Intellectual Property Theft

Intellectual property (IP) refers to any brand, invention, design or other kind of creative right that an individual or a business has legal rights over. IP is crucial to several industries and is considered to be a business asset. Common types of IP include copyright, patents, design rights and trademarks.

As a member of the World Trade Organization, America is committed to certain minimum IP protection standards and, with the advent of digital communication technologies and Internet file sharing networks, intellectual property theft is a growing threat.

Because intellectual property theft is so widespread and affects so many industries, there are several government agencies working together to combat it. These include the Federal Bureau of Investigation (FBI), the Food and Drug Administration, the U.S. Customs and Border Protection (CBP), and the U.S. Homeland Security Investigations (HSI).

And, because of the wide scope of copyright infringement, the sentences can vary depending on the facts of the case such as the value of the IP, the losses that the IP holder has endured and whether the perpetrator has prior felonies and/or record of criminal infringement of a copyright. Any criminal proceeding must be commenced within five years after the cause of action arose.

Pursuant to 17 U.S.C. § 506(a)(1)(A) and 18 U.S.C. § 2319(b), anyone who is convicted of willful infringement of copyright for purposes of commercial advantage or private financial gain faces a number of different penalties depending on the facts of the case. For example, a defendant who made more than 10 copies or more of a copyrighted work, which have a total retail value of more than $2,500, faces imprisonment up to five years of imprisonment, a fine of up to $250,000, or both. For corporate offenders, a fine of up to $500,000 is permitted. However, if the offense is a felony and the perpetrator has a history of copyright infringement for profit, the maximum imprisonment term is doubled. Take note, according to 17 U.S.C. § 506(a)(1)(B) and 18 U.S.C. § 2319(c) you can still face criminal charges if you infringe on a copyright without a profit motive.

It is a criminal act to distribute a copyrighted work that is being prepared for commercial distribution by making it available on the internet. The classic example of this is leaking a movie that is due for cinema release. The penalties for this vary on whether the infringement was committed for commercial purposes or not. If it was, the violator faces up to five years in prison, a fine of up to $250,000 ($500,000 for corporations), or both. If not, the penalties include a maximum of three years in federal prison and a fine of up to $250,000 ($500,000 for corporations), or both.

It is also illegal to create bootleg recordings of live musical performances according to 18 U.S.C. § 2319A. Specifically, the statute forbids doing so knowingly and for purposes of commercial advantage or private financial gain. Offenders face imprisonment of up to five years, or a fine of up to $250,000 ($500,000 for corporations), or both.

​Examples of Defenses Against Intellectual Property Theft

​Our firm has also had success defending our clients against charges of intellectual property theft by arguing that he/she did not knowingly attempt to steal the intellectual property and use it for his/her personal gain.

The “fair use defense” can be used against criminal charges of copyright infringement under 17 U.S.C. § 506. In order to convict the defendant of criminal copyright conviction, the prosecution must prove that the defendant willfully infringed a copyright for commercial or financial gain; that defendant reproduced or distributed copies with a total retail value over $1000; or the defendant made an unpublished work publicly available via a computer.

The government bears the burden of proving that the defendant had the necessary mens rea (criminal mind) and that he/she knew of the duty and voluntarily and intentionally violated it. Therefore, defense counsel could argue that the defendant believed in good faith that he/she was not violating the law. a proper defense may proceed with the argument that he or she believed in good faith belief that he or she was not violating the law. 17 U.S.C. 506, allows for a mistake of law type of defense. This may negate the “willfully” requirement as set forth in 17 USC § 506(a).