Congress Rallies Behind IP Owners and Passes Tough New Laws Designed to Stop Counterfeiters

November 2005

On November 10, the United States Senate passed two bills intended to strengthen criminal laws against those who traffic in counterfeit goods. The first bill, S. 1699, is entitled the “Stop Counterfeiting in Manufactured Goods Act.” This bill, if it becomes law, would amend title 18 of the United States Code to provide criminal penalties for trafficking in counterfeit marks. In this context, the term “counterfeit mark” means a trademark that is registered with the U.S. Patent and Trademark Office and that is owned by someone other than the person who is selling the goods. The term “traffic” means to sell or trade (including importation).

According to the bill’s sponsors, S. 1699 is intended to combat the “ongoing counterfeiting of manufactured goods,” which “poses a widespread threat to public health and safety.” Specifically, the bill’s sponsors found that 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. The sponsors noted that the Bureau of Customs and Border Protection has estimated that counterfeiting costs the United States $200 billion annually. The sponsors asserted that “ties have been established between counterfeiting and terrorist organizations that use the sale of counterfeit goods to raise and launder money” and that having stronger criminal remedies against counterfeiting at home will allow the United States to seek stronger anti-counterfeiting provisions in agreements with other countries.

Based on these premises, the bill would make it illegal not only to sell goods bearing counterfeit marks, but also to ship labels or packaging separately from the goods to which they will ultimately be attached. (This represents a significant departure from existing law, which requires the mark to be affixed to the goods in order for there to be infringement.) The bill also provides for forfeiture of goods and materials bearing counterfeit marks, and it requires convicted counterfeiters to pay restitution to the lawful owner of the trademark. The sponsors have summed up the rationale for the bill as follows: “Those who profit from another’s innovation have proved their creativity only at escaping responsibility for their actions.” Proponents of the bill include Lexmark International Inc., Zippo Manufacturing Company, Warnaco, Rolex Watch U.S.A., Inc., Vision Council of America, and The Timberland Company.

Senate Bill 1905, also passed by the Senate on November 10, is entitled, “The Protecting American Goods and Services Act.” If enacted, this Act will fill certain gaps in anti-counterfeiting laws by clarifying that the term “trafficking” includes possessing counterfeit goods with the intention of selling them, giving away counterfeit goods in exchange for some future benefit (i.e., bartering), and importing or exporting counterfeit goods and unauthorized copies of copyrighted works. According to the bill’s sponsors, “[T]he rampant distribution of illegitimate goods—be it counterfeited products, illegal copies of copyrighted works or any other form of piracy—undermines property rights, threatens American jobs, decreases consumer safety and, often times, supports organized crime and terrorist activity.”

The fate of these two bills will be dependent on whether the Senate and the House of Representatives can come to an agreement on the wording of the bills and whether President Bush will sign them (it is expected that he will). Both bills make it more imperative than ever that companies perform a basic search to see whether a trademark is registered before using it in any manner. In fact, under S. 1699, the fact that the defendant may not have been aware that a particular mark was registered is no defense.

Along these lines, the U.S. Customs and Border Protection agency has a procedure by which trademarks and copyrights can be registered with that agency to prevent counterfeit goods or unauthorized copies of copyrighted works from being imported into the country. For more information on this procedure, please contact qualified legal counsel.


Amicable photo of Toni

Antoinette M. Tease, P.L.L.C.