Panel finds for DirecTV on piracy.

A group of California residents that claim DirecTV Group Inc. falsely accused them of stealing satellite services intends to petition the California Supreme Court to review an appellate court's decision that threw out their case last month.

The five residents, along with two residents from Texas and Illinois, sued the El Segundo provider of satellite services after the firm sent letters in October 2002 accusing them of federal communications violations and demanding a settlement, said Jeffrey Wilens, a partner at Lakeshore Law Center representing the plaintiffs.

The plaintiffs were among the first of thousands targeted by DirecTV in a nationwide campaign against buyers of smart cards, which are the devices used in satellite receivers to obtain paid channels. Most of those who have been targeted claim they legitimately purchased smart cards as security devices on computers. DirecTV sent the letters to individuals on the customer lists of device manufacturers.

This filing is one of three purported class action suits filed against DirecTV for falsely sending demand letters to buyers of smart cards, Wilens said. Dozens of other suits have been filed for malicious prosecution or as counter-claims in lawsuits filed by DirecTV against alleged pirates.

On Oct. 29, a three-judge panel in 2nd Appellate District affirmed the decision of a Los Angeles Superior Court granting DirecTV's motion to throw out the case based on a California statute that protects businesses from a Strategic Lawsuit Against Public Participation, or SLAPP, suit. The company argued that it was within its free speech rights to send the letters in anticipation of filing a lawsuit.

In its ruling, the panel rejected the buyers' argument that their case was in the interest of the public. Wilens called the decision a "procedural issue" and plans to petition the Supreme Court.

"Dish networks, cable companies, the record industry and the motion picture industry will send out these letters," he said. "This ruling, if it holds up, will only encourage this sort of corporate blackmail to go into widespread use."

DirecTV's lawyer, Dale Oliver, a partner at Quinn Emanuel Urquhart Oliver & Hedges LLP, did not return calls.

In June, under fire for sending letters and filing lawsuits against thousands of people, DirecTV announced that it would no longer sue buyers of smart cards and other general purpose devices unless it suspects someone of actually pirating satellite services.