(February 1, 2008) A California Chamber of Commerce sponsored bill to strengthen California’s anti-counterfeiting laws passed the Assembly this week with no opposition.
CalChamber-sponsored AB 1394 (Krekorian; D-Burbank) improves protections of trademark owner rights and consumer health and safety by strengthening California laws against trafficking of fake products such as auto parts, prescription drugs and children’s toys.
AB 1394 closes loopholes that undermine enforcement efforts and brings California law into greater conformity with federal law.
“Trademark owners and consumers will receive greater protection if California ensures its anti-counterfeiting standards are strong, effective and more closely match federal ones,” said CalChamber Policy Advocate Kyla Chris-toffersen.
“Taking action and leading the way in the national effort to strengthen laws to fight counterfeiting also will help prevent significant revenue losses for California businesses, the state and local governments,” she said.
Far-Reaching Consequences
The CalChamber has pointed out that counterfeiting has far-reaching negative consequences, including taking from workers much-needed jobs in numerous industries.
In addition, fake products pose serious health or safety risks to consumers.
Counterfeiting and piracy drains $34 billion per year in revenues from the state’s economy.
In Los Angeles County alone in 2005, counterfeiting and piracy led to losses of 106,000 jobs, $5.2 billion in business revenue and $483 million in state and local government tax revenue.
U.S. businesses lose $200 billion to $250 billion per year to counterfeiting, according to the International Anti-Counterfeiting Coalition, an international non-profit organization devoted to protecting intellectual property.
The Motor and Equipment Manufacturers Association in 2003 reported several safety violations due to counterfeit auto parts, such as brake linings designed of compressed grass, sawdust or cardboard, and transmission fluid made of cheap, dyed oil.
Clarification
AB 1394 clarifies state law to ensure certain forms of trafficking of counterfeit goods are prohibited in the same manner as federal law, thereby cutting down on government prosecution costs by reducing litigation over ambiguities.
California’s anti-counterfeiting law (Penal Code Section 350) already prohibits manufacturing, selling and possession of counterfeit products with intent to sell.
Unlike federal law, however, state law does not clarify whether illegal sale and/or possession of counterfeit products includes intentional transport of the products, such as knowingly trucking a load of brake pads.
AB 1394 spells out in statute that such activities inherently related to the manufacture and sale of counterfeit products, also are illegal.
State law is fuzzy on whether separate fake components, such as fake computer parts and fake brand name labels, are considered illegal counterfeit goods. AB 1394 clarifies that point.
Tougher Penalties
AB 1394 also will give courts greater flexibility to impose stiffer monetary penalties by increasing the cap on the punishment of the crime when counterfeiting operations are especially large and profitable.
Doing so will bring California law more in line with federal penalties, which are more than double the maximum penalties currently allowed under state law. In addition, tougher monetary penalties can help deter counterfeiting crimes.
In addition to passing the seven-member Assembly Public Safety Committee on January 15 without opposition, AB 1394 passed the 16-member Assembly Appropriations Committee on January 24 with unanimous support.
Action Needed
AB 1394 is awaiting assignment to a policy committee in the Senate. Contact your senator to voice support for AB 1394.
For more information on the bill or a sample letter of support, visit www.calchambervotes.com.
Staff Contact: Kyla Christoffersen