|Saturday, June 19, 2004
DirecTV's legal strategies raise eyebrows
|The dispute centers around "smart-card technology," which can also be used legitimate ly. Critics say the company's 'guilt by purchase' approach is costing people untold sums of money.
By Jen McCaffery
Satellite television giant DirecTV has filed more than 65 lawsuits in the western part of Virginia for the alleged pirating of the company's programming and plans to file more, according to Stephen Test, an attorney for the company.
DirecTV has filed more than 24,000 lawsuits against people the company says have acquired and in some cases distributed devices to unscramble DirecTV's satellite television signals so they can get free programming, according to the Electronic Frontier Foundation, a civil liberties group in California.
Though a fair amount of the lawsuits around the country and in Virginia have been settled or dismissed, the penalties can be high in the cases that remain.
A handful of people have been prosecuted in Western Virginia for manufacturing descrambling devices, said David Burch, resident agent in charge of the Roanoke office of the FBI. The most recent prosecution was against a Patrick County man in 2001, Burch said.
And in what is believed to be one of the harshest judgments against a defendant in one of these cases, a federal judge this month ordered Tolbert Adkins of Buchanan County to pay $2.05 million for distributing 205 devices that could have been used to unscramble satellite signals.
Adkins, 49, said when he was reached for comment that he never saw a descrambling device until he was sued and saw one in his lawyer's office.
"I guess they just got my name somewhere," said Adkins. "I never ordered them. I reckon somebody else's credit card paid for them." He added that he isn't even a DirecTV customer, that he uses Dish Network, and said he pays for all of that service.
Similar in some ways to the recording industry's lawsuits against people for downloading or sharing music files in violation of copyright law, DirecTV's systematic campaign to protect its programming, which it says in court documents is worth billions, has also angered some of its customers and raised questions among some civil libertarians.
Some have turned the tables on the company. DirecTV now faces four class-action lawsuits and at least six other cases for malicious prosecution, according to California attorney Jeffrey Wilens, who is working on some of the cases.
"My thoughts are that DirecTV is losing the war because its fundamental premise, that everyone who buys a particular class of devices is a thief and should pay money to DirecTV," according to Wilens. DirecTV spokesman Robert Mercer did not return calls for comment.
At the center of the dispute is what is known as "smart - card technology" - devices such as bootloaders, unloopers, emulators and reprogrammers - that can be used to illegally intercept and descramble satellite signals for programming that people have not paid for. But some argue smart-card technology also can be used for completely legitimate purposes.
"Computer researchers, network administrators, engineers, and others are using smart-card technology in ways that are perfectly legal, yet DirecTV would have the courts adopt a theory of guilt by purchase," said Jason Schultz, a staff attorney for the Electronic Frontier Foundation in a press release. Smart-card technology is used in some credit cards, parking garages, and in some security cards, Schultz said.
Schultz also argued that in cases such as Tolbert Adkins', judges' and juries' "hands are tied," because Congress has set high penalties that do not correspond to the actual harm of the alleged offense.
Schultz described the penalties as "totally unrelated to the harm you do. It is totally unfair and quite out of proportion" when in many cases the defendant should really only owe DirecTV the equivalent of a few dozen dollars, he said.
Federal judge James Jones ruled earlier this month that Adkins should pay $2.05 million for the 205 "bootloaders" DirecTV says he bought from an Arizona Internet retailer. Adkins did not deny that he distributed the devices, according to the opinion.
But Jones said in the opinion that he agreed with defense attorneys' argument that the amount he ordered Adkins and three other defendants in the case to pay would "almost certainly bring financial ruin to most individuals living in Southwest Virginia," according to the opinion.
He added that he was constrained by federal law, which is written so that the distributors of illegal descrambling devices are punished more harshly than the people they distribute the devices to, according to the opinion.
Federal law says that people should be fined $10,000 for each time they intercept or steal satellite signals, Test said. The law also says they should pay $100,000 for each time they distribute a descrambling device, according to Best.
Jones also ordered the other defendants in the case to pay $820,000; $200,000; and $150,000, according to the opinion.
DirecTV argued that Adkins and the other defendants, Darrell Coleman, Elwood Dykes and Rex Rife, each bought illegal descrambling devices from Mountain Electronics, an Internet retailer in Arizona. Adkins said he doesn't know the other defendants.
DirecTV began its crackdown in 2001. Through legal action, the company successfully sued manufacturers and distributors of smart - card technology and shut them down, said Test, whose Virginia Beach law firm, Williams and Mullen, is representing DirectTV in all the federal lawsuits in Virginia and West Virginia. Through that process, DirecTV obtained records about people who had ordered the technology from the companies.
DirecTV then sent out more than 170,000 demand letters to customers from information it got from the manufacturers and distributors, requesting $3,500 in payment for the pirated programming, Schultz said.
Fifty-five defendants in 33 cases filed in the Western District of Virginia - several of them filed in the Roanoke area - have already settled, Test said. For a defendant who bought only one device, settlements have generally ranged from $4,000 to $7,000, according to Test.
But Test acknowledged that sometimes DirecTV pegged the wrong target and lawsuits get dismissed.
"Sometimes we have the wrong person, sometimes an adult child ordered something using a parent's credit card or computer," Test said. Other defendants have moved, can't be found, are poor or bankrupt, or have died, Test said.
"There are many different reasons," for DirecTV to drop cases, according to Test. "DirecTV is not interested in suing innocent people."