April 2007

The IRS likes to talk about how it’s primarily concerned with improving taxpayer services, particularly this time of year. But don’t be fooled. Earlier this year, the Bush Administration proposed to require “brokers” to report online sales of tangible personal property to the IRS.

This is really another giant surveillance program, like the trial balloon the administration has previously floated to require internet service providers to retain customer data to combat crimes committed against children (as I’ve discussed here and here). In both cases, the government is trying to harness the unique capacity of the Internet to identify and document conduct in ways that were never feasible nor possible before — in this case ordinary commercial transactions that just happen to be conducted online. According to press coverage, the proposal is specifically aimed at online auctions (see this and this).

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Ed Felten describes the latest phase of the cat-and-mouse game between the HD-DVD/Blu-Ray cartel and hackers trying to crack their AACS encryption scheme:

To reduce the harm to law-abiding customers, the authority apparently required the affected programs to issue free online updates, where the updates contain new software along with new decryptions keys. This way, customers who download the update will be able to keep playing discs, even though the the software’s old keys won’t work any more.

The attackers’ response is obvious: they’ll try to analyze the new software and extract the new keys. If the software updates changed only the decryption keys, the attackers could just repeat their previous analysis exactly, to get the new keys. To prevent this, the updates will have to restructure the software significantly, in the hope that the attackers will have to start their analysis from scratch.

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I’ll be speaking tomorrow at the Security and Liberty Forum hosted by the Privacy and Technology Committee of the American Civil Liberties Union of North Carolina and the Department of Computer Science, UNC-Chapel Hill.

That’s Saturday, April 14, 2007 from 1-5 p.m., Chapman Hall on the UNC Campus.

pokerRep. Barney Frank is continuing his effort to repeal the U.S. ban on online gambling, which he calls “one of the stupidest things I ever saw.” The law, the “Unlawful Internet Gambling Enforcement Act,” was passed during the last session of Congress. Now that he’s the chair of the House Financial Services Committee he certainly has a better chance taking this silly law off the books, but he still faces an uphill battle.

Back in October 2003, when I was still with the Cato Institute, my colleague Wayne Crews and I brought Rep. Frank to Cato to deliver some keynote remarks on this issue during an event we hosted. He was amazing and his speech that day remains to the most principled (and highly entertaining) thing I’ve ever heard anyone say on the issue to date. And, luckily, the video is still on the Cato website here. Make sure to check it out and listen to the excellent Q&A session in particular. Great stuff.


Tech Policy Weekly from the Technology Liberation Front is a weekly podcast about technology policy from TLF’s learned band of contributors. The shows’s panelists this week are Jerry Brito, James Gattuso, Tim Lee, Adam Thierer, and Ryan Paul of Ars Technica. Topics include,

  • More states governments defy congress and reject REAL ID
  • Won’t someone please think of the children?!
    • the FTC’s new report on marketing violence to children
    • the Child Online Protection Act
    • and the .xxx domain is rejected
  • How the net neutrality debate is bleeding into spectrum auctions and other quick bits

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If only . . .

I welcome the critical email I recently received about my April Fool’s Day post. The discussion has some interesting provocations, but more importantly it illustrates some security/privacy thinking that more people need to get their heads around.

Here’s my critic:

As a Systems Analyst, I applaud your efforts influencing public policy on such important issues as information privacy and security. However, I strongly disagree with your tactics, and methodology. Propigating fear through disseminating false information is a terrorist style tactic and in the long run I think it does more harm then good.

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Since 2000, the Federal Trade Commission (FTC) has surveyed the marketing and advertising practices of major media sectors (movies, music and video games) in a report entitled Marketing Violent Entertainment to Children. (The reports can be found here). According to the agency, the purpose of these reports is to examine “the structure and operation of each industry’s self-regulatory program, parental familiarity and use of those systems, and whether the industries had marketed violent entertainment products in a manner inconsistent with their own parental advisories.” The fifth report in this ongoing series was released today.

Generally speaking, the latest report finds that things continue to improve in all three sectors with the greatest improvements coming in the video game sector. But the FTC argues that these industries still need to do more to improve their ratings systems and the enforcement of those systems.

Many of the FTC’s recommendations are unobjectionable in that they are basically suggesting these industries do a better job promoting and enforcing their own voluntary ratings and labeling systems. It’s tough to be against that, of course, but there are some interesting questions about what it means in practice.

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Over at Ars, I cover the European Commission’s new report advocating the creation of a new set of patent courts to unify Europe’s patent system:

The report argues that European competitiveness is hampered by its limited use of patents compared with Japan and the United States. It notes that Americans and Japanese both file more patents per capita than due Europeans, and speculate that Europe’s unwieldy patent system is holding back innovation.

However, the report pays little attention to the possibility that too much patenting could be an even bigger impediment to economic growth. The report devotes only one short paragraph to patent thickets, patent trolls, and other problems created by low-quality patents. It doesn’t offer any concrete recommendations for ensuring that the European patent system avoids the problems now being encountered in the United States.

Nor does the report address the risk that creating a separate patent court will lead to a judicial system that is too sympathetic to expanding the scope of patents. Some observers argue that’s precisely what happened in the United States. They note that since Congress created the Federal Circuit in 1982 to hear patent appeals, the scope of patents has been greatly expanded. Software and business method patents have been legalized, and the bar for obviousness has been dramatically lowered. Some speculate that the large number of former patent lawyers among the judges of the Federal Circuit are one reason for this shift—lawyers who have devoted their lives to patent law will naturally be sympathetic to arguments for expanding the scope of the patent system.

REAL ID Revolt Continues

by on April 11, 2007

Ryan Paul at Ars has a write-up on the continuing revolt against the REAL ID Act among the states:

The New Hampshire House of Representatives voted last week to block implementation of the federal government’s controversial Real ID act. Since New Hampshire Governor John Lynch does not intend to veto the Real ID rejection bill, it will pass if approved by the state senate. Characterized by New Hampshire Representative Sherman Packard as “the worst piece of blackmail to come out of the federal government,” the Real ID Act creates a set of uniform standards for state-issued ID cards, and mandates the construction of a centralized national database to store information on American citizens…

Idaho and Maine have already passed bills rejecting implementation of the Real ID act, and similar proposed bills are being evaluated in South Carolina and Arkansas as well as New Hampshire. ACLU state legislative department director Charlie Mitchell says that this is just the beginning of a “tidal wave of rebellion against Real ID.” If enough state governments refuse to comply with the requirements of the Real ID act, it is likely that congress will have to reevaluate the entire plan. “Across the nation, local lawmakers from both parties are rejecting the federal government’s demand to undermine their constituents privacy and civil liberties with a massive unfunded mandate,” says Mitchell. “Congress must revisit the Real ID Act and fix this real mess.”

Indeed. Our own Jim Harper has been on the front lines in this fight, testifying before state legislatures and urging them to reject REAL ID. Perhaps his hard work is paying off.

WASHINGTON, April 11, 2007 – The wireless industry association CTIA has retained an economic consulting firm run by the former boss of FCC Chairman Kevin Martin to poke holes in proposals modifying a forthcoming auction of radio frequencies.

Furchtgott-Roth Economic Enterprises is run by Harold Furchtgott-Roth, a Republican FCC Commissioner from 1997-2001. Martin worked as a telecommunications attorney for Furchtgott-Roth from 1997 to 1999.

Some technology companies and non-profit advocacy groups have been coalescing around a proposal released in February by a new venture called Frontline Wireless. It would create a new wireless zone for public safety communications.

But CTIA and its major members – particularly Verizon and AT&T – have come out strongly against the Frontline proposal. On April 5, CTIA CEO Steve Largent, a former Republican congressman from Oklahoma, said in a letter to Martin that there were “issues involving the legality of the proposal.”

The wireless companies are also upset that seriously entertaining the Frontline proposal, which appears to be gaining momentum at the FCC, would delay the agency’s planned auction of spectrum frequencies in January 2008. “It is unclear how a resolution of the issues raised by the Frontline proposal could occur in time for an auction,” said Largent.

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