[Congressional Record Volume 148, Number 51 (Tuesday, April 30, 2002)]
[Senate]
[Pages S3561-S3563]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BIDEN (for himself, Mr. Allen, Mr. Hollings, Mrs. Boxer, 
        Mrs. Murray, Mr. Smith of Oregon, Mr. Nelson of Nebraska, and 
        Mr. Dorgan):
  S. 2395. A bill to prevent and punish counterfeiting and copyright 
piracy, and for other purposes; to the Committee on the Judiciary.
  Mr. BIDEN. Mr. President, I rise today to introduce the 
Anticounterfeiting Amendments of 2002, along with Senators Allen, 
Hollings, Boxer, Murray, Smith of Oregon, Nelson of Nebraska, and 
Dorgan.
  In February of this year, I held a hearing entitled, ``Theft of 
American Intellectual Property: Fighting Crime Abroad and At Home,'' 
and I issued a report on the status of our fight against this crime.
  What I learned is that every day, thieves steal millions of dollars 
of American intellectual property from its rightful owners. Over a 
hundred thousand American jobs are lost as a result.
  American innovation and creativity need to be protected by our 
government no less than our personal property, our homes and our 
streets. The Founding Fathers had the foresight to provide for 
protection of intellectual property, giving Congress the power to 
``promote the progress of science and useful arts'' by providing 
copyrights and patents.
  American intellectual property represents the largest single sector 
of the American economy, employing 4.3 million Americans. It has been 
estimated that software piracy alone cost the U.S. economy over 118,000 
jobs and $5.7 billion in wage losses in the year 2000. Even more, the 
International Planning and Research Corporation estimates that the 
government loses more than a billion dollars worth of revenue every 
year from intellectual property theft.
  To put that in perspective, with a billion dollars in additional 
revenue, the American government could pay for child care services for 
more than 100,000 children annually. Alternatively, $1 billion could be 
used to fund a Senate proposal to assist schools nationally with 
emergency school renovations and repairs.
  There's another problem. Counterfeiters of software, music CDs and 
motion pictures are now tampering with authentication features. 
Holograms, certificates of authenticity, and other security features 
allow the copyright owners to distinguish genuine works from 
counterfeits. But now, highly sophisticated counterfeiters have found 
ways to tamper with these features to make counterfeit products appear 
genuine and to increase the selling price of genuine products and 
licenses. Put another way, not only do crooks illegally copy American 
intellectual property, they also now illegally fake or steal the very 
features property owners use to prevent that theft.
  Copyrights mean nothing if government authorities fail to enforce the 
protections they provide intellectual property owners. The criminal 
code has not kept up with the counterfeiting operations of today's 
high-tech pirates, and it's time to make sure that it does. The 
Anticounterfeiting Amendments of 2002 update and strengthen the Federal 
criminal code, which currently makes it a crime to traffic in 
counterfeit labels or copies of certain forms of intellectual property, 
but not authentication features. For example, we can currently 
prosecute someone for trafficking in fake labels for a computer 
program, but we cannot go after them for faking the hologram that the 
software maker uses to ensure that copies of the software are genuine.
  In addition, many actions that violate current law go unprosecuted in 
this day and age when priorities, such as the fight against terrorism 
and life-threatening crimes, necessarily take priority over crimes of 
property, be they intellectual or physical. Moreover, the victims of 
this theft often do not have a way to recover their losses from this 
crime. For this reason, the Anticounterfeiting Amendments of 2002 also 
provide a private cause of action, to permit the victims of these 
crimes to pursue the criminals themselves and recover damages in 
federal court.
  Current law criminalizes trafficking in counterfeit documentation and 
packaging, but only for software programs. The Anticounterfeiting 
Amendments of 2002 update and expand these provisions to include 
documentation and packaging for phonorecords, motion pictures and other 
audiovisual works.
  America is a place where we must encourage diverse ideas, and with 
that encouragement we must protect those ideas. They are the source of 
our music, our art, our novels, our movies, our software, all that is 
American culture and American know-how. The

[[Page S3562]]

Anticounterfeting Amendments of 2002 give our ideas the protection they 
deserve.
  I ask unanimous consent that the text of this bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2395

       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 
     Amendments of 2002''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) American innovation, and the protection of that 
     innovation by the government, has been a critical component 
     of the economic growth of this Nation throughout the history 
     of the Nation;
       (2) copyright-based industries represent one of the most 
     valuable economic assets of this country, contributing over 5 
     percent of the gross domestic product of the United States 
     and creating significant job growth and tax revenues;
       (3) the American intellectual property sector employs 
     approximately 4,300,000 people, representing over 3 percent 
     of total United States employment;
       (4) the proliferation of organized criminal counterfeiting 
     enterprises threatens the economic growth of United States 
     copyright industries;
       (5) the American intellectual property sector has invested 
     millions of dollars to develop highly sophisticated 
     authentication features that assist consumers and law 
     enforcement in distinguishing genuine intellectual property 
     products and packaging from counterfeits;
       (6) in order to thwart these industry efforts, 
     counterfeiters traffic in, and tamper with, genuine 
     authentication features, for example, by obtaining genuine 
     authentication features through illicit means and then 
     commingling these features with counterfeit software or 
     packaging;
       (7) Federal law does not provide adequate civil and 
     criminal remedies to combat tampering activities that 
     directly facilitate counterfeiting crimes; and
       (8) in order to strengthen Federal enforcement against 
     counterfeiting of copyrighted works, Congress must enact 
     legislation that--
       (A) prohibits trafficking in, and tampering with, 
     authentication features of copyrighted works; and
       (B) permits aggrieved parties an appropriate civil cause of 
     action.

     SEC. 3. PROHIBITION AGAINST TRAFFICKING IN ILLICIT 
                   AUTHENTICATION FEATURES.

       (a) In General.--Section 2318 of title 18, United States 
     Code, is amended--
       (1) by striking the heading and inserting ``Trafficking in 
     counterfeit labels, illicit authentication features, or 
     counterfeit documentation or packaging'';
       (2) by striking subsection (a) and inserting the following:
       ``(a) Whoever, in any of the circumstances described in 
     subsection (c), knowingly traffics in--
       ``(1) a counterfeit label affixed to, or designed to be 
     affixed to--
       ``(A) a phonorecord;
       ``(B) a copy of a computer program;
       ``(C) a copy of a motion picture or other audiovisual work; 
     or
       ``(D) documentation or packaging;
       ``(2) an illicit authentication feature affixed to or 
     embedded in, or designed to be affixed to or embedded in--
       ``(A) a phonorecord;
       ``(B) a copy of a computer program;
       ``(C) a copy of a motion picture or other audiovisual work; 
     or
       ``(D) documentation or packaging; or
       ``(3) counterfeit documentation or packaging,

     shall be fined under this title or imprisoned for not more 
     than 5 years, or both.'';
       (3) in subsection (b)--
       (A) in paragraph (2), by striking ``and'' at the end;
       (B) in paragraph (3)--
       (i) by striking ``and `audiovisual work' have'' and 
     inserting the following: ``, `audiovisual work', and 
     `copyright owner' have''; and
       (ii) by striking the period at the end and inserting a 
     semicolon; and
       (C) by adding at the end the following:
       ``(4) the term `authentication feature' means any hologram, 
     watermark, certification, symbol, code, image, sequence of 
     numbers or letters, or other physical feature that either 
     individually or in combination with another feature is used 
     by the respective copyright owner to verify that a 
     phonorecord, a copy of a computer program, a copy of a motion 
     picture or other audiovisual work, or documentation or 
     packaging is not counterfeit or otherwise infringing of any 
     copyright;
       ``(5) the term `documentation or packaging' means 
     documentation or packaging for a phonorecord, copy of a 
     computer program, or copy of a motion picture or other 
     audiovisual work; and
       ``(6) the term `illicit authentication feature' means an 
     authentication feature, that--
       ``(A) without the authorization of the respective copyright 
     owner has been tampered with or altered so as to facilitate 
     the reproduction or distribution of--
       ``(i) a phonorecord;
       ``(ii) a copy of a computer program;
       ``(iii) a copy of a motion picture or other audiovisual 
     work; or
       ``(iv) documentation or packaging;
     in violation of the rights of the copyright owner under title 
     17;
       ``(B) is genuine, but has been distributed, or is intended 
     for distribution, without the authorization of the respective 
     copyright owner; or
       ``(C) appears to be genuine, but is not.'';
       (4) in subsection (c)--
       (A) by striking paragraph (3) and inserting the following:
       ``(3) the counterfeit label or illicit authentication 
     feature is affixed to, is embedded in, or encloses, or is 
     designed to be affixed to, to be embedded in, or to enclose--
       ``(A) a phonorecord of a copyrighted sound recording;
       ``(B) a copy of a copyrighted computer program;
       ``(C) a copy of a copyrighted motion picture or other 
     audiovisual work; or
       ``(D) documentation or packaging; or''; and
       (B) in paragraph (4), by striking ``for a computer 
     program'';
       (5) in subsection (d)--
       (A) by inserting ``or illicit authentication features'' 
     after ``counterfeit labels'' each place it appears;
       (B) by inserting ``or illicit authentication features'' 
     after ``such labels''; and
       (C) by inserting before the period at the end the 
     following: ``, and of any equipment, device, or materials 
     used to manufacture, reproduce, or assemble the counterfeit 
     labels or illicit authentication features''; and
       (6) by adding at the end the following:
       ``(f) Civil Remedies for Violation.--
       ``(1) In general.--Any copyright owner who is injured by a 
     violation of this section or is threatened with injury, may 
     bring a civil action in an appropriate United States district 
     court.
       ``(2) Discretion of court.--In any action brought under 
     paragraph (1), the court--
       ``(A) may grant 1 or more temporary or permanent 
     injunctions on such terms as the court determines to be 
     reasonable to prevent or restrain violations of this section;
       ``(B) at any time while the action is pending, may order 
     the impounding, on such terms as the court determines to be 
     reasonable, of any article that is in the custody or control 
     of the alleged violator and that the court has reasonable 
     cause to believe was involved in a violation of this section; 
     and
       ``(C) may award to the injured party--
       ``(i) reasonable attorney fees and costs; and
       ``(ii)(I) actual damages and any additional profits of the 
     violator, as provided by paragraph (3); or
       ``(II) statutory damages, as provided by paragraph (4).
       ``(3) Actual damages and profits.--
       ``(A) In general.--The injured party is entitled to 
     recover--
       ``(i) the actual damages suffered by the injured party as a 
     result of a violation of this section, as provided by 
     subparagraph (B); and
       ``(ii) any profits of the violator that are attributable to 
     a violation of this section and are not taken into account in 
     computing the actual damages.
       ``(B) Calculation of damages.--The court shall calculate 
     actual damages by multiplying--
       ``(i) the value of the phonorecords or copies to which 
     counterfeit labels, illicit authentication features, or 
     counterfeit documentation or packaging were affixed or 
     embedded, or designed to be affixed or embedded; by
       ``(ii) the number of phonorecords or copies to which 
     counterfeit labels, illicit authentication features, or 
     counterfeit documentation or packaging were affixed or 
     embedded, or designed to be affixed or embedded,

     unless such calculation would underestimate the actual harm 
     suffered by the copyright owner.
       ``(C) Definition.--For purposes of this paragraph, the term 
     `value of the phonorecord or copy' means--
       ``(i) the retail value of an authorized phonorecord of a 
     copyrighted sound recording;
       ``(ii) the retail value of an authorized copy of a 
     copyrighted computer program; or
       ``(iii) the retail value of a copy of a copyrighted motion 
     picture or other audiovisual work.
       ``(4) Statutory damages.--The injured party may elect, at 
     any time before final judgment is rendered, to recover, 
     instead of actual damages and profits, an award of statutory 
     damages for each violation of this section in a sum of not 
     less than $2,500 or more than $25,000, as the court considers 
     appropriate.
       ``(5) Subsequent violation.--The court may increase an 
     award of damages under this subsection by 3 times the amount 
     that would otherwise be awarded, as the court considers 
     appropriate, if the court finds that a person has 
     subsequently violated this section within 3 years after a 
     final judgment was entered against that person for a 
     violation of this section.
       ``(6) Limitation on actions.--A civil action may not be 
     commenced under this section unless it is commenced within 3 
     years after the date on which the claimant discovers the 
     violation.
       ``(g) Other Rights Not Affected.--Nothing in this section 
     shall enlarge, diminish, or otherwise affect liability under 
     section 1201 or 1202 of title 17.''.

[[Page S3563]]

       (b) Technical and Conforming Amendment.--The item relating 
     to section 2318 in the table of sections at the beginning of 
     chapter 113 of title 18, United States Code, is amended by 
     inserting ``or illicit authentication features'' after 
     ``counterfeit labels''.
                                 ______