(ANALYSIS) Why New York Council Woman Margaret Chin’s Proposal to CRIMINALIZE Purchasers of Fake Goods is a Terrible Idea #Fashionlaw

What an incredible week this past week was? I had actually penned this article last week but tabled it to focus my attention on the numerous rulings by the Supreme Court on pivotal cases this past week.

Folks, we are living in very interesting times. It is my view that the world is in a very chaotic state right now and that we are nearing a boiling point; after which I believe the pendulum will swing to a place where we are in a calmer state and return back to the basic value systems that define us as countries, people, etc. By the way, has anyone noticed the high intolerance the US public seems to have for entertainers when it comes to the increase in lyrics liability? Lil’ Wayne, Rick Ross are just a few that come to mind.

On the global front, wow! Look at Europe and the continued increase in the unemployment rates among youths? A recent figure I heard was 30%! Look at Brazil, Turkey, and Egypt whose citizens have shown they are fed up with the status quo. Whatever is really going on with Afghanistan and Iraq? We continue to see the instability of those regions and for Afghanistan, needless to say, have we really accomplished what we set out to do? The goal was to get in there, hunt Al Quaeda and the Taliban and be out. Where are we (the US) with these goals?

Independent of these conflicts and chaos above, I was taken aback with the serious protests led by South Africans against Obama in his visit to he country over the weekend there. Unexpected. While CNN and similar media showed the numerous speeches Obama is now infamous for, South Africans took to the streets in numbers protesting against Obama and the U.S. with a focus on our foreign policy with respect to Israel and Palestine and the closing of Guantanamo Bay. I was just stunned that there was that much anger in South Africa against my own president. In 2008, South Africans were very proud that we were electing the first Black President. What happened?

In seeing this, I was reminded of the power of social media and technology in general. That Africans and other global citizens will be angered by our role and foreign policy and take to the streets in real time, protesting, really says we are in a new age and there is a big paradigm shift.

On a domestic level, what an interesting week!!! The hunt for Edward Snowden continues, the Trayvon Martin trial began and it is clear it is fast becoming a race issue; rather than the tragic loss of a boy that should not have been dead; and a grieving family that is seeking justice.

It was really a crazy week in the legal realm. As American citizens, the 4th Amendment guarantees us a right to be free from unreasonable searches and seizures. The Edward Snowden case is certainly testing that boundary. But beyond Snowden, surely you all heard about the case I deem very appalling where the Supreme Court, early last month, held that where the police takes genetic samples from someone held without a warrant in criminal custody for “a serious offense,” such sample is not an unconstitutional search within the meaning of the 4th Amendment. WOW! Think for a second about the implication that can and will have in this digital age.

“When officers make an arrest supported by probable cause to hold for a serious offense and they bring the suspect to the station to be detained in custody, taking and analyzing a cheek swab of the arrestee’s DNA is, like fingerprinting and photographing, a legitimate police booking procedure that is reasonable under the Fourth Amendment.”

Last week, the court ruled on the Defense of Marriage Act (DOMA), and California’s Prop 8, among other rulings, and truthfully, for me, there was not much surprise there.

I think the tide is going towards gay marriage across the country and the Supreme Court seems content in taking a hands off approach and letting the states sort their issues out. I do think while that approach may work for now, the court may be forced to take a definitive and expressive stance in the future when a litigant has actual “standing” and decides to push the case all the way to the Supremes.

Finally, still on how crazy this past week was, wow! Did anyone miss the decision by the Supreme Court to invalidate a key part of the Voting Rights Act? At issue before the court was whether racial minorities in states that were historically known for discrimination, continued to face barriers to voting. The court said “no.” Times have changed and even cited Barack Obama’s historic win. Justice Ginsburg vehemently disagreed.

Folks, let me stop there and get to our case at hand otherwise I will keep going. But, I do want to hear your thoughts. What are your thoughts on some of the issues mentioned above?

NOW on to the criminalizing of the purchase of fake goods in New York.

One of the things I keep noticing is a big disconnection with theory and reality, especially where laws are proposed that will supposedly help designers, and the fashion industry at large. I also see an elitist/almost blind perspective because it appears the only views considered are those of famous brands. I stand corrected if this view is not accurate. From where I sit, that is what I seem to observe.

However, in practical terms, lawmakers or those who work with law makers must be able to figure out what the laws they propose really mean for the average citizen/the constituents they represent. Further, I would suggest in a situation like the Margaret Chin case below, that there is a real attempt to sit with fellow lawmakers, criminal defense attorneys, police officers, law enforcement in general, the fashion industry and other key members of the affected industries, including tourism arm of the New York state government, to figure out what impact proposed laws would have and the effectiveness of implementing them.

Let’s talk about the terrible bill proposed by New York Council Woman Margaret Chin who wants to criminalize the purchase of fake goods and throw persons buying fake goods in jail. Yikes!

Why is Council Woman Chin Proposing this Bill?
According to her, New York loses over $1billion in Tax Revenue as a result of counterfeit goods in the marketplace. In fairness, the amount is substantial and there are real issues when it comes to the counterfeiting of goods. So, she correctly identifies a real problem, although I would like to see how exactly she came up with those figures.

What exactly is her proposed bill going to do?
It would make it a Class A misdemeanor, under New York law, for anyone to purchase fake goods in New York.

What is the Penalty?
The penalty would be up to a  $1,000 in fines AND a jail sentence. Typically, misdemeanor refers to crimes that are punishable by imprisonment for less than one year or by fine only. In this instance, council woman Margaret Chin wants the fine AND the jail sentence.

What is the Exact Language of the Statute?

“A Local Law to amend the administrative code of the city of New York, in relation to the purchase of counterfeit goods.

Be it enacted by the Council as follows:
Section 1. Title ten of the administrative code of the city of New York is amended by adding a new chapter 9, to read as follows:

§10-901. Definitions.
§10-902. Purchase of Counterfeit Trademarks Illegal.
§ 10-901. Definitions. For the purposes of this chapter the following terms shall have the following meanings: a. “Person” shall mean a human being, a public corporation, a private corporation, an unincorporated association, a partnership, proprietorship, or any other kind of entity or business organization.
b. “Purchase” shall mean to obtain ownership or possession of a tangible item in exchange for money or any other form of valuable consideration.
c. “Trademark” shall mean any word, name, symbol, or device, or any combination thereof (i) that is adopted and used by a person or company to identify goods made by a person or company; (ii) that distinguishes such goods from those manufactured or sold by others; and (iii) that is in use and that is registered, filed, or recorded under the laws of the State of New York, any other state, or with the United States Patent and Trademark Office.
d. “Counterfeit trademark” shall mean a spurious trademark or an imitation of a trademark that is used to identify goods made by a person or company and that is identical to or substantially indistinguishable from a.
§10-902. Purchase of Counterfeit Trademarks Illegal.
a. Prohibition. No person shall purchase a tangible item containing a counterfeit trademark when such person knows or should have known such trademark is counterfeit for reasons including, but not limited to, the quality and price of the purchased item, and/or the condition of the seller and the sale location.
b. Penalties.
1. Any violation of the provisions of this section shall be deemed a Class A misdemeanor punishable by a term of imprisonment not to exceed one year and a fine not to exceed one thousand dollars, or a civil penalty not to exceed one thousand dollars for each violation, or both, and such penalties shall not limit or preclude any cause of action available to any person or entity injured or aggrieved by such violation.
2. Each object or good purchased shall be considered a separate violation of this section.
§ 2. This local law shall take effect immediately.”

Who will this affect?
Individuals and businesses, citizens from other states and foreigners visiting New York.

How is a Person Culpable Under Council Woman Chin’s Proposed Bill?
I underlined the key parts that are very troubling, to me, above. According to the bill, a person is guilty for the purchase of fake goods if they “know or should have known” an item was counterfeit before purchasing it.

Why Is this Worrisome?
First, again this is an instance where reality has no resemblance to theory. Having spent considerable time in criminal courts doing criminal defense work ranging from misdemeanor to felony crimes, I can tell you that this statute seems to make no sense.

Let’s start with some basic essential elements of a crime that must be met where a crime is committed.

First, you need a guilty act i.e. the actus reus.

Second, you need a guilty mind, the mens rea.

Third, you need a “concurrence” of the act and the mental state. This means the mental and physical act must have existed at the same time; and
finally, you need the harmful result caused by a defendant’s act. This is essentially the “causation” (actual and proximate (foreseeable) requirement.

In this instance, the proposed bill easily meets all of the above basic requirements of the basic essential elements of a crime; and attracts no controversy with the exception of the mens rea element i.e. the guilty mind i.e. the mental state.

Under New York Penal law, which shares similarities with that of many states across the US including California, a mental state is subdivided into four main categories. You can commit a crime by having one of the following under the mens rea requirement cited above:

1. Intent;
2. Knowledge;
3. Recklessness; or
4. Criminal negligence.

Council Woman Margaret Chin’s statute focuses on the intent element. In her statute, there has  to be intent that you, the fashion business owner making a purchase from a manufacturer in large quantities, a foreigner visiting New York and shopping: a) purchased a counterfeit good; and at the time you purchased it, b) you knew or should have known that the good/goods you purchased was a counterfeit.

If we focus in on the “knew” element, then this statute would be somewhat digestable. It also neatly matched the #1 intent element under the mens rea aspect of a crime. The real issue here is the “should have known” element. Where does it fit? Certainly not the “intent” i.e. you knew prong. It seems to create a different category of its own i.e. “the knowledge i.e. “should have known”. Further, the following questions come to mind:

How is Council Woman Chin proposing we the consumers determine the “should have known” a good was a counterfeit? How is she proposing the courts, judges, lawyers, jury and law enforcement determine this?

She would say well the statute calls for the consumer to look at “other reasons” including the “cost,” the “condition of the seller” and also “location of purchase” to make this determination. Really? Let’s apply this.

So, the average citizen is supposed to look at the “condition of the seller” and make discriminatory, most likely stereotypical assessments, of whether the goods the seller is selling are fake goods? In a not so upscale neighborhood like Harlem, or Canal street in New York, then we of course can easily presume that all the trademarked goods sold there, per the statutes, are most likely fake. However, if we move to a different more upscale neighborhood, even if the goods are fake, after all the statute calls for goods “containing” counterfeit trademarks, then we are to presume that the goods are most likely not fake, even though they very well may be? Why? Well the location and condition of seller warrants that conclusion. Needless to say, race would be a key factor also in making certain judgments by the consumer.

Is this what consumers should really be spending their time doing?

Council Woman Chin has cited other countries including Italy and France as places where criminal penalization for the purchase of fake goods exists. When people are quick to cite other countries doing whatever it is they are doing, I always wonder how exactly that is relevant to the US? We saw that with the Fashion Copyright Bill. I loved the proposed fashion copyright bill but digging a bit more, there some aspects that could have been a lot more beefed up and citing what other countries do does not necessarily have any bearing on the USA.

In this instance, are Italians or French people Americans? Do they share the same value systems, constitution and approach to life like we do? What real evidence do we have that what works in France or Italy will work for Americans? Where is the stats cited about the results of France and Italy coming from and how exactly and what exact factors have gone into making these final assessments as to the strength and effectiveness of their laws?

Can we just focus on America and Americans?

As to the price factor used in the statute, focusing in on luxury fashion goods, did the Council Woman miss the memo that many high-end designers are now producing diffusion lines for retailers that are highly affordable? Is the police expected to now figure out the diffusion lines the designer name is not counterfeit?

Further, why is Council Woman Chin imposing the duty to learn the facts/history of a design brand on the consumer? Is it the job of the consumer to do so? People have busy lives. We are in a recession, the average American home needs two incomes to survive, there are too many to count single mothers raising their children. What time do they have to all of these people have to go conduct what amounts to obtaining a college degree on design brands? Isn’t that for the design brands to educate the public about who they are? As in what is marketing and public relations to build brand equity for?

Speaking of children by the way, what provision do we have for our young children who will buy these products? Should they all be locked up because they “knew or should have known” that the goods were fake via New York’s Family Court system?

How does this help with raising the revenue in New York? Also, let’s be real. Is the New York police really educated on design brands in general to know what to look for? Where is the resource coming from to educate the police? Don’t we already have existing laws that take care of this in arresting the seller of fake goods? Am I missing something here?

Back to the fashion industry, how many fashion insiders, fashion lawyers and even judges actually know and can spot the difference between a fake good and real? What implication on tourism in New York? Are tourists not expected to come to New York and spend their monies anymore? If they have to be that watchful that they may be arrested, fined AND sentenced to jail, then what’s the incentive? I find it interesting that New York Council Woman’s bill would jail foreigners who purchase fake goods that they knew or “should have known” to be fake goods, YET the statute makes no mention anywhere of protecting unregistered trademarked foreign brands whose goods are counterfeited in New York.

As to the realities of the criminal court system, New York is no exception with the budget cuts and the tremendous strain that it faces in processing criminal litigants, many of whom are indigents. I, for one, see this bill, if it passes, being disproportionately applied to minorities; especially those who cannot afford counsel and that it will cost the taxpayer and the State of New York a lot more money to prosecute these crimes.

There are other ways of achieving the same goal that Council Woman Chin proposes. If she is unwilling to take the time to conduct a thorough research and analysis and answer the tough questions on the impact of this proposed bill, at a minimum, then she ought to drop the “should have known” prong of the proposed bill as it simply makes no sense and lacks a showing of an understanding of real life and the challenging realities of the everyday American.

Now over to you folks. What are your thoughts? Tell me why you are for the proposed bill or why you are against it? What are your suggestions on how to improve the bill, if any?

-Uduak Oduok

Photocredit: New York Daily Times