INTELLECTUAL PROPERTY CRIMES
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 836
II. TRADE SECRET THEFT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 837
A. Economic Espionage Act of 1996 . . . . . . . . . . . . . . . . . . . . . 837
1. Definition of Trade Secret . . . . . . . . . . . . . . . . . . . . . . . 838
2. Elements of the Criminal Offenses . . . . . . . . . . . . . . . . . 839
a. Economic Espionage. . . . . . . . . . . . . . . . . . . . . . . . 839
b. Theft of Trade Secrets. . . . . . . . . . . . . . . . . . . . . . . 840
3. Applicability to Conduct Abroad . . . . . . . . . . . . . . . . . . 840
4. Prosecutions Under the EEA. . . . . . . . . . . . . . . . . . . . . . 841
5. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 842
a. Independent Development . . . . . . . . . . . . . . . . . . . . 842
b. Reverse Engineering . . . . . . . . . . . . . . . . . . . . . . . . 843
c. Lack of Secrecy . . . . . . . . . . . . . . . . . . . . . . . . . . . 843
d. Statute of Limitations . . . . . . . . . . . . . . . . . . . . . . . 844
B. National Stolen Property Act. . . . . . . . . . . . . . . . . . . . . . . . . 844
1. Transported in Interstate or Foreign Commerce . . . . . . . . 844
2. Goods, Wares, or Merchandise . . . . . . . . . . . . . . . . . . . . 845
3. Minimum Value of $5,000 . . . . . . . . . . . . . . . . . . . . . . . 845
4. Knowledge of the Same . . . . . . . . . . . . . . . . . . . . . . . . . 846
5. Stolen, Converted, or Taken by Fraud . . . . . . . . . . . . . . . 846
C. Trade Secrets Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 846
D. Mail and Wire Fraud Statutes . . . . . . . . . . . . . . . . . . . . . . . . 847
E. Computer Fraud and Abuse Act . . . . . . . . . . . . . . . . . . . . . . 848
F. State Law Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 849
III. TRADEMARK COUNTERFEITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 849
A. Trademark Counterfeiting Act . . . . . . . . . . . . . . . . . . . . . . . . 850
1. Relation to the Lanham Act . . . . . . . . . . . . . . . . . . . . . . 850
2. The 2006 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 851
3. The PRO-IP Act of 2008 . . . . . . . . . . . . . . . . . . . . . . . . 851
4. Elements of the Criminal Offense . . . . . . . . . . . . . . . . . . 852
5. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 853
B. RICO and Money Laundering Acts . . . . . . . . . . . . . . . . . . . . 854
C. Other Federal Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 854
IV. COPYRIGHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 855
A. Copyright Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 855
1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 859
a. Existence of a Valid Copyright . . . . . . . . . . . . . . . . 859
b. Infringement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 860
c. Willfulness 862
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
835
d. Financial Gain or Threshold Violation . . . . . . . . . . . 862
B. The Internet and the First Sale Doctrine . . . . . . . . . . . . . . . . 863
C. Internet Service Provider Liability. . . . . . . . . . . . . . . . . . . . . 864
V. PATENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 867
A. False Marking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 867
B. Counterfeiting or Forging Letters Patent . . . . . . . . . . . . . . . . 868
VI. SENTENCING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 868
A. Economic Espionage Act of 1996 . . . . . . . . . . . . . . . . . . . . . 869
B. National Stolen Property Act. . . . . . . . . . . . . . . . . . . . . . . . . 870
C. Trade Secrets Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 870
D. Mail and Wire Fraud Statutes . . . . . . . . . . . . . . . . . . . . . . . . 871
E. Racketeer Influenced and Corrupt Organizations Act . . . . . . . 871
F. Trademark Counterfeiting Act and Copyright Felony Act . . . . 872
G. False Marking and Counterfeiting or Forging Letters Patent . . . 874
I. INTRODUCTION
Intellectual property (“IP”) constitutes a substantial portion of the modern
American economy.
1
See THE U.S. PATENT & TRADEMARK OFFICE, INTELLECTUAL PROPERTY AND THE U.S. ECONOMY (3d ed.
2019), https://www.uspto.gov/sites/default/files/documents/uspto-ip-us-economy-third-edition.pdf (noting that
“IP-intensive industries” accounted for 41% of U.S. GDP and 33% of all U.S. employment).
IP rights are critical to both industry and government,
2
See J. Patrick 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.
yet civil
sanctions rarely deter infringement of intellectual property.
3
Technological advancement facilitates theft while making it harder to detect. See N
AT’L 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 T
HE NAT’L 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 S
TAN. TECH.
L. REV. 247, 276 (2015) (observing that criminal prosecutions of copyright violation are still rare).
Some intellectual prop-
erty thieves view civil damages simply as a cost of doing business.
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
profit); 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/file/
891011/download (explaining government efforts to expand criminal sanctions so that IP violators do not see
civil penalty as mere cost of doing business).
Moreover, some
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 pos-
session of the property.
5
COMPUT. CRIME & INTELL. PROP. SECTION, CRIM. DIV., U.S. DEP’T OF JUST., PROSECUTING INTELL. PROP.
CRIMES 174 (4th ed. 2013) [hereinafter IP CRIMES MANUAL], https://www.justice.gov/file/442151/download.
The estimated total annual losses to the United States and its
1.
2.
3.
4.
5.
836 AMERICAN CRIMINAL LAW REVIEW [Vol. 61:835
companies from various forms of IP infringement could be anywhere between $225
to $600 billion.
6
See THE COMM’N ON THE THEFT OF AM. INTELL. PROP., THE NAT’L BUREAU OF ASIAN RSCH., UPDATE
TO THE IP COMMISSION REPORT 1 (2017), https://www.nbr.org/wp-content/uploads/pdfs/publications/
IP_Commission_Report_Update.pdf.
In addition to causing economic damage and undermining entrepre-
neurialism, IP infringement may also compromise public safety when counterfeit
materials are used in pharmaceuticals, electrical appliances, and toys.
7
See Jill Bainbridge, Intellectual Property Rights Infringement Threatens Public Safety, BLAKE MORGAN
(Sept. 2021), https://www.blakemorgan.co.uk/intellectual-property-rights-infringement-threatens-public-safety/.
The marked
increase in IP infringement—combined with the ineffective deterrence of civil rem-
edies—has led federal and state governments to criminalize IP infringement.
8
This article examines the key areas of intellectual property law that provide the
basis 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
The Economic Espionage Act (“EEA”)
9
addresses trade secret theft.
10
See BRIAN T. YEH, CONG. RSCH. SERV., R43714, PROTECTION OF TRADE SECRETS: OVERVIEW OF
CURRENT L. AND LEGIS. 1 (2016), https://sgp.fas.org/crs/secrecy/R43714.pdf.
Part A of
this Section discusses how the EEA criminalizes trade secret theft. Parts B through
E discuss other federal statutes that prosecutors have used to penalize the misap-
propriation 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.
11
A. Economic Espionage Act of 1996
Congress enacted the EEA in 1996 in response to increasing efforts by foreign
governments, instrumentalities, and agents to misappropriate the trade secrets of
U.S. companies.
12
See Economic Espionage Act of 1996, Pub. L. No. 104-294, 110 Stat. 3488 (1996) (codified at 18 U.S.C.
§§ 1831–39); see also U.S. DEP’T OF JUST., JUST. MANUAL, CRIM. RES. MANUAL § 1122 (2018) [hereinafter
JUSTICE MANUAL CRM], https://www.justice.gov/jm/criminal -resource-manual-1122-introduction-economic-
espionage-act.
The EEA provides criminal and civil penalties for the theft of
trade secrets.
13
In 2016, Congress passed the Defend Trade Secrets Act (“DTSA”),
6.
7.
8. See IP CRIMES MANUAL, supra note 5, at 3–6.
9. See Economic Espionage Act of 1996 (EEA), 18 U.S.C. §§ 1831–39.
10.
11. See YEH, supra note 10, at 6 (noting that trade secrets are primarily a matter of state law).
12.
13. 18 U.S.C. § 1831(a).
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