U.S. v. Brown

• Decision Date: 21 February 1991
• Docket Number: No. 90-2066,90-2066
• Citation: 925 F.2d 1301
• Parties: , 1991 Copr.L.Dec. P 26,690, 17 U.S.P.Q.2d 1929 UNITED STATES of America, Plaintiff-Appellant, v. John M. BROWN, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1301

925 F.2d 1301

59 USLW 2559, 1991 Copr.L.Dec. P 26,690,

17 U.S.P.Q.2d 1929

UNITED STATES of America, Plaintiff-Appellant, v. John M. BROWN, Defendant-Appellee.

No. 90-2066.

United States Court of Appeals Tenth Circuit.

Feb. 21, 1991.

David N. Williams, Asst. U.S. Atty., Albuquerque, N.M. (William L. Lutz, U.S. Atty., and Paula G. Burnett, Asst. U.S. Atty., Albuquerque, N.M., on the brief), for plaintiff-appellant.

Paul J. Kennedy, Albuquerque, N.M., for defendant-appellee.

Before HOLLOWAY, Chief Judge, EBEL, Circuit Judge, and NOTTINGHAM ^*, District Judge.

HOLLOWAY, Chief Judge.

The United States appeals from a dismissal by the district court of an indictment charging the defendant, John M. Brown, with three counts of violations of the National Stolen Property Act, 18 U.S.C. Secs. 2314 and 2315. ¹ The indictment was dismissed on the ground that the allegedly stolen property, a computer program in source code form, did not come within the ambit of 18 U.S.C. Secs. 2314 and 2315 as goods, wares or merchandise. We affirm.

I

At the hearing on the motion to dismiss the indictment, government counsel stated that defendant Brown worked as a computer programmer for The Software Link, Inc. (hereinafter TSL), a computer software company located in Georgia (II R. 31). One asset of TSL was a computer program known as PC-MOS/386. ² Later in New Mexico, Brown was the subject of an FBI investigation which culminated in the issuance and execution of a search warrant for his apartment. During the search of Brown's residence, the FBI discovered five three-ring notebooks and a hard disk ³ which contained portions of the source code ⁴ for the PC-MOS/386 program. II R. at 47.

A grand jury returned a three count indictment on November 16, 1989, charging Brown in one count with violating 18 U.S.C. Sec. 2314 and in two counts with violating 18 U.S.C. Sec. 2315. ⁵ At a pretrial motion hearing, the district judge granted a motion to dismiss made by the defendant. ⁶ The judge based his decision primarily on Dowling v. United States, 473 U.S. 207, 216, 226, 105 S.Ct. 3127, 3132, 3137, 87 L.Ed.2d 152 (1985), which held that Sec. 2314 does not apply to crimes which involve mere copyright infringement and emphasized the fact that cases under Sec. 2314 have always involved "physical 'goods, wares [or] merchandise' " that have themselves been "stolen, converted or taken by fraud."

II

The procedural handling of the case below is questioned. In the pretrial stage of the proceedings, Brown filed a motion to dismiss. The motion alleged that upon his termination from TSL, the company shipped his materials from Georgia to his home in New Mexico; that these included his backup tapes, owned by him; that when packaged, the source code, PC-MOS/386, was on the tapes; that material from the government provided to defendant indicates the source code is copyright material belonging to TSL. The motion concluded that the source code was "intellectual property" and that the infringement the government alleges implicates complex copyright interests, and that this intellectual property cannot constitute goods, wares or merchandise under the National Stolen Property Act. For reasons that might appear at a full hearing, defendant asked that his motion to dismiss be granted.

In ruling on the motion the trial judge did not consider solely the face of the indictment in determining its sufficiency, but instead conducted an evidentiary hearing. The court suggested having a factual predicate established to show what happened physically in this case; neither the government nor the defendant objected to that procedure. II R. 39-40. ⁷ Three witnesses were allowed to testify at this hearing and one exhibit was introduced in evidence by the government. The trial judge concluded the motion hearing by dismissing the indictment.

"An indictment is sufficient if it (1) contains the essential elements of the offense intended to be charged, (2) sufficiently apprises the accused of what he must be prepared to defend against, and (3) enables the accused to plead a judgment under the indictment as a bar to any subsequent prosecution for the same offense." United States v. Kilpatrick, 821 F.2d 1456, 1461 (10th Cir.1987), aff'd sub nom. Bank of Nova Scotia v. United States, 487 U.S. 250, 108 S.Ct. 2369, 101 L.Ed.2d 228 (1988). Arguing the facial sufficiency of the indictment, the government's Reply Brief on appeal says that the indictment here listed items specifically and physically related to the source code, which was physically possessed, stolen and transported to New Mexico. See note 5, supra. The government contends that it "is not for this court or the trial court to determine whether the facts support a conviction at this juncture." This is for the jury. Appellant's Reply Brief at 1-2.

This, however, is not the ordinary case arising on a motion to dismiss the indictment, as under Rule 12(b), Fed.R.Crim.P., for failure to state an offense. Here the parties both presented evidence and raised no objection to the judge's consideration of the facts. These circumstances are similar to those in United States v. Risk, 843 F.2d 1059 (7th Cir.1988). Risk was charged with failure to file Currency Transaction Reports for transactions involving more than $10,000, in violation of 31 U.S.C. Secs. 5313 and 5322, 31 C.F.R. Part 103 and 18 U.S.C. Sec. 2. Through discovery, the government gave Risk access to the documents presented to the grand jury that indicted him and Risk appended these documents to his motion to dismiss. The government's response to this motion conceded that the facts as presented by Risk were " 'essentially accurate[ ].' " ⁸ The facts developed showed that although Risk had been involved in transactions which in the aggregate totaled well over $10,000, no single transaction involved over $9,800.

In Risk, the district court held that the indictment was facially sufficient but that the facts developed could not establish a violation of the statute underlying the indictment. Risk, 843 F.2d at 1061. The government argued that the district court erred both procedurally and substantively in dismissing the case, exceeding its authority under Rule 12(b) by relying on incomplete facts. The Seventh Circuit stated that Rule 12(b) allows pretrial determination of any motion which can be resolved without trial of the general issue. Additionally, it was noted that Rule 12(e) allows the court to consider factual issues in determining a pretrial motion. ⁹ Id.; see United States v. Coia, 719 F.2d 1120, 1123 (11th Cir.1983), cert. denied, 466 U.S. 973, 104 S.Ct. 2349, 80 L.Ed.2d 822 (1984).

We find no procedural error here. Ordinarily the sufficiency of an indictment should be decided solely by the charges made in the indictment, without regard to the strength or weakness of the government's case. Risk, 843 F.2d at 1061. However, in circumstances like those in Risk or in the instant case, it is permissible and may be desirable where the facts are essentially undisputed, for the district court to examine the factual predicate for an indictment to determine whether the elements of the criminal charge can be shown sufficiently for a submissible case. In any event, here the government's procedural objection is untimely. "Now it is too late." Risk, 843 F.2d at 1061.

III

We turn now to the charges of the indictment and to the evidentiary hearing on the motion to dismiss, including statements by counsel and testimony of witnesses, which developed essentially undisputed facts.

The indictment was stated in three counts. Count I alleged that Brown violated 18 U.S.C. Sec. 2314, in February 1989 by transporting interstate, from Georgia to New Mexico, "computer programs, software and manuals, to wit: a computer program with source code PC-MOS/386 an exclusive product of The Software Link, Inc., (TSL), such items having a value of $5,000.00 or more." I R. Doc. 1 at 1. Count II alleged that Brown violated 18 U.S.C. Sec. 2315 on July 28, 1989 because he "knowingly possessed, concealed, stored, sold and disposed of computer programs, software and manuals, to wit: a computer program with source code PC-MOS/386 ... which had crossed a state or United States boundary after being stolen." Id. at 1-2. Count III was virtually identical to Count II, except that the date was August 2, 1989 and the "sold and disposed of" language was deleted. Id. at 2.

The primary focus of the hearing on the motion to dismiss was on the applicability of Dowling to the case. Brown argued that Dowling applied because the government was not "complaining that Mr. Brown took a physical object from this company in Georgia and transported it in interstate commerce" but instead that he took a source code and transported it. II R. at 24.

The government attempted to distinguish this case from Dowling, arguing that

[t]he major distinction in this case ... [is that the] source code took 15 years to develop by TSL. It is not something that Mr. Brown could have gone to TSL, talked to the engineers, talked to the computers, even if he is extremely literate and perhaps brilliant in the area of computer programming, left that area, not taken anything physically that was not his, come to New Mexico and recreated it.

Id. at 27.

Brown claimed that the government could at most show that a copy of the program was made at TSL and was then transported in interstate commerce. Id. at 33. The court questioned this characterization of the government case since the indictment did not state that only a "copy" was involved. Id. In an attempt to clarify the government's position, the court asked the prosecutor to describe what its proof would show as to "how the program got to New Mexico" or, specifically, what Brown did "physically to acquire the program in Georgia." Id.

The government reply was that "TSL has it in their computers. He acquired that, and he could either have done it on a floppy disk or a tape or a hard disk...