People v. Ebelechukwu

• Court: Appellate Court of Illinois
• Decided: July 28, 2010
• Docket: 1-08-1105 Rel
• Status: Published

Opinion

THIRD DIVISION JULY 28, 2010

No. 1-08-1105

THE PEOPLE OF THE STATE OF ILLINOIS, ) Appeal from the ) Circuit Court of Plaintiff-Appellant, ) Cook County. ) v. ) No. 07 CR 8843 ) CHUKWUEMEKA EBELECHUKWU, ) The Honorable ) Marcus R. Salone, Defendant-Appellee. ) Judge Presiding.

JUSTICE COLEMAN delivered the opinion of the court:

The issue we consider on this appeal is whether the Trademark Counterfeiting Act of

1984 (18 U.S.C. §2320(a) (2006)) preempts the State from prosecuting defendant,

Chukwuemeka Ebelechukwu, under the Illinois Counterfeit Trademark Act (765 ILCS 1040/2

(West 2006)).

Defendant was indicted by a grand jury on one count of possessing over 2,000 pairs of

shoes bearing a counterfeit Nike trademark in violation of section 2 of the Illinois Counterfeit

Trademark Act. 765 ILCS 1040/2 (West 2006). Prior to trial, defendant filed a motion to dismiss

the indictment claiming federal legislation preempted defendant's prosecution for trademark

infringement under the Illinois statute. The trial court granted defendant's motion and dismissed

the indictment. This appeal followed.

Whether a state law is preempted by federal legislation is a question of law, which we

review de novo. Kinkel v. Cingular Wireless, LLC, 223 Ill. 2d 1, 15 (2006). Fundamental to our

system of government is the principle that state and federal governments have the inherent power 1-08-1105

"to determine independently what shall be an offense against its authority and to punish such

offenses, and in doing so each is exercising its own sovereignty, not that of the other." People v.

Lewis, 295 Ill. App. 3d 587, 589 (1998), citing United States v. Wheeler, 435 U.S. 313, 320, 55

L. Ed. 2d 303, 310, 98 S. Ct. 1079, 1084 (1978). The supremacy clause of the United States

Constitution grants Congress the power to limit the states' exercise of their sovereignty. U.S.

Const., art. VI, Cl. 2.

The extent to which federal legislation preempts state law is essentially a matter of

legislative intent. Gade v. National Solid Wastes Management Ass'n, 505 U.S. 88, 96, 120 L. Ed.

2d 73, 83, 112 S. Ct. 2374, 2381 (1992). There are two broad categories of legislative intent:

express and implied. If Congress, when acting within constitutional limits, explicitly mandates

the preemption of state law within a stated situation, no further analysis is required. Gade, 505

U.S. at 98, 120 L. Ed. 2d at 84, 112 S. Ct. at 2383. Absent an expressed intention by Congress to

preempt state law, we may infer preemptive intent in two situations: field preemption and

conflict preemption. Field preemption is implied where the scheme of the federal regulation is

"so pervasive as to make reasonable the inference that Congress left no room for the States to

supplement it." Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 91 L. Ed. 1447, 1459, 67 S.

Ct. 1146, 1152 (1947). Conflict preemption arises in two ways: (1) where "compliance with both

federal and state regulations is a physical impossibility" (Florida Lime & Avocado Growers, Inc.

v. Paul, 373 U.S. 132, 142-43, 10 L. Ed. 2d 248, 257, 83 S. Ct. 1210, 1217 (1963)); or (2) where

state law creates an obstacle or otherwise impedes the accomplishment and execution of the full

purposes and objectives of federal law (Hines v. Davidowitz, 312 U.S. 52, 67-68, 85 L. Ed. 581,

587, 61 S. Ct. 399, 404 (1941)).

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Where the field that federal legislation is said to have preempted traditionally has been

occupied by the states, we begin with the assumption that the historic police powers of the states

were not to be superseded by federal legislation unless that was "the clear and manifest purpose

of Congress." Rice, 331 U.S. at 230, 91 L. Ed. at 1459, 67 S. Ct. at 1152. The power to prosecute

criminal conduct traditionally has been within the ambit of state authority. People v. Chicago

Magnet Wire Corp., 126 Ill. 2d 356, 367 (1989), citing Knapp v. Schweitzer, 357 U.S. 371, 375,

2 L. Ed. 2d 1393, 1398, 78 S. Ct. 1302, 1305 (1958); Patterson v. New York, 432 U.S. 197, 201,

53 L. Ed. 2d 281, 287, 97 S. Ct. 2319, 2322 (1977).

The instant case requires that we determine whether Congress intended the Trademark

Counterfeiting Act (18 U.S.C. §2320(a) (2006)) to preempt the Counterfeit Trademark Act (765

ILCS 1040/2 (West 2006)). Accordingly, we begin by examining the language of the federal

statute at issue to discern congressional intent. Nothing in section 2320(a) refers to state law at

all or explicitly states any preemptive intention by Congress in enacting the Trademark

Counterfeiting Act. However, section 2320(a), which codifies trademark infringement as federal

criminal conduct, is not the entirety of federal legislation in the realm of trademarks. Rather, the

Trademark Counterfeiting Act, in section 2320(a), is the criminal parallel to the Lanham Act (15

U.S.C. §1051 et seq. (2000)), a purely civil statute that governs federal regulation of trademarks,

including infringement. See Green v. Fornario, 486 F.3d 100, 102 n.1 (3d Cir. 2007). The

Lanham Act also does not contain an explicit statement of preemptive intent. Having found no

express intention from Congress to preempt state prosecution for trademark infringement, we

proceed to address whether Congress has implied such intent.

Defendant asserts that Congress implicitly intended to occupy the field of trademark

infringement by enacting an abundance of trademark legislation. In support of this argument,

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defendant recites the history of federal legislation beginning in 1881 and continuing through

1999. Defendant also refers to three sections of the Lanham Act as evidence of congressional

intent to exclude state legislation in this area: section 1121(b), which provides that no State may

require alteration of a registered mark or marks additional to those contemplated by "the

registered mark as exhibited in the certificate of registration issued by the United States Patent

and Trademark Office"; section 1122, which contains a waiver of sovereign immunity by the

States and the United States; and section 1127, which recites as one purpose of the Lanham Act

the protection of "registered marks in such commerce from interference by State, or territorial

legislation." 15 U.S.C. §§1121(b), 1122, 1127 (2002). We find defendant's argument

unpersuasive.

The three sections identified by defendant as indicative of a congressional effort to

exclude state law and occupy the field of trademark infringement do not, in this court's view,

present a full-scale federal regulatory scheme of the sort that would support an inference of field

preemption. Indeed, both federal and state courts have consistently interpreted the Lanham Act

and federal trademark legislation as not having "broad preemptive reach." JCW Investments, Inc.

v. Novelty, Inc., 482 F.3d 910, 919 (7th Cir. 2007) (stating that "[i]n the area of trademark law,

preemption is the exception rather than the rule, "the court held that the Lanham Act did not

preempt state-law punitive damages available under the Illinois unfair competition statute);

Attrezzi, LLC v. Maytag, Corp., 436 F.3d 32, 42 (1st Cir. 2006) (holding that the Lanham Act did

not preempt state law remedies in the form of attorney fees and double damages under New

Hampshire's trademark infringement and antidilution statutes); Sporty's Farm L.L.C. v.

Sportsman's Market., Inc., 202 F.3d 489, 500-01 (2d Cir. 2000) (citing a legislative report

indicating that the federal trademark laws dealing with cyber-squatting were not designed to

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preempt state law remedies); Viacom Inc. v. Ingram Enterprises, Inc., 141 F.3d 886, 891 (8th

Cir. 1998) (finding that the Lanham Act does not preempt state antidilution laws because

Congress made federal trademark registration a defense to claims under state antidilution statutes

rather than preempting them); Tonka Corp. v. Tonk-A-Phone, Inc., 805 F.2d 793, 794-95 (8th

Cir. 1986) (holding that the Lanham Act did not preempt recovery of attorney fees under

Minnesota's Deceptive Trade Practices Act). Moreover, the two state courts that have decided

the precise issue here have held that the federal Trademark Counterfeiting Act, embodied in

section 2320, does not preempt state criminal statutes penalizing trademark counterfeiting. See

Commonwealth v. Sow, 2004 PA Super 377, ¶16 (2004); State v. Frampton, 737 P.2d 183, 191

(Utah 1987). Although defendant correctly points out that the Pennsylvania and Utah cases have

merely persuasive value and urges this court to conduct an independent evaluation of the issue,

he makes no attempt to distinguish those cases from the case sub judice. Accordingly, defendant

has failed to demonstrate that the "clear and manifest" intent of Congress was to

comprehensively control all aspects of the trademark field. See Rice, 331 U.S. at 230, 91 L. Ed.

at 1459, 67 S. Ct. at 1152.

Next, we consider whether compliance with both the federal law and the state law would

be a physical impossibility, thus preempting the Illinois statute through "conflict preemption."

See Florida Lime & Avocado Growers, Inc., 373 U.S. at 142-43, 10 L. Ed. 2d at 248, 83 S. Ct. at

1217. Since both the Illinois statute section 2 and section 2320(a) of the federal Trademark

Counterfeiting Act provide for criminal penalties arising from trafficking in counterfeit

trademark goods and services, we fail to see how compliance with both the federal and the state

law would create a physical impossibility. Simply put, comply with both laws by avoiding

trafficking in counterfeit goods.

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Defendant asserts that section 2 of the Counterfeit Trademark Act conflicts with section

2320(a) of the federal Trademark Counterfeiting Act because the federal statute incorporates a

series of affirmative defenses available under the Lanham Act and the Illinois statute contains no

similar list of affirmative defenses.

However, the question posed in conflict preemption is not whether any conceivable

inconsistency exists between the statutes, but whether the state law poses an obstacle or imped-

iment to the accomplishment of the objectives of Congress. The question then becomes whether

section 2320(a) and federal trademark infringement legislation is compromised by the Illinois

law or the Illinois law otherwise conflicts with federal objectives. We find no discernable

conflict.

The Lanham Act was enacted "in order to provide national protection for trademarks used

in interstate and foreign commerce." Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189,

193, 83 L. Ed. 2d 582, 587, 105 S. Ct. 658, 661 (1985). The Lanham Act itself contains a

statement of intent in section 1127, which states:

"The intent of this Act is to regulate commerce within the

control of Congress by making actionable the deceptive and

misleading use of marks in such commerce; to protect registered

marks used in such commerce from interference by State, or

territorial legislation; to protect persons engaged in such commerce

against unfair competition; to prevent fraud and deception in such

commerce by the use of reproductions, copies, counterfeits, or

colorable imitations of registered marks; and to provide rights and

remedies stipulated by treaties and conventions respecting trade-

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marks, trade names, and unfair competition entered into between

the United States and foreign nations." 15 U.S.C. §1127 (2000).

Likewise, the Trademark Counterfeiting Act is not simply an anti-consumer-fraud statute, but

rather, "a central policy goal of the [Trademark Counterfeiting] Act is to protect trademark

holders' ability to use their marks to identify themselves to their customers and to link that

identity to their reputations for quality goods and services." United States v. Torkington, 812 F.2d

1347, 1353 (11th Cir. 1987), citing S. Rep. No. 98-526, at 1-2, 4-5 (1984), reprinted in

U.S.C.C.A.N. 3627-28, 3630-31 and H.R. Rep. No. 997, at 5-6.

The Counterfeit Trademark Act in no way interferes with the federal trademark

registration scheme or the rights of registered mark holders. At most the Illinois law augments

and supplements the federal scheme by providing criminal penalties for trafficking in counterfeit

goods to which a trademark is attached. See Mead Data Central, Inc. v. Toyota Motor Sales,

U.S.A., Inc., 702 F. Supp. 1031, 1041 (S.D.N.Y. 1988). Rather than impeding congressional

objectives, in fact, the state law furthers the same purposes as the federal statute. Both statutes

are intended to protect trademark holders from misappropriation of their investment and penalize

those individuals who infringe on trademarks by trafficking in counterfeit goods. Consequently,

we find no implied conflict preemption.

A state law is not preempted simply because it seeks to regulate criminal conduct that is

identical to conduct subject to federal regulation. See Chicago Magnet Wire Corp., 126 Ill. 2d at

371. Without evidence of Congress's intention, express or implied, to preempt state prosecution

under the Counterfeit Trademark Act, we conclude that prosecution thereunder is not preempted.

Therefore, we reverse the trial court's dismissal of the indictment and remand for further

proceedings.

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Reversed and remanded.

MURPHY, P.J., and QUINN, J., concur.