Issue 51 September 2001	BYTES IN BRIEF® by Editors: Sharon D. Nelson, Esq. and John W. Simek Associate Editor: Amelia C. Hierholzer Editor Emeritus: G.V. Nelson 9500+ subscribers worldwide © 2001 Sensei Enterprises, Inc./Nelson & Wolfe. All rights reserved. This newsletter may not be reproduced or redistributed in any manner except with consent of the copyright owner. Distributed by Silver Law Inc. under license.

COURT RECORDS SITE HACKED

On August 13th, a web site permitting online access to records of the U.S. Bankruptcy Court for the District of Nevada was hacked. The defaced site, located at http://racer.nvb.uscourts.gov, was inaccessible as "Bytes" went to publication. RACER stands for Remote Access to Court Electronic Records. The site was hacked by a group known as Hi-Tech Hate, who asked "Why do we hack?" answering their own question stating "We hack 'cause we r fighting against bad information, all of us ain't terrorists, or stupid boyz who don't know what they're doing." According to the message left by the hackers, no files were deleted or even looked at. Reportedly, the Nevada site was running on Microsoft's Internet Information Server (IIS) version 4.0. The defaced Nevada bankruptcy site is one of more than 50 developed for the US federal court system by Court Watch LLC, a provider of document management solutions. High-Tech Hate has hacked into 563 sites in the last 14 months, according to records maintained by the Alldas defacement archive. Twenty-six of those defacements have been .gov sites. On the same date, the hackers also defaced a page at a site operated by the US Court of Appeals for the 5th Circuit for its 2001 Fifth Circuit Judicial Conference. The main site for the U.S. Bankruptcy Court for the District of Nevada is at http://www.nvb.uscourts.gov and that site was unaffected by the hack. A mirror of the site's RACER defacement is at http://www.safemode.org/mirror/2001/08/13/racer.nvb.uscourts.gov

THE UNDEAD RALLY FOR MICROSOFT

Some stories are just plain fun. The Los Angeles Times reported on August 23rd that some of the "homespun" letters received by state attorneys general opposing the antitrust battle with Microsoft were actually part of an orchestrated letter writing campaign funded in part by Microsoft. A few of the letters, sent to Utah Attorney General Mark Shurtleff, were even sent by dead people. The letters were sent over the past month at the request of Americans for Technology Leadership (ATL), an organization heavily funded by Microsoft. The letters were printed on personalized stationery using different wording, color and typefaces. But when the state attorney general offices began comparing letters, many of them contained identical paragraphs and phrases, and the offices began to conclude that this was a bogus "grass roots" campaign. The Los Angeles Times reported that Microsoft officials could not be reached for comment.

EUROPEAN UNION EXPANDS MICROSOFT INVESTIGATION

The European Commission filed a new statement of objections against Microsoft on August 30th, as part of its already extant antitrust proceedings. Microsoft was told that its business practices in the areas of server operating systems and media players may be illegal. Microsoft was already being investigated by the European Commission, the executive arm of the European Union, to determine whether the marketing and licensing of its Windows 2000 operating system fell afoul of European competition law. The new statement alleges that Microsoft is abusing its market position by tying its media player to its operating system. Microsoft's Media Player allows users to see and hear video and audio content without lengthy download times. The EU said it objects to Microsoft's practice of incorporating the Media Player into its Windows operating system, as this reduces consumer choice. Should Microsoft be found guilty of breaking European Union competition rules, it can be fined up to 10 percent of its revenue. Further information may be found at http://news.excite.com/news/ap/010830/17/biz-eu-microsoft

MICROSOFT REHEARING REJECTED: MS LOOKS TO SUPREME COURT

It was a busy month for Microsoft and the Department of Justice. On August 2nd, the U.S. Court of Appeals for the District of Columbia rejected Microsoft's request to reconsider whether Microsoft had violated antitrust laws by integrating its Internet Explorer browser with its Windows operating system. The court also denied the Justice Department's request that the case be immediately sent back to the U.S. District Court in Washington. Somewhat tersely, the Court chastised Microsoft for misconstruing "our opinion, particularly with respect to what would have been required to justify vacating the district court's findings of fact and conclusions of law."

On August 7th, Microsoft asked the U.S. Supreme Court to review the appellate court's decision based on the alleged prejudice of U.S. District Judge Thomas Penfield Jackson. On August 31st, the Justice Department told the Supreme Court that it should reject Microsoft's request for review of its case because, although Microsoft claims the case is ripe for review, it offers no satisfactory reason why that it is so.

In a brief filed with the appellate court on August 14th, Microsoft argued against the government's stance that the proceedings should begin at a lower court. The Department of Justice's brief asked the court to deny Microsoft's request for a stay while the Supreme Court was considering whether to grant certiorari. On August 17th, the U.S. Court of Appeals for the District of Columbia denied Microsoft's request.

The Department of Justice has made it clear that it is considering whether to take action with respect to Microsoft's new Windows XP operating system, which might be done during the lower court's remedy hearings. Meantime, XP was released to manufacturers on August 24th and is expected to be released to consumers in October.

On August 24th, the U.S. Court of Appeals for the District of Columbia Circuit appointed U.S. District Judge Colleen Kollar-Kotelly, whose background is largely in criminal law, to oversee the lower court case after a computer selected her randomly from a field of 10 candidates. Though well respected and experienced in high-profile cases, her perceived lack of experience in business cases has raised some concern among legal commentators. Kollar-Kotelly has ordered the Justice Department and Microsoft to file a joint report by Sept. 14 outlining proposals for bringing in new witnesses and seeking additional documents.

And yet another story for the cynical: the Microsoft case is now being supervised by the son-in-law of Vice President Cheney. Philip Perry was named acting associate attorney general on August 17th, overseeing the antitrust, civil, civil rights, environmental and natural resources and tax divisions of the Department of Justice. He will continue the role during the U.S. Senate confirmation process for Jay B. Stephens, former U.S. attorney for the District of Columbia. If Stephens is confirmed, Perry, who is married to vice presidential daughter Elizabeth Perry, will become Stephens's principal deputy. Pleadings in the case may be found at http://www.microsoft.com/presspass/legalnews.asp

SOUTH CAROLINA REQUIRES IT STAFF TO INFORM ON PORN

Under a law signed on July 20th, South Carolina now requires that IT workers give authorities the names and addresses of computer users with child pornography on their computers. The law doesn't compel IT workers to search for child pornography, but it does require them to report it upon discovery. It's an extension of an existing state law that requires film processors to report child pornography when they see it at their facilities. Currently, there are no penalties imposed but it is expected that the law will be changed to include penalties of no more than six months in jail or no more than $500 in fines (or both), paralleling the current penalties for film developers who don't advise authorities about child pornography they discover. Further information may be found at http://www.informationweek.com/shared/printableArticle?doc_id=IWK20010730S0008

JUDGE EXAMINES FBI'S MOBSTER HACK

U.S. District Court Judge Nicholas H. Politan, presiding over the trial of alleged mobster Nicodemo S. "Little Nicky" Scarfo Jr., was requested by the Federal Bureau of Investigation to dismiss the discovery portion of the case which sought to reveal the details of the technology it used, pursuant to a search warrant, to capture Scarfo's computer keystrokes and forward them to investigators. The FBI argues that the technology is "highly sensitive" and should not be made public. The FBI used the technology to capture the password required to decrypt the encrypted files on Scarfo's computer. The evidence subsequently collected resulted in charges of loansharking, racketeering and running an illegal betting operation against Scarfo. The FBI said its technology did not intercept online communications between Scarfo and his associates, which would have required a wiretap order, necessitating a higher standard of proof. Wiretap orders also demand that investigators filter out irrelevant communications. Judge Politan described the FBI's position as "gobbledygook." On August 3rd, he ordered the FBI to submit details of the technology, which might aid the court in determining whether a wiretap order should have been obtained. The FBI was required to submit a full report by August 31st. The case is believed to be the first in which federal agents installed a secret computer monitoring system on a personal computer system pursuant to a search warrant.

On August 23rd, the Justice Department upped the ante in the case by invoking the Classified Information Procedures Act (CIPA). CIPA would allow the government to produce an unclassified report to Scarfo's attorneys, and a more detailed report to the court. Judge Politan would then decide whether the summary statement withholds any evidence that might be helpful to the defense. The use of CIPA is unusual, as it is normally invoked in cases where the underlying subject matter involves national security. It was last used was in the espionage case against Los Alamos scientist Wen Ho Lee. The government's CIPA request may be found at http://www.epic.org/crypto/scarfo/gov_cipa_motion.pdf. The text of CIPA itself may be found at http://www.fas.org/irp/offdocs/laws/pl096456.htm

WEBCAST ROYALTIES REQUIRED OF BROADCASTERS

On August 2nd, Eastern Pennsylvania District Court Judge Berle M. Schiller dismissed a lawsuit brought by the National Association of Broadcasters (NAB) over the issue of webcasting royalties. Schiller upheld the position of the U.S. Copyright Office, which last year said that radio broadcasters must pay music royalties to musicians and record labels when they stream over-the-air signals on the Internet. Performance rights under copyright law generally permit copyright owners to prohibit public use of their works without compensation, but there has long been an exemption for radio broadcasts. Nonetheless, the Copyright Office said the exemption would not be applied to online use. The NAB had sued to block enforcement of that policy. Judge Berle found that Congress never addressed the specific issue and that the Copyright Office therefore had authority to set the policy. The judge also said he agreed with the policy, noting that the radio broadcast exemption covers only the 150 mile radius from the point of broadcasting, hardly comparing to the global reach of webcasting. Further information may be found 
at http://www.nab.org/newsroom/pressrel/Statements/

NAPSTER BRIEF SAYS JUDGE AND EXPERT WENT TOO FAR

In a brief filed with the Ninth Circuit Court of Appeals on August 8th, Napster argued that a preliminary injunction imposed in March has been repeatedly modified by a district court judge, misinterpreted by record companies and music publishers suing Napster, and crippled the company's peer-to-peer network in ways an earlier appellate court ruling did not intend. The company also alleges that Court-appointed technical advisor A.J. Nichols was responsible at least in part for its file-sharing business being in receivership. A day earlier, the record companies and music publishers involved in the case asked the lower court to grant a motion for summary judgment against Napster. The legal pleadings in the case may be found at http://www.napster.com/pressroom/legal.html

MICHIGAN CYBERCOURT BILL MOVES FORWARD

On August 17th, a Michigan House committee approved a bill that would establish a state cybercourt. The court would handle legal disputes between businesses, with lawyers filing briefs online and making court appearances by teleconferencing. The House Civil Law and Judiciary Committee unanimously approved the bill, which will now go to the full House. Both sides would have to agree to use the cybercourt and the amount in controversy would have to exceed $25,000. Further information may be found at http://www.wlns.com/Global/story.asp?S=362375&nav=0RbP

FEDERAL JUDGES ISSUE ONLINE COURT RECORDS RECOMMENDATIONS

On August 15th, a panel of 14 federal judges unanimously endorsed the position that court records should be placed online, though with some restrictions. The Committee on Court Administration and Case Management of the Judicial Conference of the U.S. said that some personal information, including social security numbers, financial account information, dates of birth, and minors' names, should be removed from online court records and also said that criminal cases should not be put on the Internet for the moment because "information could then be very easily used to intimidate, harass and possibly harm victims, defendants and their families." They said the policy should be reviewed within two years. The committee also recommended that Congress change bankruptcy laws to allow judges to seal those cases where needed to protect privacy and prevent identity theft, though the records would generally be available online with some personal information removed. The report proposed keeping off the Internet cases involving Social Security challenges, like those filed by injured workers. The Judicial Conference of the United States, which sets policy for courts, meets September 11th and will consider the Committee's recommendations. Further information may be found at http://www.uscourts.gov/Press_Releases/privacyrel.pdf

WIPO DENIES "NUDESCAPE" DOMAIN TO AOL

AOL has won many a cybersquatting battle, more than 100 thus far, but it went too far this time in its claim that "Nudescape.com" is too close to "Netscape.com." Though AOL was granted the right to the domain AOLFind.com, which was also at issue, World Intellectual Property Organization (WIPO) Arbitrator Clive Elliott wrote "It seems ... there is a reasonably good argument that (Media Dial) should have a right to use these common English words to describe its pornographic services. Otherwise, parts of the English language would soon be acquired and removed from common use by those wishing to name their businesses or describe their services." The August 8th decision in the case may be found at http://listbox.wipo.int/wilma/domain-updates/200108/msg00013.html

IS DOMAIN NAME DISPUTE RESOLUTION FAIR?

The Uniform Domain Name Dispute Resolution Policy (UDRP) was introduced by Internet addressing authorities 20 months ago, and critics have pointed out that trademark holders who file complaints under the policy win in an overwhelming majority of cases. A study released on August 20th by Internet legal expert Michael Geist, entitled "Fair.com? An Examination of the Allegations of Systemic Unfairness in the UDRP," found that the World Intellectual Property Organization (WIPO), whose Arbitration and Mediation Center has handled 58 percent of ICANN's UDRP cases, rules in favor of the trademark holders 82.2 percent of the time. The UDRP has produced rulings in nearly 3,400 disputes involving more than 6,000 addresses. The National Arbitration Forum (NAF) has processed most of the remaining cases, 34%, and has ruled in favor of complaining trademark holders 82.9 percent of the time. Two other arbitration firms, EResolution of Montreal, and CPR Institute for Dispute Resolution in New York, have been assigned 8 percent of cases, with complainants winning 63.4 percent of the time at EResolution and 59.1 percent at CPR. Under UDRP, the trademark holder who files the complaint is permitted to choose the dispute resolution provider. When the trademark holder requests just one arbitrator, complainants win 85.4% of the time with NAF and 84.4% of the time with WIPO. However, when the complainant or the respondent opts to have three arbitrators, one selected by the complainant, one selected by the respondent and one assigned by the service provider, the overall rate of complainant victories drops to 60.3%. Geist's scrutiny of NAF decisions revealed that six individuals were responsible for 53% of that organization's 966 single-panel cases up to July 7. Geist said that some NAF arbitrators who are seen as "respondent-friendly" have yet to be assigned to even one lone panelist case. The study showed that the busiest arbitrator at NAF is James Carmondy, who has found in favor of complainants in 95.7 percent of the 140 cases in which he was the only panelist. Geist has introduced a web site that allows visitors to track the decisions of individual UDRP panelists: http://www.udrpinfo.com

JUDGE PROTECTS IDENTITIES OF ANONYMOUS ONLINE POSTERS

On August 10th, Judge Neil Cabrinha of the Santa Clara County Superior Court in California quashed a subpoena that would have forced an Internet bulletin-board operator to reveal the identities of several people who posted anonymous messages to a Web discussion. The case involved a subpoena issued by Pre-Paid Legal Services, Inc., of Oklahoma (PPLS) requesting the identity of eight posters on Yahoo!'s "Pre-Paid" message board, an online forum for discussions related to the company. PPLS argued that it needed the identities to determine whether the Internet posters had to comply with an injunction of a Florida court preventing former sales associates who work for a competitor from revealing PPLS's trade secrets. Judge Cabrinha agreed that PPLS had not presented sufficient evidence that the messages violated the injunction, and therefore the First Amendment protection of anonymous speech outweighed PPLS's interest in learning the identity of the speakers, who may or may not have been the subjects of the earlier injunction. Pleadings in the case may be found at http://www.eff.org/Censorship/SLAPP/Discovery_abuse/ PrePaid_Legal_v_Sturtz/

MORE LEGAL WOES FOR MP3.COM

On August 22nd, more than 50 music publishers and songwriters filed a copyright infringement suit against MP3.com in the U.S. District Court for the Southern District of New York. MP3.com is being acquired by Vivendi Universal and seeking to morph itself into an industry partner by converting the use of its technology to a subscription basis via agreements with major record labels. The latest suit seeks actual damages and, alternatively, statutory damages of $25,000 per song for enabling "viral infringements" of about 1000 songs. Plaintiffs allege that MP3.com is liable for direct infringement by converting songs to the MP3 format, a compression format that turns music on compact discs into small digital files. The suit alleges that once converted to the format, MP3.com then loaded the songs onto its servers and is liable for contributory infringement by creating "on demand" access to the infringed works by subscribers, and vicarious infringement for "viral distribution" of the infringed works downloaded by subscribers and then passed on to others. Further information may be found at http://www.wired.com/news/print/0,1294,46241,00.html

IAB MAY TAKE LEGAL ACTION AGAINST GATOR.COM

The Internet Advertising Bureau announced on August 28th that it would pursue legal action against Gator.com which it says illegally replaces paid banner ads on web sites with its own alternative ads. Gator.com, a company that provides express Web-site registration and e-commerce checkout services, has acknowledged that it has designed pop-up ads that fit over the top of paid, existing banner ads on Web sites, obscuring the paid ads. Gator.com sells alternative ads to support its software service, and directs advertisements to Web sites based on a measurement of sites its customers have recently visited. Gator.com says its contracts are with PC users and that they can choose to use any software they wish. The IAB says Gator.com's practices are false, misleading and unfair trade practices. The Internet Advertising Bureau's press release may be found at http://www.iab.net

MONITORING COURT STAFF WEB USE STIRS CONTROVERSY

On August 18th, federal Judge Edith H. Jones of the Fifth Circuit Court of Appeals wrote an impassioned letter to Judge Edwin Nelson, chairman of the Judicial Conference's Committee on Automation and Technology. The committee had issued a unanimous recommendation that federal courts monitor employee e-mail and Net usage for signs of "inappropriate" use such as downloading music or pornography, or playing games online. Judge Jones warns that this sort of routine monitoring could endanger the confidentiality of sensitive court documents by giving outside contractors access to court records as well as creating an atmosphere of paranoia among judicial employees. She states "The recommendations bespeak a solution in search of a problem, and do not take account of legitimate privacy interests and foreordain a workplace in which suspicion and paranoia may become rampant." If approved, the recommendations will solidify a policy that has been in place for nearly a year. In its recommendations, the committee urged that each court immediately adopt a model use policy and that it be prominently displayed every time an employee logs on to the Internet. The full 27-member Judicial Conference is slated to vote on the recommendations at its next meeting on September 11th. A copy of the letter may be found at http://cryptome.org/jones-v-cat.htm. A number of links to materials on this subject may be found at http://www.eff.org/alerts/20010831_eff_judicial_monitoring_alert.html

AFGHANISTAN OUTLAWS INTERNET

Afghanistan's Taliban militia extended its ban on the Internet on August 25th and ordered religious police to punish violators in accordance with Islamic law. Taliban leader Mullah Mohammad Omar said in a decree broadcast on radio Shariat "Within the territory of the Islamic Emirate of Afghanistan, no governmental or non-governmental, domestic or international NGO (non-governmental organization) or individuals can exploit the Internet." Omar said his headquarters in Kandahar was the only authority allowed access to the technology and would screen all material posted by government departments. The radio report gave no reason for the ban nor did it say exactly what punishment would be meted out to Internet users. The Taliban seized Kabul in 1996 and now controls most of the country. It has also banned television, cinema and music under its unique brand of Sharia law aimed at creating a pure Mohammadan state free of non-Islamic influence. Further information may be found at http://www.nando.com/technology/story/67756p-962641c.html

U.S. INDICTS RUSSIAN PROGRAMMER UNDER DMCA

Dmitry Sklyarov and his employer, ElcomSoft, were named in a five count indictment filed in federal court in San Jose, California on August 28th. They are charged with selling technology designed to defeat the U.S. Digital Millennium Copyright Act (DMCA), which bans the sale of technology allowing people to circumvent copyright protections in computer and electronic programs. Sklyarov is the first person to be prosecuted under the act and potentially faces years in prison as well as a massive fine if convicted. The arraignment had been deferred in an attempt to work out a plea bargain, which fell through. Sklyarov wrote a program for ElcomSoft that allows people using Adobe Systems eBook software to copy and print digital books, transfer them to other computers and have the text read aloud by the computer. ElcomSoft sold the $99 program, called Advanced eBook Processor, on its Web site for about a month before taking it off the market in June after Adobe complained. The company says the program is legal in Russia. Sklyarov's arrest has provoked international protests by those who believe that the new law expands copyright further in the digital realm than the print world and violates their rights to enjoy music, movies and books online under the doctrine of fair use. Sklyvarov and ElcomSoft pleaded not guilty on August 30th. The indictment may be found at http://www.usdoj.gov/usao/can/press/html/2001_08_28_skyarov.html

PETA DOMAIN DECISION FINDS TRADEMARK INFRINGEMENT

On August 23rd, the Fourth Circuit Court of Appeals held that the web site called "People Eating Tasty Animals" infringed the trademark of People for the Ethical Treatment of Animals. The parody site lampooned vegetarianism, which the real PETA requires, and applauded carnivorism. However, the three judge appeals panel denied PETA most of the attorney's fees and costs it had requested, saying that defendant Doughney's actions violated federal law, but were not malicious. Doughney was required to pay $28,671.00 in court costs. The underlying case had been filed before the Anticybersquatting Consumer Protection Act took effect in 1999, but PETA persuaded the trial judge to apply the law retroactively, which was upheld by the appellate court. The decision may be found at http://pacer.ca4.uscourts.gov/cgi-bin/getopn.pl?OPINION=001918.P