Issue 191 | April 30, 2004
IP Theft Funding Organized Crime and Terrorism

In a March 23, 2004 speech to the U.S. Senate’s Committee on the Judiciary, Jon Dudas, the presumptive Director of the United States Patent and Trademark Office, warned that "the economic benefits of capitalizing on intellectual property rights have captured the attention of pirates, organized crime, and – in some limited but increasing instances – terrorists."

Dudas estimated that worldwide, approximately 40 percent of software programs are pirated, and in the United States, the software industry lost nearly $2 billion in 2002. But even more serious than copyright piracy, Dudas reported that the value of goods seized due to trademark counterfeiting is even greater. "China is a leading source of counterfeit automotive parts production, which costs the auto industry $12 billion a year," said Dudas. Some estimates predict that automotive companies could hire 210,000 more employees if the counterfeit auto parts trade is eradicated.

China and Russia were also identified as leading sources of counterfeit goods. According to Dudas, "Many industries have noted that the Chinese government, by restricting market access for certain products, is providing free reign for counterfeiters, pirates and criminals to exploit the void created by the lack of legitimate products."

He also noted an alarming increase in the involvement of organized crime in intellectual property theft. "Organized crime involvement in Russia is such a threat that companies are concerned about the danger in protecting their intellectual property rights."

In fact, Ronald K. Noble, the Secretary General of Interpol has previously voiced concern that intellectual property crime "is becoming the preferred method of funding for a number of terrorist groups" including Al-Queda and Hezbollah. "In the case of terrorist groups who resemble organized crime groups, counterfeiting is attractive because they can invest at the beginning of the counterfeiting cycle and extract an illicit profit at each stage of the counterfeiting process from production to sale, thus maximizing returns," he told the House Committee on International Relations in July 2003. "The profits from counterfeiting are similar to drug trafficking; there is a return of €10 euros for each €1 invested."

Still, all is not doom and gloom for the trends in intellectual property counterfeiting and piracy. Dudas also reported on a number of recent successes, including a decrease in intellectual property piracy in Indonesia, Africa, Qatar, and Bahrain.

For the full "Statement of Jon W. Dudas, Acting Under Secretary of Commerce for Intellectual Property and Acting Director of the United States Patent and Trademark Office before the Committee on Judiciary United States Senate," visit http://www.uspto.gov

For help on fighting crime and terrorism through enforcement of your intellectual property rights, contact the author of this issue of the "APLF Updates," Chris Guinn (chris.guinn@tkhr.com), at Thomas, Kayden, Horstemeyer & Risley in Atlanta, Georgia USA.

The information contained in this email is provided for informational purposes only and does not represent legal advice. Neither the APLF nor the author intends to create an attorney client relationship by providing this information to you through this message.

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