TRADEMARK COUNTERFEITING: TREBLE DAMAGES RELIEF WOULD BE OPTIONAL

Executive Summary

TRADEMARK COUNTERFEITING: TREBLE DAMAGES RELIEF WOULD BE OPTIONAL, rather than mandatory, under the amended version of Rep. Hughes' (D-NJ) trademark counterfeiting bill (H.R. 5532). The provision that the awarding of treble damages would be an option left to the discretion of the court, rather than a requirement, is the principal difference between the House bill and the Senate version of the measure (S. 875). The House measure stipulates that when assessing damages in trademark counterfeiting cases, a judge shall, "unless the court finds extenuating circumstances, enter judgment for three times such profits or damages [from the sale of the counterfeit goods] whichever is greater, together with reasonable attorney's fees" (emphasis added). An amended version of the bill was presented by Hughes to the House Judiciary/Crime Subcmte. -- and passed -- Aug. 1. It will be considered by the full cmte. following Congress' summer recess. Introducing the revised version of his bill, Hughes pointed out that the measure set forth an exception to the term "counterfeit goods" that excluded "overruns and parallel imports." S. 875, introduced by Sen. Mathias (D-Md), makes the same distinction. Like the Senate version, Hughes' measure sets forth both criminal and civil penalties against trademark counterfeiters. Both bills provide that individuals who manufacture or sell counterfeit goods may be fined up to $250,000 and/or serve as many as five years in prison. The measures also call for corporate counterfeiters to be fined up to $1 mil. The House bill adds stiffer criminal penalties for repeat offenders under H.R. 5532. Individuals could be charged up to $1 mil. and/or 15 years in prison for a second offense. Firms may be charged as much as $5 mil. for a repeat infraction. Like the Senate legislation, the House bill contains an ex parte seizure provision under which a court-ordered seizure action may be used to recover counterfeit goods from distributors who "knew, or should have known" that the goods were counterfeit. The seizure may be initiated at the plaintiff's request, without trial. Under the provision, the means of making the goods and documents relating to their production may also be seized. A related House anti-counterfeiting measure (H.R. 5929) was reported out of the full House Energy & Commerce Cmte. Aug. 1. The bill, sponsored by Rep. Florio (D-NJ), designates that the counterfeiting of any trademarked goods is a violation of the Federal Trade Commission (FTC) Act. Under the bill, FTC may initiate both seizure and civil actions against counterfeiters through court proceedings. Currently, the commission is authorized to seek $10,000 per violation. The bill will go to the House Rules Cmte. and then be introduced on the House floor.