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INTERNATIONAL CABLEVISION, INC. v. NOEL

August 1, 1994

INTERNATIONAL CABLEVISION, INC. d/b/a ADELPHIA CABLE, Plaintiff,
v.
MARVIN NOEL, Defendant.



The opinion of the court was delivered by: JOHN T. CURTIN

 CURTIN, District Judge

 Plaintiff International Cablevision Inc., d/b/a Adelphia Cable ("Cablevision"), brought this action against defendant Marvin Noel seeking damages and injunctive relief, claiming that Noel sold electronic devices designed to permit unauthorized interception and decoding of Cablevision's cable television programming signal, in violation of 47 U.S.C. §§ 553(a)(1) and 605(e)(4). *fn1" Cablevision has moved for summary judgment. Noel concedes the § 553 violation; however, he has moved to dismiss the § 605 claim.

 After the parties' original briefs were filed, the Second Circuit decided International Cablevision, Inc. v. Sykes, 997 F.2d 998 (2d Cir. 1993). In that decision, the Second Circuit discussed the relationship between §§ 553 and 605 in some detail, and expressed reservations about the applicability of § 605 in cases which, like the present one, involve the theft of television signals transmitted by coaxial cable. Id. at 1007-1009. It did not, however, rule on the issue. On July 14, 1993, this court ordered the parties in the present case to file additional briefs on the applicability of § 605 in the light of Sykes. Both parties have done so.

 FACTUAL BACKGROUND

 Cablevision provides cable television programming to residents of Erie and Niagara Counties through franchises awarded by various villages, towns and municipal governments. Pursuant to the franchise agreements, the company extends its system to reach each person requesting service. Its programming includes "basic cable service" and "premium" channels. Basic service is a package of channels a subscriber receives for a minimum flat rate. Premium programming, which includes channels such as Pay-per-View, Cinemax, HBO, and Showtime, is provided for a higher fee.

 Basic service and premium signals are transmitted simultaneously to subscribers' homes via a coaxial ground cable. A device known as a "converter" converts the multiple signals into a form that can be viewed through a subscriber's television set. To prevent subscribers from receiving cable services for which they have not paid, Cablevision scrambles the signals for premium channels. These signals must be descrambled by the use of device known as a "descrambler" or "decoder" which is either attached to or incorporated into the subscriber's converter. Converter/decoder units are provided to subscribers as part of the monthly charge for cable service. In this way, Cablevision can determine which services each subscriber receives. It is the primary method by which the company prevents subscribers from gaining access to programming for which they have not paid.

 Cablevision's contracts with its subscribers forbid unauthorized tampering with its equipment. Nevertheless, it is possible for a subscriber to remove a converter/decoder unit and replace it with one capable of decoding all of the company's coded programming. Thus, a subscriber paying only for basic service may gain access to premium programming by installing a unit from a source other than Cablevision.

 On April 9, 1991, Marvin Noel sold a Scientific Atlanta descrambler that he had obtained from a company in Chicago, Illinois, to Ann Crowley and Darleen Lake, investigators for Cablevision. He explained to the investigators how to attach the unit to their existing cable and television connections, and stated that so long as they paid for Cablevision's basic service, they would be able to receive premium programming without having to pay for it. Cablevision tested the unit, and found that it could indeed descramble premium programming on a television receiving only the company's basic service.

 Noel sold a second Scientific Atlanta descrambler to Crowley and Lake on April 18, 1991. Unbeknownst to Noel, the investigators made a tape recording of the conversation that took place at that time. During the conversation, Noel again explained how to connect the descrambler, and told the investigators to be careful about who they talked to about the unit, to hide it from the cable company, and that it was "illegal."

 DISCUSSION

 1. Defendant's Liability under §§ 553 and 605

 Cablevision contends that by selling descramblers intended for use in the unauthorized reception of its premium programming, Noel violated both 47 U.S.C. § 553(a) and 47 U.S.C. § 605(e)(4). Noel concedes that he violated § 553, which provides that:

 
(1) No person shall intercept or receive or assist in intercepting or receiving any communications service offered over a cable system, unless specifically authorized to do so by a cable operator or as may otherwise be specifically authorized by law.
 
(2) For the purpose of this section, the term "assist in intercepting or receiving" shall include the manufacture or distribution of equipment intended by the manufacturer or distributor (as the case may be) for unauthorized reception of any communications service offered over a cable system in violation of subparagraph (1).

 47 U.S.C. § 553(a). He maintains, however, that his conduct was not covered by § 605(e)(4). The question of liability under § 605(e)(4) is material, because the Second Circuit has indicated that if § 605(e) is applicable in cases such as this one, district courts should award damages under that section rather than the lesser damages available under § 553. International Cablevision, Inc. v. Sykes, 997 F.2d at 1009. Further, where a plaintiff prevails on a § 605(e) claim, the court must award reasonable attorneys' fees, whereas if it is shown that the defendant violated only § 553, the court may, but is not required to, award such fees. Id. at 1009-1010; 47 U.S.C. §§ 553(c)(2)(C) and 605(e)(3)(B)(iii).

 Section 605(e)(4) establishes that it is a violation for any person to sell or distribute:

 
any electronic, mechanical, or other device or equipment, knowing or having reason to know that the device or equipment is primarily of assistance in the unauthorized decryption of satellite cable programming, or is intended for any other activity prohibited by subsection (a) of this section.

 47 U.S.C. § 605(e)(4). Section 605(a), in turn, provides in pertinent part that:

 
no person receiving, assisting in receiving, transmitting or assisting in transmitting, any interstate or foreign communication by wire or by radio shall divulge or publish the existence, contents, substance, purport, effect, or meaning thereof, except through authorized channels of transmission or reception, (1) to any person other than the addressee . . . No person not being authorized by the sender shall intercept any radio communication and divulge or publish the existence, contents, substance, purport, effect, or meaning of such intercepted communication to any person. No person not being entitled thereto shall receive or assist in receiving any interstate or foreign communication by radio and use such communication (or any information therein contained) for his own benefit or for the benefit of another not entitled thereto.

 47 U.S.C. § 605(a). Thus, in order to determine whether Noel violated § 605(e)(4), I must decide whether the descramblers he sold were either (i) "primarily of assistance in the unauthorized decryption of satellite cable programming," or (ii) intended for use in any of the various other activities prohibited by 47 U.S.C. § 605(a). This requires interpretation of the language of §§ 605(e)(4) and 605(a) in the context of their legislative history, and of the legislative history and enactment of § 553.

 Congress enacted both § 553 and the provision that ultimately became § 605(e)(4) as part of the Cable Communications Policy Act of 1984, Pub.L. No. 98-549, 98 Stat. 2779 et seq. ("the Cable Act"), which amended the Communications Act of 1934 ("the Communications Act"), 47 U.S.C. § 151 et seq. Section 553 was intended to deal specifically with the problem of "'theft of cable service,' including 'gaining access to premium movie and sports channels without paying for the receipt of those services.'" International Cablevision v. Sykes, 997 F.2d at 1003 (quoting H.R. Rep. No. 934, 98th Cong., 2d Sess. 83 (1984), reprinted in 1984 U.S. Code Cong. & Admin. News ("U.S.C.C.A.N.") 4655, 4720). The legislative history makes it clear that § 553(a)(2) was "primarily aimed at preventing the manufacture and distribution of so-called 'black boxes' and other unauthorized converters which permit reception of cable service without paying for the service." H.R. Rep. No. 934, at 84, reprinted in 1984 ...


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