United States v. Anderson

• Decision Date: 19 December 2013
• Docket Number: No. 12–10344.,12–10344.
• Citation: 741 F.3d 938
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Roosevelt ANDERSON, Jr., Defendant–Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

741 F.3d 938

UNITED STATES of America, Plaintiff–Appellee,

v.Roosevelt ANDERSON, Jr., Defendant–Appellant.

No. 12–10344.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 11, 2013.

Submission vacated July 15, 2013.

Resubmitted Dec. 12, 2013.

Filed Dec. 19, 2013.

John J. Jordan (argued), San Francisco, CA, for Defendant–Appellant.

Melinda Haag, United States Attorney; Barbara J. Valliere, Assistant United States Attorney, Chief, Appellate Division; Susan B. Gray (argued), Assistant United States Attorney, San Francisco, CA, for Plaintiff–Appellee.

Appeal from the United States District Court for the Northern District of California, Edward J. Davila, District Judge, Presiding. D.C. No. 5:09–cr–01015–EJD–1.

Before: FERDINAND F. FERNANDEZ and CONSUELO M. CALLAHAN, Circuit Judges, and SARAH S. VANCE, Chief District Judge.^*

OPINION

CALLAHAN, Circuit Judge:

Roosevelt Anderson, Jr., appeals his conviction for criminal copyright infringement under 17 U.S.C. § 506(a)(1)(A) and 18 U.S.C. § 2319(b)(1). Anderson contends that the district court erred: (1) by giving an incorrect jury instruction on willfulness; (2) by allowing the government to introduce evidence of uncharged acts of infringement; and (3) in calculating restitution. Applying the willfulness standard for criminal copyright cases as recently clarified in United States v. Liu, 731 F.3d 982 (9th Cir.2013), we conclude that the jury instruction was flawed but did not rise to the level of plain error. We also find that the evidence of uncharged acts was properly admitted as intrinsic to the charged conduct, and accordingly, we affirm Anderson's conviction. Nonetheless, consistent with United States v. Fair, 699 F.3d 508 (D.C.Cir.2012), and United States v. Chalupnik, 514 F.3d 748 (8th Cir.2008), we conclude that the district court erred in failing to award restitution reflecting the victim's actual loss, which consisted of the victim's lost profits on sales of authentic copies that would have taken place if not for Anderson's conduct. Consequently, we vacate the restitution order and remand to the district court to reconsider restitution on an open record.

I

Anderson was a Las Vegas cab driver who also dabbled in photography and electronics repair. At some point, he decided to start selling software. He initially considered contacting Adobe Systems, Inc. (“Adobe”) to see if he could work out a “financial deal” with it. Lacking any funding for such a deal, however, he decided to take an “alternative” route. Using the moniker “Moneyworld123,” Anderson began a “one-man” operation selling Adobe software online through the price comparison website Pricegrabber, while handling payments through the Google Checkout processing service. He also advertised software on his own website, Anderson9000.com.

The discs containing the software Anderson sold were consumer-grade “burned” discs with generic labels. Anderson's advertisements and the documents accompanying the discs referred to the software as “full” or “complete” “OEM” (meaning “original equipment manufacturer”) products. The accompanying documents also indicated that Moneyworld123 would make “plug-ins” (i.e., optional software upgrades providing improved software functionality) available to the customer if the customer would rate Moneyworld123 on Pricegrabber. The discs also contained a “terms and conditions” document, which stated that the software was only to be used for “archival purposes” or as a “backup” copy. The terms and conditions were not printed out for the customers, however, and the customers could (and did) install the software without viewing them.

In order to activate legitimate Adobe software, a customer must enter a 24–digit serial number (or “product key”) provided by Adobe which it generates using an algorithm. The software first confirms that the number is in the correct format and then confirms that it is a valid number with Adobe. However, counterfeiters can use “key generators” to create serial numbers that match Adobe's algorithm and disable or bypass the function requiring the software to confirm that the number is valid. Anderson's software was packaged with serial numbers written in permanent marker.

Based in part on the inauthentic appearance of the product, two customers contacted Anderson and demanded refunds. One bluntly told Anderson: “You are pirating software and marketing it as if you are not doing something illegal. I have no doubt that this is not new software and that you are not operating under legal means.” Anderson provided the requested refunds.

Anderson's operation eventually attracted Adobe's attention. An Adobe investigator purchased a copy of Photoshop CS3 Extended from Anderson using Pricegrabber and Google Checkout. The investigator purchased the software, which had a retail price of $999, from Anderson for $262.90, including shipping and handling. Adobe then contacted Christopher Morris, a U.S. Postal Inspector, who subpoenaed records from Pricegrabber and Google, as well as records from email addresses related to the Pricegrabber and Google accounts. Morris eventually concluded that Anderson controlled the accounts. The records showed that Anderson had sold 209 copies of Photoshop CS3 and 30 copies of Photoshop CS3 Extended from February 2008 through February 2009. During that time period, Anderson made approximately 350 total software sales, totaling $70,551.

Morris subsequently found Anderson9000.com and arranged a purchase of Adobe Fireworks after exchanging voicemails with an individual identifying himself as “J.” Morris paid $131, including shipping and handling, for the product, which had a retail price of $299. Surveillance cameras captured images of Anderson checking the post office box listed as the return address.

Morris subsequently set up another sale using the same process and arrested Anderson. Anderson then consented to a search of the rental car that he drove to the post office. In the car, Morris found a number of blank discs, two copies of Photoshop CS3, various discs with Adobe plug-ins, a key generator disc, and discs with various other Adobe programs.

Anderson was subsequently charged with criminal copyright infringement based on his sales of Photoshop CS3 and Photoshop CS3 Extended. At trial, Anderson admitted to selling the software but explained that, based on his internet research, he believed that OEMs were companies that resell other companies' products under their own names, and that “OEM” referred to backup copies. He said that he pulled the information for the terms and conditions from the Copyright Act (specifically, 17 U.S.C. §§ 106, 117¹) and from other websites selling OEM software. He explained that he provided customers with serial numbers using a key generator because customers frequently misplace their original serial numbers.

Anderson conceded that he did not mention that the software was for backup or archival purposes on Pricegrabber and Anderson9000.com. He also conceded that he continued to sell the software even after his customers told him that it looked illegal. He was also aware that some customers were installing the software and using it, as opposed to merely retaining it for backup purposes, but he did not change his practices. Several customers testified that they would not have purchased Anderson's software if they had known it could be used only for backup purposes.

A representative from Adobe testified that there was no market for backup copies of Adobe software and that Adobe does not authorize anyone to make backup copies for customers. He said that in an OEM deal, Adobe sells a copy of software at a discounted rate to a hardware purchaser. He said that OEM software is not sold separately from a piece of hardware and “OEM” does not refer to backup copies. He confirmed that the copy of CS3 Extended that the investigator purchased and the copy of Fireworks that Morris purchased from Anderson were unauthorized. He also stated that Adobe had no relationship with Anderson and did not authorize him to sell its products.

After a four-day trial, the jury found Anderson guilty. The district court sentenced him to 24 months of imprisonment and two years of supervised release. It further ordered him to pay a $100 special assessment and $247,144 in restitution to Adobe. Anderson now appeals, and we have jurisdiction pursuant to 28 U.S.C. § 1291.

II

Anderson first contends that the district court erred because its jury instruction on the criminal copyright willfulness standard improperly suggested that the jury could convict him even if he did not have the specific intent to violate the law.

A

Prior to trial, both parties submitted proposed jury instructions. The government's set of proposed instructions included the following instruction, titled “Willfully–Defined”:

The government must prove that the defendant willfully infringed a copyrighted work. An infringement was willful when (1) the defendant engaged in acts that infringed the copyrights, and (2) knew that those actions may infringe the copyrights [or acted with reckless disregard for, or willful blindness to the copyright holder's rights].²

Among other supporting authorities, the government cited the Ninth Circuit Manual of Model Civil Jury Instructions § 17.27 (2007). Anderson proposed the following competing explanation of “willful” infringement:

A copyright is proven to be infringed “willfully” when the defendant voluntarily and intentionally violated a known legal duty. [United States v. Moran, 757 F.Supp. 1046, 1050–51 (D.Neb.1991) (citing Cheek v. United States, 498 U.S. 192, 201, 111 S.Ct. 604, 112 L.Ed.2d 617 (1991)).] To find him guilty, you must find Mr. Anderson acted with a motive to violate that which the statute protects; something more is required than the doing of the act proscribed by the statute. [Screws v. United States, 325 U.S. 91, 101, 65 S.Ct. 1031, 89 L.Ed. 1495 (1945).] Infringement of a copyright held by...