UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 97-20479

Summary Calendar

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

VERSUS

CHONG N.CHO,

Defendant-Appellant.

Appeal from the United States District Court

for the Southern District of Texas

March 5, 1998

Before DUHÉ, DeMOSS & DENNIS, Circuit Judges.

JOHN M. DUHÉ, JR., Circuit Judge:

Chong Cho (“Cho”) appeals her sentence after pleading guilty

to two counts of trafficking in counterfeit goods. She contends

that the district court erred in applying United States Sentencing

Guidelines (“U.S.S.G.”) §§ 2B5.3 and 2F1.1 to calculate her

sentence. For the following reasons, we find no error in the

district court’s application of the Sentencing Guidelines and

therefore affirm Cho’s sentence.

BACKGROUND

Cho and her husband owned a business in Houston, Texas, called

C&S Design Handbag and Luggage (“C&S”) from around 1992 to 1996.
2

United States Customs agents began surveillance at C&S in 1995

based on information that C&S had received counterfeit merchandise

from a company in Philadelphia. The agents subsequently received

permission to search two nearby business suites used as storage

space by C&S. The agents found counterfeit merchandise in each

suite valued at over $99,000 and $27,000, respectively.

In May, 1996, a confidential informant went into C&S and

talked to Cho about purchasing counterfeit goods. The CI

subsequently purchased two counterfeit Dooney & Bourke handbags and

one counterfeit Louis Vuitton handbag for $50. On June 12, 1996,

the agents executed a search warrant at C&S. They seized 9,257

pieces of counterfeit merchandise with an estimated retail value

between $76,000 and $125,000.

Cho pled guilty to two counts of trafficking in counterfeit

goods in violation of 18 U.S.C. § 2320(a). The district judge

sentenced Cho under U.S.S.G. § 2B5.3, which mandates a base offense

level of six. The judge determined that $123,921 was the retail

value of the counterfeit merchandise for which Cho could be held

accountable. Because the retail value of the “infringing items”

exceeded $2,000, § 2B5.3(b)(1) directed the judge to “increase

[Cho’s offense level] by the corresponding number of levels from

the table in § 2F1.1 (Fraud and Deceit).” The judge then applied

the above amount ($123,921) to the table in § 2F1.1 and increased

Cho’s offense level by seven levels. See U.S.S.G. §

2F1.1(b)(1)(H). Because the district judge awarded Cho a two-level

reduction for acceptance of responsibility, her total offense level
 

1“Loss” is defined in the Application Notes to U.S.S.G. §

2B1.1 as “the value of the property taken, damaged, or destroyed.”

U.S.S.G. § 2B1.1, comment. (n.1).

 

2The prefatory sentence to the table contained in §

2F1.1(b)(1) reads: “If the loss exceeded $2,000, increase the

offense level as follows....”

3

was eleven. The court sentenced Cho to two concurrent fourteenmonth terms of imprisonment, two concurrent three-year terms of

supervised release, restitution in the amount of $6,633.95, and a

special assessment of $200. The court then granted Cho’s motion

for leave to file an out-of-time appeal.

DISCUSSION

I.

U.S.S.G. § 2B5.3, “Criminal Infringement of Copyright or

Trademark,” directs a sentencing court to increase a defendant’s

offense level by the corresponding number of levels from the Fraud

and Deceit table in § 2F1.1, but only “[i]f the retail value of the

infringing items exceed[s] $2,000.” The Fraud and Deceit table in

§ 2F1.1, however, is calibrated in terms of “loss,”1 rather than

“retail value.”

Cho argues that, once the infringing items cross the $2,000

“retail value” threshold of § 2B5.3, a sentencing court should

then, according to the plain language of § 2F1.1(b)(1),2 calculate

the “loss” resulting from Cho’s trademark infringement. That

figure (“loss”) and not the retail value of the infringed items,

Cho contends, should determine her enhancement under the § 2F1.1

table.

The district court disagreed. Relying on § 1B1.5, the
4

Commentary to § 2B5.3, and our decision in United States v. Kim,

963 F.2d 65, 67-8 (5th Cir. 1992), the district judge found that

the reference in § 2B5.3 to the § 2F1.1 table refers only to the

dollar amounts and their corresponding levels and does not

incorporate the subsection’s reliance on “loss.” The court

therefore used the retail value of the counterfeited items in

applying the § 2F1.1 table and enhancing Cho’s offense level.

II.

We review the district court’s interpretation of the

Sentencing Guidelines de novo and its application of the guidelines

to the facts for clear error. United States v. Shano, 955 F.2d

291, 294 (5th Cir. 1992); United States v. Singleton, 946 F.2d 23,

24 (5th Cir. 1991). A sentence imposed under the guidelines will

be upheld on appeal unless the defendant demonstrates that the

sentence was imposed in violation of the law, was imposed due to an

incorrect application of the guidelines, or was outside the

applicable guideline range and was unreasonable. See Shano, 955

F.2d at 294.

The Background Commentary to § 2B5.3 strongly supports the

Government’s position that the retail value of the infringing items

should determine the § 2F1.1 enhancement:

This guideline treats copyright and trademark

violations much like fraud. Note that the

enhancement is based on the value of the

infringing items, which will generally exceed

the loss or gain due to the offense.

U.S.S.G. § 2B5.3, comment. (backg’d)(emphasis added). Cho argues

that the Background Note is “simply a clarification of § 2B5.3 and
 

3We recognize that the Eighth Circuit, in United States v.

Lamere, 980 F.2d 506, 511-12 (8th Cir. 1992), may have reached a

contrary conclusion. Language in Lamere could be taken to mean

that a reference to “the table in 2F1.1" is actually a reference to

the entire subsection (§ 2F1.1(b)(1)) in which the table is

5

emphasizes that the sentencing court is to use the retail value of

the infringing items in order to determine whether it must enhance

the offense level according to § 2F1.1(b)(1).” Cho misreads the

guideline Commentary. The Background Note does not merely alert

the sentencing court that a possible reference to the § 2F1.1 table

depends on the retail value of the counterfeited items. Instead,

the Note explicitly states that the enhancement itself will be

based on retail value. The Note even takes pains to observe that

this value will generally exceed the loss or gain caused by the

infringement. Cho’s reading of the Background Note would transform

it into misleading surplusage.

Furthermore, U.S.S.G. § 1B1.5(b)(2) explains that

[a]n instruction to use a particular

subsection or table from another offense

guideline refers only to the particular

subsection or table referenced, and not to the

entire offense guideline.

Cho maintains that the reference in § 2B5.3 is in fact to the

entire subsection in which the table is included, i.e., §

2F1.1(b)(1); thus, § 2B5.3 incorporates by reference the reliance

on “loss” mandated by the prefatory sentence in § 2F1.1(b)(1). See

supra note 2.

Again, Cho misreads the guidelines. Section 2B5.3(b)(1) makes

explicit reference, not to § 2F1.1(b)(1) as a subsection, but

instead to “the table in § 2F1.1.”

3 Section 1B1.5(b)(2)
contained. (“In referring to Application Note 7, the district court

did not consider characteristics in addition to those contained in

§ 2F1.1(b)(1)--the “table.”). Lamere, 980 F.2d at 512 (emphasis

added). We disagree with that statement only insofar as it would

require a court applying § 2B5.3 to recalculate “loss” for the §

2F1.1 table, when the court had already calculated “retail value of

the infringing items” in § 2B5.3. In our view, the Background

Commentary to § 2B5.3 forecloses such an interpretation of the

guidelines. See discussion supra. We note, however, that Lamere

simply held that it was not error for the district court to refer

to the Application Notes under § 2F1.1 for guidance in interpreting

the word “loss.” See Lamere, 980 F.2d at 512. We also note that

Lamere involved the interpretation of a different guideline

section, § 2B5.1 (“Offenses Involving Counterfeit Bearer

Obligations of the United States”). See Lamere, 980 F.2d at 511.

 

4Section 2B5.4 was deleted by consolidation with § 2B5.3,

effective November 1, 1993. See U.S.S.G. § 2B5.4 [Deleted],

historical note (1995). Section 2B5.4 is identical to the present

§ 2B5.3. Cf. U.S.S.G. § 2B5.4 (1990) with § 2B5.3 (1995).

6

specifically foresees that one guideline section might refer only

to a table from another section; in such a case, § 1B1.5 instructs

the sentencing court to refer, as the district court correctly did

here, only to the “table referenced.” Thus, the reference in §

2B5.3 to “the table” in § 2F1.1, combined with the explicit

adoption of “retail value” in the § 2B5.3 Background Commentary as

the measure of enhancement, convinces us the Government’s

interpretation is the correct one.

Cho makes an ingenious argument in reliance on United States

v. Kim, 963 F.2d 65 (5th Cir. 1992), which, unfortunately for Cho,

studiously disregards the holding and import of Kim. In Kim, this

Court held that the proper measure for an enhancement under §

2B5.4(b)(1)4 was the value of the counterfeited items, and not the

value of the genuine items. Id. at 68. We further found, however,

that it was not clear error for the district court to rely on the
 

5See, e.g., U.S.S.G. § 2F1.1, comment. (n. 7)(“The amount of

loss need not be precise.... The court need only make a reasonable

estimate of the loss, given the available information);

(n.8)(“Where the market value is difficult to ascertain..., the

court may measure loss in some other way....).

7

retail value of the genuine items in assessing the retail value of

the counterfeit items; such evidence was relevant to the

counterfeit items’ value, particularly given testimony as to the

difficulty of calculating the “retail price of counterfeit items.”

Id. at 69.

Cho seeks to rob Kim of its precedential value by misstating

its holding. Cho asserts that, in Kim, we were concerned merely

with determining whether the value of the infringing items exceeded

the $2,000 threshold of § 2B5.4 (now § 2B5.3); thus, claims Cho,

Kim says nothing about the application of the § 2F1.1 table. Cho

adds that the Court’s reference to the Commentary to § 2F1.15 was

simply to support its interpretation of § 2B5.4, and was not meant

as an interpretation of § 2F1.1 itself. Id. at 69-70. Common

sense and the clear implications of Kim counsel against Cho’s

reading.

It is patently clear that the Kim court was concerned with

calculating “retail value” not to determine whether or not to apply

the § 2F1.1 table, but instead in order to apply the table itself.

The Court stated:

Kim appeals his sentence, contending that the

district court erroneously increased his

offense level by using the retail value of the

items being infringed--rather than the retail

value of the counterfeit (infringing) items.

Kim, 963 F.2d at 67 (emphasis added). Kim was complaining about an
8

“erroneous increase” to his offense level--which presupposes

application of the § 2F1.1 table--and not about the district

court’s decision to use the table at all.

Further, the Court cited the Second Circuit’s decision in

United States v. Larracuente, 952 F.2d 672 (2nd Cir. 1992) for the

proposition that the district court there, given the similarity of

bootleg tapes to the actual merchandise, “correctly used the retail

value for genuine merchandise to determine the increase in the

defendant’s offense level under section 2B5.3.” Kim, 963 F.2d at

69 (emphasis added). Again, the Kim court was interested, as was

the Larracuente court, in determining retail value for purposes of

applying the 2F1.1 table -- not, as Cho claims, for assessing

whether the § 2B5.3 $2,000 threshold had been met.

Finally, and perhaps most convincing, are the monetary amounts

addressed in Kim. The district court had determined that the

retail value of the items seized from Kim was $195,400, based on

the retail price of genuine merchandise. Kim, 963 F.2d at 68. Kim

argued that there was sufficient evidence presented at sentencing

from which the district court could have calculated the retail

value of the counterfeit items. Id. at 70. The Court found, to

the contrary, that there was insufficient evidence of the price of

the counterfeit items, and that the district court was therefore

not clearly erroneous in relying on the price of genuine articles.

Id. Specifically referring to the lack of evidence of both price

and quantity of counterfeit Louis Vuitton handbags, the Court

stated:
9

Kim has not shown that the evidence regarding

the handbags is sufficient to reduce the

amount of the counterfeit merchandise by at

least $75,400, the amount necessary to

decrease his offense level by one. See

U.S.S.G. § 2F1.1(b)(1)(H).

Id. (emphasis added).

In our view, this statement by the Kim court establishes

beyond any doubt that the court was concerned with calculating

retail value for comparison with the dollar amounts and

corresponding level adjustments found in the § 2F1.1 table. Common

sense compels this conclusion as well. The Court was dealing with

an initial retail value assessment by the district court of over

$195,000. It found that assessment was not clearly erroneous

based, in part, on its finding that Kim could not produce

sufficient evidence of the infringing items’ value to reduce the

total value by some $75,000, the amount necessary to move Kim one

level down on the § 2F1.1 table. If the Kim court had been, as Cho

insists, concerned with the $2,000 threshold amount in § 2B5.3, a

discussion of monetary values in excess of $195,000 and $75,000

would have been ridiculous at best. Contrary to Cho’s assertions,

Kim stands squarely for the proposition that the retail value of

the infringing items determines the § 2F1.1 enhancement.

Although not cited by either party, our decision in United

States v. Thomas, 973 F.2d 1152 (5th Cir. 1992), could be read to

support Cho’s argument. Thomas involved the sentencing of a

defendant who had been convicted of illegal activities involving

the alteration of motor vehicle identification numbers, in

violation of 18 U.S.C. §§ 511-12, 2321-22. Id. at 1155. The
10

Sentencing Guideline applicable to those offenses -- § 2B6.1 -- is

in pertinent part identical to § 2B5.3:

If the retail value of the motor vehicles or

parts involved exceeded $2,000, increase the

offense level by the corresponding number of

levels from the table in § 2F1.1 (Fraud and

Deceit).

U.S.S.G. § 2B6.1(b)(1). The Thomas court held that the district

court properly used “loss,” rather than retail value, in applying

§ 2B6.1 to § 2F1.1. Thomas, 973 F.2d at 1159.

One could read Thomas as conflicting with Kim. We need not

distinguish Thomas here, however. Following Thomas, Application

Note 2 was added to § 2B6.1:

The “corresponding number of levels from the

table in § 2F1.1 (Fraud and Deceit),” as used

in subsection (b)(1), refers to the number of

levels corresponding to the retail value of

the motor vehicle or parts involved.

U.S.S.G. § 2B6.1, comment. (n.2), effective November 1, 1993 (see

Appendix C, Amendment 482)(1995). That amendment seems to us to

remove any doubt Thomas might have cast on Kim.

CONCLUSION

For the foregoing reasons, we find that the district court

correctly applied U.S.S.G. §§ 2B5.3 and 2F1.1 in calculating Cho’s

sentence and we therefore AFFIRM.

AFFIRMED.