The problem of piracy—unauthorized storage, copying, or dissemination of copyrighted material such as computer software, music, movies and books—burgeoned along with the growth of the Internet. Existing federal copyright law makes it a crime to duplicate, store, or disseminate copyrighted materials for profit. But under the No Electronic Theft Act of 1997, it is also illegal merely to reproduce or distribute copyrighted works even without the defendant’s having a commercial purpose or private financial gain. This aspect of the law targets the popular free trade of copyrighted material on the Internet.

Federal copyright law provides for both criminal and civil action against offenders. Criminal penalties may include fines, jail sentences up to three years, or both. Civil penalties can reach as high as $150,000 per violation.

The Digital Millennium Copyright Act (DMCA) of 1998 marked the first significant revision of federal copyright law in a generation. Among its chief reforms, the law made it a criminal offense to bypass or defeat security provisions built into products by manufacturers to prevent copying. The applicability of that aspect of the law to the Internet was shown in Universal City v. Reimerdes (2001). In that high-profile case, a federal appeals court upheld a lower court verdict that a hacker website violated the DMCA by publishing information about defeating the anti-copying protection software built into movie DVDs.