[Congressional Record Volume 151, Number 68 (Friday, May 20, 2005)]
[Senate]
[Pages S5581-S5582]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. CORNYN (for himself and Mr. Leahy):
  S. 1095. A bill to amend chapter 113 of title 18, United States Code, 
to clarify the prohibition on the trafficking in goods or services, and 
for other purposes; to the Committee on the Judiciary.
  Mr. CORNYN. Mr. President, today I am pleased to join Senator Leahy 
to offer important legislation in our continued bipartisan effort to 
combat the trafficking of illegitimate goods throughout the world.
  Recently, we have worked together on a matter near and dear to my 
heart--good government legislation related to the Freedom of 
Information Act, and it is indeed a pleasure to work with the Ranking 
Member of the Judiciary Committee again.
  The rampant distribution of illegitimate goods--be it counterfeited 
products, illegal copies of copyrighted works or any other form of 
piracy--undermines property rights, threatens American jobs, decreases 
consumer safety and, often times, supports organized crime and 
terrorist activity.
  Amazingly, it is estimated that between 5 percent and 7 percent 
worldwide trade is conducted with counterfeit goods and services. 
According to FBI estimates, counterfeiting costs U.S. businesses as 
much as $200-$250 billion annually--and that costs Americans their 
jobs--more than 750,000 jobs according to U.S. Customs.
  In recent years, this plague on global trade has grown significantly. 
According to the World Customs Organization and Interpol, the global 
trade in illegitimate goods has increased from $5.5 billion in 1992 to 
more than $600 billion per year today. That is--$600 billion per year 
illegally extracted from the global economy.
  But perhaps most troubling, the counterfeit trade threatens our 
safety and our security. Counterfeit goods undermine our confidence in 
the reliability of our goods and service. For example, the Federal 
Aviation Administration estimates that 2 percent the 26 million airline 
parts installed each year are counterfeit. And the Federal Drug 
Administration estimates that as much as 10 percent pharmaceuticals are 
counterfeit. Worse yet--evidence indicates that the counterfeit trade 
supports terrorist activities. Indeed, Al Qaeda training manuals 
recommended the sale of fake goods to raise revenue.
  And the reach of counterfeiting runs deep in my own home State of 
Texas. Data is difficult to collect, but a 1997 piece detailing 
Microsoft's efforts to combat counterfeiting and piracy--while dated--
pointed out that this type of activity costs Texas over 10,000 jobs and 
almost $1 billion. Today, we know those numbers are much higher.
  We must act to stop this illegal activity.
  The legislation we offer today, the Protecting American Goods and 
Services Act, is not complicated, it is not long--but its global impact 
will be significant. The legislation is designed to provide law 
enforcement with additional tools to curb the flow of these 
illegitimate goods.
  First, the bill would make it specifically illegal to import or 
export unauthorized copies of copyrighted works or counterfeit goods. 
Second, it would make it illegal to possess counterfeit goods with the 
intention of selling them. Finally, the bill would more clearly specify 
that it is illegal to give away counterfeit goods in exchange for some 
future benefit--in effect, the ``bartering'' of counterfeit goods in 
such a way that avoids criminality.
  Each of these items was highlighted by the Department of Justice in 
its October, 2004 report on its Task Force on Intellectual Property. In 
it, the Department describes the significant limitation law enforcement 
often times faces in pursuing counterfeiters and offers, among others, 
the principles embraced in the Protecting American Goods and Services 
Act, as possible solutions to these obstacles.
  This legislation, and other reforms, will help turn the tide of the 
growing counterfeit trade. The legislation is critically important to 
law enforcement--but it is even more critical for businesses, large and 
small, throughout America--including in my home State of Texas--as well 
as for ensuring the safety of consumers around the globe. Those who 
traffic in counterfeit goods put Americans in danger, support terrorism 
and undermine the health of our Nation's economy. It is time to put an 
end to this scourge on society.
  I look forward to working with my colleagues to move this legislation 
forward, and in so doing, protect property rights, protect consumer 
safety, preserve American jobs and bolster the American economy.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1095

       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 ``Protecting American Goods 
     and Services Act of 2005''.

     SEC. 2. PROHIBITION ON TRAFFICKING OF CERTAIN GOODS AND 
                   SERVICES.

       (a) In General.--Section 2320 of title 18, United States 
     Code, is amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a)(1) Any person who intentionally traffics or attempts 
     to traffic in goods or services and knowingly uses a 
     counterfeit mark on or in connection with such goods or 
     services--
       ``(A) if an individual, shall be fined not more than 
     $2,000,000, imprisoned not more than 10 years, or both; and
       ``(B) if a person other than an individual, shall be fined 
     not more than $5,000,000.
       ``(2) Any person who possesses goods with a counterfeit 
     mark with an intent to traffic such goods--
       ``(A) if an individual, shall be fined not more that 
     $2,000,000, or imprisoned not more than 10 years, or both; 
     and
       ``(B) if a person other than an individual, shall be fined 
     not more than $5,000,000.
       ``(3) In the case of an offense by a person under this 
     section that occurs after that person is convicted of another 
     offense under this section, the person--
       ``(A) if an individual, shall be fined not more than 
     $5,000,000, imprisoned not more than 20 years, or both; and
       ``(B) if other than an individual, shall be fined not more 
     than $15,000,000.''; and
       (2) in subsection (b), by striking paragraph (2) and 
     inserting the following:
       ``(2) the term `traffic' means--
       ``(A) transport, transfer, or otherwise dispose of, to 
     another as consideration for anything of value or without 
     consideration; or
       ``(B) make or obtain control of with intent to so 
     transport, transfer, or dispose of; and''.
       (b) Prohibition of Transport of Counterfeit Goods or 
     Unauthorized Copies and Phonorecords of Copyrighted Works.--
       (1) In general.--Chapter 113 of title 18, United States 
     Code, is amended by inserting after section 2320 the 
     following:

     ``Sec. 2320A. Transport of counterfeit goods and unauthorized 
       copyrighted works into or out of the United States

       ``(a) Definitions.--In this section--
       ``(1) the terms `copies' and `phonorecords' have the 
     respective meanings given under section 101 of title 17;
       ``(2) the term `counterfeit mark' has the meaning given 
     under section 2320(e)(1); and
       ``(3) the term `United States' means each of the several 
     States of the United States, the

[[Page S5582]]

     District of Columbia, and the territories and possessions of 
     the United States.
       ``(b) Offense.--Any person who intentionally transports 
     goods bearing a counterfeit mark or copies or phonorecords of 
     a copyrighted work not authorized by the copyright holder 
     into or out of the United States for the purposes of 
     commercial advantage or private financial gain shall be fined 
     not more than $100,000, imprisoned not more than 10 years, or 
     both.''.
       (2) Technical and conforming amendment.--The table of 
     sections for chapter 113 of title 18, United States Code, is 
     amended by inserting after the item relating to section 2320 
     the following:

``2320A. Transport of counterfeit goods and unauthorized copyrighted 
              works into or out of the United States.''.

  Mr. LEAHY. Today, I am partnering with Senator Cornyn in another of 
our bipartisan efforts to improve the lives of Americans through 
effective and efficient government. The bill we are introducing, the 
``Protecting American Goods and Services Act of 2005,'' will strengthen 
our ability to combat the escalating problem of counterfeiting 
worldwide. In order to effectively fight intellectual property theft, 
we need stiff penalties for counterfeiters and those who are caught 
with counterfeit goods with the intent to traffic their false wares. 
Ours is a short bill--indeed, it is only four pages long--but it will 
have global implications in the fight against piracy.
  Counterfeiting is a growing problem that costs our economy hundreds 
of billions of dollars every year and has been linked to organized 
crime, including terrorist organizations. According to the 
International Anti-Counterfeiting Coalition, counterfeit parts have 
been discovered in helicopters sold to NATO, in jet engines, bridge 
joints, brake pads, and fasteners in equipment designed to prevent 
nuclear reactor meltdowns. The World Health Organization estimates that 
the market for counterfeit drugs is about $32 billion each year.
  Several years ago, Senator Hatch joined me in sponsoring the ``Anti-
counterfeiting Consumer Protection Act of 1996,'' which addressed 
counterfeiting by amending several sections of our criminal and tariff 
codes. That law made important changes, particularly by expanding RICO, 
the federal anti-racketeering law, to cover crimes involving 
counterfeiting and copyright and trademark infringement. Then, as now, 
trafficking in counterfeit goods hurts purchasers, state and federal 
governments, and economies at every level.
  Perhaps most disturbingly, the U.S. Customs Service reports that 
terrorists have used transnational counterfeiting operations to fund 
their activities: The sale of counterfeit and pirated music, movies, 
software, T-shirts, clothing, and fake drugs ``accounts for much of the 
money the international terrorist network depends on to feed its 
operations.''
  Last year, as in years past, I worked with Senator Allen on an 
amendment to the Foreign Operations bill that provides the State 
Department with vital resources to combat piracy of U.S. goods abroad. 
The bill we ultimately passed included $3 million for this important 
purpose. Yet more work both at home and abroad remains. When you 
consider that the economic impact of tangible piracy in counterfeit 
goods is estimated to be roughly $350 billion a year and to constitute 
between 5 percent and 7 percent of worldwide trade, a few million 
dollars is a worthwhile investment.
  We have certainly seen how this form of theft touches the lives of 
hard-working Vermonters. Burton Snowboards is a small company, whose 
innovation has made it an industry leader in snowboarding equipment and 
apparel. Unfortunately, knock-off products carrying Burton's name have 
been found across the globe. Vanessa Price, a representative of Burton, 
testified about counterfeiting at the Judiciary Committee's March 23, 
2004, hearing on this topic. In addition to learning about the economic 
costs of counterfeiting, I asked her after the hearing about the risks 
posed to consumers by these goods. Her answer was chilling: ``In the 
weeks since my Senate testimony, I discovered a shipment of counterfeit 
Burton boots for sale through a discount sports outfit . . . After 
examining the poor quality of the counterfeit boots, we determined that 
anyone using the boots for snowboarding risks injury due to a lack of 
reinforcement and support in the product's construction.''

  Customers and businesses lose out to counterfeiters in other ways, 
too. SB Electronics in Barre, Vt. has seen its capacitors reverse 
engineered and its customers lost to inferior copycat models. Vermont 
Tubbs, a furniture manufacturer in Rutland, has seen its designs 
copied, produced offshore with inferior craftsmanship and materials, 
and then reimported, so that the company is competing against cheaper 
versions of its own products. And Hubbardton Forge in Castleton, Vt. 
has seen its beautiful and original lamps counterfeited and then sold 
within the United States at prices--and quality--far below their own. 
This is wrong. It is unfair to consumers who deserve the high quality 
goods they think they are paying for, and it is unfair to innovators 
who play by the rules and deserve to profit from their labor.
  The bill that I am introducing today with Senator Cornyn will help to 
combat this growing scourge.
  The bill will criminalize the possession of counterfeit goods with 
the intent to sell or traffic in those goods, and it expands the 
definition of ``traffic'' to include any distribution of counterfeits 
with the expectation of gaining something of value--criminals should 
not be able to skirt the law simply because they barter illegal goods 
and services in exchange for their illicit wares. Finally, the bill 
will criminalize the importation and exportation of counterfeit goods, 
as well as of bootleg copies of copyrighted works into and out of the 
United States.
  By tying off these loopholes and improving U.S. laws on 
counterfeiting, we will be sending a powerful message to the criminals 
who belong in jail, and to our innovators.

                          ____________________