109TH CONGRESS

1ST SESSION S. 1699

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,

3 SECTION 1. SHORT TITLE; FINDINGS.

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

5 ‘‘Stop Counterfeiting in Manufactured Goods Act’’.
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1 (b) FINDINGS.—The Congress finds that—

2 (1) the United States economy is losing millions

3 of dollars in tax revenue and tens of thousands of

4 jobs because of the manufacture, distribution, and

5 sale of counterfeit goods;

6 (2) the Bureau of Customs and Border Protec7 tion estimates that counterfeiting costs the United

8 States $200 billion annually;

9 (3) counterfeit automobile parts, including

10 brake pads, cost the auto industry alone billions of

11 dollars in lost sales each year;

12 (4) counterfeit products have invaded numerous

13 industries, including those producing auto parts,

14 electrical appliances, medicines, tools, toys, office

15 equipment, clothing, and many other products;

16 (5) ties have been established between counter17 feiting and terrorist organizations that use the sale

18 of counterfeit goods to raise and launder money;

19 (6) ongoing counterfeiting of manufactured

20 goods poses a widespread threat to public health and

21 safety; and

22 (7) strong domestic criminal remedies against

23 counterfeiting will permit the United States to seek

24 stronger anticounterfeiting provisions in bilateral

25 and international agreements with trading partners.
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1 SEC. 2. TRAFFICKING IN COUNTERFEIT MARKS.

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

3 amended as follows:

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

5 ‘‘such goods or services’’ the following: ‘‘, or inten6 tionally traffics or attempts to traffic in labels,

7 patches, stickers, wrappers, badges, emblems, medal8 lions, charms, boxes, containers, cans, cases,

9 hangtags, documentation, or packaging of any type

10 or nature, knowing that a counterfeit mark has been

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

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

13 (2) Subsection (b) is amended to read as fol14 lows:

15 ‘‘(b)(1) The following property shall be subject to for16 feiture to the United States and no property right shall

17 exist in such property:

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

19 counterfeit mark used in committing a violation of

20 subsection (a).

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

22 to commit or to facilitate the commission of a viola23 tion of subsection (a).

24 ‘‘(2) The provisions of chapter 46 of this title relating

25 to civil forfeitures, including section 983 of this title, shall

26 extend to any seizure or civil forfeiture under this section.
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1 At the conclusion of the forfeiture proceedings, the court,

2 unless otherwise requested by an agency of the United

3 States, shall order that any forfeited article bearing or

4 consisting of a counterfeit mark be destroyed or otherwise

5 disposed of according to law.

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

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

8 addition to any other sentence imposed, that the person

9 forfeit to the United States—

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

11 any proceeds the person obtained, directly or indi12 rectly, as the result of the offense;

13 ‘‘(ii) any of the person’s property used, or in14 tended to be used, in any manner or part, to com15 mit, facilitate, aid, or abet the commission of the of16 fense; and

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

18 counterfeit mark used in committing the offense.

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

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

21 and any related judicial or administrative proceeding, shall

22 be governed by the procedures set forth in section 413

23 of the Comprehensive Drug Abuse Prevention and Control

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

25 of that section. Notwithstanding section 413(h) of that
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1 Act, at the conclusion of the forfeiture proceedings, the

2 court shall order that any forfeited article or component

3 of an article bearing or consisting of a counterfeit mark

4 be destroyed.

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

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

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

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

9 as an offense against property referred to in section

10 3663A(c)(1)(A)(ii).

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

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

13 (3) Subsection (e)(1) is amended—

14 (A) by striking subparagraph (A) and in15 serting the following:

16 ‘‘(A) a spurious mark—

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

18 trafficking in any goods, services, labels,

19 patches, stickers, wrappers, badges, em20 blems, medallions, charms, boxes, con21 tainers, cans, cases, hangtags, documenta22 tion, or packaging of any type or nature;

23 ‘‘(ii) that is identical with, or substan24 tially indistinguishable from, a mark reg25 istered on the principal register in the
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1 United States Patent and Trademark Of2 fice and in use, whether or not the defend3 ant knew such mark was so registered;

4 ‘‘(iii) that is applied to or used in con5 nection with the goods or services for

6 which the mark is registered with the

7 United States Patent and Trademark Of8 fice, or is applied to or consists of a label,

9 patch, sticker, wrapper, badge, emblem,

10 medallion, charm, box, container, can,

11 case, hangtag, documentation, or pack12 aging of any type or nature that is de13 signed, marketed, or otherwise intended to

14 be used on or in connection with the goods

15 or services for which the mark is registered

16 in the United States Patent and Trade17 mark Office; and

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

19 cause confusion, to cause mistake, or to

20 deceive; or’’; and

21 (B) by amending the matter following sub22 paragraph (B) to read as follows:

23 ‘‘but such term does not include any mark or des24 ignation used in connection with goods or services,

25 or a mark or designation applied to labels, patches,
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1 stickers, wrappers, badges, emblems, medallions,

2 charms, boxes, containers, cans, cases, hangtags,

3 documentation, or packaging of any type or nature

4 used in connection with such goods or services, of

5 which the manufacturer or producer was, at the time

6 of the manufacture or production in question, au7 thorized to use the mark or designation for the type

8 of goods or services so manufactured or produced,

9 by the holder of the right to use such mark or des10 ignation.’’.

11 (4) Section 2320 is further amended—

12 (A) by redesignating subsection (f) as sub13 section (g); and

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

15 following:

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

17 States to bring a criminal cause of action under this sec18 tion for the repackaging of genuine goods or services not

19 intended to deceive or confuse.’’.

20 SEC. 3. SENTENCING GUIDELINES.

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

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

23 States Sentencing Commission, pursuant to its authority

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

25 in accordance with this section, shall review and, if appro-
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1 priate, amend the Federal sentencing guidelines and policy

2 statements applicable to persons convicted of any offense

3 under section 2318 or 2320 of title 18, United States

4 Code.

5 (b) AUTHORIZATION.—The United States Sentencing

6 Commission may amend the Federal sentencing guidelines

7 in accordance with the procedures set forth in section

8 21(a) of the Sentencing Act of 1987 (28 U.S.C. 994 note)

9 as though the authority under that section had not ex10 pired.

11 (c) RESPONSIBILITIES OF UNITED STATES SEN12 TENCING COMMISSION.—In carrying out this section, the

13 United States Sentencing Commission shall determine

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

15 in application note 2 of section 2B5.3 of the Federal sen16 tencing guidelines is adequate to address situations in

17 which the defendant has been convicted of one of the of18 fenses listed in subsection (a) and the item in which the

19 defendant trafficked was not an infringing item but rather

20 was intended to facilitate infringement, such as an anti21 circumvention device, or the item in which the defendant

22 trafficked was infringing and also was intended to facili23 tate infringement in another good or service, such as a

24 counterfeit label, documentation, or packaging, taking into
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1 account cases such as U.S. v. Sung, 87 F.3d 194 (7th

2 Cir. 1996).

Passed the Senate November 10, 2005.

Attest:

Secretary.
109TH CONGRESS

1ST SESSION S. 1699

AN ACT

To amend title 18, United States Code, to provide

marks.criminal penalties for trafficking in counterfeit