Partnering With The Feds For IP Enforcement: Part 1

January 2012

Law360, New York (January 2012) -- Together, we are signaling that a new era of cooperation, engagement and vigilance has begun. And we are sending an unequivocal message to criminals profiting from the ingenuity of others or endangering the safety of our citizens by selling defective or dangerous counterfeit goods. We will find you. We will stop you. And you will be punished. --U.S. Attorney General Eric Holder


Despite the best efforts by private litigants, undertaken at their own expense, online piracy and counterfeiting of goods are still on the rise. Based on 2005 estimates, counterfeiting costs the U.S. economy an estimated $200 to $250 billion per year, and according to the FBI, Interpol and the World Customs Organization, approximately 5 percent to 7 percent of world trade ($512 billion) is in counterfeit goods. Until recently, federal law enforcement did not vigorously enforce criminal statutes covering such conduct, leaving private litigants to combat these problems on their own.

One obvious reason why intellectual property crimes are on the rise is the paucity of criminal prosecutions in a highly lucrative area of criminal enterprise. Government data shows that counterfeiters selling luxury goods can realize staggering profits, ranging from 300 percent to over 3,000 percent. Indeed, some estimates put counterfeiter profit margins ahead of drug traffickers, while drug trafficking convictions carry substantially higher penalties. So, without some new form of deterrent, counterfeiting of all goods is sure to expand. This explains the tough talk from the nation’s highest-ranking law enforcement official. But it’s not just talk.

A quick survey of news reports reveals that federal agencies, including the U.S. Department of Justice, FBI and Immigration and Customs Enforcement, recently have begun to increase their efforts to investigate and prosecute IP violators. From the IP holder’s perspective, the stepped-up enforcement raises the question: Is it better to follow the traditional path and “go it alone” by pursuing civil remedies or actively work with law enforcement to (perhaps) protect products and brands in a more lasting and cost efficient way.

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