ACTA: new (leaked) text, new issues…

By Kim Weatherall

What a surprise! Despite the best efforts of at least one negotiating party, the ACTA (Anti-Counterfeiting Trade Agreement) text has leaked, again.  This post looks at last night’s leak, and at the negotiations.  In short, though: the text is an improvement that continues to have significant problems.  The negotiations face some significant obstacles right now – but continue at break-neck speed, and I have this sinking feeling that ACTA could be spawning at least one evil little mini-me already…


For those of you who haven’t been following this particular obsession of mine (see my April 9 and April 23 posts), ACTA is the Anti-Counterfeiting Trade Agreement – a plurilateral agreement being negotiated between Australia, Canada, the EU (represented by the European Commission, and the EU President), Japan, the Republic of Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland and the United States.  The DFAT website on the agreement with background is here.  In theory, ACTA is meant to be targeted at establishing “a new standard of intellectual property (IP) enforcement to combat the high levels of commercial scale trade in counterfeit and pirated goods worldwide”.  In reality, it’s a comprehensive re-write of IP enforcement obligations at an international level, with something close to a rightsholders’ wishlist and little protection for end users or the rest of us.

The ninth round of ACTA negotiations took place in Lucerne, Switzerland on 28 June to 1 July 2010. You can basically ignore the press release: the latest one is here.  In April, the parties decided to release a draft text, which has been comprehensively analysed (and criticised).  If you’re interested, there’s a very long section-by-section analysis of the last draft text available online.

At the latest round, the parties decided not to release a text – but, surprise surprise, one has leaked already, this one dated 1 July.  This post analyses some of the changes.

So, what’s changed?

There are basically 4 big ticket, big controversy issues in ACTA that have been getting attention in international circles, and where we need to see whether anything has changed.

  1. Expansion of criminal liability in IP;
  2. statutory damages (that is, ‘fixed’ amounts for damages that in some cases have led to very significant awards, like the US$200,000+ award against one US woman for file-sharing around 25 songs;
  3. ISP liability and what ISPs have to do to get protection from liability (three strikes; notice and takedown; etc etc); and
  4. The possible impact on access to medicines and the trade in generic drugs

Internationally, ‘anti-circumvention’ (digital lock) provisions are also controversial, but I won’t go in to them because Australia already has (and, through AUSFTA, is committed to) very strong provisions in that area.

Criminal Liability (leaked text page 15)

The criminal provisions are quite different to what we saw in the last text.  The last text looked like the AUSFTA provisions – and would extend criminal liability to non-commercial acts of sufficient scale (read, file-sharing) and single acts of infringement for commercial gain.  These provisions are gone, replaced with a requirement that parties apply criminal liability to “acts carried out in the context of commercial activity for direct or indirect economic or commercial advantage”, with a provision that would allow countries to exclude end consumers from criminal liability. The exclusion is a notable improvement on the previous draft which would have required criminalising lots of end users (although it wouldn’t help in Australia, because of AUSFTA).

Liability under the new text is still very broad. The reference to ‘commercial activity for direct or indirect economic or commercial advantage’ could be interpreted as covering single acts (eg, a business is found using one unlicensed copy of software), and has plenty of scope to catch legitimate businesses acting in good faith, who might have published a book believing they have a fair use or fair dealing defences, but who are certainly engaging in ‘commercial activity’.

As Daniel Gervais notes in the third edition of his book on the TRIPS Agreement, the references in TRIPS Article 61 to ‘wilful’ acts ‘on a commercial scale’ is “not synonymous with commercial activity.  It requires that the activity have a demonstrable, significant commercial impact” (emphasis added).  In a footnote, Gervais also notes that the TRIPS expression “corresponds to what have been referred to as ‘professional infringers’”.  In my view, TRIPS is perfectly adequate; it should be left as is.

Statutory Damages (leaked text page 7)

The provision on damages has changed too.  The April ACTA draft seemed to have moved away from requiring countries to adopt statutory damages, and, in particular, it seemed to allow Australia to retain its system of ‘additional’ (effectively punitive) damages. There’s some flexibility there still. Statutory damages are not required, but a country is left with a choice: statutory damages or other ‘presumptions’, or additional damages (to what end is entirely unclear; there’s no requirement that the damages be punitive for example or deterrent).

ACTA will still restrict what a country can do to protect end-users (ie teenagers, grandparents and anyone else with an internet connection) from excessive damages awards should they be caught infringing and have the misfortune to be sued.  There is nothing in the text that limits the rules to exclude damages for ‘innocent infringers’. I’m a little unsure whether this means Australian law would have to change (it depends on whether the current Australian limit of additional damages to ‘flagrant’ infringement is ‘implicit’ in the reference to ‘additional’ damages).  In short, I can see the provision is pretty vague, but I don’t like it. I think it achieves very little if you’re serious about increasing enforcement, but it does restrict policy freedom in the cases that ACTA isn’t meant to be targeted at – end users and consumers.

ISP Liability, Safe Harbours, Three Strikes

ACTA has a strong focus on intermediary/secondary liability.  This is the big factor distinguishing ACTA from previous multilateral agreements that don’t touch on this at all. There seems to have been quite a bit of progress on ISP liability.  Not all of it good.

For one thing, third party liability is still in the text (Article 2.18.2 page 19).  This is bad, and takes ACTA well beyond its remit, which is supposed to be enforcement, not substantive law.  Not just that, but I think the provision (at least, if it includes the proposed footnote) is inconsistent with Australia’s present law of authorisation, certainly in copyright and probably in patent and trade mark too. A few thoughts:

  • Interestingly, the majority of countries (excluding Japan, EU and Switzerland) seem to want to confine the provision to copyright, excluding the question of third party liability for trade mark, patent, designs etc.  This is good.  At least in Australia, authorisation in IP outside the direct area of copyright is a less settled and almost certainly different;
  • The US and Mexico want a footnote that seeks to define third party liability. Define it, not just give examples of what might be covered. And define it in a way that doesn’t match Australian law. The footnote seems to require liability for ‘knowingly and materially aiding any act of copyright infringement’.  Under Australian law, you can ‘aid’ infringement and even know about it, but if you don’t have the power to actually prevent it, or if you’ve taken reasonable steps, say, to reduce infringement you won’t be liable;
  • Still, as before, the footnote also says that “the application of third party liability may include consideration of exceptions or limitations to exclusive rights that are confined to certain special cases…” (etc etc). I have no idea what this meaningless language is trying to say; and
  • There seems to be no requirement on the face of the text that the direct infringement occur. Australian law generally requires proof of actual direct infringement before there is third party liability (see eg WEA v Hanimex)

In addition, provisions on granting injunctions against intermediaries whose services are used for infringement are still in there. I’ve argued at some length this is a bad idea in a treaty.

Regarding safe harbours for ISPs, it looks like the EU has proposed a compromise position, and it has some improvements from last time (for a detailed consideration of the previous version, see Margot Kaminski on Balkinization).  Importantly, there is no longer any language anything akin to ‘three strikes’ language that might require ISPs to start sending letters followed by termination of internet service. There is no requirement, as was found in the previous draft, that the ISP have a policy “to address the unauthorized storage or transmission of materials protected by copyright or related rights”; no requirement to terminate repeat infringers or the like.

This of course won’t stop individual countries introducing three-strikes type laws – but it will mean ACTA doesn’t require it.  The closest the proposal comes to having such a requirement is the provision saying that Parties “shall endeavour to promote the development of mutually supportive relationships between online service providers and right holders to deal effectively with patent, industrial design, trademark and copyright or related rights infringement which takes place by means of the Internet…”. This is a Japanese proposal, and doesn’t look like much of an obligation, although no doubt it will be used rhetorically sometime. I don’t think it should be there, but I don’t think it goes near 3 strikes either.

Access to Medicines

The final ‘big ticket item is the question of the impact of ACTA on access to medicines and the trade in legitimate generic pharmaceuticals. This is something of a ‘hot button’ issue at the moment in international IP owing to Europe’s practice of halting shipments ‘in transit’ (ie going from one developing country to another) on the basis of infringement of EU IP rights (even though the goods never enter the EU market and even where there’s no infringement of rights in the exporting or importing country).  Brazil and India have initiated a dispute in the WTO about this practice.  Since earlier drafts of ACTA included provisions on applying border measures, to goods in-transit, to protect patents, and no reference to things like the WTO Declaration on Public Health, there have been legitimate concerns that access to medicines was going to be hindered by ACTA.

Where are we at now? Well, there is now reference to parties taking measures ‘necessary to protect public health and nutrition’ upfront in the text, so that’s an improvement.  And according to the press release the border measures will not be required to be applied to cases of suspected patent infringement.  On the other hand, several countries still want the provisions applied to ‘in transit goods’, and the text still allows a country to stop goods in-transit, on the basis that the goods infringe IP in the transit country, even where they do not infringe rights in either the exporting or importing country.  And several of the seized shipments in Europe were stopped on trade mark, not patent issues. So I don’t think the concerns have entirely gone away by any means.

In addition to these ‘big ticket’ areas, the other issue that’s been troubling critics has been the lack of balance in the earlier ACTA drafts and the agreement’s potential impact on fundamental rights and liberties.  To put it bluntly, there were all kinds of rights for right holders, and almost no acknowledgment that IP is about a balance of interests; that consumers and other users have rights too, and that right holders sometimes abuse their rights and that needs to be controlled. It was said in the last draft that there would be more provisions on the other side of the balance.

The new leaked text does have more detailed general principles upfront, including ‘public interest’ principles in draft.  The provision on protecting privacy has been expanded. ACTA raises a lot of privacy issues because it anticipates the release of information about individuals to right holders to facilitate enforcement: in litigation evidence-gathering, by ISPs, by police to their colleagues overseas.  Some of this information would be considered private: names, addresses…activities online… . So privacy is important. The text itself is pretty much what you’d expect: that is, it leaves it to individual countries to work out how they want to protect privacy. As I’ve said in my ACTA megapaper analysing the last public draft, this won’t help Australians all that much because our protection for private information isn’t all that strong and is based only in legislation (we have no higher constitutional or human rights principles to appeal to).  But it’s good to have it in there.

Finally, too, there is some text:

  • On the importance of ‘a balance of rights and obligations’, and to allow parties to adopt measures to protect public interests in health, nutrition, and socio-economic and technological development (Art 1.X.1-1.X.2 p3); and
  • Acknowledging that “appropriate measures … may be needed <strong>to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade</strong> or adversely affect the international transfer of technology” (Art 1.X.3 p3).

Bizarrely, this provision seems to be controversial: proposed by Australia, NZ, Singapore and Canada, there’s another bloc wanting it removed: Japan, Mexico, Korea and the US. Again, why? If ACTA is, as the negotiators keep saying, meant to be consistent with TRIPS and consistent with the WTO Declaration on TRIPS and Public Health, and will allow countries to respect fundamental rights and liberties, why protest these principles? Why even, as the EU wants to do, demote them to the level of ‘preambular statements’? (I will say though I’m pleased that Australia is on the side of the forces for good here – you go AG’s!). All I can say is that if this language, or something like it, isn’t included in the final agreement, it’s going to be embarrassing – and confirm a lot of suspicions about what the agreement is all about…

Where to from here? Hypocrisy, Red Lines, Racing Negotiations and the potential for ACTA-Spawn

So where to from here? The parties are still talking about concluding negotiations by the end of the year.  According to IP Watch, some of the negotiators have seen “a real acceleration” in the more recent rounds of negotiations, and Prof Geist has opined that we could in fact see conclusion of the negotiations this year. Perhaps this is why the tension between some of the negotiating parties is bursting out a little in public.

US negotiator Stan McCoy has said that “there was some progress on ACTA in Lucerne, but not as much the U.S. had hoped”, and the EU negotiators have been accusing the US of ‘hypocrisy’ and drawing ‘red lines’.  To an outsider, it looks like they’re getting to crunch time: and the question of exactly how far they’re willing to compromise has to be faced – but they will be faced, because everyone involved wants to move on after over 2.5 fairly intense negotiating years and more rounds in 2010 than one would care to count. Me? I think they’ll reach agreement, and soon, and they’ve all committed too much to see it fall over.

But regardless of what happens in the ACTA negotiations, I have a feeling that we’ll be seeing something very close to these provisions again real soon.  Because there is another set of negotiations going on at the moment: the Trans-Pacific Partnership negotiations. The TPP is supposed to be “a high-quality, comprehensive 21st century Free Trade Agreement (FTA) that increases economic integration in the Asia-Pacific region”.  That is trade-diplomat-code-speak for “it’s an FTA with everything, like the AUSFTA”. And that means IP will be in it.

The TPP involves Australia, Brunei, Chile, New Zealand, Singapore, Peru, the United States and Vietnam.  So looking at that, you have Australia, NZ, Singapore, and the US who are all in both.  Peru and Chile are already party to an FTA with the US, which means that it’s likely they can sign up to quite a lot of what you’d find in ACTA.  That leaves Brunei, and Vietnam… who I don’t imagine will be focusing strong efforts on the IP aspects.  And you can bet that at least some significant portion of the people doing the negotiating on behalf of the ACTA countries on IP issues is also in the TPP IP negotiations.  Sheer practicality I suspect means they’ll be starting with some bastardised evil-spawn combination of the US FTAs and ACTA. The mega-long IP chapter from hell, I’m predicting. I can feel that strange combination of glazed eyes and boiling blood starting already. Grrr.

Kimberlee Weatherall is a Senior Lecturer at the University of Queensland

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3 Responses to ACTA: new (leaked) text, new issues…

  1. […] A few folks have sent over another detailed analysis of the new leak by Kim Weatherall, who compares it to the previous draft. Definitely worth […]

  2. […] an in-depth look at the latest ACTA skinny, be sure to check out Kim Weatherall's ACTA: new (leaked) text, new issues… at The Fortnightly Review of IP & Media Law. A snippet to get you […]

  3. […] been over this ground so many times before, I’m at serious risk of sounding like a broken record. But, for the record, I thought […]


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