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A federal appeals court ruled Tuesday (15 June) that DirecTV cannot sue individuals for merely possessing technology useful for illegally intercepting the company's satellite signal, in the first significant legal victory for critics of DirecTV's aggressive anti-piracy campaign.

A three-judge panel of the Eleventh Circuit Court of Appeals ruled that the federal law criminalizing possession of wiretap equipment does not allow for civil lawsuits. District courts across the country have ruled both ways on the issue, and Tuesday's decision is the first time a higher court stepped in to settle the question.

Technically the ruling is only binding in the three southern US states covered by the Eleventh Circuit - Alabama, Florida, and Georgia - but DirecTV said that it would stop suing under the wiretap equipment statute nationwide.

The ruling affects only one type of action in the litigation cocktail that DirecTV brings to bear against suspected pirates. In addition to the possession of wiretap equipment charge, each lawsuit typically accuses a defendant of actually using the equipment to steal satellite service, in violation of federal wiretap law and the Electronic Communications Privacy Act.

"We've never sued anybody based on possession alone," said DirecTV spokesman Robert Mercer. "We've always asserted that they've used the devices for the purpose for which they're intended, which is to steal our signal... We don't believe the court's ruling will have any practical effect on our litigation activities."

But the decision means that DirecTV will have to convince a jury that a defendant actually used the equipment to pirate the company's signal in any case that comes to trial.

"They will still bring lawsuits, and perhaps just as many," says Jason Schultz, an attorney with the Electronic Frontier Foundation, which filed an amicus brief in the case opposing DirecTV. "But I think this changes the situation dramatically... You can make a pretty good argument that a purchase record is proof of possession, but making the leap that you actually figured out how to program it and connect it to a satellite receiving system with sufficient technical skills to descramble DirecTV's satellite signals is a whole other level of proof."

DirecTV's end-user campaign is aimed at shutting down and collecting money from larcenous TV watchers who use smart card programmers and other equipment to get free or expanded satellite service. Because there's no way to trace people who are passively receiving DirecTV's signal, the company turned to a strategy of physically raiding equipment sellers that cater to pirates, using the authority of the Digital Millennium Copyright Act. The company then sends out threatening letters to equipment purchasers on the seized customer lists.

The letters accused the recipients of violating anti-piracy and wiretapping laws, and demanded a cash settlement beginning at $3,500, under threat of litigation. Since last year the company has sent out an estimated 100,000 letters and filed approximately 14,000 lawsuits against over 24,000 people who've ignored them or refused to settle.

DirecTV has faced criticism over the campaign after targeting some innocent techies with perfectly legal uses for the equipment they purchased. The company says the number of non-pirates buying the equipment is minuscule.

On Monday, the day before the Eleventh Circuit ruling, the Electronic Frontier Foundation and the Stanford Center for Internet and Society announced an agreement with DirecTV aimed at helping innocent targets disentangle from the company's dragnet: DirecTV promised to change its demand letters to explain in detail how innocent recipients can get the company to drop their cases, and to investigate every credible claim of innocence.

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