U.S. v. Torkington

• Decision Date: 20 March 1987
• Docket Number: No. 86-5155,86-5155
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. John TORKINGTON, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1347

812 F.2d 1347

2 U.S.P.Q.2d 1166

UNITED STATES of America, Plaintiff-Appellant, v. John TORKINGTON, Defendant-Appellee.

No. 86-5155.

United States Court of Appeals Eleventh Circuit.

March 20, 1987.

Nancy L. Worthington, Linda Collins Hertz, Asst. U.S. Atty., Miami, Fla., for plaintiff-appellant.

James J. Kenny, Kenny, Nachwalter & Seymour, P.A., Brian F. Spector, William J. Blechman, Miami, Fla., John F. Flaherty, Gibney, Anthony & Flaherty, Brian W. Brokate, New York City, for amicus curiae, Rolex Watches.

Timothy W. Harrington, Fort Lauderdale, Fla., for defendant-appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before KRAVITCH and HATCHETT, Circuit Judges, and MORGAN, Senior Circuit Judge.

Corrected March 25, 1987.

KRAVITCH, Circuit Judge:

The definition of the term "counterfeit mark" under section 2320(d)(1)(A) of the Trademark Counterfeiting Act of 1984 (the Act), 15 U.S.C. Secs. 1116-1118, 18 U.S.C. Sec. 2320, is at issue in this case of first impression. The district court held that a mark is not "counterfeit" under section 2320(d)(1)(A) unless the use of the mark in connection with the goods in question would be likely to cause direct purchasers to be confused, mistaken or deceived. The court found that, given the enormous price differential between the allegedly counterfeit goods and the authentic goods, it was unlikely, as a matter of law, that direct purchasers would be confused, mistaken or deceived. The court therefore dismissed the indictment.

We find that the district court's ruling that section 2320(d)(1)(A) requires a showing that direct purchasers would be likely to be confused, mistaken or deceived is not supported by either the language or the legislative history of the section. Accordingly, we hold that section 2320(d)(1)(A) does not require a showing that direct purchasers would be confused, mistaken or deceived; rather, the section is satisfied where it is shown that members of the purchasing public would be likely to be confused, mistaken or deceived. Moreover, we find that this likely confusion test includes the likelihood of confusion in a post-sale context.

I. BACKGROUND

On June 2, 1985, Edward Little, a private investigator with Rolex Watch U.S.A., Inc., visited a booth operated by appellee John Torkington at the Thunderbird Swap Shop Indoor Flea Market in Fort Lauderdale, Florida. Little noticed a salesman at the booth showing customers two watches bearing both the name "Rolex" and the Rolex crown trademark emblem. The watches were virtually indistinguishable from authentic Rolex watches. These allegedly counterfeit Rolex watches had been kept under the counter; there were no such watches on display.

Little asked to see those watches as well as other models of replica Rolex watches. The salesman showed him several. The salesman said that the watches were $27 each. Little asked the salesman whether the watches were guaranteed. The salesman responded that they were not guaranteed but said that Little could return any watch that broke to the booth and the salesman would fix it. Little purchased a watch. The salesman handed it to him in a pouch bearing the Rolex crown mark. It is undisputed that Little knew that he had purchased a replica Rolex watch and not an authentic one.

On June 23, 1985, a deputy marshal executed a search and seizure order on Torkington's booth at the Thunderbird Flea Market. He seized 742 replica Rolex watches bearing both the Rolex name and crown trademarks.

On October 3, 1985, a federal grand jury in the Southern District of Florida charged Torkington with two counts of trafficking and attempting to traffic in counterfeit Rolex watches, in violation of 18 U.S.C. Sec. 2320(a). Count I of the indictment is based on the June 2, 1985 sale of the watch to Little. Count II is based on the 742 replica Rolex watches that were seized from Torkington's booth on June 23, 1985. ¹ Torkington filed two motions to dismiss the indictment pursuant to Fed.R.Crim.P. 12(b). Following hearings on the matter, the court issued an order on February 10, 1986 dismissing both counts of the indictment on the ground that the replica Rolex watches were not "counterfeit" under section 2320(d)(1)(A). The United States appealed.

II. DEFINITION OF "COUNTERFEIT MARK"

The district court concluded that the replica Rolex watches in question were not "counterfeit" under section 2320(d)(1)(A)(iii) because it determined that the section is not satisfied unless the use of the mark would be likely to cause direct purchasers of the allegedly counterfeit goods to be confused, mistaken or deceived. The court concluded that the government could not prove a section 2320 violation in the instant case because "it [is] unlikely ... that the purchaser of a replica or fake Rolex watch that sold for $27.00 would be confused, mistaken or deceived into thinking that he was purchasing a genuine Rolex watch, which may sell for approximately $1,000 to $8,000." The court also ruled that the likely confusion of members of the public who encounter the allegedly counterfeit watches in a post-sale context is irrelevant to the section 2320(d)(1)(A)(iii) inquiry. ² We disagree with both of these conclusions. ³

Section 2320 of the Trademark Counterfeiting Act was enacted in order to increase the sanctions for the counterfeiting of certain registered trademarks above the purely civil remedies available under the Trademark Act of 1946, 15 U.S.C. Sec. 1051 et seq. [hereinafter the Lanham Act]. Report of the Committee on the Judiciary, H.R.Rep. No. 997, 98th Cong., 2d Sess. 1, 4 (1984) [hereinafter H.R.Rep. No. 997]; Report of the Senate Committee on the Judiciary, S.Rep. No. 526, 98th Cong., 2d Sess. 1, reprinted in, 1984 U.S.Code Cong. & Admin.News 3182, 3627 [hereinafter S.Rep. No. 526].

Section 2320 is narrower in scope than is the Lanham Act, however. In particular, its sanctions are available only where the defendant "knowingly uses a counterfeit mark on or in connection with" the goods or services in question. 18 U.S.C. Sec. 2320(a).

The section defines "counterfeit mark" as:

(A) a spurious mark--

(i) that is used in connection with trafficking in goods or services;

(ii) that is identical with, or substantially indistinguishable from, a mark registered for those goods or services on the principal register in the United States Patent and Trademark Office and in use, whether or not the defendant knew such mark was so registered; and

(iii) the use of which is likely to cause confusion, to cause mistake, or to deceive;

18 U.S.C. Sec. 2320(d)(1)(A) (emphasis added).

A. Confusion of the Purchasing Public

The "likely to cause confusion, to cause mistake, or to deceive" test of section 2320(d)(1)(A)(iii) is broadly worded. Nothing in the plain meaning of the section restricts its scope to the use of marks that would be likely to cause direct purchasers of the goods to be confused, mistaken or deceived.

The legislative history indicates that Congress intentionally omitted such limiting language. Congress easily could have inserted language restricting the scope of section 2320(d)(1)(A)(iii) to cases where it is likely that direct purchasers would be confused, mistaken or deceived. Congress in fact had used such limiting language in a similar context in the original version of section 1114(1) of the Lanham Act. Syntex Laboratories Inc. v. Norwich Pharmacal Co., 437 F.2d 566, 568 (2d Cir.1971); Rolls-Royce Motors Ltd. v. A & A Fiberglass, Inc., 428 F.Supp. 689, 694 n. 10 (N.D.Ga.1977). Congress therefore had before it language it could have used to restrict section 2320(d)(1)(A)(iii) to situations where direct purchasers would be likely to be confused, mistaken, or deceived. Congress chose not to use either this or similar limiting language and we will not construe section 2320(d)(1)(A)(iii) in a way that adds a restriction that Congress chose not to include.

Moreover, not only did Congress omit the limiting language of the original version of section 1114(1) from section 2320(d)(1)(A)(iii), but it explicitly employed the language of the current version of section 1114(1) of the Lanham Act. ⁴ H.R.Rep No. 997, at 12; Joint Statement on Trademark Counterfeiting Legislation, Cong.Rec. H12,078 (daily ed. Oct. 10, 1984) [hereinafter Joint Statement]. In our view, Congress thereby manifested its intent that section 2320(d)(1)(A)(iii) be given the same interpretation as is given the identical language in section 1114(1) of the Lanham Act. See H.R.Rep. No. 997, at 8, 12; Joint Statement, Cong.Rec. at H12,078; see also United States v. Gonzalez, 630 F.Supp. 894, 896 (S.D.Fla.1986).

The current version of section 1114(1) of the Lanham Act differs from the original version in that it does not contain the likely to confuse direct purchasers requirement of the original section. Courts interpreting the current version of section 1114(1) have held that the section does not require a showing that direct purchasers would be likely to be confused, mistaken or deceived. Instead, they construe section 1114(1) to require simply the likely confusion of the purchasing public--a term that includes individuals who are potential purchasers of the trademark holders goods as well as those who are potential direct purchasers of the allegedly counterfeit goods. Levi Strauss v. Blue Bell, Inc., 632 F.2d 817, 822 (9th Cir.1980); Amp Inc. v. Foy, 540 F.2d 1181, 1183 (4th Cir.1976); Rolex Watch U.S.A. v. Canner, 645 F.Supp. 484, 492 (S.D.Fla.1986); Rolls-Royce Motors, 428 F.Supp. at 695-96 & n. 10; see Boston Professional Hockey Ass'n v. Dallas Cap & Emblem Mfg., Inc., 510 F.2d 1004, 1012 (5th Cir.), cert. denied, 423 U.S. 868, 96 S.Ct. 132, 46 L.Ed.2d 98 (1975); ⁵ Syntex Laboratories, 437 F.2d at 568; see also John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 972 (11th Cir.1983) (the test is whether there is a likelihood of confusion between the registered mark and the...