Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Rules and Regulations 61231

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.

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 § 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
61232 Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Rules and Regulations

importation of counterfeit trademark

goods, a new § 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), § 1.4 of

the Treasury Department Regulations

(31 CFR 1.4), and § 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 § 133.25 is added to read as

follows:

§ 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,

§ 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:

§ 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

DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and

Firearms

27 CFR Part 47

[T.D. ATF–393; 97–455]

RIN: 1512–AB62

Removal of Restrictions on

Importation of Defense Articles From

Specified New Independent States of

the Former Soviet Union and

Yugoslavia and To Amend the Term

‘‘Military Firearms and Ammunition’’

AGENCY: Bureau of Alcohol, Tobacco

and Firearms (ATF), Department of the

Treasury.

ACTION: Final rule (Treasury decision).

SUMMARY: This final rule removes the

following States of the former Soviet

Union from the list of countries from

which the import of defense articles into

the United States is proscribed: Georgia,

Kazakstan, Kyrgyzstan, Moldova,

Russian Federation, Turkmenistan,

Ukraine, and Uzbekistan. The rule also

restricts the importation of certain

firearms and ammunition located or

manufactured in any of the above

countries or previously manufactured in

the Soviet Union to conform to

limitations contained in an agreement

between the United States and the

Russian Federation and in accordance

with advice from the Department of

State. The final rule specifies the

firearms that are allowed to be imported

from these countries as well as

ammunition that may not be imported

from these countries. The final rule also

revises the list of proscribed countries to

reflect the lifting of the embargo on

importation of defense articles and

defense services from the states of the

former Yugoslavia, except for Serbia and

Montenegro. Finally, the regulations are

being revised to require applications to

import parts of military firearms or

ammunition of United States

manufacture to be submitted with

statements certifying that the parts were

not furnished to a foreign government

under a foreign assistance or sales

program of the United States.