Letter from AmeriKat: ACTA - its baaaa-aaack! (Part II)

Section 4- Criminal Enforcement

The section the AmeriKat highlighted and scribbled on the most was the section on criminal enforcement. Paragraph 1 introduces the concept of willful intellectual property infringement to jurisdictions, unlike the US, that do not already have this concept. It provides:

"Each Party shall provide for criminal procedures and penalties to be applied at least in cases of willful trademark counterfeiting or copyright or related rights piracy on a commercial scale."

Commercial scale includes at least those acts "carried out as commercial activities for direct or indirect economic or commercial advantage." Yes, the good ole "commerical advantage" test. We still do not know what it means under the UK's Copyright Designs and Patents Act 1988 fair dealing provisions and the AmeriKat bets no one will be able to point to exactly what this means. (picture, left - an IP infringer behind bars).

Each Party is required to treat willfull importation or exportation of counterfeit trade mark goods or pirated copyright goods on a commercial scale as unlawful activities subject to criminal penalties. This can include the "distribution, sale or offer for sale of counterfeit trade mark goods or pirated copyright goods on a commercial scale as unlawful activities subject to criminal penalties."

Unlike paragraph 1, paragraph 2 is a provision relating solely to trade mark infringement. It provides that the Parties shall provide for criminal procedures for the willful importation and domestic use, in the course of trade and on a commercial scale, of labels or packaging which is identical or cannot be distinguished from a registered trade mark and which is identical to goods or services for which the trade mark is registered.

Paragraph 3 has another disputed word, this time it is "may". Paragraph 2 reads:

"Each Party may provide criminal procedures and penalties in appropriate cases for the unauthorized copying of cinematographic works from a performance in a motion picture exhibition facility generally open to the public."

The AmeriKat is guessing the Motion Pictures Association of America (MPAA) wanted a "must" not a "may". See earlier Letter regarding MPAA's involvement with ACTA here.

Section 5 - Digital Environment

The section everyone was holding their breath for was the section on the enforcement of intellectual property rights on-line. From previous leaked drafts of the text, the final draft seems far more toned down in the aggressiveness of the earlier versions. In fact there is no longer any definition of "Third-party liability" or notice and takedown and Safe Harbor provisions echoing the US’s Digital Millennium Copyright Act (DMCA) (see this IPKat post that outlines the Safe Harbor provisions in action). The old Section 3 was heavily concerned with the liability of ISPs, which ISPs could avoid if they adopted a three-strike type rule(see previous IPKat post here).

The new Section 5 has generally abandoned these concepts save for the footnote to paragraph 2. This abandonment can only be seen as a failure by the US negotiators during the ACTA rounds. Paragraph 2 provides, with some disputed language, the following:

"Each Party's enforcement procedures shall apply to infringement of at least trademark and copyright or related rights over digital networks, including the unlawful use of means of widespread distribution for infringing purposes. These procedures shall be implemented in a manner that avoids the creation of barriers to legitimate activity, including electronic commerce, and consistent with each Party's law, preserves fundamental principles such as freedom of expression, fair process, and privacy."

The footnote to this paragraph suggests that such a procedure could include instances where a Party adopts or maintains a regime providing for limitations of the liability of or the remedies available against ISPs while preserving the legitimate interests of rights holders - i.e., Safe Harbour provisions again, but this time just a suggestion.

Paragraph 4 deals with orders made against ISPs that identify customers who allegedly use their account for infringing "at least trademark and copyrights". The paragraph provides that:

"Each Party may provide, in accordance with its laws and regulations, its competent authorities with the authority to order an on-line service provider to disclose expeditiously to a right holder information sufficient to identify a subscriber whose account was allegedly used for infringement, where that right holder has filed a legally sufficient claim of infringement of at least trademark and copyrights or related rights and where such information is being sought for the purpose of protecting or enforcing at least the right holder's trademark and copyright or related rights. These procedures shall be implemented in a manner that avoids the creation of barriers to legitimate activity, including electronic commerce, and, consistent with each Party's law preservers fundamental principles such as freedom of expression, fair process, and privacy."

The AmeriKat is concerned with the use of the words "allegedly used for infringement". The AmeriKat is concerned that the low-threshold of only showing an alleged infringement will allow a procedure open for abuse. Any applicant can allege that any ISP user has infringed an IP right, but absent sufficient evidence supported by concrete technological information that an ISP address did download a music track or offer for sale a counterfeit good this process is open for abuse. There needs to be a requirement for sufficient evidence that satisfies a court about the allegation of infringement, not casual assertions. What does "allegedly' even mean? That the applicant has reason to believe that the user infringed an IP right or that they actually did?

Another curiosity about Section 5 that the AmeriKat knows she and tytoc collie both share, is the reference to "at least trademark..." What does this mean? The prior drafts did not include provisions on trademark enforcement,so where did this come from? As tytoc collie says "who knows with these non-transparent treaties?" Do any readers have any suggestions?

Conclusion?

The final version of ACTA seems to be a win, albeit an unimpressive win, for critics of the digital section of the Agreement. The most contentious provisions that exported the most-argued aspects of the US's Digital Millennium Copyright Act, those relating to ISP-liability and digital rights management restrictions, have been substantially watered down, but other areas of the Agreement are so vague as to be problematic. The AmeriKat is also concerned to again notice the stark absence of any fair-use or fair-dealing provisions from the Agreement.

Unsurprisingly the Recording Industry Association of America (RIAA) praised the text. RIAA's VP for international affairs, Neil Turkwitz, said in a statement:

"While ACTA does not provide all of the answers about how governments will move forward to tackle online piracy, it is a very important multilateral statement concerning the importance of finding solutions to online theft. It may not be a precise roadmap, but it is a powerful expression of a common vision and unity of purpose."

"It may not be a precise roadmap". No kidding, Neil!

As much as the AmeriKat criticizes the wording, the biggest problem with ACTA is that China has expressed no interest in being a Party to the Agreement. According to the Wall Street Journal almost 80% of all counterfeit goods come from China. So what use is ACTA if the biggest offender is not party to its provisions?

But it is not only China's involvement that is being questioned. Members of the European Parliament have been speaking out against ACTA (see report here) and Mexico's Senate voted last week to withdraw from the negotiations. Although discord is being vocalized, the AmeriKat does not believe that such disquiet will rail-road the Agreement.

The JIPLP's weblog is inviting readers to write to Jeremy about their concerns under ACTA. For more details click here.

Letter from AmeriKat: ACTA - its baaaa-aaack! (Part I)

The AmeriKat, like any busy city Kat, generally keeps her eyes to the pavement and her ears to her iPod during her day-to-day bustle. There are probably so many interesting performances happening around her - a street performer amusing a child, a beam of sunlight illuminating a beautiful building, a wonderful sunset seeping into the London skies (picture, left) - that she misses because she does not have time to stop and look. With technology meeting our demands more rapidly than ever before, be it ordering clothes for next day delivery or travelling thousands of miles in a matter of hours, we can become so invested only in reaching the result we can be quick to miss the journey. Although all this sounds as fluffy as the AmeriKat's long-haired coat, ignoring the journey is so easy to do even in the field of intellectual property law.

ACTA - Its here and ready, but are you?

The AmeriKat is the first to admit that she did not just absent-mindedly miss the journey of ACTA's first drafts to its nearly-final draft published last week - she chose to ignore the journey completely. ACTA (the Anti-Counterfeiting Trade Agreement) was originally meant to act only as a response to counterfeit physical goods, but following a November 2008 leak by the European Commission, it was discovered that ACTA would also include a section on enforcement of IP rights on-line. Interest in the Agreement was slow, which frustrated the AmeriKat and other keen IP watchers, but slowly with reports of secretive negotiations between powerful stakeholders and only some governments, curiosity began to grow. Last December, seeing the future on the horizon, Google entered the mix and arranged a conference regarding the US government's hush-hushed negotiations of the Agreement. As of two weeks ago, it was reported that the UK government had not even seen the current draft text of the agreement.

The AmeriKat was forwarded the consolidated draft last Friday and has had ample time to digest it for your reading pleasure. Before she delves into the text she must say that she whole-heartedly agrees that IP rights holders must have effective means of protecting their intellectual property rights and have tools for combating counterfeit goods. However, if the text of a potential agreement is poorly worded and agreed without full transparency or the involvement of all stakeholders, no matter if the desire is to protect the rights of rightsholders, these inherent failings will ultimately prejudice them as well. Legislation that is ambiguous, open for abuse by a party, or is too onerous on one party over another, will not necessarily have the effect of being a deterrent and may even spur further IP infringement in retaliation. If you make a group people mad enough by abusing the system and process, they will come back to bite you.

Section 2- Civil Enforcement

This section deals with the civil procedures, injunctions, damages, other remedies, disclosure and provisional measures for trade mark, copyright and related rights. Patents apparently do not fall within the scope of the section.

Paragraph 1 of the damages section provides that the judicial authorities in all circumstances

"shall have the authority to order the infringer who knowingly or with reasonable grounds to know, engaged in infringing activity of intellectual property rights, to pay the right holder damages adequate to compensate the injury the right holder has suffered as a result of the infringement...which may include the lost profits, the value of the infringed good or service, measured by the market price, the suggested retail price."

Paragraph 2 provides that the judicial authorities have the right to order the infringer to pay the profits to the right holder attributable to the infringement, which may be the same as the amount of damages referred to in paragraph 1.

In addition to this, paragraph 3, provides that for related-music IPR, copyright and trade mark counterfeiting each Party must establish a system that provides for one or more of the following:

"(a) pre-established damages, or

(b) presumptions for determining the amount of damages sufficient to compensate the right holder for the harm caused by the infringement, or

(c) at least for copyright, additional damages. "

Where (a), basically statutory damages, or (b), presumptions as to damages, is provided by a Party, the Party must ensure that the judicial authorities or the right holder has the right to choose such a remedy as an alternative to the remedies in paragraph 1.

Besides the interesting notion of statutory damages which is a favorite in US litigation as an alternative to presumptions, the presumptions itself are an interesting formulation. A footnote to the presumptions sentence states that a presumption may include:

"(i) the quantity of the goods infringing the right holder's intellectual property right in question and actually 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 reasonably royalty or

(iii) a lump sum on the basis of elements such as at the 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"

This is nothing earth-shattering about this election. Many jurisdictions afford rightsholders the opportunity to elect how their damages are to be assessed, but what is interesting is that one can see the strong American influence in this negotiation by the presence of the statutory damages provision and the manner in which the presumptive damages are calculated.

Article 2.4 provides that judicial authorities shall have the authority upon the "justified request of the right holder" to order the infringer that relevant information regarding any person or persons involved in any aspect of the infringement" to provide relevant information including the identification of third persons involved in the infringement. .

Article 2.5 provides that judicial authorities shall have the authority to order prompt and effective provisional measures against a party or third party to prevent the infringement of IPRs and to preserve relevant evidence in relation to the alleged infringement. This therefore provides that judicial authorities have the authority to order interim injunctions and what is akin to the UK's Anton Piller order to prevent the destruction of evidence in cases "where any delay is likely to cause irreparable harm to the right holder."

All of this seems pretty straightforward, but it is paragraph 4 of Article 2.5 that causes the AmeriKat the most concern. It provides that:

"Each Party shall provide that its authorities have the authority to require the applicant, with respect to provisional measures, to provide any reasonably available evidence in order to satisfy themselves with a sufficient degree of certainty that applicants's right is being infringed or that infringement is imminent, and to order the applicant to provide a security or equivalent assurance sufficient to protect the defendant and to prevent abuse. Such security or equivalent assurance shall not unreasonably deter recourse to such procedures." (italics provided by AmeriKat)

Besides the usage of notoriously vague expressions of "reasonably available" and "sufficient degree of certainty" which by themselves are sufficiently woolly to induce a raised eyebrow, their usage in relation to incredibly powerful interim measures such as injunctions and search orders is more concerning. Further the last sentence of paragraph 4 states that such a security or assurance provided by the applicant to protect the defendant should not unreasonably deter an applicant's recourse to the procedures. This could be the AmeriKat reading this with "Doomsday" glasses on, but it appears to suggest that even where an applicant cannot provide a sufficient assurance, be it a cross-undertaking or a cross-undertaking backed up by a security to the court, this will not preclude the availability of a provisional order....eek! This analysis is of course premised on the assumption that an "equivalent assurance"could be a cross-undertaking as to damages to a court.

Paragraph 5 provides that were such a provisional measure is revoked or where there is subsequently no infringement of IPR, the judicial authorities shall have the authority upon the request of the defendant to provide the defendant appropriate compensation for any injury caused by these measures. This may go somewhere to addressing the last sentence of paragraph 4, but if an applicant is unable to make such an assurance to court in the first instance what makes it feasible that they would be able to do so after the order has been granted? And what does "unreasonably" mean anyway?

There may be arguments that this provision may help rights holders of lesser means obtain interim remedies, but the AmeriKat is little convinced by this argument. The stakeholders involved in the negotiations of ACTA were powerful stakeholders and rights holders, not small businesses. The AmeriKat may be cynical, but it seems unlikely that such a provision was mooted as a helping hand for smaller applicants. Further, the AmeriKat is concerned because interim measures such as injunctions and search orders that are great legal tools for an applicant, rightly or wrongly granted, are also incredibly burdensome on the respondent. To redress that balance the court asks that the applicant provide a cross-undertaking as to damages at the point of the order to redress the balance, which sometimes may require the provision of a security. The suggestion that such an assurance is not a always a necessary consideration where to provide one would "unreasonably deter recourse to such procedures" is a cause of concern and potential abuse. Of course, it is in a court's discretion if and as to how much they order an applicant to provide a cross-undertaking and/or security, but this woolly language makes the AmeriKat nervous.

Section 3 Border Measures

This section is a bit out of the AmeriKat's depth of understanding but she did notice another usage of the word "unreasonably". This time it was italicized and highlighted which means that some delegations during ACTA's negotiations expressed reservations on this part of the text. Article 2.X states that

"...for effective border enforcement of intellectual property rights, a Party should do so in a manner that does not discriminate unreasonably between intellectual property rights and that avoids the creation of barriers to legitimate trade."

The usage of the controversial word "unreasonably" seems to suggest that there will be instances where it is reasonable to discriminate between intellectual property rights and legitimate trade. Any readers care to proffer examples of when this would be?

Continued in Part II