Yesterday, the Los Angeles City Council voted to impose requirements for a police permit in order run a cybercafé. Technically, another vote will have to be taken next week and then the ordinance goes to Mayor James Hahn for his signature. The ordinance is expected to go into effect later this summer. Read on for a detailed look at the ordinance...
Although cybercafés would obviously prefer not to have to get a police permit in order to operate, this is actually a victory for the nascent and struggling industry. The permit requirements were orginally proposed in response to a spate of cybercafé "related" violence two years ago and proposed limits included requirements for security guards, enforcement of ESRB game ratings, and mandatory ID requirements for all patrons. The permit requirement finally passed is much less burdensome than what was orginally proposed and, more importantly, the draconian zoning regulations went away entirely. Of course, being that I was the point man for the industry (iGames) negotiations with the city for the past nine months or so, I'm a bit biased. In any case, the important aspects of the new ordinance require the following:
There shall be a video or digital camera surveillance system that monitors all entrance and exit points, during all hours of operation. The system shall be maintained in good working order and is subject to inspection by the City during business hours. The videotapes or hard drive data shall be maintained for a minimum of 72 hours.Does this raise privacy issues? Absolutely. Unfortunately, a recent California State Court of Appeals decision said that was just fine (though the dissent was one of the most blistering I've ever read). See my coverage of the decision: CyberCafe Ordinance Decision - First Amendment Victory - Privacy Defeat. Hard to say no when the courts have said yes. Also, note that only the equipment can be inspected. This beats versions I've seen that may allow city officials to inspect the video itself whenever they want.
Hopefully, if other cities feel compelled to regulate cybercafés they will follow Los Angeles' lead.
No More Draconian Zoning Regulations
One thing that the press has not discussed is the major victory cybercafés achieved in convincing Los Angeles to stop enforcing its draconian zoning regulations. Basically, when the city decided to crackdown on cybercafés, the zoning administrator "discovered" that cybercafés required "Conditional Use Permits" (CUP) in order to operate since they were the same as "Penny Arcades" (which required CUPs). The CUP process is extremely expensive, costing thousands of dollars. It takes months. At the end of that time, the Zoning Administrator has enormous discretion to deny the permit, for example, if the proposed use isn't in "harmony" with city planning. You don't get your money back. Dozens of cybercafés were hit with CUP requests and threatened with jail and business closure if they didn't comply. Many paid the money, some simply went out of business.
At every meeting of the Los Angeles Cybercafé Working Group (the city task force designated to develop the ordinance) I told them that the zoning regulations were unconsitutional and of much more concern to cybercafés than the police permit. After the courts agreed with me that similar zoning regulations in the City of Garden Grove were unconstitutional as applied to cybercafés (see, CyberCafe Ordinance Decision - First Amendment Victory - Privacy Defeat), the city decided to stop enforcement of the zoning regulations without forcing another lawsuit.
Press Coverage
The LA Daily News has had the best local coverage of this issue. This story (which quotes a friend of mine, Lisa from Blue Screen Gaming) is a good summary: New rules coming for cybercafes in the city.
The LA Times (reg. req.) is a bit sensational (L.A. Requires Safety Measures at Cyber Cafes):
Businesses that allow teenagers to play video games during school hours, smoke or gamble could lose their permits and be forced to shut down.Well, not too many businesses that allow teenagers to smoke and gamble is going to last long. However, the article does get some more reactions from various cybercafé owners.
The Register focuses on the curfew aspect of the ordinance and implicitly compares it to China shutting down 8,600 cybercafés (LA plans cybercafe teen curfew). The comparison is more than a bit over-the-top, given that the curfew and truancy laws are already in effect.
The Inquirer also compares the new ordinance to Chinese crackdowns, this time in the title (Los Angeles adopts Chinese Cyber café laws).
C|Net News runs a Reuters wirestory that points out the real concerns of the city council (Los Angeles clamps down on cybercafes):
A report found that 86 percent of people arrested at cybercafes were juveniles, and 93 percent of the arrests were for truancy or curfew violations.
One of the most interesting aspects of the gaming world for me is the LAN party. Sure, online play is great, but the social atmosphere of playing a networked game in physical proximity to the other players on a LAN is fantastic. LAN play and online play hardly compare.
Just a couple of examples: there are few lamers and griefers at a LAN party thanks to the social norms resulting from physical proximity; and, sure, you can use headsets to talk during online play, but it is nothing compared to the before/during/after social interaction of LAN play.
Anyone interested in seeing gaming thrive even more should be supporting and encouraging LAN play.
However, setting up such LANs can be burdensome: hauling around and setting up network gear, PCs or Xboxes, and enough displays is not easy, nor is ensuring all software is patched and up-to-date.
Of course, there are commercial establishments called cybercafés or LAN centers where you can join a group of friends in LAN play without the hassle, for a fee. Many also sponsor regular league play and tournaments. However, the cybercafé industry is new, small and fragmented. Most are barely profitable. Though I like to think of them as the new bowling alleys, they haven't really caught on. [Disclosure: I run a small company on the side, GameJockeys, that will set up a private LAN party for corporate events, parties, etc.]
Game licensing is a serious concern for cybercafés; they realize they need it to operate legally, but it has been hard to come by. Most software companies don't understand their needs and have difficulty negotitating such small licenses with individual members of a fragmented business community. This is changing, however, with companies such as Microsoft offering licenses through cybercafé organizations like iGames such that as long as each copy of a title is legitimately purchased, cybercafés may use them. This licensing arrangement benefits the struggling cybercafé industry and the game industry as a whole by promoting social LAN gaming. [disclosure: GameJockeys is a member of iGames]
On the other hand Valve, a company that has thrived in significant part because of LAN play, is taking a different tack. They are requiring cybercafés to use some seriously problematic software to run the games (Steam) as well as charging what is, for cybercafés, a significant amount of money to have any Valve game available. Fair enough. If that is how Valve wants to license its games, that is their choice. If LAN center customers want to know why Valve games aren't available, that can readily be explained to them.
Of course, these requirements are relatively new. Prior to these licensing requirements, some cybercafés operated in a bit of a grey zone, making the games available in their centers as the licensing issues were worked out. I'm not sure why BattleGround PC Gaming was making Counter-Strike - the five-year old game which is freely downloadble as a Half-Life Mod - available in their center without a proper license, but they did.
Well, Valve Software has sent BattleGround PC Gaming a cease and desist letter. Normally, such a letter would offer three options: a) cease using the software; b) license the software; or, c) get sued. In a bullying fashion, Valve has dropped option a). Rather than simply allow BattleGround PC Gaming to stop using the software, Valve is demanding that BattleGround pay up front for a one-year license or get sued.
What Valve is doing is legally permissible. That doesn't make it right. Perhaps fans of LAN gaming and the professional gaming leagues ought to consider whether Valve's aggressive, overbearing stance is helpful to the gaming community or not. Next time you're considering playing a game of Counter-Strike, why not consider Halo or Battlefield instead?
The text of the License or Be Sued letter is below:
June 10, 2004
URGENT/IMMEDIATE ATTENTION REQUIRED
VIA FACSIMILE AND U.S. MAIL
BattleGround PC Gaming
9807 224th St. E., Suite 108
Graham, WA 98338
Tel: (253)XXX-XXXX
Fax: (253)XXX-XXXX
Re: Infringement and Commercial Licensing of Valve Software (Counter-Strike)
Dear BattleGround PC Gaming,
Our firm represents Valve Corporation, the developers and owners of the Half-Life series of games, including Counter-Strike. Valve believes that BattleGround PC Gaming is using Valve proprietary software products such as Counter-Strike in a cyber café/LAN-center without having obtained the required commercial license from Valve. As you know, the retail versions of Valve products are not intended for, nor are they licensed for, commercial exploitation (such as use in a cyber café/LAN center). Unauthorized duplication and use of computer software products constitutes copyright infringement.
We are willing to provide you with an opportunity to conduct your own internal investigation and audit of the Valve software that you are currently using in your establishment. If further action is to be avoided, we expect that you will promptly inform us of the number of copies that you are currently using of Counter-Strike and/or other Valve products. Please respond with this information no later than 10 days from of [sic] the date of this letter. Of course, if you believe that you have commercial licenses for the Valve products that you have been using, we will need to see proof of those licenses.
If you respond promptly and are willing to obtain appropriate commercial licenses for Counter-Strike (and any other Valve products you are using), my client is willing to settle this matter in full. Should you demonstrate to our satisfaction the number of seats you have been using and presently need licensed and if you enter into a pre-paid, one year commercial license agreement with Valve for that usage, Valve will consider this matter resolved and will not pursue any claims it may have for past infringement of its software products in regard to their use at your establishment. For your information, we have attached Valve's standard commercial licensing form.
This "amnesty" program outlined above will only remain available to you until 10 days from the date of this letter. Valve respects and values its fans and the gaming establishments such as yours that serve them. It is Valve's hope that you will take this opportunity to obtain commercial licenses.
Please note that during the course of investigating and responding to this letter, it is important that you do not destroy any copies of any of Valve's computer software products that are currently installed on your computers. The software programs presently installed on your computer are evidence and must be preserved so that an accurate determination of the extent of any infringement can be made in the event this matter cannot be resolved amicably. In addition, please do not purchase or enter into any negotations to purchase any computer software products published by Valve Corporation prior to the resolution of this matter. Purchasing or deleting software at this point will not remedy past unauthorized installation or use, will not conclude our investigation, may constitute destruction of evidence relevant in the event of litigation, and may prejudice our ability to reach a mutually satisfactory resolution of this matter.
Although we are hopeful that we can reach an amicable and mutually beneficial resolution, Valve is fully prepared to pursue its civil remedies in this matter. Federal civil penalties for copyright infringement, provided in 17 U.S.C. § 504, allow the recovery of actual damages based upon the number of copies produced, infringer's profits, and/or statutory damages. In the event the copyright owner proves the infringement was willful, the court has the discretion to increase the award or statutory damages up to $150,000 for each copyrighted product that has been infringed. Further, 17 U.S.C. § 505 provides for the recovery of attorney's fes by the prevailing party.
No formal action will be taken so long as your written response is received by the undersigned no later than 10 days from the date of this letter. Again, it is Valve's hope that you will avail yourself of our amnesty offer and become a legitimately licensed cyber-café/LAN center. I look forward to hearing from you and working with you to become licensed.
Very truly yours,
PRESTON GATES & ELLIS LLP
<signature>
By
XXXXX
Findlaw's Modern Practice's Anita Ramasastry has written a column on the recent California appellate decision upholding the city of Garden Grove's requirement that cybercafes maintain surveillance cameras (Can a City Require Surveillance Cameras in Cybercafes?). She is disapproving of the decision and cites the dissent's comparison of Garden Grove's actions with those of dictatorial governments. I've written on the decision extensively here: CyberCafe Ordinance Decision - First Amendment Victory - Privacy Defeat.
via Ernie the Attorney, whose response to this privacy invasion is incredulity
Larry Lessig has written a brief note about a California Appeals Court decision that eviscerated privacy rights in cybercafes (mandated telescreen upheld). There is a Law.com article here (Internet Cafe Ordinance Sparks War of Words). Read the decision (Thany Thuy Vo v. City of Garden Grove [PDF]). The issue that has Prof. Lessig rightfully incensed is an operational requirement for cybercafes that forces them to monitor (read over the shoulder) what people are doing on cybercafe screens, whether it is reading email, browsing the web or playing a game of Counter Strike. However, there are other major issues involved and the decision has some very important victories in it for those who care about the First Amendment.
The ordinance in the City of Garden Grove was initially passed as a typical political overreaction to some isolated violence associated with a handful of cybercafes in the city. Places where young people, particular young males, spend time are almost always suspect in the eyes of older citizens. Cybercafes attract many young males. Think this revised chorus from "The Music Man":
Trouble, oh we got trouble,
Right here in Garden Grove City!
With a capital "T"
That rhymes with "C"
And that stands for Cyber,
That stands for Cyber.
We've surely got trouble!
Right here in Garden Grove City,
Right here!
Gotta figger out a way
To keep the young ones moral after school!
Trouble, trouble, trouble, trouble, trouble...
The evidence of trouble in Garden Grove City was basically anecdotal:
By memorandum of December 31, 2001, Joseph M. Polisar, the city’s chief of police, advised the city manager of the rapid growth in the number of CyberCafes operating in the city. In the space of two years, the number of these establishments had risen from three to a total of twenty. Polisar’s memorandum detailed seven incidents of criminal activity occurring in or near four different CyberCafes during the last three months of 2001. Five of the seven incidents involved gang activity. The most recent incident, occurring the day before the memorandum was written, was the murder of a 20-year-old male while he was standing in front of a CyberCafe. Polisar also reported that patrol officers were finding school aged children at these establishments during school hours, and he expressed concern about minors being able to access inappropriate and dangerous web sites. Polisar concluded: “[T]he Police Department believes that it is vital that the City enact an ordinance regulating the use of ‘Cyber Café’s [sic].’”
Heavens to Betsy! A whole seven incidents of crime! The murder was a terrible thing, but people are frequently murdered outside many other establishments as well. And my, oh, my, minors might access inappropriate dangerous web sites. Someone ought to do somethings about those libraries and schools, where children might also access inappropriate information. Seriously, read the dissent for an analysis of how much "trouble" these cybercafes really create. The original "study" by the police was a joke. For example, there are no baseline comparisons to similar business or general crime rates. If this sort of "study" were valid, one could find that any business was dangerous to the well-being of the community. Do you know how many shoplifting violations stores create?
In any case, the ordinance was passed and attacked the "problem" several different ways, with zoning and other permit requirements. The first ordinance was clearly not going to pass judicial muster, so the city revised it. The revised ordinance is what the decision considers.
One of the most important parts of the decision is that the court declares quite clearly that cybercafes enjoy First Amendment protections, much as book publishers and movie theaters:
We perceive no rationale by which CyberCafes should be accorded less protection than any of these older or more traditional businesses. As the court below aptly observed, “The targeted business is a gateway to the information super highway [—] the modern new location for information’s dissemination.” [citation omitted]
This may seem obvious (because it is), but it hasn't been obvious to many courts previously. Most of the regulations of cybercafes has been based on regulations similar to those for videogame arcades and penny arcades. Most courts have not found that videogame arcades and penny arcades have protected First Amendment status. You see, games aren't protected speech, apparently. Anyway, since cybercafes also provide access to email and the internet, regulation aimed at them does raise First Amendment issues. It would have been nice to see language about videogames being covered by the First Amendment too, this is still a significant victory.
One of the reasons is that regulation aimed at First Amendment protected businesses must beat a slightly higher standard of judicial scrutiny, as opposed to regular businesses which can be regulated almost at a whim. For example, regulations of First Amendment protected businesses must be regulated according to "objective measurement." Which doesn't mean really "objective" but does mean there can't be too much leeway for the regulators making the decision. Basically, business regulations must meet a somewhat special version of the same test used for "time, place and manner" speech restrictions.
Conditional Use Permits
Probably the most important aspect of the ordinance, from an immediate, practical point of view, was the requirement that cybercafes needed to have a Conditional Use Permit (CUP). A CUP is basically a zoning regulation that lets a city veto (through a public hearing process) particular businesses that would otherwise be permitted. Obtaining a CUP can be very expensive, time-consuming and easily turned down, even after one has gone through all the trouble of applying for one. Typical CUP ordinances can be quite vague and arbitrary. For example, here is a passage on CUPs from the city of Los Angeles:
In approving any conditional use, the decision-maker must find that the proposed location will be desirable to the public convenience or welfare, is proper in relation to adjacent uses or the development of the community, will not be materially detrimental to the character of development in the immediate neighborhood, and will be in harmony with the various elements and objectives of the General Plan.
What the heck does the above mean? What it means is that a CUP can basically be denied if the decision-maker (frequently the head of zoning) doesn't like your business. This can be very troublesome from a civil liberties point of view, especially when one is regulating First Amendment protected businesses. Luckily, the California Supreme Court has held that "A long line of decisions has held unconstitutional ordinances governing the issuance of licenses to conduct First Amendment activities where administrative officials were granted excessive discretion in determining whether to grant or deny the license."
Accordingly, the court completely invalidated the City of Garden Grove's CUP-based regulations as applied to cybercafes.
This is an important victory because cybercafes throughout the state are being regulated, primarily through the CUP process. Indeed, in the city of Los Angeles itself, the city is using CUPs to regulate cybercafes under an antiquated statute for "penny arcades." CUPs have been challenged by videogame arcades as violating the First Amendment previously, but have always lost.
Daytime Curfew for Minors
Here the court allows the city to deny minors access to cybercafes during school hours unless accompanied by a parent or guardian. Without going into detail here, let me make a few quick points:
Employee and Security Guard Requirements
The city requires at least one employee over the age of 18 (and an additional employee if there are more than 30 computers), as well as a security guard on Friday and Saturday evenings from 8pm to 2am. The court decided that these requirements were narrowly tailored to prevent gang violence. I believe they are correct on the age of 18 requirement. However, there was never any evidence of gang violence at more than a few of more than 20 different establishments. It hardly seems narrowly tailored that all cybercafes should be burdened with expensive, state-licensed security guards when there may only be problems at a handful of similar businesses. Moreover, the burden is substantial. Cybercafes are not major profit centers generally speaking, and the additional cost associated with more employees and security guards can mean the difference between a marginally successful business and an unsuccessful business.
Privacy
Here the decision really is Big Brother-ish. The court describes the ordinance thus:
section 8.82.020, subdivision (8) to the Garden Grove Municipal Code, ... requires CyberCafes to install a video surveillance system. The video system must be “capable of delineating on playback . . . the activity and physical features of persons or areas within the premises,” and must “cover all entrances and exit points and all interior spaces, excepting bathroom and private office areas.” “The system shall be subject to inspection by the City during business hours” and “[t]he videotape shall be maintained for a minimum period of 72 hours.”
The court concludes and the City of Garden Grove stipulates, that the information collected can only be turned over to authorities according to legal process, such as a search warrant. That is fine as far as it goes, though the ordinance could have been a little more clear on the point. However, that is not really the issue.
The issue is whether the government needs legal process to obtain certain information, but whether the government can require First Amendment protected business to create and retain such information in the first place. Yes, if information is being gathered and stored about First Amendment activities, of course the government should have to use legal process to obtain that information. But should the government be allowed to require the maintenance of such records in the first place? According to this decision, that isn't even a question.
Whatever that [privacy] interest is, it surely is not “fundamental to personal autonomy.” People don’t do things “fundamental to personal autonomy” in a public retail establishment. The dissent throws the reader off track by confusing the privacy issue with the free speech issue, asserting that CyberCafes “are the poor man’s printing press and private library.” As we have pointed out in the majority opinion, reasonable expectations of privacy in the setting of a CyberCafe are simply not present.
The court even goes so far as to say that the presence of human surveillance, such as the employee or security guard, is the same as the unblinking eye of a video camera:
Turning to what the video surveillance portion of the ordinance does say, we are not persuaded the video surveillance system affects First Amendment activity any more than does the presence of an adult employee and/or security guard.In a footnote, the court jests at any concern:
If an employee had a 72-hour photographic memory, would we make him unemployable because his presence would invade the privacy of the customers?
Apparently, this distinction is of no consequence to the Constitution:
That the video system has a 72-hour memory that may be better than the short-term memory of the average security guard, customer, or employee is not a distinction of constitutional significance on First Amendment grounds.
The court goes on to analyze the privacy rights according to the California State Constitution. The court basically finds that:
A person’s physical features are not “confidential,” nor are activities on the premises of a public retail establishment. No legally recognized informational privacy right can attach to either. Nor can it reasonably be understood that the observation of persons using a computer in a CyberCafe involves intrusion either on the making of an intimate personal decision or on the conduct of a personal activity. Plaintiffs do not explain why observation by a video camera intrudes on privacy any more than observation by employees or other patrons.
The closest analogy I can think of to show how wrong-headed this decision is, is to public telephones, which are frequently located on the premises of public retail establishments. Additionally, it happens that conversations on such public telephones might be observed (heard) by employees or other patrons (particularly those who are waiting in line to use the public telephone). Nevertheless, would it therefore be permissible to require all public telephones to be wiretapped and the recordings held for 72-hours? In Katz v. United States, the Supreme Court said wiretapping a public telephone booth was a violation of the Fourth Amendment. The telephone booth in question was enclosed in glass, but I don't think the decision would have been different if the telephone had been in an open booth. I certainly don't think the Supreme Court would have allowed pre-emptive wiretapping of all public telephones.
No More Privacy - Get Used to It
Of course the decision in Katz was also based on a "reasonable expectation of privacy." But apparently, we no longer have any reasonable expectation that we are not constantly under video surveillance in all public areas.
A ‘reasonable’ expectation of privacy is an objective entitlement founded on broadly based and widely accepted community norms.” With the near ubiquitous use of video surveillance in retail establishments, at automated bank teller machines, and at road intersections, it is difficult to imagine, certainly at the preliminary injunction stage, that the customer’s expectation of privacy is reasonable under the circumstances.Wow. I'll say it again, wow. Now we have to prove that we don't expect to be constantly videotaped in public.
The Dissent
Highly recommended reading. The dissent is a blistering attack on the majority decision and I must say the judge really does seem to understand what is going on. The dissent discusses blogging, for example, and cybercafe regulation in totalitarian societies, such as China and Vietnam. If you are interested in privacy, read it.
C|Net News reports a highly disturbing story from China (China to consolidate Net cafes):
Nearly all of China's 110,000 Internet cafes will be consolidated under the management of larger, mainly state-owned companies in the next three years, according to the official Xinhua news agency.
Regulation of cyber cafes is something that I've been doing a lot of research on recently. I'll be posting much more on these issues in the near future.
