What Do I Need to Know and What Do They Need to Know?

Richard Halverson
Assistant Special Agent in Charge at Homeland Security Investigations (HSI) Houston and former Unit Chief
Global Outreach and Training, National IPR Coordination Center

Does this sound familiar? You have invested and built your brand. You have designed, manufactured, marketed, sold and distributed your product. You have registered and recorded your intellectual property (IP) with various government entities including Customs and Border Protection (CBP). You have also fielded complaints from customers and have identified who is stealing your IP. But now you are at a crossroads: do you proceed with a civil action or do you present the case to law enforcement as a criminal complaint? And if you do present the case to law enforcement, how do you do so and what are issues do you need to consider?

Deciding whether to bring a civil action or present the case to law enforcement is a business decision that only you, the rights holder, can make. But if you do bring your IP theft case to law enforcement, there are some considerations that will affect the success of your case.


Law enforcement, at all levels, must constantly evaluate complaints and prioritize its resources to maximize efficiency. Even where you have a specialized law enforcement unit that focuses on IP theft, it must still prioritize its leads and cases (see BPP December, 2017 “Crime Prevention & Brand Protection: A Formula for Success (E+E=Enth)”).

Let’s look at how law enforcement may decide which cases to prioritize: 

Is there a health and safety issue?

When I’ve told rights holders, the public, and other stakeholders that we prioritize cases with health and safety concerns, I usually hear  “Of course,” or “Well yeah, obviously.” Since this is understood, the issue becomes how to prove or show risk. Several years ago, I met with a security director at a well-known cosmetics company who explained to me what health and safety risks were posed by counterfeits bearing his company’s trademarks. He shared test results from prior cases showing urine in perfume and unsanitary bottling practices leading to the presence of contaminants. Tests in a separate investigation by another cosmetics company showed counterfeit make-up did not have the SPF protection it claimed but did contain high levels of lead. These companies also have regularly attended training events for law enforcement and Customs officers where they can provide additional information concerning the health and safety risks posed by this class of counterfeit goods. 

Other products that have successfully proven health and safety issues include batteries, which can explode and result in fires or shrapnel-related injuries, and counterfeit fire extinguishers containing non-flame retardant chemicals. In the case of the batteries, the rights holder provided photos showing several examples of counterfeit lithium batteries that exploded and the resulting harm. The rights holder also conducted tests on batteries that HSI suspected of being counterfeit and shared the results with law enforcement. In the case of the counterfeit fire extinguishers, a well-known consumer product-safety certification company shared a video of a test it performed, in which a white particulate sprayed from the extinguisher, exacerbating rather than extinguishing the fire.

The ability to articulate and demonstrate those health and safety issues to law enforcement may affect their decision to accept the referral. In addition to laboratory test results and videos, press stories on harm to victims and consumer complaints can show the threat that counterfeit items pose to consumers whom law enforcement seeks to protect.

Is the case unique?

In other words, will the case garner increased attention due to the items being counterfeited, the suspects involved, or the consumers victimized? Examples of unique cases include counterfeit pet medications penetrating the legitimate supply chain (See Houston Chronicle, “Feds bust Houston, international scammers who sold fake flea medicine for pets,” September, 2017) and proprietary seeds being stolen by foreign nationals from the ground of U.S. farms (See The Kansas City Star, “Chinese national tried to steal a valuable U.S. trade secret: Kansas rice seeds,” April, 2018). Both cases brought unique facts for additional consideration by law enforcement.  

What evidence is there establishing knowledge on the part of the suspect?

This is usually the most challenging element of the case to prove, but there are many ways evidence may indicate knowledge. Prior convictions for similar offenses, CBP seizure notices, previous investigations, and raids and civil actions by rights holders can be all used to show the suspect understands the criminal nature of his actions. The importance of proving knowledge cannot be overemphasized: if your investigation fails to prove this, you will not be able to obtain a conviction for the offense. Proving knowledge from the outset will exponentially improve the chances of successful prosecution. 


Another issue to consider is how to successfully transition the complaint to law enforcement. (see BPP, September 2016 “How to Be a Good Victim”). To be clear, I’m not talking about sending an email to a detective or meeting with an agent and discussing the lead. I am talking about investigative work by the rights holder before referral. Even if the rights holder or its private investigator makes test purchases, at some point law enforcement must conduct its own investigation, which may include their own evidence purchases or undercover negotiations. There are several reasons for this, but the primary one is the need to ultimately prove that the suspects knew they were committing a crime and trafficking in counterfeit or pirated goods.

Many times when taking over an investigation, law enforcement will ask rights holder how do we get an undercover meeting with the target? This is when law enforcement learns if the rights holder’s investigator has left the cover story open to insertion of a law enforcement officer, or if the cover story was so detailed or specific that bringing an officer into the scenario would be unrealistic. If the cover story was too detailed, law enforcement would have to start from the beginning to establish the necessary elements of the crime. This happens more often than we would like and can adversely affect the ability of law enforcement to pursue the case. The best advice is to always leave the story, used in the rights holder’s investigation, “open” and talk to your law enforcement partners about various scenarios that have worked in the past to ensure this happens. Remember, the more you tell a suspect, the more you own the story and have to prove. Hence, from the law enforcement perspective “less is best”.


The final consideration is the importance of supporting the case from beginning to end. Rights holders and law enforcement both need a clear understanding and reasonable expectations about the level of support being provided during the investigation and prosecution. Discussion between the two should include how and what information can be exchanged, availability of experts to testify at trial, product identification support, disclosure of any previous or pending civil actions or licensing/business agreements, and media availability. 

Both sides must know the ground rules prior to getting too far into the case and finding problematic issues in an investigation or prosecution. The ability for rights holders and law enforcement to have an open and frank conversation helps build the trust and relationships that are needed to tackle IP theft (see BPP, March 2017 “Moving IP Crime Out of the Shadows”).

* The views expressed in this article are exclusively those of the author and do not necessarily represent the views of the U.S. Department of Homeland Security, its components, or the United States.


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