FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

ROOSEVELT ANDERSON, JR.,

Defendant-Appellant.

No. 12-10344

D.C. No.

5:09-cr-01015-EJD-1

OPINION

Appeal from the United States District Court

for the Northern District of California

Edward J. Davila, District Judge, Presiding

Argued and Submitted

June 11, 2013—San Francisco, California

Submission vacated July 15, 2013

Resubmitted December 12, 2013

Filed December 19, 2013

Before: Ferdinand F. Fernandez and Consuelo M. Callahan

Circuit Judges, and Sarah S. Vance, Chief District Judge.*

Opinion by Judge Callahan

* The Honorable Sarah S. Vance, Chief District Judge for the U.S.

District Court for the Eastern District of Louisiana, sitting by designation.
2 UNITED STATES V. ANDERSON

SUMMARY**

Criminal Law

The panel affirmed a conviction for criminal copyright

infringement, but vacated the restitution order and remanded.

The panel held that a jury instruction on willfulness was

flawed but did not rise to the level of plain error, and that

evidence of uncharged acts was properly admitted as intrinsic

to the charged conduct.

The panel held that the district court erred in failing to

award restitution reflecting the victim’s actual loss, which

consisted of the victim’s lost profits on sales of authentic

copies that would have taken place if not for the defendant’s

conduct. The panel remanded for the district court to

reconsider restitution on an open record.

COUNSEL

John J. Jordan (argued), San Francisco, California, for

Defendant-Appellant.

Melinda Haag, United States Attorney; Barbara J. Valliere,

Assistant United States Attorney, Chief, Appellate Division;

Susan B. Gray (argued), Assistant United States Attorney,

San Francisco, California, for Plaintiff-Appellee.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
UNITED STATES V. ANDERSON 3

OPINION

CALLAHAN, Circuit Judge:

Roosevelt Anderson, Jr., appeals his conviction for

criminal copyright infringement under 17 U.S.C.

§ 506(a)(1)(A) and 18 U.S.C. § 2319(b)(1). Anderson

contends that the district court erred: (1) by giving an

incorrect jury instruction on willfulness; (2) by allowing the

government to introduce evidence of uncharged acts of

infringement; and (3) in calculating restitution. Applying the

willfulness standard for criminal copyright cases as recently

clarified in United States v. Liu, 731 F.3d 982 (9th Cir. 2013),

we conclude that the jury instruction was flawed but did not

rise to the level of plain error. We also find that the evidence

of uncharged acts was properly admitted as intrinsic to the

charged conduct, and accordingly, we affirm Anderson’s

conviction. Nonetheless, consistent with United States v.

Fair, 699 F.3d 508 (D.C. Cir. 2012), and United States v.

Chalupnik, 514 F.3d 748 (8th Cir. 2008), we conclude that

the district court erred in failing to award restitution reflecting

the victim’s actual loss, which consisted of the victim’s lost

profits on sales of authentic copies that would have taken

place if not for Anderson’s conduct. Consequently, we

vacate the restitution order and remand to the district court to

reconsider restitution on an open record.

I

Anderson was a Las Vegas cab driver who also dabbled

in photography and electronics repair. At some point, he

decided to start selling software. He initially considered

contacting Adobe Systems, Inc. (“Adobe”) to see if he could

work out a “financial deal” with it. Lacking any funding for
4 UNITED STATES V. ANDERSON

such a deal, however, he decided to take an “alternative”

route. Using the moniker “Moneyworld123,” Anderson

began a “one-man” operation selling Adobe software online

through the price comparison website Pricegrabber, while

handling payments through the Google Checkout processing

service. He also advertised software on his own website,

Anderson9000.com.

The discs containing the software Anderson sold were

consumer-grade “burned” discs with generic labels. 

Anderson’s advertisements and the documents accompanying

the discs referred to the software as “full” or “complete”

“OEM” (meaning “original equipment manufacturer”)

products. The accompanying documents also indicated that

Moneyworld123 would make “plug-ins” (i.e., optional

software upgrades providing improved software

functionality) available to the customer if the customer would

rate Moneyworld123 on Pricegrabber. The discs also

contained a “terms and conditions” document, which stated

that the software was only to be used for “archival purposes”

or as a “backup” copy. The terms and conditions were not

printed out for the customers, however, and the customers

could (and did) install the software without viewing them.

In order to activate legitimate Adobe software, a customer

must enter a 24-digit serial number (or “product key”)

provided by Adobe which it generates using an algorithm. 

The software first confirms that the number is in the correct

format and then confirms that it is a valid number with

Adobe. However, counterfeiters can use “key generators” to

create serial numbers that match Adobe’s algorithm and

disable or bypass the function requiring the software to

confirm that the number is valid. Anderson’s software was

packaged with serial numbers written in permanent marker.
UNITED STATES V. ANDERSON 5

Based in part on the inauthentic appearance of the

product, two customers contacted Anderson and demanded

refunds. One bluntly told Anderson: “You are pirating

software and marketing it as if you are not doing something

illegal. I have no doubt that this is not new software and that

you are not operating under legal means.” Anderson

provided the requested refunds.

Anderson’s operation eventually attracted Adobe’s

attention. An Adobe investigator purchased a copy of

Photoshop CS3 Extended from Anderson using Pricegrabber

and Google Checkout. The investigator purchased the

software, which had a retail price of $999, from Anderson for

$262.90, including shipping and handling. Adobe then

contacted Christopher Morris, a U.S. Postal Inspector, who

subpoenaed records from Pricegrabber and Google, as well as

records from email addresses related to the Pricegrabber and

Google accounts. Morris eventuallyconcluded thatAnderson

controlled the accounts. The records showed that Anderson

had sold 209 copies of Photoshop CS3 and 30 copies of

Photoshop CS3 Extended from February 2008 through

February 2009. During that time period, Anderson made

approximately 350 total software sales, totaling $70,551.

Morris subsequently found Anderson9000.com and

arranged a purchase of Adobe Fireworks after exchanging

voicemails with an individual identifying himself as “J.” 

Morris paid $131, including shipping and handling, for the

product, which had a retail price of $299. Surveillance

cameras captured images of Anderson checking the post

office box listed as the return address.

Morris subsequently set up another sale using the same

process and arrested Anderson. Anderson then consented to
6 UNITED STATES V. ANDERSON

a search of the rental car that he drove to the post office. In

the car, Morris found a number of blank discs, two copies of

Photoshop CS3, various discs with Adobe plug-ins, a key

generator disc, and discs with various other Adobe programs.

Anderson was subsequently charged with criminal

copyright infringement based on his sales of Photoshop CS3

and Photoshop CS3 Extended. At trial, Anderson admitted to

selling the software but explained that, based on his internet

research, he believed that OEMs were companies that resell

other companies’ products under their own names, and that

“OEM” referred to backup copies. He said that he pulled the

information for the terms and conditions from the Copyright

Act (specifically, 17 U.S.C. §§ 106, 1171) and from other

websites selling OEM software. He explained that he

provided customers with serial numbers using a key generator

because customers frequently misplace their original serial

numbers.

 

1

 In relevant part, § 117(a) provides:

Notwithstanding the provisions of section 106, it is not

an infringement for the owner of a copy of a computer

program to make or authorize the making of another

copy or adaptation of that computer program provided

. . .

(2) that such new copy or adaptation is for archival

purposes only and that all archival copies are destroyed

in the event that continued possession of the computer

program should cease to be rightful.

The statute further provides that any copies made in such a manner may

only be “leased, sold, or otherwise transferred, along with the copy from

which such copies were prepared, . . . as part of the lease, sale, or other

transfer of all rights in the program.” § 117(b).
UNITED STATES V. ANDERSON 7

Anderson conceded that he did not mention that the

software was for backup or archival purposes on Pricegrabber

and Anderson9000.com. He also conceded that he continued

to sell the software even after his customers told him that it

looked illegal. He was also aware that some customers were

installing the software and using it, as opposed to merely

retaining it for backup purposes, but he did not change his

practices. Several customers testified that they would not

have purchased Anderson’s software if they had known it

could be used only for backup purposes.

A representative from Adobe testified that there was no

market for backup copies of Adobe software and that Adobe

does not authorize anyone to make backup copies for

customers. He said that in an OEM deal, Adobe sells a copy

of software at a discounted rate to a hardware purchaser. He

said that OEM software is not sold separately from a piece of

hardware and “OEM” does not refer to backup copies. He

confirmed that the copy of CS3 Extended that the investigator

purchased and the copy of Fireworks that Morris purchased

from Anderson were unauthorized. He also stated that Adobe

had no relationship with Anderson and did not authorize him

to sell its products.

After a four-day trial, the jury found Anderson guilty. 

The district court sentenced him to 24 months of

imprisonment and two years of supervised release. It further

ordered him to pay a $100 special assessment and $247,144

in restitution to Adobe. Anderson now appeals, and we have

jurisdiction pursuant to 28 U.S.C. § 1291.
8 UNITED STATES V. ANDERSON

II

Anderson first contends that the district court erred

because its jury instruction on the criminal copyright

willfulness standard improperly suggested that the jury could

convict him even if he did not have the specific intent to

violate the law.

A

Prior to trial, both parties submitted proposed jury

instructions. The government’s set of proposed instructions

included the following instruction, titled “Willfully –

Defined”:

The government must prove that the

defendant willfully infringed a copyrighted

work. An infringement was willful when (1)

the defendant engaged in acts that infringed

the copyrights, and (2) knew that those actions

may infringe the copyrights [or acted with

reckless disregard for, or willful blindness to

the copyright holder’s rights].

2

Among other supporting authorities, the government cited the

Ninth Circuit Manual of Model Civil Jury Instructions

§ 17.27 (2007). Anderson proposed the following competing

explanation of “willful” infringement:

A copyright is proven to be infringed

“willfully” when the defendant voluntarily

2 The bracketed language appears as it did in the government’s proposed

instruction.
UNITED STATES V. ANDERSON 9

and intentionally violated a known legal duty.

[United States v. Moran, 757 F. Supp. 1046,

1050–51 (D. Neb. 1991) (citing Cheek v.

United States, 498 U.S. 192, 201 (1991)).] To

find him guilty, you must find Mr. Anderson

acted with a motive to violate that which the

statute protects; something more is required

than the doing of the act proscribed by the

statute. [Screws v. United States, 325 U.S. 91,

101 (1945).] Infringement of a copyright held

by Adobe requires a finding that Mr.

Anderson acted with the purpose of depriving

Adobe of the interest protected by its

copyright. [United States v. Heilman,

614 F.2d 1133, 1137 (1980); accord Screws,

325 U.S. at 101.] Mr. Anderson must have

known his actions constituted a copyright

infringement in order for you to find he acted

“willfully.” [Peer Int’l Corp. v. Pausa

Records, Inc., 909 F.2d 1332, 1335 & n.3 (9th

Cir. 1990).] If you find that Mr. Anderson did

not know his actions were infringing the

rights of Adobe, then you must find him not

guilty.

3

Anderson objected to the government’s instruction, noting

that there was no model instruction and that the government

was relying on civil authority. The government argued that

Anderson’s instruction was “not an accurate statement of the

requirement of willfulness.” In particular, the government

3

In an explanatory section of his submission, Anderson provided the

bracketed case citations for the court’s reference but did not suggest

incorporating them into the body of the instruction to be given to the jury.
10 UNITED STATES V. ANDERSON

indicated that it was concerned that Anderson’s instruction

added additional undefined elements, such as “motive,”

“known legal duty,” and “purpose.” It argued that its

instruction accurately stated the law, “which is that the

defendant knew what he was doing would violate Adobe’s

copyright.”

The court found that Anderson’s instruction did seek to

add additional factors that were likely irrelevant. It proposed

adding the last two sentences of Anderson’s instruction to the

end of the government’s instruction. Anderson’s counsel

then stated: “Okay, I’ll accept that.” The government agreed

that the penultimate sentence was “an accurate statement of

the government’s burden” but argued that the last sentence

was unnecessary and might lead to confusion about what the

jury had to find. The court agreed that the last sentence

would be left out of the instruction and left for the parties to

address at closing argument. Anderson’s counsel responded,

“Okay.” The court asked Anderson’s counsel if he wanted

the sentence as a stand-alone instruction, but he responded:

“As much as I would love to have a stand-alone instruction,

it makes sense to keep it with the willfully defined.” The

parties also agreed that the bracketed language in the

government’s instruction regarding recklessness and willful

blindness was not necessary based on the evidence in the

record.

The final instruction, as read to the jury, was:

The government must prove that the

defendant willfully infringed a copyrighted

work. An infringement was willful when the

defendant engaged in acts that infringed the
UNITED STATES V. ANDERSON 11

copyrights and knew those actions may

infringe the copyrights.

Mr. Anderson must have known his

actions substituted [sic

4

] a copyright

infringement in order for you to find he acted

willfully.

The district court asked both parties if they objected to the

reading of the instructions, and both responded, “No.” 

Written copies of the instructions were also provided to the

jury.

On the second day of deliberations, the jury sent a note

stating: “A juror has looked at the word willful[] in a

dictionary and shared that it means deliberate. Please

advise.” In response, the court sent a note back pursuant to

the parties’ agreement indicating that the jurors were

instructed not to do any research and referring them to the

willfulness instruction. Twenty minutes later, the jury

indicated that it had reached a unanimous verdict.

B

Anderson contends that: (1) de novo review applies; (2)

the district court improperly rejected his proposed willfulness

instruction and adopted an instruction that misstated the law;

and (3) the error affected the jury’s verdict.

4 The court obviously meant “constituted.” From the record, we cannot

determine whether this was a transcription error or the judge misspoke

when reading the instructions.
12 UNITED STATES V. ANDERSON

1

The parties dispute whether a de novo or plain error

standard of review applies here. We generally review

whether a jury instruction omits or misstates an element of a

crime on a de novo basis. United States v. Kilbride, 584 F.3d

1240, 1247 (9th Cir. 2009). “However, in the absence of a

timely objection to the jury instructions, we review for plain

error.” Id. (internal quotation marks omitted). In order to

find plain error, we must “find (1) an error that is (2) plain

and (3) affects substantial rights.” Id. Even where these

conditions are met, however, “we may only exercise our

discretion to correct the error if it seriously affects the

fairness, integrity or public reputation of judicial

proceedings.” Id.

Under Federal Rule of Criminal Procedure 30(d), a “party

who objects to any portion of the instructions or to a failure

to give a requested instruction must inform the court of the

specific objection and the grounds for the objection before the

jury retires to deliberate.” We have held that Rule 30

“requires a defendant to state with adequate specificity the

grounds for an objection to a jury instruction before the jury

retires, and that a defendant’s mere proposal of an alternate

instruction does not satisfyRule 30’s standard of specificity.” 

United States v. Hofus, 598 F.3d 1171, 1175 (9th Cir. 2010)

(internal quotation marks omitted). An objection to an

instruction on a different ground is not sufficient to preserve

de novo review. See United States v. Peterson, 538 F.3d

1064, 1071 (9th Cir. 2008).

Here, Anderson submitted an alternative willfulness

instruction that the court largely rejected. However, after the

court discussed the issue with counsel, Anderson’s attorney
UNITED STATES V. ANDERSON 13

said: “Okay, I’ll accept that.” Moreover, despite having

multiple opportunities to do so, Anderson’s attorney did not

specifically object to the court’s formulation of the final

willfulness instruction, which was a combination of the

government’s instruction and Anderson’sinstruction. Indeed,

rather than objecting, Anderson’s attorney explicitly

acquiesced to it. Accordingly, plain error review applies.5

2

Under 17 U.S.C. § 506(a)(1)(A), a person is guilty of

criminal copyright infringement if he or she “willfully”

infringes a copyright for the purpose of commercial

advantage or private financial gain. We do not have a model

instruction explaining the “willfulness” requirement in

criminal copyright infringement cases. However, we recently

set forth the relevant standards in United States v. Liu,

731 F.3d 982 (9th Cir. 2013).6

In Liu, the district court had instructed the jury that the

defendant could be convicted of willful infringement if he

“without authorization duplicated, reproduced or sold the

copyright belonging to the owners of the works” and that “an

act is done ‘willfully’ if the act is done knowingly and

5 Even if we ignored counsel’s acceptance of the combined instruction,

de novo review would only apply to the district court’s decision to reject

Anderson’s willfulness instruction. Plain error review would still apply

to the district court’s formulation of the final instruction.

6 The decision in Liu was issued after we heard argument in this case. 

We subsequentlygranted the parties’joint request to provide supplemental

briefing “addressing the effect of this court’s decision in Liu on the

question of whether the district court’s instructions properly charged the

jury on the element of willfulness.”
14 UNITED STATES V. ANDERSON

intentionally, not through ignorance, mistake or accident.” 

Id. at 988 (alteration and internal quotation marks omitted). 

The district court failed to incorporate an agreed-upon

instruction that would have provided that “evidence of

reproduction or distribution of a copyrighted work, by itself,

shall not be sufficient to establish willful infringement of a

copyright.” Id. at 987–88 (alteration and internal quotation

marks omitted). We reviewed the instructions de novo

because the court failed to provide the defendant with an

opportunity to object. Id. at 988.

We held that “willfully” as used in § 506(a) “connotes a

‘voluntary, intentional violation of a known legal duty.’” Id.

at 990 (quoting Cheek, 498 U.S. at 201). We noted that the

key distinction between civil and criminal copyright liability

is that civil liability requires the general intent to copy,

whereas criminal liability requires the specific intent to

violate the law. Id. at 989–90. We accordingly found that the

district court had erred and that the error was not harmless. 

Id. at 992–93; see also United States v. Wise, 550 F.2d 1180,

1194 (9th Cir. 1977) (suggesting that the government must

prove “an act intentionally done in violation of the law” to

establish willfulness).

Thus, in order to satisfy the willfulness requirement, a

defendant must have known that the copying was illegal. The

parties do not seriously dispute this proposition. Rather,

Anderson claims that the court’s instruction was erroneous

because it indicated that Anderson was guilty if he knew his

actions “may infringe the copyrights” and “[m]ore is required

than just Anderson knowing his actions may be illegal.”

The government’s original instruction in this case

appeared to be based on commentary to a prior version of the
UNITED STATES V. ANDERSON 15

model civil instruction for “Willful Infringement.”7 The

commentary stated: “An infringement was willful when the

defendant engaged in acts that infringed the copyright, and

knew that those actions may infringe the copyright.” Ninth

Circuit Manual of Model Civil Jury Instructions 20.25 cmt.

(2001) (emphasis added). At the time of Anderson’s

prosecution, this commentary had been superseded by a new

instruction that no longer used the word “may.” Ninth Circuit

Manual of Model Civil Jury Instructions 17.27 (2007). The

commentaryin the 2007 edition acknowledged that the earlier

version “suggested language for a willful infringement

instruction that merely required that a defendant have

knowledge that its actions ‘may influence’ the plaintiff’s

copyright.” Id. cmt. The government cited the 2007 edition

of the Manual but relied on the superseded language from the

2001 edition. It is unclear to us why the government based its

proposed instruction on the older version of the instruction.

3

“In general, a party is entitled to an instruction to help it

prove its theory of the case . . . .” United States v. Heredia,

483 F.3d 913, 922 (9th Cir. 2007) (en banc). This

entitlement, however, “is not unlimited.” United States v.

Doe, 705 F.3d 1134, 1144 (9th Cir. 2013). A district court

may properly reject a misleading or confusing instruction. 

See Hammer v. Gross, 932 F.2d 842, 849 (9th Cir. 1991). “In

7 Although willfulness is not required to establish civil liability, it does

play a role in civil copyright litigation. Where proven, it can subject a

civil defendant to an increased award of statutory damages under the Act. 

§ 504(c)(2). We have previously accepted “the general principle in

copyright law of looking to civil authority for guidance in criminal cases.” 

Wise, 550 F.3d at 1188 n.14.
16 UNITED STATES V. ANDERSON

reviewing jury instructions, the relevant inquiry is whether

the instructions as a whole are misleading or inadequate to

guide the jury’s deliberation.” United States v. Chao Fan Xu,

706 F.3d 965, 985 (9th Cir. 2013) (internal quotation marks

omitted).

The district court rejected Anderson’s proposed

instruction because it sought to add additional elements and

had the potential to create confusion. Although each

individual statement in Anderson’s instruction had support in

the case law, the combination of the statements was, at the

very least, ineloquent and would have likely created

confusion among persons without legal training. The district

court reasonably distilled Anderson’s proposed instruction to

its fundamental point.

Anderson’s real objection is to the use of the word “may”

in the sentence of the instruction indicating that the

government had to prove that he must have known that his

“actions may infringe the copyrights.” He failed to object to

this language and this failure was likely material given that

the government agreed during the conference that it had to

show that Anderson knew he was infringing Adobe’s

copyright in order to establish willfulness.

The word “may” is vague and renders the first sentence of

the instruction incorrect to the extent that it suggests that

Anderson could be convicted without knowing that he was

violating Adobe’s rights. Indeed, it would not be enough for

the government to show only that he knew that there was a

possibility that his actions were illegal. Nonetheless, error is

only plain where it is “clear and obvious.” Kilbride, 584 F.3d

at 1255. The parties and the court did not perceive any issue
UNITED STATES V. ANDERSON 17

with the phrasing of the sentence despite parsing the language

very carefully.

Notably, although the government did not pursue

recklessness or willful blindness theories, those are valid

theories for satisfying the intent element in this context. See

Wash. Shoe Co. v. A-Z Sporting Goods, Inc., 704 F.3d 668,

674 (9th Cir. 2012). Under those theories, the willfulness

requirement is satisfied where there is a showing that the

defendant recklessly disregarded “the high probability that it

was infringing plaintiffs’ copyrights.” Id. (internal quotation

marks and citation omitted). Thus, the defendant’s actions

could be willful even if the defendant only knew that the

copying “may be illegal” but did not know that it was to a

certainty. Consequently, the instruction was arguably correct

in that technical sense. Nonetheless, we do not endorse the

instruction, as without further explanation, it was imprecise

at the very least. Imprecision, however, is not the equivalent

of clear and obvious error.

More significantly, when viewed in its entirety, the

instruction was not misleading or inadequate. Although the

word “may” rendered the first half of the instruction vague,

the last sentence explicitly required the jury to find that

Anderson knew his actions constituted copyright

infringement for the jury to convict. Indeed, this standard is

arguably more stringent than what Liu requires, as it required

the jury to find that he specifically knew that his actions

constituted “copyright infringement” in order to convict,

rather than the more generalized knowledge that he was
18 UNITED STATES V. ANDERSON

violating a legal duty.

8 This language materially

distinguishes this case from Liu, where the district court

essentially instructed the jury that it could convict the

defendant as long as it found that he had the general intent to

copy. Although the district court may have misspoken when

reading the instruction to the jury, it directed the jury to the

written copies of the instructions that were provided to the

jury immediately before the jury announced that it had

reached the verdict.

Moreover, any error did not affect substantial rights or the

fairness, integrity or public reputation of the proceedings. In

context, it is apparent that there was no misunderstanding

about the meaning of the instruction. The government

referred to the last sentence of the instruction in its closing

argument, asking: “did the defendant know that his actions

constituted copyright infringement? Of course he knew.” 

Defense counsel also invoked the correct standard, stating

8

Indeed, in analogous contexts, we have found that a specific intent

requirement only required that the defendant know that his or her conduct

was unlawful rather than that he or she was violating a specific statutory

or regulatory provision. See United States v. Mousavi, 604 F.3d 1084,

1094 (9th Cir. 2010) (“[W]e conclude that ‘willfulness’ under [the

International Economic Emergency Powers Act] requires the government

to prove beyond a reasonable doubt that the defendant acted with

knowledge ‘that his conduct was unlawful,’ but not that the defendant was

aware of a specific licensing requirement.” (citation omitted)); United

States v. Easterday, 564 F.3d 1004, 1006 (9th Cir. 2009) (“[I]f you know

that you owe taxes and you do not pay them, you have acted willfully.”). 

The following instruction, referenced in United States v. Cross, 816 F.2d

297 (7th Cir. 1987), thus accurately states the law: “the wor[d] ‘willfully’

as used in the statute means the act was committed by a defendant

voluntarily, with knowledge that it was prohibited by law, and with the

purpose of violating the law, and not by mistake, accident or in good

faith.” Id. at 300 (alteration marks omitted).
UNITED STATES V. ANDERSON 19

that Anderson “must have known his actions constituted a

copyright infringement in order for you to find he acted

willfully.” There was also overwhelming evidence that

Anderson acted with the requisite knowledge that his actions

were unlawful, including his admissions that he: (a) only

resorted to selling unauthorized software after determining

that he did not have the resources to pursue a legitimate deal

with Adobe; (b) had been told by his customers that what he

was doing was illegal, but continued to do it; and (c) knew

that his customers were not using the discs for backup

purposes.

Thus, evaluating the instructions as a whole, any error

was neither “clear and obvious” nor substantial or prejudicial. 

Consequently, the district court’s willfulness instruction did

not constitute plain error.

III

Prior to trial, Anderson filed a motion in limine seeking

to preclude the government from introducing “uncharged but

allegedly improper conduct,” including evidence that: (1)

Morris purchased a copyof Adobe Fireworks from Anderson;

and (2) Anderson possessed other discs containing Adobe

software. He argued that the evidence was not admissible

under Federal Rule of Evidence 404(b) as intrinsic evidence

of the crime, and alternatively, that it should be excluded

under Rule 403. The district court denied the motion, finding

that the evidence was “intrinsic” to Anderson’s “business

model,” completed an explanation of Anderson’s conduct and

business plan, and was not unfairly prejudicial. Anderson
20 UNITED STATES V. ANDERSON

contends that the district court erred.9 “We review a district

court’s evidentiary rulings for an abuse of discretion and its

interpretation of the Federal Rules of Evidence de novo.” 

United States v. Waters, 627 F.3d 345, 351–52 (9th Cir.

2010) (emphasis omitted).

A

“Other act” evidence that is “inextricably intertwined”

with a charged offense is independently admissible and is

exempt from the requirements of Rule 404(b). United States

v. Dorsey, 677 F.3d 944, 951 (9th Cir. 2012); accord Fed. R.

Evid. 404(b) advisory committee’s notes (stating that Rule

404(b)’s requirements do “not extend to evidence of acts

which are ‘intrinsic’ to the charged offense”). Such intrinsic

evidence includes evidence constituting “a part of the

transaction that serves as the basis for the criminal charge.” 

Dorsey, 677 F.3d at 951 (internal quotation marks omitted). 

We have found, for example, that contemporaneous

uncharged drug transactions may be admissible on this basis. 

United States v. Vizcarra-Martinez, 66 F.3d 1006, 1012 (9th

Cir. 1995). This is because Rule 404(b) does not apply

“when offenses committed as part of a single criminal

episode become other acts simply because the defendant is

indicted for less than all of his actions.” Id. (internal

quotation marks omitted). A transaction that is far removed

in time from the charged transaction, however, cannot be

considered “a part of” the charged transaction. See United

States v. DeGeorge, 380 F.3d 1203, 1220 (9th Cir. 2004).

9 On appeal, Anderson does not challenge the evidence that the discs he

sold contained plug-ins, or that he possessed the key generator.
UNITED STATES V. ANDERSON 21

Intrinsic evidence, however, also includes evidence that

is “necessary to permit the prosecutor to offer a coherent and

comprehensible story regarding the commission of the

crime.” Dorsey, 677 F.3d at 951 (alteration and internal

quotation marks omitted). This is because “[t]he jury cannot

be expected to make its decision in a void – without

knowledge of the time, place, and circumstances of the acts

which form the basis of the charge.” Vizcarra-Martinez,

66 F.3d at 1013 (original alteration marks and quotation

marks omitted). This includes circumstantial evidence

explaining the general nature of a defendant’s business

activity and providing a context in which the transactions at

issue took place. United States v. King, 200 F.3d 1207, 1215

(9th Cir. 1999). Where the evidence, however, is not part of

the charged transaction and the prosecution would encounter

little difficulty in presenting the evidence relevant to its case

against the defendant without it, the evidence is not

admissible as being intrinsic to the charged offense. See id.

Here, the Fireworks sale, which occurred six months after

the charged conduct took place, is arguably too far removed

in time to constitute a part of the charged transaction.10

Nonetheless, the evidence of both the Fireworks sale and the

Adobe programs that Anderson possessed when he was

arrested do help explain Anderson’s business operations,

including his manufacturing process. Anderson argues that

the government’s case was “complete” without this evidence

and that it was unnecessary. However, the larger and more

sophisticated his operation was, the more likely it was that he

10 The Fireworks sale was not chargeable on the same basis as the other

sales because 18 U.S.C. § 2319(b)(1) requires reproduction or distribution

of a minimum of ten copies to subject an individual to a sentence of up to

five years of imprisonment.
22 UNITED STATES V. ANDERSON

knew what he was doing was illegal. Moreover, the

Fireworks sale also explained the circumstances leading up to

his arrest, where the government obtained additional evidence

that Anderson is not disputing, including the blank discs, key

generator disc, and plug-ins disc. Consequently, the evidence

was intrinsic to the charged conduct in that it was reasonably

necessary for the prosecution to tell a clear and

comprehensible story.

B

A district court has discretion to exclude otherwise

relevant evidence under Rule 403 “if its probative value is

substantially outweighed by the danger of unfair prejudice,

confusion of the issues, or misleading the jury, or by

considerations of undue delay, waste of time, or needless

presentation of cumulative evidence.” Waters, 627 F.3d at

353 (quoting Fed. R. Evid. 403). “Unfair prejudice” is an

“undue tendency to suggest decision on an improper basis,

commonly, though not necessarily, an emotional one.” 

United States v. Hankey, 203 F.3d 1160, 1172 (9th Cir. 2000)

(quoting Fed. R. Evid. 403 advisory committee’s note). The

Rule “requires that the probative value of the evidence be

compared to the articulated reasons for exclusion and permits

exclusion only if one or more of those reasons ‘substantially

outweigh’ the probative value.” Id.

The evidence here was not unfairly prejudicial. It was

very similar to the charged conduct. It was probative because

it showed the scale of Anderson’s operations and conduct. 

Nonetheless, it was not particularly damning in light of all the

other evidence directly relating to the charged conduct. 

Consequently, any prejudice was fairly insignificant. 

Moreover, it was not the type of “bad act” evidence that
UNITED STATES V. ANDERSON 23

would suggest that the jury should decide the case on an

improper emotional basis. Unlike evidence of drug sales, for

example, evidence of software sales does not have a strong

prejudicial impact because there is nothing inherently wrong

with selling software, which is usually sold legally. In any

event, the district court did not abuse its discretion by finding

that the evidence was not unfairly prejudicial.

IV

The district court found that Adobe was the victim of

Anderson’s crime and calculated restitution by multiplying

the number of copies Anderson sold by Adobe’s retail price. 

Anderson claims that the district court erred, arguing that the

court should have: (a) used the price he charged his customers

because they were the real victims and Adobe’s loss is

speculative; (b) used Adobe’s lost profits instead of its retail

price because lost profit is a more accurate measure of actual

loss; and (c) discounted the amount of restitution by the

number of returns. “We review the legality of a restitution

order, including the district court’s valuation method, de

novo.” United States v. Yeung, 672 F.3d 594, 600 (9th Cir.

2012). We review the amount for abuse of discretion if “the

order is within the statutory bounds.” Id. (internal quotation

marks omitted). We review the district court’s “factual

findings supporting an order of restitution for clear error.” Id.

A

The presentence report recommended calculating the loss

at “at least $247,144,” representing Anderson’s total

Pricegrabber sales multiplied by the retail value of the

authorized software. The loss calculation was relevant both

to Anderson’s Sentencing Guidelines’ calculation and the
24 UNITED STATES V. ANDERSON

amount of restitution. Anderson objected to using the retail

value of Adobe’s software (as opposed to the price he

charged) and argued that he should receive credit for returns. 

The government agreed with the presentence report but

eventually conceded that Anderson should get credit for the

returned software in the amount of Anderson’s price. 

Anderson’s counsel argued that any returns should be offset

at Adobe’s retail price if that was the price being used to set

the amount of the loss. In response to Anderson’s arguments,

the probation officer noted that Anderson’s conduct affected

Adobe in other ways, causing it to spend additional time on

customer support and causing damage to its reputation.

The district court found that the loss amount exceeded

$200,000, pursuant to the Guidelines commentary, subjecting

Anderson to a sentencing enhancement under U.S.S.G.

§ 2B5.3 note 2(A)(i). The court then imposed restitution in

the amount of $247,144, specifically declining to offset the

returns because “the victim in this case is really Adobe.”

B

Under the Mandatory Victims Restitution Act

(“MVRA”), 18 U.S.C. § 3663A, “a court must order a

defendant to make restitution to a victim of certain specified

offenses without considering the defendant’s economic

circumstances.” Yeung, 672 F.3d at 600. “The MVRA

defines the word ‘victim’ as ‘a person directly and

proximately harmed as a result of the commission of an

offense for which restitution may be ordered.’” Id. (quoting

§ 3663A(a)(2)). The goal of restitution under the MVRA is

to make the victim whole. Id. at 600–01. Consequently, any

award is limited to the victim’s “actual losses.” United States

v. Fu Sheng Kuo, 620 F.3d 1158, 1165–66 (9th Cir. 2010). 
UNITED STATES V. ANDERSON 25

Accordingly, “the district court may not order restitution to

reflect Defendants’ ill-gotten gains.” Id. at 1166. The

government has the burden of proving the amount of the loss

by a preponderance of the evidence. Yeung, 672 F.3d at 601

(citing § 3664(e)).

We may uphold a restitution order “where the district

court fails to make pertinent factual findings . . . when the

basis of the district court’s calculations is clear.” Id. at 604. 

Indeed, the MVRA affords the district court a degree of

flexibility in assessing the victim’s actual losses; nonetheless,

“the district court may utilize only evidence that possesses

sufficient indicia of reliability to support its probable

accuracy.” United States v. Waknine, 543 F.3d 546, 557 (9th

Cir. 2008) (alteration and quotation marks omitted). 

Additionally, a district court should not rely on its calculation

of the loss under the Sentencing Guidelines to determine the

amount of restitution as the two measures serve different

purposes and utilize different calculation methods. United

States v. Gossi, 608 F.3d 574, 580–82 (9th Cir. 2010)

(“Sentencing, unlike restitution, focuses on the criminal

defendant. . . . Restitution clearly focuses on the victim, not

the individual defendant.”). “[R]emand is appropriate where

the restitution award lacks an adequate evidentiary basis and

the district court failed to explain its reasoning.” Yeung,

672 F.3d at 602.

Anderson relies on United States v. Chalupnik, 514 F.3d

748 (8th Cir. 2008). In that case, the defendant was a post

office janitor who had taken thousands of undeliverable CDs

and DVDs originally sent by BMG and sold them to used

record stores. Id. at 750. The district court imposed

restitution in the amount of the defendant’s gross revenues. 

Id. at 751. The Eighth Circuit agreed that BMG could be a
26 UNITED STATES V. ANDERSON

victim even though it was not the owner of the copyrights and

might not be able to sue the defendant for copyright

infringement. Id. at 753–54. However, the court rejected

district court’s use of the defendant’s “ill-gotten gains” as the

measure for BMG’s loss because any loss was suffered by the

market of retailers, in addition to BMG and the copyright

owners. Id. at 754–55. The court also noted that “for goods

held by a merchant for sale, lost profits rather than lost sales

revenues are the proper measure of ‘actual loss.’” Id. at 755. 

Moreover, the court stated that any calculation of lost sales or

lost profits may not be “based entirely upon speculation.” Id.

(internal quotation marks omitted).

The parties also cite the D.C. Circuit’s recent decision in

United States v. Fair, 699 F.3d 508 (D.C. Cir. 2012). Like

the present case, Fair involved a defendant who was

convicted of selling illegal copies of Adobe software. Id. at

510. The district court ordered the defendant to pay

restitution corresponding to his infringing sales. Id. at

511–12. Reviewing the case law, the D.C. Circuit explained:

In cases involving copyright infringement and

fraudulent sales, the victim’s actual loss

typically equates to the profit the victim lost

on the sales that were diverted from the victim

as a result of the defendant’s infringing sales. 

Under this lost-profits on diverted-sales

theory, the government must offer sufficient

evidence to establish both the profit margin

per sale and the number of sales lost. If the

record does not demonstrate that the

counterfeit goods ever reached the market, or

that their introduction to the market in fact

“thwarted” actual sales of the victim’s
UNITED STATES V. ANDERSON 27

product, courts have held that no actual loss

can be shown and restitution therefore is

inappropriate. In this regard, the actual loss to

the displaced (authentic) seller is the profit

lost from the displaced sales – not the retail

value of the goods that would have been sold. 

The gross proceeds that the defendant collects

from infringing sales are similarly an

inappropriate gauge of the victim’s lost

profits.

Id. at 514 (citations omitted). The court also rejected the

reliance on lost opportunity sales where there “was no

evidentiary basis on which the district court could find that

had [the defendant’s] customers not purchased pirated Adobe

software from him at a greatly reduced price, all or any

portion of them would have purchased full-priced versions

from Adobe.” Id. at 515. Accordingly, the court vacated the

district court’s restitution order. Id. at 518.11

Consistent with our own restitution precedents, as well as

Chalupnik and Fair, we hold that restitution in a criminal

copyright case must reflect the victim’s actual losses, not the

11 See also United States v. Hudson, 483 F.3d 707, 710 (10th Cir. 2007)

(expressing skepticism of the suggestion that a purchaser of discounted

counterfeit software would be willing to purchase authentic software at

full price); United States v. Beydoun, 469 F.3d 102, 108 (5th Cir. 2006)

(concluding that there could be no actual loss for inauthentic items that

were never sold and that the proper measure of loss was the legitimate

sellers’ lost net profit rather than lost gross proceeds); United States v.

Dove, 585 F. Supp. 2d 865, 872–73 (W.D. Va. 2008) (rejecting restitution

calculations based on total revenue, as opposed to lost profits, and

assumptions that each of the defendant’s illegal transfers resulted in a lost

sale to the victims).
28 UNITED STATES V. ANDERSON

defendant’s gain. In most cases, that will consist of the

copyright owner’s lost profits on sales that would have taken

place if not for the infringing conduct. Moreover, the fact

that a consumer purchased an infringing copy at a greatly

reduced price is not sufficient, alone, to establish that the

consumer would have purchased an authentic copy at full

price.

Here, the district court properly concluded that Adobe

was the primary victim of Anderson’s crime. In his brief,

Anderson suggested that this was error, but at oral argument,

Anderson’s counsel essentially conceded that Adobe was a

victim. Indeed, unlike the victim in Chalupnik, Adobe was

the copyright owner, not a mere retailer, and thus it was

entitled to compensation for each lost sale. That does not

necessarily mean, however, that Adobe was the sole victim. 

To the extent that Anderson’s conduct directly caused his

customers to suffer actual, quantifiable losses, they may also

be victims under the MVRA. Cf. Chalupnik, 514 F.3d at

753–54.

Anderson is correct to the extent that he suggests that the

district court erred in calculating restitution. Here, the district

court appeared to rely on the Sentencing Guidelines loss

calculation in setting the amount of restitution. The court

also rejected the parties’ suggestion that restitution should

reflect discounts for any returned products. There was

evidence in the record that Adobe suffered other losses,

including time spent on customer support and a loss of

goodwill, and the district court may have refused to apply the

discount for returns as a proxy for these losses. Although the

district court’s sentiment is understandable, the MVRA

requires more precision. A “back-of-the-envelope” approach

simply will not do. See United States v. Innarelli, 524 F.3d
UNITED STATES V. ANDERSON 29

286, 294 (1st Cir. 2008) (remanding to the district court to

reconsider several possible errors in its “rough

approximation” of the victims’ losses). Consequently, on this

basis alone, the district court’s loss calculation was

erroneous.12

Although the issue was not raised before the district court,

the district court also erred in using the full retail price as

opposed to lost profits to calculate the actual loss. Moreover,

the district court did not consider whether purchasers of

Anderson’s discounted software would have, in fact,

purchased full price authentic software if Anderson’s

software had not been available. These are clear and obvious

errors because they are inconsistent with the statutory

requirements. The errors affected substantial rights and the

fundamental fairness of the proceeding given that they may

have vastly inflated the restitution in excess of Adobe’s actual

losses. See Yeung, 672 F.3d at 602 (citing cases for the

proposition that it is plain error to award restitution in excess

of the victim’s actual losses); Fu Sheng Kuo, 620 F.3d at

1165 (determining that the district court plainly erred where

we could not determine whether the amount of restitution

exceeded the victim’s actual losses under its incorrect

calculation method).

12 We express no view as to whether time spent on customer support and

a loss of goodwill can constitute actual loss under the MVRA, but we note

that the issue is not free from doubt. See Catharine M. Goodwin, Federal

Criminal Restitution § 6:22 (2013) (“[T]he loss must be tangible, actual,

or ‘out-of-pocket.’ It cannot include intangible aspects of harm that are

sometimes included in civil damages or Guidelines sentencing, such as

intended harm, risk of harm, opportunity costs, or speculative harm.”

(citations omitted)).
30 UNITED STATES V. ANDERSON

We nonetheless acknowledge that the district court did

not have the benefit of the Fair decision or our guidance in

this specific context. Accordingly, we “vacate the restitution

order and remand the case to the district court on an open

record to allow for the recalculation of restitution.” Fu Sheng

Kuo, 620 F.3d at 1166. Any restitution awarded to Adobe for

lost sales may only reflect Adobe’s lost profits for sales that

were actually diverted.13

V

We recognize that our application of Liu in this case

arrives at a different result than we reached in that case. That

is so because the facts of this case are materially different

from those in Liu. In Liu, the district court failed to give the

parties’ agreed-upon instruction and essentially told the jury

that it could convict the defendant if it found that he

intentionally made the copies. Here, although the instruction

in this case was imperfect, the district court crafted the

instruction in consultation with the parties and with the

acquiescence of Anderson’s counsel. Furthermore, it

required the jury to find that Anderson knew he was

infringing Adobe’s copyright in order to convict him. 

Consequently, there was no plain error. Similarly, because

the evidence of Anderson’s uncharged activities was intrinsic

to the charged conduct and was not unduly prejudicial, the

district court did not err in admitting the evidence.

13 Although Anderson does not raise the issue on appeal, we note that the

district court was correct to reject his suggestion that the proper valuation

method was the amount that he charged his customers. See Fu Sheng Kuo,

620 F.3d at 1166.
UNITED STATES V. ANDERSON 31

We further recognize that applying the MVRA can be

complex and somewhat burdensome. The MVRA requires

restitution for certain victims but also requires some precision

when calculating restitution. Speculation and rough justice

are not permitted. See Innarelli, 524 F.3d at 294. 

Nonetheless, exact precision is not required and district courts

do have a degree of flexibility in accounting for a victim’s

complete losses; thus, a “reasonable estimate” will suffice. 

Goodwin, supra, § 7:4. Ultimately, however, it is the

government’s burden to establish that the victim suffered an

actual loss in a quantifiable amount. Where the alleged loss

is not quantifiable to any degree of certainty, the

government’s burden has not been satisfied, and no restitution

should be ordered. Cf. 18 U.S.C. § 366A(c)(3)(B). As we

had not previously set forth these standards in this context,

the district court understandably failed to apply them. 

Accordingly, we vacate the restitution order and remand to

the district court for recalculation of restitution.

AFFIRMED, IN PART, VACATED AND

REMANDED, IN PART.