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Copyright infringement spurs knife fight in Warrick County

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A copyright infringement dispute between two out-of-state companies has spurred criminal charges in Warrick County, a place where neither business has facilities, employees or quite possibly ever visited before these charges were brought.

Margaret and Ben Lu, founders of Wuu Jau Co. Inc., in Edmond, Okla., have each been charged with three counts of forgery, one count of theft and three counts of counterfeiting by the Warrick County prosecutor for allegedly infringing on the copyrights of Master Cutlery Inc., based in New Jersey.

knives-1col.jpg Ben and Margaret Lu of Oklahoma face theft and forgery charges in Indiana for alleged copyright infringement. (Submitted photo)

The two companies import and distribute hunting and survival knives from manufacturers based in China. According to court documents, the Lus were arrested after they sold and shipped knives allegedly copyrighted by Master Cutlery to an entity in Warrick County.

Since Margaret and Ben Lu were arrested, Wuu Jau has filed a copyright infringement claim against Master Cutlery in the U.S. District Court for the Central District of California. A sister company of Wuu Jau, Neptune Trading Co., is located in the coastal state.

Master Cutlery then filed a counterclaim in federal court against Neptune and Wuu Jau.

Why Indiana is involved in this case baffles Evansville attorney Mark Foster. A lawyer at Foster O’Daniel Hambidge & Lynch LLP, Foster is part of the criminal defense team representing the Lus.

“I still don’t know why they took it,” Foster said of the Warrick County Prosecutor’s Office. “It doesn’t make a whole lot of sense to me. I’m sure (Chief Deputy Prosecutor Daniel Miller) had his reasons, but for Warrick County, Ind., to stick its nose in a fight between a New Jersey company and an Oklahoma company, I don’t know.”

Miller did not return a call seeking comment.

One possible connection to Indiana is the intellectual property consulting firm Continental Enterprises in Indianapolis. Court documents identify Continental as investigating Wuu Jau on behalf of Master Cutlery and organizing the purchases of the disputed knives.

The shipments brought the knives to Warrick County and established the connection to Indiana. Court filings state, Continental presented the evidence to Warrick County which filed the seven felony counts.

Through its vice president and intellectual property counsel Jeremiah Pastrick, Continental did not make any statements specifically about the Wuu Jau case, saying it did not want to comment while the matter is still pending.

Setting precedent

A trademark fight involving toy guns that reached the Indiana Supreme Court in 2012 involved Continental Enterprises and has similarities to the copyright case in Warrick County.

Working on behalf of firearms manufacturer Heckler & Koch Inc., Continental initiated an investigation of Houston-based toy gun importer Generation Guns that included having orders shipped to Indiana. Subsequently, the Huntington County Prosecutor’s Office charged Yu-Ting Lin, who imported the guns, and her business associate An-Hung Yao with three counts of counterfeiting, three counts of theft, and one count of corrupt business influence based on the similarities between one of the toy guns and H&K’s MP5 submachine gun.

The first time Yao and Lin set foot in Indiana was when they were brought here in a state van to face criminal charges, said Jeremy Gayed, partner at Barrett & McNagny LLP in Fort Wayne, who was one of Lin’s attorneys.

Huntington County Prosecutor Amy Richison said she decided to prosecute because of a series of police shootings in neighboring Allen County. At least one of those involved law enforcement mistaking an airsoft gun from Generation Guns for an actual gun.

Indiana State Police shared with Richison the results of its investigation which contained information gathered by Continental Enterprises. Richison said she wanted to prevent the tragedy of someone in her community being killed accidentally by a police officer.

Richison acknowledged she used Continental Enterprises as a resource to understand the intricacies of intellectual property law. She maintained it was no different than the toxicologists, scientists and other experts she relies on in other cases and emphasized the Indianapolis firm was not driving the prosecution.

“I make my own choices and decisions,” Richison said. “I don’t have people influencing me one way or another.”

The defendants’ motion to dismiss was appealed all the way to the Indiana Supreme Court. In An-Hung Yao and Yu-Ting Lin v. State of Indiana, 35S02-1112-CR-704, the court rejected the defense team’s arguments that Indiana lacked jurisdiction. The justices held that counterfeiters can be held criminally liable even if they do not affix an intellectual property owner’s name or logo to a product.

On its website, Continental calls the Yao decision a “resounding victory.” Pastrick said the justices understood the nuances emerging in intellectual property as counterfeiters move away from blatantly copying a product.

“It signifies Indiana’s willingness to protect intellectual property in innovative and creative ways that keep up with what’s going on in the marketplace,” Pastrick said.

Gayed said that significant civil remedies already exist in the federal code to address infringement issues. Continental Enterprises has found a “really creative way” to help stop whatever is happening in the marketplace that their clients do not like. It has found an avenue for persuading county prosecutors to file charges on behalf of their private clients.

“The civil approach, hiring an attorney, filing a lawsuit is definitely one approach,” Pastrick said, “but I don’t think it’s the only approach, and it seems the Supreme Court agreed.”

Motion to dismiss

Like the defendants in the Yao case, Margaret and Ben Lu’s attorneys have filed a motion to dismiss partly on the grounds that the state courts lack jurisdiction. The defense argues the Lu case is distinct because it involves copyright – not trademark as in Yao – and Indiana’s authority is preempted by the federal Copyright Act.

“My take on this case is that the state of Indiana is overreaching to charge someone with an act that the state of Indiana doesn’t have the right to police,” said Benjamin Ashurov, IP attorney at KB-Ash Law Group in California. He is a member of the defense team who is providing expertise on the intellectual property aspect.

The defense can offer no state court opinion nor 7th Circuit Court of Appeals decision on point, but they reference a Florida case, Crow v. Wainwright, 720 F. 2d 1224, 1225 (11th Cir. 1983). There, the court threw out a conviction for selling “bootleg” eight-track tapes because the Copyright Act preempted Florida’s regulation of the defendant’s actions.

Attorneys for Yao made the jurisdictional argument, but the Supreme Court rejected it.

If the trial court denies the motion to dismiss, Ashurov said the defense will ask the federal court to issue an injunction to stop the state criminal proceeding while the civil copyright claim is being considered.

Margaret and Ben Lu maintain their innocence and their daughter, Jennifer, has launched an intense crusade to get the charges dropped. She has written directly to the prosecutor and has drafted a letter to Gov. Mike Pence.

However, it may be too late.

Tyler Helmond, an attorney at Voyles Zahn & Paul in Indianapolis who worked on the Yao defense, pointed out that a person charged with a crime not only has to incur the expense of hiring a lawyer but, unlike a civil suit, is faced with losing their reputation and liberty.

“It creates a scenario where the first company that is able to convince a prosecutor to charge a crime has really won,” he said. •

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    Good day, Please do you handle Copyright Infringement Cases as our long time business associate has violated our copyright agreement and we need a good lawyer to handle this matter urgently. If your firm is retained, our expectation of your services for now will be within the scenario of a Demand Letter to our client. This approach will trigger the much needed response from our client towards amicable settlement. We are prepared to pay your retainer fees and we will also send you other important and sensitive documents. Expecting your urgent reply. Regards Koon Loh (CEO) Legal Assistance

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  1. California Sex Offender Management Board (CASOMB) End of Year Report 2014. (page 13) Under the current system many local registering agencies are challenged just keeping up with registration paperwork. It takes an hour or more to process each registrant, the majority of whom are low risk offenders. As a result law enforcement cannot monitor higher risk offenders more intensively in the community due to the sheer numbers on the registry. Some of the consequences of lengthy and unnecessary registration requirements actually destabilize the life’s of registrants and those -such as families- whose lives are often substantially impacted. Such consequences are thought to raise levels of known risk factors while providing no discernible benefit in terms of community safety. The full report is available online at. http://www.casomb.org/index.cfm?pid=231 National Institute of Justice (NIJ) US Department of Justice Office of Justice Programs United States of America. The overall conclusion is that Megan’s law has had no demonstrated effect on sexual offenses in New Jersey, calling into question the justification for start-up and operational costs. Megan’s Law has had no effect on time to first rearrest for known sex offenders and has not reduced sexual reoffending. Neither has it had an impact on the type of sexual reoffense or first-time sexual offense. The study also found that the law had not reduced the number of victims of sexual offenses. The full report is available online at. https://www.ncjrs.gov/app/publications/abstract.aspx? ID=247350 The University of Chicago Press for The Booth School of Business of the University of Chicago and The University of Chicago Law School Article DOI: 10.1086/658483 Conclusion. The data in these three data sets do not strongly support the effectiveness of sex offender registries. The national panel data do not show a significant decrease in the rate of rape or the arrest rate for sexual abuse after implementation of a registry via the Internet. The BJS data that tracked individual sex offenders after their release in 1994 did not show that registration had a significantly negative effect on recidivism. And the D.C. crime data do not show that knowing the location of sex offenders by census block can help protect the locations of sexual abuse. This pattern of noneffectiveness across the data sets does not support the conclusion that sex offender registries are successful in meeting their objectives of increasing public safety and lowering recidivism rates. The full report is available online at. http://www.jstor.org/stable/full/10.1086/658483 These are not isolated conclusions but are the same outcomes in the majority of conclusions and reports on this subject from multiple government agencies and throughout the academic community. People, including the media and other organizations should not rely on and reiterate the statements and opinions of the legislators or other people as to the need for these laws because of the high recidivism rates and the high risk offenders pose to the public which simply is not true and is pure hyperbole and fiction. They should rely on facts and data collected and submitted in reports from the leading authorities and credible experts in the fields such as the following. California Sex Offender Management Board (CASOMB) Sex offender recidivism rate for a new sex offense is 0.8% (page 30) The full report is available online at http://www.cdcr.ca.gov/Adult_Research_Branch/Research_Documents/2014_Outcome_Evaluation_Report_7-6-2015.pdf California Sex Offender Management Board (CASOMB) (page 38) Sex offender recidivism rate for a new sex offense is 1.8% The full report is available online at. http://www.google.com/url?sa= t&source=web&cd=1&ved= 0CCEQFjAA&url=http%3A%2F% 2Fwww.cdcr.ca.gov%2FAdult_ Research_Branch%2FResearch_ documents%2FOutcome_ evaluation_Report_2013.pdf&ei= C9dSVePNF8HfoATX-IBo&usg=AFQjCNE9I6ueHz-o2mZUnuxLPTyiRdjDsQ Bureau of Justice Statistics 5 PERCENT OF SEX OFFENDERS REARRESTED FOR ANOTHER SEX CRIME WITHIN 3 YEARS OF PRISON RELEASE WASHINGTON, D.C. Within 3 years following their 1994 state prison release, 5.3 percent of sex offenders (men who had committed rape or sexual assault) were rearrested for another sex crime, the Justice Department’s Bureau of Justice Statistics (BJS) announced today. The full report is available online at. http://www.bjs.gov/content/pub/press/rsorp94pr.cfm Document title; A Model of Static and Dynamic Sex Offender Risk Assessment Author: Robert J. McGrath, Michael P. Lasher, Georgia F. Cumming Document No.: 236217 Date Received: October 2011 Award Number: 2008-DD-BX-0013 Findings: Study of 759 adult male offenders under community supervision Re-arrest rate: 4.6% after 3-year follow-up The sexual re-offense rates for the 746 released in 2005 are much lower than what many in the public have been led to expect or believe. These low re-offense rates appear to contradict a conventional wisdom that sex offenders have very high sexual re-offense rates. The full report is available online at. https://www.ncjrs.gov/pdffiles1/nij/grants/236217.pdf Document Title: SEX OFFENDER SENTENCING IN WASHINGTON STATE: RECIDIVISM RATES BY: Washington State Institute For Public Policy. A study of 4,091 sex offenders either released from prison or community supervision form 1994 to 1998 and examined for 5 years Findings: Sex Crime Recidivism Rate: 2.7% Link to Report: http://www.oncefallen.com/files/Washington_SO_Recid_2005.pdf Document Title: Indiana’s Recidivism Rates Decline for Third Consecutive Year BY: Indiana Department of Correction 2009. The recidivism rate for sex offenders returning on a new sex offense was 1.05%, one of the lowest in the nation. In a time when sex offenders continue to face additional post-release requirements that often result in their return to prison for violating technical rules such as registration and residency restrictions, the instances of sex offenders returning to prison due to the commitment of a new sex crime is extremely low. Findings: sex offenders returning on a new sex offense was 1.05% Link to Report: http://www.in.gov/idoc/files/RecidivismRelease.pdf Once again, These are not isolated conclusions but are the same outcomes in the majority of reports on this subject from multiple government agencies and throughout the academic community. No one can doubt that child sexual abuse is traumatic and devastating. The question is not whether the state has an interest in preventing such harm, but whether current laws are effective in doing so. Megan’s law is a failure and is destroying families and their children’s lives and is costing tax payers millions upon millions of dollars. The following is just one example of the estimated cost just to implement SORNA which many states refused to do. From Justice Policy Institute. Estimated cost to implement SORNA Here are some of the estimates made in 2009 expressed in 2014 current dollars: California, $66M; Florida, $34M; Illinois, $24M; New York, $35M; Pennsylvania, $22M; Texas, $44M. In 2014 dollars, Virginia’s estimate for implementation was $14M, and the annual operating cost after that would be $10M. For the US, the total is $547M. That’s over half a billion dollars – every year – for something that doesn’t work. http://www.justicepolicy.org/images/upload/08-08_FAC_SORNACosts_JJ.pdf. Attempting to use under-reporting to justify the existence of the registry is another myth, or a lie. This is another form of misinformation perpetrated by those who either have a fiduciary interest in continuing the unconstitutional treatment of a disfavored group or are seeking to justify their need for punishment for people who have already paid for their crime by loss of their freedom through incarceration and are now attempting to reenter society as honest citizens. When this information is placed into the public’s attention by naive media then you have to wonder if the media also falls into one of these two groups that are not truly interested in reporting the truth. Both of these groups of people that have that type of mentality can be classified as vigilantes, bullies, or sociopaths, and are responsible for the destruction of our constitutional values and the erosion of personal freedoms in this country. I think the media or other organizations need to do a in depth investigation into the false assumptions and false data that has been used to further these laws and to research all the collateral damages being caused by these laws and the unconstitutional injustices that are occurring across the country. They should include these injustices in their report so the public can be better informed on what is truly happening in this country on this subject. Thank you for your time.

  2. Freedom as granted in the Constitution cannot be summarily disallowed without Due Process. Unable to to to the gym, church, bowling alley? What is this 1984 level nonsense? Congrats to Brian for having the courage to say that this was enough! and Congrats to the ACLU on the win!

  3. America's hyper-phobia about convicted sex offenders must end! Politicians must stop pandering to knee-jerk public hysteria. And the public needs to learn the facts. Research by the California Sex Offender Management Board as shown a recidivism rate for convicted sex offenders of less than 1%. Less than 1%! Furthermore, research shows that by year 17 after their conviction, a convicted sex offender is no more likely to commit a new sex offense than any other member of the public. Put away your torches and pitchforks. Get the facts. Stop hysteria.

  4. He was convicted 23 years ago. How old was he then? He probably was a juvenile. People do stupid things, especially before their brain is fully developed. Why are we continuing to punish him in 2016? If he hasn't re-offended by now, it's very, very unlikely he ever will. He paid for his mistake sufficiently. Let him live his life in peace.

  5. This year, Notre Dame actually enrolled an equal amount of male and female students.

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