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U.S. Department of State

Diplomacy in Action

Cyber Security: Project Cyber Monday 3 and Project Transatlantic. ICE/EUROPOL Collaboration Successfully Targets U.S. and International Websites Selling Counterfeit Merchandise


John Morton, Director of U.S. Immigration and Customs Enforcement (ICE)
Washington, DC
November 26, 2012




12:00 P.M. EST

THE WASHINGTON FOREIGN PRESS CENTER, WASHINGTON, D.C.

MODERATOR: Good afternoon, everyone. The Foreign Press Center is pleased to host a briefing on recent cyber security operations with Mr. John Morton. Mr. Morton has served as director of U.S. Immigration and Customs Enforcement since May of 2009. ICE is the principal investigative arm of the Department of Homeland Security and the second largest investigative agency in the federal government.

Following the briefing, we’ll have time for a few questions, just a few. For those with me here, I would ask you to wait for the microphone before asking your question and identify yourselves as well as your outlet before you ask your question. And we’ll be also fielding some questions potentially from New York, by email, as well as overseas. With that, I will turn the floor to Director Morton.

MR. MORTON: All right. Well, good day and welcome. I am John Morton, the Director of Immigration and Customs Enforcement. And today I’m pleased to announce the results of a coordinated effort to attack online counterfeiting and consumer fraud on this Cyber Monday. Last year Cyber Monday generated a record $1.25 billion in sales, and we anticipate a similarly high level this year. The purpose of our efforts is to confront consumer fraud online. Organized criminals are using the internet and the holiday shopping season to defraud consumers on a grand scale. A wide variety of consumer goods are presented on bogus websites as being genuine, when in fact they are counterfeits, illegally produced and shipped from overseas.

In this, our third year of attacking online counterfeiters on Cyber Monday, we have seized 101 websites here in the United States that were selling counterfeit and falsely labeled goods to consumers during the holiday season. These websites sold products representing 41 different rights holders of U.S. companies, everything from Ergo baby carriers to New Era hats, Nike sneakers, Tiffany jewelry, Oakley sunglasses, and NFL jerseys just to name a few. Even counterfeit Adobe software was for sale.

This year we went a step further, taking this operation to both sides of the Atlantic. The National Intellectual Property Rights Coordination Center, a component of ICE’s Homeland Security investigations, partnered with our friends at Europol to coordinate seizures of counterfeit websites operating through top-level domain names in Europe such as .eu and .de. So today, Europol and its partner countries through Project Transatlantic seized an additional 31 domain names. Law enforcement agencies from Belgium and the United Kingdom took part in this coordinated effort, and other Europol partners will be participating in the coming days with additional websites being addressed. For the specifics, you have the Belgian Federal Police obtaining warrants to seize 12 .eu domain names and one .de domain name and the City of London Police redirecting the domain names of an additional 18 websites. We are, in short, organizing a transnational law enforcement effort to defeat transnational criminal organizations, a united front against a common foe.

Domain names such as hermesborse.eu and nikeatalon.eu were selling everything from counterfeit Hermes purses, Christian Louboutin shoes, and various Nike apparel, all of it fake, all of it substandard. Between both of these operations on both sides of the Atlantic, we have seized a total of 132 websites. These websites were stealing from businesses, trademark and copyright holders, and the people who make the legitimate products and who sell them, including companies here and abroad.

This is a global problem. It affects everyone. When IP rights are violated, jobs are lost, businesses are stolen, and ultimately consumers are cheated. Remember, counterfeiters care about making money and only about making money. They don’t pay healthcare, they don’t pay pensions, they don’t pay taxes, they don’t care about the people that work for them, and they don’t, frankly, care about the consumers who purchase the products.

Recognizing the Cyber Monday is the busiest day for online purchases in the United States, we’ve conducted specific operations around this day to try to bring more awareness to the public about the potential dangers of shopping online. Shoppers all over the world are continuing to make purchases online in increasing numbers. That’s a good thing. The internet is a good thing. Sales over the internet are a good thing. But with an increase in online shopping comes an increase, sadly, in online predators, organized criminals looking to take advantage of unsuspecting consumers to make a quick buck.

Unfortunately, counterfeiters have expanded from selling DVDs and purses to products that affect the health and safety of consumers, everything from counterfeit pharmaceuticals, counterfeit heart medicine, for example, to counterfeit airbags. For example, in this operation, counterfeiters were offering Ergo baby carriers for sale on many websites. Were these legitimate baby carriers? No. They were 100 percent knockoffs having nothing to do with Ergo Baby, having nothing to do with thoughtful design. Were they safe? Absolutely not. This is a purchase that expectant parents should not have to worry about. And in many instances, the websites were designed to mimic the real Ergo baby carrier site to further dupe consumers. If you go to our Facebook page, you can see an example of that and the increasing sophistication that counterfeiters are using to attract consumers to dupe them, to rip them off. This is a fraud from start to finish. If you go on the Facebook site, I invite you, you try to see if you can determine the difference between the real sites and the legitimate sites, and you’ll find you’ll have a very, very hard time doing it.

Visitors to the domain names that we have taken will now find a banner that notifies them of the seizure and educates them about the federal crime of trademark and copyright infringement. And these seizures underscore the lessons of online shopping for all of us at this time of the holidays. Remember, if the price seems too good to be true, it probably is. Know your supplier, know your seller, research the seller or the website from which you intend to make a purchase, look at all of the web pages. If you see misspellings, if you see addresses on a site that pretends to be about Tiffany, but the return policy addresses is used some place in China, well you’re on notice that trouble is afoot. Educate yourself on the exact logo, the hardware, and the stitching of whatever you’re considering to make sure that you’re getting what you think you’re getting. Don’t conduct business with an anonymous user. I’ll tell you, a number of these websites are frauds through and through. Not only are they looking to defraud you in terms of what you buy, often providing them your credit card number is not a good idea either, and there are numerous instances of more than one crime going on these websites. At the end of the day, trust your instincts. You know what you’re looking for, you know the product, you know when a site is likely legitimate. This is the best line of defense for you, so don’t reason away your intuition.

And I just think, in closing, people need to realize that obviously the holidays are a time of great excitement for all of us, and when you go out there and you try to buy the real thing for your relative or your family member, you want it to be legitimate, you’re paying for it, and unfortunately there is a steady group of organized criminals that are trying to rip you off, literally, from start to finish. And that’s what this enforcement action was all about, and for the first time we’re doing it together with the Europeans, the right answer. This is a global problem; this isn’t a U.S. problem, it’s not a European problem, it’s not a Mexican problem. It’s a shared problem that we need to handle all together.

So with that, I’m happy to take a few questions.

MODERATOR: Yes. Here in the front. Don’t forget to say who you are and where you’re from.

QUESTION: Hello. My name is Irina Gelevska. I’m correspondent for the Macedonian TV Europe. Can you tell us about – more about the cases with Europol that you are working on, and have you ever worked with the Macedonian authorities on this crime?

MR. MORTON: So what I can tell you is that we worked together with the Europeans for the first time, and Europol was the coordinating mechanism. Europol’s handling the specifics of the websites that they seized today and will seize over the coming days, so I would refer you to them for the specifics. There were 31 of them. The United Kingdom and the Belgians led the way, but there will be other seizures from other European countries as we go forward, and I’d let Europol answer your question about the Macedonian authorities.

MODERATOR: In the back.

QUESTION: Octavian Coman from Dilema Veche Magazine, Romania. I will have the same question. I’ve seen that Romania is also mentioned. If you cannot tell me more details, can you tell me at least how many sites with Romanian domain have you found?

MR. MORTON: What I can tell you is Romania is involved. We’re very excited that Romania is involved, but Europol is handling the details on the Romanian enforcement actions that will play out over the next couple of days and weeks.

MODERATOR: Right here.

QUESTION: Brian Beary, Washington correspondent for Europolitics. When – just a question on how the mechanics work in this operation. Do you communicate just with Europol or with the member state polices as well? That was my first question. And secondly, the scope of what this operation is – what about music downloads? Do you focus on music downloads?

MR. MORTON: So your first question, the answer is we communicate with both. Europol’s been the coordinating body for this, but obviously we’re working directly with the law enforcement agencies in question and the member states. For example, the City of London police led the charge for the United Kingdom.

With regard to – were we focusing on downloads? Not in this operation. This was exclusively focused on the sale of counterfeit items over the internet and in particular trademark violations. There were visual items for sale, namely DVDs, and some computer software, but it was not being offered in a streaming fashion. It was being offered as a hard good, as a DVD.

A common example that we face every year is a “100 Years of Disney” that is allegedly 100 years’ worth of Disney magic that is packaged and sold. The problem is that the Disney Corporation has never produced that set, and in fact, Disney Corporation has not existed for 100 years. It was founded in 1923 by Roy and Walt Disney, and so we’ve got a few years to go before we get to the 100-year mark, and Disney will have to produce that set for it to be lawful. But the short answer to your question is we focused on hard good sites and not streaming sites.

Yes, ma’am.

MODERATOR: I have a question – sorry – I have a question from Matthew Hall from the Sidney Morning Herald: Are there plans to take similar operations outside Europe, i.e. Asia, Australia, and how would that occur or be implemented?

QUESTION: That’s an excellent question, and the short answer is yes. And I think Australia would be a likely candidate, but ultimately we’d like to do this kind of coordinated action with our major enforcement partners around the world. And we do that at the street level, but we haven’t – this is the first time that we’ve done a coordinated effort at – online, at the internet level. And so I think you will see in coming years the United States doing these kinds of actions with other countries, working through the world customs organization in Brussels to have more of a coordinated, transnational effort. And the reason for that is it’s just good law enforcement, and counterfeiting and piracy isn’t a United States problem. It affects us greatly, but it certainly affects Europe and Asia and Central and South America just as much. Literally anything that you can imagine these days is being counterfeit and sold.

We just did a major case a few weeks ago involving counterfeit airbags that were being produced overseas, brought to the United States and sold. Literally every major automotive brand was affected. Wasn’t just U.S. brands; it was Asian brands, Japanese, Korean, European. All of them were affected, and obviously nobody wants to have a counterfeit airbag in their car. We had a number of them tested here in the United States and to an airbag, they all failed, some of them spectacularly. So it’s a very, very serious problem. When people try to reduce it simply to the question of whether or not a teenager is downloading something off the internet, that completely misses the mark. This is about counterfeit cancer medicine, counterfeit healthcare products. It’s serious business.

MODERATOR: We have time for maybe one last question, if there is one.

Go ahead.

QUESTION: Yeah. Just on the procedures for when you’re shutting down these websites, what do you have to do to close down these websites? What procedural steps do you have to take? And what additional steps will you take after the websites are down? Because obviously, you get the people who run these websites, you take their money. I mean, what’s the follow-up?

MR. MORTON: So one of the challenges that we face is that the fact we involved – all of the production, most of the shipment, most of the players aren’t here in the United States. That’s why the internet has become such a popular place for counterfeiting crimes, because you can set the vast majority of your criminal operations up overseas, and the only piece that actually occurs here in the United States is the actual sale through the internet and the shipment of the item in question. So it’s a challenge for us.

What we do is we go to court and we get a seizure warrant for each and every one of the domain names. And what we’re actually seizing is the domain name that has been registered here in the United States, in a U.S. registry. The servers may be somewhere else, and in almost every case are somewhere else, they’re not located in the United States. So we seize the domain registry. We do that by making a showing to a federal judge that there is probably cause to believe that a trademark or a copyright crime has been committed. And then we ultimately institute seizure proceedings to forfeit the domain name to the United States. A similar, though not identical, process occurs in Europe.

Once we have forfeited the domain name, we then put up a banner that notifies the public going to that domain name that the website has been seized, and that it was seized for a violation of federal law. And in some instances, we will play a public service announcement. Interestingly, since we’ve done this, we’ve had over 110 million visitors to the websites that we’ve seized. Some of the websites draw more traffic as a seized site with a government banner than they did when they were engaged in counterfeiting. But it gives you a sense of the volume going to some of these sites. It’s quite impressive.

MODERATOR: Well, thank you everyone.

MR. MORTON: All right. Thank you very much.

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