Annual Intellectual Property Report to Congress

Transcript

1 A NNUAL I NTELLECTUAL P ROPERTY ONGRESS R EPORT TO C February 2019 * * * U NITED S TATES OORDINATOR NTELLECTUAL P ROPERTY E NFORCEMENT C I

2 ONGRESS : IPEC A NNUAL I NTELLECTUAL P ROPERTY R EPORT TO C . 15 U.S.C. §8114 This report is submitted pursuant to During the past two years, Presi dent Trump and his Administration have worked to promote strong intellectual pr operty rights protection and enforcement, both domestically and abroad. As part of an integrated approach, t he Trump Administration views our intellectual property strategy, policy and enforcement efforts, together, as key to helping secure the future of our . innovative economy and to maintaining our competitive advantage to Congress, developed by the The Trump Administration’s Annual Intellectual Property Report Office of the U.S. Intellectual r, brings together the combined Property Enforcement Coordinato and coordinated efforts of the White House, the Departments of Commerce, Justice, Homeland Security, State, Treasury, Health and Human Services, and Agric ulture, the Office of the U.S. Trade Representative, and the U.S. Copyright Office. This repo rt was originally mandated to be submitted by the U.S. Intellectual Property Enforcement Coordin ator a decade ago by the Prioritizing Resources and Organi zation for Intellectual Proper ty Act of 2008, and builds upon that framework to provide an ove rview of the Trump Administrati on’s intellectual property ’ approach to intellectual property enforcement strategy and policy efforts. For the United States and innovation policy to be successful, it must continue to be a combined effort that includes all branches of government, the private sector, and our internation al partners. intellectual The Trump Administration continue s to build on past strategic e fforts in all areas of ts, copyrights, trademarks and trade secrets, both domestically property policy, including paten e United States to maintain its and abroad. But the Administration also recognizes that for th future economic competitiveness, we need to think strategically and shift the paradigm to one where we not only place America First, but regard America’s inventive and creative capacity as something that we must protect, promote and prioritize. 1

3 S ROPERTY P NTELLECTUAL I TATES S NITED U TRATEGY * * * “ , trademarks, trade secrets, and other We will safeguard the copyrights, patents intellectual property that is so vital to ou r security and to our prosperity. We will uphold our values, we will defend our workers, and we will protect the innovations, creations, and inventions t hat power our magnificent country.” 1 - President Donald J. Trump of the Constitution Article I, Section 8, Clause 8 he fundamental importance of recognizes t intellectual property and its protection to the United States. Intellectual Property (IP) underpins bs, it supports the arts, sciences it supports good paying jo nearly every aspect of our economy – and technology, and it creates a f ramework that allows new indu stries and innovations to flourish. On April 26, 2018, President Trump, became the first President to formally recognize World Intellectual Property Day and proc laimed that “[o]n World Intellectual Property Day, we not only celebrate invention and i nnovation, but also we recognize how integral intellectual property reason, the President stated that rights are to our Nation’s economic competitiveness.” For this “[o]ur country will no longer turn a blind eye to the theft of American jobs, wealth, and intellectual property through th e unfair and unscrupulous econo mic practices of some foreign 2 actors.” Under the Trump Administration tual Property Enforcement , the Office of the U.S. Intellec 3 Coordinator (IPEC) along with other White House offices, in coordination w ith executive branch departments and agencies, works to advance pro-growth po licies, to promote and protect our great competitive advantage – our nation’s innovative econo my. Our efforts have focused on coordinating and developing the United States’ overall intellectual property enforcement policy and strategy, to promote innovation and creativity, and to ensure effective intellectual property protection and enforcement, dom estically and abroad. The United States’ intellectual property strategy involves a br oad range of executive branch agencies and departments to ensure that the government’s effort s are focused and well- coordinated. 1 Remarks by on the President Signing a Memorandum China’s Laws, Policies, Practices, and on Addressing (August 2017) - Actions Related to Intellectual Property, Innovation, and Techn ology 14, 700571.pdf https://www.govinfo.gov/content/pkg/DCPD-201700571/pdf/DCPD-201 2 President Trump Proclaims April 26, 2018, as World Intellectua l Property Day (April 26, 2018) - https://www.whitehouse.gov/presidential-actions/president-donal d-j-trump-proclaims-april-26-2018-world- intellectual-property-day/ 3 U.S. Code: Title 15 (Commerce an d Trade), Chapter 107 (Protect ion of Intellectual Property Rights) - 15 U.S.C §8111. The IPEC Office is part of the White House Office of Ma nagement and Budget in the Executive Office of the President. 2

4 Over the past two years, the Trump Administration has taken sig nificant actions to promote and protect intellectual property. The Administration’s four-part strategic approach includes:  engagement with our trading partners; uthorities, including our trade tools;  effective use of all our legal a  expanded law enforcement ac tion and cooperation; and  engagement and partnership with the private sector and other st akeholders. The United States government is t aking a targeted, practical, a nd comprehensive approach 4 The goal is to ensure a level playing property policy and strategy. toward addressing intellectual field for American innovators and creators, where their innovations and creations are respected an businesses to operate in a free, and protected, and for systems to be in place that allow Americ fair and open marketplace. To that end, IPEC established the White House Intellectual Property Strategy Group that regularly brings together the N ational Economic Council (NEC), National Security Council (NSC), Office of Science and Technology Policy (OSTP), Council of Economic Advisors (CEA), Office of the Vice Presid ent (OVP), Office of the U.S. T rade Representative (USTR), s. Because intellectual other relevant White House Offices, and Departments and Agencie property policy in the international and domestic contexts affe cts multiple departments and agencies, the White House manage s the collaborative policy deve lopment process to determine courses of action and make Presidential recommendations to ensu re that all views are properly presented and considered. cutive branch departments and The Administration’s overall effo rts involve a multitude of exe agencies, that each handle both different and overlapping aspec ts of the federal government’s intellectual property strategy and policy. These efforts include senior officials from the Departments of Commerce, Justice, Treasury, Homeland Security, and Health State, Agriculture, and Human Services, and the U. S. Copyright Office. Additionally by statute, the executive branch has three Presidentially -appointed and Senate confirmed positions focused on IP, which are the Intellectual Property Enforcement Coordinator in the Executive Office of the President; the Undersecretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office (USPTO) at the Department of Commerce; and the Chief Innovation and Intellectual Property Negotiator at USTR. over intellectual property policy Across the Administration, federal departments have vital roles ommerce leads several agencies that have important intellectual and strategy. The Secretary of C intellectual property policy both property responsibilities and serves as a leading voice shaping in the United States and abroad. Chief among the Commerce Depa rtment agencies is the gh the Secretary of Commerce, USPTO, with statutory authority to advise “the President, throu 4 This includes implementation, o f areas in line with Presidenti al policies and priorities, of the Joint Strategic Plan, submitted under 15 U.S.C. §8113 , for FY2017 to FY2019. 3

5 onal intellectual property iss ues” and advise “Federal on national and certain internati departments and agencies on matters of intellectual property in the United States and intellectual property protection in other count ries.” 35 U.S.C. §2(b) (8)-(13). Other Commerce Department agencies that work on intellectua l property issues include the International Trade Administration (ITA), the National Telecommunications and Information Administ ration (NTIA), and the Bureau of Industry and Security (BIS). The Administration is working to ensure that the federal govern ment’s intellectual property efforts are focused and well-coordinated and that resources are being used effectively and efficiently. As the Administration works to achieve meaningful progress, there are three important questions that should always be considered – What are we doing well? What isn’t working? And what should we be doing? The Administration has made clear that our intellectual property enforcement policy includes all areas of intellectual property and innovation policy – copyrights, patents, trademarks, and trade secrets – and involves nearly every sector of our economy. Our strategic approach makes clear that our economic prosperity relies upon our leadership in technology and creativity, and we must protect our innovative econom y from those who steal intellectual property and unfairly exploit the innovations of free societies. As the United States government works to advance American economic interests overseas, a significant component of our enfor cement and protection efforts includes addressing trade curity, and rule of law concerns in enforcement, market access, competition, digital trade, cyberse round the world. American in novators and creators must be able the intellectual property space, a to operate in foreign markets th at provide them with clear path s to secure and use their IP. Countries and foreign companies should not be allowed to profit off of the theft or misappropriation of American inte llectual property, including, for example, by trade secret theft, IP infringement, piracy, forced technology transfers or localiz ation requirements. Additionally, American brand holders must have full and fair ability to marke t and sell their products and use their properly registered trademarks across the globe, without undue restrictions. The recently- concluded U.S.-Mexico-Canada Agreement has the strongest and mo st comprehensive IP standards of any prior U.S. Free Trade Agreement (FTA). On the domestic front, the Administration will work to ensure that our intellectual property laws are kept up to date, and that they promote American innovation and creativity. Intellectual property is integral to our nation’s economic competitiveness and the growth of our omically important, but a key innovative economy. For instance, copyrights are not only econ part of our culture and society. A well-functioning copyright system is essential. The U.S. copyright system is grounded in our Constitution, and built on centuries of extensive jurisprudence, statu tes and regulations. D uring the past year, Congress considered and passed the Orrin G. Hatch–Bob Goodlatte Music Modernization Act, which the President signed into law on October 11, 2018. As President Trump explained, this “landmark legislation” – which had bipartisan sponsorship and was unanimously passed by both t he Senate and the House – 4

6 “provides critical updates to copyright law to reflect the real ities of music licensing in the digital 5 age and to better reward artists and producers for the online use of their music.” Additionally, a well-functioning pa is important for our economy. The tent system Administration is working to promote innovation and to ensure that we have strong and reliable patents, that the process for granting them is thorough, yet expeditious, and that any subsequent reviews by the courts or administrative agency is done fairly. The Supreme Court has ruled on a number of significant intellectual property cases in recent years. The Administration is monitoring how those decisions are being implemented by lower c ourts and executive branch agencies. The Administration also continues to explore opportunities to engage with stakeholders on intellectual property, and to look existing industry-led voluntary initiatives to protect American at new areas for cooperation. y this Administration is We are at a defining moment in this new century, and that is wh advancing pro-growth policies, to protect our continued economi c and innovative America’s innovative and competitiveness, promote new engines of growth, and prioritize creative capacity. * * * 5 Statement by the President on s igning H.R. 1551, the Orrin G. Hatch–Bob Goodlatte Music Modernization Act (October 11, 2018) - https://www.whitehouse.gov/briefi ngs-statements/statement-by-th e-president-7 / 5

7 E T RADING P ARTNERS NGAGEMENT WITH OUR * * * “America has also finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs, and our nder is over. From now on, we expect Nation’s wealth. The era of economic surre trading relationships to be fair and to be reciprocal. We will work to fix bad trade American workers and deals and negotiate new one s. And we will protect American intellectual property, through st rong enforcement of our trade rules.” 6 - President Donald J. Trump During the past two years President Trump has met with world le aders across the globe, consistently raising intellectua l property issues with our trad ing partners. The President and his ongly for free, fair and reciprocal trade. Administration have advocated str The Trump Administration is ready to counter unfair trade practices, utilizing all appropriate inded partners to preserve and means from dialogue to enforcement tools, and “work with like-m nd reciprocal economic order” and “emphasize fair trade modernize the rules of a fair a forts to ensure transparency and as well as multinational ef enforcement actions when necessary, 7 adherence to international standa rds within trade and investmen t projects.” nic imbalance in our In China, President Trump “discussed with President Xi the chro ade, and the concrete steps th [the U.S. and China] will jointly at relationship as it pertains to tr massive trade distortion. Thi take to solve the problem of the s includes addressing China’s market access restrictions and technology transfer requirements, which prevent American companies from being able to fairly compete within China. The United States is committed to protecting the intelle ctual property of our companies and providing a level playing field for our 8 As part of the United States’ continuing response to China’s t heft of American workers.” intellectual property and forced transfer of American technolog y, and at the direction of President Trump, the U.S. has i mposed three rounds of tariffs on Chinese products this year, 9 totaling $250 billion worth of goods. 6 (January 30, 2018) - President Donald J. Trump’s State of the Union Address https://www.whitehouse.gov/briefin gs-statements/president-donal d-j-trumps-state-union-address/ 7 December 18, 2017 (page 20) - National Security Strategy, https://www.whitehouse.gov/wp - content/uploads/2017/12/NSS-Final-12-18-2017-0905.pdf 8 ovember 9, 2017) Statement (N - Remarks by President Trump and President Xi of China in Joint Press gs-statements/remarks-preside nt-trump-president-xi-china-joint-press-statement- https://www.whitehouse.gov/briefin beijing-china/ 9 Press Release: USTR Finalizes T ariffs on $200 Billion of Chine se Imports in Response to China’s Unfair Trade Practices (Septem ber 18, 2018) - https://ustr.gov/about-us/policy-offices/press-office/press- releases/2018/september/us tr-finalizes-tariffs-200 6

8 and United States, Mexico In September 2018, under the leadership of President Trump, the st into a 21 Canada reached an agreement to modernize the 24-year-old NAFTA century, high- USMCA) will support standard agreement. The United State-Mexico-Canada Agreement ( mutually beneficial trade leading to freer markets, fairer trad e, and robust economic growth in North America. The USMCA includes a modernized, high-standard Intellectual Property in U.S. trade and IP policy. It contains comprehensive chapter, which breaks new ground protections against misappropriation g by state-owned enterprises. It of trade secrets, includin data protection for biologic drug s of 10 years. It provides the minimum term of establishes a addition, strong copyright most robust border enforcement mechanisms of any prior FTA. In the grant of Geographical Indications (GI) protection and enforcement, more transparency in protection or recognition, and fu mote the strong and effective ll national treatment also pro protection and enforcement of IP rights that is critical to driving innovation, creating economic 10 growth, and supporting American jobs. rump’s leadership, we will And, in October 2018, USTR announced that, “[u]nder President T continue to expand U.S. trade and investment by negotiating tra de agreements with Japan, the EU and the United Kingdom. Today’s announcement is an importan t milestone in that process. We are committed to concluding these negotiations with timely a nd substantive results for 11 American workers, farmers, ranchers, and businesses.” es in multiple international ncing intellectual property issu The Administration is also adva ion and Development (OECD), organizations, including the Organization for Economic Cooperat ganization (WTO), Asia- nization (WIPO), World Trade Or World Intellectual Property Orga Pacific Economic Cooperation (APEC) Forum, the World Health Organization (WHO) and other international bodies. OECD is a 36-member internationa l organization that provides a forum for governments to cooperate on a wide range of ec onomic and social issues, and also provides analysis and data on property systems, among other global economic and trade developments, including intellectual issues. In March 2018, the U.S. Intellectual Property Enforcem ent Coordinator provided the D.C. launch of the OECD’s re port on keynote address at the Washington, Governance 12 Frameworks to Counter Illicit Trade . ed States in ongoing trade In April 2018, a USTR-led interagency team represented the Unit discussions with India as part of (TPF). The TPF is e Policy Forum the U.S.-India Bilateral Trad the primary bilateral trade and investment dialogue between the U.S. and India and features four working groups, including a group on Intellectual Property. The 2018 meeting included discussions on a wide range of IP protection and enforcement is sues, including trade secrets. 10 United States–Mexico–Canada Trade Fact Sheet: Modernizing NAFT A into a 21st Centur y Trade Agreement - ts/2018/october/united offices/press-office/fact-shee (October 1, 2018) - https://ustr.gov/about-us/policy- states%E2%80%93mexico%E2%80%93canada-trade-fa-1 11 tion Announces Intent Negoti to Press Release: Trump Administra ate Trade Agreements with Japan, the European Union and the United Kingdom (October 16, 2018) - https://ustr.gov/about-us/policy-offices/press-office/press- releases/2018/october/trump-administration-announces 12 The OECD report is available at http://www.oecd.org/gov/governance-frameworks-to-counter-illici t-trade- 9789264291652-en.htm 7

9 which and Promotion (DIPP), The Indian delegation from the Department of Industrial Policy led the working-level discussions at the IP working group on behalf of India, also met with the riority IP concerns. In addition, cement Coordinator to discuss p U.S. Intellectual Property Enfor the State Department, Departmen t of Homeland Security, and along with representatives from Coordinator met in both New ellectual Property Enforcement Commerce Department, the U.S. Int officials from the Indian gove Delhi and Mumbai with high-level rnment and stakeholders from various industries to identify areas where the Indian intellectual property regime and associated enforcement could be improved. ual Property Enforcement Coor dinator led an inter-agency U.S. In August 2018, the U.S. Intellect the Justice Department, the State delegation to Southeast Asia tha t included representatives from Department, Commerce Department, and the Department of Homeland Security. The delegation met with foreign counterparts in Vietnam, Thailand, and Hong Ko ng to discuss a range of intellectual property and related trade and law enforcement iss ues in the region. Senior ce of strengthening IP government officials in the countries acknowledged the importan enforcement and discussed ways to enhance cooperation with the U.S. The U.S. will continue to address intellectual property and related trade and law enforcement issues with those countries Investment Framework through bilateral engagements, including through the Trade and Agreements with Vietnam and Thailand. On October 17, 2018, the Administr ation announced that it was s ubmitting a notice of 13 withdrawal from the Universal Postal Union (UPU). As the Chairman of the Postal Regulatory Commission explained, “[t]he UPU continues to promulgate agreem ents that require posts to ipments from full application of undercharge for delivery of inbound mail, to insulate postal sh national customs laws, and to promote a different legal regime for postal operators and 14 As the President explained in his memorandum of August 23, competing private carriers.” es around the world by 2018, the current UPU system “distorts the flow of small packag goods from incentivizing the shipping of artificially low benefit from foreign countries that reimbursement rates”; as a resu lt, “in many cases” – including when packages are shipped by air from China to the US – the postal charges “are less than comparable domestic postage rates” for 15 For example , a small package is packages that are shipped entirely within the United States. charged less to be shipped by ai r from China to the United Stat es than when it is shipped entirely ificially low postage has within the US. In addition to other negative impacts, this art f counterfeits being shipped from significantly contributed to the rapid growth in recent years o hdrawal is intended to address this Administration’s notice of wit China to the United States. The rman explained, the and other problems. As the Postal Regulatory Commission’s Chai Administration’s decision “is a tremendous step towards finally addressing these distortions on 13 Statement from the White House Pr ess Secretary (October 17, 20 18) - https://www.whitehouse.gov/briefings- statements/statement-press-secretary-38/ 14 Statement of Chairman Robert G. Taub, Postal Regulatory Commis - sion (October 17, 2018) https://www.prc.gov/sites/defau lt/files/pr/Chairman%20Taub%20Statement%20on%20UPU_0.pdf 15 for the Presidential Memorandum of August 23, 2018, on “Modernizing th e Monetary Reimbursement Model Delivery of Goods Through the International Postal System and Enhancing the Security and Safety of International Mail” - https://www.whitehouse.gov/presi dential-actions/presidential-me morandum-secretary-state-secretary- treasury-secretary-homeland-security-postmaster-general-chairma n-postal-regulatory-commission/ 8

10 behalf of our fellow Americans – particularly U.S. merchants, U .S. mailers, and U.S. private- sector carriers who are trying to compete fairly in these global markets.” th In September 2018, USPTO participated in the 58 assemblies of the member states of the participated in bilateral WIPO. There the Administration engaged with WIPO officials and artners, including the European discussions on intellectual property with a number of trading p Korea, Singapore, and Chile. Union, Japan, United Kingdom, Canada, Mexico, Australia, South uilding and training programs The United States conducts a numbe r of international capacity b that leverage the resources of executive branch agencies and our embassies overseas. As the to be designed toward United States conducts these programs, it will be important for them achieving meaningful results on IP concerns raised, for example , in places such as the Annual 16 USTR Special 301 Report. The State Department supports deployment of a Global Network of regional Intellectual Property f Justice prosecutors with Law Enforcement Coordinators (IPLECs), experienced Department o n and deliver capacity building trengthen U.S. law enforcement coordinatio responsibilities to s forcement partners. The IPLECs focus on combatting the assistance to key foreign law en ime organizations in IP theft o f all kinds and on combating growing role of transnational cr as Dark Web markets where criminals us related cybercrime, such e cryptocurrencies to hide their illicit gains. In 2018, the USPTO’s Global Intellectual Property Academy (GIPA) developed and provided capacity building programs that addressed a full range of IP protection and enforcement matters, ghts at national borders, Internet piracy, express mail shipments, including enforcement of IP ri trade secrets, copyright policy, and patent and trademark examination. During the last year, the programs cumulatively included just under 4,000 government officials, judges and prosecutors, 17 from 83 countries. an integral part of their In 2018, U.S. Embassies around the world continued to make IPR bilateral policy dialogues with host governments. For example, U.S. diplomatic posts around the world celebrated World Intellectual Property Day on April 26, 2 018, highlighting IP’s eme in 2018 was “Powering importance in fostering innovation and economic growth. The th on celebrating all of the Change: Women in Innovation and Creativity,” and events focused industrious and brilliant women who have changed, and who conti nue to change, the world with to society. To celebrate the their inventions, innovations, and other creative contributions occasion, U.S. Embassies and consulates hosted IP-focused panel discussions, contests, and workshops. 16 protection and enfo of IP – Annual Review of the state 301 Report 2018 Special rcement in U.S. trading partners around the world, which the Offi ce of the U.S. Trade Representa tive conducts pursuant to Section 182 of the Trade Agreements Act of 1974, as amended by the Omnibus Trade and Competitivenes s Act of 1988, the Uruguay Round Act, and the Trade Facilitation and Trade Enforcement Act of 20 15 (19 USC §2242). The 301 Report identifies ir laws, policies, and practic foreign countries and exposes the es that fail to provide ade quate and effective IP protection and enforcement. ( https://ustr.gov/sites/default/files/files/Press/Reports/2018%2 0Special%20301.pdf ) 17 For a comprehensive list of the types of programs conducted by Executive Branch agencies in 2018, please see the appendices. 9

11 -long International Copyright Every two years, the Copyright Office and WIPO co-host the week Institute (ICI), a symposium held in Washington, D.C. that is o ne of the Copyright Office’s premier training events. The 2018 ICI, held in early June, was on “Copyright and Cross-Border Issues for Developing Countries and Countries with Economies in Transition.” Copyright officials from 17 countries heard from over 50 experts on topic s ranging from copyright st registration systems in the 21 century to inter-government al coordination on criminal enforcement across borders. The United States’ inter-agency IP training and capacity buildi ng efforts involve a multitude of Federal agencies. For example, in April 2018, USPTO and the IP Attaché in Brazil, in of Justice’s Intellectual Property Law Enforcement Coordinator conjunction with the Department (IPLEC) for Latin America (stationed in Sao Paulo), organized a Workshop on Combatting trade in Illicit and Counterfeit Agricultural Chemicals that was held in Foz do Iguaçu, Brazil. The USPTO had organized several prev ious workshops on this issue in Southeast Asia and were asked by stakeholders to organize a similar workshop in South A merica. Approximately 40 law enforcement and regulatory officials from Brazil, Argentina, Uruguay, and Paraguay discussed the laws and regulations covering the sale, import, export and use of pesticides and the parties responsible for testing, inspecting, auditing and enforcing the se laws. They also shared strategies and presented case studies on best practices for investigating and prosecuting IP and environmental crimes. In additi on, the leading private stakeholders in the agricultural industry provided an overview of the tre nds and their challenges in protecting and enforcing IP in the tri- border area (Argentina, Paraguay, and Brazil). * * * 10

12 L E , UTHORITIES A EGAL INCLUDING OUR LL OUR A SE OF U FFECTIVE T OOLS RADE T * * * countries exploit the system at the "We cannot have free and open trade if some it needs to be fair and it needs to be expense of others. We support free trade, but ade undermines us all. The United States reciprocal. Because, in the end, unfair tr will no longer turn a blind eye to unfair economic practices, including massive intellectual property theft...These and other predatory behaviors are distorting the global markets and harming businesses and workers, not just in the U.S., but around the globe." 18 - President Donald J. Trump nst the theft of American IP and President Trump and his Administration are standing strong agai Trump has expressed that we are committed to protecting our innovative economy. President our trade deficit, but the barriers to practices that drive, not only need to address the unfair trade market access. “We really have to look at access, forced techn ology transfer, and the theft of intellectual property, which just the United States and its companies , by and of itself, is costing 19 at least $300 billion a year.” tens our national security. IP theft not only damages American companies, but it also threa the Administration’s National Security Strategy Promoting American prosperity is a pillar of ronic trade abuses and will (NSS). The NSS states that “America will no longer tolerate ch st century pursue free, fair, and reciprocal ucceed in this 21 economic relationships. To s geopolitical competition, America must lead in research, technology, and innovation. We will security innovation ba se from protect our national those who steal our intellectual property and 20 unfairly exploit the innovation of free societies.” The NSS highlights that “[e]very year, competitors such as Chin a steal U.S. intellectual property y technology and early-stage ideas valued at hundreds of billions o f dollars. Stealing proprietar 21 societies.” allows competitors to unfairly The NSS lists the tap into the innovation of free United States will reduce the illicit protection of intellectual property as a priority action. “The 18 y 26, 2018) - Remarks by President Trump to t he World Economic Forum (Januar gs-statements/remarks-preside nt-trump-world-economic-forum / https://www.whitehouse.gov/briefin 19 9, 2017) - Remarks by President Trump China (November at Business Event with President Xi of https://www.whitehouse.gov/briefin nt-trump-business-event-president-xi-china- gs-statements/remarks-preside beijing-china/ 20 America’s Interests (December President Donald J. Trump Announces a National Security Strate gy to Advance 18, 2017) - https://www.whitehouse.gov/briefings-statements/president-donal d-j-trump-announces-national - security-strategy-advance-americas-interests/ 21 National Security Strategy (December 18, 2017 ) (page 21) - https://www.whitehouse.gov/wp - content/uploads/2017/12/NSS-Final-12-18-2017-0905.pdf 11

13 appropriation of U.S. public and private sector technology and technical knowledge by hostile foreign competitors. While mai ntaining an investor-friendly climate, this Administration will nvestment in the United States work with the Congress to strengthen the Committee on Foreign I (CFIUS) to ensure it addresses current and future national secu rity risks. The United States will to curtail intellectual property theft prioritize counterintelligence and law enforcement activities by all sources and will explore new legal and regulatory mechanisms to prevent and prosecute 22 violations.” irected the United States Trade Representative to investigate In August 2017, President Trump d actions that may be unreasonable or discriminatory and that China’s laws, policies, practices, and may be harming American intell ectual property rights, innovatio n, or technology development. On August 18, 2017, the Trade Representative initiated an inves tigation under section 301 of the 23 Trade Act of 1974 (19 U.S.C. 2411). he findings of its exhaustive investigation; USTR found that In March 2018, USTR released t nsfer, intellect ual property and actices related to technology tra China’s acts, policies, and pr 24 innovation are unreasonable and di Based scriminatory and burden or restrict U.S. commerce. that directed the U.S. Trade issued a memorandum on these findings, the President Representative to take all appr er Section 301, including considering increased opriate action und 25 Initially China and pursuing dispute settlement proceedings in the WTO. tariffs on goods from the U.S. imposed a 25 percent du Chinese imports, including farm ty that affected $34 billion in of aluminum and steel. That equipment, motor vehicles, medical equipment and products made nese goods. Starting September was followed by a second round of tariffs on $16 billion in Chi 24, and in response to China’s refusal to eliminate its acts, policies, and practices, tariffs on lly set at a rate of 10 percent (the another $200 billion in Chinese imports went into effect initia 26 USTR explained the need to take these rate will increase to 25 percent on March 2, 2019). na’s unfair trade practices: tariff actions, in response to Chi dership in technology and actions to protect America’s lea “We must take strong defensive innovation against the unprecedented threat posed by China’s th eft of our intellectual property, the forced transfer yber-attacks on our computer of American technology, and its c ine America’s high-tech aggressively working to underm networks. China’s government is 22 pages 21-22) - National Security Strategy, D https://www.whitehouse.gov/wp- ecember 18, 2017 ( content/uploads/2017/12/NSS-Final-12-18-2017-0905.pdf 23 to U.S. Trade Representative (August 1 Presidential Memorandum 4, 2017) - https://www.whitehouse.gov/presidential-actions/presidential-me morandum-united-states -trade-representative/ 24 Into China’s Acts, Policie USTR, Findings Of The Investigation Technology Transfer, To s, And Practices Related Trade Act of 1974 (March 22, 2018) - Section 301 of the Intellectual Property, and Innovation Under https://ustr.gov/sites/default/files/Section%20301%20FINAL.PDF 25 301 Investigation (March to the Section lated on the Actions by the United States Re Presidential Memorandum 22, 2018) - https://www.whitehouse.gov/presidential-actions/presidential-me morandum-actions-united-states- related-section-301-investigation/ 26 USTR, Related to Technology Notice of Modification of Section 301 Action: China’s Act s, Policies, and Practices Transfer, Intellectual Property, and Innovation , 83 FR 65198 ( December 19, 2018) – https://www.govinfo.gov/content/p kg/FR-2018-12-19/pdf/2018-2745 8.pdf ; Press Release: USTR Finalizes Tariffs on $200 Billion of Chinese Imports in Response to China’s Unfai r Trade Practices (September 19, 2018) - https://ustr.gov/about-us/polic y-offices/press-o ffice/press-rel eases/2018/september/ustr-finalizes-tariffs-200 12

14 industries and our economic lead ership through unfair trade practices and industrial policies like ‘Made in China 2025.’ Technology and innovation are Ameri ca’s greatest economic t our country to have a assets and President Trump right fully recognizes that if we wan prosperous future, we must tak e a stand now to uphold fair trade and protect American 27 competitiveness.” The Trump Administration is committed to promoting free, fair, and reciprocal economic and investment agreements with relationships. “The United States will pursue bilateral trade ernize existing agreements to and will mod countries that commit to fair and reciprocal trade those principles. Agreements m ensure they are consistent with ust adhere to high standards in 28 he environment.” intellectual property, digital trade, agriculture, labor, and t USTR engages closely with the Office of the U.S. Intellectual P roperty Enforcement Coordinator ters. USTR continues to lead and other U.S. government agencies on intellectual property mat ce programs such as the trade agreement negotiations; reviews under U.S. trade preferen nd Opportunity Act (AGOA); of Preferences (GSP) and the Africa Growth a Generalized System ion; and in highlighting on trade policy reviews undertaken at the World Trade Organizat ts, and notorious e-commerce and intellectual property enforcement deficiencies in foreign marke physical markets trafficking in counterfeit and pirated goods. USTR also works closely with executive branch departments and a gencies to prepare the Annual Special 301 report that identifies U.S. trading partners that do not adequately protect intellectual st, that highlights prominent property rights, and to compile the annual Notorious Markets li that engage in and facilitate online and physical marketplaces, outside the United States, report provides a review of the substantial piracy and counterfeiting. The Annual Special 301 state of IP protection and enforcement in U.S. trading partners around the world. The report calls out foreign countries and exposes the laws, policies, and practices that fail to provide adequate and effective IP protection and enforcement for U.S. inventors, creators, brands, 29 The Out of Cycle Review of Notorious Markets manufacturers, and service providers. highlights prominent examples of foreign “online and physical m arketplaces that reportedly 30 engage in, facilitate, turn a b lind eye to, or benefit from sub stantial piracy and counterfeiting.” The list includes a number of for eign e-commerce sites and phys ical markets where pirated or counterfeit goods are available. i-judicial federal agency with The International Trade Commission (ITC) is an independent quas broad investigative responsibil ion 337 of the Tariff Act of 1930 ities on matters of trade. Sect provides for relief against unfair acts and unfair methods of c ompetition in the importation of infringe a U.S. patent or a U .S. trademark. A complainant in a articles, including articles that 27 onse to Press Release: USTR Issues Tarif fs on Chinese Products in Resp Unfair Trade Practices (June 15, 2018) - https://ustr.gov/about-us/polic y-offices/press-o ffice/press-rel eases/2018/june/ustr-issues-tariffs-chinese-products 28 https://www.whitehouse.gov/wp December 18, 2017 (page 20) - - National Security Strategy, content/uploads/2017/12/NSS-Final-12-18-2017-0905.pdf 29 0Special%20301.pdf 2018 Special 301 Report - https://ustr.gov/sites/default/files/files/Press/Reports/2018%2 30 2017 Out of Cycle Review of Notorious Markets (January 11,2018 ) - https://ustr.gov/sites/default/f iles/files/Press/Reports/2017%20Notorious%20Markets%20List%201.11.18.pdf 13

15 the United States infringing entry into Section 337 action may seek an order to exclude from imported articles found to violate section 337. of exclusion orders and cease-and- The ITC is authorized to issue remedial orders in the form ident, may disapprove such authority delegated by the Pres desist orders. The USTR, under exclusion orders for policy reasons. The ITC handles a signifi cant number of patent disputes 31 pursuant to Section 337 and the Commission’s procedural rules. The World Trade Organization is o ne forum for enforcing U.S. rights under various WTO enefits of WTO membership. agreements to ensure that the United States receives the full b regional These WTO agreements also provid e a foundation for high-standar d U.S. bilateral and agreements that make a positive contribution to a free, fair an d open global trading system based on the rule of law. In regards to intellectual property rights , the WTO provides a venue for the United States to engage with trading partners on key IP issues, including through accession negotiations for prospective Memb ers, the Council for Trade-Rel ated Aspects of Intellectual Property Rights (TRIPS Council), a nd by bringing IPR-related cases before the WTO's Dispute Settlement Body. On March 23, 2018 , the United States initiate d dispute settlement proceedings 32 iscriminatory technology licensing requirements. against China concerning its d In its request es identified breaches by China of WTO rules, harming the for consultations, the United Stat intellectual property rights of U.S. companies and innovators. On October 18, 2018, the United U.S. complaint after States requested that the WTO establish a panel to examine the 33 consultations did not resolve the matter. As noted, above, the National Secu rity Strategy – issued in Dec ember 2017 – stated that “this Administration will work with the Congress to strengthen the Co mmittee on Foreign Investment 34 ensure it addresses current and future national security risks.” in the United States (CFIUS) to CFIUS is an interagency committee authorized to review certain transactions in order to the United States. A CFIUS determine the effect of such transactions on the national secur ity of review can be initiated voluntar on that might raise national security ily when parties to a transacti concerns file a voluntary noti ce with CFIUS, or involuntarily, when CFIUS unilaterally initiates onal security risks that cannot be review. If CFIUS determines that the transaction presents nati adequately resolved by other laws or by mitigation measures agr eed or imposed by CFIUS, then CFIUS may refer the transaction to the President. The President may suspend or prohibit the of U.S. chipmaker Qualcomm by transaction. In 2018, President Trump blocked the acquisition its Asian competitor, Broadcom. As the Treasury Secretary explained, President Trump assessed 35 the United States. that the transaction posed a risk to the national security of 31 19 CFR Part 210 32 Press Release: Following Presi dent Trump’s Section 301 Decisio ns, USTR Launches New WTO Challenge https://ustr.gov/about-us/policy-offices/press-office/press- ch 23, 2018) - Against China (Mar releases/2018/march/following-pr esident-trump%E2%80%99s-section . 33 Request for the Estab lishment of a Panel by the United States, China – Certain Measures Concerning the Protection of Intellectual Property Rights (WT/DS542/8) - https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds542_e.ht m 34 National Security Strategy, December 18, 2017 (page 22) - https://www.whitehouse.gov/wp - content/uploads/2017/12/NSS-Final-12-18-2017-0905.pdf 35 Statement by Secretary Mnuchin on the President’s Decision Reg arding Broadcom’s Takeover Attempt of Qualcomm (March 12, 2018) - https://home.treasury.gov/news/press-releases/sm0309 14

16 sk Review Modernization Act During the past year, Congress passed the Foreign Investment Ri 13, 2018. As the President of 2018 (FIRRMA), which the President signed into law on August y will enhance our ability to protect cutting-edge American explained, “[t]his new authorit y vital to our national secu technology and intellectual propert rity. . . . I’m pleased this new States greater authority legislation provides the Committee on Foreign Investment in the United when it comes to reviewing foreign ownership of American firms with critical technology and 36 intellectual property.” * * * 36 Remarks by President Act Trump at a Roundtable on the Foreign Inve stment Risk Review Modernization nt-trump- (FIRRMA) (August 23, 2018) - https://www.whitehouse.gov/briefin gs-statements/remarks-preside roundtable-foreign-investment-ri sk-review-modernization-act-fir rma/ 15

17 A E OOPERATION C CTION AND AW L E XPANDED NFORCEMENT * * * ign countries costs our Nation millions of “The theft of intellectual property by fore ch and every year. For too long, this jobs and billions and billions of dollars ea wealth has been drained from our country...Washington will turn a blind eye no longer.” 37 - President Donald J. Trump United States law enforcement agencies are taking strong action against criminal enterprises that both international and domestic enforcement efforts. The engage in IP theft, and improving Trump Administration’s intellect ual property enforcement efforts bring together the Department nd Security, the Department of Health and Human Services’ of Justice, Department of Homela law enforcement agencies, to Food and Drug Administration (FDA), and other executive branch protect American innovation and intellectual property. The Department of Justice (DOJ) investigates and prosecutes a w ide range of IP crimes, ht piracy, trademark counterfe including those involving copyrig iting, and trade secret theft. Primary investigative and prosecutorial respons ibility within t he Department rests with the eys’ Offices, the Computer Crime Federal Bureau of Investigation (FBI), the United States Attorn Section (CCIPS) in the and Intellectual Property ion, the Counterintelligence and Criminal Divis Export Control Section (CES) in t he National Security Division, and, with regard to offenses otection Branch of the Civil arising under the Food, Drug, and Cosmetic Act, the Consumer Pr Division. DOJ also has a network of 270 specially trained federal prosecutors who make up the Department’s Computer Hacking and Intellectual Property (CHIP) program. ative cases when United State s’ IP is infringed. The Civil DOJ’s Civil Division brings affirm Division initiates civil actions to recover various penalties or customs duties arising from negligent or fraudulent import tr ansactions, which include counterfeit goods; defends U.S. Customs and Border Protection (CBP) enforcement of the Internat ional Trade Commission’s (ITC) Section 337 exclusion orders at the Court of Internationa l Trade (these orders are a key n under the Food, Drug, and patent enforcement tool); conducts civil and criminal litigatio Cosmetic Act, including prosecu ting counterfeit drug and medical device offenses; and assists eys (AUSAs) throughout the country with their counterfeit Assistant United States Attorn pharmaceutical and device cases. 38 (IPR Center), a joint The National Intellectual Property Rights Coordination Center enforcement collaboration led by the Department of Homeland Sec urity, brings government 37 on Addressing China’s Laws, Policies, Practices, and Signing a Memorandum Remarks by the Presid ent on (August Actions Related to Intellectual Property, Innovation, and Techn ology 14, 2017) - https://www.govinfo.gov/content/pkg/DCPD-201700571/pdf/DCPD-201 700571.pdf 38 The federal member agencies of the IPR Center include: U.S. Cu stoms and Border Protec tion, the Federal Bureau of Investigation, the United Stat es Postal Inspection Service, the Food and Drug Administration’s Office of Criminal 16

18 train investigators, prosecutors, agencies together to share information, leverage resources, and enter also conducts an aggressive international program to and the public on IP. The IPR C promote cooperative enforcement efforts with our trading partners and to improve substantive the IPR Center continues to laws and enforcement regimes in other countries. Additionally, nd on-going dialogue. Through this approach, the IPR Center engage industry in an open a utilizes both law enforcement efforts and private industry coll aboration to effectively combat erous initiatives and interdiction intellectual property crimes. The IPR Center has developed num efforts to combat the infiltration of counterfeits. These effo rts are focused on counterfeits that pose a risk to the health and safety of the consumer, counterfeits entering the U.S. Department of nt supply chains, and the protec tion of the U.S. economy. In Defense (DOD) and U.S. Governme nt with the City of London addition, on October 30, 2018, the IPR Center signed an agreeme of the IPR Center (the other the fifth international member Police (CoLP) for CoLP to become evenue Service, and the Royal Interpol, Europol, the Mexican R four international members are 39 Canadian Mounted Police). The United States government has g programs for federal, state, engaged in a number of trainin investigating IP crimes. These training courses cover a range of and local prosecutors and agents between prosecutors and IP enforcement issues and are designed to increase coordination local law enforcement agencies. investigators as well as coordination among federal, state, and at 308 outreach and training In FY2018 the IPR Center reached out to more than 16,478 people events. In addition to these efforts, DHS law enforcement agen cies that support IP enforcement example, Project Trade Watch had numerous other engagements with stakeholders in 2018. For Investigations (HSI) and cement (ICE) Homeland Security is Immigration and Customs Enfor CBP’s outreach campaign to the importing community to facilitate informed compliance by private industry and to enhance public awareness of law enforce ment efforts within the trade community. The IPR Center collabo rates with industry and other government agencies for training and engagement. For example, in support of Operation Engine Newity, HSI and the Automotive Anti-Counterfeiting Council (A2C2) worked together t o provide training to HSI and CBP field offices to train personnel on how to identify counter feits. In FY 2017, the number of CBP and ICE HSI IPR seizures increase d more than eight percent, to 34,143 (from 31,560 in FY 2016). The total estimated Manufactu rer’s Suggested Retail Price (MSRP) of the seized goods, had they been genuine, decreased to $1.206 billion (from $1.383 billion in FY 2016). Investigations, the Department of Commerce’s International Trade Administration, the Naval Criminal Investigative Agency’s Office of Inspector General, Service, the Defense Criminal In vestigative Service, the Defens e Logistics U.S. Immigration and Customs Enforcement’s Homeland States Nuclear vestigations, the United Security In States Patent and Trademark O Regulatory Commission, the United ffice, the General Service Administration’s Office of Inspector General, the Consumer Product Safety Commis sion, the National Ae ronautics and Space State’s Office of Internati Administration’s Office of Insp ector General, the Department of onal Intellectual Property Enforcement, the Army Criminal I nvestigation Command’s Major Pr ocurement Fraud Unit, t he Air Force Office of Special Investigations, the U.S. P ostal Service Office of Inspe ctor General, and the Federal Maritime Commission. 39 News Release: ICE HSI teams with London police to fight counte rfeiting (October 30, 2018) – https://www.ice.gov/news/releases /ice-hsi-teams-london-police-f ight-counterfeiting#wcm-survey-target-id 17

19 ement task forces and local IP DOJ has awarded grants to support state and local IP law enforc training and technical assistance. The Intellectual Property E nforcement Program (IPEP) is designed to provide national support and improve the capacity o f state and local criminal justice systems to address criminal IP enforcement, including prosecuti on, prevention, training, and program, grant recipients esta blish and maintain effective technical assistance. Under the tween state and local law enfo rcement, including prosecutors, collaboration and coordination be multi-jurisdictional task forces, and appropriate federal agenc ies, including the FBI and United States Attorneys’ Offices. 40 From July 1, 2017 to June 30, 2018, local law enforcement grant ees: Arrested 423 individuals for violations of IP laws;   Served 187 state and local IP search warrants; and  . acy/counterfeiting organizations Disrupted or dismantled 428 pir orcement, that have DOJ has conducted training programs for state and local law enf cumulatively, supported: 104 trainings for 2,404 attendees from 1,246 agencies; 16 seminars for 118 ; and 33 technical assistance visits for 399 attendees from 538 attendees from 185 agencies agencies. To ensure that U.S. government prosecutorial and law enforcement resources are used efficiently and effectively, and are not duplicative, the IPR Center also serves as an investigation clearinghouse for the FBI, ICE-HSI, CBP, FDA, and other agencies. ad 195 pending IPR investigatio At the end of FY 2018, the FBI h ns. The largest number of investigations deal with the th eft of trade secrets (67), copyr ight infringement (64), and trademark infringement (64). During FY 2018, the FBI initiated 54 new investigations, made 22 arrests, obtained 12 convictions, forfeitures totaling $3,176,9 49, and restitutions totaling $64,549,217. re than eight percent, to In FY 2017, the number of CBP and HSI IPR seizures increased mo 34,143 (from 31,560 in FY 2016). The total estimated Manufactu rer’s Suggested Retail Price (MSRP) of the seized goods, had they been genuine, was $1,206,382,219. gations and had 457 arrests, 288 In FY 2017, ICE-HSI initiated 713 intellectual property investi indictments, and 240 convictions. In FY 2017, the IPR Center vetted 27,856 investigative leads; of these 16,030 were referred to law enforcement partners. Additionally, the IPR Center de-conf licted 4,750 investigative targets for partner agencies and industry. While performing these de-c onflictions, the IPR Center tigating the same target. Finally, identified 321 situations where two or more entities were inves the IPR Center referred 959 lead s to private industry for follo w-up. DOJ continues to prioritize IP investigations and prosecutions that involve (1) health and safety, (2) trade secret theft or economic espionage, and (3) large-sca le commercial counterfeiting and 40 See Appendix (Department of Justice) 18

20 online piracy. They have also increased focus on IP crimes tha t are committed or facilitated by use of the Internet or perpetrated by organized criminal networ ks. , and federal enforcement resources The health and safety initiative brings together private, state to address the proliferation of counterfeit goods posing a danger to consumers, including 41 counterfeit and illegally prescribed pharmaceuticals, automotiv e parts, and military goods. estigation and prosecution of DOJ prosecutors and the FBI have continued to emphasize the inv commercial and state-sponsored t d to the investigation and rade secret theft. This has le 42 prosecution of numerous trade secret thefts and economic espionage cases. DOJ continues to 43 piracy and counterfeiting operations. pursue significant, large-scale Global IP crime, from the manufacture and worldwide distributio n of counterfeit goods, to the sprawling online businesses designed to reap profits from the illegal distributi on of copyrighted works, continues to grow and change in an effort to stay ahead of law enforcement. The United technical as elop training and sistance programs to assist other States is working actively to dev fficking of counterfeit and pirated countries in effectively enforcing IP laws and reducing the tra goods. Executive Branch agencies, including DOJ, Commerce, State and H omeland Security have of IP laws. IP trainings are provided training to foreign officials on effective enforcement designed to increase cooperation between various law enforcemen t agencies with responsibility for IP offenses; to utilize various types of charges, including economic and organized crime enforcement officials and the statutes to combat IP crime; and to increase awareness amongst 44 judiciary of the importance of cy. reducing counterfeiting and pira ablish strong working relationships with host country IPR Center partner Attachés est counterparts. These relationships strengthen IPR Center partners’ capacity to conduct successful domestic, international, and multilateral operations. IPR Center partner Attachés provide coverage in over 50 countries internationally. DOJ, in coordination with other f ederal investigatory agencies, is working with the International Organized Crime Intelligence and Operations Center to provide d ata to the Center to address intelligence gaps as they relate to IP. The Center has provide d operational, intelligence, and financial support to investigati ons where international organized crime groups are involved in IP offenses. The regional IP Law Enforcement Coordinator (IPLEC) program, fu nded by the Department of State and operated by the Department of Justice, is improving t he effectiveness of U.S. personnel serving abroad by training local prosecutors, judges and police. Such training has resulted in multiple overseas prosecutions of trademark counterfeiting and copyright piracy. The program first created under the Bush Admin istration in 2006 with a single office in Thailand, has now 41 of Justice) for FY 2018 significant See Appendix (Department prosecutions 42 See Appendix (Department prosecutions of Justice) for FY 2018 significant 43 See Appendix (Department of Justice) for FY 2018 significant prosecutions 44 See Appendices for detailed examples on U.S. government traini ng and capacity building programs 19

21 of a new Global IPLEC ministration with the creation been expanded under the Trump Ad Network. The United States now has five IPLECs deployed to wor k collaboratively within and across their regions to mitigate threats to IP protections, inc luding that which supports transnational organized crime, in (1) Hong Kong, China SAR; (2) Sao Paulo, Brazil; (3) Bucharest, Romania; (4) Bangkok, Thailand; and (5) Abuja, Nigeria. Enhancing law enforcement cooperation is a key goal. For examp le, in 2018 multiple federal and state law enforcement agencies worked together to stop a massive smuggling operation of arged following an investigation counterfeit luxury goods. Specifically, 33 individuals were ch curity Investigations (HSI) by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Se into a scheme to illegally bring into the United States millions Chinese- of dollars of of entry on the East and West manufactured counterfeit goods by smuggling them through ports 45 Coasts. The investigation was conducte d by HSI Intellectual Property Group and HSI Border Enforcement Security Task Force and the NYPD Border Security En forcement Task Force. the New York State Police and Assistance was provided by U.S. Customs and Border Protection, the Brooklyn District Attorney’s Office. The federal charges against 22 of the defendants are Eastern District of New York being prosecuted by the United States Attorney’s Office for the and Computer Crime and Intellect ual Property Section of the Criminal Division at the by the Queens District Attorney’s Department of Justice; a related state case is being prosecuted Office. fficking of counterfeit sports the sale and tra The IPR Center’s Operation Team Player targets am Player resulted in the merchandise, apparel and tickets . During FY 2018, Operation Te elated items worth an estimated seizure of over 171,926 counterfeit sports- and entertainment-r 46 This year’s $15.69 million, and joint investigative efforts led to 65 arrests with 24 convictions. Operation Team Player, which saw a 16 percent increase in arres ts, began at the conclusion of last year’s Super Bowl. Throughout the year, the IPR Center led coordinated efforts with major sporting leagues to target cont raband that harms the economy, provides financing that supports d safety hazards. other criminal activities, and poses potential public health an ynthetics Trafficking and Also, during the past year Congress considered and passed the S Overdose Prevention (STOP) Act, which the President signed into law on October 24, 2018. While the STOP Act is focused on stopping the importation of dangerous synthetic drugs through the mail, the Act’s provi sions – which require the collection of advance electronic information from postal interna tional shippers, and provide for the reimbursement of costs that ncur in their processing of in bound express mail service – will the U.S. Postal Service and CBP i also assist CBP in identifying counterfeit shipments and preventing them from entering US commerce. In July 2018, IPEC convened a White House IP Roundtable, with r epresentatives from the White House, Department of Homeland Security, and Congress to meet with industry stakeholders and 45 luxury goods (August 6, News Release: 33 charged in half a billion 2018) dollar smuggling sc heme of counterfeit - https://www.ice.gov/news/releases/33-charged-half-billion-dollar-smuggling-scheme-counterfeit-luxury-goods 46 News Release: ‘Operation Team P layer’ 2018) - nets over $15 million in fake sports merchandise (February 1, https://www.ice.gov/news/releases/operation-team-player-nets-ov er-15-million-fake-sports-merchandise 20

22 small parcels in the express f es associated with the influx o shippers to discuss the challeng consignment and international mail environment. DHS/CBP officials shared information on how ternational mail and express small parcels moving through in the large and growing number of interdiction resources and facilities puts a tremendous burden on DHS/CBP’s inspection and articipants from and pirated goods. P the fight against counterfeit poses a significant challenge in sed information sharing industry and shipping companies provided examples of how increa ons and ultimately assist amongst the involved parties could aid in their own investigati eness of its interdiction eff DHS/CBP in increasing the effectiv orts. property is especially critical for maintaining U.S. competitiveness The protection of intellectual in this digital age. As the Administration explained in the National Cyber Strategy that the White House issued on September 20, 2018, “[f]ostering and prot ecting American invention and innovation is critical to maintaining the United States’ strategic advantage in cyberspace”: omic growth and innovation “Strong intellectual property pro tections ensure continued econ in the digital age. The United States Government has fostered and will continue to help operty rights system that provides incentives for innovation foster a global intellectual pr through the protection and enforcement of intellectual property rights such as patents, 47 trademarks, and copyrights.” e secrets, inflicts a significant cost Cyber-enabled theft of intellectual property, particularly trad to the U.S. economy, in addition to the immeasurable harm the theft of IP may cause individual yber-enabled theft of trade is committed to combatting the c companies. The Administration tional Cyber Strategy states: business information. As the Na secrets and other confidential States Government will also promote protection of sensitive emerging “The United ersarial nation states from and trade secrets, and we will work to prevent adv technologies expense of American research an d development. . . . For gaining unfair advantage at the more than a decade, malicious actors have conducted cyber intru sions into United States n held by American firms. commercial networks, targeting confidential business informatio other nations have stolen troves of Malicious cyber actors from trade secrets, technical data, States Government will and sensitive proprietary inter nal communications. The United of public and private sector technology and technical work against the illicit appropriation 48 knowledge by foreign competitors, while maintaining an investor -friendly climate.” The Department of Justice is committed to aggressively investig ating and prosecuting ness by stealing what they individuals and corporations w ho undermine American competitive did not themselves create. f During the past year, a China-based manufacturer and exporter o wind turbines, Sinovel, was convicted in federal court and sentenced for stealing trade sec rets from AMSC, a U.S.-based company formerly known as American Superconductor Inc. Sinovel stole AMSC’s proprietary 47 White House, National Cyber Stra tegy of the United States of A merica (September 2018) (page 16) - https://www.whitehouse.gov/wp-content/uploads/2018/09/National- Cyber-Strategy.pdf 48 Id. (pages 16-17) 21

23 etrofit existing turbines with wind turbine technology in order to produce wind turbines and r 49 AMSC technology. In addition, in March 2018, the DOJ brought charges against nin e Iranians for their roles in conducting a massive cyber theft campaign on behalf of the Islamic Revolutionary Guard Corps 50 (ISRGC) as well as other Iranian government and university clie nts. The defendants were affiliated with the Mabna Institute, an Iran-based company. In its indictment, the Justice Department charged that, as a result of the defendants’ activit ies, the Mabna Institute stole more om universities, and email than 31 terabytes of academic data and intellectual property fr sector companies, government agencies, and non-governmental accounts of employees at private Department of the Treasury’s organizations. In connection with these criminal charges, the Office of Foreign Assets Control (OFAC) imposed sanctions on th e Mabna Institute and the nine 51 defendants under Executive Order 13694 , as amended, which authorizes the imposition of 52 sanctions for such malicious cyber-enabled activity. The Justice Department has brought several more trade-secret pr osecutions in recent months. On General Electric (GE) engineer August 1, 2018, the Justice Department announced that a former 53 theft of GE’s trade secrets involving its turbine technologies. with the was arrested and charged perative of the Chinese On October 10, 2018, the Justice Department announced that an o Ministry of State Security (MSS) was arrested and charged with conspiring and attempting to commit economic espionage and steal trade secrets from multiple US aviation and aerospace to a federal complaint, companies. The MSS operative was arrested in Belgium, pursuant 54 io, and then extradited to the US. indicted by a federal grand jury in the Southern District of Oh On October 30, 2018, the Justice Department announced the indic tment of two Chinese iders who worked under their intelligence officers, and the hackers and co-opted company ins nfidential business information, al intellectual property and co direction, for conspiring to ste 55 And, on ercial airliners. including information related to a turbofan engine used in comm 49 6, 2018) - of Trade Secrets (July for Theft Grou p imum Fine on Sinovel Wind Press Release: Court Imposes Max https://www.justice.gov/opa/pr/court-imposes-maximum-fine-sinov el-wind-group-theft-trade-secrets 50 Press Release: Nine Iranians C harged ehalf of the Islamic yber Theft Campaign on B Massive C With Conducting Revolutionary - https://www.justice.gov/opa/pr/nin - Guard Corps (March 23, 2018) e-iranians-charged-conducting massive-cyber-theft-campaign-behalf-islamic-revolutionary 51 - https://www.federalregister.gov/documents/2015/04/02/2015 Executive Order 13694 (November 28, 2018) - 07788/blocking-the-property-of-certain-persons-engaging-in-sign ; this ificant-malicious-cyber-enabled-activities – Executive Order was amended by Executive Order 13757 https://www.federalregister.gov/documents/2017/01/03/2016-31922 - /taking-additional-steps-to-address-the-national emergency-with-respect-to-significant-malicious 52 Press Release: Treasury Sanctions Iranian Cyber Actors for Mal icious Cyber-Enabled Activities Targeting https://home.treasury.gov/news/press-releases/sm0332 s (March 23, 2018) - Hundreds of Universitie 53 1, 2018) - ged With Theft of Trade Secret Press Release: New York Man Char s (August -secrets https://www.justice.gov/opa/pr/new -york-man-charged-theft-trade 54 of Trade Secrets mic Espionage Involving Theft ence Officer Charged with Econo Press Release: Chinese Intellig U.S. from Leading Aviation Companies (October 10, 2018) - https://www.justice.gov/opa/pr/chinese-intelligence- s-leading e-involving-thef officer-charged-economic-espionag t-trade-secret 55 Press Release: Chinese Intelligence Officers and Their Recruited Hackers and Insiders Conspired to Steal Sensitive Commercial Aviation and Technological Data for Years (October 30, 2018) – https://www.justice.gov/opa/pr/c hinese-intelligen ce-officers-an d-their-recruited-hackers-and-insiders-conspired - steal 22

24 November 1, 2018, the Justice Department announced indictments against a Chinese state-owned enterprise, a Taiwan company, and three individuals, for their conspiracy to steal, convey, and possess stolen trade secrets of an American semiconductor compa ny (Micron Technology, Inc.) nt. The Justice Department also Chinese governme for the benefit of a company controlled by the filed a civil lawsuit to enjoin the further transfer of the sto len trade secrets and to enjoin certain ufactured by the indicted defendants from exporting to the United States any products man action to prevent the Chinese companies that were created using the trade secrets (in another Department added the company from profiting from the stolen technology, the Commerce oods and services in the United company to the Entity List, which will prevent it from buying g 56 States). And, on January 28, 2019, the Justice Department announced an indictment against a t of trade secrets of an American Chinese company and its U.S. affiliate for their attempted thef telecommunications company (T-Mobile USA). Finally, on November 1, 2018, the Attorney General announced th e creation of a China Initiative ral, and composed of a senior led by the National Security Division’s Assistant Attorney Gene FBI Executive, five United States Attorneys, and several other Department of Justice leaders and General. As the Attorney General officials, including the Criminal Division’s Assistant Attorney ade theft cases, ensure that we have explained, “[t]his Initiative will identify priority Chinese tr enough resources dedicated to them, and make sure that we bring them to an appropriate 57 In the subsequent three months, the Justice Department conclusion quickly and effectively.” ets and other confidential business ons for the theft of trade secr has continued to bring prosecuti 58 These will be discussed in next year’s annual report, coverin g Fiscal Year 2019. information. 56 ree Individuals mpany, Taiwan Company, and Th Press Release: PRC State-Owned Co Charged with Economic Espionage (November 1, 208) - https://www.justice.gov/opa/pr/pr c-state-owned-company-taiwan-c ompany-and - three-individuals-charged-economic-espionage 57 Press Release: Attorney General Jeff Sessions Announces New In itiative to Combat Chinese Economic /attorney-gener https://www.justice.gov/opa/speech Espionage” (November 1, 2018) - - ns-announces al-jeff-sessio act . See also “Attorney General Jeff Session’s China Initiative F new-initiative-combat-chinese-economic-espionage Sheet” (November 1, 2018) - https://www.justice.gov/opa/speech/file/1107256/download ; “Assistant Attorney General for National Security Joh n C. Demers Delivers Remarks Regarding Economic Espionage by the People’s - https://www.justice.gov/opa/speech/assistant-attorney-general-national- Republic of China” (November 1, 2018) of the Benczkowski rian A. ; “Assistant Attorney General B security-john-c-demers-delivers-remarks-regarding Delivers Remarks Regarding spionage” (November 1, 2018) - Criminal Division Chinese Economic E attorney-general-b v/opa/speech/assistant- https://www.justice.go - rian-benczkowski-criminal-division-delivers remarks-regarding; and Remarks by FBI Director Wra y, “Keeping A Whole-of- Our Financial Syst ems Secure: ovember 1, 2018) - https://www.fbi.gov/news/speeches/keeping-our-financial-systems Society Response” (N -secure - . a-whole-of-society-response 58 Press Releases: Two Chinese Hack ry of State Security Charged with Global ers Associated With the Minist Information (December and Confidential Business Property Computer Intrusion Campaigns Targeting Intellectual https://www.justice.gov/opa/pr/tw inistry-state-security-charged-global- o-chinese-hackers-associated-m 20, 2018) – ges Against Chinese Hackers stein Announces Char General Rod J. Rosen – and Deputy Attorney computer-intrusion (December 20, 2018) – https://www.justice.gov/opa/speech/deputy-attorney-general-rod- j-rosenstein-announces- charges-against-chinese-hackers ; Press Release: Chinese Nationa l Charged Secrets with Committing Theft of Trade (December 21, 2018) – https://www.justice.gov/opa/pr/chinese-national-charged-committ ing-theft-trade-secrets ; unications Device Manufacturer a nd its U.S. Affiliate Indicted for Theft of Trade Press Release: Chinese Telecomm Secrets, Wire Fraud, and Obstruction Of Justice (January 28, 20 19) – https://www.justice.gov/opa/pr/chinese - telecommunications-device-manuf acturer-and-its-us-affiliate-ind icted-theft-trade 23

25 government is critical to successfully tackling IP enforcement. Coordinating efforts across the The White House has convened a number of roundtables bringing t ogether industry representatives with government officials from a range of depar tments and agencies, and Members of Congress, in order to together strategize on ways to address various intellectual property related issues. In March 2018, IPEC hosted its first White House IP Roundtable on y. This roundtable was a candi counterfeits in the auto-industr d discussion on counterfeit auto parts and the serious public safety issues they raise. Roundtable participants included representatives from major auto manufacturers and auto associations along with officials from the Department of Homeland Security’s IPR Center, CBP, the FBI, the Department of Transportation, and the Justice Department. The roundtable exa mined current industry initiatives, such as the efforts of the Automotive Anti-Counter feiting Council (A2C2), and tion Engine Newity and CBP’s current law enforcement initiatives like the IPR Center’s Opera rience (CEE). Further, the discussion focused on lessons Centers for Excellence and Expe learned from such initiatives, crease the effectiveness of future how to leverage experience to in work, and how to increase collaboration between the auto industry and government. The intellectual property issues surrounding the online sale of goods and services are well- documented. Many stakeholders, including online sales platform s, payment processing companies and advertising networ artnerships to address these ks, have formed collaborative p concerns, while encouraging innova tion in the digital environme nt. Still, certain issues remain outstanding, and rapid advances in internet-enabled commerce – including entirely new business models – have brought new problems that need to be addressed. The Administration has sought partnerships and creative solutions for the input of key stakeholders to help develop new addressing outstanding IPR-related issues in the e-commerce spa ce, and will expand its efforts in the future. * * * 24

26 E ECTOR AND S RIVATE NGAGEMENT AND P ARTNERSHIP WITH THE P TAKEHOLDERS S THER O * * * awfully forces American companies to “We will stand up to any country that unl access. We will condition of market transfer their valuable technology as a combat the counterfeiting and piracy that de stroys American jobs, we will enforce the rules of fair and reciprocal trade that form the foundation of responsible commerce...” 59 - President Donald J. Trump ng closely with a broad range of U.S. industry stakeholders, The Trump Administration is worki the full scope of intellectual sized enterprises, to address covering small, medium and large property policy, enforcement and gether to find new solutions and protection issues. Working to creative ways to address intellectual property issues will be k ey. aining and capacity building pro That engagement has included tr grams conducted by Executive Branch agencies with the public nt by the Administration on hot . It has also included engageme button issues and policy prioriti action on important areas of es, to develop strategies for intellectual property policy. takeholders in support of Throughout 2018, the Administration engaged with a variety of s enhancing the protection and enfo ty rights. These efforts involved rcement of intellectual proper departments and agencies across the Executive Branch, engaging with representatives of the private sector, trade associat ions, think tanks, academia, and other entities. These discussions also extended to foreign government officials, international go vernmental institutions (such as INTERPOL, Europol, and WIPO), and private-sector associations a nd groups in other countries. In these engagements, the Adminis tration has underscored the im portance of domestic and foreign actors undertaking initiatives to promote and reinforce a robust IP environment that reduces counterfeiting, copyright nd patent infringement, and that piracy, trade secret theft, a lders with effective legal tools provides government agencies, rights holders, and other stakeho inter alia dministration emphasizes, for addressing these illicit activities. In this regard, the A , the importance of strengthening th collaboration (within and e “rule of law”; of enhancing d within the private sector) in between governments, between the public and private sectors, an combatting illicit activities that undermine the integrity of global supply chains, and thereby in supporting legitimate commerce and trade; and of governments co nsidering the adoption of the “Whole of Government” approaches for strengthening the governm ent’s effectiveness in IPR protection and enforcement. 59 Remarks by the Presid ent on Signing a Memorandum on Addressing China’s Laws, Policies, Practices, and Actions Related to Intellectual Property, Innovation, and Techn ology (August 14, 2017) - https://www.govinfo.gov/content/pkg/DCPD-201700571/pdf/DCPD-201 700571.pdf 25

27 Throughout 2018, the White House, led by the U.S. Intellectual Property Enforcement Coordinator, has convened a number of roundtables, bringing together industry stakeholders and officials from the White House, Congress, and across the govern ment to discuss matters such as it streaming devices, and others. the protection of trade secrets, automotive counterfeits, illic In May 2018, IPEC hosted a roundtable aimed at addressing the g rowing use of illicit streaming content (e.g., movies, television devices (ISDs) that allow users to illegally access and stream shows, etc.) from tatives from various fields that are . IPEC brought together represen the Internet each affected by such online piracy, including movie studios, pay televisions providers, described their experiences and nd the creative community. They broadcasters, sports leagues, a the FBI, Department of Homeland Se curity, Justice Department, concerns with officials from mmunications Commission, Federal Commerce Department, Federal Co Trade Commission, USTR, and Congress. The issue of illicit streaming devices was also a significant t opic during the Europol Crime Hungary in June 2018. The IPEC, along with other U.S. government Conference in Budapest, representatives and their intern ational counterparts, met to discuss effective ways to tackle IP crime both in terms of physical goods and online. In 2018, the White House and Administration officials met with the mobile networking business community to discuss standards se tting for the soon-to-be-deployed fifth generation (5G) of wireless infrastructure. Standards bodies are actively trying to develop voluntary consensus standards for 5G that will satis fy the diversified requirements set by the current and future use cases and applications. These meetings emphasized the need for U.S. companies to continue to lead in this space and ensure America is at the forefront of innovation and development. digital streaming sentatives from In 2018, the White House hosted a series of meetings with repre y, songwriters, and other stakeh services, the recording industr olders to discuss copyright issues and the legislation that was subsequently signed by President T rump on October 11, 2018 – the 60 . The MMA creates a single Orrin G. Hatch–Bob Goodlatte Mu sic Modernization Act (MMA) licensing entity for all digital compositions, streamlining the process and ensuring that e MMA also includes provisions songwriters receive the compensation that they have earned. Th that ensure compensation for pre-1972 sound recordings (the CLA SSICS Act) and for producers digital streaming services, the music and engineers (the AMP Act). Representatives from industry, and songwriters shared with the Administration how th ey all came together to express support for this comprehensive update to the creation and distribution in the digital environment. During the signing of the bill, the President remarked that “[t]his legislation will help ensure that artists from eras long ago, in addition to modern day, can retire in security, and that current and upcoming artists can make a living by creating amazing works that captivate their fans and 61 entertain our nation — and the world.” 60 (October 11, 2018) Modernization Act – H.R.1551 (Public Law 115-264), Orrin G. Hatch-Bob Goodlatte Mu sic https://www.congress.gov/115/b ills/hr1551/BILLS-115hr1551enr.pd f 61 Remarks by Trump at Signing President of H.R. 1551, the “Orrin G. Hatch—Bob Goodlatte Music Modernization Act” (October 11, 2018) - https://www.whitehouse.gov/briefings-statements/remarks-preside nt-trump-signing-h-r - 1551-orrin-g-hatch-bob-goodl atte-music-modernization-act/ 26

28 during the Bush Administration The Commerce Department’s IP Attaché program, established and operated by the USPTO, continues to promote U.S. economic i nterests and further U.S. government IP policy abroad. The IP Attaché program helps secure high standards in international agreements and host country laws and encourages e ffective IP protection by U.S.- trading partners for the benef it of U.S. stakeholders. IP Atta chés engage regularly with the private sector and other stake holders to understand their concerns and develop strategies to address them. Their work include s: raising issues with foreign government officials; providing training on IP law, enforcement , and administration; conducting public awareness programs; and presenting and explaining U.S. government positions. The Attachés also help U.S. stakeholders enter foreign markets and conduc U.S. stakeholders about foreign t business abroad. They inform nd help them protect and enforc e their IP abroad. IP Attachés laws, policies and regulations a serve at U.S. missions throughout t he world, including in China , Mexico, Brazil, Peru, Belgium, India, Thailand, Kuwait, Ukraine and Switzerland. In 2018, the Global IP Academy (GIPA) at the USPTO organized Ch ina IP Road Shows that took place throughout the United States, in Chicago, Denver, Las Vegas, Nashville, Phoenix, Portland, Salt Lake City, San Jose, Seattle, Louisville, Fort M itchell, New York City, New Orleans, Austin, Baltimore and Boise. These road shows were designed to help SMEs and their IP attorneys understand how to obtain and enforce IP rights in China. In general, GIPA provides IP education programming, a distance learning program for U.S. small-and-medium businesses provide comprehensive IP rterly webinar initiative to (SMEs), including a continuing qua IR-STTR programs, as well as education to grantees of the Small Business Administration’s SB IP education programming for dom estic attorneys general, and we binars. Additionally, GIPA produces and hosts 31 free IPR e-Learning modules that are avai lable to the public. This content covers six different areas of intellectual property, and is ava ilable in five languages: Arabic, English, French, Russian, and Spanish. By late 2018, the e-lea rning products had received over 75,000 hits since content was made available in 2010. During FY18, the Commerce Department’s International Trade Administration (ITA) – with the support of many USG agencies – completed six STOPfakes.gov Roadshows in Seattle, Portland, Austin, Dallas, Phoenix, and Tucson, reaching more than 155 U.S . companies. These Roadshows, what have given increased attention to SMEs, deliver critically important information about intellectual property to audiences that need it most – start-ups, entrepreneurs, small and medium-sized businesse ventors. For FY19, OIPR s, independent creators, and in intends to expand the STOPfakes Roadshows to 13 more cities thr oughout the United States. To increase enforcement cooperation and raise awareness about I P theft, the Department of Homeland Security’s IPR Center continued to conduct internation al outreach and training events. During 2017, the IPR Center conducted 96 such events. On World IP Day (April 26, 2018), the IPR Center signed a declaration of intent to support the International Chamber of Commerce’s (ICC) Business Action to St op Counterfeiting and Piracy, and expressed strong commitment to prevent the maritime transpo rt of counterfeit goods. ICC launched this effort, which had been signed in 2016 by shipping companies and freight forwarders and multinational brand owners, in order to address the problem of counterfeit goods 27

29 being transported through shipping containers. The IPR Center is the first law-enforcement 62 organization to formally pledge i ts support for this initiative. The State Department and the USPTO have also conducted training programs to prepare Foreign Service Officers embarking on ove rseas assignments on the fundamentals of intellectual property, U.S. government positions on current debates such as access-to-medicines, and U.S. industry priorities. As a result , these U.S. officials are bet ter equipped to advocate for U.S. rm interagency discussions and rights-holders overseas; provide useful field reporting to info deliberations regarding the Special 301 Annual Report to Congre ss, Notorious Markets, and other IP-related reports and po licy discussions; and articulate U.S. government policy positions in bilateral discussions a nd in international fora. The Administration also continues to examine opportunities to e ngage with stakeholders on important areas of IP policy, t hat includes existing industry-l ed voluntary initiatives to protect American intellectual property, and new areas for greater coope ration. IPEC will continue to hold White House IP roundtables in 2019, to better engage with stakeholders, develop new initiatives, examine legislative priorities, and find creative solutions. As we look forward, we will build on importance to the U.S. past roundtables and look to examine new areas of economy, stakeholders, and policymakers. new 3-year Joint Strategic n the process for developing a The Trump Administration has begu Plan on Intellectual Property E nforcement. On September 13, 20 18, the U.S. Intellectual Property Enforcement Coordinator issued a Federal Register noti ce requesting public comments 63 for the development of this 3-year strategic plan. These comments have been received, and the IPEC Office is currently reviewing them. As the Trump Administ ration develops this new 3- year plan, we will continue to e ngage with interested stakehold ers and Congress, and we 019. lan will be announced later in 2 anticipate that the Strategic P The Administration will continue to engage with stakeholders on these and other important intellectual property issues to ensure that we are promoting an d protecting American creativity and innovation. * * * 62 Press release: ICC welcomes NIP RC signing of Declaration of In tent to Prevent the Maritime Transport of Counterfeit (April 26, 2018) - https://iccwbo.org/media-wall/news-speeches/icc-welcomes-niprc-signing- declaration-intent-prevent-maritime-transport-counterfeit/ 63 IPEC, Request of the U.S. Inte llectual Property Enforcement C mments: Development of oordinator for Public Co - the Joint Strategic Plan on Inte llectual Property Enforcement, 83 FR 46522 (September 13, 2018) https://www.gpo.gov/fdsys/pkg/FR-2018-09-13/pdf/2018-19863.pdf 28

30 F ORWARD L OOKING * * * “America is the place to do business. So come to America, where you can America. As President of the United innovate, create, and build. I believe in States, I will always put America first, just like the leaders of other countries should put their country first also. But America first does not mean America alone. When the United States grows, so does the world. American prosperity has created countless jobs all around the glob e, and the drive for excellence, creativity, and innovation in the U.S. has led to important discoveries that help people everywhere live more prosperous and far healthier lives.” 64 - President Donald J. Trump Promoting strong intellectual pr operty and innovation in the United States will be key to our nation’s continued economic competitiveness in the decades to c ome. put America first will require To grow our economy, drive innovation, protect American IP, and not only effective coordination efforts within the United States government, but working together with Congress, the private sector, and the public. We must all work cooperatively to ensure that the United States’ overall intellectual property strategy takes into account both longer view an action taken in domestic and international policy and its effect. We should no ates does to keep our intellectual rs. The work that the United St one arena as separate from othe property laws modernized and up to date domestically, and the way these laws are enforced, has an effect on international discussions and negotiations. And t he actions that trading partners and competitors take overseas has a direct effect on the value of American IP, job creation and growth in the United States. The Office of the U.S. Intellectu al Property Enforcement Coordinator (IPEC) works to pro mote innovation and creativity b y ensuring effective intellectual property protection and enforcement, domestically and abroad. We must work to address intellectual property issues, including protection and enforcement, at their source. We must also work with like-minded nations to en sure that foreign entities that fit from their ill-gotten gains. engage in intellectual property theft are no longer able to pro erica’s intellectual property President Trump and his Administration are making clear that Am roader range of Executive Branch policies must be coordinated e ffectively, and include an even b agencies, and stakeholders. As part of the Trump Administration’s approach we recognize that we must change the paradigm. Of course, we will continue to build upon the work of previous Administrations to 64 Remarks by President Trump at t he World Economic Forum (Januar y 26, 2018) – https://www.whitehouse.gov/briefings-statements/remarks-preside nt-trump-world-economic-forum / 29

31 continue programs and policies that are working well. And the Administration is working to ensure that the United States’ efforts are focused and well-coo rdinated and that resources are to bear approaches that have failed being used effectively and efficiently. But there are clearly fruit. And, in those areas that are not working, or achieving meaningful results, we must ask ourselves “what can we do differently?” The road that we take will define the course of freedom, innovation, and prosperity – for decades to come. And that is why we must be committed to advancing pro -growth policies to protect our continued economic and innovative competitiveness, promote new engines of growth, and prioritize America’s innovative and creative capacity. * * * 30

32 P TATS S ACTS AND F : ROPERTY NTELLECTUAL I * * * ROPERTY AND THE : CONOMY E P NTELLECTUAL I designated 81 industries (out of 313 total, more  The Department of Commerce (2016) than 25 percent) as IP-intensive in 2014, collectively accounti ng for $6.6 trillion value added in 2014, or 38.2 percent tries directly accounted of U.S. GDP. IP-intensive indus rectly supported an additional 17 .6 million jobs, for 27.9 million jobs and indi -intensive industries also jobs in the United States. IP representing almost one in three ensive industries, workers in I P-intensive industries earn pay well; compared to non-IP int 65 46 percent higher weekly wages.  The Department of Commerce repo rted that technological innovation is linked to roughly 66 three-quarters of U.S. growth since the mid-1940s. Trademark-intensive industries accounted for 23.7 million jobs  in 2014; copyright- intensive industries accounted for 5.6 million jobs in 2014; an d patent-intensive 67 industries accounted for 3.9 million jobs. ge of $1,312, compared In 2014, workers in IP industries received an average weekly wa  68 46 percent difference. to a weekly average of $896 in non-IP-intensive industries; a  s with a bachelor’s degree or higher fell from 42.4 Share of workers in IP industrie percent in 2010 to 39.8 percent in 2015, while the share of wor kers with a bachelor’s degree or higher in non-IP industries increased from nt in 2010 to 38.9 percent 34.2 perce 69 in 2015.  ies grew to $842 billion in 2014, up from $775 billion Merchandise exports of IP industr 70 in 2010; an 8.6 percent increase.  Exports of service-providing IP industries totaled nearly $81 billion in 2012, which 71 accounted for about 12.3 percent of total U.S. private services exported that year. 65 U.S. Patent and Trademark Office and Economics and Statistics Administration (2016). Intellectual Property and conomySept2016.pdf https://www.uspto.gov/sites/default/files/documents/IPandtheUSE . pp.1-28. the U.S. Economy 66 Rai, Arti, Stuart Graham, and Mark Doms. 2010. Patent Reform: Innovation, Promoting Economic Unleashing nt Commerce. Growth, and Producing High-Paying Jobs. of White Paper. Departme https://www.commerce.gov/sites/co mmerce.gov/files/migrated/repo rts/patentreform_0.pdf 67 U.S. Patent and Trademark Office and Intellectual Property and Economics and Statistics Administration (2016). https://www.uspto.gov/sites/default/files/documents/IPandtheUSE the U.S. Economy . pp.1-28. conomySept2016.pdf 68 Ibid. 69 Ibid. 70 Ibid. 71 Ibid. 31

33 OSTS OF HEFT T IP : C CONOMIC E HE T The IP Commission estimates that counterfeit goods, pirated sof  tware, and theft of trade secrets, which includes cyber-enabled trade secrets, directly c ost the U.S. economy $225 72 or 1 to 3 percent of GDP in 2016. to $600 billion annually,  According to the 2017 IP Commission Report, China accounts for 87 percent of 73 counterfeited goods seized coming to the United States. is $180 billion, or 1% of The estimated low-end cost of trade secret theft to U.S. firms  74 U.S. GDP. The high-end estimate 3% of GDP. is $540 billion, amounting to  The U.S. Customs and Border Protection Bureau (CBP) reported se izing $1.4 billion of counterfeit goods in FY 2016 (valued using the total manufacturer’s suggested retail price), but the IP commission estimates that CBP seized only ab out 1.2-2.3 percent of the 75 feit goods entering the United projected total value of counter States (in 2015). (Note orically has been one of the that the CBP seizure figure includes labels and tags which hist finished goods by affixing top ten products seized. Counterfeiters often evade seizure of labels to generic goods and/or assembly of finished goods after importation). The IP are of seized goods to the fact that counterfeit goods commission attributes this low sh mostly travel by postal service and often in small shipments of ten items or fewer. Given that the value of seized counterfeit goods from China and Hong Kong was valued at $1.2 billion in FY2016, that implies that the total value of counterfeit goods arriving from China and Hong Kong, based on the manufacturer suggested retail price of the infringed 76 cent of 2016 GDP. good, is estimated at $52.9-$101.4 billion in 2016, 0.3-0.5 per In 2016, CBP reports that $617 million (45 percent) of seized g  oods were sourced to 77 China and $600 million (43 percent) were sourced to Hong Kong. 78 Between 2013 and 2017, total inbound  international package mail to the U.S. tripled. There was a sharp rise in seized goods after the United States Postal Service (USPS) entered into deals with postal services in China (in 2010), Hon g Kong (2011), Singapore (2012), and Korea (2013) to provide—for a small premium—trackin g and delivery 72 IP Commission. 2017. “Update to the Report of the Commission on the Theft of American I ntellectual Property.” org/report/IP_Commission_Report_Update_ http://www.ipcommission. 2017.pdf 73 ntellectual Property.” IP Commission. 2017. “Update to the Report of the Commission on the Theft of American I 2017.pdf org/report/IP_Commission_Report_Update_ http://www.ipcommission. 74 ntellectual Property.” on the Theft of American I the Report of the Commission IP Commission. 2017. “Update to 2017.pdf http://www.ipcommission. org/report/IP_Commission_Report_Update_ 75 Intellectual Property Rights: Fiscal Year 2016 Office of Trade (2016). U.S Customs and Border Protection Seizure Statistics . 21. Available at: . [online] Washington: U.S. Department of Homeland Security, p https://www.cbp.gov/sites/default/files/assets/documents/2018- Jan/FY2016%20IPR%20Seizure%20Statistics%20Book%20%28PDF%20Forma tting%29_OT.pdf 76 U.S Customs and Border Protecti on Office of Trade (2016). Int ellectual Property Rights: Fiscal Year 2016 Seizure Statistics. [online] Washington: U.S. Department of Ho meland Security, p. 23. Available at: https://www.cbp.gov/sites/default/files/assets/documents/2018- Jan/FY2016%20IPR%20Seizure%20Statistics%20Book%20%28PDF%20Forma tting%29_OT.pdf 77 Ibid. 78 United States Senate Permanent Subcommittee on Investigations (2018). Combatting the Opioid Crisis: Exploiting Vulnerabilities in International Mail. Washington: United States Senate Committee on Homeland Security and Government al Affairs, p.21. (http://www.hsgac.senate.gov/downlo ad/psi-report_-combatting-the - opioid-crisis ) 32

34 at popular online retailers. confirmation, an essential feature for e-commerce transactions ber of packages shipped to The service, called “ePacket” led to large increases in the num ber from China alone the U.S. from Asia; between fiscal years 2011 and 2012, the num 79 nearly tripled, from 9.5 million to 26.8 million. * * * 79 millions a year to help you buy cheap stuff from . The Postal Service is losing Guo, Jeff (September 12, 2014) China. Washington Post. https://www.washingtonpost.com/news/storyline/wp/2014/09/12/the-postal-service-is- losing-millions-a-year-to-help-you-buy-cheap-stuff-from-china/? utm_term=.77dc1ca94bc3 . 2014): Office of Inspector General, U.S . Postal Service (February 25, Inbound China ePacket Costing Methodology Audit Report - https://www.uspsoig.gov/sites/default/files/document-library-fi les/2015/ms-ar-14-002.pdf 33

35 PPENDICES A To the Annual Intellectual Property Report to Congress 1. Department of Agriculture...2 2. Department of Commerce...5 3. Department of Health and Human Services...41 4. Department of Homeland Security...50 Department of Justice...70 5. 6. Department of State...139 7. Department of Treasury...144 8. Office of the U.S. Trade Representative...147 9. Copyright Office...156

36 EPARTMENT OF A GRICULTURE D 2

37 D A GRICULTURE EPARTMENT OF Department of Agriculture Appendix for FY 18 Annual Report Geographical Indications (GIs) Overview Article 22(1) of the Agreement on Trade-Related Aspects of Inte llectual Property Rights ndications are, for purposes of this Agreement, indications which provides that “[g]eographical i a region or locality in that territory, identify a good as originating in the territory of a Member, or where a given quality, reputati on or other characteristic of th e good is essentiall y attributable to its geographical origin.” USDA’s GI related activities during FY 2018 iculture actively works with The Foreign Agricultural Service (FAS) of the Department of Agr other Federal agencies, particula rly the lead agencies USTR and USPTO, to monitor and directly engage with countries on the issue of GIs. USDA’s main goal is to ensure GI protections do not disadvantage U.S. producers by unfairly granting pr otection to products with common names, which could ultimately result in a loss of market access. During FY 2018, USDA engaged at the most senior levels with key foreign country counterparts to emphasize concerns and counter h armful GI policies, such as those of the European Union (EU), emphasizing transparency, a dherence with internationally recognized standards, seeking an opportunity to comment on any prop osed GIs through comment period and requesting the ations. USDA engaged with a numb countries be fair in the evalu er of countries that were negotiating Free Trade Agreements (FTAs) with the EU – including Mexico, Canada, Japan, and the MERCOSUR countries – to raise the importance of preserving common terms for food products. Secretary Perdue led a GI focu -20 with like-minded countries sed event on the margins of the G and key industries to raise aware ness of the EU approach to GIs as well as to celebrate new world food products, which are often the focus of EU GI protect ion. Finally, FAS is supporting a multi-year project with U.S. industry stakeholders targeting key countries in Asia and Western Hemisphere with the goal of achie ving widely adopted GI policies that protect common food and beve rage names and promote transparent global trade. More broadly, FAS participate d in a panel of public and private entity representatives during a special forum in June entitle d, “Intellectual Property, Food La ws, and Global Food Security: Feeding the 9 Billion in 2050” at Michigan State University (MS U). The event was jointly organized by the MSU’s College of Agriculture and Natural Resources and the MSU Law College’s Global Food Law Program . FAS’s representative highlighted how USDA’s international programs can be ut ilized to promote protection of intellectual property overseas, 3

38 e-enabling environments for prote especially to help create trad cted U.S. products and technologies. Plant Variety Protection tificates are recognized world wide and expedite foreign plant USDA plant variety protection cer variety protection application fil ing. The Plant Variety Prote ction Office (PVPO) of USDA’s Agricultural Marketing Service s of the International Union (AMS) works actively with member for the Protection of New Varieti es of Plants to promote cooper ation on the standards for variety examination. Once plant variet y protection is granted, the cer tificate owners have exclusive legal rights to market and to exclude others from selling their varieties. This legal protection for breeders and inventors promotes the development of new varietie s that can increase yield and crop productivity, increase far ortunities. Other benefits of mer income, and expand trade opp plant variety protection include provisional protection upon ap plication receipt , priority when filing in another country, use r-friendly filing without the nee d for an attorney, no annual maintenance fees, and applican t-conducted field trials. USDA Plant Variety Prot ection Activities in FY 2018 AMS launched the new electronic Pl ant Variety Protection (ePVP) System in October 2017 using widely available technology to automate the process for p lant variety protection creased efficiency and budget his platform has resulted in in applications. The addition of t savings. The system makes it easier for customers to apply for protection, track an application, correspond with program staff, and make online payments. During FY 2018, PVPO staff provi ded presentations on ePVP and e xamination procedures to nt Pioneer, American Seed delegations from Taiwan, China, T he Netherlands, Monsanto, DuPo Trade Association, and the U.S. P atent and Trademark Office. T he presentations highlighted the benefits of the new web-based system for submitting plant varie ty protection applications, and provided an overview of how PVPO examination procedures have be en streamlined to speed up certification for customers. e PVPO, which provides AMS provides intellectual prope rty rights protection through th protection to breeders of varie ) propagated plants that are new, ties of seed and tuber (potatoes Protection Act, the PVPO distinct, uniform, and stable. Authorized by the Plant Variety ates that protect varieties for 20 examines new variety characterist ics in order to grant certific years (25 years for vines and trees). The Agricultural Research Servic e’s Protection of USDA’s own IP USDA’s Agricultural Research Service (ARS) has a comprehensive program to protect US Government-owned intellectual property (IP). In addition to IP protection, ARS delivers a comprehensive training program on IP. The program has four components: (1) training scientists on DURC (Dual Use Research of Concern), TT (Technology Transfer) and insiders’ threats; (2) training TT Staff on U.S. Departmen t of Commerce regulations; ( 3) Export Control Reviews; and (4) entrance and exit proce dures for agency employees to mi nimize insider threats. 4

39 D EPARTMENT OF C OMMERCE 5

40 EPARTMENT OF C OMMERCE D Department of Commerce Appendix for FY 18 Annual Report This appendix discusses the FY 2018 activities of the Commerce Department, including the U.S. Patent and Trademark Office (USPTO), the International Trade Ad ministration (ITA), the Commercial Law Development Progr am (CLDP), and the National Telecommunications and Information Administration (NTIA). COMMERCIAL LAW DEVELOPM ENT PROGRAM (CLDP) The Commerce Department’s Commercial Law Development Program (C LDP) creates a level g the capacity of foreign countries to playing field for U.S. firms overseas, in particular by buildin ent of intellectual property rights (IPR). improve the protection and enforcem As the Office of General Counsel’s technical assistance arm, CL DP upholds the Department of Commerce’s mission, as stated i n its 2014-2018 strategic plan to “Expand the U.S. economy through increased exports.” The first objective is to “increas e opportunities for U.S. companies by opening markets globally,” and a key strategy is to “reduce trade barriers.” The strategic plan states that: “Foreign government-im posed trade barriers cost U. S. exporters billions of dollars each year. Barriers include inade quate protections for IP righ ts.” assistance programs: programs CLDP helps enforce IPR overseas through two types of technical that help countries develop an eff ective IPR enforcement environment, and programs that help lectual property, which gives them a vested interest in enforcing countries create their own intel IPR. Conducted in close coopera tion with USPTO, with other Com merce bureaus, with USTR, LDP’s activities include trai nings, seminars, and meetings that and with other Federal agencies, C der enforcement, innovation and t he role of IP in the economy, address topics such as IPR bor technology transfer, judicial trai ning in adjudicating IP infri ngement cases, capacity building for government institutions and IP enforcement systems, copyright a nd trademark protection, copyright management, public awareness of IP issues, and IP enf orcement in the digital sphere. In FY 2018, these CLDP activitie erbaijan, Bosnia and s were conducted in Armenia, Az Herzegovina, Pakistan, Sri Lanka, Tajikistan, Tunisia, Ukraine, and the United States. In addition, regional programs were conducted for MENA countries. As outlined below, CLDP’s activitie s mainly fell into four main categories: Capacity Building in Border Enforcement; Judicial Cap acity Building i n IPR Enforcement; Capacity Building for Institutions that Enforce IP R; and Development of Innovation Ec osystems in Particular Through Technology Transfer. The following are notable CLDP programs during FY 2018 (more de tailed descriptions are further below). 6

41 rder Enforcement Capacity Building in Bo Afghanistan: Border Enforcement Workshop, April 2018 TRIPS Azerbaijan: Workshop on Border Enforcement of Intellectual Property Rights, March 2018 Tajikistan: it and Pirated Products, Workshop on Border Identificati on and Interdiction of Counterfe May 2018 Judicial Capacity Building in IPR Enforcement Azerbaijan: IPR Adjudication, September 2018 Bosnia and Herzegovina: Workshop on Adjudication of Civil Intellectual Property Infring ement Cases , June 2018 Pakistan: Intellectual Property Legislativ e Update Working Group Meeting, November/December 2017 Intellectual Property Workshop, December 2017 e Update Working Group Meeting, September 2018 Intellectual Property Legislativ Technology/IP Licensing Workshop, September 2018 Intellectual Property Tribunal J udicial Workshop, September 201 8 Ukraine: tion of Judicial IP Benchbook, Oct ober 2017 Consultative Visit on Utiliza Workshop on Collective Copyright Man 2018 agement in Ukraine II, July IP Judicial Benchbook Launch, July 2018 Workshop on Adjudication of Intelle y 2018 ctual Property Disputes, Jul West Bank: E-Prosecution Session at the 8th Annual Palestine Public Prosecution Conference, March 2018 Trademark Workshop for Palestinia n Judges and Prosecutors, Apri l 2018 Capacity Building for Institutions that Enforce IPR Afghanistan: IPR-related Assessmen t of Afghanistan’s Technical Assistance Ne eds, October 2017 7

42 Bosnia and Herzegovina: of International Software Workshops on Addressing IP Issues t hat Arise in the Negotiation Agreements, June 2018 West Bank: IP Judicial Development in the West Bank, November 2017 Meeting with Officials from discuss the impact of the the Ministry of National Economy to current and draft laws to improve the legal framework for IP, A pril 2018 Development of Innovation Ecosystems in Particular through Technology Transfer Armenia: ities through Workshop r Office Common to Four Univers Creation of a Technology Transfe in Armenia Followed by Internships at Technology Transfer Offices in the U.S., October 2017 and March 2018 Pakistan: epreneurship Network Pakistan ( GEN) Seminar, Celebrating Participation in the Global Entr World IP Day, April 2018 13-14, 2018 Intellectual Property/Technology Licensing Workshop, September Regional MENA Program: Workshop on University-Industr y Relations, February 2018 Training and AUTM Meeting Vis it on Tech Transfer, February 2018 Sri Lanka: Consultations at AUTM Confer ence and Licensing Workshop, April 2018 fer Fellowship, June-August 2018 CLDP Supports Technology Trans Tunisia: U.S. Consultations on Technology Transfer Management, November/ December 2017 West Bank: Formation of an Entrepreneurs hip Working Group, October 2017 Conference on Building an Innova tion Ecosystem, October 2017 Consultations on IP Curriculum D evelopment in Law School, October 2017 The following are more detaile d descriptions of these FY 2018 C LDP programs Capacity Building in Border Enforcement On March 14-15, 2018, CLDP – in coordination with U.S. Embassy Baku and Azerbaijan: Azerbaijan State Customs Com mittee – held a two-day Workshop on Border Enforcement of Intellectual Property Rights i n Baku, Azerbaijan. The workshop was designed to improve the coordination between government agencies, and between agencies and the private sector, in order to better interdict c ounterfeit and pirated goods in Azer baijan and the region. Additionally, 8

43 CLDP organized a panel discussi Customs and Border on during the program with U.S. Protection (CBP), Azerbaijani priv ate sector, and Azerbaijan’ C ustoms Committee officials to discuss how Azerbaijan Customs could improve its approach to engagement with private sector counterparts and end-use consumers. Afghanistan: On April 22-23, 2018, CLDP in close cooperation with USPTO con ducted a two- day TRIPS Border Enforcement Workshop in New Delhi, India on Tra de-Related Aspects of Intellectual Property (TRIPS) enf orcement primarily for officia ls from Afghanistan’s Customs Additionally, three senior Department (ACD) and Ministry of Commerce and Industry (MOCI). y joined the dele gation for the s econd day of the workshop. The members of the Afghan judiciar xisting gaps between TRIPS obligations and current Afghan workshop focused on identifying e the goal of informing the cre ation of a strategy document to customs laws and procedures, with rectify the identified gaps, including updating the Implementat ion Action Plan for Afghanistan to meet its TRIPS commitments. On May 15-17, 2018, CLDP – together w ith advisors from the USP Tajikistan: TO, DHS/CBP, and the World Customs Organization (WCO) – led a Workshop on Border Identification and feit and Pirated Products in Dushanbe, Tajikistan. Interdiction of Counter Officials from the Tajik Customs Service and the Min istry of Economic Development engaged in discussion of the economic, health, and safety risk posed by counterfeits. Advisors introduced participants to international best practices in s uch topics as application/recordation, seizure of goods, whole-of- government coordination at the border, risk management, targeti ng, and destruction of infringing d up an introductory program by products. The workshop followe CLDP conducted in October 2016, and builds upon the Tajik Governments efforts to raise awareness of Intellectual Property protection in the count ry. CLDP and its advisors made plans wi th those in attendance to return for an additional program in December 2018. Judicial Capacity Building in IPR Enforcement On October 13-20, 2017, CLDP – in c ooperation with the Higher Ukraine: Commercial Court of Ukraine (HCC) and the U.S. Feder k long Consultative Visit on al Judicial Center – held a wee Minneapolis, Minnesota and Utilization of Judicial IP Benchbook. The visit took place in o obtain a more effective Washington D.C. and was part of the efforts to assist Ukraine t adjudication of IP cases by the Ukrainian judiciary through the development of the IP Benchbook. The visit brought togeth er the Benchbook Developmen t Working Group composed of six judges from the HCC and other commercial courts of Ukrai ne who participated in the Benchbook writing in 2015/2016. Duri ng their visits to the Cou rthouse in St. Paul MN, USPTO, the Alexandria, VA Courthouse, and the Federal Judicial Center, the delegation consulted with judges and magistrates on the utilization of benchbooks as well as the issues involved in the adjudication of IP cases. U kraine IP Benchbook was published i n June 2018 and launched in July 2018. On November 28-December 1, 2017, CLDP and USPTO welcomed a six -member Pakistan: Intellectual Property Legisl ative Update Working Group composed of officials from Pakistan's Ministry of Commerce and Intelle ctual Property Office as well a s three intellectual property attorneys from Pakistan. This working group is charged with updating Pakistan's IP laws and 9

44 has produced a first draft of pr oposed amendments to existing p atent, trademark, and copyright ordinances. The delegation discu ssed USG comments to the amend ments with experts from and created a work plan for prod ucing the next draft. USPTO and the Copyright Office Pakistan: On December 4-5, 2017, CLDP – in close cooperation with USPTO and the Intellectual Property Continuing Legal Education Institute of Pakistan (CLEIP) – held an Workshop in Karachi, Pakistan, for IP Tr ibunal Presiding Officers and s elect District and Session ibunals in the near future (a total Court (D&S) judges identified a s likely to be assigned to IP Tr hop focused on enhancing the kno wledge and analytical skills of of 15 participants). The works the participants when applying IP law to cases before the IP Tr ibunals and D&S courts. U.S. Federal District Court Judge David Carter and Lahore High Court Justice Farrukh I rfan Khan led numerous panel discussions wit h active participation by the Tri bunal and D&S judges, and trademark la w. At the conclusion of the supplemented by teaching sessions on copyright workshop, the participants gaine d an increased understanding of the legal and economic underpinning of IP law and global best practices which will enh ance the tribunal/court's effectiveness in adjudicating c ivil and criminal claims to prot ect IP rights holders from the unauthorized use of IP and the r esulting damages to individuals , the economy, and society as a to the U.S.-Pakistan Special 3 whole. This program is integral 01 engagement matrix. West Bank: On March 22-24, 2018, CLDP was represented by Mr. Brian Pearce and Professor 8th Annual Palestine Public Prosecutors Conference . Mr. Pearce and Michael Landau at the g on cyber and IP Professor Landau provided key remarks on e-prosecution, focusin nded the Conference, including Palestinian Public Prosecutors, crimes. Over 200 participants atte academics, and many international experts. In addition to thei r direct contribution to the conference, Mr. Pearce and Profe ssor Laundau had extensive disc ussions with the Attorney General, Dr. Ahmed Barka, about i nternational standards for electronic case management of IP he conference. cases. CLDP was the only US government entity represented in t West Bank: On April 6-7, 2018, CLDP – in coopera tion with the Higher Judicial Council and the Office of the Attorney G eneral – hosted a two-day Trademark Workshop for Palestinian with Judges and Prosecutors on the calculation of damages in trademark cases. CLDP, along rian Mazurkevich from Judge Denise Cote from the Sout hern District of New York and Do USPTO, guided 25 Judges and Prosecutors in understanding differ ent models of calculating damages under civil and common law and in the use of statutory damages. The participants e current IP law to the calculation engaged in a simulated case study to apply th that enabled them nfringement. (The current IP l aw is a hybrid of British, of civil damages for trademark i Ottoman, Jordanian, and Egyptian l aw.) The exercise was key in facilitating dialogue among the need to review the current judges and prosecutors on applic ation of the current law and on draft IP law with respect to the recovery of civil damages in t rademark cases. As a new IP law is being drafted, the workshop was timely in providing guidance on the calculation of damages in civil cases that may arise from criminal cases brought by the O ffice of the Attorney General. Bosnia and Herzegovina: On June 12-13, 2018, CLDP – in coordina tion with the Centre for Judicial and Prosecutorial Train ing of Republika Srpska and Cen tre for Judicial and Prosecutorial Training of FBiH – held a two-day Workshop on Adjudication of Civil Intellectual Property Infringement Cases in Sarajevo, Bosnia and Herzeg ovina. In attendance were 15 10

45 judges from the Court of BiH, C antonal Court Sarajevo and Munic ipal Court Travnik. The workshop featured presentations as well as practical and effect ive training in IP adjudication skills through the use of country -specific case studies and int eractive discussions. The workshop k Cases, Determining IP included topics such as: Adjudication of Copyright and Trademar Valuation: Trademark, Calculation of IP Damages, and Legal Framework and Challenges of Software Protection in BiH. The workshop was designed to provi de the judges the skills y, and effectively adjudicate in tellectual property infringement necessary to fairly, efficientl ed the discussion on updating the IP Judicial Benchbook for cases. The workshop also start BiH. On July 23-25, 2018, CLDP – in coopera tion with the Ministry o f Economic Ukraine: ted the Workshop on Development and Trade (MEDT) of Ukraine – designed and implemen Collective Copyright Management in Ukraine II in Kyiv, Ukraine. The workshop, which was a follow up to the 2015 international workshop of the same name, gathered representatives of the Ukrainian government, Ukrainian e xpert community and right hold ers, as well as representatives of U.S. and internationa l collective copyright management organ izations. International advisors, including experts from interna tional collective management orga nizations and the World Intellectual Property Organizati the newly adopted Ukrainian on, reviewed the provisions of collective copyright management law, as presented by the repres entatives of MEDT, and made specifics recommendations on suggest ed further changes in the U krainian collective copyright management system. These suggestions will help MEDT develop le gislative, regulatory, and procedural solutions in line w ith internationally accepted stan dards and best practi ces, in order to address the remaining issues of the collective copyright manage in Ukraine in the ment system light of the newly adopted law. Ukraine: On July 26, 2018, in Kyiv, Ukraine, during The Launch of the IP Judicial Benchbook, he Federal Judicial Center – Supreme Court of Ukraine and t CLDP – in collaboration with the introduced Ukraine’s judiciar y to the IP Benchbook, prepared wi th the support of CLDP. The introduction assisted the Ukrainian judiciary to use the IP Benchbook efficiently. The participants discussed the cont ents and structure of the Benchb ook, and its functions and uses, study exercises on some of the c urrent issues of IP adjudication. and also took part in the case areness of the Ukrainian judiciary of the nature and The workshop resulted in better aw importance of the IP Benchbook as a tool in further improvement of adjudication of IP disputes in Ukraine. Ukraine: On July 30-31, 2018, in Odesa, Ukr aine, CLDP – in cooperation with the U.S. judiciary and the Federal Judici al Center, as well as with the High Council of Justice and the Supreme Court of Ukraine – de Workshop on the Adjudication of signed and implemented the Intellectual Property Disputes. The workshop gathered Ukrainian judges, members of the High Council of Justice, and represent atives of the U .S. judiciary and legal community. The U.S. judges helped Ukrainian partici pants engage in the productive d iscussion of priority issues and challenges in the adjudication of IP disputes and identify potential solutions to a number of specific practical legal issues of adjudication of IP commercia l disputes in Ukraine, identified together with CLDP in the course of the preparation for the wor kshop. The workshop contributed to more effective a nd efficient adjudication of IP commercial disputes in Ukraine, which is among the key factors of continued reforms of the Ukra inian judiciary system. 11

46 Pakistan: Intellectual Property Legislative Update On September 12, 2018, CLDP met with the Working Group composed of officials from Pakis tan's Ministry of Commerce and Intellectual Property Organization (IPO), as we ll as three intellectual prop erty attorneys from Pakistan. This working group is charged with updating Pakistan's IP laws and has produced a first draft of proposed amendments to existi t ordinances. The working ng patent, trademark, and copyrigh group discussed the process IPO will follow to publish the proposed revisions for public comment, respond to such public comme nt, meet with legislators, and move the proposed legislation forward. CLDP will be ending its role in this proc ess, insofar as IPO can interact with the three Pakistani expert a ttorneys going forward. IPO will s hare an updated work plan for the ’s IP laws. activities necessary to affect the proposed changes to Pakistan On September 13-14, 2018, in Islamaba d, CLDP – in close cooper ation with Pakistan: Pakistan’s Higher Education C ommission (HEC) and the Continuing Legal Education Institute of Pakistan (CLEIP) – conducted a three phase (i.e., Technology /IP licensing basics, teaching- que) two-day program for point licensing exercise, hands -on licensing problem with criti ce of Research, Innovation and Commercialization members, university officials (e.g., Offi Business Incubation Center representatives, faculty) and legal practitioners (e.g., IP law firms and/or lawyers identified by CLEIP) regarding how to commercialize technology/IP with a focus on licensing. Pakistan: On September 26-27, 2018, CLDP – in close cooperation with USPTO and the Continuing Legal Education Institute of Pakistan (CLEIP) – held an Intellectual Property elect District and Session Workshop in Karachi, Pakistan, for IP Tr ibunal Presiding Officers and s Court (D&S) judges identified a s likely to be assigned to IP Tr future (a total ibunals in the near hop focused on Pakistani jurisprudence on intellectual property of 15 participants). The works law, with emphasis on trademar kshop was developed after the k and copyright issues. This wor completion of an earlier program in December 2017, where gaps w ere identified in the ting judges, in order to better knowledge base of the participa prepare this same group of rehensive and challenging worksho p to be held in Washington, participants for the more comp the conclusion of the workshop, t ed an increased D.C. in the next quarter. At he participants gain diate positive effect on the understanding of Pakistani jurisprudence that will have an imme ability of the tribunal ivil and criminal claims to protect IP /court's effectiveness in adjudicating c rights holders from the unauthor ized use of IP and the resultin g damages to individuals, the economy, and society as a whole. T his program is integral to t he U.S.-Pakistan Special 301 engagement matrix. Azerbaijan: tellectual Property On September 10-11, 2018, in coordination with Azerbaijan’s In e, CLDP held a two-day Workshop on the Adjudication of Agency and Ministry of Justic Intellectual Property Infringement Cases in Baku, Azerbaijan. Nineteen judges from the Azerbaijan Court of Appeals, A zerbaijan Economic Courts, and other district and city courts throughout Azerbaijan participate d. Judge Bernice Donald, U.S. Circuit Judge for the Sixth Circuit Court of Appeals, and J udge Virginia Covington of the Middle District of Florida discussed best practices nd led interactive case studies in intellectual property law a designed for practical applica tion of key concepts in copyright and trademark law. Representatives from Azerbaija n's Intellectual Property Agency presented country-specific case studies that focused on interpret ation and application of Azerb aijan intellectu al property law. 12

47 This workshop promoted reasoned decision-making and a uniform a pproach to intellectual zed, and efficient adjudication of property disputes, which will lead to more predictable, harmoni rticularly with respect to amendments to Azerbaijan's IP these cases throughout Azerbaijan, pa law. Guaranteeing the ts is fundamental to attracting protection of intellectual property righ foreign investment, as it is a cri tical factor in whether U.S. investors and businesses enter or increase their presence in a market. Capacity Building for Institutions that Enforce IPR Afghanistan: On October 9-12, 2017, Attorney Advi sors from CLDP and USPTO t raveled to Assessment of Afghanistan’s Technical Assistance Needs Kabul, Afghanistan to conduct an related to intellectual propert y rights enforcement and the Wor ld Trade Organization Agreement on Trade-Related Aspects of Intel lectual Property Rights (TRIPS). As a result of the assessment USPTO and CLDP, in 2017-2018, USPTO/ CLDP/USAID initiated techni cal assistance programs on Border Enforcement. West Bank: On November 20, 2017, CLDP and the Commerce Department’s Foreign ith high-level officials from the Attorney General’s Office and Commercial Service (FCS) met w the Higher Judicial Council to determine next steps in providin g essential IP Training to Prosecutors and Judges . The training comes at a cri tical time as the Palestinian Aut hority is in the midst of passing a new IP law , replacing the current law fr om 1933. During the meeting, the Palestinian officials expressed the need to focus on trademark law given the significant nexus has begun working on in the with competition and franchising, two other key areas that CLDP West Bank. One of the main issues that judges and prosecutors face is the calculation of civil ndards. CLDP wi ll implement a workshop for and criminal penalties within i nternational sta judges and prosecutors on monetary damages for trademark issues in the coming year. West Bank: The Palestinian Authority is in the process of reforming laws and regulations in tly, the IP and Company’s order to improve its World Bank Doing Business Ranking. Curren Law are being re-drafted. O ation with the Entrepreneurship n April 4, 2018, CLDP – in collabor Working Group – hosted an Exclusive Meeting with Officials from the Ministry of National Economy to discuss the impact of the cu rrent and draft laws proposed. The meeting was instrumental in creating a dial ogue between key stakeholders so as to improve the legal framework for IP. Bosnia and Herzegovina: On June 12-13, 2018, CLDP held the second phase of programming on judicial IPR enforcement in c oordination with the Center(s) of Judicial and Prosecutorial Workshops Training of the Federation of Bosnia-Herzegovina (BiH) and the Republika Srpska. on International Software Agreements was part of a series of workshops on IPR development and enforcement, targeting local tech companies, law firms, universities, government officials and judges and aiming to strengthe n IP capacity of local ICT in dustry and improving enforcement of IPR. The first pha se of the program, which was held on May 14-18 in both Sarajevo and Banja Luka, focus ed on negotiating international s oftware agreements for local IT companies. CLDP focused on training these firms on how software IP can be protected and key IP issues that arise in the negotiation of international softwa re agreements. The workshops also included mock negotiations sessi ons led by an internationally renowned IP partner, with specific 13

48 focus on drafting and negotiating t erm sheets. Additionally, C LDP experts discussed how to effectively utilize open-source software, and to develop and protect IP for Google and Apple app will help B iH to develop as a knowledge-based stores. Strengthening intellectual property rights economy, improving employment opportunities and economic stability, and will protect the IP of both Bosnian and U.S. companies. Development of Innovation Ecosystems in Particular through Technology Transfer ities (American Armenia: On October 9-27, 2017, participants from four Armenian univers echnic University, and National ational Polyt tate University, N University of Armenia, Yerevan S Three-week Internship in the United States hosted by George Science Academy) took part in a artment of Agriculture, and the Washington University, the University of Maryland, the U.S. Dep National Institute of Standards and Technology (NIST). Upon re turn to Armenia, the participants hope to establish a r egional technology transfer office for local universities in Yerevan, Armenia. n collaboration with U.S. ConGen On October 23, 2017, CLDP – working i West Bank: the formation of an Entrepreneurship Working Group that is leading the Jerusalem – supported technology transfer industry in the West Bank. The Committee m embers are instrumental in providing private sector perspective to the innovation field th at is outside of academia. The Committee agreed to support govern ment and academic engagement, so as to foster a ian Innovation Ecosystem. The he development of a Palestin harmonized and holistic effort to t first consultations led to a d and regulatory issues that would eeper understanding of key legal hinder IP-based entrepreneurship. West Bank: On October 24-25, 2017, CLDP hosted a conference for academia, private sector, tem and the Role of the and government officials on Building an Innovation Ecosys Universities. CLDP was joined by Technology Transfer experts from Stanford University and ovide regional and internation Louisiana State University, to pr al best practices to developing an environment that would foster en trepreneurship and innovation through IP protection. The for current entrepreneurs, acade mia, and government officials to conference provided a platform discuss current legal and regulatory challenges that impact IP development and contribution to the local economy. West Bank: On October 26, 2017, CLDP hosted a roundtable with law schools from prominent tributions that academia- academic institutions in the West Bank to discuss potential con influenced IP can have on the l ocal economy. While a few techn ology offices are opening in the West Bank, further engagement w ith the government would be key to building the support needed to develop University T echnology Transfer Offices. Tunisia: ersity’s On November 27-December 8, 2017, CLDP and Carnegie Mellon Univ Technology Transfer Office (TTO) organized U.S consultations fo r two managers of a Tunisian TTO to discuss best practices i n turning scientific research in to commercial products and services. The visits were part of CLDP's multi-year effort to develop effective technology transfer in Tunisia to encourag e job and business creation and foster the development of a knowledge-based economy. 14

49 Regional MENA Program: On February 7-9, 2018, CLDP held a North Africa Regional at the University Mohamm ed V in Rabat, Morocco. Workshop on University-Industry Relations ities and the business commu nity can interact to create The workshop focused on how univers rage technology transfer, produ innovation ecosystems that encou ct commercialization, and the creation of jobs and companies. I t included 50 participants fr om Algeria, Morocco, and Tunisia, including officials from universities and government agencies w ho are engaged in technology transfer and innovation. Experts from the University of California, Berkeley and European universities led the workshop, wit h input from regional experts . ted an intensive program Regional MENA Program: On February 15-21, 2018, CLDP conduc in Phoenix, Arizona, for technology Algeria, Morocco, Sri Lanka, and transfer specialists from d of a 3-day training program foc Tunisia. The program consiste using on contract negotiation and how to identify, evaluate, pr otect, and exploit intellectua l property develope d within their research organizations. The trai ning included visits to Arizon a State University and Skysong Innovations Inc. to learn best pr ogy licensing offices and business actices for successful technol incubators. Participants als o attended the Association of Univ ersity Technology Managers (AUTM) Annual Meeting, which prov ided 4 days of extensive train ing and networking on how to manage a technology transfer office. The combined 7-day pro gram leveraged the resources of M through case studies, mock negotiations, lectures, and private sector experts and AUT discussion. Armenia: nation with the Intellectua l Property Rights On March 16, 2018, CLDP – in coordi Consultation with a Delegation of Armenian University Center of Armenia – led a one-day hing a Technology Transfer office in Yerevan, Armenia. The Professionals on Establis consultation built on th e delegation’s internship in Washington , DC in fall 2017 (discussed above). A skilled technology trans fer office in Armenia will encourage innovation in the private and public sectors and contribute to Armenia’s shift from an agriculture-based to a knowledge- based economy. Sri Lanka: On April 15-16, 2018, eight Sri Lanka ns participated in a two- day AUTM Conference and Licensing Workshop consisting of presentations, r ound-table discussions, case studies and exercises, and an on- campus visit to Arizona State University (ASU) and the first 1½ days, experts from Skysong Innovation & Entrepreneurial Center (Skysong). For the CLDP, the United States Department of Agriculture, Cornell Univ ersity, and Boston University itutional Imperative, Licensing presented on subjects such as Technology Licensing and the Inst e, IP/Technology Valuation, Negotia tion as a Process, from a Licensee’s Perspectiv Communicating the Value of Tec erms and Conditions of a hnology Transfer, and Financial T License. Numerous negotiating exe rcises were conducted to stre ngthen teaching points and key concepts. During the afternoon of April 16th, the delegation v isited ASU and Skysong to see examples of university and local n, technology community support of innovatio commercialization, and the challenges of venture start-up. On April 18-21, the delegation attended full-day sessions of the AUTM conference, including a number of networking events, plus daily recap discussions conducted on an ad hoc basis by CL DP with the added participation of the Cornell and BU experts. 15

50 Pakistan: On April 26, 2018, CLDP – in close c ooperation with Embassy Islamabad – d by the Global Entrepreneurship Network Pakistan (GEN) participated in a seminar conducte celebrating World IP Day. nt and university officials in a panel CLDP joined Pakistani governme discussion of Women's Role i n Innovation and Creativity. Other panelists acknowledged the importance of the Contributions made by Post and CLDP to enhanc e the innovation ecosystem in Pakistan. CLDP made specific mention that innovation and creat ivity is not bound by gender or social status and highlighted the important contributions made by women in Pakistan and worldwide. The seminar was widely attended and increased the p ublic awareness of IP and its role in benefiting the economy and society in general. Sri Lanka: On June 4-August 24, 2018, CLDP arranged a Technology Transfer Fellowship for Dr. Megelhewa Nidarsha Kaumal from the University of Colombo to take place in Boston, MA on (PHI). CLDP, the World Intellectual Property Organization, with Partners Healthcare Innovati and USPTO have been supporting th e development of technology tr ansfer offices and managers selected to participate in thi s fellowship that allowed him to in Sri Lanka, and Dr. Kaumal was observe and participate in the da y-to-day activities of an operating technology transfer office. intellectual property managem Fellowship subject areas included ent, transactional affairs, finance, licensing, collaborati ons/alliances, innovation funds, template creation, and community engagement. Dr. Kaumal delivere hip on August 14 at PHI. Dr. d a presentation on his fellows Kaumal will go back to Colombo and deliver a training on what h e learned for other technology transfer managers in Sri Lanka. Pakistan: On September 13-14, 2018, CLDP – in close cooperation with th e Continuing Legal Education Institute of Pakistan (CLEIP) and Pakistan’s Higher E ducation Commission (HEC) – hop in Islamabad for university officials and private lawyers in conducted an IP Licensing Works orts to commercialize IP the Islamabad Greater Metropolit an area who are involved in eff developed within the academic c ommunity. A majority of Workshop Panelists and presenters were Pakistani experts in I P, and CLDP brought in a technology licensing expert from the best practices in identifying, University of Michigan to share evaluating, protecting, and commercializing university-devel ed in a series of case studies oped IP. The workshop culminat icipants to apply their new kno and exercises requiring the part wledge to identify and solve issues arising from IP licensing effort s. This workshop was an extens ion of earlier CLDP programs on this subject, which has led to the creation of over sixty university Offices of Research, Innovation and Commercialization (O RICs) and Business Incubatio n Centers (BICs) across Pakistan. INTERNATIONAL TRADE ADMINISTRATION (ITA) e Administration’s Office of I In FY2018, the International Trad ntellectual Property Rights (OIPR) continued to make availa ble – and update with relevant content – the STOPfakes.gov website, which is an interagency stop shop for U.S. government resource that serves as a one- tools and resources on intellect ual property rights. OIPR is t he lead agency hosting the STOPfakes.gov website along with s upport from partner Federal a gencies. The Federal agencies behind STOPfakes.gov have developed a number of resources to ed ucate and assist businesses (including SMEs) as well as cons umers, government officials, an d the general public. These include resources that assist S MEs in identif ying and working t hrough IPR issues in key foreign 16

51 markets. The STOPfakes.gov website features industry-specific brochures catering to everal industry sectors. These industry brochures cover IP- individuals and companies in s specific topics relating to an a rray of U.S. industries includi ng Pleasure Boats, Medical Devices, , helpful guidance to assist U.S. Auto Parts, and Building Produc ts. The brochures provide brief companies protect copyright, pate nts, trademarks, trade secrets and other intellectual property in overseas markets. In addition to providing information and acc ess to these interagency resources, OIPR also answers hundr eds of IPR-related inquiries from businesses and individuals each year. In FY2018, OIPR added a new featur e to the STOPfakes.gov websit e known as Country Snapshots for 36 countries. These valuable IPR resources provi de U.S. companies with contact information for seeking copyrig ion within each country. The ht, trademark and patent protect Snapshots also provide U.S. compa nies with contact information for local U.S. government officials including the IP Attachés. In addition, OIPR published four new Country in understanding the ins and outs Toolkits on www.STOPfakes.gov to assist U.S. entrepreneurs of IP protections in four Southeast Asian markets: Singapore , Malaysia, Vietnam and Brunei . In FY2018, OIPR launched the @STOPfakesGov Twitter account in A pril 2018 on World IP Day. The account publicizes STOPf akes Roadshows as well as onl ine resources from STOPfakes.gov and websites of part ner bureaus and agencies (USPTO, IPR Center, CBP, etc.). Since launching three months a go, @STOPfakesGov has grown in fo llowers and impact steadily. d the traditional IP constituency The account has proven especia lly useful for reaching out beyon to make sure resources and eve nts are widely publicized. been a leader in developing and coordinating SME-focused For over five years, OIPR has outreach programs in an array of formats. With the inception i n FY2012 of the STOPfakes.gov e, interagency Road Show that traveled to multiple U.S. Road Show, OIPR developed a uniqu ndustries and provided an array of pa nel speakers and IP experts to cities with IP-intensive i echanisms. During FY18, advise and consult with SMEs on IP protection and enforcement m OIPR reimagined and reinvigorated eared towards SMEs. the STOPfakes.gov Roadshows g These Roadshows deliver critical ly important information about intellectual property to audiences that need it most – sta rt-ups, entrepreneurs, small a nd medium-sized businesses, independent creators, and inventors. Six roadshows were comple ted in Seattle, Portland, Austin, Dallas, Phoenix, and Tucson – reach ing more than 155 U.S. compa nies. OIPR secured the support of many USG offices and ag tion, including: U.S. Customs encies for Roadshow participa & Border Protection (CBP), U.S. Patent and Trademark Office (US PTO), U.S. Copyright Office (USCO), National IPR Coordinati on Center, Federal Bureau of Inv estigation (FBI), Small Business Administration (SBA), D epartment of State (DOS), Naval Surface Warfare Center (NAVSEA), Minority Business Deve lopment Agency (MBDA), Export-I mport Bank and others. In addition, OIPR added a unique interactive feature to the Roa d Show which will include guided assistance by U.S. Customs officials to assist with trademark r ecordation and guidance from U.S. Copyright officials in filing for copyright protections. 17

52 NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION (NTIA) Protect Intellectual Pr operty at ICANN and Information Administration The National Telecommunications (NTIA) – in collaboration ance implementation by the ral agencies – continued to adv with USPTO, IPEC, and other Fede d Names and Numbers (ICANN) of the new generic top-level Internet Corporation for Assigne domain (gTLD) safeguard advice. ICANN’s Governmental Advisory Committee (GAC) a complement to earlier GAC proposed amendments to the developed this safeguard advice as Registrar Accreditation Agreements that address the concerns of trademark and other rights holders. As new gTLDs become ope rational, NTIA, USPTO, IPEC, a nd other interagency he effectiveness of new rights protection mechanisms (RPMs) colleagues continue to focus on t Clearinghouse, Trademark Claims created to protect Intellectual Property, such as the Trademark uspension System, as well as the review of these RPMs. In Service, and the Uniform Rapid S addition, NTIA, USPTO, and other federal agencies, including th e Federal Trade Commission ontinue to engage within the GA C and ICANN, highlighting the and the Department of Justice, c tion (known as WHOIS) for IP importance of timely access to domain name registration informa rights holders, to combat infringement online. Protection Regulation (GDPR), which went into effect during In response to the European Data ation information details ar FY2018, crucial domain name registr e no longer publicly provided. The US Government is playing an active role in the GAC to encou rage ICANN to establish a sustainable access and accreditation model as soon as possible, so that IP rights holders and other legitimate interests can access non-public WHOIS information. The US Government will continue to work through the GAC to ensure that i ntellectual property rights are respected in the ICANN policy processes. UNITED STATES PATENT AN D TRADEMARK OFFICE (USPTO) The Director of the USPTO has th e responsibility of, among othe r things, advising “the President, through the Secreta ry of Commerce, on national and c ertain international intellectual property policy issues” and advisi ng “Federal departments and agencies on matters of intellectual property policy in the United Sta tes and intelle protection in other countries.” 35 ctual property U.S.C. § 2(b) (8)-(13). Consistent with this responsibil ity, the USPTO provides expert legal and policy advice to the o the protecti on and enforcem ent of patents, industrial designs, Administration on issues related t cations, copyright, plant varie ties, and trade secrets, including trademarks and geographical indi regulatory test data. The USPTO re presents the United States at the World Intellectual Property Organization (WIPO) and in other in ternational in tergovernmenta l organizations discussing IP- related matters. In addition, the D uding the USPTO, provides epartment of Commerce, incl advice to the Office of the United States Trade Representative (USTR) through extensive input into the annual Special 301 rev iew of global IP regimes, and th e Notorious Markets Review, as well as the Section 301 investiga tions when intellectual property issues are involved . 18

53 Strengthen Intellectual Property Enforcem ent through International Organizations keholder views to shape d leadership and obtained sta Throughout 2018, the USPTO provide negotiating positions for a whole-of-government (State, DOJ, USTR, US Copyright Office, NTIA) effort to advocate for the exclusion of IP from the scope of the draft Hague Convention on the Recognition and Enforcement of Foreign Judgments, propos ed by The Hague Conference on Private International Law. ber of agreements with intergo vernmental organizations. The USPTO also entered into a num ntered into a Memorandum of Unde rstanding with For example, USPTO previously e INTERPOL’s Illicit Goods and Global Health Programme. The MOU was renewed in 2018. Under the arrangement, USPTO and INTERPOL will cooperate on tra ining and capacity ective intellectual property en forcement internationally. building programs to promote eff Promote Enforcement of U.S. Intellectual Property Rights through Trade Policy Tools Throughout FY 2018, USPTO provided po licy advice a nd technical expertise on domestic and international IP matters to mu ltiple other federal agencies. T hese included USTR, IPEC, and other bureaus of the Commerce De n the negotiation of trade partment. USPTO advised USTR i agreements, reviews under U.S. trade preference programs such as the Generalized System of Preferences and the African G rowth and Opportunity Act (AGOA), on Trade Policy Reviews undertaken at the World Trade Organization (WTO), and on the proposed accessions of over 20 countries to the WTO. In addition, USPTO assisted USTR in the preparation of its annual review of global developments on t rade and IP, the Special 301 Report, and the Section 301 Report. The Special 301 Report identifies U.S. trading partners in which IP protection and emained at inadequate levels a enforcement has deteriorated or r nd where U.S. persons who rely on IP protection have difficulty w access. USPTO assisted in its ith fair and equitable market preparation by providing extensi ve information on the state of IP protection and enforcement in many countries. USPTO likewise pr ovided USTR with information in connection with its compilation of the annual Notorious Markets List. The list hig hlights prominent online and physical marketplaces that reportedly engage in and facilitate substantial copyright piracy and trademark counterfeiting. USPTO participated in briefing the Industry Trade Advisory Committee (ITAC) and other stakeholders including small and medium size businesses, on of U.S. intellectual property rights through trade policy progress on promoting enforcement tools. Support U.S. Small and Medium-Size Enterp rises (SMEs) In Foreign Markets The USPTO’s Global Intellectual Property Academy (GIPA) offers advanced-topic programming for U.S. Small and Medium Enterprises (SMEs) doing business abroad. These in- depth GIPA programs cover best p ational IP protection and ractices in domestic and intern the enforcement and are delivered through face-to-face and distance learning modes, both from USPTO’s Academy headquarters in Alexandria, VA and around the country in cooperation with USPTO’s regional offices. GIPA collaborates with IP Attachés, USPTO Regional Offices, other USG agencies, and the Federal Judiciary. In the past year, GIPA provided IP awareness and education programming to over 3,275 U .S. SME representatives an d U.S. government officials. 19

54 Almost 40% of GIPA’s 151 programs i n FY18 targeted this domestic audience of IP rights owners, users and policymakers. In FY2018, USPTO collaborated with I Denver, and the Colorado TA, the World Trade Center Bar Association to present our second Anti-Counterfeiting and t he Global Marketplace seminar, featuring speakers from the IP enforcement interagency. USPTO supports the interagency STOPFakes.gov Initiative, which includes staffing the Road Show s. GIPA provides IP education programming on the margins of industry trade shows, s uch as the National Association of Music Manufacturers Trade Show. FY2018 GIPA Distance Learni ng programming for U.S. SMEs included a continuing quarterly webinar initiative to prov ide comprehensive IP education to grantees of the Small Busine ss Administration’s SBIR-STTR pr ograms, as well as IP ars on China IP from the education programming for domestic attorney generals, and webin USPTO China Team. Assess the Economic Impact of Intellect ual Property-Intensive Industries In response to the IPEC Joint St rategic Plan on Intellectual Pr operty Enforcement for FYs2017- Economist is leading a mult iyear, interagency effort to 2019, the USPTO Office of the Chief encourage empirically-based res earch on IP enforcement, particu larly in the areas of illicit trade in counterfeit goods, patents, com mercial scale piracy, and tra de secret theft. In FY2018, the interagency group finalized an implementation plan and began wo rk to improve researcher initiated engagements with scholars access to and understanding of relevant data. The group also and universities pursuing research relevant to IP enforcement. Additionally, in FY2018, USPTO completed its collaborative effo rts with the U.S. Census ts describing the business dyna mics of innovative firms. Bureau to create new data produc gencies produced datasets link ing USPTO’s patent and Through this collaboration, the a trademark data to Census Burea se datasets track the activities u data on workers and firms. The of IP-owing individuals and firms and serve as an invaluable resource for assessing the economic impact of IP. In FY2018, coauthor s from the USPTO and U.S. Census Bureau published papers discussing the construction of the se datasets and providing a f irst look at the connection between patent and trademark applicati on filing and firm performance. The patent-firm linked data was released through the Census Bureau Regional Data Centers for academic scholars to utilize on approved research projects. Raise Public Awareness of International In tellectual Property Protection and Enforcement USPTO engages in many outreach a ctivities to ra ise public aware ness of IP. Knowledge is shared through libraries and res ource centers, universities, re gional offices, Face-to-Face and Distance Learning educational programs and as a presence at tra de shows. Additionally, content covering all areas of IP is available on the USPTO’s website and promoted through the USPTO’s social media platforms. USPTO GIPA produces and hosts 31 f ree IPR e-Learning modules an d products available to the public. This content cover six different areas of Intellectual Property, and is available in five 20

55 languages: Arabic, English, Fre late FY2018, the e-learning nch, Russian, and Spanish. By products had received over 75,000 h its, by viewers all over the world since content was made Patents video (see also USPTO available in FY2010. In FY2018, GIPA produced an updated GIPA’s YouTube Playlist at http://bit.ly/USPTOGIPA ). In March 2018, USPTO HQ and its De nver Regional Office organize d a workshop on “Anti- Counterfeiting and the Global Ma rketplace: How to Protect and E nforce IP While Expanding Trade.” Approximately 60 pers ons attended the workshop which included presentations by USPTO, CBP, the DOC Office of IP Rights, HSI, and the local US Attorney. Various local companies spoke on their experiences in developing and implemen ting an effective IP enforcement strategy. In March 2018, Embassy Lima kicke d off Women’s Hi story Month wi th a program to celebrate International Women’s Day, “ Innovation, Creativity, and Entrepreneurship.” The program included a screening of the film “Joy”, and a legal specialist spoke about protecting your creations. Throughout FY2018 and as mentioned above, USPTO’s China team, USPTO Regional Offices, along with Department of Commerce local Export Assistance Cente rs and various bar associations held a series of te n China IP Roadshows in Denver, Salt Lake City, Indianapolis, Chicago, Silicon Valley, Portland, Seattle, Nashville, Las Vegas and Phoenix. These programs are designed to educate U.S. ri attendees on the m, and inform ghts holders on China’s IP syste differences between the U.S. and C hinese systems of IP registra tion, protection, and , Department of Commerce, enforcement. Speakers included government officials from USPTO Mayor’s Office, and various law enforcement agencies including U.S. Attorney’s Office, FBI, Department of Homeland Security, U.S. Immigration and Customs E nforcement, business executives, in house and outside c ounsel of U.S. IP rights hold ers as well as academic IP scholars. In general these programs have about 50 to 150 attendees. In April to May 2018, USPTO’s China team held two webinars – “C hina’s Utility Model Patent System” and “Cost-Effective Inte llectual Property Enforcement in China.” The two webinars educated U.S. rights holders on t wo specific areas of China’s IP system that differ from the U.S. system. The webinars attracte d 80 to 120 participants from across the U.S. and abroad. Taking full advantage of the webinar format, the webinar simultaneousl y featured speakers from as many as six different time zones around the globe. he USPTO held the Third Ann ual US-China Entertainment In June 2018, along with partners, t Law Conference in Shanghai . Nearly 300 people attended the con ference, which brought together senior policymakers, academics, business executives, a nd international practitioners from China and the U.S. to discus s current legal issues in the US-China entertainment industry. USPTO organized the event with Loyola Law School (Los Angeles), and co-hosted with Peking niversity, Beijing Film Academy, and Shanghai Film Group. University, Shanghai Jiaotong U Topics included recent developments in the US/China entertainme nt industry, IP issues in the film and game industries, and cross -border IP protection, inclu ding the impact of illicit streaming devices. 21

56 In November 2017, the IP Attaché Office in Bangkok, Thailand, a nd the Asian Law Students’ pter co-organized a Workshop on IPRs Protection in Digital Association (ALSA)-Thailand Cha Era in Bangkok, Thailand. Approximately 120 students participated in the program, which protection and related cutting-edge issues. addressed global trends in IPR In February 2018, the IP Attaché Office in Bangkok, Thailand co -organized a roundtable discussion concerning online copy right infringement and enforce ment with the Copyright Coalition (Thailand) and the Thai Electronic Transactions Devel opment Agency (ETDA). An expert from the United States Copyright Office gave a presentat ion to 50 officers, lecturers, practitioners and university student s participating in the prog ram. In February 2018, the Senior IP Specialist at the IP Attaché Of fice in Bangkok, Thailand spoke on copyright protection to students and researchers at Thammasa t University in Lampang, Thailand. In March 2018, the IP Attach é in Bangkok, Thailand, and the Sen ior IP Specialist participated in an outreach program co organize d by the USPTO and the Saigon Innovation Hub (SiHub) in Ho Chi Minh City. The Attaché spoke on protection and enforcement of IP in the United States and ASEAN member countries. About 50 V ietnamese SMEs, researchers and entrepreneur attended. The Attaché also discussed IPR pr tings with local IP stakeholders otection-related issues in mee and associations, such as Patent Association of H o Chi Minh Cit y, the IP Asset Management Club, the Recording Industry Associ ation of Vietnam (RIAV) and the Saigon Innovation Hub (SiHub). as a moderator in the In March 2018, the IP Attaché in Bangkok, Thailand participated Workshop on Intellectual Property E d, which was co-organized by nforcement in a Digital Worl USPTO, the U.S. Embassy Hanoi, t he Ministry of Science and Tech nology of Vietnam, and the . About 200 people attended the wo rkshop, including American Chamber of Commerce s and trade association. A Vietnamese government agencies and stakeholders and US companie anoi, one of the world’s larges t illegal streaming sites operated few days after the workshop in H in Vietnam (123movies) announced it would cease its operations. According to executives of the Motion Picture Association of Ame rica (MPAA), the workshop – along with MPAA engagement with Vietnamese law enforcement agencies – prompted the site op erator to cease operations. In celebration of WIPO’s World Int ellectual Property Day (April 26), IP Attachés in cooperation Offices hosted a number of even with U.S. Agencies and local IP ts to commemorate the global theme “Powering Changes: Wome n in Innovation and Creativity”: The IP Attaché Office in Bangkok, T hailand, and the IP Attaches’ from the United ion (JETRO), and the Kingdom’s IP Office (UKIPO), the J apan External Trade Organizat France (INPI), togeth er with WIPO Singapore and titute of National Industrial Property Ins orld IP Day program in Intellectual Property Office Singapore (IPOS), co-organized a W Singapore. The program feature d two discussion panels of succe ssful innovative and creative women from global compan ies and small businesses, shar ing their views on the importance of IP in their work. There were approximately 80 pe ople in attendance. 22

57 The IP Attaché in Bangkok, Thaila nd, co-organized a World IP Da y program in Bangkok, ntellectual Property of Thaila nd (DIP) and the Motion Thailand with the Department of I y 140 people in Picture Association of America (MPAA). There were approximatel attendance. The program include d a discussion panel of success ful Thai business women. The speakers shared their experiences and discussed the importa nce of intellectual property. The IP Attaché Office in Bangkok, Thailand and U.S. Consulate C hiang Mai co-organized a World IP Day program in Chia ng Mai, Thailand, with the suppor t from Chiang Mai University. The program feature d several activities to raise a wareness on IPR protection, including two panels of local spe akers sharing perspectives on the importance of IP and the local administrative organizat romoting innovation and creativity. ions’ role in p The USPTO Attaché in Mexico laun ched the “Original or Fake? Which one are you?” exhibition featuring 64 side-by-si de original and counterfeit and piratical articles. The USPTO Attaché in Mexico delivered opening remarks highlighting the importance of educating the public (especiall y the youth) on the economic and health dangers posed by counterfeit products. Approximate ly 50 stakeholders from the public and private sectors attended. In addition, the USPTO Attaché in Mexico screened fo ur IP-themed movies in April for the general public a nd various IP stakeholders. importance of Women in elhi supported and discussed the The IP Attaché Office in New D ed them law and STEM areas and encourag to protect their IP. In April 2018, the IP Attaché in Lima, Peru co-sponsored a World IP Day event with the ction of Intellectual National Institute for the Def ense of Competition and the Prote Property (INDECOPI), "Intellectual Property and Peruvian Women: entrepreneurship, creativity and innovation,” and the Deputy Chief of Mission (DC M) gave opening remarks. The Attaché brought down a National Inventors Hall of Fame staff person and Legal Specialist participated collegiate invention contest wi nner to participate, and the IP ng representatives from the as a speaker. More than 200 people attended the event, includi Peruvian Government and me mbers of the general public. The IP Attaché in Brussels sponsored a program for World IP Day that focused on Women for IP and Innovation. The event , co-hosted by the U.S. Mission to the EU and the U.S. Embassy to Belgium, with support fro m Women in International Tr ade (EU) and Young Professionals in International Trade, brought together 75 attendees to hear from four women leaders in IP: Ana Hinojosa, Director of the Compliance and Facilitation Directorate at the World Customs t, Director for Services, Organization; Maria Martin-Pra Investment, IP and Public Procure ment in the Commission’s Direc torate General for Trade; Anne-Sophie de Brancion, Head of Brussels Bureau of the European Patent Office; and Cheryl Miller, a pioneer and advocate in STEM education for women and girls. The Middle East North Africa IP A ttaché and the U.S. Embassy in Kuwait, in cooperation with the National Library of K uwait, organized a public event t o celebrate World IP Day at the National Library of Kuwait. The event was attended by over 150 people and was 23

58 l television and was widely co vered by print, radio, and livestreamed onto Kuwaiti nationa social media outlets. In November 2017, and again in March 2018, the IP Attaché in Me xico participated in the Mexican Institute of Industrial Property’s (IMPI’s) Jornadas Expo Ingenios in Monterrey and Tepic, respectively, providing an overview of the IP Attaché Pr ogram and general discussions on the importance of intellectual property rights protection and e nforcement. The audiences consisted of SMEs, university students and faculty, and local a nd federal officials. In December 2017, the IP Advisor in Brazil made a presentation on “the USPTO, IP and its ly 10 professors and students at Faculdades de Campinas Economic Impact” to approximate (FACAMP). In October 2017, the IP Attaché sp oke at a Brazilian Industries Coalition Webinar, with approximately 30 participants. The presentation was on the rel ationship between the U.S. and Brazil in the intelle ctual property area. In October 2017, the IP Advisor in Brazil delivered remarks on the panel “Digital Piracy: what is being done in Brazil,” during the R io de Janeiro International Film Festival. Approximately 20 people were present. In October 2017, the IP Attaché presented opening remarks durin g the 2nd International Seminar on Fashion Law, organized by the Br azil Bar Association–Rio de Janeiro Session. She spoke to importance to the international fashion industry of strong approximately 60 attendees on the nforcement. rty protection and e intellectual prope In May 2018, the IP Attaché and U SPTO HQ patent staff presented on IP to approximately 40 students at Universidad San Andrés in Argentina. The group inc luded a wide array of on (Argentina, Brazil, Cuba, Costa Rica, Mexico, Peru, etc.), representatives from the regi including government employees, lawyers, economists, technology transfer experts, and engineers. In May 2018, the IP Attaché in B razil teamed up with the U.S. C onsulate in Rio de Janeiro and Brazil-U.S. Institute (IBEU) fo r the screening of the film “Joy ”. The screening was followed by a discussion with approximately 10 University-level students on IP issues and the harms of piracy, which was le d by the IP Advisor. In May 2018, the IP Advisor in Bra zil spoke at the II Seminar o n Intellectual Property for the Industrial Development of the B razil ́s National Confederation of Industries (CN I), presenting on international cooperation to approximat ely 100 people. In May 2018, the IP Advisor fr om Brazil spoke to a group of app roximately 20 engineering students and professors visiting from the University of Oklahom a. The topic was the similarities and differences in the intellectua l property systems in Brazil and the United States. 24

59 In May 2018, several IP Attachés p resented at the International Trademark Association’s (INTA) lso presented to approximately Annual Meeting and at the AIPLA meeting in Seattle. Attachés a 25 people at Cambia Grove in Seattl e regarding IP in their regi ons. Additionally, some Attachés presented at the Washington State Bar Association regarding IP in their region. Finally, some Attachés presented on IP in their region to approximately 40 people at a Seattle University and Seattle IP American Inn of Court event. several awareness programs in Office in New Delhi conducted In February 2018, the IP Attaché partnership in the states of Mizoram and Meghalaya, organized by the Universal Research re Association (MPA), the Andhra Pradesh Film Chamber of Foundation (URF), the Motion Pictu h program Music Industry (IMI). One suc was on the Commerce (APFCC), and the Indian importance of protecting IP for en trepreneurs and another was on protecting their music and creative industry. This program was very well received and the government of Mizoram has empaneled the URF to create a ro admap for a creative council for the State. In April 2018, as part to the Roa d to the Global Entrepreneursh ip Summit, USPTO and the Government of India’s National Institution for Transforming Ind ia (NITI Aayog) partnered with the Andhra Pradesh Tourism Devel opment Corporation (APTDC) to s howcase the importance of ct, and value IP at an early stage. IP. USPTO highlighted the need for a startup to respect, prote In December 2017, the IP Attaché O ffice in New Delhi participat ed and spoke at the “Digital vent organized by the Governm ent of Bangladesh. USPTO World, 2017,” an annual flagship e d combatting online piracy. stressed the importance of Technological Protective Measures an In March 2018, at the Interpol and INTA program on IP held in N epal, the IP Attaché Office in New Delhi participated in train ing on the fight against pharmaceutical crime and products affecting consumer’s health. , and spoke at, a Custom and In May 2018, the IP Attaché Office in New Delhi participated in on on IP organized by the US Embassy in Bangladesh. Industry round-table discussi Throughout FY2018, the IP Attaché in Brussels stressed the importance of sustained, comprehensive and cooperative “w hole of government” approaches to modern and pervasive IP theft. In programs in Brussels, Milan and Rome, Amsterdam and Rotterdam, Berlin, Paris, London, and Valletta, the Attaché showcased the existing threat, highlighted U.S. priorities and strategic approaches to IP theft (such as those outlined in the IPEC Joint policies, advocated for -2019), and warned of the Strategic Plan on Intellectual Property Enforcement for FYs2017 coming economic and public safety challenges that China’s One B elt, One Road will present in the region. In Vienna, at a progr am sponsored by the U.S. Emba ssy, local Austrian industry organizations, and USPTO, the Attaché, DOJ IPLEC for Eastern Eu rope, a representative of the EU’s DG Grow, and representativ es of U.S. industry, highlighted transnational trade secret theft and the need for soli d legislative frameworks that provide oppo rtunities for cooperative enforcement efforts. 25

60 In February 2018, the Middle East North Africa IP Attaché and IP Specialist represented the U.S. Embassy and USPTO at Comic Con Kuwait 2018 and created a booth, with assistance from otecting and respecting creati USPTO HQ, on the importance of pr ve works through copyright protection. The booth also offe red information on patent and t rademark protection. Over the nd IP Specialist staffed the booth and shared USPTO’s mission course of 2 days, the IP Attaché a luding Kuwaiti government offic ials, Kuwaiti artists, families, to approximately 310 people, inc American expats, university students and kids. The IP Attaché and IP Specialist also identified local Kuwaiti comic book creators who might be interested in co llaborating with the Office of the IP Attaché and the Kuwait National Library to create a comi c book on copyrights in Kuwait. This was USPTO’s first time pa rticipating at a Comic Con. In April 2018, the Middle East N orth Africa IP Attaché hosted a n outreach event i n coordination with the Riyadh International Lawyers Association entitled “Current IPR Issues and Challenges in Saudi Arabia and the Gulf.” T he IP Attaché discussed the ro le of the IP Attaché, regional and local IPR challenges, and ways the group could provide feedback during the development phase of the new Saudi IP Authority. T he program was attended by 25 attorneys and practitioners. Capacity-Building and Training The Commerce Department continue s to engage in training and capacity building programs to strengthen intellectual propert y awareness and enforcement internationally. These programs are llectual Property Academy and t he Department’s conducted by USPTO’s Global Inte Commercial Law Development Program. USPTO’s Global Intellectual Property Academy (GIPA) ity-building programs to In FY 2018, USPTO’s GIPA continued to develop and provide capac help improve IP systems in key c ountries and regions for the be nefit of U.S. stakeholders. As detailed above, the programs addressed a full range of IP protection and enforcement matters, including enforcement of IP ri ghts at national borders, Internet piracy, and IP infringement s, trade secrets, copyright policy, and patent and trademark involving express mail deliverie examination. Participants includ ed officials with IP-related responsibilities, such as judges, prosecutors, patent and tradema rk examiners, and IP office admi nistrators. In FY2018, GIPA conducted 151 IP programs coveri ng all areas of IP. A complete list of all countries represented at GIPA trainings in FY 2018, is av ailable online at the USPTO Data Visualization Center. Programs are delivered from GIPA ’s headquarters in Alexandria, VA and around the world, through Face-to-Face and D istance Learning modes. In the interest of further ensuring efficiency and coordination , GIPA also presented programs for U.S. officials and policymakers , which provided updates on dome stic and IP law and policy. One such GIPA program explored I P law as applied to the trade show environment. Another pair of programs on U.S. Tradema rk Law for U.S. Government Atto rneys, provided attorneys from a variety of federal departme nts and agencies with trainin g on trademark issues they are likely to encounter (this follo wed a FY2017 program for USG on copyright). In FY2018, GIPA 26

61 also presented a program for USG on IP and International Trade Shows. USPTO once again e Institute (FSI) to provide IP collaborated with the U.S. Depar tment of State’s Foreign Servic training for outbound Foreign Ser subject matter expertise in vice officers, and to provide developing an update to FSI’s IP distance learning products. F inally, to increase the oordination of cap acity-building and training, GIPA reviewed the effectiveness of interagency c www.usipr.uspto.gov IPR education database and piloted an enhanced impact capabilities of the survey tool. Other USPTO Activities Related to IP Enforcement During FY2018, USPTO continued to w ork closely with the Interna tional Judicial Relations Committee of the U.S. Courts, as well as the Administrative Off ice of the U.S. Courts, to coordinate the involvement and pa in foreign and domestic training rticipation of Federal judges programs and capacity-building a nd public outreac h activities o verseas. These programs and activities addressed va rious issues in IP enforcement, as well as best practices in case management, rule of law, and tra nsparency in decision-making in the context of intellectual property civil and criminal cases. In January 2018, USPTO participat ed as speaker on two panel ses sions dealing with Anti- Counterfeit Initiatives and Trends in the Fashion and Luxury Go ods Industries and IP Enforcement and FinTech, respec tively, at the World IP Forum 20 18 in Dubai, UAE. Association’s Digital ttorneys ed in the National District A In February 2018, USPTO participat Prosecutor Workshop in San Antonio, Texas. The workshop was organized for over 80 state and all across the United States. The local prosecutors, with a handful of investigator s, from workshop focused on the use of technology in investigations and prosecution, search and seizure in the digital age, trends from the courts in 4th Amendment cas es, an overview and demonstration of the dark web and Tor browser, and electronic e vidence and preservation techniques for mobile devices and s ocial media. The USPTO prov ided an overview of trade secrets and the laws that gover n them, highlighting the provisions of the Economic Espionage Act, the Uniform Trade Secret Act , and state criminal trade secret theft statutes. In May 2018, USPTO participated a s a speaker/panelist during a session on "Government Perspectives on Trends in and Evol ution of Anti-Counterfeiting Enforcement" at the Spring Conference of the International AntiCounterfeiting Coalition (I ACC) in Seattle, Washington. s a speaker/panelist during a In May 2018, USPTO participated a session on "Working with nufacture and Trade of Counterfe it Goods in Free Trade Zones" Intermediaries to Combat the Ma ted a panel session on which was attended by approximately 180 individuals, and modera "Enforcement Strategies in Asi a" which was attended by approxim ately 200 individuals during the Annual Meeting of the Interna tional Trademark Association ( INTA), in Seattle, Washington. In May 2018, USPTO participated in an International Fellows Pro gram hosted by the National Association of Attorneys Gene ral (NAAG) and its research and tr aining arm, the National Attorneys General Training and R esearch Institute (NAGTRI), for prosecutors and attorney generals from Australia, Braz il, Denmark, Holland, Jamaica, Mau ritius, Mongolia, Nigeria, 27

62 Palestine, Rwanda, South Afri ca, UK, Taiwan, and Thailand. USPTO spoke about the dangers rafficking of counterfeit medicines of counterfeit medicines and best practices in combatting the t and medical products. ith INTERPOL’s Illicit Goods and Global Health USPTO continued its cooperation w Programme, in order to promote e ffective intellectual property enforcement internationally. In h INTERPOL in conducting a regi onal Middle East training July 2018, USPTO coordinated wit t and counterfeit food products f or 40 law enforcement officials program on combating fraudulen , and Tunisia, which was conduc ted in Amman, Jordan. from Jordan, UAE, Morocco, Egypt In March 2018, USPTO coordinated with INTERPOL to conduct a tra ining program on ade in Kyiv, Ukraine. The prog ram brought together 35 law counterfeit goods and illicit tr enforcement officials from Ukr and Poland. In December aine, Moldova, Belarus, Romania, 2017, USPTO participated in a reg ional training on counterfeit pharmaceuticals for South East Asia conducted in Vientiane, Lao s. The program brought togethe r 21 law enforcement officials a, Thailand, Malaysia, and Indone sia, and served as a from Vietnam, Myanmar, Cambodi s Operation STORM, which targe ts pharmaceutical crime. platform to prepare for INTERPOL’ In October 2017, USPTO participat ed in an INTERPOL training workshop on fraudulent and counterfeit food products, conducte d in Dublin, Ireland. The p rogram brought together approximately 40 law enforcement o fficials from Africa, Latin A merica, and Asia, including Argentina, Colombia, Kenya, Korea, Malaysia, Nigeria, Tanzania, Thailand, and the Philippines. The training served as a platform for INTERPOL’s Operation Opso n, which targets counterfeit and fraudulent food products. ntries for a three-day In December 2017, USPTO hosted sixteen delegates from seven cou workshop on Trade Secrets at USPT O’s GIPA in Alexandria, VA. T he participants included judges, prosecutors, other govern ment IP professionals, and a p arliamentarian from the following countries: Brazil, Chile, Georgia, Israel, Kazakhstan, Peru and Vietnam. The program featured two industry panels, a judicia l panel, and a case study, and in cluded a summary of each country’s trade secret laws and US trad e secret law and discussions on th e intersection between patents and ach to investigating t theft, and the prosecution of trade trade secre trade secrets, a forensic appro secret theft. In November 2017, USPTO hosted a fou r-day copyright seminar for foreign copyright officials, 18 countries in Africa, Asia, Latin America, the Caribbean, the attended by 26 participants from Middle East, and Europe. Topics included copyright subject matter and exclusive rights, exceptions and limitations, crimina l enforcement of copyright a nd international cooperation in the prosecution of online pirac y, copyright and enforcement provisions in recent Free Trade Agreements, internet service prov and other activitie s, copyright ider liability, WIPO treaties collective management organizations, the Special 301 Report and the Notorious Markets List, the economic impact of the copyright i ndustries, U.S. Copyright Off ice activities, and copyright issues for libraries and educational institutions. In addition, the seminar included presentations on various copyright industry sec tors (e.g. music, motion pictu res and television, publishing, computer software, and video ga mes). Speakers included USPTO s taff, representatives of other U.S. Government agencies (incl uding USTR, DOJ CCIPS and the Cop yright Office), academics, and speakers from the private sector and nonprofit organization s. 28

63 Commonwealth of Independent States In May 2018 (and as noted above), U SPTO and CLDP held a three-d ay program on border enforcement for customs officials in Dushanbe, Tajikistan. The participants consisted of a the Ministry of Economic Develo variety of representatives from pment and the Tajikistan Customs Service. Topics include d the importance of IPR enforce ment, TRIPS, destruction of infringing goods, risk analysis, i dentification of counterfeit goods, and transshipment of infringing goods. ction of Intellectual Property In June 2018, USPTO conducted a Judi cial Dialogue on the “Prote Rights” in Tashkent, Uzbekistan. Fifteen Uzbek judges particip ated in the program, including six from the Administrative Judi cial Bench of Supreme Court. T he discussions centered on the importance of intellectual prope rty protection; comparison of U .S. and Uzbekistan enforcement on law system and the and judicial systems; comparison of litigation in the U.S. comm Uzbekistan civil law system in intellectual property litigation ; the role of alternative dispute resolution; criminal prosecuti on and trials in the U.S. and Uzb ekistan; case management in the U.S. judicial system; and case studies addressing matters on co pyright, trademark, sentencing, and criminal investigation. In June 2018, USPTO provided a sp t issues at the “Georgia eaker to address IP enforcemen conference in Batumi, Georgi against Counterfeiting and Piracy” a. The conference was hosted by the National Intellectual Pr operty Centre of Georgia (SAKPAT ENTI). The presentations were presented by multinational organizations, including WIPO, EUIPO, WCO, INTA, AIM – tical Companies European Brands Association, REACT and Association of Pharmaceu Representatives in Georgia. t GIPA for a Judicial In September 2018, USPTO hosted seventeen judges from Armenia a Dialogue on the Protection of Intellectual Property Rights. To pics included comparative legal systems, copyright and trademar k law, trade secrets, patents, a nd criminal investigation and prosecution of IP crimes. The program included case studies an d exercises. Latin America In November 2017, the IP Attaché in Lima, Peru and the Legal Sp ecialist attended the National ions (CNAPI), organized by INDECOPI. USPTO made a Convention of Patents and Invent presentation at CNAPI about the experience of USPTO in the process of granting patents with a ndees (approximately). During the Q&A period, the audience asked about participation of 50 atte the characteristics and importance of a PPH agreement between I NDECOPI and USPTO. Attaché participated at the XV II National Contest of Inventions Award Ceremony of INDECOPI, where President Gagliuffi thanked and noted the importance of USPTO and another sponsor’s support. In December 2017, the Legal Specialist in Lima, Peru organized a training for the Minister of Transport and Communications ( MTC), together with Alianza and Direct TV regarding the identification of Internet Protoc ol Television (IPTV) and Free To Air (FTA) boxes that could be 29

64 used for illicit activ ities. There were around 30 participants between officials of the MTC and INDECOPI. IPR Center Regional (Colombia, In March 2018, the IP Attaché in Lima, Peru participated in the Ecuador, Guatemala and Peru) Tra ining on the Enforcement of IP Rights, held in Cartagena, Colombia. The Attaché spoke about “What Is IP? How Is It Protected? USPTO’s Role in the Region.” In April 2018, the IP Attaché in Lima, Peru presented at the II Seminar - Intellectual Property tion" in Customs (SUNAT) hosted b y Barlaw and SUNAT. Workshop: "Products Identifica Approximately 70 attendees were present. In April/May 2018, the IP Attaché in Lima, Peru presented at th e Barlaw/PNP Seminar: "Products Identification.” Approximately 120 policemen attende d the seminar. In July 2018, USPTO, OPDAT, INDECO PI and the Peruvian Judiciary co-sponsored a Judicial Training in Peru about Digital IP I nfringements at the Chamber of Oaths in the Supreme Court. Fifty judges attended (includi ng some by DVC). U.S. and Peruvian judges and prosecutors participated, as well as U.S. stakeholders. The President of t he Judiciary and the Ambassador provided opening remarks. Continuing and regularly: The IP Attaché, in Lima, Peru and the IP Legal Specialist participated in regular inter-agency meeti ngs led by officials from the Government of Peru. One series of meetings is dedicated to online piracy and another is dedicated to stopping camcording. Attaché Office officials also attend a m eeting of Contrafalme, which is a Peruvian Interagency group to fight counterfeit medicines. In April 2018, USPTO and the IP At t from the Department of taché in Brazil – with suppor Justice (DOJ) State/INL-funded Intellectual Property Law Enforcement Coordinator (IPLEC) for Latin America – organized a Wor kshop on Combatting trade in Ill icit and Counterfeit Agricultural Chemicals. The U SPTO had organized several previo us workshops on this issue in Southeast Asia and was approached by CropLife Latin America and asked to duplicate the workshop in South America. Approximately 40 law enforcement an d regulatory officials from Brazil, Argentina, Uruguay, and P and regulations covering the araguay (i) discussed the laws sale, import, export and use of pe sticides and the parties resp onsible for testing, inspection, , (ii) shared strategies, and (iii) presented cas e studies on best auditing and enforcing these laws ecution of environmental crimes , and enforcement of IP rights. practices on investigation, pros On the last day of the program, the leading private stakeholder s in the agricultural industry provided an overview of the tre nds and their challenges in prot ection and enforcement of IP in the tri-border area (Argen tina, Paraguay, and Brazil). In May 2018, the USPTO organized a Latin America Regional Judicial Workshop on Intellectual Property Enforcement for approximately 20 Judges from countries throughout Latin America and the Caribbean. The workshop f ocused on the importance of intellectual property protection and enforcement, the rule of law, overview of the U.S. and part icipant’s civil and criminal IP 30

65 rent sentencing, and the role of laws, civil remedies, prosecution of IP crimes, fines and deter rception. judges in shaping societal at titudes and establishing public pe In July 2018, the USPTO organized a nd participated in a three-day Workshop on Measures to Combat the Trade in Illicit a nd Counterfeit H ealth and Safety P roducts. A total of 75 customs officials, police, prosecutors and regulators from the Dominica n Republic, Mexico, El Salvador, Guatemala, Honduras and Panama attended the three-day program, one of the largest events in the the region to date. (Among the a ttendees were approximately 35 participants from Dominican Republic, comprised of h ealth regulators, inspectors, police and investigators, customs officials and prosecuto rs.) The workshop focused on the importance of protection and enforcement of intellectual property, the impact of counterfeit s on health and safely, the intersection of IP and organized crime, and the importance of l aws that serve as a deterrence. In perts, each country had the op addition to USG subject matter ex portunity to provide an overview of its health and food safety regulations, customs laws, and best practices in investigation and prosecution of IP crimes. In August 2018, the USPTO and the Brazil IP Attaché hosted a 3- day program for Argentine judges and prosecutors in Buenos Aires, Argentina. Presentatio ns were made by US judges as well as Argentine judges and prosecutors (47 Argentinean Prosec utors and Members of the ction between trafficking in discussed included the interse Judiciary participated). Topics counterfeit goods and other federa l crimes, asset forfeiture, handling electronic evidence, and theft. trade secrets assigned to Brazil spoke at a Commerce Department, Foreign In September 2018, the IP Advisor Commerce Webinar on IP and IP Crimes. App roximately 30 people Commercial Service E- representatives and owners. attended, including U.S. business In September 2018, the Brazil IP A ment staff in conducting public ttaché supported State Depart awareness programs for the video game community in the cities o f Belo Horizonte and Porto Alegre, Brazil. Approximately 560 pe ople attended a total of 7 presentations. In April 2018, the IP Attaché i n Mexico facilitated trademark e xamination workshops in San Salvador and Costa Rica for trademark examiners, supervisors an d judges. The workshop topics included likelihood of confusion analysis, descriptiveness, wel l-known marks, and bad faith applications. In May 2018, the IP Attaché in M d with attorney s from USPTO’s Office of exico coordinate Policy and International Affairs (OPIA) in the delivery of a Re gional Judicial Workshop on Intellectual Property Enforcement in Alexandria, Virginia, for judges from several Latin American countries. Topics in cluded copyright piracy in the di gital environment (such as illegal streaming, and cable, software, and content piracy) as well as trademark counterfeiting issues. Approximately 16 judges from Domin ican Republic, Costa Rica, Panama, Uruguay and Brazil attended the program. 31

66 In July 2018, the IP Attaché assigned to Mexico, Central Americ a, and the Caribbean co- ’s Office of Overseas Prosec utorial Development, sponsored – with USPTO/OPIA and DOJ Assistance and Training (OPDAT) – a regional Workshop on Measur es against Trade in Illicit y Products, held in Santo Domin go, Dominican Republic. and Counterfeit Health and Safet IPR Enforcement; Overview of U.S. Laws and Regulations Topics included the Importance of Food and Drug Safety; Overview of Participants’ Laws Regulating Food and Drug Safety: Imports and Exports; Trending Issu es in Combatting the Threat o f Counterfeit and Adulterated Foods; IPR Border Measures in the U.S.; and Participants’ Legal and Practical Approaches to -officio actions). The third day of Recordation, Seizure, Forfeiture and Destruction (to include ex the program included a product identification exhibition and tr aining with 9 rights holders representing various sectors (a pparel, cosmetics, pharmaceutica l, and tobacco). Approximately ficials and health inspectors) from 85 government officials (prosecutors, investigators, customs of s, Mexico and Panama Costa Rica, Dominican Republic, El Salvador, Guatemala, Hondura attended the program. The IP Senior Legal Specialist delivered opening remarks, facilitated the transition between sessions, and provided overall support throughout the three-day program. In August 2018, the IP Attaché a ssigned to Mexico, Central Amer ica, and the Caribbean participated in the Intellectua l Property Rights Enforcement Tr aining organized by the National Intellectual Property Rights Coordination Center (IPR Center), Mexico Tax and Customs Administration Service (SAT), a nd HSI in Mexico City. The IP Attaché gave a presentation on and safety issues associated . The training emphasized health Regional Responses to IP Crime with counterfeit goods, the advers e effects on economies, and its connection to transnational organized crime. Attendees include d representatives from the local private sector and over 100 participants from Mexican govern ment offices including SAT, the Administration for Auditing toms Ports of Entry Division ( on Foreign Trade (AGACE), the Cus AGA), México’s Attorney Police (CNS), the Mexican Ins titute of Industrial Property General Office (PGR), the Federal , and Mexico’s Consumer Product (IMPI), Mexico’s FDA (COFEPRIS) Safety Commission (PROFECO. In August 2018, the IP Attaché a ssigned to Mexico, Central Amer ica, and the Caribbean hosted a two-hour session on the importance of protecting trademarks and identifying counterfeit and piratical products at the Benjamin Franklin Library. Two IP at torneys discussed the challenges lained how to best identify original rights holders face with counterfeiting and piracy, and the exp products and the provisional meas ures they request at the border to stop illicit merchandise from tely 15 people attended the sess entering the market. Approxima ion, which was the first in a series of public awareness sessions. In August 2018, the IP Attaché a ssigned to Mexico, Central Amer ica, and the Caribbean co- sponsored —with USPTO/OPIA—a Workshop on Border Enforcement of Intellectual Property Rights in Monterrey, Mexico. Topics included the Importance of IPR Enforcement; IPR Border Measures: the U.S. Approach and Mexico’s Approach; Targeting an d Risk Indicators; and Criminal Investigation and Pros ecution of IPR Agencies. AmCham conducted the product identification exhibition and tra ining on the third day of the program. Approximately 30 Mexican customs officials receiv ed training from 24 rights holders from the apparel, pharmaceutical, consumer goods, tobacco, certification marks, a nd entertainment sectors. 32

67 zed and participated in a th ree-day Tri-border Workshop In September 2018, the USPTO organi on Combatting Intellectual Prope rty Crime. A total of 27 custo ms officials, police and El Salvador, G prosecutors from uatemala and Honduras participat ed in the workshop. The workshop, which took place at the State Department’s International Law Enforcement Academy (ILEA), focused on the intersecti on between transnational organ ized crime and intellectual property; the impact of counterfe its on health and safety, soci ety and the economy; the o seek stronger penalties in IP importance of laws that serve as a deterrence, and strategies t ducating judges about IP crimes. cases; and best practices for e In September 2018, the USPTO and IP Attaché in Mexico City plan ned and participated in a regional IP border enforcement workshop for approximately 40 Me xican SAT and Belize customs officers. Topics included the importance of IP; threat s, risk indicators, and targeting; criminal investigati on and prosecution; working with rights hol ders; and cooperation with national, regional, and international partners. Training was p rovided by USG experts and 30 rights holders from the toy, apparel, pharmaceutical, consumer goods, tobacco, certification marks, and entertainment sectors. South Asia In November 2017 (and as noted above), USPTO and CDLP hosted a six-member intellectual Pakistan’s Ministry of from property legislative update wo rking group composed of officials intellectual p roperty attorneys. The delegation Commerce, Intellectual Property O ffice and three discussed United States Governme nt comments to proposed amendments to the Patent, Copyright and Trademark Laws wit h experts from the USPTO, U.S. Copyright Office and U.S. Department of Justice. In November 2017, USPTO and DHS – along with Confederation of Indian Industry – conducted a program on enforcing trademark a nd copyright rights in India. The US and India exchanged erfeit goods. Special focus was also given to online piracy best practices on combatting count , citing the examples of the City of London Police and the and how the police can play a role Telangana Model. The programs took place in Delhi, Bihar, and Kolkata. In January 2018, the Government of Mizoram, recognizing an issue with rampant piracy and dubbing of music and films, requested USPTO and our partners to come and talk to them about setting up a task force to enforce iting in the region. As a result of IP rights and curb counterfe this roundtable, the State of Miz oram becomes the third state in the country to have a digital crime unit to combat online pira cy, and is working towards stre ngthening border protection. In January 2018, USPTO participated in a Federation of Indian C hambers of Commerce & Industry program specifically des igned to address enforcement c oncerns. DHS and USPTO spoke on protecting and enforcing I P rights in the United State s and best practices that can be adopted by India. In February 2018, USPTO – in close coordination and collaborati on with the Food and Drug Administration (FDA) – conducted a three-day workshop for the G overnments of India, Nepal, 33

68 roliferation of Substandard, U nregistered, Unlicensed, and and Sri Lanka on Combatting the P Falsified Health and Safety Regul ated Products. The program wa s conducted in New Delhi, India, and approximately 65 officials attended, including repre sentatives from state and central drug regulators, customs, and police. The Workshop leveraged expertise from FDA, U.S. Customs Border Protection, U.S. Department of Justice, INTERPOL , UK Border Force, Her Majesty’s Revenue and Customs, a nd the Universal Postal Union. The program focused attention on consignment shipment s and International Mail Facil ity enforcement challenges. and collaborati on with CLDP USPTO in close coordination In April 2018 (and as noted above), Enforcement program for Afghan C ustoms and Judicial organized a two-day IPR Border cluding leadership and legislative officials. The program hosted ten Afghan Customs officials, in Afghan specialists, three Afghan Judges fr om the Commercial Court and one official from Central Business Registry-IP unit. The program sensitized Afghan Customs leadership and policy makers on the importance of IPR Enforcement and educated the officials on TRIPS IPR Border Enforcement provisions with expertise from the World Cus toms Organization’s Combatting Counterfeiting and Piracy unit. In addition, Indian Customs IPR unit presented on Indians Custom’s experience in implementing TRIPS. The program helped provide the Afghanistan’s IPR Border delegation the requisite techni cal expertise to begin updating Enforcement procedures. -day IPR Border Enforcement program for the In April 2018, USPTO organized a two Sri Government of Sri Lanka. The participants consisted of approximately 70 officials, from Lankan Customs and the Criminal Investigation Department. The program leveraged expertise from U.S. Customs and Border Pro tection and U.S. Department of Justice, and the topics utilizing IP recordation included IPR Adjudication, prosecuting criminal IPR cases, and systems. South East Asia In May 2018, the IP Attaché i n Bangkok, Thailand, the Thai Attorney General Office, and the State’s Department’s Bureau of I nternational Narcotics and Law Enforcement Affairs (INL) co- organized a capacity building pr ogram, “Workshop on the Prosecu tion of Intellectual Property Cases for Public Prosecutors ” in Chiang Mai, Thailand. The pro gram aimed at providing information from the newly published manual for prosecuting IPR cases and sharing experiences by both Thai and U.S. experts. (The manual was produced with t he support of the IP Attaché secutors in the northern area of Thailand participated. Office.) 40 provincial public pro In June 2018, as requested by the Cen tral Intellectual Property and International Trade Court of Thailand, the IP Attaché in B for the participation of a U.S. angkok, Thailand, provided support speaker from the Columbia Law S chool in the Court’s annual conf erence held in Bangkok, Thailand. The U.S. Speaker spoke o n the topic of “The U.S. la ws on Combatting Online Piracy” to about 300 Thai judges, a ssociated judges, lawyers, p ractitioners, academic lecturers, and enterprises. In June 2018, the IP Attaché Office in Bangkok, Thailand, assisted the ASEAN Secretariat in organizing the ASEAN Judicial C olloquium on Civil and Criminal IP Cases, supported by the 34

69 USPTO, in Bangkok, Thailand. Three U.S. judges and 32 judges f rom ASEAN member countries exchanged knowledge and di scussed IP case administration and cutting edge IPR enforcement issues. In July 2018, the IP Attaché assigned to South East Asia travel ed to Nay Pyi Taw, Myanmar, to contribute to two judicial program -organized by t he USPTO, United States Agency s that were co for International Development (USAID), CLDP, and Myanmar Union Supreme Court. The U.S. speakers and participants in both pr ograms included Bernice B. Donald (Circuit Judge, U.S. Court of Appeals for the Sixth Circuit), Hildy Bowbeer (Magistrate Judge, U.S. District Court for the District of Minnesota, S w (Administrative Law Judge at t. Paul, Minnesota), Thomas Sha eal Board), Pet er Fowler (USPTO Senior Counsel for the USPTO Trademark Trial and App nbusch (Department of Justice Att Enforcement), Catherine Hartze aché, and IP Law Enforcement Coordinator for Asia), and Judy G oans (USAID IP Consultant). T he first judicial program comprised round table discussions on lectual property laws. The judicial enforcement of intel U.S. delegation received a report on Myanmar’s preparation for handling IP cases with the promulgation of four new IP laws fr om the Director General of t he Office of the Union Supervision, Union Supreme Cour t, and about 12 Myanmar particip ants. They also discussed les of how the U.S. and other co key issues, overviews and examp urts in the ASEAN region handle IP cases. The second judici al program comprised a judicial colloquium on handling pants attended the program, where administrative, civil, and criminal IP cases. About 50 partici the U.S. speakers presented information and shared experiences on various aspects of IP cases. In August 2018, the IP Attaché assigned to South East Asia and the IP Division of Thai Attorney General Office (AGO) co-organized a capacity-building program i n Phuket, Thailand for 40 Thai public prosecutors in the southern region on prosecuting cases regarding IPR violation. The y both Thai and U.S. experts, program provided relevant information and sharing experiences b on prosecuting cases related to IPR infringement. Catharine A. Hartzenbusch, Attaché for Criminal Matters in Southeast Asia and IP Law Enforcement Coord inator for Asia from the U.S. Department of Justice, also part icipated and spoke in this prog ram. In August 2018, the IP Attaché assigned to South East Asia provided support in hosting the “Workshop on Criminal Enforcement Against Online Trade in Pirated Content and Counterfeit Goods” held in Bangkok, Thailand a nd co-organized by USPTO, U.S . Department of Justice, ASEAN Secretariat, U.S. Food and D rtment of Homeland rug Administration, U.S. Depa Security and the E.U. Intelle ctual Property Office. Attending the program were 80 officers, police and public prosecutors – from countries in Asia region ( including ASEAN members, Mongolia, Pakistan, Bangladesh, Nepal, and Timor-Leste) who hav e a role in investigation and enforcement against online IPR infringement. In August 2018, the IP Attaché a ssigned to South East Asia co-h osted – with the U.S. Consulate General in HCMC and the American Chamber of Commerce – the “Workshop on Patent Protection, Licensing, and Enforcement” held in Ho Chi Minh Cit y, Vietnam. The program provided an overview of patent p rotection, commercialization, a nd enforcement in the U.S. and Vietnam. Fifty entrepreneurs, local academies’ researchers and staff, and IP practitioners participated. 35

70 In August 2018, the IP Attaché assigned to South East Asia and her team, along with a U.S. in, the Intellectual Property delegation headed by Mr. Vishal Am Enforcement Coordinator (IPEC), participated in several meetings with the Royal Thai Go vernment’s law enforcement authorities responsible for IPR protection and enforcement in T hailand. The meetings included a enforcement efforts, with the discussion on the current Thai IP National Sub-Committee on Enforcement Against IP Infringe ment, which included representat ives from the Department of Intellectual Property, Internal Security Operations Command (IS OC), Economic Crime Suppression Division of the Royal Thai Police, and Customs Department. The Attaché and the IPEC delegation also had bilateral meetings with the Department of Special Inve stigation (DSI) and Customs Department and discussed matters concerning the on- going collaboration on IPR enforcement between relevant agencies in the two countries. In August 2018, the IP Attaché assigned to South East Asia and an IPEC delegation also met with the ASEAN Network of Intelle ctual Property Enforcement Exp erts (ANIEE), organized by the ASEAN Secretariat, with s upport from USPTO and USDOJ. Mr. Amin delivered remarks, which discussed in part the impor tance of strong IP protection. The IP Attaché also discussed her role in providing training a nd assistance in the ASEAN regi on. In September 2018, the IP Attaché assigned to South East Asia and her team provided information on IP protection and enforcement, especially on col lective management system in Motion Picture Licensing an international Thailand, to representatives from the Corporation ̶ copyright licensing organization authorized by motion picture c opyright holders. Asian Pacific Economic Cooperation (APEC) In February 2018, USPTO – in co-sp onsorship with APEC – organiz ed and participated in a workshop on Trademark Infringement Determinations in a Border E nforcement Context on the margins of the APEC Intellectual Property Rights Experts’ Group (IPEG) Meetings in Papua, New Guinea. Approximately 55 representatives from both the border enforcement authorities as well as intellectual property offi ces of the APEC economies att ended the workshop. Speakers from USPTO, CBP, HSI, and DOJ disc cuting IP infringement cases ussed investigating and prose t the border. Representatives f rom arising from customs seizures a APEC member economy’s customs services also spoke on t heir experiences in stopping IP infringing goods at the border. Middle East/North Africa In January 2018, the Middle East N orth Africa IP Attaché delive red a presentation at D1! Kuwaiti creative community – in cluding filmmakers, social (Diwan) to members of the local s – about copyrights and intellec tual property laws in Kuwait. media influencers and animator The presentation highlighted the definition of copyright, why w e protect the copyright, how we protect the copyright , comparison between the copyright law in US and Kuwait, international treaties related to the copyri ghts, and what is protected by copyright. In April 2018, the Middle East Nor th Africa IP A ttaché co-sponsored and spoke at the 2018 Hewlett-Packard (HP) Anti-Counter feiting Summit which was attended by approximately 100 people. Besides HP representativ es, other speakers included Su laiman bin Abdullah Al- Tuwaijri, the General Manager for Saudi customs, and Hashal Bin Sulaiman Alhamdan, the 36

71 commercia l control at the Said Ministry of Commerce. The IP Attaché, General Manager for the in consultation with USPTO’s MENA Enforcement lead, spoke about the IP Attaché program, developments at the Saudi IP Authority, and policy considerations related to counterfeit goods, focusing on effective messaging and elements of an ideal IP eco system. In July 2018, the IP Attaché assigned to the Middle East and No rth Africa along with USPTO Technical Expert Peter Fowler conducted an IP Enforcement Consu ltation Program with the Saudi Authority for Intellectual Property (SAIP) technical team on best practices related to IP enforcement policy. Agenda topics included the U.S. enforcemen t ecosystem, outreach m of Saudi Arabia to become on how SAIP can lead the Kingdo strategies, and recommendations am was attended by eight Saudi Government officials. a regional hub for IP. The progr In August 2018, USPTO organized a f our-day IPR Judicial Exchang e at GIPA for thirty-six Middle Eastern and North Africa n Judges from Algeria, Saudi Ara bia, Jordan, Egypt, Kuwait, Oman, UAE and Bahrain. The program was coordinated with the Gu lf Cooperation Council’s xpertise from two U.S. District Intellectual Property Training C entre. The program leveraged e bstantial exchange Court Judges and U.S. law enfor cement. The program included su of best practices in adjudicating IPR cas es and incorporated case studi es presided by U.S. Judges. East Asia In October 2017, US Consulate Sh ndtable since arriving at post in anghai hosted its first IPR rou August 2017. Shanghai PTO organize 39 representatives from 28 d the event, which included U.S. companies. P Attaché in Shanghai, Chin a, and the DOJ regional IP In April 2018, USPTO HQ, the USPTO I Law Enforcement Coordinator orga nized a two-day Taiwan Trade Secrets Workshop in Taipei, Taiwan. The workshop focused primarily on criminal enforcement of trade secrets misappropriation and included presen tations and panel discussio ns from USPTO, FBI, and DOJ. Representatives from industry groups also presented their experiences in investigating and pursuing a trade secrets case in Taiwan. FBI and DOJ participants presented a case study on a recent economic espionage case in the US which led to the longe st prison sentence handed down for a trade secrets case in the U.S. In June 2018, USPTO held the third annual US-China Entertainmen t Law Conference at Shanghai Jiaotong University. T he conference brought together senior policymakers, academics, onal practitione rs from China and the U.S. to discuss current business executives and internati legal issues in the US-China en tertainment industry. USPTO org anized the event with Loyola Law School Los Angeles, and co- hosted with Peking University, S hanghai Jiaotong University, Beijing Film Academy, and Shanghai Film Group. Topics included the recent development in US and China entertainment industry, related IP issues in entertainment and game industries, and cross-border IP protection. A pproximately 250 people attended the event. Some of the speakers included Deputy Directo r General of SIPA Rui Wenbiao, Judge Hu Mi from Shanghai IP Court, Judge Li Xiaoping from Xuhui Distr ict Court, and Judge Jiang Guangrui from Pudong District Court. Shanghai Consul General Stein delivered the opening rem arks, and the Shanghai IP 37

72 Attaché spoke at the opening roundtable discussion and gave the closing remarks. Neil Graham, Attorney Advisor of USPTO, presen ted a “Spotlight Dialogue” wit h Mr. Ren Zhonglun, President of Shanghai Film Group. In July 2018, the Shanghai IP Attaché delivered the opening rem arks at the 2018 China Forum on Criminal IP Protection in Suzhou, China. The theme of the f orum was “collaboration, courts and innovation, win-win.” Of ficials from the Ministry of Public Security and from procuratorates, as well as rights holders shared their experien ce and challenges in criminal IP enforcement. Gao Feng, Director General of the Economic Crime Investigation Department of the Ministry of Public Security ( MPS/ECID), Lu Zhengmin, Deputy Director of the National Leading Group, Chang Heping, Deputy Director General of Jiangsu Public Security Bureau (PSB), and Lv Guoqiang, Counselor of WIPO, also spoke at the forum, which was attended by approximately 250 people. In September 2018, the Shanghai IP A ttaché held side meetings w ith (i) representatives from music, movie, publishing, and software industries yright protections, digital piracy regarding cop (TIPO) to discuss right holder and the work plan; (ii) the Taiwan Intellectual Property Office issues and areas for cooperati on, including examiner exchanges, Priority Document Exchange, Patent Prosecution Highway, and biological deposits; and (iii) the Taiwan Intellectual Property Court and High Prosecutors Offi ce of the Ministry of Justice to discuss enforcement issues and plans to hold two enforcemen t programs in early 2019, one on co mbatting digital piracy (which follows up on a July 2016 digital piracy program in Taipei) and one on trade secret enforcement rkshop in Taipei). Taiwan (which follows up on an April 2018 wo has asked that these programs include industry, law enforcement and judges from both Taiwan a nd the U.S. European Union In FY 2018, the IP Attaché in Bru ssels hosted a series of round tables with European D, and WCO representatives, among other Commission, Europol, OEC s, on issues such as IP and terrorist financing, IP and cyberc rime, sustained public awaren ess campaigns and education, and pharmaceutical counterfeiting. The Attaché also organized brie fings for Members of the European Parliament on various asp ects of illicit trade, includ ing IP counterfeiting. The purpose of the roundtables is to enhance understanding of the intricaci es of the various IP crime trends and emerging challenges so that nd cooperative responses. we can develop more effective a Future roundtables and briefings will be on trade secret theft and counterfeits. Engagements with local governm ents and IP stakeholders In December 2017, the USPTO and Thai Department of Intellectual Property (DIP) co-organized a half-day program on Enforcement against Signal and Streaming Piracy, at the Ministry of Commerce in Nonthaburi, Thail and. About 60 officers from the T hai governmental agencies who handle IPR enforcement – including Internal Security Operat ions Command of the Thai Army, Economic Crime Suppression D ivision (the Thai Police), Department of Special Investigation, Ministr y of Digital Economy and Society, and the National Broadcasting and Telecommunication Committee – p articipated in the program. 38

73 In January 2018, the IP Attach é in Bangkok, Thailand, and IP sp ecialist surveyed the MBK Shopping Mall in Bangkok, Thailand – which in 2017 was removed from USTR’s list of th staff of the Thai IPR notorious markets – and discussed the IPR enforcement issues wi Prayuth Chan-o-cha. Enforcement Center, which was established by the Prime Minister r with experts from In February 2018, the IP Attach é in Bangkok, Thailand – togethe the United States Copyright Office and the U SPTO, and the Deputy Assistant for Innovation and ative (USTR) – provided ce of the U.S. Trade Represent Intellectual Property of the Offi ment of Intellectual Property (DIP) on copyright registration, consultation to the Thai Depart recordation system, and technical issues concerning the current draft of Thai Copyright Law copyright law of Thailand Amendment. The draft aimed at resolving issues in the current concerning Internet Service Prov ider (ISP) liability and the Co urt’s order concerning the removal of pirated content from on for technological protection a website. The draft will add protecti measures and rights management information. In March 2018, the IP Attach é in Bangkok, Thailand – together w ith 2 experts from the United States Copyright Office and the USPTO – met with 40 judges/associate judges and the Chief judge at the Central Intellectua l Property and International Tr ade Court of Thailand and opyright Act (DMCA) and the ting to the Digital Millennium C discussed the legal issues rela xperience in Thailand. copyright enforcement e In March 2018, the IP Attach é in Bangkok, Thailand – together w ith experts from the United States Copyright Office and the USPTO, and USTR’s Deputy Assist ant for Innovation and ted in consultation meetings w Intellectual Property – participa ith groups of IP right holders on issues and concerns regardi ng IPR protection in Thailand. The groups included the Pharmaceutical Research & Manufact urers Association (PhRMA), the Business Software Alliance (BSA), Motion Picture Association (MPA) and the Intern ational Federation of the Phonographic Industry (IFPI). In June 2018, the IP Attaché in Bangkok, Thailand, accompanied three U.S. judges and USPTO Senior Counsel for IPR Enforcem ent in meetings with Thai govern mental agencies and IP stakeholders in Bangkok, Thailand. The US delegation (i) visit ed the Central Intellectual de Court of Thailand and met with 20 judges and the Chief Judge Property and International Tra cerning adjudication of IP cases; (ii) met with the U.S. Embassy for exchanging information con Bangkok’s Law Enforcement Worki ng Group (LEWG) and discussed th e roles of U.S. agencies in relation to IPR issues; and ( iii) met with the Chairman of t he IP Association of Thailand (IPAT) and the association’s me mbers. In addition, the judges received updates on challenges in IPR enforcement in Thailand. NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY (NIST) The Commerce Department’s Natio nal Institute of Standards and T echnology (NIST) and the White House Office of Science a nd Technology Policy (OSTP) are co-leading the Lab-to-Market cross agency priority (CAP) goal. To carry out these efforts, NIST has launched the Return on 39

74 Investment (ROI) Initiative at a n event titled "Unleashing Amer ican Innovation" to streamline -funded R&D at and accelerate the transfer of technology from ries and federally Federal Laborato universities. For America to maintain its posit ion as the global leader in in novation, bringing products to ong national security economy, and maintaining a str market more quickly, growing the innovation base, it is essential to optimize technology transfe r and support programs to increase om federally funded R&D. The Lab-to-Market initiative was the return on investment (ROI) fr identified as an Administr ation priority and funded by Congress to increase the economic impact d improving the transfer of new of federally-funded research and development by accelerating an technologies from the laboratory to the commercial marketplace. As part of the Department of Commerce, NIST performs a critic al role in coordinating interag ency activities including development of standard tools and practices and the measurement and evaluation of results. Interagency Lab-to-Market efforts focus on five strat egy areas: y impediments and Regulatory and Adminis trative Improvements - Identify regulator  ederal technology transfer policies and practices. administrative improvements in F ctor technology  Private Sector Engagement - Inc rease engagement with private se development experts and investors.  Entrepreneurial R&D Workforce - Build a more entrepreneurial R& D workforce. Support entrepreneurial educati on and training to develop the n ext generation of skilled innovators and entrepreneurs, and enable technology transfer an d start-ups.  Tech Transfer Tools and Servi ces - Support innovative tools and services for technology transfer. Improve and develop t ools to support the discovery and transfer of technologies.  S&T Trends and Benchmarks - Improve understanding of global sci ence and technology trends and benchmarks to measure progress and achieve results. NIST is working in collaborat ion with public sector, private sector and other Federal R&D, intellectual property, and technology transfer stakeholders to identify critically-needed improvements to Federal technol ogy transfer efforts. NIST is uniquely positioned to implement this initiative through its governme nt-wide leadership role within the Department of Commerce, including delegated regulatory a uthority and responsibility for annual reporting to the President and Congress on government intelle ctual property and collaborat ive research. 40

75 H EPARTMENT OF H EALTH AND D UMAN S ERVICES 41

76 EPARTMENT OF H EALTH AND H UMAN S ERVICES D Food and Drug Administration (FDA) Appendix for FY 2018 Annual Report Drug counterfeiting and adulteration are serious threats to pub lic health. Counterfeit drugs raise significant public health concer ns because their safety and eff ectiveness are unknown. In the United States, a relatively comprehensive system of laws, regulations, and enforcement by Federal and state authorities has kept drug counterfeiting inci dents relatively rare, and the FDA can have a high degree of confid works to ensure that Americans ence in the drugs that they nvestigate reports of counterfeit obtain through legal channels. FDA has made it a priority to i products and works with U.S. drug supply chain stakeholders to improve our ability to prevent, detect, and respond to threats of c ounterfeit and substandard d rugs. FDA also educates consumers and the health care community about the risks of, and minimizing exposure to, counterfeit and substandard dr ug products through recalls, public awareness campaigns, and other steps. Additionally, FDA reaches beyond U.S. borders and works with our foreign counterparts to identify global supply chain vulnerabilities as well as identify and implement realistic solutions, nationa lly and internationally. e Public Health Supply Chain Protecting the Integrity of th Drug Track and Trace Security Act (DSCSA) (Title FDA continues to implement provisions of the Drug Supply Chain II of the Drug Quality and Securi vember 27, 2013. The DSCSA ty Act) that was enacted on No n supply chain by building an helps to improve the security of the pharmaceutical distributio electronic, interoperable system to identify and trace certain prescription drugs that are distributed in the United States by 2023, in addition to developing national standards for licensure of wholesale distributo rs and third-par ty logistics p roviders. The DSCSA aims to facilitate the exchange of information to verify product legiti macy, enhance detection and notification of an illegitimate product, and facilitate product recalls. In FY 2018, the FDA issued six guida nce documents that provide stakeholder clarity on product identifier requirements, inclu ding grandfathering and compliance policy of product without product identifiers, determining suspect and illegitimate produ ct for verification, standardizing for product tracing, and the p data and documentation practices rocess for waivers, exceptions, ee public meetings to gain st akeholder input on electronic and exemptions. FDA conducted thr interoperability, standards for data exchange, data architectur e and inference as FDA works to develop standards and system attributes to achieve electronic, interoperable tracing of products at the package level by 2023. In a ddition, FDA intends to initiat e a DSCSA pilot project program later in 2018. FDA is activel y developing enhanced drug distri bution security needs for package level product tracing in 2023 and continues to engage stakehold ers. For updates about DSCSA implementation and copies of the guidance documents, see http://www.fda.gov/Drugs/DrugSaf ety/DrugIntegrityandSupplyChain Security/DrugSupplyChain SecurityAct/default.htm 42

77 Engagement with Other Countries obal Medical Product Quality and Supply Chain Asia Pacific Economic Cooperation (APEC) Gl Security Efforts FDA is the global lead for the A PEC Supply Chain Security Toolk it (Toolkit), which is a comprehensive resource that addr esses prevention, detection, an d response with regards to vulnerabilities in the medical product supply chain. It covers the entire supply chain and life cycle of medical products. As part of this effort, FDA helped organize the APEC Harmonization Center (AHC) for its Global Suppl y Chain Integrity Training in Seoul, Korea, from August 28- 30, 2018. FDA also presented on topics including Good Manufact uring Practices and Internet Sales, and led a case study exe rcise highlighting the utility o f the Toolkit in preventing, detecting, and responding to breach es in the medical product su pply chain. In addition, FDA Supply Chain Security Steering C ommittee, which oversees the leads the APEC Medical Product on of Centers of Excellence that provide expert and quality selection and strategic directi trainings in securing the global medical product supply chain. Global Surveillance and Monitoring System FDA was also instrumental in developing two global reports publ ished in November 2017: the World Health Organization (WHO) G lobal Surveillance and Monitor ing System http://www.who.int/medicines/re gulation/ssffc/publications/gsms -report-sf/en/ and a Study on alsified Medical Products the Public Health and Socioeconomic Impact of Substandard and F http://www.who.int/medicines/re tudy-sf/en/ . FDA has supported gulation/ssffc/publications/se-s the WHO to establish the Global Surveillance and Monitoring Sys tem (GSMS) for Substandard , launched in 2013. The GSMS pro vides national medicines and Falsified Medical Products ith an information portal to which they can report suspect regulatory authorities (MRAs) w medical products, and which they can consult to check if simila r products have been found milar products have been foun d, the WHO works with MRAs to elsewhere around the globe. If si investigate suspect cases and i ssue alerts as necessary. The G SMS portal is available in English, French, Spanish, and Portuguese. The online portal, search fac ility, and access to the photo library have also enhanced participation. The release of these two reports was followed by a special side event during the 2018 World tical role of regulators in co mbatting substandard and falsified Health Assembly entitled “The cri , the event was a structu red panel discussion of MRAs medical products”. With 120 attendees and other experts around: 1) the critical role of MRAs, and 2) the challenges MRAs face to better prevent, detect, and respond to s ubstandard and falsified medic al products problems. Illegal Opioids and Consumer Education Illegal Opioid Online and Warning Letters Issued Opioid addiction is an immense public health crisis and address ing it is one of FDA’s highest priorities. The FDA has been c oordinating its efforts to addre ss this crisis with respect to the illegal online marketing of unapproved opioids. The FDA’s Cent er for Drug Evaluation and 43

78 Research (CDER) took a proactiv e approach by hosting a one-day Online Opioid Summit in June 2018 with internet stakeholders, gove rnment entities, academic researchers, and advocacy groups to discuss ways to collaboratively take stronger action to redu ce the online availability of illicit opioids. Topics that were addres sed during the summit included research into the ease with chased online and industry appr oaches to addressing opioids which illicit opioids can be pur marketed online, followed by a r y gaps and new solutions. oundtable discu ssion to identif contain other dangerous In addition, opioids bought onlin e may be counterfeit and could substances. As part of its contin ued efforts to address this public health concern, in May and August 2018, FDA issued warning le tters to 13 networks operatin g a total of 74 illegal online pharmacies marketing potentially dangerous, unapproved, and mis branded versions of opioids, ers. These warning letters s tate that these networks must including tramadol, to U.S. consum ling these products to American c onsumers. These letters are part immediately stop illegally sel unapproved opioids. For gn to minimize the illegal sale of of FDA’s comprehensive campai each operation: more information, please see the accompanying press release for https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm6 18658.htm and https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm6 09869.htm Consumer Education The FDA/CDER’s ongoing BeSafeRx: K now Your Online Pharmacy camp aign focuses on s to raise awareness about the fraudulent web-based pharmacies. The purpose of the campaign i from ites, how to recognize them, dangers of purchasing medications fake and fraudulent webs and how to find legitimate websites. er 2018, the BeSafeRx public service announcement (PSA) Between October 2017 and Septemb aired 9,381 times on television sta tions and networks across the country. The TV PSA has yielded 72 million impressions. During the same time period, p rint ads for the campaign have ices. These placements resulted in appeared in various publications distributed in physicians’ off a combined circulation of 1,330,000 t otal copies, yielding an e stimate of 9.5 million impressions. In addition, a partner in the P ublic Service Network donated airings of the BeSafe video PSA in their nationwide network. Sin ce May 2018, the video aired 6,42 8,295 times, yielding 15 million impressions. In total, during F Y 2018, the BeSafeRx campaign has received 7,767,676 airings/placements, yielding over 96 million impressions. Outreach to Health Care Providers our Source, Notice to During August and September 2018, FDA/CDER published its Know Y Physicians (Notice) in the wall board publication of Physician’s Weekly, which was displayed in 150 oncology practices during each month. The Notice describes the importance of buying drugs from licensed sources to ens ure that patients receive saf e and effective drugs. 44

79 Using Advanced Technology to Identify Susp ect Products: CDx (handheld Counterfeit Detection devices) n (CDx) device, developed by In September 2012, FDA unveiled a handheld Counterfeit Detectio FDA scientists, which can be use d to rapidly screen suspected p roducts and packaging, by visualizing differences betwee n suspect and authentic products and to provide preliminary nt CDx technology is used at t he International Mail Facilities findings in the field. The curre (IMFs) and Express Courier Hubs (ECHs) to screen incoming packages. With the assistance of the FDA CDx review team, the de vice enabled the team to assess approximately 150,000 finished dosage form pharmaceutical s that were offered for entry. In FY 2017, FDA awarded the contract to a small engineering com pany that best met the requirements listed in the soli citation, to refine the design and manufacture devices with additional capabilities and improved ruggedness. The goal is to provide affordable tools for identifying counterfeit pharmaceutical products in the hands of global regulatory, law enforcement, and public health officials. In FY 2018, the vendor provided a C D5 prototype device (pre-pro duction devices) that was evaluated by FDA scientists. Through their feedback, the vendo r made further modifications and refinements to the device. T he plan in FY 2019 is to purchase additional CD5 prototypes for field testing, to receive input fro m the FDA investigators befo re finalizing the production device, with a target of delivery and purchase of production units befo re the end of FY 2019. Collaboration with CBP at international mail faci lities (IMFs) As part of FDA’s Import Operat ion Strategy, FDA personnel – ass igned to import operations – work daily with U.S. Customs and Bo nel at international mail rder Protection (CBP) person facilities (IMFs) and po rts of entry. The FDA investigators de termine admissibility of FDA- regulated products. All parcels reviewed which contain pharmaceuticals, regardless of detention status, are documented and pro cessed. The FDA collects daily data from all nine IMFs regarding the seizure or detention of suspected counterfeit pharmaceutica ls and products marketed as foods and/or dietary supplements cont aining undeclared drug ingredien ts. This data is shared within FDA and CBP. Due to the growth of IMFs, FDA in 2017 increased the packages received at the the number of investigators i n the IMFs, allowing FDA to open and screen significantly more. These are packages that our part ditional screening for potential ners at CBP have flagged for ad destruction; many of these packages contain unapproved and refusal of admission and possible counterfeit drugs. Furthermore, F DA is seeing an increase in n umber of packages containing opioids including tramadol, codeine and morphine. The FDA investigators are making a difference in preventing illegal drugs from reaching their inte nded consumers and assisting in finding the source of illegal drugs. See https://www.fda.gov/NewsEvents/Newsroom/FDAVoices/ucm611996.htm FDA also shares technology with CBP. For example, FDA and CBP personnel collaborate to utilize FDA’s handheld Counterfe it Detector and portable Ion Mo bility Spectrometry (IMS) devices at IMFs to identify counterfeit pharmaceuticals and die tary supplements tainted with active pharmaceutical ingredients (API). 45

80 International Capacity Building and Traini ng: FDA Capacity Building and Training ce of Criminal Investigations (OCI) capacity building and Below are examples of FDA’s Offi training activities with foreign countries. In February 2018, FDA/OCI and FDA’s foreign office in India helped to organize a three-day workshop in New Delhi titled “Combatting the Proliferation of S ubstandard, Unregistered, h and Safety Products.” The workshop focused on illicit medical Unlicensed, and Falsified Healt and tobacco products. The attendees included representatives from five countries, INTERPOL, regulated industry, and the Univer was sponsored by United States sal Postal Union. This event Patent and Trademark Office (USPTO) and Department of Justice ( DOJ). FDA/OCI also conducted training with the FDA India Office in New Delhi. In February 2018, FDA/OCI provided c ybercrime training to law e nforcement and regulatory the United Ki addition, FDA/OCI hosted two ngdom and Republic of Ireland. In personnel from law enforcement officers from the United Kingdom at its Special Agent Training Program. Both attendees played leading roles in Operation Lascar, FDA/OCI’s f irst international enforcement operation. In June 2018, representatives from 20th annual meeting of the FDA/OCI participated in the attendance were law Permanent Forum on International Pharmaceutical Crime. Also in enforcement and regulatory personnel representing Belgium, Aust ralia, Italy, Canada, Germany, , New Zealand, Singapore, Spain, Switzerland, United Kingdom, Ireland, Israel, The Netherlands World Customs Organization, and INTERPOL. In July 2018, representatives from FDA/OCI were featured speake rs at a regional workshop in Santo Domingo, Dominican Republic, which involved prosecutors a nd law enforcement and inican Republic, Guatemala, Honduras, El Salvador, Mexico, regulatory personnel from the Dom and Costal Rica. The program f ocused on import operation and f ood products. This event was sponsored by USPTO and DOJ. Laboratory/Analytical Capacity Building orum on Counterfeit Medicines (IL FCM) is comprised of The International Laboratory F scientific experts from National Regulatory Control Laboratorie s. It began in 1999 with a oducts Regulatory Agency DA and Medicines and Healthcare pr bilateral agreement between F and developed into a partnership w ith global regulatory (MHRA) in the United Kingdom counterparts from Europe, Nort h America, Asia and Australia to maximize the benefits of a scientific network and exchange information on emerging issues related to counterfeit and illegal medicines. The ILFCM also focus es on issues related to falsifi ed/substandard medicines, adulterated dietary supplement s, and other important public hea lth topics. The ILFCM is closely aligned with the Permanent Forum on International Pharmaceutica l Crime (PFIPC) and provides scientific guidance a nd laboratory support. In 2018, the PFIPC/ILFCM annual m eeting was hosted by the German Federal Police and Germany’s Official Medicines C ontrol Laboratory (OMCL) Münster. The PFIPC meeting was 46

81 entitled “20 years of Cooperati on in Prevention, Detection and Disruption of Organized Criminal Networks,” and focused on counterfe it medicines, medical devices, traditional Chinese medicines, herbal medicines adulterated with active pharmaceuti cal ingredients, and biologic pharmaceuticals. The ILFCM meeting included multiple presentat ions on the above topics from each of the laboratory organizations attending the meeting. A large portion of the meeting focused on the health crisis a ssociated with fentanyl and opioi d-containing pharmaceutical member countries. The group products, and the impact that th ese materials are having on the rtable technology which can be also shared information related to new instruments and field po used to detect the compounds. Enforcement Activities FDA/OCI’s Cybercrime In vestigation Unit (CcIU) FDA/OCI’s Cybercrime Investigatio n Unit (CcIU) protects public health by working with DOJ and other domestic and internationa tory agencies to disrupt and l law enforcement and regula sell counterfeit or adulterated dismantle criminal networks that use the internet to illegally medicines, medical devices, cosmetics, tobacco, and food produc ts. During FY 2018, OCI further strengthened its CcIU by assigning five additional full-time Special Agents to this whose activities are managed by program. Currently, there are 11 f ull-time CcIU Special Agents a Senior Operations Manager a nd supported by dedicated analytic al staff. Their priorities ng of transnational criminal group s misusing the internet as well as include the strategic targeti those who facilitate their ac e the FDA regulated supply chain or tivities by attempting to penetrat by intentionally misrepresenting t he nature of their products. FDA/OCI’s Port of Entry Program OCI’s ongoing Port of Entry Program (POE) is intended to detect violative shipments of FDA- regulated commodities entering our national ports and mail syst ems. Currently, there are 11 full- time and 10-part-time OCI POE Special Agents and the program is overseen by a Senior Operations Manager. Their prio rities include responding to int ernational mail facilities, fast parcel carriers, ports, and mail hubs. This initiative enables OCI Special Agents to collaboratively work with their r CBP, and other Federal law egulatory colleagues from FDA, enforcement agencies to stop the entry into the United States o f illicit human and animal drugs, vaccines, medical devices, and ot her biologic and tobacco produ cts. FDA/OCI Enforcement Actions FDA/OCI has a leadership role in combating counterfeit pharmace uticals and medical devices. Below are notable examples of F DA/OCI’s enforcement activities. Additional FDA enforcement cases are discussed further below. Operation Safeguard Operation Safeguard mail blitzes are conducted at IMFs by FDA, CBP and other partner government agencies (PGAs) on a r egular, rotating schedule. Beginning in March 2007, these 47

82 blitzes have been conducted monthly, with few exceptions. The format for each blitz is based on the same premise: for each of three days, CBP reviews up to 100 mail parcels each day which are suspected to contain pharmaceuticals. This format provides an idea of the wide variety of pharmaceutical products that pa ss through each IMF. FDA participates by providing technical assistance to CBP and conducting a n FDA admissibility review of each of the parcels referred as FDA-regulated articles. Upon r eview and examination, some parc els are subsequently referred to other PGAs as being articles under their jurisdiction, such as controlled substances to Drug Enforcement Administration (DE A). For those articles found to be subject to FDA jurisdiction les are generally refused admission into the U.S. and returned and found to be violative, the artic is provided to overcome the viol ation. FDA has implemented the to the sender, unless evidence enforcement tool provide d by section 708 of the Food and Drug A dministration Safety and Innovation Act (FDASIA) to combat illegal drug importation. Section 708 gives FDA the authority to administratively dest roy refused drugs that are valued at $2500 or less. This authority was implemented nationwide in FY 2017. Operation Opson Through the assignment of an Attach é at Europol, FDA/OCI contin ues to participate in the annual Operation Opson, which i s a joint operation lead by Euro pol and INTERPOL that targets counterfeit and substand ard food and beverages. Other FDA Enforcement Actions In addition to the operations discussed above, FDA enforcement cases during FY 2018 include the following prosecutions. Canadian Drug Firm Admits to Sel ling Counterfeit and Misbranded Prescription Drugs Kristjan Thorkelson, a residen Throughout the United States. t of Manitoba, Canada, together associated with Thorkelson, including Canada Drugs, Rockley with several Canadian companies Ventures, and River East Supplies, admitted on April 13, 2018, to widespread illegal sales of misbranded and counterfeit prescr iption drugs in the United Sta tes. The Canadian companies were sentenced to forfeit $29,000,000 of the proceeds of their illegal scheme, to pay a fine of $5,000,000, and to five years of prob ation. The court sentence d Thorkelson individually to pay a fine of $250,000 and to five years of probation with the first six months in home confinement. Thorkelson and the associated companies were also ordered to pe rmanently cease their illegal operations, surrender to the Un ited States all domain name registrations and websites from their United States Justice Depart ment and the FDA in any further businesses, and cooperate with the criminal investigations. https://www.fda.gov/ICECI/CriminalInvestigations/ucm605139.htm Canadian Companies Fined $45 Millio n and Ordered to Forfeit an Additional $30 Million SB Medical Inc., and . for Smuggling Misbranded Pharmaceuticals into the United States TC Medical Group, companies base d in Toronto, Canada, and St. Michael, Barbados, were fined hestrating a multi-year conspiracy $45 million and required to forfeit another $30 million for orc to smuggle misbranded prescription pharmaceuticals into the Uni ted States. During the conspiracy, SB Medical Inc. and T C Medical Group received over $33 million in proceeds from selling misbranded prescription pharmaceuticals to U.S. doctors and clinics. Tzvi Lexier, leader 48

83 ost his final appeal to the Ca nadian Supreme Court during the of the TC Medical organization, l t 19, 2018. On July 26, 2018 week of July 2, 2018. He was ordered to surrender before Augus ction will conclude over three years Lexier had his initial appearance in the United States. This a of extradition proceedings against Mr. Lexier. http://wayback.archive-it.org/7993/20180126095029/ https://www.fda.gov/ICECI/CriminalInvestigations/ucm459660.htm Pharmacy Owner Sentenced for Dispensing Misbranded Drugs. Bryan Polomoscanik, owner of Dierkens Pharmacy, Mono ngahela, PA, was sentenced to 5 years of probation, $1,450,000 in forfeiture and fine d $50,000 for his previous conviction of conspiracy, smuggling, and money laundering in connection to introducing misbranded drugs into interstate commerce. Polomoscanik purchased prescripti on medications from the United Kingdom and Canada which rchased from he dispensed to unsuspecting con sumers as FDA approved drugs pu a U.S. based wholesaler. Additionally, Dierkens Pharmacy supplied multiple assisted living facilities around the Monongahela, PA area with pr escription drugs for their pati ents. When these patients no longer needed medications, unused drugs were returned to Dierkens Pharmacy, where they were re-dispensed to unsuspecting pharmacy customers. Polomoscanik purchased Dierkens Pharmacy from Jeffrey Markovitz. Markovi Canada and drugs from tz was also buying prescription ously pleaded guilty and dispensing them to unsuspecting customers. Markovitz has previ ordered to fortified $650,000. Additionally, Quantum Solutions , a Canadian company and a source of the misbranded drugs , along with its owners, Tony Lee , Billy Lee and Tarn Uppal, pleaded guilty. Tony Lee, Billy Lee, and Tarn Uppal were each sentenced to 3 years of probation and fined $50,000. Quantum S olutions was sentenced w ith a $100,000 fine and ordered to pay $4,235,000 in criminal forfeiture. https://www.fda.gov/ICECI/CriminalInvestigations/ucm615440.htm Compounding Pharmacy Pleads Guilty to Mail Fraud in Connection to Introducing Misbranded Drugs into Interstate Commerce. Scott M. Connolly, an unlicensed pharmacy technician employed by New Engl and Compounding Center (NECC), p leaded guilty to 10 ith 13 others in connection with counts of mail fraud. Connolly was previously indicted along w the 2012 nationwide fungal meningitis outbreak originating from NECC. Connolly was assigned that are used to stop patients ’ hearts during heart surgeries. For to making cardioplegia solutions duced thousands of cardioplegia solutions that were sent to more than two years, Connolly pro customers throughout the countr y. Connolly’s unlicensed status was known to his supervising pharmacists, Barry Cadden, Gle nn Chin, and Gene Svirskiy. Connolly used Cadden’s username and password to log into the com puterized pump so that his name would not appear on any paperwork generated when he filled the cardioplegia orders. He also did not perform any of the required validation tests other pharmacy technicians were required to do. Cadden and Chin have been sentenced to 9 and 8 years’ incarceration respectively. C onnolly is cooperating with the government and is expected to te stify during the trial of the remaining NECC defendants. https://www.fda.gov/ICECI/CriminalInvestigations/ucm617436.htm 49

84 D EPARTMENT OF H OMELAND S ECURITY 50

85 Department of Homeland Security Department of DHS Appendix for FY 18 Annual Report This appendix discusses the FY 2018 activities of the Departmen t of Homeland Security. As outlined below, DHS’s activities including protecting public and private acquisition supply ; engaging with stakeholders; chains from ting law enforcement operations counterfeits; conduc educating the public; cooperati ng with foreign law enforcement; enhancing IP enforcement lding and training to support IP through international organizati ons; and providing capacity bui enforcement in other countries. on Supply Chains from Counterfeits Protecting Public and Private Acquisiti Counterfeiting is a significant challenge that can impair supply chains for both the public and private sectors. In the context of the U.S. Government, acquir ing products or services from rity, security, resilience, and qu ality assurance controls create sellers with inadequate integ ce perspective as well as from significant risks, from a national security and mission assuran an economic standpoint (due to the i ncreased costs to American tax payers). Counterfeiting can f Defense (DoD) supply chain, have particularly significant cons equences for the Department o he reliability of weapon sys by negatively affecting missions, t tems, the safety of the warfighter, and the integrity of sensitive data and secure networks. The goal is to reduce the risk of counterfeits entering the sup ply chain; quickly and collectively address those that do enter the s upply chain; and strengthen remedies against those who provide counterfeit items. DHS Training for Acquisition Professionals Buyers in the public and private sectors need better visibility into and understanding of (1) how the products, services, and sol utions they buy are developed, integrated, and deployed, and (2) the processes, procedures, and practices used to ensure the int egrity, security, r esilience, and quality of those products and services. This requires understa nding the threat that counterfeits pose, mitigating their purchase and distribution, and identifyi ng counterfeits and reporting them. gration and Customs To address the systemic threat from counterfeits, the U.S. Immi Coordination Center (IPR Center) Enforcement (ICE)-led National Intellectual Property Rights provides educational opportuni ties for public and private acqui sition professionals. The IPR Center has posted on its website free training that is designed to provide acquisition professionals with the knowledge and skills th ey need to combat the counterfe it threat. The training – “Acquisition Professional Trai ning: Counterfeit Awareness, Miti gation, Identification, and Reporting” – is at: https://www.iprcenter.gov/repor ts/training/Acquisition%20Profes sional%20Training%20revised %20for%20public%20use.pdf/view . 51

86 tion Chain Reaction) G Supply Chain (Opera Law Enforcement Efforts to Secure the US In addition to the steps taken t o secure the front end of the U .S. Government’s supply chain (through Federal procurement regulations, supplier requirements, and acquisition training), the U.S. Government is also comm itted to protecting its vital interests by taking robust enforcement measures against those who sell counterfeit goods to the U.S. G overnment. Operation Chain Reaction (OCR) targets counterfeit items entering the military and U.S. Government supply chains, and is an IPR Center-coordinated effo rt led by ICE Homeland Security Investigations (HSI) and consists of 16 Federal law en forcement agencies (including al investigative offices). ICE, U.S. Customs and Border Pro tection (CBP), and DoD’s crimin In FY 2018, under , HSI initiated 24 criminal investigations, Operation Chain Reaction nd helped secure 18 indictments and 7 convictions, as well as 68 conducted 15 criminal arrests, a seizure incidents of counterfe it goods with a total Manufacture r’s Suggested Retail Price (MSRP) of approximately $ 4.9 million. ing. Other notable OCR activities dur ing FY 2018 included the follow  panel at NXP On October 25, 2017, a representativ e of OCR participated on a headquarters in Austin, Texas, made up of experts who are using Science, Technology, Engineering, or Math to positively impact national security. O CR conveyed its efforts against counterfeits entering the supply chain, and the importa nce of the support from ions as it relates to national ng of evidence in our investigat forensic labs, and the processi security. There were ap proximately 85 attendees.  On March 14, 2018, a representative of the IPR Center spoke at the U.S. Nuclear th Regulatory Commission’s (NRC) 30 Annual Regulatory Information Conference (RIC) held in Rockville, Maryland. The RIC brought together nearly 3 ,000 participants from terested stakeholders from other government agencies, over 30 countries representing in industry, international organi zations, and the general public, providing a forum that promotes open dialogue to learn valuable information about NRC actions planned or in progress related to the regulation of nuclear power plants, oth er nuclear facilities, and nuclear safety research. The IPR Center representative participated on a panel regarding counterfeit, fraudulent, and sus pect items. Approximately 150 people were in attendance for the panel discussion (i n person and tele phonically).  Counterfeit On March 18, 2018, personnel representing OCR participated in a DoD Procurement Fraud Working Gro up (PFWG) in San Microelectronics Panel at the together experienced personnel within the DoD Antonio, Texas. The PFWG brings enforcement community in a forum of information exchange, legis lative/policy development, and continuing educat ion in regard t o current issues, future national trends, investigative strategies, appropr iate remedies, and enforcement problems in the procurement fraud arena. Prese nters provided information on in tellectual property, the IPR Center and OCR. There were approximately 139 attendees at the panel session. 52

87  On April 17-19, 2018, personnel representing OCR worked with CB P’s Electronics nment blitz operation Center of Expertise and Excelle nce to conduct an express consig that focused on counterfeit microelectronics.  On April 19, 2018 and also July 26, 2018, personnel representing the IPR Center’s OCR provided training to the Defense Counter-Proliferation Training Program (DCTP). DCTP is designed for Air For ce Office of Special Investigations (AFO SI), Naval Criminal nd Defense Crimina Investigative Service (NCIS), a l Investigativ e Service (DCIS) students, and promotes awarene ss of the threats facing DoD tech nologies. The course within the DoD to prot endorses partnerships ect critical U.S. information and ensure a continued technical and military advantage for the U.S. militar y. Department of Justice (DOJ) Computer Crime and  In May 2018, the IPR Center and the Intellectual Property Section ( Microelectronics CCIPS) co-hosted the Counterfeit ngs focused on enhancing commun ication between Working Group (CMWG). The meeti law enforcement and industry. There were approximately 69 attendees from private industry and the government.  On June 14, 2018, a representative of OCR spoke at the NRC’s si xth workshop on Vendor Oversight in Cleveland, O hio. The purpose of this workshop was to bring d utilities, vendors of nuclear com ponents, and other together NRC staff, regulate e OCR representative uss vendor oversight issues. Th interested stakeholders to disc enter and OCR. There were ap proximately 400 in presented information on the IPR C attendance (in person an d telephonically).  On June 27, 2018, an OCR partner spoke at the University of Maryland’s Center for Advanced Life Cycle Engineer ing (CALCE), which hosted its 2018 Symposium on Counterfeit Parts and Materials. There were approximately 200 attendees representing various federal agencies and private sector businesses.  On July 25, 2018, OCR presented a day-long training session to NCIS, AFOS and HSI personnel. The training took place at the Naval Base in San Di ego. The original program developed by the OCR task force me mbers was designed to educate the attendees on the IPR Center and OCR, with a speci y investigate and fic focus on how to successfull prosecute OCR subjects and to maximize success. Attendees were provided with the perspective. In addition, information about the OCR resources available from an analytic a case agent presented a brief ing on a successful case and less ons learned related to the PS prosecutor briefed on the pros ecution process and investigation. Finally, a CCI strategies for maximizing success in prosecuting. There were approximately 30 attendees at the training.  On August 8, 2018, personnel represen ting OCR attended the Micr oelectronics Integrity Meeting (MIM) at the Naval Surface Warfare Center, Crane Divisi on (NSWC Crane) near Indianapolis, Indiana. This event brings representatives from various government, industry and academia organizations together to discuss the cri tical trusted electronics issues currently faced by the Department of Defense. Approxima tely 347 members of industry and DoD personnel attended the meeting. 53

88 information on OCR  Between August 20-23, 2018, a represe ntative from OCR presented to over 150 Mexican government and military officials and indus try representatives. The IPR Center Outreach and Traini ng Unit hosted this IPR enforcement training program in coordination with the Mexico Customs and Revenue Service (SAT), DOJ’s Intellectual Property Enforcement Coordinato r program and the U.S. Patent and Trademark Office. rosecutors. Industry The attendees included national police, customs officials and p partners at this training included pharmaceutical, biotechnolog y, consumer ctronics, bicycles, pment, footwear/apparel, ele goods/products, sporting goods/equi and technology. The training emphasized health and tobacco, non-profit organizations fects on economies and its safety issues associated with counterfeit goods, the adverse ef connection to transnational organized crime. Law Enforcement Operations Protection and enforcement of IPR is a national priority, and U .S. law enforcement stands at the forefront of these efforts. In FY 2017, the number of CBP and HSI IPR seizures increased mo re than eight percent, to 34,143 (from 31,560 in FY 2016). The tot al estimated Manufactu rer’s Suggested Retail Price $1.206 billion (from $1.383 (MSRP) of the seized goods, had they been genuine, decreased to billion in FY 2016). In FY 2017, CBP completed 115 exclusion order enforcement actions (shipments seized and shipments excluded). CBP seized 297 ship ments of circumvention devices for violations of the Digital Millennium Copyright Act (DMCA), a 324 percent increase from 70 such seizures in FY 2016. The combined total number of all IPR border enforcement actions in FY 2017 increased 12 percent over FY 2016. (discussed above), the DHS law enforcement efforts Operation Chain Reaction In addition to during FY 2018 included the following operations.  Operation Apothecary is the IPR Center’s public hea lth and safety initiative that addresses, analyzes, and attack s potential vulnerabilities in the entry process that might allow for the smuggling of commercial quantities of counterfeit , unapproved, and/or s courier hubs, and land adulterated drugs through interna tional mail facilities, expres borders. During FY 2018, Operation Apothecary resulted in 65 new cases, 92 arrests, 34 indictments, and 38 convictions, a s well as 321 seizure inciden ts of counterfeit items.  Operation Safeguard activities are conduc ted monthly at International Mail Facilit ies and Express Consignment Center s throughout the United States. Each onsite examination period lasts several days and entails the inspectio n of hundreds of parcels containing pharmaceuticals and designer drugs. mail blitzes are Operation Safeguard conducted by FDA, CBP and other part ner government agencies (PG As) on a regular, rotating schedule at the international mail facilities (IMFs). Beginning in March 2007, these blitzes have been conducte d on a monthly basis, with few exceptions. The format for each blitz is based on the same premise: for each of three days, CBP reviews up to 100 mail parcels each day which a re suspected to contain pharmaceuticals. This format provides an idea of the wide variety of pharmaceutical products that pass through each 54

89 IMF. FDA participates by providi ng technical assistance to CBP and conducting an FDA he parcels referred as FDA-reg admissibility review of each of t ulated articles. Upon to other PGAs as being review and examination, some parcel s are subsequently referred s to DEA. articles under their jurisdiction, such as controlled substance E-Commerce/Operation in Our Sites  . i. The E-Commerce Program is an on- going HSI initiative targeting entities that sell Internet. This program consis counterfeit products through the ts of the well- known operation, Operation in Our Sites (IOS), which was initiated in 2010 as a method to disrupt this activity online. The E-Commerce initiative focuses on ts, and financial ns that identify targets, asse developing long term investigatio ng websites. It also emphasi zes working in schemes used in operating infringi ces, payment partnership with third-party ent ities, such as online marketpla processors and the express consignment industry. Additionally, the IPR Center coordinates with rights holders , who utilize civil and administ rative remedies to shutdown infringing sites. h of e-commerce into many of its ii. In recognition of the wide-reac programmatic areas, HSI promulgated a single agency strategy on February 14, 2018. The HSI s E-Commerce Strategy emphasizes an agency approach that leverage ners in an effort aw enforcement part n private industry and l collaboration betwee ach to identify and to act as a force-multiplier in a cooperative enforcement appro dismantle those organizations a nd prosecute those persons or entities that traffic e-commerce outlets in all manners of dangerous and illicit goods utilizing various including open-net websites, t he dark web, point-to-point sales platforms, social media and a variety of payment processors and shipping methods. iii. n FY 2018, in furtherance of the E -Commerce Strategy, IOS perso nnel met with I representatives from online plat forms, payment processors, and the shipping industry for the purpose of initiating a dialogue about how it might be possible to share information for the purpos e of stopping the sale of count erfeit goods online. In FY 2018, under E-Commerce/IOS , HSI initiated 8 investigations, conducted iv. 26 arrests, and helped secure 19 indictments and 7 convictions. These investigations are initiated and developed by HSI field offices through IPR Center leads, seizures, informants, complaints, industry leads, and/or other investigative techniques.  , the IPR Center – through HSI – Under IOS Cyber Monday/Project Transatlantic partners with Europol, which leveraged its member countries to launch multilateral enforcement actions against targeted websites and their operato rs illegally selling operation involves the execution of coordinated seizures of counterfeit merchandise. The domestic and foreign-based Inter net domain name registrations i n the United States and Europe. In November 2017, the IPR C enter and Europol concluded Operation IOS Cyber Monday/Project TransAtlantic VIII in collaboration w ith INTERPOL. Over 20,520 infringing domains were seized. https://www.europol.europa.eu/news room/news/biggest-hit-against -online-piracy-over- 20-520-internet-domain-names-seized-for-selling-counterfeits 55

90 Operation Engine Newity  i. an IPR Center and HSI-led initiative that Operation Engine Newity (OEN) is focuses on securing the supply cha ins of automotive and other heavy industry from counterfeit components. The proliferation of counterfeit parts - including ags, bearings, brake pads, accelerator arms, and critical components such as airb windshields - has grown exponent ially over the last several yea rs and now poses a hreat to end users and an econom significant health and safety t ic cost to businesses and consumers through lo st revenue, downtime, and re placement costs. al equipment In FY 2018, OEN personnel worked closely with automotive origin ii. manufacturers (OEMs) through the Automotive Anti-Counterfeiting Council (A2C2) to provide training across the country. A2C2 members al so supported criminal investigations by provi ding product authentication. e Anti- EN, HSI and the Automotiv Throughout FY 2018 and in support of O iii. ng to HSI and ked together to provide traini Counterfeiting Council (A2C2) wor CBP field offices as well as other government personnel across the country. n, Miami, Training took place in Seattle, Atlanta, Buffalo, Laredo, Bosto Baltimore, Charleston, Dallas, Las Vegas, Long Beach, Newark an d New York, m both industry and government personnel. These and included presentations fro educated them sessions trained the personnel on how to identify counterfeits, lished relationships on which fu rther collaboration about the IPR Center, and estab could be based. iv. On January 24, 2018, a representativ e from OEN met with a major payment processor to discuss funding that is associated with counterfei t automotive parts. Additionally, the A2C2 presente d information on counterfeit automotive parts. On January 25, 2018, this training was presented to approximately 37 individuals assigned to HSI, CBP and law enf orcement from the surrounding area. v. In FY 2018, under OEN, HSI initiated 79 criminal investigations, conducted 8 criminal arrests, and helped s ecure 12 indictments and 12 convi ctions, as well as mately $ 2.6 159 counterfeit goods seizures incidents with a MSRP of approxi million.  Operation Surge Protector in December i. Operation Surge Protector (OSP) w as initiated by the IPR Center 2016 to target the sale and traffi cking of counterfeit consumer electronics and nd charging cords. technology products, such as batter ies, chargers, smartphones a OSP ety combines the expertise of HSI, CBP and the Consumer Product Saf Commission (CPSC). ii. On June 4-8, 2018, a representative of OSP worked in conjunctio n with CBP and in collaboration with industry on a n enforcement operation in L ouisville, KY that focused on interdicting counter feit consumer technology. iii. On June 11, 2018, a representative of OSP conducted training on the IPR Center and OSP to an audience of appr oximately 30 HSI, CBP, USPIS and DOJ 56

91 personnel in Sterling, VA. ests, helped ated 13 cases, conducted 19 arr In FY 2018, under OSP, HSI initi iv. secure 17 indictments and 3 convi ctions, and seized approximate ly $47 million in counterfeit products. was initiated by the IPR Center in January 2015, to combat the  Operation Plastic Beauty sale of counterfeit personal healthcare and beauty products. T Operation Plastic hrough R Center of HSI, CBP, and FDA-OCI), the IP (which combines the expertise Beauty entities associated with the h partners with industry and other ealthcare and beauty product community. In FY 2018, under Operation Plastic Beauty , HSI initiated 10 cases, conducted 3 arrests, helpe d secure 1 indictment and 10 c onvictions, and seized MSRP in counterfeit products. $3.7 million Operation Team Player  i. Operation Team Player (OTP) targets the sale and traffi cking of counterfeit sports merchandise, apparel and tickets, a multi-million-dollar crimin al industry. The culmination of the sports seas on—playoffs and finals games—are events that stimulate the sale of counterfe it items. HSI Special Agents an d CBP Officers worked with sports leagues and law enforcement agencies throughout the nation it sports merchandise being i to identify shipments of counterfe mported to the nter continued United States or being sold by vendors. In FY 2018, the IPR Ce enforcement actions at multiple high-profile sport coordinating ing events, League (NFL) Pro Bowl and Super Bowl, Major including the National Football League Baseball (MLB) World Series, National Hockey League (NHL) Winter Classic; MLB, and National Bask etball Association (NBA) and Major League Soccer All-Star games; NHL and N BA Championship series; the 201 8 NHL Stadium Series; and the 2018 I nternational Champions Cup. ii. On January 26 – February 6, 2018, IPR C enter representatives tr aveled to Minneapolis/St. Paul , Minnesota, to coordi nate OTP enforcement operations targeting the importation and t rafficking of counterfeit sports merchandise and e conducted by media activities related to Supe r Bowl LII. The operations wer teams comprised of HSI St. Paul, I PR Center representatives, CB P St. Paul and nneapolis CBP Mobile Intellectual Property E nforcement Teams (MIPETs), Mi es from the Police Department, St. Paul Police Department and representativ National Football League. on with CBP to iii. On May 15-17, 2018, a representative of OTP worked in conjuncti conduct an enforcement interdic tion operation targeting counter feit sports apparel and merchandise. On May 18, 2018, the OTP representative provi ded IPR Center and OTP training to HSI personnel. iv. On July 25-26, 2018, a representativ e of OTP traveled to Atlanta, Georgia, to meet with HSI Atlanta, HSI Miami, law enforcement partners, and industry representatives from the NFL, NHL , MLB, National Collegiate Ath letic Association (NCAA), and English P remier League. The OTP repres entative provided training on the IPR Cente r and OTP at the Super Bowl L III Law Enforcement Training event hoste d by the NFL. In attendance we re 50 57

92 representatives of federal, sta te, and local law enforcement, a s well as 10 industry representatives from the sports brand industry. In FY 2018, under OTP, HSI seized more than 140,000 items count erfeit sports merchandise worth 9.3million and arrested 35 individuals. urther led by INTERPOL as a means of f  Operation Pangea is a coordinated global effort reducing the advertisement, s ale, and supply of counterfeit, un approved, and substandard pharmaceuticals are a . Websites providing counterfeit medicines and medical devices significant and growing global pr h and safety standpoint, oblem both from a public healt In FY 2018, HSI, working an intellect ual property protection standpoint. as well as from in conjunction with CBP and FDA/OC I, conducted Pangea XI related enforcement operation. However, due to a chang e in INTERPOL’s reporting times, the final statistics for Pangea XI will be released in FY2019. he following activities: DHS’s law enforcement activit ies during FY 2018 also included t  In FY 2018, CBP conducted 26 national operations that resulted in over $13 million worth of goods being seized.  HSI investigates IP violations involving the illegal production, smuggling, and distribution of counterfeit merchandise and pirated works. Sin ce the large majority of her shipped directly to re produced overseas and eit infringing and dangerous products a are to increase overseas IP the United States or via a third country, ICE’s long-term goals its foreign law enforcement and customs ollaboration with investigations through c erdicting suc h exports before they reach t nations in int counterparts, and to work with hos gents play a significant role the United States. HSI Special A in the enforcement of IP violations through their traditiona l customs authorities and expertise regarding the illicit importation and exportation of mer chandise. HSI Attachés establish strong working relationships with host country c ounterparts. These relationsh ips strengthen ICE's capacity to conduct successful dom estic, international, and multilateral operations. HSI Attachés are located in 50 count ries, and they work closely wit h host government in IP working groups at post. counterparts and participate ations and was involved in intellectual property investig  In FY 2018, HSI initiated 948 565 arrests, 378 indictment s, and 311 convictions.  In FY 2018, the IPR Center vette d 26,197 investigative leads; o f these, 9,271 were Center de-conflicted 11,204 referred to law enforcement partners. Additionally, the IPR investigative targets for part ner agencies and industry. While performing these de- conflictions, the IPR Center identified 348 “blue on blue” situ ations where two or more entities were investig ating the same target. Finally, the IPR Center referred 791 leads to private industry for follow-up.  In FY 2018, the IPR Center hosted t hree Intellectual Property a nd Trade Enforcement Investigations (IPTE I) training courses. The courses were held in April, June, and August 2018. The IPTEI course offers two weeks of advanced tra ining with a specific 58

93 focus on commercial fraud and IP theft. Trainers for the cours e came from both the and CBP. private sector and the government. Students were from both HSI Engaging with Stakeholders f The IPR Center forms the communications hub around which much o the interaction between private sector stakeholders a nd the law enforcement and regulat ory communities takes place. Operation Joint Venture and Project Trade Watch Through the IPR Center’s Outreach and Training Section HSI engages in partnerships with the public and private sectors to com s (OJV) Operation Joint Venture bat IP infringement through it ed outreach initiative is designed to increase information sharing initiative. This IPR Center-l o combat the illegal importati on and distribution of counterfeit, with public and private sectors t s well as the evasion of duties substandard and tainted goods, a . The initiative is aimed at investigations. Through OJV, the fostering commercial fraud, public health and safety, and IP s, customs brokers, freight lders, manufacturers, importer IPR Center engages with rights ho forwarders, bonded facilities, c arriers, and others to discuss the IPR Center’s priorities of protecting public health and saf ety, the economy, and securing the Government’s supply chain. eness of the he public’s awar Through outreach and public engagement, the IPR Center raises t dangers of commercial fraud viol ations, such as IP, while serving as a public point of contact for investigative leads. The IPR Center’s audience includes a broa d spectrum of industries and government agencies, including but not limited to the pharmaceutical, entertainment, wearing apparel, sports, electronic, and automobile industries, as well as customs bonded entities, Center – through OJV – reached ficials. In FY 2018, the IPR importers, and law enforcement of 308 outreach and training events. out to more than 16,000 people at is HSI and CBP’s outreach campaign to the importing Project Trade Watch community to awareness of law public ce informed compliance by private industry and to enhan facilitate community. This campaign trade the enforcement exists under the IPR Center’s within efforts OJV initiative. Through Project Trade Watch broader , ICE and CBP field personnel provide nd importer identity theft. information and red flag indicators fraud a of potential import of information with rights holders) Executive Order 13785 (expanding the disclosure ssued Executive Order 13785, t itled “Establishing Enhanced On March 31, 2017 the President i Collection and Enforcement of A ties and Violations of Trade ntidumping and Countervailing Du and Customs Laws” (82 FR 16719; April 5, 2017). The Executive Order directs CBP to “develop and implement a str ategy and plan for combating violations of United States trad e and customs laws for goods an d for enabling interdiction and disposal, including through met missible merchandise entering hods other than seizure, of inad through any mode of transportation, to the extent authorized by law.” The Executive Order also directs the Departments of Treasury an d Homeland Security – in order “[t]o ensure the timely and efficient enforcement of laws prote cting Intellectua l Property Rights (IPR) holders from the importa tion of counterfeit goods” – to “ take all appropriate steps, 59

94 istent with law, share with rights including rulemaking if necessary, to ensure that CBP can, cons holders: (i) any information necessary to determine whether the re has been an IPR infringement luntarily abandoned, as defined in or violation; and (ii) any inform ation regarding merchandise vo section 127.12 of title 19, Code of Fed eral Regulations, before seizure, if the Commissioner of CBP reasonably believes that the successful importation of the merchandise would have violated United States trade laws.” DHS and CBP are implementing the Exe cutive Order. Other Engagements DHS law enforcement agencies w hich support IP enforcement had n umerous other engagements outreach efforts are described of these public education and with stakeholders in 2018. Some below. The IPR Center has a unique role within ICE by serving as a one -stop shop for IP enforcement efforts. In this role, the IPR Center has regular contact with the international community, the media, Members of Congress, trade organizations, industry leade rs, and the general public. In FY 2018, the IPR Center conducted 308 outreach and training eve nts with 16,478 attendees. tinued the monthly publication of the In FY 2018, the IPR Center con s IPRC Connection newsletter to keep stakeholders up to date on the most signific ant IPR Center enforcement efforts and outreach activities. Additionally, the IPR Center collects, tabulates, and catalogs victim impact accounts of brand holders and consumers with the aim to show more clearly the global economies, public health full effect of IP infringement and trade fraud on the U.S. and eat to government supply chains. and safety, and any related thr ter – collaborated with Throughout FY 2018, HSI – through its leadership at the IPR Cen industry and other government agencies to present training and foster communication. Examples of this include: Operation Engine Newity In support of (which focuses on securi ng the supply chains of  ti-Counterfeiting automotive and other heavy industry), HSI and the Automotive An Council (A2C2) worked together t o provide training to HSI and C BP field offices as well as other government personnel ac ross the country. Training took place in Seattle, Atlanta, Buffalo, Laredo, Bost on, Miami, Baltimore, Charleston, Dallas, Las Vegas, m both industry and Long Beach, Newark and New York, and included presentations fro government personnel. These sess ions trained the personnel on how to identify counterfeits, educated them about the IPR Center, and established relationships on which on could be based. further collaborati  In May 2018, DOJ/CCIPS and the IPR Center co-hosted meetings of the CMWG to foster direct communication betw een industry representatives an d the prosecutors, law enforcement agents, and other government officials working to c ombat counterfeit microelectronics in the suppl y chain. Approximately 69 people attended.  During FY 2018, the IPR Center’s Stakeholder Engagement and Out reach Coordinator conducted approximately 60 meetin gs with industries and coaliti ons including Eli Lilly, Pfizer, CREE, Consumer Product Safety Commission, Benefit Cosme tics, Archery Trade 60

95 ista Outdoor, Abbott Laboratories, Burberry, American Association, Rubies Costume, V ion, PayPal, Juul Labs, ycles, Water Quality Associat Watch Association, Specialized Bic ls from Australia, rter Communications, and government officia Mitsubishi, UPS, Cha rance, Saudi Arabia, Canada, U Mexico, Colombia, Spain, China, F kraine, Kuwait, Korea, Switzerland, Brazil, Pak istan, and United Kingdom. gned to the National Cyber-Forensics and Training  The IPR Center HSI personnel assi the NCFTA to identify Alliance (NCFTA) leverage the resources and analytical tools of in support of criminal domain names and networks affilia ted with infringing activity tial civil enforcement action. (The NCF TA is a non-profit investigations or poten lysis with subject matter corporation that condu cts real-time information sharing and ana experts in the public and private sectors and academia.) The IPR Center expanded the on” to five companies and/or organizations that have use of its “Report IP Theft butt Costume Company, Water and protection, including Rubies joined the fight to maintain br , Bonanza and the Global Brake Safety Council. Quality Association, JTI Holdings and the US Army w/pending approval include Ford Agreements that are under revie Material Command. daily interaction with CBP's multi-faceted communication with IP stakeholders includes  activities, formal meetings involving both trade industry regarding enforcement fforts, and participation in nume facilitation and enforcement e rous national trade events. CBP’s stakeholder engagement includes:  Regular conference calls with t he IPR working group of the Comm ercial Customs ngs with COAC Operations Advisory Committee (COAC) and quarterly public meeti members;  Daily interaction with stakeholde rs affected by CBP’s IP enforc ement efforts at the ports of entry, and nationally through CBP’s ten industry-aligned Cen ters of Excellence and 1 Expertise (Centers), the IP-focused staff at headquart ers, the IPR Center in the statistical analysis and indust ry experts at the IPR Washington D.C. metro area, and San Francisco; National Targeting and Analysis Group (NTAG) in Los Angeles and Participation in national and loc al trade events, industry meetings, speaking engagements,  and rights holder and industry-specific right holder roundtable s; and In March 2018, CBP issued a compr ehensive e-commerce strategy to address the complexities and challenges associated with t he increases in small packages due to the worldwide proliferation of online an d mobile technologies. The DHS Private Sector Office ( . government-wide efforts to PSO) continues to coordinate U.S ctor and non-governmental-based counter-illicit trade activities. catalyze and support private se 1 nd Expertise have been heavily CBP’s Centers of Excellence a involved in the development and implementation of the trade intelligence concept, a CBP effort to establish formal linkages with the private sector to develop actiona ble intelligence. As part of these efforts, the Centers engage in continual dialogue, information sharing, and trend analysis (e.g., with the pharmaceutical industry) in order to safeguard the American public from substandard, counterfeit, or otherwise illegal products. 61

96 On the international stage, PSO and workshops in key global seeks to coordinate conferences locations, e.g. Asia, Eastern Europe, Western Hemisphere, to co llaborate on U.S. and international government efforts to detect and disrupt illicit trade activities through the sharing of best practices, approaches, and to bolster enforcement efforts. The U.S. Department of State is key to this effort as their re spective Missions work with host governments to strengthen their enforcement regimes. Educating the Public Changing public attitudes toward infringing activities remains essential to an effective intellectual property enforcemen t strategy. DHS activities dur ing FY 2018 included:  olved in the CBP’s Centers of Excellence and Expertise have been heavily inv development and implementation of the trade intelligence concep t, a CBP effort to establish formal linkages with t he private sector to develop ac tionable intelligence. As part of these efforts, the Cente rs engage in continual dialogue, information sharing, and the pharmaceutical industry) in orde trend analysis (e.g., with r to safeguard the American substandard, counterfe it, or otherwise illegal products. CBP proactively and public from frequently issues national and local press rele media notifications to ases, and social educate the public on counterfeiting. In FY 2018, CBP issued 2 9 IPR-related press releases. Truth Behind Counterfeits In FY 2018, CBP continued the  IPR Public Awareness Campaign which educates international travelers of the dangers associated with the purchase of counterfeit goods. The goal of the campaign is to make the public aware that timless crime and to encourage people to shop from well- buying counterfeits is not a vic known and reputable sources. The second and third phases of th e campaign ran at major U.S. airports (Boston, Newark, Miami, Pittsburgh, Detroit, Hous ton, Atlanta (2), Seattle, Fort Lauderdale, Philadelphi a, and Chicago) during the busy 2017 holiday travel period and summer of 2018. At electronic bulletin boards. these airports, ads were placed on the In addition, the campaign include d ads on several travel websit es. The campaign and its messages about responsible consum er behavior were viewed approx imately 200 million times during these two phases. Cooperating with Foreign Law Enforcement erate with other Federal law As discussed above, DHS law enforcement agencies regularly coop enforcement agencies and with law enforcement offices in other countries. Below are especially notable examples of DHS coopera t. tion with foreign law enforcemen In FY 2018, as discussed above, U.S . law enforcement and Federa l agencies – including the IPR Center through HSI, CBP, a nd FDA – participated in Operation Pangea XI , a global enforcement effort led by INTER POL that is aimed at disrupting organized crime networks behind the illicit online sale of fake drugs. Due to a change in INTERPOL’s reporting times, the results of Pangea XI will not be available until FY2019. As also discussed above, in November 2017 the IPR Center and Eu ropol concluded Operation 62

97 IOS Cyber Monday/Project TransAtlantic VIII in collaboration with INTERPOL. Over 20,520 e Customs participated in a zed. In June 2018, CBP and Singapor infringing domains were sei joint enforcement operation focused on shipments of IPR infring ing goods that were in-transit through Singapore and destine d to the United States. Through the U.S.-China Joint Liai son Group’s IP Criminal Enforc ement Working Group, DOJ ng HSI and FBI) maintain a ste ady exchange of information and U.S. law enforcement (includi enforcement, resulting in successful operations to disrupt the and case leads with Chinese law manufacture of counterfeit items, such as airbags, pharmaceutic als, batteries, electronic components, and luxury items. I n FY 2018, successful collabora tion between the Ministry of Public Security (MPS) of the Pe ople’s Republic of China and HSI through the ICE Attaché office in Beijing continued on a num lated investigations. One ber of health and safety-re example of this collaboration w as the successful joint investig ation into the manufacturing and distribution of counterfeit he alth and beauty products. During FY2018, the IPR Center continued to host numerous foreign government officials with an interest in IP enforcement . Among the many international de legations were representatives from Australia, Mexico, Colombia , Spain, China, France, Saudi A rabia, Canada, Ukraine, Kuwait, Korea, Switzerland, Brazil, Pakistan, and United Kingdom. Enhancing IP Enforcement thr ough International Organizations The U.S. Government continues its efforts to improve enforcemen t of IPR through a number of nts during FY 2018 include: international organizations. A summary of key DHS accomplishme • epartment continued to suppo rt the further During FY 2017, CBP and the State D development and deployment of t he WCO Cargo Targeting System (CTS) which was successfully piloted in 2013. The C TS has the potential to enh ance cooperation between the United States and foreign partners through targeting effort s to identify and interdict counterfeit products. It allows f s to receive electronic oreign customs administration cargo manifest data to identify high-risk shipments at import, export, and transshipment across the full range of customs threats, including trade in co unterfeit products. Attachés at the WCO continue to train and s upport customs administration s in CTS operation. • In 2018, at the Asia Pacific Economic Cooperation (APEC) Subcom mittee on Customs Procedures (SCCP) meeting held i n Port Moresby, Papua New Guinea, CBP proposed an APEC joint enforcement operation focused on consumer electro nics and utilizing the APEC IPR guidelines enforcement compendium that was created in 2017 to assist with the identification, in terdiction, and deterre nce of IP violations. Nine economies participated in this operation (Australia, Chile, Chinese Taipe i, Hong Kong, Mexico, Japan, Singapore, the United Sta tes, and Vietnam). In addition, CBP officials participated in the APEC Intelle ctual Property Experts Group me etings and provided presentations in a workshop on identifying trademark infringeme nt at the border that was organized by USTR and USPTO. Capacity Building and Training 63

98 DHS engages in training and cap gthen intellectual property acity building programs to stren t internationally. awareness and enforcemen partner agencies, overseas at tachés, and U.S. embassies to closely with The IPR Center works deliver the interagency ven ues as training and support capacity building through such International Law Enforcement Academy (ILEA) program; the by training events delivered and INTERPOL; and the country-specific that are funded by the ams USPTO and regional progr State Bureau of Int ernational Narcotics and Law En Department’s Affairs (State INL). forcement of these inings in support international tra In FY 2018, the IPR Center participated in 19 programs. HSI continues to work closely with its law enforceme particularly counterparts, nt following are examples. those who received training in The IP enforcement. n the American attended and participated i  On November 14, 2017, HSI Guatemala llicit Trade and Transnational C rime Conference in Chamber of Commerce (AmCham), I Guatemala City. The conference focused on Central America’s en forcement activities relative to illicit trade and i ntellectual property. HSI Guatemala highlighted prior investigative successes worked w ith the Transnational Criminal Investigative Unit (TCIU) and also participated on a pa nel to discuss general tran snational crime. This event was attended by high level private and governmental offic ials from different Central American countries. From November 24 – December 2, 2017, the IPR Center led a two-d  ay Intellectual aining workshop in Yerevan, Armenia. This training was Property Rights Enforcement Tr nvestigators, prosecutors and judges delivered to Armenia customs and police agency i and was funded by the U.S. Embas sy, Yerevan INL Director.  On January 24, 2018, HSI Guatemala T ransnational Criminal Inves tigative Unit (TCIU) members attended the Latin Ameri can Anti-Piracy & Intellectual Property Consulting (LAAPIP) conference in Guatemala City. Topics that were covere d related to the illegal retransmission of interna tional signals/channels.  On February 25, 2018, as part of the Asia-Pacific Economic Coop eration’s (APEC) First Senior Officials' Meeting, the Offi ce of the U.S. Trade Representative and the U.S. Patent and Trademark Office (USPTO) in co-hosted the conjunction with CBP and APEC, second of three workshops for AP EC delegates in Port Moresby, Papua New Guinea, aimed to 1) Ensure border and other enforcement officials impro ve their understanding of the importance of trademark pr otection and enforcement, including the harms of trademark infringing goods; and 2) Increase capacity for effect ive IPR enforcement among border and other enforcement roviding training on officials in the region by p trademark infringement determinations in a border enforcement c ontext through a series of three workshops. HSI Singapor e presented and participated i n three panels on 1) Transnational Law Enforcement and Border Enforcement Strategies , 2) Turning Customs and Border Enforcement Violati ons into Criminal Cases, and 3) a case study on a collaborative investigation into JDC Networking. 64

99 r provided IPR Enforceme  From March 13 – 15, 2018, the IPR Cente nt Training for customs, police and prosecutors from Colombia, Ecuador, Peru an d Guatemala. With the approval of INL and the support of s combined into a joint HSI Bogota, this training wa in Cartagena, Colombia. Th e training workshop was regional training for all countries ) participants. attended by a total of fifty-six (56 perty (IP) enforcement  From May 8 – 10, 2018, the IPR Center provided intellectual pro Bulgaria, Greece, Moldova, training for customs, police, prosecutors and judges from HSI Vienna and DOJ h DoS INL approval, support of Romania, Turkey and Ukraine. Wit IPLEC-Bucharest, this training w as combined into a joint regional training for all ia. A total of 60 participants attended the training countries in Bucharest, Roman ated to IP crime and its workshop. The training emphasized health and safety issues rel connection to transnational criminal organizations; the need fo r cooperation and collaboration between countries a nd governments for stronger IP protection and enforcement. Specifically, thi s training focused on illicit ph armaceuticals as this was the overwhelming IP issue faced by the participating countries. Th e pharmaceutical industry was represented by Merck, MSD, Pfi zer, Pharmaceutical Security Institute (PSI) and Sanofi. All representatives provided a presentation and partic ipated in a 90-minute discussion panel. From June 19-21, 2018, the IPR Cente  POL Operation Chain r participated in the INTER tive of the meeting was to Third Case Meeting training initiative in Singapore. The objec facilitate international cooperation among countries and suppor t transnational llicit trade of goods (trademark and piracy infringements, investigations focused on the i smuggling of legitimate products, and tax evasion). The Third Case Meeting allowed delegates to discuss pending and new transnational cases in ord er to help the investigators in their intelligence sharing and evidence collection. Presentations focused on the benefits of working together i n partnership with other public/private entities to combat uraged to discuss the transnational organized IP related crime. Presenters were enco l organized crime and best practices in overcoming those challenges posed by transnationa challenges. The training was he ld at INTERPOL Global Complex f or Innovation. Private Sector presenters included representatives from Alibaba, Nagravision-The Audiovisual Anti-Piracy Alliance (APAC-China), Syngenta (Asia Pacific), INTA-Asia Pacific office, and Johnson & Johnson.  perty (IP) enforcement From June 26-28, 2018, the IPR Cente r provided intellectual pro training for customs, police, pros ecutors and judges from Algeria, Morocco and Niger. With DoS INL approval, support of H SI Casablanca and DOJ IPLEC- Nigeria, this training was combined into a joint regional training for all countries in Casablanca, Morocco. The training emphasize d health and safety issues rela ted to IP crime and its r cooperation and connection to transnational criminal organizations; the need fo collaboration between countries a nd governments for stronger IP protection and enforcement. Industry representa tives from Apple, Colgate-Palm olive, Estee Lauder Companies, Pfizer, Philip Morris International, and Procter & G amble provided presentations on how they are ass isting law enforcement in the fight against IP crime, the economic impact of this illicit ac tivity and product identification. The presentations were 65

100 delivered in English and French w ith simultaneous interpretatio n. The U.S. Consul General was the keynote speaker who delivered opening remarks. A total of 33 receiv ed an ICE Certificate of participants attended the tra ining workshop, all of whom Completion.  On July 10-11, 2018, at the request of the U.S. Embassy (Yereva n, Armenia), the IPR Center provided IPR Enforcement Training for 30 participants fr om several Armenian enforcement agencies, including the Special Investigative Servi ce, Investigative mittee. This event Committee, National Security Service and the State Revenues Com was followed by a second two-day training for 20 participants o n July 12-13, 2018, tailored for prosecutors and judges, which included representat ives from the Office of the Prosecutor General, Court of App eals, regional Courts of General Jurisdiction, the Cassation Court’s Criminal Chamber and Criminal Court of Appeal s. In addition, this session included representatives from the IPR Agency of Armenia . A total of 50 officials participated in both sessions. Topics of discussion included; 1) health and safety issues related to IP crime; 2) the n eed for cooperation between countr ies/agencies; 3) the leading role of international organized crime groups in IP crim e and; 4) the developing trends in IP crime. The presenta tions were delivered in Englis h and Armenian with simultaneous interpretation.  he IPR Center of DOJ IPLEC (Hong Kong), t On July 18-20, 2018, at the request ing for the People’s Supreme Court of Vietnam. An supported a DOJ sponsored IPR train HSI agent participated in thi s training and provided a presenta tion on the topic of IPR investigations.  From August 7-9, 2018, the DOJ/OPDAT Africa Regional Intellectu al Property Law Enforcement Coordinator (IPLEC) organized a workshop for West A frican countries which seeks to build enforcement capacity and improve regional coordination in combatting pharmaceutical-based crimes. Seven countries which share a border; Benin, Burkina Faso, Cameroon, Ghana, N iger, Nigeria, and Togo, were i nvited. The workshop was held at the West Africa Re gional Training Center in Accra, Ghana. This three-day Africa regulatory, United States and sub-Saharan workshop brought in experts from gencies, the private sector, and international investigative and prosecutorial a organizations. It was directed t owards health regulatory offic ials, customs, law for law enforcement and enforcement officers, and pros ecutors, and had break-out groups prosecutors with separate groups for the regulatory and customs officials. The IPR Center supported this traini ng by providing an HSI Special Agent to speak on the topic of counterfeit pharmaceuticals.  From August 14-16, 2018, USPTO sponsored a workshop on Border E nforcement of Intellectual Property Rights i n Monterrey, Mexico. At the requ est of USPTO, the IPR Center supported this traini ng by providing an HSI Special Agent to speak on the topics of criminal investigation and pr osecution of IPR cases; coordination with other agencies and regional cooperation; and financial aspects of IP crime. 66

101 From August 20-24, 2018, the U.S. Department of Justice, Office of Overseas  stance and Training (DOJ/OPDAT), Prosecutorial Development, Assi the U.S. Patent and an Asia Regional SEAN Secretariat, sponsored Trademark Office (USPTO), and the A Workshop on Criminal Enforcement Against Online Trade in Pirate d Content and Counterfeit Goods in Bangkok, Thail the IPR Center OPDAT, and. At the request of DOJ/ ng an HSI Special Agent to sp eak on the topic of supported this training by providi investigation of IP crimes.  From August 20-23, 2018, the Mexico Tax and Customs Administrat ion Service (SAT), perty (IP) enforcement ter, hosted an intellectual pro in coordination with the IPR Cen y, Mexico. The main objective of this workshop was to training workshop in Mexico Cit osecutors, judicial between law enforcement, pr establish an open interactive forum officials and rights holders fo r the discussion and analysis of issues related to IP crimes in Mexico. The training emphasize d the health and safety issues a ssociated with counterfeit goods, the adverse effects on economies and its connection to transnational organized crime. Interdiction, investigati ons, enforcement operations, best practices, international sion topics. The training tification were among the discus collaboration, and product iden f over one-hundred fifty was held at SAT ́s main auditorium facilities with an audience o SAT, Post-Customs Clearance Investigation Division (AGACE), participants from l Office and Federal AGA), México ́s Attorney Genera Customs Ports of Entry Division ( Police (PGR), Mexican Institute for Industrial Property (IMPI), Mexico ́s FDA (COFEPRIS), Mexico Consumer Product Safety Commission (PROFECO), Mexico ́s DOD (SEDENA and Marines), as well as some representatives from the local private ude; apparel, footwear and sector. Industries that were rep resented at this training incl equipment, automotive, bicycl and products, non- es, biotechnology, consumer goods ology and tobacco. profit organizations, pharmaceuticals, safety consulting, techn From September 11-13, 2018, USPTO hosted an IP Enforcement Program for police,  prosecutors and customs officers from Guatemala, Honduras and E l Salvador. The workshop was held at the ILEA f acility in San Salvador, El Salv ador. The IPR Center ng an HSI Special Agent from HSI El Salvador. supported this training by providi  ice of Overseas From September 12-14, 2018, the U.S. Department of Justice, Off Prosecutorial Development, Assi stance and Training (DOJ/OPDAT), sponsored the Sixth Meeting of the IP Crime Enforcement Network (IPCEN), a biannual gathering of police and prosecutors who work IPR cases t the request of from the ASEAN countries. A DOJ/OPDAT, the IPR Center supported this training by providing an HSI special agent to speak on the topic of nationa ted circuits). l security (counterfeit integra  From September 13-14, 2018, USPTO hosted a series of Customs bo rder enforcement enter supported this training by providing an HSI workshops in Indonesia. The IPR C special agent to speak on the top ic of investigating IP crimes arising from border seizures.  From September 25-27, 2018, the USPTO, sponsored a workshop on Border Enforcement of Intellectual Property Rights in Chetumal, Mexico . At the request of 67

102 USPTO, the IPR Center supporte ng by providing an H SI special agent to d this traini deliver a presentation on criminal investigation of IPR cases.  From September 25-26, 2018, the IPR Center participated in the annual INTERPOL Intellectual Property Crime Conference in Dubai, UAE. International Law Enforcement D. Major Enforcement Activities . This targets the sale and traffi cking of counterfeit sports mer Operation Team Player chandise, apparel and tickets, a multim illion-dollar criminal industry. The culmination of the sports season—playoffs and finals games—are events that stimulate the sale of counterfeit items. HSI Special Agents and CBP Officers worked with sports leagues and law enforcement agencies throughout the nation to identify shipments of counterfeit spor ts merchandise being imported to the United States or being sold by vendors. In FY 2018 HSI sei zed more than 140,000 items se worth $9.3 million and arrested 35 individuals under counterfeit sports merchandi Operation . In FY 2018, the IPR Center cont inued coordinating enforcemen t actions at Team Player multiple high-profile sporting events, including the National F ootball League (NFL) Pro Bowl and Super Bowl, Major League Baseb all (MLB) World Series, Natio nal Hockey League (NHL) Winter Classic; MLB, and National Basketball Association (NBA) and Major League Soccer tadium Series; and the All-Star games; NHL and NBA Cha mpionship series; the 2018 NHL S 2018 International Champions Cup. nated effort led by HSI and consist ing This is an IPR Center coordi Operation Chain Reaction. of 16 Federal law enforcement age ncies including CBP and DoD’s criminal investigative offices that work to target counterfeit items entering the military and U.S. Government supply chains. Operation Chain Reaction , HSI initiated 24 criminal investigations, In FY 2018, under nd helped secure 18 indictments and 7 convictions, as well as 68 conducted 15 criminal arrests, a counterfeit goods seizure inciden ts with a Manufacturer’s Suggested Retail Price (MSRP) of approximately $4.9 million. r and HSI-led initiat . This is an IPR Cente ive that focuses on securing Operation Engine Newity the supply chains of automotive ounterfeit components. The and other heavy industry from c proliferation of counterfeit pa rts - including critical compone nts such as airbags, bearings, brake pads, accelerator arms, and windshields - has grown exponential ly over the last several years and now poses a significant health a nd safety threat to end users a nd an economic cost to businesses and consumers through lost revenue, downtime, and replacement c osts. In FY 2018, under Operation Engine Newity , HSI initiated 79 criminal inve stigations, conducted 8 crimina l arrests, and helped secure 12 indictment s and 12 convictions, as well as 159 counterfeit goods seizures incidents with a MSRP of approximately $2.6 million. 68

103 Operation Apothecary . Operation Guardian that addresses, This is an IPR Center led subset of nerabilities in the entry pr analyzes, and attacks potential vul ocess that might allow for the smuggling of commercial quantities of counterfeit, unapproved, and/or adulterated drugs through , express courier hubs, and land borders. In FY 2018, under international mail facilities Operation Apothecary d in the initiation of 65 cases, th e arrest of 92 , HSI investigations resulte individuals, the indictment of 34 individuals, and the conviction of 38 persons, as well as 321 seizure incidents of counterfeit items. E-Commerce - Operation in Our Sites . The E- Commerce Program is an on-going HSI initiative targeting entities th . The E- Commerce at sell counterfeit products through the Internet Program consists of a well-known operation dubbed Operation in Our Sites (IOS) which was initiated in 2010 as a method to di srupt this activity online. HSI has evolved this strategy to focus on developing long term investigations that identify targets, assets, and financial schemes used in operating infringing web sites. Through IOS, the IPR Ce nter also coordina tes with rights holders, who utilize civil and adm inistrative remedies to shutd own infringing sites. In FY 2018, HSI promulgated an agency-wide E-Commerce Strategy. In FY 2018 , under E-Commerce/In Our Sites , HSI initiated 8 investiga ped secure 19 indictments tions, conducted 26 arrests, and hel loped by ICE HSI field offices and 7 convictions. These investigations are initiated and deve s, informants, complaints, ind ustry leads, and/or other through IPR Center leads, seizure investigative techniques. Operation Surge Protector. The IPR Center initiated Operation Surge Protector in December cking of counterfeit consumer electronics and technology 2016 to target the sale and traffi rgers, smartphones and charging cords. Operation Surge products, such as batteries, cha Protector combines the expertise of HSI, CBP and the Consumer Product Safety Commission (CPSC). In FY 2018, under Operation Surge Protector , HSI initiated 13 cases, conducted 19 arrests, helped secure 17 indict ments and 3 convictions, and se ized approximately $47 million in counterfeit products. Operation Plastic Beauty. Operation Plastic Beauty to In January 2015, the IPR Center initiated combat the sale of counterfeit personal healthcare and beauty p roducts. Through Operation Plastic Beauty (which combines the expertise of HSI, CBP, and FDA-OCI), the IP R Center partners with industry and other entities associated with the h ealthcare and beauty product community. In FY 2018, under Operation Plastic Beauty , HSI initiated 10 cases, conducted 3 arrests, helped secure 1 indictment and 10 convictions, and sei zed $3.7 MSRP in counterfeit products. 69

104 D EPARTMENT OF J USTICE 70

105 EPARTMENT OF J USTICE D Department of Justice Appendix for FY 2018 Annual Report 2 submits this Fiscal Year 2018 (“FY The Department of Justice (the “Department” or “DOJ”) 2018”) annual report to the Unite d States Congress pursuant to Section 404 of the Prioritizing Resources and Organization for Inte llectual Property Act of 2008 (“PRO IP Act” or “Act”), Pub. L. No. 110-403. The Act imposes a number of annual reporting requirements on the Attorney General, including actions the D epartment has taken to implemen t Title IV of the Act (“Department of Justice Programs”) and “a summary of the effort s, activities, and resources the [Department] has allocated to the enforcement, investigation, and prosecution of intellectual property crimes.” The Act requi res similar reporting by the Di rector of the Federal Bureau of Investigation (“FBI”) on its intellectual property (“IP”) enfor cement efforts pursuant to Title IV of the Act. To the extent a particular reque st seeks information maintained by the FBI, the Department respectfully refers Congress to the FBI Fiscal Year 2018 Report to Congress on Intellectual Property Enforcement (“FBI’s Annual Report”). Section 404(a) of the PRO IP Act requires the Attorney General to report annually to Congress on the Department’s efforts to i mplement eight specified provis ions of Title IV during the prior fiscal year. Those provisions and t he Department’s efforts to implement them during FY 2018 30, 2018) are set forth bel ow. ( i.e. , October 1, 2017 through September In addition, working closely with t he Intellectua l Property Enforcement he Office of t Coordinator (“IPEC”), the Depar tment contributed to the FY2017- 2019 Joint Strategic Plan on Intellectual Property Enforcement, as it did with the 2013 Joint Strategic Plan on Intellectual Property Enforcement (June 2013), the Administration’s Strategy on Mitigating the Theft of U.S. Trade Secrets (February 2013), the Administration’s White Paper on Intellectual Property Enforcement Legislative Reco mmendations (March 2011), and the I PEC’s annual reports, among other things. The Department continues to participate in a number of IPEC-led working groups. State and Local Law (a) (1) Enforcement Grants ssued under Section 401, the number and identity of State and local “(1) With respect to grants i law enforcement grant applicants, the number of grants issued, the dollar value of each grant, including a breakdown of such value showing how the recipient used the funds, the specific purpose of each grant, and the reports from reci pients of the grants on the efficacy of the program supported by the grant. The Department of Justice shall use the information provided by the grant recipients to produ ce a statement for each individual grant. Such statement shall state whether each grantee has accomplished the pur poses of the grant as established in Section 401(b). Those grantees not in comp liance with the requirements of th is title shall be subject, but 2 Appendix A contains a glossary o f acronyms referenced througho ut this report. 71

106 not limited to, sanctions as described in the Fi nancial Guide issued by the Office of Justice Programs at the Department of Justice.” In FY 2018, the Office of Justice Pr ograms (“OJP”) awarded gran ts to support state and local IP law enforcement task forces under the statutory authority of th e Department of Justice Appropriations Act 2018, Pub. L. No. 115-141, 132 Stat. 348, 4 21, and as informed by Section ctual Property Enforcement P rogram (“IPEP”), as the grant 401 of the PRO IP Act. The Intelle rovide national support through training and technical program is known, is designed to p assistance and improve the capacity of state and local criminal justice systems to address criminal IP enforcement, inc luding prosecution, prevention, training, and technical assistance. Under the program, grant recipien ts establish and maintain effective collaboration and coordination between state and lo prosecutors, multi-jurisdictional cal law enforcement, including task forces, and appropriate feder al agencies, including the FB I and United States Attorneys’ Offices. The information shared und er the program includes inf ormation about the investigation, analysis, and prosecution of ma tters involving IP offenses as t hey relate to violations of state and local criminal statutes. The program is administered by the Bu reau of Justice Assistance (“BJA”), a component of OJP. In FY 2018, OJP was able to gran t seven awards totaling $2,253,259 to local and state law enforcement and prosecutorial a gencies. The following FY 2018 new awards cover expenses ng the public to prevent, deter, related to: performing criminal enforcement operations; educati and identify criminal violations of IP laws; establishing task forces to conduct investigations, forensic analyses, and prosecuti ons; and acquiring equipment to conduct investigations and forensic analyses of evidence. Award Number Grantee Amount 2018-H2197-CA-IP City of Los Angeles, California $400,000.00 City of Portland, Oregon $400,000.00 2018-H2188-OR-IP North Carolina De partment of the Secretary of State $400,000.00 2018-H2178-NC-IP 2018-H2198-TX-IP City of Houston, Texas $400,000.00 2018-H2080-TX-IP ntonio Police Department $400,000.00 The City of San A 2018-H2179-CA-IP County of Los Angeles $400,000.00 2018-H2195-KY-IP Louisville Metro Government $24,999.99 Since the inception of the pr ogram, OJP has awarded $28,610,772 in grants to support state and local law enforcement agencies , training and technical assistan ce providers, and an IP public education campaign. Of this tot al amount of funding, state and local law enforcement agencies 72

107 have received $21,312,108. Throughout the duration of the prog ram, these agencies have made seizures totaling $675,525,017, which includes counterfeit merc handise and other property valued at $629,053,308, and $16,471,705 in currency. July 1, 2017 to June 30, 2018, grantees reported seizures totaling During a one-year period from $143,296,457 ($141,902,981 in counterfeit merchandise and other property, and $1,393,476.27 in currency). Over this same one-year period, grantees engaged in the following law enforcement activities: or violations of IP laws;  423 individuals were arrested f  arrants were served; and 187 state and local IP search w 428 piracy/counterfeiting organiza  tions were disrupted or disma ntled. grants include: Examples of how state and local l aw enforcement used prior IPEP  t counterfeit “Tide” After a City of Austin Detective viewed a local news story abou micals being sold in five-poun d buckets in the believed to contain dangerous che Austin area, the Criminal Conspiracy unit researched and discov ered four stores where this counterfeit product was sold. Initially, 188 five-p ound gallon buckets were seized, and a distributor w as identified. In addition, HS I Dallas seized an ounterfeit “Tide;” police in Los Angeles and Houston additional 125 buckets of the c also seized counterfeit “Tide.”  The City of Phoenix Police Depart ment’s program focused on mult iple areas, rfeit medicine, investment fr aud, and cargo theft. including money laundering, counte The investigators identified supply lines for counterfeit medic ine flowing into immigrant communities, targeted seven locations, and seized over 100,000 doses of counterfeit medicine. Several s ictments of eight tore owners were indicted. Ind nt fraud and money laundering also are pending. The suspects involved in investme ation involving a cargo theft ring consisting of a program also conducted an investig third party delivery driver for Amazon and his associates. The ring leader used a stolen identity to secure employment at an Amazon fulfillment c enter; while working at the facility, he sto le pallets that were assigned to other d rivers. The Phoenix police executed search warrants that r of thousands of dollars esulted in the recovery of tens in stolen cargo, and two subj ects were indicted. BJA also continues to support one -day training events on IP rig hts for state and local law eements with the National enforcement agencies across the country through cooperative agr e 30, 2018, NW3C White Collar Crime Center (NW3C). Between July 1, 2017 and Jun 3 During conducted these training sessions for 234 attendees from 103 ag encies in 8 locations. this time, NW3C also conducted on site technical assistance visi ts for two IPEP Grantee task 3 Training sessions occurred in Mes a, AZ; Atlanta, GA; Humble, T X; Commerce, CA; Gonzales, LA; Sayreville, NJ; Hartford, CT; and Baton Rouge, LA. 73

108 forces and provided training to 40 s tudents through NW3C’s online IP resource in order to improve their investigative and pr osecutorial approaches to the problem of IP theft. Since the inception of the program, BJA has supported the follo wing:  es from 1,246 agencies; 104 trainings for 2,404 attende  16 seminars for 538 attendees from 185 agencies; and or 399 attendees from 118 agencies. 33 technical assistance visits f  Examples of how attendees utilize d the training and technical a ssistance include:  An attendee at an NW3C training i n San Francisco modeled an inv estigation after a case example to launch an invest igation into area liquor stores selling counterfeit goods. The investigation expanded t o certain flea market vendo rs, and ultimately led to a primary supplier who maintain ed a local warehouse. A crim inal search warrant was served and numerous pallets of thousands of infringing good s valued roughly at as $65,000.00 in cash. Federal criminal charges are $280,000 were seized, as well now pending against the supplier.  NW3C recently provided technical assistance to the St. Louis Po lice Department. This assistance included instruction on writing and properly ex ecuting search warrants related to IP theft, as well as direct work with atten dees who were preparing to launch several investigati ons throughout the state. Through this engagement, the St. Louis Police were able t o obtain search warrants on numerou s targets selling counterfeit goods in t he St. Louis area. (a) (2) Additional Agents of FBI “(2) With respect to the additiona l agents of the Federal Bureau of Investigation authorized under tions and actions in which such paragraphs (1) and (2) of section 402(a), the number of investiga agents were engaged, the type of each action, the resolution of each action, and any penalties imposed in each action.” Please see the FBI’s Annual Report, which will be submitted sep arately pursuant to Section 404(c) of the PRO IP Act. (a) (3) FBI Training “(3) With respect to the training program authoriz ed under section 402(a)(4), the number of agents of the Federal Bureau of Investigati on participating in such program, the elements of the training program, and the subject matters covered by the program.” 74

109 Please see the FBI’s Annual Report, which will be submitted sep arately pursuant to Section 404(c) of the PRO IP Act. (a) (4) Organized Crime Plan “(4) With respect to the organi zed crime plan authorized under s ection 402(b), the number of organized crime investigations and prosecu tions resulting from such plan.” As in FY 2009 through FY 2017, Congress did not appropriate fun ds to support Section 402(b) 4 of the PRO IP Act in FY 2018. Nevertheless, the Department has continued to take a number of actions in an effort to implement this provision. The actions, described below, include (1) increased information sharing and coordination and (2) training and outreach. However, the Department will not be able to provide a specific number of pro secutions directly resulting from these increased efforts for at least two reasons. First, the D epartment can retrieve statistical information from its database based on the statute charged but not based on the type of defendant or group that committed the offense. Second, it is difficult to determine whether prosecutions involving organized crime groups have resulted di rectly from th ese organized crime plan efforts or other ongoing efforts. ports for fiscal years 2009 through s detailed in PRO IP Act Re In addition to the ongoing activitie to address this important issue: 2018, the Department has taken the following additional actions Increased Information Sharing and Coordination The Department, through the Crimi nal Division, is continuing to coordinate with federal investigatory agencies to work w ith the International Organized Crime Intelligence and ffort to develop and implement Operations Center in an ongoing e a mechanism to both contribute data to the Center t o address intellig ence gaps as t hey relate to IP, among other things. l, intelligence, and financia l support to investigations where The Center has provided operationa international organized crime gr oups are involved in IP offenses. Training and Outreach In FY 2018, the Computer Crime and Intellectual Property Sectio n (“CCIPS”) of the DOJ’s Criminal Division has continued to strengthen the Department’s ability to combat organized IP 4 of appropriations to carry Section 402(b) provides that “[s]ubject to the availability out this subsection, and not later than 180 days afte r the date of the enactment of this Act, the Attorney General, through the United States Attorneys’ Offices , the Computer Crime and Intell ectual Property section, and the Organized Crime and Racketeering section of the Department of J ustice, and in consultation with the Federal Bureau of Investigation and other Federal law enforceme nt agencies, such as the Department of Homeland Security, shall create and implement a comprehensive, long-range plan to investigate and prosecute international organized crime syndicates engaging in or supporting crimes relating to the theft of intellectual property.” 75

110 crime through training and outreach with interna tional counterparts and organizations, which often encounter IP crime committed by organized crime groups. These training and outreach activities are described in section (a) (7) (B) of this Report. Executive Order On February 9, 2017, President Trump issued an Executive Order on Enforcing Federal Law with Respect to Transnational Cr iminal Organizations and Preven ting International Trafficking. DOJ is working together in partne rship with the Department of S tate, Department of Homeland Security, and the Office of the D ce to implement Executive Order irector of National Intelligen 13773. As part of this implementation, DOJ will continue to address the links between transnational criminal organizations and IP crime. (a) (5) Authorized Funds Under Section 403 “(5) With respect to the aut horizations under section 403— A. the number of law enforcement offic ers hired and the number trained; B. the number and type of investigations and pr osecutions resulting from the hiring and training of such law enforcement officers; C. any such prosecutions; the defendants involved in any penalties imposed in each such successful prosecution; D. E. the advanced tools of forensic science proc ured to investigate, prosecute, and study computer hacking or intelle ctual property crimes; and F. the number and type of investigations and prosec utions in which such tools were used.” Section 403 related to funds appropriated during FY 2009-2013. No funds were appropriated under this section or expe nded during FY 2018 based on funds previously appropriated under this section. Information about the cases, defendants, and types of investigations carried out by the Department may be found i n greater detail below. Please see the FBI’s Annual Report, provided separately under S ection 404(c) of the PRO IP Act, for details on FBI allocation of resources. (a) (6) Other Relevant Information The Department did not receive a ny authorizations under Section s 402 and 403 of the PRO IP Act in FY 2018. 76

111 (a) (7) Efforts, Activities a nd Resources Allocated to the En forcement of IP Crimes s, activities, and resources th “(7) A summary of the effort e Department of Justice has on of intellectual property allocated to the enforcement, investigation, and prosecuti crimes, including – (A) the Department of Justice related to the a review of the policies and efforts of prevention and investigation of intellectual property crimes, including efforts at the Office of Justice Programs, the Cr iminal Division of the Department of Justice, the Executive Office of United Stat es Attorneys, the Office of the Attorney General, the Office of the Deputy Attorney General, the Office of Legal Policy, and any other agency or bureau of the Department of Justice whose activities relate to intellectual property; (B) a summary of the overall successes a nd failures of such policies and efforts; (C) a review of the investigative and pr osecution activity of the Department of Justice with respect to intellect ual property crimes , including – (i) the number of investigations initiated related to such crimes; (ii) the number of arrests re lated to such crimes; and (iii) the number of prosecutions for such crimes, including— volved in such prosecutions; the number of defendants in (I) (II) sulted in a conviction; and whether the prosecution re (III) the sentence and the statutory ma ximum for such crime, as well as the average sentence imposed for such crime; and a Department-wide assessment of the staff, financial resources, and other (D) training) devoted to the enforcement, resources (such as time, technology, and investigation, and prosecution of intellect ual property crimes, including the number of investigators, prosecutors, and forensic specialists dedicated to investigating and prosecuting inte llectual property crimes.” (a)(7)(A) Review of the Department’s Policies and Efforts Relat ing to the Prevention and Investigation of IP Crimes The Department investigates and p rosecutes a wide range of IP c rimes, including those involving e and prosecutorial copyrighted works, trademarks, and trade secrets. Primary investigativ ited States Attorneys’ Offices, responsibility within the Department rests with the FBI, the Un CCIPS in the Criminal Division, the Counterintelligence and Exp ort Control Section (“CES”) in the National Security Divisi on (“NSD”), and, with regard to off enses arising under the Food, Drug, and Cosmetic Act, the Consum er Protection Branch of the Civil Division. Each of these components is described briefly below. 77

112 In addition to enforcing existing criminal laws protecting IP, the Department has continued its ating criminal IP laws, including: legislative developments upd tradition of contributing to major y for creating a federal civil the Defend Trade Secrets Act of 2016, which was notable not onl cause of action for misappropria tion of trade secrets, but also increased criminal fines for eal commercial trade secrets, a nd allowed prosecutors to bring organizational defendants who st oreign and Economic Espionage racketeering charges based on the theft of trade secrets; the F ch increased fines for thef t of trade secrets committed Penalty Enhancement Act of 2012, whi with the intent to benefit a fo reign entity; the Theft of Trade Secrets Clarification Act of 2012, which clarified that the Economic Espionage Act applies to trad e secrets that are “related to a product or service used or intended for use in interstate or fo reign commerce”; the National Defense Authorization Act for FY 2012, which enhanced penalties for certain offenses involving counterfeit military goods; the Food and Drug Administration Sa fety and Innovation Act, which created a new offense for trafficking in counterfeit drugs; the PRO IP Act of 2008; the Family Entertainment and Copyright Act of 2005, which criminalized “camcording” (the illegal copying of movies in a theater) and una uthorized distribution of pre-re lease works over the Internet; the No Electronic Theft Act of 1997, w hich criminalized the unautho rized reproduction and distribution of copyrighted wor ks even without a commercial pur pose or financial gain; and the Economic Espionage Act of 1996, whi ch criminalized the theft of trade secrets, including 5 economic espionage. The Department made substantial contributions to the criminal e nforcement proposals contained aper on Intellectual Property En in the Administration’s White P forcement Legislative Recommendations (Ma rch 2011), the majority of which (described above) were en acted into law, nt by online streaming. The ies for copyright infringeme with the exception of felony penalt Department looks forward to worki rs additional proposals. ng with Congress as it conside The Department coordinates clos ely with IPEC in addressing the Administration’s priorities on rategic Plan (“JSP”) on IP enforcement and implementing the IPEC’s FY2017-2019 Joint St t. As part of the JSP implemen tation, the Department Intellectual Property Enforcemen participates in a variety of int eragency working groups designe d to address topics including ders; money laundering / crimin al financing; engagement with engagement with private stakehol other countries; domestic appli cation of the “Whole of Governme nt” and “Specialized Office” approaches to IPR protection and enforcement; storage, destruct ion, and disposal of seized counterfeit goods; trade secrets / cybersecurity; and advancing the JSP’s “Calls for Research.” CCIPS and CHIP Program The Department carries out its ov erall IP criminal prosecution mission through the United States Attorneys’ Offices and CCIPS, whi ch works closely with a network of over 270 specially-trained federal prosecutors who make up the Department’s Computer Hacki ng and Intellectual Property (“CHIP”) program. 5 For an overview of the Departmen t’s policies and efforts in the five years prior to the enactment of the PRO IP Act in October 2008, the D epartment’s PRO IP Act First A nnual Report 2008-2009 may be found online at https://www.justice.gov/iptf/pro-ip-act-reports . The Department’s FY 2010-FY 2016 PRO IP Reports are available at the same location. 78

113 CCIPS is a section within the C riminal Division consisting of a specialized team of forty er and IP crimes. Fifteen orcing laws related to comput prosecutors who are devoted to enf CCIPS attorneys are assigned exclu sively to IP enforcement. Th ese attorneys prosecute criminal stigative agen ts in the field , and help develop and implement cases, assist prosecutors and inve e priorities. CCIPS attorneys are the Department’s overall IP enforcement strategy and legislativ available to provide advice and guidance to agents and prosecutors on a 24/7 basis. CCIPS attorneys also provide training on c riminal enforcement of IP l aws to prosecutors and investigative agents both domestically and abroad. CCIPS also houses the Cybercrime Lab, which provides support in evaluating digital evidence in IP cases. The Lab is currentl y staffed with nine computer fore nsics experts. In addition to evaluating digital evidence, the Lab’s experts have provided ex tensive training on the use of s around the world. digital forensics tools in IP cases to law enforcement audience CCIPS continues to place a high priority on fostering internati nd coordination onal cooperation a of criminal IP enforcement effo rts. The Section has developed relationships with foreign law enforcement through internationa l casework as well as through t raining and outreach. An important component of the Departm ent’s internati onal enforceme nt efforts is the Intellectual Property Law Enforcement Coordinator (“IPLEC”) program. Throug h the current program, the Department has had an experienced federal prosecutor in Bangkok, Thailand, to coordinate law enforcement activities in Asi a since 2006. The IPLEC program h as continued to expand, and regional IPLECs in Bucharest, with the assistance of the State Department, the DOJ has posted Romania; Hong Kong; Sao Paolo, B razil; and Abuja, Nigeria. experienced and s The CHIP program is a network of pecially-trained federal prosecutors who aggressively pursue computer crime and IP offenses. Each of th e 94 United States Attorneys’ Offices Offices has one or more CHIP coordinator. In addition, 25 Unit ed States Attorneys’ 6 o or more CHIP attorneys. have CHIP Units, with tw CHIP attorneys have four major areas of offenses; (2) serving as the responsibility including: (1) pr osecuting computer crime and IP district’s legal counsel on matte rs relating to those offenses and the collection of electronic evidence; (3) training prosecuto rs and law enforcement personne l in the region; and (4) conducting public and industry outreach and awareness activitie s. CES and the NSCS Network Within NSD, CES—one of NSD’s principal litigating components—is responsible for coordinating and conducting inves a wide variety of national tigations and prosecutions of 6 CHIP Units are currently located in Alexandria, Virginia; Atlanta, Georgia; Austin, Texas; Baltimore, Maryland; Boston, Massachusetts; Brooklyn, New York; Chicago, I llinois; Dallas, Texas; Denver, Colorado; Detroit, Michigan; Kan sas City, Missouri; Los Angeles , California; Miami, Florida; Nashville, Tennessee; Newark, New Jersey; New Haven, Connecticut; New York , New York; Orlando, Florida; Philadelphia, Pennsylvania; Pitts burgh, Pennsylvania; Sacrament o, California; San Diego, California; San Jose, California; Seattle, Washington; and Washington, D.C. 79

114 7 security offenses, including economic espionage. In June 2015, NSD, recognizing the eat that economic espionage po ses to the U.S. national and increasingly acute and costly thr economic security, released its “ the Economic Espionage Threat.” Strategic Plan for Countering This plan aims to heighten aware ness of the threat in order to deter and mitigate economic espionage. The plan also seeks t o coordinate efforts within th e government to counter the threat, including through operational disr uption, increased and improve d training, and the provision of technical advice and expertise . In January 2017, CES released its “Strategic Plan for Countering the National Security Cyber Thre at,” which recognizes that our nation’s adversaries are also stealing intellectual property proposes a strategy specifically through cyber-enabled means and designed to disrupt such effort ess of implementing both plans. s. NSD is currently in the proc In 2012, the Department establishe d the National Security Cyber Specialists (“NSCS”) Network to create a “one-sto p-shop” for attorneys, investigators, and m embers of the private sector looking to combat national securi ty cyber thefts—including econ omic espionage and trade secret al tools. Each U.S. Attorney’s O theft—with all appropriate leg ffice has at least one representative to the NSCS Ne twork, and in each of the last six years NSCS Network representatives have convened i n the D.C. area for specialized training focusing on legal and other issues at the intersection of national security and cybersecurity. The NSCS representative leagues within the relevant U.S. provides technical and speciali zed assistance to his or her col ation with the Department’s a point of contact for coordin Attorney’s Office, and serves as headquarters. At headquarters, all NSD components, CCIPS, and other relevant sections of the Criminal Division are members of the Network. The Department r elies on the NSCS Network to disseminate intelligence and other information to the field, to train prosecutors on investigating t national security cyber national security cybercrimes, and to coordinate and de-conflic investigations. Interagency Coordination In addition to investigating and pros ecuting IP crime, the Department has worked closely with lectual Property Rights other federal agencies directl y, and through the National Intel 8 Coordination Center (“IPR Center”), to improve IP enforcement domestically and overseas. These activities have included t raining investigators and prose cutors in the investigation and 7 In 2015, CES changed its name from on” to better reflect the scope of its the “Counterespionage Secti work. 8 “CBP”), the Federal Bureau of ustoms and Border Protection ( These federal agencies include C ice, the Food and Drug Administration’s Investigation (“FBI”), the Unite d States Postal Inspection Serv International Trade Administration, the Office of Criminal Investigations, the Department of Commerce’s stigative Service, the Defense Logistics Naval Criminal Investigative Service, the Defense Criminal Inve nforcement’s Homeland Security Agency’s Office of Inspector General, Immigration and Customs E Investigations (“ICE-HSI”), the United States Nuclear Regulatory Commission, the United States Patent and Trademark Office (“USPTO”), the General Service Administrat ion’s Office of Inspector General, the Office of d Space Administration’s on, the National Aeronautics an Commissi Consumer Product Safety Enforcement, Property Inspector General, the Department of State’s Office of Internat ional Intellectual the Army Criminal Investigation Command’s Major Procurement Fra ud Unit, the Air Force Office of Special Investigations, the U.S. Postal Service Office of Inspe ctor General, and the Federal Maritime Commission. 80

115 ributing to the Office of the Uni ted States Trade Representative’s prosecution of IP crimes; cont Special 301 process of evaluati ng the adequacy of our trading p artners’ criminal IP laws and States government’s IP enforcement regimes; helping to catalogue and review the United training programs abroad; and imp ational program to promote lementing an aggressive intern cooperative enforcement efforts with our trading partners and to improve substantive laws and enforcement regimes in other countries. (a) (7) (B) Summary of Overa ll Successes and Failures of Such Policies and Efforts cally and abroad. Some of The Department achieved notable success in FY 2018 both domesti these efforts are highlighted below: Prosecution Initiatives The Department continues to prio ritize IP investigations and pr osecutions that involve (1) health and safety, (2) trade secret th eft or economic espionage, and ( 3) large-scale commercial he Department has also incr counterfeiting and online piracy. T eased its focus on IP crimes that are committed or facilitated by use of the Internet or perpetra ted by organized criminal networks. (1) Health and Safety The Department’s health and safet y initiative br ings together p rivate, state, and federal it goods posing a danger to enforcement resources to addre ss the prolifera tion of counterfe aceuticals, automotive parts, and and illegally prescribed pharm consumers, including counterfeit er of significant prosecutions, itiative resulted in a numb military goods. In FY 2018, this in including those set forth below: r Selling Counterfeit Airbags.  Defendant Sentenced To Prison Fo On October 4, 2017, to one year and one day in prison and a $5,000 fine for Vitaliy Fedorchuk was sentenced an international scheme to sell counterfeit airbags via eBay an d other internet sales sites. Fedorchuk had pleaded guilty on May 31, 2017, to five counts of mail fraud. Between June 23, 2014, and July 27, 2016, Fedorchuk offered for sale ai rbag modules, covers, and manufacturer emblems at his eBa y online store, redbarnautoparts. Fedorchuk falsely from advertised that the counterfeit airbags were original equipment major automobile manufacturers such as Honda, Fia t, Chrysler, Nissan, Toyota, GMC and Ford.  Drug Dealer Charged In Manhattan Federal C ourt For Selling Heroin And Counterfeit Oxycodone Over The Internet. iguez was arrested and On October 23, 2017, Cristian Rodr charged with one count of distributing and possessing with inte nt to distribute heroin and oxycodone. Since at least May 2016, Rodriguez and his co-conspirators anonymously sold and distributed controlled s ubstances over th e Internet vi a online marketplaces and “dark web” sites. Rodriguez shipped various prescription drugs, including counterfeit oxycodone, which was actually mad e of heroin and other substanc es, to individuals across the United States. 81

116 Dominican National Arrested and Charged with Fentanyl Conspiracy Including the  Distribution of Counterfeit Pain Pills. On December 20, 2017, Santiago Pena was charged with conspiracy to distri bute 40 grams or more of fenta nyl. The charge stems from Pena’s participation in a large-scale fentanyl and heroin trafficking ring that was dismantled in August 2017. Pena is the seventh defendant relat ed to the drug trafficking operation to be charged in feder al court; approximately 10 othe r defendants have been charged in state court. A lengthy wiretap investigation reveal ed that James Ramirez, an individual charged separately, supplied large-quantities of fentanyl and heroin to drug o the indictment, Pena brokere d fentanyl pill deals on dealers on Cape Cod. According t ct Ramirez with a fentanyl pill supplier. Pena pleaded Ramirez’s behalf, helping to conne guilty on March 19, 2018, and is scheduled to be sentenced on N ovember 27, 2018. Three Individuals Sentenced for Opera  ting an Illegal Steroid and Counterfeit On February 1, 2018, Ryan Anthony Sikora was sentenced to 41 Prescription Drug Lab. phy was sentenced to 12 months, and John Joseph months in prison, Ariel Anna Mur Bush, II was sentenced to 8 months teroid and counterfeit for their involvement in a s prescription drug lab in Northwest Florida. The three received their sentences after pleading guilty to conspiracy charges for importing, manufacturing, and distributing anabolic steroids as well as counterfeit prescription drugs. Th e investigation began when U.S. Postal Inspectors determine d that large amounts of steroid and counterfeit various locations in prescription drug ingredients we re being shipped from China to eit drugs online using ida. They marketed the counterf South Alabama and Northwest Flor a” and they would typically process the orders through the brand name “Future Pharm encrypted email, and then use the U. S. Postal Service to send the contraband products across the United States.  Four Individuals Indicted For Trafficking In Counterfeit Goods. On March 7, 2018, Carlos Enrique Velázquez-Gines, M am Ivette Flores- ayra Evelise Gines-Otero, Nori nd wire fraud Deleon, and Vanessa Marrero-Hernández, were charged with mail a ing in counterfeit goods, introducing misbranded articles conspiracy, mail fraud, traffick into interstate commerce, dist ribution of a controlled substanc e, international money laundering, and smuggling. Accordi ng to the indictment, from a t least on or about ocated in China, and October 3, 2013, defendants purchas ed from overseas suppliers l doms, and cosmetics that , dietary supplements, latex con imported into the United States were counterfeit and/or misbranded under the Federal Food, Drug , and Cosmetic Act. s” on platforms such as Defendants marketed and sold the products through “online store eBay.com and Bonanzo.com. Marrero-Hernández pleaded guilty on October 2, 2018, and Flores-Deleon pleaded guilty on October 18, 2018. The tria l for Velazquez-Gines and Gines-Otero is scheduled to being on December 4, 2018.  Six Massachusetts Defendants Sentenced for Roles in Count erfeit Steroid Conspiracy. On March 15, 2018, Tyler Baumann was sentenced to 120 months incarceration; on March 15, 2018, Kathryn Green was sentenced to 1 year and 1 day incarceration; on March 30, 2018, Phillip Goodwin was sentenced to 130 months incarceration; on April 25, 2018, Melissa Sclafani was sentenced to 1 year and 1 day in carceration; on June 20, 2018, Brian Petzke was sentenced t o 2 years’ incarceration and 2 years of supervised 82

117 release; and on June 20, 2018, Elizabet h Green was sentenced to 2 years of probation. y to various offenses, including trafficking in Baumann and Goodwin pleaded guilt f conspiracy to distribute counterfeit drugs. Kathryn Gr een pleaded guilty to one count o controlled substances. Sclafa ni pleaded guilty to conspiracy to distribute counterfeit of conspiracy to distribute steroids. Petzke and Elizabeth Green pleaded guilty one count 12, 2017, the controlled substances. From approximately May 2015 until April defendants manufactured steroi d products made from s that they purchased raw material at were also ordered teroids using “Onyx” labels th overseas and marketed as “Onyx” s from overseas suppliers. Onyx, now owned by Amgen Inc., is a l egitimate pharmaceutical company that does not manufacture steroids. The defendants sold the steroids to customers across th e United States using email and social media platforms, as Western Unio collected payment through money remitters, such n and MoneyGram, and used false identifications and multiple remitter locations to pick up the proceeds.  and Adulterated Botox to Canadian Pharmacist Sentenced for Distributing Counterfeit Local Doctors. On April 4, 2018, Nikhil Buhecha pleaded guilty and was sentenc ed to t, misbranded, and 36 months’ imprisonment for conspiring to distribute counterfei hipments to two doctors adulterated Botox® into the United States, including multiple s located in St. Louis County, Mi ssouri. Buhecha owned and operated a sophisticated wholesale drug distribution business involving multiple persons in Canada, Panama, and Turkey and shipped it to m ultiple U.S. doctors Turkey. Buhecha sourced Botox® from fety alerts about these in Missouri and other states. T he FDA issued several public sa events.  Mexican Nationals Plead Guilty to Traffi cking in Counterfeit Goods by Operating Counterfeit Airbag Business in Albuquerque. On May 9, 2018, Two Mexican nationals entered guilty pleas to operating a counterfeit airbag business out of their residence in Albuquerque, New Mexico. Dina Gonzalez-Marquez and Emilio Gonzalez-Marquez, conspired to traffic in count erfeit goods from January 2015 to March 2017, by operating a business that sold counterfeit airbag modules and airbag cove rs out of their Albuquerque residence. They facilitated the conspiracy by listing and selling counterfeit online, shipping the counterfe airbag modules and airbag covers it goods to purchasers, and conducting in person sales of the counterfeit goods.  South Carolina Couple Sentenced to a Total of 138 Months in Prison for Trafficking Misbranded Pet Medicine. On May 9, 2018, David Haisten Counterfeit Goods, Including and Judy Haisten were sentenced to 78 and 60 months of incarceration, respectively. A jury found the Haistens guilty i n October 2017 of conspiracy as well as six counts of violating the Federal Insecticide , Fungicide, and Rodenticide A ct, five counts of distributing misbranded animal drugs, and two counts of traffic king in counterfeit goods. The defendants’ products, includi ng pesticides that are extreme ly toxic in the wrong dose, posed a serious risk to animals and humans.  Long Beach Man Sentenced to Over 26 Yea rs in Prison for Leading Counterfeit Opioid Scheme that Distributed Fentanyl Analogue. On July 9, 2018, Gary Resnik was sentenced to 320 months in federal prison. Resnik was the lead er of a narcotics 83

118 powerful fentanyl analogue fr om China and produced distribution ring that imported a hundreds of thousands of opioid pills that were distributed in bulk across the nation. Resnik pleaded guilty in August 2017 to two felony offenses—con spiracy to manufacture ng acetylfentanyl and ecstasy) and distribute narcotics (includi , and possession with the intent to distribute acetylfenta nyl. Resnik admitted to importing from China bulk chemicals, including acetylfenta nyl that were used to manufactu re opioid pills. His drug at were used to make pills organization also illegally imported pill presses from China th house. A co-defendant in homemade labs in a Long Beach storage unit and Baldwin Park in this case – Christopher Bow sentenced in May en, of downtown Los Angeles – was 2018, to 320 months in federal priso n for participating in the drug-trafficking conspiracy.  Two Indicted for Trafficking Counterfe it Oxycodone Pills Containing Fentanyl. On July 19, 2018, Alfredo Sanchez of Mader a, and Saybyn Borges, of Sacr amento, were indicted on charges relating to their sc xycodone pills that heme to distribute counterfeit o contained Fentanyl. Specifically, the defendants were charged with conspiracy to distribute fentanyl, distri bution of fentanyl, possession with intent to distribute fentanyl, and being a felon in possession of a firearm. According to oth er court filings, Sanchez nterfeit oxycodone pills sale of approximately 7,500 cou and Borges were involved in the that contained fentanyl, a synthetic opioid.  On August Cheektowaga Man Pleads Guilty to Buying and Selling Counterfeit Airbags. 30, 2018, Raymond Whelan pleaded guilty to conspiracy to traffic in counterfeit goods and is scheduled to be sentenced on December 17, 2018. Between June 2015 and March 2016, Whelan and co-defendant Davi d Nichols entered into an agr eement to sell . Whelan would contact Nichols a nd order numerous counterfeit automobile airbags emarks of Honda, Toyota, Nissan, Subaru, Mazda, airbags bearing counterfeit trad Hyundai, Acura, and Mitsubishi. N ichols would then locate manu facturers in China to supply the requested airbags. In order to avoid detection duri ng importation, the airbags were purposefully mislabeled. Onc e imported into the United St ates, Whelan would sell the airbags as genuine used air bags on eBay utilizing the name Rayscarparts71. Co- defendant David Nichols was pr eviously convicted, and is schedu led to be sentenced on January 31, 2019. (2) Protecting American Business from Commercial and State-Sponsored Trade Secret Theft In FY 2018, Department prosecutors and the FBI have continued t o emphasize the investigation and prosecution of commercial and s tate-sponsored trade secret theft. This continuing focus has led to the investiga tion and prosecution of numerous trade secr et thefts and economic espionage cases. Recent cases include:  Three Chinese Hackers Charged Firm for Hacking Three Corporations for Commercial Advantage. nd Xia On November 27, 2017, Chinese nationals Wu Yingzhuo, Dong Hao a Lei were indicted for computer hacking, theft of trade secrets, conspiracy and identity theft directed at U.S. and forei gn employees and computers of t hree corporate victims in the financial, engineering and t echnology industries between 20 11 and May 2017. The 84

119 three Chinese hackers work for t he purported China-based Intern et security firm Guangzhou Bo Yu Information Technology Company Limited (a/k/a “ Boyusec”). The rivate corporate entities in indictment alleges that the defendants conspired to hack into p order to maintain unauthorized access to, and steal sensitive i nternal documents and communications from, those ent ities’ computers. For one victim , information that the defendants targeted and stole between December 2015 and March 2 016 contained trade secrets. pionage and Theft of a Trade Secret From  Chinese National Sentenced for Economic Es Company. On January 17, 2018, Jiaqiang Xu w as sentenced to 5 years in pr ison after U.S. pleading guilty to theft of trade secrets and economic espionag e on May 19, 2017. The six-count indictment returned in June 2016 alleged that Xu stol e proprietar y source code from a former employer with the Health and Family intent to benefit the National Planning Commission of the People’s Republic of China. From November 2010 to May 2014, Xu worked as a developer and was granted access to propri etary software and its underlying source code. In May 2014, Xu voluntarily resigned an d subsequently communicated with undercover law enforcement officer that he ha d experience with his tware and proprietary source c former employer’s proprietary sof As a result of the ode. communications, Xu uploaded a functioning copy of the proprieta ry software to an undercover computer network.  Chinese Intelligence Officer Charged with Economic Espionage and Theft of Trade Secrets from Leading U.S. Aviation Companies. On April 1, 2018 a Chinese Ministry of State Security (MSS) operative , Yanjun Xu was arrested in Belgi um, pursuant to a federal complaint, and then indi cted by a federal grand jury in the Southern District of Ohio. The four-count indictment charges Xu with conspiring and attempting to commit aviation trade secrets. Xu was extradited to the United economic espionage and theft of States on October 9, 2018.  Two Businessmen Charged With Conspiring to Commit Economic Espionage for Benefit of Chinese Manufacturing Company. On April 26, 2018, Shan Shi and Gang Liu were charged with conspiracy to comm it economic espionage for the benefit of CBM-Future New Material Science and Technology Co. Ltd. (CBMF), a Chinese company based in Taizhou. Both businessmen were previously indicted in June 2017 for conspiracy to commit theft of trade secrets. A ccording to court records, Shi and Liu conspired with others to commit economic espiona ge and steal trade secrets fro m a U.S. engineering firm that produces syntactic foam, a strong, lightweight materi al with commercial and military uses. Shan, Liu, Uka Kalu Uche, Samuel Abotar Ogoe, Ku i Bo, and Hui Huang were indicted in June 2017 on a charge of conspiracy to commit theft of trade secrets. An additional defendant pleaded guilty to the charge in December 2 017. The superseding indictment includes that charge , adds the conspiracy to commit economic espionage count against Shi and Liu, and inc ludes a federal money laundering conspiracy count 85

120 tenced on August 10, against Shi. Uche pleaded guilty on April 27, 2018, and was sen 2018 to 12 month’s probation. Ogoe pleaded guilty on October 17 , 2018. Court Imposes Maximum Fine on Sinovel Wind Group for Theft of Trade Secrets. On  July 6, 2018, a manufacturer and ex porter of wind turbines base d in the People’s Republic of China was sentenced f or stealing trade secrets from AMSC, a U.S.-based company formerly known as Americ an Superconductor Inc. The Court found that AMSC’s losses from the theft exceeded $550 million, and imposed the maximum statutory fine in the amount of $1.5 million on Sinovel Wind Gr oup LLC. Sinovel was trade secrets, and wire fraud convicted of conspiracy to commit trade secret theft, theft of on January 24, 2018 following a jury trial.  Electrical Engineer Found Guilty for Intending to Convert Trade Secrets from Defense Contractor. On July 9, 2018, Jared Dylan Sparks was found guilty for his co nduct related to a scheme to convert trade sec rets belonging to a defense con tractor, related to, among others, an innovative naval prot .S. Navy. The jury found otype being developed for the U Sparks guilty of six counts of the ft of trade secrets, six counts of uploading trade secrets, and one count of transmitting trade secrets. According to evide nce admitted at trial, Sparks, an electrical engineer, w orked at LBI Inc., a defense contractor that designs and builds unmanned underwater vehicles for the U.S. Navy’s Office of Naval Research and deployable ice buoys for the National Oceanic and Atmospheric Administration. Before iles to his personal ously uploaded thousands of LBI f he left LBI, Sparks surreptiti d file-storage application. account with Dropbox, a cloud-base  Former DuPont Employee Pleads Guilty to Stealing Trade Secrets and Lying to the FBI. of trade secret theft and On July 11, 2018, Josh Harry Isler pleaded guilty to one count ment or representation to the FBI. As part of his guilty one count of making a false state th DuPont, but after plea, Isler admitted that during August 2013, while employed wi having accepted an offer of employment from a competitor, he st ole trade secrets of DuPont. In a plea agreement, Isler admitted that after he accepted employment with a competitor of DuPont in the ethanol fuel enzyme business, he tr ansferred hundreds of DuPont’s electronic files to an e mitted that when he was xternal device. Isler also ad interviewed by the FBI in November 2013, he falsely denied he h ad downloaded files containing proprietary information.  Former Apple Employee Indicted On Theft of Trade Secrets. On July 12, 2018, Xiaolang Zhang was indicted for theft of t rade secrets. According to the Indictment, Zhang is g detailed schematic alleged to have taken a confidential 25-page document containin drawings of a circuit board desi gned to be used in the critical infrastructure of a portion of an autonomous vehicle, knowing tha t the theft would injure t he owner of the trade secrets, Apple, Inc. Court docum ents filed allege that on April 30, 2018, Zhang told Apple personnel that he was resigning from his job so that he could return to China to be closer to his mother who was ill. Apple subsequently learned th at Zhang went to work for X-MOTORS—a company focused on electric automobiles and autonomo us vehicle technology with its headquart ers in China. On July 7, 2018, FBI Agents learned that Zhang purchased a last-minute round- trip airline ticket with no co-travelers , departing for 86

121 Hangzhou, China aboard Hainan Airlin es. Federal agents intercep ted and arrested Zhang Airport after he had passed throu at the San Jose International gh the security checkpoint. On August 1, 2018, Xiaoqing New York Man Charged With Theft of Trade Secrets.  Zheng was arrested in connection w ith a criminal complaint char ging him with stealing (GE). The criminal complaint alleges that on trade secrets belonging to General Electric borate and sophisticated or about July 5, Zheng, an engineer employed by GE, used an ela means to remove electronic file s containing GE’s trade secrets involving its turbine nography to hide data files ng is alleged to have used stega technologies. Specifically, Zhe belonging to GE into an innocuous looking digital picture of a sunset, and then to have e- files, to Zheng’s e-mail h contained the stolen GE data mailed the digital picture, whic account.  Second Former GlaxoSmithKline Scientist Plea ds Guilty to Stealing Trade Secrets to On September 14, 2018, Dr. Tao Li pleaded Benefit Chinese Pharmaceutical Company. GlaxoSmithKline (GSK) for the benefit of guilty to conspiracy to steal trade secrets from wo of his friends, a Chinese pharmaceutical company named Renopharma. Dr. Li and t a, supposedly to ed Renopharma in Nanjing, Chin Dr. Yu Xue and Dr. Yan Mei, creat ty, Renopharma was used as a repository drugs. In reali research and develop anti-cancer regarding of stolen information from GSK. The data contained information multiple biopharmaceutical products under development, GSK research data , and GSK processes regarding the research, devel opment, and manufacturing of biopharmaceutical products. On January 5, 2016, the FBI arrest ed Li and seized his computer on which they found a number of GSK documents contai ning trade secret and confidential information which he 31, 2018. Xue. Xue previously pleaded guilty on August had received from (3) Large-Scale Commercial Counterfeiting and Online Piracy The Department continues to pursu e significant, large-scale pir acy and counterfeiting operations. g nificant prosecutions, including those set In FY 2018, the Department has had a number of si forth below:  Orlando Pair Sentenced For Copyright In fringement Of Microsoft Products And F. Stout, and Kasey Conspiracy To Commit Wire Fraud. On December 1, 2017, Robert tout, were sentence d to 18 months’ imprisonment and 12 months N. Riley, a/k/a Kasey S fraud and copyright of home detention, respectively, f or conspiracy to commit wire infringement relating to the sa le of illegal activation keys fo r Microsoft products. As a part of their sentences, the C ourt also ordered them to pay $1, 480,227, the proceeds of the charged criminal conduct.  Sacramento Man Sentenced To Prison Fo r Criminal Trademark Infringement. On December 15, 2017, Xavier L. Johnson was sentenced to two years and six months in prison and three years of supervis ed release for trafficking in goods bearing counterfeit trademarks. From 2008 to 2011, Joh nson and co-defendant Kristi n Caldwell imported DVDs from China that contained co unterfeit versions of children ’s movies. 87

122  Staten Island Man Sentenced For Trafficki ng Over $2.5 Million In Counterfeit Footwear Through Port Of Newark. On January 23, 2018, Shi Wei Zheng was sentenced to 30 months in prison and two years of s ting to distribute more upervised release for attemp than $2.5 million of counterfeit UGG -brand boots that were ship ped into the Port of September 2016 through February 2017, Zheng recei ved certain shipping Newark. From containers container numbers from an indivi t least three dual overseas that identified a containing counterfeit UGG boots . Cheng asked individuals working at the Port of be examined by U.S. Newark to remove the containers f rom the port before they could Customs and Border Protection. On ce the containers were remove d, Zheng directed that er individuals working for him, who would then distribute the they be delivered to oth boots in New Jersey and elsewhere. racy and Trafficking of Counterfeit Apple Chinese National Pleads Guilty to Conspi  Goods into The United States. On February 2, 2018, Jianhua “J eff” Li pleaded guilty for his role as a counterfeit distributor in a scheme to traffic an d smuggle counterfeit China into the United States. electronics purporting to be Appl e iPhones and iPads, from ompany, Dream y 2014, Li, working through his c From July 2009 through Februar io LaMarca, and others Digitals, conspired with Andreina Becerra, Roberto Volpe, Rosar China more t to smuggle and traffic into the United States from han 40,000 electronic h labels and packaging devices and accessories, including iPads and iPhones, along wit bearing counterfeit Apple trad emarks. Li also received payment s totaling over $1.1 million in sales proceeds from U.S. accounts into his bank acco unts. Becerra, Volpe, and LaMarca have also pleaded guilty to their roles in the conspira cy. LaMarca was sentenced on July 20, 2017, to 37 m Becerra were sentenced onths in prison. Volpe and on October 15, 2018. Volpe was sentenced to 22 months in prison, and Beccerra was sentenced to three years of probation.  Owner of Sharebeast.com Sentenced for Copyright Infringement. On March 22, 2018, Artur Sargsyan, of Glendale, California, was sentenced to five years in prison followed a massive file-sharing by three years of supervised release for his role in operating infrastructure that distribu ted approximately 1 billion copies of copyrighted musical works through Internet downloads. He was also ordered to pay re stitution in the amount of $458,200 and to forfeit $184,768.87. Sargsyan owned and oper ated a number of om. Sargsyan websites including Sharebeast.com, Newjams.net, and Albumjams.c pleaded guilty to copyright infringement on September 1, 2017.  New York Woman Sentenced for Trafficking Over $3 Million In Counterfeit Footwear And Handbags Through Port Of Newark. On May 23, 2018, Xiao Xia Zhao pleaded guilty to trafficking in counter feit goods. F In total, Zhao t rafficked in thousands of pairs of fake Nike footwear, Louis Vuitton handbags, and other counterfeit items, with a total estimated retail value of over $3 million. From November 2013 through February 2017, Zhao received certain shipping container numbers from an indivi dual overseas that identified at least three contai chandise. Zhao asked ners containing counterfeit mer individuals working at the Port of Newark to remove the contain ers from the port before they could be examined by U.S. Customs and Border Protection. On October 22, 2018, Zhao was sentenced to 18 months imprisonment and three years of supervised release. 88

123 California Sentenced for Copyright Infringement. On July 23, 2018, Craig M. Vincent  pleaded guilty to one count of criminal infringement of a copyr ight. Vincent admitted he iolation of Jeppesen used eBay to resell aviation navigational database updates in v NavData. Jeppesen’s Company’s licensing agreement for a trademarked product called NavData includes airport inform aypoints, arrival routes, ation, runway characteristics, w departure routes, terminal procedures and general information t hat a Global Positioning uter needs to navigate an airpl ane to final destination. System or flight management comp Doing business as Merlin Enterprises, Vincent sold NavData cards and required customers to return old data cards to him. On October 15, 2018, Vincent was sentenced to serve three years on federal probation. deral Court With Multimillion-Dollar  Five Defendants Charged In Manhattan Fe On August 7, 2018, defendants Miyuki Suen, Jian Min Huang, Counterfeiting Scheme. Kin Lui Chen, Songhua Qu, and Fangra ng Qu were arrested on char ges of importing hundreds of thousands of athletic shoes from China into the United States. The defendants are each charged with one count of conspiring to tra ffic in counterfeit goods, ounterfeit goods. From and one count of trafficking in c at least in or about January 2016 uly 2018, the defendants impor ted at least 42 shipping up to and including in or about J China. Once containers holding an estimated more than 380,000 pairs of sneakers from the shoes, rendering them nts added trademarked logos to these shoes arrived, the defenda counterfeit. The estimated loss attributable to the defendants ’ efforts amounts to more than $70 million.  On August 10, California Man Sentenced for Trafficking in Counterfeit Sports Apparel. 2018, Seyyed Ali Noori was sentenced to 12 months imprisonment and 12 months of supervised release for traffick ing in counterfeit sports appare l, and ordered to pay restitution to victim com panies, totaling $27, 565.51. Noori h ad pleaded guilty on March dstar Wholesale LLC, a r egional wholesale 30, 2018. Noori owned and operated Gol distributor based in Tracy, C alifornia, and also sold goods at the Galt Flea Market in Galt, California. 22 Charged With Smuggling Millions of Do llars of Counterfeit Luxury Goods From  China Into the United States. On August 16, 2018, six indictments and one criminal complaint were unsealed in feder al court, charging a total of 2 2 defendants with illegally bringing into the United States millions of dollars of Chinese-manufactured goods by smuggling them through ports of entry on the East and West Coas ts. Twenty-one defendants were arrested on charg affic, and trafficking, in es, including conspiracy to tr counterfeit goods; conspiracy to smuggle, and smuggling, counte rfeit goods into the United States; money laundering conspiracy; immigration fraud a nd unlawful procurement of naturalization. The defendants played various ro les in the trafficking of counterfeit goods manufactured in China, brought by ocean-going ships to the United States in 40-foot shipping cont ainers, smuggled through ports o f entry disguised as legitimate imports and distri buted throughout the country. The counterfeit goods included items such as fake Louis Vuitton and Tory Burch handbags, Micha el Kors wallets, Hermes belts and Chanel perfume. 89

124 Domestic Training Department provided a number of training programs for federal, During the past fiscal year, the . These training courses covered a state, and local prosecutors and a gents investigating IP crimes range of IP enforcement issues a nd were designed to increase coordination between prosecutors and investigators as well as coordination among federal, state, and local law enforcement agencies. Examples of such training included: tion with the Executive Offic  In October 2017, CCIPS, in conjunc e of U.S. Attorneys on the prosecution of (“EOUSA”), presented a one-hour webinar for federal prosecutors The presentation inc cases involving counterfeit microelectronics . luded a background on microelectronics production and procurement, relevant law and p olicy, practical guidance in counterfeit trademark investiga tions, and included a case study. In October 2017, NSD, with suppor  t from CCIPS, organized and le d the annual NSCS Training in McLean, Virginia. T he NSCS training builds on the technical skills covered by the annual CHIP conference to address the added complexity of working with classified information and issues related t o the investigation, prosecutio n, and disruption of crimes impacting national security. l Property ed to present its Intellectua Crimes Seminar at  In January 2018, CCIPS was schedul egal Education cancelled the the NAC. Citing the lapse in appropriations, DOJ’s Office of L seminar. The Seminar is an in- d prosecuting trafficking of depth course on investigating an counterfeit goods and services, criminal copyright infringement, and theft of trade secrets, along with significant instruction on electr onic evidence gathering for IP cases. Office presented on the  In March 2018, CCIPS and the District of Kansas U.S. Attorney’s ng Zhang at the National Security trial and conviction of Weiqia Seminar on Export Control, Counterproliferation and Counterintelligence. Zhang, a former rice breeder at Ventria Biosciences in Kansas, provided proprietary rice seeds to membe rs of a visiting Chinese delegation during their vis it to the U.S. in 2013. Zhang was convicted in the District of Kansas of conspiracy to commit theft of trade secrets and relat ed charges in February 2017. ately 25 FBI Supervisory In April 2018, CCIPS presented at FBI Headquarters for approxim  United States v. Sinovel . The presentation focused on tips Special Agents and Analysts on for “investigating a case for trial.”  In April, June, and August 2018, CCIPS presented at Intellectua l Property and Trade Enforcement Investigations cour se at the IPR Center Arlington, Virginia, to approximately 30 HSI and CBP agents. The presen tation covered relevant law a nd policy, provide practical k investigations, and include a case study. guidance in counterfeit trademar In June 2018, CCIPS hosted its annu al CHIP Conference and Train ing at the NAC.  Approximately 150 prosecutors atten ded the four-day event, whic h featured training on a wide range of investigative, litigation, legislative, and techn ology issues. The conference also included multiple breakout sessions, and an optional day with two tracks—a refresher track, and an advanced technology track. 90

125  In July 2018, CCIPS presented to Naval Criminal Investigative S ervice (NCIS) and other federal agents at a day-long tra ining in San Diego, California. The training, organized by the counterfeit microelectronics IPR Center, focused on Operation Chain Reaction, which targets in the government and military supply chains. The presentation covered relevant law and policy, practical guidance in count erfeit trademark investigati ons, and included a case study.  In August 2018, CCIPS presented at FBI’s 2018 National Intellec tual Property Rights ation was titled “What You , Texas. The present ld Office in Dallas Training at the FBI Fie et Theft Prosecution.” CCIPS also presented a case study Need for a Successful Trade Secr er members of federal law about the Sinovel prosecution. Mor e than 50 FBI agents and oth enforcement attended. . rs on the diversification  In September 2018, CCIPS spoke at a symposium at FBI headquarte of transnational crime in the Western Hemisphere. CCIPS gave a presentation focusing on and intellect ual property cri me and cybercrime in Latin the links between organized crime opments and trends in the region America as well as recent devel in these areas. The audience included approximately 150 people, primarily federal law enforcement agents and analysts. International Outreach and Training n of counterfeit goods, to the Global IP crime, from the manufacture and worldwide distributio the sprawling online businesses designed to reap profits from distribution of copyrighted works, continues to grow and change in an effort to stay ahead of law enforcement. As a world leader in efforts to combat criminal IP infringement, the Department acti vely seeks to develop training and technical assistance programs to assist ot her countries in effe ctively enforcing IP laws and reducing the trafficking of pite budgetary constraints, in FY counterfeit and pirated goods. Des 2018, the Department worked extensi vely with its law enforcemen t counterparts around the world. The Department sought to engage foreign law enforcement through meetings of officials, ranging from the Attorney General to line attorneys and agents. Prosecutorial Development, A CCIPS and DOJ’s Office of Overseas ssistance and Training (“OPDAT”) worked with State Depar tment grants and in cooperatio n with other United States agencies in FY 2018 to provide tra effective enforcement of IP laws. ining to foreign officials on to increase cooperation between various law enforcement CCIPS’s IP trainings are designed agencies with responsibility for IP offenses; to utilize variou s types of charges, including economic and organized crime statutes to combat IP crime; and t o increase awareness amongst iciary of the importance of re enforcement officials and the jud ducing counterfeiting and piracy. In FY 2018, the Department, with t he assistance from the State Department, continued to expand the IPLEC program. Experienced DOJ attorneys now serve as regional IPLECs in Bangkok, 9 Abuja, Nigeria. Thailand; Bucharest, Romania; Hong Kong; Sao Paolo, Brazil; and 9 For more information about CCI PS’s international outreach, see https://www.justice.gov/cr iminal-ccips/overseas- work . 91

126 DOJ’s IPLEC Program and Cyber Resident Legal Advisor in Kuala Lumpur SA.O ULO PA • ,/' In addition to the Department’s regional efforts through its IP LEC program, examples of DOJ’s international engagement regarding various IP enforcement inclu de: ASIA Presentation to Chinese Copyright Delegation . In November 2017, CCIPS presented on U.S. ng online piracy, and international cooperation to a 17-person criminal copyright law, combatti delegation from China’s National Copyright Administration, Publ ic Security Bureaus, and Cultural Market Enforcement Agency. The U.S. Patent and Tradem ark Office and OPDAT facilitated the meeting held in Washington, D.C. : In November 2017, CCIPS presented to a delegation of Presentation to Pakistani Delegation e discussion focused on U.S. Pakistani IP government officials and private IP attorneys. Th intellectual property enforcemen t efforts and case studies. CC IPS also discussed Pakistani IP in-line with international best practices and norms through a statutes and ways to bring them comparative analysis with U.S. laws. U.S.-China Joint Dialogue on Counterfeit Pharmaceuticals . In January 2018, CCIPS and DOJ Civil Division’s Consumer Protection Branch, along with the Hon g Kong IPLEC, met with six ficials from the Ministry of P senior Chinese law enforcement of ublic Security’s Public Order Administration to discuss combatting the trafficking of counterfeit pharmaceuticals. The delegation’s trip was coordinated by CCIPS and the IPLEC throug h the U.S.-China Joint Liaison Group’s (“JLG”) Intellectual Property Criminal Enforcement Work ing Group. The JLG is designed to strengthen law enforcement cooperation between the United States and China across a range of issues, including intellectual property. Representa tives from the FDA’s Office of 92

127 nt and Trademark Office also Nationa l IPR Center, and the U.S. Pate Criminal Investigations, met with the delegation. USPTO Workshop on Proliferation of Counterfeit Products in India. In February 2018, the Hong Kong IPLEC traveled to New Del hi, India to serve as an instructor at a workshop sia Office, with assistance fro organized by the USPTO’s South A FDA-OCI, on “Combating m the Proliferation of Substandar d, Unregistered, Unlicensed and Falsified Health and Safety Regulated Products,” with partic ular emphasis on counterfeit ph armaceuticals. Workshop participants included 59 Indian de legates, most from the Centra l Drugs Standard Control Organization (CDSCO); ka; as well as representatives two delegates each from Nepal and Sri Lan from INTERPOL, Her Majesty’s Rev e recently established enue and Customs Service and th Border Force of the United Kingdom, U.S. CBP, and the United Nations Universal Postal Union (UPU). In March 2018, Training Events Promoting Intellectual Property Right Enforcement in Vietnam. the Hong Kong IPLEC and Bangkok IPLEC participated in a series of events promoting IPR enforcement in Vietnam. The Asia IPLECs co-sponsored with the U.S. Embassy and Vietnam’s Ministry of Science and Technology (MOST) a roundtable on IP en forcement in a digital world. The IPLECs met with senior officials at the MOST Inspectorate, which is responsible for coordinating training events for all nine Government of Vietnam (GOV) agencies involved in IPR enforcement. The IPLECs also participated in a roundtable for GOV agencies involved in IPR criminal enforcement, including the Supreme People’s Court, the Supreme People’s rity, as well as priv inistry of Public Secu Procuracy, and the M representing IP rights ate attorneys holders. The IPLECs also gave a n address on IP enforcement at Hanoi Law University, and the (AmCham) roundtable Hong Kong IPLEC participated in an American Chamber of Commerce on innovation and IP sponsored by AmCham ficials of the provincial as well as met with of Department of Science and Tec hnology to discuss training needs. Meeting with Chinese Media Group on Enforcement of Copyright Laws. In April 2018, CCIPS met with representatives from the Shenzhen Media Group (a state-owned media company that owns TV channels and radio statio ns) to discuss copyright enforcement issues as well as U.S. copyright law. Officials from the U.S. Patent and Trademark Of fice, U.S. Copyright Office, U.S. Trade Representative, and IPR Center also participated in the meeting. . In April 2018, CCIPS, the Southeast Asia Presentation at Trade Secrets Workshop in Taiwan ybercrime, and the Hong Kong IPLEC, in conjunction with the FBI Resident Legal Advisor for C Secrets Workshop in Taipei, Ta and the USPTO, presented a Trade iwan. The audience included approximately 175 Taiwanese prosec utors, judges and investigators, and covered Taiwan’s Trade Secrets Act, including presenta tions and panels regarding ident ifying and articulating trade secrets, using protective orders , assessing loss in theft of trade secrets cases, and more. Digital Video Conference with Taiw In May and August an on Intellectual Property Issues. 2018, CCIPS participated in a half-d ay interagency digital vide o conferences on IP issues in Washington, D.C., with 20 Taiwanese government officials includ ing prosecutors from the Taiwanese Ministry of Justice. S pecific topics included intern et piracy, illicit streaming devices, textbook piracy, and amendments to t he Taiwan Copyright Act. 93

128 Meeting with Chinese Law Enforcement Officials to Discuss Coordinated Intellectual Property Cases. In May 2018, CCIPS, and representat ives from the National IPR Center, met with als to discuss ongoing case coope Chinese law enforcement offici ration. This meeting is a continuation of CCIPS’s work under the former U.S.-China Joint Liaison Group’s (“JLG”) Intellectual Property Criminal En forcement Working Group (“IPCE WG”). The JLG was designed to strengthen law enf orcement cooperation between the United States and China across a range of issues, including int ellectual property, and was sub sumed last fall into the U.S.-China Law Enforcement and Cybersecuri ty Dialogue. A CCIPS attorney, who served as co-chair of the nese delegation was led by a D eputy Director General of IPCEWG, led the meeting. The Chi China’s Ministry of Public Security, Economic Crime Investigation Department. In May 2018, CCIPS Presentation to Chinese Delegation on Intellectual Property Rights. addressed a Chinese government delegation in Washington, D.C., on U.S. criminal enforcement of IP rights. The presentation w as a part of the U.S. State De partment’s International Visitor Leadership Program. Meeting with Korean Law Enforcement Official s on Combatting Counterfeit Pharmaceuticals. In May 2018, CCIPS met with offici als from Korea’s Ministry of Justice and Ministry of Food & Drug Safety to discuss best prac tices in investigating and prosecuting counterfeit pharmaceutical cases, as well as the take-down/se izures of related websites. Forum on Criminal Intell . In July 2018, the Hong Kong IPLEC ectual Property Cases 2018 Criminal IP Forum. The nds Protection Committee (QBPC) participated in the Quality Bra Hong Kong IPLEC served as a panelist discussing the potential f or plea bargaining in criminal cases in China. IPR Training for Vietnamese Judicial Officials. In July 2018, the Hong Kong IPLEC and CCIPS, along with HSI, met with justices of the Supreme People’s Court of Vietnam and other etnam Vietnamese judicial officials in Hanoi and Ho Chi Minh City, Vi to provide training on best practices and techniques for criminal enforcement of intellectual property rights. Over the past several years, Vietnam’s na tional legislature has enacted significant amendments to strengthen the country’s criminal intellectual property laws, b ut these changes have thus far not resulted in substantial improve ments in enforcement. The progr am, organized by the Hong developing guidance for lower Kong, is designed to assist Vietnam 's Supreme People’s Court in s, and to improve enforcement ges to Vietnam’s criminal law courts to implement these new chan of IP rights in Vietnam. . In July 2018, the Bangkok IPLEC Colloquium on Intellectual Property Rights in Myanmar presented on criminal enforcemen t of intellectua l property righ ts to an audience of judges from Myanmar at a USPTO/USAID-sponsor ed judicial colloquium on intel lectual property rights. Presentation to Thai Prosecutors on Intellectual Property Crime . In August 2018, the Bangkok IPLEC presented on criminal enfor cement of IP cases to an audie nce of Thai public provincial public prosecutors at a USPTO-Thai Attorney General’s Office-sp onsored workshop. This was one of a series of such works hops throughout Thailand to roll o ut a new manual on criminally 94

129 prosecuting IP violations devel ffice of the Attorney General oped with USPTO support by the O of Thailand for use by Thai public prosecutors. Regional Workshop on Counterfeit Goods in Thailand. In August 2018, the Hong Kong and Bangkok IPLECs, along with the USPTO, presented the “Asia Regional Workshop on Criminal e in Pirated Content and Counter feit Goods.” Approximately Enforcement Against Online Trad ministrative officials from 1 5 Asian nations attended the 120 police, prosecutors, and IP ad workshop. HSI, FDA-OCI, the ASEAN Secretariat, and the EUIPO IP Key program also supported the workshop. Subse quently, on August 24, also in Ba ngkok, the Hong Kong and Bangkok IPLECs participated in op ening the third meeting of the ANIEE, which was established in November 2016 as a successor to the ASEAN Working Group on I P Crime. Presentation at Sixth Asian IP Cr imes Enforcement Network Meeting. In September 2018, DOJ IPLECs in Hong Kong and Bangkok and CCIPS hosted the sixth meet ing of the Asian IP Crimes Enforcement Network in Hong Kong . About ten countries from the region gathered to discuss methods to facilitate the exchange of successful investigation and prosecution strategies in combating domestic piracy and c ounterfeiting crimes, and how to strengthen communication channels to promote coordinated, multinational prosecutions of the most serious offenders. The , presentations by meeting included panel discussions by law enforcement officials representatives of affected industries, and technical and legal discussions from U.S. experts. NORTH AFRICA AND THE MIDDLE EAST In March Workshop on Intellectual Property Offens es Related to Commerce and Terrorism. 2018, the Nigeria IPLEC traveled t o Kuwait, City, Kuwait to instruct on IP offenses in a workshop co-sponsored by the Kuwait Ministry of Commerce and Industry, Anti-Money Funding Administration (KMCI-A ML/CFT) and DOJ Laundering and Counter-Terrorism OPDAT. The workshop was entitle d “Investigating Fraudulent Business Transactions to Prevent unding,” and it included, in addition to the segments on IP Money Laundering and Terrorism F offenses, sections on basic fraud i nvestigations, indicators of fraud, interview techniques and prosecutions, and case scenario s. strategies, evidence needed for In June 2018, CCIPS Judicial Training Conference in Uzbekistan for Uzbekistani Judges. participated in a three-day training conference in Tashkent, Uz bekistan for Uzbekistani judges focusing on protection of intellect ual property rights. The U. S. Patent and Trademark Office, in conjunction with the U.S. Emba ssy in Tashkent, DOJ, and the Uzb ekistani judiciary, organized the conference, which include d around 20 participants. CCIPS gave five presentations on various topics involving intellectual property and IPR enforcem ent in the U.S. and Uzbekistan. CCIPS also led a discussion of a case study and participated in additional panels and discussions as well as a reception at a local nongovernmental organization for a mock trial program they organized in Chorvoq, Uzbekistan f or Uzbekistani and Afghan law enforcement. Presentation to Middle Eastern and Northern Af rican Judges at USPTO’ s Intellectual Property Judicial Exchange. In August 2018, CCIPS presented at the U.S. Patent and Trademar k Office’s Middle Eastern and Northern Afri ca Intellectual Property Judici al Exchange. The audience consisted of forty judges from Algeria, Egypt, Jordan, Kuwait, Oman, the Kingdom of Saudi 95

130 Arabia, and United Arab Emirates igned to provide a . The four-day program was des comprehensive overview of U.S. intellectual property law. CCIP S presented on DOJ’s priorities in combatting intellectual property infringement and provided a n overview of criminal trademark, copyright, and theft of trade secrets law as well as sentencing issues. CENTRAL AND SOUTH AMERICA Regional Intellectual Property Rights Enforcement Program in Brazil. In March 2018, the ional IPR enforcement program organized by HSI Colombia Brazil IPLEC participated in a reg and the IPR Center for approxi d customs officials from the mately 40 police, prosecutors, an Ecuador, Colombia, Peru, and Guatemala. The IPLEC focused on IPR prosecutions involving the Internet, and provided an overv iew of online investigation principles and the basics of electronic evidence. The IPLEC a lso visited the Port in Cartagena, and met with both CBP and Colombian customs officials to di with the importation of scuss their challenges coping counterfeit goods. South America Regional Workshop on Measures Against Trade in Illicit and Counterfeit Agricultural Chemicals. In April 2018, CCIPS assisted DOJ I P Law Enforcement Coordinato r Dan Ackerman, who is based in S ao Paulo, in hosting a DOJ and U SPTO-sponsored “Workshop on Measures Against Trade in Illi al Chemicals” in Iguazu Falls, cit and Counterfeit Agricultur Brazil. Approximately 50 government officials from regulatory, customs, investigative, and prosecutorial agencies in the Un ited States, Brazil, Paraguay and Argentina gathered to discuss methods to facilitate the excha nge of successful enforcement strategies in combating trade in illicit and counterfeit pesticid es. The program included panel discussions by law enforcement U.S. officials, presentations by industry representatives, and techn ical and legal discussions from I and USPTO representatives als o served as instructors. experts. DOJ ENRD, EPA, CBP, HS USPTO Judicial Workshop on the Pr otection and Enforcement of In tellectual Property Rights. In April 2018, CCIPS presented t o a group of judges from Latin American countries, including Argentina, Brazil, Costa Rica, D ominican Republic, Panama, Peru , on the topic of U.S. Criminal Prosecution of Intellectual Prope rty Crimes in the Digital Domain. Together, with Chief Judge Gustavo Gelpi of the U.S. Distr ict Court of Puerto, the group discussed a variety of topics, including the importance of i nternational cooperation, public-p rivate sector partnerships, and careful considerati on of public health and safety issues. . Participation in U.S.-Cuba Law Enforcement Dialogue (LED). In May 2018, in Washington, .S.-Cuba LED as a technical ex pert on cybercrime and D.C., CCIPS participated in the U crime. The LED is a high-level dialogue designed to strengthen law intellectual property ss a range of issues. Topics enforcement cooperation between t he United States and Cuba acro for discussion included lega l cooperation, counterterrorism, hu man trafficking, human smuggling, counter-narcotics, ant i-money laundering, and cyber issues. Representatives from the State Department, DHS, ICE-H RPOL, DEA, and FBI also SI, U.S. Coast Guard, HHS, INTE attended on behalf of t he United States. IPR Enforcement Program in Uruguay. In May 2018, the Brazil IP LEC participated in a regional IPR enforcement progr am in Montevideo, Uruguay, organi zed by HSI Argentina and 96

131 ecutors, and custo ms officials f rom Uruguay and Paraguay. The the IPR Center for police, pros IPLEC focused on IPR prosecutions involving the In ternet, and p rovided an overview of online investigation principles, cyber-tracing techniques, and basics of electronic evidence. The IPLEC also spoke about international co ic evidence in criminal cases. llaboration to obtain electron Training on Electronic Evidence in C opyright Infringement Cases. In July 2018, the Brazil IPLEC and USPTO trained approxi mately 60 Peruvian judges on best practices in handling of electronic evidence i n digital copyright infringement cases. T wo U.S. District Court judges as r the program. Participants learned also served as instructors fo well as several US rights holders about trending legal and policy issues in the acquisition and authentication of ele ctronic evidence in digital copyright infringement cases as well as other cyber- enabled crime. Training for Law Enforcement and Prosecutors on Intellectual Property Infringement . In July 2018, the Brazil IPLEC, CCIPS, and USPTO trained approximately 90 police and prosecutors infringement cases involving from various Central American countries on best practices in IP health and safety products in San to Domingo, Dominican Republic . The program highlighted counterfeit pharmaceuticals and cosmetics case studies and addr essed how authorities in issues that arise in these cases. different countries deal with the investigative and evidentiary Multiple pharmaceutical companies as well as Western Union pres ented on how they can assist law enforcement in these cases. In July 2018, the Brazil Training on Electronic Evidence in Intellectual Property Right Crime. IPLEC and CCIPS trained approxima rosecutors from 16 Brazilian tely 60 Brazilian police and p states and multiple cities within São Paulo state on the handli ng of electronic evidence in gram and Microsoft participated cybercrime investigations, including IPR crime. Facebook/Insta their insights on collaborati on with law enforce ment, especially in a panel for providers to share he program included a practica l tabletop exercise on locating a on requests for overseas data. T applications, third-party d ata, and traditional methods of target of a crime using open source investigation. Training on Intellectual Propert y Rights Cases in Mexico. In August 2018, the Brazil IPLEC and USPTO trained 30 Mexican pro secutors, police, and customs officials on best practices in IPR criminal investigations and prosecutions. The IPLEC co-pre sented on these issues along with the chief of the IP crimes section at the Mexican Attorney General’s office (PGR). Training with USPTO for Mexican Law Enforcement and Prosecutors. In August 2018, the ice, and customs officials on Brazil IPLEC trained approximately 100 Mexican prosecutors, pol investigations and prosecutions at National IPR Center and best practices in IPR criminal Mexican Customs (SAT)-sponsored p rters in Mexico City. The rogram held at the SAT headqua IPLEC co-presented on these issues along with the USPTO Attaché for Mexico, Central America, and the Caribbean. Training for Northern Triangle Prosecutors, Judges, and Law Enforcement on Intellectual Property Crime Prosecutions. In September 2018, CCIPS presented at a workshop on combatting intellectual property crime prosecutio ns at the Inte rnational Law Enforcement Academy in San Salvador, El Salv ador. The U.S. Patent and Trad emark Office organized the 97

132 forcement, and customs officials workshop, and participants included judges, prosecutors, law en from El Salvador, Honduras, and Guatemala. CCIPS presented on prosecuting intellectual property crime and sentencing i ssues, and also participated on panels addressing international of electronic evidence in cooperation, collaboration with customs officials, and the use intellectual prope rty prosecutions. Presentation at Workshop on Intellectual Property Rights. In September 2018, CCIPS presented at the Regional Workshop on Border Enforcement of Intellectual Property Rights in Chetumal, Mexico. Law enforcement, customs agents and prosecutors from Mexico, Guatemala, and Belize attended the workshop, organized by the U.S. Patent and Trademark Office. CCIPS presented on investigating and prosecuting intellectual propert y offenses, and participate on panels discussing infringement determinations and promoting regional cooperation. EUROPE EIPPN Third Annual Workshop. PLEC provided an overview of In October 2017, the Romania I the available legal assistance and cooperation channels with th e U.S. in IP and cybercrime cases to approximately 70 specialized I P prosecutors from 28 countrie s at a two-day workshop in The Hague. The European Union Intellect ual Property Office (EUIPO) , Eurojust, and the European Intellectual Property Prosecutors Network (EIPPN) organized the program, which was the EIPPN’s third annual workshop. Open World Program on Criminal Enfor cement of Intellectual Property Rights. In October Belarus, as part of the ts from 2017, CCIPS met with six Intellect ual Property Rights specialis Open World Program at the Libr ary of Congress. The Open World Leader Center, an ministers the program, which independent government agency of the United States Congress, ad tanding and cooperation between th e Congress, American is designed to enhance unders communities, and global leaders. Attendees were Belarusian nationals who work on intellectual property matters. The discussi cement officials investigate, on focused on how U.S. law enfor prosecute, and deter criminal int ellectual property crimes. Training Program Focused on Intellectual Prop erty Violations and Computer Crime. In December 2017, in Bucharest, Romania, the Romania IPLEC and DOJ Intermittent Legal iolations and investigating Advisor organized a two-day training program on combatting IP v financial and computer crime f or 30 judges, prosecutors, and la w enforcement officers from Romania’s Economic Crime, Organ ivisions of the Prosecutor ized Crime, and Anticorruption D DIL AUSA, and a Council of Europe representative also General’s Office. FBI, DEA, N participated in the program. Presentation to American Chamber of Commerce in Romania . In February 2018, the Romania IPLEC presented to the American C hamber of Commerce (AmCham) in Romania about improving cooperation and coordinati on in criminal IP cases and connecting resources and efforts of the private sector w national and international levels. ith law enforcement partners on The IPLEC provided an overview of DOJ’s criminal IP enforcement efforts and the IPLEC program, including how the Romania IPLEC can work with rights holders in the region, other resources for assistance in IP matters, and best practices in w orking with law enforcement. 98

133 In April 2018, the Romania IPLEC participated in the EUIPO and EIPPN Annual Conference. European Union Intellectual Prop erty Office (EUIPO) and the Eur opean Intellectual Property Prosecutors Network (EIPPN) annua l conference i n Alicante, Spai n. Approximately 68 prosecutors, law enforcement officers, academia and private ind ustry representatives from 26 countries attended. The program addressed health and safety as pects of intellectual property rights (IPR) violations, Internet protocol TV (IPTV) crime tren ds, and best practices for combating these crimes. The Romania IPLEC provided an overview of the United States’ s on counterfeit pharmaceuticals, experience with IPR and health a nd safety, with special emphasi personal care products, automotive and discussed recent parts, electronics and toys, developments in the legal assi stance and coopera tion channels available with the United States in IPR and cybercrime cases. Meeting on Arbitration and Mediation of Intellectual Property Rights Cases. In April 2018, at the Romanian-American University in Bucharest, the Romania IPLE C and FSN participated in a meeting focused on mediation and arb ized by World Intellectual itration in IPR cases organ Property Organization (WIPO) in cooperation with the Romanian C opyright Office (ORDA) to mark the 2018 World IP Day. The IPLEC presented an overview of arbitration and mediation in IPR cases in the U.S., the IPLEC program, and avenues for assis tance with the U.S. in IPR cases. Training on Trade Secrets in Austria . In June 2018, the Romania IPLEC participated in two events hosted by the U.S. Embassy in Austria and the Federation of Austrian Industries. The ernational best practices and to help strengthen Austria’s trade events were designed to share int secrets legal regime. In the morning session, the Romania IPLE C participated in a trade secrets expert roundtable during which po licymakers, officials, and bus iness representatives from Europe and the United States ex changed best practices and discu ssed the development of effective trade secret laws. In the evening session, over 40 r the Austrian epresentatives from business community attended the stakeholder event, and the Romania IPLEC participated in a panel session at that event designed to raise awareness about t he importance of strong trade secrets protection. National Conference at the Studi es Institute for Public Order . In July 2018, the Romania IPLEC, in partnership with the R omanian counterparts, organized two joint workshops for Romanian investigators and pr osecutors. 46 police investigator s focusing on IP enforcement lf workshop as part of their three-day annual national conference attended the first day-and-a-ha at Studies Institute for Public O rder (ISOP). Subsequently, tw enty-five prosecutors at the National Institute for Magistracy (INM) attended the second day -and-a-half workshop. Workshop with USPTO Regarding Intellectual Property Rights Protection in Greece . In July 2018, the Romania IPLEC, in partnership with the USPTO and HSI, organized a joint two-day workshop for law enforcement and j industry involved in IPR udicial officials as well as protection in Greece. Forty-eight investigators, prosecutors a nd judges attended the workshop. Judicial Training Conference for Armenian Judges. In September 2018, CCIPS participated in a three-day training conference at the USPTO on the protection of intellectual property rights for Armenian judges handling criminal cases at the trial, appellate, or administrative level. The 99

134 conference was organized by USPTO in conjunction with the U.S. Embassy in Yerevan, DOJ, and the Armenian judiciary, and included around 20 participants . Armenia has one of the highest rates of piracy and counterfeiting in the world. CCIPS presented on relating to IPR enia, and also participated in additional panels and discussions. enforcement in the U.S. and Arm SUB-SAHARAN AFRICA IP Meeting with Nigerian Officials. In February 2018, the Nigeria I PLEC traveled to Lagos to ees included representatives from stakeholders. Meeting attend hold a series of meetings with IP ency for Food and Drug the Nigerian American Chamber of Commerce (AmCham), National Ag Administration and Control, Nig erian Copyright Commission, and International Trademarks Association. Intellectual Property Workshop in Zimbabwe . In July 2018, the Nigeria IPLEC participated in iners IP Workshop. Representat WIPO and ARIPO’s Training of Tra thirteen of the ives from nineteen member countries attende d. The Nigeria IPLEC presente d on U.S. perspectives on IP in Africa and on the elements of trademark counterfeiting. This was the first time WIPO and LEC looks forward to further ARIPO have partnered with DOJ i n the region, and the Nigeria IP collaboration with these organizations. ent Capacity and Regional Coordination in Western Africa Workshop on Law Enforcem Combatting Pharmaceutical Crimes. In August 2018, the Nigeria IPLEC led the Western Africa Workshop to Build Enforcement Capacity and Improve Regional Coo rdination in Combatting Pharmaceutical Crimes at the West Africa Regional Training Cent er in Accra, Ghana. Police, prosecutors, health regulatory officials, gendarmerie, investigative magistrates and customs geria, Ghana, Benin, Togo, Burkin a Faso, Cameroon, and Niger. In officials participated from Ni addition to the Nigeria IPLEC, U .S. law enforcement and prosecu tors as well as a Nigerian , and industry representatives served as workshop facilitators prosecutor, an INTERPOL official and instructors. and Law Enforcement Issues . In August 2018, the Nigeria IPLEC Dialogue on Anti-Piracy convened numerous stakeholders i n Nigeria’s creative industry f or a strategic dialogue on anti- piracy and enforcement issues at the American Guest Quarters at the U.S. Consulate in Lagos, Nigeria. In the morning sessi on, the IPLEC team met with indiv iduals from the literary and software sector, and in the a fternoon session, they met with in dividuals representing the entertainment/art sector. 100

135 Outreach to the Private Sector The Department continues to reach out to the victims of IP crim es in a wide variety of ways, including during the operational stages of cases and through mo re formal training programs and conferences. For example, in F Y2018, CCIPS organized and planned its Eleventh Annual IP eeting held in Washington, D.C, i Industry and Law Enforcement M n October 2017. The yearly meeting provides representative s from a broad range of industries with an opportunity to communicate directly with the law enforcement agents and prosec utors most responsible for federal criminal enforcement of IP law at the national level. This year, Deputy Attorney General Rod Rosenstein provided keynote re marks, and several senior DOJ and law enforcement FBI, Blanco and officials from officials, including Acting Assist ant Attorney General Kenneth ated in the meeting. Approximately 90 government industry ICE-HSI, CBP, and FDA particip representatives attended the meeting, including senior represen tatives from a broad range of industries such as pharmaceuti cals, software, luxury goods, ele ctronics, apparel, motion pictures, music, consumer goods, and automobiles. vision’s high-level officials and CCIPS attorneys, as well as the In the past year, the Criminal Di Civil Division’s Consumer Protection Branch attorneys, have als o presented at a variety of domestic and international conferences, symposia, workshops, an d events attended by IP rights holders and law enforcement offi cials. These events included, among others: In October 2017, CCIPS presented at  Michigan State University’s Center for Anti- ion (A-CAPP) Brand Protection Strategy Summit on a Counterfeiting and Product Protect nd the Changing Natu panel entitled “Organizational Adaptation a re of E-Commerce Retailers.” The discussion focused on the changes to intellectual property rights enforcement in an age of increased e-commerce transactions, and addressed certain key factors affecting the evolving e -commerce landscape, including the multifaceted role of owners and e- consumers, the nature and scope of collaborations between brand commerce sites, and the impact of globalization on counterfeite rs and their organizations.  In November 2017, CCIPS addressed approximately 100 members of the International Trademark Association (INTA) Anti-Counterfeiting Committee as p art of INTA’s annual meeting in Washington, D.C. CCIPS discussed the roles of the se ction and other DOJ components, the CHIP Network, and the IP Law Enforcement Coordi nator program in crime, with a particular focus combatting intellectual property on trademark counterfeiting and the internati oods. onal trafficking of fake hard g  In November 2017, CCIPS participat ed in a panel discussion to a n audience of approximately 100 intellectual pr operty industry re presentatives and law enforcement officials at the 2017 IPR Center Symposium. The symposium was entitled “Solving the E-Commerce Puzzle,” and included protection for panels on topics such as fraud consumers and business, efforts to reduce sale of counterfeits in online marketplaces such as eBay, Amazon and Alibaba, and challenges facing law enforcem ent.  In March 2018, CCIPS attended meetings with the Automotive Anti -Counterfeiting Council (A2C2) and U.S. government representatives. The Intellectual Property 101

136 organized the roundtable discuss ion focused on A2C2’s Enforcement Coordinator (IPEC) s well as opportunities for fur current and future initiatives a ther collaboration with the IPEC and other U.S. government agencies. The IPR Center hosted an additional meeting f airbags and other that consisted briefings and disc ussions focused on the sales o atforms as well as sharing bes automotive parts on e-commerce pl t practices by industry and future training opportuniti es for law enforcement.  esented to the Electronic Co mponents Industry In March 2018, CCIPS and NSD CES pr Association (ECIA) Board in Cry stal City, Virginia, and provide d an overview of DOJ’s est practices in identifying criminal IP and export control enforcement efforts as well as b pproximately 20 executives f rom and reporting criminal activity. A major electronic ded. component manufacturers and their authorized distributors atten  In April 2018, CCIPS presented for the New York and New Jersey Intellectual Property Law Associations at a half-da y conference entitled, “Trade Secr ets / Cybersecurity: ntation, entitled Protecting Your Corporate Client ’s Information.” CCIPS’s prese “Cybercrime and Intellectual Property Crime: A Team Effort,” fo cused on the importance h law enforcement in advance of an incident, and reaching of developing relationships wit than 100 attorneys an incident does occur. More out to law enforcement as soon as attended the presentation. Intellectual Property In April 2018, CCIPS presented at the American Bar Association  rd Annual Spring Conference in Arl ington, Virginia. CCIPS was pa rt of a Section’s 33 Off’s.” CCIPS’s presentation panel on “The Dark Side of Knock- focused on the challenges of investigating and pr osecuting counterfeiting and how victims can work more effectively with law enforcement to deter counterfeiting. Approximately 100-150 IP attorneys attende d the presentation. . s Consumer Protection Branch presented to the In April 2018, the Civil Division’  Lean, Virginia, on Pharmaceutical Security Institute’s 33rd General Assembly in Mc prosecuting counterfeit drug cas es. The presentation focused on federal prosecution priorities and recent cases involving counterfeit drugs.  In May 2018, CCIPS and the IPR Cen ter co-hosted a half-day meeting of the Counterfeit Microelectronics Working Group, which meets at least twice a ye ar to discuss ways to croelectronics in the U.S. supply chain. CCIPS, in detect and prevent counterfeit mi and industry partners, organize d the meeting. Over 60 conjunction with the IPR Center ded the meeting. industry, government, and law enfor cement representatives atten  In May 2018, CCIPS participated in a panel discussion at the In ternational AntiCounterfeiting Coalition’s (IACC’s) Spring Conference in Se attle, Washington. CCIPS, and co-panelists from HSI, FBI, City of London Police, a nd the USPTO, addressed “Government Perspectives on Trends in and Evolution o f Anti-Counterfeiting Enforcement.” Topics included innovative enforcement programs at the national level and international, intergo vernmental cooperation. 102

137 oderated a panel at the  In June 2018, the Civil Division’ s Consumer Protection Branch m Partnership for Safe Medicine’s Interchange in Wa shington, D.C. The meeting brought together policymakers, families of counterfeit drug victims, la w enforcement, healthcare professionals, patient advocates, and pharmaceutical manufactur ers and focused on the dangers of counterfeit drugs, particularly the upsurge in counterfeit opioids. In July 2018, CCIPS presented at th of American History as part  e Smithsonian Museum xposition. CCIPS served on a panel entitled, “Counterfeits of the National Trademark E and Con Artists: The Real Dange rs and Costs of Fake Goods.” Th e president of the International Trademark Associat ion and a USPTO Enforcement Team representative also participated on the panel.  In August 2018, CCIPS presented for a live-stream hosted by the IP Owners Association. The presentation was entitled, “ IP Crime and Cybercrime: A Team Effort” and focused on the importance of developing re lationships with law enforcem ent in advance of an IP or cyber incident, and communica ting with law enforcement as so on as an incident does live-streamed to over 100 particip occur. The presentation was ants. Division Consumer Protectio In August 2018, CCIPS and the Civil  n Branch participated in a Roundtable on Counterfeit Drugs at USPTO. Participants in cluded public health researchers, economists, and U.S. Government representatives. The roundtable focused rugs directly to consumers. in particular on the problem of internet sales of counterfeit d rk Association as part  In September 2018, CCIPS presented to the International Tradema of its program on U.S. Federal G overnment’s Work on IP Enforcem ent, Outreach, and Education. The presentation addre ssed the Department of Justic e’s work investigating, prosecuting, and deterring intellectual property crime and how the private sector can partner with law enforcement t o address these serious crimes.  In September 2018, CCIPS and the Civil Division’s Appellate Sec tion took part in a role in copyright panel discussion in Los Angeles addressing the U.S. government enforcement for an audience of approximately 400 representatives of the entertainment and copyright content industries.  Throughout FY2018, DOJ CHIP AUSAs presented at China IP Road Sh ows, sponsored by the USPTO in Denver, Colorado; Salt Lake City, Utah; Indianapolis, Indiana; Chicago, Illinois; Portland, Ore gon; Seattle, Washington; San J ose and San Francisco, California; Nashville, Tennessee; Louisville, Kentucky; Iowa Ci ty, Iowa; Kansas City, Missouri; and New York City. Road Show s, the USPTO is partnering With the China IP with a variety of organizations across the country — including universities, USPTO regional offices, business groups , state and local governments, and other federal agencies — to present a series of one-day e vents that delve into the det ails of how to better protect IP in China. These one-day events bring to local businesses an d stakeholders the expertise and knowledge of the USPTO ’s China specialists as wel l as that of special 103

138 invited guests, and have been tailo red to address the needs of the specific locale in which it is held. the Several years ago, NSD placed additional focus on the protectio n of national assets from threats of nation states, including economic espionage and trade secret theft. These changes included creating a new Deputy Assi stant Attorney General posit ion focusing on protecting national assets. Pursuant to thi s increased focus over the las t several years, NSD leadership and at hundreds of companies over other attorneys have reached out to senior managers and counsel and efforts to combat economic the Department’s resources the last year to educate them about espionage and trade secret theft a nd other national security th reats. These outreach efforts have included presentations at universities and think tanks, cyberse curity summits and roundtable discussions, as well as one-on- one meetings with senior executi ves at Fortune 500 and other king points and other companies. The NSCS Network also periodically disseminated tal h to companies and other resources to its members nationw ide to facilitate their outreac organizations in their home districts and facilitated FBI field offices’ efforts to educate AUSAs on the national security threats i ude them in FBI’s outreach efforts in n their distri cts and to incl their districts. ebsites that, among other things, provide the public with The Department maintains two w information on the Department’s IP enforcement efforts, assist victims in understanding where , and provide guidance on case ref errals. Those sites can be found and how to report an IP crime tf and https://www.cybercrime.gov. The National IPR Center also at https://www.justice.gov/ip an report IP theft. That site can be found at has a website where the public c https://www.iprcenter.gov. (a) (7) (C) Investigative and Prosecution Activity of the Depa rtment with Respect to IP Crimes bove, there are of course hundreds In addition to the examples of successful prosecutions listed a d be cited. As demonstrated by of other worthy cases that coul the cases highlighted above, the Department has sought to increase the quality and scope of its investigations and prosecutions over the past years. Numerical statistics do not adequately convey the quality or complexity of ctiveness and impact of the these prosecutions, but they pr ovide some insight into the effe . Accordingly, we have provided the chart below that contains Department’s prosecution efforts statistics for FY 2018, listing the number of defendants and ca ses charged, the number of 10 defendants sentenced, and the length of those sentences. Section 404(b) of the PRO IP Act also 10 Case statistics were compiled by the EOUSA. The chart includes data on criminal cases/defendants (criminal where the following charges were brought as any charge against a defendant: 17 U.S.C. § 506 copyright infringement); 17 U.S.C. §§ 1201 to 1205 (circumventi on of copyright protection systems); 18 U.S.C. §§ 1831 (economic espionage) & 1832 (theft of trade secr ets); 18 U.S.C. § 2318 (counterfeit labeling); 18 U.S.C. § 2319 (criminal copyright infringement); 18 U.S.C. § 2319A (live musical performance infringement); 18 U.S.C. § 2319B (unauthorized recording of motion pictures); 18 U.S.C. § 2320 (trafficking in counterfeit goods); and 47 U.S.C. §§ 553 & 605 (signal piracy). The statutes were grouped together to eliminate double-counting of cases and/or d efendants where more than one statute was charged against the same defendant. However, this chart may not include cases or defendants if only a conspiracy to violate one of these offenses was charged. 104

139 requests statistics on the number of arrests made. Please see the Annual Report of the Federal Bureau of Investigation, provided pursuant to Section 404(c) of the PRO IP Act, for an accounting of arrest statistics. FY 2018 District Totals Investigative Matters Received by 189 AUSAs 117 Defendants Charged 67 Cases Charged 65 Defendants Sentenced 36 No Prison Term 12 1-12 Months 7 13-24 Months 4 25-36 Months 3 37-60 Months 3 60 + Months 105

140 In addition, we have provided the chart below with FY 2018 stat istics for criminal IP cases 11 broken down by type of charge. Percentage Cases charged Charge Trademark 53 77.9% Trafficking in counterfeit goods, 18 U.S.C. § 2320 Copyright 5.9% 4 Criminal copyright infringement, 17 U.S.C. § 506; 18 U.S.C. § 2319 Counterfeit labels, 18 U.S.C. § 2318 0% 0 DMCA, 17 U.S.C. § 1201 0% 0 Economic Espionage Act 1.5% 1 Economic espionage, 18 U.S.C. § 1831 Theft of trade secrets, 18 U.S.C. § 1832 14.7% 10 Total 68 100% d to (a) (7) (D) Department-Wide Asse ssment of the Resources Devote Enforcement of IP Crimes rneys, along with paralegals and The Criminal Division currently devotes fourteen full-time atto support staff, in CCIPS to IP i tantial support to the IPR Center, ssues. CCIPS also provides subs nd sometimes more, to help id entify and de-conflict assigning at least one attorney, a investigative leads, as well as develop and execute national en forcement initiatives. As who are specially trained in The CHIP Network consists of AUS the investigation and prosecution of IP and computer c rimes. Every U.S. Attorney’s O ffice has at least one CHIP attorney, and those districts th at have historically faced the highest concentration of IP and high- tech crimes tend to have multiple CHIP attorneys. Over the last year, more than twe nty NSD attorneys have worked on hacking investigations not limited to trade secrets) and ft of information, including but (most of which involve the the ns. As described above, the NSC S Network consists of more economic espionage investigatio than 100 AUSAs and attorneys at Department headquarters who rec eive specialized annual nd prosecution of na training in the investigation a tional security cyber offenses, including the theft of IP and other information. 11 EOUSA compiled the statistics for number of cases charged broke n down by IP statute. These statistics may not reflect cases where only a conspiracy to violate one of these offenses was charged, and there may be double-counting of cases where more than one statute was cha rged in the same case. 106

141 Under the IPLEC program, DOJ has had a Department attorney stat ioned in Bangkok, Thailand, ues in Asia. Between November 2007 and March 2011, a since January 2006 to handle IP iss separate DOJ attorney was stati oned in Sofia, Bulgaria, in orde r to handle IP issues in Eastern Europe. While funding for thi s position expired in 2011, DOJ has worked with the Department of State to post a DOJ attorney in Bucharest, Romania since 201 5 to continue to handle IP issues by placing a DOJ attorney in in that region. DOJ also expanded its IPLEC program in FY 2015 Brasilia, Brazil, for a six-mont h term. With the assistance of the State Department, DOJ expanded the IPLEC program i n FY 2016 by posting new regional I PLECs in Hong Kong and Sao Paolo, Brazil. Most recen tly, in FY 2017, the State Department and DOJ prepared fielded a new IPLEC position in Abuja, Nigeria. The Nigeria IPLEC deployed in October 2017, bringing the total number of regional IPLECs up to five DOJ prosecutors. In addition to evaluating digital e Lab technicians have provided evidence, the CCIPS Cybercrim extensive training on the use of digital forensics tools in IP cases to law enforcement audiences around the world. IP enforcement is also an integral part of the mission of four sections of the Department’s Civil Division: the Intellectual Property Section, the National Courts Section, the Consumer Protection Branch, and the Civil Appellate Staff. Through the Civil Divis ion’s Intellectual Property Section, the Department brings a ffirmative cases when United St ates’ IP is infringed, including Uniform Domain-Name Dispute-Re solution Policy proceedings where domain owners have used trademarks owned by the United Sta tes in a manner that is likely to confuse the public. The National Courts Section initiate s civil actions to recover vari ous penalties or customs duties t or fraudulent import arising from negligen transactions, many of which include importation of counterfeit goods. The National Courts Section also defends CB P enforcement of the ITC’s Section 337 exclusion orders at th e Court of International Trad e; these orders are an important Consumer Protection Branch co tool for patent enforcement. The nducts civil and criminal litigation under the Food, Dr ug, and Cosmetic Act, including prosecuting counterfeit drug and medical device offenses and assisting AUSAs throughout the country with their counterfeit pharmaceutical and device cases. Finally, the Civil Appellate Staff represents the United States in copyright and trademark cases in the courts of appeals, incl uding participating as an amicus in private IP litigation involving i mportant government interests and defending decisions of the Copyright Office and the U.S. Pat st constitutional and statutory ent and Trademark Office again challenges. (a) (8) Efforts to Increase Efficiency “(8) A summary of the efforts, activities, and resources that the De partment of Justice has taken to— A. minimize duplicating the efforts, material s, facilities, and procedures of any other Federal agency responsible for the enfor cement, investigation, or prosecution of intellectual property crimes; and B. enhance the efficiency and c onsistency with which Federal funds and resources are expended to enforce, investigate, or prosecu te intellectual property crimes, including the 107

142 rials, technologies, existing personnel, mate extent to which the Department has utilized and facilities.” The Department works hard to ens d resources devoted to fighting ure the effective use of limite of effort is to ensure that law IP crime. One of the most important ways to reduce duplication rosecutors are not following enforcement agencies are pursuing unique case leads, and that p prosecution strategies that duplicate those in other districts. To that end, CCIPS continues to provide ongoing support to the IPR Center in Arlington, Virginia. Among other things, the IPR Center serves as an investigati I, CBP, FDA, and other on clearinghouse for FBI, ICE-HS agencies. CCIPS also works close sist in coordina ting national ly with the CHIP Network to as y with the NSCS Network to assist prosecution initiatives. Along sim ilar lines, NSD works closel unter the nationa on initiatives designed to co in coordinating national prosecuti l security cyber ll continue to work with the IPR Center and NCIJTF to identify threat. Department attorneys wi and de-conflict investigative lead s, as well as assist the CHIP and NSCS Networks to ensure that investigations and prosecutions are streamlined, not duplicated , and that charges are brought in the appropriate venue. FBI Law Enforcement Actions At the end of FY 2018, the FBI had 195 pending IPR investigations with the following areas of focus:  67 investigations of the ft of trade secrets ringement related to software 23 investigations of copyright inf   41 investigations of other copyright infringement  25 investigations of trademark infringement  eft fringement related to signal th 8 investigations of copyright in 5 investigations of counterfeit aircraft parts  feit electrical parts  10 investigations of counter  6 investigations of counterfeit automotive parts  8 investigations of counterfeit health products 2 investigations of other counterfeit health and safety product s  istics for IPR investigations The following is a summary of stat for FY 2018:  54 new investigations initiated 22 arrests   10 information/indictments 12 convictions  Seizures totaling $940   Forfeitures totaling $3,176,949  Restitution totaling $64,536,442  FIRE (Frozen, Indicted, Restra ined, Encumbered) totaling $0 DOJ Intellectual Property Prosecutions FY 2018, by Statute 108

143 The following is a listing of DOJ IP prosecutions during FY 2018 by reference to the statutes involved (a number of these cas es are discussed above, in the s ection on “Prosecution Initiatives”). .S.C. COPYRIGHT / PRE-RELEASE / CAMCO RDING / COUNTERFEIT LABELS (17 U § 506, 18 U.S.C. §§ 2319, 2318)  California Man Pleads Guilty To Copyright Infringement. On July 23, 2018, Craig M. Vincent, 51, of Stockton, California, pleaded guilty to one count of criminal used eBay to resell aviation infringement of a copyright. In his plea, Vincent admitted he navigational database updates in violation of Jeppesen Company’s licensing agreement for a trademarked product called NavData. Jeppesen is a Boeing subsidiary. Jeppesen’s NavData includes airport inform ation, runway characteristics, w aypoints, arrival routes, departure routes, terminal procedures and general information t hat a Global Positioning uter needs to navigate an airpl System or flight management comp ane to final destination. ons to Kansas-based Garmin, Inc. Garmin received a Jeppesen sold NavData subscripti commission from the sales of J eppesen data sets. Doing busines s as Merlin Enterprises, Vincent sold NavData cards and required customers to return old data cards to him. (DKS, FBI) -copyright-infringement https://www.justice.gov/usao-ks/ pr/california-man-pleads-guilty (17-20076) On March 22, Owner of Sharebeast.com Sentenced for Copyright Infringement.  2018, Artur Sargsyan, 30, of Glendale, California, was sentenced to five years in prison ed release for his role in o perating a massive file- followed by three years of supervis stributed approximately 1 billion copies of copyrighted sharing infrastructure that di nloads. He was also ordered to pay restitution in the musical works through Internet dow amount of $458,200 and to forfeit $184,768.87. Sargsyan owned and operated a number of websites including Sharebeast. com, Newjams.net, and Albumjam s.com. Sargsyan pleaded guilty to copyright infringement on September 1, 2017. According to the Recording Industry Association of America (“RIAA”), Sharebeast. com was the largest d distribution of infringing online file-sharing website sp ecializing in the reproduction an copies of copyrighted music ope From 2012 to 2015, the rating out of the United States. RIAA sent Sargsyan over 100 e-mails notifying him that Sharebea st.com was illegally hosting and sharing copyrighte d works. Sargsyan continued, how ever, to make the copyright-infringing files availa ble for download, disregarding the many warnings that he ly estimated the total monetary received. The RIAA conservative loss to its member ional Crime companies at $6.3 billion. (NDGA, CDCA, CCIPS, OIA, FBI, UK Nat Agency, Netherlands Ministry of Security and Justice) https://www.justice.gov/usao-ndga/pr/sharebeastcom-owner-pleads-guilty-criminal- copyright-infringement https://www.justice.gov/usao-ndga/pr/owner-sharebeastcom-senten ced-copyright- infringement (17-222)  Orlando Pair Sentenced For Copy right Infringement Of Microsoft Products And 109

144 Conspiracy To Commit Wire Fraud. On December 1, 2017, Robert F. Stout, 51, and Kasey N. Riley, a/k/a Kasey Stout, 33, were sentenced to 18 mon ths’ imprisonment and 12 months of home detention, respe ctively, for conspiracy to co mmit wire fraud and on keys for Microsoft copyright infringement relating to the sale of i llegal activati to pay $1,480,227, the them products. As a part of their sen tences, the Court also ordered ocuments, Stout and proceeds of the charged criminal conduct. According to court d are products for sale online, u Riley advertised Microsoft softw sing a variety of sham business names. They purchased u nauthorized activation keys fr om various websites and then provided them, in exchange f or PayPal payments, to at leas t 13,000 customers customers in ion from throughout the United States. They received at least $1.4 mill ys. Even after receiving , activation ke nd often invalid exchange for the unauthorized, a customer complaints that speci fic activation keys were not functioning properly, Stout and Riley continued to sell them . For example, between Septemb er 2013 and June 2014, Stout and Riley pleaded they sold one specific activa tion key approximately 880 times. guilty on August 8, 2017. (MDFL, HSI, FBI) https://www.justice.gov/usao-mdfl/pr/orlando-man-and-woman-plead-guilty-copyright- infringement-microsoft-products-and https://www.justice.gov/usao-mdfl/pr/orlando-pai r-sentenced-copyright-infringement- microsoft-products-and -conspiracy-commit (17-183) (17-174) Trafficking in Counterfei t Goods (18 U.S.C. § 2320)  On September 7, New Orleans Man Charged with Trafficking In Counterfeit Goods. 2018, Mahir Salim (a/k/a Maher Salem, Mike Salem), age 40, a re sident of New Orleans, Louisiana, was charged by a federal grand jury in a one-count I ndictment with trafficking in counterfeit goods. According to the Indictment, beginning at a time unknown and continuing until about January 19, 2017, Salim trafficked and a ttempted to traffic in approximately 111 pair of “True Religion” blue jeans, 50 pair o f “Rock Revival” jeans, 8 ” wallets, 2 “Michael Kors” wal “Michael Kors” purses, 19 “Coach lets, 8 “Louis Vuitton” purses, 6 “Gucci” purses, 177 “Polo ” sweatshirts, 41 pair of “P olo” sweatpants, 24 Timberland” boots, 336 “New E ra” hats, 473 pair of “Polo” jogging suits, 44 pair of “ hoes, 6 bottles “Dolce & “Nike” shoes, 21 “Adidas” jogging suits, 114 pair of “Adidas” s Gabbana” perfume, 110 “Mitchell & Ness” hats, 24 “North Face” v ests, and 43 “Nike” hats. (EDLA, HSI) https://www.justice.gov/usao-edla/ pr/new-orleans-man-charged-tr afficking-counterfeit- goods (18-191)  Cheektowaga Man Pleads Guilty to Buying and Selling Counterfeit Airbags. On August 30, 2018, Raymond Whelan, 49, of d guilty to Cheektowaga, NY, pleade conspiracy to traffic in count erfeit goods. The defendant oper ates Rayscarparts71.com. Between June 2015 and March 2016, Whelan and co-defendant David Nichols entered into an agreement to sell counterfeit automobile airbags. Whel an would contact Nichols and order numerous airbags bearing counterfeit trademarks of Honda, Toyota, Nissan, Subaru, Mazda, Hyundai, Acura, and Mitsubishi. Nichols would t hen locate 110

145 y the requested airbags. In order to avoid detection manufacturers in China to suppl Once imported into the mislabeled. ere purposefully during importation, the airbags w the name Rayscarparts71. the airbags on eBay utilizing United States, Whelan would sell The airbags were listed on eBay as genuine used airbags designe d to fit Honda, Toyota, Nissan, Subaru, Mazda, Hyundai, A cura, and Mitsubishi. During the investigation, airbags were seized multiple undercover purchases were made from Rayscarparts71 and ll the purchased and seized ai from the defendant’s business. A rbags were determined to , Toyota, Nissan, Subaru, ontained trademarks of Honda be counterfeit. The airbags also c Mazda, Hyundai, Acura, and Mitsubis hi, trademarks registered with the United States of these companies authorize Patent and Trademark Office. None d the defendant to lan imported and sold approximate utilize their trademarks. Whe ly 360 counterfeit manufacturer’s retail price of $650.00. The total automobile airbags with an average s was previously infringement amount was $236,600.00. Co-defendant David Nichol ntencing. (WDNY, HSI, CBP) convicted and is awaiting se https://www.justice.gov/usao-wdny/pr/two-men-charged-importing-and-selling- counterfeit-airbags pr/cheektowaga-man-pleads-gui https://www.justice.gov/usao-wdny/ lty-buying-and- selling-counterfeit-airbags (17-206) On August arges. Texas Man Pleads Guilty to Federal Counterfeiting Conspiracy Ch  spiracy to defraud the exas, pleaded guilty to con 24, 2018, Steve Kim of Round Rock, T counterfeiting charges. United States. On A pril 19, 2018, Kim was arrested on federal was charged with one count of Kim ted States and one conspiracy to defraud the Uni feit goods. According to the in January dictment, from count of trafficking in counter 2010 until June 2, 2017, Kim knowingly sold more than $325,000 worth of counterfeit ired in China and shipped sports apparel on eBay. A vast m ajority of the items were acqu tball Association to his home in Round Rock. Those items included National Baske (NBA), Major League Baseball (MLB), National Football League (NFL), and National and state authorities Hockey League (NHL) jerseys and hats. On June 2, 2017, federal executed a search war rant at the defendant’s residence and seiz ed more than 2,300 items bearing counterfeit markings to include NBA, MLB, NFL, NHL, Ree bok, Louis Vuitton, New Era and others. The suggested retail value of the seized i tems exceeds $189,000. Sentencing is set for Novemb Williamson lice, er 16, 2018. (WDTX, HSI, Austin Po County Sheriff’s Office) x/pr/round-rock-man-faces-feder al-counterfeiting- https://www.justice.gov/usao-wdt charges (18-149) ers and  Sacramento Man Pleads Guilty to Selling Counterfeit Air Bag Cov Nameplate Badges. On August 21, 2018, Pavel Ryzhenkov, 32, of Sacramento, California, pleaded guilty to one count of trafficking in count erfeit goods. According to court documents, between December 2015 and September 2017, Ryzhenkov sold counterfeit air bag covers on eBay. He purchased the counterfe it covers from manufacturers in China and in turn advertised and sold them as genuine with the trademarks of various auto ma nufacturers, including Audi, BMW, Chevrolet, Dodge, 111

146 ercury, Nissan, Subaru, Toyota, and Volkswagen. (DOR, Ford, Honda, Infiniti, Lexus, M HSI) -selling-counterfeit-air- https://www.justice.gov/usao-or/ pr/sacramento-man-pleads-guilty bag-covers-and-nameplate-badges (18-313)  Apparel. fficking in Counterfeit Sports California Man Sentenced for Tra On hs imprisonment and 50, was sentenced to 12 mont August 10, 2018, Seyyed Ali Noori, ncurrently, and ordered to 12 months of supervised release per Count (1-2) to be served co ompanies, totaling $27,565.51. Noori had pleaded guilty on pay restitution to victim c ds. According to March 30, 2018, to two counts of tra fficking in counterfeit goo admissions made in connection w erated Goldstar ith his plea, Noori owned and op California, and also sold ased in Tracy, ale distributor b Wholesale LLC, a regional wholes October, and November alt, California. In August, goods at the Galt Flea Market in G 2013, undercover officers with the S Force erty Task acramento Intellectual Prop other accessories from purchased hundreds of dollars of counterfeit hats, shirts, and ofessional sports Noori. These items bore counterfeit trademarks belonging to pr franchises in Basketball Association ball League (NFL), the National the National Foot gue (NHL), as well (NBA), Major League Baseball (MLB), and the National Hockey Lea as apparel brands like Monster hases were made from Energy, Nike, and New Era. Purc Noori at the Galt Flea Market and the Goldstar warehouse. Noor i admitted that on November 12, 2013, he was served with a notice directing him to cease-and-desist selling trademarks. goods bearing counterfeit NFL, MLB, NBA, NHL, and Monster Energ y Noori signed a declaration that he understood the cease-and-des ist notice and would according to Noori’s selling such produc ts in the future. Nonetheless, refrain from admissions, he continued to sell the counterfeit goods. On Dec ember 3, 2013, undercover Task Force officers vi sited Noori’s retail stand at the Galt Flea Market, where items for sale. Instead, he Noori indicated that he could no longer display the counterfeit s, which they purchased. On directed the officers to his box truck for the counterfeit good rehouse recovered December 19, 2013, a search warrant e xecuted at the Goldstar wa of headwear, shirts, and d for sale, including pieces thousands of items openly displaye accessories, all bearing counterfeit sports trademarks. (EDCA, CCIPS, FBI, Sacramento County Sheriff’s Department) https://www.justice.gov/usao-edca/ rged-trafficking- pr/san-joaquin-county-man-cha counterfeit-sports-a pparel-and-other ifornia-man-pleads-guilty-tra fficking-counterfeit- https://www.justice.gov/opa/pr/cal sports-apparel (16-7) on-Dollar an Federal Court With Multimilli  5 Defendants Charged In Manhatt Counterfeiting Scheme. On August 7, 2018, defendants Miyuki Suen,43, Jian Min Huang, 42, and Kin Lui Chen, 53, of New York, New York, and Songhua Qu, 54, and Fangrang Qu, 31, of Hicksville, New York, were arrested on charges of importing hundreds of thousands of athletic shoes from China into the United States. The defendants are each charged with one count of conspiring to tra ffic in counterfeit goods and one count of trafficking in c ounterfeit goods. From at least in or about January 2016 112

147 up to and including in or about July 2018, Suen, Huang, Songhua Qu, Kin Lui Chen, and 42 shipping containers holding an estimated more than Fangrang Qu imported at least factured to resemble 380,000 pairs of sneakers from China. These sneakers were manu Nike Air Jordans. Once these s ed trademarked logos to hoes arrived, the defendants add the shoes, rendering them counterfeit. The defendants then sto red the counterfeit Nike Air Jordans in multiple storage units and warehouses in New York City and elsewhere. On August 7, 2018, pursuant to court-authorized search warrants , federal law enforcement agents conducted searches of a warehouse, storage u nits, and a residence related to this scheme, and found thousands of counterfeit shoes, counterfeit trademarks, and machinery to finish counterfeit shoes. The estimated loss attributable to the SI, NYPD, CBP) to more than $70 million. (SDNY, H defendants’ efforts amounts https://www.justice.gov/usao-sdny/pr/5-defendants-charged-manha ttan-federal-court- multimillion-dollar-counterfeiting-scheme (18mj6658)  Massachusetts Woman and Man Sentenced for Roles in Counterfeit Steroid On June 20, 2018, Brian Petzke, 49, of Saugus, was sentenced to two years Conspiracy. in prison and two years of supervised rel ease. Elizabeth Green , 30, of Fitchburg, was sentenced to two years of probati heir roles in a steroid on. Both were sentenced for t to one count of trafficking conspiracy. Gree n pleaded guilty in December 2017 conspiracy to distribute contro lled substances, charged by Information. In February April ontrolled substances, conspiracy to distribute c 2018, Petzke pleaded to one count of charged with six others in April 2017. From 2015 until April 12, approximately May 2017, the conspirators manufactured steroid products made from raw materials that they purchased overseas and markete d as “Onyx” steroids using “Onyx” labels that were also rs. Onyx, now owned by Amgen Inc. , is a legitimate ordered from overseas supplie pharmaceutical company that does not manufacture steroids. The defendants sold the steroids to customers across th e United States using email and social media platforms, as Western Unio n and MoneyGram, collected payment through money remitters, such and used false identifications and multiple remitter locations to pick up the proceeds. Some of the defendants laundered proceeds from the steroid sale s through Wicked Tan ed specifically to ly, which they owned and operat LLC, a tanning business in Bever the conspiracy was to launder the proceeds of the steroid operation. Green’s role in money remitters using false iden tifications and provide collect customer payments from those proceeds to another memb er of the organization. Green re trieved more than $220,000 in customer payments for s teroid purchases. Petzke’s principal roles in the conspiracy were receiving packag es containing raw steroid powde r; shipping steroids to efendants Tyler Baumann customers throughout the United S tates at the direction of co-d and Phillip Goodwin; and picking up steroid proceeds from money remitters at the direction of Baumann and Goodwin. (DMASS, HSI, USPIS, FDA) terfeit-steroids https://www.justice.gov/usao-ma/pr/six-charged-trafficking-coun https://www.justice.gov/usao-ma/ pr/fitchburg-woman-pleads-guilt y-role-counterfeit- steroid-conspiracy https://www.justice.gov/usao-ma/pr/saugus-man-pleads-guilty-rol e-counterfeit-steroid- conspiracy https://www.justice.gov/usao-ma/pr/lynn-man-sentenced-over-10-y ears-prison-role - 113

148 counterfeit-steroid-conspiracy pr/fitchburg-woman-and-saugus-m https://www.justice.gov/usao-ma/ an-sentenced-roles- counterfeit-steroid-conspiracy (17-10374) (17-10209)  Counterfeit New York Woman Pleads Guilty To Trafficking Over $3 Million In On May 23, 2018, Xiao Xia Footwear And Handbags Through Port Of Newark. cking in counterfeit goods. According to documents Zhao, 41, pleaded guilty to traffi filed in this case and statements made in court, from November 2013 through February g container numbers from an individual overseas that 2017, Zhao received certain shippin chandise. Zhao asked identified at least three contai ners containing counterfeit mer of Newark to remove the contain individuals working at the Port ers from the port before Once the containers they could be examined by U.S. Customs and Border Protection. they be delivered to other individuals, who would then were removed, Zhao directed that ew Jersey and elsewhere. Law en forcement intercepted distribute the merchandise in N l, Zhao trafficked in d distribute the goods. In tota the containers before Zhao coul s, and other counterfeit thousands of pairs of fake Nike footwear, Louis Vuitton handbag items, with a total estimated retail value of over $3 million. Zhao also paid individuals entencing is set for delivery of the containers. S over $75,000 in exchange for the October 22, 2018. (DNJ, CBP, HSI) https://www.justice.gov/usao-nj/ pr/new-york-woman-pleads-guilty-trafficking-over-3- million-counterfeit-footwear-and-handbags (18-311)  South Carolina Couple Sentenced to a Total of 138 Months in Pri son for Trafficking Counterfeit Goods, Includin On May 9, 2018, David g Misbranded Pet Medicine. Haisten, 51, and Judy Haisten, 51, bo th of Irmo, South Carolina , were sentenced to 78 and 60 months of incarceration, respectively. A jury found the Haistens guilty in October 2017 of conspiracy as well as six c ounts of violating the Feder al Insecticide, Fungicide, and Rodenticide Act, five counts of distributing misbranded animal drugs, and two counts including pesticides that of trafficking in counterfeit goods. The defendants’ products, animals and humans. are extremely toxic in the wrong dose, posed a serious risk to structions for use increased Further, as detailed at trial, the defendants’ packaging and in the likelihood that an injury w ould occur. (EDPA, EPA, FDA, HSI) https://www.justice.gov/usao-edpa/p r/south-carolina-couple-sentenced-total-138-months- prison-trafficking-counterfeit-goods (16-461) ods by Operating  Mexican Nationals Plead Guilty to Trafficking in Counterfeit Go On May 9, 2018, Two Mexican Counterfeit Airbag Business in Albuquerque. nationals, illegally present in the United States, entered guil ty pleas to operating a counterfeit airbag business out of their residence in Albuquerq ue, New Mexico. Dina Gonzalez-Marquez, 24, and Emilio Gonzalez-Marquez, 22, conspire d to traffic in counterfeit goods from Janua ry 2015 to March 2017, by operating a business that sold counterfeit airbag modules and a irbag covers out of their Albuq uerque residence. It also alleged that they facilitate d the conspiracy by listing and selling counterfeit airbag 114

149 modules and airbag covers onlin s to purchasers, and e, shipping the counterfeit good conducting in person sales of the counterfeit goods. Pursuant to their plea agreements, the siblings agreed to forfeit approximately 143 airbags and airbag covers, four storage devices, four laptops, and $2,510 in cash. (DNM, HSI) https://www.justice.gov/usao-nm/pr/mexican-nationals-plead-guil ty-trafficking- counterfeit-goods-opera ting-counterfeit-airbag (17-1103) Massachusetts Business  Selling Owner Sentenced for Defrauding SNAP and Counterfeit Merchandise. On April 25, 2018, Esther Acquaye, 31, of Worcester, was sentenced to eight months in pris on, three years of supervised release, and ordered to pay lty to one count of $285,075 in restitution. In December 2017, Acquaye pleaded gui conspiracy to acquire, possess, and redeem SNAP benefits in an unauthorized manner, and to convert public money; one c ount of SNAP fraud; and one count of trafficking in counterfeit goods. On numerous occasions, between November 2013 and April 2016, ccepted EBT cards from Acquaye, the owner of Esther’s Fashion Paradise in Worcester, a SNAP recipients wishing to excha nge their SNAP benefits for cas h. Specifically, Acquaye passed the EBT cards through a point-of-sale terminal causing the full value of ess, and then provided less onically transferred to her busin the SNAP benefits to be electr benefits in cash to the SNAP recipients. In total, than the full value of the SNAP Acquaye caused approximately $282,541 in fraudulent EBT transac tions and SNAP benefits to be transacted at t four occasions between Esther’s. In addition, on at leas November 2015 and March 2016, Acquaye accepted an EBT card from an undercover investigator as payment for c ounterfeit retail goods. Acquaye sold the investigator two s, one counterfeit Gucci purse, and one counterfeit The counterfeit Michael Kors purse North Face jacket. (DMA, USDA-OIG, HSI) pr/worcester-business-owner-ple ads-guilty-defrauding- https://www.justice.gov/usao-ma/ snap-benefits-program-and-selling https://www.justice.gov/usao-ma/pr/worcester-business-owner-sen tenced-defrauding- snap-and-selling-counterfeit-merchandise (17-40040)  Massachusetts Woman Sentenced for Role in Counterfeit Steroid T rafficking Scheme. On April 25, 2018, Melissa Sclafani, 30, fro m sentenced to one Gloucester, was In June 2017, Sclafani year and one day in prison and two years of supervised release. pleaded guilty to one count of cons piracy with intent to distribute and to distribute counterfeit steroids and one count of conspiracy to launder mon ey. On April 12, 2017, Sclafani and five others were charged by criminal complaint. F rom at least February 2016 until April 12, 2017, Sclafani conspired with others to ma nufacture steroid products, market them as “Onyx” steroids, and sell them to cust omers across the United States using email and social media platforms. Customers paid for the steroids via money remitters, such as Western Union and MoneyGram, and membe rs of the conspiracy used false identific ations and multiple remitter loc ations to pick up the steroid proceeds. Sclafani obtained materials and supplies to manufacture the counterfeit steroids and served as the corporate secretary of Wicked Tan LL C, a tanning business in Beverly that was owned by two co-c onspirators. Sclafani assist ed members of the 115

150 s from steroids through the the sale of counterfeit conspiracy in laundering proceed business. (DMA, HSI, USPIS, FDA) terfeit-steroids https://www.justice.gov/usao-ma/pr/six-charged-trafficking-coun ole-counterfeit- https://www.justice.gov/usao-ma/pr/gloucester-woman-sentenced-r steroid-trafficking-scheme (17-10185) erfeit Steroid  Lynn Man Sentenced to Over 10 Years in Prison for Role in Count Conspiracy. On March 29, 2018, Philip Goodwin, 37, of Lynn, Massachusetts , was sentenced to 130 months in prison and three years of supervised release. In November 2017, Goodwin pleaded guilty to one count of conspiracy to distribute controlled substances, one count of conspira cy to traffic counterfeit drugs, one count of trafficking in counterfeit drugs, one count of possession with intent to distribute controlled substances, and one count of m oney laundering conspiracy. In April 2017, Goodwin and re arrested and charged five others, including Tyler Bau man, a/k/a “musclehead 320,” we approximately with operating a counterfeit ster oid operation on the North Sho re. From eroid products—made rators manufactured st May 2015 until April 12, 2017, the conspi as rseas—in Goodwin’s home, and ma from raw materials purchased ove rketed them overseas suppliers. s that were also ordered from “Onyx” steroids using “Onyx” label Onyx, now owned by Amgen Inc., is a legitimate pharmaceutical c ompany that does not manufacture steroids. The defenda nts sold the steroids online to customers across the United States using email and social media platforms, collected payment through money remitters, such as Western Union and MoneyGram, and used false identifications and multiple remitter locations to pick up the proceeds. (DMA, HSI , USPIS, FDA) ears-prison-role - https://www.justice.gov/usao-ma/pr/lynn-man-sentenced-over-10-y counterfeit-steroid-conspiracy (17-10209)  Mexican Man Sentenced to Prison for Importing Counterfeit Drugs . On March 20, was sentenced for 2018, Arturo Rafael Salazar Cruz, age 38, of Matamoros, Mexico, to the maximum of 60 conspiracy to traffic in counter feit goods. Cruz was sentenced months imprisonment and 3 years supervised release. Evidence p resented in this case hers in foreign countries hrough 2017, Cruz conspired with ot established that from 2011 t to import counterfeit pharmaceuti cals from China and India into the United States. Cruz had a Non-Immigrant Visa, and he m isused his Visa to transport the counterfeit pharmaceuticals from Mexico to Texas where he shipped the drugs through the United States Postal Service. Cruz a nd others sold these counterfeit pharmaceuticals to persons without prescriptions in the Un ited States. Some of the counterfeit pharmaceuticals were highly addictive controlled substances, including Xanax and Oxy Contin. During the investigation, agents executed a s earch warrant at Cruz’s office in Texas and seized 360,000 pills. The retail value of these seized pharmaceutical s exceeded $8 million. (DSC, HSI) https://www.justice.gov/usao-sc/pr/mexican-man-sentenced-prison -importing - counterfeit-drugs (17-547) 116

151 Massachusetts Couple Sentenced for Roles in Counterfeit Steroid Conspiracy. On  March 15, 2018, a Shrewsbury couple were sentenced for their re spective roles in a far- feit steroids throughout the reaching, multi-million dollar conspiracy to distribute counter ntenced to 10 years in United States. Tyler Bauman, a/k/a “musclehead320,” 32, was se prison and three years of supervised release. Kathryn Green, 29, was sentenced to one year and one day in prison and three approximately e. From years of supervised releas irators manufactured May 2015 until April 12, 2017, Bauman, Green and their co-consp steroid products made from raw m aterials that they purchased ov erseas and marketed as “Onyx” steroids using “Onyx” label s that were also ordered from overseas suppliers. Onyx, now owned by Amgen Inc., is a legitimate pharmaceutical c ompany that does not ng on Instagram and d a robust social media followi manufacture steroids. Bauman ha other platforms under the moniker “musclehead320” and derivatio ns of that name. ming to be an Bauman used the “musclehead320” persona to promote Onyx by clai these social media accounts, Bauman provided “Onyx Sponsored Athlete.” Through customers with email addresses to place orders, received steroi d orders, and then communicated with customers via these email addresses. Bauman directed other members of the conspiracy to shi p steroids to customers using the U.S. Postal Service. stern Union and Customers paid for the steroids via money remitters, such as We y to pick up ther members of the conspirac MoneyGram. Bauman then directed o ions to attempt to avoid payments at multiple remitter locations using false identificat e oral steroids (tablets) a suspicion. Bauman purchased both th nd the raw materials to manufacture the injectable steroids from overs eas suppliers. H e also ordered the overseas suppliers counterfeit Onyx labeling and packaging from . The injectable steroids emarks of Onyx of this conspiracy bore trad advertised and sold by the members Pharmaceuticals. Further, Bauman laundered proceeds from the s teroid sales through Wicked Tan LLC, a tanning salon located in Beverly, which he an d a co-conspirator steroid operation. owned and operated specifically to launder the proceeds of the (USMA, HSI, USPIS, FDA) terfeit-steroids https://www.justice.gov/usao-ma/pr/six-charged-trafficking-coun y-building-steroid- https://www.justice.gov/usao-ma/ pr/four-charged-counterfeit-bod conspiracy https://www.justice.gov/usao-ma/ pr/shrewsbury-man-pleads-guilty -operating-counterfeit- steroid-scheme https://www.justice.gov/usao-ma/pr/lynn-man-pleads-guilty-count erfeit-steroid- conspiracy https://www.justice.gov/usao-ma/pr/saugus-man-pleads-guilty-rol e-counterfeit-steroid- conspiracy https://www.justice.gov/usao-ma/pr/shrewsbury-couple-sentenced- roles-counterfeit- steroid-conspiracy (17-10209) (17-10211)  Four Individuals Indicted For T rafficking In Counterfeit Goods. On March 7, 2018, Carlos Enrique Velázquez-Gines, M am Ivette Flores- ayra Evelise Gines-Otero, Nori Deleon, and Vanessa Marrero-Herná ndez were charged with mail an d wire fraud conspiracy, mail fraud, traffick ing in counterfeit goods, introducing misbranded articles into interstate commerce, dist ribution of a controlled substanc e, international money 117

152 laundering, and smuggling. Accordi ng to the indictment, the defendants marketed and offered numerous purport ed “dietary supplements” for male enhancement or weight loss, which were in fact “drugs” under the Federal Food, Drug, and Co smetic Act (FDCA) for sale to American consumers. Defendants marketed and sold the p roducts through “online stores” on platforms such as eBay.com and Bonanzo.com. Many of the counterfeit male- enhancement pills contain the active pharmaceutical ingredient (sildenafil), found in and these products do popular and well-known products suc h as “Viagra” and “Cialis,” sold counterfeit condoms. not advertise that pharmaceutical ingredient. Defendants also from overseas suppliers From at least on or about Oct ober 3, 2013, defendants purchased located in China, and imported int o the United States, dietary supplements, latex condoms, and cosmetics that were counterfeit and/or misbranded under the FDCA. In an effort to evade detection by law enforcement, when ordering the illegal products from es shipped to a trans-shipper l ocated in Miami, Florida, China, defendants had the packag who would then re-package and/or re-label the parcels and send them to defendants in Puerto Rico. The defendants ma iled numerous packages through USPS to customers across the United States contai ning counterfeit and/or misbrand ed products. They used a re and distribute the residence located in Manatí, Puerto Rico, as a warehouse to sto d from overseas suppliers and re-sold to customers. The unlawful products they purchase defendants also distributed whol esale quantitie s of the counterfeit and/or misbranded o wholesale buyers. Defendant Carlos Enrique overseas t products imported from ous wire transfers of funds to overseas suppliers to pay Velázquez-Gines, initiated numer nts. The defendants are ased and imported by the defenda for the unlawful products purch facing a forfeiture alleg ation of $3,699,901.94, six properties or homes, two bank accounts, one Pay Pal account, and t hree certific ates of deposi t. (DPR, FDA, HSI, USPIS, CBP, PR-Treasury Dept.) afficking-counterfit-goods https://www.justice.gov/usao-pr/pr/four-individuals-indicted-tr (18-136) . On February 9, 2018, Niagara Falls Man Sentenced For Selling Counterfeit Goods  Mohsen Kassem Abdulrab, 58, of Niaga ra Falls, NY, was sentenced to two years supervised release and fine d $2,000 for trafficking in counterf eit goods. Between January 6, 2014, and February 13, 2014, the defendant sold or a ttempted to sell , located in Niagara Falls. unauthorized counterfeit goods at hi s store, the Hip Hop Center The counterfeit merchandise incl uded UGG, Michael Kors, The Nor th Face, National Basketball Association, National Football League, Major League Baseball, Polo Ralph Lauren, Louis Vuitton, Coach, Timberland, and others. The valu e of the counterfeit merchandise, if genuine, wa s more than $40,000. (WDNY, HSI) https://www.justice.gov/usao-wdny/pr /niagara-falls-man-sentence d-selling-counterfeit- goods (15-167)  Chinese National Pleads Guilty to Conspiracy and Trafficking of Counterfeit Apple Goods into The United States. “Jeff” Li, 43, a Chinese On February 2, 2018, Jianhua national, living in the United Sta tes on a student visa, pleaded guilty for his role as a counterfeit distributor in a sc heme to traffic and smuggle coun terfeit electronics purporting to be Apple iPhones and iPads, from China into the U nited States. Li pleaded 118

153 guilty to one count of conspiracy to traffic in counterfeit goods and labels and to smuggle goods into the United States, and one count of trafficking in c ounterfeit goods. de in court, from July this case and statements ma According to the documents filed in 2009 through February 2014, Li, working through his company, Dream Digitals, conspired with Andreina Becerra, R , and others to oberto Volpe, Rosario LaMarca 40,000 electronic smuggle and traffic into the United States from China more than h labels and packaging devices and accessories, including iPads and iPhones, along wit s totaling over $1.1 emarks. Li also received payment bearing counterfeit Apple trad million in sales proceeds unts. Becerra, Volpe, and from U.S. accounts into his bank acco LaMarca have also pleaded guilty to their roles in the conspira cy. LaMarca was sentenced on July 20, 2017, to 37 months in prison. Further, t he documents filed in this the t showed that Li shipped device s separately from case and statements made in cour labels bearing counterfeit tradem arks for later assembly to avo id detection by CBP officials. The devices were the n shipped to conspirators all o ver the United States. Proceeds from the sales of the devices were funneled back to th e co-conspirators’ ey via structured cash deposits accounts in Florida and New Jers and a portion of the disguising the source of the proceeds was then transferred to conspirators in Italy, further funds. Sentencing is schedul IPS, HSI, local LE ed for October 15, 2018. (DNJ, CC agencies, Europol, Italy’s Guardia di Finanza) ng-and-trafficking- our-individuals-charged-importi https://www.justice.gov/opa/pr/f counterfeit-apple-an d-sony-technology https://www.justice.gov/opa/pr/member-conspiracy-import-and-traffic-counterfeit- electronic-products-sentenced https://www.justice.gov/opa/pr/ch inese-national-pleads-guilty-conspiracy-and- trafficking-counterfeit-apple-goods-united (15-178)  $2.5 Million In Staten Island Man Gets 30 Months In Prison For Trafficking Over Counterfeit Footwear Through Port Of Newark. On January 23, 2018, Shi Wei Zheng, 42, from Staten Island, NY, was sentenced to 30 months i n prison and two years of supervised release for atte mpting to distribute more than $2 .5 million of counterfeit UGG-brand boots that were shipped i nto the Port of Newark. According to documents filed in this case and statements made in court, from September 2016 through February 2017, Zheng received certain shippin individual overseas g container numbers from an ast three containers t UGG boots. Cheng asked that identified at le containing counterfei of Newark to remove the contain individuals working at the Port ers from the port before they could be examined by U.S. Customs and Border Protection. Once the containers were removed, Zheng directed that they be delivered to other individuals working for him, who would then distribute th e boots in New Jersey and elsewhere. However, before Zheng could distribute the goods, l he containers, examined aw enforcement intercepted t their contents, and determined t he boots were counterfeit. At no time was Zheng authorized to import authentic o r counterfeit UGG merchandise. In total, Zheng trafficked in over 15,000 pairs of counterfeit UGG boots, with a total estimated retail value of over $2.5 million. Zheng also paid individuals over $50,000 in exchange for the delivery of the containers. (DNJ, HSI, CBP) https://www.justice.gov/usao-nj/pr /staten-island-man-admits-tra fficking-over-25-million- 119

154 counterfeit-footwear-through-port nths-prison-trafficking- https://www.justice.gov/usao-nj/pr/staten-island-man-gets-30-mo over-25-million-counterfeit-footwear (17-401)  Sacramento Man Sentenced To Prison For Criminal Trademark Infri ngement. On December 15, 2017, Xavier L. Johnson, 37, of Sacramento, was se ntenced to two years and six months in prison and three years of supervised release for trafficking in goods bearing counterfeit trademarks . According to court documents, from 2008 to 2011, China that contained aldwell imported DVDs from Johnson and co-defendant Kristin C counterfeit versions of childre sold those DVDs n’s movies. They advertised and ed that they had throughout the United States using websites on which they claim he movies. The DVDs bore counterfeit trademarks, obtained limited quantities of t os, and other marks that es, the names of the movie studi including the names of the movi ice. (EDCA, USPS, were registered with the United States Patent and Trademark Off FBI) - pr/two-elk-grove-residents-plead-guilty-trafficking https://www.justice.gov/usao-edca/ counterfeit-dvds pr/sacramento-man-sentenced-p rison-criminal- https://www.justice.gov/usao-edca/ trademark-infringement (12-250) TRADE SECRET THEFT (18 U.S.C. § 1832)  Second Former Glaxosmithkline Scie ntist Pleads Guilty to Steali ng Trade Secrets to Benefit Chinese Pharmaceutical Company. On September 14, 2018, Dr. Tao Li, 45, of ilty to conspiracy to steal tr San Diego, California, pleaded gu ade secrets from GlaxoSmithKline (GSK) for the benefit of a Chinese pharmaceutic al company named Renopharma. Dr. Li and two of his friends, Dr. Yu Xue and Dr. Yan Mei, created Renopharma in Nanjing, China, suppos edly to research and develop anti-cancer drugs. In reality, Renopharma was used as a repository of stolen informat ion from GSK. Renopharma received financial s upport and subsidies from the government of China. At the time, Xue was employed as eloping a scientist at GSK working on dev biopharmaceutical products. These products typically cost in e xcess of $1 billion to research and develop. Xue sent a substantial number of GSK’s s cientific documents, some of which contained GSK trad e secrets, to Li and Mei at Ren opharma in China. The data contained information regarding multiple biopharmaceutical products under development, GSK research data, a nd GSK processes regarding the research, development, and manufacturing of biopharmaceutical products. Xue typically sent the documents via e-mail or transferred the documents via portable electronic storage devices. Xue sent these documents to Li and Mei with the inten tion to convert GSK’s information for their econo mic benefit. On January 5, 2016, th e FBI arrested Li and seized his computer on which they found a number of GSK documents containing trade secret and confidential informa tion which he had received from Xue. Xue previously pleaded guilty on August 31, 2018. (EDPA, FBI) https://www.justice.gov/usao-edpa/p r/scientists-indicted-allege dly-stealing- 120

155 biopharmaceutical-trade-secrets entist-pleads-guilty- r/former-glaxosmithkline-sci https://www.justice.gov/usao-edpa/p stealing-trade-secrets-benefit-chinese https://www.justice.gov/usao-edpa /pr/second-former-glaxosmithkline-scientist-pleads- guilty-stealing-trade-secrets-benefit (16-22) New On August 1, 2018, Xiaoqing  York Man Charged With Theft of Trade Secrets. was arrested in connection w Zheng, 55, of Niskayuna, New York, ith a criminal Electric (GE). complaint charging him with stea ling trade secrets belonging to General The criminal complaint allege s that on or about July 5, Zheng, an engineer employed by nic files containing GE’s GE, used an elaborate and sophisticated means to remove electro trade secrets involving its tu rbine technologies. Specifically , Zheng is alleged to have iles belonging to GE into an innocuous looking digital used steganography to hide data f picture of a sunset, and then t o have e-mailed the digital pict ure, which contained the stolen GE data files, to Zhe ng’s e-mail account. (NDNY, FBI) https://www.justice.gov/opa/pr/new- york-man-charged-theft-trade-secrets (18mj434) On July 12, 2018,  Former Apple Employee Indicted On Theft of Trade Secrets. Xiaolang Zhang, 33, of San Jose, was indicted for theft of trad e secret. According to the Indictment, Zhang is alleged to ha ve taken a confidential 25-page document containing circuit board des igned to be used in the critical detailed schematic drawings of a n autonomous vehicle, knowing t hat the theft would injure infrastructure of a portion of a , Apple, Inc. Court documents filed allege that on April 30, the owner of the trade secrets 2018, Zhang told Apple personnel that he was resigning from his job so that he could return to China to be closer to his mother who was ill. Apple immediately terminated Zhang’s access to its computer s ystems and Apple personnel began a forensic analysis of Zhang’s Apple-owned devices a nd network activity. According to an affidavit filed in the case, Apple subsequently lear ned that Zhang went to work for X-MOTORS—a company focused on electric automobiles and autonomous vehicle technology with its days prior to headquarters in China. Apple security personnel confirmed that in the three April 30, 2018, Zhang’s network activity increased notably comp ared to the prior two years of his employment. The m ajority of his activity consisted of downloading the project dat abases, and the downloaded info rmation contained trade information from rty. On July 7, 2018, FBI Agents lear ned that Zhang purchased a secret intellectual prope last-minute round-trip airline ticket with no co-travelers, departing San Jose for Hangzhou, China aboard Hainan Airlin es. Federal agents intercepted and arrested Zhang at the San Jose International Airport after he had passed throu gh the security checkpoint. (NDCA, FBI) https://www.justice.gov/usao-ndca/pr/former-apple-employee-indi cted-theft-trade-secrets (18-312}  Former DuPont Employee Pleads Guilty to Stealing Trade Secrets and Lying to the FBI. On July 11, 2018, Josh Harry Isler, 55, of St. Ansgar, Iowa, pled guilty to one count of trade secret theft and one c ount of making a false statement or representation to the 121

156 FBI. As part of his guilty plea , Isler admitted that during Aug ust 2013, while employed a competitor, he rom with DuPont, but after having accep ted an offer of employment f stole trade secrets of DuPont. I n a plea agreement, Isler admi tted that after he accepted employment with a competitor of DuPont in the ethanol fuel enzy me business, he lectronic files to an external device. Isler knew the transferred hundreds of DuPont’s e files he downloaded contained proprietary information and trade secrets of elated to DuPont customers who were also customers of DuPont. Many of the files also r the competitor or whose business the competitor was seeking. I sler kept the files in his to his new employer. Isler a lso admitted that when he new job and also transferred some he had downloaded was interviewed by the FBI in N ovember 2013, he falsely denied files containing proprietary information. (NDIA, FBI) https://www.justice.gov/usao-ndia/pr/former-dupont-employee-cha rged-theft-trade- secrets-and-lying-fbi ads-guilty-stealing https://www.justice.gov/usao-ndi - a/pr/former-dupont-employee-ple trade-secrets-and-lying-fbi (18-2032)  Electrical Engineer Found Guilty for Intending to Convert Trade Secrets from s, 35, of Ardmore, Oklahoma , Defense Contractor. On July 9, 2018, Jared Dylan Spark trade secrets belonging to was found guilty for his conduct related to a scheme to convert roton, Connecticut, related to, a defense contractor based in G among others, an innovative naval prototype bei The jury found Sparks ng developed for the U.S. Navy. guilty of six counts of theft of trade secrets, six counts of uploading trade secrets, and one count of transmitting trade secrets. According to evidence adm itted at trial, Sparks, an electrical engineer, worked at LB I Inc., a defense contractor t hat designs and builds unmanned underwater vehicles for th e U.S. Navy’s Office of Naval Research and deployable ice buoys for the National Oceanic and Atmospheric A dministration. During the course of his employment with LBI, Sparks collaborated with Charles River Analytics (CRA), a Massachusetts -based software company that de veloped software to be integrated into LBI’s unmanned underwater vehicles. In late 2011, CRA sought to expand into the hardware busine ss and eventually agreed with the Office of Naval the testing for a number of the unmanned vehicles Research that it would complete ks began exploring ometime after April 2011, Spar designed and developed by LBI. S n January 2012. employment with CRA, and was eventually hired by that company i Before he left LBI, Sparks su rreptitiously uploaded thousands of LBI files to his personal Those files included LBI’s account with Dropbox, a cloud-base d file-storage application. accounting and engineering files as well as photographs related to designs and renderings used to fabricate and manufacture LBI’s unmanned underwater veh icles and buoys. (DCT, CCIPS, DCIS, FBI, CCIPS Cybercrime Lab) https://www.justice.gov/usao-ct/pr/two-men-charged de-secrets-connecticut- -stealing-tra defense-contractor ectrical-engineer-found-guilty -intending-convert-trade- https://www.justice.gov/opa/pr/el secrets-defense-contractor (16-198)  Court Imposes Maximum Fine on Sinovel Wind Group for Theft of T rade Secrets. 122

157 On July 6, 2018, a manufacturer and e xporter of wind turbines based in the People’s Republic of China was sentenced f or stealing trade secrets from AMSC, a U.S.-based company formerly known as America n Superconductor Inc. The Court found that AMSC’s losses from the theft exceeded $550 million, and imposed the maximum statutory fine in the amount of $1.5 million on Sinovel Wind Gr oup LLC. The Court he restitution amount, and impo found that the parties settled t sed a year of probation until Sinovel pays the full restitution amount. Sinovel has paid $32 .5 million to AMSC this week and will pay $25 million within its year of probation. Si novel will also pay $850,000 to additional victims within its year of probation. S inovel was convicted of , and wire fraud on January conspiracy to commit trade secr et theft, theft of trade secrets n Madison, Wisconsin. (WDWI, DOJ IP Task Force, 24 following an 11-day jury trial i CCIPS, OIA, FBI, CCIPS Cybercrime Lab) individuals-charged- https://www.justice.gov/usao-wdwi/ pr/sinovel-corporation-three- theft-trade-secrets https://www.justice.gov/opa/pr/chinese-company-sinovel-wind-gro up-convicted-theft- trade-secrets https://www.justice.gov/opa/pr/court-imposes-maximum-fine-sinov el-wind-group-theft- trade-secrets (13-84)  Former Chemours Employee Sentenced for Theft Of Trade Secrets C onspiracy In Bid To Lure Chinese Investors Into Sodium Cyanide Market. On June 27, 2018, Jerry Jindong Xu, a citizen of Canad a, was sentenced to time served in prison and a $100.00 special assessment. On June 8, 2018, Xu pled guilty to one count of conspiracy ding to court documents, the cons to steal trade secrets. Accor piracy involved the theft of trade secrets related to sodium cyanide, a chemical most often used to mine gold, silver, the world’s largest and other precious metals. The Chemours Company (Chemours) is producer of sodium cyanide. Che fter the DuPont mours, formed in July of 2015 a Corporation separate sed in Wilmington and d its performance chem icals business, is ba opment for sodium cyanide products at its nearby performs the research and devel 2011 to June 2016, the defendant wa s employed in Experimental Station. From ada. There, he marketed various Chemours’ office in Ontario, Can sodium cyanide-based products developed in the United States to the Canadian mining market. The defendant previously worked for seven year s in China for the DuPont Corpo ration, where he cultivated extensive ties to t he Chinese cyanide and mining ind ustry. The defendant was arrested in New York in Augus t 2017 and arraigned in Wilmington on September 28, 2017. The defendant admitted that during his final year of emp loyment with Chemours, he systematically acquired—through surreptitious action, false statements to colleagues, and sometimes through his legitimate employment duties—dozens o f confidential files, many of which included trade s sodium cyanide ecret information about Chemours’ business. During this same time , the defendant secretly established a side company, called Xtrachemical, whose purpose was to solicit Chinese-based investors to build a sodium cyanide plant in Canada – in direct competition with Chemours. At the time of his arrest, the Royal Canadia n Mounted Police executed a search warrant on behalf of the United States pursuant to our government’s Mutual Legal Assista nce Treaty with Canada. (DDE, FBI, OIA, RCMP) 123

158 rged-conspiracy- https://www.justice.gov/usao-de/pr/former-chemours-employee-cha steal-trade-secrets-connection-plan-sell https://www.justice.gov/usao-de/pr/former-chemours-employee-ple ads-guilty-theft-trade- secrets-conspiracy-bid-lure-chinese (17-63) Multiple Trade Six Former And Current Fitbit Employees Indicted For Possessing  On June 14, 2018, six California residents were indicted Secrets Stolen From Jawbone. s. The secrets allegedly wer for possessing stolen trade secret e stolen from now-defunct San Francisco-based AliphCom , Inc., doing business as Jawbone, after his or her employment with Jawbone ended an d the defendant accepted employ ment with Fitbit, Inc., another San Francisco-bas ed company. The indictment char ges Katherine Mogal, 52, of San Francisco; Ana Rosario, 33, of Pacifica; Patrick Nar ron, 41, of Boulder Creek; Patricio Romano, 37, of Calaba o; and Jing Qi Weiden, sas; Rong Zhang, 45, of El Cerrit olen trade secrets. The ind 39, of San Jose, with possessing st ictment describes Jawbone ectronic devices, fitness as a company that “designed, man ufactured, and sold wearable el trackers, and wireless speakers i commerce. The indictment n interstate and international alleges Jawbone’s protected inter nal computer systems and cloud storage contained trade secrets, 14 of which are described in the indictment. Similarly, the indictment describes pany that promotes itself as “design[ing] products and Fitbit as a publically traded com de motivation for everyday health and fitness.” experiences that track and provi According to the indictment, each of the defendants worked for Jawbone for at least one year between May of 2011 and April of 2015, and had signed a co nfidentiality agreement with the company. The indictment alleges that in between March 2015 and April 2015, Mogal, Rosario, Narron, and Zha ng, while still working for Jawbone, received an offer of in three weeks, each had termin Fitbit and, with ated his or her employment from employment with Jawbone. Each of t hese defendants accepted his or her offer of Jawbone in March 2014 and began Fitbit. Weide n resigned from employment from working for Fitbit in November 2014. According to the indictme nt, at times in 2014 and 2015, after he or she was no longer employed by Jawbone, each d efendant received and efit of someone other de secrets for the economic ben possessed one or more of the tra than Jawbone. Further, the indictment alleges each defendant w as aware following his or her departure from Jawbone that the trade secrets were stolen a nd that they were being possessed without authorization. (NDCA, HSI) https://www.justice.gov/usao-ndca/pr/six-former-and-current-fit bit-employees-indicted- possessing-multiple-trade-secrets (18-259) ECONOMIC ESPIONAGE (18 U.S.C. § 1831)  Four Chinese State-Owned Industrial Companies Arraigned In Econ omic Espionage Conspiracy. On September 6, 2018, four state-owned Chinese companies were arraigned on a Third Superseding Indictment charging each of the companies and two of their officers with conspi ring to commit economic espionage and related crimes. The companies were arraigned on cha rges that the defendants con spired and attempted to engage in economic espionage by seeking to acquire misappropria ted trade secrets for the 124

159 production technology for chloride- route titanium dioxide (TiO2) from E.I. du Pont de as filed January 5, Nemours & Company (DuPont). According to the indictment that w known as Panzhihua 2016, between 1998 and 2011, Pangang Group Company, Ltd. (also Iron and Steel (Group) Co., Ltd.) a llegedly conspired with Chin ese nationals Hou s three of the company’s su bsidiaries and others to Shengdong and Dong Yingjie as well a d trade secrets. The defendant subsidiaries companies acquire stolen or misappropriate are: Pangang Group Steel Vanadium & Titanium Company, Ltd.; Pan gang Group Titanium Industry Company Ltd.; and Pangang Group International Economic & Trading Company. The trade secrets re late to TiO2 technology from DuPo nt. DuPont had developed the technology and cont rolled a significant amount of the world’s TiO2 sales. The defendants are alleged to have secret information obtained confidential trade including photographs related t o TiO2 plant technologies and fa cilities. Further, the defendants are alleged to have paid an Oakland company at least $27,000,000 between 2006 and 2011 for assistance with T iO2 technology, including ob taining DuPont trade secrets. The defendants also allegedly attempted, between 2008 and 2011, to commit economic espionage related to DuP ont’s TiO2 processes. (NDCA N at’l Security Unit, FBI) https://www.justice.gov/usao-ndca/pr/four-chinese-state-owned-industrial-companies- arraigned-economic-espionage-conspiracy (11-573) spiring to Commit Economic Espi Two Businessmen Charged With Con  onage for Benefit of Chinese Man On April 26, 2018, Shan Shi, 53, of ufacturing Company. superseding indictment Houston, and Gang Liu, 32, a Chinese national, were charged by c espionage for the benefit of CBM-Future New with conspiracy to commit economi Material Science and Technology Co. Ltd. (CBMF), a Chinese comp any based in Taizhou. Both businessmen were previously indicted in June 201 7 for conspiracy to commit theft of trade secrets. The superseding indictment issued also charged CBMF subsidiary, CBM Inter national, Inc. (CBMI ), for their roles in the and its Houston-based conspiracy. According to court records, Shi and Liu conspired with others to commit economic espionage and steal trade secrets from a U.S. engineering firm that produces syntactic foam, a str and military uses. Shan; ong, lightweight material with commercial Liu; Uka Kalu Uche, 36, of Spring, T exas; Samuel Abotar Ogoe, 75, of Missouri City, Texas; Kui Bo, 41, a Canadian citi zen who had been residing in the Dallas area; and Hui Huang, 33, a Chinese national, w ere indicted in June 2017 on a charge of conspiracy to commit theft of trade secrets. An additional defendant pleaded guilty to the charge in December 2017. The superseding indictment includes that charge , adds the conspiracy to commit economic espionage count es a federal money against Shi and Liu, and includ laundering conspiracy count again st Shi. CBMF and CBMI have al so been indicted on all three charges. (DDC, NSD-CES, FBI, IRS) https://www.justice.gov/usao-dc/pr/seven-people-charged-conspir ing-steal-trade-secrets- benefit-chinese-manufacturing-company https://www.justice.gov/opa/pr/two- businessmen-charged-conspiring-commit-economic- espionage-benefit-chinese-manufacturing (17-110) 125

160 a Trade Secret  Chinese National Sentenced for Economic Espionage and Theft of On January 17, 2018, Xu Jiaqiang, 31, formerly of Beijing, From U.S. Company. China, was sentenced to five years in prison, for economic espi onage and theft of a trade heft of proprietary source code from secret in connection with Xu’s t Xu’s former mily Planning fit the National Health and Fa employer, with the intent to bene public of China. Xu previously pleaded guilty to all six Commission of the People’s Re counts with which he was charged. From November 2010 to May 2014, Xu worked as a developer for a particular U.S . company (the Victim Company), and enjoyed access to certain proprietary software (the Proprietary Software), as wel l as that software’s underlying source code (the Propr ietary Source Code). In May 2 014, Xu voluntarily ny. Xu subsequently communicated with one resigned from the Victim Compa undercover law enforcement officer (UC-1), who posed as a finan cial investor aiming to rcover law enforcement start a large-data storage t echnology company, and another unde officer (UC-2), who posed as a project manager, working for UC- 1. On March 6, 2015, Xu sent UC-1 and UC-2 a code, whi ch Xu stated was a sample of X u’s prior work with tly informed UC-2 that Xu was willing to consider the Victim Company. Xu subsequen platform for UC-2’s providing UC-2’s company with the Proprietary Source Code as a company to facilitate the devel ystem. Xu informed UC- opment of its own data storage s 2 that if UC-2 set up several com n Xu would remotely puters as a small network, the install the Proprieta ry Software so that UC-1 and UC-2 could te st it and confirm its functionality. In or around ear ly August 2015, the FBI arranged for a computer network then remotely uploaded to to be set up, consistent with Xu’s specifications. Files were the FBI-arranged computer networ on or about August 26, k (the Xu Upload). Thereafter, d. On December 7, 2015, Xu and UC-2 confirmed that UC-2 had received the Xu Uploa e Hotel). Xu stated, in 2015, Xu met with UC-2 at a hotel i n White Plains, New York (th to make software to sum and substance, that Xu had us ed the Proprietary Source Code sell to customers, that Xu knew be the product of decades the Proprietary Source Code to of work on the part of the Victim Company, and that Xu had used the Proprietary Source tary Software, which Xu had uploaded and installed Code to build a copy of the Proprie on the UC Network (i.e., the Xu Upload). Later also on Decembe r 7, 2015, Xu met with UC-1 and UC-2 at the Hotel, and showed UC-2 a copy of what Xu r epresented to be the Proprietary Source Code on Xu’s laptop. (SDNY, FBI, DOJ-NSD) https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-and- fbi-assistant-director - charge-announce-arrest-individual unces-economic- https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-anno espionage-charges-against-chinese-man-stealing https://www.justice.gov/opa/pr/ch inese-national-charged-stealing-source-code-former- employer-intent-benefit-chinese https://www.justice.gov/usao-sdny/ pr/chinese-national-pleads-gu ilty-economic- espionage-and-theft-trade-secret-us-company https://www.justice.gov/opa/pr/ch inese-national-sentenced-econo mic-espionage-and- theft-trade-secret-us-company (16-10) ALTERNATIVE CHARGES 126

161  Minnesota Attorney Pleads Guilty To Federal Charges In Connection With Multi- On August 17, 2018, Million Dollar Pornography Film Copyright Fraud Scheme. y to commit mail fraud Paul R. Hansmeier, 37, of Woodbury, pleaded guilty to conspirac and wire fraud and conspiracy t o commit money laundering. On M arch 6, 2017, Hansmeier’s co-defendant, John Ste ele pleaded guilty for his ro le in the scheme. According to his guilty plea and documents filed in court, between 2010 and 2014, Hansmeier and Steele, both prac ticing lawyers, executed a schem e to obtain millions of dollars by threatening copyright l awsuits against individuals w ho supposedly downloaded pornographic movies from file-sha ring websites. Hansmeier admi tted in court that he entities, which Steele cont rolled, to obtain copyrights and Steele created a series of sham hich they filmed themselves – and then uploaded to pornographic movies – some of w those movies to file-sharing websi tes like “The Pirate Bay” in order to lure people to infringement lawsuits download the movies. The defenda nts then filed bogus copyright that concealed both their role i n distributing the movies, and their personal stake in the outcome of the litigation. After filing the lawsuits, Hansmeie r and Steele gained authority from the courts to subpoe s (“ISPs”) for na internet service provider identification information of the subscriber who controlled the IP address used to download the movie. With that information, the defendants used extortionate tactics such as letters and phone calls to thr eaten victims with enormous fi nancial penalties and public . In November 2011, in embarrassment unless they agreed to pay a $3,000 settlement fee potential fallout, the specious lawsuits and any rom order to distance themselves f Hansmeier and Steele admitted that they created and used Prenda Law, among other law heme. Hansmeier firms, to pursue their fraudulen t claims and proceeds of the sc he and Steele exerted de facto acknowledged in court today that control over Prenda Law throughout the scheme. In Octobe r 2012, the defendants changed their tactics and began filing lawsuits falsely alleging t g to their sham hat computer systems belongin clients had been hacked. To facilitate their phony “hacking” lawsuits, Hansmeier and Steele recruited individuals who had been caught downloading pornography from a file-sharing website, to act as ruse “defenda nts” who were sued in exchange for Hansmeier and Steele waiving their settlement fees while pursuing claims against the ir supposed “co- conspirators.” (DMN, CCIPS, FBI, IRS-CI) https://www.justice.gov/opa/pr/at torney-pleads-guilty-role-multi-million-dollar-scheme- fraudulently-obtain-copyright https://www.justice.gov/usao-mn/pr /minnesota-attorney-pleads-guilty-federal-charges- connection-multi-million-dollar (16-334)  Two Indicted for Trafficking Co unterfeit Oxycodone Pills Contai ning Fentanyl. On July 19, 2018, Alfredo Sanchez, 39, of Madera, and Saybyn Borges, 27, of Sacramento, were indicted on charges relating to their scheme to distribute counterfeit oxycodone pills that contained Fentanyl. Speci fically, the defendants were charged with conspiracy to distribute fentanyl, distri bution of fentanyl, possession with intent to distribute fentanyl, and being a felon in possession of a firearm. According to oth er court filings, Sanchez and Borges were involved in the sale of approximately 7,500 cou nterfeit oxycodone pills that contained fentanyl, a synthetic opioid. (EDCA, DEA) https://www.justice.gov/usao-edca/ pr/two-indicted-trafficking-c ounterfeit-oxycodone- 127

162 pills-containing-fentanyl-0 (18-136)  r 26 Years in Prison for Leading Counterfeit Long Beach Man Sentenced to Ove Opioid Scheme that Distributed Fentanyl Analogue. On July 9, 2018, Gary Resnik, o 320 months in federal priso 33, of Long Beach, was sentenced t n. Resnik was the leader of a narcotics distribution ring t hat imported a powerful fentanyl analogue from China and produced hundreds of thousands of opioid pills that were distributed in bulk across fenses – conspiracy to two felony of the nation. Resnik pled guilty in August 2017 to and ecstasy), and ics (including acetylfentanyl manufacture and distribute narcot possession with the intent to di stribute acetylfentanyl. When he pled guilty, Resnik admitted to importing from China bulk chemicals, including acet ylfentanyl that were used to manufacture opioid pill s. His drug organization also i llegally imported pill make pills in homemade lab s in a Long Beach presses from China that were used to drug enforcement storage unit and Bal dwin Park house. Resni k acknowledged that Beach lab in addition to agents seized over 11 kilograms of acetylfentanyl from the Long s from both labs. A co- other large quantities of acetylfentanyl and other illegal drug Angeles – was defendant in this case – Ch ristopher Bowen, 32, of downtown Los sentenced in May 2018, to 320 months in federal prison for participating in the drug- and 2016, Resnik’s he course of nine months in 2015 trafficking conspiracy. Over t organization sold approximately 40,000 to 45,000 pills each mon th, for between $4 to $8 per pill, according to prosecutors. (CDCA, DEA) https://www.justice.gov/usao-cdc a/pr/dea-agents-arrest-four-men -federal-charges- ics-including-pills distributing-narcot ty-federal-narcotics - https://www.justice.gov/usao-cdca/pr/long-beach-man-pleads-guil charges-including-distribution-pills https://www.justice.gov/usao-cdca/ pr/los-angeles-man-sentenced- over-26-years-prison- role-federal-narcotics-conspiracy https://www.justice.gov/usao-cdc a/pr/long-beach-man-sentenced-o ver-26-years-prison- leading-counterfeit-opioid-scheme (16-201)  Ozark Man Sentenced for Counterfeit Airbag Scheme. On June 27, 2018, Aleksey Illyuk, 28, of Ozark, Missouri, was sentenced to 45 days imprisonment, three years of supervised release, and ordered to pay restitution in the amoun t of $120,000.00. On aud and one count of December 6, 2017, Illyuk pleaded guilty to one count of mail fr e sold counterfeit smuggling goods into the United States. Illyuk admitted that h omponents on his online eBay sto res, CarPro 417 and automotive airbags and airbag c d shipments from various Chinese manufacturers of CarPro Electronics. He receive airbags, airbag covers and other items that contained the trade marks of Honda, Toyota, Chevy, Ford and other companies. Each of these imported airbag s contained trademarks and markings that made it appear rademark had the legitimate holder of the t manufactured the airbags. Illyuk f raudulently marketed these items as airbags that had been manufactured by the legitimate trademark holder, when he k new that the parts were counterfeit and not manufacture d by the legitimate trademark ho lder. He sold approximately $120,000 worth of count erfeit items to consumers throughout the United 128

163 t 17, 2017. The fact that States through his online stores from January 1, 2015, to Augus the airbags and the airbag compone d not manufactured by nts parts were counterfeit an the legal holders of the displayed trademark or logo on the item was never truthfully disclosed to the consumers. (WDMO, HSI, IRS) unterfeit-airbag- pr/ozark-man-pleads-guilty-co https://www.justice.gov/usao-wdmo/ scheme (17-3132) Connecticut Man Charged with Distributing Counterfeit Drugs.  On June 19, 2018, Kamil Golebioski, 26, of Shelton, was arrested on a federal cri minal complaint charging him with various drug offenses rel ated to the illegal distribution of counterfeit drugs, including possession with intent to distribute and distribution of a counterfeit substance. tatewide initiative targeting an ongoing s narcotics dealers who The charges stem from distribute heroin, fentanyl or opioids that cause death or seri ous injury to users. As laint, on July 9, 2017, the Seymour Police Department and alleged in the criminal comp emergency medical personnel respo nded to a report of a suspected overdose at a residence in Seymour. At the re sidence, medical personnel pron ounced a 29-year-old the scene, male deceased. Investigators seized drug and non-drug evidence from analysis of the victim’s cell including the victim’s cell phone . The complaint alleges that phone identified two individuals who purchased heroin and what they believed to be tly before the victim died. Golebioski was subsequently Xanax pills for the victim shor or Xanax pills. It is further alleged that, between August identified as a source of supply f 2017 and May 2018, investigators made multiple controlled purch ases of Xanax pills pills revealed that they were from Golebioski. Analysis of the counterfeit. In early June Canada 2018, investigators intercepted tw o packages mailed from and addressed to feit Xanax pills. ained approximately 1,400 counter Golebioski. The packages cont (DCT, DEA, HSI, CBP) https://www.justice.gov/usao-ct/pr/shelton-man-charged-distribu ting-counterfeit-drugs (18mj627) Pills Containing  Roswell Woman Sentenced for Dis tributing Counterfeit Oxycodone Fentanyl & Synthetic Opioids. On May 24, 2018, Cathine Lavina Sellers, 39, of ollowed by three years of Roswell, Georgia was sentenced to three years in prison to be f supervised release for possessi o distribute fen tanyl and two synthetic on with intent t opioids, furanyl-fentanyl and U-47700. Sellers pleaded guilty on January 30, 2018. According to the charges and other information presented in cou rt, on June 13, 2017, Sellers sold approximately 100 pills for $1,400 in cash from her Roswell townhouse to a confidential source working wit h the DEA. Later that night, DE A agents searched Sellers’s townhouse and retrieved the money from the earlier tr ansaction, and they found approximately 100 more counterfe it pills concealed in a dietary supplement bottle. Agents also found a loaded Glo ck handgun and two magazines. DE A agents arrested Sellers that night. A DEA lab test revealed the counterfeit pi lls contained furany- fentanyl, U-47700 and fentanyl. Non e of these substances are present in legitimate oxycodone tablets. The counterfeit pills are similar in appear ance to a legitimate 30mg Roxicodone tablet. (NDGA, DEA) https://www.justice.gov/usao-ndga/pr/roswell-woman-indicted-fed eral-charges- 129

164 counterfeit-oxycodone-pills-containing-fentany-0 r/roswell-woman-sentenced-di https://www.justice.gov/usao-ndga/p stributing-counterfeit- oxycodone-pills-containing-fentanyl (17-241)  er 26 Years in Prison for Role in Federal Los Angeles Man Sentenced to Ov Narcotics Conspiracy Involvi ng Counterfeit Opioids. On May 21, 2018, Christopher s role in a conspiracy to Bowen, 32, was sentenced to 320 mont hs in federal prison for hi manufacture, possess and distribute four narcotics, specificall y: acetylfentanyl; a- pyrrolidinovalerophenone, a so- called designer drug also known as “PVP” that is ly sold under the brand sometimes used in “bath salts”; e cstasy; and alprazolam, common oin and not approved for ve times more potent than her name Xanax. Acetylfentanyl, is fi any use in the United States. Bowen was sentenced after being convicted on two counts following a jury trial in October 2017. The judge remarked that the sentence of 26⅔ drugs seized by years reflected the quantities of investigators. During the investigation, DEA agents seized more than 11 kilograms of acetylfentanyl from the organization. The evidence presented during the trial showed that Bowen and other members of the drug from imported acetylfentanyl n used to produce China, which they the organization homemade pills designed to look like legitimate pharmaceuticals . Bowen and his co- he pills in bulk across the nati on. (CDCA, DEA) conspirators then distributed t -federal-charges- a/pr/dea-agents-arrest-four-men https://www.justice.gov/usao-cdc distributing-narcot ics-including-pills https://www.justice.gov/usao-cdca/pr/long-beach-man-pleads-guil ty-federal-narcotics - charges-including-distribution-pills - https://www.justice.gov/usao-cdc a/pr/los-angeles-man-found-guilty-federal-narcotics conspiracy-involving-opioid https://www.justice.gov/usao-cdca/ pr/los-angeles-man-sentenced- over-26-years-prison- role-federal-narcotics-conspiracy (16-201)  Seller of Counterfeit and Unapproved Pharmaceuticals Sentenced to Prison. On April 27, 2018, Tijuana resident A lejandro Hernandez was senten ced to 30 months in and sell counterfeit and unap custody for conspiring to smuggle proved drugs. The defendant was also ordered to pay restitution of $9,750 to Eli Lilly and Co., for losses related to his sale of counter feit products. During a long-ter m undercover investigation, agents purchased counterfeit or unapproved pharmaceuticals from Hernandez on six separate occasions – oftentimes i n a Chula Vista parking lot, p aying for them with cash. The drugs were all labeled in the Spanish langu age, and included products such as Buscapina, Prodolina and Neo-Melubrina, which are not approved by the Food and Drug Administration for use in the Un ited States. Hernandez also pr ovided counterfeit versions of several drugs, inclu dez told undercover ding Viagra and Cialis. Hernan operatives that his boss in Mex ico had other employees, including a driver who would walk or drive across the border with the pharmaceuticals. Surv eillance revealed that Hernandez stored the illegal pha rmaceuticals at various self-st orage units near the border. Agents arrested Hernandez earlier this year as he made a delive ry of pharmaceuticals, and executed a search warrant at one of his self-storage units. The search yielded over 130

165 $250,000 of unapproved and counterfeit pharmaceuticals, as well as ledgers documenting years of sales. (SDCA, FDA, HSI) https://www.justice.gov/usao-sdca/pr/seller-counterfeit-and-una pproved-pharmaceuticals- sentenced-prison (18-380)  Canadian Drug Firm Sentenced for Selling Counterfeit and Misbra nded Prescription Drugs Throug On April 13, 2018, Kristjan hout the United States. , Canada, together with sever al Canadian companies Thorkelson, a resident of Manitoba ding Canada Drugs, Rockley Ven tures, and River East associated with Thorkelson, inclu Supplies, admitted to widespread illegal sales of misbranded an d counterfeit prescription anadian companies were ordere drugs in the United States. The C d to forfeit $29,000,000 of the proceeds of their ille gal scheme, to pay a fine of $5,00 0,000, and to serve five ntenced Thorkelson individuall y to pay a fine of years of probation. The court se on with the first six mont hs in home confinement. $250,000 and to five years of probati Thorkelson and the associated companies were also ordered to pe rmanently cease their illegal operations, surrender to the United States all domain n ame registrations and websites from their businesses , and cooperate with the United S tates Justice Department and the Food and Drug Administrat ion (FDA) in any further crimi nal investigations. In 2010, it came to the attention of the FDA that Canada Drugs was shipping to health care providers in the United States prescription drugs that were unapproved in the United anguages, and that lacked adequate instructions for use. States, labelled with foreign l Drugs. Further investigation revealed EO of Canada During this time, Thorkelson was C that various entities affiliated with Canada Drugs were smuggling unapproved and misbranded drugs intended for sale in foreign countries into the United States, including for sale to providers in Montan a. To facilitate its sales, Canada Drugs purchased other ug inventories, and companies engaged in this business and used the brand names, dr s to further its illegal operat ions. One of those customer lists of those companie companies was Montana HealthCare Solutions, owned by Montana re sident Paul Bottomley, who was separately prosecuted for similar conduct. In order to avoid detection, Canada Drugs and its aff iliated companies falsified customs forms concerning the value of the drugs shipped i nto the United S tates. In two instances, Canada Drugs, feit cancer drugs Avastin through its subsidiary River Eas t Supplies, distributed counter and Altuzan (the Turkish versi tes. Testing of vials of the on of the drug) in the United Sta drugs recovered from these shipments revealed that both contain ed no active ingredient. In 2012, Thorkelson and others at Canada Drugs became aware tha t they had shipped counterfeit Avastin and Altuzan to medical clinics in the Unite d States. Thorkelson denied “selling or offering Avas tin,” even while the company at tempted to recall the horkelson notify the FDA or oth er authorities in the suspect drugs. At no time did T United States that counterfeit cancer drugs containing no activ e ingredient had been shipped to providers in the United States. (DMT, FDA, OIA) https://www.justice.gov/usao-mt/pr/canadian-drug-firm-admits-se lling-counterfeit-and- misbranded-prescription-drugs (14-27)  Co-Owner & CEO of Computer Company Sentenced for Conspiring to Steal 131

166 Intellectual Property. On April 5, 2018, the co-owner and CEO of TERiX Computer his role in fraudulently obtain Company, Inc. was sentenced for ing more than $10 million worth of intellectual proper ty. Bernd D. Appleby, 66, of San Jose, California, was sentenced to 24 months in prison and two years of supervised release and ordered to pay a $100,000 fine. TERiX – located i n Sunnyvale, California and Dublin, Ohio – used the y belonging to Sun Micro systems, Inc. and O intellectual propert racle Corporation to support its customers nationwid e and internationally. Appleby was one of four TERiX executives who pleaded guilty in August 2017 to one count of co nspiracy to commit wire fraud. According to court documen ts, the four conspired to set up three fake companies using aliases – which they suppor ted using bogus email addresse s and addresses, pre-paid telephones and pre-paid credit ca rds – to enter into service su pport contracts with Sun and Oracle for a single server. The four used the fraudulently obt ained intellectual property ustomers, who did not know about the fraud. A statement to support at least 500 TERiX c he plea agreements cites more than 2,700 s eparate downloaded pieces of facts filed with t of intellectual property between 2010 and 2014. The primary pu rpose of the conspiracy was to fraudulently obtain inte llectual property worth millions of dollars and then use the intellectual property to support unwitting TERiX customers, and for their own personal benefit. Appleby was the one defendant responsible for all asp ects of the business. (SDOH, FBI) https://www.justice.gov/usao-sdoh/ pr/co-owner-ceo-computer-company-sentenced- conspiring-steal-int ellectual-property (17-138) or Distributing Counterfeit and Canadian Pharmacist Sentenced f  Adulterated Botox to Local Doctors. On April 4, 2018, Nikhil Buhecha, a Canadian national, pled guilty and was sentenced to 36 months’ imprisonment for conspiring to distribute counterfeit, misbranded, and adulterated Botox® into the United States, including multiple shipments to two doctors located in St. Louis County, Missouri. According to reement, Buhecha owned and operat facts contained in the plea ag ed a sophisticated in Canada, Panama, and wholesale drug distribution business involving multiple persons ultiple U.S. doctors Turkey. Buhecha sourced Botox® from Turkey and shipped it to m in Missouri and other states. A ccording to the label for Botox ® Cosmetic that was approved by the U.S. Food and Drug Administration (FDA), unopen ed vials of Botox® ween 2° to 8° Celsius rigerator at temperatures bet Cosmetic should be stored in a ref terated because his he defendant’s drugs were adul before dispensing to patients. T business did not keep the Botox® a t constant cold temperatures, and sometimes shipped efrigeration or insulation. Fu and stored these drugs with no r rther, some of the Botox® sold by Buhecha had counterfeit e xterior packaging, and the man ufacturing lot numbers on the exterior of the drugs’ cartons did not match the lot numbers on the drug vials ssued several public safety alert inside the cartons. The FDA i s about these events. NTERPOL, USMS) (EDMO, FDA, College of Pharmacists of British Columbia, RCMP, I pr/canadian-pharmacist-senten ced-distributing- https://www.justice.gov/usao-edmo/ counterfeit-and-adulterated-botox-local (17-152)  Three Men Face Federal Narcotics Charges that Allege Distributi on of Counterfeit 132

167 Opioid Pills Containing Fentanyl. On April 4, 2018, Wyatt Pasek, 21, of Santa Ana, County were charged Isaiah Suarez, 22, of Newport Beach; and Duc Cao, 20, of Orange in a scheme to use the synthetic opioid fentanyl and a similar drug to manufacture and distribute counterfeit pharmaceuti cals. Specifically, the thre e designed pills that appeared the men obtained to be brand-name oxycodone pills. Court documents allege that fentanyl and an analogue calle d cyclopropyl fentanyl through in ternet suppliers, used a pill press to make counterfeit pills, and distributed the narco tics through the mails, often arranging sales through a darknet marketplace. During the arre st, authorities seized a pill press lab in Suarez’s apartment , along with bags that contained nearly 3 kilograms of odone and Xanax pills, and ba what appear to be counterfeit oxyc gs that contained approximately 4.5 kilograms of white and blue powders that are being tested. A search of Pasek’s residence revealed approximately 13,000 pills that a ppeared to be counterfeit oxycodone and bundles of United States currency. (CDCA, DEA, U SPIS, IRS, FDA, USMS, Costa Mesa Police Dept.) https://www.justice.gov/usao-cdc a/pr/three-oc-men-face-federal- narcotics-charges- allege-distribution-counterfeit-opioid (18-72) ll Counterfeit Oxycodone Pills  San Francisco Woman Who Helped Se Sentenced To 151 Months In Prison. On February 9, 2018, Candelaria Vazquez, 42, of San Francisco, was sentenced in absentia to over 12 years in prison for her ro le in a conspiracy to manufacture, distribute, and posse fentanyl. Vasquez pleaded ss with intent to distribute guilty on November 8, 2016, to conspi l and conspiracy to racy to distribute fentany launder drug proceeds. According to the plea agreement, Vazquez admitted that for two a pill press that generated thousands of fake years, she and her husband operated done, the pills were in oxycodone pills. Although stamped to appear like genuine oxyco g operation and packaged, fact laced with fentanyl. Vazquez helped with the pill pressin mailed, and delivered fentanyl pills for two years before the p air was arrested on June 10, 2016. She also conspired to launder the drug proceeds, which w ere received in bitcoin and exchanged for cash using unl icensed bitcoin brokers. Vazqu ez and her husband had of fentanyl-laced pills via o distributed hundreds of thousands nline marketplaces. In addition to the prison term, Vasqu ez was sentenced to a three-y ear period of supervised sentence upon her release. Vazquez remains a fugitive and will begin serving the apprehension. (NDCA, OCDETF, DEA, USPIS, HSI, IRS) https://www.justice.gov/usao-ndca/pr/three-defendants-arrested- connection-illegal- fentanyl-pill-manufacturing-operation pr/san-francisco-woman-who-helped-sell-counterfeit- https://www.justice.gov/usao-ndca/ oxycodone-pills-sentenced-151-months (16-259)  Three Florida Residents Sentenced for Operating an Illegal Steroid and Counterfeit Prescription Drug Lab. On February 1, 2018, three Chipley, Florida, residents were sentenced to serve time in fed eral prison for their involvement in a steroid and counterfeit prescription drug lab in Northw est Florida. Ryan Anthony Sikora (24) was sentenced to 41 months in prison, Ariel Anna Murphy (29) to 12 months, and J ohn Joseph Bush, II (26) was sentenced to 8 months. T he three received their sente nces after pleading guilty 133

168 to conspiracy charges for im uting anabolic steroids as porting, manufacturing, and distrib well as counterfeit pr escription drugs. The investigation bega n when US Postal Inspectors determined that large amounts of steroid and counter feit prescription drug ingredients were being shipped fro m China to various locations in South Alabama and ndants mass-produced counterfeit pi Northwest Florida. The defe lls at a lab near Chipley, Florida, using two large-scale pi ll presses. They marketed the counterfeit drugs online using the brand name “Future Pharma” and they would typically process the orders through encrypted email, and then us e the US Postal Service to send the contraband products across the United State s. (MDAL, USPIS, FDA, Local LE agencies) rested-after-law- r/three-florida-residents-ar https://www.justice.gov/usao-mdal/p enforcement-discovers-steroid-and-fake r/three-florida-residents-pl ead-guilty-operating- https://www.justice.gov/usao-mdal/p illegal-steroid-and-counterfeit https://www.justice.gov/usao-mdal/p r/three-florida-residents-se ntenced-operating-illegal- steroid-and-counterfeit (17-379)  Dominican National Arrested and Ch arged with Fentanyl Conspiracy Including the Distribution of Counterfeit Pain Pills. On December 20, 2017, Santiago Pena, 49, a Dominican national residing in Roxbury, Massachusetts, was charged by indictment with conspiracy to distribute 40 grams or more of fentanyl. The cha rge stems from Pena’s participation in a large-scale fentanyl and heroin trafficking ring that was dismantled in efendant related to the drug August 2017. Pena is the seventh d trafficking operation to be charged in federal court; appr e been charged in state oximately 10 other defendants hav court. According to court documen ts, a lengthy wiretap investigation revealed that James Ramirez, an individual charge d separately, supplied large-quant ities of fentanyl and heroin to Kevin and Alex Fraga, drug dealers on Cape Cod. Wire tap intercepts revealed entanyl pills in batches of 100 to numerous other drug that Ramirez was distributing f dealers, and over 2,500 fentanyl pil ls were recovered as a resu lt of Ramirez’s arrest in late August. According to the ind ictment, Pena brokered fentanyl pill deals on Ramirez’s behalf, helping to connect Ramirez with a fentanyl pill supplie r. On multiple occasions, Ramirez traded used cars for a combination of cash and fentanyl pills in deals that Pena helped arrange. Alex Fraga, Kevin Fraga, and Ramirez each plea ded guilty in November. EA, BATF, IRS, DA’s Pena is scheduled to be sente nced on October 4, 2018. (DMA, D Office and State Police) https://www.justice.gov/usao-ma/pr/dominican-national-arrested- and-charged-fentanyl- conspiracy-including-distribution (17-10390)  Drug Dealer Charged In Manhattan Federal Court For Selling Hero in And Counterfeit Oxycodone Over The Internet. On October 23, 2017, Cristian Rodriguez, 43, of the Dominican Republic, w as arrested and charged with on e count of distributing and possessing with intent to di stribute heroin and oxycodone. According to the allegations in the Complaint and statements, since at least May 2016, Rodriguez and his co-conspirators anonymously sol d and distributed controlled sub stances over the Internet via online marketplaces and “dar k web” sites. Rodriguez shippe d various prescription 134

169 drugs, including counterfeit oxycodo of heroin and other ne, which was actually made maintained a stockpile of tes. Rodriguez ss the United Sta substances, to individuals acro in the Bronx, New York. A search of Rodriguez’s residence these drugs in his apartment overed, among other things, approx at the time of his arrest unc imately 32 kilograms of prescription drugs, shipping supplies, drug paraphernalia, money transfer records, and electronics typically used in the operation of online narcotics distribution schemes. (SDNY, DEA, USPIS, NYPD, NYSP, HSI) https://www.justice.gov/usao-sdny/pr/drug-dealer-charged-manhat tan-federal-court- selling-heroin-and-counterfeit-oxycodone (17mj7822) On October 4, ags. California Man Sentenced To Prison For Selling Counterfeit Airb  nced to one year and one ope, California, was sente 2017, Vitaliy Fedorchuk, 28, of Antel sell counterfeit airbags via day in prison and a $5,000 fine for an international scheme to ites. Fedorchuk had pleaded guilty on May 31, 2017, to eBay and other internet sales s ing to court documents, between June 23, 2014, and five counts of mail fraud. Accord s, and manufacturer July 27, 2016, Fedorchuk offered for sale airbag modules, cover , redbarnautoparts. Fedorchuk falsely advertised that the emblems at his eBay online store equipment from major automobile manufacturers such counterfeit airbags were original as Honda, Fiat, Chrysler, Ni the scheme, Fedorchuk ssan, Toyota, GMC and Ford. During sold hundreds of counterfeit airb ,000. Fedorchuk was ags and obtained more than $95 his case. (EDCA, HSI) ordered to pay $1,334 in restitution to identified victims in t https://www.justice.gov/usao-edc -selling-counterfeit- a/pr/antelope-man-pleads-guilty airbags-online https://www.justice.gov/usao-edca/pr/antelope-man-sentenced-pri son-selling-counterfeit- airbags (17-73) The Antitrust Division Engages with Foreign Counterparts to Pro mote the Proper Application of Competition Laws to Intellectual Property Rights . petition enforcement policy The Antitrust Division continues to advocate for principled com abroad based on analysis of competitive effects. One area of f ocus is competition remedies that onal enforcement guidance calls affect IP assets. Our internati for appropriately-tailored ommerce and consumers, and we remedies that address the identified competitive harm to U.S. c 12 urge other enforcers to appl y similar limiting principles in dr awing remedies. The Antitrust emedies that unnecessarily ern about foreign competition r thus expressed conc Division has rty rights, where those remedies are not directly tied to the impinge on U.S. intellectual prope domestic harm. In December 2017, the Antitrust Division, along with the Federal Trade submission to the Organization for Economic Cooperation Commission (FTC), explained in a and Development (OECD) that ant itrust remedies that the Antitrust Division and the FTC seek 12 and See, e.g. , U.S. Dep’t of Justice & Fed. Tra de Comm’n, Antitrust Guidelines for International Enforcement Cooperation (rev’d Jan. 13, 2017), https://www.justice.gov/atr/internationalguidelines/download ; Roger Alford, Deputy Assistant Att’y Gen., Antitrust Div., U.S. Dep’t of Justice, Antitrust Enforcement in an Interconnected World, Remarks at the American C hamber of Commer ce in South Kor ea (Jan. 29, 2018), https://www.justice. gov/opa/speech/file/1029821/download. 135

170 fted to be limited to the Unite d States unless extraterritorial related to IP rights will be cra 13 application is necessary to rem edy harm to U.S. commerce and co nsumers. The submission also emphasized the importance of transparency, procedural fair ness, and non-discrimination with regard to individual remedy de terminations, particularly t hose implicating extraterritoriality. 13 United States Submission, OECD Roundtable on the Extraterritorial Reach of Competition Remedies (Dec. 17, 2017), https://one.oecd.org/document/DAF/COMP/WP3/WD(2017)41/en/pdf . 136

171 Appendix A – Glossary Automotive Anti-Counterfeiting Council A2C2 Assistant U.S. Attorney AUSA BJA Bureau of Justice Assistance CBP U.S. Customs and Border Protection CCIPS Section Computer Crime and Intellectual Property CES Counterintelligence and Export Control Section Computer Hacking and Intellectual Property CHIP Digital Millennium Copyright Act DMCA Department of Justice DOJ Executive Office for United States Attorneys EOUSA Federal Bureau of Investigation FBI FBI Fiscal Year 2017 Report to Congress on Intellectual FBI’s Annual Report Property Enforcement Fiscal Year 2017 FY 2017 Integrated circuits IC Immigration and Customs Enforcement’s ICE-HSI Homeland Security Investigations Intellectual property IP IP Criminal Enforcement Working Group IPCEWG Intellectual Property Enforcement Coordinator IPEC Intellectual Property Enforcement Program IPEP Intellectual Property Law Enforcement Coordinator IPLEC National IP Rights Coordination Center Center IPR U.S.-China Law Enforcement LECD and Cybersecurity Dialogue National Advocacy Center NAC NCIJTF National Cyber Investigative Joint Task Force National Security Cyber Specialists NSCS NSD National Security Division NW3C National White Collar Crime Center OJP Office of Justice Programs 137

172 OPDAT Office of Overseas Prosecutorial Development, Assistance and Training People’s Republic of China PRC PRO IP Act Prioritizing Resources and Organization for Intellectual Property Act of 2008 USPTO U.S. Patent and Trademark Office 138

173 D EPARTMENT OF S TATE 139

174 D EPARTMENT OF S TATE State Department Appendix for Annual Report October 1, 2017 through September 30, 2018 Bilateral and Multila teral Engagement During the period October 1, 2017 through September 30, 2018, U .S. Embassies around the world continued to make IPR an integral part of their policy di alogues with host governments and multilateral institutions. Ar eas in which U.S. Embassies w ork with their host governments include increasing political will for strengthening copyright, patent, trademark, and other intellectual property protections, as well piracy and counterfeit goods as combatting online production. Embassy Economic sec tions typically lead such enga gement, along with support from IP Attachés, other agencies , and with support from Ambassa dors and Deputy Chiefs of Mission. Examples of bilateral engagement include:  U.S. Embassy Hanoi co-sponsored with the Hanoi American Chamber of Commerce and the host government a workshop on Intellectual Property Enforcement in a Digital World.  dustry to shut down one One U.S. mission also worked closely with officials and U.S. in of the world's largest piracy websites.  U.S. Embassy Kuala Lumpur engaged host government officials reg ularly concerning patent and pharmaceutical issues on behalf of U.S. innovative m edicines firms.  The regional Intellectual Propert y Law Enforcement Coordinator (IPLEC) based in U.S. Consulate Sao Paulo secured coope ration of Brazilian authoritie s to make significant counterfeit goods seizures.  The IPLEC program receives State Department funding through the Bureau of International Narcotics and Law Enforcement Affairs. awareness internationally through public diplomacy events, The Department of State raises IP such as World IP Day programs in countries around the world. In April 2018, State provided funding for World IP Day programming in more than a dozen count ries in the developed and developing world consistent with this year’s theme of “Powering Change: Women in Innovation and Creativity.” State also used social media to amplify the i mportance of IP protections to its overseas and domestic audiences. International Organizations The State Department participat es in U.S. delegations to multilateral forums and international organizations where we advance gl obal intellectual property rights protections including: the 140

175 World Trade Organization’s (WTO) Trade Related Aspects of Intel lectual Property Rights on for Economic Co-operation and (TRIPS) Council, the Organizati Development (OECD) Taskforce on Countering Illicit T rade, the World Intellectual Property Organization (WIPO), the Asia-Pacific Economic Cooperation (APEC) Forum, the World Healt h Organization (WHO) and various U.N. bodies. Also, Departmen t of State representatives requested that U.S. international development and trade agency part ners educate their program recipients about the importance of IP to support business developmen t, entrepreneurship, and innovation. Report Pursuant to Article 66.2 of TRIPS: The United States reports on its incentives to promote and encourage technology t ransfer to least-developed co untry (LDC) WTO members in Department of State receiv the annual Article 66.2 Report. The mission’s overseas, es input from regional and functional bureaus e range of USG technology , and interagency partners on th ctivities around the world. Th transfer and capacity building a e USG submits the Article 66.2 Report to the WTO TRIPS Council every autumn. The broad range of activities cov ered in this report, including laboratory-base d scientific c ollaboration, ca pacity building and education, and IP enforcement activities, highlig ht the United States’ efforts to promote effective, voluntary transfer of technology t o LDC members. The Global IP Law Enforcement Coordinator (IPLEC) program The regional IP Law Enforcement Coordinator (IPLEC) program, funded by the Department of State and carried out by Depart with foreign countries to ment of Justice personnel, works strengthen IPR protection and enf tive investigation and orcement leading to more effec prosecution of IPR offenses. The IPLEC officers have regional responsibilities to: (1) asse ss the capacity of law enforcement authorities throughout the region to enforce intellectual property rights, (2) develop and deliver ing formats designed to enhanc e the capacity of justice sector training and other capacity build personnel to enforce intellectual n developing or strengthening property rights, (3) assist i institutions dedicated to enforcing intellectual property right s, (4) monitor regional trends in intellectual propert y protection and comput er crimes, and (5) p rovide expert assistance in support of U.S. Government intellectual property and computer crimes po licies and initiatives in the region. Building on early successes, State has worked closely with the Justice Department to expand the IPLEC program into a global networ k. The United States has deployed five IPLECs that work ong Kong, China SAR, Sao Paulo, their regions, stationed in H collaboratively within and across Brazil, Bucharest, Romania, B angkok, Thailand, and Abuja, Niger ia. Contributions to USTR’s Special 301 and Notorious Markets reports During the reporting period, the Dep artment of State’s Office o f Intellectual Property Enforcement (IPE) provided exten sive support to USTR and the in teragency team for the 2018 Special 301 process. At the requ est of IPE, Posts from around the world submitted detailed analysis on the state of IPR prot ection and enforcement as part of the review. IPE also obtained input from several Posts that o ffered significant contributions to the Notorious Markets Report. 141

176 Post insights on the “on-the-ground” events deepened U.S. depar tments and agencies’ ons in host countries. knowledge of IP protecti Capacity Building and Training oreign assistance anti-crime fu nds managed by the Bureau of The Department of State, using f Enforcement (INL), has a longstanding program to provide U.S. International Narcotics and Law Government capacity-building training and technical assistance to foreign law enforcement partners to combat IPR crime a nd to deter widespread commercial -scale pirated and counterfeit goods and services. State works w ith other agenci es to priorit ize assistance to developing R’s Special 301 Report as countr countries that are named in UST ies of concern. As an example of bilateral training successes:  In January 2018, the State Depar ng program in tment funded a week-long traini Manila, Philippines hosted by an intellectual property expert, in which the expert engaged with judges, prosecutors, l aw enforcement officials, students, faculty, and industry stakeholders to raise intellectual property awareness.  raining program in In March 2018, the Sao Paulo-based IPLEC delivered a regional t Brazil to Argentine, Brazilia n and Paraguayan officials. An Argentine federal judge who participated in the IPLEC t raining and received subsequent IPLEC mentoring ant seizure of executed a search warrant in A pril 2018 resulting in a signific counterfeit goods slated for sal open-air market for e at Argentina’s most notorious counterfeit hard goods.  In May 2018, the Hong Kong-based IPLEC in conjunction with INTE RPOL cybercrime in Singapore to pr delivered regional training on IP osecutors and investigators from Indonesia, t he Philippines, and Thailand. A ttending officials said they would convey the value of i nteragency collaboration to the ir colleagues in their home countries to create more e ffective IP cybercrime enforceme nt. The program will help officials be tter enforce IP rights, including those of U.S. rights holders, and prosecute violations in their home countries. On a global level, the Department of State’s nearly 1500 economic officers, together with 13 Commerce Department Intellectua l Property (IP) Attachés, secure d the participation of representatives from foreign ministries and law enforcement off icials in training programs that bolster IP law and enforcement e fforts. The Department of Stat e also organized International Visitor Leadership Program (IVLP ) visits to the National IPR Coordination Center in Alexandria, Virginia for IP po licy and enforcement officials fr om Argentina, Colombia, Thailand, the United Kingdom, Aus tralia, and Spain, among others. The Department also gave presentations to IP officials rom Southern and Sub-Saharan and private sector stakeholders f Africa and Spain who were in the United States as part of vario us international visitor programs. These engagements enabled the Department to better understand k ey IP enforcement concerns around the world and share best pr actices with int ernational IP professionals. 142

177 In addition, IPE – in partnership w ith USPTO’s Global IP Academ y (GIPA) – coordinated a two- .S. government officials. Most day training course on IPR for U participants were Foreign Service Officers preparing for onward assignments, and the trai ning also included civil servants and U.S. Embassy locally employed staff. Experts and stakeholders briefed attendees on the s on current IP “hot topics,” and fundamentals of intellectual property, U.S. government position ped to advocate for U.S. rights- U.S. industry priorities. These officials are now better equip holders overseas and articulate U.S. government policy position s in bilateral discussions and in international fora. In addition, IPE regularly briefed visitin g foreign IP officials on U.S. government policy positions and IP promotion and protection act ivities. IPE also delivered tra oreign Service Officers at the Foreign Service ining to classes of F and Commercial Tradecraft classe Institute’s Political-Economic s. IPE training gives officers and local staff the latest po licy perspectives on debates in in ternational IP and enables and ter advocate for U.S. rights-h empowers American officers to bet olders overseas. In late October 2017 and in S eptember 2018, IPE took part in we ek-long Econ-Energy Seminars for Foreign Service Officers at posts in Africa and in South an d Central America. At each of the seminars, an IPE representativ e delivered an hour-long training session on U.S. intellectual property policy in the region, enabling officers to better unde rstand U.S. policy in a regional U.S. rights-holde gions. context and better advocate for rs in their re IPE joined with the U.S. Department of Commerce “Stopfakes” roa dshows in six different domestic locations during FY 2018: Seattle, WA, Portland, OR, D allas, TX, Austin, TX, Phoenix, AZ, and Tucson, AZ. Stopf ps, entrepreneurs, and small to akes roadshows bring start-u medium-sized businesses, togeth er with USG offi cials to learn h ow to identify and protect various intellectual property assets. They also learn about me chanisms for obtaining IP protection in overseas markets, st rategies for determining where to seek protection, and the value of copyright and trade secrets pro tection to their businesses. IPE presented information on the State Department role in helpi ng U.S. companies overseas protec t their IP rights, and provided the hundreds of attendees with points of contact in case indivi dual assistance became necessary. Presentations also addressed how to combat counterfeits on international e-commerce sites and what additional government resourc es are available to help U.S. business bolster intellectual property protections, while all owing participants to have oppor tunities to meet one-on-one with the presenters to discuss intelle ctual property issues of prima ry concern. 143

178 D EPARTMENT OF T REASURY 144

179 D T REASURY EPARTMENT OF ndix for FY18 Annual Report Department of the Treasury Appe Treasury IP-related efforts on Customs Treasury authority for border enf orcement of intellectual prope rty laws, along with certain other ried out by CBP and ICE (see customs revenue functions, has been delegated to DHS and is car Treasury Order 100-16 and 6 U.S.C. §§ 212, 215). Under the del egation, Treasury retains the sole authority to approve any re gulations concerning copyright and trademark enforcement at the border, and works closely on these with CBP and ICE. Treasury efforts to identify and address certain IP-related risks to national security through the CFIUS process The Office of Investment Securit y manages the day-to-day functi ons of Treasury’s role as Chair of the Committee on Foreign Investm IUS). CFIUS is an interagency ent in the United States (CF committee authorized to review c ertain transactions that could result in control of a U.S. business by a foreign person, in order to de termine the effect of such t ransactions on the national security of the United States. Pursuant to the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), which was si gned into law on August 13, 2018, an d subject to implementing regulations, CFIUS now has the authority, among others, to review certain non-controlling investments by foreign persons i n U.S. businesses that produce, design, test, manufacture, fabricate, or develop critical technologies, which could includ e aspects of intellectual property. , during its review of a ual property laws. If, however CFIUS does not enforce intellect transaction CFIUS id entifies a risk to U.S. national security a rising from a foreign person’s acquisition of, or access to, the intellectual property of the U.S. business, and if other authorities to address the identified risk, are not adequate or appropriate CFIUS will seek to mitigate such risk. Mitigation measures could ta ke a variety of forms, inclu ding but not limited to: placing the in escrow; controlling the foreign person ’s access to the intellectual intellectual property ss controls; and ensuring U.S. property; requiring mechanisms to monitor and enforce such acce Government access to, or insight into, the intellectual propert y. If CFIUS determines that the identified risk cannot be resolved through mitigation, it will refer the transaction to the President, who can suspend or prohib it the transaction. Treasury authority to impose sanctions under Executive Order 13694, as amended, in response to certain malicious cyber-enabled activ ities, including the thef t of trade secrets for commercial or competitive advantage or private financial gain. Treasury continues to encourage relevant departm ents and agencies, including law referrals from enforcement and intelligence agen cies, regarding targets for potential designation by the Office of Foreign Assets Control (OFAC) pursuant to Executive Order (E .O.) 13694, as amended by E.O. 13757. The Executive Order authorizes the imposition of s anctions on individuals and entities determined to be respons ible for or complicit in, or t o have engaged in, certain malicious cyber-enabled activities, inc luding “causing a significant misappropriation of funds or economic resources, trade secrets, pers onal identifiers, or financial in formation for commercial or 145

180 competitive advantage or private financial gain.” Of the 47 in dividuals and entities that have been sanctioned pursuant to the E xecutive Order, one entity and ten individuals were sanctioned during FY18 for having engaged in significant malicious cyber-enabled misappropriation of financial information and persona l identifiers for private fina ncial gain. (See the Treasury Department press release of March 23, 2018, on “Treasury Sancti ons Iranian Cyber Actors for Malicious Cyber-Enabled Activitie s Targeting Hundreds of Universities,” at https://home.treasury.gov/ne ws/press-releases/sm0332.) 146

181 T O FFICE OF THE U.S. RADE R EPRESENTATIVE 147

182 FFICE OF THE U.S. T RADE R EPRESENTATIVE O USTR Appendix for FY 2018 Annual Report One avenue to promote intellectua rcement abroad is through l property protection and enfo the Administration advocates engagement with our trading partners. Through such engagement, other countries for, inter alia , for strong intellectual property protection and enforcement in rade secrets and inventions b y U.S. creators, inventors, artists creative works, brands, designs, t and businesses. Through direct engagement with foreign counter parts, the Office of the U.S. Trade Representative (USTR) empha sizes the importance that the U.S. government places on protecting and enforcing intellectual property, and presses for concrete action by trading partners l property rights, including those owned by Americans. to protect and enforce intellectua To advance the Administration’ ange of trade policy tools to s objectives, USTR uses a broad r promote strong intellectual pr operty rights protection and enfo rcement, including Section 301 of the Trade Act; the annual Special 301 review of intellectual pr operty protection and enforcement and related market access issues; trade agreement negotiations; monitoring and enforcement of those agreements; trade and inve stment framework agreements; pa rticipation in the TRIPS Council at the World Trade Organ ization; and high-level engagem ent in multilateral and bilateral meetings. creative industries, the United Given the international competitiveness of U.S. innovative and States considers strong and eff ective protection and enforcemen t of IP rights as critical to U.S. economic growth and American jobs . According to the U.S. Department of Commerce, 45.5 million American jobs in 2014 were directly or indirectly suppo rted by “IP-intensive” industries, and these jobs paid higher wages , in 2014, these IP-intensive to their workers. In addition industries accounted for $6.6 trillion in value added and 38.2 percent of the U.S. GDP. (See Intellectual Property and th e U.S. Economy: 2016 Update , at Department of Commerce, https://www.uspto.gov/sites/default/files/documents/IPandtheUSEconomySept2016.pdf .) xport strengths for the Unit ed States. To help ensure that Innovation and creativity are key e American innovators and creator s compete on a level playing field around the world, the U.S. Government uses all the tools at its disposal to promote effect ive IPR protecti on and enforcement by its trading partners. The USTR initiatives that have advanc ed IPR protection in 2018 include the following. Section 301 Investigation into China’s Technology Transfer, Intellectual Property and Innovation Law, Policies, Practices and Actions On August 14, 2017, the President of the United States issued a instructing the Memorandum Trade Representative to determi ne whether to investigate under section 301 of the Trade Act of 1974 (the Trade Act) (19 U.S.C . § 2411), laws, policies, practi ces, or actions of the government of China that may be unreasonable or discriminatory and that ma y be harming American intellectual property rights , innovation, or technology development. See 82 FR 39007. After consultation with the appropria te advisory committees and the i nter-agency Section 301 Committee, on August 18, 2017, USTR initiated an investigation into certain acts, policies, and practices of China related to tec hnology transfer, intellectual property, and innovation. See 82 148

183 uded a public hearing on Octob er 10, 2017, and two rounds of FR 40213. The investigation incl public written comments from i nterested members of the public. On March 22, 2018, the Presidential Memorandum on the A ated to the Section 301 ctions by the United States Rel Investigation noted that the Trade Representative had advised t hat the investig ation supports findings that acts, policies, and practices of the China related to technology trans fer, intellectual property, and innovation covered i n the investigation are unreasonable or discriminatory and burden or restrict U.S. commerce. In a notice published in the Federal Register on April 6, 2018, the Trade Representative found:  China uses foreign ownership res e requirements and trictions, such as joint ventur foreign equity limitations, and va rious administrative review a nd licensing processes, to require or pressure technology t ransfer from U.S. companies; ations forces U.S. companies to license  China’s regime of technology regul seeking technologies to Chinese entities to do so on non-market-based t erms that favor Chinese recipients;  China directs and unfairly facilita tes the systematic investmen t in, and acquisition of, U.S. companies and assets by Chinese companies to obtain cuttin g-edge technologies gy to Chinese and intellectual property and gene rate the transfer of technolo companies; and horized intrusions into, and t China conducts and supports unaut  heft from, the computer networks of U.S. compani es to access their sensitive c ommercial information and trade secrets. The President directed the Trade Representative to take all app ropriate acti on under Section 301, China. O including considering increased tariffs on goods from n March 23, 2018, the United ith China under the WTO Dispute Resolution Understanding (in States requested consultations w matter DS542). Consultations on DS542 were held in July 2018 but they did not resolve the dispute. On October 18, 2018, the U nited States requested that the WTO Dispute Settlement Body establish a panel to examine the U.S. complaint. After Ch ina blocked the first U.S. request nel as provided for in the rules for a WTO dispute settlement pa for dispute settlement h a WTO dispute settlement panel the United States repeated its request to establis proceedings, and a panel was established at the November 21, 2018 meeting of the Dispute Settlement Body. On a separate track, April 6, 2018, USTR published a proposed list of products imported from China, worth approximately $50 bil lion in imports that could be subject to additional tariffs. e USTR imposed additional After hearings and the receipt of numerous written comments, th mately $34 billion worth of imp orts from China, effective July 6, tariffs of 25 percent on approxi 2018. After a subsequent round of h earings and submissions, the USTR imposed additional tariffs of 25 percent on approxi mately $16 billion worth of imp orts from China, effective August 23, 2018. China, however, made clear that it would not change its policie s in response to the initial Section 301 action. China denied there w ere problems with respect to i ts policies involving technology transfer and intellectual property and increased duties on cert ain U.S. exports to China. These 149

184 initial tariff action was no longer appropriate to obtain the actions demonstrated that USTR’s elimination of China’s unfair trade acts, policies, and practic es. In addition, the burden or erce of these acts, policies, restriction on United States comm and practices continues to increase, including following the one-y ear investigation period. Accordingly, under direction of t he President, on September 24, 2018, USTR announced the imposition of tariffs of 10 per cent on approximately $200 billion worth of imports from China, rising to a rate of 25 percent effective March 2, 2019. On November 20, 2018, USTR released a report updating information on its Section 301 tices related t o technology transfer, intellectual investigation of China’s acts , policies and prac 14 property and innovation. USTR Robert Lighthizer indicated t hat “This update shows that ered its unfair, unreasonable, a nd market-distorting practices that China has not fundamentally alt 15 ch 2018 report on our Section 301 in vestigation.” were the subject of the Mar co, and Canada Agreement (USMCA) NAFTA and the United States, Mexi On May 18, 2017, USTR notified Congre intent to initiate NAFTA ss of the Administration’s of intellectual property for U.S. renegotiations. Securing effec tive protection and enforcement all trade engagement, includ rights holders is a key element of ing these negotiations. The Administration notified Congress of its intent to sign a trade deal in August. That outcome operty provisions related to cop included strong intellectual pr yright, patents, trademarks, l, border, administrative), trade geographical indications, enforcement (including civil, crimina secrets and other IP priorities. United States, Mexico and In September 2018, under the leadership of President Trump, the st century, high- Canada reached an agreement to modernize the 24-year-old NAFTA into a 21 tate-Mexico-Canada Agreement ( standard agreement. The United S USMCA) will support mutually beneficial trade leadi ng to freer markets, fairer trad e, and robust economic growth in North America. The USMCA includes a modernized, high-standard Intellectual Property It contains comprehensive chapter, which breaks new ground in U.S. trade and IP policy. protections against misappropria tion of trade secrets, includin g by state-owned enterprises. It establishes a minimum term of data protection for biologic drug s of 10 years. It provides the most robust border enforcement mechanisms of any prior FTA. In addition, strong copyright protection and enforcement, more tr ansparency in the grant of G eographical Indications (GI) protection or recognit ion, and full national treatment also pro mote the strong and effective protection and enforcement of IP rights that is critical to dri ving innovation, creating economic 16 growth, and supporting American jobs. 14 ons/301%20Report%20Update.pdf https://ustr.gov/sites/default/files/enforcement/301Investigati 15 eases/2018/november/ustr- https://ustr.gov/about-u s/policy-offices/press-office/press-rel updates-section-301 16 A into a 21st Century United States–Mexico–Canada Trade Fact Sheet: Modernizing NAFT Trade Agreement (October 1, 2018) - https://ustr.gov/about -us/policy-offices/press-office/fact- %E2%80%93mexico%E2%80%93canada-trade-fa-1 sheets/2018/october/united-states 150

185 U.S.-Korea Free Trade Agreement (KORUS) Through negotiations to improve KORUS, the U.S. Trade Represent ative has secured changes and Korea. In July 2017, that will address the trade imbalance between the United States Ambassador Lighthizer initiated t rade discussions with Korea, leading to special sessions of the KORUS Joint Committee in 2017 and f S amendments and urther negotiations for KORU modifications in 2018. In these dis cussions, the United States achieved steps to improve the large trade deficit in indust rial goods and to address KORUS im plementation concerns that have imbursements, the USTR secured hindered U.S. export growth. In the realm of pharmaceutical re Korea’s commitment to, within 2018, amend its Premium Pricing P olicy for Global Innovative Drugs to make it consistent with Korea’s commitments under KORU S to ensure non- discriminatory and fair treatment for U.S. pharmaceutical expor ts. https://ustr.gov/about- us/policy-offices/press-office/fact-sheets/2018/march/new-us-tr and ade-policy-and-national https://ustr.gov/sites/default/files/files/Press/Releases/KORUS%20Texts%20Outcomes.pdf. Ongoing Trade Agreement Implementation and Enforcement ngage with Free Trade Agreem ent (FTA) partners (including In FY 2018, the U.S. continued to e Australia, Colombia, Costa Rica, Dominican Republic, and Morocc o) to ensure that FTA ated to IPR, are being implemen obligations, including those rel ted. USTR Special 301 Report Each year, pursuant to statute, USTR issues the Special 301 Rep ort on the adequacy and effectiveness of protection and enf orcement of intellectual pro perty by our trading partners. The Special 301 Report is an important tool to engage with our trad ing partners to promote strong protection for U.S. creative a nd innovative industries, as well as to promote compliance with ss to identify and address key trade commitments. USTR actively employs the Special 301 proce esses and to document and encourage continued progress in IPR challenges for American busin countries that undertake legislat ive and enforcement reforms fo llowing engagement under Special 301. 301 Report in April 2018. (The USTR released the 2018 Special 2018 Report is at https://ustr.gov/sites/default/f iles/files/Press/Reports/2018%2 0Special%20301.pdf , and the related press release is at https://ustr.gov/about -us/policy-offices/p ress-office/press- releases/2018/april/ustr-releases-2018-special-301-report .) In the report, USTR highlighted serious and ongoing concerns with r espect to the environment for IPR protection and olombia, India, Indonesia, Russi a, Ukraine and other markets. enforcement in Canada, China, C In addition, USTR announced that Reviews (OCRs) for it would conduct Out-of-Cycle Colombia, Kuwait and Malaysia. The Special 301 Report reflects the Administration’s continued resolve to encourage adequate and effective IPR protection and e nforcement worldwide. The Re port identifies a wide range of concerns, including: (a) the deteriorati on in IPR protection an d enforcement in a number of trading partners; (b) discrimina tory and/or non-transparent mea sures that act as market access 151

186 barriers to U.S. pharmaceutical products and medical devices; ( c) unresolved inadequacies in trade secret protec tion in China, India, and elsewhere; (d) troubling “indigenous innovation,” tion policies that may unfairly disadvantage U.S. right holders in technology transfer, and localiza markets abroad; (e) the contin uing challenges of online copyright piracy; (f) measures that ntities that rely upon IPR impede market access for U.S. products embodying IPR and U.S. e temic IPR enforcement iss ues in many trading partners protection; and (g) other ongoing, sys around the world. is a tool that USTR uses to encourage progress on IP issues A Special 301 Out-of-Cycle Review of concern. Out-of-Cycle Revie ws provide an opportunity to add ress and remedy such issues through heightened engagement a nd cooperation with trading part ners and other stakeholders. ntified IP cha llenges in specific trading partner markets. Out-of-Cycle Reviews focus on ide c IP issues of concern can lead to a positive change in a trading Successful resolution of specifi partner’s Special 301 status outside of the typical period for the annual review. Conversely, failure to address identified IP concerns, or further deteriora tion as to an IP-related concern Cycle Review period, can lead to an adverse change in status. As within the 10 specified Out-of- reviews were proceeding as to Colombia, Kuwait, and of the end of FY 2018, out-of-cycle Malaysia. Notorious Markets List The Notorious Markets List (List) highlights se physical marketplaces that lect online and reportedly engage in and facilitate substantial c opyright pirac y and trademark counterfeiting. USTR has identified notorious markets in the Special 301 Report since 2006. In 2010, USTR announced that it would begin publis om the annual Special 301 Report, hing the List separately fr pursuant to an Out-of-Cycle Review (OCR). USTR first separately published the 2010 List in February 2011, and has published a List for every year since. In the List, USTR highlights markets not only because they exem plify global concerns about ecause the scale of infrin counterfeiting and piracy, but also b ging activity in such markets can cause significant economic harm to U.S. IPR holders. Some of the identified markets reportedly are host to a combination of legitimate and unauthorized activi ties. Others reportedly exist solely to engage in or facilita te unauthorized activity. The List does not purport to be an exhaustive list of all physical and online markets worldwide in which IPR infringement takes place. and operators in the private sector A goal of the List is to motivate appropriate action by owners as well as governments, to reduc e piracy and counterfeiting. T he operators of several websites identified in past Lists have begun to work with rights holders to address counterfeiting and piracy. Several markets have also ceased operations or have been the focus of government enforcement efforts. The 2017 Notorious Markets List was issued on January 12, 2018. (The List is at https://ustr.gov/sites/default/f iles/files/Press/Reports/2017%2 0Notorious%20Markets%20List%2 01.11.18.pdf , and the related pre ss release is at https://ustr.gov/about-us/policy-offices/press- office/press-releases/2018/janua ry/2017-notorious-markets-list .) The 2017 List includes a focus 152

187 on illicit streaming devices and the cit streaming ecosystem to U.S. growing threat of the illi television, movie, sports, and othe r content in foreign markets . As of the close of FY2018, the 2018 list is expected to be issued in the coming weeks. India The U.S. maintains bilateral e ngagement with India on IPR issue s through the High-Level IP Working Group under the United States–India Trade Policy Forum (TPF). USTR, working with interagency partners (USPTO, U .S. Copyright Office, ITA, DOJ, H ealth and Human Services, FTC, and others), held numerous e ngagements with Indian governm ent counterparts during FY 2018 to promote robust protection a nd enforcement of IPR, with a focus on areas such as copyright, trade secrets, pate nts, and promoting innovation and creativity through high-level government policies. World Trade Organization Council on Trade-Related Aspects of Intellectual Property Rights (TRIPS Council) The World Trade Organization ( WTO) provides an additional venue for USTR to lead engagement with trading partners on intellectual property rights (IPR) issues, including through accession negotiations for prospective Members, the Council for Trade-Related Aspects of Intellectual Property Rights (T RIPS Council), and the Dispute S ettlement Body. enda in the TRIPS Council In FY 2018, the United States advanced its IP and Innovation ag designed to facilitate greater understanding of the critical role that through a series of initiatives IP plays in promoting innovation, entitled “The Societal Value of Intellectual Property in the New Economy.” The United State s co-sponsored three submissions under this year-long theme with member states including, Australia, the European Union, Japan, Chinese Taipei, The Republic of Korea, and Switzerland, examining how IP protection and enforcement helps create conditions that encourage risk -taking and investments in innova tions of all kinds, including in the development of new technologies, new solutions to business challenges, new cultural and s to distribute such works to the public. We advanced artistic expressions, and the mean TRIPS Council meetings this y ear on how IP protection and discussion among member states at enforcement help to create ne w businesses and expand opportunit ies for individuals and societies. World Trade Organization Accession Governments in the process of negotiating the terms for accessi on to the WTO work with WTO Members, including the United S tates, to appropriately update a nd strengthen their intellectual property regimes as well as to e xpand trade and enhance the inv estment climate for innovative and creative industries. Other Fora 153

188 In addition to the WTO (which is th e principal forum for addres sing trade-related aspects of intellectual property), the Unite d States also advanced these i ssues in other fora during FY 2018, including the OECD, WIPO, APEC forum and various U.N. bodies. In the APEC Intellectual Propert y Experts Group (IPEG), the Uni ted States coordinated presentations with other APEC economies highlighting best pract ices regarding patent grace period, including the benefits of grace period harmonization for SMEs. The United States also presented on the benefits of transparency and public notice in trademark and geographical consent agreements. indications protections, and U.S . practice regarding trademark Additionally, on the margins of IPE s organized and held the second G meetings, the United State and third of three capacity-build ing workshops on intellectual property border enforcement, ector representatives from various bringing together trademark and customs officials and private s practices on addressing trade in fake goods across the region. APEC economies to discuss best Additionally, in FY 2018, the United States reviewed the intell ectual property laws and practices of Colombia in connection wit h that country’s OECD accession. Additional Areas of IPR Engagement In September 2018, USTR led a dele gation of officials to Taiwan for discussions on the full range of trade and investment i ssues, including priority issues such as digital piracy and iscussions, particularly further pharmaceuticals. Digital piracy w as a primary focus of these d steps for Taiwan to curb digital piracy and enhance cooperation with the United States. USTR led the U.S. delegation i (UK) under the U.S.-UK n meetings with the United Kingdo m roup in March and July 2018 as we Trade and Investment Working G ll as several ad hoc meetings of the subgroup on intelle ctual property rights. The Working Group, established in rcial continuity for U. S. and UK businesses as the UK July 2017, is focused on providing comme ade and investment ahead of the prepares to leave the EU and on exploring ways to strengthen tr UK can demonstrate global exit. The Working Group is exploring how the United States and nd collaborate to promote open ma rkets around the world. As one leadership in IP enforcement a king Group released toolkits on protecting intellectual properties outcome of this effort, the Wor targeted at small and medium-sized enterprises (https://www.uspto.gov/sites/default/files/documents/UK-SME-IP- Toolkit_FINAL.pdf?MURL=IPToolkit ). The United States and the UK issued statements regarding the Working Group’s March meeting ( s/policy-offices/press- https://ustr.gov/about-u office/press-releases/2018/marc h/readout-3rd-meeting-us-uk-trad e-and ) and July meeting (https://ustr.gov/about-us/policy- offices/press-office/press-rel eases/2018/july/fourth-meeting-us- uk-trade-and ). See also https://ustr.gov/a bout-us/policy-offices/press-office/press- releases/2018/september/deput y-ustr-gerrish-statement-us . Engagement with Stakeholders and the Public USTR frequently seeks public input f rom all sectors of society, including private citizens, non- governmental organizations, academia, consumer groups, small an d medium-size businesses, and 154

189 the business community (incl uding innovators, content providers , and technology and other service providers). regarding negotiation To this end, USTR holds public hearings; seeks written comments objectives through Federal Registe r notices; chairs regular sessions with designated public advisory committees; and disseminates trade policy materials such as press releases, factsheets, and statements on the USTR website. These dialogues are critic al at every stage of USTR’s implementing, and enforcing trade work, including in connection wit h the process of negotiating, rules. orious Markets List processes. USTR also seeks public input for the annual Special 301 and Not The annual Special 301 Report identifies countries that fail to adequately and effectively protect to limit market access for U.S. or enforce intellectual property rights or use unfair barriers businesses that rely on intellect ual property. The Notorious M arkets List highlights prominent online and physical marketplaces that reportedly engage in and facilitate substantial copyright piracy and trademark counterfeiting. USTR publishes requests f or public comment in the Federal public input and rebuttals, and Register that provide opportunities for the submitted comments are these processes. In addition to available online. In addition, USTR holds public hearings for requesting comments from on IPR matters, intellectual the public and holding public hearings property trade policy figured h eavily in USTR’s broader stakeholder and Congressional outreach, including in a range of domes tic and international fora. 155

190 C OPYRIGHT O FFICE 156

191 FFICE O OPYRIGHT C Copyright Office Appendix f or FY 18 Annual Report the key activities taken by the United States Copyright This appendix summarizes some of Office in FY 2018. Enactment of the Orrin G. Hatch on Act (P.L. 115-264) –Bob Goodlatte Music Modernizati Act (MMA) ation ch–Bob Goodlatte Music Moderniz Congress passed the Orrin G. Hat in late September 2018, and the President signed it into law on October 11, 2018. As President Trump explained, this “landmark legis lation” – which had bipartisan sponsorship and was unanimously dates to copyright law to reflect passed by both the Senate and the H ouse – “provides critical up the realities of music licensi ng in the digital age and to bett er reward artists and producers for the 17 online use of their music.” nd background of this legislation Congress explained the need a as follows: The United States’ copyright laws have helped make this nation the center of the to thrive by music world. Copyright laws protect creators and artists, allo wing them granting them exclusive rights and protections to their works. However, the law has to reflect changes in con not kept pace with the music industry sumer preferences and scheme appli technological developments. The current statutory es inconsistent rules inequitable that place certain technologies at a disadvantage and result in es have drawn compensation variances for music creators. These inconsistenci with and that music copyright and licensing laws are too difficult to comply criticism do not adequately reward the artists and professionals responsi ble for creating ntroduced in the American music. To address these issues, multiple bills were i Senate and House of Representatives. Songwriters, artists, publishers, producers, distributors, and other stakehol nd distribution of music ders involved in the creation a to find a path forward collaborated with legislators in both the Senate and the House on music reform. Legislative options were discussed with copyright experts and the Copyright Office. Hearings and briefings were held on music licensing reform and 18 multiple bills were introduced. To summarize, the following is a hat the three titles of the MMA accomplish description of w (this description is based on t he discussion of the MMA that is on the Copyright Office’s website ): at https://www.copyright.gov/music-modernization/ 17 Act Statement by the President on s igning H.R. 1551, the Orrin G. Hatch–Bob Goodlatte Music Modernization /. e-president-7 gov/briefings-statements/statement-by-th https://www.whitehouse. (October 11, 2018) at 18 S. Rep. No. 115-339, at 1-2 (2018); Report and Section-by-Sect ion Analysis of H.R. 1551 by the Chairmen and see also Ranking Members of the Senate and House Judiciary Committees, a t 1 (2018); H.R. Rep. No. 115-651, at 2 (2018) (detailing the House Judiciary Committee’s effort to review music copyright laws). 157

192  Title I of the MMA is the Musica l Works Modernization Act. Amo ng other things, Title I modifies the existing secti production and distribution on 115 “mechanical” license for re of musical works in phonorecords (which was previously obtained by licensees on a per- work, song-by-song basis) to establish a new blanket license fo r digital music providers to engage in specific covered activities (namely, permanent downloads, limited eaming). Licensing of physical configurations ( e.g. , CDs, downloads, and interactive str vinyl) will still operate on a per-work, individual song license, basis. Title I establishes a market-oriented “willing buyer, w illing seller” rate standard t hat will apply to all licensees of musical works under the section 115 mechanical lic ense. Pursuant to section e an entity as the 115(d)(3), as amended, the Regis ter of Copyrights will designat to administer the blanket licen se and distribute collected mechanical licensing collective ed mechanical licensing royalties to songwriters and music publishers. The newly creat collective will be tasked with developing and maintaining a database of musical works and sound recordings, which will be publicly available and is e xpected to become the be a transition period to most comprehensive database in the music industry. There will move to the new blanket license rs to limit copyright , allowing digital music provide infringement liability so l ong as the provider engages in good- faith, commercially reasonable efforts to identify and locate musical work copyrigh t owners. The legislation also modifies the process for se lecting federal di strict court judges to adjudicate rate- t are subject to consent setting disputes regarding performance rights organizations tha , ASCAP and BMI). i.e. decrees with the Department of Justice ( Title Title II of the MMA is the Cla ssics Protection and Access Act. Among other things,  artially into the federal copyright system by II brings pre-1972 sound recordings p infringement to owners of soun d recordings fixed extending remedies for copyright before February 15, 1972. The feder al remedies for unauthorize d use of pre-1972 sound for 95 years after first publicat ion of the recording, ending recordings shall be available ods. These periods provide on December 31 of that year, subject to certain additional peri varying additional protecti on for pre-1972 sound recordings, ba sed on when the sound recording was first published. This section applies a statutor y licensing regime similar to that which applies to post- 1972 sound recordings, e.g., the sta tutory licenses for noninteractive digital streami dio, satellite radio, and ng services — such as internet ra fully engaging in cable TV music services. It also establishes a process for law noncommercial uses of pre-1972 sound recordings that are not be ing commercially exploited. The legislation also a pplies certain existing title 17 limitations on exclusive bility to uses of pre-1972 sound recordings, e.g., sections 107 rights and limitations on lia (fair use), 108 (libraries and archives), 109 (first sale), 110 (certain public performances), 112(f) (certain ephemeral copies) and 512 (safe harbor provisions for online service providers).  Title III of the MMA is the Allocation for Music Producers (“AM P”) Act. Among other things, Title III will allow music producers to receive compensation from royalties collected for uses of sound reco rdings under the section 114 st atutory license by codifying a process wherein the collective designated to collec t and distribute royalties (currently, Sound Exchange) will distribute royalty payments to a producer under a “letter of di rection.” 158

193 For years, the Copyright Office has worked on issues related to music reform. In 2011, the Federal Copyright Protecti on for Pre-1972 Sound Recordings , which Office issued its report, nd means for bringing sound recor dings fixed before February 15, examined the desirability of a 1972, under federal jurisdiction. In 2015, the Office complete d its comprehensive study of the music licensing framework and the evolving needs of creators in the twenty-first century, and published its report, . The Copyright Office is heartened Copyright and the Music Marketplace by the passage of this landmark l egislation expected to benefit the many stakeholders across all aspects of the music marketp lace, including songwriters, publis hers, artists, rec ord labels, digital services, libraries, and the public at large. The Office has started work on various rulemaking endeavors rel ated to the MMA and is conducting public outreach and educational activities regarding the changes made by the MMA. ce’s implementation of the new law, see For more on the MMA and the Offi . https://www.copyright.gov/music-modernization/ Studies and Reports uring that all members of the The Office has maintained its commitment to transparency by ens copyright community – including c opyright owners, technology co mpanies, consumers, public interest groups, academics, and the general public – have robus t opportunities to participate and contribute to the Office’s polic y studies, reports, and recomme ndations. In addition, the Office t by examining and registering continued to perform its work i n administering the Copyright Ac hundreds of thousands of copyright claims and recording documents and administering statutory licenses. The Office also worked with Congressional committees and staff on copyright legislation, provided expert advi xecutive branch agencies on ce to the federal courts and e c outreach during FY18. Please opyright matters, and offered publi domestic and international c visit www.copyright.gov for more information. During FY 2018, the Office con tinued its work on a number of a ctive studies. Visual Works.  The Office continued its wor k on a study on how certain visual works – particularly photographs, graphic artworks, and illustrations – are monetized, enforced, and registered under the Copyright Act. In April 2015, the Off ice published a Federal Register request for public comments. A s the notice explained, the Off ice is specifically place for these visual works, a interested in the current market s well as observations tacles that these creators a nd, as applicable, their regarding the real or potential obs licensees or other representati ves face when navigating the dig ital landscape. In addition, the Office is interested in the perspectives of copyright owners and users of these creative works. The Office is continuing its review of these issues int o FY 2019. For information on this work, see https://www.copyright.gov/policy/visualworks/.  Moral Rights of Attribution and Integrity. During FY 2018, the Office continued its work on a study on how existing U.S found in Title 17 of the . law (including provisions U.S. Code and other federal and state laws) protects the moral rights of attribution and integrity and whether any additi onal protection is advisable in this area. As part of this study, the Office in January 2017 published a Federal Register request for two rounds of 159

194 public comment. In response, the Office received 62 written submissions. The Office continued its review of the issues, conducted additional research, and is in the process of finalizing a written report for Congress, which will be release d in FY 2019. For see information on this study, https://www.copyright.gov/policy/moralrights/.  The DMCA Safe Harbor Provisions (17 U.S.C. Section 512). The Office published a Federal Register notice in December 2015, requesting public comments on a study to evaluate the impact and effectiven ess of the safe harbor provis ions contained in section 512 of Title 17 of the U.S. Code . Section 512 established a sy stem for copyright owners imitations on liability for ine infringement, including l and online entities to address onl compliant service providers to hel p foster the growth of internet-based services. The section 512 study is evaluating the current impact and effectiveness of the Copyright Act’s notice-and-takedown syste m and safe harbor provisions. In response to the request for comments, the Office received mo re than 92,000 written comments, filed by a variety of s takeholders, including large a nd small creators, service ty, and academics. In addition, t providers, users, civil socie he Office held two days of public roundtables (in San Franc isco and New York) and heard fr om over 130 Office sought further input through a second round participants. In November 2016, the of public comments as well as a r equest for empirical studies. evaluate the impact and During FY 2018, the Office continued its work on this study to n 512 of Title 17 of the U.S. bor provisions contained in sectio effectiveness of the safe har Code. Among other issues, the Offi ce is considering the costs and burdens of the notice- and-takedown process on large- an d small-scale copyright owners, online service . The Office is also reviewing how successfully section providers, and the general public 512 addresses online infringement and protects against improper takedown notices. For information on this study, see https://www.copyright.gov/policy/section512/. Rulemakings During FY 2018, the Office engaged in a number of rulemaking ma tters. A list of both open and https://www.copyright.gov/rulemaking/ closed rulemakings is available at . An illustrative list appears below. On June 30, 2017, the Seventh Triennial Rulemaking Proceeding under the DMCA.  Office initiated the seventh tri ennial rulemaking proceeding under the Digital Millennium Copyright Act (DMCA), which provi des that the Librarian of Cong ress, upon the recommendation of the Register of Copyrights, may adopt tempora ry exemptions to section 1201’s prohibition against circumvention of technologic al measures that control access to copyrighted works. In accordance with the statute, the Librarian’s determination to grant an exemp tion is based upon the recommendation of the Register of Copyrights, who also consults with t he National Telecommunicati ons and Information Administration (NTIA) of the Dep artment of Commerce. The ultim ate goal of the proceeding is to determine whethe r there are particular classes of works as to which users 160

195 are, or are likely to be in the ne xt three years, adversely aff ected in their ability to make non-infringing uses due to the prohibition on circumventing acc ess controls. As outlined in its June 2017 notice of inquiry (NOI), which lau nched the seventh triennial rulemaking, the Office established a new, streamlined procedure for consideration of requests to renew exemptions tha t were granted during the sixth triennial rulemaking. ndations in the Office’s June 201 7 report, The Section Many of the regulatory recomme , were reflected in the NOI. 1201 Study In October 2017, the Office issue d a notice of proposed rulemak ing (NPRM). As discussed in the October NPRM, the Office reviewed all renewal petitions and related each existing regulatory exemp tion, it had received a comments and concluded that, for sufficient petition to renew that exemption and received no mea ningful opposition to renewal. Accordingly, the Offi recommend re-adoption of ce indicated that it intends to all existing exemptions. The NPRM also outlined 12 classes for new or expanded exemption s that the Office had identified in response to pub lic petitions, all of which are de scribed in greater detail in the notice. The Office then initiated three rounds of public comme nt on those classes of exemptions. In the first round of comments, the Office sought legal and evidentiary submissions from parties w ho support the adoption of a proposed exemption, as well as parties that neither support nor oppose an exemption but seek t o share pertinent legal and evidentiary information about a proposal. I n the second round, responsive emption were submissions from those who oppose the adoption of a proposed ex submitted. In the third round, written reply comments from sup porters of a proposed her support nor oppose a proposed exemption were exemption and parties that neit submitted. The Office held public hearings concerning the proposed exemptions; attorneys from both the Copyri ght Office and NTIA took part in April 2018 hearings held in Washington, D.C. (four days) an d Los Angeles (three days). Following the hearings, the Offi ce issued a series of post-hear ing questions to participants in various classes ssued further guidelines and, as promised by the NPRM, i for ex parte communications should a non-govern mental participant seek to c ommunicate with the Office. During the pos t-hearing phase of the proceedings, the Office consulted with NTIA and the Acting Registe r provided her recommendation to the Librarian of Congress regarding recommendations for new exemptions. tion and the final rule issued by the Librarian were The Acting Register’s recommenda published in the Federal Register on October 26, 2018. Additional information, including frequently asked que stions, is available at https://www.copyright.gov/1201/2018/ . The exemptions adopted in this rulemaking are effective October 28, 2018, and remain effective until the completion of the new rulemaking in 2021. More information about section 1201 is ava ilable at https://www.copyright.gov/1201/ , which contains helpful resources, such as video tutorials, the Office’s recent policy study on section 1201, an d links to prior rulemaking proceedings. 161

196  Fee Study. On May 24, 2018, the Office issued a notice of proposed rulem aking regarding the adoption of a new f ee schedule. Congress authorized the Register to set and adjust Copyright Office fees that are fair, equitable, and give due consideration to the objectives of the copyright syste m. The Office adjusts its fee s every three to five years, after first conducting a study of the actual cost to the Office of providing its fee-based services. The Office initiated a new cost study in June 2017, and based on its outcome, bed in the notice of proposed rulemaking. In addition, proposed the fee schedule descri the Office provided the economic model used to craft the fee schedule, based on the findings of the cost study. Though the Office does not seek to achieve full cost-recovery, the proposed fees aim to recover a significant portion of the c osts the Office incurs for providing fee-based services . The Office provided an opportunity to the public to re it submits the fee sched comment on the proposed changes befo ule to Congress; 158 2018 deadline. This substantive public comments we re received by the September 21, docket is available at https://www.copyright.gov/rulemaking/feestudy2018/ .  DART royalty payments. After soliciting public comments in July 2018, the Office line the administration of digita l audio recording technology adopted a final rule to stream es. This rule is (DART) royalty accounts and electronic royalty payments process cy of the Copyright Office’s Licensing Division intended to improve the efficien operations and simplify royalty pa yment procedures for filers; it becomes effective November 14, 2018. During FY 2018, the Office also issued final regulations on the following subjects:  Group registration of newspapers;  Group registration of photographs;  Deposit requirements for literary monographs; and  Fees for recording documents with electronic title lists. The Compendium of U.S. Copyright Office Practices The Office continues to maint ain updates to its office practice s. During FY 2017, the Office conducted a comprehensive review of its Compendium of U.S. Copyright Office Practices , Third Edition, which is the administra tive manual for registration and recordation practices of the U.S. Copyright Office. On September 29, 2017, the Office released the latest version of the Compendium , which is available at https://www.copyright.gov/comp3/ . A complete list of the this release, as well as a set of sections that have been added, amended, revised, or removed in redlines prepared by the Office (w hich provides a direct compar ison between the current version and the 2014 version), is at https://www.copyright.gov/comp3/revisions.html . The 2017 update included revisions to twe nty-one sections of the Compendium . It also provides preliminary guidance for claims involving useful articles based on the Supr eme Court’s March 2017 decision in Star Athletica v. Varsity Brands . 162

197 s revisions. The Office is During FY 2018, the Office continued its work to review numerou finalizing its work on another update on the Compendium which it intends to release for public https://www.copyright.gov/comp3 comment in FY 2019. For updates, see . The Fair Use Index The Office hosts and maintains the Fair Use Index, a searchable database of notable cases from U.S. courts that comment on fair use law, which was undertaken in coordination with the Intellectual Property Enforcement Coordinator. As of September 2018, the index contains more than 200 cases. The Index is co itioners and the public informed ntinually updated to keep pract of new or prominent issues in fai r use law, the application of fair use to a variety of types of works, and the law across appellate jurisdictions in the United States. The Index contains clear and concise language describing the facts and outcome of each case, making the Index accessible to the general public and providing valuable information – incl uding a full legal citation – to aid a viewer in further research. T he Fair Use Index is hosted at https://www.copyright.gov/fair- use/index.html . International Capacity Building and Training nd education regarding copyright Throughout the year, the Office continued to provide outreach a ss and exchange al visitors to discu ffice also hosted internation issues to foreign visitors. The O information on the U.S. copyright system and significant intern ational copyright issues. The Office works with other agencies, including the State Department and the USPTO, to participate encies, or to have visitors in those programs meet with the in meetings organized by those ag Office directly. In February 2018, a senior attorn ey from the Copyright Office participated in a program organized by the IP A ttaché Office in Bangkok, giving a presentation to 50 officers, lecturers, practitioners a nd university students.  International Copyright Institute. Every two years, the Offi ce and World Intellectual -host the week-long Internationa Property Organization (WIPO) co l Copyright Institute, a symposium held in Washington, D.C .; it is one of the Office’s p remier training events. Held on June 4-8, 2018, the ICI program was titled, “Copyright and Cross-Border Issues for Developing Countries and Countri es with Economies in Transition.” Copyright officials from 17 countries hear d from over 50 experts on topic s ranging from copyright registration systems in the twe nty-first century to inter-gover nmental coordination on criminal enforcement across bor ders. The program agenda is pos ted at https://www.copyright.gov/inte rnational-i ssues/ici-2018.html . 163

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