What is the Misappropriation of Intellectual Property?

June 15, 2022

Intellectual property can sometimes be some of the most valuable assets for any company. Intellectual property refers to creations of the mind, including inventions, written works, artistic creations, designs, symbols,…

Intellectual property can sometimes be some of the most valuable assets for any company. Intellectual property refers to creations of the mind, including inventions, written works, artistic creations, designs, symbols, names, and images. Intellectual property can also include copyrights, patents, and trademarks. These creations can provide the foundation for new products, technologies, and inventions. And for many companies, their intellectual property keeps them ahead of the competition.

Since this type of property can be incredibly valuable, it can often be a prime target for misappropriation, theft, or misuse.The misappropriation of intellectual property first became an issue in China when Chinese brands attempted to acquire intellectual property rights on counterfeit products. It is now becoming increasingly common in Europe.

The misappropriation of intellectual property, as seen in China, allows companies to counterfeit legitimate objects, brands, and logos and register counterfeit products in Europe. If the Intellectual Property Protection Office approves these products without attracting the attention of the legitimate brand, then the Chinese company has a legitimate property title for counterfeit products.

And while this description explains how misappropriation started, it also includes proprietary software, research and development work, trade secrets, and other product information that may be taken and used without the consent of the legitimate owner.

Violations of intellectual property rights do not generally involve physical assets and may occur without any contact with the legitimate owner. Moreover, the owner may not even be aware of the misappropriation of intellectual property until the crime is discovered and investigated.

To combat the growing threat of intellectual property misappropriation, Congress has worked to expand and strengthen criminal penalties for intellectual property misappropriation to include the following laws:

  • The counterfeit trademark crime as described in 18 U.S.C.§2320
  • Criminal infringement of copyrighted works as found in 17 U.S.C.§506(a) and 18 U.S.C.§2319
  • The counterfeit labeling provision found in 18 U.S.C.§2318
  • Theft of trade secrets as prohibited by 18 U.S.C.§§1831 and 1832

In addition to U.S. laws, the Trademark Counterfeiting Act of 1984 criminalized the intentional sale of counterfeit goods and services. Taken together, these laws allow for criminal sanctions for perpetrators of intellectual property misappropriation. In addition, the courts also provide for civil remedies, often in the form of compensation. Yet this problem still remains. In 2011, the trade-in of counterfeit copyrighted and trademarked works was estimated to be $600 billion worldwide, which accounted for between 5% and 7% of all global trade. Experts currently estimate that counterfeiting costs U.S. businesses approximately $200 billion every year.

For many victims of misappropriation of intellectual property, the first step is issuing a cease and desist order, which can resolve some issues. However, other cases require intellectual property litigation, a form of general commercial litigation. The common steps in an intellectual property dispute include:

  • The case is filed, and a complaint is served to the alleged infringer. They will then have a period where they may respond. A default judgment may be issued without a response, and the case is closed.
  • The next phase of the process is discovery, when both parties can request any evidence that the other side will present. Any expert interviews and witness depositions are also taken during this phase of the case.
  • After discovery, each side may provide an argument for a summary judgment. If none of the facts are in dispute, the judge may enter a summary judgment for certain aspects of the case or the entire case.
  • If a summary judgment is not issued for the entire case, it will go to trial, where each party will present their case to the judge or jury.
  • After the judge or jury has considered all evidence, a decision will be issued. This decision may include remedies such as injunctions, attorneys’ fees, actual damages, royalties, treble damages, and punitive damages. Additional damages may be awarded in cases where willful and malicious infringement can be proven. There is often a chance for appeal at this point.

Like all commercial litigation, intellectual property disputes can be emotionally and financially draining. They can drain your business of the resources it needs to be successful. Additionally, the case’s outcome can depend on many variables, including the type of intellectual property in question, the location of the infringer and victim, and the attorney’s skill.

Because intellectual property misappropriation is much different from the theft of physical items, it’s good to work with an experienced commercial litigation attorney with extensive knowledge of intellectual property. Contact the commercial litigation specialists at Grellas Shah today to learn more about intellectual property!

Image Credit: Photo by Andrea Piacquadio

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