What to Expect When Your Intellectual Property is Stolen:
A Prosecutor’s Perspective
Senior Counsel, U.S. Department of Justice
Trial Attorney, U.S. Department of Justice
As federal prosecutors in the Computer Crime and Intellectual Property Section, part of the U.S. Department of Justice’s (DOJ’s) Criminal Division, we regularly hear from victims, many of them brand owners, that their IP has been stolen and that they are uncertain of the next steps. The answer to this question largely is driven by what victims have already done, and the goals they want to accomplish. In this article, we’ll identify considerations related to this topic, and provide guidance to potential victim companies on what to expect throughout the criminal process.
MAKE AN INTERNAL PLAN
At the outset, companies should discuss internally whether the matter is best resolved through criminal enforcement, which places an emphasis on punishment and deterrence, or whether a better resolution might be reached through a civil lawsuit, with an emphasis on recovering financial loss. These discussions should include corporate management, general counsels, and, when appropriate, outside counsel. Discussions should weigh a variety of factors, including:
- What is the scope of the criminal conduct?
Did the theft of IP involve other criminal activity, such as wire fraud or unauthorized access to a corporate network? How egregious was the conduct? Did it involve the victimization of multiple brand owners, such as the illegal streaming of millions of copyrighted movies and tv shows (The United States Department of Justice, Justice News, 2012) or trafficking in counterfeit goods of multiple brands (United States Attorney’s Office, Western District of Washington, 2022)?
- What harm or loss occurred?
What is the potential financial loss? Did it involve counterfeit goods worth millions of dollars (United States Attorney’s Office, District of New Jersey, 2022? Was there other loss, such as the potential for adverse health effects from the sale of counterfeit medical devices (The United States Department of Justice, Justice News, 2017)?
- What is the nature of the IP?
Does the IP itself have any heightened significance? Does it relate to matters involving the health and safety of the public, or matters of national security (The United States Attorney’s Office, Eastern District of Tennessee, 2022)?
- Are there adequate civil remedies available?
Are there international components to the case that would make civil remedies difficult to obtain? Is the bad actor a known person or entity who can be reached by civil judicial process?
- Is criminal law the right tool?
Is the brand owner comfortable with the loss of direct control over the timing and resolution of the matter that is inherent in a criminal prosecution?
Taken together, the answers to these questions can help guide victim brand owners in determining whether a criminal referral is appropriate in any given circumstance. Once this determination is made, victims will be well situated to assist in a criminal investigation and prosecution.
CONTACT LAW ENFORCEMENT
Victim companies should contact law enforcement as soon as practical. Victims can make a criminal referral in a number of ways, including though the National Intellectual Property Rights Coordination Center (which has a fillable reporting form to assist in the referral process). IPR Center partners and their respective roles and expertise are discussed in more detail in DOJ’s Guide for Victims of Copyright Infringement, Trademark, Counterfeiting, and Trade Secret Theft, which also contains checklists of relevant legal considerations and potential evidence to assist in making a strong referral. Reports to law enforcement should include details of all investigate steps taken to date, including efforts to preserve evidence related to any internal investigation. If a bad actor is selling counterfeit goods online, authorities will need to know important details like the domain names, URLs, and IP addresses involved, if those are available. If a victim or its representatives purchased counterfeit goods online, all evidence related to such purchases should be preserved for law enforcement, including the method of payment, date and time of purchase, and any subsequent inspection of goods. Similarly, in a circumstance involving the theft of trade secrets, interviews of witnesses or subjects of the investigation should be documented in detail and shared with law enforcement.
WORKING WITH DOJ AND INVESTIGATORS THROUGH THE CASE
In successful cases, victims work closely with law enforcement throughout the pendency of the case; investigation and prosecution of IP theft can be difficult to prove without full support from rights holders. Following referral, victims should expect timely follow up from law enforcement with updates on the status of the referral and expected next steps. If an investigation moves forward, authorities will rely on victims to identify counterfeit trademarks, copyrighted works, or the underlying details of trade secrets. Victims can provide valuable assistance by identifying information such as specific registrations to trademarks and copyrights, or explaining the measures taken to protect trade secrets. Ideally, some of this information will have been gathered in advance of any criminal referral.
DOJ recently issued a new edition of “The Attorney General Guidelines for Victim and Witness Assistance,” which federal prosecutors around the country follow in all victim-related cases. The guidelines require that federal authorities notify victims of updates on the status of investigation and arrest of suspects unless notification will interfere with the investigation. As the case progresses to trial, victims have a statutory right under federal law to be notified of, among other things, (1) charges filed against a suspected offender; (2) scheduled hearings and the right to attend; (3) acceptance of a guilty plea by a defendant or verdict at trial; and (4) a reasonable right to be heard at sentencing. In contrast, victims should not expect weekly updates or answers to every question. While investigators and prosecutors make appropriate efforts to keep victims aware of the progression of investigations and prosecutions, at times the constraints of criminal case development limit our ability to divulge non-public information, and federal laws, regulations, and rules, such as Federal Rule of Criminal Procedure 6(e), limit the sharing of case-related details.
In addition, those investigating and prosecuting IP crimes will rely on brand owners to identify witnesses who are qualified to testify on the products, brands, or trade secrets that are the subject of the charges, and to provide victim impact statements at sentencing. Moreover, because restitution ordered by federal courts is largely limited to actual loss incurred by the victim, any request for restitution likely requires a brand representative to present evidence on lost sales or IP valuation and help the court to understand the potentially complex computations underlying such testimony.
A decision by the Department of Justice to proceed with criminal charges is factually dependent and case specific. Victim brand owners should engage in internal discussions early, identify available facts about the offense, and determine whether a criminal referral is the best course of action. Upon a criminal referral, victims can reasonably expect timely follow up from law enforcement and updates on important developments in the matter. If the case proceeds, victims should expect a deeper level of engagement, including the identification of subject matter experts and potential testimony at trial, for the best chance for a successful outcome.
THE BRAND PROTECTION PROFESSIONAL | JUNE 2023 | VOLUME 8 NUMBER 2
2023 COPYRIGHT MICHIGAN STATE UNIVERSITY BOARD OF TRUSTEES