The U.S. House of Representatives has taken another step toward
amending the Hobby Protection Act by approving a recently introduced
bill, the second piece of legislation dealing with the topic
introduced in the House this year.
H.R. 2754, the Collectible Coin Protection Act, introduced by Rep.
G.K. Butterfield, D-N.C., on July 19, was approved by a voice vote of
the House on July 30 in response to a motion to suspend the rules and
pass the bill.
The motion was agreed to without objection, after 40 minutes of
debate. It now goes to the Senate.
The bill seeks expansion of the Hobby Protection Act to cover
sales of replica numismatic items that violate the act, and also to
afford greater trademark protection to grading services’ slabs.
The legislation is in response to the continued threat from
Chinese-made counterfeit coins being sold through online auction
sites, flea markets and other venues.
The act, if it becomes law, would include the sale of counterfeit
coins among the prohibitions found in the Hobby Protection Act, and
expand the federal venue and remedies available to victims of counterfeiting.
The language in H.R. 2754 is very similar to H.R. 1849, which was
introduced May 7 by Rep. Lamar Smith, R-Texas.
Smith co-sponsored Butterfield’s bill as did others.
The latest bill would make it a violation of the act for “a person
to provide substantial assistance or support to any manufacturer,
importer, or seller if that person knows or should have known that the
manufacturer, importer, or seller is engaged in any act or practice
that violates” specific subsections of the Hobby Protection Act.
Smith’s bill renders the statement as “consciously avoids knowing”
rather than “should have known.”
Currently, the Hobby Protection Act is somewhat more limited in
what it regulates. The act states the “manufacture in the United
States, or the importation into the United States, for introduction
into or distribution in commerce of any imitation numismatic item
which is not plainly and permanently marked ‘copy’, is unlawful and is
an unfair or deceptive act or practice in commerce.”
The new legislation also adds a section to the act on trademark
violations regarding the “unauthorized use of registered trademarks
belonging to a collectibles certification service,” defined in the
bill as “a person recognized by collectors for providing independent
certification that collectible items are genuine.”
That provision would extend enforcement to fake coin encapsulation
holders bearing the logos of legitimate coin grading services.
House floor statements
In a statement on the floor of the House, Butterfield said,
“Manufacturing and selling imitation coins is a little-known black
market industry here in the United States.”
Butterfield described the sale of fake coins to unsuspecting
collectors as “big business” and said it “cuts to the very core of our
ability to control and regulate the currency. By the time the
collector realizes that he has been scammed, it is absolutely too late.”
“This bill would also extend trademark infringement protections
available under the Trademark Act of 1946 for unauthorized use of a
registered trademark in connection with an unlawful sale or other
violation involving an imitation coin,” he said.
Rep. Michael C. Burgess, R-Texas, said that H.R. 2754 “is a simple
bill with a simple purpose: to equip honest merchants and collectors
as well as the federal government with the tools needed to fight a new
wave of counterfeit coins and currency.”
He noted that in the last decade, the U.S. Treasury has taken
“extraordinary steps to make it difficult to counterfeit U.S. currency.”
“As new bills become more difficult to counterfeit, some criminals
have turned to counterfeiting rare specimens of older currency. ...
Others have invested in counterfeiting rare coins,” Burgess said. “As
you might have guessed, most of the counterfeits are coming from China
— where else?”
Burgess pointed to “criminals” who have also “cleverly taken
advantage of the certification system used by collectors to assure
authenticity, and they’ve turned it on its head.”
“The slab is designed to protect the coin, but it also protects
the integrity of the grading,” Burgess said. “If the slab is tampered
with, the grading is voided. Some counterfeiters have now realized
they can counterfeit the slab and the certificate as well. This has
the advantage of making it harder to examine the coin since dealers
are reluctant to break open the slab to examine the coin more closely
unless they are absolutely certain that it is a fake.” ■