House Panel Investigates DOJ Failure to Enforce NET Act

(May 13, 1999) The House Courts and Intellectual Property Subcommittee held a hearing on Wednesday, May 12, on why the Department of Justice has yet to obtain one indictment under the No Electronic Theft Act. The law, which was passed to deter Internet piracy, has been on the books for a year and a half.

"The No Electronic Theft, or NET, Act, which I sponsored in the last Congress," said Rep. Bob Goodlatte (R-VA), "was passed overwhelmingly to ensure that persons who illegally traffic in copyrighted works do not escape criminal prosecution solely because they fail to derive a pecuniary benefit from their actions. I believe then as now that closing the loophole that existed in the law was important for preventing an open season on copyrighted works from coming to pass on the Internet."

Rep. Bob Goodlatte

"I am not only unaware of any efforts by the Department of Justice or the FBI to apply resources to address theft of software on the Internet," added Rep. Goodlatte, "letters inquiring as to the status of these efforts have gone unanswered. I think that that is totally irresponsible."

Kevin DiGregory testified on behalf of the Department of Justice. He is the Deputy Assistant Attorney General for the Computer Crimes Division. He confirmed that "we have not yet brought any indictments under the NET Act."

Rep. Edward Pease (R-IN) asked DiGregory if there were any problems with the language of the NET Act. DiGregory said that there were none.

Nor did DiGregory refute that prosecution would have a deterrent effect on theft. He conceded that "even a handful of appropriate and well-publicized prosecutions under the NET Act is likely to have a strong deterrent impact, particularly because the crime in question is a hobby, and not a means to make a living. If these prosecutions are accompanied by a vigorous anti-piracy educational campaign sponsored by industry, and by technological advances designed to make illegal copying more difficult, we are hopeful that a real dent can be made in the practice of digital piracy."

Rep. James Rogan (R-CA) asked when the first prosecution would be brought. DiGregory refused to say.

"We are continually fine-tuning this initiative," said DiGregory in his prepared testimony, "to ensure that investigations are handled as quickly and efficiently as possible."

DiGregory suggested that there were several reasons for failing to bring any prosecutions. One is that not enough FBI and Department of Justice personnel "possess special technical skills." Moreover, "those agents who are technically adept are in high demand to fight the growing incidence of attacks on the confidentiality, integrity and availability of computers and networks, leaving few to focus on digital piracy."

Another obstacle, said DiGregory, was the failure of the U.S. Sentencing Commission to adopt sentencing guidelines for the NET Act. However, he also testified that this did not bar prosecutions.

Yet another excuse cited by DiGregory is the difficulty of identifying violators. Rep. Rogan asked him, "is it your testimony that there has not been a single identification?" DiGregory answered in the negative.

The subcommittee heard from two panels of witnesses. The first to testify were DiGregory and Timothy McGrath, of the U.S. Sentencing Commission. After testifying, DiGregory, and other DOJ personnel, walked out of the room without listening to remainder of the hearing.

The subcommittee then heard from representatives of the software and entertainment industries whose copyrighted works are being illegally pirated. Batur Oktay, an attorney for Adobe Systems, testified on behalf of the Business Software Alliance (BSA). Tim Starback, of Emigre, Inc. testified on behalf of the Software and Information Industry Association (SIIA). Finally, Tod Cohen of New Technology, testified for the Motion Picture Association of America (MPAA).

"During the first session of the 105^th Congress, HR 2265, the "No Electronic Theft Act" (NET Act) was enacted into law," said Rep. Coble. "HR 2265 criminalized computer theft of copyrighted works, whether or not the defendant derives a direct financial benefit from the acts of misappropriation."

Rep. Coble

Rep. Coble continued that "there have been no prosecutions brought by the Department of Justice under the Act. This is very troubling to some, and very frankly, to me. According to U.S. intellectual property based industries, there is no shortage of potential prosecutions that could be pursued under the Act, it is believed by many."

Rep. Coble added that, "in order to be successful in the battle against Internet piracy, not only must Congress enact legislation giving legal recourse to copyright owners, but those laws must be implemented by the appropriate law enforcement agencies."

Rep. Coble also commented on the inaction by the U.S. Sentencing Commission. "Also, currently, the U.S. Sentencing Commission does not have any Sentencing Commissioners and is therefore unable to promulgate sentencing guidelines for the Act. And a report issued by the Commission staff failed to address the NET Act's explicit instructions to consider that deterrence be adequately addressed in the sentencing guidelines. These facts have made enforcement of the NET Act virtually impossible, if not impossible."

Batur Oktay of the BSA testified that "we are disappointed, in any event, that despite much good work on the part of both the private sector and the law enforcement agencies, there have been no Net Act prosecutions. Left unprosecuted, these types of websites -- which are brazen about their own illegality -- send the message that Internet pirates can operate with impunity, that there is no effective enforcement, that intellectual property protection on the Internet is unavailable. More domestic enforcement activity would also better position the U.S. to exercise leadership in advocating stronger protections for intellectual property overseas."

No one on the subcommittee defended the inaction of the Justice Department or the U.S. Sentencing Commission.

The only members of the subcommittee who participated were Representatives Coble, Rogan, Goodlatte, and Pease. Ranking Minority Member Howard Berman (D-CA) was present at the very beginning, but left. The hearing coincided with the debate and voting in the House chamber on HR 775, a major piece of legislation to reform Y2K problem litigation procedure and liability.

"I am a pretty easy dog to hunt with," said Rep. Coble at the conclusion of the hearing. "But, I am impatient about this."