In a speech before an assembled crowd of law enforcement officials in Maryland this week, Attorney General Eric Holder announced the winners of a new federal grant that will send hundreds of thousands of dollars to 13 agencies in an effort to step up enforcement of copyright and trademark laws.
The Intellectual Property Law Enforcement Grant Award, which became available in January 2012, was given to a wide variety of local law enforcement groups, including the City of Austin, the City of Orlando, the County of Sacramento, the Virginia State Police, and most oddly, the City of Central Point, Oregon (population: 13,000).
"Although these awards will be utilized in a variety of ways, they will help to achieve our common goals: to advance prosecutions—as well as prevention and education activities—related to IP theft," Holder said in a speech at the event on Wednesday.
"Without question, these new investments are coming at a critical time. As our country continues to recover from once-in-a-generation economic challenges, the need to defend IP rights—and to protect Americans from IP theft—has never been more urgent. We have seen—far too often—that IP crimes are not victimless. Not only can they devastate individual lives and legitimate businesses, they also undermine our nation’s financial stability, can jeopardize the health of our citizens, and even threaten our national security."
The announcement marked the latest step in a series of moves that the Department of Justice (DoJ) has taken to clamp down on piracy and counterfeit goods. The DoJ has made no secret of its unilateral approach to seizing domain names and other digital property through "Operation in our Sites," illustrated most notably in the takedown and indictment of Megaupload in early January 2012.
The Bureau of Justice Assistance, the DoJ agency that administers the grant program, wrote an 18-page January 2012 application document (PDF), citing a 2009 Rand Corporation report (PDF) linking IP theft to organized crime. The document, however, ignores the 2011 major international study that basically countermands that conclusion. As we reported at the time, that study found "‘no evidence’ of systematic links between piracy and serious organized crime or terrorism."
Still, Washington, DC hopes that this new money can be used as a way to enhance existing agencies and give them a boost to target counterfeit drugs and physical goods, in addition to unauthorized copies of digital software and media. It will also surely give federal authorities a stronger window into catching piracy operations in various parts of the country. In interviews with three grant recipients, the money will be used to target those various elements of IP crime—some called it a "game-changer."
However, civil libertarian and legal experts question if this is a good use of federal money for enhancing investigation and prosecution of nonviolent crimes, particularly in large urban areas of the country, like Los Angeles, Chicago, New York, and San Antonio.
"We too often see law enforcement overreach and target alleged copyright infringement in the name of protecting public safety when many more clear threats to public safety actually exist," said Julie Samuels, a staff attorney at the Electronic Frontier Foundation. "When this happens, it's important to ask ourselves if this is really how we want our tax dollars spent. More often than not, the answer to that question is no."
St. Louis' new piracy honeypot
In St. Louis, David Marzullo, a police spokesperson, told Ars that the city would be using its grant money to form an "area task force consisting of federal, state, and local law enforcement agencies to share resources and increase enforcement of existing state and federal IP laws."
Marzullo also provided Ars with the 10-page grant application for $200,000 that St. Louis submitted—it cites counterfeit goods as a notable problem in St. Louis.
"We also know that criminal gangs and organized crime are involved with the production and distribution of counterfeit consumer goods because we encountered these networks while investigating intellectual property crimes in the City of St. Louis," the document states.
However, the document also points out an obvious problem with spending money on IP crime. Most people, particularly in poorer and more gang-ridden areas of the city, are likely more concerned with actual violence, rather than a guy on the street selling pirated CDs.
"Unfortunately, district detectives and uniformed patrol officers are overwhelmed with calls for service that are considered more serious in nature (robbery, assaults, burglaries, motor vehicle thefts) where there is an immediate threat of danger to the public," the grant application continues. "District detectives must prioritize assignments and the districts do not have the staffing or expertise to pro-actively investigate intellectual property crimes occurring in their districts."
The grant will transfer two detectives (each to be paid a base salary of $56,229 per year, plus overtime) to the Major Fraud/Cyber Crimes Section. However, the grant also will make sure that St. Louis increases "the number of investigations resulting in the arrest, seizure and the presentation of evidence…for those persons responsible for knowingly distributing copyrighted software, movies, or music over the Internet." The grant also states that the St. Louis Police Department would manage the use of an "undercover co-located server," designed to "search popular Peer-2-Peer and Internet Relay Chat networks for the distribution of copyrighted software, movies and music from locations in and around the City of St. Louis."
The grant concludes by noting that its effectiveness "will be measured in the number of new investigations, arrests and cases referred for prosecution for intellectual property crimes by the detectives assigned to the Major Fraud/Cyber Crimes Section."
Julie Samuels, the EFF staff attorney, called this goal "troubling."
"We hope that the St. Louis police department complies with all necessary protocol and includes the required due process controls when it implements this program," she added.
California to enhance coordination, expand caseload
In addition to St. Louis, California’s Department of Justice was one of the grantees, and like many of its counterparts, it will receive $200,000 in 2013 for this new program.
Robert Morgester, senior assistant attorney general in California, told Ars that the California Department of Justice would be using the money for three main objectives: to "coordinate IP crime investigation in California," to "refer completed [investigations] for state, local, or federal prosecution," and to conduct at least three law enforcement trainings "as a way to help local cops better enforce IP rules in the Golden State."
Morgester added that the $200,000 would represent about "one-tenth" of the annual $2 million budget for his eCrime Unit, and the new funds would cause a doubling of the unit’s current caseload of eight to 16.
The majority of the grant money would be used, not for anything new, but rather, to pay for overtime, he acknowledged. Morgester said that the extra money would significantly enhance how investigations and prosecutions can be carried out.
"Anytime you serve a search warrant—that search warrant is going to take more than eight hours of employee time," he said. "One of the challenges in the government is getting approval of overtime for agents."
By being given this federal mandate to spend this money specifically on IP issues, Morgester said that it would enable the unit to become more proactive, rather than reactive.
"I got a grant that says ‘thou shalt do IP crime,’" he said. "It makes it far easier for me to justify the expenditure of resources for these types of crimes."
Don't forget about those knockoff Louis Vuitton bags!
Other agencies, however, that aren’t dealing with as much on the digital side, are more concerned with the confiscation of knockoff clothing, handbags, and other items. In Riverside County, California (population: 2.1 million), the assistant district attorney told Ars that they would be spending most of their $200,000 on hiring a new prosecutor and investigator that would deal specifically with IP.
"We have 120 investigators total," Creg Datig, the assistant district attorney of Riverside County, told Ars. "We are going to devote one full-time investigator specifically for IP crime as a result of this grant."
Currently, the county has 12 investigations into IP crimes, but Datig asserted that the grant would allow them to expand to "as many as we can successfully detect and prosecute."
He noted that these new officials would spend some of their time working also on "public outreach," not only to law enforcement agencies in the county, but also to ordinary citizens.
"We’re talking about reaching out by radio, TV spots, by posters, or pamphlets that we hand out and say ‘Look, you might think you got a bargain for getting a Ralph Lauren shirt for $1, but you helped a criminal market their goods,’" he said. "A lot of this property counterfeiting is linked to organized crime. There’s money to be made. Anytime there’s money to be made by ripping somebody off, there’s organized crime there."
Datig added that while Riverside County did not deal with digital IP issues as much as other cities or counties in the country, it has encountered significant cases of trademark violations in counterfeit goods.
"At this point, we’ve had cases that range from over $2 million of counterfeit property," he added. "We have cases ranging from that much all the way down to counterfeited CDs, where the total amount might be $100 or less. It seems as though it’s like kicking over a rock—the more we focus on this particular area the more activity we see."
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