United States v. Bohai

• Court: Court of Appeals for the First Circuit
• Decided: January 30, 1995
• Docket: 94-1629
• Status: Published

Opinion

USCA1 Opinion

United States Court of Appeals
                            United States Court of Appeals
                                For the First Circuit
                                For the First Circuit
                                 ____________________

        No. 94-1629

                                    UNITED STATES,

                                      Appellee,

                                          v.

                          BOHAI TRADING COMPANY, INC., A/K/A
                          BRAYCO INTERNATIONAL CORPORATION,

                                Defendant, Appellant.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Paul J. Barbadoro, U.S. District Judge]
                                             ___________________

                                 ____________________

                                        Before

                                 Selya, Circuit Judge,
                                        _____________
                            Bownes, Senior Circuit Judge,
                                    ____________________
                              and Stahl, Circuit Judge.
                                         _____________

                                 ____________________

            Daniel  R.  Deutsch,  with  whom  Steven  J.  Brooks  and  Deutsch
            ___________________               __________________       _______
        Williams Brooks DeRensis Holland  & Drachman, P.C., were on  brief for
        __________________________________________________
        appellant.
            Jean L. Ryan, Assistant United States  Attorney, with whom Paul M.
            ____________                                               _______
        Gagnon, United States Attorney, was on brief for appellee.
        ______

____________________

                                   January 30, 1995
                                 ____________________



STAHL, Circuit Judge.  Bohai  Trading Company, Inc.
                      STAHL, Circuit Judge.
                             _____________

            ("Bohai"), a New Hampshire-based concern that causes athletic

            footwear  to  be  manufactured  overseas  primarily  for  the

            account of others, appeals  from the denial of its  motion to

            dismiss  two  counts  of   an  indictment  charging  that  it

            trafficked  in counterfeit goods in violation  of 18 U.S.C.  

            2320  and that  it  imported  goods  by  means  of  false  or

            fraudulent  practices in violation of  18 U.S.C.    542.  The

            principal  issue in  this appeal  is Bohai's argument  that  

            2320(d) is unconstitutionally vague.  Because we find no such

            infirmity, we affirm.

                                          I.
                                          I.
                                          __

                                     BACKGROUND1  
                                     BACKGROUND
                                     __________

                      In 1987 and 1988,  Bohai2 arranged for the overseas

            manufacture  of  sneakers  for  the Stride  Rite  Corporation

            ("Stride Rite"),  the owner  of the  KEDS trademark.   Stride

                                
            ____________________

            1.  In reviewing the district court's  denial of a motion  to
            dismiss, we take the factual allegations in the indictment as
            true.  Boyce Motor Lines v. United States,  342 U.S. 337, 343
                   _________________    _____________
            n.16  (1952); United  States v.  Barker Steel  Co., 985  F.2d
                          ______________     _________________
            1123,  1125 (1st  Cir. 1993).   In this  case, the  motion to
            dismiss  initially   challenged  all   five  counts  of   the
            indictment and, therefore, the factual  allegations contained
            in the  entire indictment  were properly before  the district
            court.  On this appeal, we review the motion  to dismiss only
            as to counts one and three (as explained below, pursuant to a
            plea agreement, the  district court granted  the government's
            motion  to dismiss  the remaining  counts).  Because  of this
            procedural  setting,  on this  appeal  we  take as  true  the
            factual allegations contained in the entire indictment.  

            2.  Some  of  the  events  described  here  involved  Bohai's
            predecessor, Brayco International Corporation, Inc.  

                                         -2-
                                          2



Rite  placed   two  separate   orders  with  Bohai   for  the

            manufacture of 100,000 pairs per order of women's canvas vamp

            oxford  ("CVO")  sneakers  bearing  the  KEDS  mark.    Bohai

            arranged for the shoes to be manufactured at the Qing  Dao #9

            Rubber Factory, a government-owned enterprise in the People's

            Republic of  China ("PRC").   Stride Rite  terminated Bohai's

            authority to apply  the KEDS mark to the  shoes in the spring

            of 1989.

                      Beginning in August  1989, Bohai's president, James

            L. Bryant, devised a plan to produce CVO sneakers bearing the

            KEDS mark in the PRC and distribute them in the United States

            without the knowledge or authorization of Stride Rite.  Bohai

            arranged  for the production of the shoes at the PRC factory.

            In September 1989, a  United States-based purchaser agreed to

            buy  100,000 pairs of the shoes but asked for assurances that

            they  were  not counterfeit.    A Bohai  employee  showed the

            purchaser  a   purported  Stride  Rite   purchase  order  for

            approximately  100,000  pairs of  CVO  shoes.   However,  the

            purchase order pertained to a separate, previous order of CVO

            shoes and had nothing to do with the shoes then being sold to

            the  purchaser.   The employee  falsely represented  that the

            shoes had been ordered and produced for Stride Rite, but that

            Stride Rite  had rejected them.   In fact, the  shoes had not

            yet been manufactured and Stride Rite had no knowledge of the

            plan to produce or import them.

-3-
                                          3



The Qing Dao factory produced the shoes and applied

            the  KEDS mark  to them.   Bryant  and  others took  steps to

            conceal  the fact  that trademarks  had been  applied to  the

            shoes without the knowledge or permission of Stride Rite.  In

            December 1989, Bryant instructed the PRC factory to stamp the

            shoes  then being  produced to  falsely reflect  a production

            date of 1988.  Documents were also backdated.  

                      In March 1990,  the counterfeit shoes entered  this

            country through  Boston.  The  invoice presented to  the U.S.

            Customs Service at the  time of entry falsely  indicated that

            the  shoes had been  manufactured pursuant to  a valid Stride

            Rite  purchase order  and were  intended to  be delivered  to

            Stride  Rite or its consignee.   After entry,  an employee of

            Bohai  directed  the  shipper  to  deliver  the  shoes  to  a

            warehouse  in  Holbrook, Massachusetts,  rather  than  to the

            Stride  Rite warehouse  in New  Bedford, Massachusetts.   The

            employee  explained to  the shipping  company that  Bohai and

            Stride Rite were manufacturing the shoes together as a "joint

            venture" and, therefore, Bohai was an  agent for Stride Rite.

            After the purchaser inspected  the shoes, they were delivered

            to  New Jersey,  where  they  were  sold  to  the  public  as

            authentic KEDS CVO shoes  through a national department store

            chain.  On March 27, 1990, Bohai received a wire transfer for

            $410,032 from the purchaser for the 100,000 shoes.

-4-
                                          4



On April  29, 1993,  a federal grand  jury indicted

            Bohai,  Bryant and Bohai's  Treasurer, Herbert Chih-Lun Wang,

            under one  count charging  violations of  18 U.S.C.    2320,3

            one  count charging  violations  of  18  U.S.C.    542,4  two

            counts  of conspiracy under 18  U.S.C.   371,5  and one count

            charging violations  of 18 U.S.C.    1957.6   The  defendants

            moved to dismiss the indictment on various grounds, including

            that     2320 did  not  give  them constitutionally  adequate

            notice of the illegality  of their acts.  The  district court

            held  a  hearing and,  in an  order  dated October  29, 1993,

            denied   the  defendants'  motion.    Negotiations  with  the

            government ensued.   On  February 17,  1994, Bohai  entered a

            conditional plea of guilty under Fed. R. Crim. P. 11(a)(2) to

            the first and  third counts of the  indictment, which alleged

            violations of     2320 and  542 respectively.   The agreement

            expressly reserved Bohai's right to seek review of the denial

            of  the motion to dismiss.   The district  court then granted

                                
            ____________________

            3.  18  U.S.C.    2320 provides  that "whoever  intentionally
            traffics  or attempts  to traffic  in goods  or services  and
            knowingly uses a counterfeit mark" may be subject to fine and
            imprisonment.  

            4.  18 U.S.C.    542  prohibits the  importation of goods  by
            means of false or fraudulent practices.

            5.  Counts  two   and  four   of   the  indictment   alleged,
            respectively, conspiracy to traffic in  counterfeit goods and
            conspiracy to  import goods by  means of false  or fraudulent
            practices.

            6.  18  U.S.C.      1957  prohibits   engaging  in   monetary
            transactions in property derived from unlawful activity.

                                         -5-
                                          5



the government's motion to  dismiss all counts against Bryant

            and Wang and  to dismiss the conspiracy and  money laundering

            counts against  Bohai.   Following a sentencing  hearing, the

            district  court sentenced  Bohai to  probation and  imposed a

            fine of $100,000 for violations of counts one and three.  The

            district  court  also  ordered   Bohai  to  pay  $100,000  in

            restitution to Stride Rite.7  This appeal followed.

                                         II.
                                         II.
                                         ___

                                      DISCUSSION
                                      DISCUSSION
                                      __________

                      Bohai  argues  that  the  district  court  erred in

            denying  Bohai's motion  to  dismiss the  indictment for  two

            principal   reasons:       (1)   18   U.S.C.        2320   is

            unconstitutionally vague; and (2) even if the statute is  not

            constitutionally infirm, Bohai nonetheless lacked fair notice

            because of    2320's legislative history  and a then-existing

            Customs  Service  regulation   issued  pursuant  to   another

            statute.  We address Bohai's arguments in order.8

                                
            ____________________

            7.  Pursuant  to the  plea agreement,  the restitution  is in
            escrow pending this  appeal.  The agreement  provides that if
            this  court finds count one (charging under 18 U.S.C.   2320)
            is legally invalid, the restitution and any interest  will be
            returned to Bohai.

            8.  Bohai  also challenges  count  three, which  charges that
            Bohai knowingly  and intentionally  sought to  import 100,000
            pairs of  shoes "bearing counterfeit (as defined  in Title 18
            U.S.C. Section 2320(d))  blue rectangular  heel patches  with
            the name  `KEDS' on them,  by means  of one or  more material
            false statements . . ."  in violation of 18 U.S.C.   542.  As
            Bohai notes, the "indictment  expressly ties [count three] to
            a   violation  of  section   2320."    Because   we  find  no
            constitutional  infirmity  with  regard to     2320,  Bohai's

                                         -6-
                                          6



The  due  process  clause  of the  Fifth  Amendment
                      

            requires  that a criminal  statute be  sufficiently definite.

            The "requirement  of definiteness  is violated by  a criminal

            statute that fails to give a person of ordinary  intelligence

            fair notice that his contemplated conduct is forbidden by the

            statute."   United  States  v.  Harriss, 347  U.S.  612,  617
                        ______________      _______

            (1954); see also Grayned  v. City of Rockford, 408  U.S. 104,
                    ___ ____ _______     ________________

            108  (1972) ("It is a basic principle  of due process that an

            enactment is void for  vagueness if its prohibitions are  not

            clearly defined.").  "The question is whether, looking at the

            statute  in light  of the  facts of  the case  at hand,  [it]

            provide[s] a constitutionally adequate warning to those whose

            activities  are governed."   United  States v.  Buckalew, 859
                                         ______________     ________

            F.2d  1052, 1054  (1st Cir.  1988) (quotations  and citations

            omitted);  see also  United States  v. National  Dairy Prods.
                       ___ ____  _____________     ______________________

            Corp.,  372   U.S.  29,   33  (1963)  ("In   determining  the
            _____

            sufficiency of  the  notice a  statute must  of necessity  be

            examined  in light of the  conduct with which  a defendant is

            charged.").  Our task, therefore, is  to determine whether 18

            U.S.C.   2320 gave Bohai adequate warning that, as alleged in

            the indictment, "knowingly  [using] counterfeit marks without

            the  authorization of  the holder  of the  right to  use such

            marks"  is unlawful.    Our review  is de  novo.   See, e.g.,
                                                   __  ____    ___  ____

____________________

            challenge to count three fails.   

                                         -7-
                                          7



United  States  v. Aguilar-Aranceta,  957  F.2d  18, 21  (1st
            ______________     ________________

            Cir.), cert. denied, 113 S. Ct. 105 (1992).
                   _____ ______

                      Bohai argues  that the phrase  "at the time  of the

            manufacture   or  production"   as  used  in   the  so-called

            "authorized-use"   exception  to      2320's   definition  of

            counterfeit  goods9  renders  the statute  unconstitutionally

            vague.  Bohai specifically  focuses on the word "production,"

            arguing that it has  "no core meaning" and that   2320 leaves

            the  reader  helpless  "to  understand  what  aspect  of  the

____________________

            9.  We  set forth the relevant portion of 18 U.S.C.   2320(d)
            with the "authorized-use" language underscored: 

                 (d)  For purposes of this section --
                      (1)  the term "counterfeit mark" means -- 
                           (A)  a spurious mark --
                                (i)   that  is  used  in connection  with
                                trafficking in goods or services;
                                (ii)     that   is  identical   with,  or
                                substantially  indistinguishable from,  a
                                mark  registered  for   those  goods   or
                                services on the principal register in the
                                United States Patent and Trademark Office
                                and in use, whether  or not the defendant
                                knew such mark was so registered; and
                                (iii) the use of which is likely to cause
                                confusion,  to  cause   mistake,  or   to
                                deceive; or
                           (B)   a spurious designation that is identical
                           with, or substantially indistinguishable from,
                           a designation as to  which the remedies of the
                           Lanham  Act are  made  available by  reason of
                           section 110 of the Olympic Charter Act;
                 but such term does not include any mark or designation  
                 ______________________________________________________
                 used in connection with goods or services of which the  
                 ______________________________________________________
                 manufacturer or producer was, at the time of the        
                 ________________________________________________
                 manufacture or production in question authorized to use 
                 _______________________________________________________
                 the mark  for  designation  for  the type  of  goods  or
                 ________________________________________________________
            services        so manufactured or produced, by the holder of
            ________        _____________________________________________
            the right to       use such mark or designation.
            ____________       ____________________________

                                         -8-
                                          8



production  process  --   i.e.,  creating,  bringing   about,

            furnishing,  or yielding the goods in question -- is relevant

            in dating the  existence of generalized authority  to use the

            mark on goods of the same type."  

                      Bohai's  statutory  analysis  suffers from  extreme

            myopia.  As  we have observed in  the past, statutes are  not

            enacted on a  piecemeal basis and, accordingly, should not be

            read  that way.   See  Little People's  Sch., Inc.  v. United
                              ___  ___________________________     ______

            States, 842 F.2d 570, 573 (1st Cir. 1988).  By broadening the
            ______

            focus and examining the phrase "at the time of manufacture or

            production" in  the  context  of  the  entire  authorized-use

            exception, see,  e.g., id.,  we think that  Bohai's vagueness
                       ___   ____  ___

            challenge cannot  be sustained.  Based on  the plain language

            of the statute, we conclude  that Congress intended, and made

            sufficiently plain,  that this exception would  be limited to

            those  goods  or  services  for  which authorization  existed

            during  the entire period  of production or  manufacture.  We
                        ______

            focus on Congress's  statement that authorization  must exist

            "at the time of the manufacture or production in question . .
             __ ___ ____ __

            .  for the  type  of goods  or  services so  manufactured  or
                                                     __  ____________  __

            produced."  Though perhaps  not a model of the  most exacting
            ________

            legislative craftsmanship, we think this language nonetheless

            makes clear beyond reasonable dispute that  the authorization

            to use  the mark must exist  "at the time of,"  that is, from

            beginning  of  the  production   or  manufacture  up  to  and

-9-
                                          9



including the time at  which the goods or services  have been

            finally "manufactured or produced."   

                      We believe  that Bohai could  reasonably understand

            from  the  statutory language  that  conduct  charged in  the

            indictment was not within  the authorized-use exception.  The

            government charges that Bohai was not authorized to apply the

            marks  to  100,000 pairs  of  CVO shoes,  conduct  that falls

            squarely outside the statute's exception.   Bohai asks us  to

            consider the language in light of the "undisputed fact" that,

            in  1988, it had authority  from Stride Rite  to assemble raw

            materials, import  sewing machines  and molds, and  train the

            Qing Dao  workers to produce  the KEDS CVO shoes.10   For the

            reasons outlined  above, the  language of the  statute cannot

            sustain   Bohai's  assertion  that   these  activities  alone

            constitute "production" within the meaning of the authorized-

            use  exception.  While Bohai's  activities in 1988 might have

            been steps  in the  production process, the  statute requires

            that authorization  exist until  production is complete.   In

            short,  on these facts, we do not  think this language can be

            reasonably    described    as     ambiguous,    much     less

            unconstitutionally vague.     Bohai makes  the additional and

            somewhat novel  argument that,  even  if the  statute is  not

                                
            ____________________

            10.  On this  point, the  district court  noted in  its order
            that,  although  it was  not alleged  in the  indictment, the
            government  did concede that the defendants  were at one time
                                                              ___________
            authorized to apply the  KEDS trademark to shoes manufactured
            at the Qing Dao factory.  

                                         -10-
                                          10



vague, Bohai lacked fair  notice in light of  the legislative

            history  of   2320 as well as a then-existing Customs Service

            regulation.  We  do not  agree.  As  to legislative  history,

            Bohai  argues that it "is relevant insofar as it discloses no

            intention  to  criminalize the  type  of  conduct at  issue."

            Bohai  then presents  a lengthy  examination of  various non-

            statutory materials.   As a general proposition, when a court

            finds  "clear  meaning in  the  unvarnished  language of  the

            statute, [it is] duty bound to honor that  meaning."  Baez v.
                                                                  ____

            INS, No.  94-1224, slip op.  at 13 (1st  Cir. Dec. 6,  1994).
            ___

            Consequently,  a  court  may  seldom engage  in  a  boundless

            exploration of unenacted legislative materials.  See id.; see
                                                             ___ ___  ___

            also Laracuente v. Chase Manhattan Bank, 891 F.2d 17, 23 (1st
            ____ __________    ____________________

            Cir. 1989)  ("[A]bsent ambiguity  in the  statutory language,

            our inquiry is complete  and ends with the plain  language of

            the  statute.").    Bohai's  use  of non-statutory  materials

            demonstrates the  wisdom  of this  rule.   Bohai relies  upon

            legislative history  for  the  dubious  proposition  that  it

            discloses no congressional intent to criminalize the activity

            at issue.   Under  the Constitution, Congress  speaks through

            duly enacted bills and  resolutions; as to legislation, there

            is no requirement  that Congress  memorialize anything,  much

            less  its intent, through  unenacted non-statutory materials.

            Accordingly, Congress's failure to do so can hardly  be cited

-11-
                                          11



as  proof  of  a defendant's  argument  that  it lacked  fair

            notice.11   

                      We also  disagree with Bohai's  analytical premise.

            On an  appeal like this one, the  issue is simply whether the

            statute, as enacted by  Congress, gave sufficient notice that

            the conduct charged was proscribed.  Once we  have determined

            that the statute is constitutionally sufficient, our analysis

            ends.     Bohai  seeks  to  go  a  step  farther  and  create

            uncertainty by  referring to  wholly extraneous matters.   We

            are  not  so easily  distracted.    Thus, Bohai's  exhaustive

            treatment of the Customs  Service regulation, appearing at 19

            C.F.R.   133.21(c)(3), is also unavailing.12  

                                
            ____________________

            11.  As   Judge  Harold   Leventhal  once   observed,  citing
            legislative history  is akin  to "looking  over  a crowd  and
            picking  out   your  friends."     Patricia  M.   Wald,  Some
                                                                     ____
            Observations On the  Use of Legislative  History in the  1981
            _____________________________________________________________
            Supreme Court Term, 68  Iowa L. Rev. 195, 214 (1983).   Bohai
            __________________
            seeks to  add a new  twist by  looking over a  crowd and  not
            finding an enemy.

            12.  Prior to 1988, 19 C.F.R.   133.21(c)(3), issued pursuant
            to  Section 526 of the Tariff Act  of 1930, 19 U.S.C.   1526,
            provided that  if "the articles of foreign manufacture bear a
            recorded  trademark or tradename  applied under authorization
            of the United States  owner," then the Customs  Service would
            not  prevent importation.   Bohai's  fair notice  argument is
            grounded  in  its  assertion  that the  Customs  Service  had
            routinely  admitted trademarked goods produced by "authorized
            manufacturers"   without  regard   to   the  timing   of  the
            manufacture.
                      We do  not agree with Bohai that  Grayned, 408 U.S.
                                                        _______
            at   110,   supports   the   broad   proposition   that   the
            "administrative  practice of  the agency  principally charged
            with enforcing  Section  2320 is  significant in  determining
            whether  that section  provided  fair notice  to Bohai."   In
            Grayned,  a First Amendment  case, the Court  stated that, in
            _______
            the absence of an  interpretation of the meaning of  an anti-

                                         -12-
                                          12



III.
                                         III.
                                         ____

                                      CONCLUSION
                                      CONCLUSION
                                      __________

                      Because we conclude that  the language of 18 U.S.C.

              2320 is sufficiently definite so as to give fair  notice to

            Bohai  that  the  conduct   alleged  in  the  indictment  was

            proscribed, the judgment of the district court is

                      Affirmed.
                      Affirmed.
                      ________

____________________

            noise ordinance  from the court below,  it would "extrapolate
            its allowable meaning . . .  [by looking to] the words of the
            ordinance itself, to the  interpretations the court below has
            given to  analogous statutes and, perhaps to  some degree, to
            the interpretation of the statute given by those charged with
            enforcing  it."    Id.  (internal  quotations  and  footnotes
                               ___
            omitted).   Thus, agency  interpretations might  provide some
            assistance in our  own effort to  arrive at the meaning  of a
            statute,  but they  must at  least relate  to the  statute at
            issue.

                                         -13-
                                          13