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Counterfeit Sales Illegal If Customers Knew Items Fake?

The purpose of laws concerning trademarks, copyrights, patents and trade secrets is to protect the value of the intellectual property of the owner of the trademark copyright or trade secret.  The owners of the Nike swoosh, for example, aggressively sue anyone who attempts to sell products with a pseudo Nike swoosh or even an authentic swoosh, but affixed to items not authorized to bear the mark.
Condensed Version:  Conviction for sale of counterfeit items (Penal Code § 350(a)(2)) upheld even though customers knew the items were fake.
Jacqueline and Vo Sy owned a business in San Diego selling counterfeit Coach, Gucci, Louis Vuitton, Channel, Tiffany & Co. and True Religion handbags, clothing and jewelry.

A private investigation was conducted at a Las Vegas show in March, 2010, where the Sys displayed authentic products for sale.  A private investigator for a firm specializing in trademark copyright and patent infringement saw the authentic products, but noticed counterfeit items under the table, apparently the personal handbags of Ms. Sy.

Art 328 - Court Of Appeal Fouth App Dist Div 1 San Diego Court of Appeal Fourth Appellate District Division 1 San Diego

The private investigator asked about buying some of the items.  Ms. Sy arranged a visit for the individual to their San Diego store.  The investigator went to the store and brought eight items, including a Coach handbag for $10, another Coach bag for $15, a pair of Rock & Republic jeans for $25, a Louis Vuitton wallet for $35, a Coach wallet for $10 and two Hardy belts for $30.  They were bought from Jacqueline Sy.

The investigator then asked about watches showing brand names such as Chanel, TAG and Rolex.  Vo Sy told the investigator that the watches were all $150 to $200, although authentic ones cost over $5,000.  The investigator expressed appreciation of the low prices, to which Vo Sy commented his watches were better than those in Santee Alley, an area in Los Angeles where many counterfeit items are sold.

Vo Sy also lamented the fact that “it was hard to get stuff from China” and investigators had recently confiscated 35 cases of true Religion jeans.  Vo Sy, however, did not sell anything to the investigator.

Law enforcement subsequently searched the store and seized over 13,000 counterfeit items.

At trial, the Sys faced felony charges of violating Penal Code §350(a)(2), sale of items bearing a counterfeit mark, with a value of $400 or more.  At issue at trial were more than 1,000 items.

Both Sys were convicted, but for Ms. Sy, the court reduced the charge to a misdemeanor.  Both were sentenced to three years of probation and ordered to pay $43,000 in victim restitution.

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Both Sys then appealed the convictions, contending there was insufficient evidence to support the convictions.

The Sys argued that when Ms. Sy sold the items to the investigator, Ms. Sy never represented that the items were authentic and the investigator never asked for assurance that any of the items were authentic.  In other words, the Sys never tried to mislead or trick the purchaser.  A second purchaser testified that when she bought items from the Sys, she knew they were not authentic because of the low price.

The Fourth Appellate District, in People v. Vo Sy and People v. Jacquenline Sy (2014 DJDAR 680) disagreed with the Sys.  The court acknowledged that the Sys' mental state was relevant to the intent to defraud, but Penal Code § 350(a) prohibits the intentional sale of items with counterfeit marks.  The intent of the seller or the knowledge of the purchaser was irrelevant toward criminal liability.  An innocent purchaser being tricked into buying a fake item is not required to commit the crime.

It merits mention that the Sys appealed the conviction on several other grounds, as well as contesting the restitution amount.  The appellate court spent a generous amount of the discussing each ground, but also disapproving of each.

Consequently, the judgment was affirmed. 

 The citation for the Fourth Appellate District court ruling discussed above is People v. Vo Nghia Sy (4th App. Dist., 2014) 223 Cal.App.4th 44.  

For more information about the sale of counterfeit items, click on the following articles:
  1. Trademark Infringement Is Counterfeiting, so Is It an Aggravated Felony for Removal Purposes?
  2. Cab Driver Who Sold Burned Copies of Adobe Software Is Guilty of Copy Right Infringement Because He Knew His Copying Was Illegal
  3. In Counterfeit DVD and CD Case, Victim Cannot Recover Potential Economic Loss
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