Issue 74 August 2003	BYTES IN BRIEF® by Editors: Sharon D. Nelson, Esq. and John W. Simek. Associate Editors: Jaime W. Burgess and Anthony J. Stefano Editor Emeritus: G.V. Nelson. 10000 + subscribers worldwide.® 2003 Sensei Enterprises, Inc. All rights reserved. This newsletter may not be reproduced or redistributed in any manner except with consent of the copyright owner. Distributed by this site under license.

On July 18th, America Online (AOL) announced that it would not develop any new versions of the Netscape browser, which signals a death knell for Netscape. AOL’s parent company, AOL Time Warner, continues to proclaim that Netscape is an important part of its strategy, but that proclamation is met with universal skepticism by commentators. AOL has already cut 50 jobs in the development division of its browser business. Netscape’s fate was probably sealed when Microsoft settled its longstanding litigation with AOL. A portion of the deal was that Internet Explorer would become AOL’s default browser for the next seven years. Further information may be found at http://www.infoworld.com/article/03/07/16/HNaol_1.html

On June 26th, the 4th Circuit Court of Appeals threw out most of a preliminary injunction requiring Microsoft to implement Sun Microsystems’ version of an interpreter for Java. However, the court did uphold a requirement that Microsoft stop distributing copies of its own Java virtual machine (VM), ruling that Microsoft exceeded the scope of a January 2001 license agreement with Sun. The court said the agreement only gives the company the right to include its own Java VM in Windows, not to offer it separately through computer makers or through Windows Update. In the lower court’s opinion supporting the injunction, U.S. District Court Judge J. Frederick Motz concluded there was a serious risk that the market could shift away from Java and toward Microsoft's .Net. The appellate court concluded "the district court’s findings are insufficient to support its conclusion that immediate irreparable harm will be sustained if the mandatory preliminary injunction is not entered." The case now returns to Motz for trial. The decision in Sun Microsystems v. Microsoft Corp. may be found at http://pacer.ca4.uscourts.gov/opinion.pdf/031116.P.pdf

On June 30th, the 7th Circuit Court of Appeals upheld an injunction against file-swapper Madster that closed the service pending trial. The court found that peer-to-peer network operators couldn’t evade charges of copyright infringement by granting their users the capability to encrypt the content that is swapped across their networks. The court referred to this tactic as "willful blindness," though operators had argued that they had no obligation to seek to block illegal files swapped on the network because they were unaware of specific copyright violations. The court stated: "One who, knowingly or strongly suspecting that he is involved in shady dealings, takes steps to ensure that he does not acquire full or exact knowledge of the nature and extent of those dealings, is held to have criminal intent." The decision in In Re: Aimster Copyright Litigation may be found at http://www.ca7.uscourts.gov/op3.fwx?submit1=showop&caseno=02-4125.PDF

On June 30th, America Online (AOL) released a new version of its AOL Instant Messenger service that provides client-to-client encryption. AOL has partnered with VeriSign to incorporate encryption in AIM 5.2. A VeriSign Personal Digital Certificate is used to encrypt the communication and costs $14.95 a year for individuals, but AOL is also selling certificates in bulk to corporate customers. AOL has also introduced version 2.0 of its AIM Enterprise Gateway, which allows corporate technology systems to decode encrypted AIM messages transmitted from a company’s servers. This allows IT staff to log and archive all IM messages in accordance with federal regulations, where applicable. Further information may be found at http://media.aoltimewarner.com/media/press_view.cfm?release_num=55253246

On June 30th, digital image firm Corbis sued Amazon.com, charging that Amazon offered customers unauthorized copies of hundreds of its celebrity photos. The suit was filed in the U.S. District Court in Seattle and charges that Amazon and other firms committed copyright infringement by selling the digital images themselves or by allowing sales to occur on their sites. Corbis’ suit asks for $150,000 per infringement. Corbis also accused the defendants of removing copy protection from the images in violation of the Digital Millennium Copyright Act. Corbis, founded by Microsoft Chairman Bill Gates in 1989, has garnered the rights to millions of images by making deals with commercial photographers and photojournalists. The company licenses those images to publications, businesses and individuals. The complaint accuses Amazon of vicarious infringement for allegedly allowing its "trusted retailers" to offer Corbis images through its site. Further information may be found at http://webreprints.djreprints.com/781560836770.html

In an order filed on June 24th, the Eastern District Court of Virginia granted summary judgment to adware company WhenU.com in a suit brought by U-Haul International. U-Haul had filed the suit alleging trademark infringement, unfair competition and copyright infringement based on WhenU.com’s delivery of competitors’ pop-up ads to visitors of the U-Haul site. WhenU.com’s adware software is much like Gator’s and generally comes bundled with popular free software such as file-sharing programs. The software provides pop-up and pop-under ads to Net surfers. Further information may be found at http://www.whenu.com/news_businessweek.html

On June 30th, a divided California Supreme Court refused to permit Intel to block an unhappy ex-employee from targeting its computers with thousands of e-mail messages criticizing its labor practices. The court voted 4-3 to overturn lower court decisions, concluding that there are restrictions on what a company can do to prevent the ingress of e-mail protected by the First Amendment such as those sent by ex-Intel employee Ken Hamidi. The court found that Intel failed to prove that Hamidi’s e-mail harmed its property. Intel's original suit was based on the theory of "trespass to chattels." Courts have consistently held that property owners must prove they were harmed in order to establish a trespass on their rights. The decision in Intel Corp. v. Hamidi may be found by entering the case name at http://login.findlaw.com/scripts/callaw

It had to be hard for Hormel to watch its "Spam" trademark evolve into the name given to universally detested junk e-mail. After all these years, Hormel is fighting back and asserting its trademark rights. Alleging dilution of the trademarked name "Spam," Hormel has filed complaints with the Patent and Trademark Office against Spam Arrest LLC, a Seattle technology company that provides spam-blocking software for e-mail users. Hormel challenged Spam Arrest's applications to trademark its own company name. Hormel argued that it has engendered "substantial goodwill and good reputation" in connection with its trademarked lunch meat and related products that would be damaged by Spam Arrest's use of the term. The company also said that Spam Arrest's name so closely resembles that of its meat that the public might become confused, or might think that Hormel endorses Spam Arrest's products. The challenges involve two separate applications by Spam Arrest to trademark its name as both a software provider and a services vendor. Both challenges will be heard by the Trademark Trial and Appeal Board, though no date has been set. Further information may be found at http://www.ajc.com/business/content/business/ap/ap_story.html/Financial/AP.V4785 .AP-Spam-Lawsuit.html

In a report issued on July 3rd, the Federal Trade Commission (FTC) found that state laws that prevent people from going online or using catalogs to buy wine impair competition, restrict choice and burden consumers with higher prices. The report says that customers could save more than 20 percent on some of their wine purchases and obtain wine varieties often unavailable at their local stores if the wine could be ordered directly from wineries or distributors in other states. A 2002 survey by the Wine Institute found that about half of the states restrict or ban residents from ordering wine online or through catalogs. The most common goals cited for the laws are curtailing underage drinking and taxing alcohol sales. The FTC notes that these goals can be attained through other means. For instance, adults could be required to sign for deliveries. States could also require out-of-state wineries to obtain licenses as a way to secure tax revenue on catalog or online sales. The FTC report, "Possible Anticompetitive Barriers to E-Commerce: Wine," may be found at http://www.ftc.gov/opa/2003/07/wine.htm

On July lst, the government opened up its national "do-not-call" registry, giving American citizens the right to ask that their phone numbers be removed from telemarketing calling lists. The Federal Communications Commission (FCC) also significantly broadened the scope of the do-not-call program, adding airlines, banks and telephone companies to the list of industries that will have to obey the new telemarketing rules. Starting in September, telemarketing firms will be required to buy a copy of the do-not-call list every three months and delete the names and numbers from their databases. Calling a registered number could result in fines of up to $11,000. The national registry may be found at http://www.ftc.gov/donotcall

Though praising some portions of Microsoft’s compliance with its antitrust pact, the Department of Justice (DOJ) reported to U.S. District Court Judge Kollar-Kotelly that Microsoft is taking too long to alter how much it charges competitors for technology that is necessary for their products to work with Microsoft’s systems. Justice Department lawyers said they might need the court to force Microsoft to act more quickly. Microsoft is required under the settlement agreement to make certain software code available for other companies to license on reasonable terms. Some of Microsoft's competitors have accused the company of charging inflated prices and imposing onerous terms for the code, thereby discouraging licensing of the technology, stifling competition and taking advantage of its antitrust settlement. One condition that caused an uproar was Microsoft’s practice of charging an upfront fee of $100,000 for rivals to examine the code to see whether they want to buy it. If they don't, they only get $50,000 back. Microsoft said it has agreed to reduce from $100,000 to $50,000 a prepayment from competitors who want to use its technology, and has agreed to reduce the price it charges rivals so that it collects 1 percent to 5 percent of the revenues of the software that includes its technology. The licensing provision was designed to ensure that Microsoft could not push companies into purchasing Microsoft server systems by making it harder for rival systems to work with Windows. To date, only four companies have agreed to license the code, but none is a direct competitor of Microsoft in server technology. The judge has set another court hearing for October. Further information may be found at http://www.internetnews.com/bus-news/article.php/2231891

On July 16th, Reps. John Conyers, Jr. and Howard Berman introduced a bill in the House of Representatives that would subject a file-swapper to a possible prison term of five years and a fine of $250,000 for uploading a single file to a peer-to-peer network. The bill is called the Author, Consumer and Computer Owner Protection and Security Act of 2003 (ACCOPS) and would allocate up to $15 million a year to the Department of Justice to investigate copyright crimes. The bill would also enable information sharing between countries to help in copyright enforcement abroad. ACCOPS mandates that file-sharing websites must get consent from consumers to search their computers for content or to store files. In addition, those who provide false information when registering a domain name could also be charged with a federal offense. The text of the Act may be found by entering the bill number (H.R. 2752) at http://thomas.loc.gov.

On July 18th, San Francisco Superior Court Judge Paul Alvarado gave preliminary approval to a settlement under which Microsoft will pay $1.1 billion to settle a class-action suit alleging that it overcharged consumers for Windows. The ruling allows the settlement to proceed to the next step, during which consumers and corporations in the state will be notified that they may qualify for vouchers ranging in value from $5 to $29. The vouchers can be used to buy most hardware or software products from any manufacturer. The original 1999 lawsuit claimed that Microsoft violated California antitrust laws by overcharging by as much as $40 for every copy of the Windows 95 and 98 operating systems. People seeking refunds will be able to go to MicrosoftCalSettlement.com or call (800) 203-9995 to request a claim form. The settlement affects individuals and businesses in California that bought Windows or certain Microsoft application software, including MSDOS or Windows software obtained as part of the purchase of a computer, between February 18, 1995 and December 15, 2001. Two-thirds of the unclaimed money will go to California public schools in a mix of donated Microsoft software and cash grants. Alvarado has scheduled a follow-up hearing for February 13, 2004 to review the implementation of the settlement and then approve or reject it. Further information may be found at http://www.townsend.com/media/microsoft.html

On July 21st, the Federal Trade Commission (FTC) announced that it had agreed to settle its case against a 17-year-old boy charged with using spam and a phony AOL web page to elicit credit card information. The teenager has agreed to pay back $3,500 of stolen money and to honor a lifetime ban on sending spam. The teenager's e-mails told recipients they needed to update their AOL billing information and instructed them to click on a hyperlink connected to the "AOL Billing Center." The link diverted people to a bogus AOL Web site that contained the company's logo and links to real AOL Web pages, the FTC alleged. There, they were instructed to enter their credit card numbers, along with mothers' maiden names, billing addresses, social security numbers, bank routing numbers, credit limits, personal identification numbers and AOL screen names and passwords. This particular form of fraud has come to be known as "phishing" and is a rapidly growing phenomenon. The teenager used his newfound information to go on an online shopping spree and to log on to AOL in his victims' names and send more spam. Further information may be found at http://www.ftc.gov/opa/2003/07/phishing.htm

On July 14th, the Computer Emergency Response Team (CERT) Coordination Center, a security incident clearinghouse, introduced a program to certify information technology professionals in incident handling and response. The certification program will train participants in how to react to security incidents and network intrusions. Applicants who take five courses, including an elective, and pass a test administered by the Software Engineering Institute will be granted a Certified Computer Security Incident Handler Certification (CCSIHC). The Software Engineering Institute is part of Carnegie Mellon University and manages the CERT Coordination Center. Further information may be found at http://www.cert.org/certification/

On July 18th, Bertelsmann AG filed a motion with the U.S. District Court for the Southern District of New York asking the court to dismiss three copyright infringement suits connected to the Bertelsmann’s investment in the now defunct Napster. EMI Group, Universal Music Group and another unnamed group had charged Bertelsmann with "vicarious and contributory" copyright infringement in connection with its Napster involvement. The music companies allege that Napster would have been shut down in 2000 instead of 2001 if not for Bertelsmann’s funding. Bertelsmann counters, in its motion to dismiss, that no court has ever said that by providing money to an accused infringer, an investor is exposed to copyright infringement liability. The plaintiffs have four weeks to respond to the motion. Further information is available at http://www.bertelsmann.com/news/press/press_item.cfm?id=8264

On June 25th, the Recording Industry Association of America (RIAA) announced that it would begin collecting information on individual file-swappers suspected of illegally sharing music files via the Internet, with roughly 75 subpoenas being approved each day. Subpoenas show the industry compelling some of the largest Internet providers, such as Verizon Communications Inc. and Comcast Cable Communications Inc., and some universities to identify names and mailing addresses for users on their networks known online only by screen names. Over 870 subpoenas had been issued by July 19th. The campaign comes weeks after federal appeals court rulings requiring Internet providers to readily identify subscribers suspected of illegally sharing music and movie files. The RIAA has filed so many subpoenas that the U.S. District Court in Washington has reassigned employees from elsewhere in the clerk's office to help process paperwork. There has been evidence already that the RIAA’s actions may be having an effect as Nielsen NetRatings, which monitors Internet usage, has reported a decline for traffic on the Kazaa network of one million users, with similarly large drops across other services. Further information may be found at http://www.riaa.com/news/newsletter/062503.asp and http://www.epic.org/privacy/copyright/verizon/. If you are interested in seeing whether your file-sharing name (or your child’s!) is on the list, you may enter the name at http://www.eff.org/IP/P2P/riaasubpoenas/

On July 24th, the Department of Justice announced that PayPal will pay the federal government $10 million to settle charges that it knowingly transferred funds to illegal offshore gambling sites. The government had alleged infraction of both the USA Patriot Act and the Wire Wager Act. The $10 million settlement represents what both parties agreed represented forfeitable revenue that PayPal obtained from processing the gambling transactions. PayPal also agreed to maintain a corporate compliance program for at least two years. Further information may be found at http://news.com.com/2100-1019-5055237.html?part=dht&tag=ntop

On July 25th, the owner of the pornography site sex.com won a lengthy dispute with Network Solutions. In a ruling that could lead to a large damage assessment, a federal appeals court in San Francisco held that Network Solutions, which operates the central database of dot-com domains, may be held liable for wrongfully transferring the sex.com domain to a con man based on a forged letter. Although Network Solutions, a unit of VeriSign (VRSN), did not steal the domain, the court held that the company should be held responsible for giving it to someone else without properly informing its rightful owner. The court said that "exposing Network Solutions to liability when it gives away a registrant's domain name on the basis of a forged letter is no different from holding a corporation liable when it gives away someone's shares under the same circumstances." The opinion in Kremen et al v. Cohen et al may be found at http://www.ca9.uscourts.gov/ca9/newopinions.nsf/999D1D5B0D734B6088256D6D0078CB88 /$file/0115899.pdf?openelement

Pool.com, an Ontario corporation that operates a backorder service for dot-com and dot-net domain names, launched a suit against The Internet Corporation for Assigned Names and Numbers (ICANN) over the planned Wait List Service (WLS) on July 8th. The suit argues that the WLS will have the effect of ending competition among registrars for dropped or deleted domains. It maintains that ICANN failed to abide by its contractual requirements of obtaining consensus before implementing the policy and by failing to allow an Independent Review Panel review. A second suit was filed against ICANN shortly thereafter by the Domain Justice Coalition. The claim in the Pool.com case may be found at http://www.pool.com/Press/Statement%20of%20Claim%20-%20Pool.com%20Inc.%20v.%20IC ANN1.pdf

On July 17th, the Senate voted 95-0 to cut off funding for the Total Information Awareness program, a much criticized surveillance program that sought to combine millions of data records. The military spending bill it passed prohibited the Defense Department from spending any money on the program. The Bush Administration had urged the Senate to preserve funding, saying the program is an important tool in the war on terrorism. Further information may be found at http://gcn.com/vol1_no1/daily-updates/22832-1.html

The Brookings Institute has published a new study contrasting the privacy regimes in Europe and the U.S. The study claims that the self-regulatory environment in the U.S. provides a more effective solution than the regulated EU approach, though much of that conclusion appears based largely on the greater accessibility of privacy policies on U.S. e-commerce sites. The study may be found at http://aei.brookings.org/admin/pdffiles/phpWo.pdf

On July 11th, a class-action lawsuit was filed against Internet advertiser DoubleClick in Allegheny County, Pennsylvania, over the dissemination of advertising that impersonated computer error messages and allegedly duped computer users into clicking on them. The suit claims that DoubleClick deceptively and fraudulently tricked millions into responding to the false error message, which did not allow users to close the message without clicking through to Bonzi Software, which sponsored the ads. The allegation is that DoubleClick is liable because it sells that ability to its customers. The complaint in Steelman v. DoubleClick may be found at http://www.ferencelaw.com/doubleclick/documents/complaint.pdf