My friend Julian Sanchez reports on a September 29 ruling by a federal magistrate judge that retailers will not be required to disclose the names of customers who purchased open satellite hardware that is currently the subject of a copyright lawsuit. The Plaintiff, Echostar, sought the records as part of its discovery procedures in a lawsuit against Freetech, a firm that manufacturers consumer equipment capable of receiving free satellite content. The equipment attracted Echostar’s attention because it’s also the case that with minor modifications Freetech’s devices can be used to illicitly receive Echostar’s proprietary video content. Echostar contends that satellite piracy—not the interception of legitimate free content—is the primary purpose of Freetech’s boxes. And it argues that this makes them illegal circumvention devices under the Digital Millennium Copyright Act.
The ruling is a small victory for customer privacy. But as Julian notes, the case still has some troubling implications. Echostar claims it can demonstrate that Freetech has been colluding with satellite pirates to ensure its boxes can be used to illegally intercept Echostar content. But it is a long way from proving that allegation in court. Unfortunately, the very existence of the lawsuit has had a devastating impact on its business. Freetech’s sales have dropped about 90 percent in recent years. In other words, Echostar has nearly destroyed Freetech’s business long before it has actually proved that Freetech had done anything wrong.
Second, and more fundamentally, it appears that Freetech’s liability may turn on whether there is a “commercially significant” use of Freetech’s products other than satellite piracy. As Fred von Lohmann points out, that has the troubling implication that Freetech’s liability under copyright law is dependent on the actions of customers over whom it has no control. As Fred puts it, this means that under the DMCA, a manufacturer could “go to bed selling a legitimate product and wake up liable.” It’s a basic principle of law that people should be liable for what they do, not for what third parties do without their knowledge or consent.
None of this is to condone satellite piracy. I have little sympathy for people who face legal penalties for obtaining proprietary satellite content without paying for it. But there are legal principles that are even more important than enforcing copyright. The progress of the Echostar case so far suggests that in its zeal to protect the rights of content owners, copyright law is trampling on those principles. Which is one more reason to think that the DMCA’s anti-circumvention provisions needs to be reformed or repealed.
Echostar chose to build their network on open standards, which is the reason I chose to be their customer. Further, I have found that they are highly resistant to implementing DRM as the studios may like, only giving in when absolutely necessary. As such, Dish gets high marks from men. Unfortunately, this case is a blow to open standards, as it gives ammunition to the proprietary crowd.
Echostar might do well to examine their encryption protocols. On modern equipment, it is not a complicated matter to implement rock-solid encryption without breaking from open standards, or even open source, or needing to care about third-party equipment. I suspect the problem probably lies in the distribution of session keys encrypted under $number_of_receivers individually separate keypairs.
If Echostar can prove that Freetech sold its products with knowledge and intent that its customers would use the products for copyright infringement, then per the SCOTUS Grokster decision, Freetech can be held liable for this infringement.
I agree, but I am worried about whether legislators will recognize and act on the danger posed by the DMCA. There is, unfortunately, considerable precedent for laws that exhibit the same problem. The most prominent are the laws outlawing the sale of “drug paraphernalia”. If someone sells a water pipe, it is legal if it is intended for smoking tobacco but illegal if intended for smoking marijuana or hashish. Prosecution depends on whether the authorities consider a shop to be a “head shop” or not, virtually always a purely subjective matter of opinion.