U.S. Approves ACTA While EU Abstains; Critics Question Agreement's Constitutionality

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By Tamlin H. Bason

While representatives from eight governments, including the United States, signed the Anti-Counterfeiting Trade Agreement in Japan Oct. 1, other parties, namely the European Union, expressed their support for the agreement but declined to sign at this time.

The Office of the U.S. Trade Representative—the agency that negotiated, and ultimately signed the agreement on behalf of the United States—put a joint statement on its website on behalf of the negotiating parties, claiming, “The ACTA represents a significant achievement in the fight against the infringement of intellectual property rights … .”

The agreement will take effect after six signatories, comprised either from the eight initial signatories, or from parties that later sign the ACTA, ratify the agreement.

Supporters of the agreement were quick to applaud the signing. “This accord raises the bar on enforcement by improving cooperation among partners, harmonizing how we confront IP theft, addressing IP theft online, and setting a positive example for nations that aspire to have strong IP enforcement regimes,” Mark Elliot, executive vice president of the U.S. Chamber of Commerce's Global Intellectual Property Center, said in a statement.

Critics, however, remain skeptical of the agreement, and questioned the constitutionality of the United States signing the agreement without congressional authorization or consent.

ACTA Designed to Halt Counterfeiting

Formal discussions on ACTA began in 2008 under the Bush administration, with the goal of establishing a comprehensive international framework for combatting IP rights infringement. The agreement among the 11 participants was finalized in November and includes provisions on civil, criminal, border, and digital environment enforcement.

The final agreement contained six chapters, including ones on international cooperation and institutional arrangements.

Proponents of the agreement hope 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.

An Executive Power Grab?

The USTR has long claimed that the ACTA is entirely in accord with existing U.S. laws, and therefore it will not require any implementing legislation. The USTR released a statement on the day the agreement was signed explaining:

“In particular, the ACTA is consistent with U.S. copyright, patent, and trademark laws. For example, the application of injunctive relief as provided for in the Digital Millennium Copyright Act (17 USC §512j) and other provisions of U.S. law is consistent with and implements the obligations of the ACTA.”

Because the agreement is consistent with U.S. law, “The United States may therefore enter into and carry out the requirements of the Agreement under existing legal authority, just as it has done with other trade agreements,” USTR's statement claimed.

But critics are not convinced.

American University law professor Sean Flynn, a vocal critic of the ACTA, told BNA that the administration was mistaken. Not only does the ACTA contain provisions that are not consistent with U.S. law, but even if it didn't, the president lacks the authority to bind the country to the agreement, Flynn said.

“ACTA is an agreement that concerns both the regulation of foreign commerce and intellectual property, both of which are subject to congressional power under Article 1 of the Constitution,” Flynn told BNA. Thus, the administration's assertion that ACTA can be entered into as a sole executive agreement is false because such agreements are restricted to purely executive powers, Flynn said.

“I think the ball now shifts into Congress's court,” Flynn said. “If this usurpation of congressional authority bothers Congress then it is up to them to take the next steps to challenge it.”

Is ACTA Consistent With U.S. Laws?

Furthermore, Flynn said that the ACTA was in fact not consistent with U.S. law in the first place.

In a policy brief posted to its website Sept. 30, Knowledge Ecology International pointed to two discreet areas in which the ACTA and existing American laws are in conflict: injunctions and damages.

Article 8 of the ACTA requires parties to equip their courts with the ability to issue injunctions in order “to prevent goods that involve the infringement of an intellectual property right from entering into the channels of commerce.

But KEI pointed out that a court's ability to issue injunctions in the U.S. is severely hampered by numerous provisions in both the Digital Millennium Copyright Act, 17 U.S.C. §512, and the U.S. Trademark Act, 15 U.S.C. §1117.

The same is true for damages, which under Article 9 of the ACTA can be assessed by referencing “any legitimate measure of value the right holder submits.” KEI said that this broad damage language flies in the face of “several U.S. statutes that set some restrictions on the calculation of damages.” Among those damage limiting statutes is 17 U.S.C. § 907, which places limits on the amount of damages that an innocent purchaser of a semiconductor chip can be forced to pay.

Although the USTR claimed that there are no inconsistencies, the group's policy brief pointed out that parties may independently decide not to implement, or to limit the scope of, certain provisions. It pointed to language in the USTR's joint statement acknowledging that “the ACTA specifies that a party may exclude patents and protection of undisclosed information from the obligations in Chapter II, Section 2 (Civil Enforcement).”

For example, The United States will ensure that its approach to implementing these and all other ACTA obligations is fully consistent with U.S. law.

James Love, executive director for KEI, told BNA that he had expected the USTR to issue a written statement in conjunction with the signing of the agreement in which it detailed exceptions to the ACTA.

Such a statement, if it exists, has not yet been released.

European Union, Mexico Don't Sign

The eight signatories to the ACTA were Australia, Canada, Japan, the Republic of Korea, Morocco, New Zealand, Singapore, and the United States.

The European Union, Mexico, and Switzerland did not sign the agreement. The negotiating parties' joint statement on the USTR's website stated that representatives from these countries “confirmed their continuing strong support for and preparations to sign the Agreement as soon as practicable.”

In June, Mexico's Congress of approved a resolution asking President Felipe de Jesus Calderon Hinojosa not to sign the agreement.

The agreement has not yet been approved by the European Parliament. Flynn said that the ACTA faces an uphill battle in the EU, because “unlike in the U.S., the EU Commission is not asserting it can implement ACTA without parliamentary approval.”