The author(s) shown below used Federal funds provided by the U.S. 

Department of Justice and prepared the following final report: 

Document Title: Addressing Global Scope of Intellectual 

Property Law 

Author(s): Hedi Nasheri 

Document No.: 208384 

Date Received: January 2005 

Award Number: 1700-218 

This report has not been published by the U.S. Department of Justice. 

To provide better customer service, NCJRS has made this Federallyfunded grant final report available electronically in addition to

traditional paper copies.

 

Opinions or points of view expressed are those 

of the author(s) and do not necessarily reflect 

the official position or policies of the U.S. 

Department of Justice.
Addressing Global Scope of Intellectual Property Law

By 

Hedi Nasheri 

Prepared for the National Institute of Justice, The International Center 

Department of Justice 

November 2004

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
TABLE OF CONTENTS 

Introduction........................................................................................................................ 1 

Research Methodology ..................................................................................................... 2 

What Is Intellectual Property? ........................................................................................... 4 

Different Categories Of Intellectual Property.................................................................... 5 

Industrial Property ................................................................................................. 5 

Copyright and Related Rights................................................................................ 7 

Intellectual Property Crimes.............................................................................................. 8 

Future Economic Crime Risks............................................................................... 9 

Hidden Value And Estimated Losses Of Intellectual Property Theft.............................. 11 

Magnitude Of The Problem ............................................................................................. 14 

Different Types Of Piracy................................................................................................ 15 

Digital Technology .............................................................................................. 15 

Optical Disc Piracy .............................................................................................. 16 

Internet Piracy...................................................................................................... 17 

Signal Theft ......................................................................................................... 18 

Broadcast Piracy .................................................................................................. 19 

Regional Overview of Piracy........................................................................................... 19 

North America ..................................................................................................... 20 

Asia/Pacific .......................................................................................................... 20 

Europe, Middle East & Africa ............................................................................. 21 

Typical Affected Products ................................................................................... 23 

Why Counterfeiting And Piracy Are On The Rise .............................................. 27 

IACC’s “Special 301” Report To The United States Trade Representative.................... 29 

Priority Foreign Countries ................................................................................... 31 

IACC’s Priority Watch List ................................................................................. 33 

IACC’s Watch List .............................................................................................. 39 

Technological Advances And Its Impact On Intellectual Property Law and Policy ....... 41 

The Internet.......................................................................................................... 41 

Intellectual Property Laws............................................................................................... 44 

Conflicts Of Laws................................................................................................ 45 

The European Initiatives...................................................................................... 45 

Criminalization Of Intellectual Property Violations In The United States...................... 47 

Anti-piracy Laws In The United States ............................................................... 47 

 i 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
TABLE OF CONTENTS 

Examples Of Legislative Actions ........................................................................ 48 

Border Enforcement............................................................................................. 52 

Civil Enforcement................................................................................................ 52 

Criminal Enforcement.......................................................................................... 53 

Significant Prosecutorial Accomplishments.................................................................... 53 

Operation Decrypt................................................................................................ 53 

Operation Buccaneer............................................................................................ 54 

Operation Bandwidth........................................................................................... 55 

Operation Digital Piratez ..................................................................................... 56 

United States v. Ke Pei Ma, et. al. ....................................................................... 56 

United States v. Rocci.......................................................................................... 57 

United States v. Mynaf ........................................................................................ 57 

William Haskell Farmer....................................................................................... 58 

Drug Operation In Queens New York ................................................................. 58 

John Sankus ......................................................................................................... 59 

Mark Dipadova .................................................................................................... 59 

Software Piracy Ring ........................................................................................... 59 

Chinatown In New York City.............................................................................. 60 

Counterfeit Computer Software........................................................................... 60 

Counterfeit Clothing ............................................................................................ 60 

Italian Counterfeiting Group................................................................................ 61 

Drug Ring In New York ...................................................................................... 61 

Initiatives Toward Enforcement Of Intellectual Property Rights.................................... 61 

World Trade Organization ................................................................................... 63 

The Agreement On Trade Related Aspects Of Intellectual Property Rights....... 64 

The United States Position................................................................................... 65 

Global Anti-Counterfeiting Group....................................................................... 65 

The International Anti-Counterfeiting Coalition ................................................. 65 

Intellectual Property Crimes Are Perceived As Victimless Crimes ................................ 66 

Law Enforcement Challenges.......................................................................................... 67 

What Needs To Be Done ................................................................................................. 68 

Recent Efforts Toward Protection Of Intellectual Property Rights..................... 69 

Possible Solutions for Intellectual Property Crimes........................................................ 70 

 ii 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
TABLE OF CONTENTS 

Monitoring By The Private Sector....................................................................... 70 

The Use Of Technical Devices............................................................................ 70 

Sanctions And Other Means Of Enforcing Intellectual Property Rights............. 71 

Best Practices for Enforcement of Intellectual Property Rights...................................... 71 

Enforcement Provisions Under TRIPS ................................................................ 72 

Future Policy Consideration For Protection Of Intellectual Property Rights.................. 75 

Future Research Issues......................................................................................... 76 

 iii 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Introduction

The use of intellectual property (IP) is a growing concern in both the criminal and civil 

justice systems due to the growing number of products that can be reproduced quickly and 

inexpensively with little chance of detection. The economic impact of the misuse and theft of 

intellectual property is far-reaching. The copying of software, movies, video games, and music in 

ways that deny publishers and authors their legal rights have drawn the most attention, but 

trademark and patent infringement, corporate espionage, computer intrusions, theft and sale of 

trade secrets, copyright violations, and international smuggling and transmission of copyrighted 

materials also have been identified as problems. The National Institute of Justice sponsored 

several studies to examine the nature of this problem, to discover what is known about its extent 

and the major justice-related issues it creates, and to develop recommendations for future 

research in this area. As part of its International Center’s research agenda to enhance 

understanding of intellectual property crimes (IPC) and its implications for practice, funding was 

provided to analyze the current state of law and enforcement efforts for protection of intellectual 

property rights (IPRs), and its actual and potential uses. 

In essence, this study represents an assessment of the “state of the art,” as well as 

concrete evidence of weaknesses in current law, its enforcement domestically and 

internationally, problems of application, training issues, and other matters that can be used to 

assist NIJ in its research agenda in this untapped area by researchers. While the broader interest 

of this project was to examine the policy issues associated with protection and enforcement of 

IPRs, the results of the current project provide a starting point for a critical analysis of the current

state of laws, law enforcement, and potential threats of IPC in a global context. This study is not 

intended to provide solutions to all the problems that it identifies and it is my hope that the NIJ 

 1 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
provides adequate funding and resources so that a comprehensive study in this area can be 

conducted. 

Research Methodology

Two research methods were utilized for this study: 

A. Archival Review – An extensive review of federal regulations, case reports, 

journal articles, speeches, testimony, arrest records, indictments, court records, GAO reports, 

Congressional hearings reports, agency reports, seminar reports and newspaper articles. 

B. Primary Source Interviews– Interviews with selected interest groups, including 

corporate security professionals, security consultants and federal prosecutors other government 

officials in the Department of Justice and the FBI who play key roles in prosecution and 

investigation of criminal activities in this area were conducted. 

The following questions were raised with officials and agencies interviewed: 

1. What is IP and what are IPRs?

2. How can IP be misappropriated?

3. Does IP misappropriation constitutes a crime?

4. What law enforcement initiatives domestically and internationally have taken 

place? 

5. Why criminalize IP violations? 

6. What future research is needed in this area? 

The following organizations were contacted in connection with this project: 

Federal Law Enforcement Contacts 

Computer Crime and Intellectual Property Section (CCIPS), Department of Justice 

Intellectual Property Rights Coordination Center 

Financial Crimes Section, Federal Bureau of Investigation 

U.S. Customs Service, Intellectual Property Rights Program & Intellectual Property 

Rights Branch 

Trademark Organization Contacts 

United State Patent and Trademark Office (USPTO) 

International Anti-Counterfeiting Coalition (IACC) 

 2 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
International Trademark Association (INTA) 

Copyright Organization Contacts 

Library of Congress Copyright Office 

Business Software Alliance (BSA) 

Interactive Digital Software Association (IDSA) 

International Intellectual Property Alliance (IIPA) 

International Intellectual Property Institute (IIPI)

Intellectual Property Owners Association (IPO) 

The World Intellectual Property Organization (WIPO) 

“Imagination is more important than knowledge”1

 (Albert Einstein)

We must acknowledge at the outset that, for most people, IP is either an unknown, 

misunderstood or mysterious term. Technology and creative arts pervade modern society, yet 

few actually realize that their daily lives are surrounded by IP creations from which legal rights 

of all sorts, including their own, arise. Building public awareness of the role of IP is key to 

fostering a broad understanding of what IP is and respect for the system that promotes and 

protects IPRs. 

 3 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
What Is Intellectual Property?

IP is the term that describes the ideas, inventions, technologies, artworks, music and 

literature, that are intangible when they are first created, but become valuable and tangible as 

they become products. The word “property” is used to describe this value, because the term

applies to inventions, works and names for which a person or group of persons claims

ownership. Ownership in this context is important because prospect of potential economic gain 

provides a powerful incentive to innovate. IP, very broadly, means the legal rights which result 

from intellectual activity in the industrial, scientific, literary and artistic fields. 

According to the World Intellectual Property Organization (WIPO) IP shall include rights 

relating to the following: 

• literary, artistic and scientific works, 

• performances of performing artists, phonograms, and 

broadcasts, 

• inventions in all fields of human endeavor, 

• scientific discoveries, 

• industrial designs, 

• trademarks, service marks, and commercial names and 

designations, 

• protection against unfair competition, 

• and all other rights resulting from intellectual activity 

in the industrial, scientific, literary or artistic fields.”2

Protectable property interests are present in both real property 

and IP. Real property is a commonly understood concept; it is any physical or tangible property, 

such as a house, a watch, or a piece of land.3

 IP on the other hand is not usually something you 

can touch, but it exists and has the same value. Copyrights, patents, trademarks and trade secrets 

are all forms of IP.4

 IPRs refers to the legal rights that correspond to intellectual activity in the 

industrial, scientific, and artistic fields. These legal rights, most commonly in the form of 

 4 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
patents, trademarks, and copyright, protect the moral and economic rights of the creators, in 

addition to the creativity and dissemination of their work. 

Different Categories Of Intellectual Property

IP is divided into two categories: industrial property and copyright.5

 Industrial property, 

which is part of IP, extends protection to inventions and industrial designs. Industrial property 

includes patents, trademarks, industrial design, and geographic indications of source.6

 Whereas 

copyright protects literary and artistic works such as novels, poems, plays, films, musical works, 

drawings, paintings, photographs, sculptures and architectural designs.7

 

Industrial Property

Industrial property rights make it possible for the creators of innovations (goods, 

processes, apparatus, etc.) to establish themselves more readily, to penetrate new markets with a 

minimum of risk, and to amortize the investments made in the research that led to the 

innovations in the first place. In a practical sense, these innovations become the spearhead of 

some of the most advanced technology. This is becoming more and more apparent in a modern 

world increasingly dominated by technology. 

 Patent (Invention)

A patent is an exclusive right granted for an invention (a 

product or a process that provides a new way of doing something, 

or offers a new technical solution to a problem). It provides 

protection for the invention for a limited period, generally 20 years 

from the filing date, in the country or countries in which it is patented, in exchange for the 

inventor’s public disclosure of the invention. 

 

Patent 

 5 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Trademark 

A trademark or “mark” is a distinctive name, logo or sign8

identifying the source of goods or services. Trademarks help 

consumers distinguish a product or service from one source from

those produced by another source. A mark provides protection to its 

owner by preventing confusion as to source in connection with the distribution of goods or 

services or licensing others to use them. The period of protection varies, but a mark can remain 

valid indefinitely through continued commercial use or a registration and renewal process. 

Trademark 

 6 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Copyright and Related Rights

Copyright consists of a bundle of rights given to creators in 

their literary and artistic works. These creators, and their heirs, hold 

the exclusive rights to use or license others to use the work on agreed 

terms. The creator of a work can prohibit or authorize,9

 for example: 

• its reproduction in various forms, such as a printed 

publication or a phonorecord; 

• its public performance, as in a play or musical work; 

• its broadcasting, including by radio, television, or 

satellite; 

• its translation into other languages, or its adaptation, 

such as the adaptation of a novel into a screenplay. 

Copyright applies to many different types of artistic works, 

including paintings, music, poems, plays, books, architecture and 

choreography, as well as to works that are generally not considered 

artistic such as computer software, maps and technical drawings. 

Related rights are rights that have evolved in the last 50 years 

or so “around” copyright, and include the right of a performer in 

his/her performance, the right of a producer of a sound recording in the recording, and the right 

of a broadcaster in a broadcast. 

Many creative works protected by copyright generally require mass distribution, 

communication, and financial investment for their dissemination (for example, publications, 

sound recordings, and films). Hence, creators often sell the rights to their works to individuals or 

companies that can package, market, and distribute the works in return for payment (lump sum

or royalties). These economic rights have a time limit according to the relevant WIPO treaty of 

the life of the author plus 50 years after the authors death. In some countries that term has been 

 7 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
extended to 70 years Copyright may also include moral rights which involve the right to claim

authorship of a work and the right to oppose changes to it that could harm the creators reputation. 

IPRs have come to occupy an increasingly important position in international trade and 

development. In the last decade, the importance of IPRs has led to the inclusion of IP provisions 

in international agreements. IP in itself has always been an integral part of general economic, 

social and cultural development worldwide, but these new challenges emphasize all the more 

how globally interlinked national and regional IP systems have become. 

IP theft is now one of the foremost international concerns that affect global economies 

and governments. Although not as high-profile as terrorism, smuggling, human and drug 

trafficking, infringement and counterfeiting have been feared to weaken legitimate business 

systems that would result in international economic disasters.10

Intellectual Property Crimes

IPC are serious crimes in their own right, not typically because they inflict physical 

injury or death upon a person, but rather because they steal a creative work from its owner.11 

IPC refers to counterfeited and pirated goods, manufactured and sold for profit without the 

consent of the patent or trademark holder.12 The terms “piracy” and “counterfeiting” are often 

used interchangeably. However, piracy is generally related to the theft of IPRs by some form of 

copying the original.13 Whereas, counterfeiting is the copying of a product’s trademark or the 

distinctive way the package looks.14 IPC involve a wide range of criminal actors ranging from

individuals to organized criminal groups and terrorist organizations. 

There is now a strong belief that there is an even greater threat posed by the organizations 

involved in counterfeiting and piracy. IPC includes the manufacturing, transporting, storing and sale 

of counterfeit or pirated goods. Organized crime involvement in the manufacture, distribution and 

 8 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
sale of counterfeit and pirated merchandise is no longer denied. The link between terrorist groups 

and IPC is not the focus of this study, however, the following Congressional Testimony helps 

illustrate the importance of this topic in the context of other concerns with respect to IPC. Ron 

Noble, Interpol Secretary, gave the following testimony in July 2003: 

Intellectual Property Crime is becoming the preferred method of funding for a 

number of terrorist groups. There are enough examples now of the funding of 

terrorist groups in this way for us to worry about the threat to public safety. We

must take preventative measures now. In general, law enforcement does not treat 

IPC [Intellectual Property Crimes] as a high priority crime. Law enforcement 

does not always investigate IPC cases. Investigations when initiated often tend to 

be seizure-based and do not extend to following onward flows of money. Even if 

law enforcement were to follow onward flows of money, given the high level of 

cash-based transactions involved, it is difficult to establish with precision the end 

destination of the financial flows. . . . Terrorist financing is difficult to investigate 

due to the complex flows of money often in cash form and often laundered. This 

is facilitated by complicated associations of individuals through which the money 

transits before becoming available to the relevant terrorist group. All of the above 

complicates establishing links between IPC and terrorist financing. Furthermore, 

much of the financing is of an indirect nature and it is difficult to attribute direct

links between an individual involved in IPC and funds remitted to a terrorist 

organization.15

Future Economic Crime Risks

Few sources exist that report comprehensive and seemingly reliable data on the extent of 

the problem. The two principle studies chosen for use in this report are studies by 

PricewaterhouseCoopers and the Brookings Institute due to their quality reputations and the 

apparent thoroughness of the reports. An independent audit and scrutiny of the data they report 

is, of course, beyond the scope of this study. 

According to the PricewaterhouseCoopers’ 2003 Economic Crime Survey, economic 

crime is, and will remain, a costly issue. It is, however, an issue that can be countered by 

effective controls, a strong culture of prevention and deterrence and assertive action when cases 

arise. As demonstrated by the below figure, product piracy is one of the future concerns. 

 9 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Frauds Considered Most Prevalent 

Compared With Future Concerns (worldwide)16

Over the course of the past two decades, IP owners have witnessed an explosion in the 

levels of counterfeiting and piracy, in both the domestic and international arenas. IP theft is 

rampant but largely silent so corporations and law enforcement alike have trouble grasping its 

enormous impact on profitability - not to mention on national economies.17 

Because counterfeiting and piracy are illegal, many of the normal elements associated

with legitimate business are removed, and as a result, benefits are denied society at different 

levels. Initially, loss of direct sales revenues is experienced by legitimate manufacturers. The 

size of such loss is monumental, often beyond our comprehension. Credible estimates of lost 

sales revenue by legitimate manufacturers are show below. 

Lost Sales Revenues In Selected Sectors18

 10 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Based on a survey by ASIS International sponsored by PricewaterhouseCoopers and the 

United States Chamber of Commerce in 2002, 138 large and medium-size responding companies 

indicated significant losses from IP theft. Analysts estimated that all enterprises represented by 

respondents lost between $53 billion and $59 billion, with 40 percent of respondents reporting an 

average of two losses each, from proprietary information loss in the previous year. Automation 

has made it easy to search for, find, access, download and copy voluminous data that can include 

“the keys to the kingdom” for a business - and its competitors.19

Hidden Value And Estimated Losses Of Intellectual Property Theft

The bricks-and-mortar economy is being replaced with the economy of ideas in which IP 

has become one of the major currencies. In the new economy, wealth is generated through 

creating and capturing the value of knowledge. Throughout the history of human civilization, 

wealth was based on the possession of physical assets. Today, however, the paradigm has 

changed, and knowledge has become the new wealth. IP assets are gaining ground as a measure 

of corporate viability and future performance. 

In 1982, some 62 percent of corporate assets in the United States of America were 

physical assets, but by 2000, that figure had shrunk to a mere 30 percent.20 In 2001, the creative 

industries, which include theatrical films, TV programs, home video, DVDs, business software, 

entertainment software, books, music and sound recordings contributed more to the United States 

economy and employed more workers than any single manufacturing sector, including food and 

kindred products, industrial machinery and equipment, electronics and other equipment, 

fabricated metal products, and chemicals and allied products.21 

 11 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
US Companies’ Intangible Assets As A Percentage of Total Assets22

It is difficult to get an accurate overview of the worldwide magnitude of the IP theft 

problem. Those who commit acts of counterfeiting and piracy generally do not file official 

reports on their sales. Seizures affect only a percentage of the overall market, and the extent of 

counterfeiting and piracy, including that which occurs in businesses, homes and in private 

situations, may never be known with certainty. 

Average financial loss by type of fraud from 2001 to 2003 (worldwide)23

 12 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
According to a report by the Counterfeiting Intelligence Bureau, counterfeiting accounts 

for 5% to 7% of world trade in value terms.

24 The immediate impact of this global trade is the 

loss of sales and the consequent impact upon employment. The United States copyright industry 

puts its losses due to piracy at between $12 billion and $15 billion a year. 

The Motion Picture Association of America (MPAA) and its international counterpart, 

the Motion Picture Association (MPA), estimate that the United States motion picture industry 

loses in excess of $3 billion annually in potential worldwide revenue due to piracy. According to 

the International Federation of the Phonographic Industry (IFPI) sales of illegal CDs account for 

14% of the relevant market at world level. In May 2003, the UK music industry reported that 

sales of pirate CDs have outstripped the sales of genuine products. The major industries which 

are suffering from the trade in infringing products are: computer software industry (46%), data 

processing industry (35%), the audio-visual industry (25%), the toy industry (12%), the perfume 

industry (10%), the pharmaceutical industry (6%), and the clock and watch industry (5%). 

In addition to its economic impact, counterfeiting and piracy has a damaging effect upon 

public health, such as medicinal products, medical equipment, toys, and spare parts for cars and 

airplanes. Counterfeiting is also rife in sectors involving products which are highly sensitive 

from the point of view of public health and safety. 

Counterfeiting and piracy likewise have damaging consequences for consumers. They 

generally involve deliberately deceiving the consumer about the quality he is entitled to expect 

from a product bearing, for example, a well-known trade mark. When he buys counterfeit or 

pirated goods outside the legitimate trade, the consumer does not as a rule receive any after-sales 

service or enjoy any effective recourse in the event of damage or injury. 

 13 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Counterfeiting and piracy also has an adverse effect upon public security, where profits 

from this trade are appropriated by organized crime, which uses them as a means of recycling 

and laundering the proceeds of other unlawful activities (arms, drugs, etc.). 

Magnitude Of The Problem

Counterfeiting and digital piracy have increased dramatically in recent years and are 

areas of particular concern.25 Unfortunately, in the area of counterfeiting what was once a 

localized industry concentrated on the copying of high-end designer goods has now become a 

massive, sophisticated global business involving the manufacturing and sale of counterfeit 

versions of everything from soaps, shampoos, razors and batteries to cigarettes, alcoholic 

beverages and automobile parts, as well as medicines and health care products. 

Counterfeiting of such a broad range of products on a global scale affects more than just 

the companies that produce legitimate products. While it has a direct impact on the sales and 

profits of those companies, counterfeits also hurt the consumers who waste their money and 

sometimes put themselves at risk by purchasing fake goods. It also hurts the countries concerned 

by decreasing tax revenues and deterring investments. In addition, counterfeiters pay no taxes or 

duties and do not comply with basic manufacturing standards for the health and safety of 

workers or product quality and performance. 

Piracy and counterfeiting of copyrighted products in digital, print (e.g., books, journals 

and other printed materials) and other analogue formats, as well as counterfeiting of all types of 

trademarked products, have grown to such a scale because these illegal activities offer enormous 

profits and little risk for the criminal element of society. Criminals can get into the 

counterfeiting business with little capital investment and even if caught and charged with a 

crime, the penalties imposed in many countries are so low that they offer no deterrent.26 

 14 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Most people when confronted with the problem of counterfeit and pirated products 

generally conjure up images of products typically peddled by sidewalk vendors -- music CDs, 

sunglasses, t-shirts, hats, cosmetics, cell phone covers, handbags and watches -- bearing easily 

recognizable and well known names, marks and logos. Modern day counterfeiting operations, 

however, are no longer limited to luxury goods and apparel related products. On a more 

sophisticated and organized level, counterfeiters and pirates are also trading on names and logos 

often associated with products like razor blades, shampoos, pharmaceuticals, foods, hand tools, 

auto parts, airline parts, light bulbs, film, skin lotions, laundry detergent, Band-Aids, insecticides, 

batteries, cigarettes and practically anything else that bears a name that consumers recognize. As 

infringers become more brazen and as technology provides them with the ability to produce 

greater varieties and numbers of fake goods, very few industries, if any, will remain beyond the 

reach of skilled and determined counterfeiters. 

Piracy and counterfeiting of copyrighted products in digital format, as well as 

counterfeiting of all types of trademarked products, has grown to such a scale because it offers 

enormous profits and little risk for the criminal element of society. These products can be 

produced and sold at prices much lower than legitimate products, but still deliver attractive profit 

margins for the infringer because the counterfeit and pirated products are usually made with 

substandard materials, and undergo little or no quality control or even basic health and safety 

testing. 

Different Types Of Piracy

Digital Technology

Another challenge to IP is digital piracy caused by the ease and speed with which perfect 

digital copies of books, photographs, music, and film can be made and distributed on the Internet 

 15 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
to anyone, anywhere in the world. Never before has it been so easy to duplicate labels, 

packaging, documentation, authentication devices and/or symbols/marks/logos with such speed, 

accuracy and relative anonymity. Perhaps the most maddening part of the situation is that while 

technological advances in the “digital domain” have made the creation, storage, and marketing of 

much of IP much better, these same technological advances have made the life of the 

intellectual-property pirate much better too.27 When digital materials are pirated and trademarks 

counterfeited, the total product created can appear to the consumer indistinguishable from the 

original.28 29 

With a keystroke from a computer anywhere in the world, criminals can traffic in stolen 

trademarks or download copyrighted software, music, movies, video games or other works. As 

technology improves, so do pirating techniques; digitally stored information is easily reproduced 

creating a “just as good as the original” version.30 With the advent of digital storage and 

recoding capabilities, audio and video materials can be copied without any degradation in quality 

(unlike, for example, the audio cassette or video tape) and then distributed to thousands of 

consumers eager to pay one dollar for what might cost fifteen dollars at the local CD store. 

The fight against such illegal distribution of copyrighted materials is being fought with 

technological weapons, but digital pirates are adept at finding their way through barriers put in 

place by encryption and copy protection techniques. 

Optical Disc Piracy

Optical Disc Piracy is major threat to the audiovisual sector. Pirate optical discs, which 

include Laser Discs (LD), Video Compact Discs (VCD) and Digital Versatile Discs (DVD), are 

inexpensive to manufacture and easy to distribute. In 2000, over 20 million pirate optical discs 

were seized, and by comparison, 4.5 million videos were seized worldwide in the same period. 

 16 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Unlike traditional analog piracy, a digital pirated disc is as pure and pristine as the 

original. In addition, a production facility can turn out a huge volume of illegal discs in 

relatively short time. To illustrate this, an average illegal videocassette duplication facility with 

100 VCR5 can, in a 10 hour period, produce about 400 pirated cassettes, while pirates with the 

right CD pressing equipment can produce thousands of perfect VCDs or DVDs daily. 

Internet Piracy

Online motion picture piracy is the unauthorized use of copyrighted motion pictures on 

the Internet. It is illegal to sell, trade, lease, distribute, upload for transmission, transmit or 

publicly perform motion pictures online without the consent of the motion pictures’ copyright 

owner. Online piracy is a relatively new phenomenon, and, 

unfortunately, a growing trend. 

Downloadable Media 

Downloadable Media refers to digital files that allow for 

motion pictures to be compressed and uploaded for direct 

download onto a computer. Pirates use Downloadable Media 

formats to illegally offer and distribute motion pictures to other 

Internet users. Typically, the pirate host will use illegal VCD 

copies of motion pictures to create digital copies that are 

recorded into a computer file. Using online communication 

avenues, including chat rooms, Internet Relay Chats (IRC), FTP sites, newsgroups, File 

Swapping Utilities (FSU5) and Web sites, the pirate offers these files to other Internet users who 

then download the motion picture file onto their own computers. 

 

 17 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Hard Goods 

Hard goods piracy refers to the illegal sale, distribution 

and/or trading of copies of motion pictures in any format, 

including videocassettes and all optical media product. Illegal 

hard goods are sold on web sites, online auction sites such as 

eBay and Yahoo!, and via e-mail solicitations. 

 Streaming Media 

Streaming media refers to the transmission or transfer of data that is delivered to the online 

user or viewer in a steady stream in near real time. Similar to hard goods and downloadable media, 

It is illegal to stream copyrighted content without the express authorization of the copyright holder. 

 Circumvention Devices 

A circumvention device is any physical medium or digital file that allows for the 

circumvention of content protection devices put on films, videos, discs, etc. to secure the 

copyrighted content. One such Circumvention Device is the unauthorized, so-called software 

utility DeCSS. Any person that has the DeC55 utility can use it to break the copy protection on 

DVDs making it possible for motion pictures in DVD format to be decrypted and illegally copied 

onto a computer’s hard-drive for further distribution over the Internet or otherwise, in perfect, 

digital format. Other common circumvention devices include “black boxes” and other illegal 

signal theft devices and macrovision defeators. 

Signal Theft 

Signal theft refers to the act of illegally tapping into cable 

TV systems as well as receiving satellite signals without 

authorization. In addition, pirates have made businesses out of 

 18 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
supplying consumers with illegally tampered cable decoders or satellite descramblers. 

Internationally, the problem becomes more acute when programs not licensed to a particular 

country are pirated from satellites and then re-transmitted in that country either by cable or 

broadcast TV. 

Broadcast Piracy 

Like signal theft, broadcast piracy is also defined by piracy 

that occurs on over-the-air broadcasts. However, instead of 

stealing signals, the illegal act may be the on-air broadcasting of a 

bootleg videocassette of a film or the on-air showing of legitimate 

films or television programs without permission from the copyright holder. 

Regional Overview of Piracy

Software Piracy Losses by Region (US$Billions)31

The global piracy rate for PC business software applications was an astounding 36 

percent according to the Global Software Piracy Report. However, it was 49 percent in 1994, a 

decline of 13 percentage points in five years. Notwithstanding the percentages, the industry 

calculates that it lost US$12 billion in 199932, a staggering amount, especially when one 

 19 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
compares that number, for example, to the budget of the United Nations, which was US$2.54 

billion for the 2000-2001 biennium.

33

North America

In 2000, approximately 350,000 illegal videocassettes and 4,000 VCRs were seized. 

The majority of camcording in theaters in the US is conducted out of the New York City area. In 

addition, this is where the majority of large-scale video laboratories are located. 

Asia/Pacific

In 2000, approximately 17 million pirate optical discs (predominantly VCD5) were 

seized in this region alone. Recently, illegal DVDs have been produced and distributed as well.

The connection of organized crime to pirate syndicates in this part of the world makes battling 

optical disc piracy ever more difficult, and dangerous. 

Notable hubs for optical disc piracy in Asia/Pacific include Malaysia and Taiwan. The 

International Intellectual Property Alliance (IIPA) identifies Malaysia as a major producer and 

supplier of pirated video compact discs (VCD5) to the region and throughout the world. Despite 

several concrete measures adopted in the past year to reduce the piracy levels, including the 

passage of new optical disc legislation and numerous raids on street vendors who sell pirated 

goods, Malaysia continues to be a hub for international piracy. In particular, Malaysia has done 

little to address wholly inadequate criminal enforcement against copyright infringers. Copyright 

theft is considered lightly by the courts, and violators are often sentenced to misdemeanors. 

In Taiwan, while the Taiwanese authorities have made positive developments in 

enforcement, particularly raids against optical disc factories, Taiwan needs to accomplish more 

in the area of legislation for optical disc licensing and the control of optical disc manufacturing 

equipment. 

 20 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
In addition to optical disc piracy, signal theft is a continuing burden on legitimate 

businesses and the local economy in countries such as the Philippines and India while 

videocassette piracy remains a threat in markets such as Japan.

In Australia, the parallel importation of film industry products, especially DVDs, is 

steadily increasing. Illegal parallel importation is adversely affecting the legitimate theatrical 

and video markets in the area. 

Europe, Middle East & Africa

Traditional video piracy remains the major problem in this region despite increased 

seizures of pirated optical discs and the rapid spread of pirate activities on the Internet.

Turkey now faces the largest pirate VCD problem in Europe. The problem has moved 

from one of exclusively imported products to a situation where pirate VCDs are also being 

produced in-country. Turkey’s legislation, enforcement mechanisms and court system are 

inadequate to curb pervasive piracy. To compound matters, a general amnesty in April, 2000, 

nullified all 174 criminal cases that had been initiated against pirates following pre-April 1999 

raids. 

On the policy level, the European Parliament is undertaking an important examination 

of new threats to the legitimate audiovisual sector including optical disc piracy and Internet 

piracy. Internet piracy is currently most notable in Germany, while “Smartcard” and “black 

boxes” present acute problems for the legitimate cable industries in the UK and other parts of 

Europe. 

 21 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Estimated Proportion of Counterfeit and Pirated Products34

Counterfeiting/Piracy in the European Single Market35

In addition, despite recent progress, Russia continues to have one of the worst piracy 

situations in the world. In 2000, the Russian Anti-Piracy Organization seized over 655,000 

pirate videocassettes and over 171,000 pirate CD-ROMs containing films in MPEG4 format. 

These seizures point to sophisticated organized criminal groups controlling the duplication and 

distribution of pirate product. Russia has continued to do little to address wholly inadequate 

criminal enforcement against copyright infringers. 

The Middle East has traditionally been plagued by inadequate sentencing for copyright

violations. 

 22 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Typical Affected Products

 Computer Software 

This is the most affected of all products and industries 

touched by counterfeiting and piracy. In their Global Software 

Piracy Report, the Business Software Alliance (BSA) and the 

Software & Information Industry Association (SIIA) report findings 

that are disheartening but also encouraging.36 

 Music 

The music industry is also heavily affected, reflecting the 

underside of the digital revolution. In its Music Piracy Report of 

2000, the International Federation of the Phonographic Industry 

(IFPI) reported that in 1999 the global pirated music market was 

estimated to have totaled 1.9 billion units. CD piracy increased to 500 million units, leaving 

music cassettes to account for 1.4 billion pirated units. The report notes that CD-recordable units 

made a significant impact.37 The cost of this piracy was an estimated US$4.1 billion. It is 

slightly less than in 1998, reflecting lower prices for illegal recordings and lower sales of illegal 

music cassettes. The report does note that world capacity for optical disk manufacturing rose 28 

percent in 1999, and increased more than 340 percent over the prior five years. Internet piracy 

rose dramatically in 1999. While it is almost impossible to ascertain the exact number of illegal 

downloads via the Internet, Forrester Research estimated that there were more than one billion 

illegal downloads of music files in 1999.38 

 

 23 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Films 

The counterfeiting and piracy of films and other audiovisual 

productions occur in two basic forms: illegal diversion of cable and 

satellite delivery and physical copies, generally in the form of 

videocassettes. Focusing only on the sale of physical copies, the 

Motion Picture Association (MPA) estimated that worldwide video piracy costs American 

motion picture companies US$2.5 billion a year in lost revenues.39 The Organization for 

Economic Cooperation and Development (OECD), in its report Economic Impact of 

Counterfeiting, estimated that the video piracy rate for some countries can reach almost 100 

percent.40

Luxury Goods And Fashion Wear 

Counterfeit copies of luxury goods, especially fashion wear, proliferate, most notably in 

Europe where the major manufacturers are located. One common technique in this area is to 

import the fake clothing or items from one country, and to manufacture or import the labels from

another. The fake labels are attached in the country of intended sale, thus making it much more 

difficult to identify fake goods in transit while these goods are in sufficiently large quantities to 

justify governmental enforcement action. One major source of these fakes are legitimate subcontractor manufacturers, facilities which are legitimately authorized to manufacture original 

items, but who manufacture far in excess of the ordered amount, and sell the overruns out the 

back door at greatly reduced prices. Overruns create a sort of gray market, they are items

illegitimately manufactured by a legitimate manufacturer, which are illegitimately sold or placed 

in the stream of commerce. Such overruns are essentially counterfeit goods which negatively 

affect the economy.

41

 24 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
 Sportswear 

The 1990s saw a huge upsurge in all things sports-related. Counterfeit sports wear is 

facilitated by several factors. The biggest segment of the market for these items is the youth 

market, the segment most willing to buy, even search out, counterfeit goods with well-known 

brand names at lower prices. The market for these items is also easily reachable, since, to a large 

extent, it centers around major events, particularly sport and music events. Mobile vendors of 

counterfeit goods are present in numbers at these events, and evidence suggests that these 

vendors are internationally organized and funded. Because they generally carry small 

inventories to these events, governmental authorities are restrained from putting a heavier 

emphasis on, or using more resources against, them. Another factor which helps this area to 

prosper is that buyers mostly just want the brand name; counterfeiters can easily attach fake 

labels onto ordinary clothing, and there-by satisfy large numbers of the youth market.42

 Perfumes 

Perfume products are generally sold in established retail outlets, which lend price 

stability and authenticity to the market. However, the industry is experiencing attacks from

counterfeiters and estimates that its losses in this area are greater than 5 percent of its total 

turnover. A willing public will generally purchase counterfeit perfumes from smaller shops and 

street vendors at so called bargain prices where it is often claimed that the goods are stolen but 

are the real thing. 

 Toys 

The toy industry can be divided into traditional toys and the rapidly growing electronic 

toy industry. Traditional toys are often copied and then sold under different names and 

trademarks, rendering infringement actions close to impossible. Electronic games are an ever 

 25 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
more serious problem. Video games, such as those created for the handheld Nintendo best seller, 

the GameboyTM, are copied and sold in huge numbers.43

 Aircraft Components 

Despite the fact that the legitimate market for aircraft parts is a heavily regulated 

industry, counterfeit aircraft parts slip into the chain of supply and distribution and can result in 

death and injury. The origin of counterfeit aircraft parts, where it can be ascertained, indicates 

that, with respect to accidents in the United States of America caused by such parts, more 

reported incidents involved parts produced in the United States of America than in other areas of 

the world.44

 Automobile Components 

This is an emerging growth area for counterfeiters, who target short-duration products, 

such as standard parts which are or can be sold off the shelf, or which can be fitted to different 

makes and models of automobiles. Such parts are less likely to carry any security device or anticounterfeiting technology. The industry estimates its losses from counterfeit parts to be US$12 

billion per year, with the vast majority of that taking place in Europe.45

 Pharmaceuticals 

Because of the dramatic effects which counterfeit 

pharmaceuticals can have on public health and safety, including the 

death of unsuspecting victims, this is an area which currently 

receives more attention than ever before. The problem of 

counterfeit drugs and medicines is most acute in certain developing countries, where there might 

not exist a regulatory infrastructure to prevent or curb the problem. According to a recent OECD 

report on counterfeiting, the main factors underlying the problem of counterfeit pharmaceuticals 

 26 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
in developing countries are “weak drug regulatory control and enforcement; scarcity and/or 

erratic supply of basic medicines; uncontrolled distribution chains; large price differentials 

between genuine and counterfeit medicines; lack of effective IPR protection; lack of regard for 

quality assurance; and corruption of the health care system.”46 It is estimated by the WHO that 6 

percent of worldwide pharmaceutical sales are counterfeit, and that up to 70 percent of all 

medicine sold in some countries is counterfeit.47

 Watches 

It is estimated that 5 percent of global trade in watches is counterfeit. It is interesting to 

note that in some countries, such trade creates a barrier to the sale of legitimate products. The 

difficulties encountered by some governments in enforcing IPRs, and the public perception in 

some quarters that such counterfeiting is business as usual, all serve to hamper any efforts to beat 

back the illegal trade.48

Why Counterfeiting And Piracy Are On The Rise

It appears there are two channels for counterfeiting and piracy: clandestine channels and 

normal commercial channels. The clandestine channels are by definition organized outside the 

regular market (black market), i.e. in the street, in markets, by correspondence or via the Internet. 

There are also normal commercial channels, where genuine products are sold alongside 

counterfeits. An area in which this bifurcated trade occurs, is the so called “grey goods” market 

in which legitimate branded products are sold as parallel imports. Since parallel products are 

obtained outside legitimate distribution channels, this trade lends itself to the introduction of 

counterfeit products. 

Manufacturing now accounts for more than 75 percent of total world exports.49 

Manufacturing is a value-adding process. While manufacturers are constantly adding value to 

 27 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
existing products, they are, at the same time, creating new products; and this creates market 

demand. By increasing market demand for their products so effectively manufacturers are also, 

unintentionally, creating a market for counterfeit products, which are almost always lower in 

price. Manufacturers are thus victims of their own success. Price differences between various 

markets, which are often strategically segmented by manufacturers and distributors, are reflected 

in pricing policy, underscoring a significant gap in consumer purchasing power in different 

countries. This policy often drives people to produce and distribute counterfeit goods in their 

local market. As counterfeiting activities have become rampant, counterfeiters create 

distribution channels and establish an economic and even political presence in society. Some

economies are supported by these activities which create local job opportunities. 

Emerging markets are producing an increase in demand of startling proportions for wellknown products, which legitimate manufacturers have been unable to completely satisfy. This 

extraordinary demand for goods and products has outstripped the abilities of the enforcement 

agencies to monitor and protect against counterfeit products. 

Certain new technologies have allowed easier reproduction of IPR bearing products and 

goods and facilitated the reproduction of products in nearly every field where there are eager 

customers or market demand for the legitimate products. Cultural products, such as music, films,

computer products, and literary products, are easily reproduced and foisted onto the public, 

facilitated in large part by new technologies. 

International trade has increased substantially in the past few decades, for several 

reasons, including: standardized rules and remedies applicable to the multi-lateral trading 

system; increased telecommunications capacities; the rise of the Internet; and the effectiveness of 

manufacturers in branding their products, creating market demand, and producing products 

 28 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
which are designed to satisfy that market demand. Increased worldwide demand for goods and 

products and a corresponding lack of proportional increase in worldwide enforcement 

mechanisms needed to support that demand and production, such as customs, police, and 

judiciary, allow for cracks and niches in the system. Counterfeiters are right there, ready to fill 

those cracks with counterfeit goods. 

The principal cause of piracy and counterfeiting is the incentive to unscrupulous traders 

of the considerable business profits which may be made from free-riding on the creative efforts 

and investment of others, by passing off imitations of desired products at a lower cost than those 

which are incurred by the producer of genuine products. Obviously, this trade would not exist 

without consumer demand and the public perception that piracy and counterfeiting are innocuous 

infractions. The theft of IP is not yet, equated in the public mind with other offences against 

property, crimes, such as fraud, theft or trespass. This is exacerbated by (i) a failure of the public 

authorities and commercial organizations to communicate to the consuming public of the dangers 

from the use of unauthorized products and of the deleterious social welfare effects from this 

trade; and (ii) the imposition of inadequately deterrent penalties by the judicial authorities. 

Piracy is a continually evolving crime. Traditionally, piracy operations were small, often 

run by individuals or a loose collection of people trying to make a quick buck in what has been 

perceived to be a fairly risk-free criminal enterprise. However, in recent years, this has changed. 

Piracy is now a big business, a world-wide, multi- billion dollar illicit economy which robs 

legitimate industries and creators of income, while driving up costs for consumers.50

IACC’s “Special 301” Report To The United States Trade Representative

The IACC is the largest multinational organization representing exclusively the interests 

of companies concerned with IP enforcement, i.e., product piracy and counterfeiting. Its 

 29 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
members consist of approximately 150 corporations, trade associations, and professional firms 

and represent total revenue of over $650 billion. The IP owners represent a cross-section of 

industries, consisting of many of the world’s best known companies for the various products that 

they develop, manufacture and distribute in the entertainment, automotive, pharmaceutical, 

motion picture, consumer goods, personal care, apparel and other product sectors. 

In the results of its 2004 “Special 301” annual review, the International AntiCounterfeiting Coalition (IACC) found “significant concerns” with dozens of countries, 

including key trading partners. In the IACC’s last two Special 301 submissions to the United 

States Trade Representative (USTR), its member companies identified 30 countries around the 

world that pose the greatest problems in the manufacture, distribution (import/export) and sale of 

counterfeit and pirate products. In addition, the products that are targeted by counterfeiters in 

today’s global market place is, at times, shocking because of the reckless disregard counterfeiters 

have for consumers in their effort to profit off of famous trademarked goods. 

In an effort to prevent pirating in developing nations during the 1990s, the United States 

Trade Representative (USTR) began tying IP protection provisions to trade statutes and 

regulations.51 Additionally, the USTR began identifying and targeting countries which offered 

inadequate protection for IPRs. 

In its 2004 review, USTR categorizes the most egregious offenders as “Priority Foreign 

Countries,” naming Ukraine, China and Paraguay to that category. Other problem countries 

were placed on the “priority watch list” or “watch list.” 

 30 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Priority Foreign Countries

 Ukraine 

The Government of Ukraine must address its corruption issues. Indeed, the issue of IP 

enforcement is plagued by a corruption problem that was recently summed up in the following 

manner: 

Police corruption is so bad that some confiscated pirated goods are actually sold 

by the authorities... . Organized crime gangs use Ukraine as an important base to 

manufacture pirated goods.52

Ukraine has demonstrated an unwillingness to take any measurable steps to combat 

counterfeiting and piracy. The Government needs to enact aggressive IP laws and implement the 

laws through enforcement actions. Moreover, it must address its underlying corruption issues 

that plague its system. 

According to IACC Ukraine should: 

• Confront organized crime and corruption on all levels; 

• Implement an aggressive IP enforcement legal and regulatory framework; and 

• Take enforcement actions to apprehend infringers, seize and destroy goods and 

the equipment used to produce such products.53

 China 

In 2003, China did not appear to make any substantial progress in either controlling 

counterfeiting or implementing reforms to do so. China continues to pose the greatest threat to 

IACC members’ IP assets as compared to other countries in the world. Based on available 

statistics and reports from IACC members, China has no equal either as a source of counterfeit 

and pirated goods to the world or as a market in which fakes are produced and sold locally. 

Despite significant improvements in China’s IP legal regime over the last few years, which was 

 31 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
noted by IACC in its previous filings, the enforcement system continues to be fraught with 

weaknesses and inefficiencies that facilitate massive counterfeiting and piracy. 

As in the past, it is not a question of what is counterfeited in China, but what is not 

counterfeiting in China.54 The fundamental illegal activity of counterfeiting in China becomes 

much more heinous because of the counterfeits that pose significant public health and safety 

concerns. The list below is a snapshot of the types of products counterfeited in China: 

• Batteries 

• Razors 

• Medicines 

• Shampoo 

• Cigarettes 

• Auto parts (e.g., oil filters, headlamps, windshields, brake pads, spark plugs)55

• Industrial valves 

• Vision wear 

• Apparel 

• Air compressors 

• Portable tools 

• Power strips

• Extension cords 

• Footwear56

 Paraguay 

Trademark and copyright owners report the still open border as contributing to a 

continental problem as Paraguay is a destination country for illicit goods, facilitating in-transit 

movement of goods and exporting illicit products. While the tri-border area is most often the 

focal point of cross-border trade, IACC members report Paraguay’s increasing influence on the 

trade in counterfeit and pirated products to other countries such as Bolivia and Peru. 

For any border enforcement system to have any impact on the illicit trade in counterfeits 

and pirated goods, the relevant authorities will need to have the authority to take enforcement 

actions against imports, exports and goods in-transit, similar to the type of powers our trading 

partners are expected to provide under recent bilateral free trade agreements. The lack of 

 32 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
criminal prosecutions in Paraguay and the fully inadequate measures at the border translate into a 

system that generally fails to provide IP protection.57

IACC’s Priority Watch List

 Canada 

Canada’s counterfeiting and piracy is growing. A December 2003 Canadian 

Broadcasting Company program, following an IP attorney working on behalf of toy and luxury 

brand owners, found counterfeit goods openly displayed in shops located in malls -- not unlike 

China.58 Counterfeit and pirated products are now openly available in Canada at malls, 

department stores and national chain stores.59 The open display and sale of counterfeit and 

pirated products is a clear sign that there is little or no fear that the authorities will take actions. 

Counterfeit and pirated goods in the Canadian market includes: 

• Batteries 

• Cell phones 

• Electrical products 

• Artwork 

• Toys 

• Software 

• Luxury, designer leather goods and accessories 

• Wearing apparel 

• Cigarettes 

• Printer cartridges 

• Shampoo60

According to IACC, Canada’s need to: 

• Enact border enforcement legislation that facilitates ex officio customs 

enforcement rather than infringement; 

• Impose higher penalties for IP crimes; 

• Provide information to IP owners so that cases on the merits can be initiated; 

• Improve communication and information (intelligence) sharing across 

government agencies (RCMP and customs); 

• Improve enforcement training and promote understanding of IP crimes as a public 

offense deserving RCMP resources for criminal investigations; and 

 33 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
• Instruct the prosecutors, federal and provincial, to make greater efforts to pursue 

trademark counterfeiting and copyright piracy cases.61

 India 

Copyright and trademark owners experience significant piracy and counterfeiting 

problems in India as well as procedural obstacles in obtaining protection and enforcement of 

their IP. While many industries are being injured by counterfeiting in India, the pharmaceutical 

and auto industries confront high levels of counterfeiting. The issue of counterfeit medicines has 

been internationally highlighted as a result of the recommendation to impose the death penalty 

on counterfeit pharmaceutical manufacturers. Whether or not the death penalty becomes law in 

such cases, it underscores the problem of counterfeit medicines, which must be addressed 

through improved enforcement, i.e., investigations and timely prosecution of those involved in 

these operations. 

Enforcement efforts in India are difficult due to the fact that law enforcement is not well 

informed about IPC and does not consider IP violations as worthy of their time and resources. 

Moreover, the judiciary lacks sufficient knowledge about IP crimes, and, to the extent IP cases 

are heard, the sanctions imposed do not deter IP crimes. 

According to IACC, the Indian Government must do the following: 

• Provide training and education for police, prosecutors and judges regarding the 

investigation, prosecution and hearing of IP crimes; 

• Establish an IP enforcement system that requires interaction among enforcement 

agencies having responsibilities in IP enforcement; 

• Establish a border enforcement system aimed at stopping counterfeit exports as 

well as imports; and 

• Impose sanctions sufficient to deter criminal IP theft.62

 Lebanon 

There is lack of copyright protection in Lebanon. Lebanese sources have attempted to 

highlight the efforts of the Lebanese courts to impose severe penalties for copyright 

 34 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
infringements, citing the imposition of criminal penalties on an engineering firm for the use of 

pirated software. 

Despite the possibility that some progress may have been made to combat some types of 

copyright piracy, other types of copyright piracy as well as trademark counterfeiting and 

infringement continue. For example, auto industry representatives report levels of counterfeit 

parts in the Lebanese market at approximately 20 percent. Other copyright members report 

significant ongoing domestic piracy and production of pirated goods within Lebanon. An 

unregulated CD factory producing pirate product continues to operate outside of Beirut with no 

inspection or enforcement being done by the Lebanese authorities. Pirate entertainment products 

can be found everywhere in retail locations of all levels of Lebanon. 

There is little deterrence against piracy or counterfeiting in the country and inadequate 

laws to address these chronic problems. For example, cases initiated by the auto industry have 

resulted in bad outcomes that have prompted questions about the judiciary and the parties 

involved in auto parts counterfeiting. Examples include two cases that were taken to court. Both 

cases were pursued civilly and criminally. 

In one of the cases, the Ministry of Economy was petitioned to permit release of 

counterfeit goods for sale conditioned upon the removal of the offending trademarks. The 

counterfeit goods would be repacked into packaging not bearing any offending marks. By 

making the goods appear generic, the counterfeit goods were converted to goods that could be 

offered in the market place. In the second case, the Court of Urgent Matters lifted its seizure 

order based on the same type of request, i.e., permitting the return of goods upon removal of the 

offending trademarks.63 

 

 35 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Malaysia 

Optical media piracy remains widespread in Malaysia. In addition, there is slow judicial 

process and weak prosecutions. Despite aggressive enforcement steps taken by the Malaysian 

Government in 2003, IACC members continue to report that Malaysia is a major source of 

pirated and counterfeit goods. Malaysia’s optical disc law went into effect in September 2000. 

One of the primary objectives of the law is to control optical media replication in the country. It 

is also intended to regulate licensing and manufacture of optical discs. The law includes 

provisions for significant fines and prison terms. Unfortunately, the process for prosecuting 

defendants is slow and ineffective and provides little deterrent effect. The criminal enforcement 

system is wholly ineffective in dealing with piracy. 

Trademark counterfeiting is also a major problem in Malaysia and impacts a broad range 

of industries. Some of the injured industries includes: 

• Optical media; 

• Apparel and luxury goods; 

• Tobacco;64

• Mobile phone batteries;65

• Electrical items; 

• Toys; 

• Batteries; and 

• Health products.66

 Mexico 

IACC members report continued high rates of counterfeiting of their trademarked 

products in Mexico. In addition to the familiar products that are counterfeited in large quantities 

such as apparel, footwear, headwear, leather goods, medicines67 and office products, IACC 

members report that electrical products bearing counterfeit marks are also found in the Mexican 

market. In the electrical products sector, the IACC member reports seizures of over $600,000 in 

such counterfeit goods, which is not much when compared to the overall amount of counterfeits 

 36 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
detected and seized in Mexico, but may signal the beginning of counterfeits in a new product 

area that was not a focal point in the past. 

Despite members’ attempts to shut down producers and sellers of counterfeit goods, the 

offenders are free to open up new operations practically next door to the shut down locations. 

Members find Mexican-sourced goods crossing the border into the United States and Canada as 

well as other countries.68

After years of citing the counterfeiting and piracy problem in Mexico, the IACC and its 

members question the extent to which the Government of Mexico has control over the criminal 

elements involved in counterfeiting and piracy.69

 Philippines 

There is an explosion of optical medial piracy exports, an abundance of counterfeit 

products both produced in and exported from the Philippines, ties to organized crime, large 

numbers of counterfeit pharmaceuticals and high piracy levels for books, cable television and 

software. As part of its report, the United States Government urged the Philippines to enact 

appropriate optical media legislation, criminally prosecute (IPRs) violators, expedite pending 

IPRs cases, implement deterrent penalties and become a party to the WIPO digital copyright 

treaties.70

IACC members continue to cite unacceptably high piracy and counterfeiting levels, 

millions of dollars in lost revenue, significant judicial delays, and an overall failure to crackdown 

on IPRs violators. For most IACC members, their IP theft problem in the Philippines either

stayed the same or worsened in 2003. According to one United States government official, the 

Philippines is the seventh leading exporter of pirated goods to the United States.71 

 

 37 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Poland 

Poland’s lack of political will to stop blatant piracy and counterfeiting, especially in 

notorious locations such as the Warsaw Stadium is a major concern. IACC members have 

indicated that they have seen little or no change in the situation in Poland regarding piracy and 

counterfeiting. 

The Polish border is open to imports and exports of counterfeit goods that range from

counterfeit medicines to cosmetics products, both having potential health risks for consumers. 

Asian-sourced counterfeit pharmaceutical products have been found imported into Poland by 

member companies as well as counterfeit spirits while counterfeit cosmetics products are 

exported to countries in the region.72

 Russia 

Russia has been placed on the Priority Watch List, due to its ineffective enforcement of 

its copyright and trademark laws, the presence of numerous pirate optical media manufacturing 

facilities, and the need to combat organized criminal syndicates involved in IP theft. 

IP owners continue to believe that piracy and counterfeiting in Russia pose as great a 

threat to their business as the illegal practices in China. Additionally, the involvement of 

organized criminal elements in the illicit IP trade within Russia is such a threat that many brand 

owners are concerned for the personal safety of their enforcement representatives and, at times, 

refrain from taking more proactive measures to protect their legitimate rights. The problem has 

reach epidemic proportions . Indeed, in November 2003, the President of the Russian Chamber 

of Commerce reported at an international conference that the “shadow market of commodities in 

Russia amounts to 30 - 40 percent of the country’s GDP.73 74

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
IACC’s Watch List

 Japan 

A significant amount of counterfeit and piratical goods are offered for sale in Japan 

through internet auction sites such as “Yahoo! Auction” operated by Yahoo Co., Ltd. (“Yahoo 

Japan”). Yahoo offers the second largest internet auction site in the world after “eBay” and 

trademark/copyright owners have been concerned for some time about the volume of 

counterfeit/piratical goods transacted through Yahoo! Auction sites. 

Japan must take the following actions: 

• Assess whether current procedures relating to obtaining the identities of IP

violators who offer counterfeit and pirate merchandise via internet auction sites 

are adequate and equitable; 

• Take measures to better ensure the timely circulation of enforcement information 

relating to IPRs among all customs branch offices in a timely and uniform 

manner; 

• Comply with TRIPS Article 55 by providing the appropriate number of working 

days so that IP owners are not denied time to arrange inspection of samples 

• Clarify any irregularities or confusion regarding the need for inspectors to 

produce powers of attorney documentation; and 

• Exercise flexibility at customs regarding in-person examination when customs 

knows goods are counterfeit. 

 Panama 

Significant quantities of counterfeit and pirate products continue to pass through the 

Colon Free Zone, a key transshipment point for counterfeit and pirate products to points 

throughout the world. While both Customs and the Colon Free Zone authorities support brand 

owners’ efforts against IP theft, the lack of personnel, coordination and resources prevent them

from being more effective.75

 Romania 

Romania was placed on the Watch List, due to piracy problems, poor border 

enforcement, lack of resources dedicated to IP theft and low priority given to IP theft by regional 

 39 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
and local authorities, prosecutors and courts. Unfortunately, these issues continue to make IP 

enforcement a significant challenge in Romania.76

 Turkey 

Turkey was placed on the Watch List in 2003, due to several issues including the 

counterfeit trademark issue and Turkey’s weak domestic and border enforcement. In addition, 

copyright piracy issues persist in Turkey. The situation in Turkey is basically unchanged from

2003. Large amounts of counterfeit apparel still fill the Turkish market. IACC members report 

that counterfeit jackets, shirts, belts, and labels are to be affixed to goods have been detected in 

Turkey. In addition, members report that Turkish made products are found in Europe and are 

being exported to the United States. There are estimates that in the counterfeit apparel sector, 25 

percent of the domestic market is counterfeit. In addition, as reported last year, large volumes of 

counterfeits are being exported. Turkey is a major supplier of counterfeit designer brands to 

Russia and other parts of Eastern Europe. The Turkish counterfeiting industry is also producing 

counterfeit medicines, including Viagra, film, cosmetics, detergents and soaps. 

A major problem in deterring counterfeiting and piracy in Turkey is the lack of deterrent 

penalties imposed against IP violators. Interestingly, one explanation for the lack of deterrent 

penalties being imposed was provided by the director of a Turkish book publisher’s organization 

claiming that the courts believe the sentences are too harsh because an individual caught with a 

counterfeit CD could go to jail for several years. While it might be implied that if lighter prison 

terms could be imposed the courts would be more willing, the degree of counterfeiting and 

piracy in Turkey warrants severe penalties for those involved in the manufacture and distribution 

of the illicit goods found in Turkey. 

 40 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Despite the IP owners’ ability to interest the police in conducting raids, the lack of 

criminal convictions in Turkey simply promotes counterfeiting and piracy because the activity is 

viewed as criminal activity tolerated by the courts. This has a negative effect on law 

enforcement as they see the lack of convictions as a disincentive to take action.77

Technological Advances And Its Impact On Intellectual Property Law and Policy

Due to today’s sophisticated global economy --with its easy and widespread access to 

technological advances such as computers, copiers and scanners -- there are virtually no product 

lines, corporations, or consumers that can escape the reach of counterfeiters and/or pirates. 

IP is on its way to becoming the ultimate assets.78 What has caused this transformation is 

the advent of the so-called knowledge economy supported by the Internet, which completely 

changed the coverage, amount, and speed of access to information (from which knowledge can 

be made). 

Technological advances have made IP-type counterfeiting easier, as well, because most 

pirated audio, video, and software is accompanied by paper-based printed material (including 

any trademark), which is easily reproducible (both qualitatively and quantitatively) by modern 

printing techniques.79 Ease of replication clearly present the most significant threat to the 

effectiveness and enforceability of copyright law. The advent of the compact disc clearly 

accelerated this phenomenon as it provided the pirate, or more accurately the criminal, with the 

ability to produce near perfect illegal recordings in the millions. And the recent development of

cheap recordable optical discs has created another means of illegal mass duplication. 

The Internet

The Internet has opened up vast new opportunities for both legitimate business and 

cybersmuggling crime. The card table pirate, who used to sell to dozens of customers at flea 

 41 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
markets, now reaches millions through Internet auction sites and e-mail Spams. Counterfeiters, 

including organized criminal groups and terrorist organizations, have discovered that if you do 

not have to pay anyone for the research and development of those programs, selling them is a 

high margin and low risk position.80 

Throughout the world, countries have begun to recognize the importance of the Internet 

as a vehicle for economic expansion. However, despite the promise that the Internet holds for 

innovative and creative industries, it also creates significant challenges, as it serves as an 

extremely efficient global distribution network for pirate products.81

 Enforcement Measures 

In order to realize the enormous potential of the Internet, a growing number of countries 

are implementing the World Intellectual Property Organization (WIPO) Internet Treaties and 

creating a legal environment conducive to investment and growth in Internet-related businesses 

and technologies.82 An important first step in the fight against Internet piracy was achieved at 

the WIPO when it concluded two copyright treaties in 1996: the WIPO Copyright Treaty (WCT) 

and the WIPO Performances and Phonograms Treaty (WPPT), referred to as the WIPO Internet 

Treaties. These treaties help raise the minimum standards of IP protection around the world, 

particularly with respect to Internet-based delivery of copyrighted works. They clarify exclusive 

rights in the on-line environment and specifically prohibit the devices and services intended to 

circumvent technological protection measures for copyrighted works. Both treaties entered into 

force in 2002. 

These treaties represent the consensus view of the world community that the vital 

framework of protection under existing agreements, including the Agreement on Trade Related 

Aspects of Intellectual Property Rights (TRIPS), should be supplemented to eliminate any 

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
remaining gaps in copyright protection on the Internet that could impede the development of 

electronic commerce. 

 E-Commerce 

E-commerce has already begun to have an extraordinary impact on the architecture of our 

markets and regulatory structures, and to raise issues that implicate different sectors of legal 

interest. As IP systems have been independently developed in different countries on the 

fundamental principle that each state has sovereignty over IP protection and enforcement within 

its territory, the international dimensions of e-commerce and the IP-related questions emerging 

from it complicate the development of solutions and caution against national interventions that

would ignore potential cross-border impacts. They also have horizontal implications for other 

areas of law and policy as summarized in the following table. 

E-Commerce and Its Impact on IP Law and Policy and Other Related Areas

83

 

 43 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Cybersquatters 

Another Internet-generated battle in the IP area is being fought over the eviction of 

cybersquatters who have taken over trademarks to which they have staked a claim in bad faith. 

Cybersquatters register domain names (essentially website addresses), which they have no 

intention of using and that are identical or similar to trademarks or famous names, and then try to 

sell them back to the holders of the mark or famous name at a profit. Cybersquatters, and some

of the cases brought against them under the WIPO domain-name dispute resolution procedure, 

have received wide-spread coverage in the press, highlighting the importance of trademarks and 

their new manifestation as website identifiers, in the world of commerce. The domain name

issue is yet another example of how the Internet has given a new dimension to a traditional form

of IP and has forced the IP community to find speedy and efficient solutions in order to resolve a 

problem of considerable economic importance.84

Intellectual Property Laws

Generally speaking, IP law aims at safeguarding creators and other producers of 

intellectual goods and services by granting them certain time-limited rights to control the use 

made of those productions. Those rights do not apply to the physical object in which the creation 

may be embodied but instead to the intellectual creation as such. As mentioned earlier, IP is 

traditionally divided into two branches, “industrial property” and “copyright.” IPRs are 

protected by both domestic and international legislation. 

Countries have laws to protect IP for two main reasons. One is to give statutory 

expression to the moral and economic rights of creators in their creations and the rights of the 

public in access to those creations. The second is to promote, as a deliberate act of Government 

 44 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
policy, creativity and the dissemination and application of its results and to encourage fair 

trading which would contribute to economic and social development. 

Conflicts Of Laws

Because of the expansion of global activities which are involved with IPRs, an area 

which requires increased attention, from the perspective of international harmonization, is the 

body of disparate laws and legislation known as private international law. This body of law 

comes into play when civil litigation involves parties or fora in more than one country. With 

globalization of business and expanding technological development and telecommunications 

capacities, noticeably more international litigation is being pursued. 

Litigants and their lawyers find that the laws of all Countries are not the same; moreover, 

the laws differ so much in some cases as to affect the outcome of litigation matters, depending in 

which country’s courts the plaintiff decides to initiate the litigation. Because of this disparity in 

applicable laws, efforts are underway to further and more satisfactorily develop principles of 

applicable law, so that the application of law in enforcement contexts will be fair and 

predictable. Issues such as jurisdiction, damages, and choice of applicable laws are at the heart 

of such initiatives. 

Various trade agreements ensure the free flow and protection of IP among nations. The 

MPA encourages foreign governments to abide by, and fully implement, important agreements 

such as the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement and the 

World Intellectual Property Organization (WIPO) treaties. 

The European Initiatives

The European Community (EC) has taken action in the IP field mainly to harmonize 

existing national laws.85 On October 15, 1998, the Commission presented a Green Paper86 on the 

 45 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
fight against counterfeiting and piracy in the Single Market in order to launch a debate on this 

subject with all interested parties. The areas of intervention suggested in the Green Paper related 

in particular to action by the private sector, the effectiveness of technical security provisions, 

penalties and other means of ensuring compliance with IPRs, as well as administrative 

cooperation between the national authorities. Following the receipt of submissions, a public 

hearing in Munich on March 2 and 3, 1999 and a meeting of experts from the Member States on 

3 November 1999, the European Parliament adopted a Regulation on this subject on May 4, 

2000.87 On November 30, 2000, the Commission presented a follow-up Communication to the 

Green Paper in which it indicated that it would be presenting a proposal for a Directive aimed at 

harmonizing the legislative, regulatory and administrative provisions of the Member States on 

the means of enforcing IPRs, and at ensuring that the rights available enjoy an equivalent level of 

protection in the Internal Market.88 The proposal for a Directive on the enforcement of IPRs, 

was generally welcomed by interested circles and was approved by the European Economic and 

Social Committee.89 A proposal for a Directive on measures and procedures to ensure the 

enforcement of IPRs was issued on January 30, 2003.90

As the EC Green Paper entitled, Combating Counterfeiting and Piracy in the Single 

Market (1995), observed “Since the early 1950s counterfeiting and piracy have grown 

considerably to a point where they have now become a widespread phenomenon with a global 

impact.” According to the EC Green Paper, the reasons for this phenomenon are various. They 

include developments in reprographic technologies, where digitization has facilitated the rapid 

and extensive production of copies at a minimal cost, the growth in world demand for branded 

items, as well as economic and political developments, such as the growth of international trade, 

the internationalization of the economy, the expansion of means of communication and the 

 46 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
opportunism of organized crime following the collapse of the political systems in central and 

eastern Europe and in the former Soviet Union. 

Criminalization Of Intellectual Property Violations In The United States

While owners of IP can protect their rights by pursuing civil remedies, the threat of civil 

sanctions is insufficient to deter theft of trade secrets or infringement of trademarks, copyrights, 

or patents.91 Indeed, some IP thieves view civil damages as simply another cost of doing 

business.92 

The marked increase in IPC, combined with the lack of deterrence provided by civil 

remedies, has led the federal government (and most states) in the United States to enact criminal 

statutes to prevent the theft of IPRs.93 The government has also begun a crackdown on 

trademark and copyright infringement.94 The FBI’s Operation “Counter Copy” and the DOJ’s 

“Intellectual Property Rights Initiative”95 are evidence of the government’s commitment to 

prosecute IPC.96

Anti-piracy Laws In The United States

The Copyright Act of 1976 gave the United States some of the strongest anti-piracy 

legislation in the world. The Act was amended in 1982, substantially increasing the penalties for 

the illegal duplication of copyrighted material, making such offenses felonies on the first offense. 

The Sentencing Commission guidelines have reinforced these penalties. The Communications 

Act of 1984, and later amendments provide comparable penalties and remedies for cable TV and 

satellite pirates. Copyright owners may also file civil lawsuits against copyright infringers, and 

the government may file criminal charges. Online piracy is covered by the same laws that 

govern other forms of piracy. In addition, the United States government recently amended 

federal copyright statutes to specifically address Internet copyright issues and enhance the 

 47 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
protection of IP online through the No Electronic Theft Act (NET Act) and the Digital 

Millennium Copyright Act (DMCA). 

In addition, IP relations between the United States and most foreign countries are 

governed by an array of multilateral treaties and conventions as well as bilateral agreements, 

including the Universal Copyright Convention (UCC) and the Berne Convention. 

Examples Of Legislative Actions

Piracy Deterrence And Education Act of 2003 

The “Piracy Deterrence and Education Act of 2003” orders the FBI to develop a 

deterrence program and facilitate information sharing among law enforcement agencies, Internet 

service providers and copyright owners of information. The FBI and the Recording Industry 

Association of America drafted a Memorandum of Understanding regarding the FBI Intellectual 

Property Rights Warning Program, which allows for the Recording Industry’s use of the FBI seal 

in the same way that it has been used as a warning on videotapes, DVDs and movies for years.97

 Database Protection 

Copyright law currently provides little protection for databases.98 The 106th Congress 

(1999-2000) saw an effort to correct this with the introduction of two database protection bills:99 

the Collections of Information Antipiracy Act (“CIAA”) and the Consumer and Investors Access 

to Information Act of 1999.100 

 The Digital Millennium Copyright Act (“DMCA”)

The DMCA Act became law in October 1998.101 The DMCA provides liability 

limitations for transmitting online copyrighted material,102 and it provides criminal penalties and 

for circumvention of copyright protection systems

103 and for compromising the integrity of 

copyright management information.104 

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
The No Electronic Theft Act (“NET Act”)

The NET Act was enacted in December 1997.105 This Act modified criminal copyright 

statutes by removing the financial requirement and making illegal reproduction or distribution of 

copyrighted materials as a federal crime.106 The No Electronic Theft Act was enacted in 1997 to 

reflect the fact that significant copyrighted infringement occurs not for financial gain but to harm

the copyright owner or simply for personal gratification.107 NET removed the requirement of 

financial gain.108

The Economic Espionage Act of 1996 

The Economic Espionage Act (“EEA”) of 1996 is a federal criminal statute dealing 

directly with the theft of commercial trade secrets.

109 

Trade Secrets Act 

Prior to the EEA, the only federal statute that specifically addressed theft of trade secrets 

was the Trade Secrets Act (“TSA”), which criminalizes the unauthorized disclosure of

confidential information to government employees.110 However, because the TSA does apply to 

private sector employees111 and only provides for misdemeanor sanctions,112 federal prosecutors 

have preferred to rely on the National Stolen Property Act, the Mail and Wire Fraud Statutes to 

pursue charges of criminal trade secret misappropriation.113

National Stolen Property Act 

The National Stolen Property Act (“NSPA”)114 provides criminal sanctions115 for any 

person who “transports, transmits, or transfers in interstate or foreign commerce any goods, 

wares, merchandise, securities or money, of the value of $5,000 or more, knowing the same to 

have been stolen, converted or taken by fraud.”116 Federal courts have held that, under certain 

 49 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
circumstances, the NSPA can apply to the theft of tangible property containing trade secrets,117

even though the NSPA was not designed or intended to apply to trade secret theft.118

Mail and Wire Fraud Statutes 

The mail and wire fraud statutes119 provide criminal sanctions for using or attempting to 

use the mails120 and wire services to perpetrate fraud.121 Unlike the NSPA, these statutes may be 

applied to theft of intangible rights, such as trade secrets.122 By imposing criminal penalties on 

those who use the mails or wires to defraud copyright owners, mail and wire fraud statutes can 

be used, where appropriate, to prosecute infringers.123 

Racketeer Influenced and Corrupt Organizations Act 

Criminal sanctions for theft of trade secrets are also available under RICO.124 Although 

many cases brought under RICO are civil actions,125 the predicate acts necessary to sustain a 

RICO claim are violations of criminal law.126 Consequently, the elements of civil and criminal 

RICO action similar. The definition of racketeering activity applicable to the theft of trade 

secrets includes mail fraud,127 wire fraud,128 activity prohibited by the NSPA,129 and the receipt 

of stolen property.130 

 Copyright Act 

Criminal copyright infringement, first introduced into federal law in 1897, has 

traditionally been distinguished from civil violation by the requirement that the conduct be 

willful and undertaken for profit.131 The criminal copyright statute has been frequently amended 

as Congress attempts to strengthen the Act and broaden its scope.132

Copyright Felony Act 

Enacted in October 1992, the Copyright Felony Act133 responded primarily to the 

growing problem of large-scale computer software piracy. For a little more than a century, 

 50 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
criminal copyright infringement provisions have been a part of the federal copyright act and 

distinguished from civil remedies by the requirements of willfulness and profit-making desire.134 

In 1992, Congress enacted the Copyright Felony Act as a response to a software piracy.135 Prior 

to that time, only the infringing copying of audiovisual works, motion pictures, and sound 

recordings was a violation of federal criminal law.

136 The Copyright Felony Act caused the 

protection, by criminal sanction, of all copyrighted works.137 

The Communications Act 

It is a violation of federal law (17 U.S.C. §106(1)) to distribute, rent or sell illegally 

duplicated copies, even if the copies are made by someone else (17 U.S.C. §106(3)). The 

Communications Act of 1934, as amended, (47 U.S.C. §605) and related statutes also prohibit 

the unauthorized reception of films via satellite or cable TV. Copyright infringement and 

violation of the Communications Act are felonies under federal law and carry maximum

sentences of up to five years in jail and/or a $250,000 fine. Both laws also provide for copyright 

owners to seek civil damages. 

Money Laundering Act 

The money laundering statute, 18 U.S.C. § 1956, defines money laundering, and includes 

the receipt of proceeds from trafficking in counterfeit goods or goods infringing on copyright as 

specified unlawful activities.138 

State laws relating to video piracy are not copyright laws per se. However, various states 

have so-called “truth-in-labeling” laws and other statutes that can be effectively used to 

prosecute film and video pirates. 

Forty-five states have “True Name and Address” statutes which can be used to combat 

video piracy. These laws impose criminal penalties for the rental or sale of video cassettes that 

 51 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
do not bear the true name and address of the manufacturer. Video pirates who fail to identify 

themselves as the “manufacturer” of illegally duplicated cassettes violate these statutes. In some

states these laws are currently first offense misdemeanors. 

Border Enforcement

As trade in infringing goods spreads to auto parts, foodstuffs, pharmaceuticals, electrical 

tools, power strips, beverages, shampoo, skin care products, toothpaste, batteries, cigarettes, 

vision care products, household cleaners and many other everyday consumables and increases in 

volume, minimum safety standards cannot be ensured. The trade in “branded” or trademarked 

products affects every industry with potentially dangerous effects. 

The International AntiCounterfeiting Coalition (IACC) commended the efforts of the 

U.S. inter-agency negotiating teams to raise levels of enforcement at the border in recent bilateral 

free trade agreements (FTAs). The IACC believes that the threat from global trade in counterfeit 

and pirated goods requires no less than enforcement at the border to stop imports, exports and 

goods in-transit. According to IACC, a TRIPS minimum approach is no longer acceptable. 

Requiring border authorities to take action ex officio is another major step forward. 

Civil Enforcement

The TRIPS Agreement requests Member States to provide the legal infrastructure and 

mechanisms necessary for IPRs holders to vindicate their rights, to stop infringements at the 

outset, to gather necessary evidence, and to seek appropriate and effective remedies relative to 

the particular situation, including ex parte injunctions, seizures, destruction of infringing goods 

and damages, which could include the cost of suite and attorney’s fees. Civil enforcement can be 

an effective tool against counterfeiters, although criminal enforcement is the preferred course 

against such abusers of the IP system. 

 52 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Criminal Enforcement

There is fairly general agreement that the most effective methods and procedures in the 

fight against infringement of IPRs are those involving criminal enforcement. Criminal law 

imposes different standards for liability that are generally harder for the prosecution to meet than 

in civil cases, however, criminal penalties are more onerous. Large-scale, commercial 

counterfeiting and piracy operations have traditionally looked upon civil fines as merely the cost 

of doing business. However, when the threat, or especially the reality, of prison is introduced 

into the mix, real enforcement starts to take shape. 

Significant Prosecutorial Accomplishments

The below cases are presented as illustration of both the scope of the IP violations, and 

the type of the response necessary to achieve positive enforcement and prosecution results. The 

following is a snapshot of investigative activities by law enforcement: 

Operation Decrypt

On February 11, 2003, in the Central District of California, as part of a year-long 

investigation known as Operation Decrypt, 17 individuals were indicted for their roles in 

developing sophisticated software and hardware used to steal satellite television signals. One of 

the individuals pled guilty and admitted to being responsible for nearly $15 million in losses to 

the victim companies. An additional nine defendants also agreed to plead guilty for their 

involvement. The defendants in these cases used online chat rooms to exchange information and 

techniques on how to defeat the sophisticated security protections utilized by satellite 

entertainment companies. In October 2002, search warrants were executed in seven states as part 

of this operation.139

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Operation Buccaneer

Operation Buccaneer was the culmination of an investigation that has been ongoing under 

the direction of the United States Customs Service and the Department of Justice’s Computer 

Crime and Intellectual Property Section, in conjunction with the United States Attorney for the 

Eastern District of Virginia. 

The Department of Justice and the United States Customs Service worked closely with 

law enforcement in the United Kingdom, Australia, Finland, Sweden and Norway to effect 17 

searches of foreign subjects simultaneously with the execution of the United States searches. 

Buccaneer also marks an unprecedented degree of cooperation and coordination with 

international law enforcement in the fight against IP violations committed via the Internet. 

Additionally, the investigation successfully targeted members of several leading 

“courier” groups that specialize in the illegal distribution and trading of copyrighted works over 

the Internet, including the groups RequestToSend (RTS), WeLoveWarez (WLW), and RiSC. 

Collectively, these Warez groups were responsible for illegally reproducing and distributing over 

the Internet hundreds of millions of dollars worth of copyrighted works. 

Additionally, law enforcement seized a number of the largest and most significant Warez 

“archive” sites from around the world. “Archive” sites are highly-secured computers used to 

store massive quantities of pirated software, games and movies. Access to these sites is used as a 

reward for active Warez group members and as an incentive for them to continue their illegal 

activity. Many archive sites contain 2,000 gigabytes or more of pirated software, equivalent to 

approximately 1.4 million, 3.5 inch diskettes of copyrighted material.140 

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Although an exact figure is unavailable, the retail value of the pirated software, movies, 

games, and music seized during the course of Operation Buccaneer is estimated to be in the 

hundreds of millions of dollars. See Appendix A, for additional information. 

Operation Bandwidth

On December 11, 2001, the longest-running of the undercover operations culminated 

with the execution of over 30 search warrants across the United States and Canada. This 

undercover operation, code-named “Bandwidth,” was a two-year covert investigation established 

as a joint investigative effort to gather evidence to support identification and prosecution of 

entities and individuals involved with illegal access to computer systems and the piracy of 

proprietary software utilizing “Warez” storage sites on the Internet. 

Bandwidth, through the joint efforts of the Defense Criminal Investigative Service 

(DCIS), the Environmental Protection Agency Office of the Inspector General (EPA-OIG), and 

the Federal Bureau of Investigation (FBI), supervised by the United States Attorney’s Office for 

the District of Nevada, created a “Warez” site, controlled and monitored by the undercover 

operation, as a means of attracting predicated targets involved with the distribution of pirated 

software. The undercover “Warez” site has been accessed to transfer over 100,000 files, 

including over 12,000 separate software programs, movies and games. 

Over 200 different individuals participated in the software pirating efforts. Those 

individuals were able to attain first-run movies, the latest computer games, and versions of 

notable software products even before they were publicly introduced. As a result of Operation 

Bandwidth, thousands of copies of pirated software are expected to be removed from circulation, 

as well as the seizure and forfeiture of the computer hardware and servers used to facilitate the 

crimes.

141

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Operation Digital Piratez

Operation Digital Piratez is an undercover operation by the Federal Bureau of 

Investigation’s Boston Field Office, which has been supervised by the United States Attorney’s 

Office for the District of New Hampshire. On December 11, 2001, the FBI executed nine search 

warrants, and obtained consent for an additional three searches, on computers located across the 

country. During this investigation, undercover Special Agents of the Federal Bureau of 

Investigation successfully infiltrated several Warez distribution organizations. This investigation

targeted not only the Warez sites and those who operated them, it also targeted the “cracking 

groups” specifically created for the purpose of pirating software so that it may be distributed 

over the Internet in violation of United States copyright laws.

Each of the ongoing investigations has benefited from the important assistance provided 

by various IP trade associations, including the Interactive Digital Software Association, the 

Business Software Alliance, the Motion Picture Association and individual companies, including 

Microsoft and Sega Corporation.142

United States v. Ke Pei Ma, et. al.

On February 26, 2003, in a joint operation between federal and local law enforcement in 

New York City, six people were charged (two remain fugitives) in conjunction with an 

investigation of the illegal distribution of Symantec and Microsoft software. At the time of the 

arrests, over $9 million worth of counterfeit software was seized from distribution centers in the 

New York area. The defendants were believed to have distributed thousands of copies of 

counterfeit software and received an estimated $15 million over two years in return for the 

pirated products. In a single two-month period, the defendants received nearly $2 million dollars 

as a result of their illegal activity.143

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
United States v. Rocci

Beginning on February 25, 2003, the Computer Crime and Intellectual Property Section, 

working with the CHIP Unit for the Eastern District of Virginia, engaged in a highly-successful 

public education effort as part of a conviction originally obtained in December 2002. David 

Rocci of Virginia, pled guilty to conspiring with others to traffic in illegal circumvention devices 

in violation of the Digital Millennium Copyright Act. Rocci was the owner and operator of the 

most prominent publicly-accessible web site on the Internet dedicated to providing information 

about the Awarez scene and copyright infringement, http://www.iSONEWS.com. Rocci used his 

web site as the exclusive medium to conduct the illegal sale of circumvention devices known as 

Amod chips, which defeat security protections in the Microsoft Xbox and allow unlimited play 

of pirated games on the gaming console. As a condition of his guilty plea, Rocci transferred his 

domain name and website to the United States. Upon taking control of the domain name, the 

United States replaced iSONEWS.com with a new web page providing information about United 

States v. Rocci, as well as a general anti-piracy message outlining the potential criminal 

consequences for engaging in illegal piracy. This case marked the first time that the United 

States has assumed control of an active domain name in an IP case. In the first three days, the 

new law enforcement site received over 238,000 hits from Internet users worldwide. 144

United States v. Mynaf

On February 13, 2003, a California man, Mohsin Mynaf was sentenced in the Eastern 

District of California to 24 months in federal prison for multiple violations relating to copyright, 

including Digital Millennium Copyright Act violations, criminal copyright infringement, and 

trafficking in counterfeit labels. Mynaf operated a videocassette reproduction center which 

produced counterfeit movie videocassettes, which he would then sell at various locations 

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
throughout California. In addition to 24 months in federal prison, Mynaf had to also pay in 

excess of $200,000 in restitution. Three other individuals had also been convicted of aiding and 

abetting Mynaf in his illegal activity and were awaiting sentencing. This case was successfully 

prosecuted by the United States Attorneys Office in Sacramento, California.145

William Haskell Farmer

On January 16, 2003, William Haskell Farmer entered a guilty plea to trafficking in a 

massive counterfeit clothing operation. (The guilty plea was conditional upon an appeal to the 

United States Court of Appeals for the Fourth Circuit). According to the United States

prosecutor, the scheme involved approximately $7 million in knock off t-shirts and sweat shirts. 

Farmer sold the shirts to 191 stores throughout the country. United States Customs agents seized 

over 300,000 fake items from the Farmer’s home and warehouse (the house was a two-story 

home with a swimming pool and two car garage). Farmer agreed to forfeit over $500,000 in 

cash and cashier’s checks, eight vehicles, (including two Mercedes and a 1998 Corvette), and 

two cargo trailers. The cash had been seized in 1998 when Farmer’s home was searched. The 

majority of the money was in $50 and $100 bills. There was $6,000 worth of change in the 

garage.146

Drug Operation In Queens New York

In July 2002, three individuals were arrested when police stumbled upon 5,000 fake 

Rolex watches and Mount Blanc pens and $1 million in cash during a raid of a Flushing 

(Queens), New York home in connection with a drug operation. Prosecutors stated that the 

defendants used the sale of counterfeit items to launder drug money.147

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
John Sankus

In February 2002, John Sankus Jr., 28, of Philadelphia, was sentenced to 46 months in 

prison leading an international piracy ring responsible for copying and distributing software, 

games and movies. Sankus headed an international software piracy group called DrinkorDie, 

which was comprised of about sixty members from numerous countries including the United 

States, Australia, Norway, Finland and the United Kingdom. The group’s biggest claim to fame

was distributing copies of Windows 95 two weeks before the official release of the operating 

system. Federal agents conducted raids at Duke University and MIT in connection with 

DrinkorDie’ s activities. Some of the computers seized in the operation contained more than one 

terabyte of hacked software (which is equal to 700,000 floppy disks).148

Mark Dipadova

On December 14, 2001, Mark Dipadova (who used three aliases) was sentenced to 24 

months in prison and three years of supervised release and ordered to pay over $135,000 in 

restitution for operating websites through which he sold counterfeit goods. Dipadova and his 

partner shipped over 10,000 packages, both domestically and internationally and had been sued 

civilly by trademark holders. At his sentencing hearing, Dipadova admitted to posting a link on 

one of his websites to an audio recording of a radio interview in which he stated that he was 

aware that his actions were illegal but that he refused to stop because he was making too much 

money.149

Software Piracy Ring

A 52 year old woman was one of four people arrested in November 2001 after being 

suspected of operating a piracy ring that imported close to $100 million in fake software and 

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
computer products from Taiwan. The woman was sentenced to nine years in prison and ordered 

to pay $11 million in restitution to two software companies.150

Chinatown In New York City

Police in the Chinatown section of New York City uncovered a stash of fake watches, 

handbags, sunglasses and wallets worth over $125 million, merchandise was hidden in a building 

that contained secret tunnels, trapdoors and vaults. The search resulted in ten arrests.151

Counterfeit Computer Software

In November 2001, United States federal authorities made their largest seizure ever of 

counterfeit computer software. The seizure of nearly 31,000 copies of phony software was 

valued at approximately $100 million. The software originated in Taiwan and was encased in 

counterfeit packaging (including holographs and registration codes) and also came with manuals. 

Federal authorities were alerted to the shipment when a member of a criminal syndicate 

operating between Taiwan and Los Angeles allegedly attempted to bribe an undercover agent 

who was posing as a United States Customs official. Seized in connection with the arrests were 

a forty foot shipping container filled with counterfeit computer software and package material, 

two forty foot containers filled with 85,000 cartons of counterfeit cigarettes (i.e., 17 million 

cigarettes).152 A second search warrant executed in connection with the investigation resulted in 

the seizure of 21 cartons of counterfeit end user license agreements, manuals, bar codes, 

adhesive labels and registration cards.153

Counterfeit Clothing

In November 2001, a Cocoa, Florida businessman was convicted of conspiracy to 

distribute and possession of cocaine and crack cocaine, trafficking in counterfeit merchandise 

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
and carjacking. When he was arrested police seized $150,000 in cash and truckloads of 

counterfeit clothing.154

Italian Counterfeiting Group

The speed and brazenness of Italian counterfeiting groups was demonstrated the summer 

of 2001 when burglars broke into the headquarters of a prominent Italian luxury goods/apparel 

producer. An investigation of the incident revealed that the only items missing as a result of the 

break-in were samples of the designer’s 2002 men’s spring/summer collection. It is now 

assumed that counterfeiters stole the samples to copy them before the genuine products made it 

to market. The sale of fake leather goods in Italy was estimated to be at $1.4 billion.155

Drug Ring In New York

In 1993, law enforcement officials in New York raided a large warehouse and discovered 

numerous fake handbags. The unusual part of this raid was what they found sewn into the lining 

of the handbags. A ring of drug smugglers would smuggle in the drugs this way, sell the drugs 

first and then sell the bags. Essentially, they used contraband to hide other contraband.156

As a result of cases as the ones mentioned above, law enforcement generally has a better 

understanding of piracy now than it had in the past. 

Initiatives Toward Enforcement Of Intellectual Property Rights

At the international level, a number of governments are reinforcing their legal framework 

and institutional arrangements to comply with the existing international treaties. Generally, 

enforcement of IPRs can take four basic forms: 

• Administrative enforcement, such as seizure of infringing goods by a customs 

office;

• Criminal enforcement, in which the state, generally through the police, is the 

moving party in a criminal action against the infringer; 

• Civil enforcement, in which the right holder, or someone in possession of valid 

rights, such as an assignee or licensee, takes prescribed legal action, such as in 

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
court by filing a civil action against an infringer, and perhaps seeking an 

injunction; 

• Technological enforcement, in which producers of products and services employ 

technological means to protect IPRs against infringement (for example, 

encryption of digital copyright works). 

Comparison Of Various Enforcement Measures 

These measures are limited to applicable laws (for example, in many countries, criminal 

enforcement is not applicable in the case of a patent infringement). Administrative measures and 

civil measures are linked in some countries. For some states, it is hard to determine the extent to 

which the state should use public resources to help enforce a private party’s right. However, 

effective enforcement has become an international obligation under the TRIPS Agreement, as it 

is vital in promoting trade and fostering fair competition in market-oriented economies. 

Advantages and disadvantages are shown below. 

The issue of the enforcement of IPRs cuts across many segments and layers of society; it 

affects them all in varying degrees and in different ways. Counterfeiting and piracy constitute 

the bulk of the problem. Because of the various effects on society, there are numerous 

organizations such as the World Customs Organization (WCO)157 and INTERPOL involved in 

protection of IPRs as well as several noteworthy law enforcement initiatives.158 There are other 

international organizations that have shaped the course of IPR protection. For example, in the 

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
wake of World War II, the World Bank and the International Monetary Fund (IMF) collaborated 

to create the General Agreement on Tariffs and Trade (GATT).159 GATT was established to 

provide a framework for a multilateral economic system. In order to promote that objective, it 

sponsored “rounds” as a forum for signatory nations to meet and further the established goals of 

the organization.160 

The United States and other developed countries view the GATT as the appropriate 

forum in which to strengthen IPRs.161 Under GATT, the United States and other developed 

countries were able to set high international standards for the protection of IP with those 

standards being enforced under the World Trade Organization (WTO).162 The United States has 

also included provisions protecting IPRs in multinational documents. For instance, the United 

States insisted that NAFTA contain a provision on IP protection in an effort to combat piracy in 

Mexico.163

World Trade Organization

In 1994 at the “Uruguay Round” the World Trade Organization (WTO) was created and 

replaced GATT’s old administrative structure.164 The WTO is the only global international 

organization dealing with the rules of trade between nations with the goal of helping producers 

conduct their business.165 The WTO structure is made up of three primary pillars: The 

Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS),166 the General 

Agreement on Trade in Services (GATS), and GATT - 1994.167 The TRIPS Agreement has been 

haled as “a landmark in the evolution of an international consensus on IP protection and is the 

most significant advance in the international protection of IP since the adoption of the Berne and 

Paris Conventions in the late 19th century.”168

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
The Agreement On Trade Related Aspects Of Intellectual Property Rights

The TRIPS Agreement is based on the principles of national treatment and most favored 

nation (MFN) status. National treatment under TRIPS provides that “each Member shall accord 

to the nationals of other Members treatment no less favorable than that it accords to its own 

nationals with regard to the protection of IP...”.169 This provision is similar to the protection 

afforded by the Berne and Paris Conventions. MFN, on the other hand, requires that in IPR 

protection, any advantage, favor, privilege or immunity granted by one member nation to the 

nationals of any, other country shall be conferred immediately, and unconditionally, to the 

nationals of all other member nations.170 Thus, MFN supports national treatment by assuring 

that all MFN nations are treated equally. 

These international, multilateral agreements signal a fundamental shift in the global 

protection of IPRs. The level of international cooperation and commitment to these 

organizations is unprecedented in the history of IPRs. 

Although the United States and other WICs strongly favor worldwide enforcement of 

IPRs, much of the Third World opposes such enforcement.171 The United States position of 

strengthening international IP enforcement is based on at least two motives: (1) the economic 

benefits to the United States which enhanced enforcement of IP could yield;172 and (2) a belief 

that improved protection of IP is essential for the economic development of all countries.173 

Some Third World countries, however, view WICs’ attempts to enforce IP as a continuation of 

colonialist policies in which WICs control the economic structure of the lesser-developed nations

by allocating technology and extracting exorbitant royalties in return.174 In addition, many 

developing countries believe that WICs have an obligation to aid the development of poorer 

countries rather than retarding their growth through restrictive IP policies.175

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
The United States Position

There is a dual nature to the United States’ handling of international IP. On one hand, the 

United States views IP as a legal issue. The United States is a member of all international treaty 

organizations and conventions that have been seeking, for over a century,176 to create a uniform

international IP law. On the other hand, the United States also treats IP as a trade issue.177 The 

United States has generally resolved trade issues in a multilateral context that seeks to attain 

consensus between trading partners.178

International and multinational agreements have included provisions that specifically 

provide for heightened protection of IP because new innovations are necessary to stimulate 

competitiveness in the international economy.179 

Global Anti-Counterfeiting Group

While the United States economy suffers most from the piracy and counterfeiting of its 

IP,180 other industrialized nations are suffering, as well. In early 1998, for example, several 

countries announced the formation of an anti-piracy group during a meeting organized by the 

International Chamber of Commerce (ICE).181 The new entity, called the Global AntiCounterfeiting Group, was formed “in response to the rising participation of organized crime in 

the sale and production of counterfeit goods.”182 

The International Anti-Counterfeiting Coalition

The International AntiCounterfeiting Coalition, Inc.,183 a Washington, D.C.-based nonprofit organization devoted solely to combating product counterfeiting and piracy was formed in 

1978. The International Anti Counterfeiting Coalition representing a cross section of businesses 

and industries is the largest international organization devoted solely to combating product 

counterfeiting and piracy.184 The cornerstone of the IACC’s mission is to combat counterfeiting 

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
and piracy by promoting laws, regulations and directives designed to tender the theft of IP 

undesirable and unprofitable.185 

Intellectual Property Crimes Are Perceived As Victimless Crimes

Intellectual property crime (IPC) is well established and few people will argue that it is 

not at least a $400 to $450 billion a year crime problem. One would think that this fact in itself 

would make prosecution of this crime a high priority for law enforcement around the world. 

Considering that in the United States alone IPC represents a $200 - $250 billion dollar loss, any 

problem of this magnitude should draw the attention of law enforcement at both national and 

international levels. The question still remains unanswered as to why this has not this been a 

high priority crime area for law enforcement.186 Both individuals and businesses have an interest 

in protecting the investments made in various forms of IP. There is a great deal to be lost when 

IPR are not protected. 

IP piracy is unfortunately considered as a low-risk, high-profit criminal enterprise which 

is widely tolerated and almost universally ignored.187 It is common for the public to think of IP 

piracy as a victimless crime, a minor economic offense that only affects wealthy corporations 

and does no real harm to society or to individuals. Such activities are frequently a low priority 

for domestic and international law enforcement agencies as well. Counterfeiters are counting on 

law enforcement, prosecutors and the courts to take a soft approach toward those who engage in 

what appears to be victimless counterfeiting. Until investigations of these crimes prove 

otherwise, the extent of the threat arising from these activities is unknown. Those involved in 

trafficking counterfeit goods are everywhere and despite the perception that product 

counterfeiting is harmless and victimless, consumers, companies and governments are all 

victims.188 The cross-industry impact of the crime dilutes its importance on any one industry. It 

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
is a crime that crosses national borders, so it is difficult to investigate from end to end. The 

distribution network is very dispersed, often ending up with poor immigrants standing on street 

corners with items that seem too good to resist. The penalty, if arrested and convicted, for 

engaging in this kind of activity is also low, therefore the deterrence impact is not great.189

Law enforcement and prosecutors get little credit for arrests and/or for seizures. It’s 

often viewed as a civil enforcement problem and often time the question becomes why not let the 

wealthy companies or the wealthy industries police this problem themselves? Consumers 

believe that the companies involved make so much money already, why -- and how are they 

going to be hurt if the consumers buy a disc, a CD or a designer product? From the consumers’ 

perspective, the profits of designer goods companies and drug companies are already high, 

profits of certain sports retailers -- producers also seem to be high. Therefore, the connection 

between the consumers’ act, the consumers’ purchase, and the crime seems to be far. 

Furthermore, the victim is not anyone that the consumer knows or can identify with in terms of a 

human face.190

Law Enforcement Challenges

Law enforcement agencies have to recognize that Intellectual Property Crime is not a 

victimless crime. In general, law enforcement does not treat IPC as a high priority crime. Law 

enforcement does not always investigate IPC cases. Investigations when initiated often tend to 

be seizure-based and do not extend to following onward flows of money. Even if law 

enforcement were to follow onward flows of money, given the high level of cash-based 

transactions involved, it is difficult to establish with any precision the end destination of the 

financial flows. 

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
What Needs To Be Done

One question is whether the incentives for introducing a Western-style IP system should 

be given to all countries or only to countries that play a dominate role in IPR’s violations. In 

other words, should the countries be ignored until they reach the stage-two to stage-three 

transition or should the incentives to implement an IP system be introduced even in stage-one 

countries? 

A uniform policy of encouraging all countries to adopt IP protection is probably 

preferable.191 It should be easier to encourage a developing country to adopt an IP system before 

it reaches the “pirating” stage of economic development. Once a country has developed a 

significant number of businesses that profit from pirating, these businesses will become a 

political force that will oppose the adoption of IP regulations. In addition, the United States 

might find it extremely difficult to determine when a country had reached the proper 

developmental stage for the imposition of an IP system. It would be simpler to encourage an IP 

system in all countries regardless of developmental stage. The incentives should continue until 

the country has reached a level of development where benefits of IP protection clearly outweigh 

its costs.192 

Even though IP protection is important for developing nations, most have failed to 

provide IP adequate protection, and this failure has facilitated the rampant piracy of goods.193 

The challenges of IPRs protection have become correspondingly global, with concerted action at 

the national, regional and international levels. The reasons underlying such disrespect for IPRs 

are many and varied, and range from greed, perceived necessity, lack of awareness, and ruthless 

criminal intent, all the way to innocent mistake. The scale of such disrespect also varies 

considerably, from copying a protected work in one’s home to large-scale commercial criminal 

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
enterprises which produce hundreds of thousands of illegal copies. When illegal products take 

market share (or even kill a potential market), and when recouping an investment is prevented by 

intervening criminal activity, enforcement mechanisms are called into play to protect vital 

interests, not only of the players and entities mentioned, but also those of the public. 

Recent Efforts Toward Protection Of Intellectual Property Rights

Senior officials from government, law enforcement and business sector, met at the First 

Global Congress on Combating Counterfeiting in May 2004 in Brussels, Belgium. The Congress 

called for concrete action in curbing the growing problem of counterfeiting, which they 

estimated to be worth EUR 500 billion annually, equivalent to more than seven percent of global 

trade. More than 300 delegates attended the conference co-sponsored by the World Customs 

Organization and Interpol, with the support of the World Intellectual Property Organization. The 

purpose of the Congress was to develop a collective understanding of the extent of the 

counterfeit and piracy problem, identify effective measures of governments and the private 

sector in anti-counterfeiting and anti-piracy work, generated ideas for further cooperation and 

begin to identify solutions that will make a real difference in the coming decade.194

The Congress recommended action in four main areas: 

• Substantially increased cooperation and communication among all stakeholders. 

• Better enforcement and stiffer penalties to deter counterfeiting. 

• Extended training and resources for law enforcement. 

• Increased public awareness of the full impact and costs of counterfeiting.195

According to this Congress, any future discussions should be focused on the following 

topics: 

• Developing a consensus on the full dimensions and related costs of counterfeiting 

to consumers, governments and industry. 

• Developing common understandings of the prevailing attitudes of governments, 

the private sector and consumers towards counterfeiting. 

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This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
• Generating common understanding of what is being done and what more needs to 

be done in the fight against counterfeiting. 

• Examining and understanding current international instruments for cooperation 

among governments in enforcement work, and identifying enhancements required 

for strengthening enforcement efforts. 

Possible Solutions for Intellectual Property Crimes

In order to combat counterfeiting and piracy effectively, the following measures can be 

implemented: (a) monitoring by the private sector; (b) the use of technical devices; (c) sanctions 

and other means of enforcing IPRs; and (d) administrative cooperation among the competent 

authorities.196

Monitoring By The Private Sector

Most monitoring can be carried out privately by national or international professional 

associations or organizations, such as manufacturers’ associations, trade mark proprietors’ 

associations and collecting societies. It generally consists of observing market trends, advising 

and supporting the industries concerned, collaborating with the authorities (customs, police, the 

courts, etc.), monitoring suspicious activities and detecting acts of counterfeiting and piracy, 

keeping the public informed and, where necessary, convincing the government of the need to 

amend or revise the existing laws.197

The Use Of Technical Devices

One of the means of combating counterfeiting and piracy at the disposal of the holders of 

IPRs is the use of technical devices to protect and authenticate their products or services. 

Technical devices may take many forms: security holograms, optical devices, chip cards, 

magnetic systems, biometric codes, special inks, microscopic labels, etc. These technical devices 

facilitate the prosecution and punishment of counterfeiting and piracy. Through them, unlawful 

uses of works, products or services can easily be traced back to the source, so that infringers can 

 70 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
be identified and prosecuted more effectively. However, although technical devices act as a 

filter for the most obvious counterfeit or pirated goods, they do not as a rule defeat the most 

highly organized infringers, who succeed in turn in reproducing the devices. Such devices must 

therefore enjoy suitable legal protection to prevent them from being infringed, manipulated or 

neutralized.198 

Sanctions And Other Means Of Enforcing Intellectual Property Rights

As previously mentioned, the TRIPS Agreement obliges all Member countries to 

implement the enforcement mechanisms contained in that Agreement. This includes both 

criminal and civil remedies. All Member States provide by law that counterfeiters and pirates 

are in principle liable to criminal penalties, but the level and severity of the penalties vary 

considerably from one Member State to another. For violation of certain types of right, no 

criminal penalty is provided. Some Member States have, however, been tightening up the 

criminal law in respect of counterfeiting and piracy in recent years. Failure to comply with an 

injunction is punishable by specific penalties, usually a fine payable either to the State or to the 

person seeking the injunction. The infringer may be required to pay damages to the rightholder 

to make good the loss or damage caused by the infringement of the intellectual property right. 

Other measures for combating counterfeiting and piracy, include the sanction of 

publicity, through the publication of judgments, orders to reveal information about the origin of 

the goods, the distribution channels and the identity of any third parties involved in the 

production and distribution of the goods. 

Best Practices for Enforcement of Intellectual Property Rights

According to a 2002 survey by WIPO, the principal barriers to eliminating counterfeiting 

and piracy did not subsist in the substantive law, but rather in the remedies and penalties 

 71 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
available (or not available) to stop and deter counterfeiting and piracy.199 The ineffectiveness of

enforcement systems was attributed, in many cases, to a lack of human resources, funding and 

practical experience in IP enforcement of relevant officials, including the judiciary; insufficient 

knowledge on the side of right holders and the general public, concerning their rights and 

remedies; and systemic problems resulting from insufficient national and international 

coordination, including a lack of transparency. 

Enforcement Provisions Under TRIPS

The following were identified as among the best practices for the implementation of the 

enforcement provisions of the TRIPS Agreement: 

National Cooperation And Coordination 

The fight against counterfeiting and piracy would have much greater chances for success 

if it is a coordinated one, involving all the relevant stakeholders, and dealing with all types of 

IPRs. A number of Member States have established coordinating or taskforce units involving, 

inter alia, the various relevant ministries and agencies, such as the industrial property offices, 

customs, police and justice. Also involved are members of such bodies as associations of right 

holders, copyright societies, medicines control agencies and trading standard authorities, as well 

as leading manufacturing, retail and consumer organizations. These units sometimes have 

specialized smaller committees, dealing with more specialized IP issues such as the drafting of 

new legislation and the development of frameworks for cooperation on enforcement action 

against IPC. 

The ultimate goal of this cooperation including the coordination of enforcement activities 

is to enhance the development of greater expertise, particularly among customs officers at all 

points of import and export; the improvement of general liaison procedures with all national 

 72 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
agencies involved in enforcement efforts; the enhancement of contacts with right holders and 

their representative organizations; the establishment of benchmarks with specialist anticounterfeiting units in other Customs administrations; and the participation in the public 

awareness campaigns. Right holders have been encouraged to contribute to the training of 

customs staff in the identification of counterfeit and pirated goods, and in intelligence reporting 

from their own sources to assist officers in identifying consignments of counterfeit or pirated 

goods. 

 International Cooperation 

In some Member States, cooperation with international intergovernmental organizations 

has resulted in the creation of bilateral cooperation and support programs in the field of 

enforcement. It has been suggested that industrialized Member States be requested to create an 

international computer network covering the ownership of merchandise that passes through 

customs. It was observed that the same IPRs registered in a number of countries could be 

affected by the same types of infringements. Information networks could consequently be useful 

for the exchange of information on infringement cases. 

Right Holder Cooperation 

As IPRs are ultimately private rights, right holders have the largest immediate financial 

stake in ensuring the protection of those rights. For this reason rights holders have been 

particularly willing to assist in enforcement efforts by providing information to assist in the 

identification of infringing products and in cooperating in awareness and training programs. 

 Criminal Procedures 

A number of countries have introduced criminal sanctions in relation to piracy and 

counterfeiting. Article 61 of the TRIPS Agreement requires criminal procedures and penalties 

 73 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
for cases of willful trademark counterfeiting or copyright piracy on a commercial scale. A 

number of countries provide for both civil remedies and criminal penalties in relation to piracy 

and counterfeiting, as well as for the seizure, forfeiture and destruction of the infringing goods 

and of any materials and implements the predominant use of which has been in the commission 

of the offence. 

 Deterrence Of Publicity 

In some countries, to provide protection for the public, as well as raising the awareness of 

the value of IPRs, judicial authorities, have the power to order the official publication of court 

decisions, particularly those with a deterrent effect. 

 Specialized Courts 

Some developing countries, such as Thailand and China, have established specialized 

courts to hear IPR-related cases as a means of improving their capacities for national 

enforcement, though such a measure is not formally required under TRIPS. A more attractive 

approach for developing countries is probably to establish (or strengthen) a commercial court, 

which may hear IPR-related cases infer alia and provide improved access to justice for the 

business sector as a whole. In any event, in most developing countries, a considerable program

of training for the judiciary and other enforcement agencies in IP subjects will be required. The 

“private” nature of IP rights suggests the importance of resolution of disputes between parties 

either out of court or under civil law. Indeed, as state enforcement of IPRs is a resourceintensive activity, there is a strong case for developing countries to adopt IPR legislation that 

emphasizes enforcement through a civil rather than a criminal justice system. This would reduce 

the enforcement burden on the government in the case of counterfeiting on a large scale, although the state enforcement agencies would still be required to intervene. 

 74 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Future Policy Consideration For Protection Of Intellectual Property Rights

1. There is a need to allocate resources to the investigation of IPC and to trace its 

financial flows. 

2. Successful models for investigating IPC nationally and internationally should be 

established. Various agencies involved in intellectual property crime investigation must help to 

coordinate international action against intellectual property crime. The models should be based 

on professional law enforcement and intelligence agency investigations into organized crime and 

terrorist group involvement in intellectual property crime and other forms of criminality. 

3. An intellectual property crime action group should be established by including a 

wide range of stakeholders from customs, police and private industry. 

4. Encourage Federal law enforcement agencies to cooperatively pursue 

investigations of counterfeiting to root out and prosecute manufacturers, distributors and other 

involved in the trafficking of counterfeit goods. The exchange of information and intelligence 

gathering must be enhanced between law enforcement agencies worldwide. Strategies and 

programs to combat international criminal activity linked to IP infringement must be developed. 

5. The operational contact network of private and public partners throughout the 

world must be enhanced and strengthened. International cross-border multi-agency 

investigations into intellectual property crime must be coordinated. 

6. Awareness of intellectual property crime must be raised with the general public. 

7. Data and reporting of intellectual property crime must improve. 

8. New IP laws are needed to address IPC. 

9. Increase the level of vigilance at the border regardless of the products involved. 

Counterfeiting and piracy impact national economic security. 

 75 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
10. Ensure that legislation permits ex officio border and criminal enforcement, 

including prosecution. 

11. There is a need for legislation to detain, seize, forfeit and destroy 

pirate/counterfeit goods being imported, exported and moving in-transit as well as seizure and 

destruction of equipment used to produce such goods. 

12. Raise the stakes for the individuals involved in IP theft. The federal criminal 

statute against trafficking in counterfeit goods should be strengthened. There is a need for 

sentencing guidelines that require more stringent penalties (fines/imprisonment). 

13. Examine the extent to which organized crime is involved in the international trade 

of counterfeit and pirated products. 

14. There is a need for cooperation among law enforcement agencies and the hightech industry. 

15. Finally, more research and publications is needed on this topic. 

Future Research Issues

The topic of IP violations is a complicated and challenging topic to research and analyze. 

The following unanswered questions on this topic provides a starting point for future research 

that aims to provide practical solutions to policy makers, legislatures, government agencies, 

private industry and IPRs holders around the world who are grappling with protection of IPRs. 

• What is the status of international investigations into the problem of IP violations?

• Where does this criminal activity appear most prevalent? 

• Which governments are most aggressively tackling this issue?

• Which governments are failing to address the problem?

• What are effective law enforcement strategies to combat IPC? 

• What legislative responses, if any, would be appropriate?

• What international cooperative efforts should be explored? 

• What is the most effective means by which to educate consumers about this 

growing problem?

200

 76 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Each of these questions represents a search topic unto itself. 

Whether, and to what extent, society realizes the full value of IPRs in the new economy 

and in modern society irrefutably impacts on economic, social, and cultural development. In 

addition to political will and the implementation of national legislation compliant with all the 

relevant treaties of IPRs enforcement, government leaders may wish to consider the importance 

of fostering an IP culture. 

Appreciating the value of IPRs and the potential positive impact they can have on 

society, will raise awareness in all persons involved or touched by the process. In the IP culture, 

government officials and agencies act to increase value and raise standards of living by 

advocating an increased use of IPRs. The private sector, from multinational corporations down 

to SMEs, recognizes the value of IPRs in knowledge-based industries and economies. The 

public must understand the benefits of purchasing legitimate goods and services. 

Given that we are all aware of the counterfeit goods sold in flea markets and on the 

streets of major cities, the added knowledge that counterfeiters have moved into auto parts, 

medicines, home appliances and electrical goods should give us pause to start thinking of the 

counterfeiting problem as a frontal attack on consumer safety and economic stability. Because 

no industry sector is immune from attack by counterfeiters and no country is exempt from this 

type of criminal activity, both corporate and governmental law enforcement resources must be 

committed to combating IP crime. 

Today’s level of counterfeiting has reached the point that it now requires government 

intervention to confront the organized crime elements that are involved around the world. 

Industry is neither equipped to deal with organized crime nor is it a function for industry to 

pursue this type of criminal activity. Because of a reluctance to combat product counterfeiting in 

 77 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
the past, it is now being seen as a real and dangerous threat to consumers and industry. The 

proliferation of this problem requires governments to take steps in the domestic market, at the 

border as well as in free trade zones that seem to be lawless territory. 

This report provides a review and examination of the current state of affairs in 

international IP law and its enforcement or lack thereof. As requested by NIJ when 

commissioning this work, the report is meant to review the state of the art and identify areas of 

future research. It is hoped that this will prove useful in helping to influence the future research 

agenda in the area. 

 78 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
APPENDIX A 

Operation Buccaneer Defendants 

Defendant Nickname Warez Group Affiliations Conviction Date Offense* 

SANKUS, John, Jr.

Philadelphia, PA.

eriFlleH DrinkOr Die, Harm Felony

Feb. 27, 2002 

18 U.S.C. § 371 

ERICKSON, Barry

Eugene, OR 

Radsl RiscISO, DrinkOrDie, POPZ Felony

May 2, 2002 

18 U.S.C. § 371 

GRIMES, David A.

Arlington, TX

Chevelle DrinkOrDie, RISC, RTS Felony 

March 4, 2002 

18 U.S.C. § 371 

NAWARA, Stacey 

Rosenberg, TX

Avec RTS, Razor1911, DrinkOrDie Felony

March 19, 2002 

18 U.S.C. § 371 

HUNT, Nathan

Waterford, PA 

Azide CORPS, DrinkOrDie Felony

April 3, 2002 

18 U.S.C. § 371 

PATTANAYEK, Sabuj 

Durham, NC 

Buj DrinkOrDie, CORPS, RTS Felony 

April 11, 2002 

18 U.S.C. § 371 

KELLY, Michael

Miami, FL

Erupt RiSC, AMNESiA, CORE, DrinkOrDie Felony

April 10, 2002 

18 U.S.C. § 371 

CLARDY, Andrew 

Galesburg, IL

Doodad POPZ, DrinkOrDie Felony

April 4, 2002 

18 U.S.C. § 2319 

18 U.S.C. § 2 

TRESCO, Christopher 

Boston, MA

BigRar RiSC, DrinkorDie Felony

May 28, 2002 

18 U.S.C. § 371 

EISER, Derek

Philadelphia, PA 

Psychod DrinkOrDie Felony

June 21, 2002 

18 U.S.C. § 2319 

NGUYEN, Mike

Los Angeles, CA 

Hackrat Razor1911, RISC Felony

Jan. 31, 2002 

18 U.S.C. § 371 

KARTADINATA, Kent

Los Angeles, CA 

Tenkuken DrinkOrDie Felony

Jan. 31, 2002 

18 U.S.C. § 371 

BERRY, Richard 

Rockville, MD 

Flood POPZ, DrinkOrDie Felony

Apr. 29, 2002 

18 U.S.C. § 371 

RIFFE, John 

Port St. John, FL

blue SMR, EXODUS Felony

May 9, 2002 

18 U.S.C. § 2319 

GROSS, Robert

Horsham, PA 

targetpractice DrinkOrDie Felony

May 22, 2002 

18 U.S.C. § 2319 

COLE, Myron 

Warminster, PA 

t3rminal DrinkOrDie Felony

July 10, 2002 

18 U.S.C. § 2319 

BUCHANAN, Anthony

Eugene, OR 

spaceace POPZ, DrinkOrDie Felony

August 19, 2002 

18 U.S.C. § 2319 

*Offenses:

• 18 U.S.C. § 371 - Conspiracy

• 18 U.S.C. § 2 - Aiding and Abetting 

• 18 U.S.C. § 2319 - Criminal Copyright Infringement 

Source: Computer Crime & Intellectual Property Section, U.S. Department of Justice 

 79 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
APPENDIX B 

International AntiCounterfeiting Coalition Recommendations 

1997 - 2004 

97 98 99 00 01 02 03 04

Argentina WL WL WL --

Australia WL -- -- -- --

Belize WL

Bolivia WL

Brazil WL WL WL -- WL

Bulgaria WL -- WL

Canada WL OO WL WL PWL

Chile WL -- WL WL WL

China PFC 306 306 306 306 306 306

Columbia PWL -- -- WL --

Greece PWL PWL -- -- -- --

Hong Kong OO -- --

Hungary -- WL

India WL PWL

Indonesia PWL PWL -- WL PWL --

Italy WL WL WL --

Japan WL WL -- WL

Jordan WL

Kazakhstan WL --

Korea WL WL WL -- -- --

Lebanon PWL

Libya WL

Malaysia WL PWL -- PWL PWL

Mauritius WL

Mexico OO WL WL OO WL WL PWL

Pakistan WL

Panama WL WL

Paraguay 306 306 306 306

Philippines PWL PWL PWL

Poland PWL PWL PWL

Romania WL

Russia PWL PWL PWL PWL PWL

Saudi Arabia WL WL WL

Singapore PWL -- WL WL

South Africa WL WL WL

Taiwan OO OO WL WL PWL PWL PWL WL

Thailand PWL -- WL WL WL

Turkey -- WL WL

Ukraine WL PFC -- PFC

UAE WL WL WL

Venezuela WL

Vietnam WL WL

Abbreviations

PFC: Priority Foreign Country WL: Watch List 

306: Section 306 Monitoring OO: Other Observations 

PWL: Priority Watch List 

Source: International AntiCounterfeiting Coalition 

 80 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
Notes and References

1

 Albert Einstein, Scientist (1879-1955). 

2

 The Convention Establishing the World Intellectual Property Organization in Stockholm on July 14,

1967, (Article 2(viii)). 

3

 Powell, R. & Rohan, P. (1996). Powell on real property. New York: Matthew Bender. 

4

 Chisum, D.S. (1997). Chisum on patents: A treatise on the law of patentability, validity and infringement. 

New York: Matthew Bender.

5 World Intellectual Property Organization. About intellectual property. Retrieved February 28, 2004

from, http://www.wipo.org/about-ip/en/. 

6

 Ibid. 

7

 Ibid. 

8

 Its origin dates back to ancient times, when craftsmen reproduced their signatures, or marks, on their

artistic or utilitarian products. Over the years, the practice of using these marks evolved into today’s system of

trademark registration and protection. 

9

 The creator - or the owner of the copyright in a work - can enforce rights in the courts where the owner 

may obtain an order to stop unauthorized use (often called piracy), as well as obtain damages for loss of financial

rewards and recognition. 

10 New Patent System Boosts Intellectual Property Rights. (2001, September 3). Business World, p. 30. 

11 Hyde, Henry J. Opening Remarks before the Committee on International Relations; Intellectual

property crimes: Are proceeds from counterfeited goods funding terrorism? (16 July 2003). Retrieved February

2004 from, www.fnsg.com. 

12 Ibid. 

13 Piracy is “the unauthorized and illegal reproduction or distribution of materials protected by copyright, 

patent, or trademark law.” Black’s Law Dictionary 1169 (7th ed. 1999). 

14 To counterfeit is “to forge, copy, or imitate (something) without a right to do so and with the purpose of 

deceiving or defrauding.” Black’s Law Dictionary 354 (7th ed. 1999). 

15 Testimony of INTERPOL Secretary General Ronald Noble before the House Committee on International 

Relations Hearing, “The Links Between Intellectual Property Crime and Terrorist Financing” (July 16, 2003). 

16 Helsby, R. (2003, July). Economic crime survey 2003. PricewaterhouseCoopers in association with 

Wilmer, Cutler & Pickering. Retrieved March 2004 from, www.pwc.com/ crimsurvey. See the press release at 

<http://www.pwcglobal.com/gx/eng/cfr/gecs/PwC_GECS03 _global_pr.pdf>. 

17 Interviews conducted by author with David Mahon, Supervisory Special Agent, Cyber Crime Squad,

Federal Bureau of Investigation - Denver Division, 2004. There are various loss estimates due to counterfeiting and

piracy. For example, the International Intellectual Property Association estimated that losses due to piracy of U.S. 

copyrighted materials around the world have reached $20 to $22 billion annually (not including Internet piracy). 

According to the 2003 Department of Homeland Security statistics on seizures, the majority of goods seized at U.S. 

ports of entry were counterfeit goods, worth more than $90 million.

18 See, http://www.interpol.int; IFPI Piracy Report: 2; http://www.bsa.org. 

 81 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
19 PricewaterhouseCoopers. (2002, September). The US Chamber of Commerce and ASIS International:

Trends in Proprietary Information Loss, Survey results. 

20 Interviews conducted by author, Dave Mahon, Supervisory Special Agent, Cyber Crime Squad, Federal

Bureau of Investigation - Denver Division, 2004. Smith, G.V. & Parr, R.L. (1994). Valuation of Intellectual

Property and Intangible Assets, (2nd ed.) New York: John Wiley & Sons. 

21 Siwek, S. (2001, April). “Copyright Industries in the U.S. Economy: The 2001 Report,” Economists 

Incorporated, Washington, D.C.

22 Statistics compiled by Brookings Institute. 

23 Helsby, R. (2003, July). Economic crime survey 2003. PricewaterhouseCoopers in association with 

Wilmer, Cutler & Pickering. Retrieved March 2004 from, www.pwc.com/ crimsurvey. See the press release at 

<http://www.pwcglobal.com/gx/eng/cfr/gecs/PwC_GECS03 _global_pr.pdf>. 

24 Counterfeiting Intelligence Bureau, International Chamber of Commerce (1997). Countering

Counterfeiting: A guide to protecting & enforcing intellectual property rights.

25 Interviews conducted by author with David Mahon, Supervisory Special Agent, Cyber Crime Squad,

Federal Bureau of Investigation - Denver Division, 2004. 

26 Office of the United States Trade Representative. (2004). USTR - Intellectual property: 2004 special

301 report. Washington, DC. 

27 Tomlinson, D.E. (1995). Journalism and entertainment as intellectual property on the information

superhighway: The challenge of the digital domain, 6 Stanford Law and Policy Review 61, 63-64.

28 Tomlinson, D.E. (1999). Intellectual property in the digital age: The piracy/ counterfeiting problem and

antipiracy and anticounterfeiting measures. Currents: International Trade Law Journal, 3(3) Vol. 8, no. 1, starts on

p. 3. 

29 Birden, Jr., P.B. (1996). Trademark protection in China: trends and directions. Loyola of Los Angeles

International and Comparative Law Journal, 18, 431, 486 n.444. 

30 Tomlinson, D.E. (1999). Intellectual property in the digital age: The piracy/ counterfeiting problem and

antipiracy and anticounterfeiting measures. Currents: International Trade Law Journal, 3(3) Vol. 8, no. 1, starts on

p. 3. Tomlinson notes, the realm of intellectual property, “counterfeiting” generally relates to the copying of a

product’s trademark and trade dress, e.g., using the CD packaging which accompanies the CD itself as the “master 

image” for purposes of printing as much CD packaging “just as good as the original” as an entity might wish to print 

to accompany the CDs... . 

31 Business Software Alliance and Software & Information Industry Association (2003). Global Software 

Piracy Report. (Issue 3). BSA Global Software Privacy Study, published in 2003, and located at

<http://global.bsa.org/globalstudy/2003_GSPS.pdf>. BSA “Global Software Piracy Report” in 2000, located at 

<http://global.bsa.org/usa/globallib/piracy/ piracystats99.phtml?CFID=14731&CFTOKEN=33412057>. BSA is 

located in Washington, DC. 

32 Business Software Alliance and Software & Information Industry Association (2003). Global Software 

Piracy Report. (Issue 2). BSA Global Software Privacy Study, published in 2003, and located at

<http://global.bsa.org/globalstudy/2003_GSPS.pdf>. BSA “Global Software Piracy Report” in 2000, located at 

<http://global.bsa.org/usa/globallib/piracy/ piracystats99.phtml?CFID=14731&CFTOKEN=33412057>. BSA is 

located in Washington, DC. 

33 United Nations Association Staff. (1998). Basic facts about the United Nations. New York: United

Nations Publications. 

 82 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
34 Commission of the European Communities. (1998). Green paper: Combating counterfeiting and piracy 

in the single market. Brussels, Belgium. Retrieved December 17, 2003 from, see 

http://europa.eu.int/comm/internal_market/en/intprop/indprop/922.htm; OECD, ICC Counterfeiting Intelligence 

Bureau. (1998). The economic impact of counterfeiting (#DSTI/IND(97)6/REV1: Issue 5). Paris, France. 

35 World Intellectual Property Organization. (2002). Intellectual property: A power tool for economic

growth. Geneva, Switzerland; located at http://www.wipo.int/aboutwipo/en/dgo/wipo_pub_888/index_wipo_pub_888.html: Kamil Idris. 

36 Business Software Alliance and Software & Information Industry Association (2003). Global Software 

Piracy Report. (Issue 3). BSA Global Software Privacy Study, published in 2003, and located at 

<http://global.bsa.org/globalstudy/2003_GSPS.pdf>. BSA “Global Software Piracy Report” in 2000, located at 

<http://global.bsa.org/usa/globallib/piracy/ piracystats99.phtml?CFID=14731&CFTOKEN=33412057>. BSA is 

located in Washington, DC.

37 International Federation of the Phonographic Industry. (2000). Music piracy report 2000 (Issue 2). 

London: IFPI is both author and publisher. 

38 Ibid. 

39 Ibid. 

40 Organization for Economic Co-operation and Development. (1998). Economic impact of counterfeiting 

(Issue 12). Pans: Paris; Washington, DC: Organization for Economic Co-operation and Development.

41 Organization for Economic Co-operation and Development. (1998). Economic impact of counterfeiting 

(Issue 13). Pans: Paris; Washington, DC: Organization for Economic Co-operation and Development.

42 Organization for Economic Co-operation and Development. (1998). Economic impact of counterfeiting 

(Issue 14). Pans: Paris; Washington, DC: Organization for Economic Co-operation and Development.

43 Organization for Economic Co-operation and Development. (1998). Economic impact of counterfeiting 

(Issue 15). Pans: Paris; Washington, DC: Organization for Economic Co-operation and Development.

44 Organization for Economic Co-operation and Development. (1998). Economic impact of counterfeiting 

(Issue 16). Pans: Paris; Washington, DC: Organization for Economic Co-operation and Development.

45 Organization for Economic Co-operation and Development. (1998). Economic impact of counterfeiting 

(Issue 17). Pans: Paris; Washington, DC: Organization for Economic Co-operation and Development.

46 Organization for Economic Co-operation and Development. (1998). Economic impact of counterfeiting 

(Issue 18). Pans: Paris; Washington, DC: Organization for Economic Co-operation and Development.

47 Organization for Economic Co-operation and Development. (1998). Economic impact of counterfeiting 

(Issue 18). Pans: Paris; Washington, DC: Organization for Economic Co-operation and Development.

48 Organization for Economic Co-operation and Development. (1998). Economic impact of counterfeiting 

(Issue 9). Pans: Paris; Washington, DC: Organization for Economic Co-operation and Development.

49 Organization for Economic Co-operation and Development. (1998). Economic impact of counterfeiting 

(Issue 12). Pans: Paris; Washington, DC: Organization for Economic Co-operation and Development.

50 Malcolm, John G. Federal Document Clearing House Congressional Testimony. The Internet, and 

Intellectual Property Committee on the House Judiciary, Copyright Piracy and Links to Crime and Terrorism, (13 

March 2003). 

51 Gutterman, A.S. (1992). International intellectual property: Recent developments and issues for the 

coming decade. Currents: International Trade Law Journal 5(5), Vol. 1, no. 2, pp. 335-405. 

 83 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
52 EIU Riskwire, Ukraine Risk: Legal and Regulatory Risk (January 13, 2004).

53 Office of the United States Trade Representative. (2004). USTR - Intellectual property: 2004 special

301 report. Washington, DC. 

54 Associated Press Worldstream, (January 27, 2004). Chinese police raid fake prison, find disguised

cigarette factory. Over 100 tons of tobacco found in the fake prison where 20 brand names were being used. 

55 Automotive News Europe (November 17, 2003). Authorities cite brake linings made of compressed 

grass, sawdust or cardboard, and oil filters that use rages for the filter element. 

56 Office of the United States Trade Representative. (2004). USTR - Intellectual property: 2004 special

301 report. Washington, DC. 

57 Ibid. 

58 CBC-TV, Venture Program (December 14, 2003). 

59 Flood of Fakes a Lethal Threat, National Post (December 12, 2003). 

60 Office of the United States Trade Representative. (2004). USTR - Intellectual property: 2004 special

301 report. Washington, DC. 

61 Ibid. 

62 Ibid. 

63 Ibid. 

64 See Fake Cigarettes Worth RM1 Mil Seized, Bernama The Malaysian National News Agency (January 9, 

2004). 

65 See Harny Abu Khair, Imitation Battery Warning, Malay Mail (October 10, 2003); Ahmad Kushairi, 

Pakistan Ori’ for Handphone Batteries, New Straits Times-Management Times (October 13, 2003).

66 Office of the United States Trade Representative. (2004). USTR - Intellectual property: 2004 special

301 report. Washington, DC. 

67 Counterfeit Goods Pose Real Threat, Insight on the News (2003, November 24). It is believed that 25

percent or more of drugs sold in Mexico now are counterfeit, which may be due partly to the fact that Mexico allows 

its pharmacists to work without any formal training and does not require prescriptions.

68 Office Products International, State of flux: Mexico has become a modern nation with an export-driven 

economy (December 1, 2003).

69 Office of the United States Trade Representative. (2004). USTR - Intellectual property: 2004 special

301 report. Washington, DC. 

70 Ibid. 

71 See Philippines Must do More to Protect Intellectual Property Rights, AFX-Asia, AFX News Limited 

(2004, February 2) (quoting Assistant Secretary of Commerce William Lash).

72 Office of the United States Trade Representative. (2004). USTR - Intellectual property: 2004 special

301 report. Washington, DC. 

73 See Shadow Goods Market in Russia Makes Up 30-40% of GDP, Business Report (Interfax News

Agency) (November 13, 2003).

 84 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
74 Office of the United States Trade Representative. (2004). USTR - Intellectual property: 2004 special

301 report. Washington, DC. 

75 Ibid. 

76 Ibid. 

77 Ibid. 

78 Aurigin Systems. (1999). In K.G. Rivette and D. Kline, Rembrandts in the attic: Unlocking the hidden

value of patents. Cambridge, MA: Harvard Business School Press. 

79 Friedman, D. (1994). Standards as intellectual property: An economic approach. University of Dayton

Law Review, 19, 1109-1117. 

80 Hearing before the Subcommittee on Crime of the Committee on Judiciary, House of Representatives. 

Fighting Cybercrime, (14 June 2001) U.S. Printing Office. 

81 Office of the United States Trade Representative. (2004). USTR - Intellectual property: 2004 special

301 report. Washington, DC. 

82 Ibid. 

83 World Intellectual Property Organization. (2002). Intellectual property: A power tool for economic

growth. Geneva, Switzerland; located at http://www.wipo.int/aboutwipo/en/dgo/wipo_pub_888/index_wipo_pub_888.html: Kamil Idris. 

84 Interviews conducted by author with Edwin Kwakwa, Legal Counsel, World Intellectual Property 

Organization, Geneva, Switzerland, (2004). World Intellectual Property Organization. (2004, March). WIPO, 

Information technology and internet domain name disputes. Cleveland: Case Western Reserve University School of

Law, Center for Law, Technology and the Arts: Edwind Kwakwa.

85 Eg trade marks (First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of 

the Member States relating to trade marks, OJ L 40, 11.2.1989, p. 1.8), designs (Directive 98/71/EC of the European

Parliament and of the Council of 13 October 1998 on the legal protection of designs, OJ L 289, 28.10.1998, p. 28),

patents for biotechnological inventions (Directive 99.44.EC of the European Parliament and of the Council of 6 July 

1998 on the legal protection of biotechnological inventions, OJ L 213, 30.7.1998, p. 13), aspects of copyright and 

related rights (Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs, OJ L 

122, 17.5.1991, p. 42; Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on

certain rights related to copyright in the field of intellectual property, OJ L 346, 27.11.1992, p. 61; Council Directive 

93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to

copyright applicable to satellite broadcasting and cable retransmission, OJ L 248, 6.10.1993, p. 15; Council 

Directive 93/98/EEC of 29 October 1993 harmonizing the term of protection of copyright and certain related rights,

OJ L 290, 24.11.1993, p. 9; Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on

the legal protection of databases, OJ L 77, 27.3.1996, P. 20; Directive 2001/29/EC of the European Parliament and

of the Council of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the 

information society, OJ L 167, 22.6.2001, p. 10..) resale right for the benefit of the authors of original works of art 

(Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on resale rights for the 

benefit of the authors of original works of art, OJ L 272, 13.10.2001, p. 32) and the Directive on the harmonization 

of certain aspects of copyright and related rights in the information society 13.

86 COM(98) 569 Final.

87 OJC C 41, 7.2.2001, p. 56.

88 COM (2000) 789 Final.

 85 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
89 OJ C 221, 7.8.2001, p. 20.

90 COM (2003) 46 Final.

91 Mason, J.D., Mossinghoff, G., and Oblon, D. (1999). The Economic Espionage Act: Federal protection 

for corporate trade secrets. Computer Law, 16, 14-15. Historically, civil remedies for theft of trade secrets have 

been sought in litigation. However, because increased technological complexity, delays in civil litigation, and 

advances in computer technology have allowed thieves to profit more rapidly from trade secrets, traditional 

remedies of injunctions and civil damages have become largely ineffective. Furthermore, because of the intangible 

nature of trade secrets and the fact that thieves are often judgment-proof or too sophisticated to be pursued, civil 

remedies are frequently illusory. 

92 Carr C., Morton, J. and Furniss, J. (2000). The Economic Espionage Act: Bear trap or mousetrap?

Texas Intellectual Property Law Journal 8, 159-167. 

93 Interview conducted by author with Wolfgang Starein, Director, World Intellectual Property

Organization, Geneva, Switzerland, (2004). United States Department of Justice Criminal Division. Prosecuting

Intellectual Property Crimes Manual, Introduction. Retrieved February 2004 from, http://www.cybercrime. 

gov/ipmanual/intro.htm. (“As the modern economy grows increasingly reliant on intellectual property, the 

proliferation of computers and computer networks has made the illegal reproduction and distribution of protected 

material much easier to accomplish.”). 

94 United States Dep’t of Justice. (Press Release). (1997). FBI releases first results of nationwide

crackdown on criminal trademark and copyright fraud. Retrieved December 10, 2002 from,

http://www.usdoj.gov/criminallcybercrimefl95_ag.htm (presenting results of Operation “Counter Copy” 

enforcement effort against copyright and trademark violations). 

95 Green, J.T. (2001). Don’t steal this article: Using the criminal provisions of the Copyright Act, 4 

Business Crimes Bulletin 3 (2001) (noting this initiative quickly netted four guilty pleas for copyright infringement 

by college students). 

96 United States Department of Justice Criminal Division. Prosecuting Intellectual Property Crimes 

Manual, Introduction. Retrieved February 2004 from, http://www.cybercrime. gov/ipmanual/intro.htm.

97 Monroe, Jana D. Federal Document Clearing House Congressional Testimony. Copyright Enforcement

and Internet Copyright Issues, (17 July 2003). 

98 See Feist Publications, Inc. v. Rural Telephone Serv. Co., 499 US. 340, 349, 353 (1991) (holding

originality, not sweat of brow--hard work in compiling facts--to be key to copyrightability). 

99 Tomlin, D. H. (2001). Sui generis database protection: Cold comfort for hot news. 19 Comm. Lawyer

15, 16, 18. 

100 H.R. 1858, 106th Cong. (1999). This bill was introduced by United States Representative Thomas 

Bliley (R-VA). See John J. Cotter et al., Using and Misusing Third Party Resources, 661 PLI/Pat 213 (2001), at 

254. H.R. 1858 prevented the distribution of a duplicate of another’s database in direct competition with the original

database. 

101 Pub. L. No. 105-304, 112 Stat. 2877 (codified as amended at 17 U.S.C. § 512 (1998)). See United

States v. Elcom Ltd., 203 F. Supp. 2d 1111, 1127-1129 (N.D. CaL 2002) (upholding DCMA to constitutional 

challenge); see also Goldstone, D. and O’Leary, M. (2001). Novel criminal copyright infringement issues related to

the Internet. Retrieved January 21, 2003 from, http://www.cybercrime.gov/usamay2001_5.htm. (discussing

enactment of the DMCA). 

102 17 U.S.C. § 512 (2000). 

103 17 U.S.C. § 1201 (2000).

 86 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
104 17 U.S.C. § 1202 (2000).

105 No Electronic Theft (NET) Act of 1997, Pub. L. No. 105-147, 111 Stat. 2678 (1997).

106 Coblenz, M. (1999). Intellectual Property Crimes. Albany Law Journal of Science and Technology, 9,

235-244. (commenting on history of criminal copyright statutes). The NET Act is the centerpiece of DOJ efforts to

combat intellectual property infringement, especially in the New York-New Jersey area, California, Massachusetts 

and the Southern District of Florida. Eric H. Holder, Jr. (Press Conference). (1999). Announcing the Intellectual 

Property Rights Initiative. Retrieved January 21, 2003 from, http://www.usdoj.gov/criminal/cybercrime/

dagipini.htm. (detailing new interdepartmental commitment). 

107 Hsieh, L., McCarthy, J. and Monkus, E. (1998). Intellectual Property Crimes. American Criminal Law 

Review 35, 899-915. “A college student pleaded guilty to illegally distributing movies, music and software 

programs [through] his Web site in what federal prosecutors...said was the first Internet piracy conviction under a 

1997 law.” Students pleads guilty to software pirating. (1999, August 21). Houston Chronicle, p.2C.

108 Hsieh, L., McCarthy, J. and Monkus, E. Intellectual Property Crimes, American Criminal Law Review, 

35, 899-915. 

109 Computer Crime and Intellectual Property Section. Chapter VIII: Theft of Commercial Trade Secrets. 

Retrieved February 2004 from, at http://www.cybercrime.gov/ipmanual/ O8ipma.htm. cf. 18 U.S.C. § 1905 (2000). 

110 18 U.S.C. § 1905 (2000) (describing crime of disclosure of confidential information by an officer or

employee of the United States); see United States v. Wallington, 889 F.2d 573, 577-78 (5th Cir. 1989) (noting Act 

prohibits disclosure of information only if information is confidential and federal employee knew information to be

so). 

111 18 U.S.C. § 1905 (2000) (limiting scope to “an officer or employee of the United States or of any 

department or agency thereof, any person acting on behalf of the Office of Federal Housing Enterprise Oversight, or

agent of the Department of Justice as defined in the Antitrust Civil Process Act”). 

112 18 U.S.C. § 1905 (2000) (providing for fine or imprisonment of not more than one year, or both, 

removal from office or employment, for disclosure of confidential information by officer or employee of United 

States). Pooley, J.H.A. (1996). Understanding the Economic Espionage Act of 1996. Texas Intellectual Property 

Law Journal, 5, 177-180. 

113 Pooley, J.H.A. (1996). Understanding the Economic Espionage Act of 1996. Texas Intellectual 

Property Law Journal, 5, 177-180. 

114 18 U.S.C. § 2314 (2000). The NSPA was intended “to fight the ‘roving criminal’ whose access to 

automobiles made it easy to move stolen property across state lines. . . frustrating local law enforcement.” Krakaur, 

K.D. & Juman, R.C. (1997). Two New Federal Offenses Help Battle Corporate Espionage. Business Crimes 

Bulletin: Compliance & Litigation, 4, 7. See Pooley, supra note 26, at 179-180 (indicating 18 U.S.C. §§ 2314, 2315 

are also known as the Interstate Transportation of Stolen Property Act (“ITSP”)). 

115 18 U.S.C. § 2314 (2000) (levying sanctions in form of fine and/or imprisonment for up to ten years). 

116 18 U.S.C. § 2314 (2000). Section 2314 imposes criminal sanctions on any person who: having devised

or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or

fraudulent pretenses, representations, or promises, transports or causes to be transported, or induces any person or

persons to travel in, or to be transported in interstate or foreign commerce in the execution or concealment of a

scheme or artifice to defraud that person or those persons of money or property having a value of $5,000 or more. 

117 See United States v. Stegora, 849 F.2d 291, 292 (8th Cir. 1988) (ruling theft of sample of synthetic 

casting material used in repairing broken bones falls under NSPA even though major portion of its value comes 

from intangible component); United States v. Bottone, 365 F.2d 389, 393-94 (2d Cir. 1966) (holding NSPA

 87 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
applicable to theft of copies of documents containing trade secrets); United States v. Seagraves, 265 F.2d 876, 880 

(3d Cir. 1959) (finding theft of geophysical maps identifying possible oil deposits falls under NSPA). 

118 Simon, S. (1998). The Economic Espionage Act of 1996. Berkeley Technology Law Journal, 13, 305-

306. (explaining history of National Stolen Property Act).

119 18 U.S.C. §§ 1341, 1343 (2000) (describing elements of mail or wire fraud crimes). For a more

extensive discussion of the mail and wire fraud statutes, see the Mail And Wire Fraud Article in this issue. 

120 The mail fraud statute is flexible because almost any use of the mail brings one under the statute’s 

prohibitions. See Schmuck v. United States, 489 United States 705, 710-11(1989) (holding use of mails need not be 

essential part of scheme but only “step in [the] plot”). 

121 See United States v. McNeive, 536 F.2d 1245, 1247 (1976) (construing statute in light of its manifest 

purpose to prohibit all attempts to defraud by any form of misrepresentation). 

122 See United States v. Henry, 29 F.3d 112, 114 (3d Cir. 1994) (“The statutes cover schemes to defraud 

another of intangible property, such as confidential business information.”). 

123 Hsieh, L., McCarthy, J. and Monkus, E. (1998). Intellectual property crimes. American Criminal Law 

Review, 35, 899-920. 

124 18 U.S.C. §§ 1961-1968 (2000) (criminalizing racketeer influenced and corrupt organizations 

activities). For a full discussion of §§ 1961-1968, see the Racketeer Influenced And Corrupt Organizations article in

this issue. 

125 E.g., Religious Tech. Ctr. v. Wollersheim, 796 F.2d 1076, 1084 (9th Cir. 1986) (recognizing civil RICO

claims for trade secret theft but finding injunctive relief not available in RICO action before court). The issue of 

whether RICO claims give rise to injunctive relief is now before the Supreme Court. See Scheidler v. Nat’l Org. for 

Women, Inc., 535 United States 1016 (2002). 

126 See 18 U.S.C. § 1961(1)(B) (2000) (identifying predicate offenses under RICO which violate criminal

law); see also W. Assocs. Ltd. P’ship v. Mkt. Square Assocs., 235 F.3d 629, 633 (1)12, Cir. 2001) (finding predicate 

offenses are acts punishable under certain state and federal criminal laws). 

127 18 U.S.C. § 1341 (2000).

128 18 U.S.C. § 1343 (2000).

129 18 U.S.C. § 2314 (2000).

130 18 U.S.C. § 2315 (2000). One commentator reports that Congress intended the criminal

misappropriation of trade secrets to be a crime punishable under RICO, and thinks it likely that this will occur in the 

future. See Coblenz, M. (1999). Intellectual property crimes. Albany Law Journal of Science and Technology, 9,

235-283 (speculating that Economic Espionage Act (EAA) was not included in RICO amendments because the EEA 

was signed into law three months after RICO). 

131 See United States v. LaMacchia, 871 F. Supp. 535, 539 (D. Mass. 1994) (requiring commercial 

exploitation for criminal offense of software piracy). Saunders, M. J. (1994). Criminal copyright infringement and 

the Copyright Felony Act. Denver University Law Review, 71, 671-672 (discussing requirements for criminal 

copyright infringement); Spanner, R.A. (1995). The brave new world of criminal software infringement

prosecutions. Computer Law, 12, 1-11. (discussing various factors involved in criminal software prosecutions);

Walker, K. (1994). Federal criminal remedies for the theft of intellectual property. Hastings Communication &

Entertainment Law Journal, 16, 681-683. (presenting United States Attorney’s view on factors for prosecuting

high-technology crime as distinguished from civil infringement). 

 88 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
132 See, e.g., LaMacchia, 871 F. Supp. at 539-40 (discussing history of criminal copyright law); Saunders, 

M. J. (1994). Criminal copyright infringement and the Copyright Felony Act. Denver University Law Review, 71,

671-680 at 679-80 (describing criminal copyright statute). 

133 Pub. L. No. 102-561, 106 Stat. 4233 (codified as amended at 18 U.S.C. §2319(b)-(c) (2000)). For an

in-depth discussion of the legislative history of the Copyright Felony Act; Saunders, M. J. (1994). Criminal 

copyright infringement and the Copyright Felony Act. Denver University Law Review, 71, 671-680 at 679-80

134 Hsieh, L., McCarthy, J. and Monkus, E. (1998). Intellectual property crimes. American Criminal Law 

Review, 35, 899-914. 

135 Ibid. 

136 Hsieh, L., McCarthy, J. and Monkus, E. (1998). Intellectual property crimes. American Criminal Law 

Review, 35, 899-915 at 915. 

137 Ibid. 

138 See 18 U.S.C. § 1956(c)(7)(D) (2000 & Supp. 2001) (amended to insert section 1030, relating to

computer fraud and abuse). For further discussion of this statute and its applicability to copyright law, see the 

Money Laundering article in this issue. 

139 Malcolm, John G. Federal Document Clearing House Congressional Testimony. The Internet, and 

Intellectual Property Committee on the House Judiciary, Copyright Piracy and Links to Crime and Terrorism, (13 

March 2003). 

140 Department of Justice. (2001). Federal law enforcement targets international Internet piracy 

syndicates: Multiple enforcement actions worldwide snare top “Warez” leadership. Washington, DC. 

141 Ibid. 

142 Ibid. 

143 Malcolm, John G. Federal Document Clearing House Congressional Testimony. The Internet, and 

Intellectual Property Committee on the House Judiciary, Copyright Piracy and Links to Crime and Terrorism, (13 

March 2003). 

144 Ibid. 

145 Ibid. 

146 LeBlanc, C. (2000, January 18). Huge fake clothing ring cracked: Upstate man pleads guilty to

running $7 million scam. The State, pp.A1. Department of Justice. (Press Release). South Carolina man pleads

guilty to trafficking closing with counterfeit trademarks. Retrieved March 9, 2004 from, 

http://www.cybercrime.gov/farmerPlea.htm.

147 Shifrel, S. (2002, July 11). Three charged in money laundering. Daily News, pp. 4. 

148 White, J. (2002, February 28). Pennsylvania man admits internet conspiracy. The Washington Post, pp.

B02. 

149 Department of Justice. (Press Release). (2001). Defendant who operated Fakegifts.com sentenced. 

Retrieved March 9, 2004 from, http://www.eybererime.gov/ DipadovaSent.htm.

150 Author unknown. (2002). Woman must pay slim in software. Retrieved November 25, 2002 from, 

http://www.cnn.com/2002/TECH/biztech/11/25/counterfeit.software.ap/ index.html. 

151 Martinez, E. & Kranes, M. (2002, May 10). Knockoffs knocked out. New York Post, p. 8. 

 89 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
152 (2001). Taiwan fears US blacklist after fake software haul. The Strait Times pp. A3.; Department of

Justice. (Press Release). (2001). U. S Customs Seizes $100 million in pirated computer software: Biggest case in

United States history. Retrieved December 17, 2003 from, http://www.cybercrime.gov/operationwhitehorse.htm;

Statement LaMagna, Richard C. Testimony before the House Subcommittee on Courts, the Internet, and Intellectual 

Property. Oversight Hearing on International Copyright Piracy.’ Links to Organized Crime and Terrorism, (13 

March 2003). (noting that Taiwanese authorities later confirmed that the operation was financed by criminal groups

based in Asia).

153 Ibid. 

154 Tuohy, J. (2001, November 27). Testimony from felons help convict cocoa man. Florida Today, 

volume, pages. 

155 Galbraith, R. (2001, September 29). Luxury groups battle a wave of counterfeit goods, The 

International Herald Tribune, p. 12. 

156 George W. Abbott, Jr. and Lee S. Sporn, Trademark Counterfeiting § 1.03[B] (2001); 5. Rep. 104-177.

104th Cong., Vt Sess. (1995). 

157 The WCO is based in Brussels, Belgium. Established in 1952 as the Customs Cooperation Council, it

changed its name in 1994 to World Customs Organization to reflect its worldwide role as the exclusive 

intergovernmental organization with competence in customs matters. As this is written, there are 151 member 

governments. WCO hosts a joint Customs/Business IPR Committee, in which business members work directly with

governments to enhance enforcement of IPRs and the fight against counterfeiting and piracy. 

158 Interpol was set up to globally enhance and facilitate cross-border criminal police cooperation. It is an 

international organization with 179 member countries. See more at www.interpol.int. 

159 McKenzie, S. (1998). Comment, global protection of trademark intellectual property rights: A 

comparison of infringement and remedies. In China versus the European Union. Gonzaga Law Review, 34, 529-

539. 

160 McKenzie, S. (1998). Comment, global protection of trademark intellectual property rights: A 

comparison of infringement and remedies. In China versus the European Union. Gonzaga Law Review, 34, 529-

539. 

161 Getlan, M. (1995). TRIPS and the future of section 301: A comparative study in trade dispute

resolution. Columbia Journal of Transnational Law, 34, 173-176. 

162 Getlan, M. (1995). TRIPS and the future of section 301: A comparative study in trade dispute

resolution. Columbia Journal of Transnational Law, 34, 173-176. Countries not in compliance with the set 

standard would be expected to amend their laws to coincide with international standards and would have to agree to

be bound by a dispute settlement mechanism (which would allow retaliatory measures). See Id. at 177. Retaliation

measures include the withdrawal of GATT concessions or obligations. See id. 

163 Rangel-Ortiz, H. (1996). Intellectual property and NAFTA. Currents: International Trade Law

Journal, 36, 36. 

164 The Uruguay Round was the eighth round sponsored by GATT. General Agreement on Tariffs and 

Trade -Multilateral Trade Negotiations (The Uruguay Round): Agreement Establishing the Multilateral Trade 

Organization [World Trade Organization], 15 December 1993, 33 I.L.M. 13. 

165 The World Trade Organization. What is the WTO? Retrieved February 28, 2003 from, 

http://www.wto.org/ english/thewto_e/whatis_e/whatis_e.htm. 

166 (1994). The “author” of the agreement appears to be multiple countries involved with GATT 

(http://www.wto.org/english/thewto_e/gattmem_e.htm). Agreement on trade-related aspects of intellectual property 

 90 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
rights: Agreement on trade-related aspects of intellectual property rights. Retrieved February 29, 2003 from, http:// 

www.wto.org/english/tratop_e/trips_e/ t_agm0_e.htm. 

167 The World Trade Organization. The WTO ...in brief. Retrieved February 28, 2003 from, 

http://www.wto.org/ english/thewto_e/whatis_e/inbrief_e/inbr00_e.htm. 

168 Hicks, L. & Holbein, J. (1997). Convergence of national intellectual property norms in international 

trading agreements. American University Journal of International Law and Policy, 12, 769-780. 

169 (1994). The “author” of the agreement appears to be multiple countries involved with GATT 

(http://www.wto.org/english/thewto_e/gattmem_e.htm). Agreement on trade-related aspects of intellectual property 

rights: Agreement on trade-related aspects of intellectual property rights. Retrieved February 29, 2003 from, http:// 

www.wto.org/english/tratop_e/trips_e/ t_agm0_e.htm. 

170 (1994). The “author” of the agreement appears to be multiple countries involved with GATT 

(http://www.wto.org/english/thewto_e/gattmem_e.htm). Agreement on trade-related aspects of intellectual property 

rights: Agreement on trade-related aspects of intellectual property rights. Retrieved February 29, 2003 from, http:// 

www.wto.org/english/tratop_e/trips_e/ t_agm0_e.htm. 

171 Emmert, F. (1990). Intellectual property in the Uruguay Round: Negotiating strategies of the western 

industrialized countries. Michigan Journal of International Law, 11, 1317-79. 

172 Emmert, F. (1990). Intellectual property in the Uruguay Round: Negotiating strategies of the western 

industrialized countries. Michigan Journal of International Law, 11, 1317-22. Bello, J. & Holmer, A. (1989-90). 

“Special 301”: Its requirements, implementation, and significance. Fordham International Law Journal, 13, 259-

260. 

173 Oddi, A. (1987). The international patent system and third world development: Reality or myth? Duke

Law Journal, 831, 848-55. Mossinghoff, G. (1987). Research-based pharmaceutical companies: The need for 

improved patent protection worldwide. Journal of Law and Technology, 2, 307-11.

174 Oddi, A. (1987). The international patent system and third world development: Reality or myth? Duke

Law Journal, 831, 848-55. 

175 Emmert, F. (1990). Intellectual property in the Uruguay Round: Negotiating strategies of the western 

industrialized countries. Michigan Journal of International Law, 11, 1317 at 1354. 

176 The first international patent congress was held in Vienna in 1873. Emmert, F. (1990). Intellectual 

property in the Uruguay Round: Negotiating strategies of the western industrialized countries. Michigan Journal of

International Law, 11, 1317-39.

177 Ashman, K. (1989). The Omnibus Trade and Competitiveness Act of 1988: The Section 301 

Amendments: Insignificant changes from prior law? Boston University International Law Journal, 7, 115, 129-31. 

178 Baucus, M. (1989). A new trade strategy: The case for bilateral agreements. Cornell International 

Law Journal, 22, 1-2. 

179 Farkas, L. (1996). Trade-related aspects of intellectual property In T. P. Stewart (Ed.), The 

World Trade Organization: the multilateral trade framework for the 21st century and U.S. 

implementing legislation, Chicago, IL: American Bar Association, Section of International Law 

and Practice, 1996, pp. 463-521. 

 91 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
180 McCarthy, J. (1995). Intellectual property: America’s overlooked export. University of Dayton Law 

Review, 20, 813-14. American businesses suffer the most when an Asian government tolerates the widespread

pirating of computer programs and CDs and the Asian market becomes flooded with pirated products. This occurs 

because America supplies the bulk of the world’s software and music, as well as video tapes. While the Asian 

nations produce most of the hardware used in the entertainment and computer industries, such as televisions, CD 

players, and PC clones, America supplies the content for that hardware--the shows, songs, and software that makes 

the hardware valuable. If foreign nations do not recognize or enforce intellectual property laws, then America has 

nothing to sell.

181 ICC Spawns Formation of Multinational Anti-Counterfeiting Body. (1998). Journal of Proprietary 

Rights, 10, 27. 

182 ICC Spawns Formation of Multinational Anti-Counterfeiting Body. (1998). Journal of Proprietary 

Rights, 10, 27. The GAGC expects to focus its efforts on lobbying governments that have been relatively tolerant of

counterfeiting and on disseminating information to its members. As a unified group, the GACG also believes...it can 

overcome many of the setbacks...its individual members [have] experienced in combating piracy on their own. Id. 

183 The membership of IACC is comprised of a cross section of business and industry - from autos, apparel,

luxury goods, and pharmaceuticals, to food, software and entertainment - whose combined annual revenues exceed 

$650 billion. 

184 See International AntiCounterfeiting Coalition (IACC) Frequently Asked Questions, International 

AntiCounterfeiting Coalition, Retrieved March 25, 2004 from, http://www.iacc. org/teampublish/uploads/IACCFAQs.pdf. 

185 Hyde, Henry J. Opening Remarks before the Committee on International Relations; Intellectual

property crimes: Are proceeds from counterfeited goods funding terrorism? (16 July 2003). Retrieved March 25, 

2004 from, www.fnsg.com. 

186 Ibid. 

187 Interview conducted by author with Wolfgang Starein, Director, World Intellectual Property

Organization, Geneva, Switzerland, (2004).

188 Ibid. 

189 Ibid. 

190 Ibid. 

191 Interview conducted by author with Wolfgang Starein, Director, World Intellectual Property

Organization, Geneva, Switzerland, (2004).

192 Some authors have suggested the use of an incentive system, but have emphasized that the incentives

must be strictly limited in time so that the developing countries will be encouraged to progress quickly to true

intellectual property protection. Kastenmeir, W. & Beier, D. (1989). International trade and intellectual property: 

Promise, risks, and realty. Vanderbuilt Journal of Transnational Law, 22, 285-304. The problem with setting time 

limits to the incentives is that real hardships will ensue if incentives are terminated before real benefits outweigh the 

costs of the imposed intellectual property system. 

193 Niemeyer, K. (1995). Protecting foreign copyright in the People’s Republic of China, Currents:

International Trade Law Journal 10, 10. 

194 Interview conducted by author with Wolfgang Starein, Director, World Intellectual Property

Organization, Geneva, Switzerland, (2004).

195 Ibid. 

 92 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.
196 Ibid. 

197 Ibid. 

198 See Article 11 of the WIPO Copyright Treaty and Article 18 of the WIPO Performances and 

Phonograms Treaty. Both treaties were adopted by the Diplomatic Conference on Certain Copyright and

Neighboring Rights Questions, which was convened under the auspices of WIPO in Geneva on 20 December 1996.

199 WIPO Doc., WIPO/EIM/3.

200 Interviews conducted by author with David Mahon, Supervisory Special Agent, Cyber Crime Squad,

Federal Bureau of Investigation - Denver Division, 2004. 

 93 

This document is a research report submitted to the U.S. Department of Justice. This report has not 

been published by the Department. Opinions or points of view expressed are those of the author(s) 

and do not necessarily reflect the official position or policies of the U.S. Department of Justice.