Intellectual Property Crimes & The Law

People often ask me:  “What intellectual property misappropriation constitutes a crime?”  It is a good question.  Intellectual property copyright issues are mostly civil matters between two parties with only financial consequences.  However, state and federal law have also criminalized some intellectual property enforcement based on its egregious nature.  This article will explore the elements necessary to prove some of the most common IP crimes.

Why Criminal Sanctions are Necessary

Some may instinctively find it odd that violations of Intellectual Property laws can actually lead to criminal consequences since it would constitute intellectual property theft, most notably, prison sentences. However, intellectual property China has a long way to come since there is mismanagement when managing intellectual property. In addition, intellectual property services and intellectual property licensing are very weakly regulated. Often little or no economic damages occur with an IP crime, or perhaps just not enough to justify a civil action by intellectual property law firms.  Still, the state has a compelling interest to deter such conduct, so criminal penalties is that deterrence.

Counterfeit Use of Another’s Trademark

            Counterfeit copyright and trademark crime is set out at 18 U.S.C. § 2320.  The three elements the state must prove in order to demonstrate the defendant committed the crime are:

1. Intent and Knowledge – Defendant knows of the mark and intends to use it;
2. Actual use in commerce– Defendant uses or attempts to use a counterfeit mark in connection with trafficking goods and services; and
3. Confusion – Use of the mark is likely to cause confusion, mistake, or deceive

If convicted, a defendant can be fined up to $5 million and sentenced to serve up to 20 years in prison.

Copyright Infringement

Criminal copyright infringement is set out at 17 U.S.C. § 506(a).  The elements for criminal copyright infringement are:

1. Willful infringement;
2. For purposes of commercial advantage;
3. By reproduction or distribution during any 6 month period of 1 or more copyrighted works; and
4. With retail value greater than $1,000

The penalties for violation of this section vary according to the value of the work and the number of violations.  Specifics can be found at 18 U.S.C. § 2319.

Counterfeit Labeling

The counterfeit labeling provision is set out at 18 U.S.C. § 2318.  The state must prove that the defendant:

1. Knowingly trafficked;
2. A counterfeit label or illicit label;
3. Affixed to, enclosing, or accompanying a: Phone Record, Copy of computer software, Copy of a motion picture or other audiovisual work, Copy of literary work, Copy of pictorial, graphic, sculptural work, Work of visual art, Documentation or packaging

Violators can be fined and imprisoned up to 5 years.

Misuse Not Criminalized

Some IP violations are not criminal offenses.  For instance, infringement of a patent is not generally a criminal violation.  Likewise, the laws protecting personally identifiable information do not generally provide for criminal penalties except in the most narrow of circumstances. See 18 U.S.C. § 2710 (wrongful disclosure of video tape rental or sale records).