Why Impose Criminal Sanctions?

Recently added to Wikipedia:

Why Impose Criminal Sanctions? 

The determination to impose criminal sanctions for any activity even one previously subject to civil liability is never one that should be made lightly, particularly given what some regard as the over-criminalization of American law.1 However, the Criminalization of intellectual property violations and computer misuse are grounded in both traditional and modern justifications for imposing criminal liability: preventing fraud, enforcing commercial honesty, punishing theft of property, and enhancing market reliability.2 

Intellectual property now plays an increasingly important role in the economic well-being and security of the United States.3 In response to this recognition, Congress has significantly broadened the scope of existing criminal laws that protect intellectual property rights 4 and has passed several laws.5 Such laws are necessary to deter copyright pirates, trademark counterfeiters or trade secret thieves who might otherwise regard civil penalties as the cost of doing business. In addition, criminalization of violation of intellectual property rights embodies important values expressed by the criminal law: deterring fraud, protecting property, and facilitating commercial interaction.6 These values, which reflect concerns with morality, punishment and efficiency are analogous to those expressed by the criminalization of forgery.7 Criminal law is essential to further these goals, by asserting certain sanctions on behalf of those ill-positioned to do so themselves.8  Of the three identifiable classes of victims of copyright piracy or trafficking in counterfeit goods and services-purchasers or end users of the pirated or counterfeit goods or services, foreseeable third parties in society at large, and legitimate owners of the copyrighted goods or authentic marks only the third group might ever find civil sanctions under the Copyright Act or Lanham Act a possible remedy, must less a realistic one.9 Finally, under a modern law and economics analysis of criminal law, the essential role, for example, of trademarks and service marks in facilitating commerce makes counterfeiting an excellent candidate for criminal protection.10 More specifically, copyright piracy and trafficking in counterfeit goods is tantamount to fraud in that the purchase of the counterfeit product is often not getting what they expected. Prohibitions against fraud have long been codified by federal as well as state law, either as a separate crime or as part of a comprehensive theft statute. In comparison to many traditional forms of fraud such as check kiting, copyright pirates or trademark counterfeiters can perpetrate their fraud on a much larger scale. Counterfeit goods can be widely disseminated without requiring the presence or active involvement of the defrauder. With the digitalization of consumer products and the Internet, counterfeit goods may be quickly and cheaply disseminated throughout the world.11 

Further, because of the ease with which pirated digital copyrighted works and misappropriated trade secrets can be reproduced and distributed, once the proverbial “cat is out of the bag” with respect to that material, there is very little that the victim can do to prevent further harm. While the criminal prosecution of that particular defendant for that particular crime does not make that particular victim whole, it may serve to deter future criminal violations of intellectual property rights. 

In addition, end users may be widely dispersed and thus their losses are dispersed. Many consumers of mass market products may be deceived, with one suffering only a minor monetary loss. Moreover, they are often not in direct contact with the copyright pirate or counterfeiter. Since end users may not know who deceived them, or even that they were deceived, and in many cases has suffered only minimal damage, an individual end user may have insufficient information or incentive to bring a civil action against the copyright pirate or counterfeiter. Thus, a copyright pirate or counterfeiter who has defrauded thousands of end users and profited greatly, but caused minimal damage to each individual, may avoid paying any damages. A criminal prosecution can be crucial for providing any measure of justice under such circumstances and for deterring potential violators.12 Intellectual property is increasingly treated like other forms of property. Consequently, its theft might be similarly criminalized. Indeed, a company's intangible assets such as its trade secrets may be worth far more than its tangible assets and the damage caused by the theft of a company's trade secrets may be far greater than the theft of any of its tangible assets. Since the harms caused to victims of intellectual property violations are as real as those caused by the theft of tangible property, the need for criminal sanctions is the same.13 

While the victim of conventional theft can sometimes deter crime through self-help security measures such as by hiring additional security guards or attaching anti-theft tags to the merchandise, it is very difficult to do so in the case of intellectual property violations.14 Government prosecution can play a uniquely critical role in deterring such crime and providing meaningful protections, such as investigation, to victims of intellectual property violations.15 

1 See Goldstone and Toren, “The Criminalization of Trademark Counterfeiting,” 31 Conn. L. Rev. 1, 8 (Fall 1998) (hereinafter “Trademark Counterfeiting”). See also, Mann, Punitive Civil Sanctions: The Middle Ground Between Civil and Criminal Law, 101 Yale L.J. 1795, 1802 (1992) (“This, I advocate the shrinking of the criminal law  in order to fit it into its proper role in the law of sanctions, next to an expanding arena of punitive civil sanctions”). 

2 See Goldstone and Toren, N. 1 supra, 31 Conn. L. Rev. at 9. 

3 For example, according to the legislative history of the Anti-counterfeiting Consumer Protection Act of 1996, Pub. L. No. 104-153, 110 Stat. 1386: 

“American companies spend millions of dollars to research, develop, test, and market their products. Developing high-quality goods requires substantial investment before profits can be recouped. The theft of the value of intellectual property is devastating, regardless of whether the product is a shoe, a software program, or a motion picture.” S. Rep. No. 104-177, 104th Cong., 1st Sess., at 8, (Nov. 28, 1995). 

4 Congress enacted the first criminal law protecting intellectual property in 1909.  See Act of March 4, 1909, Ch. 28, 35 Stat. 1082. The law covered only copyright violations and only at a minimal level. Since then, Congress has gradually and consistently expanded the role of federal law enforcement in this area, by imposing  felony penalties for unlawfully reproducing or distributing motion pictures or sound recordings in 1982, see Pub. L. No. 97-180, 96 Stat. 92 (May 24, 1982), by broadening the protection to all types of copyrighted works in 1992, see  Pub. L. No. 102-561, 106 Stat. 4233 (Oct. 28, 1992), by making a copyright violation a “specified unlawful activity” for money laundering in 1994, see Pub. L. No. 103-325, 108 Stat. 2111 (Sept. 23, 1994), by including copyright violations as predicate offenses under RICO in 1996, see Pub. L. No. 104-253, 110 Stat. 1386 (Oct. 9, 1996), and in 1997, by passing the No Electronic Theft Act (NET) Act, which criminalizes copyright infringement even in certain circumstances where the infringer does not act for commercial purpose or private financial gain. See 18 U.S.C. § 2319(b)(1). 

5 In addition to criminalizing trademark infringement in 1984, see Pub. L. No. 98473, 98 Stat. 2178 (1984), Congress in 1996 criminalized the theft of trade secrets by passing the Economic Espionage Act of 1996. Pub. L. No. 104-294, 110. Stat. 3488 (1996). 

6 See Goldstone and Toren, N. 1 supra, 31 Conn. L. Rev. at 11. 
7 Id. See also, McCarthy on Trademarks and Unfair Competition § 3:8, 3-15 (4th ed. 2003): 

“Trademark infringement between competitors is infringement in the same sense as if someone goes to your bank and passes himself off as you, using copied identification. That person cashes a check, drawing funds from your account because the bank teller has been confused by the similarity of the identification.” 

8   Goldstone and Toren, N. 1 supra, 31 Conn. L. Rev. at 11.
9   Goldstone and Toren, N. 1 supra, 31 Conn. L. Rev. at 11. 
10  Goldstone and Toren, N. 1 supra, 31 Conn. L. Rev. at 17-20. 
11  Goldstone and Toren, N. 1 supra, 31 Conn. L. Rev. at 13. 
12 Goldstone and Toren, N. 1 supra, 31 Conn. L. Rev. at 11. 
13 Goldstone and Toren, N. 1 supra, 31 Conn. L. Rev. at 16. 
14 Goldstone and Toren, N. 1 supra, 31 Conn. L. Rev. at 17. 
15 Goldstone and Toren, N. 1 supra, 31 Conn. L. Rev. at 17.

The use of computers to commit crimes began as far back as the 1960s, but because of the limited numbers of computers and the lack of inter-connectivity, computers were generally a tool used by criminals to commit a traditional offense such as fraud. Use of computers in this manner was similar to other technological advances that benefited society but could also be used for criminal purposes, such as automobiles that could be used to escape from a bank robbery or telephones that could be used by scam artists to contact potential victims. In response to such technological advancements, the federal government and states amended their existing substantive criminal law or enacted new laws  to  cover such  activity.1  While  the  changes  in  technology prior to computers did provide individuals with opportunities to commit new crimes or made it easier to commit traditional crimes, the threats posed to society by the use of technology remained 

acceptable and could generally be managed by local or state law enforcement. 

However, with the proliferation of the personal computer and the worldwide interconnection of such computers through the Internet, modern computer crime presents risks to society and unique challenges to law enforcement than in the past. The criminal threats posed by the Internet is based on a vastly more complex technology than the automobile, for example, computers allow criminals to commit more crimes in less time than ever before, giving law enforcement less time to react to any potential criminal threat. In addition, because of the anonymity provided by the Internet, a criminal can engage in criminal activity with very little risk of apprehension. 

Moreover, the worldwide reach of the Internet allows a cyber-criminal to cause harm to thousands, if not millions, of victims that may not,

1 For example, the Supreme Court in United States v. Turley, 352 U.S. 407, 413-414, 77 S. Ct. 397, 1 L.Ed.2d 430 (1957), explained the necessity of a federal criminal statute prohibiting the theft of motor vehicles: 

“By 1919, the law of most States against local theft had developed so as to include not only common-law larceny but embezzlement, false pretenses, larceny by trick, and other types of wrongful taking. The advent of the automobile, however, created a new problem with which the States found it difficult to deal. The automobile was uniquely suited to felonious taking whether by larceny, embezzlement or false pretenses. It was a valuable, salable article which itself supplied the means for speedy escape. ‘The automobile 
[became] the perfect chattel for modern  large - scale  theft.’  This  challenge  could  be  best  met through use of the Federal Government's jurisdiction over interstate commerce. The need for federal action increased with the number, distribution and speed of the motor vehicles until, by 1919, it became a necessity. The result was the National Motor Vehicle Theft Act.” 

even be located in the same geographic area. In the case of computer crime, national borders lose all significance. To make matters worse, such acts may not even be a crime in the originating jurisdiction. For example, the individual who created and distributed the “Love Bug” virus that caused an estimated $15 billion in damages worldwide, could not be prosecuted in the Philippines where he lived because such conduct was not a crime in that country at that time.2 

In response to how computers can be used to facilitate traditional crimes and to the rise of cyber-crimes for which there is no analogous traditional crime, Congress has pursued a dual approach. First, Congress has updated existing laws to ensure that such statutes could be used to prosecute those types of crimes committed with the aid of a computer, although, not all of these attempts have been successful.3 Second, in 1984 Congress enacted the first statute that was expressly  designed to cover computer crime in which there is no analogous traditional crime.4 Since then, Congress has repeatedly amended and revised this statute to be a more effective weapon in fighting computer crime.5 In general, the existing version of the Computer Fraud and Abuse Act, like its predecessors, seeks to protect the confidentiality, integrity and availability of data and systems.6 The Act contains seven major provisions that create liability for crimes against “protected computers”—those used in interstate or foreign commerce or communications, and any computer connected to the Internet.7 

2 The virus infected tens of thousands of computers worldwide including computers  at the Pentagon, the Central Intelligence Agency, Congress, and private companies such as Microsoft, and Dow Jones & Co. 

3 See, e.g., Ashcroft v. The Free Speech Coalition, 535 U.S. 234, 122 S.Ct. 1389, 152 L.Ed.2d 403 (2002) (portions of the Child Pornography Prevention Act which criminalizes the production, distribution, and reception of computer generated, sexual images of children were unconstitutionally over-broad because they proscribed  speech which was neither child pornography nor obscene and thus abridged the freedom to engage in a substantial amount of lawful speech.).  

 4 Ashcroft, 535 U.S. 234, at 236.
5 Ashcroft, 535 U.S. 234, at 239.
6 Ashcroft,  535 U.S. 234, at 341.
7 See generally, 18 U.S.C. § 1030. 

~~~~ Thomas "Birdy" McKee  aka: Birdymckee