Software firm acquitted in first digital copyright law case
By Howard Mintz for the Arizona Daily Star.

The jury, however, sided with ElcomSoft, which maintained since the case broke into the public spotlight last year that it believed it was marketing a legal product and was unaware that it was violating the DMCA. Jurors said after the verdict that the government failed to prove that ElcomSoft willfully intended to violate U.S. copyright laws, the high standard required to obtain a conviction under the 4-year-old copyright act...

Dennis Strader, the jury foreman, noted that ElcomSoft openly sold its software, taking no steps to conceal its conduct before being warned of problems by Adobe. Strader added that some jurors were concerned about the scope of the law and whether it curtailed the "fair use" of material simply because it was electronic.

"Under the eBook formats, you have no rights at all, and the jury had trouble with that concept," Strader said.

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Software firm acquitted in first digital copyright law case

By Howard Mintz
Knight Ridder Newspapers

SAN JOSE, Calif. — A federal jury in San Jose on Tuesday rejected the government's first attempt to enforce the criminal sanctions in a controversial digital copyright law, acquitting a small Russian software company of trying to illegally undermine a popular Adobe Systems product.

After nearly three days of deliberations, the jury cleared Moscow-based ElcomSoft of all charges that it violated the 1998 Digital Millennium Copyright Act, frustrating federal prosecutors who used the case as an unprecedented test of the law's teeth against Internet piracy. The verdict stemmed from a two-week trial in which prosecutors accused ElcomSoft of devising a "burglary tool" to allow computer users to copy and distribute electronic books that were supposed to be protected by Adobe's technology.

The jury, however, sided with ElcomSoft, which maintained since the case broke into the public spotlight last year that it believed it was marketing a legal product and was unaware that it was violating the DMCA. Jurors said after the verdict that the government failed to prove that ElcomSoft willfully intended to violate U.S. copyright laws, the high standard required to obtain a conviction under the 4-year-old copyright act.

The ElcomSoft case has been considered a key test of the DMCA, which has come under fire from critics who say it is overly broad and threatens the flow of information on the Internet. In the end, the case produced a mixed legacy — a series of rulings served to clarify and uphold the criminal provisions of the law, but legal experts said the jury's message also gives prosecutors a murky road map for using it in the future.

The case was the first to go to trial under the copyright law; two other prosecutions in the United States have ended in plea bargains. ElcomSoft faced millions of dollars in fines if convicted.

Assistant U.S. Attorney Scott Frewing, who prosecuted the case, said he "accepted" the verdict and downplayed the suggestion that it would discourage future use of the law. Frewing noted that U.S. District Judge Ronald Whyte earlier in the case upheld the constitutionality of the 1998 copyright act, establishing strong precedent for future prosecutions.

"I don't think one jury verdict is going to" undermine the copyright law, Frewing added.

San Francisco attorney Joseph Burton, a former federal prosecutor who represented ElcomSoft, agreed with Frewing that the verdict does not throw "a blanket" on the copyright act. But he stressed that he believes ElcomSoft was the wrong target for prosecutors. And ElcomSoft Chief Executive Alexander Katalov, smoking a cigarette while he phoned friends and colleagues after the verdict, was relieved by the outcome.

"This is why I spent a year to demonstrate we were not guilty of this," Katalov said. "It's why we rejected a guilty plea and a deal."

The ElcomSoft case attracted widespread attention in July 2001, when federal agents arrested Dmitry Sklyarov, an ElcomSoft programmer, at a Las Vegas Def Con hacker conference where he was praising the company's technology. Federal prosecutors broke new ground by charging Sklyarov and the company under the DMCA, sparking howls of protest from Internet rights groups and the hacker community.

Prosecutors eventually dropped charges against Sklyarov, but pursued the case against the company. They specifically alleged that ElcomSoft violated the law by marketing a program called the Advanced eBook Processor, which allowed users to unscramble Adobe's eBook Reader. The eBook Reader, designed to prevent copying of electronic books, was relied upon by publishing retailers like Barnesandnoble.com and Amazon.com to control sales and distribution of e-books.

During the trial, Frewing told jurors that ElcomSoft knew it was violating the law by selling a product designed to crack Adobe's technology. But ElcomSoft succeeded in convincing the jury otherwise, presenting witnesses, including Sklyarov, who testified that they believed the software had legitimate purposes and complied with Russian law.

Sklyarov admitted that when he developed the program, he was not concerned about violating U.S. copyright law, even though ElcomSoft sold the software on its Web site. Jurors, however, said such admissions were not enough to support a conviction.

Dennis Strader, the jury foreman, noted that ElcomSoft openly sold its software, taking no steps to conceal its conduct before being warned of problems by Adobe. Strader added that some jurors were concerned about the scope of the law and whether it curtailed the "fair use" of material simply because it was electronic.

"Under the eBook formats, you have no rights at all, and the jury had trouble with that concept," Strader said.

The "fair use" exception to traditional copyrighted material has been one of the core debates over the DMCA. Critics say the law punishes online use of material even if it could fall under that exception, which, for example, allows owners of copyrighted material to make a copy of a book for academic use or tape a record album.

The Electronic Frontier Foundation, a strong critic of the law, said the verdict would "send a strong message to federal prosecutors who believe that tool makers should be thrown in jail just because a copyright owner doesn't like the tools they build."

"We have said from the beginning that Sklyarov, ElcomSsoft and technologists like them are not pirates," said Fred von Lohmann, a senior attorney with the Electronic Frontier Foundation.

Adobe issued a brief statement saying it was disappointed in the verdict but still confident it was correct to bring the case to the attention of law enforcement.