Anti-Counterfeiting Trade Agreement Final; Group Calls Process 'Unconstitutional'

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Participants in the Anti-Counterfeiting Trade Agreement negotiations announced Nov. 15 that they have finalized the text of the agreement, after resolving the few issues that remained outstanding after the final round of negotiations in Tokyo (80 PTCJ 780, 10/15/10).

Following “legal verification” of the drafting, the proposed agreement will be submitted to the participants' respective authorities to undertake relevant domestic processes, according to a press statement from the Office of the U.S. Trade Representative, which is handling the U.S. negotiations.

Participants in the negotiations include Australia, Canada, the European Union and its member states, Japan, Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland, and the United States.

ACTA aims to establish a comprehensive international framework for combatting IP rights infringement, in particular the proliferation of counterfeiting and piracy, which are seen to undermine legitimate trade and the sustainable development of the world economy. The agreement includes provisions on civil, criminal, border, and digital environment enforcement, as well as provisions to assist the participating parties in their enforcement efforts and for the establishment of best practices for effective IP rights enforcement, according to the USTR.

Civil Enforcement Section Allows Exclusion of Patents.

In the final text, the civil enforcement section contains a footnote that says, “For the purpose of this Agreement, Parties may exclude patents and protection of undisclosed information from the scope of this Section.” The United States suggested the inclusion of this note in the October draft text.

Last month, European Trade Commissioner Karel De Gucht raised concerns before the European Parliament about the exclusion of patent infringements from civil litigation measures in ACTA because of concerns that excluding patents might deprive many industrial sectors of the benefits of the treaty (80 PTCJ 836, 10/29/10). De Gucht said that failing to address patent infringement could lead to a blanket exclusion for the automotive, machinery, pharmaceutical, and agro-chemical sectors.

Time will tell what countries exclude patents from the scope of their civil enforcement.

Damages Awards Addressed.

Like the earlier draft, the final text gives the parties' courts 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 for the injury the right holder has suffered as a result of the infringement.”

In determining the amount of damages, the courts would be allowed to consider “any legitimate measure of value submitted by the right holder, which may include the lost profits, the value of the infringed good or service, measured by the market price, the suggested retail price,” according to the final text.

Border Measures Section Tweaked.

The language addressing the scope of border measures in the final text varies slightly from the October draft. That provision now says, “In providing, as appropriate, and consistent with a Party's domestic system of IPR protection and without prejudice to the requirement of the TRIPS Agreement, for effective border enforcement of intellectual property rights, a Party should do so in a manner that does not discriminate unjustifiably between intellectual property rights and that avoids the creation of barriers to legitimate trade” (emphasis added). The word “unjustifiably” replaces the word “unreasonably” from the earlier draft.

The boarder measures section in the final ACTA text also adds the qualifying phrase “where appropriate” in the provision stating, “Each party shall provide procedures for import and export shipments: (b) where appropriate, by which right holders may request the competent authorities to suspend the release of suspect goods.”

Criminal Enforcement Similar to Draft.

As for criminal enforcement, the final text retains the requirement from earlier drafts that parties must provide “procedures and penalties to be applied at least in cases of willful trademark counterfeiting or copyright or related rights piracy on a commercial scale.”

Further, the text made final the proposed insertion of “may” in the section providing that each party may provide criminal procedures and penalties for the unauthorized copying of cinematographic works from a performance in a motion picture exhibition facility generally open to the public.

In the final text, however, the criminal enforcement provisions are not subject to the requirement in the Article 2.15 penalties provision that each party provide penalties such as imprisonment and monetary fines sufficiently high to provide a deterrent to future acts of infringement.

Digital Environment Includes Trademarks, No 3 Strikes.

Negotiators have disagreed as to whether trademarks should be included along with copyrights in the scope of coverage under the ACTA section on enforcement of IP rights in the digital environment. At the time the draft text was released in October, the United States, Mexico, and South Korea argued that the internet enforcement provisions should only apply to copyright violations. However, a compromise seems to have been made in the final text.

Trademarks were kept out of the Section 2.18.2 digital enforcement procedures language, which now states, “Each Party's enforcement procedures shall apply to infringement of copyright or related rights over digital networks, which may include the unlawful use of means of widespread distribution for infringing purposes.” Some parties had hoped to get the language “at least trademark and” before “copyright” in that section.

However, the final language of Section 2.18.3 does address trademarks, stating, “Each Party shall endeavor to promote cooperative efforts within the business community to effectively address trademark and copyright or related rights infringement while preserving legitimate competition and consistent with each Party's law, preserving fundamental principles such as freedom of expression, fair process, and privacy.”

Moreover, trademarks are included in the final version of the controversial Section 2.18.4 on notice to internet service providers. That provision now states, “Each Party may provide, in accordance with its laws and regulations, its competent authorities with the authority to order an online 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 trademark rights or copyrights or related rights and where such information is being sought for the purpose of protecting and enforcing the right holder's trademark rights or copyright or related rights.”

This ISP notice section was subject to much scrutiny during the negotiations by outside parties worried that it would oblige ACTA parties to adopt a “three strikes” system requiring ISPs to cut off customers caught illegally downloading copyrighted material three times. The final text, however, contains no such provision that would oblige a three strikes rule to be implemented.

However, an EU official told BNA Oct. 5 that there is also no provision that would prohibit such a rule (80 PTCJ 778, 10/15/10). A U.S. official said the same day that while the three strikes provision had been “dropped out” of the October text, such provisions have become common under many legal systems.

Other than a few minor changes in language or dates, the rest of the ACTA text remained the same as the October draft.

Group Faults Planned Approval Process.

Sean Flynn, associate director of the Program on Information Justice and Intellectual Property at American University's Washington College of Law, Washington, D.C., was quick to criticize as “clearly unconstitutional” the planned U.S. approval process for the final ACTA text.

A frequent critic of the ACTA negotiating process, the PIJIP in a Nov. 15 analysis faulted the USTR for “repeatedly” stating that ACTA will enter into force in the United States as an executive agreement that does not require any congressional role. “If USTR succeeds in this bold plan, it will dramatically expand presidential power to make law without congressional consent,” the group said.