§ 2.02 History of Criminal Penalties 1897-1982

• Jurisdiction: United States
• Publication year: 2020

§ 2.02 History of Criminal Penalties 1897-1982

In 1897 Congress amended the Copyright Act to include criminal sanctions,¹⁸ but this first law was limited to unlawful performances and representations of copyrighted dramatic and musical compositions.¹⁹ Importantly, it also established the "willful" and "for profit" mens rea for criminal copyright infringement, a standard that went unchanged until the passage of the No Electronic Theft (NET) Act in 1997. Violations of the statute were punishable as misdemeanors²⁰ until 1982, when felony penalties were added for the willful infringement of sound recordings and motion pictures. Perhaps, because the technology of reproduction was still in its infancy and it was relatively more difficult to reproduce a copyrighted work than to actually perform one, the law did not provide for criminal sanctions for the unauthorized reproduction or distribution of a copyrighted work.

Congress substantially broadened the crime of copyright infringement with the general copyright revision of 1909.²¹ The legislative history suggests that Congress believed that broadening the scope was necessary to provide protection against pirates who "were both financially irresponsible and transient in their business locations, making injunctions and civil damages futile."²² The 1909 Copyright Act applied criminal sanctions to all types of copyrighted works except sound recordings.²³ The 1909 Act also imposed criminal liability on anyone who "knowingly and willfully" aided and abetted an infringement.²⁴ Convictions were punishable with up to one year in prison, or a fine of between $100 and $1,000 or both.²⁵ However, there are no reported cases of individuals being prosecuted under these provisions.

Criminal provisions for copyright infringement remained unchanged until 1971. By then, the advent of tape recorders and other recording devices had led to the substantial increase in unauthorized record and tape duplication. The House of Representative Judiciary Committee estimated that the annual volume of unauthorized record and tape piracy exceeded $100 million.²⁶ In response, Congress extended general federal copyright protection to sound recordings with the Sound Recording Act of 1971 that provided for criminal sanctions against those who willfully and for profit infringed upon copyrighted sound recordings.²⁷ In 1974, Congress provided increased penalties for unauthorized copying of sound recordings because of the perception "that record piracy is so profitable that ordinary penalties fail to deter prospective offenders."²⁸

In 1976, Congress substantially revised the Copyright Act.²⁹ The House of Representatives Judiciary Committee noted that "[t]he present copyright law . . . is basically the same as the act of 1909."³⁰ However, in the preceding sixty-seven years there had been great changes in technology and techniques for recording, copying and communicating printed matter, visual images and sound.³¹ These new technologies made the reproduction and dissemination of copyrighted works much easier.³²

The 1976 Copyright Act amended criminal copyright provisions in two ways. First, it changed the mens rea requirement from "for profit" to "for purposes of commercial advantage or private financial gain."³³ This change was meant to clarify that the infringer must only have been motivated by the desire of financial gain, and whether the defendant actually received a financial benefit was not material.³⁴

Secondly, and more importantly, concerns about the substantial losses to copyright owners led to an increase in the severity of criminal penalties. However, criminal copyright was still a misdemeanor offense, except in the case of repeat offenders who faced increased fines of not more than $50,000 or imprisonment for not more than two years, or both.³⁵ First-time convictions were punishable by a maximum of $10,000 or imprisonment for not more than one year, or both.³⁶ Perhaps due to lobbying efforts by the sound recordings and motion pictures industries, the court could increase the fine to $25,000 in the case of the willful infringement of sound recordings or motion pictures, although convictions were still treated as a misdemeanor offense.³⁷ In addition, the 1976 Act also provided for the forfeiture, destruction, or other disposition of all infringing copies or phonorecords and all implements, devices, or equipment used in the manufacture of such infringing copies or phonorecords.³⁸

Beginning shortly after the passage of the Copyright Act of 1976, the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA) began to lobby to increase the penalties for film and record piracy and counterfeiting.³⁹ The MPAA and the RIAA claimed that despite spending over $1 million a year to investigate and combat piracy through civil actions, copyright counterfeiters were not deterred, and that stronger criminal penalties were needed.⁴⁰

The MPAA and RIAA were not successful in their lobbying efforts until 1982, when Congress enacted Title 18, Section 2319 of the United States Code.⁴¹ Section 2319 provided for felony penalties for the conviction of reproducing or distributing a certain specified number of records, motion pictures, or audio visual works within a 180 day time period. This was the first time that Congress considered it necessary to provide for felony sanctions, although in limited circumstances, for criminal copyright infringement. Individuals convicted for the first time of large-scale infringement were subject to a maximum penalty of up to five years imprisonment, $250,000 in fines, or both. However, even after these new felony provisions were enacted, most criminal copyright infringement remained a misdemeanor offense. For example if the infringement involved motion pictures or sound recordings, but fewer than the specified number of copies were illegally reproduced or distributed during the 180 day period, the offense remained a misdemeanor. Further, infringement of derivative, performance, or display rights in sound recordings, motion pictures, or other audiovisual works was also still a misdemeanor.

[1] Copyright Felony Act of 1992

At the time Congress increased the sanctions for criminal copyright infringement in 1982, the software and video game industries were in their infancy and there was no consideration to extend increased copyright protection to these industries. However, by the late 1980s it became evident that the importance of the software and computer industry to the U.S. economy could no longer be ignored. Computer software and video games became a very attractive target for counterfeiters because of the relatively high per-copy retail price, and the ease with which an "exact" digital copy could be made. Industry officials estimated that the software industry had lost $2.4 billion in revenue to counterfeiters.⁴² It was further estimated that, at a minimum, for each legal or authorized software program or video game in circulation, an estimated one to three unauthorized or illegal copies had been reproduced and distributed.⁴³

Accordingly, the software and video game industries, following the example set by the motion picture and sound recording industry, asked Congress for stricter penalties for software copyright infringement, claiming that the piracy problems that had previously plagued the record and motion picture industry were now attacking the software industry.⁴⁴ In fact, the software industry was so successful in its efforts that the Senate bill introduced in response to these concerns applied only to software.⁴⁵ However, after committee hearings were held on the issue, Congress decided that felony provisions should apply to willful infringement of all types of copyrighted works.⁴⁶

As enacted by Congress, the Copyright Felony Act⁴⁷ provided for sentences for first-time offenders of up to five years imprisonment and fines of up to $250,000 in the case of individuals or $500,000 in the case of organizations, or twice the gains from the offense. In order for an offense be charged as a felony, the 1992 Act required that the offense consist of the willful reproduction or distribution during a 180-day period of at least ten copies with a total retail value of more than $2,500. The Act also required that the government prove that the defendant engaged in an act of infringement "for purposes of commercial advantage or private financial gain."⁴⁸ Repeat offenders faced a maximum prison sentence of up to ten years. The 1992 Act also provided for a misdemeanor sentence of up to one year for any criminal copyright infringement that failed to reach the numerical thresholds described above, or that infringed upon one of the bundle of copyrights other than the right of reproduction or distribution.⁴⁹ Finally, Section 506(b) mandated the forfeiture and destruction of infringing items and all implements, devices or equipment used in their manufacture.

In 1994, Congress added copyright infringement under Title 18, Section 2319 of the United States Code to the list of violations that constitute "specified unlawful activity" under the money laundering statue.⁵⁰ Thus, proceeds earned by a defendant from copyright infringement could form the basis for a charge of money laundering.

[2] Developments in Criminal Copyright Infringement

The advent and popularity of digital technology has created a challenge to the traditional notions of criminal copyright enforcement. Digital technology allows counterfeiters to quickly reproduce thousands of illicit copies that can easily and anonymously be distributed over the Internet to any place in the world. Moreover, there is little or no degradation in the quality of such copies. Furthermore, there has been an increase in the number of individuals who believe in the right to freely share copyrighted works and who are not motivated by the...