Part 2: Notes on the August 25, 2010 version of the ACTA consolidated text

Introduction

Part 1 of our notes on the August 25, 2010 version of the ACTA consolidated text, covering pages 1-9 of the text, are available here. These notes cover the remainder of August 25, 2010 ACTA text, from pages 10 to 29.

The ACTA text covers a wide range of topics, each of which could merit an extensive discussion. These notes are fairly brief, and not comprehensive. For example, there is no discussion here of the Internet Chapter, a topic discussed elsewhere by several persons, and which may be the subject of a future KEI comment. Those Articles that are discussed may have a fairly brief comment.

Our first comment concerns the text on page 11, concerning border measures, an area of considerable disagreement. The comments conclude by noting that nearly all brackets have been removed from Chapters 3-6, including those that provide the mandate and the terms of reference for ACTA as a new institution.

CHAPTER TWO, LEGAL FRAMEWORK FOR ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS

Section 2: Border Measures11

In the section on Border measures, the EU and Switzerland want to address all intellectual property rights in the TRIPS as the default position, subject to the possibility of limiting the chapter to only trademarks, copyright and geographic indicators. Australia¸New Zealand and Canada favor limiting the provisions to "cases of trademark counterfeiting and copyright piracy." The U.S., Japan and Singapore would start with the AU/NZ/Can position, but provide for the possibility of including other types of intellectual property. Thus, only Australia, New Zealand and Canada have taken the position of excluding patents and other non-copyright or trademark counterfeits fro the agreement, while the EU, Switzerland, U.S. Japan and Singapore want a more open ended system, with each country choosing the categories of intellectual property rights to be included. This is quite important, given the resistance of ACTA negotiators to provide for special treatment of goods in transit, as the ACTA will certainly cover patents for at least some countries, if this is an option.

{EU/CH: ARTICLE 2.X: SCOPE OF THE BORDER MEASURES

1. This section sets out the conditions for action by the competent authorities when goods are suspected of infringing intellectual property rights, within the meaning of this agreement, when they are imported, exported, in-transit or in other situations where the goods are under customs supervision.

2. For the purposes of this section, "goods infringing an intellectual property right'' means goods infringing any of the intellectual property rights covered by TRIPS.12 However, Parties may decide to exclude from the scope of this section, certain rights other than trademarks, copyrights and GIs when [not protected exclusively by copyright and trade mark systems and] [protected by [non-product- or sector-specific] [registration] sui generis systems.]}

{US/Aus/Sing/NZ/J/Can: Parties shall provide for the provisions related to border measures to be applied [US/Sing/J: at least] in cases of trademark counterfeiting and copyright piracy. [US/Sing/J: Parties may provide for such provisions to be applied in other cases of infringement of intellectual property rights]}

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fn/11 Where a Party has dismantled substantially all controls over movement of goods across its border with another Party with which it forms part of a customs union, it shall not be required to apply the provisions of this Section at that border.

fn/12 [ Aus/KOR/CH/J: The provisions of this section shall also apply to confusingly similar trademark goods [J: , which means any goods, including packaging, bearing without authorization a trademark that is similar to the trademark validly registered in respect of such or similar goods where there exists a likelihood of confusion on the part of the public between the trademark borne and the trademark validly registered, and that thereby infringes the rights of the owner of the trademark in question under the law of the country in which the procedures set out in this Section are invoked.]]

The TRIPS v ACTA on goods in personal luggage

In Article 60 of the TRIPS, members may exclude "small quantities of goods of a non-commercial nature" in a "traveler's personal luggage or sent in small consignments". In ACTA, this possible exclusion is limited to such goods "contained in a travelers' personal luggage." It is unclear what happened to the TRIPS exception for small non-commercial consignments, which appear to be neither in nor out of ACTA.

TRIPS, Article 60 De Minimis Imports
Members may exclude from the application of the above provisions small quantities of goods of a non-commercial nature contained in travellers' personal luggage or sent in small consignments.
ACTA ARTICLE 2.X: [SMALL CONSIGNMENTS AND PERSONAL LUGGAGE]

1. Parties shall include in the application of this section goods of a commercial nature sent in small consignments.
2. Parties may exclude from the application of this Section small quantities of goods of a non-commercial nature contained in travelers' personal luggage.

Seizure of goods at the border

For the advocates of access to generic medicines, this is a very important section of the ACTA, highlighted by a series of seizures of legitimate generic medicines in European Airports that were in transit from India to destinations in Africa or Latin America. In the EU seizures cases, drugs were seized based upon either a complaint from a patent owner, or by a customs authority operating under ex officio authority, where there were allegations of infringements of patents or trademarks. In a number of high profile cases, the drugs seized were legitimate generic products in India and in the detestation countries, but were subject to patent protection in the Netherlands or Germany. In one case, shipments of an important AIDS drugs for persons with resistance to other drugs was seized in the Netherlands before it could be delivered to the U.S. Embassy in Nigeria, for use by the Clinton Foundation.

MSF, Oxfam, Health Action International, Health Gap, Act Up Paris, Public Citizen, KEI and others have repeatedly asked the ACTA negotiators to provide a specific exception for "goods in transit," where the goods are legitimate products in the shipping and destination countries. Brazil, India, China and other countries have raised this issue in the W.T.O., as a barrier to trade, and several members of the EU parliament have written to the WTO, asking that the WTO examine the ACTA as a barrier to legitimate trade.

In the WTO TRIPS Agreement, there is a specific exception for goods in transit, or parallel trade, in footnote 13, which reads:

13 It is understood that there shall be no obligation to apply such procedures to imports of goods put on the market in another country by or with the consent of the right holder, or to goods in transit.

The border measures including cases where the right owner can initiate an action (Article 2.6), or where the customs authorities themselves can initiative an action (Article 2.7).

In the current text of ACTA, the EU continues to take a hard line, seeking to include patents in the border measures, at least as an optional possibility, while opposing exceptions for legitimate in-transit products. Here is a summary of positions by different parties:

ARTICLE 2.6: APPLICATION BY RIGHT HOLDER

Party Copyright Trademarks Patents, etc Imports Exports In-Transit Parallel Trade
Aus Pirated Counterfeit Shall May May
Can Pirated Counterfeit Shall May May Excluded
CH Pirated Counterfeit Shall Shall Shall
EU Infringing Infringing Infringing Shall Shall Shall
Japan Pirated Counterfeit Shall Shall May
Mex Pirated Counterfeit Shall Shall Shall
NZ Pirated Counterfeit Shall May May Excluded
Sing Pirated Counterfeit Shall May May
US Pirated Counterfeit Shall Shall Shall Excluded

ARTICLE 2.7: EX-OFFICIO ACTION

Country Copyright Trademarks Patents, etc Imports Exports In-Transit
Aus Pirated Counterfeit Shall May May
Can Pirated Counterfeit Shall May May
CH Pirated Counterfeit Shall Shall Shall
EU Infringing Infringing Infringing Shall Shall Shall
Japan Pirated Counterfeit Shall Shall Shall
Korea Pirated Counterfeit Shall Shall Shall
Mex Pirated Counterfeit Shall Shall Shall
Morocco Pirated Counterfeit Shall Shall Shall
NZ Pirated Counterfeit May May May
Sing Pirated Counterfeit Shall May May
US Pirated Counterfeit Shall Shall Shall

In a proposed Article 2.X, Australia, New Zealand and Canada have proposed the possibility of an alternative procedure to Articles 2.6.1 and 2.7.1, as regards to the export of in-transit shipments of goods:

ARTICLE 2.x
[Aus/NZ/Can: As an alternative to procedures in Article 2.6.1 and 2.7.1 relating to export or in-transit shipments, each Party shall provide that where shipments are exported from that Party, or shipments are in-transit through that Party, it shall have the authority, to provide sufficient information to the destination Party, about such shipments, to promote effective enforcement against shipments of infringing15 goods.]
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fn/15: Subject to scope.

See also Howard Knopf on ACTA, “Ex Officio” Enforcement, and Parallel Imports.

Destruction of Goods

In Article 2.11, parties are required, without exception, to provide "competent authorities with the authority to order the destruction of goods" found to be infringing in Article 2.10. Or, where "such goods are not destroyed, each Party shall ensure such goods are disposed of outside the channels of commerce," except in "exceptional circumstances." If the scope of the board members extends to all intellectual property rights, this runs counter to Article 37 of the TRIPS, concerning semi-conductor designs. As regards copyrighted or trademarked goods, it violates a number of statutes in Finland, Italy, Sweden, Germany, Denmark and the United States, as it discussed in greater detail in this earlier analysis.

ARTICLE 2.11: REMEDIES

1. Each Party shall provide its competent authorities with the authority to order the destruction of goods following a determination under Article 2.10 that the goods are infringing.17 In cases where such goods are not destroyed, each Party shall ensure such goods are disposed of outside the channels of commerce in such a manner as to avoid any harm to the right holder, except in exceptional circumstances.

2. In regard to counterfeit trademark goods, the simple removal of the trademark unlawfully affixed shall not be sufficient, other than in exceptional cases to permit the release of the goods into the channels of commerce.

. . .

The following are some examples of national exceptions to the remedy of destroying goods.

Germany

§ 98 Anspruch auf Vernichtung, Rückruf und Überlassung
(5) Bauwerke sowie ausscheidbare Teile von Vervielfältigungsstücken und Vorrichtungen, deren Herstellung und Verbreitung nicht rechtswidrig ist, unterliegen nicht den in den Absätzen 1 bis 3 vorgesehenen Maßnahmen.

Denmark

(2) Instead of seizure or transfer, it may be ordered that the copies shall be destroyed in whole or in part or in any other manner be made unserviceable for unlawful use. If due to the artistic or financial value of the copies or if otherwise deemed reasonable in the circumstances, the courts may allow the copies to be made available to the public against damages and compensation to the infringed party.

(4) The provisions of subsections (1)-(3) shall not apply to persons who have acquired copies in good faith for private use, or to persons who have made copies in good faith in contravention of section 11 (3).

Finland

. . The provisions . . . shall not apply to a person who has acquired the property or some specific right therein in good faith, or to works of architecture;

Italy

Article 159
. .. The provisions for destruction and delivery shall not apply to infringing specimens or copies acquired in good faith for personal use.
Article 160
Removal or destruction shall not be demanded in the last year of the term for which the right endures . . .
Article 161
. . . Seizure may not be effected in the case of works resulting from the collaboration of two or more persons, except in particular serious cases or where the infringement is imputable to all joint authors. . . .
Article 169
Actions in defence of the rights relating to the authorship of a work shall give rise to removal or destruction only if the damage cannot be remedied by means of the addition or suppression of notices on the work which refer to its authorship or by other means of publicity.
Article 170
Actions in defence of the rights bearing relating to the integrity of a work shall give rise to removal or destruction of the deformed, mutilated or otherwise modified copy of the work only when it is not possible to restore such copy in its original form at the expense of the party wishing to avoid removal or destruction.

Sweden

The provisions of the first and second Paragraphs shall not apply in respect of persons who have in good faith acquired the property or a right in it,

United States

19 USC 1337 -
Exclusion of articles from entry
unless, after considering the effect of such exclusion upon the public health and welfare, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, and United States consumers, it finds that such articles should not be excluded from entry.

Forfeiture
In addition to taking action under subsection (d) of this section, the Commission may issue an order providing that any article imported in violation of the provisions of this section be seized and forfeited to the United States . . .

Importation by or for United States
Any exclusion from entry or order under subsection (d), (e), (f), (g), or (i) of this section, in cases based on a proceeding involving a patent, copyright, mask work, or design under subsection (a)(1) of this section, shall not apply to any articles imported by and for the use of the United States, or imported for, and to be used for, the United States with the authorization or consent of the Government.

CHAPTER TWO, Section 3: Criminal Enforcement

Among other things, "Each Party shall provide for criminal procedures and penalties to be applied at least in cases of willful trademark counterfeiting or copyright or related rights piracy on a commercial scale . . . in the context of commercial activity for direct or indirect economic or commercial advantage."

Beyond this, ACTA provides that:

4. The provisions of this section shall apply to aiding and abetting the offences referred to in this article. [US/NZ/Kor/Mex/J: With respect to the offences specified in this Section, each Party shall ensure that liability for aiding and abetting is available under its law.]

Section 4: Enforcement of Intellectual Property Rights in the Digital Environment

KEI does not have a complete analysis of the Internet provisions of ACTA. A number of others have focused on this section of ACTA. See, for example:


Chapters 3, 4, 5,and 6: ACTA as an institution

The last six pages of the ACTA text describe the terms of reference for ACTA as a new institution. There are very few brackets in this part of the text, suggesting great consensus among the parties.

Chapter Three is on Enforcement Practices. It contains four Articles with no brackets, and one minor Article with brackets that concerns the environmental impact of destroying goods.

Chapter Four on International Cooperation sets out the technical assistance mandate of ACTA, which is posed to be a competitor to WIPO. There are no brackets in Chapter four.

Chapter 5 on Institutional Arrangements sets out the governance structure for ACTA, including provisions for future amendments to ACTA. The only brackets in this Chapter concern the number of votes the EU will cast.

Chapter 6 on Final Provisions only has brackets as regards to the dates for the initial signatures of the agreement, the languages for the official text(s), and the name of the depository institution.

Upon reflection, Chapters 3, 4 and 5 of ACTA may, in the end, be the most significant outcome of the ACTA negotiation. Collectively they allow the negotiators to secretly set up an institution that is insulated from traditions of transparency and openness, to work closely with right owners, that is actually mandated to consider changes in its mandate and substance of the agreement. A number of ACTA critics are quite concerned about the creation of this new institution. According to Philippe Aigrain, co-founder of La Quadrature,

"ACTA was put in place to circumvent democracy, and its governance provisions will make possible to extend the scope of this circumvention after an agreement is reached." European Parliament Vs. ACTA: Rejection is the only option, September 8, 2010.

In closing, consider briefly Article 5.1.2 of ACTA:

ARTICLE 5.1: THE ACTA COMMITTEE

2. The Committee shall:
(a) review the implementation and operation of this Agreement;
(b) consider matters concerning the development of this Agreement
(c) consider in accordance with Article 6.4 any proposed amendments to this Agreement;
(d) approve in accordance with Article 6.5.2 the terms of accession to this Agreement of any Member of the WTO seeking to become Party to this Agreement; and
(e) consider any other matter that may affect the implementation and operation of this Agreement.