TO:       CMPLAW List

FROM:          Blake Bell

DATE:          June 17, 1998

RE:       Bell Cyberlaw Update #41

The following has been cross-posted to the Global Cyberlaw Network and to
the Cyberia-L List.

CYBERCRIME AND FREE SPEECH:  Justice Carolyn E. Demarest of the Supreme
Court of the State of New York for the County of Kings (the trial court
level in New York) has invalidated a section of a 1996 New York statute
that made it a crime to use the Internet to transmit sexually explicit
pictures to encourage a minor to engage in sexual activity.  The provision
in question, in substance, tracks similar provisions contained in the
Federal Communications Decency Act of 1996, Pub. L. No. 104-104, tit. V,
1996 U.S.C.C.A.N. (110 stat) 56, 133 <>.  Justice Demarest
held that the statutory section at issue is unconstitutionally vague and
violates the First Amendment to the United States Constitution.  In the
case, People v. Barrows, the defendant was convicted following a jury trial
of one count of promoting an obscene sexual performance by a child in
violation of N.Y. Penal Law Section 263.10 and two counts of attempted
dissemination of indecent material to minors in the first degree in
violation of N.Y. Penal Law Section 110/235.22.  The defendant moved to set
aside the verdict, claiming that the statutes were unconstitutional and
violative of the First Amendment and the Commerce Clause of the U.S.
Constitution.  The defendant's arguments were considered earlier in the
case on defendant's motion to dismiss.  That motion was denied by Justice
Alan Marus, also of the Kings County Supreme Court.  See People v. Barrows,
174 Misc. 2d 367 (Sup. Ct. Kings Co., 1997).  In making his arguments on
the motion to set aside the verdict, the defendant relied principally on
the decisions in  Reno v. American Civil Liberties Union, 117 S. Ct. 2329
(1997) <> and American
Libraries Ass'n v. Pataki, 969 F. Supp. 160 (S.D.N.Y. 1997) <>.  Justice Demarest concluded that
she was constrained under the decision in Reno to find N.Y. Penal Law
Section 235.22 to be unconstitutionally vague and overbroad in violation of
the First Amendment.  She dismissed the counts based on that statutory
provision (Section 235.22).  At the same time, however, the Judge rejected
the defendant's arguments regarding  N.Y. Penal Section 263.10 and
sentenced him to two to seven years in prison, the maximum allowed for
violations of that statute.  For a copy of the decision, see <>.  For a story about the decision,
see <>.

CYBERCRIME AND FREE SPEECH:  On Monday, June 15 a district court in Denmark
reportedly issued a decision in what is described as "the first case of its
kind in Denmark."  The court found a Dane guilty of posting racist slurs on
the Danish Usenet newsgroup dk.politik.  The judge reportedly imposed a
$285 fine plus legal costs.  Interestingly, Danish police originally
brought criminal charges against the man arising out of his alleged
postings of racist slurs via DigiWeb, a U.S.-based ISP.  Only days before
trial on that charge was scheduled to begin, the authorities reportedly
concluded that the charges might somehow implicate U.S. First Amendment
issues apparently because the postings were made via a U.S.-based ISP.
Seeking to avoid such complicating factors, police reportedly brought the
second charge on Friday.  The defendant's lawyer reportedly agreed to have
the new charge tried together with the earlier charge a mere three days
later when the previous charge was scheduled to be tried.    The defendant
reportedly has stated he will "appeal the decision all the way to the
supreme court."  See <>.

CYBERCRIME AND FREE SPEECH:  In a widely-criticized case that has garnered
international attention, an 18-year-old boy in Turkey has been given a
ten-month suspended jail sentence for posting to the Internet a series of
comments criticizing rough police treatment of a group of protesters who
sought repair of pavement potholes for the safety of the blind in the city
of Ankara, Turkey.  The boy signed his comments with his name and e-mail
address.  Another user turned the information over to authorities who
quickly obtained the boy's address from Turknet and charged him with a
crime.  See <>.

complaint for injunctive relief filed in Kathleen R. v. City of Livermore
(Superior Court of California, County of Alameda,
Livermore-Pleasanton-Dublin Branch) is now available via the Web.  The suit
was filed on May 27, 1998 on behalf of a parent whose child used a library
computer with Internet access to download pornographic images.  The suit
seeks, among other things, to preclude the City from using public funds to
acquire, use or maintain any computer system connected to the Internet
through which obscene material harmful to minors may be accessed.  See Bell
Cyberlaw Update #39.  For copies of the complaint, see <> and <>.  For a Web site devoted to
this and other filtering disputes which includes links to copies of
pertinent pleadings and news articles, see <>.
For those who may be interested, a copy of the Third Amended Complaint
filed on March 12, 1998 in another filtering case, Hoffman v. School Board
of Broward County, Florida, Case No. 97-06619 (Cir. Ct. of 17th Judicial
Cir., Broward Co., Fla.), is available at <>.

Earlier today, the American Civil Liberties Union issued a report
criticizing the use of filtering software at public institutions.  A copy
of the report, entitled "Censorship in a Box:  Why Blocking Software Is
Wrong for Public Libraries," is available at <>.  For an article about the
release of the report, see <,4,23277,00.html?>.

INTERNET ANTITRUST ISSUES:  Trial is scheduled to begin in the
widely-followed antitrust and trademark infringement case brought by
computer game maker Kesmai against America Online.  Kesmai argues, among
other things, that AOL is monopolize the online market and is attempting to
use its alleged monopoly to extend its dominance into online gaming.  A
pre-trial hearing is set for this Friday, June 19.  For a story about the
dispute, see <,4,23229,00.html?>.

Wireless plc entered into an agreement with MCI Communications Corp. to
purchase MCI's Internet backbone business.  Apparently fearful that MCI
might try to placate regulators who are scrutinizing its pending deal with
WorldCom by making concessions that would adversely affect the Cable and
Wireless deal, C&W sued MCI on Wednesday, June 10.  The suit, seen as a
pre-emptive strike to ensure that the Internet backbone deal would be
consummated, sought relief including an injunction to prevent MCI from
negotiating to sell its Internet backbone business to any other party.  For
a story about the filing of the suit, see <>.  For a copy of
the Complaint for Injunctive and Declaratory Relief filed in Cable and
Wireless plc v. MCI Telecommunications Corp., et al. Case No. 1:98CV01460
(D.D.C., Hon. T.P. Jackson), see <>.  On June 15,
1998, the Honorable Thomas Penfield Jackson of the United States District
Court for the District of Columbia denied C&Y's motion for injunctive
relief to prevent MCI, MCI Telecom, and WorldCom, and their
representatives, from terminating the transaction and from soliciting
competing offers or proposals.  The Court denied the motion on the ground
that C&Y could not establish one of the prerequisites for injunctive relief
-- that it did not have an adequate remedy at law -- because C&Y's contract
with MCI provided for liquidated damages of US$25 million in the event of
breach by MCI.  See <>; <,4,23102,00.html?owv>; and <>.

INTERNET TELECOMMUNICATIONS ISSUES:  On Friday, June 12, the United States
Federal Communications Commission decided to modify its position on
universal service support for schools and libraries.  Section 254(h) of the
Telecommunications Act of 1996, 47 U.S.C. Section 254(h) <>, mandates universal
service support for telecommunications services for schools and libraries.
As described in one report, "[t]he program as initially planned by the FCC
would have subsidized computer networking, Internet access, and phone
services, at $2.25 Billion in 1998.  Under harsh criticism from Congress,
the FCC decided to expand the first funding period to 18 months, spend at
the rate of $325 Million per quarter, cut Ira Fishman's quarter million
dollar pay, give Internet access and phone service priority over computer
networking, and give 'disadvantaged' schools priority as to computer
networking subsidies."  <
>.  For a copy of the FCC's press release about the development, see <>.  Techlawjournal
likewise has posted a copy of a press release issued by Senator John McCain
(Rep. - Arizona) criticizing the FCC's move.  See <>.  For background
stories about the Net subsidy dispute, see <,4,22833,00.html?owv>; <,3440,2112228,00.html> and

INTERNET COPYRIGHT ISSUES:  The Recording Industry Association of America,
a trade organization that represents hundreds of record labels, has issued
a letter to approximately 40 radio station Webcasters demanding that they
pay licensing fees over and above what those stations already pay to
copyright owners through such agencies as ASCAP (the American Society of
Composers, Authors and Publishers).  The premise of the arguments contained
in the letter is that the Digital Performance Right in Sound Recordings Act
<> provides copyright
protection for the sound recording that is owned by the record company
entirely separate from the copyright interests of the songwriters and
publishers for the composition of the written words and notes on the page.
For a story about the controversial demand letter and the debate that it
has engendered over the meaning of various provisions of the Digital
Performance Right in Sound Recordings Act, see <,4,23170,00.html?owv>.

INTERNET COPYRIGHT ISSUES:  According to the most recent information
available to me, this Friday, June 19, the Honorable Ronald Whyte will
conduct a contempt hearing arising out of the Church of Scientology's
copyright infringement suit against Keith Henson.  Last month, the Church
of Scientology won a jury verdict in a federal court proceeding in San
Jose, California.  The jury reportedly awarded an affiliate of the Church
of Scientology US$75,000 arising out of Henson's posting of NOTs 34, a
copyrighted document authored by Scientology founder L. Ron Hubbard.  The
document allegedly addressed some of the church's secret practices.  During
the trial, Henson allegedly posted sealed portions of transcripts of the
trialproceedings  to the Internet.  This prompted a contempt charge against
Henson.  A hearing on the charge originally was scheduled for Friday, May
22, but was adjourned to June 19.  Penalties for the contempt charge
include a maximum US$5,000 fine and/or a six-month prison term.  For a
story about the contempt charges, see <>.  For a history
of the case, which includes links to copies of many of the pleadings and
related documents filed over the years, see <>.  For a
pro-Henson Web site devoted to issues in the case, see <>.  For
stories about the jury verdict against Henson last month, see <> and <>.  See also Bell Cyberlaw
Update #37.

SPAM:  There reportedly have been developments in the lawsuit filed on
January 26, 1998 by Hotmail Corp. against eight alleged spammers in the
United States District Court for the Northern District of California. See
Bell Cyberlaw Update #24, #36.  Yesterday, the Honorable James Ware
reportedly issued a permanent injunction against LCGM Incorporated, Palmer
& Associates and Financial Research Group and ordered the firms to pay
Hotmail US$275,000, US$55,000 and US$7,500, respectively.  For stories
about yesterday's developments, see <,4,23254,00.html?>; <,3422,2112822,00.html>; and <>.  For a copy of
Hotmail's original press release about the commencement of the suit on
January 26, 1998, see <>.
For a story about the original commencement of the suit, see <,34,11031,00.html#2briefz2>.  For
Hotmail's May 4, 1998 press release announcing that the court had awarded
preliminary injunctive relief against the eight defendants, see <
>.  For news stories about the May 4 award of preliminary injunctive
relief, see <,25,21822,00.html?pfv>
and <>.

DOMAIN NAME DISPUTES:  The maker of one of America's best known toys, the
Etch a Sketch, apparently is threatening suit against the owner of a Web
site that is more than two years old.  The site, maintained by Alan Watts
of Austin, Texas, is known as Web-A-Sketch.  It lets Web surfers create
geometric drawings like the Etch a Sketch does and, indeed, archives a
gallery of 25,000 such sketches.  Etch a Sketch's maker, the Ohio Art
Company, apparently is not pleased that  the site's features are more
advanced than Ohio Art's own site at <> and has
issued a cease and desist letter alleging trademark infringement.  The
Web-A-Sketch site may be found at <
>, although at this writing the site simply contains a page that reads
"Experiencing Technical Difficulties Thank You."  A story about the dispute
appeared in the print version of The New York Times on June 15, 1998.  A
search of The New York Times on the Web turns up the story, although the
full citation follows.  In the event you have difficulty accessing the
story via the link, you may wish to search for it using the N.Y. Times on
the Web search function.  Laurie J. Flynn, "Business Technology:  Web
Imitator Displeases Maker of Etch a Sketch", N.Y. Times on the Web, June
15, 1998 <
+wAAA+%22Web-A-Sketch%22>.  Please note that the story that will first
appear on your screen is entitled "Insuring Against Hackers Comes With a
Catch."  You will have to scroll down to find the Web-A-Sketch story.

INTERNET TRADEMARK ISSUES:  Creative Technology reportedly has settled its
trademark infringement lawsuit against Cyrix.  Creative Technology alleged
in the suit that Cyrix  was distributing its SoundBlaster audio software
driver via its Web site without permission.  Creative Technology also
alleged that Cyrix was claiming that its chips are compatible with the
SoundBlaster audio software driver.  Terms of the settlement are
confidential, but reportedly include a consent order permanently enjoining
Cyrix from using or distributing Creative's SoundBlaster audio software
drivers and from displaying SoundBlaster trademarks.  See <,4,22951,00.html?owv>.

CYBERSECURITIES LAW:  Chat room Cybergossip on investment sites continues
to move the markets and reportedly is the source of growing concern among
regulators.  In at least the fourth such incident in the last six weeks,
participants in a Yahoo! chat room learned of rumors that Teleglobe planned
to take over Excel Communications Inc. nearly 10 days before the actual
offer was announced.  Additionally, two companies listed on the Toronto
Stock Exchange reportedly posted messages in online discussion areas
complaining that anonymous investors were using the sites to damage their
reputations.  At least one of the firms claimed that some postings were
written by disgruntled former emploiyees who allegedly were disclosing
confidential information to the chat rooms.  For a story detailing these
and other such instances, see <>.

CYBERSECURITIES LAW:  On June 11, a member of the United States House of
Representatives, Edward Markey (Dem. - Mass.), issued letters to the
Chairman of the United States Securities and Exchange Commission and the
U.S. Federal Reserve Board Chairman expressing concerns over whether
adequate steps are being taken by broker-dealers, investment advisers and
investment companies to safeguard the privacy of their clients' personal
financial information.  Markey noted that the NASD issued a propsed new
NASD Rule 3121 in March, 1997 to address such issues, but has not yet acted
on a final rule.  Markey asked for responses to his inquiries by July 2,
1998.  See Privacy:  Markey Asks SEC, Fed To Report On Consumer Financial
Privacy Issues, 3(24) Elec. Commerce & Law Rep. (BNA), June 17, 1998.

INTERNET PRIVACY ISSUES:  The State of Texas Department of Public Safety
has opened a Web site entitled "Convictions Records Database" that makes
available to the public records of criminal conviction and felony deferred
adjudications assembled from courts and criminal justice agencies through
the State.  The site is located at <>.  There is a nominal fee
to search the records.  Internet privacy watchdogs are expressing concern.
For a story about the development, see <>.

INTERNET PRIVACY ISSUES - ENCRYPTION:  On Tuesday, June 16, United States
Senator Conrad Burns (Rep. - Montana) announced his belief that legislation
to loosen restrictions on encryption software may come before the full
Senate this year.  Senator Burns is one of the proponents of loosening
restrictions on encryption and is the lead sponsor of S. 377, the Pro
Commerce Online in the Digital Era Act ("ProCODE").  For an abstract of the
bill, as well as links to its text, committee hearings and other related
resources, see <>.  For a
story about Senator Burns' comments, see <>.

INTERNET PATENT ISSUES:  The United States Court of Appeals for the Federal
Circuit has affirmed a decision by a judge in the United States District
Court for the Northern District of California which invalidated U.S.
Letters Patent No. 5,216,603, a patent owned by Action Technologies, Inc.
based on prior art.  For an image of the patent as well as an abstract, see
<>.  In late 1995,
Action Technologies sued Novell, Inc. alleging that Novell's GroupWise
product infringed the patent.  Novell countered that the patent was invalid
because it involved public domain technology.  According to Novell, based
on the allegedly overbroad claims of the patent, products from just about
every company involved with the Internet violate the patent.  Last year the
lower court found that prior art existed at the time the patent was issued
and, thus invalidated the patent.  For a copy of Novell's press release
about the affirmance, see <>.  For a story
about the decision, see <>.  For
stories about earlier developments in the lawsuit, see <,4,6323,00.html?>; <,4,6473,00.html?> and <,4,11400,00.html?>>.

Blake A. Bell
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