Remarks as Prepared for Delivery
Good afternoon. It’s a great honor to welcome you to the 13th edition of the Law Enforcement and Industry Meeting on Intellectual Property Enforcement.
This conference offers a great opportunity for CCIPS, the Department, and each of our law enforcement colleagues gathered at the table today to discuss our shared efforts in IP enforcement, and to hear your comments about the latest successes and challenges. It’s an event that benefits all of us.
Since this conference first began more than a decade ago, we have seen dramatic changes in IP crime:
- Copyright pirates have moved from peddling individual copies of movies, music, and software on street corners or offering individual downloads online, to operating technologically advanced, multi-national streaming services that generate millions of dollars in illicit profits.
- These services also pose a risk to consumers by coupling malicious code with the stolen content.
- Trademark counterfeiters are leveraging the power of online sales to copy and sell knock-offs of any product imaginable, using recognized streams of commerce upon which Americans have come to rely.
- These counterfeiters deliver substandard and sometimes hazardous goods to an unsuspecting public.
- Finally, the theft of trade secrets has morphed from individualized action into the highly-refined, publically-stated goal of certain nation-states that see themselves as America’s economic adversaries rather than as responsible trading partners.
So what is the Department doing to keep up in this ever-changing landscape?
First and foremost, we employ the expertise of attorneys across the Department and our federal prosecutors across the country to bring high-impact cases to deter IP crime.
I wanted to highlight some examples of recent prosecutions that show the diligence and creativity of our investigators and prosecutors in bringing these cases.
Online Copyright Infringement – Jetflicks
In August, we announced charges in the Eastern District of Virginia against eight Las Vegas residents for running two of the largest unauthorized streaming services in the country.
One of the services – known as Jetflicks – allegedly obtained infringing television programs by using sophisticated computer scripts to scour pirate websites around the world and collect the television shows.
It then made the programming available for paying Jetflicks subscribers to stream and download, often just one day after the original episodes aired.
The scheme, as charged, resulted in the loss of millions of dollars by television program and motion picture copyright owners.
This case demonstrates how IP criminals are leveraging technology to operate at unprecedented scale and speed.
The Jetflicks case is indicative of other technological challenges we are facing in copyright, such as the explosive growth of internet streaming devices, or “set top boxes,” which likewise can deliver massive amounts of pirated content.
CCIPS Senior Counsel Matt Lamberti, who is working with the Eastern District of Virginia U.S. Attorney’s Office on the Jetflicks prosecution, is here with us today.
In addition to unlimited free content, these services will often install malicious software that can compromise the computer security of unwitting consumers, sending passwords, financial information and other personal information to be distributed for profit on the internet.
Trafficking In Counterfeit Goods – Container Shipping
The Department of Justice also has obtained a slew of guilty pleas in a massive 22-defendant counterfeit importation conspiracy charged in the Eastern District of New York, resulting in the dismantling of one of the largest counterfeit goods trafficking rings ever uncovered in the United States.
These conspirators trafficked not drugs nor electronics, but counterfeit luxury goods that were made in China: fake Louis Vuitton, Gucci, and Michael Kors handbags, wallets, belts, perfume, and other merchandise.
This operation is significant in both its scope and scale—had the items been legitimate, it is estimated that the value would be over $1 billion in total, making it one of the largest counterfeit luxury goods cases in U.S. history.
Members of the conspiracy engaged in multiple schemes to avoid detection, pretending to be representatives of legitimate importation companies, submitting false paperwork to customs authorities, and lying about the nature of the goods in customs declarations.
Once the goods were in the U.S., conspirators sold those counterfeit items in multiple jurisdictions across the country, and laundered millions of dollars of proceeds.
To date, 20 defendants have pleaded guilty in the Eastern District of New York and New York state court in this investigation and related cases. CCIPS Senior Counsel James Yoon, one of the prosecutors working on Operation TMG, is in the audience today.
Trade Secret Theft – Syntactic Foam
This past summer, following a nine-day jury trial, an engineer and former employee of a Houston company was convicted of conspiracy to commit theft of trade secrets in federal court in the District of Columbia.
This prosecution represented the joint effort of FBI counterintelligence agents, the DC U.S. Attorney’s Office and prosecutors from CCIPS, and the National Security Division’s Counterintelligence and Espionage Section.
The defendant, Shan Shi, and four co-defendants were charged with conspiring to steal trade secrets from a business in the United States on behalf of a company in China that was engaged in manufacturing syntactic foam, a high-performance, naval-grade product with commercial and military uses that is essential for deep-sea oil and gas drilling.
Shan Shi and his coconspirators went to great lengths to cash in on the Chinese government’s desire to obtain syntactic foam technology.
During the course of the trial, the jury heard about the economic incentives in place in China that facilitate and even encourage the theft of American IP where it meets a perceived technological need of the Chinese state.
We need to focus future enforcement efforts on counteracting these incentives.
International Engagement – The China Initiative
Whether it is manufactured goods violating trademarks and counterfeits, or the theft of valuable trade secret information, we at the Department have our eyes wide open when it comes to the common denominator in the vast majority of these cases: China.
China’s state-provided economic incentives, vast manufacturing base, and limited domestic enforcement combine to create an environment that encourages IP theft.
And China is at the forefront of the conversation as we address the uptick in trade secret thefts on behalf of foreign corporations or foreign government interests.
In November 2018, I stood together with then-Attorney General Sessions to announce the Department’s new “China Initiative” – which has proceeded full steam ahead under the leadership of Attorney General Barr.
Under the China Initiative, the Criminal Division, National Security Division, FBI, and U.S. Attorney’s Offices have redoubled our efforts to investigate Chinese companies and individuals for the theft of trade secrets.
We have increased our outreach efforts to U.S. Attorneys with materials to raise awareness of these threats.
We have fostered a dialogue between the government and private sector to ensure that, whether we are dealing with counterfeiting, trade secret theft, a data breach, or ransomware, the Department is well-positioned to obtain evidence from industry.
And we have sought to find opportunities to better fight against threats to supply chains for components used in military and government systems and in critical civilian infrastructure.
Each of these efforts stem from the recognition that we must not stand by and allow our intellectual property to be stolen.
Expansion of the ICHIP Program
While we continue to focus on China as a source of IP violations, we would be remiss if we did not acknowledge the impact on American companies of IP and high-tech crime around the world.
In 2006, just before the original IP Industry Conference, DOJ placed the first IP Law Enforcement Coordinator in Bangkok, Thailand, to provide training and technical assistance to build the capacity of our foreign counterparts to combat IP crimes.
Working with our colleagues in the State Department, we have been forward-leaning in seeking to enhance our relationships with foreign counterparts – specifically in combatting IP and cybercrimes – to level the global playing field and reduce the number of safe havens available to IP criminals.
Last year at this meeting, I announced the expansion and re-naming of the Department’s experts posted around the globe, now known as International Computer Hacking and Intellectual Property or “ICHIPs.”
Our ICHIPs deliver basic and advanced law enforcement training, case-based mentoring, and other technical assistance to investigators, prosecutors, judges, and other government officials.
They have been instrumental in developing successful cases in their regions, and turning those cases into sustainable models for continued enforcement.
I’m thrilled that with the support of the State Department, we have been able to expand the ICHIP program, and I am proud to introduce to you today the two Washington, DC-based ICHIPs with subject matter expertise in dark markets, cryptocurrencies, and internet-based fraud.
Michael Chu hails from the Houston U.S. Attorney’s Office, and will be serving as our internet-based fraud and public health and safety subject matter expert.
John Ghose joins our ICHIP Network from the Atlanta U.S. Attorney’s Office, and will offer subject matter expertise on virtual currencies and dark markets.
In addition, we also have our incoming Eastern Europe ICHIP Scott Keirin in attendance today. Scott will be moving later this month from the Portland, Oregon U.S. Attorney’s Office to Bucharest, Romania.
Looking Forward
In recent months I’ve had the opportunity to interact with representatives across the many industries in the U.S. that rely on intellectual property to succeed.
Based on those discussions, I’m acutely aware of the challenges facing each of us in the room today, whether from the perspective of a company trying to compete in a global marketplace or government agencies charged with the responsibility to protect IP.
Several themes run through these discussions, and I’d like to close with areas where I believe we can work together in the coming year to address the challenges:
- Existing laws do not always address the conduct that IP criminals are engaging in today. Or, put differently, smart criminals may seek to avoid serious repercussions by developing new technologies or security measures to skirt legal authorities.
- We need to be creative and cooperative in thinking about possible solutions, whether through looking at additional charging strategies, or considering legislative amendments.
- We will never be in a position where we can prosecute our way out of the problem of IP crime. However, by working together to identify the worst actors, we can have a measurable effect on decreasing the profitability of criminal IP infringement.
- Gatherings such as our meeting today provide an excellent opportunity to share the work that we have been doing on the enforcement side, and to hear from you about developing trends and new concerns.
I trust that today’s conversation with the experts gathered around the table will be as informative as it has been in each of the prior meetings.
I look forward to hearing back from CCIPS about your input today, and in continuing to work together to combat IP crime in the coming year.
Thank you for your attention.
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