Counterfeit and Illicit Labels Under Section 2318

Much like the Copyright Act, 18 U.S.C. § 2318 is a criminal statute designed to protect creative works. It prohibits knowingly trafficking in counterfeit or illicit labels, or counterfeit documentation and packaging for protected classes of copyrighted works.[1] Section 2318 is not, however, a pure copyright statute—it provides protections that vary from those under the Copyright Act and the Trademark Counterfeiting Act.[2]

Section 2318 differs from civil and criminal trademark law. Indeed, section 2318 does not address the use of counterfeit trademarks themselves.[3] Moreover, § 2318 penalizes only the trafficking of labels and labeling components bearing counterfeit trademarks in connection with certain copyrighted works.[4]

The Elements of a Section 2318 Claim

In order to establish a criminal offense under § 2318, the government must prove the following elements:

1. The violator knowingly trafficked in labels, packaging, documentation, or copies of programs or other protected works;
2. The documentation or the packaging was counterfeit, or the labels were counterfeit or illicit; and
3. Federal jurisdiction exists.[5]

Remedies for a Section 2318 Violation

Prosecutors may favor a section 2318 charge, because the mens rea and minimum threshold for illegal conduct are generally lower than those contained in the Copyright Act.[6] Moreover, a prosecutor is not required to prove that the marks are identical to or substantially indistinguishable from registered marks.[7]

For § 2318 offenses, the maximum penalty is a fine of $250,000 and five years’ imprisonment for an individual and up to $500,000 in fines for an organization.[8] In the alternative, the individual or organization may be fined twice the pecuniary gain or loss without limit.[9] Restitution may also be available.[10]

Possible Defenses to a § 2318 Violation

Section 2318 has no specified statute of limitations and is thus subject to the general five-year limitations period.[11]

Section 2318 may also be applied in limited circumstances to those cases where either the original or counterfeit or illicit copies are electronic or digital in form.

[12] However, the statute is inapplicable to labels, documentation, and packaging only available electronically or digitally.[13]

On the other hand, the first-sale defense has generally been rejected in the context of § 2318, even though it is often a valid defense under 17 U.S.C. § 109.¹⁷⁵

[1] Office of Legal Educ. Exec. Off. of U.S. Att’ys., Prosecuting Intellectual Property Crimes 281 (4th ed. 2013).

[2] Id.

[3] Id.

[4] Id.

[5] 18 U.S.C. § 2318.

[6] Office of Legal Educ., supra note 1, at 291-92.

[7] Id.

[8] 18 U.S.C. § 2318(a).

[9] 18 U.S.C. § 3571(a)-(d).

[10] United States v. Beydoun, 469 F.3d 102, 108 (5th Cir. 2006).

[11] The Trademark Counterfeiting Act, 18 U.S.C. § 2318; 18 U.S.C. § 3282(a).

[12] Office of Legal Educ., supra note 1, at 290-91.

[13] Id.

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