United States v. Chong Lam

• Decision Date: 16 April 2012
• Docket Number: Nos. 11–4056,11–4081.,s. 11–4056
• Citation: 102 U.S.P.Q.2d 1937,677 F.3d 190
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. CHONG LAM, Defendant–Appellant, v. Burberry Limited; Louis Vuitton North America, Incorporated; VSE Corporation, Movants.United States of America, Plaintiff–Appellee, v. Siu Yung Chan, Defendant–Appellant, v. Burberry Limited; Louis Vuitton North America, Incorporated; VSE Corporation, Movants.
• Court: U.S. Court of Appeals — Fourth Circuit

102 U.S.P.Q.2d 1937

677 F.3d 190

UNITED STATES of America, Plaintiff–Appellee,

v.CHONG LAM, Defendant–Appellant,

v.Burberry Limited; Louis Vuitton North America, Incorporated; VSE Corporation, Movants.United States of America, Plaintiff–Appellee,

v.Siu Yung Chan, Defendant–Appellant,

v.Burberry Limited; Louis Vuitton North America, Incorporated; VSE Corporation, Movants.

Nos. 11–4056

11–4081.

United States Court of Appeals, Fourth Circuit.

Argued: Jan. 27, 2012.Decided: April 16, 2012.

ARGUED: Andrea L. Moseley, John Kenneth Zwerling, Zwerling, Leibig & Moseley, P.C., Alexandria, Virginia, for Appellants. John H. Zacharia, United States Department of Justice, Washington, D.C., for Appellee. ON BRIEF: Cary Citronberg, Zwerling, Leibig & Moseley, P.C., Alexandria, Virginia, for Appellants. Lanny A. Breuer, Assistant Attorney General, United States Department of Justice, Washington, D.C.; Neil H. MacBride, United States Attorney, Alexandria, Virginia, Brian R. Hood, Jessica Aber Brumberg, Assistant United States Attorneys, Office of the United States Attorney, Richmond, Virginia, for Appellee.

Before SHEDD, DUNCAN, and FLOYD, Circuit Judges.

Affirmed by published opinion. Judge DUNCAN wrote the opinion, in which Judge SHEDD joined. Judge FLOYD wrote a separate opinion concurring in part, dissenting in part, and dissenting from the judgment.

OPINION

DUNCAN, Circuit Judge:

A jury convicted appellants Chong Lam and Siu Yung Chan (collectively “Appellants”) of conspiracy to traffic in counterfeit goods, trafficking in counterfeit goods, and smuggling goods into the United States. The counterfeiting convictions were based on the jury's determination that a mark displayed on goods Appellants imported into the United States was a counterfeit of a trademark registered to fashion designer Burberry Ltd. (“Burberry”), depicting its signature plaid pattern (the “Burberry Check mark”). On appeal, Appellants advance various challenges to their convictions for trafficking in counterfeit goods under 18 U.S.C. § 2320(a). They also assert that certain comments made by prosecutors at trial necessitate a retrial. Because we find these arguments lacking in merit, we affirm.

I.

A.

The convictions in this case arise out of Appellants' participation in the manufacture, import, and sale of handbags and wallets bearing counterfeit trademarks. Since 1999, Appellants have owned or otherwise controlled at least 10 companies incorporated in the United States that engaged in the importation of both legitimate and counterfeit handbags and wallets.¹ Lam also had authority over at least three companies located in China and Hong Kong that engaged in the manufacture and export of such goods.² Appellants transferred significant amounts of money among these various enterprises. They also used the United States-based companies' names interchangeably when importing goods, seemingly for the purpose of evading detection by U.S. Customs and Border Protection (“CBP”).

Between 2002 and 2005, CBP issued seizure notices to a number of the corporations controlled by Appellants, each time informing the individual company that certain goods it had imported into the United States were being seized because CBP had determined that the goods were labeled with what were likely counterfeit trademarks.³ The marks CBP identified as counterfeit were copies of legitimate marks registered to various luxury handbag and wallet manufacturers, including Burberry. These seizures occurred at several ports throughout the United States, including Houston, Texas; Newark, New Jersey; Los Angeles, California; New York, New York; and Norfolk, Virginia. Appellants' decision to spread their importing activities among multiple ports also appeared to be a ploy to evade CBP.

The specific goods at issue here were seized in 2005 at the port of Norfolk, Virginia. CBP became aware in August 2005 that shipments imported to Global Import, Inc. (“Global Import”)—one of the companies controlled by Appellants—contained what appeared to be counterfeit handbags. It thereafter flagged all subsequent shipments imported to Global Import, opening and examining containers included in such shipments. This effort led to three seizures, occurring on September 19, October 3, and October 10, 2005. On each occasion, CBP opened containers destined for Global Import and found goods bearing what appeared to be marks registered to Burberry and other luxury designers ⁴ “secreted” within legitimate handbags and gym bags. J.A. 1204. Specifically, CBP found a layer of legitimate merchandise on the top and bottom of each container, followed by a cardboard divider, concealing the goods bearing allegedly counterfeit marks within the interior of the container. CBP seized goods displaying marks it determined were likely counterfeit. These goods form the basis for the charges brought against Appellants.

B.

On March 26, 2009, a federal grand jury sitting in the Eastern District of Virginia issued a superseding indictment charging Appellants ⁵ with conspiracy to traffic in counterfeit goods in violation of 18 U.S.C. § 371, trafficking in counterfeit goods in violation of 18 U.S.C. § 2320(a), and smuggling goods into the United States in violation of 18 U.S.C. § 545.

Appellants' first trial, lasting from January 11–25, 2010, resulted in a hung jury. Appellants' contentions on appeal arise from their convictions in the second trial.

Prior to the second trial, Appellants filed a motion in limine seeking to have the district court declare the phrase “substantially indistinguishable,” as used in 18 U.S.C. § 2320, unconstitutionally vague. Section 2320(a) criminalizes “intentionally traffic[king] or attempt[ing] to traffic in goods or services and knowingly us[ing] a counterfeit mark on or in connection with such goods or services, ... the use of which is likely to cause confusion, to cause mistake, or to deceive.” Section 2320(e)(1) uses the disputed term “substantially indistinguishable” in its definition of “counterfeit mark,” which it defines as a “spurious mark” that, inter alia, “is identical with, or substantially indistinguishable from, a mark registered on the principal register in the United States Patent and Trademark Office and in use.” Appellants argued that an average person could not understand the meaning of “substantially indistinguishable” in this context and that the vagueness of the term encouraged arbitrary enforcement of the anticounterfeiting statute. They requested that the district court either declare the statute unconstitutionally vague or narrowly construe the language. The district court denied the motion.

C.

Appellants' retrial began on June 2, 2010. As relevant here, the government presented evidence that Burberry had registered the Burberry Check mark—a mark depicting Burberry's signature plaid pattern, created by intersecting red, white, black, and grey lines against a tan background—with the United States Patent and Trademark Office (“USPTO”) in 1996. It demonstrated that Burberry also has a registered trademark for an equestrian knight symbol (the “Burberry Equestrian mark”). The government introduced into evidence examples of authentic Burberry handbags displaying the Burberry Check mark and authentic handbags displaying the combination of the Burberry Check mark and the Burberry Equestrian mark.

In addition, government witnesses testified that, in 2005, Burberry instituted a civil suit against Marco Leather Goods, Ltd. (“Marco Leather Goods”), another company controlled by Appellants, because the company had registered for copyright protection an image that appeared to be the Burberry Check mark with an equestrian knight similar to the Burberry Equestrian mark superimposed over it. Appellants refer to this pattern as the “Marco mark,” even though it was never registered as a trademark. This suit ended in a consent judgment requiring Marco Leather Goods to transfer the copyright to Burberry and to abandon an application it had filed with the USPTO seeking to register the same image.

Finally, the government produced testimony describing the seizures of goods imported by Appellants detailed above. A CBP agent explained the manner in which the wallets and handbags displaying allegedly counterfeit marks were packaged and transported. The government also introduced a number of samples of the goods seized from Norfolk that bore the allegedly counterfeit Burberry Check mark. Significantly, these wallets and handbags displayed Appellants' so-called Marco mark—the above-described pattern, which consisted of a plaid pattern similar to the Burberry Check mark with an equestrian knight superimposed over it.⁶ At the close of the government's evidence, Appellants filed a motion for acquittal pursuant to Federal Rule of Criminal Procedure 29, which the district court denied.

In their case in chief, Appellants introduced expert testimony describing the combination of the plaid pattern and the knight overlay displayed on the goods seized at Norfolk as a “composite mark that consists of a number of components.” J.A. 1381. Appellants' expert opined that a mark combining the Burberry Check mark and the Burberry Equestrian mark could qualify for trademark protection independently from both of the individual marks.

At several points during the trial, the government suggested that whether an allegedly counterfeit mark was substantially indistinguishable from a legitimate mark should be analyzed from the viewpoint of a hypothetical “reasonable consumer of ordinary intelligence.” J.A. 1368. The government made such statements at least twice during its cross-examination of Appellants' witnesses. During closing argument, the government also asserted several times that the jury should look to “the perspective of the average person” in comparing the goods. J.A. 1558. The district court sustained Appellants' objections to these comments as incorrect statements of the law.

In response to Appellants' objections...