Prepared Remarks of Acting Deputy Attorney General Craig Morford at the U.S. Chamber of Commerce Anti-Counterfeiting and Piracy Summit

Prepared Remarks of Acting Deputy Attorney General Craig Morford at the U.S. Chamber of Commerce Anti-Counterfeiting and Piracy Summit

WASHINGTON, Oct. 3 /PRNewswire-USNewswire/ -- The following prepared remarks of Acting Deputy Attorney General Craig Morford were released today by the Department of Justice.

Thank you for that introduction, Caroline. And thank you for inviting me to be here with you today. I also want to thank Professor Roberts for those powerful remarks. They are an important reminder of why enforcement of our counterfeiting laws is so important.

They are also an important reminder that this isn't just an academic discussion. This is a very real problem, with very real consequences. At the Department of Justice we never forget that; and I'd like to talk with you a little today about what we're doing to stop the kinds of tragedies Professor Roberts just talked about.

While this is my first opportunity to speak to you about this important topic, the Department of Justice has a long tradition of cooperation with the Chamber regarding these issues. And I am very proud of the great work we have done together over the past several years.

In particular, I want to highlight some of the important things the Department has done regarding Intellectual Property matters over the past six months, and address some things we have planned for the near future.

For most of my 20-year DOJ career, I was a line prosecutor. And so I would like to spend a little time speaking about this issue as a prosecutor.

Before I was asked to serve as Acting Deputy Attorney General, I was the United States Attorney in Nashville, Tennessee. In that job, and in my previous years as a prosecutor, I've tried and overseen cases on everything from terrorism, to organized crime, to white collar fraud, to public corruption.

And I will tell you that my years of experience have taught me one very important lesson: whether it's a mafia member extorting the public official abusing his office, or some con-artist selling counterfeit pharmaceuticals over the internet, crime is crime, and it is our job to stop it.

As a former United States Attorney in Music City USA, intellectual property and copyright protection are important issues to me. The presence of the country and gospel music industries was a strong reminder of how important the protection of Intellectual Property is to our economy, on the local, national, and international levels.

Simply put, the continuing worldwide attack on intellectual property threatens our economic security. And an effective response to that threat must include both strong domestic and international criminal enforcement.

At the Department of Justice, our efforts are spearheaded by our Intellectual Property Task Force. Over the past year, this group has enhanced the protection of IP by substantially increasing the Department's enforcement of laws against violations of trademarks and copyrights and the stealing of trade secrets.

The economy is no longer based on bricks and mortar like it was 30-40-50 years ago.

Today's economy is based on ideas and the development and timing of the release of those ideas. Accordingly, our ability to protect ideas has become key to the health and welfare of our economy.

And that is why the Department has made it a priority to increase the number of large-scale, multi-district, and international IP prosecutions and investigations we handle.

We are aggressively pursuing international organized crime groups that traffic in stolen and counterfeit intellectual property, with special emphasis on public health and safety offenses. And we are working to strengthen IP laws to respond to emerging technologies and the corresponding criminal threat they present.

The Department understands that combating IP theft requires the cooperation and assistance of victims and potential victims, and the Department will therefore continue to work with affected industries to achieve a significant reduction in IP theft.

We are doing this in both large and small ways.

In Nashville, my office obtained a guilty plea from a man who had engaged in criminal copyright infringement by copying and selling protected music and films. When he was arrested, the man had over 500 CDs and DVDs he was selling from the trunk of his car.

And he was burning more copies using equipment hooked up to his car's battery. That man was sentenced to ten months in prison and ordered to pay restitution to his victims.

Last December we closed the book on a man who had conspired to sell access cards that could decrypt DirecTV satellite television programming, and devices that would allow more of these cards to be manufactured.

Each of these devices was capable of modifying innumerable DirecTV access cards, leading to the potential for enormous losses for the victim company.

This was theft not only of the services of the provider, but also the intellectual property of the original producers of movies, sporting events, and other programs. And it was theft of income from the many small business owners who distribute and install satellite television equipment. For his part in the conspiracy, the defendant was sentenced to 30 months in prison and ordered to pay $800,000 in restitution to the victim, DirecTV.

Now, I chose these two examples for a reason.

The first case I wanted to mention because it demonstrates the importance not just of going after the kingpin running a large international conspiracy, but the retail-level crook - the person most of us have seen, hawking counterfeit goods in plain sight. This crook is dangerous not so much because of the scale of his crime, but because he threatens to redefine as normal what is and should be seen as illegal and wrong.

Not long ago, I took my family to New York, where we saw people selling copies of DVDs on the street. My kids wanted to buy them. I was trying to tell them we could not and explain why. They weren't getting it, because these people were selling them openly on Broadway in broad daylight.

The street mope is a threat because he creates the demand filled by the bigger fish producers and when the public sees these crimes openly tolerated, they lose respect for the copyright protections upon which billions of dollars in our economy rest. The street mope is more than a mope, he is a crucial point on a very slippery slope.

The second example I chose emphasizes how seemingly simple thefts have the potential to produce large financial losses to multiple unseen victims.

These are not the biggest cases involving the largest perpetrators of cyber crime, but they are important because they enable us to educate the public and deter others. Whether it's someone with access to a source code on a valuable program, or just someone who's considering a spam that offers him a way to steal cable, we're using increasing numbers of prosecutions to create a downside, deterrent effect.

Indeed, in 2006 we convicted 57 percent more defendants for criminal copyright and trademark offenses than in 2005. Of those convictions, the number of defendants receiving prison terms of more than two years increased even more dramatically - up 130 percent.

Increased enforcement and stiffer sentences sends the important message to IP thieves that we take their crimes seriously, and we will punish them for their actions.

Just this past June, the Department charged 29 defendants with conspiracy to smuggle more than $700 million worth of counterfeit handbags, watches, sneakers and clothing into the United States.

That operation is obviously a much larger scale than one man selling bootleg movies out of his trunk, but the principles remain the same. These crimes are not victimless, and we will prosecute them with the full force of the law.

I mentioned the importance of some of these crimes with regard to health and safety issues, and certainly Professor Roberts' case is a powerful example of the threats posed by those who sell counterfeit and mishandled medications over the internet.

The dangers posed by these crimes are severe, and the problem has increased exponentially with the dramatic rise of rogue Internet pharmacies that have worldwide distribution networks without any quality or safety controls. The Department has made the prosecution of health and safety IP cases a top priority. We've sought to build strong prosecutions against some of the largest distributors of counterfeit and misbranded pharmaceuticals to American citizens.

For example, last year, the Department obtained an indictment against eleven individuals and an Atlanta-based company on charges related to a scheme to sell counterfeit drugs over the internet. According to the indictment, the defendants marketed approximately 24 different drugs, including versions of Ambien, Valium, Lipitor, and Vioxx, through spam advertisements.

Instead of buying safe and authentic generic versions of these vital drugs from Canada, customers were unwittingly buying adulterated fakes manufactured in an unsanitary house in Belize.

What is significant about this case is not just the health and safety risk created by the targeted Internet pharmacy network, but we are also prosecuting the network of individuals who made this illegal business work. To date, prosecutors have convicted five individuals and the government has collected over $2 million in forfeiture.

To better address the threat of cyber and IP crimes, the Department created innovative Computer Hacking and Intellectual Property Units, or CHIP Units in a number of U.S. Attorney offices around the country.

These Units feature at least two and as many as eight specially-trained prosecutors who focus on intellectual property and computer crimes. Since 2005, we have nearly doubled the number of CHIP Units nationwide, from 13 offices to 25 offices.

And if a CHIP unit in one district comes across a scheme that leads them to evidence in another district, we have the flexibility to prosecute wherever we can make the strongest case. No turf battles over who found it first, just what's best for the case.

In my new job in the leadership of the Department, I am encouraging our CHIP units to continue to work across borders and jurisdictions. I'm not interested in who gets credit, but simply that as many cyber crimes as possible get investigated and prosecuted with our available resources.

Even as we established our CHIP unit in Nashville, a hub of publishing and recording industries, we recognized that cyber crimes are seldom local crimes. Crime happens where ever it's convenient and profitable for the criminal.

One of the great challenges of the internet is that a criminal can sit in an apartment in the UK and reach into your computer system and steal your most valuable corporate assets without even leaving his apartment.

And that's why we are making international cooperation a critical part of our IP/Cyber Strategy.

In 2006, we provided training and technical assistance on IP enforcement to over 3,300 foreign prosecutors, investigators, and judges from 107 countries. We established an IP Law Enforcement Coordinator in Bangkok, and next month we'll be standing up a second IP prosecutor in Sofia, Bulgaria.

The Department is also focusing substantial resources in countries that are major manufacturers of counterfeit goods, or where the investment is likely to provide a greater long-term return in terms of increased protection of IP rights.

During the past year, the Department has placed special emphasis on China, South Africa and India.

China remains a major production center for pirated and counterfeit goods, and some of the trade in those fake goods involves organized crime. Any solution to this massive enforcement problem must begin with greater cooperation and coordination on joint criminal investigations and prosecutions.

So the Department co-chairs the IP Criminal Enforcement Working Group of the U.S.-China Joint Liaison Group. This important working group is dedicated to fostering and building more joint U.S.-China operations against IP crimes, in particular crimes committed by organized criminal groups and crimes that threaten public health and safety.

This cooperation is already yielding results. In July, 25 individuals in China were arrested and authorities seized half a billion dollars worth of counterfeit software, as a result of the largest ever joint investigation conducted by the FBI and the People's Republic of China.

In this operation, code-named "Operation Summer Solstice," China's Ministry of Public Security searched multiple businesses and residential locations, seized more than $7 million in assets, and confiscated over 290,000 counterfeit software CDs and Certificates of Authenticity. The ring is believed to be the largest of its kind in the world, responsible for causing victims over $2 billion in lost revenue.

We intend to pursue more and more of these joint criminal operations in the future. We also will continue to support civil enforcement of IP rights by private owners, by filing briefs in support of those owners. By filing briefs in cases where the United States is not a direct party, the Department can play a vital role in promoting a legal environment that protects creativity and innovation. It's a tool that we have available to us, and it's one we're committed to using.

Finally, we are pursuing the acquisition of new tools. Through legislation, this past spring, we sent Congress a legislative package to further enhance IP enforcement and prosecution. This legislation would strengthen penalties for IP crimes and improve critical investigative tools for both criminal and civil enforcement.

It would increase criminal penalties for counterfeiting offenses that threaten public health and safety; strengthen penalties for repeat offenders; and ensure the authority to seize and forfeit property related to IP offenses.

The Department is committed to the President's STOP Initiative. We are doing more and making important headway. We recognize that the Department of Justice is but one of many partners in this fight, and that it will take all of us working together to make a difference -- law enforcement at all levels, government, and victim industries.

Despite our best efforts, we cannot prosecute ourselves out of the problem.

Effective protection of IP rights also requires vigorous civil enforcement by rights holders. We need your involvement -- including your help -- whether it's bringing civil actions, which we will assist by supporting an effective statutory framework for civil enforcement or working with our international counterparts to promote stronger enforcement overseas.

We must all work together: one U.S. Attorney's office with another; one government agency with another; one country with another; and one industry with another. Cooperation is not merely helpful, it is essential.

Our effort is truly a three legged stool that cannot stand without the full support and cooperation of the investigative agencies, prosecutors and industry. For our part, we will continue to provide leadership that encourages the cooperation of investigative agencies, prosecutors and industry to work together as one team.

I am committed to the importance of this effort and to working with groups like the Chamber and its partners to continue to combat this growing threat.

Thank you very much.

First Call Analyst:
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Source: U.S. Department of Justice

CONTACT: U.S. Department of Justice, +1-202-514-2007, TDD
+1-202-514-1888

Web Site: http://www.usdoj.gov/

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Profile: International Entertainment