Filed: April 29, 2013 

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 11-4888

(1:10-cr-00317-GBL-1)

UNITED STATES OF AMERICA,

Plaintiff − Appellee,

v.

DONALD CONE,

Defendant – Appellant,

and

CHUN-HUI ZHAO; RICHARD J. NELSON, Cisco Systems, Inc.,

Parties-In-Interest.

________________

 No. 11-4934

(1:10-cr-00317-GBL-1)

_______________

UNITED STATES OF AMERICA,

Plaintiff − Appellee,

v.

CHUN-YU ZHAO, a/k/a Jessica Smith, a/k/a Chun Yu Zhao,

Defendant – Appellant.
2

O R D E R

The Court amends its opinion filed April 15, 2013, as 

follows:

On page 6, second full paragraph, line 2 –- the word 

“left” is substituted for the word “fled.”

On page 40, first full paragraph, line 6 –- the word 

“not” preceding the word “manufactured” is deleted. 

For the Court – By Direction

/s/ Patricia S. Connor

Clerk
PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA, 

Plaintiff - Appellee,

v.

DONALD CONE,

Defendant-Appellant,  No. 11-4888

and

CHUN-HUI ZHAO; RICHARD J.

NELSON, Cisco Systems, Inc.,

Parties-In-Interest. 

UNITED STATES OF AMERICA, 

Plaintiff - Appellee,

v.  No. 11-4934

CHUN-YU ZHAO, a/k/a Jessica

Smith, a/k/a Chun Yu Zhao,

Defendant-Appellant. 

Appeals from the United States District Court

for the Eastern District of Virginia, at Alexandria.

Gerald Bruce Lee, District Judge.

(1:10-cr-00317-GBL-1)

Argued: October 26, 2012

Decided: April 15, 2013
Before AGEE, WYNN, and FLOYD, Circuit Judges.

Affirmed in part, vacated in part, and remanded by published

opinion. Judge Agee wrote the majority opinion, in which

Judge Floyd joined. Judge Wynn wrote an opinion concurring

in part and dissenting in part.

COUNSEL

ARGUED: Lisa Hertzer Schertler, SCHERTLER &

ONORATO, LLP, Washington, D.C., for Appellants. Lindsay

Androski Kelly, OFFICE OF THE UNITED STATES

ATTORNEY, Alexandria, Virginia, for Appellee. ON

BRIEF: Justin A. Torres, GIBSON, DUNN & CRUTCHER,

LLP, Washington, D.C.; Geremy C. Kamens, OFFICE OF

THE FEDERAL PUBLIC DEFENDER, Alexandria, Virginia,

for Appellant Donald Cone. Neil H. MacBride, United States

Attorney, Jay V. Prabhu, Assistant United States Attorney,

OFFICE OF THE UNITED STATES ATTORNEY, Alexandria, Virginia, for Appellee.

OPINION

AGEE, Circuit Judge:

Donald Cone and Chun-Yu Zhao were convicted of various

charges under an indictment arising out of a scheme to import

and resell counterfeit pieces of computer networking equipment, some of which bore the trademark of Cisco Systems,

Inc. ("Cisco"). On appeal, they challenge certain evidentiary

rulings made at their joint trial and whether some of the criminal acts alleged can support a conviction for criminal counterfeiting under 18 U.S.C. § 2320. Additionally, Cone challenges

2 UNITED STATES v. CONE
whether sufficient evidence supports his conviction for conspiracy and Zhao challenges the sufficiency of the evidence

on certain substantive counts upon which she was convicted.

For the reasons set forth below, we reject Zhao and Cone’s

attack on the district court’s evidentiary rulings and Cone’s

argument that his conviction was not supported by sufficient

evidence. However, the government’s theory of prosecution

based on a "material alteration" theory of counterfeiting trademarks is not cognizable under the criminal counterfeiting statute based on the facts of this case. Further, the government’s

evidence on Count 10 was insufficient as a matter of law to

sustain Zhao’s conviction. We therefore vacate the judgment

of the district court on certain counts of conviction, affirm the

judgment of the district court in all other respects, and remand

for resentencing. 

I.

Background and Material Proceedings Below

A. The Factual Background

Zhao, then a recent immigrant from the People’s Republic

of China ("China"), was recently divorced from Junling Yang,

an indicted co-conspirator in this case who remains at large,

when she married Cone.1 While living and working in the

United States, Zhao and Cone formed JDC Networking, Inc.

("JDC"), a licensed distributor of products made by and for

Cisco. JDC conducted frequent business with a company

known as Han Tong Technology ("Han Tong"), a Hong

Kong-based business alleged to be operated by members of

Zhao’s family. As a Cisco "registered partner," JDC was contractually prohibited from purchasing Cisco products for

resale from outside of the United States, yet records intro1Based on the jury’s verdict, we recite the facts in the light most favorable to the government. United States v. Cloud, 680 F.3d 396, 399 n.1 (4th

Cir. 2012). 

UNITED STATES v. CONE 3
duced at trial reflect that, from 2004 through 2010, JDC

imported over 200 shipments from Han Tong and companies

associated with Han Tong in China containing both genuine

Cisco products and fake imitations. 

In 2005 and 2006, while Zhao and Cone were living

together in Rockville, Maryland, U.S. Customs and Border

Patrol ("CBP") agents began intercepting and seizing shipments of highly sophisticated counterfeit computer networking products sent from Han Tong to "Lucy" and "Donald," at

addresses in Rockville, Maryland. The investigation went

cold, however, when the shipper of the counterfeit goods

began declaring a very low value for the goods shipped and

using variant spellings of the destination address, thus foiling

CBP’s tracking techniques. 

From 2004 to 2010, JDC marketed computer equipment

bearing a Cisco mark to consumers and resale outlets. Several

of JDC’s customers, however, were dissatisfied with some of

the products they purchased from JDC. E-mails introduced at

trial from JDC customers revealed that some clients believed

they had been sold counterfeit or fake products. 

Zhao filed income tax returns indicating that JDC was

struggling and that she was only earning a small salary. In

fact, JDC was thriving and producing significant income for

her. JDC records reflect that it was purchasing Cisco products

(or purported Cisco products) in China for resale at considerably below the expected market price for such products and

then reselling the products with a high markup. 

As JDC thrived, however, Zhao’s marriage to Cone deteriorated. In late 2007, Cone moved out of the couple’s home, and

Zhao moved into a condominium with her ex-husband Yang.

Upset with Zhao over their faltering marriage, Cone sent Zhao

a series of e-mails demanding his share of JDC proceeds. In

one, he stated "I won’t let my life get ruined. I will make sure

everyone knows the truth about everything. IRS, DOJ, Cus4 UNITED STATES v. CONE
toms, Immigration, et cetera. . . . I have proof of everything."

(J.A. 1651.) In another e-mail, Cone indicated that "other

companies were returning products to us because they were

counterfeit." (J.A. 1653.) Zhao and Cone later divorced. 

In 2010, CBP was notified that four pieces of "highly

sophisticated, very expensive" counterfeit networking technology ("routers") bearing Cisco marks were seized upon

entry from China into the United States, bound for a Parcel

Plus retail storefront in Northern Virginia and with an estimated value of thousands of dollars per piece of equipment.

CBP agents compared the attributes of this shipment with

those in the 2005-06 investigation and concluded that the

2010 shipments were similar and likely related to the same

counterfeiting scheme.

Coordinating its efforts with DHL (a shipping company)

and Immigration and Customs Enforcement ("ICE"), CBP

intercepted the next package sent from China to the address

in Virginia. When CBP and ICE agents opened the package,

they discovered over 300 labels bearing a Cisco mark that

agents suspected to be counterfeit. CBP and ICE forwarded

the package to an ICE facility in Washington, where agents

coordinated a controlled delivery of the package to the Parcel

Plus retail storefront. Agents observed Zhao retrieving the

package and followed her to her home. CBP and ICE agents

then executed an anticipatory search warrant at the residence.

In the course of searching Zhao’s home, federal agents discovered, in addition to the shipment of suspected counterfeit

Cisco labels that led them to Zhao, unlabeled transceivers that

matched the labels found in the shipment, labeled transceivers, business and financial records, torn labels and label backing, and instructions on how to convert Cisco equipment into

different models. 

As investigators were executing the search warrant at

Zhao’s home, a FedEx delivery driver attempted to deliver

UNITED STATES v. CONE 5
two packages to her. The delivery driver revealed to the

agents executing the warrant that Zhao maintained a storage

unit across the street. Although Zhao initially denied the existence of the storage unit (and later provided law enforcement

agents with a false unit number and a false entry code to the

storage facility), agents were eventually able to gain access.

Agents found quantities of boxes filled with equipment bearing a Cisco mark filling "at least half" the storage unit. (J.A.

614.) 

After being arrested, Zhao was interviewed by ICE Agent

Julie Hilario for approximately 45 minutes. Although Zhao

initially denied any involvement with counterfeiting (and

even denied receiving the package that was the subject of the

controlled delivery), she eventually admitted that she sold

"fake" Cisco products to make a greater profit than with a

legitimate product. 

As ICE and CBP pursued the investigation, agents interviewed Cone by telephone (he had left the United States and

was living in China). Cone admitted that JDC received and

resold both real and counterfeit Cisco products from Han

Tong (which he described as a "fake" company). (Vol. V J.A.

1990.) With respect to "authentic" Cisco products, Cone

informed agents that he and Zhao altered authentic Cisco

products obtained from China and sold them to clients, representing that they were higher end products than they actually

were. Cone was later arrested when he returned from China

in December 2010. 

B. District Court Proceedings

Cone and Zhao were both indicted by a grand jury (along

with Yang and Chun-Yan Zhao, defendant Zhao’s sister) in

2010 in the United States District Court for the Eastern District of Virginia on one count of conspiracy in violation of 18

U.S.C. § 371, with three objects: (1) trafficking in counterfeit

goods and labels; (2) importation and sale of improperly

6 UNITED STATES v. CONE
declared goods; and (3) wire fraud (Count 1); and three counts

of wire fraud in violation of 18 U.S.C. § 1343 (Counts 16-17,

23).2

As relevant to that part of the Count 1 conspiracy charge

alleging trafficking in counterfeit goods and labels, the government presented at trial three theories underlying the

alleged objects of that conspiracy. First, that some of the

products seized from Zhao’s residence or sold to end-users

were represented to be Cisco products but in fact were "pure"

counterfeits (i.e., the products were never made by or for

Cisco). Second, other products (acquired from legitimate

Cisco resellers in the United States and abroad) were indeed

made by or for Cisco, but were converted by Zhao and Cone

into a different type of Cisco product and represented to buyers as the original of that item (the "material alteration" theory). Third, other products acquired from China that were

originally made by or for Cisco but were relabeled and mislabeled by Zhao and Cone with new serial numbers to deceive

customers into believing that the products were eligible for

Cisco warranty and services in the United States, when, in

fact, such products were not so eligible.3

2

In addition, Zhao was individually indicted on five counts of importation and sale of improperly declared goods in violation of 18 U.S.C. § 545

(Counts 2-6); four counts of trafficking in counterfeit goods and labels in

violation of 18 U.S.C. § 2320 (Counts 7-10); three counts of making false

statements to federal law enforcement officials in violation of 18 U.S.C.

§ 1001(a)(2) (Counts 11-13); two counts of false statements in naturalization in violation of 18 U.S.C. § 1425(a) (Counts 14-15); seven individual

counts of wire fraud (Counts 18-2, 24-25); three counts of money laundering in violation of 18 U.S.C. § 1956(a) (Count 26-28); and one count of

monetary transaction with criminally derived proceeds in violation of 18

U.S.C. § 1957(a) (Count 29). 

3For purposes of this appeal, only Counts 1 and 9 are affected by the

second object of the conspiracy, which we address as the material alteration theory. The first and third objects are not at issue on appeal as part

of the material alteration theory challenge. The convictions related to the

first object, importation of misdeclared goods (and underlying substantive

counts) are unaffected by our analysis of the material alteration theory,

and the third object, wire fraud, was dismissed by the district court. 

UNITED STATES v. CONE 7
In support of Count 8 (counterfeiting) the government

introduced testimony from its expert, Cisco engineer Michael

Heidecker, who testified that the four routers seized by CBP

in 2010 each contained a unique Cisco "MAC address," but

that the MAC addresses found on the routers were actually

assigned to other Cisco products. Thus, Heidecker was able to

establish that the four routers were not actually manufactured

by Cisco. Furthermore, they were shipped in packaging that,

although displaying a Cisco mark, was, according to Heidecker, counterfeit. Defense expert Richard Krebs, however,

opined that the routers were manufactured by or for Cisco,

because the MAC addresses for each were actually consistent

with the MAC addresses assigned to Cisco and because counterfeiters could not have created the switches due to the prohibitive cost.

Craig Grant, a manager at Vology, a Cisco equipment

reseller, testified regarding Cisco-marked transceivers that are

the subject of Count 10 (counterfeiting). Grant testified that

Vology purchased ten Cisco transceivers from JDC, but

returned them to JDC because Vology was unable to verify

the transceivers’ authenticity. Specifically, Grant stated that

the Vology inventory team noted that the transceivers were

not packaged in standard Cisco packaging. The exact items

JDC sold to Vology were not available at trial (having been

returned to JDC and resold). Heidecker told the jury that

Cisco does not sell unlabeled transceivers and packages them

in a certain specific manner not followed in the case of

Vology. 

During the government’s case in chief, Zhao lodged timely

objections to several items of evidence. First, Zhao moved to

exclude statements made by Cone which she argued incriminated her and therefore required exclusion under Bruton v.

United States, 391 U.S. 123 (1968) (holding that admission of

a statement inculpating a co-defendant in a joint trial violates

the co-defendant’s rights under the Confrontation Clause).

The district court denied the motion, although it did require

8 UNITED STATES v. CONE
the government to excise any mention of Zhao’s name when

Cone’s statements were presented to the jury and replace her

name with a gender-neutral noun. The court reasoned that

"there are multiple individuals involved [in the conspiracy]"

and therefore, Zhao’s rights under the Confrontation Clause

would not be prejudiced by use of a gender-neutral substitute.

Accordingly, when Cone’s statements were read into evidence, "another individual" was substituted for Zhao’s name.

Zhao also filed a motion in limine to exclude e-mails from

JDC customers characterizing certain Cisco products purchased from JDC as "fake" or "counterfeit." She argued that

the e-mails constituted inadmissible hearsay. The district

court denied the motion on the grounds that the e-mails were

to be admitted not for their truth, but rather, as evidence that

Zhao and Cone were on notice that the products JDC sold

were not authentic. After the e-mails were introduced at trial,

Zhao requested a limiting instruction from the court that the

e-mail statements were not to be considered by the jury for

their truth. The court replied as follows but did not give the

requested limiting instruction. 

I believe I’ve said that multiple times to the jury. I’ll

say it again. The jury is going to decide what is

counterfeit or not. They make up the definition. The

e-mails say what they say, and the jury will have to

decide if they’re believable or not. That’s their job.

(J.A. 1673-74.)

At the close of the evidence, Cone moved pursuant to Federal Rule of Criminal Procedure 29 for judgment of acquittal

on the charges against him. The district court granted the

motion with respect to the wire fraud counts (16-17, 23),

granted it in part to the extent that Count 1 (conspiracy)

related to wire fraud, but denied the motion for the remainder

of Count 1 charging a counterfeiting and importation of misdeclared goods conspiracy. 

UNITED STATES v. CONE 9
Zhao similarly filed a Rule 29 motion as to all of the wire

fraud counts, as well as a motion to dismiss Counts 1 through

6 (the conspiracy charge and the improperly declared goods

charges). The district court granted the motion with respect to

the wire fraud charges and denied it in all other respects.4

In denying the Rule 29 motions on the remaining counts,

the district court briefly discussed Cone and Zhao’s argument

that the government’s "material alteration" theory exceeded

the scope of the federal criminal counterfeiting statute. The

court reasoned:

the issue of whether the marks appear on the serial

numbers and the various labels including barcodes

are encompassed in the definition [of spurious mark]

because labels are being applied to Cisco products to

give the end[ ]user an impression that the goods that

were of a higher grade than when they originated

from the factory. . . . 

The statute has to be interpreted in the light of the

meaning, and the presentation of an item as new

when it has been altered under a mark is likely to

cause confusion and lead the consumer to believe the

product was made by the genuine owner of the trademark in the fashion in which it left the factory even

though it was not. 

(J.A. 2344.)

The jury returned a mixed verdict, convicting Cone of conspiracy (the only remaining charge against him), convicting

Zhao of conspiracy, all four improperly declared goods

charges, all four trafficking in counterfeit goods and labels

charges, two counts of money laundering, one count of mak4The district court also dismissed Count 15, false statements in naturalization, on the government’s motion. 

10 UNITED STATES v. CONE
ing a monetary transaction with criminally derived proceeds,

and three charges not relevant to this appeal. Zhao was acquitted on one false statement to law enforcement charge and one

money laundering charge. 

The district court imposed a thirty-month sentence upon

Cone and a sixty-month sentence upon Zhao. Both noted

timely appeals and we have jurisdiction pursuant to 28 U.S.C.

§ 1291.

II.

A. Counterfeiting Charges

1. "Material Alteration" as Counterfeiting a Mark Under

18 U.S.C. § 2320

Zhao and Cone raise a pointed challenge on appeal to their

convictions under Count 1 (conspiracy to counterfeit) and by

Zhao on the underlying substantive counterfeit charge in

Count 9. Their argument is that material alteration, one of the

government’s theories of criminal liability under the federal

criminal counterfeiting statute, 18 U.S.C. § 2320 (2011, West

2012)5 is not a crime as defined by that statute.

We emphasize at the outset of our analysis, as we noted

earlier, that the government alleged several distinct activities

as separate acts of counterfeiting (and similarly types of conspiracies to counterfeit). In Count 7, for example, the government alleged that the Cisco labels found in Zhao’s home and

storage locker were completely fake, that is, never manufactured by or for Cisco resulting in "pure" counterfeit labels. As

we explain below, that act of counterfeiting is plainly cognizable as violating § 2320. What Zhao and Cone challenge is

5Section 2320 has been amended in 2011 and 2012. We cite to the prior

version of the statute which was the version in effect during all times relevant to this appeal. 

UNITED STATES v. CONE 11
the government’s theory of prosecution for "material alteration" counterfeiting. That is, the government contends

§ 2320 counterfeiting of marks includes transactions in which

a good bears a genuine and authentic mark, but is altered to

be a different product than the one to which the mark was

originally fixed. Cone and Zhao not surprisingly disagree with

the government and argue that "the [criminal counterfeiting]

statute eliminates from the universe of ‘counterfeit marks’ any

mark that was placed on a good by its authorized manufacturer and confirms that goods that have been marked in that

fashion are not ‘counterfeit.’" Opening Br. of Appellants at 25.6

As the statute is written, we conclude that Cone and Zhao

have the better argument. 

Where, as here, we are asked to interpret the language of

a criminal statute, we are guided by the relevant canons of

construction. 

"The starting point for any issue of statutory interpretation . . . is the language of the statute itself." "In

that regard, we must first determine whether the language at issue has a plain and unambiguous meaning

with regard to the particular dispute . . . and our

inquiry must cease if the statutory language is unambiguous and the statutory scheme is coherent and

consistent." "We determine the ‘plainness or

ambiguity of statutory language . . . by reference to

the language itself, the specific context in which that

language is used, and the broader context of the statute as a whole.’" 

Ignacio v. United States, 674 F.3d 252, 254 (4th Cir. 2012)

6Zhao and Cone argue, in the alternative, that § 2320 would be unconstitutionally vague if applied to them in the context of material alteration

counterfeiting. Because we agree that the material alteration theory of

criminal counterfeit lacks statutory foundation, we do not address their

alternative vagueness argument. 

12 UNITED STATES v. CONE
(citations omitted). In interpreting a criminal statute, we must

be certain that its language clearly identifies the act which is

rendered a trespass of the law. "[I]n the interest of providing

fair warning of what the law intends to do if a certain line is

passed, we will construe . . . criminal statute[s] strictly and

avoid interpretations not clearly warranted by the text." WEC

Carolina Energy Solutions LLC v. Miller, 687 F.3d 199, 204

(4th Cir. 2012) (internal quotation marks and citations omitted). 

We look first, therefore, to the plain language of the statute.

Under § 2320(a) the act made a crime is defined, in relevant

part, as "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" and "intentionally traffic[king] or attempt[ing] to traffic in labels, . . .

boxes, containers, . . . or packaging of any type or nature,

knowing that a counterfeit mark has been applied thereto, the

use of which is likely to cause confusion, to cause mistake, or

to deceive." Put succinctly, to obtain a conviction under

§ 2320(a), the government was required to prove that Cone

and Zhao "(1) trafficked or attempted to traffic in goods or

services; (2) did so intentionally; (3) used a counterfeit mark

on or in connection with such goods and services; and (4)

knew the mark was counterfeit." United States v. Lam, 677

F.3d 190, 197-98 (4th Cir. 2012) (quoting United States v.

Habegger, 370 F.3d 441, 444 (4th Cir. 2004) (internal quotation marks omitted). 

The key issue regarding the material alteration theory is

what constitutes a "counterfeit mark" under the statute. A

"counterfeit mark" is defined in § 2320(e)(1) as "a spurious

mark." That is, a trademark used in connection with goods or

labels, "that is identical with, or substantially indistinguishable from, a [registered] mark . . . the use of which is likely

to cause confusion, to cause mistake, or to deceive." Id.

§ 2320(e)(1)(A)(i). The statute provides no further definition

of what constitutes a "spurious" mark; however, we recently

UNITED STATES v. CONE 13
relied on the definition provided by Black’s Law Dictionary

to define the term as "deceptively suggesting an erroneous

origin; fake." Lam, 677 F.3d at 202 (quoting Black’s Law Dictionary, 1533 (9th ed. 2009) (brackets omitted)). 

In order to subject a defendant to criminal liability under

§ 2320, the government must therefore show that the defendant knowingly trafficked in goods or labels bearing a spurious mark. The requirement of a spurious mark is problematic

for the government’s "material alteration" theory that Cone

and Zhao obtained a genuine Cisco product bearing a genuine

mark; modified the product, but not the mark; then sold the

modified product bearing the genuine mark. The government’s contention is that the modification (the material alteration) of the Cisco product to something other than the exact

device Cisco originally manufactured transforms not only the

genuine product into a counterfeit product but also the genuine mark into a spurious mark. We do not find that § 2320 can

be properly read as the government contends without rewriting the statute: an act the Congress, but not this court, can

undertake.

The concept put forth by the government, that product

modification can transform an unaltered genuine mark into a

spurious one, does not appear in the plain language of § 2320,

and is not "clearly warranted by the text" of that statute. See

Crandon v. United States, 494 U.S. 152, 160 (1990). Indeed,

Congress could have explicitly criminalized in § 2320 the

practice of modifying genuine goods that bear a genuine,

unaltered mark, but it did not do so. Rather, Congress made

criminal the practice of "using a counterfeit mark" in connection with "traffic[king] of goods or services," and "trafficking" in containers and labels with knowledge "that a

counterfeit [i.e., fake] mark has been applied thereto." See 18

U.S.C. § 2320(a). Congress has simply not criminalized in

§ 2320 the acts that the defendants are accused of committing

under the material alteration theory in this case: altering a

product with a genuine mark but not altering the mark. 

14 UNITED STATES v. CONE
While we are confident that the text of § 2320(a), standing

on its own, does not support the government’s material alteration counterfeit theory, our conclusion is significantly bolstered by the existence of the so-called "authorized use"

exception found at § 2320(e)(1)(B). That subsection provides

that: 

such term ["counterfeit mark"] does not include any

mark or designation used in connection with goods

or services . . . of which the manufacturer or producer was, at the time of the manufacture or production in question, authorized to use the mark or

designation for the type of goods or services so manufactured or produced, by the holder of the right to

use such mark or designation.

18 U.S.C. § 2320(e)(1)(B).

This subsection makes clear that Congress did not intend to

criminalize, in the statute it adopted, the use of genuine and

unaltered marks on goods that were manufactured by or for

the mark holder. As one commentator has explained, "[a]

plain reading and literal interpretation of [the authorized use

exclusion] excludes from [the statute’s] definition of counterfeit goods those products which have their genesis in authorized production." Brian J. Kearney, Note, The Trademark

Counterfeiting Act of 1984: A Sensible Legislative Response

to the Ills of Commercial Counterfeiting, 14 Fordham Urb.

L.J. 115, 142 n.154 (1986). 

Our conclusion rejecting the government’s material alteration theory is further underscored by the novelty of the material alteration approach as posited by the government. Indeed,

the government cites no case, and we can identify none,

where a criminal conviction under the counterfeiting statute

has been sustained for the type of "material alteration" conduct alleged here. The cases the government does cite are significantly distinguishable. 

UNITED STATES v. CONE 15
The government asks us to follow United States v. Milstein,

401 F.3d 53 (2d Cir. 2005), a case in which the Second Circuit affirmed the counterfeiting conviction of a defendant

accused of purchasing drugs manufactured for foreign markets, repackaging them for sale in the United States without

the consent of the manufacturers, and representing to the public that the drugs were FDA approved when they were not. Id.

at 62. Milstein, however, is inapposite because the defendant

"obscured the fact that the drugs had been repackaged, and,

with his package design, fraudulently conveyed that the foreign drugs had been manufactured as FDA-approved products." Id. at 63. The Milstein defendant manufactured

counterfeit packaging "designed to resemble . . . authentic

packaging." Id. In this case, by contrast, the Cisco mark was

and remained a genuine mark. Milstein, which involved an

actual spurious, i.e., fake mark, provides no support for the

proposition that genuine marks can lose their genuine character by virtue of alteration only of the good to which the mark

was correctly attached when that good was produced. 

The government also relies on United States v. Farmer, 370

F.3d 435 (4th Cir. 2004), for the proposition that because

after-market alteration removes a measure of quality assurance from the original manufacturer, marketing the altered

products as genuine is prohibited under § 2320(a). In Farmer,

this court upheld the counterfeiting conviction of a defendant

accused of "purchasing blank t-shirts and sweatshirts manufactured for companies like Nike and Hilfiger, placing those

companies’ logos on the shirts without authorization, and then

passing along the shirts to the public as brand-name goods."

Id. at 436. The defendant in that case purchased authentic

shirts from authorized manufacturers, and then affixed the

unauthorized brand-name mark to represent the good as being

brand-name marked. 

Farmer, however, is materially different from the case at

bar. Critically, the mark that was affixed to the goods at issue

was not genuine, being fraudulently affixed by the defendant

16 UNITED STATES v. CONE
himself, thereby rendering the mark a "spurious mark." In

contrast to the marks genuinely affixed by Cisco to the goods

before being acquired by JDC, the placement of the marks in

Farmer was never authorized by the manufacturer at any time

during the manufacture of the goods in question. See id. at

440 ("[i]t was Farmer rather than the trademark holder who

oversaw the construction of the shirts."). Farmer therefore

does not support the government’s material alteration theory

of counterfeiting that genuine marks lose their genuine character solely from product alteration. 

Additionally, the government argues that we should adopt,

for purposes of the criminal counterfeiting statute, certain

trademark applications under the Lanham Act, 15 U.S.C.

§ 1051 et seq., the statute governing civil trademark disputes.7

The government argues that cases under the Lanham Act support the proposition that a genuine mark becomes counterfeit

when the product is altered in a way not approved by the original manufacturer. See Intel Corp. v. Terabyte Int’l, Inc., 6

F.3d 614, 620 (9th Cir. 1993) ("by the time the Intel markings

had been scraped off or printed over, Intel did make the chip

but it was no longer the source of the product which was

being sold."). 

As the government correctly notes, we recently stated that,

"[b]ecause of the similarity between [the Lanham Act] definition [of counterfeit] and the § 2320 definition of ‘counterfeit

7E.g., Rolex Watch USA v. Meece, 158 F.3d 816, 827 (5th Cir. 1998)

(upholding civil counterfeiting judgment against defendant who modified

"new, genuine Rolex watches" with "non-genuine parts to make them

resemble more expensive Rolex watches"); Westinghouse Elec. Corp. v.

Gen. Circuit Breaker & Elec. Supply Inc., 106 F.3d 894, 896 (9th Cir

1997) (defendant is liable for civil counterfeit where defendant purchased

genuine, used Westinghouse Circuit breakers, refurbished them, and reattached genuine labels); Intel Corp. v. Terabyte Int’l, Inc., 6 F.3d 614, 619

(9th Cir. 1993) (affirming civil judgment against defendant who purchased

"slow" Intel-brand microchips and relabeled them as "fast" and more

expensive chips.). 

UNITED STATES v. CONE 17
mark,’ we find Lanham Act civil counterfeiting cases helpful

to our analysis of criminal counterfeiting cases brought under

§ 2320(a)." Lam, 677 F.3d at 199 n.8.8 Helpful though these

cases may be, it does not necessarily follow that we import

every aspect of civil counterfeiting jurisprudence into the

criminal counterfeiting context. Indeed, as we recognized in

Lam, "the standard may ‘be construed more narrowly in a

criminal context than in a civil context.’" Id. (quoting United

States v. Guerra, 293 F.3d 1279, 1288 (11th Cir. 2002)). 

As a number of courts have recognized, § 2320 must be

construed more narrowly than the civil law definition of counterfeit acts contained in the Lanham Act. See United States v.

Giles, 213 F.3d 1247, 1250 (10th Cir. 2000) ("[W]e must construe [the criminal counterfeiting statute more] narrowly [than

the Lanham Act]."); United States v. Hanafy, 302 F.3d 485,

489 (5th Cir. 2002) ("Lanham Act precedent is of little value

in a § 2320 case because the Lanham Act deals with civil liability.") (citing Giles, 213 F.3d at 1250); Guerra, 293 F.3d at

1288 ("The ‘identical or substantially indistinguishable’ standard [in the counterfeit context] is to be construed more narrowly in a criminal context than in a civil context.").

Indeed, even the civil cases to have found Lanham Act liability based on material alteration have acknowledged that

such a theory of liability strays from a strict statutory definition of "counterfeit." See Rolex Watch USA, 158 F.3d at 826

("The original . . . labels are not themselves ‘counterfeits’ in

the literal sense.") (quoting Westinghouse Elec. Corp. v. Gen.

Circuit Breaker & Elec. Supply Inc., 106 F.3d 894, 899 (9th

Cir 1997)). In doing so, those courts relied upon a rationale

critical in the civil trademark infringement context: "the

important test is whether the practice of the defendant is likely

8The Lanham Act defines "counterfeit" in a manner similar to the criminal counterfeiting statute: "A ‘counterfeit’ is a spurious mark which is

identical with, or substantially indistinguishable from, a registered mark."

15 U.S.C. § 1127. 

18 UNITED STATES v. CONE
to cause confusion, not whether the defendant duplicated the

plaintiff’s mark." Westinghouse, 106 F.3d at 899 (citing Continental Motors Corp. v. Continental Aviation Corp., 375 F.2d

857, 861 (5th Cir. 1967) ("Confusion, or the likelihood of

confusion . . . is the real test of trademark infringement."). In

applying a criminal statute, however, we do not have the freedom to disregard an element of the crime: that the defendant

did, in fact, employ a counterfeit mark. See 18 U.S.C.

§ 2320(a). 

Moreover, Zhao and Cone have correctly identified a second material difference between the Lanham Act and § 2320:

the Lanham Act lacks an authorized use exception. Thus, our

conclusion that under the § 2320(e)(1)(B) authorized use

exception Congress did not intend to criminalize the use of

genuine marks used on goods that were manufactured by or

for the mark holder distinguishes this case from those civil

cases cited by the government. No court, in interpreting the

Lanham Act to allow material alteration liability, has even

had the opportunity to opine on whether an authorized use

exception (such as that codified at § 2320(e)(1)(B)), would

preclude such liability in the civil context of trademark

infringement. 

For all the reasons just discussed, we find that criminal liability under § 2320 cannot be based on the alteration of a

product to which a genuine mark was affixed and the mark

itself has not been altered. The Congress can certainly rewrite

that statute to cover a material alteration theory, but the statute as now written does not do so. 

We must now apply our holding on the scope of § 2320 to

the facts of this case and determine what, if any relief is available to Cone and Zhao. Based on our review of the indictment, and the evidence adduced at trial, we first conclude that

Zhao’s conviction under Count 9, a substantive counterfeiting

charge against her, must be vacated. 

UNITED STATES v. CONE 19
Count 9 charged Zhao with, "on June 16, 2010, . . . intentionally traffic[king] in . . . a counterfeit Cisco unit." (J.A.

74.) The evidence adduced at trial showed that in 2010 the

U.S. Fish and Wildlife Service ("FWS") purchased an "enhanced" Cisco switch from Memorydealers.com, which in

turn had purchased the switch from JDC. When the switch

arrived, officials at FWS became aware that they had received

a "standard" model, rather than the enhanced version they had

purchased. The MAC address9

 of the switch was assigned to

a standard model, while the serial number on the chassis was

assigned to an "enhanced" switch. Thus, the government

adduced evidence that a standard model switch was purchased

from Cisco, which had a proper and genuine Cisco mark

affixed to it. Zhao, through JDC, later upgraded the product

to resemble an enhanced model switch, and sold it to Memorydealers.com as an enhanced switch. The mark, however,

was genuinely affixed to the good when manufactured by or

for Cisco and the mark itself was never altered. That conduct

is not, we conclude, criminal counterfeiting because the unaltered genuine mark is not a spurious mark, a required element

of the crime under § 2320. Thus, Zhao’s conviction for Count

9 cannot stand and must be vacated. 

Cone and Zhao argue that their convictions for conspiracy

under Count 1 must also be vacated. This is so, they contend,

because the jury’s verdict was a general one and it is impossible to determine whether the conspiracy convictions rested

upon the invalid material alteration theory as opposed to the

valid theory of improperly declared goods also charged under

Count 1. 

Zhao and Cone are correct to state that "reversal is required

when a case is submitted to a jury on two or more alternate

theories, one of which is legally (as opposed to factually)

inadequate, the jury returns a general verdict, and it is impos9A "MAC address" is an identification feature, unique to each item,

imprinted by the manufacturer on networking equipment. 

20 UNITED STATES v. CONE
sible to discern the basis on which the jury actually rested its

verdict." United States v. Moye, 454 F.3d 390, 400 n.10 (4th

Cir. 2006) (en banc) (citing Yates v. United States, 354 U.S.

289, 311–12 (1957)).

In this case, however, the jury returned a special, not a general verdict as to Count 1. Indeed, the jury was given and utilized, without objection, a special verdict form. On that

verdict form the jury found Cone and Zhao guilty of conspiracy to traffic in counterfeit goods and labels, and separately

found them guilty of conspiracy to import and sell improperly

declared goods. We recently addressed a similar situation in

United States v. Lawson, 677 F.3d 629 (4th Cir. 2012). In that

case, after determining that certain juror misconduct rendered

a conviction for conspiracy to violate the Animal Welfare Act

invalid, we determined whether the defendants’ convictions

for a single count of conspiracy could nevertheless be

affirmed where the indictment alleged a multi-object conspiracy in the conjunctive. We reasoned that

in contrast to the general verdict rendered in Yates,

the verdict in the present case reveals that the jury

had two separate bases for convicting the . . . defendants of the conspiracy charges. Although the indictment alleged both objects in a single count, the

jury’s verdict forms with respect to each of the . . .

defendants listed separate guilty verdicts for "Count

1—Conspiracy (Animal Welfare Act: June 18, 2008

through April 18, 2009)" and "Count 1—Conspiracy

(illegal gambling business: May 2007 through April

18, 2009)." Thus, we are not confronted with a situation in which we are uncertain whether a jury’s verdict was solely attributable to an underlying

conviction which we have set aside on legal grounds.

Cf. Yates, 354 U.S. at 311–12. Accordingly, the conspiracy convictions for the . . . defendants are supported by a valid and independent legal basis that is

UNITED STATES v. CONE 21
apparent from the record, and we therefore affirm

those convictions.

Id. at 655. Likewise, the conspiracy convictions in this case

are supported by a "valid and independent legal basis," id.,

because of the separate verdict form, and we accordingly

affirm the conspiracy convictions of both Cone and Zhao.10

Our review of the presentence investigation report ("PSR")

and the record of the sentencing hearing, however, plainly

demonstrates that the district court relied on the counterfeiting

object of the conspiracy convictions in fashioning the sentences for Cone and Zhao. Because the district court may

have utilized what we have now determined would be noncriminal acts under the material alteration theory of counterfeiting conspiracy in arriving at the sentences, we must also

vacate the sentences of both Cone and Zhao and remand for

resentencing. 

B. Sufficiency of the Evidence

i. Counts 8 and 10 against Zhao

In addition to her challenges to Count 1 and Count 9, Zhao

also argues that Counts 8 and 10 should be vacated because

the evidence was insufficient, as a matter of law, to prove that

she engaged in § 2320 criminal counterfeiting. We agree with

Zhao as to Count 10, but not Count 8.

"A defendant challenging the sufficiency of the evidence

faces a heavy burden." United States v. Foster, 507 F.3d 233,

245 (4th Cir. 2007). In a sufficiency of the evidence chal10While we have determined that the acts charged to Zhao under Count

9, and to both Zhao and Cone under the material alteration portion of

Count 1, are not criminal acts under § 2320, nothing in our opinion should

be construed to affect their prosecution under any other state or federal

statute which may apply to these acts. 

22 UNITED STATES v. CONE
lenge, we view the evidence on appeal in the light most favorable to the government in determining whether any rational

trier of fact could find the essential elements of the crime

beyond a reasonable doubt. United States v. Collins, 412 F.3d

515, 519 (4th Cir. 2005). We review both direct and circumstantial evidence, and accord the government all reasonable

inferences from the facts shown to those sought to be established. United States v. Harvey, 532 F.3d 326, 333 (4th Cir.

2008). We do not review the credibility of the witnesses and

assume that the jury resolved all contradictions in the testimony in favor of the government. United States v. Kelly, 510

F.3d 433, 440 (4th Cir. 2007). We will uphold the jury’s verdict if substantial evidence supports it and will reverse only

in those rare cases of clear failure by the prosecution. Foster,

507 F.3d at 244–45.

With respect to the products at issue in Count 8, four routers seized by CBP in 2010, prosecution expert and Cisco

engineer Michael Heidecker opined that the MAC addresses

found on the routers matched physically different products

manufactured by Cisco. (See J.A. 1052-54.) Furthermore,

Heidecker opined that the labels applied to the routers were

nongenuine. Thus, Heidecker was able to conclude that the

routers at issue were not manufactured by or for Cisco and

could not be genuinely marked. While Zhao’s expert reached

a different conclusion, this conflicting evidence was for a jury

to weigh. The jury had ample evidence on which to conclude

that Zhao was guilty as charged in Count 8. 

On Count 10, however, the Government did not carry its

burden to show that Zhao engaged in the criminal counterfeiting of marks. Count 10 charges that JDC sold counterfeit

Cisco transceivers to Vology, a reseller of network equipment. The government alleges that these transceivers were not

made by or for Cisco, but identifies only two pieces of evidence in support of this claim.

First, the government points to testimony from Craig Grant,

a Vology manager, who testified that, upon receipt of the

UNITED STATES v. CONE 23
transceivers, he was able to tell from his experience that the

packaging was not genuine. Congress, however, has chosen to

bar the government from bringing "a criminal cause of action

. . . for the repackaging of genuine goods or services not

intended to deceive or confuse." 18 U.S.C. § 2320(g). Evidence of repackaging, therefore, is not enough standing alone

to prove the goods within that packaging bear a counterfeit

mark. The government must come forth with some other evidence that the mark on the actual good is spurious. 

To that end, the government’s second piece of evidence for

Count 10 is that law enforcement seized "additional versions"

of the transceivers at issue in Count 10 from Zhao’s residence, which Heidecker opined were not made by or for

Cisco. However, the Vology transceivers were not introduced

at trial, having been returned to JDC and resold. Whatever

marks the "additional versions" of the transceivers may (or

may not) have borne does not prove the status of the marks

on the long gone Vology transceivers. No evidence at trial

established what marks were on the Vology transceivers; a

burden which fell to the government to bear. 

Heidecker opined only that the packaging of the transceivers found at Zhao’s home was inauthentic. (J.A. 1024.) He

gave no testimony about the marks on the Vology transceivers. 

Since the "repackaging" evidence cannot, under the plain

terms of § 2320(g), sustain a conviction under the statute for

a counterfeit mark on the goods in the package, and as the

government adduced no evidence on the marks on the Vology

transceivers, the government failed to prove a violation of

§ 2320 for the acts charged in Count 10. The evidence was

insufficient as a matter of law to sustain Zhao’s conviction. 

Accordingly, while we find that the government adduced

sufficient competent evidence to sustain Zhao’s conviction

24 UNITED STATES v. CONE
under Count 8, we find that the government did not do so with

respect to Count 10, and vacate that count of conviction. 

ii. Sufficiency of the Evidence Against Cone

Cone individually challenges his conviction for conspiracy

to import misdeclared goods (Count 1) by arguing that the

evidence was insufficient and the district court accordingly

erred in denying his Rule 29 motion for judgment of acquittal.

We review the district court’s denial of a Rule 29 motion de

novo. Lam, 677 F.3d at 198. The legal standard for a sufficiency of the evidence claim is set forth above at p. 22.

In Count 1, the government alleged Cone participated in a

conspiracy to violate 18 U.S.C. § 545, which criminalizes

"fraudulently or knowingly import[ing] or bring[ing] into the

United States, any merchandise contrary to law." Id. Cone

was alleged to have conspired to import goods without taking

reasonable care to ensure that the goods were properly

declared, in violation of 19 U.S.C. § 1484(a). 

To establish a conspiracy under § 371, the Government must prove "(1) an agreement between two or

more people to commit a crime, and (2) an overt act

in furtherance of the conspiracy." United States v.

Ellis, 121 F.3d 908, 922 (4th Cir. 1997). "The existence of a tacit or mutual understanding between

conspirators is sufficient evidence of a conspiratorial

agreement." Id. (internal quotation marks omitted).

Proof of the agreement may be established by circumstantial evidence. Burgos, 94 F.3d at 857. It is

no defense to a conspiracy charge that one’s role in

the conspiracy is minor. See United States v. Laughman, 618 F.2d 1067, 1076 (4th Cir. 1980) ("Once the

existence of a conspiracy is established, evidence

establishing beyond a reasonable doubt a connection

of a defendant with the conspiracy, even though the

connection is slight, is sufficient to convict him with

UNITED STATES v. CONE 25
knowing participation in the conspiracy." (internal

quotation marks omitted)).

United States v. Kingrea, 573 F.3d 186, 195 (4th Cir. 2009).

With the standards of review in mind, we have little difficulty concluding that the government adduced sufficient evidence from which the jury could properly convict Cone under

Count 1. Cone was unquestionably an active participant in the

scheme to sell counterfeit, mislabeled, or undeclared Cisco

products. The evidence adduced at trial showed that Cone

confessed to law enforcement that he was a member of that

conspiracy. He acknowledged in his confession that he was

aware that Han Tong employees were misdeclaring goods to

avoid detection by CBP. Furthermore, when he became

estranged from Zhao, he sent e-mails to her demanding his

share of proceeds from the conspiracy. 

This is not a case, as Cone suggests, where an innocent

spouse is implicated solely by his marriage to a conspirator.

See United States v. Dozie, 27 F.3d 95, 98 (4th Cir. 1994)

(vacating conspiracy conviction against co-defendant’s

spouse who "was never tied to the conspiracy by any of the

other persons involved"). Rather, the record contains ample

evidence from which the jury could have properly concluded

that Cone was an active participant in the conspiracy. We

accordingly see no merit to Cone’s contention that there was

insufficient evidence to support his conviction on Count 1.

iii. Money Laundering

Zhao further contends her convictions for money laundering must be vacated on the basis that the government’s incorrect "material alteration" theory may have formed the basis

for her money laundering convictions.11 We agree.

11Zhao was also charged with a third count of money laundering, Count

26, on which she was acquitted by the jury. 

26 UNITED STATES v. CONE
Zhao was convicted of two counts (Count 27 and 28) of

"concealment" money laundering. See 18 U.S.C.

§ 1956(a)(2)(B)(i); (a)(1)(B)(i). She was also convicted of

Count 29, engaging in a monetary transaction with criminally

derived proceeds in violation of 18 U.S.C. § 1957(a) (collectively "the money laundering convictions"). 

To obtain a conviction under § 1956(a)(1)(B)(i) (Count 28),

the government had the burden to prove four elements: 

(1) an actual or attempted financial transaction; (2)

involving the proceeds of a specified unlawful activity; (3) knowledge that the transaction involves the

proceeds of some unlawful activity; and (4) knowledge that the transaction was designed in whole or in

part to conceal the nature, location, source, ownership, or control of the proceeds of a specified unlawful activity.

United States v. Richardson, 658 F.3d 333, 337-38 (3d Cir.

2011) (internal quotation marks, brackets, and ellipsis omitted) (emphasis added). The elements of a violation of

§ 1956(a)(2)(B)(i), as charged in Count 27, are similar, with

the additional requirement that the government prove an international transaction involving the proceeds of unlawful activity. See Cuellar v. United States, 553 U.S. 550, 553 (2008).

Finally, as to Count 29, § 1957(a) similarly requires the government to allege (and prove) a transaction involving funds

derived from a specified unlawful activity. See United States

v. Cherry, 330 F.3d 658, 668 (4th Cir. 2003). 

In this case, the district court instructed the jury properly as

to each offense, observing that, to sustain a conviction under

Counts 27, 28, and 29, the government must prove beyond a

reasonable doubt that Zhao engaged in monetary transactions

that, inter alia, involved funds derived from the offense of

trafficking in counterfeit goods or labels. (See J.A. 2430-37.)

UNITED STATES v. CONE 27
As the Supreme Court has explained, 

Jurors are not generally equipped to determine

whether a particular theory of conviction submitted

to them is contrary to law-whether, for example, the

action in question . . . fails to come within the statutory definition of the crime. When, therefore, jurors

have been left the option of relying upon a legally

inadequate theory, there is no reason to think that

their own intelligence and expertise will save them

from that error. 

Griffin v. United States, 502 U.S. 46, 59 (1991). Accordingly,

"a verdict [is required] to be set aside in cases where the verdict is supportable on one ground, but not another, and it is

impossible to tell which ground the jury selected." Yates v.

United States, 354 U.S. 298, 312 (1957). But see United

States v. Hastings, 134 F.3d 235, 242 (4th Cir. 1998) ("If [the]

evidence is such that the jury must have convicted the defendant on the legally adequate ground in addition to or instead

of the legally inadequate ground, the conviction may be

affirmed."). 

While it is no doubt correct that the government adduced

ample evidence tending to show that Zhao committed "pure"

counterfeiting, neither the indictment, nor the evidence

adduced at trial allow us to conclude that the jury necessarily

convicted Zhao of money laundering based on the government’s "pure" counterfeiting theory. 

Agent Hilario testified, in support of Count 27, that JDC

and Han Tong engaged in a series of wire transfers in June,

2010, designed to conceal the funds’ source. The source of

these funds was derived largely, if not entirely, from sales, by

JDC, of goods purchased from Han Tong. The evidence of

these sales, introduced in the form of Zhao’s ledgers, simply

does not allow us to determine whether the sales were of

"pure" counterfeits, or of "materially altered" goods, which, as

28 UNITED STATES v. CONE
discussed supra, do not constitute counterfeit marks for the

purposes of § 2320. 

The government’s evidence in support of Count 28 consisted solely of testimony from ICE agent Raymond Orzel, a

certified fraud examiner. Orzel testified that Zhao purchased

a home in 2005 with funds derived from JDC, Han Tong, and

related entities. (J.A. 1520-21.) In 2008, Zhao sold the home

to an individual named Dan Lou, (an indicted co-conspirator)

who rented the home out. However, the government also put

forth evidence that the funds Lou used to purchase the home

were drawn from Zhao’s accounts, and that rent checks made

out to Lou were deposited in accounts controlled by Zhao.

Once again, the funds at issue were derived from JDC sales

of Han Tong goods. We cannot say with any certainty that the

jury only considered sales of "pure" counterfeits when convicting Zhao of Count 28. 

In support of Count 29, the government adduced evidence

that Zhao directed that two $50,000 checks be drawn from

JDC accounts to Marcie Wu, an affiliate of Han Tong. The

checks represented, in large part, the proceeds of the sales of

certain Cisco switches from JDC to Network Hardware

Resale ("NHR"). (See J.A. 1964-66.) These switches were

obtained from Han Tong, and the evidence adduced at trial

demonstrated that the switches were manufactured by or for

Cisco, and then later altered by Zhao. Because this conduct is

not criminal counterfeiting, the jury’s verdict of conviction on

Count 29 rests on an unsound legal basis. 

Thus, the money laundering convictions must be vacated.

Count 29 appears to clearly rest on an improper legal basis,

and because we cannot say with certainty whether Zhao’s

convictions on Counts 27 and 28 are based on "pure" counterfeiting, those convictions must be vacated as well. 

iv.

Our distinguished colleague in dissent concurs in the foregoing analysis concerning the "material alteration" theory, but

UNITED STATES v. CONE 29
suggests that Zhao’s conviction on Count 8, a substantive

counterfeit charge, should also be vacated. We respect the

views of the dissent but do not agree. 

The general thesis of the dissent is that, having held that the

government’s "material alteration" theory of counterfeiting is

without legal basis, we should have vacated Count 8 owing to

improper closing argument by the government. However, at

oral argument, when asked by the panel what specific counts

of the indictment would be affected by our rejection of the

"material alteration" theory, counsel for Zhao responded that

such a holding would "most clearly" affect substantive Count

9 and Count 1 (conspiracy). Audio Recording of Oral Argument at 1:30. Counsel, of course, could have argued that vacatur of Count 8 was appropriate as well, but chose to focus

entirely on Counts 9 and 1. This is not surprising, as the

record is conclusively clear that at no point in the district

court or this court, did Zhao raise a claim of error under the

material alteration theory as to Count 8. This concept arises

sua sponte for the first time in the dissent. 

The representations of Zhao’s counsel to the panel at oral

argument were entirely consistent with the arguments set forth

in her briefs before this Court and the district court. Indeed,

although Zhao contends that Count 8 should be vacated, her

argument rests entirely on a sufficiency of the evidence basis,

which we rejected in section II(A)(ii), above. (See Opening

Br. of Appellant at 36-38). 

The dissent acknowledges as much, but argues that because

the government argued a legally incorrect theory to the jury

in closing argument, deference to the jury’s verdict is not warranted. To reach this result, the dissent analyzes the government’s remarks under United States v. Lighty, 616 F.3d 321,

361 (4th Cir. 2010). Again, a construct appearing for the first

time now, sua sponte, and which, under our precedent, has

long since been waived by Zhao.

30 UNITED STATES v. CONE
Zhao never made the argument that is the lynchpin of the

dissenting opinion: that the prosecutor’s closing comments, in

and of themselves, constitute reversible error. See Post at 53

("A prosecutor’s comments constitute reversible error if . . .

."). Zhao’s briefs on appeal are utterly devoid of any reference

to the Lighty factors because Zhao does not make a standalone challenge to the government’s statements in closing

argument. Rather, to the extent that Zhao discusses the prosecutor’s closing arguments at all, it is for purposes of the harmless error analysis under Count 1 only. 

Zhao’s failure to raise this independent assignment of error,

either in brief or at oral argument, regarding the government’s

comments to the jury is fatal to the position advocated by the

dissent. See United States v. Strieper, 666 F.3d 288, 293 n.4

(Floyd, J.) (citing Edwards v. City of Goldsboro, 178 F.3d

231, 241 n.6) (4th Cir. 1999)) ("This argument does not

appear in [Appellant’s] brief, and as such, it is waived.").

Granting relief on a basis not advanced by Zhao (and arguably

disclaimed at oral argument) is plainly improper for all the

reasons the rule of waiver is in force. The government has not

had any opportunity to respond to the claim of error advanced

by the dissent, nor was it ever placed before the district court

for consideration.12 See Cavallo v. Star Enterprise, 100 F.3d

1150, 1152 n.2 (4th Cir. 1995) ("The [Appellants’] omission

of the issue from their initial brief denied [Appellee] an

opportunity to respond, so considering it now would be unfair

to the appellee and would risk an improvident or ill-advised

opinion on the legal issues raised.") (quoting Hunt v. Nuth, 57

F.3d 1327, 1338) (4th Cir. 1995) (internal quotation marks

omitted)). 

12Because the government never had the opportunity to address an

appellate challenge to its closing arguments, the dissent’s assertion that the

government has "waived waiver" is misplaced and a conclusion of pure

speculation. Had Zhao raised an independent challenge to the government’s closing remarks, the government could have asserted the waiver

bar in response, but was never put on notice to do so. 

UNITED STATES v. CONE 31
Additionally, we do not consider the issue of the prosecutor’s comments on appeal as they were not preserved by Zhao

in the district court. We have long held that the failure to

object to a prosecutor’s statements made during closing arguments constitutes a waiver of that claim of error. See United

States v. Sawyer, 347 F.2d 372, 374 (4th Cir. 1965) ("[I]f

defense counsel does not object during the course of the Government’s closing argument he may be said to have waived

the point.").

The mere fact that Zhao challenged, as a general matter, the

"material alteration" theory presented by the government is

insufficient to preserve the claim of error formulated by the

dissent. This is so because, as explained above, the dissent’s

theory is based on a stand alone prosecutorial misstatement

claim. Indeed, the dissent acknowledges that the theory presented by the prosecution during closing statements "was even

broader than the material alteration theory advanced in the

government’s’ proposed jury instruction." Post, at 45.

Accordingly, Zhao’s pre-trial challenge to the government’s

proposed jury instructions would not preserve a claim of error

as to the prosecutor’s unchallenged remarks in closing.

It is for that reason that the dissent’s reliance on Lacy v.

CSX Transportation, Inc., 520 S.E.2d 418 (W. Va. 1999), is

unavailing. In that case, as the dissent observes, the court

found that an unsuccessful motion in limine was sufficient to

preserve a challenge to later closing remarks by the opposing

party so long as the argument fell within the scope of the

court’s earlier ruling on the motion. Id. at 427. In this case,

though, as the dissent acknowledges, Zhao succeeded in her

motion in limine. It makes sense, therefore, that if the prosecutor’s closing remarks ran afoul of the district court’s prior

ruling, Zhao should have timely objected to alert and afford

the court an opportunity to correct any error.13

13Moreover, contrary to the dissent’s suggestion, at 47, Zhao never

argues in her post-verdict motion for acquittal that the government’s

32 UNITED STATES v. CONE
The dissent does correctly observe that Zhao’s brief on

appeal mentions the government’s closing arguments. But

even a superficial reading of the briefs demonstrates that, far

from raising an independent challenge to the prosecutorial

statements, Zhao was merely describing what the prosecutor

said, or, in one case, noting that any error in the government’s

theory of prosecution was non-harmless. See Appellants’ Br.

at 39-40. The dissenting opinion goes several steps farther,

raising, for the first time, a stand alone challenge to the prosecutorial remarks.

For those reasons, the cases cited by the dissent in favor of

its position are, in our view, inapposite. Judge Floyd’s dissent

in Lam, for example, cited twice in the dissenting opinion,

observed that "the district court has sustained repeated objections to the [prosecutorial] statement." Lam, 677 F.3d at 212.

Here, the district court did not sustain any objection because

none was made. Thus the government was deprived of the

opportunity to make the case that its argument was proper,

and the district court was deprived of the opportunity to correct any purported error. See United States v. Hargrove, 625

F.3d 170, 184 (4th Cir. 2010) ("Hargrove failed to object . . .

at the time, thus denying the district court the opportunity to

consider Hargrove’s argument and correct the purported

error."). 

Accordingly, while we respect the views of the dissent, we

do not agree that the claim of error on which the dissent

would vacate Count 8 was properly preserved by the Zhao or

raised in this court or the district court. 

C. Confrontation Clause

Zhao argues that the district court committed reversible

error by admitting Cone’s out-of-court statements to Agent

remarks were improper as to the "material alteration" theory. She only

argues that the prosecutor made certain statements, unrelated to the present appeal, that were unsupported by the evidence. See Zhao’s Mot. Judgment of Acquittal 7 n.8, ECF 240. Nowhere in Zhao’s motion as to Count

8 does she mention the material alteration theory. Id. at 5-7. 

UNITED STATES v. CONE 33
Hilario into evidence against her. The core of Zhao’s claim is

that substituting "another individual" for her name made it

obvious to the jury that she was the person referenced and

thereby violated her Sixth Amendment Confrontation Clause

rights. 

In Bruton, the Supreme Court held: "[A] defendant is

deprived of his rights under the Confrontation Clause when

his nontestifying codefendant’s confession naming him as a

participant in the crime is introduced at their joint trial, even

if the jury is instructed to consider that confession only

against the codefendant." Richardson v. Marsh, 481 U.S. 200,

201-02 (1987) (citing Bruton v. United States, 391 U.S. 123,

135-36 (1968)). This court reviews de novo an evidentiary

ruling implicating the Confrontation Clause. United States v.

Palacios, 677 F.3d 234, 242 (4th Cir. 2012). 

In United States v. Akinkoye, 185 F.3d 192 (4th Cir. 1999),

we summarized Supreme Court precedent as holding that "if

a redacted confession of a non-testifying codefendant given to

the jury (by testimony or in writing) shows signs of alteration

such that it is clear that a particular defendant is implicated,

the Sixth Amendment has been violated." Id. at 197. We further noted that the Supreme Court’s precedent did not directly

address the situation in that case–"namely, whether redacted

statements that refer to the existence of another party who

may be the defendant through symbols or neutral pronouns

are admissible," and observed that "[t]he Supreme Court has

strongly implied that such statements do not offend the Sixth

Amendment." Id. at 198.

In Akinkoye, the co-defendant’s confessions were retyped

so as to replace "the defendants’ respective names with the

phrase ‘another person’ or ‘another individual.’" Id. The

retyped versions were read to the jury, and the jury "neither

saw nor heard anything in the confessions that directly

pointed to the other defendant." Id. Accordingly, we held that

the defendants’ Confrontation Clause rights were not violated

34 UNITED STATES v. CONE
by the redacted statements because use of the neutral phrase

"another person" did not facially implicate the defendant. Id.

Applying the holding of Akinkoye to the case at bar, we

readily conclude that substitution of Zhao’s name with "another individual" was sufficient to protect Zhao’s rights under

the Confrontation Clause. The phrase "another individual"

does not facially implicate Zhao. Only by reference to other

evidence could the jury have arrived at the conclusion that

Zhao was the actual subject of Cone’s out of court statement.

In such circumstances, we have concluded that the Confrontation Clause is not offended, and thus Zhao’s claim lacks

merit.

D. Introduction of Customer E-Mails

Cone and Zhao last argue that the district court erred in

admitting certain e-mails from JDC customers complaining

that JDC products were "counterfeit" and "fake." Although

the district court determined that the e-mails were introduced

for a non-hearsay purpose, i.e., to show that Zhao and Cone

were on notice that they were selling counterfeit goods, the

court declined to give a limiting jury instruction to that effect

and instead stated that "the e-mails say what they say and the

jury will have to decide if they’re believable or not. That’s

their job." (J.A. 1673-74.) Cone and Zhao contend that the

court’s actions constitute reversible error. 

This Court reviews evidentiary rulings for an abuse of discretion and "will only overturn an evidentiary ruling that is

‘arbitrary and irrational.’" United States v. Cloud, 680 F.3d

396, 401 (4th Cir. 2012) (quoting United States v. Cole, 631

F.3d 146, 153 (4th Cir. 2011)). Evidentiary rulings are subject

to harmless error review, such that any error is harmless

where we may say "with fair assurance, after pondering all

that happened without stripping the erroneous action from the

whole, that the judgment was not substantially swayed by the

UNITED STATES v. CONE 35
error." United States v. Johnson, 617 F.3d 286, 292 (4th Cir.

2010). 

At the outset, we believe that the district court properly

admitted the e-mails for the non-hearsay purpose of showing

that Cone and Zhao were on notice as to the counterfeit nature

of the goods they sold. See 5-801 Weinstein’s Federal Evidence § 801.11[5][a] (Out of court statement not hearsay

when "offered not for [its] truth but to prove the extent of . . .

a recipient’s notice of certain conditions."). 

We are troubled, however, by the court’s response to counsel’s request for a limiting instruction. Indeed, while the emails may have been properly admitted for a reason other

than their truth, the district court stated just the opposite—that

the jury will have to decide "if they’re believable or not." In

other words, the court erroneously instructed the jury to consider statements contained in the e-mails for the truth of the

matter asserted. 

The government contends, nonetheless, that the court’s

statement was not error because the statements in the e-mails

could have been admitted under a hearsay exception, namely

the business records exception to the hearsay rule, found at

Federal Rule of Evidence 803(6). We are not persuaded.

Rule 803(6)(B) allows for the introduction of records that

are "kept in the course of a regularly conducted activity of a

business." For a record to be admitted as a business record, it

must be "(1) made by a regularly conducted business activity,

(2) kept in the ‘regular course’ of that business, (3) ‘the regular practice of that business to make the memorandum,’ (4)

and made by a person with knowledge or from information

transmitted by a person with knowledge." Clark v. City of

L.A., 650 F.2d 1033, 1036-37 (9th Cir. 1981) (quoting Fed. R.

Evid. 803(6)). 

36 UNITED STATES v. CONE
E-mails, however, present unique problems of recent vintage in the context of the business records exception. As one

district court recently explained:

Courts are in disagreement on whether emails can

and should fall under the business records hearsay

exception. The business records exception assumes

that records containing information necessary in the

regular running of a business will be accurate and

reliable. See Certain Underwriters at Lloyd’s London v. Sinkovich, 232 F.3d 200, 204–05 (4th Cir.

2000). Email, however, is typically a more casual

form of communication than other records usually

kept in the course of business, such that it may not

be appropriate to assume the same degree of accuracy and reliability. As email is more commonly

used to communicate business matters both internally and externally, however, more formal paper

records are becoming more unusual.

Its My Party, Inc. v. Live Nation, Inc., No. JFM-09-547, 2012

WL 3655470 at *5 (D. Md. Aug. 23, 2012) (unpublished).

The district court in that case excluded the e-mails on the

basis that the "more specificity is required regarding the

party’s recordkeeping practices to show a particular email in

fact constitutes a reliable business record." Id.

While properly authenticated e-mails may be admitted into

evidence under the business records exception, it would be

insufficient to survive a hearsay challenge simply to say that

since a business keeps and receives e-mails, then ergo all

those e-mails are business records falling within the ambit of

Rule 803(6)(B). "An e-mail created within a business entity

does not, for that reason alone, satisfy the business records

exception of the hearsay rule." Morisseau v. DLA Piper, 532

F. Supp. 2d 595, 621 n.163 (S.D.N.Y. 2008). The district

court’s observation that the e-mails were kept as a "regular

operation of the business" is simply insufficient on that basis

UNITED STATES v. CONE 37
alone to establish a foundation for admission under Rule

803(6)(B). Accordingly, because the e-mails could not, on

this record, be admitted under an exception to the hearsay

rule, the district court’s failure to give the limiting jury

instruction was error.

We conclude, however, that the any error in the court’s jury

instructions or failure to give an e-mail limiting instruction

was harmless. In the context of a twelve-day jury trial in

which the government adduced overwhelming evidence of

Cone and Zhao’s guilt, we cannot conclude that Cone or Zhao

were prejudiced by this single error concerning a minute portion of the total evidence against them. As discussed above,

the government further introduced physical evidence in the

form of counterfeit labels seized from Zhao’s home and storage unit. The government also introduced routers seized by

CBP, that Heidecker (a Cisco engineer) identified as counterfeit goods. 

The government also introduced evidence from Cone and

Zhao themselves. In addition to Zhao’s confession at the time

of her arrest (that she sold "fake" goods in order to make more

money), the government introduced incriminating e-mails

from Cone to Zhao wherein Cone threatened to reveal the

counterfeiting scheme to law enforcement if he did not

receive his share of proceeds from the criminal venture. In

sum, the government’s evidence against Cone and Zhao was

more than ample, and we conclude that the district court’s

jury instruction with respect to certain e-mails from JDC customers was harmless beyond a reasonable doubt.

III.

Because we conclude that the government’s material alteration theory of counterfeiting is not encompassed within the

§ 2320 statutory crime of counterfeiting marks, we vacate

Zhao’s conviction on Count 9. In light of this holding, we

must vacate Zhao’s convictions for Counts 27, 28, and 29. We

38 UNITED STATES v. CONE
further hold that the evidence was insufficient as a matter of

law to sustain Zhao’s conviction on Count 10 and also vacate

that conviction. We also vacate the sentences of both Cone

and Zhao and remand for resentencing in light of our holding

today. We affirm the judgment of the district court in all other

respects.

AFFIRMED IN PART,

VACATED IN PART,

AND REMANDED

WYNN, Circuit Judge, concurring in part and dissenting in

part:

I concur with the majority’s conclusion that the government’s "material alteration" theory is not supported by the

plain language of the criminal trademark counterfeiting statute, 18 U.S.C. § 2320. As a result, I also agree that this Court

must reverse Defendant Zhao’s conviction on Count 9, which

involved a networking switch that the government concedes

was manufactured by or for Cisco, and her three money laundering convictions, which were tainted by the material alteration theory. I further concur that the government adduced

insufficient evidence to convict Defendant on Count 10

because the government’s evidence at most showed that

Defendant Zhao repackaged a genuine Cisco product.

However, I cannot join the majority in affirming Defendant

Zhao’s conviction on Count 8, the remaining trademark counterfeiting conviction potentially tainted by the errant material

alteration theory. The government and Defendant Zhao presented conflicting evidence regarding whether the products at

issue in Count 8 were manufactured by or for Cisco. In

affirming that conviction, the majority considered the evidence adduced at trial in the light most favorable to the government. But such deference is unwarranted because the

government argued its legally incorrect alteration theory to

the jury and the district court did not provide an adequate

UNITED STATES v. CONE 39
instruction to the jury regarding when a product that has its

genesis in authorized production can serve as the basis for a

trademark counterfeiting conviction. Because we do not know

whether the jury properly credited the government’s evidence

or improperly credited the government’s errant legal theory,

this conviction also should be reversed. 

In addition, I write separately to clarify that in resentencing

Defendants Zhao and Cone on their conspiracy convictions

the district court should not take into account evidence that

Defendants altered one other type of Cisco product, which,

like the switch at issue in Count 9, the government concedes

was manufactured by or for Cisco. I further emphasize

that this panel was not tasked with answering, and thus did

not decide, whether the repackaging of an altered, but genuine

product in a non-deceptive manner violates Section 2320 as

a matter of law. 

I.

Before explaining why Defendant Zhao’s conviction on

Count 8 should be reversed, it is first useful to provide some

additional background on Section 2320, the government’s

material alteration theory, and the district court’s instruction

on the definition of "counterfeit" under Section 2320.

A.

Section 2320(a) makes it unlawful for anyone to "intentionally traffic[ ] or attempt[ ] to traffic in goods or services and

knowingly use[ ] a counterfeit mark on or in connection with

such goods or services . . . ." The statute defines a "counterfeit

mark" as a "spurious mark that is used in connection with

trafficking in any goods [or] services . . . that is identical with,

or substantially indistinguishable from, a [registered] mark

. . . the use of which is likely to cause confusion, to cause mistake, or to deceive . . . ." § 2320(e)(1)(A). 

40 UNITED STATES v. CONE
Section 2320 includes two provisions that deal with when

the resale of an authentic or genuine good can serve as the

basis for a trademark counterfeiting conviction: (1) an "authorized use" exception and (2) a "repackaging," or "gray goods,"

exception. As the majority correctly notes, the authorized use

exception excludes from the definition of "counterfeit mark

. . . any mark . . . used in connection with goods or services

. . . of which the manufacturer or producer was, at the time

of the manufacture or production in question, authorized to

use the mark" by the trademark holder. § 2320(f)(1). The second exception bars the government from bringing "a criminal

cause of action . . . for the repackaging of genuine goods or

services not intended to deceive or confuse." § 2320(g). This

applies to "gray goods," which are "goods that are authentic

and that have been obtained from overseas and imported into

the United States." United States v. Hanafy, 302 F.3d 485,

488 (5th Cir. 2002).

In Hanafy, the Fifth Circuit approvingly quoted its district

court regarding the relationship between the two exceptions:

A common denominator of these two exceptions is

that the goods to which the mark is attached were

manufactured by, or with the permission of, the

owner of the mark—that is, the goods themselves are

genuine. That Congress saw fit to exempt "gray market" goods and [authorized users] from criminal liability lends support to an interpretation that § 2320

was intended to prevent trafficking in goods that

were similar to but different than the goods normally

associated with the mark.

Id. (quoting United States v. Hanafy, 124 F. Supp. 2d 1016,

1023-24 (N.D. Tex. 2000)). Thus, the two exceptions jointly

indicate that Congress intended generally to exclude from liability under Section 2320 sellers of goods that have their genesis in authorized production. Such an exclusion makes

sense—one of the primary rationales for protecting tradeUNITED STATES v. CONE 41
marks is that they assist consumers in identifying the source

of goods. OBX-Stock, Inc. v. Bicast, Inc., 558 F.3d 334, 339

("Trademark law, at a general level . . . enabl[es] consumers

readily to recognize products and their source and to prevent

consumer confusion between products and between sources of

products."). Therefore, it would make little sense for Congress

to hold a reseller criminally liable for attaching a mark to a

product if the mark correctly identifies the source of the product, and does so in a nondeceptive manner. 

B.

Prior to trial, the government submitted a lengthy proposed

instruction regarding the definition of "counterfeit," which

provided, in pertinent part:

[A] defendant cannot purchase genuine products

manufactured by or for the registered owner, materially alter those products, and then offer the products

for resale as genuine or unaltered products. . . . Such

modifications convert a genuine product into a

"counterfeit" product.

J.A. 160. This language was drawn almost entirely from federal district and appellate court decisions in civil actions

brought under the trademark counterfeiting provisions in the

Lanham Act.

Defendants Zhao and Cone filed a motion in limine seeking

an advance ruling on the government’s proposed instruction,

arguing that the "material alteration" theory was not supported

by the plain language of Section 2320 and had never been

applied in criminal cases brought under the statute. Defendants requested that the "material alteration" language not be

used, and instead proposed that the instruction state, in pertinent part:

42 UNITED STATES v. CONE
A mark is counterfeit if, and only if . . . the challenged mark is spurious, which means false or inauthentic . . . .

Because a counterfeit mark must be false or inauthentic, the definition of counterfeit mark does not

include any mark used in connection with goods or

applied to labels or packaging if, at the time of manufacture of the goods or production of the labels or

packaging, the manufacturer or producer was authorized to use the mark for the type of goods or packaging being made. . . .

The use of an inauthentic mark in the repackaging of

genuine goods does not constitute use of a counterfeit mark if it is done without any intent to deceive

or confuse as to the authenticity of the goods.

J.A. 132-33. Thus, Defendants’ proposed instruction on the

definition of "counterfeit" included both the authorized use

and repackaging exceptions.

Noting that a material alteration instruction had not previously been given in a criminal trademark counterfeiting case,

the district court expressly rejected the government’s proposed instruction. Instead, the court elected to use the model

instruction set out in 3 Hon. Leonard B. Sand et al., Modern

Federal Jury Instructions, Instruction 54A-4. In comments on

the model instruction, Sand states that "[f]urther instruction

may be required when the prosecution involves goods other

than the typical knock-off containing a false label." Sand,

supra. 

Emphasizing that the parties agreed that this was not the

typical "knock-off" case, at the conclusion of evidence, the

government renewed its request that the court instruct the jury

on the material alteration theory. J.A. 2350. Although the

government and Defendants agreed that the Sand instruction

UNITED STATES v. CONE 43
was inadequate, they could not agree on how it should be

modified. Rather than choosing between the government’s

and Defendants’ proposed instructions, the district court modified the Sand instruction by quoting Section 2320’s authorized use exception, instructing the jury, in pertinent part: 

A counterfeit mark is one that is identical to or substantially indistinguishable from a registered trademark, the use of which is likely to confuse, cause

mistake or deceive the public in general . . . .

I instruct you that as a matter of law, the counterfeiting statute in this case . . . does not criminalize any

mark or designation used in . . . connection with

goods or services . . . if the manufacturer or producer

was at the time of the manufacture or production in

question authorized to use the mark or designation

for the type of goods or services so manufactured or

produced.

J.A. 2424, 2427-28. Although it quoted the authorized use

exception, the district court did not quote or paraphrase the

repackaging exception. 

II.

With this background in mind, turn with me to Defendant

Zhao’s conviction on Count 8, which covered four network

routers bearing Cisco trademarks sold by JDC. 

Defendant Zhao contends her conviction must be reversed

because the evidence adduced by the government would only

be sufficient to support a trademark counterfeiting conviction

under the government’s errant material alteration theory,

which she contends that the government impermissibly

argued to the jury. In particular, Defendants note that after the

district court had instructed the jury and despite the fact that

the court had rejected the government’s proposed material

44 UNITED STATES v. CONE
alteration instruction, the government still argued in its closing that altering and then reselling a genuine good constitutes

illegal trademark counterfeiting for purposes of Section 2320.

For example, during its initial closing argument, the government argued that Defendants engaged in 

illegal upgrading . . . . If they were just buying things

in China and selling in the U.S., they could have

done that. But they were upgrading them. They were

changing them. They were making them new products. 

J.A. 2481. Similarly, during its rebuttal argument, the government defined "counterfeit" as follows:

[Defendants] were taking one product and converting it to another. They were making a product in

Chantilly, Virginia. That’s not a Cisco product any

more. Cisco has standards for its products, quality

control. What they did is they took software . . . to

change what those products did. They don’t know

what they actually could do with that software.

Maybe it turned it into something unusable. They

took that risk and then they packaged it up with a

Cisco logo on it and sold it. That’s counterfeit.

Those are not Cisco products. Once you make that

alteration, it’s something different.

J.A. 2546. This argument, referred to hereafter as the "alteration theory," was even broader than the material alteration

theory advanced in the government’s proposed jury instruction because it suggested that any alteration, no matter how

minor, to a product manufactured by or for a mark holder and

sold under the original mark violates Section 2320.

A.

Before reaching Defendant Zhao’s argument that these

remarks constitute reversible error, it is first necessary to

UNITED STATES v. CONE 45
address whether this issue is properly before us on appeal.

Although not disputing the merits of this argument, the majority maintains that Defendant Zhao waived any argument

regarding the government’s remarks because she did not

timely object below and failed to adequately raise the issue on

appeal. I disagree. 

At the outset, it is worth noting that the general rule is that

the government "waives waiver" by failing to argue on appeal

that the defendant did not preserve a given argument. See,

e.g., United States v. Quiroz, 22 F.3d 489, 491 (2d Cir. 1994);

United States v. Beckham, 968 F.2d 47, 54 n.5 (D.C. Cir.

1991). Here, the government did not argue in its briefs or at

oral argument that Defendants waived any challenge to the

government’s closing remarks by failing to contemporaneously object. Appropriately, the same degree of scrutiny for

preserving issues on appeal should be applied to the government as the majority seeks to apply to Defendants. If done so

here, then we must conclude that the government waived the

waiver argument advanced by the majority.

Nonetheless, regarding whether Defendant Zhao preserved

this issue below, the majority correctly notes that the general

rule is that "counsel for the defense cannot . . . remain silent,

interpose no objections, and after a verdict has been returned

seize for the first time on the point that the comments to the

jury were improper and prejudicial." United States v. SoconyVacuum Oil Co., 310 U.S. 150, 238-39 (1940). An appellate

court, however, may consider improper remarks by counsel in

"exceptional circumstances" such as if the remarks were "obvious, or if they otherwise seriously affect the fairness, integrity, or public reputation of the judicial proceedings." Id. at

239 (quotation omitted). This Court has indicated that exceptional circumstances exist when comments by the prosecution

cause "actual prejudice" to a defendant. United States v.

Elmore, 423 F.2d 775, 780 (4th Cir. 1970). 

Additionally, this Court has held that motions in limine

"preserve issues that they raise without any need for renewed

46 UNITED STATES v. CONE
objections at trial, just so long as the movant has clearly identified the ruling sought and the court has ruled upon it."

United States v. Williams, 81 F.3d 1321, 1325 (4th Cir. 1996).

For example, we have held that when a party moves in limine

to exclude evidence, the party need not renew its objection

when evidence within the scope of the motion is introduced

at trial. United States v. Ruhe, 191 F.3d 376, 383 n.4 (4th Cir.

1999); see also Fed. R. Evid. 103(b). Although we have not

previously had occasion to apply this rule in the context of

motions in limine to preclude the jury from considering a particular legal theory, the same logic applies: Because counsel

is restricted to arguing the law in accordance with the principles espoused in the court’s instructions, United States v. Trujillo, 714 F.2d 102, 106 (11th Cir. 1993), if a party moves in

limine to bar the jury from considering a particular legal theory and the court rules on that motion, it need not renew its

objection when the opposing party argues the legal theory at

trial, see Lacy v. CSX Transp. Inc., 520 S.E.2d 418, 427 (W.

Va. 1999) ("[T]o preserve error with respect to closing arguments by an opponent, a party need not contemporaneously

object where the party previously objected to the trial court’s

in limine ruling permitting such argument, and the argument

subsequently pursued by the opponent reasonably falls within

the scope afforded by the court’s ruling.").

The majority contends that Lacy is inapposite because in

that case the party’s motion in limine to preclude the jury

from considering a particular legal theory was unsuccessful,

whereas here Defendant Zhao’s motion in limine seeking to

exclude the material alteration theory was successful. But it is

paradoxical to argue that a party need not contemporaneously

object when an opposing party argues a legal theory that was

explicitly accepted by the court but must contemporaneously

object—at risk of waiver—when an opposing party argues a

legal theory that was explicitly rejected by the court. Such a

holding would unfairly reward parties that violate a court’s in

limine rulings and is contrary to the policy underlying

motions in limine, which is to allow a party to exclude from

UNITED STATES v. CONE 47
consideration of the jury a prejudicial matter without drawing

attention to the matter by having to contemporaneously object

to it. See Jeffrey F. Ghent, Annotation, Modern Status of

Rules as to Use of Motion In Limine or Similar Preliminary

Motion to Secure Exclusion of Prejudicial Evidence or Reference to Prejudicial Matters, 63 A.L.R.3d 311 § 1(a) (1975).

Here, Defendants did not contemporaneously object to the

government’s statements during its closing. At the same time,

Defendants did not "remain silent" or "interpose no objections" to the government’s efforts to get the material alteration

theory before the jury. Rather, Defendants repeatedly sought

to bar the jury from considering the theory: on two occasions

Defendants successfully asked the district court to exclude the

government’s proposed material alteration instruction; after

the government completed its case in chief, Defendant Cone

sought to have the trademarking counterfeiting counts dismissed on grounds that the alteration theory is not supported

by the plain language of Section 2320; during their closing

argument, Defendants sought to diminish the prejudice from

the prosecution’s statements by arguing that the alteration theory espoused in the government’s closing was contrary to the

court’s instruction; and, after the jury rendered its verdict,

Defendants sought to have their convictions set aside on

grounds that the government impermissibly argued the alteration theory to the jury. Because the government’s alteration

theory was within the scope of Defendants’ motion in limine,

which the court definitively ruled upon prior to closing arguments, it was unnecessary for Defendants to renew their

objection to the theory when, contrary to the court’s ruling,

the government argued the errant theory to the jury.

The majority maintains that Defendant Zhao’s post-verdict

motion for acquittal does not argue that the government’s

closing remarks regarding the material alteration theory were

improper and a basis for acquittal. To the contrary, as her

brief notes, Appellant’s R. Br. at 12, Defendant’s Zhao’s

motion explicitly incorporated all arguments made by Defen48 UNITED STATES v. CONE
dant Cone regarding the criminal trademark counterfeiting

counts in his motion for acquittal. J.A. 2698. And Defendant

Cone’s motion for acquittal states: 

The government argued, and the jury considered, the

theory that Mr. Cone agreed to materially alter

Cisco-manufactured equipment, and that this activity

constitutes a violation of § 2320. Because the jury

considered an impermissible basis for liability under

§ 2320 and the Court is unable to determine the basis

for the jury’s guilty verdict, Mr. Cone must be

granted a new trial pursuant to Rule 33.

J.A. 2748-49. Thus, Defendant Zhao did argue in her motion

for post-verdict relief that the government’s closing remarks

constituted a basis for her acquittal.

But even if Defendants’ repeated efforts to preclude the

jury from considering the alteration theory were inadequate to

preserve the issue, I believe that this is one of those few cases

where exceptional circumstances warrant consideration of the

government’s remarks on appeal. The government’s remarks

caused Defendant Zhao actual prejudice because they misled

the jury into believing that any alteration of a good manufactured by or for a mark holder would be sufficient, by itself,

to support a conviction under Section 2320. Yet the majority

correctly holds that modifying a genuine good, without modifying the mark on the good, does not run afoul of Section

2320. Ante at 14. Thus, at a minimum, Defendants were prejudiced by the government’s comments because they may have

led the jury to incorrectly believe that Defendants could be

convicted for modifying a genuine product even if the jury

found that Defendants did not alter the mark on the product.

See United States v. Mitchell, 1 F.3d 235, 241 (4th Cir. 1993)

(holding that prosecution’s appeal to improper legal theory

during closing argument constitutes prejudicial plain error);

United States v. Chong Lam, 677 F.3d 190, 212 (4th Cir.

2012) (Floyd, J., dissenting) (stating that a "misstate[ment of]

UNITED STATES v. CONE 49
the relevant legal standard" by the prosecution during closing

arguments is prejudicial).

The majority also contends that Defendant Zhao failed to

adequately raise this issue on appeal, arguing that Zhao has

never "raise[d] a claim of error under the material alteration

theory as to Count 8" and never argued that the government’s

closing remarks constitute reversible error. Ante, at 30. But

the majority’s position is belied by Defendant Zhao’s briefs.

First, after arguing at length that this Court should reject

the government’s material alteration theory by adopting a narrower interpretation of Section 2320, Defendant Zhao’s brief

states:

If the Court adopts the narrower interpretation of

Section 2320 that the plain language and the rule of

lenity require, two conclusions follow. First, the government failed to prove that Zhao trafficked in counterfeit goods (as charged in Counts 8, 9, and 10).

Those convictions therefore must be reversed, as

must the associated money laundering convictions

(Counts 27, 28, and 29).

Appellants’ Br. at 36. Moreover, during her discussion of

Count 8 in particular, Defendant Zhao asserts that the government’s "evidence showed, at most . . . that a serial number

programmed inside a genuine Cisco product was altered by

someone." Appellants’ Br. at 37 (emphasis added). Thus,

Defendant Zhao repeatedly contended that the government’s

errant alteration theory improperly tainted her conviction on

Count 8.* 

*The majority also suggests the Defendant Zhao waived any argument

that the alteration theory tainted her conviction on Count 8, when at oral

argument her counsel said that the alteration theory "most clearly"

impacted Count 1 and Count 9. Ante, at 30. But this comment cannot reasonably be interpreted as unambiguously waiving any argument that the

50 UNITED STATES v. CONE
Second, Defendant Zhao’s opening and reply briefs also

repeatedly take issue with the government’s closing remarks,

referencing them on at least five occasions. Appellants’ Br. at

20-21, 28, 32-33, 39-41; Appellants’ R. Br. at 18-19. In particular, Defendant Zhao summarizes her argument as follows:

The district court rejected the government’s unprecedented [material alteration] instruction. But the court

permitted the government to argue a version of the

legal theory to the jury, and it denied appellants’

motions challenging the theory and the verdicts that

resulted. The district court’s instructional ruling and

its acceptance of the jury’s verdicts cannot be reconciled.

Appellants’ Br. at 20-21. Therefore, Defendant Zhao unambiguously argued in her opening brief that the government’s

closing remarks regarding the alteration theory improperly

tainted the jury’s verdict. 

In sum, Defendant Zhao repeatedly argued below and on

appeal that both the material alteration theory and the broader

alteration theory tainted her trademark counterfeiting convictions because the government improperly argued the theories

to the jury. Indeed, Defendant Zhao’s challenges to the alteration theory were and are the central issue in this case. The

government has repeatedly had the opportunity to respond to

Defendant Zhao’s objections on the issue, and in each case

has argued that the theory is correct and thus her convictions

must be affirmed. The majority correctly rejects the government’s arguments and vacates or modifies all of Defendant

theory tainted her conviction on Count 8. And the majority fails to cite any

authority, nor have I been able to find any, supporting the proposition that

an appellant can waive an issue through an ambiguous statement made

during oral argument, when the issue was raised in the appellant’s briefs,

as is the case here. 

UNITED STATES v. CONE 51
Zhao’s convictions that were potentially impacted by the government’s errant alteration theory, except for Count 8. Given

the centrality of this issue to Defendant’s prosecution and her

repeated efforts below and on appeal to raise the issueregardless of how inartful they may have been—whether the

government’s argument of the alteration theory during its

closing constitutes a basis for vacating Defendant Zhao’s conviction on Count 8 is properly before us on appeal. 

B.

Having established that the government’s comments during

closing argument are properly before this Court, turn with me

now to the issue of whether these comments warrant reversing

Defendant Zhao’s conviction on Count 8. 

It is axiomatic that questions of law are the province of the

court, whereas issues of fact are reserved for the jury. Georgia

v. Brailsford, 3 U.S. 1, 4 (1794). When underlying legal principles are "undisputed," counsel is entitled to comment on the

law to the jury. United States v. Sawyer, 443 F.2d 712, 714

(D.C. Cir. 1971). But if "counsel’s view of the applicable law

differs from that of the court, then . . . the jury should hear

a single statement of law, from the court and not from counsel." Id. Consequently, "[i]n arguing the law to the jury, counsel is confined to principles that will later be incorporated and

charged to the jury." Trujillo, 714 F.2d at 106.

Although noting that a prosecutor’s instruction on the law

during closing arguments lacks "the same force as an instruction from the court," the Supreme Court has recognized that

"prosecutorial misrepresentations may . . . have a decisive

effect on the jury" and thus can warrant reversing a conviction. Boyde v. California, 494 U.S. 370, 384-85 (1990). Consequently, the Supreme Court has admonished the

government to abstain from securing convictions by misrepresenting facts or the law:

52 UNITED STATES v. CONE
The United States Attorney . . . may prosecute with

earnestness and vigor—indeed, he should do so. But,

while he may strike hard blows, he is not at liberty

to strike foul ones. It is as much his duty to refrain

from improper methods calculated to produce a

wrongful conviction as it is to use every legitimate

means to bring about a just one.

Berger v. United States, 295 U.S. 78, 88 (1935); see also

Boyde, 494 U.S. at 384.

A prosecutor’s comments constitute reversible error if they

were "(1) improper and (2) prejudicially affected the defendant’s substantial rights so as to deprive the defendant of a

fair trial." Chong Lam, 677 F.3d at 203 (quotation omitted).

This Court considers six factors in determining whether a

prosecutor’s comments prejudiced a defendant’s "substantial

rights":

(1) the degree to which the prosecutor’s remarks

ha[d] a tendency to mislead the jury and to prejudice

the accused; (2) whether the remarks were isolated

or extensive; (3) absent the remarks, the strength of

competent proof introduced to establish the guilt of

the accused; and (4) whether the comments were

deliberately placed before the jury to divert attention

to extraneous matters. We also consider (5) whether

the prosecutor’s remarks were invited by improper

conduct of defense counsel, and (6) whether curative

instructions were given to the jury.

United States v. Lighty, 616 F.3d 321, 361 (4th Cir. 2010). In

cases in which a prosecutor erroneously instructs the jury on

the law, "[t]he determinative question is whether the prosecutor’s remarks cast serious doubt on the correctness of the

jury’s verdict." United States v. Holmes, 406 F.3d 337, 356

(5th Cir. 2005) (citation omitted).

UNITED STATES v. CONE 53
C.

Applying this framework to the case at hand, we first must

determine whether the government’s remarks were improper.

Chong Lam, 607 F.3d at 203. In light of our conclusion that

the alteration theory advanced by the government is not cognizable under Section 2320, the government’s closing remarks

were an incorrect statement of the law, and thus improper.

Mitchell, 1 F.3d at 242 (holding that prosecutor’s appeal to

improper legal theory during closing argument constituted

plain error). The remarks also were improper because the government is restricted to arguing legal principles included in

the jury charge, Trujillo, 714 F.2d at 106, and the district

court had repeatedly sustained Defendants’ motions objecting

to the material alteration instruction.

The key issue, then, is whether, under the six Lighty factors, the government’s comments prejudiced Defendants’ substantial rights. Here, all of the Lighty factors support reversing

Defendant Zhao’s conviction on Count 8. Regarding the first

factor, as I explained previously, the government’s remarks

misled the jury and prejudiced Defendant Zhao because they

incorrectly suggested that she could be convicted for modifying a genuine product even if the jury found that she did not

alter the mark on the product. See United States v. Mandel,

862 F.2d 1067, 1073 (4th Cir. 1988) ("[W]e hold that in a

case in which the jury considers alternate theories of liability,

we must reverse the convictions if either theory is an

improper basis for punishment."). 

Relatedly, based on the evidence adduced at trial, it is

unclear whether there was sufficient competent evidence to

convict Defendants on Count 8, as is required by the third

Lighty factor. In particular, the government and Defendant

Zhao presented conflicting evidence regarding whether the

routers were manufactured by or for Cisco. At trial, a Cisco

employee described the routers as "counterfeit" for two reasons: (1) they had codes on them that Cisco had assigned to

54 UNITED STATES v. CONE
routers with more ports and (2) the packaging for the routers

was not Cisco packaging because it included a number of

spelling errors. By contrast, an expert witness testifying on

behalf of Defendants said that certain unalterable codes

"burned into" the routers’ memory indicated that they were

manufactured by or for Cisco. J.A. 2207 And the Cisco

employee called by the government testified that he did not

know whether the routers were manufactured by or for Cisco.

As the majority correctly holds, evidence that a product has

been repackaged is not, by itself, sufficient to prove that the

product is nongenuine for purposes of Section 2320. Ante, at

24; see also Hanafy, 302 F.3d at 489. Moreover, based on the

government’s closing statement, the jury may have erroneously believed that any alteration of a genuine product—such

as changing the codes assigned to the routers—could serve as

the basis for a conviction under Section 2320. Consequently,

we do not know whether the jury credited the government’s

evidence—and thus discredited Defendants’ evidence—that

the routers were not manufactured by or for Cisco, and therefore we do not know whether there was sufficient competent

evidence to support Defendant Zhao’s conviction. See United

States v. Hastings, 134 F.3d 235, 241 (4th Cir. 1998) (holding

that when a jury may have reached a verdict based on an erroneous legal theory, a reviewing court "must attempt to ascertain what evidence the jury necessarily credited in order to

convict the defendant under the instructions given. If that evidence is such that the jury must have convicted the defendant

on the legally adequate ground in addition to or instead of the

legally inadequate ground, the conviction may be affirmed").

The second, fourth, and fifth Lighty factors also support

vacating the conviction. In particular, the improper appeal to

the alteration theory was extensive: not only did the government argue the alteration theory during its closing, the theory

also played a key role in the government’s opening argument.

The pervasive appeal to the alteration theory throughout the

trial and the government’s repeated unsuccessful requests that

UNITED STATES v. CONE 55
the district court instruct the jury on that theory also indicate

that the government’s remarks were deliberate. See Chong

Lam, 677 F.3d at 212 (Floyd, J., dissenting) ("Where, however, a prosecutor continues to make an incorrect statement of

the law after the district court has sustained repeated objections to that statement, notifying the prosecutor of the error,

the court should, in my opinion, infer some degree of deliberateness."). Further, there is no evidence that improper conduct

by the defense invited the remarks by the government. To the

contrary, the defense properly sought to bar the government

from arguing the theory through its successful motion in

limine to prohibit the proposed instruction. 

Regarding the sixth and final factor, because we presume

juries follow their instructions, even in the absence of a curative instruction, a misstatement of law by counsel generally

will not warrant overturning a jury verdict if the court’s

instruction on the issue correctly stated the controlling law

and barred the jury from convicting the defendant based on

the erroneous legal theory. See, e.g., Chalmers v. Mitchell, 73

F.3d 1262, 1271 (2d Cir. 1996); United States v. Fierro, 38

F.3d 761, 771-72 (5th Cir. 1994). Here, the district court did

not provide a curative instruction, so the key question is

whether the court’s instruction on the definition of "counterfeit" foreclosed the jury from deciding this case based on the

government’s erroneous alteration theory.

As noted previously, the district court elected to use the

Sand model instruction and modified it by quoting the authorized use exception. But neither the Sand instruction nor the

language of the authorized use exception explicitly addresses

whether altering a product that has its genesis in authorized

production constitutes trademark counterfeiting. Thus, jurors

reasonably could have believed that the court’s instruction did

not foreclose them from finding Defendant Zhao guilty under

the alteration theory improperly argued by the government.

Indeed, the district court appears to have believed that its

instruction did not foreclose the jury from relying on the gov56 UNITED STATES v. CONE
ernment’s errant alteration theory: though the court elected

not to give the government’s proposed material alteration

instruction, the district court did embrace the theory in rejecting Defendant Cone’s Rule 29 motion for acquittal. J.A. 2345

("[T]he presentation of an item as new when it has been

altered under a mark is likely to cause confusion and lead the

consumer to believe the product was made by the genuine

owner of the trademark in the fashion in which it left the factory even though it was not.").

Nevertheless, the government argues that the court’s

instruction was proper and that "the jury was in no way

directed to convict if a ‘material alteration’ had been made."

Appellee’s Br. at 25-26. But, despite Defendants’ request, the

court refused to instruct the jury on the repackaging exception

because the court did not want to embrace a novel legal theory in its instruction. Given the centrality of the alteration theory to the government’s case, the best course of action would

have been for the district court to explicitly address the theory

in its instructions—as, with the benefit of our holding in this

case, future courts should do. At the least, it was incumbent

on the court to instruct the jury on all statutory provisions

addressing when resale of genuine products can give rise to

trademark counterfeiting liability, which it did not do. 

In sum, the majority of the Lighty factors favor vacating

Defendant Zhao’s conviction on Count 8. Moreover, the government’s uncontradicted alteration argument casts significant

doubt on the correctness of the jury’s verdict by making it

impossible for us to determine whether the jury properly credited the government’s evidence or improperly credited the

government’s errant legal theory—although the jury’s conviction of Defendant Zhao on Count 9, when the government

conceded that the product at issue was manufactured by or for

Cisco, suggests the jury improperly was doing the latter rather

than correctly doing the former. 

UNITED STATES v. CONE 57
III.

In addition to disagreeing with the majority’s decision to

affirm Defendant Zhao’s conviction on Count 8, I write separately to highlight two important points not explicitly

addressed by the majority. 

First, it is important to clarify that in resentencing Defendants on their conspiracy convictions under the majority’s

decision, the district court must not factor into the revised

sentences evidence presented at trial that Defendants’

upgraded and resold genuine Cisco PIX firewalls. Sales of the

upgraded PIX firewalls constituted a substantial portion of

JDC’s sales, exceeding $1,200,000, and therefore factored

into Defendants’ sentences. As was the case with the router

at issue in Count 9, the government concedes that the PIX

firewalls were originally manufactured by or for Cisco. Yet

under this Court’s holding, merely upgrading a genuine product does not give rise to liability under Section 2320. Therefore, Defendants cannot be punished for trademark

counterfeiting related to the PIX firewalls, and their sentences

should be modified accordingly.

Second, it should be emphasized that we were not tasked

with addressing whether a defendant violates Section 2320 by

repackaging a genuine but modified good in a non-deceptive

manner. According to the majority, a defendant cannot be

held criminally liable under Section 2320(a) for "obtain[ing]

a genuine . . . product bearing a genuine mark; modif[ying]

the product, but not the mark; then s[elling] the modified

product bearing the genuine mark." Ante, at 14. Although this

is a correct statement of law, it should not be read as holding

that a defendant who alters a genuine product and simultaneously alters an associated mark or packaging always violates Section 2320 as a matter of law.

Here, the government did not argue below and does not

argue on appeal that the coincidence of altering a genuine

58 UNITED STATES v. CONE
product and altering an associated mark gives rise to liability

under Section 2320. Rather, the government consistently has

argued that altering a genuine product by itself is sufficient to

turn the genuine product into a counterfeit—an argument that

we reject. Moreover, the government did not introduce evidence that Defendants altered the marks associated with the

Cisco products they upgraded. Consequently, we were

not tasked with resolving—and therefore did not

answer—whether nondeceptively repackaging an altered, genuine product constitutes criminal trademark counterfeiting.

The district court held that as a matter of law altering and

then repackaging a genuine good is inherently deceptive. J.A.

2345. But the Fifth Circuit has rejected the argument that the

repackaging of genuine goods causes confusion as a matter of

law. Hanafy, 302 F.3d at 488. And one can easily envision

scenarios in which a defendant nondeceptively alters and

resells a genuine product. For example, presumably a computer store can upgrade software on a Cisco router and sell it

as "Cisco router with upgraded software" without running

afoul of the statute. Therefore, whether the repackaging of an

altered product constitutes trademark counterfeiting remains

an open question and must be answered on a case-by-case

basis.

IV.

In sum, although the majority properly rejected the government’s material alteration theory of trademark counterfeiting,

it improperly affirmed one of Defendant Zhao’s substantive

trademark counterfeiting convictions that was tainted by a

version of that theory. Therefore, I respectfully dissent.

UNITED STATES v. CONE 59