Dish Networks LLC, et al. v. Ward

Court grants plaintiffs’ motion for summary judgment relating to DMCA and Communications Act claims for distributing software that allows unlawful free access to plaintiffs’ satellite service, holding that satellite television piracy software distributed by defendant is both a “device” and “equipment” within the meaning of § 605(e)(4) of the Communications Act.

Plaintiff DISH Network L.L.C. provides video, audio, and data services via a direct broadcast satellite system to more than 13 million subscribers throughout the United States. Plaintiff EchoStar Technologies L.L.C. designs and distributes receivers and other equipment for the DISH Network System. Plaintiff NagraStar L.L.C. provides smart cards and access control software that prevent unauthorized viewing of DISH Network programming. Plaintiffs moved for summary judgment on Counts I and III of their Amended Complaint against defendant Robert Ward. These claims were, respectively, a claim under the Digital Millennium Copyright Act (DMCA) and a claim under § 605(e)(4) of the Communications Act (Title 47 U.S.C.).

In their Amended Complaint, plaintiffs alleged that Ward, operating under the online aliases “Thedssguy” and “Veracity”, offered piracy software for others to download and use. This piracy software was designed to be used with free-to-air satellite receivers, which normally are only capable of receiving unencrypted, freely available satellite transmissions. The piracy software Ward allegedly distributed effectively converted free-to-air receivers into DISH Network-capable receivers, allowing users to descramble encrypted DISH Network programming and view it without paying for it.

On July 9, 2009, a federal grand jury in California indicted Ward, charging him with one count of conspiracy to violate the DMCA. After the F.B.I. arrested Ward in Florida on July 13, 2009, he pleaded not guilty at his arraignment before the USDC for the Southern District of California. When Ward’s deposition was taken in the DISH Network case on August 6, 2009, he asserted his privilege under the Fifth Amendment, refusing to answer most questions on the grounds that his answers would incriminate him. On October 14, 2009, Ward entered a guilty plea in the criminal case against him. Pursuant to a Joint Motion, the parties in the DISH Network case agreed to stay the trial in this action until after Ward’s sentencing. As the court noted, this stay had no effect on its determination of plaintiffs’ motion for summary judgment on Counts I and III. The court also noted that, although it was entitled to draw an adverse evidentiary inference based on Ward’s refusal to testify at deposition, it relied principally on the independent factual record, which was presented by the plaintiffs.

Analyzing plaintiffs’ DMCA claim, the court noted that 17 U.S.C. § 1201(a)(2) “prohibits persons from providing or offering to the public any technology that satisfies one of three criteria: (1) the technology is designed or produced for circumventing a measure that controls access to copyrighted work; (2) the technology has only limited commercial purpose or use other than for circumventing an access control measure; or (3) the technology is marketed for use in circumventing an access control measure.” The court stated that the record reflected that the DISH Network security system is an access control measure under the DMCA and that Ward offered and provided software designed to circumvent that security over the internet. The court also stated that the software files Ward provided allowed users to circumvent DISH Network’s security system and that those files had no other commercially significant purpose or use. As Ward failed to produce evidence to rebut plaintiffs’ evidence, the court granted summary judgment for plaintiffs on their DMCA claim.

Considering plaintiffs’ Communications Act claim under 47 U.S.C. § 605(e)(4), the court stated that the question of whether piracy software is a “device” or “equipment” within the meaning of the statute was a matter of first impression. Section 605(e)(4) bars any person from, inter alia, distributing “any electronic, mechanical, or other device or equipment . . . primarily of assistance in the unauthorized decryption of satellite cable programming . . . .” Plaintiffs argued that the piracy software Ward distributed is both a “device” and “equipment” within the meaning of the phrase “any electronic, mechanical, or other device or equipment.” The court agreed that the plain meanings of the terms “device” and “equipment” include software. The court also found it persuasive that a definition of “telecommunications equipment” applicable to § 605(e)(4) includes “software integral to such equipment,” that several state statutes modeled on § 605(e)(4) support the meaning of “device” as including software, and that criminal prosecutions for distribution of piracy software are brought under § 605(e)(4). Having found piracy software to be within the meaning of § 605(e)(4), the court found, as required by the statute, (1) that Ward distributed piracy software on internet websites and (2) that the software was “primarily in assistance of unauthorized decryption” of DISH Network programming. Accordingly, the court granted summary judgment for plaintiffs on their Communications Act claim.

Turning to remedies, the court first addressed the issue of statutory damages. The court determined damages under the DMCA, finding the facts of the case more relevant to that statute than to the Communications Act. The court calculated damages totaling $51,148,200, based upon the minimum amount allowed under the statute for each act of piracy ($200) and 255,741 piracy software downloads. Next, the court permanently enjoined Ward from “creating or distributing any form of technology that is designed for, primarily used for, or marketed for circumventing the DISH Network security system” and from “engaging in any form of circumvention or interception with respect to DISH Network’s security system or satellite signal.” Finally, the court awarded plaintiffs attorneys’ fees and costs.