IP Infringement, Meet Globalization: US Convicts Seller of China-made Network Hardware

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A recent U.S. intellectual property infringement case got on my radar for two reasons: first, the somewhat odd cast of players, and second, what the case says about globalization and the Internet when it comes to IP infringement.

First, the facts as reported by the Associated Press:

The federal government said Thursday that it has won 30 felony convictions and seized $143 million worth of counterfeit network computer equipment manufactured in China.

The announcement by the Justice Department and the Department of Homeland Security came as a Saudi citizen living in Sugarland, Texas, was sentenced to 51 months in prison. He was ordered to pay $119,400 in restitution to Cisco Systems Inc., whose network hardware is a prime target of counterfeiters.

Ehab Ashoor, 49, bought counterfeit Cisco equipment from an online vendor in China intending to sell it to the U.S. Marine Corps in Iraq for transmitting troop movements, relaying intelligence and maintaining security for a military base west of Fallujah, according to evidence at Ashoor’s trial.

[ . . . ]

U.S. law enforcement authorities are working with China’s Ministry of Public Security to prevent the export of counterfeit hardware.

You have to admit, this is a weird set of facts. A Saudi guy in Texas gets online and talks to a seller of fake hardware in China with the intention of turning around and selling the merchandise to the U.S. Marine Corps in Iraq.† I think I saw a Matt Damon movie like that.

This is actually a lot more common that most people realize. The Net, and online B2B platforms, make this kind of thing quite easy. In addition to eBay-type sites, B2B is the way to go for a lot of infringers these days.

I also have to wonder about that last comment about the Public Security Bureau (PSB). Apparently this operation was run by the FBI, so it’s natural that they would liaise with their counterparts over here in China.

However, either the PSB was working on a coordinated case against the manufacturer all along (and we would already have known about it) or they’re not going to do anything. I suspect the latter is the case.

The PSB is not the first place I call when I have an IP export problem. Customs would be my first port of call, if you’ll pardon the expression.

Moreover, if they’ve convicted this Saudi guy, I have to assume that they already know the identity of the Chinese manufacturer. If I’m Cisco, I might go through the motions of talking to the PSB (you never know), but at the same time, I’m setting up for a raid by the local Intellectual Property Office (I’m assuming that we are talking about patents here) and possibly a future civil suit.

I guess that the AP reporter just had information from a Justice Department press release/press conference, so no one there had any real information on future actions. Something tells me, though, that as long as Cisco has valid China patents over this technology, we might be hearing more about this one in the coming months.

One response on “IP Infringement, Meet Globalization: US Convicts Seller of China-made Network Hardware

  1. Dan

    Speaking from experience, I can tell you that Cisco is one of the most aggressive companies out there in terms of bringing in the Feds to protect their IP. I too believe this will not be the last we hear of this.