white house annual intellectual property report

8/2/2019 White House Annual Intellectual Property Report

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M A R C H 2 0 1 2

2011 U.S. INTELLECTUAL PROPERTY

ENFORCEMENT COORDINATOR

ANNUAL REPORT ON

INTELLECTUAL PROPERTY

ENFORCEMENT


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i

Content

Letter to the President o the United States and to the Congress o the United States 1

Introduction 5

Leading by Example 5

Securing Supply Chains 5

Review o Intellectual Property Laws to Determine Needed Legislative Changes 7

Combating Countereit Pharmaceuticals 7

Increasing Transparency 8

Ensuring Eciency and Coordination 8

Enorcing U S Intellectual Property Rights Internationally 9

A Data-Driven Government 10

Next Steps 11

2011 Implementation o Enorcement Strategy Action Items 13

Leading by Example 13

Establish U.S. Government-Wide Working Group to Prevent U.S. Government Purchase

o Countereit Products 13

Use o Legal Sotware by Federal Contractors 14

Increasing Transparency 14

Improved Transparency in Intellectual Property Policy-Making and International

Negotiations 14

Increased Inormation Sharing with Rightholders to Identiy Countereit Goods 15

Communication with Victims/Rightholders 16

Reporting on Best Practices o Our Trading Partners 18

Identiy Foreign Pirate Websites as Part o the Special 301 Process 18

Tracking and Reporting o Enorcement Activities 19


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2 0 1 1 IPE C ANNUAL RE PORT ON INT E L L E CT UAL PROPE RT Y E NFORCE ME NT

Share ITC Exclusion Order Enorcement Data 20

Enhanced Communications to Strengthen Section 337 Enorcement 20

Raising Public Awareness 21

Improving Eciency o Intellectual Property EnorcementUsing Our Resources as Eectively as Possible 22

Ensuring Eciency and Coordination 23

Coordination o National Law Enorcement Eorts to Avoid Duplication and Waste 23

Coordination o Federal, State, & Local Law Enorcement 25

Coordination o Training or State & Local Law Enorcement & Prosecutors 26

Improve Eectiveness o Personnel Stationed Overseas to Combat Intellectual Property

Inringement 26

Coordination o International Capacity Building and Training 28

Establishment o a Countereit Pharmaceutical Interagency Committee 29

Economic Espionage & Trade Secret Thet 30

Enorcing Our Rights Internationally 31

Combat Foreign-Based and Foreign-Controlled Websites that Inringe U.S. Intellectual

Property Rights 32

Enhance Foreign Law Enorcement Cooperation 34

Promote Enorcement o U.S. Intellectual Property Rights through Trade Policy Tools 36Special 301 Action Plans 37

Strengthen Intellectual Property Enorcement Through International Organizations 37

Supporting U.S. Businesses in Overseas Markets 38

Administrations Focus on China 40

Securing Our Supply Chain 42

FDA Notication Requirement or Countereit Pharmaceuticals and Other Medical Products 42

Mandated Use o Track-and-Trace or Pharmaceuticals and Medical Products 42Increased Enorcement Eorts to Guard Against the Prolieration o Countereit

Pharmaceuticals and Medical Devices 42

Penalty Relie or Voluntary Disclosure 45

Penalize Exporters o Inringing Goods 45

Streamline Bonding Requirement or Circumvention Devices 45

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C O N T E N T s

Facilitating Cooperation to Reduce Intellectual Property Inringement Occurring

over the Internet 46

Establish and Implement Voluntary Protocols to Help Reduce Illegal Internet Pharmacies 47

Building a DataDriven Government 47

U.S. Government Resources Spent on Intellectual Property Enorcement 47

Assessing the Economic Impact o Intellectual Property-Intensive Industries 48

Comprehensive Review o Existing Intellectual Property Laws to Determine Needed

Legislative Changes 48

Perormance Data 51

Law Enorcement Investigation 51

DOJ Prosecutions 51

Department o Homeland Security Intellectual Property Seizures 53

CBP Civil Fines 53

Appendix A: State and Local Law Enorcement IPTET Trainings 55

Appendix B: IPR Center Participants 57

Appendix C: Agencies 2011 Major Intellectual Property Enorcement Activities 59

Department o Commerce 59

United States Patent and Trademark Ofce 59

International Trade Administration 64

Department o Homeland Security 70

U.S. Customs and Border Protection 70

U.S. Immigration and Customs Enorcement 73

Department o Justice 76

Department o State 77

U.S. Trade Representative 80

Department o Health and Human Services 84

U.S. Copyright Oce 87

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Appendix D: Intellectual Property Spotlights 89

State Activity Index 117

List o Acronyms 119


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1

Letter to te Preient of te Unite state an to te Conre of te Unite state

I am pleased to present the 2011 U S Intellectual Property Enorcement Coordinators (IPEC) Annual

Report on Intellectual Property Enorcement It has been over a year and a hal since my oce issued

the Joint Strategic Plan on Intellectual Property Enorcement (Strategy) with signicant public input

and the coordinated eorts o Federal agencies including the U S Departments o Agriculture (USDA),

Commerce (DOC), Health and Human Services (HHS), Homeland Security (DHS), Justice (DOJ),

State, and the Treasury, the U S Trade Representative (USTR) and the U S Copyright Oce The Strategy

set orth thirty-three action items organized under six overarching principles designed to improve intel

lectual property enorcement thereby protecting innovation, strengthening the economy, supporting

American jobs, and promoting exports in intellectual property-related sectors by increasing intellectual

property enorcement

In 2011, the U S Government made great strides toward implementing the Strategy The eorts by the

Administration continue to be coordinated and collaborative as we take concrete steps to improve

intellectual property enorcement I would like to highlight a ew o our important steps:

Voluntary best practices by the private sector can reduce inringement online My oce hasworked hard to help acilitate and encourage dialogue among a broad range o private sector

entities to help curb the sale o countereit goods and reduce online piracy The major achieve

ments on this ront include:

In June 2011, American Express, Discover, MasterCard, PayPal and Visamajor credit card

companies and payment processorsreached an agreement to develop voluntary best

practices to withdraw payment services or sites selling countereit and pirated goods

In July 2011, a voluntary agreement was nalized among several internet service provid

ers (ISPs)AT&T, Comcast, Cablevision, Verizon, and Time Warner Cableand major and

independent music labels and movie studios to reduce online piracy Under the agreement,

ISPs will notiy subscribers, through a series o alerts, when their Internet service account

appears to be misused or inringement on peer-to-peer networks

In December 2010, as a result o the Administrations strategy to combat illegal online

pharmacies, American Express, Discover, eNom, GoDaddy, Google, MasterCard, Microsot

(Bing), Network Solutions, PayPal, Visa, and Yahoo!, announced that they would orm a

non-prot group to combat illegal ake online pharmaciescriminals masquerading aslegitimate pharmacies

U S law enorcement continues to aggressively ght countereiters, pirates, and those whoseek to steal American innovation to gain an upper hand in the global marketplace In FY 2011:

DHS agenciesCustoms and Border Protection (CBP) and Immigration and Customs

Enorcement (ICE)increased seizures o countereit pharmaceuticals by almost 200


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percent, increased ake saety and critical technology goods seizures by 44 percent, and

increased overall seizures by 24 percent in comparison to FY 2010 (an overall increase o

67 percent in comparison to FY 2009)

ICE Homeland Security Investigations (HSI) enorcement activities substantially increased in

comparison to FY 2010: the number o investigations increased by more than 17 percent (66percent in comparison to FY 2009); arrests increased by more than 57 percent (115 percent

in comparison to FY 2009); and convictions increased 71 percent

FBI investigations o new trade secret cases are up 29 percent and investigations o health

and saety cases are up 87 percent over FY 2010

DOJ prosecutions have resulted in signicantly higher sentences, refecting the gravity o the

cases pursued The number o sentences o 60+ months and 37-60 months have doubled

and tripled, respectively, over FY 2010

There has been signicant progress in agency coordination and ensuring that we are using ourresources in the most ecient manner

In FY 2010, law enorcement operations increased by over a third with only a 5 percent

projected spending increase in comparison to FY 2009

The Department o Justices (DOJ) Bureau o Justice Assistance (BJA) grant program has

increased coordination among ederal, state, and local authorities to enorce intellectual

property rights The program has been a signicant success with state and local law enorce

ment grantees having seized at least $202 million worth o inringing merchandise since

October o 2009over 18 times the value o the grants ($10 9 million) distributed as o

December 2011

The National Intellectual Property Rights Coordination Center (IPR Center), a multi-agencytask orce that coordinates intellectual property enorcement o member agencies, contin

ued to maximize precious resources by de-conficting cases De-confiction is the process o

vetting investigatory activities throughout the law enorcement community to ensure law

enorcement resources are not duplicated and wasted The number o cases de-conficted

increased to 2,877a 429 percent increase in comparison to 2010

U S Government personnel stationed overseas are more coordinated as a result o the

IPEC-led interagency working group that set country-specic objectives and activities to

address critical intellectual property enorcement issues in key countries

In March 2011, IPEC issued theAdministrations White Paper on Intellectual Property EnorcementLegislative Recommendations that set orth 20 legislative recommendations designed to

strengthen intellectual property enorcement These legislative recommendations would

enhance penalties or certain egregious intellectual property oenses (such as sales to the

military, health and saety violations, and gang activity), provide enorcement agencies with

additional tools to combat inringement and curb the sale o countereit pharmaceuticals, and

amend the laws to keep up with technology by making illegal distribution by streaming a elony,

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LETTER TO ThE PREsIdENT OF ThE UNI TEd sTATEs ANd TO ThE CONgREss OF ThE UNITEd sTATEs

as is the case or physical distribution methods In the 2011 session o Congress, eleven bills were

introduced that incorporated recommendations rom the Administrations White Paper, and two

o the recommendations have been enacted into law I look orward to working closely with

Congress on these legislative proposals that seek to strengthen U S intellectual property rights

I am encouraged by our accomplishments in 2011 in strengthening intellectual property enorcementWith the continued leadership o the Obama Administration and the support o Congress, we can

ensure that U S innovation and creativity are protected around the world and allow Americans to do

what they do bestout-innovate, out-compete, and continue to lead in the global marketplace in this

decade and beyond Protecting Americas innovation and creativity is a critical part o being competitive

in the global economy Protecting what we invent, create and produce is always important, but at this

time, when every job matters, it is especially important that we stop thet that harms our businesses

and threatens jobs here at home

Victoria A Espinel

U S Intellectual Property Enorcement Coordinator

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5

Introuction

In June 2010, the Administration, through the IPECs Joint Strategic Plan, emphasized the protection

and enorcement o U S intellectual property rights These rights drive the economy, create jobs or

American workers, promote innovation, and secure Americas position as the worlds leader or creativity

and ingenuity The 2011 Annual Report provides an illustration o the coordinated eorts that the U S

Government is undertaking to address the challenges o enorcing intellectual property o U S righthold

ers abroad, securing supply chains, pursuing sources o countereit and pirated goods, and meeting the

challenges posed by emerging criminal trends such as the online sales o countereit pharmaceuticals,

economic espionage, and targeted thet o trade secrets

The 2011 Annual Report is the second report in a three-year reporting cycle While there is more work

to be done, the accomplishments highlighted in this report represent a holistic and coordinated U S

Government approach in identiying and implementing strategies to enorce U S intellectual property

rights This work is the product o joint eorts within the Executive Branch as well as partnerships

between Federal agencies, state and local governments, private industry, labor unions, and oreign

governments

Leading by Example

The U S Government is leading by example by taking pro-active measures to ensure that the Federal

government itsel does not purchase and use countereit goods In 2011, the IPEC convened and chaired

an interagency working group comprised o subject matter experts rom ourteen Federal agencies to

develop a government-wide anti-countereiting ramework to ensure supply chain integrity throughout

the Federal government

The interagency working group, whose leadership includes the National Aeronautics and SpaceAdministration (NASA), the Department o Deense (DOD), DOJ, and the Oce o Federal

Procurement Policy (OFPP), is in the process o nalizing a strategy to ensure that the U S

government does not purchase and use countereit or pirated goods The group is examining

existing tools as well as the need or the creation o new tools to maintain the integrity o the

U S Government supply chain

Securing Supply Chains

The IPEC continues to acilitate and encourage dialogue among the dierent private sector entities

that make the Internet unction As an Administration, we have adopted the approach o encouraging

the private sector (including ISPs, credit card companies, and online advertisers) to reach cooperativevoluntary agreements to reduce inringement that are practical, eective, and consistent with protecting

the legitimate uses o the Internet and our commitment to principles o due process, ree speech, air

use, and privacy Together with law enorcement eorts, private sector voluntary actions can dramati

cally reduce online inringement and change the enorcement paradigm

In December 2010, eleven market leadersAmerican Express, Discover, eNom, GoDaddy,Google, MasterCard, Microsot (Bing), Network Solutions, PayPal, Visa and Yahoo!agreed to


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orm a nonprot organization to combat illegal online pharmaciescriminals masquerading

as pharmaciesthrough education and voluntary enorcement, including de-registering

domain names, withdrawing payment services rom ake pharmacies, and reusing to advertise

on ake pharmacy sites During 2011, the group took concrete steps towards their commitment

to orm a nonprotnow called the Center or Sae Internet Pharmacies (CSIP) We expect to

see CSIP operational by early 2012

In June 2011, major credit card companies and payment processors reached an agreement onvoluntary best practices to reduce sales o countereit and pirated goods Voluntary participants

include American Express, Discover, MasterCard, PayPal and Visa The best practices are designed

to cut o sites distributing inringing goods rom conducting nancial transactions through

these processors, and include mechanisms to investigate complaints and remove payment

services rom sites that continue to operate unlawully The best practices contain appeal mecha

nisms during and ater the investigation phase and both beore and ater any action is taken

In July 2011, a voluntary agreement was inalized among several ISPsAT&T, Comcast,Cablevision, Verizon, and Time Warner Cableand major and independent music labels andmovie studios to reduce online piracy Under the agreement, ISPs will notiy subscribers, through

a series o alerts, when their Internet service accounts appear to be misused or inringement on

peer-to-peer networks Ater the sixth alert, the ISP will take some action to temporarily aect

the user experience in a manner that is reasonably tailored to educate the subscriber, discour

age inringing activity consistent with the Federal Communication Commission (FCC) Open

Internet Order and in a manner sensitive to the legitimate needs o subscribers o an Internet

connection

The methodologies used to detect inringement will be vetted by an independent third

party or accuracy There is an independent review process and no action will be taken

until the appeal is resolved The process will be managed by a nonprot that will advise the

participants on how to implement the agreement and, as necessary, modiy, and improve

the process The nonprot will also educate the public on copyright law and on how to

avoid violating the law

The IPEC continues to encourage adoption o best practice agreements by Internet advertisers,ad agencies, internet ad brokers, and ad exchanges These voluntary best practices should both

prevent sites distributing pirated or countereit goods rom receiving advertising revenue rom

legitimate companies and create the appearance o legality by carrying advertisements rom

legitimate companies

The private sector arrangements that have been negotiated in the United States can serve asa positive example or Internet policies o other countries Working together with the relevant

Federal agencies, the IPEC intends to encourage trading partners to take similar steps to develop

voluntary agreements that will result in reducing inringement in international and domestic

supply chains, as one important part o an overall strategy to reduce online inringement

Voluntary agreements and best practices can also be eective tools to address inringement inthe physical world Over the next year, IPEC, in coordination with other Federal agencies, will

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eective coordination One such example was the successul prosecution o Shengyang Zhou,

a Chinese national, or tracking in countereit pharmaceuticals Zhou operated an online

pharmacy that sold a countereit version o the FDA approved weight loss drug Alli One user

o the countereit Alli sold online by Zhou suered a stroke ater taking the medication A joint

investigation by ICE HSI, FDA Oce o Criminal Investigations, U S Postal Inspection Service,

and the DOJ led to Zhous conviction and a sentence o 87 months in ederal prison

Increasing Transparency

The IPEC continues to encourage improved transparency in intellectual property policy making The

IPEC maintains an open door policy and meets with hundreds o stakeholders, large and small, across

a broad range o sectors in developing and implementing the Administrations strategy or intellectual

property enorcement The Administration solicits and receives input on implementation o the strategy

through ormal mechanisms including Federal Register Notices All comments received in response to

Federal Register Notices are publicly available The IPEC issues a periodic report to the public, called the

Intellectual Property Spotlight, which is also available on the IPEC website

Critical to improving transparency is also ensuring that law enorcement maintain communication

with victims and share pertinent inormation with rightholders The 2011 report provides inormation

on several mechanisms implemented to increase transparency The IPR Center continues to provide

inormation to victims and rightholders through its outreach program known as Operation Joint Venture

The IPR Center launched a new website,www iprcenter gov, which provides inormation and links

concerning intellectual property enorcement activity undertaken by all IPR Center partners The IPR

Center also has created a reporting mechanism that links to its website or the public to use to report

intellectual property thet The link is also on the website o several U S embassies located in countries

where intellectual property crimes are rampant

Ensuring Eciency and Coordination

There has been signicant progress in improving agency coordination and increasing the eciency

and eectiveness o law enorcement eorts at the Federal, state and local level, o personnel stationed

overseas, and o the U S Governments international training eorts In February 2011, President Obama

created a signicant tool to improve coordination by issuing Executive Order 13565 which established

a Cabinet-level advisory committee, chaired by IPEC, comprised o the heads o the departments

responsible or intellectual property enorcement, namely the USDA, DOC, HHS, DHS, DOJ, State, USTR,

Treasury, and the Oce o Management and Budget

U S law enorcement authorities continue to maximize their limited resources in a coordinated and

ecient manner to ght the tide o inringing and potentially dangerous products entering the U S andthe global market It is critical that we aggressively combat the thet o our technology and innovation

by countereiting and piracy, by patent inringement, and by trade secret thet

DHS agenciesCBP and ICE combinedincreased seizures o countereit pharmaceuticalsby almost 200 percent, increased ake consumer saety and critical technology merchandise

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commitment that China will not link its innovation policies to the provision o government

procurement preerences, as well as a commitment to conduct audits to ensure that Chinese

government agencies at all levels use only legitimate sotware

In August 2011, Vice President Biden continued the Administrations engagement on intellectualproperty rights as part o his trip to China During his visit, he pressed or better enorcement inseveral orums, including in meetings with Chinas Vice President, Xi Jinping, who promised that

China will intensiy IPR protection and treat all businesses as equals in terms o the accreditation

o indigenous innovation products and government procurement

At the November 2011 U S -China Joint Commission on Commerce and Trade (JCCT), coordinated by Secretary Bryson and Ambassador Kirk, China agreed to establish, or the rst time,

a permanent State Council-level leadership structure, headed by a Vice Premier, to lead and

coordinate intellectual property enorcement across all o China China also agreed to eliminate

by December 1, 2011 any indigenous innovation product accreditation catalogues or other

measures linking innovation policies to government procurement preerences

Chinese companies have been implicated as intended beneciaries in several recent trade secret and

economic espionage cases prosecuted by DOJ

In March 2011, in response to the growing threat o economic espionage and trade secret thet,the IPEC released the Administrations recommendation that Congress increase the statutory

maximum prison sentence or economic espionage to 20 years or more The IPEC also recom

mended that Congress direct the U S Sentencing Commission to increase penalties through

sentencing enhancements based on the deendants criminal conduct

The 2011 report provides a urther examination o the Administrations ocus on combatting economic

espionage and the thet o trade secrets

A Data-Driven Government

While law enorcement seizures and activities have increased, unding or these operations has remained

relatively fat Agencies have turned a small budgetary increase into large enorcement results

By eiciently spending their limited resources or intellectual property enorcement, lawenorcement has taken a modest 5 percent increase in projected spending and turned it into a

more than 33 percent increase in seizures, arrests, and investigations o countereit and pirated

merchandise in FY 2010

The DOJs BJA grant program has increased coordination between ederal, state, and localauthorities to enorce intellectual property rights The program has been a major success withgrantees having seized at least $202 million worth o inringing merchandise since October o

2009over 18 times the value o the grants ($10 9 million) distributed as o December 2011

At the request o the IPEC, the U S Government is or the rst time conducting an economicanalysis, led by DOC, the Economic and Statistics Administration (ESA), and the USPTO, work

ing with chie economists across the Federal government, to identiy the industries that most

intensively produce intellectual property and to measure the importance o those industries

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I N T R O d U C T I O N

to the U S economy This broad study will examine all sectors o our economy We believe that

improved measurement o intellectual property linked to measurements o economic peror

mance will help the U S Government understand the role and breadth o intellectual property

in the American economy and will inorm policy and resource decisions related to intellectual

property enorcement

Next Steps

The accomplishments and milestones detailed in this report will serve as the starting point or the

benchmarks that the IPEC will strive to achieve over the next year The IPEC will work to ensure that

law enorcement eorts continue to increase Combating online inringement, protecting consumers

health and saety, and preventing the thet o innovative technology, including trade secret thet, will

remain priorities o the highest order

There are a number o areas in which IPEC will seek to make signicant progress in 2012 For instance,

we will encourage the expansion o voluntary best practices or online advertising to cut o revenue

to websites distributing countereit and pirated goods We will continue to assess Federal laws andwork with Congress to make certain that Federal agencies have the necessary enorcement tools they

need to eectively combat intellectual property thet and we are ocused on increasing international

cooperation and enhancing capacity building through training, deployment o U S personnel overseas

and diplomatic engagement with oreign nations

These approaches serve as examples to our citizens and to the international community and make clear

that the U S Government will be vigorous in protecting intellectual property Americas greatest export

has been, and will always remain, the creativity, ingenuity, and innovation o the American people That

innovation is essential to growing the economy and creating jobs This strategy and the aggressive

enorcement o intellectual property rights ensure that America leads, America innovates, and America

protects its workers, creators, and innovators

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13

2011 Implementation of Enforcement stratey Action Item

Leading by Example

Establish U.S. Government-Wide Working Group to Prevent U.S. Government Purchase o

Countereit Products

As the purchaser o over $500 billion in goods and services per year, the U S Government must ensure that

it does not purchase countereit goods, secure its supply chain, and take the necessary steps to combat

the evolving tactics o countereiters The Joint Strategic Plan established a government-wide working

group to prevent the purchase and use o countereit products Over the last year, the IPEC convened

an interagency group consisting o subject matter experts to develop an anti-countereiting ramework

that is fexible enough to accommodate the wide variety o missions across the government and their

dierent systems o procurement The Oce o Federal Procurement Policy (OFPP), Department o

Deense (DOD), DOJ, and NASA have assumed leadership roles within the working group based on their

vast expertise with U S Government procurement and anti-countereiting practices Other members

include the DOC, Department o Energy, HHS, DHS, and Department o Transportation, the Environmental

Protection Agency, the Missile Deense Agency, the General Services Administration, the Small Business

Administration, the Nuclear Regulatory Commission, and the National Reconnaissance Oce

The main ocus o this interagency working group is to ensure that the U S Government has the neces

sary tools to ensure that it does not purchase or use countereit products The working group is examin

ing legislative authority, regulations, procurement policy and guidance, industry studies and reports,

and international anti-countereiting standards in order to identiy areas where risk to the security o

U S Government supply chain rom countereit parts can be reduced The working group developed

six objectives to ocus the groups eorts to identiy legislative, regulatory, or policy gaps and propose

solutions to ll those gaps The six objectives are:

Countereit Risk Assessment Supplier Requirements Traceability Testing and Evaluation o Goods Countereit Training and Outreach Enorcement Remedies

The group is developing a government-wide strategy using tools that are already at the U S

Governments disposal and creating new tools to combat the purchase or use o countereit goods by

the U S Government The strategy will ocus on reducing the risk o countereit items entering the sup

ply chain, dealing eciently with any suspected countereit items that do enter the supply chain, and

strengthening remedies against those who provide countereit items to the U S Government


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Use o Legal Sotware by Federal Contractors

The IPEC has been working with Federal agencies to review the U S Governments practices and policies

regarding the use o sotware by Federal contractors and to promote the use o only legal sotware

Building upon Executive Order 13103, which requires that Federal agencies take steps to ensure that

they use only legal copies o sotware, we are currently reviewing our policies with respect to use osotware by Federal contractors to establish appropriate procedures to ensure that any sotware they

use in perormance o a contract with a Federal agency is properly acquired and used

In reviewing practices, we decided it would be valuable to remind agency Inormation Technology

(IT) and procurement ocials o the Administrations policy o making IT procurement decisions in a

technology-neutral way On January 7, 2011, the U S Chie Inormation Ocer, the Administrator or

Federal Procurement Policy and the IPEC issued a joint statement to Senior Procurement Executives

and Chie Inormation Ocers reminding them o the Administrations policy o making IT procure

ment decisions based on perormance and value, and ree o preconceived preerences based on how

the technology is developed, licensed or distributed The statement explained that, in the context o

acquiring sotware, agencies should generally analyze all suitable alternatives, including proprietary,

open source and mixed source technologies to allow the U S Government to pursue the best strategy

to meet its needs It also reminded these ocials that all technology used must be properly licensed in

accordance with applicable law

The joint statement on technology-neutral and properly licensed procurement practices is publicly

available at: http://www cio gov/documents/Technology-Neutrality pd

Increasing Transparency

Improved Transparency in Intellectual Property Policy-Making and InternationalNegotiations

The Administration is strongly committed to transparency in the development o intellectual property

policy and in international negotiations, as well as inormation sharing and reporting on law enorce

ment activities at home and abroad

In developing and implementing the enorcement policy or the Administration, the IPEC meets with

hundreds o stakeholders, large and small, across a broad range o sectors, including: chemical manu

acturers, the ragrance industry, video game companies, biouel companies, authors, song writers,

toy manuacturers, deense contractors, sotware developers, pharmaceutical manuacturers, movie

studios, aerospace companies, automobile companies, industrial equipment manuacturers, book

publishers, electronic component manuacturers, apparel companies, music labels, the biotech industry,

green technology innovators, telecommunications companies, textile manuacturers, jewelers, semi

conductor companies, arm equipment manuacturers, artists, independent inventors, Internet service

providers, Internet search companies, Internet auction companies, online advertisers, ad brokers, credit

card companies, payment processors, think tanks, consumer advocacy groups, labor unions, students,

and academics

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2 0 1 1 IMPL E ME NT AT ION OF E NFORCE ME NT s T RAT E gY ACT ION IT E Ms

The IPEC will continue to maintain an open door policy and actively seek input rom a wide range o

stakeholders in developing and implementing the Administrations strategy or intellectual property

enorcement

The Administration solicits and receives input through more ormal mechanisms, such as Federal

Register Notices In 2011, the Administration sought public input on a range o intellectual propertyenorcement issues:

On December 30, 2010, USTR issued a Federal Register Notice and held a public hearing onMarch 2, 2011, to identiy countries that deny adequate and eective protection o intellectual

property rights as part oUSTRs annual Special 301 review

On August 9, 2011, IPEC issued a Federal Register Notice soliciting public comments on waysto prevent countereit products rom entering the U.S. Government supply chain

On August 12, 2011, USTR issued a Federal Register Notice requesting public comments regarding Chinas compliance with World Trade Organization (WTO) commitments, including

Chinas commitments to protect and enorce intellectual property rights

On September 22, 2011, USTR issued a Federal Register Notice to identiy online and physi-cal oreign markets that deal in inringing goods as part o USTRs Out-o-Cycle Review o

Notorious Markets

On October 7, 2011, USPTO issued a Federal Register Notice seeking input on how the USPTO,in coordination with other agencies, can best help small businesses obtain international

patent protection

On October 17, 2011, USPTO issued a Federal Register Notice requesting public comments onthe state oChinas patent enorcement system, including any challenges companies have

aced when attempting to enorce patents in China

All the responses received to these Federal Register Notices are available to the public

The IPEC issues periodic reports, called the Intellectual Property Spotlight, highlighting the Administrations

recent steps to improve intellectual property enorcement Copies o the Spotlight are sent to the public

through a ree email subscription, are posted on the IPEC website, and are attached as Appendix D o

this report I you wish to receive theSpotlight, please send an email to [email protected]

Increased Inormation Sharing with Rightholders to Identiy Countereit Goods

Until recently, sharing certain inormation on an import or its packaging with a rightholder was a

potential violation o the Trade Secrets Act, 18 U S C 1905 This lack o clarity presented challenges toDHSs ability to communicate with rightholders to determine the authenticity o goods To address this

concern, the Administration recommended legislation in March 2011 expressly granting DHS authority

to share inormation pre-seizure, with appropriate saeguards or importers o legitimate products In

July 2011, the Administration sent a legislative proposal to Congress refecting that recommendation

In December 2011, Senator Levin and Senator McCain introduced legislation as an amendment to the

NDAA or Fiscal Year 2012 to allow inormation disclosure to rightholders when needed to make an

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inringement determination On December 31, President Obama signed the provision into law, providing

CBP the authority it needs to communicate with rightholders and more eectively stop ake products

with countereit marks that rob innovators and threaten the health and saety o the American people,

while providing the appropriate saeguards or importers o legitimate products

During 2011, Congress was very active in trying to address the Administrations recommendation to xthis problem First, in May 2011, Senator Leahy introduced legislationas part o the Preventing Real

Online Threats to Economic Creativity and Thet o Intellectual Property Act (PROTECT IP Act)to

allow trade secret inormation disclosure to rightholders when DHS needs the disclosure to make a pre-

seizure inringement determination Also, in October, Senator Coons and Senator Grassley proposed

an amendmentco-sponsored by Senator Hatch and Senator Rubioto the Currency Exchange Rate

Oversight Reorm Act which would also provide the same disclosure authority to DHS In November 2011,

Senator Coons and Senator Rubio introduced another bill or DHS disclosure authority in the proposed

American Growth, Recovery, Empowerment and Entrepreneurship Act (AGREE Act) In December 2011,

Representative Poe introduced legislation as an amendment to the Stop Online Piracy Act (SOPA) to

allow disclosure authority or CBP Also in December, Senator Wyden and Representative Issa introducedlegislation to allow DHS to disclose inormation as part o their Online Protection and Enorcement o

Digital Trade Act (OPEN Act) The IPEC commends Congress or its leadership on this issue

Rightholders are an excellent resource or inormation regarding their own products and it is important

that the Federal government and rightholders work together to more eciently protect intellectual

property rights Obtaining the assistance o rightholders to help determine whether goods are inringing

is critical The IPEC will continue to support and encourage communication and inormation sharing

eorts between enorcement agencies and rightholders

Communication with Victims/Rightholders

Regular and ongoing communication with intellectual property rightholders and inringement victimsis extremely important in order to gain a better understanding o the issues that these persons ace and

how best to use government resources to strengthen enorcement The IPR Center has led an outreach

initiative to increase inormation sharing with victims o intellectual property rights violations in the

public and private sectors

As noted above, in August, the IPR Center launched a new website, www iprcenter gov, to serve as

a portal or the public and private sectors to gain access to inormation and contacts or IPR Center

member agencies dedicated to intellectual property enorcement

Through Operation Joint Venture, the IPR Center has ocused on communicating with victimsin an eort to combat the illegal importation and distribution o countereit, substandard, andtainted goods In FY 2011, Operation Joint Venture conducted 351 outreach and training events

to 17,037 individuals, an increase o 16 percent over FY 2010

To make it easier or victims to report crimes, the IPR Center launched an easily identiablereporting mechanism at its website (http://www iprcenter gov) to allow the public to report

intellectual property crimes A link to the reporting mechanism is highlighted in the Intellectual

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Property Spotlight and also on the websites o U S Embassies located in countries where intel

lectual property crimes are rampant

ICE HSI has sta nationwide to ensure that victims o intellectual property crimes receive alertsabout enorcement actions related to intellectual property

The DOJs Computer Crime & Intellectual Property Section (CCIPS) has a dedicated website(http://www justice gov/criminal/cybercrime/reporting html#C5), which contains a guide to

help victims understand how to report intellectual property crimes The website also contains

checklists or trade secret cases and copyright and trademark cases, which identiy the inor

mation that would be helpul or victims to provide when reporting such crimes to the DOJ or

other law enorcement ocials The IPEC also links to these materials in the Intellectual Property

Spotlight

Law enorcement agencies continue to do outreach, including:

On June 12, 2011, the IPR Center in partnership with UL (ormerly Underwriters Laboratories)held a Law Enorcement Intellectual Property Crime Workshop that brought together over 148attendees rom the private sector and law enorcement rom around the world to discuss best

practices, government and industry initiatives, and how law enorcement and customs can

integrate their eorts to attack intellectual property crimes

In July 2011, Attorney General Eric Holder and Assistant Attorney General Lanny Breuer alongwith senior DOJ ocials rom the CCIPS hosted the 5th annual law enorcement and industry

meeting on intellectual property The event brought together senior law enorcement ocials

and representatives rom trade associations and businesses that requently all victim to intel

lectual property rights crimes The meetings attendees discussed strategies and approaches

to address intellectual property crimes in industries such as pharmaceuticals, business and

entertainment sotware, luxury goods, electronics, apparel, motion pictures, music, sports,certication marks, consumer goods, and automakers and their suppliers

In September 2011, Assistant Attorney General Lanny Breuer provided keynote remarks on therst day o the 2011 International Law Enorcement Intellectual Property Crime Conerence held

in Madrid, Spain The conerence, entitled Transorming Regional Success into Global Action,

brought together over 400 law enorcement and customs personnel as well as industry repre

sentatives rom 50 countries to gain an international perspective on the trade in countereit and

pirated products, to share international best practices on how to eectively combat this illegal

trade, and to provide a global orum or networking and partnership development

On September 16, 2011, the IPR Center hosted its annual symposium The event was entitledOnline IP Thet in the 21st Century and was attended by more than 125 participants rom theintellectual property community The symposium centered on actions taken by both the U S

Government and those in intellectual property-related industries to combat online intellectual

property thet

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Reporting on Best Practices o Our Trading Partners

The U S Government continues to promote and highlight international best practices or intellectual

property enorcement Examples rom 2011 include:

ACTA:The Anti-Countereiting Trade Agreement (ACTA), signed on October 1, 2011 by theUnited States and seven other countries, is a rst-o-its-kind alliance o trading partners ACTA

represents a considerable improvement in international trade norms or eectively com

bating the global prolieration o commercial-scale countereiting and piracy in the 21st

Century Representatives o Australia, Canada, Japan, Republic o Korea, Morocco, New Zealand,

Singapore, and the United States signed the ACTA Representatives o the European Union,

Mexico, and Switzerland attended the signing ceremony and conrmed their continuing strong

support or and preparations to sign the ACTA as soon as practicable The ACTA negotiating

parties have expressed their hope that other trading partners will seek to join the agreement

Special 301: USTRs 2011 Special 301 report contains a section highlighting best practices bytrading partners in the area o intellectual property enorcement, including:

Improved cooperation and stakeholder engagement by Argentina, Canada, Guatemala,

Italy, Malaysia, Mexico, and Pakistan;

Positive eorts by China in tackling the serious problem o countereit drugs available

through online advertisements and ake Internet pharmacies by working across ministries

to target websites that knowingly violate local intellectual property laws; and

Positive reports regarding Russias eorts to combat countereit medicines through a

Memorandum o Understanding between the Ministry o Health and the Federal Service

or Intellectual Property

Identiy Foreign Pirate Websites as Part o the Special 301 Process

In February 2011, USTR released its rst-ever Special 301 Out-o-Cycle Review o Notorious Markets

(Notorious Markets List), ollowing a dedicated request or comments and separate review o online

and physical oreign markets that deal in inringing products

As a standalone report published separately rom USTRs annual Special 301 report, the February

2011 Notorious Markets List increased public awareness o, and guided trade-related enorce

ment actions against, markets that exempliy the problem o global piracy and countereiting As

a result o the increased attention to these markets, Baidu, a leading Chinese search engine listed

in the report, signed a music licensing agreement with One-Stop China, a joint venture between

the Universal Music Group, the Warner Music Group, and Sony BMG Taobao, Chinas leading business-to-consumer website listed in the Notorious Markets List, launched a campaign to address

the availability o inringing products through its website The report is publicly available here:

http://www ustr gov/about-us/press-oce/reports-and-publications/2011/2011-special-301-report

In December 2011, USTR released its second out-o-cycle Notorious Markets List ollowing a dedi

cated request or comments that began on September 22, 2011 In addition to listing markets that

are reportedly engaged in piracy and countereiting, the List also highlighted positive developments

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since the previous review For example, the December 2011 Notorious Markets List noted Baidus

landmark licensing agreement with U S and other rights holders mentioned above, as well as action

taken by Hong Kongs local customs ocials at the Ladies Market to remove allegedly inringing goods

rom the premises These authorities reported a commitment to continue to undertake enorcement

actions at the market In addition, the List noted that at the Savelovskiy Market in Russia, manage

ment implemented an action plan to stop the distribution o inringing goods Accordingly, Baidu,

the Ladies Market, and the Savelovskiy Marketwhich were previously listed in February 2011were

removed rom the Notorious Markets List in December 2011 Taobao, which appears to have made

eorts to address intellectual property inringement at its site, reportedly continues to oer inring

ing products and thereore remains on the Notorious Markets List The List is publicly available here:

http://www ustr gov/webm_send/2595

Tracking and Reporting o Enorcement Activities

This year, through the committed eorts o Federal agents and ocers rom DHS and DOJ and their

component agencies, intellectual property seizures and enorcement activities increased in FY 2011

The inormation or FY 2011 seizures and enorcement activities o DOJ and DHS are included in more

detail in the perormance data section o this report [See pages 51-53]

FY 2011 Enorcement Highlights

DHS seizuresrom CBP and ICE combinedor countereit pharmaceuticals rose nearly 200percent to 1,239

The overall number o DHS IPR seizures rose 24 percent to 24,792 Countereit and pirated goods seized via express carrier services increased by 16 percent over

FY 2010 and 65 percent over FY 2009

Countereit consumer saety and critical technology merchandise seizures rose 44 percent inFY 2011 to more than $60 million

FBI initiated 235 IPR investigations, made 93 arrests, secured 79 indictments, and obtained79 convictions The Bureau increased its number o new thet o trade secrets cases by 29%,

its number o new health and saety investigations by 87 percent, and its number o pending

health and saety IPR cases by 96 percent over FY 2010

DOJ saw sentences resulting rom its prosecutions o IPR crimes increase in severity, with adoubling in the number o sentences o 60+ months and a tripling o sentences o 37-60 months

ICE HSI increased opened intellectual property cases to 1,212, an increase o 17 percent rom FY2010 (66 percent in comparison to FY 2009) Arrests increased to 574, an increase o 57 percent

rom FY 2010 (115 percent in comparison to FY 2009), and convictions increased to 291, an

increase o 71 percent rom FY 2010 (77 percent in comparison to FY 2009)

Nine partner agencies including criminal investigative agencies rom the DOD and NASA aswell as the FBI, ICE HSI, and CBP launched Operation Chain Reaction This is a coordinated

and comprehensive initiative targeted to curtailing the fow o countereit items into the U S

Government supply chain

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CBP led a year-long initiative within the Asia Pacic Economic Cooperation (APEC) targetingcountereit pharmaceuticals shipped via international mail and express couriers The initiative

lead to enorcement action against over 1,200 shipments in the Asia Pacic region and seizures

o $231,136 worth o countereit pharmaceuticals

In September, the IPR Center in coordination with INTERPOL, the World Customs Organization(WCO), and law enorcement in 81 countries successully carried out Operation Pangea IV This

global enorcement eort ocused on websites supplying illegal and dangerous medicines to

consumers in the U S and abroad The operation is the largest Internet-based action o its kind

The DOJ and FBI have also transmitted to Congress their PRO IP Act Reports or 2011, describing in

greater depth the criminal investigations and prosecutions o intellectual property oenses or FY 2011

Share ITC Exclusion Order Enorcement Data

Under Section 337 o the Tari Act o 1930 (19 U S C 1337), the U S International Trade Commission

(ITC) issues exclusion orders to CBP to stop importation o products that use unair methods o competi

tion, or unair acts in violation o the Act, including stolen intellectual property (most oten patents)

Under current law, only ITC inorms a rightholder o CBPs exclusion or seizure o an import violating

the order, as there is no authority or CBP to directly disclose its enorcement to a rightholder However,

it would be useul or CBP to inorm rightholders o exclusions and seizures because more robust

inormation sharing would enhance CBPs eective enorcement o exclusion orders, as well as provide

transparency to rightholders While ITC eventually provides this inormation, allowing CBP to do so

earlier would enable a rightholder to take aster action against violators through a variety o judicial

and administrative actions

To solve that problem, in March 2011, the Administration recommended legislation providing DHS

with authority to notiy rightholders that inringing goods have been excluded or seized pursuant to

an ITC order In July 2011, the Administration sent a legislative proposal to Congress refecting that

recommendation We urge the Congress to act on this recommendation in order to better empower

rightholders who seek to protect their intellectual property through ITC authority and CBP enorcement

Enhanced Communications to Strengthen Section 337 Enorcement

Once ITC nds a violation o Section 337 (see Share ITC Exclusion Order Enorcement Data) and issues an

exclusion order barring the importation o inringing goods, CBP and ITC have dierent responsibilities

or determining i imported articles all within the scope o the exclusion order Because o these shared

responsibilities, both ITC and CBP need to ensure clear communication on what the order means to

improve the orders enorcement and prevent importation o inringing products ITC must understand

what CBP can do to enorce an order, and CBP must be clear on what ITC intends in carrying out the

enorcement o the order

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ITC exclusion orders should provide clear and realistic direction or CBP to carry out its enorcement o

barred goods against parties identied by the exclusion order, including enorcement against newly

identied products that were not part o the original investigation but may still all within the scope

o the exclusion order In 2011, ITC and CBP both took steps to improve their communication in the

ollowing ways:

ITC began immediately sharing drat exclusion order language or potential orders with CBP sothat i ITC issued an exclusion order, CBP would be better prepared to enorce the order

ITC and CBP representatives now periodically meet in person to discuss procedural issues ingeneral and to ensure clear communication between CBP and ITC regarding the meaning o

exclusion orders

ITC has developed a way to electronically transmit exclusion orders and the many condentialdocuments associated with the investigation or streamlined and more ecient review o

Section 337 cases

To better inorm CBPs determination o redesigned products (products that have been redesigned to be non-inringing), CBP is preparing a Notice or Proposed Rule Making (NPRM) or

a dual-party process which would allow the parties in interest to inorm CBPs determination

at the same time CBP plans to release this NPRM in 2012

Raising Public Awareness

A signicant component o an eective intellectual property enorcement strategy is to change the

publics attitude towards inringing activities It is essential to inorm the public o the ar-reaching

implications that countereiting and other intellectual property crimes have on jobs, the economy and

the health and saety o consumers In 2011, the Administration made great strides in getting the mes

sage out with a variety o eective public awareness campaigns and other activities

On November 29, 2011, Attorney General Eric Holder, IPEC Victoria Espinel, Acting DeputySecretary o Commerce Rebecca Blank, ICE Director John Morton, and the President o the

National Crime Prevention Council, Ann Harkins, unveiled the rst comprehensive public aware

ness campaign to inorm the public about the dangers o countereits and piracy The campaign

includes a television ad, new media ads, radio ads, and posters Inormation about the campaign

can be ound at:http://www ncpc org/topics/intellectual-property-thet

In April 2011, during the observance o World Intellectual Property Day, ICE HSI worked with thelm industry to launch a new public service announcement (PSA) highlighting how intellectual

property thet hurts American jobs The PSA sought to educate consumers about the economic

impact o intellectual property thet ICE HSI also signed agreements with our major movie

studios to place a new anti-piracy warning with the IPR Center logo and ICE HSI badge on shows

streamed in various pay-per-view and on-demand ormats The warnings explain that thet o

intellectual property is a crime, not only in traditional media, but also when done digitally

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Improving Eciency o Intellectual Property Enorcement

Using Our Resources as Eectively as Possible

Part o IPECs mission is to make the U S Governments eorts more ecient and eective in protecting

people and companies that innovate and create In 2011, the U S Government made great strides inenhancing eciency and increasing the eectiveness o enorcement eorts without signicant increase

in resources

Law Enorcement Eciencies

Law enorcement has maximized the use o its limited resources by turning a modest 5 percent increase

in spending into a 33 percent increase in seizures o countereit and pirated merchandise [See pages

2, 10 and 47]

Grants provided to state and local law enorcement agencies by DOJ - BJA have resulted in seizures o a

value ar beyond the amount o the grants Since October 2009, the program grantees had seized over

$202 million worth o inringing merchandiseover 22 times the value o the grants ($8 92 million) [See

pages 2, 10, 26 and 48]

Examples o operational eciencies put in place by law enorcement to maximize use o resources include:

Deconiction:The IPR Center brings together 19 partner agencies in a de-confiction process toensure that precious government resources are not being duplicated and wasted The agencies work

cooperatively on investigations using their agency-specic expertise to develop cases with one another

In FY 2011, the IPR Center vetted 178 leads directly reerred to it and de-conficted 2,877 investigations

opened by eld oces o partner agenciesan increase o 429 percent in comparison to FY 2010 [See

pages 2 and 23 or more inormation]

Intelligence Gathering:The FBI improved coordination o intelligence on global intellectual propertythreats through its Intelligence Fusion Group (IFG) The IFG and IPR Center partners examine and dene

the threats, share intelligence, issue intelligence reports, and develop strategies or addressing intellec

tual property crimes

Law Enorcement Teams/Task Forces:There are 26 ICE HSI-led IPTETs and 4 FBI-led IntellectualProperty Task Forces that operate nationwide in partnership with state and local law enorcement

that have led to more ecient use o resources and several major operations [See page 25 or more

inormation]

Overseas Personnel Eciencies

Key overseas U S embassies have in place annual interagency work plans that set country-specicobjectives and activities to address the countrys critical intellectual property issues These work plans

ensure that resources are used in a ocused and ecient manner The work plans were developed in

coordination with the IPEC interagency working group established to improve the eectiveness and

eciency o overseas personnel to combat inringement in priority locations around the world [See

pages 26-27 or more inormation]

Training Eciencies

As a result o the IPEC interagency working group to improve eciency and results o the training andcapacity building, the USPTO launched a searchable database (www usipr gov) where agencies now

post inormation on their enorcement training This publicly available database will allow resources

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to be used more eciently by sharing training materials among agencies and avoiding duplicative

programs [See page 28 or more inormation]

Inormation Sharing Eciencies

CBP instituted a pilot programthe Centers or Excellence and Expertise (CEE)that ocuses on orming closer partnerships with pharmaceutical companies to better understand the industrys practice,

and to leverage this inormation into more ecient and eective enorcement Ater a successul pilot,

this program was made a permanent component o CBP and renamed the Industry Integration Center

(IIC) A second IIC ocusing on electronics was also opened [See page 43 or more inormation]

ITC and CBP are working closely to strengthen Section 337 enorcement by sharing inormation earlyin the Section 337 proceedings in order to streamline the process, avoid conusion, and eciently

enorce ITC orders [See pages 20-21 or more inormation] CBP is working collaboratively with the trade

community to implement a distribution chain management program to enable CBP to ocus inspection

resources on high risk shipments

In coordination with the IPR Center, USPTO worked to make more ecient the process or law enorcement to obtain certied copies o trademark registrations

Ensuring Eciency and Coordination

Coordination o National Law Enorcement Eorts to Avoid Duplication and Waste

The IPR Center stands at the oreront o U S law enorcements response to global intellectual property

crime By utilizing a task orce model, the IPR Center draws on the expertise o its member agencies to

share inormation, develop initiatives, coordinate enorcement actions, and conduct investigations

related to intellectual property thet The IPR Center has also increased its investigative reach by enteringinto strategic alliances with international investigative agencies

Through the use o de-confiction meetings, the IPR Center brings together 19 partner agenciesto ensure that precious government resources are not being wasted because o a duplication

o eorts by investigating agencies [For a complete list o IPR Center partners, see Appendix B ]

The de-confiction process has been collaborative and complementary, using each agencys

comparative advantage to most eciently conduct the investigation The agencies have

cooperatively worked on investigations using their agency-specic expertise to develop

cases with one another This includes FDA pharmaceutical testing, Consumer Product Saety

Commission (CPSC) product saety analysis, IRS nancial audits, Postal Service package

inspections, CBP import targeting, ICE HSI undercover operations, and many other activities

The IPR Centers vast partner network o Federal agencies responsible or intellectual prop

erty enorcementincluding ICE HSI and the FBIallows its de-confiction process to cover

the overwhelming majority o Federal intellectual property investigations In FY 2011, the

IPR Center vetted 178 leads directly reerred to it and de-conficted 2,877 investigations

opened by eld oces o partner agenciesa 429 percent increase in comparison to

FY 2010

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Operation in Our Sites is the rst ever coordinated and sustained law enorcement eort totarget websites that distribute countereit and pirated goods In 2011, six operations were con

ducted by DOJ and ICE HSI, resulting in the seizure o 270 domain names o inringing websites

O sites seized in 2011, 248 were seized or distributing countereit hard goods and 22 were

seized or illegal distribution o copyrighted content

In February 2011, Operation In Our Sites v. 3.0, which coincided with the NFLs Super Bowl,

resulted in the seizure o 10 domain names o websites that provided access to pirated

streaming telecasts o the National Football League, the National Basketball Association,

the National Hockey League, World Wrestling Entertainment, and the Ultimate Fighting

Championship Prosecution was led by the U S Attorneys Oce or the Eastern District o

New York In March, ICE HSI arrested an operator o one o the seized sites, who is now acing

charges in New York In August 2011, ICE HSI arrested an operator o a second seized site,

who is also acing charges in New York

Also in February 2011, Operation In Our Sites v. 4.0 resulted in the seizure o 18 domain names

used to sell luxury countereit goods Prosecution was conducted by the U S Attorneys

Oces or the Southern District o New York and the Southern District o Texas

In May 2011, Operation In Our Sites v. 5.0 resulted in the seizure o ve more domain names

three dedicated to sales o countereit goods and two or pirated content

In July 2011, Operation In Our Sites v. 6.0dubbed Shoe Clerkseized 17 domain names

dedicated to sales o countereit goods Prosecution was conducted by the U S Attorneys

Oces or the District o Maryland, Western District o New York, District o Colorado, Eastern

District o Michigan and the Southern District o Texas One o the domain name operators

was arrested, and is acing prosecution in New York, or selling countereit goods related

to a popular television show

In October 2011, Operation In Our Sites v. 7.0dubbed Operation Strike OutICE HSI con

cluded a one month investigative operation directed at interdicting the sale and distribution

o countereit sports memorabilia This operation resulted in the seizure o 5,347 countereit

sports memorabilia items with an MSRP o $134,862 Additionally, ICE HSI lawully seized

58 domain names belonging to commercial websites that were engaged in the illegal sale

or distribution o countereit sports paraphernalia The seized countereit items inringed

on the copyrights or trademarks owned by Major League Baseball, the National Basketball

Association, the National Football League, and the National Hockey League

In November 2011, Operation In Our Sites v. 8.0 was conducted to coincide with CyberMondayThis joint operation by ICE HSI, FBI, and the DOJ resulted in the seizure o 150

domain names that were engaged in the criminal sale and distribution o countereit

merchandise This was the second Cyber Monday operation aimed at thwarting the

illegal ventures online during what is widely considered to be the busiest online shopping

day annually Compared to 2010s Cyber Monday operation, this operation marked an

80 percent increase in the number o online sites lawully seized

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Most recently, in December 2011, Operation In Our Sites v. 9.0 resulted in the seizure o

12 domain names and two arrests The websites were selling pirated copies o movies,

television shows, sotware, and workout DVDs that were being marketed to the Korean

community in the United States The two men arrested were associated with two o the

domain names, and they will be prosecuted in the Western District o Washington

In July 2011, the Administration unveiled the Transnational Organized Crime Strategy, and the President

signed Executive Order 13581 authorizing the Treasury Department to designate the Camorra as a

transnational crime organization An estimated 10 percent o the Camorras $25 billion in revenue comes

rom the distribution o countereit and pirated goods

The Camorra organization operates a prolic criminal enterprise that ocuses on the targetedthet and countereiting o intellectual property rom the media sector as well as the luxury

goods and clothing industries

As a result o the designation, the U S Government may now employ sanctions against theCamorra organization as well as individuals and entities that support their pirate and countereit

enterprises

Coordination o Federal, State, & Local Law Enorcement

State and local law enorcement serve critical unctions in the enorcement o intellectual property rights

through their daily contacts with businesses and citizens located in their jurisdictions Oten, law enorce

ment are rst responders to rightholders and these interactions can lead to investigative leads in the

orm o inormation development o locations and identities o persons distributing or manuacturing

countereit and pirated items The ecient coordination o Federal, state, and local law enorcement

allows investigators to work in unison to jointly investigate and combat intellectual property crimes

throughout the country

Nationwide there are now 26 ICE HSI-led Intellectual Property Thet Enorcement Teams (IPTETs)and 4 FBI-led Intellectual Property Task Forces These teams and task orces are partnerships

with state and local law enorcement built on the best practices identied by the IPR Center

and DOJ The teams and task orces have led to more ecient use o law enorcement resources

and several major law enorcement operations

Notable examples o Federal, state, and local law enorcement include: In March 2011, a joint investigation by ICE HSI, Anaheim (CA) Police Department, and the

Orange County District Attorneys Oce resulted in the arrest o two men or their role in

selling 700 countereit high-tech rife sights and 200 magnier systems, worth $475,000

In October 2011, the U S Attorneys Oce o the Southern District o Texas led the prosecu

tion which resulted in a Federal judge sentencing three human trackers to prison terms o

46, 50, and 57 months These sentences came ater investigatory cooperation between local,

state, and Federal law enorcement broke an operation that orced individuals smuggled

into the United States to sell pirated DVD/CDs with threats to both the victims and their

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amilies in Mexico ICE, FBI, the Texas Attorney Generals Oice, and the Harris County

Sheris Oce all worked on the investigation

DOJs BJA continues to provide grant unding to state and local law enorcement agencies seeking to

pursue investigations centered on intellectual property rights violations The BJA grant program has

bolstered the eorts o state and local authorities to enorce intellectual property rights

Taken together, the program grantees have seized at least $202 million worth o inringingmerchandise since October o 2009over 18 times the value o the grants ($10 9 million)

distributed as o December 2011 In 2011 alone, program grantees seized nearly $64 million

worth o inringing merchandise Seizure numbers may be even higher, as standardized data

collection procedures to ully capture seizure statistics were not instituted until 2011

In August, the Mississippi Attorney Generals Oce used unding rom a BJA grant to establishthe Mississippi Intellectual Property Rights Center That Center provides investigative and pros

ecutorial support statewide to law enorcement and district attorneys conducting intellectual

property rights investigations and coordinates its activities with ICE HSI and the National IPR

Center It is the rst state-established center in the United States

There were a number o notable cases this year resulting rom BJA grants, including in August,when North Carolina state law enorcement authorities seized $1 1 million in countereit

UL-labeled stereo and audiovisual equipment that posed a shock and re hazard to users

Coordination o Training or State & Local Law Enorcement & Prosecutors

Training at the state and local level can have a dramatic impact on intellectual property rights enorce

ment because it provides law enorcement ocials the opportunity to understand the scope and impact

o intellectual property crime and eective ways to combat these crimes Federal organizations such

as the BJA, the National White Collar Crime Center (NW3C), and the National Association o AttorneysGeneral (NAAG) provide law enorcement personnel and prosecutors training seminars on intellectual

property thet The orum emphasizes the importance o coordination among Federal, state, and local

law enorcement agencies in aggressive intellectual property law enorcement A list o 2011 seminars

can be ound in Appendix A o this report

The IPR Center also supports and coordinates training through its state and local engagement initiative

that provides the ICE HSI-led IPTETs with specic training on combating intellectual property thet A

list o IPTET training or 2011 can be ound in Appendix A

Improve Eectiveness o Personnel Stationed Overseas to Combat Intellectual Property

Inringement

2011 marked the rst time that 17 key overseas U S embassies have in place annual interagency work

plans that set objectives and activities to address the host countrys critical intellectual property issues

identied by the United States These embassy work plans were developed in coordination with the IPEC

interagency working group that was established last year to improve the eectiveness and eciency

o overseas personnel involved in the eort to combat intellectual property inringement in priority

locations around the world

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The interagency working group was led by IPEC and the State Departments Bureau o Economic,

Energy and Business Aairs (EEB) and includes representatives rom the State Departments Bureau

o International Narcotics and Law Enorcement Aairs (INL) and the U S Agency or International

Development (USAID), the Department o the Treasury, DOJ (CCIPS and the FBI), DHS (CBP and ICE

HSI), DOC (USPTO, ITA and the Commercial Law Development Program (CLDP)), USTR, and a senior

representative o the U S Copyright Oce

U S embassies in 17 countriesChina, Brazil, India, Russia, Thailand, Canada, Chile, Egypt, Colombia,

Mexico, Ukraine, Spain, Saudi Arabia, Israel, Peru, Turkey, and Nigerianow each have a ormal inter

agency team o U S Government personnel stationed there to help improve the host countrys protec

tion and enorcement o intellectual property rights

All U S embassy work plans were nalized in April 2011, with reporting to Washington occurring on

a quarterly basis on each teams implementation o their intellectual property work plans Notable

accomplishments in 2011 include:

Brazil: ICE HSI participated with Brazilian authorities in operations against several complexesnear a shopping district that led to the seizure o 10 million items estimated to be worth the

equivalent o approximately $255 million The Sao Paulo Mayors oce initiated the program

and invited ICE Attach Brazil special agents to participate in the operation which included 400

Federal, state, and city agents

China: U S Embassy Beijing, in coordination with Washington, has closely monitored ChinasSpecial Campaignagainst intellectual property inringement, and actively encouraged Chinese

ocials to make permanent the positive aspects o Chinas Special Campaign, including the

campaigns temporary State Council-level leadership structure, headed by a Vice Premier, which

resulted in improved coordination among the various intellectual property enorcement author

ities in China at the central, provincial, and local levels In response to these U S requests andencouragement, China agreed at the 2011 plenary session o the U S -China Joint Commission

on Commerce and Trade (JCCT) to make this State Council-level leadership structure permanent

Ukraine: In October 2011, Ukraine adopted a new law making the manuacture or distributiono countereit medicines a crime This legislation resulted rom a legislative recommendation

put orward at a May 2011 workshop on countereit medicines put on by U S Embassy Kyiv and

the U S Commercial Law Development Program (CLDP), which was conducted with Ukraines

health and saety enorcement agencies

IPEC also works with the agencies and within OMB to identiy resources to station additional U S person

nel specializing in intellectual property in priority locations around the world

FBI has posted an intellectual property-trained agent in Beijing, China in September 2011 towork ull time on intellectual property crime

USPTO will expand its international intellectual property attach program by posting attachsin both Mexico City, Mexico and Shanghai, China

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DOJ would place up to six International Computer Hacking and Intellectual Property (ICHIP)attorneys, i unded as called or in the Presidents FY 2012 budget, in strategic global locations

to strengthen international enorcement

Coordination o International Capacity Building and Training

IPEC established an interagency working group last year to improve the eciency and coordination o

international intellectual property enorcement capacity-building and training, and to ensure the U S

Government makes the best possible use o its limited training resources by ocusing on Administration

priorities, such as training oreign law enorcement ocials to tackle countereit drugs, conducting

online enorcement, and developing new techniques to combat intellectual property crime

To help acilitate the groups coordination and oversight o all training activities, the USPTO in 2011

launched a searchable database (www usipr gov) where all relevant U S Government agencies now

post inormation on the intellectual property enorcement trainings they conduct The publicly avail

able database is intended to (1) use resources more eciently by sharing training materials between

U S Government agencies and avoiding duplicative programs; (2)improve results by building on pastprograms and targeting U S Government eorts on countries and topics where more training is needed;

(3) increase transparency by allowing the public to see how the U S Government is allocating resources

on intellectual property training; and (4) increase public participation by identiying upcoming training

events that are open to the public

In 2011 alone, the database lists over 100 training programs conducted by 7 U S Government agencies

in 36 countries Notable programs conducted in 2011 include:

Philippines:The IPR Center and ICE Attach Manila organized an IPR Criminal EnorcementSymposium in Manila on July 18-20, 2011 or law enorcement ocers, customs ocials, and

prosecutors Within two months o receiving this training, Philippine authorities conducted two

highly successul enorcement operations, resulting in the seizure o countereit goods worth

over $18 million

Arica: USPTO and CLDP, in collaboration with DOJ, State, and ICE, provided a 5-day workshopon August 1-5, 2011 at USPTO in Alexandria, VA with government ocials rom Ghana, Kenya,

Liberia, and Nigeria, meeting with U S industry and culminating in ocials rom each country

drating an action plan to acilitate an interagency approach to intellectual property enorce

ment in their home country

Ukraine: CLDP and U S Embassy Kyiv conducted a workshop on countereit medicines orUkraines health and saety enorcement agencies in May 2011, where U S ocials put orward

a key legislative recommendation or Ukraine to make the manuacture or distribution o countereit medicines a crime This legislative recommendation was adopted by the Government o

Ukraine in October 2011, which passed a new law making it a crime to manuacture or distribute

countereit medicines

Mexico: DOJ worked with several other groups, including the World Customs Organization,U S and Mexican rightholders, and customs and intellectual property-related agencies within

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the Mexican government to provide a new generation o Mexican ocials with the skills neces

sary to identiy countereit products, to reer cases or criminal prosecution, and to continue

to establish prosecutors at the major ports in Mexico Based on the success o previous joint

programs, the Mexican Navy requested to participate to increase interagency cooperation on

enorcement This training resulted in the identication o containers o countereit products

and the initiation o new criminal prosecutions

Establishment o a Countereit Pharmaceutical Interagency Committee

In 2010, the IPEC established an interagency working group on countereit pharmaceuticals to bring

together the expertise o numerous Federal agencies whose authorities deeply impact pharmaceuti

cal enorcement The working group was convened by IPEC and includes FDA, CBP, ICE HSI, DOJ, State,

Commerce, and the Agency or International Development

Based on the eorts o that working group, the IPEC issued a strategy to Vice President Biden and

Congress in March 2011 that described in detail how the U S Government will work to ght countereit

drugs sold on the Internet, smuggled into the U S , and sold in cities nationwide The report is publiclyavailable at: http://www whitehouse gov/sites/deault/les/omb/IPEC/Pharma_Report_Final pd

The working group strategy reported on:

Issues aced by express courier and U S mail acilities in identiying, inspecting and destroyingcountereit/illegal pharmaceuticals

Tackling the prolieration o illegal Internet pharmacies through voluntary cooperative eorts How we can better work internationally to address the countereit pharmaceutical problem

worldwide

How we can increase public awareness and training

Possible legislative recommendationsFor more details see Increased Enorcement Eorts to Guard Against the Prolieration o Countereit

Pharmaceuticals and Medical Devices

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Economic Espionage & Trade Secret Thet

Economic espionage and the thet o trade secrets represent a signicant cost to victim companies and

threaten the economic security o the U S Economic espionage and trade secret thet inficts costs on

companies such as loss o unique intellectual property, loss o expenditures related to research and development, and loss o uture revenues and prots Many companies

white house annual intellectual property report

Documents