Opinion ID: 789574
Heading Depth: 3
Heading Rank: 1

Heading: Jury Instruction on Counterfeit Mark

Text: 23 A counterfeit mark is a spurious mark ... identical with, or substantively indistinguishable from, a registered trademark, the use of which is likely to cause confusion, to cause mistake, or to deceive. 18 U.S.C. § 2320(e)(1)(A)(i-iii). At trial, Milstein conceded that he bought genuine prescription drugs made for foreign markets and then repackaged them for sale in the United States without the consent of the drugs' manufacturers. However, Milstein requested a jury instruction that a spurious mark is one used in connection with goods that are not genuine or are so altered as to lose their genuine character. The District Court refused, instructing the jury that [a] counterfeit mark is a spurious mark or a mark that is not genuine, and in order for the mark to be genuine, it must be placed there by the legitimate owner of the mark or with the owner's authorization. The Court further instructed, [i]f you find that a good's production process includes the process of packaging, you may then find that the good does not bear a genuine mark if the good was repackaged using a trademark without authorization. 24 On appeal, Milstein contends that selling repackaged genuine goods is not a crime, and that if the court's instruction were a correct statement of the law, any repackaging of genuine product would be a criminal trademark counterfeiting offense, even where, as here, there was no allegation that the packaging itself was trademarked. (Milstein brief on appeal at 62.) Milstein relies primarily on the Fifth Circuit's opinion in United States v. Hanafy, 302 F.3d 485, 486-89 (5th Cir.2002) ( Hanafy ), which held that attaching a trademark to repackaged baby formula would not give rise to § 2320 liability. The Fifth Circuit suggested that, in the civil infringement context, Supreme Court precedent would require any repackaged good bearing a trademark to be marked as having been repackaged. Id. at 488 (citing Prestonettes, Inc. v. Coty, 264 U.S. 359, 368-69, 44 S.Ct. 350, 68 L.Ed. 731 (1924)); cf. Enesco Corp. v. Price/Costco Inc., 146 F.3d 1083, 1085-86 (9th Cir.1998). The Hanafy court declined to apply such a rule in the criminal context, however, reasoning that Lanham Act precedent is of little value in a § 2320 case because the Lanham Act deals with civil liability. Hanafy, 302 F.3d at 489 (citing United States v. Giles, 213 F.3d 1247, 1250 (10th Cir.2000)). But see United States v. Hon, 904 F.2d 803, 805 (2d Cir.1990) (There is no doubt that Congress wished to incorporate the Lanham Act's confusion requirement into 18 U.S.C. § 2320 and did so.). 25 Hanafy is readily distinguishable. The defendant in Hanafy resold cans of baby formula in trays that resembled trays used by manufacturers to sell the same product, bore the trademark holders' mark, and contain[ed] no more information than that which [wa]s carried on the cans themselves. 302 F.3d at 486, 488. By contrast, Milstein sold Eldepryl, Pergonal and Metrodin in forged packaging bearing false lot numbers. (Milstein brief on appeal at 9.) While the cans in Hanafy were merely being repackaged, such that consumers could be sure of the goods' quality and source, United States v. Farmer, 370 F.3d 435, 441 n. 1 (4th Cir.2004) (citing Hanafy, 302 F.3d at 486), the drugs here were repackaged so that consumers would believe foreign versions of the drug were in fact domestic, FDA-approved versions ( see Milstein brief on appeal at 60). 26 Milstein admits that the drugs were repackaged in counterfeit packaging with phony lot numbers designed to resemble the authentic packaging approved by the [FDA]. ( Id. ) Although § 2320 has been read effectively [to] exclude[] from the definition [of counterfeit mark] parallel imports, gray goods and production overruns, 4 McCarthy on Trademarks § 25:14 (2004), Milstein did more than resell parallel imports or gray goods. He 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. Moreover, he removed identifying codes from the repackaged goods. Cf. John Paul Mitchell Systems v. Pete-N-Larry's Inc., 862 F.Supp. 1020, 1026-27 (W.D.N.Y.1994). In all the circumstances, given, inter alia, Milstein's knowing repackaging of the drugs without the trademark holders' authorizations, the jury permissibly convicted Milstein of violating § 2320(a).