Cyber Crime

Intellectual property (IP) theft is defined as theft of material that is copyrighted, the theft of trade secrets, and trademark violations. A copyright is the legal right of an author, publisher, composer, or other person who creates a work to exclusively print, publish, distribute, or perform the work in public. The United States leads the world in the creation and selling of IP products to buyers nationwide and internationally. Examples of copyrighted material commonly stolen online are computer software, recorded music, movies, and electronic games.

Theft of trade secrets means the theft of ideas, plans, methods, technologies, or any sensitive information from all types of industries including manufacturers, financial service institutions, and the computer industry. Trade secrets are plans for a higher speed computer, designs for a highly fuel-efficient car, a company's manufacturing procedures, or the recipe for a popular salad dressing, cookie mix, or barbeque sauce. These secrets are owned by the company and give it a competitive edge. Theft of trade secrets damages the competitive edge and therefore the economic base of a business.

A trademark is the registered name or identifying symbol of a product that can be used only by the product's owner. A trademark violation involves counterfeiting or copying brand name products such as well-known types of shoes, clothing, and electronics equipment and selling them as the genuine or original product.

The owner of Napster at a 2001 news conference following a court ruling that the company must stop allowing users to share copyrighted music. (AP/Wide World Photos)

The two forms of IP most frequently involved in cyber crime are copyrighted material and trade secrets. Piracy is a term used to describe IP theft—piracy of software, piracy of music, etc. Theft of IP affects the entire U.S. economy. Billions of dollars are lost every year to IP pirates. For example, thieves sell pirated computer software for games or programs to millions of Internet users. The company that actually produced the real product loses these sales and royalties rightfully due to the original creator.

Historically, when there were no computers, IP crimes involved a lot of time and labor. Movie or music tapes had to be copied, physically produced, and transported for sale. An individual had to make the sale in person. To steal a trade secret, actual paper plans, files, or blueprints would have to be physically taken from a company's building and likewise sold in person.

In the twenty-first century software, music, and trade secret pirates operate through the Internet. Anything that can be digitized—reduced to a series of zeroes and ones—can be transmitted rapidly from one computer to another. There is no reduction of quality in second, third, or fourth generation copies. Pirated digital copies of copyrighted work transmitted over the Internet are known as "warez." Warez groups are responsible for illegally copying and distributing hundreds of millions of dollars of copyrighted material.

Pirated trade secrets are sold to other companies or illegal groups. Trade secrets no longer have to be physically stolen from a company. Instead, corporate plans and secrets are downloaded by pirates onto a computer disc. The stolen information can be transmitted worldwide in minutes. Trade secret pirates find pathways into a company's computer systems and download the items to be copied. Companies keep almost everything in their computer files. Pirated copies are sold over the Internet to customers who provide their credit card numbers then download the copy.

Intellectual property pirates use the computer to steal vast amounts of copyrighted material and cause severe damage to the victimized companies. IP pirates never have to make sales in person or travel, their costs are minimal, and profits are huge. Internet pirates target the online shoppers who look for discounted, but legitimate, products. They do so by emails and Internet advertisements that seem to be the real thing. Not just individuals, but companies, educational institutions, and even government agencies have been tricked by IP pirates into buying stolen goods.

Arrest and prosecution of IP crimes is difficult for U.S. law enforcement agencies. U.S. laws combating this new type of crime were only beginning to be written by the early twenty-first century. Very little stops IP pirates, and organized crime groups have become involved as well. The profits they generate from IP crimes finances many other criminal activities such as drug trafficking, illegal gun sales, gambling, and prostitution (see chapter 7, Organized Crime).

Intellectual property pirates also come from many foreign countries such as China, South Korea, Vietnam (Southeast Asia), and Russia. International IP law is practically nonexistent. While offline IP violations can be investigated by the traditional law enforcement tactics such as using undercover agents, cyber IP criminals operate only in cyberspace and can disappear in seconds.