I
107TH CONGRESS
2D SESSION
H. R. 5057
To prevent and punish counterfeiting and copyright piracy, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 27, 2002
Mr. SMITH of Texas (for himself, Mr. KELLER, Mr. SCOTT, Mr. SCHIFF, Mr.
ISSA, and Mr. DOGGETT) introduced the following bill; which was referred
to the Committee on the Judiciary
A BILL
To prevent and punish counterfeiting and copyright piracy,
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Intellectual Property
Protection Act of 2002’’.
SEC. 2. FINDINGS.
Congress finds that—
(1) American innovation, and the protection of
that innovation by the government, has been a crit-
ical component of the economic growth of this Na-
tion throughout the history of the Nation;
(2) copyright-based industries represent one of
the most valuable economic assets of this country,
contributing over 5 percent of the gross domestic
product of the United States and creating significant
job growth and tax revenues;
(3) the American intellectual property sector
employs 
approximately 
4,300,000 
people, 
rep-
resenting over 3 percent of total United States em-
ployment;
(4) the proliferation of organized criminal coun-
terfeiting enterprises threatens the economic growth
of United States copyright industries;
(5) in 2001, the United States entertainment
software industry lost $1,800,000,000 in revenue,
and 
the 
business 
software 
industry 
lost
$11,000,000,000 worldwide, due to piracy;
(6) in 2001, the motion picture industry lost
$3,000,000,000 in potential worldwide revenue, the
music industry lost $4,300,000,000 worldwide, and
the publishing industry lost $636,000,000 world-
wide, due to piracy, and these figures do not include
losses due to online piracy;
(7) the American intellectual property sector
has invested millions of dollars to develop highly so-
phisticated physical authentication features that as-
sist consumers and law enforcement in distin-
guishing genuine intellectual property products and
packaging from counterfeits;
(8) in order to thwart these industry efforts,
counterfeiters traffic in, and tamper with, genuine
physical authentication features, for example, by ob-
taining genuine physical authentication features
through illicit means and then commingling these
features with counterfeit software or packaging;
(9) Federal law does not provide adequate civil
and criminal remedies to combat tampering activities
that directly facilitate counterfeiting crimes; and
(10) in order to strengthen Federal enforce-
ment against counterfeiting of copyrighted works,
Congress must enact legislation that—
(A) prohibits trafficking in, and tampering
with, physical authentication features of copy-
righted works; and
(B) permits aggrieved parties an appro-
priate civil cause of action.
SEC. 3. PROHIBITION AGAINST TRAFFICKING IN ILLICIT
PHYSICAL AUTHENTICATION FEATURES.
(a) IN GENERAL.—Section 2318 of title 18, United
States Code, is amended—
(1) by striking the heading and inserting
‘‘TRAFFICKING IN COUNTERFEIT LABELS, IL-
LICIT PHYSICAL AUTHENTICATION FEATURES,
OR COUNTERFEIT DOCUMENTATION OR PACK-
AGING’’;
(2) by striking subsection (a) and inserting the
following:
‘‘(a) Whoever, in any of the circumstances described
in subsection (c), knowingly traffics in—
‘‘(1) a counterfeit label affixed to, or designed
to be affixed to—
‘‘(A) a phonorecord;
‘‘(B) a copy of a computer program;
‘‘(C) a copy of a motion picture or other
audiovisual work; or
‘‘(D) documentation or packaging;
‘‘(2) an illicit physical authentication feature af-
fixed to or embedded in, or designed to be affixed
to or embedded in—
‘‘(A) a phonorecord;
‘‘(B) a copy of a computer program;
‘‘(C) a copy of a motion picture or other
audiovisual work; or
‘‘(D) documentation or packaging; or
‘‘(3) counterfeit documentation or packaging,
shall be fined under this title or imprisoned for not more
than 5 years, or both.’’;
(3) in subsection (b)—
(A) in paragraph (2), by striking ‘‘and’’ at
the end;
(B) in paragraph (3)—
(i) by striking ‘‘and ‘audiovisual work’
have’’ and inserting the following: ‘‘,
‘audiovisual work’, ‘sound recording’, and
‘copyright owner’ have’’; and
(ii) by striking the period at the end
and inserting a semicolon; and
(C) by adding at the end the following:
‘‘(4) the term ‘physical authentication feature’
means any visually perceptible hologram, watermark,
certification, symbol, image, sequence of numbers or
letters, or other physical feature that either individ-
ually or in combination with another feature is used
by the respective copyright owner to verify that a
phonorecord, a copy of a computer program, a copy
of a motion picture or other audiovisual work, or
documentation or packaging is not counterfeit or
otherwise infringing of any copyright;
‘‘(5) the term ‘documentation or packaging’
means documentation or packaging for a phono-
record, copy of a computer program, or copy of a
motion picture or other audiovisual work; and
‘‘(6) the term ‘illicit physical authentication fea-
ture’ means a physical authentication feature,
that—
‘‘(A) is genuine in origin, but, without the
authorization of the respective copyright owner,
has been tampered with or altered for the pur-
pose of inducing a third party to reproduce or
accept distribution of—
‘‘(i) a phonorecord;
‘‘(ii) a copy of a computer program;
‘‘(iii) a copy of a motion picture or
other audiovisual work; or
‘‘(iv) documentation or packaging;
where such reproduction or distribution violates
the rights of the copyright owner under title 17;
‘‘(B) is genuine, but has been distributed,
or is intended for distribution, without the au-
thorization of the respective copyright owner
and not in connection with the lawfully made
copy or phonorecord to which such physical au-
thentication feature was intended to be affixed
or embedded by the respective copyright owner;
or
‘‘(C) appears to be genuine, but is not.’’;
(4) in subsection (c)—
(A) by striking paragraph (3) and insert-
ing the following:
‘‘(3) the counterfeit label or illicit physical au-
thentication feature is affixed to, is embedded in, or
encloses, or is designed to be affixed to, to be em-
bedded in, or to enclose—
‘‘(A) a phonorecord of a copyrighted sound
recording;
‘‘(B) a copy of a copyrighted computer
program;
‘‘(C) a copy of a copyrighted motion pic-
ture or other audiovisual work; or
‘‘(D) copyrighted documentation or pack-
aging; or’’; and
(B) in paragraph (4), by striking ‘‘for a
computer program’’;
(5) in subsection (d)—
(A) by inserting ‘‘or illicit physical authen-
tication features’’ after ‘‘counterfeit labels’’
each place it appears;
(B) by inserting ‘‘or illicit physical authen-
tication features’’ after ‘‘such labels’’; and
(C) by inserting before the period at the
end the following: ‘‘, and of any equipment, de-
vice, or materials used to manufacture, repro-
duce, or assemble the counterfeit labels or illicit
physical authentication features’’; and
(6) by adding at the end the following:
‘‘(f) CIVIL REMEDIES FOR VIOLATION.—
‘‘(1) IN GENERAL.—Any copyright owner who
is injured by a violation of this section or is threat-
ened with injury, may bring a civil action in an ap-
propriate United States district court.
‘‘(2) DISCRETION
OF
COURT.—In any action
brought under paragraph (1), the court—
‘‘(A) may grant 1 or more temporary or
permanent injunctions on such terms as the
court determines to be reasonable to prevent or
restrain violations of this section;
‘‘(B) at any time while the action is pend-
ing, may order the impounding, on such terms
as the court determines to be reasonable, of any
article that is in the custody or control of the
alleged violator and that the court has reason-
able cause to believe was involved in a violation
of this section; and
‘‘(C) may award to the injured party—
‘‘(i) reasonable attorney fees and
costs; and
‘‘(ii)(I) actual damages and any addi-
tional profits of the violator, as provided
by paragraph (3); or
‘‘(II) statutory damages, as provided
by paragraph (4).
‘‘(3) ACTUAL DAMAGES AND PROFITS.—
‘‘(A) IN GENERAL.—The injured party is
entitled to recover—
‘‘(i) the actual damages suffered by
the injured party as a result of a violation
of this section, as provided by subpara-
graph (B); and
‘‘(ii) any profits of the violator that
are attributable to a violation of this sec-
tion and are not taken into account in
computing the actual damages.
‘‘(B) CALCULATION
OF
DAMAGES.—The
court 
shall 
calculate 
actual 
damages 
by
multiplying—
‘‘(i) the value of the phonorecords or
copies to which counterfeit labels, illicit
physical authentication features, or coun-
terfeit documentation or packaging were
affixed or embedded, or designed to be af-
fixed or embedded; by
‘‘(ii) the number of phonorecords or
copies to which counterfeit labels, illicit
physical authentication features, or coun-
terfeit documentation or packaging were
affixed or embedded, or designed to be af-
fixed or embedded,
unless such calculation would underestimate the
actual harm suffered by the copyright owner.
‘‘(C) DEFINITION.—For purposes of this
paragraph, the term ‘value of the phonorecord
or copy’ means—
‘‘(i) the retail value of an authorized
phonorecord of a copyrighted sound record-
ing;
‘‘(ii) the retail value of an authorized
copy of a copyrighted computer program;
or
‘‘(iii) the retail value of an authorized
copy of a copyrighted motion picture or
other audiovisual work.
‘‘(4) STATUTORY DAMAGES.—The injured party
may elect, at any time before final judgment is ren-
dered, to recover, instead of actual damages and
profits, an award of statutory damages for each vio-
lation of this section in a sum of not less than
$2,500 or more than $25,000, as the court considers
appropriate.
‘‘(5) SUBSEQUENT VIOLATION.—The court may
increase an award of damages under this subsection
by 3 times the amount that would otherwise be
awarded, as the court considers appropriate, if the
court finds that a person has subsequently violated
this section within 3 years after a final judgment
was entered against that person for a violation of
this section.
‘‘(6) LIMITATION ON ACTIONS.—A civil action
may not be commenced under this section unless it
is commenced within 3 years after the date on which
the claimant discovers the violation.
‘‘(g) OTHER RIGHTS NOT AFFECTED.—Nothing in
this section shall enlarge, diminish, or otherwise affect li-
ability under section 1201 or 1202 of title 17.’’.
(b) TECHNICAL AND CONFORMING AMENDMENT.—
The item relating to section 2318 in the table of sections
at the beginning of chapter 113 of title 18, United States
Code, is amended to read as follows:
‘‘2318. Trafficking in counterfeit labels, illicit authentication features, or coun-
terfeit documentation or packaging.’’.
Æ