China, Russia Again Top IP Owners’ Concerns in USTR Review

China, Russia, Canada and the Philippines should go on the priority watch list, the International AntiCounterfeiting Coalition (IACC) said, echoing recommendations from the International Intellectual Property Alliance (WID Feb 16 p14). Its members, many of them small and medium-sized businesses, have seen a “troubling increase” in illicit trafficking through B2B websites, retail and auction sites selling counterfeits, and cyberlockers and streaming sites with pirated content.

China has “effectively tripled” the dollar threshold for prosecuting counterfeit operations through a series of guidelines starting in May 2010, though a January judicial order also set up the possibility of criminal liability for ISPs and trading platforms, which “may ultimately offer a breakthrough,” IACC said. It named Alibaba, which is part-owned by Yahoo China, among several “notorious markets” for online counterfeit sales and one specifically targeting English-language customers. Russia still hasn’t fully implemented its 2006 “side letter” IP rights agreement with the U.S. -- in which Russian download site AllofMP3.com’s existence nearly sank the deal (WID Nov 21/06 p6) -- and the Russian government’s focus on updating its IP statutes has diverted attention from improving enforcement, the coalition said. With an election this year, Canada could once again fail to pass copyright reform legislation, which in any case includes troubling provisions such as a “notice and notice” system for taking down infringing content online and making exceptions and limitations for “noncommercial” and “private” infringement activities, the coalition said. Canada’s failure to approve the WIPO Internet treaties is damning, though its promise to sign the Anti-Counterfeiting Trade Agreement (ACTA) is encouraging, the coalition said.

The illicit streaming of “entire bouquets of pay-TV channels” in China is the largest concern of the Cable & Satellite Broadcasting Association of Asia, which includes Asian operations for Bloomberg, Comcast, Fox, EchoStar and other U.S. networks, the group said. Pirated online video in China, and available to the world, comes from HBO, ESPN, Discovery and CNN among others. “Millions” of hacked set-top boxes and smart cards enable Chinese viewers to get around government media controls, the group said: The distribution of decryption “control words” through pirate Internet servers lets users watch illicit pay-TV feeds and there’s no Chinese legal penalty for such sharing. Interestingly, the group didn’t say whether China should remain on the priority watch list, only that illicit streaming and circumvention should be a “focus” of U.S.-China IP dialogue. Vietnam has similar problems and lack of cost-effective legal remedies for illicit streaming on a smaller scale, the group said, recommending it remain on the watch list.

China “without question” tops the list of problem countries for members of the Electronic Retailing Association, the group told USTR. Standalone websites selling counterfeits have seen a “dramatic rise,” including sales at big names like Alibaba and Baidu. A new tactic is counterfeit sites removing themselves from search engines and sticking to “outbound-only e-mail marketing campaigns” to sell their wares, making it much harder to flush them out, the group said.

Russia’s recent IP law update failed to fix the domain name dispute resolution system for the .ru and .rf top-level domains, Intel told USTR, recommending the country stay on the priority watch list. “Trademark owners continue to face difficulties enforcing their rights against cybersquatters” and getting transfer rights, especially for inactive domain names, in contrast to the process adopted by ICANN, Intel said: Trademark owners “must engage in costly and lengthy civil litigation with an uncertain result."

The RIAA made an unusually narrow request: Punish the United Arab Emirates for failing to authorize collecting societies. The music industry set up the Emirates Music Rights Society in 2004 to collect broadcast and public performance royalties in the UAE, but the government hasn’t created rules for them to operate, denying the industry millions in royalties, the RIAA said. A Chilean organization, NGO Derechos Digitales, told USTR it should remove Chile from the priority watch list because it approved a copyright law update in 2010 that increased punishment for infringement, provided for judicial remedies and even instituted ISP liability.

USTR has largely bended to the will of IP groups such as IIPA, said a joint filing by Public Knowledge and the Electronic Frontier Foundation: Nine in 10 countries blasted by IIPA got a “negative determination” from USTR in 2010. “By pressuring other countries to omit limitations and exceptions in their domestic copyright law,” similar to those in U.S. copyright law, “the USTR prevents U.S. constituencies from marketing their works internationally and from making lawful use of foreign works domestically,” they said. “Unduly pressuring another country to enact provisions like ’three strikes’ laws, anticircumvention prohibitions or strict enforcement measures … will only weaken” its U.S. relationship. USTR also should not use Special 301 as leverage to make countries join ACTA: Those ACTA negotiations showed that trying to impose three-strikes or ISP liability provisions “only cause needless controversy and delay the conclusion of negotiations.”

Even a so-called pirate weighed in on this year’s review. Andrew Norton, who has served in various roles for the U.S. Pirate Party and Pirate Party International, attacked the copyright industry assertion that any given download represents a lost sale. Libraries have always offered books for free reading, he said: “If the lobby groups are to be believed, this sort of wholesale, widespread free use of copyrighted materials would kill the book industry.” Free ebook copies have also spurred physical sales in some cases, Norton said.