To prevent and punish counterfeiting and copyright piracy, and for other purposes.

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 critical component of 
        the economic growth of this Nation 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, representing over 3 percent of 
        total United States employment;
            (4) the proliferation of organized criminal counterfeiting 
        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 worldwide, 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 sophisticated physical 
        authentication features that assist consumers and law 
        enforcement in distinguishing 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 obtaining 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 enforcement against 
        counterfeiting of copyrighted works, Congress must enact 
        legislation that--
                    (A) prohibits trafficking in, and tampering with, 
                physical authentication features of copyrighted works; 
                and
                    (B) permits aggrieved parties an appropriate 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, illicit physical authentication features, 
        or counterfeit documentation or packaging'';
            (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 affixed 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 individually 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 phonorecord, copy of a 
        computer program, or copy of a motion picture or other 
        audiovisual work; and
            ``(6) the term `illicit physical authentication feature' 
        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 purpose 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 authorization of 
                the respective copyright owner and not in connection 
                with the lawfully made copy or phonorecord to which 
                such physical authentication 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 inserting the 
                following:
            ``(3) the counterfeit label or illicit physical 
        authentication feature is affixed to, is embedded in, or 
        encloses, or is designed to be affixed to, to be embedded 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 picture or 
                other audiovisual work; or
                    ``(D) copyrighted documentation or packaging; or''; 
                and
                    (B) in paragraph (4), by striking ``for a computer 
                program'';
            (5) in subsection (d)--
                    (A) by inserting ``or illicit physical 
                authentication features'' after ``counterfeit labels'' 
                each place it appears;
                    (B) by inserting ``or illicit physical 
                authentication features'' after ``such labels''; and
                    (C) by inserting before the period at the end the 
                following: ``, and of any equipment, device, or 
                materials used to manufacture, reproduce, 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 threatened with injury, may 
        bring a civil action in an appropriate 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 pending, 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 
reasonable 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 additional 
                        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 subparagraph (B); 
                        and
                            ``(ii) any profits of the violator that are 
                        attributable to a violation of this section 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 
                        counterfeit documentation or packaging were 
                        affixed or embedded, or designed to be affixed 
                        or embedded; by
                            ``(ii) the number of phonorecords or copies 
                        to which counterfeit labels, illicit physical 
                        authentication features, or counterfeit 
                        documentation or packaging were affixed or 
                        embedded, or designed to be affixed 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 recording;
                            ``(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 rendered, to recover, instead 
        of actual damages and profits, an award of statutory damages 
        for each violation 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 liability 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 counterfeit documentation or 
                            packaging.''.

Summary: Intellectual Property Protection Act of 2002 - Amends the Federal criminal code to prohibit trafficking in a physical authentication feature that: (1) is genuine but has been tampered with or altered without the authorization of the copyright owner to induce a third party to reproduce or accept distribution of a phono-record, a copy of a computer program, a copy of a motion picture or other audiovisual work, or documentation or packaging, where such reproduction or distribution violates the rights of the copyright owner; (2) is genuine but has been or is intended to be distributed without the authorization of the copyright owner and not in connection with the lawfully made copy or phono-record to which it was intended to be affixed or embedded by the copyright owner; or (3) appears to be genuine but is not.Authorizes an injured copyright owner to bring a civil action in an appropriate U.S. district court. Sets forth remedies for violations.