Prosecuting Intellectual Prosecuting Intellectual Property CasesProperty Cases

Arnold H. HuftalenArnold H. HuftalenAssistant U.S. AttorneyAssistant U.S. AttorneyU.S. Department of JusticeU.S. Department of Justicearnold.huftalen@usdoj.govarnold.huftalen@usdoj.gov

AGENDAAGENDA

When Do U.S. Authorities When Do U.S. Authorities Bring Criminal IP Bring Criminal IP Charges?Charges?

How Does the US How Does the US Prosecute?Prosecute?

Recent IPR Prosecutions.Recent IPR Prosecutions. Some Enforcement Some Enforcement

IssuesIssues..

When Do U.S. Authorities When Do U.S. Authorities Bring Criminal IP Charges?Bring Criminal IP Charges?

Majority of IP enforcement actions in Majority of IP enforcement actions in U.S. are civil, not criminalU.S. are civil, not criminal• Effective civil systemEffective civil system

Burden of proof more difficult in criminal Burden of proof more difficult in criminal casescases• Civil = “preponderance of evidence”Civil = “preponderance of evidence”• Criminal = “beyond a reasonable doubt” Criminal = “beyond a reasonable doubt”

Factors Affecting Decision to Factors Affecting Decision to ProsecuteProsecute

Federal Law Enforcement PrioritiesFederal Law Enforcement Priorities Nature and Seriousness of OffenseNature and Seriousness of Offense

• scale of infringement (scope, amount of loss, harm)scale of infringement (scope, amount of loss, harm)• commercial purposecommercial purpose• health/safety issueshealth/safety issues

Organized Criminal InvolvementOrganized Criminal Involvement Adequate alternative non-criminal remediesAdequate alternative non-criminal remedies

• Adequate Civil Enforcement; Repeat Offender; Adequate Civil Enforcement; Repeat Offender; Deterrent EffectDeterrent Effect

Other: culpability, cooperation with investigation, Other: culpability, cooperation with investigation, subject to prosecution elsewheresubject to prosecution elsewhere

When Do U.S. Authorities When Do U.S. Authorities Bring Criminal IP Charges?Bring Criminal IP Charges?

How Are IP Cases How Are IP Cases Prosecuted in the U.S.?Prosecuted in the U.S.? Computer Crime & Intellectual Property Computer Crime & Intellectual Property

Section (CCIPS) in Washington, D.C.Section (CCIPS) in Washington, D.C. Computer Hacking and Intellectual Computer Hacking and Intellectual

Property (CHIP) Coordinators in all 94 Property (CHIP) Coordinators in all 94 U.S. Attorney OfficesU.S. Attorney Offices

Office of Consumer LitigationOffice of Consumer Litigation Federal Law Enforcement AgenciesFederal Law Enforcement Agencies Victim Industry PartnershipsVictim Industry Partnerships

CCIPSCCIPS

39 Attorneys in Washington, DC39 Attorneys in Washington, DC 13 Dedicated to IPR13 Dedicated to IPR Work daily with prosecutors in Work daily with prosecutors in

U.S.U.S. Work regularly with prosecutors Work regularly with prosecutors

around the worldaround the world

CHIP CoordinatorsCHIP Coordinators

CHIP Coordinators in all 94 CHIP Coordinators in all 94 DistrictsDistricts– Created in 2001Created in 2001– Prosecute crimes; provide technical Prosecute crimes; provide technical

assistance within district; provide assistance within district; provide multi-district assistance; provide multi-district assistance; provide training and community outreachtraining and community outreach

OFFICE OF CONSUMER OFFICE OF CONSUMER LITIGATIONLITIGATION

U.S. DOJ Civil DivisionU.S. DOJ Civil Division– Handles civil & criminal cases Handles civil & criminal cases

involving intellectual property laws involving intellectual property laws that protect public health and safetythat protect public health and safety

Federal Bureau of Investigation Federal Bureau of Investigation (FBI)(FBI)

Bureau of Immigration & Customs Bureau of Immigration & Customs Enforcement (BICE)Enforcement (BICE)– Customs & Border Patrol (CBP)Customs & Border Patrol (CBP)

U.S. Postal Inspection ServiceU.S. Postal Inspection Service U.S. Secret ServiceU.S. Secret Service U.S. Food and Drug U.S. Food and Drug

Administration (FDA)Administration (FDA)

U.S. FEDERAL LAW U.S. FEDERAL LAW ENFORCEMENT ENFORCEMENT AGENCIESAGENCIES

VICTIM INDUSTRY VICTIM INDUSTRY PARTNERSHIPSPARTNERSHIPS

ExamplesExamples– MicrosoftMicrosoft– CiscoCisco– Motion Picture Association of Motion Picture Association of

America (MPAA)America (MPAA)– Recording Industry Association of Recording Industry Association of

America (RIAA)America (RIAA)

RECENT IPR RECENT IPR PROSECUTIONSPROSECUTIONS Counterfeit Computer Network Counterfeit Computer Network

HardwareHardware Counterfeit PharmaceuticalsCounterfeit Pharmaceuticals WarezWarez Counterfeit CDs & DVDsCounterfeit CDs & DVDs Counterfeit Luxury GoodsCounterfeit Luxury Goods

COUNTERFEIT COUNTERFEIT COMPUTER NETWORK COMPUTER NETWORK HARDWAREHARDWARE February 2008February 2008

– Joint U.S & Canada investigationJoint U.S & Canada investigation– 400 seizures400 seizures– $76,000,000 counterfeit network $76,000,000 counterfeit network

hardware seizedhardware seized

COUNTERFEIT COUNTERFEIT PHARMACEUTICALSPHARMACEUTICALS

Cholesterol lowering medicationsCholesterol lowering medications AntibioticsAntibiotics Lifestyle medicationLifestyle medication

– Viagra & CialisViagra & Cialis

WAREZ-Software WAREZ-Software PiracyPiracy Significant U.S. prosecutionsSignificant U.S. prosecutions

– Operation Buccaneer Operation Buccaneer – Operation Digital PiratezOperation Digital Piratez– Operation BandwidthOperation Bandwidth– Operation FastLinkOperation FastLink

Operation Higher EducationOperation Higher Education

– Operation Site DownOperation Site Down– Operation Summer SolsticeOperation Summer Solstice

To Couriers

Distribution

Supplier

Drop Box

Rip/Crack

Testing

Packing

WAREZ GROUPS

OPTICAL DISC PIRACYOPTICAL DISC PIRACY

Operation Remaster-2006Operation Remaster-2006– 2 charged2 charged– 500,000 pirated music CDs500,000 pirated music CDs– 5,500 high-speed, high quality 5,500 high-speed, high quality

stampersstampers

ONLINE MUSIC PIRACYONLINE MUSIC PIRACY

2003-20082003-2008– Apocalypse Crew (APC) Apocalypse Crew (APC)

15 convictions15 convictions

Pre-release musicPre-release music Global distribution within hoursGlobal distribution within hours

LUXURY GOODSLUXURY GOODS

Counterfeit watchesCounterfeit watches Counterfeit handbags & walletsCounterfeit handbags & wallets

– 2005--Virginia2005--Virginia More than 50,000 handbags & wallets seized More than 50,000 handbags & wallets seized Worth more than $2,000,000Worth more than $2,000,000

– 2006--Massachusetts2006--Massachusetts More than 20,000 handbags & wallets seizedMore than 20,000 handbags & wallets seized Worth more than $1,400,000Worth more than $1,400,000

SOME ENFORCEMENT SOME ENFORCEMENT ISSUES . . .ISSUES . . .

Large scale infringement without profit Large scale infringement without profit motive (WAREZ)motive (WAREZ)

Proof issues: quantity and identity of Proof issues: quantity and identity of infringing itemsinfringing items

Disclaimers by distributorsDisclaimers by distributors Obtaining assistance of victimsObtaining assistance of victims Is defendant responsible for Is defendant responsible for

infringement: control over content and infringement: control over content and maintenance of infringement facilitymaintenance of infringement facility

OTHER ENFORCEMENT OTHER ENFORCEMENT ISSUESISSUES

U.S. U.S. – Balancing rights of customers, Balancing rights of customers,

inventors and content providersinventors and content providers– Increasing IP enforcement resourcesIncreasing IP enforcement resources– Training of prosecutors and agentsTraining of prosecutors and agents– Charging IP offensesCharging IP offenses– Educating (victims and public)Educating (victims and public)

OTHER ENFORCEMENT OTHER ENFORCEMENT ISSUESISSUES

InternationalInternational– Same issues as domesticSame issues as domestic– International cooperative International cooperative

agreementsagreements– Uniformity of criminal violationsUniformity of criminal violations– CoordinationCoordination– Cumbersome formal legal processCumbersome formal legal process– Informal contactsInformal contacts

QUESTIONSQUESTIONS

Thank you,Thank you,

Arnold H. HuftalenArnold H. Huftalen

Assistant United States AttorneyAssistant United States Attorney

U.S. Department of JusticeU.S. Department of Justice

arnold.huftalen@usdoj.govarnold.huftalen@usdoj.gov