A&M Records, Inc. v. Abdallah

948 F.Supp. 1449 (1996)

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Nature of the Case

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Facts

Ps are twenty-six major record companies. D is the president and sole owner of GAVC. GAVC is a California corporation doing business in California, with a branch office in New Jersey. GAVC sells empty cassette cartridges, spools of blank recording tape, audio duplicating equipment, and 'time-loaded' audio tapes. Between 1990 and 1992, GAVC sold time-loaded audio tapes to individuals who used the time-loaded audio tapes to illegally counterfeit Ps' copyrighted works. The counterfeiters were never licensed to use the plaintiffs' copyrights or trademarks. Counterfeiters are dependent on suppliers such as GAVC to acquire blank tapes that are timed to the specific length of the sound recording that they wish to counterfeit. Muslet was searching for a new supplier of time-loaded tapes for his counterfeiting operation. He met with D and informed him about the nature of the counterfeit operation, and the two agreed on a price for blank time-loaded cassettes. From September 1991 to October 1992, Muslet purchased over 300,000 blank cassettes and a tape duplicating machine from GAVC. In October of 1992, Muslet's counterfeiting operation was raided by the police and he was arrested. D's knowledge of his customer's counterfeiting activities was also demonstrated by his conversations with his employee, Asmar Chabbo. Chabbo was D's office manager in GAVC's branch office in New Jersey. Abdallah explained to him that some of GAVC's customers used the blank time-loaded tapes to counterfeit legitimate sound recordings, and also explained the methods that his customers used to counterfeit tapes. Chabbo testified as to D's relationship with Halisi, GAVC's largest customer. D mentioned that he was worried about the credit he had extended to Halisi because Halisi had been raided by the police for counterfeiting activities and all his merchandise had been seized. Halisi had also complained to D that the time-loaded cassettes he had purchased from GAVC were too short for the 'Michael Jackson cassette.' D was aware of Halisi's illegal counterfeiting activities and yet still continued to supply him with time-loaded audio cassettes. D frequently timed new legitimate cassettes for his customers. The court found that at least three of D's customers engaged in a substantial amount of counterfeiting and trademark infringement, including the 156 copyrighted sound recordings and 24 trade names There was no evidence that D or anyone at GAVC ever copied any sound recordings themselves.