of a company that ran an online rare and out of print book listing service. The company also provided e-mail service to some of its book dealer customers. The U.S. Attorney alleged that Councilman used a program to intercept, copy and store e-mail messages from to the book dealer customers, and that Councilman read these messages to gain commercial advantage.

He was charged with violation of 18 U.S.C. § 371 for conspiracy to violate 18 U.S.C. § 2511. The District Court dismissed the charge.

Holding of the Three Judge Panel. The Appeals Court affirmed. The Appeals Court summarized the charge. "Defendant allegedly conspired to intercept the electronic communications, to intentionally disclose the contents of the intercepted communications, in violation of 18 U.S.C. § 2511(1)(a), and to use the contents of the unlawfully obtained electronic communication, in violation of 18 U.S.C. § 2511(1)(c). Finally, the government alleged that defendant had conspired to cause a person to divulge the content of the communications while in transmission to persons other than the addressees of the communications, in violation of 18 U.S.C. § 2511(3)(a). The object of the conspiracy, according to the government, was to exploit the content of e-mail from, the Internet retailer, to dealers in order to develop a list of books, learn about competitors and attain a commercial advantage ..."

18 U.S.C. § 371 provides that "If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both."

18 U.S.C. § 2511(1) provides, in part, that "any person who (a) intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept, any wire, oral, or electronic communication ... shall be punished as provided in subsection (4) or shall be subject to suit as provided in subsection (5)."

The Appeals Court noted that 18 U.S.C. § 2510 contains definitions of both "wire communication" and "electronic communication". The definition of "wire communication" includes "any electronic storage of such communication", while the definition of "electronic communication" makes no reference to stored communications.

Thus, the Court concluded that no interception can occur while the e-mails are in electronic storage. And, since there is no interception, there is no violation of 18 U.S.C. § 2511.

The Appeals Court also commented that "The Wiretap Act's purpose was, and continues to be, to protect the privacy of communications. We believe that the language of the statute makes clear that Congress meant to give lesser protection to electronic communications than wire and oral communications. Moreover, at this juncture, much of the protection may have been eviscerated by the realities of modern technology. We observe, as most courts have, that the language may be out of step with the technological realities of computer crimes. However, it is not the province of this court to graft meaning onto the statute where Congress has spoken plainly."

Congressional Intent. The amicus brief argues that "the absence of the phrase ``electronic storage´´ in the definition of ``electronic communication,´´ when viewed in light of its inclusion in the definition of ``wire communication,´´ is akin to the dog that did not bark."

The brief argues that the Court of Appeals' holding that it reflects an intention to exclude stored electronic communications from the Wiretap Act's protections "badly misconstrues" the ECPA.

The amicus brief asserts that the "Congress added ``electronic storage´´ to the definition of wire communication not to lessen protections for stored e-mail, but rather to expand protections for one-time access to stored voicemail."

Fourth Amendment. The amicus brief also argues that there is a Fourth Amendment issue. It argues that there is an "intimate relationship" between the Fourth Amendment and the Wiretap Act that should "guide" the Court.

The brief puts it this way. "In Berger v. New York, 388 U.S. 41 (1967), the Supreme Court indicated that the Fourth Amendment triggers heightened scrutiny when surveillance is undertaken as ``a series or a continuous surveillance´´ rather than as ``one limited intrusion.´´ ... Under Berger, a statute that regulates ``a series or a continuous surveillance´´ must include special privacy protections or risk facial invalidity under the Fourth Amendment."

"Congress enacted the Wiretap Act soon after Berger, and drafted the statute with Berger in mind. ... Its statutory framework was designed to satisfy the Fourth Amendment in the context of ongoing surveillance."

"This brief concludes that "The Court should construe the temporal aspect of ``intercept´´ in 18 U.S.C. § 2510(4) to encompass ``continuous surveillance´´ as contemplated by Berger. Any statutory ambiguity should be resolved to synchronize the scope of the Wiretap Act with the Fourth Amendment concerns that animate it."

Stored Communications Act. The order granting rehearing en banc also posed the question of "Whether the conduct at issue in this case could have been additionally, or alternatively, prosecuted under the Stored Communications Act?" The amicus brief states that "it is uncertain but unlikely that the conduct at issue violated the Stored Communications Act."

Currently, 18 U.S.C. § 2701(a) contains the basic prohibition, while subsection (c) provides exceptions. Subsection (c)(1) provides that the basic prohibition does not apply to conduct authorized "by the person or entity providing a wire or electronic communications service". Councilman was an officer of the service provider.

The amicus brief reasons that "Councilman's conduct ... likely would be exempt from liability under the exception codified at 18 U.S.C. § 2701(c)(1). This exception states that conduct authorized by ``the person or entity providing a wire or electronic communication´´ is exempt from prosecution under Section 2701. This language was apparently intended to exempt ISPs and their employees from liability for looking through stored files stored on their own networks".

The amici are the Center for Democracy and Technology (CDT), the Electronic Frontier Foundation (EFF), the Electronic Privacy Information Center (EPIC), the American Library Association (ALA), the American Civil Liberties Union (ACLU), and the Center for National Security Studies (CNSS). The brief was written by Orin Kerr of the George Washington University School of Law.

Sen. Leahy Files Amicus Brief in US v. Councilman

11/12. Sen. Patrick Leahy (D-VT), the ranking Democrat on the Senate Judiciary Committee, filed an amicus curiae brief [22 pages in PDF] in USA v. Councilman. He too argues that stored e-mail is covered by the Wiretap Act, as amended by the ECPA.

Sen. Patrick LeahyThis brief states that Sen. Leahy (at right) was "the original sponsor of the Senate version of the" the 1986 ECPA.

His brief argues that the "Congress passed ECPA to update the existing surveillance law framework for new technologies. Recognizing the threat to privacy posed by the continuous, systematic acquisition of electronic communications during their transmission, Congress extended existing prohibitions against the unauthorized ``intercept[ion]´´ of wire and oral communications, enacted in Title III of the Omnibus Crime Control and Safe Streets Act of 1968 ... to electronic communications. Congress intended for Title III to protect electronic communications, like telephone calls, during the entirety of the transmission phase. ECPA’s legislative history fully rebuts defendant’s contention that electronic communications move in and out of Title III’s umbrella depending on whether, at a precise moment in time, they are between or within the computers transmitting them to the user’s mailbox."

His brief was prepared by Peter Swire of Ohio State University's law school and Patricia Bellia of Notre Dame Law School.

Meanwhile, others have proposed legislative fixes. For example, on July 22, 2004, Rep. Jerrold Nadler (D-NY) and others introduced HR 4977, the "E-mail Privacy Protection Act of 2004". This bill would amend the Wiretap Act and the Stored Communications Act to provide that accessing stored e-mail communications, including by e-mail service providers, can constitute criminal violations. See, story titled "Rep. Nadler Introduces Bill to Criminalize Accessing Stored E-Mail" in TLJ Daily E-Mail Alert No. 950, August 2, 2004.

Also on July 22, Rep. Jay Inslee (D-WA) and others introduced HR 4956, the "E-mail Privacy Act of 2004". This bill also responds to the three judge panel's opinion in the Councilman case, and provides increased legal protection under the Criminal Code for stored e-mail communications. However, Rep. Inslee's bill would provide less onerous limitations upon the activities of e-mail service providers than Rep. Nadler's bill. See, story titled "Rep. Inslee Introduces E-mail Privacy Act" in TLJ Daily E-Mail Alert No. 950, August 2, 2004.

Novell Sues Microsoft

11/12. Novell filed a complaint in U.S. District Court (DUtah) against Microsoft alleging violation of antitrust laws in connection with Novell's ownership, over eight years ago, of the WordPerfect word processing application.

Novell and WordPerfect Corporation merged in June of 1994. Novell sold WordPerfect (the word processing application) to Corel in March of 1996.

Novell's General Counsel Joseph LaSala stated in a release that "this lawsuit is unrelated to Novell's current business". Microsoft stated in a release that "It's also unfortunate, and surprising, that Novell has just now chosen to litigate over a business it owned for a very short time and that it sold more than eight years ago. ... their claims should be barred by the legal doctrine called the Statute of Limitations."

Novell asserts that "Microsoft withheld certain critical technical information about Windows from Novell, thereby impairing Novell's ability to develop new versions of WordPerfect and other Novell office productivity applications. The complaint also alleges that Microsoft integrated certain technologies into Windows designed to exclude WordPerfect and other Novell applications from relevant markets. In addition, Novell asserts that Microsoft used its monopoly power to prevent hardware partners from offering WordPerfect and other applications to customers."

Microsoft stated that "Novell seeks to blame Microsoft for its own mismanagement and poor business decisions. The record is clear that bad decisions and business mistakes are the reasons WordPerfect fell out of favor with consumers."

Microsoft added that "Prior to Novell's purchase of WordPerfect in 1994, WordPerfect had already begun to decline. Indeed, Novell’s stock dropped 15 percent the day after it announced the acquisition. WordPerfect deliberately chose not to develop a version for early versions of Windows in the hope that depriving Windows of a key application would limit the success of Windows. This and other missteps led to a decline in WordPerfect popularity that resulted in Novell selling it for approximately one-eighth of what was paid for it only 20 months earlier."

USTR Issues Statement on China's Currency

11/12. The Office of the U.S. Trade Representative (USTR) released a statement regarding recommendations that it has received pursuant to Section 301 regarding the exchange rate for the currency of the People's Republic of China.

The statement announces that "As we have previously made clear, the Administration believes China must move faster to adopt a flexible, market-based exchange rate and we have acted aggressively to persuade the Chinese government to undertake the complex transition toward that goal. Working closely with U.S. Treasury officials, China, according to Governor Zhou of China's People Bank, has made this a top priority and has made a series of policy moves to liberalize rules governing foreign exchange transactions, moved to strengthen and develop the finance sector, adjusted interest rates, and taken other steps toward increasing flexibility in financial policymaking; these are clear signs that the Administration's efforts are paying dividends."

But, it adds, "A Section 301 action would not assist in these efforts, and indeed could be more damaging than helpful at this time."

Section 301 is the statutory means by which the United States asserts its international trade rights, including its rights under WTO Agreements.

FCC Releases Vonage VOIP Order

11/12. The Federal Communications Commission (FCC) released its Memorandum Opinion and Order [41 pages in PDF] that addresses Vonage Holdings Corporation's Petition for Declaratory Ruling regarding its DigitalVoice service in the state of Minnesota..

The FCC adopted, but did not release, this Memorandum Opinion and Order (MO&O) at its November 9, 2004 meeting. This MO&O is FCC 04-267 in WC Docket No. 03-211.

This MO&O states that "we preempt an order of the Minnesota Public Utilities Commission (Minnesota Commission) applying its traditional “telephone company” regulations to Vonage’s DigitalVoice service, which provides voice over Internet protocol (VoIP) service and other communications capabilities. We conclude that DigitalVoice cannot be separated into interstate and intrastate communications for compliance with Minnesota’s requirements without negating valid federal policies and rules."

It continues that the FCC, and "not the state commissions, has the responsibility and obligation to decide whether certain regulations apply to DigitalVoice and other IP-enabled services having the same capabilities. For such services, comparable regulations of other states must likewise yield to important federal objectives. Similarly, to the extent that other VoIP services are not the same as Vonage's but share similar basic characteristics, we believe it highly unlikely that the Commission would fail to preempt state regulation of those services to the same extent."

However, it adds that "We express no opinion here on the applicability to Vonage of Minnesota's general laws governing entities conducting business within the state, such as laws concerning taxation; fraud; general commercial dealings; and marketing, advertising, and other business practices. We expect, however, that as we move forward in establishing policy and rules for DigitalVoice and other IP-enabled services, states will continue to play their vital role in protecting consumers from fraud, enforcing fair business practices, for example, in advertising and billing, and generally responding to consumer inquiries and complaints."

The MO&O also finds that "Minnesota's regulation would likely have the “practical effect” of regulating beyond its borders and therefore would likely violate the Commerce Clause."

This MO&O reviews the nature of Vonage's DigitalVoice service, the Minnesota Public Utilities Commission's (MPUC) September 13, 2003, Order Finding Jurisdiction and Requiring Compliance [9 pages in PDF], and Vonage's September 22, 2003 petition to the FCC. See, part 1, part 2, part 3, part 4, part 5, and part 6 [slow downloading PDF scans]. See also, story titled "FCC Adopts Order on Vonage's VOIP Petition" in TLJ Daily E-Mail Alert No. 1,015, November 10, 2004.

The MO&O states that "We find that the characteristics of DigitalVoice preclude any practical identification of, and separation into, interstate and intrastate communications for purposes of effectuating a dual federal/state regulatory scheme, and that permitting Minnesota’s regulations would thwart federal law and policy. We reach this decision irrespective of the definitional classification of DigitalVoice under the Act, i.e., telecommunications or information service, a determination we do not reach in this Order."

It adds in a footnote that the IP enabled services proceeding "will resolve important regulatory matters with respect to IP-enabled services generally, including services such as DigitalVoice, concerning issues such as the Universal Service Fund, intercarrier compensation, 911/E911, consumer protection, disability access requirements, and the extent to which states have a role in such matters. In addition, the Commission recently initiated a rulemaking proceeding to address law enforcement's needs relative to the Communications Assistance for Law Enforcement Act (CALEA), including the scope of services that are covered, who bears responsibility for compliance, the wiretap capabilities required by law enforcement, and acceptable compliance standards. Our decision in this Order does not prejudice the outcome of our proceeding on CALEA."

With respect to 911 service, the MO&O states that "Because Minnesota inextricably links pre-approval of a 911 plan to becoming certificated to offer service in the state, the application of its 911 requirements operates as an entry regulation. Vonage explains that there is no practicable way for it to comply with this requirement: it cannot today identify with sufficient accuracy the geographic location of a caller, and it has not obtained access in all cases to incumbent LEC E911 trunks that carry calls to specialized operators at public safety answering points (PSAPs). Under the Minnesota “telephone company” rules, therefore, this requirement bars Vonage from entry in Minnesota. To that extent, this requirement is preempted along with all other entry requirements contained in Minnesota’s “telephone company” regulations as applied to DigitalVoice." (Footnotes omitted.)

Nevertheless, the MO&O adds that "Although we preempt Minnesota from imposing its 911 requirements on Vonage as a condition of entry, this does not mean that Vonage should cease the efforts it has undertaken to date and we understand is continuing to take both to develop a workable public safety solution for its DigitalVoice service and to offer its customers equivalent access to emergency services."

FCC Releases MO&O Re Rules for 4.9 GHz Band

11/12. The Federal Communications Commission (FCC) adopted, but did not release, a Memorandum Opinion and Order (MO&O) regarding changes to its rules applicable to the 4.940-4.990 GHz Band at its November 9, 2004 meeting. On November 12, the FCC released the text [15 pages in PDF] of this MO&O. See also, November 9 release [PDF].

This MO&O considers a Petition for Reconsideration filed on July 30, 2003 by the National Public Safety Telecommunications Council (NPSTC) requesting the FCC to reconsider certain of the technical rules in the FCC's Memorandum Opinion and Order and Third Report and Order [50 pages in PDF] establishing licensing and service rules for 4.940-4.990 GHz band. This is Third Report and Order is FCC 03-99. The FCC adopted it on April 23, 2003, and released it on May 2, 2003.

The present MO&O states that the FCC "grants the NPSTC petition in part by adopting new 4.9 GHz emission masks -- one for high power operations (the DSRC-C mask), and one for low power operations (the DSRC-A mask)." (Footnotes omitted. Parentheses in original.)

The MO&O states that "We also reaffirm our decisions in the Third R&O not to adopt a technology standard, and not to make regional planning mandatory in the 4.9 GHz band."

This MO&O is FCC 04-265 in WT Docket No. 00-32. This proceeding is titled "In the Matter of The 4.9 GHz Band Transferred from Federal Government Use" and numbered.

More FCC News

11/12. The Federal Communications Commission (FCC) released its Report and Order [64 pages in PDF] regarding modifications to and extension of its Form 477 local competition and broadband data gathering program. The FCC adopted, but did not release, this Memorandum Opinion and Order (MO&O) at its November 9, 2004 meeting. This MO&O is FCC 04-266 in WC Docket No. 04-141. See also, story titled "FCC to Collect More Data with Form 477" in TLJ Daily E-Mail Alert No. 1,016, November 11, 2004.

11/12. The Federal Communications Commission (FCC) announced that "Due to Scheduled Maintenance the FCC Website and Related Filing Systems Will be Unavailable from Friday 11/12/04 Starting at 9:00 PM EST until Monday 11/15/04 at 6:00 AM EST. During that time, no documents will be available."

People and Appointments

11/11. Paul Otellini was elected CEO of Intel Corporation by its Board of Directors. He has worked for Intel since 1974, and is currently its President and Chief Operating Officer (COO). He will replace Craig Barrett, who will become Chairman of the Board of Directors. Barrett will replace the current Chairman, Andrew Grove, who will become an advisor to the Board and management. See, Intel release.

Go to News from November 6-10, 2004.