July 4, 2005
(Computerworld)
In February of this year, 24-year-old JuJu Jiang of Flushing, N.Y., was sentenced to 27 months' imprisonment followed by three years of supervised release and ordered to pay $201,620 in restitution after being convicted of charges related to computer fraud.
On March 4, Rolyn Abugan, 24, of Corona, Calif., was charged with criminal copyright infringement for uploading onto the Internet a copy of the movie Finding Neverland that had been sent to a "screener" for the Producers Guild of America. Just four days after that, Seth Kleinberg, 26, of Pasadena, Calif., Jeffrey Lerman, 20, of College Park, Md., and Albert Bryndzda, 32, also of Flushing, pleaded guilty to felony charges of conspiracy to commit criminal copyright infringement in U.S. District Court in New Haven. Theirs were the first U.S. cases to be brought as a result of an 18-month, multinational software piracy investigation known as "Operation Higher Education."
In recent years, we've witnessed a dramatic increase in cases of digital piracy and counterfeiting. The legal system is responding with aggressive prosecution and tough sentences.
While the latest technologies are a boon for upstanding organizations large and small, they serve less-respectable individuals and organizations as well. The worldwide trade of pirated and counterfeit goods affects all major markets, with the U.S. in the forefront. That's not surprising, since the U.S. leads the world in the development of intellectual property and the manufacture of IP-related products. (It was recently reported by the International AntiCounterfeiting Coalition that U.S. industries that rely on copyright protection and derivative businesses account for more than $433 billion, or 5.68%, of the U.S. gross national product -- more than any other single manufacturing sector.)
Illicit trade threatens the competitiveness of both established companies and up-and-coming businesses -- and the livelihoods of all of their employees. Available for purchase from lowly street vendors to large-scale mail-order organizations are all sorts of counterfeit goods, with DVDs, CDs, electronics and software at least as popular as the more traditional watches, auto parts, perfume and clothing. It is estimated that these goods account for up to 7% of the world market and cost legitimate business several billion dollars annually.
It's obvious that legitimate rights holders lose money in the form of reduced sales and profits when their goods are counterfeited; what's not as obvious is that there are other consequences as well. For one thing, manufacturers of bogus merchandise don't observe manufacturing standards and regulations. As a result, bogus goods are of inferior quality. This fact certainly isn't lost on the consumers; they probably just ignore the shortcomings in the interest of saving money, but later they may be disappointed to realize that there's no support or recourse available to them after the purchase. Moreover, the counterfeiters don't comply with regulations pertaining to the safety and health of their workers. And they don't pay duties or taxes, so the nations where the goods are traded lose out on potential tax revenues.
Intellectual property crime generally falls into one of three categories: copyright violations, theft of trade secrets and trademark infringement. The fundamental goal of each crime is for the perpetrator to realize a profit -- at the expense of the real McCoy. Copyright violation most often refers to the counterfeiting and piracy of software, movies and recorded music. Theft of trade secrets means the perpetrator has stolen proprietary information from any industry; it could be a manufacturing business, a financial services firm or a technology company. Trademark infringement involves the counterfeiting and vending of brand-name items -- handbags, clothing, watches and the like.
With so much at stake, organizations and governments are stepping up efforts to stem the looting by counterfeiters. They're having some success with the new technologies that aid in the identification of counterfeit products. While useful, these technologies do have limitations: No single anticounterfeiting system will solve the problem for all victimized businesses. Each organization must determine its specific market's weaknesses and take at least some responsibility to protect its interests.
When it comes to counterfeiting, everyone is an interested party, from the legitimate manufacturer to the retailer, the distributor and the individual consumer. When all parties act together, a united stance will prove to be the best defense against these offenses. Douglas Schweitzer is a freelance writer and Internet security specialist in Nesconset, N.Y. He can be reached at dougneak@juno.com.