Source: http://techlawjournal.com/home/newsbriefs/2007/02e.asp
Timestamp: 2019-04-22 08:25:36+00:00

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TLJ News: February 21-25, 2007.
2/23. The U.S. Court of Appeals (8thCir) issued its opinion [PDF] in USA v. Trotter, affirming a conviction in a Section 1030 case. The Court of Appeals rejected Trotter's argument that Section 1030 could not be used to prosecute him because of the absence of interstate commerce.
John Trotter used a home computer with internet access to access the computers of his former employer, the Salvation Army (SA), without authorization. The SA is a non-profit entity. Its computer are connected to the internet, and used to communicate with computers in other states. However, both Trotter and the SA computer which he accessed were in the state of Missouri. He deleted files, temporarily shut down a computer operated phone system, and caused other damage. He was charged with violation of 18 U.S.C. § 1030(a)(5)(A)(i). He pled guilty, reserving the right of appeal.
This subsection provides in part that "(a) Whoever ... (5)(A)(i) knowingly causes the transmission of a program, information, code, or command, and as a result of such conduct, intentionally causes damage without authorization, to a protected computer ... shall be punished ..."
Trotter argued on appeal that there is no interstate commerce component in his case. The Court of Appeals affirmed the conviction. It held that it does not matter that the computers affected were owned by a non-commercial rather than a commercial entity.
The Congress, under the framework of the Constitution, can only legislate on subjects enumerated in Article I of the Constitution. There is no general grant of criminal law making authority. In contrast, states have general criminal law making authority.
However, the Congress can enact criminal statutes that are incidental to other enumerated powers. One of these is the power to regulate interstate commerce. The Congress often acts as though this were a general grant of criminal law making authority. As the present case illustrates, the federal courts allow the Congress, and federal prosecutorial entities, great latitude in asserting that conduct is in interstate commerce.
The Court of Appeals wrote that "The Commerce Clause of the Constitution grants Congress the power to regulate interstate commerce. ... This includes the ability to regulate channels of interstate commerce, instrumentalities of interstate commerce, and those activities that substantially affect interstate commerce. ... No additional interstate nexus is required when instrumentalities or channels of interstate commerce are regulated."
The Court of Appeals added that "The Salvation Army’s status as a not-for-profit entity has no bearing on our analysis; it is the characteristics of the computer or computer network, not the entity using the network, that is the focus of the statute."
The Court also wrote that it relied upon the U.S. Court of Appeals (7thCir) 2005 opinion in United States v. Mitra, which is reported at 405 F.3d 492. See also, story titled "7th Circuit Affirms Broad Reach of Section 1030" in TLJ Daily E-Mail Alert No. 1,119, April 20, 2005.
In the 7th Circuit case, Mitra, a graduate student at the University of Wisconsin, transmitted a radio signal that prevented the communications system for police, fire, ambulance, and other emergency communications in Madison, Wisconsin, from operating. He accessed no computers. He sent to computer code. However, computer chips are used in the management of the emergency communications system in Madison.
The Court of Appeals wrote in the present opinion that "The Seventh Circuit held the communication system harmed by the defendant’s conduct was protected by the statute because it was engaged in interstate communication and, specifically, it was engaged in communication on the electromagnetic spectrum regulated by the Federal Communications Commission. ... Like the Internet, the spectrum is a channel of interstate commerce subject to regulation by Congress. ... In Mitra, the defendant argued the intrastate nature of his attack took it outside the constitutional applicability of the statue. Judge Easterbrook, writing for the court, explained the location of the attack is not determinative because ``[o]nce the computer is used in interstate commerce, Congress has the power to protect it from a local hammer blow, or from a local data packet that sends it haywire.´´ ... Likewise, the nature of the organization using the computer is irrelevant; once the computer is used in interstate commerce, Congress has the power to protect it."
In both Trotter and Mitra, neither the defendants nor the victims were engaged in commerce. Neither case involved an activity that crossed state borders. Yet, both courts held that the the defendants' actions satisfied the interstate commerce requirement. Moreover, these opinions are consistent with court opinions in non-Section 1030 cases.
However, the 7th Circuit's opinion in Mitra was notable to the extent that it essentially construed spectrum interference to be a form of computer hacking. In that case, devices that utilized the spectrum contained computer chips. But now a wide variety of spectrum related devices include chips. And now, the 8th Circuit has cited the Mitra case with approval.
This case is USA v. John Larkin Trotter, U.S. Court of Appeals for the 8th Circuit, No. 05-4202, an appeal from the U.S. District Court for the Eastern District of Missouri, Judge Rodney Sippell presiding.
2/23. The U.S. Court of Appeals (1stCir) issued its opinion in Universal Communication Systems v. Lycos, a case involving Section 230 interactive computer service immunity. The Court of Appeals affirmed the District Court, which had held that Lycos and others are entitled to immunity under Section 230.
The Court of Appeals rejected attempts by the plaintiffs to get around Section 230 by pleading trademark dilution (intellectual property claims are an exception to Section 230 immunity), and federal cyberstalking (which is also an exception), and state securities fraud and cyberstalking claims.
Universal Communication Systems, Inc. is a publicly traded company. Michael Zwebner is its Chairman and CEO.
Lycos operates web sites, including Quote.com and RagingBull.com, which allow subscribing users to create message boards, and post comments regarding companies.
Messages were posted to a UCS message board on the RagingBull.com web site that pertained to the financial condition, business prospects, and management of UCS. UCS and Zwebner allege that these were false and defamatory. However, they did not plead slander or defamation.
There is a long line of cases holding that interactive computer services are not liable for defamation by third party posters. Rather, in the Court of Appeals' words, "UCS attempted to plead around this Section 230 statutory immunity".
UCS and Zwebner filed a complaint in U.S. District Court (SDFla) against Lycos and other interactive service services. USC and Zwebner initially alleged for claims: (1) fraudulent securities transactions under Florida statute, (2) cyberstalking in violation of 47 U.S.C. § 223, (3) dilution of trade name under Florida law, and (4) cyberstalking under Florida law.
Pursuant to a forum selection clause in a Lycos subscriber agreement, the case was transferred to the U.S. District Court (DMass). The District Court dismissed the complaint.
47 U.S.C. § 230(c)(1) provides that "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider".
47 U.S.C. § 230(f)(2) provides that an "interactive computer service" is "any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions".
Also, 47 U.S.C. § 230(f)(3) provides that an "information content provider" is "any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other interactive computer service".
Court of Appeals Holding. The Court of Appeals held that Lycos is an "interactive computer service" within the meaning of the statute. It rejected USC's argument that it failed to qualify on the basis that it did not provide internet access to customers.
It held that the anonymous poster was an "information content provider", and that the state cyberstalking and securities claims sought to treat Lycos of the publisher of information provided by this information content provider.
The Court of Appeals also affirmed the dismissal of the trademark dilution claim. It first wrote that "Claims based on intellectual property laws are not subject to Section 230 immunity." Instead, it affirmed because the alleged used of a protected mark (that is, the use of the UCSY ticker symbol in the message board) was not actionable absent Section 230 immunity, "because of the serious First Amendment issues that would be raised by allowing UCS's claim here".
The Court of Appeals continued that "The injury that UCS alleges, however, is not a form of trademark injury. Trademark injury arises from an improper association between the mark and products or services marketed by others. ... But any injury to UCS ultimately arises from its being criticized on the Raging Bull site. To premise liability on such criticism would raise serious First Amendment concerns."
The Court of Appeals added that "To be sure, UCS does allege that in this case the criticism is false and misleading. But while such an allegation might be relevant to a defamation claim, it is not determinative of whether UCS's allegations can support a trademark claim. If the injury alleged is one of critical commentary, it falls outside trademark law, whether the criticism is warranted or unwarranted."
The Court of Appeals also affirmed the dismissal of the federal cyberstalking claim. This is a recently enacted prohibition with a short and unusual legislative history. During the First Session of the 109th Congress, the House Judiciary Committee (HJC) and its staff produced a cyber stalking bill. This carefully prepared bill did not become law. Rather, a much different version pushed by Rep. Jim McDermott (D-WA) was substituted for the HJC version during last minute negotiations and vote trading over HR 3402 (109th Congress), a Department of Justice reauthorization bill. The McDermott language makes it a federal crime to use the internet to "annoy" someone. The bill also includes the internet within the definition of "telecommunications device" for the purpose of 47 U.S.C. § 223.
For an explanation of this late amendment, see story titled "Bush Signs DOJ Reauthorization Bill" in TLJ Daily E-Mail Alert No. 1,284, January 6, 2006. See, subsection titled "The Internet as a Telecommunications Device".
The Court of Appeals affirmed the District Court's dismissal of the Section 223 claim, but only the basis that UCS did not raise this on appeal. The Court of Appeals wrote that "On the federal cyberstalking claim under 47 U.S.C. § 223, in addition to finding the claim barred by Section 230, the district court also found that the cyberstalking statute does not provide a private right of action. UCS does not challenge this dispositive ruling on appeal, so we affirm the dismissal of the claim on that basis, expressing no view on the appropriateness of applying Section 230 immunity to a putative civil claim under 47 U.S.C.§ 223."
Hence, the Court of Appeals left unresolved the question of whether there is a private right of action under Section 223. However, Section 223 is clearly a criminal prohibition which includes no express private right of action. However, were a court to create a private right of action under Section 223, then the McDermott internet annoyance language might provide a means to evade a Section 230 dismissal, because Section 223 is an exception to a Section 230 immunity.
See also, stories titled "The District Court District Court Holds Rep. McDermott Violated Wiretap Act" in TLJ Daily E-Mail Alert No. 964, August 23, 2004, and "Court of Appeals Holds that Rep. McDermott Violated Wiretap Act" in TLJ Daily E-Mail Alert No. 1,339, March 30, 2006.
This case is Universal Communication Systems, Inc. and Michael Zwebner v. Lycos, Inc., et al., U.S. Court of Appeals for the 1st Circuit, App. Ct. No. 06-1826, an appeal from the U.S. District Court for the District of Massachusetts, Judge Robert Keeton presiding.
2/23. Federal Communications Commission (FCC) Chairman Kevin Martin, who is from the state of North Carolina, announced his intent to appoint Derek Poarch, who is also from North Carolina, to be the FCC’s Public Safety and Homeland Security Bureau Chief. Poarch is currently Director of Public Safety and Chief of Police at the University of North Carolina at Chapel Hill. See, FCC release [PDF].
2/23. Ed Black, head of the Computer & Communications Industry Association (CCIA), stated in a release that the February 22, 2007, trial jury's Special Verdict Form [PDF] in Lucent v. Microsoft "is another sign that our patent system has run off the rails ... instead of promoting innovation, patents now threaten the innovation process and those companies that focus primarily on creating and using new products." This CCIA release further states that "Even though Microsoft paid $16 million in licensing fees to the companies that developed the MP3 standard in the early 1990s, they now have to pay a remarkable $1.5 billion to a company that didn’t participate in the standard/licensing process back then, and Microsoft is only the first target among the thousands of producers that have adopted the MP3 standard." See also, the CCIA's paper [3 MB PDF] titled "Patent Reform for the Digital Economy".
2/23. The National Telecommunications and Information Administration (NTIA) issued a release [PDF] that discussed management of the usTLD locality space.
2/23. The Federal Communications Commission (FCC) held a hearing on regulation of media ownership in Harrisburg, Pennsylvania. See, statement [PDF] by FCC Chairman Kevin Martin, statement [PDF] by Commissioner Deborah Tate, statement [PDF] by Commissioner Robert McDowell, statement [PDF] by Commissioner Jonathan Adelstein, and statement [PDF] by Commissioner Michael Copps. Copps devoted much of his statement to the effect of media consolidation on the transparency of state and local governments. He did not discuss the lack of transparency of the FCC's activities and operations, or his own efforts to further reduce FCC transparency by seeking a loophole in the federal open meetings statute for the FCC. See, story titled "Copps and Stevens Advocate Less Transparency at FCC" in TLJ Daily E-Mail Alert No. 1,272, December 14, 2005. The relevant statute, which is codified at 5 U.S.C. § 552b, requires federal agencies to hold their meetings in public, and give notice "at least one week before the meeting, of the time, place, and subject matter of the meeting". Transparency is generally understood to refer to the extent to which government entities make their hearings, deliberations, and other processes open, observable, and receptive to public input, and the extent to which agencies promptly reduce all decisions, and substantive and procedural laws and rules, to readily available and understandable texts. However, Copps advanced the argument that transparency is a function of the number of reporters. He argued that media consolidation reduces the number of reporters who write about state and local government, and this reduces transparency. He stated that "That's what a vigorous press is all about. It brings transparency and accountability to government." He said that "A merger between two newsrooms usually means one less statehouse reporter."
2/22. Secretary of Commerce Carlos Gutierrez gave a speech in Washington DC to the U.S.-India High Technology Cooperation Group.
Gutierrez (at right), who just returned from a trip to India, stated that "I talked with government business leaders about opening India's market further, and forging ahead with a reform agenda to attract more investment and maintain the strong pace of growth."
He reviewed the relaxation of US controls on exports to India. He also said that "There are other reforms -- opening markets in sectors where obstacles remain, further reducing tariffs and getting tougher on enforcing IPR and protecting IP and pharmaceutical test data -- that will benefit India's economy and consumers, while maintaining the current growth trajectory."
He also discussed Doha round trade negotiations. He said that "In my meetings in India , I stressed the importance of India's full participation in the Doha round of global trade talks. Simply put: India's leadership is required to achieve an agreement. India has a tremendous opportunity to play an active and positive role in pushing these talks ahead. We are willing to make difficult choices. But we have a shared responsibility to make the round a success."
He also said that "we ... are working with the new Congress to renew President Bush's Trade Promotion Authority, which is currently set to expire at the end of June."
2/22. A trial jury of the U.S. District Court (SDCal) returned a Special Verdict Form [PDF] in Lucent v. Microsoft, finding patent infringement by Microsoft, and awarding $1.52 Billion in damages to Lucent, which is now Alcatel-Lucent.
Tom Burt, Microsoft's Deputy General Counsel, stated in a release that "We think this verdict is completely unsupported by the law or the facts. We will seek relief from the trial court, and if necessary appeal." He added that "Like hundreds of other companies large and small, we believe that we properly licensed MP3 technology from its industry recognized licensor -- Fraunhofer. The damages award seems particularly outrageous when you consider we paid Fraunhofer only $16 million to license this technology." Burt also stated that "today's outcome is disappointing for us and for the hundreds of other companies who have licensed MP3 technology. We are concerned that this decision opens the door for Alcatel-Lucent to pursue action against hundreds of other companies who purchased the rights to use MP3 technology from Fraunhofer, the industry-recognized rightful licensor."
This case is Lucent Technologies, Inc., and Multimedia Patent Trust v. Microsoft Corporation, et al., U.S. District Court for the Southern District of California, D.C. Nos. 02cv2060-B, 03cv0699-B, and 03cv1108-B.
2/22. The National Telecommunications and Information Administration (NTIA) and the Department of Homeland Security (DHS) released a memorandum of understanding [PDF] regarding implementation of a public safety interoperable communications grant program. The NTIA wrote in a release that this MOU provides that the "DHS’s Office of Grants and Training will provide grants management services to NTIA for the PSIC grant program. DHS, among other things, will: (1) develop policies, procedures and regulations to govern the PSIC program; (2) develop a timetable to complete actions so that grants may be awarded by the established dates; (3) develop and distribute program application and guidance materials; (4) publicize the availability of grant opportunities; (5) provide technical assistance to applicants; (6) notify recipients of grant awards; (7) award grant funds by September 30, 2007; and (8) conduct site visits to verify progress and completion of funded projects." This grant program was created by the Digital Television Transition and Public Safety Act of 2005, which was Section 3006 of the Deficit Reduction Act of 2005, which is now Public Law No. 109-171. The MOU was executed on February 16, and released on February 22.
2/21. The Progress and Freedom Foundation (PFF) released a paper [PDF] titled "Copy Protection and Games: Lessons for DRM Debates and Development". The author is the PFF's Solvieg Singleton. She argues that "Content producers do respond to consumer complaints about clumsy copy protection". She also concludes that "Interoperability with general purpose media increases piracy risks for content", and that "Hardware-linked protection is most durable." Finally, she argues that "Consumers do not always demand what advocates think they ought to demand. Consumers will buy special-purpose hardware when it is easy to use and not too expensive. They do not demand interoperability or the right to make backup copies at all costs."
Go to News from February 16-20, 2007.

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