Improved ACTA Draft Released, Foreign Legal Threats To US Companies Remain

The latest draft of the Anti-Counterfeiting Trade Agreement raises serious questions about – and potential flaws with – the possibility of including new subject matter in this agreement at the eleventh hour. It is troubling that, after negotiations have been concluded, there is still uncertainty about its scope. ACTA, which would expand international intellectual property enforcement, has been updated in positive ways, but it seeks to implement U.S. digital copyright laws in nations without copyright limitations and exceptions. This means US companies could face charges in other countries for practices that are entirely legal in the United States. Given continuing uncertainty about the scope of the agreement, however, the technology industries will likely be reserving final judgment.

The concern is that the high legal costs could result in U.S. companies having to withdraw from some foreign markets. The Computer & Communications Industry Association repeatedly has expressed concerns about specific aspects of ACTA, rather than the entire agreement.  Large portions of ACTA will be beneficial or at least innocuous from the perspective of many in the technology industry. USTR has listened to concerns of Internet Access Providers and tech companies and has largely removed language in three problematic areas:

• Damages: New language says there should be some consideration of the nature and cost of the infringement in awarding damages.
• Secondary Liability: Language that could have held IAPs and websites responsible for their customers’ action appears to be gone.
• Circumventing Digital Rights Management: Previous language would have made it unclear when there were exceptions, if any, to breaking digital locks. There are exceptions under DMCA, but there had not been exceptions in ACTA. That section is now gone.

The following comments can be attributed to CCIA President & CEO Ed Black:

“CCIA remains concerned that even though the nearly final draft of ACTA represents an improvement, it would perpetuate the disharmony among nations when it comes to proper limitations and exceptions to copyright law. It is troubling that the scope of this agreement remains unclear – even after negotiations have supposedly concluded.

“Exceptions to copyright law such as “fair use,” largely do not exist in the countries negotiating ACTA.  As a result, should ACTA increase intellectual property protections without fair-use-like safeguards that allow legitimate businesses to operate, it would expose U.S. Internet and technology companies to liability in foreign courts for things that are perfectly legal here.

“CCIA has always been an advocate for trade as it typically opens foreign markets to U.S. goods and services. But instead of helping U.S. companies expand overseas markets, ACTA may have just the opposite effect. This executive agreement could have a negative impact on our economy if U.S. companies can no longer afford to fight legal battles in foreign courts for activities permitted under U.S. law.

“Tech and industries that depend on fair use and other copyright exceptions have a significant role to play in boosting the economy. To promote this growth and the jobs that come with it, the U.S. should first work to help resolve the patchwork quilt of inconsistent IP restrictions that regulates what products and services Internet and technology companies may offer across the global e-commerce marketplace.”

The following comments can be attributed to CCIA senior counsel Matt Schruers:

“USTR should be commended for listening to some of the concerns of tech and telecom companies and making much needed improvements to ACTA. Uncertainty regarding the scope of the agreement remains, however, and final judgment must be reserved until this crucial issue is clarified.

“Removing secondary liability was an important step. Creating broad new categories of liability for legitimate businesses not engaged in piracy was never an appropriate subject for an IP enforcement agreement. It would have been such a significant legal change, that it would have heightened calls for legislative review by Congress, the European Parliament and others who now may not have the ability to review and approve ACTA.

“We remain concerned that the agreement permits limitations and exceptions, but doesn’t require them.  Thus, a US Internet or technology business depending upon certain exceptions to copyright (including fair use) has no certainty in foreign markets as to whether or not they could be liable for business models permitted and encouraged by US law.

“The recognition in the final draft that remedies and penalties must be proportional to the injury is another improvement. Currently we see six-figure fines levied on individuals for illegally downloading a song they could have bought for 99-cents.

“We’re also glad to see the removal of unclear language addressing “anti-circumvention” – the legal protection accorded to ‘digital rights management’ (DRM) technology on when circumvention is allowed.”

For more information, please go to CCIA’s ACTA resource page.