TLJ News from June 16-20, 2007

PFF Releases Report on Online Child Protection

6/20. The Progress and Freedom Foundation (PFF) released a report [119 pages in PDF] titled "Parental Controls and Online Child Protection: A Survey of Tools & Methods". The author is the PFF's Adam Thierer.

The report finds that "parents now have multiple layers of protection at their disposal to shield their children from potentially objectionable media content or to protect them while they are online. These tools include the various content rating and labeling systems, the V-Chip, set-top box parental controls (including gaming console controls), personal video recorders, Internet and mobile media filtering and screening services, monitoring tools, and so on." (Parentheses in original.)

Moreover, "media creators and information distributors are taking steps to help parents make content determinations and better control child access to unwanted media."

The report also addresses various legislative proposals. For example, it states that "Many policymakers are advocating mandatory age verification of minors as a potential solution to some of the concerns expressed above. In particular, many state attorneys general (AGs) are demanding that social networking websites such as MySpace, Facebook, Xanga, and others verify the age of their users before they are allowed on such sites." (Footnotes omitted from all quotations.)

The report argues that "perfect age verification is a quixotic objective and the pursuit of it could create a false sense of security for both parents and children. It is also important that lawmakers do nothing that could force mainstream, domestic social networking sites offshore or, even worse, that could drive the users we are trying to protect to offshore sites."

The report also addresses data retention mandates. "Many lawmakers argue that data about subscribers or consumers should be retained for much longer periods to aid law enforcement efforts." It adds that "In 2006, members of Congress and officials at the Justice Department floated new proposals that would have required ISPs and others (including search engines and social networking sites) to retain data on their customers and traffic flows for long periods (typically between six months and three years, if not longer)." (Parentheses in original.)

The report argues that while government surveillance was feasible when there was a single communications technology and a single monopoly provider, it is not today.

The report states that "Back in the days of a regulated communications monopoly, the monopolist (namely, AT&T) was willing to comply with whatever the government demanded on these matters because (a) cost recovery was possible or even guaranteed through rate-of-return regulatory proceedings, and (b) it was more commonly understood that this was part of the regulatory compact or quid pro quo. Indeed, if you go back and read cold war-era histories that incorporate a communications component, you will discover how AT&T bent over backward to cooperate with the feds on these matters."

But, the report finds, "the world has changed since then and the communications industry has expanded to include more companies, sectors and technologies. Thus, even if the government can demand that telecom companies like AT&T, Qwest and Verizon to retain all the information government wants collected, how far does that really get them? What about Comcast, Time Warner, Cox, Google, Yahoo!, Microsoft, eBay, MySpace.,com, Facebook, Live Journal, and the countless other companies that move or retain data about users or customers?"

It concludes that "government still wants to play the game the old way but now must contend with dozens (and potentially hundreds) of stakeholders instead of just one big communications monopoly." (Parentheses in original.)

The report also addresses risks associated with data retention mandates. It states that "it’s unclear where companies would even store all the information that government wants them to collect", and "who should have access to such data and how those parties would protect all that information from unauthorized uses." The report states a wide range of actors, including identity thieves, hackers, and divorce lawyers would seek access.

The report offers an alternative framework for data retention. It proposes that "the government should be able to ask an ISP (or any other Internet company) to retain data but: (a) only through a well-established judicial subpoena process; (b) only for specific individuals who officials have probable cause to believe are engaging in illegal activities (terrorism, child porn, etc.); and, (c) only for a limited period (officials should seek additional subpoenas for extended data retention)." (Parentheses in original.)

The report concludes that "There is a world of difference between this sort of data preservation policy and the data retention mandates that many lawmakers are proposing today, which would require ISPs and other Internet companies to retain massive amounts of customer data for an extended period."

People and Appointments

Deborah Tate6/20. President Bush announced his intent to nominate Deborah Tate (at right) to be a Commissioner of the Federal Communications Commission (FCC) for a five year term expiring on June 30, 2012. The is a renomination. She is currently an FCC Commissioner. See, White House release. FCC Chairman Kevin Martin praised Tate in a release [PDF].

6/20. President Bush announced his intent to nominate John Young to be Under Secretary for Acquisition, Technology and Logistics at the Department of Defense (DOD). He is currently the DOD's Director of Defense Research and Engineering. See, White House release.

More News

6/20. The  U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register that announces that it requests nominations for membership on its Patent Public Advisory Committee (PPAC) and its Trademark Public Advisory Committee (TPAC). Nominations are due by Saturday, September 1, 2007. See, Federal Register, June 20, 2007, Vol. 72, No. 118, at Pages 33981-33982.

Google Complained to DOJ Regarding Search Functions in Vista

6/19. Microsoft, the Department of Justice's (DOJ) Antitrust Division, and state plaintiffs filed a pleading with the U.S. District Court (DC) titled "Joint Status Report on Microsoft's Compliance with the Final Judgments" in U.S. v. Microsoft, D.C. No. 98-1232 (CKK).

This is the DOJ's antitrust action against Microsoft filed in 1998. Pursuant to the final judgment, the DOJ and U.S. District Court continue to regulate operating system software development by Microsoft. This report addresses numerous topics, including an issue raised by Google regarding search functions.

This report states that Google complained to the DOJ late last year regarding Microsoft's desktop search function in Windows Vista, and that the DOJ notified Microsoft.

The report continues that "Microsoft has worked cooperatively with the Plaintiffs to answer their questions and has provided detailed documentary and technical information to the Plaintiffs and their technical experts. Microsoft believes that Google's complaint is without merit. Nevertheless, Microsoft worked with the Plaintiffs in a spirit of cooperation to resolve any issues the complaint may raise under the Final Judgments. Microsoft has committed to make the changes described in the Plaintiffs' section of this report in Service Pack 1 for Windows Vista. Microsoft anticipates that beta code will be available by the end of the year."

In addition, Thomas Barnett, the Assistant Attorney General in charge of the Antitrust Division, stated in a release that "Through a constructive and ongoing dialogue, the Department, the state Attorneys General, and the District of Columbia continue to ensure that Microsoft complies with all of its obligations under the final judgments ... In addition to reaching an agreement with Microsoft to resolve any issues about desktop search under the final judgments, the Antitrust Division has worked to ensure that Microsoft fully discloses and provides complete technical documentation for all protocols covered by the decrees.”

The U.S. District Court (DC), Judge Colleen Kotelly presiding, will hold a status conference at 10:30 AM on June 26, 2007.

People and Appointments

6/19. Robert Portman resigned from his position as Director of the Office of Management and Budget (OMB) in the Executive Office of the President (EOP). President Bush announced his intent to nominate Jim Nussle to be the next OMB Director. Nussle was a member of the House of Representatives from 1991 through 2007, and Chairman of the House Budget Committee. See, White House release. See also, transcript of statements by Bush, Portman and Nussle at White House event.

More News

6/19. The Department of Commerce's (DOC) Bureau of Industry and Security (BIS), which regulates exports, published a notice in the Federal Register that announces, describes, recites, and sets the effective date (June 19, 2007) for, its amendments to the Export Administration Regulations (EAR) pertaining to exports and reexports to the People's Republic of China (PRC). These rules changes affect, among other things, computers, software, telecommunications, and encryption. See, Federal Register, June 19, 2007, Vol. 72, No. 117, at Pages 33646-33662.

6/19. The Copyright Office (CO) published a notice in the Federal Register that announces that it is extending the deadline to submit reply comments in response to its Notice of Inquiry (NOI) regarding the operation of, and continued necessity for, the cable and satellite statutory licenses under the Copyright Act. The deadline for reply comments was September 13, 2007. The new deadline for reply comments is October 1, 2007. The deadline for initial comments remains July 2, 2007. See, just released notice of extension in the Federal Register, June 19, 2007, Vol. 72, No. 117, at Pages 33776-33777. See also, original notice in the Federal Register, April 16, 2007, Vol. 72, No. 72, at Pages 19039-19055, and technical correction notice in the Federal Register, April 24, 2007, Vol. 72, No. 78, at Page 20374.

6/19. The Copyright Office (CO) published a notice in the Federal Register that announces, describes, recites, and sets the effective date (July 1, 2007) for, its final rule establishing a lower basic registration fee of $35 for copyright claims submitted electronically. This notice states that "This fee applies to all
registrations where the application is submitted electronically, including those registrations where the deposit materials cannot be sent electronically together with the application. At the same time, the Office is retaining its current fee of $45 for processing paper applications for basic copyright registration of a copyright claim." See, Federal Register, June 19, 2007, Vol. 72, No. 117, at Pages 33690-33692.

6th Circuit Holds That People Have a Reasonable Expectation of Privacy in E-Mail Stored With, or Sent or Received Through, an ISP

6/18. The U.S. Court of Appeals (6thCir) issued its opinion [20 pages in PDF] in Warshak v. U.S., a case regarding the 4th Amendment, the Stored Communications Act (SCA), and government access to e-mail held by internet service providers (ISPs).

Summary. The government obtained orders under obsolete provisions of the SCA that enabled it to obtain from two ISPs e-mail from the personal accounts of Steven Warshak, a Cincinnati peddler of "nutraceuticals" and "natural supplements". The government obtained the orders under a mere relevance standard, and provided no notice to Warshak until one year latter. He sued the government.

The Court of Appeals held that "individuals maintain a reasonable expectation of privacy in e-mails that are stored with, or sent or received through, a commercial ISP". Hence, the 4th Amendment's requirement that the government must obtain a warrant based upon probable cause applies to certain stored e-mail. The Court of Appeals added that alternatively the government can give prior notice to the targeted individual. The government cannot merely rely upon the statutory procedure set out in the SCA to seize stored e-mail.

The Court of Appeals also affirmed, with minor modification, the preliminary injunction issued by the U.S. District Court (SDOhio). The Court of Appeals remanded to the District Court to enjoin the government from "seizing the contents of a personal e-mail account maintained by an ISP in the name of any resident of the Southern District of Ohio without either (1) providing the relevant account holder or subscriber prior notice and an opportunity to be heard, or (2) making a fact-specific showing that the account holder maintained no expectation of privacy with respect to the ISP, in which case only the ISP need be provided prior notice and an opportunity to be heard."

This is the first Court of Appeals to address the application of the 4th Amendment to personal e-mail accounts in the possession of an ISP. This is the first Court of Appeals to sustain a facial 4th Amendment challenge to the SCA.

This opinion, if it stands, is a major victory for groups that advocate 4th Amendment and/or privacy rights in the context of information technologies, and a major setback for the Department of Justice's (DOJ) efforts to erode Constitutional and privacy rights associated with these new technologies.

The 4th Amendment requires the government to obtain a court order, based upon a finding of probable cause to believe that a crime has been committed, before it can seize or search "persons, houses, papers, and effects". The Supreme Court has held since its 1967 opinion in Katz v. U.S. that this requirement extends to wiretapping telephone calls.

The Supreme Court applies a "reasonable expectation of privacy" test to determine whether a warrant based upon probable cause is required. The Court applies a two prong test. First, the Court asks whether the person targeted by the government investigation has an actual expectation of privacy in the object of the search. Second, the Court asks whether this expectation of privacy is one that society deems reasonable.

It should be noted here that while it was easy for the courts to apply the second prong to phone conversations, this second prong will challenge the courts in the context of emerging information technologies. First, what degree of privacy society wants is more of a question for democratic and legislative, rather than judicial, processes. Second, most federal judges lack a sufficient understanding how new technologies work, and how they are used, to render societal judgments regarding which uses of which technologies should be accorded protection.

The Department of Justice (DOJ) has long argued that the 4th Amendment protection does not apply to a wide range of communications that involve third party carriers or ISPs, even though such communications are functionally and constitutionally analogous under Katz to phone conversations, or to records that are stored on the servers owned by parties, even though such storage is functionally and constitutionally analogous to "houses, papers, and effects".

This just released opinion squarely addresses whether the 4th Amendment requirement applies to e-mail. In addition, by analogous reasoning, the 4th Amendment probable cause requirement would also apply to many other forms of data stored on the web servers of third party service providers.

Not only is this opinion the first to extend 4th Amendment protection to stored e-mail -- it is sweeping. The District Court sustained a facial challenge to the SCA (as opposed to an as applied to Warshak challenge). The DOJ argued that a facial challenge requires a finding that the statute can never be constitutionally applied. It offered hypothetical factual circumstances under which it argued that application of the SCA would be constitutional. The Court of Appeals went on to hold that 4th Amendment protection would apply in each of these circumstances.

However, there are limitations and uncertainties regarding the reach of this opinion. It clearly reaches personal e-mail accounts. It does not affect "users of electronic bulletin boards" where there is "public posting". It does not affect employers' monitoring of e-mail of employees using company equipment and services. Although, the opinion is not clear regarding government access to employee e-mail when the employer has monitoring policies or agreements. The opinion states at one point that such employees still hold a reasonable expectation of privacy in e-mail as against the outside world. At another point it states that policies of monitoring and auditing can extinguish the expectation of privacy. The opinion lacks clarity on this.

Also, the opinion does not address related questions, such as what is the content of an e-mail, or how cell phone location data should be treated.

See, full story.

Supreme Court Rules in Credit Suisse v. Billing

6/18. The Supreme Court issued its opinion [30 pages in PDF] in Credit Suisse Securities v. Billing, a case regarding when federal securities laws preclude an antitrust claim against securities underwriters.

The Supreme Court wrote that "A group of buyers of newly issued securities have filed an antitrust lawsuit against underwriting firms that market and distribute those issues. The buyers claim that the underwriters unlawfully agreed with one another that they would not sell shares of a popular new issue to a buyer unless that buyer committed (1) to buy additional shares of that security later at escalating prices (a practice called "laddering"), (2) to pay unusually high commissions on subsequent security purchases from the underwriters, or (3) to purchase from the underwriters other less desirable securities (a practice called ``tying´´)." (Parentheses in original.)

The Court continued that "The question before us is whether there is a ``‘plain repugnancy’´´ between these antitrust claims and the federal securities law."

It concluded that there is, and added, "Consequently we must interpret the securities laws as implicitly precluding the application of the antitrust laws to the conduct alleged in this case."

Hence, the Supreme Court reversed the judgment of the U.S. Court of Appeals (2ndCir).

This case is Credit Suisse First Boston Ltd., et al. v. Glen Billing, et al., Sup. Ct. No. 05-1157, a petition for writ of certiorari to the U.S. Court of Appeals for the 2nd Circuit, App. Ct. Nos. 03-9284 and 03-9288. See also, Supreme Court docket.

More Supreme Court News

6/18. The Supreme Court issued three opinions and an Orders List on June 18, 2007. However, it has yet to issue its opinions in Leegin Creative Leather Products v. PSKS and Tellabs v. Makor. Leegin is an antitrust case regarding minimum resale price maintenance by manufacturers and intermediate distributors. The case could impact the way some consumer electronics products are marketed. See story titled "Supreme Court Grants Certiorari in Antitrust Cases" in TLJ Daily E-Mail Alert No. 1,501, December 8, 2007. This case is Leegin Creative Leather Products, Inc. v. PSKS, Inc., Sup. Ct. No. 06-480, a petition for writ of certiorari to the U.S. Court of Appeals for the 5th Circuit, App. Ct. No. 04-41243. See also, Supreme Court docket. Tellabs is a case regarding the heightened pleading requirements of the Private Securities Litigation Reform Act (PSLRA). The outcome will likely impact the number and viability of class action securities lawsuits against technology companies. This case is Tellabs, Inc. and Richard Notebaert v. Makor Issues & Rights, Ltd., et al., Sup. Ct. No. 06-484, a petition for writ of certiorari to the U.S. Court of Appeals for the 7th Circuit, App. Ct. No. 04-1687. See also, Supreme Court docket.

6/18. The Supreme Court denied certiorari in EML Technologies v. Desa IP, a patent case. See, Orders List [9 pages in PDF] at page 2. This lets stand the January 4, 2007, opinion [12 pages in PDF] of the U.S. Court of Appeals (FedCir). This case is EML Technologies, LLC, et al. v. Desa IP, LLC, Sup. Ct. No. 06-1455, a petition for writ of certiorari to the U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 06-1168. See also, Supreme Court docket.

6/18. The Supreme Court denied certiorari in Israel Bio-Engineering Project v. Amgen, a case involving ownership of a patent. See, Orders List [9 pages in PDF] at page 7. This lets stand the January 29, 2007, opinion [22 pages in PDF] of the U.S. Court of Appeals (FedCir). This case is Israel Bio-Engineering Project v. Amgen, Inc., et al., Sup. Ct. No. 06-1552, a petition for writ of certiorari to the U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 06-1218. See also, Supreme Court docket.

6/18. Terry Semel resigned from his position as CEO of Yahoo. He was CEO and Chairman of the Board of Directors. He will continue as non-executive Chairman. The Board  named co-founder Jerry Yang CEO. It named Susan Decker President. See, Yahoo release, Semel's letter to Board, and Board's letter to Semel.

6/18. John Duffy was named Adjunct Fellow at the Progress and Freedom Foundation (PFF). He is a professor at the George Washington University Law School. See, PFF release.

Go to News from June 11-15, 2007.