TLJ News from July 16-20, 2006

DOJ Obtains Grand Jury Subpoena for Critic of NSA Surveillance

7/20. The U.S. District Court (EDVa) issued a subpoena to Russell Tice to testify on August 2, 2006, before a grand jury of the U.S. District Court. The subpoena was issued upon the application of the Kenneth Melson of the Department of Justice (DOJ). The subpoena does not request any records. It does not identify the subject matter of the testimony sought, the matter being investigated, or what federal criminal statutes may have been violated.

The National Security Whistle Blowers Coalition (NSWBC) issued a release in which it states that Tice is a former National Security Agency (NSA) intelligence analyst and a member of the NSWBC.

This release also states that this subpoena relates to the New York Times' disclosure of an NSA electronic surveillance program.

The New York Times published a story by James Risen and Eric Lichtblau titled "Bush Lets U.S. Spy on Callers Without Courts" on December 16, 2005. It states that "President Bush secretly authorized the National Security Agency to eavesdrop on Americans and others inside the United States to search for evidence of terrorist activity without the court-approved warrants ordinarily required for domestic spying, according to government officials."

See also, stories titled "President Bush Discloses Interception of Communications Without Court Approval" in TLJ Daily E-Mail Alert No. 1,275, December 19, 2005; and "Bush, Gonzales & Hayden Discuss Presidential Intercepts and PATRIOT Act" in TLJ Daily E-Mail Alert No. 1,276, December 20, 2005.

And see, May 11, 2006, article in USA Today by Leslie Cauley titled "NSA has massive database of Americans' phone calls". See also, story titled "Bush Responds to USA Today Story Regarding NSA Database of Phone Calls" in TLJ Daily E-Mail Alert No. 1,369, May 12, 2006.

The NSWBC release quotes Tice as saying that "This latest action by the government is designed only for one purpose: to ensure that people who witness criminal action being committed by the government are intimidated into remaining silent."

See also, May 12, 2006, story in titled "Former NSA officer alleges illegal activities under Hayden" by Chris Strohm.

District Court Denies DOJ Motion Dismiss Class Action Against AT&T Regarding Warrantless Surveillance

7/20. The U.S. District Court (NDCal) issued an Order [72 pages in PDF] in Hepting v. AT&T, a class action against AT&T arising out of AT&T surveillance assistance to the U.S. government. The Order, which is also a lengthy opinion, denies the U.S. government's motion to dismiss based on the state secrets privilege.

The Order also denies AT&T's motion to dismiss based on the plaintiffs lack standing, and based on the argument that telecommunications providers are immune from suit if they receive a government certification authorizing them to conduct electronic surveillance.

Tash Hepting and other individuals filed a complaint in District Court against AT&T alleging violation of the 1st and 4th Amendments to the U.S. Constitution, the Foreign Intelligence Surveillance Act (FISA), the Electronic Communications Privacy Act (ECPA), the Stored Communications Act (SCA), the Communications Act at 47 U.S.C. § 605, and California statutes, in connection with its alleged "collaborating with the National Security Agency (NSA) in a massive warrantless surveillance program that illegally tracks the domestic and foreign communications and communication records of millions of Americans."

The allegations in the complaint relate to the disclosures made by the New York Times in December of 2005, and by USA Today in May of 2006. See, stories titled "President Bush Discloses Interception of Communications Without Court Approval" in TLJ Daily E-Mail Alert No. 1,275, December 19, 2005; "Bush, Gonzales & Hayden Discuss Presidential Intercepts and PATRIOT Act" in TLJ Daily E-Mail Alert No. 1,276, December 20, 2005; and "Bush Responds to USA Today Story Regarding NSA Database of Phone Calls" in TLJ Daily E-Mail Alert No. 1,369, May 12, 2005.

The original complaint was filed on January 31, 2006. The amended complaint [PDF] was filed on February 22, 2006.

The named plaintiffs seek class action certification. The named plaintiffs are represented by the the law firm of Lerach Coughlin Stoia Geller Rudman & Robbins. The senior name partner, William Lerach, and other attorneys in this firm, have a long history of bringing class action lawsuits against large technology and communications companies. However, their legal theories typically have been based upon federal securities statutes, rather than the statutory violations that are alleged in the present case.

The litigation activities of Lerach, and other class action securities lawyers, caused the Congress to twice enact securities litigation reform legislation in the 1990s.

Lerach's former law firm was the former Milberg Weiss Bershad Hynes & Lerach. The current law firm of Milberg Weiss Bershad & Schulman was recently indicted in connection with it class action litigation practices. See, story titled "Milberg Weiss Indicted for Paying Illegal Kickbacks to Class Action Plaintiffs" in TLJ Daily E-Mail Alert No. 1,375, May 22, 2006.

The named plaintiffs are also represented by the law firm of Traber Voorhees and the Electronic Frontier Foundation (EFF).

The United States is not a named defendant. However, it filed a motion to intervene. It also filed a motion [34 pages in PDF, incomplete version] to dismiss or for summary judgment that is the subject of the present opinion. The U.S. is represented in this case by the Department of Justice (DOJ). The DOJ's motion is signed by Anthony Coppolino and Andrew Tannenbaum.

The U.S. deleted numerous items from the publicly released version of this motion. TLJ offers no summary here because the extent of the redactions from the publicly released version render it incapable of accurate summary.

However, the U.S. did argue that the Court should "Dismiss this action because adjudication of Plaintiffs' claims risks or require the disclosure of protected state secrets and would thereby risk or cause exceptionally grave harm to the national security of the United States."

Also, the Court wrote that the U.S. asserted that "(1) the very subject matter of this case is a state secret; (2) plaintiffs cannot make a prima facie case for their claims without classified evidence and (3) the privilege effectively deprives AT&T of information necessary to raise valid defenses."

The U.S. did not argue in the publicly released version that failure to dismiss actions alleging violation of the Communications Act, FISA, ECPA, SCA, and other statutes, could result in civil judgments against the companies that violate these statutes, which in turn would provide a disincentive for companies to provide surveillance assistance to the government in violation of these statutes.

Six law professors who specialize in electronic surveillance and constitutional law filed an amicus curiae brief [PDF] urging the Court to deny the motion to dismiss. They are Susan Freiwald (University of San Francisco), Cynthia Farina (Cornell), Peter Shane and Joseph Platt (Ohio State University), Peter Raven-Hansen (George Washington University), and Erwin Chemerinsky (Duke University).

They wrote that "Federal law strictly prohibits interception of communications without a court order. It requires that telecommunications providers refuse to help the government listen in to citizens’ communications without a court’s approval. When it set up the statutory scheme, Congress recognized that telecommunications providers play a critical role in protecting subscribers’ privacy interests. In contrast to those whose houses are searched, victims of electronic surveillance rarely learn that someone has listened to their telephone conversations without authorization. For that reason, Congress tasked telecommunications providers with ensuring that any surveillance is properly authorized, and provided strict penalties for ignoring that responsibility. This case is about whether the Defendants violated their obligations under the law."

They added that "The Government asks this Court to disrupt this statutory scheme and to decline to decide whether the telecommunications companies violated the law because the case implicates state secrets. However, at least the interception claims, and perhaps all the claims, may be decided based on publicly available information. If Defendants intercepted Plaintiffs' conversations without a court order, they violated federal electronic surveillance law. Liability attaches regardless of what Defendants did with the information afterwards. While the government’s role in these interceptions may be an important part of the public discourse about this case, the government’s actions are not implicated in the interception claims."

This case is Tash Hepting et al. v. AT&T Corporation, AT&T, Inc., and Does 1-20, U.S. District Court for the Northern District of California, D.C. No. C-06-672 VRW, Judge Vaughn Walker presiding.

Federal Reserve Reports on Activity in Tech Sector

7/20. The Senate Banking Committee held a hearing on July 19 titled "The Federal Reserve's Second Monetary Policy Report to Congress for 2006". Federal Reserve Board (FRB) Chairman Ben Bernanke presented the FRB's report [30 pages in PDF] titled "Monetary Policy Report to the Congress". The House Financial Services Committee (HFSC) held a related hearing on July 20.

Bernanke stated in his prepared testimony that "Spending on equipment and software has also been strong."

However, the FRB's written report contained more detail. It states that "Demand for high-technology equipment stepped up noticeably in the first quarter because of a sharp jump in outlays for communications equipment. Providers of telecommunications services appear to be investing heavily in fiber-optic networks, which will allow them to offer a wider range of Internet services; the recent spurt likely also includes some replacement demand for equipment damaged by last year’s hurricanes. In contrast, business demand for computing equipment, while still increasing at a double-digit pace in real terms, has been relatively modest by historical standards so far this year."

It adds that "Industry analysts suggest that firms may be delaying investment in anticipation of introductions, later this year and in early 2007, of several products that will allow faster and more energy-efficient processing. Spending on equipment other than transportation and high-tech goods continued to trend up at a solid pace, on average, during the fourth and first quarters. Demand was particularly strong for metalworking and general industrial machinery as well as for equipment used in construction, energy extraction, and services industries."

The FRB report also states that "Productivity has been rising at a solid rate over the past two years, albeit more slowly than the especially rapid pace that prevailed during the first three years of the expansion. A strong trend in productivity is likely to be maintained as businesses take advantage of new investment in facilities and equipment, as diffusion of technology continues, and as organizational advancements and business process improvements yield further increases in efficiency.

See also, opening statement [PDF] of Rep. Mike Oxley (R-OH).

DOJ and SEC File Criminal and Civil Charges Against Former Brocade Executives for Backdating Stock Option Grants

7/20. The Securities and Exchange Commission (SEC) filed a civil complaint [21 pages in PDF] in U.S. District Court (NDCal) against Gregory Reyes, Antonio Canova, and Stephanie Jensen alleging violation of federal securities laws in connection with their alleged backdating of stock option grants.

In addition, the Department of Justice (DOJ) filed a criminal complaint in U.S. District Court (NDCal) against Reyes and Jensen alleging criminal violation of 15 U.S.C. §§ 78j(b) and 78ff. See, complaint and supporting affidavit [15 pages in PDF]. See also, SEC release describing both actions.

Reyes was previously P/CEO of Brocade Communications Systems, which develops and sells storage networking products. Canova was Brocade's VP for finance and CFO. Jensen was VP of human resources.

The SEC's civil complaint states that "From at least 2000 through 2004, executives of Brocade Communications Systems, Inc. ... a San Jose computer networking company, concealed millions of dollars in expenses from investors, and significantly overstated the Company's income, by falsifying records relating to employee stock option grants. The fraudulent scheme was orchestrated by former chief executive officer Gregory L. Reyes, who routinely executed backdated documents and evaded rules requiring Brocade to publicly report these compensation expenses."

It further states that "In order to provide Brocade employees and executives with far more lucrative ``in-the-money´´ options, while avoiding having to inform shareholders of the millions of dollars in compensation expenses, Reyes engaged in a scheme to grant ``in-the-money´´ options by falsifying company records to create the false appearance that the options had been granted at the market price on an earlier date."

And, the complaint states that "By falsifying the dates on which options were purportedly granted, Reyes and others materially understated Brocade's expenses and overstated its income, and falsely represented in certain filings that Brocade had incurred no expense for options grants."

The SEC's complaint contains eight counts, including violation of Section 17(a) of the Securities Act (15 U.S.C. § 77q(a)), Section 10b of the Exchange Act (15 U.S.C. § 78j(b), Section 13(b)(5) of the Exchange Act (15 U.S.C. § 78m(b)(5), and rules thereunder.

Brocade stated in a release that "No executive officers involved in the historical stock option granting practices remain employed with Brocade."

It added that "In the first quarter of fiscal year 2006, the Company reserved $7 million for a proposed settlement with the SEC. The $7 million is based on an offer of settlement that the Company made to the SEC staff and which the Staff has indicated it would recommend to the SEC Commissioners. This proposed settlement is contingent upon SEC Commissioners approval."

The civil case is SEC v. Gregory Reyes, Antonio Canova, and Stephanie Jensen, U.S. District Court for the Northern District of California, at San Jose, D.C. No. C 06 4435.

The criminal case is USA v. Gregory Reyes and Stephanie Jensen, U.S. District Court for the Northern District of California, at San Francisco, D.C. No. 3 06 70450.

PRC's Ministry of Commerce States It Has Perfect IPR Legal System

7/20. The Ministry of Commerce (MOC) of the Peoples Republic of China (PRC) published a statement on July 19, 2006, by MOC spokesman Chong Quan, in question and answer format, regarding Doha round negotiations, and intellectual property rights (IPR) protection in the PRC. He said that the PRC "has established a perfect IPR legal system". In addition, book publishers' groups in the US and UK recognized the PRC for its recent efforts to penalize textbook copiers.

Chong Quan stated that the "Chinese government always attaches importance to the IPR protection. Since China's entry into WTO, the government has established a perfect IPR legal system. In recent year, Chinese government has taken a series of effective measures and strongly strengthened IPR protection, especially conducted highly effective works in strengthening criminal enforcement, reinforcing coordination among law enforcement agencies in IPR and enhancing publicity of IPR protection. China made huge progress in IPR protection."

He added that "In April 2006, President Hu Jintao reiterated when visiting US that China had a firm position to protect IPR and fight against pirate and IPR infringement crimes. China will maintain improving the legal system of IPR protection, enhance law enforcement, severely fight against various crimes of IPR infringement and protect beneficiaries' legal rights in China according to law. In order to arrange works for IPR protection, China published Outline of IPR Protection Action from 2006 to 2007 and announced China's Action Plan on IPR Protection 2006, and the situation of China's IPR protection would be further improved with the implementation of the above-said plans."

See also, story titled "Hu Says PR China Will Strengthen Intellectual Property Rights and Increase Market Access" in TLJ Daily E-Mail Alert No. 1,355, April 21, 2006.

In a related matter, the Association of American Publishers (AAP) stated in a release on July 20 that "The Chinese government took action against illegal copying of English language textbooks on university campuses in June, with the Copyright Bureaus of two Chinese provinces announcing Punishment Decisions against three university textbook centers for copying books without authorization."

The AAP stated that it and the Publishers Association of the United Kingdom (PA) "recognized the efforts of the Hubei Province and Shanghai City Copyright Bureaus in targeting these activities. The Copyright Bureaus fined universities and/or related textbook service centers at Fudan University (Shanghai), Wuhan University and Wuhan University of Technology. Authorities also confiscated and destroyed pirated copies found on the premises."

The AAP added that Wuhan University of Technology, "where more than 700 infringing copies were seized, received a fine of RMB 20,000 from the Hubei Copyright Bureau. Wuhan University received a fine of RMB 10,000. The Copyright Bureau of Shanghai City levied a fine of RMB 2,000 against the textbook service center of Fudan University and directed the university to cease the infringing activity. The pirated books included titles by member companies of both PA and AAP."

The AAP concluded that "These activities constitute a positive first step in the fight against textbook piracy in China."

People and Appointments

7/20. President Bush nominated Sharon Lynn Hays to be Associate Director of the Office of Science and Technology Policy (OSTP). She is currently OSTP Chief of Staff. Before that she was Staff Director of the House Science Committee's Subcommittee on Research. See, White House release and release.

7/20. President Bush nominated Mary Ourisman to be Ambassador to Antigua and Barbuda, Barbados, St. Kitts and Nevis, Saint Lucia, the Commonwealth of Dominica, Grenada, and Saint Vincent and the Grenadines. See, White House release and release. Antigua and Barbuda, and other Caribbean states, are home to numerous internet gambling operations. Antigua and Barbuda have complained to the World Trade Organization (WTO) that various U.S. laws, including the Wire Act, and laws affecting international money transfers and payments, violate the U.S.'s treaty obligations. See, stories titled "WTO Panel Instructs Congress to Amend Wire Act to Legalize Internet Gambling" in TLJ Daily E-Mail Alert 1,016, November 11, 2004; "WTO Appellate Body Upholds U.S. Laws Affecting Internet Gambling" in TLJ Daily E-Mail Alert No. 1,111, April 8, 2005; and "Allgeier Addresses Trade Agreements and Internet Gambling" in TLJ Daily E-Mail Alert No. 1,118, April 19, 2006. The Congress is now considering further legislation affecting internet gambling, and associated financial transactions. Mary Ourisman married Mandell Ourisman, an automobile dealer and major Republican financial donor. Mary Ourisman is a hostess from Texas whose diplomatic experience consists of making five figure contributions to Republican committees, and appointment to the Board of Trustees of the Washington National Opera. See, Federal Election Commission (FEC) individual donor filings.

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7/20. The House approved HR 5684, the "United States-Oman Free Trade Agreement Implementation Act", by a vote of 221-205. See, Roll Call No. 392. Republicans voted 199-28 for the bill. Democrats voted 22-177.

7/20. The Copyright Office announced in a release that "The Copyright Card Catalog located in the James Madison Memorial Building of the Library of Congress will temporarily close to the public from August 14-18, 2006. The Records Room containing copyright registration records, also located in the Madison Building in LM B-14, will close to the public during the same period." It adds that "As of August 7, 2006, the Copyright Office Public Information Office will be temporarily relocated to room LM-430 of the Madison Building. Hours of service, telephone numbers, and email addresses will remain the same. It is anticipated that the Public Information Office will return to its location in LM-401 by the end of the year."

Microsoft Announces What Some of Its Business Practices Will Be After Expiration of U.S. Antitrust Order

7/19. Brad Smith, Microsoft's General Counsel, gave a speech in Washington DC titled "How Will Microsoft Enhance Windows While Promoting Competition?" He discussed what Microsoft will do when parts of the 2002 antitrust order and consent decree expire. Microsoft also released a document titled "Windows Principles: Twelve Tenets to Promote Competition".

Many provisions of the 2002 antitrust order expire in November of 2007. Although, the parties to the government antitrust actions have agreed to extend until 2009 provisions in the 2002 order that apply to the licensing of client server communication protocols.

Microsoft has also stated that it will release its Windows Vista operating system sometime in 2007.

Brad SmithSmith (at right) stated that "Through the set of voluntary Windows principles that we are announcing and adopting today, we're taking a principled, transparent and accountable approach to the future of our operating system."

He asserted that "We're ensuring that computer manufacturers will have choice; that software developers will have opportunities to build great products on top of Windows, and that users will have interoperability among disparate computer systems and applications."

The statement of principles released by Microsoft states that they only apply to "Windows desktop development projects going forward". Microsoft has, and will continue to develop, products other than its desktop operating systems. This statement does not apply to them.

This statement attempts to address topics in the 2002 antitrust order, which pertains to the Windows desktop operating system. Microsoft's statement does not, however, address several desktop operating system issues. For example, it does not attempt to satisfy the European Commission, which continues to demand that Microsoft make large payments to it in connection with its 2004 Commission Decision [302 pages in PDF]. Nor is there anything in Microsoft's statement about information security, individual privacy, or law enforcement and intelligence agency activities.

OEMs. The statement first addresses Microsoft's relationship with original equipment manufacturers (OEMs). It states that "Computer manufacturers and customers are free to add any software to PCs that run Windows" and are "free to install and promote any operating system, any application, and any Web service on PCs that run Windows."

This statement elaborates that OEMs "are free to add icons, shortcuts and the like to the Windows Start menu and other places used to access software programs" and that "Microsoft will design Windows so as to enable computer manufacturers and users to set non-Microsoft programs to operate by default in key categories, such as Web browsing and media playback, in lieu of corresponding end-user functionality in Windows. Computer manufacturers are free to set these defaults as they please when building new PCs."

This statement further provides that OEMs "will have the right to remove the means by which end users access key Windows features", such as MSIE and MediaPlayer, and that the "Set Program Access and Defaults utility developed as part of the U.S. antitrust ruling makes it easy for users and computer manufacturers to exercise these options."

This statement also asserts that "Microsoft will not retaliate against any computer manufacturer that supports non-Microsoft software" and that "Microsoft will offer Windows for license on standard terms and conditions so that a computer manufacturer knows that it will be offered the same licensing terms regardless of its decision to promote or not promote software from competitors."

Developers and APIs. The statement of principles next addresses Microsoft's relationship with developers. It states that "Microsoft provides the developer community with a broad range of innovative operating system services, via documented application programming interfaces (APIs), for use in developing state-of-the-art applications. The U.S. antitrust ruling requires that Microsoft disclose all of the interfaces internal to Windows called by ``middleware´´ within the operating system, such as the browser, the media player and so forth."

The statement says that "we will continue to disclose these interfaces even after the U.S. antitrust ruling expires. In fact, we will go further, extending our API commitment to the benefit of all software developers. Going forward, Microsoft will ensure that all the interfaces within Windows called by any other Microsoft product, such as the Microsoft Office system or Windows LiveTM, will be disclosed for use by the developer community generally."

It also states that "Microsoft will design Windows Live as a product that is separate from Windows. Customers will be free to choose Windows with or without Windows Live."

Smith stated in his speech that this is "an issue that has really come to the forefront since the U.S. antitrust ruling". He added that Microsoft will design Windows Live as a product that's separate from Windows, so customers will be free to choose Windows with or without Windows Live and building upon the prior tenet, all of the APIs in Windows that are accessible to Windows Live will be accessible to other web services as well."

The statement also states that the "antitrust ruling generally provides that Microsoft may not enter into contracts that require any third party to promote Windows or any ``middleware´´ in Windows on an exclusive basis. We will maintain this practice going forward, and in fact broaden it to apply to Windows or any part of Windows, whether or not it would qualify as "middleware" under the U.S. antitrust ruling."

Net Neutrality. The statement also addresses issues related to open access and net neutrality. It also states that "Microsoft will design and license Windows so that it does not block access to any lawful Web site or impose any fee for reaching any non-Microsoft Web site or using any non-Microsoft Web service."

Smith stated that this "addresses open Internet access. It commits, if you will, that Microsoft will honor the principle of net neutrality. We will never charge a fee for the use of Microsoft Windows to access any legitimate site or service on the Internet."

There are numerous proposals being considered by the House and Senate that relate to network neutrality. None has yet been enacted into law. However, the Federal Communications Commission (FCC) in August of 2005 adopted a policy statement [3 pages in PDF] related to network neutrality.

Microsoft's statement of principles follows the first and second elements of the FCC's policy statement, which provide that "consumers are entitled to access the lawful Internet content of their choice", and that "consumers are entitled to run applications and use services of their choice".

However, neither Smith, nor the written statement of principles, addressed the fourth element of the FCC's policy statement, which provides that "consumers are entitled to competition among network providers, application and service providers, and content providers".

Moreover, the FCC's policy statement is qualified by the clause, "subject to the needs of law enforcement". Neither the statement, nor Smith's speech, addressed this.

Smith was asked to elaborate on net neutrality during the question and answer session. He said that "antitrust enforcement clearly is very important. I think that's been proven in the case of software, and I don't meet general counsel in any major company who would question that premise. In no doubt, antitrust rules and enforcement will continue to play a very important role to new technologies and practices with respect to the Internet."

He added that the key antitrust statute prohibiting monopolization is only two sentences long. This, he said "places quite a substantial burden, I think, on government officials, on judges, on lawyers, and companies to try to predict what the law is going to be."

He also spoke vaguely about legislative proposals. He said that when "we get to a point where the dust has settled, the issues are more concrete, and you can get some codification, that's not bad. And sometimes it's codification in the antitrust arena, but frankly, more often it is then picked up in another regulatory area. And I think that is why I think that the -- whether one agrees or disagrees that a particular bill should be passed, I think it's healthy that everybody is engaged in this kind of dialogue about what the rules of the road will be as the internet moves forward."

Interoperability, Licensing and Standards. Finally, Microsoft's statement of principles addresses interoperability. It states that "Microsoft will make available, on commercially reasonable terms, all of the communications protocols that it has built into Windows and that are used to facilitate communication with server versions of Windows."

It also provides that Microsoft "will generally license patents on its operating system inventions (other than those that differentiate the appearance of Microsoft's products) on fair and reasonable terms so long as licensees respect Microsoft's intellectual property rights." (Parentheses in original.)

And, it states that "Microsoft is committed to supporting a wide range of industry standards in Windows that developers can use to build interoperable products. Microsoft is committed to contributing to industry standard bodies as well as working to establish standards via ad hoc relationships with others in the industry."

Web Site Operator Indicted for Supporting Terrorism

7/19. The U.S. District Court (DConn) unsealed an indictment [14 pages in PDF] that charges Syed Talha Ahsan with conspiracy to provide material support to terrorists, and providing material support to terrorists, in violation of 18 U.S.C. §2339A, and other crimes, in connection with his alleged providing of "material support and resources to persons engaged in acts of terrorism in Afghanistan, Chechnya and elsewhere ... through the creation and use of various internet websites, e-mail communications, and other means" and by providing "expert advice and assistance, communications equipment ... financial services" to recruit, raise funds, and provide assistance.

The indictment, which was returned (issued) but sealed (kept secret) on June 28, 2006, also charges Ahsan with conspiracy to kill/injure persons abroad in violation of 18 U.S.C. § 956, conspiracy in violation of 18 U.S.C. § 371, and aiding and abetting in violation of 18 U.S.C. § 2.

See, full story.

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7/19. The U.S. Court of Appeals (9thCir) issued its per curiam opinion [45 pages in PDF] in Miller v. Glenn Miller Productions, affirming the judgment, and adopting the opinion, of the District Court in favor of Glenn Miller Productions. The Courts held that a licensee of trademark and related publicity rights may not sublicense those rights to third parties without express permission from the original licensor. That is, the Court followed other jurisdictions in extending the sublicensing rule from copyright and patent law to the licensing of trademark and related publicity rights. However, Glenn Miller Productions prevailed because the plaintiffs were barred by the doctrine of laches. This case is Jonnie Miller, et al. v. Glenn Miller Productions, Inc., U.S. Court of Appeals for the 9th Circuit, App. Ct. Nos. 04-55874 and No. 04-55994, appeals from the U.S. District Court for the Central District of California, D.C. Nos. CV-03-00529-AHM and CV-03-00529-AHM, Judge Howard Matz presiding.

11th Circuit Addresses § 230 Interactive Computer Service Immunity and Amazon Book Listing

7/18. The U.S. Court of Appeals (11thCir) issued its opinion [25 pages PDF] in Almeida v., a case involving the interactive computer service immunity provision of 47 U.S.C. § 230. The District Court held that Amazon is immune under § 230 from Florida right of publicity and invasion of privacy claims for listing a book and picture in its web site.

The Court of Appeals affirmed, but solely on state law grounds. In a long but not always clear opinion, it wrote that whether § 230 provides immunity against claims for violation of state intellectual property laws, including the right of publicity, misappropriation, and invasion of privacy, remains an open question. It concluded that it was unnecessary for the District Court to apply § 230.

See, full story.

House Subcommittee Holds Hearing on Access to Whois Database

7/18. The House Financial Services Committee's (HFSC) Subcommittee on Financial Institutions held a hearing titled "Hearing entitled "ICANN and the Whois Database: Providing Access to Protect Consumers from Phishing".

The Internet Corporation for Assigned Names and Numbers (ICANN) is considering proposals to limit access to the WHOIS database of domain name registration information. The database is currently publicly available online. However, many registrants, particularly those who engage in online fraud, spamming, and intellectual property theft, register with false information.

Rep. Spencer Bachus (R-AL), the Chairman of this Subcommittee, used this hearing to make clear his position that the WHOIS database should remain publicly accessible.

Representatives of the Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) and Federal Trade Commission (FTC) took different positions. The NTIA supports maintaining public access. The FTC supports law enforcement access, and public access to information on commercial web sites, but not personal web sites.

John Kneuer, acting head of the NTIA, explained in his prepared testimony [4 pages in PDF] the origin of the present debate. He wrote that the "ICANN's Generic Names Supporting Organization (GNSO) has initiated a policy development process, which among other things, seeks to define the purpose of WHOIS data in the following contexts: ICANN’s mission and core values; laws protecting individual privacy; laws specifically addressing WHOIS; and the changing nature of registered name holders. In April 2006, the GNSO Council voted in favor of a new definition of the purpose of WHOIS data that is to ``resolve issues related to the configuration of the records associated with the domain name within a DNS nameserver.´´"

He wrote that "This definition is considered by many, including the U.S. Government, to reflect a narrow, technical definition. The United States public and private sectors are working within the ICANN process to address this problem." He added that "a narrow, technical definition of the purpose of WHOIS data would hinder continued access to the WHOIS database for a range of legitimate uses."

He argued in both his written and oral testimony, and stated that it is the position of the U.S. government, that there should remain public access to the WHOIS database.

TLJ spoke with Kneuer after the hearing. He reiterated that public access is the position of the U.S. government, and enumerated many U.S. government agencies that concur. He did not name the FTC.

Eileen Harrington, Deputy Director of the FTC's Consumer Protection Bureau, testified that a distinction should be made between access to WHOIS data on commercial web sites and personal web sites. She argued that there should only be public access to data on commercial web sites. See, prepared testimony of the FTC [22 pages in PDF].

Harrington did not explain, either in her oral or written testimony, why persons who use web sites to engage in fraudulent commercial activities would not register their URLs as personal web sites.

Rep. Steve Pearce (R-NM) made the point that if a pervert is communicating with his granddaughter via the internet, that is not commercial activity, but he should be able to find out from the Whois database who is contacting his granddaughter.

Both Rep. Bachus and Rep. Pearce argued that dealing with fraud, phishing, theft, and other bad conduct should not be left to government agencies. Consumers must be able to protect themselves, including by obtaining information about those with whom they deal.

Rep. Carolyn Maloney (D-NY) differed. While her main concern at this hearing was the unrelated issue of freezes on credit files, she also asked Harrington if access to the WHOIS database contributes to identify theft, and whether spammers are using it build spam lists.

Rep. Bachus said that access to the Whois database is one of "important rights of consumers". He added that consumers have a right to protect themselves.

Mark Bohannan, General Counsel of the Software and Information Industry Association (SIIA), argued that the WHOIS database should be publicly accessible. He said that the ICANN proposal would prevent the use of the WHOIS database to track down cybersquatters, infringers of intellectual property rights, phishers, and fraud artists. See, prepared testimony [12 pages in PDF].

Marc Rotenberg, Executive Director of the Electronic Privacy Information Center (EPIC), testified in opposition to the current ICANN policy. He argued that the current policy allows spammers and other bad actors to access the WHOIS database. He said that as with state driver licensing regimes, web site registration information should be accessible only to law enforcement. See, prepared testimony [12 pages in PDF].

Catherine A. Allen of the Financial Services Roundtable argued that WHOIS data should be made available to both law enforcement and financial institutions. See, prepared testimony [23 pages in PDF].

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7/18. The U.S. Court of Appeals (11thCir) issued its opinion [15 pages PDF] in International Stamp Art v.  U.S. Postal Service, affirming the District Court's summary judgment for the US Postal Service (USPS) on International Stamp Art's (ISA) claim of trademark infringement, pursuant to the defense of fair use. ISA registered the mark, the parties stipulated that the mark is incontestable, and the USPS used it. However, it asserted the defense of fair use. The Court of Appeals wrote that a fair use defense is established if a defendant proves that its use is (1) other than as a mark, (2) in a descriptive sense, and (3) in good faith. The only issue in this case is the third element -- good faith. The Court of Appeals held that good faith element means that the defendant must have "intended to benefit from the good will". The Court of Appeals concluded that the USPS had not, so its use was in good faith, and the fair use defense succeeds. This case is International Stamp Art, Inc. v.  U.S. Postal Service, U.S. Court of Appeals for the 11th Circuit, App. Ct. No. 05-13492, an appeal from the U.S. District Court for the Northern District of Georgia, D.C. No. 02-02459-CV-TWT-1.

7/18. Federal Reserve Board (FRB) Governor Kevin Warsh gave a speech in Washington DC titled "Corporate Cash Balances and Economic Activity" in which he stated that "Spending on high-tech equipment has been rising at an annual rate of more than 15 percent, several percentage points faster than in 2003 and 2004, with spending especially strong for telecommunications equipment."

People and Appointments

7/18. Brian Besanceney, the Department of Homeland Security's (DHS) Assistant Secretary for Public Affairs, will leave on July 28, 2006. He will become the Department of State's Deputy Chief of Staff for Planning. See, DHS release.

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7/17. The U.S. District Court (DC) approved the Securities and Exchange Commission's (SEC) plan to distribute $300 Million to investors in SEC v. Time Warner. The SEC stated in a release that it had "charged Time Warner with materially overstating online advertising revenue and the number of its Internet subscribers, with aiding and abetting three other securities frauds and with violating a Commission cease-and-desist order". This case is SEC v. Time Warner, Inc., U.S. District Court for the District of Columbia, Judge Gladys Kessler presiding.

7/17. The House approved HR 3729, the "Federal Judiciary Emergency Tolling Act of 2005", by a vote of 363-0. See, Roll Call No. 377. This bill would permit the Chief Judge of any U.S. District Court to extend deadlines in the event of a natural disaster, civil disobedience, or other emergency.

7/17. The Government Accountability Office (GAO) released a report [76 pages in PDF] titled "Information Technology: Agencies and OMB Should Strengthen Processes for Identifying and Overseeing High Risk Projects".

7/17. The Consumer Electronics Association (CEA) and the Home Recording Rights Coalition (HRRC) filed an amicus curiae brief [25 pages in PDF] with the U.S. District Court (SDNY) in Atlantic Recording Corporation v. XM Satellite Radio. On May 16, 2006, Atlantic and other members of the Recording Industry Association of America (RIAA) filed their complaint against XM Satellite Radio alleging various copyright related claims. The nine count complaint alleges direct infringement of distribution rights, unauthorized digital phonorecord delivery, direct infringement of reproduction rights, and ephemeral recordings infringement. It also alleges inducement of infringement, and contributory and vicarious infringement  The complaint alleges that XM's services are not like traditional terrestrial broadcast radio. The complaint alleges that XM provides a "digital download subscription service that obliterates the careful limits Congress imposed in Section 114". The CEA and HRRC assert that the RIAA's copyright claims are barred by the Audio Home Recording Act of 1992 (AHRA), which is codified at 17 U.S.C. § 1001, et seq. See also, stories titled "Summary of the RIAA Lawsuit Against XM Satellite Radio", "Summary of the Sen. Feinstein's Perform Act", and "Music Licensing, Satellite Radio, and Perform Act Debated" in TLJ Daily E-Mail Alert No. 1,384, June 5, 2006.

Go to News from July 11-15, 2006.