United States v. Liu

731 F.3d 982 (9th Cir. 2013)

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Nature of the Case

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Facts

CD replication plants process orders for customers, who are typically the publishers (or persons purporting to be the publishers) who own the reproduction rights to the works in question. While a few plants specialize in mastering, most deal exclusively with replicating. In 2000, D founded and became the CEO of, a DVD-manufacturing company called Super DVD. By 2001, Super DVD employed about 65 people and operated four replication machines. In mid-2001, Super DVD fell on hard financial times. Its replication machines were repossessed or use was frozen. Super DVD's engineers left for other employment, and in 2003 the company did not renew its business license with the city. In an effort to lease the factory space, D showed the property to approximately 10-15 persons per week. In May 2003, Immigration and Customs Enforcement agents raided the warehouse of Vertex International Trading. Agents recovered counterfeit copies of the Symantec software 'Norton Anti-Virus 2003' and related documentation. The documentation included purchase orders, handwritten notes, and FedEx shipping labels from more than 50 vendors, including Super DVD. Agents executed a search warrant on the Super DVD warehouse and recovered thousands of DVDs and CDs. One room stored CDs and DVDs, and another held stampers, artwork, and masters. There was a compilation of rap tracks, Rap Masters Vol. 2; three compilations of Latin music tracks, Los Tucanes de Tijuana: Romanticas, Lo Mejor de la Mafia, and 3 Reyars del Tex Mex: Romanticas; and a greatest hits album, Beatles 1. There were DVD copies of the film Crouching Tiger, Hidden Dragon. D did not have authorization from the copyright holders to replicate any of these works. D admitted that Super DVD manufactured the Crouching Tiger DVDs in 2001 for a company called R&E Trading. R&E gave Super DVD a stamper with the name 'Tiger' on it but not the full title of the film. R&E refused to pay for the order when D claims he realized that R&E did not have the right to duplicate such a famous movie. Super DVD filed a lawsuit against R&E alleging that R&E deceived it about the copyrights. The lawsuit sought payment from R&E on about 40 invoices totaling approximately $85,000, including work done on the Crouching Tiger movie. Super DVD obtained a jury verdict for approximately $600. D denied any knowledge of or involvement in replicating the other works. D claimed that many of his customers simply lied to him about ownership. The jury instructions stated that D should be found guilty if he willfully infringed and that infringement is done knowingly and intentionally, rather than by accident or mistake. It added: An act is done 'knowingly' if the Defendant is aware of the act and does not act through ignorance, mistake, or accident. The government is not required to prove that the defendant knew that his act was unlawful. You may consider evidence of the Defendant's words, acts, or omissions, along with all the other evidence, in deciding whether the defendant acted knowingly. The court instructed the jury that D 'willfully infringed' if he 'without authorization duplicated, reproduced or sold the copyright belonging to the owners of the works.' The court further adopted the government's requested definition of willfully-that 'an act is done 'willfully' if the act is done knowingly and intentionally, not through ignorance, mistake or accident.' D requested instruction that evidence of reproduction, on its own, was not evidence of willfulness. The government agreed but the court did not present the instruction. D was convicted on all counts and sentenced to four years in prison followed by three years of supervised release.