Splits Noted: Issues concerning the Piracy of Encrypted Satellite Television Signals

• Does 47 U.S.C. § 605(e)(4) Apply to end-users of Piracy Devices?
• Does a District Court Have Discretion Not To Award Damages For Piracy of an Encrypted Satellite Signal Under the Wiretap Act?

Per DIRECTV, Inc. v. Rawlins, 2008 WL 1777856, *7-*10 (4th Cir. Apr. 21, 2008)

With the coverage of this case, this blog has now covered a case from every circuit court capable of creating or noting a circuit split. It has also had visitors from every inhabited continent, and over 1,300 unique visitors. The most visitors continue to come from the U.S. Courts. I want to thank again those who have helped me start up, particularly Appellate Law & Practice, California Blog of Appeal, Decision of the Day, Obsidian Wings, Sentencing Law & Policy, and Southern Appeal. Please visit those blogs (links on the side) to help me thank them.

DIRECTV has been vigilant in pursuing actions against those who pirate its satellite television signal, instituting legal action against more than 25,000 defendants (see here). It commenced the instant action against defendant Rawlins after discovering evidence that he had purchased five devices enabling Rawlins to watch DIRECTV programming without paying for a subscription. DIRECTV alleged violations of the Cable Act and the Wiretap Act. After Rawlins failed to appear, DIRECTV moved for default judgment including a permanent injunction, statutory damages, attorneys’ fees, and costs. The district court granted summary judgment, entered an injunction, awarded DIRECTV costs and fees, but denied statutory damages under either Act. DIRECTV only appealed the denial of damages under the Wiretap Act.

Nonetheless, Judge Duncan considers the history and provisions of both acts as they apply to this case. The Cable Act proscribes the unauthorized reception of an encrypted satellite signal by end users, 47 U.S.C. § 605(a), and the manufacture, assembly, modification, importation, exportation, sale, or distribution of piracy devices or equipment, 47 U.S.C. § 605(e)(4). The former provision is punishable by statutory damages of not less than $1,000 and not more than $10,000, whereas the latter provision is punishable by statutory damages of not less than $10,000 and not more than $100,000. 47 U.S.C. § 605(e)(3)(C)(i)(II). Any award of damages is subject to the discretion of the district court.

The panel, unanimous on this point, notes that the circuits have split on the question of whether § 605(e)(4) may be applied to end-users (CA 4,5) or is limited to upstream manufacturers (CA 9, several district courts). In this case, the district court denied summary judgment to DIRECTV on its claim under § 605(e)(4), finding that that section was limited to upstream manufacturers. Even though the trial judge did not mention the contrary Fourth Circuit precedent on this issue, the panel does not address it because DIRECTV did not appeal the failure to award damages under the Cable Act.

Pirating a satellite signal also violates the Wiretap Act, which forbids the interception of any wire, oral, or other electronic communication. 18 U.S.C. § 2511(1)(a). Like the Cable Act, the Wiretap Act provides a civil remedy to those harmed by violations of its provisions. 18 U.S.C. § 2520. The statute provides for mandatory damages for the piracy of non-encrypted satellite communications in an amount ranging from $50-$1000. 18 U.S.C. § 2520(c)(1). For the theft of encrypted satellite communications, the statute provides for discretionary statutory damages in amount of $10,000 or $100 per day for each day of violation, whichever is greater. 18 U.S.C. § 2520(c)(2).

As this case concerns the piracy of DIRECTV’s encrypted signal, the latter provision applies. Judge Duncan notes that, despite the statute’s permissive language (“may”), the circuits have split over whether the award of damages under § 2520(c)(2) is discretionary. The CAs 4,6,8,11 all hold that it is discretionary, whereas the CA 7 requires a court to award damages.

Having thus concluded that the decision to award damages under either act lies within a district court’s discretion, the panel concludes the trial judge in this case abused his discretion by considering legally irrelevant factors. It therefore remands to the district court to consider whether damages under the Wiretap Act would be appropriate in light of the relevant concerns.