Copyright Issues in NAFTA Talks Rattle Tech Companies

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By Michaela Ross

Tech companies and industry groups are nervously eyeing negotiations over a revamped North American Free Agreement, fearful about the progress of talks on an intellectual property chapter.

The U.S., Canada and Mexico are wrangling over how tech companies can use and host copyrighted content without running afoul of intellectual property laws in the three countries. Tech companies are pushing for provisions that will allow for leeway in the use or hosting of copyrighted works. Content makers are opposing such policies.

Canadian, U.S. and Mexican ministers are slated to meet in Washington, D.C., April 6. Negotiations on the IP chapter may still be in the early stages, private sector sources briefed on the talk told Bloomberg Law. Tech trade and advocacy group officials and other industry sources say tensions among the three countries and competing industries could result in a new NAFTA IP chapter that favors content providers over tech companies.

The tech industry has been pushing for IP provisions similar to the ones in a multi-lateral trade agreement with Canada, Mexico and several other countries, the Trans-Pacific Partnership, from which the U.S. withdrew last year.

There’s wide agreement that an updated NAFTA should include more digital economy provisions. Robust intellectual property protection rules could prevent thefts of U.S. inventions and lost revenue. But tech industry officials are worried that airtight rules, without some leeway for exceptions and limitations, could stunt innovation across borders.

The tech sector wants two TPP provisions included in the new NAFTA: exceptions for the fair use of copyrighted material, which would allow tech companies to use copyrighted material for limited and specific purposes; and a safe harbor provision, which gives online platforms some leeway when copyrighted materials are posted on their sites by third-party users.

To be sure, intellectual property issues—given their complexity and impact on an array of industries—are typically hammered out toward the end of trade negotiations. Also, the intellectual property chapter likely won’t be finalized until the three countries reach agreement on all of the language for a revamped NAFTA.

Still, the Trump administration has proposed contentious provisions in other areas, and there might not be much time left for negotiators to reach a deal. U.S. Trade Representative Robert Lighthizer said in March that time was running “very short” for the talks to wrap up.

Tech companies may not choose to support a NAFTA deal without certain provisions, industry sources told Bloomberg Law.

Companies developing artificial intelligence, social media, machine learning and other emerging technologies, could be held liable in foreign courts for copyright infringement depending on how the chapter is written, Matthew Schruers, vice president of law and policy at the Computer and Communications Industry Association, told Bloomberg Law.

“The risk that U.S. trade policy could update a pre-internet free trade agreement to the internet era and leave out the two most critical policy choices that have enabled the internet industry is a serious one,” Schruers told Bloomberg Law.

A spokesperson for Lighthizer declined to comment on the IP chapter, other than to cite the administration’s November 2017 list of negotiation objectives.

US Priorities Unclear

Tech groups, such as Internet Association and the Information Technology Industry Council (ITI), have said fair-use protections are designed so copyrighted material can be used without affecting the potential market for an original work and are crucial for a wide range of industry innovations. For example, artificial intelligence systems developed to recognize songs or artwork need to be trained using copyrighted works.

“What we’ve heard is (fair use) is not being proposed for the agreement at all,” Jeremy Malcolm, senior global policy analyst at the internet advocacy non-profit Electronic Frontier Foundation, told Bloomberg Law.

E-commerce sites, search engines and social media networks also rely on safe harbor provisions, outlined in the 1998 U.S. Digital Millennium Copyright Act (DMCA). These safe harbor policies free companies from having to continuously monitor and take down copyrighted materials from their sites. Instead, companies are required to remove infringing content only after they’ve been notified of it.

Pressure from associations representing U.S. copyright holders—such as the Motion Picture Association of America and the Recording Industry Association of America— has countered tech companies’ lobbying on the issue.

“Overbroad application of the fair use doctrine threatens to undermine vital copyright protection for software, just as it does for the music, film, and other creative industries,” the ACTION for Trade coalition, whose members include the MPAA and RIAA, said in a January 2018 trade policy paper.

Canadian Politics

Another factor possibly slowing agreement on NAFTA’s intellectual property chapter is Canada’s recent IP moves during negotiations to renew the TPP trade agreement without the U.S., according to two Canadian industry sources briefed by Canadian NAFTA negotiators. The new Pacific trade agreement is known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes Canada, Mexico and nine other countries.

Canadian negotiators were central in pulling 11 intellectual property provisions from the CPTPP that had been U.S. demands in the original TPP, the sources said. It’s unclear whether the U.S. will push to include the language in a new NAFTA IP chapter. But it would be tough for Canada to accept the provisions, the sources said.

—With assistance from Rossella Brevetti, Len Bracken and BJ Siekierski

To contact the reporter on this story: Michaela Ross in Washington at mross@bloomberglaw.com

To contact the editor responsible for this story: Roger Yu at ryu@bloomberglaw.com

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