Reply to Government's Opposition to Defendant's Motion to Dismiss (United States vs. D. LaMacchia)
United States District
Court
District of Massachusetts
United States of America v. CR. No.
94-10092-RGS
United States of America v. David
LaMacchia
Reply to Government's opposition to
defendant's motion to dismiss.
December 28, 1994
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Introduction
We have argued that the indictment against David LaMacchia
fails to allege a conspiracy to commit wire fraud because,
under the authority of Dowling v. United States, 473 U.S. 207
(1985), the alleged object of the conspiracy --copyright
infringement -- is not covered by the wire fraud statute. Def.
Mem. at 10. While the government urges this Court to ignore the
lengthy discussion of copyright contained in the Dowling
opinion and to pretend that the Supreme Court held only that
"section 1343 requires a physical taking of the transported
goods," Gov. Opp. at 9, this crabbed reading of Dowling is not
reasonable, has been rejected by the leading commentators, is
not contained in any of the cases cited by the government, and
is inconsistent even with the position previously taken by the
Department of Justice as to the import of Dowling.
Unable to answer our Dowling argument, the government
instead sets up a straw man to knock down. The "legion of
cases" cited by the government in support of the proposition
that the Copyright Act did not repeal the wire fraud statute by
implication (Gov. Opp. at 1, 5 & n.3, 11-12), are
inapposite to our actual position, which is that the wire fraud
statute, which was enacted long after the Copyright Act, never
covered copyright infringement. 1
The government's remaining claims are either false, or were
rejected by the Supreme Court in Dowling. First, contrary to
the government's repeated assertions that the defense has
failed to address the plain language of the wire fraud statute,
Gov. Opp. at 2, 5, & 12,2 we have urged this Court to
follow the plain language analysis employed by the Supreme
Court in Dowling. Def. Mem. at 10-17. Just as the Dowling Court
held that copyright rights cannot be "taken by fraud" within
the meaning of 18 U.S.C. Sec. 2314, by the same reasoning,
copyright rights cannot be "obtain[ed]" by means of a "scheme
or artifice to defraud" within the meaning of the wire fraud
statute. Def. Mem. at 16.
Second, Dowling and case law interpreting it disprove the
government's assertion that copyright rights are
indistinguishable from the type of intangible property
protected by the wire fraud statute under Carpenter v. United
States, 484 U.S. 19 (1987), Gov. Opp. at 13. The Dowling Court
distinguished the unique bundle of rights granted by the
Copyright Act from the type of interests -- tangible as well as
intangible -- protected by the federal interstate theft
statutes. 473 U.S. at 216-218; United States v. Riggs, 739 F.
Supp. 414 (N.D. Ill. 1990) (distinguishing copyright rights,
which can only be "infringed," from intangible proprietary
business information, which may be obtained by a "scheme to
defraud").
Third, contrary to the government's assertion, consideration
of the scope and history of the criminal copyright provision --
in which Congress demonstrated a clear intent not to
criminalize the conduct charged in the indictment -- is not
only appropriate, but mandated by Dowling. Here, as in Dowling,
the discrepancy between the Congress's sensitive balancing of
interests in the Copyright Act, and the government's indirect,
"blunderbuss" attempt to use interstate theft statutes to
prosecute copyright infringement, supports the conclusion that
Congress did not intend the wire fraud statute, any more than
the National Stolen Property Act to reach copyright
infringement. Finally, the government's claim that the general
nonexclusivity provision of the Copyright Act controls this
case should be rejected by this Court just as the same argument
was rejected by the Supreme Court in Dowling. Since the wire
fraud statute does not cover copyright infringement, the
general provision of the copyright right act not precluding
other applicable statutes has no bearing on this case.
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This Case is
Controlled by Dowling
The Dowling opinion charted the course for determining
whether an interstate theft statute applies to copyright
infringement, and thus controls this case. Def. Mem. at 4-7.
The leading copyright commentators agree. Def. Mem. at 6
(citing Nimmer and Goldstein treatises). While the government
asserts that Dowling stands for nothing more than the
proposition that "section 2314 requires a physical taking of
the transported goods" Gov. Opp. at 9, this assertion is not
based on a fair reading of Dowling and was even rejected by the
Justice Department in a previous case.
As even the government acknowledges, the question framed by
the Dowling Court was not whether Sec. 2314 requires a physical
taking, but rather, whether copyrighted musical compositions
used without authorization or payment of royalties "are
consequently `stolen, converted, or taken by fraud' for
purposes of Sec. 2314.'" 473 U.S. at 216; Gov. Opp. at 7. If,
as the government asserts, the Court were concerned only with
the distinction between tangible and intangible property, there
would have been no reason for the Court to engage in the
lengthy discussion of the language and history of the Copyright
Act and of the unique bundle of rights created therein.
Dowling, 473 U.S. at 216-229. The point of this discussion,
which is central to the Court's holding, is that copyright
rights are different from the property interests protected by
the interstate theft statutes.
Moreover, the government's assertion that "the entire burden
of the Dowling decision is that section 2314 requires a
physical taking of the transported goods," Gov. Opp. at 9, is
directly contrary to the position advocated by the Justice
Department in United States v. Riggs, 739 F. Supp.414 (N.D.
Ill. 1990). In Riggs, the defendant was charged with violating
Sec. 2314 by transmitting confidential, proprietary business
information over a computer network. In response to the
defendant's argument that, under Dowling, Sec. 2314 does not
apply to the transmission of intangible property, the
government took the following position:
viewed in its correct context, Dowling was
emphasizing that Sec. 2314 sanctions property obtained by theft
rather than stating that Sec. 2314 was concerned with the
tangible or intangible nature of the thing stolen.
"Government's Response to Defendant Neidorf's Motion to
Dismiss Counts Three and Four of the Indictment Relating to
Interstate Transportation of Stolen Property" at 14. None of
the cases cited by the government support the proposition that
Dowling is limited to nothing more than a ruling that section
2314 requires a "physical taking." The government's reliance on
the Court of Appeals' decision in Dowling is misplaced for two
reasons. First, contrary to the implication in the government's
brief, the fact that the Court did not review the Ninth
Circuit's affirmance of the mail fraud conviction does not
indicate agreement with the lower court's decision. United
States v. Carver, 260 U.S. 482, 490 (1923) ("The denial of a
writ of certiorari imports no expression upon the merits of the
case, as the bar has been told many times."); Stern, et. al,
Supreme Court Practice 239 (1993) Rather, the Court's decision
to review the section 2314 issue and not the mail fraud issue
was evidently due to the fact that a circuit conflict existed
on the former, but not on the latter. 473 U.S. at 213 &
n.6. Second, the reasoning employed by the Court of Appeals in
affirming Dowling's mail fraud conviction was eviscerated by
the Supreme Court. The Ninth Circuit based its conclusion that
the mail fraud statute covers copyright infringement upon its
earlier ruling that Sec. 2314 covers copyright infringement.
739 F.2d at 1448 (citing United States v. Belmont, 715 F.2d 459
(9th Cir. 1983), cert. denied, 465 U.S. 1022 (1984)). The
Supreme Court's rejection of the Belmont holding means that
there is no reasoning to support the Ninth Circuit decision.
See Goldstein, Copyright, Vol. II, Sec. 11.4.2, at 304 n.67
(1989) ("Although the Court did not directly rule on whether
the mail fraud statute encompassed the infringing conduct, its
reasoning with respect to the Stolen Property Act, 18 U.S.C.
Sec. 2314, suggests that it would have treated the mail fraud
statute similarly."). The other authorities cited by the
government shed little or no light on the question before this
Court. The decision in Cooper v. United States, 639 F. Supp.
176 (M.D. Fla. 1986), aff'd without opinion, 822 F.2d 63 (11th
Cir.), cert. denied sub nom. McCullock v. United States, 484
U.S. 947 (1987), contains no reasoning. Moreover, based on the
description in the district court opinion, it appears that the
defendants did not make the argument presented here, namely,
that the wire fraud statute, by its terms, does not reach
copyright infringement. 3
The citation to RCA Corp. v. Tucker, 1985 WL 26032 (E.D.N.Y.
1985), an unpublished memorandum in a civil copyright case
indicating that the defendant had earlier pled guilty to a 1979
information charging him with wire fraud and copyright
infringement, is entirely specious, since the plea occurred
before the Supreme Court's decision in Dowling, and the
defendant did not raise any challenge to the government's use
of the wire fraud statute.
Accordingly, this Court should reject the government's
crabbed reading of Dowling.
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The Conduct
Alleged in the Indictment Fails to state an Offense Under the
Plain Language of the Conspiracy and Wire Fraud
Statutes
Contrary to the government's claims that we have failed to
address the plain language of the wire fraud statute, we have
argued that Congress did not intend the phrase "obtaining money
or property" by means of "a scheme or artifice to defraud" to
include copyright infringement. Just as the Supreme Court held
in Dowling that copyright rights (including rights to royalties
and licensing fees) cannot be "taken by fraud" within the
meaning of 18 U.S.C. Sec. 2314, so too here, the allegedly
infringing conduct does not amount to "obtaining money or
property" by means of a "scheme or artifice to defraud" within
the meaning of the wire fraud statute. Def. Mem. at 16. There
is no basis for holding that copyright rights cannot be "taken
by fraud" under one federal interstate theft statute (Sec.
2314), but can be "obtained" by means of a "scheme or artifice
to defraud" under another federal interstate theft statute
(Sec. 1343). Indeed, first principles of statutory construction
prohibit such an absurd result. Sutherland Statutory
Construction 229-230 (1992) (Courts are "under a duty to
construe statutes harmoniously where that can reasonably be
done.").
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Courts have
Distinguished Copyright Rights from the Type of Property
Interests Protected by the Interstate Theft Statutes
In Dowling, the Court concluded that copyright "infringement
plainly implicates a more complex set of property interests
than does run-of-the-mill theft, conversion, or fraud," not
simply because copyright rights are intangible, as the
government emphasizes, but because a copyright "comprises a
series of carefully defined and carefully delimited interests
to which the law affords correspondingly exact protections,"
473 U.S. at 216. As we set out in great detail in our initial
memorandum, the financial interest of copyright holders is but
a secondary consideration in a delicate balance of rights and
remedies designed to promote the production and dissemination
of new works. See Def. Mem. at 13-16. The copyright holder's
interest, which is "subjected to precisely defined limits," is
"distinct from the possessory interest" that can be "converted,
stolen, or taken by fraud." 473 U.S. at 217. It is, in the
words of the Supreme Court, "the special concerns implicated by
the copyright laws," 473 U.S. at 225, that distinguish
copyright rights from the type of property - whether physical
or intangible - that is encompassed within the general
interstate theft statutes.
The government's claim that no distinction can be drawn
>between copyright rights and the type of intangible
property interests protected by the wire fraud statute, is
further undermined by United States v. Riggs, 739 F. Supp. 414
(N.D. Ill. 1990), in which the defendant was charged with
transferring intangible, confidential business information on a
computer network in violation of section 2314. Rejecting the
defendant's argument that Dowling prohibited his prosecution
for transmitting intangible information, the Court
distinguished confidential business information, "something
which has clearly been recognized as a item of property" under
Carpenter, from copyright rights, which, under Dowling, can
only be "infringed." 739 F. Supp. at 423. The court held that
"while the holder of a copyright possesses certain property
rights which are protectible and enforceable under copyright
law, he does not own the type of possessory interest in an item
of property which may be "stolen, converted or taken by fraud."
739 F. Supp. at 422-423.
Indeed, the juxtaposition of Dowling and Carpenter put the
lie to the government's position in clear and dramatic fashion.
The only rational explanation for the difference in the
respective holdings of these two Supreme Court cases -- the
reason why the National Stolen Property Act was held
inapplicable to the intangible property in Dowling while the
mail fraud statute was held applicable to the intangible
property in Carpenter, was this: The property interest in
Dowling was copyrighted material, while the property in
Carpenter was non-copyrighted business proprietary information.
It was the unique nature of copyrighted intellectual property
that dictated the different results.
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The Text and History of
the Criminal Copyright Provisions Supports the Conclusion that
the Wire Fraud Statute does not Cover Copyright
Infringement
In Dowling, the Supreme Court determined that "neither the
text or the legislative history" of the Copyright Act
"evidences any congressional awareness, let alone approval, of
the use of" section 2314 "in prosecutions for interference with
copyright." 473 U.S. at 225 n.18. To the contrary, the Court
held that "Congress' sensitivity to the special concerns
implicated by the copyright laws" as demonstrated in the
legislative history of the criminal copyright provisions
"convinces us that congress had no intention to reach copyright
infringement when it enacted Sec. 2314." 473 U.S. at 225-226.
The legislative history of the 1992 amendments to the criminal
copyright provisions, wherein Congress specifically declined to
criminalize the conduct charged in this indictment, further
underscores the distinction between Congress's careful
step-by-step approach to copyright infringement and the
"blunderbuss" approach suggested by the government in this
case.
The government claims that we have argued that Dowling holds
that "Congress intended that conduct which does not constitute
criminal copyright infringement may not be charged under any
other criminal statute."2 This is not our argument. Rather, we argue that
the wire fraud statute would not cover LaMacchia's conduct even
if his conduct constituted a clear violation of the Copyright
Act. Indeed, Dowling itself involved conduct violative of the
criminal provision of the Copyright Act, and the Court held
that the National Stolen Property Act did not apply. This is
because the text and legislative history of the Copyright Act
demonstrate that Congress acted with special sensitivity in
drafting the copyright laws, and it did not intend that
blunderbuss interstate property statute should override those
distinctions.
The government also urges this Court to ignore the language
and legislative history of the Copyright Act, Gov. Opp. at 15,
but its justification for departing from the Dowling analysis
rings hollow. The government's concession that the language of
section 2314 -- "taken by fraud" -- is ambiguous with respect
to copyright infringement, thus necessitating consideration of
legislative history, Gov. Opp. at 8, undermines its assertion
that the language of the wire fraud statute -- "obtaining money
or property" by means of a "scheme or artifice to defraud" --
is so clear as to preclude inquiry into legislative history.
4
The government's claim that "the legislative history of the
Copyright Act and its amendments sheds no interpretive light"
on Congress's intent, Gov. Opp. at 16, is also flatly
inconsistent with the Court's opinion in Dowling. Indeed, if,
as the government posits, "reviewing legislative history is
like looking over the crowd at a party and picking out one's
friends," Gov. Opp. at 15 n.6, then this is clearly a gathering
where the government's friends failed to show up. The
government cites nothing in the legislative history of the
Copyright Act demonstrating congressional approval or awareness
of the use of the wire fraud statute to prosecute copyright
infringement, and, indeed, there is nothing in the legislative
history to support such a claim. To the contrary, the history
of the 1992 amendments clearly demonstrates that Congress
believed infringement of computer software copyrights was not
covered by any then-existing felony provision. Def. Mem. at
22-23.
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The
Penalty Provision of the Copyright Act does not Extend the
Conspiracy and Wire Fraud Statute to Copyright
Infringement.
This Court should reject the government's claim that the
penalty provision of the Copyright Act contains "controlling
language" dictating application of the wire fraud statute, just
as the Supreme Court rejected the parallel argument in Dowling.
The dissenters in Dowling argued that, prior to the enactment
of this provision, many courts had applied section 2314 to
copyright infringement, and by enacting a nonexclusivity
provision, Congress implicitly consented to the continued
application of section 2314 to copyright offenses. The majority
rejected this argument in no uncertain terms:
Neither the text nor the legislative history of either the
1982 Act or earlier copyright legislation evidences any
congressional awareness, let alone approval, of the use of Sec.
2314 in prosecutions like the one now before us. In the absence
of any such indication, we decline to read the general language
appended to Sec. 2319(a) impliedly to validate extension of
Sec. 2314 in a manner otherwise unsupported by its language and
purpose. Dowling, 473 U.S. at 226 n.18.5 Similarly, Sec.
2319(a) provides no basis for reading the wire fraud statute to
apply to copyright infringement, where neither the language nor
the legislative history of the wire fraud statute demonstrate
any congressional intent to do so.
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Conclusion
For these reasons, and for the reasons stated in our initial
memorandum, the charge against David LaMacchia of conspiracy to
commit wire fraud must be dismissed.
DATED: November 4, 1994
Respectfully submitted,
Andrew Good (#201240), Harvey A.
Silverglate (#462640), Sharon L. Beckman (#552077), Silvergate
& Good, 89 Broad Street, Boston, MA 02110, Tel. (617)
542-6663, Fax (617) 451-6971
David Duncan (#546121), Zalkind,
Rodriguez, Lunt & Duncan, 65A Atlantic Avenue, Boston, MA
02110, Tel. (617) 742-6020
Certificate of Service
I, Andrew Good, hereby certify that I have this day served
the foregoing motion on Jeanne Kempthorne, Assistant United
States Attorney, 1000 Post Office & Courthouse, Boston, MA
02109 via hand delivery.
Andrew Good
Dated: November 4, 1994
Footnotes
Cite this page:
"Reply to Government's Opposition to Defendant's Motion to Dismiss (United States vs. D. LaMacchia)"
Online Ethics Center for Engineering
3/7/2006
National Academy of Engineering
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