A Fun and Wacky Guide to Criminal Copyright Law

After posting the Black Plague paper and seeing a few curious minds satisfied, I thought I'd throw this one up as well. This is a paper I did for my White Collar crime class this year, which copyright infringement is filed under albeit loosely. While the term was originally used to describe sending rich white men to jail, it's now loosely defined as anytime you steal or rob from someone using sophisticated non-violent means. That isn't a very satisfactory definition depending on who you ask because there really isn't a good definition of the field, white collar law is composed of over 40,000 statutes that a Federal prosecutor will pick & choose from when they are hunting the big fish.

Before going further....I AM NOT A LAWYER. THIS IS A STUDENT PAPER. IF YOU ARE IN TROUBLE WITH THE GOVERNMENT OR ARE CONCERNED ABOUT THE LEGALITY OF YOUR ACTIONS, PLEASE CONSULT WITH A LICENSED ATTORNEY. FOR THE LOVE OF GOD PLEASE DON'T SEND ME AN E-MAIL TELLING ME ABOUT YOUR BIT TORRENT HABITS BECAUSE I COULD VERY WELL GET SUBPOENAED TO APPEAR AT YOUR TRIAL TO TESTIFY. THE BAR APPLICATION IS A HELLISH ENOUGH ORDEAL AS IT IS.

Continuing on, I should point out that a criminal copyright violation is not the same thing as the RIAA suing people downloading mp3s. That is a civil violation, which is the traditional method for resolving these kinds of disputes. If you are with the EFA or believe that it is your inherent right to download a video game, that's not what this paper is really about. I cite civil cases heavily because criminal copyright law depends on them for their own rulings.

The development the paper is addressing are the various ways IP law has evolved in response to new forms of distribution. The criminal prosecution element was not even introduced until the VCR. Even then, the law was fairly simple: if you're selling someone else's copyrighted material, that's your ass. The FBI does not screw around when it comes to prosecution. Conviction rate was over 90% in 2008. This is because when the FBI knocks on your door, they already have everything they need to throw you in jail. The interwebs and several new laws have complicated this process significantly.

What's curious about copyright law is how public sentiment will soften penalties. Once everyone gets used to a new means of distribution, they start balking at IP holders crying foul. If people become accustomed to getting their copyrighted materials in an easier and more convenient manner, that's what they're going to stick with. This becomes problematic with the Federal Government because despite their reputation, when it comes to copyright violators they tend to go easy on them. When it comes to criminal law, you want consistency because the possibility for abuse is too massive otherwise. As it stands now, a person stealing a million dollars by selling copyrighted materials will get less jail time than someone defrauding a million with a Ponzi scheme. That needs to be fixed, one way or the other.

I rattle off some stats and talk about how the country is evolving and that the Feds ought to stay out of the whole process at the end. This isn't a concise history and I orient the discourse around technology instead of chronological sequence. If you want the proper footnotes, drop me an e-mail. Without further ado:



An explanation of criminal copyright law is both a study in the civil law upon which the cases are founded and the technology that drives the field. All criminal cases prosecuting infringers relies upon civil law because the technology through which copyrighted works are distributed is continually changing . Congress and the American people have a vested interest in allowing new, innovative technology that can distribute artistic works more efficiently for the betterment of society. At the same time, supporting a business model that gives sufficient incentive to authors and the businesses to produce their work must exist. With each new technological innovation that allows for new means of distribution, an old business model dies and a new one is formed. With this in mind, it is easier to study these cases based on the technology that instigates the business model shifts rather than just a linear timeline. As America slowly becomes an information economy, a nation that profits off copyrighted works more than any other good, the Federal government has increasingly been asked to step in and leverage criminal charges against violators of copyright law. The effectiveness of this has been mixed.

The Printed Word

The beginnings of copyright law pitted the two ideals of the public good versus the author’s rights from the very beginning. An excellent example is a case handled by Justice Story in 1841 concerning the rights to republish the collected letters and journals of President George Washington. In Folsom v. Marsh, the nephew of George Washington inherited the documents from his Uncle and sold the publishing rights to Chief Justice Marshall and an editor named Sparks. He then sold the hard copies to the Library of Congress for a tidy sum. An eleven volume series of books was released detailing the entirety of the collection. The defendant, Upham, copied all of the letters out of the book and published his own version. Story explains, “This is one of those intricate and embarrassing questions, arising in the administration of civil justice, in which it is not…easy to arrive at any satisfactory conclusion.” He draws a distinction between simply copying a text and creating a “real, substantial condensation of the materials”. For example, someone writing a review of the volumes can cite large passages if they are arguing a point. An encyclopedia, which covers a wide range of topics, must have certain fixed limits to what topics it can claim as property. Justice Story ultimately acknowledges that all letters and journals are literary whether they are meant for business or publication, but parties to whom they are addressed retain “a limited right” to produce them under special circumstances. These documents can be considered property and transferring those rights does not effect their integrity. Even then, Justice Story understood that giving absolute right to all things George Washington to one individual party was not in the best interests of the public.

Since the technology for producing printed works remained stable, copyright litigation in civil law is relatively quiet and still non-existent in criminal cases. Often people still continued to blatantly copy and sell literary works with no royalties granted to the author, such as the collected works of Charles Dickens here in America. Many of the copyright disputes that do occur during this time period revolve around playwrights trying to bar other theaters from performing their scripts. The first major technological breakthrough that instigated a new wave of copyright litigation was the copying machine.

Litigation revolving around the copying machine is still relatively small in scale compared to modern copyright law. Few people are inclined to sit and copy an entire book and as a consequence there weren’t many infringers worth prosecuting. What was vulnerable to the new technology was smaller articles and journals, such as Law reviews and medical journals. In Williams & Wilkins Company v. United States the publisher of several medical journals sued the National Institute of Health (NIH) and the Federal government for copying these journals without permission . Requests from government agencies including the military were forwarded to the NIH and requested copies were sent out. Confronted with the plain language of the Copyright Act of 1909, which grants “exclusive right” to all reprints of a document, the Court tempered this absolute control of information. They did this based on the House committee report from the Act which explained that the law was, “not primarily for the benefit of the author, but primarily for the benefit of the public.” Considering that the case took place in 1973, many years after the technology had been introduced, it is no surprise that the court goes on at length about how all businesses, including Congress and the Judicial system, rely on the ability to copy documents. A four part test is proposed which gauges (a) the purpose of the use, (b) the nature of the copyrighted work, (c) the amount and substantiality of the material used in relation to the copyrighted work as a whole, and (d) the effect of the use on a copyright owner’s potential market for and value of this work. The court then draws several key distinctions. The NIH is a non-profit institute distributing materials for the betterment of scientific study. From 1958 to 1969 (when the suit was filed) the journal’s subscription rate increased. The journals do not pay the authors of the actual articles and many of them testified that they approved of the copying. There is thus no substantial proof that the photocopying has harmed the Plaintiff in any way. Granting them absolute rights over all photocopies would simply make them “the dog in the manger”. Royalties were denied.

To illustrate a civil photocopying case swinging the other way, American Geophysical Union v. Texaco, Inc. is a very similar case. A publisher of scientific journals sued Texaco for copying their work and distributing it amongst their staff. Applying the same four factor test as in Williams & Wilkins, Texaco fails because they are a for-profit business seeking only to stem costs. Due to the size of the company, a significant amount of money had been lost by these journals . None of the academics published seemed inclined to testify in favor of Texaco at trial since they are not mentioned in the record. Willfully violating a copyright to the detriment of the owner for profit was ruled a clear violation of the Copyright Act, particularly when it’s a for-profit business doing it.



Sound & Tape Recordings

The purpose behind criminally prosecuting a copyright infringer is to provide a greater deterrent to taking or re-selling the works of a copyright holder. On a Federal level, criminal prosecution of copyright violators was difficult because compared to major crimes like narcotics or murder, it isn’t particularly important. Michael Coblenz explains in the article ‘Intellectual Property Crime’, “As former U.S. Attorney (and noted copyright expert) David Nimmer stated: "there simply are not enough resources to prosecute every federal crime vigorously. Narcotics, crimes of violence, and large-scale fraud are viewed as more worthy of pursuit than intellectual property cases, which, after all, are normally subject to some sort of civil remedy."

Furthermore, getting the early courts to think of these acts as actual property being stolen was equally problematic. In the case Dowling v. United States a bootleg record operation that created and distributed Elvis Presley records without consent was prosecuted for interstate transportation of stolen property. In terms of civil copyright law, this is an obvious violation under the Williams & Wilkins standard, moreso than even American Geophysical Union to the extent that the entire business was re-selling copyrighted materials. The courts explain, “interference with copyright does not easily equate with theft, conversion, or fraud.” The copyright owner still had the original Elvis Presley recordings, so that arguing infringement violates the same rights as physical possession is “colloquial” at best. The prosecution was making this bold argument to win a higher fine and penalty against the defendant, one that went beyond what the 1976 Copyright Act would have called for. Under 17 U.S.C. § 506 (a), the offender would only receive a maximum fine of $ 10,000 and one year in jail. A 1982 Amendment to that law increased this to $ 250,000 and imprisonment up to five years in prison. The Courts conclude, “Congress has not spoken with the requisite clarity” by specifically saying criminal property laws now apply to copyright violations.

Instances like the Dowling case were relatively infrequent because the equipment and business knowledge required for a large scale vinyl bootlegging operation were not common. Violators could be prosecuted fairly efficiently in civil courts without excessive cost to the copyright owners. The progress of technology would change all of this with home recording devices. By imprinting the information onto a magnetic strip in a cassette, devices capable of recording both television and music became both cheap and accessible to the public. Analyzing the impact of this technology will be broken into looking through examples of criminal and civil violations of both forms of infringement.

Cases dealing with the subject of copied music are relatively straightforward, a copied tape that is being sold is a clear violation of the law, however a criminal case on a questionable derivative work is important to note because it illustrates how awkward criminal copyright litigation can be. In the case United States v. Richard Taxe the courts are confronted with an artist selling remix tapes . Numerous songs from various artists are re-recorded, audibly modified, and synthesized to create a relatively new but similar track on Taxe’s album. The Courts write, “If the work is produced by re-recording the original sounds, or “recapturing” those sounds, the work infringes. If the work is produced by imitation or simulation by hiring of other musicians, or even the same musicians, to perform the copyrighted work in as similar a manner as possible, there is no infringement.” The re-recording must be more than a “trivial part” of the original recording . Unlike civil law, criminal law is construed narrowly . What is troubling about this case is that the precedent cited is all civil law. While such standards are useful when gauging a civil dispute, they are cripplingly empowering to the copyright owner when applied under criminal law. Given that Taxe’s album was only infringing in the sense that it was a “re-recording from the original” before being modified, the issue of whether or not this can still be considered a copy should fall under the doctrines of ‘fair use’ and derivative works. The courts here do not offer any jury instructions on this matter and focus narrowly on the law’s literal application. This is deciding the fate of a person facing massive fines and potential jail time.

Speaking generally, bootlegging a record or tape by copying it onto a cassette results in significant sound quality degradation. Although piracy existed, the music industry would have to wait until computers allowed for the MPEG-3 or mp3 before they would encounter serious problems. The major impact of magnetic recording devices would instead occur with home video tapings.



One of the landmark civil cases dealing with the issue of copying devices themselves comes from Sony v. Universal City Studios . Sony sold VCR’s (Betamax) which were capable of recording television programs while they were broadcasted. This could be done through a timer while one was at work or even when you wanted to watch a different channel while a different one was being recorded. By the time of litigation the use of the devices was so prevalent that, like the copying machine, attempting to hold individual violators liable would be impossible. People who taped such programs typically skipped the commercials, costing companies ad revenue, as well as allowing them to create home libraries of copyrighted materials. Defendants instead relied on a respondeat superior theory to hold Sony liable for lost revenue. As with Williams & Wilkins, the four part test was applied. Surveys indicated that 80% of Betamax owners watched as much television as they did before purchasing one. 75.4% used them for time-shifting purposes half or most of the time. 55.8% had 10 or fewer cassettes in their home library while 70.4% claimed they generally only watched the tape once. The courts argue that this is consistent with the First Amendment’s policy of providing the fullest possible access to information because time-shifting enables you to view programs you would otherwise miss. Advertising for the Betamax never explicitly advises copyright violation and the owner’s manual for the device points out that recording copyrighted programs violates U.S. law. Only 25% of Betamax users claimed to fast-forward through commercials, explaining that they often missed parts of the program when they did so. 62 out of a survey of 107 programs during the Spring of 1978 authorized some home taping while 22 allowed for unrestricted home taping. Several of these program creators, including Fred Rogers, were adamantly against imposing a penalty on Sony. While taking care to acknowledge that making copies for commercial profit would be a violation of the law, private home use ‘must be characterized as a noncommercial, non-profit activity.’ The fact that a VCR is capable of non-infringing uses alone renders it legal. The Court concludes that this specific use of a Betamax qualifies as ‘fair use’. Justice Stevens explains, “The immediate effect of our copyright law is to secure a fair return for an ‘author’s’ creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good.”

Yet the case is not without its warning signs or policy considerations that would become key to later criminal prosecutions. In order to ameliorate the respondeat superior charges the courts rely on patent law, which does hold someone who contributes to the infringement of a patent by a third party liable. The Court points out that a, “challenge to a noncommercial use of a copyrighted work requires proof either that the particular use is harmful, or that if it should become widespread, it would adversely affect the potential market for copyrighted works.” Several critics of the ruling point out that the Supreme Court essentially created a secondary liability trap for anyone trying to produce a new means of distributing intellectual property . Like undermining a patent, the device must undermine the author’s entire copyright for liability to hold the infringing product’s creator liable. In a strongly worded dissent, Justice Blackmun points out that these tapes do precisely that. He writes, “when a user reproduces an entire work and uses it for its original purpose, with no added benefit to the public, the doctrine of fair use usually does not apply. There is then no need whatsoever to provide the ordinary user with a fair use subsidy at the author’s expense.” Essentially, Sony was able to prevail because the Betamax, by itself, did not do enough specific damage to the television market.

With home tape recordings came the bootleggers seeking to profit off pirated copies and with them criminal prosecutions relying on the Sony ruling. The Government would once again attempt to apply 18 U.S.C. § 2314 for transferring bootlegged tapes across state boundaries and have courts again reject the notion of treating a copyrighted work as actual property. However, engaging in the profitable sale of someone else’s copyrighted work still results in criminal liability. For example, in United States v. Cross the FBI warned defendant that he was violating copyright laws by renting copied tapes . He would remove labels from the original videocassettes and transfer them to the copies. Seizure of the store’s inventory revealed that 28 out of 116 tapes were illegal copies. While the store owner was clearly guilty, his associate in the business Fleek claimed that she did not ever profit from the store. The court dismisses this argument by stating, “A conviction under 17 U.S.C. § 506(a) does not require that a defendant actually realize either a commercial advantage or private financial gain. It is only necessary that the activity be for the purpose of financial gain or benefit.” Just doing something that could theoretically make a profit with someone else’s copyrighted work was enough to hold her liable.

Strict enforcement of this policy is not particularly consistent by Federal standards. An example would be United States v. Moran, which dealt with another video tape rental store. Moran was a police officer who ran a rental store in his spare time. To prevent vandalism, he would “insure” his tapes by putting the copy out for rent and keeping the original in the back. He claimed to read somewhere that this was permissible. The reason this becomes problematic is that 17 U.S.C. § 506 (a) states that any “person who infringes a copyright willfully and for purpose of commercial advantage or private financial gain” is in violation. The officer’s ignorance of the law, along with his strict policy of only making one copy and upstanding police record, made the situation cross into the grey area. Normally in criminal law ignorance is not a defense. Since civil authority provides guidance in criminal copyright violations, the courts justify being uncharacteristically lenient on Moran because civil authority often mitigates for circumstances.



Digital Distribution

Industries dependent on profiting from copyright materials learned quickly from the Sony case that the more a device that enabled infringement became socially acceptable, the more the courts would be unwilling to call such an act illegal. The distinction remained: if a person was only creating a back-up of a copyrighted work that they had purchased then courts were not inclined to find products that enabled this conduct infringing. Computers had become sophisticated enough by the early 90’s to play music independent of a compact disc and thus threatened control over music distribution. To address these concerns the Audio Home Recording Act of 1992 was created, 17 U.S.C. § 1001, which required music devices by law to have some form of copyright management built in. Yet when the Third District court was confronted with a civil case where the RIAA attempted to sue the manufacturer of an mp3 player that did not have a copyright management system, the court would not enforce the law . The defendant produced an mp3 player called a Rio, which came with a program that would allow the user to concert a compact dics’s audio recordings into an MPEG-3 or mp3. Picking through Senate Reports and parsing language carefully, the court points out that an mp3 is not like a compact disc or audio recording. It is a computer program, which under copyright law is classified as a ‘literary work’ and thus does not fall under the Home Recording Act. Despite the District Court previously arguing that this interpretation would “effectively gut the Act”, the Court rules in favor of the defendant. They write, “the Rio is not a digital audio recording device subject to the restrictions of the Audio Home Recording Act of 1992.”

This willingness to allow people to distribute products that enabled copyright infringement expanded to software protection measures as well. In Vault Corp. v. Quaid Software Limited, a decryption program that broke a copy protection system was ruled acceptable so long as it was for archival purposes . The protection system, called PROLOK, involved specific diskettes that were licensed to companies seeking to protect their software. If a user installed defendant’s program RAMKEY, they could copy the data from the disk. Several engineers and programmers testified that they used this ability to back-up their files and thus qualified as an exception to the infringing use policy in 17 U.S.C. § 108 (b) which allowed for copying “for purposes or preservation and security”. It was also technically possible to back-up a PROLOK disk without RAMKEY. Relying heavily on Sony’s exception of excusing devices that had a “non-infringing use”, the court concluded that Quaid Software was not guilty of infringement or contributing to it. This, despite the fact that even the court admitted that the defendant has substantially harmed the plaintiff’s business . As in Sony and the case involving the Rio, the court is not willing to grant a copyright holder excessive control on the means of distribution for a copyrighted work without a compelling reason to preserve the old business model.

Courts would finally have their reason to begin defending copyright holders more vigorously with the arrival of the internet. In 1992 Congress passed the Copyright Felony Act to address the growing problem of computer piracy. Computer programs had normally been protected by a weird amalgamation of copyright laws but were now consolidated and offered full civil protection. Despite all of this, it would still take several years for laws to exist that addressed the precise nature of illegal internet distribution because in most cases, the violator is not actually selling the copyrighted work. An example of an early Federal criminal case dealing with digital distribution can be found in United States v. LaMacchia. In 1994 a 21 year old MIT student used the school’s computer network to create an electronic bulletin board system (BBS) to distribute software and video games. The total number of downloads came to about one million dollars worth of potential purchases. Because LaMacchia did not personally profit from this situation, the Government was forced to pursue a wire fraud case instead of simple copyright infringement. As in Dowling, the current laws simply did not present an effective way to find an act that is obviously wrong to be illegal. The court cites the mandate that “the primary objective of copyright is not to reward the labor of authors, but ‘to promote the Progress of Science and useful Arts’, arguing that the case fails the wire fraud requirement of 18 U.S.C. § 1343. Since LaMacchia did not have “any scheme or artifice to defraud” by distributing these works on the internet, he did not meet the standard. There is no fiduciary relationship between LaMacchia and the copyright owners, there is no scheme to make money, and technically what he did was not even illegal under 17 U.S.C. § 506(a) of the Copyright Act . It is important to note that courts are not attempting to defend LaMacchia. They end by describing his conduct as, “nihilistic, self-indulgent, and lacking in any fundamental sense of values.”

This legal predicament would not last long. The Department of Justice formed the Computer Crimes and Intellectual Property division in 1995. While the division still considers civil remedies to be adequate to compensate victims in typical IP cases, it explains that the organization’s purpose is to prosecute those who can still continue breaking the law despite civil prosecution. In April 1997, thirty-five indictments were obtained for copyright and trademark infringement, but only three convictions and eight guilty pleas were obtained. The trademark cases dealt primarily with designer clothing, but one case involved improperly labeled computer chips. The criminal copyright infringement cases are split between motion picture videotapes, music recordings, and computer programs. In 1997 Congress passed the No Electronic Theft Act (NET) which modified criminal copyright law to make violation a Federal crime. This was a follow-up to their amendments to the RICO act to make intellectual property distribution punishable if done across wire or mail services. The ‘for-profit’ exception that got LaMacchia off the hook was now removed. Criminal infringement is the same as civil except for the presence willfulness and sometimes financial gain.

The two most well-known cases involving unauthorized digital distribution in civil court deal with the programs Napster and Grokster. The case A&M Records, Inc. v. Napster, Inc. represents a complete turnabout of the policies found in Sony . Using “peer-to-peer” file sharing, Napster’s software and network servers would allow online users to search each other’s computers and download music from one another. Since the files were in mp3 format, there was minimal quality degradation. By this point the four part test of Sony had been codified into 17 U.S.C. § 107. First, the purpose and character of Napster was to facilitate the downloading of copyrighted music. The program did little else. Second, the nature of the copyrighted work was musical recordings that were copyrighted by law. The entire work was used in this infringement. As for the final part of the test, “the effect of the use upon the potential market for the work”, Napster’s impact was clearly enormous. At the time of trial, 10,000 songs per second were being downloaded from the service . People who owned an mp3 statistically did not go on to buy the compact disc and Napster’s presence undermined any legitimate mp3 website. The remarkable thing about the Napster case is that it fails to merit any of the loopholes courts typically used to excuse copyright violations. The space-shifting defense of only using the mp3 for private, home use that worked in Diamond Multimedia failed here because Napster “involved distribution of the copyrighted material to the general public.” The standards of respondeat superior in Sony that many companies relied on to shield them were easily met here. Napster knowingly encouraged and assisted in the infringement of the copyrights through advertising and even after repeated warnings from the RIAA. The court notes that Napster also failed to meet the Audio Home Recording Act requirements of 17 U.S.C. § 1008 because they are perfectly capable of screening copyrighted material through the server but refuse to do so. Napster was subsequently bankrupted and purchased due to the extraordinary amount of fines levied against it.

Watching the mistakes made by Napster, the case MGM, Inc. v. Grokster demonstrates that even when the program does a better job of ‘gaming’ the legal system the courts were unwilling to tolerate this new level of copyright violation . Unlike Napster, Grokster was a peer-to-peer program that was capable of both infringing and non-infringing uses. Music, movies, academic journals, and numerous other types of files could be distributed through its services. Yet because their ultimate intent was still to profit off a service that infringed copyrights, they were held liable for the conduct of their users. In-house e-mails were offered up as evidence that showed the company clearly intended to ‘leverage Napster’s 50 million user base’ once the litigation destroyed the company. Advertisements were pretty blunt about this such as, “Napster Inc. has announced that it will soon begin charging you a fee…what will you do to get around it?” Grokster, unlike Napster, even went so far as to make a profit by selling advertising space on the programs. Non-infringing uses of the program did exist, such as various non-copyrighted works by Shakespeare being distributed, but these were far outweighed by infringing uses. There was no evidence of any attempt to comply with 17 U.S.C. § 1008‘s requirement that some form of copyright screening exist. Despite the testimony of bands claiming they supported their music reaching a wider audience, Grokster’s attempt to use the exceptions that allowed Sony to continue making VCR’s were not permitted. The court writes, “where an article is “good for nothing else” but infringement…there is no legitimate public interest in its unlicensed availability, and there is no injustice in presuming or imputing an intent to infringe.”

Despite the litigation that created injunctions or simply shut down these programs, digital piracy only increased. One secondary legal authority that harshly criticized the ruling pointed out, “The creators/copyright holders/labels will only stay relevant if customers find them relevant -- and also pay for the product or service. The new twist on this long-recognized principle is that now customers want the product in a range of formats for use on various platforms. They want the content on their mobile telephones, on their iPods, on their desktops, on their laptops. The copyright holders are tied to their customers.”

The long and painful process of getting the music into these new formats while still making a profit became the subject of much innovation and legal wrangling. In order to effectively protect copyright holders from infringers, Congress created the DMCA or 17 U.S.C. § 1201. The law includes a variety of measures, the most significant in regards to copyright infringement is making it illegal to “circumvent a technological measure that effectively controls access to a work protected under this title.” This is broadly defined as any technical process a program or song must go through to function. I-Tunes, for example, uses a special encryption on its mp3’s so that only an I-pod or other licensed program can play the file. The law is problematic because, presuming a copyright owner were to become over-zealous in protecting their encryptions, they would have a de-facto monopoly on all expressions of their copyright. As the courts noted years ago in Sony, “The more artistic protection is favored, the more technological innovation may be discouraged; the administration of copyright law is an exercise in managing the tradeoff. ”

Enforcement of the DMCA in criminal courts initially resembled the situation in Taxe, a narrow application of a law meant for a broad and grey-area subject. The leading example is United States v. Elcom Co., Ltd. Defendant created a program that undermined the DMCA protected copyright measures of Adobe’s eBook Reader. Normally an ebook can only be read on the computer onto which the ebook was downloaded, it cannot be transferred to a different computer. The court is put into the awkward position of admitting that using the program is technically ‘fair use’, it is your legal right to move a copyrighted work that you have paid for and handle it how you see fit. Yet the DMCA clearly defines the program as illegal. The court notes, “It cannot be seriously argued that any form of computer code may be regulated without reference to First Amendment doctrine. The path from idea to human language to source code to object code is a continuum.” In order to restrict someone’s First Amendment rights, there must be a compelling state interest that is done by the least restrictive means. Defendants then attempt to argue that Adobe is attempting to create a monopoly and infringe on the public good, but the argument ultimately falls apart. The books can still be accessed in shops and through other vendors. No new, limiting rights are being held by Adobe outside the protective measures for their work. Banning the sale of circumvention tools does not substantially burden First Amendment rights more than is necessary in this instance . Furthermore, once the copyright expires, all protectable interests are gone in the book just as it would be in a normal infringement dispute.



Modern Trends and Conclusions

Seven years later, the criminal prosecution of violators of the DMCA continues using Elcom as precedent. Yet as with Moran, the enthusiasm and interest has waned significantly. A prime example is United States v. Whitehead. Whitehead was convicted of selling over 1000 “access cards” that allowed individuals to pirate digital satellite service from DirecTV. This violated the DMCA by circumventing the protective measures imposed by DirecTV to keep pirates from stealing satellite time. This cost DirecTV roughly one million dollars in potential customers and netted Whitehead a profit of about $ 400,000. At sentencing, his offense level status was reduced from 24 to 20 after several motions to only impose a 33 month sentence. Felony copyright infringement carries a maximum sentence of five years in prison for a first offense if the infringement is for commercial advantage or financial gain, and three years in prison for willful reproduction and distribution. For second or subsequent offenses the maximum terms of imprisonment doubles to ten and six years respectively. Despite already receiving a slap on the wrist, Whitehead then complained of mitigating circumstances. Whitehead explained that he had a sick mother, was sorry for what he had done, and that he had just bought a puppy with his daughter. The sentence was then reduced to 5 years probation, 1000 hours of community service, and restitution of $ 50,000. As a very bitter dissent explains, “It looks as if the district courts can give a mere wrist-slap to those convicted of white collar crime; and then await a summary affirmation from our court. ”

Light sentences like this are the norm for criminal copyright infringement. The problem is that if the Federal Government is going to criminally prosecute violators of a law, it must be uniform in that approach. If someone stole the same amount of money as Whitehead did from a bank using wire fraud, he would not have gotten the same sentence. In the Cohen case mentioned earlier the defendant was sentenced to eighteen years despite the fact that an FBI agent literally told him he was violating the law and to stop before the arrest weeks later. A similar videotape copying operation of 78 VCRs received only twelve months. In what must be a historic first for the Federal Court system, you are better off in Criminal Court than Civil for a Copyright Infringement.

The problem with copyright law is that the way we distribute information is always changing. A company whose business model cannot or will not adapt to a massive technological innovation like the internet is always going to complain. In 1906 famous composer John Philip Sousa wrote a bitter editorial complaining that the gramophone would destroy the nation’s habit of singing in groups and enjoying individual works. It was also costing him a fortune as people copied his music onto records without any compensation to him. He writes, "Do they not realize that if the accredited composers who have come into vogue by reason of merit and labor are refused a just reward for their efforts a condition is almost sure to arise where all incentive to further creative work is lacking and compositions will no longer flow from their pens or where they will be compelled to refrain from publishing their compositions at all and control them in manuscript?" A century later, the prediction has fortunately not come true. Rather than ban the gramophone, the music industry adapted to allow musicians to recover a return from their recordings.

When testifying before Congress about the VCR’s effects on the film industry, Jack Valenti declared, “the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone." The film industry has since gone on to make billions by selling films on tape and DVD. The recording industries initial reaction to DAT recording devices was to ask Congress to ban them. Film and television executives regularly complain of DVR and the ominous ability to skip commercials. Jamie Kellner, CEO of Turner Broadcasting, argued that any time someone does not watch a commercial for a program on television, they are effectively stealing it. The copyright industry has an unfortunate habit of crying wolf anytime someone introduces a superior distribution method.

It is for good reason then that criminal courts are uncomfortable with enforcing copyright infringement laws. In the case of something like Taxe, where a person technically violated the law but innovated enough to qualify for ‘fair use’, handling the matter as a strict violation makes little sense. On the other hand, the erratic rulings in two similar video tape cases along with the light ruling in the Whitehead case illustrate that when criminal courts do try to apply the looser standards of civil courts, it is uncharacteristically lenient of the Federal Criminal System.

Businesses that employ fair use of copyrights such as Google in 2006 accounted for $4.5 trillion in revenues and $2.2 trillion in associated value or 1/6 of the U.S GDP. 17 million jobs, along with 1.2 trillion in pay checks, and 194 billion in exports are also brought by fair use business practices. People are making money and boosting the economy by using other people’s copyrights. On the other hand, the Motion Picture industry, calculating profits lost based on movies pirated instead of purchased that same year, reported losses at 6.1 billion. The math in all of these reports is fuzzy because there is no real way to tell if someone was going to buy the movie or not. One business model is dying, another is rising up.

While the civil litigation and criminal cases of past copyright disputes are helpful when dealing with copyright matters, the truth about the internet is that there is no precedent for this scale of a technological impact. The process of creating laws to manage this new technology efficiently while ensuring that copyright holders can make a living has always been the guiding principle of the copyright act. Justice Story was correct centuries ago when he phrased a copyright dispute as an “intricate and embarrassing question.” When you’re prosecuting someone for criminally violating a copyright infringement, you might be sending the person with the better business to jail for it.