If you came across a trash can filled with lawfully made compact discs and DVDs that the copyright owner had authorized to be put in that trash can and then thrown away because it didn’t want to pay the postage to have them returned, do you think you could be criminally prosecuted for selling those copies, and would you think that the copyright owners would be entitled to restitution under the Mandatory Victims Restitution Act? If you answered no to these questions, you would be wrong according to the Eighth Circuit.
Here’s the opinion, United States v. Chalupnik, 2008 WL 268997 (8th Cir. Feb. 1, 2008), court’s docket no. 07-1355, available on the court of appeals’ website, here (search for Chalupnik).
The facts are pretty much these (at least as recited in the opinion): defendant was an employee for the U.S. Postal Service. BMG Columbia House is a mail order operation selling CDs and DVDs by mail. Many of these discs are undeliverable. Rather than pay the postage to have them returned to it, BMG Columbia House instructed the Postal Service to throw them away. The Postal Service did throw them away. Defendant then retrieved them from the trash and sold them to area stores, netting $78,818. A surveillance camera showed defendant retrieving the items and he was arrested; he was originally charged with felony mail theft, but then pleaded guilty to misdemeanor copyright infringement. The trial court sentenced defendant to two years probation and ordered him to pay $78,818 to BMG in restitution. Chalupnik appealed .
The district court’s theory was “I do believe that there is in fact a lost opportunity to ... BMG, that the people that bought those CD's ... would likely have bought new CD's, and that that represents a real and substantial loss to ... BMG in the amount of $78,818.” The government argued that “BMG is a victim because it owns the discs, sells them with permission of the copyright owners, and controls the disposition of undeliverable discs; that each time Chalupnik sold an undeliverable disc, the artist lost a royalty and BMG lost a potential sale; and that the amount of those losses is conservatively estimated by Chalupnik's gross revenues, $78,818.
The court of appeals agreed that BMG Columbia House was a victim within the meaning of the MVRA, but held that no loss had been established...
Among the many things I find amazing in this whole debacle is the assumption that there could be copyright infringement. The copies had been thrown away at the direction of the BMG Columbia House (which may or may not have also been the copyright owner). I would think that means any ownership in the copies had been abandoned and that therefore anyone was free to do with them what they wanted. If instead of the postal worker having taken them out of the trash, what if the trash dump owner had discovered them and sold them?"
Saturday, February 09, 2008
The Crime of Selling Abandoned Copies
Also via the Museum of Hoaxes blog - William Patry has an interesting story about a postal worker who was convicted for selling undelivered DVDs that the US Postal Service, on the instructions of the owners of the DVDs, had thrown away.