United States v. Foote
413 F.3d 1240 (2005)
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Rule of Law:
The 'likelihood of confusion' element of the criminal Counterfeit Trademark Act is satisfied by showing a likelihood of confusion, mistake, or deception among the general public in a post-sale context, regardless of whether the direct purchaser was deceived.
Facts:
- Jerome Foote operated a business named 'Replicas' from his residence and later a strip mall in Lenexa, Kansas, selling high-quality reproductions of brand-name products.
- Foote openly advertised his business as offering reproductions and told an investigator his items were the 'best damn copies in the world that money could buy.'
- FBI Special Agent Albert Pisterzi received a mailer for Foote's business, visited Foote's home, and observed goods with original tags removed and replaced with tags bearing famous trademarks.
- Richard Smith, a private investigator for trademark owners, visited Foote's business and determined the goods were counterfeit.
- On November 22, 1998, Smith, along with two FBI Special Agents, visited Foote's store and purchased $466 worth of merchandise, including a pen bearing a counterfeit Mont Blanc trademark symbol.
- After this purchase, Foote became suspicious that he was under investigation and removed all counterfeit merchandise from his store the following day.
Procedural Posture:
- Jerome Foote was indicted in the U.S. District Court for the District of Kansas (a federal trial court) on 44 counts of counterfeiting, conspiracy, and related financial crimes.
- The district court granted Foote's pretrial motion to suppress evidence seized from his store, which resulted in the dismissal of 20 counts.
- A jury convicted Foote on 23 of the remaining 24 counts.
- The district court subsequently granted Foote's motion for a judgment of acquittal on 21 of those counts, finding the government failed to present evidence that the trademarks were in use at the time of the offense.
- The district court upheld the jury's verdict on one count of trafficking in counterfeit goods and one count of conspiracy, based on the sale of a single counterfeit Mont Blanc pen.
- At sentencing, the district court sentenced Foote to thirty-seven months of imprisonment and a fine of over $104,000.
- Foote, as the appellant, appealed his convictions and sentence to the U.S. Court of Appeals for the Tenth Circuit, with the United States as the appellee.
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Issue:
Does the 'likelihood of confusion' element of the Counterfeit Trademark Act, 18 U.S.C. § 2320, apply to members of the public in a post-sale context, even if the direct purchaser knew the goods were counterfeit?
Opinions:
Majority - Murphy, Circuit Judge.
Yes. The 'likely to cause confusion, to cause mistake, or to deceive' test under the Counterfeit Trademark Act is not limited to the direct purchasers of counterfeit products; the correct test is whether the defendant's use of the mark was likely to cause confusion in the public in general. By adopting the 'post-sale confusion' doctrine, this court joins the Second, Fifth, Eighth, and Eleventh Circuits. The court reasoned that the plain language of the statute, which does not limit its scope to 'purchasers,' supports this interpretation. Furthermore, a central policy goal of the Act is to protect a trademark holder's ability to use its mark to identify itself and its reputation for quality. This reputation is harmed when potential purchasers see unauthentic goods in a post-sale context and identify them with the trademark holder, regardless of the initial buyer's knowledge. The court also held that trafficking in a single counterfeit 'good' satisfies the statutory language of trafficking in 'goods' under 1 U.S.C. § 1, and that the five-year federal criminal catchall statute of limitations applies to such prosecutions. The court affirmed Foote's convictions but vacated his sentence and remanded for resentencing because the district court applied the wrong version of the U.S. Sentencing Guidelines.
Analysis:
This decision formally adopts the post-sale confusion doctrine for criminal trademark cases within the Tenth Circuit, aligning it with a consensus among other federal circuits. This solidifies the legal principle that a counterfeiter's liability is not absolved by their transparency with the immediate buyer about the product's inauthenticity. The ruling strengthens protections for trademark holders by focusing on the harm to their goodwill and reputation in the broader marketplace, making it significantly more difficult for sellers of 'replicas' or 'super fakes' to evade criminal prosecution.
