Watered-down ACTA Approaching Conclusion

8 September 2010

Controversial multi-country negotiations on an "Anti-Counterfeiting Trade Agreement" are within striking distance of conclusion, according to a leaked draft text.

The secrecy surrounding the talks took another hit this week when Knowledge Ecology International, a Washington-based non-governmental organisation, posted the draft on its website, along with a note stating that the United States was alone among participating governments in opposing the draft's release.

While the secrecy has steadily eroded, with regularly leaked draft texts and greater support for transparency among the dozen-odd mostly industrialised countries taking part in the talks, the prospective agreement has continued to draw fire for other reasons.

Critics have charged that the terms being considered go well beyond what is necessary to target counterfeiting, and would create new intellectual property protections that surpass existing multilateral rules and upset the carefully constructed balance in the WTO's agreement on intellectual property. They worry that if an accord entered into force, it could threaten internet freedom, access to technology, and the availability of affordable medicine in poor countries.

The leaked draft, which includes compromises reached during the last round of negotiations in Washington from 16-20 August, has had some provisions watered down enough that some have dubbed it ‘ACTA-lite'. But while the changes will allay some fears, they do not address others. James Love, KEI's director, said that the "substantial surgery" the negotiated text had undergone went in both directions.

The new draft contains far fewer provisions within square brackets - the drafting practice signifying the absence of consensus - than earlier versions, suggesting that participants have made considerable headway towards an agreement. According to the communiqué issued at the end of the talks in Washington in August, they committed to resolving all remaining substantive issues at the next negotiating round, scheduled for later this month in Japan.

Some issues unresolved

Some critical issues remain unresolved, not least the fundamental matter of the scope of the agreement: the EU, backed by Switzerland and Japan, would like it to cover all intellectual property rights, which would include patents; in contrast, the US, with support from countries including Canada, New Zealand, and Mexico, wants it to focus on copyright and trademarks.

One of the reasons for the difference is that the EU wants the ACTA to apply to ‘geographical indications', i.e., foods and alcoholic beverages whose names are linked to particular places. Securing greater intellectual property protections for GIs other than those for wines and spirits has been a longstanding European goal in negotiations at the WTO. Under the EU's proposals for ACTA, Reuters reports, Washington fears that ACTA parties could be required to treat shipments of US food products such as Kraft parmesan cheese - quite distinct from the EU-approved raw-milk cheese from Italy's Emilia-Romagna region - as illegal and subject to seizure by customs authorities.

Other bracketed proposals from the EU have potential ramifications for international shipments of legal generic copies of patent-protected drugs. The EU's preferred option for aggrieved rights-holders (Article 2.6) would require all ACTA parties to set up procedures for rights-holders to petition customs authorities to seize suspected goods in transit between third countries, not just those being imported to and exported from the party in question. And while other countries, including the US, want such a clause to be limited to suspected counterfeit trademark goods or suspected pirated copyright goods, the EU alone wants it to cover goods "suspected of infringing an intellectual property right." This could conceivably enable the rights holder to a drug under patent in the EU but not in India to petition Dutch customs authorities to seize shipments of generic versions while they are in Rotterdam en route from India to Brazil.

Such seizures have happened in the past. Seizures of in-transit generics have been in the spotlight over the past two years, after several batches of medicines en route from India to Brazil were temporarily held by border officials in European ports. The medicines in question did not have patent protection in either developing country; they were, however, patent protected in the EU. Developing country governments and health activists have complained that such seizures, even when the drugs are subsequently released, hurt access to affordable medicines.

In general, the EU and Switzerland would like border measures to apply to goods suspected of infringing intellectual property rights "when they are imported, exported, in-transit or in other situations where the goods are under customs supervision." WTO intellectual property rules only apply such measures to goods being imported (TRIPS Article 51; their application to exports is non-mandatory).

Substantial convergence on internet issues

On other issues, notably internet-related rules, there has been substantial convergence. Several provisions in the new draft suggest that the US has dropped many of its earlier demands on enforcement and the internet, according to Michael Geist, a law professor at the University of Ottawa who is an expert on internet and e-commerce issues. It is "increasingly apparent that the USTR is willing to agree to almost anything in order to bring home an agreement before the next round of elections in November," he wrote on his blog.

Some of the most controversial issues in the ACTA negotiations provisions have been dropped, the new text reveals. ‘Secondary liability' provisions that could have seen internet service providers required to provide information about customers who download unlawfully copied music have been dropped entirely. The text would give governments the option to exclude travellers' personal luggage from the provisions of the text, which may help calm fears about iPods and laptops being seized at international borders. The text specifies that while ACTA parties "shall provide the means to address the infringement" of the rights ultimately covered by the Agreement in the digital environment, "these procedures shall be implemented in a manner that avoids the creation of barriers to legitimate activity, including electronic commerce, and, consistent with each party's law, preserves principles relating to freedom of expression, fair process, and privacy."

On the other hand, Geist wrote, on the issue of "anti-circumvention" - rules prohibiting the circumvention of technological barriers to using a digital good in ways the rights-holders don't want you to - the Obama administration "is still pushing for two additional provisions that would define adequate legal protection and effective legal remedies in an effort to limit the flexibility that all countries agreed to with the WIPO Internet treaties in the 1990s."  The US approach, he adds, would mandate protection against circumvention of access controls and prohibit devices used for circumventing digital locks, and even prohibit the marketing of such devices. The EU is opposed to the provisions.

The internet chapter is now "far better than the initial US proposal," Geist concluded, although he urged countries to push back on the US ‘anti-circumvention' proposals.

The text's chapter on institutional arrangements would have parties create an ‘ACTA Committee' upon concluding the negotiations. The committee would make decisions by consensus, and be responsible for overseeing the implementation and functioning of the agreement. The text does not provide for an independent dispute settlement mechanism; an earlier proposal had called for one, prompting concerns about marginalising multilateral fora like the World Intellectual Property Organisation. The ACTA Committee is empowered to determine terms of accession for each country that applies to join in the future.

Governments participating in the ACTA negotiations (including EU member states) are Australia,  Austria,  Belgium,  Bulgaria,  Canada,  Cyprus,  the  Czech  Republic, Denmark,  Estonia,  Finland,  France,  Germany,  Greece,  Hungary,  Ireland,  Italy,  Japan,  Korea, Latvia, Lithuania, Luxembourg, Malta, Mexico, Morocco, the Netherlands, New Zealand, Poland, Portugal, Romania,  Singapore,  Slovakia,  Slovenia,  Spain, Sweden,  Switzerland, the United Kingdom, the United States, and the European Union.

ICTSD reporting.

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