904 F.2d 803 (2nd Cir. 1990), 655, United States v. Hon

Docket Nº:655, Docket 89-1424.
Citation:904 F.2d 803
Party Name:30 F. R. Evid. Serv. 461 UNITED STATES of America, Appellee, v. Nam Ping HON, Defendant-Appellant.
Case Date:May 21, 1990
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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904 F.2d 803 (2nd Cir. 1990)


Fed. R. Evid. Serv. 461

UNITED STATES of America, Appellee,


Nam Ping HON, Defendant-Appellant.

No. 655, Docket 89-1424.

United States Court of Appeals, Second Circuit

May 21, 1990

Argued Jan. 22, 1990.

Adina Schwartz, New York City (The Legal Aid Soc., Federal Defender Services Unit, New York City, of counsel), for defendant-appellant.

Jeffrey B. Sklaroff, Asst. U.S. Atty., New York City (Otto G. Obermaier, U.S. Atty. for the S.D. of N.Y., David E. Brodsky,

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Asst. U.S. Atty., of counsel), for appellee.

Before KEARSE, MINER and WALKER, Circuit Judges.

WALKER, Circuit Judge:

Nam Ping Hon appeals from his conviction, after a jury trial in the United States District Court for the Southern District of New York (Robert W. Sweet, Judge ), on two counts of trafficking and attempting to traffic in wrist watches bearing prestige-brand counterfeit trademarks, in violation of 18 U.S.C. Sec. 2320. Hon's primary argument is that Judge Sweet erred when he instructed the jury on the "likely to confuse" element of section 2320 that it could consider the confusion of members of the non-purchasing public in addition to actual or potential purchasers. Because we conclude that Judge Sweet's charge was appropriate, and because we find Hon's other claims to be without merit, we affirm.


In early 1988, undercover agents of the United States Customs Service, seeking to buy counterfeit watches, made contact with Nam Ping Hon and his wife Sandy Hon who had imitation Rolex, Gucci, Piaget and Movado watches for sale at prices ranging between $13 and $17. The watches generally bore a close resemblance to the genuine article and carried an identical or nearly identical trademark, but their quality of manufacture was poor.

On January 25, 1988, the agents purchased eight counterfeit watches at the Hons' place of business at 326 Canal Street in New York City and told the Hons that, if these were satisfactory, they would purchase a much larger quantity. Through the spring and summer, the agents kept sporadic contact with the Hons. On August 23, Sandy Hon agreed to sell Agent Bonnie Goldblatt 1,200 counterfeit watches at 8:00 a.m. on August 25. Sandy said that Nam Ping Hon would be with her and gave the agent a list of the styles and prices involved. The total price for the watches was $17,200, an average price of $14.33 per watch.

On the morning of August 25, 1988, Nam Ping Hon, accompanied by Sandy Hon and carrying two shopping bags he had taken from his car, met Agent Goldblatt outside his Canal Street address. Both Hons separately indicated that the watches were in the bags. Agent Goldblatt said that she had seen police nearby and suggested that they complete the transaction elsewhere. Sandy went in a car with Agent Goldblatt and Special Agent Blaise Piazza to the pre-arranged spot. Nam Ping left on foot with the two shopping bags. When the group reconvened, Sandy and Nam Ping conferred separately. Sandy returned alone to the agents and said that the deal was off. The agents arrested Sandy Hon and, shortly thereafter, Nam Ping Hon.

A surveillance agent found and, as authorized by 19 U.S.C. Sec. 1595a, seized Hon's car and took the two shopping bags--containing 889 counterfeit watches--from the trunk. Searches ensued at 326 Canal Street with a warrant, and at 325 Canal Street and Hon's home on consent. The agents seized a total of 2,600 counterfeit watches from these locations and found $68,000 in cash in a bedroom closet.

The Hons were charged with one count of conspiracy under 18 U.S.C. Sec. 371 and three counts of trafficking and attempting to traffic in counterfeit watches, in violation of 18 U.S.C. Secs. 2320 and 2. Sandy Hon pled guilty to all counts and was sentenced to 36 months probation, a $6,000 fine and a $200 special assessment. A jury found Nam Ping Hon guilty of two of the counts of trafficking and attempting to traffic. Judge Sweet sentenced Hon to five months imprisonment, five months in a community treatment center, a $3,000 fine and a $100 special assessment.



Hon's principal argument on appeal is that Judge Sweet erred when he charged the jury that they could find "likelihood of confusion," an element of 18 U.S.C. Sec. 2320,

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"either among the members of the purchasing public or among the members of the nonpurchasing public ... [including] persons who have no intention of purchasing a watch, such as the recipient of a gift or someone who simply views the watch." 1 Hon argues that this instruction was based upon an erroneous interpretation of both section 2320 and the civil Lanham Act, 15 U.S.C. Secs. 1051 et seq., whose confusion requirement was incorporated into section 2320. Hon asserts that Second Circuit authority interpreting the Lanham Act--including Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492 (2d Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961), and its progeny--compels the conclusion that trademark confusion is limited to purchasers and potential purchasers.

We note at the outset that the discrepancy between Judge Sweet's charge and one Hon would favor is quite likely to be material in a case such as this. A purchaser or potential purchaser would invest at least minimal effort in examining the counterfeit watch in question and, based on the differences he would discover in price and quality of manufacture between the counterfeit and the genuine item, would probably not be confused as to the watch's origin. However, a casual observer viewing a counterfeit watch, on the wrist of a friend, for instance, could easily be confused.

Section 2320, enacted as the Trademark Counterfeiting Act of 1984, punishes "[w]hoever intentionally traffics or attempts to traffic in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services." "Counterfeit mark" is defined, in pertinent part, as:

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 ...; and

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

There is no doubt that Congress wished to incorporate the Lanham Act's confusion requirement into 18 U.S.C. Sec. 2320 and did so. See 15 U.S.C. Sec. 1114(1). As stated by the chief House and Senate sponsors of the Trademark Counterfeiting Act,

likely "to cause confusion, to cause mistake, or to deceive," ... is the key phrase in the remedial section of the Lanham Act ... and its inclusion here is intended to ensure that no conduct will be criminalized by this act that does not constitute trademark infringement under the Lanham Act.

Joint Statement on Trademark Counterfeiting Legislation, 130 Cong.Rec. 31,67 3, 31,675 (1984). See also United States v. Torkington, 812 F.2d 1347, 1351-52 & n. 4 (11th Cir.1987); United States v. Gonzalez, 630 F.Supp. 894, 896 (S.D.Fla.1986).

Hon argues that the confusion requirement under 18 U.S.C. Sec. 2320 must be read more narrowly than its Lanham Act counterpart because "Congress intended that the criminal act be narrower in scope than the Lanham Act and prohibit only 'egregious' instances of the conduct that the civil statute prohibits." While we agree with Hon's characterization of congressional intent, the conclusion he urges does not follow. Egregiousness is grounded

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not upon whether the person deceived is a purchaser or potential purchaser but whether the mark is a counterfeit and is knowingly used as such.

Section 2320 is, of course, "narrower" than the Lanham Act provision. Section 2320 proscribes only the use of counterfeits--marks "identical with, or substantially indistinguishable from" a registered trademark--while Lanham Act liability may rest upon not only a "counterfeit" but also a "reproduction," "copy" or "colorable imitation." Section 2320 is also narrower than the Lanham Act because it requires proof of criminal intent. In fact, section 2320's mens rea requirement is dual: the defendant must intend to traffic or attempt to traffic in goods and services and knowingly use a counterfeit mark on or in connection with such goods or services. See S.Rep. No. 98-526, 98th Cong., 2d Sess. 11 (1984), reprinted in 1984 U.S.Code Cong. & Admin.News 3182, 3627, 3637.

The legislative history of 18 U.S.C. Sec. 2320 supports our view that the statute reaches public, non-purchaser confusion. Congress enacted section 2320 in response to an increasing tide of commercial trademark counterfeiting and wished to impose stiff criminal penalties upon those whose intentional acts were previously subject only to civil sanctions under the Lanham Act. See S.Rep. No. 98-526, supra, at 3-6, reprinted in 1984 U.S.Code Cong. & Admin.News at 3629-32. The Senate Report cited our observation in Montres Rolex, S.A. v. Snyder, 718 F.2d 524, 528 (2d Cir.1983), cert. denied, 465 U.S. 1100, 104 S.Ct. 1594, 80 L.Ed.2d 126 (1984), that "[c]ommercial counterfeiting has reached epidemic proportions.... [T]he owners of trademarks on prestige items are particularly likely to be plagued by recurring counterfeit problems," and specifically stated that the criminal counterfeiting act was designed to help stem this epidemic. S.Rep. No. 98-526, supra, at 5, reprinted in 1984 U.S.Code Cong. & Admin.News at 3631.

Congress was concerned not only that "[t]rademark counterfeiting ... defrauds purchasers, who pay for brand-name quality and take home only a fake," but also that "counterfeiters [can earn] enormous profits ... by capitalizing on...

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