When counterfeit products are sold in direct competition with a product they will be found to have a significant impact on interstate commerce.
Lorillard Tobacco Company (“Lorillard”) manufactured and sold a popular brand of cigarettes, called "Newport." Michael Hamden (“Hamden”) operated two convenience stores that sold Newport cigarettes. A sales representative from Lorillard discovered that the Hamden stores had both sold counterfeit Newport cigarettes alongside true Newport cigarettes. The court applied an eight-factor test to determine whether use of the mark would cause confusion with the original product. Having found overwhelming support with no evidence to the contrary on each factor, the court found trademark and counterfeit infringement. Since the counterfeit products were sold in direct competition, they had a significant impact on interstate commerce. Finally, since the Newport trademark was famous and distinctive prior to the date of sale of the counterfeit cigarettes, Hamden diluted the mark by selling a nearly identical product. Therefore, the court GRANTED Lorillard's motions for summary judgment for claims of counterfeiting and infringement, false designation of origin, and dilution.