Criminal Counterfeit Goods

History The 1984 Trademark Counterfeiting Act for the FIRST time in the US law made trademark and counterfeiting a federal crime as part of the Comprehensive Crime Control Act of 1984. o Prior to this- it was not until Penal Act of 1876- that Congress criminalized trademark counterfeiting, which threatened violators with dines and a two year max. prison sentence upon conviction. However, the SC struck down these initial congressional efforts, when it declared in the Trademark Cases that since federal control of trademarks was an exercise of a power not confided to Congress all federal statutes regulating trademarks were unconstitutional. o Again in 1881, Trademark of 1905, Lanham Act, however it was not until the 1984 that criminal prohibitions on trafficking of counterfeit goods existed at the federal level. Despite the initial criminal sanctions imposed by the 198 Act the trade in counterfeit goods in the US continued to proliferate at such a rapid pace that 12 years later they deemed the current legislation to be an inadequate remedy for the explosive growth in the industry. o 18 USCA 2330 defines the intentional trafficking in counterfeit goods or services as a federal crime as part of the Violent Crimes control and Law Enforcement Act of 1994. In 1996 Congress also enacted the AntiCounterfeiting Protection Act of 1996. o This act is most notable for classifying trafficking in counterfeit goods in violation of 2330 as a racketeering activity thus it was subject to prosecution under RICO. It was not again until 2000 in the US v. Giles case that Congress decided to focus on 2320 and precipitated a whole reinvention of the statute through the STOP ACT. o New clause- targets any offender who intentionally traffics or attempts to traffic in labels, patches, stickers, wrappers, badges emblems, boxes, containers, cans, cases, hangtags, documentation, or packaging of any type or nature knowing that a counterfeit mark has been applied thereto. o Civil forfeiture- upon being convicted, in addition to a fine and prison sentence, a mandatory civil forfeiture of any property amounting to or derived from any proceeds obtained through trafficking such as: any property used, or intended to be used, to traffic in, or facilitate, aid or abet

the trafficking, such as vehicle; and any property that displays or consists of a counterfeit trademark. Statistics The international market for counterfeit goods is nearly twice the size of the worldwide market for illicit drugs. The value of the global market in illicit drugs, based on retail sale prices and with government seizures and other losses to suppliers taken into account, totaled $322 billion in 2003, while the value of the worldwide counterfeit goods trade surpassed $600 billion. The North American segment of the worldwide illegal narcotics market, valued at $142 billion and dominated by the appetites of the United States, comprised fortyfour percent of the global aggregate marketplace, while American businesses lose an estimated $250 billion each year to the illicit counterfeit goods trade. Between 2001 and 2004, the incidence of seizures of counterfeit goods at America's borders jumped by eighty-one percent.

Applicable Statute Language and example of state ones Elements The elements of a criminal charge of counterfeiting are that the accused: 1. trafficked or attempted to traffic in goods or services; 2. did so intentionally; i. The Fifth Circuit has said that there are two mental state requirements for the government to prove in a criminal counterfeiting case: 1. the defendant intends to traffic in goods or services; and 2. that he or she knows that the goods or services are counterfeit 3. used a counterfeit mark on or in connection with such goods or services; and 4. knew the mark was counterfeit. While defendant "must have knowledge as to each of the subparts of the second element," the Act is explicit in not requiring knowledge that the trademark was registered. The statue requires that the government prove that the genuine mark is in use. o This means that the criminal anti-counterfeiting law requires proof not only that the genuine mark be federally registered, but also that the mark be in actual use

by the trademark owner at the time of the challenged use of the mark by the accused. The Trademark Counterfeiting Act incorporates: all defenses, affirmative defense, and limitations on remedies that would be applicable in an action under the Lanham Act o Ignorance of the law is not a defense o The fact the R symbol is not always used.

SOL It has no separate SOL hence is subject to the catchall 5 year SOL.

Penalties 18 U.S.C.A. 2320 defines the intentional trafficking in counterfeit goods or services as a federal crime subject to maximum penalties for a first offense against a person of $2 million and/or 10 years in prison and a maximum fine of $5 million as against a corporation. 2nd offense? In the federal sentencing guidelines applicable to criminal trademark counterfeiting, an increase in the defendant's offense level is provided if the retail value of the infringing items exceeds $2,000. Under original sentencing guidelines, this amount could be determined only by looking to the retail value of counterfeit goods that defendant intended to sell; the value of the corresponding genuine goods sold by plaintiff could not be used. However, the revised Sentencing Guidelines permit, in certain circumstances, using the value of the legitimate items whose sales the counterfeit item seeks to usurp. o For purposes of sentencing, the relevant value to consider is the value of the counterfeit merchandise with counterfeit logos attached, not just the value of the counterfeit logos alone.

Approach- Need to be enforced; deportation issues; safety issues.

The extent to which federal prosecutors and law enforcement agencies will make use of the increases potency of the updated 2320 remains to be unseen. Criminal trademark counterfeiting prohibitions must be enforced more consistently. The Department is presently developing mechanisms to aid in addressing these requirements. o The grant will be available in 2012 for the attorney general's "Operation Knock Out Knock-Offs" program, a multi-tiered effort combining education, investigative work and agency partnerships to discourage and combat intellectual property crime. The grant from the Department of Justice will be used in part to

fund overtime pay for task force members. The money also will pay for productspecific training for investigators. It is the third such grant Attorney General Jim Hood's office has received.