Pennsylvania’s Trademark Counterfeiting Statute Found Unconstitutional

A recent Pennsylvania Supreme Court decision ruling that the Commonwealth’s Trademark Counterfeiting Statute is unconstitutionally overbroad has temporarily left Pennsylvania without a state criminal counterfeiting statute on the books. See Commonwealth of Pennsylvania v. Omar A. Omar; Commonwealth of Pennsylvania v. Daniel J. O’Connor, 2009 Pa. LEXIS 2104 (Pa. Oct. 5, 2009).

Defendant Omar was discovered during a traffic stop with boxes of allegedly counterfeit NIKE sneakers, and Defendant O’Connor was arrested for selling hats bearing the PENN STATE logo outside Beaver stadium on the Pennsylvania State University campus. The Court of Common Pleas for Centre County dismissed state criminal counterfeiting charges against Omar and O’Connor, citing a previous decision in which it had found the statute unconstitutional. The Commonwealth appealed both decisions, and the Pennsylvania Supreme Court consolidated the two cases into the subject appeal.

Pennsylvania’s Trademark Counterfeiting Statute, as struck down by the Court, assigned criminal liability for trademark counterfeiting to any person “who knowingly manufactures, uses, displays, advertises, distributes, offers for sale, sells or possesses with intent to sell or distribute any items or services bearing or identified by a counterfeit mark” and further defined a “counterfeit mark” as “[a]ny unauthorized reproduction or copy of intellectual property” and “intellectual property” as “[a]ny trademark, service mark, trade name, label, term, device, design or word adopted or used by a person to identify that person’s goods or services.” 18 Pa.C.S. § 4119. Rejecting the Commonwealth’s argument that the statute only prohibited the use of counterfeit marks when the user intended to sell or distribute the product deceptively, the Court found that the statute as written prohibited “a much broader range of uses of trademarks, many of which involve constitutionally protected speech.” Omar, 2009 Pa. LEXIS 2104 at *17-*18. The Court found that because the statute criminalized the use of “any items bearing an unauthorized reproduction of terms or words used by a person to identify that person’s goods or services” the statute unconstitutionally prohibited protected speech “including the use of words on a sign praising or protesting any entity with a trademarked name, including Penn State.” Omar, 2009 Pa. LEXIS 2104 at *19-*20. 

By contrast, the U.S. federal criminal counterfeiting statute imposes criminal liability upon whomever “intentionally traffics or attempts to traffic in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services” and defines a “counterfeit mark” as “a spurious mark— (i) that is used in connection with trafficking in any goods, services, labels, patches, stickers, wrappers, badges, emblems, medallions, charms, boxes, containers, cans, cases, hangtags, documentation, or packaging of any type or nature; (ii) that is identical with, or substantially indistinguishable from, a mark registered on the principal register in the United States Patent and Trademark Office and in use . . . (iii) that is applied to or used in connection with the goods or services for which the mark is registered with the United States Patent and Trademark Office . . . and (iv) the use of which is likely to cause confusion, to cause mistake, or to deceive . . .” 18 U.S.C. § 2320. Thus, unlike the overbroad Pennsylvania statute, the more narrowly tailored federal statute only prohibits certain types of uses and further requires a finding that the prohibited use is likely to cause confusion, mistake, or deception. Accordingly, the Pennsylvania legislature, which has not yet enacted a new law, has a viable blueprint for drafting a more constitutionally acceptable statute.

Meanwhile, the ability to bring criminal charges against counterfeiters in Pennsylvania temporarily requires application of the federal statute, which, as set forth in section (ii) and (iii) of 18 U.S.C. § 2320, requires federal registration of the subject mark. Accordingly, for trademark owners who want criminal penalties as a deterrent against infringers in addition to civil remedies (which remain unchanged by the recent decision), having a federal registration is more important than ever, at least in Pennsylvania.