ACTA: The Public Revolt

by Ladas & Parry LLP

The Anti-Counterfeiting Trade Agreement (ACTA) is the latest and most far-reaching attempt to harmonize intellectual property enforcement and strengthen anti-counterfeiting efforts across the globe. As of May 2012, the European Union and 22 of its 27 member states have joined Australia, Canada, Japan, Morocco, New Zealand, Singapore, South Korea and the United States as signatories of ACTA. Yet, the outlook for ratification by the May 1, 2013 deadline appears dismal. Mexico dropped out of early negotiations and is unlikely to sign, and in February 2012, the EU suspended ratification following widespread protests across Europe and riots in Poland. Effectively, ACTA has been declared dead on arrival.

How would ACTA have changed the IP enforcement landscape?

The World Trade Organization’s 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was the first agreement to introduce intellectual property rules to the multilateral trading system. This was prior to any widespread use of the Internet and although remedies for intellectual property infringement were set out, the powers it required to be given to the authorities to deal with infringement (and to obtain information about infringement) were quite limited. By 2000, it had become clear that any expansion of rights under TRIPS was unlikely in the near future and so a “coalition of the willing” sought to create an agreement for a more limited group of countries in the hopes that others would join later. ACTA represents the next step forward for right holders and aims to add further tools to deal with such problems to those already provided by TRIPS, particularly with respect to international operations and digital enforcement. For this reason, ACTA is often referred to as “TRIPS Plus.” Unlike TRIPS, however, ACTA is not expected to cover patents but does extend to actions carried out using the Internet.

ACTA expands the scope of remedies. With regard to monetary damages, the agreement covers unjust enrichment and allows additional damages for copyright infringement. Furthermore, the infringer may be liable for cost of destruction. With regard to non-monetary relief, ACTA empowers customs authorities to act on their own initiative and allows judicial authorities to order third parties to prevent goods from entering channels of commerce. ACTA also provides for expanded criminal procedures for infringement including for secondary liability.

Broader group of persons affected under ACTA. In addition to pulling in third parties, ACTA implicates “alleged” infringers and provides that “competent authorities” (i.e. judicial or administrative bodies) can order an alleged infringer to provide information about others involved in the alleged infringement. ACTA also contains no minimal levels to protect ordinary consumers, since it clearly covers “small consignments” and has no definition of “commercial scale.”

ACTA has fewer writing requirements than TRIPS. With regard to due process, some critics believe that minimal writing requirements may lead to quick decisions by judicial authorities that are not well-reasoned. ACTA contains no writing requirement for civil judicial procedures, and right holders can request suspension of goods at Customs without a court order.

ACTA attempts to deal with the Internet. Article 27 of the treaty is entitled “Enforcement in the Digital Environment” and provides that “[e]ach Party shall ensure that enforcement procedures…are available…[and] apply to infringement of copyright or related rights over digital networks.[]” These enforcement procedures include those noted above for tangible goods. The provision further states that “[e]ach Party shall provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures” and contains restrictions on removal and distribution of electronic rights management information

Increasing criticism in Europe.

The protestors have taken issue with the secrecy surrounding the ACTA negotiations. They believe developing countries have little say and that ACTA is biased towards source countries and content providers; only the major content providers were given access to early drafts. It is further believed that increased seizure of generic drugs at Customs could limit access to affordable healthcare.

Following the noisy resignation of the EU’s chief negotiator Kader Arif on the day ACTA was signed, Neelie Kroes, head of the EC’s Digital Agenda, announced on May 8, 2012 that ACTA “would probably never be agreed upon following the significant public protests against measures included in the treaty aimed at combating online copyright infringement.” The European Data Protection Supervisor had also released similar statements against ACTA.

ACTA’s opponents fear that the treaty will destroy Internet freedom. ACTA impacts music download culture and threatens to undermine existing safe harbors through its required anti-circumvention measures. Under ACTA, online service providers may be forced to remove content and disclose subscriber identifications to “competent authorities.” Furthermore, opponents cite draconian remedies for file sharing, as seen in the expanded scope of remedies, other discovery issues, and seizure without court order.

European Court of Justice (ECJ) to rule on legality of ACTA. The European Commission (EC) has asked the ECJ to examine whether ACTA is compatible with EU law. Some groups are seeking a vote to reject ACTA in the European Parliament even before the ECJ’s decision.

The global fight against IP theft.

Reasonably reliable estimates are that about 25% of all traffic on the Internet involves pirated material – with significant organized crime involvement. There are also growing concerns about international trade in counterfeit pharmaceuticals. Rumor has it that G-8 is looking for an alternative to ACTA.

One of the problems with ACTA has been trying to deal with the tangible and the intangible in a single treaty. Had ACTA not tried to cover the digital world, its enhanced provisions vis-à-vis TRIPS would likely have been adopted. It is the perceived intrusions into people’s private lives that have created the problem. There seems to be a growing view that the problem of infringement and the Internet should be dealt with by “following the money” rather than having provisions that can intrude on small scale “semi-private” activities where the public is proving resistant. After all, many of the so-called “rogue” sites accept advertising and make money that way. However, this approach raises concerns in the advertising industry and with on-line payment service providers trying to ensure that legitimate business is not impeded.

Meanwhile, in view of the demise of PROTECT IP (PIPA) and the Stop Online Piracy Act (SOPA), no one in the U.S. administration seems keen to send ACTA for approval at present. Other U.S. legislation such as the Online Protection and Enforcement of Digital Trade Act (“OPEN Act”) is being considered, and in April 2012, the Cybersecurity Intelligence Sharing and Protection Act (CISPA) was amended to remove intellectual property theft as a possible trigger of disclosure of private information to the government. Most recently, the U.S. adopted a new regulation, made effective immediately by the 2012 National Defense Authorization Act, that reverses a prior directive prohibiting customs authorities from relaying identification markings to right holders. The outcome of the case under current law may provide clarity to whether new legislation on digital trade is indeed essential to the prevention of intellectual property violations via foreign “rogue” websites. The case is among the largest criminal copyright cases brought by the U.S. government and involves the seizure of a popular cyberlocker by the Department of Justice on January 19, 2012. The charges relating to running an international organized criminal enterprise include two counts of criminal copyright infringement and conspiring to commit money laundering. The defendants include citizens and residents of Germany, New Zealand, Estonia, Hong Kong, Slovakia, Turkey and The Netherlands.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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