Nowadays, technological advancements have created a situation where many valuable assets only exist in the form of information, and many physical ones can be replicated, given specific data. As such, the concept of intellectual property, which can be stolen, is gaining importance. However, the laws on the topic are still new and unrefined, particularly concerning their jurisdictional implications. As such, smaller instances such as digital piracy as well as larger, more damaging cases such as counterfeiting take place. This paper will review the jurisdictional implications of intellectual property theft, discuss the legislation surrounding it in the U.S., and make a case for an appropriate penalty.
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Generally, each country has power over intellectual property theft prosecution within its borders, with others having to influence the process indirectly. As such, some countries choose to overlook the issue because they benefit from their companies obtaining the knowledge of large foreign entities. China, in particular, has a reputation for making counterfeit goods that undermines the credibility of its legitimate brands internationally. Other countries can apply economic or other pressure to try and make the offending nation curb the practice, but in doing so, they would often harm themselves more than the ongoing theft does. As such, nations usually leave jurisdictional matters to each other without interfering.
With that said, there are cases where countries agree to avoid some aspects of intellectual property theft. May (2015) mentions the TRIPs agreement, which bans the importation of counterfeit pharmaceutical products, but also highlights how people can be hurt by not receiving the treatment they need as a result. Intellectual property theft often occurs with expensive goods that operate in a low-competition environment, such as drugs that only one manufacturer is permitted to produce or designer items. The recognition of these facts often creates the perception that the victims of the crime should pursue retribution actively instead of relying on complicated law enforcement systems.
Intellectual Property Theft and Law Enforcement
Generally, most intellectual property theft cases that end in prosecution are enacted on a large scale and cause significant economic harm. As such, Flax (2015) claims that in the United States, the crime is generally relegated to federal law enforcement, bypassing the local and state levels. Agencies at the highest level have the resources to create an overview of the situation, discover any issues, and develop the appropriate legislation. In particular, agencies that control movement in and out of the country, such as ICE and CBP, play a prominent role in the prevention of the crime.
However, these agencies are not the only ones involved in the process, and the network of intellectual property theft prevention spans the entire federal government. Chaudhry (2017) highlights positions in the Department of State, the President’s Executive Office, and the U.S. Library of Congress as well as multiple coordinated agency efforts. Generally, these entities cooperate with copyright holders directly, bypassing institutions at the lower levels. The cause is likely the generally international nature of intellectual property theft, with the perpetrators being likely to be foreign agents rather than local entities. Local and state agencies do not have the jurisdiction necessary to address situations on such a scale.
The Appropriate Penalty
Intellectual property theft can result in severe economic harm, reducing the revenues of the companies affected and taking jobs away as a result of removing money from the economy. However, as Albanese (2017) notes, the penalty for the crime is low, particularly for low-level distributors, which results in weak deterrence. The dispersed and decentralized nature of many counterfeiting networks is a strength that makes them both challenging to investigate and reduces the individual fault of each participant. Moreover, the principal offenders will likely be located overseas, beyond American law enforcement’s ability to control. Nevertheless, one can argue that by introducing stricter penalties, the nation can deter local counterfeit sellers, making it much more difficult for the manufacturers to distribute them.
However, increased punishment severity can also make it possible for companies to abuse the copyright system, which is often seen as overly strict. Flaherty (2018) describes the case of Nintendo suing a couple that was distributing its old games for free in a format that was playable on modern hardware and forcing them to pay $12 million. The company’s classic games are made for discontinued consoles and no longer produced. As such, people had no legal way to access the property, and the people sued were not selling the ROMs but rather soliciting donations and serving ads to maintain the website (Flaherty, 2018). Nintendo provided a legal way to access the games later, but at the time, the punishment was excessive, especially without a prior warning.
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The international nature of much of intellectual property theft creates jurisdictional issues due to the still-undeveloped nature of the law. Within the United States, cases are usually handled at the federal level, but it is challenging to pursue them internationally. With regard to the punishment, the current system does not deter bad-faith actors sufficiently but can be abused to excessively retaliate against people who do not intend to break the spirit of the law. Overall, the framework requires significant development before it can become viable for preventing the crime appropriately.
Albanese, J. S. (ed.). (2017). Intellectual property theft and fraud: Combating piracy. New York, NY.
Chaudhry, P. E. (ed.). (2017). Handbook of research on counterfeiting and illicit trade. Northampton, MA: Edward Elgar Publishing.
Flaherty, J. (2018). Arizona couple sued by Nintendo to pay $12 million in piracy settlement. Phoenix New Times. Web.
Flax, M. (2015). Conspiracy investigations. San Clemente, CA: LawTech Publishing Group.
May, C. (2015). The global political economy of intellectual property rights: The new enclosures (2nd ed.). New York, NY: Routledge.