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Intellectual Property Crime

Working with third parties

CPS fraud lawyers regularly deal with intellectual property crime offences. Prosecutors' understanding of intellectual property crime offences is more important now than ever. A global event like the London 2012 Olympics will attract a huge upsurge in the incidence of counterfeiting and piracy over a long period. Growth in new distribution routes and marketplaces like the internet also make intellectual property crime more attractive to organised criminals. They see intellectual property crime as low risk and high yield.

When the police send a case to the CPS which has been investigated by a third party or by the police assisted by a third party (for example the Federation Against Copyright Theft (FACT) or Federation Against Software Theft (FAST)) it is the CPS's duty to take over such police prosecutions (section 3 Prosecution of Offences Act 1985).

As a basic principle the police should conduct the investigation in the same way in which they normally investigate and such investigations must be independently managed and directed by the police. Third parties should have no involvement with the decision making process and no guarantees should be given regarding the charge and conviction of suspects. The CPS should be in sole charge of the prosecution; this will ensure that the independence of the investigation and prosecution of intellectual property offences are not undermined.

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Offences to be considered

Consider offences under the following when dealing with counterfeiting and piracy cases:

  • Copyright Designs and Patents Act 1988
  • Trade Marks Act 1994
  • Fraud Act 2006
  • Video Recordings Act 2010
  • Proceeds of Crime Act 2002
  • London 2012 Olympics and Paralympic Games legislation
  • Common Law offence of conspiracy to defraud

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Copyright

What is Copyright?

Copyright is an unregistered, automatic right (unlike patents, registered designs or trade marks). So, in terms of protection there is no official action to take, (no official registration or application to make, no forms to fill in or fees to pay). Copyright comes into effect as soon as something that can be protected is created and "fixed" in some way, e.g. on paper, on film, via sound recording, as an electronic record on the internet.

Copyright gives the author, artist, creator or composer of certain works (or their employer, if the work was created in the course of employment) the right to prevent another person from copying or exploiting their work - it protects the form in which ideas are expressed rather than the ideas themselves, in order to prevent unfair advantage being taken of a person's creative efforts.

Copyright Law can be found in Part I of the Copyright, Designs and Patents Act 1988 as amended (known as the CDPA). It has been amended on a number of occasions since it came into force on 1 August 1989. A list of the most important pieces of legislation that have amended the 1988 Act and some other information about legislation can be obtained from the UK Intellectual Property Office web site at http://www.ipo.gov.uk/c-law.htm. The primary legislation and amending legislation can be read athttp://www.legislation.gov.uk/.

Copyright may not subsist in a name, title or phrase. But these may be eligible for registration as a trade mark. Ideas are also not protected. Title to English copyright cannot be taken away by any foreign governmental decree - Peer International Corporation and others v Termidor Music Publishers Ltd and another [2003] EWCA Civ 1156.

Is infringement of copyright a criminal offence?

Deliberate infringement of copyright may be a criminal offence. Pursuing the criminals (e.g. when pirate or counterfeit copies of CDs/DVDs etc are being made, distributed or sold) can involve the police or trading standards departments.

However, many of the copyright-based industries concerned about this type of crime have formed organisations representing their interests that are actively involved in enforcement work, often in collaboration with the police or trading standards departments. In some cases these organisations undertake criminal prosecutions in their own right.

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Copyright - Rights in Performances

These are distinct from copyright rights but are contained within Part II of the CDPA (section 180 onwards). Amongst other things, they are rights covering bootleg recordings i.e. illicit recording and distribution of live performances.

The rights are given to performers and persons having recording rights and their consent is required for the exploitation of the live performance or the making of recordings.

Rights in performances should not be confused with performing rights. This term is usually used to signify rights under copyright in relation to the acts of performing, showing or playing a work, in which copyright subsists in public. For example: a store playing music over the loudspeakers.

Generally, a performance is a live performance given by one or more individuals which is a dramatic performance (including a dance or a mime), a musical performance or recitation of a literary work or a variety act or any similar presentation (section 180(2)). For example, if a person sings live to a recorded backing track (karaoke) the live performance relates only to the live singing. A performance is a qualifying performance if it is given by a qualifying individual (section 206) or takes place in a qualifying country.

The meaning of recording is important in terms of recording rights and infringement and is defined as being a film or sound recording made directly from a live performance etc. Rights are also infringed where copies of the recording are made without authorisation directly or indirectly from a master recording that was made of the performance.

For the rights to exist, certain qualification requirements must be satisfied. The performer's rights only subsist if the performance is a qualifying performance, (which by section 181, means that it must be given by a qualifying individual or take place in a qualifying country).

For the recording right, the person having recording rights who is party to an exclusive recording contract with a performer or the assignee of the benefit of such a contract must be a qualifying person. If not then the right may still arise where a person who has been licensed to make recordings or to whom the benefit of such a licence has been assigned is a qualifying person. A qualifying person can be an individual or a body corporate formed under UK law or of another qualifying country which carries on a substantial business in any qualifying country (section 206).

Section 181 defines qualifying performances.

Section 182 deals with consent for live transmission.

Section 182A deals with consent for copying of a recording.

Section 182B deals with consent for issue of copies to the public.

Section 182C deals with consent for rental or lending of copies to the public.

Section 182CA deals with consent required for making available to the public.

Section 183 deals with infringement of rights by use of recording made without consent.

Section 184 deals with infringement of performers rights by importing, possessing or dealing with illicit recording.

Section 185 defines exclusive recording contracts.

Section 186 deals with infringements of rights associated with exclusive recording contracts.

Section 187 deals with infringements of recording rights.

Section 188 deals with importation of possessing or dealing with illicit recordings.

Criminal offences contrary to the CDPA

Be aware of the following sections of the CDPA which are summarised below:

  • Exceptions to rights conferred and duration and transmission of rights - Sections 189 - 193 and Schedule 2.
  • Remedies for infringements, offences and provisions with respect to delivery up and seizure - Sections 194 - 205.
  • Qualification for protection - Sections 206 - 210.

Section 107 contains a mixture of either way and summary only offences with a range of penalties.

CPDA creates criminal offences relating to articles which infringe copyright (unauthorised copying). Offences can relate to:

  • CDs and DVDs - music, films, computer software and games;
  • Video - music, films and games;
  • Publications
  • Books
  • Photographs
  • Posters.

Section 107(1)(a), (b), (d)(iv) or (e) offences are either way offences, for which the maximum sentence on indictment is 10 years' imprisonment or an unlimited fine.

Section 107(1)(c), (d)(i), (d)(ii), and (d)(iii) offences are summary offences, for which a sentence of 3 months' imprisonment and/or a fine of £5,000 are available by way of penalty.

Section 107(2) summary offences, for which a sentence of 3 months' imprisonment and/or a fine of £5,000 are available by way of penalty.

Section 107(2A) either way offences, for which the maximum sentence on indictment is 2 years or an unlimited fine.

Section 107 offences require criminal intent. Proof of the activity being 'in the course of a business' is not needed for 'making' or 'importing' and may not be required for 'distributing' (this word is not defined and has not, yet, received judicial interpretation).

Without the licence of the copyright owner - It is submitted that section 101 of the Magistrates' Courts Act 1980 applies - i.e. the onus is on the defendant to show that he had such licence. See also Musa v Le Maitre [1987] FSR 272 Stephen Brown LJ:

"... I can see no practical difficulty to prevent a prosecutor from inviting a defendant to make an admission of fact as to first publication. An obstructive attitude might result in substantial costs. In any event it is unlikely to require the evidence of the actual maker or the holder of the copyright."

The presumptions as to authorship, in sections 104 and 105, do not apply to any offences under section 107; see section 107(6).

The meaning of infringing copy is contained in section 27 and the meaning of illicit recording is contained in section 197. See also, in particular, sections 17 (copying), 21, 22, 23 and 24 for equivalent infringement provisions to section 107 offences.

Section 198 covers criminal liability for making, dealing with or using illicit recordings. These are recordings made without the consent of the performer (i.e. piracy or bootlegging). Bootlegging is the recording, duplication and sale of a performance such as a live concert stage performance without the permission of the performer.

Section 198 CPDA provides for similar offences as section 107 CPDA in relation to illicit recordings except there are no offences equivalent to (d)(iii) exhibits in public or (e) distributes otherwise than in the course of a business to such an extent as to affect prejudicially the owner of the copyright.

Like section 107 this offence requires criminal intent. The terms "in the course of a business", "without the licence of the copyright owner" and "infringing copy" have the same meaning as set out at section 107 above.

Because of the potential complexity of investigations for these offences, police and/or prosecutors should consider consulting experts from the appropriate Anti-Piracy Unit or rights owner concerned.

Section 198(1)(a), (b), or (d)(iii) are either way offences, for which the maximum sentence on indictment is 10 years' imprisonment or an unlimited fine.

The other offences under section 198 CPDA carry a mixture of sentences.

There are no statutory defences to sections 107 or 198.

Section 50A is an exception for a lawful user to make a back up copy of a computer program. It has been unsuccessfully utilised in the past to justify copying software. See Sony Computer Entertainment v Paul Owen and Others [2002] ECDR 27; [2002] EMLR 34; [2002] EWHC 45 where the practice of making back up copies of computer games is considered within the context of Section 50A and regarded as falling outside of the criteria of making a lawful back up copy.

Section 296ZB CPDA creates a range of criminal offences which deal with the circumvention of technological measures and the advertising of a service to do this. In relation to computers, games stations and consoles this circumvention is commonly known as chipping, modding, soft modding or flashing. Section 296ZB offences are hybrid offences for which the maximum sentence on indictment is two years imprisonment and /or a fine.

In the useful case of Gilham v R [2009] EWCA Crim 2293, paragraph 14 gives a checklist of points that prosecutors must prove in such cases.

Section 297 CPDA covers fraudulent reception of broadcasts e.g. Satellite television programmes. Section 297(1) is a summary only offence for which the maximum penalty is a fine not exceeding level 5 on the standard scale.

Section 297A CPDA sets out criminal liability for making, importing, etc. unauthorised decoders. Section 297A offences are hybrid offences for which the maximum sentence on indictment is 10 years' imprisonment and/ or an unlimited fine.

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Designs

A design refers to the appearance of the whole or a part of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture or materials of the product or its ornamentation.

There is no criminal offence under the legislation. Infringement of a registered or unregistered design raises potential civil law liability not criminal.

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Patents

A patent for an invention is granted by government to the inventor, giving the inventor the right for a limited period to stop others from making, using, selling or importing the invention without the permission of the inventor. When a patent is granted, the invention becomes the property of the inventor, which like any other form of property or business asset can be bought, sold or licensed. Patents are territorial rights; a UK Patent will only give the holder rights within the United Kingdom, including the right to stop others from importing the patented products into the United Kingdom. The legislation in force at present is the 1977 Patents Act.

Patent infringement in the UK is a civil law matter not a criminal law issue.

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Trade Marks

A trade mark is any sign which can distinguish the goods and services of one trader from those of another. A sign includes, for example, words, logos, pictures, or a combination of these. Basically, a trade mark is a badge of origin, used so that customers can recognise the product of a particular trader. Trade marks are closely associated with business image, goodwill and reputation. Goods are often requested by reference to a particular trade mark. A trade mark may in some cases be relied upon to indicate quality among other things.

Passing off and unregistered trade marks

Passing off occurs where a defendant makes a misrepresentation (which itself may or may not involve the use of a trade mark) that causes damage to the goodwill of the claimant's business which is itself known by a distinguishing sign or mark (effectively an unregistered trade mark). Strictly the right is not in the claimant's unregistered trade mark but in the business conducted under that sign or mark. The owner of an unregistered trade mark can take civil action to prevent passing off.

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Trade Marks Infringements

There are civil rights and remedies for owners of registered trade marks in cases of infringement by unauthorised use - not just for goods or services which are identical with those for which the trade mark is registered and bearing an identical sign, but (with additional requirements) extending to:

  • goods or services which are similar to those for which the trade mark is registered;
  • goods or services which are not similar to those for which the trade mark is registered; and
  • where the sign is similar to the registered trade mark.

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Criminal Offences contrary to the Trade Marks Act 1994 (TMA)

Although only the offences in section 92 have specific enforcement responsibilities attached to them, there are other criminal offences under TMA which prosecutors may wish to be aware of, including:

  • section 84 - unregistered person being described as a registered trade mark agent;
  • section 94 - making of a false entry in the register of trade marks;
  • section 95 - falsely representing that a mark is a registered trade mark (either by means of the word 'registered' or any other word or symbol);
  • section 99 - unauthorised use of Royal Arms.

Section 92 TMA covers unauthorised use of trade mark, in relation to goods. Section 92 is not confined to fraudulent misapplication/misuse, the prosecutor does not have to prove mens rea - R v Keane [2001] FSR 7; no requirement to prove mens rea, the offence is one of "near absolute liability" - Torbay Council v Satnam Singh (1999) 163 JP 744.

Section 92(1)(a),(b),(c), (2) and (3) offences are all hybrid offences, for which the maximum sentence on indictment is 10 years' imprisonment or an unlimited fine.

Section 103(2) sets out the definition of use.

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Elements of the offence

To establish the offence under section 92(1)(a) the prosecutor must prove:

  • Registration of the trade mark - the prosecutor must prove that, on the date of the commission of the alleged offence, the trade mark was registered; and the registration had been published;
  • "Application of a sign to goods within the registration" - the prosecutor must prove that:
    • the sign is identical to, or likely to be mistaken for, the registered trade mark in question
    • the goods are goods in respect of which the trade mark is registered OR, if they are not the trade mark has a reputation in the United Kingdom and the use of the sign takes or would take unfair advantage of, or is or would be detrimental to, the distinctive character or the repute of the trade mark
    • the application of the sign was by the defendant (or the defendant conducted one of the activities set out in section 92(1)(b) or (c))
  • Lack of consent by the proprietor - In Houghton v Liverpool City Council [2000] Crim.L.R. 574 - lack of consent is "... a matter, like so many matters of fact, that may be the subject of proper inferences by the court, never forgetting the criminal standard of proof applies. In this case ... the inference is most plainly to be drawn."
  • That the registered trade mark was being used as a trade mark.

For each of the offences in section 92(1) - (3) it is also necessary for the prosecutor to prove that the person conducted the activities "... with a view to gain for himself or another, or with intent to cause loss to another."

These words appear in the Theft Act 1968 and the meaning given for the purposes of that Act (section 34(2)(a)) is "... 'gain' and 'loss' are to be construed as extending only to gain or loss in money or other property, but as extending to any such gain or loss whether temporary or permanent and

(i) 'gain' includes a gain by keeping what one has, as well as gain by getting what one has not; and

(ii) 'loss' includes a loss by not getting what one might get, as well as a loss by parting with what one has...". R v Zaman [2002] EWCA Crim 1862, considered whether the words "with a view to" have the same meaning as "with intent to" in section 92 - and concluded, dismissing the appeal, that they did not.

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Business

There is a requirement in some criminal law covering Intellectual Property to demonstrate that an illegal activity is carried out in the course of a business and the words used in the Trade Marks Act 1994 are similar to those used in the Trade Descriptions Act 1968.

Defences

Section 92(5) TMA It is a defence for a person charged with an offence under this section to show that he believed on reasonable grounds that the use of the sign in the manner in which it was used, or was to be used, was not an infringement of the registered trade mark.

The existence of the reason to believe and of the belief founded on it is ultimately a question of fact to be tried on evidence and the grounds on which the person acted must be sufficient to induce in a reasonable person the required belief; see in particular McArdle v Egan (1933) 150 LT 412, [1933] All ER Rep 611 CA; Nakkuda Ali v Jayaratne [1951] AC 66; Registrar of Restrictive Trading Agreements v W H Smith & Son Limited [1969] 3 All ER 1065 at 1070, [1969] 1 WLR 1460 at 1468, CA, per Lord Denning MR; and IRC v Rossminster Ltd [1980] AC 952, [1980] 1 All ER 80 at 84, 92, 93, 103, 104, HL. (From Halsbury's Laws on TMA section 92).

Evidential issues in trade mark cases

As a registered trade mark certificate is a public document it is "... admissible in evidence on its mere production ..." - see section 14, Evidence Act 1851.

A certified copy of the entry on the trade mark register may be produced - see section 63 TMA. Production needs to have regard to the fact that the register is computerised material - see also Houghton v Liverpool City Council [2000] Crim.L.R. 574. The Youth Justice and Criminal Evidence Act 1999 sections 60 - 69 and PACE ceased to have effect from 14 April 2000. Computer evidence now must follow the common law rules; there is a presumption of reliability.

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Fraud Act 2006

The Fraud Act creates an offence of fraud; additionally it creates offences of making or possessing articles for use in or in connection with fraud, and making or supplying articles for use in fraud. Fraud can extend to the sale of counterfeit goods per se, particularly if sold as genuine, or sold at the same price as the genuine product. In addition the possession, use or sale of chipping or copying equipment could also give rise to offences contrary to the Fraud Act.

Section 2 Fraud Act covers fraud by false representation. This offence requires dishonesty in making a false representation, an intention to make a gain for oneself or another or an intention to cause loss to another or expose another to a risk of loss. Dishonesty is determined by the reasonable standards of honest people. The representation can be direct or implied, so a trade mark falsely applied to goods could constitute either a direct or implied representation as to the trade origin or manufacture of the goods. The maximum sentence on indictment is 10 years' imprisonment and/or an unlimited fine.

Section 6 Fraud Act covers possession of any article(s) for use in the course of or in connection with any fraud.

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Illegal recording in cinemas

This is where individual's illegally record films they are watching in the cinema, using their mobile phone, a camcorder or other sophisticated recording device.

Section 6 of the Fraud Act has been successfully used to prosecute a number of offenders for illicit recording (also known as camcording).

The Copyright, Designs and Patents Act 1988 only criminalises commercial acts of illicit recording. The key difficulty historically has been the building of a prosecution case in the absence of proof of a commercial activity. There is typically no available evidence at the time of detection to show that a suspect is acting in the course of a business, or intends to upload the film to the internet rather than (as is often claimed) simply recording the film for personal use.

The prerequisite under section 6 of the Fraud Act is that there must be evidence that a suspect was acting dishonestly and had an intention to make a gain for himself or another or cause loss to another or expose another to a risk of loss in money or other property. By covertly recording a film, the individual concerned has made a gain (effectively stealing the intellectual property in the film and being able to watch it again or sell it on) and the owners of the cinema and the producers of the film have suffered a loss in being deprived of their intellectual property and future potential revenue.

Section 7 Fraud Act covers the offence of making or supplying articles for use in fraud. This section could extend to counterfeit goods or the manufacture or supply of chipping or copying equipment.

Section 8 of the Fraud Act extends the meaning of "article" for the purposes of section 6 and 7 so as to include any program or data held in electronic form.

For further information prosecutors should refer to the legal guidance on the Fraud Act 2006.

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Common Law Offence of Conspiracy to Defraud

The Attorney General issued guidance on the 9 January 2007 on the use of the common law offence of conspiracy to defraud. This guidance sets out the situations in which it maybe appropriate to use the common law offence rather than the statutory offences. See Attorney General's Guidance on the use of the common law offence of conspiracy to defraud. Prosecutors will need to specify why this charge is being chosen as opposed to any other and will need management approval to charge, as well as complete monitoring forms.

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Video Recordings Act 2010

The Video Recordings Act 2010 repealed and revived provisions of the Video Recordings Act 1984. It applies to all video media, including CDs and DVDs, the 1984 Act was introduced in order to help classify and label video works.
The Act contains a number of criminal offences in Sections 9 - 14.

Prosecutors should refer to the legal guidance on the Video Recordings Act 1984 and 2010.

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Confiscation and the Proceeds of Crime Act 2002 (POCA)

If a person is suspected of having committed an Intellectual Property offence and that person is also suspected of having concealed , disguised, converted, transferred or removed their criminal property from the UK, consider using POCA section 327 (money laundering).

Almost all offences under the Trade Marks Act and CDPA are schedule 2 lifestyle offences.

Prosecutors should refer to the legal guidance on:

Proceeds of Crime - General Guidance
Money Laundering Offences - Proceeds of Crime Act 2002
Proceeds of Crime Guidance - Confiscation and Ancillary Orders - Post POCA

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London 2012 Olympic Games and Paralympic Games

All of the official names, phrases, trade marks, logos and designs related to the London 2012 Games and the Olympic and Paralympic Movements (collectively referred to as the Games Marks) are protected by law in a variety of ways.

The Games Marks are legally protected by a combination of registered trademarks, copyright, registered community designs, and common law. In the UK, special laws have also been passed to give extra protection to some of the Games Marks: the Olympic Symbol etc. (Protection) Act 1995 protects the Olympic and Paralympic symbols, mottos and various words. Added protection is provided by the London Olympic Games and Paralympic Games Act 2006.

For more detailed information on these special laws, download the London Organising Committee of the Olympic Games and Paralympic Games Limited document on statutory marketing rights.

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Search, seizure and retention of material

The provisions particularly relevant to trade mark and copyright investigations are Part 2 of Criminal Justice and Police Act 2001 (Powers of Seizure), the Criminal Justice and Police Act 2001 (Powers of Seizure) Order 2003 and revised PACE Code B.

Sections 50 and 51 Criminal Justice and Police Act 2001 allows for the seizure and removal of property where it is not practicable to complete a process of examination, searching or separation at the scene.

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Forfeiture

Specific provisions exist under trade mark, copyright, video recordings and weights and measures legislation for the forfeiture of items. Where goods, materials or articles - which are connected with 'relevant' offences - come into possession of any person, that person may apply for a forfeiture order. The application may be made as part of proceedings or by way of complaint.

The court must be satisfied that a relevant offence has been committed in respect of the goods etc, or a representative sample of them. It may order that the goods etc are to be destroyed or impose conditions for them to be re-manufactured.

In R v Gleeson [2001] EWCA Crim 2023, [2002] 1 Cr App R (S) 112, the defendant's computer used to copy 20 CDs at a time was forfeited.

Provisions corresponding to those in sections 97 and 98 of the Trade Marks Act 1994, allowing forfeiture of infringing goods, are inserted into the Copyright, Designs and Patents Act 1988 in respect of the offences in sections 107(1) and (2), 198(1) and 297A and those involving dishonesty or deception. Section 97 of the 1994 Act relates to forfeiture in England, Wales and Northern Ireland and section 98 is a modified version relating to forfeiture in Scotland.

Sections 108 and 199 Copyright, Designs and Patents Act 1988 empowers a court to order infringing copies to be 'delivered up' as a result of criminal proceedings. Section 114A and section 114B (the equivalent of section 114A for Scotland) deals with forfeiture of infringing copies.

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Deprivation

Powers of the Criminal Courts (Sentencing) Act 2000 Sections 143 - 145 (derived from the Powers of the Criminal Courts Act 1973 Section 43).

A court may make an order to deprive a convicted defendant of property which has been lawfully seized or which was in the defendant's possession or under his control, when the property was used, or intended to be used, for the purpose of committing or facilitating the commission of an offence.

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Useful Links

Attorney General's Guidance on the use of the common law offence of conspiracy to defraud, issued 9 January 2007
Fraud Act 2006
Intellectual Property Office
Limited document on statutory marketing rights - London Organising Committee of the Olympic Games and Paralympic Games
Money Laundering Offences - Proceeds of Crime Act 2002
Proceeds of Crime - General Guidance
Proceeds of Crime Guidance - Confiscation and Ancillary Orders - Post POCA
Video Recordings Act 1984 and 2010

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