Appeal from the United States District Court for the Western District of Wisconsin. No. 01-CR-0021-C-01--Barbara B. Crabb, Chief Judge.
Before Bauer, Ripple and Rovner, Circuit Judges.
The opinion of the court was delivered by: Ripple, Circuit Judge
After his indictment for participating in an international computer-program piracy ring, Kah Choon Chay pleaded guilty to one count of trafficking in counterfeit documents and packaging for computer pro grams in interstate commerce. See 18 U.S.C. sec. 2318(a). The district court sentenced him to eight months of incarceration, three years of supervised release and $49,941.02 in restitution to the owners of the copyrighted programs that Mr. Chay had pirated. This restitution figure is based on Mr. Chay's gross income from sales of the illegal programs and counterfeit packaging in the United States. In this appeal, Mr. Chay raises three arguments regarding the restitution portion of his sentence. For the reasons set forth in the following opinion, we affirm the judgment of the district court.
After meeting a "Ms. Lee" in a Kuala Lumpur, Malaysia computer store in December 1996, Mr. Chay, a Malaysian citizen residing in the United States, embarked on a scheme of international computer-software piracy. For the next several years, Mr. Chay bought newly released computer games in the United States and then sent them to Ms. Lee in Malaysia for copying. In return, he would receive 20 to 30 copies of the games with counterfeit packaging and instructions. These counterfeit items were so realistic that some of his subsequent customers could not distinguish them from the real products. Mr. Chay, using a variety of aliases on eBay and other electronic bulletin boards and auction sites, advertised and sold these pirated copies over the internet.
The scheme came to an end after one of Mr. Chay's former roommates, suspicious of Mr. Chay's activities, retrieved from a dumpster a box of Mr. Chay's business records and turned them over to the FBI. The records were enough to prompt an investigation during which an undercover agent bought counterfeit computer games from Mr. Chay via the internet. After confirming the former roommate's allegations, the FBI searched Mr. Chay's apartment and seized his computer, records of his illegal sales of copyrighted programs, and numerous illegally copied computer games, some still in packages bearing a Malaysian postmark.
Mr. Chay then confessed to his crimes and pleaded guilty to one count of violating 18 U.S.C. sec. 2318(a). The plea agreement, which reserved Mr. Chay's right to appeal, acknowledged his willingness to pay restitution for all the victims' losses caused by his activities:
The defendant agrees to pay restitution for all losses relating to the offense of conviction, all losses covered by the same course of conduct or common scheme or plan as the offense of conviction . . . . The exact restitution figure will be agreed upon by the parties prior to sentencing or, if the parties are unable to agree upon a specific figure, restitution will be determined by the Court at sentencing. R. at 9.
Notably, the plea agreement did not specify how the "losses" caused by Mr. Chay's activities would be calculated.
Mr. Chay and the Government could not agree on the proper restitution figure before sentencing; accordingly, the court determined the amount of restitution and ordered that Mr. Chay pay $49,941.02 in restitution to the 52 victim companies holding copyrights that Mr. Chay had infringed. The court set the restitution amount according to charts, generated by the Government and incorporated into the Presentence Investigation Report (PSR) through an addendum. This analysis showed that Mr. Chay had grossed $49,941.02 from the sale of pirated computer games. The charts also set forth the precise amount that Mr. Chay owed each of the 52 victim copyright holders of the pirated games. The Government had computed losses for each company by multiplying the number of that company's pirated programs that Mr. Chay sold by the actual price he received for them. The charts were based on evidence obtained from eBay, Mr. Chay's computer, and the box of Mr. Chay's discarded records turned over to the FBI by Mr. Chay's former roommate; this evidence revealed how many programs Mr. Chay had sold and the price at which he had sold them.
At sentencing, Mr. Chay raised two objections to the Government's calculation of the losses caused by his piracy. The first was to the Government's determination of the number of games that had copyrights, but the court overruled the objection because Mr. Chay had presented no evidence undermining the Government's figure. The other objection concerned the restitution amount. Through counsel, Mr. Chay argued that the court should reduce the amount of restitution by his costs in producing and distributing the pirated games and programs. Mr. Chay argued that the court should use his net profit rather than his gross sales as the restitution amount. Mr. Chay did not, however, present any evidence of his costs. The court rejected his argument, stating that:
[H]e owes the legal owner the full amount of what he sold because that was a gain he never should have realized, just as I would owe you the full $50 for [a stolen watch] because it wasn't my watch to sell. Not just the difference between what the watch cost you and what I received for it, but the full amount of my gain . . . . [I]f he had costs, those are his to absorb. Those aren't chargeable to the defendant [sic] whose copyright he stole. The copyright owners, ...