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Article: 4287 of misc.legal
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From: [ac w f] at [doc.ic.ac.uk] (Anthony Finkelstein)
Newsgroups: misc.legal
Subject: CyberLaw/Lex 4/93
Date: 10 May 1993 10:16:55 GMT
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Posted on behalf of [y--a--n] at [aol.com]

CyberLaw (tm) [4/93]

Search & Seizure

I.  Liberty & Cyberspace

Three years ago, a small publisher of role-playing games in Texas was raided
by the United States Secret Service.  Government agents carted away
computers, one of which ran the company's computer bulletin board system
(BBS), hundreds of floppy disks, and drafts of a soon-to-be-published book
and of magazine articles.  The seized material was held for months, which led
to the layoff of a number of the company's employees.  No-one at the company
was arrested or charged with a crime.  The owner of the company, Steve
Jackson, appealed for help and managed to gain the attention of some
prominent members of the computer community.  The case came to be viewed by
many as a struggle for civil liberties in the new electronic frontier, known
as Cyberspace.  Steve Jackson and his supporters were vindicated recently,
when a Federal District Court ruled that the Secret Service had violated
federal statutes protecting publishers and the privacy of electronic
communications with regard to its raid of the company.

II.  The Saga Begins

The saga of Steve Jackson and his company began in the summer of 1989, when
the Secret Service was contacted by a representative of BellSouth (a Regional
Bell Operating Company) who advised that there had been a theft of sensitive
data from BellSouth's computer system.  The stolen data was described as "an
internal, proprietary document that described the control, operation and
maintenance of BellSouth's 911 emergency system."  This report led the Secret
Service and the U.S. Attorney's office in Chicago into a larger
investigation, concerning a national group of computer hackers called the
"Legion of Doom" (LOD).

A member of LOD had allegedly entered a BellSouth computer and copied the 911
document to his own computer.  The 911 document was then allegedly sent to a
BBS in Illinois, from which it was downloaded by a student named Craig
Neidorf and edited for and distributed in a publication named __Phrack__. 
One person who received __Phrack__ was Loyd Blankenship, also a member of
LOD.  

Notably, the 911 document is not a computer program and has nothing to do
with accessing a 911 system.  It simply details who does what in the
telephone company bureaucracy regarding customer complaints and equipment
failures, among other things.  For the Secret Service, BellSouth estimated
the cost of the 911 document at $79,449.  But in July 1990, during Neidorf's
trial, it was disclosed that the 911 document was available to the public
directly from BellSouth for about $20.  (Upon this disclosure, the
prosecution of Neidorf collapsed -- leaving him owing over $100,000 in legal
fees.)

In early 1990, the Secret Service learned that another LOD member had posted
a message on a BBS maintained by Blankenship, allegedly "inviting other BBS
participants to send in encrypted passwords stolen from other computers,
which Blankenship and [the other member of LOD] would decrypt and return...."
 After seeking additional information, the Secret Service decided to obtain
search warrants to obtain evidence against them, including a search warrant
for the offices of Blankenship's employer, Steve Jackson Games, Inc.

Steve Jackson Games, as described by its lawyers, "publishes role-playing
games in book form, magazines, a book about game theory, boxed games, and
game-related products.  The company's games are played not on computers, but
with dice, a game book or books, and lots of imagination."  As part of its
business, the company runs a BBS (the "Illuminati" BBS) that allows outside
callers to dial in and, as outlined by Steve Jackson, "read messages left by
[the company], read public messages left by others who have called the
bulletin board, leave public messages for other callers to read, send private
electronic mail to other persons who called the bulletin board, and
'download' computerized files to their own computer."  Like the typical BBS,
the Illuminati BBS stored electronic mail, including mail that had been sent
but not yet received.  In February 1990, there were 365 users of the
Illuminati BBS and, according to the trial court, Blankenship was a
"co-sysop" of the BBS.

III.  The Raid

On March 1, 1990, Steve Jackson Games was raided by the Secret Service.  They
seized and carried away a computer found on Blankenship's desk, a
disassembled computer next to his desk, the computer running the Illuminati
BBS, over 300 computer disks, and various documents and other materials. 
Among the seized items were drafts of a book titled __GURPS Cyberpunk__,
which was to be published within days or weeks of the raid, and drafts of
magazines and magazine articles.  ("GURPS" stands for "Generic Universal Game
Role Playing System.")  According to the company's attorneys, a Secret
Service agent called __GURPS Cyberpunk__ "'a handbook for computer crime' in
Mr. Jackson's presence, (although the government now claims that the book was
not the target of the search and admits it was not evidence of any crime)."

For Steve Jackson Games, the raid was a calamity.  It was suffering severe
cash flow problems, and the seizure caused substantial delays in publication
and the termination of 8 employees.  The bulk of the seized material was not
made available to the company until late June 1990, and no printed copies of
__GURPS Cyberpunk__ were ever returned.  

The raid also caused wide concern across the United States.  From the outset,
as noted by the company's lawyers, many saw the case as one in which,

"The Secret Service, on exceedingly weak pretense, invaded the office of an
upstanding, hard-working small businessman, and nearly put him out of
business.  The Secret Service shut down a working BBS -- a new, powerful
means of public and private communication -- with __no__ evidence that
anything unlawful was transpiring there.  Shutting down the "Illuminati" was
like clearing or closing down a park or meeting hall, simply because one of
hundreds of the people gathered there was under vague suspicion."

This view was later validated by the trial court, which found that, 

"[P]rior to March 1, 1990, and at all other times, __there has never been any
basis for suspicion__ that [Steve Jackson Games, Steve Jackson, or any of the
other individuals who subsequently sued the Secret Service as a result of the
raid] have engaged in any criminal activity, violated any law, or attempted
to communicate, publish, or store any illegally obtained information or
otherwise provide access to any illegally obtained information or to solicit
any information which was to be used illegally."  (Emphasis added.)

IV.  The Lawsuit

After the raid, Steve Jackson Games, Steve Jackson and 3 users of the
Illuminati BBS filed suit against the United States Secret Service, the
United States of America, and several government employees who had been
involved in the raid.  The plaintiffs brought causes of action for violation
of the following: the Fourth Amendment to the U.S. Constitution; the Privacy
Protection Act, 42 U.S.C. 2000aa et seq.; the Wire and Electronic
Communications Interception and Interception of Oral Communication Act, 18
U.S.C. 2510 et seq.; and, the Stored Wire and Electronic Communications and
Transactional Records Act, 18 U.S.C. 2701 et seq.  (The latter 2 statutes are
part of the Electronic Communications Protection Act, or ECPA.)

V.  Fourth Amendment

With respect to the Fourth Amendment, the plaintiffs argued that "probable
cause to believe that a crime has occurred ... does not automatically give
license to search every place that a suspect may frequent," and also that
"there must be probable cause to believe that the __type__ of materials
sought are located at the place to be searched."  "The search warrant,"
continued the plaintiffs, "did not establish probable cause that evidence of
any crime would be found at [Steve Jackson Games]," and the search of the
company "was broader than justified by any facts in the warrant."  In
response, the government argued that even if the plaintiffs were correct,
they still had to prove that "these defects were so obvious that no
reasonable officer could have believed the warrant to be valid, in light of
the information [the officer] possessed."  Because a court determination in
favor of the plaintiffs could have resulted in an immediate appeal that would
delay the balance of their case, the plaintiffs dropped their Fourth
Amendment claims to focus their case on the Privacy Protection Act and ECPA
claims.

VI.  Privacy Protection Act

The Privacy Protection Act concerns the investigation and prosecution of
criminal offenses and, in relevant part, prohibits government employees from
searching for or seizing any "work product materials" possessed by a person
reasonably believed to have a purpose to disseminate to the public a
newspaper, book, broadcast, or other similar form of public communication. 
"Work product materials" are defined to include materials, not including
contraband, the fruits of a crime, or things used as the means of committing
a crime, created or prepared for the purpose of communicating such materials
to the public.  

At the time of the raid on Steve Jackson Games, the Secret Service was
advised that the company was in the publishing business.  No significance was
attached to this information, however, as the Secret Service agents involved
in the raid were oblivious of the provisions of the Privacy Protection Act.  

Notwithstanding the fact that the Secret Service had failed to make a
reasonable investigation of Steve Jackson Games "when it was apparent [its]
intention was to take substantial properties belonging to the [company], the
removal of which could have a substantial effect on the continuation of
business," the trial court declined to find that on March 1, 1990, any
government employee had reason to believe that the property to be seized
would be "work product material" subject to the Privacy Protection Act.  But
during the raid, the Secret Service had been advised of facts that put its
agents on notice of probable violations of that Act.  Indeed, the Secret
Service continued to detain the company's property through late June 1990
despite the fact that, as observed by the trial court, "[i]mmediate
arrangements could and should have been made on March 2, 1990, whereby copies
of all information seized could have been made."  The refusal of the Secret
Service to return the company's information and property violated the Privacy
Protection Act, and the court awarded Steve Jackson Games its expenses
($8,781) and economic damages ($42,259).

VII.  ECPA

The trial court did not find, however, that the Secret Service had violated
the Electronic Communications Interception and Interception of Oral
Communication Act.  According to the trial court, "the Secret Service
intended not only to seize and read [the communications stored on the
Illuminati BBS], but, in fact, did read the communications and thereafter
deleted or destroyed some communications either intentionally or
accidentally."  But the Secret Service had not "intercepted" communications
within the meaning of the latter Act, ruled the court, apparently on the
grounds that only the contemporaneous acquisition of a communication is
prohibited thereby.

In support of this ruling, the court looked to the Congressional enactment of
the Stored Wire and Electronic Communications and Transactional Records Act,
among other things.  This statute protects the content of electronic
communications in electronic storage and sets out specific requirements for
the government to follow to obtain the "disclosure" of such communications. 
One such requirement is that there be "reason to believe the contents of a[n]
... electronic communication ...  are relevant to a legitimate law
enforcement inquiry."  Although the Secret Service wanted to seize, review
and read all electronic communications, public and private, on the Illuminati
BBS, the Secret Service did not advise the Magistrate Judge who issued the
warrant for the raid on Steve Jackson Games "that the Illuminati board
contained private electronic communications between users or how the
disclosure of the content of these communications could relate to [the]
investigation."  The court commented that it was not until June 1990 that the
plaintiffs were able to determine the reasons for the March 1, 1990, seizure,
"and then only with the efforts of the offices of both United States Senators
of the State of Texas."  Simply stated, "[t]he procedures followed by the
Secret Service in this case virtually eliminated the safeguards contained in
the statute."  Lacking sufficient proof of compensatory damages, the court
assessed statutory damages in favor of the plaintiffs, in the amount of
$1,000 for each plaintiff.

VIII.  Further Information

Further information concerning this case may be found in the opinion of the
United States District Court in __Steve Jackson Games, Inc., et al. v. United
States Secret Service, et al.__, No. A-91-CA-346-SS (W.D. Tex. 3/12/93).  For
background information on this case and other related cases, see B. Sterling,
__The Hacker Crackdown__ (1992), and John Perry Barlow, __Crime &
Puzzlement__ (1990).

(Copies of the arguments filed with the trial court and of the court's
opinion were kindly made available to the author by Peter D. Kennedy, Esq.,
of George, Donaldson & Ford, attorneys for Steve Jackson Games, Inc. and the
other plaintiffs.)

CyberLaw (tm) is published solely as an educational service.  The author may
be contacted at [j r s n r] at [well.sf.ca.us]; [c--er--w] at [aol.com]; questions and comments
may be posted on America Online (go to keyword "CYBERLAW").  Copyright (c)
1993 Jonathan Rosenoer; All Rights Reserved.  CyberLaw is a trademark of
Jonathan Rosenoer. 

CyberLex (tm) 
[4/93]

Notable legal developments reported in April 1993 include the following:

# The Ninth Circuit Court of Appeals has ruled that an independent service
provider violated copyright laws by loading operating software licensed to
its client into the random access memory of its client's computer in the
course of fixing the computer.  (__MAI Systems Corp. v. Peak Computer Inc.,
et al.__, 93 C.D.O.S. 2
596 (9th Cir. 4/9/93)).

# The White House has announced the development of a computer chip, called
the "Clipper Chip," that encodes voice and data transmissions using a secret
algorithm.  The chip is to work with an 80-bit, split key escrow system.  Two
escrow agents would each hold 40-bit segments of a user's key, which would be
released to law enforcement agents upon presentation of a valid warrant. 
After the announcement, several groups expressed concern that, among other
things, the algorithm used cannot be trusted unless it is public and open to
testing.  (New York Times, April 16, 1993, A1; San Jose Mercury News, April
16, 1993, 1A, and April 17, 1993, 11D;Wall Street Journal, April 19, 1993,
A5.)

#
 The CIA has warned U.S. high-tech companies that the French government may
be spying on the
m.  (San Jose Mercury News, April 27, 1993, 11E.)

# Kevin Poulson, a hacker already scheduled to be tried on 14 federal
felonies, has been indicted on 19 more felony counts in which he is accused
of using telephone and computer skills to ensure that he and two alleged
accomplices would win radio station call-in contests.    Prizes in those
contest included a pair of Porsche cars and more than $20,00 in cash. 
 (San Jose Mercury News, April 22, 1993, 1F.)

# InterDigital Communications Corp. has filed suit for patent infringement
against Oki Electric Industry Co., of Tokyo.  The suit concerns a data
communication technique called code division multiple access (CDMA),
developed by a San Diego-based company, and CDMA-based phones that Oki plans
to manufacture, among other things.  InterDigital holds many patents on a
rival technique called time division multiple access, used by several
cellular phone companies. 
 (Wall Street Journal, April 19, 1993, 7B.)

# 20 Japanese telecommunications companies announced that they will join
Motorola's Iridium project, a planned digital cellular telephone network
linked by 66 orbiting satellites.  (San Jose Mercury News, April 3, 1993, 11D.)

# The nation's local phone companies offered to build the "information
superhighway" promoted by Vice President Al Gore if they are allowed to go
back onto the long-distance phone business, to manufacture equipment, and to
provide vi
deo programming over phone lines.  (San Jose Mercury News, April 16, 1993,
3C.)

# Apple Computer, Inc. is fighting a $290 million claim by the IRS for back
taxes for the years 1987 and 1988 relating to the value of property
transferred between foreign and domestic units of the company.  (San Jose M
ercury News, April 3, 1993, 9D.)

# A federal judge overturned a jury verdict that AMD did not have the right
to use Intel microcode in AMD chips, and granted a new trial.  The basis for
the court's ruling was that Intel had failed to produce critical documents
that would have allowed AMD fairly to present its defense.  The verdict had
stopped AMD from selling a clone of Intel's 486 microprocessor.  Within 2
weeks, Intel sued AMD alleging that AMD's 486 clones and an AMD chip not yet
on the market violate Intel copyrights.  (San Jose Mercury News, April 17,
1993, 1A, and April 29, 1993, 1C; New York Times, April 1
7, 1993, p.17.)

# The Commerce Department has imposed permanent import duties of up to 11.45%
on Korean-made computer memory chips, following an International Trade
Commission finding of "dumping"
 by South Korean manufacturers.  (San Jose Mercury News, April 23, 1993, 1C.)

# Taiwan has adopted a set of copyright law revisions.  (San Jose Mercury
News, April 23, 1993, 3C.)

# The International Trade Commission has agreed to investigate claims by a
Mississippi inventor that 20 computer disk-drive manufacturers are violating
a patent he holds for placing carbon coating on computer disks by importing
drives that use the technology.  One manufacturer, Connor Peripherals Inc.,
has filed suit to declare the inventor's patent invalid.  (San Jose Mercury
News, April 27, 1993, 9E.)

CyberLex (tm) is published solely as an educational service.  Copyright (c)
1993 Jonathan Rosenoer; All Rights Reserved.  CyberLex is a trademark of
Jonathan Rosenoer.   

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