ACTA Proposals Break Little New Ground, Say USTR, IP Group

That the agreement won’t be a major departure was echoed by the head of an intellectual property group on a panel with McCoy. But the statement was forcefully challenged by a digital-liberties activist who has seen a draft of the agreement under a promise of nondisclosure. And a researcher studying media consumption and piracy trends abroad also previewed the results of a study that contradicts some of the content industries’ most frequent claims of how to create new markets and protect copyrights.

The USTR is acting as an “infrastructure provider” to bring together countries whose leaders agree “we need to do something stronger, more than the existing minimum standards” for international IP protection, McCoy said. Many of the supposed secrets in the ACTA drafts have been made public as a “summary of topics under negotiation,” he said, quickly correcting his first description of the document as a “summary of the agreement.” USTR made the summary available after digital liberties groups filed a Freedom of Information Act court complaint that produced only a few documents about negotiations (WID April 7 p1). McCoy acknowledged that groups had pressed for greater openness about the discussion, and “there’s more we could do in this area.” The subject came up at the sixth round of ACTA negotiations that wrapped up Friday in Seoul, he said. Countries want to provide “meaningful opportunities for public feedback.”

The U.S. has a history of intimidating other countries outside the international process that doesn’t bode well for how ACTA will turn out, said Sean Flynn, associate director of the law school’s Program on Information Justice and Intellectual Property. The U.S. successfully pressured Brazil to recognize patents in software and pharmaceuticals under Section 301 of the 1974 Trade Act, which lets the U.S. raise tariffs in response to foreign practices that “burden or restrict” U.S. commerce, regardless of other treaty obligations, he said. The USTR’s Special 301 list of countries with inadequate IP protections, which evolved from Section 301, should have gone away when the World Trade Organization was formed, Flynn said. That’s because only the WTO can find a country in violation of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, and the Special 301 list -- which includes a “prioritized” sublist for expedited investigations -- could be considered a WTO-prohibited “threat of sanctions,” he said. Only since last year, when the USTR first gave foreign governments two weeks to reply to industries’ Special 301 complaints, have more than a handful of governments actually participated in the process, he said. Next year will be the first full Special 301 proceeding run by the Obama administration, and it could determine whether a “vestige” of American protectionism continues, Flynn said.

No one thinks that Special 301 listing “means anything other than you're going to take the case to the WTO,” countered Eric Smith, the president of the International Intellectual Property Alliance. ACTA and previous agreements are “no big deal,” he said. “'Threat, menace’ -- there’s just an incredible amount of very high rhetoric” applied to activity that’s “standard fare.” The enforcement provisions of TRIPS, which remained secret until drafting ended, turned out to be “primitive” compared to what developed countries were already doing. The first round of free trade agreements with individual countries included “expansion and clarification” of the “true meaning” of TRIPS, and tougher enforcement provisions were already required by the World Intellectual Property Organization’s Internet treaties, Smith said.

The U.S. is hardly alone in its interpretations, Smith said: More than 100 countries have banned devices that circumvent technological protection measures. Other reputed parts of ACTA, such as ex officio authority for customs agents to seize infringing goods, have been widely adopted - though not by Canada -- because enforcement is “very difficult” otherwise, he said. Shortcomings in other countries’ legal systems, such as long waits for civil judgments in India, likely will result in ACTA provisions such as expedited contempt-of-court penalties for those accused of infringement who ignore injunctions, Smith said. The free trade agreements also penalize the noncommercial distribution of infringed works -- such as posting through file-sharing networks -- if the activity is “substantial” and harms the legitimate market, so it will be no surprise if that ends up in ACTA.

Reported provisions concerning ISP liability for infringement are in line with the Digital Millennium Copyright Act, which included safe harbors for ISPs at their request, Smith said. But he’s “quite confident” the U.S. wouldn’t pursue a three-strikes Internet cutoff provision in ACTA because “it doesn’t exist in U.S. law,” where required responses to “repeat infringers” are much less specific. ACTA basically would create a new forum for elevating enforcement standards and better organizing governments’ response to the borderless piracy online, he said.

Hollywood’s ‘Campaign’ Trumps Solid Piracy Metrics

Smith’s “meme” boils down to “'don’t worry, trust us,'” said Public Knowledge President Gigi Sohn, one of a handful of activists sounding the alarm over ACTA who has seen the drafts under a nondisclosure agreement. Trading her silence for a peek “has made me a criminal in my own community,” she said, referring to “potshots” from fellow activists who want USTR to make public the discussion drafts rather than doling out invitations to select groups. The truth is that “the text goes beyond what U.S. law is,” Sohn said. “Please don’t stand here and tell folks who have been working on this for several years that we don’t have legitimate concerns. I personally take offense.”

Even ACTA sections “evidently authored” by the U.S. have been restricted, and those allowed access subjected to NDAs, said a letter to the White House last week from Public Knowledge, the Electronic Frontier Foundation, the Center for Democracy & Technology, the Internet Archive and other groups. Several more industry representatives than public interest groups got invitations as well, they said. Sohn told the audience that she has talked with Hill staffers and “the vast majority with jurisdiction over this hasn’t seen it either.” It’s “galling” that the USTR is presenting ACTA as an executive agreement that doesn’t require congressional approval, she said. The pact is becoming a “cut and paste” of parts of the Digital Millennium Copyright Act that rights holders like, but with none of the limitations in law and judicial decisions, such as intermediary immunity for ISPs, search engines and e-commerce sites. Referring to a three- strikes system, Sohn said, “if you think that’s not what ACTA’s about, you're whistling Dixie.”

The Social Science Research Council is wrapping up a study of how piracy is organized and enforcement carried out in several developing economies, said Joe Karaganis, its program director for media, technology and culture. Many findings challenge long-held assumptions in the copyright industries, and so their policy recommendations, he said. Price is the main determinant of piracy, but prices are “pretty much the same wherever you go” around the world because multinational companies dominate the markets and enforce “Western prices,” Karaganis said. Optical-disc prices, in turn, are plummeting because of the shift to “formatless” Internet distribution -- the average is “a dollar plus a bit” per disc, affordable to lower-income consumers. Successful enforcement should lead to a price increase, he said. There’s a $5 average price for a U.S. “niche market” of grainy camcorded theatrical films on pirated DVDs. With its competitive local film industry, India has challenged the trends elsewhere, Karaganis said. Legal prices are far lower than those charged by multinationals, and piracy is less of a problem than Hollywood taking on Bollywood, he said.

Some Hollywood piracy research methods are “credible on their face,” but others aren’t, Karaganis said, saying much research remains proprietary and studios won’t share their inputs. “The advocacy campaign has always taken precedence” over developing solid metrics. Enforcement is highly selective, local officials often helping big studios and software makers instead of local companies, creating a competitive advantage, he said. Infringement is a “dying concept” among consumers, and the industries’ pursuit of file-sharing networks is also outdated, Karaganis said, pointing to the emergence of “terabyte-sized hard drive swaps” as a sharing mechanism. He also said the study found “minimal connections to organized crime and certainly not to terrorism,” because the “huge noncommercial sphere” has made piracy less profitable.

Smith said McCoy would get fired if ACTA ends up exceeding U.S. law. It just sets “minimum standards” that of course won’t include the pages of exemptions applied to ISPs in the DMCA, to give each country flexibility in implementation. “Fair use doesn’t belong in this agreement.” Sohn countered: “Then neither does secondary liability.” The DMCA has “parts I really, really like” because they balance between rights holders and users, she said.