[A2k] Letter to the European Parliament regarding ACTA

James Love james.love at keionline.org
Mon Oct 25 04:47:38 PDT 2010


http://www.keionline.org/node/992

Knowledge Ecology International

October 25, 2010

Letter to the European Parliament regarding ACTA

Negotiations on ACTA were formally announced on October 23, 2007. Now,
three years latter, the European Parliament is being asked to endorse an
agreement that was officially published in near final form on October 6,
2010.[1] This letter addresses our concerns about the current text, and
asks the Parliament to consider actions that would address its
shortcomings.

Overall, and in many important areas, the October 2010 version of the
ACTA text is a significant improvement over the only other public
version, the one published on April 16, 2010. In the October 2010 text,
a number of important safeguards have been added in areas such as
privacy, public health, and in clarifying the objectives and purposes of
the agreement. The border measures and the Internet provisions have been
significantly improved by removing patents from the border measures,
narrowing the scope and more carefully addressing the importance of
safeguards and balance in the text. We also note improvements in the
civil litigation provisions on injunctions. This said, there are
outstanding issues that are important, and which may undermine the
creditability, usefulness and durability of the agreement.

     Damages for Patents

The early public justification for ACTA was to address a concern over
trade in counterfeits and copyright piracy. The extension of the
agreement to a much broader definition of all types of “intellectual
property” referenced in Part II of the WTO TRIPS agreement emerged as an
objective of the European Union, Japan, Switzerland and at one point,
the United States, during the early negotiations. However, as the
concrete provisions of the ACTA text have become better known, the
problems of lumping all types of intellectual property together into a
single set of obligations have also become more obvious.

Some of these issues have been resolved by language to exclude patents
from the border provisions, or to limit some obligations to “at least”
copyright and related rights or trademarks. However, there remain
unintended consequences of the broad scope.

For example, to the extent that pharmaceutical test data is referenced
in Part II of the TRIPS, some might argue that that ACTA has created a
new obligation to provide for damages, injunctions, and orders to
destroy goods that infringe upon this “intellectual property right.”

The ACTA provisions on damages and injunctions are particularly
problematic for patent law, for the following reasons. First, the
damages section of the ACTA reads as though it was written by lobbyists
for the entertainment and copyright industries, particularly as regards
to requiring courts to consider “any legitimate measure of value
submitted by the right holder,” including “the value of the infringed
good or service, measured by . . . the suggested retail price.” 

Wholly apart from the inappropriateness of the “suggested retail price”
as a global norm for copyright, it is even more problematic for patent
damages. As one judge recently noted at a conference at Fordham
University, the ACTA text seems to suggest the courts be required to
consider use of the entire market value rule for patents (EMVR). Patent
experts increasing see the EMVR as a deeply defective approach to patent
damages, and call for “more rigorous, empirical approaches” that
“provide adequately detailed evidence of consumer-driven demand,” as
well as a realistic analysis of the importance of a particular patented
invention in a product that may contain dozens, hundreds or even
thousands of inventions, not to mention significant investments and
outlays entirely unrelated to the patented invention.

The ACTA provisions on damages are inappropriate as a general standard,
and even more so for certain special cases.
For a variety of reasons, flexibilities in intellectual property rules
are sometimes implemented as limits on remedies, rather than exceptions
to patent rights. For example, in the United States, damages for patent
infringement are limited by statute to zero in cases involving
performance of medical or surgical procedures by a medical professional.

In new U.S. legislation concerning regulatory pathways for generic
biologic drugs, damages are limited by statute in some cases to a
reasonable royalty. When patents are not disclosed timely to potential
competitors, the damages are limited to zero. These limitations on
remedies are an incentive to motivate patent holders to make useful
disclosures of patent landscapes. Some biologic drugs are quite
expensive to manufacture, and mechanisms for timely disclosure of
patents facilitate needed investments in generic products, and enable
more competition for products for the treatment of cancer and other
severe illnesses. ACTA should not be a barrier to these policies, but in
the current draft, it will be. ACTA requires, without limitation, that a
court have the authority to grant damages for infringement.

Some experts believe that in the future policy makers should introduce
similar limitations on remedies for undisclosed patents in cases
involving standards.[2]

Even though European members states have not implemented such policies,
the Parliament may consider if the foreclosure of the policy options is
wise.
In-Transit Goods and the ACTA civil enforcement provisions

In the October 2010 draft, ACTA border measures do not apply to patent
infringement, and there is welcome flexibility regarding parallel trade
and in-transit goods. But if patents are included in the civil
enforcement provisions of ACTA, there will still be an obligation to
make patent injunctions and damages available in court actions brought
against against in-transit goods. This has important negative risks and
consequences for access to medicines in developing countries, in those
cases where medicines are off-patent in the countries where they are
manufactured and used, but on-patent in country of transit.[3] It simply
is not good enough to provide exceptions for in-transit goods in the
section on special border measures if the section on civil enforcement
requires Parties to give courts the authority to enforce private actions
seeking injunctions, damages and orders for the destruction of goods.

     ACTA provisions on damage and Orphan Copyrighted Works

The provisions in ACTA for damages are particularly aggressive in terms
of infringement of copyrighted and related rights works. EU officials
argue that the damages provisions are plausibly consistent with EU legal
norms, despite the introduction of the possibility of using the
suggested retail price as a measure of the value of the infringed good.
Even if this is true, the ACTA norms for damages may present an
unwelcome barrier to creating new EU norms to expand access to works for
which the owners of copyrighted works cannot be identified or located.

With copyright and related rights now extending to millions of orphaned
books, photographs, pamphlets, audio recordings, video, broadcasts and
other protected works, and rapidly improving tools for computer
translations of works into different languages, there is growing
interest in making digital versions of such works widely available. The
European Commission will be examining a variety of methods to address
the orphan works issue, including extended “opt-out” licensing
approaches, which generally involve making making payments to use works
for which owners cannot be found, and approaches that involve
limitations on remedies for infringement of such works. Under the Berne
Convention, there is greater flexibility in fashioning solutions based
upon limitations on remedies than on compulsory licensing of works,
particularly if the solution involves free uses of works where owners
are never found.[4]

The provisions in ACTA will make it much more difficult to address the
orphan works problem, by closing off one promising avenue for policy
intervention.[5]

     Exceptions to ACTA standards for remedies to infringement

In the October 2010 text, ACTA includes some general safeguards, which
are welcome, and the specific obligations to provide remedies for
infringement provide some limited room for exceptions. There are,
however, no general provisions that allow a Party to ignore the specific
obligations in the ACTA. Thus, Parties that are out of compliance with a
particular obligation, or which are considering new departures from the
ACTA obligations – such as to address access to orphaned copyrighted
works, for example, or to provide exceptions to remedies for civil
infringement for in-transit medicines, are faced with a dilemma. Do they
forgo changes in domestic laws that solve problems, or do they ignore
the ACTA obligations?

This is not a hypothetical situation. The United States adopted new
limits on remedies for infringement of patents on biologic medicines in
the Affordable Care Act, which passed on March 23, 2010, and is likely
to consider new legislation on orphaned copyrighted works, based upon a
bill that passed the US Senate in the 110th Congress. The United States
is also considering patent reform legislation, that would give judicial
authorities the right to limit methodologies for patent damages that
could be considered in litigation. The United States also has several
other areas where there are limits on remedies for the infringement of
patents, copyrights and trademarks, all of which are inconsistent with
the precise language of the various ACTA articles on injunctions,
damages and other remedies.[6]

The USTR is now telling legislators, other federal agencies, industry
lobby groups and NGOs that the ACTA is in fact not really that binding,
and that language in ACTA Article 1.2 provides a general loophole for
pretty much everything:

            “Each Party shall be free to determine the appropriate 
            method of implementing the provisions of this Agreement 
            within its own legal system and practice."

While it is difficult to imagine that the USTR really thinks Article 1.2
of ACTA allows such wide latitude to ignore the specific obligations of
the TRIPS,[7] it does suggest a different possibility – that the United
States does not really consider the ACTA to have any binding effect on
the United States, and that it will be used primarily to set standards
for developing countries, through bilateral pressure.

     Transparency and the ACTA Committee

The entire process for negotiating ACTA was appalling in terms of the
secrecy and exclusion of civil society. KEI has asked negotiators to
include language in Chapter 5 requiring the ACTA committee to operate in
an “open, transparent and inclusive manner.” There should be some
assurance this will happen.

     Concluding Comments

The White House wants the ACTA signed before the November 2, 2010
Congressional elections, on the theory that it will provide some
evidence the Obama Administration is taking steps to protect US jobs.
While it is doubtful that voters will be influenced much by such an
announcement, the deadline is pushing the negotiating Parties to rush
the final text, and sign the document without resolving important
outstanding issues. Among those important issues are the treatment of
patents in the final text, analysis of the impact of the proposed
standards for damages, and a common understanding of the flexibility to
have exceptions to the obligations in ACTA.

Exploiting the United States' weak negotiating position or often weak
analysis of its own legal system may lead to a pyrrhic victory for the
European Union. If the United States signs ACTA, and then ignores
important obligations in the agreement, it may be unrealistic to expect
other trading partners to take the ACTA seriously, at least in the short
run. And, the European Union also risks signing an agreement that is
against its own longer term interests, because exceptions to remedies
are often useful for public policy makers, and not really a cause of
counterfeiting or loses in comparative advantage.

If the leading IPR enforcement issue is the lack of respect for laws
that already exist, signing an agreement that will not be honored by the
largest national economy is not necessary a good thing.

For this reason, it may be useful to insist that the Commission clarify
the mechanisms that enable the flexibility for Parties to adopt
legitimate exceptions to the obligations of the agreement. This could be
done in connection with an obligation to report those exceptions to the
new ACTA Committee, which would address the issues raised by exceptions,
if there is a need, at a later date.

Sincerely,

James Love, Director
Knowledge Ecology International
http://www.keionline.org
1621 Connecticut Avenue, NW
Suite 500
Washington, DC 20009
Email: james.love at keionline.org
Voice: +1.202.332.2670
Fax: +1.202.332.2670
Mobile: +1.202.361.3040

Notes

1. The text is dated October 2, 2010, but was related to the public on
October 6, 2010.

2. We note that at the most recent meeting of the World Intellectual
Property Organization (WIPO) Standing Committee on the Law of Patents
(SCP), the European Commission made the following intervention: “the
question of “Industrial Property Rights and Competition” is one of the
challenges identified (as point 3.4.) in the European Commission’s
document, “An industrial property rights strategy for Europe”, published
in July 2008. Within the framework of this strategy the Commission also
intends to make an assessment of the interplay between intellectual
property rights and standards, particularly in information and
communications technologies.” The EU and its Member States believe that
the continuation of debates on these matters will be helpful.

3. The need for special treatments of goods in transit was recognized by
the European Federation of Pharmaceutical Industries and Associations
(EFPIA). See March 13, 2009 statement on in-transit seizers of
medicines:
“EFPIA recognizes the right of Member States to stop products that they
suspect may be counterfeit from entering the supply chain. On occasions
this will require the temporary detention of some products for the
purposes of verification and testing. Where the product is not
counterfeit and it is ascertained that no intellectual property rights
apply at either country of origin or destination, the customs
authorities should allow the product to be released, irrespective of the
intellectual property status of the product in the EU.”

4. Or for works where compulsory licenses are not available in the
Berne.

5. This issue is examined in more detail here: Access to Orphan Works,
and ACTA provisions on damages, October 20, 2010.
http://www.keionline.org/node/980

6. See: Areas where the Oct 2, 2010 ACTA text is inconsistent with U.S.
Law, October 14, 2010,http://www.keionline.org/node/970

7. See: USTR's implausible claim that ACTA Article 1.2 is an all purpose
loophole, and the ramifications if true, October 22, 2010, 
http://www.keionline.org/node/990
-- 
James Love, Director, Knowledge Ecology International
http://www.keionline.org | http://www.twitter.com/jamie_love
Wk: +1.202.332.2670 | US Mobile +1.202.361.3040 | Geneva Mobile +41.76.413.6584





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