ACTA section analysis

GENERAL/OVERVIEW

In general, what ACTA is doing is exporting the most controversial aspects of US copyright law to other countries. (Flynn, 4/21/10)

The draft is a fairly clear product of close consultation with rights holders with little concern for or representation of the interests of competitors. Increased enforcement procedures are always specific and mandatory; mention of intellectual property limitations and exceptions is always proposed as permissive. There is a large deal of language mandating that procedural requirements for initiating enforcement procedures should not “deter” their use by rights holders. But there is very little inclusion of measures, including basic norms like notice and rights of reply and punishment of frivolous and bad faith use of procedures, that seek to avoid the overuse of enforcement procedures deter and create barriers to entry by legitimate competitors. The text is a foreseeable product of a consultation process that has been focused the concerns of a small number of large content owning industries. (Flynn, 4/28/10)

ACTA aggressively exports the strictest provisions of U.S. intellectual property law, ensuring that intellectual property rights holders will have numerous avenues available for protecting IP law in ACTA-compliant countries, but also fails to mandate the protections in U.S. intellectual property law that have promoting innovation, competition, and free expression in the United States.(CCIA, 4/21/10)

ACTA's stated goal is to establish a new set of high standards for enforcement efforts to combat "counterfeiting and piracy."  The idea is that a core group of countries would agree to meet certain benchmarks for strong intellectual property enforcement, and then likely press other countries to meet those benchmarks as well. (CDT, 5/18/2010)

ACTA could include provisions that affect a much broader range of parties.  For consumers, overly aggressive copyright policies can raise privacy, free expression, and due process issues.  For online innovators and businesses, there can be serious issues of liability exposure and barriers to innovation.  (CDT, 5/18/2010)

The biggest problem is that ACTA could skew foreign legal regimes  by selectively promoting a stringent, one-sided model of U.S. copy right law.  In addition, several provisions could encourage problematic interpretations of or changes to U.S. copyright law.  Many ACTA copyright provisions appear to be modeled on U.S. law, particularly the Digital Millennium Copyright Act (DMCA).  But to the extent that the agreement aims to export U.S. law, it does so in a highly selective fashion.  The draft text repeatedly mandates those elements of U.S. law creating strong enforcement tools, while making entirely optional and discretionary those elements of U.S. law establishing limits on copyright.  In short, the draft unmoors the law's tough, expansive copyright provisions from its safeguards and limitations.  It therefore invites foreign countries to adopt copyright legal regimes that would be far harsher and far less balanced than that of the United States. (CDT, 5/18/2010)

The end result of ACTA could be foreign legal regimes that cater strongly to rights holders at the cost of discouraging a wide range of legitimate commerce and technology innovation - including the international business activities of U.S. information technology companies.  That would be a strange result for a trade agreement being pushed by the United States. (CDT, 5/18/2010)

CONSTITUTIONALITY

As Harvard Law professors Larry Lessig and Jack Goldsmith opined in a recent (March 26) Washington Post editorial, there is a big constitutional issue here. The administration is proposing to have the President sign ACTA into law as a "sole executive agreement" without Congressional approval. Normally, international agreements including treaties and executive agreements must go to Congress for approval. Traditionally, sole executive agreements are limited to matters under the sole authority of the president, such as the power to recognize foreign governments. The president does not sole authority to make intellectual property policy. That is a congressional power under the Constitution. So this is a major example of the President bypassing Constitutional channels to make law outside of his authority. (Flynn, 4/21/10) 

To the extent that ACTA gets into matters of substantive copyright law, there are legitimate questions about whether it is appropriate to address such matters in an executive agreement that can be concluded without any role for Congress. (CDT, 5/18/2010)

USTR has stated that ACTA will build upon the substance of prior bilateral trade agreements negotiated under "Fast Track" authority.  However, ACTA will be negotiated as a sole executive agreement with minimal Congressional oversight.  The Agreement will operate like a treaty, shaping international standards, but will not be subject to the requirements of the U.S. Constitution's Treaty Clause, which gives the President the power to enter into foreign agreements "by and with the Advice and Consent of the Senate" with a supermajority vote.  The framers intended to give the Executive the power to negotiate international agreements on the nation's behalf, so long as this power was checked by the diversity of economic interests representing the states in the Senate. (Katz & Hinze, 11/19/09) 

With the expiration of Trade Promotion Authority in 2007, the USTR elected to negotiate ACTA as a sole executive agreement.  Sole executive agreements are concluded on the basis of the President's independent Constitutional authority alone.  Unlike in agreements negotiated under Fast Track, the USTR is not guided by negotiating objectives; nor is the agreement subject to a congressional vote.  This transparency loophole removes the inter-branch accountability mechanism essential to balanced policymaking.  It also risks eroding the legitimacy of U.S. trade policy with the American public if agreements are seen as backroom deals subject to capture by corporate lobbyists.  General public input as part of a meaningful participatory democracy is now possible with new online tools and databases.  Given its likely impact on the knowledge economy and the Internet, the use of a sole executive agreement to negotiate ACTA should questioned. (Katz & Hinze, 11/19/09)

TITLE

ACTA calls itself a “trade” agreement, but it is really a new international agreement modifying the local intellectual property laws of its members. There is nothing in the agreement that covers tariff barriers or other traditional trade issues. This is the latest example of the radical expansion of the use of trade agreements to impose international restrictions on the core regulatory powers of individual countries that have little to do with traditional trade concerns.  (Flynn, 4/21/10)

ACTA is not a trade agreement. It is an anti-trade agreement that closes foreign markets for U.S. tech companies. For 37 years CCIA has been pro trade and opposing ACTA is pro trade. (Black, 4/21/10)

[T]he officially released text makes it crystal clear that ACTA is not just about counterfeiting. When ACTA was announced two years ago, it was portrayed as a modest effort at increasing coordination between customs agencies tracking counterfeit physical goods. The officially released text shows that it's far broader. First, it is not just about trademarks; it covers copyright, potentially patents, and all other forms of intellectual property. Second, it's not just about physical goods. It's all about the Internet — which it targets very specifically — and citizens' ability to use it to communicate, collaborate and create. ACTA contains new potential obligations for Internet intermediaries, requiring them to police the Internet and their users, which in turn pose significant concerns for citizens' privacy, freedom of expression and fair use rights. (Hinze, 4/22/10)

MISLEADING LABELS

Article 2.18 is entitled "Enforcement Procedures in the Digital Environment."  But nothing in the provision concerns either "enforcement" or "procedure."  Rather Article 2.18 defines substantive legal obligations.  Under this article, ACTA parties must impose liability on third parties.  Likewise, they must prohibit the circumvention of effective technological measures.  At the same time, they must limit the liability of online service providers.  Referring to these substantive measures as "enforcement procedures" obscures their true nature. (Bond, 4/23/10)

ACTA's references to "copyright piracy" and "pirated copyright goods" are misleading.  The use of the term "piracy" as a synonym for copyright infringement creates a false equivalence between the violation of an economic right and a dangerous crime involving physical violence.  Consequently, the term "piracy" should be replaced with the more appropriate term of art "copyright infringement." (Bond, 4/23/10)

The absence of a realistic definition of either counterfeiting or piracy is one of the more unfortunate aspects of ACTA. A sensible definition of trade mark counterfeiting would include at least:  A requirement that an identical or substantially identical mark be used on identical goods; A requirement of fraudulent intent; A requirement (whether it be the subject of a presumption or not) of a commercial context or purpose. (Weatherall, 5/4/10)


ACTA changes the TRIPS definition of "pirated copyright goods." TRIPs defines "pirated copyright goods" in Art. 51 Footnote 14(b) as "would have constituted an infringement.... Under the law of the country of importation". ACTA Footnote 26 defines "pirated copyright goods" as "would have constituted an infringement... under the law of the country in which the procedures set out in this Section are invoked."

ACTA also changes the TRIPS definition of "counterfeit trademark goods". TRIPS in Art. 51 Footnote 14(a) defines "counterfeit trademark goods" as "any goods, including packaging, bearing without authorization a trademark ... which thereby infringes the rights of the owner of the trademark in question under the law of the country of importation". ACTA Footnote 25 uses the same language but states "under the law of the country in which the procedures set out in this Section are invoked". Furthermore, ACTA expands the definition of "intellectual property rights" under TRIPS to include "confusingly similar trademark goods" (Footnote 22).

Both of these altered definitions ("under the law of the country of importation" to "under the law of the country in which the procedures set out in this Section are invoked") mean that transhipments through an ACTA Party country can be held to the standards of the seizing country rather than the country of importation (implicating Dutch Seizure-like cases). (Kaminski, 4/21/10)

CHAPTER ONE
INITIAL PROVISIONS AND DEFINITIONS

SECTION A: INITIAL PROVISIONS

ARTICLE 1.1: RELATION TO OTHER AGREEMENTS

ACTA states that nothing in the agreement “shall derogate from any international obligation” with respect to any parties obligations to another. Do the parties consider human rights treaties and the Doha Declaration to be such agreements? This provision should explicitly reference the Doha Declaration and human rights obligations to promote access to medicines through use of all TRIPS flexibilities. But such references would be a bit meaningless if the agreement continues to include TRIPS plus provisions on patent enforcement measures without adequate exceptions and limitations. (Flynn, 4/28/10)

This provision provides benefits by explicitly preserving TRIPS provisions, including TRIPS protections for defendants/accused infringers. It ought to mention the Doha Declaration on the TRIPS Agreement and Public Health, so that Members of ACTA will have the right to rely on the various flexibilities in the TRIPS Agreement reaffirmed in the Doha Declaration without interference. (Weatherall, 5/4/10) 


ARTICLE 1.2: NATURE AND SCOPE OF OBLIGATIONS

Allowing more extensive protection is common in international IP treaties, but care needs to be taken to preserve any necessary exceptions/safe harbours so they cannot be overridden by such extended protection. The ‘appropriate method’ clause should be retained but may be of limited import: many provisions of ACTA specify mechanisms closely. In detailed ACTA provisions, the parties should consider explicitly making them subject to this kind of qualification: this would assist in preserving general principles of civil procedure under Australian law that might otherwise be impacted inappropriately by ACTA. (Weatherall, 5/4/10)


ARTICLE 1.3: RELATION TO STANDARDS CONCERNING AVAILABILITY AND SCOPE OF INTELLECTUAL PROPERTY RIGHTS

The meaning of [1.3.1] is unclear. It would seem to say that the Agreement doesn’t touch on substantive IP laws. But in that sense, the provision is contradicted by the remaining text of ACTA: since ACTA text affects ‘scope’ of IP rights by impacting on secondary liability, safe harbours, etc, the right to an injunction etc. Presumably, as a matter of international law, ACTA would be interpreted so as to ensure internal consistency: thus provisions on secondary liability would be interpreted as not being issues of ‘scope’ under Article 1.3.1. (Weatherall, 5/4/10)

[Article 1.3.2] represents another way of preserving domestic substantive IP law, by suggesting that where a party has defined certain acts as ‘non-infringing’ then the ACTA provisions do not apply. Note, however, that where an act is defined as infringing but remedies are confined (as happens frequently in patent law in the US), this provision will not protect the domestic approach. This point is not presently relevant in Australia (we do not use this approach) but is in the US. (Weatherall, 5/4/10)


ARTICLE 1.4: PRIVACY AND DISCLOSURE OF INFORMATION

The provision should be supported, because (a) it would assist in the interpretation of the treaty, and (b) it would ensure that Australia could legislate any obligations under an ACTA with protections for the privacy of individuals. As many commentators have noted, the vagueness of this provision is highly indicative of an Agreement that it has been drafted from a protective point of view with consumer or individual protections an afterthought. (Weatherall, 5/4/10)

SECTION B: GENERAL DEFINITIONS

There is no definition of counterfeiting in the definitions section. That is a bit remarkable in an agreement with the word “counterfeiting” in its title. Instead, it defines “intellectual property” as all rights in TRIPS. And thereby expands the scope of the agreement to trademarks, patents, copyrights, data protection, integrated circuit protections, trade secrets, and other laws. (Flynn, 4/28/10)  

There needs to be definitions of trademark “counterfeit” versus “infringement.” The agreement often uses the words interchangeably. But they are not the same in most trademark laws. In the US, something can be infringing by being merely confusingly similar, regardless of criminal intent. A counterfeit is a narrower class of spurious marks that are intentionally identical to a protected mark with the purpose to deceive consumers. This agreement should be limited to counterfeits, as the title implies. (Flynn, 4/28/10)

Despite claims that ACTA would focus predominantly on counterfeiting and piracy, these terms are not defined. This lack of definition would allow countries to easily blur the boundaries between ordinary acts of infringement on the one hand and counterfeiting and piracy on the other if ACTA were implemented. Copyright infringement can be any act of infringement, whether willful or inadvertent. (Rangnath, 4/21/10)

The effect of [defining intellectual property as all categories of intellectual property that are the subject of Sections 1 through 7 of Part II of the Agreement on Trade-Related Aspects of Intellectual Property Rights] is that many provisions of the rest of ACTA extend to all forms of IP including GIs, confidential information, and patent – taking this Agreement beyond the scope of the common understanding of counterfeiting. It is this definition, and the use of it later in the Agreement, that show that ACTA is in fact not about counterfeiting, but is an IP treaty in the tradition of those treaties ordinarily written by intellectual property experts in the context of the World Intellectual Property Organization – rather than trade negotiators. (Weatherall, 5/4/10)


CHAPTER TWO

LEGAL FRAMEWORK FOR ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS

GENERAL OBLIGATIONS

ARTICLE 2X: GENERAL OBLIGATIONS WITH RESPECT TO ENFORCEMENT

Para 4 contains a new section in brackets stating that a provision on limitations on remedies for government use of intellectual property will be inserted. This is a welcome development that is required to bring the agreement into compliance with US law. But the language must extend beyond government use to third parties authorized by the government, as is provided for in Article 31 or TRIPS. Governments must retain the power to enact limitations on remedies to meet public purposes. ACTA does not protect that important authority in its present form. (Flynn, 4/28/10)

The countries still disagree on scope - some want it extended to all IP rights, others limited to copyright and trademark.  The proposed language still includes broad injunction powers and requires the establishment of statutory damages, something not found in many ACTA countries. Moreover, Canada and New Zealand appear to dropped their request for the following limiting language:

For greater certainty, a Party may limit or exclude damages in certain special cases. (Geist, 4/21/10)

In a large number of places, the agreement extends far beyond traditional counterfeiting issues into all “intellectual property,” including patents. This includes sections on damages, injunctions and other remedies. (Flynn, 4/21/10)


        The inclusion of some provision or provisions may repeat TRIPS Art 41.2, but is important because ACTA will potentially cover more than TRIPS. It would, however, perhaps be more sensible to have one provision. It would be important that a single provision not be downgraded to a simple requirement of ‘taking these issues into account’ (as in the current drafting of 2.X.2).

        As drafted, 2.X.1 requires that procedures be fair and equitable (etc). 2.X.2 requires that remedies and penalties must be framed with an eye to proportionality (although they need not reach a result where the remedy is proportionate). 2.X.3 requires that remedies, measures and procedures should be some thing: effective, proportionate, fair, equitable, and/or deterrent. This broadly reflects TRIPS, which provides that procedures should be ‘fair and equitable’; remedies should be proportionate – and (sometimes) measures should be effective. 

        But procedures could be disproportionate: for example, bringing the full force of customs suspension procedures for de minimis acts. And equity ought to be a consideration in relation to remedies as well as procedures: for example, the extortionate damages awards made in some file-sharing cases in the US are ‘inequitable’ because they impose extraordinary remedies on an individual for an act which is common across the broader society. No one deserves to lose their house over something literally millions of people do.

        The better approach, therefore, might be to require measures, procedures, and remedies, to be effective, proportionate, fair and equitable, and deterrent. Including ‘deterrent’ in the same sentence would assuage the concern that a requirement of ‘proportional’ remedies would prevent the making of ‘deterrent’ orders (and thus require changes to Australian law concerning additional damages). It would suggest the view of the contracting parties that deterrence can be a valid consideration in determining proportionality: but suggest that deterrence cannot entirely override other concerns, such as equity and proportionality. (Weatherall, 5/4/10)

[In 2.X.4], it would be useful to limit remedies against governments/ public officials, although such a provision is not presently a necessity for Australia. The Australian government makes little use of its ‘sovereign rights’ to avoid IP rights, instead for the most part using compulsory licensing. This can be compared to the US, which provides considerable protection to governments particularly against patent law, by limiting the remedies available in many cases of public or government use. It is something the Australian government should explore more; in order to preserve the government’s freedom to do so, this would be a useful provision to have. (Weatherall, 5/4/10)

[Section 2.X.5] is critical. As is, the text is uncertain. The scope of ACTA ought to be limited to its purported goals: counterfeiting and piracy. This would imply excluding patents, designs, confidential information, and potentially GIs: or, at the very least, including more IP rights but limiting the provisions to cases of counterfeiting – ie cases where the impugned product is a full substitute for the original, and there is an intention to mislead consumers. Assuming this does not occur, in order to make the agreement more intelligible, every provision should spell out what forms of IP it applies to. (Weatherall, 5/4/10)


SECTION 1: CIVIL ENFORCEMENT

ARTICLE 2.1: AVAILABILITY OF CIVIL PROCEDURES

There is bracketed text stating that there must be either [judicial] or [administrative] procedures for enforcing any [intellectual property right]. If the "judicial" language is kept and applied to patents, then the agreement would remove a key flexibility in Article 31 of TRIPS. Article 31 allows for compulsory licenses by administrative agencies without possibility of injunctions subject to administrative "independent review."


ARTICLE 2.X: INJUNCTIONS

ACTA would require changes in laws in the U.S. and other countries, and would prejudice policy objectives in other areas, or frustrate new legislative initiatives. Among the many examples given are the provisions in the new U.S. health care reform act on injunctions and damages, and the proposals for patent reform and orphan works legislation, which are contrary to the U.S. proposals in ACTA. (KEI 4/6/2010)

According to the last sentence in TRIPS Article 44.1, there is no obligation to provide for injunctions to stop an infringement when the protected subject matter was “acquired or ordered by a person prior to knowing or having reasonable grounds to know” that they were involved in the infringement. The TRIPS flexibility regarding innocent infringements is not included in the ACTA provision. This conflicts with at least two federal statutes. One is the U.S. implementation of the TRIPS mandatory restriction on injunctions for innocent infringement for semiconductor chip products. Under U.S. law, there is also a provision in the Lanham Trademark Act (15 USC §§ 1114) for “Innocent Infringement by Printers and Publishers,” that eliminates the possibility of an injunction for a newspaper, magazine, or other similar periodical or an electronic communication “where restraining the dissemination of such infringing matter or violating matter in any particular issue of such periodical or in an electronic communication would delay the delivery of such issue or transmission of such electronic communication after the regular time for such delivery or transmission.” KEI 4/6/2010

Rightsholders are to be permitted an injunction even before a violation has occurred if they can show that a violation is imminent. (CCIA, 4/21/10)

Article 2.X mandates that right holders be in the position to apply for injunctions against intermediaries whose services are used by a third party to infringe IP rights. . . . [A] cursory examination of US IP law highlights pretty significant limitations on the use of injunctions in IP cases (17 USC 512(j))See also 2.5x re interlocutory injunctions to prevent imminent infringement against intermediaries. (Kaminski, 4/21/10)

The award of injunctions may create a new role for ISPs by requiring them to take active steps to prevent infringement. This may create a back door for courts to award a three strikes injunction that requires termination of the accounts of repeat infringers, or an injunction to block sharing traffic (including non-infringing file sharing). (Dawes, 4/22/10)

Art. 2.x para 1 states that each country shall authorizes judicial injunctions for the enforcement of all [intellectual property rights]. In brackets, the language is made subject to statutory limitations. Read together witrh Article 2.1, and depending on which way the bracketed text comes out in the final negotiation, these provisions could make it impossible for a country to adopt an administrative liability rule system in which the only remedy for certain infringements (e.g. where access to essential goods and services is at issue) would be an administrative just compensation determination scaled to promote access and affordability. Such a system is one potential best practice for taking advantage of TRIPS Art. 31 in developing countries. (Flynn, 4/28/10)

Art. 2X para 2 (bracketed, EU proposal) proposes injunctions against third parties “whose services are used . . . to infringe an intellectual property right.” It is a US proposal to expand this provision to all intellectual property rights, which would include patents. As written, this would appear to allow injunctions against active pharmaceutical ingredient providers whose products are used by generic companies who are found to “infringe” a trademark or patent law, even in unintentionally. This is a pretty draconian remedy for a wide range of infringements and would likely alter US law dramatically. (Flynn, 4/28/10)

Article 2.X.2 reinforces the concern that ACTA may expose third parties such as Internet service providers to legal risks far greater than they face under U.S. law.  The article says that rights holders may "apply for an injuction against [infringing] intermediaries whose services are used by a third party to infringe an intellectual property right."  Under U.S. law, the aviailability of injunctions against intermediaries is limited by the Sony safe harbor . . . for products and services with "substantial noninfringing uses."  In addition, an intermediary qualifying for the DMCA section 512 safe harbor would be entitled to the protections of section 512(j), which directs a court to consider the burden an injuncton would impose on the intermediary.  The ACTA proposal on injuctions makes no reference to such limits.  It thus could prompt other countries to embrace intermediary injunctions in a fashion far more burdensome and sweeping than in the United States. (CDT, 5/18/2010)

[In Article 2.X.1], the qualification making the right to injunctions ‘subject to any statutory limitations under its domestic law’ would ensure that the various conditions found in equity limiting the availability of injunctions would continue to apply. It could also be important in preserving flexibility, effectively taking the place of the TRIPS qualification on the right to an injunction. Art 44 is limited in two ways:
        1. Innocent third parties are protected: members are not obliged to accord such authority [to grant injunctions] in                 respect of protected subject matter acquired or ordered by a person prior to knowing or having reasonable grounds to          know that dealing in such subject matter would entail the infringement of an intellectual property right; and
        2. Members can limit rights holders to a remedy in damages: under Art 44.2, where an injunction would be                        inconsistent with a Member's law, declaratory judgments and adequate compensation must be available. (Weatherall, 5/4/10)

[Article 2.X.2] should be strongly opposed. If included with the word ‘infringing’ it adds nothing to Art 2.X.2 above; if included without that word it would require far-reaching changes to Australian law.  The provision without the qualification would be a significant change to Australian law. Ordinarily, injunctions are issued against infringers, not third parties. There is a good reason for this: failure to comply with a court injunction is contempt of court, a wrong which can lead to civil or criminal penalties. Only wrongdoers ought to have their conduct restrained on pain of criminal penalties in the ordinary course; only in very limited and specific situations do orders lie against third parties. Thus a plaintiff may seek preliminary discovery against third parties to obtain information about the identity of an alleged wrongdoer; Mareva orders (‘freezing orders’ or ‘asset preservation orders’) to require third parties to hold assets in their possession, custody or control, which may be required to satisfy a judgment against another person; Anton Piller orders (‘search orders’) against a third party who ‘possesses important evidentiary material’, where there is a ‘real possibility that the respondent might destroy such material or cause it to be unavailable for use in evidence in a proceeding or anticipated proceeding before the Court. Such orders, however, are subject to the strict control of the court and, in general, clearly limited in time. Injunctions against intermediaries of the kind enabled by Art 2.X.2 would have much more far-reaching impact. (Weatherall, 5/4/10)

[In 2.X.2, the term] 'Intermediaries’ also has meaning too beyond online service providers, and beyond copyright where such injunctions are perhaps familiar. There is no indication on present drafting that the meaning of ‘intermediary’ is confined to the online context, or a matter for individual Members. What about libraries? Universities and schools? Australia Post or couriers? In relation to patent infringement, what about companies providing active ingredients to a generic pharmaceutical producers in the context of a patent dispute? The companies shipping the generic drugs? In trade mark, what about eBay and other online auction houses where trade mark infringements may occur, or classifieds providers like the Trading Post which could publishes advertisements for a company said to be engaging in trade mark or design infringement?
(Weatherall, 5/4/10)


ARTICLE 2.2: DAMAGES


Art. 2.2(1)(b) states that judges should consider losses based on suggested retail prices, for example. This may a particularly bad measure of damage in many environment, such as in poor countries where branded products are prices so high that sales at suggested prices will never occur. (Flynn, 4/21/10)

Para 1(b) states that judicial authorities shall consider a range of factors for damage determinations, including “the value of the infringed good or service, measured by . . . the suggested retail price.” The use of suggested retail price for a lost profit calculation applied to patents may thwart the use of a liability rule system based on reasonable royaltiesto promote access to medicines. Imagine the very real case of an AIDS drug sold at a suggested retail price of $12,000 /year and a generic price of $85. The reasonable royalty from the infringer in a liability rule system committed to promoting access to medicines may be 4-10% of sales (to take UNDP suggestion). Under a retail price model, it would be a thousand fold royalty per sale. That would defeat the purpose of the Doha declaration in permitting the use of TRIPS flexibilities to promote access to medicine. (Flynn, 4/28/10)

ACTA will require courts to consider a 'lost sale analysis' when assessing the amount of damages to be awarded for copyright infringement. This assesses damages on the basis that an infringement represents a loss of revenue from a transaction that otherwise would have happened, and the damage is the price of the good. This is extremely controversial when one considers online infringement. The United States Government Accountability Office recently criticised the analysis for not taking into account substitution rates (would you have bought it anyway?) or complimentary affects (would you then buy something legitimate?). The lost sale analysis is not in applicable to Australian law or anywhere else internationally. Giving such a questionable assessment of damages support in an international agreement is likely to pave the way for future lobbying from rights holder groups (such as film and record companies). (Dawes, 4/22/10)

'Additional damages' are proposed as a new measure in the public draft, which may be supported by Australia as they are already part of our law. Additional damages are not arbitrary and are awarded at the court's discretion. (However, in my opinion, while they are superior to the other measures, they can be punitive and unfair and are far from satisfactory.) (Dawes, 4/22/10)

[Article 2.2(1)(b)] would only be appropriate if (a) in every single IP infringement case, it was appropriate to consider the retail price of the product, and (b) courts were refusing to hear such evidence. I am unaware of any evidence of the latter, and the former is demonstrably not true. Sometimes, particularly in cases where IP rights cover some component of a product, a royalty is clearly more appropriate. The extension of a requirement to consider such measures would be particularly inappropriate in patent. In the US, reforms have been proposed to require apportionment of damages. More recent proposals would require the court to ‘identify the methodologies and factors that are relevant to the determination of damages’, and would allow the court or jury to ‘consider only those methodologies and factors relevant to making such determination’, with only evidence relevant to such methodologies being admissible. (Weatherall, 5/4/10)

STATUTORY DAMAGES

The text requires the establishment of statutory damages. These are damages set without regard to any actual loss occurred by the content owner. They can be particularly damaging in cases against individuals who download content or copy material with no commercial purpose. In the U.S., statutory damages can reach $150,000 per infringed work, an award that may be far out of proportion to the harm suffered by the copyright owner. Though it is argued that the existing statutory damages in the U.S. chills innovation and creativity while encouraging frivolous litigation and unfair settlements, the fair use exception mitigates some of the negative impact. However, other countries do not recognize fair use exceptions so exporting increased enforcement mechanisms without increased exceptions to copyright infringement may potentially expose U.S. Internet companies to dramatically increased liability abroad. (Flynn, 4/21/10)

The statutory damages provision still includes disagreement over whether it is required (U.S. and Japan) or optional (EU, Canada, New Zealand).  (Geist, 4/21/10)

Troublingly, ACTA encourages, and may mandate, "pre-established" or statutory damages. These fixed-sum awards encourage copyright trolling, and lead to extraordinary jackpot awards against tech innovators, even in the absence of any harm. Because ACTA does not mandate any of the technology protections like fair use that characterize U.S. law, it threatens U.S. technology companies doing business abroad that rely on those protections with extreme liability. (CCIA, 4/21/10)

ACTA would require signatory countries to institute a statutory damages regime as one option in dealing with copyright infringement. As the operation of statutory damages in the U.S. indicates, such a regime can result in draconian damages awards that bear no relation to the offense. Exposure to this regime hinders the introduction of innovative products and services. In view of these problems, legislation has been introduced in Congress, in the past, to reform the statutory damages regime. ACTA’s effort to export a similar regime to other countries could easily prevent future Congressional efforts at reform. (Rangnath, 4/21/10)

What is worse, ACTA fails to incorporate the few balancing provisions contained in the U.S. statutory damages regime. For instance, U.S. law provides for a reduction in statutory damages in cases of innocent infringement. ACTA does not contain similar safeguards.  (Rangnath, 4/21/10)

It’s up for debate whether statutory damages “shall” or “may” apply. Article 2.2(2). (Kaminski, 4/21/10)

A statutory damages scheme can encourage disproportionate and excessive awards of damages. They are unprincipled and ultimately result in injustice to individuals. There are also concerns that statutory damages can be used to threaten people into settling disputes. (Dawes, 4/22/10) 

The U.S. government supports language in the Consolidated Text that mandates ACTA parties to provide for the award of statutory damages for copyright infringement as an alternative to actual damages.  We object to this provision for three reasons: 1) it could limit the ability of Congress to amend the statutory damages framework in the Copyright Act; 2) it could increase the exposure of U.S. companies operating overseas to significant damages liability; and 3) it does not accurately reflect the statutory damages provisions on the U.S. Copyright Act. (Band, 4/23/2010)


If statutory damages were made mandatory, the provision should certainly be opposed, because they have well-known and serious problems:

    1. They could lead to excessively high awards based on the US experience where, as Samuelson and Wheatland note,     “[a]wards of statutory damages are frequently arbitrary, inconsistent, unprincipled, and sometimes grossly excessive”;

    2. Awards of this kind operate punitively, but the money goes to the copyright owner, not the state, leading to a private     windfalls and encouraging litigation;

    3. They can outstrip criminal fines without the protection of criminal procedure;

    4. They can operate ‘in terrorem’: that is, they are used “with considerable success to strike terror into the heart of            anyone with the temerity to make unauthorized uses” of copyright;

    5. They can lead to inflated damages awards in inappropriate cases;

    6. The various countries do not agree on the purpose of pre-established damages (the US treats them as punitive; the        EU takes the position that punitive damages are inappropriate). This will only lead to further tension amongst members,     and represents an absence of consensus that should suggest that such a provision is not ready to be included in a            treaty. (Weatherall, 5/4/10)


Unknowing violators

The text includes proposed language authorizing damage actions against people who “did not knowingly” engage in any infringing activity. This brings fears about suits against users to a new level. Probably everyone who has ever surfed the internet has, in the eyes of the big copyright industries, unknowingly violated copyrights. Authorizing damage suits against such people could have a huge chilling effect on the freedom of the internet. (Flynn, 4/21/10)

Up for debate: Infringers who infringed unknowingly may be subject to statutory damages. But this is “may” and not “shall”, although complete exclusion from the agreement would be preferable. The comparable U.S. provision is 504(c)(2), providing for statutory damages for non-knowing infringers in the amount of “not less than $200”, but also including exceptions-- for nonprofits, educational institutions, and public broadcasting entities-- which are missing from ACTA. (Kaminski, 4/21/10)


The provision is not mandatory. Vis-à-vis Australian law re innocent infringers, as noted above, this provision is:

    1. Not consistent with copyright law: courts in Australia cannot award damages but can order account of profits;

    2. Consistent with patent law: courts have authority to refuse remedies for innocent infringers but can award damages or     account of profits;

    3. May or may not be consistent with trade mark law, which is uncertain (there is caselaw stating that there are no            compensatory damages for innocent TM infringement), but the Act is unqualified, suggesting there is at least ‘authority’     to make such orders. (Weatherall, 5/4/10)

ARTICLE 2.3 OTHER REMEDIES

Para 1 contains bracketed text requiring that in any case of “[infringing an intellectual property right],” the good shall be destroyed. This an extremely broad proposal that would require destruction of unintentionally “similar” marks and technical violations of patents. US law only requires the destruction of counterfeit goods, not goods that merely infringe a trademark by being “confusingly similar.” (Flynn, 4/28/10)

Para 2 proposes also requiring the destruction of materials and implements used to infringe, and proposes expanding this to all infringements of intellectual property rights. As proposed, this could mean that courts would order the destruction of active pharmaceutical ingredient plants if their products are used in generic drugs found to violate a patent or a trademark, even if unintentional. This is extreme on its face, and would surely require changes in US law.  (Flynn, 4/28/10)

[Regarding Article 2.3.1], proportionality is critical: a provision like this covers not only counterfeits and obvious imitations but also infringements done by legitimate businesses or ordinary consumers inadvertently or with arguable defenses. Destruction of such goods where some other option is available (for example, removal of the infringing part) would be unacceptable. The draft text however does not require destruction. (Weatherall, 5/4/10)

[Regarding Article 2.3.2], the requirement that remedies be carried out at the expense of the infringer is insulting to judges. Assuming that the ‘costs’ of the legal action are already available, this is overkill. (Weatherall, 5/4/10)


ARTICLE 2.4: INFORMATION RELATED TO INFRINGEMENT

[E]nsuring a broad power to extract any relevant information from an infringer might require specific adjustments to the Federal Court rules. Specific, IP-only adjustments to rules of this kind are undesirable: they fragment and complicate court procedural rules. (Weatherall, 5/4/10)


ARTICLE 2.5 PROVISIONAL MEASURES

Parties to ACTA may issue injunctions to prevent “imminent infringement.” This applies to infringing intermediaries as well (e.g., ISPs). Even before “the commencement of proceedings on the merits,” judicial authorities may seize or take samples of the infringing goods or documents “to preserve relevant evidence.” The courts must act on requests for provisional measures “without undue delay.” This phrase eliminates the possibility that courts will be held to a specific time period for responding to right holder requests (the U.S. wanted a 10 day turnaround time for such action, Mexico 20 days), but the provision still forces courts to process IP cases with unnecessary haste and prioritize them over other matters. Authorities may (but do not have to) require the plaintiff to provide “any reasonably available evidence” regarding infringement and to provide “a reasonable security or equivalent assurance” to prevent abuse of the defendant. However, the text also stipulates that “such security or equivalent assurance shall not unreasonably deter recourse to such procedures.” Grunstra 4/23/10

This recent draft of the treaty also omits a paragraph included in earlier versions, which allowed provisional measures to be revoked upon the defendant’s request if the plaintiff failed to institute proceedings within a month. Removal of this paragraph allows right holders to request injunctions of suspected infringing goods without having to prove in a timely fashion that the goods were in fact infringing or counterfeit. Grunstra 4/23/10
Privacy

In several places, the text proposes requiring countries to enable rights holders to obtain information about specific users alleged to be infringing copyright. This would appear to alter Canadian law’s “notice and notice” system which does not compel disclosure of internet user information to right holders. (Flynn, 4/21/10)

If subjected to an infringement suit, defendants must share info with plaintiffs. Appears potentially targeted at ISPs: mandating disclosure of info “regarding any person or persons involved in any aspect of the infringement and regarding the means of production or distribution channel of such goods or services, including the identification of third persons involved”. Art 2.4. This expands on TRIPS, which as mentioned allows but does not mandate such disclosure, includes proportionality language (“unless this would be out of proportion to the seriousness of the infringement”), and limits disclosure to the ID of “third persons involved in the production and distribution of the infringing goods or services and of their channels of distribution” rather than persons “involved in any aspect of the infringement” as ACTA dictates. See TRIPS Art. 47. (Kaminski, 4/21/10)

Some improvements, but still problems. Where competent authorities “have seized or, in the alternative, made a determination under Article 2.10 that goods infringe rights covered by the section”, ACTA mandates that countries inform rights holders of identifying information for the consignors, importers, exporters, and manufacturers of the goods. This is a positive change because it allows countries to mandate informing rights holders only after a determination of infringement, which is consistent with TRIPs Art. 57 (“[w]here a positive determination has been made on the merits of a case”). But it still encourages such information sharing after seizure only, and seemingly places the infringement decision in the hands of “competent authorities” rather than judges as implied by the “merits of a case” language in Art. 57. (Kaminski, 4/21/10)

Collaboration between ISPs and rights holders: This language MUST NOT BE INCLUDED. The first proposal requires OSPs to provide the identity of subscribers after “effective notification” from rights holders—not after court proceedings. The second option requires Parties to “promote the development of mutually supportive relationships between online service providers and right holders”. (Kaminski, 4/21/10)

International criminal investigation cooperation and information-sharing. It is currently up for debate whether cooperation on criminal investigations is mandated cross-Parties. Mandatory information sharing in criminal investigations is highly problematic from a civil liberties standpoint across regimes with different criminal law processes and protections. For information sharing, the two debated provisions are as follows: Parties must “(b) exchang[e] available data with custom authorities of other Parties regarding significant seizures of [counterfeit and pirated] [infringing] goods by customs, wherever possible” VERSUS “(b) when appropriate, exchange data with border authorities of other Parties”. The second is preferable. (Kaminski, 4/21/10)

A scary new proposal has crept into the text that may require ISPs to provide information on their users who are alleged by rights holders to have infringed copyright. (Dawes, 4/22/10)

This provision is TRIPS-plus in the following respects:
    1. In extending interlocutory injunctions against intermediaries,
    2. In the detail concerning the particular measures to preserve evidence, and details certain kinds of measures for        preservation of evidence).
Art 2.5.3, like TRIPS Art 50.3, requires that parties given their courts the authority to require that the right holder establish some kind of prima facie case, and provide security to compensate the person subject to the orders, but these are authorities given to courts, not preconditions. There is no requirement in TRIPS, or ACTA, that the evidence be important or that it be at risk of destruction. (Weatherall, 5/4/10)

SECTION 2: BORDER MEASURES

Border searches

Although it is technically true that the agreement does not require border searches of I-Pods and other personal possession of media content – it does not prohibit such searches either. (Flynn, 4/21/10)

The released text seems to address the problem of the iPod searching border guards. It provides for the possibility of an exception from border searches for personal baggage. However, like the few other beneficial provisions of ACTA, this one is only permissive. That means that a country is not required to have this exception. It is merely permitted to have one.(Rangnath, 4/21/10)

A de minimis exception is consistent with TRIPS (Article 60) and not dealt with by AUSFTA. Such an exception is critical to include – it does, after all, constitute the mechanism for ensuring countries not required to introduce ‘border iPod or bag searches’. However, it should at a minimum include the bracketed text, without which it is more limited than TRIPS because TRIPS allows exclusion of goods ‘sent in small consignments’. (Weatherall, 5/4/10)


ACTA critics have repeatedly expressed their worries that in future private persons’ electronic storage devices could be searched regularly at borders by customs authorities for content violating copyright. The draft agreement does not provide any binding provision for this purpose. Instead, there is a so-called “de-minimis” provision allowing the signatory states to exclude from the application of ACTA provisions for measures at the border “small quantities of goods of a non-commercial nature contained in travellers’ personal luggage”. But the possibility for customs authorities to perform searches on private person’s equipment is not excluded.

Regular searches are likely to be carried out randomly, instead of following a specific suspicion of copyright violation. We reiterate that any infringement of fundamental freedoms of individuals is only acceptable when it fulfills the conditions of subsidiarity and proportionality. As to the criminalization, this could mean the introduction of a slippery slope. The agreement does not specify the meaning of significant, nor does it identify who is allowed to specify this meaning. That could mean that what is seen as significant in one country, may not all be significant in another. Thus, no harmonization of legislation on this point would be achieved. (Hammerstein, 7/20/10)

Border seizures

The text requires that countries provide procedures for the seizure of “suspected” counterfeit trademark goods, including goods “in-transit” (that is, only in the country by virtue of being transported between two other countries). Seizures are required where there is a mere “prima facie” case of infringement. That is the lowest standard of proof in civil cases in the US, which normally triggers a right of reply, not authorization of a penalty. There is no requirement that in in-transit cases the laws being violated ate those of the country using the product. These provisions could lead to more “Dutch seizure” type instances when important goods are removed from the market in transit countries, even if the goods do not violate the laws of the importing or exporting countries. (Flynn, 4/21/10)

ACTA would require its signatories to provide for destruction of infringing goods as part of their civil and criminal penalties. ACTA would also require the destruction or disposal outside channels of commerce of implements used in infringement. We cautioned against overbroad application of such provisions when Congress was considering the Prioritizing Resources and Organizations for Intellectual Property (PRO IP) Act. These provisions from the recently-passed PRO IP Act are now being promoted internationally through ACTA, before their effects have been fully examined in the U.S. This not only spreads potentially problematic provisions, it also may hinder Congress from amending any of the newly-passed provisions if necessary.  (Rangnath, 4/21/10)

There is still disagreement on scope as the EU wants the option to extend to all IP, others want it limited to copyright and trademark. There was major progress in New Zealand on the de minimis provision, which is designed to address fears of iPod searching border guards.  Prior drafts contained several proposals.  The current consolidation reflects near consensus:

Parties may exclude from the application of this Section small quantities of goods of a non-commercial nature contained in travelers’ personal luggage [or sent in small consignments.]

(Geist, 4/21/10)

ACTA...obliges contracting parties to foresee border measures against goods in transit. And ‘goods infringing an intellectual property right’ generally cover all IP rights under TRIPS, including patents. Does it mean that ACTA would lead to more seizures of generic drugs or other goods merely on the basis of allegations of patent infringements in the transit country? If so, one might question its consistency with Art.V GATT (Freedom of Transit) and several TRIPS provisions such as Art.41:1 (which demands that IP enforcement procedures “shall be applied in such a manner as to avoid the creation of barriers to legitimate trade”). (Große Ruse-Khan, 4/22/10)

Paragraph 2 of the ACTA provision [on Border Measures] allows to exclude certain types of IP infringements if the rights concerned are inter alia “[protected by [non-product- or sector-specific] [registration] sui generis systems.]” The still heavily bracketed text indicates certain (registration) rights may be excluded – does this cover patents? (Große Ruse-Khan, 4/22/10)

A bracketed Fn.21 to the border measure provision in the ACTA draft states: “No Party shall be obliged to apply this section to any goods that do not infringe an intellectual property right held within the territory of that Party.” Art.1.3:2 of the ACTA draft confirms this in form of a general rule. This seems to make the final fate of allegedly infringing goods in transit dependant upon the question whether the scope of IP protection in the transit country actually covers the mere transit as an infringing act. In other words, would the domestic IP law consider acts with a marginal territorial link to the transit country as infringements or does it demand a real and proven threat of trade diversion onto the market of transit country? In a similar UK case (Nokia vs. Commissioner of Customs), exactly this question has recently been posed to the European Court of Justice. (Große Ruse-Khan, 4/22/10)

Finally, the ACTA draft does not contain any ‘free trade’ safeguard provision like Art.41:1 TRIPS. But Art.1.1 states: “Nothing in this Agreement shall derogate from any international obligation of a Party with respect to any other Party under existing agreements to which both Parties are party.” Hence ACTA would have to interpreted in a manner consistent with GATT and TRIPS. Can this really be achieved – given that also a temporary detention of goods in transit (until courts have decided that such act does not infringe domestic IP rights) can interfere with free transit and create barriers to trade? (Große Ruse-Khan, 4/22/10)

ACTA contains "ex officio" language that allows customs officials and border agents to hold infringing shipments of goods without needing a rightsholder to complain first. Several options are still being considered in the draft, but all give the authorities the right to "act upon their own initiative" in releasing suspected goods at customs checkpoints. (Anderson, 4/21/10)

The border chapter does not exclude patents as some of the negotiators claimed in press releases. Paras 1, 2 and 3 all have bracketed language requiring or permitting the border measures chapter to be applied to all “intellectual property rights.” That is an incredibly broad proposal which would require extending border seizures for alleged violations of date protection rules, trade secrets, patents and everything else covered by by TRIPS. (Flynn, 4/28/10)

The chapter also explicitly – at the US suggestion – proposes to apply to”in-transit” shipments. This raises major concerns about how the agreement will promote, legitimate and expand the problem of in-transit seizures of goods exemplified by the so-called “Dutch seizure” cases. (Flynn, 4/28/10)

The Dutch seizures occurred when Netherlands and some other European countries began suspending the release of drugs that were lawfully produced in India and would be lawfully consumed in the receiving countries but would violate patent laws if released in the EU. Applying the EU law to the products in EU airports and ports on their way to other countries, the drugs were seized and denied to the ultimate consumers. (Flynn, 4/28/10)  

Art. 2.x, paragraph 2 and fn 22 proposes applying border measures to “confusingly similar” and “infringing” marks, not just suspected counterfeits.

It looks like it is Australia, Canada and Singapore are pushing for this expansion beyond criminal counterfeiting.

Art. 2.6 requires border suspensions upon applications by rights holders. The text is highly bracketed. Read with fn 22 – which says you should apply the local law of the border country in which an application is brought – the Article can be read to require Dutch seizure problems in all ACTA members. One version of the article would require seizures of a good in-transit between other countries if the good is suspected of infringing the transit country’s law (which includes all intellectual property law in one bracketed suggestion), even if the good does not infringe the producing or ultimate destination country. This is the basic fact pattern of the Dutch seizure debacle. (Flynn, 4/28/10)

As discussed above, Art. 2.11 echoes the remedies chapter in proposing in bracketed text to authorize the destruction of goods found to “infringe” a trademark, even if not a counterfeit. Bracketed text also proposes to require destruction of a product that infringes any IP right, an incredibly broad proposal that one assumes will be narrowed. (Flynn, 4/28/10)

The section is likely to be narrowed to the US standard, which is that infringing goods can be suspended but onlycounterfeits (intentionally and fraudulently labeled with identical marks) destroyed. But the globalization of this standard, which extends significantly beyond the problem of true counterfeits, should worry access to medicines advocates. The agreement would (and likely will) authorize suspension of goods upon a “prima facie” finding by a border guard that are grounds to “suspect” the product of “infringing” a trademark by being “confusingly similar.” This is a detailed fact-specific determination that is prone to mistaken conclusions and strategic misuse by rights holders to thwart competition. In the case of access to medicines, wrongful detentions can cost lives dependent on access to affordable drugs. All the border measures provisions in the agreement should be limited to true criminal counterfeiting, not mere infringements. (Flynn, 4/28/10)

The problem with trademark infringements is particularly complex and worrying for generic medicines. Generic labels are required to be similar to the brands. They must use the same words identifying active ingredients, the same warnings and indications and other information. In addition, they often desire to have similar packaging and presentation as the brand drugs to help patients switch between brand and generic with comfort. Requiring border officials to identify which medicine labels are too “similar” to allow into the market is bound to lead to many more supply interruptions than if the measures were limited to criminally counterfeit products that intentionally use identical marks. (Flynn, 4/28/10)

Another concern is that there is no process required for a reply where the TM owner makes a complaint to customs alleging suspected infringement. At minimum, public interest concerns, especially for medicines, demand more protections to thwart wrongful suspensions of legitimate competing products. (Flynn, 4/28/10)


The coverage of infringing, and not just counterfeit goods is arguably problematic for several reasons.

    First, it means the border measures can impact legitimate businesses who import goods, perhaps where there is an arguable case for non-infringement but a court later decides there is infringement. Border suspension is perhaps not an appropriate mechanism for such cases, which are better dealt with via ordinary court proceedings and not under the stringent timetable of border measures.

    Second, it is arguable that inclusion of mere infringing goods is most likely to impact on generic pharmaceutical manufacturers. It is not uncommon for generic manufacturers to adopt a trade mark or packaging that is similar to a branded pharmaceuticals: either because they are required to use similar presentation, or because it assists in giving ‘comfort’ to consumers that they are in fact receiving ‘the drug they need’.

    Third, the mechanics of the process are potentially troubling. Deciding whether a trade mark is ‘confusingly similar’ (or in Australian legal terms, ‘deceptively similar’) is a difficult question of law requiring the exercise of a legal judgment and the application of legal principles that are not straightforward. Including these provisions in the border measures effectively requires Customs officers to exercise that judgment and apply those laws. Furthermore customs officers are more likely to err on the side of suspension than release, because the alternative means giving up control of the goods entirely (to the ire of IP owners with whom they deal on a relatively regular basis through these border measure provisions). 

    If this analysis is correct, and if (a) inclusion of ‘deceptively similar’ marks is problematic or even arguably problematic and (b) AUSFTA is unclear on the existence of any obligation to extend border measures to such trade mark infringements, then it would be a serious mistake to ‘lock in’ a requirement for border measures in such cases at an international level. (Weatherall, 5/4/10)


Burden on Government Resources

When rights holders apply for the seizure of suspected infringing goods at the border, their application is good for one year, which places the burden of policing infringement on the government rather than individual companies. In addition, ACTA requires that courts "expeditiously" act on a party's request for provisional measures in the face of suspected infringing imports, with countries like the U.S. suggesting a ten day turnaround time. Critics have noted that such swift action is "disproportionate to the impact of these IP cases" and have questioned the wisdom of forcing countries to prioritize intellectual property cases over other more pressing matters. (Flynn, 4/21/10)

Ex officio criminal enforcement requires countries to allow law enforcement officials to initiate investigations without rights holder plaintiffs. Regulatory capture: employing government resources for private interests. (Kaminski, 4/21/10)

Any change along [the lines of Article 2.6.1] would impose additional expense and burdens on Customs. The inclusion of in-transit goods should be strongly opposed. It raises concerns about possible impact on generic medicine (see disputes between India and Europe over such issues). Even aside from that, extension to patent has been opposed by Australian Customs on the basis of the additional burdens it would involve (although is available in Europe to suspend patent-infringing goods; this has caused significant controversies). (Weatherall, 5/4/10)

This provision could allow a country to give to individual customs officers the power to make determinations about whether goods are infringing. This would create risks of inappropriate seizure of goods. It is not difficult to imagine local customs being quite ready to intercept imported goods at the behest of a local IP owner (or a local person asserting they own IP). The potential for corruption is significant. It would be better to have such matters handled by the courts where more transparency can be expected. (Weatherall, 5/4/10)


SECTION 3: CRIMINAL ENFORCEMENT


The criminal provisions extend beyond cases of “commercial scale” infringement to any “willful” infringement. This would include, for example, the individual downloader who willingly copies material for personal use. (Flynn, 4/21/10)

ACTA would require member countries to subject “significant willful” copyright infringements that have no “direct or indirect motivation of financial gain” to criminal penalties. Even if it is intended to combat large scale infringements, this provision can subject individual users to criminal penalties. While this provision is similar to provisions contained in U.S. law, there seems to be little reason to subject more individuals to criminal penalties out of proportion to the infringement at issue. More importantly, it does not square well with the professed intention of ACTA to deal with large scale commercial counterfeiting and piracy. (Rangnath, 4/21/10)

The chapter still targets both commercial infringement and cases of non-commercial "wilfull" infringement.  This section illustrates the downside of removing attribution from the text.  The leaked consolidation showed many variable proposals.  The new text simply places everything in square brackets and does not flesh out the different proposed language.

The EU proposal to include "inciting, aiding, and abetting" also remains in the text, in square brackets.  Proposals to target labels and camcording in theatres remain in the text. (Geist, 4/21/10)

The debated language is as follows:[(a) significant willful copyright or related rights infringements that have no direct or indirect motivation of financial gain; and (b) willful copyright or related rights infringements for purposes of commercial advantage or financial gain.37]. Definitional footnote: “For purposes of this Section, financial gain includes the receipt or expectation of receipt of anything of value.” Again, this pushes the boundaries of TRIPs’ requirement of criminal enforcement of violations on a commercial scale towards the U.S. standard of criminal enforcement for “private financial gain”, aka Internet piracy. Thankfully, this draft does not include “private” before “financial gain”, which would push to a full U.S. standard. The footnote definition of “financial gain”, however, does appear to allow for/encourage the U.S. interpretation of “private financial gain”. (Kaminski, 4/21/10)

They’re debating criminal liability for “legal persons”, ie companies and not just individuals (Art. 2.15(1)). Plus they’re debating criminalizing “[i]nciting, aiding and Abetting” infringement. These provisions are both up for debate, and should not be included in the final draft if ISPs don’t want to become subject to criminal investigations. Of particular note is the “up for debate” footnote: “[It is understood that there is no obligation to provide penalties of imprisonment against legal persons for the crimes set forth in Article 2.14.].” The fact that this is up for debate means there’s a chance companies will be specifically on the line for imprisonment for infringement on their networks. (Kaminski, 4/21/10)

ACTA could rewrite the current internationally agreed standards for criminal penalties for copyright and trademark infringement. At the time that the TRIPS Agreement was negotiated it was understood that criminal penalties would be reserved for the worst cases of willful, commercial-scale copyright piracy and counterfeiting. This is reflected in the language of Article 61 of TRIPs. However, ACTA could expand this, imposing criminal sanctions for individuals' non-commercial activities via a broad definition of "commercial scale". ACTA contains a US proposal to define "commercial scale" to include activities that have no direct or indirect motivation of financial gain (Article 2.14 (1)(a) and (b) (in square brackets)). While that appears consistent with US law, incorporating this in ACTA would amount to a wholesale re-write of the internationally agreed TRIPs standard.

This clearly reflects a desire to penalize P2P file-sharing. But no matter what views you hold about file-sharing, no one should lose sight of the larger impact of this: some of the 37 countries negotiating ACTA are seeking to overturn the standards agreed to by the more than 150 member countries of the World Trade Organization. (Hinze, 4/22/10)


ACTA requires criminal penalties against "willful copyright infringement" when done "on a commercial scale." Early drafts explicitly mentioned online piracy, and that still seems to be in view. Though this section remains under negotiation, the draft shows that this may apply to infringements "that have no direct or indirect motivation of financial gain. 

In other words, P2P distribution, where this exact issue of financial gain has come up in numerous court cases. (Anderson, 4/21/10)


Leaks of the ACTA text indicated that individuals who infringed for 'private financial gain' would commit a criminal offence. This would criminalise private acts that occur within the home, such as copying a DVD to avoid paying the retail price. Thankfully, the official text has dropped 'private' from the definition, easing this concern. However, ACTA lowers the bar for individuals to be found criminally liable for a variety of offences by imposing liability where the conduct is 'wilful' - a word capable of very broad definition. If ACTA is - as it is asserted to be - about criminal and commercial activities and not about addressing private acts, then there is no justification for extending criminal liability beyond large scale infringement that is direct and intentional. (Dawes, 4/22/10)

Article 2.14.1 calls for criminal penalties for infringement "on a commercial scale."  It then goes on to describe "commercial scale" infringement as including any infringement that is willful and "significant."  The meaning of "significant" would be up to individual countries, but this formulation seems to invite them to set a very low bar for treating infringement as a criminal rather than a civil violation. (CDT, 5/18/2010)

Article 2.14.1 conflates the private and personal acts of individuals in a non-commercial context with commercial-level acts, and makes them all (equally) criminal. Further, the redefinition of ‘commercial scale’ to include all infringements for private gain has nothing to do with the kinds of counterfeiting that are said to be problematic by organizations like the OECD. To counter large-scale counterfeiting or piracy, it is not necessary to criminalize single acts of infringement, especially single acts for private ‘financial gain’. Such individual acts are unlikely to be the subject of trans border enforcement or even local enforcement by international IP owners. Nor is the inclusion of language such as ‘willful’ likely to be the protection you might hope. In the US, courts have interpreted willfulness so broadly that those who merely should have known their conduct was infringing are often treated as willful infringers. (Weatherall, 5/4/10)

The criminal provisions are also problematic as they relate to trade mark. I have noted above that the concept of ‘trade mark counterfeiting’ is problematic, in that it applies wherever an identical or substantially identical mark is applied to the registered goods: which, as earlier noted, could apply even to a legitimate business not attempting to mislead consumers particularly in the case of some of the newer marks. Whether the provision would apply to legitimate businesses depends, of course, on the interpretation of the concept of ‘wilfulness’. If ‘wilfulness’ refers to an intention to infringe a trade mark, criminal liability is appropriately limited. If, on the other hand, the requirement is merely one of knowledge of the trade mark, it is less clear: a legitimate business could know of the trade mark (or be recklessly careless as to its existence) but still not believe they are infringing. Australian trade mark law, unfortunately, requires knowledge, rather than intent: it proscribes ‘falsely applying a registered trade mark’ (or a substantially identical sign) to the registered, goods, ‘knowing’ or ‘recklessly careless’ to the fact that that the trade mark is registered. A false application of a registered trade mark consists simply of the application of the mark, or one substantially identical with, or deceptively similar to it, without permission or authorisation. The result is to put legitimate business at risk of criminal liability. (Weatherall, 5/4/10)

Article 2.14.2 seems to extend criminal liability for packaging and labels in relation to any kinds of goods. As a result, ACTA significantly increases the risk of legitimate businesses being caught by the provisions. For example, I have cited earlier in this paper the problem with talking about ‘identical marks’ in the context of newer marks: in particular, colours and packaging. This provision gives rise to a risk of criminal liability, for trading in packaging which bears no risk of confusing consumers. (Weatherall, 5/4/10)

In addition, the negotiating partners explicitly intend to proceed against file sharers. Thus, they intend to stipulate that parties to the agreement shall provide for criminal procedures in their countries as to “(a) significant wilful copyright or related rights infringements that have no direct or indirect motivation of financial gain; and (b) wilful copyright or related rights infringements for purposes of commercial advantage or financial gain. (article 2.14)” File sharing would also be covered, if and to the extent it is found to involve copyright infringement. Even if the file sharers’ Internet access were not to be cut of, due to ACTA they could be subject to criminal convictions. (Hammerstein, 7/20/10)


SECTION 4: SPECIAL MEASURES RELATED TO TECHNOLOGICAL ENFORCEMENT OF INTELLECTUAL PROPERTY IN THE DIGITAL ENVIRONMENT

ARTICLE 2.18: ENFORCEMENT PROCEDURES IN THE DIGITAL ENVIRONMENT

A provision under debate requires penalties be proportional to the violation. This could possibly be used to argue against extreme fines or cutting off Internet access. It is particularly telling that a requirement in the agreement that "measures, procedures and remedies shall also be fair and proportionate" is in bracketed text. This suggests that the negotiating parties cannot agree on whether to require that remedies be fair and proportionate, which suggests that at least one delegation wants to maintain the flexibility to impose remedies that might be unfair and disproportionate. (CCIA, 4/21/10)

3 strikes

The text no longer compels ISPs to adopt a “three strikes” or “graduated response” system to remove users from the internet. Bracketed text recognizes such programs as optional and permissible: it  “shall not effect the possibility” of countries implementing graduated response systems. (Flynn, 4/21/10)

Although not mandating such a policy, the released text contains language supporting the “development of mutually supportive relationships between online service providers and rights holders” to deal with infringement. A three strikes provision could easily be part of such a mechanism. (Rangnath, 4/21/10)

This has been one of the hot button issues and countries have tried to counter concerns by arguing that there is no mandatory three strikes provisions within ACTA.  That is true.  In fact, the footnote proposed by the U.S. which envisioned three strikes as a model policy for ISPs has been removed from the consolidation (the footnote now only notes that one country - likely Japan - would like language confirming that its national law complies with the ACTA provision).  This indicates that the U.S. has dropped the reference to three strikes from its proposed language on ISP liability. However, that does not mean that three strikes has disappeared from the draft entirely.  The U.S. proposal for ISP liability is one of three options currently being considered.  The European option preserves, but does not require, three strikes:

Paragraph 3(a) shall not affect the possibility for a judicial or administrative authority, in accordance with the Parties legal system, requiring the service provider to terminate or prevent an infringement, nor does it affect the possibility of the parties establishing procedures governing the removal or disabling of access to information

The EU will argue this is consistent with the law in a few of its member states.  If the approach is adopted, it will clearly keep three strikes on the table and could be used in other ACTA member countries to encourage its adoption.  Note that Japan has offered a third alternative which involves the development of codes of conduct between rights holders and ISPs. (Geist, 4/21/10)

We expect that the Commission will make good on its public commitment to ensure that the final text of ACTA contains no 'three strikes' obligations." The current language does not replicate the controversial French law that would cut off Internet access to those accused of infringement. But it does say countries can force Internet Access Providers to cut off Internet access to customers for alleged copyright infringement. We would hope other language requiring penalties be proportional to violations could counter this. But unfortunately that language appealing to reasonableness is under debate. (Mann, 4/21/10)

Internet Access Providers will be forced to take a more active role in policing for copyright violations. (It appears nothing prevents countries from forcing IAPs to cut off Internet service to customers to prevent copyright violations.) (CCIA, 4/21/10)

New to this draft is an option, clearly targeting European law, that would explicitly allow Internet disconnections. Countries will be allowed to force ISPs to "terminate or prevent an infringement" and they can pass laws "governing the removal or disabling of access to information." So, basically, Internet disconnection and website blocking. (Anderson, 4/21/10)

Many leaks maintained the spectre that 'three strikes' would feature in ACTA, where people have their internet cut off on the basis of repeated allegations of infringement. The public draft was accompanied by a statement promising that no such scheme would be mandated. The real threat from ACTA is its encouragement of three strikes - it does not need to be mandatory. The official text will require ISPs to deter online infringement. The leaked text included a footnote (now deleted) which gave an example that this might be done by cutting off the alleged infringer's internet access. The clear implication is that anything less than three strikes, which dealt only with termination of repeat infringers but did not seek in any further way to reduce infringement, would be insufficient. (Dawes, 4/22/10)

"Graduated response" or "three strikes" regimes which require ISPs to disconnect their subscribers' Internet access for alleged copyright infringement are extremely controversial. Three strikes laws currently exist in only three countries – South Korea, France and Taiwan – so inclusion in ACTA might result in more countries adopting such regimes. This has rightly been the subject of much debate in Europe, where the European Parliament has categorically rejected three strikes regimes on several occasions. Accordingly, the European Commission went to considerable lengths in their press release yesterday to emphasize that ACTA does not require countries to adopt three strikes laws:

The negotiation draft shows that specific concerns, raised in particular by the civil society, are unfounded. No party in the ACTA negotiation is proposing that governments should introduce a compulsory "3 strikes " or "gradual response" [sic] rule to fight copyright infringements and internet piracy.

We agree that ACTA does not require countries to adopt a three strikes law, but the more interesting question is: does it create a legal framework that facilitates that? Article 2.18(3) of ACTA contains three proposals in this area. In our view, the answer is yes under at least two of those proposals. Here's why.

The words "graduated response" and "three strikes" do not appear in the official ACTA text. The three strikes discussion is taking place in the context of intermediary liability for copyright infringement. The first proposal, put forward by the US, in Option 1 of Article 2.18.3 (on page 21), sets out conditions that intermediaries will need to comply with in order to get the benefit of limitation of liability provisions that countries might enact. The US proposes that online service providers should be required to adopt and reasonably implement a policy "to address the unauthorized storage or transmission of materials protected by copyright".

A previously leaked European Commission memo describes how US negotiators had explained the intent of this provision:

"On the limitations from 3rd party liability: to benefit from safe harbors, ISPs need to put in place policies to deter unauthorised storage and transmission of IP infringing content (ex: clauses in customers' contracts allowing, inter alia, a graduated response). From what we understood, the US will not propose that authorities need to create such systems. Instead they require some self-regulation by ISPs."

And footnote 29 in the leaked 18 January 2010 consolidated text stated that:

"An example of such a policy is providing for the termination in appropriate circumstances of subscriptions [US: and][AUS:or] accounts on the service provider's system or network of repeat infringers."

That footnote has now disappeared. If the US proposal is adopted in the final ACTA language, what constitutes appropriate policies for this purpose will therefore be a question for interpretation by national policymakers and perhaps by the ACTA Oversight Committee, which is tasked with monitoring and evaluating whether signatories' laws comply with ACTA.

The EU has tabled its own proposal (in square brackets in Option 2 on page 21). It would permit countries to create a system requiring ISPs to terminate particular subscribers upon receipt of an order from a judicial or administrative body should they be inclined to do so – as in the French HADOPI law's internet disconnection regime.

"[Paragraph 3(a) shall not affect the possibility for a judicial or administrative authority in accordance with the Parties legal system, requiring the service provider to terminate or prevent an infringement, nor does it affect the possibility of the parties establishing procedures governing the removal or disabling of access to information."

While this might be consistent with one EU Member States' national law, creating the global framework for ISP termination obligations on the basis of a non-judicial administrative body order poses significant due process concerns for citizens.

A third proposal is in square brackets in Article 2.18 (3 quater), apparently put forward by Japan. It states that:

"Each Party shall promote the development of mutually supportive relationships between online service providers and right holders to deal effectively with patent, industrial design, trademart and copyright or related rights infringement which takes place by means of the Internet, including the encouragement of establishing guidelines for the actions which should be taken."

This language would also leave room for a Three Strikes policy.

If ACTA incorporates the EU proposal permitting regimes requiring ISPs to terminate Internet access by non-judicial administrative order, or the US or Japanese proposals for conditions that ISPs must comply with to obtain the benefit of a limitation on liability, it will create a new global norm - facilitating an ISP practice of Internet user disconnection on the basis of copyright holder allegations of copyright infringement. (Hinze, 4/22/10)
 

Subsection (b)(i) of Option 1 (of Article 2.18.3) could easily be interpreted as endorsing policies that place far more onus on Internet service providers than does the DMCA.  The subsection calls for measures "to address the unauthorized storage or transmission of materials protected by copyright."  As a preliminary matter, "unauthorized" is broader than "infringing," since some activity - such as fair use - can be unauthorized but not infringing.  In addition, countries implementing this section could well conclude that a policy of terminating the accounts of proven repeat infringers - the safe harbor prerequisite contained in the DMCA - does not sufficiently "address" the problem of unauthorized transmissions.  Countries might therefore adopt more aggressive prerequisites for whatever safe harbor protection they choose to offer.  Bracketed language suggests that affirmative monitoring requirements might be off limits, but anything else would be fair game. (CDT, 5/18/2010)  

We understand from the draft agreement that ACTA is not only supposed to facilitate action against the trade, on an industrial scale, in counterfeited products. Very obviously it is also intended to address alleged copyright infringements carried out by individuals in the framework of using online peer-to-peer file sharing sites.

To mitigate minor alleged copyright infringement carried out by individuals, the current text would stimulate the signatory states to oblige Internet providers in case of copyright infringements to “terminate or to prevent the infringing act” or “to determine procedures in order to prevent access to information or in order to remove them”. We recognize that these wordings may not explicitly provide for Internet access blocking.  The do not provide either
for the monitoring of the Internet to enable the identification of alleged infringers.  Nevertheless, they indicate that the states parties to ACTA shall at least be encouraged to voluntarily include Internet access blocking and to some extend the monitoring of the Internet to enable identification of alleged infringers as an answer to copyright infringements into national legislation.

In the Joint Statement of 16 April 2010 the negotiating parties emphasized that they do not propose to require the introduction at national level of the controversial “Three Strikes Out Principle”, according to which the Internet access has to be blocked after three alleged violations of copyright. The agreement should rather contain minimum standards for the enforcement of the copyright holders’ rights, in compliance with EU law. WP29 emphasizes that any form of large scale monitoring or systematic recording of data of EU citizens would be contrary to the provisions of Directive 95/46/EC since that would affect millions of individuals, regardless of whether or not they are under any suspicion. A full analysis of the objections against the “Three Strikes Out Principle” and similar systems is given in the
Opinion of the European Data Protection Supervisor (EDPS) of 22 February 2010. We fully subscribe to the arguments given in this Opinion. (Hammerstein, 7/20/10)


Notice and take down

The text has bracketed language proposing a safe harbor from suit for ISPs if they expeditiously remove or disable  content claimed to be infringing – the so-called notice and take down procedures in the DCMA. This seems to preclude Canada’s “notice and notice” system where A "notice and notice" system where any notice of potential infringement is forwarded to a user, which may then be monitored for a period of time without revealing the subscriber's personal information. In Canada, copyright legislation permits the download of copyrighted material, but makes it illegal to upload the same material. Some analysts say that Canada’s system is better at serving copyright holder’s interests while ensuring that non-infringing material is not removed from the web. (Flynn, 4/21/10)

There is a legitimate fear of an increase in frivolous takedown complaints that may result. Authorizing take downs without penalties for misrepresentation or frivolous complaints in takedown notices may encourage abuse by content holders. This, in turn, will lead to a chilling effect on protected content. According to some statistics, up to a third of all take down notices in the U.S. are posted by companies targeting their competitors. (Flynn, 4/21/10)

ACTA still contains a notice-and-takedown requirement for ISPs to qualify for a safe harbour.  That is inconsistent with Canadian law, which has no such requirement and has twice proposed a notice-and-notice system.  Notice-and-notice has been used effectively for many years in Canada. (Geist, 4/21/10)

There are three different possible versions of ISP liability, worth reading in greater detail. All at least vaguely resemble the DMCA’s “notice-and-takedown” provisions. (Kaminski, 4/21/10)

IAPs would not be automatically liable for content users place on their site. But this safe harbor provision is contingent on the adoption of policies that target unauthorized storage and transmission of copyrighted materials. The immunity for IAPs is also contingent on a takedown process if copyright violations are reported. (CCIA, 4/21/10)

ACTA contains bracketed proposals to expand notice & takedown under the Digital Millennium Copyright Act to other forms of intellectual property. If implemented, this text would vastly expand the reach of notice & takedown and require Congress to reopen the DMCA. (CCIA, 4/21/10)

ISP immunity is conditioned on the existence of "takedown" process. In the US, this is the (in)famous "DMCA takedown" dance that starts with a letter from a rightsholder. Once received, an ISP or Web storage site (think YouTube) must take down the content listed in order to maintain its immunity, but may repost it if the uploader responds with a "counter-notification" asserting that no infringement has taken place. After this, if the rightsholder wants to pursue the matter, it can take the uploader to court. This will strongly affect countries like Canada, which have no such system. (Anderson, 4/21/10)  

The good news is that American service providers which already operate under the DMCA take-down regime will not be affected.  The Bad news is that other service providers will have to revamp their take-down procedures to DMCA-style levels. (Gaudamuz, 4/21/2010)  

In relation to the notice-and-takedown provisions:
1. Why does the language refer only to ‘subscribers’ giving counter-notifications? Compare this to the language of AUSFTA which refers to counter-notifications ‘by those whose material is the subject of a notice for removal or disabling’;
2. Why are there no provisions to prevent abuse of the notice-and-takedown provisions? Presumably Australia could keep its abuse provisions intact under an ACTA, however, the absence of such protections (a) may mean Australians subject to removal from overseas websites have no recourse; and (b) the agreement looks one-sided, which is bad publicity for IP laws. (Weatherall, 5/4/10)     

We note that it is also proposed to oblige all signatories to introduce a notice-and-take-down-procedure according to the US model. As a consequence, providers of online services would have to block access to content uploaded by users in case a third party claims that his/her rights are violated by making the content available. Moreover, the right holder could be granted the entitlement to ask a provider of online services for information about the identity of a user who is suspected of a copyright violation.

We are concerned about this proposal. Not only can it be used to interfere with the freedom of expression of individuals, as has happened in the US, but it also raises concerns about the disclosure of individuals’ data to third parties.  We remind that under Article 15.1 of Directive 202/58 Member States may provide that providers of electronic communication service providers can only communicate personal data of their subscribers following a legal obligation to hand over the data; thus, excluding such communication in civil cases, much less to private parties.  Accordingly, at a minimum, any final text should remind of the limitations applying to the transfer of personal data held by providers of electronic communication services to third parties, and also make sure that retention periods of those data at the service provider are fixed to a strict maximum under applicable data protection legislation. (Hammerstein, 7/20/10)

Third party liability  

There are several provisions that require adoption of third party liability standards, meaning authorizing suits, injunctions, damages or other enforcement against parties who do not themselves violate any law. This could extend to the makers of active pharmaceutical agreements whose supplies find themselves into counterfeit medicines or the operators of interpret service providers, including libraries and colleges and internet cafés, who provide forums for others to access content. Third party liability is incredibly controversial in the U.S. and its extension to the rest of the world will have unknown chilling effects on access to information. (Flynn, 4/21/10)

Perhaps some of the most problematic provisions of ACTA deal with third party liability. These provisions would require signatories to adopt a system of secondary liability similar to the U.S. and provide online service providers (OSPs) with a system of safe harbors from such liability. First, the definition of secondary liability contained in ACTA differs in important respects from U.S. law contrary to USTR’s claim that they would “color within the lines of U.S. law.” Second, the so-called safe harbor provisions do not offer any real safe harbor from liability to online service providers. Unlike U.S. law, which eliminates the possibility of damages against OSPs and limits the nature of injunctions against them, ACTA merely provides for unspecified limitations on civil remedies. Even a small limitation on remedies, such as a small reduction in the amount of damages could be called a “safe harbor” under this definition. (Rangnath, 4/21/10)

The key provision - and the most contentious - is the ISP safe harbour provision.  At the moment, there is even disagreement over whether it is a requirement or recommendation.  There are also several options on the table, with the U.S., EU, and Japan all tabling proposed language. (Geist, 4/21/10)

Language on ISP monitoring: Up for debate, and should be included: “no Party may condition the limitations in subparagraph (a) on the online service provider’s monitoring its services or affirmatively seeking facts indicating that infringing activity is occurring”.  (Kaminski, 4/21/10)

The ACTA text doesn't include provisions of U.S. law, such as the principle from the Sony Betamax case in 1984 (Sony Corporation of America v. Universal City Studios Inc., 464 U.S. 417 (1984)) that designing and distributing a device that is also capable of substantial noninfringing uses could not be liable for third-party infringement.(Sohn, 4/23/10)

As we feared, ACTA will worsen the trend of international courts penalizing U.S. companies for products and services that are perfectly legal here. This agreement exports the strong penalties found in U.S. copyright law without also exporting those essential protections like fair use that provide much needed balance. An agreement that says, "please punish our tech companies" will not be good for U.S. trade. (Black, 4/21/10)

Just as problematic, ACTA proposes to mandate criminal liability in certain IP infringement cases, but it would not mandate the protections against liability for tech innovators that are found in U.S. law. As we have already seen, foreign courts are too willing to apply criminal liability to online service providers for the wrongdoing of users. ACTA, therefore, increases the likelihood of foreign courts unjustly punishing innovative U.S. businesses. (CCIA, 4/21/10)

The proposed response to liability issues appears in footnote 47, which states: "Parties also understand that the application of third party liability may include consideration of exceptions or limitations to exclusive rights... including fair use, fair dealing, or their equivalents." (emphasis supplied) Yet even this permissive, non-binding language is apparently opposed by at least one delegation. This non-binding language will not adequately protect U.S. businesses operating overseas. A regime of mandatory criminal penalties and optional protection for intellectual property defendants will result in unbalanced foreign IP law. (CCIA, 4/21/10)

Third party liability is not covered by any existing international treaties. I would argue that it is a matter of substantive rights, rather than enforcement, and requires the flexibility that comes from having it dealt with at a domestic level, not an international level. (Dawes, 4/22/10)

Internet intermediaries are the chokepoints for the Internet. Creating or increasing Internet intermediaries' liability for their users' behavior and content on their networks creates incentives for intermediaries to police their users and platforms. This in turn has a direct impact on citizens' privacy, freedom of expression, and ability to create and collaborate. Policy makers in the 1990s understood that Internet intermediaries had to be shielded from potentially unbounded liability if the Internet was to flourish. That is why many countries adopted special legal regimes for Internet Service Providers and other Internet intermediaries, limiting their potential legal liability for copyright infringement, and defamation. Now, as more and more of our cultural and civic life depends on the existence of content hosting platforms, discussion forums, wikis and social networking communities, these rules have come to have even greater significance. In short, appropriately tailored limitation of liability regimes for Internet intermediaries are key to individuals' freedom of expression and user generated content. The existing limitation of liability regimes are under attack in a range of national and international venues, but ACTA is the most troubling. (Hinze, 4/22/10)

ACTA contains various provisions requiring countries to impose liability on intermediaries for their users' behavior (Article 2.18(3)). This would apply to Internet intermediaries, but also to intermediaries such as libraries and educational institutions, which frequently provide Internet access to their customers and users. This is not required by any of the major international IP treaties – not by the 1994 Trade Related Aspects of IP Agreement, nor the WIPO Copyright Treaty or WIPO Performances and Phonograms Treaty, and so would establish a new global norm. (Hinze, 4/22/10)

Previous ACTA leaks disclosed that the US was proposing that signatory countries recognize third party liability based on the secondary copyright liability doctrines developed by US courts, including for "inducement" of copyright infringement. (Apparently opposed by New Zealand, Canada, the EU and perhaps Japan). The official text shows that this is still proposed. Footnote 47 states that: (Hinze, 4/22/10)

"[For greater clarity, the Parties understand that third party liability means liability for any person who authorizes for a direct financial benefit, induces through or by conduct directed to promoting infringement, or knowingly and materially aids any act of copyright or related rights infringement by another….]" 

As others have noted, the language here and in previously leaked texts does not accurately reflect US case law in this area, and effectively takes one side in an ongoing debate about the interpretation of the 2005 Supreme Court decision in MGM v. Grokster. The official text also contains other potential new sources of liability for intermediaries, including a proposal for pre-litigation injunctions against intermediaries (Article 2.5 X). (Hinze, 4/22/10)

ACTA allows, but does not require, countries to create limitations on intermediaries' civil liability (Article 2.18(3), Options 1 and 2 and Footnote 47). However, unlike the US safe harbor provisions, the ACTA text does not specify what types of limitations of liability can be created, and for what activities. This may reflect an effort to find compromise language between the safe harbor regime in section 512 of the US Copyright Act and similar provisions in the laws of US Free Trade Agreement partners, the European Union's eCommerce Directive framework, and Japanese law. Much would then depend on the national implementation and judicial interpretations of these provisions in ACTA countries. This creates the potential for US Internet companies to be subject to more onerous requirements and higher levels of liability in other countries in which they operate. And this in turn, is likely to have an adverse impact on citizens' freedom of expression, and ability to access content hosted on platforms in different countries. (Hinze, 4/22/10)

Article 2.18.3 of the proposed text requires each signatory to ensure that is legal system includes third party liability.  Footnote 47 describes the circumstances in which third party liability should apply.  But limitations, exceptions, and defenses to third party liability, while expressly permitted, are left entirely to the discretion of each country.  There is not even a mention of the core principle, established by the Supreme Court in the 1984 Sony case and reaffirmed unanimously in the 2005 Grokster decision, that the act of making or distributing a product with "substantial noninfringing uses" cannot be a basis for liability.  Fair use, another crucial factor in U.S. third party liability cases, is referenced in ACTA footnote 47, but is entirely optional.  Indeed footnote 47 includes language designed to ensure that countries may not adopt overbroad exceptions and limitations to third party liability - but ACTA takes no similar care to ensure that countries will not adopt an overbroad approach to third party liability itself. (CDT, 5/18/2010)

It is remarkable that ACTA, which as a trade agreement would be expected to carefully reflect the needs of commerce, shows little sensitivity to the potential commercial impact of the third party liability regime it requires.  It demands third party liability and demands that it not be too weak, but takes a pass on all the Supreme Court law aimed at preventing it from being too strong. (CDT, 5/18/2010)

The "Option 1" text of Article 2.18.3 is presumably modeled on the DMCA's section 512 safe harbor.  But it fails to require countries to adopt anything close to a true safe harbor.  Instead of providing a complete shield against monetary damages, as U.S. law does, ACTA merely says that countries must provide unspecified "limitations on the scope of civil remedies."  Such "limitations" could fall well short of holding intermediaries harmless. (CDT, 5/18/2010)

Footnote 47 to Article 2.18.3 attempts to briefly summarize third party liability doctrine as it has emerged from caselaw in the United States.  In doing so, however, it appears to take sides on an important unsettled legal question.  The Grokster case was ambiguous about whether "inducement" of copyright infringement represents a new, independent theory of third party liability, or simply a revised test for applying contributory liability.  There is a strong argument that it is just a restatement of the contributory liability test:  The Court said that "one infringes contributorily by intentionally inducing or encouraging direct infringement."  The doctrinal question is not merely semantic; it has significant implications for the mental state (intent versus knowledge) required for contributory liability.  But ACTA appears to take the position that inducement liability and contributory liability are two separate, alternative bases for third party liability.  By weighing in on that question, ACTA could affect U.S. law in this area. (CDT, 5/18/2010)

It is difficult to argue that provisions addressing how and when third parties may be liable for infringements committed by others is merely a question of "enforcement."  Third party liability is not just about how to pursue those who violate the law; it is about how far copyright law reaches and which parties can be considered violators in the first place. (CDT, 5/18/2010) 

[ACTA] seems to overhaul the intermediary liability regime.  For example, Article 2 establishes the obligation for signatory states to issue an injunction not only against ingringers, but also against intermediaries. [The] current law [UK] law requires that the intermediary should have actual knowledge of the infringement taking place, while the ACTA text does not require such a thing.  It would be possible then that courts could issue injunctions against service providers even if they have no knowledge of the infringement, which is a big change to the current system. (
Gaudamuz, 4/21/2010) 

Article 2.18.3 requires every ACTA country to confirm that it provides civil remedies "in cases of third party liability for copyright or related rights infringement."  Footnote 47 then defines third party laibility as "liability for any person who authorizes for a direct financial benefit, induces through or by conduct directed to promoting infringement, or knowingly and amterially aids, any act of copyright or related rights infringement by another."  No multilateral IP agreement has such a requirement concerning third party liability, and many countries do not even ahve third party liability principles in their laws.  Thus, including third party liability in ACTA represents a major change in the framework of international IP law, and goes far beyond the enforcment focus of ACTA.  Additionally, the definition of third party liability in footnote 47 does not accurately reflect U.S. law. (Bond, 4/23/10)

[A]rticle 2.18.3 lacks the balance present in U.S. third party liability law.  Article 2.18.3 makes third party liability mandatory.  In contrast, exceptions to such third party liability are only permissive: "the application of third party liability may include consideration of exceptions or limitations . . . ." (Bond, 4/23/10)

Exporting a broad third party liability regime overseas, without also exporting specific limiting principles such as the Sony test and mandatory exceptions, will increase the liability exposure of U.S. Internet companies, and nonprofit service providers such as libraries and universities, for activity that is lawful in the U.S. (Bond, 4/23/10) 

First, secondary liability is a matter of substantive not procedural or enforcement law: not mentioned in any other IP treaty and hence not otherwise part of international IP law. It ought not to be in the agreement at all. Second, on scope: the scope of secondary liability in trade mark, patent, and design laws is unsettled and certainly does not reflect any of the language seen here. (Weatherall, 5/4/10)

[Footnote 47] touches on aspects of secondary liability as it is found in Australian law: but is, in its detail, inconsistent with Australian case law. Were this provision to be adopted, Australia might be required to change its legislation to reflect these new factors. Just as occurred when Australia last tried to codify its law of authorisation in 2000, this would likely lead to years of confusion requiring considerable litigation in order to interpret the new provisions. (Weatherall, 5/4/10)

The reference to the three step test is disturbing. The established role of the three step test, as found in the Berne Convention Article 9(2) and TRIPS Article 13 is to constrain the right of legislatures to create new limitations on or exceptions to copyright owners’ exclusive rights. Even in that role it has, in recent times, proved controversial. If, as used here, it merely intends to state that in determining whether a third party (such as, for example, an online host, or a theatre owner) is authorizing infringement the court must take into account that some of the alleged infringements may be protected by exceptions, there would be little cause for alarm. However, if it is intended to suggest that limitations on third party (secondary) liability must be subject to the three step test there is very real cause for alarm. Because secondary liability is not addressed by TRIPS, or Berne, it is arguably not presently subject to the three step test found in those treaties: this footnote, therefore, could add a new limitation on the freedom of countries to define the rights of copyright owners. Further, the use of the test is simply inappropriate, for two reasons. First, authorization liability is a very differently constituted form of liability: in most countries, it depends on concepts such as knowledge, and power to act, and responsibility for infringement that are not relevant to direct liability. Second, the scope of secondary liability has different policy implications: it impacts on the providers of services and technology, rather than wrongdoers themselves, and so can have impact on legitimate as well as illegitimate activity. Hence, secondary liability ought to be subject to different kinds of limitations, exceptions and analysis. (Weatherall, 5/4/10)


Looking at Option 1 [of Article 2.18.3], the troubling areas are these.
First, why does the initial text refer to ‘services of third parties’ generally, where limitations on remedies are provided only for online intermediaries? Is this intended to imply that other intermediaries ought not be protected from liability? That would seem strange, given the important role played by other intermediaries like schools and libraries.

Second, as noted above, any proposal to extend these provisions beyond copyright must be resisted, as there is insufficient international consensus to support such a move. The drafting at this stage is poor: copyright and related rights are mentioned in the initial text, but the language below talks about ‘infringing activities’. This ought to be clarified.

Third, the phrase ‘provide limitations’ creates little certainty for OSPs. The Australian system (in common with the US and EU) provides for limitations on damages but not injunctions. ‘Limitations’ in ACTA could be narrower however – it could mean a lessening of damages awards; shelter from additional or statutory damages, etc etc. To the extent that Australia is concerned to protect its OSPs (in particular, webhosts and the like) operating overseas, why give noticeably narrower protection?

Fourth, the reference to infringements that occur by certain processes is potentially narrower than present Australian law, which protect against infringements that “occur in the course of carrying out any of the categories of activities”.

Fifth, the categories for protection may or may not cover the full extent of protected activities in Australia. Clearly they use different language: the difficulty, as noted above, is working out the implications of that. Presumably, the idea here is that ‘automatic technical processes’ covers both Category A (mere conduit/transmission) and Category B (caching) activities, the view being that both are technical and automatic. There is, however, room for doubt. Article 2.18.3(a)(ii) refers to protection from liability for ‘the actions of the provider’s users, that are not directed or initiated by that provider and when the provider does not select the material’. Does this cover what in Australian law and AUSFTA is referred to as “storage at the direction of a user”? Is “storage at the direction of a user” (which might imply some activity on the part of the online service provider, even if only the act of ‘storage’) the same as actions of the provider’s users? Of course, if any ACTA treaty was issued accompanied by ‘Agreed Statements’ noting in some way the consistency of existing laws with those proposed in ACTA, agreed by all the negotiating parties, that might assist (unilateral statements by Australia, the EU, or US unsupported by other negotiating parties will not be sufficient).

Sixth, the language referring to ‘an online service provider adopting and reasonably implementing a policy to address the unauthorized storage or transmission of materials protected by copyright or related rights’ is potentially troubling. Right holders will argue that one (good) way to comply with such an obligation is for service providers to adopt ‘graduated response’ (also known as a ‘three strikes system’) – warning letters, followed by more stringent penalties for repeat infringers identified by copyright owners. It is not clear, from this text, what steps short of a graduated response system would be sufficient: would, for example, ‘educative’ steps be sufficient? Right holders might argue no. Further, the language of ‘policy’ implies that in the absence of some official, government, judicially-monitored system service providers would be required to take (extra-judicial) action to impose some kind of penalty. (Weatherall, 5/4/10)

Anti-circumvention

The text includes language modeled on the Digital Millennium Copyright Act's "anti-circumvention" section, which makes it illegal to copy digital media even for uses that are entirely within the user’s rights under copyright law – for example for personal use or for a “fair use” necessary to protect free expression rights. There a large amount of concern about these provision in the U.S. – that they eviscerate fair use rights that are needed by artists, filmmakers and others to exercise their free speech rights. Enacting ACTA would mean that Congress could not change these aspects of law in the future without changing international law at the same time. This would appear to require changes in Japan, Canada and EU law. (Flynn, 4/21/10)

ACTA would require signatories to institute in their laws civil and criminal penalties against circumvention of digital locks that control access to works. In addition, it would require countries to prevent trafficking in devices that permit such circumvention. These provisions are present in current U.S. law and their ill-effects are well-documented. However, U.S. law also contains certain mandatory exceptions to these provisions and the possibility that the Librarian of Congress can grant even more exceptions via the Copyright Office’s triennial rulemaking process. ACTA, does not contain any of these limitations. (Rangnath, 4/21/10)

The anti-circumvention provisions continue to mark a renegotiation of the WIPO Internet treaties by mandating the implementation of the DMCA.  The provision calls for adequate and effective legal protection for technological protection measures (much like WIPO), but then requires provisions against devices that can be used to circumvent and some countries want the provision to extend to access controls (neither in WIPO).  There are still considerable square brackets on this provision, but the direction is clear - limit the flexibility that exists under international law for the protection of TPMs. (Geist, 4/21/10)

Despite the otherwise rampant exportation of U.S. law, there is no indication that the U.S. wants to export its conception of fair use to either the agreement as a whole, or the DMCA provisions, where in US code it is scattered throughout. Instead, two debated sections indicate that “each Party may adopt exceptions and limitations” allowed under the Berne Convention, in the limited context of discussing the DMCA provisions. These “exceptions and limitations” provisions must occur prominently at the beginning of the agreement, and apply throughout. (Kaminski, 4/21/10)

While discussing anticircumvention issues, the measure proposes to adopt the reasons to punish someone for circumventing technological protection measures, but without the mandatory exceptions found in U.S. law. The proposed agreement only says that countries may adopt exceptions. Sohn, 4/23/10)

Consumers may be punished for bypassing Digital Rights Management locks on the products they buy. (While permitting exceptions and limitations to copyright according to their own laws, ACTA mandates little in the form of consumer protection.) (CCIA, 4/21/10)

While the ACTA draft adopts the best part of the DMCA (copyright "safe harbors"), it also adopts the worst: making it illegal to bypass DRM locks. ACTA would ban "the unauthorized circumvention of an effective technological measure." It also bans circumvention devices, even those with a "limited commercially significant purpose." Countries can set limits to the ban, but only insofar as they do not "impair the adequacy of legal protection of those measures." This is ambiguous, but allowing circumvention in cases where the final use is fair would appear to be outlawed. Fortunately, a new option in this section would allow countries much greater freedom. The option says that countries "may provide for measures which would safeguard the benefit of certain exceptions and limitations to copyright and related rights, in accordance with its legislation." (Anderson, 4/21/10)

As we have previously noted ACTA would make the US DMCA TPM legal framework the de facto global norm, effectively displacing the more open-ended language finally adopted in the 1996 WIPO Copyright Treaty and Performances and Phonograms Treaty. The US TPM regime contains at least three characteristics that are broader than what is required to implement the WIPO Treaty obligations. First, it creates an absolute ban on TPM circumvention, even where done for lawful non-copyright infringing purposes. Second, it requires legal protection for TPMs that control access (and not just use) of technologically protected copyrighted works. (To which Japan strenuously objected in the leaked 18 January 2010 text.) Third, it includes a broad prohibition on the manufacture and distribution of circumvention devices. Fourth, it requires criminal penalties for flouting the TPM circumvention bans,while the WIPO treaties are silent on this point.

Other countries have chosen to implement the WIPO treaties by creating TPM legal regimes with different features to avoid some of the collateral damage experienced in the US. If ACTA contains an obligation to adopt the DMCA TPM framework, the US will be able to achieve what it was not able to do by international agreement in Geneva in 1996, and has only been able to do on a piecemeal basis since then via its bilateral free trade agreements. (Hinze, 4/22/10)

Article 2.18.4 is based on section 1201 of the DMCA, requiring countries to prohibit both the circumvention of technical protection measures and the distribution of circumvention devices.  But once again, ACTA reflects U.S. law in a selective and asymmetrical way.  DMCA section 1201 includes seven important exceptions to the anticircumvention prohibition, including for interoperability, encryption research, and security testing.  ACTA, in the two options listed under Article 2.18.5 merely says that countries "may" include exceptions.  The prohibition is mandatory, but the crucial balancing exceptions are merely permissive. (CDT, 5/18/2010)

Articles 2.18.4 and 2.18.5 are intended to export Section 1201 of the DMCA.  Here, too, the proposal lacks the balance found in U.S. law.  Section 1201 contains seven exceptions. In contrast, Article 2.18.5 simply provides that each country "may adopt exceptions and limitations to measures implementing paragraph (4) so long as they do not significantly impair the adequacy of legal protection of those measures or the effectiveness of legal remedies for violations of those measures."  Once again, the chapter makes prohibitions mandatory, but exceptions only permissive. (Bond, 4/23/10)

Rightsholders in the U.S. could assert that the existing [DMCA] Section 1201 exceptions "significantly impair the adequacy of legal protection" or "the effectiveness of legal remedies" against the circumvention of effective technological measures.  The exceptions for interoperability, encryption research, and security testing are particularly important for innovation and the functioning of the information economy.  The law enforcement and intelligence exception is critical to our national security.  ACTA must not jeopardize these essential activities. (Bond, 4/23/10)

Section 1203(c)(5) [of DMCA] grants a court the discretion to "reduce or remit the total award of damages" in any circumvention case where the violator "was not aware and had no reason to believe that its acts constituted a violation."  ACTA's Paragraph (4), in contrast, makes no provision for innocent violations. (Bond, 4/23/10)

The main reason to oppose the inclusion of [Article 2.18.4] in ACTA is that they are not enforcement provisions, but substantive, even on their own terms, which state (Art 2.18.4.2) that parties should provide that violation of a measure implementing paragraph (4) is a separate civil or criminal offense, independent of any infringement of copyright or related rights. [Second], they do not represent an ‘ideal’ model for laws to address circumvention of technical measures or digital piracy. (Weatherall, 5/4/10)

The thrust of the two provisions of Article 2.18.5 is quite different. Option 1 enables a broad range of exceptions, of any kind, provided that they do not impair the general scheme of the legislation. This has the benefit of allowing for exceptions that might not be readily matched to copyright exceptions. One example would be an exception to allow people to circumvent those features of a technological measure that are privacy-invasive. The second option focuses on preserving existing exceptions, but without a requirement of non-impairment. This has the advantage of appearing to allow a full range of copyright exceptions to be protected. Option 1 is broader and is to be preferred as ensuring a greater scope for the exercise of a country’s right to decide its own innovation policy. (Weatherall, 5/4/10)


CHAPTER FIVE: INSTITUTIONAL ARRANGEMENTS


The text calls for a new oversight committee, which would bypass existing more open and public forums for international rule making, such as WIPO. It appears that consumer representatives will be locked out of the organization. The text only envisions that “nongovernmental groups of intellectual property stakeholders,” not consumers, will be able to obtain observer status in the new institution. (Flynn, 4/21/10)

The institutional issues around ACTA remain a huge concern.  This is explicitly an attempt to circumvent WIPO and the more open, transparent, and inclusive international process.  The implications are very significant for all countries as this undermines the ability for many countries to have their concerns heard.  Instead, many will face demands to comply with a treaty from which they were completely excluded during the negotiation process. (Geist, 4/21/10)

Chapter Five establishes the “ACTA Oversight Council”, which shall convene regularly and supervise implementation of the Agreement. The Committee’s resolution or avoidance of disputes must not conflict with the WTO dispute resolution mechanisms, per footnote Article 5.1(2)(c). The Committee is meant to issue best practice guidelines regarding IP adherence, and promote capacity building, something traditionally in the purview of WIPO. The Committee is to be conducted in English (open for debate) and to meet in Geneva (open for debate), perhaps lending it institutional legitimacy by geographic location(Kaminski, 4/21/10)

New states become party to ACTA by signature or deposit of an instrument of accession. Amendments to ACTA happen only through Party-submitted proposals submitted to the Oversight Committee. (Kaminski, 4/21/10)

ACTA is a plurilateral agreement. It will be the first and a new kind of international trade agreement, which effect IPR national law making and which is negotiated outside of WTO or WIPO. The effects are completely unknown. The only agreement which was ever tried before and which had a similar outreach was the MAI (Multilateral Agreement on Investment). That failed badly, first in the WTO and afterwards in an OECD environment. (Mann, 4/21/10)

Some have raised questions about ACTA's call for an Oversight or Steering Committee that would function as a brand new international I.P. institution separate from the World Intellectual Property Organization (WIPO) and World Trade Organization (WTO).  The impact on existing I.P. institutions and the potential for "forum shopping" are worth considering. (CDT, 5/18/2010) 

ACTA is intended to set new global IP enforcement norms above the current international standards in the Agreement on Trade Related Aspects of Intellectual Property (TRIPs).  ACTA was conceived as a plurilateral agreement that would be created outside of multilateral institutions such as the World Intellectual Property Organization (WIPO) and the World Trade Organization (WTO), where international IP norm-setting takes place.  These international bodies account for a range of interests, while ACTA will lack such checks and balances. (Katz & Hinze, 11/19/09)

ADDITIONAL CONCERNS


Changes to US Law

The text has so many bracketed issues that are left for negotiating, it is hard to imagine a final version that would not require amendments to US law to comply. (Flynn, 4/21/10)

Those defending ACTA insist it doesn’t change US law. But it exports the most insidious parts of our digital copyright law and makes the protections and consumer-oriented parts of it optional. (Black, 4/21/10)

The anti-circumvention provisions of the argument seem to contradict the current interpretation of Title I of the DMCA, which, according to the Federal Circuit, requires evidence of a nexus to infringement before a circumvention claim may be sustained. As it lacks such a provision, ACTA would seem to mandate liability where U.S. federal courts have exonerated defendants. (CCIA, 4/21/10)

ACTA contains a number of provisions that are inconsistent with US law, despite the oft-repeated claim of the USTR that ACTA will "color within the lines of US law". For instance, the text includes a EU proposal, for criminal sanctions for "inciting, aiding and abetting" intellectual property infringement (Article 2.15(2)]. That language is taken from the draft 2007 EU IPR enforcement criminal sanction directive. US copyright law does not recognize the concept of "inciting" copyright infringement, so it is unclear what this means and when it would apply. This raises the concern that ACTA could expand the scope of secondary copyright liability for Internet intermediaries, consumer device manufacturers and software developers, beyond the boundaries of the doctrines enunciated by US courts. Next, ACTA's chapter on "Special Measures Related to Technological Enforcement of Intellectual Property in the Digital Environment" contains a proposal (apparently put forward by Japan, based on the leaked 18 January 2010 draft) requiring ACTA signatories to enable IP rightsholders to expeditiously obtain subscriber identity information from ISPs after giving "effective notification"(Article 2.18 (3ter)(Option 2). This appears to be inconsistent with US standards of due process and judicial oversight. US copyright holders must currently file a lawsuit and seek a court injunction to force ISPs to disclose such information. Further, ACTA's civil enforcement chapter includes two proposals for UK-style loser-pays attorney fee awards, something that is not common practice in US civil litigation (Article 2.2.5). In each of these examples the proposals are in square brackets and have not been agreed by all negotiating countries. In relation to the "inciting" proposal, footnote 39 notes that "At least one delegation has asked for the deletion of paragraph 3" (sic). Hence, there's no guarantee that this language will be in the final ACTA, but the key question is how will this be resolved in a way that does not involve changes to US law, or to EU law, as EU negotiators have claimed? (Hinze, 4/22/10)

The official text also contains a number of provisions that appear to be based on parts of US copyright law, but are either incomplete or inaccurate characterizations of US law. For instance, ACTA requires countries to adopt laws prohibiting circumvention of copyright owners' technological protection measures modeled on the US Digital Millennium Copyright Act (discussed in more detail below). But ACTA does not precisely mirror the DMCA; in particular, it does not includes the seven exceptions in section 1201 of the Copyright Act, nor the triennial rulemaking process in section 1201(a)(1)(C), which provide a small measure of flexibility. ACTA contains two proposals that would permit (but not require) countries to create exceptions to these bans. In addition, as currently framed, particularly if read in conjunction with square-bracketted Article 2.18(5) or (4.2), the ACTA provisions are inconsistent with recent US Circuit court judgments on the scope of the US provisions, which required a nexus between copyright infringement and legal protection for TPMs. As a result, the ACTA text would require signatories to adopt anti-circumvention prohibitions that are even broader than those in U.S. law. Similarly, ACTA requires countries to adopt third party liability, but several proposals only permit, and do not require, countries to create limitations on the liability of Internet intermediaries, and contain vague limitations that are weaker than the limitations on monetary damages against Internet intermediaries found in the US safe harbor provisions. 
(Hinze, 4/22/10)

ACTA contains provisions that could constrain the ability of the US Congress to engage in legislative reform to meet changing public policy needs. The ACTA text contains a proposal mandating countries to adopt statutory damages. While US copyright law contains a statutory damages regime, it is subject to an important limitation for innocent infringement done without knowledge, allowing judges to reduce or remit statutory damages in certain circumstances. ACTA includes a limitation provision, but it is discretionary, leaving it up to ACTA countries to decide whether to transpose it in their national law (Article 2.2(3)). Even with this important limitation, the US statutory damages regime has led to disproportionately large awards of damages against individuals in the file-sharing context, far exceeding the actual harm caused, and has had a significant chilling effect on innovation by Internet intermediaries and technology creators, who cannot afford to be threatened with statutory damages for engaging in activity that might be found to be fair use, or infringement. For that reason, Congress has been considering statutory reform in this area, (for instance in H.R. 1201 before the 110th Congress). ACTA would appear to lock-in the existing regime, to the detriment of US citizens and the technology sector. Similarly, the inclusion of the DMCA TPM provisions in ACTA could act as a constraint on Congress' ability to amend the DMCA to clarify the scope or address other concerns with the current anti-circumvention provisions, such as those contained in the respective reform proposals of Representatives Boucher and Lofgren. (Hinze, 4/22/10) 

U.S. officials have indicated that they intend to "color within the lines" of U.S. domestic law, such that ACTA will not require changes to the U.S. legal regime.  But several proposals currently on the table could have an impact on the U.S. legal framework or could encourage future changes to it. (CDT, 5/18/2010)

Proposed Article 2.18.3ter is flatly inconsistent with U.S. law.  The proposed language would require each country to enable rights holders to "expeditiously obtain" from Internet service providers the identiy of any subscriber that the rights holders claim are enganging in infringement.  This conflicts with settled decision of two federal appeals courts, which have held that the DMCA does not require ISPs in their capacity as conduits to turn over subscriber information based on allegations of infringement. (CDT, 5/18/2010)

Internet termination obligations would remove the discretion that Congress gave Internet service providers in the DMCA.  If ACTA were to include such provisions, its implementation by Congress would require change to U.S. law.  While resulting legislative amendments might be subject to challenge in federal court to the extent that they impinge on Constitutionally protected speech and Due Process protections, the deference courts have shown to international treaties superseding U.S. law renders ACTA a target vehicle for policy laundering. (Katz & Hinze, 11/19/09)

Consumer interests

At bottom, there is little to meet, and much to restrict, the interests of consumers. This agreement goes far beyond any legitimate interest in ensuring that illegal activities do not commercially compete with legitimate intellectual property right holders. (Flynn, 4/21/10)

It appears some level of public scrutiny and oversight is leading to slight changes in the language here and there. But what is missing from this document is a real understanding of the dangers they are so zealously trying to counter, and the cost to customers’ privacy and freedom, technology companies and innovation by exporting copyright law on steroids to these nations. (Black, 4/21/10)

ACTA has the potential to have a negative impact on individuals as Internet citizens and as consumers of digital technologies. (Dawes, 4/22/10)

Article 2.18.3 quater is a little disturbing because (a) there is no mention of consumers or individual rights; and (b) there is no mention of who might ensure the protection of individual rights and civil liberties in the context of this development of mutually supportive relationships. This raises the possibility that ISPs and copyright owners will reach some mutually desirable solution that is less protective of the privacy and other rights of customers than it might otherwise be: it might involve the handover of subscriber information without judicial or administrative process; the handover on the basis of suspicion rather than proof, etc. (Weatherall, 5/4/10)


Data protection and the protection of privacy is one of the fundamental rights of the European Union. The protection of personal data and privacy is enshrined in the Treaty on European Union, in the Treaty on the Functioning of the European Union and in the Charter of Fundamental Rights of the European Union. Although no treaty such as ACTA is capable of diluting this protection, the WP29 nevertheless stresses the need for any new agreement to fully comply with EU safeguards of data protection and privacy and urges you and your negotiating team to keep this principle in mind at all times. Special attention is required for the rights of the data subject, retention periods once the personal data of the individual is obtained as well as possibilities for judicial redress. (Hammerstein, 7/20/10) 

[We deem] it necessary that at all times a right balance is struck between the rights of all parties involved. This balance clearly depends on the circumstances of the situation. It can therefore not be determined as a general matter, whether in an agreement like ACTA or in any other instrument, that the rights of copyright holder trump the right to privacy of the individual. As copyright issues are not black and white judicial evaluation is required. (Hammerstein, 7/20/10)

Developing countries

The agreement clearly envisions developing countries be invited (reads: pressured) to join the agreement. But there are no special and differential treatment provisions recognizing the different context and capacities of developing countries. (Flynn, 4/21/10)

[T]he real danger of ACTA is the ammunition it gives to rights holder lobbyists to demand domestic legislative reform and argue aggressive test cases. (Dawes 4/22/10)

Althogh not participating in negotiations, developing country governments will nevertheless find their domestic policy space reduced by ACTA.  [N]egotiating states intend that developing countries will accede to and implement ACTA.  ACTA standards likely will be a requirement of future bilateral agreements and evaluation criteria in the annual Special 301 report.  In addition to the international trade framework, ACTA may have its own enforcement mechanism overseen by an ACTA Oversight Council. (Katz & Hinze, 11/19/09)

Lack of Empirical Evidence

Though USTR and industry justify the necessity of ACTA based on lost profits due to online copyright infringement, there is a lack of empirical evidence to support this reasoning. The data that is used to support the industry's lost profits is provided only by industry and is unreliable.  The GAO recently reviewed available studies and found that they rely on questionable assumptions and “cannot be substantiated due to the absence of underlying studies.” (Flynn, 4/21/10)



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