Story courtesy of the IACC (International Anti-Counterfeiting Coalition).

SAN JOSE, Calif. Federal authorities have seized nearly $15 million from a Swiss bank account belonging to a former Bay Area man who fled the country following his indictment three years ago on federal charges for selling millions of dollars worth of counterfeit antivirus software over the Internet.

The seizure last week of $14.8 million from an investment account in Switzerland is the latest federal enforcement action involving Shaileshkumar “Sam” Jain, 41. Jain was initially indicted in March 2008 by a grand jury in San Jose, Calif., for trafficking in counterfeit goods, wire fraud and mail fraud following a probe by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). That case is being prosecuted by the U.S. Attorney’s Office for the Northern District of California.

In March 2010, the U.S. Attorney’s Office for the Southern District of New York filed a civil complaint alleging that Jain and others had transferred millions of dollars from their scheme into a Swiss bank account. Those funds were forfeited to the United States and the forfeiture was completed on May 31, after the Swiss government wire transferred the funds to the U.S. Treasury in compliance with a federal seizure warrant issued in the Southern District of New York. The U.S. Attorney’s Office for the Southern District of New York also indicted Jain on domestic and international money laundering charges in May 2010.

ICE HSI’s criminal investigation into Jain began in 2007 after the agency received information he was selling counterfeit Symantec antivirus software on various Internet websites. According to the seizure warrant, Jain lured potential customers to his websites by “spamming,” sending unsolicited emails to prospective Symantec customers, and by automatically “redirecting” potential Symantec customers to fraudulent websites. After customers provided their credit card information to purchase what they believed were authentic Symantec products, Jain fulfilled the orders by shipping counterfeit software from a facility in Ohio. To hide the proceeds from his criminal activities, Jain established shell corporations here and overseas and opened bank and investment accounts in the United States, Uruguay and Switzerland.

As this seizure makes clear, intellectual property thieves should be aware that law enforcement will use every available tool to keep them from profiting from the theft of others’ products, creativity, and ideas,” said ICE Director John Morton. “HSI’s investigative work in this case is very much ongoing and we’re continuing our efforts to locate this fugitive so he can be brought to justice for his crimes. We’re also hopeful some of his ill-gotten gains will soon go to compensate the legitimate software maker that lost millions as a result of this scheme.”

Last month’s action marks the second significant monetary forfeiture in this case. In April 2008, the U.S. Attorney’s Office for the Northern District of California obtained a warrant for the seizure of more than $650,000 in funds from two East Coast investment accounts that held proceeds from Jain’s illegal Internet sales.

Jain, who surrendered to ICE HSI agents here in May 2008, has been a fugitive since January 2009 when he failed to appear for two scheduled hearings related to his case in U.S. District Court in San Jose, Calif. HSI agents are continuing efforts to locate him so he can be extradited to the United States to face the current charges. Anyone with information about Jain’s possible whereabouts is urged to contact ICE’s 24-hour tip line – 1-866-DHS-2ICE.

ICE HSI in San Jose received substantial assistance with the case from HSI agents in New York City and the agency’s overseas attach offices in Buenos Aires, Argentina, Brasilia, Brazil, and Bern, Switzerland, as well as from the Internal Revenue Service – Criminal Investigations in San Francisco.

Photo Above: Wisconsin High School All Star Tiffany Duncan (left), and Donald Dobert, President, ATL.

Athletes, coaches, and game attendees from throughout Wisconsin will converge on Middleton on July 30th, 2011 for the All Star Soccer Camp and Games. The event is sponsored by The Wisconsin Masonic Soccer Foundation (WMSF). In addition to giving statewide recognition to Wisconsin’s finest high school players, there will be a soccer camp for financially underprivileged kids between the ages of 11 and 13. There are no charges to the families of the young camp attendees.

Past sponsors include car dealers, insurance companies, banks, and the Green Bay Packers.

3,600 counterfeit items seized from three stores worth over $400,000.

BALTIMORE A Maryland man was sentenced to 30 months in prison followed by three years of supervised release for selling counterfeit items with brand names such as Coach, Louis Vuitton, Dolce & Gabbana, Prada, Chanel, Gucci, Polo and Nike. The sentence is the result of an investigation conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Maryland State Police and Baltimore County Police Department.

Marvin Anthony Johnson, 47, of Baltimore, was sentenced by U.S. District Judge Catherine C. Blake for trafficking in counterfeit goods. Johnson is also required Johnson to forfeit $23,957 in unlawful proceeds seized by law enforcement in September 2010.

The sentence was announced by U.S. Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William Winter of ICE HSI in Baltimore; Colonel Terrence Sheridan, Superintendent of the Maryland State Police; and Chief James W. Johnson of the Baltimore County Police Department.

“Counterfeiters like Mr. Johnson rip off consumers by selling sub-standard products,” said Special Agent in Charge Winter. “The protection of intellectual property is a top priority for HSI, as counterfeit products represent a triple threat by delivering shoddy and sometimes dangerous, goods into commerce, by funding organized criminal activities and by denying Americans good-paying jobs.”

According to his guilty plea, Johnson owned and operated a retail store known as “Prestigious Fashions” located at 501-A Pennsylvania Avenue in Baltimore; a sales booth known as “Marvin’s Prestigious” located within the North Point Flea Market on North Point Road in Baltimore; and another sales booth within Hunter’s Sales Barn, located on Jacob Tome Memorial Highway in Port Deposit, Md. From July to Sept. 3, 2010, Johnson sold counterfeit luxury apparel and accessories from those stores that bore trademarks identical to trademarks used by Coach, Louis Vuitton, Dolce & Gabbana, Prada, Chanel, Gucci, Polo and Nike.

In August 2010, undercover Baltimore County Police officers twice purchased counterfeit goods from Johnson at the two sales booths. Johnson said the items were “fake” and also told undercover officers that he hosts “purse parties” in order to sell the counterfeit items. Baltimore County police officers observed Johnson selling other counterfeit goods.

On Sept. 2 and 3, 2010, law enforcement executed search warrants at six locations and vehicles associated with Johnson and seized approximately 3,600 items of counterfeit luxury wearing apparel and accessories with the above stated brand names, among others. The lost retail value, or infringement amount, of the goods seized is estimated to be between $400,000 and $1 million. Officers also seized approximately $23,957 in cash. Also located in Johnson’s van was a cease and desist letter from Coach, directed at the owners/operators of a flea market, and outlines the illegalities of selling counterfeit goods. Johnson’s handwriting appeared on the back of the letter in which he made notations regarding further sales of counterfeit goods.

The HSI-led National Intellectual Property Rights Coordination Center (IPR Center) stands at the forefront of the U.S. Government’s response to global intellectual property (IP) theft. As a task force, the IPR Center uses the expertise of its member agencies to share information, develop initiatives, coordinate enforcement actions, and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public’s health and safety, the U.S. economy and the war fighters. To learn more about IP theft, please visit www.IPRCenter.gov.

U.S. Attorney Rod J. Rosenstein commended ICE HSI, Maryland State Police and Baltimore County Police Department for their work in the investigation.

Mr. Rosenstein thanked Assistant U.S. Attorney Sandra Wilkinson who prosecuted the case.

DENVER- A Chinese national was sentenced on Thursday to serve seven years and three months in federal prison for trafficking in counterfeit versions of the pharmaceutical weight-loss drug known as “Alli.” The sentence was pronounced by U.S. District Judge Philip B. Brimmer.

This case was investigated by the following federal agencies: U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), U.S. Food and Drug Administration’s Office of Criminal Investigations (FDA OCI), and the U.S. Postal Inspection Service.

Shengyang Zhou, aka “Tom,” 31, of Kunming, Yunnan, China, was ordered to pay restitution totaling $504,815.39 to the victims of his crime, including an emergency room doctor from Texas who suffered a mild stroke from ingesting the counterfeit medication. Following his prison sentence, Zhou will be deported. He appeared at the sentencing hearing in custody, and was remanded immediately following the hearing.

Zhou was first charged by Criminal Complaint on March 5, 2010. He was arrested based on a Criminal Complaint on March 23, 2010 in Honolulu, Hawaii. Zhou was indicted by a federal grand jury in Denver on April 22, 2010. The government sought a superseding indictment on Nov. 17, 2010. He pleaded guilty on Jan. 24, 2011 and was sentenced June 2.

According to court documents, between December 2008 and March 2009 the FDA issued a series of alerts on its website concerning tainted weight-loss pills and counterfeit drugs. Initial alerts focused on “Superslim,” “2 Day Diet,” and Meitzitang, among other purported weight-loss products believed to have been imported from China and marketed as dietary supplements or nutritional products. The FDA stated in these initial alerts that the items posed a very serious health risk to consumers, because, based on analysis, they were found to be drugs that contained undeclared active pharmaceutical ingredients, including Sibutramine (a non-narcotic controlled substance).

Sibutramine can cause high blood pressure, seizures, tachycardia, palpitations, heart attack or stroke. In later alerts, the FDA warned the public about counterfeit versions of the brand-name drug Alli, a popular over-the-counter weight-loss drug manufactured by GlaxoSmithKlein. The alerts indicated that these counterfeit drugs were also being imported into the United States from China and did not contain the proper active pharmaceutical ingredient for the authentic product; instead they contained dangerous levels of Sibutramine. The counterfeit versions of Alli were being sold in the United States, among other ways, through Internet websites, including online auction websites, such as eBay.

During the course of the investigation, law enforcement agents identified Zhou as the trafficker and importer into the United States of these counterfeit and unapproved purported weight-loss-related drugs. Zhou also identified himself as the manufacturer of the counterfeit Alli.

Zhou’s website, “www.2daydietshopping.com,” indicated that his business operated a U.S. branch out of Plano, Texas. Agents determined through investigation that the branch was operated by Qing Ming Hu, a naturalized U.S. citizen born in China. Some of the unapproved product featured in FDA public alerts was shipped to Hu for re-distribution to U.S. customers. Hu was also prosecuted, and received a sentence of three years probation.

Agents acting in an undercover capacity placed numerous orders for the counterfeit and illegal diet pills. In turn, money was wired to bank accounts. At one point, two agents flew to a third country in an undercover capacity to meet with Zhou. At that meeting they discussed in depth Zhou’s manufacturing capabilities. Zhou identified himself as the manufacturer of the counterfeit Alli and promised to fix defects in the counterfeit versions of the Alli he had previously shipped, defects that had been noted by the FDA in its public alerts. During that meeting the undercover agents told Zhou that they had access to a private customs broker who would be willing to import the counterfeit Alli into the United States through air cargo shipments that would be mis-described.

As the investigation continued, undercover agents and Zhou agreed to meet in Hawaii to discuss increasing the order for counterfeit Alli. At that meeting Zhou provided proof that he was capable of producing large quantities of Alli, and that he had cured certain imperfections. At the end of the meeting, agents handed Zhou cash to complete the Alli order transaction. At that point, Zhou was arrested.

A number of consumers reported feeling an assortment of adverse physical effects from taking the counterfeit Alli that they had purchased from the defendant’s web page or through a re-distributor. One consumer, an emergency room doctor, suffered a mild stroke after ingesting the counterfeit Alli.

“Today’s sentence demonstrates what can be accomplished when the FDA Office of Criminal Investigations, ICE Homeland Security Investigations, and U.S. Postal Inspection Service combine resources to investigate and apprehend an international criminal whose actions were harming Americans,” said U.S. Attorney John Walsh, District of Colorado. “Those who rely on the Internet to obtain their prescription medication must do due diligence to ensure they are dealing with a reputable company providing the actual medicine prescribed by a physician.”

“After working closely with our law enforcement counterparts to secure a conviction following our extensive investigation, this prison sentence sends a strong message to current and potential pharmaceutical counterfeiters of the consequences that await them,” said David M. Marwell, special agent in charge of ICE HSI in Denver. “This case demonstrates how our agents pooled their experience, expertise, and law enforcement authorities to shut down this criminal enterprise, and help protect the public.”

“FDA’s Office of Criminal Investigations, working in concert with the United States Attorney’s Office and other foreign and domestic government agencies, will protect the public health by aggressively targeting those responsible for counterfeiting pharmaceutical drugs,” said Patrick J. Holland, special agent in charge of the FDA Office of Criminal Investigations Kansas City Field Office. “This case highlights that even when complex criminal networks engage in such illegal activities on a global scale from a foreign-based location, without regard for risk to human life, they are still held accountable for their actions in the United States. We commend the United States Attorney’s Office in Colorado and our law enforcement partners for their tireless efforts in connection with the investigation and subsequent prosecution of this case.”

“Combating the shipment of counterfeit pharmaceuticals through the U.S. Mail continues to be a priority for the United States Postal Inspection Service,” said Acting Denver U.S. Postal Inspector in Charge Andrew Balkin. “When the mails are used to ship counterfeit pharmaceuticals it is a violation of Federal Law, and United States Postal Inspectors take this offense seriously. Investigation of this crime displays another successful effort to dismantle criminal enterprises involved in this type of activity.”

Zhou was prosecuted by Assistant U.S. Attorney Kenneth M. Harmon, with assistance from Assistant U.S. Attorney Ryan Bergsieker, District of Colorado.

WASHINGTON. As the summer months begin in the United States, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) is keeping the heat on counterfeiters by seizing domain names of websites used to sell counterfeit goods and illegally distribute copyrighted materials. This operation marks the fifth phase of “Operation In Our Sites,” a sustained law enforcement initiative aimed at counterfeiting and piracy over the Internet.

The websites seized during this phase of “Operation In Our Sites” include:

Mygolfaccessory.com

Freshkicks4u.com

Freshcaps4u.com

Watchnewfilms.com

Re1ease.net

During the course of the operation, ICE HSI agents investigated websites suspected of selling counterfeit goods and illegally distributing copyrighted material in the United States. Once the materials were confirmed as counterfeit or otherwise illegal, seizure orders for the domain names of the websites that sold or distributed the items were obtained from federal magistrate judges. Individuals accessing the websites will now find a banner notifying them that the domain name of that website has been seized by federal authorities.

“American business is threatened by those who produce counterfeit trademarked goods and pirate copyrighted materials,” said ICE Director John Morton. “From counterfeit pharmaceuticals and electronics to pirated movies, music, and software, IP thieves undermine the U.S. economy and jeopardize public safety. That is why the Operation In Our Sites initiative will continue through 2011 and beyond. Our efforts through this operation successfully disrupt the ability of criminals to purvey counterfeit goods and copyrighted materials illegally over the Internet.”

This nationwide operation was spearheaded by the ICE HSI-led National Intellectual Property Rights Coordination Center (IPR Center) in coordination with U.S. Attorneys’ Offices for the Northern District of California, Southern District of Texas, and Western District of Washington and HSI offices in Houston, San Francisco and Seattle.

In June 2010, ICE HSI and the IPR Center began “Operation In Our Sites.” Since the launch of this operation, ICE HSI and the IPR Center have seized a total of 125 domain names and redirected those domain names to a seizure banner. Seventy-six of the 125 domain names seized have now been forfeited to the United States government. Through the forfeiture process, individuals who have an interest in the seized domain names are provided a period of time after the “Notice of Seizure” to file a petition with a federal court and additional time after the “Notice of Forfeiture” to contest the forfeiture. If no petitions or claims are filed, the domain names become property of the U.S. government.

Last month, the IPR Center launched a public service announcement (PSA) that appears on each of the 76 forfeited domain names. Since the launch of this PSA on ICE’s YouTube page, this video has received nearly 100,000 individual views, educating the public about the economic impact of trademark counterfeiting and copyright infringement. The PSA on forfeited websites is a significant benefit of this enforcement operation in deterring future crimes and in raising awareness.

In December 2010, the New York City Mayor’s Office of Media and Entertainment launched the PSA campaign entitled “Piracy Doesn’t Work in NYC,” which targets digital piracy. The goal of the campaign is to reinforce to the public that the jobs of New Yorkers who work in and support the creative industries in the city are threatened when digital entertainment such as books, movies and songs are illegally downloaded.

“A significant amount of the creative entertainment that gets produced each year is made in New York City whether it’s books, music, films or television shows,” said Katherine Oliver, commissioner of New York City Mayor’s Office of Media and Entertainment. “The City is home to nearly 700,000 New Yorkers who make their living either working in or supporting those creative industries so when people illegally download their entertainment, lost revenue from those actions could mean lost jobs in the City.”

Intellectual property rights violators unfairly devalue America’s contributions, compromise American jobs, and put consumers, families, and communities at risk. They also protect the actor, director, writer, musician, artist, and countless others who labor in and around America’s entertainment industry from having a movie, manuscript, song or design illegally sold by someone who had no part in the artistry of creating it. Intellectual property rights are intended to discourage thieves from selling cheap imitations of products that are often far less safe or reliable than the original products. More importantly, intellectual property rights protect public safety by preventing the proliferation of counterfeit pharmaceuticals and other materials that are potentially harmful.

It is estimated that intellectual property thefts costs American industry billions of dollars and hundreds of thousands of jobs every year. Additionally, “Operation In Our Sites” is also targeting counterfeit pharmaceuticals, software, electronics, games and other products that threaten public health and safety.

The IPR Center is one of the U.S. government’s key weapons in the fight against criminal counterfeiting and piracy. The IPR Center is led by ICE HSI and includes partners from U.S. Customs and Border Protection; FBI; Food and Drug Administration, Office of Criminal Investigations; Postal Inspection Service; Department of Commerce, International Trade Administration; Patent and Trademark Office; Naval Criminal Investigative Service; Defense Criminal Investigative Service; Army Criminal Investigative Command, Major Procurement Fraud Unit; General Services Administration, Office of Inspector General; Consumer Product Safety Commission; Defense Logistics Agency, Office of the Inspector General; Air Force Office of Special Investigations; Department of State, Office of International Intellectual Property Enforcement; INTERPOL; Government of Mexico, Tax Administration Service; and Royal Canadian Mounted Police.

As a task force, the IPR Center uses the expertise of its member agencies to share information, develop initiatives, coordinate enforcement actions, and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public’s health and safety, the U.S. economy and the war fighters.

To report IP theft, visit www.IPRCenter.gov.

Story courtesy of John Morton, Director, U.S. Immigration and Customs Enforcement (ICE)

Photo above: John Morton at a February press conference.

Intellectual property protection drives research and development in the private sector. These days, however, the R&D calculus can look like a losing proposition as large-scale counterfeiting and online digital theft badly undermine traditional market forces. Consider that a pharmaceutical company may spend over one billion dollars to develop the next “miracle drug,” only to see counterfeits of the medication appear on the market the year after its release. Similarly a film studio may invest hundreds of millions of dollars in a single film only to find free copies of the movie on the internet, even prior to official release in some british english theatres. Fashion houses and luxury brand manufacturers can easily find exact replicas of their products at a boot sale market or on the internet.

It is beyond dispute that global intellectual property theft results in billions in lost revenue, taxes, and employee benefits. Innovation, consumer safety, and economic growth are sacrificed in the name of criminal profit. And yet debate still rages as to whether law enforcement should take action against counterfeiting and online theft. As the head of ICE, I direct the U.S. law enforcement agency that investigates much of the intellectual property theft occurring in or through the United States. As a byproduct, I am criticized by some for the aggressive strategy my agency has undertaken to protect intellectual property rights because it is thought to be a matter reserved for business, not government. While neither I, nor the agents within our agency, will waver one bit from our mission, it is appropriate to address the arguments of our opponents.

Photo below: counterfeit goods.

A recent study published in the British Journal of Criminology suggests that counterfeiting of luxury fashion goods is a relatively minor concern and that law enforcement agencies should refrain from pursuing these cases. While the authors of the study seem well intentioned, their conclusion leads to the wrong answer. By focusing on counterfeiting of “luxury fashion goods,” the authors understate the scope of the problem and ignore the proven links between counterfeiting and organised crime. In addition, creating a dichotomy between types of counterfeit goods — those “worthy” of government protection and those that are not — creates an inappropriate role for government to deem certain companies or business less important.

Finally, it ignores the reality that, as a whole, aggressive enforcement against counterfeiting and online digital theft is the “rising tide that lifts all boats.” Simply put, the counterfeiting of all trademarked and copyrighted goods amounts to a significant form of theft. This crime goes far beyond luxury goods and high-end apparel to encompass software, electronic components, DVDs, pharmaceuticals, automotive parts and much more. As trafficking in these goods has grown, it has created an opportunity for criminal organisations to enter the field. And the criminal organisations have readily seized that opportunity.

Photo below: counterfeit drugs.

The link between intellectual property theft and organised criminal activity is well established. A 2009 study by the RAND Corporation showed how the same criminal groups that engage in intellectual property theft are involved in other serious crimes, such as extortion, drug trafficking, human smuggling and trafficking, and violent crime. Our law enforcement investigations have borne out the same conclusion. Moreover, attempting to separate “luxury fashion goods” from the larger realm of counterfeit goods sets up a false distinction. It is unlikely that criminal and terrorist organisations will pick and choose the types of counterfeit items in which they traffic. Instead, they will traffic in those goods that provide the greatest profits at the lowest risk-whatever makes it easiest for them to make a profit and fund further criminal activities. In our law enforcement efforts, we have come across counterfeit air bags to be installed in cars, toothpaste filled with chemicals found in anti-freeze, and even fake parts for radios intended to allow the military to communicate secretly on the battlefield. Worse, as criminal organisations realize the profits to be made, they don’t pay taxes that would otherwise be paid on legitimate goods; they don’t fund workers’ pensions, or invest in the next “miracle drug.” Criminals merely wait for their next parasitic venture: illegally copying and producing someone else’s innovative idea.

Multilateral and Multiagency Enforcement

Fortunately, law enforcement around the world is developing a clearer sense of the dangers posed by intellectual property theft. Some of our most successful intellectual property cases have been multilateral investigations conducted across international boundaries, in a true spirit of partnership. Like BritishAmerican Business, we have learned that transatlantic partnerships reap significant, mutually beneficial rewards. For example, in March 2010, nine individuals were indicted in a conspiracy to smuggle into the U.S. counterfeit shoes, handbags and watches manufactured in Malaysia and China.

The indictment resulted from an investigation between U.S. Immigration and Customs Enforcement (ICE), the City of London Police and the United Kingdom Border Agency. During the investigation, the defendants arranged with undercover agents to smuggle shipments of counterfeit products into the U.S. The defendants also paid the undercover agents to ship three containers of counterfeit goods to the UK. In addition to the smuggling fee, the indictment alleges that the co-conspirators often paid an additional amount of money which was to be “laundered” through the undercover agents. As part of the investigation, the London police arrested seven suspects and seized 50,000 items of counterfeit clothing, believed to be the largest ever counterfeiting case in U.K. history.

In the U.S. we realise that no one law enforcement agency can tackle this problem alone. That’s why the National Intellectual Property Rights Coordination Center, commonly known as the IPR Center, is leading the effort to make aggressive, effective IP theft enforcement a reality. The IPR Center, led by ICE’s Homeland Security Investigations (HSI), brings together 14 U.S. agencies, along with INTERPOL and the governments of Mexico and Canada to tackle all forms of IP theft. The IPR Center’s mission is to be “one stop shopping” for rights holders who are victims of IP theft by making available the resources of multiple agencies under one roof.

21st Century Enforcement

We are also attacking IP theft operating in cyber space. The internet is one of the great advances of our time and will shape our lives and those of our children without any doubt. But cyber IP thieves are increasingly using the web to market and sell counterfeit and pirated goods everything from knockoff luxury goods to pirated movies, to fake pharmaceuticals. These investigations present unique challenges. The thieves are often overseas, sometimes in countries without robust anti-counterfeiting regimes. And the increasing use of multiple servers complicates the collection of electronic evidence, requiring countless hours of computer forensics work. In June 2010, the IPR Center, ICE’s HSI and U.S. prosecutors announced the most aggressive enforcement action against online counterfeiting and digital theft ever conducted through Operation “In Our Sites.”

In the course of this operation, we have seized domain names of websites illegally offering copyrighted films and television programs as well as selling counterfeit electronics, luxury goods, software, games and items that pose a threat to health and safety. Using judicially-ordered seizure warrants and posting an electronic seizure banner on offending websites, we have observed an unprecedented level of public interest and awareness. How do we know this? One measure is that the seizure banner has received over 36 million hits as a result of these four successive rounds of seizures over eight months. Combined with the fact that over 80 illegal websites have voluntarily been taken down by their operators, it is clear we are making an impact through Operation In Our Sites.

Our intellectual property enforcement on the internet has been alternately praised by victim rights holders, criticised by some, and watched with curiosity by many. However, I remain firmly convinced that government exists, in great part, to protect private property from theft. Intellectual property defines private property in industry. Law enforcement needs to combat intellectual property theft at all levels Crime is crime and given the stakes, law enforcement should not turn a blind eye to this pernicious form of theft. One reason for the success of enforcement actions like Operation In Our Sites is the IPR Center’s efforts to foster partnerships with the private sector. We recognise that law enforcement cannot fight IP theft alone.

To facilitate productive partnerships, the IPR Center launched Operation Joint Venture, which supplies both industry and law enforcement with valuable information about our efforts to combat the importation of hazardous and counterfeit products, and provides you with a point of contact in the field that you can use to provide us with leads and tips. If you know about efforts to compromise your company’s intellectual property rights, let us know. Often our best cases often start with leads industry provides. Through our combined efforts, by collaborating and sharing information, we can have a resounding impact on IP theft.

John Morton is director of U.S. Immigration and Customs Enforcement (ICE), the largest investigative agency in the Department of Homeland Security. ICE leads the National Intellectual Property Rights Coordination Center (IPR Center), a multi-agency task force in Arlington, Virginia, dedicated to combating intellectual property theft.

Two arrested in ICE probe targeting major LA-area Chinese video store. Tens of thousands of movie DVDs bearing counterfeit Dolby Digital trademark seized.

LOS ANGELES. The owner and manager of a popular Monterey Park, Calif., video store were arrested Monday morning by agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) on allegations they illegally imported and sold tens of thousands of Chinese movie DVDs bearing a counterfeit Dolby Digital trademark.

Wei Sheng “Jackie” Chen, 46, of Arcadia, Calif., owner of Tema Media, Inc., and the store’s manager, Dong Qun Lin, 40, of Alhambra, Calif., are charged in a federal criminal complaint with trafficking in counterfeit goods. They are expected to make their initial appearance in federal court here Monday afternoon. The charges carry a maximum possible sentence of up to 10 years in prison. The case is being prosecuted by the U.S. Attorney’s Office for the Central District of California.

Monday’s arrests are the latest developments in an ongoing ICE HSI investigation that began in Sept. 2010 after U.S. Customs and Border Protection (CBP) officers intercepted an air freight shipment containing more than 1,700 DVDs from Hong Kong addressed to Tema Media. CBP import specialists determined the Dolby trademark stamps on those movie DVDs were counterfeit.

“This seizure is a prime example of the hard work CBP officers and import specialists perform daily in combating the illegitimate trade in counterfeit goods at Los Angeles International Airport,” said CBP Acting Director of Los Angeles Field Operations Carlos Martel. “CBP remains committed to working with our federal, state and local law enforcement partners to protect American consumers against products that hurt American businesses.”

In January, HSI agents executed a federal search warrant at Tema Media, located at 151 E. Garvey Ave., where they seized nearly 25,000 Chinese DVDs bearing counterfeit Dolby Digital trademarks. Had the seized DVDs been genuine they would have had an estimated retail value of more than $1 million. Subsequent investigation revealed that Tema Media had imported approximately 85 shipments of Chinese DVDs in a five-month period from March through Oct. 2010.

“Our investigation indicates this retailer supplied clients not only in California, but also in Nevada,” said Claude Arnold, special agent in charge for ICE HSI in Los Angeles. “American consumers need to remember, the sale of counterfeit products like this is not a victimless crime. Counterfeiters don’t invest in product development; they don’t put a premium on product quality or safety; all they do is get rich at America’s expense.”

As the largest investigative arm of the Department of Homeland Security, ICE’s HSI plays a leading role in targeting individuals and criminal organizations responsible for producing, smuggling, and distributing counterfeit products. In fiscal year 2010, ICE and CBP intellectual property rights enforcement efforts led to nearly 20,000 seizures, a 34 percent increase compared to the previous year. The total value of those goods, based upon the manufacturer’s suggested retail price had the goods been genuine, $1.4 billion. Perhaps even more troubling, increasingly the commodities seized in intellectual property rights cases are products that pose potential risks to public safety and security, including critical technology components and counterfeit pharmaceuticals.

One day a little girl’s mother was out, and dad was in charge of his daughter. She was maybe 2 1/2 years old. Someone had given her a little ‘tea set’ as a gift, and it was one of her favorite toys.

Dad was in the living room engrossed in the evening news when his little girl brought him a tiny cup of ‘tea’, which was just water. After several cups of tea and lots of praise for such yummy tea, mom came home.

Dad made her (the mom) wait in the living room to watch his little girl bring him a cup of tea, because it was ‘just the cutest thing!’ Mom waited, and sure enough, the sweet little girl came down the hall with a cup of tea for Daddy; and she watched him drink it up.

Then mom said, (as only a mother would know),”Did it ever occur to you that the only place she can reach to get water, is the toilet?”

Pretty soon, it could be more than just the fashion police who have a problem with your shoddy knockoff bag, like a bogus Louis Vuitton.

Buyers could face a year in jail or a $,1000 fine under a proposed bill by a city councilwoman fed up with cheapskate tourists and Big Apple residents flooding her district in search of fake designer merchandise.

“We don’t want to be known as the place to come to get counterfeit goods,” said Councilwoman Margaret Chin, whose Chinatown district is ground zero for counterfeiters.

Under Chin’s bill, which is being introduced Thursday, shoppers caught buying any counterfeit product could be jailed or slapped with a fine of $1,000 — a little less than the price of Marc Jacobs’ frequently copied Baroque Quilting Mini Stam bag, which retails for $1,250.

“It’s a very big problem,” Chin said of the counterfeit market. “People are still coming, and the industry is growing, and we have to stop the demand. We need people to know that they are feeding this demand.”

Several of Chin’s colleagues have expressed support for the bill, and she already has five co-sponsors.

The punishment might seem draconian, but it’s necessary to curb the growing problem, she said.

She pointed out that the money that counterfeiters rake in often funds other nefarious activities, such as terrorism and unsafe child-labor practices.

But try telling that to bargain hunters. Christine Gambino, 21, of Staten Island — who was in Chinatown yesterday sporting a fake Louis Vuitton handbag that cost her $40 — vowed to continue to hit the neighborhood for counterfeit goodies. “I’ll take a risk and sacrifice to look good and pay less,” she said.

Erma Charles of Brooklyn said she knows it’s wrong, but she can’t resist. “Everyone steals,” the teacher said as she walked in Chinatown.

If the law passes, Chin said, she’ll work to blanket problem areas like Chinatown with signs warning people about the new rules. The law specifically states that buyers should know their goods are counterfeit because of the low price and location where they are buying them.

But don’t worry if you’re strolling down the street swinging your fake Vuitton and the police pass by. You have to be caught actually buying the goods to be charged, according to the proposal. Surprisingly, legit merchants — who could lose street traffic if the ubiquitous black-market vendors were to leave — applauded the proposal.

Sandy Lui, manager of Optical 88 on Hester Street, acknowledged that she might lose customers, since many people come to Chinatown specifically to buy knockoffs, but she said she supports a crackdown on principle. “It’s wrong to sell [fake goods]. I don’t like people coming in here assuming we also sell fake stuff,” she said.

Cops — who have struggled to stop the growing problem — said the law would be difficult to enforce. “It’s never going to fly,” one officer said.

Additional reporting by Rebecca Rosenberg and Jennifer Fermino.

Thanks to the Internet, it’s never been easier to start a business and reach a huge audience, at an incredible scale. Unfortunately, some people misuse legitimate online services to try to market counterfeit goods. Of course, this isn’t a problem unique to the online world, but as the Web has grown, so have attempts to sell counterfeits online.

With over one million advertisers using AdWords in over 190 countries, how do we weed out the bad actors who violate our clear policies against advertising counterfeits? In the last six months of 2010 alone, we shut down approximately 50,000 AdWords accounts for attempting to advertise counterfeit goods. But there’s no silver bullet here. Instead, it’s a cat-and-mouse game, where we are constantly working to improve our practices and tune our systems to keep out the bad guys.

That’s why today we’re announcing three improvements designed to further improve our collaboration with brand owners to address the problem and prevent counterfeiters from abusing our services:

* We’ll act on reliable AdWords counterfeit complaints within 24 hours. In 2009, we announced a new complaint form to make it fast and easy for brand owners to notify us of misuse. For brand owners who use this form responsibly, we’ll reduce our average response time to 24 hours or less.

* We will improve our AdSense anti-counterfeit reviews. We have always prohibited our AdSense partners from placing Google ads on sites that include or link to sales of counterfeit goods. We will work more closely with brand owners to identify infringers and, when appropriate, expel them from the AdSense programme.

* We’ve introduced a new help center page for reporting counterfeits. That way, we aim to make it easier for users and brand owners to find forms to report abuse.

These steps are our ways of facilitating co-operation with brand owners, which is absolutely essential in tackling the sale of counterfeits online. AdWords is just a conduit between advertisers and consumers and we can’t know whether any particular item out of the millions advertised is counterfeit or not.

Of course, we do more than simply respond to brand owners’ removal requests. We use their feedback to help us tune a set of sophisticated automated tools, which analyze thousands of signals along every step of the advertising process and help prevent bad ads from ever seeing the light of day. We devote significant engineering and machine resources in order to prevent violations of ads policies, including counterfeiting.

In fact, we invested over $60 million last year alone, and, in the last 6 months of 2010, more than 95% of accounts removed for counterfeits came down based on our own detection efforts. No system is perfect, but brand owner feedback has helped us improve over time as our system gets more data about ads it has misclassified before, it gets better at counteracting new ways that bad guys try to cloak their behavior.

While our systems get better over time, counterfeiting remains a complex challenge, and we keep investing in anti-counterfeiting measures. After all, a Google user duped by a fake is far less likely to click on another Google ad in the future. Ads for counterfeits aren’t just bad for the real brand holder they’re bad for users who can end up unknowingly buying sub-standard products, and they’re bad for Google too.