Intellectual Property Rights: Criminal Enforcement

Matthew DevlinAssistant United States AttorneyUnited States Attorney’s Office

Austin, Texas

Agenda

• Intellectual Property Rights Enforcement and the U.S. Department of Justice

• Intellectual Property Rights Enforcement and U.S. Law Enforcement

• What is Intellectual Property?• Types of IP Crime

– Trademark counterfeiting– Copyright infringement– Theft of trade secret

• What to Do If You’re a Victim of IP Crime

Intellectual Property Rights and the Department of Justice

Computer Crime & Intellectual Property Section (CCIPS)

• Created in 1996 as a Section of the Department of Justice’s Criminal Division

• DOJ’s In-house Experts on Cybercrime• Support and Train the Nationwide Network

of Cybercrime-Savvy Federal Prosecutors

U.S. Attorneys’ Offices• U.S. Attorneys are appointed by the President.• The Nationwide Computer Hacking & Intellectual

Property (CHIP) Coordinator Network

• 93 Offices in the U.S. and in the District of Columbia, Guam, the Marianas Islands, Puerto Rico, and the U. S. Virgin Islands.

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Computer Hacking & Intellectual Property (CHIP) Units

• Computer Hacking and Intellectual Property Units in 13 U.S. Attorneys’ Offices

• Atlanta, Boston, Chicago, Dallas, Kansas City, Los Angeles, Miami, New York (Manhattan & Brooklyn), San Diego, San Francisco, Seattle, and Alexandria, Virginia

U.S. History LessonCopyright and patent rights are in

the U.S. Constitution!

Article 1, Section 8, Clause 8

The Congress shall have Power … To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

Who Protects Intellectual Property in the United States?

• Majority of IP enforcement is civil action undertaken by intellectual property owner. The U.S. Government is not a litigant.

• In civil enforcement, the burden is on the intellectual property owner to show infringement by a “preponderance of the evidence.”

• A successful rights-holder can collect injunctive relief; monetary damages; or extraordinary remedies.

When Does the US Government Bring Criminal Charges?

• Criminal charges can be brought when there is willful or knowing infringement.

• Criminal cases require a higher burden of proof: “Beyond a reasonable doubt”

• Remedies: incarceration, fines, and restitution• Common factors affecting whether to charge a criminal

violation include:• Organized Criminal Involvement• Public Health and Safety Concerns• Commercial Nature of Violation• Amount of Loss & harm• Violation of Previous judgment

Attorney General’s Intellectual Property Task Force – October 2004

• IP rights must be enforced• Enforcement is the collective responsibility of

IP owners and the federal government• DOJ will take lead role in prosecuting the most

serious violations of IP laws• Punish misuse of innovative technologies, not

innovation itself• Enforcement also involves coordination and

cooperation of foreign governments

Intellectual Property Rights and U.S. Law Enforcement

IP Enforcement Is a Team Effort!

• Federal Bureau of Investigation

• US Immigration & Customs Enforcement (ICE)

• U.S. Secret Service

• U.S. Postal Inspections Service

• State and Local Authorities

What is “Intellectual Property”?

Intellectual Property

• What is “intellectual property”?– Intangible assets recognized as “property” by

the state– For example, trademarks, copyrights, patents,

and trade secrets.

• What is “infringement”?– Unauthorized use of intangible assets whose

control had been exclusively granted to the owner.

• Trademarks (®) are intellectual property in a brand (such as Coke®)

• Copyright law (©) is intellectual property in creative works, such as books, music, and movies (and presentations!). For example:

Trademark & Copyright

The “Happy Birthday” song was copyrighted in 1935. Until 2010, royalties must be paid if it is publicly performed.

• Defined at 18 U.S.C. 1839:– all forms and types of financial, business, scientific,

technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if …”

Trade Secrets

– The owner has taken reasonable measures to keep such information secret (§ 1839(3)(A))

– The information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public (§ 1839(3)(B))

Trade Secrets

The formula for Coke is a trade secret. It has

been protected for over 100 years!

Commonly Infringed Intellectual Property

Why Enforce Intellectual Property Rights?

Why is IP Enforcement Important?

• Harm legitimate producers (artists, musicians, and companies), retailers, distributors (local, importers, and exporters) and exhibitors of intellectual property

Intellectual Property Violations Can:Intellectual Property Violations Can:

Pirated creative works include books, software, music, and movies.

Software Music DVD/Video

Why is IP Enforcement Important?

• Threaten public health and safety:

Intellectual Property Violations Can:Intellectual Property Violations Can:

Counterfeit Airplane Parts Defective Batteries

Why is IP Enforcement Important?

• Foster growth of a lawless underground economy that escapes accountability (such as paying taxes on sales)

• Provide funding for violent domestic and foreign-based organized crime syndicates

Intellectual Property Violations Can:Intellectual Property Violations Can:

Why is IP Enforcement Important?

• Enforcing IP Rights Can:• Improve product-related health and safety• Foster growth of economic industries (software,

high tech, etc.)• Foster creativity• Create incentive for investment• Fulfill international treaty obligations

Types of IP Crime

• Criminal Infringement of a Copyright (18 U.S.C. § 2319 & 17 U.S.C. § 506) - Up to 5 yrs (10 yrs for repeat offenders)

• Trafficking in Counterfeit Labels for Software & Music (18 U.S.C. § 2318) - Up to 5 yrs

• Trafficking in Recordings/Videos of Live Musical Performances (18 U.S.C. § 2319A) - Up to 5 yrs (10 yrs for repeat offenders)

• Circumvention of Copyright Protection Systems (17 U.S.C. §§ 1201-1205 - Up to 5 yrs (10 yrs for repeat offenders)

• Unauthorized Reception of Cable Services (47 U.S.C. § 553) - Up to 6 mos (individual use) / 2 yrs (commercial gain) / 5 yrs (repeat offenders)

Copyrighted Works

Trademarks• Trafficking in Counterfeit Goods &

Services (18 U.S.C. § 2320) - Up to 10 yrs (20 yrs for repeat offender)

Trade Secrets• Economic Espionage (18 U.S.C. § 1831) -

Up to 15 yrs

• Theft of Trade Secrets (18 U.S.C. § 1832) - Up to 10 yrs (corporate offender - up to $5M fine)

• Confidentiality- Protective orders and other actions authorized (18 U.S.C. § 1835)

What to Do If You’re a Victim of Intellectual Property Crime

If You’re a Victim of IP Crime

• Contact law enforcement as soon as possible• Thoroughly document any internal investigation• Record all investigative activities• Carefully preserve all evidence• Assist law enforcement as much as possible

– Identify stolen intellectual property– Share results of internal investigations or civil lawsuits– Explore confidentiality measures

DOJ cybercrime website: