Author: Vinita Kailasanath
DirecTV, Inc., a satellite programming provider, sued two end-users of pirating technology, Hoa Hunyh and Cody Oliver. Defendants failed to appear or otherwise respond to the complaints. DirecTV claimed violations of the Federal Communications Act (FCA) and Electronic Communications Privacy Act (ECPA) for defendants’ alleged purchase of an unlooper for illegally modifying DirecTV’s access cards. The individual end-users removed and inserted DirecTV’s previously disabled access cards into DirecTV's receivers after restoring the cards using an unlooper. By doing so, they were able to intercept DirecTV’s satellite signals and access DirecTV’s programming.
In DirectTV, Inc. v. Huynh, No. 04-cv-3496-CRB and DirecTV, Inc. v. Oliver, the United States District Court for the Northern District of California, Judge Breyer, and Judge Armstrong, respectively, granted default judgment as to DirecTV’s ECPA (18 U.S.C § 2520(a)) claims, denied default judgment on its FCA claim (47 U.S.C. § 605(e)(4)), and declined to reach the issue of liability under FCA section 605(a). DirecTV appealed. The United States Court of Appeals for the Ninth Circuit examined and affirmed both decisions, although it found that the Oliver court “abused its discretion by reading out of the statute the terms ‘assembles’ and ‘modifies’ in requiring allegation of sale or distribution in order to establish a violation of subsection (e)(4).” The Court of Appeals held that end-users’ removal and insertion of previously disabled access cards into provider’s receivers was not “assembly” of pirating devices under the FCA; end-users’ programming and reprogramming of access cards was not “modification” of devices primarily used to assist piracy under the Act; and section 605(e)(4), which penalizes those who manufacture, assemble, modify, or distribute piracy devices, does not apply to individual end-users.
The court held that the end-users’ insertion of modified access cards into DirecTV receivers did not constitute “assembly of piracy devices” as the term is used in subsection (e)(4) and therefore did not violate the FCA provision penalizing manufacture, assembly, modification, or distribution of piracy devices. Such an interpretation would collapse the FCA’s two-tiered approach authorizing harsher penalties ($10,000-$100,000) for pirates motivated by commercial gain and lesser penalties ($1,000-$10,000) for end-users of piracy devices for individual personal use. Reading the statute as DirecTV insisted would mean that even minimum actions for interception would have been subject to harsher penalties under the FCA and rendered section 605(a), regarding individual use of a piracy device to intercept signals, redundant.
The court also held that end-users’ programming and reprogramming of DirecTV’s previously disabled access cards by purchasing unloopers did not constitute “modification” of piracy devices in violation of the FCA. DirecTV’s access cards are not devices “primarily of assistance” in piracy, but rather anti-piracy devices integral to DirecTV’s subscription process and used in every legitimate DirecTV system.
Finally, the court held that the provision of the FCA that penalized pirates who manufacture, assemble, modify, import, export, sell, or distribute any device or equipment knowing that it is primarily of assistance in unauthorized decryption of satellite cable programming or direct-to-home satellite services, does not apply to end-users who employ such pirating technology for individual personal use. Section 605(e)(4) only applies to those who make piracy devices for commercial purposes.
Judge Siler, a Senior Circuit Judge for the Sixth Circuit sitting by designation, filed a dissenting opinion finding that the district courts had erred in determining that section 605(e)(4) does not apply to individual use. The text of the statute does not explicitly limit its application to manufacturers and sellers, thus section 605(e)(4) is not limited to commercial use. He also noted that the majority’s holding was at odds with decisions of the Second, Fourth, and Fifth Circuits.