ElcomSoft Reply to Government Opposition

in US v. ElcomSoft (Feb. 25, 2002)

JOSEPH M. BURTON (SB No. 142105)
STEPHEN H. SUTRO (SB No. 172168)
JON D. RUBIN (SB No. 196944)
DUANE MORRIS LLP
100 Spear Street, Suite 1500
San Francisco, CA  94105
Telephone: (415) 371-2200
Facsimile: (415) 371-2201

Attorneys for Defendant
ELCOMSOFT COMPANY, LTD.

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION

TABLE OF CONTENTS

INTRODUCTION

Elcomsoft Company, Ltd.'s ("Elcomsoft") Motion to Dismiss Indictment for Lack of Jurisdiction is not based on the ground that the court lacks personal jurisdiction over the defendant.   Instead, Elcomsoft brings its Motion on the ground that the court lacks subject matter jurisdiction.  Specifically, that Section 1201 of the Digital Millennium Copyright Act ("DMCA") does not have extraterritorial application, and that the alleged criminal conduct in this case occurred either in Russia or on the Internet.  In its Opposition, the government, relying mainly on personal jurisdiction concepts, argues that Section 1201 confers jurisdiction upon this court because Elcomsoft offered and sold the AEBPR program in the United States, or alternatively, that Section 1201 of the DMCA should be applied to Elcomsoft's extraterritorial conduct.

ARGUMENT

A.   THE ALLEGED CONDUCT DID NOT OCCUR IN THE UNITED STATES

The government argues that "Elcomsoft offered the AEBPR program to the public and trafficked in the AEBPR program in the United States."  Opposition, p. 4.  However, in fact all of Elcomsoft's conduct occurred in Russia or on the Internet, and as such does not fall within the territorial jurisdiction of the United States.

1.   The Internet is a Place Outside of the Territorial Jurisdiction of the United States.

The Internet is not a territory of, or place within, the United States.  The territorial jurisdiction of the United States is limited to "places over which the United States has sovereignty or has some measure of legislative control."  Foley Bros. v. Filardo, 336 U.S. 281, 285 (1949).  The Internet does not meet this definition.

As explained by one Court of Appeals, "the Internet connects over 159 countries and more than 109 million users,"  American Civil Liberties Union v. Reno, 217 F.3d 162, 169 (3rd Cir. 1999), over whom the United States does not have sovereignty.  Indeed, "no single organization or entity controls the Internet"  American Civil Liberties Union v. Reno, 929 F.Supp. 824, 838 (E.D.Pa.1996); American Civil Liberties Union v. Reno, 31 F.Supp.2d 473, 484 (E.D.Pa. 1999).  The "international" nature of the Internet results from the fact that activities which occur on it are not limited to a particular jurisdiction:

[T]he Internet "negates geometry . . . it is fundamentally and profoundly anti-spatial.  You cannot say where it is or describe its memorable shape and proportions or tell a stranger how to get there.  But you can find things in it without knowing where they are. The [Internet] is ambient--nowhere in particular and everywhere at once."

Indeed, the places most analogous to the Internet, in a jurisdictional sense, are outer space and the international waters.  Outer space and international waters, like the Internet, are areas outside of the jurisdiction of nations, but which may nonetheless have an impact on them.  They are global commons.  See, e.g., Natural Resources Defense Council, Inc. v. Nuclear Regulatory Commission, 647 F.2d 1345, 1348 fn.8 (1981) (defining "Global commons" as "the high seas, Antarctica, and portions of the atmosphere outside the sovereign jurisdiction of a single nation").

Prior treaties that address outer space and international waters set the foundation for the concept of international space as the "common heritage of mankind."  The common heritage of mankind ("CHM") has been defined as a principle that extends management rights of an area to everyone, while giving ownership to no one.  See, e.g., Jannat C. Thompson, Space for Rent: the International Telecommunications Union, Space Law, and Orbit/spectrum Leasing, 62 JALC 279, 305 (1986). According to CHM principles, no one nation owns areas that have the CHM distinction.  Instead, the international community, through treaties, norms, and agreements, collectively regulate the area for the benefit of all parties.  Under CHM, "mankind" takes on a set of priorities distinct from the summation of individual nation-state interests.  Because of its likeness to outer space and international waters, users of the Internet must respect these principles and treat it similarly.

2.   The Alleged Violations of Section 1201 Occurred Either in Russia or on the Internet, Not in the United States.

It is important to first define the conduct prohibited by Section 1201.  Section 1201 prohibits the manufacturing, importing, offering to the public, providing or otherwise trafficking in certain devices, technologies or services.  Webster's Dictionary defines "provide" as "to make available; supply; or afford."  Similarly, Webster's Dictionary defines "traffic" as "buying and selling; or 

dealings, business, or intercourse."  Significantly, Section 1201 does not prohibit accessing, viewing, downloading, possessing or using such devices.

Elcomsoft released the AEBPR program to the public from Russia on or about June 22, 2001, by posting the program on its website at www.elcomsoft.com.  Declaration of Katalov, ¶ 4.  The AEBPR program was designed and developed by Elcomsoft exclusively in Russia.  Declaration of Katalov, ¶ 8.  The webpage describing the AEBPR program and all other related Elcomsoft webpages were also completely designed and coded by Elcomsoft in Russia.  Declaration of Katalov, ¶ 9.  When finished and ready for public viewing, Elcomsoft's web pages related to the AEBPR program was loaded onto the Internet from Elcomsoft computers in Russia.  Declaration of Katalov, ¶ 9.  In fact, once Elcomsoft uploaded the AEBPR program to the webserver on the Internet, no affirmative action by another person or company was needed for the AEBPR program to be available for download by the public.  Declaration of Katalov, ¶ 10.  In other words, as soon as Elcomsoft uploaded the AEBPR to its Internet webserver, the AEBPR program was immediately available for downloading.  Finally, all Internet e-mail contact from or to Elcomsoft originated from and terminated at Elcomsoft e-mail server which was located in Moscow, Russia.  Declaration of Katalov, ¶ 11. 

These facts make clear the criminal conduct specifically at issue in this prosecution, offering to the public (counts 2 and 4) and providing (counts 3 and 5) occurred either in Russia or on the Internet, not in the United States.  The AEBPR program was made available for purchase only on the Internet.  Elcomsoft did not make the program available for purchase through any other means.  The AEBPR program was not available for purchase in the United States through wholesale or retail outlets.  Nor was it sold or marketed by Elcomsoft employees or any other individuals within the United States.  Declaration of Katalov, ¶ 3.

The government does not dispute these facts, but instead argues that the charged conduct occurred in the United States because:  (1) Elcomsoft offered the AEBPR program from a webserver physically located in Illinois; (2) Elcomsoft directed e-mails to individuals in the United States; (3) Customers of Elcomsoft made payment for the AEBPR program to RegNow!, an Internet company that operates from Issaquah, Washington and offers use of its ordering and registration system to companies doing business on the Internet; (4) RegNow! Processed credit card payments from Elcomsoft through a processor in California; and (5) Elcomsoft sold a copy of the AEBPR program to a purchaser located in San Jose, California.

The fact that the Elcomsoft webserver was located in Chicago, Illinois is irrelevant to the issue of where the unlawful conduct occurred.  The AEBPR program was not available or sold in Illinois or anywhere else in the United States.  It was only available, and could only be bought and sold on the Internet.  A prospective purchaser, who may have heard of the program, could have searched throughout Illinois but would not have been able to learn about or purchase the program  from Elcomsoft, unless that purchaser went on to the Internet; the only place the program was available. 

The lack of any significance to the location of the webserver and the criminal conduct at issue is demonstrated by a simple example.  On Monday a prospective purchaser visits the Elcomsoft website which is hosted on a server on Chicago, and purchases a copy of the AEBPR program.  On Tuesday, the same purchaser visits the Elcomsoft website, which has now been switched electronically so that it is hosted in Russia, and purchases a second copy of the AEBPR program.  It is mere sophistry to say that based on the location of the Chicago server that the program was available and sold in the United States on Monday, but that on Tuesday it was not.  The fact is that the program was available in only one place, the Internet, on both Monday and Tuesday.  The program was available on the Internet to purchasers in the United States (and elsewhere) on both days.  Purchasers do not and need not know that a website they visit on the Internet may be hosted by machines in two different physical locations.  That fact is irrelevant to their conduct on line in every way that is meaningful.

The Internet is a place that is independent of the physical location of any particular person or company involved in a transaction occurring thereon.  The Internet is "a decentralized, self-maintaining series of redundant links between computers and computer network . . ."  American Civil Liberties Union v. Reno, supra, 929 F.Supp. at 832.  It has "no particular geographical location."  Reno v. American Civil Liberties Union, 521 U.S. 844, 849-851 (1997).

The system is indifferent to the physical location of those machines, and there is no necessary connection between an Internet address and a physical jurisdiction.

Although the domain name initially assigned to a given machine may be associated with an Internet Protocol address that corresponds to that machine's physical location (for example, a ".uk" domain name extension), the machine may be physically moved without affecting its domain name.

Johnson and Post, Law and Borders -- The Rise of Law in Cyberspace, 48 Stanford Law Review 1367, 1371 (1996).

The problem with looking to the physical location of hardware on the Internet, is demonstrated when one considers the manner in which the Internet works.

"The Internet assigns a unique IP address to each computer on the Internet and uses those addresses to relay "packets", i.e. small chunks of digital correspondence.  "When you send information across the Internet, the Transmission Control Protocol (TCP) first breaks it up into packets.  Your computer sends those packets to your local network, Internet Service Provider (ISP), or online service. From there, the packets travel through many levels of networks, computers, and communications lines before they reach their final destination, which might be across town or around the world.  A variety of hardware processes those packets and routes them to their proper destinations."

United States v. Ivanov, 175 F.Supp.2d 367, 369 fn. 2 (D.Conn. 2001) (quoting Preston Gralla, How the Internet Works 9 (1999)).  Attempting to define jurisdiction based on the physicality of aspects of the Internet would alter the existing pattern of Internet communications in an impractical  manner and create jurisdictional mayhem.  For example, an uploader could be subject to the jurisdiction of a country or state where a randomly assigned routing node was momentarily held on a server.

The problems with viewing physicality as the sole basis for jurisdiction was thoroughly yet succinctly discussed in Jurisdiction in Cyberspace: A Theory of International Spaces.  That article provides:

This narrow approach ignores the interactivity of cyberspace in four important ways.  The first can be best stated in the following question: does a webpage really exist before it is accessed and constituted on the screen of the downloader? Surely a single gif file containing pornography cannot be "obscene" until compiled and displayed on the downloader's machine in the community whose standards must be applied to define it as such.  This has more than metaphysical implications.  It is not difficult to figure out who put garbage into cyberspace, but it is very difficult to say what happens to it once it is there.  If a webpage is located at Stanford, it is difficult to decide for jurisdictional purposes whether a Bolivian accessing it comes to Stanford or the webpage "travels" to Bolivia.

Second, constituent parts of a webpage are often called from other servers, with the source code for the page consisting mostly of images called up from other places.  We do not know what the future will bring, but we can only suppose that "sites" consisting of data pulled from around the world at the downloader's request will become more common.  Thus, the "illegal" portion of a webpage may exist on a server in another country, where the materials are completely legitimate.

Third, a webpage consists in large part of links to other pages which may be  "located" in other countries.  Even if the data is not called up by the webpage itself, links to other data are presented to the downloader for him to "click" on.  It becomes irrational to say that a webpage with links to gambling and pornography "located" in twenty different countries is subject to the law of any or all of those countries. . . .

Fourth, and it is often overlooked, such interactivity is complicated by randomness and anonymity.  William Byassee argues persuasively that territoriality should refer only to the "physical components of the cyberspace community", who are the "sender and recipient."  The terms "sender" and "recipient" imply the intent of two (and only two) parties to communicate with each other.  These are not the same people as the "uploader and downloader."  The uploader and the downloader do not necessarily know who or where the other is.  The substantive results of this analysis would lead to a considerable amount of seemingly random criminal liability, without really adding anything to a state's ability to control the content of cyberspace.  Persons traveling around cyberspace need to know what set of laws applies to their actions.  If we reject the territorialization of cyberspace and accept the theory of the uploader and the downloader, we must reject the broad form of the "law of the server."

Id. at 80-81.

Paradoxically, adoption of this server based thinking would neuter the government's second jurisdictional basis - - that email was sent between Elcomsoft and its customers - - because Elcomsoft's email server is located in Russia.  Katalov Declaration ¶ 11.  Moreover, contrary to the government's assertion, Elcomsoft did not direct e-mail to individuals in the United States.  While Elcomsoft did send out e-mails to prior customers, they were not directed to the United States.  The e-mails were directed to Internet addresses, without regard to physical location.  As Elcomsoft noted in its moving papers and stated in the Reno case, "[t]here is no effective way to determine the identity . . . of a user who is accessing material through e-mail, mail exploders, newsgroups or chat rooms.  An e-mail address provides no authoritative information about the addressee. . . ."  American Civil Liberties Union v. Reno, 929 F.Supp. 824, 845 (E.D. Penn. 1996), aff'd American Civil Liberties Union v. Reno, 217 F.3d 162 (3rd Cir. 2000).

The government argues that the charged conduct occurred in the United States because Elcomsoft's customers paid for the AEBPR program through RegNow!, that RegNow! processed credit card payments through a California processor, and that Elcomsoft sold a copy of the AEBPR program to a purchaser located in San Jose, California.  Elcomsoft's relationship with RegNow! and RegNow!'s processing activities have nothing to do with Elcomsoft's conduct and are an improper attempt to apply concepts of personal jurisdiction to the question of territorial jurisdiction.

Finally, the government's argument that jurisdiction has been conferred under the DMCA because Elcomsoft sold a copy of the AEBPR program to a person located in California, constitutes a fundamental misunderstanding of the essential nature of Internet transactions.  As noted earlier, Section 1201 does not prohibit the purchase, possession, or use of the devices it prohibits.  Thus, no unlawful conduct occurred in California.  This case is in sharp contrast to Vacco v. World Interactive Gaming Corporation, 1285 Misc. 2d 852, 714 N.Y.S. 2d 844 (1999).  In Vacco, the New York Supreme Court found that the State of New York subject matter jurisdiction over Internet gambling activities conducted from off-shore by an Antiguan corporation.  However, the court based its finding of jurisdiction on the fact that the New York State Penal Code makes it illegal for a person in New York to enter a bet, or transmit a bet regardless of where that bet may finally be consummated.  Here, the purchase of the AEBPR program by a person in the United States is lawful, and, as discussed previously all of Elcomsoft's conduct occurred on the Internet. 

Moreover, even if the purchase of the program by a person in California were considered to be "trafficking,"^[1] Elcomsoft asserts that this conduct occurred on the Internet and not in California.  The mere fact that a person located in California bought a product does not mean that the product was bought in California.  For example, a Californian citizen may go to another place (Mexico), make a purchase and return to California.  No one would under these circumstances consider that the purchase was made in California.  The Internet makes this same transaction and visit to another place possible instantaneously.  As discussed previously, the Internet is a place separate and apart from the physical location of the users who go to it.  Adoption of the government's result oriented view of Internet transactions would subject Elcomsoft and any other person or entity transacting business on the Internet to the simultaneous jurisdiction of every place and any place that had a citizen who accessed Elcomsoft's website. 

3.   Elcomsoft Was Not Present In the United States During Commission of the Charged Offenses.

The government argues that "Elcomsoft was physically present in the United States when it committed the charged conduct," (Opposition, p. 5), "because a corporation is present in a jurisdiction when it operates an Internet computer server or engages in other substantial conduct on the Internet, particularly when, as here, the electronic presence is augmented by other business contacts."  Id.

This argument and the cases the government cites in support of it - - Intercom, Inc. v. Bell Atlantic Internet Solutions, Inc., 205 F.3d 1244 (10th Cir. 2000); 3D Systems, Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 1377-78 (Fed. Cir.1998); CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996) and; Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D.Pa. 1997) - - may be relevant in determining personal jurisdiction, but have not and should not be used to resolve questions of subject matter jurisdiction.^[2]

Subject matter jurisdiction requires the court to apply an unquestionably different test from that applied for personal jurisdiction.  See Ruhrgas AG v. Marathon Oil Company, 526 U.S. 574, 575 (1999).  The United States Supreme Court addressed the distinction between subject matter and personal jurisdiction in Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694 (1982).  There, the Court stated:  "The concepts of subject matter and personal jurisdiction . . . serve different purposes, and these different purposes affect the legal character of the two requirements."  Id. at 701.  Subject matter jurisdiction arises from Article III of the United States Constitution as well as statutory requirements.  Id. at 702.  It concerns the restriction of federal power.  As such, no action of the parties can confer subject-matter jurisdiction upon a federal court.  Conversely, personal jurisdiction arises, not from Article III, but from the Due Process Clause guarantees of the Fifth and Fourteenth Amendments.  See id. at 702; Hansberry v. Lee, 311 U.S. 32, 41.  Its purpose concerns the protection of individual liberty interests.  Thus, personal jurisdiction can be conferred by a party.  See Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, supra, 456 U.S. at 703; McDonald v. Mabee, 243 U.S. 90 (1917). 

Because of these fundamental differences, the cases cited by the government are  inapposite.  This court must decide if the charged offenses were committed within the territorial jurisdiction of the United States, not whether the totality of Elcomsoft's contacts with the United States are sufficient to justify personal jurisdiction over it.

However, even if personal jurisdiction analysis were appropriate, which it is not, the cases cited by the government are all distinguishable because, unlike this prosecution, they all involve a circumstance in which the conduct at issue was intentionally directed at the forum state.

In Intercon, Inc. v. Bell Atlantic Internet Solutions, Inc., supra, 205 F.3d 1244, the United States District Court for the Tenth District considered an appeal taken by plaintiff Intercon, Inc., to the district court's order dismissing its action against defendant Bell Atlantic Internet Solutions, Inc., for lack of personal jurisdiction.  Id. at 1245.

The Court of Appeals reversed the lower court's decision, "[b]ecause plaintiff made a prima facie showing that defendant purposefully directed its conduct at the forum state, and that this conduct caused plaintiff's harm."  Id. at 1245-46.  Contrary to the United States' contention, the holding was not:

based on defendant's continued use of a server in the forum state, even after it learned that it was not authorized to do so, that the server was located in the forum state, and that the excess use was causing problems for the true owner.

Opposition, p. 5.  The Court rendered its holding because "plaintiff ha[d] shown that defendant purposefully directed its conduct toward [the forum]. . . ."  Id. at 1247 (emphasis added).  The Court explained:

[D]efendant had notice that it was routing its customers' e-mail through the Oklahoma mail server and that the unauthorized traffic was causing problems for the Oklahoma-based company.   It is possible that defendant knew this information even earlier, as it was already providing plaintiff's phone number to its customers for technical support before plaintiff advised defendant of the problem. Defendant nonetheless continued to provide plaintiff's address to its new subscribers for a full two months, until December 31, 1996, and permitted thousands of its old customers to access the Oklahoma server for an additional seven weeks, despite having the technological ability to prevent such access immediately upon discovering the problem.

Id. at 1247-48.

Assuming arguendo that Intercom could be applied to an issue arising from a challenge to subject matter jurisdiction, which Elcomsoft disputes, Intercom is sufficiently distinguishable from the case at bar to render the government's reliance on it useless.  Elcomsoft did not purposely direct the offer and sale of the AEBPR program at the United States.  Rather, it made the program available on the Internet to all interested purchasers without regard to their location.

In 3D Systems, Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 3D Systems, Inc. appealed the decision of the United States District Court for the Central District of California dismissing its complaint against Aarotech Laboratories, Inc., et al. for lack of personal jurisdiction.   The Court of Appeals for the Ninth Circuit affirmed the district court's determination, finding, in part, that Aarotech purposefully directed its activities at residents of California because it: (1) physically (as opposed to electronically) sent promotional letters, solicited orders for models, sent videos and sample parts, and issued price quotations to residents of California; (2) responded to e-mail requests for information, and discussed the use of a California company's software with its own rapid prototyping equipment; and (3) purchased parts for its rapid prototyping equipment in California.  Id. at 1377.

In CompuServe, Inc. v. Patterson, 89 F.3d 1257, Patterson, a Texas resident, entered into a contract to distribute shareware  through CompuServe's Internet server located in Ohio.  Id at 1260.  From Texas, Patterson electronically uploaded thirty-two master software files to CompuServe's server in Ohio via the Internet.  Id. at 1261.  CompuServe later began to market a product that Patterson believed to be similar to his own.  Id.  Patterson threatened to sue.  Id.  CompuServe brought an action in the Southern District of Ohio, seeking a declaratory judgment.  Id.  The District Court granted Patterson's motion to dismiss for lack of personal jurisdiction and CompuServe appealed.  Id.  The Sixth Circuit reversed.  The Court explained that Patterson had purposefully directed his business activities toward Ohio by knowingly entering into a contract with an Ohio resident and then "deliberately and repeatedly" transmitted files to Ohio.  Id. at 1264-66.

In Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 case brought before the United States District Court for the Western District of Pennsylvania an Internet domain name dispute, which existed between plaintiff Zippo Manufacturing Corporation ("Manufacturing") and Zippo Dot Com, Inc. ("Dot Com").  As part of that action, Dot Com moved the court to dismiss for lack of personal jurisdiction.  The court denied the motion, explaining: "Dot Com has contracted with approximately 3,000 individuals and seven Internet access providers in Pennsylvania."  Id. at 1126.

The court rejected Dot Com's efforts to characterize its conduct as falling short of purposeful availment of doing business in Pennsylvania.  The court reasoned:

[Dot Com] repeatedly characterized its actions as merely "operating a Web site" or "advertising."   Dot Com also cites to a number of cases from this Circuit which, it claims, stand for the proposition that merely advertising in a forum, without more, is not a sufficient minimal contact.  This argument is misplaced.   Dot Com has done more than advertise on the Internet in Pennsylvania.  Defendant has sold passwords to approximately 3,000 subscribers in Pennsylvania and entered into seven contracts with Internet access providers to furnish its services to their customers in Pennsylvania.

Id.  (emphasis added)

In summary, there is no basis for concluding that Elcomsoft offered for sale or trafficked the AEBPR program in the United States, or that Elcomsoft was present in the United States at the time of the alleged conduct.  Accordingly, this court should find that Elcomsoft's conduct with regard to the AEBPR program occurred in Russia or on the Internet, outside of the jurisdiction of the DMCA.

B.   PRINCIPLES OF STATUTORY CONSTRUCTION PRECLUDE AN EXTENSION OF SECTION 1201 EXTRATERRITORIALLY

When interpreting a criminal statute, courts begin with the language of the statute itself,  and, if possible, "follow the plain and unambiguous meaning of the statutory language."  United States v. Albertini, 472 U.S. 675, 680 (1985) (citing Garcia v. United States, 469 U.S. 70, 75 (1984); United States v. Turkette, 452 U.S. 576, 580 (1981)).  See also Almero v. Immigration and Naturalization Service, 18 F.3d 757, 760 (9th Cir. 1994).  Only where a statute is silent or ambiguous regarding an issue, will courts "'resort to the language and structure, legislative history, and motivating policies of the statute.'"  United States v. LeCoe, 936 F.2d 398, 402 (9th Cir.1991) (quoting Moskal v. United States, 498 U.S. 103, 108 (1990)).  If the statue remains ambiguous after such an inquiry, courts will apply the rule of lenity and construe the criminal statute in favor of leniency toward the accused.  United States v. Bass, 404 U.S. 336, 348 (1971).

The words of Section 1201 provide no indication of an intent that it be applied extraterritorially.  The government, however, argues that Congress' use of the term "import" demonstrates such an intent.  Opposition, p. 10.    Citing United States v. Larsen, 952 F.2d 1099, 1101 (9th Cir. 1991).  The government argues that:  "When Congress enacts a statute criminalizing conduct that involves importation, Congress intends the statute to apply extraterritorially."

First, it should be noted that Elcomsoft is not here charged with importing the AEBPR program.  Thus, even if it were found that Congress intended Section 1201 to have extraterritorial application in that regard - - a position we strongly deny - - extraterritorial application to the conduct charged in this case would not be appropriate.

Larsen involved an appeal by Charles Edward Larsen from a conviction for his involvement in an international marijuana smuggling operation.  Id. at 1099.  Larsen's appeal was based on his belief that the district court erred when it denied his motion to dismiss one count against him, which was based on 21 U.S.C. §  841(a)(1).  Mr. Larsen believed that Section 841 did not have extraterritorial application.  Id. at 1099-1100.  The Court of Appeals for the Ninth Circuit rejected Mr. Larsen's claim because of the unique nature of drug possession/distribution statutes.  The Court explained:

Extraterritorial application of a drug possession/distribution statute comports with the reasoning behind the Supreme Court's Bowman decision, since such a statute is "not logically dependent on [its] locality for the Government's jurisdiction, but [was] enacted because of the right of the government to defend itself against obstruction, or fraud wherever perpetrated" and "[i]t would be going too far to say that because Congress does not fix any locus it intended to exclude the high seas in respect of this crime."

Id. at 1100.  (Quoting United States v. Bowman, 260 U.S. 94, 98-99. (1922)). (emphasis added)

And although the Court did hold "that [extraterritorial] intent can be implied because illegal drug trafficking, which the statute is designed to prevent, regularly involves importation of drugs from international sources," it did not hold,  as the government suggests, that when Congress enacts a statute criminalizing conduct that involves importation, Congress always intends for that statute to be applied extraterritorially.  To the contrary, the Larsen court specifically limited its holding to drug trafficking statutes.  Id. at 1101.  Accordingly, the United States argument that Congress' use of the term "import" is demonstrative per se of an intent that Section 1201 be applied extraterritorially is unsupported and must fail.

The government also argues that holding that Section 1201 does not apply extraterritorially would "improperly read the term [import] out of the statute."  Opposition, p. 11.  The government  explains: "If the term 'import' applied only to those individuals within the United States receiving circumvention technology, the term would be superfluous as those individuals would also guilty [sic] of 'trafficking' in the product."  Id.

This argument is almost incomprehensible.  The question of whether or not the term 'import" is meant to have extraterritorial application has nothing to do with the location of the putative defendant.  Of course, persons outside of the United States can be guilty of importing.  It is not a question of where a person is, but of what that person does.  Importation involves a defendant who physically sends or brings something into the United States.  A defendant can perform that conduct from either in or outside of the United States.  In this case, Elcomsoft did not bring or send anything into the United States contrary to law.  The fact that Elcomsoft is not also charged under the "import" provision of Section 1201 suggests that the government agrees with  this proposition.

Moreover, the term "import" is almost by definition domestic in nature and not concerned with extraterritorial conduct.  The act of importing can only occur within the United States.  Whatever preparations are made, whatever a defendant's intent, the offense is not committed until a product is brought into the United States.  This is the very essence of a domestic offense and consistent with an intent by Congress that Section 1201 not be applied to criminal conduct occurring outside of the United States.

The courts have interpreted the term "import" to apply exclusively to domestic activities.  In Callahan v. United States, 53 F. 2d 467 (3rd Cir. 1931), for example, the court recognized that "[a]n importation takes place whenever merchandise is brought within the territorial waters of the United States with intent to illegally bring said merchandise into the country."  Id. at 468-69. (emphasis added).  See also Olais-Castro v. United States, 416 F.2d 1155, 1158 (9th Cir. 1969), United States v. Catano, 553 F.2d 497, 500 (5th Cir. 1977), cert. denied, 434 U.S. 865 (1977), and Palmero v. United States, 112 F.2d 922, 924 (1st Cir.1940) (cases holding that the crime of importation occurs at the point when contraband is brought into the United States territory).

There are numerous statutes in which the legislature uses the term "import" to describe activities exclusively within the United States.  For example, in the Plant Protection Act, the legislature defined the terms "import" and "importation" to mean "to move into, or the act of movement into, the territorial limited of the United States."  7 U.S.C. § 7702.  Similarly, in Section 7671 of title 42 to the United States Code, the legislature defined the term " import" to mean:

to land on, bring into, or introduce into, or attempt to land on, bring into, or introduce into, any place subject to the jurisdiction of the United States, whether or not such landing, bringing, or introduction constitutes an importation within the meaning of the customs laws of the United States.

42 U.S.C. § 7671.  See also 16 U.S.C. § 1532 (defining "import" as "to land on, bring into, or introduce into, or attempt to land on, bring into, or introduce into, any place subject to the jurisdiction of the United States, whether or not such landing, bringing, or introduction constitutes an importation within the meaning of the customs laws of the United States"); 16 U.S.C. § 2402 (defining "import" as "to land on, bring into, or introduce into, or attempt to land on, bring into or introduce into, any place subject to the jurisdiction of the United States, including the 12-mile territorial sea of the United States, whether or not such act constitutes an importation within the meaning of the customs laws of the United States").  In sum, the plain words of Section 1201 do not demonstrate an intent that the statute be applied extraterritorially.  The use of the term "import" does not indicate such an intent.  Indeed, Congress' use of that term suggests the opposite conclusion; that Congress intended the statute to apply only to domestic conduct.

C.   A CONCLUSION THAT SECTION 1201 OF THE DMCA APPLIES TO THE EXTRATERRITORIAL CONDUCT OF ELCOMSOFT DOES NOT COMPORT WITH PRINCIPLES OF STATUTORY CONSTRUCTION AND INTERNATIONAL LAW

The United States also posits that an interpretation of Section 1201 which does not extend it to extraterritorial activities would "frustrate Congress' intent."  Opposition, p. 11.  This argument of course, begs the question.  Did Congress intend that the DMCA have extraterritorial application?  As set forth more fully in our moving papers, several important principles, particularly when coupled
with an absence of express intent, strongly suggest that the DMCA was not intended to be, and should not be extended to extraterritorial conduct. 

Initially, as discussed in Elcomsoft's moving papers and above, Congress' silence expresses an intent that Section 1201 not be applied extraterritorially.  Moreover, if this court were to find that it cannot be said with assurance that the "provision's drafters chose the term[s]" of Section 1201 to apply extraterritorially, United States v. Granderson, 511 U.S. 39, 54 (1994), the rule of lenity demands that the ambiguity by resolved in Elcomsoft's favor.  Id.

The Ninth Circuit explained the rule this way:

[T]he due process clause also protects an accused from a surprising expansion of the express words of Congress.   In this regard, the Supreme Court has instructed as follows:  "There can be no doubt that a deprivation of the right of fair warning can result not only from vague statutory language but also from an unforeseeable and retroactive judicial expansion of narrow and precise statutory language."

United States v. Facchini, 874 F.2d 638, 645-646 (1989) (quoting Bouie v. City of Columbia, 378 U.S. 347, 352 (1964).  For this reason, principles of statutory construction demand a conclusion that Section 1201 of the DMCA not be extended to include extraterritorial activities.

Moreover an interpretation extending the statute to extraterritorial activities would conflict with the purpose of  the World Intellectual Property Organization Treaty of April 12, 1997, S. Treaty Doc. No. 105-17 ("WIPO Copyright Treaty" or "Treaty").  Through the WIPO Copyright Treaty, the signatories agreed, on behalf of the countries they represented, to act in accord with the terms contained therein.  The WIPO Copyright Treaty signatories agreed, in part that:

(1) Contracting Parties undertake to adopt, in accordance with their legal systems, the measures necessary to ensure the application of this Treaty.

(2) Contracting Parties shall ensure that enforcement procedures are available under their law so as to permit effective action against any act of infringement of rights covered by this Treaty, including expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements.

WIPO Copyright Treaty, Art. 14.

If Section 1201 were applied extraterritorially, there would be no need for the Treaty.  Section 1201 would allow the United States to unilaterally implement and enforce the measures set forth in the Treaty.  Not only would the Treaty be superfluous for the United States, but it would simultaneously be irrelevant to the rest of the world, since joining or abstaining from it would not affect whether or not its citizens' actions would be subject to legal consequence.  The United States could simply adopt a law, as the government advocates, that is applicable to the World.  Such a result would violate the basic principles of international law.

CONCLUSION

For all of the foregoing reasons, Elcomsoft respectfully requests that this court find that it does not have subject matter jurisdiction over the conduct alleged in the indictment and therefore dismiss the indictment against it with prejudice.

Dated: February 25, 2002

DUANE MORRIS LLP

By:
JOSEPH M. BURTON
Attorney for Defendant
ELCOMSOFT COMPANY, LTD.

SF\28819

United States of America v. Elcom Ltd., a/k/a Elcomsoft Co., Ltd.

Case No.: CR 01-20138 RMW

ENDNOTES

1.  We do not believe that this is the government's position.  If so, Adobe would no doubt be surprised to learn that its actions may have violated the DMCA.
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2.  Contrary to the thrust of the government's opposition, Elcomsoft has not moved this court to dismiss the action against it for a lack of personal jurisdiction.  Elcomsoft recognizes that it waived its right to make such a claim when it entered a plea of not guilty.  See e.g., Ford v. United States, 273 U.S. 593, 606 (1927) (establishing principle that any challenge to the court's personal jurisdiction over a defendant must be raised prior to a plea).
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