TLJ News from March 1-5, 2013

Sen. Wyden Introduces Bill to Amend DMCA to Create an Exemption for Unlocking

3/5. Sen. Ron Wyden (D-OR) introduced S 467 [LOC | WW], the "Wireless Device Independence Act of 2013", a bill to amend the DMCA to allow certain unlocking of wireless phones and other wireless devices.

This bill was referred to the Senate Judiciary Committee (SJC). Sen. Wyden is not a member.

First, to understand how Sen. Wyden's operates, it is necessary to understand the structure of Section 1201. Subsection 1201(a)(1)(A) contains the basic ban: "No person shall circumvent a technological measure that effectively controls access to a work protected under this title." Then, (a)(1)(B), which Sen. Wyden's bill would amend, provides that the basic ban "shall not apply to persons who are users of a copyrighted work which is in a particular class of works" designated by the Librarian of Congress every three years pursuant to a process set out in (a)(1)(C). These classes of works are now commonly referred to as DMCA exemptions. Subsections (d), (e), (f) and (g) contains permanent "exemptions" to the basic ban.

Subsection (b) provides that "No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that ... is primarily designed or produced for the purpose of circumventing ..."

Sen. Wyden's bill takes an exemption from the Librarian's 4th triennial rules, and incorporates it into (a)(1)(B). Since this exemption is by statute, and is permanent, it might have more logically fit the structure of the Section 1201 to put it in as a subsection (h). The placement in (a)(1)(B) also limits its reach to the person who circumvents. It arguably does not reach the makers of things that are used to circumvent.

This bill would amend 17 U.S.C.§ 1201(a) to exempt the following from Section 1201's ban on circumvention of "a technological measure that effectively controls access to a work protected under" Title 17:

This exemption is very similar to the language used by the Librarian of Congress in its 5th triennial rules containing exemptions to the ban on circumvention. That exemption expired in January of this year.

The recently expired exemption was this:

This bill is broad to the extend that it would allow consumers to unlock a wide range of devices, and that it contains no requirement that the term of a contract with the wireless service provider have reached its end. A consumer could sign a service contract, obtain a subsidized and locked phone, and then unlock, and switch service providers, without violating the DMCA. Of course, the original service provider might still attempt to collect money from the customer due under the contract.

This bill pertains to "a user of a computer program", while the expired rule pertained to the "Computer programs". The DMCA directs the Librarian of Congress to adopt regulations that exempt classes of copyrighted works. The bill exempts the person who unlocks his or her phone (under certain circumstances).

What then of the manufacturer, importer or retailer of the things that consumers use to unlock their phones? Could they still be at risk of violating the DMCA, and being sued by service providers, device makers, or others under the DMCA's Section 1203 private right of action?

This would arguably be the most literal interpretation of the bill as introduced.

The clause "access to the network is authorized by the operator of the network" would exclude from the exemption unlocking when, hypothetically, the purpose is to access an open network.

This bill would be effective retroactively to January 23, 2013. This is the date that the Librarian's 5th triennial rules took effect.

Google Discloses that it Receives FBI NSLs

3/5. Google released a statement regarding its receipt of, and compliance with, National Security Letters (NSLs) from the Federal Bureau of Investigation (FBI).

It is significant merely that Google is publicly addressing this subject. Most companies do not. Also, over many years many representatives of internet and communications companies have refused to discuss this subject with TLJ.

However, Google's letter discloses little. For example, it states that for the year 2012, Google received somewhere between 0 and 999 NSLs that pertained to somewhere between 1,000 and 1,999 "Users/Accounts". For the year 2011, the numbers fell within the same ranges.

Google wrote that is used these ranges "to address concerns raised by the FBI, Justice Department and other agencies that releasing exact numbers might reveal information about investigations".

An NSL, which is just one of many surveillance tools available to the FBI, enables the FBI to demand from phone companies, and anything that the FBI considers to be an "electronic communication service", records regarding its customers or users, such as their names, addresses, and billing information. The FBI does not need any kind of court approval. It issues the NSL itself. However, the FBI cannot use an NSL to listen to a phone conversation.

Also, Google wrote in its statement that it requires "that government agencies use a search warrant if they're seeking search query information or private content, like Gmail and documents, stored in a Google Account".

Google also stated that "people don't always use our services for good, and it's important that law enforcement be able to investigate illegal activity. This may involve requests for personal information. When we receive these requests, we ... scrutinize them carefully to ensure they satisfy the law and our policies" and "seek to narrow requests that are overly broad".

More on NSLs. NSL authority is codified at 18 U.S.C. § 2709. NSLs do not require a warrant or other prior court authorization, and hence, are inherently subject to abuse, and have in fact have been widely abused. They enable the Department of Justice's (DOJ) 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 (ECS).

ECS is defined at 18 U.S.C. § 2510. ECS is a term created by the 1986 Electronic Communications Privacy Act (ECPA), based upon technology as it existed prior to the enactment of the ECPA. The application of this and other 1986 terms to current technologies is no longer clear, and in the hands of FBI lawyers, is quite elastic and expansive. However, one thing is clear. Google is treated as an ECS for the purposes of Section 2709.

Section 2709 provides that "A wire or electronic communication service provider shall comply with a request for subscriber information and toll billing records information, or electronic communication transactional records in its custody or possession" that is made by the FBI Director or certain other officials at the DOJ or FBI.

NSLs require no warrant or judicial approval of any kind. They can be issued by the FBI Director "or his designee in a position not lower than Deputy Assistant Director at Bureau headquarters or a Special Agent in Charge in a Bureau field office designated by the Director".

The NSL can demand production of any "name, address, length of service, and local and long distance toll billing records of a person or entity".

The closest thing to a standard or limitation in this section is that the person who issues the NSL must certify in writing that the information sought is "relevant to an authorized investigation to protect against international terrorism or clandestine intelligence activities".

The FBI is also authorized by this section to issue a gag order that prohibits the recipient from disclosing that it has received an NSL. This section provides that "no wire or electronic communications service provider, or officer, employee, or agent thereof, shall disclose to any person (other than those to whom such disclosure is necessary to comply with the request or an attorney to obtain legal advice or legal assistance with respect to the request) that the Federal Bureau of Investigation has sought or obtained access to information or records under this section." (Parentheses in original.)

The DOJ and FBI have a history of violation of Section 2709. The DOJ's Office of the Inspector General (OIG) released three lengthy reports in 2007, 2008 and 2010 that disclosed long running, egregious and patently obvious disregard by the FBI for surveillance laws, including Section 2709.

The General Counsel at the time of the violations covered by these reports was Valerie Caproni. She is now Deputy General Counsel at Northrop Grumman Corporation. President Obama nominated her to be a Judge of the U.S. District Court (SDNY) on November 14, 2012, and re-nominated her on January 3, 2013. Her nomination is pending.

For more on NSLs, FBI violation of its NSL authority, and Caproni, see story titled "Obama Nominates Caproni to District Court" in TLJ Daily E-Mail Alert No. 2,474, November 19, 2012.

The DOJ/OIG surveillance abuse reports are as follows:

Obama Administration Urges Creation of DMCA Anti-Circumvention Exemption for Unlocking Cell Phones

3/4. David Edelman, Senior Advisor for Internet, Innovation, & Privacy in the Executive Office of the President (EOP), wrote a short policy statement titled "It's Time to Legalize Cell Phone Unlocking".

He wrote that it is the position of the "White House" that "consumers should be able to unlock their cell phones without risking criminal or other penalties". Also, "the same principle should also apply to tablets".

Unlocking is the circumvention of computer programs on mobile phones or tablets to enable such devices to connect to alternative wireless networks. Carriers sell consumer phones at discounted prices, in return for the consumers signing wireless service contracts with a minimum fixed term. Carriers use locking to prevent these consumers from switching service providers.

Edelman asserted that this as a "telecommunications issue", and wrote that "the Federal Communications Commission (FCC), with its responsibility for promoting mobile competition and innovation, has an important role to play here."

In fact, this is a Title 17 matter involving copyright and Digital Millennium Copyright Act (DMCA), over which the Library of Congress's (LOC) Copyright Office (CO) has rulemaking authority. The LOC released a statement that suggests that it will not reopen this matter.

FCC Chairman Julius Genachowski, like FCC Chairmen and other Commissioners before him, has often adopted rules and taken adjudicatory action without statutory authority. Moreover, while the President has no authority to direct or fire the Register of Copyright, Genachowski has often acted as if he were a loyal member of the Obama administration.

Genachowski wrote in a statement on March 4 that "From a communications policy perspective," the CO's decision "raises serious competition and innovation concerns, and for wireless consumers, it doesn't pass the common sense test. The FCC is examining this issue, looking into whether the agency, wireless providers, or others should take action to preserve consumers' ability to unlock their mobile phones."

It might be recalled also that the FCC under the leadership of former Chairman Michael Powell ventured into copyright policy with the adoption of broadcast flag rules in 2003. However, the Court of Appeals held that it lacked statutory authority. See, story titled "DC Circuit Reverses FCC's Broadcast Flag Rules" in TLJ Daily E-Mail Alert No. 1,131, May 9, 2005.

Edelman also wrote that "The Obama Administration would support a range of approaches to addressing this issue, including narrow legislative fixes in the telecommunications space that make it clear: neither criminal law nor technological locks should prevent consumers from switching carriers when they are no longer bound by a service agreement or other obligation."

Edelman's statement refers to an online petition titled "Make Unlocking Cell Phones Legal" in an Obama administration web site. That petition states, "We ask that the White House ask the Librarian of Congress to rescind this decision, and failing that, champion a bill that makes unlocking permanently legal."

There is no law that prohibits cell phone or tablet unlocking. However, there are contracts between service providers and consumers, which the President is powerless to abrogate.

Second, there is the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA). The DMCA directs the LOC to conduct a proceeding every three years to adopt rules that create exemptions to the ban on circumvention. Nominally the rules are adopted by the Librarian of Congress, but in fact the Register of Copyright and her staff attorneys write these rules. These triennial rules are codified at 37 C.F.R. § 201.40.

Unlocking of wireless devices may violate the anti-circumvention provisions of the DMCA. Only the CO can create an exemption for this.

The CO's fourth triennial rules contain exemptions related to unlocking. See, story titled "Copyright Office Releases 4th Triennial DMCA Exemptions" in TLJ Daily E-Mail Alert No. 2,115, July 30, 2010.

The CO's fifth set of rules, now in effect, do contain an exemption for unlocking phones, but only through the end of January of 2013. See, story titled "Librarian of Congress Adopts 5th Triennial § 1201 Exemptions" in TLJ Daily E-Mail Alert No. 2,467, October 24, 2012.

The purpose of the exclusive rights of copyright is to incent creation, by protecting the creator's or assignee's ability to derive revenue from the sale, licensing or streaming or copyrighted works. The object of the DMCA is to further this purpose by banning circumvention of technological measures that effectively control access to copyrighted works.

The process of unlocking entails circumventing a technological measure that controls access to copyrighted software. But, that software is not being sold or licensed. Rather, it is part of the process of enforcing a business model that ties a phone to a wireless service contract. That is, the DMCA is being invoked by service providers in a manner not envisioned by the members of the Congress that enacted the DMCA back in 1998.

Text of the CO Exemptions. The 4th set of rules which are not longer in effect contained two exemptions that relate to the app store business models, and wireless service provider business models:

The 5th set of rules which are now in effect include these two exemptions:

That is, the exemption first created in the 4th set of rules applies only to mobile phones acquired prior to the effective date of the exemption or within 90 days thereafter. The effective date was October 28, 2012. 90 days thereafter fell in late January. Hence, there is now no phone unlocking exemption.

More Reaction. The Library of Congress, of which the Copyright Office is a component, released a polite but unbending statement regarding the Obama administration statement. It noted that the DMCA "does not permit the U.S. Copyright Office to create permanent exemptions to the law".

It also explained that the CO conducted a thorough rule making proceeding.

Most significantly, the statement makes no reference to re-examining its decision.

On the other hand, the CO will likely commence its 6th triennial rulemaking proceeding in less than two years.

The CTIA stated in a release that "The Librarian of Congress concluded that an exemption was not necessary because the largest nationwide carriers have liberal, publicly available unlocking policies, and because unlocked phones are freely available in the marketplace -- many at low prices."

It added that "Customers have numerous options when purchasing mobile devices. They may choose to purchase devices at full price with no lock, or at a substantially discounted price -- typically hundreds of dollars less than the full price -- by signing a contract with a carrier. When the contract terms are satisfied, or for a reason that is included in the carrier's unlocking policy -- such as a trip outside the U.S. -- carriers will unlock a phone at their customer's request."

Sherwin Siy of the Public Knowledge (PK) wrote in a short piece on March 5 that "the White House statement doesn't reverse the Library's decision".

He added that "The problem here is one created by statute, and thus it falls to Congress to repair the damage. The Library of Congress's statement certainly doesn't suggest that it's likely to start some new process of reversing itself".

More on the DMCA. The anti-circumvention provisions are codified at 17 U.S.C. § 1201, et seq. Subsection 1201(a)(1)(A) provides that "No person shall circumvent a technological measure that effectively controls access to a work protected under this title ...".

Then, § 1201(a)(2)(A) provides that "No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that --- (A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title;"

Furthermore, § 1201(b)(1)(A) provides that "No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that --- (A) is primarily designed or produced for the purpose of circumventing protection afforded by a technological measure that effectively protects a right of a copyright owner under this title in a work or a portion thereof; ..."

Then, Subsections 1201(a)(1)(B) through (E) provide for rulemaking proceedings conducted by the Copyright Office (CO) every three years to establish exemptions to the prohibition of (a)(1)(A) for certain non-infringing uses.

Cato Urges Free Trade in Online Education

3/4. The Cato Institute released a paper titled "Liberalizing Cross-Border Trade in Higher Education: The Coming Revolution of Online Universities". The author is the Cato's Simon Lester.

The paper states that higher education is moving online, that this increases international competition between universities, that this is international trade, and that US universities will seek protectionist policies, but that the government should reject such demands.

The Cato Institute has a long history of free trade advocacy.

Lester wrote that "Recent developments in higher education, with leading institutions starting to offer courses online, suggest that the Internet is going to disrupt this industry, just as it has already disrupted the music and book industries and many others. We are entering a period of experimentation with new business models for higher education, with MOOCs (massive open online courses) the most prominent among these." (Parentheses in original.)

He predicted that "there is likely to be more competition, lower costs, and higher quality. This is great news for consumers of higher education. However, some existing institutions may fare badly in this transition and are likely to call for government support."

He added that "demands for government protection will be even stronger where foreign online competition is hurting traditional domestic institutions."

He urged that "One way to promote free trade in higher education is with international trade agreements.
Through these agreements, governments can make commitments not to discriminate against foreign online higher education programs."

He elaborated that current General Agreement on Trade in Services (GATS) rules are old and inadequate for addressing online services. Hence, these rules must be updated to specifically address online higher education.

He offers numerous recommendations. "Treat foreign and domestic online programs alike in accreditation" and "Online degrees should be recognized all over the world".

He also argues that "Subsidies should be for students, not for domestic educational institutions." That is, a government may subsidize education for its lower income students, but "these subsidies should not be used to discriminate against foreign online universities".

He argues that state universities should no longer favor students who are state residents, but "for political reasons, this may be a difficult change to make".

There are also other political reasons for not adopting the GATS rules changes that Lester recommends. For example, this paper focuses on governments, universities and students. However, in addition, faculty have interests, and tend to be organized and politically active. Much of government spending on higher education pays for faculty salaries and benefits. Some spending might be viewed merely as transfer payments from taxpayers to faculty. The sort of international competition envisioned by Lester would threaten the financial interests of many US based faculty.

Also, this paper does not address the related issue of US based state run and non-profit universities seeking government assistance in limiting competition from US based for profit universities, which increasingly are offering online services.

Judicial Appointments

3/4. The confirmed Katherine Failla to be a Judge of the U.S. District Court (SDNY). See, Congressional Record, March 4, 2013, at Page S1094. President Obama first nominated her on June 25, 2012. See, White House news office release and release. He nominated her again on January 3, 2013. She has been an Assistant U.S. Attorney since 2000. Before that, she worked for the law firm of Morgan Lewis & Bockius.

3/4. The confirmed Pamela Ki Mai Chen to be a Judge of the U.S. District Court (EDNY). See, Congressional Record, March 4, 2013, at Page S1094. She was previously a long time employee of the Department of Justice (DOJ). She worked in the DOJ's Civil Rights Division, and then in the Office of the U.S. Attorney for the Eastern District of New York.

3/4. Sen. Patrick Leahy (D-VT) spoke in the Senate regarding judicial nominations generally, and the nomination of Caitlin Halligan to be a Judge of the U.S. Court of Appeals (DCCir). Republicans have held up her confirmation for years, in part because Democrats held up for years former President Bush's nominee for the same seat. Sen. Leahy argued that "there is no reason to delay further the confirmation of Caitlin Halligan, whose nomination to the D.C. Circuit was first reported nearly two years ago. Senate Republicans justified their filibuster of her nomination a year ago by arguing that the Circuit did not need another judge. Since that time, the number of vacancies on that court has doubled, and it is now more than one-third vacant. It needs Caitlin Halligan. She is the kind of moderate, superbly qualified nominee who should easily be able to be confirmed under any standard by which the Senate has considered judicial nominees in the past. It is well past time to walk back from the precipice marked by the wrongheaded filibuster of Ms. Halligan. The continued filibuster of her nomination does harm to the Senate, to the important D.C. Circuit, and to the American people." See, transcript.

More People and Appointments

3/4. Heather Blanchard joined the CTIA as Director of Wireless Internet Development (WID). See, CTIA release.

OUSTR Releases 2013 Trade Policy Statement

3/1. The Office of the U.S. Trade Representative (OUSTR) released a document [382 pages in PDF] titled "The President's 2013 Trade Policy Agenda".

USTR Ron Kirk stated in a release that this document "calls for continued progress and bold steps".

This report contains rhetorical support for other countries buying more things from the U.S., and other countries removing their barriers to free trade.

However, the Obama administration has not negotiated any bilateral free trade agreements (FTAs) that would facilitate expanded exports and imports. Nor has it sought the trade promotion authority (TPA) that would facilitate obtaining Congressional approval of FTAs.

However, this report states that "we will also work with Congress on Trade Promotion Authority".

This document also states that "the Administration will continue to advance negotiations for the Trans-Pacific Partnership (TPP)" and intends "to launch negotiations with the EU on a comprehensive Transatlantic Trade and Investment Partnership (TTIP)".

Sen. Orrin Hatch (R-UT), ranking Republican on the Senate Finance Committee, stated in a release that "Negotiations to conclude a Trans-Pacific Partnership and launching negotiations with the European Union are promising starts. But a strong trade agenda is more than just starting negotiations, it requires making the tough political choices necessary to conclude them and close cooperation and consultation with Congress to ensure any trade agreement ultimately becomes law."

Sen. Orrin HatchSen. Hatch (at right) continued that "Trade Promotion Authority (TPA) is the lynchpin that brings these elements together. It articulates a shared trade vision for our country, and lays out clear rules and procedures for consultation and consideration of any trade agreement. And while I’m pleased that the White House has finally heeded my call and is asking for its renewal, making TPA a reality requires more than talk, it demands real leadership and action from the President. Every President since FDR has sought this authority from Congress, because they’ve understood that trade is good for America."

He added that "According to the World Trade Organization (WTO), an estimated 400 free trade agreements (FTA) were implemented around the world by the end of 2010, more than half of which were negotiated since 2002. Yet the United States has only 14 agreements with 20 countries in force -- with two more under negotiation. Our stagnant economy needs the boost that trade can provide."

Rep. Dave Camp (R-MI), Chairman of the House Ways and Means Committee, stated in a release that "we’ve made significant progress in the Trans-Pacific Partnership negotiations, and I hope that the Administration will conclude a high-level, comprehensive agreement by October.  In addition, the International Services Agreement, a U.S.-EU trade agreement, a WTO agreement on trade facilitation, and an expansion of the Information Technology Agreement would bring significant gains to our sluggish economy.  However, I am disappointed that the Administration has not engaged with Congress concerning Trade Promotion Authority."

WTO ITA. The OUSTR document states that the US will "play a leading role in negotiations to expand the scope of products covered by the WTO Information Technology Agreement (ITA). The ITA entered into force in 1997 and now covers over $4 trillion in annual global trade, according to the Information Technology and Innovation Foundation. However, despite the tremendous technological development and innovation in the sector over the past 16 years, the ITA’s product coverage has never been expanded. Eliminating duties on the newer products that have been developed and the advances still to come would provide a significant boost for U.S. technology exports and enable all countries to benefit from increased trade flows of cutting edge products and innovation."

Intellectual Property. The OUSTR document states that the US "will continue to seek greater market access for IP-intensive U.S. products, and to protect job-supporting innovation in a balanced policy that benefits both producers and users of innovative products and services worldwide." The US will also "engage with all of our trading partners to make progress on key IP trade-related issues."

It states that "will closely monitor implementation of China’s bilateral and WTO commitments to respect and protect U.S. intellectual property, and will work with China to improve intellectual property protection and enforcement".

In particularly, "we will seek prompt implementation of China’s 2012 commitments on intellectual property, including the commitments regarding the use of legal software by Chinese enterprises, as well as audits of software on computers used by the Chinese government. We will also closely monitor implementation of China’s February 2012 agreement, which followed the United States' win in a WTO dispute, to increase market access significantly for U.S. movies being imported and shown in China’s theaters."

In TPP negotiations, the US seeks "state-of-the-art, high-standard provisions that will protect and promote the spread of IP-intensive products and services throughout the entire region".

It adds that the "We will continue to seek constructive input from Congress and stakeholders on a wide range of trade issues related to the protection and enforcement of copyrights, trademarks, patents, trade secrets, and other forms of intellectual property. Such input helped to shape a 2012 U.S. proposal that would, for the first time in any U.S. trade agreement, obligate TPP Parties to seek to achieve an appropriate balance in their copyright systems in providing copyright exceptions and limitations for purposes such as criticism, comment, news reporting, teaching, scholarship, and research."

It also states that the US "will continue consultations with Japan on its interest in the TPP, focusing on Japan’s readiness to meet the TPP’s high standards and address U.S. concerns in key sectors such as automotive and insurance. At the same time, the United States will engage with Japan through bilateral mechanisms to reduce regulatory and other barriers to U.S. exports and to enhance two-way trade." See also, story titled "Japan May Join TPPA Negotiations" in TLJ Daily E-Mail Alert No. 2,527, February 25, 2013.

It also addresses the OUSTR's Special 301 process. It states that the US will use this process "and a broad array of other trade policy tools to identify and resolve intellectual property rights issues and related market access issues of concern. We will continue to collaborate with our trading partners to develop and implement solutions to issues of concern, and to encourage reforms that support innovation and creativity through consistent application and enforcement of the rule of law."

People and Appointments

3/1. The Senate Appropriations Committee (SAC) announced new staff appointments. See, release.

Go to News from February 26-28, 2013.