Can Acts Related to Intellectual Property Related Matters be Subject to Criminal Penalties?

By Hannah Walton

Copyright Law, Trademark Law, and Trade Secret Law are the three types of intellectual property laws that apply to criminal statutes. “Although individuals or companies can pursue civil remedies to address violations of their intellectual property rights, criminal sanctions are often warranted to ensure sufficient punishment and deterrence of wrongful activity” (Reporting Intellectual Property Crime).

Copyright laws provide federal protection for original works such as films, musical compositions, and novels (Reporting Intellectual Property Crime). When a work is used unlawfully, for example reproduced or distributed without permission, it is known as copyright infringement (Definitions). The penalties for criminal copyright infringement are based on factors such as the number of copies stolen and the previous convictions of the offender. Punishment for first time offenders can include up to five years of imprisonment and a fine of up to $250,000. “If you have previously been convicted of criminal copyright infringement, for second or later offenses, you can be sentenced to a maximum of 10 years in prison, up to $250,000 in fines, or both” (Criminal Copyright Infringement Laws). A real-world example of copyright law and infringement is recording a movie in a theater, which violates the Family Entertainment and Copyright Act. “The Family Entertainment and Copyright Act criminalizes the use of camcorders and similar devices to record movies playing in public theaters. ‘Camcording’ is a felony punishable by up to three years imprisonment and a $250,000 fine...” (Reporting Intellectual Property Crime).

Trademark law works to protect words, phrases, and logos that identify a specific good or service. Trademark infringement occurs when the style or logo of an established brand is copied with the intent of making customers believe they are buying authentic goods (Reporting Intellectual Property Crime). A specific example of this is a street vender selling fake designer sunglasses. The most significant federal statute that deals with trademarks in the United States is the Lanham Act. Under the Lanham Act trademark dilution, cybersquatting, trademark infringement, and false advertising are all prohibited. (Glossary). According to the Trademark Counterfeiting Act, “penalties of up to ten years’ imprisonment and a $2 million fine for a defendant who intentionally ‘traffics in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services’ or intentionally ‘traffics in labels,...documentation, or packaging...knowing that a counterfeit mark has been applied thereto’” (Reporting Intellectual Property Crime).

“Trade secret law prohibits the unauthorized disclosure of any confidential and proprietary information, such as a formula, device, or compilation of information but only when that information possesses an independent economic value because it is secret and the owner has taken reasonable measures to keep it secret” (Reporting Intellectual Property Crime). According
to the United States Patent and Trademark Office, “unauthorized disclosure” includes theft, misrepresentation, breach of duty, and espionage. Despite this fact, there are cases where a trade secret can be legally obtained. Acquiring a trade secret through independent discovery, reverse engineering, and licensing are all examples of proper acquisition (USPTO). The Economic Espionage Act creates two provisions that define the criminal penalties for the theft of trade secrets. “The first provision prohibits the theft of trade secrets for the benefit of a foreign government, instrumentality, or agent, and is punishable by up to 15 years’ imprisonment and a $5,000,000 fine. The second prohibits the commercial theft of trade secrets to benefit someone other than the owner, and is punishable by up to ten years’ imprisonment and a $250,000 fine” (Reporting Intellectual Property Crime). In 2006, PepsiCo reported that an employee of Coca-Cola was attempting to sell them trade secrets. The three conspirators were found guilty of conspiring to steal and sell trade secrets and were given both prison sentences and fines. While Coca-Cola's original formula and upcoming product information remained safe, this was a significant case for companies with important trade secrets (United States Attorney).

Works Cited
“Reporting Intellectual Property Crime.” U.S. Department of Justice Criminal Division, www.justice.gov/criminal/criminal-ccips/file/891011/dl#:~:text=Congress%20has%20continually%20expanded%20and,standard%20cost%20of%20doing%20business.
“Criminal Copyright Infringement Laws.” Justia, 19 Sept. 2024, www.justia.com/intellectual-property/copyright/criminal-copyright-infringement.
Definitions (FAQ) | U.S. Copyright Office. www.copyright.gov/help/faq/faq-definitions.html.
USPTO. “Intellectual Property Toolkit – TRADE SECRETS.” Intellectual Property Toolkit – TRADE SECRETS, www.uspto.gov/sites/default/files/documents/tradesecretsiptoolkit.pdf.
United States Attorney David E. Nahmias and Northern District of Georgia. EX-EMPLOYEE OF THE COCA COLA COMPANY AND CO-DEFENDANT SENTENCED FOR STEALING TRADE SECRETS. press-release, 23 May 2007, www.justice.gov/archive/criminal/cybercrime/press-releases/2007/williamsSent.pdf
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Legal-Lore. “ADIDAS V. FOREVER 21.” Legal-lore, 18 Nov. 2022, www.legallore.info/post/adidas-v-forever-21.