Music Industry Still Suing Thier Customers

Four years ago, the music industry set off a legal barrage, and public relations nightmare, when it sued 261 music file-swappers.^[1] This is a move that has reshaped the peer-to-peer, file-sharing world and pushed more invention in pirating technologies.^[2]

The legal storm commenced September 8, 2003 when members of the Recording Industry Association of America started the litagtion, and they have followed with some 20,000 similar lawsuits, legal threats and settlements, according to a report published by the Electronic Frontier Foundation.^[3]

"The lawsuits, however, are not working…..Today, downloading from P2P networks is more popular than ever, despite the widespread public awareness of lawsuits…[the report's conclusion was that] suing music fans is no answer to the P2P dilemma," according to the report by the California privacy group.^[4]

Napster was shuttered. But alternatives like Aimster and AudioGalaxy filled the vacuum. They too, were supplanted by Kazaa and Morpheus, which were overshadowed by eDonkey and Bit Torrent.^[5]

The report goes on to detail several stages of the industry's litigation tactics.^[6]
At the outset, the RIAA issued 1,500 subpoenas to internet service providers nationwide, a prelude to its first 261 targets; but they evolved into an online business, the RIAA has created a web site for infringers to pay fines with credit cards.^[7]

The RIAA then issued 204 threat letters, a majority of the targets settled for an average $3,000.^[8] After the legal landscaped changed, a later phase of the litigation began in 2004. More than 500 so-called "John Doe" lawsuits were filed targeting unidentified uploaders.^[9] The courts issued subpoenas to the ISP's who turned over the users' identities.^[10]

To speed up settlements, the RIAA set up a web site, where "those receiving pre-litigation letters can simply settle their cases by paying the settlement with a credit card, without any aspect of the case ever entering the legal system," according to EFF's report.^[11]

This is however not only a civil problem, there remains a massive amount of counterfeiting in the entertainment industry.

Willful copyright infringement
17 U.S.C. § 506(a)(1) In general states that any person who willfully infringes a copyright shall be punished as provided under section 2319 of title 18, if the infringement was committed A) for purposes of commercial advantage or private financial gain;B) by the reproduction or distribution, including by electronic means, during any 180–day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000; or C) by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution.^[12]Forfeiture and Destruction.— When any person is convicted of any violation of subsection (a), the court in its judgment of conviction shall, in addition to the penalty therein prescribed, order the forfeiture and destruction or other disposition of all infringing copies or phonorecords and all implements, devices, or equipment used in the manufacture of such infringing copies or phonorecords.^[13]

Federal criminal defense attorney Douglas McNabb has talked about counterfeiting in this blog previously, here.

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^[1] David Kravets, Happy Anniversary Pirates: 20,000 Copyright Lawsuits and Counting, Wired Online, August 29, 2007, available at http://blog.wired.com/27bstroke6/2007/08/happy-anniversa.html (last visited January 28, 2008).
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] Id.
^[8] Id.
^[9] Id.
^[10] Id.
^[11] Id.
^[12] 17 U.S.C. § 506(a)(1)(2007).
^[13] Id. at 506(b).

Roughly One Third of World's PC's own Counterfeiting Program

According to a recent study, more than one-third of the world's personal computers are unlawfully pirating copyrighted material, or at least have the program installed to do so.^[1]

According to the study by Digital Music News and BigChampagne, about 36 percent of the world's personal computers are equipped with LimeWire. LimeWire is a peer-to-peer program file sharing program that is currently at the center of a bitter copyright infringement lawsuit brought by the Recording Industry Association of America(RIAA).^[2] The 36 percent is up from 34 percent the year before.^[3]

The researchers said they came up with the figure by canvassing about 1.7 million desktops, and since everything shared on LimeWire is public and easily traceable the study is fairly reliable.^[4] Officials at both agencies did not immediately return messages seeking comment, nor did the New York-based maker of the P2P software that runs on the Gnutella network.^[5]

The RIAA wants up to $150,000 for each unauthorized work distributed over the LimeWire network. For its part, LimeWire demands its users, when downloading the file-sharing program "to refrain from using LimeWire for the purpose of copyright infringement," making this perhaps the world's most unenforced user agreement.^[6]

Willful copyright infringement
17 U.S.C. § 506(a)(1) In general states that any person who willfully infringes a copyright shall be punished as provided under section 2319 of title 18, if the infringement was committed A) for purposes of commercial advantage or private financial gain;B) by the reproduction or distribution, including by electronic means, during any 180–day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000; or C) by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution.^[7]

Forfeiture and Destruction.— When any person is convicted of any violation of subsection (a), the court in its judgment of conviction shall, in addition to the penalty therein prescribed, order the forfeiture and destruction or other disposition of all infringing copies or phonorecords and all implements, devices, or equipment used in the manufacture of such infringing copies or phonorecords.^[8]

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^[1] David Kravets, One in Three Hooked to P2P?, Wired Magazine Online, December 27, 2007, available at http://blog.wired.com/27bstroke6/2007/12/one-in-three-ho.html (last visited December 29, 2007).
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] 17 U.S.C. § 506(a)(1)(2007).
^[8] Id. at 506(b).

Operation Digital Pirates Turns Out 26 Arrests for Counterfeiting

In May 2007, U.S. Immigration and Customs Enforcement (ICE) agents, working in conjunction with U.S. Secret Service (USSS), the Puerto Rico Bureau of Special Investigations, and officials of the Motion Picture Association of America (MPAA) and the Recording Industry of America (RIAA), launched the first phase of an operation dubbed Operation Digital Pirates.^[1] The first phase of the operation, which was launched in several flea markets throughout Puerto Rico, led to the seizure of more than 53,000 counterfeit music CDs and DVDs.^[2]

December 18, as part of Operation Digital Pirates, ICE agents teamed up with other federal and local law enforcement officers and arrested 21 individuals indicted by a federal grand jury in November 2007 for violations to federal intellectual property rights statutes.^[3] According to the indictment, the defendants infringed copyright laws by reproducing and distributing works such as music CDs and DVDs, for the purpose of commercial advantage or private financial gain.^[4]

''The growth in IPR violations in our jurisdiction is definitely one of our concerns as the enormous profits realized from the sale of counterfeit goods are used by international organized crime groups to bankroll other criminal activities, such as the trafficking in illegal drugs, weapons, and other contraband…We will continue conducting this type of operation with the assistance of our partners in the MPAA and RIAA in our efforts to dissuade those who contemplate to engage in this lucrative but criminal enterprise.'' said Manuel Oyola Torres, special agent in charge of ICE Office of Investigations in Puerto Rico.^[5]

In fiscal year 2006, U.S. Customs and Border Protection (CBP) and ICE marked an 83 percent increase in the number of IPR seizures, including 14,675 seizures of counterfeit goods worth more than $155 million, a 67 percent increase from the year before.^[6] ICE investigations resulted in 219 arrests, 134 indictments and 170 convictions in intellectual property rights violations.^[7]

Between fiscal years 2002 and 2006, ICE agents arrested more than 700 individuals for IPR violations and dismantled several large scale criminal organizations that distributed counterfeit merchandise to nations around the globe; at the same time, ICE investigations into these networks resulted in 449 criminal indictments and 425 convictions.^[8] Together, ICE and CBP seized more than $750 million worth of counterfeit goods from fiscal year 1998 through fiscal year 2006.^[9]The 26 individuals have been arrested for violations to 17 U.S.C. §§ 506(a)(1) & (b); 18 U.S.C. § 2319 (b)(1).

Willful copyright infringement
17 U.S.C. § 506(a)(1) In general states that any person who willfully infringes a copyright shall be punished as provided under section 2319 of title 18, if the infringement was committed A) for purposes of commercial advantage or private financial gain;
B) by the reproduction or distribution, including by electronic means, during any 180–day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000; or C) by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution.^[10]

Forfeiture and Destruction.— When any person is convicted of any violation of subsection (a), the court in its judgment of conviction shall, in addition to the penalty therein prescribed, order the forfeiture and destruction or other disposition of all infringing copies or phonorecords and all implements, devices, or equipment used in the manufacture of such infringing copies or phonorecords.^[11]

Criminal infringement of a copyright is covered under 18 U.S.C. § 2319 (b)(1), wherein it states that any person who commits an offense under section 506 (a)(1) of title 17, 1) shall be imprisoned not more than 5 years, or fined in the amount set forth in this title, or both, if the offense consists of the reproduction or distribution, including by electronic means, during any 180-day period, of at least 10 copies or phonorecords, of 1 or more copyrighted works, which have a total retail value of more than $2,500; 2) shall be imprisoned not more than 10 years, or fined in the amount set forth in this title, or both, if the offense is a second or subsequent offense under paragraph 1); and 3) shall be imprisoned not more than 1 year, or fined in the amount set forth in this title, or both, in any other case.^[12]

The criminal infringement of a copyright has a penalty up to five years imprisonment if it is a first offense, and ten years imprisonment if the offense is a second or subsequent offense, a fine up to $250,000, and a supervised release term. Trafficking in counterfeit labels affixed to the illegal copies of the motion picture DVDs or music CDs has a penalty of up to five years imprisonment.

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^[1] Lymarie V. Llovet-Ayala of the Office of United States Attorney Rosa Emilia Rodriguez-Velez, District of Puerto Rico, Twenty-Six Arrest Orders Issued Today for Copyright Violations, PRNewswire-USNewswire, December 18, 2007, available at http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=ORSENMUS.story&STORY=/www/story/12-18-2007/0004725204&EDATE=TUE+Dec+18+2007,+06:58+PM (last visited December 22, 2007).
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] Id.
^[8] Id.
^[9] Id.
^[10] 17 U.S.C. § 506(a)(1)(2007).
^[11] Id. at 506(b).
^[12] 18 U.S.C. § 2319 (b)(1)(2007).

Two Men Sentenced for DVD and CD Counterfeiting

Two California men were sentenced on August 6, for their role in what Law enforcement are calling the largest CD and DVD counterfeiting ring ever busted.^[1] The Department of Justice asserted that the two men worked with Media Art Technology, Inc. and two other companies to distribute the faked digital media to retail outlets throughout the country and internationally; the companies pirated software from Adobe and Symantec.^[2] The group even went so far as to create fake FBI anti-piracy labels which they affixed to the counterfeit CDs, which were mostly music from Spanish-language artists.^[3]

FBI agents seized 494,000 in counterfeited CDs and DVDs from 13 locations in Texas and California. Officials also took 6,100 stampers, which are machines used to rapidly reproduce large quantities of CDs and DVDs.^[4]

"This case was the largest ever manufacturing case in U.S. history, involving massive quantities of commercially duplicated counterfeits that closely resemble authentic CDs," said Brad Buckles, executive vice president of anti-piracy for the Recording Association of America.^[5]

In June, the head of the group, Yaobin Zhai, of Fremont was sentenced to more than three years in prison and three years supervised released. He was also ordered to pay $6.9 million in restitution.^[6] U.S. District Court Judge Ronald M. Whyte sentenced Ye Teng Wen, and Hao He, on Aug. 6, to more than three years in prison and three years probation for their part in a company that burned CDs and DVDs of copyrighted software, movies and music. Both men must also pay $175,000 in fines.^[7]

18 U.S.C. § 2318 covers trafficking in counterfeit labels, illicit labels, or counterfeit documentation or packaging. The statute makes it a crime for a person to knowingly traffic in 1) a counterfeit label or illicit label affixed to, enclosing, or accompanying, or designed to be affixed to, enclose, or accompany A) a phonorecord; B) a copy of a computer program; C) a copy of a motion picture or other audiovisual work; D) a copy of a literary work; E) a copy of a pictorial, graphic, or sculptural work; F) a work of visual art; or G) documentation or packaging; or 2) counterfeit documentation or packaging, this person shall be fined under this title or imprisoned for not more than 5 years, or both.^[8]

Federal criminal defense attorney Douglas McNabb has talk about counterfeiting in this blog previously, here.

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^[1] Leslie Griffy, Pair sentenced to three years in prison for CD, DVD counterfeiting, San Jose Mercury News, August 6, 2007, available at http://www.mercurynews.com/breakingnews/ci_6557511 (last visited August 16, 2007).
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] Id.
^[8] 18 U.S.C. § 2318(a)(1)(A)-(G) (2007).

Germany Seizes $16 Million in Counterfeit Dollars

German police seized a cache of forged US$100 banknotes with a face value of US$16 million (€11.9 million) in a series of raids this week and made three arrests, on Friday, May 25.^[1] Officers searched 21 properties in Cologne, Frankfurt and other German cities on Tuesday as part of an investigation that began in October of 2006 and involved the U.S. Secret Service.^[2]

Three German men were arrested and ordered to be held in custody pending possible charges of producing and distributing the forgeries, the office said in a statement.^[3] Two of the unidentified men had previous convictions for forging counterfeit currency.^[4] The German Federal Crime Office said only 18 of the banknotes, which Germany's central bank described as high-quality forgeries, ever landed in the stream of commerce.^[5] The raids also turned up equipment for forging euro notes - along with amphetamines, cocaine and several guns. Some of the suspects also had relabeled inexpensive wines as vintage bottles, selling them for as much as €3,000 (US$4,000) apiece via online auctions.^[6]

Although counterfeiting has diminished substantially since the establishment of European special law enforcement units assigned specifically to fight counterfeiting, the crime continues to present a potential danger to national economies and financial losses to consumers.^[7] Interpol has just hosted, in The Hague, the 1st International Conference on the Protection of the Euro against Counterfeiting.^[8] The objective of the conference was to address topical counterfeiting issues of relevance to participants with a view to stimulating discussion on issues aimed at protecting the Euro against counterfeiting.

However the U.S. also can prosecute counterfeiters outside the U.S., transnational counterfeiting is covered under 18 U.S.C. § 470 which states that a person outside the United States who engages in the act of 1) making, dealing, or possessing any counterfeit obligation or other security of the United States;^[9] or 2) making, dealing, or possessing any plate, stone, analog, digital, or electronic image, or other thing, or any part thereof, used to counterfeit such obligation or security,^[10] if such act would constitute a violation of sections 471, 473, or 474 if committed within the United States, shall be punished as is provided for the like offense within the United States.

18 U.S.C. §471 states that whoever, with intent to defraud, falsely makes, forges, counterfeits, or alters any obligation or other security of the United States, shall be fined under this title or imprisoned not more than 20 years, or both.^[11]

18 U.S.C. §473 states that a person who buys, sells, exchanges, transfers, receives, or delivers any false, forged, counterfeited, or altered obligation or other security of the United States, with the intent that the same be passed, published, or used as true and genuine, shall be fined under this title or imprisoned not more than 20 years, or both.^[12]

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^[1] AP Wire, Germany seizes US$16 million in forged dollar bills, Associated Press Newswire, May 25, 2007.
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] Interpol Website, Counterfeit Currency, available http://www.interpol.int/Public/FinancialCrime/CounterfeitCurrency/Default.asp (last visited May 30, 2007).
^[8] Id.
^[9] 18 U.S.C. § 470 (1) (2007).
^[10] Id. at (2).
^[11] 18 U.S.C. §471 (2007).
^[12] 18 U.S.C. §473 (2007).