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The cyberlaw informer #30

Welcome to the thirtieth issue of the weekly Mishpat Update, 
Law on the net newsletter from

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In this issue:

1. Introduction
2. Deleting email evidence
3. Fighting Internet Crime
4. Cyberlaw resource of the week
5. Computer & Internet law news and updates


1. Introduction

I would like to welcome the 58 new subscribers who joined the list this

This week we focus on several issues. First we take a look at a new
start up company that will offer a new service, that might change the
possibility of using email as evidence in court. In the next section we
will bring parts of a special report by an FBI agent about the threats
of the online world.
This week's resource of the week features the Search Engine Watch web
site. As usual, the last section of this newsletter is packed with
cyberlaw news and updates including an important jurisdiction decision,
a new domain name dispute policy and the first rule to govern
cable-modem Internet service providers.

I want to thank Mishpat Update reader Boaz Guttman from Israel for the
many cyberlaw news resources he sent, they served me in writing this
newsletter. Next week his article about computer legislation in Israel
will be published here. If you want to recommend a resource, publish an
article or contribute a tip, send it to

The Mishpat Update archive (issues 1-29) is available at:

Feel free to use any of the material, or forward the newsletter to a
friend. Just don't forget to mention that they can subscribe by sending
a blank email to

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2. Deleting email evidence

Emails are usually copied and stored on the sender's and recipient's
PCs and on any number of computers they passed through on the way.
These email messages might come back to haunt you years later, when
used as evidence against you in court. Currently, even if both sender
and recipient delete a message, copies remain on computers they can't
get to. As much as 85% of the evidence in the Iran-contra hearings came
from restored email. Microsoft executives, including Bill Gates, have
been burned by internal messages introduced as evidence in the
company's antitrust case.

That might change soon. Disappearing Inc., a small start-up firm in San
Francisco, has devised a service that will enable writing email that
self destructs at a set time. Disappearing Inc.'s system, due early
next year, offers a way to "shred" email and make it inaccessible to
readers at the decision of the sender.

The idea behind the system is very simple. Let's say, for example, that
Evan is sending a message to Steve. When Evan hits the send key, a
small add-on program notifies the Disappearing Inc. site. The site
assigns the email message an identifying number and gives it a software
key with which to scramble it. When Steve opens the message, the same
key from Disappearing Inc. unscrambles it. Evan can decide how long the
key is to exist. When time is up, the key is deleted from Disappearing
Inc., and the recipients are not able to read the message, and
therefore it couldn't be used in court as evidence against the sender.

However, there are many problems with this idea:

* It is illegal to destroy keys in response to an investigation against
you, you can only destroy keys on a regular basis. This is similar to
paper documents - it is accepted to shred documents regularly, but it
is destruction of evidence if you shred documents when the police are
on your tail.

* Disappearing Inc. can't control printed hard copies. If the recipient
prints the message, or copies the text to a word processor, the sender
looses control over the message,

* Many companies would not agree to open their firewalls to
Disappearing Inc. incoming messages.

* Disappearing Inc. will probably have a copy of the keys, or at least
some record of them so it can bill clients according to their usage.
However, company executives stated that they will destroy backups on

* Using the system requires that Disappearing Inc.'s servers are up
when sending email (and of course that the company does not go 
out of business - if it does users can't access old mail).

* Disappearing Inc. will be able to collect information about each
user's use of email (it has to do it in order to bill clients).

* There are different laws that require keeping documents (such as tax
receipts or medical records) for several years, so each key might need
a different expiration time.

* Finally there is the option of hacking - either by intercepting the
communication between the sender and Disappearing Inc. or by breaking
the code. Since many times it is old messages that are used as evidence
(messages in the Microsoft case where 3-5 years old when presented in
court), it might not be too hard to break what is now considered a
strong code in several years, as computers become much more powerful.

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3. Fighting Internet Crime

U.S. federal officials acknowledged that hackers have broken into
Defense Department networks from overseas. In the first official
comment on a year long investigation, FBI agent Michael A. Vatis
testified before Congress that intruders have penetrated computers
belonging to the Defense Department, other government agencies and
private contractors.

Vatis told the Senate Judiciary subcommittee on technology and
terrorism that the unidentified hackers stole "unclassified but still
sensitive information about essential defense technical research
matters. The intrusions appear to originate in Russia, but Vatis
declined to say whether the attacks are continuing, or whether the
Russian government is believed to be responsible.
Boris Labusov, spokesman for Russia's SVR Foreign Intelligence Service,
said that Russian spies would probably have been clever enough not to
allow themselves to be traced. "Do you think Russian special services
are so stupid as to engage in such activities directly from Moscow?" he
said. Labusov said the culprits could have been amateur computer
hackers seeking thrills, or even intelligence agents from a third
country acting out of Moscow to avoid detection. 

According to Vatis, cyberspace poses a spectrum of threats:
Politically motivated hackers have been attacking numerous U.S.
Government websites; Computer viruses this year have caused damages of
more than 7 billion dollars; Foreign intelligence services use cyber
tools as part of their information gathering and espionage tradecraft;
Terrorists are also known to use information technology and the
Internet to formulate plans, raise funds, spread propaganda, and to
communicate securely. For example, convicted terrorist Ramzi Yousef,
the mastermind of the World Trade Center bombing, stored detailed plans
to destroy U.S. airliners on encrypted files on his laptop computer;
There is also an increased use of cyber intrusions by criminal groups
who attack systems for purposes of monetary gain. For example,in
1994-95 an organized crime group from St. Petersburg, Russia,
transferred 10.4 million dollars from Citibank into accounts all over
the world. After surveillance and investigation by the FBI's New York
field office, all but 400,000 dollars of the funds were recovered.

Vatis thinks that the greatest potential threat to U.S. national
security is the prospect of "information warfare" by foreign militaries
against critical infrastructures. For example, two Chinese military
officers recently published a book that called for the use of
unconventional measures, including the propagation of computer viruses,
to counterbalance the military power of the U.S; During the recent
conflict in Yugoslavia, Russian as well as other individuals supporting
the Serbs attacked websites in NATO countries, using virus infected
e-mails and hacking attempts. More than 100 entities in the U.S.
received these e-mails. Several British organizations lost files and
databases. These attacks did not cause any disruption of the military
effort, and the attacked entities quickly recovered. But such attacks
are just a taste of much more serious attacks in future conflicts.

So far, only a handful of agents have been assigned full time to
computer squads in just 10 of the bureau's 56 field offices, and few
are considered fully trained. The number of investigators assigned to
the National Infrastructure Protection Center (NIPC), the FBI unit
coordinating the federal response to computer threats, is relatively
small compared to the growing number of computer related crimes.
Two years ago the FBI had about 200 cases of computer related crimes
under investigation. Now it is handling more than 800, ranging from
vandalism of Web sites to potential theft of military secrets.
E-commerce has become so important that firms, including Lloyds of
London, are now offering "hacker insurance."

Maybe in reaction to these problems, the CIA has decided to start its
own company called In-Q-It. The 'In' stands for intelligence,
the 'It' for information technology, and the 'Q' for the guy in the
James Bond movies who provides 007 with all those really neat gadgets
In-Q-It will have investment capital of 150 million dollar. The idea is
that In-Q-It will keep the CIA wired into cutting edge technologies. 

More details can be found at:
(Free registration with the NY times required).

Vatis's full testimony is available at:

The British government launched a drive to fight crime on the Internet,
with a crackdown on pedophiles, terrorist groups, and computer hackers
who use the net. 
Among the U.K. government's moves to tackle Internet crime are
proposals for the police to be able to obtain passwords or decoded data
from criminals who use complex encryption to conceal their activities.
The British government supports the industry funded Internet Watch
Foundation, through which the police can be informed of illegal
material on the Web. Britain also backs international moves to combat
Internet crime through the Group of Eight nations and the Council of

4. Cyberlaw resource of the week

The Search Engine Watch located at is
probably the most comprehensive resource about the way search engines

The site is aimed at assisting webmasters who want to improve their
search engine ranking, and researchers who want to learn how to use the
web effectively.
While the Search engine watch project is not about cyberlaw, there are
some sections that deal with legal aspects of search engines. 

For as long as readers of Mishpat Update might remember, there have
been many legal questions raised with regard to search engines, and
several lawsuits have been filed. These issues include copyrights on
search engine databases, indexing illegal content by search engines
(such as pirated MP3 files), using trademarks in 'Meta Tags', search
engine spamming, keyword advertising and trademarks and more.

Some pages on the Search engine watch include reports about these issue
and links to relevant laws, news stories and articles:

Search Engines and Legal Issues

Meta Tag Lawsuits

Multimedia Search Complaints

If you would like to recommend an Internet legal resource, please send
it to

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5. Cyberlaw news and updates

Each week Mishpat-Update brings you the latest news about
online and computer law, with links to the full reports available
on the web.

* Domain dispute policy *
Dave Lahoti, the owner of, says he has spent several months
and tens of thousands of dollars in his fight to hold onto the name
after being challenged by E-Stamp Corporation, the online postage
company. Lahoti, like many others who have stakes in Net names, is
closely watching the development of a universal policy to settle domain
name disputes through a neutral arbitration panel, which would cost
less than 1,000 dollars.  
The details of the policy lay out rights for those who have built
brands around their ".com" names and set up new dispute mechanisms for
those combating cybersquatters (people who register domains in hope of
reselling them to the highest bidder or well known companies). The
Internet Corporation for Assigned Names and Numbers (ICANN), which is
in charge of managing the Net's address system (see last week's feature
article), will accept public comment on the proposed policy until
October 13. Then all 70 domain name registrars accredited by the ICANN
plan will implement the policy and provide registrants with a list of
arbitration services.
Before handing a name over to a trademark holder, the arbitration panel
would have to consider several conditions, including whether a name is
being used for noncommercial purposes and whether the domain name
holder has tried to resell the name to the trademark holder. The policy
also gives new weight to those who have built specific brands around
their domain name.
>From the time the policy takes effect, those who register domain names
or renew accounts will have to agree to submit to an initial
arbitration process instead of going to court in the event of a domain
name fight. Either party can still go to court if it is unhappy with a
panel's decision, but the complaint would have to be filed within ten
days in a court that resides in the same district as the registrar that
sold the name. This could lead to an unfair advantage for domain name
registrants who live in the U.S. since most registrars are American.
I will write a full article about the domain dispute rules after ICANN
adopts the final rules (expected early November). The draft is
available for comments at:

* Important Internet Jurisdiction ruling *
The 5th U.S. Circuit Court of Appeals ruled that out of state companies
cannot be sued in Texas merely because they advertise over the
Internet. In Mink v. AAAA Development, the 5th Circuit followed the
lead of the famous Zippo ruling from 1997, describing three levels of
Internet business.  
At one end of the spectrum, companies enter into contracts with out of
state residents that involve the "knowing and repeated transmission of
computer files over the Internet". These companies can be sued in the
home state of the out of state residents. One step down are companies
with a Web site that allows a user to exchange information with a host
computer. In this case the exercise of jurisdiction is determined by
the level of interactivity. Finally, companies that merely advertise or
post information about their business on the Internet with "passive"
Web sites  cannot be sued out of state simply because they maintain the
site that is accessible worldwide.
The defendant AAAA, a Vermont company sued in Houston by a Texas
resident for alleged copyright infringement, operated a passive
website. The site provides users with a printable mail order form,
AAAA’s toll free telephone number, a mailing address and an email
address, but orders are not taken through AAAA’s website. This does not
classify the website as anything more than passive advertisement.
Therefore AAAA could not be sued in Texas.

* Internet Cable users get "bill of rights" *
In a 4-0 vote, the Fremont city council (a suburban city south of San
Francisco) approved standards governing how ISPs must treat cable modem
service subscribers. Although many traditional dial-up ISPs have
customer service policies in place, they are not legally accountable to
any local government agency. Cable companies, however, operate under
local franchise contracts with city and county governments. The final
customer "bill of rights" policy, is the result of months of
negotiations between city staff members, Excite@Home executives,
subscribers, and AT&T representatives (AT&T is the largest shareholder
in Excite@Home, the biggest U.S. high speed Internet access provider). 
According to the new rule ISPs must ensure the following: At least 90
percent of customer service phone calls must be answered within 30
seconds - three times faster than they now do on average; Service
outages must be fixed within 12 to 24 hours; 95 percent of the time,
and Written communications, including email, must be responded to
within ten business days. The rules also require the companies to
connect 95 percent of new subscribers within 7 days and 100 percent
within 14 days. 
However, some key issues, including guidelines for the download speeds
of the @Home service and how penalties for violations by AT&T will be
imposed, remain unresolved.
(Free subscription to the NY Times required)

* Spam in the House *
Thousands of members and staff from the U.S. House of representatives,
received a junk email last week announcing: "DRASTICALLY reduced
our prices on weight loss medications!" Republican representative Gary
Miller sent an email to those who got the junk email. "You've been
spammed!!! Sign on to the Can Spam Act of 1999!!!" Adding an overview
of his bill to penalize companies, Miller's e-mail said that use the
Internet to send unwanted junk mail was wrong. Some recipients were
upset by being double-spammed. In any event, the act succeeded,
generating substantial interest in the legislation.

* AOL users - victims of fraud *
Despite months of warnings, America Online subscribers continue to fall
prey to an email scam that enables spammers to hijack their accounts.
AOL alerted customers in April that emails reporting an "AOL Billing
Problem" or titled "AOL Rewards," for example, were tricking recipients
into visiting a non-AOL Web site. Once at the Web site, users were
asked to enter their usernames and passwords to receive special offers.
The AOL users' accounts were then accessed by the unauthorized parties
and used to send spam or commit other fraud, the company said. AOL,
which has won groundbreaking lawsuits against spammers who trespassed
on its network, has no idea how many users have unwittingly given up
their account password codes as a result of the scam.

* News from the Microsoft trial *
The U.S. federal government has spent 12.6 million dollars
investigating Microsoft and litigating against it in the famous
antitrust trial. That amount is less than one thousandth (1/1000) of
the Department of Justice's (DOJ) litigation and investigation budget.
This and other information related to the case was provided by the DOJ
in response to questions from Senator Slade Gorton. Cynthia Bergman, a
spokeswoman for Gorton, said that "the senator feels that any amount is
too much for this case. It's good for Microsoft's competitors, because
they're getting free legal representation." 
Editor's note: This argument seems flawed, since every antitrust
investigation "helps" those competing with the monopoly. The idea
behind antitrust is the need for legal intervention to help the markets
work properly. This is exactly the situation in the Microsoft case. If
the DOJ's allegations are true, that intervention is needed to protect
consumers, and the way to do that includes helping the monopoly's

Tom Campbell, a U.S. congressman and expert in antitrust law, said that
if Microsoft is found liable in its antitrust case it should be broken
into pieces. Campbell said that the only remedy that makes sense is to
separate the operating system from the software development.

* Microsoft sues software pirates *
In other Microsoft legal news, Microsoft filed five lawsuits in New
York, alleging Manhattan and Long Island firms have been distributing
counterfeit Microsoft software and installing it in computers sold to
consumers. Three of the suits allege the defendants distributed
counterfeit copies of Microsoft software to investigators or customers.
Four of the suits also allege that the defendants distributed either
counterfeit end-user license agreements or computer systems after
loading unauthorized copies of software onto the hard drives.

* Microworkz agrees to pay tax * owner Rick Latman agreed to pay all back taxes, plus
interest, penalties and court costs to dispose of a criminal charge
relating to his company's alleged failure to pay Seattle's business and
occupation tax. The company, founded by Latman in 1996 as a maker of
low cost computers, is in trouble on several fronts. Microworkz is the
subject of ongoing investigations by the Washington state Attorney
General's Office and the Federal Trade Commission. Those agencies
received complaints from consumers who claim they received defective
machines, did not receive machines when promised, or did not receive
refunds when requested.

* NetCoalition to lobby in Washington *, America Online, eBay, Excite@Home, Yahoo, Lycos and several
other companies have formed, a lobbying group
determined to influence decisions affecting companies whose business is
Internet related. The U.S. Congress is paying increasing attention to
the Net: more than 75 pieces of legislation now exist. NetCoalition
says it worries that Congress's newfound interest in cyberspace could
spawn laws that will limit or slow the growth of the Internet.

* Feds won't shut down chemical plants *
Although some chemical companies have decided to shut down operations
as a precaution over the Y2K (year 2000 computer bug) date rollover,
U.S. federal officials said they have no plans to ask other chemical
companies to do the same. Federal officials have little information
about the Y2K readiness of small to midsize chemical manufacturers and
handlers and continue to urge local preparedness committees to contact
local chemical producers and handlers.

* Xerox fires workers who surfed at work *
Xerox, the world's biggest copier maker, has fired about 40 employees
this year for looking at pornographic Internet sites at work. Last
spring, Xerox began using hardware and software to track the Internet
use of its 92,000 employees. Those fired spent too much time on
"non Xerox related sites" said Xerox spokeswoman.

* FTC will assist online privacy groups *
The U.S. Federal Trade Commission (FTC) said it plans to give priority
to online privacy complaints that are referred to it by organizations
such as TRUSTe and BBB Online. The associate director for financial
practices at the FTC's bureau of consumer protection, said the policy
would give more weight to the group's seals of approval (site owners
can get their privacy policies approved by these organizations).,6061,2349700-2,00.html

* Virginia anti online pornography act 
U.S. states have passed laws designed to restrict the online
distribution of material deemed "harmful to minors" four times in the
last three years. Federal judges have struck down three of those laws
on Constitutional grounds. This week in Virginia, free speech advocates
filed suit to block the fourth law. 
The Virginia law makes it illegal for businesses to engage in the
"knowing" display to minors of sexually explicit "electronic files or
messages" deemed "harmful to juveniles." The law's opponents claim that
the Internet is so different from print that the Virginia law, like the
other attempts at putting harmful to minors statutes in place, steps on
important Constitutional rights. They argue that Internet publishers
have no way of knowing for sure who is viewing their content. As a
result, those who wanted to comply with the law would need to self
censor material that may be explicit or controversial but that adults
have a right to view under the First Amendment.
(Free registration with the NY Times required)

If you know of any cyberlaw updates, please send them to

That's all for this time,
see you next week

Yedidya M. Melchior 

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