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>From http://www.ij.org/cftc Web page:
Institute for Justice Scores Major Victory
For Internet/Software Speech
WEB RELEASE: June 21, 1999
CONTACT: John Kramer (202) 955-1300
[First Amendment]
See Related Background and Press Information
------------------------------------------------------------------------
Washington, D.C.-First Amendment free speech rights extend to the Internet and
software. That is the finding of a hotly contested lawsuit that pitted financial publishers
against a federal regulatory agency.
In a federal case closely watched by the high-tech industry, U.S. District Court Judge
Ricardo Urbina today held that Internet publishers and computer software developers as
well as traditional newsletter publishers can publish without first being licensed by the
Commodity Futures Trading Commission (CFTC). This decision sets an early and
important precedent in favor of extending First Amendment protection to software
development and the Internet, areas of law where the jurisprudence is only now being
established.
"Today, the First Amendment won and an overreaching federal bureaucracy lost," said
Scott Bullock, senior attorney at the Institute for Justice, a Washington, D.C. public
interest law firm. The Institute represented publishers of online content, websites,
software, books, and newsletters designed to assist people in analyzing the commodity and
futures markets, and consumers who subscribe to the sites, on-line services, and
publications to find information and make their own decisions. Like most content
providers, the Institute's clients do not invest customer funds; nor do they give person-to-
person trading advice. Instead, they simply provide information and analysis to their
customers. "The decision is an important victory for Internet publishers and computer
software developers," Bullock said.
The CFTC sought to establish its authority to regulate and license anyone who speaks on
topics under its jurisdiction-in this case the commodity markets. The CFTC demanded
registration as a "Commodity Trading Advisor" before one can publish any information on
these markets.
Registration requires fees, fingerprinting, background checks, and perhaps most
onerously, handing over a list of one's subscribers and being subject to on-demand audits
by the CFTC. Failing to register risks $500,000 in fines and up to five years in prison.
Judge Urbina wrote, "There comes a point, however, where government legislation
crosses the line between the regulation of a profession and the regulation of speech." The
judge then went on to write, ". . .the CFTC's application of the CEA's [Commodity
Exchange Act] registration requirement to the plaintiffs in this case constitutes an attempt to
regulate speech, not a profession."
"If the regulators had prevailed in the suit, development of software and online content
would have been dramatically curtailed as government agencies aggressively licensed and
regulated information providers over these evolving media," said the Institute's Managing
Vice President John K. Keppler.
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Cheers,
Rob Lake
rbl@xxxxxxxxxxx
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