*VIOLATION OF I.B.M. TRADEMARK RESULTS IN *_ *_$3.3 MILLION FINE AND RESTITUTION _* *_FOR CHICAGO-AREA COMPANY_*------------------------------------------------------------------------
WASHINGTON, D.C. (November 19, 1998) A computer hardware firm based in a Chicago suburb today pleaded guilty to violating a federal criminal trademark law by distributing computer memory boards in counterfeit International Business Machine Corp. (IBM) boxes.
The defendant, Desktop Sales, Inc., now doing business as VisionTek, Inc., based in Gurnee, Ill., pleaded guilty and agreed to pay $3.3 million in fines and restitution. The payment equals three times the $1.1 million profit that VisionTek made from selling the counterfeit merchandise.
"This case demonstrates that counterfeiting does not pay," said James Robinson, Assistant Attorney General in charge of the Criminal Division.
"The fine of $2.2 Million is one of the largest ever for a criminal trademark case in the United States," said Scott Charney, Chief of the Computer Crime and Intellectual Property Section of the Criminal Division.
According to the plea agreement, the company purchased computer memory chips and modules used to upgrade the memory capacity of personal computers. The company then took these products, which were not manufactured by or under the authority of IBM, and packaged them in counterfeit IBM box sets. Because the products appeared to be produced by IBM, the company was able to resell them at a premium price. In fact, however, the purchaser received non-IBM memory chips and modules, and did not receive the benefits of the special packaging protections contained in legitimate IBM box sets. Between January 1991 and May 1993, the company sold approximately 30,000 units of memory chips in counterfeit IBM boxes , earning $11.1 million- $1.1 million more than they would have if the products had not been sold in counterfeit boxes.
The case was heard by U.S. District Judge Robert W. Gettleman.
In accord with the plea agreement, the Court imposed a fine upon VisionTek of $2.2 million, which represents twice the gain to the defendant. In addition, the defendant will pay $1.1 million as restitution to IBM.
"The resolution of this case ensures that IBM will be made whole for the violation of its trademark and that the defendant will pay the maximum fine for illegally infringing on a trademark," said Scott R. Lassar, United States Attorney for the Northern District of Illinois.
"IBM greatly appreciates the outstanding job done by the Department of Justice in this case. This type of action by the Department is extremely valuable in protecting IBM's trademarks which represent the high quality and reliability our customers have come to expect," said D.J. Rosenberg, IBM's Vice President and Assistant General Counsel for Litigation.
The case was investigated by the Chicago Field Division of the Federal Bureau of Investigation and the Computer Crime and Intellectual Property Section of the Department of Justice's Criminal Division. The government is being represented in court by Assistant U.S. Attorney Matthew Crowl.
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