[A2k] EFF comments to USTR on proposed ACTA

[Gwen Hinze]

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[ Picked text/plain from multipart/alternative ]
FYI. (Minus footnotes, that don't seem to have transposed)
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ELECTRONIC FRONTIER FOUNDATION SUBMISSION TO
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
ON PROPOSED ANTI-COUNTERFEITING TRADE AGREEMENT

The Electronic Frontier Foundation (EFF) is
pleased to submit the following comments to the
Office of the United States Trade Representative
(USTR) in response to the Request for Public
Comments on a Proposed Anti-Counterfeiting Trade
Agreement, published in the Federal Register of
February 15, 2008 (Volume 73, Number 32, pages
8910-8911).

Executive Summary

Part III of the Agreement on Trade-Related
Aspects of Intellectual Property Rights (the
TRIPs Agreement), together with the 1996 WIPO
Copyright Treaty and Performances and Phonograms
Treaty, Model Provisions of the World Customs
Union, and bilateral cooperation agreements,
provide WTO Member States with a sophisticated
array of remedies to enforce intellectual
property rights both within, and across, WTO
members' national borders. In addition, U.S.
bilateral free trade agreements since 2002 have
routinely required foreign trading partners to
comply with a set of specific enforcement
obligations beyond the internationally agreed
standards embodied in the TRIPs Agreement.

EFF believes that no empirical evidence has been
provided justifying the creation of a new
TRIPs-plus plurilateral intellectual property
enforcement treaty backed by the sanctions of
international trade law. However, if the USTR
decides to negotiate such a treaty, at a minimum
it should (1) protect the fundamental privacy
rights and freedom of expression of citizens of
the U.S.A. and its trading partners, and (2)
facilitate a global environment that fosters
interoperability and is conducive to technology
innovation.

Most importantly, any treaty on enforcement of
intellectual property must balance the needs of
all stakeholders. As treaty proponents have
stated, a key part of effective enforcement is
citizens' respect for copyright and other
intellectual property laws. That is not just a
matter of education in the narrow sense of
telling consumers about the content of statutes.
It is instead a matter of social value and
fairness. In short, citizens will only respect a
copyright system that is balanced, and serves the
interests of all stakeholders. In the effort to
curtail genuine commercial-level copyright
infringement, the USTR must avoid harming other
important public policy priorities, including in
particular, citizens' privacy and expression
rights, and technology innovation. If enforcement
mechanisms are perceived to undermine the
traditional balance embodied in the copyright
system, it is inevitable that there will be less
respect for, and correspondingly lower compliance
with, copyright law.

Lack of Transparency

Unfortunately, the Request for Public Comments
published in the Federal Register on February 15,
2008 contained very little information about the
substance of the proposed trade agreement. EFF is
aware of the existence of a "Discussion Paper" on
the proposed substance of such an agreement,
which is apparently circulating among content
industry representatives, but is not aware of any
substantive information about the agreement
emanating from the Office of the USTR. In the
absence of a specific text to comment upon, these
comments focus on the appropriate scope of any
proposed agreement, and three aspects of recent
copyright enforcement activity that have raised
significant public policy concerns, and which we
anticipate could form part of the content of any
proposed treaty.

1. Scope of Treaty

Part III of the TRIPs Agreement reflects the
current level of international agreement about
standards and methods for enforcement of
intellectual property rights. We understand that
the proposed agreement would cover the same scope
- namely "counterfeit trademarked goods" and
"pirated copyright goods" as those terms are used
in Part III of TRIPs and defined in footnote 14
to the TRIPs Agreement:

  (a)    "counterfeit trademark goods" shall mean
any goods, including packaging, bearing without
authorization a trademark which is identical to
the trademark validly registered in respect of
such goods, or which cannot be distinguished in
its essential aspects from such a trademark, and
which thereby infringes the rights of the owner
of the trademark in question under the law of the
country of importation;
     (b)    "pirated copyright goods" shall mean
any goods which are copies made without the
consent of the right holder or person duly
authorized by the right holder in the country of
production and which are made directly or
indirectly from an article where the making of
that copy would have constituted an infringement
of a copyright or a related right under the law
of the country of importation.

Accordingly, we understand that the agreement
would not apply to all copies of copyrighted
works, but instead only to those copies (a)  that
would be an infringement of one of the exclusive
rights granted to copyright holders by section
106 of the U.S. copyright statute, (b) that are
made willfully, with the intent to commit
copyright infringement, and (c) are made for the
purpose of commercial gain. Thus, "counterfeit"
goods do not include unauthorized but permitted
uses of copyrighted works, such as uses that
would be considered "fair use" under U.S.
copyright law.

For the sake of clarity, we note that the
internationally agreed definition of
"counterfeit" works set out in the TRIPs
agreement differs markedly from the broader
definition used by particular entertainment
industry groups calling for a new enforcement
treaty, which would appear to encompass all
unauthorized uses of works, including uses that
are lawful but not specifically authorized by
rightsholders, such as non-infringing fair use
under U.S. copyright law .

2. Internet Intermediary Liability

The U.S. Copyright statute contains four "safe
harbors", limiting Internet intermediaries'
liability for secondary copyright infringement
for routine activities: acting as a conduit of
Internet communications, caching of material,
hosting of user created content, and provision of
information location and search tools (17 U.S.C.
=A7512). This regime has created a relatively
stable environment for innovation and facilitated
the development of robust hosting platforms,
which have made possible a comprehensive and free
worldwide encyclopedia (Wikipedia), a rich world
of user created content (YouTube, MySpace),
global economic enterprises (eBay, Amazon.com)
and powerful search tools (Google, Yahoo!). There
is no international harmonization of secondary
copyright liability concepts and standards across
countries. However, in recognition of the
economic importance of the safe harbor regime to
the U.S. telecommunications industry, this regime
has been exported to the legal regimes of U.S.
trading partners through the enforcement chapter
of all bilateral and regional free trade
agreements signed since 2002, as a specific
implementation of Article 41 of the TRIPs
Agreement.

The stable innovation environment resulting from
harmonized limitation of liability regimes in the
U.S., EU and elsewhere, is now under threat from
various sources. Copyright owner industry groups
have attempted to overturn the balance struck in
the U.S. copyright safe harbor regime, in efforts
to clamp down on perceived widespread online
copyright infringement by Internet users. These
efforts endanger fundamental privacy rights of
Internet users and threaten the end-to-end
principle that is central to the Internet's open
architecture. Reflecting the decision in
Religious Technology Centre v. Netcom On-line
Communication Services, Inc., 923 F. Supp. 1231
(N.D. Cal, 1995), the U.S. safe harbor regime
specifically states that Internet Service
Providers (ISPs) and Online Service Providers are
not required to monitor, nor affirmatively search
for evidence of potential infringement on their
networks (17 USC =A7512(m)).

Major film and music copyright industry groups in
Europe have recently advocated for a suite of
proposals that seem to jeopardize this
foundational principle. A memorandum produced by
the International Federation of Phonographic
Industries circulated to European Parliament
staffers in November 2007 calls on the European
Parliament to mandate that ISPs block
communications using particular Internet
protocols, install network-level filtering, and
block access to websites that facilitate
copyright infringement.  In December 2007, a
proposed amendment to a European Parliamentary
committee report would have required ISPs to
filter their networks and monitor customer
communications in order to find evidence of
potential copyright infringement.

If adopted, these proposals are likely to
dramatically alter the current nature of the
Internet.  ISPs and Internet intermediaries will
be obliged to monitor their networks in an
unprecedented manner. This directly threatens'
citizens' privacy rights and makes it more likely
that ISPs will be deemed to have constructive
knowledge of online copyright infringement taking
place on their networks, thus disqualifying them
from the safe harbors that have previously
safeguarded their businesses. At the same time,
adopting such filtering measures is not likely to
be technologically effective because they can be
defeated by encrypting communications. Thus,
mandatory network filtering is not likely to
reduce online copyright infringement, but is
likely to lead to file-sharing going
"underground".

At the request of a major music industry
rightsholder group , France and the United
Kingdom have proposed draft legislation for a
"graduated response" requiring ISPs to send a
warning notice to alleged infringing subscribers,
to suspend those customers' access on a second
warning, and to terminate the Internet access of
customers on the basis of a third rightsholder
allegation of copyright infringement, independent
of any judicial review. The French proposal also
requires ISPs to create and exchange lists of
"blacklisted" Internet users to whom Internet
service cannot be provided.

In the digital age, as more of citizens' civic
and cultural life takes place in online fora,
excluding citizens from the ability to connect
to, and communicate on the Internet, amounts to
social exclusion from the knowledge economy.
This is a disproportionate response to the harm
in issue. As highlighted by the recent rejection
of a similar termination proposal by Members of
the Swedish Parliament, the penalty of exclusion
from the Internet is far more severe than
traditional copyright monetary sanctions, both
for the individual involved, and also for society
at large. It is likely to divide society into two
communities  - one, highly networked and able to
take advantage of the educational, social and
economic benefits that flow from access to the
Internet, and a second,  unable to access the
Internet's rich informational resources nor
utilize it for communications.

Imposing such an Internet access termination
obligation via the proposed enforcement
agreement, in order to meet the perceived needs
of one group of rightsholder, is likely to create
social division, and will certainly slow the
momentum of technology innovation and impede the
development of the Internet's global
infrastructure.

Recommendation:

Any proposed agreement should respect countries'
distinctive national legal regimes and not seek
to impose secondary liability on ISPs and
Internet intermediaries where none might
otherwise exist under national law. The proposed
agreement should incorporate remedies for
rightsholders that are proportionate to the harm
suffered from an incident of copyright
infringement, and should not require Internet
intermediaries to engage in mandatory termination
of Internet access for their subscribers unless
ordered to do so by a competent court, following
a comprehensive judicial review.

3. Preserving Due Process and Copyright Enforcement

Article 47 of TRIPs allows, but does not require,
WTO members to provide judicial authorities with
the ability to order infringers to disclose the
identity of third parties involved in an act of
infringement, but only if this would not "be out
of proportion to the seriousness of the
infringement." EFF is disturbed by reports that
major film and music copyright owner industry
groups are seeking to include a mandatory
obligation on ISPs to disclose to rightsholders
information about the identity of alleged
copyright-infringing file-sharers in the proposed
agreement. An extra-judicial mandatory disclosure
obligation raises very substantial privacy and
due process concerns.

U.S. law does not currently provide an
extra-judicial mechanism forcing disclosure of
the identity of individuals allegedly engaged in
file-sharing activity.  However the absence of
such a mechanism has not provided any obstacle to
U.S. copyright holders' ability to enforce their
rights against alleged file-sharers, as evidenced
by the more than 20,000 lawsuits brought against
individuals since 2003 .

By comparison, the European Union introduced a
mandatory disclosure obligation in the "right of
information" enshrined in Article 8 of the 2004
Intellectual Property Enforcement Directive
(2004/48/EC). National courts in the European
Community have for some time been making
determinations about requests for customer data
made by European rightsholder organizations,
taking into consideration EU Directive 2004/48/EC
and the EU Information Society directive
2001/29/EC, the EU Electronic Commerce directive
(2000/31/EC) and European personal data
protection and privacy law (2002/58/EC).

However, following the European Court of
Justice's decision in the Productores de M=FAsica
de Espa=F1a (Promusicae) v. Telef=F3nica de Espa=F1a
case where an ISP was not required to disclose
customers' identity data, reports have surfaced
that entertainment industry groups are seeking to
incorporate a mandatory identity disclosure
obligation in the proposed anti-counterfeiting
trade agreement. From the public policy
perspective, mandating divulgence of customer
data from intermediaries without providing
appropriate due process and judicial review
threatens citizens' privacy and personal data
protection rights and is ripe for misuse by
unscrupulous parties.

Recommendation

The proposed treaty needs to provide balanced
solutions that recognize and respect the
fundamental rights of all stakeholders in the
information society. At a minimum, any disclosure
obligation must incorporate adequate due process
and be conditioned on a process of judicial
review.

4. Criminal sanctions for IP infringement

There is widespread agreement that actual
commercial enterprise-scale counterfeiting and
piracy are unlawful and harmful to investment in
research and development, technology innovation
and consumer protection. This is embodied in
Article 61 of TRIPs, which requires WTO Members
to provide criminal sanctions for willful
copyright piracy and trademark counterfeiting
done on a commercial scale.

It was well understood at the time of negotiation
of TRIPs that criminal sanctions would be
reserved for only the most serious, and
commercially motivated,  cases of IP
infringement. While there is agreement for
measures addressing genuine enterprise level
infringement done willfully and with commercial
motivation, there is no public policy
justification for changing the contours of
current copyright law and penalizing non
commercial activities of individuals and
legitimate business practices.

The last 10 free trade agreements entered into by
the United States have required trading partners
to introduce criminal sanctions for a broader set
of purposes than required by the TRIPs Agreement,
including for acts that are not done with
commercial motive or intent of financial gain,
mirroring the language introduced into 17 USC
=A7605 by the No Electronic Theft Act.

Criminal sanctions are intended to be a
deterrent. While they are appropriate in the case
of commercial-scale wilful infringement, applying
criminal sanctions to non commercially motivated
and unintentional infringement serves no public
policy purpose. At the same time, it will harm
consumers and the environment for technology
innovation.

Recommendation:

Criminal sanctions should be reserved for actual
commercial-level profit-motivated infringement.
The terms "commercial-scale" and "wilful" should
be defined narrowly, as originally intended, and
should not be expanded to encompass
non-commercially motivated infringement. If the
real intent behind introducing expanded criminal
sanctions is to address infringement on the
Internet, this provision is not likely to
accomplish that, but is likely to cause
significant collateral harm to consumers.

Given the very significant numbers of individuals
who regularly engage in file-sharing, it would be
more effective to promote new business models
focused on licensing of content exchanged on the
Internet, rather than creating new legal rules
that would criminalize millions of individuals.
U.S. copyright law already contains criminal
sanctions for certain behavior. As the experience
of the last five years, and over 20,000 lawsuits
against individual filesharers in the United
States has shown, legal sanctions have had little
or no appreciable impact on the volume of
file-sharing taking place on public and private
networks across the globe. There is no reasonable
basis for believing that adding criminal
sanctions in the proposed trade agreement will
change this situation. On the contrary, all
indications are that filesharers will migrate to
encrypted communication channels, evading
detection and prosecution by current procedures.

At the same time, adopting legal rules that
criminalize the behavior of such a significant
proportion of the population, for what is widely
perceived to be a market failure, is likely to
lead to a lessening of respect for copyright law.
The proposed trade agreement should avoid
undermining the normative force of intellectual
property law.


We would be pleased to provide further information on any of the above issu=
es.

Thank you for your consideration.


Gwen Hinze
International Policy Director
Electronic Frontier Foundation
Email: gwen@eff.org

March 21, 2008