Analysis by Aaron Shaw

The quoted portions of this Analysis come from http://www.kestudies.org/ojs/index.php/kes/article/view/34/59
Read the whole article there.

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Knowledge Ecology Studies, Vol 2 (2008) Cite as: Shaw, Aaron, “The
Problem with the Anti-Counterfeiting? Trade Agreement (and what to do
about it),” KEStudies, Vol. 2 (2008).


The Problem with the Anti-Counterfeiting? Trade Agreement (and what to do about it)
Aaron Shaw April 2008

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While the USTR has emerged as the loudest voice supporting ACTA in the
global arena, the roots of the proposal appear to lie elsewhere. A
Discussion Paper published by the Australian Department of Foreign
Affairs and Trade indicates that the idea first emerged in the 2004
Global Congress on Combating Counterfeiting. Hosted by the World
Customs Organization and Interpol in Geneva, the Congress was sponsored
by the Global Business Leaders' Alliance Against Counterfeiting
(GBLAAC), an interest group representing some of the world's largest
multinational copyright and trademark owners. The following July,
during the 2005 G8 summit in Gleneagles, Japanese representatives
suggested that member states create stricter regulations and enforcement
provisions to combat “piracy and counterfeiting.” The publication of a
post-G8 statement entitled “Reducing IPR Piracy and Counterfeiting
through More Effective Enforcement” marked the first official step
towards what would become ACTA. After Gleneagles, the ACTA supporters
tried to promote their agenda in multilateral governance institutions,
engaging in a tactic known as “forum shifting.” Not surprisingly, the
idea of expensive new enforcement measures and rigid legal restraints
did not interest middle- and low-income countries.




In recent years, wealthy states and multinationals have found themselves
on the defensive in the WTO and other global governance institutions.
The G22 (together with numerous non-governmental organizations and
activists) has drawn attention to the issues of access to protected
inventions and works; the “flexibilities” in the agreements to provide
limitations and exceptions to intellectual property rights; as well as
the ability to implement obligations under domestic legal traditions.
Similarly, in the World Intellectual Property Organization (WIPO)
support for a new Development Agenda has reduced the influence of G8
representatives over their less affluent peers.

At the World Customs Organization (WCO), the G8 managed to open
negotiations over a set of provisional Standards Employed by Customs for
Uniform Rights Enforcement (SECURE). A draft of SECURE released on the
WCO website suggests that the standards could create a precedent for
expanded enforcement against trademark and copyright infringement.5
However, the WCO lacks the authority to set or enforce policies that
contradict the WTO. Thus, even if the current version of SECURE survives
negotiations, it may hold little more than symbolic value.

Having failed to achieve their aims through multilateralism, the ACTA
supporters returned to Japan's original plan. Less than two weeks after
the WIPO General Assembly voted to create a permanent Committee on
Development and Intellectual Property, the USTR and the European
Commission announced their intent to open ACTA negotiations before the
end of the year. They promptly extended invitations to a short list of
trading partners and corporate lobby groups to participate in
consultations and negotiations. Instead of merely shifting the debate
from one forum to another, the ACTA supporters now seek to create an
entirely new layer of global governance.

So why is ACTA such a big deal? If signed, the agreement would
constitute a diplomatic putsch by a handful of wealthy states and
corporations against the rest of the world. Already, it signals an overt
and troubling rejection of multilateralism. The so-called “plurilateral”
approach represents an outdated model of international treaty-making
whereby the unelected representatives of Northern states and a few
corporate lobbyists dictate the rules of global markets. Such
arrangements were commonplace during the 1990s under the neo-liberal
“Washington Consensus” and prior to the Doha Round of negotiations in
the WTO. Today, however, this kind of blatant disregard for global
consensus and the needs of developing regions poses a threat to the
world's prosperity, security and health.

ACTA would create unduly harsh legal standards that do not reflect
contemporary principles of democratic government, free market exchange,
or civil liberties. Even though the precise terms of ACTA remain
undecided, the negotiants' preliminary documents reveal many troubling
aspects of the proposed agreement.6 For example, ACTA advocates intend
to further criminalize non-commercial copyright and trademark
infringements. They also aim to reinforce so-called “Digital Rights
Management” (DRM) technologies that currently prevent the personal,
legal reproduction of optical discs like DVDs and trample on “fair use”
rights. In addition, rights owner lobby groups want the agreement to
undermine legal safeguards that protect Internet Service Providers
(ISPs) from liability for the actions of their subscribers. It would
also facilitate privacy violations by trademark and copyright holders
against private citizens suspected of infringement activities without
any sort of legal due process.

All of these provisions threaten to reach far beyond existing U.S. and
E.U. legal norms without any mandate from the appropriate, elected
legislative bodies that govern them.7 As such, the trade officials
involved in ACTA negotiations demonstrate a surprising disregard for
their own countries' democratic political processes and public welfare.
They also threaten to overturn the existing balance of rights and
regulations established through global governance institutions.

The ACTA supporters justify these harsh encroachments on the rights of
their citizens, private companies, and fellow states in the interests of
international cooperation, law enforcement, and modernization.8 They
also claim to be acting in the interests of public health and safety.
However, their radical attempt to curtail vital liberties, access to
information, and incentives to innovate belies this rhetoric. Instead,
ACTA would require signatories to undertake an unprecedented expansion
of customs and law enforcement officials' abilities to police goods and
information.9 It would also create a dispute settlement system outside
of existing multilateral institutions such as the WTO Tribunal or TRIPS
Council to enforce these new powers. Rather than promote cooperation,
ACTA signatories would seek to impose a one-sided vision of the
knowledge-based economy on the rest of the world. They do so with no
regard for the costs of their actions.

In the absence of widespread support for their position, the states
behind the ACTA proposals have restricted participation to those
organizations that already share their views. In the case of the USTR,
this has included closed-door meetings with industry lobby groups that
have a vested interest in expanded IP-law enforcement. Meanwhile, the
USTR has shut out civil society groups, corporations, academic experts,
and citizens that disagree with their approach. The result has been a
set of narrow-minded policies that do not reflect the breadth of opinion
and research on the trade in knowledge-based goods.

Much recent research in economics, law, sociology, business, and
political science examine the claim that strict IP-rights regimes
promote growth, innovation, and well-being.05c602ceb9ecbdbd047771fcdd90148a99dca737236cc21811dabd6f05a479 Several of these
empirical studies suggest that alternative regulatory and enforcement
practices allocate public goods more efficiently.7771fcdd90148a99dca737236cc21811 Of course, other
studies contradict the claims of these authors. The point, however, is
precisely that such disagreement exists; the prospective ACTA
signatories appear to have ignored any findings that do not reflect
their ideological agenda. A recent OECD-sponsored study frequently cited
in public statements on ACTA typifies their approach.12 The study
frames the problem of IP-related crime exclusively through the lens of
“piracy” and lost corporate revenue. In doing so, it overlooks the
social costs of overly strict-IP regimes. Such regimes restrict access
to knowledge, present barriers to follow-on innovation, incentivize
anti-competitive behavior and stifle markets, harming those same
corporate interests in some cases. Without some calculation of the
economic and social costs of a dubious assertion of rights, or an
inappropriate or abusive exercise of those rights, such data does not
provide an effective basis for policy-making; yet, that is exactly what
would happen under ACTA.

In a series of recent decisions, the Supreme Court of the U.S. has
recognized the harm caused by the overly strict enforcement of
intellectual property rights. The court has sought to make it more
difficult to enforce patents with a low inventive step,13 or even
legitimate patents, when the invention is part of a larger product and
the public interest is better served by limits on the ability to enforce
injunctions. 14 These decisions signal an important shift towards
creating a more balanced IP system and reflect the Court's concern that
intellectual property rights can harm innovation when they are poorly
implemented and mindlessly enforced. These concerns are shared by the
critics of ACTA.

Who wins under ACTA? Some multinational firms believe that their
business models depend on ever stricter enforcement of copyrights and
trademarks, and they seek to reap a double windfall. Under many legal
systems, IPRs are considered “private rights,” meaning that the rights
holder - and not the state - bears the burden and cost of enforcement.
The countries that sign ACTA would thus provide a very valuable and
expensive service to these firms at no charge. In addition, many
copyright and trademark owners believe that some provisions in ACTA will
alter the level of protection itself by effectively changing the balance
of rights between right-owners and consumers. In seeking to advance
their own interests, these companies have overlooked the potential for
adverse outcomes that would also affect them negatively. While Microsoft
wants to enforce its copyrights on software products, it is also a
defendant in a growing number of patent lawsuits. News Corporation may
want strict copyright protection for some products, but it also wants to
support new, user-generated content services like Myspace. Time-Warner?
is both a content owner and a provider of network services, placing part
of its business at risk in the interests of another. Johnson and
Johnson, Abbott Laboratories, Toyota, Verizon, and many other firms are
likewise finding they have complicated and highly nuanced interests, as
they assert intellectual property rights in some areas, but also are
concerned about their growing liability for infringement claims.

The majority of the governments of the Global South have wisely declined
to participate in this form of corporate welfare and norm re-balancing.
However, if ACTA goes forward, they may find themselves with few
alternatives in future negotiations with the E.C. or the USTR.

Already, a number of civil society NGOs and developing country trade
representatives have begun to push back against ACTA, but without a
clear strategy to block or slow down the agreement.15 What is needed
is a broad alliance that incorporates the innovative private sector
companies that are more aware of the complex nature and consequences of
changes in enforcement policies.

Many corporations and states would suffer if this agreement moves
forward, although few have analyzed the treaty proposals in a serious
way. The liberal use of the emotionally charged and misleading word
“counterfeit” in the proposals reflects negotiants' aversion to critical
analysis. Such blithe categorization of complex enforcement issues,
including unauthorized non-commercial private uses or infringement
disputes involving patents of dubious merit, is designed to undermine
effective policy debate and portray treaty opponents as defenders of
criminal acts.16

Among those most likely to exert most effective diplomatic pressure
against ACTA are potential dissenters within the G8 and E.U.; powerful
Southern states such as China, Brazil, and India; as well as coalitions
of smaller states within existing regional trade blocs (Mercosur,
Caricom, ASEAN, etc.). In addition, multinationals that recognize the
benefits of more flexible approaches to intellectual property – such as
IBM, Google, Intel, Sun Microsystems, and other members of the Open
Source Initiative – should mobilize their own lobbyists to resist an
agreement that presents new risks and liabilities. They should be joined
by Internet Service Providers, and even corporations like News
Corporation or Microsoft that are unlikely to benefit from one-sided
approaches to changes in the enforcement of some intellectual property
right claims. In addition, these businesses should ally with consumer
protection and civil liberties groups whose hard-earned legal rights
would be harmed under ACTA.

Numerous elected officials might also take a stand against ACTA once
they learn more about such an underhanded attempt to circumvent their
legitimate legislative and fiscal authority. These political leaders
could explain to voters why enforcement policies that lack procedural
safeguards and accountability undermine consumer rights and threaten
civil liberties. At the same time, their task is made more difficult by
the treaty proponents' deliberate use of the term “counterfeit” to
describe activities that have nothing to do with counterfeiting.

Such an alliance could potentially hold the USTR, E.C., and their
trading partners accountable for their actions. It could also build
consensus for more balanced and knowledge-based trade policies in the
future. However, in the absence of a rapid, widespread mobilization of
resistance, the ACTA proponents will not be stopped. They have already
shown their willingness to ignore legal, intellectual, political, and
moral obstacles to their agenda. Something more must now be done.

1 These provisions are mentioned in a “Discussion Paper” circulated
among the states involved in the negotiations. As of this writing, the
discussion paper has not been disclosed to the public.

2 Available at:
http://www.dfat.gov.au/trade/acta/discussion-paper.html (Accessed 27
March, 2008).

3 These include: Coca Cola, Daimler Chrysler, Pfizer, Proctor and
Gamble, American Tobacco, Phillip Morris, Swiss Watch, Nike and Canon
(among others). See the site of the 2004 Congress:
http://www.anti-counterfeitcongress.org/wco2004/website.asp (Accessed 27
March, 2008).

4 Available at:
http://www.g7.utoronto.ca/summit/2005gleneagles/index.html (Accessed 27
March, 2008).

5 Available at:
http://www.wcoomd.org/files/1.%20Public%20files/PDFandDocuments/
Enforcement/SECURE_E.pdf (Accessed 27 March, 2008).

6 My analysis refers to the aforementioned “Discussion Paper”
circulated among participating governments. An overview of this
“Discussion Paper” can be found in the USTR's “Fact Sheet” on ACTA
(available at:
http://www.ustr.gov/assets/Document_Library/Reports_Publications/2007/
asset_upload_file122_13414.pdf) and the Austrailian DFAT's “Discussion
Paper” (see note 2, above). For a comparable account to my own, see the
“IP Justice White Paper on the Proposed Anti-Counterfeiting? Trade
Agreement,” by Robin Gross, available at:
http://www.ipjustice.org/campaigns/acta (Accessed 26 March, 2008).

7 They would also expand the provisions of existing Free Trade
Agreements (FTAs) and European Partnership Agreements (EPAs). See:
Abbot, Frederick M. “Intellectual Property Provisions of Bilateral and
Regional Trade Agreements on Light of U.S. Federal Law,” UNCTAD-ICTSD
Project on IPRs and Sustainable Development , Issue Paper No. 12; and
Santa Cruz S., Maximiliano, “Intellectual Property Provisions in
European Union Trade Agreements: Implications for Developing Countries,”
ICTSD Programme on IPRs and Sustainable Development, Issue Paper No. 20.
Both available at: http://www.iprsonline.org (Accessed 3 April 2008).

8 For examples, see the USTR's “Fact Sheet” (note 6, above) and the
E.C.'s own “Fact Sheet” on ACTA, available at:
http://ec.europa.eu/trade/issues/sectoral/intell_property/fs2305c602ceb9ecbdbd047771fcdd90148a99dca737236cc21811dabd6f05a47907_en.
htm (Accessed 3 April 2008).

9 These changes are consistent with US and EU-led initiatives at
INTERPOL and the WCO. See the draft of SECURE available from the WCO
(note 5 above) and the speech by INTEPOL Secretary General Ronald K.
Noble delivered at the 4th Global Congress on Combating Counterfeiting
and Piracy, Dubai, U.A.E., 3 February, 2008, available at:
http://www.interpol.int/Public/ICPO/speeches/SGDubai20080203.asp
(Accessed 24 March 2008).

05c602ceb9ecbdbd047771fcdd90148a99dca737236cc21811dabd6f05a479 See, for example, Weber, Steven, The Success of Open Source ,
Harvard University Press (2004); Tirole, Jean and Josh Lerner, “The
Economics of Technology Sharing: Open Source and Beyond,” Journal of
Economic Perspectives, Vol. 19, No. 2, Spring 2005: 99-120; Benkler,
Yochai, The Wealth of Networks, Yale UP (2006); Lakhani, Karim and Eric
von Hippel, “How Open Source Software Works: 'Free' User-to-User?
Assistance,” Research Policy, Vol. 32, No. 6 (June 2006): 923-943; and
Stark, David and Gina Neff, “Permanently Beta: Responsive Organization
in the Internet Era,” in Society Online: The Internet In Context ,
Philip E.N. Howard and Steve Jones, eds., Thousand Oaks, CA, Sage
(2003): 173-188.

7771fcdd90148a99dca737236cc21811 See: Drahos, Peter, “Patent Reform for Risk Management: A
Separation of Powers Approach,” Knowledge Ecology Studies, Vol. 1
(2007); and Jaffe, Adam B.; Josh Lerner; and Scott Stern (eds.),
Innovation Policy and the Economy , National Bureau of Economic Research
(2005).

12 "The Economic Impact of Counterfeiting and Piracy" (draft).
Available at:
http://www.oecd.org/document/40/0,3343,en_2649_207771fcdd90148a99dca737236cc2181185_39542888_1_1_1_1,
00.html (Accessed 27 March, 2008)

13 KSR v. Teleflex, 550 U.S. ___, 127 S. Ct. 1727 (2007).

14 eBay Inc v. MercExchange?, L.L.C., 547 U.S. 388 (2006).

15 Comments of Knowledge Ecology International on the Proposal for
Anti-Counterfeiting? Trade Agreement (ACTA), March 20, 2008; Electronic
Frontier Foundation Submission to Office of the United States Trade
Representative on Proposed Anti-Counterfeiting? Trade Agreement (March
21, 2008); IP Justice Comments to the U.S.T.R. on the proposed
Anti-Counterfeiting? Trade Agreement (ACTA) 21 March 2008;
Anti-Counterfeiting? Trade Agreement (ACTA) Comments of Public Knowledge
(March 21, 2008); Comments of Essential Action on the Proposal for an
Anti-Counterfeiting? Trade Agreement. Public Knowledge comments
available at: http://www.publicknowledge.org/node/1468 All other
comments are available at:
http://fringethoughts.wordpress.com/2008/03/24/acta-comments-round-up/

16 Comments of Knowledge Ecology International on the Proposal for
Anti-Counterfeiting? Trade Agreement (ACTA), Submitted to United States
Trade Representative, Request for Public Comments, March 20, 2008.

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