President Clinton signed the No Electronic Theft Act (NET) in 1997. The law provides for enhanced criminal remedies for copyright infringement. NET was intended to stem the widespread theft of computer software.
The NET Act amended provisions in titles 17 and 18 of the U.S. Code. It permits federal prosecution in cases of large scale, willful copyright infringement even where the purpose is not for a commercial purpose or private financial gain. The law allows for the prosecution of anyone who copies, distributes, or receives software worth more than $1,000, in violation of copyright. Violation is a misdemeanor for the $1,000/six months, but becomes a felony where the value exceeds $2,500.
The law closed a loophole in prior law, which permitted criminal prosecution only for violations that result in financial gain. In 1994 a college student and computer hacker named David LaMacchia used an electronic bulletin board to distribute many commercial software programs. His actions allegedly cost software companies more than $1 million, but La-Macchia himself did not profit. Using pre-NET Act law, a federal judge dismissed the charges against La-Macchia.