CYBERLAW REPORT ON THE SJ GAMES CASE

CyberLaw is an educational service focusing on legal issues concerning
computer technology. CyberLex reports legal developments touching the
computer industry.  CyberLaw and CyberLex are distributed as a monthly
column, published by computer user groups throughout the United
States.

CyberLaw is edited by Jonathan Rosenoer (jrsnr@well.sf.ca.us)

CyberLaw (tm) [4/93]

Search & Seizure

I.  Liberty & Cyberspace

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

II.  The Saga Begins

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

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

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

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

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

III.  The Raid

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

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

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

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

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

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

IV.  The Lawsuit

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

V.  Fourth Amendment

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

VI.  Privacy Protection Act

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

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

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

VII.  ECPA

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

In support of this ruling, the court looked to the Congressional 
enactment of the Stored Wire and Electronic Communications and 
Transactional Records Act, among other things.  This statute protects 
the content of electronic communications in electronic storage and 
sets out specific requirements for the government to follow to obtain 
the "disclosure" of such communications.  One such requirement is 
that there be "reason to believe the contents of a[n] ... electronic 
communication ...  are relevant to a legitimate law enforcement 
inquiry."  Although the Secret Service wanted to seize, review and 
read all electronic communications, public and private, on the 
Illuminati BBS, the Secret Service did not advise the Magistrate Judge 
who issued the warrant for the raid on Steve Jackson Games "that the 
Illuminati board contained private electronic communications 
between users or how the disclosure of the content of these 
communications could relate to [the] investigation."  The court 
commented that it was not until June 1990 that the plaintiffs were 
able to determine the reasons for the March 1, 11990, seizure, "and 
then only with the efforts of the offices of both United States 
Senators of the State of Texas."  Simply stated, "[t]he procedures 
followed by the Secret Service in this case virtually eliminated the 
safeguards contained in the statute."  Lacking sufficient proof of 
compensatory damages, the court assessed statutory damages in 
favor of the plaintiffs, in the amount of $1,000 for each plaintiff.

VIII.  Further Information

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

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

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

CyberLex (tm) [4/93]

Notable legal developments reported in April 1993 include the 
following:

#The Ninth Circuit Court of Appeals has ruled that an 
independent service provider violated copyright laws by loading 
operating software licensed to its client into the random access 
memory of its client's computer in the course of fixing the computer.  
(__MAI Systems Corp. v. Peak Computer Inc., et al.__, 93 C.D.O.S. 
2596 (9th Cir. 4/9/93)).

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

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

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

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

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

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

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

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

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

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

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

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