U.S. v. Hux

• Decision Date: 26 July 1991
• Docket Number: No. 90-2914,90-2914
• Citation: 940 F.2d 314
• Parties: 1991 Copr.L.Dec. P 26,774, 19 U.S.P.Q.2d 1541 UNITED STATES of America, Appellee, v. Austin Jerry HUX, dba Fireball Electronics, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 314

940 F.2d 314

1991 Copr.L.Dec. P 26,774, 19 U.S.P.Q.2d 1541

UNITED STATES of America, Appellee, v. Austin Jerry HUX, dba Fireball Electronics, Appellant.

No. 90-2914.

United States Court of Appeals Eighth Circuit.

Submitted April 10, 1991.

Decided July 26, 1991.

Ronald L. Griggs, El Dorado, Ark., for appellant.

Matthew W. Fleming, argued (J. Michael Fitzhugh and Matthew W. Fleming, on brief), Fort Smith, Ark., for appellee.

Before LAY, Chief Judge, and PECK ^* and ROSS, Senior Circuit Judges.

JOHN W. PECK, Senior Circuit Judge.

Austin Jerry Hux appeals from a guilty verdict in the district court ¹ on two counts of manufacturing an electronic device which surreptitiously intercepts electronic communications in violation of 18 U.S.C. Sec. 2512(1)(b) and two counts of infringing the copyright of computer programs contained in satellite descramblers in violation of 17 U.S.C. Sec. 506(a). Hux appeals on three grounds. First, he contends that 18 U.S.C. Sec. 2512(1)(b) is not applicable to the conduct alleged in the first two counts. Second, he asserts that the district court erred in admitting certain evidence. Third, he alleges that the evidence was insufficient to convict him of the copyright charges. For the reasons stated below, we reverse in part and affirm in part.

I. BACKGROUND

Hux sells and services satellite systems, two-way radios, and other electronic devices. In March 1989, an undercover agent working with the FBI asked Hux to modify a General Instruments VideoCipher II Satellite Descrambler Module so that it would receive premium pay channels without the user paying the provider of the programming. Hux made the modification for $400. Again in May 1989, the undercover agent gave Hux a VideoCipher II for modification. Hux modified the second unit and was paid $400. The FBI analyzed the descrambler and found that a computer chip had been modified to allow the receipt of all encrypted channels. On the basis of this evidence, a search warrant was issued for Hux's business, Fireball Electronics. Items seized during the search included modified computer chips, programs to modify computer chips, and the tools necessary to perform the modifications.

Hux was indicted on two counts of manufacturing an electronic device for the purpose of surreptitiously intercepting electronic communications, two counts of copyright infringement, and one count that was dismissed prior to trial. Hux was convicted on the four counts presented to the jury. He was sentenced to three years of probation, six months of which was to be served in an in-home detention program. Additionally, he was fined $40,000. Hux appealed his convictions to this court.

II. APPLICABILITY OF 18 U.S.C. Sec. 2512(1)(b)

18 U.S.C. Sec. 2510 et seq. are commonly referred to as the Wiretap Law. Hux argues that as such 2512(1)(b) is not applicable to the alleged conduct of modifying satellite descramblers. His contention presents a difficult question of statutory interpretation that has caused a split of opinion within the Circuit Courts.

A. Statutory authority

The legislative history of 18 U.S.C. Sec. 2512 as it was originally promulgated states that its statutory language is intended to "establish a relatively narrow category of devices whose principal use is likely to be for wiretapping or eavesdropping.... The crucial test is whether the design of the device renders it primarily useful for surreptitious listening." S.Rep. No. 90-1097, 90th Cong., 2nd Sess., reprinted in 1968 U.S.Code Cong. & Admin.News 2112, 2183. Martini olive transmitters, spike mikes, and other microphones disguised as jewelry, pens, or cigarette lighters were specifically listed as prohibited devices. Id.

In 1986, the existing law was amended through the Electronic Communications Privacy Act of 1986. The stated purpose of the amendments was to "update and clarify Federal privacy protections and standards in light of dramatic changes in new computer and telecommunications technology." S.Rep. No. 99-541, 99th Cong.2d Sess., reprinted in 1986 U.S.Code Cong. & Admin.News 3555. While the original law covered only interception of oral and wire communications, the amendments added electronic communications as well. The legislative history lists many of the new telecommunications and computer technologies covered by the amendments including electronic mail, computer-to-computer communications, electronic bulletin boards, microwave, cellular telephones, cordless telephones, electronic pagers, pen registers, trap and trace devices, electronic tracking devices, and remote computer services. Id. at 3562-65. Interception of certain satellite transmissions by home viewers is discussed in the legislative history only in the context of excepting unencrypted satellite transmissions from the Wiretap Law under 18 U.S.C. Sec. 2511. ² In fact, the legislative history states that "[t]he private viewing of satellite cable programming, network feeds and certain audio subcarriers will continue to be governed exclusively by [47 U.S.C. Sec. 605] and not by [18 U.S.C. Sec. 2510 et seq. ]. Id. at 3576.

The amended provision under which Hux was charged, 18 U.S.C. Sec. 2512(1)(b), imposes criminal sanctions on anyone who intentionally:

manufactures, assembles, possesses, or sells any electronic, mechanical, or other device, knowing or having reason to know that the design of such device renders it primarily useful for the purpose of the surreptitious interception of wire, oral, or electronic communications....

Hux contends that the proper statute for the alleged conduct is 47 U.S.C. Sec. 605(e)(4) which provides criminal penalties for:

Any person who manufactures, assembles, modifies, imports, exports, sells, or distributes any electronic, mechanical, or other device or equipment, knowing or having reason to know that the device or equipment is primarily of assistance in the unauthorized decryption of satellite cable programming....

As noted earlier, the propriety of convicting a person who manufactures or sells modified descramblers under Sec. 2512 has caused a split in the Circuits.

B. Case law

In United States v. McNutt, 908 F.2d 561 (10th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 955, 112 L.Ed.2d 1043 (1991), the Tenth Circuit concluded that the defendant, who was involved in a conspiracy involving cloned satellite descramblers for unauthorized interception of satellite programming, was properly charged under Sec. 2512. While admitting that there was some legislative history to the contrary, the Tenth Circuit determined that it was ambiguous and looked to the plain language of the statute for guidance. Under the statute, "intercept" is defined as "the aural or other acquisition of the contents of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device." 18 U.S.C. Sec. 2510(4). "Electronic communication" is defined 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...." 18 U.S.C. Sec. 2510(12).

The Tenth Circuit reasoned that satellite television transmissions carry both images and sounds by radio waves and that the defendant's cloned descramblers were electronic devices which intercepted electronic communications. 908 F.2d at 564-65. The reception of programming through the cloned descramblers is surreptitious because the satellite television program providers are unaware that it is being intercepted. Id. at 565. Therefore, the Tenth Circuit concluded that the defendant was properly charged under Sec. 2512. Id. No mention was made of 47 U.S.C. Sec. 605.

The Eleventh Circuit reached the opposite conclusion in United States v. Herring, 933 F.2d 932 (1991), a case in which the defendants modified VideoCipher II units so that they could receive unauthorized satellite programming. In Herring, the court provided a thorough historical and precedential review of Sec. 2512. In doing so, the court cited United States v. Schweihs, 569 F.2d 965 (5th Cir.1978), a case which reverses a conviction under Sec. 2511(1)(b) as it was originally promulgated. In Schweihs, the defendant had made an amplifier that aided him in avoiding an alarm system in an office he was burglarizing. The Government witnesses testified that the amplifier could be used with ordinary audio equipment and that it was not primarily useful for surreptitious listening. Id. at 969. In overturning the conviction, the court in Schweihs examined the legislative history and concluded that even a device that was constructed for eavesdropping was not prohibited by the statute "if its design characteristics do not render it primarily useful for that purpose." Id. at 968. The court stated that the statutory language "reflects a careful and studied congressional decision to leave untouched the production, distribution, and possession of electronic equipment designed for regular use in varied nonsurreptitious activities, even though the equipment is capable of being used in a surreptitious manner...." Id. The Eleventh Circuit determined that the modified descramblers in Herring also had no specifically surreptitious characteristics. Herring at 934. Their similarity to legitimate descramblers was precisely what made them useful for illegitimate reception of satellite transmissions. Id. Because the descramblers have significant legitimate uses and are not primarily useful for surreptitious listening, the Eleventh Circuit concluded that the Herring defendants could not have been convicted under Sec. 2512(1)(b) prior to its amendment. Id.

The legislative history of the 1986 amendments to the Wiretap Law stated that private viewing of cable programming was governed exclusively by 47 U.S.C. Sec. 605. The Eleventh Circuit noted that the provisions of Sec. 605 clearly prohibited the defendants' conduct in modifying descramblers to allow unauthorized access to satellite programming. Herring at...