Cybertelecom Federal Internet Law & Policy An Educational Project

IP: Copyright: Enforcement: NET Act

"In December 1997, Congress passed the No Electronic Theft ("NET") Act, making it a criminal offense to distribute or to reproduce copies of copyrighted works, if not authorized to do so, regardless of whether the distributor was trying to profit from the activity.  The legislation was intended to fill a gap in the criminal copyright statute, highlighted in the dismissal of an indictment in United States v. LaMacchia, 871 F. Supp. 535 (D Mass 1994).

"In LaMacchia, an MIT student operated a BBS over the Internet that allowed anyone with a computer and modem to send to the BBS or acquire from the BBS copyrighted software programs.  His actions caused an estimated loss to copyright holders of over $1 million during the 6-week period the system was in operation.  The student could not be charged with violation of the criminal law protecting copyright, 17 U.S.C. § 506, because he was not acting "for commercial purpose or private financial gain,' an element of the criminal copyright offense.  Instead he was charged with conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1343.  The district court dismissed the indictment, finding copyright law to be the exclusive remedy for protecting intellectual property rights from this kind of theft, even while recognizing that the existing copyright law failed to cover this conduct.  The district court invited Congress to remedy this gap in the law, and Congress did so in the NET act.

"The NET Act creates a new criminal offense to cover the unauthorized distribution or reproduction of copies of copyrighted works, regardless of whether the distributor intends to profit from the activity.  See 17 U.S.C. § 506(a)(2); 18 U.S.C. § 2319(b)(2).  It establishes a felony, punishable by up to three years imprisonment, for reproducing or distributing, during any 180-day period, ten or more copies of one or more copyrighted works that have a total retain value of more than $2,500.  The NET Act also:

• Increases penalties for second or subsequent felony criminal copyright offenses;
• Extends the statute of limitations from three to five years, bringing it in line with most other criminal statutes
• Clarifies 'financial gain' to include the receipt of anything of value, including the receipt of other copyrighted works, to cover pirate operations that involve barter rather than cash transactions;
• Clarifies 'reproduction or distribution' to include electronic as well as tangible means;
• Extends victims' rights to allow the producers of pirated works to provide a victim impact statement to the sentencing court; and
• Directs the US Sentencing Commission to amend the Sentencing Guidelines for copyright and trademark infringement to allow courts to impose sentence based on the retail value of the good infringed upon, rather than the often lower value of the infringing good."

-- President's Working Group on Unlawful Conduct on the Internet, The Electronic Frontier: The Challenge of Unlawful Conduct Involving the Use of the Internet, Appendix I (March 2000)

Law

• Legislative History
• No Electronic Theft (NET) Act, Pub. L. No. 105-147, 111 Stat. 2678 (1997) codified at 17 U.S.C. § 506 and 18 U.S.C. § 2319 (signed into law Dec. 16, 1997).
• U.S. Sentencing Guidelines Manual§ 3E1.1.1 (2002).
• U.S. Sentencing Comm'n, No Elec. Theft Act: Policy Dev. Team Report 1 (1999)
• Hearings
• Implementation of the "Net" Act and Enforcement Against Internet Piracy: Oversight Hearing Before the Subcomm. on Courts and Intellectual Prop., House Comm. on the Judiciary, 106th Cong. (1999)
• Statement of Rep. Coble.
• Statement of Kevin DiGregory, Deputy Assistant Attorney General, Criminal Division of the DOJ).
• Copyright Piracy, and H.R. 2265, the No Electronic Theft (NET) Act: Hearings on H.R. 2265 Before the Subcomm. on Courts and Intellectual Prop. of the House Comm. on the Judiciary, 105th Cong. (1997)
• Statement of Sandra A. Sellers, V.P. of Intellectual Property Education and Enforcement for the Software Publishers Association
• United States v. LaMacchia, 871 F. Supp. 535 (D. Mass. 1994) (The Court referred to LaMachia’s unprosecutable behavior as "heedlessly irresponsible, and at worst as nihilistic, self-indulgent, and lacking in any fundamental sense of values.").

Enforcement

• Press Release, U.S. Department of Justice, Iowa Man Receives Two- Year Prison Sentence in Internet Software Piracy Conspiracy (Sept. 30, 2003).
• Press Release, U.S. Department of Justice, Man Admits to Distribution of Pirated Movies, Music, Computer Software and Games Worth Over $2.2 Million (Dec. 8, 2003)
• Press Release, U.S. Department of Justice, Federal Investigation Leads to Prosecution of Internet Software Pirate (Oct. 2, 2003)
• Press Release, U.S. Department of Justice, Massachusetts Man Pleads Guilty in New Hampshire Software Piracy Conspiracy (Dec. 19, 2003).
• Press Release, U.S. Department of Justice, Background on Operation Cyber Sweep--Examples of Prosecutions (Nov. 20, 2003)
• Press Release, U.S. Department of Justice, Arlington, Virginia Man Pleads Guilty to Distributing Pirated Software Over the Internet (Feb. 3, 2003).
• Press Release, U.S. Department of Justice, Arlington County Man is Sentenced to Federal Prison for Distributing Pirated Computer Software over the Internet (Apr. 25, 2003)
• Press Release, U.S. Department of Justice, N.J. Man Pleads Guilty in Federal Court to Stealing the Movie 'The Hulk' and Posting it on the Internet (June 25, 2003).
• Press Release, U.S. Department of Justice, Online Music Piracy Leader Pleads Guilty (Aug. 21, 2003)
• Statement of Facts, United States v. Shumaker, Criminal No. 03-326-A (E.D. Va. 2003).
• U.S. Department of Justice, Operation Buccaneer: The Investigation (July 19, 2002).
• Press Release, U.S. Department of Justice, Twelve "Operation Bandwidth" Software Pirates Enter into Group Guilty Plea (Dec. 18, 2003).
• Press Release, U.S. Department of Justice, Man Sentenced in Michigan for Offering Software Programs for Free Downloading on "Hacker Hurricane" Web site (Jan. 30, 2001)
• Press Release, U.S. Department of Justice, Federal Law Enforcement Targets International Internet Piracy Syndicates (Dec. 11, 2001).
• Fact Sheet, U.S. Customs Service, The "DrinkOrDie" Group: What is It? Who Are They? What is the DrinkOrDie Group? (Dec. 11, 2001)
• Press Release, U.S. Department of Justice, Man Pleads Guilty to Internet Piracy of Star Wars Film (Dec. 15, 2000).
• Press Release: U.S. Department of Justice, Defendant Sentenced for First Criminal Copyright Conviction Under the "No Electronic Theft" (NET) Act for Unlawful Distribution of Software on the Internet (Nov. 23, 1999).
• Press Release: U.S. Department of Justice, Virginia Man Pleads Guilty to Charges Filed Under the "No Electronic Theft" (NET) Act for Unlawful Distribution of Software on the Internet (Dec. 22, 1999).

Papers

• Brian P. Heneghan, The NET Act, Fair Use, and Willfulness--Is Congress Making a Scarecrow of the Law?, 1 Suffolk J. High. Tech. L. 27, 29 (2002).
• The Spring 1998 Horace S. Manges Lecture--The 105th Congress: Recent Developments in Intellectual Property Law, 22 Colum.-VLA J.L. & Arts. 269 (1998)
• Karen J. Bernstein, Net Zero: The Evisceration of the Sentencing Guidelines Under the No Electronic Theft Act, 27 New Eng. J. on Crim. & Civ. Confinement 57, 63 (2001)
• Joseph F. Savage, Jr. & Kristina E. Barclay, When the Heartland is "Outside the Heartland:" the New Guidelines for NET Act Sentencing, 9 Geo. Mason L. Rev. 373, 377 (2000)
• Karen J. Bernstein, The No Electronic Theft Act: The Music Industry's New Instrument in the Fight Against Internet Piracy, 7 UCLA Ent. L. Rev. 325, 326 (2000)
• Kevin M. Kelly, Comment, The MP3 Challenge: Has Congress Effectively Shielded the Music Recording Industry from Internet Copyright Piracy?, 18 Temp. Envtl. L. & Tech. J. 163, 189 (2000)
• Shahram A. Shayesteh, High-Speed Chase on the Information Superhighway: The Evolution of Criminal Liability for Internet Piracy, 33 Loy. L.A. L. Rev. 183 (1999)
• Lydia P. Loren, Digitization, Commodification, Criminalization: the Evolution of Criminal Copyright Infringement and the Importance of the
  Willfulness Requirement, 77 Wash. U. L. Q. 835, 861-62 (1999).
• Stephanie Brown, The No Electronic Theft Act: Stop Internet Piracy!, 9DePaul-LCA J. Art & Ent. Law & Pol'y 147, 162-63 (1998)
• Letter from Dr. Barbara Simons, Chair, U.S. Public Policy Committee, Association For Computing, to President William J. Clinton (Nov. 25, 1997).

News

• Declan, DOJ to Proseute file swappers, ZDNet ( August 20, 2002 ).