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Communications of the ACM
Legally Speaking: the Promise and Problems of the No Electronic Theft Act
Advances in technology have always caused difficulties for societies. Frequently, the reaction is a quick call for new laws. When these laws are criminal in nature, the liberties of individuals can be held hostage for economic concerns.
The information age has generated its share of new statutes, many of them criminal. By and large, they address legitimate concerns and proscribe wrongful conduct. However, their scope and breadth give challenge to notions of fair play and reasonableness, and raise questions of the deliberate advancement of ulterior agendas. One of these new laws give a firm basis for such concern: the No Electronic Theft (NET) Act.
This column will examine how the NET Act goes beyond what is justified, and why a call to the technical community to prevent similar excesses in future laws is needed.
The NET Act: Origins and Purpose
Intellectual property can be reduced to digital form, and digital information can be disseminated globally by fiber optics and cable at little cost to those involved. The Internet as the ubiquitous copying machine gave rise to a demand from the software and media industries that such action be punished when the information disseminated was protected by copyright, regardless of whether the distributor intended to gain financially or commercially. Until recently, the Copyright Act supplied civil, but not criminal penalties for such conduct.
United States vs. LaMacchia, filed in the District of Massachusetts federal court, was a test case brought by the Department of Justice. The indictment sought criminal penalties under the general conspiracy and wire fraud statutes for the alleged conduct of the defendant, David LaMacchia. LaMacchia, a college student, was charged with causing the distribution of copyrighted software by means of the Internet, to the financial detriment of the owners of the copyrights of the works distributed. The indictment was struck down by U.S. District Judge Richard Stearns in a strongly worded opinion that made it clear: for constitutional reasons, any criminal charge of a copyright violation must be brought under the copyright laws, and cannot be brought under general federal criminal laws.
The government's response to this ruling was the enactment of the NET Act. Its purpose appears noble enough: in essence it criminalizes the dissemination of copies of copyrighted information by electronic means. However, when analyzed under the twin microscopes of the legal rules of statutory construction and the technical understanding of how things work, two serious problems with the Act become glaringly apparent.
Under the First Amendment, it cannot be denied that a collateral to the right to publish is the right to read what is published.
Scope of the Act
The first problem is the scope of the statute. Prior to the amendment, the pertinent parts of the criminal provisions of the Copyright Act follow:1
- Any person who infringes a copyright willfully and for purposes of commercial advantage or private financial gain shall be punished as provided [elsewhere in the criminal code].
The NET Act amended this language to read as follows:2
- Any person who infringes a copyright willfully either
- (1) For purposes of commercial advantage or private financial gain; or
- (2) By the reproduction or distribution, including by electronic means, during any 180-day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000, shall be punished [as provided elsewhere in the criminal code].
The term "infringes a copyright" has had, until the instant amendment, a well-understood meaning, specifically, that someone had made an unauthorized "fixed," or nontransient, copy of a copyrighted work. Ostensibly, the purpose of the NET Act and its addition of the new prohibition found in the second clause was merely to establish a criminal punishment for a new means of infringing a copyright. This clause, however, goes beyond this limited purpose and introduces a change to the up-to-now, well- established definition of the term.
To make this change clear, compare the wording of the first clause with that of the second. The first creates the following prohibition: a person who "infringes a copyright willfully" for purposes of commercial advantage or private financial gain commits a crime.
The language of the second clause also results in a prohibition: a person who "infringes a copyright" willfully by the reproduction or distribution, including by electronic means of one or more copies of copyrighted works having a retail value of more than $1,000 commits a crime. A plain reading of this italicized wording of the second clause implies that the meaning of "copyright infringement" has been expanded. Now, in addition to such infringement occurring by means of a fixation, an infringement can occur by the mere distribution, by electronic means, of a copyrighted work, regardless of whether or not the work is ever printed on paper, downloaded onto a floppy disk, or even maintained on a hard drive. By a literal language of the amended statute, the mere viewing of a copyrighted work posted on the Internet is a copyright violation punishable by criminal penalties, whether or not there is a reproduction of that work.
Net browsing, in-and-of itself, is closer to the exercise of constitutionally protected free speech than it is to infringement of anyone's intellectual property. Under the First Amendment, it cannot be denied that a collateral to the right to publish is the right to read what is published. Might this, then, be an innocent accident in legislative drafting? Or was there, instead, a guiding hand somewhere in the background that intended an expansive redrafting? The history leading to the NET Act suggests the latter.
In 1995, the year before the passage of the NET Act, the Clinton administration issued a study formally called "Intellectual Property and the National Information Infrastructure: The Report of the Working Group on Intellectual Property." This was also known as the White Paper. The group responsible for the drafting of the White Paper was heavily represented by individuals overt in their support of the software, video, and music industries. The White paper took a position on the proper definition of the term "infringement" in the age of the Internet. Specifically, it argued that the mere viewing of copyrighted material over a computer network is an act of infringement.3 The rationale for this position is that viewing a document over a network requires a downloading of information into the receiving computer's memory; the consequential maintenance of this information in such memory is a "fixation," no matter how briefly the information may be stored, and regardless of whether or not such information was later copied or printed. In hindsight, it appears the inference can safely be drawn that the same pressures influencing the position found in the White Paper made their presence felt in the drafting of the NET Act.
Was such an expansive redefinition of "copyright infringement" necessary to satisfy the needs of the affected commercial industries? In short, the answer is no. A narrower and yet adequate means of protecting the interests of copyright holders would have been to model the new prohibition of the NET Act upon the general conspiracy statute. That statute makes it a crime to "conspire" to commit a crime against the U.S., or to conspire to defraud the U.S.4 The term "conspire" is defined to include an agreement or mutual understanding, tacit or express, to accomplish an unlawful plan.
As can be readily seen, the statute borders perilously close to criminalizing thought and mere speech. To draw a clear line around the proscribed conduct, and to insure that the First Amendment will not be infringed, this statute as enacted contains an additional requirement: one or more of the co-conspirators must commit an overt act. What this means in practice is that the government in any prosecution must not only prove that the co-conspirators talked about committing a crime, but that one of them actually went out and engaged in some conduct that was clearly in furtherance of carrying out the crime.
Similar protections could have been built into the NET Act in order to protect the legitimate First Amendment rights of individuals to read and discuss copyrighted works. First, in those instances where an intentional distribution of a copyrighted work has occurred by electronic means, the conduct could be held as criminal where one or more of several possible additional elements can be found to have occurred, such as:
- Where the electronic distribution occurred with the knowledge that it would deprive the copyright holder of financial benefit or commercial advantage of his copyright;
- In the case of executable software, where the electronic distribution occurred with the knowledge that the copyrighted work would be executed; and
- Where the electronic distribution occurred with the intent to destroy, damage, or impair the value of the copyright.
Second, in place of the suspect language found in the second clause, which reads, "by the reproduction or distribution, including by electronic means," the clause should have been drafted separately from the first. It should then have been written in a manner similar to the following:
A person who willfully and through electronic means reproduces or distributes a copyrighted work, and who engages [in one of the aforementioned additional elements], infringes the copyright of such work and is punishable [as provided elsewhere in the criminal code].
The question might be asked: Is all lost? That is, has fixation as we knew it until the NET Act came along irretrievably gone? Fortunately, there is hope. The argument exists that Congress did not intend to expand the meaning of the term "copyright infringement." In the same Congress that enacted the NET Act, there were also two bills introduced, H.R. 2441 and S. 1284, which would have explicitly amended this term in the manner in which the NET Act seems to do only implicitly. It remains possible that the courts, when eventually faced with this issue, will look to the decision of Congress to reject these attempts to explicitly broaden the definition of "copyright infringement" as a clear signal that Congress did not, in fact, do the same with the NET Act. What remains unfortunate is that we must leave it to the courts to protect what should never have been put at risk.
Punishment Under the Act
There is another troublesome aspect of the NET Act, arising from the punishment provisions applicable to the second clause. Put briefly, a person who electronically reproduces or distributes copyrighted works having a retail value of $1,000 or more may be convicted of a misdemeanor, and someone who commits the same offense where the copyrighted works have a retail value of $2,500 or more may be convicted of a felony.5
Under the best of circumstances, using retail value is an inappropriate and dangerous standard for pricing intellectual property. Particularly for software, there is a tremendous disparity between the official retail price set by a vendor, and a realistic street value. Further, the functional value of intellectual property can depreciate drastically over a short period of time, as engineering advances swiftly redefine the meaning of the "state of the art" for computer technology. Finally, unique or specialized intellectual property may not have a value that can be easily determined. A concrete example of this last difficulty resulted in a federal prosecution being dismissed during the middle of trial.6 In this case, a systems manual, valued by the "victim" company at approximately $80,000, was found to be available to the public in substantially the same form for the price of $13. It is anything but reassuring to know that the vagaries of this unstable and somewhat illusionary concept of "retail value" may determine whether an individual will or will not be subject to a criminal prosecution?
In the same vein, the distinction between $1,000 and $2,500 is, under the best of circumstances, much too minor to determine whether a conviction should be a misdemeanor or a felony. Few criminal statutes have such a narrow gap, with most requiring a threshold of $5,000 or $10,000 before a felony prosecution can be considered. Furthermore, many of these other statutes were enacted decades ago, when $5,000 was much more valuable than it is today. It seems difficult to justify a felony conviction, with the concomitant loss of civil liberties, the risk of jail time, and the destruction of reputation and career, on a retail value of $2,500.
The misdemeanor threshold of $1,000 poses its own difficulties. The provable conduct of few, if any defendants, will fall between $1,000 and $2,500. For this reason, individuals will typically be threatened with felony prosecutions. The real-world effect of the narrow monetary gap between a misdemeanor and a felony offense will be wholesale plea bargaining: defendants will rarely risk a felony prosecution if they can avoid one by pleading guilty to a misdemeanor. Furthermore, prosecutors will be encouraged to bring weak cases under the Act, knowing they will be readily able to resolve such cases by offering defendants misdemeanors in lieu of felonies in plea deals. The ultimate result will be questionable prosecutions brought and resolved by plea bargaining, with misdemeanor plea deals accepted by persons not because they are guilty, but because they fear the risks they will take if they insist on asserting their constitutional right to trial in order to establish their innocence.
Conclusion
The NET Act as enacted chills legitimate conduct and over-punishes questionable conduct. However, what must be asked is not so much what is wrong with this Act, but rather how the political process produced it. The NET Act is but the first of a series of new laws that have been enacted, and will continue to be enacted, in response to legitimate threats to commercial interests arising in the information age. The technological community, which gave birth to this age, must recognize it has a responsibility to educate Congress on the full implications of the new laws it considers.
Footnotes
117 U.S.C. 506(a) (amended 1990).
217 U.S.C. 506(a) (as amended 1997).
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