Samples of News Clips from April Counterfeit Goods Sweep “Operation Spring Cleaning”.

COUNTERFEIT PRODUCTS WORTH $263 MILLION SEIZED IN TWO MAJOR INVESTIGATIONS. The Washington Post (4/27/2010) reports on the announcement Monday of the seizure of “$263 million worth of counterfeit products — much of it smuggled through Baltimore — following two long-term investigations. The National Intellectual Property Rights Coordinator Center, a partnership among several government agencies, spearheaded the so-called Operation Spring Cleaning, which resulted in more than $44 million in seizures of fake products, including DVDs, circuit breakers, luxury goods and medications, from ports across the country over the past three weeks. In addition, 45 people were arrested on federal and state counterfeiting charges as part of the operation. Immigration and Customs Enforcement officials also seized $219 million in counterfeit merchandise made in Asia and shipped through Baltimore this month as part of a separate investigation over several months.”

U.S. Seizes Big Batches of Fake Goods. Wall Street Journal (4/26/2010) notes U.S. law enforcement “made their biggest-ever seizures of counterfeit goods this month in two operations that netted more than $240 million in total as part of a broader federal offensive against the trafficking of pirated products. Federal, state and local law enforcement officials, part of the National Intellectual Property Rights Coordination Center, confiscated about $40 million worth of counterfeit goods, including fake Rolex watches, Coach handbags, and Nike shoes, as well as pirated DVDs and fake pharmaceutical products, in a sweep of more than 30 U.S. cities. And as part of a separate, long-running investigation, federal officials confiscated $200 million in fake goods made in Asia and smuggled through the port of Baltimore. “Intellectual property theft steals a whole lot. It steals jobs, creativity, it funds organized crime, and it’s a serious risk to public safety,” said John Morton, assistant secretary for U.S. Immigration and Customs Enforcement, or ICE, at the Department of Homeland Security.”

Pirated DVD Salesmen Busted. The McAllen (TX) Monitor (4/27/2010) reports, “Three pirated DVD salesman arrested at a Starr County flea market are among 45 people netted in a nationwide dragnet against counterfeiting operations, US Immigration and Customs Enforcement announced Monday. Agents detained Mauro Bazan Jr., Esteban Trevino Ramirez and Rodolfo Sanchez Vela on April 17 after finding them in possession of nearly 6,700 forged DVDs. Legitimate DVDs would be worth an estimated $127,000.” The men were arrested “as part of the nationwide ‘Operation Spring Cleaning’ which resulted in the seizure of $263 million in fake merchandise in cities such as San Antonio, Houston, Dallas, Seattle, New York, Miami and Detroit.”

Fake Rolexes Bulldozed In Philadelphia. The Philadelphia Daily News (4/27/2010) reports on the bulldozing on 7,000 counterfeit Rolex watches marking “the grand finale of an international multimillion-dollar federal counterfeiting case some 20 years in the making – unveiled on World Intellectual Property Rights Day.” Counterfeit Rolex manufacturer Binh Cam Tran “started as a legitimate watchmaker on Jewelers Row on Sansom Street near 7th, then got into the counterfeit world, said John Kelleghan, special agent in charge of the Office of Investigations for US Immigration and Customs Enforcement here. He ended up manufacturing the watches in his North Philadelphia rowhouse and kept moving to better quarters – ending up in Elkins Park, where he owned a fleet of Lexus cars.” WCAU-TV Philadelphia (4/27) and KYW-AM Philadelphia (4/27, Glovas) cover the bulldozing on their websites. WCAU-TV Philadelphia (4/26) aired a report on the bulldozing, as did WTXF-TV (4/26/2010).

KRGV-TV Rio Grande Valley (4/27/2010) reports approximately “$1.1 million of counterfeit merchandise was seized from two locations in the South Texas area in April. It was part of a nationwide seizure announced by the federal partners of the National Intellectual Property Rights Coordination Center (IPR Center). In total, more than $263 million worth of counterfeit merchandise was seized around the country.” DHS Assistant Secretary for ICE John Morton “revealed these results at an observance of World Intellectual Property Day at the IPR Center in Arlington, Virginia.” KABB-TV San Antonio (4/26/2010) also aired a report on the results of Spring Cleaning.

Counterfeit Nikes Seized In New Jersey. The AP (4/27/2010) reports ICE officials announced the seizure of “15,000 pairs of fake Nike shoes at Port Elizabeth as part of a nationwide sweep of counterfeit products. … They say more than 700,000 fake items were found in 30 cities during Operation Spring Cleaning. The counterfeit goods included medicines. … ICE spokesman Harold Ort said the Nike sneakers found in two shipping containers in New Jersey were worth $1 million.”

7 Mile Fair Seizures Noted. WITI-TV Milwaukee (4/26/2010) aired a report on ICE’s bust of counterfeit goods at 7 Mile Fair as part of Spring Cleaning.

Criminals around the world have found that they can maximize gain with relatively little capital outlay through product fraud. It could be pharmaceuticals, baby formula, toothpaste, brake pads, or toys. The more fraud that we allow to take place, the more patients will be put at risk for counterfeit medicines, or, the more chance that your children (or grand-children) will have toxic lead paint on their toys. The problem goes beyond violation of intellectual property rights. Counterfeiting is not a victimless crime. People die each day from unsafe counterfeited items. The problem is as old as mankind.

Early currency was plainly labeled “To Counterfeit Is Death”. The example below is a 4 Pound Note issued by Pennsylvania in 1777.

The theory behind such harsh punishments was that one who had the skills to counterfeit currency was considered a threat to the safety of the state, and had to be eliminated. Far more fortunate was an earlier practitioner of the same art, active in the time of the Emperor Justinian (527 A.D., mosaic shown below), who got the nickname “Alexander The Barber”. Rather than executing the counterfeiter when he was caught, the Emperor decided to employ his financial talents in the government’s own service.

Modern U.S. Currency has changed many times over the past few years:

With the exception of the one-dollar bill (above), all of these notes are obsolete. This is because the United States Government “Mixes & Rotates” (M&R) its overt and covert techniques to stay one step ahead of the counterfeiters. Shown below are examples of anti-counterfeiting “layered levels” of the “ever-changing” “face” of U.S. notes. You will notice the different colors when compared to the notes that are now obsolete:

Overt and Covert M&R (Mix And Rotate) anti-counterfeiting measures include fine detail with raised intaglio printing on bills. This allows non-experts to easily spot forgeries. As a side note, on coins, milled or reeded (marked with parallel grooves) edges are used to show that none of the valuable metal has been scraped off. This detects the shaving or clipping (paring off) of the rim of the coin. However, this does not detect sweating, or shaking coins in a bag and collecting the resulting dust. Since this technique removes a smaller amount, it is primarily used on the most valuable coins, such as gold.

For paper bills, in the late twentieth century advances in computer and photocopy technology made it possible for people without sophisticated training to easily copy currency. To combat this, national engraving bureaus began to include new (more sophisticated) anti-counterfeiting systems such as holograms, multi-colored bills, embedded devices such as strips, microprinting, and inks whose colors change depending on the angle of the light. New technology also includes the use of design features such as the “Eurion Constellation” which disables modern photocopiers.

This is very similar in concept to the “Canada Green” overprint on the U.S. 1862 note (used almost 150 years ago). The tint made it very difficult to photograph (complete story and photo are in the President’s Corner dated October 6th, 2008).

To protect your intellectual property, ATL recommends that you educate yourself about overt and covert anti-counterfeiting (anti-piracy) technologies. We also recommend that you take a long look in the mirror. You, as a brand owner, have the power to do the right things. You have the power to protect the public against diversion, dillution, and counterfeiting. By taking these extra steps you will find out something very surprising in the journey – you, in all likelihood, will be saving money in the process.

Bill Cosby said it best: “A word to the wise ain’t necessary – it’s the stupid ones that need the advice.”