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 What Is The No Electronic Theft Act?

The No Electronic Theft (NET) Act focuses primarily on the illegal distribution of intellectual property over the Internet. Before the 1997 NET Act, copyright infringement only occurred when an individual or business willfully abused someone else’s registered copyright for commercial advantage or private financial gain. Under the NET Act, you may be convicted of a federal crime even if you act without a commercial purpose or receive no private gain.

The NET Act: Why Is it Necessary?

As far back as 1994, a college student named David LaMacchia got away with what authorities called copyright infringement.

A copyright infringement occurs when someone reproduces or distributes content they do not own. LaMacchia, who was a student at MIT at the time, created an electronic bulletin board called Cynosure.

LaMacchia encouraged users to upload copyrighted software to Cynosure, where other users could download it for free.

Authorities arrested LaMacchia for facilitating the distribution of software he did not own, but they were in for a surprise. As the existing law did not provide for prosecution of those who failed to profit from their infringement, LaMacchia’s case was dismissed.

Because LaMacchia did not make any money from the website (despite music and software companies claiming they lost more than $1 million in the U.S. alone as a result of LaMacchia’s site), he could not be prosecuted.

That was before 1997. A lack of prosecution and the court’s encouragement to make non-commercial infringements a crime led Congress to pass the No Electronic Theft Act.

Merely uploading and downloading files on the Internet did not meet the requirement for criminal copyright infringement prior to the NET Act in 1997, so even large-scale online infringement could not be prosecuted.

As an example of this, LaMacchia was unsuccessfully prosecuted in 1994 for facilitating massive copyright infringement as a hobby without any commercial motive. The court dismissed United States v. LaMacchia because then-existing criminal law did not apply to non-commercial infringements (referred to as the “LaMacchia Loophole”).

Through the NET Act, Congress enacted legislation making some non-commercial infringements crimes.

In addition, the NET Act extends the definition of “commercial advantage or private financial gain” to include “receiving, or expecting to receive, anything of value, including other copyrighted works” (17 USC 101) and specifies prison sentences of up to five years.

Additionally, it added a threshold for criminal liability for infringements where the infringer did not obtain any value from the infringement – “by reproducing or distributing, including using electronic means, during any 180-day period, one or more copies of 1 or more copyrighted works, which have a total retail value of more than $ 1,000” (17 USC 506(a)(1)(B)).

The U.S. Sentencing Commission toughened intellectual property sanctions in response to the NET Act.

What Is a Violation of the NET Act?

Online piracy has serious criminal and civil consequences. Under the NET Act, you may not reproduce, distribute, or share copies of electronic copyrighted works (such as songs, movies, games, or software programs).

According to the NET Act, you may face charges if you:

  • Distributed copyrighted files over the Internet;
  • Uploaded copyrighted software to a Web site; or
  • Provided information regarding the availability of the uploaded and copyrighted software.

How Will I Be Penalized for Violating the NET Act?

Your actions may be criminally punishable under the NET Act, and you could be required to:

  • Serve a maximum penalty of five years in prison, or ten years if the offense is your second;
  • Pay a maximum criminal fine of $250,000; and
  • Face civil liability and pay damages of up to $150,000 per work infringed, actual damages, or lost profits (whichever is greater).

In addition to the penalties described above, guilty defendants in recent NET Act violators have been sentenced to:

  • Home confinement;
  • Probation;
  • Internet restrictions; and
  • Community service.

Online Piracy: What Are the Consequences?

Because of the nature of the Internet, it is difficult to catch online piracy. If you are caught, you may be punished as follows:

  • Litigation for copyright infringement that may result in heavy fines
  • Federal agencies raiding, searching, and seizing your property
  • When you download illegally from illegal servers, your personal information may be accessible to others.
  • DVDs and C.D.s are more expensive

With So Many People Doing it, How Can Piracy Be Illegal?

There are no specific laws addressing online piracy (although some are in the works). Despite the lack of specific laws, online piracy is not legal. Online piracy is federal copyright infringement.

Is It Possible to Prove Someone Infringed My Copyright?

You must prove two elements of copyright infringement:

  • Having a valid copyright is the first element to proving someone violated your copyright, regardless of how obvious this may seem: A valid copyright must be demonstrated to the court by demonstrating that the work is an original work of authorship, exists in a tangible medium of expression, and is protected by law. Essentially, you must demonstrate that you created a copyrightable work, such as those listed above. Although it is not a requirement to register your copyright with the U.S. Copyright Office, doing so will make proving you own a valid copyright much easier; and
  • In order to prove that your copyrighted work was infringed, you must demonstrate that your exclusive rights, such as those listed above, were violated: In some cases, this is an easy element to prove where your actual work was copied or is being used for financial gain. In other cases, you will have to demonstrate that someone else’s work is substantially similar to yours to the point that their work is the same as your copyrighted work.

Every copyright infringement case is unique. Some cases of copyright infringement are obvious, as noted above.

For example, a person who completely copies a piece of copyrighted work and distributes it without permission for financial gain. The infringement of a copyright may not be as obvious in other cases. For example, if the infringer created a derivative work that is substantially similar to a copyrighted work.

Are There Any Defenses To Online Piracy?

A successful online piracy charge consists of a few elements:

  1. Downloading or using material;
  2. Which is copyrighted;
  3. Without paying for the material to the producers or disturbers.

As such, there are a few defenses:

  • Fair use: people have the right to use the material provided that the material is for educational purposes or satire.
  • Free speech: If there is original work mixed with copyrighted work, the government may not be able to shut the whole website down.
  • No knowledge or intent: If the downloader didn’t intend to infringe on copyright, some or all the damages demanded may be waived.

Do I Need A Lawyer?

If you are concerned about whether you violated the NET Act, you should discuss your past actions and current situation with an experienced entertainment lawyer. If you face criminal charges for violating the NET Act, you should immediately speak with a white-collar crime attorney. A lawyer is in the best position to advise you of your rights, help you determine the best course of action, and represent you in court, if necessary.


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