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Article


(A version of this article first appeared in the State Bar News, Technology Issue )
(November 2002, New York State Bar Association)

Piracy of Satellite and Cable TV Signals:

Liability Under
The Digital Millennium Copyright Act and
The Federal Communications Act

by: Richard L. Ravin, Esq.*

The Digital Millennium Copyright Act

     The Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. § 1201, et seq.,  was enacted in 1998 in response to the passage of Article 11 of the World Intellectual Property Organization ("WIPO") Copyright Treaty [1] in 1997. See Universal City Studios, Inc. v. Reimerdes, 111 F. Supp. 2d 294, 315-16 (S.D.N.Y. 2000). Broadly speaking, Article 11 of the WIPO Copyright Treaty requires signatory countries to enact legal measures designed to address the circumvention of technological measures used to protect copyrighted work.  Id.

      The DMCA incorporates three anti-circumvention provisions to the Federal Copyright Act.  First, Section 1201 (a) (1) of the DMCA states that "[n]o person shall circumvent a technological protection measure that effectively controls access to a work protected under this title".  17 U.S.C. § 1201 (a) (1).  Second, Section 1201 (a) (2) states:

No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that --

(A)    is primarily designed or produced for the purpose of circumventing a technological          measure that effectively controls access to a work protected under this title;

(B)   has only limited commercially significant purpose or use other than to circumvent a          technological measure that effectively controls access to a work protected under         this title; or

(C)   is marketed by that person or another acting in concert with that person with that          person's knowledge for use in circumventing a technological measure that          effectively  controls access to a work protected under this title. 

17 U.S.C. § 1201 (a) (2).  Section 1201, therefore, addresses the circumvention of technological measures effectively controlling "access" to a copyrighted work.

Finally, Section 1201 (b)(1) states:

No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that --

(A)    is primarily designed or produced for the purpose of circumventing protection          afforded by a technological measure that effectively protects a right of a copyright          owner under this title in a work or a portion thereof;

(B)    has only limited commercially significant purpose or use other than to circumvent          protection afforded by a technological measure that effectively protects a right of a          copyright owner under this title in a work or a portion thereof; or

(C)    is marketed by that person or another acting in concert with that person with that          person's knowledge for use in circumventing protection afforded by a technological          measure that effectively protects a right of a copyright owner under this title in a work  or a portion thereof.

17 U.S.C. § 1201 (b)(1).  Thus, Section 1201 (b) addresses the circumvention of technological measures that limit the "use" of copyrighted works.

     If a plaintiff elects to recover actual damages, the court is to award actual damages suffered as a result of the violation, and any profits of the violator that are attributable to the violation and not taken into account in computing actual damages.  17 U.S.C. § 1203 (c)(2). 

     If a plaintiff elects to recover statutory damages for Section 1201 violations, the court is to award not less than $200 or more than $2,500 "per act of circumvention, device, product, component, offer, or performance of service, as the court considers just."  17 U.S.C. § 1203 (c)(3) (emphasis added).

     Violators of the DMCA are also subject to criminal penalties.  17 U.S.C. § 1204.  The DMCA provides, in pertinent part:

         Any person who violates section 1201 or 1202 willfully and for purposes of commercial advantage or private financial gain --

(1)    shall be fined not more than $500,000 or imprisoned for not more than 5 years, or          both, for the first offense; and

(2)    shall be fined not more than $1,000,000 or imprisoned for not more than 10 years,          or both, for any subsequent offense.

     In Sony Computer Entertainment America Inc. v. Gamemasters, 87 F. Supp. 2d 976 (N.D. Ca. 1999), the Defendant sold various "game enhancers" which allowed users to modify the rules of Sony's PlayStation games, such as by making the game harder or easier, or by giving a game character infinite lives or unlimited ammunition.  Id. at 981.  The devices also allowed users to play games designed exclusively for use in Japanese and European PlayStation versions.  Id.  In granting Sony's application for a preliminary injunction, the Northern District of California held that the "game enhancers" appeared to be devices whose primary function was to circumvent "a technological measure (or a protection afforded by a technological measure) that effectively controls access to a system protected by a registered copyright.... " Id. at 987-88 (citing 17 U.S.C. § 1201 (a) (2) (A)).    

     A leading case on the DMCA is Universal City Studios, Inc. v. Reimerdes, 111 F.Supp.2d 294 (S.D.N.Y. 2000), which involved an application to enjoin the posting of decryption software for downloading, and the posting of hyperlinks to other sites which made the software available.  The Reimerdes plaintiffs were eight major American motion picture studios that distributed their copyrighted movies on digital versatile disks (DVDs) for home use.  Id. at 303.  The plaintiffs used encryption technology called content scramble system (CSS) to protect the movies from copying.  Id.  Computer hackers, however, developed a software program called DeCSS which could circumvent CSS, thereby allowing the copying of DVD-formatted movies on unlicensed players.  Id.  The plaintiffs brought a DMCA action against individuals who posted DeCSS on their Web sites for downloading.  Id.  The defendants had also posted hyperlinks to other sites wherein DeCSS could be downloaded.  Id

     The defendants argued, among other things, that DeCSS was designed not for pirating copyrighted movies, but to assist in the development of a DVD player that would run under a Linux operating system.  Id. at 319.  The defendants also argued that applying the DMCA to the dissemination of DeCSS violated the First Amendment because (1) the computer code in DeCSS is protected speech, and (2) the statute was overbroad since prohibiting the use of DeCSS effectively prevented third parties from making fair use of copyrighted work.  Id. at 319, 325-26. 

     The Reimerdes Court concluded, among other things, that DeCSS was "technology" as defined by the DMCA, that CSS "controlled access to copyrighted works", and that DeCSS was designed primarily for decrypting CSS.  Id. at 317-19.  The court found compelling the fact that Jon Johansen, the principal programmer of DeCSS, and defendant Corley admitted that DeCSS was made solely for the decryption of CSS.  Id.  The plaintiffs were thus entitled to an injunction enjoining the defendants from posting DeCSS on their Web sites, and from posting hyperlinks to other sites which posted DeCSS.

     The DMCA defines "circumvent a technological measure" as meaning "to descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner."  17 U.S.C. § 1201 (a)(3).

     An individual accused of selling satellite or cable programming pirate devices may, for instance, sell devices classified into three broad categories: (i) devices with significant legitimate commercial uses, (ii) devices with only limited legitimate commercial use, but primarily used for the decryption of satellite signals or cable programming, and (iii) devices with no other use but the decryption of satellite signals or cable programming.  

     With respect to unprogrammed hardware and/or components, one might argue that such devices fall into the first category, and are, by themselves, incapable of circumventing technological measures that protect a copyrighted work.  However, notwithstanding the fact that some of these devices may have significant legitimate commercial purposes, an individual may still be liable under the DMCA if he has knowledge that the device would be used to circumvent a technological measure.  See 17 U.S.C. § 1201 (a) (1) (C).  Knowledge could be inferred through the use by the alleged seller of a pirate device in advertising literature or other media of nomenclature unique or common in the pirate device market.   

     Importantly, too, these unprogrammed devices could fall within the DMCA since the statute prohibits the sale and/or importation of "devices, or component, or part thereof"  (17 U.S.C. §§ 1201 (a) (2) and (b) (1))  if the devices have "only limited commercially significant purpose." (17 U.S.C.. §§ 1201 (a) (2) (B), 1201 (b)(1)(B).

     An uncharted aspect of the statute is the interpretation of “person injured” as a potential plaintiff.  Under the DMCA, "any person injured" by a violation of Section 1201 may file an action for temporary and permanent injunctions, the impounding of devices or products under the custody or control of a violator, and for an award of actual or statutory damages.  17 U.S.C. § 1203 (b).  Under a broad interpretation of "person injured", a DMCA defendant could potentially be subject to multiple lawsuits -- from pay channel companies, copyright owners, owners of technological measures designed to protect the right of a copyright owner, or which control access to a copyrighted work, satellite service programming providers, cable service providers, and others who otherwise benefit from encryption technology.

     An alleged pirate or seller of pirate devices must not only be concerned with the possibility of multiple civil lawsuits under a broad interpretation of “person injured”, but must also be concerned with the prospect of criminal prosecution.  As to criminal prosecution, law enforcement officials oftentimes will be less inclined to pursue criminal action against a defendant who is already being civilly prosecuted.   

The Federal Communications Act

     The Federal Communications Act ("FCA") may provide an additional or alternative recourse for satellite or cable programming companies.  Section 605 (a) of the FCA states, in pertinent part:

       No person not being entitled thereto shall receive or assist in receiving any interstate or foreign communication by radio and use such communication (or any information therein contained) for his own benefit or for the benefit of another not entitled thereto.  No person having received any intercepted radio communication or having become acquainted with the contents, substance, purport, effect, or meaning of such communication (or any part thereof) knowing that such communication was intercepted, shall divulge or publish the existence, contents, substance, purport, effect, or meaning of such communication (or any part thereof) or use such communication (or any information therein contained) for his own benefit of for the benefit of another not entitled thereto. 

47 U.S.C. § 605 (a) (emphasis added).

     While the term "intercept" is not defined by the FCA, the term has been interpreted as referring to the "taking or seizure by the way or before arrival at the destined place".  See Goldman v. United States, 316 U.S. 129, overruled on other grounds, Katz v. United States, 389 U.S. 347 (1967); That's Entertainment, Inc. v. J.P.T., Inc., 843 F.Supp. 995 (D.Md. 1993); National Satellite Sports, 253 F.3d at 915. 

     The FCA defines "radio communication" or "communication by radio" as meaning "the transmission by radio of writing, signs, signals, pictures, and sounds of all kinds, including all instrumentalities, facilities, apparatus, and services (among other things, the receipt, forwarding, and delivery of communications) incidental to such transmission.  47 U.S.C. § 153 (33). 

     In National Subscription Television v. S&H TV, 644 F.2d 820 (9th Cir. 1981), the Ninth Circuit held that the makers and distributors of decoding devices which could unscramble subscription television audio signals violated Section 605 (a) by " 'assisting third parties in receiving communication to which they are not entitled' ".  Id. at 826.  The Ninth Circuit also held that the act of viewing a program using unauthorized decoding devices amounted to "disclosure of the 'existence, contents, substance, purport, effect, or meaning' of ... signals to nonsubscribers."  Id. Accord California Satellite Systems, Inc. v. Nichols, 170 Cal.App.3d 56, 67-68 (Cal. Ct. App. 1985). 

     Additionally, Subsection 605 (e)(4) of the FCA states, in pertinent part:

       Any person who manufactures, assembles, modifies, imports, exports, sells, or distributes any electronic, mechanical, or other device or equipment, knowing or having reason to know that the device or equipment is primarily of assistance in the unauthorized decryption of satellite cable programming, or direct-to-home satellite services, or is intended for any other activity prohibited by Subsection (a) of this Section, shall be fined not more than $500,000 for each violation, or imprisoned for not more than 5 years for each violation, or both.  For purposes of all penalties and remedies established for violations of this paragraph, the prohibited activity established herein as it applies to each such device shall be deemed a separate violation. 

47 U.S.C. § 605 (e)(4).  It should be noted that, unlike Subsection 605 (a), the foregoing subsection incorporates the criminal provisions within the subsection. 

     In Cablevision Systems Corp. v. Muneyyirci, 876 F.Supp. 514, 425, (E.D.N.Y. 1994), a case involving satellite cable programming, the court held, among other things, that the defendants had violated Subsection 605 (e)(4) by selling cable signal decoders and combination units knowing that the devices would be used to intercept premium cable television services without authorization.  The court also held that the defendants had failed to show a legitimate retail market for the signal decoders or combinations units.  Id. at 418-19.   

     Under the FCA, any person aggrieved by violations of Sections 605(a) and 605 (e) (4) could bring a civil action for temporary and final injunctions, and damages.  47 U.S.C. § 605 (e) (3). 

     Additionally, persons aggrieved by violations of Subsections 605 (a) and (e)(4) may avail of either actual or statutory damages. Actual damages are measured by the actual damages caused by the violation, plus the violator's profits attributable to the violation which were not considered in determining actual damages.  47 U.S.C. § 605 (e)(3)(C)(i)(I).

     The term "any person aggrieved" is defined by the statute as including "any person with proprietary rights in the intercepted communication by wire or radio, including wholesale or retail distributors of satellite cable programming, and, in the case of a violation of paragraph (4) of Subsection (e) of this section shall also include any person engaged in the lawful manufacture, distribution, or sale of equipment necessary to authorize or receive satellite cable programming."  47 U.S.C. § 605 (d) (6).  The foregoing language apparently contemplates a broad interpretation of "person aggrieved".

     Alternatively, a person aggrieved by a violation of 605 (a) may elect to recover statutory damages of not less than $1,000 or more than $10,000 for each violation.  Moreover, a person aggrieved by a violation of 605 (e)(4) may recover not less than $10,000 or more than $100,000 for each violation.  47 U.S.C. § 605 (e) (3) (C) (i) (II) (emphasis added).

     In Cablevision of Southern Connecticut v. Smith, 141 F.Supp.2d 277 (D. Conn. 2001), a case in which the defendant failed to appear, the court concluded that it was reasonable to infer that of the 20 illegal decoders purchase by the defendant, the defendant had sold or distributed 19, and used one decoder for personal use.  Id. at 287.  Significantly, the court did not conclude that each viewing of the unlawfully obtained programming constituted one violation.   

     Additionally, if a court concludes that a violation was "committed willfully and for purposes of direct or indirect commercial advantage or private financial gain, the court in its discretion may increase the award of damages, whether actual or statutory, by an amount of not more than $100,000 for each violation of Subsection (a) of this Section."  47 U.S.C. § 605 (e) (3) (C) (ii).     

     The court also has discretion to reduce an award of damages to a sum of not less than $250 where a court concludes that a violator had no reason to believe that his or her conduct was a violation of Section 605.  47 U.S.C. § 605 (e) (3) (C) (iii).

     Finally, a court may award costs and reasonable attorneys' fees to the aggrieved party.  47  U.S.C. § 605 (e) (3) (B) (iii).

     Under the FCA's criminal provisions, any person who willfully violates Subsection 605 (a) "shall be fined not more than $2,000 or imprisoned for not more than 6 months, or both".  47 U.S.C. § 605 (e) (1).  Additionally, anyone who violates Subsection 605 (a) "willfully and for purposes of direct or indirect commercial advantage or private financial gain shall be fined not more than $50,000 or imprisoned for not more than 2 years, or both, for the first such conviction and shall be fined not more than $100,000 or imprisoned for not more than 5 years, or both, for any subsequent conviction".  47 U.S.C. § 605 (e) (2).

     Thus, alleged sellers of satellite and cable programming pirate devices could be particularly vulnerable to liability under the FCA.  While the cases interpreting section 605 deal primarily with satellite cable programming, the statute does provide for devices or equipment relating to "direct-to-home satellite services".  47 U.S.C. § 605 (e) (4).

     As to damages for violating Subsection 605 (a), the phrase "for each violation" could be interpreted to mean each act of assisting in the receipt of a communication.  As to Subsection 605 (e) (4), the phrase "for each violation" could be interpreted to mean each sale of an unlawful device.

[1] Article 11 of the WIPO Copyright Treaty provides that signatory countries:

     shall provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors in connection with the exercise of their rights under this Treaty or the Berne Convention and that restrict acts, in respect of their works, which are not authorized by the authors concerned or permitted by law.

WIPO Copyright Treaty, 1997 WL 447232.

* Richard L. Ravin is a member of Hartman & Winnicki, P.C., and head of the firm’s Internet and Intellectual Property Law Group, with offices in New Jersey and New York.  He is Vice Chair of the New York State Bar Association’s Intellectual Property Section, and past (founding) Co-Chair of the Internet Law Committee of the Section. His e-mail address is: rick@ravin.com  Van V. Mejia is an associate in the firm’s Internet and Intellectual Property Law Group. 

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