United States v. Lam, No. 11-4056; United States v. Chan, No. 11-4081

Decided: April 16, 2012

Defendants Chong Lam and Siu Yung Chan were found guilty by a federal jury in in the Eastern District of Virginia of conspiracy to traffic in counterfeit goods, trafficking in counterfeit goods, and smuggling goods into the United States.  The defendants appealed their convictions for trafficking in counterfeit goods in violation of 18 U.S.C. § 2320(a), which prohibits “knowingly using a counterfeit mark on or in connection with such good or services,…the use of which is likely to cause confusion, to cause mistake, or to deceive.”  The federal statute defines a “counterfeit mark” as a “spurious mark…that is identical with, or substantially indistinguishable from,” a mark registered with the U.S. Patent and Trademark Office.  § 2320(e)(1)(A).

The Fourth Circuit affirmed the defendants’ convictions which were based on the defendants manufacturing, importing, and selling handbags that bore marks “substantially indistinguishable” from those registered by fashion designer Burberry Ltd.  On appeal, the defendants put forth several contentions.  First, they argued the district court erroneously denied their motion for judgment of acquittal under Federal Rule of Criminal Procedure 29 because the government’s evidence was insufficient to allow the jury to conclude that the mark used on their goods was a counterfeit of the Burberry mark.  Reviewing the district court’s denial de novo, the Fourth Circuit held there was substantial evidence to allow a jury to conclude that the mark displayed on the defendants’ goods was a counterfeit.  The court determined that the plaid pattern displayed on the defendants’ goods was similar enough to the authentic Burberry “Check” mark (Burberry’s signature plaid pattern) that a rational jury could find that § 2320(a) was violated.  The defendants also argued first the first time on appeal that the government’s evidence was insufficient to allow a reasonable jury to determine they had knowledge that the mark displayed on their goods was counterfeit.  Joining the majority of the circuits that have considered the issue, the court expressly adopted the rule that a defendant waives on appeal any alternative basis for a Rule 29 motion that is not specifically raised in the motion at trial.

The Fourth Circuit also dismissed the defendants’ contention that the trial judge erred in instructing the jury that it could, but was not required to, consider the presence of an equestrian knight symbol on the defendant’s plaid mark when comparing it with the Burberry mark.  Though Burberry also has a registered equestrian knight mark, it does not superimpose its knight over its plaid pattern as the defendant had done on its counterfeit goods.  Because the defendants did not object to this instruction at trial, the court reviewed the challenge under the plain error doctrine and found that the defendants could not point to any case law that supported their contention that the judge’s instruction was improper.  In addition, the court held that § 2320 was not unconstitutionally vague because it was “sufficiently clear to allow an ordinary person to understand what conduct it punishes.”  Finally, the court held that the district court did not abuse its discretion in denying the defendants a new trial pursuant to Federal Rule of Criminal Procedure 33.  The defendant’s argument was based on certain misstatements made by prosecutors at trail regarding the standard upon which the jury was to compare the alleged counterfeit mark with the Burberry mark.  The Fourth Circuit, assuming without deciding that these misstatements were made, found that because the trial judge twice instructed the jury that it was to apply the law as explained by the court–and not as described by the prosecutors—any prejudicial effect against the defendants was thus cured.

Judge Floyd concurred in part, dissented in part, and dissented from the judgment.  According to Judge Floyd, the prosecutors repeated misstatements of the legal standard governing the jury’s counterfeit determination deprived the defendants of their right to a fair trial.  Judge Floyd pointed out that the prosecutor repeatedly stated—even after sustained objections—that the jury should compare the counterfeit mark to the authenticated Burberry mark “from the standpoint of the average purchaser.”  These remarks contaminated the proper standard which was that the jury should conduct only a side-by-side comparison, using its own judgment in determining whether the marks were substantially indistinguishable.  Moreover, Judge Floyd found that the trial judge’s curative instructions did not dispel the prejudicial effect because of the “pervasive and highly misleading nature of the prosecutor’s comments.”

Full Opinion

-John C. Bruton, III

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