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ELIZABETH PRITZKER; SBN 146267
FIRST AMENDMENT PROJECT
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Attorneys for Plaintiff
Daniel J. Bernstein

			IN THE UNITED STATES DISTRICT COURT
			FOR THE NORTHERN DISTRICT OF CALIFORNIA

DANIEL J. BERNSTEIN			 )
					 )  C 95-00582 MHP
                       Plaintiff, 	 )
					 )  PLAINTIFF'S FIRST
					 )  SUPPLEMENTAL COMPLAINT
v.					 )
					 )
					 )
UNITED STATES DEPARTMENT OF	 	 )
 STATE et al.,				 )
					 )
					 )
	   Defendants.			 )
					 )
                                         )

	Plaintiff Daniel J. Bernstein files this First Supplemental
Complaint and alleges:
	1.      On February 21, 1995, Plaintiff filed his Complaint in
this action alleging that the Arms Export Control Act ("AECA") and its
implementing regulations, the International Traffic in Arms Regulations
("ITAR"), are unconstitutional on their face and as applied to him by
defendants.  A copy of the Complaint is attached as Exhibit A and
incorporated by reference as though set forth fully herein.
	2.      After the original complaint was filed, the President
of the United States, on November 15, 1996 issued Executive Order
13,026 ("EO 13026") and a Presidential Memorandum, 61 Fed.Reg.  58767
(1996), as well as a letter to the Speaker of the House of
Representatives and the President of the Senate concerning export
controls on cryptography.  Copies of each are attached as Exhibit B to
this Supplemental Complaint and incorporated by reference as though
fully set forth herein.
	3.      By these actions, the President "transfer[red] certain
encryption products from the United States Munitions List administered
by the Department of State to the Commerce Control List administered by
the Department of Commerce."  Presidential Letter, Exhibit B.
	4.      Under EO 13026, "export controls of encryption products
that are or would be, on this date, designated as defense articles in
Category XIII of the [U.S.] Munitions List and regulated ...  pursuant
to the [AECA]" shall now be regulated by the Department of Commerce
under the Export Administration Regulations ("EAR"), 15 C.F.R.  Parts
730 et seq., originally promulgated under the Export Administration Act
("EAA"), 50 U.S.C. App. sec. 2401 et seq.
	5.      On December 30, 1996, the Commerce Department issued
regulations pursuant to EO 13026 effective immediately, establishing
encryption item ("EI") controls ECCN 5A002, 5D002 and 5E002 for
commodities, software and technology transferred from the U.  S.
Munitions List by EO 13026 to Commerce export licensing.  61 Fed.Reg.
68572 (1996) ("EI regulations").  A copy of the EI regulations is
attached as Exhibit C.
	6.      Plaintiff seeks declaratory and injunctive relief as to
this new regulatory scheme ("EAA/IEEPA Scheme") and to any
substantially similar regulatory scheme by defendants on the grounds
that it is unconstitutional on its face and as applied to him.

	STATUTORY AND REGULATORY CONTEXT

	7.      The EAA expired on August 20, 1994.
	8.      The President has continued the EAR to the extent
permitted by law under authority of the International Emergency
Economic Powers Act ("IEEPA"), 50 U.S.C. sec. 1701 et seq.  Executive
Order 12,924 (1994) ("EO 12924"), 59 Fed.Reg.  43437; Notice of Aug.
15, 1995, 60 Fed.Reg.  42767 (Aug.  17, 1995); Notice of Aug. 14, 1996,
61 Fed.Reg. 42527 (Aug. 14, 1996).
	9.     If and when Congress reauthorizes the EAA, statutory
authority for the EI regulations will be the EAA; however, the
President stated when he issued EO 13026 that if ``adequate controls''
were not placed on encryption products, he would transfer jurisdiction
back to the ITAR:

	Upon enactment of any legislation reauthorizing the
	administration of export controls, the Secretary of Defense,
	the Secretary of State, and the Attorney General shall
	reexamine whether adequate controls on encryption products can
	be  maintained under the provisions of the new statute and
	advise the Secretary of Commerce of their conclusions as well
	as any recommendations for action.  If adequate controls on
	encryption products cannot be maintained under a new statute,
	then such products shall, where consistent with law, be
	designated or  redesignated as defense articles under 22
	U.S.C.  2778(a)(1), to be placed on the United States Munitions
	List and controlled pursuant to the terms of the [AECA] and the
	[ITAR].  Any disputes regarding the decision to designate or
	redesignate shall be resolved by the President.

Exhibit B, para. 8.

	KEY STATUTORY PROVISIONS OF THE IEEPA

	10.     The IEEPA does not give the President the authority to
regulate or prohibit the exportation of any information or
informational materials, except for those "otherwise controlled for
export" under 50 U.S.C. App. sec. 2404 and 2405 (to the extent such
controls promote nonproliferation or antiterrorism policy).  50 U.S.C.
sec. 1702(b)(3).

	KEY STATUTORY PROVISIONS OF THE EAA

	11.     The EAA authorizes restrictions on the export of any
	goods or technology subject to the jurisdiction of the United
States or exported by any person subject to the jurisdiction of the
United States, and includes authority over the transfer of goods or
technology within the United States to embassies and affiliates of
controlled countries..  50 U.S.C.  App. sec. 2404(a)(1).
	12.     The term "good" excludes "technical data."  50 U.S.C.
App. sec. 2415(3).
	13.     The term "technology" is defined to mean "the
information and know-how ... that can be used to design, produce,
manufacture, utilize, or reconstruct goods, including computer software
and technical data, but not the goods themselves." 50 U.S.C. App. sec.
2415(4).  Thus, "technology," not "good," includes computer software.
	14.     The term "export" is defined to mean "an actual
shipment, transfer, or transmission of goods or technology out of the
United States," "a transfer of goods or technology in the United States
to an embassy or affiliate of a controlled country," or "a transfer to
any person of goods or technology either within the United States or
outside of the United States with the knowledge or intent that the
goods or technology will be shipped, transferred, or transmitted to an
unauthorized recipient."  50 U.S.C. App. sec. 2415(5).
	15.     EAA precludes judicial review of licensing decisions.
50 U.S.C.  App. sec. 2412(a), (e).

	KEY REGULATORY PROVISIONS

	16.     Under the EAA/IEEPA Scheme, "commodity" is defined as
"[a]ny article, material, or supply except technology and software." 15
C.F.R. sec. 772.  This definition is essentially identical to the
statutory definition of "good."  50 U.S.C. App. sec. 2415(3).
	17.     The EAR generally treats "software" as "technology,"
and defines "technology" as technical data, training and assistance.
15 C.F.R. sec. 772 (encryption items)
	18.     Despite this normal categorization, the EAA/IEEPA
Scheme provides that encryption software "shall not be considered or
treated as 'technology', as that term is defined in ...  the EAA (50
U.S.C. App. sec. 2415) and in the EAR (61 Fed. Reg.  12714, March 25,
1996)."  EO 13026, sec. 1(c).  Instead, "for export licensing purposes
encryption software is treated ... in the same manner as a commodity
included in ECCN 5A002." Despite this, "[L]icense Exemptions for
commodities are not applicable." Note to Supp. No. 1, Part 774
(Commodity Control List), ECCN 5D002, 61 Fed.  Reg. 68587.
	19.     "Encryption items" are defined as "all encryption
commodities, software, and technology that contain encryption features
and are subject to the EAR," other than "encryption items specifically
designed, developed, configured, adapted or modified for military
applications (including command, control and intelligence applications)
which are controlled by the Department of State on the U.S. Munitions
List."  15 C.F.R. sec. 772.
	20.     The term "knowledge" is defined to include "an
awareness of a high probability of [a circumstance's] existence or
future occurrence."  15 C.F.R. sec. 772.
	21.     "Export of encryption software" is defined as:  "actual
shipment, transfer, or transmission out of the United States";
"transfer of such software in the United States to an embassy or
affiliate of a controlled country"; or "downloading or causing the
downloading, of such software to locations (including electronic
bulletin boards and Internet file transfer protocol and World Wide Web
sites) outside the U.S., and making such software available for
transfer outside the United States, over radio, electromagnetic, photo
optical, or photoelectric communications facilities accessible to
persons outside the United States, including transfers from electronic
bulletin boards and Internet file transfer protocol and World Wide Web
sites, or any cryptographic software subject to controls under this
regulation unless the person making software available takes
precautions as adequate to prevent unauthorized transfer of such code
outside the United States."  15 C.F.R. sec. 734.2(b)(9).
	22.     Thus the regulations specify that electronic or
Internet publication of encryption software requires a license while
publication of the same information in "a printed book or other printed
material" is not subject to licensing pursuant to 15 C.F.R.  sec.
734(b)(2).
	23.     The export of "assistance," including training, to
foreign persons with respect to these "encryption products," shall be
controlled to the same extent that export of such assistance is
controlled under the AECA and ITAR.  EO 13026, sec. 2(d); 15 C.F.R.
sec. 730.5(d); 734.5(c); 736.2(b)(7)(ii); 744.9.
	24.     Under the EI regulations, licenses are required for
export to all destinations except Canada.  15 C.F.R. sec. 742.15.
Exceptions are made for certain mass-market and key-recovery or
key-escrow products, none of which are relevant to Plaintiff's proposed
activities.  15 C.F.R. sec. 742.15 (b).
	25.     "Encryption products" shall not be subject to
provisions permitting the unlicensed export of "foreign-available"
items.  EO 13026, sec. 1(a); 15 C.F.R. sec. 768.1(b).
	26.     All publicly available technology or software other
than encryption technology software may be exported without a license.
15 C.F.R. sec. 732.2 (b)(1), 744.9.
	27.     In general, information published on an electronic
bulletin board is not subject to the EAR because it is publicly
available.  15 C.F.R. Part 734, Supp. No. 1 (Q&A), I(3).
	28.     However, "the provisions of the EAR applicable to the
control of software (e.g., publicly available provisions) are not
applicable to encryption software."  15 C.F.R. Part 772, Note to ECCN
5D002 ("Encryption software controlled for EI reasons under this entry
remain subject to the EAR even when made publicly available").
	29.     Under the EI regulations, "the fundamental research
provisions ... do not apply to encryption software in both source code
and object code." 15 C.F.R. sec. 734.8 (a).
	30.     Under the EI regulations, "the educational information
provisions ... do not apply to encryption software in both source code
and object code."  15 C.F.R. sec. 734.9.

	PARTIES

	31.     When plaintiff filed his Complaint, neither the U.S.
Department of Justice ("DOJ"), the Central Intelligence Agency ("CIA")
nor the U.S.  Department of Energy ("DOE") had a formal role in the
export licensing process for cryptography.
	32.     The DOJ is now among the agencies that can review
export license applications for encryption software and "is concerned
with control relating to encryption items."  15 C.F.R. sec.
750.3(b)(2)(v), 61 Fed. Reg. 68585.
	33.     CIA, DOE and DOJ are now directly involved in the
administration of encryption export controls and are proper defendants
in this action.
	34.     At all times relevant to this action, Plaintiff is
informed and believes and upon such information and belief alleges that
the Defendant U.S. DEPARTMENT OF JUSTICE was and is an agency of the
Government of the United States and was and is delegated to coordinate
and concur with Defendant COMMERCE DEPARTMENT in promulgating and
administering regulations under the EAA/IEEPA.
	35.     At all times relevant to this action, Plaintiff is
informed and believes and upon such information and belief alleges that
the Defendant U.S. DEPARTMENT OF ENERGY was and is an agency of the
Government of the United States and was and is delegated to coordinate
and concur with Defendant COMMERCE DEPARTMENT in promulgating and
administering regulations under the EAA/IEEPA.
	36.     At all times relevant to this action, Plaintiff is
informed and believes and upon such information and belief alleges that
the Defendant CENTRAL INTELLIGENCE AGENCY was and is an agency of the
Government of the United States and was and is delegated to coordinate
and concur with Defendant COMMERCE DEPARTMENT  in promulgating and
administering regulations under the EAA/IEEPA.

	GENERAL ALLEGATIONS

	37.     Plaintiff continues to develop and study cryptographic
software.
	38.     Plaintiff wishes to publish cryptographic software and
related technical information to the worldwide cryptographic community,
both in printed materials and  in electronic form (such as on the
Usenet newsgroup sci.crypt).  He further wishes to exchange
cryptographic software and related technical information with foreign
persons interested in cryptography, both inside and outside the United
States, and to teach cryptographic software and related technical
information to his students, some of whom are likely to be foreign
nationals, all as part of plaintiff's research and teaching activities
as a member of the academic community.
	39.     Plaintiff is scheduled to begin teaching a course in
the theory and practice of cryptography at the University of Illinois
at Chicago on January 13, 1997, and wishes to use and distribute
cryptographic software and related technical information in his
teaching of this course as well as in future courses that he is likely
to teach.
	40.    Plaintiff, in teaching this course and future courses,
and in furtherance of his professional career of academic research and
development in cryptography, intends to publish cryptographic software
and related technical information in electronic form, to his students
and others on a University of Illinois at Chicago ("UIC") World Wide
Web ("WWW") site, which under normal scientific practice and general
principles of academic freedom, as well as established UIC policy, is
not restricted as to the possible audience.
	41.     As to each of the following counts, Plaintiff alleges
the need for injunctive and declaratory relief, damages and the need
for a Temporary Restraining Order, a Preliminary Injunction and a
Permanent Injunction, as follows:
	 42.   This Court has declared that "the ITAR licensing system
as applied to Category XIII(b) acts as an unconstitutional prior
restraint in violation of the First Amendment."  Dec. 16, 1996
Memorandum and Order at 22-23.
	43.    The cryptographic speech that plaintiff wishes to teach,
exchange with foreign peers, and publish, is now subject to export
licensing control under the EAA/IEEPA Scheme.
	44.   As a direct result of the acts and omissions of
Defendants, their agents and employees, acting in their official
capacities under color of federal law, Plaintiff, and all other persons
wishing to publish, discuss, teach and share cryptographic software,
and other information relating to cryptography, have been and are
deprived of their federal constitutional rights to speak, to publish,
assemble, to receive information, and to engage in academic study,
inquiry and publication, guaranteed by the First Amendment to the
Constitution of the United States.
	45.     Unless immediately restrained, the defendants will
apply the EAA/IEEPA Scheme to plaintiff or will chill his speech
through the possibility of prosecution and will cause him irreparable
injury.
	46.    An actual controversy now exists between Plaintiff and
Defendants concerning the constitutional validity of the EAA,/IEEPA
Scheme on its face and as applied to him.
	47.    A judicial declaration is necessary and appropriate at
this time under the circumstances in order that Plaintiff may ascertain
and enforce his rights and duties and also to prevent injustice and
irreparable injury to Plaintiff.
	48.    Plaintiff has already suffered damages from Defendants'
conduct in that he has been unable to advance his professional
reputation and career by publishing, exchanging and discussing his work
with his professional peers and others.
	49.     Plaintiff's academic colleagues and peers, as well as
the public, are harmed by plaintiff's inability to disseminate his work
freely.  In particular, foreign persons who wish to engage in
scientific exchange on cryptography will suffer harm to their careers
and reputation because plaintiff and other U.S. persons are deterred
from engaging in activities that might constitute provision of
technical assistance to a foreign person in developing cryptographic
software outside of the United States.
	50.     Plaintiff has no adequate remedy in the ordinary course
of the law.

	SUPPLEMENTAL COUNT I (UNCONSTITUTIONAL PRIOR RESTRAINT)

	51.     Plaintiff realleges and incorporates herein by this
reference all of the allegations contained in all of the previous
paragraphs as though the same were fully set forth in Court I.
	52.     Materials containing cryptographic software in
electronic form are subject to prepublication licensing.  Note to 15
C.F.R. sec. 734.3 (b)(2) and (3).
	53.     Although the EAA/IEEPA Scheme does not apply to printed
encryption source code, Defendants "continue[s] to review whether and
to what extent scannable encryption source or object code in printed
form should be subject to the EAR and reserves the right to impose
export controls on such software."  61 Fed.Reg. 68575.
	54.     Under the EAA/IEEPA Scheme, there exists a procedure
like that under the ITAR Scheme by which plaintiff may determine
whether a license is required.  An exporter may ask Commerce for a
non-binding Advisory Opinion ("AO").  15 C.F.R. sec. 748.3(a).  The AO
process normally takes about 30 days. 15 C.F.R. sec. 750.2(b).
	55      The EAA precludes judicial review of Defendants'
determination that speech is controlled.
	56.     Once a person has completed the AO process, he or she
must seek a license and advance approval for each recipient of the
controlled software or technical assistance.   15 C.F.R. sec. 750.3.
	57.    Under the EAA/IEEPA Scheme, teaching foreign persons
both inside and outside the United States about cryptography "with the
intent to aid a foreign person in the development or manufacture
outside the U.S. of encryption commodities and software" outside of an
academic setting require a license 15 C.F.R. sec. 744.9(a).  This
provision threatens to restrict Plaintiff and others' ability, among
others, to speak at conferences or other public meetings.
	58.     The EAA/IEEPA Scheme does not contain narrowly drawn,
reasonable and definite standards for the administering officials to
follow, and gives them unbridled discretion to determine what speech is
subject to licensing, and whether licensing should be required.  As
such, the EAA/IEEPA scheme, both facially and as applied, constitutes
an impermissible prior restraint of Plaintiff's right of free speech in
violation of the First Amendment to the U.S.  Constitution.
	59.     The EAA/IEEPA Scheme does not provide that the
Defendants must either issue a license within a specified brief period
of time or to go to court to restrain publication, and such undue delay
results in unconstitutional suppression of speech.   As such, the
EAA/IEEPA scheme, both facially and as applied, constitutes an
impermissible prior restraint of Plaintiff's right of free speech in
violation of the First Amendment to the U.S. Constitution.
	60.     The EAA/IEEPA Scheme does not ensure a prompt final
judicial decision reviewing any interim and possibly erroneous denial
of a license and does not require that the burden of proof in any such
judicial action be on the government.   As such, the EAA/IEEPA scheme,
both facially and as applied, constitutes an impermissible prior
restraint of Plaintiff's right of free speech in violation of the First
Amendment to the U.S. Constitution.
	61.    The EAA precludes judicial review of licensing
decisions.  As such, the EAA/IEEPA Scheme, both facially and as
applied, constitutes an unconstitutional prior restraint of Plaintiff's
First Amendment right to free speech since it purports to prohibit
judicial review on any grounds.
	WHEREFORE, Plaintiff prays for judgment against Defendants as
hereinafter set forth.

	SUPPLEMENTAL COUNT II (VAGUENESS)

	62.     Plaintiff realleges and incorporates herein by this
reference all of the allegations contained in all of the preceding
paragraphs herein as though the same were fully set forth in Court II.
	63.     The EAA/IEEPA Scheme fails to give adequate notice to a
person of ordinary intelligence concerning the speech it proscribes.
See e.g. 15 C.F.R. sec. 744.9(a).  Accordingly, it is susceptible to
arbitrary and discriminatory enforcement, chills First Amendment
freedoms, and is vague both on its face and as applied to Plaintiff.
	WHEREFORE, Plaintiff prays for judgment against Defendants as
hereinafter set forth.

	SUPPLEMENTAL COUNT III (OVERBREADTH)

	64.     Plaintiff realleges and incorporates herein by this
reference all of the allegations contained in all of the preceding
paragraphs herein as though the same were fully set forth in Count
III.
	65.     The EAA/IEEPA Scheme is overbroad, both on its face and
as applied to plaintiff, in that it is not carefully drawn or
authoritatively construed to punish only unprotected speech and is
susceptible of application to protected expression.
	66.     The EAA/IEEPA Scheme is overbroad in that licensing is
required for the publication of all materials containing encryption
source code in electronic form or media, regardless of whether such
source code is publicly available, the result of fundamental research
or educational.
	67.     The EAA/IEEPA Scheme is not narrowly tailored to
address the Government's purported interest in protecting national
security in that it requires a license for the export of cryptographic
items even when they are already available outside the United States.
	WHEREFORE, Plaintiff prays for judgment against Defendants as
hereinafter set forth.

	SUPPLEMENTAL COUNT IV (CONTENT-BASED DISCRIMINATION)

	68.     Plaintiff realleges and incorporates herein by this
reference all of the allegations contained in all of the previous
paragraphs herein as though the same were fully set forth in Count IV.
	69.     The EAA/IEEPA Scheme discriminates against speech on
the subject of cryptography, discriminates against recipients based on
whether they are foreign nationals or are located outside the United
States, discriminates against technology which is sold for a price
exceeding the cost of reproduction and distribution, and discriminates
against encryption software in electronic form, each of which
constitutes an impermissible regulation of speech based on content in
violation of the First Amendment to the U.S. Constitution.
	WHEREFORE, Plaintiff prays for judgment against Defendants as
hereinafter set forth.

	SUPPLEMENTAL COUNT V (RIGHT TO RECEIVE/FREEDOM OF ASSOCIATION)

	70.     Plaintiff realleges and incorporates herein by this
reference all of the allegations contained in all of the previous
paragraphs herein as though the same were fully set forth in Count V.
	71.     The EAA/IEEPA Scheme's requirement of a license prior
to the electronic publication of encryption software or the provision
of "technical assistance" to foreign persons, including the provision
of encryption software,  impermissibly infringes on the First Amendment
rights of Plaintiff and others in restricting the development of the
science of cryptography.
	72.     The EAA/IEEPA Scheme infringes on the First Amendment
rights of Plaintiff and others to receive the results of the study and
inquiry with regard to scientific issues, since the licensing scheme
will prevent or chill others from electronically publishing encryption
software or providing information about cryptography outside of an
"academic" setting.
	WHEREFORE, Plaintiff prays for judgment against Defendants as
hereinafter set forth.

	SUPPLEMENTAL COUNT VI (ULTRA VIRES)

	73.     Plaintiff realleges and incorporates herein by this
reference all of the allegations contained in all of the previous
paragraphs herein as though the same were fully set forth in Count VI.
	74.    The IEEPA does not permit the President to regulate
purely domestic speech.
	75.    The IEEPA does not permit the President to regular or
prohibit, directly or indirectly, exportation of any information or
informational materials, and Congress intended by this limitation on
the President's power to restrict information that is protected under
the First Amendment.
	76.     The IEEPA does not permit the President to regulate
"any postal, telegraphic, or other personal communication which does
not involve a transfer of anything of value."  50 U.S.C. sec.
1702(3)(b)(2).
	77.     Because cryptographic source code and information
related to cryptography is speech protected by the First Amendment, and
because it extends to noncommercial cryptographic source code, the
EAA/IEEPA Scheme exceeds the limits set in the IEEPA, in contrary to
law and violates the Administrative Procedure Act.

	PRAYER

	WHEREFORE, Plaintiff prays for judgment against Defendants, and
each of them, as set forth below:

   1.   For a Declaration of this Court:

	a.      declaring that the statutes, regulations, policies,
		practices and conduct complained of herein are, on
		their face, and therefore unconstitutional and void;

	b.      declaring that the statutes, regulations, policies,
		practices and conduct complained of herein are in
		violation of the First and Fifth Amendments to the
		Constitution of the United States and so are null and
		void as applied to Plaintiff's desired conduct of
		publishing the Items and any other scientific paper,
		algorithm or computer program;

   2.   For a Temporary Restraining Order, a Preliminary Injunction,
and a Permanent Injunction, all enjoining Defendants, and each of them,
as well as those persons or entities acting on their behalf, and all
persons acting in concert or participating with them, from prosecuting
Plaintiff or any others for publishing in electronic form or otherwise,
a scientific paper, algorithm or computer program, and specifically,

	a.      preliminarily and permanently enjoining Defendants from
		doing or causing to be done any of the following acts:

		1)  further and future enforcement, operation or
		execution of the statutes, regulations, policies,
		practices and conduct complained of herein, with
		respect to scientific papers, algorithms or computer
		programs through criminal prosecution or in any other
		way;

		2)  threatening, detaining, prosecuting, discouraging,
		or otherwise interfering with Plaintiff and any other
		person in the exercise of their federal constitutional
		rights.

	b.      granting expedited docket treatment to bring this case
		to trial at the earliest possible time.

   3.   For the recovery of damages in a sum to be proved at trial;

   4.   For attorneys fees incurred herein;

   5.   For costs of suit incurred herein; and

   6.   For such other and further relief as the Court deems just and proper.

Dated: January 7, 1997     McGLASHAN & SARRAIL
			   Professional Corporation

				(signed Cindy A. Cohn)
			   By ______________________________
			      CINDY A. COHN
			      Attorneys for Plaintiff
			      DANIEL J. BERNSTEIN