[Congressional Record (Bound Edition), Volume 151 (2005), Part 8]
[House]
[Pages 10721-10725]
[From the U.S. Government Publishing Office, www.gpo.gov]




             STOP COUNTERFEITING IN MANUFACTURED GOODS ACT

  Mr. GOODLATTE. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 32) to amend title 18, United States Code, to provide 
criminal penalties for trafficking in counterfeit marks, as amended.
  The Clerk read as follows:

                                H.R. 32

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; FINDINGS.

       (a) Short Title.--This Act may be cited as the ``Stop 
     Counterfeiting in Manufactured Goods Act''.
       (b) Findings.--The Congress finds that--
       (1) 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;
       (2) the Bureau of Customs and Border Protection estimates 
     that counterfeiting costs the United States $200 billion 
     annually;
       (3) counterfeit automobile parts, including brake pads, 
     cost the auto industry alone billions of dollars in lost 
     sales each year;
       (4) counterfeit products have invaded numerous industries, 
     including those producing auto parts, electrical appliances, 
     medicines, tools, toys, office equipment, clothing, and many 
     other products;
       (5) ties have been established between counterfeiting and 
     terrorist organizations that use the sale of counterfeit 
     goods to raise and launder money;
       (6) ongoing counterfeiting of manufactured goods poses a 
     widespread threat to public health and safety; and
       (7) strong domestic criminal remedies against 
     counterfeiting will permit the United States to seek stronger 
     anticoun-
     terfeiting provisions in bilateral and international 
     agreements with trading partners.

     SEC. 2. 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 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

[[Page 10722]]

     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.''.

     SEC. 3. SENTENCING GUIDELINES.

       (a) 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 section, shall review and, if 
     appropriate, amend the Federal sentencing guidelines and 
     policy statements applicable to persons convicted of any 
     offense under--
       (1) section 1204 of title 17, United States Code; or
       (2) section 2318 or 2320 of title 18, United States Code.
       (b) 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.
       (c) Responsibilities of United States Sentencing 
     Commission.--In carrying out this section, 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 subsection 
     (a) 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).

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Virginia (Mr. Goodlatte) and the gentlewoman from California (Ms. Zoe 
Lofgren) each will control 20 minutes.
  Mr. GOODLATTE. Mr. Speaker, I ask unanimous consent to yield the 
balance of the time to the chairman of the committee, the gentleman 
from Wisconsin (Mr. Sensenbrenner).
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Virginia?
  There was no objection.


                             General Leave

  Mr. SENSENBRENNER. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days in which to revise and extend their 
remarks and to include extraneous material on H.R. 32, the bill 
currently under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Wisconsin?
  There was no objection.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of H.R. 32, the Stop Counterfeiting in 
Manufactured Goods Act. This legislation will facilitate efforts by the 
Department of Justice to prosecute those who exploit the good names of 
companies by attaching counterfeit marks to substandard products.
  This 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 are not 
authorized by the company to bear that name, the company suffers losses 
not only to its bottom line but to its reputation as well.
  In addition, counterfeit products are often purchased unwittingly by 
consumers who have come to rely on the quality of the product by a 
company they know and trust. Instead, what they receive is a low-
quality, often 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, airport parts, baby 
formulas, 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 they are used by an unsuspecting 
consumer.
  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, this legislation 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. The legislation also requires that restitution 
be paid to the owner of the mark which was counterfeited.
  By mid-fiscal year 2003, the Department of Homeland Security had 
already reported 3,117 seizures of counterfeit-branded goods, including 
cigarettes, books, apparel, hand bags, toys, and electronic games, with 
an estimated street value of $38 million. Fortune 500 companies are 
spending between $2 million and $4 million each and every year to fight 
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 provide another tool for the Federal Government 
to stop the wave of counterfeit products flooding the marketplace.
  This legislation has broad bipartisan support. It was amended in the 
Committee on the Judiciary to ensure only those individuals who are 
operating with an intent to deceive or confuse the consumer by 
attaching counterfeit labeling or packaging will be held criminally 
liable.
  I urge my colleagues to support this very important piece of 
legislation.

[[Page 10723]]

  Mr. Speaker, I reserve the balance of my time.
  Ms. ZOE LOFGREN of California. Mr. Speaker, I yield myself such time 
as I may consume.
  I rise in support of this legislation. H.R. 32 is aimed at criminals 
who traffic in counterfeit labels and packaging rather than the 
products themselves.
  Many counterfeit products are labeled with brand names or trademarks 
that consumers know and trust. However, under current law, trafficking 
in counterfeit labels is not illegal if the labels are not affixed to 
the counterfeit products. Counterfeiters have exploited this by 
importing the counterfeit labels and products separately, and then 
affixing the labels in the United States.
  This bill expands criminal penalties to include those who traffic in 
counterfeit labels and packaging. It also requires forfeiture of any 
property derived from the proceeds of the violation and requires 
restitution to the trademark owner.
  At the same time, H.R. 32 now includes language that will ensure that 
criminal sanctions do not reach legitimate businesses that repackage 
goods or services with no intent to deceive or cause confusion.
  The original bill left open the question of whether someone other 
than the manufacturer could affix marks to goods that could correctly 
identify the source. This confusion struck at the very heart of the 
parallel market in which third parties lawfully obtain goods and make 
them available in discount stores. Not only has this practice been 
upheld by the Supreme Court, but it also saves consumers billions of 
dollars each year.
  I appreciate that the majority worked with us to address this 
concern. We now have a bill that protects manufacturers, targets 
illegitimate actors, protects consumers, and leaves the legitimate 
parallel market unscathed. Therefore, I urge a ``yes'' vote on this 
legislation.
  Mr. Speaker, I reserve the balance of my time.

                              {time}  1415

  Mr. SENSENBRENNER. Mr. Speaker, I yield 2 minutes to the gentleman 
from Virginia (Mr. Goodlatte).
  Mr. GOODLATTE. Mr. Speaker, I thank the gentleman for yielding me 
this time and bringing this legislation to the floor, and I especially 
want to commend the gentleman from Michigan (Mr. Knollenberg) for his 
persistence in this matter.
  Several years ago I had an opportunity to bring forward legislation 
which passed the House and was signed into law by President Clinton 
which significantly increased the authority of the U.S. Customs Service 
to deal with this problem of counterfeit goods. Up until that time, 
when counterfeit goods were discovered by Customs inspectors, all they 
could do was refuse to allow them into the country.
  What happened was they would simply bring them around to another port 
and try again. Eventually, they would succeed, or they would send them 
to another market in the world and wreak the havoc that these 
counterfeit goods do in terms of health and safety concerns and cost to 
businesses elsewhere in the world. That was changed so that now the 
Customs Service can seize and destroy these goods.
  This is the next logical step to handling that. When the criminals 
bring these goods into the country and do not have the labels on them 
and escape liability because they have separated the labels from the 
counterfeit goods, that is obviously a loophole that needed to be 
plugged.
  I commend the gentleman and the committee for offering this 
legislation. I urge my colleagues to adopt it.
  Ms. ZOE LOFGREN of California. Mr. Speaker, I yield such time as he 
may consume to the gentleman from Michigan (Mr. Levin), an original 
cosponsor of this bill.
  Mr. LEVIN. Mr. Speaker, I am glad to join the gentleman from Michigan 
(Mr. Knollenberg) and all of the members on the committee who have 
worked hard on this bill to make sure that it is targeted in the right 
direction and that it will be, indeed, effective.
  We have an immense counterfeiting problem in this country. A lot of 
it occurs overseas outside of our shores, but a lot of it occurs right 
here in the United States. We need to do more about what is going on 
overseas. I heard on the radio coming in this morning that they are 
selling in China a counterfeit DVD of the new ``Star Wars'' movie, and 
people here in the United States are waiting in line to get into the 
theater.
  Here in the U.S. the counterfeiting problem has grown, and that was 
the inspiration for this bill. It has struck manufacturing in many 
respects. It has surely hurt the automobile industry, including the 
auto parts industry. Some estimates are that counterfeiting has cost 
the automotive parts industry over $12 billion in the last year. This 
is a time when that industry, as so many other parts of manufacturing, 
are having an immense challenge. They face an unlevel playing field. 
There is much talk in trade and competition about the need to level it, 
and there is nothing that rigs a field more than counterfeiting. That 
is the ultimate rigging.
  This bill is an effort to get at this problem, to increase the 
sanctions, to increase the ability of law enforcement to crack down.
  Mr. Speaker, I hope there is unanimous support for this bill. There 
is surely bipartisan support. Again, we have been glad to work with the 
gentleman from Michigan (Mr. Knollenberg) and others on this, and we 
salute the Committee on the Judiciary, the majority and the minority, 
for taking this issue seriously and working out any problems and 
placing this bill on a path where it could be brought up today and, we 
hope, supported across the board.
  Mr. SENSENBRENNER. Mr. Speaker, I yield 3 minutes to the gentleman 
from Michigan (Mr. Knollenberg), the principal sponsor of the bill.
  Mr. KNOLLENBERG. Mr. Speaker, I rise today in support of my bill, 
H.R. 32, the ``Stop Counterfeiting in Manufactured Goods Act.'' This 
legislation will help stop the scourge of counterfeit manufactured 
goods.
  Let me thank the Committee on the Judiciary in its entirety, 
particularly the gentleman from Wisconsin (Chairman Sensenbrenner) for 
all of his assistance, the subcommittee chairmen, the gentleman from 
North Carolina (Mr. Coble) and the gentleman from Texas (Mr. Smith), 
and the majority leader for his leadership in bringing the bill to the 
floor today.
  Most people understand that counterfeit goods is a problem, but many 
people do not understand how severe the problem is and how severe it 
has become. Counterfeiters are endangering consumers, are stealing jobs 
and money away from legitimate companies, destroying brand names and 
requiring costly investigations. The numbers are staggering, in 
addition to safety issues, and it has been mentioned about counterfeit 
auto parts, but they cost the automotive supplier over $12 billion 
annually. It has been estimated if these losses were eliminated, the 
industry could hire some 200,000 additional workers.
  The impact of counterfeiters affects almost every manufacturing 
industry in the country, including clothing, batteries, electronics and 
even pharmaceuticals. When it comes to the economy, the U.S. Customs 
Service has estimated that counterfeiting resulted in the loss of some 
750,000 jobs and cost the U.S. around $20 billion annually. It is 
estimated almost 7 percent of world trade is counterfeit.
  My bill has two key provisions that will help address the problem. 
The first provision is the most important. It requires the mandatory 
destruction and forfeiture of the equipment and materials used to make 
counterfeit goods.
  Under current law, a convicted trademark counterfeiter is only 
required to give up the actual counterfeit goods, not the machinery 
used to make those goods. My bill would prohibit trafficking in 
counterfeit labels, patches, and medallions.
  Passing this bill will send a signal to counterfeiters around the 
world that the U.S. will fight this growing problem. This bill will 
give prosecutors more tools to go after the criminals and punish them 
severely. This legislation also addresses the global problem,

[[Page 10724]]

and has the widespread support of the MEMA, NEMA, and the U.S. Chamber 
of Commerce.
  Mr. Speaker, I rise today in support of my bill, H.R. 32--the ``Stop 
Counterfeiting in Manufactured Goods Act.'' This legislation will help 
stop the scourge of counterfeit manufactured goods.
  Let me thank the Judiciary Committee, including Chairman 
Sensenbrenner, Subcommittee Chairman Coble and Subcommittee Chairman 
Lamar Smith. They've all provided important leadership to bring this 
bill to the floor today. I'd also like to thank the leadership, 
including Majority Leader DeLay, for their help in getting this bill 
through the process.
  The economy of my district is largely centered on the auto industry, 
particularly auto suppliers. In fact, my district includes the 
headquarters of over one-fourth of the 100 largest auto suppliers in 
North America, as well as a host of small suppliers.
  To say that the manufacturing sector is important to my district and 
to the State of Michigan is an understatement. In my district alone, 
there are more than 1,500 manufacturing entities, and over 90 percent 
of them have less than 100 employees.
  Most people understand that counterfeit goods are a problem. But many 
people don't understand just how severe the problem has become.
  Early last year, I was made aware of the serious and growing problem 
of counterfeit auto parts. What I found out was the counterfeiters are 
making all sorts of fake parts including brake pads, spark plugs, old 
filters, and in one case even an entire car. I was struck by how large 
an impact counterfeiters are having on the auto supplier industry.
  The numbers, in fact, are staggering. In addition to the obvious 
safety issues, counterfeit automobile parts cost the automotive 
supplier industry over $12 billion annually. It's estimated that if 
these losses were eliminated, and those sales were brought into 
legitimate companies, the auto industry could hire 200,000 additional 
workers. It's important to remember those numbers, because 
counterfeiting is not a victimless crime.
  In addition to selling bogus products, the counterfeiters are 
stealing jobs and money away from legitimate companies, destroying 
brand names, increasing warranty claims, and requiring legal fees and 
costly investigations.
  The fight against counterfeiters is not limited to the automotive 
industry. The impact of counterfeiters is broad and affects just about 
every manufacturing industry in the country--including clothing, 
batteries, electronics, and even pharmaceuticals.
  When it comes to the economy overall, the U.S. Customs Service has 
estimated that counterfeiting has resulted in the loss of 750,000 jobs 
and costs the United States around $200 billion annually. The 
International Chamber of Commerce estimates that 7 percent of the 
world's trade is in counterfeit goods and that the counterfeit market 
is worth $350 billion. We must provide more tools to fight 
counterfeiters, not only for the economy, but for the safety of our 
consumers.
  My bill has two key provisions that will help stop criminals who use 
counterfeit trademarks.
  The first provision is the most important and gets at the roots of 
the problem--it requires the mandatory destruction and forfeiture of 
the equipment and materials used to make the counterfeit goods.
  Under current law, a convicted trademark counterfeiter is only 
required to give up the actual counterfeit goods, not the machinery 
used to make those goods. If we don't take away the equipment used to 
make the fake goods, what's to stop the criminals from going back to 
make more? My bill would require the convicted criminals to give up not 
just the counterfeit goods, but also the equipment they used to make 
those goods. This will help to dig up the counterfeiting networks by 
the roots.
  In addition to this provision, my bill also prohibits trafficking in 
counterfeit labels, patches, and medallions.
  Under current law, it is legal to make and sell these items if they 
are not attached to a particular counterfeit good. This just doesn't 
make sense. Why would counterfeiters make these labels, if not for the 
chance at illegal profits?
  This bill will send a signal to counterfeiters that the United States 
is serious about fighting this growing problem. Passing this bill will 
give prosecutors more tools to go after the criminals here in the U.S. 
and punish them severely.
  This bill is also necessary to address the problem globally. Most of 
the counterfeit goods are being manufactured in other countries, 
particularly China. Some countries are better than others at fighting 
counterfeiting, but we need to have ways to prod the stragglers. 
However, we can't demand that other countries take steps to combat 
trademark counterfeiting that we have not taken ourselves.
  So, by passing my bill and improving our own law, Congress will 
empower our trade negotiators to press for stronger anti-counterfeiting 
provisions in other countries. We will show the world that the United 
States is serious about putting counterfeiters out of business for 
good.
  This bill has broad support, including the U.S. Chamber of Commerce, 
the National Association of Manufacturers, the Motor and Equipment 
Manufacturers Association, the National Electrical Manufacturers 
Association, the IACC, International Trademark Association and a host 
of major associations and corporations.
  As I have outlined, counterfeiting is a very serious worldwide 
problem that threatens public safety, hurts the U.S. economy and costs 
Americans thousands of manufacturing jobs. No one supports 
counterfeiters, and we must do everything we can to eliminate the 
problem.
  For these reasons, Mr. Speaker, I respectfully urge my colleagues to 
support H.R. 32, the Stop Counterfeiting in Manufactured Goods Act, and 
I yield back the remainder of my time.
  Mr. CONYERS. Mr. Speaker, I rise in support of this legislation and 
thank the chairman and his staff for working with us to ensure the bill 
does not overreach.
  The bill was designed to target illegitimate actors who trade in 
counterfeit marks. 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, could have been construed by 
some as going further than that. It left as an open question whether 
someone other than the manufacturer could affix marks to goods that 
correctly identify the source of the goods. This ambiguity could have 
had a negative impact on the parallel market, in which third parties 
lawfully obtain goods and make them available in discount stores. Not 
only has this practice been upheld by the Supreme Court, but it also 
saves consumers billions of dollars each year.
  Fortunately, H.R. 32 was amended in the full committee pursuant to an 
amendment offered by Representative Wexler to clarify that the 
legislation is not intended to be relied upon as a weapon against the 
secondary discount marketplace to the detriment of American consumers--
consumers dependent upon the price options and competition afforded by 
alternative sources of genuine goods.
  In particular, H.R. 32 was amended to specifically protect lawful 
repackaging of genuine goods by ensuring that any such third party 
repackaging, not intended to deceive or confuse, is specifically saved 
from criminal prosecution under this Act. The Committee specifically 
agreed that combining single genuine products into gift sets, 
separating combination set of genuine goods into individual items for 
resale, inserting coupons into original packaging or repackaged items, 
affixing labels to track or otherwise identify genuine products and 
removing genuine goods from original packaging for customized retail 
displays were not covered by the legislation as they provide important 
value to American consumers.
  I am happy to report that the final language ensures that H.R. 32 
adequately protects lawful American businesses, including those 
servicing the discount marketplace, while, at the same time punishes 
illicit counterfeiting activity. As a result of these good faith 
negotiations, we now have a bill that protects manufacturers, targets 
illegitimate actors, and leaves a legitimate industry unscathed.
  I urge a ``yes'' vote on this legislation.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise in support of this 
legislation that concerns such an important matter that affects 
interstate commerce as referenced in Article I, Section 8 of the United 
States Constitution. The Committee on the Judiciary rightly exercised 
oversight over the issue of counterfeiting products and conspiring to 
commit retail theft, and I applaud the gentleman from Michigan for 
having crafted legislation that has garnered bipartisan support.
  Similar legislation, namely H.R. 3632, the ``Anti-Counterfeiting 
Amendments Act of 2003'' in the 108th Congress, passed under suspension 
of the rules and became law, and I supported it. That measure regulated 
the trafficking of certain security components of products, for 
example, Certificates of Authenticity (COAs). Now that it has become 
law, piracy of these security markers, which are the source of each 
product's value, will be discouraged by way of criminal consequences.
  In the context of discussing H.R. 3632, I cited a situation in Texas 
in which a crime ring was implicated for the import of over 100 million 
counterfeit cigarettes by mislabeling shipping documents and indicating 
that they were

[[Page 10725]]

importing toys or plastic parts. That crime threatened the copyright 
royalties of property owners.
  However, this legislation extrapolates that aspect of criminal 
activity by inserting the possibility that unsafe products as well as 
counterfeit products could be circulated in the flow of interstate 
commerce.
  Last year, U.S. Immigration and Customs Enforcement officials seized 
fake goods valued at $22 million in the Houston area alone. Federal 
inspectors now work to curtail the flow of fake Louis Vuitton and Coach 
handbags and other items coming from Houston, which lags behind only 
New York and Los Angeles in supplying counterfeit products to the rest 
of the Nation. Furthermore, during Super Bowl XXXVIII that was held in 
Houston this past year, NFL investigators seized about 1,000 
counterfeit products in Houston that were peddled by two vendors.
  Therefore, the subject matter of this bill is of great importance to 
me. This bill is largely bi-partisan; however, we have a duty to ensure 
that its provisions are narrowly tailored before passing them into law.
  At the committee level, I had questions regarding the intended scope 
of search and seizure law and how H.R. 32 proposes to change it. One 
question that I posed relates to the property forfeiture provision 
found on page 3, line 21 of the bill as drafted. Subparagraphs (A) and 
(B) are conjunctive so as to require both findings before a forfeiture 
would follow--how proposes to prevent law enforcement from seizing the 
property of an innocent person (assuming it is in possession or use by 
the perpetrator of the underlying offense). I hope that this 
legislation is clear in its provisions to jurists in order to prevent 
future appellate litigation that can be both costly and time 
consuming--to the detriment of bona fide claimants.
  Another question I posed goes to the matter of restitution. Section 
2, page 4, lines 15-16 would require one convicted of the offense in 
question to pay restitution damages to the ``victim'' as defined in 
Title 18, Section 3663(A)(2):

     a person directly and proximately harmed as a result of the 
     commission of an offense for which restitution may be ordered 
     including, in the case of an offense that involves as an 
     element a scheme, conspiracy, or pattern of criminal 
     activity, any person directly harmed by the defendant's 
     criminal conduct in the course of the scheme, conspiracy, or 
     pattern.

(emphasis added). I queried whether the drafter of this bill 
contemplate those proximately harmed by the perpetration of the crimes 
enumerated to include State governments. As I cited earlier in my 
statement, criminals trafficked over 1,000 counterfeit products in the 
stream of commerce and caused the State of Texas, among others, to lose 
significant revenues.
  I believe that H.R. 32 can provide much needed legislative protection 
of the American consumer and of the owners of intellectual and licensed 
property.
  Ms. ZOE LOFGREN of California. Mr. Speaker, I yield back the balance 
of my time.
  Mr. SENSENBRENNER. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Radanovich). The question is on the 
motion offered by the gentleman from Wisconsin (Mr. Sensenbrenner) that 
the House suspend the rules and pass the bill, H.R. 32, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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