TLJ News from July 11-15, 2011

Rep. Conyers Announces House Judiciary Committee Staff Will Investigate News Corporation

7/15. Rep. John Conyers (D-MI) announced in a release that "the Democratic Staff of the House Judiciary Committee will review allegations that News Corporation ... has engaged in serious and systemic invasions of privacy".

Rep. John ConyersRep. Conyers (at left), the ranking Democrat on the House Judiciary Committee (HJC) stated in this release that "Last week, we learned that News of the World -- a British tabloid published by a News Corp. subsidiary -- hacked into the voicemail of a British teenager who was abducted and murdered in 2002. This revelation follows reports that the tabloid, which maintained a bureau in Hollywood, had for years illegally intercepted the voicemail messages of private individuals residing in the United States."

Noting news articles stating that "News of the World approached a New York City police officer and asked him to obtain and provide the phone records of victims of the attacks on our country on September 11, 2001", Rep. Conyers added that "the actions of the media should be scrutinized by the government only in rare circumstances. However, I believe the allegations in this case, particularly those relating to the families and victims of 9/11, are serious enough to warrant our examination".

He also praised Attorney General "Eric Holder's announcement that the Justice Department has opened a formal investigation into allegations that News Corp. may have violated both federal wiretapping statutes and the Foreign Corrupt Practices Act". See also, story titled "Commentary: Suitability of the DOJ to Investigate News Corporation" in TLJ Daily E-Mail Alert No. 2,261, July 17, 2011.

CEA's Shapiro Offers Legislative Recommendations

7/15. Gary Shapiro, head of the Consumer Electronics Association (CEA), sent a letter to President Obama and Congressional leaders, with legislative proposals for growing the economy by incenting innovation.

Gary ShapiroShapiro (at right) recommended the U.S. cut its corporate tax rate from 35% to 25%, and "only tax income earned in the United States".

He also advocated "Allowing repatriation of the more than one trillion dollars of corporate money parked overseas at a lower tax rate if these companies use that money to make capital investments, hire more workers or buy bonds from a U.S. infrastructure bank."

For more information on pending repatriation proposals, see HR 1834 [LOC | WW], the "The Freedom to Invest Act", and stories titled "Rep. Brady Introduces Repatriation Holiday Bill" and "House Ways and Means Committee Holds Hearing on International Tax Issues" in TLJ Daily E-Mail Alert No. 2,240, May 13, 2011.

Shapiro also advocated "Changing the immigration laws to give visas and eventual citizenship to immigrants who earn advanced degrees in science, math, IT and engineering from American universities", giving visas to "entrepreneurs with a funded business plan to hire Americans", and making it easier for people from "friendly countries" to obtain visa waivers

He also advocated passage of legislation to give the Federal Communications Commission (FCC) authority to "hold voluntary auctions of our nation's underused spectrum".

He also advocated passing pending free trade agreements with Korea, Columbia and Panama.

He also stated that "Last week, I returned from China and sadly agree with the view that we are reverting to second-class status". But, he argued, that can be altered by adopting his recommendations.

Rep. Goodlatte and Rep. Schiff Introduce Bill Regarding ID Theft and Computer Intrusion

7/15. Rep. Bob Goodlatte (R-VA) and Rep. Adam Schiff (D-CA) introduced HR 2552 [LOC | WW], the "Identity Theft Improvement Act of 2011".

It is a response to a recent Supreme Court opinion. It would clarify that prosecutors need not prove that the "defendant knew the means of identification was of another person". This change would impact both identity theft and computer intrusion cases.

The bill was referred to the House Judiciary Committee (HJC), which is scheduled to consider it at its meeting of July 20-21, 2011. See, notice.

This short bill would merely amend 18 U.S.C. § 1028 and 18 U.S.C. § 1028A by adding a new subsection (j) to section 1028 regarding "State of Mind Proof Requirement". It provides that "In a prosecution under subsection (a)(7) or under section 1028A(a), the Government need not prove that the defendant knew the means of identification was of another person."

Section 1028(a)(7) provides in part that "Whoever ... knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person with the intent to commit, or to aid or abet, or in connection with, any unlawful activity that constitutes a violation of Federal law, or that constitutes a felony under any applicable State or local law ... shall be punished".

Section 1028A(a)(1) provides in part that "Whoever, during and in relation to any felony violation enumerated in subsection (c), knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person shall, in addition to the punishment provided for such felony, be sentenced to a term of imprisonment of 2 years". Subsection (c) enumerates numerous fraud related crimes, including computer fraud under 18 U.S.C. § 1030.

Sections 1028 and 1028A are two of the federal identity theft statutes. Subsection 1028(a)(7), which is one of eight separate prohibitions in section 1028, is charged in some cases involving computer network intrusions. It is also charged in cases involving theft of social security numbers. See for example, the 2007 opinion [25 pages in PDF] of the U.S. Court of Appeals (9thCir) in U.S. v. Sutcliffe, 505 F.3d 944.

Sections 1028(a)(7) and 1028A(a)(1) contain similar language. Moreover, the Supreme Court held in its 2009 opinion [18 pages in PDF] in Flores-Figueroa v. U.S., 556 U.S. __, that section 1028A(a)(1) requires the government to show that "the defendant knew that the means of identification at issue belonged to another person."

The Supreme Court ruled as a matter of statutory interpretation, rather than due process. Hence, the Congress is free to change the outcome by changing the statute.

The two sections at issue refer to the "means of identification of another person". The defendant in Flores-Figueroa v. U.S., a citizen of Mexico who was present in the U.S., gave his employer a counterfeit Social Security Card and alien registration card which contained his real name, but someone else's Social Security Number (SSN). He argued that the prosecution had to prove that he knew that the means of identification, the SSN, belonged to another person, as opposed to being a ficticious SSN. The Supreme Court agreed.

See also, the Department of Justice's (DOJ) manual [213 pages in PDF] titled "Prosecuting Computer Crimes" at pages 96-100.

Update on Apple Microsoft RIM Sony Ericsson Acquisition of Nortel Patents

7/15. Nortel conducted an auction of 6,000 patents and patent applications. A coalition consisting of Apple, Microsoft, Research in Motion, EMC, Sony and Ericsson outbid a coalition of Google and Intel. The winning bid was $4.5 Billion. See, Nortel's June 30, 2011, release.

Nortel, which filed a Chapter 11 bankruptcy petition in 2009, stated in this release that "The sale includes more than 6,000 patents and patent applications spanning wireless, wireless 4G, data networking, optical, voice, internet, service provider, semiconductors and other patents. The extensive patent portfolio touches nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking."

Nortel added that "The sale is subject to applicable Canadian and U.S. Court approvals which will be sought at a joint hearing expected to be held on July 11, 2011. Nortel will work diligently with the consortium to close the sale in the third quarter of 2011."

The U.S. Bankruptcy Court for the District of Delaware and the Superior Court of Justice in Toronto, Ontario, did hold a joint hearing by teleconference on Monday, July 11, 2011.

The Federal Trade Commission's (FTC) and the Department of Justice's (DOJ) Antitrust Division's joint list of early terminations granted during the month of June, 2011, lists various bidders for the Nortel patent portfolio. See, notice in the Federal Register, Vol. 76, No. 136, Friday, July 15, 2011, at Pages 41795-41797.

This is a list of grants of requests for early termination of the waiting period under the premerger notification rules, also know as Hart Scott Rodino.

It lists "Apple Inc.; Nortel Networks Corporation; Apple Inc.", "Rockstar Bidco, LP; Nortel Networks Corporation; Rockstar Bidco, LP", and "Intel Corporation; Nortel Networks Corporation; Intel Corporation". See also, FTC's list of June 23 grants and list of June 22 grants.

On July 6, 2011, the American Antitrust Institute (AAI) sent a letter to the DOJ's Antitrust Division urging it "to commence an in-depth investigation of the proposed purchase of Nortel's portfolio of more than 6,000 patents and patent applications, many of which may be vital to the future of mobile communications and computing devices".

See also, story titled "AAI Urges DOJ to Investigate Acquisition of Nortel Patent Portfolio" in TLJ Daily E-Mail Alert No. 2,255, July 11, 2011.

Supreme Court Applies Heightened Scrutiny to State Regulation of Commercial Data

7/15. On June 23, 2011, the Supreme Court issued its 6-3 opinion [53 pages in PDF] in Sorrell v. IMS Vermont, holding unconstitutional under the First Amendment a Vermont statute that regulates certain sales, disclosures and uses of pharmacy records.

Key to this outcome was the majority's application of "heightened judicial scrutiny" to this speech. That is, the Constitution merely provides that "Congress shall make no law ... abridging the freedom of speech, or of the press". The Supreme Court has long since extended this restriction to other government entities, including state legislatures. In addition, the Supreme Court has invented categories of speech, regulation of which are subjected to widely divergent standards of review. Whether are regulation of speech is found constitutional is often dependent upon which standard of review is applied.

Vermont's regulation of the use of pharmacy records is not in itself of wide reaching importance. However, the analysis applied by the Court provides some indication of how it might rule in future cases involving state or federal legislation, or agency rulemaking, that restricts the collection and sharing of information about individuals under the guise of privacy protection.

On July 8, 2011, Rep. Ed Markey (D-MA) introduced HRes 343, a resolution expressing the disapproval of the House of Representatives. It states that the Supreme Court "incorrectly applied a heightened First Amendment standard of review to a Vermont statute that lawfully regulated purely economic activity".

This resolution has no cosponsors. It was referred to the House Commerce Committee (HCC). See also, Rep. Markey's release.

On July 19, 2011, at 12:00 NOON, the Tech Freedom (TF) will host an event at which this case will be discussed. The first panel is titled "Towards Greater Commercial Free Speech Protections?". The speakers will be Greg Stohr (Bloomberg), Tom Julin (Hunton & Williams), Bob Revere (Davis Wright Tremaine), Greg Beck (Public Citizen), and Richard Ovelmen (Jordan Burt).

The second panel is titled "Reconciling Data Restrictions & the First Amendment". The speakers will be Jim Harper (Cato Institute), John Verdi (Electronic Privacy Information Center), Jonathan Emord (Emord & Associates), John Morris ( Center for Democracy & Technology), and Berin Szoka (TF). See, notice and registration page.

Anthony KennedyJustice Kennedy (at left), writing for a six Justice majority, concluded that the statute at issue violates the First Amendment.

In this case, the state of Vermont enacted a statute that restricts the sale, disclosure, and use of pharmacy records that reveal the prescribing practices of individual doctors. It provides that the information may not be sold, disclosed by pharmacies for marketing purposes, or used for marketing by pharmaceutical manufacturers.

Vermont asserted privacy protection as a rationale for its statute.

The Supreme Court held that "Speech in aid of pharmaceutical marketing, however, is a form of expression protected by the Free Speech Clause of the First Amendment. As a consequence, Vermont's statute must be subjected to heightened judicial scrutiny. The law cannot satisfy that standard."

The Court wrote that the statute is a content based restriction, aimed at diminishing the effectiveness of marketing by manufacturers of brand name drugs, and that the First Amendment requires heightened scrutiny whenever the government creates a regulation of speech because of disagreement with the message it conveys.

The Court also wrote that this statute is not a mere commercial regulation. "Both on its face and in its practical operation, Vermont's law imposes a burden based on the content of speech and the identity of the speaker."

The Court added that "The capacity of technology to find and publish personal information, including records required by the government, presents serious and unresolved issues with respect to personal privacy and the dignity it seeks to secure. In considering how to protect those interests, however, the State cannot engage in content-based discrimination to advance its own side of a debate."

Under the statute at issue, Vermont "gives possessors of the information broad discretion and wide latitude in disclosing the information, while at the same time restricting the information's use by some speakers and for some purposes, even while the State itself can use the information to counter the speech it seeks to suppress. Privacy is a concept too integral to the person and a right too essential to freedom to allow its manipulation to support just those ideas the government prefers."

Justice Breyer wrote a lengthy dissent, joined by Justices Kagan and Ginsburg. He argued that the Court should have applied its intermediate scrutiny test for commercial speech in the case, and under that standard concluded that the Vermont statute passes constitutional muster.

Breyer, relying on the 1980 opinion in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, which is reported at 447 U.S. 557, argued that heightened scrutiny applies to core political speech, while the Court should apply looser constraints on the regulation of commercial speech.

Berin Szoka
Berin Szoka
Copyright TF

Berin Szoka, head of the Tech Freedom, asserted in a release that "Future courts will therefore strike down privacy laws that burden too much speech, such as by requiring opt-in rather than opt-out. The government must clearly establish the need for privacy regulation and consider the availability of less-restrictive alternatives, such as user empowerment, education and the enforcement of existing laws."

He argued that "Policymakers should carefully consider the values recognized by the Court today before further clamping down on the flow of data that drives speech throughout the information economy."

Sen. Patrick Leahy (D-VT), who represents the state that just lost this case, stated in a release that "the Supreme Court has overturned a sensible Vermont law that sought to protect the privacy of the doctor-patient relationship. This divided ruling is a win for data miners and large corporations and a loss for those of us who care about privacy not only in my home state of Vermont but across the nation. States like Vermont must be able to protect the privacy of sensitive information exchanged between a doctor and patient. This decision undermines that ability, and risks unduly influencing doctors in their future prescription choices."

He wrote that "This decision is another example of this Court using the First Amendment as a tool to bolster the rights of big business at the expense of individual Americans."

People and Appointments

7/15. Rep. Dale Kildee (D-MI) announced that he will not run for re-election to the House of Representatives. He will have served for 36 years in the House. See, President Obama's statement.

More News

7/15. The U.S. charged Ricardo Blanco, Karol Blanco, Pedro Rameriz-Alvarez, Carlos Zuniga, and Roberto Arguelles-Femandez by criminal complaint in the U.S. District Court (NDCal) with conspiracy in violation of 18 U.S.C. § 371 and criminal copyright infringement in violation of 18 U.S.C. § 2319, in connection with their "sale of counterfeit movies at a retail store" in San Jose, California. The complaint further states that undercover FBI agents made purchases of counterfeit DVDs and then seized more, including "Harry Potter and the Deathly Hallows".

GAO Releases Report on Children's TV Programming

7/14. The Government Accountability Office (GAO) released a report [42 pages in PDF] titled "Children's Television Act: FCC Could Improve Efforts to Oversee Enforcement and Provide Public Information".

The Congress enacted the Children's Television Act (CTA), Public Law No. 101-437, in 1990. It is codified at 47 U.S.C. § 303a and 47 U.S.C. § 303b. It requires the Federal Communications Commission (FCC), among other things, to write rules "to prescribe standards applicable to commercial television broadcast licensees with respect to the time devoted to commercial matter in conjunction with children’s television programming".

The just released report finds that "Broadcasters aired significantly more core children's programming in 2010 than in 1998, primarily because there are more broadcast channels and stations than there were then. An important source is multicasting, or the multiple channels aired by broadcasters since the digital television transition."

It also finds that "households increasingly rely on cable and satellite providers -- to which core children’s programming requirements do not apply -- increasing the number of channels specifically targeted to children, but also increasing the impact of CTA and FCC's rules on advertising, which limit the duration of commercials and require their separation from children’s programming on broadcast, cable, and satellite. Other media platforms, such as the Internet and MP3 players, are outside CTA's reach."

This report states that "FCC has avoided developing specific standards for core children's programming or judging program content, due to free speech concerns, relying instead on a broad definition and oversight by the public. A lack of widely accepted standards to assess such programming makes it difficult for parents and broadcasters to evaluate the educational content of core children's programming, potentially leading to wide variation in its quality."

It recommends that the FCC "develop and implement a strategy for overseeing cable operators’ and satellite providers’ compliance with the required advertising limits", "collaborate with the media industry to explore the potential for voluntary guidelines or standards to be used in creating and assessing core children’s programming", and identify and implement additional mechanisms for educating the public about core children's programming on commercial broadcast television stations.

Update on Rare Earth Materials Legislation

7/14. The Senate Energy and Natural Resources Committee (SENRC) held a business meeting at which it marked up numerous bills, but not either of the two bills on the agenda that pertain to rare earth materials (REMs). See, SENRC release announcing results of meeting.

The two bills are S 1113 [LOC | WW], the "Critical Minerals Policy Act of 2011", and S 383 [LOC | WW], the "Critical Minerals and Materials Promotion Act of 2011". REMs have many applications in information and communications technology products and devices.

Sen. Lisa Murkowski (R-AK), the ranking Republican on the SENRC, introduced S 1113 on May 26, 2011. As of July 14, 2011, there are 19 cosponsors.

It states that "It is the policy of the United States to promote an adequate, reliable, domestic, and stable supply of critical minerals, produced in an environmentally responsible manner, in order to strengthen and sustain the economic security, and the manufacturing, industrial, energy, technological, and competitive stature, of the United States."

It would require the Secretary of the Interior to draft a methodology for determining which minerals qualify as critical minerals, and require the President "to encourage Federal agencies to facilitate the availability, development, and environmentally responsible production of domestic resources to meet national critical minerals needs".

Sen. Mark Udall (D-CO) introduced S 383 on February 17, 2011. There are two cosponsors.

It states that "It is the policy of the United States to promote an adequate and stable supply of critical minerals and materials necessary to maintain national security, economic well-being, and industrial production with appropriate attention to a long-term balance between resource production, energy use, a healthy environment, natural resources conservation, and social needs."

It directs the President to "coordinate the actions of applicable Federal agencies" and "promote and encourage private enterprise in the development of economically sound and stable domestic critical minerals and materials supply chains".

Sen. Udall stated that "These materials are used in everything from wind turbines to cell phones to weapons guidance systems." See, Congressional Record, February 17, 2011, at Page S882.

He continued that "One group of critical minerals with very high importance today is rare earth elements. The United States was once the primary producer of rare earth materials according to the U.S. Geological Survey, but over the past 15 years we have become 100 percent reliant on imports, with 97 percent coming from China."

Sen. Udall continued that "When the rare earth industry left the United States, our rare earth materials workforce dwindled as well, leaving very few experts with experience in processing these materials. Currently, there are no curricula in U.S. universities that are geared toward training a new expert workforce; rather, most of the expertise resides in China and Japan. In addition, the U.S.-developed intellectual property for making many of these materials is owned by Japan."

Senators Seek Investigation of News Corporation

7/14. Several Democratic Senators asked the Department of Justice (DOJ) to investigate News Corporation. The Washington Post (WP) and other news media have reported that the DOJ's Federal Bureau of Investigation (FBI) has opened a preliminary inquiry. See for example, July 14, 2011, story titled "FBI opens inquiry after report that News Corp. tried to hack phones of 9/11 victims

On July 13, 2011, Sen. Frank Lautenberg (D-NJ) sent a letter to Attorney General Eric Holder asking the DOJ and Securities and Exchange Commission (SEC) to investigate News Corporation and "determine whether U.S. laws have been violated".

He cited only one U.S. statute, the Foreign Corrupt Practices Act (FCPA). He wrote that "the anti-bribery provisions of FCPA make it illegal for a U.S. person or company to pay foreign officials to obtain or retain business. In this case, media reports indicate that reporters for News of the World, a newspaper that is controlled by a subsidiary of News Corporation, paid London police officers for information, including private telephone information, about the British royal family and other individuals for use in newspaper articles."

He added that "Because News Corporation is a U.S. corporation, the FCPA may apply to all Company employees everywhere in the world, regardless of their nationality or where they reside or do business."

The requests for investigations of News Corporation have identified and proposed two U.S. agencies for conducting investigations, the DOJ and SEC.

Also on July 13, Sen. John Rockefeller (D-WV) and Sen. Barbara Boxer (D-CA) sent a letter to Holder and Mary Schapiro, Chairman of the SEC, to request an investigate whether News Corporation has violated the FCPA.

They wrote that "senior officials of News Corporation subsidiaries have recently been arrested on allegations that they bribed members of London's Metropolitan Police to gain access to private information. If these allegations are true, they may constitute a violation of the" FCPA.

They added that "There have also been allegations that News Corporation employees may have illegally accessed the phone records of victims of the attacks of September 11, 2001. We urge you to investigate whether any United States citizens had their privacy violated by this alleged hacking."

Sen. Rockefeller also issued a statement on July 12. He wrote, "The reported hacking by News Corporation newspapers against a range of  individuals -- including children -- is offensive and a serious breach of journalistic ethics. This raises serious questions about whether the company has broken U.S. law, and I encourage the appropriate agencies to investigate to ensure that Americans have not had their privacy violated.  I am concerned that the admitted phone hacking in London by the News Corp. may have extended to 9/11 victims or other Americans. If they did, the consequences will be severe."

The Center for American Progress (CAP), a Washington DC based interest whose policy proposals over overlap those of the Democratic party, initiated an online petition drive pertaining to the information collection activities in the United Kingdom of News Corporation subsidiaries.

The petition is directed to Holder and Schapiro. It states that there are reports that "News Corp. subsidiaries bribed police offers to obtain information" and "hacked into voicemails of politicians".

The CAP wants the DOJ, which enforces criminal statutes, and the SEC, which has civil and administrative authority to regulate securities markets, to investigate News Corporation and its subsidiaries, including U.S. based subsidiaries "such as Fox News, the Wall Street Journal and the New York Post".

The petition identifies two statutes. It requests investigation of whether there was any violation of "The Foreign Corrupt Practices Act (15 U.S.C. §§ 78dd-1, et seq.), the Electronic Privacy Communications Act (18 U.S.C. § 2510-2522) or any other applicable U.S. laws."

Commentary: Suitability of the DOJ to Investigate News Corporation

7/14. This commentary presents two related points regarding recent calls for the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) to investigate News Corporation for its accessing of phone records and messages, and other confidential information, to further its news reporting.

First, while in this matter it is reporters who have improperly obtained confidential information, there is also a long history of others using improper means to obtain phone records and other confidential information of reporters -- often for the purpose discovering their sources, impeding their news reporting, and reducing public understanding of the activities of government and publicly traded companies.

Second, while some of improper activity has been conducted by companies such as Hewlett Packard, the DOJ and its Federal Bureau of Investigation (FBI) have been serial and unrepentant offenders of communications privacy principles and journalistic independence, and have directed their improprieties at news reporters.

The DOJ, and to a lesser extent the SEC, and have done much to interfere improperly with the legitimate and important activities of news journalists that are protected and promoted by the First Amendment.

To the extent that the News Corporation investigation focuses on prosecuting, punishing and deterring improper access to phone and other information, the DOJ would enter into the investigation with the unclean hands of any prosecutor that imposes rules upon the public that it violates itself.

To the extent that this investigation is about restoring news journalism to its appropriate position as an ethical and effective provider of information, the DOJ's involvement is undermined by its history of impeding and obstructing news reporting, particularly through its abuse of subpoena powers to force journalists to disclose confidential sources.

Pretexting. There is not yet a factual record on News Corporation. No court has issued a findings of fact. No evidentiary hearing has taken place. One of the activities alleged in media reports is bribery of police officers to obtain phone information. However, much of the activity alleged in media reports is in the nature of pretexting to obtain phone, medical and financial information.

During Congressional consideration of pretexting related legislation following the HP pretexting scandal in 2006, Rep. Joe Barton (R-TX) said that "Pretexting is pretending to be someone you're not, to get something you shouldn't have, to use in a way that is probably wrong." See, story titled "House Commerce Committee Holds Hearing on Bill Related to Pretexting of, and Data Sharing by, Carriers" in TLJ Daily E-Mail Alert No. 1,550,  March 12, 2007.

The 109th Congress enacted HR 4709, the "Telephone Records and Privacy Protection Act of 2006", early in 2007, in the aftermath of the HP pretexting scandal, to ban phone record pretexting. It is now Public Law No. 109-476. It added 18 U.S.C. § 1039, regarding "Fraud and related activity in connection with obtaining confidential phone records information of a covered entity", to the criminal code. The Congress had previously banned pretexting to obtain financial records in the Gramm Leach Bliley Act, at § 521. See, 15 U.S.C. § 6821.

One of the events that prompted the Congress to act was the HP pretexting scandal, in which pretexters and private investigators, attempted to obtain phone records of, and/or physically surveil, HP Directors (including George Keyworth, Thomas Perkins, Lawrence Babbio, and Carly Fiorina) and numerous news reporters (including Dawn Kawamoto, Tom Krazit, and Stephen Shankland of CNET, Roger Crockett, Ben Elgin, and Peter Burrows of Business Week, John Markoff of the New York Times, and Pui-Wing Tam and George Anders of the Wall Street Journal, which is now owned by News Corporation).

The House Commerce Committee (HCC) held a lengthy hearing on this matter on September 28, 2006. See, HCC web page with hyperlinks to prepared testimony. See also, stories in TLJ Daily E-Mail Alert No. 1,462, October 5, 2006, and TLJ Daily E-Mail Alert No. 1,463, October 6, 2006.

The HCC also held a hearing on September 29, 2006, at which business reporter Christopher Byron testified regarding pretexting to obtain his phone records to learn his sources for news stories. A company about which he had reported was seeking to stop reporting that reflected negatively on the company. See, Byron's prepared testimony.

Byron worked for News Corporation's New York Post, although the reporting at issue was for Red Herring.

NSA Illegal Warrantless Wiretap Program. Federal government agencies do not have to resort to pretexting to obtain phone records or content of communications. Phone companies give it to them pursuant to existing, or non-existent, statutory authority.

The federal government and communications companies may, or may not, have engaged in illegal activities pursuant to the National Security Agency's (NSA) warrantless wiretap program.

The New York Times published a story by James Risen and Eric Lichtblau on December 16, 2005, titled "Bush Lets U.S. Spy on Callers Without Courts". It stated 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, story titled "President Bush Discloses Interception of Communications Without Court Approval" in TLJ Daily E-Mail Alert No. 1,275, December 19, 2005, and story titled "Bush, Gonzales & Hayden Discuss Presidential Intercepts and PATRIOT Act" in TLJ Daily E-Mail Alert No. 1,276, December 20, 2005.

The details of this program have not been disclosed to the public. Nor has the legality of this program been determined by the courts. This is because the DOJ has blocked such consideration by asserting sovereign immunity and the state secrets privilege, and in 2008 the Congress granted the private companies immunity, including retroactive immunity, for their collaboration in this program. See, HR 6304 (110th Congress), the "FISA Amendments Act of 2008", Public Law No. 110-261, at Title II, Section 201.

FBI Illegal Use of Exigent Letters to Surveil Washington Post and New York Times.  On January 20, 2010, the DOJ's Office of the Inspector General (OIG) released a redacted copy [306 pages in PDF] of a report that found misconduct at the FBI.

The report discloses misconduct by the FBI in its use of "exigent letters" to obtain phone records from collaborating communications companies to, among other things, "target" reporters at the Washington Post and New York Times, which first reported the NSA warrantless wiretap program.

See, report at pages 250-252. See also, story titled "Another DOJ Inspector General Report Finds FBI Misconduct in Obtaining Phone Records" in TLJ Daily E-Mail Alert No. 2,037, January 20, 2010.

The FBI has considerable authority to conduct counter-terrorism surveillance. The 2001 USA PATRIOT Act (HR 3162, 107th Congress, October 26, 2001, Public Law 107-56) expanded these powers. Yet, two aspects of this OIG report are particularly pertinent.

First, while the Congress has given the FBI powers to surveil terrorists, the OIG report revealed that the FBI was also surveilling journalists at the publications that were among the most accomplished at reporting on the war on terror.

Second, the FBI did not abuse exigent letter authority to get phone records from phone companies. It made up exigent letter authority out of thin air. There is no such thing in any federal statute as exigent letters.

The federal agency entrusted with investigating and prosecuting DOJ officials is the DOJ. The DOJ has not prosecuted FBI General Counsel Valerie Caproni, who remains in office, or any other DOJ officials.

FBI Illegal Use of National Security Letters. The DOJ's OIG has also released two other reports that document FBI abuse of National Security Letter (NSL) authority.

NSL authority exists under federal statute. See, 18 U.S.C. § 2709. NSLs do not require a warrant or other prior court authorization, and hence, are inherently subject to abuse. They enable the DOJ's FBI to obtain records, including subscriber, billing and call records of phone companies and ISPs. NSLs also apply to libraries to the extent that they are providing an electronic communication service.

On March 9, 2007, the DOJ's OIG released a report [30 MB in PDF] titled "A Review of the Federal Bureau of Investigation's Use of National Security Letters". See also, story titled "DOJ IG Releases Reports on Use of NSLs and Section 215 Authority" in TLJ Daily E-Mail Alert No. 1,551, March 13, 2007. That report covered the use of NSLs in 2003 through 2005.

On March 13, 2008, the OIG released a report [187 pages in PDF] titled "A Review of the FBI’s Use of National Security Letters: Assessment of Corrective Actions and Examination of NSL Usage in 2006". See also, story titled "DOJ Inspector General Releases Second Report on FBI Misuse of National Security Letters" in TLJ Daily E-Mail Alert No. 1,730, March 12, 2008.

DOJ Abuse of Subpoena Powers. Underlying the investigation of News Corporation is the notion that it has engaged in unethical journalistic practices, and that the public interest in ethical and reliable news reporting has been compromised and must be restored.

The gist of this commentary is that reliance upon the DOJ to restore the news media to its appropriate position is misplaced due to the DOJ's long history of working to undermine news reporting. In addition to the improper targeting of the Washington Post and New York Times in surveillance activities, the DOJ has a history of abuse of subpoena powers to impede and degrade the quality of news reporting.

The DOJ uses subpoenas to compel reporters to disclose their confidential sources, including government whistleblowers who disclose government corruption, waste, and fraud, and officials who disclose information to which the public would be entitled under the Freedom of Information Act, Open Meetings Act, and Administrative Procedure Act, were the relevant agencies to comply with those statutes.

The American Society of News Editors (ASNE) published a piece in 2009 that states that "Since 2001, five journalists have been sentenced or jailed for refusing to reveal their confidential sources in federal court. Two reporters were sentenced to 18 months in prison and one reporter faced up to $5,000 a day in fines. A 2006 study estimated that in that year alone, 67 federal subpoenas sought confidential material from reporters, with 41 of those subpoenas seeking the name of a confidential source."

Rep. Mike Pence (R-IN) and former Rep. Rick Boucher (D-VA) worked over many Congresses to enact legislation known as both "media shield" and "free flow of information" that would protect news reporters from abusive subpoenas from federal government agencies. These bills would limit the ability of federal entities to compel journalists to provide testimony or documents, or disclose sources, related to their work. These bills would also would limit government access to records of carriers, ISPs and other service providers.

The DOJ's excessive use of subpoenas not only harms the reporters who are served with the subpoenas. It harms news gathering regarding government and policy across the board, and the public's interest in access to information about their government. The use of subpoenas to root out whistleblowers and other confidential sources puts all government officials on notice that their discussions with reporters may be discovered, and that they may be subjected to retaliation. This makes legitimate news gathering more difficult, and degrades the quality of news reporting.

The Bush and Obama administrations, and particularly the DOJ, have opposed the media shield bills.

The House passed HR 985 [LOC | WW], the "Free Flow of Information Act", on March 31, 2009. See, story titled "House Judiciary Committee Approves Media Shield and Communications Services Provider Protection Bill" in TLJ Daily E-Mail Alert No. 1,919, March 30, 2009. HR 985 is substantially identical to HR 2102 [LOC | WW], the version of the bill in the 110th Congress. See, story titled "House Approves Boucher-Pence Media Shield Bill" in TLJ Daily E-Mail Alert No. 1,656, October 17, 2007. On December 10, 2009, the Senate Judiciary Committee (SJC) approved its version of the bill, S 448 [LOC | WW], also titled the "Free Flow of Information Act of 2009".

SEC's Improper Subpoenas Directed to Reporters. Senators and others who have asked for investigation of News Corporation have also asked for an SEC investigation. However, the SEC is affected too by disclosure in early 2006 of its abuse of subpoenas to compel business reporters to disclose their sources to the SEC.

However, the SEC's then Chairman, Chris Cox, gave a mea culpa speech on May 1, 2006, to financial journalists in which he asserted that going forward, "issuing a subpoena to a journalist will be exceedingly rare, and employed only as a last resort". See also, February 27, 2006, statement by Cox, and April 12, 2006, SEC policy statement,

Similarly, HP CEO Mark Hurd profusely apologized for HP's pretexting and promised that HP would respect privacy in the future. See, Hurd's prepared testimony of September 28, 2006. In contrast, the DOJ has not disclosed contrition for any of its improprieties referenced in this article.

Also, it should not go unnoticed that the SEC in recent years, despite its huge budget and massive resources, failed to uncover the long running and extensive fraud at either Bernard L. Madoff Investment Securities LLC or at Enron Corporation.

It learned about fraud at these companies by reading the reports of financial analysts and business journalists, such as Fortune's Bethany McLean.

The thrust of this commentary is not that News Corporation should not be investigated, but rather that there exist reasons for questioning the suitability of the DOJ and FBI for this investigation.

US Announces That It Reserves the Right to Respond to Cyber Attacks Militarily

7/14. William Lynn, Deputy Secretary of Defense, gave a speech at the National Defense University in Washington DC, in which he stated that the U.S. "reserves the right, under the laws of armed conflict, to respond to serious cyber attacks with a proportional and justified military response at the time and place of our choosing".

He said that "bits and bytes can be as threatening as bullets and bombs".

However, he also said that U.S. policy is to strengthen cyber security to deny potential attackers "the benefit of an attack". He said that "our first goal is to prevent war".

The Department of Defense (DOD) also released a paper [19 pages in PDF] on July 14, 2011, titled "Department of Defense Strategy for Operating In Cyberspace". It does not address what attacks would warrant a military response, how the DOD would attribute the source of the attack, or how the U.S. might deliver a military response. Rather, it is a five part plan for building up cyber security. See, related story in this issue titled "Department of Defense Releases Strategy for Operating In Cyberspace".

William LynnLynn (at right) began by stating that "In 2008, a foreign intelligence agency penetrated our classified computer systems". He did not state which one.

Lynn said that the "the centrality of information technology to our military operations and our society virtually guarantees that future adversaries will target our dependence on it.  Our assessment is that cyber attacks will be a significant component of any future conflict, whether it involves major nations, rogue states, or terrorist groups."

"Although in the future we are likely to see destructive or disruptive cyber attacks that could have an impact analogous to physical hostilities, the vast majority of malicious cyber activity today does not cross this threshold." He continued that "the most prevalent cyber threat to date has been exploitation -- the theft of information and intellectual property from government and commercial networks".

Currently, "sophisticated cyber capabilities reside almost exclusively in nation-states". However, he said that in the future non-state actors may pose a cyber threat.

"Terrorist groups and rogue states must be considered separately. They have few or no assets to hold at risk and a greater willingness to provoke. They are thus harder to deter. If a terrorist group gains disruptive or destructive cyber tools, we have to assume they will strike with little hesitation. And it is clear that terrorist groups, as well as rogue states, are intent on acquiring, refining, and expanding their cyber capabilities."

"Commentators have asked whether and how the U.S. would respond militarily to attacks on our networks." He stated in response that "Just as our military organizes to defend against hostile acts from land, air, and sea, we must also be prepared to respond to hostile acts in cyberspace. Accordingly, the United States reserves the right, under the laws of armed conflict, to respond to serious cyber attacks with a proportional and justified military response at the time and place of our choosing."

But, he also said that the U.S. will seek to deny potential attackers "the benefit of an attack rather than relying exclusively on the threat of retaliation".

He also said that the nature of the internet "can also make intrusions difficult to attribute", so "we cannot rely on the threat of retaliation alone to deter potential attackers".

Department of Defense Releases Strategy for Operating In Cyberspace

7/14. The Department of Defense (DOD) released a paper [19 pages in PDF] titled "Department of Defense Strategy for Operating In Cyberspace".

Despite the broad title of this paper, its content is limited. It does not address what kinds of cyber attacks would warrant a military response by the U.S. It does not address how the DOD would attribute the source of a cyber attack. It does not address how the U.S. might deliver a military retaliation for a cyber attack.

Rather, this paper is merely a five part plan for building up cyber security. It argues that a degree of deterrence can be achieved by making cyber space less vulnerable to cyber attacks.

First, this paper describes the problem. "The Department and the nation have vulnerabilities in cyberspace. Our reliance on cyberspace stands in stark contrast to the inadequacy of our cybersecurity -- the security of the technologies that we use each day. Moreover, the continuing growth of networked systems, devices, and platforms means that cyberspace is embedded into an increasing number of capabilities upon which DoD relies to complete its mission."

It continues that "many foreign nations are working to exploit DoD unclassified and classified networks, and some foreign intelligence organizations have already acquired the capacity to disrupt elements of DoD's information infrastructure. Moreover, non-state actors increasingly threaten to penetrate and disrupt DoD networks and systems."

"Foreign cyberspace operations against U.S. public and private sector systems are increasing in number and sophistication. DoD networks are probed millions of times every day, and successful penetrations have led to the loss of thousands of files from U.S. networks and those of U.S. allies and industry partners."

It states that the "DoD is particularly concerned with three areas of potential adversarial activity: theft or exploitation of data; disruption or denial of access or service that affects the availability of networks, information, or network-enabled resources; and destructive action including corruption, manipulation, or direct activity that threatens to destroy or degrade networks or connected systems."

This is an outline of the DOD cyber strategy announced in this paper:

  1. Treat cyberspace as an operational domain to organize, train, and equip so that DoD can take full advantage of cyberspace’s potential.
  2. Employ new defense operating concepts to protect DoD networks and systems.
  3. Partner with other U.S. government departments and agencies and the private sector to enable a whole-of-government cybersecurity strategy.
  4. Build robust relationships with U.S. allies and international partners to strengthen collective cybersecurity.
  5. Leverage the nation's ingenuity through an exceptional cyber workforce and rapid technological innovation.

Senate Judiciary Committee Considers Judicial Nominees

7/14. The Senate Judiciary Committee (SJC) held an executive business meeting at which it considered numerous judicial nominees.

The SJC approved by voice vote the nomination of Stephen Higginson to be a Judge of the U.S. Court of Appeals (5thCir).

The SJC again held over consideration of the nomination of Steve Six to be a Judge of the U.S. Court of Appeals (10thCir). His nomination is on the agenda for the SJC's meeting of July 21. See, notice.

The SJC held over for the first time consideration of the nomination of Christopher Droney to be a Judge of the U.S. Court of Appeals (2ndCir). His nomination is on the agenda for the SJC's meeting of July 21. See, notice. He has been a Judge of the U.S. District Court (DConn) since 1997. Judge Droney, sitting by designation, joined in the opinion of a three judge panel of the Second Circuit in Arista Records v. Launch Media, holding that a webcasting service is not an interactive service within the meaning of 17 U.S.C. § 114(j)(7). See also, story titled "Obama Nominates Droney for 2nd Circuit" in TLJ Daily E-Mail Alert No. 2,233, May 5, 2011.

The SJC approved by voice vote the nomination of Katherine Forrest to be a Judge of the U.S. District Court (SDNY). See also, story titled "Obama Nominates Time Warner Copyright Lawyer for SDNY" in TLJ Daily E-Mail Alert No. 2,233, May 5, 2011.

The SJC approved by a vote of 14-4 the nomination of Alison Nathan to be a Judge of the U.S. District Court (SDNY). The ranking Republican on the SJC, Sen. Charles Grassley (R-IA), vote yes, but stated at this meeting that Nathan "has been admitted to practice law for only 8 years" and that she does "not have enough experience." He said that "Being appointed a federal District Judge should be the capstone of an illustrious career. Federal judges should have significant courtroom and trial experience as a litigator or judge. This is not the place for on-the-job training." He explained that due in part to her support from the Senators from New York, including Sen. Charles Schumer (D-NY), who is a member of the SJC, he "will not block or delay" the SJC process. He added that he would vote for her in the SJC, " with the understanding that there will be a second opportunity to fully examine" her record, and the he will not "deprive the full Senate from having the opportunity to express its will".

The SJC also approved the nominations of Jane Milazzo (USDC/EDLa) and Susan Hickey (USDC/WDArk), and held over until the meeting of July 21 the nominations of Robert Mariani (USDC/MDPenn), Cathy Bissoon (USDC/WDPenn), Mark Hornak (USDC/WDPenn), and Robert Scola (USDC/SDFl).

House Judiciary Committee Approves Wireless Tax Fairness Act

7/14. The House Judiciary Committee (HJC) approved by voice vote HR 1002 [LOC | WW], the "Wireless Tax Fairness Act of 2011".

Rep. Zoe Lofgren (D-CA), Rep. Trent Franks (R-AZ), and others introduced this bill on March 10, 2011.

This bill would impose a five year moratorium on any state or local "new discriminatory tax on or with respect to mobile services, mobile service providers, or mobile service property". It would exempt state universal service taxes, and taxes to fund E-911 communications systems.

Rep. Zoe LofgrenRep. Lofgren (at right) stated in a release that "If we hope to compete in the interconnected global marketplace of tomorrow, the government needs to encourage the deployment and adoption of wireless broadband. In many places, the taxation of wireless approaches or even exceeds the rates of sin taxes on goods like alcohol and tobacco. This legislation simply freezes existing discriminatory wireless taxes to help foster wireless networks as a platform for innovation and jobs growth."

Rep. Lamar Smith (R-TX), the Chairman of the HJC, wrote in his statement that "This bill freezes state and local government taxes on wireless services for five years."

"The National Conference of State Legislatures and the National League of Cities have admitted that states need to reform their wireless tax policies. This bill gives states the breathing room to do so and prevents new discriminatory taxes in the interim", said Rep. Smith. "State and local revenues should not be affected by this legislation because its relief is prospective only.  Under the bill, states are still free to raise taxes on wireless subscriptions as long as the tax hike is generally applicable to all goods and services."

 He concluded that "This legislation simply promotes tax fairness; it does not tell states what tax rate they must impose on wireless subscriptions."

The CTIA's Jot Carpenter stated in a release that the "CTIA greatly appreciates the effort by Chairman Smith and the Wireless Tax Fairness Act's lead sponsors, Representatives Lofgren and Franks, to provide millions of American consumers with some much needed relief by putting a five-year freeze on new, discriminatory taxes and fees on their wireless bills. Today's Judiciary Committee vote was an important step and we hope the full House moves as soon as possible to protect wireless consumers from additional taxes and fees."

Sen. Ron Wyden (D-OR), Sen. Olympia Snowe (R-ME), and others introduced the companion bill in the Senate, S 543 [LOC | WW], also titled the "Wireless Tax Fairness Act of 2011", on March 10, 2011.

Paper Argues DNS Filtering Provisions of PROTECT IP Act Would Threaten DNS Security

7/14. Center for Democracy & Technology (CDT) and Internet Society hosted an event in Washington DC to present and discuss a paper [17 pages in PDF] titled "Security and Other Technical Concerns Raised by the DNS Filtering Requirements in the PROTECT IP Bill".

This paper argues that Domain Name System (DNS) filtering provisions of S 968 [LOC | WW], the "Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011", or "PROTECT IP Act", if enacted into law, would have the effect of reducing DNS security and stability.

The paper's authors are Steve Crocker (Shinkuro, Inc.), David Dagon (Georgia Tech), Dan Kaminsky (DKH), Danny McPherson (Verisign, Inc.), and Paul Vixie (Internet Systems Consortium).

The paper criticizes Section 3(d)(2) of the bill, which the paper states "would empower the Department of Justice, with a court order, to require operators of DNS servers to take steps to filter resolution of queries for certain names. Further, the bill directs the Attorney General to develop a textual notice to which users who attempt to navigate to these names will be redirected."

It states that "Redirecting users to a resource that does not match what they requested, however, is incompatible with end-to-end implementations of DNS Security Extensions (DNSSEC), a critical set of security updates. Implementing both end-to-end DNSSEC and PROTECT IP redirection orders simply would not work. Moreover, any filtering by nameservers, even without redirection, will pose security challenges, as there will be no mechanism to distinguish court-ordered lookup failure from temporary system failure, or even from failure caused by attackers or hostile networks."

The paper also states that "Circumvention is possible, with increasing ease, and is quite likely in the case of attempts to filter infringement via the DNS."

Paul Brigner of the Motion Picture Association of America (MPAA), a group that advocates passage of S 968, commented on this paper. He wrote in a short piece that "DNSSEC was designed to provide consumers with a secure, trusted connection to services like online banking, commercial transactions, and electronic medical records -- not to foreign websites operated by criminals for the purpose of offering counterfeit and infringing works. These evolving protocols should be flexible enough to allow for government, acting pursuant to a court order, to protect intellectual property online. And we have a hard time believing that average Internet users will be willing to reconfigure their computers to evade filters set up by court order when doing so will risk exposure to fraud, identity theft, malware, slower service, and unreliable connections. The PROTECT IP Act makes getting to rogue sites just inconvenient enough that the large majority of users will seek a legitimate option instead."

House Commerce Subcommittees Hold Hearing on Regulating Internet Privacy

7/14. The House Commerce Committee's (HCC) Subcommittee on Commerce, Manufacturing, and Trade (SCMT) and Subcommittee on Communications and Technology (SCT) held a joint hearing titled "Internet Privacy: The Views of the FTC, the FCC, and NTIA".

See, opening statement of Rep. Mary Mack (R-CA) Chairman of the SCMT, opening statement of Rep. Greg Walden (R-OR), Chairman of the SCT, opening statement of Rep. Fred Upton (R-MI), Chairman of the HCC, opening statement of Rep. Henry Waxman (D-CA), ranking Democrat on the HCC, and statement of Rep. Ed Markey (D-MA).

There were three witnesses. See, prepared testimony [4 pages in PDF] of Julius Genachowski (Chairman of the Federal Communications Commission), prepared testimony [13 pages in PDF] of Lawrence Strickling (head of the National Telecommunications and Information Administration), and prepared testimony [18 pages in PDF] of Edith Ramirez (Commissioner of the Federal Trade Commission).

Rep. Bono wrote that "While it's still unclear to me whether government regulations are really needed, providing consumers with more transparency is the first step in better protecting Americans. Consumers should be notified promptly if there is a material change in a privacy policy; no bait and switch schemes should be allowed nor tolerated. Sensitive information should have greater safeguards in place, especially when it comes to financial and personal health records. We should take a long look at how our children are treated online and how they are marketed to."

Rep. Walden wrote that "regulatory overreach may curb the ability of entrepreneurs to invest, innovate, and create jobs"

He continued that "Today's regime is neither competitively nor technologically neutral." He continued that 47 U.S.C. § 222, the customer proprietary network information (CPNI) section, gives the FCC "broad authority to implement privacy protections for consumers of wireline and wireless telephone services. Section 222 also specifically calls out location-based services for regulation, but applies that regulation only to carriers and not providers of devices, operating systems, or applications. Other parts of the Communications Act give the Commission authority over cable operators and satellite television providers under a ``prior consent´´ framework." See, 47 U.S.C. § 551 and 47 U.S.C. § 338(i) and .

"In stark contrast," said Rep. Walden, "there are few if any communications privacy regulations governing web-based companies, even those that can access a user's search queries, emails, voice and video online conversations, web browser, and even operating systems."

He asked rhetorically, "Why should a wireless provider that transmits data to and from a smartphone be subject to federal oversight, but not an operating system provider that has access to the exact same data?"

Rep. Waxman wrote that "the majority has stated that it is not sure whether legislation is needed and that it does not intend to move too quickly on this important issue. I think it is well past the time to move ahead. There were six privacy hearings in the 111th Congress. Each made me more and more convinced that current law does not ensure proper privacy protections for consumer information".

Rep. Markey touted a bill that he is cosponsoring with Rep. Joe Barton (R-TX), HR 1895 [LOC | WW], the "Do Not Track Kids Act". See also, story titled "Rep. Markey and Rep. Barton Release Draft of Do Not Track Kids Act" in TLJ Daily E-Mail Alert No. 2,236, May 9, 2011.

People and Appointments

7/14. Herb Congdon will join the Telecommunications Industry Association (TIA) on July 25, 2011, as Associate Vice President of Technology and Standards. He is currently Campaign and Systems Marketing Manager for TE Connectivity, which was previously named Tyco Electronics. See, TIA release.

Rep. Goodlatte Introduces Fashion Design Copyright Bill

7/13.  Rep. Bob Goodlatte (R-VA) and others introduced HR 2511 [LOC | WW], the "Innovative Design Protection and Piracy Prevention Act", or IDPPPA or ID3PA. This bill would extend copyright protection to clothing designs. Related bills introduced in prior Congresses did not become law.

Chapter 13 of the Copyright Act, codified at 17 U.S.C. §§ 1301-1332, pertains to "Protection of Original Designs". This bill would extend such copyright protection to fashion design, including clothes, shoes, apparel and its ornamentation, but only for a term of three years.

Currently, fashion designers rely upon trademark, trade dress, and counterfeit labeling laws for protection from copying. Although, as with other types of intellectual property (IP), it is primarily the large companies with large legal budgets that are able to avail themselves of the protections afforded by IP legal regimes.

Clothes, shoes, purses, and other fashion items are not the stuff of information or communications technologies. However, this bill, if enacted, could impact technology. Increasingly, fashion products, including copies, imitations, and knock offs, are being sold through web sites. Also, enforcement efforts are increasingly focusing on those web sites.

Moreover, there is a parallel legislative initiative to enable the Department of Justice (DOJ) to target and take down "Internet sites dedicated to infringing activities", and to take other actions against various intermediaries. See, S 968 [LOC | WW], the "Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011", or "PROTECT IP Act".

A related bill has not yet been introduced in the House. However, Rep. Goodlatte and others have stated that they intend to introduce their own version of the bill.

If the concepts contained in both HR 2511 and S 968 were enacted into law, then the DOJ would be targeting web sites dedicated to selling, among other things, design copyright infringing fashion items.

The bill was referred to the House Judiciary Committee (HJC). The HJC's Subcommittee on Intellectual Property, Competition and the Internet promptly held a hearing on HR 2511 on Friday, July 15, 2011.

Kurt Courtney of the American Apparel & Footwear Association (AAFA) wrote in his prepared testimony [4 pages in PDF] that S 968 and related bills "will help address one of the more onerous ways counterfeiters steal from legitimate companies -- by establishing fake websites to fool consumers into thinking that they are buying legitimate products."

Lazaro Hernandez of the Council of Fashion Designers of America (CFDA) wrote in his prepare testimony [7 pages in PDF] that "we can't compete against piracy. Without this legislation, the creativity and innovation that has put American fashion in a leadership position will dry up".

The Subcommittee also receiving conflicting testimony from law professors. Christopher Sprigman (University of Virginia law school) wrote in his prepared testimony [14 pages in PDF] that "for more than two centuries Congress has not seen the need to extend IP rules to cover fashion designs. During that period the American fashion industry has grown and thrived, and American consumers have enjoyed a wide range of apparel offerings in the marketplace. We are skeptical that Congress ought to begin regulating fashion design now, given the success of the existing system."

In contrast, Jeannie Suk (Harvard university law school) wrote in her prepared testimony [11 pages in PDF] that "The IDPPPA strikes an appropriate balance between giving incentives to create original designs and leaving designers free to draw upon influences, inspirations, and trends. If enacted, it would serve its purpose, to push the fashion industry toward innovation rather than substantially identical copying. The new law would harm fast fashion copyists but not retailers as a whole – and even then, only by compelling firms to change their businesses in ways consistent with Act’s purpose. It would increase consumers' choice of designs that are inspired by other designs and that participate in trends, while limiting their ability to buy exact knockoffs of designs. It would not promote unnecessary litigation, but to the contrary, represents a wisely balanced and carefully tailored response to the problems of a distinctive industry."

The original cosponsors of the bill are Rep. Jerrold Nadler (D-NY), Rep. James Sensenbernner (R-WI), Rep. Carolyn Maloney (D-NY), Rep. Linda Sanchez (D-CA), Rep. Howard Coble (R-NC), Rep. Adam Schiff (D-CA), Rep. Sheila Lee (D-TX), Rep. Maxine Waters (D-CA), Rep. Darrell Issa (R-CA), and Rep. Charles Rangel (D-NY).

Bernanke Testifies on State of U.S. Economy

7/13. Ben Bernanke, Chairman of the Federal Reserve Board (FRB), testified before the House Financial Services Committee (HFSC) on July 13, 2001, and before the Senate Banking Committee (SBC) on July 14. He presented the FRB's report [61 pages in PDF] titled "Semiannual Monetary Policy Report to the Congress".

While the overall outlook is bleak, businesses are spending on information technology.

He wrote in his prepared testimony for both hearings that "the pace of the expansion so far this year has been modest. After increasing at an annual rate of 2-3/4 percent in the second half of 2010, real gross domestic product (GDP) rose at about a 2 percent rate in the first quarter of this year, and incoming data suggest that the pace of recovery remained soft in the spring. At the same time, the unemployment rate, which had appeared to be on a downward trajectory at the turn of the year, has moved back above 9 percent."

He added that "Two bright spots in the recovery have been exports and business investment in equipment and software. Demand for U.S.-made capital goods from both domestic and foreign firms has supported manufacturing production throughout the recovery thus far. Both equipment and software outlays and exports increased solidly in the first quarter, and the data on new orders received by U.S. producers suggest that the trend continued in recent months."

The FRB's report elaborates that "Real business spending for equipment and software (E&S) rose at an annual rate of about 10 percent in the first quarter, roughly the same pace as in the second half of 2010." Moreover, "outlays on information technology (IT) capital ... continued to rise at solid rates."

The Department of Commerce's (DOC) Bureau of Economic Analysis's (BEA) next Gross Domestic Product (GDP) report, the advance estimate for the second quarter of 2011, is due out on July 29, 2011. See also, story on the first quarter report, titled "BEA Reports Sluggish Growth in GDP and IT Investment" in TLJ Daily E-Mail Alert No. 2,228, April 28, 2011.

FCC Adopts Wireless Location Surveillance Order and NPRM

7/13. The Federal Communications Commission (FCC) adopted an item [77 pages in PDF] regarding location surveillance mandates at its July 12, 20011 meeting. It released the text of this item, titled "Notice of Proposed Rulemaking, Third Report and Order, and Second Further Notice of Proposed Rulemaking", on July 13.

The order portion of this item retains the FCC's existing handset based and network based location accuracy standards and the eight year implementation period established in the FCC's Second Report and Order [48 pages in PDF] adopted and released on September 23, 2010. (That 2nd R&O is FCC 10-176 in PS Docket No. 07-114).

See also, the FCC's Notice of Proposed Rulemaking and Notice of Inquiry [36 pages in PDF] adopted and released on September 23, 2010. (That NPRM & NOI is FCC 10-177 in PS Docket No. 07-114 and WC Docket No. 05-196.

However, the just released order also provides for phasing out the network based standard. It also requires new Commercial Mobile Radio Service (CMRS) networks to comply with the handset based location criteria, regardless of the location technology they actually use.

It also states that the FCC will require wireless carriers to periodically test their outdoor E911 location accuracy results and to share the results with Public Safety Answering Points (PSAPs), state 911 offices, and the FCC.

The NPRM portion of just released item addresses expanding the range of services covered by the FCC's location surveillance mandates.

It also states that "We do not propose specific automatic location accuracy requirements for VoIP at this time but instead seek comment on whether we should adopt general governing principles for the development of automatic location identification solutions."

This item, like other FCC actions to mandate the use of, and increase the accuracy of, location detection technologies, references one FCC purpose -- 911 services. There are, however, other purposes, including ensuring that law enforcement and intelligence agencies are able to discover and track the location of persons under criminal or FISA surveillance, and to enable private sector location based services and marketing.

Location surveillance capabilities in electronic devices give rise to a host of issues regarding consumer privacy. And, the day after the release of this item, FCC Chairman Julius Genachowski testified at a House Commerce Committee (HCC) hearing about the FCC's deep concerns for consumer privacy. However, this item only addresses privacy briefly and in passing in the NPRM portion, at paragraph 76, on page 77.

It refers to 47 U.S.C. § 222, which pertains to customer proprietary network information (CPNI), then asks, "How would section 222 apply to broadband providers if we were to amend our rules to require them to assist interconnected VoIP service providers in providing ALI? Could the Commission use authority ancillary to sections 222 and 615a-1 to require broadband providers to maintain the confidentiality of location information except as consistent with section 222? Could we extend the exception to the prior authorization rule for providers of emergency services to broadband providers? Are there other sources of authority that would enable the Commission to address privacy concerns in this area?" See also, 47 U.S.C. § 615a-1.

For more information, see story titled "FCC Extends E911 Location Tracking Rules to Interconnected VOIP" in TLJ Daily E-Mail Alert No. 1,589, May 31, 2007, story titled "FCC Adopts E911 Location Tracking Accuracy Benchmarks" in TLJ Daily E-Mail Alert No. 1,640, September 17, 2007, story titled "FCC Files Opposition to Stay in Challenge to Its Latest Wireless E911 Location Tracking Mandates" in TLJ Daily E-Mail Alert No. 1,729, March 11, 2008, and story titled "FCC Seeks Comments on Wireless Location Tracking Rules" in TLJ Daily E-Mail Alert No. 1,833, September 26, 2008.

This item is FCC 11-107 in PS Docket No. 07-114 and WC Docket No. 05-196. Initial comments will be due 60 days after publication of a notice in the Federal Register. Reply comments will be due within 90 days of such publication. As of the July 18, 2011, issue of the Federal Register, such notice had not yet been published.

Senate Commerce Committee Holds Hearing on Phone Bill Cramming

7/13. The Senate Commerce Committee (SCC) held a hearing titled "Unauthorized Charges on Telephone Bills: Why Crammers Win and Consumers Lose" on July 13, 2011.

Sen. John Rockefeller (D-WV), Chairman of the SCC, presided at this hearing. He wrote in his prepared statement, from which he read, that "The companies responsible for these cramming charges don't sell legitimate products. Most of them don't seem to sell anything at all. Their sole purpose is to place bogus charges on your telephone bill, and hope that you will pay your bill every month without looking at it too closely."

He continued that "While all the telephone companies have anti-cramming policies, they haven't made a serious effort to keep the crammers off their phone bills. Even when the phone companies kick a company off their bills, the crammers just invent a new company name and product and are allowed to put the charges right back on consumers' bills. One reason the telephone companies don't really crack down on crammers is that they make money from cramming."

He concluded that "voluntary guidelines aren't solving this problem. It's also pretty clear that a case-by-case law enforcement approach is not working. ... It's time for us to take a new look at this problem and find a way to solve it once and for all."

He stopped short of making any specific legislative or rule making proposals. He offered this vague statement as he closed the hearing: "Let's not worry about whether something is convenient or not, or whether something is a quarter of one percent or not, let's just say if certain authorized things that should be done, let's work on that, and figure that out, and take the rest and just ban it."

Sen. Amy Klobuchar (D-MN) said with vagueness that "we need clear rules of the road to prevent this kind of behavior".

The SCC heard testimony from state Attorneys General, but not from either the Federal Trade Commission (FTC) or Federal Communications Commission (FCC).

Lisa Madigan, Attorney General of Illinois, advocated enactment of legislation banning third party charges on phone bills. She said that allowing third party billing is an "open invitation to fraud and deceit" and "should be banned altogether".

Lisa MadiganMadigan (at right) said that "people are completely unaware of the fact that their phone number can be used as a credit card". She added that "the vast majority" of consumers never find these unauthorized charges on their bills. And, "almost nobody" goes through their bills.

She added that it shouldn't be the obligation of law enforcement agencies "to play whack a mole" as the fraudulent actors keep changing their names and tactics in response to law enforcement efforts.

At the end of the hearing she conceded that there are a few legitimate third party billers, and they should be allowed to continue. She wrote in her prepared testimony that there should be "a few exceptions for some regulated services, such as operator-assisted calls".

Elliot Burg, of the Office of the Vermont Attorney General, testified that in a Vermont survey, ninety percent of people who responded to a survey had no recollection of consenting to charges. He also said that consumers do not scrutinize their phone bills. See also, prepared testimony.

Walter McCormick, head of the USTelecom, which represents phone companies whose bills include third party items, wrote in his prepared testimony [PDF] that "the problem of cramming persists".

He outlined efforts by local exchange companies to deal with cramming. He explained that this includes working with contractual provisions to "prevent bad actors from ever getting access to the telephone bill", attempting "to make new charges on a customer's bill as clear and transparent as possible", by providing "an instant credit to any customer that notifies the company that there is a charge on their bill that is not recognized and/or unauthorized", and by performing "continuous review of cramming complaints to identify problems and to invoke the remediation provisions in the contracts with billing aggregators and individual providers -- measures that include financial penalties, suspension of service, or termination of third-party billing services".

He also explained that three parties are typically involved in "the billing chain for products or services being charged on the consumer's telephone bill -- the third-party provider of that product or service, the billing consolidator or clearinghouse, and the local exchange company that presents the invoice to its customer."

During the question and answer portion of the hearing, he told Sen. Rockefeller that "this is a continuing problem that needs to be addressed", and that the USTelecom wants to work with the Senate on this matter. He also pointed out that there have been certain federal and state obligations to allow third parties access to bills, and there remains uncertainty as to what obligations remain. But, no Senator asked him if the Congress should enact a new statute to provide clarity.

Sen. Kelly AyotteSen. Kelly Ayotte (R-NH) (at right) asked McCormick questions about whether there are any benefits or conveniences for consumers in third party billing. He did not name any particular third party biller who provides a benefit or convenience to consumers by taking payment via phone bills. However, he suggested, referencing a bill enacted by the Vermont legislature, that it could be "convenient for the consumer be be able to have certain services aggregated on a single bill."

McCormick also said that that "any kind of examination in this area I think would require some broad understanding of what legitimate businesses do rely upon this third party billing as a both a competitive opportunity, and as a consumer convenience, so we can try to provide you with more information for the record".

Sen. Claire McCaskill (D-MO) asked McCormick about "how much are the phone companies" make each year from third party billing. She said that "they are getting a piece of the pie", and asked "how much did AT&T make last year on cramming?"

McCormick answered that AT&T makes "fifty million a year" from third party billing, as distinguished from cramming, and that the figure is less than "200 million for the entire industry". He also said that this is about "one tenth of one percent of overall revenues" for the industry.

Sen. Rockefeller said, regarding McCormick's "one tenth of one percent" statement, "don't you understand how misleading that is?"

Rockefeller asked "why not ban it?" McCormick said that we do ban all unauthorized billing, but with respect to banning all third party billing, he said that "that is something that I will explore with the industry".

Sen. Ayotte about having a single national standard, with preemption. Madigan said that often federal legislation is "not strong enough".

The SCC also heard from two witnesses from businesses who deal with cramming who testified regarding the extent of cramming and the time and cost of monitoring bills, and demanding removal of unauthorized charges -- Susan Eppley and David Spofford (CEO of Xigo, LLC).

Spofford testified that more than 99% of third party charges are unauthorized.

Sen. Tom Udall (D-NM) asked about third party billing on cell phones. Madigan said that "the wireless carriers are much more aggressive and vigilant", so that there are many more complaints about land line phones.

Spofford said that "it is no where near as bad a problem" on wireless bills. He predicted, however, that it will "get worse".

Sen. John Boozman (R-AR) and Sen. Mark Begich (D-AK) also participated in the hearing.

Sen. Feinstein and Sen. Durbin Introduce Bill to Regulate Political Robocalling

7/13. Sen. Diane Feinstein (D-CA) and Sen. Richard Durbin (D-IL) introduced S 1355 [LOC | WW],  the "Robocall Privacy Act of 2011", a bill that would impose minor restraints on robocalling prior to federal elections. See, Sen. Feinstein's release.

This bill would only apply to prerecorded political robocalls. It does not address robocalling by charities, marketers, perpetrators of financial fraud, or others. It would only apply to federal elections. It would only apply to calls made between 9:00 PM and 8:00 AM. It would only apply during the 60 days leading up to a general, special, or run off election, and the 30 days leading up to a primary election.

The bill bans more than two robocalls to the same telephone number in a single day, bans blocking caller identification information, and requires that the caller identify itself.

The Congress has enacted Do Not Call legislation. That regime is implemented and enforced by the Federal Trade Commission (FTC). However, that regime exempts political calls.

This bill would give enforcement authority, not to the Federal Communications Commission (FCC), but to the Federal Election Commission (FCC). The bill also creates a private right of action.

The bill provides for statutory damages of "not more than $1,000 per violation", and not more than $3,000 per violation for "knowing or willful violation". The bill fails to define "violation". For example, if a federal candidate were to cause one prerecorded message to be sent by robocall to ten people, at 11:00 PM the night before an election, would that be one violation or ten?

Sen. Feinstein stated in the Senate that "In recent years, we have seen an increase in the development of new technologies that help political candidates reach out to voters. This is a good thing. Political speech is essential and should be protected. The vast majority of these developments strengthen the Democratic process by promoting an interchange of information and ideas." See, Congressional Record, July 13, at Page S4557.

She continued that "One of these developments is the robocall -- a prerecorded message that can be sent out to tens of thousands of voters at a minor cost through computer automation. With television and radio ads becoming so expensive, these prerecorded calls can play an important role in alerting voters to a candidate's position and urging their support at the polls."

She said that "the process can be abused. Throughout recent elections, we have continued to hear stories about people being inundated with phone calls throughout the day and night."

In addition, Sen. Feinstein enumerated several examples of recorded robocalls that contain "misleading and outright false information".

This bill provides that "It shall be unlawful for any person during the specified period to make a political robocall or to cause a political robocall to be made--
  (1) to any person during the period beginning at 9 p.m. and ending at 8 a.m. in the place which the call is directed;
  (2) to the same telephone number more than twice on the same day;
  (3) without disclosing, at the beginning of the call -- (A) that the call is a recorded message; and (B) the identity of the person making the call or causing the call to be made; or
  (4) without transmitting the telephone number and the name of the person making the political robocall or causing the political robocall to be made to the caller identification service of the recipient."

The bill does not prohibit robocalling with false or misleading information.

It was referred to the Senate Rules and Administration Committee.

People and Appointments

7/13. Democrat Janice Hahn defeated Republican Craig Huey with 55% of the vote in a special election for the 36th Congressional District in southern California. She will replace former Rep. Jane Harman (D-CA), who retired in February. This district has long returned large majorities for Democratic candidates.

More News

7/13. The Copyright Office (CO) published a notice in the Federal Register in which it announced that it has amended its regulations by removing Part 251 regarding "Copyright Arbitration Royalty Panel Rules of Procedure". The CO explained that "In 2004, Congress replaced the Copyright Arbitration Royalty Panels with three Copyright Royalty Judges who operate under separate regulations." This removal is effective July 13, 2011. See, Federal Register, Vol. 76, No. 134, July 13, 2011, at Page 41075.

7/13. The National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) released its draft NIST IR-7802 [25 pages in PDF] titled "Trust Model for Security Automation Data 1.0". The deadline to submit comments is August 1, 2011.

7/13. Lawrence R. Marino pled guilty in the U.S. District Court (DNH) to unauthorized access to a protected computer system in violation of 18 U.S.C. § 1030 in connection with his accessing his former employer's computer systems. The Department of Justice (DOJ) stated in a release that after leaving his job at OneSky Jets he went to work for a competitor, Regent Jet, but continued to access OneSky Jets' e-mail accounts from which he "obtained information about OneSky’s existing and prospective customers" and a OneSky Jets database "with tens of thousands of customer names and other information", which he used to "solicit new customers on behalf of Regent Jet".

Senate Commerce Committee Releases Report on Unauthorized Charges on Phone Bills

7/12. The Senate Commerce Committee (SCC) released a report [50 pages in PDF] titled "Unauthorized Charges on Telephone Bills". It concludes that "third-party billing is causing extensive financial harm to all types of landline telephone customers".

The SCC released this report the day before a SCC hearing on the subject, and the same day that the Federal Communications Commission (FCC) adopted a Notice of Proposed Rule Making (NPRM) [48 pages in PDF] on this topic. See, related stories in this issue titled "Senate Commerce Committee Holds Hearing on Phone Bill Cramming" and "FCC Adopts Cramming NPRM".

This report states that "Cramming is not a new problem. It began appearing in the 1990s, when telephone companies opened their billing platforms to an array of third-party vendors offering a variety of services. For the first time, telephone numbers became a payment method equivalent to credit card numbers. Consumers and businesses could purchase products or services with their telephone numbers and the charges for the services would later appear on their telephone bills. While the telephone companies' decision to open their billing platforms had the potential to benefit consumers and businesses, cramming quickly emerged as an unintended consequence."

The report states that phone companies profit from cramming because the collect fees for placing third party charges on their bills, that they are aware of the problem of cramming, and that "Many telephone customers experiencing cramming did not receive help from their telephone companies".

The SCC report offers no estimate of what percentage of third party charges are unauthorized. It states only that they constitute a "substantial percentage".

This report addresses only illegitimate businesses that place unauthorized charges on phone bills, and the harm that this causes. While this report offers the cursory statement that "some legitimate companies use third-party billing on landline telephone bills", it does not attempt to elaborate on legitimate third party billing. Nor does this report address how much consumers benefit from being able to make payment for purchases via phone bills. Nor does it address how much business opportunity and competition is enhanced by the availability of phone bill based billing.

This report offers no legislative recommendations.

FCC Adopts Cramming NPRM

7/12. The Federal Communications Commission (FCC) adopted and released a Notice of Proposed Rule Making (NPRM) [48 pages in PDF] regarding cramming, the placement of unauthorized charges on consumers' telephone bills.

However, while the proposed rules contained in this NPRM are labeled as "Truth-in-Billing Requirements", this NPRM does propose to do anything to bring clarity to array of deceptively labeled federal and state taxes included on consumers' bills.

Indeed, the FCC has a history of pressuring carriers not to provide consumers accurate information regarding the taxes that are imposed via phone bills to fund the FCC's universal service tax and subsidy programs.

Moreover, the proposed rules in this NPRM would only impose minimal new requirements on carriers. First, this NPRM does not propose either to prohibit third party charges on carriers' phone bills, or to require that consumers be given the option to block all third party charges.

Rather, this NPRM merely proposes to tinker with the arrangement of bills, and notices contained in bills. It proposes that FCC's rules be amended to provide that "Where charges for two or more carriers appear on the same telephone bill, the charges must be separated by service provider."

Also, "Where charges for one or more service providers that are not carriers appear on a telephone bill, the charges must be placed in a distinct section separate from all carrier charges."

Also, "Telephone bills must contain clear and conspicuous disclosure of any information that the subscriber may need to make inquiries about or contest charges on the bill."

Also, "Telephone bills and carrier websites must clearly and conspicuously state that the subscriber may submit inquiries and complaints" to the FCC.

Witnesses at a Senate Commerce Committee (SCC) hearing on July 13, 2011, said that almost all consumers are unaware that third parties can cause charges to be placed on their phone bills, and do not scrutinize their phone bills for improper charges. See, related story in this issue titled "Senate Commerce Committee Holds Hearing on Phone Bill Cramming".

If the testimony of these SCC witnesses is accurate, then the proposed rules changes in this NPRM would likely have little effect in reducing cramming.

The FCC's cramming rules apply only to wireline carriers. However, this NPRM asks for comments on whether the regime should be extended to commercial mobile radio service (CMRS), and if so, what would be the statutory authority for such action. It also asks about extending the rules to cover providers of interconnected VOIP service.

Also, while the proposed rules in the NPRM would only address the content and arrangement of bills, the NPRM also asks for comment on a wider array of topics. It asks, for example, "whether wireline carriers should be required to block third-party charges from subscribers’ telephone bills upon request". It also asks whether certain classes or third party charges should be blocked, or whether on certain classes of third party charges should be allowed.

The FCC asserts that it has statutory authority for its current rules under 47 U.S.C. § 201(b), which provides, in relevant part, that "All charges, practices, classifications, and regulations for and in connection with such communication service, shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is declared to be unlawful ..."

See also, FCC release, statement of Chairman Julius Genachowski, statement of Commissioner Robert McDowell, statement of Commissioner Michael Copps, and statement of Commissioner Mignon Clyburn.

This NPRM is FCC 11-106 in CG Docket No. 09-158) and CC Docket No. 98-170. Initial comments will be due 60 days after publication of a notice in the Federal Register. Reply comments will be due within 90 days of such publication. As of the July 14, 2011, issue of the Federal Register, such notice had not yet been published.


7/12. The Federal Communications Commission (FCC) adopted and released a Third Notice of Proposed Rule Making (3rdNPRM) [32 pages in PDF] regarding the impact of the enactment of the Local Community Radio Act of 2010 (LCRA) on "the procedures previously adopted to process the approximately 6,500 applications which remain pending from the 2003 FM translator window".

FCC Chairman Julius Genachowski wrote in his statement [PDF] that the FCC is "clearing the way for development of a more robust local community radio service and processing of thousands of pending FM translator applications."

FCC Commissioner Robert McDowell wrote in his statement [PDF] that "I am delighted that we are reconsidering the policy of limiting each applicant to only ten pending FM translator applications. I dissented against this cap in the Third Report and Order in 2007 stating that it could increase the risk of harmful interference to services provided by FM translators in many unserved areas. With the benefit of experience and hindsight, we now tentatively conclude that this proposal was also unworkable in other respects. In advancing a replacement licensing methodology, we improve upon our previous ten application restriction by seeking comment on a market-specific approach for processing the approximately 6,500 FM translator applications that remain pending."

FCC Commissioner Michael Copps wrote in his statement [PDF] that "Low Power should be available in every possible market -- specifically including spectrum-limited markets -- while permitting translator applicants to pursue more licenses once Low Power FM has a shot at gaining a toe-hold. There is nothing in today’s action that precludes translator applicants from pursuing licenses in the future even in those markets where pending applications may be dismissed. Today's action simply clears the path forward to a new LPFM window, a window that may be the last substantive opportunity for LPFMs to obtain licenses."

Copps also urged the FCC to promptly "open a new LPFM window" and "put in place some effective incentives so that women- and minority-owned businesses can take shape in the Low Power world". He also wrote that the FCC "will need to address the issues of second-adjacent waivers and of permitting LPFM stations to use a more flexible contour-based approach for locating available channels".

See also, statement [PDF] of FCC Commissioner Mignon Clyburn, and FCC release [PDF]. This 3rdNPRM is FCC 11-105 in MM Docket No. 99-25 and MB Docket No. 07-172. Initial comments will be due 30 days after publication of a notice in the Federal Register. Reply comments will be due within 45 days of such publication. As of the July 14, 2011, issue of the Federal Register, such notice had not yet been published.

The LCRA was HR 6533 [LOC | WW] in the 111th Congress. It is now Public Law No. 111-371. See also, story titled "Obama Signs Low Power FM Bill" in TLJ Daily E-Mail Alert No. 2,193, January 5, 2011, and stories titled "Congress Passes Low Power FM Bill", "Summary of HR 6533, the Community Radio Act of 2010", and "History of LPFM Law and Policy Making" in TLJ Daily E-Mail Alert No. 2,183, December 19, 2010.

House Crime Subcommittee Holds Hearing on Data Retention Mandate Bill

7/12. The House Judiciary Committee's (HJC) Subcommittee on Crime, Terrorism and Homeland Security held a hearing on HR 1981 [LOC | WW], the "Protecting Children from Internet Pornographers Act of 2011".

The bill would create a mandate that all "electronic communication service" (ECS) and "remote computing service" (RCS) providers retain for 18 months "network addresses the service assigns to each account". However, the bill would exempt wireless providers. The bill would create broad new immunities for service providers. The bill would create no limitations on the reasons for accessing retained data, and it would not limit who could obtain access.

As of July 12, this bill had 19 cosponsors most but not all of whom are Republicans.

Rep. Lamar Smith (R-TX), the Chairman of the HJC, and the sponsor of HR 1981, participated in the hearing. However, Rep. James Sensenbrenner (R-WI) the Chairman of the Subcommittee, presided.

This hearing disclosed that there is substantial opposition from members of both parties to parts of this bill. While Rep. Smith advocated various provisions of this bill, Rep. Sensenbrenner condemned it repeatedly, and with harsh language.

The HJC heard from one panel of three witnesses. See, prepared testimony [8 pages in PDF] of Ernie Allen (National Center for Missing and Exploited Children), prepared testimony [5 pages in PDF] of Michael Brown (Sheriff of Bedford County, Virginia), and prepared testimony [16 pages in PDF] of Marc Rotenberg (head of the Electronic Privacy Information Center). No one from the Department of Justice (DOJ) testified at this hearing.

Rep. Sensenbrenner has a history of support for law enforcement and intelligence agencies. He is a previous Chairman of the HJC. He organized efforts to quickly pass the USA PATRIOT Act in 2001, and later lead efforts to extend sunsetted provisions. He negotiated compromises with other members of Congress and the Bush administration officials. For years, he defended the DOJ against Democratic attacks, and advocated the DOJ's interests.

Then, DOJ Office of the Inspector General (OIG) reports disclosed that the DOJ and its FBI engaged in serial and serious violations of surveillance law, did not observe some of the terms of the Act, and violated bargains that it had struck with the Congress. In recent hearing Rep. Sensenbrenner angrily berated DOJ officials for their betrayal.

Rep. James SensenbrennerRep. Sensenbrenner stated at this hearing that he is concerned about "this bill being trashed, just like the PATRIOT Act." He said that the bill is bad policy and that he will try to kill it.

He concluded that "this bill needs a lot of fixing up", and that "it is not ready for prime time".

He stated that he is concerned that law enforcement "will use it beyond investigating child pornography". He asked Sheriff Brown if he needed a data retention mandate for other crimes. The Sheriff said he did not.

No one from the DOJ testified at this hearing. However, a DOJ representative testified at a hearing in January that data retention would assist in many other areas. See, subsection below titled "January 25 Hearing".

Rep. Smith read a prepared statement in support of his bill. He said that it "enables law enforcement officials to successfully locate and prosecute those who want to hurt our children."

"Often, the only way to identify a pedophile who operates a website or exchanges child pornography images with other pedophiles is by an Internet Protocol address."

Rep. Lamar Smith"Law enforcement officials must obtain a subpoena and then request from the Internet Service Provider the name and address of the user of the IP address. Unfortunately, ISPs regularly purge these records, making it difficult if not impossible for investigators to apprehend child pornographers on the Internet." Rep. Smith (at right) continued that "H.R. 1981 directs Internet Service Providers to retain Internet Protocol addresses to assist federal law enforcement officials with child pornography and other Internet investigations."

He added that "This is a narrow provision that addresses the retention of only the Internet Protocol addresses the providers assign to their customers. It does not require the retention of any content. So the bill does not threaten any legitimate privacy interests of Internet users."

Rep. John Conyers (D-MI), the ranking Democrat on the HJC, stated that "the problem is that HR 1981 would not achieve the goal" of protecting kids from child pornographers. One reason for this, he said, is that it exempts wireless service providers. He explained that "criminals will exploit this loophole" and "migrate to a wireless service".

Rep. Conyers also said that the bill's title "is a misnomer". He said that law enforcement agencies could gain access to retained data to investigate "routine street crimes".

He suggested this: "limit law enforcement's access to internet pornography crimes against children".

Rep. Bobby Scott (D-VA), the ranking Democrat on the Subcommittee, stated that law enforcement has the ability to obtain the information that it needs, that "the DOJ already has more data than it has personnel to investigate".

Rep. Bobby ScottRep. Scott (at right) said too that with the enactment of HR 1981's data retention mandate, retained data could end up being used in divorce cases, seized by hackers, or used for marketing purposes.

Later he asked witnesses whether retained data would be available in copyright infringement cases. Marc Rotenberg answered yes, by civil subpoena.

Greg Nojeim of the Center for Democracy and Technology (CDT) did not testify at the July 12 hearing. However, he wrote a short piece that is in the CDT web site.

January 25 Hearing. The HJC's Subcommittee on Crime also held a hearing back on January 25, 2011, titled "Data Retention as a Tool for Investigating Internet Child Pornography and Other Internet Crimes". The Subcommittee heard from four witnesses.

See, prepared testimony [9 pages in PDF] of Jason Weinstein (DOJ), prepared testimony [5 pages in PDF] of John Douglas (International Association of Chiefs of Police), prepared testimony [9 pages in PDF] of Kate Dean (Internet Service Provider Association), and prepared testimony [10 pages in PDF] of John Morris (Center for Democracy and Technology).

See also, transcript [85 pages in PDF] of January 25 hearing.

The DOJ's Weinstein wrote that data retention would assist in investigating not only CP crimes, but only drug crimes, computer hacking, and national security matters.

He also stressed the importance of a data retention mandate for cell phone providers, because criminals use cell phones to access web sites.

He acknowledged the threat of data retention to the privacy interests of individuals. He wrote, "To be sure, the presence of large databases, by itself, poses privacy concerns."

He also wrote that "we do not have a position on what information should be retained or for how long"

The ISP Association's Dean wrote that "a blanket legal requirement to retain Internet usage data for established time periods is certain to present significant challenges to the communications industry, both for well-established companies and newer online media enterprises, as well as unintended consequences which are incapable of precise identification."

She also wrote that "Maintaining exponentially-increasing volumes of data, in a searchable format that would enable companies to quickly locate a targeted user’s data amidst exabytes of information, would be extremely complicated, and burdensome. While storing huge volumes of data may be possible, providers have concerns about ensuring the integrity and availability of that data to respond to legal demands. The sheer complexity of systems required to perform these tasks increases the probability of crashes, failures, and delays. Thus, despite a provider’s efforts to comply with the data retention obligation, the data, through no fault of the provider, may still not be available to law enforcement."

She also wrote that a data retention mandate would increase search times, which would hamper investigations, such as child abductions, where time is of the essence.

The CDT's Morris urged the Subcommittee to "reject calls for mandatory data retention, whether narrow or expansive".

Summary of HR 1981, Data Retention Mandate Bill

7/12. Rep. Lamar Smith (R-TX) and Rep. Debbie Schultz (D-FL) introduced HR 1981 [LOC | WW], the "Protecting Children from Internet Pornographers Act of 2011", on May 25, 2011. See, full story.

Summary of Existing Data Retention Mandates

7/12. The cornerstone provision of HR 1981 [LOC | WW], the "Protecting Children from Internet Pornographers Act of 2011", is its data retention mandate. There are already two data retention mandates.

The term commonly used for these two existing mandate is "preservation", while the term commonly used for proposals for an even broader mandate is "retention".

First, the 1996 amendments to the Stored Communications Act (SCA) added a data retention mandate. The SCA, at 18 U.S.C. § 2703(f), currently provides that "A provider of wire or electronic communication services or a remote computing service, upon the request of a governmental entity, shall take all necessary steps to preserve records and other evidence in its possession pending the issuance of a court order or other process."

A government entity can compel data preservation under this section for 180 days.

HR 1981 would add to Section 2703 a broader and longer data preservation or retention mandate. It would amend the SCA by adding an 18 month data retention mandate. It would apply to every covered entity regardless of whether or not the government has asked it to do so. It also contains an exception for wireless, and two immunity provisions.

It may also be significant that HR 1981 does not eliminate, or phase out this existing retention mandate.

Second, the Congress enacted HR 1738 (110th Congress), the "Providing Resources, Officers, and Technology To Eradicate Cyber Threats to Our Children Act of 2008" or "PROTECT Our Children Act of 2008". It is now Public Law No. 110-401.

Section 501 of that act added a reporting and data retention mandate for all "electronic communication service" (ECS) or a "remote computing service" (RCS) providers.

This section, which is now codified at 18 U.S.C. § 2258A, requires ECSs and RCSs to report to the CyberTipline of the National Center for Missing and Exploited Children (NCMEC) any "actual knowledge of any facts or circumstances" that constitute an apparent violation of CP statutes, including either 18 U.S.C. § 2252 and 18 U.S.C. § 2252A.

It also requires any ECS or RCS that makes such a report to retain not only data, but also content, for 90 days. The ECS or RCS "shall preserve any images, data, or other digital files that are commingled or interspersed among the images of apparent child pornography within a particular communication or user-created folder or directory".

This section provides that the ECS's or RCS's report to the CyberTipline "shall be treated as a request to preserve, as if such request was made pursuant to section 2703(f)".

This section also requires the NCMEC to forward information to relevant law enforcement agencies.

More News

7/12. The National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) releasd its draft SP 800-126 Rev. 2 [51 pages in PDF] titled "The Technical Specification for the Security Content Automation Protocol (SCAP): SCAP Version 1.2". The deadline to submit comments is August 1, 2011.

7/12. The National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) released its draft SP 800-56 C [17 pages in PDF] titled "Recommendation for Key Derivation through Extraction-then-Expansion". The deadline to submit comments is August 11, 2011.

CCIA Releases Report on Importance of Fair Use to U.S. Economy

7/11. The Computer and Communications Industry Association (CCIA) released the 2011 edition of a report [PDF] titled "Fair Use in the U.S. Economy: Economic Contribution of Industries Relying on Fair Use". See also, CCIA release.

It states that the fair use industries make up a large and growing part of the U.S. economy, and that policymakers should consider the importance of the fair use industries when addressing copyright policy proposals.

The report states that the fair use industries include internet search and web hosting providers, software developers, and manufacturers of consumer electronic devices that enable copying of copyrighted works.

This report states that "in 2008 and 2009, fair use industries generated total revenue averaging $4.6 trillion, a 35 percent increase over 2002 revenue of $3.4 trillion." Moreover, "Fair use-related industry value added in 2008 and 2009 averaged $2.4 trillion, approximately 17 percent of total U.S. current dollar GDP."

The report also states that "Employment in industries benefiting from fair use and related limitations and exceptions increased from 16.9 million in 2002 to 17.7 million in 2008."

Also, "From 2002 to 2007, the productivity of U.S. fair use industries increased by 38 percent to nearly $137,000 per employee."

The report also states that "Exports of goods and services related to fair use industries increased by 64 percent from $179 billion in 2002 to $294 billion in 2008, and then fell back to $266 billion in 2009."

The report concludes that "By any measure, the growth rate of fair use industries has outpaced overall economic growth in recent years, fueled productivity gains, and supported millions of jobs."

Rep. Jared Polis (D-CO), Ed Black (head of the CCIA), and Andrew Szamosszegi (Capital Trade Inc.), an author of the report, spoke at an event on Capitol Hill on July 11.

Ed Black argued that policymakers should take note of the size and importance of fair use industries when considering changes to copyright law. However, he did not assert that any recent statute caused a decrease in GDP or total employment, or that any pending legislative proposal would have such an effect.

He argued that fair use is important to the economy, and that policy makers should promote balance in U.S. and international copyright policy.

Black expressed concern about a pending legislative proposal advocated by copyright industries, and particularly the movie and music companies -- S 968 [LOC | WW], the "Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011", or "PROTECT IP Act".

The Senate Judiciary Committee (SJC) amended and approved this bill on May 26, 2011.

Black also argued that the content industries tend to claim more rights than they posses under copyright law, and to blur fair use rights. He cited as examples claims regarding televised sporting events, and book publishers' assertion that nothing in a book can be reproduced without permission.

More News

7/11. The Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB) adopted and released an Order [14 pages in PDF] expanding the FCC's e-rate subsidy program for schools and libraries to cover "off-premises wireless access to the Internet". It is FCC 11-1181 in WC Docket No. 10-222.

7/11. Symantec announced in a release that it has completed it acquisition of Clearwell Systems, Inc., a privately held company that provides electronic discovery software for law firms, business, and government agencies. Symantec announced in a May 19, 2011, release that it "has entered into an agreement to acquire" Symantec's Enterprise Vault already provides document management, archiving, retrieval, and searching. Symantec's Deepak Mohan stated in this release that "As information continues to grow at unprecedented rates, the biggest challenge for customers is to protect, manage and backup this information as well as have the ability to categorize and discover it efficiently". He added that "The acquisition of Clearwell's market leading electronic discovery solution will further increase Symantec's ability to get the right information, to the right people, at the right time, while reducing overall legal review costs and limiting risk."

Go to News from July 6-10, 2011.