A bill to amend title 18, United States Code, to provide criminal penalties for trafficking in counterfeit marks.

SECTION 1. SHORT TITLE; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``Stop 
Counterfeiting in Manufactured Goods Act''.
    (b) Findings.--The Congress finds that--
            (1) the United States economy is losing millions of dollars 
        in tax revenue and tens of thousands of jobs because of the 
        manufacture, distribution, and sale of counterfeit goods;
            (2) the Bureau of Customs and Border Protection estimates 
        that counterfeiting costs the United States $200 billion 
        annually;
            (3) counterfeit automobile parts, including brake pads, 
        cost the auto industry alone billions of dollars in lost sales 
        each year;
            (4) counterfeit products have invaded numerous industries, 
        including those producing auto parts, electrical appliances, 
        medicines, tools, toys, office equipment, clothing, and many 
        other products;
            (5) ties have been established between counterfeiting and 
        terrorist organizations that use the sale of counterfeit goods 
        to raise and launder money;
            (6) ongoing counterfeiting of manufactured goods poses a 
        widespread threat to public health and safety; and
            (7) strong domestic criminal remedies against 
        counterfeiting will permit the United States to seek stronger 
        anticounterfeiting provisions in bilateral and international 
        agreements with trading partners.

SEC. 2. TRAFFICKING IN COUNTERFEIT MARKS.

    Section 2320 of title 18, United States Code, is amended as 
follows:
            (1) Subsection (a) is amended by inserting after ``such 
        goods or services'' the following: ``, or intentionally 
        traffics or attempts to traffic in labels, patches, stickers, 
        wrappers, badges, emblems, medallions, charms, boxes, 
        containers, cans, cases, hangtags, documentation, or packaging 
        of any type or nature, knowing that a counterfeit mark has been 
        applied thereto, the use of which is likely to cause confusion, 
        to cause mistake, or to deceive,''.
            (2) Subsection (b) is amended to read as follows:
    ``(b)(1) The following property shall be subject to forfeiture to 
the United States and no property right shall exist in such property:
            ``(A) Any article bearing or consisting of a counterfeit 
        mark used in committing a violation of subsection (a).
            ``(B) Any property used, in any manner or part, to commit 
        or to facilitate the commission of a violation of subsection 
        (a).
    ``(2) The provisions of chapter 46 of this title relating to civil 
forfeitures, including section 983 of this title, shall extend to any 
seizure or civil forfeiture under this section. At the conclusion of 
the forfeiture proceedings, the court, unless otherwise requested by an 
agency of the United States, shall order that any forfeited article 
bearing or consisting of a counterfeit mark be destroyed or otherwise 
disposed of according to law.
    ``(3)(A) The court, in imposing sentence on a person convicted of 
an offense under this section, shall order, in addition to any other 
sentence imposed, that the person forfeit to the United States--
            ``(i) any property constituting or derived from any 
        proceeds the person obtained, directly or indirectly, as the 
        result of the offense;
            ``(ii) any of the person's property used, or intended to be 
        used, in any manner or part, to commit, facilitate, aid, or 
        abet the commission of the offense; and
            ``(iii) any article that bears or consists of a counterfeit 
        mark used in committing the offense.
    ``(B) The forfeiture of property under subparagraph (A), including 
any seizure and disposition of the property and any related judicial or 
administrative proceeding, shall be governed by the procedures set 
forth in section 413 of the Comprehensive Drug Abuse Prevention and 
Control Act of 1970 (21 U.S.C. 853), other than subsection (d) of that 
section. Notwithstanding section 413(h) of that Act, at the conclusion 
of the forfeiture proceedings, the court shall order that any forfeited 
article or component of an article bearing or consisting of a 
counterfeit mark be destroyed.
    ``(4) When a person is convicted of an offense under this section, 
the court, pursuant to sections 3556, 3663A, and 3664, shall order the 
person to pay restitution to the owner of the mark and any other victim 
of the offense as an offense against property referred to in section 
3663A(c)(1)(A)(ii).
    ``(5) The term `victim', as used in paragraph (4), has the meaning 
given that term in section 3663A(a)(2).''.
            (3) Subsection (e)(1) is amended--
                    (A) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) a spurious mark--
                            ``(i) that is used in connection with 
                        trafficking in any goods, services, labels, 
                        patches, stickers, wrappers, badges, emblems, 
                        medallions, charms, boxes, containers, cans, 
                        cases, hangtags, documentation, or packaging of 
                        any type or nature;
                            ``(ii) that is identical with, or 
                        substantially indistinguishable from, a mark 
                        registered on the principal register in the 
                        United States Patent and Trademark Office and 
                        in use, whether or not the defendant knew such 
                        mark was so registered;
                            ``(iii) that is applied to or used in 
                        connection with the goods or services for which 
                        the mark is registered with the United States 
                        Patent and Trademark Office, or is applied to 
                        or consists of a label, patch, sticker, 
                        wrapper, badge, emblem, medallion, charm, box, 
                        container, can, case, hangtag, documentation, 
                        or packaging of any type or nature that is 
                        designed, marketed, or otherwise intended to be 
                        used on or in connection with the goods or 
                        services for which the mark is registered in 
                        the United States Patent and Trademark Office; 
                        and
                            ``(iv) the use of which is likely to cause 
                        confusion, to cause mistake, or to deceive; 
                        or''; and
                    (B) by amending the matter following subparagraph 
                (B) to read as follows:
        ``but such term does not include any mark or designation used 
        in connection with goods or services, or a mark or designation 
        applied to labels, patches, stickers, wrappers, badges, 
        emblems, medallions, charms, boxes, containers, cans, cases, 
        hangtags, documentation, or packaging of any type or nature 
        used in connection with such goods or services, of which the 
        manufacturer or producer was, at the time of the manufacture or 
        production in question, authorized to use the mark or 
        designation for the type of goods or services so manufactured 
        or produced, by the holder of the right to use such mark or 
        designation.''.
            (4) Section 2320 is further amended--
                    (A) by redesignating subsection (f) as subsection 
                (g); and
                    (B) by inserting after subsection (e) the 
                following:
    ``(f) Nothing in this section shall entitle the United States to 
bring a criminal cause of action under this section for the repackaging 
of genuine goods or services not intended to deceive or confuse.''.

SEC. 3. SENTENCING GUIDELINES.

    (a) Review and Amendment.--Not later than 180 days after the date 
of enactment of this Act, the United States Sentencing Commission, 
pursuant to its authority under section 994 of title 28, United States 
Code, and in accordance with this section, shall review and, if 
appropriate, amend the Federal sentencing guidelines and policy 
statements applicable to persons convicted of any offense under section 
2318 or 2320 of title 18, United States Code.
    (b) Authorization.--The United States Sentencing Commission may 
amend the Federal sentencing guidelines in accordance with the 
procedures set forth in section 21(a) of the Sentencing Act of 1987 (28 
U.S.C. 994 note) as though the authority under that section had not 
expired.
    (c) Responsibilities of United States Sentencing Commission.--In 
carrying out this section, the United States Sentencing Commission 
shall determine whether the definition of ``infringement amount'' set 
forth in application note 2 of section 2B5.3 of the Federal sentencing 
guidelines is adequate to address situations in which the defendant has 
been convicted of one of the offenses listed in subsection (a) and the 
item in which the defendant trafficked was not an infringing item but 
rather was intended to facilitate infringement, such as an anti-
circumvention device, or the item in which the defendant trafficked was 
infringing and also was intended to facilitate infringement in another 
good or service, such as a counterfeit label, documentation, or 
packaging, taking into account cases such as U.S. v. Sung, 87 F.3d 194 
(7th 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 criminal penalties 
                 for trafficking in counterfeit marks.

Summary: Stop Counterfeiting in Manufactured Goods Act - (Sec. 2) Amends federal criminal code provisions regarding trafficking in counterfeit goods or services to prohibit trafficking in counterfeit marks. Subjects to forfeiture any article that bears or consists of a counterfeit mark and any property derived from proceeds of, or used in the commission of, the violation. Makes code provisions regarding civil forfeitures, including general rules for civil forfeiture proceedings, applicable to any seizure or civil forfeiture under this section. Directs the court: (1) at the conclusion of forfeiture proceedings, to order the destruction of any forfeited article bearing or consisting of a counterfeit mark; and (2) to order a person convicted of such offense to pay restitution to the owner of the mark and any other victim of the property offense.

Makes criminal penalties applicable to persons who intentionally traffic, or attempt to traffic, in labels or packaging the use of which is likely to cause confusion, to cause mistake, or to deceive.

Modifies the definition of "counterfeit mark" to include a spurious mark that is applied to, or consists of, a label, patch, medallion, documentation, or packaging that is designed, marketed, or otherwise intended to be used on or in connection with the goods or services for which the mark is registered in the U.S. Patent and Trademark Office. Provides that nothing in this Act shall entitle the United States to bring a criminal cause of action for the repackaging of genuine goods or services not intended to deceive or confuse.

(Sec. 3) Directs the U.S. Sentencing Commission to: (1) review and amend the federal sentencing guidelines applicable to persons convicted of trafficking in counterfeit labels or marks; and (2) determine whether the definition of "infringement amount" under the guidelines is adequate to address situations in which the defendant has been so convicted and the item the defendant trafficked in was intended to facilitate infringement.