Intellectual Property Crimes
Maher, Megan K., Thompson, Jon Michael, American Criminal Law Review
Safeguarding intellectual property has become an increasingly visible responsibility in recent years, (1) largely because the Internet allows the transfer of information at high speeds. (2) Although owners of intellectual property are able to protect their rights by pursuing civil remedies, the threat of civil sanctions alone is often insufficient to deter violators who steal trade secrets or infringe on others' trademarks, copyrights, or patents. (3) Indeed, some intellectual property thieves view civil damage actions as just another cost of doing business. (4) The theft of intellectual property rights in the United States cost an estimated $300 billion dollars in 1997, with high technology corporations most frequently targeted. (5) A more recent study sponsored by The American Society for Industrial Security estimates that Fortune 1000 companies alone lost more than $45 billion from theft of trade secrets in 1999 (6) and in 2000, American companies lost in excess of $1 trillion overall. (7)
Such a marked noted increase in intellectual property crimes, combined with the lack of deterrence associated with civil mechanisms, has led the federal government and most states to enact statutes with criminal provisions designed to prevent the theft of intellectual property rights. (8) The government has also undertaken a national crackdown specifically targeted at trademark and copyright infringement. (9) Operation "Counter Copy," in addition to the DOJ's "Intellectual Property Rights Initiative," (10) is evidence of the government's commitment to prosecute intellectual property crimes. (11)
This article examines several areas of intellectual property law under which criminal prosecutions are brought. Section II covers the theft of trade secrets, while Section III discusses trademark counterfeiting. Section IV addresses copyright infringement. Section V examines the new problems raised by online servers, while Section VI looks at patents and Section VII at art crimes. Finally, Section VIII discusses sentencing for intellectual property crimes.
II. THEFT OF TRADE SECRETS
Trade secret theft may be the largest obstacle faced by the United States in its worldwide business, (12) yet prior to the enactment of the Economic Espionage Act, addressed below in Part II A, no federal criminal statute has dealt directly with the theft of commercial trade secrets. (13) Parts B through E of this Section will cover alternative statutes federal prosecutors have used in the past, with limited success, to penalize the misappropriation of trade secrets. These include the National Stolen Property Act, the Trade Secrets Act, the Mail and Wire Fraud statutes, and the Racketeer Influenced and Corrupt Organizations Act. Finally, Part F describes state provisions used to combat trade secret theft.
A. Economic Espionage Act of 1996
A survey conducted in 1995 found that half of the 325 companies questioned had fallen victim to trade secret theft. (14) Discouraged by the failure of civil remedies to prevent trade secret theft, the inability of prosecutors to effectively use other criminal statutes, and frequent efforts by foreign governments to obtain trade secrets from American companies, Congress made the theft of trade secrets a federal crime by enacting the Economic Espionage Act (hereinafter "EEA") in October 1996. (15) The EEA, intended by Congress to criminalize all trade secret theft, (16) established two offenses under which the Government can prosecute such theft. The first offense, "economic espionage" (hereinafter "section 1831"), arises only when the theft benefits a foreign government. (17) This carries higher penalties than the second offense, "theft of trade secrets" (hereinafter "section 1832"), which is more sweeping, covering theft benefiting all but the true owner, and generally defining trade secret theft. …