Intellectual Property Crimes

AuthorKassie Miller/Cesar Azrak/Rianna Jha/Victoria Kingham
Pages1055-1104
INTELLECTUAL PROPERTY CRIMES
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1056
II. TRADE SECRET THEFT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1057
A. Economic Espionage Act of 1996 . . . . . . . . . . . . . . . . . . . . . 1058
1. Definition of Trade Secret . . . . . . . . . . . . . . . . . . . . . . . 1058
2. Elements of the Criminal Offenses . . . . . . . . . . . . . . . . . 1060
a. Economic Espionage . . . . . . . . . . . . . . . . . . . . . . . 1060
b. Theft of Trade Secrets . . . . . . . . . . . . . . . . . . . . . . 1061
3. Applicability to Conduct Abroad . . . . . . . . . . . . . . . . . . 1062
4. Prosecutions Under the EEA . . . . . . . . . . . . . . . . . . . . . 1063
5. Defenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1064
a. Independent Development . . . . . . . . . . . . . . . . . . . 1065
b. Reverse Engineering . . . . . . . . . . . . . . . . . . . . . . . 1065
c. Lack of Secrecy . . . . . . . . . . . . . . . . . . . . . . . . . . . 1066
d. Statute of Limitations . . . . . . . . . . . . . . . . . . . . . . . 1066
B. National Stolen Property Act . . . . . . . . . . . . . . . . . . . . . . . . 1066
1. Transported in Interstate or Foreign Commerce . . . . . . . 1067
2. Goods, Wares, or Merchandise . . . . . . . . . . . . . . . . . . . 1068
3. Minimum Value of $5,000. . . . . . . . . . . . . . . . . . . . . . . 1069
4. Knowledge of the Same. . . . . . . . . . . . . . . . . . . . . . . . . 1070
5. Stolen, Converted, or Taken by Fraud . . . . . . . . . . . . . . 1070
C. Trade Secrets Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1070
D. Mail and Wire Fraud Statutes . . . . . . . . . . . . . . . . . . . . . . . 1071
E. Computer Fraud and Abuse Act . . . . . . . . . . . . . . . . . . . . . . 1072
F. State Law Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1073
III. TRADEMARK COUNTERFEITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1074
A. Trademark Counterfeiting Act . . . . . . . . . . . . . . . . . . . . . . . 1075
1. Relation to the Lanham Act . . . . . . . . . . . . . . . . . . . . . . 1075
2. The 2006 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 1075
3. The PRO-IP Act of 2008 . . . . . . . . . . . . . . . . . . . . . . . . 1076
4. Elements of the Criminal Offense . . . . . . . . . . . . . . . . . 1077
5. Defenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1078
B. RICO and Money Laundering Acts . . . . . . . . . . . . . . . . . . . . 1079
C. Other Federal Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1080
IV. COPYRIGHT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1080
A. Copyright Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1081
1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . 1084
a. Existence of a Valid Copyright . . . . . . . . . . . . . . . . 1085
b. Infringement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1085
c. Willfulness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1088
1055
d. Financial Gain or Threshold Violation . . . . . . . . . . . 1088
B. The Internet and the First Sale Doctrine . . . . . . . . . . . . . . . . 1089
C. Internet Service Provider Liability . . . . . . . . . . . . . . . . . . . . 1090
V. PATENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1093
A. False Marking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1094
B. Counterfeiting or Forging Letters Patent . . . . . . . . . . . . . . . 1095
VI. CABLE TELEVISION AND SATELLITE DESCRAMBLING . . . . . . . . . . . . . . . 1095
VII. SENTENCING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1096
A. Economic Espionage Act of 1996 . . . . . . . . . . . . . . . . . . . . . 1097
B. National Stolen Property Act . . . . . . . . . . . . . . . . . . . . . . . . 1098
C. Trade Secrets Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1098
D. Mail and Wire Fraud Statutes . . . . . . . . . . . . . . . . . . . . . . . 1099
E. Racketeer Influenced and Corrupt Organizations Act. . . . . . . 1100
F. Trademark Counterfeiting Act and Copyright Felony Act . . . . 1100
G. False Marking and Counterfeiting or Forging Letters Patent . 1103
H. Cable Television and Satellite Descrambling. . . . . . . . . . . . . 1103
I. INTRODUCTION
Intellectual property (IP) constitutes a substantial portion of today’s American
economy.
1
IP rights are critical to both industry and government,
2
yet civil sanc-
tions rarely deter infringement of intellectual property.
3
Some intellectual property
thieves view civil damages simply as a cost of doing business.
4
Moreover, some
1. See ECON. & STATISTICS ADMIN. & THE U.S. PATENT & TRADEMARK OFFICE, INTELLECTUAL PROPERTY
AND THE U.S. ECONOMY: 2016 UPDATE (2016), https://www.uspto.gov/sites/default/files/documents/
IPandtheUSEconomySept2016.pdf (describing IP-intensive industriesas a major, integral and growing part
of the U.S. economyand noting that as of 2014, IP-intensive industries constitute 38.2% of U.S. GDP); see also
Intangible Asset Market Value Survey, OCEAN TOMO (Sept. 22, 2020), https://www.oceantomo.com/intangible-
asset-market-value-study/ (finding that the implied intangible asset value of the S&P 500 grew to over 90% by
July 1, 2020).
2. See Jon Gelinne, J. Donald Fancher & Emily Mossburg, The Hidden Costs of an IP Breach: Cyber Theft
and the Loss of Intellectual Property, DELOITTE INSIGHTS (July 25, 2016), https://www2.deloitte.com/insights/us/
en/deloitte-review/issue-19/loss-of-intellectual-property-ip-breach.html#endnote-2.
3. Technological advancement facilitates theft while making it harder to detect. See NATL RSCH.
COUNCIL, THE DIGITAL DILEMMA: INTELLECTUAL PROPERTY IN THE INFORMATION AGE 3 (2000). Even if theft is
detected, state civil remedies are historically difficult to pursue. See THE NATL BUREAU OF ASIAN RSCH., THE IP
COMMISSION REPORT: THE REPORT OF THE COMMISSION ON THE THEFT OF AMERICAN INTELLECTUAL PROPERTY
73 (May 2013), https://www.nbr.org/wp-content/uploads/pdfs/publications/IP_Commission_Report.pdf
(discussing challenges for litigants in state courts including limited access to evidence and difficulty in
enforcing judgments). Criminal prosecution also remains a limited deterrent. See Eldar Haber, The
Criminal Copyright Gap, 18 STAN. TECH. L. REV. 247, 276 (2015) (observing that criminal prosecutions of
copyright violation are still rare).
4. See J. Derek Mason, Gerald J. Mossinghoff & David A. Oblon, The Economic Espionage Act: Federal
Protection for Corporate Trade Secrets, 16 COMPUT. L. 14, 15 (1999) (noting that “even if a company does bring
suit, the civil penalties often are absorbed by the offender” and the stolen property simply retained for future
prot); see also COMPUT. CRIME & INTELL. PROP. SECTION, CRIM. DIV., U.S. DEP T OF JUST., REPORTING
INTELLECTUAL PROPERTY CRIME: A GUIDE FOR VICTIMS OF COPYRIGHT INFRINGEMENT, TRADEMARK
COUNTERFEITING, AND TRADE SECRET THEFT 4 (3d ed. 2018), https://www.justice.gov/criminal-ccips/le/
1056 AMERICAN CRIMINAL LAW REVIEW [Vol. 59:1055
forms of IP infringement, like piracy of intangible goods and information, may
reduce or destroy the intellectual property’s value even if the original owner
remains in possession of the property.
5
The estimated total annual losses to the
United States and its companies from various forms of IP infringement could be
anywhere between $225 to $600 billion.
6
In addition to causing economic damage
and undermining entrepreneurialism in the U.S., IP infringement may also com-
promise public safety when counterfeit materials are used in pharmaceuticals,
automobile parts, and toys.
7
The marked increase in IP infringementcombined
with the ineffective deterrence of civil remedieshas led federal and state govern-
ments to criminalize IP infringement.
8
This article examines the key areas of intellectual property law that provide the
bases for criminal prosecutions. Section II examines the theft of trade secrets.
Section III discusses trademark counterfeiting. Section IV examines copyright
infringement. Section V considers patent violations. Section VI looks at cable tele-
vision and satellite descrambling. Section VII describes sentencing for intellectual
property crimes.
II. TRADE SECRET THEFT
Trade secret theft, one of the challenges facing U.S. corporations engaged in
global business,
9
is addressed by the Economic Espionage Act (EEA).
10
Part A
of this Section discusses the EEA. Parts B through E discuss other federal statutes
that prosecutors have used to penalize the misappropriation of trade secrets, albeit
without overwhelming success. These statutes include the National Stolen
Property Act, the Trade Secrets Act, the Mail and Wire Fraud statutes, and the
Racketeer Influenced and Corrupt Organizations Act (RICO). Part F describes
various state attempts to combat the theft of trade secrets; trade secret law is pri-
marily a matter of state law.
11
891011/download (explaining government efforts to expand criminal sanctions so that IP violators do not see
civil penalty as mere cost of doing business).
5. See COMPUT. CRIME & INTELL. PROP. SECTION, CRIM. DIV., U.S. DEPT OF JUST., PROSECUTING
INTELLECTUAL PROPERTY CRIMES 174 (4th ed. 2013), https://www.justice.gov/file/442151/download [hereinafter
IP CRIMES MANUAL] (Although many of these means of misappropriation leave the original property in the
hands of its owner, they reduce or destroy the trade secret’s value nonetheless.).
6. See THE COMMISSION ON THE THEFT OF AMERICAN INTELLECTUAL PROPERTY, THE NATIONAL BUREAU OF
ASIAN RESEARCH 1 (2017), https://www.nbr.org/wp-content/uploads/pdfs/publications/IP_Commission_
Report_Update.pdf.
7. See Office of the United States Trade Representative, 2021 Special 301 Report 9 (2021), https://ustr.gov/
sites/default/files/files/reports/2021/2021%20Special%20301%20Report%20(final).pdf.
8. See IP CRIMES MANUAL, supra note 5, at 36.
9. See BRIAN T. YEH, CONG. RSCH. SERV., R43714, PROTECTION OF TRADE SECRETS: OVERVIEW OF CURRENT
LAW AND LEGISLATION 1 (2016), https://sgp.fas.org/crs/secrecy/R43714.pdf.
10. See Economic Espionage Act of 1996 (EEA), 18 U.S.C. §§ 183139.
11. See YEH, supra note 9, at 6.
2022] INTELLECTUAL PROPERTY CRIMES 1057

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