Case: 09-20074 Document: 00511042472 Page: 1 Date Filed: 03/04/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 4, 2010
No. 09-20074
Charles R. Fulbruge III
Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee
v.
KEVIN XU,
Defendant-Appellant
Appeal from the United States District Court
for the Southern District of Texas
Before SMITH, GARZA, and CLEMENT, Circuit Judges.
EMILIO M. GARZA, Circuit Judge:
Appellant Kevin Xu was convicted by a jury of conspiring to traffic in
counterfeit pharmaceutical drugs, in violation of 18 U.S.C. § 371 (Count 1),
introducing into interstate commerce misbranded drugs with the intent to
defraud and mislead, in violation of 21 U.S.C. §§ 331(a) and 333(a)(2) (Counts
2–4), and trafficking in counterfeit goods, in violation of 18 U.S.C. § 2320(a)
(Counts 5 – 9). Xu filed a post-verdict motion for judgment of acquittal pursuant
to Federal Rule of Criminal Procedure 29(c) as to Counts 5 – 9 for trafficking in
counterfeit Zyprexa, Tamiflu, Plavix, Casodex, and Aricept, respectively. The
district court granted his motion, except as to Count 5, for trafficking in
counterfeit Zyprexa. Xu appeals his conviction on that count, arguing that the
evidence was insufficient to establish that the Zyprexa trademark was: (1)
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registered on the principal register in the United States Patent and Trademark
Office, and (2) “in use” at the time of the offense.
We review de novo the denial of a Rule 29 motion for a judgment of
acquittal. United States v. Valle, 538 F.3d 341, 344 (5th Cir. 2008). In
determining if there was sufficient evidence to support a conviction, the
“relevant question is whether, after viewing the evidence in the light most
favorable to the prosecution, any rational trier of fact could have found the
essential elements of the crime beyond a reasonable doubt.” Id. (quoting
Jackson v. Virginia, 443 U.S. 307, 319 (1979)) (internal quotation marks
omitted).
Section 2320 punishes “[w]hoever[] 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.” 18 U.S.C. § 2320(a)(1). To establish a
violation, the Government must prove that: “(1) the defendant trafficked or
attempted to traffic in goods or services; (2) such trafficking, or the attempt to
traffic, was intentional; (3) the defendant used a counterfeit mark on or in
connection with such goods or services; and (4) the defendant knew that the
mark so used was counterfeit.” United States v. Hanafy, 302 F.3d 485, 487 (5th
Cir. 2002). Xu challenges only the third element—proof that he used a
“counterfeit mark.” Under the statute, a “counterfeit mark” must be “identical
with, or substantially indistinguishable from, a mark registered on the principal
register in the United States Patent and Trademark Office [“USPTO”] and in
use.” 18 U.S.C. § 2320(e)(1)(A)(ii). Thus, a rational juror must be able to
conclude beyond a reasonable doubt that the mark at issue was “registered on
the principal register” and “in use.”
We have found no case in this circuit addressing the quantum of proof
sufficient to show the third element of a violation of § 2320(a)(1). It is
unsurprising that we have not previously considered this issue because proving
trademark registration is usually a simple pro forma matter of offering a
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certified copy of the certificate of registration. Indeed, the Department of
Justice’s manual on prosecuting intellectual property crimes explains that this
is the preferred procedure for proving registration. U NITED S TATES D EPARTMENT
OF J USTICE, P ROSECUTING I NTELLECTUAL P ROPERTY C RIMES 101 (3d ed. 2006),
available at http://www.justice.gov/criminal/cybercrime/ipmanual/ipma2006.pdf.
Although offering certificates of registration may be the most straightforward
method of proof, at least two courts have found other types of evidence sufficient.
See United States v. Park, 164 F. App’x 584, 585–86 (9th Cir. 2006)
(unpublished); United States v. DeFreitas, 92 F. Supp. 2d 272, 278 (S.D.N.Y.
2000).
In Park, the Ninth Circuit held that “registration and use at the time of
conspiracy can be indirectly established . . . [by] evidence that trademarks . . .
were registered and used prior to and after the conspiracy was formed . . . .” 164
F. App’x at 585. The court found that a contemporaneously filed civil complaint,
alleging that the trademark holders registered and used trademarks for items
similar to those found in the defendant’s possession, and testimony from a law
enforcement agent that the items seized from the defendant’s business were
identical to items registered as trademarks with the USPTO, was sufficient to
prove that the trademarks were registered and in use. Id. Similarly, in
DeFreitas, the court found that actual samples of both the genuine and
counterfeit products, with tags affixed showing various trademarks registered
by the trademark holder, coupled with testimony from the company’s CEO and
an expert, were sufficient proof that the marks at issue were registered and in
use. 92 F. Supp. 2d at 278.
Here, the Government did not introduce a certificate of registration for
Zyprexa. Xu contends that the Government was, therefore, required to produce
evidence from which a jury could reasonably conclude that Zyprexa was a
trademark registered on the principal register, but that it failed to do so. The
Government introduced a number of exhibits of the allegedly counterfeit
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Zyprexa, but not samples of the original, authentic drug from which a jury could
infer trademark registration. The Government argues that testimony of an
employee of Eli Lilly (the manufacturer of Zyprexa) was sufficient to show that
the trademarks were registered on the principal register. The employee testified
that he conducted tests on samples of the suspected counterfeit Zyprexa obtained
from Xu. Although the employee referred to the Zyprexa as “counterfeit” and
explained how the samples obtained from Xu differed from the drug produced by
Eli Lilly, he never stated that Zyprexa was a mark registered on the USPTO’s
principal register, as required to meet the definition of “counterfeit” under 18
U.S.C. § 2320(e)(1)(A)(ii).
The closest the Government came to presenting testimony about the
trademark itself was when the Eli Lilly employee was asked about the “little
symbol that’s next to Zyprexa” on one of the allegedly counterfeit containers of
the medication. The employee stated that it was the “registered trademark
symbol.” This too is insufficient. First, the symbol being discussed was on a
package of allegedly counterfeit goods, not authentic drugs, and no effort was
made to demonstrate that authentic Zyprexa carried the same symbol.
Moreover, the statement that the trademark was “registered,” standing alone,
is insufficient to sustain the conviction. A trademark may be registered in a
number of ways. In addition to registration on the principal register, a mark
may be registered on the USPTO’s supplemental register, recorded with
customs, or registered with state agencies. See, e.g., 15 U.S.C. § 1091 et seq.;
U NITED S TATES D EPARTMENT OF J USTICE, P ROSECUTING INTELLECTUAL P ROPERTY
C RIMES 101. To prove that the mark was counterfeit, however, the Government
was required to demonstrate that the mark was registered on the USPTO’s
principal register. 18 U.S.C. § 2320(e)(1)(A)(ii); see also U NITED S TATES
D EPARTMENT OF J USTICE, P ROSECUTING I NTELLECTUAL P ROPERTY C RIMES 101
(noting that federal registration on the principal register is a “jurisdictional
element” that must be satisfied to charge a § 2320 violation). The Eli Lilly
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employee’s statement did nothing to establish that the mark was listed on the
principal register, as opposed to being registered in some other manner.
The Government also contends that Zyprexa’s compliance with FDA
requirements indicates registration on the principal register. They point to
testimony from the Eli Lilly employee that the potency range of each Zyprexa
tablet is a “registered commitment.” No testimony was offered defining a
“registered commitment.” Nor did the Government make any attempt to show
that a “registered commitment” has anything to do with registration on the
USPTO’s principal register, as opposed to simply some form of FDA
requirement, as indicated by the employee’s testimony. A statement that a drug
potency level is a “registered commitment” is simply not evidence of registration
on the principal register.
For the foregoing reasons, we find that a rational juror could not have
found beyond a reasonable doubt that the Zyprexa mark was registered on the
USPTO’s principal register. Because we reverse on this ground, we need not
address Xu’s argument that there was no evidence that the mark was “in use”
at the time of the offense.
Accordingly, the judgment of conviction on Count 5 is VACATED and the
case is REMANDED for resentencing consistent with this opinion.
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