OCA CIRCULAR NO. 4-2004, January 15, 2004

In line with the Resolution of the Honorable Court in A.M. No.
03-03-03-SC (Consolidation of Intellectual Property Courts with
Commercial Courts) dated June 17, 2003 and to promote expediency and
efficiency in handling special cases, those involving cases formerly
cognizable by the Securities and Exchange Commission and violations of
the intellectual property rights under Intellectual Property Code (R.A.
No. 8293), we reiterate our commitment to minimize if not totally
eliminate fraudulent or manipulative devices and practices which create
distortions in the free market.

Momentarily, we would like to impart to you an information given
by Mr. Bradford J. Bell, Second Secretary for Economic Affairs, U.S.A.
illustrating the U.S. Government’s concern to carve out infringements on
intellectual property rights.

“CRIMINAL CONVICTIONS OF INTELLECTUAL PROPERTY CRIMES
IN THE UNITED STATES

At both the federal and state levels, U.S. authorities are
cracking down on and prosecuting IPR violators. Below are some current
trends and statistics that demonstrate the U.S. government’s commitment
to enforcement of intellectual property rights in the United States.

The conviction and prosecution statistics include both federal
and State cases, and are derived from attorney general reports. These
reports under-represent the actual number of cases, especially at the
state level. Additionally, because complex prosecutions can take a
significant amount of time from investigation to sentencing, the
attendant time lag may skew figures. For instance, a criminal case that
was filed by prosecutors in late 2001 might result in a conviction in
2002 and sentencing in early 2003. Finally, the majority of enforcement
in the U.S. occurs in the civil courts, as we have a fully functioning
and highly trained judiciary, and rights owners are able to avail
themselves of preliminary measures (such as seizure of goods) and
remedies (such as enforceable financial judgments). These caveats should
be kept in mind when using the figures below.

In fiscal year (FY) 2000, the Justice Department obtained
federal court convictions of 76 defendants for IPR violations. In FY
2001, the number increased to 86 and in FY 2002, the number increased
again in 106. Using FY 2000 as a base, the number of convictions
increased 13 percent in FY 2001 and nearly 40 percent in FY 2002.

Moreover, the number of defendants sentenced to imprisonment is
also on the rise. In FY 2000 5 25 defendants received jail time. In FY
2001, the number increased to 40 defendants and in FY 2002, the number
increased again to 48 defendants. Again using FY 2000 as a base,
defendants incarcerated for violating IPR laws increased 60 percent in
FY 2001 and 92 percent in FY 2002.

State law enforcement officials also vigorously enforce
intellectual property rights by engaging in criminal anti-piracy and
anti counterfeiting actions to halt the distribution of illegal
materials. In 2001, as a result of state actions,, anti-piracy actions
and/or raids were conducted in over 2,100 cases and 6,100 defendants
were indicted, resulting in 3,741 convictions. Of those convicted, 125
defendants were sent to jail for criminal violations and criminal fines
were issued in 1,845 cases.

Recent Enforcement Efforts

Video Piracy: On June 25, 2003 , a New Jersey man pled guilty to
stealing the movie “The Hulk” and posting it on the Internet. The
defendant was sentenced to three years probation and ordered to pay
S7,000 in restitution. On April 16, 2003 , a New York federal judge
sentenced the two leaders of a counterfeit videotape ring to 46 months
in prison each. The judge also ordered the two defendants to jointly pay
$11.2 million in restitution. In January 2002, the Justice Department
indicted two men after seizing over 60,000 pirated DVDs and CDs with an
approximate retail value of SI million in Brooklyn , New York .

Music Piracy: In May 2003, a Virginia man pled guilty to
creating and selling over 17,000 musical compact discs in violation of
criminal copyright laws. The man faces a maximum sentence of five years
in prison and a fine of $250,000. In the District of Columbia, a man
pled guilty in February 2003 after producing and selling musical CDs
over the Internet and was sentenced to six months in prison in September
2003.

Trademark Piracy: In July 2003, a Massachusetts man pled guilty
to conspiring to sell counterfeit Rolex, Cartier, Omega, Movado, and Tag
Heuer watches over the Internet. The defendant faces up to five years
in prison, a 5250,000 fine and restitution to the identifiable victims
of the crime. A South Carolina man pled guilty to trafficking in
clothing with counterfeit Nike and Tommy Hilfiger trademarks in January
2003. He faces a maximum penalty of 30 years in prison and a fine of $3
million.

Software Piracy: A federal judge sentenced a North Carolina man
to IS months in prison for distributing pirated game software-on the
Internet, In April 2003, a federal judge in Virginia sentenced a man to
four months in prison, four months of home confinement and a $3,000 fine
for offering pirated copies of software on his web site. Authorities
estimated the value of pirated software between 540,000 – 50,000.

Pharmaceutical piracy: In August 2002, a federal district court
convicted a California man of two counts of trafficking in counterfeit
goods, conspiracy and misbranding food shipped in interstate commerce.
The conviction came after the man fraudulently labeled baby formula with
a popular name brand. The man was sentenced in December 2002 to 44
months in prison. This case is under appeal.

Operation Buccaneer: On December 11, 2001, the U.S. Customs
Service, in coordination with its law enforcement counterparts in the
United Kingdom, Australia, Finland, Sweden, and Norway, executed
approximately 70 search warrants worldwide in the initial phase of
Operation Buccaneer, the most significant law enforcement penetration
to date of international organizations engaged in the criminal
distribution of copyrighted software, games and movies over the
Internet. This coordinated law enforcement action was the result of a
14-month undercover operation that began in “October 2000. As of October
2003, there have been 24 felony convictions resulting from Operation
Buccaneer, 20 of whom have been sentenced. Core conspirators received
sentences ranging from 33 to 46 months imprisonment.

Seizure of counterfeit goods by Legacy U.S. Customs: Legacy U.S.
Customs issues fines for counterfeit goods that are seized. In addition
to the fine issued, seized counterfeit goods are destroyed. The penalty
for violations of copyrights is the destruction of piratical goods. The
following fines were issued for seized goods bearing a counterfeit
trademark: FY 2001 – $51,63’9,525.29; FY 2002 – $55,977,628.74; and FY
2003 -$45,612,124.83.”

For information

January 15, 2004