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FIRM ARTICLES
July 29, 2005
Digital Piracy Why You Might Be a Pirate and Not Even Know It
By Colin McKibbin, Attorney at Law and Dan Rhoads
Music and movie bootleggers on street corners are as common in some cities as panhandlers, ticket scalpers, and jaywalkers. Unlike patrons of street vendors, computer or digital file sharers fail to understand the fact that they are breaking the law. Even less known than the governing laws are the vast networks of online pirates that have made a virtual blood sport of distributing illegally obtained files.
Spurred by the entertainment industry, which blames huge losses on piracy, legislatures are bringing down the ax on all levels of electronic piracy. The danger is that consumers can become unwitting defendants when the public does not understand the piracy laws and the actions that can be considered violations of those laws.
All types of media are susceptible to piracy. In fact, the federal laws against the sharing of computer files arose as a response to a situation at M.I.T., where a student created a bulletin board where users could postand downloadcopyrighted software such as WordPerfect and Excel (Schleimer). The laws passed in response were aimed at protecting copyright owners in the music, motion picture, and videogame industries.
Exclusive Rights and Fair Use
Federal law governs the legal questions surrounding copyright infringement since it is the federal government that issues and regulates copyrights.
The owner of a copyright of an artistic work, such as a motion picture or a song or a musical composition, is usually its creator. The copyright owner has the exclusive rights to reproduce the copyrighted work, to prepare derivative works based upon the copyrighted work, to distribute copies of the work to the public, and to perform or display the work publicly. 17 U.S.C. 106.
Fair use standards protect users of copyrighted material where the purpose is criticism, comment, news reporting, teaching . . ., scholarship, or research. 17 U.S.C. 107. Use is most likely legal when it is not for profit and does not affect the potential or actual market value of the work.
Infringement laws are based upon violations of the copyright owners exclusive rights.
Reproduction and Distribution
The channels through which digital files are spread on the Internet have only recently come to light. At the top of the pyramid of piracy are release groups, which are comprised of the most tech-savvy, secretive, paranoid online pirates out there (Healey), according to the MPAAs John Malcolm. Once an illegal copy reaches a release group, highly skilled technicians [are] responsible for compressing and packaging the media file (Howe).
The compressed files are then moved on to topsites, which are extremely secretive and exclusive. Outside of a pirate elite and the Feds who track them, few know that topsites exist (Howe). Couriers eventually transfer the files from the topsites to dump sites, where more people have access. Only then, after having been duplicated thousands of times, do the files reach the peer-to-peer networks.
Movies
Although the prevalence of high-tech methods of movie piracy is increasing, the traditional street-corner bootlegger is still in business.
One man sold mangos and hot dogs on the street before he turned to selling DVDs. He expected to sell up to 20,000 copies a week for $1 to $5 each. He sold the copies that he made at a wholesale price to vendors in downtown Los Angeles. When the LAPD raided his home, along with investigators from the Motion Picture Association of America (MPAA), they confiscated nearly 19,000 DVDs, a professional copy machine, 10 DVD burner towers, hundreds of spindles with master copies of films . . . and scores of blank DVDs.
Bootleggers like this risk prosecution under the No Electronic Theft (NET) Act of 1997. The NET Act prohibits infringement by the reproduction or distribution . . . during any 180-day period of . . . copyrighted works which have a total retail value of more than $1,000. 17 U.S.C. 506(a)(1)(B).
As part of the same operation, the police also arrested a woman, who allegedly downloaded the publicity art for the sleeve inserts. Her actions, if true, infringed the copyright of the artist(s) who conceived and/or created the design.
The old-fashioned method of videotaping a film while inside a theater still occurs today. About 90% of pirated movies are taped in theaters with camcorders (Piracy Suspect Claims Tapings Werent Illegal). One man would pose as an employee of the MPAA to get into pre-release screenings. After taping a movie, he then sold the DVDs internationally over the Internet, getting up to $100 apiece.
The Family Entertainment and Copyright (FE&C) Act of 2005 makes it a federal crime to use or attempt to use a video camera in a movie theater. 18 U.S.C. 2319B(a). A person convicted for this offense can be fined and/or imprisoned for up to 3 years on a first offense or 6 years for a subsequent offense.
Due to an emphasis on quality, the online movie pirates disfavor copies that have been recorded by camcorders. In general, they get their booty from one of three sources: industry insiders, projectionists, or agents placed inside disc-stamping plants and retail outlets (Howe).
Music
The NET Act makes it clear that file sharing is illegal. It prohibits copyright infringement for purposes of commercial advantage or private financial gain. 17 U.S.C. 506(a)(1)(A). The term financial gain has been expanded to include receipt, or expectation of receipt . . . of other copyrighted works. 17 U.S.C. 101. Anyone still using P2P networks to share copyrighted files violates this law.
Also, if a concertgoer records, transmits, or distributes a taping of a live performance for purposes of commercial advantage or private financial gain, he or she is violating federal law, unless the performer has consented to the recording. 18 U.S.C. 2319A(a). Anyone who traffics in illegal recordings of live performances can be fined and imprisoned for up to 5 years for a first offense or 10 years for a subsequent offense.
Videogames
In 2004, digital pirates hacked into Valves corporate server and obtained a version of Half-life 2. As the file trickled down through topsites and into dump sites, One file became 30 files became 3,000 files became 300,000 files as Valve stood helplessly by watching its big Christmas blockbuster turn into a lump of coal (Howe).
If caught, the perpetrators of this scheme could be charged under the NET Act. The Act criminalizes the distribution of a work being prepared for commercial [release] by making it available on a computer network accessible to members of the public, if [the actor] knew or should have known that the work was intended for commercial distribution. 17 U.S.C. 506(a)(1)(C). A violator can be fined and imprisoned for as many as 10 years if the violation is not his first. 18 U.S.C. 2319(d).
RICO Risk
The Racketeer Influenced and Corrupt Organizations (RICO) Act has been amended to encompass organized copyright infringement. 18 U.S.C. 1961(1)(B). Clearly, release groups and the people associated with them can be charged with RICO violations. 18 U.S.C. 1962(c). It also appears that groups of file sharers formed on P2P networks come within the scope of RICO.
Costs
The MPAA estimates that piracy annually costs the industry $3.5 billion. The Recording Industry Association of America (RIAA) claims that its loss to global piracy is $4.2 billion a year. The revenue loss translates directly into lay-offs, beginning with the most expendable workers.
Conclusion
To protect the industries that thrive on the production of intellectual property, the government has shown an increased seriousness in policing digital piracy. Users of widely available online services find themselves confused by the prospect of prosecution. What seemed an innocuous form of good, clean fun at the turn of the millennium is now being treated as a serious federal crime.
Anyone who shares copyrighted files on a P2P network must understand that that conduct is every bit as illegal as buying a bootleg copy of a DVD or CD from a street vendor. Those who have used P2P networks illegally should be aware that the statute of limitations under the NET Act is 5 years. The best way to avoid prosecution is to conform with the law as soon as possible.
The federal law is complex, and involves many rules and requirements that the novice, or inexperienced, attorney would not know or understand. Even an attorney familiar with a particular practice in a state criminal court may not be familiar with the federal courts procedures. If a prosecutor exercises his discretion and chooses to file charges in the federal court, it is wise to consult an attorney who can advise on the best way to proceed. In some instances, an attorney can get involved in the investigative phase to assist prior to the filing of charges. In some instances, obtaining legal counsel early on in the legal process can assist someone in minimizing the potential consequences of these devastating laws.
Works Cited: Jon Healey, Digital Piracy Raids Net Arrests, Los Angeles Times, 1 July 2005, at C10.
Jeff Howe, The Shadow Internet, Wired Magazine, issue 13.01.
Lorenza Munoz, 3 Arrested in DVD Piracy Raid, Los Angeles Times, 15 June 2005, at C2.
Lorenza Munoz & David Rozensweig, Motion Picture Bootlegger Convicted, Los Angeles Times, 30 June 2005, C1. Piracy Suspect Claims Tapings Werent Illegal, Los Angeles Times, 22 June 2005, C2.
Joseph Schleimer & Kenneth Freundlich, Criminal Prosecution of On-line File-sharing, Journal of Internet Law, August 2001.
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