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Posts tagged "Infringement"

Megaupload Faces Mega-Problems for Alleged Copyright Infringement

US Justice Department Charges Leaders of Megaupload with Widespread Online Copyright Infringement

 

Seven individuals and two corporations have been charged in the United States with running an international organized criminal enterprise allegedly responsible for massive worldwide online piracy of numerous types of copyrighted works, through Megaupload.com and other related sites, generating more than $175 million in criminal proceeds and causing more than half a billion dollars in harm to copyright owners, the U.S. Justice Department and FBI announced recently.

 

This action is among the largest criminal copyright cases ever brought by the United States and directly targets the misuse of a public content storage and distribution site to commit and facilitate intellectual property crime.

           

The individuals and two corporations - Megaupload Limited and Vestor Limited - were indicted by a grand jury in the Eastern District of Virginia on Jan. 5, 2012, and charged with engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two substantive counts of criminal copyright infringement. The individuals each face a maximum penalty of 20 years in prison on the charge of conspiracy to commit racketeering, five years in prison on the charge of conspiracy to commit copyright infringement, 20 years in prison on the charge of conspiracy to commit money laundering and five years in prison on each of the substantive charges of criminal copyright infringement.

 

The indictment alleges that the criminal enterprise is led by Kim Dotcom, aka Kim Schmitz and Kim Tim Jim Vestor, 37, a resident of both Hong Kong and New Zealand. Dotcom founded Megaupload Limited and is the director and sole shareholder of Vestor Limited, which has been used to hold his ownership interests in the Mega-affiliated sites.

 

In addition, the following alleged members of the Mega conspiracy were charged in the indictment:

  • Finn Batato, 38, a citizen and resident of Germany, who is the chief marketing officer;
  • Julius Bencko, 35, a citizen and resident of Slovakia, who is the graphic designer;
  • Sven Echternach, 39, a citizen and resident of Germany, who is the head of business development;
  • Mathias Ortmann, 40, a citizen of Germany and resident of both Germany and Hong Kong, who is the chief technical officer, co-founder and director;
  • Andrus Nomm, 32, a citizen of Estonia and resident of both Turkey and Estonia, who is a software programmer and head of the development software division;
  • Bram van der Kolk, aka Bramos, 29, a Dutch citizen and resident of both the Netherlands and New Zealand, who oversees programming and the underlying network structure for the Mega conspiracy websites.

Dotcom, Batato, Ortmann and van der Kolk were arrested today in Auckland, New Zealand, by New Zealand authorities, who executed provisional arrest warrants requested by the United States. Bencko, Echternach and Nomm remain at large. Today, law enforcement also executed more than 20 search warrants in the United States and eight countries, seized approximately $50 million in assets and targeted sites where Megaupload has servers in Ashburn, Va., Washington, D.C., the Netherlands and Canada. In addition, the U.S. District Court in Alexandria, Va., ordered the seizure of 18 domain names associated with the alleged Mega conspiracy.

 

According to the indictment, for more than five years the conspiracy has operated websites that unlawfully reproduce and distribute infringing copies of copyrighted works, including movies - often before their theatrical release - music, television programs, electronic books, and business and entertainment software on a massive scale. The conspirators' content hosting site, Megaupload.com, is advertised as having more than one billion visits to the site, more than 150 million registered users, 50 million daily visitors and accounting for four percent of the total traffic on the Internet. The estimated harm caused by the conspiracy's criminal conduct to copyright holders is well in excess of $500 million. The conspirators allegedly earned more than $175 million in illegal profits through advertising revenue and selling premium memberships.

 

The indictment states that the conspirators conducted their illegal operation using a business model expressly designed to promote uploading of the most popular copyrighted works for many millions of users to download. The indictment alleges that the site was structured to discourage the vast majority of its users from using Megaupload for long-term or personal storage by automatically deleting content that was not regularly downloaded. The conspirators further allegedly offered a rewards program that would provide users with financial incentives to upload popular content and drive web traffic to the site, often through user-generated websites known as linking sites. The conspirators allegedly paid users whom they specifically knew uploaded infringing content and publicized their links to users throughout the world.  

 

In addition, by actively supporting the use of third-party linking sites to publicize infringing content, the conspirators did not need to publicize such content on the Megaupload site. Instead, the indictment alleges that the conspirators manipulated the perception of content available on their servers by not providing a public search function on the Megaupload site and by not including popular infringing content on the publicly available lists of top content downloaded by its users.  

 

As alleged in the indictment, the conspirators failed to terminate accounts of users with known copyright infringement, selectively complied with their obligations to remove copyrighted materials from their servers and deliberately misrepresented to copyright holders that they had removed infringing content. For example, when notified by a rights holder that a file contained infringing content, the indictment alleges that the conspirators would disable only a single link to the file, deliberately and deceptively leaving the infringing content in place to make it seamlessly available to millions of users to access through any one of the many duplicate links available for that file.

 

The indictment charges the defendants with conspiring to launder money by paying users through the sites' uploader reward program and paying companies to host the infringing content.  

 

The case is being prosecuted by the U.S. Attorney's Office for the Eastern District of Virginia and the Computer Crime & Intellectual Property Section in the Justice Department's Criminal Division. The Criminal Division's Office of International Affairs, Organized Crime and Gang Section, and Asset Forfeiture and Money Laundering Section also assisted with this case.

 

The investigation was initiated and led by the FBI at the National Intellectual Property Rights Coordination Center (IPR Center), with assistance from U.S. Immigration and Customs Enforcement's Homeland Security Investigations. Substantial and critical assistance was provided by the New Zealand Police, the Organised and Financial Crime Agency of New Zealand (OFCANZ), the Crown Law Office of New Zealand and the Office of the Solicitor General for New Zealand; Hong Kong Customs and the Hong Kong Department of Justice; the Netherlands Police Agency and the Public Prosecutor's Office for Serious Fraud and Environmental Crime in Rotterdam; London's Metropolitan Police Service; Germany's Bundeskriminalamt and the German Public Prosecutors; and the Royal Canadian Mounted Police - Greater Toronto Area (GTA) Federal Enforcement Section and the Integrated Technological Crime Unit and the Canadian Department of Justice's International Assistance Group. Authorities in the United Kingdom, Australia and the Philippines also provided assistance.  

 

This case is part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation's economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce .

 

SOURCE:   US DOJ

2011 Another Record Year for Counterfeit/Infringing Imported Goods Seizures

According to a recently-released report from U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE), counterfeit and pirated goods seizures during fiscal year (FY) 2011 totaled almost 25,000 - a 24 percent increase over 2010.

Many fake goods seriously threaten the health and safety of American consumers and our national security. With this in mind, CBP and ICE continued to step up enforcement against these dangerous products resulting in a 44 percent increase in the number of seizures of health and safety products that could have harmed Americans. The value of these seizures soared to more than $60 million due to increases in pharmaceutical and perfume seizures.

Despite the significant increase in the number of seizures, the domestic value for seizures in fiscal year 2011 decreased by five percent to $178.9 million and the manufacturer's suggested retail price declined slightly to $1.1 billion. This is primarily due to a shift toward using international mail, express courier, and consolidated shipping services to import counterfeit and pirated goods.

"The growth of websites selling counterfeit goods directly to consumers is one reason why CBP and ICE have seen a significant increase in the number of seizures at mail and express courier facilities," said Acting CBP Commissioner David V. Aguilar. "Although these websites may have low prices, what they do not tell consumers is that the true costs to our nation and consumers include lost jobs, stolen business profits, threats to our national security, and a serious risk of injury to consumers."

"I'm very proud of the unrelenting efforts of the ICE-led National Intellectual Property Rights Coordination Center and our law enforcement partners," said ICE Director John Morton. "IP enforcement is a high priority for ICE and CBP because the trade in counterfeit and pirated goods robs Americans of jobs and puts their safety at risk, costs legitimate businesses billions of dollars in revenue, and fuels criminal activity. In fiscal year 2012, ICE and CBP will continue to focus on keeping these goods off the streets and bring those responsible for producing and distributing them to justice."

China continues to be the number one source country for counterfeit and pirated goods seized, accounting for 62 percent or $124.7 million of the total domestic value of seizures.

For the first time since FY 2005, footwear was not the top commodity seized in fiscal year 2011. Consumer electronics were the top commodity seized, and approximately one-third of this category was represented by IPR infringing cellular phones.

The top 10 categories of IPR-infringing products seized were pharmaceuticals, health/personal care, eyewear/parts, critical technology components, electronic articles, cigarettes, perfumes/colognes, batteries, exercise equipment and transportation/parts.

As the federal agency responsible for the management, control and protection of U.S. borders, CBP is on the frontline of IPR enforcement. The men and women of CBP protect our nation's economy, the safety of its people, and our national security against harm from counterfeit and pirated goods. The continued vigilance of CBP personnel protects United States citizens and businesses every day.

As the largest investigative arm of the Department of Homeland Security, ICE Homeland Security Investigations (HSI) plays a leading role in targeting criminal organizations responsible for producing, smuggling, and distributing counterfeit products. ICE HSI focuses not only on keeping counterfeit products off our streets, but also on dismantling the criminal organizations behind such illicit activity.

The National Intellectual Property Rights Coordination Center (IPR Center) is one of the U.S. government's key weapons in the fight against criminal counterfeiting and piracy. The IPR Center uses the expertise of its 19 member agencies to share information, develop initiatives, coordinate enforcement actions, and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and the war fighters.

To report IP theft or to learn more about the IPR Center, visit www.IPRCenter.gov.

Source:  CBP/ICE

CUSTOMS IP ENFORCEMENT NEWS

CUSTOMS IP ENFORCEMENT NEWS


The CBP strategic approach to intellectual property rights enforcement is multi-layered and includes seizing counterfeit goods at the border, pushing the border outward through audits of infringing importers and cooperation with our international trading partners, and partnering with industry and other government agencies to enhance these efforts.  CBP officers and import specialists are aggressively working together to intercept shipments containing counterfeit and pirated items.

Recent CBP IP counterfeit seizures at the US border include:
 
- Chicago CBP Seize Counterfeit Drivers Licenses
Since the beginning of this year, Chicago Customs and Border Protection (CBP), Office of Field Operations officers working at the International Mail Facility at O'Hare Airport have seized more than 1,700 counterfeit state drivers licenses coming in to this country from China.
 
The seized licenses are high quality counterfeits of identification for the states of Illinois, Ohio, South Dakota, New Jersery, Florida, Georgia and Pennsylvania. The majority of the fake license shipments were addressed to college students throughout the United States. Federal, state and local law enforcement agencies are conducting investigations regarding some of the intended recipients.
 
"Our greatest concern is the ease at which these high quality fakes can be ordered over the internet," said David Murphy, CBP director of Field Operations in Chicago. "CBP will continue to work closely with our federal, state and local law enforcement partners to ensure the security of our nation and assist in ongoing investigations or prosecutions.
 
This year, CBP officers seized shipments ranging from two drivers licenses to 48 in various concealment methods. In some cases, the counterfeit licenses were shipped in envelopes, in others they were hidden inside shipments of various electronic and gift items.
 
Source: CBP

IP Infringement in China Costs US Companies


Despite broad success in the China market, many U.S. companies have reported that the infringement of their intellectual property rights (IPR) in China and China's indigenous innovation policies have undermined their competitive positions, reports the U.S. International Trade Commission (USITC).

In response to a USITC survey, many U.S. firms reported lost sales, profits, and license and royalty fees, as well as damaged brand names and product reputation, as a result of IPR infringement in China, according to the report. U.S. firms reported losses associated with China's indigenous innovation policies as well but noted greater concern about the future implications of these evolving policies.

The report, the second of two reports on IPR infringement and indigenous innovation policies in China and their effects on the U.S. economy and employment, was released today. The USITC, an independent, nonpartisan, factfinding federal agency, conducted the studies at the request of the U.S. Senate Committee on Finance.

As requested, the Commission report estimates the size and scope of reported Chinese IPR infringement; provides a quantitative analysis of the effect of IPR infringement in China on the U.S. economy and its sectors; and assesses the effects of China's indigenous innovation policies on the U.S. economy and employment. Highlights of the report follow.

·              Based on survey information, the USITC estimates that U.S. IP-intensive firms' losses from IPR infringement in China were approximately $48 billion in 2009. The survey was sent to over 5,000 U.S. firms in the IP-intensive part of the U.S. economy, which is the sector most likely to be affected by IPR infringement in China. Firms in this segment of the U.S. economy also spent approximately $4.8 billion in 2009 to address possible Chinese IPR infringement in 2009. These figures may be understated because they do not reflect losses incurred by firms in the rest of the economy.
 
·              Firms reported that among the losses they incurred as a result of IPR infringement in China, those associated with copyright infringement were the largest monetarily, and those associated with trademark infringement were the most widespread. The "information and other services sector" represented the segment within the U.S. IP- intensive sector with the highest amount of reported losses associated with IPR infringement in China.
 
·              U.S. firms in the IP-intensive economy reported that an improvement in China's IPR protection and enforcement to levels comparable to the United States' would likely increase employment in their U.S. operations by approximately 923,000 jobs.
 
·              To complement the survey results, the USITC used a statistical and simulation analysis to estimate the U.S. economic effects of an improvement in China's IPR protection to levels comparable to the United States'. This analysis found the following effects: (1) a $21.4 billion increase in U.S. exports of goods and services, (2) a $87.8 billion increase in sales to U.S. majority-owned affiliates in China, (3) a potential 2.1 million increase in net U.S. employment under conditions of prolonged and high unemployment, and (4) some reallocations within the U.S. workforce towards more IP-intensive services sector jobs.
 
·              Respondents to the USITC survey also expressed concerns about China's indigenous innovation policies, especially: (1) preferential support for Chinese firms in the form of tax incentives, subsidies, and preferential lending; and (2) China-specific technical standards. The USITC's case studies in the wind energy, telecommunications equipment, software, automotive, and aircraft sectors provide a fuller picture of the effects of China's indigenous innovation policies on these selected sectors.
 
China: Effects of Intellectual Property Infringement and Indigenous Innovation Policies on the U.S. Economy (Investigation No. 332-519, USITC Publication 4226, May 2011) will be available on the USITC's Internet site at http://www.usitc.gov/publications/332/pub4226.pdf.

SOURCE: USITC
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