BILL ANALYSIS
SB 324
Page 1
SENATE THIRD READING
SB 324 (Cedillo)
As Amended June 11, 2009
Majority vote
SENATE VOTE :37-0
PUBLIC SAFETY 6-0
-----------------------------------------------------------------
|Ayes:|Arambula, Hagman, | | |
| |Ammiano, Gilmore, Hill, | | |
| |Ma | | |
-----------------------------------------------------------------
SUMMARY : Authorizes lawfully registered owners of intellectual
property to consent to the donation of seized counterfeit goods to
charity. Specifically, this bill :
1)States that upon request of any law enforcement agency and
consent from the lawful registrants, a court may consider a
motion to have seized counterfeit goods donated to nonprofit
organizations.
2)Specifies that the purpose of distributing the goods to charity
is to benefit persons living in poverty and that no charge shall
be rendered upon the persons served by the charitable
organization.
3)Excludes recordings and audiovisual works.
EXISTING LAW :
1)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:
a) 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 to $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
SB 324
Page 2
than $100,000; or,
b) When the crime involves 1,000 or more articles, or has a
total retail value that meets the standard for grand theft
(over $400 to $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, 2 years or 3 years, by a fine not to exceed $250,000,
or both. If the defendant is a corporation, the maximum
fine is $500,000.
2)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 2
or 3 years, or both. If the defendant is a corporation, the
maximum fine is $200,000.
3)Provides that where a defendant is convicted of a trademark
counterfeiting, the court shall order the forfeiture and
destruction of all of 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 or transporting the marks used in
connection with the violation.
4)Describes "fair use" of a trademark, which is not subject to
prosecution or a civil action, as any of the following:
a) Advertising or promotion that permits consumers to compare
goods or services;
b) Identifying and parodying, criticizing, or commenting upon
the famous mark owner or the goods or services of the famous
mark owner;
c) Non-commercial use of the mark; and,
d) All forms of news reporting and news commentary.
FISCAL EFFECT : None
COMMENTS : According to the author, "The underground market of
counterfeit goods is sizable and growing rapidly. In 2007, United
SB 324
Page 3
States 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 families
who are homeless on any given night. This number of homeless
Californians will likely grow in the next two years because of job
loss 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
non-commercial redistribution of the items. Landfills are already
at capacity and the destruction of goods adds to the immense waste
in our communities.
"Under current law, upon conviction and confiscation of
counterfeit items, such 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."
Please see the policy committee for a full discussion of this
bill.
Analysis Prepared by : Gabriel Caswell / PUB. S. / (916)
319-3744 FN:
0001466