Intellectual Property
File-Sharing Cases Could Ensnare Education Community
by Drew Clark
Universities and college students could be ensnared by the recording industry's litigation campaign against file sharing on peer-to-peer (P2P) computer networks, according to a report issued Monday by a joint committee of the higher education and entertainment communities.
The white paper, offered by the education task force of the committee, outlines the legal issues surrounding P2P file-sharing, with its focus on the huge liabilities that students are likely to face if they use P2P technology to swap digital songs.
The white paper is the latest work of a joint committee preparing for an education campaign urging college students not to engage in piracy. Next month, the committee is scheduled to release a report highlighting how some universities have used technologies to curb P2P file sharing -- a move that could encourage others to adopt the anti-P2P technologies.
The paper "is intended to assist campus administrators in understanding the application of copyright law to P2P file sharing and the potential serious liabilities that may be incurred by students who engage in that activity," John Hennessey, president of Stanford University, and Graham Spanier, president of Pennsylvania State University, said in the paper's cover letter.
Spanier is co-chairman of the Joint Committee of the Higher Education and Entertainment Communities that was created in December after the Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA) urged greater collaboration with higher education officials. Hennessey chairs the education task force, and other task forces address technology and public policy.
"Colleges and universities are under no legal obligation to defend, or accept responsibility for, the illegal actions of their students in the P2P context" the paper says, but adds that universities should educate students about their rights and responsibilities.
It details many ways that college students have and could break copyright law using P2P networks. In April, the RIAA sued two Princeton University students and students at Michigan Technological University and Rensselaer Polytechnic Institute, although it subsequently settled with the students.
The 11-page report also notes: "Institutions may face claims of contributory or vicarious liability from the conduct of their students. Such cases would likely raise questions about the institution's knowledge of the conduct, contribution to the conduct, ability to control the conduct, and whether or not the institution obtains a direct financial benefit from the conduct."
In addition to calling for more copyright education, the joint committee has issued two requests for information about P2P technologies. In April, the committee sought technologies to monitor and block file sharing. In June, it sought P2P technologies that could provide universities with a legitimate way to distribute music and movies online.
"The rules will be more clear, the commitment to enforcement will be more clear, and in some cases there will be legitimate music services that will be offered instead of just letting [the file-sharing service] Kazaa overwhelm the university systems," an entertainment industry source close to the committee said.
Intellectual Property
ID-Masking Features Add Twist To File-Sharing Debate
by Steve Seidenberg for Technology Daily
The music industry faces new technological challenges as consumers who swap online music files turn to new file-sharing software that helps them navigate the online world anonymously.
The newest programs -- including Morpheus, Blubster and Filetopia -- offer users various techniques to hide their users' online identities. And by adding those features to the programs, the companies that own them may be taking a big gamble, according to experts.
"These companies are playing a very risky game," said Anthony Lupo, an Internet expert with the law firm of Arent Fox Kintner Plotkin & Kahn. By offering the privacy protections now, he said, "it looks like they are helping people hide their identities" from the Recording Industry Association of America (RIAA) and others on the hunt for copyright infringers. "This creates a presumption of bad faith" and brings the software companies "closer to being found liable as contributory or vicarious infringers," he added.
The file-sharing service Aimster conceals the content of communications through encryption, and that creates a strong presumption of illegitimacy, wrote 7th Circuit Court of Appeals Judge Richard Posner in his June ruling against the company, now called Madster. "Its ostrich-like refusal to discover the extent to which its system was being used to infringe copyright is merely another piece of evidence that it was a contributory infringer," he wrote.
But if the companies can provide legitimate reasons for adding the features, the presumption could be overcome, Lupo said.
StreamCast Networks, which makes the Morpheus file-sharing program, claimed that the software's new privacy protections are not aimed at the RIAA. "Our concern with privacy pre-dated the moves by the RIAA against users," company spokesman Brian O'Neal said. "In the past, people have complained to us about hackers, identity thieves and spammers. We are responding to users' concerns. ... We want to give users options to protect their privacy."
The recording industry is not impressed by that argument. A spokesman for the organization warned that the software companies could be held "criminally liable" under copyright law for providing that sort of privacy technology.
In deciding whether the new P2P software violates copyright law, the courts would examine whether the products have substantial non-infringing uses, said Seth Greenstein, an Internet attorney with the law firm of McDermott, Will & Emery. "And it seems on its face that there are non-infringing uses for these privacy protections," he said. "For instance, people could use the [technology] to ensure no one knew they were engaged in unpopular political activities."
However, even if there are substantial non-infringing uses, the software companies are not in the clear.
The courts "have to balance the infringing uses versus the non-infringing uses," said James Jacobs, an intellectual property lawyer with the firm of Baker & McKenzie, meaning that the courts would examine how much the privacy protections help infringers hide and how well they serve other, legitimate ends.
There is unlikely to be any definitive ruling on this anytime soon, according to Glenn Perry, a partner in the Pillsbury Winthrop law firm. "I think there's going to be a collision between copyright and privacy," he said, and the winner will be known only after the Supreme Court issues a major ruling.
Budget
House Backs More FBI Funding But With Conditions
by Drew Clark
House lawmakers want to increase funding levels for the FBI to help it combat terrorism, cyber crime and conventional crime, but they also want to put the bureau on a shorter leash, according to the budget plan the chamber passed on July 23.
The House passed a bill, H.R. 2799, to fund the Commerce, Justice and State departments in fiscal 2004, and that legislation reiterated the importance of FBI funding by increasing its spending level $424 million. The total FBI budget under the measure would be $4.6 billion, and the Justice Department budget would be about $20 billion.
But appropriators remained wary about FBI spending. The House Appropriations Committee report on the bill calls for agency funding to be drawn from three separate accounts -- on criminal and security investigations, law enforcement support and administration.
"The committee is supportive of efforts to focus resources on national security issues but remains concerned that resource allocation may have a negative impact on other FBI activities, including drug, violent crime, and public-corruption investigations," the report said.
The funding levels would be: $2.9 billion criminal, security and other investigations; $1.7 billion for law enforcement support; and $393 million for program direction and administration. To ensure that homeland security responsibilities do not drain funding reserved for other, more conventional crime-fighting, the appropriators directed the FBI to keep time-utilization and record-keeping records and to report on them biannually.
The committee report also stressed the importance of keeping technology current in order to combat terrorism and other crimes.
The biggest funding increases would be: $450 million to protect the nation from terrorist attacks, foreign intelligence operations, and cyber attacks and high-tech crimes, including $74 million for counter terrorism; $31 million to investigate domestic security threats; $28 million for field investigation support; and $15 million for additional analysts.
But the committee reiterated concern about the Terrorist Threat Integration Center expressed in a hearing by Virginia Republican Rep. Frank Wolf and Kentucky Republican Harold Rogers. The center attempts to unite FBI and CIA analysts under the aegis of a CIA-appointed official, but the committee said the physical relocation of the counter-terrorism division "may have a negative impact on information sharing with other components within the FBI."
The committee calls for the FBI to submit a detailed report within 60 days "regarding the specifics of the relocation" into the joint facility.
Appropriators also chastised the bureau for failing to establish an advisory board that Congress funded with $5 million in fiscal 2003. The board of outside experts would advise FBI Director Robert Mueller on science, technology, research, engineering and information management. The committee ordered the FBI to appoint members, convene a meeting and decide on an agenda within 30 days of the new spending bill's enactment.
Regarding Trilogy, the effort to put all of the bureau's computers on a single computer system, the committee noted previous cost overruns and expressed its expectation that the "virtual case file" element of the system be completed by the end of the year.
On The Hill
Technology May Be The Prescription For Medical Errors
by Spencer Rich, CongressDaily
Computers are prevalent in office management, but many physicians are still in the horse-and-buggy age. They keep patient records on paper charts and thumb through medical manuals to learn about unfamiliar. And while some physicians and medical institutions are using computers to keep their patients' health records and stay abreast of research advances, many are not -- and that situation is now getting attention on Capitol Hill.
Only 17 percent of physicians in office-based practice have computerized patient records, according to a recent article in Health Affairs. The policy journal said that the healthcare system is "mired in a morass of paper records and bills, fax transmittals, and unreturned phone messages," and that physicians "face major barriers to coordinating access to their patient information with the record systems of the hospitals they use."
As a result, hospitals, pharmacies and laboratories often fail to get important patient information. And hitting a timely and politically popular note, the authors of the article added, "Our current fragmented, largely paper-based clinical record system hampers an efficient and timely response to the all-too-real threat of bioterrorism."
Ideally, experts said a broad-based computer system would contain patient medical records that could be rapidly accessed by doctors and hospitals (with safeguards against misuse and to protect patient privacy), information for physicians about the most appropriate treatment, and the ability to analyze national health trends.
What would such a system cost? Molly Coye of the Health Technology Center in San Francisco and William Bernstein, a New York attorney who works on such issues, said in another Health Affairs article that the system would need $800 million a year from the federal government and $200 million from the states for a minimum of five years.
Facing record budget deficits, Congress is not looking at anything remotely that ambitious right now. As part of the bipartisan patient-safety bill that the House passed on a 418-6 vote in March, however, lawmakers included an authorization of $50 million over two years to start work on a computerized medical information system.
Senate Health, Education, Labor and Pensions Committee ranking Democrat Edward Kennedy of Massachusetts, Sen. Christopher Dodd, D-Conn., and others also favor the creation of a medical information network.
At a committee voting session on the patient-safety bill in July, Dodd proposed, and then withdrew, an amendment to authorize $50 million for the system, hinting that he might revive the proposal on the Senate floor.
But Senate Majority Leader Bill Frist, R-Tenn., said he prefers to consider the information technology proposals separate from the broader bill.
Lobbying
Indian Software Industry Lobbies On Immigration, Labor
by William New
Both India and the United States lose when laws limit cross-border movement of professionals and the outsourcing of jobs to foreign firms, a top Indian industry representative said on Monday.
With the U.S. economy continuing to struggle, some legislators are targeting India, whose highly skilled technology workers regularly fill jobs in the United States either by immigrating to America or by doing the work from offices in India. But Sunil Mehta, vice president of the National Association of Software and Service Companies (NASSCOM), wants to convince those lawmakers that both countries gain much more than they lose in the arrangement.
"It has been a growing, mutually beneficial relationship," he said in an interview at National Journal Group offices. NASSCOM has 850 members, including about 100 U.S. companies such as Microsoft and American Express.
Mehta is in Washington this week meeting with government, business and academic officials to argue that allowing market forces to work, not legislating change, is the best way forward. He will meet with people at the Office of the U.S. Trade Representative, Commerce Department, and House and Senate immigration subcommittees.
Tech firms' "absolutely crucial" ability to conduct global operations have been delayed as a result of the U.S. emphasis on homeland security measures, Mehta said.
And because of the struggling U.S. economy and high unemployment rate, "the popular perception is that outsourcing is a zero-sum game," he said. "I think that's a myth that has been reported over and over again."
Mehta also said the number of Indian IT workers is small compared with U.S. IT workers. In addition, only 80,000 of the 195,000 possible H1-B visas for highly skilled workers entering the United States were used in 2002, with less expected this year, he said. The ceiling is scheduled to revert to 65,000 in October.
Any U.S. action taken to impede trade with India could provide fuel for Indian protectionists to take action against U.S. products and services exported to India, Mehta cautioned. Some people think U.S. restrictions would be unfair after India has opened markets to U.S. products, he said.
India has dropped tariffs on computer hardware imports from 400 percent to 15 percent, and Mehta said he hopes "that within the next 18 months they will go to zero." There are no tariffs on software.
Indian firms also go to great lengths to protect systems and data, he said. For instance, the physical security at customer-service call centers is higher than on Capitol Hill, Mehta said, and there is little actual transmission of data to the centers, which normally see "read-only" copies.
Employees face stringent background checks, he said, and areas where sensitive materials are located are isolated. India follows the U.S. approach of industry self-regulation for the protection of personal data.
Mehta said the government also has established strong intellectual property laws, with high penalties for piracy, and NASSCOM created a police hotline to report piracy. Two months ago, a call to the hotline led to a $2 million seizure of pirated goods, he said.
Correction
A story in Monday's PM edition incorrectly stated the amount that the House and Senate chose not to provide in a fiscal 2004 spending bill for an "alternate computing facility" for the legislative branch. The correct amount is $61 million.
Today's Feature:
People Column
Washington is quiet with Congress away for the August recess, but the technology industry is beginning to make some noise in the 2004 election cycle. A sample of Federal Election Commission records shows that many well-known tech executives already are financing their favorite presidential and congressional candidates, and the early returns indicate that the sector's campaign spending remains as divided as in the past.
Every Tuesday, read the People Column by Special Correspondent Ted Leventhal
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E-briefs
Taxes: House Ways and Means Committee Chairman Bill Thomas on Monday sent another letter to House members seeking support for his international tax measure. The California Republican said his bill, H.R. 2896, would benefit small businesses to the tune of as much as $100 billion in business tax relief. The legislation is designed to fix tax rules declared illegal by the World Trade Organization. The rules must be remedied by December to avoid retribution from the European Union. Thomas previously has touted plans to let small business claim as a tax write-off up to $100,000 of the value of new purchases for two more years and to cut the time during which companies could recover their costs for manufacturing equipment. Thomas' bill also would stipulate that net operating losses could be carried back for five years and would give small companies relief from the alternative minimum tax.
Security: A coalition of trade associations on Monday filed comments on a Homeland Security Department measure to protect security technology providers from liability if their products or services fail to prevent terrorist attacks. The coalition, which included the Information Technology Association of America and National Association of Manufacturers, endorsed a proposal to distinguish between "qualified anti-terrorism technologies" and "approved products for homeland security." They cautioned that the proposed five- to eight-year limits on products exempt from legal liability under such designations could discourage the development of anti-terrorism technologies and said the regulations should be retroactive, with shorter review periods. The group also called for an extension of the immunity from lawsuits and a broadening of designations to include more products and services, and they are seeking greater confidentiality about their security roles and more financial support from the government if they are successfully sued for breaches in security.
Broadband: A cable industry official on Tuesday defended the 1996 deregulation of the cable market as a boon to consumers "who are getting far more for their dollar." Rob Stoddard, the senior vice president for communications and public affairs at the National Cable and Telecommunications Association, made the comments in a statement issued in response to a new U.S. Public Interest Research Group report charging that cable deregulation has done consumers more harm than good and that Congress should give local telecommunications officials more regulatory authority over the cable industry. Stoddard called those claims "wild and unfounded," adding that the cable industry has invested more than $75 million in "upgrades and rebuilds" to facilitate high-speed Internet access, high-definition television and competitive local telephone service, among other things. "If these self-appointed consumer representatives had their way, the majority of this investment and innovation would have been stifled from the start," he said.
E-Government: The State Department on Tuesday expanded its deal with Entrust to include the production of digital signatures. Entrust now will provide the department "smart cards" for staffers to use to digitally sign and encrypt e-mails. "With this announcement, the State Department has strengthened its leadership position as an innovator in the area of information security while realizing the enormous productivity gains and cost efficiencies enabled by the use of digital signatures," Entrust Chairman, President and CEO Bill Connor said. The department has worked with Entrust since January 2001.
Business: The Securities and Exchange Commission (SEC) has improved the information that it provides investors on how to protect themselves, according to a General Accounting Office (GAO) report issued on Monday. Two years ago, the GAO suggested 10 reforms the SEC could make to help investors protect their investments, and the SEC has begun implementing seven of those suggestions, the report said. For example, the SEC updated the investor-education section of its Web site to offer more information about the Securities Investor Protection Corporation's policies and practices. The SEC also improved oversight of the corporation and is working with self-regulatory bodies, such as the New York Stock Exchange and National Association of Securities Dealers, to improve information distributed to investors. However, the corporation needs to improve the links on its Web site to connect investors with relevant information rather than linking only to its main Web site, the report said.
E-Government: The U.S. archives will permanently store the online copies of Government Printing Office (GPO) publications, including the Congressional Record, Federal Register, Code of Federal Regulations and other government titles, according to an agreement between Archivist John Carlin and Public Printer Bruce James. Law and research libraries have advocated for permanent access and storage of electronic government information. Under the terms of the agreement, the National Archives and Records Administration will assume legal custody of the records as part of the U.S. archives, while the GPO will physically store and provide online access to more than 250,000 government titles through the "GPO Access" Web site.
Campaigns: Former Microsoft Chief Operating Officer Bob Herbold said on Monday that he will not seek the Republican nomination to be the governor of Washington state despite weeks of courting from the White House and state Republican leaders. Herbold is married to King County Republican Chairwoman Pat Herbold, and his experience with Microsoft and personal fortune made him an attractive potential candidate. Herbold said after speaking to other governors and other Republican officials -- including Karl Rove, President Bush's chief strategist -- he decided that politics is not for him. "You worry about why it is that we can't move fast, why it is we can't be decisive and do significant things," he told The Seattle Times. "We're all nitpicking a bunch of things that in the great scheme of things aren't that important."
Business: The Napster music-sharing will be back online by Christmas, according to Roxio, the software firm that currently owns the assets to the revolutionary system. Roxio on Monday said it plans to re-launch the service as a legal, subscription-based vendor of digital music. Napster 2.0 will offer individual songs for downloading by computer, a subscription service, original programming and Internet radio stations, according to Roxio officials. The old Napster, which began life in August 1999 as the Internet's first widespread program for sharing music files, allowed anyone with a computer and an Internet connection to swap songs. A copyright-infringement lawsuit filed by the recording industry eventually forced Napster offline.
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