[Federal Register Volume 63, Number 186 (Friday, September 25, 1998)]
[Rules and Regulations]
[Pages 51296-51297]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-25723]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Part 133
[T.D. 98-75]
RIN 1515-AC10
Anticounterfeiting Consumer Protection Act: Disposition of
Merchandise Bearing Counterfeit American Trademarks; Civil Penalties
AGENCY: Customs Service, Treasury.
ACTION: Final rule.
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SUMMARY: This document amends the Customs Regulations by adopting final
rules 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. This document addresses the
public comments submitted in response to the interim regulations which
initially implemented these counterfeiting provisions, and makes
certain changes to those interim regulations in response to the public
comments and in order to add clarity and improve the readability of the
final regulations.
EFFECTIVE DATE: October 26, 1998.
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) 4 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. 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. 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)).
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) that 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. Since this provision is new, there were
no Customs Regulations that addressed civil fines for those involved in
the importation of counterfeit trademark goods.
To implement these statutory provisions as soon as possible to
afford the protection legislated to trademark owners and the public
from imported merchandise bearing a counterfeit trademark, on November
17, 1997, Customs published interim regulations in the Federal Register
(62 FR 61231). These interim regulations amended the Customs
Regulations at Sec. 133.52(c) to implement the provisions of section 9
of the ACPA, and created a new Sec. 133.25 to implement the provisions
of section 10 of the ACPA. The document also solicited comments
concerning these changes.
The comment period closed on January 16, 1998. Two comments were
received. The comments and Customs responses to them follow.
Discussion of Comments
The comments received were from a professional association and a
law firm representing a foreign trade association. Both commenters
supported the interim regulations, with one commenter suggesting
modifications. The suggested modification is discussed below.
Comment: One commenter urged Customs to modify the text of
Sec. 133.25 concerning use of the phrase ``American trademark.'' This
commenter states that the phrase is arguably ambiguous, as it is not
defined anywhere, and could lead to misunderstandings concerning the
scope of the protection afforded. The commenter cites the legislative
history of the ACPA (the Act) to show that Congress intended to extend
coverage of the Act to all entities, foreign as well as domestic,
holding a trademark properly registered with the Patent and Trademark
Office and recorded with Customs. Accordingly, the commenter recommends
that Customs modify the text of this regulatory provision to provide
for ``counterfeit mark or name (within the meaning of Sec. 133.21 of
this part)'' in lieu of the present ``counterfeit American trademark.''
Customs response: Customs agrees in part with this recommendation
to modify the text of Sec. 133.25. Use of the term ``American'' could
cause confusion regarding the scope of the protection afforded, since
Congress did intend to confer protection to trademarks (whether or not
owned by foreign interests) registered with the U.S. Patent Office.
However, Customs does not feel that adding the additional term ``name''
is appropriate; it might also cause confusion, since one cannot
register a trade name with the U.S. Patent Office. Accordingly, the
text of Sec. 133.25 is modified to read ``counterfeit mark
[[Page 51297]]
(within the meaning of Sec. 133.21 of this part)'' in lieu of the
present ``counterfeit American trademark'' text.
Conclusion
After analysis of the comments received and further consideration
of the matter, Customs has decided to adopt the interim amendments to
Part 133 of the Customs Regulations with the modification discussed
above in the analysis of comments. Further, to make the text of
paragraphs (a) and (b) of Sec. 133.25 read more clearly, the phrase
``as determined by'' in paragraph (b) is replaced with the phrase
``based on'' used in paragraph (a), and the term ``domestic value''
used in paragraph (a) is inserted in paragraph (b). Lastly, the
authority citation of part 133 is revised to add a specific authority
citation for new Sec. 133.25.
Inapplicability of the Regulatory Flexibility Act and Executive
Order 12866
Because these regulatory amendments reflect existing statutory
requirements or merely implement interpretations and policies that are
already in effect under interim regulations to protect trademark owners
and the public from imported merchandise bearing a counterfeit
trademark, pursuant to the provisions of the Regulatory Flexibility Act
(5 U.S.C. 601 et seq.), it is certified that the regulations will not
have a significant economic impact on a substantial number of small
entities. Accordingly, the regulations are not subject to the
regulatory analysis or other requirements of 5 U.S.C. 603 and 604.
Further, 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 as set forth below:
PART 133--TRADEMARKS, TRADE NAMES, AND COPYRIGHTS
1. The general authority citation for part 133 continues, and the
specific authority for Sec. 133.52 is revised, to read as follows:
Authority: 17 U.S.C. 101, 601, 602, 603; 19 U.S.C. 66, 1624; 31
U.S.C. 9701;
* * * * *
Sections 133.25 and 133.52 also issued under 19 U.S.C. 1526;
* * * * *
2. Section 133.25 is revised 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 mark (within the meaning of
Sec. 133.21 of this part) 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 each
subsequent seizure of such merchandise, the fine imposed shall not be
more than twice the domestic value of the merchandise as if it had been
genuine, based on the manufacturer's suggested retail price of the
merchandise at the time of seizure.
3. Section 133.52(c) is republished to read as follows:
Sec. 133.52 Disposition of forfeited merchandise.
* * * * *
(c) Articles bearing a counterfeit trademark. Merchandise forfeited
for violation of 19 U.S.C. 1526 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.
Approved: August 3, 1998.
Samuel H. Banks,
Acting Commissioner of Customs.
Dennis M. O'Connell,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 98-25723 Filed 9-24-98; 8:45 am]
BILLING CODE 4820-02-P