After making a haul, eBay counterfeiters in the US and UK are hauled off to jail in operations that highlight a growing phenomenon in the online auction world: fake products falling through the cracks.

Thanks to Federal Bureau of Investigation (FBI) operatives in the US and the Federation Against Copyright Theft (FACT) Internet Investigations Team in the UK, counterfeiters exploiting eBay to illegally profit at the expense of copyright holders are now sitting in jail instead of plotting more scams against unsuspecting online auction customers.

Early this year, Courtney Smith of Anderson, Indiana was sentenced to 27 months in prison for selling fake computer software on the eBay Internet auction site. He confessed to purchasing counterfeit Rockwell Automation computer software through eBay, duplicating it, and reselling the copyright-protected product to other eBay customers in 32 or more separate auctions. His profit – $4,149.97. The actual retail value of the software – more than $700,000. Prior to Smith’s arrest, FBI agents seized numerous computers, CDs and other counterfeit software-manufacturing paraphernalia at his home. Smith admitted that he knew it was illegal to sell copyrighted software; nevertheless, he not only manufactured and sold the fake products, but also made his own Rockwell Automation Software labels to affix to the counterfeit software. During his sentencing, he was ordered to forfeit the computers and other equipment used in the offense, make a $5,200.45 restitution to Rockwell Automation, pay a $2,000 fine, and serve two years of supervised release after completing his incarceration.

This summer, in another software scam, Robert Koster of Jonesboro, Arkansas, and Yutaka Yamamoto of Pico Rivera, California, were convicted of criminal copyright infringement after they were found to have sold counterfeit Rockwell Automation software (actual retail value of this software: almost $6 million). They each face up to five years in prison, a $250,000 fine, and three years of supervised release. Koster admitted that he made a profit of more than $23,000 in 105 or more separate online auctions in which he sold the counterfeit software (actual retail value: more than $5 million). For his part, Yamamoto said he made a profit of more than $6,000 (actual retail value: $543,000) on 92 or more online auctions. This verdict brings the total number of felony convictions involving the eBay auction sales of counterfeit Rockwell Automation software to nine. The combined retail value of the counterfeit software in all nine prosecutions is approximately $30 million.

Meanwhile, just recently in the UK, Helen Louise Sharkey, a 38-year-old woman from Penrith, Cumbria, was sentenced to six months in jail after pleading guilty to 18 charges of breaching trade mark and copyright law, in a case brought by Cumbria Trading Standards. Sharkey admitted to copying films and selling them over the Internet, initially using eBay to advertise, and then also using direct mail to sell to her existing client base.

The matter came to light when FACT’s Internet Investigations Team became aware of Sharkey’s activities and purchased eight counterfeit DVD films. FACT reported their findings to Cumbria Trading Standards who, with Cumbria police officers, executed a warrant on Sharkey’s house. They found two copying towers for making counterfeit discs, 600 “master” film discs, over 33,000 MP3 music files and over 5,000 CD and DVD cover artworks.

Online auction sales of counterfeit and pirated goods have increased over the years, causing significant losses to the copyright and trade mark industries. Law enforcement has undertaken several initiatives to address this situation and hold the perpetrators accountable.

But it also begs the question: Who is minding the (online) store?