Statement of PIJIP Assoc. Dir. Sean Flynn on the Release of the ACTA Negotiating Text

FOR IMMEDIATE RELEASE
April 21, 2010

CONTACT: Prof. Sean Flynn
202-274-4157 | sflynn@wcl.american.edu

 


Preliminary Analysis of the ACTA Text

Sean Flynn

Associate Director

Program on Information Justice and Intellectual Property

American University Washington College of Law

 

April 21, 2010

 

 

Lack of trade regulation

Criticism of the text can start with its title. It calls itself a “trade” agreement, but it is really a new international agreement modifying the local intellectual property laws of its members. There is nothing in the agreement that covers tariff barriers or other traditional trade issues.

 

3 strikes

The text no longer compels ISPs to adopt a “three strikes” or “graduated response” system to remove users from the internet. Bracketed text suggests making such a program optional – the text “shall not effect the possibility” of countries implementing graduated response systems.

 

Notice and take down

The text has bracketed language proposing a safe harbor from suit for ISPs if they expeditiously remove or disable  content claimed to be infringing – the so-called notice and take down procedures in the DCMA. This seems to preclude Canada’s “notice and notice” system where A "notice and notice" system where any notice of potential infringement is forwarded to a user, which may then be monitored for a period of time without revealing the subscriber's personal information. In Canada, copyright legislation permits the download of copyrighted material, but makes it illegal to upload the same material. Some analysts say that Canada’s system is better at serving copyright holder’s interests while ensuring that non-infringing material is not removed from the web.

 

There is a legitimate fear of an increase in frivolous takedown complaints that may result. Authorizing take downs without penalties for misrepresentation or frivolous complaints in takedown notices may encourage abuse by content holders. This, in turn, will lead to a chilling effect on protected content. According to some statistics, up to a third of all take down notices in the U.S. are posted by companies targeting their competitors.

 

Privacy

In several places, the text proposes requiring countries to enable rights holders to obtain information about specific users alleged to be infringing copyright. This would appear to alter Canadian law’s “notice and notice” system which does not compel disclosure of internet user information to right holders.

 

Third party liability

There are several provisions that require adoption of third party liability standards, meaning authorizing suits, injunctions, damages or other enforcement against parties who do not themselves violate any law. This could extend to the makers of active pharmaceutical agreements whose supplies find themselves into counterfeit medicines or the operators of interpret service providers, including libraries and colleges and internet cafés, who provide forums for others to access content. Third party liability is incredibly controversial in the U.S. and its extension to the rest of the world will have unknown chilling effects on access to information.

 

Damages

The agreement proposes to dictate various measures of damages that authorities must use in infringement cases. Art. 2.2(1)(b) states that judges should consider losses based on suggested retail prices, for example. This maty a particularly bad measure of damage in many environment, such as in poor countries where branded products are prices so high that sales at suggested prices will never occur.

 

Changes to US Law

The text has so many bracketed issues that are left for negotiating, it is hard to imagine a final version that would not require amendments to US law to comply.

 

Exportation of DMCA

In general what it is doing is exporting the most controversial (even in the US) aspects of US law to other countries.

 

The text includes language modeled on the Digital Millennium Copyright Act's "anti-circumvention" section, which makes it illegal to copy digital media even for uses that are entirely within the user’s rights under copyright law – for example for personal use or for a “fair use” necessary to protect free expression rights. There a large amount of concern about these provision in the U.S. – that they eviscerate fair use rights that are needed by artists, filmmakers and others to exercise their free speech rights. Enacting ACTA would mean that Congress could not change these aspects of law in the future without changing international law at the same time. This would appear to require changes in Japan, Canada and EU law.

 

Border searches

Although it is technically true that the agreement does not require border searches of I-Pods and other personal possession of media content – it does not prohibit such searches either.

 

Border seizures

The text requires that countries provide procedures for the seizure of “suspected” counterfeit trademark goods, including goods “in-transit” (that is, only in the country by virtue of being transported between two other countries). Seizures are required where there is a mere “prima facie” case of infringement. That is the lowest standard of proof in civil cases in the US, which normally triggers a right of reply, not authorization of a penalty. There is no requirement that in in-transit cases the laws being violated ate those of the country using the product. These provisions could lead to more “Dutch seizure” type instances when important goods are removed from the market in transit countries, even if the goods do not violate the laws of the importing or exporting countries.  

 

Burden on Government Resources

When rights holders apply for the seizure of suspected infringing goods at the border, their application is good for one year, which places the burden of policing infringement on the government rather than individual companies. In addition, ACTA requires that courts "expeditiously" act on a party's request for provisional measures in the face of suspected infringing imports, with countries like the U.S. suggesting a ten day turnaround time. Critics have noted that such swift action is "disproportionate to the impact of these IP cases" and have questioned the wisdom of forcing countries to prioritize intellectual property cases over other more pressing matters.

 

Unconstitutional law making by the executive branch

As Harvard Law professors Larry Lessig and Jack Goldsmith opined in a recent (March 26) Washington Post editorial, there is a big constitutional issue here. The administration is proposing to have the President sign ACTA into law as a "sole executive agreement" without Congressional approval. Normally, international agreements including treaties and executive agreements must go to Congress for approval. Traditionally, sole executive agreements are limited to matters under the sole authority of the president, such as the power to recognize foreign governments. The president does not sole authority to make intellectual property policy. That is a congressional power under the Constitution. So this is a major example of the President bypassing Constitutional channels to make law outside of his authority.

 

Statutory damages

The text requires the establishment of statutory damages. These are damages set without regard to any actual loss occurred by the content owner. They can be particularly damaging in cases against individuals who download content or copy material with no commercial purpose. In the U.S., statutory damages can reach $150,000 per infringed work, an award that may be far out of proportion to the harm suffered by the copyright owner. Though it is argued that the existing statutory damages in the U.S. chills innovation and creativity while encouraging frivolous litigation and unfair settlements, the fair use exception mitigates some of the negative impact. However, other countries do not recognize fair use exceptions so exporting increased enforcement mechanisms without increased exceptions to copyright infringement may potentially expose U.S. Internet companies to dramatically increased liability abroad.

 

Unknowing violators

The text includes proposed language authorizing damage actions against people who “did not knowingly” engage in any infringing activity. This brings fears about suits against users to a new level. Probably everyone who has ever surfed the internet has, in the eyes of the big copyright industries, unknowingly violated copyrights. Authorizing damage suits against such people could have a huge chilling effect on the freedom of the internet.

 

Extension to Patents

In a large number of places, the agreement extends far beyond traditional counterfeiting issues into all “intellectual property,” including patents. This includes sections on damages, injunctions and other remedies.

 

Criminal provisions

The criminal provisions extend beyond cases of “commercial scale” infringement to any “willful” infringement. This would include, for example, the individual downloader who willingly copies material for personal use.

 

Consumer interests

At bottom, there is little to meet, and much to restrict, the interests of consumers. This agreement goes far beyond any legitimate interest in ensuring that illegal activities do not commercially compete with legitimate intellectual property right holders.

 

Institutional issues

The text calls for a new oversight committee, which would bypass existing more open and public forums for international rule making, such as WIPO. It appears that consumer representatives will be locked out of the organization. The text only envisions that “nongovernmental groups of intellectual property stakeholders,” not consumers, will be able to obtain observer status in the new institution.

 

Developing countries

The agreement clearly envisions developing countries be invited (reads: pressured) to join the agreement. But there are no special and differential treatment provisions recognizing the different context and capacities of developing countries.

 

Lack of Empirical Evidence

Though USTR and industry justify the necessity of ACTA based on lost profits due to online copyright infringement, there is a lack of empirical evidence to support this reasoning. The data that is used to support the industry's lost profits is provided only by industry and is unreliable.  The GAO recently reviewed available studies and found that they rely on questionable assumptions and “cannot be substantiated due to the absence of underlying studies.”


 

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