U.S. v. Sachs

• Decision Date: 23 September 1986
• Docket Number: No. 86-1021,86-1021
• Citation: 801 F.2d 839
• Parties: , 231 U.S.P.Q. 197, 1986 Copr.L.Dec. P 26,002 UNITED STATES of America, Plaintiff-Appellee, v. Lee William SACHS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 839

801 F.2d 839

94 A.L.R.Fed. 85, 231 U.S.P.Q. 197,

1986 Copr.L.Dec. P 26,002

UNITED STATES of America, Plaintiff-Appellee, v. Lee William SACHS, Defendant-Appellant.

No. 86-1021.

United States Court of Appeals Sixth Circuit.

Argued Aug. 4, 1986.

Decided Sept. 23, 1986.

Kenneth Haber, Asst. U.S. Atty., Detroit, Mich., Patricia G. Blake (argued), for plaintiff-appellee.

James A. Callahan (argued), Barbier, Goulet, Petersmarck, Tolleson, Mead & Paige, P.C., Detroit, Mich., for defendant-appellant.

Before KEITH and MERRITT, Circuit Judges, and CONTIE, Senior Circuit Judge.

CONTIE, Senior Circuit Judge.

Defendant-Appellant Lee William Sachs appeals from a jury verdict finding him guilty of aiding and abetting in the infringement of copyrights in motion pictures in violation of 17 U.S.C. Secs. 106(3), 506(a) and 18 U.S.C. Sec. 2(a), and guilty of conspiring to infringe copyrights in motion pictures in violation of 18 U.S.C. Sec. 371 and 17 U.S.C. Sec. 506(a). For the reasons set forth below, we affirm the convictions.

I.

In April 1979, a five-count indictment was issued against defendant Sachs and co-defendant Irving Stollman. The indictment alleged that Sachs and Stollman, and others unknown, had conspired to infringe copyrights in motion pictures from December 1, 1977 to November 14, 1978. It further alleged that Sachs and Stollman specifically infringed the copyrights of three movies: "Smokey and the Bandit," "Shampoo" and "Blazing Saddles." A jury trial was not conducted until September 1985, however, because appellant Sachs had taken up residence in Florida under a different name and was not discovered until sometime in 1985. In the meantime, the charges against co-defendant Stollman were dismissed. The following facts were adduced at trial.

FBI agent James Owens arranged to meet with the defendant on November 11, 1978 to discuss purchasing videotaped movies. Agent Owens was working undercover as part of an investigation into the manufacture of "pirate" movies, using the name Rubin Stern. Stollman picked up Owens at a hotel and drove him to an apartment which contained numerous pieces of equipment used for recording and duplicating videotapes as well as "master tapes" ¹ on 3/4-inch tape and boxes of blank video cassette tapes. Defendant Lee Sachs was present at the apartment.

Defendant then provided agent Owens with a list of movies for sale. Owens first ordered three films, "Smokey and the Bandit," "Shampoo" and "Blazing Saddles." These films were to be ready the next day for a price of $60 each. Owens then told Sachs, as part of a cover-up story, that he was hoping to purchase 50 to 100 movies per week for export to the Middle East. As a result, Owens reached a second agreement with Sachs to purchase 20 or 30 additional movies, on a trial basis, for this imaginary export business. He testified that the defendant told him that it would take approximately one week "to duplicate" that number of films. Owens gave Sachs a $1500 check as a deposit for the large order.

Owens returned to the same apartment on the following day to pick up the films he had initially ordered, giving Sachs $260 in cash. In exchange, Owens received copies of the film on video cassette tape and a receipt for this purchase signed by Sachs in Owens' presence.

On November 14, 1978, FBI agents seized many items from Sachs' apartment pursuant to a search warrant based on Owens' undercover work. ² Sachs was arrested in Florida six years later following a domestic dispute with Karyn Rose, the woman he had been living with. At that time, Sachs was using a different name and was carrying different documents containing false identification. Karyn Rose testified that Sachs had said he used false identification because he was a "felon."

The jury returned a verdict on December 13, 1985, finding Sachs guilty on each of the substantive counts as well as the conspiracy count. The defendant raises several issues on appeal.

II.

A. "FIRST SALE"

As his initial assignment of error, the defendant asserts that there was insufficient evidence to convict him of the charged offenses. In particular, the defendant argues that the government failed to meet its burden of proving that the particular films purchased by Owens had not been the subject of a "first sale." In order to address the merits of this argument, we must review the "first sale" doctrine and relevant statutory provisions.

Under 17 U.S.C. Sec. 106(3), the owner of a copyright has the exclusive right to "distribute copies ... of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending...." 17 U.S.C. Sec. 506(a) establishes a criminal offense for "[a]ny person who infringes a copyright willfully and for purposes of commercial advantage or private financial gain...." 17 U.S.C. Sec. 501 provides that an individual is an "infringer" if he "violates any of the exclusive rights of the copyright owner...." Therefore, an individual who duplicates and sells for profit a copyrighted work which he does not own is infringing on the copyright owner's exclusive rights. In the instant case, the defendant was charged with infringing copyrighted works by distributing by sale copies of the copyrighted motion pictures.

Implicit in the act of "infringement," is the requirement that the particular copy of the copyrighted work be an unauthorized or illegally obtained copy. In other words, the law does not forbid an individual from selling, or otherwise transferring, a copy of a copyrighted work which was lawfully obtained or lawfully manufactured by that individual. If the copyright owner has given up title to a copy of a work, the owner no longer has exclusive rights with respect to that copy. This is known as the "first sale doctrine," which was originally contained in 17 U.S.C. Sec. 27, see United States v. Powell, 701 F.2d 70, 72 (8th Cir,1983), and has since become a "judicial gloss" on the criminal liability provisions for copyright infringement. United States v. Atherton, 561 F.2d 747, 750 (9th Cir.1977).

The Ninth Circuit has held that the government has the burden, as part of its burden of proving the defendant guilty beyond a reasonable doubt, of establishing that the copy which the defendant distributed was not subject to a first sale; i.e., that the defendant did not, in fact, distribute a lawfully obtained copy. See United States v. Moore, 604 F.2d 1228, 1232-33 (9th Cir.1979); Atherton, 561 F.2d at 750; United States v. Wise, 550 F.2d 1180, 1188-91 (9th Cir.), cert. denied, 434 U.S. 929, 98 S.Ct. 416, 54 L.Ed.2d 290 (1977). Some courts appear to have characterized the "first sale" doctrine as a defense, however, rather than as a burden initially carried by the government. See United States v. Drum, 733 F.2d 1503, 1507 (11th Cir.), cert. denied, sub nom, McCullock v. U.S., 469 U.S. 1061, 105 S.Ct. 543, 83 L.Ed.2d 431 (1984); Powell, 701 F.2d at 72-73. Although we conclude that it is more logical to view the first sale doctrine as an implied governmental burden since the government does have the burden of establishing that the defendant's activities are forbidden by the criminal copyright statutes, this characterization of the burden does not completely address the defendant's assignment of error. Rather, the concern is how the government can go about satisfying this burden. As explained below, we conclude that the government's burden encompasses proving that the copies were unauthorized copies, but does not necessarily extend to disproving "every conceivable scenario in which appellant would be innocent of infringement." United States v. Whetzel, 589 F.2d 707, 711 (D.C.Cir.1978).

There are two acceptable methods of satisfying the first sale doctrine. The first method entails tracing, step-by-step, every possible source of the particular copy of the work in question. This, in essence, requires the government to disprove the possibility that the tape came from any legitimate source. See, e.g., Wise, 550 F.2d at 1191.

The other recognized method of satisfying this doctrine is for the government to prove that the copy in question was made without authorization from another recording. Moore, 604 F.2d at 1228. Under this method, the government can show that the copies in question have illegitimate origins. Therefore, "[t]he government may prove the absence of a first sale by direct evidence of the source of the pirated recordings or by circumstantial evidence that the recording was never authorized." Drum, 733 F.2d at 1507. As a logical result, the first sale doctrine only permits the "sale of a particular lawfully made copy, not its reproduction." Id. If the government produces evidence from which a jury could find beyond a reasonable doubt that the defendant was in the business of making "bootleg" or "pirated" copies, there is no justification for requiring the government to trace every copy of the film ever produced. See Powell, 701 F.2d at 73 (the first sale doctrine is not applicable to "bootleg" copies since, by definition, a "bootleg" copy is not authorized and the copyright owner could not have parted with his title to that copy through a first sale).

The defendant argues that the government's evidence was insufficient to satisfy the first sale doctrine because the government's witnesses did not have personal knowledge as to the source of the specific tapes/copies in question and that the copies of the film could have been made from salvage film, contrary to contract, or at a time before the copyrights were issued. We will judge the sufficiency of the evidence under the second method discussed above since that is how the government chose to proceed with its evidence.

As an initial matter, the district court ruled that the government's witnesses who testified about the movie companies' records on particular copies of motion pictures were competent to testify as to those facts, noting that it would be impractical to require...