[Congressional Record (Bound Edition), Volume 151 (2005), Part 19]
[Senate]
[Pages 25794-25796]
[From the U.S. Government Publishing Office, www.gpo.gov]




          PROHOBITION ON THE TRAFFICKING OF GOODS AND SERVICES

  Mr. FRIST. Mr. President, I ask unanimous consent that the Senate 
proceed to the immediate consideration of Calendar No. 277, S. 1095.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The legislative clerk read as follows:

       A bill (S. 1095) 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.

  There being no objection, the Senate proceeded to consider the bill 
which had been reported from the Committee on the Judiciary with an 
amendment.
  [Strike the part shown in black brackets and insert the part shown in 
italic.]

                                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 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.''.]

     SECTION 1. TRAFFICKING DEFINED.

       (a) 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;''; and
       (2) by redesignating paragraph (3) as paragraph (4) and 
     inserting the following:
       ``(3) the term `financial gain' includes the receipt, or 
     expected receipt, of anything of value; and''.
       (b) 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.--As used in this section, the term 
     `traffic' has the same meaning as in section 2320(e) of title 
     18, United States Code.''.

  Mr. CORNYN. Mr. President, I rise today to thank my colleagues for 
joining me in the fight against global counterfeiting--a plague on our 
economy, on the safety of our citizens, and on our national security.
  S. 1095, the Protecting American Goods and Services Act, or PAGS, is 
important legislation designed to combat the trafficking of 
illegitimate goods throughout the world--and I look forward to working 
with our colleagues in the House of Representatives to send it to the 
President.

[[Page 25795]]

  I am particularly pleased to work with Senator Leahy in our continued 
bipartisan effort to protect intellectual property rights as well as to 
work on other important issues. 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 indeed has been a pleasure to 
work with the ranking member of the Judiciary Committee and his staff 
again.
  Mr. President, 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 and 5 percent and 7 percent 
of 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 of the 26 million 
airline parts installed each year are counterfeit. And the Federal Drug 
Administration estimates that as much as 10 percent of pharmaceuticals 
are counterfeit. Worse yet--evidence indicates that the counterfeit 
trade supports terrorist activities. Indeed, alQaeda 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.
  Mr. President, we must act to stop this illegal activity.
  The legislation that we are sending over to the House 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 and it is perhaps even more critical 
for businesses, large and small, throughout America and 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. The 
PAGS Act fills certain important gaps in current counterfeiting law by 
clarifying the term ``trafficking'' to ensure that it is illegal to: 
Possess counterfeit goods with the intention of selling them; give away 
counterfeit goods in exchange for some future benefit--in effect, the 
``bartering'' of counterfeit goods in such a way that avoids 
criminality and import or export counterfeit goods or unauthorized 
copies of copyrighted works.
  This bill will protect property rights, protect consumer safety, 
preserve American jobs and bolster the American economy by cracking 
down on the trade of illegal counterfeit goods and services.
  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 ensuringthe 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.
  Mr. LEAHY. Today, I am pleased that the Senate is passing S. 1095, 
the Protecting American Goods and Services Act of 2005, which is the 
latest of the bipartisan efforts that Senator Cornyn and I have made to 
improve the lives of Americans through effective and efficient 
government. 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 two pages long--
but it will have powerful 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 antiracket-
eering 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, knockoff 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

[[Page 25796]]

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 Protecting American Goods and Services Act of 2005 will help to 
combat this growing scourge. It amends the definition of trafficking in 
the counterfeit law to criminalize the possession of counterfeit goods 
with the intent to sell or traffic in those goods, as well as 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's new definition 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.
  Mr. FRIST. Mr. President, I ask unanimous consent that the committee 
substitute be agreed to, the bill, as amended, be read a third time and 
passed, the motions to reconsider be laid upon the table, with no 
intervening action or debate, and that any statements relating to the 
bill be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The committee amendment in the nature of a substitute was agreed to.
  The bill (S. 1095), as amended, was read the third time and passed.

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