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Prosecutors eager to go after violators of the new Digital Millennium Copyright Act recently suffered a high-profile defeat. In December a jury in U.S. district court in San Jose delivered a “not guilty” verdict to the first criminal defendant tried under the 1998 law. Prosecutors had charged Moscow’s Elcomsoft Co. with five counts of violating the copyright act. The company could have faced fines totaling more than $2 million. Prosecutors said that the Russian company’s code-busting software could be used to circumvent security protections on Adobe Systems Inc.’s eBook reader. They argued that the software skirted electronic protections of copyrighted works, and amounted to a conspiracy as defined by the DMCA. But the jurors in the case didn’t buy the government’s contention that Elcomsoft knowingly flouted the law � a necessary element to prove criminal intent under the DMCA. Indeed, during the trial before U.S. district court judge Ronald Whyte, the evidence showed that Elcomsoft had pulled its software from the market a mere five days after learning that the product could violate U.S. law. Having sold just 25 copies, the company had made only a few thousand dollars. The verdict seemed to point to a big dilemma for prosecutors in such cases: Should they wait for damages to mount before pursuing a criminal copyright case, or risk alienating juries by pursuing cases where damages might be minimal? While supporters and opponents of the DMCA agree that the Elcomsoft verdict won’t mark the end of criminal copyright prosecutions under the act, they say that prosecutors and target companies face a real conundrum. “It’s a catch-22,” says Evan Cox, a partner in the San Francisco office of Washington, D.C.’s Covington & Burling. “Do you act quickly before you run up losses, or do you let them run up so the case is strong? If you are a copyright owner, you usually want the authorities to take quick action to minimize the losses. You stopped the losses in this case, but you don’t wind up with a conviction that deters people in future cases.” The U.S. attorney’s office tried to put a positive spin on the verdict. “While disappointed, we are also pleased that the judge upheld the constitutionality of the Digital Millennium Copyright Act,” says U.S. Attorney Kevin Ryan. Ryan’s office had pursued its high-profile strategy against Elcomsoft in a locale, Silicon Valley, that seemed a natural venue. But prosecutors soon found that they had alienated the tech community: At a Las Vegas software convention, federal agents arrested the Russian programmer, Dmitri Sklyarov, who had developed the software. And Sklyarov ultimately became a cause c�l�bre, sparking national press coverage and outrage from advocates of electronic freedom. Charges against Sklyarov were to be dropped in exchange for his cooperation in the case. “When prosecutions are brought, there appears to be the need for more compelling evidence of intent,” says Q. Todd Dickinson, former head of the U.S. Patent and Trademark Office and a partner with Howrey Simon Arnold & White in D.C . “Mr. Sklyarov seems to have become somewhat of a folk hero, or a Robin Hood � type character [and] that makes a conviction more difficult.” DMCA critics say the verdict is a boost for fair use and shows that products like Elcomsoft’s have legal, not just criminal, uses. “It was really difficult to figure out what the crime was because no one was hurt. There was not intent. At most, [Adobe] was embarrassed because it was revealed the product was not very good,” says Cindy Cohn of the Electronic Frontier Foundation in San Francisco. In turn, copyright and antipiracy attorneys say that the jury may have underestimated the sophistication of the defendants. The lesson? In the future, prosecutors will need to present a more airtight theory of criminal intent. This article originally appeared in The Recorder, a sibling publication of Corporate Counseland a part of American Lawyer Media.

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