[Congressional Record: June 4, 1996 (House)]
[Page H5776-H5781]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
[DOCID:cr04jn96-74]
{time} 1445
ANTICOUNTERFEITING CONSUMER PROTECTION ACT OF 1996
Mr. MOORHEAD. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 2511) to control and prevent commercial counterfeiting, and
for other purposes, as amended.
The Clerk read as follows:
H.R. 2511
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 ``Anticounterfeiting Consumer
Protection Act of 1996''.
SEC. 2. FINDINGS.
The counterfeiting of trademarked and copyrighted
merchandise--
(1) has been connected with organized crime;
(2) deprives legitimate trademark and copyright owners of
substantial revenues and consumer goodwill;
(3) poses health and safety threats to United States
consumers;
(4) eliminates United States jobs; and
(5) is a multibillion-dollar drain on the United States
economy.
SEC. 3. COUNTERFEITING AS RACKETEERING.
Section 1961(1)(B) of title 18, United States Code, is
amended by inserting ``, section 2318 (relating to
trafficking in counterfeit labels for phonorecords, computer
programs or computer program documentation or packaging and
copies of motion pictures or other audiovisual works),
section 2319 (relating to criminal infringement of a
copyright), section 2319A (relating to unauthorized fixation
of and trafficking in sound recordings and music videos of
live music performances), section 2320 (relating to
trafficking in goods or services bearing counterfeit marks)''
after ``sections 2314 and 2315 (relating to interstate
transportation of stolen property)''.
SEC. 4. APPLICATION TO COMPUTER PROGRAMS, COMPUTER PROGRAM
DOCUMENTATION, OR PACKAGING.
(a) In General.--Section 2318 of title 18, United States
Code, is amended--
(1) in subsection (a), by striking ``a motion picture or
other audiovisual work,'' and inserting ``a computer program
or documentation or packaging for a computer program, or a
copy of a motion picture or other audiovisual work, and
whoever, in any of the circumstances described in subsection
(c) of this section, knowingly traffics in counterfeit
documentation or packaging for a computer program,'';
[[Page H5777]]
(2) in subsection (b)(3) by inserting `` `computer
program','' after `` motion picture',''; and
(3) in subsection (c)--
(A) by striking ``or'' at the end of paragraph (2);
(B) in paragraph (3)--
(i) by inserting ``a copy of a copyrighted computer program
or copyrighted documentation or packaging for a computer
program,'' after ``enclose,''; and
(ii) by striking the period at the end and inserting ``;
or''; and
(C) by adding after paragraph (3) the following:
``(4) the counterfeited documentation or packaging for a
computer program is copyrighted.''.
(b) Conforming Amendments.--(1) The section caption for
section 2318 of title 18, United States Code, is amended to
read as follows:
Sec. 2318. Trafficking in counterfeit labels for
phonorecords, copies of computer programs or computer
program documentation or packaging, and copies of motion
pictures or other audio visual works, and trafficking in
counterfeit computer program documentation or packaging''.
(2) The item relating to section 2318 in the table of
sections for chapter 113 of such title is amended to read as
follows:
``2318. Trafficking in counterfeit labels for phonorecords, copies of
computer programs or computer program documentation or
packaging, and copies of motion pictures or other audio
visual works, and trafficking in counterfeit computer
program documentation or packaging.''.
SEC. 5. TRAFFICKING IN COUNTERFEIT GOODS AND SERVICES.
Section 2320 of title 18, United States Code, is amended by
adding at the end the following:
``(e) Beginning with the first year after the date of
enactment of this subsection, the Attorney General shall
include in the report of the Attorney General to Congress on
the business of the Department of Justice prepared pursuant
to section 522 of title 28, an accounting, on a district by
district basis, of the following with respect to all actions
taken by the Department of Justice that involve trafficking
in counterfeit labels for phonorecords, copies of computer
programs or computer program documentation or packaging,
copies of motion pictures or other audiovisual works (as
defined in section 2318 of title 18), criminal infringement
of copyrights (as defined in section 2319 of title 18),
unauthorized fixation of and trafficking in sound recordings
and music videos of live musical performances (as defined in
section 2319A of title 18), or trafficking in goods or
services bearing counterfeit marks (as defined in section
2320 of title 18):
``(1) The number of open investigations.
``(2) The number of cases referred by the United States
Customs Service.
``(3) The number of cases referred by other agencies or
sources.
``(4) The number and outcome, including settlements,
sentences, recoveries, and penalties, of all prosecutions
brought under sections 2318, 2319, 2319A, and 2320 of title
18.''.
SEC. 6. SEIZURE OF COUNTERFEIT GOODS
Section 34(d)(9) of the Act of July 5, 1946 (60 Stat. 427,
chapter 540; 15 U.S.C. 1116(d)(9)), is amended by striking
the first sentence and inserting the following: ``The court
shall order that service of a copy of the order under this
subsection shall be made by a Federal law enforcement officer
(such as a United States marshal or an officer or agent of
the United States Customs Service, Secret Service, Federal
Bureau of Investigation, or Post Office) or may be made by a
State or local law enforcement officer, who, upon making
service, shall carry out the seizure under the order.''.
SEC. 7. RECOVERY FOR VIOLATION OF RIGHTS.
Section 35 of the Act of July 5, 1946 (60 Stat. 427,
chapter 540; 15 U.S.C. 1117), is amended by adding at the end
the following new subsection:
``(c) In a case involving the use of a counterfeit mark (as
defined in section 34(d) (15 U.S.C. 1116(d)) in connection
with the sale, offering for sale, or distribution of goods or
services, the plaintiff may elect, at any time before final
judgment is rendered by the trial court, to recover, instead
of actual damages and profits under subsection (a), an award
of statutory damages for any such use in connection with the
sale, offering for sale, or distribution of goods or services
in the amount of--
``(1) not less than $500 or more than $100,000 per
counterfeit mark per type of goods or services sold, offered
for sale, or distributed, as the court considers just; or
``(2) if the court finds that the use of the counterfeit
mark was willful, not more than $1,000,000 per counterfeit
mark per type of goods or services sold, offered for sale, or
distributed, as the court considers just.''.
SEC. 8. DISPOSITION OF EXCLUDED ARTICLES.
Section 603(c) of title 17, United States Code, is amended
in the second sentence by striking ``as the case may be;''
and all that follows through the end and inserting ``as the
case may be.''.
SEC. 9. DISPOSITION OF MERCHANDISE BEARING AMERICAN TRADEMARK
Section 526(e) of the Tariff Act of 1930 (19 U.S.C.
1526(e)) is amended--
(1) in the second sentence, by inserting ``destroy the
merchandise. Alternatively, if the merchandise is not unsafe
or a hazard to health, and the Secretary has the consent of
the trademark owner, the Secretary may'' after ``shall, after
forfeiture,'';
(2) by inserting ``or'' at the end of paragraph (2);
(3) by striking ``, or'' at the end of paragraph (3) and
inserting a period; and
(4) by striking paragraph (4).
SEC. 10. CIVIL PENALTIES
Section 526 of the Tariff Act of 1930 (19 U.S.C. 1526) is
amended by adding at the end the following new subsection:
``(f) Civil Penalties.--(1) Any person who directs, assists
financially or otherwise, or aids and abets the importation
of merchandise for sale or public distribution that is seized
under subsection (e) shall be subject to a civil fine.
``(2) For the first such seizure, the fine shall be not
more than the value that the merchandise would have had if it
were genuine, according to the manufacturer's suggested
retail price, determined under regulations promulgated by the
Secretary.
``(3) For the second seizure and thereafter, the fine shall
be not more than twice the value that the merchandise would
have had if it were genuine, as determined under regulations
promulgated by the Secretary.
``(4) The imposition of a fine under this subsection shall
be within the discretion of the Customs Service, and shall be
in addition to any other civil or criminal penalty or other
remedy authorized by law.''.
SEC. 11. PUBLIC DISCLOSURE OF AIRCRAFT MANIFESTS.
Section 431(c)(1) of the Tariff Act of 1930 (19 U.S.C.
1431(c)(1) is amended--
(1) in the matter preceding subparagraph (A), by inserting
``vessel or aircraft'' before ``manifest'';
(2) by amending subparagraph (D) to read as follows:
``(D) The name of the vessel, aircraft, or carrier.'';
(3) by amending subparagraph (E) to read as follows:
``(E) The seaport or airport of loading.'';
(4) by amending subparagraph (F) to read as follows:
``(F) The seaport or airport of discharge.''; and
(5) by adding after subparagraph (G) the following new
subparagraph:
``(H) The trademarks appearing on the goods or packages.''.
SEC. 12. CUSTOMS ENTRY DOCUMENTATION.
Section 484(d) of the Tariff Act of 1930 (19 U.S.C.
1484(d)) is amended--
(1) by striking ``Entries'' and inserting ``(1) Entries'';
and
(2) by adding at the end the following new paragraph:
``(2) The Secretary, in prescribing regulations governing
the content of entry documentation, shall require that entry
documentation contain such information as may be necessary to
determine whether the imported merchandise bears an
infringing trademark in violation of section 42 of the Act of
July 5, 1946 (commonly referred to as the `Trademark Act of
1946'; 15 U.S.C. 1124), or any other applicable law,
including a trademark appearing on the goods or packaging.''.
SEC. 13. UNLAWFUL USE OF VESSELS, VEHICLES, AND AIRCRAFT IN
AID OF COMMERCIAL COUNTERFEITING.
Section 80302(a) of title 49, United States Code, is
amended--
(1) by striking ``or'' at the end of paragraph (4);
(2) by striking the period at the end of paragraph (5) and
inserting ``; or''; and
(3) by adding at the end the following new paragraph:
``(6)(A) a counterfeit label for a phonorecord, copy of a
computer program or computer program documentation or
packaging, or copy of a motion picture or other audiovisual
work (as defined in section 2318 of title 18);
``(B) a phonorecord or copy in violation of section 2319 of
title 18;
``(C) a fixation of a sound recording or music video of a
live musical performance in violation of section 2319A of
title 18; or
``(D) any good bearing a counterfeit mark (as defined in
section 2320 of title 18).''.
SEC. 14. REGULATIONS.
Not later than 6 months after the date of the enactment of
this Act, the Secretary of the Treasury shall prescribe such
regulations or amendments to existing regulations that may be
necessary to carry out the amendments made by sections 9, 10,
11, 12, and 13 of this Act.
The SPEAKER pro tempore (Mr. Upton). Pursuant to the rule, the
gentleman from California [Mr. Moorhead] and the gentlewoman from
Colorado [Mrs. Schroeder] will each be recognized for 20 minutes.
The Chair recognizes the gentleman from California [Mr. Moorhead].
general leave
Mr. MOORHEAD. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days to revise and extend their remarks on H.R.
2511.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
Mr. MOORHEAD. Mr. Speaker, I yield myself 3 minutes.
(Mr. MOORHEAD asked and was given permission to revise and extend his
remarks.)
[[Page H5778]]
Mr. MOORHEAD. Mr. Speaker, I would like to commend my friend and
colleague from Virginia, Mr. Goodlatte, for his leadership in drafting
and introducing this bill, which is cosponsored by Chairman Hyde,
Ranking Minority Member Conyers, Representative Coble, a valued senior
member on the subcommittee, myself, and several other Members. I also
want to thank the gentlewoman from Colorado, Pat Schroeder, for her
support in processing this legislation.
Two amendments to H.R. 2511 were adopted by the Subcommittee on
Courts and Intellectual Property, and the bill was unanimously approved
by both the subcommittee and the full Judiciary Committee. A companion
bill in the other body, S. 1136, passed by voice vote on December 13,
1995.
Current law recognizes that a problem of criminal trademark and
copyright counterfeiting exists, but it does not do enough to deter and
prosecute counterfeiters. Criminal counterfeiting has risen to a new
level. In 1982, the cost of piracy to U.S. industries was approximately
$5.5 billion. Today, American businesses lost 35 times that amount,
more than $200 billion per year.
The combination of high profits and low risk of prosecution has made
trademark and copyright counterfeiting a favorite activity of organized
crime syndicates. Law enforcement agents from the U.S. Customs Service
testified that combating criminal activity connected to counterfeiting
is starting to look like attacking the drug trafficking problem. Last
year, those same customs agents coordinated raids in New York and Los
Angeles that netted $27 million in counterfeit merchandise and
supported indictments of 43 members of a Korean crime syndicate.
The price of counterfeiting goes well beyond lost revenues and
damaged business reputations: it can cost lives. Fatal automobile,
airplane, and helicopter crashes have been associated with faulty
counterfeit machine parts. Name brand prescription and over-the-counter
drugs have also been counterfeited. Millions of bogus pills containing
inferior, or even harmful, ingredients have been distributed to
unsuspecting consumers purchasing medicine.
Searle discovered the distribution of more than 1 million bogus birth
control pills after several women complained of unusual bleeding.
Tylenol, Advil, Tagament, Ceclor, and Zantac are all other famous name
brand pharmaceuticals that are reported to have been counterfeited. One
witness testified that toy makers are concerned that cheap knock-offs
present choking hazards and may contain toxic paints or dyes.
H.R. 2511 proposes key amendments to both criminal and civil laws in
response to the growing threat of criminal counterfeiting. It improves
the ability of law enforcement officers to detect and arrest
counterfeiters. It also allows for the meaningful prosecution of all
levels of a criminal organization involved in counterfeiting.
Finally, this bill ensures that seized counterfeit goods are
destroyed rather than returned to the importer for reshipment to
another port of entry.
I am unaware of any opposition to H.R. 2511, and I urge its adoption.
Mr. Speaker, I reserve the balance of my time.
Mrs. SCHROEDER. Mr. Speaker, I yield myself such time as I may
consume.
(Mrs. SCHROEDER asked and was given permission to revise and extend
her remarks.)
Mrs. SCHROEDER. Mr. Speaker, I join the subcommittee chairman in
supporting H.R. 2511. This bill strengthens criminal and civil laws and
remedies relating to copyright and trademark counterfeiting.
Our subcommittee has worked hard to ensure that intellectual property
is accorded a high level of protection. As we seek to persuade other
countries around the world to provide strong protection for copyrights,
trademarks, and patents, it is critical that we demonstrate through our
own legal system the high value that we place on intellectual property.
Because there is an enormous potential for profit in illegal
counterfeiting, the civil and criminal remedies must be strong if we
are to deter counterfeiting. As the committee report notes, between 5
and 8 percent of all goods and services sold worldwide are counterfeit.
In some industries, the problem is enormous; the computer software
industry, for example, estimates that for every five software programs
that are legally sold, two illegally pirated copies are also sold.
As the gentleman from California has pointed out, the problem goes
beyond the monetary loss and damage to reputation suffered by the
copyright or trademark owner. Counterfeit goods also can pose a serious
threat to consumers. Many of my colleagues may recall, for example, the
substandard infant formula, falsely labeled with a well-known brand,
that was distributed last year in the United States. In another case,
more than a million bogus birth control pills were distributed falsely
bearing the mark of a pharmaceutical company; the company did not
discover the counterfeits until women complained of pain and unusual
bleeding.
By making trafficking in counterfeit goods or services a predicate
offense subject to RICO, by strengthening provisions relating to the
seizure and destruction of counterfeited goods, and by providing for
judicially determined statutory damages for trademark owners, this bill
will make it easier to combat commercial counterfeiting.
The administration supports this bill, and I urge my colleagues to
support this bill strengthening the ability of trademark and copyright
owners to protect their property rights, and that is what this bill
does.
Mr. Speaker, I thank everybody on the committee for doing this, and I
think it has been in the long tradition of this committee to move these
in a very bipartisan, nonconfrontational fashion because we understand
how terribly important it is for the United States to stand firm on the
globe in protecting these trademarks and to be moving forward and
protecting copyrights. This country produces a very high percentage of
it, it is a high percentage of our trade internationally, and I again
thank the subcommittee chairman for his strong leadership on all of
this.
Mr. Speaker, I reserve the balance of my time.
Mr. MOORHEAD. Mr. Speaker, I yield 2 minutes to the gentleman from
Illinois [Mr. Hyde], chairman of the full Committee on the Judiciary of
the House.
(Mr. HYDE asked and was given permission to revise and extend his
remarks.)
Mr. HYDE. Mr. Speaker, I surely am not going to take all that time. I
have nothing new to add that has not already been said. This is a fine
piece of legislation. It will cure or move toward cure of a very
serious problem, that of counterfeiting, and so I will ask that my
remarks, which are truncated and comprehensive, be included in the
Record.
But, I do want to congratulate the chairman of the subcommittee, the
gentleman from California, Carlos Moorhead, and the ranking member, the
gentlewoman from Colorado, Mrs. Patricia Schroeder, on her excellent
counsel, the gentleman from Virginia, Mr. Goodlatte, who initiated this
legislation. And I think the staff, certainly our staff, Tom Mooney,
John Dudas, Mitch Glazier, Joe Wolfe, and Betty Wheeler, all deserve
special thanks as well.
Mr. Speaker, I strongly support H.R. 2511, the Anticounterfeiting
Consumer Protection Act of 1996. Soon we will consider the renewal of
most-favored-nation status for China. This timely legislation
highlights one of the growing problems we have with that country:
counterfeit goods. The Chinese continue to counterfeit the goods of
legitimate American companies at an alarming rate.
Just 2 weeks ago, the administration issued a finding that China was
not satisfactorily implementing the Agreement on Enforcement of
Intellectual Property Rights and Market Access, signed in March 1995.
In making its finding, the administration said the following:
Critical deficiencies are present in China's implementation
of measures to address piracy at the production and wholesale
distribution level. Piracy remains particularly rampant in
Guangdong province. Manufacturers and distributors, primarily
located in southern China, continue to produce pirated CD's,
LD's, and CD-ROM's in massive quantities. Due to lax
enforcement at the point of production and at the border,
exports of pirated computer software, movies, sound
recordings, and other products have grown substantially over
the past year. Products pirated in China have flooded
Southeast Asia, Russia, and the other Commonwealth of
[[Page H5779]]
Independent States [CIS] countries. Latin America and
European markets have also been targeted, and the U.S.
Customs Service has seized pirated CD's and CD-ROM's entering
the United States from China.
According to recent newspaper articles, the Chinese may have as many
as 31 government-licensed plants turning out pirated CD's and CD-ROM's.
To make matters worse, many believe that some or all of these plants
are run by the Chinese military or government officials. According to
these articles, the International Intellectual Property Alliance, which
represents the record and motion picture industry, estimates that in
1995, the United States lost $6.9 billion in exports because of
counterfeit movies, records, books, and software. About $2.3 billion
were lost to the Chinese. The Pharmaceutical Manufacturers' Association
estimates that its losses from pirated drug patents exceed $3 billion.
Millions more are lost to counterfeit auto parts, athletic shoes, and
apparel.
Unfortunately, the probe is not limited to the Chinese.
Organized crime operations sell counterfeit goods as a way to launder
the money from their other criminal activities. By doing so, the
Chinese, the Mob, and countless other criminals steal billions of
dollars' worth of intellectual property that American companies and
individuals have developed at great expense.
For far too long, we have tended to look upon the counterfeiting of
goods as a rather trivial crime. That must stop. The sale of
counterfeit goods has numerous serious consequences.
First, we must consider who is selling these goods: the Chinese
communist government, the Mob, and common criminals. These are not
people that Americans want to finance.
Second, counterfeit goods amount to nothing more than the theft of
intellectual property. If we do not vigorously protect intellectual
property, we destroy the incentive to create.
Third, counterfeit goods are frequently dangerous, and they can cause
serious injury. The current issue of Business Week reports that
substandard airplane parts contributed to at least 166 airplane crashes
from 1973 to 1993. Last September, the New York Times reported that the
FDA has uncovered at least 10 operations in 8 States producing
substandard infant formula that has caused sickness in babies using it.
Finally, by injuring legitimate American companies, counterfeit goods
destroy American jobs. If we want to protect our American jobs, we must
stop the importation of the phony compact discs and computer programs
that the Chinese would foist upon us.
Because of all these serious consequences, I strongly support H.R.
2511. It will give new tools to the legitimate American companies who
want to fight off the counterfeiters. It will place counterfeiting
activities within the RICO statute, exactly the place where such
organized criminal activity belongs. With all of the RICO remedies in
hand, law enforcement officials and the private companies will be able
to hit the counterfeiters in their pocketbooks.
H.R. 2511 will also give the Government new tools when it seizes
counterfeit goods at the border. Amazingly, up until now, our law
allowed counterfeiters who got caught at the border to re-export the
goods to another country. Obviously then, there was little cost to
getting caught. H.R. 2511 insures that we will never engage in that
simple-minded practice again. Rather, under H.R. 2511, counterfeit
goods seized at the border will either be destroyed or, if the
legitimate trademark owner consents, given to charity.
For all these reasons, Mr. Speaker, I commend the distinguished
chairman of the Subcommittee on Courts and Intellectual Property, Mr.
Moorhead, and the ranking member, Mrs. Schroeder, for their important
work in bringing this bipartisan legislation to the floor. I urge all
of my colleagues to vote in favor of H.R. 2511.
Mr. MOORHEAD. Mr. Speaker, I yield 8 minutes to the gentleman from
Virginia [Mr. Goodlatte], the sponsor of this legislation.
Mr. GOODLATTE. Mr. Speaker, as the lead sponsor of H.R. 2511 I am
proud that this House is taking a decisive step to make it tougher for
product counterfeiters to prey on American business and American
consumers and cost American workers their jobs.
Counterfeit products cost U.S. businesses an estimated $200 billion
annually. An estimated 5 percent of products sold worldwide are phony.
Fortune Magazine has called it the crime of the 21st century. That is
because counterfeiting is a highly lucrative, but relatively low-risk
crime with only hand-slap penalties if caught.
New technology has made it much easier for counterfeiters to pursue
their trade. Computers and digital technology have made it a cinch to
copy audiotapes, video, and software, and unlike analog copies, the
thousandth digital copy is just as clean and clear as the first.
Scanners and laser printers have made it easy to replicate labels,
logos, and even the holograms that software producers afix to their
products to prove authenticity.
For years we have overlooked counterfeiters, assuming that product
counterfeiting meant $2 fake watches and was a victimless crime. But
the evidence is mounting that counterfeiting is a very dangerous crime
that can threaten the health and safety of us all.
Last year the Federal Aviation Administration grounded 6,000 piston-
powered aircraft to check for phoney crankshaft bolts that could cause
crashes. The cover story in this week's Business Week is on bogus
airplane parts and cites the explosion last June of the No. 2 engine on
a ValuJet plane as an example. Business Week reports that the explosion
was caused by an engine that had been overhauled and later sold to
ValuJet by a repair station in Turkey that lacked FAA approval. It
further reports that investigators found that the engine contained a
cracked and corroded compressor disk which had been plated over during
the overhaul and was thus undetectable.
Counterfeit airplane parts actually caused a deadly crash of a
Norwegian plane that killed 55 people.
In April 1995, the Food and Drug Administration released a ``Consumer
Alert'' warning parents against using counterfeit-labeled Similac with
iron ``Ready to Feed'' liquid formula in 8-ounce plastic cans with a
fictitious code number and expiration date. The fake infant formula,
found in 16 States, reportedly caused illnesses ranging from rashes to
seizures in many babies who consumed the substandard product.
A counterfeit brake pad caused an automobile crash that killed a
mother and her child. In 1990 more than 30 raids were conducted in 15
States as a result of a crackdown on auto parts counterfeiting.
Rampant piracy of the intellectual property of American businesses
has strained United States-China relations, bringing us to the brink of
a trade war and requiring a reconsideration of whether China should
receive most-favored-nation trade benefits.
The question Congress must ask is whether China will agree to abide
by the basic rules that govern international trade, or will Chinese
officials continue to condone piracy? Remember that China is our fifth
largest trading partner and very well may be on its way to becoming the
world's largest economy. If China refuses to play by the rules and
continues at best, to ignore piracy, or at worst, to encourage it, the
losses for American companies will be staggering.
For example, Chinese officials, after much prodding by Microsoft
Corp. agreed to investigate the Jin Die Science and Technology
Development Co. in southern China. When they raided the company,
Chinese officials found 5,700 computer disks containing thousands of
dollars each in Microsoft software, illegally mass-produced on
sophisticated machinery. According to the Washington Post, during this
raid the Chinese confiscated the counterfeit software disks, but U.S.
executives who were at the raid claim they also saw Jin Die's machines
producing video discs containing movies such as ``Waterworld'' and
``Ace Ventura II.'' The Chinese authorities did nothing to stop the
pirating of these American movies.
H.R. 2511 will make it easier to ensure that the constant flow of
counterfeits, arriving in the United States from countries like China
can be confiscated and taken out of the stream of commerce. It also
ensures that the American businesses who suffer commercial damage from
counterfeit products may be awarded either actual or statutory damages.
Because of the lure of enormous profits compared to the relatively
low risk of being arrested, prosecuted, and sent to jail, it has not
taken long for organized crime to get involved in counterfeiting
operations. These operations have become highly sophisticated, well-
financed, mobile, and international in scope.
In March 1995, more than 10.5 million dollars' worth of counterfeit
software was found during a raid in California that also turned up
semiautomatic
[[Page H5780]]
weapons, handguns, and military explosives. Newspaper stories report
that those who were arrested are under investigation for their link to
organized crime, a link that may reach from China, Hong Kong, and
Taiwan to southern California's immigrant neighborhoods.
These criminal networks have distribution systems as diverse as any
modern corporation. Counterfeiters know that although criminal
penalties exist on the books, criminal actions are rarely initiated
against counterfeiters. As for private enforcement actions, trademark
and copyright owners are consistently frustrated by an inability to
recover any meaningful damages.
This legislation takes strong steps to attack this problem.
The Anticounterfeiting Consumer Protection Act will help law
enforcement officials contend with the sophisticated nature of modern
counterfeiting. First, it increases criminal penalties by making
trafficking in counterfeit goods or services a RICO offense,
consequently providing for increased jail time, criminal fines, and
asset forfeiture.
Second, the legislation allows greater involvement by all levels of
Federal law enforcement in fighting counterfeiting, including enhanced
authority to seize counterfeit goods and the tools of the
counterfeiters' trade.
Third, it makes it more difficult for these goods to re-enter the
stream of commerce once they have been seized.
Fourth, our bill also adds teeth to existing statutes and provides
stronger civil remedies, including civil fines pegged to the value of
genuine goods and statutory damage awards of up to $1,000,000 per mark.
The Anticounterfeiting Consumer Protection Act will provide law
enforcement officials with the tools they need to fight back, and to
protect American business and the health and safety of American
consumers. The time has come to make sure that our fight against
counterfeiting is as sophisticated and modern as the crime itself.
Finally, I want to thank all of the members of the Judiciary
Committee who have supported this important legislation. Chairman Hyde,
Chairman Moorhead, ranking minority member Conyers, Congresswoman
Schroeder have all contributed to this effort. I greatly appreciate
their hard work on behalf of American consumers and businesses.
I urge all to support this legislation.
{time} 1500
Mrs. SCHROEDER. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I would like to thank two more staff people who worked
very, very hard on this legislation, and that would be Elizabeth Frazee
and Betty Wheeler. They also, I think, worked very hard on this, and we
wanted to make sure everyone was included in the chairman's very
generous thank yous.
Mr. Speaker, I yield back the balance of my time.
Mr. MOORHEAD. Mr. Speaker, I yield 2 minutes to the gentleman from
Virginia [Mr. Davis].
Mr. DAVIS. Mr. Speaker, first of all, I want to compliment the author
of this legislation, the gentleman from Virginia [Mr. Goodlatte], the
chairman, the gentleman from California [Mr. Moorhead], and the ranking
member, the gentlewoman from Colorado [Mrs. Schroeder], for their
leadership on this issue.
Trademark counterfeiting costs this Nation over $200 million
annually. That is more than the annual budget deficit in this country.
Counterfeiting has grown from about $5.5 million in costs in 1982 to
that $200 billion figure today. I once again applaud the authors of
this amendment and the bipartisan way in which we have moved forward
passage today.
The industry estimates that sales of counterfeit software exceed 40
percent of total industry revenues. Almost two of five cartridges that
include a piece of software that are sold are counterfeit. Counterfeit
software also costs companies more than revenues and it costs this
Nation more than just jobs. It costs companies their reputation,
because often substandard products with inferior quality enter the
marketplace mislabeled with the originating company. What consumers do
is they cannot take a chance on this, so they will buy other products
that they figure are not mislabeled. The better companies end up, as a
result of that, losing sales, losing jobs, losing revenues.
Mr. Speaker, this legislation I think is going to make a significant
contribution toward curbing these abuses. It is going to make this a
RICO offense. It is going to increase fines and jail time for
offenders. It is going to speed the seizure of goods, in many cases. It
is going to increase penalties and civil fines of up to $1 million per
mark. It is going to allow greater enforcement coordination by State
and local law enforcement officials working toward this.
This is, I think, an increasing area of concern for those in the
software industry, and I think this legislation is going to make
tremendous headway toward curbing these abuses in the future. I am
proud to be a cosponsor of this, and once again congratulate my
colleagues in bringing this to the floor today.
Mr. MOORHEAD. Mr. Speaker, I have no further requests for time, and I
yield back the balance of my time.
The SPEAKER pro tempore (Mr. Upton). The question is on the motion
offered by the gentleman from California [Mr. Moorhead] that the House
suspend the rules and pass the bill, H.R. 2511, 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.
general leave
Mr. MOORHEAD. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks on H.R. 2511, the bill just passed.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
Mr. MOORHEAD. Mr. Speaker, I ask unanimous consent to take from the
Speaker's table the Senate bill, S. 1136, to control and prevent
commercial counterfeiting, and for other purposes, and ask for its
immediate consideration in the House.
The Clerk read the title of the Senate bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
Mrs. SCHROEDER. Mr. Speaker, reserving the right to object, I would
ask the gentleman from California [Mr. Moorhead], if he could explain
the purpose of his unanimous-consent request.
Mr. MOORHEAD. Mr. Speaker, the purpose of this request is to send the
bill back to the Senate with an amendment consisting of the text of the
House-passed bill, and to ask for a conference.
Mrs. SCHROEDER. Mr. Speaker, based on that, I withdraw my reservation
of objection.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
The Clerk read the Senate bill, as follows:
S. 1136
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 ``Anticounterfeiting Consumer
Protection Act of 1995''.
SEC. 2. FINDINGS.
The counterfeiting of trademarked and copyrighted
merchandise--
(1) has been connected with organized crime;
(2) deprives legitimate trademark and copyright owners of
substantial revenues and consumer goodwill;
(3) poses health and safety threats to American consumers;
(4) eliminates American jobs; and
(5) is a multibillion-dollar drain on the United States
economy.
SEC. 3. COUNTERFEITING AS RACKETEERING.
Section 1961(1)(B) of title 18, United States Code, is
amended by inserting ``, section 2318 (relating to
trafficking in counterfeit labels for phonorecords, computer
programs or computer program documentation or packaging and
copies of motion pictures or other audiovisual works),
section 2319 (relating to criminal infringement of a
copyright), section 2320 (relating to trafficking in goods or
services bearing counterfeit marks)'' after ``sections 2314
and 2315 (relating to interstate transportation of stolen
property)''.
[[Page H5781]]
SEC. 4. APPLICATION TO COMPUTER PROGRAMS, COMPUTER PROGRAM
DOCUMENTATION, OR PACKAGING.
Section 2318 of title 18, United States Code, is amended--
(1) in subsection (a), by inserting ``a computer program or
computer program documentation or packaging or'' after ``copy
of'';
(2) in subsection (b)(3), by inserting `` `computer
program,' '' after `` `motion picture,' ''; and
(3) in subsection (c)(3), by inserting ``a copy of a
computer program or computer program documentation or
packaging,'' after ``enclose,''.
SEC. 5. TRAFFICKING IN COUNTERFEIT GOODS OR SERVICES.
Section 2320 of title 18, United States Code, is amended by
adding at the end the following new subsection:
``(e) Beginning with the first year after the date of
enactment of this subsection, the Attorney General shall
include in the report of the Attorney General to Congress on
the business of the Department of Justice prepared pursuant
to section 522 of title 28, on a district by district basis,
for all actions involving trafficking in counterfeit labels
for phonorecords, copies of computer programs or computer
program documentation or packaging, copies of motion pictures
or other audiovisual works (as defined in section 2318 of
title 18), criminal infringement of copyrights (as defined in
section 2319 of title 18), or trafficking in goods or
services bearing counterfeit marks (as defined in section
2320 of title 18), an accounting of--
``(1) the number of open investigations;
``(2) the number of cases referred by the United States
Customs Service;
``(3) the number of cases referred by other agencies or
sources; and
``(4) the number and outcome, including settlements,
sentences, recoveries, and penalties, of all prosecutions
brought under sections 2318, 2319, and 2320 of title 18.''.
SEC. 6. SEIZURE OF COUNTERFEIT GOODS.
Section 34(d)(9) of the Act of July 5, 1946 (60 Stat. 427,
chapter 540; 15 U.S.C. 1116(d)(9)), is amended by striking
the first sentence and inserting the following: ``The court
shall order that service of a copy of the order under this
subsection shall be made by a Federal law enforcement officer
(such as a United States marshal or an officer or agent of
the United States Customs Service, Secret Service, Federal
Bureau of Investigation, or Post Office) or may be made by a
State or local law enforcement officer, who, upon making
service, shall carry out the seizure under the order.''.
SEC. 7. RECOVERY FOR VIOLATION OF RIGHTS.
Section 35 of the Act of July 5, 1946 (60 Stat. 427,
chapter 540; 15 U.S.C. 1117), is amended by adding at the end
the following new subsection:
``(c) In a case involving the use of a counterfeit mark (as
defined in section 34(d) (15 U.S.C. 1116(d)) in connection
with the sale, offering for sale, or distribution of goods or
services, the plaintiff may elect, at any time before final
judgment is rendered by the trial court, to recover, instead
of actual damages and profits under subsection (a), an award
of statutory damages for any such use in the amount of--
``(1) not less than $500 or more than $100,000 per
counterfeit mark per type of goods or services sold, offered
for sale, or distributed, as the court considers just; or
``(2) if the court finds that the use of the counterfeit
mark was willful, not more than $1,000,000 per counterfeit
mark per type of goods or services sold, offered for sale, or
distributed, as the court considers just.''.
SEC. 8. DISPOSITION OF EXCLUDED ARTICLES.
Section 603(c) of title 17, United States Code, is amended
in the second sentence by striking ``as the case may be;''
and all that follows through the end and inserting ``as the
case may be.''.
SEC. 9. DISPOSITION OF MERCHANDISE BEARING AMERICAN
TRADEMARK.
Section 526(e) of the Tariff Act of 1930 (19 U.S.C.
1526(e)) is amended--
(1) in the second sentence, by inserting ``destroy the
merchandise. Alternatively, if the merchandise is not unsafe
or a hazard to health, and the Secretary has the consent of
the trademark owner, the Secretary may'' after ``shall, after
forfeiture,'';
(2) by inserting ``or'' at the end of paragraph (2);
(3) by striking ``, or'' at the end of paragraph (3) and
inserting a period; and
(4) by striking paragraph (4).
SEC. 10. CIVIL PENALTIES.
Section 526 of the Tariff Act of 1930 (19 U.S.C. 1526) is
amended by adding at the end the following new subsection:
``(f)(1) Any person who directs, assists financially or
otherwise, or aids and abets the importation of merchandise
for sale or public distribution that is seized under
subsection (e) shall be subject to a civil fine.
``(2) For the first such seizure, the fine shall be not
more than the value that the merchandise would have had if it
were genuine, according to the manufacturer's suggested
retail price, determined under regulations promulgated by the
Secretary.
``(3) For the second seizure and thereafter, the fine shall
be not more than twice the value that the merchandise would
have had if it were genuine, as determined under regulations
promulgated by the Secretary.
``(4) The imposition of a fine under this subsection shall
be within the discretion of the United States Customs
Service, and shall be in addition to any other civil or
criminal penalty or other remedy authorized by law.''.
SEC. 11. PUBLIC DISCLOSURE OF AIRCRAFT MANIFESTS.
Section 431(c)(1) of the Tariff Act of 1930 (19 U.S.C.
1431(c)(1)) is amended--
(1) in the matter preceding subparagarph (A), by inserting
``vessel or aircraft'' before ``manifest'';
(2) by amending subparagraph (D) to read as follows:
``(D) The name of the vessel, aircraft, or carrier.'';
(3) by amending subparagraph (E) to read as follows:
``(E) The seaport or airport of loading.''; and
(4) by amending subparagraph (F) to read as follows:
``(F) The seaport or airport of discharge.''.
SEC. 12. CUSTOMS ENTRY DOCUMENTATION.
Section 484(d) of the Tariff Act of 1930 (19 U.S.C.
1484(d)) is amended--
(1) by striking ``Entries'' and inserting ``(1) Entries'';
and
(2) by adding at the end the following new paragraph:
``(2) The Secretary, in prescribing regulations governing
the content of entry documentation, shall require that entry
documentation contain such information as may be necessary to
determine whether the imported merchandise bears an
infringing trademark in violation of section 42 of the Act of
July 5, 1946 (60 Stat. 440, chapter 540; 15 U.S.C. 1124) or
any other applicable law, including a trademark appearing on
the goods or packaging.''.
SEC. 13. UNLAWFUL USE OF VESSELS, VEHICLES, AND AIRCRAFT IN
AID OF COMMERCIAL COUNTERFEITING.
Section 80302(a) of title 49, United States Code, is
amended--
(1) by striking ``or'' at the end of paragraph (4);
(2) by striking the period at the end of paragraph (5) and
inserting ``; or''; and
(3) by adding at the end the following new paragraph:
``(6)(A) A counterfeit label for a phonorecord, computer
program or computer program documentation or packaging or
copy of a motion picture or other audiovisual work (as
defined in section 2318 of title 18);
``(B) a phonorecord or copy in violation of section 2319 of
title 18; or
``(C) any good bearing a counterfeit mark (as defined in
section 2320 of title 18).''.
SEC. 14. REGULATIONS.
Not later than 6 months after the date of enactment of this
Act, the Secretary of the Treasury shall prescribe such
regulations or amendments to existing regulations that may be
necessary to implement and enforce this Act.
motion offered by mr. moorhead
Mr. MOORHEAD. Mr. Speaker, I offer a motion.
The Clerk read as follows:
Mr. Moorhead moves to strike out all after the enacting
clause of S. 1136 and to insert in lieu thereof the text of
H.R. 2511, as passed by the House.
The motion was agreed to.
The Senate bill was ordered to be read a third time, was read the
third time, and passed, and a motion to reconsider was laid on the
table.
appointment of conferees
Mr. MOORHEAD. Mr. Speaker, I offer a motion.
The Clerk read as follows:
Pursuant to rule XX and by direction of the Committee on
the Judiciary, Mr. Moorhead moves that the House insist on
its amendment to the bill S. 1136 and request a conference
thereon with the Senate.
The motion was agreed to.
The SPEAKER pro tempore. Without objection, the Chair appoints the
following conferees: Messrs. Hyde, Moorhead, Goodlatte, Conyers, and
Mrs. Schroeder.
There was no objection.
A similar House bill (H.R. 2511) was laid on the table.
____________________