ACTA Analysis: You Can't Craft A Reasonable Agreement When You Leave Out Stakeholders

from the counterfeiting-democracy dept

Well, as was expected, the latest draft text of ACTA has been released (pdf). Let's bulletpoint a few things up top, and then we'll discuss things in more detail down below:

• This version is not final, and despite suggestions to the press to the contrary, there are still some pretty substantial differences between negotiating parties. Some of those differences are pretty big deals, as they could require changes to laws (if the countries want to be seen as complying) from countries who have insisted, repeatedly and publicly, that ACTA will require no such law changes.
• While much of the worst of the document has been removed, the process by which this happened was hardly reasonable and open. Instead, it involved secrecy, misleading statements, ignoring important stakeholders until copies were leaked and concerned stakeholders shouted loud enough to be heard. As La Quadrature Du Net points out, this whole process was a counterfeit of democracy. Furthermore, this shows why all of the ACTA supporters, who insisted that people were making too big a deal about this, were flat-out wrong. There were some really, really bad things in ACTA initially, that appear to have only been removed due to loud protests from people who, otherwise, weren't supposed to even know what was in ACTA.
• The document still has many, many problems. It's way too broad at points. It still would require changes to US law (contrary to claims by the negotiators). It also includes exports enforcement without consumer rights or protections and some troubling language with no legal basis. It's better than what was in the initial documents, but it's still pretty bad in some places, as detailed below.

So... what's in the actual document? We'll go through a few different reviews that highlight some of the differences in the document, and where many of the problem areas are. Michael Geist points out that the anti-circumvention stuff that sought to effectively export the US's draconian DMCA anti-circumvention clause has been greatly watered down and provides much more flexibility in how countries set their anti-circumvention plans. It's still ridiculous that anti-circumvention is in this thing, but at least it's not as bad as it was, and it leaves open the possibility of setting up anti-circumvention rules that recognize fair use (unlike the DMCA currently). This seems like a clear case where the US caved to other parties.

On injunctions and damages, there still appear to be serious problems with the text, and seem to go beyond current TRIPS requirements, and at certain points appear contrary to US law (despite claims from US officials that no changes to US law will be required). Once again, it's a case where ACTA tries to export the enforcement side but ignores the safe harbors and consumer protections. On injunctions, for example, TRIPS has some key protections for those who infringe unknowingly or for totally non-commercial use. Those are missing in ACTA. As KEI notes:

The ACTA does not permit the elimination of injunctive relief in cases where there is no remuneration paid. This is contrary to the provisions in U.S. law eliminating injunctions and damages against certain health care workers, or for manufacturers of biosimiliar drugs, in cases involving patents not previously disclosed by the incumbent drug company. ACTA seems to eliminate the limitation on the TRIPS, which concerns injunctions in cases where a person does not have prior "reasonable grounds to know that dealing in such subject matter would entail the infringement of an intellectual property right." This makes the ACTA contrary to current U.S. laws concerning infringement of trademarks by newspapers and online publications, among other things.

On damages, the situation appears even worse. KEI highlights the following extremely troubling text:

In determining the amount of damages for infringement of intellectual property rights, its judicial authorities shall have the authority to consider, inter alia, 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.

This is, frankly, ridiculous. As has been discussed for years, the various industries have a long history of totally making up these numbers of "lost profits" that have absolutely nothing to do with reality. And, I'm still waiting for someone to show me how one "loses" profits. In the real world, you don't "lose" profits -- there is no such line on your income statement. You lose to competition and it's your responsibility to fix your business model when you do. As KEI says, this setup is "not based upon national laws in any country," and "clearly contrary to laws in several countries."

Sean Flynn's analysis notes that there are still substantial differences in what's actually covered by ACTA. The US has been fighting hard to remove patents from ACTA entirely, because it knows that it would have to change US patent laws to be in compliance (and it has said publicly many times that ACTA won't require changes to US laws). Unfortunately, everyone else seems to want to include patents:

The US has proposed that patents should be clearly carved out of the Civil Enforcement Chapter (fn 2). But as of now there are no other countries indicated as supporting this position. This is a major advocacy point for access to medicines groups. If the US does not carry the day, the claims of negotiators that the agreement will not limit important TRIPS tools to promote access to medicines will ring hallow.

Along those lines, there are still serious concerns that ACTA will allow border seizure of legitimate drugs in transit (something that has been a big problem). Legitimate generic drugs are seized in transit because a country that it ships through may have a pharmaceutical-lobbied law that blocks the sale of such drugs. Even if the drugs are not intended for that country (i.e., drugs made in India that ship via Europe to South America), European border guards are confiscating and destroying them. It appears that whether or not ACTA will deal with this is still in dispute:

As currently worded, and in contradiction to many public statements by the negotiators, the border measures section still extends to patents and to in-transit seizures. In fn 6 on page 9, there is proposed language carving out patents. But that language is proposed by the US and is not joined by any other party according to the text as released.

As for copyright issues... again, there are problems with the document:

The damages section contains many provisions that will encourage the over-enforcement and excessive punishment of copyright infringers. The text requires that countries to maintain a system of "pre-established" damages, as well as "additional damages," which means damages not based on any actual proof of harm. Such a system will over-deter the making of copies of copyrighted works where the copyright owner does not adequately serve the market on reasonable terms and conditions, and therefore does not actually suffer significant damage from the copy.

And, despite rumors to the contrary, this could apply to individual users:

The ACTA language is not limited to commercial scale infringement. So individual downloaders and copiers for personal non-commercial purposes could be subject to massive "deterrent" fines without proof of any market harm to the copyright owner.

As for fair use? What fair use?

The negotiators have failed to adequately protect the most important "fair use" and other rights of users with respect to copyright. The definition of copyright piracy does not include the reasonable suggestion to add language making clear that it "does not extend to copies that are lawfully made, without the permission of the right owners."

All in all, what we have here is a travesty of process. You had a bunch of industry stakeholders, who drove the process from the beginning, putting in extreme language and extreme ideas. Rather than having an open and honest discussion about these issues, and looking for consensus, negotiators chose to obfuscate, obscure and abstain from discussion. In the end, thanks to widespread public pressure and outcry -- including from elected officials around the world, negotiators clearly backed off many of the absolutely worst aspects of ACTA. But, remember, they started at one extreme, basically granting everything the industry stakeholders wanted, and then caved on pieces there, moving slowly back. So, the document still is based on the stakeholder's positions, with the changes being an attempt to appease everyone else. At no point was there an effort to build a document that actually recognized the rather legitimate interests of the public. And this is a shame.

Filed Under: acta, copyright, damages, democracy, patents, trademarks