Deputy Attorney General Rosenstein Delivers Remarks at the Interpol 2017 International Law Enforcement IP Crime Conference

New York, NY

~ Tuesday, August 29, 2017

Thank you, Bill, for that kind introduction. It is a tremendous honor to be here with more than 600 of the people most directly responsible for the global protection of intellectual property. By gathering together today, we highlight our shared commitment to address this challenge.

This is the 11th annual intellectual property conference. I understand that it is the first time the conference has been held in the United States. I am pleased to welcome you to New York. I hope you enjoy your visit to this great American city.

As a child, I learned a fable about a hen that finds some wheat grains and asks other animals for help in planting them. Nobody is willing to help, so the hen does the work itself. At every stage of the process – harvesting the wheat, threshing it, milling it into flour, and baking the flour into bread – nobody wants to help. But when the work is finished, everyone wants to eat the bread.

Modern intellectual property is more complicated than baking bread, but the same fundamental principle applies. If we let some people steal things without compensating the people who produce things, the incentive to create new things will be lost.

Intellectual property enforcement assures innovators and investors that when they devote time and money to develop new concepts and products, they will reap the financial rewards. If governments fail to protect intellectual property rights, the immediate consequence will be monetary losses to individual property owners. But the long-term impact will be less investment of time and resources, and fewer innovations for society at large.

This conference represents an ongoing commitment by law enforcement, industry partners, and other stakeholders from all over the world to come together and identify ways to protect intellectual property and the industries that fuel the modern global economy. These protections are critical to almost every sector of the economy, from new, life-saving drugs and medical techniques that allow us to live longer and healthier lives; to computers and software that run the devices we use to navigate the airplanes and trains and taxi cabs that brought us here today; to applications on the smartphones we use to purchase coffee.

One of our challenges is that intellectual property crime does not look like traditional crime, where the perpetrator takes a physical item directly from the victim. Everybody understands that it is wrong to walk into a business and take property without permission. In contrast, the individual act of downloading a movie from a file-sharing site, or buying a cheap knockoff of a name brand item, may seem harmless. But the accumulated economic loss from thousands or millions of those illegal transactions can destroy legitimate businesses, eliminate the incentive to invest in innovation, and undermine the rule of law.

Some consumers knowingly buy knock-off items to gain the cachet of owning brand-name merchandise without paying the price for the real thing. But many consumers are victimized by unscrupulous sellers who market counterfeit products without disclosing that they are not authentic.

Products carry brand names because brand owners have worked and invested to make those names valuable to consumers, who trust them. Counterfeit products often look identical to legitimate merchandise, complete with packaging and labels. Purchasers may learn they have been cheated only when knock-off batteries do not power devices, sham prescription drugs fail to improve health, phony cosmetics cause infections, counterfeit clothing disintegrates, or pirated automobile parts break down.

I learned about the scale of the problem firsthand a few years ago, when my office prosecuted a case in Maryland. Over the course of 20 months, criminals imported 500,000 counterfeit handbags manufactured in Asia with fraudulent logos.

Intellectual property enforcement does not prevent retailers from selling inexpensive products, or stop customers from getting bargains. Entrepreneurs are free to manufacture discount items and sell them using novel brand names. Innovators can create and market new songs, movies, books and computer programs. They just cannot sell anything that belongs to someone else.

If we want to promote innovation, we need to understand the patterns of intellectual property crime. We can disrupt counterfeit manufacturing sources, cut off international supply chains, remove the ability of intellectual property thieves to process payments, and educate the public about the harms caused by illicit products.

In the United States, our Department of Justice has undertaken a range of responses to the problem. I want to discuss some of the significant cases we have prosecuted in recent years.

The protection of public health and safety is a top priority for my government. Many counterfeit products fall in this category. Some are obviously dangerous. Fake automobile brake pads and counterfeit pharmaceutical drugs are two examples. Sometimes, even seemingly innocuous items put the public at risk. Earlier this year, we prosecuted the owner of an international operation that imported counterfeit and misbranded contact lenses from suppliers in Asia. He sold the lenses over the internet to tens of thousands of customers without any prescription. Many of the contact lenses carried labels with counterfeit trademarks of legitimate companies. Some of the lenses contained bacteria that could cause extensive eye damage and blindness. The defendant was sentenced to serve 46 months in prison and ordered to forfeit $1.2 million in proceeds.

The most valuable intellectual property of a company often is the technical information that it keeps secret. The United States government is committed to vigorously enforcing the law that criminalizes the theft of corporate trade secrets. Earlier this year, our Department of Justice brought criminal charges against an engineer who worked for a large government contractor on commercial and military satellites sold to the United States Air Force, the Navy, and the National Aeronautics and Space Administration.

The defendant’s employer gave him access to proprietary trade secrets, including anti-jamming technology, encryption plans for communication with satellites, and related technical data — all of which are controlled technology. The defendant saw his access to critical technical data as an opportunity to make a profit. He attempted to sell the information to people he believed were foreign agents interested in military technology. In fact, the contacts were undercover federal law enforcement officers. The defendant pleaded guilty in federal court to the crime of economic espionage. He is scheduled to be sentenced next month.

In July 2016, the alleged owner of one of the world’s most visited illegal file-sharing websites was arrested in Poland. He is now awaiting extradition to the United States. The site received more than 50 million unique visitors each month and it was ranked among the top 100 most-visited websites. The website enabled users to illegally reproduce and distribute hundreds of millions of copyrighted motion pictures, video games, television programs, musical recordings, and other electronic media. The actual owners of the products received no profit. The copyrighted material transferred illegally may be worth more than $1 billion.

Pursuing the investigation and prosecution of such an international website is labor intensive and time consuming. The process of working with our international counterparts on extradition proceedings adds an extra layer of challenge. However, the task is well worth the effort, due to the tremendous deterrent effect that one case can have on other individuals around the world who may consider engaging in the same type of illegal business.

These are just a few recent examples of cases prosecuted by the United States Department of Justice. Each of our law enforcement colleagues can tell similar stories about criminals who seek to profit from the hard work of inventors and creators, and who put citizens at risk by selling counterfeit goods.

Those of you who work in the private sector well understand why we need to work tirelessly to prevent thieves from stealing intellectual property and marketing fake products. Criminals are always looking for vulnerabilities. When we disrupt an existing illegal market, they show flexibility and even ingenuity in devising new fraudulent schemes.

We must continue to look for ways that we can improve our effectiveness in combatting this global criminal problem. We need to be creative, we need to be cooperative, and we need to use all of our available tools.

We must take our understanding of international organized crime, and apply that knowledge to eliminate global smuggling networks.

We need to use our insight about the gatekeeper financial institutions that clear domestic and international monetary transactions, so we can disrupt the payment methods and profit streams from intellectual property theft.

And we should develop expertise in the technology used by criminals to steal, reproduce, distribute, and profit from counterfeiting and copyright piracy.

The United States government’s commitment is reflected in the National Intellectual Property Rights Coordination Center, a fusion center that brings together our key American partner agencies along with foreign governments and international police agencies.

At the United States Department of Justice, we are taking concrete steps to root out intellectual property crime.

We plan to direct every component of our Department that plays a role in intellectual property enforcement to join in a national Intellectual Property Task Force to explore new approaches to combat the theft of intellectual property. We will rely on both criminal and civil enforcement. We will promote international cooperation. We will build expertise in understanding the technological aspects of the problem. And we will increase our public outreach to promote awareness of the harms caused by intellectual property violations.

Recognizing that intellectual property crime can arise anywhere, we are strengthening our ability to pursue charges against criminals through the more than 260 Computer Hacking and Intellectual Property Coordinators placed throughout the nation, in our 93 U.S. Attorneys’ Offices. Those highly-trained prosecutors are equipped to communicate with industry about possible cases, to support our partner agencies in thoroughly investigating criminal infringements of property rights, and to bring strong cases to court for prosecution. In addition to our nationwide prosecutors’ network, our Department also has a Computer Crime and Intellectual Property Section in Washington, D.C., with more than 45 attorneys who are responsible for prosecuting intellectual property and cybercrime matters.

We need to remain up to date about the technological challenges of intellectual property and cybercrime, so our Department has established a Cybercrime Lab staffed by expert technologists. They assist with investigations and monitor developments in the ways criminals use technology.

I cannot emphasize enough our commitment to international cooperation. The global nature of intellectual property crime is the reason why all of us are gathered here today. We can confront this issue effectively only by taking a transnational approach. Building on the success of the prosecutors’ network within the United States, our Department of Justice and Department of State have worked together to deploy Intellectual Property Law Enforcement Coordinators in key areas around the world.

In the coming weeks, the United States will post intellectual property experts to offices in Bangkok, Hong Kong, Sao Paulo, Bucharest, and Abuja.

Our coordinators will be a resource for regional cooperation, and an important point of contact for industry and for our law enforcement colleagues. I encourage each of you to contact the nearest coordinator. They are eager to work with you. As they expand our network, they will play an increasing role in developing our knowledge of the patterns and techniques of intellectual property criminals.

Finally, in a demonstration of our commitment to international coordination, the Attorney General instructed our Department of Justice to respond more quickly to requests for mutual legal assistance. We must support each other in our efforts to combat criminals who perpetrate crimes in foreign countries while concealing the evidence in our own country.

Let me conclude by acknowledging that there is no easy solution to the problem of intellectual property crime. Our greatest strength comes from our commitment to work together, and our collective ability to confront this global challenge to economic and technological progress.

This conference provides a superb opportunity to share experiences and to strengthen the foundation for future cooperation. We must continue to promote the rule of law and enhance respect for intellectual property rights.

Thank you for your commitment to protecting intellectual property. I hope you enjoy the remainder of the conference, and I look forward to continuing our important work in the years ahead.