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Mark Traphagen, Criminal Copyright Infringement, 16 Ent. & Sports Law. 23 (1998).

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Criminal Copyright Infringement

e No Electronic Theft (NET) Act was law to meet the requirements of the 1996 WIPO
passed by Congress and signed into law by Copyright Treaty (WCT) and the WIPO Performances
the president in late 1997, and has since and Phonograms Treaty (WPPT). These treaties would
taken effect. The law amended Section 506 of the improve copyright and neighboring rights protection
Copyright Act and corresponding sections of the feder- for music, motion pictures, books, and computer soft-
al criminal code to prohibit commercial-scale copy- ware, and provide important new remedies against
right piracy as it takes place on the Internet. unauthorized tampering with technological measures
Under previous law, Section 506 made it a crime to that control access and copying of these works.
make or distribute infringing copies of a copyrighted On May 22, the Senate passed its version, S. 2037,
work, provided that the defendant did so willfully and by a vote of 99 to 0. The House passed its version, H.R.
for purposes of commercial advantage or private finan- 2281, by voice vote on August 3. The fundamental
cial gain. The effectiveness of this law was cast in structure and substance of both bills is very similar, but
doubt in late 1994, however, when a U.S. district court the legislative process has produced differences that
in U.S. v. La Macchia dismissed federal wire fraud must be reconciled before the DCMA can be sent to
charges against a computer bulletin board operator the president for signature.
accused of distributing $1 million in pirate software. Title I of both the House and Senate versions of the
The court speculated that he could not be prosecuted DCMA would implement the new WlPO obligations by
for criminal copyright infringement because no money prohibiting the unauthorized circumvention of techni-
had been exchanged. cal measures, such as encryption and passwords, used
The NET Act revised Section 506 to close this "La by copyright owners to control access to copyrighted
Macchia Loophole" in several ways. First, it clarified works. The DCMA would also prohibit the manufac-
that making and distributing infringing copies "by elec- ture and trafficking in devices and the offer of services
tronic means," such as Internet sites, where pirate soft- that are designed or marketed to disable such access or
ware and music are downloaded, can constitute a copy control technologies, or that have only a limited
crime. Second, by clarifying that private financial gain commercially significant purpose other than unautho-
encompasses "receipt of anything of value," including rized circumvention. These prohibitions would extend
the exchange of other copyrighted works, the NET Act existing remedies under federal law against unautho-
gave prosecutors confidence to shut down "barter rized descrambling of cable and satellite television pro-
boards," through which pirate copies are openly trad- gramming. Such remedies are required by the WIPO
ed. Finally, the NET Act enables prosecutors to pursue treaties, and are considered by copyright owners to be
willful commercial-scale copyright vandals, even in the essential to building confidence in electronic com-
absence of private financial gain, if they make or dis- merce in copyrighted works.
tribute infringing copies with a value of over $1,000. Since H.R. 2281 was introduced by Judiciary
As this report is written, federal prosecutors had not Subcommittee Chairman Howard Coble (R. N.C.) in
yet brought an indictment relying on the amendments July 1997, these anticircumvention measures have
made by the NET Act. In the meantime, as required by been criticized by consumer electronics manufactures,
the NET Act, the U.S. Sentencing Commission is revis- library representatives, and others who sought excep-
ing its guidelines for federal judges to increase penal- tions to the prohibitions for activities as varied as
ties for criminal copyright infringement, and preparing reverse engineering of computer programs, privacy
to accept victim impact statements from copyright protection, broadcasting encryption testing, and
owners who have suffered criminal infringement. pornography filtering. Although the exception for
reverse engineering is the same in both bills, other
WIPO Copyright Treaty solutions fashioned for these concerns in the House
The most important pending legislation regarding and Senate versions of the DCMA are different in sub-
copyright and electronic commerce are H.R. 2281 and stance and emphasis.
S.2037, the House and Senate versions of the Digital One such example is encryption testing, which
Millennium Copyright Act, which would revise U.S. (continuedon page35)


limitations are not required by the WIPO treaties,
LEGISLATVE UPDATE telecommunications interests successfully opposed the
(continuedfrom page 23)
bills until an accommodation was reached with copy-
evaluates whether scrambling technologies used to right owners last March. As a result, the DCMA limits
the liability of service providers for the infringing acts
protect a work have flaws that make them vulnerable
of subscribers and other third parties, provided they
to piracy. While the Senate bill provides no exception
remove or block access to such infringements upon
to the anticircumvention remedies, the House bill per-
learning of them, or otherwise lack knowledge of or
mits computer scientists to do so subject to strict safe-
financial benefit from these infringements. These limi-
guards. The House bill also specifically permits users to
tations would also apply to infringing copies made
disable access control measures that collect personal
directly by Internet service providers in the course of
information without notice. Another difference is
routing and delivering copyrighted works, and for sys-
unauthorized circumvention by schools and libraries.
tem caching of such works.
Copyright owners fought very hard to prevent the "fair
The initiative lies with Senate Judiciary Committee
use" defense from being applied to unauthorized cir-
Chairnan Orrin Hatch and House Judiciary Committee
cumvention. The compromise reflected in the House
Chairman Henry Hyde, who will decide whether the
bill is a two-year delay in imposing liability for the act
DCMA is sent to the president this year.
of circumventing access control measures in that per-
mission. This postponement could be lengthened for Other Legislation
certain categories of works if federal government stud-
With election day just around the corner, the 105th
ies conclude that such liability would adversely affect
Congress is racing to complete pending legislation
otherwise lawful use of copyrighted works. This "sun-
before it adjourns in early October. On the docket are
rise" provision would not apply to remedies for traf-
bills that matter to the entertainment and sport indus-
ficking in devices or offering services for unauthorized
tries copyright protection, the Internet, and other new
circumvention. The House version of the DCMA has
technologies. Already finished is a bill that updates
several other provisions that are not in the Senate bill,
criminal copyright infringement for the Internet, but
such as legal protection for uncopyrighted databases
the future is still uncertain for bills that would lengthen
and the creation of a new Undersecretary of
the term of copyright protection.
Commerce for Intellectual Property.
The other major provisions of these bills providing Mark Traphagen is counsel to the Software Publishers
for limitations on remedies against Internet service Association in Washington, D.C He is the Assistant Edi-
providers for certain infringements are virtually identi- tor/Government Affairs of Entertainment and Sports
cal in the House and Senate versions. Although these Lawyer.

FROM TEE TO GREEN Brent Turley, an attorney,is president and generalcounsel

of Johnny Miller Design and Tournament Players Design.
(continuedfrom page 5)
He has representeda host of other golf professionals includ-
The course is financed by the issuance of tax exempt ing Seve Ballesteros,Craig Stadler,andLanny Wadkins.
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tive is lease/purchase financing, which requires a Endnotes
leasehold contract between the municipality and the 1. The National Golf Foundation, 1150 South U.S. Hwy 1, Jupiter,
lease/purchase finance entity. This results in a guaran- FL 33477. Tel. 888/NGF-2500. http://www.ngf.org
teed fixed-price turnkey golf course to be delivered to 2. Id.
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Conclusion 4. 221 N. La Salle Street, Chicago, IL 60601. Tel. 312/372-7090.
The golf course development business is exciting, Fax 312/372-6160. http://wwwl.golfweb.comlibrary/arch/asgca/
especially during this time of rapidly growing inter- 5. Provided by Michael Dingman and Dianna Almini with the
company of Environmental Golf, 24121 Ventura Blvd., Calibasas, CA
est in golf. Hopefully, this brief outline of the golf
91302. Tel. 818/223-8500.
course development and financing process will help 6. Provided by Richard Norton of the National Golf Foundation.
your developer/client enjoy the fruits of this positive See also ROBERT MUIR GROVE AND JEFFREY S. CORNISH, GOLF COURSE
business climate. DESIGN (1998).