UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
____________________________
)
UNITED STATES OF AMERICA )
)
v. ) Cr. No. 94-10092-RGS
)
DAVID M. LaMACCHIA )
____________________________)
REPLY TO GOVERNMENT'S
OPPOSITION TO DEFENDANT'S MOTION TO DISMISS
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.
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, 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. § 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.
Argument
I. 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 § 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 § 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 §2314 by transmitting confidential, proprietary
business information over a computer network. In response to
the defendant's argument that, under Dowling, § 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 § 2314 sanctions property obtained
by theft rather than stating that § 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 § 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,
§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. § 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.
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.
II. 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. § 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 (§ 2314), but can be
"obtained" by means of a "scheme or artifice to defraud"
under another federal interstate theft statute (§ 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.").
III. 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.
IV. THE TEXT AND HISTORY OF THE CRIMINAL
COPYRIGHT PROVISIONS SUPPORT 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 §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." Gov. Opp. at 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.
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.
V. THE PENALTY PROVISION OF THE COPYRIGHT ACT
DOES NOT EXTEND THE CONSPIRACY AND WIRE
FRAUD STATUTES 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 § 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 § 2319(a)
impliedly to validate extension of § 2314 in a
manner otherwise unsupported by its language and
purpose.
Dowling, 473 U.S. at 226 n.18. Similarly, § 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.
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)
SILVERGLATE & 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