United States v. Bohai

USCA1 Opinion












United States Court of Appeals United States Court of Appeals
For the First Circuit For the First Circuit
____________________

No. 94-1629

UNITED STATES,

Appellee,

v.

BOHAI TRADING COMPANY, INC., A/K/A
BRAYCO INTERNATIONAL CORPORATION,

Defendant, Appellant.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE


[Hon. Paul J. Barbadoro, U.S. District Judge] ___________________

____________________

Before

Selya, Circuit Judge, _____________
Bownes, Senior Circuit Judge, ____________________
and Stahl, Circuit Judge. _____________

____________________

Daniel R. Deutsch, with whom Steven J. Brooks and Deutsch ___________________ __________________ _______
Williams Brooks DeRensis Holland & Drachman, P.C., were on brief for __________________________________________________
appellant.
Jean L. Ryan, Assistant United States Attorney, with whom Paul M. ____________ _______
Gagnon, United States Attorney, was on brief for appellee. ______


____________________

January 30, 1995
____________________

















STAHL, Circuit Judge. Bohai Trading Company, Inc. STAHL, Circuit Judge. _____________

("Bohai"), a New Hampshire-based concern that causes athletic

footwear to be manufactured overseas primarily for the

account of others, appeals from the denial of its motion to

dismiss two counts of an indictment charging that it

trafficked in counterfeit goods in violation of 18 U.S.C.

2320 and that it imported goods by means of false or

fraudulent practices in violation of 18 U.S.C. 542. The

principal issue in this appeal is Bohai's argument that

2320(d) is unconstitutionally vague. Because we find no such

infirmity, we affirm.

I. I. __

BACKGROUND1 BACKGROUND __________

In 1987 and 1988, Bohai2 arranged for the overseas

manufacture of sneakers for the Stride Rite Corporation

("Stride Rite"), the owner of the KEDS trademark. Stride

____________________

1. In reviewing the district court's denial of a motion to
dismiss, we take the factual allegations in the indictment as
true. Boyce Motor Lines v. United States, 342 U.S. 337, 343 _________________ _____________
n.16 (1952); United States v. Barker Steel Co., 985 F.2d ______________ _________________
1123, 1125 (1st Cir. 1993). In this case, the motion to
dismiss initially challenged all five counts of the
indictment and, therefore, the factual allegations contained
in the entire indictment were properly before the district
court. On this appeal, we review the motion to dismiss only
as to counts one and three (as explained below, pursuant to a
plea agreement, the district court granted the government's
motion to dismiss the remaining counts). Because of this
procedural setting, on this appeal we take as true the
factual allegations contained in the entire indictment.

2. Some of the events described here involved Bohai's
predecessor, Brayco International Corporation, Inc.

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Rite placed two separate orders with Bohai for the

manufacture of 100,000 pairs per order of women's canvas vamp

oxford ("CVO") sneakers bearing the KEDS mark. Bohai

arranged for the shoes to be manufactured at the Qing Dao #9

Rubber Factory, a government-owned enterprise in the People's

Republic of China ("PRC"). Stride Rite terminated Bohai's

authority to apply the KEDS mark to the shoes in the spring

of 1989.

Beginning in August 1989, Bohai's president, James

L. Bryant, devised a plan to produce CVO sneakers bearing the

KEDS mark in the PRC and distribute them in the United States

without the knowledge or authorization of Stride Rite. Bohai

arranged for the production of the shoes at the PRC factory.

In September 1989, a United States-based purchaser agreed to

buy 100,000 pairs of the shoes but asked for assurances that

they were not counterfeit. A Bohai employee showed the

purchaser a purported Stride Rite purchase order for

approximately 100,000 pairs of CVO shoes. However, the

purchase order pertained to a separate, previous order of CVO

shoes and had nothing to do with the shoes then being sold to

the purchaser. The employee falsely represented that the

shoes had been ordered and produced for Stride Rite, but that

Stride Rite had rejected them. In fact, the shoes had not

yet been manufactured and Stride Rite had no knowledge of the

plan to produce or import them.



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The Qing Dao factory produced the shoes and applied

the KEDS mark to them. Bryant and others took steps to

conceal the fact that trademarks had been applied to the

shoes without the knowledge or permission of Stride Rite. In

December 1989, Bryant instructed the PRC factory to stamp the

shoes then being produced to falsely reflect a production

date of 1988. Documents were also backdated.

In March 1990, the counterfeit shoes entered this

country through Boston. The invoice presented to the U.S.

Customs Service at the time of entry falsely indicated that

the shoes had been manufactured pursuant to a valid Stride

Rite purchase order and were intended to be delivered to

Stride Rite or its consignee. After entry, an employee of

Bohai directed the shipper to deliver the shoes to a

warehouse in Holbrook, Massachusetts, rather than to the

Stride Rite warehouse in New Bedford, Massachusetts. The

employee explained to the shipping company that Bohai and

Stride Rite were manufacturing the shoes together as a "joint

venture" and, therefore, Bohai was an agent for Stride Rite.

After the purchaser inspected the shoes, they were delivered

to New Jersey, where they were sold to the public as

authentic KEDS CVO shoes through a national department store

chain. On March 27, 1990, Bohai received a wire transfer for

$410,032 from the purchaser for the 100,000 shoes.





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On April 29, 1993, a federal grand jury indicted

Bohai, Bryant and Bohai's Treasurer, Herbert Chih-Lun Wang,

under one count charging violations of 18 U.S.C. 2320,3

one count charging violations of 18 U.S.C. 542,4 two

counts of conspiracy under 18 U.S.C. 371,5 and one count

charging violations of 18 U.S.C. 1957.6 The defendants

moved to dismiss the indictment on various grounds, including

that 2320 did not give them constitutionally adequate

notice of the illegality of their acts. The district court

held a hearing and, in an order dated October 29, 1993,

denied the defendants' motion. Negotiations with the

government ensued. On February 17, 1994, Bohai entered a

conditional plea of guilty under Fed. R. Crim. P. 11(a)(2) to

the first and third counts of the indictment, which alleged

violations of 2320 and 542 respectively. The agreement

expressly reserved Bohai's right to seek review of the denial

of the motion to dismiss. The district court then granted

____________________

3. 18 U.S.C. 2320 provides that "whoever intentionally
traffics or attempts to traffic in goods or services and
knowingly uses a counterfeit mark" may be subject to fine and
imprisonment.

4. 18 U.S.C. 542 prohibits the importation of goods by
means of false or fraudulent practices.

5. Counts two and four of the indictment alleged,
respectively, conspiracy to traffic in counterfeit goods and
conspiracy to import goods by means of false or fraudulent
practices.

6. 18 U.S.C. 1957 prohibits engaging in monetary
transactions in property derived from unlawful activity.

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the government's motion to dismiss all counts against Bryant

and Wang and to dismiss the conspiracy and money laundering

counts against Bohai. Following a sentencing hearing, the

district court sentenced Bohai to probation and imposed a

fine of $100,000 for violations of counts one and three. The

district court also ordered Bohai to pay $100,000 in

restitution to Stride Rite.7 This appeal followed.

II. II. ___

DISCUSSION DISCUSSION __________

Bohai argues that the district court erred in

denying Bohai's motion to dismiss the indictment for two

principal reasons: (1) 18 U.S.C. 2320 is

unconstitutionally vague; and (2) even if the statute is not

constitutionally infirm, Bohai nonetheless lacked fair notice

because of 2320's legislative history and a then-existing

Customs Service regulation issued pursuant to another

statute. We address Bohai's arguments in order.8

____________________

7. Pursuant to the plea agreement, the restitution is in
escrow pending this appeal. The agreement provides that if
this court finds count one (charging under 18 U.S.C. 2320)
is legally invalid, the restitution and any interest will be
returned to Bohai.

8. Bohai also challenges count three, which charges that
Bohai knowingly and intentionally sought to import 100,000
pairs of shoes "bearing counterfeit (as defined in Title 18
U.S.C. Section 2320(d)) blue rectangular heel patches with
the name `KEDS' on them, by means of one or more material
false statements . . ." in violation of 18 U.S.C. 542. As
Bohai notes, the "indictment expressly ties [count three] to
a violation of section 2320." Because we find no
constitutional infirmity with regard to 2320, Bohai's

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The due process clause of the Fifth Amendment

requires that a criminal statute be sufficiently definite.

The "requirement of definiteness is violated by a criminal

statute that fails to give a person of ordinary intelligence

fair notice that his contemplated conduct is forbidden by the

statute." United States v. Harriss, 347 U.S. 612, 617 ______________ _______

(1954); see also Grayned v. City of Rockford, 408 U.S. 104, ___ ____ _______ ________________

108 (1972) ("It is a basic principle of due process that an

enactment is void for vagueness if its prohibitions are not

clearly defined."). "The question is whether, looking at the

statute in light of the facts of the case at hand, [it]

provide[s] a constitutionally adequate warning to those whose

activities are governed." United States v. Buckalew, 859 ______________ ________

F.2d 1052, 1054 (1st Cir. 1988) (quotations and citations

omitted); see also United States v. National Dairy Prods. ___ ____ _____________ ______________________

Corp., 372 U.S. 29, 33 (1963) ("In determining the _____

sufficiency of the notice a statute must of necessity be

examined in light of the conduct with which a defendant is

charged."). Our task, therefore, is to determine whether 18

U.S.C. 2320 gave Bohai adequate warning that, as alleged in

the indictment, "knowingly [using] counterfeit marks without

the authorization of the holder of the right to use such

marks" is unlawful. Our review is de novo. See, e.g., __ ____ ___ ____



____________________

challenge to count three fails.

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United States v. Aguilar-Aranceta, 957 F.2d 18, 21 (1st ______________ ________________

Cir.), cert. denied, 113 S. Ct. 105 (1992). _____ ______

Bohai argues that the phrase "at the time of the

manufacture or production" as used in the so-called

"authorized-use" exception to 2320's definition of

counterfeit goods9 renders the statute unconstitutionally

vague. Bohai specifically focuses on the word "production,"

arguing that it has "no core meaning" and that 2320 leaves

the reader helpless "to understand what aspect of the


____________________

9. We set forth the relevant portion of 18 U.S.C. 2320(d)
with the "authorized-use" language underscored:

(d) For purposes of this section --
(1) the term "counterfeit mark" means --
(A) a spurious mark --
(i) that is used in connection with
trafficking in goods or services;
(ii) that is identical with, or
substantially indistinguishable from, a
mark registered for those goods or
services on the principal register in the
United States Patent and Trademark Office
and in use, whether or not the defendant
knew such mark was so registered; and
(iii) the use of which is likely to cause
confusion, to cause mistake, or to
deceive; or
(B) a spurious designation that is identical
with, or substantially indistinguishable from,
a designation as to which the remedies of the
Lanham Act are made available by reason of
section 110 of the Olympic Charter Act;
but such term does not include any mark or designation ______________________________________________________
used in connection with goods or services of which the ______________________________________________________
manufacturer or producer was, at the time of the ________________________________________________
manufacture or production in question authorized to use _______________________________________________________
the mark for designation for the type of goods or ________________________________________________________
services so manufactured or produced, by the holder of ________ _____________________________________________
the right to use such mark or designation. ____________ ____________________________

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production process -- i.e., creating, bringing about,

furnishing, or yielding the goods in question -- is relevant

in dating the existence of generalized authority to use the

mark on goods of the same type."

Bohai's statutory analysis suffers from extreme

myopia. As we have observed in the past, statutes are not

enacted on a piecemeal basis and, accordingly, should not be

read that way. See Little People's Sch., Inc. v. United ___ ___________________________ ______

States, 842 F.2d 570, 573 (1st Cir. 1988). By broadening the ______

focus and examining the phrase "at the time of manufacture or

production" in the context of the entire authorized-use

exception, see, e.g., id., we think that Bohai's vagueness ___ ____ ___

challenge cannot be sustained. Based on the plain language

of the statute, we conclude that Congress intended, and made

sufficiently plain, that this exception would be limited to

those goods or services for which authorization existed

during the entire period of production or manufacture. We ______

focus on Congress's statement that authorization must exist

"at the time of the manufacture or production in question . . __ ___ ____ __

. for the type of goods or services so manufactured or __ ____________ __

produced." Though perhaps not a model of the most exacting ________

legislative craftsmanship, we think this language nonetheless

makes clear beyond reasonable dispute that the authorization

to use the mark must exist "at the time of," that is, from

beginning of the production or manufacture up to and



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including the time at which the goods or services have been

finally "manufactured or produced."

We believe that Bohai could reasonably understand

from the statutory language that conduct charged in the

indictment was not within the authorized-use exception. The

government charges that Bohai was not authorized to apply the

marks to 100,000 pairs of CVO shoes, conduct that falls

squarely outside the statute's exception. Bohai asks us to

consider the language in light of the "undisputed fact" that,

in 1988, it had authority from Stride Rite to assemble raw

materials, import sewing machines and molds, and train the

Qing Dao workers to produce the KEDS CVO shoes.10 For the

reasons outlined above, the language of the statute cannot

sustain Bohai's assertion that these activities alone

constitute "production" within the meaning of the authorized-

use exception. While Bohai's activities in 1988 might have

been steps in the production process, the statute requires

that authorization exist until production is complete. In

short, on these facts, we do not think this language can be

reasonably described as ambiguous, much less

unconstitutionally vague. Bohai makes the additional and

somewhat novel argument that, even if the statute is not

____________________

10. On this point, the district court noted in its order
that, although it was not alleged in the indictment, the
government did concede that the defendants were at one time ___________
authorized to apply the KEDS trademark to shoes manufactured
at the Qing Dao factory.

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vague, Bohai lacked fair notice in light of the legislative

history of 2320 as well as a then-existing Customs Service

regulation. We do not agree. As to legislative history,

Bohai argues that it "is relevant insofar as it discloses no

intention to criminalize the type of conduct at issue."

Bohai then presents a lengthy examination of various non-

statutory materials. As a general proposition, when a court

finds "clear meaning in the unvarnished language of the

statute, [it is] duty bound to honor that meaning." Baez v. ____

INS, No. 94-1224, slip op. at 13 (1st Cir. Dec. 6, 1994). ___

Consequently, a court may seldom engage in a boundless

exploration of unenacted legislative materials. See id.; see ___ ___ ___

also Laracuente v. Chase Manhattan Bank, 891 F.2d 17, 23 (1st ____ __________ ____________________

Cir. 1989) ("[A]bsent ambiguity in the statutory language,

our inquiry is complete and ends with the plain language of

the statute."). Bohai's use of non-statutory materials

demonstrates the wisdom of this rule. Bohai relies upon

legislative history for the dubious proposition that it

discloses no congressional intent to criminalize the activity

at issue. Under the Constitution, Congress speaks through

duly enacted bills and resolutions; as to legislation, there

is no requirement that Congress memorialize anything, much

less its intent, through unenacted non-statutory materials.

Accordingly, Congress's failure to do so can hardly be cited





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as proof of a defendant's argument that it lacked fair

notice.11

We also disagree with Bohai's analytical premise.

On an appeal like this one, the issue is simply whether the

statute, as enacted by Congress, gave sufficient notice that

the conduct charged was proscribed. Once we have determined

that the statute is constitutionally sufficient, our analysis

ends. Bohai seeks to go a step farther and create

uncertainty by referring to wholly extraneous matters. We

are not so easily distracted. Thus, Bohai's exhaustive

treatment of the Customs Service regulation, appearing at 19

C.F.R. 133.21(c)(3), is also unavailing.12

____________________

11. As Judge Harold Leventhal once observed, citing
legislative history is akin to "looking over a crowd and
picking out your friends." Patricia M. Wald, Some ____
Observations On the Use of Legislative History in the 1981 _____________________________________________________________
Supreme Court Term, 68 Iowa L. Rev. 195, 214 (1983). Bohai __________________
seeks to add a new twist by looking over a crowd and not
finding an enemy.

12. Prior to 1988, 19 C.F.R. 133.21(c)(3), issued pursuant
to Section 526 of the Tariff Act of 1930, 19 U.S.C. 1526,
provided that if "the articles of foreign manufacture bear a
recorded trademark or tradename applied under authorization
of the United States owner," then the Customs Service would
not prevent importation. Bohai's fair notice argument is
grounded in its assertion that the Customs Service had
routinely admitted trademarked goods produced by "authorized
manufacturers" without regard to the timing of the
manufacture.
We do not agree with Bohai that Grayned, 408 U.S. _______
at 110, supports the broad proposition that the
"administrative practice of the agency principally charged
with enforcing Section 2320 is significant in determining
whether that section provided fair notice to Bohai." In
Grayned, a First Amendment case, the Court stated that, in _______
the absence of an interpretation of the meaning of an anti-

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III. III. ____

CONCLUSION CONCLUSION __________

Because we conclude that the language of 18 U.S.C.

2320 is sufficiently definite so as to give fair notice to

Bohai that the conduct alleged in the indictment was

proscribed, the judgment of the district court is

Affirmed. Affirmed. ________


























____________________

noise ordinance from the court below, it would "extrapolate
its allowable meaning . . . [by looking to] the words of the
ordinance itself, to the interpretations the court below has
given to analogous statutes and, perhaps to some degree, to
the interpretation of the statute given by those charged with
enforcing it." Id. (internal quotations and footnotes ___
omitted). Thus, agency interpretations might provide some
assistance in our own effort to arrive at the meaning of a
statute, but they must at least relate to the statute at
issue.

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