Skyway robbery.

Byline: Edward Russo The Register-Guard

CORRECTION (ran 7/30/03): The Web site searchingforsignal.com is not in the business of selling equipment that unscrambles encrypted satellite television signals. An article on page F1 in the July 13 Register-Guard incorrectly described the Web site's purpose.

Two years ago, John Schaefer of North Bend allegedly bought via mail order a computer device popular with people who illegally tap into satellite TV signals.

The supposed acquisition brought upon Schaefer the wrath of DirecTV, the nation's largest satellite TV company. In a lawsuit it filed against Schaefer and other Oregonians in U.S. District Court in Eugene earlier this year, DirecTV claims that they bought the equipment in order to swipe programing from DirecTV instead of signing up with the company and paying monthly fees.

Schaefer - who denied breaking any laws and says DirecTV has no legal basis for suing him - is among 70,000 Americans on the receiving end of a tough campaign by DirecTV against alleged satellite TV pirates. The firm is demanding cash payments plus surrender of the allegedly illegal equipment and, in many cases, filing federal lawsuits. So far, the firm has targeted nearly 800 Oregonians as part of its crackdown.

DirecTV, part of General Motors Corp., says it is acting in self-defense and is legally justified in pursuing people who buy certain computer hardware and illegally modified satellite service access cards. Access cards are key to satellite piracy because they contain codes that let a user unscramble an encrypted signal beamed to earth from orbiting satellites.

Stealing signals is "like going into a video store and stuffing DVDs down your shirt," said DirecTV spokesman Robert Mercer. The signals are "very tangible to us and to the copyright holders of the material that we distribute." DirecTV spent $1.5 billion creating its satellite-based system "and we have to protect this business," Mercer said.

But DirecTV is venturing into a hazy area of the law.

Critics fault the campaign as indiscriminate and heavy-handed. Defense attorneys say DirecTV's approach is flawed because it assumes that a person who buys the devices uses them to steal signals.

DirecTV admits that it doesn't have evidence that the owners of the equipment use it to tap into DirecTV's programs.

But the firm notes that under federal law it is a criminal offense to own the devices if the owner knows or has reason to know that the equipment can be used to unscramble encrypted satellite service. Using criminal laws, federal officials prosecute dealers who sell the equipment. But they typically avoid prosecuting satellite dish owners who buy the devices. DirecTV is seeking to use federal criminal laws to pursue civil actions against these end users. One federal criminal law lets firms pursue such civil lawsuits - but only against people who have been shown to have illegally intercepted electronic signals.

The firm's lawsuits have started going to trial and, in some cases, federal judges have sided with critics and tossed out DirecTV's claims.

One industry expert says the firm is trying to bully people so they don't steal signals. But, he said, the strategy has little effect on the overall problem of satellite piracy.

"It's more of an intimidation and public relations campaign than a legal strategy," said Bob Scherman, publisher of the trade publication Satellite Business News. "I think it's having a nominal impact. (The effect is) just a drop in the bucket."

DirecTV has 11.4 million subscribers. No one knows how many people hijack the firm's satellite signals. Estimates put the overall cost to the satellite TV industry in enforcement, legal action and lost sales at hundreds of millions of dollars a year.

The second largest satellite TV provider, Colorado-based Dish Network, hasn't taken the same sweeping approach to pirates, mainly because its access cards aren't as vulnerable to hacking, two Lane County satellite TV retailers said.

Emulators and unloopers

DirecTV, based in El Segundo, Calif., gets the name of people who buy illegal signal-stealing equipment by helping law enforcement agencies raid equipment dealers and Web sites in the U.S. and Canada. These dealers often use the Internet to sell emulators and unloopers - computer equipment capable of mimicking or modifying access cards - along with cards that already are modified, or "hacked."

Founded in 1994, DirecTV has been pursuing the makers and distributors of pirating equipment and bootleg cards almost from the start, Mercer said. The firm's Office of Signal Integrity has four former FBI agents who focus full-time on satellite piracy.

In the past couple years, the company widened its net to try to snag people who buy the devices.

The devices can save consumers a bundle. DirecTV charges $33 a month for 110 channels and $86 a month for 185 channels. Special sports and entertainment programming costs extra, such as last season's complete coverage of the NFL for $199.

"We are moving up and down the food chain, attacking both the supply and demand side," Mercer said. "We need to do this to be effective."

DirecTV gleans the names of people who have acquired the equipment or cards after seizing dealers' sales and shipping records, credit card receipts and e-mails.

In 2001, DirecTV helped law enforcement seize $4.5 million in piracy paraphernalia in Orange County, Calif. The company got the name of Oregonians, inlcuding North Bend's Schaefer, from that raid. The company alleged that Schaefer bought an unlooper from a firm called Vector Technologies.

Reaching a big audience

To date, DirecTV's hard-nosed approach has reached more than 70,000 Americans. The firm sent these people letters demanding that they stop stealing signals, surrender the pirating equipment and pay damages of $3,500 per illegal device.

Some people - the company won't say how many - have settled, usually after they agree to pay DirecTV negotiated amounts in return for DirecTV dropping all allegations, the firm says.

In some cases, people have shown they used the devices for legal purposes or were mistakenly identified as buyers, said Ralph Wiser, a Lake Oswego attorney who represents Schaefer and several other Northwest residents targeted by DirecTV.

When DirecTV is unable to extract settlements, it sues. So far, it has sued 8,700 people, including 140 Oregonians in Portland, Eugene, Springfield, Salem, North Bend, LaPine, Oregon City, Sutherlin and elsewhere.

The Oregon cases before U.S. District Judge Michael Hogan of Eugene are still in the early phases, with no trial dates set.

Win some, lose some

DirecTV's court success thus far is patchy.

In Ohio, the company sued four men for allegedly buying and using illegal interceptors. The four didn't respond to the lawsuit. A judge in May ruled that it was reasonable to presume the four had used the equipment to steal satellite signals from DirecTV. The judge ruled that each defendant had to pay DirecTV $10,000, plus lawyers' costs.

But in some cases where defendants have fought back, the outcome has been very different.

Federal judges in cases Michigan, Virginia and Florida have ruled against DirecTV, finding that the firm isn't entitled to win damages from people who happen to own the equipment. DirecTV would need to prove that those people had used the equipment to intercept DirecTV's signal, these courts said, and the firm wasn't able to do so.

In the Schaefer case, Wiser said that DirecTV has no basis for using criminal laws to prosecute Schaefer. Wiser cites a Florida case in which a judge rejected DirecTV's claims for civil damages. The judge said DirecTV had failed to show that an equipment owner actually used the device.

The past and present client list of Wiser includes 60 Oregon and Washington residents who DirecTV has alleged were satellite pirates.

Many of Wiser's clients bought emulators and unloopers. Wiser argues that some of his clients did not use the devices, and that others used them for purposes other than trying to steal DirecTV's signals.

The devices have legitimate uses, he said, such as modifying access cards for other equipment, including security systems for homes or gunsafes. Access cards "are being used for a million and one purposes," he said.

Wiser said one of his Oregon clients works for an auction company and bought the devices to program smart cards so they can be used at auctions, to speed transactions.

Another client is a former university student who bought card-modifying equipment to illustrate a report on satellite piracy for a business ethics course, Wiser said.

DirecTV's Mercer said he's heard plenty of such excuses, but they are "pretty thin arguments."

He said DirecTV goes after people who bought equipment and cards from Web sites that clearly are in business to sell pirating equipment. These included searchingforsignal.com, hack100.com and piratesden.com.

One recently sezied Web site, decodernews.com, had more than 23,000 paying subscribers who sought information on how to hack DirecTV's latest software, Mercer said.

A few people may be wrongly accused, Mercer acknowledged, such as a credit card holder whose relative used the card to buy a device. In such cases, DirecTV drops its claims, he said.

Seeking settlements

Wiser said that for 40 of his 60 clients, he has negotiated settlements with DirecTV, or got the firm to drop claims.

Given the cost of defending oneself in court, people named in the letters and civil lawsuits are usually eager to settle, he said.

The $3,500 per illegal device that the firm demands in its form letter is usually a starting point in talks, said Mercer. "We do attempt to negotiate a fair settlement based on several factors, some of which include the extent of illegal activity and (the person's) ability to pay," he said.

Ignoring DirecTV's letters and lawsuits is the worst thing to do, Wiser said.

People who don't respond to lawsuits can be found in default and hit with a monetary judgment.

DirecTV can seek to collect that through property liens or wage garnishments.

A Portland man in April was hit with a default judgment and owes DirecTV more than $14,000 in damages and legal fees, court records show.