Special to the national law journal
In
1997, the No Electronic Theft Act radically changed the underpinnings of
criminal copyright infringement. Before the act, criminal copyright
infringement targeted infringers making profits. The act focuses instead on
copyright owners' losses, treating criminal copyright infringement as a type of
theft -- like shoplifting.
Prior
to the act, criminal copyright infringement required willful infringements
committed for commercial advantage or private financial gain. In 1993, David
LaMacchia, a 21-year-old Massachusetts Institute of Technology student,
operated a bulletin board system that allowed users to upload and download
infringing software applications and videogames.
LaMacchia
operated the bulletin board system for fun, without any profit motive. Because
of that, prosecutors couldn't charge him with criminal copyright infringement.
Instead, prosecutors charged LaMacchia with one count of conspiracy to commit
wire fraud. In Dowling v. United States, 473 U.S. 207 (1985), the U.S. Supreme
Court ruled that intangible intellectual property couldn't be taken by fraud.
The court then dismissed the indictment. U.S. v. LaMacchia, 871 F. Supp. 535
(D. Mass. 1994).
Following
LaMacchia, copyright owners sought relief from Congress, which provided it with
the No Electronic Theft Act in December 1997. The Act helped copyright owners
in four principal ways:
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Supplemented the existing infringement-for-profit standard with a second
prohibition: willfully reproducing or distributing, in any 180-day-period, copyrighted
works with a total retail value of more than $1,000;
-
Expanded the financial gain definition to include receipt (or expectation of
receipt) of anything of value, including other copyrighted works;
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Increased criminal infringement punishments; and
-
Instructed the U.S. Sentencing Commission to toughen criminal copyright
infringement sentencing guidelines.
In
the legislative history, Congress uniformly indicated that the act targeted the
LaMacchia case specifically and piracy generally, citing industry estimates
that software counterfeiting and piracy cost copyright owners $11 billion in
1996. Some legislators tried to target commercial-scale pirates; others
targeted pirates who sought notoriety. Under either standard, Congress intended
to target warez (pronounced "wares") traders -- enthusiasts who
thrive on trading or distributing illegal software, usually with any software
copy-protection scheme disabled. Although not characterized as such, in
retrospect LaMacchia can be characterized as a warez trader.
Prosecutions Under The
Act
Eight
publicized prosecutions, comprising five individual prosecutions and three
group prosecutions, have ensued.
In
August 1999, Jeffrey Levy, a 22-year-old college student, was the first
individual convicted under the act. He operated a Web site that allowed third
parties to download thousands of software programs, games, songs and movies.
Levy pleaded guilty to distributing copyrighted works of at least $5,000 and
was sentenced to two years of probation with conditions.
Eric
Thornton, a 24-year-old Navy technician, operated a Web site that offered
infringing software to attract users to the site. At least one user downloaded
20 software programs with a retail value of $9,638. In December 1999, Thornton
pleaded guilty to a misdemeanor violation. He received five years of probation,
paid $9,600 restitution, forfeited his computer and had to stay off computers
for 12 months except for business or educational purposes. Thornton also posted
a notice on his Web site for 18 months describing his arrest and conviction.
In
October 2000, 21-year-old Brian Baltutat pleaded guilty to violating the Act.
He operated a Web site, visited by 65,000 people, that offered 142 software
programs for downloading by third parties. He was sentenced to three years'
probation, 180 days' home confinement, restitution, 40 hours of community
service and restrictions on using the Internet.
In
December 2000, 25-year-old Jason Spatafore, a computer technician, pleaded
guilty to a single violation of the Act. He posted, and encouraged downloading
of, parts of "Star Wars Episode I: The Phantom Menace" on various Web
sites. He was sentenced to two years' probation and fined $250.
In
February 2001, nine members of Fastlane -- an international software piracy
ring -- were charged with one count of conspiracy to commit copyright
infringement, and eight members were charged with one count of committing
copyright infringement. During a 9-month period in 2000, allegedly more than
697 gigabytes of software were uploaded to Fastlane-operated servers, and 1,900
gigabytes were downloaded with a total retail value of more than $1 million.
Three defendants received prison sentences of between five and 30 months. The
others received probation of three years.
Pirates with Attitude
Pirates
with Attitude was an international software trading group regarded as the
oldest and most sophisticated band of software pirates in Internet history. Its
flagship site hosted over 30,000 software programs accessed by more than 100
people.
In
2000, 17 defendants were indicted, including 12 Pirates with Attitude members
and five Intel employees who exchanged Intel computer hardware for access to
software sprograms. The government initially contended that infringed programs
had a retail value of more than $10 million, but the court ultimately set the
value at $1,424,640.
The
trading group's leader, Robin Rothberg, entered a guilty plea and was sentenced
to 18 months in federal prison. Another member, Christian Morley, took his case
to a jury. The jury found him guilty of software-piracy conspiracy, and he was
sentenced to 2 years in prison. Two other defendants, Jason Slater and Justin
Robbins, received jail sentences of 8 and 7 months, respectively. Nine
defendants received probation of 5 years, and two received probation of 3
years. Two defendants remained fugitives as of late winter.
In
December 2001, pursuant to operations known as Buccaneer, Bandwidth and Digital
Piratez, the government launched a major crackdown on warez traders involving
more than 100 search warrants, domestically and internationally, and dozens of
defendants. The major warez operation DrinkOrDie, which has been characterized
as one of the eight to 10 major Internet piracy groups and one of the oldest
and best-known warez groups, was a primary target. Of 15 defendants sentenced
as of March 1, 10 received prison sentences between 30 and 46 months, one
received 5 years' probation and four received 2 years' probation.
This
February, William Fitzgerald, 53, pleaded guilty to one count of criminal
copyright infringement. He operated a Web site offering pirated copies of
business software. Fitzgerald stipulated that the downloaded software was worth
between $40,000 and $70,000. He was scheduled to be sentenced this month.
These
prosecutions indicate that the LaMacchia loophole has been plugged. Prosecutors
can now go after defendants doing exactly what LaMacchia did. Pirates with
Attitude, Fastlane and DrinkOrDie were highly visible commercial- scale piracy
groups acting without a direct profit motive and thus were exactly the type of
organization Congress targeted. Levy, Thornton, Baltutat and Fitzgerald all
operated pirate Web sites just as LaMacchia did, so they were also the type of
defendants in Congress' crosshairs.
Spatafore's
prosecution is more troubling because he was prosecuted for a single incident
of disseminating a single copyrighted work -- a standard that if applied
generally would expose a large number of Americans to prosecution.
Nevertheless, given his willfulness and the copyrighted work at issue (Star
Wars I), his prosecution still could be said to be within Congress' goals.
However,
while the prosecutions are consistent with the Act's objectives, available
evidence suggests the Act still hasn't accomplished its core objective of
reducing piracy. While reliable piracy statistics are hard to come by, a 1999
Business Software Alliance (BSA) study showed that warez trading sites
increased from 100,000 to 900,000 in the 2 years following the Act. Also, a May
2002 BSA survey showed that more than 80% of all Internet users have downloaded
commercial software without paying for it, and 25% of users who download
software never pay for it.
Why
has the Act not reduced piracy more effectively? Several hypotheses, alone or
jointly, could explain this result,
-
Weak enforcement. The number of prosecutions -- eight in 5 years -- might not
be enough to deter, and there might not be enough predictability about who gets
prosecuted. Also, sentencing remains unpredictable.
-
Poor education. Even with significant publicity accompanying each prosecution,
the act remains relatively unknown.
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The Act may be too weak. It's possible that available punishment is too lax or
the willfulness requirement makes prosecutions too hard.
-
Socialization. As people become accustomed to exchanging copyrighted materials
electronically, they become desensitized to copyright law.
-
Activity occurring overseas. Overseas piracy is outside the reach of U.S. law,
making enforcement actions difficult.
-
The Act was not sharply enough tailored. The act does not adequately target the
unique characteristics of warez traders' behavior. This hypothesis warrants
more discussion.
As
a group, warez traders have some distinctive motivations. They strive, for
instance, to have the biggest or most impressive collection of pirated software
to show off to their peers. In this respect, warez traders belong to part of a
community. Warez traders also derive a thrill from doing something illicit;
committing a crime is a big part of the fun.
Many
warez traders also have a deep antipathy toward the software industry -- an
industry they consider unjust -- and view themselves as cyber-Robin Hoods,
taking from the rich and giving to the poor. Many warez traders no longer
expect a person who downloads one of their warez to return the favor.
Based
on these characteristics, the Act may be ineffective -- or even
counterproductive -- at deterring warez trading. Because warez traders are
motivated by illegal behavior, increased penalties might increase the thrill of
warez trading rather than inhibit it. Also, if warez traders view criminal
prosecutions as software-industry bully tactics, then such prosecutions could
exacerbate their antipathy toward the industry and reinforce their Robin Hood
personas.
Nevertheless,
some legislators and commentators believe criminal sanctions are the only way
to deter warez traders. But the legislative history and literature lacks any
empirical or systematic analysis confirming that belief, and it may not be
appropriate to assume that criminal penalties motivate warez traders as they
would rational actors. Externally imposed obligations may only aggravate them.
The
No Electronic Theft Act provides prosecutors with a powerful and occasionally
useful tool to attack infringers acting without a profit motive. Prosecutors
have been able to use this tool to shut down some large warez- trading
operations and a few smaller ones, and in that sense the Act has succeeded.
But
the Act is not a total success. It hasn't used all its potential in reducing
piracy, because (among other reasons) the Act did not carefully address the
unique characteristics of warez traders. Also, existing criminal laws (such as
the Computer Fraud and Abuse Act or state computer crime laws) and civil
copyright infringement lawsuits might have provided ways to pursue these
infringers without a new law.
Meanwhile,
it's impossible to measure how much socially beneficial activity has been
discouraged by the Act, but certain some has been. The Act created some imprecise
boundaries of criminal infringement, such as what constitutes willful behavior
and how the Act applies to intermediaries and facilitators. As with any
imprecise criminallaw, many individuals will steer far clear of the criminal
line. Therefore, while prosecutions under the Act have been the type desired by
Congress, the Act's overall efficacy is questionable, and it comes at some
social cost.
About the authors: Eric Goldman is an assistant professor at Marquette University Law School. Julia Alpert Gladstone is an assistant professor of legal studies at Bryant College in Rhode Island. This article is derived from a report prepared for the American Bar Association, Business Law Section, Cyberspace Law Committee, Intellectual Property Subcommittee.