Counterfeiting is a problem that has plagued both governments and consumers for centuries. In Utah, counterfeiting is covered by the Forgery code. It has been used as a weapon by those seeking to create economic instability: When counterfeit money is introduced into a market, both the currency and people’s faith in the government become devalued. Recognizing the government’s need to protect the integrity of its currency, America’s founding fathers included in the Constitution a clause granting the new government the power to punish counterfeiting. Lawmakers passed the first federal anti-counterfeiting laws in 1790, and since then Congress has regularly introduced new legislation as counterfeiting techniques have grown more sophisticated.
The criminal statutory framework prohibiting trademark counterfeiting is important for many reasons, including the protection of intellectual property rights, economic detriment caused by counterfeits, health and safety issues, and potential connections to other criminal enterprises (including organized crime and terrorism).
1 Although U.S. federal enforcement of trademark rights remains one of the primary and most well-known remedies available to brand owners and prosecutors to address trademark counterfeiting,
2 it is fraught with challenges
.3 Federal law enforcement does not always prioritize trademark infringement crimes; investigations are lengthy and complex; penalties are lax (particularly when compared to other crime types); and prosecution rates do not necessarily keep pace with increasing seizures and criminal investigations of intellectual property violations
4 Federal prosecutors must also consider whether other jurisdictions are able to pursue the same case, as states have concurrent jurisdiction with federal courts for criminal trademark offenses and state charges are permissible in addition to or in place of federal charges.
5 These challenges at the federal level substantiate the need for brand owners to consider utilizing state statutes to enforce their trademark rights. Each state has established a statutory framework with some type of criminal statute that allows for the prosecution of trademark counterfeiting.
6 In this analysis, we examine the use of state criminal trademark counterfeiting statutes, which we argue are a vital yet largely untapped resource for brand protection. Brand owners can capitalize on understanding the complexities of the state-level legal framework governing trademark rights. The provisions of state statutes may differ both from federal statutes and from similar laws in other states.
7 Furthermore, the enforcement of these laws varies widely across the states, although existing knowledge of the extent of these differences is limited. To provide a better understanding of this variation in state-level enforcement, we analyzed available data on the enforcement of such statutes throughout the criminal adjudication process. This includes the process from the commission of a trademark counterfeiting crime to charges issued under existing anti-counterfeiting statutes, to a verdict and imposition of sentencing, and through any appeals and final convictions. This data provides insights on three overarching issues:
(1) how states have inconsistently used anti-counterfeiting statutes;
(2) how state courts have interpreted their respective statutes; and
(3) evidentiary issues produced by the brand owner to obtain convictions. To qualify, this information does not yield a complete picture of product counterfeiting in the states. First, the “dark figure” of trademark counterfeiting crime is largely unknown due to the illicit nature of the crime, the lack of prioritization from law enforcement, inconsistent record keeping, and the challenges of obtaining accurate measurements.
Remember, not all arrests result in criminal charges (as indicated in Figure 1). Some states collect this data according to their criminal statutes, while others do not. Third, in several states where data broken down by statute is collected, appellate court records indicate there was a conviction, while the available state conviction data does not.9 Hence, our analyses focus on conviction and, particularly, appellate court data, and their insights on the challenges and strategies of the prosecutors, law enforcement, and defense. To obtain data on convictions, we contacted state corrections offices, court administrative offices, and statistical centers for aggregate counts of those convicted under trademark counterfeiting statutes from 2006 to 2015.
Although the word counterfeit is also used in discussion about forged art or other commercial products such as bags or shoes; these are not the kinds of counterfeits covered by federal criminal law. Those kinds of fakes are typically punished under fraud and trademark laws. Interestingly, when these cases do fall under prohibitions on counterfeiting it is typically on account of the forged documentation relating to the fake piece, rather than the fake item itself, that causes liability.
Fakes that are forbidden by federal law involve the production, possession, and use of fake documents that are used to defraud the U.S. government. Counterfeit items that are covered by federal counterfeit crime laws include:
• Letters patent
• Ship’s papers
• Postage stamps
• Military passes, permits, discharge papers, and other documents
• Legal documents such as deeds, power of attorney documents, certificates, receipts, contracts, and other documents for sending and receiving intending to enable a person to claim any sum of money from the United States or its officers
• Government documents
Are all knockoffs counterfeits?
The term “knockoff” is often used as a substitute for “counterfeit.” But the terms aren’t exactly synonymous. Some knockoffs might imitate an established product without infringing. That could be the case because the underlying work—a dress, for example—cannot be protected under the law, meaning that a knockoff doesn’t violate any legal rules.
How bad is the counterfeiting problem?
The marketplace is littered with millions of counterfeits relating to brands like Gucci, Louis Vuitton, and Dolce & Gabbana. The Zippo lighter has been the target of massive counterfeiting—depending on where you are in the world, the percentage of fake Zippos can be between 5% and 50%. The ripoffs eventually cut into sales, generally causing revenues to drop by 25% and forcing the company to lay off 15% of its employees.
Let’s go back to our opening questions. The short answer is that selling counterfeit goods is a bad idea for a business. There are three big problems:
(1) If the trademark owner chases you, you can quickly lose all of your business investments and assets (all your fake Gucci bags) and much more (you may be pursued for your personal property and home).
(2) There’s no predictability to your business because your success is tied to not being discovered by the trademark owner.
(3) You’ll need an illegal connection to obtain or import these products.
How will you get caught?
Most illegal distributors are caught as a result of online sales (for example, eBay has powerful anti-counterfeiting rules and will banish violators), or because someone (sometimes a disgruntled customer or competitor) reports them. Trademark owners will pursue you, and if they find you, they will seek to make an example of you. In other words, it’s a little like cheating on your taxes. You might get away with it for a while, but when you’re discovered, very bad things are likely to happen.
Proving the case
Proving trademark infringement is easier when dealing with counterfeits because there is usually no need to conduct a factor-by-factor analysis of likelihood of confusion. Courts have said that, by their very nature, counterfeit goods cause confusion. (Gucci Am., Inc. v. Duty Free Apparel, Ltd., 286 F. Supp. 2d 284 (S.D.N.Y. 2003).)
The remedies for trademark counterfeiting under the Lanham Act are much harsher than for traditional trademark infringement. Unless a court finds some mitigating circumstances, intentionally using a counterfeit mark (and related behavior) may lead to an award of three times the profits or damages (whichever is greater), plus reasonable attorney’s fees. (The counterfeiter must have duplicated the trademark on the kind of goods or services for which the trademark was federally registered. That means that, for example, it’s not counterfeiting to put the Gucci mark on automobile seat covers, as these are not goods for which Gucci has a registered trademark.)
A mere offer to sell counterfeit products can also trigger counterfeiting liability. For example, an individual offered to sell counterfeit jeans and provided a sample to an undercover police officer. Proof of actual production or sale of the jeans wasn’t necessary to prove counterfeiting.
Similarly, an Internet Service Provider (ISP) that hosted several websites selling fake Louis Vuitton merchandise could be liable for contributory infringement. The district court likened the ISP in this case to a proprietor of the flea market found liable for contributory infringement.
There are several reasons why people should avoid buying counterfeit goods. First, buyers don’t know what they are getting. Counterfeit products can be poorly made, or made with inferior materials. This can be a significant issue when items like counterfeit perfume, baby formula, or car parts are being purchased.
Counterfeiters generally do not pay taxes, so they are taking services without paying for them. Third, the people who make counterfeits are generally not treated well — child labor can be used to make products, and laborers can be paid below minimum wage.
Finally, who is behind the counterfeits? Who is the money going to? It can be going to sponsor unlawful or terrorist activities. For more information, I’d recommend taking a read of the U.S. Customs and Border Protection’s websiteabout the dangers of counterfeits.
As an experienced criminal defense attorney, we can confidently say that it’s never a good idea to buy anything that you think may be stolen or counterfeit. Doing so could land you in serious legal trouble. While buying counterfeit goods may not be a crime, possession of those goods could cause trouble.
Possession of counterfeit goods for sale is a serious crime. Minor violations are misdemeanors, punishable by a year in jail. Serious violations are felonies, punishable by up to 3 years behind bars. You can also be required to pay tens of thousands of dollars in fines.
It’s also important to understand that buying counterfeit goods may actually drive up the cost of the legitimate goods. This can hurt others and even drive legitimate businesses to a state of financial ruin. So, buying counterfeit goods may not just have consequences for you, but others, as well. Counterfeiting is unlawful to engage in forgery or counterfeiting in the United States. Those who engage in unlawful behaviors related to either counterfeiting or forgery can face serious federal charges that carry lengthy prison sentences.
A wide array of different behaviors are prohibited in connection with counterfeiting ranging from taking impressions of tools used for obligations or securities to collecting parts of different notes to rules for foreign bank notes, coins, and bars.
Violating any of the federal laws connecting with counterfeiting can have serious consequences, so it is important that you are represented by an experienced federal criminal defense attorney who knows the rules and who can fight for your future.
We can help if you have been accused of counterfeiting or forgery crimes. We represent clients in California, Utah, Nevada, and Arizona who are facing federal charges and we put our legal experience to work to help fight for the most favorable possible outcome
Federal laws on counterfeiting
18 U.S. Code Chapter 25 is the part of the U.S. Code that addresses forgery and counterfeiting offenses. There are 47 different statutes within Chapter 25 that address all different kinds of criminal conduct that a defendant could be charged with. These statutes include:
• § 470 – Counterfeit acts committed outside the United States
• § 471 – Obligations or securities of United States
• § 472 – Uttering counterfeit obligations or securities
• § 473 – Dealing in counterfeit obligations or securities
• § 474 – Plates, stones, or analog, digital, or electronic images for counterfeiting obligations or securities
• § 474A – Deterrents to counterfeiting of obligations and securities
• § 475 – Imitating obligations or securities; advertisements
• § 476 – Taking impressions of tools used for obligations or securities
• § 477 – Possessing or selling impressions of tools used for obligations or securities
• § 478 – Foreign obligations or securities
• § 479 – Uttering counterfeit foreign obligations or securities
• § 480 – Possessing counterfeit foreign obligations or securities
• § 481 – Plates, stones, or analog, digital, or electronic images for counterfeiting foreign obligations or securities
• § 482 – Foreign bank notes
• § 483 – Uttering counterfeit foreign bank notes
• § 484 – Connecting parts of different notes
• § 485 – Coins or bars
Whenever you have been accused of violating any of these laws, it is imperative that you understand the specific definition of the crime you have been accused of and the elements that a prosecutor must prove to secure your conviction.
For example, 18 U.S. Code section 482 defines forgery and counterfeiting crimes connected with foreign bank notes. According to the relevant statute, anyone in the U.S. who falsely makes, alters, forges, or counterfeits a bank note or bill issued by a bank or issued by a corporation of a foreign country that was intended to circulate as money can be charged with a crime if that individual acts with intent to defraud. The penalty includes a fine and the potential for imprisonment for up to 20 years, or both.
Prosecutors must prove intent to defraud for a defendant to be charged under 18 U.S. Code section 482, as well as for many of the other offenses listed within 18 U.S. Code Chapter 25. This means that in order for you to be convicted, the prosecutor must not only show that you took unlawful actions related to counterfeiting or forgery but also must demonstrate your motivation for taking such actions.
Penalties for Counterfeiting
Penalties for specific kinds of counterfeiting vary, but counterfeiting U.S. securities carries a potential fine of up to $250,000 and a maximum of 25 years in federal prison. Penalties are increased where the crime resulted in financial gain, or resulted in another party suffering a financial loss. Penalties may be up to double the amount gained or lost. Issuance of false securities is punished with fines and a maximum 20 year prison sentence. Forging postage stamps carries possible fines and imprisonment for not more than five years.
Counterfeiting Crimes in Utah
The Utah Code for Counterfeiting is found in Fogery Law.
Utah Code Section 76-6-501. Forgery and producing false identification -This is similar to Counterfeiting under federal law.
(a) “Authentication feature” means any hologram, watermark, certification, symbol, code, image, sequence of numbers or letters, or other feature that either individually or in combination with another feature is used by the issuing authority on an identification document, document-making implement, or means of identification to determine if the document is counterfeit, altered, or otherwise falsified.
(b) “Document-making implement” means any implement, impression, template, computer file, computer disc, electronic device, computer hardware or software, or scanning, printing, or laminating equipment that is specifically configured or primarily used for making an identification document, a false identification document, or another document-making implement.
(c) “False authentication feature” means an authentication feature that:
(i) is genuine in origin but that, without the authorization of the issuing authority, has been tampered with or altered for purposes of deceit;
(ii) is genuine, but has been distributed, or is intended for distribution, without the authorization of the issuing authority and not in connection with a lawfully made identification document, document-making implement, or means of identification to which the authentication feature is intended to be affixed or embedded by the issuing authority; or
(iii) appears to be genuine, but is not.
(d) “False identification document” means a document of a type intended or commonly accepted for the purposes of identification of individuals, and that:
(i) is not issued by or under the authority of a governmental entity or was issued under the authority of a governmental entity but was subsequently altered for purposes of deceit; and
(ii) appears to be issued by or under the authority of a governmental entity.
(e) “Governmental entity” means the United States government, a state, a political subdivision of a state, a foreign government, a political subdivision of a foreign government, an international governmental organization, or a quasi-governmental organization.
(f) “Identification document” means a document made or issued by or under the authority of a governmental entity, which, when completed with information concerning a particular individual, is of a type intended or commonly accepted for the purpose of identification of individuals.
Here is the guts of the law:
(2) A person is guilty of forgery if, with purpose to defraud anyone, or with knowledge that the person is facilitating a fraud to be perpetrated by anyone, the person:
(a) alters any writing of another without his authority or utters the altered writing; or
(b) makes, completes, executes, authenticates, issues, transfers, publishes, or utters any writing so that the writing or the making, completion, execution, authentication, issuance, transference, publication, or utterance:
(i) purports to be the act of another, whether the person is existent or nonexistent;
(ii) purports to be an act on behalf of another party with the authority of that other party; or
(iii) purports to have been executed at a time or place or in a numbered sequence other than was in fact the case, or to be a copy of an original when an original did not exist.
(3) It is not a defense to a charge of forgery under Subsection (2)(b)(ii) if an actor signs his own name to the writing if the actor does not have authority to make, complete, execute, authenticate, issue, transfer, publish, or utter the writing on behalf of the party for whom the actor purports to act.
(4) A person is guilty of producing or transferring any false identification document who:
(a) knowingly and without lawful authority produces, attempts, or conspires to produce an identification document, authentication feature, or a false identification document that is or appears to be issued by or under the authority of an issuing authority;
(b) transfers, or possesses with intent to transfer, an identification document, authentication feature, or a false identification document knowing that the document or feature was stolen or produced without lawful authority;
(c) produces, transfers, or possesses a document-making implement or authentication feature with the intent that the document-making implement or the authentication feature be used in the production of a false identification document or another document-making implement or authentication feature; or
(d) traffics in false or actual authentication features for use in false identification documents, document-making implements, or means of identification.
(5) A person who violates:
(a) Subsection (2) is guilty of a third degree felony; and
(b) Subsection (4) is guilty of a second degree felony.
(6) This part may not be construed to impose criminal or civil liability on any law enforcement officer acting within the scope of a criminal investigation.
Now, obviously that’s not the entire forgery law, but this is enough for you to consider that counterfeiting or forgery is a serious crime in Utah. It’s a felony crime.
Free Consultation with a Criminal Defense Lawyer
When you need a criminal defense attorney to fight counterfieting charges or forgery charges in Utah, please call Ascent law for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506