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DirecTV, Inc. v. Huynh

June 3, 2005

DIRECTV, INC., PLAINTIFF,
v.
HOA HUYNH, DEFENDANT.



The opinion of the court was delivered by: Charles R. Breyer United States District Judge

MEMORANDUM AND ORDER GRANTING MOTION TO ENTER DEFAULT JUDGMENT

Currently pending before this Court are several motions for default judgment in cases brought by DirecTV, Inc. ("DirecTV") against individuals that it alleges have illegally intercepted its satellite broadcasts of television programming. These cases represent only a tiny fraction of cases filed by DirecTV in district courts nationwide against alleged pirates. In nearly all of these cases, DirecTV alleges that the defendants bought devices used either to emulate or reprogram DirecTV access cards in order to illegally receive plaintiff's satellite programming. The complaints further allege that the defendants in fact used these "pirate access devices" to those ends and did receive such programming.

Subsequent to the entry of defaults in these cases by the clerk, the Court conducted an evidentiary hearing on March 17, 2005 in which DirecTV offered expert testimony supporting the inference that the defendants' purchase of the pirate access devices establishes that they illegally intercepted DirecTV's signal.*fn1 The Court also considered argument by amicus curiae the Electronic Frontier Foundation ("EFF"), which expressed concern at what they contend is plaintiff's attempt to infer unlawful conduct from the lawful purchase of technology that has both illegitimate and legitimate uses.*fn2 Having carefully considered all of the positions presented, the Court has determined that it should enter default judgment and award damages as detailed below.

BACKGROUND

A. DirecTV

Plaintiff DirecTV provides satellite television programming on a subscription and pay-per-view basis to over 13 million paying customers. In order to become a DirecTV customer, an individual must purchase the appropriate hardware, including a DirecTV satellite dish and an integrated receiver decoder ("receiver"). The satellite dish receives encrypted signals from DirecTV's orbiting satellites and sends the signal to the receiver, which decrypts the signal and transmits it to the consumer's television.

Inserted into the receiver is a removable credit-card sized device containing two microchips called a "conditional access module" and commonly referred to as a smart card. Smart cards are essentially miniature computers containing their own software and memory. They are used in a number of applications, including as phone cards, personal identification cards and gift cards. DirecTV's smart cards contain data identifying the particular customer and the subscription package purchased. Using this information, the smart card tells the receiver which channels the receiver may and may not decrypt. DirecTV pirates were able to exploit this system by reprogramming DirecTV smart cards to unlock all of DirecTV's channels regardless of whether the user had paid for them. A related piracy strategy involved replacing the smart card entirely with a machine that would tell the receiver to decrypt channels without payment.

When DirecTV first became aware of these strategies, it invested in anti-piracy technology. For example, DirecTV's satellites broadcasted electronic countermeasures that disabled illegally reprogrammed smart cards. However, soon after the countermeasures were implemented, pirates were able to develop software patches that repaired access cards disabled by them. Therefore, for those pirates who knew of these fixes and were willing and able to apply them, the electronic countermeasures were only successful in temporarily discontinuing their illegal access to DirecTV.

The most effective countermeasure--dubbed "Black Sunday" by pirates--was originally believed by DirecTV to permanently disable a large proportion of illegally programmed smart cards. However, only three weeks after implementation of that countermeasure, new hardware and software emerged on pirate websites that was able to repair and reprogram smart cards effected by Black Sunday.

B. Pirate Access Devices

In order to illegally receive DirecTV, pirates have employed various devices. Because of the widespread use of smart card technology, some of the devices labeled by DirecTV as "pirate access devices" may have legitimate uses separate from stealing DirecTV's programming. DirecTV's experts have highlighted for the Court the specific attributes of the equipment at issue in these lawsuits that make DirecTV confident that they were in fact purchased for the sole purpose of illegally descrambling DirecTV's signal. Those devices identified by plaintiff as pirate access devices are marketed as "unloopers," "bootloaders," "emulators," and "reader/writers."

Products marketed as "unloopers" and "bootloaders" are specialized smart card programmers that are effective in repairing smart cards damaged by DirecTV's electronic countermeasures. Unloopers*fn3 are constructed in a manner so specific to DirecTV piracy as to create a strong presumption that an individual who buys the device is using it for that purpose. First, unloopers apply a lower power supply to smart cards inserted into them than any other devices used to read, program or reprogram smart cards. The purpose of providing a lower voltage supply is to alter the processor on the smart card in a manner that is useful in satellite piracy. DirecTV's experts have not been able to locate any other smart card application that is compatible with the unlooper's unique power supply system. Indeed, the unlooper's power system violates the universal standard for smart card devices and therefore is likely to damage smart cards that are used with it. A second attribute indicating use for piracy is that many unloopers are sold with microchips containing software which has no other use than to reprogram DirecTV's access cards in order to steal DirecTV.*fn4 Finally, a third indication is that unloopers are compatible with and recognized by software applications available on the internet which have the sole use of reprogramming DirecTV smart cards for the purpose of piracy. Together, these three attributes make an individual's possession of an unlooper highly suggestive of satellite piracy.

An "emulator" is a circuit board that is manufactured to be the same size and shape as a smart card, as well as to have the same external components.*fn5 Because of this design, emulators can be inserted into a DirecTV receiver in place of a smart card. While inserted, an emulator can be connected to a personal computer. The user can then, through the emulator, apply software applications from the computer to the DirecTV receiver to decrypt all of DirecTV's channels.

Nothing about this structure is necessarily suggestive of use for satellite piracy. However, DirecTV identifies other emulator attributes which it contends indicates illegal use. Like smart cards, emulators have external metal contact points that connect to corresponding contact points on the inside of a DirecTV receiver in order to transmit information between the two. Unlike most smart card receptacles, DirecTV receivers are designed such that smart cards should be inserted into them with the metallic contact points facing downward. Most other smart card devices are made for the card to be inserted with the contact points facing upward or sideways. Emulators are designed to be compatible with DirecTV's atypical insertion design. Some of them contain a "This Side Up" instruction on one side, such that when they are inserted consistent with the instruction, the contact points face downward.*fn6

Therefore, because emulators share this unique quality with DirecTV's equipment, possession of an emulator suggests use for piracy. In addition, the emulators were advertised by pirate websites in a manner that indicated they had the ability to pirate DirecTV's signal. However, because DirecTV's receiver design is not wholly unique, and because a user could easily purchase an emulator and not heed the "This Side Up" instruction, emulators may possess some legitimate uses.

A smart card reader/writer is, quite intuitively, a device that allows the user to read and reprogram the software contained on a smart card.*fn7 Similar to emulators, those smart card reader/writers that were sold on pirate device websites contain some indication that they were used for DirecTV piracy. Many reader/writers used for legitimate uses contain a switch that detects the insertion of a smart card. The switch is useful for smart cards used for identification purposes, because it allows insertion of the card alone to initiate a log-in sequence rather than requiring the user to take the extra step of manually notifying the computer when the card has been inserted. Those reader/writers that DirecTV has identified as having been marketed and used for piracy do not contain this switch, and therefore do not have the functionality of more widely-used reader/writers. In addition, reader/writers used for DirecTV piracy were designed to have smart cards inserted into them with the contacts facing downward. Therefore, like emulators, possession of reader/writers is indicative (though not conclusively) of satellite piracy.

C. Other Evidence of Piracy

In addition to features inherent in the technology itself, DirecTV identified potential satellite pirates from other circumstantial evidence. Pirate access devices were sold on the internet by retailers such as "White Viper Technologies," "cansat2000," "Kick Ass Clones," and "Vector Technologies." DirecTV was able to identify individuals who were potentially using pirate access devices after executing searches of sales records held by these companies. For example, in the instant case DirecTV discovered that the defendant purchased an unlooper and a reader/writer from the website of White Viper Technologies for approximately $300. The White Viper website contained links to other internet pages which provided instructions on how to program DirecTV access cards for the purpose of piracy.

Once obtaining purchase records from pirate access device producers, DirecTV would also make attempts to cross-reference the lists with their own subscription lists. A customer who had once held a DirecTV subscription was likely to still possess the equipment necessary to receive DirecTV's signal. Here, for example, the address at which Mr. Huynh received the pirate access devices was found in DirecTV's database as the address of a DirecTV subscriber from August 1998 to August 2000. The record also shows that Mr. Huynh purchased the pirate access devices in November 2000.

DirecTV's searches also revealed the e-mail addresses of pirate access device customers. DirecTV cross-referenced that information with data it possessed containing e-mail addresses of individuals who had participated in internet bulletin boards used to discuss DirecTV piracy. Mr. Huynh, for example, was connected ...


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