27 Nov 23

When Selling Replica Goods Becomes a Federal Crime

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Last Updated on: 15th December 2023, 01:35 pm

When Selling Replica Goods Becomes a Federal Crime

Selling replica goods, like fake designer handbags or counterfeit watches, seems pretty harmless. But there are actually a bunch of laws that make it illegal to sell knockoffs. Here’s what you need to know about when selling replicas can get you in trouble with the feds.

Copyright Law

Copyright law can also make selling replicas illegal. Copyright protects creative works like books, movies, songs, and art.

If you reproduce parts of a creative work without permission, that’s copyright infringement. Even if you just copy a small part.

For example, putting Mickey Mouse on a t-shirt you designed could violate Disney’s copyrights. Even though it’s just one character.

Penalties for criminal copyright infringement include fines up to $250,000 and up to 5 years behind bars. So those Disney knockoffs aren’t worth the risk!

When Selling Replicas Becomes a Federal Crime

Most trademark and copyright cases are civil lawsuits. But selling fakes can also be a federal crime if:

  • You sell over $2,000 worth of counterfeit goods
  • You’ve already been sued for infringement before
  • You import the fake goods from overseas

The government takes counterfeiting really seriously if it involves importing knockoffs from other countries. That automatically makes it a federal case.

Trafficking in Counterfeit Goods

There’s a law called the Trafficking in Counterfeit Goods Act that can land you in federal prison for importing or selling fakes.

The penalties get harsher the more counterfeit goods are involved:

  • Less than $2,500 worth – up to 10 years in prison
  • $2,500 to $100,000 worth – up to 20 years
  • Over $100,000 worth – up to 30 years

And if the counterfeits endanger public health or safety, the max sentence is life in prison. Yikes!

Repeat Offender Penalties

The penalties for selling counterfeit goods also get worse if you’ve been busted for it before.

Under federal law, the maximum prison term doubles for a second counterfeit goods offense.

So if it’s your first offense, the max is 10 years. If you get caught again after that, the max goes up to 20 years. The third time, it’s 40 years!

Defenses Against Selling Counterfeits

Let’s say you get arrested for selling fake goods. Are there any defenses that could get the charges dropped?

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There are a few arguments that may get you off the hook:

You Didn’t Know They Were Fakes

If you can convince the court you didn’t actually know the goods were counterfeit, that’s a solid defense. Prosecutors have to prove you knew the items were knockoffs.

But if you were selling brand name purses out of your trunk for $20, this probably won’t fly. It’s pretty obvious those are fakes!

It’s Protected Parody

Parody is protected under the First Amendment. So if you’re making a funny spoof of a brand, that’s generally legal. Like a shirt with the “Michelob Ultra” logo changed to “Michelob Obese.”

Just make sure your parody logo isn’t too similar to the real one. And you can’t use the parody defense for straight-up counterfeiting.

Fair Use

Fair use is another defense against copyright and trademark claims. Fair use allows you to use part of a copyrighted work for things like commentary, criticism, news reporting, or education.

So if you used a snippet of a Disney song in a YouTube critique of Disney movies, you’d probably be protected.

But again, you can’t hide straight-up piracy behind the fair use shield.