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Charges Include Conspiracy and Violations Under The NET Act and The D…

Charges Include Conspiracy and Violations Under The NET Act and The Digital Millennium Copyright Act

“Star Wars: Episode III – Revenge of the Sith,” “Batman Begins,” “Bewitched,” and More, Allegedly Distributed to Online Sites

SAN JOSE – 14 July – LAWFUEL – The Law News Network – The United States Attorney for the Northern District of California announced that three arrested individuals in Operation Site Down made their initial appearance this morning before United States Magistrate Judge Howard R. Lloyd in San Jose. A federal grand jury yesterday returned an indictment against DAVID M. FISH, 24, of Watertown, Connecticut, CHIRAYU PATEL, 23, of Fremont, California; WILLIAM VEYNA, 34, of Chatworth, California; and NATHANIEL E. LOVELL, 22, of Boulder, Colorado, charging them with violations of federal copyright laws for their involvement in a “warez” conspiracy. All but Mr. Fish appeared this morning. After Mr. Fish failed to appear, Magistrate Judge Lloyd issued a bench warrant for Mr. Fish’s arrest, but stayed the issuance of the warrant for 24 hours to determine if there was an explanation for his failure to appear.

The charges stem from the recent undercover investigation targeting online “warez” groups illegally distributing newly-released movies, games, software and music. “Warez groups” are the “first-providers” of copyrighted works to the warez underground – the so-called “release” groups that operate as the original sources for a majority of the pirated works distributed and downloaded via the Internet.

Operation Copycat is the largest and local part of the coordinated international law enforcement action known as Operation Site Down, which is investigating online piracy of copyrighted movies, music and software.

United States Attorney Kevin V. Ryan, a member of the Justice Department’s Intellectual Property Task Force, and head of the prosecuting office where the first Computer Hacking and Intellectual Property Unit was formed, stated: “This first indictment focuses on three organizers and an equipment supplier identified in the recent undercover investigation of a warez conspiracy. With investigations and searches being conducted around the country and the world, more charges against others are expected. This indictment sends a clear message that individuals participating in these ‘warez’ groups and distributing pirated movies, games and software will face federal prosecution.”

According to the indictment, defendant David Fish served as a site operator of one of the warez servers and also as a scripter, equipment supplier, broker, and encoder for the warez sites. Defendant Chirayu Patel is alleged to be one of the site operators at another warez server, and is also a scripter, equipment supplier, and broker. Defendant William Veyna allegedly acted as a site operator at the same warez site as Patel and also as an equipment supplier and broker. Defendant Nathaniel Lovell is alleged to have served as an equipment supplier for the warez sites. These positions are described below. The four individuals were all arrested on June 29, 2005, during the coordinated takedown of “Operation Site Down.”

The nine count indictment charges the four defendants with conspiring to violate federal copyright laws and with violating the No Electronic Theft Act (known as the “NET Act”). The NET Act makes it illegal to reproduce or distribute copyrighted works by electronic means, including over the Internet, even if the defendant acts without a commercial purpose or for private financial gain. The indictment alleges that upon conviction of the copyright violations, the defendants shall forfeit equipment, devices and infringed copyrighted works to the government. The indictment lists an assortment of computer and hardware equipment as subject to forfeiture.

The indictment alleges that many DVDs contained an access control and copy prevention system, including a “Content Scramble System” (CSS), which served as a technological measure to protect the contents of a DVD from unauthorized access and copying. Some warez members, including defendant David Fish, allegedly trafficked in products and devices that were used to circumvent the access control and copy prevention systems protecting the copyrighted content on the DVDs. The DMCA, enacted in 1998, enforced intellectual property laws by focusing on conduct that was primarily intended to circumvent technological measures protecting copyrighted works.

Defendant David M. Fish is charged with four counts under the Digital Millennium Copyright Act (DMCA), including three counts of circumvention of a technological measure designed protect the contents of a DVD from unauthorized access and copying; and one count of trafficking in tools used to circumvent technological measures protecting a right of a copyright owner.

“Operation Site Down” Background

Undercover operations were simultaneously concluded on June 29, 2005 in three U.S. Attorney Offices, including San Jose, Chicago and Charlotte. Collectively, the three investigations are referred to as “Operation Site Down,” which was designed to combat online piracy of copyrighted movies, music and software.

According to the U.S. Department of Justice, approximately 90 searches were conducted worldwide, with more than 70 searches executed in the United States, and more than 20 abroad. Four individuals were arrested in the United States based on arrest warrants issued in the Northern District of California, and searches and/or arrests occurred in ten other countries, including: Canada, Israel, France, Belgium, Denmark, the Netherlands, United Kingdom, Germany, Portugal and Australia. At least eight major online distribution sites were dismantled. More than 120 leading members of the organized online piracy underground were identified by the investigation to date, and others will be added as the investigations continues. Details concerning the broader “Operation Site Down” action are available from the Department of Justice at www.usdoj.gov, which issued a press release and conducted a press conference on June 30, 2005, with U.S. Attorney General Alberto R. Gonzalez.

“Operation Copycat” Background

“Operation Copycat,” is local part of the coordinated international law enforcement action known as “Operation Site Down,” and is based in the Northern District of California. Nearly 40 searches were conducted around the country based on investigative leads developed in “Operation Copycat,” a two-year long undercover investigation into “warez groups,” which are online organizations engaged in the illegal uploading, copying and distribution of copyrighted works. The investigation was led by the Computer Hacking and Intellectual Property (“CHIP”) Unit of the United States Attorney’s Office and the Federal Bureau of Investigation.

“Warez groups” are the “first-providers” of copyrighted works to the warez underground – the so-called “release” groups that operate as the original sources for a majority of the pirated works distributed and downloaded via the Internet. Once a warez release group prepares a stolen work for distribution, the material is distributed in minutes to secure, top-level warez servers throughout the world. From there, within a matter of hours, the pirated works are distributed globally, filtering down to peer-to-peer and other public file sharing networks accessible to anyone with Internet access.

According to court documents, to gather evidence in this investigation, the FBI utilized two original undercover computer servers that were used by members of the warez groups to store pirated works for illegal distribution. Some of the warez members added other servers to the undercover site. Higher level members of the warez groups, known as site operators or “SiteOps,” administered and maintained the site and controlled access to the site by use of security measures such as usernames and passwords. Others serve as “equipment suppliers” (providing hardware (such as hard drives, computer parts, and computer servers) to the warez site), “encoders” or “crackers” (those defeating copy protection devices); “scripters” (creating, programming, and helping build the warez site); “brokers” (who found groups to participate on the warez site). Lower level members included “suppliers” (providing an unauthorized copyrighted movie, game or software), “cammers” (those making unauthorized camcorder recordings in movie theaters), “couriers.”

Directory lists from the undercover “warez” servers in Operation Copycat showed that more than 750 copyrighted movies were uploaded to the site, including new releases such as “Star Wars: Episode III – Revenge of the Sith,” “Batman Begins,” and “Bewitched.” Some of these titles were available on the site within hours of the movie’s theatrical release. Directory lists also showed that over 1,250 copyrighted titles of computer games were available on the site, and over 180 titles of software applications, including those by makers such as Adobe, Apple, Autodesk, Microsoft, and Symantec. Conservative estimates of the value of pirated works seized in yesterday’s Operation Site Down action exceed $50 million.

The maximum penalties for conspiring to violated federal copyright law and for violations of the Digital Millennium Copyright Act, in violation of 18 U.S.C. § 371; 17 U.S.C. §§ 1201(a)(2)(A), and 1204(a)(1); 17 U.S.C. §§ 1201(a)(1)(A), 1204(a)(1) are five years in prison and three years of supervised release. The maximum penalties for violating the NET Act, in violation of 17 U.S.C. § 506(a)(1)(B); and 18 U.S.C. § 2319(c)(1) are three years in prison and two years of supervised release. A maximum fine of $250,000 applies to each offense, except violations of the Digital Millennium Copyright Act, which carry a maximum fine of $500,000. All offenses carry a mandatory special assessment for each conviction. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. An indictment only contains allegations and these defendants, as with all defendants, must be presumed innocent unless and until convicted.

Mark L. Krotoski is the Assistant U.S. Attorney from the CHIP Unit who is prosecuting the case. This prosecution is the result of an investigation by the FBI.

The next appearance for these defendants is scheduled for September 26, 2005, before U.S. District Court Judge Ronald M. Whyte for a status hearing.

Further Information:

A copy of this press release and related court filings may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can .

Electronic court filings and further procedural and docket information are available at (click on the link for “to retrieve documents from the court”).

Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.

All press inquiries to the U.S. Attorney’s Office should be directed to Assistant U.S. Attorney Christopher P. Sonderby, Chief of the CHIP Unit, at (408) 535-5037, or Luke Macaulay at (415) 436-6757 or by email at Luke.Macaulay3@usdoj.gov .

British MP George Galloway and his opponent the Daily Telegraph will leave no stone unturned to sort out what could be a spectacular libel case.