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Jim Chester

U.S IP-intensive Industry Worth $5 Trillion, 40 Million Jobs to US Economy

By Intellectual Property, International IP, Technology Transactions

The U.S. Commerce Department recently released a comprehensive report, entitled “Intellectual Property and the U.S. Economy: Industries in Focus,” which finds that intellectual property (IP)-intensive industries support at least 40 million jobs and contribute more than $5 trillion dollars to, or 34.8 percent of, U.S. gross domestic product (GDP).

While IP is used in virtually every segment of the U.S. economy, the report identifies the 75 industries that use patent, copyright, or trademark protections most extensively. These “IP-intensive industries” are the source – directly or indirectly – of 40 million jobs. That’s more than a quarter of all the jobs in this country. Some of the most IP-intensive industries include: Computer and peripheral equipment, audio and video equipment manufacturing, newspaper and book publishers, Pharmaceutical and medicines, Semiconductor and other electronic components, and the Medical equipment space.

The report has several important findings, including:

• IP-intensive industries contributed $5.06 trillion to the U.S. economy or 34.8 percent of GDP in 2010.

• 40 million jobs, or 27.7 percent of all jobs, were directly or indirectly attributable to the most IP-intensive industries in 2010.

• Between 2010 and 2011, the economic recovery led to a 1.6 percent increase in direct employment in IP-intensive industries, faster than the 1.0 percent growth in non-IP-intensive industries.

• Merchandise exports of IP-intensive industries totaled $775 billion in 2010, accounting for 60.7 percent of total U.S. merchandise exports.

The full report can be found online at



SOURCE:  USPTO / US Dept of Commerce

Crime of the Century? Software Pirates Steal $100 Million in Revenue from US Companies

By Customs IP Enforcement, Export, Intellectual Property, International IP, Internet / eCommerce

Two Chinese nationals have been charged in a 46-count superseding indictment for a variety of charges including software piracy and illegally exporting technology to China. Additionally, a Maryland man, and former NASA employee, has pleaded guilty to charges of criminal copyright infringement. Both investigations are being conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

Xiang Li, 35, and Chun Yan Li, 33, of Chengdu, China, have been charged by a federal grand jury. Xiang Li was arrested by HSI agents June 7, 2011, in Saipan, Northern Mariana Islands. Chun Yan Li remains an at large fugitive in Chengdu.

“Counterfeiting and intellectual property theft are seriously undermining U.S. business and innovation — more than $100 million in lost revenue in this one case alone,” said ICE Director John Morton. “Homeland Security Investigations is committed to protecting American industry and U.S. jobs from people like Xiang Li, the leader of this criminal organization who believed he could commit these crimes without being held accountable for his actions. Li thought he was safe from the long arm of U.S. law enforcement, hiding half way around the world in cyberspace anonymity. He was sorely mistaken. Whether in China or cyberspace, this arrest is proof that HSI and our partners at the National Intellectual Property Rights Coordination Center are committed to identifying, infiltrating and disrupting these criminal enterprises wherever they exist.”

“These cases demonstrate our vulnerability to foreign acquisition of American technology,” said U.S. Attorney Charles M. Oberly III, District of Delaware. “I applaud our law enforcement partners for their exceptional dedication in pursuing this major investigation.”

The indictment charges that Xiang Li and Chun Yan Li engaged in a course of criminal conduct relating to the unauthorized access to, reproduction and distribution of copyrighted software between April 2008 and June 2011. This copyrighted software stolen by Xiang Li and Chun Yan Li was produced by more than 150 manufacturers, mostly American.

The charges arise out of the defendants’ operation of a website called Crack 99 that sold pirated copies of software in which the access control mechanisms had been “cracked” or circumvented. An international investigation was initiated by HSI after discovering the Crack 99 website, which advertised the sale of pirated software.

During the course of the conspiracy, more than 150 manufactures lost retail value of the pirated software in excess of $100 million.

In particular, the indictment charges that Xiang Li, Chun Yan Li and others conspired and engaged in software cracking. This is considered the willful circumvention of digital license files and access control software created to prevent unauthorized access to copyrighted software products.

Xiang Li, Chun Yan Li and others also conspired and engaged in the unauthorized international distribution and reproduction of cracked copyrighted computer software over the Internet.

Commercial software is often designed with security features embedded in the software code for the purpose of preventing the unauthorized access or reproduction of the software. Software in which the access controls have been circumvented — and is sold without authorization of the copyright owner — is considered pirated software. The superseding indictment charges that Xiang Li unlawfully distributed this pirated software over the Internet by selling the copyrighted material on the websites:, and

These websites advertised over 2,000 different cracked software products for sale at a fraction of their retail prices. The advertised pirated software, most of which was created and copyrighted by companies based in the United States, is used in numerous applications including: engineering, manufacturing, space exploration, aerospace simulation and design, mathematics, storm water management, explosive simulation and manufacturing plant design. The prices listed for the pirated software on the websites range from $20 to $1,200. The actual retail value of these products ranges from several hundred dollars to over one million dollars.

The indictment charges that between April 2008 and June 2011, Xiang Li distributed over 500 pirated copyrighted works to at least 325 purchasers located in Delaware, at least 27 other states and over 60 foreign countries. More than one-third of these purchases were made by individuals within the United States.

Xiang Li faces up to 20 years in federal prison and an extensive fine — a $500,000 fine or twice the loss from this case — per charge

Former NASA employee pleads guilty

Cosburn Wedderburn, 38, of Windsor Mill, Md., a former NASA employee, has pleaded guilty to conspiracy to commit criminal copyright infringement. This case was investigated by HSI with the assistance of the NASA Office of Inspector General.

According to court documents, Wedderburn was a customer of Xiang Li. He purchased over $1 million of cracked stolen software.

Wedderburn faces up to five years in federal prison and an extensive fine — a $250,000 fine or twice the loss from this case.


I.C.E. Seizes more than $896,000 in proceeds from the online sale of counterfeit sports apparel manufactured in China

By Customs IP Enforcement, Import, Intellectual Property, International IP, Internet / eCommerce, Technology Transactions

The U.S. Immigration and Customs Enforcement (ICE)-led National Intellectual Property Rights Coordination Center (IPR Center) and the Department of Justice recently seized more than $896,000 in proceeds from the distribution of counterfeit sports apparel as the result of an investigation into the sale of counterfeit goods on commercial websites. The investigation also resulted in the seizure of seven domain names engaged in the sale of counterfeit goods. The funds were seized from interbank accounts and three PayPal accounts.

The investigation by ICE’s Homeland Security Investigations (HSI) is a result of Operation In Our Sites, which targets online commercial intellectual property crime, and began in June 2010. Operation In Our Sites targets online retailers for a diverse array of counterfeit goods, including sports equipment, shoes, handbags, athletic apparel, sunglasses and DVD boxed sets. To date, 758 domain names of websites engaged in the sale and distribution of counterfeit goods and illegal copyrighted works have been seized as a result of Operation In Our Sites.

“Counterfeiting and intellectual property theft are seriously undermining U.S. business and innovation,” said ICE Director John Morton. “Consumers are at risk, American industry is harmed and U.S. jobs are lost. As a country, we can ill afford the toll that intellectual property theft exacts on our economy and industries. Operation In Our Sites and the related efforts of the National Intellectual Property Rights Coordination Center are critical to combating intellectual property crime and consumer fraud over the Internet.”

According to court documents, investigation by federal law enforcement officers revealed that several subjects whose domain names had been seized in November 2010 through Operation In Our Sites continued to sell counterfeit goods using new domain names. In particular, the individuals, based in China, sold counterfeit professional and collegiate sports apparel, primarily counterfeit sports jerseys. Law enforcement officers made numerous undercover purchases from the websites associated with the new domain names. After the goods were confirmed to be counterfeit or infringing, seizure warrants for seven domain names used to sell the goods were obtained from a U.S. magistrate judge in U.S. District Court for the District of Columbia.

The individuals conducted sales and processed payments for the counterfeit goods using PayPal accounts and then wired their proceeds to bank accounts held at Chinese banks. Pursuant to warrants issued by a U.S. district judge, law enforcement officers seized $826,883 in proceeds that had been transferred from PayPal accounts to various bank accounts in China. The funds were seized from correspondent, or interbank, accounts held by the Chinese banks in the United States. Pursuant to additional seizure warrants issued by a U.S. magistrate judge, law enforcement officers also seized $69,504 in funds remaining in three PayPal accounts used by the subjects.

“We are working hard to protect American businesses and consumers from the damaging effects of intellectual property crime,” said Assistant Attorney General Lanny A. Breuer. “This investigation disrupted an online counterfeit goods operation, and also struck at the heart of the criminal enterprise by seizing hundreds of thousands of dollars in illegal profits. The Justice Department, together with our partners at ICE, will continue to do all that we can to punish and deter the sale and distribution of counterfeit goods.”

“Those who traffic in counterfeit goods harm the American economy as well as the consumers who purchase the substandard merchandise,” said U.S. Attorney Ronald C. Machen Jr., District of Columbia. “Seizing the domain names of these unscrupulous operators was one big step, and seizing their ill-gotten proceeds should send them another message that these counterfeit sales will not be tolerated.”

The investigation was conducted by the IPR Center and HSI. The case is being prosecuted by Assistant U.S. Attorneys Jonathan Hooks and Diane Lucas, and Special Assistant U.S. Attorney Katharine Wagner of the District of Columbia; Senior Trial Attorney Pamela Hicks of the Asset Forfeiture and Money Laundering Section in the Justice Department’s Criminal Division; and Trial Attorney Thomas Dougherty of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division.

As the largest investigative arm of the Department of Homeland Security, HSI plays a leading role in targeting criminal organizations responsible for producing, smuggling and distributing counterfeit products. HSI focuses not only on keeping counterfeit products off our streets, but also on dismantling the criminal organizations behind such illicit activity.

HSI manages the IPR Center in Washington. The IPR Center is one of the U.S. government’s key weapons in the fight against criminal counterfeiting and piracy. As a task force, the IPR Center uses the expertise of its 20 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public’s health and safety, the U.S. economy and the war fighters.

To report IP theft or to learn more about the IPR Center, visit


Protecting Intellectual Property (IP) in International Business

By Intellectual Property, International Business, International IP, Technology Transactions

Protecting IP in International Trade

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Intellectual property is a valuable asset in the modern business world.  Unfortunately, it is also mercurial and difficult to protect, particularly in international business.  This PPT provides some strategies for protecting IP assets at home and abroad.



Importer of Pirated Software Gets “Clicked” . . . into Handcuffs

By Customs IP Enforcement, Import, International IP, Internet / eCommerce

A California, man was recently arrested by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) special agents for importing more than 1,000 counterfeit Microsoft Office CD-ROMs and selling them to unsuspecting customers over the Internet.

Collier Bennett Harper, 30, was taken into custody late Friday (April 6). He is charged in a four-count federal indictment following the seizure of two shipments of Microsoft Office Professional Edition 2007 software CD-ROMs. Specifically, the indictment charges Harper with two counts of trafficking counterfeit goods and two counts of smuggling. If convicted of all charges, Harper faces a maximum sentence of 60 years in federal prison. The case is being prosecuted by the U.S. Attorney’s Office for the Central District of California.

“With the advent of the Internet, counterfeiting now threatens nearly every consumer in the nation and it also harms the valuable intellectual property of our manufacturers,” said U.S. Attorney André Birotte Jr., Central District of California. “That is why we are working with our partners at HSI to crack down on the illegal sales and distribution of counterfeit products like the software packages seized in this case.”

HSI’s investigation revealed that, as part of the alleged scheme, Harper would contact reputable dealers on eBay and hire them to sell the counterfeit software. According to investigators, the defendant allegedly instructed the sellers how to list the software, describing the product as “new” and authentic. The sellers would provide Harper with the payment and the customers’ addresses, and the defendant would ship the counterfeit software to the unsuspecting buyers. Based on evidence gathered during the probe, investigators believe nearly 1,000 counterfeit software packages were sold.

“The sale of counterfeit goods is not a victimless crime,” said Claude Arnold, special agent in charge for HSI Los Angeles. “These activities undermine our economy, rob Americans of jobs, stifle American innovation and promote crime. Intellectual property theft amounts to economic sabotage, which is why HSI will continue to aggressively pursue product counterfeiters and those who sell counterfeit products.”

Investigators estimate, based upon the manufacturer’s suggested retail price, the seized software would have retailed for approximately $150,000 had it been genuine.



CHESTER PLLC Launches new web site

By Blog, News

Dallas-based global business & technology law firm CHESTER PLLC is excited to announce the launch of their new web site:, now available for public consumption.

CHESTER PLLC is the only global business & technology law firm in the central United States.  The launch of this new web site formally announces the firm’s emergence as a viable alternative to large law firms and NY, DC or LA firms focusing on innovation, business, and/or international transactions and trade law.

Development of the site was been a long, demanding process, but the firm is very pleased with the results.  And the firm knows they couldn’t have done it alone.  The firms notes its thanks to web developer Jake Thompson and to marketing expert Paige Dawson and her team at MPD Ventures for their fine work and assistance on this project.  CHESTER PLLC also thanks the many folks who provided input and feedback as we revised and tweaked the site into something they are very proud to share.

“Although the site has gone ‘live’, it is far from finished – and never will be,” said Managing Attorney Jim Chester.  “We intend to frequently update the site with news, presentations and articles, not to mention the firm’s ‘Trade & Innovation Law’ blog that has been integrated into the site.”

Far from being some “cookie-cutter” or “slick” marketing piece, the site reflects the unique culture and progressive philosophy of CHESTER PLLC, and illustrates the character and  strengths of the firm.



CHESTER PLLC is a Dallas-based global business & technology law firm.  The firm represents technology-oriented and other innovation-based companies, and advises clients on a variety of legal issues related to their domestic and international business operations. Firm clients include entrepreneurs, start-ups and privately-held companies of all sizes in a variety of industries.  The firm’s practice includes business formations, acquisitions and technology transactions and agreements; intellectual property (including trademark, copyright, patent and trade secret protection) protection, licensing & enforcement; and eCommerce/Internet business.  The firm also assists companies in international business transactions and import/export and other trade matters (e.g., ITAR, FCPA, and NAFTA, etc.) and has advised clients on business deals involving over 100 countries.
CHESTER PLLC believse it takes great legal representation to protect great ideas and great companies.  If you’d like to learn how CHESTER PLLC can assist your company, please contact the firm at [email protected] or visit our site for more information.

Remember – “You’re not alone in the world.”

Medical Device Company to Pay $23 Million to Settle Foreign Corrupt Practices Act Investigation

By Blog, FCPA

Indiana-based Biomet Inc. has entered into a deferred prosecution agreement with the Department of Justice (DOJ) and Securities & Exchange Commission (SEC) to resolve improper payments by the company and its subsidiaries in violation of the Foreign Corrupt Practices Act (FCPA).

The matter is part of an investigation into bribery by medical device companies of health care providers and administrators employed by government institutions.   Previously, Johnson & Johnson and Smith & Nephew Inc. have agreed to pay criminal penalties and entered into deferred prosecution agreements related to the ongoing investigation.

Biomet, headquartered in Warsaw, Ind., manufactures and sells medical devices worldwide and is listed on the NASDAQ.   According to the criminal information filed today in U.S. District Court in the District of Columbia in connection with the agreement, Biomet, its subsidiaries, employees and agents made various improper payments from approximately 2000 to 2008 to publicly-employed health care providers in Argentina, Brazil and China to secure lucrative business with hospitals.   During this time, more than $1.5 million in direct and indirect corrupt payments were made.   In addition, at the end of each fiscal year, Biomet, its executives, employees and agents falsely recorded the payments on its books and records as “commissions,” “royalties,” “consulting fees” and “scientific incentives” to conceal the true nature of the payments.

As part of the agreement, Biomet will pay a $17.28 million criminal penalty and is required to implement rigorous internal controls, cooperate fully with the department and retain a compliance monitor for 18 months.  The agreement recognizes Biomet’s cooperation with the department’s investigation; thorough and wide-reaching self-investigation of the underlying conduct; and the remedial efforts and compliance improvements undertaken by the company.   In addition, Biomet received a reduction in its penalty as a result of its cooperation in the ongoing investigation of other companies and individuals.

In a related matter, Biomet reached a settlement today with the U.S. Securities and Exchange Commission (SEC), under which Biomet agreed to pay $5.4 million in disgorgement of profits, including pre-judgment interest.


Stop Infringing Imports at the United States Border

By Customs IP Enforcement, Import, Intellectual Property, International IP, White Papers

Trademark and copyright piracy (i.e., the production and sale of counterfeit merchandise) is a multi-billion dollar global industry. According to US government reports, pirated and counterfeit products cost US companies up to $250 billion annually and are directly responsible for the loss of 750,000 US jobs.  US law provides a number of remedies to owners of intellectual property (IP) such as trademarks, copyrights, trade names and patents.


Intellectual Property ( “IP” ) – Due Diligence in Transactions

By Intellectual Property, Internet / eCommerce, Technology Transactions

Intellectual property due diligence investigations should be conducted by a party any time a merger, acquisition (“M&A”) or investment is being considered.  Intellectual property due diligence involves the gathering of information on the target party’s assets and liabilities, in order to assess the merits and risks of the transaction