In U.S. v Cone, the 4th Circuit Court of Appeals held that the exceptions to the definition of a counterfeit trademark found in 18 U.S.C. §2320 prevent a finding of criminally trafficking in counterfeit goods if a genuine mark is applied to a genuine product…even if that product has been repackaged or “materially altered.” A copy of the decision is available through the Resource Center located at https://aftaus.com/resources/.
As explained by the Court, “…criminal liability under § 2320 cannot be based on the alteration of a product to which a genuine mark was affixed and the mark itself has not been altered.”
- “…a “counterfeit mark” is defined in § 2320(e)(1) as “a spurious mark.” That is, a trademark used in connection with goods or labels, “that is identical with, or substantially indistinguishable from, a [registered] mark . . . the use of which is likely to cause confusion, to cause mistake, or to deceive.”
- Section 2320 also specifically includes two provisions providing exceptions to a definition of what is included within the defition of a counterfeit mark and both address resale of authentic or genuine goods: (1) an “authorized use” exception and (2) a “repackaging,” or “gray goods,” exception.
- The authorized use exception excludes from the definition of of a counterfeit mark “. . . any mark . . . used in connection with goods or services. . . of which the manufacturer or producer was, at the time of the manufacture or production in question, authorized to use the mark” by the trademark holder. § 2320(f)(1).
- The second exception bars “a criminal cause of action . . . for the repackaging of genuine goods or services not intended to deceive or confuse.” § 2320(g).
Importantly, these 2 exceptions describing what is not a counterfeit product under the Criminal Code are not found in the definition of a counterfeit trademark under The U.S. Lanham Act (15 U.S.C. § 1051 et seq.,) which provides civil remedies against counterfeiting, infringing and unfair competition.