Thursday, March 25, 2010

The Anti-Counterfeiting Trade Agreement

Guest Blogger

Margot Kaminski

The Anti-Counterfeiting Trade Agreement, a plurilateral agreement negotiated outside of the WTO's processes and protections, is the biggest set of new laws to hit international Intellectual Property. Many organizations have had serious concerns about the potential civil liberty and economic impact of ACTA. A draft text of ACTA has been leaked here.

Many of these issues are clearly still up for debate. The biggest three issues may be the scope of criminal copyright infringement, the expansion of the US Digital Millenium Copyright Act (DMCA) internationally, and the creation of a new international institution (an ACTA "Committee") to deal with enforcement of ACTA.

In short, ACTA is geared up to do almost exactly what I predicted in a "Recent Development" in YJIL last year (The Origins and Potential Impact of the Anti-Counterfeiting Trade Agreement (ACTA), 34 Yale J. Int’l L. 261 (2009)). It amps up IP protection and criminal sanctions, without respecting existing international institutional process and involving the interests of developing countries.

Unsurprisingly, the US is an IP maximalist here, pushing for the strongest provisions. Singapore is a minimalist. Australia fluctuates depending on the provision. Japan appears to be on board with the US except for DMCA provisions, with which it heartily disagrees.

What's at stake here? Institutional process and legitimacy (why is this taking place outside of the World Trade Organization (WTO) and WIPO?), and a rush to standardization on approaches to the Internet around the US standard, which arguably isn't the ideal.

Privacy interests (implicated by data sharing with both other countries and with rights' holders) and liberty interests (why rush to the unreasonable US standard of criminalization?) are also very much at stake.

Important things to note, in no particular order:

1) There is a debate over Paragraphs 2 and 3, mandating a statutory damages provision in civil copyright law. Australia, Mexico, and New Zealand do not want it (as Australia does not require statutory damages for copyright infringement), and the US/EU do. Statutory damages can be grossly overvalued, from $750-$150,000 per work in the US.

2) Privacy in civil cases: ACTA Art. 2.4 as proposed by the U.S. and Japan mandates the production of evidence by infringers of the "means of production and distribution" during civil proceedings. The EU proposes that this mandate be subject to data privacy protections. These privacy protections must enter the agreement; otherwise copyright law can be used as a wedge for tantamount surveillance of potentially IP infringing networks.

3) EU/Canada/New Zealand want proportionality between infringement and remedies. Art 2.3 5. Good. The US doesn't want this.

4) Rushing/harnessing/overloading the courts: ACTA Art. 2.5 Option 1 mandates a particularly swift response from courts, disproportionate to the impact of these IP cases. Why should copyright take precedent over other cases and have such a fast turnaround?

5) Smaller De minimis exception in Border Measures: TRIPS stated that there's an exception for the import of "small quantities of goods of a non-commercial nature". The US/Canada/New Zealand propose to further limit this exception by stating that the quantities must be "reasonably attributable to personal use of the traveler". This has potential to allow searches of laptops finding copyright infringing material to be outside the de minimis exception, and appears to suggest that gifts (not personal use) are non-de minimis.

6) Seizure of goods at the border: a potentially injured party may apply for the suspension of the release of potentially infringing goods- and that one application is valid for ONE YEAR from the date of application. This places the work burden on the government as opposed to the private companies who fear infringement (regulatory capture). Singapore proposes an alternative that applies to specific shipments and lasts for 60 days only.

7) Ex Officio action at border aka seizure of goods by customs officials without a complaint filed. Countries may optionally mandate ex officio action under TRIPs, but only once a prima facie case of infringement has been shown. Under ACTA, the US argues for mandating such ex officio action ("shall" instead of "may"), and refers to "suspected" counterfeit goods rather than goods for which a prima facie case of infringement has been shown. Mexico does not require ex officio action, and Singapore proposes using "infringing" instead of "suspected".

8) Further at issue: the US and Japan request including "confusingly similar" goods instead of just suspected counterfeit goods.

9) Privacy: Releasing personally identifying information of Border crossers to rights holders: EU/US/Australia/New Zealand propose that "with a view to establishing whether an intellectual property right has been infringed" authorities shall inform rights holders of the names, addresses, etc of potential infringers. TRIPS requires that before such action can be taken, "a positive determination has been made on the merits of a case" Art 57. See also ACTA 2.13 Disclosure of Information- Singapore, per TRIPS, argues that information be disclosed only after determination that it's infringing; US argues for disclosure once suspect goods have been confiscated. Both Mexico and Singapore express concern over the privacy of those from whom suspect, but not necessarily infringing, goods have been seized.

10) Government pays for these border procedures- the US and Japan propose that application fees, storage fees, and costs to the government not "unreasonably burden rights holders" or "unreasonably deter recourse to these procedures". Aus/Can/Sing/N.Z. want instead to provide for procedures for recovery of such costs by rights' holders- but doesn't automatically prevent them from paying such costs.

11) Expanding the definition of Criminal Copyright Infringement- THIS IS BIG: ACTA as the US wants it to read will expand the international definition of criminal copyright infringement to explicitly include Internet "piracy" done for personal benefit alone. Under TRIPS, countries must hold a person to have committed an act of criminal copyright infringement if he or she has willfully infringed on a "commercial scale", which was understood to mean involving sale to others. ACTA: 1) expands the international definition of “commercial scale” to include “private financial gain,” (Australia and New Zealand request striking "private" to stick to a TRIPS understand of commercial scale) which is the standard in U.S. law, and 2) explicitly includes “significant willful infringements that have no direct or indirect motivation of financial gain" (U.S. initially, in its ACTA discussion paper, made clear that this was referring to Internet copyright infringement: "without motivation for financial gain to such an extent as prejudicially affect the copyright owner (e.g., Internet piracy).”)

The downloading of copyrighted files or collection of copyright-infringing research “for private financial gain” by avoiding paying for such material may be found to meet this standard. This standard has the potential to criminalize the behavior of an enormous number of individuals, worldwide.

12) ACTA adds criminal sanctions for trafficking in counterfeit labels, not existing in TRIPS.

13) ACTA enlarges the scope of international criminal law sanctions to include imprisonment. TRIPS allowed countries to chose between criminal fines and prison terms, and sets no minimum standards for either. Art. 61. ACTA 2.15 mandates "penalties that include actual sentences of imprisonment as well as monetary fines", and includes a negotiator's note by the US (requested deleted by Australia and Canada) reiterating that countries "encourage competent authorities" to "impose penalties... including imposition of actual terms of imprisonment".

14) ACTA allows "authorities", which may include Customs Officials, to initiate criminal investigations or legal action: Art 2.17 The EU notes that this article is still under examination, meaning that they're trying to figure out a stance.

15) SECTION 4 THE INTERNET: The US purports to effectively export the Digital Millenium Copyright Act (DMCA)'s provisions of notice and takedown into international law.

Exceptions for third-party (OSP or ISP) liability include: 1) automatic technical processes, 2) actions of users that are not "initiated" by the site, 3) links and/or storage (an EU request). The OSP or ISP must not have actual knowledge or awareness of the "facts and circumstances from which infringing activity is apparent".

Note that the US narrows the safe harbor exceptions by saying that the site might also be liable if it "directs" rather than solely "initiates", indicating inducement, while the EU wants this "direction" language struck and limited to "initiating" infringement. The US standard is lower.

In strong language: New Zealand notes that it does not find search engine activity to be copyright infringing, and therefore questions why this provision regarding third party liability exists in reference to search engines. Interestingly, US case law suggests a similar trend of understanding by courts (see Perfect 10), even if ACTA negotiators appear to think differently.

New Zealand also notes that it does not agree with the notice/takedown provisions, but supports saying that any safe harbors cannot be conditioned on monitoring services or affirmatively seeking infringing content.

Mexico notes that takedown must be requested by a competent authority, not a party.

Japan proposes that in absence of meeting safe harbors, an OSP or ISP should be held civilly liable only if 1) it is technically possible to prevent infringement AND 2) the provider knew infringement was occurring. Japan includes extensive explanation of why the DMCA measures are not consistent with its own jurisdiction.

16) Exceptions and Fair Use: The US in a note argues for including reference to exceptions and limitations, and fair use. EU wishes to strike this note, and include exceptions and limitations in the actual text of the agreement, proper. Countries currently have discretion to enact copyright exceptions and limitations according to the Berne Convention and the Three Step Test in Article 13 of TRIPs. ACTA must include in-text reference to these exceptions and limitations.

17) DMCA technological circumvention measures: The US wants to expand DMCA criminalization of technological circumvention ("hacking" digital rights management (DRM)). The EU wants to strike the criminalization aspect of this, limiting to civil remedies. Japan explicitly notes that its laws allow for circumvention in certain cases, and do not provide criminal sanctions, but suggests that it may modify Japanese laws to match the US standard if the US provides information to show that the DMCA has been effective at preventing actual harm. New Zealand notes that circumvention of noncopyrighted works is not a crime, and access control is not a right given to copyright owners.

18) International cooperation: ACTA mandates cooperation between countries in criminal IP infringement cases. The EU proposes including language that mandates "particular attention... to infringing goods detrimental to the health and safety". This potentially targets the distribution of generic medicines.

19) Information Sharing between countries- parties are debating whether countries "may" or "shall" share information. This could be extremely problematic for countries with different privacy laws or understandings of privacy, aka China.

20) Crafting Domestic Legislation: countries must work with countries not party to ACTA to craft domestic legislation that brings them in line with ACTA. Canada wishes to strike this provision. This is extraordinarly offensive to the national sovereingty of developing countries.

21) Officially fostering dialogue with private party rights holders: the US wants to establish formal mechanisms for authorities to hear the views of rights holders. Again, this looks like regulatory capture: the government doing the dirty work for private commercial entities.

22) Transparency- but with major discretional exceptions: ACTA thankfully provides for some mandates of transparency in the enforcement process, but also provides exceptions to such transparency, including where it would be "contrary to its domestic laws or policy" (US) or "the public interest".

23) A NEW IP INSTITUTION TO PRESERVE ACTA: what, WIPO and WTO weren't good enough for you? This ACTA "Committee" would oversee disputes, amendments to ACTA, and supervise implimentation. This is unbelievable- effectively, ACTA signatories are establishing a new international mechanism for enforcing IP law, taking it outside of WTO. This also screws developing countries, who are not original signatories to the agreement.

24) Only Five states are required for ratification. So effectively, the five most powerful can rush to sign on to terms that everybody else will have to take on later.