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U.S. ELEVENTH CIRCUIT COURT OF APPEALS UPHOLDS GUILTY
VERDICT IN CIGAR COUNTERFEITING CASE
FLORIDA CIGAR COUNTERFEITER’S CONVICTION
IS AFFIRMED
Altadis U.S.A. Inc., the world’s largest manufacturer
of premium cigars, has scored yet another victory in its ongoing efforts to prosecute
those who engage in counterfeiting of the company’s trademarks.
On December
17, 2008, The United States Court of Appeals for the Eleventh Circuit affirmed
the conviction and sentencing of defendant Juan Penton. During a sting operation,
Penton had sold an undercover Miami-Dade County police officer boxes of cigars
containing an assortment of the registered trademarks owned by Altadis U.S.A.’s
subsidiaries, Cuban Cigar Brands, N.V. (“CCB”) and Max Rohr, Inc., and by General
Cigar Co., as well as the words “Habana,” “Habana Cuba,” “Habanos SA,” and “Hecho
en Cuba.” The boxes were sealed with fabricated Cuban seals and contained inside
fake Cuban Government guarantees. “Habana” was also printed on each of the cigar
bands. Penton was found guilty by a Miami jury of three counts of trafficking
and attempting to traffic in counterfeit goods, namely, cigars sold under trademarks
that were counterfeits of the registered trademarks of CCB, Max Rohr and General
Cigar, and he was sentenced by the District Court to five year’s probation with
five months of home confinement, a $7,500 fine and a $300 special assessment.
On
appeal, Penton moved for an acquittal on the grounds that the evidence showed
that there were “parallel” marks in the United States and Cuba, that is, the Cuban
government sells Cuban cigars in Cuba and other parts of the world under the same
apparent trademark as non-Cuban cigars are sold in the U.S. by Altadis U.S.A.
and General Cigar. Penton argued that his cigar boxes imitated the Cuban marks.
As the Court noted, the problem for Penton was that such argument had already
been rejected by the Court in U.S. v. Guerra, 293 F.3d 1279 (11th Cir. 2002).
Penton attempted to suggest that the holding in the Guerra case is no longer good
law because of the Helms-Burton Act. The Court rejected Penton’s position.
Additionally,
Penton argued that the government failed to prove that his use was likely “to
cause confusion.” The Court rejected Penton’s argument, citing its prior decision
in U.S. v. Torkington, 812 F.2d 1347 (11th Cir. 1987), in which the Court held
that it is not necessary to show proof of confusion through the testimony of consumers
or experts or the admission of surveys, and that it is a question for the jury
to decide whether a direct purchaser or subsequent individual in a post-sale context
might be confused, mistaken or deceived.
Finally, Penton argued that the
government’s rebuttal argument prejudiced his right to have the jury consider
his theory of evidence. Specifically, the government had argued that while Penton
used boxes and labels designed to look like “Cuban” cigars, what he used was in
fact identical or substantially indistinguishable from the victims’ U.S. registered
trademarks. Penton’s counsel responded by asserting that no crime was committed
because his client had copied Cuban marks and Cuba has no rights in the U.S. In
rebuttal, the government argued that if defense counsel was correct, any country
like Cuba or Venezuela could allow a U.S. mark to be copied and subsequent counterfeiting
in the U.S. could be contended to be legal on the grounds that the copying was
of the Cuban or Venezuelan marks, and not the U.S. marks. The Court did not find
the prosecutor’s remarks to be improper.
“We are very pleased with the
Court’s decision,” said Eric Workman, Altadis U.S.A.’s Senior Vice President Marketing
and National Accounts. “The decision clearly confirms that the excuses used by
counterfeiters such as Penton to try to avoid prosecution will not hold water
in court. This is a great win not only for Altadis U.S.A., but for the entire
industry as well as consumers. We remain committed to the protection of our trademarks
and the prosecution of those individuals who would infringe upon them.”
NOTICE TO THE TRADE
Altadis U.S.A. is strongly committed to vigorous
enforcement of its trademark rights and will seek criminal prosecution of anyone
who would infringe those rights. Altadis U.S.A. continues to work with state and
federal law officials to use anti-counterfeiting laws to secure convictions of
counterfeiters of our brands.
If we learn that any importer, distributor,
retailer or other member of the Trade is dealing in counterfeit cigars or cigar
packaging of our brands, we will proceed against them aggressively through civil
and/or criminal channels. In addition to criminal prosecution, in appropriate
cases, we will invoke the civil provision of the federal trademark law that allows
courts to award trademark owners like Altadis U.S.A. up to $1 million in statutory
(non-compensatory) damages per counterfeited mark, as well as their attorney’s
fees. We have been awarded damages and attorney’s fees of $1 million to $3.5 million
in such cases.
Altadis U.S.A. also continues to work successfully with
U.S. Customs to arrange for the seizure and destruction of shipments of counterfeit
cigars and packaging materials. Any retailer who has paid for cigars that turn
out to be counterfeits and are thus seized by officials should be aware that in
such circumstances they will find themselves without recourse. Counterfeiters
do not refund monies paid nor are they in a position to make good with legitimate
product with the quality and prestige of Altadis U.S.A.’s brands. Additionally,
Altadis U.S.A. reserves the right to cancel as direct accounts those parties who
trade in counterfeit cigars.
Altadis U.S.A.’s premium brands include,
among others: Montecristo, H. Upmann, Romeo y Julieta, Trinidad, Don Diego, Santa
Damiana, Cabañas, Por Larrañaga, La Corona, Saint Luís Rey and Quintero.
We
caution the Trade against engaging in illegal activity in violation of our rights
in any of our brands and ask you to inform us immediately if you receive solicitations
for products that violate such rights.
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