Links to Terrorism and Terrorist Organizations. the Paper Was Updated and Released Again, in Its Present Form, in January 2005

Intellectual property crime and Terrorism

Michael Blakeney Faculty of Law, University of Western Australia [email protected] Outline

1. Media commentary 2. US Congressional Investigation 3. Industry Investigations 4. G8 responses 5. National Legislation

SERIOUS ORGANISED CRIME

TERRORIST LINKS

• Hassan Nassrallah, leader of Hezbollah

“…counterfeiting is one of the methods used to fund the terrorist activities of Hezbollah…”

Interpol

From T-Shirts to Terrorism That Fake Nike Swoosh May Be Helping to Fund Bin Laden's Network by Roslyn A. Mazer

Sunday, September 30, 2001; Page B02 Roslyn Mazer, a Washington lawyer, served as associate deputy attorney general and criminal division special counsel for intellectual property in the Clinton administration. It's highly likely that some of the funds used to finance terrorist networks are being derived from the sale of products ripping off iconic American companies, such as Microsoft or Nike. Mazer, Washington Post • Recent developments suggest that many of the governments suspected of supporting al Qaeda are also promoting, being corrupted by, or at the very least ignoring highly lucrative trafficking in counterfeit and pirated products capable of generating huge money flows to terrorists and other organized criminal groups. • According to 1995 testimony before the Senate Judiciary Committee, New York's Joint Terrorist Task Force had reason to believe that high-level players who controlled a counterfeit T-shirt ring were using the proceeds to support terrorist groups such as the one that bombed the World Trade Center in 1993. Mazer, Washington Post • Last year, in the notorious piracy haven of Ciudad del Este, Paraguay, Ali Khalil Mehri, a naturalized Paraguayan citizen born in Lebanon,was charged with selling millions of dollars of counterfeit software, the proceeds from which he allegedly funneled to the militant Islamic group Hezbollah in Lebanon. He fled to Paris. • Last December, several news organizations reported that trademark pirates based in Pakistan were filling orders from Afghanistan to produce T-shirts bearing counterfeit Nike logos and glorifying bin Laden as "The great mujahid (holy warrior) of Islam." WPMI-TV—Mobile, AL 31 March 2006 Counterfeit Goods and Terrorism Tariq Abdush Shakur was carrying more than forty thousand dollars worth of counterfeit Cd's and DVD's when Mobile County Fraud Investigators caught up with him. Shakur, who used to go by the name Charles Williams, listed his address to deputies as 1156 Texas Street. • NBC15's Sandra Shaw asked Sgt. Lackey "If I go down there and I buy that fake Nike shirt there's a possibility that money, could be funneled to a terrorist?" He replied, "There's always that possibility." Terrorist link to copyright piracy alleged by Declan McCullagh CNET News.com,: May 27, 2005, 6:34 AM PDT Counterfeit DVDs and cigarettes may be funding terrorists. That's what the Senate Homeland Security committee heard Wednesday from John Stedman, a lieutenant in the Los Angeles County Sheriff's Department who's responsible for an eight-person team of intellectual property (IPR) investigators. "Some associates of terrorist groups may be involved in IPR crime," Stedman said. "During the course of our investigations, we have encountered suspects who have shown great affinity for Hezbollah and its leadership." Interpol IDs piracy link to funding of terrorism Brooks Boliek June 10, 2004 Hollywood Reporter • There is new evidence that terrorist organizations around the world are getting at least some of their funding from the sale of illegally copied intellectual property, including pirated DVDs and CDs, according to Interpol and copyright trade groups. • According to an Interpol report prepared for the House Committee on International Relations, intellectual property crimes are a growing resource for terrorist groups from Northern Ireland to the Arab world, including al-Qaida and Hizbullah. Terror groups move into pirated DVDs as profits overtake drugs Gerard Seenan, Tuesday July 13, 2004 The Guardian (London) • Ronald Noble, secretary general of Interpol, said: "The link between organised crime groups and counterfeit goods is well established, but Interpol is sounding the alarm that intellectual property crime is becoming the preferred method of funding for a number of terrorist groups." • He said there was enough evidence of terrorist groups using bootleg DVD sales to fund their activities for it to constitute a threat to public safety. HOW MANY DISCS DID THIS COST • The reality in N Ireland the terrorist sells counterfeit goods such as music playstation video and clothing order to purchase lethal weapons such as this Reuters February 12, 2007

•The city police commissioner, Raymond Kelly, told a conference on counterfeiting this month. "It is a threat to democracy and a threat to the rule of law." •Kelly said that the group accused of the Madrid train bombings in 2004, which killed 191 people, had used proceeds from the sale of pirated CDs to fund their activities. •The U.S. authorities have also said that another group sells counterfeit goods, including fake Viagra, to support Hezbollah, the militant group in Lebanon. INTERNATIONAL/GLOBAL INTELLECTUAL PROPERTY THEFT: LINKS TO TERRORISM AND TERRORIST ORGANIZATIONS Written Testimony of Timothy P. Trainer President International AntiCounterfeiting Coalition, Inc. (IACC) Before the House of Representatives Committee on International Relations Washington, D.C. July 16, 2003 Trainer-Committee on International Relations, U.S. House of Representatives Washington, D.C.

On June 5, 2003, the IACC released a White Paper entitled “International/Global Intellectual Property Theft: Links to Terrorism and Terrorist Organizations”. The project to prepare this document was undertaken due to IACC members’ increasing concerns that product counterfeiting and piracy are very low enforcement priorities after September 11, 2001. Trainer-Committee on International Relations, U.S. House of Representatives Washington, D.C.

2. Counterfeiting—Funding Terrorist Organizations? A major reason why the IACC is giving testimony today is due to our White Paper, which includes a section that addresses this possible link. I say “possible” link because industry does not have the responsibility of making the concrete link. The primary objective of our members who own intellectual property is to research, develop, create, manufacture and offer new and better products to consumers, not to undertake undercover criminal investigations. Statement of Under Secretary Asa Hutchinson Border and Transportation Security Directorate U.S. Department of Homeland Security Before the International Relations Committee U.S. House of Representatives On Intellectual Property Crimes: Are Proceeds From Counterfeited Goods Funding Terrorism? July 16, 2003 Statement of Secretary Hutchison Neither Bureau of Immigration and Customs Enforcement (“BICE”) and the Bureau of Customs and Border Protection (“BCBP”) have established a direct link between profits from the sale of counterfeit merchandise and specific terrorist acts. However, criminals involved in manufacturing, distributing and selling of counterfeit and piratical products reap large profits with relatively low risk of prosecution. As a result, this type of crime could be attractive to organizations seeking lucrative and low risk funding mechanisms to support terrorist activities. STATEMENT OF JOHN G. MALCOLM DEPUTY ASSISTANT ATTORNEY GENERAL FOR THE CRIMINAL DIVISION UNITED STATES DEPARTMENT OF JUSTICE BEFORE THE SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY COMMITTEE ON THE JUDICIARY UNITED STATES HOUSE OF REPRESENTATIVES CONCERNING COPYRIGHT PIRACY AND LINKS TO CRIME AND TERRORISM PRESENTED ON MARCH 13, 2003 Statement of John G Malcolm Terrorism and Piracy We are constantly examining possible links between traditional crimes and terrorism, and we will continue to do so. All components of the Justice Department, including CCIPS, the Counterterrorism Section, and the Organized Crime and Racketeering Section, will do everything within their power to make sure that intellectual property piracy does not become a vehicle for financing or supporting acts of terror. The Links Between Intellectual Property Crime and Terrorist Financing Text of Public Testimony of Ronald K. Noble, Secretary General of Interpol Before the House Committee on International Relations One Hundred Eighth Congress July 16th 2003 Noble - Hizbullah

• In February 2000, an individual was arrested for piracy and suspected fundraising for Hizbullah. The individual sold pirated music CDs, Sega, Sony and Nintendo game discs to fund a Hizbullah-related organization. Among the discs recovered were discs containing images and short films of terrorist attacks and interviews with suicide bombers. The discs were allegedly used as propaganda to generate funds for Hizbullah. This individual is currently a fugitive. Noble - Hizbullah

• Another indivdual was arrested for his alleged ties with the Hizbullah in Foz do Iguazu in June 2002 after evading arrest in October 2001. The individual is wanted for tax evasion and the collection and remittance of funds to extremist organizations. Interpol files do not mention involvement in IPC. The alleged IPC connection is stated in open sources. Noble – “Future evolutions”

• Based on the following factors it is possible to state that IPC may become a more important source of illicit financing for terrorist groups. • IPC crime is a low priority for law enforcement agencies and investigations are poorly resourced when compared to illicit narcotics or counter-terrorism investigations. • Trafficking in counterfeit goods is a relatively easy criminal activity. A terrorist could make profit solely from the sale of counterfeit or pirated goods and does not need to be involved in the actual production or fabrication. Thus, there are relatively low entry costs and the illicit profit margins are high.

Terrorism and Intellectual Property Theft

The IACC believes there is ample evidence to support and confirm the litany of suspicions, allegations and anecdotal accounts that terrorist organizations are currently exploiting America’s valuable intellectual property and profiting from the manufacture and sale of counterfeit and pirate products. Terrorism and Intellectual Property Theft

This paper helps to identify the extent of the connections between intellectual property theft and terrorist groups as well as the potential devastating impact to both the American citizenry and economy. The paper provides specific examples of the links and further details how terrorists could use intellectual property crimes not only as a source of funding, but also as a means of attack. Terrorism and Intellectual Property Theft

• This Paper was first released in June 2003 and was entitled International/Global Intellectual Property Theft: Links to Terrorism and Terrorist Organizations. The Paper was updated and released again, in its present form, in January 2005. The purpose of updating and reissuing this Paper is to underscore the continuing global problems arising from intellectual property theft. Rand Corporation Study: Film Piracy, Organized Crime, and Terrorism (2009) CHAPTER TWO Organized Crime and Terrorism This chapter explores the possibility that counterfeiting could become increasingly important to terrorists as terrorist groups become more cell-based, with more-obscure links to al Qaeda and other central organizations, and as the distinction blurs between crime intended to finance violence for political and ideological purposes and crime for money’s sake.

Union des Fabricants, Report, 2016 UNIFAB – 200 members including:

6. AFGHAN TERRORIST GROUPS, AL-QAÏDA AND OTHER AFFILIATED GROUPS • Following the Madrid bombings of March 11th, 2004, orchestrated by the terrorist network Al- Qaïda, the former Spanish Minister of the Interior, Angel Acebes, said that “one of the suspects arrested was already a well-known counterfeiter”

Legislative Responses Stop Counterfeiting in Manufactured Goods Act 2005 HR 32

(2) Findings- The Congress finds that-- (A) the United States economy is losing millions of dollars in tax revenue and tens of thousands of jobs because of the manufacture, distribution, and sale of counterfeit goods; (B) the Bureau of Customs and Border Protection estimates that counterfeiting costs the United States $200 billion annually; .... (E) ties have been established between counterfeiting and terrorist organizations that use the sale of counterfeit goods to raise and launder money; (F) ongoing counterfeiting of manufactured goods poses a widespread threat to public health and safety; ... USA S.522 of Modified Intellectual Property Enforcement Act introduced, March 12, 2007 SEC. 2. FINDINGS. The Congress makes the following findings: (1) Funds generated from intellectual property theft have financed acts of terrorism. (2) Terrorist groups have advocated the sale of counterfeit goods to finance their activities. (3) Counterfeit medicines and automobile and aviation parts have resulted in serious health problems and death. (4) The greatest economic assets of the United States are its innovators, entrepreneurs, and workers. (5) Counterfeiting and piracy costs United States businesses, authors, and artists hundreds of billions of dollars annually. (6) Counterfeiting and piracy has resulted in the loss of hundreds of thousands of American jobs. (7) The World Customs Organization estimates that up to 7 percent of global trade is in counterfeit goods. International Initiatives 7 July 2005 8 July 2005 - Gleneagles G8 Statement on Reducing IPR Piracy and Counterfeiting Through More Effective Enforcement committed the G8 to take “concrete steps” to: • promote and uphold laws, regulations and/or procedures to strengthen effective intellectual property enforcement, where appropriate, in areas such as the seizure and retention of suspected counterfeit or pirated goods… G8 - St. Petersburg, 2006

5. We instruct our experts to study the possibilities of strengthening the international legal framework pertaining to IPR enforcement. 2007 G8 Summit, Heiligendamm

Establishment of an Intellectual Property Rights Task Force focusing on anti-counterfeiting and piracy. “It will be the urgent responsibility of this body to determine measures to improve international IPR protection and enforcement, and, most importantly, produce immediate recommendations for future actions that can be reviewed at the next G8 summit,” Plurilateral Anti-Counterfeiting Trade Agreement (ACTA). October 23, 2007 Congressional Caucus on Intellectual Property and Piracy Prevention announced ACTA as a major step in the fight against intellectual property rights (IPR) counterfeiting and piracy. The envisioned ACTA will include commitments by participating governments in three areas: strengthening international cooperation; improving enforcement practices; and providing a strong legal framework for IPR enforcement. Trading partners engaged in discussions with the U.S. government so far include Canada, the European Union (with its 27 Member States), Japan, Korea, Mexico, New Zealand and Switzerland. Anti-Counterfeiting Trade Agreement (ACTA)- EU Perspective. OUT-LAW News, 25/10/2007 • The European Commission wants to create a new layer of intellectual property protections because it says that existing structures such as WIPO [World Intellectual Property Organization] are not flexible enough. Anti-Counterfeiting Trade Agreement (ACTA)- EU Perspective.

OUT-LAW News, 25/10/2007 • The Commission wants to create the Anti Counterfeiting Trade Agreement (ACTA), which will create "high-level international framework that strengthens the global enforcement of intellectual property rights and helps in the fight to protect consumers from the health and safety risks associated with many counterfeit products". • The activity envisaged by the plan is more usually undertaken by trade bodies such as the WTO, the G8 group of industrialised nations and WIPO. A Commission statement, though, said that it felt it needed more room to manoeuvre than those bodies provided. ACTA signed

The USA, Australia, Canada, Korea, Japan, New Zealand, Morocco, and Singapore signed the Anti- Counterfeiting Trade Agreement (ACTA) at a ceremony on October 1, 2011, in Tokyo ACTA Enforcement Art.25,4

4. A Party shall provide that its competent authorities have the authority to order the seizure of … the assets derived from, or obtained directly or indirectly through, the infringing activity. Precedent Legislation (USA) Racketeer Influenced and Corrupt Organizations (RICO) Act 1970 renders criminally and civilly liable “any person” who uses or invests income derived “from a pattern of racketeering activity” to acquire an interest in or to operate an enterprise engaged in interstate commerce, who acquires or maintains an interest in or control of such an enterprise “through a pattern of racketeering activity,” Proceeds of Crime Act 2002 (UK) • the Crown Court must decide whether the defendant has a “criminal lifestyle” and if so whether he “has benefited from his general criminal conduct”. • If it decides that he does not have a criminal lifestyle it must decide whether he “has benefited from his particular criminal conduct”. • If the court decides that the defendant has benefited from the conduct referred to it, it : (a) decides the recoverable amount, and (b) makes an order (a confiscation order) requiring him to pay that amount. Schedule 2 , clause 7–IP Offences

(1) An offence under any of the following provisions of the Copyright, Designs and Patents Act 1988 (c. 48)- (a) section 107(1) (making or dealing in an article which infringes copyright); (b) section 107(2) (making or possessing an article designed or adapted for making a copy of a copyright work); (c) section 198(1) (making or dealing in an illicit recording); (d) section 297A (making or dealing in unauthorised decoders). (2) An offence under section 92(1), (2) or (3) of the Trade Marks Act 1994 (c. 26) (unauthorised use etc of trade mark). Criminal Property Confiscation Act 2000 (Western Australia)

4. Confiscable property Property of the following kinds is confiscable to the extent provided by this Act — (a) property equal in value to any amount by which the total value of a person’s wealth exceeds the value of the person’s lawfully acquired wealth Criminal Property Confiscation Act 2000 (Western Australia)

11. Applying for unexplained wealth declarations (1) The Director of Public Prosecutions may apply to the court for an unexplained wealth declaration against a person. 12. Making unexplained wealth declarations (1) On hearing an application under section 11(1), the court must declare that the respondent has unexplained wealth if it is more likely than not that the total value of the person’s wealth is greater than the value of the person’s lawfully acquired wealth. Revenue’s cash rewards and confiscation targets ‘skewing justice’, The Times, October 5, 2009 • The Times has learnt that £44,000 in bonuses for the “most senior staff” at the Revenue & Customs Prosecution Office (RCPO), which pursues tax fraud cases, were linked in part to hitting confiscation targets. • The prosecuting authority also receives 18.5 per cent of the money seized from people convicted of fraud and subjected to confiscation orders. But leading lawyers are increasingly concerned that the setting of targets and provision of financial incentives will, in the words of one, “skew justice”. • The Home Office has set the criminal justice system a target for the annual seizure of £250 million of criminal assets by 2010 and wants the figure to rise to £1 billion per year.