United States v. Farmer

Court of Appeals for the Fourth Circuit
370 F.3d 435 (2004)

ELI5:

Rule of Law:

Information supporting a search warrant is not stale if, under the totality of the circumstances, it relates to a criminal enterprise of a protracted and continuous nature and the evidence sought consists of records likely to be kept. Unauthorized affixing of a trademark constitutes criminal infringement because it usurps the trademark holder's right to control the quality of goods, regardless of the final product's actual quality.

Facts:

William H. Farmer purchased blank t-shirts and sweatshirts from mills that were authorized manufacturers for companies like Nike, Adidas, and Tommy Hilfiger.
These mills were required by the trademark holders to remove all brand names or logos from any irregular, overrun, or cancelled-order apparel before selling it to third parties.
Farmer hired other companies to sew counterfeit brand-name neck labels into the shirts and to screen-print or embroider trademarked logos onto them without authorization.
From January through May 1997, informants John Pierce and Ron Davis sold Farmer over $500,000 worth of counterfeit clothing, with Farmer's last payment to them occurring on June 14, 1997.
In October 1997, phone records for Farmer's residence showed calls to Ron Davis and to Heritage Embroidery, a company that embroidered Nike logos for Farmer.
Farmer sold the finished counterfeit apparel to Carolina Apparel Trading, Inc., which in turn sold the items to off-price retailers.

Procedural Posture:

The U.S. Customs Service obtained a search warrant for William H. Farmer's residence in July 1998.
Farmer was charged in the U.S. District Court for the District of South Carolina with trafficking in counterfeit clothing and other related offenses.
Farmer filed a motion to quash the search warrant of his house, which the district court denied.
Farmer then filed a motion to dismiss the indictment, which the district court also denied.
After a three-day trial, the district court ruled as a matter of law that Farmer had failed to establish any affirmative defense.
Farmer entered a conditional guilty plea, preserving his right to appeal the district court's denial of his motions.
The district court sentenced Farmer to 84 months in prison, restitution, and forfeiture.
Farmer appealed the judgment to the U.S. Court of Appeals for the Fourth Circuit.

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Issue:

Does information that is approximately nine months old become too stale to support probable cause for a search warrant when the alleged criminal activity is a large-scale, ongoing enterprise and the evidence sought consists of business records?

Opinions:

Majority - Wilkinson, Circuit Judge

No. Information that is nine months old does not become too stale to support probable cause for a search warrant when the totality of the circumstances suggests a protracted and continuous criminal operation. The court rejected Farmer's staleness argument by applying a totality of the circumstances test, emphasizing that the vitality of probable cause is not determined merely by counting days. The court identified three key factors: the nature of the crime, the length of the activity, and the nature of the property to be seized. Here, Farmer's counterfeiting operation was a protracted and continuous criminal enterprise, not an isolated violation, making the passage of time less critical. The evidence showed activity spanning at least ten months (January to October 1997), suggesting the operation was not likely to have been suddenly abandoned. Finally, the warrant sought business records (checks, receipts, bank statements), which are not ordinarily destroyed or moved and are likely to be kept for extended periods, making it reasonable to believe they would still be at Farmer's residence. The court also rejected Farmer's claim that his actions were not criminal trademark infringement, holding that a trademark owner's right to control the quality of its goods is fundamental. By affixing logos without authorization, Farmer usurped Nike's and Hilfiger's right to ensure the products met their standards, and this act constituted infringement regardless of whether the final shirts were of comparable quality to genuine ones.

Analysis:

This case reinforces the flexible, totality-of-the-circumstances standard for determining whether probable cause for a search warrant has become stale. It provides strong precedent for upholding warrants based on months-old information in cases involving long-term, ongoing criminal enterprises, such as complex fraud, drug trafficking, or money laundering operations. The decision makes it more difficult for defendants in such cases to suppress evidence based on a staleness claim. Furthermore, the opinion clarifies a key aspect of trademark law, affirming that the right to control quality is a core component of trademark protection, and circumventing this control is itself a violation, even if the underlying goods are authentic.

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