The South Strikes Back Against Overreaching IP Enforcement

By Catherine Saez, William New and Kaitlin Mara
Developed nations are overreaching in their broad push to escalate enforcement of intellectual property rights and their efforts should be reined in and centralised in the World Intellectual Property Organization, say leading developing nations led by China. This especially applies to a secret negotiation led by the United States, Europe and Japan to create an Anti-Counterfeiting Trade Agreement (ACTA), they said.

“We have got some concerns regarding the negotiation of ACTA,” said Yusong Chen of the Chinese mission, adding that “this could be the most strange and most dangerous” international agreement on IP rights. International consumer groups also are up in arms about ACTA.

Viviana Muñoz Tellez of the South Centre said concerns about the heightened enforcement initiative include a lack of agreement on definitions, lack of robust and reliable data, and a lack of understanding of the problem before rushing to solutions. Her comments were echoed by numerous speakers throughout the day-long event on 16 September sponsored by the South Centre.

Muñoz Tellez said the concern about forum shopping may be better described as forum “capture,” as it involves capturing the agenda of various institutions and other fora.

Henrique Choer Moraes of the Brazilian mission in Brussels said that while forum shopping itself is nothing new, what is new and problematic is the process of forum shopping in bodies meant to be strictly technical, where there are no experienced negotiators with informed opinions on IP policy matters.

Muñoz Tellez noted limits on enforcement under laws such as the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). For instance, IP rights are private rights, making enforcement the primary responsibility of the rights holders, not their governments. Also, TRIPS provides for exhaustion of IP rights after sale, and it gives flexibility to nations as they provide “effective action” against IPR infringement, plus requires that enforcement not create trade barriers and contain safeguards against abuse.

Chen and others suggested the ACTA might create such trade barriers and harm consumers, domestically and outside the signatory nations. The ACTA is being negotiated in secret, has a “lack of democracy,” and lack of balance as it relies overly on industry groups and rights holders with no representation from the consumer side, Chen asserted. And as the law enforcement side rises, individual legal rights may be diminished, he and others said.

Speakers discussed the many fora in which developed nations are pressing for new enforcement measures that would reach beyond TRIPS, even though least-developed nations are not required to implement TRIPS before 2013, and some larger developing countries have suggested implementation has been harmful to their economies.

Fora in which stronger enforcement measures have been proposed include: the WTO Council on TRIPS, the World Intellectual Property Organization (WIPO), Anti-Counterfeiting Trade Agreement (ACTA), World Health Organization (WHO), World Customs Organization (WCO), Interpol, Universal Postal Union, bilateral free trade agreements, and others.

Moraes called the WCO a “safe haven for the TRIPS-plus agenda,” where IP enforcement efforts would “over-empower customs to the detriment” of other agencies. This is particularly notable in a proposed standard of the SECURE working group – which is drafting IP regulations for customs officials – that would allow applications from private rights holders directly to customs officials (bypassing judges and other proper authorities).

Many of the proposals put forth at WCO would be “impossible” in more political fora, Moraes said, such as model IP legislation that explicitly states that only by surpassing TRIPS regulations can adequate IP enforcement at the borders be achieved, or that tampering with digital rights management constitutes an IP violation. WCO’s relative isolation from political fora, coupled with its “unprecedented” policy of copyrighting its reports and proposed legislation, and keeping original reports under password-protection, has meant resistance to these enforcement mechanisms has been hard to coordinate.

The UN Universal Postal Union Congress in August adopted a resolution (number 40) that encouraged members to identify counterfeit and pirated items in the postal network and to cooperate with the relevant national and international authorities in awareness-raising initiatives to prevent illegal circulation of counterfeit goods, the Third World Network reported. But a number of countries were concerned that the postal service did not have the scope or necessary legal and other expertise to implement such a resolution, in particular the expertise to determine whether a product is counterfeit or violates IP laws. The resolution’s adoption was appealed. The UPU did not respond to repeated requests for comment.

WIPO Central

Developing countries seemed to reach consensus that all enforcement efforts should be channelled through WIPO as the central United Nations forum dealing with IP issues. But developed countries may be reluctant to do so as developing countries have so far forcefully restricted discussion of IP enforcement to an advisory committee with no policy-making powers. The countries that initiated the ACTA negotiations also have sought to gain ground through the TRIPS Council and met with the same resistance.

But developing countries maintain the issue can be discussed at WIPO. “It is very important to enhance WIPO to take advantage of the principles consecrated by the WIPO Development Agenda,” said Cristiano Berbert of the Brazilian mission. “Wherever the issue of enforcement comes outside … WIPO, it undermines balance.” The Development Agenda contains a provision requiring enforcement to be in line with international agreements, he said. TRIPS Article 7 requires that enforcement and protection contribute to innovation, technology transfer and be conducive to social and economic welfare as well as to a balance of rights and obligations, he noted.

A developed country official told Intellectual Property Watch that the ACTA does not appear to be on track for completion this year, as originally targeted. The official also said participating nations have the general expectation that the final agreement will not require significant changes to their national laws.

On Tuesday, more than 100 international public interest organisations issued a call to officials from the countries negotiating ACTA to immediately publish the draft text of the agreement. Additional countries in the talks are Australia, Canada, Mexico, New Zealand, and South Korea. “Secrecy around the treaty negotiation has fuelled concerns that its terms will undermine vital consumer interests,” they said. For instance, it may: require internet service providers to monitor all internet communications; interfere with fair use of copyrighted materials; criminalise peer-to-peer electronic file sharing; and undermine access to low-cost generic medicines, they said.

Positive steps suggested by speakers included focussing on implementation of the WIPO Development Agenda, stepping up negotiations at the WTO on strengthening protection of traditional knowledge and biological diversity, improving technology transfer, and focussing on the impact of intellectual property rights and standards. “Unless we have a more balanced international regime on IP and standards, the issue of enforcement should not be a priority for developing countries,” Chen said.

Enforcement of IP rights should be adapted to particular countries and flexibilities should be used, said Carlos Correa from the University of Buenos Aires. IP rights being private rights, part of the enforcement should be borne by the beneficiaries, he said. A model for enforcement measures should be set up that takes into account the specific conditions of developing countries.

Private sector contributions to enforcement should be based on revenue to avoid discrimination against smaller companies, according to Christoph Spennemann from the UN Conference on Trade and Development (UNCTAD).

Trade Woes

Separately, Hong Xue from the University of Hong Kong argued that a US WTO challenge against China lacks merit because WTO members are free to implement TRIPS as appropriate. On a US claim that foreign authors are denied copyright prior to publication or distribution in China, she referred to article 17 of the Berne Convention, which gives the “possibility of control of circulation, presentation and exhibition of works” to its member, adding that this article should be included into TRIPS.

Another initiative that came under fire is the annual “Special 301” report of the US Trade Representative’s office, which singles out trading partners USTR sees as providing inadequate protection for US intellectual property rights. Sean Flynn of the American University law school Program on Information Justice and Intellectual Property argued that the Special 301 process could be in violation of WTO rules as it sets WTO members up for trade sanctions even if they do not violate WTO agreements, but rather for failing to meet TRIPS-plus standards.

According to Flynn, the 301 process is an informal adjudication as the inclusion of nations in special 301 reports is largely determined by US businesses, whose data should be challenged. He suggested challenges to arbitrary decisions under US law and political processes, as well as a WTO challenge. There may be grounds to argue the United States’ unilateral enforcement is discriminatory and arbitrary, he said, and US decisions regarding the Special 301 might be appealed at the WTO as well.

Meanwhile, economist Carsten Fink suggested more evidence is needed to confirm claims of involvement of organised crime in IP infringing activities, as it is difficult to pin down. A 2007 study by the Organisation for Economic Cooperation and Development (OECD), that estimated global trade in IPR-infringing goods at US$200 billion in 2005, was just an “educated guess,” he said.

It also showed that the majority of counterfeit products is in areas such as fashion apparel, audiovisual recordings and software, which cause no significant harm to consumers. In addition, he questioned industry methodology in its assessments of lost revenues due to piracy. For instance, he said, the Business Software Alliance, in its annual analysis, assumes that all consumers of pirated software would switch to legitimate copies at their current prices.

Fink concluded by suggesting that much of the lack of enforcement in developing countries may be better attributed to institutional deficiencies that “cannot be easily addressed through international treaties and development aid.” He found a very high correlation between levels of piracy and the economic standing of countries, where more piracy occurs in worse-off economies.

Counterfeit Medicines

Valerio Reggi, executive secretary of the WHO-led International Medical Products Anti-Counterfeiting Taskforce (IMPACT), said he did not understand the opposition from some member states at the May World Health Assembly to a resolution aimed at strengthening the WHO’s assault on counterfeit medicines. He singled out India. The WHO is continuing its efforts this year, a source said afterward.

Some opposing countries during the assembly said they wanted more time to consider the issue, and were displeased at the effort to push the issue through without full support from the WHO membership. Some criticism also was levelled this week on IP rights holders for using fear to thwart markets for infringing goods.

Counterfeit medicine is a public health problem, not an IP problem, Correa said. The fight against counterfeit medicine should be undertaken by legislation, like medicine approval and control of production, he said.

Biotech and IP Abuse

Correa suggested that developing countries should develop their own set of data and should start recording anti-infringement abuses. He presented the case of Monsanto against Argentina concerning Roundup Ready soybeans in which the company sought compensation for its technology even though the modified bean technology is in the public domain in Argentina. When such compensation was not forthcoming, Monsanto tried to use patents obtained in the EU to stop Argentina’s exports of processed soy flour to Europe.

Soyflour is a derivative product of soybeans and the patents cover genetic sequences within a living soy plant. According to EU biotechnology directive (Art. 9) a gene “should perform its functions,” which is rendered impossible by the processing needed to make the soy plant into flour. But some European countries complied with Monsanto’s claim and stopped imports based on the suspicion of patent infringement. “Patent infringement is very hard do determine by custom officers” who might not have the expertise, Correa said. “This is why alleged patent infringement is so dangerous.”

“We are moving toward a fragmented world” which can no longer face global challenges Spennemann concluded. “There is a reduced comprehension of the other side’s position” and a much needed collaboration needs to take place in order to instil a sense of ownership in all.

The authors may be reached at info@ip-watch.ch.