NATIONALLY RECOGNIZED FEDERAL LAWYERS
Last Updated on: 15th December 2023, 05:54 pm
The Cost of Counterfeiting: Fines and Jail Time for Trafficking Fake Goods
Selling knockoff purses or watches on the street corner may seem harmless, but trafficking in counterfeit goods is illegal and can lead to serious penalties. I was curious about the legal consequences for counterfeiting, so I did some research into federal laws against trafficking fake products. What I found shows that the government and brands take counterfeiting seriously, with fines reaching into the millions and prison sentences up to 30 years.
An Overview of Counterfeiting Laws
In the U.S., the main law prohibiting trafficking in counterfeit goods is 18 U.S.C. § 2320. This statute bars importing, exporting, selling, or otherwise distributing fake items. It covers all types of knockoff products, from handbags to electronics. There are also laws barring counterfeits of specific goods like military gear or prescription drugs.
Section 2320 sets up a tiered system of penalties based on the type of counterfeit, the number of offenses, and whether the perpetrator is an individual or company:
- For basic counterfeiting crimes by individuals, the maximum sentence is 10 years in prison and a $2 million fine.
- Harsher punishments apply for military knockoffs (20 years, $5 million) or fake drugs (20 years, $5 million).
- Second offenses trigger even steeper penalties – up to 30 years and $15 million.
- Fines can be doubled for companies, up to $15 million for a first offense.
In addition to jail time, counterfeiters face asset forfeiture – the government can seize all money and property connected to the illegal activity. And victims can sue for trademark infringement or losses from the fake goods.
Real-World Examples of Penalties
Looking at recent prosecutions shows how severely counterfeiters can be punished:
- In November 2022, Chenglan Hu was sentenced to 3 years in prison for importing and selling over $1 million of fake Apple products from China. He pled guilty to trafficking under §2320. The court also ordered Hu to forfeit almost $800,000, reflecting the proceeds from his crime.
- Earlier in 2022, Rosario LaMarca got a 5-year prison sentence for importing and selling counterfeit luxury retail items. Investigators seized over $31 million worth of fake Chanel, Gucci, Louis Vuitton and Tory Burch merchandise. LaMarca’s penalty shows how repeat offenses lead to longer sentences – he had a prior conviction for selling knockoff clothing.
- In 2020, a federal judge gave Moussa Ouedraogo a 30-month sentence for importing fake Nike Air Jordan sneakers from China and Hong Kong. The estimated retail value of the shoes was over $70 million if they were genuine. While lower than the 10-year maximum, even 2.5 years in prison sends a strong warning.
Defenses and Challenges
Facing counterfeiting charges under §2320 can be intimidating given the steep penalties. But experienced criminal defense lawyers have arguments to challenge the government’s case, like:
- No intent to infringe – Trademark law requires showing the defendant deliberately used a fake mark. For example, if you unknowingly bought and resold counterfeit goods, you may not have criminal intent.
- Free speech – The First Amendment protects expressive activities, even those using trademarks. So creative works involving brand names or logos aren’t necessarily illegal.
- No evidence you trafficked goods – Section 2320 requires distributing or transporting counterfeits. Just buying or possessing fake products doesn’t always violate the law.
An experienced lawyer can also negotiate with prosecutors for reduced charges or punishments. Depending on the case specifics, they may agree to:
- Drop the §2320 charge in favor of less serious trademark offenses.
- Recommend little to no jail time and lower fines.
- Allow a pretrial diversion program avoiding prosecution.
So while federal counterfeiting laws allow harsh penalties – even decades behind bars – all hope isn’t lost if you’re facing charges.
The Bottom Line
Trafficking in counterfeit merchandise may seem trivial, but selling fakes can lead to million-dollar fines and years in prison under federal law. The penalties get stiffer for repeat offenders or military/drug knockoffs. And the government can seize assets tied to counterfeiting activity. But experienced criminal defense lawyers understand how to challenge counterfeiting cases and negotiate reduced punishments. So if you’re facing charges, get advice from a lawyer right away.
The bottom line is counterfeiting is seen as a serious crime harming companies, consumers, and the economy. Brand owners pressure officials to get tough on fakes. And after looking at the prison terms and massive fines for those convicted, the government seems to be listening.