Citation Codes

Equivalent Citations

citation codes

Docket Number

No. CR-84-50C.

Motions

Motion to dismiss : Denied

Attorney(S)

Salvatore R. Martoche, U.S. Atty., Buffalo, N.Y. (Kathleen M. Mehltretter, Asst. U.S. Atty., Buffalo, N.Y., of counsel), for United States of America. Lorenzo Pieri, Buffalo, N.Y. (John Patrick Pieri, Buffalo, N.Y., of counsel), for defendant Gallo. Boreanaz, Baker Humann, Buffalo, N.Y. (Patrick J. Baker, Buffalo, N.Y., of counsel), for defendant Melchiorre.

Judges

John Thomas Curtin

Acts

See more information ...

Smart Summary

Summary of Opinion: UNITED STATES v. Carmen GALLO and Alfred Melchiorre, No. CR-84-50C (W.D.N.Y. Dec. 10, 1984)

Factual and Procedural Background

Defendants are charged in an indictment with: (Count I) conspiracy to violate 17 U.S.C. § 506(a) and 18 U.S.C. § 2319(b)(2)(B) relating to copyright infringement; (Counts II–V) substantive copyright infringement; (Counts VI–VIII) importation of merchandise by means of false statements in violation of 18 U.S.C. § 542; and (Counts IX–X) smuggling goods into the United States in violation of 18 U.S.C. § 545. Defendants moved to dismiss all counts and to suppress evidence seized under four search warrants (three warrants issued January 20, 1983, and one on February 16, 1983). One of the games alleged (PENGO) had a registration date of November 2, 1982, which is noted in the opinion with respect to the periods of alleged distribution. Defendants also moved to suppress items taken from Gallo's wallet at arrest. The court considered these motions and, for the reasons set forth below, denied them.

Legal Issues Presented

Whether Counts I–V of the indictment properly allege distribution in violation of 17 U.S.C. § 506(a) and 18 U.S.C. § 2319(b)(2)(B), given allegations of public performance and display and the number of charged distributions.
Whether Counts VI–VIII, charging violations of 18 U.S.C. § 542 (importation by means of false statements), sufficiently allege that the goods entered the country "by means of" the false statements (i.e., the materiality and causal nexus required under § 542).
Whether Counts IX–X, charging violations of 18 U.S.C. § 545 (smuggling), can encompass claims based on intangible rights such as copyrights.
Whether the indictment should be dismissed for lack of notice that video games could be subject to copyright law, affecting the willfulness element.
Whether the search warrants (and the evidence seized pursuant to them) were supported by probable cause and described the items to be seized with sufficient particularity.
Whether items seized from defendant Gallo's wallet at the time of arrest were lawfully obtained and should be suppressed.

Arguments of the Parties

Defendants' Arguments

Counts II–V fail to allege distribution because public performance or display is not distribution; the indictment lists only three sales (paragraph 8 overt acts), not the statutory minimum of seven copies within 180 days.
Counts VI–VIII under 18 U.S.C. § 542 are defective because the goods were not introduced "by means of" the false statements — i.e., without the false statements the goods would have been admitted.
Counts IX–X under 18 U.S.C. § 545 should be dismissed because Section 545 refers to "goods" or "merchandise" and, per certain authority, does not reach incorporeal privileges such as copyrights.
Gallo argues insufficient notice that video games could be copyrighted, undermining the willfulness element required for the charged crimes.
The affidavits supporting the search warrants lack probable cause and fail to describe with particularity the items to be seized.
Items taken from Gallo's wallet at arrest should be suppressed.

Government's Arguments

Counts II–V and Count I (conspiracy) properly allege distribution; whether performance or display constitutes distribution and whether the government can prove the requisite number of distributions are questions for trial.
Under § 542, materiality to the importation process is sufficient; a showing that the false statements were material (even if goods might have been admitted absent the falsehood) supports the counts and is a factual issue for trial.
Intangible rights can support prosecution under statutes concerning goods — the government relies on circuit authority and argues § 545 can reach infringements related to intangible rights.
The indictment covers events after Stern Electronics (holding video games may be copyrighted); even before absolute clarity, defendants were on notice that intangibles could be copyrighted.
Search warrants were supported by Agent Culhane's affidavits, which included agent observations, statements by defendants, and opinions of company investigators; reliance on United States v. Leon supports consideration of good-faith reliance, but the magistrate properly found probable cause.
The search of Gallo's wallet was authorized incident to arrest.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
United States v. Steerwell Corp., et al., CR-84-51C	Referenced as a parallel video-game case in which similar motions were denied; used for comparison.	The court noted many motions paralleled those in Steerwell, but significant differences existed; the Steerwell decision informed but did not control every determination here.
American Vitagraph, Inc. v. Levy, 659 F.2d 1023 (9th Cir. 1981)	Holds mere performance is not equivalent to publication or distribution (as interpreted by Ninth Circuit).	The court observed that although the Ninth Circuit concluded mere performance is not distribution, that court did not hold performance/display immaterial to distribution; thus the indictment need not be dismissed on that basis now.
United States v. Morano, 697 F.2d 923 (11th Cir. 1983)	Supports the presumption of regularity that attaches to a grand jury indictment.	The court held defendants failed to rebut the presumption of regularity as to the grand jury's consideration of evidence supporting § 542 counts.
United States v. Teraoka, 669 F.2d 577 (9th Cir. 1982)	Used for the proposition that under § 542 the goods must have entered the country "by means of" the false statement (i.e., false statement made to effect or attempt to effect entry).	Defendants relied on Teraoka to argue § 542 requires that the false statement be the reason goods were admitted; the court treated that as a significant authority but left resolution of the factual materiality issue for trial.
United States v. Ven-Fuel, Inc., 602 F.2d 747 (5th Cir. 1979)	Reads a materiality requirement into § 542 and speaks of a "logical nexus" between the false statement and the actual importation.	The court noted the government cited Ven-Fuel, and observed that that case required materiality and a logical nexus; here the court concluded materiality is a factual/legal issue for trial and denied dismissal for now.
United States v. Meldish, 722 F.2d 26 (1983), cert. denied, ___ U.S. ___, 104 S.Ct. 1597, 80 L.Ed.2d 128 (1984)	Second Circuit discussion that § 542 concerns false statements made "to effect or attempt to effect the entry of the goods."	The court cited Meldish for the description of § 542's "by means of" requirement and used it to frame the question whether the false statements here were material to entry — a question for trial.
United States v. Smith, 686 F.2d 234 (5th Cir. 1982)	Interpreted "goods, wares or merchandise" (in context of 18 U.S.C. § 2314) as not meant to describe incorporeal privileges such as copyrights.	Defendant relied on Smith to argue § 545 should not apply to copyrights; the court contrasted Smith with Second Circuit authority and denied dismissal under § 545.
United States v. Bottone, 365 F.2d 389 (2d Cir. 1965)	Establishes that intangible rights can be the basis of prosecution under statutes like 18 U.S.C. § 2314 (Second Circuit law).	The court applied the Bottone principle to conclude intangible rights can likewise support prosecution under § 545 and denied dismissal of Counts IX and X.
Stern Electronics, Inc. v. Kaufman, 669 F.2d 852	Second Circuit explicitly held that the sequence of sounds and images of a video game could qualify for copyright protection.	The court noted Stern Electronics was decided Jan. 20, 1982, and that the indictment covers events after that date; this supported the court's view that defendants had notice that video games could be copyrighted.
United States v. Leon, ___ U.S. ___, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984)	Supreme Court limited the exclusionary rule, holding evidence seized in good-faith reliance on a search warrant need not be suppressed.	The government invoked Leon to support consideration of good-faith reliance; the court nevertheless examined probable cause and found the warrants were supported by probable cause.
United States v. Bily, 406 F.Supp. 726 (E.D.Pa. 1975)	Observes difficulty in establishing probable cause for criminal copyright violation because possession of near-infringing items is not necessarily illegal.	The court cited Bily when noting the challenges of establishing probable cause for infringement and used that context in evaluating Agent Culhane's affidavits.
Ideal Toy Corp. v. Fab-Lu, Ltd., 360 F.2d 1021 (2d Cir. 1966)	Defines "substantial similarity" as established when an average lay observer would recognize the alleged copy as appropriated from the copyrighted work.	The court applied the Ideal Toy standard to conclude the magistrate could rely on lay-observer comparisons and that the affidavits' descriptive detail could suffice for probable cause.
United States v. Moore, 604 F.2d 1228 (9th Cir. 1979)	First sale doctrine applies only to copies lawfully obtained; thus first sale defense only operates when copies were lawfully acquired.	The court noted that although the affidavits did not explicitly state defendants were not bona fide distributors, the affidavits' theory was that the copies were unauthorized, and the first sale doctrine did not preclude probable cause here.
United States v. McEachern, 675 F.2d 618 (4th Cir. 1982)	Supports the proposition that searches of personal effects (e.g., wallet) can be authorized incident to arrest.	The court cited McEachern in denying suppression of items taken from Gallo's wallet incident to arrest.

Court's Reasoning and Analysis

The court addressed each motion in turn, applying legal standards stated in the opinion and deferring contested factual determinations to trial where appropriate.

I. Counts I–V (copyright counts): The court found the indictment adequately charged distribution, noting Counts II–V allege distribution "to the public for sale" of more than seven but fewer than sixty-five infringing copies and Count I charges a conspiracy. Although defendants argued performance/display are not distribution and that only three sales were alleged, the court concluded it was unnecessary at this stage to resolve whether performance/display equate to distribution; the Ninth Circuit's decision in American Vitagraph did not preclude consideration of performance/display as relevant. Whether the government can prove distribution and the requisite number of copies is a question for trial. Motion to dismiss Counts I–V denied.

II. Counts VI–VIII (§ 542 importation by false statement): The court first rejected a grand-jury-insufficiency challenge because defendants offered no evidence to overcome the presumption of regularity (citing Morano). On the merits, the court recognized competing lines of authority: defendants relied on Teraoka to argue § 542 requires that false statements be the means by which goods entered (i.e., without the falsehood the goods would not have been admitted); the government argued only materiality is required and cited Ven-Fuel. The court discussed the Second Circuit's Meldish statement that § 542 concerns false statements made "to effect or attempt to effect" entry. The court observed the government conceded at oral argument that the goods probably would have been admitted even with truthful statements, but the government asserted it had evidence that truthful answers would have led to further investigation revealing infringement. Because materiality rests on factual showings though it is ultimately a legal issue, the court denied dismissal without prejudice to renewal at trial.

III. Counts IX–X (§ 545 smuggling): Defendant Melchiorre argued § 545's reference to "goods" excludes incorporeal rights, citing Smith. The court relied on Second Circuit precedent in Bottone holding intangible rights may support prosecution under statutes like 18 U.S.C. § 2314 and extended that principle to § 545. Motion denied.

IV. Lack of Notice / Willfulness: Gallo argued insufficient notice that video games could be copyrighted and thus lack of willfulness. The court noted the Second Circuit's explicit holding in Stern Electronics (Jan. 20, 1982) that video games may be copyrighted and that the indictment's charged period post-dates that decision. The court also observed that the possibility of copyright protection for intangibles had been known since Bottone (1966). Willfulness remains a matter for trial; motion denied.

V. Suppression of evidence seized pursuant to warrants: The court analyzed Agent Culhane's affidavits supporting four warrants. It considered the government’s invocation of Leon but nonetheless examined probable cause. The affidavits included lay-observer comparisons (citing Ideal Toy), agent observations of machines labeled "Super Star" with tape labels naming copyrighted games, "Made in Taiwan" markings, statements by Gallo about storage and avoidance of authorities, and opinions from investigators/representatives of copyright holders (Nintendo, Bally-Midway, Sega). The court acknowledged potential bias of corporate investigators but found the magistrate was entitled to credit their conclusions. Agent Culhane also personally played games he characterized as "identical in sound and video" to DONKEY-KONG and PAC-MAN. Considering all of this, and noting the difficulty of proving infringement at probable cause stage, the court concluded the affidavits supplied probable cause for the January 20 and February 16 warrants. The court rejected the first-sale argument because that doctrine applies only to lawfully obtained copies and the affidavits' theory was that copies were unauthorized. Motion to suppress evidence seized by warrants denied.

VI. Motion to suppress items from Gallo's wallet: The court found the search of the wallet was incident to a valid arrest warrant issued Jan. 20, 1983, and cited McEachern; suppression denied.

Holding and Implications

HOLDING: All motions to dismiss the indictment and motions to suppress evidence were DENIED.

Implications:

The indictment stands in full: Counts I–X remain pending and the government may proceed to trial on the charged offenses.
The court left factual disputes — notably whether distribution occurred in the statutory manner and whether false statements were material to importation under § 542 — for resolution at trial; defendants retain the ability to renew certain motions at trial (the court explicitly allowed renewal of the § 542 challenge).
The court found the affidavits and magistrate determinations provided probable cause for the search warrants; evidence seized under those warrants and items taken from Gallo's wallet were not suppressed.
No novel legal rule was announced by the court; the decision applies existing authority to the instant motions and does not purport to set new precedent beyond its factual holdings in this case.

Show full summary ...

UNITED STATES of America, v. Carmen GALLO and Alfred Melchiorre, Defendants.

JOHN CURTIN, Senior District Judge

The alleged distribution of video games said to infringe upon valid copyrights is at issue in this case. Several motions are pending, many of which parallel motions made in another video case, United States v. Steerwell Corp., et al., CR-84-51C. A decision and order denying the motions in that case was issued November 16, 1984. There are, however, significant differences between the two cases.

In the instant case, defendants are charged with conspiracy to violate 17 U.S.C. § 506(a) and 18 U.S.C. § 2319(b)(2)(B), relating to copyright infringement (Count I of the indictment); substantive copyright infringement (Counts II-V); importation of merchandise by means of false statements in violation of 18 U.S.C. § 542 (Counts VI-VIII); and smuggling goods into the United States in violation of 18 U.S.C. § 545 (Counts IX and X).

Defendants have moved to dismiss all counts of the indictment and to suppress evidence seized pursuant to a warrant. For the reasons discussed below, the motions are denied.

I. Motion to Dismiss Counts I-V

Defendants claim that Counts I-V of the indictment do not properly allege violations of 17 U.S.C. § 506(a) and 18 U.S.C. § 2319(b)(2)(B). Section 506 sets forth the crime of copyright infringement; section 2319(b)(2)(B) provides for a maximum penalty of two years' imprisonment and a $250,000 fine for violations of section 506(a) if the offense

involves the reproduction or distribution, during any one-hundred-and eighty-day period, of more than seven but less than sixty-five copies infringing the copyright in one or more . . . audiovisual works.

(Emphasis added.)

Counts II-V clearly charge that defendants did "distribute to the public for sale, perform publicly and display publicly . . . more than seven but less than sixty-five copies infringing the copyrights . . ." (Indictment, p. 4). Count I charges a conspiracy to do this. Defendants argue that public performance or display does not constitute distribution. They claim that only three incidents of distribution are charged in the indictment (paragraph 8 of the overt acts alleges three sales of infringing boards), not the statutorily required minimum of seven.

As was stated by this court in Steerwell, it is not necessary to reach a legal conclusion at this time as to the effect of the charges of performance and display. Although the United States Court of Appeals for the Ninth Circuit has concluded that mere performance is not the equivalent of publication or distribution, that court did not hold that performance and display are immaterial to the question of distribution. American Vitagraph, Inc. v. Levy, 659 F.2d 1023 (9th Cir. 1981).

The indictment has properly charged distribution. Whether the government can prove that distribution occurred and that it involved the requisite number of copies is a question for trial. The motion to dismiss Counts I-V is denied.

II. Motion to Dismiss Counts VI-VIII

Defendants attack Counts VI-VIII on two theories. The first is disposed of readily. Defendants allege that there was insufficient evidence before the grand jury to support a charge of introducing goods into the United States by means of a false statement ( 18 U.S.C. § 542). They fail, however, to offer any support for this allegation and so do not overcome the presumption of regularity which attaches to a grand jury indictment. United States v. Morano, 697 F.2d 923 (11th Cir. 1983).

Defendants' second ground of attack on Counts VI-VIII merits closer consideration. Defendants maintain that, under section 542, the goods must have entered the country "by means of" the false statement; that without the statement, the goods would not have been admitted. Defendants rely on United States v. Teraoka, 669 F.2d 577 (9th Cir. 1982), for this proposition.

The government asserts that, under section 542, materiality to the importation process is all that is required. It cites United States v. Ven-Fuel, Inc., 602 F.2d 747 (5th Cir. 1979), noting that the court in that case read a materiality requirement into the statute. However, that court seemed to read section 542 in the same light as did the court in Teraoka, 669 F.2d 577. The Ven-Fuel court concluded that there must be a "logical nexus" between the false statement and the " actual importation." Id. at 753 (emphasis added).

In a recent Second Circuit decision, the court briefly discussed section 542. United States v. Meldish, 722 F.2d 26 (1983), cert. denied, ___ U.S. ___, 104 S.Ct. 1597, 80 L.Ed.2d 128 (1984). The court noted that, under section 542, the attempt to import goods must be "by means of" the false statement. Citing Teraoka, the Court stated: "Section 542 concerns itself only with whether a false statement was made to effect or attempt to effect the entry of the goods in question." Id. at 28 (emphasis added).

In this case, defendants are specifically charged with three counts of importing merchandise by means of a false consumption entry form. The question in this case is whether the merchandise would have been admitted in any event, thereby showing that the false statements were not material to the entry of the games.

At oral argument, the government admitted that the game boards probably would have been admitted even if defendants had given the correct answers. Yet, it claims to have evidence showing that, had defendants been truthful about the value and purpose of the goods, further investigation would have ensued, eventually revealing the allegedly infringing nature of the boards. This is an issue for trial.

It should be remembered, however, that the question of materiality, while resting on a factual showing, is ultimately a legal issue. Defendants' motion to dismiss is denied for the present, but defendants may raise it again at trial.

III. Motion to Dismiss Counts IX and X

Defendant Melchiorre seeks dismissal of Counts IX and X, charging him with a violation of 18 U.S.C. § 545. His theory is that since section 545 speaks in terms of smuggling "goods" or "merchandise," it does not apply to the facts of this case. Defendant relies on United States v. Smith, 686 F.2d 234 (5th Cir. 1982), in which the court held that the words, "goods, wares or merchandise," as used in 18 U.S.C. § 2314, were not meant to describe incorporeal privileges, such as copyrights. Section 2314 deals with interstate transportation of stolen goods.

The law of this circuit is that intangible rights can be the basis of a prosecution under 18 U.S.C. § 2314. United States v. Bottone, 365 F.2d 389 (2d Cir. 1965). In similar fashion, intangible rights can be the basis of a prosecution under section 545. The motion to dismiss Counts IX and X is denied.

IV. Motion to Dismiss for Lack of Notice

Defendant Gallo moves to dismiss the indictment for lack of sufficient notice that video games could be subject to the copyright laws. Defendant claims that this insufficient notice makes it "improbable" that he was willful, a requisite element of all crimes charged in the indictment.

As defendant Gallo points out, the Second Circuit first explicitly held that the sequence of sounds and images of a video game could qualify for copyright protection in Stern Electronics, Inc. v. Kaufman, 669 F.2d 852. The case was decided January 20, 1982. The indictment covers events occurring after that date, between approximately June 1982 and January 1983.

Moreover, as was noted by this court in the Steerwell decision, the law need not be absolutely settled to put a defendant on notice. The fact that intangibles could be copyrighted has been known since the decision in United States v. Bottone, 365 F.2d 389, in 1966. Defendants were on notice that video games were capable of being copyrighted. The question of their willfulness is a matter for trial. Defendant's motion to dismiss the indictment is denied.

In its brief at page 7, the United States Attorney notes that copyrights alleged to have been violated were duly registered on the dates listed in Counts II through V. However, the court notes that one of the games, PENGO, which forms the basis of Count V, was not duly registered until November 2, 1982 (Registration number 152-539, Sega Enterprises). The infringement charged in Counts II-V was said to have begun on October 6, 1982, and continued until January 20, 1983. The distribution charged in Counts II-V was said to have occurred for a 180-day period, ending January 20, 1983. Of course, there can be no infringement or illegal distribution until a game is protected by a copyright. In the case of PENGO, the government must prove enough instances of distribution occurring after its November 2, 1982, registration date to fulfill the statutory requirements. Evidence as to activities involving PENGO before the registration date could perhaps be relevant to other matters, but not to show copyright infringement or wrongful distribution of PENGO.

V. Motion for Suppression of Evidence Seized Pursuant to a Warrant

Defendants move to suppress evidence seized pursuant to four search warrants. Three authorized the searches of 67-69 Allen Street, 79 Allen Street, and 177 Lancaster Avenue and were issued January 20, 1983. The warrant authorizing the search of the garage at 177 Lancaster Avenue was issued February 16, 1983. Defendants claim that the issuance of these warrants was not based on probable cause and that the warrants did not describe with particularity what was to be seized.

All warrants issued on the strength of two affidavits by John P. Culhane, Jr., a special agent of the Federal Bureau of Investigation. The first, covering three of the four sites, was signed on January 20, 1983; the second was signed February 16, 1983. The objects of the warrants resulting from these affidavits were audiovisual games, keys to these games, computer programs, and business records covering games substantially similar or identical to copyrighted video games. The warrant focused on games believed to infringe on the following copyrighted games: PAC-MAN, MS. PAC-MAN, SUPER PAC-MAN, DONKEY-KONG, DONKEY-KONG JUNIOR, PENGO, and FROGGER (January affidavit, p. 15).

The government argues that the recently decided opinion of the Supreme Court controls. United States v. Leon, ___ U.S. ___, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984). There, the Court limited the scope of the exclusionary rule, holding that it does not apply to suppress evidence seized in good faith reliance on a search warrant. However, as this court stated in Steerwell, trial courts should not avoid making a determination on probable cause before turning to the question of good faith reliance on a search warrant.

In this case, as in Steerwell, the affidavits relied partially on the opinions of investigators employed by the firms whose copyrights were allegedly infringed. A game with "Superstar" on the marquee was examined by Jon Pederson, Technical Services Manager from Nintendo of America, Inc., which holds the DONKEY-KONG and the DONKEY-KONG JUNIOR copyrights. Pederson indicated that the "electronics" of the game were exactly the same as the electronics of DONKEY-KONG JUNIOR (January affidavit, p. 9).

Robert Landy examined another game with "Superstar" on the marquee. Landy is an investigator for Bally-Midway, Inc., holder of the PAC-MAN series of copyrights. He concluded merely that the "audio-visual display of this video game was a copyright infringement on Bally-Midway's `SUPER PAC-MAN.'" (January affidavit, p. 10).

Finally, agents contacted a Robert Crane, an attorney representing Sega Enterprises, Inc., which owns the copyright on PENGO. Mr. Crane did not even examine the game. He heard the "play" of the game described over the telephone by agents and concluded that it infringed on PENGO (January affidavit, p. 10).

As was noted in Steerwell, the possible bias on the part of these employees of firms holding copyrights may hurt their credibility before a jury, but the magistrate was entitled to accept their conclusions. However, the government is again reminded that the magistrate's inquiry into probable cause would be significantly aided if the agents' affidavits contained more detailed comparisons of protected games and infringing games. The details need not be technical: a finding of substantial similarity is based on the view of a lay person. Ideal Toy Corp. v. Fab-Lu Ltd., 360 F.2d 1021 (2d Cir. 1966).

Fortunately, in this case, Agent Culhane's affidavit did provide more details for two of the games, DONKEY-KONG and PAC-MAN. While at 69 Allen Street, Agent Culhane played a game "identical in sound and video" to each of these games which he states he has played in the past (January affidavit, p. 5).

Additionally, Agent Culhane observed approximately 25 games with the label "Super Star" on the front. Small pieces of masking tape were attached to several machines with names such as "Puck-man," "Donky-Kong" and "Pengo" written on them. Agent Culhane also saw stickers reading "Made in Taiwan" on these machines. At a later date, Agent Culhane observed boxes large enough to hold video games at 79 Allen Street. These boxes were stamped "Made in Taiwan." An employee of defendant Gallo told Agent Culhane that games are stored there (January affidavit, p. 8). Defendant Gallo also told Agent Culhane that he had a game at his home, which is at 177 Lancaster Avenue (January affidavit, p. 11).

Finally, defendant Gallo made statements which serve to bolster the magistrate's finding of probable cause. He advised Agent Culhane about how to avoid having machines he might purchase confiscated by the authorities (January affidavit, pp. 6-7).

Defendant Gallo told Culhane he has 65 games, 10 of which are protected by copyrights. These are the newer games, such as SUPER PAC-MAN. Culhane was warned that if he put one of these "patented" games into his arcade immediately, it would be confiscated. He was advised to first buy a game not subject to any copyrights and therefore available for everyone's use. This way, defendant Gallo said, he would avoid being checked by the authorities. Later, Culhane could then substitute a "patented" game.

It is difficult to establish probable cause that a criminal copyright violation occurred, because it is not illegal to possess something which comes close to being a copyright infringement. United States v. Bily, 406 F.Supp. 726 (E.D.Pa. 1975). The games in this case must be substantially similar to games protected by copyrights. Substantial similarity is established "when an average lay observer would recognize the alleged copy as having been appropriated from the copyrighted work." Ideal Toy Corp. v. Fab-Lu, Ltd., 360 F.2d at 1022.

The court finds there was probable cause to believe defendants possessed and sold video games which infringed on the copyrights of the games listed in the indictment. Therefore, the court finds that there was probable cause for the issuance of the three warrants based on the January 20, 1983, affidavit of Agent Culhane. There was also probable cause for the warrant authorizing the search of the garage at 177 Lancaster, based on Culhane's February 16, 1983, affidavit. That later affidavit encompassed the facts put forth in the January affidavit. It also stated that only 17 suspect machines were found in the first search, leaving 23 unaccounted for. A named informant told agents more were stored in the garage at 177 Lancaster Avenue (February affidavit, pp. 13-15).

Before moving to defendants' next claim, it should be noted that they also urge there was no probable cause to believe the games were infringing, because the affidavits failed to state that there was no "first sale." Under the first sale doctrine, a copyright owner loses his protection as to a particular copy once he gives up title to that copy. No subsequent purchases of that particular copy will infringe the copyright. But this doctrine only applies to copies lawfully obtained. United States v. Moore, 604 F.2d 1228 (9th Cir. 1979). The affidavits never explicitly state that defendants are not bona fide distributors, but the whole theory of the affidavits is clearly that the copies were unauthorized.

Defendants' motion to suppress evidence seized pursuant to the search warrants is denied.

V. Motion to Suppress Evidence Found in Defendant Gallo's Wallet

Defendant Gallo moves to suppress items taken from his wallet at the time of his arrest. At the time the search warrants issued on January 20, 1983, an arrest warrant was issued for defendant Gallo. The search of his wallet was authorized as a result of the arrest. United States v. McEachern, 675 F.2d 618 (4th Cir. 1982). The motion is denied.

Defendants' motions to dismiss the indictment and for suppression of evidence are denied.

So ordered.

U.S. v. GALLO, (W.D.N.Y. 1984)