Many Fear Liability Terms of Anti-Counterfeiting Trade Pact Draft

The parties have been under intense pressure from civil liberties advocates and others to disclose details of the agreement which was shaped behind closed doors over two years. The public document seems to track closely text that had leaked, and it doesn’t relieve concerns over provisions on ISP liability and civil and criminal sanctions, several observers said.

The draft still contains many brackets allowing alternate language for some provisions, indicating disagreements among participants. The document would generally require signers to provide fair and proportionate civil and criminal penalties for infringements using the Internet. The agreement would require signers to enact criminal penalties for willful infringement for commercial advantage or financial gain, or on a commercial scale. Aiding and abetting these activities would also have to be criminalized.

As for liability of go-betweens like ISPs, an option under discussion requires signers to limit the scope of civil remedies available against online service providers for infringing activities that occur by automatic technical processes; by the actions of users that aren’t directed or initiated by the providers, and in which they don’t choose the content; or by providers’ referring or linking users to an online location. To qualify for protection under the second and third categories, though, an ISP couldn’t have actual knowledge of an infringement or be aware of facts or circumstances from which infringing activity would be apparent.

The other option would require signers to limit liability of service providers for automatic technical processes or actions of users in which ISPs play no part. It also would require immunity when the information an ISP stores is provided by, or stored at the request of, a user. Liability limits would apply only when ISPs act quickly to remove or disable infringing content.

Further optional language would condition immunity on a service provider’s having a policy to deal with unauthorized storage or transmission of copyrighted material and taking down infringing material when notified. A second option clarifies that immunity provisions “shall not affect the possibility for a judicial or administrative authority … requiring the service provider to terminate or prevent an infringement, nor does it affect the possibility of the parties establishing procedures governing the removal or disabling of access to information."

The agreement wouldn’t require service providers to monitor for piracy on their network. Rights holders that have given effective notice of infringement would have a right to subscriber identification information. Countries would be required to “promote the development of mutually supportive relationships between online service providers and rights holders” to deal with infringement issues.

The text shows the agreement’s overall goal to be combating large-scale intellectual property rights infringements that have significant economic effect, the EC said. The agreement would “by no means lead to a limitation of civil liberties or to ‘harassment’ of consumers,” it said. Concerns raised by civil society are “unfounded,” it said. No one proposes that governments should introduce a compulsory three-strikes -- graduated response -- rule to fight Internet piracy, it said.

The draft is essentially the same as the leaked versions and its provisions on ISP liability, civil and criminal penalties and aiding and abetting infringement remain troubling, said Jérémie Zimmermann of French digital rights advocacy group La Quadrature du Net. The document is “(nearly) the same as it ever was,” University of Ottawa Internet law professor Michael Geist wrote on his blog. Public pressure “has helped make ACTA marginally better,” but the text “confirms many of the fears regarding the substance of the treaty,” he said.

The agreement would require drastic changes in many domestic laws, with its new requirements on statutory damages, injunctions, anticircumvention of digital rights management systems and ISP safe harbors, Zimmermann said. Many of those provisions are substantive copyright rules not limited to counterfeiting or enforcement, he said.

It’s true that the agreement has no mandatory three-strikes provision, Geist said. A footnote proposed by the U.S. envisioning three-strikes as a model policy for ISPs has been dropped, but that doesn’t mean the issue is gone, he said. The U.S. proposal for ISP liability is one of three options under consideration. EU wording on the possibility of judicial orders requiring ISPs to cut off access to infringing information preserves but doesn’t require three-strikes, Geist said. If that approach is adopted, it will leave three-strikes on the table and could be used in other ACTA countries to encourage its adoption, he said.

With most attention on ISP liability, one paragraph is turning out to be an “improvised explosive device that no one sees,” Dow Lohnes lawyer Jim Burger told us. Its bracketed text would require signers to confirm that they have civil remedies as well as limitations, exceptions and defenses related to those remedies related to third-party liability, or to enact laws imposing liability on those who authorize infringement.

A footnote defines third-party liability as “liability for any person who authorizes for a direct financial benefit, induces through or by conduct directed to promoting infringement, or knowingly and materially aids any act of copyright or related rights infringement by another.” All high-tech companies involved in helping users watch and consume online audiovisual content are going to panic over this provision, he said. Third-party or vicarious liability in the U.S. is a complex, cobbled-together set of judicial decisions with user exceptions and limitations, he said. It’s unclear how other countries will adopt such a law, because many don’t even have third-party liability, he said.

The text confirms fears that the agreement would unreasonably increase the legal exposure of U.S. technology and Internet businesses operating abroad, the Computer & Communications Industry Association said. It would “worsen the trend of international courts penalizing U.S. companies for products and services that are perfectly legal here,” said CCIA President Ed Black. It would export the worst parts of U.S. digital copyright law and make optional protections and consumer-oriented aspects of it, such as fair use, he said.

The next negotiation round is set for June in Switzerland. The participants have said they want to finalize the agreement as soon as possible this year.

The U.S. Chamber of Commerce said the release proves false the claims of ACTA critics and that it will “enhance support for this important agreement,” which should be “ambitious and comprehensive.” Piracy and counterfeiting are “killing jobs, stunting our economic recovery and harming consumers,” the Chamber said.

Public Knowledge said the draft lacks the “balance” of U.S. copyright law. It tries to “export” U.S. provisions such as third-party liability, while neglecting its immunities for those parties, such as exist under the Supreme Court’s Betamax doctrine on “substantial noninfringing use,” the group said. Signers would get only the power to adopt exceptions to anti-circumvention rules, in contrast to the mandatory exceptions in U.S. law, the group said.