TLJ News from December 11-15, 2007

People and Appointments

12/15. Rep. Julia Carson (D-IN) died. See, statement by Rep. Steny Hoyer (D-MD), the House Majority Leader, and statement by President Bush.

11th Circuit Applies 4th Amendment to Contents of Computers Attached to Networks

12/14. The U.S. Court of Appeals (11thCir) issued its opinion [13 pages in PDF] in US v. King, a case regarding the 4th Amendment and warrantless remote searches of laptop computers connected to networks. The Court of Appeals upheld a warrantless government remote search in a sloppily worded opinion that may leave attorneys, judges, and policy makers frustrated by its vagueness.

Introduction. The Court of Appeals affirmed a conviction that followed from evidence obtained in a remote search of a privately owned laptop computer located in a dormitory room. The government did not have either the permission of the owner/defendant or a warrant. The Court of Appeals held that this search did not violate the defendant's 4th Amendment rights.

The opinion is hard to assess because it is lacks clarity and specificity at several points. However, the Court of Appeals held that, for the purpose of analyzing the defendant's 4th Amendment privacy right, "The contents of his computer’s hard drive were akin to items stored in the unsecured common areas of a multi-unit apartment building or put in a dumpster accessible to the public".

This opinion could be far reaching because people tend to use computers, and to attach them to networks.

The likely impact of this opinion is uncertain. First, the Court of Appeals failed to recite key facts. The opinion states that King accessed a network; it does not state who owned and/or operated the network. The opinion states that King was a "civilian contractor"; it does not state for whom he worked or contracted. The opinion states that King "understood that as a user of the base network, his activities on the network were subject to monitoring"; it does not state the source of this, what was subject to monitoring, or by whom.

Second, the Court issued a broad holding regarding computers connected to networks without specifying that its holding is limited to any specific circumstances of the case. Third, the Court of Appeals did not distinguish, compare, or even cite other key cases involving the 4th Amendment and information technologies.

This opinion may be a setback for proponents of 4th Amendment and/or privacy rights in the context of information technologies, and a boon for aggressive federal investigators and prosecutors who seek erosion of Constitutional and privacy rights associated with new technologies.

4th Amendment and Katz. The 4th Amendment to the Constitution provides, in full, that "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized."

The Supreme Court issued its landmark opinion in Katz v. U.S. in 1967. It is reported at 389 U.S. 347. In that case the FBI conducted a warrantless wiretap of a public telephone booth used by the defendant, and introduced the product of those wiretaps into evidence in a criminal trial.

The Supreme Court held that warrants based upon probable cause are required for telephone wiretaps, even when the call is placed from a public phone booth. Stewart wrote that "the Fourth Amendment protects people, not places."

Current 4th Amendment analysis builds on former Justice Harlan concurring opinion, in which he used the phrase "constitutionally protected reasonable expectation of privacy". He elaborated that "My understanding of the rule that has emerged from prior decisions is that there is a twofold requirement, first that a person have exhibited an actual (subjective) expectation of privacy and, second, that the expectation be one that society is prepared to recognize as ``reasonable.´´" (Parentheses in original.)

The Congress followed up on the Katz opinion when it enacted the Omnibus Crime Control and Safe Streets Act of 1968, which is Public Law No. 90-351. It included the Wiretap Act, which is now codified at U.S.C. §§ 2510-2522. Two decades later the Congress extended meaningful statutory protection to electronic communications, including stored communications.

However, the present opinion only involves a 4th Amendment challenge. There was no statutory challenge.

Similar Cases. There are relatively few circuit court opinions regarding application of the 4th Amendment to privacy rights in new information technologies. Hence, the few opinions take on greater importance than most other opinions. While there are some cases regarding application of the 4th Amendment to search and seizures involving new technologies, the Court of Appeals cited none of these. Three such cases are Warshak, Heckenkamp and Simons.

The U.S. Court of Appeals (6thCir) issued its opinion [20 pages in PDF] in Warshak v. U.S. on June 18, 2007. That case concerned the 4th Amendment and government access to e-mail held by internet service providers (ISPs). 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.

Both Warshak and the present case involve a warrantless government search of data stored on a computer. In Warshak, the data was on the server of a third party ISP used by the defendant. In the present case the data was on the personal laptop of the defendant.

See, story titled "6th Circuit Holds That People Have a Reasonable Expectation of Privacy in E-Mail Stored With, or Sent or Received Through, an ISP" in TLJ Daily E-Mail Alert No. 1,597, June 19, 2007.

That case is Steven Warshak v. United States of America, U.S. Court of Appeals for the 6th Circuit, App. Ct. No. 06-4092, an appeal from the U.S. District Court for the Southern District of Ohio, at Cincinnati, D.C. No. 06-00357, Judge Susan Dlott presiding. Judge Boyce Martin wrote the opinion of the Court, in which Judges Martha Daughtrey and William Schwarzer (USDC/NDCal sitting by designation) joined.

The U.S. Court of Appeals (9thCir) issued its opinion [13 pages in PDF] in U.S. v. Heckenkamp in April of 2007. That case involved seizure of data from a computer owned by a student (Heckenkamp) that was located in his dormitory room. The government used evidence seized to obtain a conviction for violation of 18 U.S.C. § 1030. The issue was the admissibility of evidence acquired in a warrantless remote search of the student's hard drive by a university network administrator who was acting in association with the FBI.

Heckenkamp prevailed on the issue of whether he held a reasonable expectation of privacy in the contents of his computer. The Court added that "privacy expectations may be reduced if the user is advised that information transmitted through the network is not confidential and that the systems administrators may monitor communications transmitted by the user." But, "In the instant case, there was no announced monitoring policy on the network."

However, Heckenkamp lost on another issue -- the special needs exception to the warrant and probable cause requirement. That is, the Court of Appeals held that the search was permissible because the network administrator had an independent concern about the security of the university's own computers.

Both Heckenkamp and the present case involve a warrantless government remote search of a computer of the defendant located in the defendant's dormitory room.

See also, story titled "9th Circuit Constrains Computer Privacy" in TLJ Daily E-Mail Alert No. 1,563, April 10, 2007.

That case is U.S.A. v. Heckenkamp, U.S. Court of Appeals for the 9th Circuit, App. Ct. Nos. 05-10322 and 05-10323, appeals from the U.S. District Court for the Northern District of California, D.C. Nos. CR-03-20041-JW and CR-00-20355-JW, Judge James Ware presiding. Judge Sidney Thomas wrote the opinion of the Court of Appeals, in which Judges William Canby and Michael Hawkins joined.

The U.S. Court of Appeals (4thCir) issued its opinion [16 pages in PDF] in U.S. v. Simons on February 29, 2000. It is reported at 206 F.3d 392. The Court of Appeals found that the Simons lacked a reasonable expectation of privacy in the contents of a computer hard drive. However, he was a CIA employee, who used a CIA computer, at the CIA, while there was in effect a CIA policy of auditing computer usage. Simons proceeded to use his CIA computer to download porn. He was caught and prosecuted. The Court of Appeals held that he had no reasonable expectation of privacy.

Both Simons and the present case involve a warrantless government search of a computer used by the defendant. However, in Simons the government owned the computer, while King owned his. (The opinion describes it as "his personal laptop".) Moreover, the opinion in Simons is clear that there was a monitoring policy in place; it recites the wording of the policy; it finds that the language of the policy covered the search in question; and, it states that this served as the basis for the authority to conduct a warrantless search. In contrast, the present opinion makes only one brief reference to "monitoring" in the recitation of facts, and nothing further.

That case is U.S. v. Simons, U.S. Court of Appeals for the 4th Circuit, App. Ct. No. 99-4238, an appeal from the U.S. District Court for the Eastern District of Virginia, Judge James Cacheris presiding, D.C. No. CR-98-375.

Holding in the Present Case. The Court of Appeals applied the two part 4th Amendment test discussed in Katz. (Although, it did not site Katz.) It first held that King satisfied the first prong of the test. That is, King held a subjective expectation of privacy in the contents of his laptop. It wrote that "His experience with computer security and the affirmative steps he took to install security settings demonstrate a subjective expectation of privacy in the files ..."

However, it held that King failed to satisfy the second prong. That is, he did not hold an expectation in privacy that society is prepared to recognize as legitimate.

It wrote that "the threshold issue in this case is whether King had a legitimate expectation of privacy in the contents of his personal laptop computer when it was connected to the base network from his dorm room".

It added that "rather than analyzing the military official’s actions as a search of King’s personal computer in his private dorm room, it is more accurate to say that the authorities conducted a search of the military network, and King's computer files were a part of that network".

It concluded that "The contents of his computer's hard drive were akin to items stored in the unsecured common areas of a multi-unit apartment building or put in a dumpster accessible to the public." Moreover, "Because his expectation of privacy was unreasonable King suffered no violation of his Fourth Amendment rights when his computer files were searched through the computer’s connection to the base network."

The Court of Appeals cited no information technology related cases. Instead, it relied exclusively upon two 11th Circuit cases regarding real property -- one involving common areas of apartment buildings, and the other regarding discarded garbage.

Unanswered Questions. The section of the opinion (at pages 6-8) that articulates the holding as to the 4th Amendment does not reference any monitoring policy.

However, the incomplete recitation of facts (at page 2) states that "King understood that as a user of the base network, his activities on the network were subject to monitoring."

The opinion leaves unanswered whether or not the holding applies only in situations where there is notice of a monitoring policy.

Also, the opinion does not state who owned and/or operated the network, or what was the source and extent of the authority to monitor users. For example, was there a contract, written policy, or something else? Who was authorized to monitor? Did the policy authorize remote searches of users' hard drives? And, does it matter? Does government authority to search flow automatically from a company's authority? If not, can a company with a monitoring policy authorize the government to conduct a search?

The Court of Appeals opinion uses the term "network", but does not elaborate on the meaning this term, or whether different 4th Amendment analysis might apply to different types of networks. For example, does this holding apply only in the case of closed networks operated by or for the military or government? Does it apply only to closed networks? Does it apply to any network, including accessing the internet with a laptop at a coffee shop Wi-Fi hot spot, or accessing the the internet with a smart phone via a carrier's wireless network?

One might interpret this as a workplace monitoring case. However, this would be problematic because the opinion does not state that it is a workplace monitoring or privacy case. Also, the opinion does not even identify King's employer, or whether the network owner and his employer were the same entity. Moreover, workplace monitoring generally involves use of company computers in company offices on company time. King used his own computer in his dormitory room. Moreover, workplace monitoring cases are usually disputes between private sector employers who monitor their employees. There is no government action in these cases, and hence, no 4th Amendment issue. State laws regarding contract and employment control. The present case is a 4th Amendment case involving a law enforcement search.

One might interpret this as a national security case, since the opinion states that the network was associated with a Saudi military base located in Saudi Arabia. However, this would be problematic because the opinion does not state that national security concerns justified the warrantless search. In contrast, the opinion states that the government searched King's laptop because an informant told them that he had files "of a pornographic nature" on it. This is not national security.

One might interpret this as an authorized monitoring case, because of the one brief reference to "monitoring". However, this would be problematic because the opinion fails to state that the warrantless authority is limited to situations involving monitoring policies.

One might interpret this as a closed network case. However, this would be problematic because the opinion does not state so much. The opinion does not even state whether or not the network was closed.

Finally, one might interpret this as a broad holding that any government search of a computer connected any network does not require a warrant. This would be a literal interpretation of the holding section of the opinion. However, this would be problematic because it would be hard to reconcile this with the 4th Amendment and other federal cases.

First, the Heckenkamp opinion clearly provides that absent a policy in effect that permits the person conducting the search to conduct the search without a warrant, searches are not permissible. Second, it would be a stretch to conclude that there is no legitimate expectation of privacy in any computers attached to networks. Third, this conclusion, combined with the holding in Warshak, would lead to the anomalous result that e-mail stored on a third party service provider's server is protected, but e-mail stored on one's own personal laptop is not.

Aggressive government investigators and prosecutors may assert that this case stands for the broad proposition that any computer attached to any network, including internet access, is subject to warrantless government searches. Advocates for 4th Amendment and privacy rights may assert that holding is limited to some specific circumstances, such as a monitoring policy being in place, or a national security nexus.

Alternatively, one might argue that the Court of Appeals simply failed to draft its opinion with clarity sufficient to put attorneys on notice of what the holding is.

This case is U.S. v. Michael David King, U.S. Court of Appeals for the 11th Circuit, App. Ct. No. 07-11808, an appeal from the U.S. District Court for the Middle District of Alabama, D.C. Docket No. 05-00301-CR-WHA. The three judge panel was comprised of Judges Anderson, Carnes, and Pryor. It issued a per curiam opinion.

9th Circuit Issues Opinion in TransUnion Conspiracy Case

12/14. The U.S. Court of Appeals (9thCir) issued its opinion [16 pages in PDF] in US v. Betts, a case regarding sentencing following a plea of guilty to conspiracy under 18 U.S.C. § 371. The ruling regarding sentencing is not technology related.

However, the underlying facts of the case may bear upon to the accuracy of large electronic databases containing personally identifiable information, and the reliance placed upon these databases by businesses and government agencies.

The defendant, Marcus Betts, worked for TransUnion, a data aggregator. He took payments to make changes to the credit records of 654 persons. The Court of Appeals wrote that he "took bribes" as part of a "private sector ticket-fixing scheme". The Court added that his activities caused "around a million dollars in losses to lenders who got stuck with the bad risks".

The Court's opinion does not address the prevalence of this practice at data aggregation entities. Nor does it address the extent to which databases used for identification, immigration, law enforcement, national security, and/or other purposes are similarly compromised.

This case is US v. Marcus Betts, U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 06-50205, an appeal from the U.S. District Court for the Central District of California, D.C. No. CR-04-00172-DOC 3, Judge David Carter presiding. Judge Andrew Kleinfeld wrote the opinion of the Court of Appeals, in which Judges Ronald Gould and Milan Smith joined.

1st Circuit Holds Copyright Act Limitation Applies to State Law Claim for Accounting for Sales of Items for which Copyright Ownership is Disputed

12/13. The U.S. Court of Appeals (1stCir) issued its divided opinion in Cambridge Literary Properties, Ltd. v. W. Goebel Porzellanfabrik, affirming the summary judgment of the District Court for the defendant in an action for an accounting regarding the sale of copyrighted works. The issue is which statute of limitations to apply.

Cambridge Literary Properties (CLP) filed a complaint in U.S. District Court (DMass), based upon diversity of citizenship, against W. Goebel Porzellanfabrik and others seeking an accounting and share of the profits, under state law, regarding the sale of figurines and images in which it claims a copyright interest. The complaint does not plead copyright infringement, or seek a declaration of ownership of copyright, although this fact is in dispute.

Basically, CLP filed its complaint beyond the limitation set by the Copyright Act for claims to establish copyright ownership, but within the state statute's limitation for claims for an accounting.

The Court of Appeals held that the Copyright Act limitation applies, and therefore affirmed the summary judgment of the District Court for the defendant.

The Court of Appeals reasoned that "The accounting and equitable trust claims created by state law are premature. Such claims may well be governed by state law, but they are not ripe and necessarily rest upon plaintiff having met the antecedent showing that it has ownership rights under the Copyright Act. Plaintiff may not assert the state-law claims for accounting or equitable trust without establishing that it is a co-owner. Whether Cambridge is a co-owner in turn depends, on the facts of this case, upon the federal Copyright Act. This in turn requires that Cambridge have asserted its ownership claims within that statute's limitations period."

Judge Cyr wrote in his dissenting opinion that this holding "threatens to draw into the federal courts many copyright-related claims over which Congress deliberately intended to give the state courts concurrent jurisdiction".

This case is Cambridge Literary Properties, No. U.S. Court of Appeals for the 1st Circuit, App. Ct. 06-2339, an appeal from the U.S. District Court for the District of Massachusetts. Judge Lynch wrote the opinion of the Court of Appeals, in which Howard joined. Judge Cyr wrote a dissenting opinion.

Rep. Barton Questions Google on Doubleclick Merger and Privacy

12/12. Rep. Joe Barton (R-TX), the ranking Republican on the House Commerce Committee (HCC), sent a letter to Eric Schmidt, Ch/CEO of Google, that propounds numerous written interrogatories related to the proposed merger of Google and Doubleclick, protection of consumer privacy, and HR 964, the SPY ACT.

rightRep. Barton (at right) asks in this letter about Google's data retention policies (such as for data on consumers' searches), Google's use of that data, including merging of data, Google's privacy policies, Google's use of cookie technology, and behavioral targeting.

The letter also asks about Google's anonymization of data, and whether its practices are consistent with industry-wide practices.

The letter asks Schmidt to "explain how and why information is combined or shared across platforms when consumers opt-in for personalized services and whether Google first requires consent prior to such information-sharing. (For instance, whether search query data is shared with or linked to a user’s Gmail account.)" (Parentheses in original.)

The letter also asks "If the merger of Google and DoubleClick is approved, please describe what use Google plans to make of the data retained and collected by DoubleClick (for example, data from DoubleClick’s tracking cookies or DoubleClick click-stream data), and whether Google plans to combine or merge DoubleClick’s data with data Google retains from individual search queries and other user activity on" (Parentheses in original.)

HR 964. The House passed HR 964, the "Securely Protect Yourself Against Cyber Trespass Act", or "SPY ACT", on June 6, 2007. This bill would prohibit certain deceptive acts or practices related to spyware, and prohibit collection of certain information without notice and consent. See, stories titled "House Subcommittee Approves SPY ACT" and "Summary of HR 964, the SPY ACT" in TLJ Daily E-Mail Alert No. 1,568, April 23, 2007, and "House Approves Commerce Committee's Spyware Bill" in TLJ Daily E-Mail Alert No. 1,591, June 6, 2007.

The House also passed a related bill, HR 1525 [LOC | WW], the "Internet Spyware (I-SPY) Prevention Act of 2007", on May 22, 2007. See, story titled "House Approves Spyware Bill" in TLJ Daily E-Mail Alert No. 1,586, May 23, 2007. However, the Senate has not passed either bill.

Rep. Barton wrote in his letter to Schmidt that HR 964 "mandates an opt-in privacy regime by prohibiting the collection of personal information from a computer without a user’s notice and consent prior to the execution of any information collection program. H.R. 964 also demands that a user be able to easily remove or disable the information collection program."

He asked Schmidt to "explain whether Google’s applications are subject to H.R. 964's consent requirements. If the answer is no, please explain why these programs, which collect personal information, are not subject to the consent regime established by H.R. 964."

Rep. Barton's letter propounds 24 numbered questions, many of which include multiple questions. He asked for answers by Tuesday, December 18, 2007.

EPIC Seeks Recusal of Majoras in Google Doubleclick Merger Review

12/12. The Electronic Privacy Information Center (EPIC) and the Center for Digital Democracy (CDD) submitted a filing [PDF] to the Federal Trade Commission (FTC) requesting the recusal of FTC Chairman Deborah Majoras from the pending review of the proposed merger of Google and Doubleclick.

The EPIC is a Washington DC based group that advocates privacy interests. It also opposed the merger on the grounds that it would adversely impact individual privacy.

It argued in its April 20, 2007, complaint [11 pages in PDF] to the FTC that "Neither Google nor DoubleClick have taken adequate steps to safeguard the personal data that is collected. Moreover, the proposed acquisition will create unique risks to privacy and will violate previously agreed standards for the conduct of online advertising." See also, supplemental materials [21 pages in PDF] submitted on June 6, 2007. See also, the EPIC's web section on the proposed merger.

The two groups wrote in their just filed recusal request that "Petitioners learned on Monday, December 10, 2007 that Doubleclick, a party to the proceeding, has retained the Washington law firm of Jones Day to represent the company before the Federal Trade Commission in the pending merger review."

They continued that "Majoras is a former equity partner of the law firm Jones Day" and that her husband, John Majoras, "is currently an equity partner with the law firm Jones Day".

They added that Majoras has recused herself in other proceedings in which Jones Day represents a party.

They argued that they "do not accept the premise that the spouse of the Chairman should represent a client in the pending matter and profit from an outcome that is favorable to the client. Such an outcome calls into question the ability of the Commission to render decisions that are fair and just. Ethical guidelines were established to prevent precisely such situations."

Marc Rotenberg of the EPIC and Jeff Chester of the CDD submitted the filing.

Copps and Adelstein Complain About FCC Media Ownership Agenda Item

12/12. Commissioners Michael Copps and Jonathan Adelstein complained about the inclusion in the agenda [PDF] for the Federal Communications Commission's (FCC) event on December 18, 2007, of an item regarding FCC regulation of ownership of media. See also, story titled "FCC Announces Agenda of December 18 Event" in TLJ Daily E-Mail Alert No. 1,687, December 12, 2007.

The FCC has not released a text of any rules to be adopted at the December 18 event. However, FCC Chairman Kevin Martin released a proposal [PDF] on November 13, 2007.

Martin proposed allowing one entity to own a newspaper and one television station or one radio station, in the largest markets, subject to criteria and limitations. See, story titled "Martin Releases Media Ownership Proposal" in TLJ Daily E-Mail Alert No. 1,675, November 13, 2007.

Copps and Adelstein wrote in their joint statement [PDF] that "We are deeply disappointed that the announced agenda for the December 18 open meeting includes media ownership. This is a huge mistake. The FCC should have heeded the calls of Congress and the American people to conduct a credible process on an issue of this importance to our very democracy. That means providing a meaningful opportunity for public input, rather than the callous disregard exhibited thus far -- most recently, the Chairman circulated a draft decision on his proposal two weeks before public comment was even due! And it means taking meaningful action on minority and female ownership and broadcast localism, rather than the mish-mash of half-baked ideas currently before us."

The two added that "We have been engaged in internal discussions to try to get our processes back on track. We wish those discussions had led to better results. At this point, given the lateness of the hour, we hope that either we can turn this around internally, or that Congress can save the FCC from itself."

The Media Access Project (MAP) submitted a comment [PDF] to the FCC on December 11, 2007. It criticized Martin's proposal, criticized the administrative procedure being used by the FCC in this set of proceedings, and called on the Congress to "enact legislation to terminate the FCC’s authority to modify its ownership rules".

The National Association of Broadcasters (NAB) also submitted a comment [33 pages in PDF] on December 11. It urged the FCC "to act expeditiously on the November 13 proposal to revise the blanket ban on newspaper/broadcast cross-ownership."

The NAB argued that there "is no empirical or policy justification for retaining this 32-year-old ban, especially given the Commission’s previous determination, subsequently upheld by the court, that the ban was no longer in the public interest. In fact, as discussed in detail above and in numerous prior submissions, a more extensive revision of newspaper cross-ownership restrictions would be entirely appropriate."

Copyright Office Issues Notice of Inquiry Regarding Cable Systems

12/12. The Copyright Office (CO) published a notice in the Federal Register that announces, describes, and sets comment deadlines for, a Notice of Inquiry (NOI) regarding the meaning of the Copyright Act's term "cable system", and issues related to the phantom signal phenomenon.

The National Cable and Telecommunications Association (NCTA) filed of a petition for rulemaking to address cable copyright royalty issues arising from the current definition of "cable system". The CO has issued a NOI, rather than a notice of proposed rulemaking (NPRM).

The Copyright Act, at 17 U.S.C. § 106, provides that "the owner of copyright under this title has the exclusive rights to do and to authorize" certain things. However, the Copyright Act also includes numerous limitations on these exclusive rights. 17 U.S.C. § 111 provides that certain secondary transmissions are not an infringement of copyright. It creates for cable systems a statutory license to retransmit a performance or display of a work embodied in a primary transmission made by a television station licensed by the Federal Communications Commission (FCC). Cable systems that retransmit broadcast signals in accordance with the provisions governing the Section 111 statutory license are required to pay royalty fees to the CO. The CO has promulgated rules implementing this statutory license.

Section 111(f) defines "cable system" as "a facility, located in any State, Territory, Trust Territory, or Possession, that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service. For purposes of determining the royalty fee under subsection (d)(1), two or more cable systems in contiguous communities under common ownership or control or operating from one headend shall be considered one system."

The CO offered its summary of the phantom signal phenomenon. It wrote that "The circumstance usually has occurred when two or more cable systems (large or small) merge and where each of the former systems carried a unique set of distant broadcast signals. Consequently, a portion of the newly merged cable system's subscriber base may not receive certain distant signals for a certain period of time." (Parentheses in original.)

The CO continues that based on its analysis of Statement of Account forms (SOAs) on file, "we find that there are three possible phantom signal scenarios: (1) when two larger cable systems (those that use the Form 3 statement of account form) with different channel line-ups merge; (2) when a larger cable system and a smaller cable system (those that use the Form 1-2 Statement of Account form), with different channel line-ups, merge; and (3) when a smaller cable system merges with another smaller cable system, with different channel line-ups, resulting in a Form-3 cable system."

The CO wrote that "Phantom signals may arise because the systems are not yet technically integrated and thus an operator is incapable of retransmitting the distant signals to all subscribers it serves after a merger. That is, the distant signals cannot be made available to certain subscriber groups. However, if over time, the cable systems become technically integrated, and the signals are apparently available to all subscribers, then the phantom signal problem would disappear. The new integrated system would be considered like any cable system that decides to offer a complement of distant signals to one subscriber group, but not another. In these circumstances, and under present regulations, the operator would be required to pay a statutory royalty based on the gross receipts of all subscribers served by the cable system even if certain subscribers are not offered certain distant signals."

The NCTA stated in its petition that the statutory definition of "cable system" and the phantom signal phenomenon give rise to royalty payment issues. It also proposed solutions. In particular, it proposed the creation of subscriber groups for the purpose of eliminating the phantom signal phenomenon.

The CO's notice summarizes and analyzes the NCTA's petition, and poses questions for public comments. It requests comments on the NCTA's proposals, how the NCTA's proposal would affect royalty collections, among other questions.

Initial comments are due by February 11, 2008. Reply comments are due by March 26, 2008. For more information, contact either Ben Golant, CO Assistant General Counsel, or Tanya Sandros, CO General Counsel. See, Federal Register, December 12, 2007, Vol. 72, No. 238, at Pages 70529-70540.

More IP News

12/7. The Department of Defense (DOD) published a notice in the Federal Register that announces, describes, recites, and sets the effective date (December 7, 2007) for, a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to add a clause pertaining to patent rights under contracts awarded to large business concerns for experimental, developmental, or research work. See, Federal Register, December 7, 2007, Vol. 72, No. 235, at Pages 69159-69162.

Greg Garcia Addresses Cybersecurity

12/11. Greg Garcia, the Department of Homeland Security's (DHS) Assistant Secretary for Cybersecurity and Communications, gave a speech in New York City at the New York Metro Infragard conference titled "Critical Infrastructure Protection in the Financial Services Sector". He discussed cyber threats, federal activities and collaboration with the private sector, criminal investigation and enforcement, telework as response to a flu pandemic, and network capacity to handle an increase in telework.

He stated that "Hackers are becoming more sophisticated and focused in their efforts. Criminal computer code is now written at the PhD level, and sold cheaply on the Internet." He said that "What was once a nuisance committed by various individuals years ago has now progressed into organized efforts by highly skilled professionals."

He added that "Our adversaries are also seeking our intellectual capital and proprietary information".

He advocated securing systems by collaboration and information sharing, through such mechanisms as the DHS's U.S. Computer Emergency Readiness Team (US-CERT). He also discussed the DHS's EINSTEIN early warning system, and the National Institute of Standards and Technology's (NIST) National Vulnerability Database (NVD).

Garcia said that in March of 2008 there will be a second national cyber exercise, titled "Cyber Storm II". He said that this exercise will examine "our response and coordination mechanisms against a simulated cyber event affecting international, federal, state, and local governments, and the private sector".

He also said that the DHS is working "to prepare for and, if necessary, respond to a national-level cyber incident", such as the "denial of service attack against the government of Estonia".

He also advocated telecommuting. He stated that it "will be a key mechanism to keeping our businesses and government operational during a pandemic flu".

He elaborated on the "potential communications consequences of a pandemic influenza". He said that "while the telecommunications backbone is unlikely to experience congestion, the so-called last mile -- to the home and the enterprise -- could experience disruptive congestion".

FCC Announces Agenda of December 18 Event

12/11. The Federal Communications Commission (FCC) released a tentative agenda [4 pages in PDF] for its event scheduled for December 18, 2007, titled "Open Commission Meeting". This agenda includes seven items, including adoption of new rules regulating ownership of media.

1. The FCC is scheduled to adopt a 12th Annual Report and Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services. The proceeding is WT Docket No. 07-71

2. The FCC is scheduled to adopt a 2nd Further Notice of Proposed Rulemaking (NPRM) regarding licensing satellite digital audio radio service (SDARS) terrestrial repeaters in the 2320­2345 MHz frequency band. The FCC is also scheduled to adopt a NPRM regarding facilitating the coexistence of SDARS and Wireless Communications Service licensees.

3. The FCC is scheduled to adopt a Report and Order (R&O) regarding its regulation of the ownership of media. The FCC's notice states that this R&O "addresses the relevant issues remanded by the U.S. Court of Appeals for the Third Circuit in Prometheus Radio Project, et al. v. FCC., 373 F.3d 372 (2004), and responds to petitions for reconsideration of the 2002 Biennial Review Order."

4. The FCC is scheduled to adopt a R&O and 3rd Further NPRM regarding initiatives designed to increase participation in the broadcasting industry by new entrants and small businesses, including minority and women owned businesses.

5. The FCC is scheduled to adopt a NPRM regarding trends in embedded advertising and the efficacy of the current sponsorship identification rules with regard to embedded advertising.

6. The FCC is scheduled to adopt a R&O and NPRM in its Broadcasting Localism proceeding. This proceeding is MB Docket No. 04-233.

7. The FCC is scheduled to adopt a 4th R&O and NPRM establishing the cable horizontal ownership limit and seeking comment on vertical ownership limits and cable and broadcast attribution rules.

This event is scheduled for 10:30 AM on Tuesday, December 18, 2007, in the FCC's Commission Meeting Room, Room TW-C305, 445 12th Street, SW. The FCC's recent events titled "Open Commission Meeting" have rarely been held at the time announced by the FCC. The FCC does not always take up all of the items on its published program. The FCC sometimes adds items to the program without providing the "one week" notice required 5 U.S.C. § 552b. The FCC usually does not release at its events copies of the items that it adopts at its events.

House Passes Two Do Not Call Registry Bills

12/11. The House passed HR 2601 [LOC | WW], "Do-Not-Call Registry Fee Extension Act of 2007", and HR 3541 [LOC | WW], the "Do-Not-Call Improvement Act of 2007", by voice votes.

The House Commerce Committee (HCC) approved HR 2601 and HR 3541 on October 30, 2007. See, stories titled "House Commerce Committee Approves Do Not Call Registry Fee Extension Bill" and "House Commerce Committee Approves Bill to Preclude Expiration of Do Not Call Registrations" in TLJ Daily E-Mail Alert No. 1,666, October 31, 2007.

HR 3541 provides that registrations of numbers with the Do Not Call Registry do not expire after five years. HR 2601 extends and amends the Federal Trade Commission's (FTC) authority to collect Do Not Call Registry fees.

Rep. John Dingell (D-MI), the Chairman of the HCC, stated in the House that these two bills "strengthen and ensure the continued operation of one of the most popular Federal consumer protection programs ever adopted by the Congress, the registry that allows consumers to list their phone numbers and thereby protect themselves from unwanted telemarketing phone calls."

Rep. John DingellRep. Dingell (at right) added that "Congress originally assigned the task of implementing and enforcing the Do-Not-Call Registry to the Federal Communications Commission, but they proved less than enthusiastic and nothing ensued. We then directed the Federal Trade Commission to perform these tasks. To date, the Registry established by the FTC includes over 145 million telephone numbers, and the FTC has initiated 27 cases alleging Do-Not-Call violations, resulting in orders totaling $8.8 million in civil penalties and $8.6 million in redress or disgorgment."

HR 3541 amends the Do-Not-Call Implementation Act, which was enacted in 2003 to implement a Do Not Call Registry. The 2003 Act is Public Law No. 108-10. It is codified at 15 U.S.C. § 6101 note. Section 3 of the 2003 Act requires the Federal Communications Commission (FCC) to adopt certain rules. Section 2 authorizes the FTC to adopt rules.

The 2003 Act is silent on the subject of automatic expiration. However, the FCC and FTC wrote a five year expiration into their rules. This bill eliminates the expiration.

It provides that "Telephone numbers registered on the national `do-not-call´ registry of the Telemarketing Sales Rule (16 C.F.R. 310.4(b)(1)(iii)) since the establishment of the registry and telephone numbers registered on such registry after the date of enactment of this Act, shall not be removed from such registry except as provided for in subsection (b) or upon the request of the individual to whom the telephone number is assigned." (Parentheses in original.)

Subsection (b) provides that the FTC "shall periodically check telephone numbers registered on the national `do-not-call´ registry against national or other appropriate databases and shall remove from such registry those telephone numbers that have been disconnected and reassigned."

The related bill in the Senate is S 2096 [LOC | WW]. The Senate Commerce Committee (SCC) amended and approved it on October 30, 2007. See, story titled "Senate Commerce Committee Approves Bill to Preclude Expiration of Do Not Call Registrations" in TLJ Daily E-Mail Alert No. 1,666, October 31, 2007. The Senate has yet to approve either HR 3541 or S 2096.

HR 2601 also amends the 2003 Act. It extends the authority of the Federal Trade Commission (FTC) to collect Do-Not-Call Registry fees to fiscal years after fiscal year 2007.

This bill also lower fees for telemarketers who access the database to $54 per area code, or a maximum of $14,850, with the first five area codes free. Currently, telemarketers pay $62 for each area code, with the first five area codes free, and total fees capped at $17,050.

The related bill in the Senate is S 781 [LOC | WW], also titled the "Do-Not-Call Registry Fee Extension Act of 2007". The SCC approved an amended version [7 pages in PDF] of this bill on August 2, 2007. See, story titled "Senate Commerce Committee Approves Bill to Revise and Extend Do Not Call Registry Fees" in TLJ Daily E-Mail Alert No. 1,620, August 1, 2007. The full Senate has yet to approve either HR 2601 or S 781.

On November 27, 2007, the FCC adopted a Notice of Proposed Rulemaking (NPRM) seeking comment regarding extension of the current five year registration period for the Do Not Call Registry. See, story titled "FCC Adopts NPRM Regarding Extending Do Not Call Registrations" in TLJ Daily E-Mail Alert No. 1,680, November 30, 2007. The FCC released the text on December 4, 2007.

Public Knowledge Asks FCC to Declare that Blocking and Refusing to Carry Text Messages Violates Title II

12/11. The Public Knowledge (PK), Consumer Federation of America (CFA), Consumers Union (CU), Educause, Free Press, Media Access Project (MAP), New America Foundation (NAF) and USPIRG filed a Petition for Declaratory Ruling [33 pages in PDF] with the Federal Communications Commission (FCC) regarding carriers' blocking of certain text messages.

The petition alleges that "Mobile carriers currently can and do arbitrarily decide what customers to serve and which speech to allow on text messages, refusing to serve those that they find controversial or that compete with the mobile carriers' services."

The petition offers as an example Verizon Wireless's recent action with respect to messages of the National Abortion Rights Action League (NARAL). The petition alleges that "In September of 2007, Verizon refused to issue a short code to NARAL Pro-Choice America, an activist group which was seeking to keep its supporters up-to-date via text messages like similar organizations had done in the past."

See, story titled "Verizon Wireless and Net Neutrality Advocates Clash Over Text Messaging" in TLJ Daily E-Mail Alert No. 1,647, September 27, 2007. See also, letter from Verizon Wireless to NARAL dated September 27, 2007, and NARAL's web page titled "NARAL Pro-Choice America Wins Fight over Corporate Censorship".

The petition also addresses VOIP and Rebtel. It states that "several wireless carriers refuse to provision text messaging services to companies that offer Voice over Internet Protocol (``VoIP´´) phone calls in competition with the wireless carrier. Earlier this year, several carriers including Verizon and Alltel refused to carry short code messages for Rebtel, a telecommunications entrant offering service in over forty countries. Rebtel offers consumers the ability to make phone calls, including international calls, by using a local number and connecting to a VoIP network. The mobile carriers publicly admitted that they denied Rebtel's request because Rebtel's services competed with their own."

The petition argues that "The wireless industry should not be permitted to make these discriminatory decisions." It continues that "These practices violate the Title II obligations held by all carriers and are also contrary to the public interest, which Title I mandates the FCC to protect. Such discrimination restricts free speech, is anticompetitive, stifles innovation, and even affects public health."

The petition requests that the FCC "declare that text messaging services, including those sent to and from short-codes, are governed by the anti-discrimination provisions of Title II of the Communications Act, and that discrimination is therefore prohibited in providing these services."

It requests, in the alternative, that the FCC "should use its Title I ancillary jurisdiction to apply the nondiscrimination provisions of Title II to these services to ensure a robust and open communications infrastructure."

Ben Scott, of the Free Press, stated in a PK release that "Free speech should be protected everywhere -- whether it's text messages, phone calls, e-mails or the Internet ... But unless the FCC explicitly prohibits blocking and interference on all these platforms, the censorship policies of Verizon and AT&T are what we can expect to see time and again. If we can't trust these corporate gatekeepers to deliver a text message, why would we chance handing over the future of all communications?"

GAO Finds There Is No Comprehensive Plan for DTV Transition

12/11. The Government Accountability Office (GAO) released a report [56 pages in PDF] titled "Digital Television Transition: Increased Federal Planning and Risk Management Could Further Facilitate the DTV Transition".

It reports that the Federal Communications Commission (FCC) and National Telecommunications and Information Administration (NTIA) "in conjunction with other stakeholders, have taken steps to facilitate the DTV transition." The report review the activities of the FCC, NTIA, and private sector entities.

But, the GAO found that "no comprehensive plan exists for the DTV transition".

It wrote that "a comprehensive plan can detail milestones and key goals, which provide meaningful guidance for assigning and coordinating responsibilities and deadlines and measuring progress. Such planning also includes assessing, managing, and mitigating risks, which can help organizations to identify potential problems before they occur and target limited resources."

The report finds that the FCC and NTIA "have made progress in educating consumers about the DTV transition", but that "the initiative is still largely in the planning stages, and widespread efforts have yet to be implemented."

The report also finds that the NTIA "has made progress in implementing the converter box subsidy program", but that "the program still faces certain challenges".

The FCC simultaneously issued its response [99 pages in PDF] titled "FCC Written Response to the GAO Report on DTV".

The NTIA issued a release on December 11 announcing that "seven of the largest consumer electronics retailers -- Best Buy, Circuit City, Kmart, RadioShack, Sam's Club, Sears, Target, Wal-Mart -- have been certified to participate in the TV Converter Box Coupon".

Jason Oxman, of the Consumer Electronics Association (CEA), stated in a release that "The DTV transition is on schedule and is working. Successfully transitioning the nation to digital television requires the government and private sector to work cooperatively to educate consumers, and we are encouraged by GAO's finding that the `FCC and NTIA, along with industry and other private sector stakeholders, have made progress in educating consumers about the DTV transition.´ Since GAO completed its survey in August, the extensive outreach of NTIA and the FCC, particularly to minority, low income, and elderly constituencies, has been impressive."

Martin Responds to Dingell's Questions About Lack of Transparency at the FCC

12/11. Rep. John Dingell (D-MI), the Chairman of the House Commerce Committee (HCC), sent a letter [3 pages in PDF] on December 3, 2007, to Federal Communications Commission (FCC) Chairman Kevin Martin to complain about "an apparent breakdown in an open and transparent regulatory process" at the FCC, and to propound a set of written interrogatories to be answered by Martin.

Chairman Martin sent a letter [15 pages in PDF] in response to Rep. Dingell on December 11, 2007. He provided responses to the interrogatories, and assured Rep. Dingell that he shares his interest in transparency.

There is much in FCC procedures, activities and operations that lacks transparency. The same is the case for the HCC's legislative process. There is is also a mutual lack of transparency about the relationship, communications and interactions between the FCC and HCC. Members of the FCC and HCC rarely speak publicly about any lack of  transparency.

This exchange of letters reveals differences between Chairman Martin and Rep. Dingell. Also, Martin's letter includes a discussion of some aspects of the rule making process at the FCC that some may find informative.

Rep. Dingell stated in his December 3 letter that the HCC's Subcommittee on Oversight and Investigations (SOI) will conduct "further inquiry into Commission procedures to ensure that the Commission processes are fair, open, and transparent ..."

He cited as examples of lack of transparency that the FCC "does not put the text of proposed rules out for notice and comment; there is little public notice of certain proposed Commission actions; and Commissioners are often not informed of the details of draft items until it is too late to provide the necessary scrutiny and analysis that is so important to reasoned decision-making."

Some FCC Commissioners complained about lack of transparency in their statements associated with items adopted at the FCC's event on November 30, 2007. See, stories in TLJ Daily E-Mail Alert No. 1,680, November 30, 2007.

For example, Commissioner Jonathan Adelstein wrote in his statement [PDF] regarding Martin's attempt to impose new regulation on cable companies that "Unfortunately, the most important data we have -- the FCC's own numbers -- were suppressed from the Commissioners until the last minute. I did not learn until after 7:00 pm last night that the FCC’s own 2006 survey found that only 54 percent of homes passed subscribe to cable."

In response to a question from Rep. Dingell about whether the FCC will "commit to publishing the text of proposed rules sufficiently in advance of Commission meetings ...", Martin responded that the Administrative Procedure Act (APA), at 5 U.S.C. § 553, merely requires a description of the substance of the proceeding, and that that is what the FCC does.

In response to a question about whether Martin will "commit to providing your fellow Commissioners with all relevant data and analysis upon which a proposed order or rule is based", Martin responded "Yes".

Martin wrote that "I already provide my fellow Commissioners all of the relevant data and analysis upon which a proposed order or rule is based. Proposed orders that Commissioners receive include background discussion, a detailed review of the record, and the rationale supporting our decisions regarding implementation of any new rules or changes to existing rules."

Martin then elaborated at length about the video competition report and cable regulation.

In response to a question about whether Martin will "commit to giving your fellow Commissioners adequate time to review proposed orders and rules", Martin responded "Yes".

He wrote that the FCC's "processes and decision-making time frames remain essentially the same as the general decision-making procedures established nearly ten years ago under Chairman William Kennard."

Martin continued that the "full Commission considers proposed rules or rule changes through one of two methods", either "on circulation" or at the "required monthly Open Meeting".

"The vast majority of the FCC's rules are adopted ``on circulation.´´ Under this process, the Commissioners receive and vote electronically proposed orders which include background discussion, a detailed review of the record, and a thorough explanation of our decisions regarding the implementation of any new rules or changes to existing rules. Items on circulation remain in that status until 3 Commissioners vote electronically to approve proposed orders. If an item has been on circulation for at least 21 days, once a majority of Commissioners have vote to approve a circulate item, the remaining Commissioners have 10 days to register their votes or seek an extension beyond the 10 day voting period."

He then wrote that under the monthly meeting process, "Commissioners' offices receive items for their review at least three weeks before the open meeting. We have provided to the Commissioners a list of items that we are providing to them that day or that they already have that I would like the Commission to consider at the next open meeting."

He continued that "when an item designated for the meeting has been received by the Commissioners' offices at least three weeks before the meeting, all Commissioners' substantive edits should be provided to the originating Bureau/Office not later than close of business seven days before the meeting. During my tenure, I have not enforced this practice on my fellow Commissioners in order to provide them even more time to consider items."

"Unfortunately", wrote Martin, "many of the delays we have experience with respect to the starting time of Open meetings have resulted because Commissioners have waited until 24 or 48 hours before the designated start of the Commission meeting to provide input, and have continued to provide edits up to and past the time the meeting was scheduled to begin. While it might be more orderly to enforce the prior, I would be concerned that it would significantly reduce the opportunity to reach a compromise with my colleagues."

People and Appointments

12/11. William Roberts was named President of Verizon Washington DC, effective immediately. He also remains President of Verizon Maryland. Roberts replaces Anthony Lewis, who has been named a VP at Verizon Wireless. See, Verizon release.

Go to News from December 6-10, 2007.