109TH CONGRESS

1ST SESSION H. R. 32

AN ACT

To amend title 18, United States Code, to provide

marks.criminal penalties for trafficking in counterfeit

109TH CONGRESS

1ST SESSION H. R. 32

AN ACT

To amend title 18, United States Code, to provide criminal

penalties for trafficking in counterfeit marks.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE; FINDINGS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Stop Counterfeiting in Manufactured Goods Act’’.

4 (b) FINDINGS.—The Congress finds that—

5 (1) the United States economy is losing millions

6 of dollars in tax revenue and tens of thousands of

7 jobs because of the manufacture, distribution, and

8 sale of counterfeit goods;

9 (2) the Bureau of Customs and Border Protec10 tion estimates that counterfeiting costs the United

11 States $200 billion annually;

12 (3) counterfeit automobile parts, including

13 brake pads, cost the auto industry alone billions of

14 dollars in lost sales each year;

15 (4) counterfeit products have invaded numerous

16 industries, including those producing auto parts,

17 electrical appliances, medicines, tools, toys, office

18 equipment, clothing, and many other products;

19 (5) ties have been established between counter20 feiting and terrorist organizations that use the sale

21 of counterfeit goods to raise and launder money;

22 (6) ongoing counterfeiting of manufactured

23 goods poses a widespread threat to public health and

24 safety; and

25 (7) strong domestic criminal remedies against

26 counterfeiting will permit the United States to seek
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1 stronger anticounterfeiting provisions in bilateral

2 and international agreements with trading partners.

3 SEC. 2. TRAFFICKING IN COUNTERFEIT MARKS.

4 Section 2320 of title 18, United States Code, is

5 amended as follows:

6 (1) Subsection (a) is amended by inserting after

7 ‘‘such goods or services’’ the following: ‘‘, or inten8 tionally traffics or attempts to traffic in labels,

9 patches, stickers, wrappers, badges, emblems, medal10 lions, charms, boxes, containers, cans, cases,

11 hangtags, documentation, or packaging of any type

12 or nature, knowing that a counterfeit mark has been

13 applied thereto, the use of which is likely to cause

14 confusion, to cause mistake, or to deceive,’’.

15 (2) Subsection (b) is amended to read as fol16 lows:

17 ‘‘(b)(1) The following property shall be subject to for18 feiture to the United States and no property right shall

19 exist in such property:

20 ‘‘(A) Any article bearing or consisting of a

21 counterfeit mark used in committing a violation of

22 subsection (a).

23 ‘‘(B) Any property used, in any manner or part,

24 to commit or to facilitate the commission of a viola25 tion of subsection (a).
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1 ‘‘(2) The provisions of chapter 46 of this title relating

2 to civil forfeitures shall extend to any seizure or civil for3 feiture under this section. At the conclusion of the for4 feiture proceedings, the court, unless otherwise requested

5 by an agency of the United States, shall order that any

6 forfeited article bearing or consisting of a counterfeit

7 mark be destroyed or otherwise disposed of according to

8 law.

9 ‘‘(3)(A) The court, in imposing sentence on a person

10 convicted of an offense under this section, shall order, in

11 addition to any other sentence imposed, that the person

12 forfeit to the United States—

13 ‘‘(i) any property constituting or derived from

14 any proceeds the person obtained, directly or indi15 rectly, as the result of the offense;

16 ‘‘(ii) any of the person’s property used, or in17 tended to be used, in any manner or part, to com18 mit, facilitate, aid, or abet the commission of the of19 fense; and

20 ‘‘(iii) any article that bears or consists of a

21 counterfeit mark used in committing the offense.

22 ‘‘(B) The forfeiture of property under subparagraph

23 (A), including any seizure and disposition of the property

24 and any related judicial or administrative proceeding, shall

25 be governed by the procedures set forth in section 413
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1 of the Comprehensive Drug Abuse Prevention and Control

2 Act of 1970 (21 U.S.C. 853), other than subsection (d)

3 of that section. Notwithstanding section 413(h) of that

4 Act, at the conclusion of the forfeiture proceedings, the

5 court shall order that any forfeited article or component

6 of an article bearing or consisting of a counterfeit mark

7 be destroyed.

8 ‘‘(4) When a person is convicted of an offense under

9 this section, the court, pursuant to sections 3556, 3663A,

10 and 3664, shall order the person to pay restitution to the

11 owner of the mark and any other victim of the offense

12 as an offense against property referred to in section

13 3663A(c)(1)(A)(ii).

14 ‘‘(5) The term ‘victim’, as used in paragraph (4), has

15 the meaning given that term in section 3663A(a)(2).’’.

16 (3) Subsection (e)(1) is amended—

17 (A) by striking subparagraph (A) and in18 serting the following:

19 ‘‘(A) a spurious mark—

20 ‘‘(i) that is used in connection with

21 trafficking in any goods, services, labels,

22 patches, stickers, wrappers, badges, em23 blems, medallions, charms, boxes, con24 tainers, cans, cases, hangtags, documenta25 tion, or packaging of any type or nature;
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1 ‘‘(ii) that is identical with, or substan2 tially indistinguishable from, a mark reg3 istered on the principal register in the

4 United States Patent and Trademark Of5 fice and in use, whether or not the defend6 ant knew such mark was so registered;

7 ‘‘(iii) that is applied to or used in con8 nection with the goods or services for

9 which the mark is registered with the

10 United States Patent and Trademark Of11 fice, or is applied to or consists of a label,

12 patch, sticker, wrapper, badge, emblem,

13 medallion, charm, box, container, can,

14 case, hangtag, documentation, or pack15 aging of any type or nature that is de16 signed, marketed, or otherwise intended to

17 be used on or in connection with the goods

18 or services for which the mark is registered

19 in the United States Patent and Trade20 mark Office; and

21 ‘‘(iv) the use of which is likely to

22 cause confusion, to cause mistake, or to

23 deceive; or’’; and

24 (B) by amending the matter following sub25 paragraph (B) to read as follows:
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1 ‘‘but such term does not include any mark or

2 designation used in connection with goods or

3 services, or a mark or designation applied to la4 bels, patches, stickers, wrappers, badges, em5 blems, medallions, charms, boxes, containers,

6 cans, cases, hangtags, documentation, or pack7 aging of any type or nature used in connection

8 with such goods or services, of which the manu9 facturer or producer was, at the time of the

10 manufacture or production in question, author11 ized to use the mark or designation for the type

12 of goods or services so manufactured or pro13 duced, by the holder of the right to use such

14 mark or designation.’’.

15 (4) Section 2320 is further amended—

16 (A) by redesignating subsection (f) as sub17 section (g); and

18 (B) by inserting after subsection (e) the

19 following:

20 ‘‘(f) Nothing in this section shall entitle the United

21 States to bring a criminal cause of action under this sec22 tion for the repackaging of genuine goods or services not

23 intended to deceive or confuse.’’.
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1 SEC. 3. SENTENCING GUIDELINES.

2 (a) REVIEW AND AMENDMENT.—Not later than 180

3 days after the date of enactment of this Act, the United

4 States Sentencing Commission, pursuant to its authority

5 under section 994 of title 28, United States Code, and

6 in accordance with this section, shall review and, if appro7 priate, amend the Federal sentencing guidelines and policy

8 statements applicable to persons convicted of any offense

9 under—

10 (1) section 1204 of title 17, United States

11 Code; or

12 (2) section 2318 or 2320 of title 18, United

13 States Code.

14 (b) AUTHORIZATION.—The United States Sentencing

15 Commission may amend the Federal sentencing guidelines

16 in accordance with the procedures set forth in section

17 21(a) of the Sentencing Act of 1987 (28 U.S.C. 994 note)

18 as though the authority under that section had not ex19 pired.

20 (c) RESPONSIBILITIES OF UNITED STATES SEN21 TENCING COMMISSION.—In carrying out this section, the

22 United States Sentencing Commission shall determine

23 whether the definition of ‘‘infringement amount’’ set forth

24 in application note 2 of section 2B5.3 of the Federal sen25 tencing guidelines is adequate to address situations in

26 which the defendant has been convicted of one of the of-
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1 fenses listed in subsection (a) and the item in which the

2 defendant trafficked was not an infringing item but rather

3 was intended to facilitate infringement, such as an anti4 circumvention device, or the item in which the defendant

5 trafficked was infringing and also was intended to facili6 tate infringement in another good or service, such as a

7 counterfeit label, documentation, or packaging, taking into

8 account cases such as U.S. v. Sung, 87 F.3d 194 (7th

9 Cir. 1996).

Passed the House of Representatives May 23, 2005.

Attest:

Clerk.