Computer underground Digest Fri Sept 22, 1995 Volume 7 : Issue 75

Computer underground Digest Fri Sept 22, 1995 Volume 7 : Issue 75
ISSN 1004-042X

Editors: Jim Thomas and Gordon Meyer ([email protected]
Archivist: Brendan Kehoe
Shadow Master: Stanton McCandlish
Field Agent Extraordinaire: David Smith
Shadow-Archivists: Dan Carosone / Paul Southworth
Ralph Sims / Jyrki Kuoppala
Ian Dickinson
Cu Digest Homepage: http://www.soci.niu.edu/~cudigest

CONTENTS, #7.75 (Fri, Sept 22, 1995)

File 1--CuD readers may want to know...
File 2--VTW BillWatch #18: new child porn bill (S1237)
File 3--Ruling in RTC v. F.A.C.T.NET (Church of Sci. Loses)
File 4--Cu Digest Header Info (unchanged since 19 Apr, 1995)

CuD ADMINISTRATIVE, EDITORIAL, AND SUBSCRIPTION INFORMATION APPEARS IN
THE CONCLUDING FILE AT THE END OF EACH ISSUE.

---------------------------------------------------------------------

From: Stanton McCandlish <[email protected]>
Subject: File 1--CuD readers may want to know--(EFF Homepage)
Date: Wed, 20 Sep 1995 20:47:43 -0400 (EDT)

..that the EFF-housed CuD archive has been jazzed up a bit for WWW users.
It now features a nice index page.
URL: http://www.eff.org/pub/Publications/CuD/

This index should propagate to all the mirrors as well, so all of them
should be browsable in style.

Only the top level is currently so indexed. Will work on the
subdirectories at some point.

--
<A HREF="http://www.eff.org/~mech/"> Stanton McCandlish
</A><HR><A HREF="mailto:[email protected]"> [email protected]
</A><P><A HREF="http://www.eff.org/"> Electronic Frontier Foundation
</A><P><A HREF="http://www.eff.org/1.html"> Online Services Mgr. </A>

------------------------------

Date: Sun, 17 Sep 1995 17:30:12 -0400
From: [email protected](Shabbir J. Safdar, Voters Telecom Watch)
Subject: File 2--VTW BillWatch #18: new child porn bill (S1237)

SUMMARY OF INTERNET CENSORSHIP LEGISLATION

The four different pieces of legislation that address Internet regulation
are still waiting for conference committee consideration. With the budget
as the current Congressional priority, it isn't likely the fate of the
Internet will be considered for several weeks.

VTW is still collecting the signatures of businesses and bulletin boards
that wish to participate in the joint letter to be sent to Congress urging
parental control (instead of censorship) as a means of approaching the
Internet. VTW urges you to contact your Internet service provider along
with any business that use the Internet to signon to this letter. Details
can be found at the http://www.vtw.org/cdaletter/
or by sending mail to [email protected] with "send cdaletter" in the subject line.

_________________________________________________________
CHANGES IN US CRYPTOGRAPHY POLICY

VTW has been chronicaling the government's attempts at forcing Clipper II
onto the public and industry. Of course, it is still extremely unpopular.
At the Sep. 6th and 7th NIST workshop, industry and public interest
groups panned the plan and small working groups setup by NIST to evaluate
the criteria unhappily participated, even openly revolting in some instances.

On Sep 15th, NIST held another workshop to discuss the FIPS (Federal
Information Processing Standard) that would embody Clipper II (also
know as Commercial Key Escrow). Believe it or not, this meeting was not
a repeat of the Sep 6th/7th meeting. Several attendees noticed significant
differences:

HEIGHTENED GOVERNMENT PRESENCE
At the Sep 6th/7th workshop, dissent among industry and public
representatives interfered with NIST's attempts at having a discussion
about the specifics of Clipper II. Simply put, industry and the public
advocates didn't like the plan. Therefore discussions of the details
were fruitless. One smaller working group simply refused to work on
the details and issued a statement condemning the whole Clipper II plan.

The government upped the number of Federal participants at the Sep. 15th
meeting in order to prevent the repeat of such an event. Several public
advocates noticed a high percentage of government-provided participants in
the working groups. One civil liberties advocate noted that he had never
seen so many NSA individuals identifying themselves in public before.

Needless to say the tactic worked. Little in the way of opposition to
the plan was voiced.

BURNOUT AMONG INDUSTRY AND PUBLIC REPRESENTATIVES
Having been through this Kafka-esque exercise a mere two years ago with
the original Clipper plan, industry and public advocates are showing
signs of burnout. It's fairly clear that their concerns are not being
listened to. Both the public and the industry clearly sent a message to
the Clinton Administration when the original Clipper was proposed.
Said F. Lynn McNulty of NIST in the New York Times Magazine (6/12/94), "We
received 320 comments, only 2 of which were supportive."

NIST made the Clipper Chip a government standard anyway, and it flopped
in the marketplace. How many of those Clipper-phones do you see running
around? The government's so-called "stupid criminals" are just falling
over themselves to buy them, aren't they? NIST has stated that it has
already been decided to make Clipper II a standard, before receiving any
public input. Is this how democracy is supposed to work?

COMMERCIAL CHEERLEADING FROM SELECT INDUSTRY INDIVIDUALS
If you're wondering how the Clinton administration can get away with
pushing such a disastrous proposal again, look no further than select
members of the hardware and software industry. Several companies that
make both security software, hardware devices and several key escrow
companies are pushing Clipper II because they incorrectly believe that
the government will not make it mandatory, and because they believe
the industry wants key escrow.

VTW believes they have it half-right: industry wants key escrow, though
not on the Clinton Administration's terms. It is clear, however, that
the Administration will not allow key-escrow to be a voluntary program.

The EPIC (Electronic Privacy Information Center) has proved that the
government has enough common sense to know that key escrow is going to be
unpopular and will have to be forced on the marketplace. (See FOIA'd
documents at URL:http://www.epic.org/crypto/).

Never the less, several companies who want to produce hardware key
escrowed devices, key escrowed software, and become escrow holders have
become the champions of the Clipper II (Commercial Key Escrow)
program. With their support, VTW predicts that the Clinton
Administration will ratify Clipper II as a FIPS standard over the
objections of industry and public.

Stay tuned to BillWatch for progress on Clipper II.
______________________________________________________________

Internet Freedom and Family Empowerment Act (HR 1978, S n.a.)

*** THIS BILL IS IN CONFERENCE COMMITTEE ***

Description:
HR 1978 is an attempt to recognize the unique medium that is
online systems and avoid legislating censorship. It would:
-prohibit the FCC from regulating constitutionally-protected
online speech
-absolve sysops and services from liability if they take
good faith measures to screen their content or provide
parental-screening software

See directions below for obtaining analyses from various
organizations.

House sponsors and cosponsors: Cox (R-CA), Wyden (D-OR), Matsui (D-CA),
White (R-WA), Stupak (D-MI), Rohrabacher (R-CA)

House status:
HR 1978 was passed 8/4/95 by the House in a vote (421-4).

Where to get more info:
Email: [email protected] (with "send hr1978" in the subject line)
Gopher: gopher -p 1/vtw/exon gopher.panix.com
WWW: http://www.panix.com/vtw/exon

___________________________________________________________

1995 COMMUNICATIONS DECENCY ACT (CDA) (Passed Senate, HR 1004)

*** THIS BILL IS IN CONFERENCE COMMITTEE ***

Description:
The CDA would criminalize electronic speech currently protected
in print by the First Amendment.

House CDA sponsors: Johnson (D-SD)

House status:
HR1004 will probably never leave committee.

Senate status:
The Senate affirmed the Communications Decency Act (84-16)
as amended to the Telecommunications Reform bill (S 652).

Where to get more info:
WWW: http://www.panix.com/vtw/exon
http://www.eff.org/
http://www.cdt.org/
http://epic.org/free_speech
Gopher: gopher -p 1/vtw/exon gopher.panix.com
gopher gopher.eff.org
Email: [email protected] (with "send cdafaq" in the subject line)
[email protected]
[email protected]

____________________________________________________________
Child Protection, User Empowerment, and Free Expression in Interactive
Media Study Act (Amendment to HR1555 in the House, S 714)

*** THIS BILL IS IN CONFERENCE COMMITTEE ***

Description:
Would direct the Department of Justice to study whether current
law is sufficient to cover enforcement of existing obscenity
laws on computers networks.

Senate sponsors: Leahy (D-VT)

Senate status:
Currently unattached to any legislation; attempted attachment to
S.652 but failed (6/14/95).

House sponsors: Klink (D-PA)

House status:
Amended to HR 1555 in committee.

______________________________________________________________

Last-minute provisions of the Manager's Mark amendment to HR1555 (added to
HR1555 at the last minute)

*** THIS BILL IS IN CONFERENCE COMMITTEE ***

Description:
Criminalizes many forms of constitutionally-protected speech
when they are expressed online.

House sponsors: Unknown

House status:
Amended to HR 1555 through the Manager's Mark on 8/4/95.

______________________________________________________________

1995 Protection of Children from Computer Pornography Act (S 892)

Description:
Would make Internet Service Providers liable for shielding
people under 18 from all indecent content on the Internet.

Senate sponsors: Dole (R-KS), Coats (R-IN), Grassley (R-IA), McConnell (R-KY),
Shelby (R-AL), Nickles (R-OK), Hatch (R-UT)

Senate status:
A hearing was held Monday July 24th. No action on the bill
has happened yet as a result of that hearing.

___________________________________________________________

Anti-Electronic Racketeering Act of 1995 (HR n.a., S 974)

Description:
S 974 has many effects (not good) on law enforcement's use of
intercepted communications. It would also make it unlawful for
any person to publicly disseminate encoding or encrypting
software including software *currently allowed* to be exported
unless it contained a "universal decoding device". This
more than likely means that Clipper-style key escrow systems
could be disseminated, but not strong, private cryptography.

Senate sponsors: Grassley (R-IA)

Senate status: Currently not active and probably won't move before the
August recess.

Senate citizen action required:
Request bill below and familiarize yourself with it. VTW is
tracking this bill, and will alert you when there is movement.
There is no Congressional action to take right now; as other
bills (such as the Communications Decency Act) pose a greater,
more immediate threat.

House of Representatives status: No House version is currently enrolled.

Where to get more info:
Email: [email protected] (with "send s974" in the subject line)
Gopher: URL:gopher://gopher.panix.com:70/11/vtw/

_________________________________________________________
Child Pornography Prevention Act of 1995 (HR n.a., S 1237)
Description:
S 1237 would criminalize material that depicts children engaging
in sexually-explicit conduct whether or not the material was
produced with children or entirely without computer.

Senate sponsors:
Hatch (R-UT), Abraham (R-MI), Grassley (R-IA), Thurmond (R-SC)

Senate status: In the Judiciary committee, no hearing has been held yet

Senate citizen action required:
Read the bill below and familiarize yourself with it. VTW is
tracking this bill, and will alert you when there is movement.

House of Representatives status: No House version is currently enrolled.

Where to get more info:
Check URL:http://thomas.loc.gov and search for bill S1237. VTW
will have a homepage on this bill soon. We've included both
the text of the bill and Congressional debate on it below.

To amend certain provisions of law relating to child pornography,
and for other purposes.
IN THE SENATE OF THE UNITED STATES
September 13 (legislative day, September 5), 1995
Mr. Hatch (for himself, Mr. Abraham, Mr. Grassley, and Mr.
Thurmond) introduced the following bill; which was read twice
and referred to the Committee on the Judiciary
A BILL
To amend certain provisions of law relating to child pornography,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Child Pornography Prevention Act of
1995'.
SEC. 2. FINDINGS.
Congress finds that--
(1) the use of children in the production of sexually
explicit material, including photographs, films, videos,
computer images, and other visual depictions, is a form of
sexual abuse which can result in physical or psychological
harm, or both, to the children involved;
(2) child pornography permanently records the victim's abuse,
and its continued existence causes the child victims of sexual
abuse continuing harm by haunting those children in future years;
(3) child pornography is often used as part of a method of
seducing other children into sexual activity; a child who is
reluctant to engage in sexual activity with an adult, or to
pose for sexually explicit photographs, can sometimes be
convinced by viewing depictions of other children `having fun'
participating in such activity;
(4) prohibiting the possession and viewing of child
pornography encourages the possessors of such material to
destroy them, thereby helping to protect the victims of child
pornography and to eliminate the market for the sexually
exploitative use of children; and
(5) the elimination of child pornography and the protection
of children from sexual exploitation provide a compelling
governmental interest for prohibiting the production,
distribution, possession, or viewing of child pornography.
SEC. 3. DEFINITIONS.
Section 2256 of title 18, United States Code, is amended--
(1) in paragraph (2)(E), by inserting before the semicolon
the following: `, or the buttocks of any minor, or the breast
of any female minor';
(2) in paragraph (5), by inserting before the semicolon the
following: `, and data stored on computer disk or by electronic
means which is capable of conversion into a visual image';
(3) in paragraph (6), by striking `and';
(4) in paragraph (7), by striking the period and inserting `;
and'; and
(5) by adding at the end the following new paragraph:
`(8) `child pornography' means any visual depiction,
including any photograph, film, video, picture, drawing, or
computer or computer-generated image or picture, whether made
or produced by electronic, mechanical, or other means, of
sexually explicit conduct, where--
`(A) the production of such visual depiction involves the
use of a minor engaging in sexually explicit conduct;
`(B) such visual depiction is, or appears to be, of a
minor engaging in sexually explicit conduct; or
`(C) such visual depiction is advertised, promoted,
presented, described, or distributed in such a manner that
conveys the impression that the material is or contains a
visual depiction of a minor engaging in sexually explicit
conduct.'.
SEC. 4. PROHIBITED ACTIVITIES RELATING TO MATERIAL CONSTITUTING OR
CONTAINING CHILD PORNOGRAPHY.
(a) In General: Section 2252 of title 18, United States Code, is
amended to read as follows:
`Sec. 2252. Certain activities relating to material constituting or
containing child pornography
`(a) Any person who--
`(1) knowingly mails, transports, or ships in interstate or
foreign commerce by any means, including by computer, any child
pornography;
`(2) knowingly receives or distributes--
`(A) any child pornography that has been mailed, shipped,
or transported in interstate or foreign commerce by any
means, including by computer; or
`(B) any material that contains child pornography that
has been mailed, shipped, or transported in interstate or
foreign commerce by any means, including by computer;
`(3) knowingly reproduces any child pornography for
distribution through the mails, or in interstate or foreign
commerce by any means, including by computer;
`(4) either--
`(A) in the maritime and territorial jurisdiction of the
United States, or on any land or building owned by, leased
to, or otherwise used by or under the control of the United
States Government, or in the Indian country (as defined in
section 1151), knowingly sells or possesses with the intent
to sell any child pornography; or
`(B) knowingly sells or possesses with the intent to sell
any child pornography that has been mailed, shipped, or
transported in interstate or foreign commerce by any means,
including by computer, or that was produced using materials
that have been mailed, shipped, or transported in
interstate or foreign commerce by any means, including by
computer; or
`(5) either--
`(A) in the maritime and territorial jurisdiction of the
United States, or on any land or building owned by, leased
to, or otherwise used by or under the control of the United
States Government, or in the Indian country (as defined in
section 1151), knowingly possesses 3 or more books,
magazines, periodicals, films, videotapes, computer disks,
or any other material that contains any child pornography; or
`(B) knowingly possesses 3 or more books, magazines,
periodicals, films, videotapes, computer disks, or any
other material that contains any child pornography that has
been mailed, shipped, or transported in interstate or
foreign commerce by any means, including by computer,
shall be punished as provided in subsection (b).
`(b)(1) Whoever violates, or attempts or conspires to violate,
paragraphs (1), (2), (3), or (4) of subsection (a) shall be fined
under this title or imprisoned not more than 10 years, or both,
but, if such person has a prior conviction under this chapter or
chapter 109A, such person shall be fined under this title and
imprisoned for not less than 5 years nor more than 15 years.
`(2) Whoever violates paragraph (5) of subsection (a) shall be
fined under this title or imprisoned for not more than 5 years, or
both.'.
(b) Technical Amendment: The table of sections for chapter 110 of
title 18, United States Code, is amended by amending the item
relating to section 2252 to read as follows:
`2252. Certain activities relating to material constituting or
containing child pornography.'.
SEC. 5. PRIVACY PROTECTION ACT AMENDMENTS.
Section 101 of the Privacy Protection Act of 1980 (42 U.S.C.
2000aa) is amended--
(1) in subsection (a)(1), by inserting before the semicolon
at the end the following: `, or if the offense involves the
production, possession, receipt, mailing, sale, distribution,
shipment, or transportation of child pornography, the sexual
exploitation of children, or the sale or purchase of children
under section 2251, 2251A, or 2252 of title 18, United States
Code'; and
(2) in subsection (b)(1), by inserting before the semicolon
at the end the following: `, or if the offense involves the
production, possession, receipt, mailing, sale, distribution,
shipment, or transportation of child pornography, the sexual
exploitation of children, or the sale or purchase of children
under section 2251, 2251A, or 2252 of title 18, United States
Code'.
SEC. 6. SEVERABILITY.
If any provision of this Act, an amendment made by this Act, or
the application of such provision or amendment to any person or
circumstance is held to be unconstitutional, the remainder of this
Act, the amendments made by this Act, and the application of such
to any other person or circumstance shall not be affected thereby.

STATEMENTS OF INTRODUCED BILLS AND JOINT RESOLUTIONS (Senate -
September 13, 1995)

THE CHILD PORNOGRAPHY PREVENTION ACT OF 1995

Mr. HATCH. Mr. President, it is impossible for any decent American not
to be outraged by child pornography and the sexual exploitation of
children. Such material is a plague upon our people and the moral
fabric of this great Nation.

And, as a great Nation, I believe that we have both the constitutional
right and moral obligation to protect our children from those who,
motivated by profit or perversion or both, would abuse, exploit, and
degrade the weakest and most vulnerable members of our society.

Current Federal law dealing with child pornography reflects the
overwhelming bipartisan consensus which has always existed, both in
Congress and in the country, that there is no place for such filth
even in a free society and that those who produce or peddle this
reprehensible material must be made to feel the full weight of the law
and suffer a punishment reflective of the seriousness of their
offense.

As with many of our criminal statutes, however, effective enforcement
of our laws against child pornography today faces a new obstacle: The
criminal use, or misuse, of new technology which is outside the scope
of existing statutes. In order to close this computer-generated
loophole and to give our law enforcement authorities the tools they
need to stem the increasing flow of high-tech child pornography, I am
today introducing the Child Pornography Prevention Act of 1995.

The necessity for prompt legislative action amending our existing
Federal child pornography statutes to cover the use of computer
technology in the production of such material was vividly illustrated
by a recent story in the Washington Times. This story, dated July 23,
1995, reported the conviction in Canada of a child pornographer who
copied innocuous pictures of children from books and catalogs onto a
computer, altered the images to remove the childrens' clothing, and
then arranged the children into sexual positions. According to
Canadian police, these sexual scenes involved not only adults and
children, but also animals.

Even more shocking than the occurrence of this type of repulsive
conduct is the fact that, under current Federal law, those pictures,
depicting naked children involved in sex with other children, adults,
and even animals, would not be prosecutable as child pornography. That
is because current Federal child pornography and sexual exploitation
of children laws, United States Code title 18, sections 2251, 2251A,
and 2252, cover only visual depictions of children engaging in
sexually explicit conduct whose production involved the use of a minor
engaging in such conduct; materials such as photographs, films, and
videotapes.

Today, however, visual depictions of children engaging in any
imaginable forms of sexual conduct can be produced entirely by
computer, without using children, thereby placing such depictions
outside the scope of Federal law. Computers can also be used to alter
sexually explicit photographs, films, and videos in such a way as to
make it virtually impossible for prosecutors to identify individuals,
or to prove that the offending material was produced using children.

The problem is simple: While Federal law has failed to keep pace with
technology, the purveyors of child pornography have been right on line
with it. This bill will help to correct that problem.

The Child Pornography Prevention Act of 1995, which includes a
statement of congressional findings as to harm, both to children and
adults, resulting from child pornography, has three major provisions.
First, it would amend United States Code title 18, section 2256, to
establish, for the first time, a specific, comprehensive, Federal
statutory definition of child pornography. Under this bill, any visual
depiction, such as a photograph, film, videotape or computer image,
which is produced by any means, including electronically by computer,
of sexually explicit conduct will be classified as child pornography
if: (a) its production involved the use of a minor engaging in
sexually explicit conduct; or (b) it depicts, or appears to depict, a
minor engaging in sexually explicit conduct; or (c) it is promoted or
advertised as depicting a minor engaging in sexually explicit conduct.

_____________________________________________________________

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------------------------------

Date: Fri, 22 Sep 1995 15:21:41 CDT
From: CuD Moderators <[email protected]>
Subject: File 3--Ruling in RTC v. F.A.C.T.NET (Church of Sci. Loses)

((MODERATORS NOTE: The following is the text of the Church of
Scientiology civil action against F.A.C.TNET. The ruling
is a legal blow for CoS. Links to web sites detailing what
some have called a "campaign of litigation terrorism" or a
"war on the Net" can be found on the CuD homepage at
http://www.soci.niu.edu.

Copyright © 1995 Faegre & Benson Professional Limited
Liability Partnership and Internet Broadcasting Corporation,
all rights reserved. http://www.faegre.com))

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

Civil Action No. 95-B-2143

RELIGIOUS TECHNOLOGY CENTER,
Plaintiff,

vs.

F.A.C.T.NET, INC., et al.,
Defendants.

_________________________________________________________________

REPORTER'S TRANSCRIPT
RULING

Proceedings before the HONORABLE JOHN L. KANE, JR., Judge, United
States District Court for the District of Colorado, commencing at 4:00
p.m., on the 12th day of September, 1995, in Courtroom C-401, United
States Courthouse, Denver, Colorado.

_________________________________________________________________

DEBORAH A. STAFFORD, Official Reporter
P.O. Box 3592
Denver, Colorado 80294

Proceedings Reported by Mechanical Stenography
Transcription Produced via Computer
_________________________________________________________________

APPEARANCES

For the Plaintiff:

EARLE C. COOLEY, ESQ.
Cooley, Manion, Moore & Jones
21 Custom House Street
Boston, MA 02110

TODD P. BLAKELY, ESQ.
Sheridan Ross & McIntosh
1700 Lincoln Street, 3500
Denver, CO 80203

ERIC M. LIEBERMAN, ESQ.
Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C.
740 Broadway at Astor Place
New York, New York 10003

HELENA K. KOBRIN, ESQ.
7629 Fulton Avenue
North Hollywood, CA 91605

For the Defendants:

THOMAS B. KELLEY, ESQ.
KENNETH LIEBMAN ESQ.
NATALIE HANLON-LEH, ESQ.
Faegre & Benson
2500 Republic Plaza
370 17th Street
Denver, CO 80202

_________________________________________________________________

PROCEEDINGS

THE COURT: I have some remarks to make, some of which may be
considered preliminary. But I think that they are important for a full
understanding of what this kind of procedure is.

A preliminary injunction is an extraordinary remedy providing the
potential for considerable harm, yet because of its emergency nature,
it does not afford the Court the usual degree of careful consideration
and examination of all relevant and material evidence which is
afforded by the deliberative process of a so-called full-fledged
trial. It is by its very nature an emergency matter, and as a
consequence, the issuance of an injunction is tentative, and it's
subject to later modification or for that matter even a complete
rescission or vacation following trial on the merits. That is why in
our legal tradition the question of whether to issue an injunction,
what terms such an injunction should contain are to be approached with
the utmost caution and prudence.

The power to issue an injunction, like the power to hold a person in
contempt of court is a power which is best used sparingly, if at all.
Moreover, the very purpose of an injunction is to preserve the status
quo ante. That is a rather elegant piece of Latin which means the last
existing state of peaceable, non-contested conditions which preceded
the pending controversy. I will not dwell on this, but I do think it's
helpful to observe that our legal forefathers were not fools, and the
complete phrase from the Latin is the status quo ante bellum which
literally means the state of things before the war began.

Given this purpose and the caution that the law prescribes, there are
four basic considerations or findings which must be made before an
injunction can issue. These same four factors likewise assist in
determining the scope of an injunction and the conditions which would
attach to it. Applying these conditions and factors to this case and
reserving, as I had previously indicated, the right, if not indeed the
obligation, to issue a more detailed document of a finding, finding of
fact and conclusion of law, in other words, a more formal opinion at a
later time, I am going to make the following ruling on the case from
the bench. And if there is any ambiguity, the parties can obtain a
copy of these comments from the court reporter.

The first consideration is probability of success on the merits. I
find the plaintiff has not established a probability of success on the
merits, either in relation to the copyright or the trade secret cause
of action.

With regard to the copyright infringement, on the evidence before me,
I find there is no probability of plaintiffs succeeding on their
copyright claim because the evidence which has been presented shows
that the defendants' use of the copyrighted works constitutes a fair
use under Section 107 of the Copyright Act in that it is for the
purposes of criticism, comment, or research, and as such is not an
infringement.

With regard to the trade secrets violation claim, the plaintiff has
not shown by a preponderance of the evidence that the materials in
issue are secret or within the definition of trade secrets under
Colorado law. The evidence shows the materials are in fact in the
public domain, and I am not persuaded by the evidence presented here
that they entered the public domain only through unlawful means.

The second consideration or factors is irreparable injury, and I find
that the plaintiffs has not shown it will suffer irreparable injury of
the use by defendants for the materials in issue. The evidence does
not show that plaintiff will lose competitive advantage through
defendants' use of the materials, nor that the defendants are using
the materials for commercial purpose. In balancing the hardships to
the plaintiff, I find the threatened injury of the plaintiff does not
outweigh the damage the proposed injunction would cause the
defendants. Whereas, the evidence has not shown the plaintiffs will
suffer harm if the injunction is not issued. It shows the affect of
issuing the injunction would amount to an infringement on defendants'
right of fair use of copyright materials, and even more so in this
case to barely prevent the functioning of the defendant F.A.C.T.NET in
its entirety.

With respect to the final consideration of public interest, the public
interest is served best by the free exchange of speech and ideas on
matters of public interest. This is indeed a matter of public interest
and to issue the injunction sought would not serve that interest.

Having weighed all of the factors, as I am required to do, I conclude
the plaintiff has not shown a likelihood of success on the merits and
the balance of harm lies in favor of the defendants. For these
reasons, Plaintiff's Motion for Preliminary Injunction is denied.

I order, however, as follows: That the plaintiffs shall return and
restore to the defendants immediately at the plaintiff's expense all
seized materials, including defendants' hard drive in the exact
conditions that they were taken and from the precise places from which
they were taken. I also order the defendants in this case that they
must maintain -- and each defendant must maintain the status quo as to
the possession of all of the copyrighted materials at issue in this
case and the defendants, and each of then, are restricted to making
fair use and only fair use thereof. The defendants here are
specifically prohibited from making any additional copies of the
materials or transferring them in any manner or publishing them other
than in the context of fair use. Those are the orders of the Court.

I thank counsel for the presentation, and the Court will be in recess
until 9:00 a.m.

MR. COOLEY: Your Honor, we'll undoubtedly be appealing this to the
United States Court of Appeals for the Tenth Circuit, and we would
respectfully ask a stay of the Court's order of return pending that
appeal.

THE COURT: No, I will not order a stay of the return of the materials.
That would, in my view, cause the exact harm, which I am mot concerned
with, and that is the inability of the defendants in the case to
maintain their continued existence during this litigation.

(Recess.)

_________________________________________________________________

REPORTER'S CERTIFICATE

I certify that the foregoing is a correct transcript from the record
of proceedings in the above-entitled matter. Dated at Denver,
Colorado, this 13th day of September, 1995.

__________________________________
Deborah A. Stafford

_________________________________________________________________

Last changed 15-September-95

Copyright © 1995 Faegre & Benson Professional Limited Liability
Partnership and Internet Broadcasting Corporation, all rights
reserved.

------------------------------

Date: Sun, 19 Apr 1995 22:51:01 CDT
From: CuD Moderators <[email protected]>
Subject: File 4--Cu Digest Header Info (unchanged since 19 Apr, 1995)

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