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Customs agents seize Web sites suspected of selling knockoffs

By Jerry Markon and Cecilia Kang
Washington Post Staff Writers
Monday, November 29, 2010; 5:34 PM

Federal customs agents have seized 82 Web sites accused of trafficking in handbags and other counterfeit goods, escalating a crackdown against knockoffs that have increasingly moved online, the Justice Department said Monday.

The seizures, announced on the "Cyber Monday" online shopping day, targeted sites selling an array of products, including fake Coach purses, counterfeit sports equipment and a Disney DVD set with Minnie Mouse's name misspelled.

U.S. Immigration and Customs Enforcement agents, acting on seizure orders issued by federal judges in Washington and nationwide, shut the Web sites over the past few days and seized the domain names. People trying to find the sites are directed to an ICE server, which notifies them that the domain name has been grabbed by federal authorities.

The investigation, coordinated by an ICE-led intellectual property rights center in Crystal City, is the latest step in a crackdown on trafficking in counterfeit goods. That response has been controversial among some who make their living via the Web. But experts say it is necessary to address a counterfeiting problem that has mushroomed with globalization and lower trade barriers.

"Counterfeiters are prowling in the back alleys of the Internet, masquerading, duping and stealing," ICE Director John Morton said at a news conference announcing the seizures, which was timed for Cyber Monday and the holiday shopping season.

Displayed on a table at the Justice Department were samples of the fake goods, including a backpack posing as a Louis Vuitton bag, a "Coach" purse with plastic on the handles (dead giveaway, agents said) and a Donovan McNabb Washington Redskins jersey with a fraudulent NFL seal.

Officials say Web sites selling fakes are increasingly sophisticated and can be difficult for consumers to detect, but ultralow prices should raise a red flag.

"To put it simply: If a deal seems too good to be true, it probably is,'' said Attorney General Eric H. Holder Jr. Justice Department officials said the sale of fake goods costs the U.S. economy billions annually in lost tax revenue.

It is against the law to sell counterfeit trademarked goods - though not to purchase them - and law enforcement officials said a criminal investigation of the seized Web sites is underway. But they cautioned that it will be difficult to bring charges, since most of the fraudulent goods were made in China. Domain names are registered in the United States, which gives the government legal authority to seize them.

The move was welcomed by companies including Coach, which over the past year and a half has filed 325 lawsuits against manufacturers and stores accused of distributing knockoffs.

"Counterfeit goods not only infringe on the reputation and value of legitimate intellectual property creators and the holders of these rights, but also impose economic, social and environmental harm and threaten human health and safety on a global level," said Nancy Axilrod, associate general counsel of Coach.

After complaints from media and retailing firms that online piracy and counterfeiting have hurt their bottom lines, the White House appointed Victoria Espinel last year as the nation's first intellectual property enforcement coordinator.

Some public interest groups, however, have decried federal efforts, which they say can censor Web sites engaged in lawful activity. Web engineers have also criticized the practice of seizing domain names.

Web giants such as Google and Wikipedia have protested legislation, introduced by Sen. Patrick J. Leahy (D-Vt.) and Sen. Orrin G. Hatch (R-Utah) and approved by the Senate Judiciary Committee, that would give U.S. law enforcement more leeway in seizing domain names of Web sites that violate copyright laws. The companies say they fear being held responsible for counterfeiting and piracy on their sites.

Leahy applauded the ICE seizures Monday, as did the U.S. Chamber of Commerce, which has led lobbying efforts for greater federal enforcement. "The Web sites that were seized profited off the hard work of America's innovative and creative industries and the thousands of Americans that they employ," said Steve Tepp, counsel for the chamber.

The seizures were the latest step in ICE's "Operation in Our Sites," which targets Internet counterfeiting and piracy. In June, authorities seized nine domain names of Web sites offering first-run movies, often within hours of their release in theaters. Those actions were announced by Morton, who was joined on a Los Angeles soundstage with movie studio representatives.

ICE is widely known for its immigration activities, but the agency also has wide authority to keep contraband from entering or leaving the United States.

The latest seizures targeted sites that offered items posing as Burberry and Timberland merchandise. ICE agents purchased items such as watches, sunglasses and shoes at an average discount of 85 percent.

Federal officials acknowledged that some of the seized Web sites could return under different domain names and vowed to continue their efforts. "I can tell you one thing: We're not going away,'' Morton said.

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