AEZ C.S.H.B. 1613 75(R)BILL ANALYSIS CRIMINAL JURISPRUDENCE C.S.H.B. 1613 By: Place 4-2-97 Committee Report (Substituted) BACKGROUND The counterfeiting of consumer products has increased substantially in recent years. The Texas economy is currently losing hundreds of thousands of dollars in tax revenue and tens of thousands of jobs because of the manufacture, distribution and sale of counterfeit goods. For example: (1) the computer industry as a whole is losing between $12 billion to $15 billion per year because of counterfeiting, amounting to more than 40 percent of all software industry revenues; (2) in some countries, more than 90 percent of computer software are illegitimate copies; (3) U.S. automobile manufacturers and suppliers are losing $12 billion a year in revenue worldwide because of the sale of counterfeit parts; (4) the Federal Trade Commission estimates the auto industry could hire an additional 210,000 workers by eliminating the manufacturing and sale of counterfeit auto parts; and (4) illegal videotaped copies of newly released films are often available for sale on the street even before the movies appear in theaters. Counterfeit products also pose safety hazards. In August 1995, Ohio-based Proctor & Gamble, maker of Head & Shoulder shampoo, placed a half-page advertisement in newspapers informing consumers that counterfeits of its name brand shampoo on store shelves could harm users with weakened immune systems. Counterfeit cosmetics often contain the residue of industrial solvents and carcinogens which may cause severe allergic reactions when applied to the skin. U.S. toy manufacturers fear that small children could be harmed either by choking on swallowed parts from inferior counterfeit toys which have not been safety-tested and which break easily or which could be coated with toxic paints. Currently, Texas law enforcement and prosecuting officials are hampered in their efforts to arrest and prosecute counterfeiters because Texas law does not have a specific criminal statute which adequately addresses the crime as it has evolved in the last few years. One of the criminal statutes currently used the most frequently to prosecute counterfeiting carries a Class A misdemeanor. PURPOSE CSHB 1613, as proposed, would create a separate section within the Forgery subchapter of the Penal Code for the crime of counterfeiting and to strengthen criminal penalties for counterfeiting so as to deter criminal activity in this area. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1.Legislative finding and declaration. SECTION 2.Chapter 32, Subchapter 2, Penal Code, FORGERY, is amended by adding: Sec. 32.23. TRADEMARK COUNTERFEITING. Defines the following terms: "counterfeit mark," "identification mark:, protected mark", "retail value", "service mark", "trademark". Makes it an offense to intentionally manufacture, use, display, advertise, distribute, offer for sale, sell, or possess with intent to sell or distribute an item or service that bears or is identified by a counterfeit mark. States that a state or federal certificate of registration of intellectual property is prima facie evidence of the facts stated in the certificate. Establishes that the total retail value of the items or services is to be used in determining the grade offense. Establishes grades of penalties, ranging from a Class C misdemeanor to a first degree felony. SECTION 3:The change in law applies only to an offense committed on or after the effective date of this Act. An offense committed before the effective date of this Act is covered by law in effect when the offense was committed. SECTION 4: Effective Date: September 1, 1997. SECTION 5. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute adds legislative findings and declaration, the original bill did not. The original bill established automatic intent to sell or distribute if a person has more than 25 items that bear a counterfeit mark. The substitute states that the person knows or should have known items bear or are identified by a counterfeit mark.