St i C t f itiStopping Counterfeiting Around the World: ou d t e Wo d:An AUSA’s View

Brian PearceAssistant U.S. Attorney/CHIP

US Attorney’s OfficeNorthern District of Georgia

ADVERTISEMENT

U.S. Attorneys’ Offices• Frontline prosecutors• The Nationwide Computer Hacking & Intellectual p g

Property (CHIP) Coordinators.

• 94 Offices in the U.S. and in the District of C l bi G th M i I l d P tColumbia, Guam, the Marianas Islands, Puerto Rico, and the U.S. Virgin Islands.

Computer Hacking & Intellectual Property (CHIP) UnitsProperty (CHIP) Units

• Computer Hacking and Intellectual Property i i 18 S A ’ OffiUnits in 18 U.S. Attorneys’ Office

• Including Los Angeles, San Diego, Atlanta, Boston, New York (Brooklyn and Manhattan), Dallas, Seattle, and Alexandria, Virginia.

• Over 200 Dedicated CHIP Attorneys total.

ADVERTISEMENT

Computer Crime & Intellectual Property Section (CCIPS)Section (CCIPS)

CCIPS Intellectual Property Focus: Prosecution of selected casesProsecution of selected casesAdvice and trainingLegislative & policy initiativesCoordinate international enforcement effortsPublications:

• Prosecuting Intellectual Property Crimes (2006)• Prosecuting Intellectual Property Crimes (2006)• Searching and Seizing Computers and Obtaining

Electronic Evidence in Criminal Investigations(September 2002)

Website: www.cybercrime.gov

Team Effort

• FBI• Immigration and Customs Enforcementg• U.S. Postal Inspections Service• U S Secret Ser ice• U.S. Secret Service• Food & Drug Administration• State and Local Authorities• State Departmentp

IP Investigative Landscape“Past” “Future”

• Single-district cases• Sole defendants

• Multi-jurisdictional cases • Groups of defendants;

• Single investigative agency• Single charges

Si l i l i

conspiracy charges• Multi-agency investigations• Multiple charges• Simple cases involving

“analog” technologies• Old law applied to new

• Multiple charges • Cases involving Internet and

digital technologiesOld law applied to new technology

g g• New laws: EEA, NET Act,

DMCA

1980 1990 2000 2010

Internationalization & InternetK l h k E lKovulchek Example

The Scheme: The Scheme: -- Ukraine ↔ World (pirated software) The Evidence (obtained through MLATs): The Evidence (obtained through MLATs):

– Lithuania (bank records) – Canada (Internet/financial records)Canada (Internet/financial records)– Ukraine (financial records, ISP records, items seized in search)– Thailand (hotel records)( )

• The Perpetrator/“Pocket Trash” (Extradition Treaty used)– Thailand (treaty also applies to personal effects).

7

Priorities

• Health and safety: includes, but is not limited to co nterfeit prod cts relating toto, counterfeit products relating to pharmaceuticals, critical computer or net orking infrastr ct re h giene prod ctsnetworking infrastructure, hygiene products, and manufactured goods that are otherwise harmfulharmful.

• Theft of trade secrets (18 U.S.C. §1832) and i i (18 S C §1831economic espionage (18 U.S.C. §1831 – to

benefit a foreign government);

Priorities (cont.)

• Organized crime/organized criminal net orks: aims at gro ps hich rel onnetworks: aims at groups which rely on corruption, violence, or use structure to protect acti ities or to e ploit internationalprotect activities, or to exploit international commerce or communications.

l li i l i d• Large-scale online commercial piracy and counterfeiting: includes the distribution of

i h d k d k icopyrighted works or trademarks via websites, auction sites, direct sale sitesand other peer-to-peer networks.

Criminal Counterfeiting Statutes

§• Criminal Copyright Infringement (17 USC § 506, 18 USC § 2319)C i i l T d k I f i (18 USC § 2320)• Criminal Trademark Infringement (18 USC § 2320)

• Bootlegging (18 U.S.C. § 2319A)• Camcording (18 USC § 2319B)• Counterfeit Labels (18 U.S.C. § 2318)• Digital Millennium Copyright Act (17 USC §§ 1201,

1204)

Criminal Copyright InfringementCriminal Copyright Infringement( )( )

• Felony Infringement Elements

(17 U.S.C. 506 & 18 U.S.C. 2319)(17 U.S.C. 506 & 18 U.S.C. 2319)

Felony Infringement Elements– Valid copyright exists– Defendant infringed work (by reproduction or distribution) – Defendant acted willfully– Infringed >10 copies of works w/total retail value of > $2,500

w/in 180 daysw/in 180 days– Note: Commercial purpose not necessary

• Misdemeanor– EITHER $1000 worth of copying OR commercial purpose

Applies to any exclusive right if commercial purpose– Applies to any exclusive right, if commercial purpose

PrePre--Release PiracyRelease Piracy(17 U S C 506(a)(1)(C) 18 U S C 2319(d))(17 U S C 506(a)(1)(C) 18 U S C 2319(d))

• Felony Elements

(17 U.S.C. 506(a)(1)(C), 18 U.S.C. 2319(d))(17 U.S.C. 506(a)(1)(C), 18 U.S.C. 2319(d))

– Defendant willfully infringed by distribution (only)– Work being “prepared for commercial distribution” (i.e., a pre-

release work)release work)– By making available on a publicly accessible computer network– If defendant knew or should have known that the work was a

pre-release work

Note: (1) No commercial purpose;Note: (1) No commercial purpose; (2) No scale requirement

CamcordingCamcording( )( )

El

(18 U.S.C. 2319B)(18 U.S.C. 2319B)

• Elements– Knowingly and without authorization

U i i di i l di– Using or attempting to use an audiovisual recording deviceTo transmit or copy a movie (not infringement)– To transmit or copy a movie (not infringement)

– From a performance of the work in a movie theater

Note: (1) No commercial purpose; (2) No scale requirement( ) q

Recent © Cases in NDGA • United States v. Scott Ahn, et al.: 13-

defendant conspiracy to violate 18 U.S.C. §defendant conspiracy to violate 18 U.S.C. §2318, 2319 & 2320 involving main supply center for counterfeit DVD movies andcenter for counterfeit DVD movies and music CDs in Southeast, including raw materials and artwork suppliers; 5materials and artwork suppliers; 5 convictions to date; trial pending.

• US v John Mwangi: was charged• US v. John Mwangi: was chargedwith violating § 2319 to cure procedural i ith § 2320 h BAPE d LRGissue with § 2320 charge; BAPE and LRG were also copyrighted; pled guilty.

Trademark InfringementTrademark Infringement

• 18 U.S.C. § 2320: The defendant §– Trafficked, or attempted to traffic, in goods or

services (or labeling components for goods or services)

– Trafficked “intentionally”– Used a “counterfeit mark” on or in connection

with (or applied to labels for) such goods or iservices

– Used counterfeit mark “knowingly”

Typical TM Fact Pattern

MFA

Atlanta, GA

Recent TM Cases in NDGA• US v. Xing Jiang, et al.: 5-defendant case

in ol ing aro nd MSRP $30 million MSRP ininvolving around MSRP $30 million MSRP in consumer goods spread across multiple

areho ses and storage nits; 1 con iction 4warehouses and storage units; 1 conviction, 4 fugitives;

i d f d l d il• US v. Yi: defendant store owner pled guilty to trafficking in counterfeit goods; sold generic

d f b h d h lf illi igoods from store, but had over a half million in counterfeit inventory in nearby warehouse.

More Recent TM Cases • US v. Shakon Lin & Xiao Zheng: importers

and o ners of large store dedicated toand owners of large store dedicated to counterfeit goods convicted under 18 U.S.C. § 2320§ 2320.

• US v. John & Joyce Wu: multiple seizures of f i li d hcounterfeit appliances and other consumer

goods from shipments and store valued at ca. $ illi S i i d §$7 million MSRP; one conviction under §2320, § 545 importation plea pending.

More Recent TM Cases • US v. Shakon Lin & Xiao Zheng: importers

and o ners of large store dedicated toand owners of large store dedicated to counterfeit goods convicted under 18 U.S.C. § 2320§ 2320.

• US v. John Mwangi: had MSRP $1.3 million i d i l d l din store and extensive sales records; pled guilty to conspiracy to violate §§2318, 2319;

d 23 hsentenced to 23 months.

Internet TM Case

• US v Robert Benninger et al : prosecution• US v. Robert Benninger, et al.: prosecution of scheme to import counterfeit sports jerseys from Korea and sell them throughjerseys from Korea and sell them through Ebay; 3 convictions in US. K i f i d• Korea prosecution: manufacturers convicted in Korea with assistance of ICE-Seoul.

Importation Statutes• US v. Ressler: complex

scheme to import• US v. Wu: wife pled

guilty and wasscheme to import counterfeit Prada merchandise from Italy to

guilty and was sentenced on trademark count; husband ismerchandise from Italy to

NYC and Italy through shell companies in UK,

count; husband is scheduled to plead guilty to importation

Switzerland and California; two convictions; pled to

ft th f t t

contrary to law under 18 U.S.C. § 545.

accessory after the fact to 18 U.S.C. § 542, importation with fraudulentimportation with fraudulent invoices.

US Sentencing Guideline§2B5.3. Criminal Infringement of Copyright or

TrademarkTrademark Based on mix of theories about harm,

including lost profits and control unjustincluding lost profits and control, unjust enrichment, and fraud.

Has evolved in response to case law Has evolved in response to case law. Has changed to adapt to new means and

types of infringement (e g file sharing)types of infringement (e.g., file sharing).

Sentencing Guidelines: Offense Tables (cont.)

Section 2B5.3• General rule: look to the retail value of the• General rule: look to the retail value of the

infringed item and multiply by the number of infringing items.infringing items.

• Exception:Infringing item would not appear identical orInfringing item would not appear identical or substantially equivalent to reasonably informed purchaser; AND retail value of o ed pu c ase ; N eta va ue oinfringing item 3/4ths that of infringed item.

• Base offense level: 8.se o e se eve : .

For More Information

• Brian Pearce@usdoj gov; 404 581 6000• Brian.Pearce@usdoj.gov; 404-581-6000• Contact CCIPS: (202) 514-1026• CCIPS Manuals:CCIPS Manuals:

– Prosecuting Intellectual Property Crimes (Sept. 2006)– Searching and Seizing Computers and Obtaining Electronic

Evidence in Criminal Investigations (August 2009)Evidence in Criminal Investigations (August 2009)

• CCIPS Website: