Russian software firm found innocent in copyright violation trial

Wednesday December 18, 2002

By BOB PORTERFIELD
Associated Press Writer

SAN JOSE, Calif. (AP) A Russian software firm acquitted of criminal charges that it violated the controversial 1998 Digital Millennium Copyright Act, will continue to produce computer programs that decrypt security codes in many popular software products just not Adobe's eBook Reader.

``No more. We're not selling the product anywhere,'' said Elcomsoft president Alex Katalov, who was jubilant his company's name had been successfully defended Tuesday.

Elcomsoft makes a variety of decryption programs that it sells to clients that include Fortune 500 companies and federal law enforcement agencies, including the FBI, IRS and the Department of Justice itself.

The Moscow-based company was accused of marketing a computer program designed solely to crack the security of Adobe's electronic book publishing software.

Lawyers for Elcomsoft said its program merely allowed users to make backup copies of eBooks and be able to read them on other devices, something permitted under the ``fair use'' concept of copyright law.

The federal case against Elcomsoft was the first to go to trial under a law hastily crafted by Congress at the urging of many Silicon Valley companies and the movie and recording industries, despite complaints by many in the technology industry that consider it unduly restrictive.

Elcomsoft's product, the Advanced eBook Processor Program, was based upon an algorithm developed by Dmitry Sklyarov, a 27-year-old programmer. He became a lightning rod for hacker rights after his arrest last year in Las Vegas, where he described his work at a convention.

Adobe, which had complained to federal authorities when Elcomsoft first offered the software, tipped off the FBI that Sklyarov would be attending the annual Defcon hacker conclave.

Following his arrest Sklyarov was jailed for three weeks in Nevada and Oklahoma until the government agreed to drop charges in return for his testimony against Elcomsoft. His incarceration prompted protests by software developers, who threatened to boycott Adobe.

Although the government subpoenaed Sklyarov as a prosecution witness, federal prosecutors never called him to the stand, choosing instead to play videotaped excerpts of a deposition he gave in August of 2001.

Defense attorney Joseph Burton of San Francisco did call Sklyarov, who testified that he knew his software could be used for bad purposes but his intent in writing the program was to permit legal owners of eBooks to remove security restrictions that he believed were allowed under the ``fair use'' concept of copyright law.

Jury foreman Dennis Strader said the argument made a big impact on the jurors, who asked U.S. District Judge Ronald M. Whyte to clarify the ``fair use'' definition shortly after deliberations began.

``Under the eBook formats, you have no rights at all, and the jury had trouble with that concept,'' said Strader.

The DMCA, which was being tested at trial for the first time, prohibits the production and distribution of any product designed primarily to circumvent security features of digital media.

Adobe's Content Server, the software that is used to encrypt the electronic book content and sells for $10,000 a copy, allows publishers to sell electronic books in formats that, depending upon ``permissions'' established by the publisher, prohibit the content from being copied, printed out or transferred by end users who buy the product. Adobe has been concerned about any perception that copyrighted content isn't secure because it is attempting to generate sales with large publishers.

``Clearly we're disappointed that the jury did not feel the government met its burden of proof in this case,'' Adobe said in a statement. ``We continue to believe that Elcomsoft violated the DMCA by selling a tool designed to hack the Adobe Acrobat eBook Reader and we stand behind our original decision to report Elcomsoft's activity to the U.S. attorney's office.''

Burton characterized the case as a dispute between Elcomsoft and Adobe, arguing there was no intent to violate the copyright act because his clients believed their product was legal. It is legal in Russia.

In fact, Burton repeatedly pointed out in court that Elcomsoft makes another product, the Adobe PDF Password Recovery Program, based upon identical encryption cracking code that was sold for almost a year before the eBook program was marketed, and is still being sold with no complaints from Adobe. That program removes security features on portable document format or PDF files that are created in Adobe Acrobat software and are similar to electronic book files.

If convicted, Elcomsoft could have been fined up to $2 million, with additional penalties if willful intent was determined.

In closing arguments, prosecutors brought up Enron, WorldCom and other embattled corporations, telling the jury that Elcomsoft must follow the rules just like American corporations.

During the 10-day period Elcomsoft offered its eBook software in the summer of 2001, about 20 copies were sold worldwide, including nine in the United States that went to several individuals, the Los Alamos National Laboratory and Credit Suisse First Boston.

Prosecutor Scott H. Frewing, who told jurors that the Russians ``were selling a burglar tool for software to make a profit,'' said only that the government ``respects the jury's decision.''

Defense attorney Joe Burton said the government failed to prove Elcomsoft intended to violate the law, but predicted more prosecutions.

``I don't see it as throwing a blanket on DMCA. It will take another case to test that,'' Burton said.

Civil libertarians say the digital copyright act stifles computer research and gives publishers, record companies and movie studios too tight a grip on online content.

``The good guys won one; it's nice to see,'' said Fred von Lohmann, senior intellectual property attorney for San Francisco's Electronic Frontier Foundation, an organization that opposes the act and assisted Elcomsoft and Sklyarov in obtaining their attorneys.

``This jury verdict sends a message to prosecutors that they should think twice before they answer the next call from Adobe asking them to bring criminal charges against a software company,'' he said.

``This is the first DMCA criminal case where there was no copyright infringement,'' von Lohmann added. ``They built a tool. And sure that tool could be misused by some people, but nobody alleged they themselves committed any infringement.''

Jefferson Scher, a copyright expert and partner in the Palo Alto law firm of Carr & Ferrell, had predicted before the verdict was reached that jurors might be disturbed by the law's impact on consumers.

``If the jury sits back and says, 'Wait a second, this means I'm only going to be able to get music that I pay for, I won't be able to burn any music to a CD,''' Scher said. ``If they start thinking about the consequences of this law, they might say, `To heck with that. Let's acquit.'''

In the year-and-a-half since the charges were brought there have been two other DMCA criminal cases against individuals, both ending in plea agreements.

``Three cases in four years since the act was passed doesn't indicate a zealous enforcement by the federal government,'' said Peter Toren, an intellectual property expert with the New York law firm of Sidley Austin Brown & Wood. ``It may have been a poor choice by the U.S. Attorney's office in California to make this a test case or bring this case at all.''

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On the Net:

Elcomsoft: http://www.elcomsoft.com

Adobe Systems: http://www.adobe.com

(Copyright 2002 by The Associated Press. All Rights Reserved.)