Near-Finished Anti-Counterfeiting Trade Pact Could Have Broad Reach

The countries that own most of the world’s intellectual property rights have all but completed an agreement among themselves that raises the level of protection of those rights while appearing to reduce obligations placed on rights holders. Now they’ll need to find ways to apply it to the countries of the world seen as responsible for much of the infringing material.

The latest draft of the Anti-Counterfeiting Trade Agreement (ACTA) is available here. Observers and analysts range in their reactions to the near-final draft text released last week – the first official release since April, though there have been leaks – but all sides found something to like in the end. Rights holder groups like the software makers praised the deal as the help they need in the fight against massive counterfeiting and piracy, and public advocacy groups sighed in relief over the last-minute removal of some stronger provisions related to the internet.

Commentators who lean toward the high-technology industry interests immediately picked up on a significantly weakened internet chapter, missing many of the measures most feared by advocates of freedom online. Others mapped areas where they said the agreement still caused them concern. The concern for developing countries who did not participate in the negotiations could be in what happens to the agreement once it is in effect.

ACTA negotiators have insisted repeatedly that the agreement will not change the national laws of any negotiating parties. The real value added is likely to be in where ACTA is taken from here. The “success of ACTA depends on whether we find other countries to join,” said a participant in the negotiations. “That was one of the goals.”

Another of the goals was to make up for areas where “TRIPS enforcement is not up to date,” he said, referring to the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights. While ACTA parties remain bound by TRIPS, ACTA goes beyond TRIPS in several places, for example, in placing enforcement procedures on exports as well as imports.

“Clearly, the agreement goes beyond TRIPS in certain ways, so it has meaning for the signatories,” said Amy Kapczynski, a law professor at Yale University. “The history of international IP also suggests that those countries will try to get others to sign on to ACTA, and that its provisions will become a new negotiating baseline.”

According to informal analysis, the current ACTA text differs from TRIPS in increasing the inclusion of third parties and intermediaries, in some cases possibly opening the door to future debates over who these third parties might be. It appears to add the ability of authorities to take action against local distributors of infringing material that may have derived from a non-signatory country. In the case of injunctions, it may reduce the criteria needed to issue injunctions.

On damages, the ACTA text gets more specific than TRIPS, which simply indicated the damages should be adequate to compensate for injury. ACTA goes further to say that it may include “any legitimate measure of value submitted by the right holder. This could include “lost profits, the value of infringed good or service measured by the market price, suggested retail price.” It has long been in contention whether a person using a free or cheaper infringing copy of a work would otherwise have purchased it at full price.

Border measures in TRIPS are clear on laying out limits on agents delaying entering goods on suspicion of IP infringement. There are safeguards aimed at preserving the flow of trade and consumer rights. These may be weaker in ACTA, which, for instance, would allow rights holders, “where appropriate,” to directly request the suspension of goods. ACTA appears to have trimmed safeguards for defendants.

Questions also arise over the definition of what represents commercial scale piracy, which is subject to criminal enforcement. The ACTA text provides for criminal enforcement of acts on a commercial scale, which it defines as including “at least those [acts] carried out as commercial activities for direct or indirect economic or commercial advantage.” It unclear what acts would be excluded from commercial scale under this definition.

It is also notable that patents have been removed from the civil enforcement section of ACTA, but only by a bracketed – that is, as yet not agreed – footnote (2) proposed by the United States. They also are removed from border measures by footnote 6, which is agreed.

The digital environment chapter is the main area where the text significantly changed in the final version negotiated in Tokyo in late September, said a participant in the negotiation.

University of Ottawa law professor Michael Geist in an analysis of the digital chapter said measures to prevent circumvention of technological protection measures have been weakened. Qualifications have been added making enforcement depend on national context or subject to limitations and exceptions, Geist said. On internet service provider (ISP) liability the agreement is “largely unchanged” from recently leaked drafts.

The latest text says that parties “may provide” the authority to require ISPs give rights holders information about alleged infringers, and they may also provide limitations on the liability of ISPs for infringement on their networks. But neither is mandated.

The digital chapter still has a few bracketed areas of text, including several areas where enforcement applies to “[at least trademark and] copyright or related rights.” If the “at least” remains, it is most likely to apply to industrial designs, a participant in the negotiations told Intellectual Property Watch.

Questions of Legality in US

At least some commentators have raised questions about the legality of the agreement in the United States, where it was packaged by the Obama administration as a “sole executive agreement” which limits public and congressional participation on the assurance it would not change US law.

US group Knowledge Ecology International began an analysis of ways in which the text might run afoul of US law. US Senator Ron Wyden (Democrat, Oregon) this month called for the Congressional Research Service to analyse the legality of provisions, especially those related to injunctions, damages, and intermediary liability.

The United States had been seen through leaked drafts revealing which countries sought which additions or deletions to the text as pursuing stronger language on statutory damages. The European Union seemed strong on border measures. In both cases, a softer compromise was reached through the course of negotiations.

Reactions

The Office of the US Trade Representative released an ACTA fact sheet and guide to the public draft text.

“[T]rading partners representing more than fifty percent of world trade developed and released draft text for what will be the highest-standard plurilateral agreement ever achieved concerning the enforcement of intellectual property rights,” said USTR.

The Business Software Alliance praised the commitment in ACTA to criminalising “copyright piracy that is for commercial advantage, including software license infringement by end users.” ACTA “builds on the foundation of” TRIPS and the WIPO Copyright Treaty “in an effort to raise the bar higher.”

BSA dismissed the concerns of public interest groups about ACTA as “overheated and hyperbolic rhetoric from copyright skeptics.” Those groups have accused BSA of overheated rhetoric in its own right, when it publishes exorbitant figures on the damaging effects of piracy that assume each illicitly downloaded copy of software represents a lost sale.

Advocacy group Public Knowledge said the narrowing of the internet chapter “should be seen as a qualified victory for those who want to protect the digital rights of consumers around the world,” but said the process by which it was produced was deeply flawed. The USTR had to be “taken to court and taken to task in the court of public opinion” before allowing anyone outside of industry groups to be part of the agreement’s development, a press release added. They credited the eventual elimination of some of the digital chapter’s more offensive provisions to the hard-won public participation.

Canadian professor Geist saw it differently, saying one of the “biggest stories of the three year negotiation of ACTA has been the willingness of the US to cave” on the internet chapter. The end result is a “failure by the US, which clearly envisioned using ACTA to export its DMCA-style approach,” he said. DMCA refers to the Digital Millennium Copyright Act.

This may be due to the need to have a stronger narrative on jobs and the perception that success is being achieved abroad as the United States goes toward mid-term elections next month.

Public interest group La Quadrature du Net called the text a “bullying weapon for the entertainment industries,” and said that the pressure placed on internet service providers, while more subtle in the final text than in previous versions, still gives rights holders too much power over content flows on the internet.

On criminal enforcement, La Quadrature du Net said the definition of commercial scale is “vague, open to interpretation, and just plainly wrong when it comes to determining the scope of proportionate enforcement … [w]idespread social practices, like not-for-profit filesharing betweens individuals, could be interpreted as ‘commercial scale.'”

As drafted, the agreement will create a committee to oversee its implementation. ACTA will enter into force after six negotiating parties have ratified it.