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                                                       Calendar No. 250
104th Congress                                                   Report
                                 SENATE

 1st Session                                                    104-177
_______________________________________________________________________


 
           ANTICOUNTERFEITING CONSUMER PROTECTION ACT OF 1995

                                _______


               November 28, 1995.--Ordered to be printed

_______________________________________________________________________


Mr. Hatch, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                         [To accompany S. 1136]

    The Committee on the Judiciary, to which was referred the 
bill (S. 1136) to control and prevent commercial 
counterfeiting, having considered the same, reports favorably 
thereon, with an amendment, and recommends that the bill, as 
amended, do pass.

                                CONTENTS

                                                                   Page
  I. Purpose..........................................................1
 II. Legislative history..............................................2
III. Discussion.......................................................3
 IV. Vote of the committee............................................6
  V. Section-by-section analysis......................................9
 VI. Cost estimate...................................................12
VII. Regulatory impact statement.....................................13
VIII.Changes in existing law.........................................13


                               I. Purpose

    Existing Federal law is not adequate to protect consumers 
and American businesses from the crime of counterfeiting 
copyrighted and trademarked products. Such counterfeiting is 
not harmless, and is not limited to minor sectors of 
inconsequential markets. Today, counterfeit products cost 
American businesses an estimated $200 billion each year. 
Counterfeiting is a drain on the American economy, on the 
Federal treasury, and costs American jobs. Organized crime is 
increasingly involved in this illegal business, reaping profits 
from the investment of legitimate companies which are plowed 
back into other activities traditionally associated with 
organized crime. Counterfeiters are increasingly sophisticated 
and traffic in every kind of product, including auto parts, 
pharmaceuticals, and food products. Some of these counterfeits 
threaten the health and safety of American citizens.
    S. 1136 seeks to correct the deficiency by making sure that 
Federal law adequately addresses the scope and sophistication 
of modern counterfeiting. The legislation provides important 
weapons in the fight against counterfeiters in four principal 
areas. First, it increases criminal penalties for 
counterfeiting and allows law enforcement to fight 
counterfeiters at the organizational level by making 
trafficking in counterfeit goods or services an offense under 
the Racketeer Influenced and Corrupt Organizations (RICO) Act, 
thereby providing increased jail time, criminal fines, and 
asset forfeiture against those involved in criminal 
counterfeiting enterprises. Second, the bill enhances law 
enforcement's ability to fight counterfeiting more effectively 
by increasing the involvement of all levels of law enforcement 
in this area and expanding their power to seize counterfeit 
goods and the tools of the counterfeiters' trade. Third, the 
legislation helps staunch the flow of counterfeit goods by 
making it easier to find counterfeit goods in transit and 
making it more difficult for seized goods to reenter the stream 
of commerce. And fourth, the bill strengthens the hand of 
businesses harmed by counterfeiters by updating existing 
statutes and providing stronger civil penalties against 
counterfeiters, including civil fines tied to the value of 
genuine goods and statutory damage awards of up to $1,000,000 
per mark.

                        II. Legislative History

    Counterfeiting of trademarked and copyrighted merchandise 
costs legitimate American businesses billions of dollars and 
results in a multimillion dollar loss in sales and tax 
revenues. Congress recognized the gravity of this problem when 
it enacted the Trademark Counterfeiting Act of 1984. Both the 
Senate and House Reports accompanying that legislation 
emphasized the harm associated with counterfeiting. The Senate 
Report stated that counterfeiting

        defrauds purchasers, who pay for brand-name quality and 
        take home only a fake. It cheats manufacturers of sales 
        that their reputation has earned them, and tarnishes 
        that reputation when the manufacturers are blamed for 
        the flaws of goods they did not produce. Finally, it 
        injures unwitting retailers, who must face the ire of 
        customers who discover that their brand name purchases 
        are in fact counterfeits.1
    \1\ S. Rept. 98-526, 98th Cong., 2d sess. 4 (June 21, 1984).

    The House Report similarly observed that, in addition to 
presenting ``grave risks to the health and safety of consumers 
of these articles,'' counterfeiting has a ``dire effect on the 
---------------------------------------------------------------------------
economy'':

        Businesses are unjustly criticized for having sold 
        substandard products, when in fact the products are 
        fake. Consumers buy products that fall apart after 
        minimal use. Trademark owners lose sales to 
        counterfeiters, when consumers seeking the genuine 
        article mistakenly buy the counterfeit. As businesses 
        suffer economically, workers suffer a corresponding 
        loss of jobs.2
    \2\ H. Rept. 98-997, 98th Cong., 2d sess. 5-6 (Sept. 7, 1984).

    Unfortunately, no one predicted the phenomenal growth of 
the crime of counterfeiting, nor the increased availability of 
technology that makes counterfeiting both easy and inexpensive. 
In 1982, counterfeiting losses were estimated at $5.5 billion. 
Today, such losses are estimated in excess of $200 billion. In 
addition, no one could have predicted the extent to which 
organized crime syndicates, often operating on an international 
level, would become directly involved in the manufacturing, 
distributing, selling, and financing of counterfeit products.
    For these reasons, the chairman of the committee, Senator 
Hatch, who was joined by Senators Leahy, Thurmond, Brown, Kyl, 
Abraham, and Feinstein, introduced S. 1136, in the 104th 
Congress, on August 9, 1995.3 Senators Simpson, D'Amato, 
Lautenberg, Heflin, and Moseley-Braun subsequently joined as 
cosponsors of the legislation.
    \3\ S. 1136, 104th Cong., 1st sess. (1995).
---------------------------------------------------------------------------
    The Senate Judiciary Committee held hearings on the bill on 
October 10, 1995, at which testimony was given by Leonard 
Walton, Deputy Assistant Commissioner, Office of 
Investigations, U.S. Customs Service; Thomas McGann, executive 
vice-president, Burton Snowboards; Dempster Leech, president, 
Harper Associates, a private investigation firm that has 
extensive experience investigating product counterfeiting 
cases; and John S. Bliss, president of the International 
Anticounterfeiting Coalition. The committee received additional 
written testimony from a number of representatives of the law 
enforcement and business communities.

                            III. Discussion

                          the need for s. 1136

    Traditionally, counterfeiting was thought to be a small-
time criminal operation, a victimless crime, consisting of the 
sale of cheap watches and sunglasses. Today, however, 
counterfeiting has grown into a multibillion dollar, highly 
sophisticated illegal business, increasingly involving 
organized crime syndicates. According to some estimates, it 
costs American business more than $200 billion every year in 
lost revenue. And, according to the U. S. Customs Service, it 
results in a loss of up to an estimated 750,000 jobs. 
Increasingly, counterfeit products pose significant health and 
safety risks as well.
    Counterfeit products range from watches and sunglasses to 
automobile and airplane parts; from baby formula and other food 
products to computer software and packaging. Counterfeited 
automobile parts such as brake pads and oil filters cost the 
domestic auto industry losses of more than $12 billion. The 
auto industry has estimated that if the sales of these 
counterfeit products were eliminated, an additional 200,000 
workers could be hired.
    The U.S. software industry has estimated that sales of 
pirated software equal more than 40 percent of the industry's 
total revenues, which is greater than some estimates of the 
entire industry's profits. The committee was shown counterfeit 
software labels and packages that were copied with such 
sophistication that they even included hologram labels on phony 
certificates of authenticity. These packages and documents 
appeared identical in every respect to the genuine articles.
    American companies spend millions of dollars to research, 
develop, test, and market their products. Developing high-
quality goods requires substantial investment before profits 
can be recouped. The theft of the value of intellectual 
property is devastating, regardless of whether the product is a 
shoe, a software program, or a motion picture. It often costs 
hundreds of thousands of dollars to prepare a product for 
market. Once such a product is sold, a counterfeiter, using 
powerful computers and copying equipment, can quickly 
manufacture and sell knock-offs for a fraction of the 
legitimate company's costs. The sales of knock-offs can reduce 
the legitimate company's opportunity to recoup its investment 
in the product. Counterfeiters and intellectual property 
pirates are increasingly efficient at getting knock-offs to 
market in a way to reap profits from legitimate businesses' 
investments. For example, according to John Bliss, president of 
the International Anti-counterfeiting Coalition, before even 
the theatrical release of the much-hyped movie ``Waterworld,'' 
which had estimated production costs in excess of $100 million, 
pirated videos of the film were being sold on the streets of 
New York.
    American companies invest in quality to develop valuable 
consumer goodwill and brand loyalty. Thomas McGann, executive 
vice-president of Burton Snowboards, testified before the 
committee that, while the injury to his company from displaced 
sales by cheap knock-offs was substantial, the real injury to 
businesses like his comes from erosion of a company's 
reputation through association of their trademark and company 
name with falsely marked products, which are likely to be of 
lower quality than the genuine ones.
    Counterfeiters can trade on the investment of genuine 
businesses in quality and goodwill, reaping profits from the 
work of others. And often, because of the sophisticated 
computers and copying equipment, organized crime syndicates can 
reproduce the products for only a few dollars. For example, 
Dempster Leech testified before the committee that 
counterfeiters can have a low-quality quartz watch, similar in 
outward appearance to a high-priced designer watch, shipped to 
the United States from Hong Kong for as little as $3. The 
counterfeiter attaches a counterfeit trade name and logo on the 
watch for 50 cents. The watch can then be sold on the street 
for $15 to $20, or more.
    Syndicates can generate millions of dollars in profit every 
year in what has been traditionally thought to be a low-risk 
criminal venture. Product counterfeiting is perceived to be 
low-risk because the perceived likelihood of being caught and 
punished is not very high and because the penalties, if caught, 
are not too great. The perception of counterfeiting as a high-
profit, low-risk venture has enticed more and more organized 
crime syndicates into the business. For example, David Thai, 
the former head of the Born to Kill gang based in New York 
City, recently stated that he made an estimated $13 million a 
year selling counterfeit Rolex and Cartier watches. Because of 
the high profit ratio compared to the small risk of being 
arrested, prosecuted, and punished, it has not taken long for 
organized crime syndicates like Mr. Thai's gang to dominate 
this illegal industry.
    In three recent raids in Los Angeles, counterfeit software 
and other material with a potential retail value in excess of 
more than $10.5 million was seized. Three Chinese triads were 
implicated in the activity. Law enforcement officials seized 
software, manuals, and hologram labels. They were surprised 
also to find four pounds of plastic explosives, two pounds of 
TNT, shotguns, handguns, and silencers.
    Sometimes the counterfeiting business becomes not just a 
method of generating money to support other nefarious 
activities, but also a low-risk method of furthering the more 
traditional criminal businesses themselves. Recently, $400,000 
worth of counterfeit handbags was seized in New Jersey. During 
the raid, law enforcement officials using drug sniffing dogs 
discovered that heroin had been stitched into the linings of 
the counterfeit Louis Vuitton handbags. The more high-risk 
contraband was masked by the apparently low-risk contraband. 
The committee has also been informed that counterfeiting 
businesses can provide a convenient method of laundering 
profits from other criminal enterprises such as drug 
trafficking.
    Perhaps the most disturbing element of the counterfeit 
consumer product business, however, is the increasing threat 
these products pose to the health and safety of every American 
man, woman, and child. For example, there have been recent 
seizures of counterfeit knock-offs of a popular infant formula. 
These counterfeit formulas could be deadly to any child who is 
allergic to the contents of the fake products and there is no 
guarantee that the counterfeit baby formulas were produced in 
safe and sanitary conditions.
    Law enforcement officials have seized counterfeit brake 
pads made from wood chips and other substandard materials that 
will fail significantly sooner than the genuine articles. 
Counterfeit brake pads made of such substandard materials have 
been found to have caused automobile traffic fatalities. Recent 
attention has been focused on the increasing danger from bogus 
airplane parts made to substandard quality which can interfere 
with the proper functioning of airplanes and, therefore, 
endanger the safety of passengers.
    Given these facts, one would expect that counterfeiting 
crimes would be a priority for law enforcement officials. In 
fact, the reverse has often been the case. This is partly a 
problem of the law itself and partly a problem of educating 
both some sectors of law enforcement and the public. Leonard 
Walton, Deputy Assistant Commissioner, Office of 
Investigations, U.S. Customs Service, testified before the 
committee that these crimes are often not taken as seriously as 
other crimes because of a lack of understanding of the real 
harms suffered by consumers and businesses and a lack of 
awareness of the close connection between these crimes and the 
more violent ones they often support.
    Existing law is still premised upon the myth that 
counterfeiting is primarily a crime committed by individuals 
operating in isolation. The law does not recognize that today 
most counterfeiters are part of an organized structure that 
more closely resembles a sophisticated international 
corporation. To combat such criminals, law enforcement officers 
must be free to attack the entire organization instead of a 
single person somewhere within the structure.
    This reality was underscored by written testimony received 
from Sgt. Tom Budds, Chief, Asian Organized Crime Unit, Los 
Angeles Sheriff's Department. He reported that the Los Angeles 
U.S. Attorney's office refused to take part in a case involving 
the seizure of more than $10.5 million in counterfeit software 
products, in part because the criminal RICO laws they 
traditionally use to combat such criminal organizations would 
not apply, since the RICO laws have no predicate offense 
involving counterfeiting.
    Moreover, there is the persistent assumption that 
counterfeiting is primarily a victimless crime. Many consumers 
are unaware of the dangerous collateral activities they are 
financing when they purchase even such seemingly harmless items 
as a counterfeit watch, handbag, or tee-shirt. According to 
testimony received by the committee, the Born to Kill gang in 
New York used the profits made from selling counterfeit watches 
to finance a variety of criminal activities in three different 
States. These included robbery, extortion, and murder. In fact, 
Mr. Thai, the leader of that gang, is now serving three 
consecutive life sentences following his conviction for 
multiple counts of murder, robbery, and extortion.
    The Anticounterfeiting Consumer Protection Act, S. 1136, 
seeks to make the dangerous crime of counterfeiting a higher 
priority for law enforcement and to provide those charged with 
enforcing the laws the tools they need to do the job. The 
committee believes that the bill will aid in fighting this 
drain on the U.S. economy, and this threat to the health and 
well-being of American citizens, and recommends its adoption by 
the Congress.

                       IV. Vote of the Committee

    On October 26, 1995, with a quorum present, the Senate 
Committee on the Judiciary accepted an amendment offered by 
Senator Leahy by unanimous consent, and then, by unanimous 
consent, ordered S. 1136 favorably reported.
    The amendment offered by Senator Leahy clarified the 
language of Section 10 of the bill to make clear that those 
subject to civil penalties for participating in the importation 
of counterfeit goods should include those who ``aid and abet'' 
rather than those ``in any way concerned in'' the activity, and 
that those penalties should be meted out at the discretion of 
the U.S. Customs Service, within the boundaries set out by 
Congress in the bill.
    The bill, as amended, is as follows:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Anticounterfeiting Consumer 
Protection Act of 1995''.

SEC. 2. FINDINGS.

    The counterfeiting of trademarked and copyrighted merchandise--
          (1) has been connected with organized crime;
          (2) deprives legitimate trademark and copyright owners of 
        substantial revenues and consumer goodwill;
          (3) poses health and safety threats to American consumers;
          (4) eliminates American jobs; and
          (5) is a multibillion-dollar drain on the United States 
        economy.

SEC. 3. COUNTERFEITING AS RACKETEERING.

     Section 1961(1)(B) of title 18, United States Code, is amended by 
inserting ``, section 2318 (relating to trafficking in counterfeit 
labels for phonorecords, computer programs or computer program 
documentation or packaging and copies of motion pictures or other 
audiovisual works), section 2319 (relating to criminal infringement of 
a copyright), section 2320 (relating to trafficking in goods or 
services bearing counterfeit marks)'' after ``sections 2314 and 2315 
(relating to interstate transportation of stolen property),''.

SEC. 4. APPLICATION TO COMPUTER PROGRAMS, COMPUTER PROGRAM 
                    DOCUMENTATION, OR PACKAGING.

     Section 2318 of title 18, United States Code, is amended--
          (1) in subsection (a), by inserting ``a computer program or 
        computer program documentation or packaging or'' after ``copy 
        of'';
          (2) in subsection (b)(3), by inserting ``computer program,'' 
        after ``motion picture,''; and
          (3) in subsection (c)(3), by inserting ``a copy of a computer 
        program or computer program documentation or packaging,'' after 
        ``enclose,''.

SEC. 5. TRAFFICKING IN COUNTERFEIT GOODS OR SERVICES.

    Section 2320 of title 18, United States Code, is amended by adding 
at the end the following new subsection:
    ``(e) Beginning with the first year after the date of enactment of 
this subsection, the Attorney General shall include in the report of 
the Attorney General to Congress on the business of the Department of 
Justice prepared pursuant to section 522 of title 28, on a district by 
district basis, for all actions involving trafficking in counterfeit 
labels for phonorecords, copies of computer programs or computer 
program documentation or packaging, copies of motion pictures or other 
audiovisual works (as defined in section 2318 of title 18), criminal 
infringement of copyrights (as defined in section 2319 of title 18), or 
trafficking in goods or services bearing counterfeit marks (as defined 
in section 2320 of title 18, an accounting of--
           ``(1) the number of open investigations;
          ``(2) the number of cases referred by the United States 
        Customs Service;
          ``(3) the number of cases referred by other agencies or 
        sources; and
          ``(4) the number and outcome, including settlements, 
        sentences, recoveries, and penalties, of all prosecutions 
        brought under sections 2318, 2319, and 2320 of title 18.''.

SEC. 6. SEIZURE OF COUNTERFEIT GOODS.

    Section 34(d)(9) of the Act of July 5, 1946 (60 Stat. 427, chapter 
540; 15 U.S.C. 1116(d)(9)), is amended by striking the first sentence 
and inserting the following: ``The court shall order that service of a 
copy of the order under this subsection shall be made by a Federal law 
enforcement officer (such as a United States marshal or an officer or 
agent of the United States Customs Service, Secret Service, Federal 
Bureau of Investigation, or Post Office) or may be made by a State or 
local law enforcement officer, who, upon making service, shall carry 
out the seizure under the order.''.

SEC. 7. RECOVERY FOR VIOLATION OF RIGHTS.

    Section 35 of the Act of July 5, 1946 (60 Stat. 427, chapter 540; 
15 U.S.C. 1117), is amended by adding at the end the following new 
subsection:
    ``(c) In a case involving the use of a counterfeit mark (as defined 
in section 34(d) (15 U.S.C. 1116(d)) in connection with the sale, 
offering for sale, or distribution of goods or services, the plaintiff 
may elect, at any time before final judgment is rendered by the trial 
court, to recover, instead of actual damages and profits under 
subsection (a), an award of statutory damages for any such use in the 
amount of--
           ``(1) not less than $500 or more than $100,000 per 
        counterfeit mark per type of goods or services sold, offered 
        for sale, or distributed, as the court considers just; or
          ``(2) if the court finds that the use of the counterfeit mark 
        was willful, not more than $1,000,000 per counterfeit mark per 
        type of goods or services sold, offered for sale, or 
        distributed, as the court considers just.''.

SEC. 8. DISPOSITION OF EXCLUDED ARTICLES.

    Section 603(c) of title 17, United States Code, is amended in the 
second sentence by striking ``as the case may be,'' and all that 
follows through the end and inserting ``as the case may be.''.

SEC. 9. DISPOSITION OF MERCHANDISE BEARING AMERICAN TRADEMARK.

    Section 526(e) of the Tariff Act of 1930 (19 U.S.C. 1526(e)) is 
amended--
          (1) in the second sentence, by inserting ``destroy the 
        merchandise. Alternatively, if the merchandise is not unsafe or 
        a hazard to health, and the Secretary has the consent of the 
        trademark owner, the Secretary may'' after ``shall, after 
        forfeiture,'';
          (2) by inserting ``or'' at the end of paragraph (2);
          (3) by striking ``, or'' at the end of paragraph (3) and 
        inserting a period; and
          (4) by striking paragraph (4).

SEC. 10. CIVIL PENALTIES.

    Section 526 of the Tariff Act of 1930 (19 U.S.C. 1526) is amended 
by adding at the end the following new subsection:
     ``(f)(1) Any person who directs, assists financially or otherwise, 
or aids and abets the importation of merchandise for sale or public 
distribution that is seized under subsection (e) shall be subject to a 
civil fine.
     ``(2) For the first such seizure, the fine shall be not more than 
the value that the merchandise would have had if it were genuine, 
according to the manufacturer's suggested retail price, determined 
under regulations promulgated by the Secretary.
     ``(3) For the second seizure and thereafter, the fine shall be not 
more than twice the value that the merchandise would have had if it 
were genuine, as determined under regulations promulgated by the 
Secretary.
     ``(4) The imposition of a fine under this subsection shall be 
within the discretion of the United States Customs Service, and shall 
be in addition to any other civil or criminal penalty or other remedy 
authorized by law.''.

SEC. 11. PUBLIC DISCLOSURE OF AIRCRAFT MANIFESTS.

     Section 431(c)(1) of the Tariff Act of 1930 (19 U.S.C. 1431(c)(1)) 
is amended--
          (1) in the matter preceding subparagraph (A), by inserting 
        ``vessel or aircraft'' before ``manifest'';
          (2) by amending subparagraph (D) to read as follows:
                  ``(D) The name of the vessel, aircraft, or 
                carrier.'';
          (3) by amending subparagraph (E) to read as follows:
                  ``(E) The seaport or airport of loading.''; and
          (4) by amending subparagraph (F) to read as follows:
                  ``(F) The seaport or airport of discharge.''.

SEC. 12. CUSTOMS ENTRY DOCUMENTATION.

    Section 484(d) of the Tariff Act of 1930 (19 U.S.C. 1484(d)) is 
amended--
          (1) by striking ``Entries'' and inserting ``(1) Entries''; 
        and
          (2) by adding at the end the following new paragraph:
                  ``(2) The Secretary, in prescribing regulations 
                governing the content of entry documentation, shall 
                require that entry documentation contain such 
                information as may be necessary to determine whether 
                the imported merchandise bears an infringing trademark 
                in violation of section 42 of the Act of July 5, 1946 
                (60 Stat. 440, chapter 540; 15 U.S.C. 1124) or any 
                other applicable law, including a trademark appearing 
                on the goods or packaging.''.

SEC. 13. UNLAWFUL USE OF VESSELS, VEHICLES, AND AIRCRAFT IN AID OF 
                    COMMERCIAL COUNTERFEITING.

    Section 80302(a) of title 49, United States Code, is amended--
          (1) by striking ``or'' at the end of paragraph (4);
          (2) by striking the period at the end of paragraph (5) and 
        inserting ``; or''; and
          (3) by adding at the end the following new paragraph:
                  ``(6)(A) A counterfeit label for a phonorecord, 
                computer program or computer program documentation or 
                packaging or copy of a motion picture or other 
                audiovisual work (as defined in section 2318 of title 
                18);
                  ``(B) a phonorecord or copy in violation of section 
                2319 of title 18; or
                  ``(C) any good bearing a counterfeit mark (as defined 
                in section 2320 of title 18).''.

SEC. 14. REGULATIONS.

    Not later than 6 months after the date of enactment of this Act, 
the Secretary of the Treasury shall prescribe such regulations or 
amendments to existing regulations that may be necessary to implement 
and enforce this Act.

                     V. Section-by-Section Analysis

                         section 1. short title

    This section sets forth the title of the Act, the 
``Anticounterfeiting Consumer Protection Act of 1995''.

                          section 2. findings

    This section contains the findings, which state that the 
counterfeiting of trademarked and copyrighted merchandise (1) 
has been connected with organized crime; (2) deprives 
legitimate trademark and copyright owners of substantial 
revenues and consumer goodwill; (3) poses health and safety 
threats to American consumers; (4) eliminates American jobs; 
and (5) is a multibillion-dollar drain on the United States 
economy.

               section 3. counterfeiting as racketeering

    This section amends section 1961(1)(B) of title 18 to make 
trafficking in counterfeit goods a Racketeer Influenced and 
Corrupt Organizations (RICO) predicate offense. By extending 
the Federal RICO statute to cover criminal infringement and 
trafficking in counterfeit products, including phonorecords, 
computer programs, and video products, the act expands the 
power of law enforcement to seize the fruits, raw materials, 
and tools of criminal counterfeiting enterprises and provides 
an additional statutory basis for prosecution of 
counterfeiters. This section makes it possible to combat the 
entire structure of a counterfeiting organization, from those 
providing the financing to those involved in the manufacture, 
distribution, and sale of the copies. And, it enhances the 
penalties faced by those criminal organizations engaging in 
this illegal enterprise.

     section 4. application to computer programs, computer program 
                      documentation, or packaging

    This section amends section 2318 of title 18 to make it a 
crime to traffic in computer software programs, computer 
program labels and computer software packaging. The prohibition 
in current law only applies to record and video labels. The 
section will make sure that the same protections provided these 
products will also be available for the computer industry, one 
of the primary targets of counterfeiting operations today. In 
addition, by including the trafficking of counterfeit labels 
and packaging under RICO, a counterfeiter will no longer be 
able to traffic in the components of a computer software 
product, closing a potential legal loophole.

        section 5. trafficking in counterfeit goods or services

    This section, which amends section 2320 of title 18, 
requires the U.S. Attorney General to include in his or her 
annual report to Congress statistics relating to all criminal 
counterfeiting actions. This provision will make it easier to 
assess the extent to which commercial counterfeiting is being 
investigated and prosecuted by federal officials. In addition, 
according to testimony received by the committee, several 
witnesses concluded that requiring statistical reporting by the 
Attorney General of anticounterfeiting activities will 
facilitate prosecution of these offenses.

                section 6. seizure of counterfeit goods

    This provision amends section 34(d)(9) of the Lanham Act to 
make it clear that in a civil action, any Federal or local law 
enforcement officer can execute a seizure order, which reduces 
the risk that seizure orders will go unexecuted because of a 
personnel shortage of any particular law enforcement 
department. This provision also removes any confusion about 
whether local law enforcement officers may execute a Federal 
court's seizure order. This provision does not interfere with 
constitutional concerns relating to comity between Federal and 
State governments, however. The language allowing State and 
local law enforcement officers to carry out seizure orders is 
permissive, not mandatory. Consequently, a State or local law 
enforcement officer could not be compelled to execute a Federal 
court's order. Moreover, by making it clear that any Federal or 
local officer may carry out the seizure, it may be easier for 
civil litigants to actually seize counterfeit goods before the 
counterfeiters are able to move their products to another 
jurisdiction.

              section 7. recovery for violation of rights

    This section amends section 35 of the Lanham Act, allowing 
civil litigants the option of obtaining discretionary, 
judicially imposed damages in trademark counterfeiting cases, 
instead of actual damages. The committee recognizes that under 
current law, a civil litigant may not be able to prove actual 
damages if a sophisticated, large-scale counterfeiter has 
hidden or destroyed information about his counterfeiting.
    Moreover, counterfeiters' records are frequently 
nonexistent, inadequate or deceptively kept in order to 
willfully deflate the level of counterfeiting activity actually 
engaged in, making proving actual damages in these cases 
extremely difficult if not impossible. Enabling trademark 
owners to elect statutory damages is both necessary and 
appropriate in light of the deception routinely practiced by 
counterfeiters. The amounts are appropriate given the extent of 
damage done to business goodwill by infringement of trademarks.

              section 8. disposition of excluded articles

    This section eliminates a provision found in section 603(c) 
of title 17 that has been interpreted to allow seized pirated 
goods to be returned to the importer. Custom officials have 
complained of a frustrating cycle under current law. Pirated 
goods are seized at one location and then returned to the 
importer. This individual then tries to bring the same products 
into the country at a different location. There have been times 
when U.S. Customs Service officials have seized the same goods 
three and four times. Under this section, the rule would be for 
government officials to destroy pirated products once they are 
seized.

    section 9. disposition of merchandise bearing american trademark

    This provision amends section 526(e) of the Tariff Act to 
ensure that counterfeits of American products are routinely 
destroyed, unless there is no public safety risk and the 
trademark owner agrees to some other disposition of the 
merchandise (e.g., delivery of the merchandise to charity). 
Once again, this provision is necessary to ensure that 
counterfeited merchandise is not returned to the criminal 
importer who will simply redistribute the counterfeit goods.

                      section 10. civil penalties

    This section amends section 526 of the Tariff Act to allow 
a U.S. Customs Service officer to impose civil fines on those 
involved in the importation of counterfeit goods. This 
provision gives the U.S. Customs Service the discretion to 
impose a fine, up to the value of the merchandise if it were 
genuine, for the first seizure. For the second and subsequent 
seizures, the fine may be an amount up to twice the value of 
the merchandise if it were genuine. This provision has two 
primary purposes. First, it will provide a deterrent to 
counterfeiting in cases in which resources are not available to 
bring a criminal case. Second, it makes penalties related to 
counterfeit products at least as stringent as those penalties 
applied to counterfeits made in this country.

          section 11. public disclosure of aircraft manifests

    This section amends section 431(c)(1) of the Tariff Act to 
permit public disclosure of aircraft manifests under the same 
terms currently allowed for sea shipments. Under current law, 
the U.S. Customs Service routinely discloses information 
relating to the nature of shipments imported by sea. This 
information has proven to be extremely valuable to U.S. 
trademark holders who are trying to trace or interdict the 
entry of counterfeit goods.
    Additional authority is needed, however, to disclose the 
same information for shipments by air. Since most low-weight, 
high value counterfeits are shipped by air, trademark holders 
need access to air shipment data as well as sea shipment data 
if they are to be able to better assist enforcement officials 
in identifying counterfeiters and stopping the flow of 
fraudulent goods transported in this manner. Moreover, this 
provision eliminates the unwarranted and out-of-date 
distinction between information required about goods shipped by 
sea as compared to goods shipped by air.

                section 12. customs entry documentation

    This section amends section 484(d) of the Tariff Act to 
require that the U.S. Customs Service's entry documentation, 
required to be completed by importers, provide information 
about trademarks on their goods or packaging that would help 
the U.S. Customs Service to determine whether those trademarks 
are valid.
    This provision enables the Customs Service, assisted by 
trademark owners, to identify shipments likely to contain 
counterfeit products because they come from a location where 
goods bearing a particular mark are not legitimately 
manufactured. For example, information that a shipment of Rolex 
watches originated from China would cause concern since Rolex 
watches are manufactured only in Switzerland.
    This provision should not be burdensome to legitimate 
businesses or to the U.S. Customs Service since most businesses 
already identify their trademarks on shipping documents, and 
identification of the trademark would add very little to the 
other shipping data already required to be recorded. Requiring 
trademark information to appear on entry documentation could 
significantly assist both law enforcement personnel and 
trademark owners to identify counterfeit goods and to locate 
both counterfeiters and importers of counterfeit goods. Because 
of the role of trademark owners in this process, the trademark 
information contained in the entry documentation should be made 
publicly available in a form that permits the trademark owner 
to discover shipments purporting to contain its products.
    In promulgating regulations under this section, the 
Secretary should ensure that such information is made publicly 
available in an expeditious and efficient manner. To accomplish 
this end, the Secretary may require that trademark information 
be included on vessel or aircraft manifests (as prescribed by 
19 U.S.C. 1431). If the Secretary does so, this information 
should be made publicly available in a manner consistent with 
the way other manifest data is made publicly available.

 SECTION 13. UNLAWFUL USE OF VESSELS, VEHICLES, AND AIRCRAFT IN AID OF 
                       COMMERCIAL COUNTERFEITING

    This section amends section 80302(a) of title 49 to include 
counterfeit goods as ``contraband'' items. This allows law 
enforcement officials to seize vehicles, vessels, and aircraft 
used in counterfeiting operations. This provision will assist 
law enforcement officials to combat today's highly organized 
counterfeiters. Since other contraband products already listed 
under current law, such as narcotics, are routinely shipped by 
organized crime syndicates, this provision simply adds the most 
recent of organized crime's illegal product lines to the list 
of contraband products. Indeed, the committee heard testimony 
regarding an instance in which counterfeit handbags were 
imported into the United States carrying concealed quantities 
of other contraband, including drugs such as heroin.

                        SECTION 14. REGULATIONS

    This section requires the Secretary of the Treasury to 
prescribe any necessary regulations governing application of 
this act no later than 6 months after the date of enactment of 
this act.

                           VI. Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, November 2, 1995.
Hon. Orrin G. Hatch,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, D.C.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed S. 1136, the Anticounterfeiting Consumer Protection 
Act of 1995, as ordered reported by the Senate Committee on the 
Judiciary on October 26, 1995. CBO estimates that enacting this 
legislation would have no significant impact on the federal 
budget. While the bill could lead to increases in both direct 
spending and receipts, the amounts involved would be less than 
$500,000 a year. Because S. 1136 could affect direct spending 
and receipts, pay-as-you-go procedures would apply. The bill 
would not affect the budgets of state or local governments.
    S. 1136 would make several changes to current law that aim 
to prevent commercial counterfeiting. Violators of certain 
provisions would be subject to civil or criminal fines, or 
forfeiture of assets.
    Enacting S. 1136 could increase governmental receipts from 
additional fine collections, but we estimate that any such 
increase would be less than $500,000 annually. Civil penalties 
would be recorded in the budget as miscellaneous receipts to 
the Treasury. Criminal fines would be deposited in the Crime 
Victims Fund and would be spent in the following year. (Thus, 
direct spending from the fund would match the increase in 
revenues with a one-year lag.) Enacting this legislation also 
could increase governmental receipts from additional 
forfeitures of criminals' assets, but we estimate that any such 
increase also would be less than $500,000 annually in value. 
Proceeds from the sale of any such assets would be deposited as 
revenues into the Assets Forfeiture Fund of the Department of 
Justice and spent out of the fund in the same year. Thus, 
direct spending from the Assets Forfeiture Fund would match any 
increase in revenues.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz.
            Sincerely,
                                         June E. O'Neill, Director.

                    VII. Regulatory Impact Statement

    In accordance with paragraph 11(b), rule XXVI of the 
Standing Rules of the Senate, the Committee, after due 
consideration, concludes that the act will not have significant 
regulatory impact.

                     VIII. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the changes in existing law made 
by the bill, as reported by the committee, are shown as follows 
(existing law proposed to be omitted is enclosed in bold 
brackets, new matter is printed in italic, and existing law 
with no changes is printed in roman):

                           UNITED STATES CODE

          * * * * * * *

                      TITLE 15--COMMERCE AND TRADE

          * * * * * * *

                         CHAPTER 22--TRADEMARKS

          * * * * * * *

Sec. 1116. Injunctive relief

    (a) Jurisdiction; Service.--* * *
          * * * * * * *
    (d) Civil Actions Arising Out of Use of Counterfeit 
Marks.--(1)(A) In the case of a civil action arising under 
section 1114(1)(a) of this title or section 380 of Title 36 
with respect to a violation that consists of using a 
counterfeit mark in connection with the sale, offering for 
sale, or distribution of goods or services, the court may, upon 
ex parte application, grant an order under subsection (a) of 
this section pursuant to this subsection providing for the 
seizure of goods and counterfeit marks involved in such 
violation and the means of making such marks, and records 
documenting the manufacture, sale, or receipt of things 
involved in such violation.
          * * * * * * *
    (9) [The court shall order that a United States marshal or 
other law enforcement officer is to serve a copy of the order 
under this subsection and then is to carry out the seizure 
under such order.] The court shall order that service of a copy 
of the order under this subsection shall be made by a Federal 
law enforcement officer (such as a United States marshal or an 
officer or agent of the United States Customs Service, Secret 
Service, Federal Bureau of Investigation, or Post Office) or 
may be made by a State or local law enforcement officer, who, 
upon making service, shall carry out the seizure under the 
order. The court shall issue orders, when appropriate, to 
protect the defendant from undue damage from the disclosure of 
trade secrets or other confidential information during the 
course of the seizure, including, when appropriate, orders 
restricting the access of the applicant (or any agent or 
employee of the applicant) to such secrets or information.
          * * * * * * *

Sec. 1117. Recovery for violation of rights

    (a) Profits; Damages and Costs; Attorney Fees.--* * *
          * * * * * * *
    (c) In a case involving the use of a counterfeit mark (as 
defined in section 34(d) (15 U.S.C. 1116(d)) in connection with 
the sale, offering for sale, or distribution of goods or 
services, the plaintiff may elect, at any time before final 
judgment is rendered by the trial court, to recover, instead of 
actual damages and profits under subsection (a), an award of 
statutory damages for any such use in the amount of--
          (1) not less than $500 or more than $100,000 per 
        counterfeit mark per type of goods or services sold, 
        offered for sale, or distributed, as the court 
        considers just; or
      (2) if the court finds that the use of the counterfeit 
mark was willful, not more than $1,000,000 per counterfeit mark 
per type of goods or services sold, offered for sale, or 
distributed, as the court considers just.
          * * * * * * *

                          TITLE 17--COPYRIGHTS

          * * * * * * *

         CHAPTER 6--MANUFACTURING REQUIREMENTS AND IMPORTATION

          * * * * * * *

Sec. 603. Importation prohibitions: Enforcement and dispositions of 
                    excluded articles

    (a) The Secretary of the Treasury and the United States 
Postal Service shall separately or jointly make regulations for 
the enforcement of the provisions of this title prohibiting 
importation.
          * * * * * * *
    (c) Articles imported in violation of the importation 
prohibitions of this title are subject to seizure and 
forfeiture in the same manner as property imported in violation 
of the customs revenue laws. Forfeited articles shall be 
destroyed as directed by the Secretary of the Treasury or the 
court, [as the case may be, however, the articles may be 
returned to the country of export whenever it is shown to the 
satisfaction of the Secretary of the Treasury that the importer 
had no reasonable grounds for believing that his or her acts 
constituted a violation of law] as the case may be.
          * * * * * * *

                TITLE 18--CRIMES AND CRIMINAL PROCEDURE

          * * * * * * *

       CHAPTER 96--RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS

          * * * * * * *

Sec. 1961. Definitions

    As used in this chapter--
          (1) ``racketeering activity'' means (A) any act or 
        threat involving murder, kidnapping, gambling, arson, 
        robbery, bribery, extortion, dealing in obscene matter, 
        or dealing in a controlled substance or listed chemical 
        (as defined in section 102 of the Controlled Substances 
        Act), which is chargeable under State law and 
        punishable by imprisonment for more than one year; (B) 
        any act which is indictable under any of the following 
        provisions of title 18, United States Code: Section 201 
        (relating to bribery), section 224 (relating to sports 
        bribery), sections 471, 472, and 473 (relating to 
        counterfeiting), section 659 (relating to theft from 
        interstate shipment) if the act indictable under 
        section 659 is felonious, section 664 (relating to 
        embezzlement from pension and welfare funds), sections 
        891-894 (relating to extortionate credit transactions), 
        section 1029 (relating to fraud and related activity in 
        connection with access devices), section 1084 (relating 
        to the transmission of gambling information), section 
        1341 (relating to mail fraud), section 1343 (relating 
        to wire fraud), section 1344 (relating to financial 
        institution fraud), sections 1461-1465 (relating to 
        obscene matter), section 1503 (relating to obstruction 
        of justice), section 1510 (relating to obstruction of 
        criminal investigations), section 1511 (relating to the 
        obstruction of State or local law enforcement), section 
        1512 (relating to tampering with a witness, victim, or 
        an informant), section 1513 (relating to retaliating 
        against a witness, victim, or an informant), section 
        1951 (relating to interference with commerce, robbery, 
        or extortion), section 1952 (relating to racketeering), 
        section 1953 (relating to interstate transportation of 
        wagering paraphernalia), section 1954 (relating to 
        unlawful welfare fund payments), section 1955 (relating 
        to the prohibition of illegal gambling businesses), 
        section 1956 (relating to the laundering of monetary 
        instruments), section 1957 (relating to engaging in 
        monetary transactions in property derived from 
        specified unlawful activity), section 1958 (relating to 
        use of interstate commerce facilities in the commission 
        of murder-for-hire), sections 2251, 2251A, 2252, and 
        2258 (relating to sexual exploitation of children), 
        sections 2312 and 2313 (relating to interstate 
        transportation of stolen motor vehicles), sections 2314 
        and 2315 (relating to interstate transportation of 
        stolen property) section 2318 (relating to trafficking 
        in counterfeit labels for phonorecords, computer 
        programs or computer program documentation or packaging 
        and copies of motion pictures or other audiovisual 
        works), section 2319 (relating to criminal infringement 
        of a copyright), section 2320 (relating to trafficking 
        in goods or services bearing counterfeit marks), 
        section 2321 (relating to trafficking in certain motor 
        vehicles or motor vehicle parts), sections 2341-2346 
        (relating to trafficking in contraband cigarettes), 
        section 2421-24 (relating to white slave traffic), (C) 
        any act which is indictable under title 29, United 
        States Code, section 186 (dealing with restrictions on 
        payments and loans to labor organizations) or section 
        501(c) (relating to embezzlement from union funds), (D) 
        any offense involving fraud connected with a case under 
        title 11 (except a case under section 157 of that title 
        \1\), fraud in the sale of securities, or the felonious 
        manufacture, importation, receiving, concealment, 
        buying, selling, or otherwise dealing in a controlled 
        substance or listed chemical (as defined in section 102 
        of the Controlled Substances Act), punishable under any 
        law of the United States, or (E) any act which is 
        indictable under the Currency and Foreign Transactions 
        Reporting Act;
          * * * * * * *

                      CHAPTER 113--STOLEN PROPERTY

          * * * * * * *

Sec. 2318. Trafficking in counterfeit labels for phonorecords and 
                    copies of motion pictures or other audiovisual 
                    works

    (a) Whoever, in any of the circumstances described in 
subsection (c) of this section, knowingly traffics in a 
counterfeit label affixed or designed to be affixed to a 
phonorecord, or a copy of a computer program or computer 
program documentation or packaging or a motion picture or other 
audiovisual work, shall be fined under this title or imprisoned 
for not more than five years, or both.
    (b) As used in this section--
          (1) the term ``counterfeit label'' means an 
        identifying label or container that appears to be 
        genuine, but is not;
          (2) the term ``traffic'' means to transport, transfer 
        or otherwise dispose of, to another, as consideration 
        for anything of value or to make or obtain control of 
        with intent to so transport, transfer or dispose of; 
        and
          (3) the terms ``copy'', ``phonorecord'', ``motion 
        picture'', ``computer program,'' and ``audiovisual 
        work'' have, respectively, the meanings given those 
        terms in section 101 (relating to definitions) of title 
        17.
    (c) The circumstances referred to in subsection (a) of this 
section are--
          (1) the offense is committed within the special 
        maritime and territorial jurisdiction of the United 
        States; or within the special aircraft jurisdiction of 
        the United States (as defined in section 46501 of title 
        49);
          (2) the mail or a facility of interstate or foreign 
        commerce is used or intended to be used in the 
        commission of the offense; or
          (3) the counterfeit label is affixed to or encloses, 
        or is designed to be affixed to or enclose, a copy of a 
        computer program or computer program documentation or 
        packaging, a copyrighted motion picture or other 
        audiovisual work, or a phonorecord of a copyrighted 
        sound recording.
          * * * * * * *

Sec. 2320. Trafficking in counterfeit goods or services

    (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 shall, if an 
individual, be fined not more than $2,000,000 or imprisoned not 
more than 10 years, or both, and, if a person other than an 
individual, be fined not more than $5,000,000. In the case of 
an offense by a person under this section that occurs after 
that person is convicted of another offense under this section, 
the person convicted, if an individual, shall be fined not more 
than $5,000,000 or imprisoned not more than 20 years, or both, 
and if other than an individual, shall be fined not more than 
$15,000,000.
          * * * * * * *
    (e) Beginning with the first year after the date of 
enactment of this subsection, the Attorney General shall 
include in the report of the Attorney General to Congress on 
the business of the Department of Justice prepared pursuant to 
section 522 of title 28, on a district by district basis, for 
all actions involving trafficking in counterfeit labels for 
phonorecords, copies of computer programs or computer program 
documentation or packaging, copies of motion pictures or other 
audiovisual works (as defined in section 2318 of title 18), 
criminal infringement of copyrights (as defined in section 2319 
of title 18), or trafficking in goods or services bearing 
counterfeit marks (as defined in section 2320 of title 18, an 
accounting of--
          (1) the number of open investigations;
          (2) the number of cases referred by the United States 
        Customs Service;
          (3) the number of cases referred by other agencies or 
        sources; and
          (4) the number and outcome, including settlements, 
        sentences, recoveries, and penalties, of all 
        prosecutions brought under sections 2318, 2319, and 
        2320 of title 18.
          * * * * * * *

                        TITLE 19--CUSTOMS DUTIES

          * * * * * * *

                     CHAPTER 4--TARIFF ACT OF 1930

          * * * * * * *

Sec. 1431. Manifests; requirement, form, and contents

    (a) In General.--Every vessel required to make entry under 
section 1434 of this title or obtain clearance under section 91 
of the Appendix to Title 46 shall have a manifest that complies 
with the requirements prescribed under subsection (d) of this 
section.
          * * * * * * *
    (c) Public Disclosure of Information.--(1) Except as 
provided in subparagraph (2), the following information, when 
contained in such vessel or aircraft manifest, shall be 
available for public disclosure:
          (A) The name and address of each importer or 
        consignee and the name and address of the shipper to 
        such importer or consignee, unless the importer or 
        consignee has made a biennial certification, in 
        accordance with procedures adopted by the Secretary of 
        the Treasury, claiming confidential treatment of such 
        information.
          (B) The general character of the cargo.
          (C) The number of packages and gross weight.
          [(D) The name of the vessel or carrier.]
          (D) The name of the vessel, aircraft, or carrier.
          [(E) The port of loading.]
          (E) The seaport or airport of loading.
          [(F) The port of discharge.]
          (F) The seaport or airport of discharge.
          (G) The country of origin of the shipment.
          * * * * * * *

Sec. 1484. Entry of merchandise

    (a) Requirement and Time.--(1) Except as provided in 
sections 1490, 1498, 1552, 1553, and 1336(j) of this title, one 
of the parties qualifying as ''importer of record'' under 
paragraph (2)(B), either in person or by an agent authorized by 
the party in writing, shall, using reasonable care--
          * * * * * * *
    (d) Signing and Contents.--[Entries] (1) Entries shall be 
signed by the importer of record, or his agent, unless filed 
pursuant to an electronic data interchange system. If 
electronically filed, each transmission of data shall be 
certified by an importer of record or his agent, one of whom 
shall be resident in the United States for purposes of 
receiving service of process, as being true and correct to the 
best of his knowledge and belief, and such transmission shall 
be binding in the same manner and to the same extent as a 
signed document. The entry shall set forth such facts in regard 
to the importation as the Secretary may require and shall be 
accompanied by such invoices, bills of lading, certificates, 
and documents, or their electronically submitted equivalents, 
as are required by regulation.
    (2) The Secretary, in prescribing regulations governing the 
content of entry documentation, shall require that entry 
documentation contain such information as may be necessary to 
determine whether the imported merchandise bears an infringing 
trademark in violation of section 42 of the Act of July 5, 1946 
(60 Stat. 440, chapter 540; 15 U.S.C. 1124) or any other 
applicable law, including a trademark appearing on the goods of 
packaging.
          * * * * * * *

Sec. 1526. Merchandise bearing American trademark

                         importation prohibited

    (a) Except as provided in subsection (d) of this section, 
it shall be unlawful to import into the United States any 
merchandise of foreign manufacture if such merchandise, or the 
label, sign, print, package, wrapper, or receptacle, bears a 
trademark owned by a citizen of, or by a corporation or 
association created or organized within, the United States, and 
registered in the Patent and Trademark Office by a person 
domiciled in the United States, under the provisions of 
sections 81 to 109 of Title 15, and if a copy of the 
certificate of registration of such trademark is filed with the 
Secretary of the Treasury, in the manner provided in section 
106 of said Title 15, unless written consent of the owner of 
such trademark is produced at the time of making entry.
          * * * * * * *
    (e) Merchandise Bearing Counterfeit Mark; Seizure and 
Forfeiture; Disposition of Seized Goods.--Any such merchandise 
bearing a counterfeit mark (within the meaning of section 1127 
of Title 15) imported into the United States in violation of 
the provisions of section 1124 of Title 15, shall be seized 
and, in the absence of the written consent of the trademark 
owner, forfeited for violations of the customs laws. Upon 
seizure of such merchandise, the Secretary shall notify the 
owner of the trademark, and shall, after forfeiture, destroy 
the merchandise. Alternatively, if the merchandise is not 
unsafe or a hazard to health, and the Secretary has the consent 
of the trademark owner, the Secretary may obliterate the 
trademark where feasible and dispose of the goods seized--
          (1) by delivery to such Federal, State, and local 
        government agencies as in the opinion of the Secretary 
        have a need for such merchandise,
          (2) by gift to such eleemosynary institutions as in 
        the opinion of the Secretary or have a need for such 
        merchandise, or
          (3) more than 1 year after the date of forfeiture, by 
        sale by appropriate customs officers at public auction 
        under such regulations as the Secretary prescribes, 
        except that before making any such sale the Secretary 
        shall determine that no Federal, State, or local 
        government agency or eleemosynary institution has 
        established a need for such merchandise under paragraph 
        (1) or (2)[, or].
          [(4) if the merchandise is unsafe or a hazard to 
        health, by destruction.]
    (f)(1) Any person who directs, assists financially or 
otherwise, or is in any way concerned in the importation of 
merchandise for sale or public distribution that is seized 
under subsection (e) shall be subject to a civil fine.
    (2) For the first such seizure, the fine shall be equal to 
the value that the merchandise would have had if it were 
genuine, according to the manufacturer's suggested retail 
price, determined under regulations promulgated by the 
Secretary.
    (3) For the second seizure and thereafter, the fine shall 
be equal to twice the value that the merchandise would have had 
if it were genuine, as determined under regulations promulgated 
by the Secretary.
    (4) The imposition of a fine under this subsection shall be 
within the discretion of the United States Customs Service, and 
shall be in addition to any other civil or criminal penalty or 
other remedy authorized by law.
          * * * * * * *

                        TITLE 49--TRANSPORTATION

          * * * * * * *

                        CHAPTER 803--CONTRABAND

          * * * * * * *

Sec. 80302. Prohibitions

    (a) Definition.--In this section, ``contraband'' means--
          (1) a narcotic drug (as defined in section 102 of the 
        Comprehensive Drug Abuse Prevention and Control Act of 
        1970 (21 U.S.C. 802)), including marijuana (as defined 
        in section 102 of that Act (21 U.S.C. 802)), that--
          * * * * * * *
          (4) material or equipment used, or intended to be 
        used, in making a coin, obligation, or other security 
        referred to in clause (3) of this subsection; [or]
          (5) a cigarette involved in a violation of chapter 
        114 of title 18 or a regulation prescribed under 
        chapter 114[.] ; or
          (6)(A) A counterfeit label for a phonorecord, 
        computer program or computer program documentation of 
        packaging or copy of a motion picture or other 
        audiovisual work (as defined in section 2318 of title 
        18);
          (B) a phonorecord or copy in violation of section 
        2319 of title 18; or
          (C) any good bearing a counterfeit mark (as defined 
        in section 2320 of title 18).
          * * * * * * *