United States v. Sherwin Sterling
685 F. App'x 880
| 11th Cir. | 2017Background
- Defendants Sherwin Sterling and Orlando Comrie pleaded guilty to conspiring to traffic, trafficking, and importing counterfeit DVD box sets sold online from ~2009–2013.
- They purchased counterfeit DVD sets from China, used stolen identities to create seller accounts (Amazon, eBay), and sold counterfeits packaged to appear authentic at prices similar to genuine sets.
- The Motion Picture Association of America (MPAA) submitted a restitution request on behalf of its member studios, asserting 10,025 counterfeit box sets were sold and using a $16.32 average wholesale value to calculate $163,608 in losses.
- At a restitution hearing, MPAA witnesses testified the counterfeits were high quality, sold through mainstream retail channels, and likely displaced genuine sales; wholesale price reflected creation/production/marketing/intrinsic IP value.
- The district court found the MPAA members were directly and proximately harmed and awarded $163,608 in restitution based on wholesale value; defendants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether copyright holders (MPAA members) are "victims" under the MVRA | MPAA members were directly and proximately harmed because counterfeits displaced genuine sales; IP holders are victims under §2320 | Appellants argued government failed to prove MPAA members suffered direct, proximate harm from their conduct | MPAA members are victims under the MVRA; district court did not clearly err on proximate-cause findings |
| Proper measure of restitution when counterfeits displace sales | Wholesale value of authentic DVDs reasonably estimates actual loss per displaced sale; use wholesale value × number of counterfeits sold | Appellants challenged using wholesale value as overcompensating and insufficiently precise | Court upheld use of wholesale wholesale-price estimate; restitution need only be a reasonable estimate, not "laser-like" precision |
Key Cases Cited
- United States v. Washington, 434 F.3d 1265 (11th Cir. 2006) (standards for reviewing restitution orders)
- United States v. Robertson, 493 F.3d 1322 (11th Cir. 2007) (proximate cause and victim proof under MVRA)
- United States v. Martin, 803 F.3d 581 (11th Cir. 2015) (restitution amount must equal loss actually caused; review for clear error)
- United States v. Futrell, 209 F.3d 1286 (11th Cir. 2000) (reasonable-estimate standard for restitution calculations)
- United States v. Huff, 609 F.3d 1240 (11th Cir. 2010) (MVRA victim and loss principles)
- Hughey v. United States, 495 U.S. 411 (U.S. 1990) (restitution restores victim to pre-loss position)