United States v. Lam
677 F.3d 190 (2012)
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Rule of Law:
Under 18 U.S.C. § 2320, the phrase 'substantially indistinguishable from' is not unconstitutionally vague and requires a jury to determine whether a mark is counterfeit based on a side-by-side comparison, rather than from the perspective of a hypothetical consumer.
Facts:
- Chong Lam and Siu Yung Chan owned and controlled numerous U.S. and Chinese companies that manufactured, imported, and sold handbags and wallets.
- Between 2002 and 2005, U.S. Customs and Border Protection (CBP) issued multiple seizure notices to the Appellants' companies for importing goods with likely counterfeit trademarks, including marks resembling those of Burberry.
- Appellants utilized multiple U.S. ports for their import activities in an apparent effort to evade CBP detection.
- In 2005, Burberry successfully sued one of Appellants' companies, Marco Leather Goods, in a civil action over a copyrighted image that combined a plaid pattern similar to the Burberry Check mark with an equestrian knight.
- In September and October 2005, CBP seized three shipments in Norfolk, Virginia, destined for one of Appellants' companies, Global Import, Inc.
- Within these shipments, handbags and wallets bearing a plaid pattern with a superimposed equestrian knight (the 'Marco mark') were found concealed between layers of legitimate merchandise.
- Burberry holds separate registered trademarks for its plaid pattern (the 'Burberry Check mark') and an equestrian knight symbol, and often sells products displaying both marks together.
- The seized goods displayed the 'Marco mark', which had a plaid pattern differing only slightly in color and shape from the registered Burberry Check mark.
Procedural Posture:
- A federal grand jury in the U.S. District Court for the Eastern District of Virginia returned a superseding indictment charging Chong Lam and Siu Yung Chan with conspiracy, trafficking in counterfeit goods, and smuggling.
- The Appellants' first trial in January 2010 resulted in a hung jury.
- Prior to the second trial, Appellants filed a motion in limine to have the phrase 'substantially indistinguishable' in 18 U.S.C. § 2320 declared unconstitutionally vague, which the district court denied.
- Following a retrial in June 2010, a jury found the Appellants guilty of conspiracy, trafficking in counterfeit goods, and smuggling.
- Appellants filed a motion for acquittal and a motion for a new trial, arguing insufficient evidence and prejudicial prosecutorial misconduct, respectively.
- The district court (a federal trial court) denied both post-trial motions.
- Appellants appealed the judgment to the United States Court of Appeals for the Fourth Circuit.
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Issue:
Is the phrase 'substantially indistinguishable from,' as used in the definition of a 'counterfeit mark' in the federal criminal trafficking statute, 18 U.S.C. § 2320(e)(1)(A), unconstitutionally vague?
Opinions:
Majority - Duncan, J.
No, the phrase 'substantially indistinguishable from' in 18 U.S.C. § 2320 is not unconstitutionally vague because its plain language provides sufficient notice of the prohibited conduct. A criminal statute must define an offense with enough definiteness for ordinary people to understand what is prohibited and to prevent arbitrary enforcement. Here, the plain meaning of words like 'spurious,' 'substantially,' and 'indistinguishable,' especially when read next to 'identical with,' makes it clear that the statute prohibits fake marks that are, to a considerable degree, impossible to tell apart from a genuine registered mark. The court also held that there was sufficient evidence for the jury to find the Appellants' mark was a counterfeit of the Burberry Check mark, as the determination is a factual one for the jury based on a side-by-side comparison. Finally, while the prosecutor's repeated misstatements of the law regarding the 'average consumer' standard were improper, the district court's specific and curative instructions to the jury to use their own eyes and follow the court's statement of the law were sufficient to cure any prejudice and ensure a fair trial.
Dissenting - Floyd, J.
The dissent does not directly answer the vagueness issue but argues the appellants were deprived of a fair trial and their convictions should be reversed. The government prosecutor's repeated and deliberate misstatements of the law regarding the central issue of the case constituted prejudicial misconduct that was not cured by the trial court's instructions. The prosecutor, on at least eight occasions, wrongly instructed the jury to adopt the perspective of an 'average purchaser' rather than conduct its own side-by-side comparison, and improperly used testimony admitted for a limited purpose to argue the 'substantially indistinguishable' element. These remarks were extensive, highly misleading, and persisted even after sustained objections. The district court's curative instructions were insufficient because they were too general and failed to specifically address the prosecutor's most damaging errors, such as the misuse of witness testimony and the suggestion that the jurors themselves were too expert to make the determination.
Analysis:
This decision solidifies the legal standard for criminal counterfeiting, clarifying that the 'substantially indistinguishable' test is a factual inquiry for the jury based on direct visual comparison, distinct from the 'likelihood of confusion' standard often used in civil trademark law. It affirms the constitutionality of the statutory language against vagueness challenges, providing prosecutors with a stable foundation for such cases. The ruling also reinforces the high threshold for overturning a verdict based on prosecutorial misconduct, highlighting the strong presumption that a judge's curative instructions can remedy even repeated and significant errors by counsel, thereby preserving jury verdicts.
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