[Congressional Record Volume 152, Number 28 (Tuesday, March 7, 2006)]
[House]
[Pages H593-H596]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STOP COUNTERFEITING IN MANUFACTURED GOODS ACT
Mr. SENSENBRENNER. Madam Speaker, I move to suspend the rules and
concur in the Senate amendment to the bill (H.R. 32) to amend title 18,
United States Code, to provide criminal penalties for trafficking in
counterfeit marks.
The Clerk read as follows:
Senate amendment:
Strike out all after the enacting clause and insert:
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,
[[Page H594]]
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 SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Wisconsin (Mr. Sensenbrenner) and the gentleman from Michigan (Mr.
Conyers) each will control 20 minutes.
The Chair recognizes the gentleman from Wisconsin.
General Leave
Mr. SENSENBRENNER. Madam Speaker, I ask unanimous consent that all
Members may have 5 legislative days within which to revise and extend
their remarks and include extraneous material on H.R. 32 currently
under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Wisconsin?
There was no objection.
Mr. SENSENBRENNER. Madam Speaker, I yield myself such time as I may
consume.
Madam Speaker, I rise in support of H.R. 32, the Stop Counterfeiting
in Manufactured Goods Act. This legislation, which is substantially
similar to legislation that passed the House by voice vote in May of
2005, contains important provisions to facilitate efforts by the
Department of Justice to prosecute those who exploit the good names of
companies by attaching counterfeit marks to substandard products.
As amended by the other body, H.R. 32 includes changes to the
definition of ``traffic'' contained in Federal counterfeiting statutes
to permit the prosecution of persons who import or export counterfeit
products or possess counterfeit products with the intent to transport,
transfer, or distribute such products.
Counterfeiting is a serious problem. Legitimate businesses work hard
to build public trust and confidence in their products. When a
legitimate company's name is attached to counterfeit products, that
company may suffer financial losses and may also have its reputation
tarnished as a result.
In addition, counterfeit products are often purchased unwittingly by
consumers who have come to rely on the quality of a product from a
company they know and trust. What unsuspecting consumers of counterfeit
products often receive is a low-quality, and potentially dangerous,
imitation. Some of these products are such poor imitations of the
original that they have caused physical harm to consumers.
The FBI has identified counterfeit goods in a wide range of products
including pharmaceuticals, automobile parts, airplane parts, baby
formula, and children's toys. The U.S. automobile industry has reported
a number of instances of brake failure caused by counterfeit brake pads
manufactured from wooden chips. Counterfeits of other products, such as
prescription or over-the-counter medications, may have serious health
consequences if consumed by consumers.
Under this legislation, section 2320 of title 18 would be expanded to
include penalties for those who traffic in counterfeit labels, symbols,
or packaging of any type knowing that a counterfeit mark has been
applied. Additionally, H.R. 32 would require the forfeiture of any
property derived directly or indirectly from the proceeds of the
violations as well as any property used, or intended to be used, in
relation to the offense. It also requires that restitution be paid to
the owner of the mark that was counterfeited.
In fiscal year 2003, the Department of Homeland Security reported
6,500 seizures of counterfeit-branded goods including cigarettes,
books, apparel, handbags, toys, and electronic games with an estimated
street value of $94 million. According to the U.S. Customs and Border
Protection, the number of seizures for violations of intellectual
property rights increased by 11.8 percent between fiscal year 2003 and
fiscal year 2004 to 7,255 seizures for an estimated value of $139
million. Fortune 500 companies are spending between $2 million and $4
million a year each to fight the counterfeiters.
The counterfeiting of manufactured goods produces staggering losses
to businesses across the United States and around the world.
Counterfeit products deprive the Treasury of tax revenues, add to the
national trade deficit, subject consumers to health and safety risks,
and leave consumers without any legal recourse when they are
financially or physically injured by counterfeit products.
In addition, established links between counterfeiting, terrorism, and
organized crime have made this a priority for Federal law enforcement
agencies. H.R. 32 will help the Federal Government stop the wave of
counterfeit products flooding the marketplace.
Before closing, I would like to thank and congratulate the gentleman
from Michigan (Mr. Knollenberg), the author of the House-passed
legislation, for his tireless efforts to address the counterfeiting
problem. He has crafted a good piece of legislation that has broad
bipartisan support. I urge my colleagues to support this important
bill.
[[Page H595]]
Madam Speaker, I reserve the balance of my time.
Mr. CONYERS. Madam Speaker, I support this bill with great
enthusiasm. I yield as much time as he may consume to the gentleman
from Virginia (Mr. Scott). No one has worked harder on the committee
than this gentleman.
Mr. SCOTT of Virginia. Madam Speaker, I rise in support of H.R. 32,
the Stop Counterfeiting in Manufactured Goods Act.
The bill amends existing law in a matter designed to intensify the
effort to prevent counterfeiting of goods. Counterfeited goods
victimize the manufacturer and shortchange purchasers with substandard
products. They also expose all of us to risks from unsafe products and
deprive Americans of jobs and other benefits from commerce when the
authentic goods are not sold.
The sale of counterfeit goods is illegal. This bill clarifies any
ambiguity there may be in present law. Madam Speaker, when we began
working on this bill on a bipartisan basis at the subcommittee level,
there was a concern when drafted that the bill went too far and
actually criminalizes current legitimate, time-honored practices by
law-abiding merchants who legally purchased authentic goods and
repackage them in various ways to enhance sales of such goods.
We forged an agreement which addressed this potential problem to the
satisfaction of all those who had expressed concerns about it. So this
bill addresses the problem of counterfeiting of manufactured goods in a
manner that should now be considered non-controversial.
Accordingly, Madam Speaker, I support the bill, and I urge my
colleagues to do the same.
Mr. SENSENBRENNER. Madam Speaker, I yield 4 minutes to the gentleman
from Michigan (Mr. Knollenberg), the author of the bill.
Mr. KNOLLENBERG. Madam Speaker, thank you very much for allowing me
to speak on my bill, H.R. 32, the Stop Counterfeiting in Manufactured
Goods Act. I sincerely want to salute the chairman, Mr. Sensenbrenner,
for the effort he has made. And I also wanted to thank the ranking
member, Mr. Conyers, and Mr. Scott and anybody else that wants to rise.
I appreciate very much all the hard work and the support you have given
this bill.
I introduced this bill last year in response to the concerns of many
manufacturing companies about the proliferation of counterfeit
products, especially auto parts. Simply put, counterfeit parts and
goods cost American jobs. Every year, counterfeiting costs the U.S. an
estimated $200 billion, and that is climbing. Counterfeit auto parts
alone cost the automotive supplier industry over $12 billion annually.
To put it in more tangible terms, it is estimated that if these
losses were eliminated, the auto industry could hire 200,000 additional
workers.
Counterfeit products not only damage our economy, as the chairman
just mentioned; they compromise the safety of all Americans.
Counterfeit auto parts, including brake pads, have been found in taxi
cabs; fake prescriptions drugs have been confiscated; babies have been
fed fake formula; and even, and this is serious, military combat
vehicles have received counterfeit parts.
Oftentimes there is no way, virtually no way of telling the
difference between a legitimate and a counterfeit product. That is why
H.R. 32 prohibits trafficking in also counterfeit labels, patches, and
medallions.
This legislation also requires convicted counterfeiters to not only
surrender confiscated counterfeit goods but also, more importantly, the
equipment used to make those products. H.R. 32 will help to dig up the
counterfeiting networks by the roots, to stop criminals from reusing
machinery and defrauding the American people.
I do just want to briefly address why we have to pass H.R. 32 again,
when the House passed it last year by voice vote. First, the Senate
added a technical clarification to address the concerns of some
Internet marketplace companies that this bill would unfairly punish
them for crimes committed by third parties. I support this technical
change. The intent of this bill is not to punish the victims of
counterfeit schemes but, rather, to penalize those that blatantly and
consciously pursue the sale of counterfeit products.
Second, the Senate added additional anticounterfeit provisions that
broaden the activities deemed criminal under current law to include
international property violations, and I fully support the addition of
these provisions.
Madam Speaker, in closing, I want to again thank Judiciary Committee
Chairman Jim Sensenbrenner for his work on this bill. His committee has
been tasked to do so many things over the last several months, so many
pressing issues; and it took some time to bring this about. I sincerely
appreciate everything he has done to bring this along. I also want to
thank everybody else who was involved in bringing this bill to a final
legislative finish.
We should all be proud of this bill, and I urge my colleagues to
support its passage.
Mr. CONYERS. Madam Speaker, I yield myself such time as I may
consume.
Madam Speaker, I rise proudly in support of this legislation and
thank the chairman of the committee and his staff and others for
working with us to ensure that this bill does not overreach.
The measure was designed to target illegitimate actors who trade in
counterfeit trademarks, ranging from auto parts to fake labels for
handbags or cologne. We all agree that manufacturers have a right to
ensure that fake goods are not marketed in their names and that their
own goods are not marketed under fake names.
The bill as originally written, however, went further than that. It
was vague on the issue of whether someone other than the manufacturer
could affix marks to goods that correctly identify the source of the
goods. This struck at the very heart of the parallel market in which
third parties lawfully obtain genuine goods and make them available in
discount stores without deception. Not only has this practice been
upheld by the Supreme Court, but it also saves consumers billions of
dollars each year.
Through negotiation with the majority and affected parties, we have
been able to revise the legislation to protect manufacturers, target
illegitimate actors, and leave a legitimate industry unscathed. More
specifically, because the bill amends the definition of a counterfeit
trademark to include packaging and labeling formats which can be used
lawfully by a variety of businesses, the new language clarifies that
the repackaging of goods that were made under the authority of the
United States trademark owner is not prohibited.
{time} 1545
Such repackaging can include combining single products into gift
sets, separating combination sets of goods into individual items for
resale, inserting coupons into original packaging or repackaged items,
affixing labels to track or otherwise identify products, removing goods
from original packaging for customized retail displays, and moving
products from large end caps or display modules into smaller cases.
In deciding whether to bring a cause of action under the new law in
situations involving the repackaging of genuine goods, it is expected
that the government will consider evidence that clearly shows an intent
to deceive or confuse. Such evidence could come in the form of
altering, concealing or obliterating expiration dates or information
important to the consumer use of the product; for example: safety and
health information about the quality, performance or use of the product
or service; statements or other markings that a used, discarded or
refurbished product is new; or statements or other markings that the
product meets testing and certification requirements. Also relevant to
a decision to bring a criminal action would be a meaningful variance
from product testing and certification requirements, placing seals on
product containers that have been opened or otherwise adulterating the
genuine product.
Finally, the bill was modified to clarify that it was not intended to
allow criminal actions against persons who, with no intent to deceive
or confuse, traffic in goods or services that were originally
manufactured under the authority of the United States trademark owner.
In this regard, the phrase ``the use of which is likely to cause
confusion, to cause mistake, or to deceive''
[[Page H596]]
is not intended to create a new element for this cause of action but,
instead, reiterates what is already reflected in the definition of
``counterfeit mark.''
So I congratulate the bipartisan effort that made this measure far
more useful and appealing, and I urge my colleagues to support this
legislation.
Mr. GILLMOR. Madam Speaker, as an original co-sponsor of H.R. 32, I
am proud to rise in support of this important legislation.
Each year, counterfeit manufactured goods cost American companies
billions in lost revenue and exacerbate the global challenges that this
sector of our economy already face on a daily basis. Madam Speaker, in
my district alone, manufacturing accounts for 50 percent of all jobs.
This legislation will make a significant impact in ensuring that
northwest Ohio's long and vibrant manufacturing history is not lost as
a result of criminal actions designed to make a quick profit and
deprive consumers of high-quality manufactured goods. Finally, I want
to thank my colleague from Michigan, Mr. Knollenberg, for his
leadership on this legislation as well as my colleague from Wisconsin,
the distinguished Chairman of the Judiciary Committee, Mr.
Sensenbrenner, for ushering it to the floor just two weeks before
National Manufacturing Week is set to kickoff.
Madam Speaker, I would urge all of my colleagues to show their
support for the manufacturing community by voting in favor of this
legislation.
Mr. LEVIN. Madam Speaker, I rise in strong support of H.R. 32, the
``Stop Counterfeiting in Manufactured Goods Act.'' This legislation
responds to a serious and growing problem: the trafficking of
counterfeit goods.
We've all seen movies in which someone buys what looks to be an
expensive Rolex watch from a street vendor, only to find out later what
they've really purchased is a cheap imitation that doesn't even keep
proper time. Lately, it's the DVDs of the movie themselves that are
increasingly likely to be counterfeit. In the area of pharmaceuticals,
counterfeit drugs are now being sold in this country and around the
world. The packaging makes them look like the real thing, but the pills
inside often lack the active ingredient people are relying on to treat
their illnesses, or contain the wrong active ingredient altogether.
According to the Food and Drug Administration, upwards of ten percent
of the drugs worldwide are counterfeit. In some countries, it is
estimated that more than half the drug supply is made up of counterfeit
drugs.
The trade in counterfeit goods has also had a negative impact on the
automobile industry, including the auto parts industry. People buy what
they believe are name-brand parts, like brake pads and spark plugs,
only to find that they spent good money on counterfeit goods that do
not meet safety and performance requirements. Beyond the obvious safety
problem for consumers, the trade in counterfeit parts costs the
automotive parts industry an estimated $12 billion a year. This is a
heavy loss to a U.S. auto parts industry that already faces immense
challenges.
The fact of the matter is that--whether it's counterfeit DVDs, video
games, medicines, auto parts, or handbags--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.We need new tools to deal with this growing problem, and that's
what this legislation does. This bill expands criminal penalties to
include those who traffic in counterfeit labels and packaging, setting
fines of up to $2 million and a prison sentence of up to ten years for
those who intentionally sell or distribute counterfeit labels and other
false packaging. It also requires the offender to make restitution to
the owner of the mark. In addition, the bill requires the forfeiture of
any property derived from the proceeds of the violation, as well as any
property used in connection with the offense.
I urge all my colleagues to join me in supporting this needed
legislation.
Mr. CONYERS. Madam Speaker, I have no other requests for time, and I
yield back my time.
Mr. SENSENBRENNER. Madam Speaker, I also yield back the balance of my
time.
The SPEAKER pro tempore (Mrs. Biggert). The question is on the motion
offered by the gentleman from Wisconsin (Mr. Sensenbrenner) that the
House suspend the rules and concur in the Senate amendment to the bill,
H.R. 32.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the Senate amendment was
concurred in.
A motion to reconsider was laid on the table.
____________________