Diebold is facing threats on two fronts as free-speech advocates pursue monetary damages against it and a presidential candidate urges a congressional inquiry into the company.

Diebold, which makes touch-screen voting machines in use around the world, on Monday reiterated its withdrawal of copyright takedown notices directed at numerous Internet service providers with subscribers who posted copies of its internal e-mail correspondence--and in some cases links to those copies.

Those takedown notices, issued under a provision of the Digital Millennium Copyright Act (DMCA), earned Diebold a lawsuit by an ISP with a client who linked to the documents and by two Swarthmore students whose school--acting as their ISP--had removed copies under takedown threat.

The DMCA takedown provision is designed to let copyright holders warn ISPs of copyright violations and ask that they be taken down before filing suit against them. Free-speech advocates argued that Diebold's notices had less to do with copyright protection than with damage control.

The internal Diebold e-mail correspondence in question criticized the company's software, security, certification and sales practices.

Diebold indicated in a Nov. 24 filing with the U.S. District Court in San Jose, Calif., that it would retract the DMCA notices and would not sue those who posted the e-mail correspondence or their ISPs. On Monday, the company restated that promise in the courtroom.

But lawyers who represent the Online Policy Group, an ISP whose client Indymedia had linked to the Diebold e-mails without posting them, indicated that they had not finished pressing their case against Diebold.

Instead, they pledged to seek a court order spelling out that publishing or linking to the Diebold e-mails doesn't amount to copyright infringement, as well as monetary damages under the DMCA on grounds of misrepresentation.

"It's a tremendous victory for free speech, for the Internet as a communications forum, and it's reaffirming the public side of the balance that copyright is supposed to embody," Wendy Seltzer, an attorney with the Electronic Frontier Foundation (EFF), said in an interview after Monday's hearing.

Seltzer, who represented the Swarthmore students, said the plaintiffs would seek monetary damages to dissuade companies from using DMCA takedown notices lightly.

This week Sharman Networks contacted Slyck giving notice of the launch of an advert-free version of Kazaa. At the same time, Slyck received a DMCA violation notice to remove references to Kazaa Lite. Slyck was not alone as Sharman embarked on a campaign against free speech in an underhand method to promote Kazaa Plus.

It is now known that these DMCA violation notices were filed against Google, Slyck, Zeropaid and other websites.

The DMCA used against Google ordered it to remove references to 15 websites that contain information related to Kazaa Lite. Google has complied, but has linked to the notice (on an EFF site) at the bottom of the violation-related search result page. One of the websites Sharman asked Google to remove was Zeropaid, while conducting a search for 'Kazaa'. Zeropaid contains 100's of pages articles and discussion threads related to kazaa, which were previously returned with Google results. They have all been removed and replaced with 1 ZP webpage that links to Kazaa.com. The removal of webpages that simply contained comments seems a certain breach of freedom of speech.

Why is DirecTV threatening innocent people?

In the past year or so, satellite TV giant DirecTV has sent ominous letters to an estimated 100,000 individuals, accusing them of purchasing "illegal signal theft equipment" and "pirate access devices" and threatening to haul them into court for stealing DirecTV. The letter tells the unlucky recipients that the prospect of a pricey legal battle will go away if they pay up, to the tune of $3,500 in most cases. Yet, in too many cases, the receipients of the letters have never intercepted DTV’s signal. They merely possess smart card technology. Without proof of a violation of law, DTV’s unsubstantiated threats to sue are an abuse of the legal system.

DirecTV's campaign began with a series of raids on Internet Web sites. Armed with Digital Millennium Copyright Act , DirecTV paid visits to well-known online vendors like Whiteviper, took over their Web sites ("this link leads to the Whiteiper site after being taken over by DirecTV"), and went home with their customer records.

Next, groups of DirecTV enforcers with euphemistic names such as the "End User Development Group" started sending threat letters and staffing the call center. The word to worried technology researchers and customers: Pay now, or pay a lot more later in court -- possibly up to $100,000.

Most recently, DirecTV has been making good on its threats to sue, even against people who expressly explained to DirecTV the legitimate uses they were pursuing, such as scientific research or home-brewed security systems. Undeterred, the company has brought nearly 9,000 lawsuits in federal district courts across the country.

In its letters, DirecTV often makes an unjustified and dangerous legal leap: that purchasing technology with a possible illegal use (intercepting DirecTV's signal) is illegal, even if you haven’t been breaking the law by actually intercepting the signal. This "guilty until proven innocent" campaign has presented a tough call for all the non-pirates targeted by DirecTV: Pay thousands of dollars to stop DirecTV's threats or face a long and expensive legal battle to prove you are innocent.

When innocent people end up paying corporate behemoths for crimes they didn't commit, something is wrong.

So called Super-DMCA legislation, which critics fear could outlaw firewalls and other common technology because of its overly broad language, has seen defeat in several states, though in Georgia the debate rages on. For those unfamiliar with the legislation, you can find EFF analysis of it here, as well as a list of which states have either passed a version or are considering doing so.

States in essence took the model language draft (rtf file) created by the MPAA, and revised it as they saw fit, some doing a better job of it than others. At its core, the law was designed to help prosecute anyone who has an "intent to defraud a communication service provider." However not all the variations of the legislation are very clear that "criminal intent" is necessary in order to prosecute.

Some of the versions make it illegal to "conceal from a communication service provider ... the existence or place of origin or destination of any communication", thus making many worry that NAT hardware and other such devices could become illegal on a whim. Section 6(a)(3) of the Texas variant says you can't even possess information about how to get around cable theft protection systems.

The Texas version is now all but dead for the time being, and Colorado's Governor likewise put that state's interpretation of the bill six feet under. In Michigan, outrage over the legislation forced state lawmakers to consider changing the wording to ease concerned technology buffs.

In Georgia, HB 867 is now running the gauntlet, with complaints from civil liberty groups mirroring those in other states; namely that the legislation is far too vague, and is, as one EFF lawyer puts it, "the worst kind of special interest legislation, sacrificing the public interest in favor of the self-serving interests of one industry."

So far, Georgia lawmakers aren't sold on the legislation either. The Sponsor of the Bill, Rich Golick, has scheduled an open meeting (updated: June 13 at 8 AM in Room 606 Legislative Office Building) to hear complaints from consumer advocates (and others), who are busy trying to get the issue out in the open.

A state bill reminiscent of the controversial Digital Millennium Copyright Act may be coming soon to a legislature near you. That is, if it hasn't arrived already.

Nearly five years after the federal government enacted the DMCA (a law that makes it a crime to circumvent security protections on copyrighted materials) legislators in several states are proposing bills that place restrictions on devices that aid in copyright infringement. In some cases, those laws are passing.

Opponents, who include a vociferous contingent of digital rights groups, have dubbed them "super-DMCAs." The state bills are backed by the Motion Picture Association of America, which rejects the comparison.

"These are amendments to existing communications or cable theft laws," said Van Stevenson, vice president of state legislative affairs for the MPAA. "They have nothing to do with the DMCA."

Draft legislation supported by the MPAA -- which closely resembles the bills pending in several states -- calls for criminal charges against individuals who provide or employ devices "with the intent to defraud a communication service provider." Violators would face misdemeanor or felony charges, depending on the seriousness of the infringement.

While the MPAA has gained support from state legislators, several digital rights groups are actively opposing the passage of pending bills, saying they could outlaw useful devices merely on the grounds that they might be used for illicit purposes.

"Basically, it lays out a scheme under which if you attach an unauthorized device to the cable network, or the telecom network, suddenly you are not merely in violation of your contract, you're also at risk of felony liability," said Mike Godwin, technology counsel at the legal policy group Public Knowledge.

Godwin said he is fearful that the statutes proposed in several states would criminalize a practice like viewing television programs on a computer, something he does frequently.

According to the Electronic Frontier Foundation, seven legislatures, including Colorado, Delaware, Illinois, Michigan, Oregon, Pennsylvania and Wyoming, have already passed so-called super-DMCA bills.

Similar proposals are on the table in Arkansas, Florida, Georgia, Massachusetts, Oregon, Tennessee and Texas. On Tuesday, the judiciary committee of the Tennessee Senate recommended the passage, with amendments, of its proposed legislation (PDF).

By and large, the state bills don't lay out specific devices that would be deemed illegal. Most follow along the lines of the proposed Tennessee statute, which would criminalize "any communication device which is connected in such a manner that would permit the unauthorized receipt, interception, acquisition, description, transmission or re-transmission of a communication service."

The MPAA's Stevenson said such laws are needed because existing communications or cable theft laws don't necessarily cover new technologies, many of them Internet-based, that can be used for illicit purposes.

But Godwin says the MPAA's push for new legislation is premature. Theft of digital video content is not widespread in the United States, he said, and has not visibly hurt box office profits.

John Palfrey, director of the Berkman Center for Internet & Society at Harvard Law School, says many of the crimes addressed in the proposed state bills are already illegal under existing statutes.

During a state legislature hearing in Massachusetts earlier this month, Palfrey spoke out against an MPAA-backed proposal on the grounds that it could criminalize legitimate research.

As for the bills' aim to prevent theft, Palfrey said, "There are already lots of laws that say you can't steal."

WASHINGTON--Critics of the federal Digital Millennium Copyright Act said Friday that they were disturbed by proposals for similar laws at the state level.

Quietly, opponents said, with few people paying close attention, state legislators are considering bills that would be even broader than the controversial DMCA, which restricts bypassing copy-protection measures.

The DMCA critics reacted with dismay this week after learning about the existence of the state bills when a lobbyist flagged one as disturbing, an industry source said. On Friday, library groups quickly dashed off a note to Arkansas and Colorado warning politicians there that their "proposed legislation is deeply flawed and should be rejected."

"The entertainment companies state that these laws need to be updated to combat digital piracy," said the letter from the Association of Research Libraries, the American Association of Law Libraries and the American Library Association. "While digital piracy is a serious problem, some of the proposed amendments will undermine the ability of libraries to provide important information services."

But whether the proposals are an attempt to unjustly restrict computer users' freedom to tinker or a reasonable response to the threat of piracy depends on whom you talk to. The movie industry, which backs the proposals, says DMCA opponents are overreacting.

The group primarily responsible for the state bills is the Motion Picture Association of America, one of the most vocal supporters of the federal DMCA. The MPAA rejects the characterization of the state legislation as similar to the federal law, saying the state measures update cable and satellite protection laws to catch up with today's hacking technologies.

"The intention of this legislation is to protect services and audiovisual works, music, and sound recordings in the digital age," said Vans Stevenson, the MPAA's senior vice president for state legislative affairs. "It provides state remedies for people who steal or pirate those works. It's an extension of what we've done for years with cable television and phone services at the state level. It's nothing new. For the life of me, I don't see why anybody would object to that."

Some of the proposals have already become law and have been on the books for some time. In Maryland, residents may not possess or distribute software that can take music or video transmitted over the Internet and convert it to another format, unless they have the copyright holder's explicit permission. The law arguably restricts reverse engineering as well, and punishes violators with up to three years in state prison.

The law went through in May 2001, passing the Maryland Senate with only one nay vote and clearing the House unanimously.

Though, like similar measures in other states, the Maryland law has been characterized as a way to stop theft of cable and cellular phone service, it stretches to Internet communications, hardware and software as well. It's arguably more sweeping than the federal DMCA, which contains exemptions for reverse engineering, for encryption research and for librarians. The DMCA also created a process that the Library of Congress can use to identify additional exemptions; the state bills do not include such procedures.

The MPAA's Stevenson said laws like the one in Maryland already have been enacted in Virginia, Delaware, Illinois and Michigan and that there has been nothing underhanded about their adoption. He said that he testified before the Maryland legislature in an open process where the public could participate and that other MPAA representatives have appeared in other state capitals.

"These statutes are all about theft. They're all about piracy and theft," Stevenson said. "I don't know anybody who objects to laws that (advance) as technology changes, and as the ability to steal things increases. Who objects to that? It's like saying, 'I object to a shoplifting law that prohibits stealing DVDs from Blockbuster.'"

But a trade group for Internet service providers says it was blindsided by the MPAA's latest efforts.

"They were in four states before we even saw them doing this," said David McClure, president of the U.S. Internet Industry Association.

"Basically, (the bills) outlaw any device they don't like," McClure said. "Any technology they don't like is banned. Not only is it banned, but it opens you to criminal penalties for its use. If you use a computer, you could be a criminal. (They don't) require that a computer be used for copyright infringement, just that it could potentially be used for copyright infringement."

A Colorado bill would restrict distributing software or hardware "capable of defeating or circumventing" copy protection technology.

Texas politicians are considering a proposal introduced this month saying an Internet user may not "conceal from a communication service provider...the existence or place of origin or destination of any communication." That would restrict anonymous Web browsing, or using an encrypted communication to send and receive e-mail. Ed Felten, a Princeton University computer scientist, says the Texas bill would outlaw firewalls using the popular Network Address Translation scheme as well.

"This has obvious implications for the right of anonymity online and the right to create tools such as proxy servers that have a lot of legitimate uses aside from their ability to facilitate anonymous speech," said Fred von Lohmann, a staff attorney at the Electronic Frontier Foundation.

The MPAA's Stevenson said the Texas bill--which is more extensive than the Maryland one--was the product of input from many groups, not merely the MPAA.

A representative for the Recording Industry Association of America, which along with the MPAA has been one of the most vocal supporters of the DMCA, said the group was not involved with drafting the state bills.

WASHINGTON--The recording industry on Friday fought to preserve a preliminary courtroom victory, arguing that Verizon Communications has no choice but to hand over the identity of an alleged Kazaa music pirate.

In a strongly worded brief filed in federal district court in Washington, the Recording Industry Association of America (RIAA) assailed Verizon's request for a stay of a Jan. 21 order as a brazen attempt by the telecommunications firm to "evade its responsibilities under the law."

The lawsuit, filed last August, pits the 1998 Digital Millennium Copyright Act (DMCA) against Internet users' right to remain anonymous online. With the vocal assistance of civil liberties groups, Verizon has argued that the DMCA's turbocharged subpoena process is not sufficiently privacy-protective, because it can be used to glean the identities of hundreds or thousands of suspected peer-to-peer pirates at a time.

Matthew Oppenheim, a senior vice president at the RIAA, said in a conference call Friday that Verizon was exaggerating the privacy risks of complying with requests made under the DMCA. Verizon and its allies, including a former Clinton administration privacy official, have suggested that copyright holders should file a "John Doe" lawsuit to unmask suspected peer-to-peer infringers instead of wielding DMCA subpoenas.

"In private conversations with the RIAA, Verizon has made it very clear that this is not a privacy issue," Oppenheim said. "They said they would be happy to turn over the names of some of their customers, as long as they don't have to turn over the names of a lot of their customers."

At issue in the RIAA's request is section 512 of the DMCA, which permits a copyright owner to send a subpoena ordering a "service provider" to turn over information about a subscriber. The service provider must promptly comply with that order, and no judge's approval is required first. In August, the RIAA asked a federal court for an order under the DMCA compelling Verizon Communications to reveal the name of a Kazaa subscriber accused of illegally trading hundreds of songs.

Oppenheim said that Congress had created a careful balance between privacy and copyright when drafting the DMCA, and Verizon's argument that the DMCA applies only to material hosted on its own servers is specious. "They're not engaged in private conduct," Oppenheim said about peer-to-peer users. "They're on public networks making available hundreds of music recordings to millions of other users. They're not doing anything in private. They don't have the right to anonymously commit a crime."

WASHINGTON--When it comes to the subject of copyright protection, neither Intel nor Hewlett-Packard can make up its mind what to do.

The two companies seem to simultaneously love and loathe the Digital Millennium Copyright Act, the 1998 law that's famously unpopular among hackers, programmers and the open-source crowd.

Last week, Intel and HP's names appeared on a press release circulated by the Business Software Alliance (BSA) opposing crucial changes to section 1201 of the DMCA. Specifically, the BSA lashed out at a bill that would make it legal to bypass copy-protection mechanisms--as long as you're not planning to circulate the resulting file to tens of thousands of your closest friends.

The BSA, likely the world's most influential antipiracy group, offered the following warning: "Of particular concern, provisions of this legislation allowing the disablement of technological protection measures on copyrighted materials would provide safe harbor for pirates who could easily claim that the 'intent' of their actions were legal even if it resulted in knowingly unlawful infringement and economic loss to copyright owners."

That means researchers like Ed Felten at Princeton University and companies like Static Control that sell toner cartridge chips will remain vulnerable to civil or even criminal prosecution. So will people who sell patches to DVD-burning software or distribute descrambling utilities that let legally purchased DVDs be watched on a Linux computer.

In other words, the BSA, speaking on behalf of its members including Intel and HP, thinks these DMCA prohibitions should remain intact. So it opposes two related bills in Congress--one championed by Rep. Rick Boucher, D-Va., and the other by Rep. Zoe Lofgren, D-Calif.

Yet Intel, speaking individually, has been lobbying to fix the same portion of the DMCA. Intel's name appears at the top of Boucher's list of sponsors of his bill--anathema to the BSA--that would defang section 1201 of the DMCA. The law currently says that "no person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component" that is designed to bypass copy-protection schemes. The split highlights a real difference between software and hardware manufacturers.

HP, too, appears to differ with its own trade association. During a meeting with CNET News.com last month, HP Senior Vice President Pradeep Jotwani characterized recent uses of the DMCA as "stretching it." (HP appears to have learned its lesson after invoking the DMCA itself last year, then hastily beating a retreat.)

The split highlights a real difference between software and hardware manufacturers. While they may be longtime allies on everything from free trade to mandatory stock option expensing and broadband implementation, software companies are more at risk to Internet piracy than hardware makers. That means they're more eager to endorse laws that intend to thwart copying, even if their side effects hinder research and punish heretofore-legitimate activity with hefty prison terms.

Replacing a car's transmission could become more expensive if automakers decide to embed auto parts with computer chips protected under a controversial copyright law.

That's just one scenario critics of the Digital Millennium Copyright Act envision if the law is interpreted to include a broad range of digital devices beyond the scope originally envisioned by legislators.

Congress passed the DMCA in 1998 in an attempt to prevent piracy of copyrighted material such as movies and music on the Internet. Under the law, it's illegal to circumvent technical measures that control access to copyrighted materials. Likewise, any tools or technology that can be used in the process of circumvention are banned.

But some businesses unrelated to Internet piracy are using the legislation to stifle their competitors, critics say.

"There definitely are vendors who are designing their products to take advantage of the DMCA so they can threaten their competitors with it," said Fred von Lohmann, senior staff attorney with the Electronic Frontier Foundation. "Anything that reduces market competition should worry consumers."

In a case that's being closely watched by DMCA critics, Lexmark is suing Static Control Components, a company that remanufactures toner cartridges to make them compatible with Lexmark printers.

The printer company says Static Control reverse-engineered a chip on laser toner cartridges meant for Lexmark printers, in violation of the DMCA. Static Control announced on Monday that it is countersuing Lexmark; it alleges unfair trade practices and seeks more than $100 million in damages.

"Cases like Lexmark's scare us," said Aaron Lowe, vice president of government affairs for the Automotive Aftermarket Industry Association, an organization of manufacturers, distributors, retailers and installers of automobile parts and accessories. "Our concern is that something like this could be used to try to prevent us from producing or remanufacturing parts for vehicles and that would prevent competition in the repair market.

"Once there's no competition, you can just see where those parts prices are going to go, and it's not going to be down," Lowe said.

Lowe said that about 75 percent of cars (after warranty) are repaired by independent repair facilities that regularly use aftermarket parts, many of which are computerized.

"Right now, onboard computers monitor and control virtually every system on the vehicle," Lowe said.

In addition, a car's antilock brakes, emissions sensors, ignition system, radiator, oxygen sensors that monitor a car's catalytic converter and airbags could potentially include DMCA-protected chips.

Both the AAIA and the Automotive Parts Rebuilders Association have filed an amicus brief in the Lexmark case.

"The bottom line is that we think there is potential for abuse if Lexmark is permitted to do what they're doing," Lowe said.

A representative for Lexmark would not comment on the specifics of the Static Control lawsuit, but said it's a "misperception" that defending the company's intellectual property rights hurts competitors and consumers.

He said Lexmark sells a general-use cartridge that can be refilled by anyone and does not use a chip.

"Lexmark spends hundreds of millions of dollars each year developing the technologies that make our printing solutions unique and compelling," said Tim King, a spokesman for the company. "We believe that every company has the right to legally defend its intellectual property, which is exactly what we are doing."

Skip London, counsel for Static Control, replied, "They have a right to protect their work from being copied. They don't have the right to tell people who have repaired cartridges that those cartridges cannot be used in their printers."

Printer cartridge maker claims unfair business practice.

The North Carolina company that says it's fighting for the survival of low-cost, remanufactured printer cartridges has filed an antitrust lawsuit against Lexmark International, charging it with attempting to monopolize the printer market.

The new lawsuit, filed Monday by Static Control Components, comes after Lexmark filed a lawsuit against SCC last December, charging the firm for illegally copying Lexmark's printer computer technology--the computer chips that have become an integral part of toner cartridges.

Sales Stalled: On Friday, the U.S. District Court for the Eastern District of Kentucky issued a preliminary injunction favoring Lexmark that bars SCC from making chips used in replacement cartridges for two of its laser printers. "Naturally, we're disappointed in that order," said William "Skip" London, general counsel for SCC. But London said Judge Karl Forester's ruling also provided guidance on what the company could and couldn't do in producing compatible cartridges. "We anticipate that we will be able to come up with a chip in a very short period of time that doesn't go against the judge's ruling," he said.

In its antitrust case filed in federal court in North Carolina, SCC alleges that Lexmark's anticompetitive practices are squeezing out companies that remanufacture toner cartridges. In its lawsuit, SCC argues that approximately 35 percent of Hewlett-Packard toner cartridges are remanufactured, compared with about 14 percent for Lexmark. SCC blames that disparity on Lexmark's anticompetitive practices.

Lexmark officials today said they hadn't received the lawsuit and wouldn't comment until they had a chance to look it over.

Cartridge Controversy: The cartridges in dispute are sold by Lexmark with an up-front discount for buyers who agree not to turn the cartridge over to a remanufacturer. Lexmark said the company offers users the option of buying its cartridges without an up-front discount if they choose not to return the cartridges to Lexmark. Those cartridges can be remanufactured.

But SCC officials have called the "prebate" program a "sham" and said end users will always buy the lower-priced discounted cartridge that can't be remanufactured.

The case has potentially broad implications. Lexmark's December 30 lawsuit against SCC charges the company with violating the Digital Millennium Copyright Act, the controversial 1998 law established to prevent piracy. The law was aimed at music and motion pictures, but critics have said Lexmark's use of it illustrates a broader problem.

Under the DMCA, it's conceivable, for example, that a hardware maker could prevent interoperability with other systems by citing the law's anticircumvention provisions. By putting software controls on, for instance, auto parts, manufacturers could use the law to stop remanufacturing of parts in that industry.

Printer maker Lexmark International Group won a preliminary injunction Thursday in efforts to prevent a company from selling computer chips that allow toner cartridges to be recycled.

Judge Karl Forester of the U.S. District Court for the Eastern District of Kentucky issued the pretrial injunction against Static Control Components, a small Sanford, N.C.-based company that sells printer parts and other business supplies.

The order prohibits the company from selling its Smartek chip. When installed in compatible Lexmark printers, the chips allow the printers to use cheaper recycled toner cartridges that would otherwise be rejected by the printer's sensors.

Lexmark filed the suit late last year, alleging the Smartek chip violates the Digital Millennium Copyright Act, which prohibits the dismantling of devices intended to protect intellectual property rights.

Printer makers have employed a variety of technological means in recent years to undercut the market for recycled toner and ink cartridges, which typically sell for much less than original items. Most printer makers sell their printers at or near cost, making their profit from sales of supplies.

Lexmark is the No. 2 seller of printers in the United States, behind Hewlett-Packard, and manufactures printers under the Dell Computer brand.

Anti-circumvention language in the DMCA has been a foundation for a number of recent copyright actions, including the Justice Department's crackdown earlier this week on a site distributing "mod chips" for Microsoft's Xbox video game console.

SANTA CLARA, California -- The Digital Millennium Copyright Act is threatening innovation in Silicon Valley, and it's time for businesses and consumers to mobilize to change the law.

That was the message at the Digital Rights Summit here on Wednesday. Intel hosted the event at its Santa Clara headquarters with Digitalconsumer.org, an organization dedicated to protecting consumers' fair-use rights with regard to digital media.

"I'm here today to tell you that I'm scared. Silicon Valley is under threat," said Joe Kraus, co-founder of Digitalconsumer.org. "The DMCA's blatant restriction on circumvention threatens a few of the core foundations of Silicon Valley: interoperability, innovation without prior permission and Silicon Valley's (belief in) empowering the consumer.

"It's the over application of a law meant to prevent Internet piracy being used to prevent legitimate competition. And that's what Silicon Valley has to watch out for and wake up to."

Technology executives, policymakers and analysts attended the forum to hear Sen. Ron Wyden (D-Ore.) and Reps. Zoe Lofgren (D-Calif.) and Howard Berman (D-Calif.), as well as executives from Sonicblue and ClearPlay among others, discuss the copyright act's impact on business.

Litigation costs, for one, have had a crippling effect on companies like Sonicblue, which spends $3 million a quarter fighting lawsuits, according to Greg Ballard, CEO of Sonicblue, which manufactures ReplayTV. Twenty-eight media companies are suing Ballard's company.

ClearPlay creates filters that allow people to strip movies of gore, profanity and nudity. Multiple movie studios, the Directors Guild of America and 15 individual directors are suing ClearPlay for applying its technology to certain films.

"We don't edit or change the DVD in any way," said ClearPlay CEO Bill Aho, who has been dubbed the most hated man in Hollywood. "We don't take money out of studio's pockets.

"It becomes an issue of creative control. (Using the filters) changes the experience for you, but not for anyone else," he said.

Panelists Skip London and David Djavaherian described how businesses unrelated to the Internet, music and movies are being sued under the DMCA.

London's company, Static Control Components, reverse-engineered a chip on laser toner cartridges meant for Lexmark printers in order to make their less expensive replacement cartridges compatible. Lexmark has subsequently filed a lawsuit against Static Control Components.

Djavaherian is an attorney for Skylink Technologies, which manufactures a universal garage door opener and is being sued by the market leader in garage door openers in a similar dispute to that of Lexmark and Static Control Components.

"What next? What other markets are going to be affected?" asked Djavaherian.

Venture capitalist Hank Barry compared the stories to Ripley's Believe It Or Not and said that investors are reluctant to fund technology startups that develop technology customers want, but that pose too great a legal risk.

"People are so afraid of getting sued that they don't innovate," said Barry, Napster's former CEO who is now a VC with Hummer Winblad.

"I meet with entrepreneurs every day. They are eager to explain how their technology is not controversial," Barry said.

For many startups, however, "the way the law is written right now, there's a good chance they will get sued," he added.

Berman's bill would protect copyright owners from liability for disrupting the unauthorized use of copyrighted content on peer-to-peer networks.

Wyden said he planned to focus his legislative efforts from the consumer rights perspective. He said he wants all technology restrictions to be disclosed to the consumer before they buy, which will also serve to educate consumers about the issue.

"There's been entirely too much focus on the threat that technology presents and nowhere near the focus on the opportunity that technology presents," said panelist Van Baker, a vice president at Garter/G2.

Baker said media companies are afraid to stray from the business models they have always relied on, but that a fundamental change is "coming whether they want it or not."

"It's going to be the policy issue of the year," predicted Michael Petricone, vice president of technology policy for the Consumer Electronics Association. "We really have a chance to move things forward, but that's only if Silicon Valley engages in the process.

"It's very counterintuitive for the Silicon Valley crowd (to get involved in lobbying efforts)," Petricone said. "Historically, their attitude toward Washington has been 'Let us build our ingenious products and leave us alone.'"

On the other hand, Petricone said Hollywood has always sought legislators' help and relied on powerful lobbyists like Motion Picture Association of America president Jack Valenti.

"We're never going to match them with the Washington approach," Petricone said. "But there are many more consumers than there are studio heads."

Seventeen people have been charged with creating satellite TV piracy tools that cost US operators DirecTV and Dish Network millions of dollars in lost revenues.

Half a dozen defendants have been charged under copyright circumvention measures contained in the controversial Digital Millennium Copyright Act. The other accused face conspiracy charges.

It is alleged that members of the group developed software and hardware devices to defeat the smart card protection designed to restrict satellite TV services to only paying subscribers.

Information on how to unscramble satellite TV signal and defeat smartcards was traded in Net chat rooms amongst the accussed, prosecutors claim.

Ten defendants, including a 43-year-old Los Angeles man who admits causing satellite TV firm $14.8 million in lost revenue, have already entered guilty pleas, AP reports. Most of the defendants, whose age ranges from 19 to 52, come from California but some are from as far away as North Carolina, Ohio and other states.

The charges against the 17 come in federal grand jury indictments returned last month and unsealed earlier this week. ®

In a final round of skirmishing prior to a court hearing Friday, a North Carolina company argued that a controversial copyright law does not prevent it from selling computer chips that allow toner cartridges to be reused.

Static Control Components said in a legal brief filed this week that Lexmark, the No. 2 printer maker in the United States, is trying to bilk customers and stifle competition by invoking the 1998 Digital Millennium Copyright Act (DMCA).

U.S. District Judge Karl Forester has set a hearing on Lexmark's request for a preliminary injunction for Friday in Lexington, Ky., in the case, which is the first to pit the long-established right to reverse-engineer against copyright law.

In December 2002, Lexmark sued Static Control, a family-owned business in Sanford, N.C., claiming that its Smartek chips sold to toner cartridge remanufacturers violate the DMCA. The Smartek chip "circumvents the technological measure" that the printer uses to verify the cartridge is original and not remanufacturered, Lexmark claims.

On Jan. 10, Forester accepted Static Control's offer to temporarily cease manufacturing the Smartek chip until a hearing could be scheduled.

In an interview with CNET News.com on Wednesday, a top Hewlett-Packard executive slammed the printer rival for wielding the DMCA against the remanufacturing industry. "We think it is stretching it," HP Senior Vice President Pradeep Jotwani said. "The DMCA was put in place (to protect) things like movies, music and software applications."

Static Control's 41-page brief warns that if Lexmark's claims were successful, they would set a worrying precedent and cause DMCA-protected chips to sprout in many consumer products. "One readily could envision, for example, an automobile manufacturer applying technological measures...to prevent competition in the aftermarket for replacement tires, wiper blades or other automotive parts; camera manufacturers attempting to foreclose the use of competitors' lenses or brands of film; a ball-point pen manufacturer using a technological measure and an 'ink low' program to shut out replacement ink refills; or a cell phone manufacturer applying technological measures to replacement batteries," the brief says.

This lawsuit is the latest of several recent DMCA cases--both civil and criminal--that have tested the limits of the 1998 copyright law, which Congress intended to limit Internet piracy. Eight movie studios wielded it to force 2600 magazine to delete a DVD-descrambling utility from its Web site, but the U.S. Justice Department recently lost a criminal case against a Russian firm that created a program that cracked Adobe's electronic books.

Under section 1201 of the DMCA, it is generally unlawful to circumvent technology that restricts access to a copyrighted work or sell a device that can do so. But Congress also included exemptions in the DMCA explicitly permitting activities such as law-enforcement purposes, encryption research, security testing and interoperability.

Static Control has seized on the last exemption, which permits reverse-engineering "for the purpose of enabling interoperability of an independently created computer program with other programs," and says its creation of the Smartek chip is also protected by traditional fair use rights enshrined in U.S. copyright law.

Its attorneys cite the landmark 1993 Sega v. Accolade decision from the 9th U.S. Circuit Court of Appeals. In that case, the court said: "Where disassembly is the only way to gain access to the ideas and functional elements embodied in a copyrighted computer program and where there is a legitimate reason for seeking such access, disassembly is a fair use of the copyrighted work, as a matter of law."

Static Control also claims that Lexmark's code allegedly protected by the DMCA is nothing more than "than bare-bones implementations of mathematical formulae and scientific observations that cannot be protected by copyright." Lexmark uses the government-standard Secure Hash Algorithm-1 (SHA-1 Lexmark could not be reached for comment Wednesday.

If passed in it's current state, the Digital Media Consumers' Rights Act would modify the DMCA so that copy-protected products would have to be labeled as such, and so that encryption could be broken as long as it's for a legitimate purpose (playing DVDs on your computer, backing up CDs, etc.)

You can read about this bill at the following websites:

• Rick Boucher at House.gov
• Explanation and commentary at Geek.com

This bill is in the House of Representatives for the second time. You can send a FREE FAX to your local representative notifying them that you support this legislation via the Electronic Frontier Foundation.

Stand up for your rights, because your rights aren't profitable.

UNITED States trade negotiators are pushing for Australia to sign up to a tough new copyright regime that could hold internet service providers liable for breaches.

The first round of talks in an Australia-US Free Trade Agreement will commence in Australia in March, and the internet industry is flagging that ISP liability for copyright material is "on the table" as far as the US side is concerned. US Trade Representative Robert Zoellick has raised the issue in a letter to Congress ahead of the talks.

A free trade agreement would probably involve the two nations "harmonising" key legislation on commerce. This could include bringing the Australian Copyright Act into line with US law.

Australia's law differs substantially from the US Digital Millennium Copyright Act, which holds ISPs liable for the transmission of copyright material unless they sign up to a content management agreement that requires them to remove material judged to be in breach of copyright law.

"The US would like to influence our legislation in a way similar to theirs," Department of Foreign Affairs and Trade regional and free trade agreement section director John Richardson said.

The US was also likely to seek stronger protection against software piracy, he said. "In copyright they believe we don't have strong enough criminal penalties, as opposed to civil penalties."

Australian ISPs have said heavy lobbying from the entertainment industry is behind the US stance.

"The US side is heavily influenced by music and motion picture industry interests, which in the US have been very aggressive in the way they have pursued ISPs," Internet Industry Association chief executive Peter Coroneos said.

"The US has definitely put ISP liability on the agenda, and we're developing a position on that."

The controversial DMCA was passed by Congress in 1998, and has been widely attacked for not providing enough protection to users.

While 1998 amendments to Australia's Copyright Act protect ISPs from legal action when they act as conduits for copyright material, the US law provides that so-called "safe harbour" only when they sign up for a regime of takedown notices.

Like Australia's internet censorship regime, the US takedown system requires ISPs to deliver notices to alleged violators and to block access to copyright material.

Copyright owners may also ask for the identity of the subscriber, but many ISPs have fought such orders.

Just last week, the US District Court ordered ISP and telco Verizon to give up the name of a subscriber alleged to have downloaded 600 songs via Kazaa in a single day.

Mr Coroneos said the Department of Foreign Affairs and Trade had approached the IIA for input on the copyright issue.

Unlike many other interests - including the Australian Wheat Board, which is opposing US attempts to dismantle the single desk system for exports - the internet industry could join the agreement quickly.

The IIA has been working on a code of practice with the Australian Recording Industry Associations for some months.

What if there was a law that said you couldn't browse the Internet with any device that could be attached to a printer? You'd probably ignore the law and recognize it as stupid and unenforceable. But maybe content providers want to make sure they get page hits from people reading their material. If you print out this article and give it to a friend then O'Reilly wouldn't be able to track it and get credit for that additional reader. Now, O'Reilly doesn't care. In two presentations Tuesday at O'Reilly's Mac OS X Conference, company founder and president, Tim O'Reilly said, "Obscurity is a far greater threat to anyone in the content industry than piracy."

But imagine that there are some publishers who do care and their solution is to pass laws that regulate technology. Imagine a law that says it's illegal to produce a device that can both display content in a browser and connect to a printer. Now there's someone concrete to sue if a law is broken. Imagine the law says more than that. Suppose it said that your device has to check in with some central authority on a regular basis. This is so that if a device can browse the Internet and later finds a way to connect it to a printer then the Web browsing capabilities can be disabled by this central authority. You would be buying a device because it can perform certain functions--but later these functions can be disabled by someone else without your permission.

These political facts that author Cory Doctorow and others have been explaining are far stranger than the science fiction in the books that Cory writes. The entertainment industry is pressuring Congress for laws that will restrict what the technology companies can sell to you. These efforts aren't new, but this time the lack of opposition from the technology companies is telling.

Sec. 1201. Circumvention of copyright protection systems

(a) VIOLATIONS REGARDING CIRCUMVENTION OF TECHNOLOGICAL MEASURES- (1)(A) No person shall circumvent a technological measure that effectively controls access to a work protected under this title. The prohibition contained in the preceding sentence shall take effect at the end of the 2-year period beginning on the date of the enactment of this chapter.

In the latest bit of DMCA lunacy, copyright guru David Nimmer turned me onto a case that his firm is defending, where a garage door opener company (The Chamberlain Group) has leveled a DMCA claim (among other claims) against the maker of universal garage door remotes (Skylink). Yet another case where the anti-circumvention provisions of the DMCA are being used to impede legitimate competition, similar to the Lexmark case. Not, I think, what Congress had in mind when enacting the DMCA.