Relates to amending the penal law, in relation to the definition of a counterfeit trademark

BILL NUMBER:S6681

Title of bill

An act to amend the penal law, in relation to the definition of a counterfeit trademark

This is one in a series of measures being introduced at the request of the Chief Administrative Judge upon the recommendation of her Advisory Committee on Criminal Law and Procedure.

This measure would amend section 165.70 of the Penal Law to add technical precision to the definition of "counterfeit trademark." Specifically, the definition should clarify that the term means a spurious or imitation trademark that is used in connection with trafficking in goods that are identical with or substantially indistinguishable from goods bearing a legitimate trademark. The current definition of a "counterfeit trademark" is awkward and leads to unnecessary confusion in pleading and charging decisions.

In 1992, in response to an increase in trafficking in counterfeit goods, New York added the crimes of "trademark counterfeiting" to the Penal Law (L. 1992, c. 490, § 1). The Legislature modeled the law, and the definition of counterfeit trademark, after Federal law (see Donnino, Practice Commentary, McKinney's Cons Laws of NY, Book 39, Penal Law §165.70; see also 18 USC §2320). Unfortunately, there is an ungainly difference in the New York statute. Penal Law § 165.70(2), in part, defines a "counterfeit trademark" as a "spurious trademark... used in connection with trafficking in goods; and... used in connection with the sale... of goods that are identical with or substantially indistinguishable from a trademark...." Under this definition, "goods" must be indistinguishable from a "trademark." However, a "trademark" is not comparable with goods; instead a trademark is used to identify particular goods (see PL, §165.70(1)). The parallel provision in Federal law provides that "goods" should not be compared to a "trademark." The Federal definition makes plain that a "counterfeit trademark" is a spurious mark "used in connection with trafficking in any goods... that is identical with, or substantially indistinguishable from, a mark registered on the principal register in the United States Patent and Trademark Office..." (18 USC §2322(e)(1)(A)(ii)). The Federal statute therefore appropriately requires a comparison of a "spurious mark" with a legitimate, registered "marks."

We believe that the imprecise wording of New York's definition has practical consequences in the prosecution of cases under the current statute, and has led to inconsistent opinions among courts. For instance, motions to dismiss an accusatory instrument are often claimed when a complaint undertakes to allege a difference between the quality of the counterfeit and the genuine article without actually comparing the marks themselves (see e.g., People v Jobe, 20 Misc 3d 1114(A) (Crim Ct, NY County 1999); People v Ensley, 183 Misc 2d 141 (Sup Ct, NY County 1999)). Other

courts have upheld the sufficiency of complaints that identify and distinguish the characteristics of the genuine and counterfeit trademark (People v Guan, 2003 WL 21169478 (App Term, 1st Dept 2003)).

This measure would amend the definition of a "counterfeit trademark" to reflect that a counterfeit trademark requires a comparison of a spurious mark with a legitimate mark. It will clarify to practitioners that the two marks must be "identical or substantially indistinguishable" to come within the purview of criminal prosecutions, and that any distinctions between the two marks are simply elements of proof necessary to establish that the trafficked goods are illegal copies of goods that bear legitimate marks.

This measure, which would have no meaningful fiscal impact on the State, would take effect immediately and shall apply to all crimes committed on or after such effective date.

Legislative history

None. New proposal.