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Counterfeiting

Manufacturing, Selling, or Possession With Intent to Sell Merchandise With a Counterfeited Trademark. (Penal Code section 350.)

Someone who makes or sells fake merchandise can be charged with counterfeiting under this code section. While it is true that most counterfeited merchandise is manufactured outside the United States, it is enough to sell or possess these items for sale, knowing the merchandise is counterfeit.

This is one of the more common crimes committed in this state, but one that is not often vigorously prosecuted. However, being charged with this offense can, in some circumstances, result in a prison sentence.

There are a few important elements that the prosecutor must prove to prevail on this charge:

  1. The item must have a counterfeited trademark. That trademark must be registered with the California Secretary of State or with the United States Patent and Trademark office.
  2. There must the intent to sell the counterfeited merchandise or there is an actual sale of the merchandise.

Have you ever been to the Orange County swap meet and seen knock-off purses, shoes, perfume, and so on for sale? The folks selling these items may be guilty of violating Penal Code section 350 if the merchandise carries a fake logo or name. For example, a purse designed to look just like a Louis Vuitton purse with a Louis Vuitton label or logo would probably qualify as a counterfeit item under this code section, no matter the quality of the purse. You might look at it and think, oh that’s an obvious knock-off, look at the seams coming apart. But that would not exempt the purse from being a counterfeit.

But what if the purse has a logo very similar to the Louis Vuitton logo but has slight change to the LV logo? Depending on how similar the logo is to the actual trademarked logo, the item could still qualify as counterfeit under the statute. The code defines a counterfeit mark as a “spurious mark that is identical with, or confusingly similar” to the registered trademark.

On the other hand, merchandise that looks just like trademarked merchandise but does not have a counterfeited trademark, is not a violation of this code. For example, a vendor selling perfume that is called “Wild Roses” with a label that says, “Smells Just like Café Rose by Tom Ford”, is not selling counterfeit merchandise. Nor would a purse that looks just like a designer purse, but without any trademarks (including on a label) registered under the actual designer, be a violation.

If someone is caught selling the counterfeit merchandise, the prosecution must prove that the seller knew the merchandise was counterfeit. This might be easy to prove if it’s a seller at the swap meet, for example, with an entire booth filled with the counterfeit merchandise, which he or she is selling a price far below the retail price of the actual trademarked product. But it would be more difficult to prove if an individual was selling a few counterfeited products on Ebay, as another example.

If a person is found to possess the merchandise, the prosecution must prove that the merchandise was intended for sale. In another example, say the police raid a storage unit filled with counterfeit merchandise, but the owner of the merchandise can prove that the items were intended to be used as gifts or as prizes. In this case, the requisite intent to sell is not present.

Defenses

As the above discussion suggests, no actual knowledge that the merchandise was counterfeit is a defense to this crime. For example, if you were paid by a vendor to sell their merchandise and you had no idea some of that merchandise was counterfeited, you have a viable defense. Or another example might be that you bought a large lot of Ray-Ban sunglasses from an overstock discounter with no clue that the sunglasses were knock-off Ray-Bans. The sunglasses are seized, and you are charged with possessing the counterfeit sunglasses with the intent to sell them. In both cases, Orange County counterfeiting defense attorney William Weinberg would argue that you did not have the requisite knowledge that the items were counterfeit.

Another defense is that you did not intend to sell the merchandise. Obviously, this won’t work as a defense if you are caught actually selling the merchandise, but if you are charged because you simply possessed the merchandise, the prosecution must be able to prove your intent to sell it. Intent is usually proved by circumstantial evidence (after all, intent is a state of mind). If you are in possession of large quantities of counterfeit merchandise, the intent will be easier to prove. But what if you only have 50 or 100 items?

The counterfeited trademark must be either same or “confusingly similar” to the registered trademark. In some instances, this requirement provides a good defense. A skilled counterfeiting attorney might be able to make the argument that the trademark is not similar enough to confuse a purchaser. Even if the prosecutor maintains that the trademark is substantially similar, this argument might be enough to prompt the prosecution to dismiss the charge, reduce the charge to a lesser crime, or agree to a lenient sentence in a plea bargain.

Penalties

Punishment for this crime will depend on the number of items and the retail or fair market value of the items. If the offense involves less than 1,000 items and the market value of the items would add up to less than the amount required for grand theft (currently that is $950), the offense is a misdemeanor and an individual convicted under this code section could be sentenced to a maximum of one year in county jail and/or a maximum fine of $10,000.

If the offense involves over 1,000 items and the market value is equal to or greater than the amount required for grand theft, the offense can be charged as a misdemeanor or a felony (a wobbler). If charged as a misdemeanor, the maximum penalty is one year in county jail and/or a fine not to exceed $500,000. If charged as a felony, the offender faces a possible sentence of up to three years imprisonment and/or a fine not to exceed $500,000. In many felony cases, and most misdemeanor cases, the court will order probation in lieu of incarceration.

A subsequent violation of this statute, after having already been convicted of this offense once, may be charged as a misdemeanor or felony, no matter how many items or the total value of the items involved in this subsequent offense.

Orange County Counterfeiting Defense Attorney William Weinberg can Help.

Attorney Weinberg is happy to speak with you regarding the specifics of your case. If you have been arrested or charged with counterfeiting, he welcomes your questions. You may contact him for a complimentary consultation by calling his Irvine officer at (949) 474-8008 or by emailing him at bill@williamweinberg.com.

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