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Monday, May 15, 2017, 3:17 PM

Important Steps to Prepare for the WannaCry Ransomware Attack

Posted by: Bruce Buchanan
By Ted Claypoole, Allen O'Rourke & Claire Rauscher

Your business may have been victim to the latest ransomware attack, or it may be caught in the next wave. Womble Carlyle can help manage the attack and can prepare you to beat the next one.

On May 12, 2017, the “WannaCry” ransomware attack compromised over 70,000 organizations in nearly 100 countries. The attack encrypted people’s computer files – making them inaccessible – and demanded a ransom of about $300 worth of Bitcoin to release them. The malicious software exploited a known vulnerability in Windows that Microsoft had patched two months ago. Microsoft has also issued emergency patches for unsupported, outdated versions of Windows.

If your organization runs Windows, it is important to make sure that all appropriate patches have been installed. Another important step is to create backups of your computer files that can be used in the event that your system becomes encrypted by ransomware.

Finally, if you do not have one already, this would be a good time to develop a cybersecurity incident response plan.

Womble Carlyle’s Cyber & Privacy Law attorneys are poised to help clients develop such incident response plans, implement cybersecurity preparedness measures, and respond to any incidents that may occur.

Tuesday, April 25, 2017, 4:41 PM

Reading the Tea Leaves: What Lies Ahead for Broadband Privacy Regulation?

Posted by: Rebecca Jacobs

On April 3, 2017, President Trump signed into law a rare Joint Resolution of Congress under the Congressional Review Act (“CRA”), which disapproved the Broadband Privacy Rules adopted late last year by then-Chairman Wheeler’s Democratic-led Federal Communication Commission (“FCC”), making final the rollback of the controversial rules adopted during the last months of the Obama Administration.  Beyond nullifying the rules themselves, the Congressional disapproval provides little clarity and leaves many questions unanswered regarding the privacy framework that will remain applicable to providers of Broadband Internet Access Services, and with numerous moving parts still in play, the question of who will regulate those privacy practices and under what rubric, is very much an open question.
The FCC’s Broadband Privacy Order (the “Order”), which we discussed in detail following its release in October, applied a sweeping new privacy framework to be administered by the FCC upon not only traditional  telecommunications carriers and interconnected VoIP providers offering voice services, which had been subject to the Commission’s former Customer Proprietary Network Information (“CNPI”) rules, but also upon providers of Broadband Internet Access Services (“BIAS”), which the Commission previously had found were common carrier services under its 2015 Open Internet Order.  The reclassification, the Commission concluded, subjected BIAS providers to Section 222 of the Communications Act, a provision that prior to the Wheeler FCC, had been focused almost exclusively on the use of CPNI by voice providers, but in which the Commission now found far broader authority to more generally regulate the privacy and cybersecurity practices of broadband Internet access providers.
The Order implemented new protections for CPNI, and added specific protections for personally identifiable information (“PII”) and the content of communications under a provision of Section 222 which the Wheeler Commission found imposes an independent duty on carriers to protect the confidentiality of customer proprietary information, beyond Section 222’s CPNI requirements.  Web browsing and mobile application usage history were designated sensitive customer proprietary information (“customer PI”) subject to heightened protection, including customer opt-in for use of the data for third party marketing purposes, beyond what the Federal Trade Commission (“FTC”) has concluded is customer PI.  In addition to those new protections, the Order also eliminated certain CPNI regulations for common carriers, such as the annual CPNI certification and record-keeping requirements. 
It is clear that enactment of the CRA resolution means that these new broadband privacy rules will no longer be effective, and any aspects of the rules that had not yet become effective will never become so.  Congress’s CRA rejection of the broadband privacy rules also has continuing effect: it bars the FCC from reissuing any substantially similar new rules as the broadband privacy rules that Congress has disapproved, absent new Congressional authorization.  Less clear is the extent to which broadband providers will remain subject to Section 222 in the absence of implementing rules.  The Wheeler Enforcement Bureau had used Section 222 to bring several high profile and controversial enforcement actions against carriers for alleged data breaches when no specific rules were in place, and shortly after adoption of the Open Internet Order released an Enforcement Advisory on broadband provider privacy practices under Section 222, pending adoption of formal rules.  Both actions suggest that Section 222 could remain a residual source of authority for the FCC to regulate BIAS privacy practices, even in the absence of specific rules.

It is virtually certain, however, given prior statements by Chairman Pai and Commissioner O’Rielly critical of Chairman Wheeler’s expansive view of the FCC’s Section 222 authority, that the current FCC Republican majority will avoid allowing the FCC to replace the FTC as a general regulator of all personal data handled by broadband providers.  Moreover, there is significant question as to whether the new FCC, under Chairman Pai, has any intention of bringing enforcement actions against broadband provider privacy practices under Section 222, to which, as a Commissioner during the Wheeler regime, Chairman Pai vociferously objected.

While Section 222 continues to apply (at least in theory) to broadband providers, since they remain currently regulated under Title II, the absence of implementing regulations makes ongoing regulatory obligations of broadband providers unclear.  For the time being, enforcement of broadband privacy protections of consumers will have limited and unclear authority and virtually no clear boundaries.   FCC enforcement activities, if any, will likely be limited to literal CPNI violations, as statutorily defined under Section 222(c), with the Republican-led FCC refusing to enforce any breaches of data security under Section 222(a), as the FCC had done in high profile Enforcement Bureau actions brought under Chairman Wheeler.

The elephant in the room, however, is that if the current FCC leadership does decline to police broadband privacy practices under Section 222 – either because Section 222 does not provide such authority (particularly after the CRA rejection of the FCC’s broadband privacy rules) or simply as a discretionary matter it declines to apply what authority it does have – then the privacy practices of broadband providers, at least at present, will be subject to no federal oversight.  This is because post-reclassification, broadband Internet access services are outside the scope of the FTC’s unfair and deceptive practices oversight authority, under the communications common carrier exemption to Section 5 of the FTC Act.  To further complicate matters, the FCC’s reclassification of broadband Internet access services as a common carrier service, while initially sustained by the D.C. Circuit, remains unsettled, pending resolution of petitions for an en banc rehearing of the DC Circuit order, and any subsequent petitions for certiorari to, or review by, the Supreme Court.  Moreover, a decision en banc overturning the broadband common carrier classification would only clarify matters for providers that are not otherwise providers of common carrier services, such as some cable operators and stand-alone providers of mass market high-speed Internet access services.  These providers would, once again, become subject to the FTC’s Section 5 jurisdiction.

But for wireless carriers and phone companies that provide broadband services, even if broadband Internet access services are reclassified as a non-common carrier offering, the FTC’s hands will continue to be tied with regard to common carriers.  This is because its jurisdiction to regulate common carriers for even non-common carrier activities remains in question pending resolution of the 9th Circuit’s ruling in FTC v. AT&T Mobility LLC that the common carrier exemption in Section 5 of the FTC Act is a status-based exemption barring any FTC oversight of common carriers.  The FTC has a pending petition for rehearing en banc of the 9th Circuit decision.

Regardless, the talk in Washington is of ways to fill this regulatory void.  Acting FTC Chairman Ohlhausen has urged Congress to give back the FTC’s power to actively police broadband providers’ privacy practices by rescinding the reclassification of broadband Internet access or lifting the FTC’s common carrier exemption.   Moreover, a group of Democratic Senators, led by Senator Markey (D-Mass.) recently introduced a bill that would give the FCC explicit authority to adopt broadband privacy and cybersecurity regulations.  In addition, Senator Blumenthal (D-Conn.) separately introduced a bill, the pointedly named “Managing Your Data Against Telecom Abuses (MY DATA) Act,” to restore FTC jurisdiction over broadband provider privacy practices.  So far, however, there is no indication of bipartisan support to fill the gap, and, in the absence of Republican support, the odds are long that either of these measures will pass in a Republican-controlled Congress, or be signed into law by President Trump.  At the same time, according to a recent report of the National Council of State Legislatures, states may be stepping in to fill the gap:  at least 12 states are considering legislation to adopt broadband privacy protections for consumers following the CRA disapproval of the FCC’s broadband privacy rules  and in the absence of clarification at the federal level, state broadband privacy regimes may take on increased significance as the only game in town.
For those keeping score, the CRA is obviously a big win for broadband providers (Verizon, AT&T, and other large broadband providers, especially those with edge provider affiliates), which argued strongly that such privacy rules should be adopted uniformly across the Internet ecosystem, not advantaging one set of providers (edge providers) over another (broadband providers), by imposing opt-in requirements for use of consumer PI for digital advertising for some but not for others.  These providers are now free from the FCC’s broadband privacy regulations and, at least in the short term, from FTC regulation until the FTC common carrier exemption is conclusively addressed by the courts or Congress.  On the other hand, the CRA may be considered something of a loss for the leading edge providers such as Google and Amazon, since the decision will likely mean more formidable competition from broadband providers for a piece of the profitable online advertising revenue pie.

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Thursday, April 20, 2017, 12:48 PM

Patent Holder Sues CBS and iHeart Over Digital Audio Signal Transmission Systems

Posted by: Bruce Buchanan

This article originally was published by Radio Ink.

On Friday, April 14, 2017, Digital Stream IP, LLC filed two separate complaints in federal court in the Eastern District of Texas against CBS Radio Inc. and iHeartMedia, Inc., alleging infringement of U.S. Patent No. 6,757,913 (“the ‘913 patent”). 

The ‘913 patent is directed to sending a digital audio signal from a transmitter to a receiver or tuner, which can display, for example, song titles and artists along with playing the corresponding audio.  This, of course, sounds routine in this age of ubiquitous digital radio, but the asserted patent claims a history going back to an original patent application filed July 15, 1996.  Due to patent term extensions granted due to delays in patent office processing, the ‘913 patent is set to expire on July 5, 2018. 

In the complaints, Digital Stream alleges that the ‘913 patent reflects an “improvement in digital audio” devices and systems and “solve[s] the problems of limited range, signal strength, variety of channels, program information available and overall accessibility and ease of use.”

The ‘913 patent has considerable and ongoing litigation history.  In 2016, Digital Stream first targeted the automotive industry in suits against General Motors, Honda, Nissan, BMW, and Mercedes-Benz. Digital Stream also asserted the ‘913 patent in suits against Best Buy and Robert Bosch.  Many of these cases were dismissed in the preliminary stages based on settlement.  However, Unified Patents, a company self-dubbed the “Anti-Troll” and dedicated to challenging patents asserted on a mass scale, filed a petition for inter partes review (IPR) before the Patent Trial and Appeal Board (PTAB) in September 2016, asking that certain claims of the ‘913 patent be found invalid over various prior art references.

On March 14, 2017, the PTAB agreed with Unified Patents’ positions and instituted a review of the ‘913 patent, finding a reasonable likelihood that one or more of the challenged claims would be found unpatentable (invalid).  A final decision, which will issue no later than March 14, 2018, will decide the fate of the challenged ‘913 patent claims.  Mercedes-Benz filed its own IPR petition in February of this year challenging a different set of claims, and the PTAB will decide whether to institute this challenge of within the next few months.  In the meantime, Digital Stream appears to have turned its attention onto the radio industry.

The lawsuits allege that CBS Radio and iHeartMedia are infringing at least claim 31 of the ‘913 patent by broadcasting their hybrid digital/analog HD Radio stations.  Interestingly, claim 31 is one of the few claims not challenged in the two pending IPR proceedings – although it appears to of a similar scope as those under PTAB review.  Digital Stream specifically points to several HD Radio stations broadcast in Texas, including CBS Radio’s 105.3 The Fan, KRLD 1080AM, and Cowboys Radio 24/7, and iHeartMedia’s LoneStar 92.5, KERA HD1 and KERA HD2.  Digital Stream is seeking monetary damages and a finding that the case is exceptional, which would entitle it to attorneys’ fees under 35 U.S.C. § 285.  

To date, no other radio industry companies have been sued.  The pending lawsuits are titled as DigitalStream IP, LLC v. CBS Radio Inc., No. 2:17-cv-313 (E.D. Tex.) and Digital Stream IP, LLC v. iHeartMedia, Inc., No. 2:17-cv-315 (E.D. Tex.).

Friday, February 10, 2017, 5:57 PM

FCC Waives Certain Classification Standards from 2017 E-rate Eligible Services List

Posted by: Rebecca Jacobs

On February 8, 2017, the Wireline Competition Bureau ("Bureau") granted a waiver of certain Category One/Category Two classification standards established in the 2017 Eligible Services List ("ESL") on its own motion, meaning that it was made without a request from an outside party for waiver. In the 2017 ESL, the Bureau provided a new explanation of how to classify connections between multiple buildings in a single school for purposes of requesting Category One or Category Two support and provided an Appendix B with FAQ on the classification of connections. With regard to multiple buildings, the Bureau clarified that connections between different buildings are eligible for Category One support regardless of whether the buildings are located on the same grounds. Beginning with the 2017 Funding Year, if connections are between instructional buildings of a single school, or non-administrative buildings of a single library located on different campuses belonging to the school or library, they should be classified as Category One. If, however, the connections are between instructional buildings of a single school, or non-administrative buildings of a single library branch that are located on the same campus, they should seek Category Two funding. For schools or libraries that share a single building, the portion of the building used by each would be considered their campus, so the connections between the "campuses" would be considered Category One services.

In the waiver, the Bureau waived the obligation to apply the standards from the ESL to multi-year contracts that had been entered into prior to 2017, if it would cause certain connections to move from being Category Two to Category One. For 2017 applicants, the Bureau waived the requirement to classify connections between different schools and libraries sharing a single building as Category One services. Accordingly, applicants can seek Category Two funding for customer-owned or –controlled inside wiring that connects different schools and libraries within the same building.

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Friday, February 3, 2017, 1:55 PM

Chairman Pai Steps-It-Up on Broadband Deployment

Posted by: Bruce Buchanan

Earlier this week, FCC Chairman Ajit Pai announced the formation of a new Broadband Advisory Committee, calling for nominations by February 15, 2017.  The mission of the new FCC federal advisory committee is to make recommendations to the Commission as to how to accelerate broadband deployment by reducing and/or removing regulatory barriers to infrastructure investment, and to exchange ideas and develop recommendations on broadband deployment.  While the stated focus of the committee appears to be on removing regulatory barriers to deployment, particularly at the local level, and on what localities can do to promote broadband deployment, no doubt, the committee’s work will also address the permitting practices of state agencies (such as the right-of-way practices of state DOTs), as well as the practices of various federal agencies that have been a significant concern for the industry.   We also expect that ways to streamline environmental and historic preservation reviews will be within the group’s purview.
More broadly, this effort is part of Chairman Pai’s stated agenda to close the digital divide (which some in the public interest community remain skeptical of), and, of course, the importance of broadband and 4G densification through small cell infrastructure deployment generally, as well as what he has referred to as his “digital empowerment agenda.”   Chairman Pai indicated, while a Commissioner, that as part of that agenda, he would back efforts to create gigabit opportunity zones, boost rural mobile broadband, remove broadband regulatory barriers, and promote entrepreneurship and innovation.
Beyond the limited mission on removing regulatory barriers and steps governmental entities can take to promote broadband, this is a welcome part of a larger agenda, particularly given the broader focus of the Administration on infrastructure deployment.  Interestingly, just following the Chairman’s rollout of his deployment agenda, the Chairman’s Republican colleague, Commissioner  Michael O’Rielly, posted an entry to the FCC Blog on the potential pitfalls of federal broadband infrastructure spending – that is, beyond the federal Universal Service program.  This could signal an area of potential disagreement between the Republican commissioners on the extent to which the Federal Government should be subsidizing broadband infrastructure deployment, and is certainly worth keeping an eye on.

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Thursday, February 2, 2017, 10:35 AM

John Garziglia in Radio Ink: Are You Liable If Your Station is Hacked?

Posted by: Bruce Buchanan

This week, a South Carolina radio station’s listeners were surprised to find their regular programming interrupted by a political song with obscene lyrics. A hacker (from IP addresses in Russia and Taiwan) broke into Sunny 107.9’s transmitter and looped in the objectionable song.
While station officials certainly didn’t intend for this song to air, can the FCC still hold them liable? Womble Carlyle Telecom attorney John Garziglia addresses this question in a new column for Radio Ink.
Garziglia said the station is under no obligation to inform the FCC. However, a listener complaint still may subject the station to a $350,000 FCC fine.
"At the risk of delving too deeply into the subject, no one has any idea what will be the FCC’s stance under the new Chairman on indecency,” Garziglia writes. In recent years, he said the FCC has been inconsistent in its handling of on-air profanity.
He adds, “These hacking incidents are a good reminder to confirm that your errors and omissions insurance policy covers potential fines and defense costs should an FCC indecency complaint be filed. Also, please confirm that your internet connected device password is not ‘password’”.

Thursday, January 19, 2017, 11:03 AM

FCC Wireless Bureau’s Staff Report Questions AT&T and Verizon Zero Rating Practices in Mobile Broadband Market…But To What Effect Under the Trump Administration?

Posted by: Bruce Buchanan

By Doug Bonner

On January 11, 2017, the FCC released its most extensive “policy review” of mobile broadband operators sponsored data offerings for zero-rated content and services since the Commission’s 2015 Open Internet Order.  

Rebuffing Republican requests, and a stated commitment by the Chairman not to take action on any controversial post-election items before the Trump Administration takes office, the FCC Wireless Telecommunications Bureau (WTB), under Chairman Wheeler’s direction, released this Bureau report following a year long investigation into the zero-rating practices in the mobile broadband market.  “Zero-rating” generally refers to the practice of not counting consumer use of certain sponsored applications under a customer’s data usage caps under mobile carrier sponsored data plan.    

While not finding zero rating plans per se harmful, the report singles out sponsored data offerings by “vertically integrated mobile broadband providers” which “may harm consumers and competition in downstream industry sectors by unreasonably discriminating in favor of select downstream providers, especially their own affiliates.”  Report at 17.  The Report expresses “serious concerns” about AT&T Mobility’s Sponsored Data program, and that “we believe there is a substantial possibility that some of AT&T’s practices may violate the [Open Internet Order] General Conduct Rule.”   Report at 12. 

In particular, the Report refers to AT&T “hefty per-gigabyte charges on unaffiliated third parties [edge providers]” that consumers might use for their Sponsored Data which compete against AT&T’s DIRECTV Now affiliate.  The WTB also references Verizon’s FreeBee Data 360 sponsored data program as posing similar concerns as AT&T’s but describes it as a “nascent” service with only a limited content portfolio at this time in contrast to DIRECTV Now’s full range of live TV and full length movies and shows.  Report at 17.

Chairman Wheeler in a final speech to the Aspen Institute on January 13 defended the Report’s conclusions arguing that if the large ISPs can determine “which applications and clouds work better than others in terms of access speed and latency, then they will control the future.”     

FCC Republican Commissioner Pai issued a statement criticized the “midnight regulations” of the Bureau-level report as done without a Commission-level majority, and which he saw only after its release, as “casting doubt on the legality of free data offerings” that are popular among consumers.

Commissioner Pai expressed confidence that the Report will “not have any impact” on FCC policymaking or enforcement activities following President Trump’s inauguration. 

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