Business, Governments See Momentum For ACTA, But EU Snags

By Liza Porteus Viana for Intellectual Property Watch
NEW YORK – Business leaders and some global government officials on Monday urged ratification of a global anti-counterfeiting treaty and proposed a series of new strategies aimed at curbing pirated goods they say not only harm developed and developing countries’ economies, but their citizens’ health as well.

Meanwhile, European Union participation in the negotiations has come into question, and non-governmental critics have raised concerns about the need for a treaty and the inclusiveness of the negotiations.

“Our future relies on innovation, creation, brands and unfortunately, all of those are very easy to theft,” said Jean-Rene Fourtou, chairman of the supervisory board of Vivendi and co-chair of the International Chamber of Commerce’s Business Action to Stop Counterfeiting and Piracy (BASCAP). He added that the security, social and economic issues associated with rampant theft is “like a cancer.”

Fourtou and other CEOs and corporate executives of BASCAP met Monday in New York City with US Trade Representative Susan Schwab, World Intellectual Property Organization Deputy Director General Michael Keplinger and World Customs Organisation (WCO) Secretary General Michel Danet, among others. BASCAP’s Global Leadership Group tackled topics such as how to get Group of 8 countries to make more progress on shutting down counterfeit markets, working with the WCO to stop the flow of counterfeit goods across borders and forthcoming consumer awareness and education campaigns that will spell out the dangers of fake and pirated goods.

BASCAP will work with WIPO to seek out other government partnerships on the education campaign, which they say is critical to relaying to consumers the message that buying counterfeit goods harms the economy, local manufacturers and creators of such goods, and poses serious safety and health concerns.

“We need to more effectively translate these hard-hitting facts” to work toward a “fake-free world,” Keplinger said during a press conference after the meeting.

Officials also urged Schwab to move quickly toward completing the Anti-Counterfeiting Trade Agreement (ACTA), which the United States, European Union and other key trading partners announced last October. Schwab, who attended the morning business meeting but not the press conference afterward, told attendees that she is hopeful negotiations can be completed this year. The language of the draft agreement is expected early this year.

“We think it’s absolutely necessary to work toward that while there’s so much momentum behind this issue,” said Alan Drewsen, executive director of the International Trademark Association. He also said Schwab vowed that whatever new administration enters the White House in November, there will be the “same level of commitment to the protection of intellectual property” and pursuing ACTA.

Kevin Havelock, president of Unilever United States, said Schwab “made quite a commitment of her own energy” to pushing ACTA through this year.

But a main sticking point, several officials told Intellectual Property Watch, is that the EU has not settled issues surrounding its negotiating authority as one unit yet. “There’s a major problem in the European Union,” Keplinger told Intellectual Property Watch. “That is the open issue,” added Drewsen. “We’re told progress is being made.” Some sources have said the EU has a question of competency versus the national governments in this area.

Seeking to Include Developing Countries

One ACTA message relayed to government officials from business was that it is fine to have the US, EU, and Japan involved in the negotiations, but it also is imperative to have other less developed countries involved as well. Also discussed were objectives the group could take to further education and various country initiatives that vary by country and culture. The World Customs Organization gave a presentation on challenges it faces interdicting fake goods.

“Today we consider this an industry that kills employment, productivity, progress and people,” Danet said in French. “There is no single product that has not been pirated today … the consumers are the pirates and also the victims.”

Officials also said the finger cannot just be pointed at China as the main culprit, although the fact remains that 80 percent of counterfeit goods seized in Europe alone come from China. Russia, Ukraine, Turkey, Nigeria and Vietnam also are sources, they said. The problem in holding China accountable, Danet said, is that Beijing may sign onto various agreements but it is hard to know whether they actually are implemented by the country’s various regional leaders who remain fairly independent.

Bob Wright, vice chairman of General Electric US and a co-chairman of BASCAP, said the hope is that ACTA will be “fill-in-the-blanks for lots of things that are not as thought out or as well drawn having to do with counterfeiting or piracy” in current international agreements.

Industry Recommendations

The ICC and INTA also on Monday presented a paper to Schwab, outlining their ACTA recommendations. The paper will be distributed to leaders of the EU, Japan, Korea, Mexico and other governments.

Intellectual Property Watch obtained a copy of those recommendations, which include avoiding compromises that will limit the scope and effectiveness of the final agreement, having governments warn consumers about the harms of counterfeit products and providing clear guidance and deliver tangible results in topics such as:

• requiring that each party designate a chief intellectual property enforcement officer to oversee coordination of relevant government officials and agencies and allocate resources
• ensuring that criminal penalties reflect the magnitude of the crime
• disrupting the flow of counterfeit goods through free trade zones and other transhipment sites by giving local customers and enforcement authorities power to inspect all shipments and seize infringing goods
• developing global “minimum standards” in adjudicating counterfeiting and piracy cases
• addressing the growing problem of the sale of counterfeit goods on the Internet
• treating counterfeiting and piracy as a transnational crime if activity crosses borders.

USTR is seeking public comment on ACTA via the Federal Register. Comments must be submitted by March 21 to be considered.

Critics Raise Doubts on Narrow ACTA Process

But some ACTA critics say that is not enough, and that developing countries and civil society groups not part of the inter-governmental discussions are at a disadvantage from the outset.

“These talks have all been going on between a select handful of countries that will basically decide what the parameters of the agreement will be and the concerns of developing countries, the concerns of civil societies, won’t be included in the final text,” said Robin Gross, executive director of the civil liberties organisation IP Justice.

Gross also is concerned that ACTA will result in increased data-sharing between governments – which could pose privacy concerns – as well as increased use of public resources that would be put toward trying to remedy a problem hurting “a very small number of companies” and would fund what she called “propaganda campaigns” to discourage.

She said there is no need to reinvent anti-counterfeiting laws, when many countries have already signed onto the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which, among other things, establishes minimum levels of protection that each government has to give to the intellectual property of World Trade Organization members. Pro-ACTA officials say the new agreement would set a new, higher benchmark for enforcement that countries can join voluntarily.

Undermining Trust in Company Brands

BASCAP officials maintain that the problem is very real – and potentially deadly, emphasising that it is about more than illegal copies of CDs and DVDs being sold on streets.

For example, as of December 2007, Pfizer – which has implemented a programme to identify and disrupt the major manufacturers and distributors of counterfeit Pfizer goods – confirmed the presence of counterfeit medicines under its name in at least 75 countries. Fake versions of seven Pfizer products had been detected in legitimate supply chains (e.g., pharmacies) in at least 25 countries – and not just developing nations with weak regulatory systems.

“Counterfeit pharmaceuticals are truly a global problem for which we need global solutions,” said Andreas Fibig, Pfizer’s senior vice president of US pharmaceutical operations. “And as long as it remains a ‘low risk-high reward’ activity, it will continue to attract opportunists, organised crime and terrorists.”

Liza Porteus Viana may be reached at info@ip-watch.ch.