Subways Fares, File Sharing, and Larceny

On December 13, the New York Times reported that selling MetroCard swipes isn’t larceny, “and it overturned the 2009 conviction of a New Jersey man who, having served a day in jail for the crime, had fought his case all the way to the State Court of Appeals.” Subway officials had long treated the sale of MetroCard swipes as “a clear-cut case of theft of fare.”

But Jonathan Lippman, the chief judge of the Court of Appeals, wrote in an opinion that the fraud, “although decidedly criminal in nature,” did not amount to an unlawful taking of property from New York City Transit because the transit agency never actually possessed the fare that it would have otherwise been paid.   As Lippman put it, the agency “never acquired a sufficient interest in the money to become an ‘owner.’ ”

But wait. If buyers of the unauthorized swipes would otherwise have paid to use subway, then selling unauthorized swipes reduces paid ridership one-for-one, and swipe-seller’s revenue is diverted from MTA system revenue. It’s as if the swipe buyer purchased his ride legitimately and the swipe seller took money from the till, which would presumably be “larceny.”

Which brings us to intellectual property piracy. Someone buys a legal copy of a piece of music, which he then shares with a bunch of complete strangers without charging them. As we now know from a large body of economic studies, this sort of sharing displaces sales – albeit not 1:1 – and reduces recorded music revenue. It seems a lot like stealing to me. But maybe it’s not “larceny.”

2 Replies to “Subways Fares, File Sharing, and Larceny”

  1. Larceny, in a legal and not colloquial sense, is a very specific crime different than fraud, burglary, or theft. If I understand this case, the defendant was most likely guilty of other crimes that carried lesser punishments, but the prosecutor was chose to abandon those charges so that the jury or judge couldn’t equivocate and find guilty only on a lesser charge.

    Consider if the exchange was for nonfungable goods. Think of a contractor you pay to build you a deck and they skip town. You have claims against the contractor for breach of contract or fraud or whatever, but you never had possession of the deck.

    (I am not a lawyer) (or an economist)

  2. The penalties for piracy are much higher than the penalty for stealing a CD. Advocates of piracy don’t like the comparison, because they view stealing a physical product that cost money to produce as worse than giving away a copy. Advocates of the record labels don’t like the comparison because an act of piracy is considered much worse than petty larceny under current law. “Warning: The unauthorized reproduction or distribution of this copyrighted work is illegal. Criminal copyright infringement, including infringement without monetary gain, is investigated by the FBI and is punishable by up to five years in federal prison and a fine of $250,000.”

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