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Counterfeiting is theft

April 26 is "World Intellectual Property Day," a day designated to increase public awareness about how intellectual property rights promote innovation and creativity. The federal government is working to prevent counterfeiting and piracy, but the government needs help from vigilant citizens who understand why intellectual property rights matter.

In order to promote economic, scientific and creative progress, the Constitution expressly empowers Congress to give authors and innovators the exclusive right to profit from their writings and discoveries. Congress has passed laws protecting copyright, patent and trademark rights, but they are meaningless if they are not enforced.

It is no coincidence that democracy and capitalism brought a quantum leap in scientific and economic progress. Intellectual property enforcement assures innovators and investors that when they devote time and money to develop new products, they will reap the financial rewards. If government fails to protect intellectual property rights, the immediate consequence will be monetary losses to property owners. But the long-term impact will be less investment of time and resources, and fewer innovations.

Some people think about counterfeit merchandise in terms of the occasional purchase of a single knock-off item. I learned to view the issue differently in 1999, when I prosecuted a counterfeit merchandise supplier. His warehouse inPrince George's Countycontained more than 80,000 bootleg CDs and videotapes that were produced without one penny going to the artists and legitimate distributors.

The Internet greatly enhances opportunities for criminals to sell products that do not belong to them. Anything that can be transferred digitally now can be sold anywhere in the world, in the blink of an eye.

In one pending Maryland case, the defendant allegedly used the Internet to sell pirated commercial software. Criminals who pay nothing for their inventory usually sell bootleg software below normal prices. Copyright owners receive no benefit, and retailers who play by the rules cannot compete.

When it comes to physical merchandise, intellectual property fraud is not just about unscrupulous street vendors diverting business from law-abiding retailers. It is about foreign criminal enterprises producing millions of counterfeit items, shipping them overseas in freight containers, flooding American cities with bootleg merchandise, and laundering billions of dollars in fraudulent proceeds.

My office recently prosecuted nine defendants for importing counterfeit goods through the Port of Baltimore. The sham merchandise included 500,000 Coach handbags, 120,000 pairs of counterfeit Nike shoes, and samples of counterfeit Viagra pills. The Chinese and Malaysian factories that manufactured the counterfeit goods remain in business. Those factories and the criminal organizations that run them are beyond our enforcement power, but they will only produce merchandise if distributors, retailers and customers continue to buy it.

As part of a nationwide initiative, federal prosecutors in Maryland have worked with Homeland Security agents to obtain court orders shutting down websites that violate intellectual property laws. Victims include local businesses, such as the Baltimore Ravens and Under Armour, and retailers that lose profits and jobs. These efforts complement Homeland Security's efforts to combat local sales of counterfeit products, as evidenced by last weekend's raid at the Patapsco Flea Market.

Some consumers knowingly buy knock-off items to gain the cachet of owning brand-name merchandise without paying the price for the real thing. But many consumers are victimized by unscrupulous sellers who market counterfeit products without disclosing that they are not authentic.

Products carry brand names because brand owners have worked and invested to make those names valuable to consumers, who trust them. Counterfeit products often look identical to legitimate merchandise, complete with packaging and labels. Unknowing purchasers learn they have been ripped off only when knock-off batteries do not power devices, sham prescription drugs fail to improve health, phony cosmetics cause infections, counterfeit clothes disintegrate in the washing machine, or pirated automobile parts break down on the highway.

Some people wrongly assume that intellectual property enforcement stops retailers from selling inexpensive products and prevents customers from getting bargains. Entrepreneurs are free to manufacture cheap clothing, shoes, handbags and other consumer items and sell them using novel brand names. Innovators may create and market new songs, movies, books and computer programs. They just can't sell anything that belongs to someone else.

Sellers of counterfeit and pirated goods cheat the people who invested time and money to create the authentic versions. A simple word describes what it means when you take something that someone else owns and sell it without permission.

Intellectual property fraud is theft.

Rod J. Rosenstein is Maryland's U.S. attorney and the vice-chair of the Attorney General's Subcommittee on Cybercrime and Intellectual Property. His email is usamd.comments@usdoj.gov.

Copyright © 2015, The Baltimore Sun
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