THE C O M P U T E R LAW SECURITY REPORT 2 CLSR

image on a screen. Since it is not fixed in any material form the computer image per se would not be protected by copyright. However, a recording of the data on magnetic media or a photographic film could be protected.

Pre-existing rights preserved Since the approach which I have proposed is based on conventional copyright principles, it does not remove any pre- existing rights. Thus, the owner of a database may claim copyright in its data because he has created it himself or purchased the rights from other authors. The users of the database can access it only with his permission and he can licence the users subject to any restrictions which he considers to be reasonable. For example, it is quite common to have different subscription rates depending upon the extent to which the user wishes to disseminate extracts from the database. In a similar way, the copyright in the software is unaffected and can be licensed in the variety of ways which have become established. The user of a computer system may modify and adapt the licensed material of a database instead of merely selecting and incorporating parts of it in his output data. This may create a separate copyright in a manner similar to that which arises with conventional literary works, such as compilations. This does not appear to introduce any new problems.

Conclusions Finally, what conclusions does this analysis lead to in relation to the proposals in the White Paper? Firstly, the new Act should leave no doubt that the provisions on subsistence of copyright and on reproduction apply equally to software and to computer-generated, stored and processed data. The views expressed in Chapter 9 of the White Paper may have over- simplified the situation, so that the definitive wording in the Bill will require careful scrutiny. Secondly, two "for the avoidance of doubt clauses" would save much argument:- (1) The use of a tool of any kind by an author in generating a copyright work does not affect the copyright status of that work in any way; (2) Subject to any agreement to the contrary, the legitimate user of computer-based copyright material owned by another party (programs, databases, records, etc.) may freely incorporate extracts of such material in his computer- generated output to an extent consistent with the basis on which he has obtained access to the material.

John Cartwright, Consultant. Report Correspondent

US FOCUS

Hackers' documentary Recently, the public broadcasting system in the US aired what I thought was a very interesting programme, entitled "Hackers - Wizards of the Electronic Age". The programme, a documentary on hackers, was essentially the video version of Steven Levy's book: Hackers. The program, like Levy's book, was the who's who of hacking with comments from: Steve Wozniak, co-founder of Apple Computers; John Draper, the famous "Captain Crunch", credited with inventing the blue box - a device used to bypass telephone billing systems; Richard Cheshire known in hacking circles as "Cheshire Catalyst"; Andrew Flugelman, the author of PC Talk; and many others. The programme did distinquish between the criminal hacker and the regular hacker. Richard Stallman, labelled the last "pure hacker", because he is still at MIT, the birthplace of hacking said hackers (the regular kind) are noted for their 'love of excellence in programming" and desire to do "neat things" with computers. The "hacker's ethic" was explained and discussed. The "hacker's ethic" is the concept there are no secrets on systems or programs - source is always available. This "ethic" was hotly debated by some of the authors of computer games, who equated their work with creating a work of art. Any changes to their program by another programmer would be like another artist changing the work of a fellow artist. However, out of the "hacker's ethic" came "freeware" or "shareware". "Freeware" or "shareware" is just what the name implies: free software. The software is distributed free but has a note, generally displayed when the program starts, asking you to send $10.00 or so to the author if you like and use the software. A number of "freeware" authors post their software on electronic bulletin boards and just wait for the satisfied users to mail in the cheques. Needless to say, there is quite a debate in the computer community surrounding this. One "freeware" author, Bob

Wallace, the author of PC Write, pointed out that he has grossed over $250,000 from his "freeware". The program is a great history of micro computer evolution in the United States. Hopefully, it will be picked up by the BBC and shown in the UK before long.

This is work?? Currently, Gato, a World War II submarine-battle game has become the talk of the business world in the United States. It seems that the game manufacturer, Spectrum Holobyte, Inc. of Boulder Colo., put a fake spreadsheet in it. So if someone is around, instead of up periscope - - - it's up spreadsheet! Phillip G. Adam, Executive Vice President of Spectrum Holobyte recently told the Wall Street Journal that some customers thought they might want to play the game at work and could they turn off the sound from the game. Spectrum thought it might be a cute idea to put in a dummy spreadsheet. The spreadsheet "feature", while not documented in the manual, comes up as an option when you hit the "escape" key. It asks if you want to continue or "S " for spreadsheet. I had the opportunity to try the game and several of my associates tried it - ALL thought it was great. It was particularly popular in Accounting. I'm not advocating the playing of this at work, but I found it challenging and a pleasant diversion. If you like computer games, I highly recommend it. The game is available in the UK and Australia for $39.95 (US) and in France for $49.95 (FF). Distribution is being handled by Mirrorsoft in the UK, Imagineering in Australia, and Logitec in France.

RSA public keys inventors start own company The three authors of the RSA public key encryption system, who developed the system while teaching together at the Massachusetts Institute of Technology (MIT) in 1977, recently purchased the exclusive commercial rights to the RSA system from MIT. The three: Ronald Rivest, Professor of computer science at

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JULY - AUGUST THE COMPUTER LAW AND SECURITY REPORi

MIT; Adi Shamir, Associate Professor of applied mathematics at the Weizmann Institute of Science in Israel; and Leonard Adlemand, Professor of Mathematics at the University of Southern California, have joined together to form RSA Data Security Inc., of Redwood City, California. RSA, named for the first initial of each of the inventors last names, is an encryption system where one key is made public and the other is kept private. With this system, it is very easy to authenticate messages. Charles Brookson of British Telecom presented a paper entitled, "A Protocol For Network Authentication and Security", to Securicom '86 in Paris last March which described the RSA system. According to Brookson, RSA combined with his methodology, would allow for data origin authentication, data confidentiality, signature mechanism and data integrity. RSA Data Security, Inc., located at 11) Twin Dolphin Drive, Redwood City, California, 941)65, Tel (415) 595-8782, is planning to release software for the PC and IBM mainframe.

Credit card fraud is becoming big business A civil suit filed in the Federal Court in Los Angeles recently by MasterCard International Inc. and Visa International Services Inc., claims that one telemarketing fraud scheme stole more the $2 million from 12 banks between 1982 and 1984. The fraud obtained credit card numbers and then billed the numbers with charges from a fake business. When the charge was discovered the business was gone and the bank who paid the charge had to suffer the loss because the cardholder is protected from the fraudulent charge by US law. The fraud operated like this: To get credit card numbers, operators of the fraud would call MasterCard holders and tell them they had won a free trip to Hawaii if their card began with the number five. It should be noted that ALL MasterCard numbers begin with a five. The operators would then ask for the complete number, allegedly for tax purposes, and the expiration date of the card. The operators had phoney businesses set up so that once they had the credit card numbers they could submit cards to the target banks, who paid the charge. When the card holders noticed the charge, generally around a hundred dollars, the banks would have to absorb the charge. By this time, the operators had set up a new phoney business and the cycle was repeated. This type of fraud again points out the need to protect credit card numbers, systems, PIN's and so on: which brings us back to one of the basics in computer security: educate the user. If the consumer realised that he/she should not give out his/her credit card number this fraud would have failed because they would not be able to get the numbers.

Bernard Zajac Opinions expressed herein are those of the author and do not necessarily reflect those of the ABEX Corporation

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REFORM OF INTELLECTUAL PROPERTY: LAWS COULD FOLLOW US REPORT A long-awaited Report designed to assist Congress in addressing problems of protecting intellectual property in a high-technology information age was released on April 16, 1986. Prepared by the Office of Technology Assessment ('O.T.A.") an official information gathering and supporting agency of the U.S. Congress, the Report was requested by Sen. Charles McC. Mathias, Jr. and Reps. Peter W. Rodino, Jr., Robert W. Kastenmeier, Hamilton Fish and Carlos Moorhead.

Intellectual property law - particularly copyright law - was originally formulated to reflect the technology of the printing press. Thus, the implementation of the law was relatively simple. The government granted copyrights to authors and patents to inventors. Monetary rewards were determined in the marketplace. The patent and copyright holders, themselves, monitored infringements and enforced their rights through the courts. It was a policy statement reflecting our capitalist philosophy that authors' and inventors' interests coincided with the public interest. To profit from copyright, an author had to print his works and sell them; to profit from a patent, the inventor had to disclose his ideas in public. Since the traditional intellectual property system is being outmoded by rapid developments in computers, communications, and other information technologies copyright law, based on originality of works and individual authorship, may become too unwieldly to administer when works involve many authors, worldwide collaboration, and dynamically- changing materials, OTA says. Although vast quantities of copyrighted works can be easily, inexpensively, and privately reproduced and transmitted, OTA reports that current law is ambiguous about whether this should be allowed or how this should be enforced. OTA also notes that high-speed communications, combined with large storage-capacity technologies, allow vast amounts of copyrighted materials to be traded without the knowledge or permission of rights holders. New technologies also may be used to misrepresent and undermine the integrity of artists' works. For example, an unscrupulous artist might use technology to distort a well-known piece of art for his own purpose or profit without the knowledge of the original artist. according to OTA. OTA refers to "functional works" which, in its view, are new kinds of intellectual property that use information in a process (for example, computer software). It sees these as obscuring the traditional distinction between patentable inventions and copyrightable writings. Also, the repackaging of information and creation of new information products made possible by new technologies raises questions about whether the original copyright holder should control all the uses. Electronic distribution of intellectual creations may lead to tighter contols over public access to information, according to OTA. Also, copyright may fail to meet its intended educational goals because information is increasingly being sold rather than shared and some of it may become too expensive for educational institutions. In its realistic report, OTA notes these problems have no simple answers. Technological change is complicating the intellectual property system, and our understanding of how the system now operates is extremely limited. Technology is changing the way information is created, distributed, and used. It is also bringing new parties into the intellectual property debate and it is making information a critical factor for the U.S. economy and for society as a whole. Not surprisingly, the decisions that Congress makes about intellectual property policy will affect a broad range of other policy areas; communications, trade and international affairs, privacy, antitrust, education, public information, research and development, and tax policy. In making decisions about intellectual property policy therefore, according to OTA, Congress will need to take into account new issues and new stakeholders, as well as assure the coordination of policymaking among the relevant areas. While it may be too early in OTA's view to change existing law, if Congree is to devise a sound intellectual property policy for the future, it must begin now to establish a mechanism

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