Federal Trafficking in Counterfeit Goods Law - 18 U.S. Code § 2320
Financial struggles are always difficult to navigate. Sometimes the pressure of economic instability draws people into illegal money-making operations, such as trafficking counterfeit goods.
The federal government is financially interested in protecting the reputation of authentic goods, especially those related to federally protected marks, military goods, and medical drugs.
Thus, federal law makes it a crime to traffic or otherwise deal in counterfeit goods and includes severe penalties for violations of the counterfeit goods laws, such as huge fines and time in the Federal Bureau of Prisons.
18 U.S.C. 2320 lays out federal laws against trafficking in counterfeit goods, including various ways to violate the law. In proper context, “trafficking” means transporting, transferring, or disposing goods or services for commercial gain.
In other words, trafficking goods or services are illegal, knowing they don't have a counterfeit mark. Further, it's illegal to traffic in labels, boxes, or other types of packaging with a counterfeit mark that will likely cause confusion or deceit. Again, the same knowledge required from the above applies.
It's also illegal to knowingly traffic counterfeit military goods or services as there is a high risk of causing serious bodily harm or death or interfering with military operations. It's also illegal to traffic drugs knowing they are counterfeit. For the violation, a “drug” is defined under 21 U.S.C 321 and includes a range of narcotics, pharmaceuticals, supplements, and other medical items.
If you have been charged or are under investigation under 18 U.S. Code § 2320, this page will help you better understand these charges and what you can anticipate going forward. Our federal criminal defense lawyers will take a more detailed look at this federal statute below.
Review of the Law Under 18 U.S. Code § 2320
18 U.S.C. § 2320 is the statute detailing the laws and penalties for trafficking in counterfeit goods. To briefly summarize, it is illegal to “traffic” (transport, transfer, or dispose of) any counterfeit items presented as authentic. The statute outlines four possible offenses under the § 2320 umbrella below.
Knowingly trafficking in goods or services which use a “counterfeit mark,”
Knowingly trafficking in items to which a counterfeit mark has been applied. Types of items include:
- Labels, stickers, wrappers, or tags,
- Patches or badges,
- Emblems, medallions, or charms,
- Boxes, cans, containers, cases, or packaging,
Knowingly trafficking in counterfeit military goods or services, the use of which is likely to cause:
- Death or bodily harm to the user,
- Disclosure of classified information,
- Combat operations impairment,
- Significant harm to a member of the Armed Forces.
Trafficking in a drug that uses a counterfeit mark, which could be:
- Dietary supplements,
What Is Considered a Counterfeit Mark?
Legally, a counterfeit mark is defined as a “spurious,” or fake, mark that is considered to be:
- Identical to, or virtually indistinguishable from, another mark that is currently in use and has been registered by the U.S. Patent and Trademark Office,
- Used similarly, or connection with, the previously registered mark,
- Likely to cause confusion or mistakes,
- Intended to deceive.
Counterfeit marks frequently include logos, signs, insignias, or another branding.
What Are the Penalties?
Section 2320 establishes a penalty structure for trafficking in counterfeit goods, and the punishments can change depending on whether the perpetrator is a person or a legal entity, such as a business or corporation.
Readers should note that any attempt or conspiracy to violate this statute is punished in the same way as a completed violation. The penalties for violating 18 U.S.C. § 2320 can be found within the law and are pretty straightforward. For general violations:
- Once convicted, trafficking in counterfeit goods carries penalty fines of up to $2,000,000 and up to 10 years of incarceration,
- For a second offense, fees are raised to $5,000,000, with prison time up to 20 years.
For violations where the convicted has caused or has attempted to cause serious bodily injury:
- The convicted party is fined $5,000,000 and imprisoned for up to 20 years,
- If the violation results in an individual's death, the defendant may be imprisoned for life.
For military or drug-based violations:
- A first offense carries a fine of up to $5,000,000 and up to 20 years of imprisonment,
- A subsequent violation evokes maximum penalties of $15,000,000 in fines and a 30-year prison sentence.
If the offense is committed by a legal entity rather than an individual:
- If convicted, up to $5,000,000 for a first-time offense,
- Up to $15,000,000 for subsequent offenses,
- If the subsequent violation includes trafficking in drugs or military goods and services, the maximum fine increases to $30,000,000.
As with other federal crimes, attempting or conspiring to commit an offense is prosecuted as if the crime had been completed. Full restitution for victims could also be ordered under 18 U.S.C. § 2323.
Forfeiture and destruction of counterfeit goods and restitution to any financially harmed party could be ordered, subject to 18 U.S. C. 2323.
What Are Some Additional Charges?
Simultaneous charges are common in federal cases. 18 U.S.C. 2320 is frequently combined with:
- 18 U.S.C. § 1961 — RICO,
- 18 U.S.C. § 371 — Conspiracy to commit a crime,
- 18 U.S.C. § 1956-1957 — Money Laundering,
- 18 U.S.C. § 1029 — Credit card fraud,
- 18 U.S.C. § 1341 — Mail fraud,
- 18 U.S.C. § 1343 — Wire fraud,
- 17 U.S.C. § 506 — Copyright infringement.
What Are the Defenses for Counterfeit Goods Trafficking Charges?
Being charged with any federal crime can feel daunting, but the reality is that there are many legal defense options that you and your attorney may choose to utilize.
As with other fraud cases, federal prosecutors using 18 U.S.C. § 2320 must prove that the defendant knew about the crimes being committed. It is possible to argue that you were unaware that the counterfeit good or service was not authentic.
Items that have been imported from overseas may not be considered counterfeit. This is because the goods may be legitimate, even though they have been manufactured outside the authorized channels. These are referred to as “parallel imports” or “gray market” goods.
There are also situations in which the defendant has, at one point, had authorization from the trademark owner to produce these marked goods. Even if some goods were produced after the authorization had expired, it could be argued that these “overrun goods” do not qualify as counterfeit under 18 U.S.C. § 2320.
Suppose the government violated your Constitutional rights in investigating or obtaining evidence? In that case, the seized evidence could be suppressed from a case after filing and arguing a successful motion.
Eisner Gorin LLP is a top-ranked federal criminal defense law firm in Los Angeles, California. We provide legal representation across the United States for all types of federal offenses. You can contact us for a case review via phone or contact form.