U.S. v. Davis

• Citation: 978 F.2d 415
• Decision Date: 28 October 1992
• Docket Number: No. 91-2162,91-2162
• Parties: UNITED STATES of America, Appellee, v. Duane Dale DAVIS, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 415

978 F.2d 415

UNITED STATES of America, Appellee, v. Duane Dale DAVIS, Appellant.

No. 91-2162.

United States Court of Appeals,

Eighth Circuit.

Submitted May 11, 1992.

Decided Oct. 28, 1992.

David A. Butler, Des Moines, Iowa, argued, for appellant.

Robert L. Teig, Cedar Rapids, Iowa, argued, for appellee.

Before RICHARD S. ARNOLD, Chief Judge, McMILLIAN, JOHN R. GIBSON, FAGG, BOWMAN, WOLLMAN, MAGILL, BEAM, LOKEN, and HANSEN, Circuit Judges, En Banc.

BEAM, Circuit Judge.

A jury found Davis guilty of manufacturing and selling a device used for the unauthorized decryption of satellite cable programming, in violation of 47 U.S.C. § 605(e)(4); unauthorized reception of encrypted radio communications, in violation of 47 U.S.C. § 605(a); copyright infringement, in violation of 17 U.S.C. § 506; manufacturing and selling an electronic device primarily useful for the surreptitious interception of electronic communications, in violation of 18 U.S.C. § 2512(1)(b); and interception of encrypted electronic communications, in violation of 18 U.S.C. § 2511(1)(a). Davis appeals his convictions under 18 U.S.C. §§ 2511 and 2512, claiming that his conduct is outside the scope of these statutes.

In United States v. Hux, 940 F.2d 314 (8th Cir.1991), a panel of this court held that the manufacture of a satellite descrambler was not a violation of 18 U.S.C. § 2512(1)(b). We overrule Hux in this respect and affirm Davis's convictions.

I. BACKGROUND

In the early to mid-1980's, a predecessor to General Instruments Corporation (GI) was asked to develop a system to allow cable television providers transmitting their signal via satellite to collect a fee from owners of satellite-signal reception systems. The system developed by GI was comprised of a microprocessor chip and a descrambler module, and in its current form is referred to as the VideoCipher II (VCII). Each VCII has a unique address, much like a telephone or social security number, that allows the satellite to send a personalized message to each unit. This message enables a VCII to unscramble or decrypt only those signals that the subscriber pays for. In practice, a subscriber contacts the marketing arm of the satellite programming provider, requests access to certain programming, and gives the provider his VCII's unit address. The satellite then sends a signal to that specific unit, enabling it to descramble or decrypt the signal carrying the program. Because each unit has a unique address, units may be individually enabled and disabled with programming tailored to the specific request of the individual subscriber.

The intelligence allowing the VCII to carry out its function is contained in the microprocessor chip. GI sought to prevent tampering with this chip by covering it with an epoxy resin. Unauthorized descrambling or decrypting of programming, or video piracy as it is commonly referred to, requires accessing and replacing this chip. Usually, the epoxy resin is melted and chipped away and a new microprocessor chip is substituted. Two common methods of video piracy are referred to as "cloning" and "3 Musketeers."

In cloning, the modified device is given the same address as a device legitimately authorized to descramble or decrypt particular satellite signals. Since there is no method by which the transmitting satellite can determine that more than one VCII has the same address, both the legitimate and all cloned units descramble or decrypt the same signals. Using the "3 Musketeers" method, a unit authorized to descramble or decrypt one signal is modified so as to descramble all programs. This method is referred to as the "3 Musketeers" because, like Dumas's selfless, royal bodyguards, it is one for all (authorization to descramble one program) and all for one (descrambles all programs).

Using a combination of the methods described above, Davis began illegally modifying and selling VCII units as early as 1987. Davis sold units directly to users and to subdealers. At his trial, thirteen customers and subdealers testified about the units they had bought from him.

II. DISCUSSION

A. Is Davis's Conduct Covered by the Wiretap Act?

First, Davis contends that section 2511(1)(a), which makes it unlawful for any person to intentionally intercept electronic communications, ¹ is inapplicable to the interception of commercial satellite programming. As authority for his allegation, Davis cites a number of district and circuit court cases. These cases, however, were decided before the 1986 amendments to the Wiretap Act that expanded its scope to include electronic communications. See Electronic Communications Privacy Act of 1986 [hereinafter ECPA], Pub.L. No. 99-508, § 101(a)(6)(C), 100 Stat. 1848. The Wiretap Act defines electronic communications as "any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, [or] electromagnetic ... system." 18 U.S.C. § 2510(12). Clearly, the language of this section is broad enough to include programming transmitted by satellites. Section 2511(4), ² specifying the punishment for a violation of section 2511(1), supports our view regarding the scope of that section. In excluding certain types of unencrypted and unscrambled satellite transmissions not intercepted for commercial advantage or private financial gain from the reach of section 2511(1), subsection (c) of 2511(4) establishes that satellite transmissions are contemplated by the Wiretap Act. ³

Despite the broad language of the Wiretap Act, Davis alleges that the Senate report accompanying the ECPA demonstrates a Congressional intent to restrict the prosecution for theft of satellite programming to the Communications Act of 1934 (CA). In support, Davis quotes language in that report stating that "[t]he private viewing of satellite cable programming, network feeds and certain audio subcarriers will continue to be governed exclusively by section 705 [47 U.S.C. § 605] of the Communications Act of 1934, as amended, and not by ... [the Wiretap Act]." S.Rep. No. 541, 99th Cong., 2d Sess. (1986) [hereinafter Senate Report], reprinted in 1986 U.S.C.C.A.N. 3555, 3576. However, 18 U.S.C. § 2511(4)(c) excludes from the Wiretap Act's proscriptions satellite transmissions transmitted "to a broadcasting station for purposes of retransmission to the general public," but only if the transmissions are not encrypted or scrambled. 18 U.S.C. § 2511(4)(c)(i). In many instances, network feeds are transmitted by satellite. Consequently, network feeds are satellite transmissions transmitted "to a broadcasting station for purposes of retransmission to the general public" and, adhering to Davis's view, are unconditionally excepted from the Wiretap Act by the Senate language quoted above. However, as earlier stated, the language of 2511(4)(c) excepts these signals only if they are unscrambled or unencrypted. In order to harmonize the statement in the Senate report (excluding satellite cable programming and network feeds from the Wiretap Act) with the plain language of section 2511(4)(c)(i), we must assume that the statement means only to exclude unencrypted and unscrambled programming and feeds from coverage by the Wiretap Act. See 132 Cong.Rec. S14451 (1986) (statement of Sen. Mathias) (discussing the ECPA and recognizing that networks may preserve the privacy of news footage transmitted via satellite by encrypting). Subsection 2511(2)(g)(iii)(II) supports this interpretation. Subsection 2511(2)(g)(iii)(II) states that it "shall not be unlawful under this chapter ... to engage in any conduct which ... is excepted from the application of ... [47 U.S.C. § 605(a) ] by ... [47 U.S.C. § 605(b) ]." Subsection 605(b)(1) expressly exempts programming that is not encrypted. Had Congress wished to exempt all satellite programming from the reach of the Wiretap Act, it would have been unnecessary to include in the Wiretap Act the narrower exclusion provided by subsection 2511(2)(g)(iii)(II). United States v. Lande, 968 F.2d 907, 910 (9th Cir.1992); see 132 Cong.Rec. S14453 (1986) (statement of Sen. Mathias) (stating that "[a]s a general rule, conduct which is illegal under section 705 of the Communications Act [47 U.S.C. § 605] would also be illegal under this bill [ECPA]").

Furthermore, when the ECPA was introduced, several senators expressed concern "about the bill's penalty structure for the interception of certain satellite transmissions by home viewers." Senate Report, 1986 U.S.C.C.A.N. at 3560. Rather than remove interception of satellite transmissions by home viewers from the proscriptions of the Act, Congress responded to these concerns by altering the penalty provisions for this conduct, but only when the signals intercepted were unencrypted and unscrambled. See 18 U.S.C. § 2511(5). Additionally, the Senate report accompanying the ECPA specifically mentions the private viewing of satellite programming and states that the section 2511(5) exception to the criminal penalties of section 2511(4)(a) & (b) only applies "if the communication is not scrambled or encrypted." Senate Report, reprinted in 1986 U.S.C.C.A.N. 3555, 3576.

Excluding unencrypted and unscrambled network feeds and programming from the Wiretap Act's scope makes sense since these signals may be easily and inadvertently intercepted by anyone with a dish antenna and appropriate tuner without illegal modifications to any element. Receiving and decrypting or unscrambling a satellite signal, however, takes significant effort and is not an act of inadvertence. Furthermore, the act of encrypting or scrambling a satellite signal evinces the originator's intent to prevent unauthorized persons from viewing the transmission and communicates this intent unequivocally to persons receiving the encrypted or scrambled signal. An unencrypted or unscrambled signal does not inherently demonstrate or communicate this intent.

Citing United States v. Schweihs, 569 F.2d 965 ...