October 26, 2010
Intellectual Property Alerts

California Appeals Court Rules RIAA is Not a Direct Victim of Music Piracy
by Cyrus Wadia

Earlier this month, California's Fourth District Court of Appeal struck down a restitution award to the Recording Industry Association of America ("RIAA) for music piracy from criminal defendants.  People v. Micah Akeem Kelly and People v. Robert Trongale.  The court held that the RIAA was not a direct victim of defendants' music piracy crimes.
In 2006, Micah Kelly and Robert Trongale were arrested for possession and sale of counterfeit compact discs of the Notorious B.I.G. album Life after Death.  Mr. Kelly plead no contest to violating California's criminal anti-piracy statute and Mr. Trongale plead guilty to counterfeiting a registered mark.  The RIAA, as a trade association representing the U.S. recording industry, sought restitution for the amount of $14,606.66 based on the wholesale value of the counterfeit compact discs that were alleged to be at issue.  The trial court granted the restitution award to the RIAA, basing its judgment on an earlier ruling that a trade association "stand[ing] in the shoes of direct victims" is entitled to restitution.
The Court of Appeal addressed the "threshold issue of whether RIAA is a direct victim" of the sale of counterfeit compact discs.  The court vacated the trial court's restitution order, noting that while the record companies and musicians may have lost profits, the RIAA had not and therefore could not claim lost profits or other losses caused by defendants' crimes.  In short, the RIAA did not suffer any economic loss necessary to be considered a direct victim of defendants' alleged crimes.
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