Issue 75 September 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.

TELEMARKETERS SUE TO STAY DO-NOT-CALL LIST

On July 28th, the American Teleservices Association (ATA) filed a petition in the United States Court of Appeals for the Tenth Circuit seeking judicial review of the Federal Communications Commission's (FCC) Report & Order issued earlier in July adopting rules that mirror the Federal Trade Commission's (FTC) regulations creating a national Do-Not-Call (DNC) list and otherwise governing telemarketing practices. At the same time, the ATA asked the FCC to issue an expedited stay to forestall enforcement of the new rules until after the court has had a chance to review them. The free government registry for blocking telephone sales pitches has grown to more than 28 million numbers since it was opened June 27th according to the Federal Trade Commission, which operates the service. The FTC has predicted registration will grow to 60 million numbers by the summer of 2004. The telemarketing industry estimates the Do-Not-Call list could cut its business in half, costing it up to $50 billion in sales each year. According to the ATA, implementing the list could also eliminate up to two million jobs. Further information may be found at http://www.ataconnect.org/ataconnect.org-asp//newsrelease.asp?ID=99

The Uniform Computer Information Transactions Act (UCITA), drafted four years ago, was meant to protect software developers from intellectual property theft by resolving conflicting software licensing laws that vary from state to state. However, increasingly vocal critics have charged that UCITA favors corporate interests over those of consumers. They say it grants software makers too much freedom in restricting the use of their products and in dictating settlement terms for conflicts. Only Maryland and Virginia have enacted UCITA in spite of a vigorous enactment campaign by the National Conference of Commissioners on Uniform State Laws (NCCUSL). The group anticipated that UCITA would be adopted by additional states after it was amended in 2002 to address consumer rights concerns. UCITA’s opponents mounted successful challenges to the law and UCITA made no further headway. The NCCUSL announced on August 1st that it had pulled the plug on all efforts to help states introduce and enact the bill. Without that backing, commentators believe UCITA is unlikely to gain further consideration from the states. The NCCUSL also disbanded the special committee that oversees its UCITA activity. Further information may be found at http://www.nccusl.org/nccusl/ucita/KKB_UCITA_Letter_8103.pdf

On August 5th, the Business Software Alliance (BSA) released results of its state-by-state analysis of software piracy in the U.S. According to the report, the country’s piracy rate dropped two percentage points over the 2001 rate, to 23 percent. The International Planning and Research Corporation conducted the study for the BSA. The BSA also reported that some 37 organizations handed out more than $3.1 million in piracy-related settlements as a result of its annual campaign to raise awareness among business users regarding the illegal use of copyrighted software. States that showed the most significant reduction in piracy percentage rates were Louisiana, Maine, Oregon, West Virginia, Idaho, Hawaii, Alaska, South Carolina, Washington and Oklahoma. The top nine states that had the lowest piracy rates in 2002 were: Illinois, Michigan, Ohio, Indiana, New York, Connecticut, New Jersey, Washington, D.C., Washington, and Virginia. A link to the study may be found at http://global.bsa.org/statestudy/

On August 4th, Red Hat upped the ante in its legal combat with the SCO Group, filing a lawsuit in the U.S. District Court of Delaware that asks, among other things, for a declaratory judgment that Red Hat has not violated SCO's copyrights or trade secrets. SCO is the owner of pivotal Unix copyrights and is engaged in litigation against Linux. SCO says it will answer the Red Hat complaint with counterclaims for copyright infringement and conspiracy. SCO said in a statement that it had "been educating end-users on the risks of running an operating system that is an unauthorized derivative of Unix. Linux includes source code that is a verbatim copy of Unix and carries with it no warranty or indemnification." Earlier this year, SCO filed a $3 billion lawsuit in Utah against IBM for alleged copying of proprietary Unix intellectual property into Linux. It has also sent letters to about 1,500 Linux customers, warning that they may be infringing on SCO's intellectual property. According to the Red Hat complaint, "SCO's campaign is designed to both slow the growth of Linux and to reverse its failing fortunes by convincing Linux users they need to pay SCO a license fee to use the lower-cost Linux operating system." Further information may be found at http://www.redhat.com/about/presscenter/2003/press_sco.html

On August 6th, IBM filed counterclaims against the SCO Group in their continuing litigation over the Linux operating system. IBM argued in its pleading that just because SCO distributed a version of Linux under the open-source General Public License (GPL), it can't claim that Linux software is proprietary. IBM also argues that SCO software violates four IBM patents and that the company interfered with IBM's business by saying it had terminated IBM's right to ship a Unix product, AIX. IBM is seeking unspecified monetary damages and an injunction to stop SCO from shipping its software. The counterclaims were filed in the federal district court in Utah. In a statement, SCO reasserted its position that Linux violates SCO's intellectual property rights in Unix and called on IBM to back up its faith in Linux by providing its customers with legal protection for using the software. SCO’s media statement regarding IBM’s counterclaims may be found at http://ir.sco.com/ReleaseDetail.cfm?ReleaseID=115725

On August 7th, the European Union (EU) charged in a third "Statement of Objections" that Microsoft is still trying to monopolize new markets. The European Commission, the EU’s antitrust arm, said that recent surveys of more than 150 businesses showed that Microsoft’s anticompetitive behavior was ongoing. The Commission gave Microsoft a last chance to defend itself or to agree to open up two markets involving low-end servers and media players. The EU has also threatened to levy fines of up to 10 percent of Microsoft’s worldwide sales. Microsoft's response to the EU’s action is due by the end of September. Commentators speculated that the new statement of objections was intended to bolster the EU’s legal case in the wake of several court defeats in which EU trustbusters were reprimanded by judges for shoddy casework. Microsoft argues that last year's U.S. settlement, combined with additional steps it has taken voluntarily, answers the European complaints. Further information may be found at http://www.eurunion.org/news/press/2003/2003049.htm

Who would ever think that Supreme Court oral arguments would be available as MP3s? They are now, thanks to the OYEZ Project, an undertaking by Northwestern University. Since 1994, the OYEZ Project has made audio versions of Supreme Court arguments available in streaming format, requiring a persistent Internet connection. Taping of oral arguments began in 1955. The new MP3 format includes the arguments for the Roe v. Wade abortion rights case and the case involving the disputed presidential election. The new format allows offline listening, use of portable devices and sharing through the same peer-to-peer networks used to swap music and movies. OYEZ buys tapes from the National Archives and Records Administration and copies them into ".wav" files for streaming. A student team then edits the files and converts them into MP3 files. The next batch of files, 600 hours of arguments from the 2001 term, will be released by October 1st. The MP3 files are available from OYEZ under a Creative Commons copyright license, which encourages redistribution but still gives OYEZ some ownership. Users can share the files if they agree to credit OYEZ and limit uses to noncommercial reasons. The Oyez site may be found at http://www.oyez.org/oyez/frontpage

In the United States District Court for the Eastern District of Virginia, Judge Jerome Friedman issued a ruling on August 6th ordering eBay to pay MercExchange $29.5 million for infringing an e-commerce patent. The jury had previously awarded $35 million. The judge said that there was no dispute about the infringement and that there was sufficient evidence to support the finding that the infringement was willful. The judge, however, declined to issue an injunction barring eBay from further using the technology, saying that there was insufficient evidence that its continued use would cause the patent holder any monetary damages. EBay said it is still considering an appeal. The patent in question was developed by Thomas Woolston, an engineer who helped build the CIA's communications network, and later went on to develop a series of e-commerce patents through his company, MercExchange. Although Judge Friedman agreed with most of the jury's findings, he reduced the amount of the award, writing in his opinion that the jury had incorrectly double-counted certain damages. Further information may be found at http://www.washingtonpost.com/wp-dyn/articles/A24895-2003Aug6.html

The August outbreak of the MSBlast worm has heightened awareness that today’s method of patching security flaws operates too slowly to combat critical vulnerabilities. In spite of the fact that Blaster, as it is commonly known, is considered to be poorly programmed, it spread rapidly, infecting at least 250,000 computers and causing all kinds of havoc for businesses and Internet Service Providers. Intrusion detection systems have spotted PCs the worm compromised on the networks of most major consumer Internet providers, including America Online, AT&T, Comcast, Cox Communications, SBC Communications and Verizon Communications. Blaster infected a dozen computers in the U.S. Senate and caused the Federal Reserve Bank of Atlanta to shut down most of its computer system. It's unlikely that the worm has infected the ISPs’ systems, but a large number of clients that connect to those providers may have been compromised. The worm's code contains a message for Microsoft’s chairman: "billy gates why do you make this possible? Stop making money and fix your software!!" The FBI is searching for the worm’s creator, along with the Department of Homeland Security. Symantec’s information about Blaster may be found at http://securityresponse.symantec.com/avcenter/venc/data/w32.blaster.worm.html

Hewlett-Packard (HP) announced on August 14th its victory against S-Systems and its owner, Leroy Anthony Sallee. S-Systems acquired more than $5.7 million in equipment from Compaq Computer, paying $3.1 million through the use of an education discount. The company said the machines were for Case Western Reserve University in Cleveland, but then attempted to resell the equipment, according to HP, which acquired Compaq in May of 2002. The HP suit is a significant stride forward in the fight against the "gray market," in which genuine products are sold in unauthorized ways. A raid on a Massachusetts warehouse allowed HP to recover some of its equipment as well as documents outlining S-Systems' plan. Sallee pled guilty to federal mail fraud charges for his participation in the alleged scheme. HP successfully recovered $1.8 million. Further information may be found at http://www.hp.com/hpinfo/newsroom/press/2003/030814a.html

On August 7th, the U.S. District Court for Massachusetts blocked several subpoenas issued by the Recording Industry Association of American (RIAA) aimed at college song swappers, ruling that the universities were not immediately required to identify the file traders. The subpoenas were challenged by the Massachusetts Institute of Technology (MIT) and Boston College (BC), which said that the RIAA’s subpoenas had not been legally filed. The colleges were objecting only on the technical legal grounds that the RIAA had filed the subpoenas in the wrong court, so the RIAA may revise its subpoenas to comply with the court’s order. Since late June, the RIAA has issued more than 900 subpoenas for information that would identify Internet service provider subscribers or university students who have allegedly offered copyrighted material online. The subpoenas are a precursor to an expected spate of lawsuits for copyright infringement against individual file traders. The RIAA has used a single Washington, D.C., federal court to issue all the subpoenas, no matter where they were to be served. The colleges had argued that they were not subject to orders the federal court issued. The Massachusetts court concurred, holding that federal legal rules required valid subpoenas to be issued in the local court. The RIAA has also filed separate motions with the federal court asking for enforcement of the MIT and BC subpoenas. Court documents in the RIAA cases may be found at http://www.eff.org/IP/P2P/riaa-v-thepeople.php

On July 30th, Pacific Bell Internet Services, operated by SBC Communications, challenged the subpoenas served upon it by the Recording Industry Association of America (RIAA) on procedural grounds, stating that they were improperly served. The lawsuit charges that the Digital Millennium Copyright Act (DMCA), which the RIAA says supports its current antipiracy actions, may violate the Constitutional right to privacy. According to the suit, more than 200 of the subpoenas filed against PBIS were issued from the wrong court of jurisdiction, arguing that they should have been issued from the California district court rather than from Washington, D.C. PBIS also said the subpoenas were overly broad and that the RIAA could not group multiple requests for information on alleged file swappers under a single subpoena. Further information may be found at http://www.kron4.com/Global/story.asp?S=1382955&nav=5D7lHCua

On July 30th, the Federal Trade Commission (FTC) issued a consumer alert regarding the potential privacy invasions that may accompany file-swapping software. Though the FTC did not suggest that file-swapping be avoided, it said computer users should take care to understand and prevent a range of potentially unpleasant consequences. The alert cited the possibility that consumers might download viruses, share private or copyrighted files that could place them in legal trouble, or accidentally download mislabeled pornography. The FTC warning suggested that computer users: 1) set up file-sharing software carefully, making sure that no private files or folders are being shared; 2) be aware of potential spyware, and think about using software that can prevent downloading or delete intrusive programs; 3) close connections when finished using file-sharing software, to avoid accidentally sharing files; and 4) use and update antivirus software. Further information may be found at http://www.ftc.gov/bcp/conline/pubs/alerts/sharealrt.htm

On August 11th, the U.S. District Court for the Northern District of Illinois handed down a jury verdict that Microsoft must pay $521 million to Eolas Technologies for patent infringement involving Microsoft’s Internet Explorer. The suit alleged that Microsoft infringed on Eolas’ patents when it enabled Explorer to use plug-ins and applets. The technology was first described in a patent application filed in 1993. Though the Eolas patent was not specifically referenced in internal Microsoft documents, Microsoft executives had described the necessity for technology that conformed to the outlines of the patent. The University of California will receive 25 percent of the proceeds from the verdict, while Eolas will obtain the rest, minus legal fees and costs. The university owns the patents for the technology, which it licensed to Eolas in 1994. Microsoft has announced that it will appeal the decision. The court will hear evidence in the coming weeks on a counterclaim from Microsoft, which alleges that Eolas' patents are invalid and that an inventor name Pei Wei came up with similar technology before the Eolas patent applications. Microsoft representatives also alleged that Eolas knew of Pei Wei’s work. Further information may be found at http://www.ucop.edu/news/archives/2003/aug11art1.htm. The patent at issue in the case may be found at http://164.195.100.11/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PALL& amp;p=1&u=/netahtml/srchnum.htm&r=1&f=G&l=50&s1=%275838906% 27.WKU.&OS=PN/5838906&RS=PN/5838906

On July 24th, a follow-up ruling was issued in the Zubulake v. Warburg case, a gender employment discrimination suit. In an earlier ruling considering seven factors that should govern cost shifting in electronic discovery, the court had ordered a sampling of evidence produced before a cost-shifting ruling was issued. After reviewing the sampling of responsive e-mail from the defendants, including optical disks, active servers and five backup tapes selected by the Plaintiff, the court ordered production of the data contained on the remaining 72 backup tapes, finding a significant likelihood that the tapes contained relevant e-mail not available from any other source. The court ordered the costs of backup tape restoration to be allocated between UBS and Zubulake seventy-five percent and twenty-five percent, respectively. In determining if this result should apply to the entire cost of the production, the court stated that, as a general rule, where cost shifting is appropriate, only the costs of restoration and searching should be shifted. The responding party should always bear the cost of reviewing and producing electronic data once it has been converted to an accessible form. The opinion in Zubulake v. Warburg may found at http://www.nysd.uscourts.gov/rulings/02cv01243_072403.pdf

On August 18th, the Federal Communications Commission (FCC) issued a stay of new regulations governing fax advertisements for a period of 16 months, until January 1, 2005. The FCC granted the stay request after receiving hundreds of comments and requests for interpretation from associations and other businesses over the past several weeks regarding the rulemaking, published July 25th in the Federal Register. Many submissions argued that the fax regulations as written would significantly impede the marketing strategies and basic communications between associations and their own members. The new rules were due to go into effect August 25th, but will now be given more deliberate consideration to determine congressional intent. The new fax rules would require associations and other businesses to seek the written consent of each recipient before transmitting any faxes that are "commercial" in nature. Prior to the changes, associations and other businesses were free to send fax advertisements where there was an established business relationship in place, such as membership in an association, for example. Further information may be found at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-03-208A1.doc

On August 1st, the staff manager for the Internet Corporation for Assigned Names and Numbers released a long awaited report on the Uniform Domain Name Dispute Resolution Policy (UDRP). The report concludes that there is not an urgent need for UDRP revision and that other issues, such as WHOIS, may warrant a higher priority. Should a policy development process commence, the report recommends focusing on questions such as the searchable access to decisions, public availability of filings, filing amendments, appellate procedures, and enforcement of decisions. The report may be found at http://www.icann.org/gnso/issue-reports/udrp-review-report-01aug03.htm

On August 13th, Google’s fun new math tool almost got lost in the panic over the Blaster worm. By using the brand new Google tool bar on your browser or going to the google.com site, math is now child’s play. You can use words or numbers. Type in the search box "64 squared," "100 cm in inches," "20 knots in mph," and even "the speed of light in furlongs per fortnight" and receive the calculated answers. For math-challenged lawyers, it is an easy and fun way to quickly perform computations on the fly. The new toolbar 2.0 offers lots of other great features too, including an autofill function and a pop-up ad blocker. More information about the new toolbar and a link to download it may be found at http://www.google.com/press/pressrel/toolbar.html

On July 29th, the Fourth Circuit Court of Appeals ruled that the government did not violate search and seizure laws when it used evidence that a hacker gathered to establish a child pornography case. The decision involved a case in which a hacker uploaded a file to a child porn newsgroup that made it possible to track users who downloaded files from the service. The uploaded file contained the SubSeven virus, which the hacker used to remotely search people's computers for porn. The hacker then played the part of a vigilante, alerting law enforcement to child porn files on users’ computers. The opinion reversed a lower court ruling that suppressed the evidence, saying the government had violated the defendant’s rights. The Fourth Circuit reversed, finding that most of the exchanges between the hacker and law enforcement took place after he had searched the man’s computer. As a result, the court found that the hacker was not an agent of the government and did not run afoul of the Fourth Amendment. However, the judges did warn that law enforcement "operated close to the line" in this case. The decision in U.S. v. Jarrett may be found at http://pacer.ca4.uscourts.gov/opinion.pdf/024953.P.pdf

On August 11th, the South Carolina High Court issued a ruling addressing the question of whether victims of identity theft have a valid claim of negligence against a credit card company that issues a card to an imposter. The court ruled that there was no tort of negligent enablement of imposter fraud as the relationship between credit card issuers and victims of identity theft is too attenuated to rise to the level of a duty between them. The decision in Huggins v. Citibank may be found at http://www.sclawyersweekly.com/archives/sc/opin/sup/25691.htm

On August 15th, the Minneapolis public library announced that it would consider using Internet filters to restrict patrons' access to online porn, and will pay $435,000 to a dozen librarians who said easy access to the images resulted in a hostile work environment. Library officials said they would also consider increasing penalties for those who violate the library’s Internet policy. The library did not admit any fault. The librarians had complained to various state and federal agencies, and the Equal Employment Opportunities Commission found in 2001 that there was probable cause that federal law had been violated and that a sexually hostile work environment existed. The case was referred to the Justice Department, which declined to prosecute, so the librarians filed a federal suit. Further information may be found at http://www.brainerddispatch.com/stories/081603/sne_0816030021.html

On August 13th, the 9th Circuit Court of Appeals ruled that Matchmaker.com, an online dating site, enjoys intermediary immunity provided by the Communications Decency Act (CDA), section 230, in a case involving identity theft. Carafano v. MetroSplash.com and Matchmaker.com involved a false posting on the Matchmaker service purporting to be Christine Carafano, a popular actress. The posting included a picture along with her email and real home address. The actress began receiving death threats at home and proceeded to sue the service. The court ruled that the broad interpretation accorded to the statute would cover the matchmaking service and that it could not be held liable for the incident. The decision in the case may be found at http://www.ca9.uscourts.gov/ca9/newopinions.nsf/23FE0B8E8A5093C188256D810068FB6F /$file/0255658.pdf?openelement

On August 12th, the Tennessee Court of Appeals ruled that Prodigy is free from sales tax requirements because it is not a telecommunications service. The court found that while services provided by the Internet Service Provider involve communication, it does not fall within the telecommunication service definition subject to the state sales tax. Tennessee has not yet decided whether it will appeal. The decision in Prodigy v. Johnson may be found at http://www.tsc.state.tn.us/opinions/tca/PDF/033/prodigyservices.pdf