Unofficial transcript. XXX means something indecipherable. Cast, in order of appearance: * Scott McIntosh: attorney for Defendants * Myron Bright: Judge, visiting from the 8th Circuit (Fargo, N. Dakota) * Betty Fletcher: Judge, 9th Circuit Court of Appeals * Thomas Nelson: Judge, 9th Circuit Court of Appeals * Cindy Cohn: attorney for Plaintiff Date: 8 December 1997 Location: 9th Circuit Court of Appeals, Mission Street, San Francisco Time: approximately 11:00 McIntosh: [XXX] by my count uh something like 400 pages of briefs from the parties and the amici in this case, and we obviously can't cover all of the terrain that's covered by those briefs in the time we have this morning. But I do think it's possible to get to the heart of the case. And the way to do that is to be clear about what _is_ at issue here and what is _not_ at issue. What's not at issue in this case is whether the government can undertake to prevent the free public exchange of information and ideas about the discipline of cryptography. That's _not_ at issue, because the Export Administration Regulations which are being challenged in this case make no attempt to do that. To the contrary, the export regulations at issue in this case go out of their way to make---to place outside the regulatory scheme the exchange of information and ideas about cryptography. As you know from our briefs, all publicly available technology, which is the term of art used by the the EAR, all publicly av---uh available information about cryptography is simply outside the scope of EAR and its licensing requirements. That means, for example, that information presented in academic settings, in courses of instruction, in seminars, in universities, information that has been published or will be published in books, magazines, um, information that's a product of basic academic research in an academic setting, all of that information is freely available and is not subject to licensing by the federal government. You will find in the record in this case literally hundreds of pages of books---taken from books and articles and university syllabuses, devoted to the subject of cryptography, and the government does not require a license for any of them. Bright: Well then what's the big deal about uh putting the source code on computers? McIntosh: Well your honor, source code, here we here we move from what isn't at issue to what is at issue. What the government controls are products that are capable of encrypting data. It controls hardware, or it controls the export of, hardware and software that can encrypt data. And the parties have stipulated that encryption source code is capable of being used by a computer to encrypt data. Bright: Well, I'm I notice you cite uh the Lakewood uh City of Lakewood case uh as supporting your position. Of course, City of Lakewood case was a restriction on uh uh newspapers only indirectly. It was uh the uh type of uh of uh units that are out on the street in which people buy newspapers. And so that wasn't strictly First Amendment, but it was something that related to speech uh print in this case print. McIntosh: Uh that's correct, your honor. They were the newsstands as you say that were used for distributing um newspapers and other periodicals. Uh what the Court---the distinction the Court tried to draw in Lakewood, and the distinction on which we rest in this case, is the distinction between regulations, a licensing scheme, that is focused narrowly and specifically at expression or activities commonly associated with expression, and on the other hand a general licensing scheme, which may happen to include within its reach particular activities that can be undertaken for expressive purposes, but which is nonetheless a general scheme that doesn't single out in a narrow and specific fashion expressive activities. That's the distinction the Court is drawing in Lakewood. That's the distinction this court drew in the Roulette case. Fletcher: Let me ask you another question, uh apropos what you say this case does not include. At some earlier point, uh the government was contending that uh his---Bernstein's papers on this subject were subject to licensing. Now they've abandoned that position. McIntosh: The, the, there are, uh let me just preface this by saying of course we're dealing with a facial challenge here. It doesn't turn on the particular circumstances of Professor Bernstein. But, turning to those circumstances, Professor Bernstein um ultimately presented six--- we we're back on the prior regulatory scheme, the State Department scheme---presented the State Department six distinct documents if you will. Um two of them, two of those documents, represent the source code itself for his Snuffle encryption program. Fletcher: And you still think those are subject to licensing. McIntosh: The the software itself is subject to licensing. There's no dispute--- Fletcher: No, but the---the paper describing it--- McIntosh: I'm sorry, your honor. The---source code in printed form, in a book, a magazine, some other printed medium, is not subject to licensing. But the in---the the the request, the inquiry that he was making, wasn't directed at least as I understand it to the to the physical piece of paper itself. It was directed to the software in some electronic, in some medium, whether it be a diskette, or on the Internet, some other computer-ready medium--- Fletcher: There must be some confusion in the record about that then. McIntosh: I I I don't think there's any---I think at this point, your honor, there's no debate between the parties as to what the government, with respect to Professor Bernstein, what the government thinks is subject to licensing and what the government thinks is not. Uh Ms. Cohn can uh correct me if I'm wrong on that. But I think it's fairly clear at this point his software, the source code for the the Snuffle program, is subject to the licensing requirements of the EAR as encryption software. Fletcher: Is the---This, this is a very puzzling case, at least to to my mind. If you can put it all down on paper and all that's involved is a lotta hard work to put it into uh software or hardware, why does the government do this? McIntosh: Well, your honor, the the short answer is that the government, uh not simply under the current regulations but under the prior regulations in the State Department, has permitted the export of printed materials. And that practice, permitting that export, has not thus far compromised the government's intelligence-gathering capabilities. Um if if in fact it had resulted in the inability of the government to engage in intelligence-gathering activities, I think you would see either the government giving up the game, or, more realistically, trying to exercise control over the the paper materials themselves--- Fletcher: Well, after the barn doors are open and the pigs have fled, I don't uh--- McIntosh: You, your honor, the the reason that the government is is engaged in the control of encryption software is preci---notwithstanding the paper exception---is precisely because, in the real world, that doesn't open the barn doors in any way that thus far has actually compromised the government's ability to c---to to engage in intelligence activities. The the um. Eh um I think it's a matter of common sense. If you were to say to the American software industry, you have a choice, you can export books which have printed source code in them, or you can export diskettes that have computer-ready programs on them, which one is going to result in broader use abroad, which one is gonna result in broader uh demand for American products abroad, I think the answer's obvious. Um the the assumption behind um all of the public debates on these export controls is that the export controls if they were lifted would result in some fairly material expansion of American [XXX] software being exported abroad. Bright: This hasn't been argued either side, but you're objecting to the software being distributed being used uh to go overseas---and this is a prior restraint case, as I gathered, and Bernstein has not applied for a license on his uh program, is that right? McIntosh: He has not applied for a license that's correct. Bright: Now the question I have, and as I say it bothers me. And maybe you've got an answer, maybe you haven't. Uh does the First Amendment uh apply to overseas beyond the borders of this country? Nobody's argued that point, and and that seems to be something that at least is of a concern to me. McIntosh: Uh it it's clear under this court's decision in the Bullfrog Films case, your honor---uh this is from about ten years ago---that at least to some extent the First Amendment does have applications to communications abroad uh and the government has not contended in this court that there is no First Amendment issue at all simply because of a foreign locus. I do think there is room for argument uh that the foreign setting the national security concerns uh would result in a a less uh extensive degree of First Amendment protection. But we don't think that you need to resolve that, because we think under conventional First Amendment standards the government's um activities here are constitutional. Fletcher: Then you're not contending that the---our government's capacity to protect its communications is compromised. What you're asserting is that what's compromised is your capacity to eavesdrop on others. McIntosh: If if if you like it it's the so-called signals intelligence capabilities of the of the United States, the ability to obtain electronic intelligence from from foreign intelligence targets. That's what---that's what these regulations are designed to protect, is that capacity. And I think what's important to understand is that that capacity that the concern about the government's, that capacity, is what drives these regulations not only with respect to hardware and encryption object code but even encryption source code. The President's executive order and his memorandum are very clear on that and the structure of the regulations is very clear on that. All of these products are regulated because of their capacity to make computers encrypt data. Bright: Uh you say that uh you're concerned with the function of the c---of uh the source code. And yet and it's and you're saying that that's not uh communication in the First Amendment sense. Is that your position? McIntosh: I I I wouldn't put it quite that way, your honor. Let me let me try to put it this way. The activity that's being regulated here is the export of encryption software, more particularly here the export of encryption source code. It is possible and the government does not dispute that you---that one can distribute source code for expressive purposes. That is that is true. It is also true, and I think undisputed, that one can distribute source code, and source code can be used, for wholly non-expressive purposes. Bright: But in this case Bernstein says he wants to use this source code for expressive pur---purposes. He's gonna put it in a book or he may put it in a book, and now he wants to put it in the computer so that foreign uh scientists and experts can communicate and discuss uh the importance of this source code and how it may be amplified and so forth to be used commercially. Why isn't that expression and---why are you saying that the fact that it's functional takes it out of the First Amendment uh context? McIntosh: No, your honor. I I I want to be clear on that. We do not contend that it simply take---taken out of the First Amendment context. Our contention is a different one. It is that when the government regulates any activity for reasons that are unrelated to the expression involved, for reasons that are not based on some disagreement with the views or ideas or information being conveyed, that a very different First Amendment analysis applies. Bright: Well isn't that, wasn't that the analysis however, you said a different reason? And that's how, is that how you distinguish this case uh from uh the uh [XXX] Plain Dealer case. McIntosh: Well, your honor. Bright: Lake---the Lakes---Lakewood City--- McIntosh: Lakewood case. Yes your honor. Um uh that's part of it, your honor, um I think the the fact that the government is not---is plainly not undertaking suppress information about cryptography, that's not the purpose of these regulations, places this case at a considerable remove from the sort of core prior restraint cases like the Pentagon Papers case, where the whole object of the prior restraint was to keep people from learning information. That's not what the government's regulations are trying to--- Fletcher: They're just keeping them from using it. McIntosh: Not using the information, your honor. Using the software, because--- Fletcher: That, that's just words, counsel. [laughter] McIntosh: No no, your honor. I don't think so. Uh Professor Bernstein is free for example, is---Professor Bernstein I think he said in his brief that he has uh a colleague in New Zealand, if I'm remembering correctly, who he'd like to uh present this information to, as he puts it, his ideas about cryptography. Well he can send his source code in printed form to his colleague in New Zealand, or any other colleague abroad, practically any purposes. He's free to do so. The government isn't trying to stop him from doing that. He can go to a seminar or a lecture series in Paris or Oslo or anywhere else he wants to. He can talk about his theories, he can present, pardon me, present them to his colleagues, he can for that matter hand out printed versions of the source code at at his seminars--- Nelson: Couldn't he export himself? In other words, couldn't he go to London and enter into an agreement with uh---make up uh a uh partnership with uh, become Bernstein and Widget LLC and uh actually make these uh uh disks over there and sell them any place he wants? McIntosh: Well if, your honor, if he undertook---uh I I think there'd be a question if his goals were to get into the the marketing of this software abroad [XXX] that's not--- Nelson: All he's taking with him is his head. McIntosh: I'm s---pardon me, your honor? Nelson: All he takes with him is his head and what's in it. McIntosh: I understand, your honor. There are um restrictions on providing so-called technical assistance to foreigners uh with the purpose of bringing about the manufacture of controlled products abroad. And it might well be---I don't claim expertise on this particular area---but it might well be if he undertakes the kind of scheme you're talking about, go abroad, uh help set up a company abroad that starts cranking out these diskettes, that that itself would be technical assistance within the meaning of that regulation. It's 15 CFR 744.9. That might well be a controlled activity that needs a license. Nelson: Let me see if if I understand uh how you get to your your content-neutral analysis. Uh contrary to a famous philosopher you're saying that the medium is not the message. You have to separate the message from the medium. That here when when we're talking the---not just the code but the the disk in which that code is embedded that that's the medium and the government doesn't care what message is on that medium, it's the medium it's concerned with. McIntosh: Uh I think it's clear both from the President's um executive order here and from the structure of the regulations that the government's object is not---the government is not concerned with the message. Um--- Nelson: So it doesn't---it doesn't help to start with cases that say, uh, computer code is language, uh language is speech, speech is expression, ergo the First Amendment leaps on this thing full blown. McIntosh: The---I think that's absolutely correct, your honor. I mean the point is that when the government's regulatory goals are unrelated to suppressing that information that you don't simply apply kind of full-blown--- Nelson: Let's let's say let's say that you're right. Uh you would agree that uh in the face of a First Amendment challenge the government has to defend the regulation, is that correct? McIntosh: I'm sorry, your honor--- Nelson: That in the face of a First Amendment challenge, the government has to defend the regulation. McIntosh: Yes, I I think that's--- Nelson: It's not gonna lose it, it's got to defend it. McIntosh: That's correct your honor. Nelson: All right, so the battleground you've chosen is to say that it's uh content-neutral, intermediate scrutiny, and in your view then it survives intermediate scrutiny. McIntosh: That's correct your honor. Nelson: The problem I have with that---and tell me tell me where where I'm I'm uh I'm off---it seems to me, if as the parties seem to agree, that software that is is at least as capable as what we're talking about here uh is fully available uh in Europe and other places and Asia then what is the government accomplishing? Is what it's accomplishing here really narrowly tailored to its view, when what it's doing is to some degree at least uh hampering uh some elements of First Amendment expression? McIntosh: Uh let me say several things about foreign availability, your honor. First the President gave very specific consideration to the issue of foreign availability. And he determined that nothwithstanding the actual or apparent availability of encryption software, and hardware for that matter, abroad that uncontrolled exports of encryption products in this country could still compromise this country's national security and foreign policy interests in ways which are not happening as the as the current state of affairs exists. Uh as this court's decision in the Mandel case indicates, I think that kind of determination by the President is one that is entitled to a very concrete deference. Beyond that I think you need to bear in mind the exact nature of this regulatory scheme. This is not a simple ban on the export of encryption products. This is a licensing scheme. And all this scheme is designed to do is to put the government in a position so it can evaluate on a case-by-case basis--- Fletcher: Were there any particular standard that I have seen? McIntosh: Well your honor, I---the the standard, the standards are those associated with the national concer---national security problems posed by foreign use of encryption--- Nelson: Can the test be standard? McIntosh: Well, your honor, there there's something, um the nature of the inquiry here, uh the nature of the of the administrative process, is one that gets into matters that are for obvious reasons extraordinarily confidential and secret. Um the the you [XXX]---you are familiar I'm sure with the state secret privilege. And one of the things the state secrets privilege applies to with greatest force is information about this country's intelligence-gathering capabilities. I think it's difficult in any sort of public forum whether it's administrative or judicial uh for the government to get into any level of detail about--- Fletcher: That may be, counsel, but when you wave national security against the First Amendment, the government has a higher burden to prove its case. McIntosh: Uh uh I I certainly don't suggest that merely---the mere assertion of national security ends the case, your honor--- Fletcher: That's about all that happened as far as the court's knowledge is concerned. McIntosh: Well, your honor, I I I think, you certainly have before you the President's own appraisal of the national security consequences. Um you have your decision in Mandel, which reflects I think a legitimate concern about the relative capacity of the courts and the executive branch to make these kinds of national security assessments. And, as I was trying to say a moment ago, you have a licensing scheme which doesn't prohibit altogether exports of encryption programs, nor does it make foreign availability entirely irrelevant. It leaves the Department of Commerce with discretion in particular cases to take account of foreign availability if that appears to be relevant to the national security risks. It does so quite explicitly. The real question is what are the consequences of the alternative regime that the district court has tried to bring about, and that Professor Bernstein is trying to accomplish, one in which there are _no_ export controls on encryption software, regardless of the strength of the software, regardless of the country to which it's destined, regardless of the persons or organizations who are going to use it, and regardless of the uses to which they're going to put it. I think the answer is, it should I hope be obvious that there are legitimate reasons of national security not to wind up in such a situation where the government cannot exercise any control regardless of all those factors. Bright: Does that uh put into issue the time, manner, and place restrictions in this case, or if we decide that this is not a prior restraint do you win at least at uh from the standpoint of this litigation? McIntosh: Well I think there there are two separate questions here. There is the the prior restraint or licensing issue, and there is a a separate although related question about the con---the standards governing content-neutral regulations. They are the same standards that would apply to a time, place, and manner uh regulation. So I think---I I I don't suggest a simply one inquiry for you to make here. You you have to inquire both into the content-neutrality issues that we've put forward--- Bright: Are you saying that uh under time, manner, and place restrictions uh the government's regulation is a valid one? McIntosh: Under the standards that apply to time, place, and manner regulations, which are which are the standards that apply generally to content-neutral regulations, yes, it is our submission that the government's regulations are valid. Fletcher: Your argument seemed to say that if the government's purpose was legitimate and pure that that should end it. And you don't talk about the effect on---a chilling effect on First Amendment. For example, there are all kinds of communications in today's world that need to be encrypted, and they need to be strongly encrypted. And how does the government respond to that chilling effect on First Amendment uh communications? McIntosh: Uh your honor, the the these regulations don't prohibit the use of encryption by anyone. Fletcher: Well but if you don't have the software how can you encrypt? McIntosh: Well within this country anyone can purchase any encryption software, and anyone who travels abroad from this country can bring with them for their own personal use any encryption software they have purchased in this country. There are specific provisions in the regulations that provide for that. You don't have before you a statute which purports to limit the use by American citizens of encryption software. Fletcher: So I could buy um Bernstein's source code, um, take it abroad, and have it stolen from me in London? McIntosh: Well I hope that wouldn't happen your honor. Uh but certainly the risks posed by that uh random theft of your the one copy that's in your uh briefcase uh are I think an order of magnitude different from those that are presented if it is published or posted or otherwise distributed uh to everyone in the world by the Internet. Uh and it is to the latter kinds of risks that these regulations speak. Nelson: I think I can I can detect some kind of a form behind your, the government's assertion of of security. Let me see if if it's roughly right. Uh let's uh let's assume that uh some expert looked at uh the ability of people to encrypt information, from the dawn of time to today, and decided that Mr. Bernstein on an arithmetic scale was about at level 5, and no telling how high it'll go in time. If the government then prohibits the export of Bernstein's level 5 program in direct usable form by people overseas, then it's saying we aren't up to level 5 yet in our ability to de-encrypt uh this kind of information. So that in your mind would be an admission of its uh intelligence-gathering capability? McIntosh: Well, I suppose some inferences can be drawn, your honor. Uh I I wouldn't want to press them too hard. Um. Nelson: I mean---is it that kind of a framework that we're talking about? That that we know there are people in Europe that can do this kind of work. And that the government is interested in the in the information that they're encrypting, and is probably trying to decipher. And so there's something here that if if if Snuffle is better than what's in Europe then that gives some level of idea of what we can do with European programs. McIntosh: That that certainly is is the kind of inference that that could be drawn, your honor. I don't---in a particular case it might or might not be the the driving base of the decision, but it could be drawn. Um well I I think I'd better leave it at that. Uh I've exhausted my time. If the court has further questions I'd be happy to answer them. Fletcher: Well we'll hear from the other side and we then may have some more questions for you. McIntosh: Thank you your honor. Cohn: May it please the court. My name is Cindy Cohn, and I'm from the San Mateo law firm of McGlashan & Sarrail. We're here today representing Professor Daniel Bernstein, plaintiff and appellee, and our job today is to defend the district court's determination that the government's cryptography licensing scheme is an unconstitutional prior restraint on speech, in that it requires scientists to submit their ideas to faceless government bureaucrats for evaluation, prior to publication, without any standards or discretionary limits on the on the bureaucrat's actions. We believe that this case can be decided with reference to four settled Supreme Court precedents: City of Lakewood, Freedman v. Maryland, the Pentagon Papers case, and Reno v. ACLU, which was decided by the Supreme Court in its last term. Bright: What was the first one you mentioned, I didn't catch it. Cohn: City of Lakewood. Bright: Oh that's the one I talked about. Cohn: Which we've already discussed. That case, as as you you did discuss with Mr. McIntosh, involved the licensing of newsracks, and a licensing scheme that had no limits on the discretion of the licensing bureaucrat to grant or not grant a newsrack license. And it set out to test for whether a facial prior restraint could lie. Bright: Does the record here show why Professor Bernstein uh did not apply for a license, at least to find out whether he could get it? Cohn: Well, the gov---the the determination that Professor Bernstein would have to apply for a license was essentially the determination of whether he would get one in this case. The government, although it's not printed and although it's not bound to it, has a pretty consistent policy of not granting licenses for strong encryption such as Professor Bernstein's Snuffle. In addition it's our contention that he shouldn't have to apply for a license here. Bright: I understand your position is he doesn't have to apply, that he's got a First Amendment right. Now um--- Fletcher: Your first argument, futility? Cohn: Yes, your honor. Okay. Um the second case is is Freedman v. Maryland. And that case laid out the procedural requirements that the government must put in place if it wants to institute a prior restraint scheme. Indeed, we we believe that if the court finds that City of Lakewood applies, that there is a close enough nexus to expression or conduct commonly associated with expression here, and that the Freedman v. Maryland procedural protections are not in place, which the government doesn't contest, that it need go no further in its analysis. In FW/PBS, a recent Supreme Court case involving a general licensing scheme for businesses that had especially onerous restrictions for adult businesses, Justice O'Connor writing for the plurality held that, once the court finds a facial prior restraint and a lack of procedural protections, it need go no further, following settled Supreme Court precedent that there is no need to go any further once it---it need not find any further problems once it's found a initial co---facial constitutional problem. The third case and the fourth case are raised by the government's defenses here. The Pentagon Papers case sets up the standards for proof of harm, proof of causation, and proof of imminence that the government must meet if it wants to const---if it wants to institute a facial prior restraint on---a licensing scheme. And it's important to take a look at that that---we think that opinion is very instructive here because in that case, as the as in this case, the government was claiming a national security interest. In that case, unlike this case, our nation was at war. But yet the government---but yet the court held in the Stewart opinion---well there are many opinions in the Pentagon Papers case---but the Stewart opinion holds that the government must demonstrate a direct, immediate, and irreparable damage to our nation or its people from publication of of the material sought to be enjoined. That's a high standard. And indeed the Pentagon Papers case took a close look at the proof that the government presented in that case and held that it didn't meet the standard. In this case there's no proof presented in the record. Fletcher: Has the government offered to submit proof under seal? Cohn: It has not, your honor. Indeed they moved for summary judgment below without making an offer of proof whatsoever so it's the---there were cross-motions for summary judgment. They did not make an offer proof below, other than the President's assertion and their assertion which is at best throughout their papers that publication of this material _may_ cause harm. That's exactly what the government said in the Pentagon Papers, and the Supreme Court was clear that simply an assertion that there may be some possible future harm from publication of materials was not sufficient to meet the First Amendment standards. And the final case is Reno v. ACLU. And we believe that it's in this case that the Supreme Court's done much of of the work necessary in this case. It took a look at the government's claim that it's okay to forbid publication in one medium as long as you allow it in another. And harkening back to City of Ladue, previous Supreme Court cases involving media discrimination by the government, it said that the Internet is a fully protected medium. And the fact of where where Professor Bernstein chooses to publish his ideas, the Internet, should make no difference in your analysis of this case. The the government bases its arguments on some factual assertions here that we think ignore some of the good fact-finding work that Judge Patel did down below in the district court. The---obviously this is a facial constitutional challenge, and this court isn't bound by the factual findings of Judge Patel, but we think it's important to pr---that this court take a look at at what what Judge Patel found in hearing, in her opinion about the facts of the case. The judge---the judge found that, the district court found that the regulations do have an impact on academic speech, and that that speech is often undertaken by academics, and that indeed these restrictions restrict the most common expressive activities of scholars, and that includes teaching, and that includes publishing. Bright: Well, isn't this a case where the government is saying, the function of source code which goes into the computer is such that if we allow that source code into the computer and then it's it's converted so uh the the message can go all over the world. And the government is saying essentially we're looking at the function and what runs the computer, and even though it may be speech-related it is not aiming it at the speech itself, and says the reason we're not aiming it at at speech itself is because there's so many other uh places that uh the speech can be uh had and read and communicated. Now as as applied to function alone, does that involve in your view a prior restraint, or can that be construed to be content neutral? Cohn: Well, your honor, the test for whether um a prior restraint facial challenge can lie was set up in City of Lakewood. And and that test is whether the regulations um have a close enough nexus to expression or conduct commonly associated expression to present a real threat of censorship. Um we think that, regardless of the government's aim here, the record is clear, and the district court found, that these regulations have a clear effect on expression. And so therefore a prior restraint analysis must apply and Freedman v. M--- Bright: Well what expression are we talking about? The expression, is it the code or is it cryptology, the ultimate message that would go out, the secret message if I can use that term. Cohn: Uh I I think it's both. Uh the code itself, for people like Professor Bernstein and many people in the room here today, is itself an expression. People who work in this area of science, people who work in areas of science that are um assisted by computer programs, read those programs, just like you or I might read a brief that might be Greek to some person who's not had legal training. These people read that source code--- Nelson: Some of them are. [laughter] Cohn: And some of them are, exactly. Um I hope ours weren't to you. But um that that that the people like Professor Bernstein and his colleagues all over the world read the code. They read the code just like we would read read a brief. Code is published in books and has been for many many years because people read it. Bright: Why isn't the ability to read it in a book sufficient for academic discourse. Why does it have to be on disk? Cohn: Well I think that it's im---there---the question is, first of all, does the government get to decide which medium Professor Bernstein publishes ideas in, or not? Because there's no question that electronic media is a legitimate and well-used medium for expression, just as paper is. And does the government get to sit and tell Professor Bernstein you can publish, because your ideas are on this subject, you can publish them on paper, but you can't publish them electronically. The answer is that that question requires stringent First Amendment analysis. And we think of course the answer is no in this particular instance. Um the---back to your your question cause I think that there was a an um---you asked a second question which is is it the message itself that is encrypted that is protected expression. We contend that that's that's important too, and that the ability to send a message such that it can't be read by anybody but your intended recipient is an important part of the First Amendment, and that the ability of the government to restrict the development of the technology that lets us have electronic envelopes is itself imbued with First Amendment difficulties, and itself could be a reason to trigger First Amendment analysis. We think there are two two--- Bright: Well they're not trying to stop encrypted material. They're trying to stop the computer from sending it out to the world at large. And is that the same thing as a newsstand in the Lakewood City case, City of Lakewood? Cohn: Well the government is trying to prevent people from getting this code--- Bright: Yes. Cohn: ---because if they have this code they can use electronic envelopes. Um I I think that the government's um---I think that this is---I think the code itself is pure speech. It's a text. It's closer to the First Amendment than the newsracks were in Lakewood. No one seriously considered that the newsracks in Lakewood were themselves speech. It was only that they they were part of the process of conveying speech to readers. In this case the code itself is speech. And the record is replete with examples of people who read code, who write code, who develop it, and who who who have been chilled in their further development of this particular kind of code because of these regulations. And Judge---the district court's opinion re---reflects that. Nelson: If you meet the government on its own ground, in other words it's brushed aside uh everything you you said, and said no, this is uh content-neutral, intermediate scrutiny, we win. Uh if you accept their premise and meet them on their own playing field, what do you think is the basic flaw with the government's position? Cohn: The basic flaw with the government's position is that they have a licensing scheme. Bright: I didn't hear that. Cohn: The basic flaw with the government's position is that they have chosen to implement their concerns here through a prepublication licensing scheme. Like Mr.---Mr. uh McIntosh said that that it was important to note that this did---wasn't a complete ban, that it was a licensing scheme, and that there were government agents with discretion to decide whether someone could publish or whether they could not. We think that's exactly the point. That when the government sets up a bureaucrat to decide who gets to speak and who doesn't get to speak on a particular topic, they have to meet the very strict standards of prior restraint. Nelson: So the fact that it's a licensing scheme keeps it from being content-neutral. Cohn: No. I think it's content-based in addition. But you asked me for the first problem and I I gave you the first one. Th---this is a content-based scheme. This is a content-based scheme because it singles out cryp---software on the subject of cryptography for especially onerous treatment. If you look at the way the Export Administration Regulations are structured as a whole, all other software on all other topics is treated under the under the rubric of the phrase technology. And the technology provisions contain pretty good First Amendment cutouts. If you're involved in fundamental research, if you're uh--- people like Professor Bernstein's work on Snuffle would be allowed if it were categorized as technology like all other software that's controlled under the Export Administration Regulations. But in promulgating the cryptography-specific regulations the government said if your software is about this subject you don't get the First Amendment cutouts. Nelson: Well I can I can see the government's arguments on why that isn't so. I---not necessarily agree with them, but I can see their arguments. But let's assume they're correct: in spite of your licensing answer, this is a content-neutral scheme. Given intermediate scrutiny, does it fail to meet the scrutiny? Cohn: Yes it does. Nelson: How does it fail? Cohn: It fails intermediate scrutiny because the government hasn't shown that its scheme directly and materially furthers its interest. And the reason for that is the reason that you raised in discussing with Mr. McIntosh before. The foreign availability problem, that there is cryptography available all over the world. We have some really bright cryptographers in this country but we do not hold a monopoly on this knowledge. We do not hold a monopoly on the ability to take this knowledge and turn it into functioning software. In the record there's clear---there's clear evidence from people who have done surveys of the cryptography that's available abroad and shown that extremely strong cryptography is widely available abroad. The second reason that they fail intermediate scrutiny--- Bright: Did the district court uh uh address intermediate scrutiny? Cohn: It did not. Bright: I didn't think so. Cohn: It did not, because it found that it was a prior restraint, and that Lakewood applied, and and following on the FW/PBS--- Bright: Well if if uh if you're uh. If if we should decide that there is no prior restraint, and the issue now is uh the adequacy or inadequacy of intermediate scrutiny, doesn't this case have to go back for that kind of a determination in the distr---in the district court, rather than our making the determination? Cohn: I think that that that this court could send it back to the district court for further findings. But I don't think it has to. I think the record here is very clear, and indeed the foreign availability is one problem in in meeting intermediate scrutiny test, but the second one, the print exception, doesn't require any findings of fact, doesn't require any factual knowledge. It's---there's no question, and the government admits, that if---that Professor Bernstein could make 200---200000 copies of Snuffle, which by the way is two pages, it's 550 words---and take it on an airplane, and distribute it over Baghdad today, and not be in violation of the export restrictions. But if he if he were to take one copy of the program and electronically send it to his colleague in New Zealand, he would be prosecuted as an arms exporter. Bright: So, from your standpoint, for complete affirmance we have to determine the district court was right uh in ruling that this was a prior restraint of free speech. Is that correct? Cohn: Um I think you could affirm on different grounds if you if you wanted to. I think the record is sufficient to allow you to affirm--- Bright: Well um we could but we wouldn't have to on the--- Cohn: You would not have to. I think it's also important in considering this case to take a look---the government's claiming that because---the government in essence here wants you to create a new category of lesser protected speech. And that's speech that can be read by humans and used by humans but can also be functional if given to a machine. Now the government conceded just moments ago that software can be used to convey ideas without also conveying, controlling a computer. And that software that's conveyed merely to other people to read is still controlled. Um we submit that at best their argument triggers some of the intertwined cases, the cases where there's a speech element and perhaps a lesser protected speech element intertwined in the same speech. But we say that analysis of those cases also leads you to prior restraint, full prior restraint analysis. In this---in this court the [XXX] case involving the selling of peddler's license for selling of t-shirts that had messages on them um is a case in which the, there there was speech, there was lesser-protected commercial speech involved, but yet this court found that full prior restraint analysis had to apply. And because the scheme at issue didn't have limits on the discretion of the agent---the the the sherriffs, the agency bureaucrats who were administering it, it failed. So we think that even if you---even if you accept the government's argument, that that functionality or capability should somehow add a lesser-than-speech element to the speech here, the cases clearly indicate that you've got to do full prior restraint analysis. And there's no question that this scheme fails prior restraint analysis. There are no limits on the discretion of the agency bureaucrat. We saw that in this case. Because Professor---as as Judge Fletcher noted earlier, when Professor Bernstein first submitted his materials to the agency, they told him his paper, his scientific paper, was controlled. And it wasn't until after we sued that they issued a clarification saying that they didn't really mean that. Um so the ab---the abuse of discretion is clear in the record here. There are several other declarants in the record who can talk ab---who talk about the abuse of discretion, and and uh the chilling effect that this scheme has on them. That's why---that's why prior restraint analysis is is is more is is applied in licensing scheme cases, because of the chilling effect, because it stops speech before it happens. That's how this case is different than the Roulette case that the government cites over and over again. The Roulette case involved uh a a scheme that criminalized sitting on sidewalks. But there was no question that there would be judicial review of each of these determinations, because a person would be prosecuted. It was a subsequent punishment scheme. So we submit that Roulette is not the correct place to look for the proper analysis. The correct place to look is previous licensing schemes. If the court has no further questions I'll sit down. Fletcher: This is an odd case in that uh we say that the essence of prior restraint is that you mustn't stop speech before it happens. We know what the speech is here. It's kind of looking at the effects of stopping it. Cohn: We do but this---that's part of why this is a facial challenge, because there are other people out there who haven't had the benefit of four years of pro bono representation in the courts, who would like to publish their ideas, who are chilled from doing so. And we won't know about them, you'll never know about them, unless they're lucky enough to to to have the the benefit that that Professor Bernstein's had. That's why it's important that this is a facial challenge and that it be decided as a facial challenge, because you'll never see, you'll never see the people who are chilled by this. And the record's clear that there are others out there who are. Fletcher: We'll give you a few minutes, counsel. McIntosh: Thank you, your honor. Uh Ms. Cohn said that this regulatory scheme puts the government in a position to decide who can speak and who can't speak. If I accomplish nothing else this morning, I want to make clear that that is absolutely, utterly incorrect. This regulatory scheme doesn't stop anyone from speaking, including Professor Bernstein--- Fletcher: It does---it does prevent them speaking in certain mediums. McIntosh: It does in a particular medium, your honor, the Internet, that I guess in his in his instance. But the the the critical point for prior restraint analysis is there's no attempt here by the government, and no capacity by the government with these regulations, to keep Professor Bernstein's ideas bottled up inside his head or anywhere else. There are any number of ways that he can distribute those ideas to anyone he wants to for academic purposes, which is his stated purpose. Now--- Nelson: Except on the Internet. McIntosh: Except on the Internet. There's a particular medium that's being restricted here. [XXX] And so of course--- Nelson: If he writes a letter to the to the editor of the New York Times, Unabomber style, and puts his [source code in the letter], he can't do that because they put out an Internet edition. McIntosh: Well no he he wouldn't certainly be subject to any restrictions, your honor. And they could publish it, the New York Times could print it. Now if they posted the source code on the web that would be subject to export controls. But what's important, your honor--- Nelson: Don't they---don't they have an edition that goes on the web? McIntosh: They do, your honor. I don't know whether it's comprehensive. But they certainly do. Nelson: So so I guess my point is that that he could write to the Boise Statesman and be perfectly safe as to the the Boise Statesman. If he writes the the same letter to the New York Times, somebody's in trouble. McIntosh: Well he's not in trouble, your honor. He's not in trouble. Fletcher: Even if he knows it's going to go on the Internet? McIntosh: Pardon me, your honor? Fletcher: Even if he knows that it's going to go on the Internet? McIntosh: Uh um I'm not sure how he would know that, your honor. Fletcher: Well let's assume that. He knows that the New York Times puts all these things on the Internet. Nelson: Hey I've read it on the Internet so I assume he might know that too. [laughter] McIntosh: Well if the New York Times were undertaking to to engage in conduct [XXX] export of source code then---and he was aware of that then that might have---he might be subject to regulation in that regard. But, your honor--- Nelson: Would the New York Times be subject to regulation? McIntosh: The the export of encryption software requires a license as a general matter. And therefore the posting in some unrestricted forum of encryption source code on the Internet is subject to a licensing requirement. If if controls are placed on the avail---on access so that it's limited to domestic access then there's no export and therefore no licensing requirement. Nelson: So that would have to be policed after the fact? McIntosh: I'm sorry, your honor? Nelson: That would have to be policed after the fact? I assume the the New York Times doesn't have a licensing bureau. McIntosh: I I I I assure you your honor the government does not spend its time reading the New York Times online to try to bring bring prosecutions for the publication of electronic uh source code. Uh--- Nelson: Doesn't that make that make the the scheme even less effective? In other words, if if uh Bernstein wanted some help all he had to do was write to the Times and say if you publish this uh you're going to jail. And I can assure you they'd---he'd get lots of help. Wouldn't be pro bono. [laughter] McIntosh: I think he's he's he he has done very well by his pro bono counsel, your honor. I don't think he needs the Times's assistance. Um but if I could just pursue this a little bit further. We've been talking about different avenues for communicating information, and about the effect of restricting a particular avenue of communication while leaving other avenues open, press, print, other avenues. Here too the distinction between content-based and content-neutral regulations is absolute critical for you to keep in mind. What the Supreme Court has said in Ward, and what your honor Judge Fletcher said last year in a case called Bland v. Fessler [79 F.3d 942 (9th Cir. 1996)], is that when you have a content-neutral regulatory scheme, a scheme that is not directed at the at the s---suppressing information, that the existence of alternative avenues for disseminating information are very significant. Recall Bland v. Fessler was a case involving automated uh phone solicitation. And the government pointed out that, while restrictions were placed on these automated uh phone solicitation devices, there were other ways you could engage in phone solicitation or more direct solicitation. And the plaintiffs in that case said, but but this is the best way, this is better than the alternatives, this really affects us, and the alternatives aren't as good. And under intermediate scrutiny what this court said, and what the Supreme Court has said in Ward, is as long as there are ample alternative avenues for communication it doesn't get you anywhere simply to say that this one is preferable from your standpoint. Fletcher: Does the fact that it was commercial speech we were talking about have anything to do with it? McIntosh: There was more than com---I believe, your honor, more than commercial speech at issue in that case. Uh I could be wrong about that but I--- Fletcher: It was somebody who had a carpet business, and he wanted to advertise his cleaning. McIntosh: Uh there were uh again---I could stand corrected in this, your honor, but I think there was more than that in the case. And in any event the standards that were being applied, the intermediate scrutiny standards, are the same ones that would apply to any content-neutral government regulation. Bright: On intermediate scrutiny I've asked uh uh your opposing counsel since the district court didn't address it. What do we do with that issue if we find that uh this regulation is content-neutral but subject to the intermediate scrutiny analysis. Do we send this back, or do we have to decide it? McIntosh: I I I think this is the one of the rare points where opposing counsel and I are in agreement. Uh it would be within your power to send it back, um but it would likewise be within your power to decide it yourself. Uh any review [XXX] subsequently engaged in if there were a decision by the district court would be de novo, uh and the questions that are presented are substantially questions of law. I don't think there are genuine issues of material fact in this case. Um now one final point. Judge Bright you asked whether this case, whether the speech that we're dealing with here is the code itself or the messages that are being encrypted. Um the district court's decision rests on the source code itself, that is the speech that the district court was concerned with, not the messages that are being encrypted by software. And indeed, this also goes back to one of Professor---um pardon me, one of Judge Fletcher's questions. Uh Professor Bernstein has never asserted that he himself has been impaired in any way in _his_ ability to engage in encrypted conversations. As far as I know there's nothing in the record to that effect. And so this simply isn't a case for that reason as well as others that presents that question whether--- Fletcher: Well, uh, if in fact the government's fears are realized, it is in effect preventing others from, uh free to conversing---with lots of encryption. McIntosh: Well the the government's object your honor is to preserve its ability to maintain electronic surveillance of foreign intelligence targets. Fletcher: Right. McIntosh: Uh there's no there's no attempt to to restrict at all in these regulations the use of encryption of whatever strength, whatever capabilities, domestically. Nelson: Well if Coca-Cola wants to send an encrypted message to, from Atlanta to its uh its European headquarters in Paris, wherever it is, it can't use this this code system because it can't get the decoding disk to Paris. McIntosh: Okay. A license would be required for export. Now we we don't know, your honor, because there's never been a license application here um whether a license--- Nelson: Without---without getting a license it can't do that. McIntosh: Yes. Any any export of encryption software generally speaking requires a license. If the court has no further questions. Fletcher: Thank you, counsel. Uh the case we have just heard is submitted. The court stands adjourned.