U.S. Draft Law Would Toughen Penalties Against Counterfeit Goods

Washington - Violations of intellectual property rights not only deprive legitimate businesses of millions of dollars and undercut innovation but often pose serious threat to human safety and health, says U.S. Attorney General Alberto R. Gonzales.

In response to this problem, the U.S. Justice Department on May 14 sent to Congress the Intellectual Property Protection Act of 2007. The draft legislation calls for stronger penalties for repeat offenders and would increase the maximum penalty for counterfeiting offenses if the defendant “knowingly and recklessly causes serious bodily injury or death,” Gonzales said.

To be considered by Congress, a draft bill sent by the administration must be sponsored by one or more members of Congress.  To become a law, identical versions of a bill must be passed by both chambers of Congress and signed by the president.

The administration also announced plans to expand its efforts to improve intellectual property enforcement in key countries. Many counterfeit goods, particularly pharmaceuticals, are imported from overseas markets.

According to the draft bill, serious body injury could carry a penalty of 10 years to 20 years in prison, and up to life imprisonment if counterfeiting results in death, a senior Justice Department official told journalists May 14.

Although some may think violations of intellectual property rights have purely economic effects on “faceless corporations,” the reality is much different, especially when medical and pharmaceutical products are concerned, the attorney general said May 14 at the U.S. Chamber of Commerce.

“Imagine a heart patient undergoing emergency surgery at a hospital that unknowingly purchased substandard counterfeit surgical equipment or medication,” he said.

Gonzales added that the new bill would “hit the criminals in their wallet” and make sure they lose all illicit profits and any property used to commit the crime.

This summer, the Justice Department will establish a second IP law enforcement coordinator in Sofia, Bulgaria, to improve the department’s international cooperation and outreach. The first Justice Department IP coordinator was installed in 2006 in Bangkok, Thailand. (See related article.)

Gonzales said he recently traveled to Brazil to discuss joint operations to combat intellectual property crime. The issue of intellectual property violations also will be a subject of his discussions at the G8 justice and interior ministers meeting in Munich, Germany, May 23-25.

As criminal organizations benefiting from intellectual property theft are becoming more sophisticated and better organized, the Justice Department is dedicating more resources and increasing the number of investigations and prosecutions to protect intellectual property rights, the attorney general said.

For example, in 2006 federal investigations resulted in 57 percent more convictions for copyright and trademark offenses than in 2005 and the number of defendants receiving prison terms of more than two years has grown by 130 percent, he said.

Modern technology has given inventors and creators unprecedented opportunities to share the fruits of their hard work with audiences and communities throughout the world, Gonzales said. But the same technology also has made it easy to copy and trade pirated and counterfeit goods across national borders, he said.

Those who seek to undermine the cornerstone of U.S. economic competitiveness and recklessly put human well-being at risk believe they are beyond the reach of the law, the U.S. attorney general said. “It is our responsibility and commitment to show them that they are wrong.”

The full text of prepared remarks by Gonzales is available on the Justice Department Web site.

See also "Public Safety Jeopardized by Chinese Counterfeiters, Experts Say."

For more information, see Protecting Intellectual Property Rights.