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November, 2017

New York court sentences two Chinese nationals to three years in prison

Original article: The Epoch Times

A New York federal court has sentenced two Chinese nationals to three years in prison for smuggled counterfeit goods into the United States. Dong Daye and Chen Hongyu (husband and wife) of Bayside, New York imported bogus luxury goods into the U.S. between March 2012 and October 2016.


Dong and Chen's counterfeiting caper ended abruptly on October 27, 2016, when authorities raided the couple's warehouse, residence, and retail store. Investigators discovered more than 30,000 counterfeit items with an infringement value of US$23 million. Authorities estimate that the items had a street retail value of US$680,000. Police also seized $US179,000 in cash. 


“These defendants allegedly sold counterfeit goods, fueling consumers’ desire for low prices on high end products," said Manhattan U.S. Attorney Preet Bharara in a Justice Department statement. "But the cheap prices come at a high price for legitimate businesses. Protection of intellectual property remains an important priority for my office and for our partners at CBP, ICE, and the NYPD."

Analysis:

Dong and Chen got off with relatively light sentences. They were both charged with one count of conspiring to traffic in counterfeit goods, and one count of trafficking in counterfeit goods. Each offense is punishable by up to 20 years in prison. 


The prosecution had pushed for 46 to 57-month sentences. The defendants' attorney argued that the cheap knock-offs sold by the couple could not be credibly mistaken for genuine products, noting that the retail price for most of the items was $US15-$25. With that in mind, the attorney said that the infringement value of the counterfeits was exaggerated. 


Dong Daye was repentant during the proceedings, claiming that life had been hard for him and his family in the United States, and that he was just trying to make ends meet. He insisted he was ignorant of trademark law in America, noting that IP protection is pursued less vigorously in his home country. 


Dong is right: Prison sentences for trademark infringement in China are not yet common. One reason for that is that smuggling charges are rarely involved. A serious smuggling crime in China is punishable by more than five years in prison. But most Chinese counterfeiters produce the fakes at home, often in factories that also churn out authentic goods. 


At the same time, lax enforcement ensures many cases never make it to court. In an August newsletter, TIPG highlighted the lenient treatment of beer counterfeiters in Shaanxi Province. Since the infringement value of the fake Tsingtao beer was only RMB 30,000, authorities didn't even bother to charge the suspects with a crime. Instead, they just required them to empty the bottles. Police even allowed the suspects to keep the bottles so that they could be redeemed for cash at a recycling center. It would be more lucrative, however, to refill the bottles with bogus beer. 

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