Feds estimate counterfeiting costs U.S. $200B annually.

President Bush signed legislation today (March 16) that closes loopholes in current law that makes the trafficking in counterfeit trademarks a crime. The Stop Counterfeiting in Manufactured Goods Act goes into effect immediately.

Before the trademark counterfeiting law was amended today, certain definitions allowed an individual who attempted a sale of counterfeit goods, but who was unsuccessful so received nothing of value, could avoid criminal liability. One federal appeals court also held that an individual who merely trafficked in only the counterfeit trademarks, such as labels or patches, which were not attached to any goods, did not violate the federal law.

The Act closes these loopholes. It expands the definitions of "traffic" and "financial gain" to criminalize any distribution of counterfeit goods -- or possession with the intent to distribute counterfeit goods – even if the person simply expects to gain something of value. It ensures that importing or exporting counterfeit goods is a crime. It also makes possession of the counterfeit marks illegal, even if not attached to any goods.

Also under the prior law, the court was not required to order destruction of the counterfeit goods when an individual was convicted under the trademark counterfeiting law. The law now requires the court to order destruction of the counterfeit goods and forfeiture of any assets traceable to illegal counterfeiting activities.

According to the Act, Congress found that the U.S. 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 Bureau of Customs and Border Protection estimates that counterfeiting costs the United States $200 billion annually; counterfeit products have invaded numerous industries; ties have been established between counterfeiting and terrorist organizations that use the sale of counterfeit goods to raise and launder money; and ongoing counterfeiting of goods poses a widespread threat to public health and safety.

As passed by the House on March 7, sponsored by Rep. Joe Knollenberg (R-Mich.), H.R. 32 combines the text of two Senate bill: S. 1699 introduced by Sen. Arlen Specter (R-Pa.) and S. 1095 introduced by Sens. John Cornyn (R-Tex.) and Patrick Leahy (D-Vt.).

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