Prepared Remarks of Attorney General Alberto R.

Gonzales at the American Bar Association, Section on Intellectual Property Law
Boston, Massachusetts June 22, 2006
Thank you, Mr. Figg, for that introduction. I thank the ABA Section on Intellectual Property Law for arranging my presentation, and I appreciate the opportunity to speak to you today. Two hundred and fifty billion dollars in annual losses, and seven hundred and fifty thousand lost jobs. These are among the many costs of intellectual property theft to American businesses and families. I’m sure many of you in this room can give example after example of the damage counterfeiting, trademark infringement, copyright violations, and unauthorized disclosure of trade secrets have inflicted on many of your clients. And even these staggering figures do not cover the costs of intellectual property theft to our economy and everyone involved in it, from consumers to workers to stockholders. Our research edge in world competition suffers when American research and development budgets shrink because products are readily counterfeited. A shoddy substitute will damage the reputation and profitability of a sought-after, trademarked original. Counterfeit airplane or car parts may fail, fraudulent electrical appliances may explode. And in the case of fake pharmaceuticals, such as cholesterol medication or antibiotics, patients will suffer or even die. Intellectual property — patented inventions of all sorts, copyrighted material, trademarked goods, and trade secrets painstakingly developed — is the lifeblood of our strong economy and the source for making it even stronger. As rich as America’s natural resources are, and as strong as our labor force is, it is the creativity and innovation of intellectual property industries that have been the great engine of our growth. At the Department of Justice, we understand that a key law enforcement objective is to protect the ingenuity of the artist and of the inventor. It is also our objective to

enforce the law. The magnitude of the challenge we face can be seen in the case of Danny Ferrer, an admitted software pirate. Just last week, Ferrer, one of the largest commercial online distributors of pirated software in the country, pleaded guilty to copyright infringement. Some of the trinkets he obtained from his thievery (trinkets he has now forfeited) include: three airplanes (including two Cessnas), a helicopter, and a flight simulator; a boat; and several cars, including a Hummer, three Corvettes, a Lamborghini, and … an ambulance. Obviously, he did very well for himself until he was identified by the FBI and prosecuted by the Department of Justice. Ferrer’s website sold almost two and a half million dollars worth of copyrighted software before the FBI shut it down last October. His sales resulted in losses of nearly $20 million to the rightful owners of copyrighted products. Ferrer faces a maximum sentence of 10 years in prison and a $500,000 fine. To address intellectual property crimes such as this, as some of you know, in March 2004, the Department of Justice established a Task Force on Intellectual Property. This Task Force included high-level officials who were given the task of reviewing how the Department enforced and protected intellectual property rights. Later that year, the Task Force issued a comprehensive report that made 31 substantive recommendations to improve the Department of Justice’s efforts to protect and enforce intellectual property rights through criminal, civil, and antitrust enforcement; international cooperation; legislation; and prevention programs. When I became Attorney General, I recognized the importance of continuing the work of the Task Force and appointed several new members. I also charged the Task Force with the important responsibility of implementing ALL of the recommendations contained in the Task Force Report as soon as possible. I am proud to tell you that the Department of Justice has achieved this goal. By implementing these recommendations, we have strengthened our ability to address intellectual property theft and preserve the rights of intellectual property owners. Let me illustrate our first implemented recommendation with a recent local example: Just this Monday, our Massachusetts U.S. Attorney’s Office successfully prosecuted one of New England’s largest counterfeit goods conspiracies, involving $1.4 million in counterfeit luxury handbags and wallets. In addition to restitution payments and forfeiture, the two confessed criminals face decades of prison and fines that could reach nearly $3 million. This was the work of the Boston Office’s Computer Hacking and Intellectual Property or “CHIP” unit. Cities that have CHIP units have shown dramatic increases in the number of defendants charged with intellectual property offenses. That is why – pursuant to

the recommendation of the 2004 Report -- we have increased the number of prosecutors in the field by creating new CHIP units in five cities: the District of Columbia; Nashville, Tennessee; Orlando, Florida; Pittsburgh, Pennsylvania; and Sacramento, California. Our 2006 Progress Report details the numerous other recommendations that we have successfully implemented: We have deployed an experienced federal prosecutor to Southeast Asia to serve as an Intellectual Property Law Enforcement Coordinator who will coordinate our efforts in areas such as China and Thailand. We will also be sending another prosecutor to Eastern Europe in the coming months to address intellectual property concerns in areas such as Russia. We have dismantled international criminal organizations that have stolen valuable intellectual property to fund other crimes. We have expanded our international training and technical assistance efforts. We have increased the number of extradition and mutual assistance treaties to include intellectual property offenses to ensure that intellectual property offenders can be extradited to the United States and critical evidence can be gathered and shared by foreign governments. We have continued to prosecute intellectual property cases that threaten public health and safety so that we can protect our citizens from harmful products. We have carefully monitored and vigorously protected the rights of victims to pursue intellectual property cases in civil courts. We have organized victims’ conferences in Los Angeles and New York to educate potential victims of intellectual property theft about what they should do if they are victimized. And, we have created innovative intellectual property educational programs to educate America’s youth about the importance of protecting creativity through our intellectual property laws. The Department of Justice did not stop at simply implementing the recommendations of the Task Force. Instead, we went well beyond the recommendations: By creating seven additional CHIP Units in: • Austin, Texas • Baltimore, Maryland • Denver, Colorado • Detroit, Michigan • Newark, New Jersey • New Haven, Connecticut; and • Philadelphia, Pennsylvania

By increasing the number of defendants prosecuted for intellectual property offenses by 98 percent; By providing training and technical assistance to over 2,000 foreign prosecutors, investigators, and judges on intellectual property investigations and prosecutions; By working with the U.S. Trade Representative to improve the language in Free Trade Agreements and other international treaties regarding intellectual property protections; By publishing a nearly 400-page comprehensive resource manual for federal prosecutors on prosecuting intellectual property crimes; AND, by partnering with the U.S. Patent and Trademark Office to dedicate $900,000 over three years for piracy prevention efforts with non-profit educational institutions. All of these accomplishments and more are presented for you in the Department’s 2006 Progress Report on intellectual property. *** As I hope you can see, we are doing a great deal, but the Department of Justice is not alone in this unprecedented effort to stem the tide of intellectual property theft. The Department is working closely with eight other federal agencies as part of the Bush Administration’s Strategy Targeting Organized Piracy, or “STOP,” Initiative, which is dedicated to eliminating piracy and stopping counterfeits from entering our borders. President Bush’s leadership is invaluable to our progress. This March the President signed into law H.R. 32, the “Stop Counterfeiting in Manufactured Goods” Act. This law helps protect the rights of America's consumers, workers, and entrepreneurs by strengthening our laws against counterfeit labels and packaging; by increasing forfeiture penalties for counterfeiters; and by closing loopholes in the law against trafficking in counterfeit goods. This tough anti-counterfeiting law will help, in the President’s words, “keep honest Americans from losing business to scam artists.” And, as the 2006 Progress Report makes clear, there is more Congress can do to enable entrepreneurs to enjoy the fruits of their labors and punish those who would exploit those who work hard, invest, and take risks. In November of 2005 the Department of Justice transmitted to Congress the Bush Administration’s Intellectual Property Protection Act, which would, among other things, add repeat-offender penalties and forfeiture and recovery provisions to existing laws. The legislation would also amend CIVIL copyright law to allow victims of intellectual property theft to obtain ex parte seizure orders for records and other evidence in civil cases. In addition, a treaty concerning intellectual

property, the Council of Europe Cybercrime Convention awaits Senate ratification. I continue to urge the Congress to act on this proposed legislation, and I also urge the Senate to ratify this treaty. Enforcing intellectual property rights requires that we go beyond our borders. Last November, I met with officials of the People’s Republic of China. We have received some cooperation from the PRC in cracking down on intellectual property theft, but the fact remains that many commercial piracy cases now under investigation by federal law enforcement have a nexus to China. Accordingly, we will continue to push for the recognition of intellectual property rights by the PRC and for increased law enforcement cooperation. And just last week, I was in Moscow, Russia, where I spoke with my counterparts from the G8 countries – including Russia – about our global efforts to protect intellectual property. Finally, let me say a word about prevention. I’ve had the pleasure of discussing intellectual property with some very young audiences. Here is where the culture of respect for intellectual property must take hold if we are to succeed in our law enforcement mission. To help promote a culture of respect for intellectual property, the Department of Justice is establishing a national education program to prevent intellectual property crime. In partnership with the U.S. Patent and Trademark Office, we have committed $900,000 over the next three years to train teachers and educate students about intellectual property rights. Victims of intellectual property theft and their representatives can help prevent intellectual property theft too. Victims have an important role to play by protecting their intellectual property however they can, including in the courts. The Department supports rights holders who seek civil remedies against infringers. For example, we have filed 13 amicus briefs in the Supreme Court in cases involving intellectual property disputes. In the Grokster case, and more recently in last month’s case in eBay v. MercExchange, the Supreme Court adopted the arguments made by the Department and preserved the rights of victims to bring civil actions to protect their intellectual property. *** The scope of this challenge reaches every corner of the globe and affects every level of our economy from the inventor to the consumer. But as I have outlined today, progress is being made and this Administration will continue to attack this problem at every level. To encourage creativity, to stimulate innovation, to strengthen our economy, and to create jobs for our citizens, we must be successful in combating intellectual property theft. President Bush and I are committed to this effort and will continue to work to promote respect for intellectual property rights. The Founding Fathers enshrined in our Constitution the wisdom of promoting,

quote, “the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Founding Father James Madison argued that “a man has property [rights] in his opinions and the free communication of them.” Another great statesman, Abraham Lincoln, argued that the American intellectual property system “added the fuel of interest to the fire of genius, in the discovery and production of new and useful things.” In the spirit of these great men, the Bush Administration has launched the most aggressive effort to protect intellectual property in history. And the Department of Justice is committed to doing its part. Thank you for your help in this endeavor, and may God continue to bless America. ###