Piracy indictments to test DMCA's clout

The defendants allegedly created software and hardware designed to unscramble transmission signals sent by satellite TV operators, such as DirecTV and Dish Networks, said James Spertus, an assistant U.S. attorney with the computer crimes section of the U.S. Attorney General's Office for the Central District of California.

The defendants allegedly sold or distributed free software and hardware to hundreds of thousands of people, giving them free access to paid subscription satellite TV services, Spertus said. The satellite TV industry and the Motion Picture Association of America lose millions of dollars from piracy, he noted.

Seventeen defendants were indicted in all, but only six were charged under the criminal antidecryption provisions of the 1998 Digital Millennium Copyright Act (DMCA). The 11 others were charged with breaking federal laws against conspiracy and manufacturing devices for the purpose of stealing satellite signals. The DMCA-related charges were unsealed Tuesday and marked only the second time a grand jury has issued indictments involving the act.

The first case involved the highly publicized arrest of Russian encryption expert Dmitry Sklyarov, and eventual charges against his company, ElcomSoft, which published software capable of cracking the antipiracy protection of e-books. Ultimately, a jury acquitted the company.

"The message we're trying to send out is we have infiltrated the hacking community," Spertus said. "There is massive theft going on, with satellite signal providers as the victims...The FBI investigation into this rampant theft is still ongoing."

Under section 1201 and 1204 of the DMCA, it's generally considered unlawful to circumvent technology that limits access to copyrighted work, or to sell a device to perform such a task. Punishment for violating the statute is a maximum of 5 years in prison and a $500,000 fine.

Critics of the DMCA argue that aggressive applications of the act go beyond bringing copyright laws into the digital age and instead quash free speech and stifle innovation.

The six individuals indicted on DMCA-related charges are:

• Jason Hughes, 19, of North Carolina. Hughes agreed to plead guilty to developing software to circumvent DirecTV smart cards, and to selling it for $50,000.

• Edward Vanderziel, 35, of Ontario, Calif., also indicted on charges of conspiracy and manufacturing signal theft devices.

• Michael Whitehead, 37, of Boca Raton, Fla., also indicted on charges of conspiracy and manufacturing satellite signal theft devices for nationwide sale.

• Peter DeForest, 30, of Seadrift, Texas, also indicted on charges of manufacturing satellite signal theft devices and "unloopers" to sidestep smart cards.

• Linh Ly, 38, of Rosemead, Calif., agreed to plead guilty to violating the DMCA and distributing hardware that ultimately resulted in a loss of slightly more than $560,000 to DirecTV and Dish Network.

• Richard Seamans, 52, of Chino Hills, Calif., also indicted on charges of distributing decryption devices.

Trial dates are expected to be set within the next 70 days, Spertus said.