On November 30, 2009, a leaked European Commission document dated October 29, 2009, confirmed suspicions regarding the Anti-Counterfeiting Trade Agreement's controversial Internet chapter. This comes after Round Six of ACTA negotiations that took place November 4-6, 2009, focusing on enforcement in the digital environment, ramped into controversy in light of a different leaked document, a summary dated September 30, 2009, also drafted by the European Commission. The leaked summary discussed the US Trade Representative's oral briefing on the progress of the proposed Internet Chapter, and led many in the technology industry to fear that ACTA would impose DMCA-like regulations worldwide. The October document leaked on November 30th is the European Commission's analysis of the ACTA Internet Chapter proposed by the United States, and it confirms suspicions that the US is pushing for ACTA to contain DMCA-like provisions, third-party liability, and criminal sanctions.
ACTA
ACTA is a proposed agreement between the United States, the European Union, Australia, Canada, Japan, Singapore, Morocco, Mexico, the Republic of Korea, New Zealand and Switzerland to address global counterfeiting and piracy. The idea was launched by the United States and Japan in 2006; thus far, ACTA has been negotiated to cover a broad scope of infringements related to intellectual property and their consequences, including (1) depriving legitimate businesses and their workers of income; (2) discouraging innovation and creativity; (3) threatening consumer health and safety; (4) providing an easy source of revenue for organized crime; and (5) causing a loss of tax revenue. The aim is to enhance international co-operation and to create worldwide standards for enforcing intellectual property rights. Negotiations began in June 2008 and are set to be completed in 2010.
The leaked October document titled "European Union's Comments to the US Proposal" confirms the suspicions generated by the previously leaked September document, in which the EU summarized the USTR's briefing on its progress in drafting the Internet Provisions for ACTA. Taken together, these documents confirm that the US is pushing to model ACTA's Internet Chapter generally on the respective Internet section of the recently completed US-Korea Free Trade Agreement (KORUS), which was based on Section 512 of the Digital Millennium Copyright Act (DMCA).
According to the documents, the US has drafted ACTA's Internet provisions to consist of 7 sections:
Section 1
First section covers general obligations, focusing on "effective enforcement procedures" with language inspired by article 41 TRIPS. Critics have noted, however, that absent from this language is a statement that the procedures shall be fair, equitable, and/or proportionate, contained in the corresponding sections of TRIPS, the WIPO Copyright Treaty, and Europe's Intellectual Property Rights Enforcement Directive.
Section 2
The real controversy begins with Section 2, which would require ACTA members to provide for third-party liability for copyright infringement. Although this is something that copyright owners have long sought after, it is not required by any of the major international IP treaties, including the 1994 Trade Related Aspects of IP agreement (TRIPS), the WIPO Copyright Treaty and WIPO Performances and Phonograms Treaty. Opponents are concerned that this section focuses solely on copyright, and that it may incorporate US "contributory copyright infringement" standards, including the "inducement" standard from the Grokster case which would significantly change the law in many countries.
Section 3
Perhaps the most controversial, Section 3 discusses limitations on third-party liability, laying out the conditions under which an ISP could qualify for safe-harbors. The section is reported to require ISPs to adopt and reasonably implement a policy "to address the unauthorized storage or transmission of materials protected by copyright or related rights" and mandate "broad" provisions regarding notice-and-takedown mechanisms.
The concern here is that the requirement that ISPs must develop and implement a certain policy goes beyond the law already in place in the EU by essentially conditioning the application of the liability limitations on an ISP actively policing its content. An example of a reasonable policy is explained in footnote 6 which discusses requiring ISPs to terminate subscriptions. This is highly controversial as the issue of whether such an account can be terminated without court decision is still subject to negotiation between the European Parliament and the Council of Telecoms Ministers.
Further, the leaked September document mentioned the following:
"to benefit from safe-harbours, ISPs need to put in place policies to deter unauthorized storage and transmission of IP infringing content (ex. Clauses in customer's contracts allowing, inter alia, a graduated response)"
Opponents are concerned that the "graduated response" language may imply that negotiators are considering a sort of "three-strikes" policy under which ISPs would be required to terminate a customer upon repeated allegations of copyright infringement, or the ISP could be vulnerable to liability. The Three Strikes/Graduated Response has been sought by the entertainment industry since the European office of the Motion Picture Association began advertising the Three Strikes policy as an ISP "best practice" in 2005. Those in the technology and telecom industries are concerned that requirements of this type will make it too costly to successfully operate online enterprises such as Flickr or YouTube.
Such Three Strikes regime has previously been rejected by the European Parliament and in several ACTA-negotiating countries, and has never been proposed by US legislators. Opponents argue that even the suggestion of such a policy is contrary to the USTR's own statement that ACTA will not change US law. The current safe harbors under the US DMCA require ISPs to adopt and reasonably implement a policy for termination of "repeat infringers" "in appropriate circumstances." ISPs are given the flexibility to determine what constitutes "appropriate circumstances." If a Three Strikes policy were adopted, this would change. ISPs would no longer be able to determine "appropriate circumstances," but instead would be required to automatically terminate a customer.
Further, many are concerned that this section's aim at implementing a notice and take down procedure will be at odds with the current European Commission's E-Commerce Directive (2000/31/EC), under which an ISP may adopt such policies, but they are not a requirement to benefiting from liability exemptions.
Section 4
Section 4 of the US proposal focuses on technical protection measures (TPMs, aka DRM), and includes language inspired by the US-Jordan Free Trade Agreement (article 4.13) and WIPO Internet Treaties (articles 11 WCT and 18 WPPT). This section would cover prohibitions on use, manufacture and trafficking in circumvention of access controls and provide both civil and criminal penalties, separate and apart from "general" copyright infringements.
Sections 5, 6 and 7
Section 5 focuses on Civil and Criminal Enforcement of Anti-Circumvention and requires both civil and criminal provisions. These provisions are also reportedly designed to stop efforts towards establishing interoperability requirements (i.e., ability for consumers to play purchased music on different devices).
Finally, Section 6 focuses on Rights' Management, again inspired by the US-Jordan Free-Trade Agreement and WIPO Internet Treaties and provides for civil and criminal remedies, and Section 7 focuses on the limitations to Rights Management Information protection.
The Good and Bad
The main concern with sections 4, 5, and 6 is that they go beyond current EU law by requiring members to provide for civil and criminal remedies. Under current EU law, member states are merely required to provide "adequate legal protection."
Opponents are concerned that the proposed Internet provisions of ACTA will impede consumer privacy, civil liberties and the free flow of information on the internet. They also fear that many of the provisions may mandate requirements above and beyond, or even in the face of, what is already required under other treaties and/or international law. Because the purpose of ACTA is to create new global standards, many fear that implementation of ACTA by developing countries could become a condition imposed in future free trade agreements and ensure that US' chosen implementation of the WIPO Internet Treaty becomes a global standard, hindering the ability of developing countries (which, opponents argue, are excluded from negotiations) to choose polices best suited for their domestic priorities and economy.
Members of the entertainment and content industries take the position that in light of the substantial technological changes since the drafting of TRIPS nearly 20 years ago and the growth of online theft, new tailored rules are long overdue.
On November 19, the MPAA wrote a letter to Congress expressing its support for a "robust" ACTA and requesting codification of the "best practices" for copyright enforcement (aka "three strikes") in order to protect members of the entertainment and content industry whose livelihood is dependent on intellectual property. In light of the technological changes that have occurred in the last decade, they argue, internet piracy is the fastest growing threat to their industry and copyright protection needs to be strengthened accordingly. They argue that opponents' view that stronger rules are "anti-innovation" disregards that innovation thrives only with adequate incentive. A number of movie studios, labels, and other copyright-holding companies wrote a similar letter in support of ACTA on the same date also requesting codification of "best practices" for copyright and urging for stronger protections.
Conclusion
Since no official draft has been released, it is yet to be seen how far the Internet provisions may go. In any case, negotiating countries are set to meet again in Morocco in July 2010, and the intention is still to conclude negotiations in 2010.
Vol. 53, June 2010