U.S. v. Gottesman, No. 81-5663

• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)
• Writing for the Court: Before HENDERSON and HATCHETT, Circuit Judges, and JONES; ALBERT J. HENDERSON
• Citation: 724 F.2d 1517
• Parties: , 1984 Copr.L.Dec. P 25,632, 15 Fed. R. Evid. Serv. 98 UNITED STATES of America, Plaintiff-Appellee, v. Barbara GOTTESMAN, Defendant-Appellant.
• Decision Date: 16 February 1984
• Docket Number: No. 81-5663

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724 F.2d 1517 222 U.S.P.Q. 206, 1984 Copr.L.Dec. P 25,632,
15 Fed. R. Evid. Serv. 98 UNITED STATES of America, Plaintiff-Appellee,
v.
Barbara GOTTESMAN, Defendant-Appellant. No. 81-5663. United States Court of Appeals,
Eleventh Circuit. Feb. 16, 1984.

Page 1519

Henry J. Boitel, Rockville Centre, N.Y., for defendant-appellant.

Gloria C. Phares, Dep. Justice, Washington, D.C., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before HENDERSON and HATCHETT, Circuit Judges, and JONES, Senior Circuit Judge.

ALBERT J. HENDERSON, Circuit Judge:

Following a jury trial in the United States District Court for the Southern District of Florida, the appellant Barbara Gottesman was convicted on one count of racketeering, 18 U.S.C. Sec. 1962(c) (Count I), one count of criminal copyright infringement, 17 U.S.C. Sec. 506(a) (Count II), and two counts of interstate transportation of stolen property, 18 U.S.C. Sec. 2314 (Counts III and IV). She was sentenced to a concurrent eighteen-month term of imprisonment on each count, except that the sentence on one count of interstate transportation of stolen property was suspended and she was placed on probation for twenty-four months.

Gottesman's conviction came in the wake of an undercover investigation of the national pornography industry conducted in 1977 in Miami by the Federal Bureau of Investigation (FBI). During this investigation, two FBI agents established contact with Gottesman and her husband Rubin who owned a California company that engaged in the business of distributing pornographic films. The agents arranged by phone and by meetings with the Gottesmans to buy a number of pirated videotape cassettes of copyrighted motion pictures, as well as copies made from them. Those tapes were delivered to the agents by the appellant's husband.

On appeal, Gottesman alleges that the indictment was defective in that (1) the counts charging interstate transportation of stolen property erroneously proceed upon the assumption that materials produced as a result of criminal copyright infringement constitute stolen property within the meaning of 18 U.S.C. Sec. 2314, and (2) the criminal act on which the count of racketeering was predicated did not fall within the ambit of 18 U.S.C. Sec. 1962. She also alleges that the evidence was insufficient to sustain her convictions on the various counts, and that she was deprived of a fair trial since she was not permitted to confront and cross-examine her husband even though incriminating recordings of statements made by him were admitted into evidence. Finally, she contends that the court erred in sentencing her to eighteen months imprisonment on the copyright infringement count because the maximum sentence allowed by law for a violation of 17 U.S.C. Sec. 506 is twelve months.

We affirm the judgment of the district court and remand to the district court solely for the purpose of modification of the sentence on the criminal copyright infringement charge contained in Count II of the indictment.

I.

Gottesman contends that transportation of unauthorized video tape cassettes of copyrighted movies does not constitute an offense under the National Stolen Property Act, 18 U.S.C. Sec. 2314. In particular, she

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maintains that the property in issue was not the video tape cassettes, but only the intangible magnetic signals impressed upon the tapes, and that such intangibles cannot constitute "goods, wares, and merchandise," nor can they be acquired by theft, conversion or fraud within the meaning of 18 U.S.C. Sec. 2314. This court has already rejected this argument in the appeal of the prior conviction of the appellant's husband. United States v. Gottesman, 685 F.2d 1387 (11th Cir.1982), cert. denied, --- U.S. ----, 103 S.Ct. 1256-57, 75 L.Ed.2d 484 (1983). In that case, we adopted the stance taken by the Ninth Circuit in United States v. Drebin, 557 F.2d 1316, 1332 (9th Cir.1977), cert. denied, 436 U.S. 904, 98 S.Ct. 2232, 56 L.Ed.2d 401 (1978), in which the court dismissed as "both illogical and contrary to law" the notion that the strictures of section 2314 apply only to rights in tangible items, rather than to rights in intangible property such as copyrights. We hold that the intangible idea protected by the copyright is effectively made tangible by its embodiment upon the tapes and therefore constitutes "goods, wares, or merchandise" within the meaning of section 2314. ¹

Gottesman also urges that the Copyright Act of 1976, 17 U.S.C. Sec. 506(a) and its amendments, the Piracy and Counterfeiting Amendments of 1982, 18 U.S.C. Sec. 2319, preclude the application of section 2314 to cases of willful copyright infringement. She asserts that the legislative history of the copyright statute compels the conclusion that Congress intended it to be the exclusive penal provision dealing with copyright infringement.

We are not persuaded by this argument. Gottesman cites nothing from the legislative history of the Copyright Act of 1976 to suggest that Congress intended 17 U.S.C. Sec. 506(a) to replace 18 U.S.C. Sec. 2314 in this area, and absent such an indication, we will not presume that result. "It is a cardinal principle of construction that repeals by implication are not favored. When there are two acts upon the same subject the rule is to give effect to both if possible ... The intention of the legislature to repeal 'must be clear and manifest.' " United States v. Borden, 308 U.S. 188, 198-99, 60 S.Ct. 182, 188-89, 84 L.Ed. 181 (1939), quoting Red Rock v. Henry, 106 U.S. 596, 601-02, 1 S.Ct. 434, 438-39, 24 L.Ed. 251 (1883). ²

We also note that the enactment of the 1982 amendments, 18 U.S.C. Sec. 2319, which increased the penalties for copyright infringement, evidences the intent of Congress that section 506(a) is not meant to be the sole statute under which the government may prosecute criminal copyright infringement. Before the 1982 amendments, the criminal offense of copyright infringement and the penalties resulting from a conviction thereof were set out in 17 U.S.C. Sec. 506(a). The formal effect of the 1982 amendments was to leave the statement of the offense in 17 U.S.C. Sec. 506(a), but to move the penalty provisions to 18 U.S.C. Sec. 2319. The language of 18 U.S.C. Sec. 2319(a) is explicit that its penalties are not exclusive:

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Whoever violates section 506(a) ... shall be punished as provided in subsection (b) of this section and such penalties shall be in addition to any other provisions of title 17 or any other law.

(Emphasis added.) This language--permitting the additional imposition of penalties under any other applicable statute--effectively ratifies the earlier practice of prosecuting willful copyright infringers under 18 U.S.C. Sec. 2314.

Gottesman also attacks her conviction on the interstate transportation of stolen property counts by alleging that the government failed to prove that the value of each of the two shipments of tapes aggregated $5,000.00 as required by 18 U.S.C. Sec. 2314. She claims (1) that the government offered no proof of the value of the tapes, and (2) that when the appropriate deductions are made to account for the value of non-stolen tangible tapes, the total value of at least the first shipment falls below the value of $5,000.00.

We are satisfied that the government presented sufficient proof as to the value of the tapes. The government used the "thieves market" approach to determine the value of the stolen property. Under this method, the value of the stolen property is determined by the sale price paid by the agents for each shipment, less appropriate deductions for non-stolen material contained in each shipment, i.e., the value of the non-stolen tangible tapes. This method of valuation is appropriate in situations where stolen intangible property has been affixed to legitimately acquired tangible property, inasmuch as it takes into account the "true" retail value of the tapes--that is, the value Gottesman could have obtained in the market for which the products were targeted--as well as the legitimate costs associated with the enterprise. See United States v. Berkwitt, 619 F.2d 649, 656-658 (7th Cir.1980).

The evidence provided ample proof of value in excess of the jurisdictional amount for each shipment. The government proved the total price the agents paid for the cassettes in each shipment, as well as the resale value of used video cassette tapes. There was additional evidence from which the jury legitimately could have determined the "used" character of the tapes. Calculations based upon the figures in evidence result in valuation of...