#16481 - Criminal Intellectual Property - Intellectual Property (IP) Law

28. Criminal Intellectual Property

MML 841-45;142-46; 1121-23; 17 U.S.C. § 506; 18 U.S.C. §§ 1831-1832, 1837, 1839; 18 U.S.C. § 232

Why Criminalize IP infringement

• Express condemnation, Open door to other punishments, making it more severe, greater deterrence

• P may not be able to bring the case state goes after it for them

• Convince the gov it is worth the resources to go after them

• Heightened constitutional protection for P

• Heightened MR for D: knowing, intentional, misappropriation

• Elements are different from civil infringement

Copyright (P.841-45)

• Pressure on Congress to enact law on criminal copyright infringement

  • Previously only if conduct was willful + for profit

  • Punishment felony provision covered all copyright infringement work

• To prove Copyright criminal infringement:

  1. Willful; and

  2. For purposes of commercial advantage/ private financial gain

• Artists’ Rights and Theft (ART) Prevention Act 2005

  • Prohibits unauthorized, knowing/ attempt use of a video camera or similar device to transmit or make a copy of a motion picture in movie theaters [Camcorder law]

  • Authorises movie theater employees to detain suspects in a reasonable manner and imposes imprisonment and stiff fines for violators

• Prioritizing Resources and Organization for Intellectual Property Act 2008 (PRO-IP Act)

  • Stiffer penalties for piracy and counterfeiting activities

  • Harmonizes forfeiture procedures for IP offenses

  • Make it illegal to export counterfeit goods

  • Eliminates loopholes that might prevent enforcement of otherwise validly registered copyrights

  • Established an IP Enforcement Coordinator (IPEC) Office: to coordinate anti-piracy efforts across relevant Federal agencies + develop and implement Joint strategic plan to combat counterfeiting and piracy

  • E.g. IPEC coordinated with Department of Homeland Security to seize hundreds of websites alleged to traffic in unauthorized copyright content and counterfeit goods)

    • Raised concerns about freedom of expression, due process, chilling effect son technological innovation

• United States v. Moran (District Court. Neb. 1991)

  • Facts: Moron is a police officer and an owner of a movie rental business which rents video cassettes of copyrighted movies to the public movies were distributed to D with permission of the copyright holder but D “insured” the videos by duplicating a copy of the cassettes to rent to the public.

    • 17 USC 506(a) punishes as a criminal any personal who infringes a copyright willfully and for purpose of commercial advantage or private financial gain

    • Issue: Whether willfully requires a showing of bad purpose or evil motive, there was intentional violation of a known legal duty; or an intent to copy and not to infringe

  • Held: Test is whether D truly believed that the law did not prohibited his conduct

    • It is a subjective test

    • Test is not whether D’s view was objectively reasonable

    • Despite common law presumes ignorance of law is no defense

    • D knows he is making copies, but doesn’t necessarily know it is infringing no specific intent

    • “willfully” means a “voluntary intentional violation of a known legal duty”

    • Court assumes willful infringement in a civil context applies in criminal context

    • The more unreasonable the asserted belief/ misunderstanding the more likely that the fact finder will find D acted not willfully it is a disagreement with known legal duties gov has satisfied its burden of proving knowledge

    • Here, court found that D did not infringe to maximise profit, long-term police officer, is honest not guilty of criminal copyright infringement

• United States v. LaMacchia (District Court. Mass 1994)

  • Facts: a MIT student set up an electric bulletin board which he dubbed Cynosure, encouraged people to upload copyrighted software and computer games to the board, and transferred to another encrypted address where software can be downloaded freely by public

  • Held: for D. Committing copyright infringement for non-commercial motives could not be prosecuted under criminal copyright law

    • Upheld Dowling v US (1985) decision that copyright prosecutions should only be brought under S.506 Copyright Act which defined MR of criminal copyright infringement as “willful” and is undertaken for profit (at that time)

      • Stolen property is not about physical property, but copyrighted material, which is not tangible should use Copyright Act

    • Since not for profit D was not liable for criminal copyright infringement under the Copyright Act D argued the Wire Fraud Statue shouldn’t be used to get him (beyond scope of copyright criminal infringement)

  • Effect: lead to the LaMacchia loophole (cannot prosecute if not undertaken for profit) Congress enacted the No Electronic Theft Act (NET) in 1997 to close the loophole, by

    • Redefining the term “financial gain” broader to include anything of value “receipt, or expectation of receipt, of anything of value, including the receipt of other copyrighted works” s 101 NET

      • But troubled many as it is so broad, may cause people to fear and not to do what would consider as fair use

    • Also criminalized the willful “reproduction or distribution, including by electronic means, during any 180-day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000” (s 506(a) NET)

NET Act lead to more criminalization overtime; while public interest groups pushes back

• § 101: “The term ‘financial gain’ includes receipt, or expectation of receipt, of anything of value, including the receipt of other copyrighted works.”

• Also criminalized the willful “reproduction or distribution, including by electronic means, during any 180-day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000” (§ 506(a))

Trade Secret P.142-146

• Criminal Trade Secret Statutes

  • Less used than Federal law, more expensive

  • Misappropriation in trade secret can be a crime improper means

  • Mostly: computer executives accused of taking trade secrets to their new employers

  • Complaining party: gov

    • but injured companies usually have some presence in the case, supply witnesses, have high level of communication with the district attorney

    • injured party would want to prevent disclosure in the public courtroom of the very secrets that D is accused of stealing (but: D’s constitutional right to a public trial)

    • civil cases are generally stayed pending the outcome of a criminal prosecution the criminal prosecution may delay injunctive relief (the relief that a civil P is most interested in)

  • Burden of proof: higher than civil case, esp. because definition of trade secrets in criminal laws are often more limited than civil definitions

  • D accused of stealing trade secrets may be charged with other offenses:

    • E.g. D who acquired a secret through improper means may also be guilty of larceny, receiving stolen property

• Federal Criminal Trade Secret Liability The Economic Espionage Act 1996

  • Previously no basis to go after misappropriating trade secret, came before civil law

  • Enacted as trade secret became growing economic significance, the misappropriation reported by foreign companies and gov were on the rise

  • Significantly broader in some aspects than corresponding civil trade secret laws (e.g. Uniform Act)

  • Makes appropriation of trade secrets a federal crime

  • § 1831

    • (a) In General.—Whoever, intending or knowing that the offense will benefit any foreign government, foreign instrumentality, or foreign agent, knowingly—

      • (1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains a trade secret;

      • (2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys a trade secret;

      • (3) receives, buys, or possesses a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization;

      • (4) attempts to commit any offense described in any of paragraphs (1) through (3); or

      • (5) conspires with one or more other persons to commit any offense described in any of paragraphs (1) through (3), and one or more of such persons do any act to effect the object of the conspiracy,

shall, except as provided in subsection (b), be fined not more than $5,000,000 or imprisoned not more than 15 years, or both.

• (b)Organizations. Any organization that commits any offense described in subsection (a) shall be fined not more than the greater of $10,000,000 or 3 times the value of the stolen trade secret to the organization, including expenses for research and design and other costs of reproducing the trade secret that the organization has thereby avoided.

  • benefit to a foreign gov need not be economic, benefit include strategic knowledge/ reputational benefits

  • knowing benefit the foreign gov

  • Corporation 3x of value of stolen

• §1832

  • (a) Whoever, with intent to convert a trade secret, that is related to a product or service used in or intended for use in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly—

    • (1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains such information;

    • (2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits,...