Opinion ID: 75885
Heading Depth: 3
Heading Rank: 1

Heading: Value of Infringing Items

Text: 41 The Ninth Circuit in United States v. Bao, addressed the issue of the proper valuation of the infringing items in the context of a printer's involvement in a conspiracy to traffic in counterfeit software. 189 F.3d 860, 866 (9th Cir.1999). There, the district court had assigned a sentencing enhancement to the printer of counterfeit Microsoft computer software operation manuals that was based on the retail value of the entire counterfeit software package into which the manuals were eventually inserted. See id. at 867. The Court remanded for resentencing, reasoning that the retail value of the manuals, not the loss derived from their production, is the proper measure for determining the sentencing. See id; see also United States v. Cho, 136 F.3d 982, 983-84 (5th Cir.1998) (finding that Section 2B5.3 retail value and Section 2F1.1 loss were distinguishable, and that only retail value should be used to determine the proper enhancement under the § 2F1.1 table when sentencing under § 2B5.3). The court rejected the Government's argument that the manual's value could not be separated out from the value of the whole package ($50) where there was evidence that comparable genuine manuals Microsoft sold individually had a retail value of $12. In this case, unlike in Bao, there is no evidence that the bands and labels are sold at retail individually. The value of the bands and labels is inextricably intertwined with that of the completed product, as the value of the counterfeit cigars derives primarily from the degree to which the bands and labels bear marks that are indistinguishable from the genuine marks. Thus, the district court did not err by considering infringing items to be cigars rather than labels. 42 The district court erred, however, by relying in part on the value of genuine cigars where there is sufficient evidence of the value of the counterfeit items and no findings as to the quality of the counterfeit goods. 11 The district court considered the Government's valuation of the counterfeit cigars and decided to use the upper end of the valuation based on affidavits regarding the value of the genuine cigars. The value actually assigned ($4.00), however, still falls within the range specified by Ordonez as the amounts he charged for the counterfeit cigars ($40 to $100 per box, or $1.60 to $4.00 per cigar). There is no support for Appellant Guerra's contention that the district court was under an obligation to calculate an average value rather than selecting a value within the range. Nonetheless, because we remand for resentencing on the valuation issue based on court's method of determining the number of infringing items, the district court will have the opportunity to decide if the $4.00 is the appropriate retail value of the counterfeit, not genuine, merchandise. 43