Legal Ramifications of
Selling Fake Watches

 

18 U.S.C. Section 2320: Criminal Penalties for Counterfeiting

The maximum penalties provided are 10 years imprisonment and/or a $2 million fine in the case of an individual, and a $5 million fine in the case of a business. The law includes an additional provision stipulating increased penalties for recidivists. In the case of a second conviction, the person convicted, if an individual, faces a maximum potential fine of $5 million and prison sentence of 20 years. The maximum fine for a repeat offender other than an individual rises to $15 million.

California Penal Code Section 350: Selling Counterfeit Goods

(a) Any person who, without the consent of the registrant, willfully manufactures, intentionally sells, or knowingly possesses for sale at the point of sale any counterfeit of a mark registered with the Secretary of State or registered on the Principal Register of the United States Patent and Trademark Office, shall upon conviction, be punishable as follows:

(1) Where the offense involves less than 1,000 of the articles described in this subdivision, and if the person is an individual, he or she shall be punished by a fine of not more than five thousand dollars ($5,000), by imprisonment in a county jail for not more than one year, or by both that fine and imprisonment; or, if the person is a corporation, by a fine of not more than one hundred thousand dollars ($100,000).
(2) Where the offense involves 1,000 or more of the articles described in this subdivision, and if the person is an individual, he or she shall be punished by imprisonment in a county jail not to exceed one year, or in the state prison for 16 months, or two or three years, by a fine not to exceed two hundred fifty thousand dollars ($250,000), or by both that imprisonment and fine; or, if the person is a corporation, by a fine not to exceed five hundred thousand dollars ($500,000).

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(d) Any person who knowingly possesses for sale, at a location other than the point of sale, any article described in subdivision (a) is guilty of a public offense.

(1) A violation of this subdivision involving less than 100 of these articles shall be punishable by imprisonment in a county jail for not more than six months, by a fine not to exceed five thousand dollars ($5,000), or by both that imprisonment and fine. Any person who previously has been convicted of a violation of any paragraph of this subdivision shall, upon a new conviction of violating this subdivision arising from conduct described in this paragraph, be punished by imprisonment in a county jail not to exceed one year, or by a fine not to exceed ten thousand dollars ($10,000), or by both that imprisonment and fine. Any person who has been convicted of a violation of any paragraph of this subdivision on two or more previous occasions shall, upon a new conviction of violating this paragraph, be punished by imprisonment in a county jail not to exceed one year, or in the state prison for 16 months, or two or three years, by a fine not to exceed twenty-five thousand dollars ($25,000), or by both that imprisonment and fine.
(2) A violation of this subdivision involving 100 or more of these articles, but less than 1,000, shall be punishable by imprisonment in a county jail not to exceed one year, by a fine not to exceed ten thousand dollars ($10,000), or by both that imprisonment and fine. Any person who previously has been convicted of a violation of any paragraph of this subdivision on one or more occasions shall, upon a new conviction of violating this subdivision arising from conduct described in this paragraph, be punished by imprisonment in a county jail not to exceed one year, or in the state prison for 16 months, or two or three years, by a fine not to exceed twenty-five thousand dollars ($25,000), or by both that imprisonment and fine.
(3) A violation of this subdivision involving 1,000 or more of these articles shall be punishable by imprisonment in a county jail not to exceed one year, or in the state prison for 16 months, or two or three years, by a fine not to exceed one hundred thousand dollars ($100,000), or by both that imprisonment and fine.

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(f) As used in this section, the following definitions shall apply:

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(3) "Counterfeit mark" means a spurious mark that is identical with, or substantially indistinguishable from, a registered mark and is used on or in connection with the same type of goods or services for which the genuine mark is registered.
(4) "Knowingly possess" means that the person possessing an article actually knew that the article was not genuine.
(5) "Sale" includes resale.


Think it doesn't happen?

United States v. Torkington, 812 F.2d 1347 (11th Cir. 1987) A private investigator with Rolex Watch U.S.A. visited the local flea market and purchased two replica Rolexes from Torkington for $27.00 each. The investigator then reported Torkington to federal authorities and three weeks later they seized the flea market booth containing 742 replica watches. Torkington was indicted on two felony counts, but the District Court dismissed the indictment on the ground that no person could reasonably be confused that a $27.00 watch sold at a flea market was in fact a genuine Rolex. The Court of Appeals reinstated the indictment, ruling that the possibility that consumers might be confused after the sale (as evidenced by consumers bringing fake Rolexes into Rolex authorized service departments for service) is sufficient.

United States v. Hon, 904 F.2d 803 (2nd Cir. 1990) Undercover agents purchased replica watches from Hon's shop on Canal Street in New York. Hon and her husband were charged with three counts of trafficking in counterfeit watches and one count of conspiracy, and pled guilty, receiving 36 months probation. Her husband was sentenced to 5 months for the same offenses.

United States v. Song, 934 F.2d 105 (7th Cir. 1991) Defendant tried to sell fake Gucci watch at her flea market stand to undercover agent. Defendant was convicted of five counts of trafficking in counterfeit watches and sentenced to 14 months imprisonment.

Rolex Watch U.S.A. v. Dauley, 230 U.S.P.Q. 617 (N.D. Cal. 1986) Rolex U.S.A. obtained a seizure order against the Dauleys, who were purchasing counterfeit Rolexes from the Sians. The court found that Sians willfully infringed the Rolex mark, entitling Rolex to triple damages and attorneys fees totaling $223,000.00.

 



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