Case o' The Week: A Profitable appeal - Anderson and restitution orders

  The Ninth wants a criminal defendant to pay a huge software company’s profits.

  (And it’s a good thing). United States v. Anderson, 2013 WL 6670793 (9th Cir. Dec. 19, 2013), decision available here.

 

Players: Decision by Judge Callahan, joined by Judge Fernandez and Chief DJ Vance. Hard-fought appeal by ND CJA attorney John Jordan.

Facts: Anderson sold (unauthorized) copies of Adobe software online. Id. at *1. Activation codes were hand-written on the disk in permanent marker. Id. He sold about $70,000 worth of the software, was discovered by Adobe, and was ultimately prosecuted for criminal copyright infringement. Id. at *2. At trial, Anderson explained that he thought these disks were legal backup copies. Id. The parties disputed a “willful infringement of copyright” jury instruction, and the jury later sent a note questioning the meaning of “willful.” Id. at *4-*5. Anderson was convicted and the district court imposed $247,144 in restitution. Id. at *3.

Issue(s): “[  ]Anderson . . . appeals his conviction for criminal copyright infringement . . . .. 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.” Id. at *1.

Held: “Applying the willfulness standard for criminal copyright cases as recently clarified in . . . Liu, 731 F.3d 982 (9th Cir.2 013), 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 . . . Fair, 699 F.3d 508 (D.C. Cir. 2012), and . . . 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.” Id.

Of Note: The district court erroneously calculated restitution by multiplying the number of copies of Adobe disks sold, by the retail value of the disks. Id. at *10. The Ninth embraces out-of-circuit authority for copyright restitution cases and reverses. Restitution for criminal copyright should focus on the victim’s loss, not the defendant’s gain – and “in most cases, that will consist of the copyright owner’s lost profits on sales that would have taken place if not for the infringing conduct.” Id. at *12. Anderson is a useful, rigorous application of restitution – a “back of the envelope approach simply will not do.” Id. “Speculation and rough justice are not permitted.” Id. at *13. Turn to Anderson to put some bite in restitution fights.

How to Use: In addition to a good restitution holding, the Court in Anderson also offers helpful language on the mens rea requirement for criminal copyright infringement. Id. at *7. The government in Anderson inexplicably used an old instruction that allowed for conviction if Anderson knew his acts “may” infringe upon copyrights. Id. “May” won’t cut it: the word is “vague” and rendered “the first sentence of the instruction incorrect to the extent that it suggests that Anderson could be convicted without knowing that he was violating Adobe’s rights.” Id. at *7. Because this was plain error review, this erroneous instruction didn’t earn a reversal – but the good mens rea language is still useful for copyright cases.  

                                               

Executive Committee, A.O. US Courts (new Chair Judge Traxler, not pictured)

For Further Reading: The Hon. Sarah S. Vance, Chief Judge of the E.D. La., sat on the Anderson panel. Chief Judge Vance is one of the eight members of the Executive Committee of the Administrative Office of the United States Courts (CJ Vance is to the far left, in front, in red). See article here. 

   The significance? It is the Executive Committee who ultimately determines the funding of the Defender Service account – a subject of much interest to those committed to the defense of indigent clients in federal court. See, e.g., E.C. Letter re: CJA Rate Cut, here. 

Image of Adobe symbol from http://www.sjsu.edu/at/ec/pics/adobe-systems-incorporated.png?ox=  

 Image of the (2012) Executive Committee from http://www.uscourts.gov/FederalCourts/UnderstandingtheFederalCourts/AdministrativeOffice/DirectorAnnualReport/annual-report-2012/support-for-the-judges-and-court-staff.aspx

Steven Kalar, Federal Public Defender ND Cal FPD. Website at www.ndcalfpd.org

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