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A WARNING WITH TEETH
N.Y. Rolls Up Movie Piracy Rings

06/30/06

FBI Anti-Piracy Seal

It’s the first thing you see on movie DVDs and tapes: the FBI anti-piracy warning that leaves little room for interpretation: “The unauthorized reproduction or distribution of this copyrighted work is illegal.” So it was “no small irony,” as the FBI’s top agent in New York said in a June 28 news conference, that agents raiding two huge movie piracy rings discovered the FBI’s warning neatly appended to a cache of bootleg movies.

“It’s said that imitation is the sincerest form of flattery,” Assistant Director in Charge Mark J. Mershon said. “Well, it’s also often said that flattery will get you nowhere. Motion picture piracy isn’t flattery, it’s theft, plain and simple.”

The arrests of 18 members of two large-scale international movie piracy networks culminated a three-year investigation that included cooperating witnesses and undercover agents who infiltrated the networks. The arrests were tied to the release of “Superman Returns,” a much-anticipated movie that represents a large up-front investment by the movie’s backers—but also an opportunity for movie pirates intent on surreptitiously filming the movie and illegally distributing it, siphoning away profits. One of the defendants planned such a scheme. “He was in handcuffs before he ever got the chance,” Mershon said.

Here’s how it works:

  • “Cammers” use digital cameras to record first-run movies off theater screens. They convert the video into a limited number of Master DVDs, which they sell to “wholesalers.”
  • “Wholesalers” make copies from the masters. They also buy thousands of high-quality paper inserts from “printers” for packaging in DVD cases. The “wholesalers” then sell a Master DVD and printed inserts to “retailers.”
  • “Retailers” make still more copies of the DVDs, which they package with the legitimate-looking inserts and sell out of storefronts.

While many pirated movies turn up locally, some in this case were sold via the Internet to distributors in Hong Kong, Malaysia, Pakistan, and Singapore.

“The FBI, often working in consultation with MPAA (The Motion Picture Association of America), considers the theft of intellectual property to be a serious crime, with tremendous economic impact,” Mershon said.

The film industry estimates pirating robbed it of some $18 billion in 2005. “Cammers” in this case typically pirated two or three first-run movies a week, sometime before their release.

The investigation follows hand-in-hand with an anti-piracy initiative the FBI launched in 2004 with the entertainment and software industries. The initiative highlighted efforts to combat criminals who swipe copyrighted music, movies, software, and games and distribute them via the Internet. In 2003, piracy cost those industries some $23 billion. Intellectual property theft—which includes movie and software piracy and also stolen trade secrets—costs the U.S. economy $250 billion and 50,000 jobs annually, according to U.S. Attorney General Alberto R. Gonzales. The Department of Justice recently expanded its efforts to battle intellectual property crimes, nearly doubling its assigned personnel.

In New York, meanwhile, the defendants face prison if convicted. Mershon said, “In laymen’s terms, they…stole valuable property as surely as if they had broken into bank vaults and walked away with bags of cash.”

Resources: Press Release | Pirates of Hollywood | Anti-Piracy Warning Seal