WASHINGTON — President Bush on Thursday signed into law a bill that increases criminal penalties for counterfeiting.

“Counterfeiting costs our country hundreds of billions of dollars a year,” said Bush at a signing ceremony in the Dwight D. Eisenhower Executive Office Building for the Stop Counterfeiting in Manufactured Goods Act. “Counterfeiting hurts businesses. They lose the right to profit from their innovation.

“This administration and Congress have worked together to confront the illegal threat, the real threat of illegal activity such as counterfeiting. And the bill I’m signing today is an important step forward,” he said.

The bill criminalizes the trafficking in counterfeit labels regardless of whether the bogus labels, hangtags, medallions or packaging are attached to the counterfeit product. Distributors of counterfeit products have attempted to circumvent current laws by importing goods and counterfeit labels separately, then affixing the labels to generic goods, creating a counterfeit.

“This loophole helped counterfeiters cheat consumers by passing off poorly made items as brand-name goods,” said Bush. “By closing the loophole, we’re going to keep honest Americans from losing business to scam artists.”

The bill also expands penalties for those who traffic in counterfeit labels and packaging and requires the forfeiture of equipment used to make the items. It requires courts to order the destruction of all counterfeit products seized as part of a criminal investigation and it requires convicted counterfeiters to turn over their profits and any equipment. Lastly, the bill requires those convicted of counterfeiting to reimburse the legitimate businesses they exploited.

In a study released earlier this year, the U.S. Chamber of Commerce said that, based on estimates by the Federal Bureau of Investigation, Interpol and the World Customs Council, counterfeit goods cost U.S. companies $200 billion to $250 billion annually. On a global basis, piracy and counterfeiting costs the world economy an estimated $600 billion a year in lost sales, according to the Paris-based International Chamber of Commerce.

This story first appeared in the March 17, 2006 issue of WWD. Subscribe Today.

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