U.S.S.G. §2B5.3

(a) Base Offense Level: 8

(b) Specific Offense Characteristics

(1) If the infringement amount (A) exceeded $2,500 but did not exceed

$6,500, increase by 1 level; or (B) exceeded $6,500, increase by the

number of levels from the table in §2B1.1 (Theft, Property Destruction, and Fraud) corresponding to that amount.

(2) If the offense involved the display, performance, publication, reproduction, or distribution of a work being prepared for commercial distribution, increase by 2 levels.

(3) If the (A) offense involved the manufacture, importation, or uploading

of infringing items; or (B) defendant was convicted under 17 U.S.C.

§§ 1201 and 1204 for trafficking in circumvention devices, increase by

2 levels. If the resulting offense level is less than level 12, increase to

level 12.

(4) If the offense was not committed for commercial advantage or private

financial gain, decrease by 2 levels, but the resulting offense level

shall be not less than level 8.

(5) If the offense involved a drug that uses a counterfeit mark on or in

connection with the drug, increase by 2 levels.

(6) If the offense involved (A) the conscious or reckless risk of death or

serious bodily injury; or (B) possession of a dangerous weapon (including a firearm) in connection with the offense, increase by 2 levels. If

the resulting offense level is less than level 14, increase to level 14.

(7) If the offense involved a counterfeit military good or service the use,

malfunction, or failure of which is likely to cause (A) the disclosure of

classified information; (B) impairment of combat operations; or

(C) other significant harm to (i) a combat operation, (ii) a member of

the Armed Forces, or (iii) national security, increase by 2 levels. If the

resulting offense level is less than level 14, increase to level 14.

Commentary

Statutory Provisions: 17 U.S.C. §§ 506(a), 1201, 1204; 18 U.S.C. §§ 2318–2320, 2511. For additional

statutory provision(s), see Appendix A (Statutory Index).

Application Notes:

1. Definitions.—For purposes of this guideline:

“Circumvention devices” are devices used to perform the activity described in 17 U.S.C.

§§ 1201(a)(3)(A) and 1201(b)(2)(A).

“Commercial advantage or private financial gain” means the receipt, or expectation of receipt, of anything of value, including other protected works.

“Counterfeit military good or service” has the meaning given that term in 18 U.S.C.

§ 2320(f)(4).

“Drug” and “counterfeit mark” have the meaning given those terms in 18 U.S.C. § 2320(f).

“Infringed item” means the copyrighted or trademarked item with respect to which the crime

against intellectual property was committed.

“Infringing item” means the item that violates the copyright or trademark laws.

“Uploading” means making an infringing item available on the Internet or a similar electronic

bulletin board with the intent to enable other persons to (A) download or otherwise copy the

infringing item; or (B) have access to the infringing item, including by storing the infringing item

as an openly shared file. “Uploading” does not include merely downloading or installing an infringing item on a hard drive on a defendant’s personal computer unless the infringing item is

an openly shared file.

“Work being prepared for commercial distribution” has the meaning given that term in

17 U.S.C. § 506(a)(3).

2. Determination of Infringement Amount.—This note applies to the determination of the infringement amount for purposes of subsection (b)(1).

(A) Use of Retail Value of Infringed Item.—The infringement amount is the retail value of

the infringed item, multiplied by the number of infringing items, in a case involving any of

the following:

(i) The infringing item (I) is, or appears to a reasonably informed purchaser to be, identical or substantially equivalent to the infringed item; or (II) is a digital or electronic

reproduction of the infringed item.

(ii) The retail price of the infringing item is not less than 75% of the retail price of the

infringed item.

(iii) The retail value of the infringing item is difficult or impossible to determine without

unduly complicating or prolonging the sentencing proceeding.

(iv) The offense involves the illegal interception of a satellite cable transmission in violation of 18 U.S.C. § 2511. (In a case involving such an offense, the “retail value of the

infringed item” is the price the user of the transmission would have paid to lawfully

receive that transmission, and the “infringed item” is the satellite transmission rather

than the intercepting device.)

(v) The retail value of the infringed item provides a more accurate assessment of the pecuniary harm to the copyright or trademark owner than does the retail value of the

infringing item.

(vi) The offense involves the display, performance, publication, reproduction, or distribution of a work being prepared for commercial distribution. In a case involving such an

offense, the “retail value of the infringed item” is the value of that item upon its initial

commercial distribution.

(vii) A case under 18 U.S.C. § 2318 or § 2320 that involves a counterfeit label, patch,

sticker, wrapper, badge, emblem, medallion, charm, box, container, can, case, hang-tag, documentation, or packaging of any type or nature (I) that has not been affixed

to, or does not enclose or accompany a good or service; and (II) which, had it been so

used, would appear to a reasonably informed purchaser to be affixed to, enclosing or

accompanying an identifiable, genuine good or service. In such a case, the “infringed

item” is the identifiable, genuine good or service.

(viii) A case under 17 U.S.C. §§ 1201 and 1204 in which the defendant used a circumvention

device. In such an offense, the “retail value of the infringed item” is the price the user

would have paid to access lawfully the copyrighted work, and the “infringed item” is

the accessed work.

(B) Use of Retail Value of Infringing Item.—The infringement amount is the retail value

of the infringing item, multiplied by the number of infringing items, in any case not covered

by subdivision (A) of this Application Note, including a case involving the unlawful recording of a musical performance in violation of 18 U.S.C. § 2319A.

(C) Retail Value Defined.—For purposes of this Application Note, the “retail value” of an

infringed item or an infringing item is the retail price of that item in the market in which

it is sold.

(D) Determination of Infringement Amount in Cases Involving a Variety of Infringing

Items.—In a case involving a variety of infringing items, the infringement amount is the

sum of all calculations made for those items under subdivisions (A) and (B) of this Application Note. For example, if the defendant sold both counterfeit videotapes that are identical

in quality to the infringed videotapes and obviously inferior counterfeit handbags, the infringement amount, for purposes of subsection (b)(1), is the sum of the infringement amount

calculated with respect to the counterfeit videotapes under subdivision (A)(i) (i.e., the quantity of the infringing videotapes multiplied by the retail value of the infringed videotapes)

and the infringement amount calculated with respect to the counterfeit handbags under

subdivision (B) (i.e., the quantity of the infringing handbags multiplied by the retail value

of the infringing handbags).

(E) Indeterminate Number of Infringing Items.—In a case in which the court cannot determine the number of infringing items, the court need only make a reasonable estimate of

the infringement amount using any relevant information, including financial records.

3. Application of Subsection (b)(7).—In subsection (b)(7), “other significant harm to a member of the Armed Forces” means significant harm other than serious bodily injury or death. In

a case in which the offense involved a counterfeit military good or service the use, malfunction,

or failure of which is likely to cause serious bodily injury or death, subsection (b)(6)(A) (conscious

or reckless risk of serious bodily injury or death) would apply.

4. Application of §3B1.3.—If the defendant de-encrypted or otherwise circumvented a technological security measure to gain initial access to an infringed item, an adjustment under §3B1.3

(Abuse of Position of Trust or Use of Special Skill) may apply.

Background: This guideline treats copyright and trademark violations much like theft and fraud.

Similar to the sentences for theft and fraud offenses, the sentences for defendants convicted of intellectual property offenses should reflect the nature and magnitude of the pecuniary harm caused by

their crimes. Accordingly, similar to the loss enhancement in the theft and fraud guideline, the infringement amount in subsection (b)(1) serves as a principal factor in determining the offense level for

intellectual property offenses.

Subsection (b)(1) implements section 2(g) of the No Electronic Theft (NET) Act of 1997,

Pub. L. 105–147, by using the retail value of the infringed item, multiplied by the number of infringing

items, to determine the pecuniary harm for cases in which use of the retail value of the infringed item

is a reasonable estimate of that harm. For cases referred to in Application Note 2(B), the Commission

determined that use of the retail value of the infringed item would overstate the pecuniary harm or

otherwise be inappropriate. In these types of cases, use of the retail value of the infringing item, multiplied by the number of those items, is a more reasonable estimate of the resulting pecuniary harm.

Subsection (b)(5) implements the directive to the Commission in section 717 of Public Law 112–144.

Section 2511 of title 18, United States Code, as amended by the Electronic Communications Act

of 1986, prohibits the interception of satellite transmission for purposes of direct or indirect commercial advantage or private financial gain. Such violations are similar to copyright offenses and are

therefore covered by this guideline.