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State v. Marchiani

February 02, 2001


On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Ind. No. 00-05-00072SGJ.

Before Judges Havey, Wefing and Lefelt.

The opinion of the court was delivered by: Lefelt, J.A.D.


Submitted January 8, 2001

An Atlantic County grand jury indicted defendants Phillip Marchiani and Lillian Buonfiglio Marchiani for selling items bearing counterfeit trademarks, contrary to the Trademark Counterfeiting Act, N.J.S.A. 2C:21-32, ("TCA"). The Atlantic County Assignment Judge concluded that the TCA only protected defendants' customers from deceit or fraud and did not protect the trademark owners or any other persons. Because defendants' customers knew they were not buying name-brand goods, the judge found the TCA was not violated, and dismissed the indictment, pursuant to N.J.S.A. 2C:2-11, the de minimis statute. The State appeals from the dismissal. We conclude that the TCA protects not only defendants' customers but also other persons, including the trademark owners and future consumers of the counterfeit goods.

Consequently, we reverse the dismissal, reinstate the indictment, and remand for further proceedings.

Defendants were selling so called "knock-off" merchandise from their Margate home. "Knock-offs" are consumer goods with counterfeit trademarks. Defendants were selling items bearing such counterfeit trademarks as Movado, Nautica, Ralph Lauren, Adidas, Donna Karan, Nike, Pokeman, Weebok and Tommy Hilfiger.

Defendants admit they sold merchandise with counterfeit trademarks, but deny they deceived their customers. During the investigation of defendants, for example, Mr. Marchiani told an undercover investigator that some of the items for sale were fake, but because the false trademark insignias were on good-quality clothing, the final products were better than the authentic goods. The State agrees that defendants' customers knew they were not buying original name-brand goods, but argues that defendants intentionally defrauded and deceived the holders of legitimate trademarks together with future consumers of the counterfeit goods.

Defendants argue, in essence, that the Legislature only intended the TCA to protect the defendants' immediate customers, and the Assignment Judge accepted this argument. He dismissed the indictment because the defendants did not "deceive or defraud, or intend to deceive or defraud, the purchasers of the merchandise," which according to the judge, was "the harm the legislature sought to prevent in enacting" the TCA.

Trademarks not only allow the public to distinguish between manufacturers, but they also provide incentives for manufacturers to produce quality goods. See U.S. International Trade Commission, The Effects of Foreign Product Counterfeiting on United States Industry, 82 Pat. & Trademark Rev. 471, 483 (1984). To the extent the mark is unprotected, the owner's interest in producing quality goods is undercut to the detriment of the public generally. Any construction of the TCA that allows persons to traffic legally in counterfeit trademarks also risks fostering the proliferation of "substandard and sometimes dangerous" goods. Bagger Bill Making Trademark Counterfeiting a Crime Approved by Assembly, Assembly Republican News, Feb. 20, 1997. There are thus significant public interests involved in proper interpretation of the TCA.

The TCA on its face is quite broad and provides that:

[a] person commits the offense of counterfeiting who, with the intent to deceive or defraud some other person, knowingly manufactures, uses, displays, advertises, distributes, offers for sale, sells, or possesses with intent to sell or distribute within, or in conjunction with commercial activities within New Jersey, any item, or services, bearing, or identified by, a counterfeit mark. [N.J.S.A. 2C:21-32c (emphasis added).]

Considering the statutory language, a defendant who sells "knock- off" goods commits a crime when, with "intent to deceive or defraud some other person," he or she sells any item bearing "a counterfeit mark." The State thus specifically argues that the phrase "some other person" applies not only to consumers or potential future consumers, but also to the owners whose trademarks have been counterfeited.

We are of course aware that criminal statutes must be strictly construed so that "'[n]o one shall be punished for a crime unless both that crime and its punishment are clearly set forth in positive laws.'" State v. Valentin, 105 N.J. 14, 18 (1987) (quoting In re Suspension of DeMarco, 83 N.J. 25, 36 (1980)). "Penal laws cannot be extended by implication or intendment. Where more than one reasonable interpretation may be made, or where the ...

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