[Senate Hearing 110-782]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-782

 EXAMINING U.S. GOVERNMENT ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS

=======================================================================

                                HEARING

                               before the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 7, 2007

                               __________

                          Serial No. J-110-60

                               __________

         Printed for the use of the Committee on the Judiciary












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                       COMMITTEE ON THE JUDICIARY

                  PATRICK J. LEAHY, Vermont, Chairman
EDWARD M. KENNEDY, Massachusetts     ARLEN SPECTER, Pennsylvania
JOSEPH R. BIDEN, Jr., Delaware       ORRIN G. HATCH, Utah
HERB KOHL, Wisconsin                 CHARLES E. GRASSLEY, Iowa
DIANNE FEINSTEIN, California         JON KYL, Arizona
RUSSELL D. FEINGOLD, Wisconsin       JEFF SESSIONS, Alabama
CHARLES E. SCHUMER, New York         LINDSEY O. GRAHAM, South Carolina
RICHARD J. DURBIN, Illinois          JOHN CORNYN, Texas
BENJAMIN L. CARDIN, Maryland         SAM BROWNBACK, Kansas
SHELDON WHITEHOUSE, Rhode Island     TOM COBURN, Oklahoma
            Bruce A. Cohen, Chief Counsel and Staff Director
           Stephanie A. Middleton, Republican Staff Director
              Nicholas A. Rossi, Republican Chief Counsel











                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Cornyn, Hon. John, a U.S. Senator from the State of Texas........     1
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont.     6
prepared statement...............................................   127
Specter, Hon. Arlen, a U.S. Senator from the State of 
  Pennsylvania, opening statement................................   145

                               WITNESSES

Bayh, Hon. Evan, a U.S. Senator from the State of Indiana........     3
Israel, Chris, U.S. Coordinator for International Intellectual 
  Property Enforcement, Department of Commerce, Washington, D.C..     7
Moore, Chris, Deputy Assistant Secretary for Trade Policy and 
  Programs, Bureau of Economic, Energy and Business Affairs, 
  Department of State, Washington, D.C...........................     9
O'Connor, Kevin J., U.S. Attorney for the District of 
  Connecticut, and Chairman, Task Force on Intellectual Property, 
  U.S. Department of Justice, Washington, D.C....................    10

                   PRE-HEARING QUESTIONS AND ANSWERS

Responses of Kevin O'Connor to questions submitted by Senator 
  Coburn.........................................................    19

                         QUESTIONS AND ANSWERS

Responses of Chris Israel to questions submitted by Senators 
  Leahy, Hatch and Coburn........................................    24
Responses of Kevin O'Connor to questions submitted by Senators 
  Leahy, Hatch and Coburn........................................    33
Questions submitted by Senator Hatch to Chris Moore (Note: 
  responses to questions were not received as of the time of 
  printing, April 1, 2009).......................................    43

                       SUBMISSIONS FOR THE RECORD

Bayh, Hon. Evan, a U.S. Senator from the State of Indiana, 
  statement......................................................    44
Forman, Marcy M., Director, Office of Investigations, U.S. 
  Immigration and Customs Enforcement, Department of Homeland 
  Security, Washington, D.C., statement..........................    49
GAO, Intellectual Property, Strategy for Targeting Organized 
  Piracy, Washington, D.C., report...............................    56
Israel, Chris, U.S. Coordinator for International Intellectual 
  Property Enforcement, Department of Commerce, Washington, D.C., 
  statement......................................................   113
Moore, Chris, Deputy Assistant Secretary for Trade Policy and 
  Programs, Bureau of Economic, Energy and Business Affairs, 
  Department of State, Washington, D.C., statement...............   128
O'Connor, Kevin J., U.S. Attorney for the District of 
  Connecticut, and Chairman, Task Force on Intellectual Property, 
  U.S. Department of Justice, Washington, D.C., statement........   134
U.S. Trade Representative, Washington, D.C., November 2007, 
  mission........................................................   147
Voinovich, George V., a U.S. Senator from the State of Ohio, 
  statement......................................................   149

 
 EXAMINING U.S. GOVERNMENT ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS

                              ----------                              


                      WEDNESDAY, NOVEMBER 7, 2007

                                       U.S. Senate,
                                Committee on the Judiciary,
                                                   Washington, D.C.
    The Committee met, pursuant to notice, at 2:11 p.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Patrick J. 
Leahy, Chairman of the Committee, presiding.
    Present: Senators Leahy and Cornyn.

OPENING STATEMENT OF HON. JOHN CORNYN, A U.S. SENATOR FROM THE 
                         STATE OF TEXAS

    Senator Cornyn. Senator Leahy has been detained, but he is 
en route and in the interest of time asked that we go ahead and 
get started. Let me start with a brief opening statement, and 
then I will turn it over to our distinguished colleague from 
Indiana, Senator Bayh.
    First of all, I want to express my gratitude to Senator 
Leahy for convening this important hearing on protection of 
intellectual property. He and I are introducing a bill today 
that provides additional tools to the Justice Department and 
which strengthens our anti-piracy and anti-counterfeiting laws. 
Our bill reflects extensive input from the content community as 
well as the Department of Justice, particularly the DOJ's Task 
Force on Intellectual Property.
    The Leahy-Cornyn Intellectual Property Enforcement Act of 
2007 is another example of bipartisan cooperation on an issue 
of critical importance to the United States economy and U.S. 
consumers. This legislation builds on previous legislation 
Senator Leahy and I cosponsored, the Protecting American Goods 
and Services Act of 2005, which passed the Senate during the 
109th Congress.
    I am proud that the Chairman and I have been able to work 
together on this and other IP legislation, like the Patent 
Reform Act and the Vessel Hull Design Protection Act. I am also 
proud of the work that this Committee has done and to be able 
to work with another distinguished colleague on the Judiciary 
Committee, Senator Feinstein, on the Artists' Rights and Theft 
Prevention, or ART, Act. That legislation, which was signed 
into law by President Bush in 2005, criminalized the use of 
recording devices in movie theaters and provided stiff 
penalties for violators.
    Earlier this year, Senator Feinstein and I were alerted to 
the fact that Canadian-sourced camcordings had jumped in 2006 
by 24 percent and Canadian theaters were suspected to be the 
source for nearly half of all illegal camcordings. It became 
clear to us that changes to the U.S. law was not enough, and we 
wrote to Prime Minister Harper and urged the Canadian 
Government to consider similar legislation. We are pleased to 
learn that, in June, Canada took a decisive step toward 
combating camcording-generated piracy by enacting legislation 
modeled on the ART Act.
    I know there is another area of bipartisan agreement, and 
that is the hard work that is done by our anti-counterfeiting 
and anti-piracy experts and enforcement personnel throughout 
the Federal Government. We should endeavor to give them all the 
tools that they need to fight this growing problem.
    To its credit, the administration has devoted significant 
resources and personnel to fighting pirated and counterfeit 
goods. The Department of Justice's Task Force on Intellectual 
Property, represented here today by Mr. O'Connor, is an 
integral part of these efforts and provided significant input 
into the legislation that the Chairman and I have introduced 
today.
    I think it is important to recognize a few of the recent 
accomplishments in this regard. For example, there has been a 
surge of seizures in counterfeit goods by Customs and Border 
Protection, nearly a doubling from 2005 to 2006. The Department 
of Justice has deployed more than 230 specialized intellectual 
property prosecutors across the country since 2004, and there 
has been a significant increase in the number of Federal IP 
prosecutions, 287 convictions in fiscal year 2007 versus 2,013 
convictions in fiscal year 2006.
    The President has launched the Anti-Counterfeiting Trade 
Agreement, which is a major new initiative with several trading 
partners, including the European Union and Japan. This accord 
aims to raise the bar on IP enforcement across the globe.
    The administration has implemented, I believe, effective 
and coordinated strategies to address key concerns like China 
and Russia. This administration brought the first intellectual 
property cases against China in the WTO and is leading the 
effort to improve intellectual property enforcement in Russia 
prior to that Nation joining the WTO. These are significant 
developments, and there is much more to be done. The FBI 
estimates that counterfeiting costs companies in the United 
States somewhere on the order of $250 billion a year. And we 
must confront the fact that profits from counterfeiting and 
piracy wind up in the hands of those who may wish America harm.
    We know, for example, that confiscated al Qaeda training 
manuals have recommended the sale of counterfeit goods as a 
revenue stream for its operatives. This disturbing fact alone 
should motivate our work to combat counterfeiting and piracy.
    When the Founding Fathers put the protection of 
intellectual property in the Constitution, they recognized the 
unique and unlimited creativity of the American people and the 
impact that American innovators would have on the world in the 
areas of art and technology. It is our obligation to protect 
those innovations as well as American consumers, and I look 
forward to learning here today about the administration's 
progress and the ways that Congress can continue to provide the 
necessary tools.
    Finally, again, I want to welcome our distinguished 
colleague, Senator Bayh, who has contributed with his own 
intellectual property legislation, along with Senator 
Voinovich, which I look forward to learning more about this 
afternoon.
    Senator Bayh, let me turn it over to you.

 STATEMENT OF HON. EVAN BAYH, A UNITED STATES SENATOR FROM THE 
                        STATE OF INDIANA

    Senator Bayh. Thank you, Senator Cornyn. I appreciate your 
courtesy in allowing me to offer my thoughts today about an 
issue that is of great importance to businesses and workers 
across our country, and particularly in my home State of 
Indiana. I hope you will relay my thanks to the Chairman. I 
know the Committee has many pressing matters before it, 
including the matter you dealt with yesterday, the next 
Attorney General of the United States, judicial nominations, 
patent protection, among other things. And so I thank you and 
the Chairman for making intellectual property protection a 
priority by having this hearing today.
    On a personal note, I cannot help but come before your 
Committee with at least some nostalgia. My father served on 
this Committee for 18 years, and so I know firsthand about the 
good work that you do, and it is an honor to be with you again 
today.
    Since the founding of our Republic, innovation has been a 
driving force behind our national prosperity. As you pointed 
out, Senator, the Constitution's Framers listed intellectual 
property protection as the eighth enumerated power of Congress 
in Article I, Section 8. It is listed even before governing 
imperatives like forming a court system.
    Consistent with our historic responsibility, members of 
this body have over time crafted a system of intellectual 
property rights protection that has become a successful 
catalyst for economic growth and job creation. A recent study 
traced 30 to 40 percent of all U.S. productivity gains over the 
last century to economic innovation. Further studies have found 
that IP-intensive industries pay wages almost 50 percent higher 
than firms that are not IP focused.
    Today however, many of our innovators are being undermined 
by countries that refuse to play by the rules of the global 
marketplace. American companies have lost almost 750,000 jobs 
because of intellectual property theft, making it a major 
impediment to employment growth.
    Consumer safety concerns are also very real. Counterfeit 
pharmaceuticals and auto and aviation parts have caused serious 
injuries and death. An estimated 2 percent of the 26 million 
airline parts installed each year are counterfeit. Fake goods 
account for 10 percent of all pharmaceuticals.
    Finally, as you pointed out, Senator, there is a serious 
national security dimension to this problem. For example, the 
United States seized an al Qaeda training manual in Afghanistan 
that recommended the sale of counterfeit goods as a source of 
terrorist funding. And also, at the time of the first attack on 
the World Trade Center, there were reports that that attack 
might have been funded in part by the sale of counterfeit 
goods. So there is a pressing national security dimension to 
this challenge.
    Earlier this year, I joined with Senator Voinovich in 
introducing S. 522, the Intellectual Property Rights 
Enforcement Act, to improve the Government response to this 
problem. The administration has taken some good first steps 
with its STOP initiative, but we are still lacking the kind of 
high-level coordination and accountability needed to deal 
effectively with this problem.
    Our legislation was crafted--welcome, Mr. Chairman, at 
least temporarily. That is all right.
    Our legislation was crafted after extensive consultations 
with private industry groups to identify the flaws with our 
domestic and international IP enforcement regime. What emerged 
from these consultations was a consensus that interagency 
coordination is lacking in a number of important areas, and 
international cooperation on enforcement is weak at best.
    Under our current fragmented approach, we see a stovepiping 
effect in which communication occurs vertically within agencies 
but not horizontally throughout the Government. As you know all 
too well, interagency coordination is critical to the success 
of any large-scale Federal effort.
    Currently, there is no plan for how agencies should work 
together on this problem. Current reporting requirements to 
Congress merely show what agencies are doing individually, not 
collectively as part of the united force. There is no 
indication of which organizations will provide the overall 
framework for oversight and accountability.
    Last November, the GAO released a study that echoes this 
critique of the shortcomings of our current approach. With the 
Chairman's permission, I would like to enter this GAO report 
into the record, along with my statement.
    Chairman Leahy. Without objection.
    Senator Bayh. Thank you, Mr. Chairman.
    I hope that members of the Committee will review this 
report and promptly move legislation to the floor, because 
there are many systemic problems in our Government's approach 
to IP rights enforcement that require immediate corrective 
action. Our legislation requires a permanent strategy that 
addresses some of these flaws. It requires U.S. Government 
agencies to unify as part of an intellectual property 
enforcement network. It would vest responsibility for IP 
enforcement with a Senate-confirmed Government official--the 
Deputy Director for Management of the OMB. The Deputy Director 
would be responsible for submitting to Congress a strategic 
plan that includes objectives for IP enforcement, means for 
measuring results, and how agencies are to work together.
    Currently, Congress plays no meaningful role in IP 
enforcement other than appropriating funds and asking for 
briefings from administration officials. American workers, 
businesses, and taxpayers have the right to expect that we will 
take more of a leadership role in the face of a serious problem 
affecting our national economy and so many of our constituents.
    The OMB is uniquely situated to address the flaws in our 
current approach. Curbing global IP theft involves criminal 
prosecutions, border enforcement, trade policy, and 
international relations. Setting priorities and budgets for 
such a broad multi-agency effort is outside the scope of the 
Department of Justice, Homeland Security, or the U.S. Trade 
Representative alone. We need a stronger management presence to 
ensure that separate agencies are part of a single mission, 
thereby increasing overall efficiency and effectiveness.
    Our approach would also establish an international task 
force of concerned countries to track and identify IP 
criminals. The task force would be modeled on a similar 
international team that fights money laundering and other black 
market crimes. The task force will grant membership solely to 
countries with adequate IP protection laws and a track record 
of enforcing those laws. Today, international cooperation in 
many organizations is hampered by the worst global actors being 
part of those organizations. Our legislation envisions the 
United States sharing information on criminal activity and even 
engaging in joint enforcement operations. Such a close-knit 
arrangement can only flourish among trusted allies.
    A broad coalition of interests dissatisfied with the 
current approach supports our legislation. More than 500 
companies, labor groups, and other organizations as diverse as 
the U.S. Chamber of Commerce, the AFL-CIO, the National 
Association of Manufacturers, and United Auto Workers have 
endorsed our strategy.
    Mr. Chairman, time is of the essence on this issue. The 
STOP program expires when the President leaves office. Our 
legislation will ensure that robust IP protection is a 
permanent priority regardless of the politics of the moment.
    In closing, Mr. Chairman, I would simply say this: The 
heart of America's competitive advantage lies in the economy of 
tomorrow, an economy that is being invented and discovered each 
and every day. Until we take more aggressive action to curtail 
IP theft, we will continue to be robbed of profits, jobs, and 
legal protection for our best ideas. A stronger and more 
effective approach is needed to prevent the United States from 
losing its most valuable asset in the global marketplace--our 
innovators and entrepreneurs.
    Mr. Chairman, I want to take this opportunity to thank you 
for making this subject a priority--I know how busy the 
Committee is--and for your courtesy in allowing me to share my 
thoughts with you today.
    Thank you.
    Chairman Leahy. Well, thank you, Senator Bayh. I also want 
to thank Senator Cornyn for stepping in. He has been a partner 
with me on so much of this material where we tried to 
demonstrate to the Senate that it is not a partisan matter. We 
have passed, I think, the PIRATE bill three times, John, in the 
Senate? And we have reintroduced it again this morning to allow 
the Department of Justice the authority to prosecute copyright 
violations and civil wrongs, and we will continue to support 
that.
    I know you have to be at other places, Senator Bayh, so you 
are welcome to stay, but you are welcome to leave, too.
    John, do you have anything?
    Senator Cornyn. No. Thank you.
    Senator Bayh. Thank you very much, Mr. Chairman.
    Thank you, Senator Cornyn.
    [The prepared statement of Senator Bayh appears as a 
submission for the record.]

  STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM THE 
                        STATE OF VERMONT

    Chairman Leahy. You know, I was going to say earlier that 
intellectual property--our copyrighted works, our trademarked 
goods, our patented inventions--is the engine that drives our 
U.S. economy. Intellectual property, I am told, accounts for 
around 40 percent of our Nation's exports. At a time when the 
dollar is sliding so precipitously against other currencies, we 
have to increase our exports.
    We also consume it voraciously here at home. IP is the 
medicine that cures us, the movies that thrill us, the music 
that inspires us, the software that empowers us, the technology 
that aids us. It is everywhere in our lives, and it is very 
important in our economy.
    Unfortunately, the piracy and counterfeiting of 
intellectual property is at an unprecedented high, certainly 
way beyond anything I saw when I first came to the Senate. 
Copyright infringement alone costs the U.S. economy at least 
$200 billion and also 750,000 jobs each year. Not only does 
piracy infringe these rights, but it can also endanger our 
health and safety when there is counterfeiting of things that 
we depend upon for our health or our safety--fake drugs that 
look just like the real thing or tainted infant formula sold to 
unsuspecting parents, electrical appliances that have shoddy 
insulation, automobile parts that fail under stress--like 
brakes. These kinds of goods are proliferating. They are often 
difficult to distinguish from the real ones.
    I have worked for years to strengthen our laws and to give 
our law enforcement the powers they need. We passed in the last 
Congress the Stop Counterfeiting in Manufactured Goods Act, 
which expanded the prohibition on trafficking in counterfeit 
goods to include trafficking in labels or similar packaging 
with knowledge that a counterfeit mark had been applied to 
those goods. I have regularly authored amendments to the State 
Department's appropriations bill. My amendments have provided 
millions to the Department in order to send staff overseas 
specifically to combat piracy in countries that are not members 
of the Organization for Economic Co-Operation and Development, 
or OECD.
    In the current Congress, there are a number of other bills 
along with Senator Cornyn's and my PIRATE Act. Senator Bayh 
introduced a bill focused on interagency coordination. Senator 
Biden recently introduced omnibus crime legislation that has 
many provisions suggested by the Department of Justice. There 
are bound to be more.
    I worry that anything like this, if it is addressed 
piecemeal, could be a mistake. It is far too important to be 
addressed piecemeal. To have the greatest change, we have to 
examine enforcement efforts from the top down. So in our second 
panel--and I would invite you to come forward. I will first let 
the people who actually make this place run, the staff, put up 
the names.
    Mr. Chris Israel is the United States Coordinator for 
International Intellectual Property Enforcement, serving as 
head of the National Intellectual Property Law Enforcement 
Coordination Council. Is it true that it is called NIPLECC?
    Mr. Israel. Yes. We did not name it, Senator.
    Chairman Leahy. I know you did not. But what it does, it 
includes the Departments of Commerce, Justice, State, and 
Homeland Security, and the U.S. Trade Representative. Before 
becoming the U.S. Coordinator, Mr. Israel was Deputy Chief of 
Staff first to Commerce Secretary Donald Evans, then to the 
current Commerce Secretary, Carlos Gutierrez.
    Chris Moore is the Deputy Assistant Secretary of State for 
Trade Policy and Programs in the Bureau of Economic, Energy, 
and Business Affairs, and oversees the State Department's 
activities to strengthen intellectual property rights 
protection. Prior to the State Department, he served in both 
the Office of the U.S. Trade Representative and the Department 
of Commerce.
    Kevin O'Connor currently serves as United States Attorney 
for the District of Connecticut, as Chief of Staff to the 
United States Attorney General, as Chairman of the Department 
of Justice Task Force on Intellectual Property, and was a 
partner before that in the law firm of Day, Berry & Howard. I 
believe you served in the Securities and Exchange Commission, 
too. Is that correct, Mr. O'Connor?
    Mr. O'Connor. That is correct, Senator.
    Chairman Leahy. Mr. Israel, why don't we begin with you, 
sir.

 STATEMENT OF CHRIS ISRAEL, U.S. COORDINATOR FOR INTERNATIONAL 
INTELLECTUAL PROPERTY ENFORCEMENT, U.S. DEPARTMENT OF COMMERCE, 
                        WASHINGTON, D.C.

    Mr. Israel. Thank you, Chairman Leahy. I am pleased to join 
you today to discuss the U.S. Government's intellectual 
property enforcement efforts.
    As the U.S. Coordinator for International Intellectual 
Property Enforcement, it is the task of my office to leverage 
the capabilities and resources of the U.S. Government to 
promote effective global enforcement of intellectual property 
rights. Today I would like to discuss the ongoing leadership 
and prioritization of the Bush administration regarding IP 
enforcement, provide an account of some of the progress we have 
made, and, finally, give some insight on how we are 
coordinating our efforts.
    The reasons for the administration's leadership on IP 
enforcement and for its prioritization are clear.
    Few issues are as important to the current and future 
economic strength of the United States as our ability to create 
and protect intellectual property. U.S. IP industries account 
for over half of all U.S. exports. They represent 40 percent of 
our economic growth and employ 18 million Americans, who earn 
40 percent more than the average U.S. wage. This growth in 
prosperity is put in jeopardy, however, by rampant theft of 
intellectual property. Quite simply, a secure and reliable 
environment for intellectual property is critical to the 
strength and continued expansion of the U.S. economy. 
Therefore, the protection of intellectual property is a major 
trade, economic, health, and safety issue for the Bush 
administration. We seek every opportunity at every level to 
engage our trading partners, strengthen our enforcement 
capabilities, and collaborate with industry.
    As this Committee understands, the problem of global piracy 
and counterfeiting confronts many industries, exists in many 
countries, and demands continuous attention. With finite 
resources and seemingly infinite concerns, how we focus our 
efforts is crucial. A critical element of our overall 
coordination is the Strategy Targeting Organized Piracy, or 
STOP! Initiative, launched by the administration in October of 
2004. STOP is built on five key principles:
    First, empowering innovators to better protect their rights 
at home and abroad;
    Second, increasing efforts to seize counterfeit goods at 
our borders;
    Third, pursuing criminal enterprises involved in piracy and 
counterfeiting;
    Fourth, working closely and creatively with industry;
    And, fifth, aggressively engaging our trading partners to 
join our effort.
    STOP is a broad interagency effort led by the White House 
that draws upon the capabilities of the Department of Commerce, 
the Department of Justice, USTR, the State Department, the 
Department of Homeland Security, and FDA. The principles of 
STOP are essentially our combined action plan. They are the 
things that this administration is committed to expanding, 
coordinating, and executing in order to protect American IP and 
demonstrate leadership around the world.
    On a number of fronts, our efforts have brought meaningful 
results. We have provided useful tools and information that has 
reached thousands of American rights holders. As you will hear 
from Mr. O'Connor, criminal enforcement has increased 
dramatically, and Justice is leading our effort to promote even 
stronger domestic IP laws. U.S. seizures of counterfeit goods 
doubled from 2005 to 2006, in total over 50,000 since 2002. 
Finally, we are leading an aggressive effort around the world 
to promote IP enforcement. We have launched a major new 
initiative, the Anti-Counterfeiting Trade Agreement, with the 
EU, Japan, Korea, Mexico, Canada, New Zealand, and Switzerland, 
to create a global gold standard for IP enforcement. We have 
also established strong IP enforcement programs with the EU, 
the G-8, and through the Security and Prosperity Partnership 
with Canada and Mexico.
    To confront major concerns, we have filed the first 
complaint with the WTO regarding China's failure to enforce 
intellectual property rights and made IP enforcement a major 
premise for our support of Russia's accession to the WTO.
    To achieve these results, we have established a permanent 
and comprehensive U.S. Government strategy that draws upon 
multiple agencies and spans the globe. We have utilized the 
statutory National Intellectual Property Law Enforcement 
Coordination Council as a cornerstone for implementing our key 
priorities, and we have taken steps to be more transparent and 
accountable, such as through our quarterly IP enforcement 
updates and an improved annual report to the President and 
Congress.
    These are significant steps in a very long and difficult 
journey to combat global IP theft. Piracy and counterfeiting is 
an expanding global business led by sophisticated and organized 
criminals. Mr. Chairman, we are dedicated to stopping 
intellectual property theft and providing businesses with the 
tools they need to flourish in the global economy. We look 
forward to working with this Committee to promote strong 
intellectual property rights protection for American businesses 
and entrepreneurs around the world.
    Thank you very much, and I welcome your questions.
    [The prepared statement of Mr. Israel appears as a 
submission for the record.]
    Chairman Leahy. Thank you very much. I think we will have 
each one of you testify and then ask some questions. So, Mr. 
Moore?

STATEMENT OF CHRIS MOORE, DEPUTY ASSISTANT SECRETARY FOR TRADE 
 POLICY AND PROGRAMS, BUREAU OF ECONOMIC, ENERGY, AND BUSINESS 
      AFFAIRS, U.S. DEPARTMENT OF STATE, WASHINGTON, D.C.

    Mr. Moore. Thank you, Chairman Leahy. Thank you for this 
opportunity to speak today about the State Department's work to 
combat counterfeiting and piracy and enforce intellectual 
property rights around the world.
    A strong intellectual property rights regime has made the 
United States economy one of the most innovative and 
competitive on Earth, and the administration is working 
aggressively to combat counterfeiting and piracy and to 
strengthen intellectual property enforcement at home and abroad 
using all available tools.
    The United States was instrumental in building a robust 
worldwide legal infrastructure for innovation and creativity 
through the WTO Agreement on Trade-Related Aspects of 
Intellectual Property Rights. This administration has built on 
the strong legal protections in the WTO by including 
groundbreaking IPR provisions that improve on the TRIPS 
foundation in a dozen free trade agreements reached with 17 
countries since 2001, and we have brought new tools and 
partnerships to our work in this critical area through STOP, 
the administration's Strategy Targeting Organized Piracy 
Initiative.
    In close coordination, agencies across the Federal 
Government are successfully engaging our partners around the 
world to promote full implementation of the IPR protections in 
America's trade agreements and to strengthen laws and take 
other steps to improve enforcement. The State Department plays 
a vital role in supporting and complementing the enforcement 
activities of other Federal agencies with lead responsibilities 
in this area. Secretary Rice is a strong champion of 
intellectual property protection, and top Department officials 
regularly press their overseas counterparts to improve 
enforcement.
    In 2005, at the request of Congress, the State Department 
established its first Office of International Intellectual 
Property Enforcement. This office is marshalling and leveraging 
the full range of often unique tools and resources at our 
disposal to achieve real results for American innovators and 
creative artists.
    Through the State Department's network of more than 260 
embassies, consulates, and missions around the world, America's 
Ambassadors, consul generals, and economic officers are playing 
a powerful role in advancing and implementing the 
administration's global IPR enforcement policies and 
activities, acting as first responders for U.S. right holders 
facing counterfeiting and piracy challenges abroad, engaging 
regularly and successfully with foreign government officials to 
secure tougher enforcement, and promoting full implementation 
of trade agreement commitments.
    Capitalizing on our central role in negotiations leading to 
annual G-8 leaders meetings, the State Department is leading 
work among the industrialized nations of the world to 
prioritize and build a common agenda for IPR enforcement. 
Through this work, G-8 leaders are giving priority to 
substantially reducing global trade in counterfeit and pirated 
goods.
    Thanks to your leadership, Mr. Chairman, and to the 
leadership of Representative Diane Watson and others in 
Congress, the State Department has significantly increased the 
funding available for its IPR law enforcement training programs 
from less than $1 million in fiscal year 2003 to $3 million in 
fiscal year 2007, and we are working to ensure these funds are 
effectively managed and deployed to maximum impact around the 
world.
    Our training programs are delivering real results. In 
Indonesia, for example, we support two full-time U.S. advisors 
who have helped the Indonesian Government launch a recent 
series of large-scale enforcement actions.
    Finally, the State Department is utilizing its extensive 
global public diplomacy tools to help build public 
understanding of the value of IPR and public support for 
stronger enforcement in countries around the world.
    In closing, I would like to thank you, Mr. Chairman, and 
the other members of this Committee for your continued 
leadership, focus, and engagement on this vital issue and for 
emphasizing the need for stronger intellectual property 
enforcement with foreign government officials, legislators, and 
media in your overseas travel. Our trading partners pay close 
attention to what Members of Congress say, and your actions 
play a big part in helping us to effectively meet the challenge 
of global counterfeiting and piracy.
    Thank you again, Mr. Chairman, for the opportunity to 
testify today. I look forward to answering any questions you or 
other members of the Committee may have.
    [The prepared statement of Mr. Moore appears as a 
submission for the record.]
    Chairman Leahy. Thank you very much, Mr. Moore.
    Mr. O'Connor, please go ahead. Is your microphone on?
    The little red button there.

STATEMENT OF KEVIN J. O'CONNOR, UNITED STATES ATTORNEY FOR THE 
     DISTRICT OF CONNECTICUT, AND CHAIRMAN, TASK FORCE ON 
INTELLECTUAL PROPERTY, U.S. DEPARTMENT OF JUSTICE, WASHINGTON, 
                              D.C.

    Mr. O'Connor. Chairman Leahy, good afternoon, and thank you 
for the opportunity to discuss the Department of Justice's role 
in the coordinated effort to protect intellectual property 
rights.
    Today the Department is dedicating more energy and 
resources than ever before to the protection of intellectual 
property. As part of President Bush's Strategy Targeting 
Organized Piracy, or the ``STOP,'' initiative, the Department 
created a task force that you previously referred to on 
intellectual property, which conducted a thorough review of the 
Department's IP enforcement efforts and implemented numerous 
recommendations, 31 in all, to improve those efforts.
    At the core of that task force's mission is enforcement, 
specifically increasing our criminal prosecutions of those who 
violate our IP laws. We have done just that. Through the 
dedicated efforts of U.S. Attorney's Offices, our Criminal 
Division, and law enforcement across the country, the 
Department has convicted and sentenced 287 defendants on 
intellectual property charges in this past fiscal year, which 
is a 35-percent increase over the prior fiscal year and a 93-
percent increase over fiscal year 2005.
    The Department is also dedicating more prosecutors to IP 
crime. In 2001, the Department had one Computer Hacking and 
Intellectual Property Unit, otherwise known as a CHIP Unit. 
Today we have 25 units and over 230 prosecutors in U.S. 
Attorney's Offices across the country dedicated exclusively to 
prosecuting IP and other computer crimes. In fiscal year 2007, 
those CHIP units successfully convicted and sentenced 80 
percent more defendants than they did last year.
    Time does not allow me to cover all the prosecutions listed 
in my written testimony, but I would like to take a moment to 
highlight a recent case from the District of Connecticut, where 
I am proud to serve as the U.S. Attorney.
    Recently, an individual by the name of Eli El was sentenced 
to 30 months' imprisonment for conspiracy to distribute over 
the Internet more than 20,000 copies of pirated software. His 
conviction arose from an undercover investigation targeting an 
underground Internet community specializing in cracking and 
distributing copyrighted works online.
    I cite this case not only because it is from Connecticut, 
but also because this prosecution exemplifies the Department's 
strategy against the growing global threat of online software 
piracy. We were attacking the high end of the supply chain and 
prosecuting the sources and first suppliers of the pirated 
material so widely available online. We hope Mr. El's 30-month 
sentence will send the message that this type of conduct will 
not be tolerated.
    Our enforcement strategy is not and cannot, however, be 
confined to our borders. Recently, in a joint investigation 
with the FBI, China's Ministry of Public Security arrested 25 
individuals and seized more than half a billion dollars of 
counterfeit software and another $7 million in assets. This 
case, known as ``Operation Summer Solstice,'' dismantled one of 
the largest international piracy syndicates. To continue to 
promote these types of joint international investigations, the 
Department established an IP Law Enforcement Coordinator for 
Asia. This week, a second Coordinator for Eastern Europe just 
began work in Bulgaria. These seasoned prosecutors with 
experience in IP prosecutions will coordinate our joint 
investigations in those parts of the world and promote training 
and outreach efforts with our foreign counterparts.
    Just last month, with assistance from our colleagues with 
the State Department and the U.S. Patent and Trademark Office, 
we hosted the first IP Crime Enforcement Network in Bangkok. 
This conference brought together key law enforcement officials 
from 12 nations in Asia with the aim of developing an 
international network targeting large-scale intellectual 
property crimes.
    While the Department is pleased with its record, more work 
remains. In May, the Department transmitted to Congress 
comprehensive legislation to provide prosecutors with 
additional tools to combat organized piracy and hacking 
networks. This legislation would strengthen sentences for 
repeat copyright offenders, increase the penalties for 
counterfeiters whose actions threaten public health and safety, 
and create a new crime for attempting to commit copyright 
infringement. I want to thank the Committee and your staffs for 
continuing to work with the Department toward enactment of as 
many of these bills' provisions as possible.
    Finally, Mr. Chairman, despite the divergent roles played 
by many of the Government agencies involved in STOP, 
coordination has not been a significant problem. In fact, 
thanks in no small part to the leadership of my colleague Chris 
Israel, support and cooperation amongst the agencies involved 
in this effort and important endeavor has been outstanding and 
has produced unprecedented results.
    Thank you for the opportunity to highlight this afternoon 
the Department's role and achievements in the coordinated U.S. 
Government effort to protect intellectual property rights. I am 
pleased to answer any questions you may have.
    [The prepared statement of Mr. O'Connor appears as a 
submission for the record.]
    Chairman Leahy. Thank you, and I am glad to hear you 
speaking of the cooperation and how that works. I want to get 
into this a little bit.
    It was interesting during the days when I was a prosecutor, 
and you worried about people who stuck a gun in the face of a 
bank teller or something like that and off you would go. And 
here you are talking about somebody who may be doing the 
stealing and could be a thousand miles away from where they 
stole it and be selling it thousands of miles away from there. 
It is an entirely different situation. And we know that the way 
it is going, we are always going to have more battles to fight, 
and we are always going to have a finite amount of resources to 
use.
    So let me ask you this, and I will ask each of you: What 
pirates and counterfeiters do the most harm? And what kind of 
enforcement targets, assuming you could use whatever you 
wanted, would be best to bring them down? Mr. Israel? And I 
realize there are all kinds of people out there. Who causes the 
most harm?
    Mr. Israel. Well, Mr. Chairman, that is a very insightful 
question, obviously, and I think we are seeing--with the 
deployment of technology around the world, I think the Internet 
has become a very efficient and preferred platform for a 
variety of different types of IP crimes. I think you obviously 
see the quick-to-market type of applications when it comes to 
movies and music and really moving those products globally very 
quickly. And it has changed dramatically the entire business 
model of a number of industries.
    One thing that is certainly alarming is the trend in the 
sophistication, moving upscale in terms of the sophistication 
of the types of products that we see--electronics, 
pharmaceutical products. If you look into the Customs' seizure 
data over the last couple of years, you see a pretty dramatic 
uptick in the number of seizures they are making of IT 
products--consumer electronics, pharmaceuticals. So higher 
value-added, more sophisticated products I think is a trend 
that clearly is drawing a tremendous amount of attention from 
the enforcement resources within the Federal Government and 
from industry itself.
    Chairman Leahy. And what would be the targets?
    Mr. Israel. The targets are clearly the products that have 
high brand-name recognition.
    Chairman Leahy. But would the people that we want to bring 
down, are they in this country? Are they outside of this 
country? Or both?
    Mr. Israel. It is going to be both. You are going to see 
distribution mechanisms that are set up within this country 
using direct mail, using a variety of different methods to get 
product to consumers who are demanding it. That is a piece of 
this we need to address, too, the demand side.
    But you see a large sourcing of these products in Asia; 80 
percent of the counterfeit goods coming to this country that we 
seize come from China. So, clearly, that is the nexus of the 
production for a vast majority of the counterfeit goods in the 
world.
    Chairman Leahy. Thank you. You know, it is interesting. We 
had another matter. We had people who made movies in the 
digital age, very easy to copy, and the man who had spent a 
considerable amount of his life to produce the movie ``Ray'' 
about Ray Charles. He talked about how he had mortgaged his 
home, had done all these other things to raise the money, and 
was so proud when it opened in New York. And he is walking up 
the street the day after it opens and admiring it on the 
marquee, walks around the corner and somebody is trying to sell 
him a counterfeit copy of ``Ray.''
    Mr. Moore.
    Mr. Moore. Thank you, Mr. Chairman. I think as we look out 
at this challenge globally, what we find most alarming are the 
examples of organized and sophisticated transnational groups 
that are involved in counterfeiting and piracy. Where we see 
organizations that are counterfeiting and pirating goods on a 
commercial scale, who are causing those goods to be distributed 
around the world, these are the companies or the organizations 
that tend to be one of the largest problems for us. They are 
the companies and the organizations that are causing 
significant damage to many of our small businesses. Oftentimes, 
our small businesses are not aware that if you have a website, 
you are a global company today. And so we have instances of 
counterfeiters and pirates in China basically looking at the 
product lists that they have on their website, downloading that 
product list, reproducing the items that are there to quite a 
high and sophisticated quality level, and then distributing 
those products in many countries around the world, undermining 
the market and value of--
    Chairman Leahy. Gorilla Glue.
    Mr. Moore. I am sorry?
    Chairman Leahy. Gorilla Glue is one.
    Mr. Moore. Yes, exactly. And so that is one of the key 
challenges that I think we see.
    In terms of solutions to that, I think it underscores the 
need for us to continue to engage aggressively with our trading 
partners around the world. When you are talking about 
transnational counterfeiting and piracy, the production of 
these goods in one country and the distribution through others 
and finding markets in still third countries, we need to be 
working aggressively with our partners so that--
    Chairman Leahy. Well, and in that regard, if you take 
China, which has been a very significant problem--it is a very 
significant problem in legal goods, as we have found with lead 
in children's toys--something that every parent or every 
grandparent is looking at especially as the holiday seasons are 
coming up. But China is a country that if they really wanted to 
bring a stop to that, could. I mean, you have got as controlled 
a distribution system and economy and law enforcement and so on 
there. And you have to assume that in many instances there is a 
blind eye being turned to this. Am I correct?
    Mr. Moore. Well, I think we have seen--
    Chairman Leahy. I do not want to get you on the carpet when 
you get back to the office, but isn't that a fact?
    Mr. Moore. What I think we have seen in China is certainly 
some will to have additional raids and crackdowns. As a result 
of our bilateral engagement, they have taken certain other 
steps that have been helpful. But I think what they are looking 
at, what we are looking at, is a systemic problem. It is not 
enough to have raids and crackdowns if that is not followed up 
by effective prosecution and enforcement, if it is not followed 
up by deterrent penalties, including criminal penalties, if the 
market is not open to legitimate copyrighted and trademarked 
items.
    And so all of these things added together, I think they are 
looking at a systemic problem, but they are dealing with just 
one piece of that.
    Chairman Leahy. And when you have instances like you have a 
factory that is basically controlled by the military, and when 
pressure is brought, they will bring counterfeit goods out in 
the parking lot in front and run some kind of a crushing 
machine over it for all the cameras rolling, and out the back 
door there are large tractor-trailers filling up with the same 
product being shipped out, I think that raises a real concern.
    Mr. O'Connor, your view on this?
    Mr. O'Connor. I do not want to, Senator--
    Chairman Leahy. You are coordinating with U.S. Attorneys 
around the country. I mean, what pirates and counterfeiters are 
doing the most harm?
    Mr. O'Connor. Well, I would agree with and echo the 
comments of my colleagues here today in the sense that 
obviously the organized criminal syndicates, whether they are 
the ``warez scene'' that we have seen in Connecticut and across 
the country, they probably are the biggest threat because they 
can do the most harm and do it most efficiently, because they 
are organized, they are extensive, they use the Internet to 
distribute stuff in seconds that would otherwise take months or 
years. And so they pose the biggest threat.
    But I must say, in fairness to the victims of these crimes, 
they are probably less concerned whether it is an organized 
criminal syndicate or somebody sitting behind their computer by 
themselves. I mean, it still has affected them as any defendant 
would feel.
    So we have to be sure to balance our efforts to go after 
organized criminal syndicates with also the ability to 
prosecute what you might call ``Lone Rangers,'' and that is, 
you know, the balance we are trying to strike.
    Chairman Leahy. Well, let me just followup on that a little 
bit, and then I will yield to Senator Cornyn, if he is able to 
come back. But let me just followup a little bit on this. Let's 
look at it from the view of state and local law enforcement. I 
look at my little State of Vermont. We have only got 650,000 
people, but on a per capita basis, we are the largest exporting 
state in the country. We have a great deal of intellectual 
property that is sent out, computer software and so on. I 
remember years ago, when he was first starting, the man who 
began Burton Snowboards--it is now worldwide--Jake Burton--I 
was getting on a plane in Chicago with him, and we were both 
kind of squeezed into--those of us who are large enough know 
how uncomfortable some of these seats are way back in steerage, 
and Jake and I were squished in with a third person in a row in 
the back, and he said, ``See that guy who is going in first 
class? '' I said, ``Yes.'' He said, ``He is a pirate.'' I said, 
``What do you mean? '' He said, ``We just spent a fortune 
designing a new boot for our snowboards. He just took it over 
to China. They are copying it, and they are underselling us. He 
gets to fly first class.''
    Now, Jake has done well enough that--I still ride in those 
seats in the back. I will wave to him as he goes up front. But 
you see what I am getting at.
    Now, I was thinking, okay, he has got a business in 
Burlington, Vermont. What can the State do? I mean, how do 
local prosecutors or even up to the level of the Federal 
prosecutor within a district, or in our case the district is 
the whole State, what do they do? How do they go after this?
    Mr. O'Connor. Well, I would think in most States in 
situations like that, they would work very closely with Federal 
authorities, particularly if there is an international element 
to the offense. You know, the State and locals generally do not 
have the amount of resources the Federal level does. They do 
not have the ability to do international or multi-State 
investigations.
    That being said, in many States, including Connecticut, and 
I am sure Vermont, they are doing great work on the local level 
on other computer crimes, whether it is tracking child 
predators--so it is a question of, I think if you are a U.S. 
Attorney and this is a problem, you should have a very close 
working relationship with your State's authority or local DA 
and be sharing information and utilizing the laws that fit the 
situation best.
    In some States, they may have--I doubt it as a general 
rule, but they may have strong IP laws, and in that case it 
might make sense to help out federally, but let the case be 
prosecuted by the State.
    Chairman Leahy. In other words, if they put together a good 
law, but there may be one assistant or one half of an 
assistant, as it sometimes is in a local prosecutor's office, 
if the Feds can come in and help them make the case, then 
prosecute it under State law.
    Mr. O'Connor. Yes, that is what we do, whether it is 
Project Safe Neighborhoods, Project Safe Childhood, you can 
oftentimes use the Federal resources to leverage State pleas. 
At the end of the day, I think we are less concerned where the 
person pleads guilty than that they are held accountable in 
some court of law.
    Chairman Leahy. Mr. Israel has the job of coordinating 
efforts, and notwithstanding the acronym, but what does that 
mean, we support each other, we complement each other, whether 
it is the State Department or Justice Department? Each agency 
seems to conduct its own training seminars on IP enforcement. 
Give me actual cases of how across agencies you are actually 
supporting each other.
    Mr. Israel. Sure. Thank you, Mr. Chairman. I will give you 
two examples that indicate a good deal of cooperation with the 
number of agencies, and I will leave the questions of actual 
tactical law enforcement engagement to Mr. O'Connor.
    Just 2 weeks ago, in China, our U.S. Ambassador there, 
Ambassador Randt, has the sixth of his annual IP enforcement 
roundtables, which was a product organized by the State 
Department, put together in large measure with a U.S. Patent 
and Trademark Office IP Attache who has been posted in Beijing 
now for about 3 years; our U.S. Trade Representative's Office 
participated, as did ICE, Customs and Protection, and the 
Department of Justice. So we had literally every Federal agency 
that has a role to play in IP enforcement present at this day-
long session in Beijing hosted by the Ambassador that listened 
for the entire day to U.S. industry and the concerns they have 
got and some of the specific cases that we are going to try 
to--
    Chairman Leahy. Well, what comes of that?
    Mr. Israel. We are putting together as a result of that--it 
essentially formulates the action strategy for the U.S. 
Embassy's IP enforcement efforts in Beijing for the coming 
year. From that will come the specific projects and the 
followup that they will do with our industry, and some of those 
things are diplomatic relationship issues with the Chinese. 
There are some specific law enforcement activities that will 
come as a result of that. So really there I think you see the 
coming together of just about every agency involved in China.
    Chairman Leahy. But if China just ignores you, there is not 
much you can do in China.
    Mr. Israel. We every day have to deal with the challenge of 
getting and sustaining the attention of the Chinese and--
    Chairman Leahy. And I do not mean that dismissively saying 
that. I have dealt with the Chinese. I know how difficult that 
is. But--
    Mr. Israel. We are constrained certainly by the attention 
and the focus of the Chinese, and we will keep trying to work 
on that.
    A second quick example I would cite is the ACTA Agreement 
that Ambassador Schwab announced about 2 weeks ago. That is 
really the result of about a year's worth of discussion and 
dialogue with all the member countries that are involved in 
that, and that was truly an interagency, U.S. interagency 
process. The things we are talking about doing with these 
countries go well beyond just trade enforcement and operating 
under the WTO. They involve law enforcement cooperation, 
establishing networks of law enforcement officials across all 
these countries to work with each other, share information, 
work on operations that could lead to law enforcement 
activities. Customs is involved in that. Our Patent and 
Trademark Office is involved in that effort, as is the State 
Department. So that really was about a year-long process that 
involved a number of agencies and culminated in what we think 
is a pretty cutting-edge agreement with some very relevant 
nations that the Ambassador announced 2 weeks ago.
    Chairman Leahy. Thank you.
    Mr. Moore, would you like to add anything to that?
    Mr. Moore. Sure. I will just give you a couple of examples 
from the different areas that I mentioned in my prepared 
testimony.
    Chris has already mentioned the ways that our embassies can 
be very supportive, talking about the Ambassador's roundtable 
in Beijing. Our embassies around the world play a vital role in 
supporting the enforcement actions and monitoring of our trade 
agreements that are done by the Commerce Department and by 
USTR, helping to advise in those issues, helping to conduct on 
the ground what is needed to support the activities here in 
Washington.
    Through our training programs, my colleague from the 
Department of Justice talked about some work that we are doing 
in Eastern Europe, through the intellectual property law 
enforcement. Oftentimes, the programs that are done by DOJ and 
by some of the other agencies are funded through our training 
programs, and so we help to support those.
    In our international efforts, we are also helping to build 
global coalitions through our work in the G-8 and other 
international forums.
    Chairman Leahy. Are you getting cooperation there?
    Mr. Moore. We are. We are getting very good cooperation 
there.
    Chairman Leahy. I would think that some of these countries, 
while they may think, gosh, they could make a short-term gain 
by kind of ignoring us, especially as they become more 
technically adept themselves, and many of them have equal 
technical abilities as we do, in the long term it is going to 
hurt them.
    Mr. Moore. One of the things that has been most striking 
about our engagement with other countries through these 
international forums is the degree to which they are seeing 
many of the same challenges that we are with global 
counterfeiting and piracy, the trade in counterfeit and pirated 
goods. They are looking to cooperate with us. They want to 
cooperate with us. And so I think we are getting a good 
response in the forums and--
    Chairman Leahy. And when you think of some of the countries 
that have large pharmaceuticals, countries that are beginning 
to go if not to the degree we do but into the entertainment 
world, whether music, movies, or software, and how that goes. 
We have it with manufactured goods. We have it with computers, 
telephones, automobiles, and replacement parts for automobiles, 
which is a significant aftereffect of having sold you--the car 
may have been made in Germany or France or elsewhere. But they 
also want to make sure, if they are going to have replacement 
parts, that they know where they come from.
    Mr. Moore. Exactly, and it is on that basis, I think, they 
are seeing some of the economic damage that we are. They are 
concerned about the public health and safety, the implications 
of counterfeit and pirated goods. And so all of those are areas 
where we have seen good cooperation.
    Chairman Leahy. And, Mr. O'Connor, you get the last word on 
this, because what I am going to do after you finish, I am 
going to place in the record, without objection, a statement by 
Senator Specter, and I am going to leave the record open for 
questions others might have. What we are trying to do is 
prepare enough of a record for legislation that we will keep 
trying to get through before we get out of here.
    Mr. O'Connor. At the risk of delaying things, I will simply 
say that--
    Chairman Leahy. Take all the time you want, Mr. O'Connor. I 
am actually fascinated by this, so go ahead.
    Mr. O'Connor. Thank you, Mr. Chairman. I think from the 
Department's perspective, perhaps the biggest benefit to us 
from working with State and Commerce in particular is State is 
really our bridge to our foreign counterparts who we must work 
with in light of the international aspects of this problem very 
closely. And they can open up doors to help establish good 
working relationships, whether it is China, India, Russia, or 
anywhere else.
    I would say with respect to Commerce, they are our bridge, 
but our bridge to the industry, those victimized the most by 
these crimes. They understand the industry. They know the key 
players in the industry, and they are always the vehicle by 
which we are able to set up forums, including, I believe, one 
in Vermont not too long ago, to discuss this in--
    Chairman Leahy. I was there.
    Mr. O'Connor. I know you were. I was supposed to be, but 
could not be, but I know we did have a Department of Justice--
    Chairman Leahy. You had Department representation there, 
and we have gotten nothing but great feedback from the people, 
and we went from IBM, which, of course, has all sorts of 
worldwide--connect down to people, a three- or four-person 
business, but making a very, very unique product that has been 
copyrighted and trademarked and everything else and terrified 
about somebody else just duplicating it.
    Mr. O'Connor. And those forums are key for us as 
prosecutors because that is where we learn not only, you know, 
the impact on the victims. I think we are fairly sensitized to 
that by now. But it is really how we learn about the tools of 
the trade because the victims are usually the ones who first 
discover the newest techniques, whether it is by the Internet 
or elsewhere, that they are victimizing people. So they are 
tremendous, useful forums, and our friends in the Commerce 
Department have always been very good about including us, and I 
expect in the future we will continue to play a role in that.
    Chairman Leahy. Well, the Committee will stand in recess, 
and I thank you very much.
    [Whereupon, at 3:06 p.m., the Committee was adjourned.]
    [Questions and answers and submissions follows.]



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