Electronics Recycler Sentenced for Criminal Copyright Infringement

The protection of intellectual property is critically important for many businesses, particularly in the electronics and technology industries. Computer and software companies rely extensively on copyright, trademark, and patent protections. Most acts of alleged copyright infringement result in civil claims, but federal criminal law allows prosecution in some situations. An individual often described as a “e-waste recycler” is facing a prison sentence for acts that he stated were intended to help extend the lives of personal computers, but which a major software company considered infringement. Prosecutors indicted him on 21 counts in 2016. United States v. Lundgren, No. 16-cr-80090, superseding indictment (S.D. Fla., Feb. 2, 2017). Last year, he pleaded guilty to two counts, criminal copyright infringement and conspiracy to traffic in counterfeit goods. An appeals court has now affirmed the district judge’s sentence of 15 months’ imprisonment and a $50,000 fine. United States v. Lundgren, No. 17-12466, slip op. (11th Cir., Apr. 11, 2018).

Copyright infringement involves the use of copyrighted material without a license from the copyright owner. It becomes a criminal offense when a person infringes a copyright “willfully,” and “for purposes of commercial advantage or private financial gain.” 17 U.S.C. § 506(a)(1)(A). The penalty for criminal copyright infringement depends in part on the number of copies made of any infringed works and their total value. If a defendant is found to have produced or distributed 10 or more copies, “including by electronic means,” they could face up to five years in prison and a fine. 18 U.S.C. § 2319(b)(1).

The defendant in Lundgren operated a business that refurbished discarded electronic devices, such as cell phones, for resale. His legal problems began when he attempted to take on the issue of “planned obsolescence.” This is a practice by many designers and manufacturers to set a limit on the useful life of a product or device, requiring consumers to purchase a new one. Light bulbs offer one example. While they reportedly could last much longer, light bulb manufacturers design them with a limited life span. Computers and cell phones become effectively unusable as newer software and hardware enter the market.

New computers usually have a pre-installed operating system (OS), which comes with a license from the software company allowing the purchaser of the computer to use the OS. When most computers still used CD-ROM drives, new computers would come with recovery discs that allowed users to restore the OS if they had problems with the computer. The defendant was accused of obtaining or creating counterfeit recovery discs, without a license from the software company, and distributing them to a partner to use in restoring the OS to refurbished computers that no longer had their original discs.

The software company considered this copyright infringement. Federal prosecutors issued a 21-count indictment against the defendant and the partner. The defendant pleaded guilty to two counts in May 2017, but he challenged the determination of the value of the infringed items. The district court had calculated a total value of $700,000, based on 28,000 discs containing the copyrighted material. The Eleventh Circuit affirmed this calculation and the district court’s judgment and sentence.

These blog posts are meant to be illustrative only. Unless expressly stated to the contrary herein, these matters are not the result of any legal work of Michael J. Brown, but are used to communicate a particular point of view. Michael J. Brown does not claim credit for any legal work done by any lawyer or law firm either generally or specifically, with respect to the matters contained in this blog.

Michael J. Brown is a board-certified federal criminal defense lawyer in West Texas. For more than 20 years, he has advocated for the rights of defendants against state and federal criminal charges. You can contact us at (432) 687-5157 or online today to schedule a confidential consultation with a member of our knowledgeable and skilled team.

More Blog Posts:

Defendant Charged with Alleged Copyright Scam Pleads Guilty to Federal Conspiracy Charges, Texas Criminal Lawyer Blog, June 25, 2017

The Strange World of Criminal Copyright Enforcement, Texas Criminal Lawyer Blog, September 17, 2014

Does Illegal File Sharing Belong in the Same League as Other Cyber Crimes? Texas Criminal Lawyer Blog, January 14, 2012