United States v. Liu

Julius Liu (defendant) owned a company called Super DVD, which replicated compact discs (CDs) and digital versatile discs (DVDs) on a commercial scale. The process for commercial replication requires the producer to have a master stamper of the requested media content. The master is created based on some source material providing the content to be replicated, such as an original recording or compilation of recordings. Liu would replicate media as requested by his clients. Clients were required to sign a document confirming the client had the right to reproduce the media. In 2003, Immigration and Customs Enforcement raided the warehouse of one of Liu’s clients, Vertex International Trading (Vertex), and discovered copies of computer software in which Vertex did not have a copyright interest. Documents at the scene, such as purchase orders and shipping labels, confirmed that Liu had made some of the counterfeit software CDs. Liu’s company also replicated, among other things, DVD copies of Crouching Tiger, Hidden Dragon (Crouching Tiger) and several different CD compilations with the Beatle’s hit songs, rap, and Latin music. Liu asserted that the Crouching Tiger source discs had simply been labeled as Tiger. Liu said that as soon as Liu realized what the content was and that the client did not have a copyright interest, Liu sued the client for misrepresentation. Additionally, Liu stated that he had not known anything about most of the music-compilation CDs, but he had met and discussed a Latin music compilation provided by Juan Valdez. Liu stated that Valdez claimed he’d had purchased copyright licenses in the music and had performed the vocals himself. Liu listened to some tracks and believed them to have been sung by Valdez. The government charged Liu with criminal copyright infringement based on counterfeit software CDs, music-compilation CDs, and the Crouching Tiger DVDs. The jury received instructions that stated that Liu should be found guilty if the government proved that Liu had willfully infringed and that infringement had been done willfully if it was done knowingly and intentionally, rather than by accident or mistake. The court’s instructions did not include instructions requested by Liu, and agreed to by the government, that specified that evidence of reproduction, on its own, was not evidence of willfulness. The jury convicted Liu of all charges and sentenced him to four years in prison. Liu appealed based on the jury instructions.