With An Eye On ACTA: China Champion of TRIPs Freedoms and Flexibilities

During the TRIPs Council, which was held June 8 and 9, China told delegates it was concerned about developed countries that want provisions (for example the lower thresholds for criminal enforcement of counterfeiting and piracy) that go beyong TRIPs. This could lead according to China, to barriers to legitimate trade (when customs can seizure goods too easily) and restrict the flexibilities of TRIPs. And each country should be able to make decisions about the allocation of resources to enforce IPRs.

China points out all the provisions of TRIPs that makes their dramatic low IPR enforcement level arguably not noncompliant to TRIPs.

- Article 7 and 8 TRIPs: which gives a country leeway to not enforce in case of a public health or security emergency.
- Article 41(5) TRIPs: I called this in my master's thesis the Achilles heel of TRIPs: because it says that a country has the souvereignty to decide how much of its resources it would allocate to TRIPs.
The DSU panel at the WTO who decided over DS663 'China - Measures Affecting the Protection and Enforcement of Intellectual Property Rights' made it clear that China's level of numerical thresholds of criminal enforcement was not noncompliant to TRIPs.

Obviously China is not falling for ACTA's charms of the promise of high enforcement levels. And maybe even some obligations of measures. One could say that ACTA is demanding a monotonous relationship with right holders. China rather wants to continue its marriage of convenience with TRIPs because it gives it only the obligation to legislate, not a single obligation of measure, let alone obligation of result. TRIPs allows room for a romance with other goals than only enforcement on behalf of right holders: technology transfer, public dissemination of information, developing regions, indigenous innovation.

Read Catherine Saez' article about the TRIPs Council meeting for Intellectual Property Watch here.

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Do ACTA Member Countries Want to Confront China With A Fait Accompli?

Since April 9, when I blogged 'China and ACTA: Why the problem is not made part of the solution', new information about the Anti-Counterfeiting Trade Agreement (ACTA) has leaked, see Wikileaks here. It makes you realise how transparent the founding parties to ACTA want to be. Compare the United States Trade Representative posting a 6 page Summary, April 6, 2009 with the 48 page draft that leaked.

I know some lawyers who will be exuberant with the most conspicious provision of the ACTA draft you can find:

Section 3: Criminal Enforcment; article 2.14:

"Willful copyright or related rights piracy on a commercial scale includes:

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 for purposed of commercial advantage or private gain."

Although a lot is in flux, these are some of the other interesting things in the draft:

- Higher damage awards;

- Mandated information from infringer;

- The right holder is not liable for payment of any storage or destruction;

- Right to block or detain goods at the border for up to one year.

By excluding countries such as the People's Republic of China, it seems that the ACTA members first want establish a high IPR enforcement standard, and make this standard the global standard. But this makes all the other fora less significant. As Professor Michael Geist put it: "there will be a concerted effort to transform a plurilateral agreement into a multilateral one, though only the original negotiating partners will have had input into the content of the treaty". Read Professor Geist's column for Intellectual Property Watch: 'The ACTA Threat To The Future Of WIPO'. Of course ACTA is not only threatening the World Intellectual Property Organization (WIPO), but also World Trade Organization (WTO)'s Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPs). One of the advantages of WTO's TRIPs in comparison to WIPO treaties is that WTO has an effective dispute resolution mechanism. It will be interesting to see how the ACTA members will resolve disputes.

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China and ACTA: Why Is The Problem Not Made Part Of The Solution?

Medio December 2008 IP Dragon wrote about the controversial genesis of the China-less Anti-Counterfeiting Trade Agreement (ACTA) by Japan and the US (joined by Australia, Canada, the European Union, Mexico, Morocco, New Zealand, Republic of Korea, Singapore and Switzerland) whose goal it is to stem the tide of counterfeit and pirated goods that originate for the lion share from China, read here.

ACTA is not only controversial because it was born in darkness (then again out of darkness beautiful flowers grow), but also because:

- Why start a new multilateral trade agreement when the international community has already the World Trade Organization (WTO)'s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs). Then again it is hard to reform TRIPs because there are many WTO members. So the way of least resistance is to start a new trade agreement with pre-selected countries that think the same about a TRIPs plus level of IPR enforcement;

- If the People's Republic of China causes the initiators of ACTA such headaches, should they not involve this country in some way with ACTA? In the philosophy of Yin and Yang, the problem (China's lack of IPR enforcement) is existent in the solution (multilateral trade agreement) and vice versa;

- ACTA's content is unknown, so this opens the gates to speculations.

Now the United States Trade Representative has posted ACTA's 'Summary of Key Elements Under Discussion' (Summary) which gives the countours of the draft structure:

• Chapter 1. Initial Provisions and Definitions;

• Chapter 2. Legal Framework for Enforcement of Intellectual Property Rights;

Section 1. Civil Enforcement

Section 2. Border Measures:

Under discussion is whether border measures should apply not only to importations (as TRIPs prescribes) but also to export and transit of goods;

Another possible point of contention is whether travelers can import counterfeit or pirated goods for their personal use (de minimis exception);

It is no surprise that ACTA tries to solve some of the points, which especially has frustrated the US (which among other reasons brought a claim against China at the WTO: DS 362): measures to ensure that infringing goods are not released into free circulation and the destruction of goods that have been determined to infringe intellectual property rights.

Section 3. Criminal Enforcement; the holy grail (overestimated to my taste) remains criminal enforcement of IPR. In the leaked out version of the ACTA proposal of 2007, see below on page 2 here, it was proposed to apply criminal sanctions to IPR infringements on a commercial scale "IPR infringements for purposes of commercial advantage or financial gain. This sentence that I could not find back in the Summary was a bit unclear, because either you apply criminal sanctions if a commercial threshold of the infringed goods is reached (problem: which threshold is not arbitrary and what to do with infringers that keep their activities just under the threshold) or you sanction the intention of commercial advantage/financial gain plus the infringement of minimal one product.

Section 4. Intellectual Property Rights Enforcement in the Digital Environment: surprisingly no draft proposal has been tabled yet.

• Chapter 3. International Cooperation;
• Chapter 4. Enforcement Practices; I cannot stress the importance of the exchange of best practices enough. Transparence of IPR enforcement information, including statistics is key;
• Chapter 5. Institutional Arrangements;
• Chapter 6. Final Provisions.

Expect a lot more discussion when the first draft provisions are disclosed (or leaked).

UPDATE: First draft leaked; read 'Do ACTA Member Countries Want to Confront China With A Fait Accompli?'

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Drafting An Anti-Counterfeiting Trade Agreement: Where is China?

The drafting of the Anti-Counterfeiting Trade Agreement (ACTA) was, and to a lesser extent still is, shrouded in secrecy. There has been a lot of criticism about the lack of transparency in the negotiation process and drafting of ACTA. Only a leakage in 2007 provided a draft version of ACTA, see here (4 pages pdf).

This September a lot of stakeholders signed a protest letter that to withhold the citizens of countries participating in the negotiation process is undemocratic. The Chinese Domain Name User Alliance in Beijing was the only Chinese signatory of the protest.

It became clear in October 2007 that the United States, the European Community, Switzerland, and Japan are participants. After that Australia, Republic of Korea, Mexico, Jordan, Morocco, Singapore, the United Arab Emirates and Canada joined.

The goal is to establish a new international legal framework and to set a new, higher benchmark than TRIPs for the enforcement of intellectual property rights that countries can join on a voluntary basis.

Although China is not participating in the drafting process (either because China was not invited or it declined an invitiation), it is the ultimate objective of ACTA that "large emerging economies, where IPR could be improved, such as China and Russia" to sign up to the global act. Read more in the November 2008 Fact Sheet of the European Commission about ACTA, here. However, one can doubt whether China wants to adhere to a global act if they did not participated in the negotiation process.

So why did the United States and European Community shift the forum from WTO's TRIPs to this new forum, that has no ties with WTO, WIPO or anything we already know? I take it that if you have ambitions to increase the minimum protection/enforcement level of intellectual property, the WTO is a forum with many members so it is likely that the participants have to strike a compromise.

The drafting process of ACTA is in full swing and will continue in 2009.

Read more about ACTA here.

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