BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 324|
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UNFINISHED BUSINESS
Bill No: SB 324
Author: Cedillo (D)
Amended: 6/11/09
Vote: 21
SENATE PUBLIC SAFETY COMMITTEE : 7-0, 4/14/09
AYES: Leno, Benoit, Cedillo, Hancock, Huff, Steinberg,
Wright
SENATE FLOOR : 37-0, 4/20/09
AYES: Aanestad, Alquist, Ashburn, Benoit, Cedillo,
Cogdill, Corbett, Correa, Cox, Denham, DeSaulnier,
Ducheny, Dutton, Florez, Hancock, Harman, Hollingsworth,
Huff, Kehoe, Leno, Liu, Lowenthal, Maldonado, Negrete
McLeod, Oropeza, Padilla, Pavley, Romero, Runner,
Simitian, Steinberg, Strickland, Walters, Wiggins, Wolk,
Wright, Yee
NO VOTE RECORDED: Calderon, Wyland, Vacancy
ASSEMBLY FLOOR : 76-1, 6/25/09 - See last page for vote
SUBJECT : Counterfeit goods
SOURCE : Shelter Partnership, Inc.
DIGEST : This bill specifically provides that counterfeit
goods, with specified exceptions, may, at the consent of
the trademark owner, be donated to charity, rather than
destroyed.
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Assembly Amendments exclude recordings or audiovisual
works, as defined.
ANALYSIS : Existing law states that any person who
willfully manufactures, intentionally sells, or knowingly
possesses for sale any counterfeit of a mark registered
with the California Secretary of State or registered on the
United States Patent and Trademark Office shall be
punishable as follows:
1.If the offense involves less than 1,000 of the articles
with a total retail value less than the standard for
grand theft (over $400 - $487), the defendant is guilty
of a misdemeanor, punishable by a fine of not more than
$5,000, imprisonment in a county jail for up to one year,
or by both. If the defendant is a corporation, by a fine
of not more than $100,000.
2.When the crime involves 1,000 or more articles, or has a
total retail value that meets the standard for grand
theft (over $400 - $487), the crime is an alternate
felony-misdemeanor, punishable by imprisonment in a
county jail for up to one year, or in the state prison
for 16 months, two years, three years, by a fine not to
exceed $250,000, or both. If the defendant is a
corporation, the maximum fine is $500,000. (Penal Code
Section 350, subd. (a).)
Existing law provides that a repeated violation of the
counterfeit trademark statute is an alternate
felony-misdemeanor, punishable by a fine of not more than
$50,000, imprisonment in a county jail for not more than
one year, or in the state prison for 16 months, or two or
three years, or both. If the defendant is a corporation,
the maximum fine is $200,000. (Penal Code Section 350,
subd. (b).)
Existing law provides that where a defendant is convicted
of a trademark counterfeiting, the court shall order the
forfeiture and destruction of all counterfeit marks and all
counterfeit items. The court, with specified exceptions
for community property vehicles, shall also order
forfeiture and destruction or other disposition of all
means of making the marks and all other devices for making
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or transporting the marks used in connection with the
violation.
Existing law describes "fair use" of a trademark, which is
not subject to prosecution or a civil action, as any of the
following:
1.Advertising or promotion that permits consumers to
compare goods or services;
2.identifying and parodying, criticizing, or commenting
upon the famous mark owner or the goods or services of
the famous mark owner;.
3.noncommercial use of the mark; and
4.all forms of new reporting and news commentary.
(Business and Professions Code Section 14247.)
Existing federal law provides that it is a crime to
"traffic" or "attempt to traffic" is counterfeit goods.
The crime is punishable by a fine of up to $2 million,
imprisonment for up to 10 years, or both. The maximum fine
for a corporation or an entity other than an individual is
$5 million. Repeated convictions are punishable by
imprisonment for up to 20 years, a fine of up to $5
million, or both. Where the convicted defendant of
repeated violations is other than an individual the maximum
fine is $15 million. (18 U.S.C. Section 2320.)
Existing federal law provides the following property is
subject to forfeiture following a defendant's conviction
for trafficking in counterfeit goods: the proceeds of the
crime; any of the defendant's property used or intended to
be used in the crime; any article bearing a counterfeit
mark. (18 U.S.C. Section 2320(b).)
This bill provides that upon a request by law enforcement
and with consent from the trademark registrant, the court
may consider a motion to for donation of counterfeit goods
to a non-profit organization for distribution to indigent
persons at no charge. This provision excludes recordings
or audiovisual works as defined in Section 653w of the
Penal Code.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/25/09)
Shelter Partnership, Inc. (source)
Western Center on Law and Poverty
Minister of God and Christ Jesus Foundation
Substance Abuse Foundation of Long Beach, Inc.
Community Action Partnership of San Bernardino County
David and Margaret Youth and Family Services
Taxpayers for Improving Public Safety
Union Rescue Mission
Los Angeles Mission
Fred Jordan Missions
OPPOSITION : (Verified 6/25/09)
Los Angeles County District Attorney's Office
International Anti-Counterfeiting Coalition
ARGUMENTS IN SUPPORT : According to the author's office,
"The underground market for counterfeit goods is sizable
and growing rapidly. In 2007 U.S. customs officials seized
$197 million in counterfeit goods, up 27% from the previous
year. The county Economic Development Corporation
estimates about $2 billion worth of counterfeit goods are
sold annually in Los Angeles alone.
"Yet, in our state there are over 150,000 individuals and
family members who are homeless on any given night. This
number of homeless Californians will likely grow in the
next two years because of loss of jobs and the impact of
home foreclosures.
"SB 324 provides for a practical method in aiding our
state's homeless by repurposing counterfeit shoes and
clothes after their confiscation and with the trademark
owner's consent. The donation of these items to non profit
agencies will fill the paucity of public funding created by
budget cuts homeless and women's shelters face. This bill
is also an environmentally sound fit to noncommercial
redistribution of the items. Landfills are already at
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capacity and the destruction of goods adds to the immense
waste in our communities.
"Under current law counterfeit items must be destroyed. In
some instances items have been donated by the Los Angeles
City Attorney's office to organizations serving the
homeless with the permission of the trademark owners. The
organizations taking possession of counterfeit goods go to
great lengths to ensure the items do not re-enter commerce
by removing tags and imprinting the pieces with an
indelible stamp. However, there is a reluctance to
continue this practice because the statute calls for
destruction regardless of trademark owner's consent and
there is not sufficient case law to guide the protocol for
donating goods. SB 324 will take an existing problem and
transform it into a transparent solution for non profit
agencies that serve the homeless and indigents in our
communities."
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Beall, Bill Berryhill, Tom
Berryhill, Blakeslee, Block, Blumenfield, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore,
Duvall, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
Huber, Huffman, Jeffries, Jones, Knight, Krekorian,
Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning,
Nava, Nestande, Niello, Nielsen, John A. Perez, V. Manuel
Perez, Portantino, Ruskin, Salas, Saldana, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torrico, Tran, Villines, Yamada, Bass
NOES: Anderson
NO VOTE RECORDED: Lieu, Torres, Vacancy
RJG:cm 7/2/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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