[Congressional Record Volume 142, Number 80 (Tuesday, June 4, 1996)]
[House]
[Pages H5776-H5781]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              {time}  1445
           ANTICOUNTERFEITING CONSUMER PROTECTION ACT OF 1996

  Mr. MOORHEAD. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 2511) to control and prevent commercial counterfeiting, and 
for other purposes, as amended.
  The Clerk read as follows:

                               H.R. 2511

       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 ``Anticounterfeiting Consumer 
     Protection Act of 1996''.

     SEC. 2. FINDINGS.

       The counterfeiting of trademarked and copyrighted 
     merchandise--
       (1) has been connected with organized crime;
       (2) deprives legitimate trademark and copyright owners of 
     substantial revenues and consumer goodwill;
       (3) poses health and safety threats to United States 
     consumers;
       (4) eliminates United States jobs; and
       (5) is a multibillion-dollar drain on the United States 
     economy.

     SEC. 3. COUNTERFEITING AS RACKETEERING.

       Section 1961(1)(B) of title 18, United States Code, is 
     amended by inserting ``, section 2318 (relating to 
     trafficking in counterfeit labels for phonorecords, computer 
     programs or computer program documentation or packaging and 
     copies of motion pictures or other audiovisual works), 
     section 2319 (relating to criminal infringement of a 
     copyright), section 2319A (relating to unauthorized fixation 
     of and trafficking in sound recordings and music videos of 
     live music performances), section 2320 (relating to 
     trafficking in goods or services bearing counterfeit marks)'' 
     after ``sections 2314 and 2315 (relating to interstate 
     transportation of stolen property)''.

     SEC. 4. APPLICATION TO COMPUTER PROGRAMS, COMPUTER PROGRAM 
                   DOCUMENTATION, OR PACKAGING.

       (a) In General.--Section 2318 of title 18, United States 
     Code, is amended--
       (1) in subsection (a), by striking ``a motion picture or 
     other audiovisual work,'' and inserting ``a computer program 
     or documentation or packaging for a computer program, or a 
     copy of a motion picture or other audiovisual work, and 
     whoever, in any of the circumstances described in subsection 
     (c) of this section, knowingly traffics in counterfeit 
     documentation or packaging for a computer program,'';

[[Page H5777]]

       (2) in subsection (b)(3) by inserting `` `computer 
     program','' after `` motion picture',''; and
       (3) in subsection (c)--
       (A) by striking ``or'' at the end of paragraph (2);
       (B) in paragraph (3)--
       (i) by inserting ``a copy of a copyrighted computer program 
     or copyrighted documentation or packaging for a computer 
     program,'' after ``enclose,''; and
       (ii) by striking the period at the end and inserting ``; 
     or''; and
       (C) by adding after paragraph (3) the following:
       ``(4) the counterfeited documentation or packaging for a 
     computer program is copyrighted.''.
       (b) Conforming Amendments.--(1) The section caption for 
     section 2318 of title 18, United States Code, is amended to 
     read as follows:

     Sec. 2318. Trafficking in counterfeit labels for 
       phonorecords, copies of computer programs or computer 
       program documentation or packaging, and copies of motion 
       pictures or other audio visual works, and trafficking in 
       counterfeit computer program documentation or packaging''.

       (2) The item relating to section 2318 in the table of 
     sections for chapter 113 of such title is amended to read as 
     follows:

``2318. Trafficking in counterfeit labels for phonorecords, copies of 
              computer programs or computer program documentation or 
              packaging, and copies of motion pictures or other audio 
              visual works, and trafficking in counterfeit computer 
              program documentation or packaging.''.

     SEC. 5. TRAFFICKING IN COUNTERFEIT GOODS AND SERVICES.

       Section 2320 of title 18, United States Code, is amended by 
     adding at the end the following:
       ``(e) Beginning with the first year after the date of 
     enactment of this subsection, the Attorney General shall 
     include in the report of the Attorney General to Congress on 
     the business of the Department of Justice prepared pursuant 
     to section 522 of title 28, an accounting, on a district by 
     district basis, of the following with respect to all actions 
     taken by the Department of Justice that involve trafficking 
     in counterfeit labels for phonorecords, copies of computer 
     programs or computer program documentation or packaging, 
     copies of motion pictures or other audiovisual works (as 
     defined in section 2318 of title 18), criminal infringement 
     of copyrights (as defined in section 2319 of title 18), 
     unauthorized fixation of and trafficking in sound recordings 
     and music videos of live musical performances (as defined in 
     section 2319A of title 18), or trafficking in goods or 
     services bearing counterfeit marks (as defined in section 
     2320 of title 18):
       ``(1) The number of open investigations.
       ``(2) The number of cases referred by the United States 
     Customs Service.
       ``(3) The number of cases referred by other agencies or 
     sources.
       ``(4) The number and outcome, including settlements, 
     sentences, recoveries, and penalties, of all prosecutions 
     brought under sections 2318, 2319, 2319A, and 2320 of title 
     18.''.

     SEC. 6. SEIZURE OF COUNTERFEIT GOODS

       Section 34(d)(9) of the Act of July 5, 1946 (60 Stat. 427, 
     chapter 540; 15 U.S.C. 1116(d)(9)), is amended by striking 
     the first sentence and inserting the following: ``The court 
     shall order that service of a copy of the order under this 
     subsection shall be made by a Federal law enforcement officer 
     (such as a United States marshal or an officer or agent of 
     the United States Customs Service, Secret Service, Federal 
     Bureau of Investigation, or Post Office) or may be made by a 
     State or local law enforcement officer, who, upon making 
     service, shall carry out the seizure under the order.''.

     SEC. 7. RECOVERY FOR VIOLATION OF RIGHTS.

       Section 35 of the Act of July 5, 1946 (60 Stat. 427, 
     chapter 540; 15 U.S.C. 1117), is amended by adding at the end 
     the following new subsection:
       ``(c) In a case involving the use of a counterfeit mark (as 
     defined in section 34(d) (15 U.S.C. 1116(d)) in connection 
     with the sale, offering for sale, or distribution of goods or 
     services, the plaintiff may elect, at any time before final 
     judgment is rendered by the trial court, to recover, instead 
     of actual damages and profits under subsection (a), an award 
     of statutory damages for any such use in connection with the 
     sale, offering for sale, or distribution of goods or services 
     in the amount of--
       ``(1) not less than $500 or more than $100,000 per 
     counterfeit mark per type of goods or services sold, offered 
     for sale, or distributed, as the court considers just; or
       ``(2) if the court finds that the use of the counterfeit 
     mark was willful, not more than $1,000,000 per counterfeit 
     mark per type of goods or services sold, offered for sale, or 
     distributed, as the court considers just.''.

     SEC. 8. DISPOSITION OF EXCLUDED ARTICLES.

       Section 603(c) of title 17, United States Code, is amended 
     in the second sentence by striking ``as the case may be;'' 
     and all that follows through the end and inserting ``as the 
     case may be.''.

     SEC. 9. DISPOSITION OF MERCHANDISE BEARING AMERICAN TRADEMARK

       Section 526(e) of the Tariff Act of 1930 (19 U.S.C. 
     1526(e)) is amended--
       (1) in the second sentence, by inserting ``destroy the 
     merchandise. Alternatively, if the merchandise is not unsafe 
     or a hazard to health, and the Secretary has the consent of 
     the trademark owner, the Secretary may'' after ``shall, after 
     forfeiture,'';
       (2) by inserting ``or'' at the end of paragraph (2);
       (3) by striking ``, or'' at the end of paragraph (3) and 
     inserting a period; and
       (4) by striking paragraph (4).

     SEC. 10. CIVIL PENALTIES

       Section 526 of the Tariff Act of 1930 (19 U.S.C. 1526) is 
     amended by adding at the end the following new subsection:
       ``(f) Civil Penalties.--(1) Any person who directs, assists 
     financially or otherwise, or aids and abets the importation 
     of merchandise for sale or public distribution that is seized 
     under subsection (e) shall be subject to a civil fine.
       ``(2) For the first such seizure, the fine shall be not 
     more than the value that the merchandise would have had if it 
     were genuine, according to the manufacturer's suggested 
     retail price, determined under regulations promulgated by the 
     Secretary.
       ``(3) For the second seizure and thereafter, the fine shall 
     be not more than twice the value that the merchandise would 
     have had if it were genuine, as determined under regulations 
     promulgated by the Secretary.
       ``(4) The imposition of a fine under this subsection shall 
     be within the discretion of the Customs Service, and shall be 
     in addition to any other civil or criminal penalty or other 
     remedy authorized by law.''.

     SEC. 11. PUBLIC DISCLOSURE OF AIRCRAFT MANIFESTS.

       Section 431(c)(1) of the Tariff Act of 1930 (19 U.S.C. 
     1431(c)(1) is amended--
       (1) in the matter preceding subparagraph (A), by inserting 
     ``vessel or aircraft'' before ``manifest'';
       (2) by amending subparagraph (D) to read as follows:
       ``(D) The name of the vessel, aircraft, or carrier.'';
       (3) by amending subparagraph (E) to read as follows:
       ``(E) The seaport or airport of loading.'';
       (4) by amending subparagraph (F) to read as follows:
       ``(F) The seaport or airport of discharge.''; and
       (5) by adding after subparagraph (G) the following new 
     subparagraph:
       ``(H) The trademarks appearing on the goods or packages.''.

     SEC. 12. CUSTOMS ENTRY DOCUMENTATION.

       Section 484(d) of the Tariff Act of 1930 (19 U.S.C. 
     1484(d)) is amended--
       (1) by striking ``Entries'' and inserting ``(1) Entries''; 
     and
       (2) by adding at the end the following new paragraph:
       ``(2) The Secretary, in prescribing regulations governing 
     the content of entry documentation, shall require that entry 
     documentation contain such information as may be necessary to 
     determine whether the imported merchandise bears an 
     infringing trademark in violation of section 42 of the Act of 
     July 5, 1946 (commonly referred to as the `Trademark Act of 
     1946'; 15 U.S.C. 1124), or any other applicable law, 
     including a trademark appearing on the goods or packaging.''.

     SEC. 13. UNLAWFUL USE OF VESSELS, VEHICLES, AND AIRCRAFT IN 
                   AID OF COMMERCIAL COUNTERFEITING.

       Section 80302(a) of title 49, United States Code, is 
     amended--
       (1) by striking ``or'' at the end of paragraph (4);
       (2) by striking the period at the end of paragraph (5) and 
     inserting ``; or''; and
       (3) by adding at the end the following new paragraph:
       ``(6)(A) a counterfeit label for a phonorecord, copy of a 
     computer program or computer program documentation or 
     packaging, or copy of a motion picture or other audiovisual 
     work (as defined in section 2318 of title 18);
       ``(B) a phonorecord or copy in violation of section 2319 of 
     title 18;
       ``(C) a fixation of a sound recording or music video of a 
     live musical performance in violation of section 2319A of 
     title 18; or
       ``(D) any good bearing a counterfeit mark (as defined in 
     section 2320 of title 18).''.

     SEC. 14. REGULATIONS.

       Not later than 6 months after the date of the enactment of 
     this Act, the Secretary of the Treasury shall prescribe such 
     regulations or amendments to existing regulations that may be 
     necessary to carry out the amendments made by sections 9, 10, 
     11, 12, and 13 of this Act.

  The SPEAKER pro tempore (Mr. Upton). Pursuant to the rule, the 
gentleman from California [Mr. Moorhead] and the gentlewoman from 
Colorado [Mrs. Schroeder] will each be recognized for 20 minutes.
  The Chair recognizes the gentleman from California [Mr. Moorhead].


                             general leave

  Mr. MOORHEAD. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days to revise and extend their remarks on H.R. 
2511.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  Mr. MOORHEAD. Mr. Speaker, I yield myself 3 minutes.
  (Mr. MOORHEAD asked and was given permission to revise and extend his 
remarks.)

[[Page H5778]]

  Mr. MOORHEAD. Mr. Speaker, I would like to commend my friend and 
colleague from Virginia, Mr. Goodlatte, for his leadership in drafting 
and introducing this bill, which is cosponsored by Chairman Hyde, 
Ranking Minority Member Conyers, Representative Coble, a valued senior 
member on the subcommittee, myself, and several other Members. I also 
want to thank the gentlewoman from Colorado, Pat Schroeder, for her 
support in processing this legislation.
  Two amendments to H.R. 2511 were adopted by the Subcommittee on 
Courts and Intellectual Property, and the bill was unanimously approved 
by both the subcommittee and the full Judiciary Committee. A companion 
bill in the other body, S. 1136, passed by voice vote on December 13, 
1995.
  Current law recognizes that a problem of criminal trademark and 
copyright counterfeiting exists, but it does not do enough to deter and 
prosecute counterfeiters. Criminal counterfeiting has risen to a new 
level. In 1982, the cost of piracy to U.S. industries was approximately 
$5.5 billion. Today, American businesses lost 35 times that amount, 
more than $200 billion per year.
  The combination of high profits and low risk of prosecution has made 
trademark and copyright counterfeiting a favorite activity of organized 
crime syndicates. Law enforcement agents from the U.S. Customs Service 
testified that combating criminal activity connected to counterfeiting 
is starting to look like attacking the drug trafficking problem. Last 
year, those same customs agents coordinated raids in New York and Los 
Angeles that netted $27 million in counterfeit merchandise and 
supported indictments of 43 members of a Korean crime syndicate.
  The price of counterfeiting goes well beyond lost revenues and 
damaged business reputations: it can cost lives. Fatal automobile, 
airplane, and helicopter crashes have been associated with faulty 
counterfeit machine parts. Name brand prescription and over-the-counter 
drugs have also been counterfeited. Millions of bogus pills containing 
inferior, or even harmful, ingredients have been distributed to 
unsuspecting consumers purchasing medicine.
  Searle discovered the distribution of more than 1 million bogus birth 
control pills after several women complained of unusual bleeding. 
Tylenol, Advil, Tagament, Ceclor, and Zantac are all other famous name 
brand pharmaceuticals that are reported to have been counterfeited. One 
witness testified that toy makers are concerned that cheap knock-offs 
present choking hazards and may contain toxic paints or dyes.
  H.R. 2511 proposes key amendments to both criminal and civil laws in 
response to the growing threat of criminal counterfeiting. It improves 
the ability of law enforcement officers to detect and arrest 
counterfeiters. It also allows for the meaningful prosecution of all 
levels of a criminal organization involved in counterfeiting.
  Finally, this bill ensures that seized counterfeit goods are 
destroyed rather than returned to the importer for reshipment to 
another port of entry.
  I am unaware of any opposition to H.R. 2511, and I urge its adoption.
  Mr. Speaker, I reserve the balance of my time.
  Mrs. SCHROEDER. Mr. Speaker, I yield myself such time as I may 
consume.
  (Mrs. SCHROEDER asked and was given permission to revise and extend 
her remarks.)
  Mrs. SCHROEDER. Mr. Speaker, I join the subcommittee chairman in 
supporting H.R. 2511. This bill strengthens criminal and civil laws and 
remedies relating to copyright and trademark counterfeiting.
  Our subcommittee has worked hard to ensure that intellectual property 
is accorded a high level of protection. As we seek to persuade other 
countries around the world to provide strong protection for copyrights, 
trademarks, and patents, it is critical that we demonstrate through our 
own legal system the high value that we place on intellectual property.
  Because there is an enormous potential for profit in illegal 
counterfeiting, the civil and criminal remedies must be strong if we 
are to deter counterfeiting. As the committee report notes, between 5 
and 8 percent of all goods and services sold worldwide are counterfeit. 
In some industries, the problem is enormous; the computer software 
industry, for example, estimates that for every five software programs 
that are legally sold, two illegally pirated copies are also sold.
  As the gentleman from California has pointed out, the problem goes 
beyond the monetary loss and damage to reputation suffered by the 
copyright or trademark owner. Counterfeit goods also can pose a serious 
threat to consumers. Many of my colleagues may recall, for example, the 
substandard infant formula, falsely labeled with a well-known brand, 
that was distributed last year in the United States. In another case, 
more than a million bogus birth control pills were distributed falsely 
bearing the mark of a pharmaceutical company; the company did not 
discover the counterfeits until women complained of pain and unusual 
bleeding.

  By making trafficking in counterfeit goods or services a predicate 
offense subject to RICO, by strengthening provisions relating to the 
seizure and destruction of counterfeited goods, and by providing for 
judicially determined statutory damages for trademark owners, this bill 
will make it easier to combat commercial counterfeiting.
  The administration supports this bill, and I urge my colleagues to 
support this bill strengthening the ability of trademark and copyright 
owners to protect their property rights, and that is what this bill 
does.
  Mr. Speaker, I thank everybody on the committee for doing this, and I 
think it has been in the long tradition of this committee to move these 
in a very bipartisan, nonconfrontational fashion because we understand 
how terribly important it is for the United States to stand firm on the 
globe in protecting these trademarks and to be moving forward and 
protecting copyrights. This country produces a very high percentage of 
it, it is a high percentage of our trade internationally, and I again 
thank the subcommittee chairman for his strong leadership on all of 
this.
  Mr. Speaker, I reserve the balance of my time.
  Mr. MOORHEAD. Mr. Speaker, I yield 2 minutes to the gentleman from 
Illinois [Mr. Hyde], chairman of the full Committee on the Judiciary of 
the House.
  (Mr. HYDE asked and was given permission to revise and extend his 
remarks.)
  Mr. HYDE. Mr. Speaker, I surely am not going to take all that time. I 
have nothing new to add that has not already been said. This is a fine 
piece of legislation. It will cure or move toward cure of a very 
serious problem, that of counterfeiting, and so I will ask that my 
remarks, which are truncated and comprehensive, be included in the 
Record.
  But, I do want to congratulate the chairman of the subcommittee, the 
gentleman from California, Carlos Moorhead, and the ranking member, the 
gentlewoman from Colorado, Mrs. Patricia Schroeder, on her excellent 
counsel, the gentleman from Virginia, Mr. Goodlatte, who initiated this 
legislation. And I think the staff, certainly our staff, Tom Mooney, 
John Dudas, Mitch Glazier, Joe Wolfe, and Betty Wheeler, all deserve 
special thanks as well.
  Mr. Speaker, I strongly support H.R. 2511, the Anticounterfeiting 
Consumer Protection Act of 1996. Soon we will consider the renewal of 
most-favored-nation status for China. This timely legislation 
highlights one of the growing problems we have with that country: 
counterfeit goods. The Chinese continue to counterfeit the goods of 
legitimate American companies at an alarming rate.
  Just 2 weeks ago, the administration issued a finding that China was 
not satisfactorily implementing the Agreement on Enforcement of 
Intellectual Property Rights and Market Access, signed in March 1995. 
In making its finding, the administration said the following:

       Critical deficiencies are present in China's implementation 
     of measures to address piracy at the production and wholesale 
     distribution level. Piracy remains particularly rampant in 
     Guangdong province. Manufacturers and distributors, primarily 
     located in southern China, continue to produce pirated CD's, 
     LD's, and CD-ROM's in massive quantities. Due to lax 
     enforcement at the point of production and at the border, 
     exports of pirated computer software, movies, sound 
     recordings, and other products have grown substantially over 
     the past year. Products pirated in China have flooded 
     Southeast Asia, Russia, and the other Commonwealth of

[[Page H5779]]

     Independent States [CIS] countries. Latin America and 
     European markets have also been targeted, and the U.S. 
     Customs Service has seized pirated CD's and CD-ROM's entering 
     the United States from China.

  According to recent newspaper articles, the Chinese may have as many 
as 31 government-licensed plants turning out pirated CD's and CD-ROM's. 
To make matters worse, many believe that some or all of these plants 
are run by the Chinese military or government officials. According to 
these articles, the International Intellectual Property Alliance, which 
represents the record and motion picture industry, estimates that in 
1995, the United States lost $6.9 billion in exports because of 
counterfeit movies, records, books, and software. About $2.3 billion 
were lost to the Chinese. The Pharmaceutical Manufacturers' Association 
estimates that its losses from pirated drug patents exceed $3 billion. 
Millions more are lost to counterfeit auto parts, athletic shoes, and 
apparel.
  Unfortunately, the probe is not limited to the Chinese. 
Organized crime operations sell counterfeit goods as a way to launder 
the money from their other criminal activities. By doing so, the 
Chinese, the Mob, and countless other criminals steal billions of 
dollars' worth of intellectual property that American companies and 
individuals have developed at great expense.

  For far too long, we have tended to look upon the counterfeiting of 
goods as a rather trivial crime. That must stop. The sale of 
counterfeit goods has numerous serious consequences.
  First, we must consider who is selling these goods: the Chinese 
communist government, the Mob, and common criminals. These are not 
people that Americans want to finance.
  Second, counterfeit goods amount to nothing more than the theft of 
intellectual property. If we do not vigorously protect intellectual 
property, we destroy the incentive to create.
  Third, counterfeit goods are frequently dangerous, and they can cause 
serious injury. The current issue of Business Week reports that 
substandard airplane parts contributed to at least 166 airplane crashes 
from 1973 to 1993. Last September, the New York Times reported that the 
FDA has uncovered at least 10 operations in 8 States producing 
substandard infant formula that has caused sickness in babies using it.
  Finally, by injuring legitimate American companies, counterfeit goods 
destroy American jobs. If we want to protect our American jobs, we must 
stop the importation of the phony compact discs and computer programs 
that the Chinese would foist upon us.
  Because of all these serious consequences, I strongly support H.R. 
2511. It will give new tools to the legitimate American companies who 
want to fight off the counterfeiters. It will place counterfeiting 
activities within the RICO statute, exactly the place where such 
organized criminal activity belongs. With all of the RICO remedies in 
hand, law enforcement officials and the private companies will be able 
to hit the counterfeiters in their pocketbooks.
  H.R. 2511 will also give the Government new tools when it seizes 
counterfeit goods at the border. Amazingly, up until now, our law 
allowed counterfeiters who got caught at the border to re-export the 
goods to another country. Obviously then, there was little cost to 
getting caught. H.R. 2511 insures that we will never engage in that 
simple-minded practice again. Rather, under H.R. 2511, counterfeit 
goods seized at the border will either be destroyed or, if the 
legitimate trademark owner consents, given to charity.
  For all these reasons, Mr. Speaker, I commend the distinguished 
chairman of the Subcommittee on Courts and Intellectual Property, Mr. 
Moorhead, and the ranking member, Mrs. Schroeder, for their important 
work in bringing this bipartisan legislation to the floor. I urge all 
of my colleagues to vote in favor of H.R. 2511.
  Mr. MOORHEAD. Mr. Speaker, I yield 8 minutes to the gentleman from 
Virginia [Mr. Goodlatte], the sponsor of this legislation.
  Mr. GOODLATTE. Mr. Speaker, as the lead sponsor of H.R. 2511 I am 
proud that this House is taking a decisive step to make it tougher for 
product counterfeiters to prey on American business and American 
consumers and cost American workers their jobs.
  Counterfeit products cost U.S. businesses an estimated $200 billion 
annually. An estimated 5 percent of products sold worldwide are phony. 
Fortune Magazine has called it the crime of the 21st century. That is 
because counterfeiting is a highly lucrative, but relatively low-risk 
crime with only hand-slap penalties if caught.
  New technology has made it much easier for counterfeiters to pursue 
their trade. Computers and digital technology have made it a cinch to 
copy audiotapes, video, and software, and unlike analog copies, the 
thousandth digital copy is just as clean and clear as the first. 
Scanners and laser printers have made it easy to replicate labels, 
logos, and even the holograms that software producers afix to their 
products to prove authenticity.
  For years we have overlooked counterfeiters, assuming that product 
counterfeiting meant $2 fake watches and was a victimless crime. But 
the evidence is mounting that counterfeiting is a very dangerous crime 
that can threaten the health and safety of us all.
  Last year the Federal Aviation Administration grounded 6,000 piston-
powered aircraft to check for phoney crankshaft bolts that could cause 
crashes. The cover story in this week's Business Week is on bogus 
airplane parts and cites the explosion last June of the No. 2 engine on 
a ValuJet plane as an example. Business Week reports that the explosion 
was caused by an engine that had been overhauled and later sold to 
ValuJet by a repair station in Turkey that lacked FAA approval. It 
further reports that investigators found that the engine contained a 
cracked and corroded compressor disk which had been plated over during 
the overhaul and was thus undetectable.
  Counterfeit airplane parts actually caused a deadly crash of a 
Norwegian plane that killed 55 people.
  In April 1995, the Food and Drug Administration released a ``Consumer 
Alert'' warning parents against using counterfeit-labeled Similac with 
iron ``Ready to Feed'' liquid formula in 8-ounce plastic cans with a 
fictitious code number and expiration date. The fake infant formula, 
found in 16 States, reportedly caused illnesses ranging from rashes to 
seizures in many babies who consumed the substandard product.
  A counterfeit brake pad caused an automobile crash that killed a 
mother and her child. In 1990 more than 30 raids were conducted in 15 
States as a result of a crackdown on auto parts counterfeiting.
  Rampant piracy of the intellectual property of American businesses 
has strained United States-China relations, bringing us to the brink of 
a trade war and requiring a reconsideration of whether China should 
receive most-favored-nation trade benefits.

  The question Congress must ask is whether China will agree to abide 
by the basic rules that govern international trade, or will Chinese 
officials continue to condone piracy? Remember that China is our fifth 
largest trading partner and very well may be on its way to becoming the 
world's largest economy. If China refuses to play by the rules and 
continues at best, to ignore piracy, or at worst, to encourage it, the 
losses for American companies will be staggering.
  For example, Chinese officials, after much prodding by Microsoft 
Corp. agreed to investigate the Jin Die Science and Technology 
Development Co. in southern China. When they raided the company, 
Chinese officials found 5,700 computer disks containing thousands of 
dollars each in Microsoft software, illegally mass-produced on 
sophisticated machinery. According to the Washington Post, during this 
raid the Chinese confiscated the counterfeit software disks, but U.S. 
executives who were at the raid claim they also saw Jin Die's machines 
producing video discs containing movies such as ``Waterworld'' and 
``Ace Ventura II.'' The Chinese authorities did nothing to stop the 
pirating of these American movies.
  H.R. 2511 will make it easier to ensure that the constant flow of 
counterfeits, arriving in the United States from countries like China 
can be confiscated and taken out of the stream of commerce. It also 
ensures that the American businesses who suffer commercial damage from 
counterfeit products may be awarded either actual or statutory damages.
  Because of the lure of enormous profits compared to the relatively 
low risk of being arrested, prosecuted, and sent to jail, it has not 
taken long for organized crime to get involved in counterfeiting 
operations. These operations have become highly sophisticated, well-
financed, mobile, and international in scope.
  In March 1995, more than 10.5 million dollars' worth of counterfeit 
software was found during a raid in California that also turned up 
semiautomatic

[[Page H5780]]

weapons, handguns, and military explosives. Newspaper stories report 
that those who were arrested are under investigation for their link to 
organized crime, a link that may reach from China, Hong Kong, and 
Taiwan to southern California's immigrant neighborhoods.
  These criminal networks have distribution systems as diverse as any 
modern corporation. Counterfeiters know that although criminal 
penalties exist on the books, criminal actions are rarely initiated 
against counterfeiters. As for private enforcement actions, trademark 
and copyright owners are consistently frustrated by an inability to 
recover any meaningful damages.
  This legislation takes strong steps to attack this problem.
  The Anticounterfeiting Consumer Protection Act will help law 
enforcement officials contend with the sophisticated nature of modern 
counterfeiting. First, it increases criminal penalties by making 
trafficking in counterfeit goods or services a RICO offense, 
consequently providing for increased jail time, criminal fines, and 
asset forfeiture.
  Second, the legislation allows greater involvement by all levels of 
Federal law enforcement in fighting counterfeiting, including enhanced 
authority to seize counterfeit goods and the tools of the 
counterfeiters' trade.
  Third, it makes it more difficult for these goods to re-enter the 
stream of commerce once they have been seized.
  Fourth, our bill also adds teeth to existing statutes and provides 
stronger civil remedies, including civil fines pegged to the value of 
genuine goods and statutory damage awards of up to $1,000,000 per mark.
  The Anticounterfeiting Consumer Protection Act will provide law 
enforcement officials with the tools they need to fight back, and to 
protect American business and the health and safety of American 
consumers. The time has come to make sure that our fight against 
counterfeiting is as sophisticated and modern as the crime itself.
  Finally, I want to thank all of the members of the Judiciary 
Committee who have supported this important legislation. Chairman Hyde, 
Chairman Moorhead, ranking minority member Conyers, Congresswoman 
Schroeder have all contributed to this effort. I greatly appreciate 
their hard work on behalf of American consumers and businesses.
  I urge all to support this legislation.

                              {time}  1500

  Mrs. SCHROEDER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I would like to thank two more staff people who worked 
very, very hard on this legislation, and that would be Elizabeth Frazee 
and Betty Wheeler. They also, I think, worked very hard on this, and we 
wanted to make sure everyone was included in the chairman's very 
generous thank yous.
  Mr. Speaker, I yield back the balance of my time.
  Mr. MOORHEAD. Mr. Speaker, I yield 2 minutes to the gentleman from 
Virginia [Mr. Davis].
  Mr. DAVIS. Mr. Speaker, first of all, I want to compliment the author 
of this legislation, the gentleman from Virginia [Mr. Goodlatte], the 
chairman, the gentleman from California [Mr. Moorhead], and the ranking 
member, the gentlewoman from Colorado [Mrs. Schroeder], for their 
leadership on this issue.
  Trademark counterfeiting costs this Nation over $200 million 
annually. That is more than the annual budget deficit in this country. 
Counterfeiting has grown from about $5.5 million in costs in 1982 to 
that $200 billion figure today. I once again applaud the authors of 
this amendment and the bipartisan way in which we have moved forward 
passage today.
  The industry estimates that sales of counterfeit software exceed 40 
percent of total industry revenues. Almost two of five cartridges that 
include a piece of software that are sold are counterfeit. Counterfeit 
software also costs companies more than revenues and it costs this 
Nation more than just jobs. It costs companies their reputation, 
because often substandard products with inferior quality enter the 
marketplace mislabeled with the originating company. What consumers do 
is they cannot take a chance on this, so they will buy other products 
that they figure are not mislabeled. The better companies end up, as a 
result of that, losing sales, losing jobs, losing revenues.
  Mr. Speaker, this legislation I think is going to make a significant 
contribution toward curbing these abuses. It is going to make this a 
RICO offense. It is going to increase fines and jail time for 
offenders. It is going to speed the seizure of goods, in many cases. It 
is going to increase penalties and civil fines of up to $1 million per 
mark. It is going to allow greater enforcement coordination by State 
and local law enforcement officials working toward this.
  This is, I think, an increasing area of concern for those in the 
software industry, and I think this legislation is going to make 
tremendous headway toward curbing these abuses in the future. I am 
proud to be a cosponsor of this, and once again congratulate my 
colleagues in bringing this to the floor today.
  Mr. MOORHEAD. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Upton). The question is on the motion 
offered by the gentleman from California [Mr. Moorhead] that the House 
suspend the rules and pass the bill, H.R. 2511, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.


                             general leave

  Mr. MOORHEAD. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks on H.R. 2511, the bill just passed.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  Mr. MOORHEAD. Mr. Speaker, I ask unanimous consent to take from the 
Speaker's table the Senate bill, S. 1136, to control and prevent 
commercial counterfeiting, and for other purposes, and ask for its 
immediate consideration in the House.
  The Clerk read the title of the Senate bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  Mrs. SCHROEDER. Mr. Speaker, reserving the right to object, I would 
ask the gentleman from California [Mr. Moorhead], if he could explain 
the purpose of his unanimous-consent request.
  Mr. MOORHEAD. Mr. Speaker, the purpose of this request is to send the 
bill back to the Senate with an amendment consisting of the text of the 
House-passed bill, and to ask for a conference.
  Mrs. SCHROEDER. Mr. Speaker, based on that, I withdraw my reservation 
of objection.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  The Clerk read the Senate bill, as follows:

                                S. 1136

       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 ``Anticounterfeiting Consumer 
     Protection Act of 1995''.

     SEC. 2. FINDINGS.

       The counterfeiting of trademarked and copyrighted 
     merchandise--
       (1) has been connected with organized crime;
       (2) deprives legitimate trademark and copyright owners of 
     substantial revenues and consumer goodwill;
       (3) poses health and safety threats to American consumers;
       (4) eliminates American jobs; and
       (5) is a multibillion-dollar drain on the United States 
     economy.

     SEC. 3. COUNTERFEITING AS RACKETEERING.

       Section 1961(1)(B) of title 18, United States Code, is 
     amended by inserting ``, section 2318 (relating to 
     trafficking in counterfeit labels for phonorecords, computer 
     programs or computer program documentation or packaging and 
     copies of motion pictures or other audiovisual works), 
     section 2319 (relating to criminal infringement of a 
     copyright), section 2320 (relating to trafficking in goods or 
     services bearing counterfeit marks)'' after ``sections 2314 
     and 2315 (relating to interstate transportation of stolen 
     property)''.

[[Page H5781]]

     SEC. 4. APPLICATION TO COMPUTER PROGRAMS, COMPUTER PROGRAM 
                   DOCUMENTATION, OR PACKAGING.

       Section 2318 of title 18, United States Code, is amended--
       (1) in subsection (a), by inserting ``a computer program or 
     computer program documentation or packaging or'' after ``copy 
     of'';
       (2) in subsection (b)(3), by inserting `` `computer 
     program,' '' after `` `motion picture,' ''; and
       (3) in subsection (c)(3), by inserting ``a copy of a 
     computer program or computer program documentation or 
     packaging,'' after ``enclose,''.

     SEC. 5. TRAFFICKING IN COUNTERFEIT GOODS OR SERVICES.

       Section 2320 of title 18, United States Code, is amended by 
     adding at the end the following new subsection:
       ``(e) Beginning with the first year after the date of 
     enactment of this subsection, the Attorney General shall 
     include in the report of the Attorney General to Congress on 
     the business of the Department of Justice prepared pursuant 
     to section 522 of title 28, on a district by district basis, 
     for all actions involving trafficking in counterfeit labels 
     for phonorecords, copies of computer programs or computer 
     program documentation or packaging, copies of motion pictures 
     or other audiovisual works (as defined in section 2318 of 
     title 18), criminal infringement of copyrights (as defined in 
     section 2319 of title 18), or trafficking in goods or 
     services bearing counterfeit marks (as defined in section 
     2320 of title 18), an accounting of--
       ``(1) the number of open investigations;
       ``(2) the number of cases referred by the United States 
     Customs Service;
       ``(3) the number of cases referred by other agencies or 
     sources; and
       ``(4) the number and outcome, including settlements, 
     sentences, recoveries, and penalties, of all prosecutions 
     brought under sections 2318, 2319, and 2320 of title 18.''.

     SEC. 6. SEIZURE OF COUNTERFEIT GOODS.

       Section 34(d)(9) of the Act of July 5, 1946 (60 Stat. 427, 
     chapter 540; 15 U.S.C. 1116(d)(9)), is amended by striking 
     the first sentence and inserting the following: ``The court 
     shall order that service of a copy of the order under this 
     subsection shall be made by a Federal law enforcement officer 
     (such as a United States marshal or an officer or agent of 
     the United States Customs Service, Secret Service, Federal 
     Bureau of Investigation, or Post Office) or may be made by a 
     State or local law enforcement officer, who, upon making 
     service, shall carry out the seizure under the order.''.

     SEC. 7. RECOVERY FOR VIOLATION OF RIGHTS.

       Section 35 of the Act of July 5, 1946 (60 Stat. 427, 
     chapter 540; 15 U.S.C. 1117), is amended by adding at the end 
     the following new subsection:
       ``(c) In a case involving the use of a counterfeit mark (as 
     defined in section 34(d) (15 U.S.C. 1116(d)) in connection 
     with the sale, offering for sale, or distribution of goods or 
     services, the plaintiff may elect, at any time before final 
     judgment is rendered by the trial court, to recover, instead 
     of actual damages and profits under subsection (a), an award 
     of statutory damages for any such use in the amount of--
       ``(1) not less than $500 or more than $100,000 per 
     counterfeit mark per type of goods or services sold, offered 
     for sale, or distributed, as the court considers just; or
       ``(2) if the court finds that the use of the counterfeit 
     mark was willful, not more than $1,000,000 per counterfeit 
     mark per type of goods or services sold, offered for sale, or 
     distributed, as the court considers just.''.

     SEC. 8. DISPOSITION OF EXCLUDED ARTICLES.

       Section 603(c) of title 17, United States Code, is amended 
     in the second sentence by striking ``as the case may be;'' 
     and all that follows through the end and inserting ``as the 
     case may be.''.

     SEC. 9. DISPOSITION OF MERCHANDISE BEARING AMERICAN 
                   TRADEMARK.

       Section 526(e) of the Tariff Act of 1930 (19 U.S.C. 
     1526(e)) is amended--
       (1) in the second sentence, by inserting ``destroy the 
     merchandise. Alternatively, if the merchandise is not unsafe 
     or a hazard to health, and the Secretary has the consent of 
     the trademark owner, the Secretary may'' after ``shall, after 
     forfeiture,'';
       (2) by inserting ``or'' at the end of paragraph (2);
       (3) by striking ``, or'' at the end of paragraph (3) and 
     inserting a period; and
       (4) by striking paragraph (4).

     SEC. 10. CIVIL PENALTIES.

       Section 526 of the Tariff Act of 1930 (19 U.S.C. 1526) is 
     amended by adding at the end the following new subsection:
       ``(f)(1) Any person who directs, assists financially or 
     otherwise, or aids and abets the importation of merchandise 
     for sale or public distribution that is seized under 
     subsection (e) shall be subject to a civil fine.
       ``(2) For the first such seizure, the fine shall be not 
     more than the value that the merchandise would have had if it 
     were genuine, according to the manufacturer's suggested 
     retail price, determined under regulations promulgated by the 
     Secretary.
       ``(3) For the second seizure and thereafter, the fine shall 
     be not more than twice the value that the merchandise would 
     have had if it were genuine, as determined under regulations 
     promulgated by the Secretary.
       ``(4) The imposition of a fine under this subsection shall 
     be within the discretion of the United States Customs 
     Service, and shall be in addition to any other civil or 
     criminal penalty or other remedy authorized by law.''.

     SEC. 11. PUBLIC DISCLOSURE OF AIRCRAFT MANIFESTS.

       Section 431(c)(1) of the Tariff Act of 1930 (19 U.S.C. 
     1431(c)(1)) is amended--
       (1) in the matter preceding subparagarph (A), by inserting 
     ``vessel or aircraft'' before ``manifest'';
       (2) by amending subparagraph (D) to read as follows:
       ``(D) The name of the vessel, aircraft, or carrier.'';
       (3) by amending subparagraph (E) to read as follows:
       ``(E) The seaport or airport of loading.''; and
       (4) by amending subparagraph (F) to read as follows:
       ``(F) The seaport or airport of discharge.''.

     SEC. 12. CUSTOMS ENTRY DOCUMENTATION.

       Section 484(d) of the Tariff Act of 1930 (19 U.S.C. 
     1484(d)) is amended--
       (1) by striking ``Entries'' and inserting ``(1) Entries''; 
     and
       (2) by adding at the end the following new paragraph:
       ``(2) The Secretary, in prescribing regulations governing 
     the content of entry documentation, shall require that entry 
     documentation contain such information as may be necessary to 
     determine whether the imported merchandise bears an 
     infringing trademark in violation of section 42 of the Act of 
     July 5, 1946 (60 Stat. 440, chapter 540; 15 U.S.C. 1124) or 
     any other applicable law, including a trademark appearing on 
     the goods or packaging.''.

     SEC. 13. UNLAWFUL USE OF VESSELS, VEHICLES, AND AIRCRAFT IN 
                   AID OF COMMERCIAL COUNTERFEITING.

       Section 80302(a) of title 49, United States Code, is 
     amended--
       (1) by striking ``or'' at the end of paragraph (4);
       (2) by striking the period at the end of paragraph (5) and 
     inserting ``; or''; and
       (3) by adding at the end the following new paragraph:
       ``(6)(A) A counterfeit label for a phonorecord, computer 
     program or computer program documentation or packaging or 
     copy of a motion picture or other audiovisual work (as 
     defined in section 2318 of title 18);
       ``(B) a phonorecord or copy in violation of section 2319 of 
     title 18; or
       ``(C) any good bearing a counterfeit mark (as defined in 
     section 2320 of title 18).''.

     SEC. 14. REGULATIONS.

       Not later than 6 months after the date of enactment of this 
     Act, the Secretary of the Treasury shall prescribe such 
     regulations or amendments to existing regulations that may be 
     necessary to implement and enforce this Act.


                     motion offered by mr. moorhead

  Mr. MOORHEAD. Mr. Speaker, I offer a motion.
  The Clerk read as follows:

       Mr. Moorhead moves to strike out all after the enacting 
     clause of S. 1136 and to insert in lieu thereof the text of 
     H.R. 2511, as passed by the House.

  The motion was agreed to.
  The Senate bill was ordered to be read a third time, was read the 
third time, and passed, and a motion to reconsider was laid on the 
table.


                        appointment of conferees

  Mr. MOORHEAD. Mr. Speaker, I offer a motion.
  The Clerk read as follows:

       Pursuant to rule XX and by direction of the Committee on 
     the Judiciary, Mr. Moorhead moves that the House insist on 
     its amendment to the bill S. 1136 and request a conference 
     thereon with the Senate.

  The motion was agreed to.
  The SPEAKER pro tempore. Without objection, the Chair appoints the 
following conferees: Messrs. Hyde, Moorhead, Goodlatte, Conyers, and 
Mrs. Schroeder.
  There was no objection.
  A similar House bill (H.R. 2511) was laid on the table.

                          ____________________