Congress attempts to upgrade border remedies and criminal penalties against counterfeits

United States of America
Three new anti-counterfeiting bills were introduced in the US Congress between November 8 and 17 2011.
 
The first bill, the Protect American Innovation Act 2011 (112th Congress, S 1830) was introduced by Senator Deborah A Stabenow (Dem Mich) on November 8 2011. The bill seeks to establish a 'three strikes' penalty against importers of counterfeit goods, which would empower the US International Trade Commission to ban further imports by repeat offenders and visas for individual offenders.
 
The bill also seeks to coordinate and enhance anti-counterfeiting enforcement efforts through the US Treasury Department and US Customs and Border Protection (CBP) by:
  • establishing “director[s] of IP rights enforcement in the US Department of the Treasury” and CBP;
  • directing the CBP to provide additional training in enforcement technologies and update its recordation procedures; and
  • establishing a programme to identify high and low risk importers, thereby reducing burdens on entities with a record of IP compliance and increasing scrutiny of bad actors.
Currently, the Protect American Innovation Act 2011 rests with the Senate Finance Committee.
 
The second bill, the American Growth, Recovery, Empowerment and Entrepreneurship Act (the AGREE Act) (112th Congress, S 1866) was introduced by Senators Marco Rubio (Rep Fla) and Chris Coons (Dem Del) on November 15 2011. The AGREE Act seeks to correct a flaw in the Uniform Trade Secrets Act, which currently deters CBP employees from sharing suspected counterfeit products with brand owners because of potential liability for inadvertently disclosing trade secrets. The AGREE Act authorises the CBP to “share information on, and unredacted samples of, products… with the rights holders of the trademark suspected of being copied or simulated, for the purpose of determining whether the products are prohibited from importation...”.
 
The AGREE Act is not the first bill aimed at correcting this problem. Similar language can be found in both the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act 2011 (PROTECT IP Act) (112th Congress, S 968), which is expected to reach the Senate floor for a vote later in the year or early 2012, and the Currency Exchange Rate Oversight Reform Act (112th Congress, S 1619), which was passed in the Senate on October 11 2011 and has not yet been referred to a committee in the House of Representatives.
 
Currently, the AGREE Act also rests with the Senate Finance Committee. 
 
The third bill, the Counterfeit Drug Penalty Enhancement Act of 2011 (112th Congress, S 1886 and HR 3468), is actually two counterpart bills by the same name, introduced by Senator Patrick J Leahy (Dem Vt) in the Senate and Representative Patrick L Meehan (Rep Pa) in the House of Representatives on November 17 2011. Both bills seek to increase the maximum penalties for trafficking in counterfeit pharmaceuticals.
 
According to Senator Leahy, “[u]nder current law, it is illegal to introduce counterfeit drugs into interstate commerce, but the penalties are no different than those assessed for trafficking other counterfeit products, such as handbags or sneakers”.

Currently, maximum penalties for trafficking in all counterfeit goods are $2 million in fines and/or 10 years in prison for individuals, and $5 million in fines for entities. Maximum penalties for repeat offenders are $5 million in fines and/or 20 years in prison for individuals, and $15 million in fines for entities (18 USC § 2320(a)).
 
The Counterfeit Drug Penalty Enhancement Act 2011 would increase maximum penalties for trafficking in counterfeit drugs to $4 million in fines and/or life in prison for individuals, and $10 million in fines for entities. Maximum penalties for repeat infringers would increase to $8 million in fines and/or life in prison for individuals, as well as $20 million in fines for entities. Both bills have been referred to their respective judiciary committees. 
 
In a very short period of time - a little over one week - the US Congress has demonstrated its commitment to crack down on the importation of counterfeit goods, including counterfeit drugs. Because a significant percentage of the US economy consists of IP-intensive industries, combating counterfeit imports will continue to be a legislative priority.
 
James L Bikoff, David K Heasley and Phillip V Marano, Silverberg Goldman & Bikoff LLP, Washington DC

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