[Federal Register Volume 62, Number 221 (Monday, November 17, 1997)]
[Rules and Regulations]
[Pages 61231-61232]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-30048]



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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 133

RIN 1515-AC10
[T.D. 97-91]


Anticounterfeiting Consumer Protection Act: Disposition of 
Merchandise Bearing Counterfeit American Trademarks; Civil Penalties

AGENCY: Customs Service, Treasury.

ACTION: Interim regulations.

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SUMMARY: This document amends the Customs Regulations on an interim 
basis to implement two statutory changes contained in the 
Anticounterfeiting Consumer Protection Act of 1996 (ACPA) enacted by 
Congress to protect consumers and American businesses from counterfeit 
copyrighted and trademarked products. In general, the amendments made 
by the ACPA are designed to help Customs fight counterfeiting more 
effectively by enhancing its information base to interdict illicit 
shipments of trademarked merchandise, by strengthening the civil 
remedies available to intellectual property owners harmed by 
counterfeiting, and by providing the government with additional tools 
to address intellectual property violations. The provisions of the ACPA 
addressed in this document concern the government disposition of 
merchandise bearing counterfeit American trademarks, and the imposition 
of civil penalties on any person who directs, assists financially or 
otherwise, or aids and abets the importation of counterfeit goods.

DATES: Interim rule effective November 17, 1997; comments must be 
submitted by January 16, 1998.

ADDRESSES: Written comments (preferably in triplicate) may be addressed 
to the Regulations Branch, Office of Regulations and Rulings, U.S. 
Customs Service, 1300 Pennsylvania Avenue, NW., Washington, DC 20229. 
Comments submitted may be inspected at the Regulations Branch, Office 
of Regulations and Rulings, U.S. Customs Service, 1300 Pennsylvania 
Avenue, NW., 3rd Floor, Washington, DC.

FOR FURTHER INFORMATION CONTACT:

For Entry Questions--Jerry Laderberg, Entry and Carrier Rulings Branch, 
(202) 927-2320, Office of Regulations and Rulings;
For Penalties and Other Legal Questions--Charles Ressin, Penalties 
Branch, (202) 927-2344, or John Atwood, Intellectual Property Rights 
Branch, (202) 927-2330, Office of Regulations and Rulings.

SUPPLEMENTARY INFORMATION:

Background

    Finding that counterfeit products cost American businesses an 
estimated $200 billion each year worldwide, Congress enacted the 
Anticounterfeiting Consumer Protection Act of 1996 (ACPA) to make sure 
that Federal law adequately addresses the scope and sophistication of 
modern counterfeiting. See, S. Rpt. No. 177, 104th Cong., 1st Sess. 
(1995), reprinted in (1996) 6 U.S.C.C.&A.N. 1074. On July 2, 1996, the 
President signed the ACPA into law (Pub. L. 104-153, 110 Stat. 1386). 
The ACPA was designed to provide important weapons against 
counterfeiters in four principal areas. First, it increases criminal 
penalties for counterfeiting and allows law enforcement to fight 
counterfeiters at the organizational level by making trafficking in 
counterfeit goods or services an offense under the Racketeer Influenced 
and Corrupt Organizations (RICO) Act, by providing increased 
imprisonment terms, criminal fines, and asset forfeiture against those 
involved in criminal counterfeiting enterprises. Second, the 
legislation enhances law enforcement's ability to fight counterfeiting 
more effectively by increasing the involvement of all levels of law 
enforcement and expanding their power to seize counterfeit goods and 
the tools of the counterfeit trade. Third, the legislation helps stem 
the flow of counterfeit goods by making it easier to find imported 
counterfeit goods and making it more difficult for seized goods to 
reenter the stream of commerce. Lastly, the ACPA, in part, strengthens 
the hand of businesses harmed by counterfeiters by updating existing 
statutes and providing additional civil penalties and remedies against 
counterfeiters.
    Section 14 of the ACPA directs the Secretary of the Treasury to 
prescribe such regulations or amendments to existing regulations as may 
be necessary to implement and enforce particular provisions of the 
ACPA. Accordingly, Customs will amend its regulations as a result of 
the enactment of sections 8, 9, 10, 11, and 12 of the ACPA, and these 
changes will be implemented in several Federal Register documents. This 
document concerns sections 9 and 10 of the ACPA.
    Section 9 of the ACPA pertains to government disposition of 
merchandise bearing American trademark information and amends section 
526(e) of the Tariff Act of 1930, as amended, (19 U.S.C. 1526(e)) to 
ensure that counterfeits of American products are routinely destroyed, 
unless there is no public safety risk and the trademark owner agrees to 
some other disposition of the merchandise. Thus, section 9 of the ACPA 
makes the destruction of forfeited counterfeit merchandise the general 
rule, which is necessary to ensure that counterfeited merchandise is 
not returned to the violator who could simply redistribute the 
counterfeit goods. The provisions of section 526(e) are provided for, 
in part, at Sec. 133.52(c) of the Customs Regulations (19 CFR 
133.52(c)), which is amended by revising the introductory text of 
paragraph (c) and the texts of paragraphs (c)(1) through (c)(3), and 
removing the provisions of paragraph (c)(4).
    Section 10 of the ACPA pertains to civil penalties and further 
amends section 526 of the Tariff Act of 1930 (19 U.S.C. 1526) by adding 
a new subsection (f). New subsection (f) provides for civil fines on 
persons involved in the importation of merchandise bearing a 
counterfeit American trademark and are in addition to any other civil 
or criminal penalty or other remedy authorized by law. The fine may be 
imposed on any person who directs, assists financially or otherwise, or 
aids and abets the importation of merchandise for sale or public 
distribution that is seized pursuant to 19 U.S.C. 1526(e). For the 
first seizure, the fine imposed can be an amount up to the value of the 
merchandise as if it were genuine, based on the manufacturer's 
suggested retail price (MSRP). For subsequent seizures, the fine 
imposed can be an amount up to twice the value of the merchandise as if 
it were genuine, based on the MSRP. This provision has two primary 
purposes. First, it will provide a deterrent to counterfeiting in cases 
in which resources are not available to bring a criminal case. Second, 
it makes penalties related to imported counterfeit products at least as 
stringent as those penalties applied to counterfeits made in this 
country. For the purposes of mitigation of these civil fines, Customs 
has decided to apply the guidelines for remission contained in the 
Appendix of Customs Directive 4400-07 (January 26, 1988). As there are 
currently no Customs Regulations that provide for civil fines for those 
involved in the

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importation of counterfeit trademark goods, a new Sec. 133.25 is 
created to implement the provisions of section 526(f).

Comments

    Before adopting these interim regulatory amendments as a final 
rule, consideration will be given to any written comments timely 
submitted to Customs. Comments submitted will be available for public 
inspection in accordance with the Freedom of Information Act (5 U.S.C. 
552), Sec. 1.4 of the Treasury Department Regulations (31 CFR 1.4), and 
Sec. 103.11(b) of the Customs Regulations (19 CFR 103.11(b)), on 
regular business days between the hours of 9 a.m. and 4:30 p.m. at the 
Regulations Branch, Office of Regulations and Rulings, U.S. Customs 
Service, 1300 Pennsylvania Avenue, NW., 3rd floor, Washington, DC.

Inapplicability of Notice and Public Comment, Delayed Effective Date 
Requirement, the Regulatory Flexibility Act, and Executive Order 12866

    Pursuant to 5 U.S.C. 553(b)(B), it has been determined that it 
would be contrary to the public interest to issue this rule with notice 
and public procedures because the rule implements statutory provisions 
enacted to protect trademark owners and the public from imported 
merchandise bearing a counterfeit American trademark. For this reason, 
and pursuant to 5 U.S.C. 553(d)(3), good cause exists to make this rule 
effective immediately without a 30-day delayed effective date. Because 
no notice of proposed rulemaking is required for interim regulations, 
the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) 
do not apply. This document does not meet the criteria for a 
``significant regulatory action'' as specified in Executive Order 
12866.

List of Subjects in 19 CFR Part 133

    Copyrights, Counterfeit goods, Customs duties and inspection, 
Imports, Penalties, Prohibited merchandise, Reporting and recordkeeping 
requirements, Restricted merchandise, Seizures and forfeitures, 
Trademarks, Trade names, Unfair competition.

Amendments to the Regulations

    For the reasons stated above, part 133 of the Customs Regulations 
(19 CFR part 133), is amended on an interim basis as set forth below:

PART 133--TRADEMARKS, TRADE NAMES, AND COPYRIGHTS

    1. The general authority citation for part 133 continues to read as 
follows:

    Authority: 17 U.S.C. 101, 601, 602, 603; 19 U.S.C. 66, 1624; 31 
U.S.C. 9701.
* * * * *
    2. A new Sec. 133.25 is added to read as follows:


Sec. 133.25  Civil fines for those involved in the importation of 
counterfeit trademark goods.

    In addition to any other penalty or remedy authorized by law, 
Customs may impose a civil fine on any person who directs, assists 
financially or otherwise, or aids and abets the importation of 
merchandise bearing a counterfeit American trademark as follows:
    (a) First violation. For the first seizure of such merchandise, the 
fine imposed shall not be more than the domestic value of the 
merchandise, (see, Sec. 162.43(a) of this chapter), as if it had been 
genuine, based on the manufacturer's suggested retail price of the 
merchandise at the time of seizure.
    (b) Second and subsequent violations. For the second and any 
subsequent seizure of such merchandise, the fine imposed shall not be 
more than twice the value of the merchandise as if it had been genuine, 
as determined by the manufacturer's suggested retail price of the 
merchandise at the time of seizure.
    3. Section 133.52 is amended by revising paragraph (c) as follows:


Sec. 133.52  Disposition of forfeited merchandise.

* * * * *
    (c) Articles bearing a counterfeit trademark. Merchandise forfeited 
for violation of the trademark laws shall be destroyed, unless it is 
determined that the merchandise is not unsafe or a hazard to health and 
the Commissioner of Customs or his designee has the written consent of 
the U.S. trademark owner, in which case the Commissioner of Customs or 
his designee may dispose of the merchandise, after obliteration of the 
trademark, where feasible, by:
    (1) Delivery to any Federal, State, or local government agency 
that, in the opinion of the Commissioner or his designee, has 
established a need for the merchandise; or
    (2) Gift to any charitable institution that, in the opinion of the 
Commissioner or his designee, has established a need for the 
merchandise; or
    (3) Sale at public auction, if more than 90 days has passed since 
the forfeiture and Customs has determined that no need for the 
merchandise has been established under paragraph (c)(1) or (c)(2) of 
this section.
George J. Weise,
Commissioner of Customs.
    Approved: July 3, 1997.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 97-30048 Filed 11-14-97; 8:45 am]
BILLING CODE 4820-02-P