Issue 56 February 2002	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.

SCARFO: FBI MAY USE KEYSTROKE LOGGERS WITHOUT WIRETAP

On December 26th, U.S. District Judge Nicholas Politan ruled in Newark N.J. that the Federal Bureau of Investigation did not have to secure a wiretap order to attach a keystroke-recording device to an alleged mobster's computer in order to discover the password to an encrypted file. The judge also allowed prosecutors to keep secret the specifics of the technology, saying disclosure "would cause identifiable damage to the national security of the United States." Lawyers for Nicodemo Scarfo Jr., who had been indicted on gambling and loan-sharking charges in June of 2000, had asked the court not to allow the gambling file obtained from his computer to be used as evidence, saying that the FBI violated the Fourth Amendment, collecting more information than was needed by picking up modem transmissions without a wiretap order under the provisions of 18 U.S.C. 2510. The government did, however, have a search warrant. After prosecutors invoked the 1980 Classified Information Procedures Act, Politan held an in camera hearing to review classified information about how the logger operates, after which he issued a protective order under CIPS but ordered the government to provide Scarfo's attorneys with an unclassified explanation of how the logger works. The ruling was based in part on the FBI's evidence that it configured the logger to record keystrokes only when the modem was not transmitting. The opinion in the case may be found at http://lawlibrary.rutgers.edu/fed/html/scarfo2.html-1.html

CALIFORNIA APPELLATE COURT UPHOLDS SPAM LAW

On January 2nd, a three judge panel of the California appeals court unanimously upheld California's 1998 anti-spam law in Ferguson v. Friendfinder. The panel said that California may require junk e-mailers to identify their e-mails as advertisements and provide mechanisms for recipients to be removed from their mailing lists. Eighteen states currently have anti-spam legislation and such legislation is also pending in Congress. The defendants in the case argued that the state law was unconstitutional because it interfered with interstate commerce. However, the court found that the law "does not violate the commerce clause if it serves a legitimate local 
public interest and if the burden it imposes on interstate commerce is not excessive when viewed in light of its local benefits." California's anti-spam law requires unsolicited messages to include a viable return address or a toll-free phone number that recipients can use to tell the sender to stop sending documents. The statute also requires unsolicited e-mail to include "ADV" for advertisement in the subject line of the message and, in cases where the advertisements relate to adult material, "ADV:ADLT." Violating the law is a misdemeanor. The opinion in the case may be found at http://www.courtinfo.ca.gov/opinions/documents/A092653M.PDF

FTC AUTHORITY TO REGULATE NET ADS UPHELD

On December 28th, the U.S. Court of Appeals for the D.C. Circuit upheld a ruling against Ken Roberts Co., which had been ordered by the FTC to produce information supporting its online claims about its commodities and securities investment training programs. The FTC filed suit after the company refused to disclose information relevant to a 1999 investigation into deceptive day-trading promotions. The defendant argued that it did not have to respond because most of the information had already been provided to the Security and Exchange Commission and the Commodities Futures Trading Commission as part of the 1999 investigation. The court found that none of the defendant's arguments were "sufficiently forceful to deprive the Commission of its general prerogative to determine, at least in the first instance, the scope of its own investigatory authority." The court noted that the FTC has broad authority to investigate all manner of commercial activity, and declined to interfere with that authority in the online world. The opinion in the case may be found at 
http://pacer.cadc.uscourts.gov/common/opinions/200112/00-5266a.txt

TECHNOLAWYER: REBORN ON ITS FIFTH ANNIVERSARY

On January 28th, the venerable legal IT mailing list community known as Technolawyer announced that it had reinvented itself on its fifth anniversary. The revamped Technolawyer uses PECS 1.0, a new technology that transforms listserver content into e-mail newsletters published on a regular schedule. By utilizing this technology, Technolawyer avoids flooding a subscriber's e-mail box with streams of electronic mail. Also, the community now allows members to customize their use of Technolawyer so they can select which content/newsletters they would like to receive.
There are currently 12 newsletters to choose from. Lawyers and others in the legal profession can join The TechnoLawyer Community by visiting its new home page at 
http://www.technolawyer.com

NAPSTER TRIAL DELAYED FOR SETTLEMENT TALKS

Napster and most of the major record companies who have been battling each other over Napster's peer to peer sharing of music asked Judge Marilyn Hall Patel to postpone court proceedings until February 17th in order to conduct settlement talks. On January 23rd, it was reported that Judge Patel had acceded and deferred the proceedings in the U.S. District Court in San Francisco. The companies that did not join the request were the two EMI Recorded Music units involved, Capitol Records and Virgin Records American. Napster has recently launched a beta version of a new "legal" site, which does not run afoul of U.S. copyright law. Further information may be found at http://www.nando.net/technology/story/227174p-2186840c.html

U.S. EASES COMPUTER EXPORT RULES

On January 2nd, the Bush administration announced that it would relax Cold War era restrictions on the export of powerful computing technology. The U.S. will now permit U.S. companies to sell more power computers to "Tier 3" countries, which include Russia, China, Israel India and Pakistan. The new regulations will more than double the processing power of allowable exports. Under the new standards, individual licenses and prior government review will be required only for the export of computers that perform more than 190,000 MTOPS, or millions of theoretical operations per second. The current threshold is 85,000 MTOPS, a performance standard that has become commonly available for years. The United States will continue its virtual embargo on computer exports to Iraq, Iran, Libya, North Korea, Cuba, Sudan and Syria. Further information may be found at http://www.wired.com/news/politics/0,1283,49453,00.html

FACE RECOGNITION THAT DOESN'T

Face recognition cameras have caused consternation among privacy advocates, but it seems there's not much to worry about – yet. Data obtained by the American Civil Liberties Union shows that the face recognition system implemented in Tampa, Florida has not resulted in the correct identification of a single individual in the police department's database. In fact, a Tampa detective reports that the system was such a waste of time that the police stopped using it. The system was implemented on June 29, 2001, using technology from Visionics, and apparently ceased operations on August 11th. The technology was so faulty that it was unable to distinguish men from women in cases where human operators could easily make the distinction. Nonetheless, Visionics signed a deal late last year with conglomerate Tyco International to distribute its technology at 100 of the nation's 450 commercial airports. The January 3rd ACLU report is fascinating reading and reports on facial recognition developments in other areas of the U.S. and Great Britain. It may be found at 
http://www.aclu.org/issues/privacy/drawing_blank.pdf

VERISIGN: HOW MUCH WILL YOU PAY TO WAIT?

As new purchases of domain names begin to tail off, VeriSign thinks it has found a moneymaker. It announced on January 4th that it is planning to roll out a waiting list service for expiring domain names on March 20th, pending approval from the Internet Corporation for Assigned Names and Numbers (ICANN). VeriSign said it will make the service available to any interested registrar. The original plan called for a $40 price. Other domain name registrars have expressed opposition, saying the system is overpriced and uncompetitive. On January 29th, VeriSign announced the adoption of a revised plan, dropping the wholesale cost from $40 to $35 and adding rebates that can further reduce the per-subscription wholesale cost to $24 per name if registrars sell large numbers of subscriptions and make good faith efforts to educate their customers about the costs, risks and benefits of the service. Further information is available at http://www.wired.com/news/business/0,1367,49493,00.html

10TH CIRCUIT AFFIRMS LAPTOP SEARCH CASE

The U.S. Court of Appeals for the 10th Circuit issued its opinion in U.S. v. Russell Walser on December 28th. A motel manager had notified police that Walser had drugs in his motel room. Officers obtained a search warrant covering electronic records relating to the delivery or distribution of controlled substances. While searching the room, officers found Walser's laptop and opened a single AVI (video) file that contained child pornography. They then obtained a second warrant authorizing them to search for child pornography. The evidence found resulted in Walser's conviction on child pornography charges and Walser appealed. The court affirmed, finding that opening a single AVI or other graphics file was permissible. The opinion suggests that if the police had searched through a number of graphics files, they would have violated the First Amendment. The opinion in the case may be found at 
http://pacer.ca10.uscourts.gov/cgi-bin/getopn.pl?OPINION=01-8019.wpd

COMPUTER SEARCH MAY VIOLATE 1ST AND 4TH AMENDMENTS

On December 28th, the Fourth Circuit Court of Appeals issued its opinion in Trulock v. Freeh, allowing plaintiff Notra Trulock to proceed with a civil suit against the Federal Bureau of Investigation for searching password protected files on his computer in violation of his Constitutional rights. Trulock was the "whistle blower" in the Wen Ho Lee case in which there were security breaches involving nuclear weapons technology held by the Department of Energy. Trulock was the Director of the DOE's Office of Intelligence from 1994-98 and its Office of CounterIntelligence from 1995-98. When he found evidence of espionage, he reported it, but was largely ignored by the DOE, the FBI and the Clinton administration. He says he was forced out of the DOE. He subsequently wrote an article critical of the government, which was published in the National Review. He alleges that the FBI coerced his roommate into signing a consent for a search of their house and their shared computer. The FBI searched the computer for 90 minutes and confiscated the hard drive. Trulock and his roommate filed suit alleging violation of their First and Fourth Amendment rights. With respect to the First Amendment claim, the Court wrote "we find that Trulock has alleged sufficient facts in support of his retaliation claim to withstand a motion to dismiss and proceed to discovery." Though the lower court's dismissal of the Fourth Amendment claim was upheld because the status of the law was not clear at the time of the search, for future cases, the Court noted that though the roommate had authority to consent to a general search of the computer, she did not have authority to consent to a search of Trulock's password protected files. The opinion in the case may be found at http://pacer.ca4.uscourts.gov/cgi-bin/getopn.pl?OPINION=002260.P

BERNSTEIN RENEWS ENCRYPTION BATTLE

On January 7th, Daniel Bernstein went back to court, renewing his constitutional challenge to U.S. encryption laws, arguing that the government's restrictions on the export of domestic cryptography research violates the First Amendment. Bernstein, a University of Illinois computer science professor, began battling U.S. encryption policy in 1995, when he challenged export regulations that prevented him from using the Internet to post the source code for "Snuffle," a powerful encryption program he created. A year later, a California district judge found in his favor, declaring the encryption regulations unconstitutional. In May 1999, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit upheld that decision. The appeals court accepted the Justice Department's petition for a rehearing en banc by an eleven judge panel, but when the Clinton administration issued updated, more relaxed regulations, the court subsequently withdrew the lower court precedents, and both parties agreed to have the case sent back to the district court. While grateful for the exceptions in the new regulations, Bernstein says the rules are more complicated. They require, as an example, that whenever scientists disclose something new to a foreign colleague they must simultaneously send a copy of the shared information to the U.S. government. This effectively makes collaboration in person with a foreign colleague impossible. The government is scheduled to respond to Bernstein's complaint by February 4th. Further information may be found at http://www.newsbytes.com/news/02/173483.html

NORWAY CRACKS DOWN ON DECSS CREATOR

On January 9th, the teenage creator of DECSS, a program that cracks DVD security, was charged with breaking through a security system to gain access to movies on DVD. Norway's economic crime unit took the action against Jon Johansen, who now faces up to two years in prison. The charges mark the first time the Norwegian security law has been used to pursue someone for breaking into material he already owns. Section 145(2) of the Norwegian Criminal Code provides criminal penalties for "any person who by breaking a protective device or in a similar manner, unlawfully obtains access to data or programs which are stored or transferred by electronic or other technical means." Further information may be found at http://www.eff.org/IP/Video/DeCSS_prosecutions/Johansen_DeCSS_case/ 20020110_eff_pr.html

KOREAN GAY ACTIVISTS CHALLENGE WEB SITE BAN

A South Korean homosexual group has taken its government to court over its ban on a gay web site. The government imposed the ban on "harmful media" and classified the web site of the Lesbian and Gay Alliance Against Discrimination in Korea as harmful, along with many similar sites. The group announced the suit on January 10th, and is challenging the classification of sites as obscene and perverse by the Korean Information and Communications Ethics Committee. The activists call for "an end to this system of compulsory site blocking by the Korean government; a revision of measures in the Youth Protection Law that designate homosexuality a harmful influence to youth; and the adoption of provisions barring discrimination on the basis of sexual orientation in Korea." Further information can be found on the group's web site at http://outpridekorea.com/lgaad

MICHIGAN CYBER COURT SIGNED INTO LAW

On January 9th, Michigan Governor John Engler signed into law a bill that creates the nation's first cyber court. The new court will have jurisdiction in business and commercial complaints where the amount in controversy exceeds $25,000. The court is expected to be operational in October, and will incorporate a presiding judge, electronic filing of documents and teleconferenced arguments. The Michigan Supreme Court will assign judges, and cases may be transferred to the state's circuit court system or appealed to the state appeals court. The fee for filing a case will be $200. A legislative committee will exercise oversight of the court and must file a report on the system by October 1, 2004. The web site for the new cyber court may be found at http://www.michigancybercourt.net

CHINA IMPOSES TOUGH NET CONTROLS

It was reported on January 18th that China has issued the most restrictive Internet controls yet, ordering ISPs to scan e-mail for political substance and making them liable for "subversive" content on web sites they host. Foreign software manufacturers are now required to issue written guarantees that their software does not contain hidden programs that would permit spying or hacking into Chinese computers. Some elements of the industry are required to use only domestic software. General portal sites must utilize security programs to screen and copy all e-mail messages, turning over those with "sensitive materials" to the government. Prohibited web site content includes writings that reveal state secrets, damage China's reputation or advocate the
overthrow of communism, ethnic separatism or "evil cults." Further information may be found at http://www.wired.com/news/politics/0,1283,49855,00.html

SUPREME COURT HANDS CABLE A VICTORY

On January 16th, the U.S. Supreme Court issued its decision in The National Cable & Telecommunication Association, Inc. (NCTA) v. Gulf Power Co. et al. The court ruled that the federal government could regulate the fees charged by utility companies for attaching high-speed Internet lines to street poles. The NCTA claimed that utilities raised fees in some cases from $6 per pole to $36 per pole, a 500% increase. Had such fees become widely adopted, costs for the cable industry, and ultimately for consumers, would have increased dramatically. The opinion in the case may be found at http://a257.g.akamaitech.net/7/257/2422/16jan20021040/ www.supremecourtus.gov/opinions/01pdf/00-832.pdf

AFILIAS BEGINS BULK CHALLENGE OF .INFO DOMAINS

Afilias, the registrar that manages the newly launched .info top level domain, announced on January 17th that it had filed the first of multiple bulk challenges designed to reclaim .info addresses which were fraudulently procured. Afilias has requested that arbitrators from the World Intellectual Property Organization (WIPO) revoke the registrations of 741 .info names sold during the .info pre-registration period last year. Afilias expects that it will ultimately challenge some 10,000 names. During the pre-registration period, Afilias gave trademark holders a "sunrise period" in which they could pre-register .info domains. Predictably, speculators misrepresented themselves as trademark holders in order to snatch up valuable domains. The outcry from legitimate trademark holders caused Afilias to inspect each of the more 52,000 domain names registered during the pre-registration period, checking to see if the trademark numbers listed by the registrants match international trademark records. Afilias has not yet announced how it will redistribute any names that may be reclaimed. Further information may be found at http://www.afilias.info/news/press_releases/pr_articles/2002-01-17-01

NETSCAPE VS. EXPLORER: A NEW COURT BATTLE

On January 22nd, AOL Time Warner, which now owns Netscape, filed suit in the U.S. District Court for the District of Columbia against Microsoft, alleging that Microsoft used anticompetitive behavior to guarantee that its Internet Explorer browser would prevail over Netscape's Navigator browser. AOL alleges that Microsoft cut deals with ISPs and computer makers to effectively close Netscape out of the marketplace. AOL is asking for treble damages and attorneys' fees under antitrust law as well as an injunction against "ongoing and further damage" to Netscape. The complaint in the case may be found at http://news.com.com/pdf/ne/2002/01/Complaint_Netscape_FINAL.pdf

EPIC FILES SUIT FOR FEDERAL DATA INFO

On January 14th, the Electronic Privacy Information Center (EPIC) filed suit in the U.S. District Court for the District of Columbia seeking an order forcing the government to release records detailing the sale of personal information by private companies to law enforcement agencies. EPIC said that the Justice and Treasury Departments both failed to respond to Freedom of Information Act requests. EPIC filed its requests with the FBI, the Drug Enforcement Agency, the United States Marshals Service, the Internal Revenue Service, the Immigration and Naturalization Service and the Bureau of Alcohol, Tobacco and Firearms, following media reports that a company called ChoicePoint routinely sells personal information to federal law enforcement agencies. EPIC said that it discovered that ChoicePoint and Experian both sell information, based on information obtained from the IRS. Collected information includes credit header data, property records, state motor vehicle records, marriage and divorce records and international asset location data. The IRS provided 80 pages of data, but withheld another 300 pages, citing a trade secrets exemption to the FOIA Act. The complaint in EPIC v. Department of Justice, et al. may be found at 
http://www.epic.org/privacy/litigation/profilingcomplaint.html

2600 SEEKS RECONSIDERATION OF DECSS DECISION

On January 14th, lawyers for "2600" (The Hacker Quarterly magazine) announced that they have asked that the full 2nd Circuit Court of Appeals reconsider a decision by three of its judges upholding a ban on publishing DECSS, the software code which can decrypt encrypted video on DVDs. The request for reconsideration is based on First Amendment grounds. The earlier three judge panel had upheld the lower court's decision, finding that although computer code can convey some elements of "speech" for the purposes of the First Amendment, "computer code is not purely expressive any more than the assassination of a political figure is purely a political statement." The panel found that the potential of DECSS to contribute to widespread pirating of motion pictures outweighed the rights of plaintiffs to publish it. Further information and legal pleadings in the case may be found at 
http://www.eff.org/IP/Video/MPAA_DVD_cases/20020114_ny_eff_pr.html

ZUNDEL HATE SITE ORDERED CLOSED BY CANADA

On January 18th, the Canadian Human Rights Commission ordered Ernst Zundel to pull a web site featuring hate propaganda targeting Jews and the Holocaust. The site was found to violate section 13 of the Canadian Human Rights Act. The commission said that any free-speech protection that exists for hate material on the Internet is vastly outweighed by the social benefits of eliminating hate-mongering. The ruling came six years and millions of dollars in legal expenses after the original complaints in the case were filed. Further information may be found at http://www.chrc-ccdp.ca/news-comm/2002/NewsComm180102.asp?l=e

MICROSOFT: A STORMY NEW YEAR

On December 31st, the nine states that have not settled with Microsoft urged U.S. District Court Judge Colleen Kollar-Kotelly to deny Microsoft's request to delay a hearing on behavioral remedies. California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah and West Virginia all want the scheduled March 11th hearing to proceed, saying that Microsoft needed no additional time to prepare and that further delay would only be injurious to consumers. The judge apparently agreed and denied Microsoft's request on January 7th. However, the judge did respond to Microsoft's complaints that some competitors were being recalcitrant in responding to requests for documents. Kollar-Kotelly bluntly warned competitors that they will not be allowed to testify if they do not provide timely information, saying that they "cannot cooperate with the states and then stonewall Microsoft."

On January 9th, Microsoft filed a motion that would bar the public from access to future depositions in the case, saying that the original August 1998 order applies only to cases between the federal government and Microsoft and is therefore inapplicable now that the Department of Justice has settled its antitrust case with Microsoft. Media organizations fought the motion, arguing that the remaining case is so intertwined with the original case that it is effectively the same case, and even retains the same case number. On January 29th, Kollar-Kotelly ruled that the public could attend the depositions unless Microsoft can show that confidential information would be revealed.

On January 23rd, Microsoft filed a brief alleging that AOL Time Warner has not supplied information subpoenaed in preparation for the March 11th hearing. On January 24h, AOL asked the court for the opportunity to file a legal brief responding to Microsoft's allegations on January 29th. Microsoft would have until February 1st to file a response. Hours later, Microsoft filed a succinct legal brief of its own. "Counsel for Microsoft will not dignify the misrepresentations in AOL's reply unless and until the Court indicates a desire to receive such a reply," read the brief in part. Microsoft then withdrew its demands on AOL Time Warner on January 28th, saying that the matter had been resolved, but no details were released. Microsoft had wanted New York-based AOLTW to be forced to quickly turn over documents in the case, arguing that its rival was withholding information while it helped the nine U.S. states and the District of Columbia, which have refused to sign off on a proposed settlement agreement between Microsoft and the U.S. Department of Justice and nine other states.

Microsoft also found itself embroiled in controversy in January because of court filings, which disclosed contacts only with executive branch officials and not legislators. Disclosure of such contacts is required by the Tunney Act, which is designed to make sure that a company settling antitrust charges discloses contacts with the government prior to approval of the settlement. The Act requires defendants in antitrust cases such as Microsoft's to disclose "any and all written or oral communications" with "any officer or employee of the United States" related to the settlement. In cases not involving antitrust, judges have ruled that a legislator or congressional staff member counts as a U.S. employee. In its disclosure to the court, Microsoft acknowledged speaking only with U.S. government lawyers, lawyers for the states suing the company, and two court-appointed mediators.

On January 24th, the American Antitrust Institute (AAI) filed suit against the Department of Justice and Microsoft alleging that they violated the Tunney Act by not disclosing all pre-settlement information and communications. The suit is largely based on newspaper reports. The AAI also wants the Justice Department to explain why it rejected other viable settlement options. Legal documents in the case may be found at http://www.microsoft.com/presspass/legalnews.asp

COURT NIXES MS PRIVATE CLASS ACTION SETTLEMENT

On January 11th, U.S. District Court Judge J. Frederick Motz rejected a settlement proposal between Microsoft and plaintiffs in more than 100 private class action lawsuits consolidated under his jurisdiction. He wrote that he was not convinced that the settlement would have resulted in a fair outcome. The agreement would have given about $1 billion worth of computers, software and support to the nation's poorest schools. However, Motz said that the record had not been sufficiently developed on the underlying value of the class claims. Motz also questioned whether a charitable organization, designated in the settlement to manage the funds, would have been sufficiently funded under the terms of the settlement proposal. He expressed particular concern that the organization would not have had sufficient funds to load any non-Microsoft software on the PCs, thereby potentially extending Microsoft's monopoly. Motz's decision will send the case back into litigation in the various private, state and federal jurisdictions involved.

LINDOWS FILES MOTION TO DISMISS

Lindows, a software company that would allow Windows programs to run on Linux computers, announced on January 15th that it had filed a motion to dismiss a trademark infringement suit filed by Microsoft. Lindows, based in California, argued that it has no presence in the state of Washington, where Microsoft had filed suit. A hearing is tentatively scheduled for February 1st on the company's motion and on Microsoft's motion for a preliminary injunction that would halt the use of the Lindows name. Microsoft said the Lindows name could confuse the public, but Lindows argues that Microsoft doesn't pursue legal action against many other companies that employ "windows" or similar words in their names. Further information may be found 
http://www.lindows.com/lindows_news_pressreleases.php