## Facts

- Defendants operated businesses that bought individual cans of infant formula from convenience stores that had obtained the cans from third parties (including cans originally acquired through welfare programs or stolen).
- Defendants consolidated cans by manufacturer into cardboard shipping trays designed to resemble manufacturers’ trays and bearing manufacturers’ trademarks.
- It was undisputed that the resold cans were genuine, unadulterated, and sold within their “sell by” dates, though a tray could include different lots and different “sell by” dates.
- The government charged that the trademarked trays made the goods “counterfeit” under 18 U.S.C. § 2320 and that the products were “misbranded” under the FDCA based on how the goods were repackaged and presented.
- A jury convicted defendants of trafficking in goods with counterfeit marks, selling misbranded goods with intent to defraud, and related conspiracy and money-laundering offenses.
- The district court entered a post-verdict judgment of acquittal, ruling the conduct did not satisfy § 2320 or the charged FDCA misbranding theory; the government appealed.

## Issues

1. Whether repackaging genuine infant formula into trays bearing manufacturers’ trademarks, without authorization, constitutes trafficking in “counterfeit” goods under 18 U.S.C. § 2320.
2. Whether the repackaged infant formula was “misbranded” under the FDCA so as to support convictions for selling misbranded goods with intent to defraud.
3. Whether conspiracy and money-laundering convictions premised on the alleged trademark and misbranding offenses can stand if the predicate offenses fail as a matter of law.

## Decision

- The Fifth Circuit affirmed the judgment of acquittal on all counts.
- The court held that using manufacturers’ trademarks on trays containing genuine, unadulterated infant formula did not create “counterfeit” goods under § 2320 because the marks accurately identified the source of the goods.
- The court held the government’s trial theory did not establish FDCA “misbranding” as charged, given the absence of falsity or misleading labeling proven beyond a reasonable doubt.
- Because the predicate trademark and FDCA offenses failed, the dependent conspiracy and money-laundering convictions also failed.

## Legal Principles

- Criminal trademark counterfeiting under 18 U.S.C. § 2320 requires a “spurious” mark used to falsely indicate source; repackaging authentic goods does not become “counterfeit” solely because the repackager used the trademark on packaging.
- Where the goods are genuine and the mark continues to identify the actual manufacturer, § 2320 does not reach the conduct absent a mismatch between the mark and the goods’ true source or nature.
- FDCA misbranding liability requires proof that labeling or presentation is false or misleading (or otherwise violates statutory labeling requirements); repackaging genuine, properly labeled goods, without proof of statutory falsity or misleadingness as charged, is insufficient.
- Conspiracy and money-laundering convictions that depend on specified predicate offenses cannot stand when those predicate offenses are legally unsupported.

## Conclusion

The Fifth Circuit ruled that unauthorized repackaging of genuine infant formula into trademarked trays was not criminal trademark counterfeiting and was not misbranding under the government’s charged theory; without those predicate crimes, the related conspiracy and money-laundering convictions could not be sustained.


United States v. Hanafy, 302 F.3d 485 (5th Cir. 2002)