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(3) the requirement that such order be granted only upon an affidavit or a verified complaint. These standards and safeguards are implicit in the proposed Act as written and can be explicitly detailed in that statute if Congress deems that to be necessary.

During the November 3, 1983 hearing, Representative Hughes suggested that the bill also provide a safeguard for fair and minimally intrusive execution of seizure warrants by explicitly requiring any seizure order issued under the proposed Act to be carried out by a United States Marshal or other law enforcement authority. We have no objection to stating this requirement on the face of the statute, since the execution of such seizure orders is properly a matter for law enforcement officers. Unlike a private party plaintiff, or an agent of that plaintiff, an impartial law enforcement officer has no motive to seize property beyond that specified in the seizure order or to unduly harass the defendant in conducting the seizure. Finally, such an officer can ensure that the materials seized are initially delivered to the Court, as the bill appears to contemplate, and not made available to the civil claimant until all interested parties have been afforded their opportunity for a hearing.

In our opinion, the ex parte order provision in the proposed Act should also be modified to provide that the United States be given notice and an opportunity to be heard before a seizure order is issued. The United States has an interest in these proceedings. Without such notice, evidence needed for criminal cases could be lost or its usefulness impaired, thereby compromising ongoing criminal investigations.

CONCLUSION

I hope that the information provided in this letter fully answers the Subcommittee's outstanding questions on my testimony of November 3, 1983. As you know, the Department of Justice supports legislation to provide greater protection for federally registered trademarks and is anxious to help your Subcommittee in any way possible.

Sincerely,

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Timothy J. Tim

Timothy J. Finn
Associate Deputy Attorney General

Mr. HUGHES. Our next witness is Gerald J. Mossinghoff. Mr. Mossinghoff is the Commissioner of Patents and Trademarks and has served in that capacity in the Department of Commerce since July of 1981. He also serves as an Assistant Secretary of Commerce. He is an adjunct professor of law at American University, where he teaches patent and intellectual law.

He has received many awards in the government and is the head of the U.S. delegation to the Diplomatic Conference on the Revision of the Paris Convention, with the personal rank of Ambassador. In September of this year he was elected chairman of the General Assembly of the World Intellectual Property Organization, a 102nation U.N. specialized agency.

He has had a most distinguished career in his profession, and we welcome him here this morning.

Mr. Mossinghoff, if you will come forward. We have your very excellent statement, which will be made a part of the record in full, without objection. You may proceed as you deem fit, Commissioner. Welcome this morning.

TESTIMONY OF GERALD J. MOSSINGHOFF, ASSISTANT SECRE

TARY AND COMMISSIONER OF PATENTS AND TRADEMARKS, U.S. DEPARTMENT OF COMMERCE, ACCOMPANIED BY MICHAEL K. KIRK, ASSISTANT COMMISSIONER FOR EXTERNAL AFFAIRS Mr. MOSSINGHOFF. Thank you, Mr. Chairman. Mr. Chairman, accompanying me this morning is Mr. Michael K. Kirk, who is our Assistant Commissioner for External Affairs. Mr. Kirk has been active in working with the Department of Justice on some of their suggestions and, in addition, has led U.S. delegations to Taiwan and to South Korea to discuss firsthand with officials of those nations the problems of counterfeiting. He is our expert on counterfeiting.

Mr. HUGHES. We are delighted to have you, too, Mr. Kirk. Welcome.

Mr. MOSSINGHOFF. Mr. Chairman, what I propose to do is to begin my summary of the statement at about page 3 of the prepared statement.

The administration has been very concerned with the problems of commercial counterfeiting. Earlier this year Secretary of Commerce Malcolm Baldrige raised the problem with the Cabinet Council on Commerce and Trade and urged that effective steps be taken to stem the flow of counterfeit goods.

As a result of the Secretary's efforts, the Cabinet Council on Commerce and Trade strongly endorsed an aggressive, two-pronged attack to combat commercial counterfeiting.

Internationally, the Cabinet Council recommended that the United States should continue its efforts to advocate the development of an international anticounterfeiting code under the General Agreement on Tariffs and Trade, the so-called GATT.

As you know, the negotiation of this code was initiated by the United States in 1978 and has received the strong backing of this administration. The Cabinet Council recommended that the United States continue these efforts in the GATT-although some countries have suggested that the World Intellectual Property Organiza

tion might be a preferable forum, this administration prefers pursuing the matter in GATT-and make a special effort to persuade other countries to accept the code.

Domestically, the Cabinet Council recommended that the administration strongly support legislation strengthening the criminal and civil sanctions for commercial counterfeiting along the lines

of H.R. 2447, introduced by Chairman Rodino, and Senate bill S. 875, introduced by Chairman Mathias.

Despite the progress that has been made, the Department of Justice has, as you know, reservations regarding the specific formulations of the bill. I think based on the conversations this morning, you have some of those same reservations.

We are working closely with the Department of Justice. We, of course, defer totally to them in the area of defining crimes and extraterritoriality. They are the government's experts on that, but we have worked closely with them, trying to provide as much expert advice as we can in the area of trademark enforcement and registration.

After the introduction of H.R. 2447 and S. 875, we learned that a number of associations supported the concepts of these bills, but differed over the manner in which the bills carried out the concepts.

In an effort to promote the bill which would have the broadest support, we hosted a meeting, chaired by Mr. Kirk, in Washington on June 3 of this year, and the U.S. Trademark Association, at our request, hosted another meeting in New York City. Members from the U.S. Trademark Association, the International Anticounterfeiting Coalition, the American Patent Law Association, the ABA Patent, Trademark and Copyright section, the Department of Justice and, of course, PTO officials, Patent and Trademark Office officials, attended.

Although not in the position to speak for their organizations, the attendees were the people in the various organizations most active in establishing their organization's position on counterfeiting.

I believe that several worthwhile suggestions were developed through this effort. These suggestions are being incorporated into a letter by the Department of Justice to express the administration's views on this important legislation.

I would like to emphasize that members of the organizations involved have not endorsed the results of their efforts. As I indicated, though, a number of useful suggestions were brought forth. Indeed, the letter from the Department of Justice suggests a number of concepts that evolved from the discussions. One of those—and I think it goes to the questions that Mr. Sawyer was addressingwas the suggestion to change the emphasis of the bill from counterfeit marks to counterfeit goods and services.

I believe this change is desirable, since in the United States there is no right to a mark in gross. You simply have to use a mark on goods in order to obtain the right to use that mark and your exclusive rights to it. Rights only accrue to the owner of a mark in relation to the goods or services on which or in connection with which the mark is used.

As I indicated, the administration has been actively reviewing this and other suggestions for improving the bill, and the results will be communicated to the committee formally by the Department of Justice.

I am aware that the subcommittee wishes to proceed with this legislation. It is certainly in line with the view of the Cabinet Council on Commerce and Trade. We are prepared to work with you in every appropriate way to satisfy all the concerns that have been raised but to get to an effective piece of legislation to halt counterfeiting which, as you point out, Mr. Chairman, is not just a matter of Cartier watches anymore. We are talking about public health and safety here.

Thank you, Mr. Chairman. That concludes my prepared summary. We would be pleased to answer any questions you and the subcommittee members may have.

[The statement of Mr. Mossinghoff follows:

STATEMENT OF GERALD J. MOSSINGHOFF
ASSISTANT SECRETARY AND COMMISSIONER OF PATENTS AND TRADEMARKS

BEFORE THE
SUBCOMMITTEE ON CRIME

OF THE
HOUSE COMMITTEE ON THE JUDICIARY

ON
H.R. 2447
NOVEMBER 3, 1983

I appreciate the opportunity to appear before the Subcommittee this morning to express the support of the Department of Commerce for legislation to strengthen civil and criminal sanctions against commercial counterfeiting.

Commercial counterfeiting has serious consequences on commerce.

Legitimate producers of trademarked goods lose sales to counter

feiters who can market their goods more cheaply because they do not

pay for research, advertising, quality control, or frequently, U.S.

labor costs.

Since counterfeit goods commonly are of inferior

quality or defective, legitimate producers often suffer a loss of

reputation because the public perceives the inferior imitation as

the legitimate producer's product.

In addition to harming legitimate producers, counterfeiting is

harmful to consumers.

Consumers are deceived as to the source of

the goods that they are purchasing. Also, since counterfeiters are not accountable for the quality of their goods, the goods the public

purchases from counterfeiters are often inferior, defective, or even

harmful.

Until recently, counterfeiting was directed primarily to luxury

goods, such as "Cartier" watches and "Cross" pens.

Now, not

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