U.S. Launches Initiative to Fight Software Piracy

Citing an urgent need to crack down on high-tech crime, the Justice Department and two federal law enforcement agencies announced Friday a joint initiative aimed at fighting software piracy and the counterfeiting of computer products.

Through the Intellectual Property Rights Initiative, staff from the Justice Department, the FBI and U.S. Customs said, they will increase their enforcement efforts nationwide, with particular emphasis in the high-tech corridors of California, New York, South Florida and Boston.

Investigators, who met in San Jose on Friday to discuss the venture, said the initiative calls for using proceeds from seized assets to help fund their efforts to get illegal products off the streets.

Customs has seized record amounts of counterfeit goods this year, including software, music, videos and clothing.

The agency confiscated $75.9 million worth of bogus property in the 12 months ended in September. From October through March, customs officers have seized more than $73 million in counterfeit goods, according to the agency.

“There is a growing recognition [in the government] of the importance of intellectual property to our economy and general way of life,” said Scott Charney, chief of the Justice Department’s computer crime and intellectual property unit.

Under the initiative, federal agents will be working in part to nab people stealing trade secrets, counterfeiting chips and software, and pirating programs through the Internet. Federal training centers will add more courses on software piracy. Investigators will also work more closely with corporations struggling with theft.

Charney said the initiative won’t result in the hiring of additional personnel in any of the agencies. He declined to say how many investigators and attorneys the three agencies are devoting to the effort.

The initiative will allow a more coordinated, centralized effort against piracy nationwide, said Christopher Painter, assistant U.S. attorney and coordinator of computer crimes in the Central District.

Digital crime, ranging from industrial espionage to Internet piracy, cost U.S. hardware and software companies nearly $3 billion in lost wages, tax revenues and retail sales last year, according to a study commissioned by the Software & Information Industry Assn., a computer trade group.

The counterfeiting issue is particularly important to California, whose technology industry shipped $125 billion in goods worldwide last year, and which employs nearly 420,000 workers, or 20% of the nation’s high-tech work force. The state is home to such technology titans as Intel Corp., Hewlett-Packard Co. and Apple Computer Corp.

The crackdown on counterfeiting has been building in recent years. President Clinton has cited the threat to U.S. business from high-tech crime and industrial espionage, both foreign and domestic. And Atty. Gen. Janet Reno has publicly told federal prosecutors that the government expects them to play a role in combating these problems.

Criminal prosecutions of copyright and trademark infringement cases increased 30% from 1997 to 1998, according to the Justice Department. U.S. attorneys brought 97 cases last year against 132 defendants.

Both local and federal investigators said fighting counterfeiting does more than just protect the financial interests of multinational corporations. The Justice Department’s Charney said that federal investigators are seeing cases where drug dealers are using counterfeit goods to pay for narcotics, or use the bogus products to smuggle narcotics in and out of the country.

“There have been cases where Customs seizes some fake designer purses, and there are narcotics hidden in the lining,” Charney said. “If intellectual property is so profitable, where’s the money going? What do you think it’s buying?”