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Statements on Introduced Bills and Joint Resolutions

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STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. BIDEN (for himself, Mr. HOLLINGS, Mrs. MURRAY, Mr. SMITH, and Mr. ALLEN):
S. 2227. A bill to prevent and punish counterfeiting and copyright piracy, and for other purposes; to the Committee on the Judiciary.
Mr. BIDEN. Mr. President, I rise today to introduce the Anticounterfeiting Act of 2004, along with Senators MURRAY, HOLLINGS, SMITH, and ALLEN.
Two years ago, I held a hearing entitled, "Theft of American Intellectual Property: Fighting Crime Abroad and At Home," and I issued a report on the status of our fight against this crime. Today, I attended a hearing chaired by Senator Specter on a similar topic, again driving home for me the serious problems encountered in today's world by American intellectual property.
What I have learned is that every day, thieves steal millions of dollars of American intellectual property from its rightful owners. Over a hundred thousand American jobs are lost as a result.
American innovation and creativity need to be protected by our government no less than our personal property, our homes and our streets. The Founding Fathers had the foresight to provide for protection of intellectual property, giving Congress the power to "promote the progress of science and useful arts" by providing copyrights and patents.
American intellectual property represents the largest single sector of the American economy, employing 4.7 million Americans. It has been estimated that software piracy alone cost the U.S. economy over 118,000 jobs and $5.7 billion in wage losses in the year 2000. Even more, the International Planning and Research Corporation estimates that the government loses more than a billion dollars worth of revenue every year from intellectual property theft.
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To put that in perspective, with a billion dollars in additional revenue, the American government could pay for child care services for more than 100,000 children annually. Alternatively, $1 billion could be used to fund a Senate proposal to assist schools nationally with emergency school renovations and repairs.
There is another problem. Counterfeiters of software, music CDs and motion pictures are now tampering with authentication features. Holograms, certificates of authenticity, watermarks and other security features allow the copyright owners to distinguish genuine works from counterfeits. But now, highly sophisticated counterfeiters have found ways to tamper with these features to make counterfeit products appear genuine and to increase the selling price of genuine products and licenses. Put another way, not only do crooks illegally copy American intellectual property, they also now illegally fake or steal the very features property owners use to prevent that theft.
Copyrights mean nothing if government authorities fail to enforce the protections they provide intellectual property owners. The criminal code has not kept up with the counterfeiting operations of today's high-tech pirates, and it's time to make sure that it does. The Anticounterfeiting Act of 2004 updates and strengthens the Federal criminal code, which currently makes it a crime to traffic in counterfeit labels or copies of certain forms of intellectual property, but not authentication features. For example, we can currently prosecute someone for trafficking in fake labels for a computer program, but we cannot go after them for faking the hologram that the software maker uses to ensure that copies of the software are genuine.
In addition, many actions that violate current law go unprosecuted in this day and age when priorities, such as the fight against terrorism and life-threatening crimes, necessarily take priority over crimes of property, be they intellectual or physical. Moreover, the victims of this theft often do not have a way to recover their losses from this crime. For this reason, the Anticounterfeiting Act of 2004 also provides a private cause of action, to permit the victims of these crimes to pursue the criminals themselves and recover damages in federal court.
Current law criminalizes trafficking in counterfeit documentation and packaging, but only for software programs. The Anticounterfeiting Act of 2003 updates and expands these provisions to include documentation and packaging for phonorecords, motion pictures, other audiovisual works, and copies of other copyrighted works.
The existing provision with regard to counterfeiting addresses certain items of intellectual property, including motion pictures, software, and phonorecords. The Anticounterfeiting Act of 2004 updates the coverage of this statute to include other copyrighted works, such as books. As published books and ebooks begin to be subject to the piracy already witnessed by motion picture, softward and recording industries, they need the same protection.
This issue is not going way; to the contrary, it is growing, and Congress continues to focus on potential solutions, as evidenced by today's hearing in the Senate Judiciary Committee, and an upcoming hearing in the Foreign Relations Committee. The 2002 version of this bill did not manage to secure passage and enactment into law, but there is reason for optimism that this year its fate will be different. America's content providers, and the many jobs that depend on them, could certainly use the help.
America is a place where we must encourage diverse ideas, and with that encouragement we must protect those ideas. They are the source of our music, our art, our novels, our movies, our software, our products, all that is American culture and American know-how. The Anticounterfeiting Act of 2004 gives our ideas the protection they deserve.
I ask unanimous consent that the text of this bill be printed in the RECORD.
There being no objection, the bill was ordered to be printed in the RECORD, as follows:
S. 2227

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the "Anticounterfeiting Act of 2004".
SEC. 2. FINDINGS.
Congress finds that-
(1) American innovation, and the protection of that innovation by the government, has been a critical component of the economic growth of this Nation throughout the history of the Nation;
(2) copyright-based industries represent one of the most valuable economic assets of this country, contributing over 5 percent of the gross domestic product of the United States and creating significant job growth and tax revenues;
(3) the American intellectual property sector employs approximately 4,300,000 people, representing over 3 percent of total United States employment;
(4) the proliferation of organized criminal counterfeiting enterprises threatens the economic growth of United States copyright industries;
(5) the American intellectual property sector has invested millions of dollars to develop highly sophisticated authentication features that assist consumers and law enforcement in distinguishing genuine intellectual property products and packaging from counterfeits;
(6) in order to thwart these industry efforts, counterfeiters traffic in, and tamper with, genuine authentication features, for example, by obtaining genuine authentication features through illicit means and then commingling these features with counterfeit software or packaging;
(7) Federal law does not provide adequate civil and criminal remedies to combat tampering activities that directly facilitate counterfeiting crimes; and
(8) in order to strengthen Federal enforcement against counterfeiting of copyrighted works, Congress must enact legislation that-

(A) prohibits trafficking in, and tampering with, authentication features of copyrighted works; and
(B) permits aggrieved parties an appropriate civil cause of action.

SEC. 3. PROHIBITION AGAINST TRAFFICKING IN ILLICIT AUTHENTICATION FEATURES.
(a) IN GENERAL.-Section 2318 of title 18, United States Code, is amended-

(1) by striking the heading and inserting "TRAFFICKING IN COUNTERFEIT LABELS, ILLICIT AUTHENTICATION FEATURES, OR COUNTERFEIT DOCUMENTATION OR PACKAGING";
(2) by striking subsection (a) and inserting the following:

"(a) Whoever, in any of the circumstances described in subsection (c), knowingly traffics in-
"(1) a counterfeit label affixed to, or designed to be affixed to-
"(A) a phonorecord;
"(B) a copy of a computer program;
"© a copy of a motion picture or other audiovisual work; or
"(D) documentation or packaging;
"(2) an illicit authentication feature affixed to or embedded in, or designed to be affixed to or embedded in-
"(A) a phonorecord;
"(B) a copy of a computer program;
"© a copy of a motion picture or other audiovisual work; or
"(D) documentation or packaging; or
"(3) counterfeit documentation or packaging, shall be fined under this title or imprisoned for not more than 5 years, or both.";
(3) in subsection (b)-

(A) in paragraph (2), by striking "and" at the end;
(B) in paragraph (3)-

(i) by striking "and 'audiovisual work' have" and inserting the following: ", 'audiovisual work', and 'copyright owner' have"; and
(ii) by striking the period at the end and inserting a semicolon; and

(C) by adding at the end the following:

"(4) the term 'authentication feature' means any hologram, watermark, certification, symbol, code, image, sequence of numbers or letters, or other physical feature that either individually or in combination with another feature is used by the respective copyright owner to verify that a phonorecord, a copy of a computer program, a copy of a motion picture or other audiovisual work, or documentation or packaging is not counterfeit or otherwise infringing of any copyright;
"(5) the term 'documentation or packaging' means documentation or packaging for a phonorecord, copy of a computer program, or copy of a motion picture or other audiovisual work; and
"(6) the term 'illicit authentication feature' means an authentication feature, that-
"(A) without the authorization of the respective copyright owner has been tampered with or altered so as to facilitate the reproduction or distribution of-
"(i) a phonorecord;
"(ii) a copy of a computer program;
"(iii) a copy of a motion picture or other audiovisual work; or
"(iv) documentation or packaging;
in violation of the rights of the copyright owner under title 17;
"(B) is genuine, but has been distributed, or is intended for distribution, without the authorization of the respective copyright owner; or
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"© appears to be genuine, but is not.";
(4) in subsection ©-

(A) by striking paragraph (3) and inserting the following:

"(3) the counterfeit label or illicit authentication feature is affixed to, is embedded in, or encloses, or is designed to be affixed to, to be embedded in, or to enclose-
"(A) a phonorecord of a copyrighted sound recording;
"(B) a copy of a copyrighted computer program;
"© a copy of a copyrighted motion picture or other audiovisual work; or
"(D) documentation or packaging; or"; and
(B) in paragraph (4), by striking "for a computer program";

(5) in subsection (d)-

(A) by inserting "or illicit authentication features" after "counterfeit labels" each place it appears;
(B) by inserting "or illicit authentication features" after "such labels"; and
(C) by inserting before the period at the end the following: ", and of any equipment, device, or materials used to manufacture, reproduce, or assemble the counterfeit labels or illicit authentication features"; and

(6) by adding at the end the following:

"(f) CIVIL REMEDIES FOR VIOLATION.-
"(1) IN GENERAL.-Any copyright owner who is injured by a violation of this section or is threatened with injury, may bring a civil action in an appropriate United States district court.
"(2) DISCRETION OF COURT.-In any action brought under paragraph (1), the court-
"(A) may grant 1 or more temporary or permanent injunctions on such terms as the court determines to be reasonable to prevent or restrain violations of this section;
"(B) at any time while the action is pending, may order the impounding, on such terms as the court determines to be reasonable, of any article that is in the custody or control of the alleged violator and that the court has reasonable cause to believe was involved in a violation of this section; and
"© may award to the injured party-
"(i) reasonable attorney fees and costs; and
"(ii)(I) actual damages and any additional profits of the violator, as provided by paragraph (3); or
"(II) statutory damages, as provided by paragraph (4).
"(3) ACTUAL DAMAGES AND PROFITS.-
"(A) IN GENERAL.-The injured party is entitled to recover-
"(i) the actual damages suffered by the injured party as a result of a violation of this section, as provided by subparagraph (B); and
"(ii) any profits of the violator that are attributable to a violation of this section and are not taken into account in computing the actual damages.
"(B) CALCULATION OF DAMAGES.-The court shall calculate actual damages by multiplying-
"(i) the value of the phonorecords or copies to which counterfeit labels, illicit authentication features, or counterfeit documentation or packaging were affixed or embedded, or designed to be affixed or embedded; by
"(ii) the number of phonorecords or copies to which counterfeit labels, illicit authentication features, or counterfeit documentation or packaging were affixed or embedded, or designed to be affixed or embedded, unless such calculation would underestimate the actual harm suffered by the copyright owner.
"© DEFINITION.-For purposes of this paragraph, the term 'value of the phonorecord or copy' means-
"(i) the retail value of an authorized phonorecord of a copyrighted sound recording;
"(ii) the retail value of an authorized copy of a copyrighted computer program; or
"(iii) the retail value of a copy of a copyrighted motion picture or other audiovisual work.
"(4) STATUTORY DAMAGES.-The injured party may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for each violation of this section in a sum of not less than $2,500 or more than $25,000, as the court considers appropriate.
"(5) SUBSEQUENT VIOLATION.-The court may increase an award of damages under this subsection by 3 times the amount that would otherwise be awarded, as the court considers appropriate, if the court finds that a person has subsequently violated this section within 3 years after a final judgment was entered against that person for a violation of this section.
"(6) LIMITATION ON ACTIONS.-A civil action may not be commenced under this section unless it is commenced within 3 years after the date on which the claimant discovers the violation.

"(g) OTHER RIGHTS NOT AFFECTED.-Nothing in this section shall enlarge, diminish, or otherwise affect liability under section 1201 or 1202 of title 17.".
(b) TECHNICAL AND CONFORMING AMENDMENT.-The item relating to section 2318 in the table of sections at the beginning of chapter 113 of title 18, United States Code, is amended by inserting "or illicit authentication features" after "counterfeit labels".

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