Magnum IP: why private investigators matter

Corporate counsels and law firms are often faced with a challenge: how to gather the evidence and knowledge to win their case without tipping off a suspected infringer.

When the time comes for straightforward information-gathering to turn to sleuthing, IP professionals may call upon the trilby-wearing IP investigator, who waits patiently in the wings with a mackintosh slung over one arm.

For trilby and mackintosh read cleanly pressed suit. The truer picture is not all dark alleys, femme fatales and bad drinking habits—IP investigators are seasoned professionals of the corporate world, in some cases with decades of experience of dealing with IP infringement.

IP investigators gather information to be used as evidence in a court of law. They aim to protect and serve IP in ways that their clients cannot, particularly by proving and preventing infringement of trademarks, patents and copyright.

Brand owners, corporate counsels and law firms sometimes discuss the idea of carrying out an IP investigation themselves. But they don’t always have the necessary tradecraft required to successfully investigate an IP infringer, so they may not know how best to tackle an investigation. Naturally, IP investigators are protective of the proprietary techniques used to gather information on a target.

Ken Taylor, president and chief executive officer at Marksmen, a California-based IP investigation company, believes in preparatory research before contact with the target is made.

“Generally speaking, all investigators should do a good amount of research before making contact with the target of the investigation. Most of the work is undercover work, so you need to know what you are getting into before you get into it," he says.

Online research is a fundamental requirement of a successful IP investigation, but an overreliance on search engines is perhaps where a prospective client may falter when conducting their own investigation. “We know the best methods of researching hidden data,” says Ross Bulla, president at the Treadstone Group, a North Carolina-based IP investigation company.

This information exists on the ‘deep web’ or ‘hidden web’—websites that are not registered with search engines are considered hidden—and now there is the problem of Web 2.0. Essentially, Web 2.0 is information that exists on the Internet but is not searchable, mainly because it exists on interactive websites, such as social-networking sites.

He adds: “It’s not crawled by search engines, so you won’t find it by doing a Google search.” To combat this slippery information, IP investigators cast a wide net in their online search, accessing databases and libraries that are both well hidden themselves and costly to use.

Bulla says: “There are specific Internet libraries and sites that are industry or market-specific that aren’t common knowledge. We have the subscriptions to these databases, which cost $10,000 a year. Also, we have propriety databases that have been created, as well as access to press and media databases.”

Eliciting information

Gathering information from the Internet is quite a complex affair, but gathering it from a person is an entirely different matter. At best, a prospective client of an IP investigator may have the art of cross-examination perfected if they are a lawyer.

Elicitation requires different skills to that of witness cross-examination, so a lawyer may struggle to gain the information needed from a target of an investigation.This may count for corporate clients who have no experience in interrogation whatsoever. An IP investigator has the knowledge and skill to conduct a “boots on the ground” investigation, says Bulla.

“We know how to elicit actionable intelligence,” he says. “Elicitation is a learned skill, so we know what questions to ask that best elicit the answers the client is looking for.” Eliciting information from any source is usually done by approaching a target under a pretext, reinforced with a fictional story and false identities. It is important to approach a source with a pretext because it quells a target’s suspicions.

Graham Robinson, managing partner at Farncombe International in Worthing, in the UK, says: “When we do speak to targets, we would have created a credible pretext to explain the reasons for our questions and why we need the information.”

“Eliciting information from any source is usually done by approaching a target under a pretext, reinforced with a fictional story and false identities.”

A credible pretext requires a complicated infrastructure to support it. When approaching a target, ostensibly to enquire about a product for example, it is necessary to have the capability to back the pretext up with information that is checkable by the target.

Robinson says: “We need to have cover companies under which we can operate. The cover companies need to have phone lines that can be answered under different company names, as well as websites and email addresses. All of these are used to support the pretext that we create.” This infrastructure is sometimes underestimated by the prospective client when they decide to do their own investigation.

Aside from being a time consuming and complex effort, says Robinson, maintaining the infrastructure of a cover company is often rife with legal difficulties. “Most of the legislation these days is geared towards making everything more transparent so it is more difficult for people to hide their interests, for very good reasons, but when we have an equally legitimate reason for hiding who we are, there’s quite a tension there.”

Approaching a target under pretext means that a certain amount of deception will take place. The degree to which this deception can escalate may be a concern for a prospective client. There have been incidents, such as Hewlett Packard’s (HP) use of private investigators, which have had ramifications for conducting an investigation under pretext.

“Since HP used private investigators, pretext is a dirty word,” Bulla says. In 2006, private investigators, on behalf of HP, obtained phone records belonging to journalists and HP board members under a pretext. Criminal charges were brought against two HP employees and four private investigators, all of which were dropped, apart from one.

Bryan Wagner, a private investigator, pleaded guilty to the charges levied at him. Bulla sees the need to approach a target under pretext as a necessary evil, and certain legal bodies may agree with him.

“The New York Bar Association has rendered an opinion that approaching a target under pretext is not forbidden in matters involving IP investigations, because it is seen as one of the best ways to obtain factual information," he says.

Acceptable pretexts

Since IP investigations appear to lean on this form of deception, the onus is on the IP investigator to calm a prospective client’s fears about the lengths an investigator will go to when approaching a target. A way of doing this is to offer the prospective client a choice.

Bulla says: “We do employ it, and I’m very clear to our clients. The clients have the option to request that we don’t. That’s one of our standard questions—can we contact the trademark owner under pretext?” The answer to this question is often the same. “Some clients say no, most say yes," he says.

In order to maintain a professional reputation, and to stay out of court, it is important to assure the client that the IP investigator has the ability to conduct “legal and appropriate pretexts”. One way of doing this is setting boundaries for the types of information an investigator can seek to obtain under pretext. It is important to draw a line that they should not cross in any circumstances, says Bulla.

“We do not ask for trade secret or proprietary information, and we don’t ask for banking or financial information—all the typical things people should not ask for.” As well as certain types of information, certain identities that the investigator could take on are completely out of bounds.

Posing as a government official of any capacity is illegal in the US and other jurisdictions, but there are also other professions that are considered inappropriate to impersonate. “Some investigators will pose as priests or doctors,” says Bulla.

“We won’t even do that. Our investigators, as a safety measure, are instructed not to pose as any profession that is regulated, ordained or somehow certified. So because a priest is ordained by some type of religious institution, and receives some type of certification, mark or licence to practice, we don’t pose as or take on that identity.”

The identities that guarantee the legality and appropriateness of a pretext approach are those that confirm, for the target, how the information will be used or shared. Identities such as a consumer or a student are the most typically used, because they ensure the target knows that it is supplying information to a third party who may ultimately share it with someone else.

Bulla says: “That way, the target knows that if they are giving that information to any of those persons, the information they are giving should not be privileged.” To keep on top of IP infringement worldwide is a tall order for any brand owner, counsel or law firm. As a result, investigative companies exist as an outsourcing possibility, and though an IP investigator may have a speciality, clients can approach them for all sorts of things.

Robinson says: “Our activities range anywhere from investigating the use of a trademark by a third party, all the way up to more complicated issues such as investigating counterfeiting and grey marketing issues, [as well as] the anonymous acquisition of IP assets on behalf of our clients, most typically domain names and trademarks.”

Global investigations

The ways in which IP can be infringed are matched by the number of distant shores on which infringement can take place. A prospective client of an IP investigator need not worry about the possibility of outsourcing to a ‘small-time’ private investigator.

IP investigators are not restricted by borders, mountains and oceans. Robinson says: “One minute we could be investigating a toy-making company in South America, the next minute we could be investigating a producer of counterfeit clothing in Taiwan, and the next minute we could be trying to buy an IP asset from an owner in the States.”

The emergence of China as a strong economic power has led to it becoming a key battleground for IP investigators. IP infringement began to really take hold in the country about 20 years ago, says Violet Ho, a managing director at risk consultancy firm Kroll. As China opened up to the outside world, its export-orientated economy made it a large producer of consumer products.

“Eliciting information from any source is usually done by approaching a target under a pretext, reinforced with a fictional story and false identities”

“Infringement centred on fast-moving consumer goods,” says Ho. “They were easy to copy and reached a large consumer base.” Nowadays, counterfeiters have become more of a threat to leading brands. The extent to which they will go to infringe IP has increased alongside the financial muscle of the Chinese consumer, so much so that it is now possible to get not only quality from copies.

She says: “Now a lot of the counterfeit products are launched before the real thing makes it into the market, and as more and more make it into official distribution channels, even retailers cannot distinguish between what is fake and what is real.”

The ability to beat brand owners to the release of a product in China may change the way IP investigators tackle the counterfeiting problem. Usually, an IP investigator on the ground in China focuses solely on doing market sightings and conducting raids, so their entire workload is based on the quantity of counterfeit goods confiscated, says Ho.

This can lead to investigators conducting ‘fake raids’ to illustrate they are doing something, while the ‘confiscated goods’ quickly make their way back to the market. She says: “When choosing an investigation company, be very wary of investigators who promise everything. Be wary of the wording of their business models— they may be misleading.”

One of the best ways to address counterfeiting may be to establish the link between IP holder and counterfeiter. The origins of the counterfeit problem may come from within the company itself, says Ho, so the key is finding out where a potential IP leak might occur.

“There are a lot of investigative methodologies that may be adopted,” says Ho. “A background check on company employees who have access to a company’s IP might illustrate whether they are linked to any external parties or small companies that are engaging, manufacturing or distributing counterfeit products.”

A prospective client may only have a specific issue in need of investigating, so identifying the right IP investigation company to use may be difficult if they all do a little bit of everything. IP investigation companies are similar to some law firms in the sense that they often have a speciality, or at least a service that results in repeat business from existing clients.

Farncombe International is often hired to investigate whether a particular trademark is ‘in use’ and, if so, to what extent it is being used. These cases generally open when a client’s marketing department launches a new brand with a new name, says Robinson.

The client’s legal department steps in if the new name has the potential to infringe existing trademarks that are either similar or identical. The IP investigator is then called in to determine what these trademarks are used for, if they are used at all, says Robinson.

Talent pool

As an organisation, an IP investigation company develops its investigative abilities from the personnel that it employs. The common misconception among prospective clients, according to Robinson, is that investigation companies are thought to employ a group of former law enforcement officials, such as ex-police officers.

When selecting an IP investigator, prospective clients should remember that they are seeking to hire a corporate-savvy organisation, not freshly retired detectives. He says: “The personnel [at Farncombe International] are drawn from a wide range of areas, generally from professional backgrounds and disciplines.”

Indeed, not only are some IP investigators familiar with the corporate environment, but they are familiar with IP too. Robinson is from a legal background, having trained and practised as an IP litigation solicitor. Other skills are desirable too.

Robinson says: “The other sorts of people we employ tend to have language skills or IT skills, or to be drawn from various areas of industry where their experience may have applications to the sorts of things that we do.”

This is echoed by Taylor, who in fact takes this one step further: he considers his investigators to be “experts” at IP investigations. Almost all of Marksmen’s investigators began their careers in professions other than the IP or investigative fields. Taylor was an actor and a playwright before entering the investigative industry.

“Most of them started out in the arts: actors, writers, musicians and stand-up comedians. These are good skill sets to have in one’s quiver before employing other investigative strategies," he says.

IP investigators may be partners in the protection of IP and the prevention of infringement. They are familiar with the potential threats to IP, so they know what to look for before infringement happens. The investigator frequently hunts in many different haunts, so they know the local language, customs and sources—the requirements necessary for successfully conducting an investigation.

But it is the job of the client to restrain the IP investigator if the methods they propose do not meet the client’s moral code, because not to ask is not to get. Clients who are explicit in their instructions to an IP investigator will get the most benefit from an outsourced investigation.