45 F. 3d 577 - United States v. Bohai Trading Company Inc A/k/a

Bohai Trading Company, Inc. ("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. Sec. 2320 and that it imported goods by means of false or fraudulent practices in violation of 18 U.S.C. Sec. 542. The principal issue in this appeal is Bohai's argument that Sec. 2320(d) is unconstitutionally vague. Because we find no such infirmity, we affirm.

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 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.

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.

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. Sec. 2320,3 one count charging violations of 18 U.S.C. Sec. 542,4 two counts of conspiracy under 18 U.S.C. Sec. 371,5 and one count charging violations of 18 U.S.C. Sec. 1957.6 The defendants moved to dismiss the indictment on various grounds, including that Sec. 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 Secs. 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 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.

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. Sec. 2320 is unconstitutionally vague; and (2) even if the statute is not constitutionally infirm, Bohai nonetheless lacked fair notice because of Sec. 2320's legislative history and a then-existing Customs Service regulation issued pursuant to another statute. We address Bohai's arguments in order.8

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, 74 S.Ct. 808, 811-12, 98 L.Ed. 989 (1954); see also Grayned v. City of Rockford, 408 U.S. 104, 108, 92 S.Ct. 2294, 2298-99, 33 L.Ed.2d 222 (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, 83 S.Ct. 594, 598, 9 L.Ed.2d 561 (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. Sec. 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., United States v. Aguilar-Aranceta, 957 F.2d 18, 21 (1st Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 105, 121 L.Ed.2d 64 (1992).

Bohai argues that the phrase "at the time of the manufacture or production" as used in the so-called "authorized-use" exception to Sec. 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 Sec. 2320 leaves the reader helpless "to understand what aspect of the 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 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 vague, Bohai lacked fair notice in light of the legislative history of Sec. 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, 41 F.3d 19, 24 (1st Cir.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 nonstatutory 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 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. Sec. 133.21(c)(3), is also unavailing.12III.

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