Anti-Counterfeiting Bill Awaits Presidential Signature

On March 10, 2006, the U.S. Senate sent President Bush a bill that strengthens existing anti-counterfeiting laws. Known as the "Stop Counterfeiting in Manufactured Goods Act," the bill amends 18 U.S.C. § 2320 to require that counterfeit goods be destroyed and any property used for counterfeiting be forfeited. The bill further amends 18 U.S.C. § 2320 to prohibit trafficking in counterfeit labels, even if the labels are not attached to any goods. House of Representatives Bill H.R. 32/Senate Bill S. 1699.

18 U.S.C. § 2320 codifies the regulations relating to trafficking in counterfeit goods or services. Currently 18 U.S.C. § 2320 allows, but does not require, the destruction of articles that are found to bear counterfeit marks. Also, 18 U.S.C. § 2320 does not mention any forfeiture of property used for counterfeiting, such as equipment or materials used to make counterfeit goods. At present, therefore, counterfeiters can quickly resume counterfeiting activities following a conviction.

H.R. 32/S. 1699 adds mandatory destruction provisions for counterfeit goods, stating "…the court shall order that any forfeited article…bearing or consisting of a counterfeit mark be destroyed." H.R. 32/S. 1699 also introduces mandatory forfeiture provisions for counterfeit goods and for any property used in counterfeiting. These provisions state that "any article bearing or consisting of a counterfeit mark…and any property used…to commit…the offense [of counterfeiting]…shall be subject to forfeiture …"

Further, H.R. 32/S. 1699 closes a loophole that currently exists in 18 U.S.C. § 2320. This loophole allows counterfeiters to avoid liability by trafficking in counterfeit labels that are not attached to any goods and by separately trafficking in unlabeled goods. In United States v. Giles decided in June 2000, the U.S. Court of Appeals for the Tenth Circuit confirmed the existence of this loophole by ruling that section 2320 does not forbid trafficking in counterfeit labels that are not attached to any goods. H.R. 32/S.1699 now explicitly prohibits the trafficking in "labels, patches, stickers…or packaging of any type or nature, knowing that a counterfeit mark has been applied thereto."

Representative Joe Knollenberg introduced H.R. 32 in January 2005. On May 23, 2005, H.R. 32 passed the House of Representatives by voice vote. Senators Arlen Spector and Patrick Leahy introduced the Senate companion bill S. 1699 on September 14, 2005. On February 15, 2006, S. 1699 passed in the Senate by unanimous consent. On March 10, 2006, the Senate presented H.R. 32/S. 1699 to President Bush. H.R. 32/S. 1699 will become law when signed by President Bush.

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