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UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT
______________
No. 91-7030
______________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
CHANG HO KIM,
Defendant-Appellant.
__________________________________________________
Appeal from the United States District Court
For the Northern District of Texas
__________________________________________________
( June 3, 1992)
Before DAVIS, JONES and EMILIO M. GARZA, Circuit Judges.
EMILIO M. GARZA, Circuit Judge:
Chang Ho Kim pled guilty to conspiracy to traffic in
counterfeit goods--a violation of 18 U.S.C. зз 371, 2320--and was
sentenced1 based on an offense level calculated pursuant to
U.S.S.G. з 2B5.4.2 In this appeal, Kim challenges the district
court's use of section 2B5.4 to increase his base offense level by
seven. Although we find that the district court erred in its
interpretation of U.S.S.G. з 2B5.4, we find no reversible error in
1
The district court sentenced Kim to a ten-month term of
imprisonment, a three-year term of supervised release, and a $50
special assessment.
2
United States Sentencing Commission, Guidelines Manual,
з 2B5.4 (Nov. 1990).

the district court's factual determination of the retail value of
an infringing item. Accordingly, we affirm.
I
Between July and September 1990, United States Customs Service
agents observed two of Kim's co-defendants, Ok Chin Chambers and
William Floyd Chambers, selling counterfeit Gucci and Louis Vuitton
handbags at a market in Kansas City, Missouri. On September 12,
1990, after obtaining a warrant to search the Chambers' residence
and their two vans, the warrant was executed and the agents seized
numerous counterfeit Gucci, Louis Vuitton, and Rolex items.

The following day, the Chambers decided to cooperate with the
Customs Service investigation. They provided the telephone number
of their supplier (Kim) and indicated that Kim was scheduled to
deliver counterfeit merchandise to them that evening. Kim arrived
as expected in a pickup truck containing counterfeit Louis Vuitton
and Gucci merchandise. In the agent's presence, Ok Chin Chambers
told Kim that his acquaintance (the United States Customs agent)
wanted to purchase some of Kim's merchandise. Kim and the agent
walked outside to Kim's pickup where they observed the counterfeit
merchandise. Kim gave the agent a price list for the merchandise,
and the two men then arranged for more merchandise to be delivered
that evening.
Kim returned to his residence and loaded several large
containers from his house into his pickup. As Kim started to
leave, agents arrested him, and obtained his identification and
consent to search his vehicle and residence. Subsequently, agents
-2-

seized assorted items of counterfeit merchandise bearing the Gucci
and Louis Vuitton trademarks.
II
Kim was convicted of conspiracy to traffic in counterfeit
goods--a violation of 18 U.S.C. зз 371, 2320. In imposing Kim's
sentence, the district court increased Kim's base offense level by
seven, pursuant to U.S.S.G. з 2B5.4(b)(1).3 Kim appeals his
sentence, contending that the district court erroneously increased
his offense level by using the retail value of the items being
infringed--rather than the retail value of the counterfeit
(infringing) items. The government argues that the district court
properly interpreted section 2B5.4 and was correct in using the
value of the genuine merchandise.4
A sentence imposed under the guidelines will be upheld on
appeal unless the defendant demonstrates that the sentence was
imposed in violation of the law, was imposed due to an incorrect
application of the guidelines, or was outside the applicable
guideline range and was unreasonable. See United States v. Shano,
3
The district court used $195,400--the figure contained in
Kim's presentence report (PSI). The district court stated: "The
Court finds that the retail value that is intended to be taken into
consideration by the guideline Section 2B5.4(b)(1) is the retail
value of the legitimate item rather than the counterfeit item."
Record on Appeal, Vol. 3 at 3, United States v. Kim, No. 91-7030
(5th Cir. filed Nov. 18, 1991) ("Record on Appeal").
4
In summarizing its argument, the government contends that
"[n]o reported cases have been found which define `retail value of
the infringing item'; however, a review of other guidelines shows
that the only reasonable interpretation is that the value of the
legitimate item must be used." Government's Brief on Appeal at 4,
United States v. Kim, No. 91-7030 (5th Cir. filed Dec. 23, 1991).
-3-
3

955 F.2d 291, 294 (5th Cir.) (citations omitted), cert. dismissed,
112 S. Ct. 1520 (1992). We review the district court's
interpretation of section 2B5.4 de novo. See United States v.
Singleton, 946 F.2d 23, 24 (5th Cir. 1991) (citation omitted),
cert. denied, 112 S. Ct. 1231 (1992).
The district court used section 2B5.4--entitled "Criminal
Infringement of Trademark"--which is the guidelines section
applicable to 18 U.S.C. з 2320. Section 2B5.4(b)(1) provides for
an increase in a defendant's offense level if the "retail value of
the infringing items" exceeds $2,000. U.S.S.G. з 2B5.4(b)(1)
(emphasis added). This section also provides that, if the value
exceeds $2,000, the district court should increase the base offense
level in accordance with the table in U.S.S.G. з 2F1.1 (Fraud and
Deceit). Id.
Although the phrase "retail value of the infringing items" is
not expressly defined in the guidelines,5 we find that, because
that phrase is plain and unambiguous, it should be accorded its
ordinary, contemporary meaning. See Perrin v. United States, 444
U.S. 37, 42, 100 S. Ct. 311, 314 (1979) (citation omitted) ("A
fundamental canon of statutory construction is that, unless
5
The Background section to the Commentary to section 2B5.4
notes that the "Commission concluded that trademark infringement is
roughly comparable to copyright infringement." U.S.S.G. з 2B5.4,
comment (backg'd). The section applicable to copyright
infringement, U.S.S.G. з 2B5.3, also does not provide definitions
of terms used in the guidelines. The Background section to the
Commentary to section 2B5.3 states, "This guideline treats
copyright violations much like fraud. Note that the enhancement is
based on the value of the infringing items, which will generally
exceed the loss or gain due to the offense." U.S.S.G. з 2B5.3,
comment. (backg'd).
-4-
4

otherwise defined, words will be interpreted as taking their
ordinary, contemporary, common meaning."); United States v. Chen,
913 F.2d 183, 189 (5th Cir. 1990) ("`[W]e start with [the
statute's] plain words without pausing to consider whether a
statute differently framed would yield results more consistent with
fairness and reason.'"), quoting Garcia v. Gloor, 618 F.2d 264, 268
(5th Cir. 1980), cert. denied, 449 U.S. 1113, 101 S. Ct. 923
(1981). In the present case of trademark violation, we find that
the clear and unambiguous phrase "retail value of the infringing
items" refers to the counterfeit merchandise. This phrase does
not, by its terms, refer to the retail value of genuine
merchandise--the items subject to infringement. Accordingly, we
hold that the district court erred in its interpretation of section
2B5.4. The proper determination is the retail value of the
counterfeit merchandise Kim intended for sale.
Although the district court erred in its interpretation of
section 2B5.4, we have reviewed the record as a whole and find a
remand unwarranted. Williams v. United States, 112 S. Ct. 1112,
1120-21, 117 L. Ed. 2d 341, 355 (1992). At sentencing, the
district court found the retail value of the items seized from Kim
was approximately $195,400, based on the evidence the government
offered of the retail value of genuine merchandise.6 Kim, citing
6
Paragraph 10 of the PSI states:
Original Louis Vuitton or Gucci handbags are worth at least
$275 each. Original Louis Vuitton or Gucci watches are worth
at least $200 each. Original Rolex watches are worth at least
$3,000. These figures are conservative based on the retail
value. Based on the merchandise seized by customs agents, the
estimated retail value of the items outlined above is
-5-
5

section 2B5.4, objected to the use of retail value of the genuine
merchandise; however, he made no attempt to submit evidence of the
retail value of the infringing items.7 Accordingly, we determine
whether the evidence offered by the government of the retail value
of genuine merchandise is relevant evidence of the retail value of
the infringing (counterfeit) merchandise.8
Id.
approximately $195,400.
Presentence Report, United States v Kim, No. 91-7030 (5th Cir.
filed Nov. 21, 1991).
7
Kim contends on appeal that, in imposing his sentence,
the district court was aware that there were two different values:
(1) the retail value of the genuine merchandise and (2) the retail
value of the counterfeit merchandise. Kim also argues that,
despite the probation officer's assertion that there was no way to
ascertain the retail value of the counterfeit merchandise, the PSI
belies this assertion because it indicates that an agent purchased
three counterfeit handbags for $102, and it also indicates the
retail value of the counterfeit merchandise could be determined by
using the price list Kim gave to the agent.
8
The colloquy between the district court, Kim's attorney,
and the probation officer focuses the issue:
MR ELMENDORF [Kim's attorney]:
I guess my concern is we
feel there is a distinguishment [sic] between a retail value
of--or what Mr. Kim sold his products for; the retail value of
what he sold it for rather than the retail value of an actual
true item.
THE COURT:
Now, Ms. Denton, you formed the calculations on
these. Would you tell me which items you used when you--in
arriving at the $195,000 figure.
MS DENTON [the probation officer]:
I used the total amount of
items that were confiscated over all for the whole offense,
the Rolex watches and the bags.
THE COURT:
But which retail value did you use?
MS DENTON:
The retail value of the original items. It's
our position, your Honor, that there is no way to tell how
much a fake Rolex watch would actually retail for, and that
the--these items are actually sold to people as similar items
to a Rolex watch, and they are infringing upon the copyright
of the actual merchandise of Rolex or Gucci, and that the
actual price should be used of those items.
THE COURT:
Well, that was my assessment of what you had
done, and that's the assessment the Court believes is proper.
So the Court is finding that it is the original item's
-6-
6

We apply due deference to the district court's application of
section 2B5.4 to the facts and review the district court's factual
findings for clear error. See United States v. Medina-Saldana, 911
F.2d 1023, 1024 (5th Cir. 1990) (citations omitted). The
government, as the party seeking to adjust Kim's sentence level,
has the burden of proving by a preponderance of the evidence the
facts necessary to support the adjustment. See United States v.
Alfaro, 919 F.2d 962, 965 (5th Cir. 1990), citing, e.g., United
States v. Mourning, 914 F.2d 699, 706 (5th Cir. 1990). "In
resolving any reasonable dispute concerning a factor important to
the sentencing determination, the court may consider relevant
information without regard to its admissibility under the rules of
evidence applicable at trial, provided that the information has
sufficient indicia of reliability to support its probable
accuracy." U.S.S.G. з 6A1.3(a).
value--the retail value of the original item using the
infringing items as being the ones to calculate from, but not
the--the value that an infringing item would be sold at. It's
the Court's position that when a person decides to handle
counterfeit items, that is the risk the person takes.
Obviously, they are going to counterfeit relatively expensive
items because the mark-up would be that much greater.
MR ELMENDORF:
I understand that, that concept, and we--our
position is the direct wording of the guideline does not
support that.
Record on Appeal, Vol. 3 at 4-5. Determining whether evidence of
the retail value of genuine merchandise is relevant to the retail
value of the infringing items presents a factual issue, distinct
and separate, from the legal interpretation of section 2B5.4. See
U.S.S.G. з 6A1.3(a). We disagree with Kim that "the direct wording
of the guideline" would always prohibit the introduction of the
retail value of the genuine merchandise. See, e.g., United States
v. Larracuente, 952 F.2d 672 (2d Cir. 1992).
-7-
7

Although we have not found any authority discussing what
evidence is relevant to establish the "retail value of the
infringing items" under section 2B5.4, one circuit court has
addressed the application of U.S.S.G. з 2B5.3 to ascertain the
retail value of infringing items--bootleg tapes in that case--for
sentencing purposes. See United States v. Larracuente, 952 F.2d
672 (2d Cir. 1992).
In Larracuente, the Second Circuit found the district court
correctly used the retail value for genuine merchandise to
determine the increase in the defendant's offense level under
section 2B5.3. Id. at 674. The Second Circuit found that, because
"unauthorized copies [of bootleg tapes] are prepared with
sufficient quality to permit their distribution through normal
retail outlets, the value of the infringing items is their normal
retail price . . . ." Id. (emphasis added).9
Here, the district court based its sentence on the PSI and the
testimony at the sentencing hearing. In the PSI, the government
offered evidence of the retail value of genuine merchandise.10 A
"presentence report generally bears sufficient indicia of
reliability to be considered as evidence by the trial judge in
making the factual determinations required by the sentencing
guidelines." Alfaro, 919 F.2d at 966, citing United States v.
9
The Second Circuit expressly noted, "[w]e would have a
different question if the infringing items were of obviously
inferior quality and were for that reason distributed to consumers
who pay far less than the retail price for authentic items." Id.
at 675.
10
See supra note 6.
-8-
8

Murillo, 902 F.2d 1169, 1173 (5th Cir. 1990). In addition, the
probation officer testified at the sentencing hearing that there
was no way to determine the retail price of counterfeit items.11
We cannot say that the district court's finding--that the retail
value of the items seized from Kim was $195,400, based on "the
[probation officer's] assessment"12--is clearly erroneous. We are
required to give due regard to the sentencing court's opportunity
to judge the credibility of the witnesses, and must accept the
district court's findings of fact unless clearly erroneous. See 18
U.S.C. 3742(e). We find that, under the facts of this case, the
retail value of genuine merchandise is relevant in determining the
retail value of the infringing items.
We find additional support for our decision in the application
notes to sections 2B1.1 and 2F1.1. See U.S.S.G. 2F1.1 comment (n.7
and n.8). "The amount of loss need not be precise . . . . The
court need only make a reasonable estimate of the loss, given the
available information." U.S.S.G. з 2F1.1 comment. (n.8). "Where
the market value is difficult to ascertain . . . , the court may
measure loss in some other way . . . ." U.S.S.G. з 2B1.1 comment.
(n.2). Moreover, "[t]he loss need not be determined with
precision, and may be inferred from any reasonably reliable
information available . . . ." Id. comment. (n.3) Although the
concept of "loss" is not mentioned in section 2B5.4, section 2B5.4
does refer to the table in section 2F1.1 for the purpose of
11
See supra note 8.
12
See supra note 8.
-9-
9

enhancing a defendant's base offense level. See U.S.S.G. з
2B5.4(b)(1).13 Given the difficulty in this case of determining
"how much a[n infringing item] would actually retail for," the
district court was not clearly erroneous to "measure loss in some
other way" which "may be inferred from any reasonably reliable
information available." U.S.S.G. з 2B1.1 comment. (n.2 and n.3).
Kim argues that there is sufficient evidence to calculate the
value of the counterfeit items. He points out that the PSI
describes the agents' purchase of three handbags for $102 in July
1990 and refers to the price list Kim gave to the agents in
September 1990. We disagree that this is sufficient evidence.
First, the district court was unable to consider the price list
because neither party presented it at sentencing and it was not
otherwise in the record. Without the price list, the record is
devoid of evidence pertaining to the retail price of counterfeit
Rolex, Gucci, or Louis Vuitton merchandise. Moreover, the list Kim
gave to the agents was a wholesale price list. Section 2B5.4
requires a determination of retail prices. Kim has offered no
evidence on the relationship between wholesale and retail prices.
Even if the price list were in evidence, then, there would be no
definitive figures upon which to base the necessary calculations.
We do agree with Kim that the price paid by the agents for the
three handbags is evidence of the retail counterfeit price for
those items. But there is no evidence that $34 was the ordinary
retail price for counterfeit Louis Vuitton handbags. There is also
13
See also supra note 5.
-10-
10

no evidence as to the number of counterfeit Louis Vuitton handbags
found.14 Thus Kim has not shown that the evidence regarding the
handbags is sufficient to reduce the amount of counterfeit
merchandise by at least $75,400, the amount necessary to decrease
his offense level by one. See U.S.S.G. з 2F1.1(b)(1)(H).
Accordingly, no remand is necessary. Williams, 112 S. Ct. at 1120-
21, 117 L. Ed. 2d at 355.
III
For the foregoing reasons, we AFFIRM.
14
The PSI attributes to Kim a total of 316 "assorted items"
of counterfeit Louis Vuitton merchandise. The PSI does not specify
how many of these 316 were handbags, and Kim did not ask for such
a breakdown.
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11