Analysis of the new ACTA text

Notes on ACTA Release

Sean Flynn
October 6, 2010
12:00pm

The latest ACTA text has been released.

In general, the new ACTA text shows many signs of incorporating safeguards that have been long advocated by public interest voices. But the agreement contains many notable flaws, which have been flagged in previous drafts, that threaten fundamental rights and liberties, pose barriers to the free trade in legitimate medicines, export rights owner processes and protections without correlative protections for due process and the interests of users and consumers and conflict with the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).

SCOPE OF THE AGREEMENT

The scope of the agreement is still incredibly broad. The criminal chapter has been narrowed to willful trademark counterfeiting and commercial scale copyright piracy. This is a welcome narrowing. But the entire agreement should be narrowed to these original intentions of the negotiation. Instead, many of the parties, with the EU in the apparent lead, have successfully included a great deal of language that extends to all conceivable intellectual property rights, including to patents, geographic indicators and to non-commercial copyright infringement (e.g. non-commercial file sharing).  

BORDER SEIZURES OF MEDICINES

The biggest issue for access to medicines advocates has not been resolved. The text still promotes an EU-style legal regime that would facilitate the cross-border seizures of legitimate and lawful generic medicines that transit through any ACTA member.  

The border measures section now includes a clear exclusion of patents in fn 6. The language used is much better than the opt in and opt out proposals in the last leaked draft from July. The section now clearly states that "For the purpose of this Agreement, Parties agree that patents do not fall within the scope of this Section." 

In a seeming contradiction to carve out of patents, there is new introductory text in the Border Measures section requiring parties to extend border enforcement systems "in a manner that does not discriminate [unreasonably] between intellectual property rights." The word "unreasonably" does not appear to be agreed upon.

This discrimination ban would seem to require the extension of border measures to all other non-patent forms of intellectual property, such as geographic indicators, at least absent some level of justification not described in the text. This new norm, which does not parallel anything in the TRIPS agreement, could spawn a series of disputes between members (e.g. between the EU and others) and be used to pressure countries to adopt the initial EU position - that draconian border seizures, destructions of goods and other remedies normally reserved for willful counterfeiting be made available for the full range of suspected intellectual property infringements (except patents).

Even with the exemption fo patents, the spector of in transit seizures of medicines is still present. Access to medicine advocates have repeatedly warned against replicating the trademark standards that have allowed drug seizures in the EU. That legal regime applies the substantive IP law of the EU when dealing with in transit cases, rather than the law of the importing country where the goods are destined. Similarly, the definition of "counterfeit" in ACTA, which countries are encouraged to use in in-transit cases, applies "the law of the country in which the procedures . . . are invoked."

This is an area where ACTA conflicts with TRIPS on its face. Requiring in transit issues to be adjudicated based on the law of the in transit country rather than the importing country violates TRIPS Article 51, which requires the use of the substantive law of the importing country, not the in transit country. (For more on this issue.)

INJUNCTIONS

The section of injunctions contains some notable new safeguards. But it also still applies to patents on its face.

The US has proposed that patents should be clearly carved out of the Civil Enforcement Chapter (fn 2). But as of now there are no other countries indicated as supporting this position. This is a major advocacy point for access to medicines groups. If the US does not carry the day, the claims of negotiators that the agreement will not limit important TRIPS tools to promote access to medicines will ring hallow.

Importantly, the text now includes one of the most important flexibilities in the TRIPS agreement. ACTA now repeats the TRIPS Art. 44.2 norm that countries may avoid granting injunctions in any case "where these remedies are inconsistent with a Party's law," and subject to the requirement that "declaratory judgments and adequate compensation shall be available." This allows countries to adopt liability rule systems through compulsory licenses, limited exceptions to rights, limitations of remedies and other means. This is a very significant improvement to the text.

DUE PROCESS

Throughout the text, there are authorizations of seizures, suspensions and even destructions of goods without requirements that the owners of those goods be notified or given an opportunity to respond to the complaints. This is a good example of exporting only one side (the rights owners' side) of US law. US law (19 U.S.C. Sec. 1337) provides full due process hearings for those accused of importing infringing goods into the US. This issue was raised in regard to previous drafts.

DAMAGES

The damages section of the agreement still contains many controversial provisions.

As James Love has noted:

"By requiring the judicial authorities to consider ‘any legitimate measure of value submitted by the right holder,' including specifically ‘the suggested retail price,' this Article in ACTA would be contrary to national statutes that provide for different standards, such as limits on damages to reasonable royalties. The use of ‘the suggested retail price' is an aggressive standard for liability, particularly for some types of copyright infringement cases, and clearly inappropriate for some cases. One obvious area where the standard will present problems are the cases where governments seek to liberalize access to orphaned copyrighted works. If applied to patent cases and other types of intellectual property rights, it would be contrary to a number of U.S. statutes, including the new health care reform bill provisions on generic biologic medicines, and many other cases, including some cases where zero remuneration is set out in the statute. If the standard is applied to patent cases, it will also run directly contrary to the proposals in the US Congress to limit the discretion of plaintiffs to present certain methodologies in terms of damages."

The current section does apply to patents. There is a US proposed footnote to remove coverage of patents (fn 2). But it has not been accepted into the text.

STATUTORY DAMAGES

The damages section contains many provisions that will encourage the over-enforcement and excessive punishment of copyright infringers. The text requires that countries to maintain a system of "pre-established" damages, as well as "additional damages," which means damages not based on any actual proof of harm. Such a system will over-deter the making of copies of copyrighted works where the copyright owner does not adequately serve the market on reasonable terms and conditions, and therefore does not actually suffer significant damage from the copy. It could also promote the most absurd and draconian aspects of application of US law, such as the college students assessed six figure damages judgments for file sharing that does not impact the right holder's market.

The ACTA language is not limited to commercial scale infringement. So individual downloaders and copiers for personal non-commercial purposes could be subject to massive "deterrent" fines without proof af any market harm to the copyright owner.  

THREATS TO FAIR USE AND COPYRIGHT USER RIGHTS

The negotiators have failed to adequately protect the most important "fair use" and other rights of users with respect to copyright. The definition of copyright piracy does not include the reasonable suggestion to add language making clear that it "does not extend to copies that are lawfully made, without the permission of the right owners."

There remains an anti-circumvention clause that requires criminalization of goods the primary purpose of which is to hack digital rights management tools that lock up content from being copied at all, even for a fair and lawful use of the material (e.g. quotation of a visual work in a documentary).

Although there is now a paragraph (Sec. 5, Art. 2.18(8)) allowing countries to make exceptions to protect fair use and other exceptions, how you square the total ban on the technology with the authority to make an exception is unclear. Squaring these contradictory mandates will likely lead to legal uncertainty in many countries that will inhibit the production of technologies needed to practically access digitally locked material needed for free expression.

This is an area where the agreement may curtail the enjoyment of fundamental free expression rights, despite the clear intent of the negotiators to protect them.

REQUIRING CHANGES IN US LAW ON TRADEMARK IN THE INTERNET

The insertion of trademarks into the Internet chapter would appear to require changes to US law.

PROMOTING ASSOCIATIONAL LAW SUITS

John Mitchell at Interaction Law noted the "definition of ‘Right holder' is shortened, but it keeps the most troubling part: ‘right holder includes a federation or an association having the legal standing to assert rights in intellectual property.'"

Mitchell explains that "[t]his conflates two totally separate concepts -- having a copyright, for example, and having standing to assert it. Almost anyone can have ‘standing to assert rights in intellectual property' (most are copyright owners by the time they reach kindergarten), but even if limited to rights in the intellectual property alleged to be infringed, the RIAA, for example, may have ‘associational standing' if any of its members' rights are infringed. In the U.S., we now have a law firm buying up rights to enforce them."

PARALLEL IMPORTATION

The negotiators have rejected requests to "ensure that [ACTA] will not be used to alter the flexibility in trips to establish and enforce an intellectual property exhaustion regime of choice."

There are fears that border measures and other parts of ACTA will be used to block parallel importation of IP protected goods, i.e. the free flow of IP protected goods between countries (e.g. if cheaper in one country than another).

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