Manufacturing or Selling a Counterfeit Mark

California Penal Code 350 PC provides for criminal penalties for people who manufacture, sell or possess for sale any counterfeit trademarks.1

In other words, this statute punishes those who make, sell or intend to sell “knock-off” versions of branded products.

Manufacturing or selling a counterfeit mark bears some resemblance to the California crime of forgery —but it is punished more like a California theft crime.

It is also somewhat similar to the crime of mislabeling food under Health & Safety Code 114087 HS, in that both are connected to the broader social goal of protecting consumers.

350_designerbag
The sale or manufacture of fake designer bags can lead to Penal Code 350 charges.
The legal definition of manufacturing or selling counterfeit marks

You are guilty of manufacturing or selling counterfeit marks if you either

  • manufacture,
  • sell, or
  • knowingly possess for sale,

any counterfeit mark.3

You “knowingly possess” a counterfeit mark if you know or have reason to believe that it is counterfeit.4

Note that you are do not violate Penal Code 350 PC by simply possessing counterfeit goods. You need to have possessed the goods with intent to sell them.

Example: Monica buys a Louis Vuitton bag from a man on the street for $30. She is well aware that the bag is a fake. But she thinks most people won't be able to tell the difference and is buying the bag intending only to carry it to social events.

Monica is not guilty of PC 350 counterfeit marks because she did not possess the bag with intent to sell it.

BUT

Example: Bill travels to China and finds extremely convincing knock-off versions of expensive sunglasses on sale for very low prices.

He buys 10 pairs of sunglasses and brings them back to the United States, thinking that he will try to make a quick buck by passing them off as real and selling them on eBay.

Bill can be charged with violating California's counterfeit marks law because he possessed the sunglasses with intent to sell them.

350_sunglasses
Some counterfeit marks cases involve the alleged manufacture or sale of "knock off" designer sunglasses.

A “counterfeit” mark means a fake trademark/brand that is identical with, or confusingly similar to, a mark that is registered with either:

  1. The California Secretary of State; or
  2. The United States Patent and Trademark Office.5

A counterfeit mark must also be used, or be intended to be used, on or in connection with the same type of goods or services for which the genuine mark is registered.6

Example: Isabel is trying to make some extra money by making homemade perfume oils and selling them on the internet.

She decides to distinguish herself from the competition by making oils that smell like popular foods and beverages—for example, Starbucks coffee and McDonalds fries. She places the logos of the companies that make those foods and beverages on the bottles of perfume oil.

Those companies might be able to make Isabel stop using their logos through a civil lawsuit. But Isabel is not guilty of manufacturing or selling counterfeit marks, because she is using the logos for perfume oils rather than coffee or fast food.

California Penal Code 350 penalties: first offense

The penalties for manufacturing or selling counterfeit marks in California depend on the number and value of the counterfeit goods involved.

Specifically, Penal Code 350 is a California misdemeanor if both of the following are true:

  1. The charges involve fewer than one thousand (1,000) counterfeit items; and
  2. The counterfeit goods have a total retail or fair market value less than that required for theft to be Penal Code 487 PC grand theft—currently nine hundred fifty dollars ($950).7

Misdemeanor counterfeit goods carries the following potential penalties:

  • Misdemeanor (summary) probation;
  • Up to one (1) year in county jail; and/or
  • A fine of up to ten thousand dollars ($10,000) for individuals, and two hundred thousand dollars ($200,000) for business entities.8
377a_criminalfine
Manufacture or sale of a counterfeit mark carries hefty potential criminal fines in California.

But if the number of counterfeit goods exceeds 1,000 or the value of the goods exceeds $950, then PC 350 becomes a wobbler in California law. A wobbler is a crime that may be charged as either a misdemeanor or a California felony, at the prosecutor's discretion.9

When manufacturing/selling/possessing for sale counterfeit goods is charged as a felony, the potential penalties are:

  • Felony (formal) probation;
  • Sixteen (16) months, two (2) years or three (3) years in county jail; and/or
  • A fine of up to five hundred thousand dollars ($500,000) for individuals, and one million dollars ($1,000,000) for business entities.10

In addition, if you are convicted under Penal Code 350, the court will order the asset forfeiture of all of the counterfeit marks and the goods that bear them, any machines or materials used to manufacture or assemble the counterfeit marks, and any vehicles used to transport them.11

Second and subsequent offenses; death or great bodily injury

The penalties for manufacturing or selling counterfeit marks are steeper if this is not your first conviction for violating California Penal Code 350.

If you have a prior conviction for this offense, then this second offense will be a wobbler crime even if the number of counterfeit items is less than 1,000 and the value is $950 or less. The potential penalties will be the same as those described above for PC 350 as a wobbler—except the maximum fine is one hundred thousand dollars ($100,000) for individuals and four hundred thousand dollars ($400,000) for business entities.12

Also, you will face steeper penalties if your manufacture or sale of the counterfeit mark caused death or great bodily injury to someone who used the counterfeit item thinking it was genuine.

In that case, manufacture or sale of knock-off goods is always a felony. The maximum jail sentence rises to two (2), three (3) or four (4) years.13

Legal defenses against PC 350 charges
350_blouse
Something as simple as putting a counterfeit designer label on a non-designer shirt can lead to charges under PC 350.

According to Palm Springs criminal defense lawyer Michael Scafiddi14:

“California law is pretty aggressive about protecting the rights of property owners, and that includes so-called intellectual property like trademarks. Penal Code 350 PC punishes counterfeits and knock-offs every bit as harshly as California theft law punishes more normal acts of theft. To a lot of people, that's fairly counterintuitive—and defendants facing counterfeit marks charges are often surprised by the magnitude of the penalties.”

Experienced criminal defense attorneys often find that a helpful legal defense to charges of manufacture/sale of counterfeit marks is lack of knowledge (also known as “mistake of fact”). Sellers of counterfeit goods frequently have no idea that the items they are selling are not genuine.

Another possible common legal defense is that your arrest for violating PC 350 arose from an illegal search or seizure. If the police did not follow proper procedure, then evidence obtained from the illegal search may not be used against you.

Call us for help…
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For questions about the crime of manufacture or sale of counterfeit marks under Penal Code 350 PC, or to discuss your case confidentially with one of our California criminal defense attorneys, do not hesitate to contact us at Shouse Law Group.

We have local criminal law offices in and around Los Angeles, San Diego, Orange County, Riverside, San Bernardino, Ventura, San Jose, Oakland, the San Francisco Bay area, and several nearby cities.

Legal References:


1 Penal Code 350 PC – Counterfeit of registered mark; offenses; punishment. (“(a) Any person who willfully manufactures, intentionally sells, or knowingly possesses for sale any counterfeit 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) When the offense involves less than 1,000 of the articles described in this subdivision, with a total retail or fair market value less than that required for grand theft as defined in Section 487, and if the person is an individual, he or she shall be punished by a fine of not more than ten thousand dollars ($10,000), or 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 business entity, by a fine of not more than two hundred thousand dollars ($200,000). (2) When the offense involves 1,000 or more of the articles described in this subdivision, or has a total retail or fair market value equal to or greater than that required for grand theft as defined in Section 487, 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 pursuant to subdivision (h) of Section 1170 for 16 months, or two or three years, or by a fine not to exceed five hundred thousand dollars ($500,000), or by both that imprisonment and fine; or, if the person is a business entity, by a fine not to exceed one million dollars ($1,000,000).”)

2 Same.

3 Same.

4 Penal Code 350 PC – Counterfeit of registered mark; offenses; punishment. (“(e) . . . (4) “Knowingly possess” means that the person possessing an article knew or had reason to believe that it was spurious, or that it was used on or in connection with spurious articles, or that it was reproduced without authorization of, or in excess of any authorization granted by, the registrant.”)

5 Penal Code 350 PC – Counterfeit of registered mark; offenses; punishment. (“(e) . . . (3) “Counterfeit mark” means a spurious mark that is identical with, or confusingly similar to, a registered mark and is used, or intended to be used, on or in connection with the same type of goods or services for which the genuine mark is registered. It is not necessary for the mark to be displayed on the outside of an article for there to be a violation. For articles containing digitally stored information, it shall be sufficient to constitute a violation if the counterfeit mark appears on a video display when the information is retrieved from the article. The term “spurious mark” includes genuine marks used on or in connection with spurious articles and includes identical articles containing identical marks, where the goods or marks were reproduced without authorization of, or in excess of any authorization granted by, the registrant. When counterfeited but unassembled components of any articles described under subdivision (a) are recovered, including, but not limited to, labels, patches, fabric, stickers, wrappers, badges, emblems, medallions, charms, boxes, containers, cans, cases, hangtags, documentation, or packaging, or any other components of any type or nature that are designed, marketed, or otherwise intended to be used on or in connection with any articles described under subdivision (a), the number of “articles” shall be equivalent to the number of completed articles that could have been made from those components.”)

6 Same.

7 Penal Code 350 PC – Counterfeit of registered mark; offenses; punishment, endnote 1, above.

See also Penal Code 487 PC – “Grand theft” defined. (“Grand theft is theft committed in any of the following cases: (a) When the money, labor, or real or personal property taken is of a value exceeding nine hundred fifty dollars ($950), except as provided in subdivision (b).”)

8 Same.

9 Same.

10 Same.

11 Penal Code 350 PC – Counterfeit of registered mark; offenses; punishment.. ("(d)(1) Except as provided in paragraph (2), in any action brought under this section resulting in a conviction or a plea of nolo contendere, the court shall order the forfeiture and destruction of all of those marks and of all goods, articles, or other matter bearing the marks, and the forfeiture and destruction or other disposition of all means of making the marks, and any and all electrical, mechanical, or other devices for manufacturing, reproducing, transporting, or assembling these marks, that were used in connection with, or were part of, any violation of this section. (2) Upon request of any law enforcement agency and consent from the specific registrants, the court may consider a motion to have the items described in paragraph (1), not including recordings or audiovisual works as defined in Section 653w, donated to a nonprofit organization for the purpose of distributing the goods to persons living in poverty at no charge to the persons served by the organization.")

12 Penal Code 350 PC – Counterfeit of registered mark; offenses; punishment. (“(b) Any person who has been convicted of a violation of either paragraph (1) or (2) of subdivision (a) shall, upon a subsequent conviction of paragraph (1) of subdivision (a), if the person is an individual, be punished by a fine of not more than one hundred thousand dollars ($100,000), or by imprisonment in a county jail for not more than one year, or pursuant to subdivision (h) of Section 1170 for 16 months, or two or three years, or by both that fine and imprisonment; or, if the person is a business entity, by a fine of not more than four hundred thousand dollars ($400,000).”)

13 Penal Code 350 PC – Counterfeit of registered mark; offenses; punishment. (“(c) Any person who has been convicted of a violation of subdivision (a) and who, by virtue of the conduct that was the basis of the conviction, has directly and foreseeably caused death or great bodily injury to another through reliance on the counterfeited item for its intended purpose shall, if the person is an individual, be punished by a fine of not more than one hundred thousand dollars ($100,000), or by imprisonment pursuant to subdivision (h) of Section 1170 for two, three, or four years, or by both that fine and imprisonment; or, if the person is a business entity, by a fine of not more than four hundred thousand dollars ($400,000).”)

14 Palm Springs criminal defense attorney Michael Scafiddi is a former police officer who now uses that inside knowledge to help defend clients accused of property crimes like manufacturing or selling counterfeit marks. He practices criminal defense primarily in San Bernardino and Riverside Counties, and makes appearances at the Murrieta Southwest Justice Center and in Banning, Fontana, Joshua Tree, Barstow, and Victorville.

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