Topic: Telecom, Internet & Information Policy

Would Telco Immunity Be Unconstitutional?

Via EFF, a fascinating article on the possible constitutional issues raised by the push to give telecom companies retroactive immunity for illegal surveillance. Anthony Sebok points out that the courts have historically held that plaintiffs in tort suits have a constitutionally-protected property interest that the court cannot wipe away without compensation. I’m not a constitutional lawyer, so I won’t venture an opinion on whether his argument is right or not. But I think it does remind us of an important fact: the plaintiffs in these lawsuits are real people whose rights have allegedly been violated by these companies.

The FISA debate raises a lot of interesting policy questions about the appropriate relationships among the government, the courts, and the telecom industry. But while those questions are important, we shouldn’t lose sight of the fact that this debate is also about a contractual relationship between those telecom companies and millions of ordinary customers. Customers had a reasonable expectation that those companies would not share their private data with third parties unless doing so was legally required. It appears that certain large telecom companies may have violated that trust. If so, it seems to me that the customers should have their day in court.

Patents, Injunctions, and Uncertainty

There’s some fantastic back and forth between Chicago law professor Richard Epstein (a Cato adjunct scholar) and Berkeley law professor Peter Menell about the similarities and differences between physical property and what’s often called intellectual property—patents and copyrights. The exchange is a response to Menell’s previous contribution to Regulation.

I think Menell has the better of the argument. They both devote a considerable amount of ink to the eBay v. MercExchange, which centered around the question of when it’s appropriate to grant injunctions for patent infringement. Epstein has generally advocated a rule that grants injunctions more freely, arguing that this creates more certainty for the patent holder. Menell, in contrast, has argued that damages are often more appropriate.

The reason this matters is that if an injunction is granted, it can often drive the losing party into bankruptcy. In 2006, for example, Research in Motion, makers of the popular BlackBerry mobile device, was forced to pay $612 million to a company called NTP that had no employees, no products, and patents that were subsequently ruled invalid by the patent office. By rights, NTP shouldn’t have gotten a dime (because there was ample prior art for its “inventions”) but because RIM would have been forced to shut down its BlackBerry network before it had exhausted its appeals, NTP was able to extort hundreds of millions of dollars from the firm.

Interestingly, Epstein alludes to the biggest flaw in his argument, but doesn’t stop to ponder its implications. He writes:

This set of institutional arrangements [from real property] does not carry over perfectly to patent cases where the fact of infringement is harder to determine outside the piracy context, owing to the lack of clear boundaries that surround any patent.

This is a gross understatement. The boundaries of many patents—especially those relating to software, which is what the MercExchange case was focused on—are so fuzzy that it’s basically impossible for even the most experienced patent lawyer to predict accurately which of the hundreds of thousands of software patents in existence might be related to a given software product. Microsoft, for example, has darkly hinted that the Linux operating system had infringed several hundred software of its patents, but the company has refused to say which patents they are and the Linux develop community hasn’t been able to figure it out.

I share Epstein’s goal to create “a system of secure property rights that allows people to transact at low cost and high reliability,” but I think he fails to appreciate how completely our current patent system fails that test. In many cases, an inventor wishing to identify the patents his new invention might infringe has no low-cost or high-reliability means of doing so. This introduces uncertainty and litigation that greatly reduces the potential rewards for inventive activity. Strengthening these vague patents even further by making injunctions even easier to obtain will only make the problem worse, because the disincentives created by the patent system will be magnified.

It’s also worth noting the important contrast between patents and physical property: if a court fails to grant you an injunction against someone who’s using your land, you are thereby deprived of the opportunity to use the land yourself. In contrast, if the court fails to grant an injunction against a patent infringer, you have lost nothing other than potential licensing revenues. This means that unlike with physical property, there’s no compelling reason to impose the potentially devastating remedy of an injunction any earlier than absolutely necessary.

A Clear Division Among Candidates

So much of the presidential nominating process is issue-free posturing, it’s welcome to spot a clear division among candidates on a discrete issue.

Senators Barack Obama (D-IL) and Hillary Clinton (D-NY) disagree quite starkly on whether illegal immigrants should be licensed — or, more accurately, on whether driver licensing and proof of immigration status should be linked.

Senator Obama supports licensing without regard to immigration status, and recently received the endorsement of La Opinion, the nation’s largest Spanish language newspaper, largely for that reason. (His “Yes, we can”/”Si, se puede” rhetoric probably hasn’t hurt.)

On This Week With George Stephanopolous Sunday morning, Senator Clinton said (9:09), “[M]y position has been consistent. I don’t think we should be giving drivers’ licenses to people who are not documented.”

The right answer here isn’t obvious, but it is important.

Many people believe that illegal immigrants shouldn’t be “rewarded” with drivers’ licenses. Fair enough: the rule of law is important. There’s also a theory that denying illegal immigrants “benefits” like driver licensing will make the country inhospitable enough that they will leave. This has not borne out, however. Denying illegal immigrants licenses has merely caused unlicensed and untrained driving, with the hit-and-run accidents and higher insurance rates that flow from that.

The major reason, though, why I agree with Senator Obama is because the linking of driver licensing and immigration status is part of the move to convert the driver’s license into a national ID card. Mission-creep at the country’s DMVs is not just causing growth in one of the least-liked bureaucracies. It’s creating the infrastructure for direct regulatory control of individuals by the federal government.

Were immigration status and driver licensing solidly linked nationwide, the driver’s license would not just be a “benefit” of citizenship. It would then clearly be amenable to use as an immigration-control tool — as has already been proposed. Law-abiding, native-born citizens would more and more often be required to show ID. And it would be converted to additional uses. The federal government could condition our access to goods, services, and infrastructure on carrying and presenting a national ID, possession of which the government could make conditional on every regulatory whim that swept past.

We need to restore the driver’s license to its original role — as a license to drive. American citizens should not have to submit or prove their Social Security numbers in order to get licensed. If illegal immigrants “benefit” from that, so be it. It’s more important to protect U.S. citizens’ liberties now and for the future than to “go after” illegal immigrants while reform of our out-of-whack immigration laws languishes.

Taxation With Representation

All year in 2008, former National Journal Tech Daily editor and Beltway Blogroller Danny Glover will be cataloging all the taxes his family pays.

“How much do you really pay in taxes?” he says. “If you knew, you might get angry. You should – and I hope this blog will get you riled.”

Note the Weekly Tax Bite posts, where he tracks the tax-man’s weekly take in sales taxes, gas taxes, and so on.

DHS Was Bluffing

Last week, I published an Op-Ed in the Detroit News predicting chaos at the border in the face of ramped up document checks. I was wrong.

In fact, the DHS was bluffing. Border crossers who lacked government-issued photo ID and proof of citizenship like birth certificates or naturalization certificates weren’t prevented from crossing. They were given fliers.

As the AP reports:

Bobby and Genice Bogard of Greers Ferry, Ark., … who winter in Mission, Texas, knew the requirements were coming but thought they took effect in June. So even though they have U.S. passports, they had left them at home.”He allowed us to pass with a driver’s license,” Bobby Bogard said of a border agent.

“But next time he said he wouldn’t,” added Genice Bogard.

Yeah.

Something to keep in mind as the DHS threatens to make air travel inconvenient for people from states that don’t comply with the REAL ID Act’s national ID mandate.

E-Verify: Slow and Unsteady in Arizona

I’ll soon have a paper out on “electronic employment eligibility verification.” This is the idea of requiring every employer in the country to check the immigration status of employees against Department of Homeland Security and Social Security Administration databases.

A nationwide EEV program, building on the current Basic Pilot/”E-Verify” program, was treated as a matter of near consensus at the beginning of this past summer’s immigration debate, and the Department of Homeland Security continues to promote it.

My paper goes into the practical and technical problems with a full-fledged EEV system, as well as the question whether such a thing is appropriate for a free country. But I’ve already become aware of problems I didn’t think of.

A law went in to effect in Arizona January 1st requiring all employers to use the E-Verify system. The Arizona Republic reports that just 17,000 of the state’s 150,000 businesses have signed up for E-Verify. (January is a slow month for hiring, but employers may be holding off on hiring too. And a lawsuit has been brought challenging the Arizona law.)

Among employers using E-Verify, the question has arisen what to do when an employee has worked for a few days, but then is deemed ineligible by the database. Should the employee who is either an illegal immigrant are a citizen with bad paperwork be paid? “[E]mployers could look for workers who are at risk of failing E-Verify, the online database that checks employment eligibility, and fire those workers without paying them for up to three days of labor,” says the report.

The simple idea of “internal enforcement” of immigration law using employers as Border Patrol agents turns out not to be so simple. E-Verify puts fair-minded employers between a rock and a hard place, while facilitating unscrupulous behavior by others.

National Review on the FISA Overhaul

Yesterday, National Review Online ran a misleading and misguided editorial on the FISA debate. The editorial states that “Last year, a FISA-court decision required judicial authorization even in those cases where the government sought to monitor terrorists communicating with each other outside the United States.” This is doubly misleading.

On the one hand, the FISA ruling only held that a warrant was needed to install wiretaps on US soil to intercept foreign-to-foreign communications as they pass through US infrastructure. No one has ever claimed that FISA has jurisdiction over communications that occur entirely outside of the United States. Second, both sides of the FISA debate in Congress agree that the law should be changed to explicitly exempt foreign-to-foreign communications from FISA oversight. Every serious legislative proposal in Congress, including the one the House passed last November, changes this aspect of the FISA rules. So it’s extremely misleading to present this as if it’s the heart of the dispute.

In reality, the president has threatened to veto the House’s legislation for two reasons that have nothing to do with foreign-to-foreign communications: judicial oversight of calls that originate on US soil and the lack of amnesty for telecom companies. National Review’s take on the latter issue is particularly wrongheaded:

Some Democrats oppose the legislation because they want the FISA court to have more authority. They laud it as a responsible manager of intelligence collection, even though tribunal is unaccountable and has a spotty record. (The most important part of the Patriot Act was its dismantling of the “wall” between agencies that obstructed intelligence gathering before 9/11. The FISA court tried to undo that part of the act, but was thankfully unsuccessful.) We have less confidence in the judiciary’s ability to manage wartime intelligence operations.

Other Democrats oppose the measure (Sen. Chris Dodd is threatening a filibuster) in no small part because of the telecom immunity provision. This objection is specious. The bill provides protection only for companies that acted on assurances from the administration that the program was lawful. If the companies cannot bank on such assurances, they have no incentive to cooperate in the intelligence collection that is a must if Americans are to be protected.

Rather than complaining about courts being “unaccountable,” most of us call this “judicial independence” and consider it a virtue of our system of government. And an important part of judicial independence is the principle that a warrant from an independent judge, not merely “assurances from the administration,” are required to permit searches of Americans on American soil. That’s the whole point of having a warrant process. AT&T and Verizon’s lawyers probably know this area of the law as well as anyone in the country. They can and should have done what Qwest did and told the NSA to come back when they had a warrant. Reports suggest that telecom companies that have chosen to cooperate with the government have made a healthy profit from doing so, while firms like Qwest have taken a financial hit for obeying the law.

If Congress lets the lawbreaking firms off the hook this time, they will have absolutely no incentive to obey the law (and protect their customers’ rights) in the future. National Review’s advocacy of amnesty for telecom companies is especially ironic because for the last year, they’ve been banging on about how amnesty for illegal immigrants “rewards lawbreaking” and breeds disrespect for the law. At least under the leading immigration reform proposals, immigrants would have been required to admit their lawbreaking and pay a fine. In contrast, NRO believes that lawbreaking telecom companies deserve immediate, blanket amnesty with no penalty or even admission of guilt. If we want to foster a culture of respect for the law, there’s no better place to start than with some of the largest, most powerful companies in America.