                           PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


UNITED STATES OF AMERICA,              
                 Plaintiff-Appellee,
                 v.                             No. 05-5157
DAVID ARMSTEAD,
             Defendant-Appellant.
                                       
           Appeal from the United States District Court
        for the Eastern District of Virginia, at Alexandria.
            Leonard D. Wexler, Senior District Judge,
                      sitting by designation.
                            (CR-05-13)

                      Argued: February 1, 2008

                       Decided: May 6, 2008

 Before NIEMEYER, TRAXLER, and DUNCAN, Circuit Judges.



Affirmed by published opinion. Judge Niemeyer wrote the opinion,
in which Judge Traxler and Judge Duncan joined.


                            COUNSEL

ARGUED: Dale Edwin Sanders, Alexandria, Virginia, for Appellant.
Jay V. Prabhu, OFFICE OF THE UNITED STATES ATTORNEY,
Alexandria, Virginia, for Appellee. ON BRIEF: Chuck Rosenberg,
United States Attorney, Charles F. Connolly, OFFICE OF THE
UNITED STATES ATTORNEY, Alexandria, Virginia, for Appellee.
2                    UNITED STATES v. ARMSTEAD
                             OPINION

NIEMEYER, Circuit Judge:

   After selling 100 "bootleg" DVDs of unreleased movies to an
undercover federal agent on June 11, 2003, and then selling 200 more
to the same agent on January 13, 2004, David Armstead was indicted
and convicted on two felony counts of willful copyright infringement
for private financial gain by distributing at least 10 unauthorized
DVDs on each occasion, having "a total retail value of more than
$2,500," in violation of 17 U.S.C. § 506(a)(1) and 18 U.S.C.
§ 2319(b)(1). At trial, Armstead contested only the total retail value
of the DVDs sold and urged that he be convicted of only misdemea-
nors for selling DVDs with a total retail value of $2,500 or less. See
18 U.S.C. § 2319(b)(3). The jury, however, convicted Armstead of
the felony charges, and he was sentenced to six months’ home deten-
tion.

   On appeal, Armstead focuses on the fact that he sold the DVDs in
the first transaction for a total of $500 and in the second transaction
for a total of $1,000, and that the government offered no adequate
alternative value to prove that the "total retail value" of the DVDs
sold in each transaction was more than $2,500, as required for felony
convictions. He requests that we vacate the felony convictions and
enter judgments for misdemeanor offenses, remanding the case for
resentencing accordingly.

   As a matter of first impression, we hold that "retail value" as used
in 18 U.S.C. § 2319(b)(1) refers to the value of copies of the copy-
righted material at the time the defendant committed the violation and
sold the copies and that the retail value is determined by taking the
highest of the "face value," "par value," or "market value" of copies
of the copyrighted material in a retail context. See 18 U.S.C. § 2311.
Because the evidence of retail value, so construed, supported felony
convictions, we affirm.

                                   I

   On June 11, 2003, Armstead sold 100 illicit movies in DVD format
for $500 ($5 per DVD) to an undercover agent of the Bureau of
                      UNITED STATES v. ARMSTEAD                        3
Immigration and Customs Enforcement ("ICE") at the parking lot of
the Springfield Mall in northern Virginia. The 100 bootleg DVDs
included 25 copies of "2 Fast 2 Furious"; 25 copies of "The Matrix
Reloaded"; 25 copies of "Finding Nemo"; 15 copies of "The Italian
Job"; and 10 copies of "Wrong Turn." Again on January 13, 2004,
Armstead sold the same agent more illicit movies in DVD format, this
time 200 DVDs for $1,000 (again $5 per DVD). The 200 bootleg
DVDs included 75 copies of "Lord of the Rings: The Return of the
King"; 75 copies of "Paycheck"; 25 copies of "Bad Santa"; 15 copies
of "My Baby’s Daddy"; and 10 copies of "Gang of Roses." The cop-
ies sold on both occasions were, for the most part, made by using a
hand-held camcorder to record the films as they played in movie the-
aters and were, with a few exceptions, of poor quality. At the time,
however, better copies of the DVD movies sold to the undercover
agent were not available, as the movies were only in the "theatrical
release" stage and authorized DVDs were not yet available. Accord-
ing to the undercover agent, legitimate DVDs would not be available
until three to six months after the movie was released to theaters.

  Armstead was indicted in two felony counts, one for each occasion
on which he sold DVDs to the undercover agent.

   At trial, Armstead conceded all elements of the offenses against
him except the "total retail value" of the DVDs, claiming that their
total value on each date was far less than $2,500, the threshold
amount for felony liability under 18 U.S.C. § 2319(b)(1). He con-
tended that with the proper finding of retail value, he could be con-
victed of only misdemeanors. He grounded his retail value assertions
on the fact that the only hard evidence of retail value was the price
of the DVDs in the "thieves’ market," which priced the DVDs at $500
on the first occasion and $1,000 on the second.

   Although the jury was instructed that if it found every element of
the crime other than a retail value of over $2,500, it could return only
misdemeanor convictions, it returned felony convictions on both
counts. The district court sentenced Armstead to six months’ home
detention, five years’ probation, and ordered him to pay $1,500 in res-
titution.

   On appeal, Armstead presents the single issue of retail value and
argues that "retail value," as used in § 2319(b)(1), refers to "the price
4                    UNITED STATES v. ARMSTEAD
a willing buyer would pay a willing seller at the time and in the mar-
ket in which [the infringing DVDs are] sold — the thieves’ market."
With that definition of "retail value," Armstead contends that the evi-
dence at trial was insufficient to support felony convictions.

                                   II

   The Copyright Act, in relevant part, provides that "[a]ny person
who willfully infringes a copyright shall be punished as provided
under section 2319 of title 18, if the infringement was committed —
(A) for purposes of commercial advantage or private financial gain."
17 U.S.C. § 506(a)(1)(A). Section 2319 of Title 18, in turn, provides
in relevant part:

    Any person who commits an offense under section
    506(a)(1)(A) of title 17 —

    (1) shall be imprisoned not more than 5 years, or fined in
        the amount set forth in this title, or both, if the offense
        consists of the reproduction or distribution, including
        by electronic means, during any 180-day period, of at
        least 10 copies or phonorecords, of 1 or more copy-
        righted works, which have a total retail value of more
        than $2,500.

18 U.S.C. § 2319(b)(1) (emphasis added). Section 2319 also provides
that if the $2,500-retail-value element is not satisfied, the defendant
is to be punished for a misdemeanor. See id. § 2319(b)(3).

   Armstead’s argument that the government failed to produce suffi-
cient evidence that the DVDs he sold to the undercover agent had an
aggregate retail value of more than $2,500 hinges on the meaning of
"retail value" as used in § 2319(b)(1). He asserts that retail value, as
used in the statute, means "the price a willing buyer would pay a will-
ing seller at the time and in the market in which it is sold — the
thieves’ market." With this definition of "retail value," he argues that
what a willing buyer would pay a willing seller at the time was evi-
denced by what the undercover agent paid him and therefore that the
retail value amount was insufficient to satisfy the felony threshold
amount of $2,500.
                      UNITED STATES v. ARMSTEAD                         5
   The government contends that "retail value" refers to the higher
value of what a willing buyer would pay a willing seller for a legiti-
mate copy of the infringed item, such as an authentic, authorized
DVD of the same movie. The government states that retail value as
used in the statute is not the "‘bootleg value’ the defendant received
on the black market." It argues, "[i]f the Congress had meant to use
the ‘bootleg value’ or ‘wholesale value’ of counterfeit product[s], it
certainly would have used that or similar language; instead, the Con-
gress used the phrase ‘total retail value’ of the copyright works."

   Both parties seem to be arguing about a "market value," debating
whether the relevant "market" from which to draw this market value
refers to the market for bootleg products or the market for legitimate
products. But their debate fails to account for the statutory language,
which produces a broader formulation of "retail value."

   "Retail value," as a phrase, is not defined in the statute, but "value"
is. Section 2311, which provides definitions for chapter 113 of Title
18 (addressing "Stolen Property") defines "value" for the entire chap-
ter (in which § 2319 is included) as "the face, par, or market value,
whichever is the greatest." 18 U.S.C. § 2311 (emphasis added). Thus,
"value" is measured not only by actual transactions that define a mar-
ket, but also by face or par values assigned to commodities or goods
before reaching the market, and the statute instructs that the greatest
of those "values" be used. "Retail," which is not defined at all, refers,
in its ordinary meaning, to sales transactions of commodities or goods
in small quantities to ultimate consumers. See, e.g., Webster’s Third
New International Dictionary 1938 (1993). As distinct from "retail,"
"wholesale" refers to sales transactions of goods and commodities in
quantity for resale. Id. at 2611. It follows, accordingly, that retail
prices are higher than wholesale prices.

   Thus considering "retail" and "value" as component terms that are
individually defined by common understanding and by § 2311,
respectively, we conclude that "retail value" refers to the greatest of
any face value, par value, or market value of commodities or goods
in reference to actual or potential sales to ultimate consumers. Thus,
while market value — a value determined by the price that a willing
buyer would pay a willing seller — is included in the class of values
defined as "retail value," it is not the exclusive determinant. It follows
6                     UNITED STATES v. ARMSTEAD
that if a manufacturer of DVDs sells its DVDs at wholesale with a
suggested retail price of $29 and the retailer actually sells the DVDs
to the consumer at the discounted price of $19, the "retail value" as
used in § 2319(b)(1) refers to the greater of the two numbers, or $29
per DVD. Of course, if the prices paid in actual retail transactions
were the only evidence presented to support a prosecution under
§ 2319(b)(1), those prices could be considered as evidence of an
actual "market value," which would be a permissible value for consid-
eration as the "retail value."

   In this case, while the parties agree that a "market value" may be
determined by the price that a willing buyer would pay a willing
seller, see United States v. Ruhe, 191 F.3d 376, 390 (4th Cir. 1999)
(defining a "market value" as "the price a willing buyer would pay a
willing seller at the time and place the property was stolen"), they dis-
agree on whether that market value may be determined by sales in a
"thieves’ market." The government provides no authority to support
the position that prices paid in a "thieves’ market" cannot be a market
value. Indeed, its only definition — the price of a movie "if it were
sold to a member of the public" — would seem to include any market,
except for the fact that the government argues for a value determined
only by a market of "legitimate" copies. The government’s assertion
that the market for illicit goods is not determinative of "retail value"
may be correct, but only if there is other evidence of a higher "value."
See 18 U.S.C. § 2311. Otherwise, a black market for illegitimate
goods undoubtedly may provide evidence of a "market value." See
United States v. Oberhardt, 887 F.2d 790, 792-93 (7th Cir. 1989)
(applying the "thieves’ market" price when it was higher than the
legitimate price of the item to be valued under 18 U.S.C. § 641, which
instructed the court to use "face, par, or market value, or cost price,
either wholesale or retail, whichever is greater"); cf. United States v.
Bakken, 734 F.2d 1273, 1278-79 (7th Cir. 1984) (holding that the
"market value" component of 18 U.S.C. § 2311 included the "thieves
market" price a willing buyer would pay a willing seller for the illicit
goods); United States v. Berkwitt, 619 F.2d 649, 658 (7th Cir. 1980)
(same). And § 2311 directs that the criterion for satisfying the thresh-
old amount for a felony conviction be the "greatest" of the permissible
values in evidence. See also Ruhe, 191 F.3d at 390.

  It remains undisputed by the parties that whatever value is used, it
must be a value applicable at the time the violations occurred and the
                      UNITED STATES v. ARMSTEAD                         7
transactions in question took place — in this case, June 2003 and Jan-
uary 2004.

   Accordingly, retail value, as used in § 2319(b)(1), refers to prices
assigned to commodities and goods for sale at the retail level at the
time of sales at issue, representing face value or par value, or prices
of commodities and goods determined by actual transactions between
willing buyers and willing sellers at the retail level — whichever is
the greatest. This understanding of "retail value," which is derived
from §§ 2311 and 2319, is confirmed by the House Committee Report
that accompanied enactment of § 2319. That Report provided:

        The term "retail value" is deliberately undefined, since in
     most cases it will represent the price at which the work is
     sold through normal retail channels. At the same time, the
     Committee recognizes that copyrighted works are frequently
     infringed before a retail value has been established, and that
     in some cases, copyrighted works are not marketed through
     normal retail channels. Examples include motion pictures
     prints distributed only for theatrical release, and beta-test
     versions of computer programs. In such cases, the courts
     may look to the suggested retail price, the wholesale price,
     the replacement cost of the item, or financial injury caused
     to the copyright owner.

H.R. Rep. No. 102-997, at 6-7 (1992), as reprinted in 1992
U.S.C.C.A.N. 3569, 3574-75 (emphasis added) (footnote omitted);
see also 138 Cong. Rec. 34,370-72 (1992) (statement of Sen. Hatch),
available at 1992 WL 279577.

                                   III

   In this case, Armstead sold the illicit DVDs to an undercover agent
when the movies recorded on them had only been distributed for the-
atrical release (and perhaps for hotel and airline release) but certainly
before they had been released on DVDs to the public. Thus, at the
time of the illicit transactions, there was no legitimate retail market
for the sale of DVDs except as evidenced by the occasional and spo-
radic illicit transactions of the kind represented in this case. As noted,
prices paid in those illicit transactions might be evidence of a market
8                    UNITED STATES v. ARMSTEAD
value. But in this case, the "thieves’ market" prices were not the only
evidence. The government presented evidence of other kinds of value
that related to retail value during the theatrical release stage of the
movies when the illegal transactions occurred.

   First, the government offered the testimony of two different wit-
nesses who indicated that, based on information from the Motion Pic-
ture Association of America, a single copy of a motion picture sold
during the prerelease stage to hotels and airlines carries a price of at
least $1,000 per copy, and, depending on the movie, up to $50,000
per copy. As one ICE agent explained, this was so because "at the
time that these films are released in theaters, there is no legitimate
market for [the public] to get [DVDs]. And the only people who can
get a licensed copy of this film while it’s in theaters is a hotel chain
or an airline." The witness explained further that $1,000 was the price
for the low-end films, and the more popular films could cost any-
where from $25,000 to $50,000 a copy. A piracy investigator for the
Motion Picture Association of America then gave his opinion that
there was "a good argument" to be made that the actual bootleg copies
sold by Armstead "had a retail value of $1,000 a copy[,] as much as
$50,000 [a] copy," even though he acknowledged that the number
might be reduced somewhat to accommodate deficiencies in quality.

   The government also presented testimony that after a movie was
released to the public through DVDs — when prices for DVDs are
much lower than prerelease values — the average retail price of the
10 DVD movies involved in this case would be "in every instance . . .
higher than $19" per DVD.

   Finally, the government proffered evidence that the "suggested
retail price" of each of the DVDs sold by Armstead was between $25
and $30 per copy, but the district court excluded that evidence pre-
cisely because it was only suggested, and not actual. This was error,
however, because the suggested retail price was relevant to determine
a "face value" or "par value" that would be especially relevant to
determining prerelease retail value. Indeed, the House Report that
accompanied the bill for § 2319 explicitly noted that for unreleased
movies, courts could look at suggested retail prices. H.R. Rep. No.
102-997, at 6-7. And since there would be evidence of both face value
(had the court properly allowed it) and market value, the higher would
                      UNITED STATES v. ARMSTEAD                        9
be applicable in determining the threshold amount for a felony con-
viction under § 2319(b)(1).

   Based on our reading of the statute, the government’s evidence of
the prerelease values of copies of movies, the actual selling prices of
legitimate copies of movies in the postrelease period, as well as the
suggested retail prices (which were erroneously excluded by the trial
court), were all appropriate evidence for a jury to consider in deter-
mining total retail value of the illicit transactions. Likewise, the evi-
dence relied on by Armstead of the actual transaction prices in the
wholesale "thieves’ market" was appropriate evidence for a jury to
consider. But in considering whether the evidence supports a convic-
tion, we of course take the evidence actually presented to the jury and
consider it in a view "most favorable to the Government." See United
States v. Kelly, 510 F.3d 433, 440 (4th Cir. 2007).

   While the government’s evidence about the wholesale cost of a sin-
gle copy of a movie sold to hotels before DVDs were released to the
public was not directly on point, it was a benchmark from which the
jury could rationally have concluded that DVDs sold during that
period had a retail value that exceeded $25 per copy. The minimum
$1,000 per copy for a movie sold to hotels was a wholesale price that
included payment for a license to show the movie to hotel customers.
But the jury could conclude that, if there were a market for the retail
sale of such DVDs, it would be higher than the wholesale price. And
even though hotels did not resell the copies they bought, they none-
theless recovered their costs and profits from multiple retail rentals in
hotel rooms. In this manner, the jury could readily reason from the
$1,000 threshold level to conclude that the retail value of a single
DVD before general release of the movie as a DVD exceeded $25.
This conclusion would be buttressed by the fact that the average
postrelease price of DVDs in the legitimate market would be greater
than $19 per copy, indicating a much greater price for such DVDs
prerelease.

   (Moreover, while the jury did not hear the evidence of the sug-
gested retail prices, had the court admitted that evidence, as it should
have, the "retail value" of a DVD would again be shown to exceed
$25 per copy and therefore the threshold amount for a felony convic-
tion.)
10                     UNITED STATES v. ARMSTEAD
   The fact that Armstead actually sold his DVDs in bulk for $5 per
copy was also evidence that the jury could have considered. But this
evidence would not be evidence of the greatest value; rather, it pro-
vided evidence of the lowest value that could be assigned to the
DVDs. Indeed, the $5-per-copy price was a wholesale price, suggest-
ing a "retail" value somewhat greater than $5 per copy.

   Armstead makes much of the fact that the DVDs he sold were of
poor quality, since most of them were recorded with camcorders in
theaters. While he may be correct that the quality of the infringing
copy might bear on retail value, this was something that he was able
to, and did, argue to the jury, and the jury was fully able to take that
into account in determining the retail value of the DVDs. But it could
have recognized, for example, that at this prerelease stage, advance
knowledge of the plot of a movie, the action, and how the movie ends
might be far more significant to retail value than reproduction quality.

   At bottom, the jury had sufficient evidence from which to conclude
that each copy of the DVDs sold by Armstead to undercover agents
during the period before the films’ release to the public on authorized
DVDs had a retail value exceeding $25 per copy and therefore that
each transaction exceeded the threshold amount for a felony convic-
tion. Moreover, with respect to the second transaction, which
involved the sale of 200 DVDs, even the $19 per copy ($3,800 in
total), testified to by government witnesses as a retail value for the
postrelease market, exceeded the $2,500 threshold amount.

     The judgment of the district court is

                                                          AFFIRMED.
