2. Prosecuting Intellectual Property Cases Arnold H. Huftalen Assistant U.S. Attorney U.S. Department of Justice arnold.huftalen@usdoj.gov

3. AGENDA When Do U.S. Authorities Bring Criminal IP Charges? When Do U.S. Authorities Bring Criminal IP Charges? How Does the US Prosecute? How Does the US Prosecute? Recent IPR Prosecutions. Recent IPR Prosecutions. Some Enforcement Issues. Some Enforcement Issues.

4. When Do U.S. Authorities Bring Criminal IP Charges? Majority of IP enforcement actions in U.S. are civil, not criminal Majority of IP enforcement actions in U.S. are civil, not criminal Effective civil system Effective civil system Burden of proof more difficult in criminal cases Burden of proof more difficult in criminal cases Civil = “preponderance of evidence”Civil = “preponderance of evidence” Criminal = “beyond a reasonable doubt”Criminal = “beyond a reasonable doubt”

5. Factors Affecting Decision to Prosecute Federal Law Enforcement Priorities Federal Law Enforcement Priorities Nature and Seriousness of Offense Nature 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 Involvement Organized Criminal Involvement Adequate alternative non-criminal remedies Adequate alternative non-criminal remedies Adequate Civil Enforcement; Repeat Offender; Deterrent EffectAdequate Civil Enforcement; Repeat Offender; Deterrent Effect Other: culpability, cooperation with investigation, subject to prosecution elsewhere Other: culpability, cooperation with investigation, subject to prosecution elsewhere When Do U.S. Authorities Bring Criminal IP Charges?

6. How Are IP Cases Prosecuted in the U.S.? Computer Crime & Intellectual Property Section (CCIPS) in Washington, D.C. Computer Crime & Intellectual Property Section (CCIPS) in Washington, D.C. Computer Hacking and Intellectual Property (CHIP) Coordinators in all 94 U.S. Attorney Offices Computer Hacking and Intellectual Property (CHIP) Coordinators in all 94 U.S. Attorney Offices Office of Consumer Litigation Office of Consumer Litigation Federal Law Enforcement Agencies Federal Law Enforcement Agencies Victim Industry Partnerships Victim Industry Partnerships

7. CCIPS 39 Attorneys in Washington, DC 39 Attorneys in Washington, DC 13 Dedicated to IPR 13 Dedicated to IPR Work daily with prosecutors in U.S. Work daily with prosecutors in U.S. Work regularly with prosecutors around the world Work regularly with prosecutors around the world

8. CHIP Coordinators CHIP Coordinators in all 94 Districts CHIP Coordinators in all 94 Districts –Created in 2001 –Prosecute crimes; provide technical assistance within district; provide multi- district assistance; provide training and community outreach

9. OFFICE OF CONSUMER LITIGATION U.S. DOJ Civil Division U.S. DOJ Civil Division –Handles civil & criminal cases involving intellectual property laws that protect public health and safety

10. Federal Bureau of Investigation (FBI) Federal Bureau of Investigation (FBI) Bureau of Immigration & Customs Enforcement (BICE) Bureau of Immigration & Customs Enforcement (BICE) –Customs & Border Patrol (CBP) U.S. Postal Inspection Service U.S. Postal Inspection Service U.S. Secret Service U.S. Secret Service U.S. Food and Drug Administration (FDA) U.S. Food and Drug Administration (FDA) U.S. FEDERAL LAW ENFORCEMENT AGENCIES

11. VICTIM INDUSTRY PARTNERSHIPS Examples Examples –Microsoft –Cisco –Motion Picture Association of America (MPAA) –Recording Industry Association of America (RIAA)

12. RECENT IPR PROSECUTIONS Counterfeit Computer Network Hardware Counterfeit Computer Network Hardware Counterfeit Pharmaceuticals Counterfeit Pharmaceuticals Warez Warez Counterfeit CDs & DVDs Counterfeit CDs & DVDs Counterfeit Luxury Goods Counterfeit Luxury Goods

13. COUNTERFEIT COMPUTER NETWORK HARDWARE February 2008 February 2008 –Joint U.S & Canada investigation –400 seizures –$76,000,000 counterfeit network hardware seized

14. COUNTERFEIT PHARMACEUTICALS Cholesterol lowering medications Cholesterol lowering medications Antibiotics Antibiotics Lifestyle medication Lifestyle medication –Viagra & Cialis

15. WAREZ-Software Piracy Significant U.S. prosecutions Significant U.S. prosecutions –Operation Buccaneer –Operation Digital Piratez –Operation Bandwidth –Operation FastLink Operation Higher Education Operation Higher Education –Operation Site Down –Operation Summer Solstice

16. To Couriers Distribution Supplier Drop Box Rip/Crack Testing Packing WAREZ GROUPS

17. OPTICAL DISC PIRACY Operation Remaster-2006 Operation Remaster-2006 –2 charged –500,000 pirated music CDs –5,500 high-speed, high quality stampers

18. ONLINE MUSIC PIRACY 2003-2008 2003-2008 –Apocalypse Crew (APC) 15 convictions 15 convictions Pre-release music Pre-release music Global distribution within hours Global distribution within hours

19. LUXURY GOODS Counterfeit watches Counterfeit watches Counterfeit handbags & wallets Counterfeit handbags & wallets –2005--Virginia More than 50,000 handbags & wallets seized More than 50,000 handbags & wallets seized Worth more than $2,000,000 Worth more than $2,000,000 –2006--Massachusetts More than 20,000 handbags & wallets seized More than 20,000 handbags & wallets seized Worth more than $1,400,000 Worth more than $1,400,000

20. SOME ENFORCEMENT ISSUES... Large scale infringement without profit motive (WAREZ) Large scale infringement without profit motive (WAREZ) Proof issues: quantity and identity of infringing items Proof issues: quantity and identity of infringing items Disclaimers by distributors Disclaimers by distributors Obtaining assistance of victims Obtaining assistance of victims Is defendant responsible for infringement: control over content and maintenance of infringement facility Is defendant responsible for infringement: control over content and maintenance of infringement facility

21. OTHER ENFORCEMENT ISSUES U.S. U.S. –Balancing rights of customers, inventors and content providers –Increasing IP enforcement resources –Training of prosecutors and agents –Charging IP offenses –Educating (victims and public)

22. OTHER ENFORCEMENT ISSUES International International – Same issues as domestic – International cooperative agreements – Uniformity of criminal violations – Coordination – Cumbersome formal legal process – Informal contacts

23. QUESTIONS Thank you, Arnold H. Huftalen Assistant United States Attorney U.S. Department of Justice arnold.huftalen@usdoj.gov