[A2k] Classified ACTA Documents Reveal Disagreements Among Participants

[James Love]

-------------
Inside US Trade
Classified ACTA Documents Reveal Disagreements Among Participants

Date: February 13, 2009

Classified negotiating proposals for the Anti-Counterfeiting Trade
Agreement (ACTA) obtained by Knowledge Ecology International and
examined by Inside U.S. Trade reveal wrangling between Japan, the United
States, European Union, Australia and Canada over issues of civil and
criminal enforcement and how to apply border measures against infringing
products.

For example, in the section of civil enforcement, the documents reveal
that the EU has sought language on injunctions which some intellectual
property rights (IPR) experts fear overturns U.S. law.

The proposals also reinforce previous reports about disagreements
between parties on the details of the ACTA. For example, the documents
show that the EU has sought greater privacy protection for its citizens
than the U.S. and Japan. They also reveal that the EU has sought
provisions which would state that seizures of infringing goods by
customs officials must not impair legitimate trade, and which would
exempt officials from legal liability for their actions.

On injunctions, the relevant EU-inserted provisions state: =E2=80=9CEach pa=
rty
shall ensure that where a judicial decision is taken regarding an
infringement of an intellectual property right, the judicial authorities
may issue against the infringer an injunction aimed at the prohibition=E2=
=80=9D
of the continuance of the infringement.

James Love, the director of Knowledge Ecology International believes
that the inserted injunctions provision could have far reaching
consequences for current U.S. law and a bill introduced before the last
Congress. In an interview, he said that the provision would limit the
flexibility of Article 44 of the World Trade Organization Trade Related
Aspects of Intellectual Property Rights (TRIPS) agreement, which allows
injunction power for judicial authorities. Part II of the article allows
members to limit the injunction authority to =E2=80=9Cpayments of renumerat=
ion=E2=80=9D

Under U.S. law, he said, there is no possibility of an injunction when
the federal government wants to use a patented invention or copyrighted
work. In other words, a right holder cannot get a court order to stop
the government from using his work. The right holder can, however,
receive reasonable monetary damages.

Additionally, legislation covering =E2=80=9Corphan works=E2=80=9D with no k=
nown rights
holder under consideration in the last Congress would allow publishers
of compilations that include orphan works to continue to use the works
once a legitimate rights holder emerges. Under the legislation, he said,
the right holder can seek compensation but not halt publication of the
work.

James Love argues that the ACTA language would have the effect of giving
the authorities the powers to stop infringement in all cases.

The documents in question reflect the negotiating positions from last
July to last October, and informed sources this week cautioned that the
negotiating positions have been in flux since then. But they said that
the basic thrust of the agreement remains in effect since the last
December meeting of the ACTA parties.

Overall, the documents reveal that the U.S. has sought enforcement
provisions largely along the lines of those contained in the text of the
bilateral free trade agreement the U.S. negotiated with Korea. This is
in line with the statements by the Office of the U.S. Trade
Representative on the Korea FTA being the basis for the ACTA enforcement
provisions.

The proposals envision that the ACTA will have six chapters: Initial
Provisions, Enforcement Measures, International Cooperation, Enforcement
Practices, Institutional Arraignments and Final Provisions.

The documents examined provide the details of the first three
subchapters of the enforcement chapter that the ACTA envisions: Civil
Enforcement, Criminal Enforcement, Border Measures, and Special
Requirements Related to Rights Management Technology and the Internet.

It is unclear at this time if the documents are still the basis for the
talks or if they have been replaced by a new proposal at the December
ACTA meeting. Sources familiar with that meeting have only said that
there was little progress on core issues at the meeting. A U.S. trade
official last week said it remains up to the new Obama administration to
decide how to proceed with the talks.

On criminal enforcement, as in the Korea FTA, the U.S. and Japan
proposed in October that signatories provide criminal penalties for
counterfeiting, copyright and related rights piracy on a commercial
scale. This is defined to include both =E2=80=9Cwillful infringements for t=
he
purposes of commercial advantage or private financial gain=E2=80=9D and
=E2=80=9Csignificant willful copyright or related rights infringement that =
have
no direct or indirect motivation of financial gain.=E2=80=9D

There has been significant debate whether this second provision would
capture peer-to-peer file sharing of music and USTR has never clarified
what type of file-sharing it considers criminal.

The civil enforcement section of the document dates from September. In
the document it contains five subsections: Scope, Damages, Other
Remedies, Information Related to Infringement and Provisional Measures.

Following the Korea FTA template, the ACTA proposal would require civil
damages =E2=80=9Cadequate to compensate=E2=80=9D a rights holder for the in=
jury
suffered. In the FTA, judicial authorities are required to consider =E2=80=
=9Cthe
value of the infringed good or service, measured by market price, the
suggested retail price, or other legitimate measure of value submitted
by the right holder.=E2=80=9D

In the document, the EU proposes adding lost profits, unfair profits and
=E2=80=9Cactual prejudice=E2=80=9D to this measure, expanding the leeway ju=
dges would
have in determining damages through terms that appear more open to
interpretation. Alternatively, Australia suggests changing =E2=80=9Cshall=
=E2=80=9D
consider to =E2=80=9Cmay=E2=80=9D consider, making it less of an obligation=
.

As in the Korea FTA, the U.S.-Japan proposal also required the
signatories to set up an alternate list of pre-established civil
damages. The standard for these emerging in the ACTA was =E2=80=9Csufficien=
t to
compensate the rights holder for the harm caused by the infringement.=E2=80=
=9D

The U.S. had proposed further adding the word =E2=80=9Cfully=E2=80=9D befor=
e
=E2=80=9Ccompensate.=E2=80=9D Japan sought language that would require auth=
orities to
consider a calculation of the quantity of goods multiplied by the
profits per unit given a =E2=80=9Creasonable=E2=80=9D royalty.

Australia suggested deleting this list approach altogether, but it is
unclear why this would be since pre-established damages exist in the
U.S.-Australia FTA. Canada in this section proposed eliminating any
reference to damages for patent infringement.

The ACTA draft spells out that the right holder can choose either from
the list of pre-established damages or to have judges decide what is
=E2=80=9Cadequate to compensate.=E2=80=9D Judges in signatory countries wil=
l also be
empowered to order infringers to pay court costs of right holders.

Also in the civil enforcement section, the draft would specify that
infringing goods must be destroyed, but for =E2=80=9Cexceptional=E2=80=9D s=
ituations,
and the authorities shall be empowered to destroy all materials and
implements associated with the infringement. In this section, there is a
provision which states that the removal of trademarks is not sufficient
to allow the good to be released for commerce. Such provisions appear in
the Korea FTA.

The section on empowering authorities to order infringers to provide
information on other persons involved in their activities also appears
in the Korea FTA and ACTA draft. In the document, the EU seeks to add
language that would limit this provision so that it conforms with
national laws such as those on personal data privacy.

EU sources have long said that they want to be sure that EU privacy
directives are not countermanded by the ACTA and the comments appear to
reflect that goal.

Canada in this section sought to limit the information that infringers
must provide only =E2=80=9Crelevant=E2=80=9D information to authorities. Th=
ese talks
have dealt with border measures, civil enforcement and criminal
enforcement but left decisions on contentious discussion Internet
provisions for a planned March meeting.

In the border measures proposal, the U.S. evokes the Korea FTA in
seeking coverage of imports, exports and in-transit goods. These goods
are defined in the ACTA draft include =E2=80=9Cconfusingly similar trademar=
k
goods=E2=80=9D but an exception appears to be made for types of integrated
circuit designs.

In this section, the EU has sought a provision specifically designed to
exclude non-commercial items in =E2=80=9Ctraveler=E2=80=99s personal baggag=
e,=E2=80=9D from the
scope of the ACTA border measures. U.S. officials have said that the
agreement would not lead to wholesale raids on laptops and iPods at
airports, but the EU appears to be trying to make sure this is the case
in this section.

The proposed provision reads: =E2=80=9CWhere a traveler=E2=80=99s personal =
baggage goods
of a non-commercial nature within the limits of the duty-free allowance
and there are no material indication to suggest the goods are part of
commercial traffic, each Party may consider to leave such goods or part
of such goods outside the scope of this section.=E2=80=9D

The next subsection outlines a process for a rights holder to make
applications that infringing goods be seized at the border. Bracketed
text would prevent authorities from charging a fee for this application
and require them to provide the applicant with adequate information.

The proposal would require that signatories allow the authorities to
detain goods for up to one year if a rights holder makes a prima facie
case that a good is an infringement. The one year date is in brackets
however, which means participants have not yet agreed on it.

In a section of ex-officio powers for customs officials, there is a
debate between parties on whether in-transit goods should be deleted and
whether =E2=80=9Cintellectual property rights not covered in this section=
=E2=80=9D such
as possibly patents, are to be included.

There is considerable public debate about whether including this
provision will inhibit debate or lead to the seizure of generic drugs
(see related story).

Similarly, in the civil enforcement section, the U.S. has sought
language that would empower authorities to order a party to cease
activities to prevent the exportation of goods following a civil
complaint.

In that section the EU has sought language that would specify that this
provision must =E2=80=9Cavoid the creation of barriers to legitimate trade.=
=E2=80=9D If
an application does not lead to an IPR case, then goods must be released
after 20 working days or 31 calendar days, under an EU proposal.

A remedies section specifies that forfeited goods shall be destroyed and
infringing goods will be released only in exceptional circumstances.
Fees for detaining goods are not to be =E2=80=9Cunreasonable=E2=80=9D such =
that they
could deter a right holder from seeking the detention of the goods.

The EU at the requested that provisions limiting the liability for
customs authorities who fail to accept an application or whose
intervention causes harm to a defendant.

The criminal enforcement proposal includes a subsection requiring
criminal penalties for trafficking in counterfeit labels and
unauthorized =E2=80=9CCamcording=E2=80=9D in movie theaters. Despite Canadi=
an comments
elsewhere in the document counterfeit packaging documents and illicit
labels taken from a right holders.

The U.S. proposed =E2=80=9Cusing an audiovisual=E2=80=9D device as the offe=
nse and Japan
wanted =E2=80=9Cmake=E2=80=9D and =E2=80=9Ctransmit=E2=80=9D to be the offe=
nse in the =E2=80=9CCamcording=E2=80=9D
section.

Criminal trafficking in labels is defined as occurring even in the
absence of willful piracy.

The ex-officio subsection in the criminal enforcement section states
that authorities shall be empowered to initiate either an investigation,
as per the Japanese negotiator or a =E2=80=9Clegal action=E2=80=9D per the =
U.S.
language. When goods and related materials and implements are seized,
the authorities =E2=80=9Cneed not individually identify the items=E2=80=9D =
seized, the
draft says.

The documents do not detail the subsection on Internet measures and
these are known to be among the most controversial provisions. The
Internet measures are hotly contested by Internet companies in the
United States on the one hand and recording and music firms on the other
over issues such as secondary liability for Internet Service Providers
(ISPs)

ACTA participants included Australia, Canada, the EU, Japan, Jordan,
South Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland, the
United Arab Emirates and the U.S.