Legal Briefing

ACTA: out of focus

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Technology, Media and Telecoms | 01 November 2010

the plurilateral Anti-Counterfeiting Trade Agreement (ACTA) is currently being negotiated by Australia, Canada, Japan, Mexico, Morocco, New Zealand, Korea, Singapore, Switzerland, the US and the EU, in response to the ever-increasing international trade in counterfeit goods. It is hoped that the large emerging economies, often the source of counterfeit goods, will ultimately sign up to ACTA.

The underlying idea is simple. You would have to be living under a rock to have failed to notice the increasing prevalence of counterfeit goods in recent years. Despite the ever-more costly efforts of a seemingly endless stream of intellectual property (IP) rights owners, the problem just seems to get worse. It is now widely accepted that it affects virtually all industries, is global in nature (mirroring the global economy), and, increasingly, attracts the attention of organised criminals. The potential rewards and negligible risk make it a far more lucrative proposition than dealing in illicit drugs. A concerted effort is therefore required to tackle the situation: better laws, the introduction of enforcement standards, and greater sharing of information between enforcement agencies.

From an initial suggestion by Japan, picked up by the US in 2005/06, the idea gradually snowballed with negotiations starting officially, but somewhat secretively, in June 2008. There have been 11 rounds of negotiations in all. The tenth was in Washington in August. The eleventh, and supposedly final, round took place in Tokyo in late September and early October. Anyone who has watched international negotiations over the years will appreciate that this was quite a sprint to the line! According to the joint statement issued after the Tokyo round:

‘Participants in the negotiations constructively resolved nearly all substantive issues and produced a consolidated and largely finalised text of the proposed agreement, which will be submitted ad referendum to their respective authorities. The participants agreed to work expeditiously to resolve the small number of outstanding issues that require further examination… with a view to finalising the text of the agreement as promptly as possible.’

It looks as though we are perilously close and are going to get to a final agreement, something that many people had serious doubts about.

What does ACTA look like?

The initial signatories will be few in number (although responsible for a large amount of world trade), and ACTA will be largely irrelevant unless, over time, a substantial number of other countries, particularly those seen as problem countries due to the large-scale manufacturing of counterfeits taking place within their borders, can be persuaded to sign up as well.

For a long time, the negotiations were shrouded in secrecy. Negotiating parties did not want their positions made public. However, as word of the negotiations spread, there was an increasing clamour for openness. The European Parliament, for example, was especially critical of the European Commission, calling on it (in a report published in March 2009) to make documents relating to the negotiations available to the public immediately. This eventually resulted in a draft text being issued in April 2010. A further draft, dated 1 July 2010, was subsequently leaked.

This leaked draft text was a political analyst’s dream, setting out the varying positions taken by each country. However, somehow the various views of the negotiating parties have been reconciled such that the text released on 6 October has very little left to be resolved.

Chapter 2 covers the legal framework for the enforcement of IP rights:

  • Section 2: civil remedies (final injunctions, interim injunctions, damages and information, recovery of attorney costs, destruction of infringing goods). This section, which sets out the remedies that should be available in signatory countries, should be non-contentious.
  • Section 3: border measures (actions by Customs authorities). Again, this should be relatively non-contentious. The section says that remedies should be available via Customs for goods to be detained at the borders. Interestingly, the section states that the parties shall provide procedures in respect of imports and exports, and may provide procedures in respect of goods in transit. Covering exports will be new to many. The fact that covering goods in transit is left optional will be a huge disappointment to many rights holders who are regularly frustrated by Customs authorities allowing counterfeits in transit to pass through unopposed, thereby simply allowing the problem to sail off to another country.
  • Border measures are not limited to counterfeits and pirate goods as some countries wished, but can instead be applied to any goods that infringe an IP right. This may well be a stumbling block for other countries joining ACTA. It may also explain why covering goods in transit is only permissive, not mandatory – the EU, for example, has come under considerable pressure in light of some instances of generic drugs being detained by Customs while in transit from and to countries where they do not infringe. A particularly encouraging aspect of s3 is Article 2.13, which provides for the disclosure of information between authorities. This is subject to national laws on privacy and confidential information, so in practice may not be as useful as it could be. However, it is an encouraging start. The more information is exchanged between authorities, the better the prospects, surely, of some significant progress being made against some of the more organised criminals involved in the trade in counterfeit and pirate goods.
  • Section 4: criminal enforcement (which infringements should be considered sufficiently serious to constitute crimes and what consequences, particularly in terms of penalties, should flow from that?). The final text limits the obligation to provide criminal procedures and penalties to cases of willful counterfeiting or piracy on a commercial scale, and willful dealing in labels and packaging.
  • Section 5: enforcement in the digital environment (addressing particular issues raised by special technologies over recent years, ie downloading, file sharing and liability of internet service providers). By all accounts, this complex set of provisions gave rise to the most debate. However, there is very little in the text now released which is not agreed, the principle sticking point being whether to limit this section to infringement of copyright or to also include infringement of trade marks.
  • Parties may provide the authority for online service providers to be ordered to reveal subscriber information in certain circumstances. Moreover, parties shall provide adequate protection and remedies in respect of circumvention of effective technological measures to prevent copying.
  • Chapter 3 deals with enforcement practices. Here, the parties have agreed to promote certain practices seen as being healthy contributors to effective enforcement, for example data collection and analysis, engaging with rights holders and, (most importantly in the author’s opinion), public awareness (without which, surely, the fight against counterfeit and pirate goods will never be won).

Chapter 4 covers international co-operation and aims to set standards for the exchange of information among different national authorities.

Chapter 5 deals with institutional arrangements, most notably the setting up of an ACTA committee made up of representatives from each signatory country, whose role will be to oversee the implementation of ACTA. It is far from clear what powers the committee will have to sanction a signatory’s non-compliance.

Will it make things better: or is ACTA fatally flawed?

It is tempting to ask… what is wrong with any of that? What is not to like? Counterfeiting is bad. More should be done to stamp it out. Better civil enforcement tools. Better border measures. Stronger penalties. More international co-operation. Who but a counterfeiter could possibly find fault with any of that?

Unfortunately, however, there is a flaw, which could well be fatal.

What started out as an agreement to address the problem of counterfeiting on an international scale was quickly hijacked. It was instantly expanded to cover piracy (blatant copyright infringement). It is easy to have sympathy with this. Piracy and counterfeiting are very similar evils, each involving blatant copying – so blatant as to be equated with stealing.

By its nature, piracy in modern times is often a very different beast from counterfeiting. It involves digital products existing in the ether, rather than physical products you can pick up and hold. This, in turn, means the media through which the copies are bought, sold or transported are often very different. Enforcement presents complicated issues that cannot easily be addressed in ACTA. It would appear that negotiations to try to accommodate differing views on these and other related areas have left something significantly watered down.

Furthermore, much of ACTA goes beyond counterfeiting, beyond piracy and into the realms of all IP infringement. The EU has been particularly keen to have many areas of ACTA expanded to cover all IP infringements. Not surprisingly, this has led to accusations that the negotiators have been trying to take the Agreement on Trade-Related Aspects of IP Rights (TRIPS) – so painstakingly negotiated and finally agreed in 1994 – and improve on it. Which is precisely what some of the negotiators wanted to do! It is not difficult to understand why. TRIPS has proved to be too weak, has quickly become out of date and needs strengthening, but a re-negotiation would take far too long and has only a limited prospect of success.

To understand this point of view, a reminder is needed of how TRIPS came about. It was part of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) negotiations, which gave rise to the World Trade Organization (replacing GATT). The Uruguay round started in 1986 and took eight long years to conclude. It was a major achievement that TRIPS was negotiated as part of all those trade negotiations, but is also very telling. There was, and is, much about TRIPS that developing countries consider heavily weighted against them – the developed countries tending to be the ones whose citizens are the creators, owners, licensors and enforcers of IP rights, often seeking to enforce them against those in poorer nations. It was only within the framework of a much broader trade agreement that TRIPS was able to be negotiated, with developing countries securing trade-offs in the wider context. The fear, therefore, of those who wish to see TRIPS strengthened is that it will be impossible to do so without having to provide concessions to developing countries in unrelated areas. There is even the fear that a re-negotiation of TRIPS could lead to them being watered down rather than strengthened, such is the opposition by some developing nations to its current terms.

The countries negotiating ACTA have therefore taken what started off as a treaty geared towards anti-counterfeiting and expanded the negotiations to give rise, in effect, to a new, improved (they would say) TRIPS.

However, it is questionable as to how far this will lead, if anywhere. There is a strong argument that the end result will be nothing better than an agreement signed by the EU, the US and nine other countries, which lays down a best practice that is not very different from what those signatory countries already provide, but to which very few others are likely to sign up.

COMMENT

This has the makings of a massive missed opportunity, all the more disappointing because the initial intent was so laudable. It appears that seeking just to tackle counterfeits, and those who deal with them, more effectively, is something that few would argue against and, therefore, something that many countries would sign up to. This would result in significantly improved international co-operation, which most commentators agree is essential, in this narrow field. However, by wrapping all those excellent initiatives up in a bundle of obligations that are much wider and much less likely to gain consensus, it is possible that the opportunity to deal with counterfeits effectively will not be taken up by sufficient countries to make a real difference.

Had the focus remained what it was initially intended to be – counterfeit goods – we would in all likelihood be on the verge of an exciting brave new world. The fact this is not the case is a great shame.