Why the EU will repent ACTA at leisure

The 22 European states that signed up to the controversial Anti-counterfeiting Trade Agreement (Acta) last week may have been in an unseemly rush.

They appear to have ignored the recommendation that the European Parliament (EP) postpones ratification of the US-inspired agreement on at least two grounds: firstly, because it does not comply with existing European rules and agreements (acquis) as it stands, and secondly, because the European Court of Justice has not had a chance to evaluate the method for calculating financial damages for copyright infringements.

The haste with which the UK and 21 others joined the US, Australia, Canada, Japan, Mexico, Morocco, New Zealand, Singapore, South Korea and Switzerland may also have led to the resignation of Kader Amir, the Acta rapporteur. Amir was responsible for shepherding the agreement through the EP ratification process, scheduled for June. He quit on the day of the signing, describing the process as a “masquerade“.

The recommendation to postpone is in a 76-page technical assessment ordered by the EP as to whether Acta is compatible with the existing acquis communautaire and the World Trade Organisation’s Trade Related intellectual Property rights (TRIPs) Agreement. (For my highlighted copy see here.)

The authors found plenty that disturbed them. Some of it may be why Germany, the Netherlands, Estonia, Cyprus and Slovakia did not sign up.

They also said it was “difficult to point to any significant advantages that Acta provides for EU citizens beyond the existing international framework”.

“The apparent lack of intent to seek congressional approval and thus actually implement the treaty in US law begs the question of what, if anything, the EU gained from the US. There are serious concerns regarding whether Acta will have any effect under US law and thus be able to be treated as a treaty under international law,” the authors said.

They added that the exclusion of China, India and Brazil (which were apparently not invited to the secret negotiations and which have all raised questions over Acta) meant that major competitors to the EU are not bound by its provisions.

The authors said the EU had won one concession, that Acta signatories would act against faked geographic indicators (GIs). GIs cover brands like Parma ham and Champagne. But counties that do not already protect GIs are not bound by Acta. This exempts the US, Australia, Japan and South Korea, the study said.

The authors found that proposed measures on copyright piracy seen in early leaked documents published on WikiLeaks had been watered down. However, the proposed financial penalties go further than existing EU and international agreements.

“Damages apply not only to a knowing infringement but also to infringement due to negligence,” the report says. “Thus those who could be considered to have reason to know they were or might be infringing, would be liable for damages even if they did not intend to infringe.”

This would appear to nail websites like The Pirate Bay and MegaUpload. These pointed to sites that held infringing material, even though they did not host it themselves. Both have been shut down using other laws.

But it could include search engines such as Google, which index and point to sites that host infringing material. Google is clearly the focus of a secret document, now public after a Open Rights Group Freedom of Information request, that calls for search engines to delist sites that hold infringing material.

Penalties

Acta provides for judicial authorities to order four types of financial penalties: for the infringer to pay his profits to the rightsholder, to pay pre-established damages, or a presumption of the harm caused by the infringement, or additional damages.

The authors objected to the way in which damages are to be calculated. They said, “The focus is not on objective tests but on any ‘legitimate’ measure of value the rightsholder puts forward.”

The list of measures to be taken into account when assessing damages contains “two novel approaches that are problematic” and not in the existing rules. These are the market price of infringing goods, based on the concept that each infringing product constitutes a lost sale; and the suggested retail price, which they describe as “another proxy for the concept that each infringing product represents a lost sale”.

The authors said, “This latter authority is only mandatory for cases of copyright and trade mark infringement, not for the infringement of designs, patents or geographical indications.”

The authors noted that rightsholders could allege copyright infringements to prevent competitors indefinitely from entering markets. This could include makers of generic drugs (drugs that are out of patent protection), but only in signatories’ markets.

Acta also excluded copying for personal, no-for-profit uses, including “fair use” for study, teaching, new reporting, commentary or criticism, they said. It also sought to criminalise unauthorised copying by anyone.

“(Acta’s) criminal measures (are) most problematic in the field of copyright and related rights, as these cover not only economic actors, but address private individuals in equal measure,” they said.

The authors accepted that it is important to protect intellectual property, but added that “knowledge” has a sell-by date.

They raised questions over who stands to benefit from such protection. The said countries with more established knowledge-based capabilities (ie research-intensive manufacturers, pharmaceuticals, software, or creative products such as music, films, etc) will benefit, not least through enforcement.

“Countries with weaker knowledge-based capabilities are likely to benefit most by being outside such an international system, so they can freely exploit and imitate IP-related products in their own domestic economies,” the authors say.

“Where they are successful, these countries may even be able to compete with the original IP owners, thus becoming exporters of such products themselves.”

From the start Acta has aimed to further the interests of the US music and film industry, almost exclusively. It has been negotiated in secret, with US president Barack Obama stating at one point that it was a US national secret. It does nothing to enhance protections the EU has already secured in public forums, and may severely curtail the ability and capacity for its people to use what is already published for legitimate ends.

Rejecting ratification means that the EU writes off the cost of the negotiations, and possibly some political capital. Accepting it lock, stock and barrel potentially exposes EU citizens to unquantifiable criminal and financial penalties for an indefinite period, while allowing its main economic competitors free reign.

If you were an MEP, what would you do?