DirecTV accuses thousands of signal theft

THE BALTIMORE SUN

Two years ago, DirecTV officials, backed by law enforcement officers, swooped into three warehouses in California and seized shipping records and credit-card receipts of people who bought electronic equipment commonly used to steal the beams of satellite television.

The nation's leading satellite television provider, DirecTV Inc., has used those records to file thousands of piracy lawsuits across the country, including recently in federal court in Chicago.

"Clearly, we're sending a message to consumers," said spokesman Robert Mercer. "They need to understand that this is theft."

The company threatens accused pirates with stiff penalties of $100,000 or more, but offers to settle complaints for as little as $3,500.

Critics complain of DirecTV's strong-arm tactics. At least one lawsuit against the company claims its legal campaign is little more than extortion.

"This is a huge anti-piracy effort by DirecTV," said Fred von Lohmann, senior staff attorney with the Electronic Frontier Foundation, a nonprofit that works to protect consumers' digital rights. "The problem is it's a classic shakedown venture."

DirecTV acknowledges that it has taken an aggressive attitude toward piracy but denies that it is using the lawsuits as a profit-making vehicle.

"We would like to break even" on attorneys' fees, Mercer said.

The dragnet also has snared some people who claim they are not pirates. Retiree Darrel Moore of Indianapolis, for instance, says he has never owned a satellite system. Yet he will probably have to spend more money on attorney fees fighting the case than settling with DirecTV.

A small band of attorneys working with people like Moore charge that DirecTV has failed to conduct any kind of investigation to prove its cases, and that the company, as a result, is abusing the legal system.

They also note that DirecTV, in an apparent effort to reduce its own costs, has grouped multiple defendants in a single filing rather than separately, as they say is required.

"This is what I call robo-litigation," said Paul Overhauser, an attorney in Greencastle, Ind., who represents more than 200 people who have been sued or contacted by DirecTV. "They've replaced the judgment and evaluation done by an attorney with a computer program that spits out form letters."

Still, it appears the public backlash against DirecTV has been minimal compared with that against the U.S. music industry, which seemingly borrowed a page from DirecTV's strategy and in September launched lawsuits accusing hundreds of ripping off music online. Apparently the public views the two types of thievery as being distinct from each other, one legal expert said.

"People simply do not believe that downloading music online is illegal," said Joseph Metcalfe, assistant professor at the University of Oregon School of Law and former prosecutor with the intellectual property division of the Department of Justice. "But swapping music on the Internet is not the same as using black market access cards to intercept satellite signals without authorization."

Satellite piracy has become a big business in the United States. As many as 1 million households, by some estimates, illegally obtain programming from the nation's two big satellite providers, EchoStar and DirecTV.

The tool for the illegal trade is a palm-size plastic card, similar to a credit card, that, when inserted into a receiver, unscrambles the satellite signals. The so-called smart card can be transformed to a free card through reprogramming.

Until recently, DirecTV targeted peddlers of the unauthorized access cards and the electronic equipment capable of reprogramming the cards. Its anti-piracy division, the Office of Signal Integrity, also developed a countermeasure, the equivalent of an electronic bullet, that it can broadcast to destroy the unauthorized cards. In 2001, DirecTV zapped an estimated 200,000 illegal users on Super Bowl Sunday.

Later that year, the company, based in El Segundo, Calif., launched its "end-user campaign," aiming its corporate might at illicit viewers. DirecTV, which has more than 12 million paid subscribers, risked creating a public relations nightmare.

"I think we risk a greater backlash from our honest customers, our programming partners and our retailers if we did not take an aggressive attitude toward piracy," Mercer said.

As many as 100,000 names and addresses were collected from searches beginning in May 2001 of bootleg smart-card operations. DirecTV mailed strongly worded letters to suspected pirates.

The letter warns that using illegal signal theft equipment to gain access to DirecTV programs violates federal and state laws, subject to fines of up to $10,000 per device. "Modifying devices to illegally gain access to DirecTV's programming increases potential statutory damages to $100,000," the letter says.

If the individual does not surrender the device and pay DirecTV $3,500 for damages, the company threatens a lawsuit. Once a lawsuit is filed, the company still offers a settlement, Mercer said, but the amount increases to cover court filing fees and other expenses.

The company estimates that it has mailed 70,000 to 80,000 letters in the past two years. An estimated 18,000 people who did not respond have been sued in federal and state courts, and more lawsuits are expected, the company said.

DirecTV has filed so many cases that it cannot keep track of them all, defense attorneys contend. For instance, Michael Scherer of Lake County, Ind., was sued twice, once in June and a second time this month, said Overhauser, his attorney. He also has clients who were sued after agreeing to settle.

DirecTV declines to say how many people settle before being sued and how much money it has collected.

"It's a very intimidating situation, even if you think you're innocent," said von Lohmann of the Electronic Frontier Foundation. "It's hard to find a way out without laying out a bunch of cash."

The company is pressuring people to settle because it wants to control its legal costs, defense attorneys claim. Indeed, a single case has yet to go to trial. Mercer responded that while the company prefers not to go to trial, it is prepared to do so.

DirecTV also is finding that its legal position is on shaky ground in some courts. Last month, a federal judge in Texas threw out a case because the company could not prove that the defendant, Winston Bush, had intercepted or attempted to intercept DirecTV's broadcast.

"DirecTV cannot simply allege that it possesses evidence that Bush bought a device that was, in principle, capable of intercepting its signal," Judge Sim Lake wrote.

Other courts have split on whether the company can sue for civil damages under a federal criminal statute that prohibits the manufacture, assembly, possession or sale of interception devices. DirecTV has appealed some of those rulings.

"Because of ambiguous statutory language, it's not a slam dunk for either side," Metcalfe said.

A federal judge in South Carolina dismissed eight cases last summer because the defendants did not own the smart-card technology, although their credit cards were used to buy the devices for others. In all the cases, the defendants did not own DirecTV satellite equipment.

Even being a paid subscriber of DirecTV doesn't shield the subscriber from one of the company's letters.

Erol Bars, a university researcher in Buffalo, N.Y., and a DirecTV subscriber for at least two years, admits he bought equipment - a smart card reader - but that it was for a legitimate purpose: to develop a computer system used in cancer research.

After receiving a letter from DirecTV, he called the company to explain his situation. The person on the other end of the line, he said, didn't believe his story. So Bars hired a lawyer.

"They are suing their own subscribers," he said. "That doesn't make sense."

The Chicago Tribune is a Tribune Publishing newspaper.

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