[Ip-health] Damages, Injunctions and Transparency key issues in the ACTA negotiations

[James Love]

http://www.keionline.org/blogs/2009/06/15/thoughts-acta-negotiations/

Damages, Injunctions and Transparency key issues in the ACTA negotiations
Knowledge Ecology Notes
By James Love, on June 15th, 2009

The decision to restart the ACTA negotiations makes it important to
understand the nature and consequence of proposed agreement. Following a
complaint about transparency, this note focuses on damages and
injunctions.

1. It is astonishing that the US Congress, the Obama Administration, the
EU Parliament, the European Union and its 27 member states, Australia,
Canada, Japan, Mexico, Morocco, New Zealand, Singapore, South Korea, and
Switzerland all think it is normal and acceptable to negotiate a global
treaty on IP enforcement in secrecy, with no public access to proposed
treaty texts, no transparency of the names of the country negotiators,
and no ability of the public to attend negotiating meetings. It is as if
years of pushing for transparency in multilateral fora is suddenly
irrelevant. It surprising and discouraging USTR still defends the US
system of clearing text for well connected corporate lobbyists, but
keeping the public in the dark.

2. Based upon leaked documents, ACTA is proposing sweeping changes in
the damages from intellectual property infringements. The norms for
damages in TRIPS include Article 45, which include =E2=80=9Cdamages adequat=
e to
compensate for the injury,=E2=80=9D or =E2=80=9Cadequate=E2=80=9D compensat=
ion or remuneration,
in Article 44.2. Compare this to the more aggressive language proposed
for ACTA.

-------------------------
    Damages
    (b) in determining amount of damages for infringement of
intellectual property rights, its judicial authorities shall consider
all appropriate aspects, inter alia, the lost profits, the value of the
infringed good or service, measured by the market price, the suggested
retail price, or other legitimate measure of value submitted by the
right holder.

    Such measures [Option J: shall][Option US: may] include the
presumption that the amount of damages is (i) the quantity of the goods
infringing the right holder=E2=80=99s intellectual property right and actua=
lly
assigned to third persons, multiplied by the amount of profit per unit
of goods which would have been sold by the right holder if there had not
been the act of infringement or (ii) a reasonable royalty or (iii) a
lump sum on the basis of elements such as at least the amount of
royalties or fees which would have been due if the infringer had
requested authorization to use the intellectual property right in
question.
------------------------------

Why are damages important? You might ask Microsoft, which was paying
$.04 per copy of Microsoft office for patent infringement, instead of
the $2 per copy demanded by the patent owner. Or DirectTV, which pays
$1.60 per set top box, or Toyota which pays $25 per Prius hybrid
automobile, how those cases would have turned out under the ACTA
standards. Or ask Google about its liabilities for youtube or Google
Books. Or ask Marybeth Peters about ACTA and the US proposals for Orphan
Works legislation, which depend upon a more reasonable standard for
damages.

The issue of damages is very complicated, and it is dangerous to set
simple-minded global norms. Standards that might make sense in one
context may give an unjust or inappropriate result in another. We are
aware of no analysis whatsoever by any government to justify changes in
the TRIPS standards. Neither the USTR nor DG-Trade even think they are
under any obligation to justify their positions with any type of
analysis or evidence.

Obvious example of the bias, judicial authorities would be required
(shall) to consider =E2=80=9Cother legitimate measure of value submitted by=
 the
right holder.=E2=80=9D Missing from the proposed standard is a requirement =
to
listen to the party who has to pay the damages.

By ratcheting up the liability for damages of intellectual property
right infringements, the ACTA will reduce innovation in some important
areas, particularly where products are complex and involve multiple
patents (particularly software and information technologies, some
medical devices such as new diagnostics for TB, HIV or Hepatitis C, new
energy efficient automobiles, etc), where great uncertainly exists
regarding the scope or validity of patent claims, where user generated
content will often involve infringing copyrighted works, or where there
is uncertainly regarding the extend that fair use extends to new
innovative services such as search engines or distance education, or
where the line between personal uses of products and commercial
infringement is drawn (Tivo, Text-to-Speech in electronic book readers,
backup devices, etc).

3. There is also the issue of injunctions.* They are not required under
Article 44.2 of the TRIPS, where governments can completely eliminate
injunctions if there is a system of =E2=80=9Cadequate=E2=80=9D compensation=
 or
remuneration in place. This important flexibility in TRIPS would be
eliminated in the most recent leaked ACTA text.

-----------------
    Article 2.7: Injunctions
    Each Party shall ensure that, where a judicial decision is taken
finding an infringement of an intellectual property right, the judicial
authorities may issue against the infringer an injunction aimed at
prohibiting the continuation of the infringement. Where provided for by
domestic law, non-compliance with an injunction shall, where
appropriate, be subject to a recurring penalty payment, with a view to
ensuring compliance. The Parties shall also ensure that right holders
are in a position to apply for an injunction against intermediaries
whose services are used by a third party to infringe an intellectual
property right.
-------------------

Why is this important? Well, ACTA would make a half dozen US statutes
illegal, including 28 USC 1498 and laws involving nuclear power and
newspapers. It would force Canada to make injunctions apply to
infringements of architectural works after buildings are under
construction. It would run counter to the proposals by the US Library of
Congress to deal with orphan copyrighted works.

If applied to all intellectual property, ACTA would also override
Article 37 of the TRIPS, which prohibits the use of injunctions in cases
involving certain infringements of integrated circuit layout-designs,
and it would require changes in some national rules on certain
industrial designs. There is also no exemption for goods in transit.

The possibility of obtaining an injunction is provided for in Article
44.1 of the TRIPS, and would continue to be consistent with many
judicial decisions (subject to the related and important proposed
changes in damages). But Article 44.2 of the TRIPS sets out the rule for
cases where injunctions are not an option under national law. It is not
a technical detail to eliminate the flexibility of Article 44.2 of the
TRIPS. Neither the USTR or DG-Trade have investigated the degree to
which the change would require changes in state practice.

--
James Love, Director, Knowledge Ecology International
http://www.keionline.org | mailto:james.love at keionline.org
Wk: +1.202.332.2671 | US Mobile +1.202.361.3040 | Geneva Mobile +41.76.413.=
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