Opinion ID: 706981
Heading Depth: 2
Heading Rank: 2

Heading: General Instrument

Text: 20 Allarcom also claims that General Instrument violated Sec. 605(a) and Sec. 605(e)(4) by distributing VC II decoders. We conclude that Allarcom has not alleged facts sufficient to demonstrate that General Instrument distributed the VC II knowing or having reason to know that it is primarily of assistance in the unauthorized decryption of satellite cable programming.... 47 U.S.C. Sec. 605(e)(4). 21 General Instrument and Showtime rely upon Shenango Cable TV, Inc. v. Tandy Corp., 631 F.Supp. 835 (W.D.Pa.1986), to argue that Sec. 605(e)(4) prohibits only the distribution of devices designed solely, intentionally and specifically for pirating programming. Id. at 837-39. In 1988, after Shenango was decided, Congress amended that subsection by adding language that prohibited distributing a device while knowing or having reason to know that the device is primarily of assistance in piracy. Therefore, Shenango does not interpret the operative statutory language in this case, and is therefore not relevant to our analysis. 22 We begin by making clear that the VC II decoder distributed by General Instrument is not capable of pirating satellite broadcasts. That decoder is capable of piracy only if it has been modified. Allarcom has not alleged that General Instrument has ever sold any modified VC II decoders. Cf. United States v. Davis, 978 F.2d 415 (8th Cir.1992) (upholding a conviction for modification and sale of modified VC II decoders). 23 Allarcom's allegation that General Instrument sells VC II decoders knowing that others modify some or even many of those decoders does not state a claim under Sec. 605(e)(4). When Congress amended Sec. 605(e)(4) in 1988, it identified the VC II as the industry's de factor [sic] standard for preventing the pirating of satellite broadcasts. H.R.Rep. No. 887, 100th Cong.2d Sess., pt. 2, at 14-15, 28 (1988), reprinted in, 1988 U.S.C.A.A.N. 5638, 5642-43, 5657. See also United States v. Lande, 968 F.2d 907, 908 (9th Cir.1992) (recognizing same), cert. denied, --- U.S. ----, 113 S.Ct. 1299, 122 L.Ed.2d 689 (1993). We reject Allarcom's claim that the anti-piracy device adopted by the STV industry, which has the most acute interest in protecting its broadcasts, is also primarily of assistance in piracy, simply because some modify it to accomplish piracy. Indeed, the VC II is useful for piracy only because so much of the STV industry employs it to prevent piracy. Therefore, sale of that product in Canada and the United States, where many people indisputably use it legitimately, does not violate the FCA, and the district court properly dismissed the FCA claim against General Instrument. STATE LAW CLAIMS A. Federal Communications Law Preemption 24 Showtime and General Instrument contend that the FCA, 47 U.S.C. Sec. 556(c), expressly preempts Allarcom's state law claims, or, in the alternative, that Federal Communications law implicitly preempts those claims. We reject this argument. 25 47 U.S.C. Sec. 556(c), entitled Preemption, states: 26 Except as provided in section 557 of this title [a section not relevant to this appeal], any provision of law of any State ... which is inconsistent with this chapter shall be deemed to be preempted and superseded. 27 [T]his chapter includes Sec. 605. Sec. 605(e)(6) states: 28 Nothing in this subsection shall prevent any State ... from enacting or enforcing any laws with respect to the ... distribution of equipment by any person with the intent of its use to assist in the interception or receipt of radio communications prohibited by subsection (a) of this section. In addition, Sec. 605(f)(first) states: 29 Nothing in this section shall affect any right, obligation, or liability under ... any other applicable Federal, State, or local law. 30 These provisions allow states to enact laws that impose obligations that are the same as or in addition to those imposed by the FCA, so long as those obligations are not contrary to rights or obligations contained in the FCA. The legislative history supports this interpretation. Senator Robert Packwood stated that under Sec. 605(e)(6), state laws concerning the distribution of equipment now in effect or adopted in the future, which are consistent with, or afford greater protection than this subsection, shall not be affected. (Statement of Senator Robert W. Packwood, Chairman of the Committee on Commerce, Science, and Transportation, on the House Amendments to S. 66, 130 Cong.Rec. S14286 (Oct. 11, 1984), reprinted in 1984 U.S.C.A.A.N. 4742, 4751 (emphasis added)). In addition, the House Energy and Commerce Committee Report description of Sec. 556(c) provides an example of a preempted state law that supports our interpretation: The FCA requires that states impose obligations on cable operators only in franchise agreements. A state law that imposes such an obligation by means other than placing it in franchise agreements would be preempted. H.R.Rep. No. 934, 98th Cong., 2d Sess. 94 (1984), reprinted in 1984 U.S.C.A.A.N. 4655, 4731. 31 The obligations imposed under state law causes of action for unfair competition, interference with contract, and interference with prospective economic advantage are in addition to FCA obligations. Allarcom has pointed to no obligation imposed under these causes of action that is contrary to any right or obligation contained in the FCA, and therefore Sec. 566(c) does not expressly preempt those claims. 32 Showtime and General Instrument also argue that federal law implicitly preempts Allarcom's state law claims. A federal statute implicitly preempts state law when the scope of that statute indicates that Congress intended federal law to occupy a field exclusively, when it is impossible for a party to comply with both federal and state requirements, or when state law creates an obstacle to accomplishment of congressional objectives. Freightliner Corp. v. Myrick, --- U.S. ----, ----, 115 S.Ct. 1483, 1487, 131 L.Ed.2d 385 (1995). 33 While the inclusion of an express preemption provision in a statute does not by itself obviate implied preemption, id. at 1487-88, in this case, the express preemption provisions quoted above, and the analysis that those provisions call for, make clear that Allarcom's state law claims are not implicitly preempted. First, the savings clauses contained in Sec. 605(e)(6) and Sec. 605(f) (first) both expressly preserve state communications law, thereby indicating that Congress did not intend to occupy the entire field. Secondly, Showtime and General Instrument have not argued that they cannot comply with both federal and state law contemporaneously. Finally, our conclusion that the state law at issue here imposes no obligations inconsistent with the FCA (and thus is not expressly preempted) also indicates that state law would not frustrate any congressional objective. Accordingly, federal communications law does not preempt Allarcom's state law claims. B. Federal Copyright Law Preemption 34 The Federal Copyright Act preempts certain state causes of action. 17 U.S.C. Sec. 301. However, federal copyright law does not apply to extraterritorial acts of infringement. Subafilms, Ltd. v. MGM-Pathe Communications Co., 24 F.3d 1088, 1095-98 (9th Cir.1994) (en banc). Accordingly, it does not preempt causes of action premised upon possible extraterritorial infringement. 35 In this case, the district court concluded that if part of an act of infringement begins in the United States, and is completed in a foreign jurisdiction, or if a person in the United States authorizes an infringement that takes place in a foreign jurisdiction, then U.S. copyright law applies. The court concluded that Allarcom's state claims were premised upon possible infringement under either or both of these theories, and were therefore preempted by the Copyright Act. 36 After the district court rendered its decision, an en banc panel of this court rejected these theories on the applicability of U.S. copyright law. We held that in order for U.S. copyright law to apply, at least one alleged infringement must be completed entirely within the United States, and that mere authorization of extraterritorial infringement was not a completed act of infringement in the United States. Subafilms, 24 F.3d at 1094, 1098. In this case, defendants either initiated a potential infringement in the United States by broadcasting the Showtime signal, which contained copyrighted material, or defendants authorized people in Canada to engage in infringement. In either case, the potential infringement was only completed in Canada once the signal was received and viewed. Accordingly, U.S. copyright law did not apply, and therefore did not preempt Allarcom's state law claims.