Indiana Leading the Way Forward in Criminal Anti-Counterfeiting
Criminalization of Trade Dress copying, Theft of Intangible Property and Clarity on Criminal Territorial Jurisdiction – All get extended coverage by the Indiana Supreme Court in a landmark ruling issued today.
A resounding victory for IP owners was issued by the Indiana Supreme Court today.
Three key issues were given extended attention and clarity.
AN-HUNG YAO AND YU-TING LIN v. STATE OF INDIANA
First (1) came an analysis of the state’s jurisdictional reach for criminal cases and an affirmation that criminal territorial jurisdiction is both separate from and more expansive than it’s civil counterpart.
Then, (2) the court moved on to two issues of even greater significance to IP owners – clarification of Indiana’s 1) counterfeiting and 2) theft statutes. The importance of these two issues to IP owners cannot be understated.
The court’s reading of both Indiana’s counterfeiting and theft statutes is an unambiguous endorsement of IP owners’ rights and the statutory foundation for the state to prosecute a broad range of counterfeiting, including copying of what, in the civil context, would be considered trade dress.
The criminalization of “trade dress violations” is articulated in the Court’s analysis of Indiana’s counterfeiting statute. The entirety of Indiana’s counterfeiting statute is attached and the following excerpt is particularly relevant:
“A person who knowingly or intentionally makes or utters a written instrument in such a manner that it purports to have been made . . . by authority of one who did not give authority commits counterfeiting, a Class D felony.” IC 35-43-5-2(a).
Critical to the application of Indiana’s counterfeiting statute is the definition of “written instrument”. Defendants argued for a narrow interpretation of “written instrument” but, taking legislative intent and prior case law into consideration, the Court opted for a more expansive view.
“At first blush it seems intuitive that ‘written instrument’ must at least consist of a document of some kind. But we agree with the Jacobs court that the Legislature broadened the scope and definition of ‘written instrument’ to include more than just documents, paper, and other instruments containing written matter. Instead the definition includes ‘other objects or symbols of value, right, privilege, or identification.’
It seems clear enough to us that a handgun or rifle – just as an unsigned Monet’ painting, Remington sculpture, or Tiffany vase – could be subject to counterfeiting. To require actual writing or markings on a replica in order to bring it within the reach of the counterfeiting statute would defeat the purpose of the statute and eliminate a very wide range of items. We are not convinced the Legislature intended such a result.”
By bringing “other objects or symbols . . . of identification” within the reach of Indiana’s counterfeiting statute, the Court recognized that goods can be counterfeit even if they are not emblazoned with a trademark owner’s name or logo. This is a nuanced, thoughtful and completely correct recognition of the fact that counterfeiting, especially in the 21st Century, comes in many forms and prosecutors must be armed with the appropriate tools to properly address the mercurial threat of counterfeiting.
In addition to counterfeiting of trade dress, the Court also tackled the conceptually difficult issue:how intangible property can be “stolen,” Indiana’s theft statute applies to intangible property.
Defendants argued that: (1) trademarks and/or markings or symbols do not constitute property; and (2) it is not possible to exercise unauthorized control over (a key component to theft) trademarks, symbols or markings.
Here too, the Court’s application of the theft statute was thoughtful, articulate and unambiguously supportive of intangible property’s value. Looking to the entirety of the theft statute, rather than just accepting a common understanding of what is and is not a theft, the Court concluded that, at the very least, counterfeiting “encumbers” a trademark right. That “encumber” is included as one of the ways that control may be exerted over property in Indiana’s theft statute paving the way for the Court to conclude that the theft statute may be applied to intangible property such as trademarks.
In other words, (1) trademark owners can be victims of theft if their rights are encumbered even though they are not fully divested of their ability to use their trademarks; and (2) counterfeiting encumbers a trademark right.
In a final coda to its decision, the Court also cast off defendants’ assertion that counterfeiting is an issue that should be contained within the civil arena. Should the facts satisfy the elements of the crimes being charged, the Court concluded, combating counterfeiting through the criminal process is perfectly appropriate.
Reading between the lines it’s easy to infer that, Prosecutors have the right, if not the duty, to protect intangible property in the same manner and with the same authority that they protect real or personal property.
No small amount of credit is due to the Indiana prosecutors who initially brought these charges against defendants and who saw this case through interlocutory appeals, adverse appeals court rulings and on to the decision that the Supreme Court issued today. Chief among them was Huntington County Prosecutor Amy Richison and Indiana Attorney General Gregory Zoeller. Ms. Richison was first to charge defendants for importing counterfeit products into the state of Indiana which she concluded bore the requisite “markings and symbols of identification” of another person. In this case the products were Airsoft pellet guns and the owner of the “markings and symbols of identification” was famed German small arms manufacturer Heckler & Koch (“H&K”). Defendants’ products, while not incorporating the name or logo of H&K, did copy almost every other element of H&K’s firearms. Ms. Richison deemed this to be an unauthorized copying of H&K’s “markings and symbols of identification” and brought charges against defendants for violation of Indiana’s forgery and theft statutes as well as charges predicated upon “Indiana’s Corrupt Business Influence statute”.
In its ruling today, the Indiana Supreme Court affirmed Ms. Richison’s reading of the forgery and theft statutes and remanded this case to the trial court so that the prosecution of defendants may proceed.
In summary: This is a landmark decision. It affirms the notion that a corporation’s identity is comprised of elements that are more broad and complex than a simple name and logo. This decision further recognizes the fact that counterfeiters who attempt to evade prosecution by simply not affixing an IP owner’s name or logo to a product have not insulated themselves from criminal liability.
All in all, this decision represents a paradigm shift in how counterfeiting is policed and we hope that prosecutors and courts throughout the U.S., especially in those states whose laws track Indiana’s, follow the lead that Indiana has taken on this issue today.
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