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People v. Levy

November 18, 2010


The opinion of the court was delivered by: Read, J.

This opinion is uncorrected and subject to revision before publication in the New York Reports.

In October 2004, police executed a search warrant against Black & Yellow Major Auto Parts, a business owned by Defendant Mordekhay Levy, to find and seize counterfeit parts for Ford vehicles. The search, which was conducted by a detective and a brand-protection employee from Ford, turned up a variety of allegedly counterfeit parts that were immediately seized.

Roughly at the same time, Ford filed suit against Levy for trademark infringement arising from the sale of counterfeit parts, and the court issued a temporary restraining order. In November 2004, at the invitation of Levy's attorney, the brand protection employee and Ford's trademark attorneys visited Black & Yellow's warehouse on a Friday and the following Tuesday to identify parts that were not genuine Ford parts. Following these visits, Levy entered into a stipulated preliminary injunction that prohibited him and his business from "manufacturing, advertising, offering for sale, selling or distributing automotive parts or any related products or services having or bearing any trademark of Ford, Ford Motor, Ford Motor Company, Ford blue oval, racing car, speeding car design, Motorcraft, Lincoln Star, or Lincoln certified or any Ford part number or any other mark or design that's likely to cause confusion with any marks that are specifically listed in this order."*fn1

Subsequent search warrants were issued and executed in October 2005 and July 2006, both of which resulted in the confiscation of allegedly counterfeit parts from Black & Yellow's warehouse. As a consequence, Levy was eventually indicted and tried before a jury for second-degree trademark counterfeiting (Penal Law § 165.72). A person is guilty of this crime "when, with intent to deceive or defraud some other person or with the intent to evade a lawful restriction on the sale, resale, offering for sale, or distribution of goods, he or she manufactures, distributes, sells, or offers for sale goods which bear a counterfeit trademark, or possesses a trademark knowing it to be counterfeit for the purpose of affixing it to any goods, and the retail value of all such goods bearing counterfeit trademarks exceeds on thousand dollars" (id. [emphasis added]).

The People's trial witnesses identified parts seized in the 2005 and 2006 raids as counterfeit in several ways. In some cases, the products were not manufactured by Ford (or its aftermarket brand, Motorcraft), but nevertheless bore a Ford product number; in other cases, the products bore a Ford trademark (e.g., the familiar "Ford oval"), but were tagged as fake because of their packaging. There was evidence presented to show that Levy had purchased and sold the purportedly genuine parts at less than the cost to a Ford dealer. Additionally, Ford's chief trademark counsel testified that the trademarks alleged to be counterfeit were registered and in use. Through him, the People introduced evidence regarding 34 trademarks claimed to be in full force and effect.

After the People rested, Levy moved to dismiss on the ground that a majority of the parts -- seven of the 12 parts charged in count one, and both of the parts charged in count two of the indictment -- were not covered by the trademark registration certificates introduced into evidence and therefore were not "counterfeit" within the meaning of Penal Law § 165.70. The trial judge reserved decision, and Levy called three witnesses in his defense.

The first witness handled shipping and receiving for Levy's warehouse. He testified about how he separated genuine parts from their aftermarket or off-brand counterparts. The second witness, the co-owner of a wholesale auto parts business, described the genuine "Crown Victoria" tail lights he purchased from Ford and then resold to Levy. The third witness was the former parts manager at a Lincoln-Mercury dealership authorized to sell Ford parts. He testified that Levy was his "top" customer, and that he offered him discounts "[b]ecause of the volume of parts [Levy] bought."

After the close of evidence, Levy asked the trial judge to instruct the jury that an "intent to evade a lawful restriction" on the sale of goods under Penal Law § 165.72 required knowledge that the parts were counterfeit. The trial judge declined this request and elected to "follow the CJI"; he also denied Levy's motion to dismiss. After charging the jury, the trial judge again considered and turned down a request from Levy for what the defense styles a "knowledge charge," explaining that

"[t]he second element [necessarily] provides for the knowledge because you can't intend to evade a lawful restriction without knowing what it's all about. The knowing is part and parcel of the intention because if you didn't know it, you couldn't intend to evade a lawful restriction."

He added that "the overall purpose of criminal jury instruction is to provide the law as basic and as simple as possible containing all the necessary elements."

The jury convicted Levy of two counts of second-degree trademark counterfeiting. Levy moved to set aside the verdict on the ground that he could not be convicted for trademark counterfeiting if the trademarks in evidence did not cover the specific products allegedly counterfeited. The trial court denied the motion, and Levy was sentenced to a conditional discharge and a $10,000 fine.

The Appellate Division unanimously affirmed. The court concluded that the jury charge was proper as it closely tracked the CJI instruction and "properly conveyed to the jury the correct principles to be applied in evaluating the evidence before it" (65 AD3d 1057, 1058 [2d Dept 2009]). The Appellate Division also held that the evidence was legally sufficient to establish Levy's guilt of trademark counterfeiting. A Judge of this Court granted leave to appeal, and we now affirm.

The Penal Law defines a trademark as a mark that is "registered" and "in use" which identifies and distinguishes goods from those manufactured by others (Penal Law § 165.70 [1]). A "counterfeit" mark is simply a "spurious" or "imitation" mark that is used in the trafficking, sale or distribution of goods that are "identical with or substantially indistinguishable from" the genuine article (Penal Law § 165.70, [2]; and "goods" are defined as "products, services, objects, materials, devices or substances which are identified by the use of a trademark" (Penal Law § 165.70 [4]).*fn2

Levy contends that the evidence was insufficient to sustain his conviction because allegedly counterfeited goods seized from his warehouse -- a hubcap cover bearing the "Lincoln star," for example -- were not protected by a mark that was in use and registered, and which identified a good. Levy reasons that there would be no crime, for example, if someone affixed the "Ford oval" to a baseball bat: the bat is not "identical or substantially indistinguishable from a trademark" because Ford does not use the "Ford oval" on baseball bats, and it therefore cannot be "counterfeit" within the meaning of the trademark counterfeiting statute. By parity of reasoning, ...

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