Senate Okays Leahy Bills Targeting
Counterfeit Goods
. . Bill Takes Aim At Costly Crime
Of Pirating That Plagues Many Vermont Companies
WASHINGTON
(Wednesday, Nov. 16) – Sen. Patrick Leahy (D-Vt.) led efforts in the
Senate to win passage of two key bipartisan anti-counterfeiting
bills targeting the pernicious and costly problems of piracy and
illegal trafficking of goods and services that plague several
Vermont companies.
Leahy, the
ranking member of the Senate Judiciary Committee, teamed up with
leading Republican senators on the measures: Sen. Arlen Specter
(R-Pa.), the panel’s chairman, is the principal cosponsor of the
Stop Counterfeiting in Manufactured Goods Act, while Sen. John
Cornyn (R-Texas), a member of the committee, joined Leahy in
sponsoring the Protecting American Goods and Services Act.
The Senate
passed both bills by unanimous consent on Nov. 10, sending them to
the House for consideration.
Piracy has had a
particularly negative effect on a number of Vermont businesses who
have worked with Leahy on combating the crime, including Burton
Snowboards, Vermont Tubbs of Rutland, SB Electronics of Barre, and
Hubbardton Forge of Castleton. A representative form Burton
Snowboards testified before the Committee last year on the issue.
A longtime
leader in Congress on anti-piracy issues and the ranking member on
the Intellectual Property Subcommittee of the Judiciary Committee,
Leahy stressed the importance of the bills: “Product counterfeiting
hurts our workers and our consumers and our economy. These are
useful tools to help beat back this threat.”
Leahy noted that
more than $200 billion in tax revenue is lost annually to
counterfeiting and piracy operations, and estimates show that more
than 5 percent of trade worldwide is illegally conducted in the
trafficking of counterfeited goods. In addition to its damage to
the economy, counterfeiting has been linked to organized crime,
including terrorist organizations.
[Below are
Leahy’s statements on passage of the bills.]
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Statement Of Senator Patrick Leahy
On Senate Passage Of S. 1699,
The “Stop Counterfeiting In Manufactured Goods Act”
November 10, 2005
MR. LEAHY. Counterfeiting threatens the
American economy, our workers, and our consumers. I am pleased that
the Senate has today taken an important step towards beating back
that threat, by passing S. 1699, the “Stop Counterfeiting in
Manufactured Goods Act.” Senator Specter is the principal
co-sponsor, and I know that he shares with me the conviction that
this bill that will give law enforcement improved tools to fight
counterfeit trademarks, and that it could work a significant change
in the efforts to combat this type of theft. So are all our
co-sponsors, and I thank them: Senators Alexander, Bayh, Brownback,
Coburn, Cornyn, DeWine, Durbin, Feingold, Feinstein, Hatch, Kyl,
Levin, Reed, Stabenow, and Voinovich.
It is all too easy to think of counterfeiting
as a victimless crime, a means of buying sunglasses or a purse that
would otherwise strain a monthly budget. The reality, however, is
far different. According to the Federal Bureau of Investigation,
counterfeiting costs the U.S. between $200 billion and $250 billion
annually. In Vermont, companies like Burton Snowboards, Vermont
Tubbs, SB Electronics, and Hubbardton Forge – all of which have
cultivated their good names through pure hard work and creativity –
have felt keenly the damage of intellectual property theft on their
businesses. This is wrong. It is simply not fair to the businesses
who innovate and to the people whose economic livelihoods depend on
these companies.
The threat posed by counterfeiting is more than
a matter of economics. Inferior products can threaten the safety of
those who use them. When a driver taps a car’s brake pedals there
should be no uncertainty about whether the brake linings are made of
compressed grass, sawdust, or cardboard. Sick patients should not
have to that they will ingest counterfeit prescription drugs and, at
best, have no effect. The World Health Organization estimates that
the market for counterfeit drugs is about $32 billion each year.
Knock-off parts have even been found in NATO helicopters. What’s
more, according to Interpol, there is an identifiable link between
counterfeit goods and the financing of terrorist operations.
S. 1699 makes several improvements to the U.S.
Code. The bill strengthens 18 U.S.C. 2318, the part of the criminal
code that deals with counterfeit goods and services, to make it a
crime to traffic in counterfeit labels or packaging, even when
counterfeit labels or packaging are shipped separately from the
goods to which they will ultimately be attached. Savvy
counterfeiters have exploited this loophole to escape liability.
This bill closes that loophole.
The bill will also make counterfeit labels and
goods, and any equipment used in facilitating a crime under this
part of the code, subject to forfeiture upon conviction. Any
forfeited goods or machinery would then be destroyed, and the
convicted infringer would have to pay restitution to the lawful
owner of the trademark. Finally, although the bill is tough, it is
also fair. It states that nothing “shall entitle the United States
to bring a cause of action under this section for the repackaging of
genuine goods or services not intended to deceive or
confuse.” It is truly just the bad actors we want to punish.
Those who profit from another’s innovation have
proved their creativity only at escaping responsibility for their
actions. As legislators it is important that we provide law
enforcement with the tools needed to capture these thieves. I am
committed to this effort, and will continue to sponsor legislation
that will support law enforcement in the protection of the
intellectual property rights that are so important to the American
economy and its creative culture.
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Statement Of Senator Patrick Leahy
On Senate Passage Of S. 1095,
The “Protecting American Goods and Services Act Of 2005”
November 10, 2005
MR. LEAHY. Today, I am pleased that the Senate
has passed S. 1095, the “Protecting American Goods and Services Act
of 2005,” which is the latest of the bipartisan efforts that Senator
Cornyn and I have made to improve the lives of Americans through
effective and efficient government. The “Protecting American Goods
and Services Act of 2005” will strengthen our ability to combat the
escalating problem of counterfeiting worldwide. In order to
effectively fight intellectual property theft, we need stiff
penalties for counterfeiters and those who are caught with
counterfeit goods with the intent to traffic their false wares.
Ours is a short bill – indeed, it is only two pages long – but it
will have powerful global implications in the fight against piracy.
Counterfeiting is a growing problem that costs
our economy hundreds of billions of dollars every year and has been
linked to organized crime, including terrorist organizations.
According to the International Anti-Counterfeiting Coalition,
counterfeit parts have been discovered in helicopters sold to NATO,
in jet engines, bridge joints, brake pads, and fasteners in
equipment designed to prevent nuclear reactor meltdowns. The World
Health Organization estimates that the market for counterfeit drugs
is about $32 billion each year.
Several years ago, Senator Hatch joined me in
sponsoring the “Anti-counterfeiting Consumer Protection Act of
1996,” which addressed counterfeiting by amending several sections
of our criminal and tariff codes. That law made important changes,
particularly by expanding RICO, the federal anti-racketeering law,
to cover crimes involving counterfeiting and copyright and trademark
infringement. Then, as now, trafficking in counterfeit goods hurts
purchasers, state and federal governments, and economies at every
level.
Perhaps most disturbingly, the U.S. Customs
Service reports that terrorists have used transnational
counterfeiting operations to fund their activities: The sale of
counterfeit and pirated music, movies, software, T-shirts, clothing,
and fake drugs “accounts for much of the money the international
terrorist network depends on to feed its operations.”
Last year, as in years past, I worked with
Senator Allen on an amendment to the Foreign Operations bill that
provides the State Department with vital resources to combat piracy
of U.S. goods abroad. The bill we ultimately passed included $3
million for this important purpose. Yet more work both at home and
abroad remains. When you consider that the economic impact of
tangible piracy in counterfeit goods is estimated to be roughly $350
billion a year and to constitute between 5 percent and 7 percent of
worldwide trade, a few million dollars is a worthwhile investment.
We have certainly seen how this form of theft
touches the lives of hard-working Vermonters. Burton Snowboards is
a small company, whose innovation has made it an industry leader in
snowboarding equipment and apparel. Unfortunately, knock-off
products carrying Burton’s name have been found across the globe.
Vanessa Price, a representative of Burton, testified about
counterfeiting at the Judiciary Committee’s March 23, 2004, hearing
on this topic. In addition to learning about the economic costs of
counterfeiting, I asked her after the hearing about the risks posed
to consumers by these goods. Her answer was chilling: “In the weeks
since my Senate testimony, I discovered a shipment of counterfeit
Burton boots for sale through a discount sports outfit… After
examining the poor quality of the counterfeit boots, we determined
that anyone using the boots for snowboarding risks injury due to a
lack of reinforcement and support in the product’s construction.”
Customers and businesses lose out to
counterfeiters in other ways, too. SB Electronics in Barre, Vt. has
seen its capacitors reverse engineered and its customers lost to
inferior copycat models. Vermont Tubbs, a furniture manufacturer in
Rutland, has seen its designs copied, produced offshore with
inferior craftsmanship and materials, and then reimported, so that
the company is competing against cheaper versions of its own
products. And Hubbardton Forge in Castleton, Vt. has seen its
beautiful and original lamps counterfeited and then sold within the
United States at prices – and quality – far below their own. This
is wrong. It is unfair to consumers who deserve the high quality
goods they think they are paying for, and it is unfair to innovators
who play by the rules and deserve to profit from their labor.
The “Protecting American Goods and Services Act
of 2005” will help to combat this growing scourge. It amends the
definition of “trafficking” in the counterfeit law to criminalize
the possession of counterfeit goods with the intent to sell or
traffic in those goods, as well as to include any distribution of
counterfeits with the expectation of gaining something of value –
criminals should not be able to skirt the law simply because they
barter illegal goods and services in exchange for their illicit
wares. Finally, the bill’s new definition will criminalize the
importation and exportation of counterfeit goods, as well as of
bootleg copies of copyrighted works into and out of the United
States.
By tying off these loopholes and improving U.S.
laws on counterfeiting, we will be sending a powerful message to the
criminals who belong in jail, and to our innovators.
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