[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3891 Reported in House (RH)]






                                                 Union Calendar No. 366
105th CONGRESS
  2d Session
                                H. R. 3891

                          [Report No. 105-650]

    To amend the Trademark Act of 1946 to prohibit the unauthorized 
  destruction, modification, or alteration of product identification 
                     codes, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 19, 1998

Mr. Goodlatte introduced the following bill; which was referred to the 
                       Committee on the Judiciary

                             July 28, 1998

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
[For text of introduced bill, see copy of bill as introduced on May 19, 
                                 1998]

_______________________________________________________________________

                                 A BILL


 
    To amend the Trademark Act of 1946 to prohibit the unauthorized 
  destruction, modification, or alteration of product identification 
                     codes, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Trademark Anticounterfeiting Act of 
1998''.

SEC. 2. PROHIBITION AGAINST UNAUTHORIZED ALTERATION OF PRODUCT 
              IDENTIFICATION CODES.

    (a) In General.--Title VIII of the Act entitled ``An Act to provide 
for the registration and protection of trade-marks used in commerce, to 
carry out the provisions of certain international conventions, and for 
other purposes.'', approved July 5, 1946 (commonly referred to as the 
``Lanham Act'' and the ``Trademark Act of 1946'') is amended by 
inserting after section 43 (15 U.S.C. 1125) the following:

      ``unauthorized modifications of product identification codes

    ``Sec. 43A. (a) Definitions.--In this section--
            ``(1) the term `consumer'--
                    ``(A) means--
                            ``(i) the ultimate user or purchaser of a 
                        good; or
                            ``(ii) any hotel, restaurant, or other 
                        provider of services that must remove or alter 
                        the container, label, or packaging of a good in 
                        order to make the good available to the 
                        ultimate user or purchaser; and
                    ``(B) does not include any retailer or other 
                distributor who acquires a good for resale;
            ``(2) the term `good' means any article, product, or 
        commodity that is customarily produced or distributed for sale, 
        rental, or licensing in interstate or foreign commerce, and any 
        container, packaging, label, or component thereof;
            ``(3) the term `manufacturer' includes the original 
        manufacturer of a good and a duly appointed agent or 
        representative of that manufacturer acting within the scope of 
        its agency or representation;
            ``(4) the term `product identification code'--
                    ``(A) includes any number, letter, symbol, marking, 
                date (including an expiration date), code, software, or 
                other technology that is affixed to or embedded in any 
                good, by which the manufacturer of the good may trace 
                the good back to a particular production lot or batch 
                or date of removal, or otherwise identify the source of 
                the good, the date of manufacture, the date of 
                expiration, or other comparable critical data; and
                    ``(B) does not include copyright management 
                information conveyed in connection with copies or 
                phonorecords of a copyrighted work or any performance 
                or display of a copyrighted work;
            ``(5) the term `Universal Product Code' refers to the 
        multidigit bar code and number representing goods in retail 
        applications; and
            ``(6) the term `value' means the face, par, or market 
        value, whichever is the greatest.
    ``(b) Prohibited Acts.--Except as otherwise authorized by Federal 
law, it shall be unlawful for any person, other than the consumer or 
the manufacturer of a good, knowingly and without authorization of the 
manufacturer--
            ``(1) to directly or indirectly alter, conceal, remove, 
        obliterate, deface, strip, or peel any product identification 
        code affixed to or embedded in that good;
            ``(2) to directly or indirectly affix or embed a product 
        identification code to or in that good which is intended by the 
        manufacturer for a different good, such that the code no longer 
        accurately identifies the source of the good;
            ``(3) to directly or indirectly affix to or embed in that 
        good any number, letter, symbol, marking, date, code, or other 
        technology intended to simulate a product identification code; 
        or
            ``(4) to import, export, sell, distribute, or broker that 
        good, the product identification code for which has been 
        altered, concealed, removed, obliterated, defaced, stripped, 
        peeled, affixed, or embedded in violation of paragraph (1) or 
        (2), or that bears an unauthorized number, letter, symbol, 
        marking, date, or other code in violation of paragraph (3).
    ``(c) Applicability.--The prohibitions set forth in subsection (b) 
shall apply to product identification codes (or simulated product 
identification codes in a case to which subsection (b)(3) applies) 
affixed to, or embedded in, any good held for sale or distribution in 
interstate or foreign commerce or after shipment therein.
    ``(d) Exclusion.--
            ``(1) UPC codes.--Nothing in this section prohibits a 
        retailer from affixing a Universal Product Code or other 
        electronic pricing code to a good if that code does not (or can 
        be removed so as not to) permanently alter, conceal, remove, 
        obliterate, deface, strip, or peel any product identification 
        code.
            ``(2) Repackaging for resale.--(A) Nothing in this section 
        prohibits a distributor from removing an article, product, or 
        commodity of retail sale from a shipping container and placing 
        such article, product, or commodity in another shipping 
        container for purpose of resale in a quantity different from 
        the quantity originally provided by the manufacturer or from 
        replacing a damaged shipping container, if, except as provided 
        in paragraph (1), such article, product, or commodity of retail 
        sale retains its original product identification code, without 
        any obstruction or alteration, and if--
                    ``(i) such distributor is registered with all 
                applicable Federal and State agencies;
                    ``(ii) such distributor repackages the article, 
                product, or commodity in full compliance with all 
                applicable State and Federal laws and regulations; and
                    ``(iii) the act of repackaging does not result in a 
                prohibited act under section 301 of the Federal Food, 
                Drug, and Cosmetic Act or violate any other applicable 
                State or Federal law or regulation.
            ``(B) As used in this paragraph, the term `shipping 
        container' means--
                    ``(i) a container or wrapping used for the 
                transportation of any article, product, or commodity in 
                bulk or in quantity to manufacturers, packers, or 
                processors, or to wholesale or retail distributors 
                thereof; and
                    ``(ii) containers or wrappings used by retailers to 
                ship or deliver any article, product, or commodity to 
                retail customers, if such containers and wrappings bear 
                no printed matter pertaining to any particular article, 
                product, or commodity.
    ``(e) Criminal Penalties.--Any person who willfully violates this 
section shall be punished as provided in section 1365A of title 18.
    ``(f) Civil Remedies.--
            ``(1) In general.--Any person who is injured by a violation 
        of this section, or threatened with such injury, may bring a 
        civil action in an appropriate United States district court 
        against the alleged violator.
            ``(2) Injunctions and impounding and disposition of 
        goods.--In any action under paragraph (1), the court may--
                    ``(A) grant 1 or more temporary, preliminary, or 
                permanent injunctions on such terms as the court 
                determines to be reasonable to prevent or restrain the 
                violation;
                    ``(B) at any time while the action is pending, 
                order the impounding, on such terms as the court 
                determines to be reasonable, of any good that is in the 
                custody or control of the alleged violator and that the 
                court has reasonable cause to believe was involved in 
                the violation; and
                    ``(C) as part of a final judgment or decree--
                            ``(i) order the destruction of any good 
                        involved in the violation that is in the 
                        custody or control of the violator or that has 
                        been impounded under subparagraph (B); or
                            ``(ii) if the court determines that any 
                        good impounded under subparagraph (B) is not 
                        unsafe or a hazard to health, dispose of the 
                        good by delivery to such Federal, State, or 
                        local government agencies as, in the opinion of 
                        the court, have a need for such good, or by 
                        gift to such charitable or nonprofit 
                        institutions as, in the opinion of the court, 
                        have a need for such good, if such disposition 
                        would not otherwise be in violation of law, and 
                        if the manufacturer consents to such 
                        disposition and is given the opportunity to 
                        reapply a product identification code to the 
                        good.
            ``(3) Damages.--
                    ``(A) In general.--Subject to subparagraph (B), in 
                any action under paragraph (1), the plaintiff shall be 
                entitled to recover the actual damages suffered by the 
                plaintiff as a result of the violation, and any profits 
                of the violator that are attributable to the violation 
                and are not taken into account in computing the actual 
                damages. In establishing the violator's profits, the 
                plaintiff shall be required to present proof only of 
                the violator's sales, and the violator shall be 
                required to prove all elements of cost or deduction 
                claimed.
                    ``(B) Statutory damages.--In any action under 
                paragraph (1), the plaintiff may elect, at any time 
                before final judgment is rendered, to recover, instead 
                of actual damages and profits described in subparagraph 
                (A), an award of statutory damages for any violation 
                under this section in an amount equal to--
                            ``(i) not less than $500 and not more than 
                        $100,000, with respect to each type of goods 
                        involved in the violation; and
                            ``(ii) if the violation threatens the 
                        health and safety of the public, as determined 
                        by the court, not less than $5,000 and not more 
                        than $1,000,000, with respect to each type of 
                        goods involved in the violation.
            ``(4) Costs and attorney's fees.--In any action under 
        paragraph (1)--
                    ``(A) in addition to any damages recovered under 
                paragraph (3), a prevailing plaintiff may recover the 
                full costs of the action; and
                    ``(B) the court, in its discretion, may also award 
                reasonable attorney fees to the prevailing party.
            ``(5) Repeat violations.--
                    ``(A) Treble damages.--In any case in which a 
                person violates this section within 3 years after the 
                date on which a final judgment was entered against that 
                person for a previous violation of this section, the 
                court, in an action brought under this subsection, may 
                increase the award of damages for the later violation 
                to not more than 3 times the amount that would 
                otherwise be awarded under paragraph (3), as the court 
                considers appropriate.
                    ``(B) Burden of proof.--A plaintiff that seeks 
                damages as described in subparagraph (A) shall bear the 
                burden of proving the existence of the earlier 
                violation.
            ``(6) Limitations on actions.--No civil action may be 
        commenced under this section later than 3 years after the date 
        on which the claimant discovers the violation.
            ``(7) Innocent violations.--In any action under paragraph 
        (1), the court in its discretion may reduce or remit the total 
        award of damages in any case in which the violator sustains the 
        burden of proving, and the court finds, that the violator was 
        not aware and had no reason to believe that the acts of the 
        violator constituted a violation.
    ``(g) Enforcement.--The Attorney General shall enforce this 
section.''.
    (b) Conforming Amendment.--The heading for title VIII of the Act of 
July 5, 1946, is amended by striking ``AND DILUTION'' and inserting 
``DILUTION, AND ADULTERATION OF PRODUCT CODES''.

SEC. 3. CRIMINAL PENALTIES.

    (a) In General.--Chapter 65 of title 18, United States Code, is 
amended by inserting after section 1365 the following:
``Sec. 1365A. Unauthorized modification of product identification codes
    ``(a) Criminal Penalties.--Any person who willfully violates 
section 43A of the Act of July 5, 1946 (commonly referred to as the 
`Trademark Act of 1946') shall--
            ``(1) be fined under this title, imprisoned not more than 1 
        year, or both;
            ``(2) if the total retail value of the good or goods 
        involved in the violation is greater than $5,000, be fined 
        under this title, imprisoned not more than 5 years, or both;
            ``(3) if the person acts with reckless disregard for the 
        risk that the health or safety of the public would be 
        threatened and under circumstances manifesting extreme 
        indifference to such risk, and the violation threatens the 
        health or safety of the public, be fined under this title, 
        imprisoned not more than 10 years, or both;
            ``(4) if the person acts with reckless disregard for the 
        risk that another person will be placed in danger of death or 
        bodily injury and under circumstances manifesting extreme 
        indifference to such risk and--
                    ``(A) serious bodily injury to any individual 
                results, be fined under this title, imprisoned not more 
                than 20 years, or both; or
                    ``(B) death of an individual results, be fined 
                under this title, imprisoned for any term of years or 
                for life, or both; and
            ``(5) with respect to any second or subsequent violation, 
        be subject to twice the maximum term of imprisonment that would 
        otherwise be imposed under this subsection, fined under this 
        title, or both.
    ``(b) Injunctions and Impounding, Forfeiture, and Disposition of 
Goods.--
            ``(1) Injunctions and impounding.--In any prosecution under 
        this section, upon motion of the United States, the court may--
                    ``(A) grant 1 or more temporary, preliminary, or 
                permanent injunctions on such terms as the court 
                determines to be reasonable to prevent or restrain the 
                alleged violation; and
                    ``(B) at any time during the proceedings, order the 
                impounding, on such terms as the court determines to be 
                reasonable, of any good that is in the custody or 
                control of the defendant and that the court has 
                reasonable cause to believe was involved in the 
                violation.
            ``(2) Forfeiture and disposition of goods.--Upon conviction 
        of any person of a violation of this section, the court shall--
                    ``(A) order the forfeiture of any good involved in 
                the violation that is in the custody or control of the 
                defendant or that has been impounded under paragraph 
                (1)(B); and
                    ``(B) either--
                            ``(i) order the destruction of each good 
                        forfeited under subparagraph (A); or
                            ``(ii) if the court determines that any 
                        good forfeited under subparagraph (A) is not 
                        unsafe or a hazard to health, dispose of the 
                        good by delivery to such Federal, State, or 
                        local government agencies as, in the opinion of 
                        the court, have a need for such good, or by 
                        gift to such charitable or nonprofit 
                        institutions as, in the opinion of the court, 
                        have a need for such good, if such disposition 
                        would not otherwise be in violation of law and 
                        if the manufacturer consents to such 
                        disposition and is given the opportunity to 
                        reapply a product identification code to the 
                        good.''.
    (b) Conforming Amendment.--The table of sections for chapter 65 of 
title 18, United States Code, is amended by inserting after the item 
relating to section 1365 the following:

``1365A. Unauthorized modification of product identification codes.''.

SEC. 4. ATTORNEY GENERAL REPORTING REQUIREMENTS.

    Section 2320(f) of title 18, United States Code, is amended--
            (1) by inserting ``unauthorized modification of product 
        identification codes under section 1365A,'' after ``involve''; 
        and
            (2) in paragraph (4), by inserting ``1365A,'' after 
        ``sections''.




                                                 Union Calendar No. 366

105th CONGRESS

  2d Session

                               H. R. 3891

                          [Report No. 105-650]

_______________________________________________________________________

                                 A BILL

    To amend the Trademark Act of 1946 to prohibit the unauthorized 
  destruction, modification, or alteration of product identification 
                     codes, and for other purposes.

_______________________________________________________________________

                             July 28, 1998

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed