The No Electronic Theft Act, or NET Act, was passed by the United States Congress in 1997. This law expanded the scope of copyright protection to cover the theft of intellectual property that has no financial motive. It allowed for the criminal prosecution of anyone who illegally distributed copyrighted materials, regardless of whether or not they had any personal financial stake in the distribution.
Copyright law in the United States before the passage of the NET Act was designed to deal only with direct breaches of copyright by individuals with clear financial motives. The rapid rise of the Internet revealed a crucial weakness in this legal structure. The distribution of copyrighted material without any financial motive, which was made possible by the Internet, was not, in fact, illegal under United States law.
The case of United States vs. LaMacchia provided the impetus for the passage of the NET Act. Lamacchia was a student at the Massachusetts Institute of Technology, and active in several online communities. He used an electronic bulletin board to distribute copies of video games. The court ruled that LaMacchia, who had no personal financial motive in distributing roughly one million dollars worth of software, was not in violation of copyright law, which then required that there be such a financial motive.
The NET Act addressed this weak spot in copyright law. It explicitly made illegal the intentional distribution of copyrighted material, regardless of whether or not any financial motive existed. It was designed to target primarily medium and large piracy operations and created different tiers of copyright offense. Minor infractions, involving the theft of property with a total value of less than one thousand dollars, were not covered by the act.
Penalties under the NET Act scaled, and large-scale copyright infringement was made a felony, for which offenders were subject to a fine of up to $250,000 and five years in prison. The NET Act also raised the statute of limitations on electronic copyright violations to a level comparable to that for other types of copyright infringement.
The NET Act was part of the process by which intellectual property law in the United States was gradually modified to deal with new challenges posed by the rise of the Internet and other associated technologies that made copyright infringement much easier and potentially much more profitable. The Digital Millennium Act, passed one year after the NET Act, expanded on the restrictions put in place by the NET Act, primarily by making it illegal to circumvent most forms of electronic copy protection. These two laws, taken together, provide very strong protection for digital intellectual property.