United States v. LaMacchia
871 F. Supp. 535 (1994)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
The federal wire fraud statute cannot be used to prosecute a defendant for copyright infringement that does not meet the specific elements of a criminal copyright violation, particularly the requirement that the infringement be for 'commercial advantage or private financial gain'. Congress's specific and detailed legislative scheme for copyright infringement precludes the use of more general criminal statutes to bypass its limitations.
Facts:
- David LaMacchia, a student at the Massachusetts Institute of Technology (MIT), was a computer hacker.
- Using pseudonyms and an encrypted address, LaMacchia set up an electronic bulletin board named 'Cynosure' on MIT's computer network.
- LaMacchia encouraged users to upload popular copyrighted software applications and computer games, such as Excel 5.0, WordPerfect 6.0, and Sim City 2000.
- He then transferred the uploaded software to a second encrypted address, 'Cynosure II', making it available for other users to download for free.
- The scheme allegedly caused losses of more than one million dollars to the software copyright holders.
- LaMacchia did not seek or derive any personal financial benefit from his actions.
Procedural Posture:
- On April 7, 1994, a federal grand jury returned a one-count indictment charging David LaMacchia with conspiracy to commit wire fraud in violation of 18 U.S.C. § 1343.
- The case was brought in the United States District Court for the District of Massachusetts, a federal trial court.
- On September 30, 1994, LaMacchia filed a motion to dismiss the indictment, arguing that the wire fraud statute was being improperly used as a copyright enforcement tool.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the federal wire fraud statute permit the prosecution of a defendant for facilitating copyright infringement when the defendant's actions do not meet the 'commercial advantage or private financial gain' element required for criminal liability under the Copyright Act?
Opinions:
Majority - Stearns, District Judge
No. The federal wire fraud statute does not permit the prosecution of a defendant for facilitating copyright infringement when the defendant's actions do not meet the 'commercial advantage or private financial gain' element required for criminal liability under the Copyright Act. The court's reasoning relies heavily on the Supreme Court's decision in Dowling v. United States, which held that copyright infringement could not be prosecuted under the National Stolen Property Act. Like the Stolen Property Act, the wire fraud statute is a general law enacted to fill jurisdictional gaps, whereas Congress has legislated directly and with great precision in the area of copyright. The Copyright Act has a 'finely calibrated' and 'studiously graded' penalty scheme that specifically requires infringement to be willful and for purposes of commercial advantage or private financial gain to be criminal. Allowing the government to use the more general wire fraud statute, which lacks this financial gain element, would subvert Congress's specific intent and criminalize conduct that Congress chose not to punish criminally. It is the role of the legislature, not the courts, to define crimes and prescribe punishments, especially in a complex area like copyright law that is subject to rapid technological change.
Analysis:
This decision created what became known as the 'LaMacchia Loophole,' highlighting a significant gap in federal law where large-scale, willful, non-commercial copyright infringement via the internet was not criminally prosecutable. The court's ruling emphasized the principle of statutory interpretation that a specific statute (the Copyright Act) governs over a more general one (the Wire Fraud Act), and that courts should defer to Congress in defining criminal liability for intellectual property. The case served as a direct catalyst for legislative action, prompting Congress to pass the No Electronic Theft (NET) Act of 1997, which closed the loophole by criminalizing certain large-scale copyright infringements even in the absence of a profit motive.
