Rulings against DirecTV's legal tactics upheld on appeal
12 September 2007 14:45 by vurbal Rulings against DirecTV's legal tactics upheld on appealA U.S. Federal Appeals Court upheld a lower court's refusal to grant a default judgement against two men accused of pirating DirecTV. The judgement, if granted, could have made each man liable for up 10,000 simply for inserting a reprogrammed smart card into their DirecTV receivers, and another $10,000 for modifying the cards. This doesn't shield them from up to $10,000 in damages for intercepting an encrypted satellite signal using modified smart cards, but does clearly draw a clear line between personal and commercial piracy penalties.
The original decision also noted that smart card itself doesn't qualify as a device "primarily of assistance in the unauthorized decryption of satellite cable programming, or direct-to-home satellite services" as the law requires. The card itself is primarily used by legitimate DirecTV customers to lawfully receive broadcasts.
In the court's opinion, one of the three judges involved in the 2-1 decision noted that DirecTV's original claim that simply inserting the removable smart card into a DirecTV receiver constitutes "assembling a piracy device" would, if upheld, blur the distinction between commercial and personal penalties.
According to an affadavit submitted to the court by former DirecTV employee John Fisher, he was hired by the company to Field phone calls from recipients of a letter that the satellite provider sent to people who had purchased smart card programming equipment. He said the letters were part of a campaign to threaten owners of smart card programmers, which could potentially be used in the pircy of DirecTV's signal, into paying thousands of dollars simply for owning the programming equipment. the recipients were selected from customer lists DirecTV obtained after lawsuits against companies selling equipment for pirating their signal.
According to Fisher, on one occasion he learned that the company was trying to force a settlement from someone who had only bought a plastic pouch that could carry a smart card programmer.
Two men who received the letters, Hoa Huynh and Cody Oliver, didn't respond by phone to them, and when taken to court didn't appear. However, the judges in the original cases disagreed with DirecTV's lawyers that there were grounds for decisions against them based on the statute regarding modification and distribution.
The Electronic Frontier Foundation (EFF) submitted a friend of the court brief in support of upholding the decision.
Sources: 9th Circuit Court of Appeals John Fisher's Affidavit EFF
In a ruling (PDF) issued yesterday, the Ninth Circuit Court of Appeals upheld a lower court ruling and concluded that reconfiguring a DirecTV access card in order to decrypt a satellite signal without paying for subscription does not constitute "assembly" or "modification" of satellite signal interception equipment. Related Stories
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Federal law prohibits production of satellite piracy devices and imposes strict penalties, which are spelled out in section 605(e)(4) of the Federal Communications Act. According to the Act, "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," faces fines of up to $500,000 and up to five years in prison for each violation.
The law also separately establishes fines of up to $2,000 and six months in prison for interception, and fines up to $50,000 and two years in prison for intercepting satellite signals for private financial gain, as described in 605(a).
The Ninth Circuit judges determined that using a device called an "unlooper" to activate hacked DirecTV satellite decryption card doesn't fall under 605(e)(4) because it isn't assembly or modification within the context of the law. In the decision, the judges state that 605(e)(4) is intended to punish those produce and sell satellite piracy devices, not individuals who simply reactivate hacked cards for the purposes of interception.
"Reading section 605 as a whole makes clear that Congress intended to treat differently individuals who played different roles in the pirating system," the decision states. "In contrast to subsection (a)€ targeting of individuals who use piracy devices to intercept satellite signals, subsection (e)(4) aims at bigger fish--the assemblers, manufacturers, and distributors of piracy devices."
This significance of this ruling stretches beyond the scope of satellite piracy. In a blog entry written today, Electronic Frontier staff attorney Jason Schultz (who argued the defendants' case before the court) explains how the judges' decision protects researchers. "Security researchers and computer scientists who assemble and modify these devices for purposes of educational research and innovation studies (but not to intercept TV illegally) will no longer have to worry about potential liability from vendors who don't like their results."
DirecTV's cold war with satellite hackers has been running for years. We have previously reported on past attempts by DirecTV to aggressively overreach the scope of law in an effort to crack down on signal piracy. The ruling issued yesterday by the Ninth Circuit will prevent signal pirates from facing excessive penalties for their crime by reaffirming the clear distinction established by Congress between commercially-motivated piracy enablement and mere signal piracy.