Computer underground Digest Sun May 4, 1997 Volume 9 : Issue 34 ISSN 1004-042X Editor: Jim Thomas (cudigest@sun.soci.niu.edu) News Editor: Gordon Meyer (gmeyer@sun.soci.niu.edu) Archivist: Brendan Kehoe Shadow Master: Stanton McCandlish Shadow-Archivists: Dan Carosone / Paul Southworth Ralph Sims / Jyrki Kuoppala Ian Dickinson Field Agent Extraordinaire: David Smith Cu Digest Homepage: http://www.soci.niu.edu/~cudigest CONTENTS, #9.34 (Sun, May 4, 1997) File 1--Legal Bytes 5. - CyberLaw Info File 2--Cu Digest Header Info (unchanged since 13 Dec, 1996) CuD ADMINISTRATIVE, EDITORIAL, AND SUBSCRIPTION INFORMATION APPEARS IN THE CONCLUDING FILE AT THE END OF EACH ISSUE. --------------------------------------------------------------------- Date: Wed, 9 Apr 1997 10:07:58 -0500 (CDT) From: pkennedy Subject: File 1--Legal Bytes 5. - CyberLaw Info (MODERATORS' NOTE: We originally intended to distribute Legal Bytes over several issues, but that would disrupt the articles' continuity. Readers might also enjoy seeing what the full issue looks like. It's worth subbing to--another great Net resource!!)) ********************************************** ** LEGAL BYTES ** ********************************************** Spring 1997, Volume 5, Number 1 George, Donaldson & Ford, L.L.P. Attorneys at Law 114 West 7th Street, Suite 1100 Austin, Texas 78701 (512) 495-1400 (512) 499-0094 (Fax) gdf@gdf.com http://www.gdf.com ---------- Copyright 1997, George, Donaldson & Ford, L.L.P. (These articles may be re-distributed electronically, without editing and with proper attribution) ---------- David H. Donaldson, Jr., Publisher, dhdonald@gdf.com Peter D. Kennedy, Editor, pkennedy@gdf.com ---------- IN THIS ISSUE: 1. THE SUPREME COURT AND CYBERSPACE -- THE PENDING COMMUNICATIONS DECENCY ACT CHALLENGES. 2. OPEN GOVERNMENT AND ELECTRONIC COMMUNICATIONS: IS E-MAIL A PUBLIC RECORD ... AND OTHER QUESTIONS. 3. NBA LOSES FIGHT TO CONTROL "REAL-TIME" SPORTS INFORMATION. _________________________________________________________________ 1. THE SUPREME COURT AND CYBERSPACE -- THE PENDING COMMUNICATIONS DECENCY ACT CHALLENGES (This article was first published in Communications Lawyer, Vol.14, No.3 (Fall 1996)). This year's term will see the Supreme Court's maiden voyage into cyberspace. On March 19, 1997, the Court heard oral argument in a case dealing with Congress' own first stumbling steps to regulate speech on the Internet. Fresh from its trip through the wilds of regulating indecency on cable television, in the Denver Area Consortium case, 116 S.Ct. 2374 (1996), the members of the Court must now define constitutional boundaries in a decentralized, anarchic, expanding and ever-changing communications technology that no Founding Father could have envisioned. How will the Justices fare? The Communications Decency Act of 1996. Spurred by torrid and exaggerated reports of pervasive on-line pornography, Congress drafted, and then grafted onto the Telecommunications Act of 1996, the "Communications Decency Act" (CDA). A candidly content-based regulation of speech, the CDA prohibits transmitting obscenity and child pornography via computer communications -- something already illegal under federal and most state laws. The CDA ventures further, however, by prohibiting the transmission of "patently offensive" and "indecent" material over computer networks. Modeled after the "dial-a-porn" laws, the CDA sanctions violators with fines and up to two years in prison, but provides several "safe harbor" affirmative defenses to prosecution, discussed below. No one -- not even its defenders -- claims the CDA was elegantly or even consistently drafted. Its provisions regarding obscene material have so far gone unchallenged; the disputes have centered on its regulation of indecency. Two provisions are at stake. The first is section 223(a), which prohibits using, or knowingly permitting the use of, a telecommunications device to knowingly make, create, or solicit any "comment, request, suggestion, proposal, image or other communication which is obscene or indecent, knowing that the recipient of the communication is under 18 years of age." 47 U.S.C. s 223(a)(1)(B) & (2). The CDA supplies no definition of "indecent." The second is section 223(d), which does not use the term "indecent," but prohibits using, or knowingly permitting the use of, an interactive computer service to display in a manner available to a person under 18 years of age, any comment, request, suggestion, proposal, image or other communication that in context, depicts, or describes, in terms patently offensive as measured by contemporary community standards, sexual or excretory activities or organs. 47 U.S.C. s 223(d). As anyone who has spent time online knows, Internet communications do not easily lend themselves to confirmation of the participants' ages. World Wide Web home pages and Usenet newsgroups, for example, are generally available to anyone online; they neither target communications to subscribers, nor admit to easy methods of filtering out minors. On the other hand, unlike broadcast communications, most Internet communications are not pervasive. A user must take affirmative steps to receive or view information (unlike simply turning a radio or television dial), thus reducing the risk of inadvertent exposure to material that might offend. And most significantly, unlike other mass media, online publishing is not concentrated; it is radically decentralized, where everyone on the Internet is both audience and publisher -- to millions. Content-based regulations that impose liability depending on whether material is made "in a manner available" to seventeen-year-olds just do not sit well with the Internet's structure, nor with most of its denizens. The Legal Challenges. The Internet culture -- libertarian by nature -- reacted to the CDA's passage in predictable fashion. Usenet blistered with attacks on Congress and the President, and thousands of World Wide Web sites turned their backgrounds black and added blue ribbons in protest. The American Civil Liberties Union, initially slow to appreciate the Internet, teamed up with the on-line civil liberties pioneer, the Electronic Frontier Foundation, and sued to enjoin the CDA in Philadelphia federal court on February 8, 1996, the very day President Clinton signed the bill into law. Eighteen other plaintiffs joined the ACLU and EFF in the case, entitled ACLU v. Reno. On February 15, District Judge Ronald L. Buckwalter issued a temporary injunction restraining enforcement of the indecency provision of the Act.[fn.1] Shortly thereafter, the American Library Association and twenty-five others filed suit in the same court, and their case was consolidated with ACLU v. Reno.[fn.2] On the same date that ACLU v. Reno was filed, Joe Shea, the editor and publisher of an electronic daily newspaper, filed a separate suit in the Southern District of New York (Shea v. Reno).[fn.3] Conservative groups such as Morality in Media lined up with the Justice Department, and during the Spring of 1996 the Philadelphia and New York federal courthouses rang with testimony about Web surfing and crawling, Internet search engines and indexes, cybersmut, anonymous remailers and blocking software with names like "NetNanny" and "SurfWatch." Under special provisions for expedited review included in the Act, three-judge District Court panels were convened to hear the ACLU and Shea cases. In Philadelphia, Judge Buckwalter, joined by Third Circuit Chief Judge Dolores K. Sloviter and District Judge Stewart Dalzell, heard evidence over a number of days on the ACLU's request for a temporary injunction, and ruled on June 11. The court's ruling consisted of joint findings of fact and three separate opinions, each finding both challenged sections of the CDA unconstitutional. All three judges concluded that the CDA effectively prohibited constitutionally-protected speech among adults, and was not narrowly tailored to justify the government's interest in protecting minors from indecent speech. Judges Buckwalter and Sloviter additionally concluded that the CDA's use of "indecent" and "patently offensive" was inherently vague and unconstitutional as well. The New York District Court followed suit on July 29, in a single opinion written by Second Circuit Judge Jose Cabranes, joined by District Judges Leonard Sand and Denise Cote. [fn.4] While the New York court did not conclude that the CDA was unconstitutionally vague, it agreed that the law's restrictions on indecent speech were overly broad, and were not saved by the government's attempt to limit the CDA's reach or by its safe harbor defenses. The Internet rang with celebration; the CDA's proponents declared that the Supreme Court would have the final word, and indeed it will. The Key Questions Facing the Supreme Court. The Supreme Court was almost certain to hear the government's appeal, as section 561(a) of the CDA specifically provides for expedited review "as a matter of right by direct appeal to the Supreme Court." These are the key questions it will likely face. 1. Is the CDA Void for Vagueness? Judge Buckwalter, with Judge Sloviter joining, concluded that the CDA's definition of the speech at issue was too vague to enforce, particularly with criminal sanctions. Judge Buckwalter was skeptical of the government's claim that section 223(a)'s "patently offensive" language meant the same thing as section 223(d)'s undefined use of "indecent," but even assuming they did, he concluded that this still left the regulated speech too poorly defined to be subject to criminal penalties under the Act. In FCC v. Pacifica Foundation, 438 U.S. 726 (1978), the Supreme Court had found the application of the FCC's indecency definition to George Carlin's seven dirty words routine constitutional. Judge Buckwalter distinguished Pacifica by noting that the Court had not considered a facial challenge to the FCC's definition of indecency. Is it likely that the Supreme Court will reject the similar definition of proscripted material in section 223(d) of the CDA? The New York District Court in Shea v. Reno ruled that the CDA was not unconstitutionally vague. Unlike the judges in ACLU v. Reno, Judge Cabranes had access to the Supreme Court's June 28 ruling in Denver Area Consortium, where the justices struggled with the constitutionality of, among other things, the Cable Television Consumer Protection and Competition Act's regulation of indecent programming. While the Court did not produce a majority in that case, Justice Breyer's plurality opinion (joined by Justices Stevens, O'Connor and Souter) rejected an argument that the Cable Act's regulation of "patently offensive" materials was unconstitutionally vague. The other justices did not discuss vagueness, and even the plurality decision does not foreclose the issue, as the CDA carries criminal prohibitions -- which require the greatest definitional precision -- while the Cable Act's regulations only determined what material cable companies could keep off their leased access channels. 2. What Level of Scrutiny Applies in Cyberspace? Whether an enactment is subject to "strict," "intermediate" or "rationality" review often predetermines its fate. Content-based regulations of speech are ordinarily subject to close scrutiny by the Court, but this has sometimes varied depending on the nature of the medium. Could the nature of the Internet permit a lower standard of review? The Justice Department at first appeared to think so, initially asserting in ACLU v. Reno that an intermediate-level scrutiny applied, similar to the standard used to evaluate indecency regulation of broadcast media in FCC v. Pacifica Foundation. Eventually, however, the government apparently did not contest that a stricter scrutiny along the lines of Sable Communications v. FCC, 492 U.S. 115 (1989), was appropriate, requiring proof that the regulations are narrowly tailored to advance a compelling governmental interest, and that was the standard applied in ACLU v. Reno.7 In Shea v. Reno, the court "easily" concluded that strict scrutiny under Sable Communications applied to regulation of the Internet.8 It seems likely that some form of "strict" scrutiny will apply, although the exact formulation of the standard may be subject to debate. In Denver Area Consortium, a clear majority applied a strict standard to the FCC's indecency regulations, but did not settle on a particular formulation of that standard. Justice Breyer's plurality concluded that the regulations permitting cable operators to prohibit indecent material on public access channels failed to "satisfy this Court's formulations of the First Amendment's `strictest,' as well as its somewhat less `strict,' requirements." Justice Kennedy, joined by Justice Ginsburg, concluded that "at a minimum" the proper standard of review was "strict scrutiny," and expressed fear about setting adrift from recognized standards of review: When confronted with a threat to free speech in the context of an emerging technology, we ought to have the discipline to analyze the case by reference to existing elaborations of constant First Amendment principles. This is the essence of the case-by-case approach to ensuring protection of speech under the First Amendment, even in novel settings. The CDA rulings may provide the Court the opportunity to define, or retreat from, the common understanding that Pacifica and Turner Broadcasting System Inc. v. FCC indicate that the standard of review in content-based regulations depends upon the nature of the underlying technology. What relevance will such a rule have, anyway, in ten or even five years down the road, as meaningful distinctions between "broadcast," "cable" and "the Internet" become harder and harder to draw? 3. What Is the Compelling Government Interest? Neither the challengers nor the three-judge panels questioned that the government had a compelling interest in keeping pornography away from minors; Judge Buckwalter did question, however, whether there was a compelling governmental interest in protecting minors from much of the material that falls within the corners of the CDA's prohibitions - such as graphic AIDS prevention education, news reports on genital mutilation or artistic but graphic portrayals of sexual topics. The Shea court treated essentially the same issue under its general "substantial overbreadth" analysis, and agreed that a compelling interest could be shown in restricting the distribution of at least some of the material prohibited by the CDA. 4. Is the CDA Narrowly Tailored? Much of the evidence before the three-judge panels concerned the likely impact of the CDA on Internet communications. While the Justice Department argued that the CDA did not effect a "ban" on indecent communications between consenting adults, substantial evidence supported the challengers' contention that significant amounts of constitutionally-protected speech would evaporate from the Internet on account of the CDA. Judge Sloviter concluded that A wealth of persuasive evidence ... provided that it is either technologically impossible or economically prohibitive for many of the plaintiffs to comply with the CDA without seriously impeding their posting of online material which adults have a constitutional right to access. ... If it is not feasible for speakers who communicate via these forms of communication to conduct age screening, they would have to reduce the level of communication to that which is appropriate for children in order to be protected under the statute. The ACLU v. Reno court's factual findings about the nature of on-line communications, and the potential effect on those communications by the CDA, are particularly detailed.14 The Justice Department attempted to minimize the CDA's impact, and defend its "narrow tailoring" on several grounds. The government first argued, relying on Congressional reports, that the CDA's scope was only meant to reach "commercial pornographers." None of the judges accepted this argument, as the CDA's language contains no such restrictions. Next, the government argued that the CDA only applied to material that met the legal definition of obscenity, which can be banned. The court declined the suggested judicial narrowing of the CDA's based on its language: the Act refers to both obscene and indecent material, and so the words cannot logically be read to have the same meaning, and the Act's "patently offensive" provision did not include two of the three essential elements of obscenity the obscenity test -- appeal to prurient interest and lack of serious artistic, literary, political and scientific value. Aside from these attempts at interpretive narrowing, the government's chief position was that two statutory defenses found in section 223(e) saved the CDA from constitutional infirmity. Section 223(e)(5)(A) provides a defense for those who, "in good faith," take "reasonable, effective, and appropriate actions under the circumstances," including any steps "feasible under available technology" to prevent minors' access to communications regulated by the CDA. Section 223(e)(5)(B) provides a defense for those who employ age-verification through use of a verified credit card, debit account, adult access code, or adult identification number. Neither the ACLU v. Reno nor the Shea v. Reno court found these defenses compelling; both concluded that substantial amounts of constitutionally-protected speech would remain subject to prosecution, even when the defenses applied. Judge Dalzell noted that while age-verification might be effective on the World Wide Web, such verification simply is not available for many unique ways of communicating on the Internet, such as Usenet newsgroups or bulletin boards, IRC ("chat") discussion channels, mail exploders and mailing lists. Judge Buckwalter emphasized the wide latitude the CDA's language would give prosecutors, and that the potential availability to some of affirmative defenses would not preclude prosecution. Both courts likewise concluded that other possible technological methods of screening information or recipients would be too unreliable, costly, or burdensome. Interestingly, both sides argued to some degree that the Internet would develop technology that would solve the other side's objections. The plaintiffs pointed out the burgeoning market in screening software for the audience, such as "NetNanny" and "SurfWatch." This software empowers parents to screen out Web sites and newsgroups from their children's access, without restricting their own (or others') access. While these software blockers may be imperfect, because they are always trying to keep up with new Internet sites with adult material, they do not restrict the ability of adults to reach each other with indecent, but constitutionally-protected, speech. The government stressed the development of speaker screening technology, including adult-registration procedures for Web sites, segregation of material into restricted directories, and yet-to-be-implemented "tagging" technology, which like the controversial "V-Chip," would enable those publishing "indecent" speech to implant codes in their communications. Sites and communications with such codes could be made inaccessible to minors. Can Developing Technology Save an Otherwise Unconstitutional Content-Based Law? At this stage, anyway, the Internet's own decentralized, anarchic structure has helped defeat the attempts to regulate it. Government regulations of on-line speech are particularly intrusive now, because the current methods of on-line communication do not lend themselves to identifying and targeting particular audiences. The state of current technology therefore helps protect freedom of speech on the Internet. As John Gilmore's famous quote says, "the Internet interprets censorship as damage and routes around it." But will a technology-grounded attack on government regulation invite a technology-based defense of those regulations? Soon after the ACLU v. Reno decision, CDA proponent Bruce Taylor of the National Law Center for Children and Families was confidently predicting that new and better software would reduce the cost of self-censorship to the point where the CDA (or its successor) would survive constitutional scrutiny -- an argument the three-judge panel's focus on technology may have invited.18 Is the Court entering an arena where the technology might permit more restrictions on speech? The Supreme Court ought to be bound by the record before it -- a record that strongly supports the extensive impact on free debate the CDA would have on the Internet. But does a legal analysis that turns too finely on the nature of particular technology foretell a forever-evolving challenge to laws restricting free speech? Could a censorship law that is unconstitutional today become permissible as technology provides ways to more finely target "indecent" speech? Wouldn't this diminish the greatest benefit of the Internet: the ability of everyone, not just the wealthy or sophisticated, to reach a mass audience? Wouldn't it be ironic if continued technical developments became the reason for regulating the explosion of "robust, wide open debate" that the Internet's technology has itself spawned? As the Supreme Court surfs into cyberspace this Fall, it will do well to keep Justice Souter's advice in Denver Consortium in mind -- advice contained in a passage that easily could have been written about the Internet: I cannot guess how much time will go by until the technologies of communication before us today have matured and their relationships become known. But until a category of indecency can be defined both with reference to the new technology and with a prospect of durability, the job of the courts will be just what Justice Breyer does today: recognizing established First Amendment interests through a close analysis that constrains the Congress, without wholly incapacitating it in all matters of the significance apparent here, maintaining the high value of open communication, measuring the costs of regulation by exact attention to fact, and compiling a pedigree of experience with the changing subject. These are familiar judicial responsibilities in times when we know too little to risk the finality of precision, and attention to them will probably take us through the communications revolution. Maybe the judicial obligation to shoulder these responsibilities can itself be captured by a much older rule, familiar to every doctor of medicine, "First, do no harm." Footnote 1: American Civil Liberties Union v. Reno, No. 96-963, 24 Media Law Rep. 1379, 1996 Westlaw 65464 (E.D. Pa. February 15, 1996). Footnote 2: American Library Association v. U.S. Department of Justice, No. 96-1458 (E.D. Pa.). Footnote 3: Shea v. Reno, No. 96 Civ. 0976 (S.D.N.Y.). Footnote 4: Shea v. Reno, 930 F. Supp. 916 (S.D.N.Y. 1996). _________________________________________________________________ 2. OPEN GOVERNMENT AND ELECTRONIC COMMUNICATIONS: IS E-MAIL A PUBLIC RECORD? ... AND OTHER QUESTIONS. The federal government and every state has some form of open records and open meetings law. These "government in the sunshine" acts generally provide for three things: (1) they declare what government records are open to public inspection and copying; (2) they require public documents to be retained under a schedule; and (3) they require government agencies to meet publicly, with prior notice, rather than unannounced or behind closed doors. Although we in the United States have had a long tradition of open government, these sunshine statutes are relatively new, and have been the subject of many hard legal fights. There is a tension between the need to keep our public officials accountable and the need to protect the privacy of some information in government hands, particularly information about private citizens. There is also the less legitimate desire of public officials to work without the oversight and the inconvenience that come with holding public meetings and disclosing records and information to the public. These conflicting interests are still being worked out in court decisions and in rulings by state attorneys general (who are often charged with making the initial interpretation of a state's open government laws). Even as the contours of sunshine statutes continue to be hammered out, changing technology has added a new twist: how to deal with the advent of computerized records and electronic communications. The widespread use of computers in government offices raises new, interesting questions in all three core areas of open government laws: public records, record retention and open meetings. For instance: Is Government Employee E-mail Really a Public Record? Most open records laws define "public" documents very broadly. Texas' provision, for example, is not atypical and declares "information that is collected, assembled, or maintained under a law or ordinance or in connection with the transaction of official business" to be public information. Tex. Govt. Code s 552.002(a). While the law provides for many exceptions, whether a document is exempt from disclosure turns on its content, not its form; the medium doesn't matter. Public information can be stored on paper, or on "a magnetic, optical, or solid state device that can store an electronic signal." Tex. Gov. Code s 552.002(b). Even if public information is stored only in electronic form, it is still an open record. If electronic records can be public information, what keeps e-mail between government employees from becoming "public information"? Nothing, so long as the communication is the type that would be subject to the open government laws if it was on paper. Unlike the phone call that is not recorded, e-mail always creates at least one electronic record on the mail server, often more than one if there are intermediate servers, or the sender or recipient keep copies. Although Texas has seen no official ruling declaring government e-mail to be public, under its law the conclusion seems inescapable that when a government employee's e-mail relates to the "transaction of official business," it is public information unless covered by one of the law's exemptions. In Florida, this question was decided way back in 1989 -- ancient history, relatively speaking. A county commission was computerizing its operation, and asked whether computer records and e-mail between commissioners would be subject to the state's government in the sunshine laws. The Florida Attorney General, undoubtedly correctly, responded that computer-stored documents are public and that electronic communications between public officials would be subject to that state's open records laws. See 1980 Fla. Op. Gen. 101, AGO 89-39. While personal e-mail of government employees may not be covered by the open records laws, e-mail reflecting official business may well be, which is a good reason to be familiar with your state's laws and to be careful what you "say" when dashing off those quick electronic notes. How Long Do We Have to Keep the Records? Along with making public records available for inspection and copying, government agencies also have to concern themselves with maintaining public records. For instance, in Texas the Public Information Act requires government agencies to determine a time for keeping records, and to maintain document retention schedules. Although it might take some work and space, maintaining paper files is a fairly simple matter. However, when it comes to electronically-stored documents, new issues arise. The Texas act does not make exception for electronically-stored records, so each agency responsible for retaining and destroying public documents should consider reviewing its treatment of stored computer data. Where are its records kept? Are electronic documents stored for the requisite period of time? Does the agency's document retention schedule deal with electronic documents? Who makes sure (and who's going to answer for complying with the law)? When requesting public information from an agency, don't forget to ask for -- and insist upon -- a review of electronic document storage as well as paper. Why Can't the School Board Meet in a Chat Room? Sunshine is a disinfectant -- for governments as well as wounds. Another open government battleground are open meetings acts: legal requirements that public business be transacted in public meetings, with an agenda posted publicly some time prior to the meeting. Typically, an open meetings statute prohibits a quorum of a decision-making body from discussing policy outside a public meeting and without prior notice of that meeting. Some officials consider these requirements to be cumbersome, and the effect of a violation can be drastic, resulting in the nullification of business conducted, and even criminal penalties. As a result, open meetings laws are strewn with clever attempts to conduct business without complying with the laws.. All sorts of short-cuts have been tried to avoid a "meeting" that might invoke the act's requirements: circulating memos; round-robin discussions between individual government representatives without a quorum ever being present at one time; conference calls, and down the line. Generally, the courts and attorneys general have spotted these tactics for what they are, and held them to be violations of the open meetings laws. As with government records, computers present a new issue and a new temptation: does a government body "meet" under an open meetings act when its members communicate by computer -- whether by e-mail communications, postings on bulletin boards, or even through live chat? Why should the members of a school board physically get together when they can set up a chat room on America Online to conduct business? Because it is probably illegal in most states. Texas' Open Meetings Act would clearly prohibit a quorum of a government body from discussing public business by computer, because that discussion would not be "open to the public." In fact, after the Texas Attorney General ruled that telephone conference call meetings would violate the Open Meetings Act, it required a special amendment to permit such meetings, and they remain limited to emergencies. Florida's prescient Attorney General in 1989 came to the same conclusion about computers, declaring that electronic communications between commissioners would be subject to that state's open meetings act, effectively prohibiting a quorum from discussing official business on-line. See 1980 Fla. Op. Gen. 101, AGO 89-39. Even for computerphiles, this should not be thought of as a bad thing. A public body "meeting" by computer raises the same objections as "meeting" by conference call, and more: e-mail leaves the public entirely out of the loop, and avoids the true deliberation that our government bodies are supposed to be engaging in. Even when a chat room is open, the public cannot easily attend a "virtual meeting," and those without the technology or the know-how of course are entirely left out. The deliberative process and face-to-face contact is lost. Computers are a terrific supplement to providing public access to government information, and promise a similar advantage to public participation in the democratic process. But they can't supplant face-to-face deliberation, and most citizens still do not have computers or on-line access. In the meantime -- and perhaps forever -- all government agencies will have to concern themselves both with paper and with electrons, and make sure that the government does not become less open and responsive as it becomes more efficient by using new technologies. _________________________________________________________________ 3. NBA LOSES FIGHT TO CONTROL "REAL-TIME" SPORTS INFORMATION. Last issue, we reported on a startling legal ruling from the federal court in New York City: the National Basketball Association "owned" the "essence" of its professional basketball games, and could prohibit the unauthorized publishing of "real-time" basketball scores and statistics by others -- even though that information cannot be copyrighted, and even though the games were being broadcast live on television and radio. See It's All in the Game: Who Owns "Real-Time" Sports Information?, Legal Bytes Vol. 4, No. 2. The ruling startled many legal observers who saw it as significantly expanding a narrow state law prohibition against unfair competition. The NBA used the ruling to prohibit a small company called STATS from contracting with Motorola to provide real-time NBA game statistics through a pager system -- at least without a paid license from the NBA. The court's legal ruling raised some troubling questions: If sports statistics cannot be copyrighted, as the NBA admitted, why didn't the U.S. Copyright Act pre-empt and preclude a state-law claim for "copying" of that information? How could the NBA control the distribution of public information, which is almost universally considered to be free to anyone who can put it to use? Why was the considerable energy that STATS and Motorola put into compiling and distributing the NBA statistics discounted? And what would be the scope of this new intellectual property right, if it was indeed there was a new right to own the "essence" of a live performance? The Second Circuit Court of Appeals answered a number of these questions on January 30, 1997, when it reversed the trial court injunction. On appeal, the NBA lost, decisively. The Second Circuit freed STATS to continue its pager service and to re-open its "real-time" sports information site on America Online, and wrote an opinion that is likely to set the pace in similar battles over the ownership of valuable information. First, the Court agreed with the trial judge that the NBA games themselves could not be copyrighted under federal law. No court has ever held otherwise, and the Second Circuit firmly held that live, unrehearsed and participatory events like a basketball game are not "works" that are "authored" under the Copyright Act. The Court saw less legal significance in this conclusion than did the trial judge, though. While Judge Preska had held that because the games could not be copyrighted the Copyright Act did not preclude New York law from stepping in to protect the uncopyrightable "essence" of the game, the Court of Appeals concluded that the Copyright Act still pre-empted state law because, as applied to STATS, the interest that the New York "unfair competition" law was protecting was the same as that covered by the Copyright Act. Because the Copyright Act is exclusive, state law protection is preempted: for those elements of a sports contest - like statistics - that cannot be copyrighted, there is no legal protection at all. Or perhaps not quite none. The Second Circuit carefully left room in New York law to prohibit the appropriation of "hot news." Constrained to do so by the U.S. Supreme Court's 1918 ruling in International News Service v. Associated Press, the Second Circuit held that state law was not pre-empted under the Copyright Act, and could be violated when (1) a person gathers or generates information at a cost; (2) the information is time-sensitive; (3) another person uses that information by "free riding" the first person's efforts; (4) the second user is in direct competition with the first; and (5) the ability of others to "free ride" on the first person's efforts would "so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened." This limitation to New York's unfair competition law doomed the NBA, but saved the Associated Press, which depends upon the old INS v. AP decision to keep competitors from simply re-writing and re-selling its news stories. The Court held that, unlike a competing "hot news" service, STATS was not competing directly with the NBA's live games, it was not providing a substitute for NBA games live, and was not going to threaten the existence of the NBA or reduce the NBA's incentive to continue to sponsor professional basketball. The Court's ruling now opens the field for competition in providing "real-time" sports information, but leaves some lingering questions. How far can a service go in reproducing the "facts" of a live basketball game? Can the service show a court, and players moving on the court, even simulating plays? Can the service use "avatars" to represent the players? At some point, won't the evolving technology allow for a product that in fact does compete with the experience of watching a game? And would the STATS ruling have been different if the sport at issue were baseball instead of basketball, where statistics and strategy are a far bigger portion of the enjoyment of the game? ================================================================= ABOUT THIS NEWSLETTER LEGAL BYTES is a service to the public. These articles are summaries and brief discussions of current legal issues. They are not exhaustive discussions of the topics, and by their nature should not be relied upon as legal advice or used as a basis for reaching a conclusion. If you have ideas or topics you would like to see discussed in LEGAL BYTES, drop us a line. All current and back issues of Legal Bytes are available at George, Donaldson & Ford, LLP's home page at http://www.gdf.com/lbytes.htm For an electronic subscription to Legal Bytes: Send an e-mail to legal-bytes-Request@io.com and include the words "subscribe legal-bytes" in the _body_ of the message. ABOUT GEORGE, DONALDSON & FORD, L.L.P. George, Donaldson & Ford, L.L.P., is a Texas registered limited liability partnership litigating and counseling clients in a broad range of practice areas, including general business litigation, intellectual property, trade secret, libel, invasion of privacy, media and constitutional law. Renea Hicks is Board Certified, Civil Appellate Law -- Texas Board of Legal Specialization. All other attorneys in George, Donaldson & Ford, L.L.P., are Not Certified by the Texas Board of Legal Specialization. ------------------------------ Date: Thu, 15 Dec 1996 22:51:01 CST From: CuD Moderators Subject: File 2--Cu Digest Header Info (unchanged since 13 Dec, 1996) Cu-Digest is a weekly electronic journal/newsletter. Subscriptions are available at no cost electronically. 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