[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]



                   INTELLECTUAL PROPERTY: ENFORCEMENT 
                   ACTIVITIES BY THE EXECUTIVE BRANCH

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

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON COURTS, INTELLECTUAL 
                        PROPERTY, AND THE INTERNET

                                 OF THE

                       COMMITTEE ON THE JUDICIARY

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION
                               __________

                          TUESDAY, MAY 7, 2024
                               __________

                           Serial No. 118-75
                               __________

         Printed for the use of the Committee on the Judiciary 
         
         
         
         
         
              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
              
              
              


               Available via: http://judiciary.house.gov              
                               ______

                  U.S. GOVERNMENT PUBLISHING OFFICE  

55-652                   WASHINGTON : 2024 












               
                       COMMITTEE ON THE JUDICIARY

                        JIM JORDAN, Ohio, Chair

DARRELL ISSA, California             JERROLD NADLER, New York, Ranking 
MATT GAETZ, Florida                    Member
ANDY BIGGS, Arizona                  ZOE LOFGREN, California
TOM McCLINTOCK, California           SHEILA JACKSON LEE, Texas
TOM TIFFANY, Wisconsin               STEVE COHEN, Tennessee
THOMAS MASSIE, Kentucky              HENRY C. ``HANK'' JOHNSON, Jr., 
CHIP ROY, Texas                        Georgia
DAN BISHOP, North Carolina           ADAM SCHIFF, California
VICTORIA SPARTZ, Indiana             J. LUIS CORREA, California
SCOTT FITZGERALD, Wisconsin          ERIC SWALWELL, California
CLIFF BENTZ, Oregon                  TED LIEU, California
BEN CLINE, Virginia                  PRAMILA JAYAPAL, Washington
KELLY ARMSTRONG, North Dakota        MARY GAY SCANLON, Pennsylvania
LANCE GOODEN, Texas                  JOE NEGUSE, Colorado
JEFF VAN DREW, New Jersey            LUCY McBATH, Georgia
TROY NEHLS, Texas                    MADELEINE DEAN, Pennsylvania
BARRY MOORE, Alabama                 VERONICA ESCOBAR, Texas
KEVIN KILEY, California              DEBORAH ROSS, North Carolina
HARRIET HAGEMAN, Wyoming             CORI BUSH, Missouri
NATHANIEL MORAN, Texas               GLENN IVEY, Maryland
LAUREL LEE, Florida                  BECCA BALINT, Vermont
WESLEY HUNT, Texas
RUSSELL FRY, South Carolina
Vacancy

                                 ------                                

           SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND
                              THE INTERNET

                    DARRELL ISSA, California, Chair

THOMAS MASSIE, Kentucky              HENRY C. ``HANK'' JOHNSON, Jr., 
SCOTT FITZGERALD, Wisconsin            Georgia, Ranking Member
CLIFF BENTZ, Oregon                  TED LIEU, California
BEN CLINE, Virginia                  JOE NEGUSE, Colorado
LANCE GOODEN, Texas                  DEBORAH ROSS, North Carolina
KEVIN KILEY, California              ADAM SCHIFF, California
NATHANIEL MORAN, Texas               ZOE LOFGREN, California
LAUREL LEE, Florida                  MADELEINE DEAN, Pennsylvania
RUSSELL FRY, South Carolina          GLENN IVEY, Maryland

               CHRISTOPHER HIXON, Majority Staff Director
         AARON HILLER, Minority Staff Director & Chief of Staff 
         
         
         
         
         
         
         
         
         
         
         
         
         
                            C O N T E N T S

                              ----------                              

                          Tuesday, May 7, 2024

                           OPENING STATEMENTS

                                                                   Page
The Honorable Darrell Issa, Chair of the Subcommittee on Courts, 
  Intellectual Property, and the Internet from the State of 
  California.....................................................     1
The Honorable Henry C. ``Hank'' Johnson, Ranking Member of the 
  Subcommittee on Courts, Intellectual Property, and the Internet 
  from the State of Georgia......................................     2
The Honorable Jerrold Nadler, Ranking Member of the Committee on 
  the Judiciary from the State of New York.......................     4

                               WITNESSES

Michael Ball, Acting Assistant Director for the Global Trade 
  Devision, Homeland Security Investigations, U.S. Department of 
  Homeland Security
  Oral Testimony.................................................     7
  Prepared Testimony.............................................     9
Josh Goldfoot, Acting Deputy Assistant Attorney General, Criminal 
  Division, U.S. Department of Justice
  Oral Testimony.................................................    16
  Prepared Testimony.............................................    18
Brandon Lord, Executive Director of Trade Policy and Programs, 
  U.S. Customs and Border Protection, U.S. Department of Homeland 
  Security
  Oral Testimony.................................................    26
  Prepared Testimony.............................................    28

          LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING

All materials submitted by the Subcommittee on Courts, 
  Intellectual Property, and the Internet, for the record........    61

Materials submitted by the Honorable Darrell Issa, Chair of the 
  Subcommittee on Courts, Intellectual Property, and the Internet 
  from the State of California, for the record
    A letter to the Honorable Katherine C. Tai, U.S. Trade 
        Representative, May 4, 2024, from the Honorable Jim 
        Jordan, Ranking Member of the Committee on the Judiciary 
        from the State of Ohio, and the Honorable Jerrold Nadler, 
        Chair of the Committee on the Judiciary from the State of 
        New York
    A letter to the Honorable Jim Jordan, Ranking Member of the 
        Committee on the Judiciary from the State of Ohio, Aug. 
        19, 2021, from the Honorable Katherine C. Tai, U.S. Trade 
        Representative
    A report entitled, ``Overview of the Results of the 2023 
        Review of Notorious Markets for Counterfeiting and 
        Piracy,'' Jan. 30, 2024, Office of the United States 
        Trade Representative, Executive Office of the President
    A report entitled, ``2024 Special 301 Report,'' Apr. 25, 
        2024, Office of the United States Trade Representative, 
        Executive Office of the President
    A letter to the Honorable Katherine C. Tai, U.S. Trade 
        Representative, Feb. 13, 2024, from Jim Jordan, Chair of 
        the Committee on the Judiciary from the State of Ohio, 
        Darrell Issa, Chair of the Subcommittee on Courts, 
        Intellectual Property, and the Internet from the State of 
        California, and the following Members of the Subcommittee 
        on Courts, Intellectual Property, and the Internet, 
        Thomas Massie, Cliff Bentz, Lance Gooden, Nathaniel 
        Moran, Russell Fry, Scott Fitzgerald, Ben Cline, Kevin 
        Kiley, and Laurel M. Lee
    A letter to the Honorable David Johanson, Chair of the U.S. 
        International Trade Commission, Jul. 9, 2002, from the 
        Honorable Katherine C. Tai, U.S. Trade Representative
    A letter to the Honorable David Johanson, Chair of the U.S. 
        International Trade Commission, Dec. 16, 2022, from the 
        Honorable Katherine C. Tai, U.S. Trade Representative
    A document entitled, ``Ministerial Decision on the Trips 
        Agreement,'' Jun. 22, 2022, from the World Trade 
        Organization, The Ministerial Conference
    A report entitled, ``COVID-19 Diagnostics and Therapeutics: 
        Supply, Demand, and TRIPS Agreement Flexibilities,'' Oct. 
        2023, United States International Trade Commission
    A press release entitled, ``Readout of Ambassador Katherine 
        Tai's Virtual Meeting With India Minister of Commerce and 
        Industry Piyush Goyal,'' May 14, 2021, The Office of the 
        United States Trade Representative
    A press release entitled, ``Readout of Ambassador Katherine 
        Tai's Virtual Meeting With Minister Ebrahim Patel of 
        South Africa About Increasing Vaccine Production and 
        Combating the COVID-19 Pandemic,'' May 13, 2021, The 
        Office of the United States Trade Representative
    A press release entitled, ``Readout of Ambassador Katherine 
        Tai's Virtual Meeting With World Health Organization 
        Director General Tedros Adhanom Ghebreyesus,'' May 14, 
        2021, The Office of the United States Trade 
        Representative
    A letter to the Honorable Jim Jordan, Chair of the Committee 
        on the Judiciary from the State of Ohio, Apr. 3, 2024, 
        from the Honorable Katherine C. Tai, U.S. Trade 
        Representative
    A letter to the Honorable Jim Jordan, Chair of the Committee 
        on the Judiciary from the State of Ohio, Feb. 26, 2024, 
        from the Honorable Katherine C. Tai, U.S. Trade 
        Representative
    A press release entitled, ``Statement from Ambassador 
        Katherine Tai on an Intellectual Property Response to the 
        COVID-19 Pandemic,'' Jun. 17, 2022, the Honorable 
        Katherine C. Tai, U.S. Trade Representative
    A press release entitled, ``U.S. to Support Extension of 
        Deadline on WTO TRIPS Ministerial Decision; Requests 
        USITC Investigation to Provide More Data on COVID-19 
        Diagnostics and Therapeutics,'' Dec. 6, 2022, The Office 
        of the United States Trade Representative
    A redacted calendar excerpt from the Honorable Katherine C. 
        Tai, U.S. Trade Representative
    A letter to the Honorable Darrell Issa, Chair of the 
        Subcommittee on Courts, Intellectual Property, and the 
        Internet from the State of California, and the Honorable 
        Henry C. ``Hank'' Johnson, Ranking Member of the 
        Subcommittee on Courts, Intellectual Property, and the 
        Internet from the State of Georgia, May 14, 2024, from 
        Jeffrey P. Hardy, Director-General, Transnational 
        Alliance to Combat Illicit Trade
    A letter to the Honorable Darrell Issa, Chair of the 
        Subcommittee on Courts, Intellectual Property, and the 
        Internet from the State of California, and the Honorable 
        Henry C. ``Hank'' Johnson, Ranking Member of the 
        Subcommittee on Courts, Intellectual Property, and the 
        Internet from the State of Georgia, May 13, 2024, from 
        American Apparel & Footwear Association
    A letter to the Honorable Darrell Issa, Chair of the 
        Subcommittee on Courts, Intellectual Property, and the 
        Internet from the State of California, and the Honorable 
        Henry C. ``Hank'' Johnson, Ranking Member of the 
        Subcommittee on Courts, Intellectual Property, and the 
        Internet from the State of Georgia, May 7, 2024, from the 
        Global Innovation Policy Center, U.S. Chamber of Commerce
    A letter to the Subcommittee on Courts, Intellectual 
        Property, and the Internet, May 15, 2024, from the 
        Automotive Anti-Counterfeiting Council (A2C2)
    A letter to the Honorable Darrell Issa, Chair of the 
        Subcommittee on Courts, Intellectual Property, and the 
        Internet from the State of California, and the Honorable 
        Henry C. ``Hank'' Johnson, Ranking Member of the 
        Subcommittee on Courts, Intellectual Property, and the 
        Internet from the State of Georgia, May 23, 2024, from 
        the Partnership for SafeMedicines
    A letter to the Honorable Darrell Issa, Chair of the 
        Subcommittee on Courts, Intellectual Property, and the 
        Internet from the State of California, and the Honorable 
        Henry C. ``Hank'' Johnson, Ranking Member of the 
        Subcommittee on Courts, Intellectual Property, and the 
        Internet from the State of Georgia, May 14, 2024, from 
        the Transnational Alliance to Combat Illicit Trade 
        (TRACIT.ORG)

                 QUESTIONS AND RESPONSES FOR THE RECORD

Questions submitted by the Honorable Darrell Issa, Chair of the 
  Subcommittee on Courts, Intellectual Property, and the Internet 
  from the State of California, and the Honorable Ted Lieu, a 
  Member of the Subcommittee on Courts, Intellectual Property, 
  and the Internet from the State of California, for the record
  Questions to Michael Ball, Acting Assistant Director for the 
      Global Trade Devision, Homeland Security Investigations, 
      U.S. Department of Homeland Security
  Questions to Josh Goldfoot, Acting Deputy Assistant Attorney 
      General, Criminal Division, U.S. Department of Justice
Questions to Brandon Lord, Executive Director of Trade Policy and 
  Programs, U.S. Customs and Border Protection, U.S. Department 
  of Homeland Security, submitted by the Honorable Darrell Issa, 
  Chair of the Subcommittee on Courts, Intellectual Property, and 
  the Internet from the State of California
No responses at the time of publication

 
                  INTELLECTUAL PROPERTY: ENFORCEMENT  
                  ACTIVITIES BY THE EXECUTIVE BRANCH 

                              ----------                              


                          Tuesday, May 7, 2024

                        House of Representatives

           Subcommittee on Courts, Intellectual Property, and

                              the Internet

                       Committee on the Judiciary

                             Washington, DC

    The Subcommittee met, pursuant to notice, at 10:08 a.m., in 
Room 2141, Rayburn House Office Building, the Hon. Darrell Issa 
[Chair of the Subcommittee] presiding.
    Present: Representatives Issa, Massie, Fitzgerald, Bentz, 
Cline, Kiley, Moran, Lee, Fry, Johnson, Ross, Schiff, Lofgren, 
Dean, and Ivey.
    Mr. Issa. The Subcommittee will come to order.
    Without objection, the Chair is authorized to declare a 
recess at any time.
    We welcome everyone here today to a hearing on intellectual 
property enforcement activities by the Executive Branch. I will 
now recognize myself for an opening statement.
    The purpose of today's hearing is to scrutinize the Biden 
Administration's enforcement of existing intellectual property 
laws. Any comments made today about the current 
administration's enforcement does not imply the previous 
administrations were somehow flawless. I want to make it clear; 
this is a snapshot in time, but it's an important snapshot in 
time.
    IP is the foundation of our Nation's economy, creativity, 
and innovation. Annual losses due to lack of enforcement are 
costing the American economy nearly $1 trillion. It is 
estimated to be over $715 billion; I believe that is an 
understatement.
    As far back as 2017, the cost of counterfeiting copyrighted 
and pirated software and the theft of trade secrets in the U.S. 
was estimated to be between $225 billion and $600 billion. 
Unsurprisingly, the People's Republic of China is the lead 
culprit. Last year, more than half of Customs and Border 
Protection's total seizures of goods came from the People's 
Republic of China and their captive satellite Hong Kong. These 
seizures accounted for 80 percent of the value of all IP 
infringing goods that were seized.
    China is not only flooding the market, but the CBP with its 
de minimis exception parcels finds itself with more than one 
billion parcels. There is not enough money in the Treasury to 
search one billion parcels properly, particularly when we don't 
know what's in them. Yet, despite these significant economic 
and security threats, there has been a steady decrease in 
enforcement actions and prosecutions under the current 
administration.
    In 2023, the Department of Justice filed only one copyright 
piracy case. By the way, I had to correct that from two. I've 
had to cut in half the amazing performance. There has been a 
drop in IP-related seizures at the border. No surprise, they're 
busy with other issues. In fact, when you look at $1 trillion 
in an economy, it's meaningful. It's meaningful because, for 
example, the amount of theft from this country exceeds the 
entire Department of Defense budget.
    The current administration did not nominate a new head of 
the Intellectual Property Enforcement Coordinator until May 
2023, and has not pushed to have that position filled. As a 
matter of fact, it's one of the reasons that the nameplate is 
empty, is that the ``acting'' or ``doing on behalf of'' 
declined to come. Additionally, the U.S. Trade Representative 
declined to come.
    Underscoring these failures by the Biden Administration to 
prioritize IP are two empty chairs here this morning. I want to 
make it clear; we'll clear off the empty chairs. We just wanted 
to make it clear that we appreciate the people who are here. We 
appreciate your being here. Your testimony is important. We all 
know that you're not the problem, but you're here to explain 
what the problem is and how we can work together on solutions.
    With that, I would recognize the Ranking Member of the 
Subcommittee.
    Mr. Johnson. Thank you, Mr. Chair. I'd like to start by 
thanking you for convening this important hearing. The agencies 
represented here today are on the front lines of preventing 
piracy, keeping counterfeits off the market, and securing our 
businesses' trade secrets. It's important that we, as one of 
the Committees responsible for their oversight, have the 
opportunity to engage them about their work.
    It is one of the quirks of our intellectual property system 
that, in many cases, it's up to the IP owners themselves to 
enforce their rights. If an individual holds a copyright 
trademark or patent, that intellectual property is worth very 
little unless they police it themselves. An individual can hold 
a patent, for example, but that patent is only as good as its 
owner's ability to enforce it in a court of law.
    Some IP protections, however, are also policed by the 
Federal Government. Customs and Border Protection prevents 
products that violate our intellectual property laws from 
entering the country; Homeland Security Investigations, through 
its IPR center, works across nations and with international 
governmental agencies to prevent theft of American IP; and the 
Department of Justice, through its investigators at the FBI and 
prosecutors with CCIPS, investigates and prosecutes 
intellectual property cases ranging from piracy of e-books to 
trade secret theft at the highest levels of American business.
    Their work is essential to our economic competitiveness in 
the United States. Just last month, an article in Bloomberg 
declared that my home State of Georgia, quote, ``is booming 
like it never did before Joe Biden became the 46th President.'' 
That is in part because of our strong IP protections for 
creators, innovators, and artists, including those who call the 
Atlanta area home.
    Enforcement of intellectual property protections helps more 
than just our economy; it also keeps consumers safe. 
Counterfeit products can pose real dangers to Americans. 
Imagine learning that your car is equipped with an airbag that 
wasn't manufactured to American safety standards, or that the 
moisturizer you just bought, the makeup you applied, or even 
the pills you took for a medical condition were made with cheap 
toxic chemicals, or that the batteries you bought on an e-
commerce site might start a fire in your home.
    When counterfeit products slip through the cracks, these 
dangers become all too real. In many cases, consumers, 
manufacturers, and online marketplaces don't even know that the 
products are counterfeit until it's too late. I'm looking 
forward to hearing from our witnesses how their agencies are 
working to prevent counterfeits and pirated goods from entering 
our stream of commerce, including managing the increase in de 
minimis shipments from e-commerce sites and scaling up 
enforcement by adopting AI-driven systems.
    Another threat to consumers comes from cybersecurity risks 
posed by digital piracy. Today, it is all too easy to 
unwittingly download a file from an illegal source or click on 
the wrong links for a live-streamed cultural or athletic event. 
Then there is the economic harm associated with piracy. 
According to recent estimates from the U.S. Chamber of 
Commerce's Global Innovation Policy Center, digital piracy and 
illegal streaming services cost our economy about $30 billion 
per year in lost revenue.
    The work these agencies do to prevent online piracy helps 
keep our economy strong, and I'm looking forward to hearing 
from our witnesses about recent successes of taking down 
pirated streaming operations and how they plan to increase 
enforcement of copyright piracy.
    The agencies represented today are staffed with dedicated 
and capable public servants, but the challenges they confront 
cannot be solved by the American government alone. It is 
crucial that we work together with other governments and their 
law enforcement agencies to combat the real dangers of IP theft 
to the health of our economy and the safety of our citizens.
    Finally, I appreciate that we often work in a bipartisan 
nature on this Subcommittee. Our work reaffirms the principle 
that we do not need to agree on everything to get some good 
work done. Putting these empty chairs here appears more 
political theater than good, honest policymaking or oversight. 
Because the Senate has not yet confirmed an IPEC--and I 
encourage them to confirm Ms. Robinson's nomination as soon as 
possible--there is no one available to appear here.
    With regard to USTR, Congress has a responsibility to 
accommodate the Executive Branch. Stunts like this make the 
back and forth harder, not easier, and I would advise against 
it in future hearings. It's my hope that we on this Committee 
can do our part to safeguard intellectual property, continue 
our trend of strong economic growth, and keep consumers safe.
    I thank the witnesses for appearing today, and I yield back 
the remainder of my time.
    Mr. Issa. I thank the gentleman.
    We now recognize the Ranking Member of the Full Committee, 
Mr. Nadler.
    Mr. Nadler. Thank you, Mr. Chair. Mr. Chair, intellectual 
property in the United States at its core is the right to own 
an idea. The power of IP is not in the individual movie, the 
chemical compound, or the store sign--though they certainly 
have value--but in the exclusive authority to reproduce their 
protective content. Because it is difficult to put most 
creations in the stream of commerce while also keeping them 
under lock and key, the enforcement of IP protections is key to 
the success of our system.
    If the ideas we protect are easily stolen, then they hold 
no value. If copyrights, trademarks, and patents have no value, 
then the American system cannot encourage innovation, protect 
consumers, help drive economic growth, and keep our country 
safe.
    Responsibility for IP investigation, enforcement, and 
prosecution is spread across multiple agencies within the 
Executive Branch. The Computer Crime and Intellectual Property 
Section at the Department of Justice is responsible for 
protecting American businesses by stopping copyright piracy, 
prosecuting trademark violations, and preventing economic 
espionage.
    The National Intellectual Property Rights Coordination 
Center, or the IPR Center, within the Homeland Security 
Investigations Branch at DHS acts as a hub for all its 
enforcement activities, combining regulatory, civil, and 
criminal authorities to execute a mission that varies from 
investigation of crimes to educating the public about IP theft.
    Finally, Customs and Border Protection enforces our laws at 
our ports of entry, inspecting packages and shipments for 
counterfeit goods, and collaborating with other agencies leads 
to shut down IP violators operating overseas.
    Our witnesses today represent these agency departments 
tasked with Federal enforcement of our IP system. Their 
authority is clearly broad and wide ranging, from enhancing 
cybersecurity and stopping copyright piracy, to counterfeit 
enforcement and protection of trade secrets. Recent 
technological innovations have further complicated this already 
complex web of enforcement responsibilities.
    The widespread availability of 3D printing to create 
counterfeit goods of artificial intelligence to replicate 
copyrighted works and advanced technology to make pirated live 
streams available to living rooms around the world have all 
made it harder to protect Americans' creative works.
    Technology innovations that allow users to evade IP 
protections do not mean we are in a post-IP world. Far from it. 
America's leadership in AI, our flourishing research 
institutions, and our diverse creative communities show that 
strong intellectual property protections mean a healthy 
innovation ecosystem.
    As those who wish to take advantage of our IP system change 
how they do business, our approach to enforcement, too, must 
change. I'm particularly looking forward to hearing from our 
witnesses how the shift to selling counterfeit goods on e-
commerce platforms has affected their work. Over the past few 
years, violators have increasingly moved to e-commerce sites to 
ship counterfeit goods into the United States.
    This has been accompanied by a related change from larger 
shipments to smaller parcels containing counterfeits that are 
easier to evade detection. Between 2019 and 2022, those smaller 
mailings of counterfeits increase from a little over 400 
million to nearly 700 million shipments.
    I was glad to see recent data from the Biden Administration 
that HSI initiated 81 criminal investigations and conducted 94 
seizures related to its e-commerce enforcement operation in 
Fiscal Year 2023, preventing hundreds of thousands of dollars 
in counterfeit goods from reaching the market while also 
securing several indictments and convictions of bad actors.
    I am concerned, however, about the ongoing proliferation of 
counterfeit products available on e-commerce platforms, and I 
look forward to reintroducing my bill, the SHOP SAFE Act, with 
Chair Issa soon, which will further reduce the number of 
dangerous counterfeits online.
    While threats to Americans' intellectual property come from 
many different countries, including within the United States, 
the government of China prevents a persistent threat to our IP 
system. This reality underscores the importance of our patents, 
trademarks, and copyrights, not just to our creators and 
businesses, but to our national security overall.
    Over the last year, the Chair has held multiple hearings on 
the IP threat from the Chinese Government, and at every one I 
have emphasized the importance of protecting our system from 
Nation States seeking tactical advantage by violating our 
innovators' rights. At each of these hearings, however, I've 
also cautioned my colleagues that recognizing a threat from a 
foreign government is different from treating every citizen of 
that country as a threat.
    I was glad when the Biden Administration ended the China 
Initiative, which sought to target individuals based on where 
they were from rather than what they were doing. This strategy 
ruins successful careers while yielding no meaningful results, 
and I'm looking forward to hearing about DOJ's successful 
prosecutions since it changed its approach.
    Finally, it is imperative that the agencies responsible for 
the protection of our intellectual property rights can 
coordinate across agencies to maximize their effectiveness. The 
White House Intellectual Property Enforcement Coordinator, or 
IPEC, is tasked with coordinating a whole-of-government 
approach to the enforcement of IP rights.
    While the office continues to do good work, the Senate, 
unfortunately, has not yet confirmed President Biden's nominee 
for coordinator. I sincerely hope that Ms. Robinson's 
nomination is considered soon so that she can begin the 
important work of ensuring our IP laws are supported across the 
administration.
    I'd like to thank Chair Issa and Ranking Member Johnson for 
holding this important hearing, and I extend my appreciation to 
the witnesses for appearing before us today. I look forward to 
hearing how your agencies' activities fit into the larger 
picture of IP enforcement across the government and what 
resources you need to further prevent IP violations by those 
who seek to take advantage of our system and our creators.
    With that, Mr. Chair, I yield back.
    Mr. Issa. I thank the gentleman.
    Without objection, all their opening statements will be 
included in the record. It is now my honor to introduce our 
distinguished panel of witnesses.
    Mr. Michael Ball is the Acting Assistant Director for 
Homeland Security Investigations, or HSI, Global Trade Division 
at the Department of Homeland Security. In this role, Mr. Ball 
oversees operational activities of HSI and GTD's national 
program related to trade enforcement and intellectual property 
and counterfeit proliferation investigations. He also serves as 
the Acting Director of the National Intellectual Property 
Rights Coordination Center.
    We also have here Mr. Josh Goldfoot. Mr. Goldfoot is the 
Acting Deputy Assistant Attorney in the Department of Justice 
Criminal Division where he supervises criminal division 
Computer Crime and Intellectual Property Section and the Child 
Exploitation Obscenity Section. He has previously served as the 
Principal Deputy Secretary--or Principal Deputy Chief of the 
Computer Crime and Intellectual Property Section for eight 
years and served as Deputy Chief for Cyber Policy in DOJ's 
National Security Division for three years before that. 
Welcome.
    Mr. Brandon Lord is the Executive Director of the U.S. 
Customs and Border Protection, or CBP, trade policy and 
programs directorate. In that role, he is responsible for 
policy enforcement priorities and stakeholder outreach related 
to CBP's priority trade issues. He also oversees the 21st 
Century Customs Framework Initiative and two ongoing pilots, 
the Section 321 Data Pilot and Entry Type 86 Test, which cover 
the review of what we will refer to repeatedly today as de 
minimis e-commerce shipments.
    Not present, and regrettably, the Intellectual Property 
Enforcement Coordinator. Although the Office of Intellectual 
Property Enforcement Coordinator is critical and exists for a 
reason, no one was nominated for the first three years of the 
administration, and when nominated the nominee has not been 
confirmed. For that period of time, there has been an 
``acting'' or ``performing duties as'' who declined to come, 
stating that they were career professionals and inappropriate.
    I might note for my Members here on both sides of the aisle 
that we have two actings here. This Committee does not assume 
that we can have somebody who has been confirmed, when no one 
is confirmed, we take the acting or the person most 
knowledgeable and we take them as prepared to answer the 
questions and, by the way, as dedicate public servants who 
deserve to be in that position.
    Last, with great disappointment, the U.S. Trade 
Representative declined to be here. We had many important 
questions, some of which I will now ask for unanimous consent 
that these public documents be placed in the record. That stack 
of them is sitting there on the empty chair.
    Without objection, so ordered.
    These documents were the only ones we could glean, but they 
do include important information that we wanted to ask about, 
including the trip's waiver. Items that USTR has authority over 
that does affect the ability for countries to, in fact, 
participate in a way that can undermine the work of the other 
three witnesses here. Those would not have been the only 
questions, but within our jurisdiction they would've been the 
ones that we were most interested in.
    So, I would ask the staff to remove the name tags of the 
individuals who were not able to be here and would ask the 
three witnesses to rise and take the oath.
    Do you solemnly swear under penalty of perjury that the 
testimony you are about to give is true and correct to the best 
of your knowledge, information, and belief, so help you God?
    Thank you. Please be seated.
    Let the record reflect that all witnesses answered in the 
affirmative.
    For the witnesses, please know that your written testimony 
will be placed in the record in its entirety, so that gives you 
the ability to read your statement or summarize or even go off 
message, but please try to stay as close as you can to the 
five-minutes so we can get to a round of questioning.
    With that, Mr. Ball is recognized for his opening--or for 
his--yes, his five-minute opening statement.

                   STATEMENT OF MICHAEL BALL

    Mr. Ball. Thank you, sir. Chair Issa, Ranking Member 
Johnson, and distinguished Members of this Committee, on behalf 
of the National Intellectual Property Rights Coordination 
Center, thank you for the opportunity to testify before this 
Committee.
    Homeland Security Investigations, formed by the Homeland 
Security Act in 2002, is the largest investigative component of 
the Department of Homeland Security, empowered with broad legal 
authority to conduct Federal criminal investigations into the 
illegal cross-border movement of people, goods, money, 
technology, and other contraband throughout the United States. 
With the authority to enforce more than 400 Federal statutes, 
HSI investigates, disrupts, and dismantles transnational 
criminal organizations and national security threats seeking to 
exploit the customs and immigration laws of the United States.
    HSI's footprint extends toward the 6,800 special agents 
assigned to 235 domestic field offices and more than 90 
international offices in more than 50 countries. HSI's 
international presence is the largest within DHS and enables 
HSI investigations to reach beyond our borders. HSI's cadre of 
internationally deployed special agents, criminal analysts, and 
mission support personnel work alongside locally employed staff 
and foreign law enforcement partners to advance the HSI and DHS 
mission around the world.
    I serve as the Acting Assistant Director of HSI's Global 
Trade Division. The Global Trade Division provides oversight 
and support for criminal investigations of U.S. import and 
export laws to ensure national security, protect the public's 
health and safety, stop predatory and illegal trade practices, 
and prevent sensitive U.S. technologies or weapons from 
reaching transnational criminal organizations and foreign 
adversaries.
    I also serve as the Acting Director of the National IPR 
Center. The IPR Center leads the Federal Government's efforts 
to enforce international trade laws and to stop global 
intellectual property theft.
    In Fiscal Year 2023, HSI initiated 623 cases, 434 criminal 
arrests, obtained 327 indictments, and 206 convictions related 
solely to IP theft and commercial fraud. The IPR Center 
disrupts and dismantles criminal networks using a whole-of-
government approach, including interdiction, investigation, and 
outreach and training.
    Created in 2000 and codified with the Trade Facilitation 
and Trade Enforcement Act of 2015, or TFTEA, the IPR Center is 
responsible for coordinating the Federal Government's 
enforcement on our IP laws. The IPR Center focuses on criminal 
investigations impacting health and safety, national security, 
and the U.S. economy.
    We have programs dedicated to addressing counterfeit 
pharmaceuticals and medical devices, consumer electronics and 
technology, automotive parts, luxury goods, apparel, cosmetics, 
and digital piracy. We also identify and investigate 
counterfeits in the U.S. Government supply chain with an 
emphasis on counterfeit microelectronics in the DOD supply 
chain.
    Together with IP administrative and regulatory agencies, 
including the U.S. Patent and Trademark Office, the IPR Center 
stands at the forefront of IP enforcement. The IPR Center 
structure leverages the authorities, resources, and skills of 
each participating agency. The IPR Center is headed by HSI with 
deputy directors from HSI, CBP, and the FBI. Each of the 
agencies represented at the IPR Center bring their unique 
authorities, jurisdictions, and culture together to coordinate 
a whole-of-government IP approach.
    The key to the IPR Center's operating model is our 
partnerships. We partner with Federal agencies including DOJ, 
Department of Commerce, State Department, Food and Drug 
Administrations, Veterans Affairs, DOD, and many others. We 
also partner with international law enforcement agencies, 
academic institutions, and private industry. While each 
partnership is unique, the goal is always to enhance each 
organization's capabilities in furtherance of investigative 
case support, training, and outreach.
    Outside of our Federal and international law enforcement 
partners, the IPR Center maintains robust partnerships and 
significant engagement with private industry, a range of 
industry leaders and industry associations. Protecting IP is a 
global problem that requires a whole-of-government approach, 
strong partnerships with private industry, and continued 
collaboration with academic and public partners. HSI and the 
IPR Center are on the forefront of IP enforcement, leveraging 
the strengths of our partners to constantly adapt to the 
evolving tactics of transnational criminal organizations.
    I welcome your questions. Thank you.
    [The prepared statement of Mr. Ball follows:]
    
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    Mr. Issa. I thank the gentleman. Mr. Goldfoot.

                   STATEMENT OF JOSH GOLDFOOT

    Mr. Goldfoot. Good morning, Chair Issa, Ranking Member 
Johnson, and the Members of the Subcommittee. My name is Josh 
Goldfoot, and I am Acting Deputy Assistant Attorney General in 
the criminal division of the Department of Justice. Thank you 
for the opportunity to testify today about the important work 
of intellectual property enforcement in the Department of 
Justice.
    I'll say, it's also an honor to be here today with Mr. Ball 
and Mr. Lord, two representatives of agencies we work with so 
much in enforcing intellectual property laws.
    The core responsibility of the criminal division is to 
ensure the enforcement of the U.S. law through effective 
prosecutions, to vindicate the interests of the public, and to 
deter unlawful conduct. The criminal division prosecutes all 
Federal crimes not otherwise specifically assigned to other 
divisions. The Computer Crime and Intellectual Property 
Section, which is abbreviated CCIPS, and we pronounce it CCIPS, 
is a section within the criminal division, and it executes the 
criminal division's work in enforcing intellectual property 
statutes.
    The members of the IP team at CCIPS prosecute criminal IP 
cases, as well as serve as a source of expertise for other 
prosecutors, including more than 260 computer hacking and 
intellectual property AUSAs and investigators across the 
country. CCIPS works closely with the investigative partners at 
the National Intellectual Property Rights Coordination Center 
to coordinate among multiple jurisdictions in complex IP 
matters.
    The internet and the globalization of trade make IP crime 
truly a global problem. To counter the problem of international 
IP crime, the Department focuses additional resources funded by 
the Department of State on international engagement, including 
developing relationships and engaging in cooperative 
enforcement efforts with foreign law enforcement agencies, 
supporting training, case-based mentoring, and other capacity 
building where appropriate.
    Central to the Department's international efforts on IP 
enforcement is the International Computer Hacking and 
Intellectual Property program, or ICHIP program, a network of 
Federal prosecutors with expertise in IP crime and other high-
tech legal issues stationed in U.S. missions in key regions 
around the world, and supported by U.S.-based legal experts 
specializing in internet fraud and public health, illicit 
markets, cryptocurrency, as well as digital forensics experts 
and CCIPS's Cybercrime Lab.
    While IP is a key driver of the U.S. economy across many 
sectors, some technologies protected by IP rights have national 
security implications that warrant extra attention. The 
Department, led by my colleagues in the National Security 
Division, takes a multipronged approach to identify and counter 
Nation State threats to U.S. IP and technology that affect U.S. 
security interests. The criminal division works with the 
National Security Division to advise on trade secrets and 
economic espionage cases and prioritize those with an 
international or Nation State connection.
    In February 2023, the deputy attorney general announced the 
creation of the Department's Disruptive Technology Strike 
Force, a partnership between the Department of Justice and the 
Department of Commerce, designed to enforce U.S. laws 
protecting U.S. advanced technologies from illegal acquisition 
and use by nation-state adversaries.
    Under the leadership of the Department's National Security 
Division and the Department of Commerce's Bureau of Industry 
and Security, the strike force brings together experts 
throughout government, including the FBI, Homeland Security 
Investigations, Defense Criminal Investigative Service, and 17 
U.S. Attorney's Offices in metropolitan regions across the 
country to target illicit actors, strengthen supply chains, and 
protect critical technological assets from being acquired or 
used by nation-state adversaries.
    In conclusion, the Department appreciates the opportunity 
to present information about the ongoing efforts to protect IP 
rights both within the Department and in collaboration with the 
other agencies represented here today, and I'll be happy to 
answer any questions you have.
    [The prepared statement of Mr. Goldfoot follows:]
    
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    Mr. Issa. Thank you. Mr. Lord.

                   STATEMENT OF BRANDON LORD

    Mr. Lord. Good morning. Chair Issa, Ranking Member Johnson, 
and distinguished Members of the Subcommittee, thank you for 
the opportunity to appear today to discuss U.S. Customs and 
Border Protection's role in enforcing intellectual property 
rights, or IPR. I am proud to represent the nearly 30,000 CBP 
officers, trade specialists, and others who enforce U.S. trade 
laws and protect our national and economic security.
    Trade in counterfeit and pirated goods threatens America's 
economy and industry, the livelihood of U.S. workers, and, in 
some cases, national security and the health and safety of 
consumers. By some estimates, counterfeits, counterfeit 
products cause over 70 deaths and 350,000 serious injuries 
every year. Furthermore, trading these illegitimate goods is 
frequently linked to smuggling and other criminal activities. 
That's why CBP has designated intellectual property rights as a 
priority trade issue since 2007. Last fiscal year, CBP seized 
and destroyed over 23 million counterfeit items valued at $2.7 
billion had they, in fact, been genuine. CBP is on pace to 
achieve similar results this fiscal year.
    CBP performs its IPR enforcement mission in a challenging 
and dynamic trade environment. Increasing volumes of small 
packages valued under the $800 de minimis threshold has 
significantly altered the dynamic of the international trade 
environment and CBP's intellectual property rights enforcement 
approach. Small packages arriving at our seaports, airports, 
and land border ports of entry pose the same health, safety, 
and economic security risks as traditional containerized 
shipments, but the volume is higher and growing.
    The 600 million small packages that CBP processed in Fiscal 
Year 2022 increased to more than one billion in Fiscal Year 
2023, and now, today, CBP is processing close to four million 
small packages every day across the Nation. These numbers are 
even more significant considering 90 percent of our 
intellectual property rights-related seizures in Fiscal Year 
2023 occurred in the small package environment.
    For all imports, from de minimis packages to traditional 
containerized cargo, CBP enforces hundreds of U.S. trade laws 
and regulations on behalf of over 45 different U.S. Federal 
agencies by applying our advanced targeting capabilities, 
collaborating with Homeland Security Investigations and other 
government partners, and engaging industry stakeholders.
    Partnerships and information sharing are the cornerstones 
of CBP's IPR enforcement strategy. For example, CBP has an 
integral role in the IPR Center. In addition to my position at 
CBP, I serve as one of three deputy directors at the IPR Center 
where my staff works side by side with our colleagues at HSI 
and 30 additional partners to strengthen our joint enforcement 
efforts. Collaboration between the IPR Center and the CBP ports 
of entry generated thousands of IPR-related case leads last 
year for potential criminal investigation.
    We also work very closely with private industry. Thanks to 
the support of Congress, the Trade Facilitation and Trade 
Enforcement Act of 2015 expanded CBP's authorities to allow 
direct engagement with intellectual property rights holders to 
verify the authenticity of imported products that CBP 
encounters. This capability has been a powerful tool for 
protecting the owners of intellectual property and stopping 
counterfeit products from entering the United States.
    Building on our current authorities and capabilities, CBP 
is working in close coordination with Congress and our trade 
stakeholders to advance its 21st Century Customs Framework 
Initiative, commonly referred to as 21 CCF, to ensure the 
agency is positioned to address these evolving trade 
enforcement challenges. Information sharing and activity proven 
to be a vital tool for trade enforcement is a central pillar of 
this initiative.
    The 21 CCF includes a statutory concept that would 
authorize CBP to share additional information with private 
industry beyond a shipment-specific event to better identify 
and track illicit sellers who use online marketplaces to import 
IPR infringing goods into the United States. The 21 CCF 
initiative also pursues several other concepts that would allow 
for more efficient seizure and disposition of IPR violative 
goods in the de minimis shipment environment and stricter 
penalties for noncompliance.
    In all shipping environments, CBP is committed to 
protecting businesses and consumers from the health and safety 
and economic risks associated with IPR violations. CBP will 
continue to collaborate with Congress and our government and 
private industry partners to identify workable solutions to IPR 
enforcement challenges.
    Chair Issa, Ranking Member Johnson, and distinguished 
Members of the Subcommittee, thank you for your continued 
support of CBP's trade enforcement mission.
    I look forward to your questions.
    [The prepared statement of Mr. Lord follows:]
    
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    Mr. Issa. Thank you. I'll now recognize myself for a quick 
round of questioning.
    Mr. Lord, from your experience, you gave us $3 billion--
nearly $3 billion of seizures, 23 million seizures, some of 
which were in the de minimis, but most, I assume, were in 
larger shipments. Is that correct?
    Mr. Lord. No, sir. Actually, the 90 percent of our 
intellectual property rights seizures did occur in the de 
minimis environment.
    Mr. Issa. So, the de minimis environment, the $800, or at 
least alleged to be $800 in value, because if they're true 
Louis Vuittons, they would be more than that for just one. Is 
that correct?
    Mr. Lord. Thank you for the question, sir. I'm not 100 
percent familiar with the going price for a Louis Vuitton bag. 
My wife might be better at that. Yes, if the bag as a genuine 
article is, in fact, valued at more than $800, it would not be 
eligible for de minimis.
    Mr. Issa. So, when these come in at $800, sometimes they 
actually are more than $800 selling price but that's what they 
claim. The reality is this is a backdoor and abusive system 
that particularly China has figured out and is gaming to the 
tune of one billion parcels a year.
    Mr. Lord. Well, Chair, I would just start by saying, in the 
environment we see today, the average declared value of a 
shipment is $50. The vast majority of shipments are declared 
well under $100. So, while we see shipments that are declared 
higher dollar value, and there certainly are instances of 
legitimate shipments being valued over--being well valued over 
$800 but being declared under $800, the vast majority of what 
we see from a value perspective is, in fact, much, much less 
than $800.
    Mr. Issa. So, to fix this we have to deal not at going from 
$800--$400 or $200, we have to deal with the fact that a $50 or 
$100 declared value is, in fact, very, very often, and I'll use 
that fake Louis Vuitton as an example, but it could be a fake 
Rolex. It could be any number--it could be, as the Ranking 
Member said, ``counterfeit cosmetics that literally can burn 
your face.'' It could be any of that.
    Mr. Lord. That's correct.
    Mr. Issa. So, this is iclearly a backdoor, something that 
you do not have the authority to change, only Congress does. Is 
that correct?
    Mr. Lord. That is correct. We're looking at other ways, 
sir, to better manage that risk environment. It is, at close to 
four million small packages a day. It is an area of concern for 
us. We're looking at making changes to our regulatory 
environment as well as making investments in key infrastructure 
and technology to help us better manage them.
    Mr. Issa. Let me ask one quick question. It may tax some of 
the expertise, but it's a potential solution. As somebody who 
shipped to and from around the world for years and sometimes 
using Speed Post and other systems that offer that de minimis 
opportunity. If you were given the authority not only to reduce 
the amount, but also to create two categories, known shipper, 
meaning the shipper of de minimis who has been cleared, who has 
that responsibility because they do ship, for example, to 
Amazon regularly or whatever, and then concentrate on those who 
are not, if you will, a trusted shipper, would that help in 
your authority if Congress gave you that specific opportunity?
    Mr. Lord. Well, thank you, Congressman. I would start by 
just saying given the very real economic benefits of the de 
minimis exception, I'm not sure as a law enforcement agency 
we're best placed to make the decision as to what the dollar 
value should or should not be in that environment.
    Regarding the known shipper idea, that is an idea that we 
are looking at internally. The challenge in the environment, 
without spending too much time on it, sir, is its very low 
barriers to enter as an overseas shipper, very low incentive to 
learn our laws, customs regulations, requirements, and the cost 
of being caught is too low to deter bad behavior.
    So, what that means is, the minute you figure out somebody 
might be trusted, or somebody might be a violative shipper, 
they may disappear tomorrow and reconstitute as a completely 
different entity. Since this is all overseas, it does pose an 
enforcement challenge.
    Mr. Issa. I appreciate that.
    Mr. Ball, I apologize for not having time to ask all of you 
questions.
    Mr. Goldfoot, my round of questioning in any additional 
time I have will really concentrate on, why are there so few 
prosecutions in this area? Are they incredibly difficult? I'll 
just give you a quick example--hopefully a quick answer--I was 
a shipper. I was an importer. My products came from Hong Kong 
and Taiwan almost exclusively from Taiwan. Fake Viper Security 
Systems came in from South Korea. They were discovered inside 
what was purported to be garments, they had no business being 
in to begin with.
    I was able to get the seizure of it. I was able to get 
Customs and Border to eventually destroy them. I was even able 
to get one sample so I could verify that not only was it not 
mine, it hadn't been transshipped, but the Korean manufacturer, 
who he was and so on. We knew who the Korean manufacturer was. 
We turned that over. Of course, they knew where the product was 
going. There was no prosecution.
    So, I ask you today, because this is an old one, but it 
obviously is still happening, why is it you do not routinely 
send the FBI or other agencies to the recipient of large 
counterfeit shipments and followup with prosecution more often 
than the records indicate?
    Mr. Goldfoot. Thank you for the question. So, I think your 
question also hints at some of the answers, which is to say 
that these cases can be quite complex. While it is one thing to 
detect at the border that goods are counterfeit, cease them and 
dispose of them appropriately, identifying a defendant with 
whom we can charge with counterfeit with proof beyond a 
reasonable doubt, getting that defendant into court, 
particularly if they're in Korea or some other foreign 
jurisdiction, requires considerable resources.
    Mr. Issa. My question was actually as to the recipient. If 
you don't mind, we'll focus on that.
    Mr. Goldfoot. As to the recipient specifically.
    Mr. Issa. The buyer.
    Mr. Goldfoot. Thank you, sir, for the clarification. Here, 
again, there could be some difficulty in identifying all the 
necessary elements of the case, such as that the recipient 
understood what they were bringing in. Let me speak more 
broadly of how we're spending our resources. Given the 
resources we have, we are prioritizing cases in trademark and 
counterfeiting that affect health and safety issues.
    For example, a case I like to think of, we did, I think 
about two years ago, it was two individuals from Ukraine, 
Maksym Nienadov and Volodymyr Nikolaienko, both ran a company 
called Healthy Nation. This company was importing counterfeit 
cancer medicine into the United States. These were pills that 
were marked as though they were legitimate cancer medicine, but 
they had inactive ingredients. They did nothing. Unsuspecting 
Americans were receiving this counterfeit medication, taking 
it, hoping to treat their cancer, and there were disastrous 
results.
    We focus on cases like that. We focus on a case like the 
one we sentenced last week, Mr. Aksoy, who was selling 
counterfeit Cisco routers. These routers were being sold to 
hospitals, to government installations, and they were 
counterfeit. They didn't work or they didn't work longer than a 
few days. They were patchy things that the actual company would 
never sell. You can imagine the threat to the health and public 
safety that occurs from those.
    So, I think you and I agree, I would like to see more 
counterfeit prosecutions as well. I think probably anyone who 
works in law enforcement, if you ask him or her, are you 
satisfied with the amount of cases you're doing, whether it's 
IP or some other field, we'll say no. Given the resources we 
have, we're looking to create the maximum benefit for the 
American people.
    Mr. Issa. Thank you. Mr. Johnson.
    Mr. Johnson. Thank you, Mr. Chair.
    Let me say straight out that this Subcommittee has been 
very unique, in terms of the Judiciary Committee, in that the 
leadership of the Committee has always been--the leadership of 
the Subcommittee has always been open, forthright, and 
apolitical when it comes to the operations of this 
Subcommittee. So, I made some comments about the empty chairs 
here this morning. I'll note that the markings for the empty 
chairs have been removed, and that's a testament to the good 
faith of the Chair of this Committee, who sometimes can be 
misunderstood in terms of his actions, but nothing that 
communication cannot cure. So, I appreciate the Chair.
    Mr. Lord, in your written statement, you discuss the 
increase in the use of de minimis administrative exemptions to 
reach consumers directly, including over one billion shipments, 
and those are coming in at the rate of four million per day, as 
you've said, that are processed by CBP in Fiscal Year 2023 
alone. Can you walk us through how e-commerce sites are driving 
an increase in these smaller shipments?
    Mr. Lord. Thank you, Ranking Member. I appreciate the 
question. I would just begin by saying we actually believe the 
internet writ large is driving this increase. You can go to 
almost any retailer or any website and order something. Maybe 
it's online--maybe it's on Marketplace, maybe it's a favorite 
clothing brand and that gets shipped direct to your house from 
overseas, oftentimes with the American consumer not knowing 
that it originated from overseas.
    Having said all that, sir, the challenge that we face with 
online marketplaces is that it's very easy to sign up as a 
seller on those online marketplaces, as a foreign seller. I'm 
talking about foreign sellers only. I'm not talking about U.S. 
citizens selling. Foreign sellers selling on these online 
marketplaces. It's at a low cost. There's oftentimes little, if 
any, guidance given on what the expectations are to comply with 
U.S. laws, especially if you're shipping a product that might 
be regulated, say, by the Consumer Product Safety Commission or 
maybe the Food and Drug Administration. Then when that sale is 
made, it's very easy to just drop that into your country's post 
service or use another freight forwarder or logistics provider 
to move that into the country through the de minimis exemption.
    The last thing I would say that's challenging about that, 
too, is it's very easy for a foreign seller to take down their 
listing on an online marketplace, move to a different online 
marketplace, or even stay on the same online marketplace but 
just come back as a seemingly new or different entity. All that 
makes our targeting interdiction that much more difficult at 
the border.
    Mr. Johnson. Thank you.
    Mr. Ball, you've testified that HSI's innovation lab is 
using AI to enhance staff capabilities. Can you walk us through 
how AI is helping staff currently and how you see the 
technology being used in the future to expand your agency's 
reach?
    Mr. Ball. Yes, sir. It's a great question. So, the 
innovation lab within HSI is relatively unique in Federal law 
enforcement. It's an entity in our cyber and operational 
technology division dedicated to out-of-the-box thinking, using 
advanced technology to further criminal investigations.
    When I started working criminal investigations, I'm dating 
myself a bit here, when we would plan for a search warrant, 
we'd have to take into account renting a truck and getting hand 
trucks and boxes, moving file cabinets and boxes of paper to go 
through. Today that's not the case. You're dealing with 
terabytes and petabytes of data that are collected on search 
warrants or through other core processes that we have to sift 
through.
    The innovation lab is currently using AI technology to help 
criminal investigations sift through those core processes to 
identify items of evidence, things that we're looking for that 
are in that search warrant to take criminal investigations with 
the goal of taking those criminal investigations down from that 
aspect of it, from weeks, months, and numbers of people, now 
down to much shorter. So, we're very proud of the effort that 
we're using at this time.
    Mr. Johnson. Thank you.
    Mr. Chair, I've just about run out of time, so I'll yield 
back.
    Mr. Issa. Oh, I did run a little over.
    Mr. Johnson. Well, I know you did, but I'm not going to 
follow your abuse of precedence.
    Mr. Issa. I thank the gentleman for part of that.
    With that, we go to Mr. Fitzgerald.
    Mr. Fitzgerald. Thank you, Mr. Chair.
    Mr. Goldfoot, according to the Bureau of Justice 
Statistics, DOJ filed only six new trade secret theft cases in 
2022, as compared with over 91 cases filed between 2017 and 
2021. What are your thoughts on why that happened, why such a 
reduction?
    Mr. Goldfoot. Thank you for the question. So, I think when 
I look at trade secrets, the case statistics, I'm a little less 
concerned about fluctuations from year to year. I focus more on 
the impact of what we are doing and how we're using our 
resources to best serve the American people. What I mean by 
that is, trade secret cases are truly some of the most complex 
cases that I've seen worked on in the sections I supervise. 
These are cases that, in addition to the difficulties that come 
with being a white-collar case, typically also require the 
investigators and the prosecutors to become deeply familiar 
with the technology at issue, and sometimes that means mastery 
over not just the technology, but an entire industry that 
you've never heard of or worked on before.
    I think about a recent case we did involving the chemical 
lining on the inside of beverage containers, known as BPA free, 
and that was a trade secret that was stolen. The work involved 
in identifying that and preparing a case like that, not to 
mention the different proof issues involved with the trade 
secret statute, such as establishing all the aspects of the 
trade secret are maintained, the amount of preparation can be 
intense.
    Now, I think where you and I agree is the number is lower 
than it ought to be. I wish that we could be doing more of 
these cases. We're doing what we can with the resources that 
have been provided.
    Mr. Fitzgerald. So, coincidentally, in February 2022, when 
DOJ ended the China Initiative, do you think there's any 
relationship there because of the decline in prosecutions, 
maybe because of the trade secret theft, do you think this 
decline had anything to do with the elimination of the China 
Initiative?
    Mr. Goldfoot. Well, thank you for the question. I do not 
think the fluctuation of the statistics was caused by the end 
of the China Initiative. So, the China Initiative was--I should 
clarify, this was my colleagues in the National Security 
Division. I don't want to take credit for their work. They're 
continuing to do excellent work in this field.
    In February 2022, as you say, the Assistant Attorney 
General Olsen, at the same time that he canceled the China 
Initiative he launched a new initiative, the national strategy 
to counter nation-state threats. The same work as before, 
looking about China, the PRC's theft of American intellectual 
property, continues to be done under that present initiative 
and now also through the Destructive Technology Strike Force, 
which has been in effect for about a year.
    You can look at recent announcements out of the National 
Security Division. In March 2024, they announced one case of an 
arrest of an individual who was taking technology related to 
electric car batteries and planning to give that to a PRC-
related company. There was another case in March 2024, where 
someone attempted to steel files from Google related to 
artificial intelligence and give it to a PRC-related entity.
    So, I see the NSD's work in countering intellectual 
property theft to benefit the PRC continuing. What Assistant 
Attorney General Olsen said when he canceled the China 
Initiative is he was concerned that the name was giving people 
an incorrect impression that the Department was cutting corners 
in these cases, and he found that to be harmful to his 
prosecutor's work.
    Mr. Fitzgerald. Thank you. I'm going to sneak in one more 
question here.
    I'm concerned with the amount of counterfeit goods coming 
into the United States under de minimis, which we talked about 
before. Mr. Lord, how are they leveraging the National 
Intellectual Property Rights Coordination Center when it comes 
to specifically vaping products, which has suddenly risen in 
overall concern about some of the knockoffs that you're seeing 
globally right now? Can you talk about that very specific 
subject?
    Mr. Lord. Happy to, Congressman, and thank you for the 
question. Our approach to vaping products in the de minimis 
space is very similar to what we do with other products. So 
anytime our officers at port of entry makes an interdiction or 
detain a good, they do two things:
    First, they call the partner or government agency that 
might regulate that product, in the case of vaping products, 
that's the Food and Drug Administration, to get some advice on 
what to do, what should the ultimate disposition of that 
product be.
    Second, of course, we have our special agents from Homeland 
Security Investigations at all our ports of entry where these 
goods are coming in, and they'll alert HSI if we, in fact, do 
make a seizure of those goods. That work that starts at that 
port of entry then moves up to the National IPR Center as 
appropriate based on sometimes it's--most of the time it's a 
pattern of seizures, right, that might speak to certain means, 
methods, and tactics that warrant a more specific criminal 
investigation or additional action by the other government 
agencies that are at the IPR Center.
    Mr. Fitzgerald. Very good. Thank you. I yield back.
    Mr. Issa. I thank the gentleman.
    We now go to the Ranking Member of the Full Committee, Mr. 
Nadler, for five minutes.
    Mr. Nadler. Thank you, Mr. Chair.
    Mr. Ball, last year, HSI opened 81 criminal investigations 
through its e-commerce program, IOS. These operations included 
94 seizures with an estimated value of over $300,000. How does 
HSI in the IPR Center work with e-commerce platforms to prevent 
the intrusion of counterfeit goods into the stream of commerce?
    Mr. Ball. That's a great question, sir. We found early on 
in the flow of e-commerce, especially in the increase in de 
minimis, that we were running into an issue. One of the things 
that we do at the National Intellectual Property Rights Center 
is coordinate very well with industry. The major e-commerce 
platforms were encountering counterfeits and were encountering 
bad actors, but weren't talking to each other, worried about 
trade secrets, worried about bad publicity, and worried about 
things shifting from one to the other.
    We brought the four major platforms together, Amazon, eBay, 
Alibaba, and Wal-Mart, to create an e-commerce task force. This 
e-commerce working group we were able to use some great common 
practices and some best practices that we had used with the 
automotive industry, with the airbag issue, where they created 
an industry group called A2C2 that's extremely effective and 
bring that to bear on the e-commerce platforms.
    So, to date, they have agreed for a joint counsel, they 
have agreed to a third-party data contractor where they can 
share that information with each other, and then that 
information also flows to HSI for criminal investigations as 
well.
    Mr. Nadler. Thank you.
    Mr. Goldfoot, just a few months ago, in March, the GAO 
submitted their report to Congress with recommendations for 
stronger fraud risk management in the trademark system. The 
study found that in recent years there have been a growing 
number of trademark applications with false or inaccurate 
images of goods that are usually--that are not actually sold or 
used, making it more difficult for businesses to find unused 
trademarks.
    The GAO warns that, quote, ``As generative AI becomes more 
advanced, the potential for more sophisticated fraudulent 
activity could increase.'' Though the GAO primarily directs 
this warning to the PTO, it flags that it would be incumbent on 
the DOJ to pursue charges when the PTO discovers such instances 
of trademark fraud. Are you aware of the GAO's report, and how 
are you thinking about the use of generative AI to facilitate 
fraud?
    Mr. Goldfoot. Well, thank you, sir, for that question. I 
was not aware of the report you just described, but now that 
you've brought it to my attention, I'll absolutely look at 
that. I think we are looking at all the different ways that 
artificial intelligence changes the game in the enforcement of 
intellectual property laws.
    I think you can look at it from two different directions: 
(1) How does it make crime easier, such as the situation you 
describe where people are using generative AI to create 
meritless trademark filings? (2) We're within the Department of 
Justice looking at how we can use it to improve our own 
enterprise and improve our ability to go after intellectual 
property crime.
    Mr. Nadler. Thank you.
    Mr. Lord, in a 2018 study by the Department of Commerce, 
the authors discuss the introduction of counterfeit 
semiconductors, including chips infected with malware into the 
product supply chain for defense manufacturing and operations. 
Counterfeit chips are a significant concern for our national 
security, particularly because many of these products originate 
in China where multiple cyber intrusions against the United 
States have originated.
    Could you explain how infected chips affect our national 
security and what your agency is doing to prevent this problem 
from spreading?
    Mr. Lord. Thank you, Ranking Member. I appreciate the 
question.
    Yes, happy to explain. So, first and foremost, Customs and 
Border Protection works closely with private industry on such 
matters. It is very difficult to expect a CBP officer working 
at a port of entry to just be able to look at a semiconductor 
and make a decision on counterfeits, and that's why we lean 
heavily on our Donation Acceptance Program, which is an 
authority that Congress gave us in the Trade Facilitation and 
Trade Enforcement Act of 2015.
    What that program allows is for private sector industry to 
donate to CBP authentication devices. Cisco and Apple are two 
that have signed up for that program now and provide those 
devices to our officers at ports of entry to help make better 
determinations on authentication.
    In terms of the danger of getting into the military supply 
chain, we're regular participants through the IPR Center, an 
operation called Chain Reaction, which is entirely focused on 
keeping semiconductors out of sensitive supply chains.
    The Cisco case that Mr. Goldfoot referenced earlier came 
out of that very operation. CBP had a role in interdicting 
counterfeit shipments, identifying the means, methods, and 
tactics, referring that to the investigators, and then also 
participating in the search warrants that helped build that 
case.
    Mr. Nadler. Thank you.
    My time has expired. I yield back.
    Mr. Issa. I thank the gentleman.
    We now go to the gentleman from Oregon for five minutes, 
Mr. Bentz.
    Mr. Bentz. Thank you, Mr. Chair. Thank you, witnesses, for 
your testimony today.
    I'm looking at an article from Reuters, dated October 18, 
2023, where they say five countries came together, including 
the United States, Britain, Canada, Australia, and New Zealand, 
and made comments following meetings with private companies in 
the Silicon Valley. FBI Director Christopher Wray said,

        The unprecedented joint call was meant to confront the threat 
        China poses to innovation across the world. From quantum 
        technology and robotics to biotechnology and artificial 
        intelligence, China was stealing secrets in various sectors.

He goes on to say the incredible amount of theft--I'll just 
read the exact phrase.

        What makes this so challenging is all of the tools deployed in 
        tandem at a scale of the likes we have never seen.

Christopher Wray said,

        The officials called for private industry and academia to help 
        in countering those threats.

Chief among them which they said were artificial intelligence 
tools.

        We worry about AI as an amplifier for all sorts of misconduct.

Accusing China of stealing more personal and corporate data 
than any other Nation by orders of magnitude.
    Mr. Lord, so assuming that Mr. Wray is correct--I assume he 
is--how have you focused on China? Or you can share that--I'd 
hate to blame you, but how has your organization, following 
what Mr. Wray said, responded?
    Mr. Lord. Thank you, Congressman, for that question.
    I'm not familiar with the specific meeting that you 
referenced, sir. I'll be happy to look into it and have my 
staff look into it. What I can say, as a general matter, is a 
lot of what you described there often requires export of 
sensitive technologies from the United States. So, Customs and 
Border Protection works very closely with Congress' Bureau of 
Industry and Security, which is tasked with enforcing export of 
sensitive technology.
    Through that partnership, we do make interdictions at 
export when we get the correct information from the Bureau of 
Industry--
    Mr. Bentz. OK. I'm asking, are you focusing on China? 
That's my question. If so, are you prioritizing China? That's 
my question.
    Mr. Lord. OK. I apologize, sir.
    Yes, so we're responsible at import for managing all 
threats. In the context of IPR, well over 90 percent 
counterfeit goods come from China and Hong Kong. They're 
consistently named on the USTR Special 301 Report as a source 
for counterfeits. We are absolutely concerned about that 
threat, and it's something that we think about every day.
    Mr. Bentz. Mr. Ball, same question.
    Mr. Ball. Again, as my colleague said too, not being 
familiar with the interchange that you mentioned, I can tell 
you on that same line to go a couple of steps further. On the 
export of sensitive technology, this is part of what we do 
under his global trade; we have our counter proliferations 
investigations. Yes, to be very clear, we are focusing on 
China, on Russia, and on Iran on what's happening in those 
theatres.
    With the export of sensitive technologies, we have a 
wonderful working group, E2C2. It's our Export Enforcement 
Coordination Center, and we work hand-in-hand with DOJ and with 
the Department of Commerce using their strike force for 
prosecutions on those cases.
    Mr. Bentz. Let me shift to Mr. Goldfoot.
    Mr. Goldfoot, you mentioned some activity in this space. 
How much more do you think we should be doing than what you 
mentioned? The suggestion by Director Wray was that we're not 
doing enough. Do you agree? If so, what would you do in 
addition to what he has suggested?
    Mr. Goldfoot. Thank you for the question. It's a very 
interesting one and thank you also for repeating and amplifying 
Director Wray's comments about this.
    I think also, not only he, but the Office of ODNI in the 
annual threat report said, specifically, that,

        Beijing is seeking to increase its science and technologies 
        sector in part through the theft of intellectual property.

This is absolutely a concern within the Department of Justice. 
We're prioritizing that.
    Regarding your question of how much more should we do and 
what more should we be doing, I hesitate to describe the limit 
of how much we ought to be doing. In this field, as you see the 
amount of intelligence go by, you see information about the 
extent of the theft, it's just deeply concerning.
    As I've said before, if we had more resources, we would do 
more of these cases. We're interested in doing more of this. I 
also, having micro'd this, I want to emphasize that, within the 
Department of Justice, this work is primarily coordinated 
through my colleagues in the National Security Division, who 
treat intellectual property theft for the benefit of foreign 
nation-states alongside the other ways that foreign nation-
states are breaking our laws to advance themselves.
    Mr. Bentz. Thank you yield back.
    Mr. Issa. I thank the gentleman.
    We now go to the gentlelady from North Carolina, Ms. Ross, 
for her questions.
    Ms. Ross. Thank you, Mr. Chair and thank you to all the 
witnesses for being with us today.
    I'm really grateful that this Subcommittee has shown such a 
bipartisan interest in protecting American innovation. This 
hearing is yet another example of that focus and the work 
between the Chair and the Ranking Member.
    Criminal IP theft costs American innovators hundreds of 
billions of dollars every year. The 47 percent of brands have 
lost sales to counterfeit goods, a third of which have been 
reported and at a drop in revenue of 10 percent or more. As you 
know, this is a serious loss to American innovation and one 
that administration after administration has tried to combat.
    Mr. Goldfoot, my first question is for you. In 2020, 
Congress passed the Protecting Lawful Streaming Act to close a 
loophole in the law that allowed sophisticated criminal 
enterprises operating streaming websites to traffic illegally 
copyrighted material.
    It's important, given that the American motion picture and 
television industries contribute 2.4 million jobs across the 
United States, and in 2022 alone, there were over 215 billion 
visits to pirate sites, many which look much more sophisticated 
than they did even a few years ago. Piracy of filmed 
entertainment costs the U.S. economy $29.2 billion annually.
    Now, that Congress has closed that loophole in the law, I'm 
interested in how this authority has been used. Has DOJ pursued 
any actions using this new tool?
    Mr. Goldfoot. Thank you for the question.
    So, in fact, last week, the District of South Carolina in a 
press release announced what we believe to be the first 
concluded case for the Protecting Lawful Streaming Act. The 
defendant's name was Franklin Valverde, and that press release 
came out on May 2nd. However, having given you that example, I 
don't want to give the impression that the Protecting Lawful 
Streaming Act has been used as much as you or I might hope.
    Let me first thank all the Members of the Subcommittee for 
the work that many of you did in getting the PLSA passed. 
That's an important new authority. We were able to take down 
some streaming services before the passage of the PLSA, 
charging defendants based on conduct they did before that 
statute was enacted, using the 1976 Copyright Act and other 
authorities.
    One example I can give is Gears TV. This was a service that 
was essentially stealing streams from channels, reselling that. 
We were able to charge and convict that individual under the 
Copyright Act of 1976.
    Another example I would give--and this was also used 
initially on the PLSA--was a defendant named Joshua Street, who 
was charged in the Southern District of New York. Now, his 
business, he was stealing the streams from sporting events, 
such as Major League Baseball and NFL. He would get all of 
them. Now, he would get them through various means, but for 
Major League Baseball specifically, he was charged with hacking 
into their facilities to get that.
    Now, that's a helpful example because it shows that, when 
we address these, it isn't necessarily one or two statutes that 
are always going to get used. In that case, we had a guy who 
was violating the Computer Fraud and Abuse Act. So, he was 
charged with that and also with the Protecting Lawful Streaming 
Act. In the end, that was a plea. He pled to the Computer Fraud 
and Abuse Act and not to the PLSA, but that was still there in 
the case, and it was used there.
    So, the PLSA is a welcome development for us.
    I agree with you also; streaming services are an enormous 
concern of ours. We have taken down--as I mentioned, there was 
Gears TV. We took down Jetflicks and a related site named 
iStreamItAll. I want to take down more. I want to take down 
more. I hate seeing these things up. I'm very interested in 
everything we can do to address it.
    With more resources, we can address more of these, but I'm 
quite proud of the work that we've been doing so far, and the 
PLSA is going to help us do more in the future.
    Ms. Ross. OK. Thank you very much.
    With the very limited time that we have, Mr. Ball, one of 
my colleagues touched earlier on AI and China. Can you tell us 
anything that you're doing to address President Biden's 
Executive Order on AI and enforcement for AI?
    Mr. Ball. Yes, ma'am, very important question.
    In that Executive Order, the National IPR Center and his 
were specifically tasked working with industry to find out what 
threats they're seeing from AI and what these industries, 
especially the ones that have a large technological support, 
are using AI to protect their intellectual property, and then 
creating a training program specifically for medium and small 
businesses that might not have those resources.
    At the National IPR Center, with all the partners that we 
have, one of the unique things--another one of the unique 
things we have is partnerships with academia. We have these 
incredible research institutions in the United States. We 
specifically partner on many of these items with Michigan State 
University and their A-CAPP program, their Anti-Counterfeiting 
and Property Protection program, and we have employed their 
very robust research engine that Ph.D. and master students 
reach out to industry across the spectrum. Right now, they have 
gathered quite a bit of data. In talking to their research lead 
just last week, it's the best response they've ever received at 
any research project from industry. So, we're in the process of 
putting that together.
    One initial finding that I can talk about now is that 
industry is finding that the initial threat that's coming from 
AI is using AI to attack their computer systems and hacking to 
overcome their encryption to steal their trade secrets. That's 
just one that's coming out of that, and we'll be working to put 
together a training course on that as well.
    Ms. Ross. Thank you for your indulgence.
    Mr. Issa. That's all right. I had to make up for my excess 
and my Ranking Member's indulgence.
    Mr. Johnson. Almost as abusive as--
    Mr. Issa. Important question; important answer.
    We now go to the gentleman from California, Mr. Kiley, for 
five minutes.
    Mr. Kiley. Thank you, Mr. Chair.
    Intellectual property protections are vital to our Nation's 
economic success. Not only that, it is an extremely personal 
right in a sense in that it is a right that an individual or, 
for that matter, an enterprise has to benefit from the fruits 
of their labor and from their own enterprise.
    So, I think this is a very important hearing, because to 
the extent that our intellectual property laws are not being 
enforced or had adhered to, then it undermines both that right 
and the economic vitality of our country.
    In addition to that, the theft of intellectual property 
also potentially has national security concerns and concerns 
when it comes to the competitiveness of the United States, 
particularly with respect to China.
    In 2023, Customs and Border Protection seizures of goods 
from the Peoples Republic of China and Hong Kong alone made up 
more than half of the agency's total seizures and more than 80 
percent of the value of IP infringing goods seized.
    Approximately 80 percent of all economic espionage cases 
prosecuted by the Department of Justice involved theft of trade 
secrets by the Chinese Government or its instrumentalities or 
agents, and approximately 60 percent of all trade secret 
misappropriation cases brought in the United States have a 
nexus to China.
    In addition, as of just a few years ago, in 2020, the FBI 
had approximately 1,000 open investigations involving China's 
attempted theft of U.S.-based technology in all 56 field 
offices spanning almost every industry and every sector.
    So, Mr. Goldfoot, you made a point a few minutes ago to my 
colleague about how China has specifically used the theft of 
intellectual property in the U.S. and elsewhere to advance--as 
one tool to advance its science and technology sector.
    So, could you expand on that as to how intellectual 
property theft by the CCP is harming the United States' global 
competitiveness and its competitiveness vis-a-vis China?
    Mr. Goldfoot. Thank you for that question.
    So, as my colleagues on the National Security Division, the 
Justice Department, and their Assistant Attorney General Matt 
Olsen have said, ``it's an enormous concern that China is 
attempting to gain a competitive advantage over the United 
States by cutting corners and taking our technology rather than 
developing it.''
    So, as you say, sir, one of the issues we protect 
intellectual property at all is to encourage people to develop 
it, to give a sort of property right over it so that we're 
encouraging investment in everything else. There's damage 
whenever that's lost, yes, but it's doubly damaged when that is 
a loss that then benefits one of our chief adversaries in 
technology and science.
    So, I can tell you this is an issue that I see come across 
my desk repeatedly. As we discuss these issues with our 
National Security Division colleagues, they're quite sided to 
this as well, the problem that is being created by a foreign 
nation-state benefiting from U.S. technology improperly by 
acquiring it either through theft or through acquisition.
    Mr. Kiley. Mr. Lord, same question. Do you have any 
thoughts on the broader concerns this raises for United States' 
competitiveness and security?
    Mr. Lord. Well, thank you, Congressman, for the question.
    I largely agree with Mr. Goldfoot. What I think about, from 
Customs and Border Protection's standpoint, though, is a lot of 
this trade secrets theft oftentimes involve export, right, 
export of sensitive technology. While we have the authorities 
to interdict with our partners on export, we've already talked 
a lot about that we've got a lot coming in, four million small 
packages. So, it is going to be important that we all think 
about new and innovative ways to prevent physical technology 
from being exported out of the United States to our 
adversaries.
    Mr. Kiley. Thank you.
    So, I think this underscores two things. (1) Is the need 
for greater scrutiny, which, unfortunately, this administration 
has perhaps taken a step back from, when it comes to the 
concerted efforts of the CCP to steal U.S. intellectual 
property; but, (2) It speaks to the need to have strong 
intellectual property protections for our own inventors, for 
our own innovators so that we're able to advance our science 
and technology and continue our lead in key technology areas 
where, unfortunately, we have been falling behind, even with 
respect to China and others in recent years.
    So, I appreciate you calling this hearing, Mr. Chair, and I 
yield back.
    Mr. Cline. [Presiding.] The gentleman yields back.
    The gentlelady from California is recognized.
    Ms. Lofgren. Thank you, Mr. Chair.
    Thanks to each of the witnesses. It's been very 
informative, not only your oral testimony, but the written 
statements we were able to read in advance.
    I think all of us agree that protecting intellectual 
property is very important, not only for the creators but for 
the security of the United States and its people.
    I'm interested--you're talking about the packages 
interdicted and the counterfeits, and there's a lot of 
counterfeits that could be harmful to people. I'm wondering, 
among the counterfeit goods that have been interdicted, how 
many of them are toys? Because I always worry the Consumer 
Product Safety Group tests toys to make sure that children are 
not harmed by them, but they don't do that, of course, with 
counterfeits.
    Can you enlighten us on that point, any of you?
    Mr. Lord. I assume that question was to me, Congresswoman?
    Ms. Lofgren. Yes.
    Mr. Lord. OK. Thank you very much for the question.
    We do, in fact, encounter counterfeit toys. We do, in fact, 
encounter substandard toys. We encounter children's bike 
helmets that don't survive a basic drop test onto a concrete 
floor and then shatter when they hit the floor. We're fortunate 
enough, though, to have at many of our ports of entry a 
Consumer Product Safety Commission inspector to help us make 
sure that we are seizing the appropriate goods.
    I do not have a specific breakout here for you today for 
toys. I'll just say that last fiscal year, we did seize just 
over 230,000 game consoles and accessories, and from that, I 
would imagine there's a portion of toys in there. Toys are a 
big focus of what we do. We focus on that a little bit more 
from the import safety aspect.
    Ms. Lofgren. Right.
    Mr. Lord. Because there's other aspects that maybe they're 
not counterfeit, but maybe there's too much lead in the toy. 
So, there's just a little bit of a different lens there. I'd be 
more than happy to have my team followup with your staff.
    Ms. Lofgren. Whatever. I don't want to put a lot of extra 
work on you. I would rather you spent the time enforcing, but 
whatever data you have I would appreciate having.
    Mr. Lord. Yes.
    Ms. Lofgren. Last Congress we passed the INFORM Act, which 
was a pretty robust piece of legislation helping to reduce 
counterfeit goods online. One of the things about that is it 
gave concurrent jurisdiction not only to the FTC but to State 
attorney generals.
    Do we know whether the State attorney generals have taken 
advantage of the new authority that they have under that act? 
Anyone?
    Mr. Goldfoot. I'm sorry. I do not know the answer to that 
question.
    Ms. Lofgren. Maybe that's something we can check on from 
the FTC.
    I was interested, Mr. Ball, in your testimony that you are 
collaborating with outside groups. I think that's very smart 
because they're also on the lookout to protect their property.
    You mentioned that you had a partnership with the Motion 
Pictures Association, which I think is terrific. We had a 
hearing a while ago where they showed a website that was a 
broad that was massively infringing on movies, and it's 
important that we figure out how to deal with that.
    I'm wondering if you have had success working with the MPA 
on cutting out or dealing with illegal streaming sites that 
operate from outside the United States?
    Mr. Ball. Yes, ma'am. That's a great question as well.
    We have, with our Digital Piracy Working Group dealing with 
the recording industry of America that's dealing with--
    Ms. Lofgren. Yes, they've got the same problem.
    Mr. Ball. --those AI threats right now and what MPA is 
looking at and what they're dealing with illegal streaming.
    One of the issues of working with this partnership, as you 
mentioned, industry is losing money. So, industry is a vested 
interest, and they are our first line of intelligence and 
information. MPA is the organization that was able to inform us 
that circumvention devices were changing from physical devices, 
and then that's where our relation comes in with CBP.
    Ms. Lofgren. Right.
    Mr. Ball. We're able to tell them, ``Here are the different 
devices that they're using.'' Now, it's going to more software 
based. So, the issue with digital streaming will always be 
taking down sites, and the sites going up so easy.
    Ms. Lofgren. Yes.
    Mr. Ball. So, our goal is to work with all these partners 
with a focus on disrupting the network and dismantling the 
organization.
    We've recently had some great success in talking to the 
website hosting services to get their voluntary agreement, in 
addition to court orders, to where a joint MPA-IPR Center 
communication just to take that website down or to block it 
while we're trying to--instead of waiting for a court process. 
So, we have a wonderful relationship there.
    Ms. Lofgren. That's very smart. As you know, we're trying 
to work through various other legal remedies that don't disrupt 
the actual workings of the internet, but also are effective in 
protecting American interests. So, I'm glad to hear that you're 
succeeding even without our successful conclusion of that, but 
I'm going to continue working on that.
    Thank you, Mr. Chair. I yield back.
    Mr. Cline. The gentlelady yields back.
    The gentleman from Texas is recognized.
    Mr. Moran. Thank you, Mr. Chair.
    Mr. Goldfoot, I want to talk to you just briefly about 
China in particular. I want to go back to this issue of China. 
I think we can all agree that China really is the most major 
actor out there from a country that is infringing on our 
intellectual property.
    Would you agree with that?
    Mr. Goldfoot. Sir, I do agree with that based on what I 
have seen.
    Mr. Moran. Right. By statistics, when we actually prosecute 
crimes, such as economic espionage cases or trade secret 
misappropriations cases, most of those by an overwhelming 
majority actually are against entities or individuals connected 
to the PRC, correct?
    Mr. Goldfoot. Thank you for the question.
    I'm actually unsure if we have accurate statistics from 
that. Anecdotally, what you say does sound right to me.
    Mr. Moran. I can tell you the statistics I've seen is about 
80 percent of the economic espionage cases are connected to the 
PRC, and about 60 percent of the cases for trade secret 
misappropriations are connected to the PRC. Anecdotally, I 
think that you would agree with that.
    So, let's talk about the China Initiative, because when the 
China Initiative was dropped in February 2022, we saw a decline 
in actual cases prosecuted after that time. Isn't that true?
    Mr. Goldfoot. Thank you for the question.
    So, when Assistant Attorney General Olsen announced an end 
to the China Initiative, in the same speech, he announced the 
beginning of a new strategy to counter nation-state threats.
    Mr. Moran. So, on that new strategy, because the numbers I 
looked at said that in Fiscal Year 2022, that same time this 
program got canceled, this China Initiative, we actually 
prosecuted zero of the trade secret misappropriations or zero 
of the economic espionage cases. Is that accurate?
    Mr. Goldfoot. Sir, I do not have that statistic at my 
fingertips, but it would coincide with what I think to be true, 
that the number went down for that year. I don't believe that 
this was because of the cancellation of the China Initiative. 
As I said before, fluctuations from year to year in the 
number--
    Mr. Moran. If we're going to--even if we change the name or 
change initiatives, would you agree that we ought to be ramping 
up our efforts to push back against Chinese intellectual 
property theft, or should we be reducing our enforcement 
efforts?
    Mr. Goldfoot. Well, thank you for that question.
    Because I think all of us agree that we ought to be 
increasing our amount of intellectual property--
    Mr. Moran. Absolutely agree with that. Unfortunately, the 
numbers are showing we're decreasing our enforcement, which is 
really a big problem I think for us because they're ramping up 
their efforts to steal our intellectual property, and we seem 
to be reducing our efforts to push back against that.
    Let me ask about criminal enforcement in particular. We've 
got criminal enforcement statutes out there for trademark and 
copyright. We do not have them out there for patent 
infringement.
    Would you agree that this might be something we need to 
look into as it relates to foreign entities and espionage 
cases?
    Mr. Goldfoot. Well, thank you for that question.
    It's an interesting idea I haven't heard before. I'm not 
sure that I've seen a bill about it, so I don't know standing 
here right now I could weigh in on that idea.
    If I could address your prior question a little bit more, 
if I could, I want to emphasize that the work of prosecuting 
trade secret theft to benefit the PRC is absolutely continuing. 
You can see in my statement for the record five cases announced 
over the last couple of months of arrests of individuals who 
are taking electric vehicle battery information, missile 
guidance systems, and artificial intelligence source code, all 
to benefit the People's Republic of China. Those are arrests. 
They're innocent until proven guilty. I should emphasize that. 
You can see the work against that is continuing apace.
    I am not aware of any particular prosecutor or agent being 
told, ``Well, I'm sorry. The China Initiative has canceled so 
now you're going to be working on other things.''
    Mr. Moran. Was there anything communicated to the U.S. 
Attorney's Office about the cancellation of the China 
Initiative, the reasons for that?
    Mr. Goldfoot. Assistant Attorney General Olsen made public 
remarks at George Mason University in February 20--
    Mr. Moran. Other than that, was there anything said 
internally to the Justice Department or were there any changes 
made to the Justice Manual as a result of the decision to 
cancel the China Initiative?
    Mr. Goldfoot. I'm not sure I'm able to answer your 
question, sir. I'm sorry about that.
    Mr. Moran. OK. Would you agree that perhaps we ought to 
also look into additional enforcement actions that are private 
actions that maybe put more teeth into the individuals behind 
these entities that are actually engaging in intellectual 
property theft? Would that be an appropriate response?
    Mr. Goldfoot. Yes. I would say that really the leading 
force in enforcing intellectual property rights in the United 
States has always been private sector, civil lawsuit 
enforcement. We on the criminal side tend to reserve ourselves 
for the most egregious cases where the deterrent effect of 
criminal law can have the most impact.
    Mr. Moran. One last question on that.
    Do you think that injunctive relief, additional injunctive 
relief, the ability to get injunctions, permanent injunctions 
when there is infringement in patent cases would be an 
essential tool to bring back American businesses to get their 
redress here in American courts as opposed to going to Chinese 
courts?
    Mr. Goldfoot. Thank you for the question.
    It's an interesting idea. I'm not sure that we've seen a 
bill about that. I don't feel comfortable weighing in on the 
idea now, but we'd be happy to examine any legislation you ask 
the Department to comment on.
    Mr. Moran. Thank you. I yield back.
    Mr. Cline. The gentleman yields back.
    The gentleman from Maryland is recognized.
    Mr. Ivey. Thank you, Mr. Chair. Good afternoon to all of 
you.
    Mr. Goldfoot, let me stick with you. Along the lines of the 
questions you were just getting and some previous to that, it's 
clear at this point that there's bipartisan view that we'd like 
to do more with respect to addressing espionage issues and 
thefts of trade secrets and the like.
    On a couple of occasions you said, ``If we had the 
resources, we would do more of these cases.'' I don't know if 
that's--what set of cases you meant. One thing I did want to 
figure out, though, was what kind of resources do you need? 
Because you've got this rare moment in Congress here where 
there's bipartisan agreement that this is something that needs 
to happen, especially with respect to the PRC. What sorts of 
resources do you need to ramp up the prosecution efforts?
    Mr. Goldfoot. Thank you for the question.
    So, being a career official in the Department of Justice, 
it's not my place to make, for example, a budget request or 
anything independent of what the administration is--or what 
they're asking for.
    What I can tell you, as far as the work we're supervising 
and what we're seeing, we use the resources we have to recruit 
and train prosecutors who can then work with investigators in 
the field to appropriately build cases.
    Intellectual property cases are hard. They're hard because 
of the statutes involved and the elements you need to prove. 
They're hard also increasingly because of the international 
aspect of them. That is probably one of the biggest changes 
we've seen in the last 10 or 15 years. We're no longer in the 
world of 2012 when you could do something like the Megaupload 
takedown by just finding their servers in the United States and 
seizing them and knocking out one of the biggest infringers at 
the time.
    What you have now is the criminals are adapting to tactics 
like that. They're attempting to locate their businesses 
themselves and their servers in jurisdictions where they 
calculate, or sometimes incorrectly, that the United States 
cannot get law enforcement cooperation.
    So, increasingly, the resourcing tool we need isn't just 
within the Department of Justice. We rely on the Nation's 
international relations.
    Mr. Ivey. Let me get you to focus on what is internal. Do 
you need more investigators? Do you need more prosecutors? What 
do you need? What is it that we can do to help you ramp up 
those efforts? I'm not asking you to speak for the White House 
or anything along those lines on specific budgetary requests, 
but I do want to get a sense of what exactly we're talking 
about from the standpoint of, if you need additional resources, 
what are they?
    Mr. Goldfoot. Well, thank you for the question.
    I can just repeat that with more input, you've got more 
output. I think we are looking--I think it's a mixture of 
everything that you have described here.
    Mr. Ivey. All right. Let me--just last point with respect 
to this issue. Iit was your testimony that touched on intended 
loss. Not to get too deep into the weeds on the sentencing 
guidelines, but I think it's a good point that you made with 
respect to the calculation of intended loss, depending on how 
low it is, undermines the likely range that you can get for 
jail time.
    So, it says here in your testimony that you're seeking with 
the Sentencing Commission to get a reworking of the definition 
of how that's defined. A quick suggestion, part of the reason 
that judges increasingly became suspicious about that was 
because of the way the Department was using it in some 
unrelated matters, but like credit card fraud. So, you get a 
guy that steals a credit card and he can charge up to $20,000, 
and he buys--I don't know--something for $100, and the 
prosecutors come in and say, ``We think the sentencing 
guideline should be based on a $20,000 calculation''; judges 
started dismissing that basically.
    So, I appreciate the fact that you're going to the 
Sentencing Commission on this, but I would encourage you to try 
and separate your prosecutions from those kinds of 
prosecutions.
    Then really quickly--I see I'm running out of time--one of 
the issues that I heard with respect to my participation on the 
Homeland Security Committee was some of the seizures, and this 
goes to at the border with respect to imported goods. This was 
forced labor, Uyghurs, China, and the like. I also raised the 
issue of forced and slave labor with respect to some minerals 
like cobalt coming largely from Africa but frequently through 
China anyway.
    One of the things that was said by one of your colleagues 
at Homeland Security was that sometimes they would detect these 
goods and reject them as opposed to seizing them. In fact, it 
sounded like they reject them more than they seize them. One of 
the things I asked them to do was to increase the number of 
seizures, because if you just reject it, they just send it 
somewhere else, and they're not losing the money. It undermines 
the sanction that could be had. When you go through the 
effort--and as you pointed out, there's hundreds of millions of 
these items coming through. When you catch one, you have to put 
the hammer down as much as possible. It's tough to prosecute 
these criminally sometimes, but administratively do that if you 
can.
    Then the last quick point, the task force, the UFLPA Task 
Force, which I think DOJ is on as well, with respect to that 
type of labor also isn't generating a lot of prosecutions or 
even the number of entities that are on these lists having been 
caught with trying to import these defective goods. If there's 
a way to ramp that up, I would appreciate it as well because, 
one way or the other, we have got to find ways to prosecute 
these cases or at least make an impact with administrative or 
civil sanctions so we send a message back to China, or whoever 
is sending these goods, that we're going to enforce it and 
there's going to be a sanction for it.
    So, I apologize for running over, Mr. Chair, but I thank 
you for the time, and I yield back.
    Mr. Cline. The gentleman yields back.
    The gentlelady from Florida is recognized.
    Ms. Lee. Thank you, Mr. Chair.
    Mr. Ball, in your testimony you spoke about how the 
Intellectual Property Rights Coordination Center, or the IPR 
Center, operates with partnerships with over 20 other Federal 
agencies and academic institutions as well as stakeholders in 
of the private sector.
    Would you elaborate on how HSI's partnership with the 
National Football League and the Motion Picture Association 
work and what outcomes these partnerships have created?
    Mr. Ball. Yes, ma'am. Fantastic question.
    Our partnerships across the spectrum of intellectual 
property benefit both business and our criminal investigations. 
One of those keys is the NFL. The Super Bowl every year is a 
major, major event for both human trafficking and, obviously, 
intellectual property theft. We work hand-in-hand with the NFL 
and with the brands and the apparel manufacturers, and we 
conduct operations around large events. The sports 
manufacturers provide subject-matter experts with teams of 
agents in the field taking these goods. Then as a key 
partnership in the National IPR Center and to these events is 
our CPB partnership, identifying where these routes, the ports, 
intelligence, where things are coming from, for seizures of 
everything from counterfeit rings to jerseys to all kinds of 
sports apparel.
    We have that same kind of relationship with the Motion 
Picture Association as well.
    I have found that industry, when they own what is happening 
to their products and they share that information from us. It 
helps direct our criminal investigations much more effectively. 
When they take what has been called before onesie-twosie 
seizures and they help put those together with what's happening 
not only to their brand, but then we can take that and attach 
it to other brands going after networks versus just individual 
shippers.
    Ms. Lee. Tell us, if you would, how the IPR Center is 
working with universities on similar types of partnerships?
    Mr. Ball. Another great question. Thank you.
    I'm going to go back to Michigan State University. Michigan 
State University's A-CAPP program isn't a degree program. It's 
multidisciplinary, so there's law students, business students, 
criminal justice students that are all focused on property 
protection. They have a massive data base of research, of 
information that's informed by industry where they go, and 
they'll look at a particular problem set in a particular way.
    What we're doing with them in the AI space, we replicated 
with them in a program that we created jointly called IP 
Protect. We are finding from our industry partners that the 
medium and small businesses weren't having the same benefit of 
having an internal large brand protection program within their 
industry. So, we created this IP Protect program with MSU to 
inform medium and small businesses how they can better protect 
their IP.
    Ms. Lee. Would it potentially be productive for you to 
expand those partnerships to include other universities, like 
the University of Florida or the University of South Florida, 
and access their IP research data bases as well?
    Mr. Ball. Yes, absolutely. In some of the questioning 
earlier about what we could do with more, Congress was generous 
enough to provide Homeland Security Investigations some 
enhancement money in the Fiscal Year 2023 budget, and we used 
that not only on the IP space to increase what we're doing with 
the government supply chain investigative unit, outside of our 
work with DOD, also in our wildlife and environmental crimes, 
and I know, just recently speaking with my team leads of our 
wildlife and environmental crimes, that they're actually 
talking to both of those universities.
    Ms. Lee. Thank you.
    Mr. Chair, I yield back.
    Mr. Cline. The gentlelady yields back.
    The gentleman from South Carolina is recognized.
    Mr. Fry. Thank you, Mr. Chair, for having this hearing 
today.
    For generations the textile industry has been a pillar of 
the economy in both South Carolina and the United States. 
Darling Fibers in the district I represent is one of the 
largest domestic producers of high-quality fibers for fabric, 
garment, and fashion industries. Milliken, also in South 
Carolina, is located in Spartanburg and has been in the 
business since the 1800s.
    I've heard from many of my constituents concerning their 
concerns regarding de minimis. So, most of my questions are 
going to be centered around that. De minimis imports from 
places like China account have exceeded a billion total 
packages just last year according to the CBP reports. E-
commerce giants are flooding the U.S. market with low-cost 
products. Many of them, as we know from this hearing today, are 
counterfeit, and yet they avoid inspection and taxes. 
Unfortunately, this number is expected to grow in the coming 
years.
    Deputy Director Lord, you oversee CBP policy and 
enforcement priorities, and I've heard from many constituent 
companies about the problems they're facing due to the influx 
of de minimis packages entering the U.S. We've heard that 85 
percent of all IP seizures occur in the de minimis environment, 
and it's become a high-way for other illicit goods such as 
fentanyl, which has been talked about here. The sheer volume of 
these duty-free packages, though, is crippling our own economy 
and our own companies and our own American workers, especially 
in textiles, which is a crucial industry not only for my direct 
but my State and indeed the country.
    So, Mr. Lord, how do we close these loopholes? What policy 
recommendations would be helpful to you in closing these 
loopholes?
    Mr. Lord. Well, thank you very much for the question, 
Congressman.
    I want to acknowledge first that Customs and Border 
Protection is very much aware of the challenges that the 
textile industry is facing at this moment. We've been working 
closely with the domestic textile producers in the United 
States since, we'll say September or October of last year. I've 
had the privilege of going down to some of the production 
facilities in South Carolina that you have mentioned during my 
career. It's an impressive operation. I don't wake up every day 
and my staff does not wake up every day not thinking about how 
to protect U.S. jobs.
    When it comes to the specific challenges in de minimis, we 
are ramping up our inspections of textile products in the de 
minimis environment. As an agency, we've made investments in 
some of our laboratory and scientific services centers around 
the country, in Savannah, New York, and Los Angeles. They will 
have very cutting-edge technology to begin testing textiles for 
compliance with the Uyghur Forced Labor Protection Act. We do 
intend and are deploying that technology in the de minimis 
environment. There's a perception that we're not testing for 
that in the de minimis environment. That is not true.
    Mr. Fry. Mr. Lord, let me ask you something really quick, 
and I don't mean to cut you off, but I've got two minutes. So, 
I just want to vet this thing through a little bit.
    Do you think that maybe labeling China as a country of 
concern would be a prudent step for us to take in Congress? 
Because we know that most of these issues are coming from the 
PRC, at least they're a big actor in this. Would that be 
helpful to you in your efforts to do your job?
    Mr. Lord. That is an excellent question, sir.
    It's difficult for me to answer without understanding what 
that label might trigger in terms of additional legal 
authorities or presumption of guilt or anything along those 
lines. At Customs, we're focused on the China threat, sir. More 
than happy to explore those ideas with you and your staff. 
We're committed to finding workable solutions in the de minimis 
space.
    Mr. Fry. Mr. Lord, as part of your portfolio, you receive 
the de minimis data pilot program. What insights can you 
provide about the results so far?
    Mr. Lord. Yes, absolutely. I appreciate you asking that 
question, sir.
    Our two pilot programs in the de minimis environment have 
been running since the Summer 2019. Those two pilot programs 
look at a couple of different things, but what I'll just 
highlight is what we're discovering is there is better data out 
there that will help us better segment risk and identify 
compliant or noncompliant shipments, particularly from what 
I'll all nontraditional actors in the supply chain, to include 
online marketplaces. We have successfully been able to pair a 
web address of a product listing with a small package coming 
through. Thw data from that website helps us make better risk 
management decisions.
    Last Fiscal Year when there were a billion small packages 
entering the United States, over half of them had additional 
information from one of those two tests, which to us signals an 
interest in the private sector in getting this additional data 
for us. As a result, we're in the process now of updating our 
regulations to codify the lessons learned from those tests.
    Mr. Fry. Thank you for that.
    I'll just conclude by saying, look, there are so many 
concerns. I didn't know a lot about IP when I got onto this 
Subcommittee, but there's so many concerns, from the fees and 
tariffs that the United States is missing out on within the de 
minimis space. There's no adherence by foreign actors or 
entities on the Uyghur Act that you mentioned, labor standards. 
The IP concerns are very self-evident when you look at kind of 
what we're talking about here. Of course, at the end of the 
day, the real impact--and this isn't a fault at you. I'm just 
kind of sharing the concern that I have, which you share too, 
is that American workers and American companies are put at a 
disadvantage because we basically have created a free trade 
agreement with China because they're shipping these things in 
with substandard labor standards, and American companies are 
forced to compete with that on an international stage at a very 
big disadvantage to them.
    So, however we can partner with you, I'm happy to do that 
and listen to your insights because I think this is a very big 
issue for our country to tackle.
    Thank you so much.
    Mr. Lord. Chair, if I may?
    Mr. Cline. Mr. Lord.
    Mr. Lord. Thank you, sir.
    Thank you for that, Congressman.
    I would just like to say and offer my staff to reach out to 
your staff. We have an initiative that I mentioned in my 
opening remarks, the 21st Century Customs Framework Initiative, 
that proposes statutory changes to help us better manage this 
environment. We are concerned, just to be very direct, and we 
do need help and are eager to partner with Congress. So, thank 
you.
    Mr. Fry. Well, and thank you, by the way, for being--and 
all three of you, quite frankly, but thank you for being a 
witness that actually answers questions. We have that very 
rarely in Congress sometimes. So, thank you for that.
    Mr. Chair, I yield back.
    Mr. Cline. The gentleman yields back.
    I'm going to go ahead and take a few minutes to ask some 
questions as well.
    Mr. Goldfoot, I've heard you speak about how the past 
several years have seen fewer IP-related cases brought by DOJ, 
the fact that the Protecting Lawful Streaming Act of 2020, 
which I was pleased to see enacted, has only been used to 
conclusion once.
    Is that your testimony?
    Mr. Goldfoot. We have announced, I believe, one case where 
someone was sentenced under that act.
    Mr. Cline. What resources or authorities does the DOJ 
believe it lacks at this point to enforce criminal copyright 
piracy laws effectively?
    Mr. Goldfoot. Thank you for the question.
    So, enforcing criminal--going after streaming sites 
specifically, which is the target of the Protecting Lawful 
Streaming Act, is a very difficult lift investigatively, yes, 
but also in terms of securing the necessary foreign cooperation 
is quite difficult.
    So, for some of the streaming sites we're talking about--I 
don't want to say their name to give publicity, but you 
probably know which one I'm referring to--the location of the 
servers, the locations of the domain name registration, the 
location of the individuals responsible are all outside the 
United States. They've attempted to locate themselves in places 
where they believe that their local law enforcement will not 
follow U.S. legal process in terms of getting at them.
    How do we approach such a situation? First, there's no 
substitute for slowly over time building appropriate law 
enforcement relationships with our international partnerships, 
coming to a common understanding, helping each other out in 
investigations, providing case-based mentoring, and so on, as 
that proceeds.
    Separate from that, given the profusion of these sites and 
the amount of streaming occurring, as the amount of crime 
increases, it's helpful if we can increase our capacity to 
address it at the same time.
    Mr. Cline. OK. Back in December, the Subcommittee held a 
hearing on digital copyright piracy in the film and television 
industry. At that hearing we heard testimony about a notorious 
foreign pirate site, FMovies, which the Motion Picture 
Association testified averages 98 million users a month, 33 
percent of the traffic coming from the United States.
    We saw a demonstration showing how easy it was to access 
high-quality copies of American movies and television shows 
advertised using the studio's copyrighted cover art and 
organized by title, genre, season, and episode. It also used an 
interface highly similar to legitimate streaming services. The 
U.S. Chamber estimates these sites cost the U.S. economy at 
least $29 billion in lost revenue annually.
    U.S. intellectual property rights holders referred FMovies 
to the IPR Center five years ago in 2019, and his brought in 
Vietnamese law enforcement in early 2021. A couple of years 
ago, his believed that Vietnamese law enforcement was wrapping 
up the investigation and close to making arrests, but since 
then, the case seems to have stalled numerous times.
    In the meantime, the streaming piracy site dedicated to 
infringing content continues to see over 160 million visits per 
month, a third of which traffic still comes from the United 
States.
    So, can you speak to the challenges of working with 
international law enforcement on prosecuting streaming piracy 
cases and with Vietnamese law enforcement specifically 
regarding FMovies?
    Mr. Goldfoot. Thank you.
    I assume the question is directed to me, sir?
    Mr. Cline. Yes.
    Mr. Goldfoot. So, thank you for the question.
    So, of course, longstanding policy prevents me from 
commenting about or confirming or denying the existence of any 
particular investigation. However, your question is quite 
astute in pointing out the difficulties that we have in going 
after streaming sites or foreign defendants when they're 
located in jurisdictions where you're having challenges dealing 
with them. I think that increasingly we see this as an issue 
not solely for the Department of Justice, but administrative 
wide looking, also as part of a foreign policy and other ways 
to address the problem.
    Mr. Cline. Mr. Ball, Mr. Lord, do you have anything to add 
to that?
    Mr. Ball. I will say, sir, that, yes, our relationship with 
the MPA and this case and many other cases, the problem that we 
face, as mentioned earlier, is shifting the jurisdiction, 
shifting the sites, having the trained investigators to work 
those cases. So, we've partnered with the MPA and with the RAAA 
and with one of our key partners, the National Cyber Forensic 
Training Alliance, in Pittsburgh to create a digital piracy 
training program, both for the investigators and for inspectors 
and for attorneys as well.
    We do face the same international challenges from an 
investigative standpoint. His has his offices in those 
countries working with their law enforcement, but we share the 
concern and the frustration from DOJ as well.
    Mr. Cline. Mr. Lord?
    Mr. Lord. Nothing further to add, sir.
    Mr. Cline. All right. Thank you.
    I'll ask one more question, Mr. Goldfoot. I have been 
concerned that the Biden DOJ has had recent significant losses 
in cases, including the case against Georgia Tech researcher 
Gee-Kung Chang. Mr. Chang is accused of collaborating with 
sanctioned PRC telecommunications company, ZTE, assisting 
Chinese nationals applying for visas that claimed to be 
students at Georgia Tech. Instead of attending Georgia Tech, 
the Chinese nationals traveled to the U.S. to work for ZTE.
    Mr. Goldfoot, despite these allegations, how many of the 10 
counts against Mr. Chang were recently dismissed by the Federal 
judge?
    Mr. Goldfoot. Thank you for the question.
    I'm not sure that this case was done under my supervision. 
I'm not certain of the answer.
    Mr. Cline. The answer is nine. So, dismissal of nine out of 
ten counts generally would be troubling. Wouldn't you agree?
    Mr. Goldfoot. I would answer the question by saying I think 
the Department of Justice does not bring a count or indeed a 
prosecution unless we think we can prove it beyond a reasonable 
doubt. When losses happen, you take it to heart. You examine 
why it occurred.
    I don't know if I can say more about a case, I didn't 
supervise that, sir.
    Mr. Cline. Do you know the status of the Chinese nationals 
who Mr. Chang assisted?
    Mr. Goldfoot. No. I'm sorry, sir, this case was not under 
my supervision. I'm not familiar with the facts at all.
    Mr. Cline. All right. My time has expired. I will yield 
back to the Chair.
    Mr. Issa. [Presiding.] OK. I'm going to take the liberty of 
just one comment, and then we're going to close this out if 
that's all right.
    Mr. Goldfoot, the last round of questioning I found great. 
I've got no objections, and I agree with all the questions. 
Isn't it also true that, a little bit like Babe Ruth that, in 
fact, if you want to hit home runs, sometimes you get 
strikeouts, that you sometimes charge because you want to, in 
fact, enforce the law, and you don't always succeed. In other 
words, you don't only take slam-dunk cases is maybe the way to 
ask it.
    Mr. Goldfoot. Thank you for the question. I could describe 
the approach of the Department of Justice as that our job, the 
Department of Justice wins when justice is done. We want to 
bring cases only when we can prove it beyond a reasonable 
doubt. Losses are regrettable, but as you say, sometimes that's 
how it breaks.
    Mr. Issa. With that, this hearing was informative. I would 
ask all the witnesses; would you agree to take additional 
questions from those who did not have sufficient time or who 
have followup questions?
    Mr. Ball. Absolutely sir.
    Mr. Lord. Yes.
    Mr. Goldfoot. Of course, sir.
    Mr. Issa. OK. With that, I'll leave three legislative days 
for those questions to be placed in the record and then 
submitted to you.
    Without objection, this hearing is concluded.
    [Whereupon, at 12:06 p.m., the Subcommittee was adjourned.]

    All materials submitted for the record by Members of the 
Subcommittee on Courts, Intellectual Property, and the Internet 
can
be found at: https://docs.house.gov/Committee/Calendar/ByEvent 
.aspx?EventID=117252.

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