Counterfeiting: Why Crime Doesn’t Pay


Based on a recent restitution submission prepared by Faegre Drinker, a federal judge in Harrisburg, Pa. awarded Eli Lilly and Company $1.9 million in restitution from an individual convicted of trafficking in drugs bearing counterfeit trademarks of Lilly and other pharmaceutical companies. The defendant in this matter was sentenced to 70 months in prison and ordered to pay $3.6 million in restitution, the remainder split between the other companies based on the defendant’s conduct involving their trademarks.  In this instance, crime clearly didn’t pay for the defendant and success was achieved by partnering with our client to fight counterfeiting and illegal importing.  So how does this work?

Under federal law, such as the Crime Victims’ Rights Act (18 U.S. C. § 3771), the Victim and Witness Protection Act (18 U.S.C. § 3663) and the Mandatory Victim Restitution Act (18 U.S.C. § 3663A), victims of federal crimes are entitled to restitution. In some cases restitution is mandatory, while in others restitution is at the discretion of the district or state court judge. The criminal justice process can be complex, starting from investigation to grand jury to expert witness preparation to trial and ultimately resulting in verdict/plea and sentencing. But the investment of resources including time, effort, and expense can pay off for trademark owners, who are among the victims of these crimes.  In some cases, restitution may be satisfied from the proceeds of the defendants’ criminal activities. However, obtaining actual recoveries of money is not always the only objective of trademark owners. Seeking restitution can show prosecutors, courts, and most importantly potential offenders that the companies whose trademarks are being misused are also victims of these crimes, sending a clear warning to any potential counterfeiter. Helping to maintain the integrity of a brand owner’s marks, as well as deterring illegal actors from entering legitimate manufacturing and distribution systems, is a critical component of an effective anti-counterfeiting strategy.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.


About the Author: Daniel E. Pulliam

Daniel Pulliam represents clients in federal and state investigations. He also advises clients in internal investigations and responding to whistleblower complaints. In litigation, his areas of focus include defending and prosecuting state-law tort and fraud claims, and nonprofit disputes. He also advises institutions on First Amendment issues and responses to circumstances implicating rights provided under the Fourth and Fifth Amendments to the U.S. Constitution.

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