Summary of ACTA

Notes on ACTA:

By: Kristine Holm

What is ACTA?

Although SOPA and PIPA have been shelved for the time being, there is another regulation on the horizon that has raised many of the same concerns as these two bills. The Anti-Counterfeiting Trade Agreement (ACTA) is a trade agreement designed to implement international standards for intellectual property rights enforcement. The main purpose of ACTA is to curb the proliferation of counterfeit and pirated goods. The negotiating parties to the agreement are: the United States, Japan, the European Union, Canada, Switzerland, Australia, Mexico, Morocco, New Zealand, the Republic of Korea, and Singapore. ACTA is intended to complement, not replace, the TRIPS Agreement.

Current Status of ACTA

On October 1, 2011, ACTA was signed by the United States, Japan, Australia, Canada, Morocco, New Zealand, Singapore, and South Korea. On January 26, 2012, the European Union and 22 of its member states also signed. However, ACTA will not go into effect until it is ratified by the European Parliament, for which a debate will be held in June.

Breakdown of ACTA Provisions

Following is a breakdown of the main provisions of ACTA:

Scope of Obligations

• Each Party to ACTA is obligated to provide enforcement procedures that permit effective action against any act that infringes upon the IP rights covered by the agreement, including expeditious remedies to prevent infringements and remedies to deter infringements.
• Each Party to ACTA may determine the appropriate method of implementing the provisions of the agreement within its own legal system. While each Party is free to implement more extensive enforcement than is required by ACTA, no Party is required to apply measures where an intellectual property right is not recognized by, or exceeds the scope of, its own laws.

Civil Enforcement

• Each Party to ACTA must make a private right of action available to rights holders that provides for injunction and damages. In determining damages, each Party’s judicial authorities may consider any legitimate measure of value that the rights holder submits, including lost profits, market value, suggested retail value, and the amount of the infringer’s profit attributable to the infringement. Each Party shall also provide that, at the right holder’s request, its judicial authorities have the authority to order destruction of the infringing goods and of any material or implement used in the manufacture of such goods.

• Furthermore, with respect to infringement of copyright and or related rights protecting works, phonograms, and performances, and in cases of trademark counterfeiting, each Party shall also:
  • Establish or maintain a system that provides for one or more of these remedies:
    • pre-established damages;
    • presumptions for determining the amount of damages sufficient to compensate the right holder for the harm caused by the infringement; or
    • at least for copyright, additional damages.
    • Provide that its judicial authorities have the authority to order the seizure or other taking into custody of suspect goods, and of materials and implements relevant to the act of infringement, and, at least for trademark counterfeiting, documentary evidence, either originals or copies thereof, relevant to the infringement.

Border Measures

• Each Party shall adopt or maintain procedures with respect to import and export shipments to suspend the release of suspect goods, providing that 1) customs authorities may act on their own initiative, and 2) rights holders may request such measure from competent authorities.
  • “Competent authorities” is defined as including the appropriate judicial, administrative, or law enforcement authorities under a Party’s law.

• Each Party may adopt or maintain procedures with respect to suspect in-transit goods or in other situations where the goods are under customs control, to suspend the release of or detain such goods, providing that 1) customs authorities may act on their own initiative, and 2) rights holders may request such measure from competent authorities.

• Additionally, in implementing border enforcement of intellectual property rights, each Party shall include goods of a commercial nature sent in small consignments and may exclude small quantities of goods of a non-commercial nature contained in travelers’ personal luggage.

• Each Party is obligated to adopt or maintain procedures by which its competent authorities may determine, within a reasonable period after initiating border measures, whether the suspect goods infringe an intellectual property right.

• It is further required that each Party’s competent authorities have the authority to order the destruction of goods following a determination that the goods are infringing. When infringing goods are not destroyed, each Party must ensure that, except in exceptional circumstances, such goods will be disposed of outside the channels of commerce and in a manner avoiding any harm to the right holder.

Criminal Enforcement

• Each Party shall provide for criminal penalties in the following situations:
  • in cases of willful trademark counterfeiting or copyright or related rights involving piracy on a commercial scale. Acts conducted on a “commercial scale” includes at least those carried out as commercial activities for direct or indirect economic or commercial advantage.
  • in cases of willful importation and domestic use, in the course of trade and on a commercial scale, of labels or packaging:
    • to which a mark has been applied without authorization which is identical to, or cannot be distinguished from, a trademark registered in its territory; and
    • which are intended to be used in the course of trade on goods or in relation to services which are identical to goods or services for which such trademark is registered.
    • for the unauthorized copying of cinematographic works from a performance in a motion picture exhibition facility generally open to the public.
    • for aiding and abetting any of the above activities.

• Penalties for the above offenses shall include imprisonment and monetary fines that are high enough to deter infringement.
• Each Party must give its competent authorities the authority to order the seizure of suspected counterfeit trademark goods or pirated copyright goods, any related materials and implements used in the commission of the alleged offense, documentary evidence relevant to the alleged offense, and the assets derived from, or obtained directly or indirectly through, the alleged infringing activity.

• Each Party’s competent authorities must also have the authority to order the forfeiture or destruction of materials and implements predominantly used in the creation of counterfeit trademark goods or pirated copyright goods and, at least for serious offenses, of the assets derived from, or obtained directly or indirectly through, the infringing activity.

• Each Party may provide that its judicial authorities have the authority to order:
  • the seizure of assets the value of which corresponds to that of the assets derived from, or obtained directly or indirectly through, the allegedly infringing activity; and
  • the forfeiture of assets the value of which corresponds to that of the assets derived from, or obtained directly or indirectly through, the infringing activity.

• Furthermore, each Party shall provide that, in appropriate cases, its competent authorities may act upon their own initiative to initiate investigation or legal action with respect to the above criminal offenses.

Digital Enforcement

• Each Party must ensure that enforcement procedures are available under its law so as to permit effective action against an act of infringement of intellectual property rights which takes place in the digital environment, including expeditious remedies to prevent infringement and remedies which constitute a deterrent to further infringements.
• Each Party shall also promote cooperative efforts within the business community to effectively address trademark and copyright or related rights infringement while preserving legitimate competition and, consistent with that Party’s law, preserving fundamental principles such as freedom of expression, fair process, and privacy.
• Parties may provide their competent authorities with the authority to order online service providers to disclose expeditiously to a right holder information sufficient to identify a subscriber whose account was allegedly used for infringement. The right holder must file a legally sufficient claim of trademark or copyright or related rights infringement, and the information must be sought for purposes of protecting or enforcing those rights.
• Parties shall provide legal protection and remedies against the unauthorized or illegal circumvention of effective technological measures implemented by authors, performers or producers of phonograms in connection with the exercise of their rights in and that restrict acts in respect of, their works, performances, and phonograms. In connection with this requirement, parties must provide, at the very least, protection against:
  • to the extent provided by its law, unauthorized circumvention of an effective technological measure carried out knowingly or with reasonable grounds to know; and
  • to the extent provided by its law, the offering to the public by marketing of a device or product, including computer programs, or a service, as a means of circumventing an effective technological measure; and
  • the manufacture, importation, or distribution of a device or product, including computer programs, or provision of a service that: is primarily designed or produced for the purpose of circumventing an effective technological measure; or has only a limited commercially significant purpose other than circumventing an effective technological measure.

• Each Party shall protect “electronic rights information” by adequate legal protection and effective legal remedies against any person knowingly performing without authority any of the following acts knowing, or with respect to civil remedies, having reasonable grounds to know, that it will induce, enable, facilitate, or conceal an infringement of any copyright or related rights:
  • to remove or alter any electronic rights management information;
  • to distribute, import for distribution, broadcast, communicate, or make available to the public copies of works, performances, or phonograms, knowing that electronic rights management information has been removed or altered without authority.
  • Electronic rights information is defined as:
    • information that identifies the work, the performance, or the phonogram; the author of the work, the performer of the performance, or the producer of the phonogram; or the owner of any right in the work, performance, or phonogram;
    • information about the terms and conditions of use of the work, performance, or phonogram; or
    • any numbers or codes that represent the information described in (a) and (b) above; when any of these items of information is attached to a copy of a work, performance, or phonogram, or appears in connection with the communication or making available of a work, performance, or phonogram to the public.

Establishment of an ACTA Committee

• The agreement establishes the creation of the ACTA Committee, which will have representation from each participating Party to the agreement. Among the Committee’s duties is the review of the implementation or operation of the Agreement, the consideration of amendments to the Agreement, the decision upon the terms of accession to the Agreement of any member of the WTO, and the consideration of matters concerning the development of the Agreement or any other matter that may affect the implementation and operation of the Agreement.

• The Committee may decide to, among other things, establish ad hoc committees or working groups, seek the advice of non-governmental persons or groups, and share information and best practices with third parties on reducing intellectual property rights infringement, including techniques for identifying and monitoring piracy and counterfeiting.

• The Committee shall not oversee or supervise domestic or international enforcement or criminal investigations of specific intellectual property cases.

Signature

• The Agreement is open for signature by participants in its negotiation, and by any other WTO Members the participants may agree to by consensus, from May 1, 2011 until May 1, 2013.

Criticism of ACTA

A Closed-Door Drafting Process

Details of ACTA were unavailable to the public until a series of discussion papers and other related documents were uploaded to Wikileaks from mid-2008 – 2010. The leaks spurred criticism concerning the reputed secrecy of the negotiations from the Party countries’ citizens. Further criticism arose when it was discovered, through a FOIA request, that many large corporations and lobbying groups received or were able to view portions of the draft under nondisclosure agreements with the Office of the United States Trade Representative (USTR). These organizations include Google, eBay, Dell, Intel, Business Software Alliance, Consumer Electronics Association, News Corporation, Sony Pictures, Time Warner, Motion Picture Association of America, and Verizon. Additionally, some individual members of USTR Advisory Boards were given access to the text. The negotiating parties to the Agreement published an early draft of the Agreement on April 20, 2010. Afterward, there was much criticism concerning the breadth of the Agreement and the power given to enforce intellectual property rights, especially online. In June 2010, a group of academics, legal practitioners, and public interest organizations from six continents convened at American University Washington College of Law to analyze the text and determined that ACTA threatened numerous public interests, including: fundamental rights and freedoms; internet governance; access to medicines; scope and nature of intellectual property law; international trade; international law and institutions; and democratic process. Additionally, a group of over 75 law professors signed a letter to President Barack Obama that urged him to direct the USTR to halt its endorsement of ACTA and subject the text to a meaningful participation process that could influence the shape of the agreement going forward.

On April 15, 2011, the final draft of the text was published by the negotiating parties. In this final draft, significant changes were made, with some of the more onerous provisions removed. However, criticism of the closed-door negotiations has continued. The Electronic Frontier Foundation (EFF) asserts that ACTA “bypassed the checks and balances of existing international IP norm-setting bodies, without any meaningful input from national parliaments, policymakers, or their citizens.” Further, the EFF finds fault with ACTA’s establishment of the ACTA Committee to oversee the implementation of the Agreement and which would be comprised of “unelected members with no legal obligation to be transparent in their proceedings.”

On January 27, 2012 the European Parliament’s rapporteur for ACTA resigned and publicly condemned the entire process leading up to signature of the Agreement.

Constitutional Concerns

Furthermore, it has been debated whether the United States’ signing of ACTA is Constitutional. ACTA has been categorized by the US as a “sole executive agreement.” If it were classified as a “treaty,” it would require ratification by a 2/3 vote in the Senate. As a sole executive agreement, it can be negotiated under the President’s power and would not require Congressional approval. Thus, if it is considered a sole executive agreement, ACTA became binding on the US when USTR Ambassador Ron Kirk signed it in October 2011. Constitutional scholars have called this classification into doubt, noting that the president has no independent constitutional authority over intellectual property or communications policy and there is no historical practice of making sole executive agreements in this area, while the Constitution gives primary authority over these matters to Congress, which is charged with making laws that regulate foreign commerce and intellectual property. Additionally, Senator Ron Wyden has challenged the constitutionality of ACTA as a sole executive agreement in a letter to President Obama.

Enforcement in the Digital Environment

The earlier draft of the Agreement contemplated imposing liabilities (along with a safe harbor) on online service providers. It also provided for a three-strikes rule, whereby online service providers would be required to terminate access to users who are found to have illegally downloaded infringing materials three times. These requirements sparked the most fervent criticism of ACTA, but they were removed from the final draft.

The language of the final draft now includes several vague mandates for each Party with respect to enforcement digitally. This is a contrast to the previous draft, which outlined more specific methods of enforcement. What remains in the Agreement is a broad mandate to “ensure that enforcement procedures are available that permit effective action against an act of infringement, including expeditious remedies to prevent infringement and remedies that are a deterrent to further infringement” and to “promote cooperative efforts within the business community to effectively address trademark and copyright or related rights infringement.” The scope of this language may arguably be interpreted and implemented quite broadly. EFF believes that it could “lead to ‘voluntary agreements’ by Internet intermediaries to restrict Internet access and to monitor and censor Internet communications under threat of legislation or criminal sanctions,” as well as “exacerbate existing pressures on Internet intermediaries to monitor, censor and block online communications, and stifle freedom of expression across the globe.”

Others have criticized ACTA as an attempt to force global U.S.-based IP policies at the behest of Hollywood. A leaked lobbying letter sent in April 2011 by the MPAA and 21 other groups reportedly urged the European Parliament to sign ACTA without further review or delay.

While there was initial criticism that the Agreement’s information sharing provisions would violate the EU’s strict data protection laws, the final draft makes it clear that nothing in the Agreement requires a Party to disclose information that would be contrary to its own laws.