United States v. Chalupnik

BMG Columbia House (BMG) sold CDs and DVDs by mail and instructed the Postal Service to discard undeliverable discs rather than pay for their return. James Chalupnik (defendant), a postal janitorial manager, took the discarded discs from the trash over several years and resold them to secondhand retailers for a total gain of $78,818. Chalupnik pleaded guilty to misdemeanor copyright infringement and was sentenced to probation. At sentencing, the government argued BMG was a victim entitled to restitution because it competed with the secondhand retailers and lost sales and royalties, and the district court set restitution at Chalupnik's full gross revenue of $78,818. Chalupnik appealed, arguing BMG held no copyright interest and had suffered no actual loss since the discs were headed for the trash anyway.