Feds urged to probe terrorist piracy rackets

Top executives from several large anti-counterfeiting organizations and companies that own intellectual property rights on Wednesday called for the federal government to bolster efforts to stop terrorists' use of piracy and counterfeiting to fund their activities.

"Organized, violent, international criminal groups are getting rich from the high-gain, low-risk business of stealing America's copyrighted works," said Jack Valenti, president and CEO of the Motion Picture Association of America. "U.S. industry alone will never have the tools to penetrate these groups or to trace the nefarious paths to which those profits are put. Only governments have the tools necessary for this kind of investigation."

Valenti made the comments in a written statement submitted to a House International Relations Committee hearing. He cited global examples.

Timothy Trainer, president of the International AntiCounterfeiting Coalition recommended that that federal criminal statute against trafficking in counterfeit goods be strengthened and that law enforcement agencies be encouraged to cooperate on investigations. He also called for more vigilance on the border, higher standards for enforcing intellectual property law on U.S. trading partners and supporting international coordination.

Trainer suggested that the government study federal law enforcement agencies to assess whether investigations are trying to find potential funding links between counterfeiting and terrorist organizations. And he proposed a study to assess the level of counterfeit and pirated products in the domestic market and its impact.

Trainer put much of the onus on the federal government to conduct criminal investigations. "The primary objective of our members who own intellectual property is to research, develop, create, manufacture and offer new and better products to consumers, not to undertake criminal investigations," he said in prepared remarks.

Iain Grant, head of enforcement at the International Federation of the Phonographic Industry, added: "The potential market for, and profit from, music piracy is enormous and growing. However, the criminal sanctions for breach of copyright and trademark legislation bear little relation to the extent and nature of the criminality involved and are of minimal deterrent value."

"The huge illegal profits made are inevitably used to entrench the position of the pirates; to secure manufacturing and distribution networks through violence, intimidation and corruption; and to subvert state institutions and processes," he added.

Grant also articulated the need for government involvement. "The music industry resource is capable of disturbing the debris at the edges of this particular stone, but the substantial activities beneath continue undisturbed," he said.

At the hearing, Asa Hutchinson, the Homeland Security Department's border and transportation security undersecretary, said that nearly 50 percent of seizures of illegal products in 2002 were in China, followed by 27 percent in Taiwan.

Larry Johnson, founder and partner of international consulting firm BERG Associates, said that some companies' efforts to target intellectual property crime are further hurt by victims, such as Sony and Hitachi, that are unwilling to cooperate on pursuing counterfeiters.

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