US Fourth Circuit Affirms Criminal Convictions for Trademark Infringement

The U.S. Court of Appeals for the Fourth Circuit affirmed convictions of two defendants for trafficking in counterfeit goods in violation of 18 U.S.C. § 2320(a). The convictions were based on the defendants’ unauthorized use on counterfeit handbags and wallets of trademarks owned by apparel manufacturer Burberry Limited. United States v. Lam, No. 11-4056 (4th Cir. Apr. 16, 2012).

Section 2320(a) criminalizes “intentionally traffic[king] or attempt[ing] to traffic in goods or services and knowingly us[ing] a counterfeit mark on or in connection with such goods or services, . . . the use of which is likely to cause confusion, to cause mistake, or to deceive.” The statute defines a “counterfeit mark” as a “spurious mark” that, among other things, “is identical with, or substantially indistinguishable from, a mark registered on the principal register in the United States Patent and Trademark Office and in use.”

The defendants argued that the phrase “substantially indistinguishable,” as used in the statute, is unconstitutionally vague. The Fourth Circuit rejected this contention, holding “that a mark punishable as a counterfeit is one that suggests an erroneous origin and is, to a considerable degree, impossible to distinguish from a legitimate mark.”

The defendants also argued that the marks they used were not actually “counterfeit” within the meaning of Section 2320(a). The defendants had taken one image similar to a Burberry mark—the symbol of an equestrian knight—and superimposed it on Burberry’s signature plaid mark, referred to by the court as the “Check” trademark. The result was an image that the defendants claimed was neither identical with Burberry’s marks nor substantially indistinguishable, and therefore was not counterfeit. The Fourth Circuit disagreed, pointing out that—

a mark need not be absolutely identical to a genuine mark in order to be considered counterfeit. Such an interpretation would allow counterfeiters to escape liability by modifying the registered trademarks of their honest competitors in trivial ways.

(Quoting Joint Statement on Trademark Counterfeiting Legislation, 130 Cong. Rec. 31,675 (1984).)

The Fourth Circuit agreed with the district court that the evidence submitted to the jury was sufficient to support the jury’s judgment that the marks used by the defendants were counterfeit. The court explained–

The plaid pattern displayed on Appellants’ goods differs only slightly from the Burberry Check mark—in color and in the shape of the boxes formed by the stripes. Moreover, although the Burberry Check mark does not include an equestrian knight, it is undisputed that Burberry has obtained trademark protection for an equestrian knight mark, and that it often sells handbags and other goods displaying a combination of the two marks. It is also undisputed that Appellants used their mark on handbags—the same category of goods on which Burberry used its marks. The district court was therefore correct to afford the jury the opportunity to view the government’s evidence and form an independent conclusion regarding whether Appellants’ plaid design was substantially indistinguishable from the Burberry Check mark and whether the inclusion of the equestrian knight figure made any difference.

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