United States v. Adams ( 2001 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.  No. 00-4905
JOHN O. ADAMS, JR.,
Defendant-Appellant.

Appeal from the United States District Court
for the Eastern District of North Carolina, at Raleigh.
Terrence W. Boyle, Chief District Judge.
(CR-99-176)
Submitted: June 5, 2001
Decided: June 29, 2001
Before MOTZ, KING, and GREGORY, Circuit Judges.
Affirmed in part, vacated in part, and remanded with instructions by
unpublished per curiam opinion.
COUNSEL
Thomas P. McNamara, Federal Public Defender, G. Alan DuBois,
Assistant Federal Public Defender, Raleigh, North Carolina, for
Appellant. Janice McKenzie Cole, United States Attorney, Anne M.
Hayes, Assistant United States Attorney, Thomas B. Murphy, Assis-
tant United States Attorney, Raleigh, North Carolina, for Appellee.
2 UNITED STATES v. ADAMS
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
John O. Adams, convicted of criminal infringement of a copyright
under 17 U.S.C.A. § 506 (West 1995), 18 U.S.C.A. § 2316 (West
2000), appeals the district court’s imposition of mandatory restitution
in the amount of $13,106.28 and denial of federal benefits to Adams
for five years under 21 U.S.C.A. § 862(a) (West Supp. 1999). For the
following reasons, we vacate these components of his sentence, and
affirm his conviction and sentence in all other respects.
As a threshold matter, because Adams did not raise these assign-
ments of error before the district court, in order to prevail on appeal,
Adams must demonstrate plain error. Specifically, Adams must con-
vince this Court that (a) an error was committed, (b) the error was
plain, meaning obvious, (c) the error affects Adams’ substantial
rights, as it was so prejudicial as to affect the outcome of the proceed-
ings, and (d) the error seriously affects the fairness, integrity or public
reputation of judicial proceedings. United States v. Strickland, 245
F.3d 368, 376 (4th Cir. 2001) (citing United States v. Olano, 507 U.S.
725, 731-32 (1993)); United States v. Perkins, 108 F.3d 512, 516 (4th
Cir. 1997).
As to Adams’ first claim, we find the district court’s imposition of
restitution under the Mandatory Victims Restitution Act of 1996, cod-
ified in relevant part at 18 U.S.C.A. §§ 3663A, 3664 (West 2000)
("MVRA"), must be vacated. Under the terms of the MVRA, Adams
is subject to mandatory restitution only if his offense is punishable
under Title 18 of the United States Code, and "an identifiable victim
or victims has suffered physical injury or pecuniary loss."
§ 3663A(c)(1) (emphasis added). See also United States v. Messner,
107 F.3d 1448, 1455 (10th Cir. 1997) (requiring showing of actual
loss as predicate to restitution under the MVRA). For the following
reasons, we find the district court committed plain error with respect
to the latter requirement.
UNITED STATES v. ADAMS 3
Although Adams was charged with criminal infringement of a
copyright for receiving a shipment of pirated videocassettes, those
tapes were confiscated before Adams could sell them. In reviewing
the damages available to a copyright holder as a result of an infringe-
ment, we have recognized that the benchmark of a copyright holder’s
actual loss is "plaintiff’s loss plus defendant’s gain." Walker v. For-
bes, Inc., 28 F.3d 409, 411-12 (4th Cir. 1994). At the very least, dimi-
nution in the fair market value of a copyright requires that profits be
lost as a result of the infringement. See Data General Corp. v. Grum-
man Sys. Support Corp., 36 F.3d 1147, 1170 (1st Cir. 1994). See also
Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 567
(1985) (setting baseline for injury in an infringement action as reve-
nue lost as a result of the infringement); Deltak, Inc. v. Advanced Sys.,
Inc., 767 F.2d 357, 361 (7th Cir. 1985) (finding measure of actual
damages based on total number of copies rather than number actually
distributed inappropriate). In this case however, the immediate confis-
cation of Adams’ shipment prevented Adams from usurping the copy-
right holders’ potential sales and deriving personal gain. In addition,
on appeal the Government concedes, with commendable candor, that
it failed to satisfy its burden of proving loss, see § 3664(a), (e), a nec-
essary predicate to sustain an order of restitution. Accordingly, we
find that despite Adams’ violation of § 506, Adams’ victims incurred
no pecuniary loss within the meaning of § 3663A(c)(1), precluding
applicability of the MVRA as a matter of law.
We further conclude that the district court’s imposition of an unau-
thorized restitution order adversely affects Adams’ substantial rights
and implicates the fairness or integrity of judicial proceedings. See
United States v. Ubakanma, 215 F.3d 421, 429 (4th Cir. 2000).
Accordingly, we find the district court’s order of restitution consti-
tutes plain error, and vacate this portion of the district court’s judg-
ment.
Likewise, we conclude that the district court committed plain error
in foreclosing Adams’ eligibility for federal benefits for five years
under § 862. As a preliminary matter, a review of § 862, entitled "De-
nial of Federal benefits to drug traffickers and possessors," indicates
that this statute applies only to convictions for crimes relating to con-
trolled substances, as the trigger for a denial of benefits under this
section is a contemporaneous conviction for the distribution or pos-
4 UNITED STATES v. ADAMS
session of a controlled substance. See § 862(a)(1), (b)(1). Because
Adams’ conviction relates only to his criminal infringement of a
copyright, we find the application of § 862 to Adams to be an error
that affected the outcome of the proceedings and sufficiently under-
mines the fairness of his conviction. See Perkins, 108 F.3d at 516.
Accordingly, we find this aspect of Adams’ sentence constitutes plain
error as well.
Based on the foregoing, we vacate those provisions of Adams’ sen-
tence that impose restitution and preclude his eligibility for federal
benefits, and remand with instructions to resentence Adams consistent
with this opinion. Adams’ conviction and sentence are affirmed in all
other respects. We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials before the
court, and argument would not aid in the decisional process.
AFFIRMED IN PART, VACATED IN PART,
AND REMANDED WITH INSTRUCTIONS