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Appeals Court Upholds $60K Piracy Award

12/05/1999 7:00 PM Eastern

A Philadelphia appeals panel has upheld a lower-court
decision limiting the amount of statutory damages collected by cable plaintiffs to
$60,000, no matter how much theft paraphernalia is seized from a pirate manufacturer or
distributor.

Even though the court accepted assertions from the original
court that the defendant -- Nu-Tek Electronics & Manufacturing Inc. of Philadelphia --
appeared to have no "identifiable legitimate business," the U.S. Court of
Appeals for the Third Circuit upheld the award to General Instrument Corp.

The Cable Communications Policy Act of 1984 set the amount
of statutory damages, capping it at $60,000 for "all violations," the court
noted.

Cable attorneys have argued that it was the intent of
Congress to multiply the damage amount by the number of doctored boxes, but the courts
have consistently interpreted the language of the statute on a per-prosecution basis.

Using a multiplier, GI lawyers argued, the company should
collect up to $215 million in damages from the national "black-box" marketer.

"I think it was a sound decision," GI lead
attorney Geoffrey Beauchamp said. "[The panel] felt constrained to follow the Ninth
Circuit. Congress may have to revisit this issue."

The Ninth Circuit Court in San Francisco issued a similar
opinion on damages in a piracy case brought by then-Continental Cablevision Inc. (now
MediaOne Group Inc.).

Federal law also allows companies to sue for actual
damages, but computing and justifying such an award is time-consuming and costly.
"That's not a viable option," Beauchamp said.

GI prevailed on other issues of the appeal. For instance,
Nu-Tek attorneys argued that GI didn't have standing to sue in the first place because in
had not suffered "injury in fact." But at trial, executives for Comcast Corp.
and Suburban Cable testified that they were less likely to do business with the vendor
because of piracy problems.

The plaintiff also alleged that GI's attorney's fees had
been artificially inflated by "overlawyering." This assertion was justified by
the fact that GI lost or dropped charges against the defendant and eventually got the
$60,000 judgment, and not the millions of dollars it was seeking, Nu-Tek said. But the
appeals panel said the costs were documented and justified.

 

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