How HSI Investigates Intellectual Property and Trademark Violations

Intellectual property crime and trademark violations are a huge problem. Products that violate trademarks or patents hurt American businesses and consumers. Homeland Security Investigations (HSI) is the main agency that investigates these crimes.

What is Intellectual Property?

Intellectual property refers to creations of the mind, like inventions, literary and artistic works, designs, and symbols, names, images used in commerce. There are four main types of intellectual property:

• Patents – for inventions
• Trademarks – for brand names and logos
• Copyright – for literary and artistic works
• Trade secrets – for confidential business information

When people or companies create intellectual property, they can get legal rights like patents, trademarks, or copyrights. This gives them the right to stop others from using their intellectual property.

Why Intellectual Property Crime Matters

Trade in counterfeit and pirated goods threatens America’s innovation economy, the competitiveness of our businesses, the livelihoods of U.S. workers, and in some cases, national security and the health and safety of consumers. That’s why investigating intellectual property crime is so important.

Economic Harm

Intellectual property violations rob companies of revenue. This hurts American businesses and workers. One estimate says intellectual property violations cost the U.S. economy between $200-$250 billion annually and leads to the loss of 750,000 American jobs.

Consumer Health and Safety

Counterfeit products are often made with inferior materials and standards. They can be contaminated or not work as intended, putting consumer health and safety at risk. For example, fake pharmaceuticals may not contain the right active ingredients or could contain toxic contaminants.

National Security

The profits from counterfeit goods may support criminal organizations. And counterfeits making their way into military or other sensitive supply chains could compromise national security.

Key HSI Responsibilities

HSI uses its legal authority and resources to investigate intellectual property violations. Some key responsibilities include:

• Investigating the trafficking of counterfeit goods and products that infringe on copyrights, patents, or trademarks
• Enforcing exclusion orders on patent-infringing and other intellectual property rights (IPR) violating goods
• Collaborating with Customs and Border Protection (CBP) to identify and seize counterfeit imports
• Working with law enforcement partners through the National Intellectual Property Rights Coordination Center
• Educating the public and stakeholders about the dangers of intellectual property theft and counterfeits

How HSI Conducts Investigations

HSI uses a variety of techniques to identify and build cases against intellectual property violators:

Inspections and Raids

HSI agents inspect shipments at ports of entry, raid storage facilities, and search brick-and-mortar stores and flea markets suspected of trafficking in counterfeit goods. These operations often seize large quantities of fakes.

For example, in 2020 HSI raided an online auction house in Tennesee and seized $16.7 million worth of counterfeit luxury items, pharmaceuticals, personal protective equipment, and more.

Undercover Operations

HSI agents go undercover online and in person to infiltrate counterfeit trafficking networks. Agents pose as buyers or sellers to gather evidence against criminals selling and distributing fake goods.

Tracing Financial Transactions

Following the money trail helps identify major counterfeiters and disrupt criminal organizations. HSI has experts who analyze banking records, money transfers, and other financial transactions to uncover IP criminals.

Digital Forensics

With the rise of e-commerce, more counterfeit trafficking occurs online. HSI digital forensic experts retrieve data from computers, smartphones, and online platforms to find evidence against IP violators.

Collaboration with CBP

CBP officers inspect imported shipments and flag counterfeits for further investigation. HSI agents take over complex investigations into trafficking networks. This collaboration led to the seizure of over 20,000 shipments of counterfeit goods in 2022.

Criminal Penalties for Intellectual Property Theft

Those caught stealing intellectual property face serious criminal penalties including:

• Fines up to $2 million for individuals, $5 million for companies
• Up to 10 years in prison for individuals
• Forfeiture of assets connected with the crime
• Being barred from importing to the U.S. in the future

For example, in 2022 HSI arrested 255 individuals related to intellectual property crimes and helped secure 95 convictions.

Reporting Intellectual Property Crime

Companies and individuals can report suspected intellectual property violations to HSI or the National Intellectual Property Rights Coordination Center. When evidence is provided, HSI can open investigations into trademark counterfeiting, copyright piracy, or patent violations.

Victims of intellectual property crime should gather as much evidence as possible, like product samples, shipping documents, payment records, and website screenshots. The more proof of the violation, the better.

While HSI and other agencies work hard to combat intellectual property theft, consumers should also be vigilant. Be wary of deals that seem too good to be true. And inspect items closely for signs of low quality. Being an informed buyer helps avoid supporting intellectual property criminals.