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S. HRG. 112–922 

OVERSIGHT OF INTELLECTUAL PROPERTY LAW 

ENFORCEMENT EFFORTS 

HEARING 

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JUNE 22, 2011 

Serial No. J–112–28 

Printed for the use of the Committee on the Judiciary 

( 
(II) 

COMMITTEE ON THE JUDICIARY 

PATRICK J. LEAHY, Vermont, Chairman 

HERB KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

CHUCK SCHUMER, New York 

DICK DURBIN, Illinois 

SHELDON WHITEHOUSE, Rhode Island 

AMY KLOBUCHAR, Minnesota 

AL FRANKEN, Minnesota 

CHRISTOPHER A. COONS, Delaware 

RICHARD BLUMENTHAL, Connecticut 

CHUCK GRASSLEY, Iowa 

ORRIN G. HATCH, Utah 

JON KYL, Arizona 

JEFF SESSIONS, Alabama 

LINDSEY GRAHAM, South Carolina 

JOHN CORNYN, Texas 

MICHAEL S. LEE, Utah 

TOM COBURN, Oklahoma 

BRUCE A. COHEN, Chief Counsel and Staff Director 

KOLAN DAVIS, Republican Chief Counsel and Staff Director 
(III) 

C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Page 

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont .................... 1 

prepared statement .......................................................................................... 40 

Grassley, Hon. Chuck, a U.S. Senator from the State of Iowa ............................ 3 

WITNESSES 

Witness List ............................................................................................................. 39 

Espinel, Victoria A., Intellectual Property Enforcement Coordinator, Office 

of Management and Budget, Washington, DC .................................................. 4 

prepared statement .......................................................................................... 42 

Weinstein, Jason M., Deputy Assistant Attorney General, Criminal Division, 

U.S. Department of Justice, Washington, DC ................................................... 7 

prepared statement .......................................................................................... 50 

Snow, Gordon M., Assistant Director, Cyber Division, Federal Bureau of 

Investigation, Washington, DC ........................................................................... 9 

prepared statement .......................................................................................... 67 

Gina, Allen, Assistant Commissioner, Office of International Trade, U.S. Customs and Border Protection, U.S. Department of Homeland Security, Washington, DC ............................................................................................................. 11 

prepared statement .......................................................................................... 76 

Barnett, Erik, Assistant Deputy Director, U.S. Immigration and Customs 

Enforcement, U.S. Department of Homeland Security, Washington, DC ....... 12 

prepared statement .......................................................................................... 89 

QUESTIONS 

Questions submitted by Senator Coburn for Victoria Espinel and all witnesses .................................................................................................................... 109 

Questions submitted by Senator Coburn for Jason Weinstein and all witnesses .................................................................................................................... 111 

Questions submitted by Senator Coburn for Gordon Snow and all witnesses ... 113 

Questions submitted by Senator Coburn for Allen Gina and all witnesses ........ 115 

Questions submitted by Senator Coburn for Erik Barnett and all witnesses .... 117 

Questions submitted by Senator Franken for Victoria Espinel ........................... 119 

Questions submitted by Senator Franken for Jason Weinstein .......................... 120 

Questions submitted by Senator Franken for Erik Barnett ................................ 121 

Questions submitted by Senator Grassley for Allen Gina .................................... 122 

Questions submitted by Senator Grassley for Erik Barnett ................................ 123 

Questions submitted by Senator Grassley for Victoria Espinel ........................... 124 

Questions submitted by Senator Hatch for Jason Weinstein .............................. 125 

ANSWERS 

Responses of Victoria A. Espinel to questions submitted by Senators Coburn, 

Franken, and Grassley ........................................................................................ 126 

Responses of Gordon M. Snow to questions submitted by Senators Grassley 

and Coburn ........................................................................................................... 164 

Responses of Allen Gina to questions submitted by Senators Coburn and 

Grassley ................................................................................................................

Responses of Erik Barnett to questions submitted by Senators Coburn, 

Franken and Grassley ......................................................................................... 181 
Page

IV 

Responses of Jason M. Weinstein to questions submitted by Senators Coburn, 

Franken, and Hatch (Note: At the time of printing, after several attempts 

to obtain responses to the written questions, the Committee had not received any communication from the witness.) ................................................... 223 

MISCELLANEOUS SUBMISSIONS FOR THE RECORD 

American Federation of Musicians, American Federation of Television and 

Radio Artists, Directors Guild of America, International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artists and Allied 

Crafts of the United States, Its Territories and Canada, International 

Brotherhood of Teamsters, Screen Actors Guild, June 20, 2011, joint letter .. 224 

American Society of Composers, Authors, and Publishers (ASCAP), Paul Williams, President and Chairman of the Board, New York, New York, June 

20, 2011, letter ..................................................................................................... 225 

Institute for Policy Innovation (IPI), Tome Giovanetti, President, Lewisville, 

Texas, June 20, 2011, letter ................................................................................ 227 

Kelley, Colleen M., National President, National Treasury Employees Union, 

(NTEU), Washington, DC, statement ................................................................. 228 

Motion Picture Association of America, Inc., Paramount Pictures Corporation, 

Sony Pictures Entertainment Inc., Twentieth Century Fox Film Corporation, Universal City Studios LLC, Walt Disney Studios Motion Pictures, 

Warner Bros. Entertainment Inc., June 22, 2011, joint letter ......................... 236 

Recording Industry Association of America, Inc., (RIAA), Mitch Bainwol, 

Chairman and CEO, Washington, DC, June 21, 2011, letter .......................... 239 

U.S. Chamber of Commerce, Washington, DC, statement ................................... 240 
(1) 

OVERSIGHT OF INTELLECTUAL PROPERTY 

LAW ENFORCEMENT EFFORTS 

WEDNESDAY, JUNE 22, 2011 

U.S. SENATE, COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Committee met, pursuant to notice, at 10:06 a.m., in Room 

SD–226, Dirksen Senate Office Building, Hon. Patrick J. Leahy, 

Chairman of the Committee, presiding. 

Present: Senators Leahy, Kohl, Whitehouse, Klobuchar, Franken, 

Coons, Blumenthal, Grassley, and Coburn. 

OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. 

SENATOR FROM THE STATE OF VERMONT 

Chairman LEAHY. Good morning. Sorry. We are trying to do 

about 40 things here at once, as you know. We have about five 

meetings going on at once, so I apologize for the delay starting, but 

I do appreciate the witnesses who are here to discuss the enforcement of our Nation’s intellectual property laws. We spent a lot of 

time on this in the Committee in the last few months, and there 

is good reason for that. While estimates of intellectual property 

theft are hard to get exactly the amount, we know that it costs billions of dollars and hundreds of thousands of lost jobs. Now, I do 

not care what the economic climate is. That would be unacceptable. 

Of course, it is devastating today. It is not like 50 years ago where 

you get very excited about somebody who had a bank robbery 

where they stole a couple hundred thousand dollars. Most bank 

robbers get caught. We are talking about people who, with a keystroke, might steal tens of millions of dollars or more. 

Now, whether the property theft takes place on street corners or 

on the Internet, it poses a threat to American businesses, American 

public safety, and now we are finding even the American military. 

It is an epidemic. But thanks to the work of each of our witnesses, 

it is one that we are making significant strides to combat. 

Today’s hearing is almost a year to the day from our first oversight hearing for the Intellectual Property Enforcement Coordinator (IPEC) position, which was created by the PRO–IP Act. Several Members of this Committee cosponsored that bill, and one of 

the primary motivations behind creating this new position was to 

have one central presence to coordinate the work being done across 

the government to combat intellectual property theft. So it is fitting 

that the IP Enforcement Coordinator, Victoria Espinel, joins us 

again. She is joined by representatives from some of the key enforcement agencies with which she works—the Department of Jus-
2 

tice, the Federal Bureau of Investigation, Customs and Border Patrol, and Immigration and Customs Enforcement. 

The IPEC position has not been in place for very long, but you 

have worked very closely together, and I appreciate that. All of 

your agencies, as well as the other members of the Intellectual 

Property Rights Center, deserve credit for putting egos and turf 

aside and coordinating your investigative and prosecutorial efforts. 

This is so widespread that no one agency could handle it all. All 

of you working together, though, we might have a handle on it. 

And I know a lot of you have had to defer to another agency in pursuit of a high-profile investigation. I commend you that you have 

done that for the greater good. There was a time in our history 

when that would not have been done. 

Now, Ms. Espinel, last year when you appeared before this Committee, you unveiled the IPEC’s Joint Strategic Plan against counterfeiting and infringement. That plan outlined the general purposes behind your intellectual property enforcement strategy— 

growing the American economy and promoting innovation, protecting consumer trust and safety, and preserving our National security. And it appears you have taken some great steps in that 

area. 

I would mention two areas in particular. The first is in criminal 

enforcement. The coordinated efforts of the Justice Department and 

law enforcement have resulted in a number of victories, including 

two cases involving more than $100 million in counterfeit merchandise. The Justice Department and ICE ran a successful ‘‘Operation 

in our Sites’’ and took down 120 domain names of Web sites that 

were trafficking counterfeit goods. 

The second advance is your ability to engage so many prominent 

members of the Internet ‘‘ecosystem’’—including payment processors, Internet registrars, and ad networks—to come together to 

combat online infringement. This complements what we have been 

doing in Congress on the PROTECT IP Act, and it points out that 

the private sector can always do more to self-police than the government could ever enforce on its own. So we have to work together 

on that. 

Intellectual property enforcement is a great example of a bipartisan area. The PRO–IP Act, for example, was cosponsored by 22 

Senators—11 Democrats and 11 Republicans—and it passed the 

Senate unanimously. Last month we reported the PROTECT IP 

Act unanimously from the Committee. The House is currently considering another IP-related bill, the America Invents Act. That we 

passed out of the Senate 95–5. 

So there is a long way to go. I cannot emphasize how important 

this is. It is not just the thousands and thousands of jobs, the billions of dollars lost, but there are also great threats to our public 

safety and to our law enforcement and others. I will use an example of in the area of things that could be done, what happens in 

a part of the country like mine where it may be 10 below zero in 

January and somebody destroys the command and control of our 

power systems. That goes off into a different area, but it just shows 

how interdependent we are in these areas. 

[The prepared statement of Senator Leahy appears as a submission for the record.] 
3 

Senator Grassley. 

STATEMENT OF HON. CHUCK GRASSLEY, A U.S. SENATOR 

FROM THE STATE OF IOWA 

Senator GRASSLEY. I usually start out my remarks by thanking 

you for holding this hearing. I will go beyond that this time and 

say that not only by holding this hearing but several others you 

have had and the promotion of bipartisan legislation, in fact, almost a consensus formed that you need to be complimented for. 

But I think also beyond even helping our own economy, you are 

bringing attention to a lot of things that are seen as a global issue, 

and by your leadership and U.S. leadership in this area, doing 

much more good than what maybe you even anticipate, but without 

a doubt recognize a tremendous need in trying to solve it wherever 

we can. So thank you for that, including this hearing. 

Our country is a global leader in innovating, creating, and developing new technology and products. The U.S. Chamber of Commerce estimated that over 19 million Americans are employed by 

intellectual property-based industries here in this country. The 

Chamber estimates that more than 60 percent of U.S. exports involve intellectual property and more than seven-tenths trillion of 

the U.S. gross domestic product is represented by intellectual property-related industries. 

At the same time, the theft of intellectual property has skyrocketed out of control, even beyond what we most often talk about 

involving the country of China. A recent report estimated that 

counterfeit and piracy has resulted in 2.5 million jobs lost in the 

G–20 economies, and that brings additional emphasis to what I 

complimented you about, Mr. Chairman, of having a hearing here 

that has international implications. 

Beyond the jobs lost in the G–20 countries, the global value of counterfeited and pirated goods exceeded $650 billion. Protecting 

intellectual property rights is crucial to promoting innovation, creating new jobs, and advancing economic growth in the United 

States. Protecting intellectual property rights is also critical to 

keeping American consumers safe from unsafe and defective consumer products. No one intentionally wants to buy dangerous counterfeit pharmaceuticals, defective electrical products, malfunctioning equipment, and sub-par construction materials. Yet consumers are scammed all the time into purchasing these products. 

I am pleased today that we hear from our federal law enforcement agencies about their efforts to enforce these property rights, 

both here in the United States and abroad, and how they are coordinating with each other and industry to stop intellectual property theft and how they are helping to protect the American economy and the safety of our public. 

I am interested in hearing more about the Intellectual Property 

Enforcement Coordinator’s recommendations, whether law enforcement needs more tools to go after these criminals and how the 

PRO–IP Act has helped combat intellectual property. 

I just said how important this Committee hearing is, and you 

might wonder how important it is when I say I have to leave at 

10:30 for flood issues on the Missouri River when I am meeting 

with FEMA people, but I am going to have to leave. And I also 
4 

want to make an excuse for Senator Hatch, who is tied up in the 

Finance Committee as Ranking Member there because he has always been very actively involved in intellectual property rights. 

So I might be able to be back here at 11, Mr. Chairman, but if 

I do not get back to ask questions, then I will submit them for answer in writing. 

Chairman LEAHY. Without objection, your questions and anybody 

else’s questions will be included. I thank you, and I thank you for 

your compliment. It is nice to work on things that bring Republicans or Democrats together, and this is one of those areas, just 

as so many of you did on the patent bill. 

Victoria Espinel serves as the Nation’s first Intellectual Property 

Enforcement Coordinator. She was confirmed by the Senate in 

2009. I remember that confirmation hearing very well. She is well 

qualified for this position. She previously served as the Assistant 

U.S. Trade Representative for Intellectual Property and Innovation. 

She was the chief trade negotiator for the United States on intellectual property issues. She was a professor at George Mason University School of Law. She served as an adviser to several committees in Congress, including this one. She received her undergraduate and law degrees from Georgetown—I am delighted to see 

somebody with a law degree from Georgetown—and a master of 

laws degree from the London School of Economics. 

Ms. Espinel, please go ahead, and what we will do is I will introduce each one of you separately and each one of you will speak or 

give your statement. Your whole statement will be made part of 

the record, of course, and then we will open it to questions. 

Ms. Espinel. 

STATEMENT OF HON. VICTORIA A. ESPINEL, INTELLECTUAL 

PROPERTY ENFORCEMENT COORDINATOR, OFFICE OF MANAGEMENT AND BUDGET, WASHINGTON, DC 

Ms. ESPINEL. Thank you. Chairman Leahy, Ranking Member 

Grassley, Members of the Judiciary Committee, thank you for your 

continued leadership on this important issue. 

One year ago today we sent you our Joint Strategic Plan on Intellectual Property Enforcement. Today we will be submitting to 

you a report on the progress made in the year since the strategy 

was issued. While we have taken great steps forward over this past 

year, much work lies ahead, and we need a continuing, coordinated 

response to these problems. 

First let me say that law enforcement is doing great work. I feel 

lucky and proud to be sitting here today with these people and not 

just at the hearing today but every day that I work with them and 

their colleagues. Law enforcement agencies all have a number of 

priorities, but they have shown real commitment to intellectual 

property enforcement. 

Looking at fiscal year 2009 compared to fiscal year 2010, DHS 

investigations and seizures of goods crossing our borders have each 

increased by over 30 percent, and FBI investigations are up by 

more than 44 percent. DOJ has bolstered State and local law enforcement by providing $6.5 million in grants. That $6.5 million 

has been used to seize close to $200 million worth of infringing 

goods. 
5 

Through Operation in our Sites, DOJ and ICE have seized 125 

domain names used for counterfeiting and piracy. DOJ and the FBI 

have increased investigation and prosecution of trade secret cases 

to protect against the transfer of American innovation and technology overseas. Some cases involve the theft of technology owned 

by our automobile industry or extremely valuable proprietary code. 

Internationally, ICE now has a full-time IP-dedicated attache in 

China, and the FBI is preparing to do the same. The President has 

called for the placement of six DOJ attaches specializing in intellectual property in strategic global locations to strengthen international enforcement. 

We are pressing our foreign counterparts to do more, and we are 

seeing greater cooperation from some governments. In June, DOJ 

and ICE worked with Dutch law enforcement to seize a server that 

was being used for piracy. ICE, working with the World Customs 

Organization, Interpol, and others, has targeted online sales of 

counterfeit medicines in coordination with 45 countries, resulting 

in worldwide arrests and seizures of thousands of potentially harmful drugs. 

China is clearly a priority. In January, President Obama and 

President Hu Jintao issued a joint statement, agreeing that China 

will strengthen its efforts to protect intellectual property rights. 

China has launched a Special Campaign Against Piracy and Counterfeiting under the direction of its State Council. We are working 

with USTR, PTO, law enforcement, and others to assess the impact 

of this campaign and to press China to do more. 

In addition to increased law enforcement against online infringement, we need cooperation and action from the private sector. 

Given the scope of the problem, we will never address it as effectively if we do not have more engagement and action from all of 

those who have a stake in Internet commerce. 

Over the past year we have been encouraging cooperative voluntary practices to reduce infringement online that are practical 

and effective and consistent with important policy principles, including privacy and due process. We strongly support these voluntary agreements to help address counterfeiting and piracy online. They are complementary to increased enforcement, updated 

legislation, and coordinated educational campaigns. 

Many rogue Web sites earn revenue through the use of online 

payment processing services. The major credit card companies and 

payment processors have now agreed to a set of voluntary best 

practices that provide for rapid investigation and for payment processors to withdraw their services from sites that are operating unlawfully. Starving illegal online businesses of revenue will necessarily disrupt and likely cripple the business model of many illegal enterprises. Many rogue Web sites also earn revenue through 

advertising, including from some of America’s best-known companies. The ads for iconic and trusted brands lend legitimacy to illicit 

sites and can mislead consumers into believing that the sites are 

legitimate. 

We have been working with many of the major ad networks to 

reach agreement on a set of voluntary best practices. While still 

under discussion, these best practices would limit ads being placed 

on sites engaged in counterfeiting or piracy. We believe that legiti-
6 

mate companies do not want to be supporting illegal activity. We 

are working with a number of major advertisers and their trade associations to develop a voluntary pledge demanding that their ads 

not be placed on pirate sites. That process is also underway. 

My office is focused on good government, saving taxpayer dollars 

and making sure that we avoid duplication and waste. We now 

have 30 law enforcement teams across the country led by ICE and 

the FBI that include federal, State, and local law enforcement. To 

better coordinate abroad, our embassies have established seniorlevel working groups to improve their efforts, and in April the PTO 

launched a public online data base that will lead to more efficient 

use of resources by allowing different agencies to share materials 

and avoid duplicative work. 

We must prevent counterfeit products from coming into the U.S. 

Government’s supply chain. We are working intensely with NASA 

and DOD to have recommendations to the President in early fall. 

Effective enforcement against online infringement requires 

strong laws that keep up with technology. In March, we made 20 

recommendations for legislative changes to Congress. We have 

been working with Congress on proposals that address illegal 

streaming, economic espionage, the Trade Secrets Act, and counterfeits sold to the military. We commend Chairman Leahy, Senator 

Klobuchar, Senator Kohl, Senator Whitehouse, Senator Franken, 

Senator Coons, Senator Blumenthal, and Senator Grassley for their 

leadership on these important issues. 

Finally, we know that there is a great deal of interest in Congress in giving our law enforcement additional tools to stop Web 

sites engaged in substantial criminal infringing activity. This is a 

priority issue for us as well, and my office has convened a process 

to develop the administration’s position on this legislation. 

I commend this Committee’s leadership on IP enforcement, and 

I look forward to working closely with you on improving protection 

of American intellectual property. With a unified front, we can and 

will defeat the criminals preying upon U.S. businesses. 

Thank you. 

[The prepared statement of Ms. Espinel appears as a submission 

for the record.] 

Chairman LEAHY. Thank you very much. 

Incidentally, I like the idea of having, as you mentioned, the people in our embassies abroad because we have always had military 

liaisons, agricultural liaisons, and others. They are all important, 

but this is extraordinarily important. 

Jason Weinstein is the Deputy Assistant Attorney General in the 

Criminal Division, Department of Justice. In that role he oversees 

the Division’s efforts to combat intellectual property crime, computer crime, anti-gang and violent crime, and human smuggling. 

Before joining the Criminal Division, he was chief of the Violent 

Crime Section at the United States Attorney’s Office for the District of Maryland. He served as Assistant U.S. Attorney in the 

Southern District of New York. He received his undergraduate degree from Princeton, his law degree from the George Washington 

School of Law. 

Deputy Assistant Attorney General, we are delighted to have you 

here. And did I pronounce your last name right? 
7 

Mr. WEINSTEIN. Yes, you did, Mr. Chairman. 

Chairman LEAHY. I always worry about that. Thank you. 

STATEMENT OF JASON M. WEINSTEIN, DEPUTY ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT 

OF JUSTICE, WASHINGTON, DC 

Mr. WEINSTEIN. Good morning, Chairman Leahy, Ranking Member Grassley, and Members of the Committee. I thank you for the 

opportunity to be here today. 

As we all know, and as the Chairman said in his opening, criminal enforcement of intellectual property rights is critical to our economic security and to the health and safety of our citizens. Piracy, 

the distribution of counterfeit goods, and trade secret theft threaten American companies and American jobs. Counterfeit pharmaceuticals and other dangerous products threaten our health and 

safety. And when counterfeit computer hardware makes it into the 

military supply chain, it puts our troops, already in harm’s way, in 

even greater danger. 

Technological innovations have revolutionized the way the world 

does business. The increasing availability of Internet access has allowed rights holders to distribute or stream digital content to a 

worldwide market almost instantaneously. And with improvements 

in manufacturing and transportation and shipping, even small 

businesses have unprecedented opportunities to market and distribute their goods and services around the world. 

Yet as our world has become smaller, the threat posed by IP 

crime has grown bigger. IP criminals have exploited these same innovations to engage in every type of IP offense imaginable, from 

online piracy, the sales of counterfeit goods and pharmaceuticals, 

to economic espionage. And these IP criminals can now operate 

anonymously in cyberspace, committing their crimes from around 

the corner or around the globe. 

In recognition of this growing threat, Attorney General Holder 

has made IP enforcement a top priority, and from the highest levels, the Department of Justice is fully committed to aggressive, effective criminal enforcement efforts, both here and abroad, to protect our Nation’s IP stakeholders and the American public. 

Under the leadership of the Task Force on Intellectual Property, 

which was formed by the Attorney General in February 2010, the 

Department has pursued a comprehensive strategy that includes 

the following: 

No. 1, aggressive investigations and prosecutions of IP crime, 

with a particular emphasis on cases involving health and safety, 

trade secret theft and economic espionage, links to organized criminal enterprises, and large-scale commercial counterfeiting and piracy, particularly when it occurs online. 

No. 2, training for State, local, and federal law enforcement. 

No. 3, a grant program that, as Victoria mentioned, has provided 

approximately $6.5 million to date to support IP enforcement efforts at the State and local level. 

No. 4, extensive outreach to victims of IP crime. 

And, No. 5, last but not least, close collaboration with other Federal Government agencies and with the Intellectual Property Enforcement Coordinator, who has provided outstanding leadership in 
8 

charting and pursuing the administration’s comprehensive approach to IP protection and enforcement. 

In all of that important work, our outstanding prosecutors at 

DOJ, both from the Criminal Division’s Computer Crime and IP 

Section and from the Computer Hacking and Intellectual Property, 

or CHIP, Network in the U.S. Attorney’s Offices, enjoy very strong 

relationships with our agency partners and in particular with the 

agencies represented on the panel with me today—the FBI, ICE, 

Homeland Security Investigations, and CBP—and with the national IP Rights Coordination Center. 

Those strong relationships and the dedication and skill of our 

prosecutors and agents have led to a number of major enforcement 

successes, including the examples referred to in my written statement, and those cases, and many others like them, illustrate the 

scope of our efforts to pursue IP criminals. But they also reveal the 

global reach that IP criminals can have. The individuals and organizations responsible for these crimes often operate from foreign jurisdictions, and it is often impossible to identify, arrest, and prosecute them or to obtain critical evidence against them without the 

assistance of foreign law enforcement. 

For that reason, Mr. Chairman, our work does not stop at our 

shores. Due to the increasingly international nature of IP crime, 

close coordination and cooperation with our foreign partners is critical to our success. We have also placed great emphasis on 

strengthening the enforcement capacity of nations overseas, from 

Europe to Asia, to Africa, to South America, to Mexico, both to reduce safe havens for IP criminals and to improve our ability to hold 

those criminals accountable throughout the world. 

In pursuing this critical mission, we are fortunate to have the 

support of Congress and in particular of this Committee. I am 

pleased to have the opportunity today to discuss how our law enforcement strategy has been significantly enhanced by the additional tools and resources provided in the PRO–IP Act of 2008. We 

thank the Committee for its support of that Act and for its continuing efforts to identify ways to further enhance our ability to enforce IP rights and protect American consumers and businesses. 

I thank you for the opportunity to be here today, and I would be 

pleased to answer your questions. 

[The prepared statement of Mr. Weinstein appears as a submission for the record.] 

Chairman LEAHY. Thank you very much. 

Our next witness, Gordon Snow, is Assistant Director for the 

Cyber Division at the FBI. His lengthy career with the Bureau 

began as a special agent in 1992. He also served in the U.S. Marine 

Corps for more than 10 years. Among his many roles with the Bureau, Mr. Snow has served as on-scene commander for the Counterterrorism Division in Afghanistan. He served as Director of the National Cyber Investigative Joint Task Force, received his undergraduate degree from the University of Michigan, Ann Arbor; also 

received an MBA from Virginia Tech and a law degree from Catholic University. 

Mr. Snow, we are delighted to have you here. Please go ahead. 
9 

STATEMENT OF GORDON M. SNOW, ASSISTANT DIRECTOR, 

CYBER DIVISION, FEDERAL BUREAU OF INVESTIGATION, 

WASHINGTON, DC 

Mr. SNOW. Thank you. I am pleased to appear before you today 

to discuss the Prioritizing Resources and Organization for Intellectual Property Act of 2008 and the FBI’s efforts, activities, and successes relating to intellectual property rights crimes. 

The enforcement of U.S. laws protecting IPR is critical to the 

U.S. economy, our National security, and the health and safety of 

American citizens. 

IPR violations, which include theft of trade secrets, digital piracy, and the trafficking of counterfeit goods, result in billions of 

dollars in lost profits annually. 

Some IPR violations pose a more far-reaching and serious threat 

to the U.S. than just economic loss to the rights holder. Such violations put public safety at risk through the sale of counterfeit pharmaceuticals, electrical components, aircraft and automobile parts, 

and the funding of organized crime. My remarks today will focus 

on the role the FBI plays in protecting IPR, our efforts to coordinate with other federal agencies to ensure that intellectual property is protected, and our successes in this arena. 

The FBI’s strategic objective is to detect and disrupt state-sponsored groups and international and domestic criminal organizations 

that manufacture counterfeit goods and distribute or otherwise 

profit from the theft of intellectual property. 

The FBI partners closely with the National Intellectual Property 

Rights Coordination Center, which is hosted by U.S. Immigration 

and Customs Enforcement. The IPR Center serves as a centralized, 

multiagency entity for the U.S. Government’s criminal enforcement 

of intellectual property laws, hosting weekly deconfliction meetings 

to ensure resources are effectively and efficiently devoted to investigations. 

The FBI moved its Intellectual Property Rights Unit to the IPR 

Center in April of 2010. The IPR Unit provides national program 

management for the FBI IPR program and initiates and conducts 

IPR investigations that are complex, multijurisdictional, and/or 

international in nature. 

As a result of the PRO–IP Act, the FBI has 51 dedicated IPR 

special agents placed in 21 field offices and the IPR Unit. Of these 

51 positions, 44 special agents were placed in 20 field offices where 

United States Attorneys’ Offices had Computer Hacking and Intellectual Property Rights Units. The locations for the distribution of 

these resources were selected based on a regional domain analysis 

of the threat to intellectual property, intellectual property threat 

intelligence reporting, input from the IPR Center, and an understanding that the geographically dispersed nature of IPR violations 

and subject locations made it possible to establish venues regionally. The placement of the special agents was coordinated with and 

approved by the Office of the Deputy Attorney General and the Executive Office of the United States Attorneys. 

In an effort to improve international relationships on IPR investigations, the IPR Unit embedded a dedicated IPR team comprised 

of an analyst and an agent in the FBI’s Legal Attache offices in 

Beijing and New Delhi to work directly with local and regional au-
10 

thorities on IPR matters for 60 days. Based upon the results of this 

effort and the threat emanating from these regions, the IPR Unit 

is currently in the process of embedding a full-time IPR dedicated 

agent in Beijing for one year. 

The FBI places a heavy emphasis on meaningful training and capacity building. The FBI provides IPR training to domestic and 

international law enforcement officials and is collaborating with its 

partner agencies to develop a more comprehensive and advanced 

intellectual property training curriculum to ensure a uniform foundation across law enforcement agencies conducting IPR investigations. The FBI also provides State and local law enforcement and 

industry liaisons with information about how to most effectively 

partner with the Federal Government in IPR cases. In fiscal year 

2009, the FBI provided IPR training to 782 individuals from the 

Federal Government, the domestic private sector, foreign governments, and the overseas private sector. In fiscal year 2010, that 

number was 1,678 additional individuals within the same groups. 

At the end of last month, the FBI had already trained up to 1,064 

individuals. 

Over the past two years, the FBI provided training in IPR to law 

enforcement officials from 15 different countries. The FBI’s use of 

PRO–IP Act resources has permitted an increased focus on training 

in high-priority areas. 

Over the past year, the FBI and its partners have successfully 

investigated major IPR violations that resulted in millions of dollars in losses and unquantifiable harm to human health and safety. 

Those examples are in my statement. 

The PRO–IP Act has enabled the FBI to dedicate increased numbers of special agents and analysts to IPR matters, ensure quality 

training, and support effective interagency collaboration. We look 

forward to working with the Committee and Congress as a whole 

to continue on a successful course forward for the Nation that protects intellectual property and its citizens. 

Thank you for the opportunity to be here, and I would be happy 

to answer any questions you may have. 

[The prepared statement of Mr. Snow appears as a submission 

for the record.] 

Senator WHITEHOUSE [presiding]. Thank you, Mr. Snow. 

Our next witness is Allen Gina. He is Assistant Commissioner at 

the Office of International Trade for the United States Customs 

and Border Protection agency, a position he has held since March. 

Mr. Gina began his career as a customs inspector in 1983. Prior to 

serving in the Office of International Trade, he served as Assistant 

Commissioner at the Office of International Affairs. From February 

2003 to May 2004, he was detailed to the Directorate of Border and 

Transportation Security to help set up the Department of Homeland Security. He received his undergraduate degree from Queens 

College in New York, is a graduate of the Kennedy School of Government Senior Executive Fellows Program, and we welcome him 

today. 

Mr. Gina. 
11 

STATEMENT OF ALLEN GINA, ASSISTANT COMMISSIONER, OFFICE OF INTERNATIONAL TRADE, U.S. CUSTOMS AND BORDER PROTECTION, U.S. DEPARTMENT OF HOMELAND SECURITY, WASHINGTON, DC 

Mr. GINA. Good morning, distinguished Members. Thank you for 

the opportunity to discuss the actions we are taking at Customs 

and Border Protection to ensure that the laws governing intellectual property rights are properly enforced. 

Having spent the past 29 years of my career with CBP and previously the U.S. Customs Service and having been a uniformed inspector, I have firsthand experience of the challenges CBP encounters daily to protect our National security while also facilitating the 

flow of legitimate trade and travel and enforcing trade laws. 

As you know, CBP targets goods entering the United States, and 

we detain and seize merchandise that infringes trademarks, trade 

names, and copyrights. We also assess fines and penalties against 

violators and enforce exclusion orders issued by the International 

Trade Commission. Our office’s import specialists, trade specialists, 

auditors, lawyers, and other disciplines are trained in the many 

facets of international trade to take into account the ever-changing 

challenges at over 300 ports of entry. 

In addition to our own staff, CBP partners with other federal 

agencies, foreign governments, and the private sector. Our closest 

partner in IP enforcement is, of course, our sister agency, ICE, 

which is the investigative arm of DHS. Within the U.S. Government, we also work closely with Ms. Espinel’s office to ensure a coordinated U.S. Government response to IP theft as envisioned in 

the PRO–IP Act. 

Internationally, we actively engage our trading partners to share 

best practices, exchange information, and conduct joint enforcement operations. For example, we are conducting a joint enforcement operation focusing on counterfeit pharmaceuticals shipped via 

international mail and express consignment with 11 members of 

APEC. In addition to our collaboration in APEC, CBP strengthened 

its engagement with China customs by amending the Memorandum of Cooperation on IP Enforcement that our two agencies 

signed in 2008. Last month, I signed letters of exchange with my 

counterpart from China customs to remove all limits on the amount 

of information that we can share. 

When goods arrive at our borders, CBP inspects targeted shipments and seizes, forfeits, and disposes of the counterfeit and pirated goods. Last year alone, cooperative efforts by CBP and ICE resulted in 19,959 seizures. This year we are on pace to reach 25,000 

seizures. This is in comparison to 3,500 seizures made in 2001 and 

14,600 seizures made in 2006. 

Our seizures also lead to criminal convictions such as the federal 

conviction of an individual who trafficked in counterfeit Cisco 

equipment that Mr. Barnett will be referring to. 

Nevertheless, CBP recognizes that we must continue to improve 

our enforcement efforts. The appropriation from Congress will help 

us do so. We plan on spending the funds on human capital, technology procurement, training, and travel for outreach and temporary duty assignments to support IPR enforcement. 
12 

CBP identified several challenges in its five-year strategy on IPR 

enforcement which was delivered to Congress in 2010, including a 

need for additional advance information, the high quality of counterfeit and pirated goods which is making infringement determinations more challenging, and the need to enhance our partnerships 

with the trade community. We are working to resolve these issues, 

and we have a number of initiatives to guide us that are included 

in the IPEC’s Joint Strategic Plan and our own five-year IPR strategy. 

To improve the information available for targeting, we initiated 

the pharmaceutical Center for Excellence and Expertise pilot in 

November. The center works with industry stakeholders to enhance 

CBP’s understanding of and centralize our knowledge of private 

sector business practices. Last month, the CEE personnel conducted an enforcement operation in which they worked with ICE 

and DOJ to obtain three criminal warrants. 

To combat the improving quality of counterfeit and pirated goods 

which makes infringement determinations increasingly difficult, we 

are working with the IPEC to identify legislative recommendations 

that would allow CBP to share information with right holders to 

leverage their expertise. With your assistance implementing these 

recommendations, we will be able to take dramatic steps toward 

enforcing IPR at the border. 

I thank you again for the opportunity to appear before you today, 

and I would be happy to answer any of your questions. Thank you. 

[The prepared statement of Mr. Gina appears as a submission for 

the record.] 

Chairman LEAHY [presiding]. Thank you very much. 

Our next witness is Erik Barnett. He serves as Assistant Deputy 

Director for Immigration and Customs Enforcement, which we 

know as ICE. His responsibilities in this position include intellectual property theft enforcement, narcotics trafficking, human rights 

violations, and war crimes, among others. That is a pretty big portfolio. 

Mr. BARNETT. Yes, sir. 

Chairman LEAHY. Prior to joining ICE, he served as Assistant 

U.S. Attorney in the Eastern District of Virginia, where he was 

chief of the Narcotics and Dangerous Drug Unit. He spent some 

time on this Committee, as we all know, as the legislative fellow 

for Senator Durbin. He received his undergraduate degree from the 

University of Arizona, law degree from California Western School 

of Law. 

Please go ahead, sir. 

STATEMENT OF ERIK BARNETT, ASSISTANT DEPUTY DIRECTOR, U.S. IMMIGRATION AND CUSTOMS ENFORCEMENT, U.S. 

DEPARTMENT OF HOMELAND SECURITY, WASHINGTON, DC 

Mr. BARNETT. Good morning, Mr. Chairman, and I thank you 

and Members of the Committee for the opportunity to discuss ICE’s 

efforts in intellectual property theft enforcement. 

With the Committee’s indulgence, I will begin my remarks just 

by walking you through one of ICE’s very recent successes in IP 

theft enforcement. 
13 

Less than two months ago, the Fifth Circuit Court of Appeals affirmed a criminal conviction for trafficking in counterfeit Cisco network cards. The defendant had a contract to sell genuine Cisco network cards to the United States Marine Corps. The court noted 

that the criminal case began when a shipment from China was 

intercepted by a CBP officer who suspected that the Cisco parts 

were not genuine and were counterfeit. CBP informed an ICE 

agent, who contacted and interviewed the defendant. The case involved ICE, the Defense Criminal Investigative Service, and the 

Houston United States Attorney’s Office and resulted in the defendant being sentenced to 51 months in a federal prison. That was 

the high end of the Sentencing Guidelines range. 

We submit respectfully that there are three very important 

points that arise from this significant intellectual property theft 

case. 

First, ICE cannot achieve success in IP theft enforcement without partnerships with other key law enforcement agencies, many of 

whom are represented today at this table. 

Second, ICE needs the support of the private sector to thoroughly 

conduct criminal investigations. Cisco Systems worked diligently 

with our agents on identifying the counterfeits and assisting with 

the investigation. 

Finally, and clearly the most troubling, is that counterfeiting is 

no longer limited to luxury brands and high-end goods. It has infiltrated almost all segments of commerce. Wherever there is a price 

point at which criminals can make a profit with absolute disregard 

for the significant impact on public safety, just in the past year, 

ICE has seen cases involving fake cancer drugs and heart medicines, phony circuit breakers that could have been built into homes, 

and counterfeit airbags destined for used cars. ICE has received a 

fair amount of recognition for our increased IP theft enforcement 

over the past two years. In particular, since last June we have engaged with the Justice Department in innovative enforcement 

through Operation in our Sites against Web sites that commit IP 

theft. 

At ICE our intention has been no less than to change the face 

of IP theft enforcement in the United States through vigorous and 

consistent investigation and prosecution. But our efforts do not— 

cannot—occur in a vacuum. CBP, FBI, DOJ, and Victoria Espinel’s 

office have all worked steadily with ICE over the past two years 

on moving forward. We have also enjoyed the assistance of State 

Attorneys General and local law enforcement through 26 local IP 

Theft Enforcement Teams, also known as IPTETs. These were developed last year by ICE at the IPR Center to attack IP theft at 

all levels throughout the country. We work with DOJ to provide 

training for each of the IPTETs. 

Our successes have been achieved through the dedicated efforts 

of our agents, more than 7,000 of whom are in ICE’s Homeland Security Investigations, whose mission to combat IP crime comes 

from one of our legacy agencies, the U.S. Customs Service. Mostly, 

though, our success has been made possible through the joint efforts of agencies at the National Intellectual Property Rights Coordination Center, also known as the IPR Center, that although led 

by ICE, consists now of 19 partner agencies, including FBI and 
14 

CBP. The existence of the IPR Center is a recognition that no one 

law enforcement agency alone can take on IPR theft enforcement. 

That recognition sparked the announcement last week of Operation Chain Reaction, a specialized enforcement action involving 

ICE, CBP, FBI, DOJ, and the relevant military investigative agencies, as well as the General Services Administration, at the IPR 

Center. Operation Chain Reaction will specifically target for investigation individuals that attempt to sell counterfeit goods to the 

military and other U.S. Government agencies. 

Thank you again for the opportunity to testify, and I would be 

pleased to answer any questions. 

[The prepared statement of Mr. Barnett appears as a submission 

for the record.] 

Chairman LEAHY. Well, thank you very much. 

You know, you talked about the artificial airbags, for example, 

or counterfeit airbags. We have also seen it with brake pads and 

everything else. And sometimes people think that with these counterfeit goods it is like buying a handbag or a belt holding a brand 

name from a street corner. That is one thing, and that is wrong, 

too. But these are things that you can end up dying as a result of 

it. 

In counterfeit drugs, we have seen that with cancer patients and 

others, the high cost of drugs. Well, you can buy it somewhat less 

on one of these things, but it is useless to protect their lives. Those 

things worry me, as I know it does you. 

Ms. Espinel, I was glad to see what you have done to bring the 

private sector together on intellectual property and infringement. 

You had several members of the Internet ecosystem, payment processors, advertisers, networks, registrars. They formed a nonprofit 

to combat illegal pharmacies, which goes to what I was just saying 

here. Those go well. 

How extensive do you think this voluntary action can be? Is this 

a real tool that we can count on in the future? 

Ms. ESPINEL. I think it could be enormously important, and that 

is why my office, with the Administration as a whole, including the 

President and the Vice President, have been so supportive of this 

approach. You have sites that are selling illegal goods and services, 

and if pay processors are not engaging with those sites and are not 

processing those sorts of illegal transactions, they no longer have 

a financial incentive to sell. 

You have sites that are supported by advertising, which is problematic both in that it is giving those sites a source of revenue but 

also, as I mentioned, it is making sites appear legitimate when 

they are not. If we can get both the ad networks that place those 

ads and the major advertisers online to step up and take steps to 

make sure that ads are not placed on those sites, I think that could 

be enormously important, again, both in terms of cutting off the 

revenue source and in making those sites seem less legitimate. 

Internet service providers have interaction with obviously subscribers across the United States. I think having ISPs engage in 

educational activities so that the customers they interact with are 

aware that they are engaging in what is illegal activity I think can 

be enormously valuable. Domain name registries and registrars— 

obviously the ones who essentially are leasing the names of the 
15 

Web sites—have an important role to play, and we have found 

them to be very cooperative in our efforts and also—I will let law 

enforcement speak to this, but also engaging with law enforcement. 

Chairman LEAHY. You mentioned a challenge there, and the advertisers, it is an area that really bothers me, and you have put 

your finger on it. It is not just the revenue they get. It is the 

verisimilitude they give to the site, and that bothers me a great 

deal. I can think of some these advertisers that have done this, and 

at some point I would hope that they would realize voluntarily they 

should work with you because, otherwise, there will have to be real 

pressure from the Congress on this. 

Let me ask each one of the rest of you. We can talk about successes, and there have been a lot. What would you say—we are the 

legislators, we are the appropriators. We have to have some idea 

of where we are going. What would you describe as the greatest 

challenge that your agency or your office faces related to intellectual property enforcement? If you could do it briefly, what is the 

greatest challenge? Mr. Weinstein, I will start with you first. 

Mr. WEINSTEIN. Mr. Chairman, I think it is the international/ 

transnational nature of IP crime, and particularly as it relates to 

online piracy. You know, as I said in my opening remarks, the fact 

that the crime could be committed by somebody sitting in an apartment somewhere in a country in Eastern Europe just as easily as 

if the person was in this building makes it a particular challenge. 

And as you know, there are a number of particularly difficult 

things that make international cases challenging generally and 

they make online cases challenging in particular: the need to collect electronic evidence, the need to follow the trail of proxies and 

other anonymizing technologies used by these criminals to try to 

protect their identity when they are committing the crime, and the 

fact that they are often in countries where they believe that they 

have safe havens. And so for that reason, one of the things we try 

to do is work with our foreign partners to reduce safe havens overseas. 

Chairman LEAHY. It is not like a bank robbery where you could 

look at the surveillance cameras. 

Mr. WEINSTEIN. That is right. 

Chairman LEAHY. Mr. Snow. 

Mr. SNOW. Senator, I would echo what Mr. Weinstein just said, 

the international nature of not only the cyber threat itself, but the 

global proliferation on the Internet and how it brings into this a 

harder investigative road to go forward. I would add to it also just 

an extreme knowledge and insight that we can bring to the private 

sector in that partnership. I think there have been years where the 

private sector has thought that we would want to push off, from 

the law enforcement side, investigations, number one; or, two, that 

we did not have the time to look at those investigations and address them as seriously as we have in the last two years. 

Chairman LEAHY. That is encouraging. 

Mr. Gina. 

Mr. GINA. Sir, CBP being a non-investigatory agency but one 

that interdicts, you know, apprehends, and seizes, I think a significant challenge for us is actually determining the legitimacy of 

goods and/or based on current technology the quality of counterfeits 
16 

has so significantly improved, being able to partner with the appropriate right holders to make those determinations is probably one 

of the most significant challenges for CBP. 

Chairman LEAHY. Interesting. Thank you. 

Mr. Barnett. 

Mr. BARNETT. Mr. Chairman, one of the benefits of being last is 

I can certainly agree with everything that has just been said, and 

I do. 

The other thing I would mention is that a disturbing trend in 

terms of enforcement capacity is that ICE and CBP seizures in fiscal year 2010 of parcels coming into the country that are valued— 

manufacturer’s suggested retail price of counterfeiting that is valued under $1,000, seizures increase 40 percent. More and more 

counterfeits are coming in through the parcel services, so FedEx, 

U.S. Mail service, otherwise. And while we are still seeing the 14- 

foot cargo containers that allows you to seize hundreds of thousands of dollars worth of counterfeit goods at a time, there are 

some real resource challenges but also investigative challenges in 

terms of working backwards from a parcel. 

So a lot of this I think is—as Mr. Weinstein said, a lot of this 

is because this has become Internet-based shopping, and the pharmaceuticals are still coming in that way as well. 

Chairman LEAHY. I was going to say, a pharmaceutical is an 

easy one to send that way. 

Mr. BARNETT. Yes, sir. 

Chairman LEAHY. Well, I appreciate this. Before I yield to Senator Coburn, who has been waiting here patiently, I just wanted 

to ask consent to insert in the record letters and statements from 

various outside groups: the U.S. CMS, Recording Industry Association of America, the American Federation of Musicians, and others, 

American Society of Composers, National Treasury Employees 

Union, Institute for Policy Innovation, Motion Picture Association 

of America, a number of studios and a number of others. 

[The information referred to appears as a submission for the 

record.] 

Chairman LEAHY. I thank you very much. 

Senator Coburn. 

Senator COBURN. Mr. Chairman, first of all, let me thank you for 

having this hearing. I think it is tremendously important. We lose 

hundreds of billions of dollars of GDP to intellectual property theft 

every year, and I want to thank each one of you personally for 

what you do. I think the idea that we are now starting to see coordination through the various agencies is very helpful and I think 

is sending the signal. 

Let me start my questions with Ms. Espinel and let me thank 

you again for what you are doing. You said that it is underway to 

see the ads not going on these rogue websites. Do you have any 

idea when you are going to be able to accomplish that? 

Ms. ESPINEL. That is an excellent question. We are pressing very 

aggressively on it. Obviously, it ultimately lies in the hands of the 

private sector, so our role as government here is really to encourage and convene and facilitate a discussion and to let them know 

how important this is for the administration. 
17 

I would hope that we could see sort of a final agreement here 

within the next few months. I think we have made some progress, 

and I think we have a lot of good will that we are working with. 

So I would hope that within the next few months we would be able 

to say that we had agreement. But I will also say that hearings 

like this one and other ways that Congress can demonstrate, including I know how important this issue is for you, I think that is 

enormously helpful to our efforts not just on the voluntary cooperation but in general. And if this is something that is important to 

Congress, that is useful for us to know. I think that it is also useful 

for the community at large to know. 

Senator COBURN. Today it is not a violation of any law that you 

intentionally know you are going on a rogue Web site to place an 

ad there. There is no violation of federal law, is there? 

Ms. ESPINEL. I will take advantage of having the expertise of 

DOJ on this panel to defer questions, but I will say that I think, 

you know, there are definitely areas involving Internet stakeholders and online infringement where the law is murky, and that 

is one of the reasons that we think, you know, regardless of the 

status of the law, companies need to step up and do more. 

We think the first best approach would be to have the private 

sector driving that effort and enthusiastic about it rather than 

moving to more, say, heavy-handed—but I would also want to say 

that ultimately our goal is to drive down online infringement, and 

so if the approach that we are very enthusiastic about and think 

it is going well, if that ultimately turns out not to be successful, 

then, of course, we will reassess. 

Senator COBURN. Okay. Mr. Weinstein, I noticed that under the 

appropriations under the PRO–IP Act you did not receive the funding for the grant authorization, but the appropriators gave you 

other funding that you were allowed to use. One of the things that 

concerned me about what I saw on this is we are using nonprofits 

to train rather than government staff. Why is that? Do we not have 

capable staff which we can train rather than—and we limit the 

grants, but we do not limit the grants to nonprofits. We limit the 

grants to the States. Could you just clear that up for me? 

Mr. WEINSTEIN. I would be happy to, Senator. 

First of all, the appropriations we got, where there were actual 

monies provided, were the monies that we used to hire the new 

prosecutors, the new agents. The grant program, as you indicated, 

was not funded, but our Office of Justice Programs used discretionary funds, about $6.5 million and counting, to provide those 

grants. 

The three nonprofits that were among the 27 grantees who received some of that money received the money because one of the 

things that they can do a little more easily than we can do with 

government contracting rules is actually set up the trainings. The 

substance of the training was provided by government experts, so 

our folks did participate in the trainings and were the experts in 

the room who were doing the instructing. But some of the nonprofit 

grantees just can contract for space and handle the logistics of arranging a training session a little more easily than we can. 

Senator COBURN. Okay. I am about to run out of time. Mr. Gina, 

you talked about your increase in seizures on counterfeit goods and 
18 

the ability—you do have the ability to assess penalties in the form 

of monetary fines. Between 2001 and 2006, you assessed $1.1 billion in fines. You only collected $2.7 million. You noted that since 

2006 the increased assessment of penalties and collection of penalties, but the collection only went up by three percent. Why is it 

that we have so much trouble collecting the fines that you assess? 

Mr. GINA. Our attempt is to reach the individuals who are ultimately accountable, and we have been challenged in having those 

individuals pay the penalties. At the direction of Commissioner 

Bersin, he has asked us to look at our penalties and our mitigation 

process to actually see if we can go against other individuals that 

may have a financial connection or a nexus to those individuals. 

Very similar to areas such as antidumping, countervailing duty, we 

have foreign-based importers of record who, when we go to assess 

the penalty, they are outside the reach of CBP, but the Commissioner has asked us to review that. 

Senator COBURN. All right. Thank you. 

Mr. Chairman, I will have the rest of my questions for the 

record. 

Chairman LEAHY. Thank you, and I appreciate the questions you 

had here. 

[The questions of Senator Coburn appear under Questions.] 

Chairman LEAHY. Senator Kohl. 

Senator KOHL. Thank you very much, Mr. Chairman. 

Ms. Espinel, your office issued a report earlier this year that 

called economic espionage one of the most serious intellectual property crimes facing our country. Nearly 80 percent of Fortune 500 

companies’ market value is in intellectual property, including trade 

secrets, and they lose billions of dollars when criminals steal them. 

As you know, I have introduced legislation to increase penalties 

for economic espionage, and we have been working with your office 

on it. This bill is a small but important step in updating and modernizing the 1996 law that made economic espionage a federal 

crime. Can we count on your support for our legislation? 

Ms. ESPINEL. Absolutely. We think this is an enormously important issue. Trade secret theft in general, because of the negative 

impact that it has in taking the technology and innovation that is 

developed by American companies, is one of the worst types of IP 

crimes, and then economic espionage, where a foreign government 

is involved, is even more egregious. So we think it is an enormously 

important issue. We say it all the time, but it is absolutely true 

that our intellectual property is our global comparative advantage, 

and if we are losing it to other countries, it has enormous repercussions for our economy, and we look forward to working very closely 

with you on the legislation that you introduced, and thank you for 

your leadership. 

Senator KOHL. Thank you so much. We have heard, Ms. Espinel, 

from companies and lawyers who advise them on trade secrets that 

they would be aided in their fight against economic espionage if 

they could bring private lawsuits in federal court. Would you support creating a federal private right of action for trade secret theft? 

Ms. ESPINEL. It is something that we would seriously consider. 

We have had some preliminary conversations with the Department 

of Justice about this, and I can commit to get an answer to you on 
19 

that issue. I know it is something that you are interested in. It is 

not something that we have a final position on, but I can tell you, 

as a general matter, as I said, this is a very important issue to us, 

and if a private right of action would be beneficial to our law enforcement, then I think it is something that we would at least seriously consider, if not support. 

Senator KOHL. Would it help, Ms. Espinel, trade secret owners 

better protect their businesses if they had this right? 

Ms. ESPINEL. Since there is no formal administration position on 

this, I would prefer not to give a formal answer at this time, but 

I can promise you that we will consider it. As I said, we have already had some preliminary discussions with the Department of 

Justice. We will turn up the volume on those discussions and be 

back to you as soon as possible. 

Senator KOHL. Okay. Thank you. 

Mr. Weinstein, do you support my legislation to increase criminal 

penalties? Do you think there are any additional changes that need 

to be made to the Economic Espionage Act of 1996 to improve its 

effectiveness? 

Mr. WEINSTEIN. Senator, we do support your bill. We think it is 

a good idea, and I think its intent is consistent with the proposals 

that are in the white paper that Victoria’s office sent to Congress 

in March. And we appreciate your leadership on this issue as well. 

We have been working with your staff, as I think you know, to 

provide technical assistance and are happy to continue to do that. 

There is not anything that comes to mind that I think could 

make the bill stronger. I know that there is frequently discussion 

about whether legislative changes are needed to give us additional 

tools to protect trade secrets during the course of investigations 

and prosecutions, that is, to give companies greater comfort that 

their secrets will be protected during the course of a criminal case. 

And in our view, although we are always happy to explore other 

options, it is our view that that is not so much an issue of whether 

we have adequate tools, but whether companies are sufficiently 

educated about the tools we do have. 

Section 1835 gives courts very broad authority to fashion orders 

and appropriate remedies to protect trade secrets during criminal 

cases, everything from—you know, the statute gives the court authority to do whatever it wants, but the tools include, you know, 

closing a courtroom, making orders that provide that the trade secrets are available only for the attorney’s eyes, protective orders, 

things of that nature. And what we have been trying to do, both 

the FBI and DOJ, has been to educate victim companies at conferences and other meetings we have with victim companies 

throughout the country about those tools, to give them greater comfort that if they come forward and they assist us in investigations 

and prosecutions, their trade secrets will be protected. And we 

have got a number of examples from major companies—Goldman 

Sachs, Societe Generale, whose name I just butchered, Ford, Dupont, Dow Chemical—major U.S. companies that have come forward and, I think been responsive to the training and education we 

have been doing with them and that they have more comfort and 

confidence that their trade secrets will remain protected while we 

try to vindicate their rights in a criminal court. 
20 

Senator KOHL. Thank you. Quickly, a last question. For many 

years, the Department of Justice was slow to prosecute economic 

espionage. Recently, DOJ has stepped up enforcement and has had 

a number of successful high-profile convictions, yet we have heard 

from stakeholders that they are hesitant to report economic espionage to Justice because they are concerned that it will not prosecute cases unless they are high-profile, slam-dunk cases and that 

their trade secrets may not be fully protected during a trial. 

What can we do to address these concerns? 

Mr. WEINSTEIN. Well, taking the second one first, I think as I 

said we need to do more. We have been doing quite a bit, both the 

FBI and Justice, to try to educate potential victims that their trade 

secrets will be protected and that we have got the tools to do that. 

But obviously we need to be constantly vigilant and make sure that 

we are doing even more to make sure that victims have that comfort. 

With respect to the first characterization, I just respectfully disagree with anyone who would say that. The fact is trade secret 

cases are inherently difficult. They are time-consuming. Some are 

more difficult than others, but Justice does not shy away and the 

FBI or the law enforcement partners do not shy away from difficult 

cases. In fact, I think we are drawn to them. If people feel that 

trade secret cases are taking a long time, it is not a reflection of 

our lack of desire or focus on them. It is a function of the complexity of the case. 

I can tell you that the IP task force that I mentioned in my opening remarks that the AG created last February has made the prosecution of trade secret and economic espionage cases one of the 

highest priorities for him personally and for the Department. So 

throughout the country, not just at CCIPs but in the U.S. Attorney’s Offices and the FBI, we are seeking those cases out, and we 

are aggressively pursuing them. 

Senator KOHL. Thank you, Mr. Weinstein. 

Thank you, Mr. Chairman. 

Chairman LEAHY. Thank you. 

Senator Franken. 

Senator FRANKEN. Thank you, Mr. Chairman, for this important 

hearing, and thank you all for the work that you are doing. 

I have a question that is really for anyone who wants to answer 

it. It is about China. I am probably the only Member of the Committee who made most of his living creating intellectual property, 

so I have a special interest in this hearing. 

Mr. Weinstein, I know you mentioned China as an emphasis and 

also online activity as an emphasis. What percentage of the Chinese people are online? 

Mr. WEINSTEIN. I do not know the answer to that question, Senator. I do not know if Victoria does. 

Ms. ESPINEL. I do not know the answer to that question, but I 

know that it is a lot. And, in fact, one of the things that we are 

seeing in China—— 

Senator FRANKEN. There are a lot of people in China. 

Ms. ESPINEL [continuing]. Is sort of sites that are very similar to 

U.S. sites, you know, Chinese versions of eBay and Facebook and 
21 

Google being developed in China because of the number of people 

that are online. 

Senator FRANKEN. I noted the special emphasis on China and the 

Internet, but the vast majority of people in China are not online. 

What I am interested in is enforcing that copyright infringement, 

too. I have seen a report that the private DVD industry—this is the 

physical DVDs; this is not online—in China brought in over $6 billion in 2010. What are we doing about that? 

Ms. ESPINEL. I will mention a few things, but then I may also 

call on my colleagues to speak as well. It is absolutely true that 

in China and in other countries around the world we have a huge 

physical problem in addition, frankly, in China, to also a growing 

online problem. But the scope of the physical problem in China 

both in terms of impacting the domestic market in China and in 

terms of counterfeit goods, physical goods that then get exported 

out of China around the world, is a big problem. I will just mention 

a few things. 

First, China is clearly the priority focus in terms of countries 

overseas, and there is no other country in the world that is receiving the amount of pressure from the U.S. Government that China 

is, and that includes President Obama has raised this repeatedly 

with President Hu Jintao, but it has also been raised by seniorlevel officials across the administration. 

The Chinese launched Special Campaign Against Counterfeiting 

and Piracy, and while they have launched campaigns in the past, 

this campaign is being led by the State Council, which is sort of 

like the Chinese equivalent to the Cabinet, and it is overseen by 

their Vice Premier. So it is a much more senior and much more coordinated campaign than any that China has launched in the past. 

One of the things that we are engaged in right now is working 

with law enforcement agencies here that have people on the 

ground—industry, USTR, PTO, and others—to find out exactly 

what happened in that campaign. The Chinese set out 10 to 12 

goals that they were going to address and see which of those they 

have actually made progress on, which they have in some, and 

where they are deficient and press them to do more in the areas 

where they are deficient. 

Two other things that I would mention just briefly. Part of 

what—we need to have foreign law enforcement, including Chinese 

law enforcement, more engaged, and Attorney General Holder was 

in Beijing, in China, and he made it very, very clear to his counterpart that there needed not just to be nice high-level discussion between the Attorney General and his counterpart, but actual on-theground cooperation from foreign law enforcement. Attorney John 

Morton of ICE and Alan Bersin of CBP were also in China within 

the last nine months pressing their counterparts to do more. 

Beyond pressure, I think we also need to have people on the 

ground in order to build those day-to-day relationships, which is 

why I think it is so important that the agencies here are all having 

attaches or essentially law enforcement personnel placed on the 

ground in China to help build those relationships directly. 

The last thing that I would mention is USTR this year for the 

first time did a special report on what they call notorious markets. 

So those are both physical markets and online markets that exist. 
22 

Many, as you probably will not be surprised to hear, are in China, 

and the purpose of the report is to get Chinese law enforcement to 

do more, so to encourage countries to actually be enforcing in their 

own backyard. 

One of the benefits of those, we have seen not just increased law 

enforcement, for example, from the Hong Kong authorities coming 

out of that report; we have also seen in the online environment 

some of the Chinese sites, at least one big Chinese site sort of voluntarily say that they were going to take action because they were 

unhappy about being on the USTR list. 

With that, I have taken a lot of time, so I am going to pause, 

if any of my colleagues would like to add to that. 

Mr. WEINSTEIN. The only thing I would say, Senator, is that 

there is virtually no type of IP crime for which China would not 

be at or near the top of the list of concern. It is not just piracy and 

it is not just online piracy, but it is manufacturing counterfeit 

DVDs, it is fraudulent software, it is counterfeit goods, trade secret, economic espionage. China is all over some of our biggest 

cases in that area, too. 

From a law enforcement point of view, what we emphasize is bilateral engagement with Chinese law enforcement. CCIPs is part 

of a working group with the Ministry of Public Security to try to 

identify cases where we can help each other exchange evidence, 

cases we can work together jointly. We had one big case back in 

2007 in which we took down—helped the Chinese take down a ring 

of 25 people who, according to Microsoft, were manufacturing $2 

billion in counterfeit Microsoft software. But that is just one case, 

and one case four years ago. And so what we want from China is 

not just encouraging signs but enduring commitment. We want the 

Chinese to match their words and the promises with action, and we 

intend to keep the pressure on to make sure they do that. 

Mr. SNOW. And, sir, I will make one quick statement. Obviously, 

in our international outreach from the law enforcement side, and 

particularly in this case from the FBI, we found out in all the cyber 

threats that the people that we embed, not just the people that we 

have at the embassy, but the people who wake up every day and 

work on the computer crime investigative units across the world, 

when we embed a person from the FBI or from law enforcement 

there, it just moves that relationship so much further forward. It 

makes sure that we have the correct connectivity and much more 

success. 

Obviously, I do not think that we will be able to embed somebody 

over in the Ministry of Public Security, but we do have somebody 

that is going to be attached directly to the embassy in Beijing. We 

are selecting that person now. We have a full immersion Chinese 

speaker that will go over there and try to make that relationship 

between law enforcement, you know, with the direction of the—and 

the guys of the Department of Justice in the Intellectual Property 

Coordination Office would like to go to see if we can work on those 

issues, and we have engaged our Director of Intelligence to evaluate those threats that are over there. 

Senator FRANKEN. I am sorry I went over my time, Mr. Chairman. I want to note the USTR, as Ms. Espinel mentioned, and or 

China has certain trade obligations to us. I hope we enforce them, 
23 

and I hope we are working with the USTR and WTO to clamp 

down on this huge problem. 

Thank you. 

Senator WHITEHOUSE [presiding]. Chairman Leahy had to go to 

another hearing that is scheduled. As everybody on the Committee 

and everybody on the panel knows, he has been a real champion 

on these intellectual property enforcement issues, but he had to excuse himself for another hearing, so I will carry the gavel for him 

for the remainder of this hearing, and I recognize Senator Coons. 

Senator COONS. Thank you, Senator Whitehouse, and thank you 

to everybody on the panel for your very determined hard work in 

this field, for your testimony in front of us today, for your obvious 

coordination and enthusiasm in taking on what I think is one of 

the most important strategic challenges facing the United States. 

If we are to sustain our competitiveness, if we are continue to be 

the world’s innovation leader, and a vibrant economy, we have to 

get this right. It is something that I think the administration has 

brought a new level of focus and coordination to, and I just wanted 

to commend you for that. 

I had a chance to meet with USTR Ron Kirk earlier this week 

and highlighted the importance, in my view, of additional enforcement resources, additional assertion of American rights. As Senator 

Franken mentioned, I think we are, frankly, losing, have been for 

more than a decade losing huge amounts of American intellectual 

property of all different types. Senator Kohl’s work on trade secrets, I think, is particularly important. I am pleased to hear about 

your enthusiasm for pursuing that. 

I wondered, Mr. Snow and Mr. Weinstein, if you might just briefly mention—we have dedicated a lot of this conversation to state 

actors and to private actors within states such as China, but can 

you just comment about links you may have seen between IP theft 

and organized crime or terrorist organizations, whether in the U.S. 

or abroad, and what DOJ in particular is doing about that. 

Mr. WEINSTEIN. Sure, Senator. As you know, I think in the PRO– 

IP Act, one of the things the statute calls for is to have law enforcement engage in an effort to identify links between IP crime and organized crime, and we have taken that to heart. 

The Attorney General has directed us to make sure that we do 

everything we can to make sure that our IP investigators and our 

organized crime investigators are sharing information. One of the 

things that we did was have all of the agencies that do IP investigations input all of their data into what we call IOC–2, which is 

the International Organized Crime Intelligence Center, to try to 

identify links between organized crime groups and organized crime 

investigations and IP crime, and those links exist and they are 

being pursued. I cannot obviously talk about particular investigations, but those links have been found and are being pursued. 

What we are finding with IP crime, especially online piracy, is 

that it is increasingly being committed by nontraditional organized 

crime groups. These are sophisticated criminal organizations, and 

it is not just piracy. One of the bigger counterfeit goods cases we 

took down involved a group that was operating at eight manufacturing plants in China, 13 shell companies, and was, in every sense 

of the word, an organized crime group. But I think the statute is 
24 

really focused more on, you know, old-school organized crime, and 

new-school organized crime, you know, transnational organized 

crime groups, that is something that we have been pursuing. 

We also have been cross-training the IP investigators and organized crime investigators to be able to understand the work each 

other is doing, and we are trying to get them to work together as 

much as possible in cases. 

Senator COONS. Three things, if I could. 

First, we just had a field hearing in Delaware on Monday where 

deconfliction and the importance of Fusion Centers and sharing 

was referenced, and I wondered if, Mr. Barnett, given some of your 

previous testimony and given your comment, if deconfliction of ongoing investigations was an important tool. 

Second, just on the point you were just on, under Section 402(b) 

of the PRO–IP Act, Congress was to appropriate funds for the AG 

for exactly this purpose. The written testimony suggested we have 

not. I am new here. Should we? 

And then I have a last question for Ms. Espinel. 

Mr. WEINSTEIN. I guess I will take it before I turn it over to Erik 

to talk about deconfliction. I guess I will take the money question. 

I am not in the habit of turning down money when people are 

offering it to me, but I think that notwithstanding the fact that 

that portion of the bill was not funded, it is something that we 

have taken on enthusiastically. Obviously, these investigations, 

even those that do not involve organized crime but particularly 

those that do, are resource intensive, and they take a lot of time, 

and because they are by their nature international, you know, they 

are more complicated and more expensive than other cases. 

IOC–2 as an entity, which is critical to our ability to identify 

links not just between OC and IP crime, but among organized 

crime cases throughout the country generally, I think has not been 

funded at the level that perhaps it could be. But, you know, obviously we support the President’s budget request, and I think that 

the most important part of that budget request from an IP point 

of view is not about organized crime, but is the position that Victoria mentioned in her opening, which is the proposal to create six 

international CHIPs to work overseas, which is an expansion of a 

program we have had in place for three or four years called the 

IPLEC program, IP Law Enforcement Coordination program, which 

are positions that we embed overseas in our embassies who work 

in—one for three or four years worked in Eastern Europe; the other 

continues to work in Asia—to train law enforcement to build capacity in the regions in which they are operating, to work on joint investigations with those foreign countries, and to help U.S. prosecutors who are investigating and building cases here in the U.S. get 

the evidence they need and get the targets they need when those 

people or that evidence is located overseas. 

So we enthusiastically support that portion of the President’s request, and we think it is a critical investment in our ability to fight 

IP crime as we move forward in this century. 

Senator COONS. I can see that my time has expired, and not 

wanting to go over my time, I will simply say how grateful I am 

for the testimony of the panel and the opportunity to follow up on 

some of the proposals in your white paper. And I know Senator 
25 

Klobuchar, who has taken the lead on that, may well ask questions 

that I would have asked about misperceptions of our cosponsored 

bill. So thank you very much for your appearance before the Committee. 

Senator WHITEHOUSE. And we can, of course, have a second 

round for further questions, but now it is my pleasure to recognize 

our distinguished Ranking Member, Senator Grassley. 

Senator GRASSLEY. Thank you. I have three questions. I may not 

get to all of them because I want three people maybe to look at the 

first one, Espinel, Weinstein, and Barnett. What additional tools 

would you like to see enacted into law that would assist you in 

your efforts to protect intellectual property both here and abroad? 

Ms. ESPINEL. I will speak to that briefly, especially since you 

wanted to hear from others on the panel, but there are three things 

that I would highlight. 

One is we believe the ability to have increased penalties in certain areas would be helpful, and those are for the types of IP 

crimes that we consider to be particularly egregious, including economic espionage, IP crimes that would have a serious risk to 

health and safety, sales to the military. There are certain—you 

know, as the intellectual property infringement problem has expanded, there are certain types of crimes that are particularly reprehensible and for which we think we may need increased penalties. 

The second thing I would mention is we need to make sure that 

our laws are keeping pace with technology. One thing I would highlight in this regard is the problem of illegal streaming from the 

Internet and making sure that our laws are sufficient to allow our 

prosecutors to bring the cases that they want to bring. And generally, in terms of getting law enforcement tools, obviously we want 

to make sure that they have what they need in order to do the jobs 

that they do every day. I believe this has already been mentioned, 

but I will just mention briefly one of the problems that we have 

that we understand law enforcement is facing at the border is a restriction on their ability to share certain types of information with 

rights holders, which makes it harder for them to do their job, and 

that is something that we think would be very useful to have fixed. 

Senator GRASSLEY. Thank you. 

Mr. WEINSTEIN. Senator, I will be brief. Senator Whitehouse has 

never heard me give a brief answer to a question before, but I will 

be uncharacteristically brief. 

In addition to streaming, which Victoria mentioned, and the increase in penalties, which we support, there is a proposal in the 

white paper to grant wiretap authority for IP cases so that we can 

intercept wire and oral communications as well as electronic communications. Especially as we fight IP crime that is related to organized crime, that is an increasingly important tool. 

Then the I–CHIPs, which is not a new legislative tool but an appropriation that we support that would help us. 

Senator GRASSLEY. Okay. Mr. Barnett. 

Mr. BARNETT. Thank you, Senator Grassley. I would echo what 

my colleagues said, and certainly with Victoria’s white paper, as 

you well know, that was an interagency process that she, frankly, 
26 

boldly and thoughtfully undertook. So those really represent the 

administration’s positions, and so we agree with those. 

The one thing that I would note that is important to us and has 

been talked about a little bit and Senator Franken’s question really 

got to about China is an international presence, but not just a presence of our law enforcement agents, which we in the FBI have and 

CBP will have, but international training and capacity building. 

With the Department of Justice and CBP, we recently undertook 

to train Chinese investigators, and there is not just lip service from 

these investigators. They really do want to do some good work, but 

they really do need that the government, and that is important to 

us as a law enforcement agency to have partners that have the capacity to work with. 

Senator GRASSLEY. The same three people, because we have a finite number of resources for prosecution and for law enforcement, 

and yet we are seeing piracy and counterfeiting skyrocketing, and 

even online, do you think that the right holders’ actions can alleviate some of the burden on federal law enforcement and effectively 

combat IP theft? 

Ms. ESPINEL. First, I would say we are aware that we have limited resources and an enormous problem on our hands. So part of 

what my office in coordination with all the agencies here at the 

table have been working on is how to use those limited resources 

as efficiently and as effectively as possible. But I think absolutely 

the private sector has a role to play here. Right holders have a role 

to play, and I will maybe ask my law enforcement colleagues here 

to speak a bit about how they interact with the private industry 

and how the right holders can help support them in bringing cases. 

In addition to that, as I mentioned before, I think there are companies that are involved in facilitating Internet commerce, and 

they can be enormously helpful as well in helping us try to stem 

online infringement. 

Senator GRASSLEY. Mr. Weinstein. 

Mr. WEINSTEIN. Senator, I would say that as a general matter, 

recognizing that we have limited law enforcement resources, all of 

us do, and that IP crime is a little bit unusual in that it is an area 

of the law where victims actually have substantial resources typically to enforce their rights, we generally do support giving private 

parties the tools they need to enforce their rights. We think it is 

an important complement to law enforcement’s ability to focus on 

the worst of the worst. 

To the last thing Victoria said, I think she is absolutely right 

that we have made relationships with and outreach to industry a 

priority, all of us have, and one of the things that the IPR Center 

has done exceptionally well under the really outstanding leadership 

of Bob Rutt, its current director, who is here, and the folks that 

Gordon has placed out there is to be a one-stop shop for industry 

to learn about how to report IP crime and to be kept apprised of 

what law enforcement is doing and trends in IP crime, and perhaps 

I will defer to Erik and let him talk about that a little bit more. 

Mr. BARNETT. Senator, the question I think is a good one in 

terms of what government can do. As a public servant for now almost 20 years, I am very proud of what government can do, but, 

quite frankly, I also recognize government cannot do everything 
27 

and is not responsible to do everything. So I think a lot of the work 

of the private sector is important, and I think what Victoria has 

tried to do is get those voluntary actions by the private sector so 

that, frankly, we do not have to pick up a lot of the criminal investigations. So we would support what the private sector can do. 

Senator GRASSLEY. Thank you. 

Senator WHITEHOUSE. Thank you, Senator Grassley. 

Well, we are now down to kind of a murderers’ row of prosecutors here for you, and what I would intend to do is recognize first 

Senator Blumenthal, who served for many years with great distinction as the Attorney General of his home State of Connecticut, and 

then although I am next, since I have the gavel I will have to be 

here until the end, then I will yield to Senator Klobuchar, a very 

distinguished district attorney, a prosecutor from Minnesota, and 

then I will close out myself. So first, Senator Blumenthal. 

Senator BLUMENTHAL. Thank you. Thank you, Mr. Chairman. 

And thank you for your great work and your testimony today. I 

have a number of questions, and I suspect that we will not reach 

all of them, so I would appreciate answers in writing, assuming 

that we do not. 

First of all, to expand on the answer you have given on the private right of action, I would like to know the administration’s position on according a private right of action and a greatly enhanced, 

much more robust one than they may have now. In light of the answer that you have given, Ms. Espinel, about turning up the volume, I would appreciate a specific position on it, and I hope it will 

be in favor of it because I think in light of the resources that right 

holders can bring to bear and the near for that kind of enforcement, there is a real opportunity to enhance enforcement through 

private rights of action. 

Second, in terms of the Kohl bill, I am delighted that you are 

supporting it. I, too, will be joining in it, but a question for you, 

Ms. Espinel. In light of your very distinguished background in the 

trade area, isn’t there more that we can do to enforce our existing 

rights as a Nation but also perhaps enhance provisions that are in 

trade agreements to protect intellectual property? 

Ms. ESPINEL. I will mention a few things with respect to international agreements. Probably first and foremost is the international IP agreement that governs all the WTO members is something called the TRIPS agreement, and the TRIPS agreement is an 

excellent agreement, but it is now 15 years since the TRIPS agreement was negotiated and concluded, and TRIPS was negotiated in 

a very different world than the one that we face today. So online, 

I mean, the Internet—you know, it was essentially concluded in the 

early 1990s when the Internet was not the presence that it is 

today, and the problems that we are facing in terms of online infringement in the copyright world but also with respect to the 

health and safety issues simply did not exist. The level of sophistication of counterfeiting, the organized criminal enterprises that 

Jason referred to, those also did not exist. 

So that international agreement does not address those issues 

because they literally did not exist at the time the agreement was 

negotiated, and that is the principal reason why the United States, 

working with Japan and a number of other countries, embarked on 
28 

negotiations for an international agreement that would focus just 

on enforcement, on counterfeiting and piracy, because we knew 

that the international rules that existed were not adequate to address the challenges. Those negotiations were concluded in November. I think that agreement, the anti-counterfeiting trade agreement, will be of enormous importance as countries sign on to it and 

it goes into effect, both in terms of increasing cross-border enforcement action but also in terms of setting a new legal standard 

around the world. 

Now, that agreement is not part of the WTO, and while there are 

38 countries that have signed on to it and those 38 countries represent half of global trade. China is not yet one of those countries, 

and obviously from the United States’ perspective, we think it is 

enormously important for China to be there. I think we are hopeful 

that as more and more countries sign on to that agreement and 

start increasing standards, China will eventually join. 

Senator BLUMENTHAL. Thank you for that answer, and I would 

appreciate also in writing any additional measures that you think 

we can take in terms of enforcement, but also perhaps in some of 

the bilateral areas. As you know, the Senate may soon be called 

upon to consider trade pacts with Korea, Panama, and Colombia. 

I would appreciate your views on that one as well. 

Ms. ESPINEL. I would be happy to, and I would just say briefly 

that I think the intellectual property provisions of those agreements are excellent and would be enormously beneficial to the U.S. 

economy if they went into force. But I would be happy to answer 

in more detail any questions that you have. 

[The information referred to appears as a submission for the 

record.] 

Senator BLUMENTHAL. Thank you. Let me also pursue an area 

with you and other members of the panel because it is mentioned 

in your testimony in terms of the United States contracting with 

companies that may be involved, either knowingly or not, because 

of the supply chain of products that reaches them, particularly in 

the defense area, where I think there is a vulnerability. As a member of the Armed Services Committee, I would be very interested 

in your views, again, because we may run out of time here, in writing if necessary on what more the Department of Defense and the 

Congress can do to prevent the infiltration or entangling of our 

supply chain with counterfeit or pirated products. 

Ms. ESPINEL. Could I speak to that briefly? 

Senator BLUMENTHAL. Absolutely. 

Ms. ESPINEL. Obviously, it is a very important problem that we 

are facing. We have been working with DOD and NASA on coming 

up with a whole series of recommendations, and we set ourselves— 

we committed ourselves to get those recommendations to the President by early fall. That process is underway, but I strongly suspect 

that some legislative or regulatory changes may be coming out of 

that process, so we may be coming back to Congress to ask for your 

help in terms of those legislative changes. And beyond legislation, 

there is a whole sort of host of other regulatory policy issues that 

we feel we need to improve inside the U.S. Government to keep 

counterfeits out of our supply chain. 
29 

The second thing that I would mention is increased law enforcement efforts, and that I would mention not just the work that all 

of these agencies have been engaged in, but specifically the campaign that Erik mentioned in his opening statement, I believe, that 

is specifically targeted at prosecuting those who are selling into our 

military. 

Mr. BARNETT. And just to follow up, it was in my written statement as well as my oral remarks. That is, I think—the most important thing about it is that there are nine agencies involved in that, 

which are the military investigative agencies, CBP, FBI, of course 

DOJ, as well as the General Services Administration Office of Inspector General. And it is the first time that we have taken a coordinated law enforcement approach to securing the DOD supply 

chain as well as the federal supply chain, both for obviously the 

safety of our warfighters as well as, frankly, the taxpayer dollars. 

So we expect to have vigorous and increased activity over the next 

six months to a year on that. 

Senator BLUMENTHAL. Well, I know you mention in your testimony, a number of you, operations that have been successful—Operation Network Raider, Operation Chain Reaction. But the success 

of those operations may indicate the need for even more enhanced 

law enforcement activities in this area because, obviously, there is 

a problem, and the numbers of dollars, the volume and the magnitude of work are so huge, as you well know, that I think that 

greatly increased activity may have a lot of payoff. 

Thank you. 

Senator WHITEHOUSE. Senator Klobuchar. 

Senator KLOBUCHAR. Thank you very much. Thank you, Mr. 

Chairman, for holding this hearing, and I know firsthand how important protecting intellectual property is. My State was built on 

it, everything from the medical device industry to the Post-it note— 

he is waiting for me to say ‘‘Post-it note’’—to a lot of our creators 

in our State from Prince to the Coen Brothers. We are a hot place 

for new bands, and so all of this intellectual property has led to one 

of the reasons our State has one of the lower unemployment rates 

in the country at 6.6 percent. It still not perfect, but without this 

kind of creativity and thought, things would be a lot worse. 

So I am very focused on how to protect that intellectual property, 

and I think the figures I have seen, we lose something like $600 

billion a year to people, whether they are in China or they set up 

shop as organized crime to steal our intellectual property. And that 

is one of the reasons, based on things I was hearing from our own 

State, whether it is orchestra members or kids working in lighting 

departments, that they all get hurt when you have this theft, 

wholesale theft of intellectual property. So that is why I got involved in introducing this bill, and as we all know, it went through 

the Judiciary Committee without objection, although we know 

there is some work that needs to be done really in two areas. One 

is with the cable industry has some concerns and then, second, 

really to make sure that it is very clear that this is about people 

who are profiting should be prosecuted. In fact, the statute’s exact 

phrasing, we are actually including this penalty within an exact 

statute that is already on the books that makes it a misdemeanor, 
30 

that it has to be for purposes of commercial advantage or private 

financial gain. 

So I would start with you, Mr. Weinstein, to talk about how this 

bill does not criminalize any new behavior. It simply takes particularly egregious acts that already actually are considered misdemeanors and makes the worst of the worst subject to felony liability. So could you describe just looking at the felony streaming 

bill, which, as I said, passed through the Judiciary Committee, how 

it would not involve—I am looking at some of the blog postings on 

this, which are very hard to respond to. It would not involve a kid 

putting a recording of them doing karaoke when they do not do it 

for profit on the Web. It would not involve a teenager putting some 

music—a video of a party—this is one today—that includes background music when they are not profiting from putting that video 

out. It would not include a kid putting their high school band concert on the Web when they are not profiting, and some of these 

other things that we are seeing that are examples, which have 

nothing to do with for-profit activity that we are trying to focus on 

here. 

Mr. Weinstein. 

Mr. WEINSTEIN. Senator, depending on how bad the band is, it 

may be a crime to post it online. 

[Laughter.] 

Mr. WEINSTEIN. I want to thank you and Senator Coons for your 

leadership. I know this is an issue that—— 

Senator KLOBUCHAR. And Senator Cornyn as well. 

Mr. WEINSTEIN. And Senator Cornyn as well. It has been an important one for you, and as you know, we have been working with 

your staffs to provide technical assistance on the bill and are happy 

to continue to do that. 

We agree, I think as a number of us have mentioned, that 

streaming is a serious and growing problem. It is in some ways the 

next frontier of online piracy, and it is one that the content industry is greatly concerned about. 

To answer your question, we are still reviewing the bill, but 

based on my understanding of what it says, my answer to your 

question, ‘‘Does it make anything criminal that is not currently 

criminal?’’ is no, with one limited exception. For the most part, it 

takes conduct, as you said, that would be a misdemeanor and just 

makes it a felony, which we think is a more appropriate treatment 

given the seriousness of the crime and the impact that it has economically. 

The exception is for the streaming of pre-release works. Currently, to be a misdemeanor, to stream a pre-release work and have 

it be a misdemeanor, it would have to be for commercial purpose 

or private financial gain. Under the bill, as I understand it, prerelease streaming would become a felony—as is the case, by the 

way, with distribution and reproduction even if there is no commercial purpose and private financial gain. Now, let me break that 

down a little bit. 

As a practical matter—the blog postings are a little bit off the 

wall. As a practical matter, any streaming site—— 

Senator KLOBUCHAR. You are going to be quoted for saying that. 
31 

Mr. WEINSTEIN. I am sure I will. I do not think they are any fan 

of mine, either. But as a practical matter, any site that is going to 

get prosecuted is one that is going to be with a commercial purpose 

or for private financial gain, and the way that is defined in the law 

is really quite broad. If you have an ad-supported site, even if you 

are not charging for the stream, you are conducting it for a commercial purpose. 

The kind of sites that we are interested in, the kind of sites that 

the content industry is worried about, the kind of sites that are 

having an economically devastating impact are those that are conducted for a commercial purpose. The irony is that pre-release 

streaming is probably the most serious and has the most potentially economically devastating effects because streaming pre-release works is streaming them when they have their greatest commercial value, and it is the pre-release streaming, when Congress 

changed the statute you are referring to to make reproduction and 

distribution of pre-release works a felony, you did so without requiring the commercial purpose and private financial gain component to it because of the significance of and the economic consequences of pre-release distribution and reproduction. And we 

think that streaming should be treated the very same way. 

So with that limited exception, that pre-release streaming now 

becomes a felony even without the commercial purpose or private 

financial gains, you are absolutely correct, although I would add 

that that is perfectly appropriate and we fully support it. 

Senator KLOBUCHAR. Does anyone want to add to this in terms 

of how you think it would be helpful? 

Ms. ESPINEL. I would just say briefly I think to echo what Jason 

said, streaming is sort of the next frontier, and streaming essentially is just another form of distribution, the way more traditional 

forms of distribution are. So we think it is completely appropriate 

to make streaming a felony, distribution by streaming a felony the 

way distribution of physical copies would already be a felony. 

We are going to continue to face challenges as our law sort of 

sets in place and as the technology moves quickly and often ahead 

of how quickly we can make legislative changes. But this area of 

illegal streaming is a place where we already know that we have 

a problem, and so I think it is enormously important to try to clarify what is essentially an ambiguity or deficiency in our law so that 

streaming by distribution is a felony as well. 

I think there is a misunderstanding, at least from what I have 

read on blog posts, about what this legislation would accomplish, 

so I have seen similar sort of anecdotes, someone playing guitar on 

a street corner takes a video of themselves and posts it, or that this 

is going to be used to go after individuals, and, of course, that is 

just simply not true. The purpose of this law, the purpose of our 

recommendation and the legislation that you introduced, as I understand it, is to essentially make streaming, distribution by 

streaming, a felony the way that traditional forms of distribution 

have been for many years. 

Senator KLOBUCHAR. When it is for a commercial purpose, because, remember, people think of streaming in other ways. Some 

of these examples, when you just say that it is a felony by streaming, then they are, like, ‘‘Well, anything I put on there, I guess, 
32 

then, is a felony.’’ And that is not what we are saying. And so we 

will continue to work with people, but I just refer them to the statute that says it has to be for a commercial purpose, with that one 

limited exception, and for private financial gain. 

Thank you very much, and we will continue to work with you 

and try to get at some of these concerns that have been raised 

about the bill, and people have to remember that right now someone could be prosecuted for a felony when they are standing or a 

corner and sell over $2,500 worth of DVDs, but they cannot be 

prosecuted for doing the same conduct on the Internet, and that is 

what we are trying to get at to protect the intellectual property in 

this country. 

Thank you very much. 

Senator WHITEHOUSE. Thank you, Senator Klobuchar. 

Let me start with Ms. Espinel. You have mentioned this already, 

but I just want to emphasize that we are here with a lot of people 

from law enforcement. We are talking about a very significant 

crime. We are talking about a crime that has colossal economic impacts on our country. And yet there is a very, very mixed message 

because if you go to a rogue Web site that is hosting this criminal 

enterprise, you are taken there by legitimate American corporations like Verizon and Comcast that run the network to connect 

you; you find the places by going to legitimate American corporations like Google and Yahoo! whose search engines will take you to 

a pirated movie. When you get there, you find legitimate American 

corporations like MasterCard and Visa processing payments for the 

rogue Web site. You often find a broader array of legitimate American corporations advertising on those Web sites. So if you are an 

ordinary American citizen, you are hearing from all of you folks, 

‘‘This is a serious crime; we really need to do something about it.’’ 

But the other message that you are hearing is, ‘‘This is perfectly 

normal. Your ISP will connect you to it. Your search engine will let 

you find it. Your credit card company supports it, and regular companies that you see all over the place are advertising on it. This 

must be legit.’’ 

And I do not know why it is that the private sector has not been 

more energetic about sorting this out amongst themselves, why it 

is that the content providers, who are themselves very big legitimate American corporations, are not taking stronger action to stop 

ISPs from providing these connections, search engines from providing the locations, and credit card companies and advertisers 

from supporting the rogue Web sites. 

What is your insight into that? And what can we do to accelerate 

that process? Because we can talk until we are blue in the face 

about what a big crime this is, but when every signal the ordinary 

consumer gets from this is this is legitimate, all these companies 

that I know and like and are part of the American economic landscape are in on the deal, this cannot be bad. 

Ms. ESPINEL. So first I will start off by saying I completely agree 

with you, and that is the reason why we have been so focused on 

getting all the different types of companies that you named, every 

single one of them, more engaged and taking voluntary action in 

this process. And that process is still underway, and I agree with 

you that we certainly would like to see it move much more quickly, 
33 

although we also want there to be private sector not just engagement but enthusiasm about this process, and so that takes some 

time. 

I would like to mention that—you talked about credit cards and 

payment processors. In my view, the major credit card and payment processors have stepped up. We have very recently come to 

agreement on a set of best practices that I think could have a significant impact on infringement, and there is a—we will be reviewing how that works, and six months from now, I hope that we are 

in a position that we will be able to report some real progress there 

in terms of cutting off these illegal sites’ ability to sell their goods. 

But we are also in discussions with the advertisers, as you mentioned. We are in discussions with the ISPs. We are in discussions 

with the search engines. They are all different parts of the Internet 

economy, and we have made it very clear to all of those parts that 

we feel that they all need to be there, that this is also not just a 

problem for credit cards or just a problem for the ISPs or just a 

problem for the search engines. We really need to have all the 

parts of the Internet ecosystem working together if we are going 

to be effective. 

This is criminal activity, and nothing is going to be entirely effective. Criminals are always going to look for ways that they can 

evade law enforcement and that they can evade what the private 

sector did. But we do feel strongly that if we have both increased 

law enforcement—and I hope that it has been clear through everything that has happened in the past year how serious our commitment is, but combined with that increased voluntary action from 

the private sector, I think that can make a tremendous difference. 

But we need to have all the parts of the ecosystem that you mentioned, we need to have everyone working together. 

Senator WHITEHOUSE. Mr. Weinstein, aren’t those other parts of 

the ecosystem actually as a matter of law aiding and abetting the 

criminal enterprise in supporting it in these different ways? 

Mr. WEINSTEIN. Well, Senator, as you know, I think the law on 

secondary liability civilly is trending away from that conclusion; 

that is, it is increasingly difficult even in the civil context to hold 

some of these companies accountable without being able to establish that they specifically took steps to make the infringement succeed. And that is certainly amplified in the criminal context where 

you have got a higher burden of proof and a willfulness standard. 

So I think that if a company that is facilitating infringement 

without knowingly facilitating infringement, willfully doing it, intentionally trying to make it succeed, I think that it is quite difficult to make a criminal case. That is not to say that there are not 

a set of facts that would support it, but I think—— 

Senator WHITEHOUSE. Well, let us talk for a minute about civil 

cases. Sometime ago Microsoft brought a very effective civil case to 

shut down the Waledac botnet. The Department of Justice and the 

FBI were very effective recently with a legal action, a civil action, 

that shut down the Coreflood botnet after, I do not know, over hundreds of millions dollars, I think, in damage had been done. I forget 

the exact number that was used in our briefing. 

In some cases, it appears that both the ISPs and the search providers, they are happy to participate; they just do not want to have 
34 

to do it on their own and be the actor against these sites. They prefer, it seems sometimes, the legal protection and the security and 

the assurance of a court order that somebody obtained that said 

you must shut down access to this site. 

Why is there not more of that going on? You would think that 

you could almost have a friendly lawsuit between the content provider and the ISP where they go into court together, they agree, 

much in the way that happened with the Waledac botnet with 

Microsoft. There was no real opposition there. It was just a question of sorting it all out, going before the court, getting the order, 

and the next thing you know the botnet is shut down. Why can’t 

that apply with respect to rogue Web sites as well? 

Mr. WEINSTEIN. Well, civil enforcement is not my area of expertise, but as I think some of the cases you mentioned, in the lime 

wire case and some others indicate, we have not found some of the 

companies, the rights holders, at least, to be shy about resorting 

to their civil remedies when they think that they have got a case. 

I do not know why there are not more of these sort of friendly 

lawsuits that are designed to get court orders that give companies 

cover. You know, Victoria, I think, has been exercising tremendous 

leadership in trying to bring these companies together voluntarily, 

as she talked about, and she is too modest to say it, so I will. I 

do not think that any of that process would be happening if her office did not exist and if she was not in it. 

She may have a better insight into sort of what their thinking 

is about how to balance their need to avoid liability with their concerns about what their customers will think if they are assisting 

law enforcement or appearing to be anti-free Internet. So she may 

have a better window because she has been participating in the 

discussions about what their thinking is. But I do think it is very 

encouraging that they are taking the voluntary steps they are talking about that she has been discussing. 

Senator WHITEHOUSE. Well, we will come back to that. One of 

the nice things about waiting to go last is that I have nobody waiting and I can go over my time. 

The question of resources I think is a significant one, and I know 

that you all are somewhat constrained by OMB in what you are allowed to say about your need for resources. But let us just talk 

about these cases in terms of their complexity. 

As I understand it, if you want to be really effective in this area, 

you need to combine not only traditional criminal prosecution with 

these very modern, Coreflood/Waledac-type civil actions that can 

help shut down the criminal activity. Rather than just try to find 

somebody guilty of it and find them and punish them, you can actually stop it. It tends to be international, which makes for exactly 

complicated investigative and prosecutorial issues dealing with foreign jurisdictions. It tends to have very considerable technical complexity that a prosecutor and an agent have to understand in order 

to investigate it. 

When you put it all together, it strikes me that these are really 

apex cases in terms of resource intensiveness and complexity. Is 

that your experience as well? That is a question for Mr. Snow and 

then Mr. Weinstein. 
35 

Mr. SNOW. Yes, sir. These cases tend to be very complex. Some 

of the lower-level cases that we had maybe in the past decade or 

so, when we talked about the physical seizure of goods in the marketplaces and on the street corners were a normal investigative 

case. It relied on almost the drug analogy-type drug case, drug-trafficking resource model, whatever was needed in order to secure the 

area, to grab the goods, and then come back for the search and the 

normal prosecution. 

Now that we add the Internet into it, it goes in that exact same 

venue that you are talking about. Huge forensic capabilities are 

needed to look at the evidence that is seized, the evidence that is 

taken down, and how we actually in all realms on the Internet and 

in cyber cases deal with anonymization and movement through to 

actually find out who is behind this act itself. So everything—— 

Senator WHITEHOUSE. Particularly where the activity is originating overseas and it makes the investigation extremely complicated to be operating in a foreign nation. 

Mr. SNOW. Yes, sir, absolutely. And then the same side—and I 

will let Jason talk for himself, but the same side with the CHIPs 

attorneys and the DOJ prosecutive process. 

Mr. WEINSTEIN. You will recall in April Mr. Snow and I were 

here talking to you about cybersecurity and cyber crime, and I 

think you made a very similar observation about cyber and intrusion cases. And everything you said then and everything you have 

said today applies with equal force to these IP cases. 

I just want to highlight one thing that Gordon said, which is 

forensics. You know, the cases are complicated enough when you 

are talking about collecting electronic evidence, but they place a 

significant burden on very, very limited forensic resources. You 

know, computer forensics is a concern in every type of case, but it 

is a particular concern in cyber and IP cases. 

So these are incredibly resource-intensive cases, and the cases 

that are likely to have the greatest impact are the ones that are 

the hardest and the most expensive. 

Senator WHITEHOUSE. A number of you have discussed sales to 

the military as an area of particular concern in terms of counterfeiting. I know we have had cases in which the Kevlar was not 

Kevlar or in which the advanced microchip was not an advanced 

microchip. And, of course, anything that puts our soldiers and the 

equipment that they need at risk is of particular importance. 

Senator Coons and I have a bill on our side, joined by Senator 

Graham and Senator McCain on the other side, to increase the 

penalties for military counterfeiting, and I would appreciate if each 

of you could give your reactions to that bill, anything in the way 

of technical assistance or recommendations that you would make. 

And I think probably based on your position, Ms. Espinel, if you 

are in a position to say that the White House would support it or 

not, or with changes, that would be helpful. It is a bill we would 

like to move, and we would like to make sure it is well supported. 

I think it is already strongly bipartisan. It makes a lot of sense. 

A number of you have already raised the issue today, so there is 

a lot of potential here. I would like to make sure it happens, and 

I would like to get your reactions to it as a question for the record, 

if I may. If you would like to respond briefly now as well, but I do 
36 

not want that to constrain a written response in a question for the 

record. 

Ms. ESPINEL. We would also be happy to send a written response, 

but I will just say briefly, as you know, we made recommendations 

to Congress in March to increase penalties, increase the Sentencing 

Guidelines for sales to the military. It is an enormously important 

issue. We were very pleased to see the legislation that was introduced. As it was recently introduced, we are still in the process of 

assessing it. But I think I can speak for DOJ or at least ask DOJ 

to confirm that we would—my office would certainly be happy to 

work with DOJ on technical assistance on the legislation, and we 

think it is very important. 

[The information referred to appears as a submission for the 

record.] 

Mr. WEINSTEIN. I completely agree. We have been working with 

your staff for a while to provide technical assistance, and we are 

obviously happy to continue to do that. We think it is a very important issue, and it demonstrates more than anything that IP crime 

can be a national security issue. Anybody who thinks that IP crime 

is just selling a bunch of DVDs and counterfeit Nikes on the street 

should read a description of one of these cases involving a counterfeit network hardware that was going to be used in a computer system to control troop movements in Iraq. It will make your jaw 

drop. IP crime is a national security crime, and we think this is 

a vitally important issue to pursue. 

Senator WHITEHOUSE. Very good. I guess the last thing I would 

mention before I let everybody go at the noon hour is that I am 

a member of the International Anti-Piracy Caucus, along with Senator Hatch. The Caucus has highlighted China as one of the 

watchlist countries that fail to protect American intellectual property. From my time on the Intelligence Committee, there is other 

information out there that this is not an appropriate forum to discuss in, but a great deal of the public information that has come 

out about the major attacks and hacks on corporations and infrastructure has traced that back to China. China appears to be the 

most dangerous and active nation state actor, malefactor, in this 

area, and the administration has recently signed a letter of intent 

with China’s Ministry of Public Safety on law enforcement cooperation in this area. 

Given the extent to which not only in this behavior seeming to 

emerge from China, but it often seems to be sanctioned—the example I have used is in the old days privateers were put on the ocean 

and they were allowed to attack other ships if they had letters of 

mark from a country or principality. They were essentially private 

actors, but they had that going on behind them. And I think that 

it appears that a lot of the activity coming out of China is basically 

privateers who are operating with knowledge and the implied consent perhaps of the government. Certainly it is a significant economic transfer of wealth into China from our country. 

How will you ensure that the relationship with China’s Ministry 

of Public Safety will be productive going forward given the mixed 

messages, shall we say, we are getting from this country? 

Mr. SNOW. Sir, I will go ahead and take that question, and I 

would just state that we spent some time with the Director of Intel-
37 

ligence, and we spent some time sending an agent over there TDY 

to Beijing not only to look at a lot of things that were going on in 

the Intellectual Property Rights Center but to feel out that relationship with MPS. I think Mr. Barnett pointed to it earlier, that 

MPS is very forward leaning in trying to address the threats that 

they may have over there, as well as for us to engage in a good 

conversation and discussion on the threats that we see emanating 

trans-border into the United States from China. 

So we are hoping—and I think it will be fruitful—that that direct 

connect that we will have with the FBI, with Customs and Border 

Protection in the future, with ICE, will be that original groundbreaking initiation that it takes in order for those law enforcement 

officers to actually take a look at the threat and provide the information that all countries need to do to address this globally. 

I think we see that in many respects across the world as history 

developed itself, but I am hoping that that is what we will see as 

we move with MPS. 

Senator WHITEHOUSE. Well, I would encourage you to participate 

in this and to pursue it. But I do not need to tell you that you need 

to do so guardedly given the issues on the other side. Senator 

Klobuchar mentioned this with respect to Minnesota. Rhode Island 

does a lot of invention and design. The Rhode Island School of Design is one of the legendary universities in this area. I have spoken 

to Rhode Island manufacturers who have been invited to open 

plants in China, and they have refused to do so because it is their 

expectation that the purpose of that invitation was to give access 

to their technology, to their procedures, to their intellectual property in ways that would allow it to be stolen, instantly reproduced, 

and they would find a competitor fully up to speed with their technology but not paying them any licensing fees or anything for the 

effort and the expense that they put into developing the technology. 

So, you know, right down to a local manufacturer in Cranston, 

Rhode Island, the concern about what China is doing to our intellectual property is a very real, immediate, and grave one, and I 

hope that continues to be a significant issue for the administration 

not only in law enforcement but also as we deal with them in the 

diplomatic and trade venues. It seems to me that it—I have said 

that we are on the losing end of the biggest transfer of wealth 

through crime and piracy in the history of humankind, and we 

need to do a lot more about it. I know that each one of you is doing 

an enormous amount about it in your own offices and in your own 

ways, and I thank you for your time this morning, and I thank you 

for your service to our country in this important cause. 

The record of the hearing will remain open for an additional 

week if anybody wishes to add anything, and unless there is anything else to put into the record—no, there is not—we will stand 

adjourned. Thank you all very much. 

[Whereupon, at 12:03 p.m., the Committee was adjourned.] 

(39) 

A P P E N D I X 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD
40 

PREPARED STATEMENT OF CHAIRMAN PATRICK LEAHY
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PREPARED STATEMENT OF HON. VICTORIA A. ESPINEL, INTELLECTUAL PROPERTY ENFORCEMENT COORDINATOR, OFFICE OF MANAGEMENT AND BUDGET, WASHINGTON, 

DC 
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PREPARED STATEMENT OF JASON M. WEINSTEIN, DEPUTY ASSISTANT ATTORNEY

GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE, WASHINGTON, DC 
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PREPARED STATEMENT OF GORDON M. SNOW, ASSISTANT DIRECTOR, CYBER DIVISION, 

FEDERAL BUREAU OF INVESTIGATION, WASHINGTON, DC 
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PREPARED STATEMENT OF ALLEN GINA, ASSISTANT COMMISSIONER, OFFICE OF INTERNATIONAL TRADE, U.S. CUSTOMS AND BORDER PROTECTION, U.S. DEPARTMENT OF

HOMELAND SECURITY, WASHINGTON, DC 
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PREPARED STATEMENT OF ERIK BARNETT, ASSISTANT DEPUTY DIRECTOR, U.S. IMMIGRATION AND CUSTOMS ENFORCEMENT, U.S. DEPARTMENT OF HOMELAND SECURITY, WASHINGTON, DC 
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QUESTIONS

QUESTIONS SUBMITTED BY SENATOR TOM COBURN FOR VICTORIA ESPINEL AND ALL

WITNESSES
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QUESTIONS SUBMITTED BY SENATOR TOM COBURN FOR JASON WEINSTEIN AND ALL

WITNESSES
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QUESTIONS SUBMITTED BY SENATOR TOM COBURN FOR GORDON SNOW AND ALL

WITNESSES
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QUESTIONS SUBMITTED BY SENATOR TOM COBURN FOR ALLEN GINA AND ALL

WITNESSES
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QUESTIONS SUBMITTED BY SENATOR TOM COBURN FOR ERIK BARNETT AND ALL

WITNESSES
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QUESTIONS SUBMITTED BY SENATOR AL FRANKEN FOR VICTORIA ESPINEL
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QUESTIONS SUBMITTED BY SENATOR AL FRANKEN FOR JASON WEINSTEIN
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QUESTIONS SUBMITTED BY SENATOR AL FRANKEN FOR ERIK BARNETT
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QUESTIONS SUBMITTED BY SENATOR CHARLES GRASSLEY FOR ALLEN GINA
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QUESTIONS SUBMITTED BY SENATOR CHARLES GRASSLEY FOR ERIK BARNETT
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QUESTIONS SUBMITTED BY SENATOR CHARLES GRASSLEY FOR VICTORIA ESPINEL
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QUESTIONS SUBMITTED BY SENATOR ORRIN HATCH FOR JASON WEINSTEIN
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ANSWERS

RESPONSES OF VICTORIA ESPINEL TO QUESTIONS SUBMITTED BY SENATOR COBURN
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RESPONSES OF VICTORIA ESPINEL, JASON WEINSTEIN, GORDON SNOW, ALLEN GINA, 

AND ERIK BARNETT TO QUESTIONS SUBMITTED BY SENATOR COBURN
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RESPONSES OF VICTORIA ESPINEL TO QUESTIONS SUBMITTED BY SENATOR FRANKEN
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RESPONSES OF VICTORIA ESPINEL, ALLEN GINA, AND ERIK BARNETT TO QUESTIONS

SUBMITTED BY SENATOR GRASSLEY
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RESPONSES OF GORDON SNOW TO QUESTIONS SUBMITTED BY SENATOR GRASSLEY
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RESPONSES OF ERIK BARNETT TO QUESTIONS SUBMITTED BY SENATORS GRASSLEY, 

COBURN, AND FRANKEN
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RESPONSES OF JASON M. WEINSTEIN TO QUESTIONS SUBMITTED BY SENATORS

COBURN, FRANKEN, AND HATCH

(Note: At the time of printing, after several attempts to obtain 

responses to the written questions, the Committee had not received 

any communication from the witness.) 
224 

MISCELLANEOUS SUBMISSIONS FOR THE RECORD

AMERICAN FEDERATION OF MUSICIANS, AMERICAN FEDERATION OF TELEVISION AND

RADIO ARTISTS, DIRECTORS GUILD OF AMERICA, INTERNATIONAL ALLIANCE OF THE- ATRICAL STAGE EMPLOYEES, MOVING PICTURE TECHNICIANS, ARTISTS AND ALLIED

CRAFTS OF THE UNITED STATES, ITS TERRITORIES AND CANADA, INTERNATIONAL

BROTHERHOOD OF TEAMSTERS, SCREEN ACTORS GUILD, JUNE 20, 2011, JOINT LETTER
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AMERICAN SOCIETY OF COMPOSERS, AUTHORS, AND PUBLISHERS (ASCAP), PAUL WILLIAMS, PRESIDENT AND CHAIRMAN OF THE BOARD, NEW YORK, NEW YORK, JUNE

20, 2011, LETTER
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INSTITUTE FOR POLICY INNOVATION (IPI), TOME GIOVANETTI, PRESIDENT, 

LEWISVILLE, TEXAS, JUNE 20, 2011, LETTER
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COLLEEN M. KELLEY, NATIONAL PRESIDENT, NATIONAL TREASURY EMPLOYEES

UNION, (NTEU), WASHINGTON, DC, STATEMENT
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MOTION PICTURE ASSOCIATION OF AMERICA, INC., PARAMOUNT PICTURES CORPORATION, SONY PICTURES ENTERTAINMENT INC., TWENTIETH CENTURY FOX FILM CORPORATION, UNIVERSAL CITY STUDIOS LLC, WALT DISNEY STUDIOS MOTION PICTURES, WARNER BROS. ENTERTAINMENT INC., JUNE 22, 2011, JOINT LETTER
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RECORDING INDUSTRY ASSOCIATION OF AMERICA, INC., (RIAA), MITCH BAINWOL, 

CHAIRMAN AND CEO, WASHINGTON, DC, JUNE 21, 2011, LETTER
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U.S. CHAMBER OF COMMERCE, WASHINGTON, DC, STATEMENT
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