Lengthy prison terms for counterfeiting upheld

In United States v Beltran (2007 WL 2685157, September 14 2007), the US Court of Appeals for the First Circuit has sustained the convictions of the defendants for manufacturing and selling counterfeit DVDs and video tapes, and affirmed their sentences of 48 and 36 months in prison, respectively.

After a 12-day jury trial in November 2005, the defendants (husband and wife Nelson Acevedo-Cruz and Noraida Beltran) were convicted of conspiracy to infringe copyright, trafficking in counterfeit labels and trafficking in counterfeit goods or services in connection with the reproduction and distribution of unauthorized copies of DVDs and video tapes. The jury found the defendants guilty on all counts. Acevedo was sentenced to 48 months in prison and Beltran was sentenced to 36 months in prison.

The defendants appealed, challenging the sufficiency of the evidence against them and their prison sentences. They argued that they were unaware that their actions constituted the making of unauthorized copies of movies. The court held that evidence of the offences was overwhelming. The evidence included:

  • admissions by the defendants that they copied and sold movies;

  • the prominent display of FBI copyright warnings on the films and video cases that were copied;

  • an earlier permanent injunction barring Acevedo from reproducing copyrighted movies; and

  • equipment for copying on a large scale found in a cellar next door to the defendants' home.

The defendants also argued that the evidence was unlawfully seized, but the court found no evidence of illegal seizure.

In addition, the defendants challenged their sentences. The court examined whether the sentencing guideline range assigned by the district court was overstated, as an overstatement would jeopardize the sentence imposed on the defendants. Using the 2004 Sentencing Guidelines, the district court started with a base level of eight for infringement, and added other levels and adjustments which resulted in guideline ranges of 63 to 78 months in prison for Acevedo and 41 to 51 months in prison for Beltran. The resulting sentences were well below the guideline minimum.

The defendants argued that the guideline range was overstated because an enhancement added for manufacturing constituted impermissible double counting. The court held that double counting is not automatically forbidden, but concluded that there was no double counting in this case. Citing USSG § 2B5(3)(a) and (b)(3), the court explained that the guidelines provide a base level which represents the generic offence of copyright infringement. Adjustments can be made for aggravating activities such as manufacturing. However, since not all of the infringing activities involved manufacturing, the court concluded that double counting did not take place. The loss calculations and other offence enhancements added to the guideline base were also upheld by the court, as evidence supported the offence enhancements, and Acevedo's enhancement for obstruction of justice was based on his perjury at trial relating to the denial that his actions were unlawful.

This decision is significant in upholding lengthy prison terms for a crime involving intellectual property and in sustaining the sentencing enhancements that the district court imposed for a crime of this type.

Susan Progoff and Erica Fischer, Fish & Neave Intellectual Property Group of Ropes & Gray, New York

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