[Congressional Record Volume 152, Number 19 (Wednesday, February 15, 2006)]
[Senate]
[Pages S1367-S1370]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             STOP COUNTERFEITING IN MANUFACTURED GOODS ACT

  Mr. FRIST. Mr. President, I ask unanimous consent that the Committee 
on the Judiciary be discharged from further consideration of H.R. 32 
and that the Senate proceed to its immediate consideration.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will state the bill by title.
  The bill clerk read as follows:

       A bill (H.R. 32) to amend title 18 United States Code, to 
     provide criminal penalties for trafficking in counterfeit 
     marks.

  There being no objection, the Senate proceeded to consider the bill.
  Mr. SPECTER. Mr. President, I want to take a moment to speak about 
H.R. 32, the Stop Counterfeiting in Manufactured Goods Act of 2005, 
sponsored by Representative Knollenberg and 59 House cosponsors. The 
counterfeiting of goods bearing American held trademarks is an 
important problem that I am committed to fighting, as reflected by my 
sponsoring S. 1699, the Senate companion bill to H.R. 32, earlier this 
year with Senator Leahy and Senators Alexander, Bayh, Brownback, 
Coburn, Cornyn, DeWine, Durbin, Feingold, Feinstein, Hatch, Kyl, Levin, 
Reed, Stabenow, and Voinovich.
  H.R. 32, the Stop Counterfeiting in Manufactured Goods Act of 2005 
addresses a problem that has reached epidemic proportions as a result 
of a loophole in our criminal code: the trafficking in counterfeit 
labels. Criminal law currently prohibits the trafficking in counterfeit 
trademarks ``on or in connection with goods or services.'' However, it 
does not prohibit the trafficking in the counterfeit marks themselves. 
As such, there is nothing in current law to prohibit an individual from 
selling counterfeit labels bearing otherwise protected trademarks 
within the United States.
  This loophole was exposed by the Tenth Circuit Court of Appeals in 
United States v. Giles, 213 F.3d 1247 (10th Cir. 2000). In this case, 
the United States prosecuted the defendant for manufacturing and 
selling counterfeit Dooney & Bourke labels that third parties could 
later affix to generic purses. Examining title 18, section 2320, of the 
United States Code, the Tenth Circuit held that persons who sell 
counterfeit trademarks that are not actually attached to any ``goods or 
services'' do not violate the Federal criminal trademark infringement 
statute. Since the defendant did not attach counterfeit marks to 
``goods or services,'' the court found that the defendant did not run 
afoul of the criminal statute as a matter of law. Thus, someone caught 
redhanded with counterfeit trademarks walked free.
  H.R. 32 closes this loophole by amending title 18, section 2320 of 
the United States Code to criminally prohibit the trafficking, or 
attempt to traffic, in ``labels, patches, stickers'' and generally any 
item to which a counterfeit mark has been applied. In so doing, H.R. 32 
provides U.S. Department of Justice prosecutors with the means not only 
to prosecute individuals trafficking in counterfeit goods or services, 
but also individuals trafficking in labels, patches, and the like that 
are later applied to goods.
  Congress must act expeditiously to protect U.S. held trademarks to 
the fullest extent of the law. The recent 10-count indictment of four 
Massachusetts residents of conspiracy to traffic in approximately $1.4 
million of counterfeit luxury goods in the case of U.S. v. Luong et 
al., 2005 D. Mass. underscores the need for this legislation. According 
to the indictment, law enforcement officers raided self-storage units 
earlier this year and found the units to hold approximately 12,231 
counterfeit handbags; 7,651 counterfeit wallets; more than 17,000 
generic handbags and wallets; and enough counterfeit labels and 
medallions to turn more than

[[Page S1368]]

50,000 generic handbags and wallets into counterfeits. Although the 
U.S. Attorneys Office was able to pursue charges of trafficking and 
attempting to traffic in counterfeit handbags and wallets, they were 
not able to bring charges for trafficking and attempting to traffic in 
the more than 50,000 counterfeit labels and medallions. As such, these 
defendants will escape prosecution that would have otherwise been 
illegal if they had only been attached to an otherwise generic bag. 
This simply does not make sense. Had the Stop Counterfeiting in 
Manufactured Goods Act of 2005 been in effect at the time of 
indictment, U.S. prosecutors would have been able to bring charges 
against the defendants for trafficking and attempting to traffic in not 
only counterfeit goods, but also counterfeit labels.
  As Assistant Attorney General Alice Fisher said:

       Those who manufacture and sell counterfeit goods steal 
     business from honest merchants, confuse or defraud honest 
     consumers, and illegally profit on the backs of honest 
     American workers and entrepreneurs.

  This point is underscored by the Bureau of Customs and Border 
Protection estimate that trafficking in counterfeit goods costs the 
United States approximately $200 to $250 million annually. With each 
passing year, the United States loses millions of dollars in tax 
revenues to the sale of counterfeit goods. Further, each counterfeit 
item that is manufactured overseas and distributed in the United States 
costs American workers tens of thousands of jobs. With counterfeit 
goods making up a growing 5 to 7 percent of world trade, this is a 
problem that we can no longer ignore.
  To be sure, counterfeiting is not limited to the popular designer 
goods that we have all seen sold on corners of just about every major 
metropolitan city in the United States. Counterfeiting has a 
devastating impact on a broad range of industries. In fact, for almost 
every legitimate product manufactured and sold within the United 
States, there is a parallel counterfeit product being sold for no more 
than half the price. These counterfeit products range from children's 
toys to clothing to Christmas tree lights. More frightening are the 
thousands of counterfeit automobile parts, batteries, and electrical 
equipment that are being manufactured and placed into the stream of 
commerce with each passing day. I am told that the level of 
sophistication in counterfeiting has reached the point that you can no 
longer distinguish between the real and the counterfeit good or label 
with the naked eye. However, just because these products look the same 
does not mean that they have the same quality characteristics. The 
counterfeit products are not subject to the same quality controls of 
legitimate products, resulting in items that are lower in quality and 
likely to fall apart. In fact, counterfeit products could potentially 
kill unsuspecting American consumers.

  In addition to closing the ``counterfeit label loophole,'' the Stop 
Counterfeiting in Manufactured Goods Act strengthens the criminal code 
and provides heightened penalties for those trafficking in counterfeit 
marks. Current law does not provide for the seizure and forfeiture of 
counterfeit trademarks, whether they are attached to goods or not. 
Therefore, many times such counterfeit goods are seized one day, only 
to be returned and sold to an unsuspecting public. To ensure that 
individuals engaging in the practice of trafficking in counterfeit 
marks cannot reopen their doors, H.R. 32 establishes procedures for the 
mandatory seizure, forfeiture, and destruction of counterfeit marks 
prior to a conviction. Further, it provides for procedures for the 
mandatory forfeiture and destruction of property derived from or used 
to engage in the trafficking of counterfeit marks.
  When this legislation was sent over to the Senate from the House, 
concerns were raised to Senator Leahy and myself about the language in 
Section 2(bbb)(1)(B) of this bill pertaining to the forfeiture 
authority of the U.S. Department of Justice. In focusing our attention 
to this section, we discussed the scope of the facilitation language, 
which parallels the drug and money laundering forfeiture language in 21 
U.S.C. 853 and 18 U.S.C. 982, respectively, and how it might relate to 
Internet marketplace companies, search engines, and ISPs. Specifically, 
we were aware of concerns regarding the potential misapplication of the 
facilitation language in Section 2(b)(1)(B) to pursue forfeiture and 
seizure proceedings against responsible Internet marketplace companies 
that serve as third-party intermediaries to online transactions.
  Mr. LEAHY. Mr. President, Section 2(b)(1)(B) authorizes U.S. 
Attorneys to pursue civil in rem forfeiture proceedings against ``any 
property used, in any manner or part, to commit or to facilitate the 
commission of a violation of subsection (a).'' The intent of this 
language is to provide attorneys and prosecutors with the authority to 
bring a civil forfeiture action against the property of bad actors who 
are facilitating trafficking or attempts to traffic in counterfeit 
marks. The forfeiture authority in Section 2(b)(1)(B) cannot be used to 
pursue forfeiture and seizure proceedings against the computer 
equipment, website or network of responsible Internet marketplace 
companies, who serve solely as a third party to transactions and do not 
tailor their services or their facilities to the furtherance of 
trafficking or attempts to traffic in counterfeit marks. However, these 
Internet marketplace companies must make demonstrable good-faith 
efforts to combat the use of their systems and services to traffic in 
counterfeit marks. Companies must establish and implement procedures to 
take down postings that contain or offer to sell goods, services, 
labels, and the like in violation of this act upon being made aware of 
the illegal nature of these items or services.
  It is the irresponsible culprits that must be held accountable. Those 
who profit from another's innovation have proved their creativity only 
at escaping responsibility for their actions. As legislators it is 
important that we provide law enforcement with the tools needed to 
capture these thieves.
  I say to Senator Specter, it is also my understanding that the U.S. 
Sentencing Commission recently promulgated new Federal sentencing 
guidelines to account for the changes in how intellectual property 
crimes are committed. Could the Senator clarify for the record why we 
have authorized the U.S. Sentencing Commission to further amend the 
Federal sentencing guidelines and policy statements for crimes 
committed in violation of title 18, section 2318 or 2320, of the United 
States Code?
  Mr. SPECTER. I say to Senator Leahy, as the Senator is aware, 
periodically Congress directs the Sentencing Commission to update the 
Federal sentencing guidelines upon the periodic directive of Congress 
to reflect and account for changes in the manner in which intellectual 
property offenses are committed. The recent amendments to which you 
refer were promulgated by the Sentencing Commission pursuant to the 
authorization in the Family Entertainment and Copyright Act of 2005, 
also known as FECA. These amendments to the Federal sentencing 
guidelines, which took effect on October 24, 2005, address changes in 
penalties and definitions for intellectual property rights crimes, 
particularly those involving copyrighted pre-release works and issues 
surrounding ``uploading.'' For example, these guidelines provide for a 
25 percent increase in sentences for offenses involving pre-release 
works. In addition, the Commission revised its definition of 
``uploading'' to ensure that the guidelines are keeping up with 
technological advances in this area.

  I would like to make it clear for the record that the directive to 
the Sentencing Commission in section 3 of H.R. 32 is not meant as 
disapproval of the Commission's recent actions in response to FECA. 
Rather, section 3 covers other intellectual property rights crimes that 
Congress believes it is time for the Commission to revisit. 
Specifically, section 3 directs the Commission to review the 
guidelines, and particularly the definition of ``infringement amount,'' 
to ensure that offenses involving low-cost items like labels, patches, 
medallions, or packaging that are used to make counterfeit goods that 
are much more expensive, are properly punished. It also directs the 
Commission to ensure that the penalty provisions for offenses involving 
all counterfeit goods or services, or devices used to facilitate 
counterfeiting, are properly addressed by the guidelines. As it did in 
response to the No

[[Page S1369]]

Electronic Theft Act of 1997 and FECA, I am confident that the 
Commission will ensure that the Federal sentencing guidelines provide 
adequate punishment and deterrence for these very serious offenses and 
I look forward to the Commission's response to this directive.
  Mr. LEAHY. I say to Senator Specter, thank you for that 
clarification. As you are aware, there has been overwhelming support 
for this legislation. It has been very heartening to see such 
overwhelming support for this important bill. Counterfeiting is a 
threat to America. It wreaks real harm on our economy, our workers, and 
our consumers. This bill is a tough bill that will give law enforcement 
improved tools to fight this form of theft. The bill is short and 
straightforward, but its impact should be profound and far reaching.
  Mr. SPECTER. At this point, I would like to take this opportunity to 
thank Representative Jim Sensenbrenner, chairman of the House Judiciary 
Committee, and Representative Joe Knollenberg for their leadership in 
the House with regard to H.R. 32. In January of 2005, Representative 
Knollenberg introduced H.R. 32 in the House. When the bill was in 
committee, he fostered negotiations between the Department of Justice, 
the U.S. Chamber of Commerce, and the International Trademark 
Association to ensure that it passed the House. I would also like to 
thank my colleague Senator Leahy, ranking member of the Senate 
Judiciary Committee, and Senators Alexander, Bayh, Brownback, Coburn, 
Cornyn, DeWine, Durbin, Feingold, Feinstein, Hatch, Kyl, Levin, Reed, 
Stabenow, and Voinovich for their cosponsorship of S. 1699, the 
companion legislation to H.R. 32. It is through the hard work of all of 
these Members that we were able to achieve truly bipartisan support for 
language that will ensure the protection of American-held trademarks.
  Mr. LEAHY. Some of our most important legislation is produced not 
only when we reach across the aisle in the name of bipartisanship, but 
when we work across Chambers and reach true consensus. I would also 
like to thank Senators Alexander, Bayh, Brownback, Coburn, Cornyn, 
DeWine, Durbin, Feingold, Feinstein, Hatch, Kyl, Levin, Reed, Stabenow, 
and Voinovich for their cosponsorship of the Senate companion 
legislation. Counterfeiting is a serious problem that does not lend 
itself to a quick and easy solution. This legislation is an important 
step towards fighting counterfeiting. I hope we can build on the 
success of this law.
  Mr. LEAHY. Mr. President, I am pleased to join with Senator Cornyn in 
another of our bipartisan efforts to improve the lives of Americans 
through effective and efficient Government. The Protecting American 
Goods and Services Act of 2005, which was passed unanimously out of the 
Senate last November as S. 1095, is now part of a package that includes 
the Stop Counterfeiting in Manufactured Goods Act, which I co-sponsored 
with Senator Specter as S. 1699. The Protecting American Goods and 
Services Act strengthens 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 two 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 antiracketeering 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.
  This bill helps to combat this growing scourge.
  S. 1095 criminalizes 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 are sending a powerful message to the criminals who 
belong in jail, and to our innovators.
  Mr. FRIST. Mr. President, I ask unanimous consent that the Specter 
substitute at the desk be agreed to, the bill, as amended, be read the 
third time and passed, the motion to reconsider be laid on the table, 
and that any statements thereon be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 2889) was agreed to, as follows:

[[Page S1370]]

 (Purpose: To amend title 18, United States Code, to provide criminal 
penalties for trafficking in counterfeit marks, clarify the prohibition 
    on the trafficking in goods or services, and for other purposes)

       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. TRAFFICKING IN COUNTERFEIT MARKS.

       (a) Short Title; Findings.--
       (1) Short title.--This section may be cited as the ``Stop 
     Counterfeiting in Manufactured Goods Act''.
       (2) Findings.--The Congress finds that--
       (A) the United States economy is losing millions of dollars 
     in tax revenue and tens of thousands of jobs because of the 
     manufacture, distribution, and sale of counterfeit goods;
       (B) the Bureau of Customs and Border Protection estimates 
     that counterfeiting costs the United States $200 billion 
     annually;
       (C) counterfeit automobile parts, including brake pads, 
     cost the auto industry alone billions of dollars in lost 
     sales each year;
       (D) counterfeit products have invaded numerous industries, 
     including those producing auto parts, electrical appliances, 
     medicines, tools, toys, office equipment, clothing, and many 
     other products;
       (E) ties have been established between counterfeiting and 
     terrorist organizations that use the sale of counterfeit 
     goods to raise and launder money;
       (F) ongoing counterfeiting of manufactured goods poses a 
     widespread threat to public health and safety; and
       (G) strong domestic criminal remedies against 
     counterfeiting will permit the United States to seek stronger 
     anticounterfeiting provisions in bilateral and international 
     agreements with trading partners.
       (b) Trafficking in Counterfeit Marks.--Section 2320 of 
     title 18, United States Code, is amended as follows:
       (1) Subsection (a) is amended by inserting after ``such 
     goods or services'' the following: ``, or intentionally 
     traffics or attempts to traffic in labels, patches, stickers, 
     wrappers, badges, emblems, medallions, charms, boxes, 
     containers, cans, cases, hangtags, documentation, or 
     packaging of any type or nature, knowing that a counterfeit 
     mark has been applied thereto, the use of which is likely to 
     cause confusion, to cause mistake, or to deceive,''.
       (2) Subsection (b) is amended to read as follows:
       ``(b)(1) The following property shall be subject to 
     forfeiture to the United States and no property right shall 
     exist in such property:
       ``(A) Any article bearing or consisting of a counterfeit 
     mark used in committing a violation of subsection (a).
       ``(B) Any property used, in any manner or part, to commit 
     or to facilitate the commission of a violation of subsection 
     (a).
       ``(2) The provisions of chapter 46 of this title relating 
     to civil forfeitures, including section 983 of this title, 
     shall extend to any seizure or civil forfeiture under this 
     section. At the conclusion of the forfeiture proceedings, the 
     court, unless otherwise requested by an agency of the United 
     States, shall order that any forfeited article bearing or 
     consisting of a counterfeit mark be destroyed or otherwise 
     disposed of according to law.
       ``(3)(A) The court, in imposing sentence on a person 
     convicted of an offense under this section, shall order, in 
     addition to any other sentence imposed, that the person 
     forfeit to the United States--
       ``(i) any property constituting or derived from any 
     proceeds the person obtained, directly or indirectly, as the 
     result of the offense;
       ``(ii) any of the person's property used, or intended to be 
     used, in any manner or part, to commit, facilitate, aid, or 
     abet the commission of the offense; and
       ``(iii) any article that bears or consists of a counterfeit 
     mark used in committing the offense.
       ``(B) The forfeiture of property under subparagraph (A), 
     including any seizure and disposition of the property and any 
     related judicial or administrative proceeding, shall be 
     governed by the procedures set forth in section 413 of the 
     Comprehensive Drug Abuse Prevention and Control Act of 1970 
     (21 U.S.C. 853), other than subsection (d) of that section. 
     Notwithstanding section 413(h) of that Act, at the conclusion 
     of the forfeiture proceedings, the court shall order that any 
     forfeited article or component of an article bearing or 
     consisting of a counterfeit mark be destroyed.
       ``(4) When a person is convicted of an offense under this 
     section, the court, pursuant to sections 3556, 3663A, and 
     3664, shall order the person to pay restitution to the owner 
     of the mark and any other victim of the offense as an offense 
     against property referred to in section 3663A(c)(1)(A)(ii).
       ``(5) The term `victim', as used in paragraph (4), has the 
     meaning given that term in section 3663A(a)(2).''.
       (3) Subsection (e)(1) is amended--
       (A) by striking subparagraph (A) and inserting the 
     following:
       ``(A) a spurious mark--
       ``(i) that is used in connection with trafficking in any 
     goods, services, labels, patches, stickers, wrappers, badges, 
     emblems, medallions, charms, boxes, containers, cans, cases, 
     hangtags, documentation, or packaging of any type or nature;
       ``(ii) that is identical with, or substantially 
     indistinguishable from, a mark registered on the principal 
     register in the United States Patent and Trademark Office and 
     in use, whether or not the defendant knew such mark was so 
     registered;
       ``(iii) that is applied to or used in connection with the 
     goods or services for which the mark is registered with the 
     United States Patent and Trademark Office, or is applied to 
     or consists of a label, patch, sticker, wrapper, badge, 
     emblem, medallion, charm, box, container, can, case, hangtag, 
     documentation, or packaging of any type or nature that is 
     designed, marketed, or otherwise intended to be used on or in 
     connection with the goods or services for which the mark is 
     registered in the United States Patent and Trademark Office; 
     and
       ``(iv) the use of which is likely to cause confusion, to 
     cause mistake, or to deceive; or''; and
       (B) by amending the matter following subparagraph (B) to 
     read as follows:

     ``but such term does not include any mark or designation used 
     in connection with goods or services, or a mark or 
     designation applied to labels, patches, stickers, wrappers, 
     badges, emblems, medallions, charms, boxes, containers, cans, 
     cases, hangtags, documentation, or packaging of any type or 
     nature used in connection with such goods or services, of 
     which the manufacturer or producer was, at the time of the 
     manufacture or production in question, authorized to use the 
     mark or designation for the type of goods or services so 
     manufactured or produced, by the holder of the right to use 
     such mark or designation.''.
       (4) Section 2320 is further amended--
       (A) by redesignating subsection (f) as subsection (g); and
       (B) by inserting after subsection (e) the following:
       ``(f) Nothing in this section shall entitle the United 
     States to bring a criminal cause of action under this section 
     for the repackaging of genuine goods or services not intended 
     to deceive or confuse.''.
       (c) Sentencing Guidelines.--
       (1) Review and amendment.--Not later than 180 days after 
     the date of enactment of this Act, the United States 
     Sentencing Commission, pursuant to its authority under 
     section 994 of title 28, United States Code, and in 
     accordance with this subsection, shall review and, if 
     appropriate, amend the Federal sentencing guidelines and 
     policy statements applicable to persons convicted of any 
     offense under section 2318 or 2320 of title 18, United States 
     Code.
       (2) Authorization.--The United States Sentencing Commission 
     may amend the Federal sentencing guidelines in accordance 
     with the procedures set forth in section 21(a) of the 
     Sentencing Act of 1987 (28 U.S.C. 994 note) as though the 
     authority under that section had not expired.
       (3) Responsibilities of united states sentencing 
     commission.--In carrying out this subsection, the United 
     States Sentencing Commission shall determine whether the 
     definition of ``infringement amount'' set forth in 
     application note 2 of section 2B5.3 of the Federal sentencing 
     guidelines is adequate to address situations in which the 
     defendant has been convicted of one of the offenses listed in 
     paragraph (1) and the item in which the defendant trafficked 
     was not an infringing item but rather was intended to 
     facilitate infringement, such as an anti-circumvention 
     device, or the item in which the defendant trafficked was 
     infringing and also was intended to facilitate infringement 
     in another good or service, such as a counterfeit label, 
     documentation, or packaging, taking into account cases such 
     as U.S. v. Sung, 87 F.3d 194 (7th Cir. 1996).

     SEC. 2. TRAFFICKING DEFINED.

       (a) Short Title.--This section may be cited as the 
     ``Protecting American Goods and Services Act of 2005''.
       (b) Counterfeit Goods or Services.--Section 2320(e) of 
     title 18, United States Code, is amended--
       (1) by striking paragraph (2) and inserting the following:
       ``(2) the term `traffic' means to transport, transfer, or 
     otherwise dispose of, to another, for purposes of commercial 
     advantage or private financial gain, or to make, import, 
     export, obtain control of, or possess, with intent to so 
     transport, transfer, or otherwise dispose of;'';
       (2) by redesignating paragraph (3) as paragraph (4); and
       (3) by inserting after paragraph (2) the following:
       ``(3) the term `financial gain' includes the receipt, or 
     expected receipt, of anything of value; and''.
       (c) Conforming Amendments.--
       (1) Sound recordings and music videos of live musical 
     performances.--Section 2319A(e) of title 18, United States 
     Code, is amended by striking paragraph (2) and inserting the 
     following:
       ``(2) the term `traffic' has the same meaning as in section 
     2320(e) of this title.''.
       (2) Counterfeit labels for phonorecords, computer programs, 
     etc.--Section 2318(b) of title 18, United States Code, is 
     amended by striking paragraph (2) and inserting the 
     following:
       ``(2) the term `traffic' has the same meaning as in section 
     2320(e) of this title;''.
       (3) Anti-bootlegging.--Section 1101 of title 17, United 
     States Code, is amended by striking subsection (b) and 
     inserting the following:
       ``(b) Definition.--In this section, the term `traffic' has 
     the same meaning as in section 2320(e) of title 18.''.

  The bill (H.R. 32), as amended, was read the third time and passed.




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