Intellectual Property Investigations a Growing Practice for Private Investigators
- July 08, 2010
- by Cynthia Padilla
Editor's note: This is the first article in a two-part series covering intellectual property (IP) investigations. In this article you'll learn what IP investigation is and why private investigators should consider getting involved. In the second article, we'll give you tips on how to enter the growing practice.
According to the World Intellectual Property Organization, intellectual property (IP) consists of "creations of the mind." These include inventions, literary and artistic works, and designs and images used by businesses. The main types of IP are patents, trademarks, designs, and copyrights. Inventors and creators are entitled to earn profits from their IP. Unfortunately, while some forms of IP are not as tangible as other forms of property such as land, there is a growing problem of outright theft of IP worldwide.
To assist individuals and businesses with protecting their IP rights, IP investigators typically provide the following services for brand owners, law firms, and trademark attorneys:
* trademark research
* audit of royalties
* forensic analysis of seized computer evidence
* service of Cease and Desist letters
But with the globalization of trade, IP has become more at risk for theft through counterfeiting and piracy. IP investigators have moved out of the office and into the streets and cyberspace.
What types of IP are criminals targeting?
Counterfeiting and piracy are the two main categories of IP crimes worldwide. Counterfeiting involves branded goods protected by trademarks such as clothing, footwear, and pharmaceuticals. Piracy involves items protected by copyright such as music, film, computer games, and software. Other crimes include the unlawful sale of trade secrets and product creation processes.
The size and scope of these crimes have grown in recent years. Consider the following statistics from the International AntiCounterfeiting Coalition:
* Counterfeiting has grown over 10,000% in two decades, costing U.S. businesses at least $200 billion annually
* Since 1982, the global trade in illegitimate goods has increased from $5.5 billion to approximately $600 billion annually
According to U.S. Customs, the number one counterfeited item seized in the last few years continues to be footwear. However, there are many other products increasingly counterfeited. Stuart Drobny is president of Stumar Investigations and has more than 25 years of experience in various fields of investigation. One of his firms specialties is IP anti-counterfeiting/fraud. Counterfeit products that he frequently encounters include luxury items (handbags), clothing, printers/toners, car parts, jewelry/watches, cell phone accessories, and tools.
These crimes do not just affect the financial profits of businesses. They also pose a threat to health and safety as well. The Federal Drug Administration estimates that counterfeit drugs account for 10% of all drugs sold in the United States. The World Health Organization estimates that as much as 50% of medicines purchased over the Internet are counterfeit.
Where is IP crime prevalent, and why is it spreading so quickly?
The United State Trade Representative's annual Special 301 Report regarding the adequacy and effectiveness of IP rights protection by U.S. trading partners in 77 countries lists several countries in its Priority Watch List. These include China, India, Indonesia, Russia, and Venezuela. According to U.S. Customs, seizures of IP-infringing products from China accounted for 79% of the total domestic value of all IP seizures. But even European countries have problems with enforcing IP rights when it comes to the illegal sharing and downloading of files online.
When asked what country or region he considered a hotbed for IP crimes, Drobny replied that in the manufacturing area, China, the Eastern Bloc, Mexico, the U.K., and Central Africa are leading countries or regions. But he also observed that when it comes to sales, IP crimes are global. He also added that counterfeit pharmaceuticals come mainly from Third World countries.
To add to the spread of IP crimes, a growing trend involves organized criminals using profits from counterfeit and/or pirated products to fund other criminal activities such as terrorism and drug trafficking. This is due to the high financial returns with low investment and low risk of law enforcement attention inherent in IP crimes. In fact, penalties imposed in many countries are too low to offer any form of deterrence. Drobny has been working with Pennsylvania legislators to gain passage of a new criminal statute that would strengthen Pennsylvania's trademark counterfeiting law. Currently, law enforcement agents are limited to charging a trademark counterfeiting case as a misdemeanor.
Who hires IP investigators?
While some potential clients seek preventive services in order to avoid IP infringements before they occur, most will approach an IP investigator after their IP rights have been violated. Drobny estimates that about 90% of his clients come to him after they already have an IP problem while 10% are looking for ways to prevent potential IP infringements in advance.
The type and size of clients will vary. While IP thefts and infringements tend to affect mostly the big brand names and companies, smaller businesses can also be the target of IP theft. Drobny's clients range from startups to Fortune 500 companies. But he also says that small companies within the apparel industry are frequent victims of IP crimes.
IP crimes are expected to continue growing until tougher laws are adopted and enforced worldwide. Until then, private investigators may want to consider offering IP investigation services to assist their clients and law enforcement in the continuing battle against IP crimes worldwide.
Stay tuned: Part 2 will discuss issues to consider when deciding to offer IP investigation services and tips from Stuart Drobny.
This article was written by PInow.com staff writer Cynthia Padilla.
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