Greater DOJ Action Needed to Stop Corporate IP Theft

“Individual cases of IP theft are of course problematic, and it’s great that the DOJ has developed a functioning system that prosecutes it regularly. That said, corporate IP theft often involves larger amounts of data and has the potential to cause significant economic and competitive damage.”

biopharmaceuticalIn a laudable effort to curtail rampant corporate IP theft, a bipartisan group of U.S. Senators has called on a hesitant Department of Justice (DOJ) to step up its enforcement.

As reported in Forbes, Senators Thom Tillis (R-NC), Chris Coons (D-DE), and Marsha Blackburn (R-TN) recently issued a letter to the DOJ identifying the core gap in its prosecution habits. Their primary complaint was “the DOJ’s focus on individual, as opposed to corporate, offenders.” This is an oversight that must be corrected.

In their letter, the Senators discussed five cases to illustrate the discrepancies in the DOJ’s approach to IP theft when undertaken by corporations versus individuals.

CoStar v. CREXi

The most prominent of the bunch was the misconduct alleged against real estate marketplace CREXi.com, in CoStar Group et al. v. Commercial Real Estate Exchange Inc. Those in the IP world have closely watched this ongoing case. BloombergLaw and Reuters have attentively reported on the civil case against CREXi, reporting that “more than half of the infringement [of more than 50,000 copyrighted images owned by CREXi’s rival CoStar Group] occurred after [CoStar] originally brought the suit.”

The breadth of the alleged misconduct may have been what drove the willingness of the Senators to talk specifically about CREXi. Questions have been raised as to why the DOJ has not taken a closer look at potential violations of the Computer Fraud and Abuse Act of 1986 (“CFAA”). Further, this congressional letter comes on the heels of a series of significant revelations and setbacks for CREXi.

Previously, the federal civil case was rocked by a key CREXi agent recanting his testimony and confessing that CREXi had ordered his company to remove CoStar watermarks from CoStar-copyrighted photographs. Before that, CREXi’s counter-claims of supposed anti-competitive conduct by CoStar were rejected for a second time, and with prejudice, by the federal court in Los Angeles. And as Forbes reported, this isn’t the first time CREXi has been dinged for corporate theft, having settled a prior trade secret misappropriation case for seven figures and issuing a public apology in which its CEO, Michael DiGiorgio, expressed regret for the misconduct.

RyanAir v. Booking.com

The other case mentioned in the senators’ letter was a civil suit in the District of Delaware, which the letter indicates alleges that Booking.com similarly “violated the Computer Fraud and Abuse Act by accessing an airline website [Ryanair.com] without authorization and mass-copying data from a password-protection section of the site.” While the details of this case are not as colorful, the allegations are just as serious. According to the National Law Review, the plaintiff’s complaints indicate that Booking.com “entered into numerous contracts with non-party scraping providers to bypass the technical and non-technical barriers on the Ryanair site and perform the scraping at issue.”

A Real Problem

The point the Senators tried to make in their letter is that, while prosecutions have come in the examples they cited of alleged IP theft from individuals, no criminal charges have been brought to date in even the most prominent cases of corporate IP theft in the United States. In other words, if the DOJ is unwilling to even look at these two cases they cited, which have experienced plenty of developments and where there appears to be no shortage of allegations to inspect, then is it willing to look at any case of alleged corporate IP theft?

Individual cases of IP theft are of course problematic, and it’s great that the DOJ has developed a functioning system that prosecutes it regularly. That said, corporate IP theft often involves larger amounts of data and has the potential to cause significant economic and competitive damage. The theft of trade secrets, proprietary technologies, or strategic business plans from a corporation can have far-reaching consequences on a national or global scale. Corporate IP theft can result in economic losses not only for the company whose IP is stolen but also for the economy at large. The stolen technology or information might give foreign competitors an unfair advantage, affecting industries and jobs.

Moreover, the rule of law requires an equal and fair administration of the law. So, for the DOJ to punish only individuals who violate the law, and to refuse to punish corporations for violating the same law and in some cases in far more egregious ways — is a real problem. As Americans, we have the right to know and have confidence that the rule of law is an important foundation of all that the DOJ does.

The Senators respectfully asked “the Computer Crime & Intellectual Property Section and the Department more generally to provide an overview of the Department’s goals and priorities in bringing and enforcing cases alleging violations of the Computer Fraud and Abuse Act, the Digital Millennium Copyright Act, and other intellectual property protections Congress has enacted.”

A response to this letter was requested no later than December 12, so here’s hoping the DOJ provides a strategy for investigating corporate IP theft in the immediate days to come. Businesses have needed and deserved the DOJ’s attention to this matter for far too long.

Image Source: Deposit Photos
Author: maxkabakov
Image ID: 22591901 

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One comment so far.

  • [Avatar for Pro Say]
    Pro Say
    December 20, 2023 01:57 pm

    Thanks George — great post on a critically-important matter.

    Time for the DOJ to stop being a paper tiger when it comes to corporate IP theft.

    Long past time.

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