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US House Seeks to Close Anti-Counterfeiting Loophole
Published By World Trademark Law Report June 23, 2005

The US House of Representatives has passed the Stop Counterfeiting in Manufactured Goods Act (HR 32). The bill would extend criminal sanctions to cover the use of a counterfeit mark on labels, stickers, packaging, documentation and similar articles that accompany goods. The existing law allows counterfeiters to escape criminal liability by importing inferior manufactured goods that do not bear a counterfeit mark and thereafter placing counterfeit marks on them. One of the bill's sponsors noted that this practice has allowed importation and sale of substandard products such as pharmaceuticals, automobile and aeroplane parts, baby formulas and children's toys bearing counterfeit marks. The bill is intended to close this loophole.

HR 32 would amend the criminal statute dealing with trafficking in counterfeit goods and services, 18 USC § 2320. Subsection (a) of § 2320 would be amended as follows (additional language is in plain text):

'(a) Whoever intentionally traffics or attempts to traffic in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services, 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, shall, if an individual, be fined no more than $2 [million] or imprisoned not more than 10 years, or both, and, if a person other than an individual, be fined not more than $5 [million].'

Similar language would be inserted in the definition of a counterfeit mark that appears in 18 USC § 2320(e)(1) (changes are noted, additions are in plain text):

'(1) the term 'counterfeit mark' means-

(A) a spurious mark-

(i) that is used in connection with trafficking in any goods, or 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 for those goods or services on the principal register in the ... [US] Patent and Trademark Office and in use, whether or not the defendant knew such mark was so registered; and

(iii) that is applied to or used in connection with the goods or services for which the mark is registered with the ... [US] 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 ... [US] Patent and Trademark Office; and

(iv) the use of which is likely to cause confusion, to cause mistake, or to deceive.'

The bill would also broaden forfeiture provisions applicable to any articles bearing or consisting of a counterfeit mark used in committing a violation, and any property used, in any manner or part, to commit or facilitate the commission of a violation. (See amendment to § 2320(b).) In addition, the bill would add language to ensure criminal liability does not extend to repackagers of genuine goods not intended to deceive or confuse. (See new § 2320(f).)

HR 32 is now before the Senate and has been referred to the Committee on the Judiciary.


This article has been reprinted with permission from the June 23, 2005 edition of the World Trademark Law Report . © 2002-2006, Globe Business Publishing Ltd.

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