By Tamlin H. Bason
The Department of Homeland Security's Immigration and Customs Enforcement agency, in conjunction with the Department of Justice, seized 150 domain names that allegedly sold counterfeit and pirated goods.
The seizures took place over the weekend leading up to Cyber Monday—a day when many Americans log in to websites for special offers. During a Nov. 28 conference call ICE Director John Morton said, “Our basic emphasis is that we want to promote a lawful online environment as much as we can, and that means going after a small but significant number of websites engaging in fraud on consumers.”
The seizures represented the eighth phase of the “Operation in Our Sites” initiative that was first launched in June 2010. In all, the initiative has resulted in the seizure of 350 domains.
Under the initiative, ICE, the DOJ, and the FBI are able to apply for warrants from federal magistrate judges.
The government maintains that this remedy was granted by the 2008 Pro-IP Act, Pub. L. No. 100-403, which at Section 2323 allows the government to seize the instrumentalities or proceeds of criminal conduct.
The government argues that domain names are instrumentalities that are used to traffic pirated and counterfeit goods. Thus, the government says that the websites are subject to in rem proceedings.
In order to maximize their impact, each round of seizures has generally been tied to holidays or events that will result in a spike of internet traffic.
For example, the most recent seizures come exactly a year after 82 websites were seized during a Cyber Monday crackdown in 2010.
Prior to the 2011 Super Bowl, ICE also seized a number of websites that allowed users to illegally stream copyrighted sporting events.
Many of the domain names seized over the weekend sell counterfeit sports jerseys, though Morton said that ICE did not necessarily target any particular industry.
Morton said that rights holders can assist in the process by helping to determine the authenticity of goods that ICE purchases from the websites.
Rights holders that suspect that a website is selling pirated or counterfeit goods can contact the National Intellectual Property Rights Coordination Center, where Operation in Our Sites is permanently housed.
After a domain has been seized, users that try to access the website are instead brought to a page that informs them that the website has been seized by ICE because it sold counterfeit goods. Users that remain on the page are then automatically directed to a YouTube video that details the economic impact of counterfeit and pirated goods.
Although Morton said that ICE did not know the volume of goods that were sold on the most recently seized websites, he said that given that Cyber Monday sales were estimated to be close to $1.2 billion, the seizures likely saved rights holders millions of dollars.
“These domain names are no longer open for business, so on a day when many consumers are shopping online, we disrupted the sale of thousands and thousands of counterfeit goods,” Assistant U.S. Attorney General for the Criminal Division Lanny A. Breuer said during the conference call.
Morton acknowledged that counterfeiters could thwart ICE's efforts by continuing their business under a different domain name. For instance, he said that some companies have simply opened .org websites after ICE seized their .com domain names.
Moreover, ICE only has jurisdiction over domain names that are registered in the United States, such as those that operate on the generic top-level domains .com, .org, and .net. Therefore, counterfeiters could completely evade ICE by simply choosing another top-level domain such as cn, .ru, or .bz.
In fact, Morton said that while all of the seized websites are registered in the United States, the counterfeit and pirated products are manufactured overseas— “predominantly in China.”
Thus, it would seem that counterfeiters could easily steer clear of U.S. jurisdiction. But, Morton said that such evasive measures are not immediately profitable. For one thing, there is a certain air of legitimacy attached to domain names that operate on the .com TLD that may not be attached with some of the other TLDs.
Also, Morton said that in order to make money from selling counterfeit goods, a website needs a substantial amount of internet traffic. Once a website becomes popular, it can then make money by selling a large volume of counterfeit and pirated goods, by selling advertising space, or both.
“If you seize a particular domain name, it disrupts that traffic and it disrupts that advertising and it takes a certain amount of time for websites to build that back up,” Morton said.
“Combating intellectual property theft is among our top priorities at DOJ,” Breuer said.
But, Breuer noted that law enforcement can be effective only up to a certain extent. Ultimately it will be up to consumers to recognize the dangers of purchasing counterfeit and pirated goods, and to make sure that they only purchase from legitimate sources. “We all have to be a part of the solution,” Breuer said.
Morton agreed. “A strong public outreach campaign to make sure the consumers are aware of what is going on is critical,” Morton said.
A full list of the domain names that were recently seized can be found at http://pub.bna.com/ptcj/IOS_Seized_Websites.pdf