(October 9, 2008) The California Chamber of Commerce has successfully spearheaded an effort to strengthen California’s anti-counterfeiting laws.

CalChamber-sponsored AB 1394 (Krekorian; D-Burbank), has been signed by Governor Arnold Schwarzenegger and will take effect on January 1, 2009.

The bill 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.

Clarifies Law

AB 1394 clarifies the anti-counterfeiting statute by enacting clarifications recently adopted at the federal level.

California’s anti-counterfeiting statute, Penal Code Section 350, currently prohibits the manufacture, sale and possession for sale of counterfeit products. Unlike federal law, however, state law is unclear on whether separate fake components, for example, fake computers and the fake brand name labels that are to be affixed to them, are illegal counterfeit goods unless already assembled.

AB 1394 clarifies the law by expressly providing the unassembled components are illegal goods. In addition, AB 1394 clarifies that illegal counterfeit goods must be forfeited, as is the case under federal law.

Impact

The problem of counterfeiting has far-reaching negative consequences, having an impact on numerous California industries. Counterfeit or fake products, such as auto parts and prescription drugs, pose serious health or safety risks to consumers.

Counterfeiting and piracy also drain the California economy of $34 billion per year in revenues. In 2005 in Los Angeles County alone, they resulted in 106,000 lost jobs, $5.2 billion in lost business revenue and $483 million in lost state and local government tax revenue.

The CalChamber believes this law will help prevent significant revenue losses sustained by California businesses, the state and local governments because of counterfeiting.