At WIPO: New Business Models Aim To Shrink Market For Counterfeits

New business models for reducing markets for counterfeit and pirated goods were presented by speakers at the WIPO Advisory Committee on Enforcement this week, including voluntary mechanisms and graduated responses. But prices on brand name products was a little-explored issue during the presentations, only underlined as a possible factor of piracy by one developing country delegation.

The ninth session of the Advisory Committee on Enforcement (ACE) took place from 3-5 March.

Music Most Innovative Sector, Says European Observatory

The European Observatory on Infringements of Intellectual Property Rights presented a mapping of new business models for the distribution of copyrighted content.

According to the session document [pdf], the European Observatory is a network of public and private sector stakeholders. It includes specific working groups, one of which is dedicated to “IP in the Digital World.”

The most inventive sector is music, Observatory Director Paul Maier said yesterday. The sector continues to evolve very fast and to offer more and more services. The industry uses a combination of various models, in a fiercely competitive environment.

Among those models are subscription services, which he described as “luxury” models. They are the fastest growing area in digital music, with subscribers up to 44 percent in 2012 compared to 2011, and revenues up to 62 percent.

Downloading, which a few years ago was the main way to get music online, has been challenged by an increasing interest in streaming options, he said. Streaming models are often ad-supported models, he explained. Internet radio services are popular in the United States, he said, but have not permeated the European market yet.

The market for audiovisual media services in Europe has been growing, he said, showing a 49.8 percent growth in 2012 (€ 1.6 billion – approximately US$ 2.2 billion) compared to 2011, while there is a marked decline in spending on physical video. The number of non-linear TV services have also been increasing (non-linear referring to “services that are not based on pre-established and fixed programs,” according to the session document). A number of those systems are subscription-based and financed by publicity, he said. Content-on-demand might constitute the future of audiovisual consumption, he added.

Books online are a rather recent feature (5 years), he said and except for the United Kingdom where e-books accounted for 12 percent of the book market in 2012, the market is at an early stage, with around 2 to 3 percent in Germany, France, Spain and Italy. A number of approaches to create revenue for e-books have been experimented with, including subscription services allowing access to collections of e-books upon a monthly fee, according to the session document.

A number of business models will disappear due to financial sustainability issues or will remain niche, he said.

Four elements are absolutely necessary for an efficient fight against piracy, he offered: a strong and clear legislation perceived to be fair, a good awareness of the legislation, a strong enforcement. But “absolutely essential,” he said, “we need a good availability of legal offer,” which brings all the quality, the diversity, the completeness, speed, versatility, ease to use and “of course a reasonable price.”

Voluntary Mechanisms Hold Promises, MPAA Says

Marianne Grant, senior vice-president of the Motion Picture Association of America (MPAA), presented voluntary mechanisms for addressing online infringement. According to Grant, voluntary initiatives hold real promise to address online piracy. The session paper [pdf] lays out facts about two voluntary initiatives, one in the US and the other one in the UK.

In the UK, “Operation Creative” is a partnership of the city of London police (Police Intellectual Property Crime Unit) and the advertising industry. It aims at reducing the amount of advertising placed on “rogue” websites and cutting their revenues. Right owners collect evidence of infringement, forward this evidence to the Unit, which in turn conducts its own evaluation, and advises websites if necessary.

A list of websites which have not responded to the Unit advice is then sent to the advertising industry, which is encouraged to consider their business relationship with those sites, she said.

In the US, the “Copyright Alert System” programme has been running for a year and aims to target P2P networks through a graduated response. It is a voluntary Memorandum of Understanding between rights holders and the five largest US internet service providers (Comcast, AT&T, Verizon, Time Warner Cable and Cablevision).

The ISP sends a series of alerts to the subscriber whose account is associated with P2P activity. The first one or two alerts are in the form of a warning and inform about sources of legal content, copyright law, and internet safe practices, she said. The following ones request acknowledgement of receipt, and the last two alerts are mitigation alerts. Very few people get to that stage, she said, adding that because sanctions are involved, both voluntary mechanisms have an appeal process.

Spain to “Re-Establish a Situation of Legality”

Jorge Cancio Meliá, senior legal advisor and legal coordinator of the Second Section of the Intellectual Property Commission, Deputy Directorate General for Intellectual Property of Spain, presented the Spanish administrative and legal procedure concerning infringements of copyright and related rights.

According to the session document [pdf], “the administrative and judicial procedure for infringements of copyrights and related rights committed by providers of information society services” was established in March 2011 and implemented in December of the same year.

“The purpose of the procedure is to re-establish a situation of legality,” Cancio said. “Priority is given to the voluntary removal of the illegally-offered content or the disabling of access to said content by the party responsible for the infringement,” according to the session document, but the absence of compliance leads to measures of suspension of intermediary services in the Spanish territory, Cancio explained.

The procedure goes beyond a simple notice and takedown system, he said, and includes several value-added elements such as: the identification of infringers and other third parties involved in the procedure in a quick and cheap manner; the intervention of a competent public authority respecting the principles of due process; a detailed, reasoned and justified ruling that can be appealed.

According to the session document, certain requirements of the procedure “to a certain extent, resemble those required under notice and takedown systems for infringing content established in other countries, such as the United States Digital Millennium Copyright Act.”

UK Protects Its Creative Industries

Elizabeth Jones, from the Copyright & IP Enforcement Directorate at the UK Intellectual Property Office presented the UK experience of tackling online IP infringement. She mentioned the UK legislative framework dealing with intellectual property infringements, namely the Copyright Designs and Patent Act of 1988, the Fraud Act of 2006, the common law offence of conspiracy to defraud, and the Proceeds of Crime Act 2002.

Collectively, the creative industries already generate more than £36 billion (US$ 60 billion) a year in the UK economy, she said, and employ some 1.5 million people. The UK approaches the challenge of tackling online IP infringement in an integrated manner, she explained, through a combination of enforcement, educating the public, and providing consumers with the ability to access legitimate digital content.

The session document [pdf] details administrative, civil and criminal interventions.

Russian Federation Federal Act of 2013

The Russian Federation presented “the enforcement of rights to audiovisual works under the Federal Act 187-FZ of July 2013 on amendments to certain legislative Acts of the Russian Federation concerning the protection of intellectual Property rights in information and telecommunication networks, and other measures undertaken to combat piracy and counterfeiting on the internet.”

According to the session document [pdf], prepared by Natalia Romashova, head of Law Department, Ministry of Culture of the Russian Federation, “the adoption of the Act marked the beginning of the regulation on the handling of information on the Internet. It is an important first step in stopping violations of intellectual property rights in films, including theatrical and television films, on information and telecommunications networks.”

Legal Culture in Poland

The Legalna Kultura Foundation of Poland presented its project “Legal Culture,” and in particular a research conducted on user-generated content, carried out in two stages, one in the spring of 2013 and the other one last autumn.

In the session document [pdf], the foundation says it promotes the use of legal sources of culture and build awareness in the field of IP, but also supports culture through the use of legal sources, and builds awareness of the recipients of culture in the new digital reality.

The research yielded interesting results, the foundation representative said, such as showing that most of the research participants believe that internet is the best place to gain popularity, and that the top downloaded material on the internet is music, school and work-related materials, and photos.

According to the session document, “the strategic partners for the project Legal Culture are the Ministry of Culture, the National Heritage, and the Polish Institute of Film Art. The campaign is supported by 32 institutions, 43 media partners and by numerous festivals and cultural events. The supporting institutions provide the content, material and promotional support. The media partners also provide support.”

Alternative Dispute Mechanism

Several countries, academics and others presented alternative dispute resolution mechanisms during the meeting.

Trevor Cook, a partner at WilmerHale in New York, started with a presentation of the main types of alternative dispute resolution (ADR) but focussed on arbitration and expert determination. He said they are most relevant for the purpose of the enforcement of IP rights as these are binding procedures.

The session document [pdf] gives an overview as to how ADR can be used as a tool for IP enforcement. Arbitration awards can easily be enforced due to well-established international norms such as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as the New York Convention, which includes more than 140 contracting parties.

Arbitration is also a good alternative to multi-jurisdictional disputes, which are often complicated with deferred procedures and various outcomes. Expert determination is particularly relevant in the field of patent pools for standard essential patents.

Activities of the WIPO Arbitration and Mediation Centre were presented by Ignacio de Castro, deputy director of the centre, and are fully detailed in the session document [pdf].

Then officials of national intellectual property offices presented their ADR mechanisms, representing Cambodia [pdf], Mexico [pdf], Korea [pdf] and Spain [pdf].

Law professors Thomas Barton and James Cooper, co-directors of the Center for Creative Problem Solving in the United States, considered that adjudication must remain the central option for dispute settlement. However, they asserted that a system with a wide range of procedures is likelier to give parties to a dispute the best-suited procedure, thus including ADR. The session document [pdf] offers a description of alternative mechanisms.

Michael Groβ from Fraunhofer-Gesellschaft, an organisation for applied research based in Munich, stated that foreign R&D contractors and licensees negotiate more and more difficult terms of agreements related to the applicable law and the place of the dispute resolution. His statement can be found in the session document [pdf].

Sabine Fehringer, an attorney in Vienna, presented the Intellectual Property Agreement Guide (IPAG) project, whose purpose is “to improve the cooperation and to reinforce and foster the knowledge transfer between science and industry,” according to the session document [pdf].

Maëli Astruc contributed to this article.