By

Mark Motivans, Ph.D.

BJS Statistician

Intellectual property-related (IP) cases

are handled as both civil and criminal

matters in Federal court. During 2002,

134 defendants were sentenced for IP

infringement offenses under the U.S.

Sentencing Guidelines with more than

half convicted of stealing IP worth over

$70,000.1

 Also in 2002, 8,254 civil

cases related to intellectual property

theft were filed in U.S. district courts 

(up 20% from 1994).

Suspects with copyright violation as the

lead charge comprised more than half

(52%) of criminal IP referrals to U.S

attorneys in 2002; 25% were referred

with trademark offenses; and 22%, 

with trade secret offenses. Eighty-eight

percent of defendants adjudicated with

IP theft as the most serious terminating

offense in 2002 were convicted. 

Forty-two percent of the 8,254 civil IP

complaints filed in U.S. district court

during 2002 were trademark suits; 33%

were patent-related; and 25% were for

copyright infringement. The U.S.

Government was plaintiff or defendant

in 32 civil cases filed in U.S. district

court during 2002 for patent (20) and

trademark (12) complaints. 

Criminal IP offenses include the

trafficking of goods with counterfeit

trademarks or brands (such as clothing

and consumer electronics), software

piracy, the distribution of bootleg

musical recordings and movies, selling

Criminal enforcement

y The number of suspects referred to

U.S. attorneys with an IP theft-related

lead charge increased 26% from 1994

to 2002. The number of defendants

convicted in U.S. district court with an

IP offense increased 51% over this

same period (89 in 1994 to 134 in

2002).

• During 2002, 88% of defendants 

with an IP offense as their most

serious offense were convicted. Less

than half (43%) of those convicted

received prison time. The median

prison term imposed was 15 months.

y More than half of defendants

sentenced for copyright/trademark

infringement had stolen IP worth over

$70,000. One in three defendants

received a fine as part of their

sentence (median $2,000).

Civil litigation

y From 1994 to 2002 the number of

cases in which plaintiffs sought civil

remedies related to patent, trademark,

and copyright infringement increased

20% to 8,254. The growth was due

largely to increases in patent and

trademark cases filed between private

parties.

y Less than 2% of the 7,445 civil IP

disputes disposed in 2002 were

resolved by a trial verdict (140).

y 83 of the 140 plaintiffs in IP cases

disposed of by a trial verdict won, and

of these 83, 53 received a monetary

settlement. The median award amount

in 2002 was $965,000. The median

awards by nature of suit were: $84,500

for trademark, $159,000 for copyright,

and $2.3 million for patent suits.

Highlights

1994 1996 1998 2000 2002

0

2,000

4,000

6,000

8,000

10,000

Civil cases filed

All civil IP filings

Trademark

Copyright

Patent

1994 1996 1998 2000 2002

0

100

200

300

400

500

Suspects investigated

All IP referrals

Trademark

Trade secrets

Copyright

Criminal matters referred to U.S.

attorneys with an intellectual

property (IP) offense, 1994-2002

Civil intellectual property suits filed

in U.S. district courts, 1994-2002

U.S. Department of Justice Office of Justice Programs

Bureau of Justice Statistics

Special Report

October 2004, NCJ 205800

1

Defendants sentenced under copyright/

trademark infringement (§2B5.3) as primary

guideline. 

Federal Justice Statistics Program

Intellectual Property Theft, 2002
company trade secrets, and derivative

copyright violations of intercepting

cable/satellite broadcasts (for statutes,

Appendix table, page 9). Recent

Federal legislation prohibits use of the

Internet or other communication

technology to distribute pirated intellectual property. Recent laws have 

targeted counterfeit manufacturing

operations, both domestic and international. This report uses data from the

Federal Justice Statistics Program

(FJSP) and other sources to describe

the enforcement of intellectual property

rights in the Federal criminal and civil

justice systems including private civil

remedies.

From 1994 to 2002, 3,395 suspects

were referred to U.S. attorneys for an

intellectual property offense as the lead

charge. This is under 1% of the more

than 1 million total Federal suspects

referred to U.S. attorneys over the

9-year period. The number of suspects

2 Federal Justice Statistics Program

Protecting intellectual property

Intellectual property (IP) rights are rooted

in copyright and patent protections in the

U.S. Constitution.1

 As intellectual property

grew more important in the U.S. economy,

making it an attractive target for individual

and organized criminals, Federal lawmakers codified IP protections.

Federal legislation targets the use of the

Internet and other communication devices

used in reproducing/distributing IP

material and the importation of counterfeit

merchandise. Congress strengthened civil

penalties (the primary remedy for IP

offenses/disputes) and established new

criminal statutes providing penalties that

include imprisonment and fines tied to the

estimated value of infringed goods.

Trademark

The Lanham Act of 1946 codified civil

law into a national system of trademark

protections.2

 The act provides for the

registration and enforcement of trademarks and prohibits counterfeit merchandise from being imported into the U.S.3

The Trademark Counterfeiting Act of

1984 made trafficking in goods and

services using a counterfeit trademark a

felony (18 U.S.C. § 2320) and strengthened civil remedies to allow for statutory

and treble damages and attorney fees. It

also permitted the destruction of articles

bearing counterfeit marks.4

Trade secrets

The Economic Espionage Act (EAA) of

1996 created the first criminal statutes

specifically aimed at the theft of trade

secrets. Two crimes were codified including: “economic espionage” (18 U.S.C. §

1831) prohibiting theft of valued, proprietary information for the benefit of a foreign

government and “theft of trade secrets”

(18 U.S.C. § 1832) which more generally

includes offenses involving the conversion

of a trade secret for economic benefit,

whether foreign or domestic, a company

or an individual.5

The act also authorized the Attorney

General to enforce civil actions (18 U.S.C.

§ 1834) and ensure forfeiture of property

used in the offense.

Copyright

The first criminal provision in copyright

laws, passed in 1897, made it a misdemeanor to perform dramas or music

willfully and for profit without copyright

owner’s permission.6 The Copyright Act

of 1976 provided the basic framework for

today’s copyright laws. It also made

infringement (for purposes of commercial

advantage or financial gain) a misdemeanor offense and stiffened penalties for

repeat offenders. The act created Federal

preemption of copyright criminal remedies

(eliminating most recourse to State criminal laws).7

 In 1982 Congress passed The

Piracy and Counterfeiting Amendments Act, making mass infringement of

movies and records a felony.8 The

Copyright Felony Act of 1992 targeted

the mass reproduction of computer

software and made copyright infringement

involving 10 or more copies (value over

$2,500) a felony.9

 The unauthorized

recording of live musical recordings or

“bootlegging” was made criminal in 1994

(18 U.S.C. § 2319A). The AntiCounterfeiting Consumer Protection

Act of 1996 made trademark and

copyright counterfeiting predicate offenses

under the Racketeering Influenced and

Corrupt Organization (RICO) statutes 

(18 U.S.C. §§ 1961-1968).10

More recently, the No Electronic Theft

(NET) Act made distributing copyrighted

materials (that is, over the Internet) a

Federal crime (total retail value of

$1,000).11 Further, the NET Act spurred

changes to the U.S. Sentencing Guidelines, stiffening sanctions for IP theft

offenders.12 The Digital Millennium

Copyright Act (DMCA), enacted 

in 1998, established criminal penalties 

for circumventing copyright protection

systems.13

1

Article I, Sec. 8, cl. 8.

2

15 U.S.C. § 1051-1127. 

3

19 C.F.R. Part 133 (1995). 

4

Pub. L. No. 98-473, II § 1502(a), 

98 Stat. 2178 (1984).

5

Pub. L. No. 104-294, 110 Stat. 3488. 

6

The Act of January 6, 1897 (54th Congress,

2d Session, 29 Stat. 481). 

7

Pub. L. No. 94-553, 101, 90 Stat. 2451, 2586;

17 U.S.C. § 506(a). 

8

Pub. L. No. 97-180, 96 Stat. 91, 92; 18 U.S.C.

§ 2319(b). 

9

Pub. L. No. 102-561, 106 Stat. 4233; 18

U.S.C. § 2319(b). 

10Pub. L. No. 104-153, 110 Stat. 1386. 

11Pub. L. No. 105-147, 111 Stat. 2678; 17

U.S.C. § 506(a). 

12U.S. Sentencing Commission, USSG Appendix C., Amendment 590, May 1, 2000, promulgated in response to Pub. L. 105-147. Sec.

2(g).

13Pub. L. No. 105-304, 112 Stat. 2860; 17

U.S.C. § 506(a).

Intellectual property theft and related 

Federal legislation (1946 to present)

• Economic 

Espionage 

Act of 1996

• Copyright 

Felony Act 

of 1992

• Digital 

Millennium 

Copyright 

Act (1998)

• No 

Electronic 

Theft Act 

(1997)

• AntiCounterfeiting 

Consumer 

Protection Act 

of 1996

• Trademark 

Counterfeiting 

Act of 1984

• Lanham 

Act of 1946

• Copyright 

Act of 1976

• Piracy and 

Counterfeiting 

Amendment 

Act (1982)

1950 1970 1960 1980 1990 2000

Criminal enforcement
investigated for an intellectual property

offense increased 26% from 322 in

1994 to 405 in 2002 (peaking in 2001

at 455: Highlights figure). The number

of suspects in matters referred to U.S.

attorneys for copyright offenses

increased 47% (from 143 in 1994 to

210 in 2002), surpassing trademark

offenses, which decreased 42% (179 in

1994 to 103 in 2002). Following

passage of the Economic Espionage

Act of 1996, the number of suspects

referred for trade secret offenses

increased more than threefold from 28

in 1997 to 92 in 2002. 

The Computer Crime and Intellectual

Property Section (CCIPS) in the Criminal Division of Justice oversees the

Federal prosecution of IP theft and

 Intellectual Property Theft, 2002 3

In 2002 U.S. Customs and Border

Protection (CBP) reported nearly 5,800

seizures of IP worth over $99 million

U.S. Customs and Border Protection

(CBP) seizes illegal intellectual property at

317 U.S. ports of entry.* Ports of entry are

locales designated for the movement of

merchandise and people in and out of the

country. Customs has the authority to

determine trademark and copyright violations, to search and seize property, and to

arrest suspects. (See the Tariff Act.)

The number of Customs' seizures

increased 177% from 2,091 in 1995 to

5,793 in 2002 (not shown in table). In

2002 counterfeit cigarettes were 38% of

all CPB seizures, followed by media

(movies, software, and music) at 29%,

and watches, consumer electronics,

apparel, and handbags at 21%. Among

exporting countries of origin, China

accounted for a quarter of all seizures 

and half of the total value seized in 2002.

Cigarettes made up 75% of the seizures

from China. Taiwanese IP comprised less

than 2% of seizures and 27% of the total

value (media being 88% of seized

material). 

*The Homeland Security Act of 2002 (P.L.

107-296) created the Bureau of Customs and

Border Protection (CBP) by merging most of

U.S. Customs with immigration inspectors from

the former Immigration and Naturalization

Service, the Border Patrol, and agricultural

border inspectors from the Department of

Agriculture’s Animal and Plant Health Inspection Service. The CBP took effect on March 1,

2003, under the newly created Department of

Homeland Security (DHS). 

a

U.S. Immigration and Customs Enforcement Statistics, Department of Homeland Security

<http:///www/customs/ustreas.gov>. b

U.S. Census Bureau, Foreign Trade Division, Data Dissemination Branch, Washington D.C.

c

Computed as: (domestic value of seized goods/value of general imports) x 1 million.

 All other 3,043 16 16.0 1,038,810 15 --

 Korea 312 2 1.8 35,570 51 Electronics (34%)

 Pakistan 35 2 2.4 2,310 1,041 Apparel (62%)

 Hong Kong 819 4 4.0 9,330 429 Watches/parts (30%)

 Taiwan 96 27 26.8 32,150 824 Media (88%)

 China 1,488 49 49.1 125,190 388 Cigarettes (75%)

Total 5,793 $99 100% $1,164,000 $85 Cigarettes (38%)

Primary product 

seized (% of 

property value)

Value seized

per $1 million 

in importsc

General 

U.S. imports 

($ millions)b

Percent of

total value

seized

Domestic

value ($

millions)

Total 

number of

seizures

Country of

origin/export

Seizures of intellectual propertya

Table 1. U.S. Immigration and Customs Enforcement seizures

and U.S. trade imports, by country of origin/export, 2002

Computer Hacking and Intellectual

Property (CHIP) prosecution units 

By fiscal year-end 2002, the Attorney

General had designated Federal CHIP

prosecution units in 13 U.S. cities. CHIP

units specialize in the enforcement of a

wide range of intellectual property theft

including copyright and trademark violations, theft of computer components, theft

of trade secrets and economic espionage.

They also specialize in prosecuting

computer hacking, fraud, and other Internet crimes. Cities were selected based on

concentrations of high tech industries and

other likely targets of IP theft or computer

crimes.

The CHIP units work with the FBI and

other investigatory agencies to foster

relationships with the technology community for enforcement efforts. The units also

train members of Federal, State, and local

law enforcement agencies in detection of

cybercrime and intellectual property theft.

Source: Computer Crime and Intellectual

Property Section (CCIPS), U.S. Department of Justice

25 and fewer 101 to 175

26 to 100 Over 175

Number referred

San Francisco

Los Angeles

Dallas

Manhattan/

Brooklyn

Atlanta

Miami

Kansas City

Chicago

Alexandria, VA

Seattle

San Diego

Boston

Source: Executive Office for the U.S. Attorneys, central system file

Criminal matters referred to U.S. attorneys with intellectual property theft

as most serious charge, by Federal judicial district, 1994-2002

Figure 1
advises on policies related to infrastructure protection and global IP theft

enforcement. CCIPS also supports the

CHIP program (described on page 3,

with figure 1).2

In 2002 more than 15 Federal, State,

and local agencies provided referrals to

U.S. attorneys for IP theft. The majority

were from agencies of Treasury and

Justice. The FBI, with primary authority

to investigate IP theft, referred 63% of

suspects to U.S. attorneys, followed by

the U.S. Customs Service (23%)

(USCS). Following the Homeland

Security Act of 2002, the USCS is

made up of the CBP, which monitors

the movement of merchandise and

people into and out of the country (text

box on page 3 ), and the U.S. Immigration and Customs Enforcement (ICE),

which conducts intelligence and investigations pertaining to IP smuggling.

Various agencies made up the remaining 14% of referrals in 2002 (including

the Secret Service and the U.S. Postal

Service).

From 1994 to 2002, 32% of IP matters

were referred from seven Federal

judicial districts (figure 1). These

districts were the Central and Northern

Districts of California (7% and 6%,

respectively), the Southern and Eastern

Districts of New York (5% and 3%,

respectively), the Middle District of

Florida (5%), and the Northern and

Southern Districts of Texas (3% each).

Matters prosecuted

The number of suspects prosecuted 

for IP theft by U.S. attorneys increased

41% from 129 in 1994 to 182 in 2002.

In 2002, 48% of 383 suspects in

matters concluded with an IP theft

offense as lead charge were prosecuted in U.S. district courts — a slightly

greater share than in 1994 (46%).

Suspects referred for copyright

offenses (56%) were more likely than

trademark (50%) or trade secret (22%)

suspects to be prosecuted in 2002.

The most common reasons given by

U.S. attorneys for declining to prosecute in 2002 were weak/insufficient

admissible evidence (20%), agency

request (17%), lack of evidence of

criminal intent (12%), and civil/administrative action/prosecution by other

authorities (11%). Twenty-three

suspects in IP matters concluded in

2002 were organizational defendants

(6%); three were prosecuted in U.S.

district courts (see text box above).

4 Federal Justice Statistics Program

Defendants sentenced in U.S. district

courts for IP theft offense, 1995-2002

Note: “Primary” guideline includes defendants

sentenced under §2B5.3 for which copyright/

trademark infringement convictions yielded the

greatest sentence. The §2B5.3 guideline does

not include economic espionage offenses or

theft of trade secrets (18 U.S.C. §1831 & 1832

are included in the theft guideline, §2B1.1).

1996 1998 2000 2002

0

50

100

150

Number sentenced under § 2B5.3

Primary guideline only

Primary or secondary guideline

Source: U.S. Sentencing Commission,

monitoring file

Commercial suspects of IP theft In 2002 businesses were 9% of suspects (37) referred to U.S. attorneys for an IP

offense. During 1994 businesses comprised 12% of the suspects referred to U.S. attorneys with IP theft as lead

charge. As IP theft referrals increased over 9 years, the number of organizational suspects remained about the same

(38 in 1994; 37 in 2002). Three organizations were adjudicated for an IP offense in 2002 (one for a copyright offense

and two for trademark offenses), and two were convicted (one organization received a 12-month term of supervision

and the other, a suspended sentence).

Figure 2

1994 1996 1998 2000 2002

0

100

200

300

400

500

Number of IP theft suspects referred

Individual

Organization

Source: Executive Office for the U.S. Attorneys,

central system file.

Commercial suspects in matters referred to

U.S. attorneys with IP theft as lead charge,

1994-2002

2

The U.S. Attorney General announced the

creation of the Intellectual Property Task Force

in March 2004 to strengthen IP theft enforcement. The task force focuses attention on countering international piracy and counterfeiting by

organized crime. Figure 3

Data source: Executive Office for the U.S. Attorneys, central system file.

d

Title 17 U.S.C. §§ 1201-1205.

e

Title 47 U.S.C. §§ 553 & 605. 

f

Title 18 U.S.C. § 2320. 

g

Title 18 U.S.C. §§ 1831-1832.

--No cases of this type occurred in the data.

a

Title 17 U.S.C. § 506 & 18 USC § 2319.

b

Title 18 U.S.C. § 2318. 

c

Title 18 U.S.C. § 2319A. 

Theft of trade secretsg 92 90.2 9.8

Trafficking in counterfeit goodsf 103 88.4 11.6

Trademark

Cable or satellite television piracy 49 95.9 4.1 e

Digital Millennium Copyright Act 5 100.0 -- d

Bootlegging musical performances 5 100.0 -- c

Counterfeiting labels of copyrighted itemsb 13 76.9 23.1

Copyright infringementa 138 92.0 8.0

Copyright 210 92.3 7.7

Total 405 90.9% 9.1%

Lead charge Total Percent Percent

Individual Organization

Type of suspect

Table 2. Matters referred to U.S. attorneys with IP theft as lead

charge, by type of suspect and offense, 2002
Criminal case outcomes

Eighty-eight percent of criminal defendants with an IP offense as their most

serious offense at case conclusion

were convicted in 2002. This is comparable to the overall conviction rate of

89% for the 80,000 criminal defendants

adjudicated in 2002. Ninety-three

percent of copyright defendants, 85%

of adjudicated trademark offenders,

and 75% of trade secret offenders

were convicted in 2002 (not shown 

in table).

During 2002, 72% of IP theft offenses

were disposed within 1 year (time from

case filing to disposition). The mean for

all IP offenses was 10.6 months (not

shown in table). 

IP defendants sentenced under the

U.S. Sentencing Guidelines 

The Sentencing Reform Act of 1984

eliminated parole, restricted good time

that could be earned, and authorized

the U.S. Sentencing Commission to

create guidelines that consider a broad

variety of factors. The guidelines take

into account offense-specific characteristics which are scored and used to

determine sentencing ranges.

The number of defendants sentenced

for IP theft (as primary guideline)

increased 54% from 1995-2002 (87 

in 1995 to 134 in 2002) peaking at 137

in 1998. During 2002, 141 defendants

were sentenced for IP theft as a

primary or secondary guideline. The

bulk (134 or 95%) of defendants

convicted of IP theft in 2002 were

sentenced with IP theft as the primary

guideline (figure 3). In 2002 IP theft

offenders comprised less than 1% 

of the 64,366 defendants sentenced

under the Sentencing Reform Act 

of 1984.

During 2002 sentenced defendants

were predominantly male (93%), white

(65%) or Asian (15%), 35 or older

(60%), U.S. citizens (78%), and college

educated (50% with some college or a

degree). Three-fourths of defendants

did not have prior convictions used in

determining sentence. Relatively more

males, whites, persons under age 35,

and persons with some college (or

graduate) were convicted of IP

offenses in 2002 than in 1998. A similar

percentage of IP defendants convicted

in 2002 pleaded guilty (97%) as in 1998

(96% pleaded guilty). 

In response to the NET Act of 1997,

the USSC modified the IP theft guidelines (effective May 1, 2000). The

USSC increased the base offense

score for IP theft from 6 to 8, added

three offense-specific characteristics,

and changed the definition of value of

infringed IP from being based on the

value of counterfeit goods to being

based on the legitimate retail value of

infringed items. For example, prior to

the 2000 amendment, if an offender

sold 10 fake name brand watches at

 Intellectual Property Theft, 2002 5

Note: Defendants sentenced with §2B5.3 as the primary sentencing guideline.

Percents are calculated based on nonmissing data. 

-- No cases of this type occurred in the data.

a

Data in this table reflect defendants sentenced in fiscal year 2002 and therefore aggregate defendants for whom differing guideline amendments may have applied. The 2002 cohort reflects defendants sentenced following a period of significant change in the guidelines (that is, in 2000 the base

offense level was increased from 6 to 8; the definition of loss was changed from ‘value of infringing

items’ to ‘infringement amount;' and, 3 new offense-specific characteristics were added to the

guideline). Appendix table 1 describes the 2002 cohort by amendment year.

b

Missing or indeterminate.

Source: U.S. Sentencing Commission, FY1998 and FY2002 monitoring files.

Fine only 0 -- 1 0.7

Probation with confinement 32 23.7 36 26.9

Probation only 57 42.2 39 29.1

Any prison 46 34.1% 58 43.3%

Sentence imposed

Upward departure 1 0.8 0 --

Substantial assistance 27 20.3 38 30.9

Downward departure 6 4.5 13 10.6

 Other 4 3.0 2 1.6 b

 Guideline maximum 1 0.8 2 1.6

 Lower and upper range 11 8.3 11 8.9

 Guideline minimum 83 62.4 57 46.3

Sentenced within range 99 74.4% 72 58.5%

Sentencing range

Total 137 100% 134 100%

Characteristic Number Percent Number Percent

2002a 1998

IP theft offenders sentenced under 

U.S. Sentencing Guidelines

Table 4. Sentencing IP theft offenders under the U.S. Sentencing Guidelines, 1998

and 2002

Note: Percents are calculated based on

nonmissing data.

*Indicates presence of prior convictions used

in computation of sentence under the Federal

Sentencing Guidelines.

Source: U.S. Sentencing Commission,

FY1998 and FY2002 monitoring files.

Number of defendants 137 134

Jury trial 3.6 3.0

Guilty plea 96.4% 97.0%

Mode of conviction

Yes 24.3 23.9

No 75.7% 76.1%

Prior criminal history*

Some college or more 42.0 49.6

High school graduate 39.7 30.5

Less than high school 18.3% 19.9%

Education 

Non-U.S. citizen 34.1 21.6

U.S. citizen 65.9% 78.4%

Citizenship

Over 50 yrs 19.7 14.9

35-50 yrs 50.4 44.8

25-34 yrs 24.1 32.1

Under 25 yrs 5.8% 8.2%

Age

Other 2.2 1.5

Asian 33.1 15.3

Hispanic 2.2 12.2

Black 11.0 6.1

White 51.5% 64.9%

Race/ethnic

Female 16.8 7.5

Male 83.2% 92.5%

Gender

Total 100% 100%

Characteristic 1998 2002

Percent of IP theft

offenders

Table 3. Profile of defendants

convicted of IP theft, 1998 and 2002
$35 each, when the retail value of a

legitimate watch was $1,000, the loss

calculation would be $350 (‘value of

infringing items’). Under the post-2000

guidelines, the total loss calculation

would be $10,000 (based on the retail

value of legitimate watches or ‘infringment amount’). 

During 2002 more than half of IP theft

defendants were convicted with an

infringement value of over $70,000.

Given the change in the definition of IP

loss effective in 2000, the loss value for

most IP defendants sentenced in 2002

was calculated as the legitimate retail

value of infringed goods (figure 4).3

During 2002, 13 of the 15 defendants

in cases with infringement amounts of

over $2.5 million did not have a prior

criminal history (that is, prior convictions used for computation of

sentence) (not shown in table).

In 2002, 10 defendants sentenced

under the IP theft guideline (7.5%)

received an adjustment for abuse 

of position of trust. Ten defendants

(7.5%) received an adjustment for 

an organizing or managing role in the

offense, down slightly from 11% 

in 1998. Six percent of defendants

received a mitigating adjustment for

their minimal/minor participation in the

offense (down slightly from 9.5% in

1998). Almost all IP defendants sentenced in 1998 (93%) and 2002 (96%)

accepted responsibility for their crime.

Forty-one (46%) of the 92 defendants

sentenced under post-May 2000

amendments received an aggravated

adjustment to their sentence for

manufacturing, importing, or uploading

infringing items to the Internet (for

example, causing goods to enter

stream of commerce) (not shown in

table).

6 Federal Justice Statistics Program

Note: Defendants were sentenced with copyright/trademark infringement as the primary sentencing guideline.

*Detail will not sum to total as defendant could be sentenced to more than one sanction. a

Calculation of 1998 medians excludes 4 defendants with a suspended prison sentence, 2 with missing or indeterminate restitution

amounts, 4 missing amounts of community service imposed, and 6 defendants missing amounts of home detention ordered.

b

Calculation of 2002 median excludes 4 defendants who received a suspended prison sentence.

Source: U.S. Sentencing Commission, FY1998 and FY2002 monitoring files.

Home detention 40 29.2 6.0 mos 1-9 mos 44 32.8 6.0 mos 2-14 mos

Community service 26 19.0 100 hrs 20-300 hrs 33 24.6 200 hrs 40-500 hrs

Restitution 33 24.1 $25,700 $120-$4 million 37 27.6 $25,238 $603-$10 million

Fine 65 47.4 $2,000 $250-$15,000 47 35.1 $2,000 $200-$50,000

Probation 89 65.0 36.0 mos 6-60 mos 76 56.7 36.0 mos 12-60 mos

Prison 46 33.6 10.0 mos 1-30 mos 58 43.3 15.0 mos 1-46 mos a

Total* 137 100% -- -- 134 100% -- -- 

Sanction Number Percent Median Range Number Percent Median Range

2002b 1998a

Table 5. Sanctions imposed for IP theft, 1998 and 2002

3 In 2001 USSC also amended the IP theft

guidelines (§2B5.3) to include a new loss table

that associates increased offense levels with

most loss amount categories. The combined

effect of this amendment and the new loss

definition has increased the severity of sanctions

for IP theft.

Loss amounts corresponding to IP convictions before and after the 2000 emergency guideline

amendment (§2B5.3) changed the definition of loss

Source: U.S. Sentencing Commission, FY2000, FY2001, and FY2002 monitoring files.

2000 2001 2002

Number of defendants sentenced for IP theft

2000 2001 2002

0

10

20

30

40

50

60

70

Loss specified in determining IP offender sentences

2000 2001 2002 2000 2001 2002

Less than $5,000 $5,000-$69,999 $70,000-$2.5 million

Definitions of loss

based on:

Legitimate retail

value of counterfeit

items (postamendment)

Value of

counterfeit items

(pre-amendment)

Over $2.5 million

Figure 4

*Copyright/trademark infringement as primary

guideline used at sentencing (§3B5.3). 

Number of defendants 137 134

Minimal/minor role in offense 9.5 6.0

Manager/leader organizer 11.0 7.5

Abused position of trust 1.0 7.5

Accepted responsibility 92.7% 95.5%

Chapter 3 adjustments 1998 2002

Percent of 

defendants

sentenced under

IP guidelines*
Most defendants were sentenced

within the guideline range in 2002

(59%); 31% received a downward

adjustment for providing substantial

assistance to the prosecution; and 11%

received a downward departure for

other reasons. IP defendants were less

apt to be sentenced within the guidelines in 2002 (59%)4

 than in 1998

(72%), attributable in part to increased

use of substantial assistance (20% of

cases received in 1998 compared to

31% in 2002) and other downward

departures (4% in 1998 compared to

11% in 2002). 

Forty-three percent of defendants

received some prison time in 2002, up

from 34% in 1998. In 2002 a smaller

share of defendants (29%) received

probation only, compared to 1998

(42%), and a greater share received

probation with confinement (27% in

2002 and 24% in 1998).

Of the 134 IP theft defendants

sentenced in 2002, 58 (43%) received

some imprisonment with a term

ranging from 1 to 46 months and a

median of 15 months. In 1998, 34% of

defendants were sentenced to prison

with a range of 1 to 30 months and

median of 10 months. Fifty-seven

percent received probation as some

part of their sentence in 2002 and 35%

of defendants received a fine in 2002

 Intellectual Property Theft, 2002 7

Trademark, copyright, and patent

protections

Trademarks are brand names distinguishing manufactured goods. Registration with

the U.S. Patents and Trademark Office

establishes Federal jurisdiction in a criminal prosecution. From 1983 to 2001 registrations increased 148% (41,200 in 1983

to 102,300 in 2001). 

Copyright registration establishes ownership in criminal and civil infringement

deliberations. From 1983 to 2001, the

number of registrations increased from

1983 to a peak of 663,700 in 1991 and

then decreased to 601,700 in 2001. From

1990 to 2002, copyright registrations

increased for monographs (including

computer software and machine readable

works), decreased for serials and musical

works (including dramatic works, accompanying music and motion pictures), and

remained at about the same level for

sound recordings and works of visual arts

(including fine and graphic art and photographs). The number of patents granted

increased by 197% from 62,000 in 1983 to

184,000 in 2001. Unlike trademark and

copyright laws, U.S. patents are enforceable only against infringements occurring

in the United States.

Sources: U.S. Patent and Trademark Office (annual reports).

U.S. Copyright Office (annual reports). Figure 5

U.S. copyrights and trademarks registered and patents granted, 1983-2001

1983 1986 1989 1992 1995 1998 2001

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Patents granted

Trademarks registered

Copyrights registered

Source: Administrative Office of the U.S. Courts, Annual Report of the Director, annual,

Washington D.C. Special C-3 table - Copyright, Patent, and Trademark.

2002 8,254 3.0 32 20 12 8,222 2,084 2,680 3,458

2001 8,314 3.3 32 24 8 8,282 2,446 2,496 3,340

2000 8,738 3.4 41 24 17 8,697 2,050 2,460 4,187

1999 8,242 3.2 41 32 9 8,201 2,093 2,286 3,822

1998 7,748 3.0 41 31 10 7,707 2,082 2,187 3,438

1997 7,559 2.8 23 14 9 7,536 2,258 2,098 3,180

1996 7,028 2.6 36 28 8 6,992 2,263 1,812 2,917

1995 6,866 2.0 27 17 10 6,839 2,417 1,706 2,716

1994 6,902 2.9% 30 14 16 6,872 2,828 1,603 2,441

Total Copyright Patent Trademark

TradeTotal Patent mark

As a percent U.S. cases Private cases (Federal question)

of all civil

cases filed

Overall

Year total

Civil intellectual property complaints filed in U.S. district courts

Table 6. Jurisdiction of civil intellectual property complaints filed 

in U.S. district courts, 1994-2002

Number of copyright, patent, and trademark civil suits in cases terminated, 

by Federal judicial district, 2002

Less than 25 100 to 349

25 to 99 Over 350

Number of civil terminations

Source: Administrative Office of the U.S. Courts, civil master file, annual

 (excludes remanded and transferred cases and statistical closures)

Note: Includes 7,455 civil cases terminated in U.S. district court in 2002 

N. District of

California (5%)

Central District

of California (13%)

N. District of

Illinois (5%)

S. District of

New York (9%)

Figure 6

4

See appendix table 1 for differences by the

guideline amendment year applied for defendants sentenced in FY 2002.
(compared to 47% in 1998). Restitution

was ordered for 37 (28%) defendants

in 2002 (amounts imposed ranged from

$600 to $10 million with a median of

$25,200). 

Civil remedies can include injunctions

used to halt further infringement, forfeiture, or monetary relief to include a

defendant’s profits, damages

sustained, costs of actions, and trebled

damages. In 2002 a total of 274,841

civil cases were filed in U.S. district

courts (up 9.5% from 2001). The scope

of civil IP cases differs from criminal as

it includes patent but excludes trade

secret offenses. The 8,254 IP cases

filed comprised 3% of this total in 2002.

IP case filings increased 20% from

1994 to 2002 (6,902 to 8,254). From

1994 to 2002 patent filings grew at the

greatest rate (67%), followed by trademark filings (42%). Copyright filings

decreased 26% (table 6).

Between 1994 and 2002 the number 

of intellectual property complaints

between private parties increased 20%

(from 6,872 in 1994 to 8,222 in 2002)

due to increases in patent and trademark filings (up 67% and 42%, respectively). Copyright complaints decreased

26% (from 2,828 in 1994 to 2,084 

in 2002).

U.S attorneys have authority to pursue

civil litigation on behalf of the United

States. In 2002 the United States

Government was plaintiff or defendant

in 32 intellectual property complaints

filed (63% patent and 37% trademark

cases). 

In 2002, 7,445 copyright, patent, and

trademark suits were disposed of

(down 5% from 2001). Federal judicial

districts with the largest share of cases

included the Central and Northern

Districts of California (13% and 5%,

respectively), the Southern District of

New York (9%), and the Northern

District of Illinois (5%) (figure 6).

Most civil cases were dismissed (76%),

rather than disposed of by judgment

(24%) (table 7). Overall, 40% were

settled, 22% were voluntarily

dismissed, and 22% received judgment

other than trial (such as judgment on

default, consent, motion before trial,

and award of arbitrator). Less than 2%

of cases were disposed by trial verdict.

Among types of IP offenses, patent

(3.2%) suits were more likely than

copyright (1.5%) and trademark (1.2%)

suits to terminate with a trial verdict.

Copyright suits were slightly more likely

to end in settlement (42%). Of the 140

IP cases terminated by trial verdict in

U.S. district courts in 2002, patent

cases comprised 52% (73); trademark

cases, 28% (39); and copyright cases,

20% (28). 

Of the 140 complaints terminated by

trial, 61% were disposed of by jury

verdict, 35% by decision of judge or

magistrate, and 4% by directed verdict.

Juries decided 69% of patent trials,

64% of copyright trials, and 46% of

trademark trials. 

During 2002 plaintiffs were winners in

59% (83) of the 140 cases terminated

by trial. Of the 83 plaintiff winners, 52%

(43) were patent cases, 19% (16)

copyright cases, and 29% (24) trademark cases. 

Of the 83 plaintiff winners, 53 (64%)

received a monetary award (table 8).

The median award was $965,000 with

42% less than $500,000, 31% between

$500,000 and $5 million, and 27%

greater than $5 million. Monetary

awards varied by type of IP suit: The

median award for patent suits was 

$2.3 million, followed by copyright

($159,000) and trademark ($84,500)

suits. 

The median case processing time

(from case filing to disposition) for all IP

theft cases terminated in 2002 was 7

months. Median case processing time

varied by type of IP complaint: patent

(9 months), copyright (7 months), and

trademark (6 months) cases.

8 Federal Justice Statistics Program

*Number of trial cases disposed for which a judgment was known. Includes jury trials, court trials,

and directed verdicts.

Source: Administrative Office of the U.S. Courts, civil master file, annual.

2002 140 59.3 83 63.9 53 965,000 42.3 30.8 26.9

2001 144 55.6 80 61.3 49 300,000 53.1 28.6 18.4

2000 143 62.2 89 69.7 62 193,000 62.9 19.4 17.7

1999 164 57.3 94 72.3 68 267,500 57.4 19.1 23.5

1998 180 58.9 106 66.0 70 662,500 44.3 34.3 21.4

1997 181 61.3 111 58.6 65 162,000 64.6 16.9 18.5

1996 166 52.4 87 55.2 48 157,000 70.8 14.6 14.6

1995 182 51.1 93 68.8 64 224,000 64.1 21.9 14.1

1994 174 57.5% 100 71.0% 71 $435,000 53.5% 22.5% 23.9%

More than

$5 million

$500,000-

$5 million

Less than

Percent Number Median $500,000

Total

number

Total

Year percent

Monetary awards Award amount

Number Plaintiff winners

of cases

terminated

by trial

verdict*

Table 8. Plaintiff winners and awards in intellectual property complaints

terminated by trial in U.S. district courts, 1994-2002

a

Excludes remanded and transferred cases and statistical closures.

b

Includes dismissed for want of prosecution, lack of jurisdiction, and other.

c

Includes jury and directed verdict judgments and bench trials.

d

Includes judgment on default, consent, motion before trial, award of arbitrator, 

or by other final judgment method.

Source: Administrative Office of the U.S. Courts, civil master file.

Trademark 3,273 2,443 74.6 38.8 22.3 13.5 830 25.4 1.2 24.2

Patent 2,283 1,774 77.7 39.7 23.2 14.9 509 22.3 3.2 19.1

Copyright 1,889 1,466 77.6 42.3 19.1 16.3 423 22.4 1.5 20.9

Total 7,445 5,683 76.3% 40.0% 21.8% 14.6% 1,762 23.7% 1.9% 21.8%

Otherd Trialc Other NumberPercent b Number Percent tled tary

Total Set- Volun- Total

Dismissed Judgment

Total 

cases

disposeda

Nature 

of

suit

Table 7. Disposition of intellectual property complaints terminated in U.S.

district court, 2002

Civil litigation
Property associated with the IP offense

is subject to civil forfeiture pursuant to

civil forfeiture statutes unique to IP theft

and as a predicate offense to money

laundering under 18 U.S.C. § 981. The

CPB can seize, forfeit, and destroy

imported products which violate

copyright infringement (see 17 U.S.C. §

603(c)), trafficking in bootleg musical

performance recordings (18 U.S.C. §

2319A(c)), and trademark infringing

products (19 U.S.C. § 1526(e)). Criminal forfeiture is mandatory for trafficking in counterfeit labels (18 U.S.C. §

2318) and for copyright infringement

can include all copies of infringing

articles as well as the equipment used

to manufacture items after court order

following judgment of conviction (see

17 U.S.C. § 506(b)).

Methodology

The source of the data used in this

report is the BJS Federal Justice

Statistics Program (FJSP) database. 

The FJSP compiles comprehensive

information on individuals and corporations processed through the Federal

justice system from source files

provided by the Executive Office for

United States Attorneys (EOUSA), the

Administrative Office of the United

States Courts (AOUSC), the United

States Sentencing Commission

(USSC), and other agencies. 

 Intellectual Property Theft, 2002 9

The Bureau of Justice Statistics is

the statistical agency of the U.S.

Department of Justice. Lawrence A.

Greenfeld is director.

Mark Motivans wrote this report

under the supervision of Steven K.

Smith. The following individuals

reviewed this report and provided

substantive comments: Eric Klumb

and Martha Stansell-Gamm of the

Computer Crime and Intellectual

Property Section of the Department

of Justice; B. Frederick Williams of

the U.S. Attorney’s Office for the

Western District of North Carolina;

and Pragati Patrick and Maurice

Galloway of the Administrative Office

of the U.S. Courts. William Adams,

Avi Bhati, and Christine Arriola of the

Federal Justice Statistics Resource

Center verified this report. Tom

Hester edited the report.

October 2004, NCJ 205800 C 

Criminal IP theft offenses in this report

are defined according to copyright, trademark, and trade secrets statutes:

Copyright

17 U.S.C. § 506 & 18 U.S.C. § 2319

Criminal infringement of a copyright.

Statutory maximum penalty of 5 years 

in prison and $250,000 fine and 10 years

in prison for repeat copyright offenders.

18 U.S.C. § 2318

Trafficking in Counterfeit Labels for

phonograph records, copies of computer

programs, and similar materials.

Maximum penalty of 5 years in prison and

$250,000 fine.

18 U.S.C. § 2319A 

Unauthorized Fixation of and Trafficking

in Sound Recordings and Music Videos of

Live Musical Performances. Maximum

penalty of 5 years in prison and $250,000

fine for first time offender and 10 years in

prison for repeat “bootlegging” offender.

17 U.S.C. § 1201-1205

Circumvention of copyright protection

systems. Maximum penalty of 5 years 

in prison and $500,000 fine for first time

offender and 10 years in prison and

$1,000,000 fine for repeat offender.

47 U.S.C. § 553

Unauthorized reception of cable services.

Maximum penalty of 6 months in prison

and $1,000 fine for individual use and 

2 years in prison and $50,000 fine for

commercial/financial gain with first time

offender and 5 years in prison and

$100,000 fine for repeat offender.

47 U.S.C. § 605

Unauthorized publication or use of

communications. Maximum penalty of 6

months in prison and $2,000 fine for

individual use and 2 years in prison and

$50,000 fine for commercial/financial gain

with first time offender and 5 years in

prison and $100,000 fine for repeat

offender.

Trademark

18 U.S.C. § 2320

Trafficking in Counterfeit Goods of

Services. Maximum penalty of 5 years 

in prison and 10 years in prison and

$5,000,000 fine for repeat offenders.

Corporations subjects to fines up to

$15,000,000.

Trade secrets

18 U.S.C. § 1831

Economic espionage. Maximum penalty

of 15 years in prison and $500,000 fine

for individual and $10,000,000 fine for

corporate offender.

18 U.S.C. § 1832

Theft of trade secrets. Maximum penalty

of 10 years in prison and $250,000 fine

for individual and $5,000,000 fine for

corporate offender.

Selected Federal criminal intellectual property theft statutes and maximum penalties

Figure 7

 Civil intellectual property complaints terminated in U.S. district courts, 2002

Federal civil IP cases disposed in 2002 (7,445)

Copyright 1,889 

(24% of 7,445)

Patent 2,283 

(31% of 7,445)

Trademark 3,273 

(44% of 7,445)

28 (1.5% of 1,889)

Cases disposed

Terminated by 

trial verdict 73 (3.2% of 2,283) 39 (1.2% of 3,273)

16 (57.1% of 28) Plaintiff winner 43 (58.9% of 73) 24 (61.5% of 39)

Received 

monetary award 13 (81.3% of 16) 30 (69.8% of 43) 10 (41.7% of 24)

Median 

monetary award $159,000 $2,300,000 $84,500

Source: Administrative Office of the U.S. Courts, civil master file.
In this report, intellectual property

offenders were defined according to

selected Federal criminal statutes.

(See textbox on page 9.) For suspects

in matters referred to U.S. attorneys,

the “lead charge” is the basis for investigation and for which at least 1 hour of

investigation time was spent. As secondary charges are not available, IP theft

is undercounted to the extent it is

present as a secondary charge. In

table 2 and figure 3, organizational

suspects were manually identified in

the Executive Office for the U.S. Attorneys central system file by inspecting

the name field on suspects in matters

referred from 1994-2002 with an IP

statute as the lead charge.

AOUSC data were used to describe the

distribution of IP theft defendants in

cases adjudicated resulting in conviction. The “most serious terminating

offense” designation is the offense that

yields the maximum statutory penalty.

For more information see the methodology section in the Compendium of

Federal Justice Statistics, 2002 (NCJ

205368). 

The USSC provided data on IP defendants convicted and sentenced under

the Sentencing Reform Act of 1984.

The primary guideline (§2B5.3) was

used to describe defendants as it

provided the largest and most representative group of defendants

sentenced for IP theft. The guideline,

§2B5.3, includes each of the criminal 

IP theft statutes listed on page 9 with

exception of theft of trade secrets (18

U.S.C. § 1831) and economic espionage (18 U.S.C. § 1832) offenses.

These IP offenses are included under

the general theft guideline (§2B1.1).

IP theft defendants sentenced under

the guidelines were compared from

1998 and 2002 as these years represented two periods of comparable size

as well as points before and after the

2000 guideline amendment to §2B5.3.

As about a third of IP defendants

convicted in 2002 were sentenced

under pre-2000 amendments to the

§2B5.3 guideline, appendix table 1 was

included to show the break-out by

amendment year. The cut-points used

in describing loss amounts (see figure

4) were the categories which could be

collapsed across years of data. 

The November 1, 2001 guideline

amendment changed loss categories

and this affected direct comparison

with previous years.

The source of civil data presented in

this report is the Federal Judicial

Center’s Integrated Data Base (Civil).

The database is derived from data

provided by the Administrative Office of

the U.S. Courts (AOUSC). The Federal

intellectual property categories used in

this report are based on the codes

established by the Administrative Office

of the United States Courts (AOUSC).

For cases that involved more than one

filed action, the most definitive (as

determined by the plaintiff’s attorney) is

recorded, and it is this nature of suit

code that was used in the analysis for

this report.

For more information:

Computer Crime and Intellectual

Property Section of the Criminal

Division of the Department of Justice.

see <http://www.cybercrime.gov>.

10 Federal Justice Statistics Program

• In 2002, 67% of the 134 IP theft defendants sentenced under Federal

sentencing guidelines were subject to two major guideline amendments

which went into effect on May 1, 2000, and November 1, 2001, respectively

(see footnote 3 on page 6).

• Of those sentenced under post-2000 amendments, 55% were sentenced

within range of the guidelines compared to 53% of those sentenced under

pre-2000 guidelines. 

• 26% received a substantial assistance motion under post-2000 guidelines

compared to 35% under pre-2000 guidelines.

• 52% received some prison time under post-2000 guidelines compared to

24% of defendants sentenced under pre-2000 guidelines.

Note: Table reports on 134 defendants sentenced with §2B5.3 as the primary sentencing 

guideline. Percents were calculated based on nonmissing data. 

--No cases of this type occurred in the data.

a

Missing range information.

Source: U.S. Sentencing Commission, FY2002 monitoring data.

Fine only -- 0 1.3 1 -- 0

Probation with confinement 31.0 13 24 18 29.4 5

Probation only 45.2 19 18.7 14 35.3 6

Any prison 23.8% 10 56.0% 42 35.3% 6

Sentence imposed

Upward departure -- 0 -- 0 -- 0

Substantial assistance 35.0 14 29.8 20 25.0 4

Downward departure 12.5 5 10.5 7 6.2 1

 Other -- 0 5.0 2 -- 0 a

 Guideline maximum 4.8 1 2.5 1 -- 0

 Lower and upper range 19.0 4 17.5 7 -- 0

 Guideline minimum 76.2 16 75.0 30 100.0 11

Sentenced within range 52.5% 21 59.7% 40 68.8% 11

Sentencing range

Total 100% 42 100% 75 100% 17

Characteristic Percent Number Percent Number Percent Number

On or after 

Nov. 1, 2001

May 1, 2000 –

Oct. 31, 2001

Prior to 

May 1, 2000

IP theft offenders sentenced in 2002 under U.S. Sentencing

Guidelines which were amended —

Appendix table 1. IP theft offenders sentenced under Federal

Sentencing Guidelines by amendment year of guideline applied, 2002