Two areas where ACTA is inconsistent with US law, injunctions and damages
KEI Policy Brief, 2011:2
30 September 2011, revised 3 October 2011
James Love and Krista Cox
As the U.S. is reportedly about to sign ACTA, we wanted to point out two important areas where ACTA is not consistent with U.S. law. These are the sections of ACTA dealing with injunctions and damages. Below we have included the text from ACTA and the WTO TRIPS agreement on these two topics.
On injunctions, Article 8 of ACTA can be compared to Article 44 of TRIPS. Note that Article 8.1 of ACTA does not inlcude the language in Article 44.1 of TRIPS concerning innocent infringements.
In TRIPS but not ACTA: “Members are not obliged to accord such authority in respect of protected subject matter acquired or ordered by a person prior to knowing or having reasonable grounds to know that dealing in such subject matter would entail the infringement of an intellectual property right.”
One example of why this is important concerns 15 USC 1114. Remedies; Infringement; Innocent Infringement By Printers And Publishers. In particular, this law eliminates the possibility of injunctions in the following cases:
- 15 USC 1114 (2)(A) Where an infringer or violator is engaged solely in the business of printing the mark or violating matter for others and establishes that he or she was an innocent infringer or innocent violator, the owner of the right infringed or person bringing the action under section 43(a) [15 USC 1125(a)] shall be entitled as against such infringer or violator only to an injunction against future printing.
- 15 USC 1114 (2)(B) . Where the infringement or violation complained of is contained in or is part of paid advertising matter in a newspaper, magazine, or other similar periodical or in an electronic communication as defined in section 2510(12) of title 18, United States Code, the remedies . . . shall be limited to an injunction against the presentation of such advertising matter in future issues . . . The limitations of this subparagraph shall apply only to innocent infringers and innocent violators.
- 15 USC 1114 (2)(C) Injunctive relief shall not be available to the owner of the right infringed or person bringing the action under section 43(a) [15 USC 1125(a)] with respect to an issue of a newspaper, magazine, or other similar periodical or an electronic communication containing infringing matter or violating matter where restraining the dissemination of such infringing matter or violating matter in any particular issue of such periodical or in an electronic communication would delay the delivery of such issue or transmission of such electronic communication after the regular time for such delivery or transmission, and such delay would be due to the method by which publication and distribution of such periodical or transmission of such electronic communication is customarily conducted in accordance with sound business practice, and not due to any method or device adopted to evade this section or to prevent or delay the issuance of an injunction or restraining order with respect to such infringing matter or violating matter.
The requirement that injunctions are made available is in conflict with 17 USC 512 Limitations on liability relating to material online. USTR says that this tension is resolved by footnote 13 of the TRIPS. This footnote concerns ACTA language on the “procedures” to enforce rights, which
shall be implemented in a manner that avoids the creation of barriers to legitimate activity, including electronic commerce, and, consistent with that Party’s law, preserves fundamental principles such as freedom of expression, fair process, and privacy.13
13 For instance, without prejudice to a Party’s law, adopting or maintaining a regime providing for limitations on the liability of, or on the remedies available against, online service providers while preserving the legitimate interests of right holder.
Footnote 13 is helpful, and perhaps sufficient, although it is not as clear as it should be, given that it applies to procedures to enforce obligations that require that injunctions always be available. USTR rejected proposals by several countries to include plain language in the injunctions section that acknowledge the requirement would be subject to statutory exceptions.
The proposal to include clear language on the possibly of exceptions to remedies was also rejected by USTR for the damages section, and here there are many problems.
The ACTA provisions on damages are set out in Article 9, which contains 498 words organized in 5 paragraphs and one footnote. The relevent TRIPS provisions are set out in Article 45, which is just 122 words, organized in two paragraphs. The most important change in the ACTA, as compared to the TRIPS, is this obligation:
In determining the amount of damages for infringement of intellectual property rights, a Party’s judicial authorities shall have the authority to consider, inter alia, any legitimate measure of value the right holder submits, which may include lost profits, the value of the infringed goods or services measured by the market price, or the suggested retail price.
The party alleged to have infringed is given no rights to present theories of damages. The obligation to consider “any legitimate measure of value the right holder submits” including, but not limited to “the suggested retail price” takes the ACTA into an area outside of U.S. law. There are several U.S. statutes that set some restrictions on the calculation of damages. Among these are the following:
44 USC 2117. Limitation on liability
This concerns the National Archives And Records Administration. When letters and other intellectual productions (exclusive of patented material, published works under copyright protection, and unpublished works for which copyright registration has been made) come into the custody or possession of the Archivist, the United States or its agents are not liable for infringement of copyright or analogous rights arising out of use of the materials for display, inspection, research, reproduction, or other purposes.
Librarian of Congress not subject to damages for certain infringements:
Cite: Pub. L. 85-147, Aug. 16, 1957, 71 Stat. 368, as amended by Pub. L. 87-263, Sept. 21, 1961, 75 Stat. 544; Pub. L. 88-299, Apr. 27, 1964, 78 Stat. 183.
That the Librarian of Congress is authorized and directed to arrange,index and microfilm the papers of the Presidents of the United States in the collections of the Library of Congress, in order to preserve their contents against destruction by war or other calamity and for the purpose of making them more readily available for study and research to the fullest possible extent consistent with any existing limitations that may have been imposed on the use of or the access to such papers by their donors or by those placing them on deposit with the Library of Congress. Neither the United States nor any officer or employee of the United States shall be liable for damages for infringement of literary property rights by reason of any activity authorized by this Act.
Civil Remedies for non-payment of royalties on digital audio recording devices and media:
Chapter 101 Digital Audio Recording Devices and Media
17 USC § 1009. Civil remedies
(d) Award of Damages. —
(1) Damages for section 1002 or 1003 violations. —
(A) Actual damages. —
(i) In an action brought under subsection (a), if the court finds that a violation of section 1002 or 1003 has occurred, the court shall award to the complaining party its actual damages if the complaining party elects such damages at any time before final judgment is entered.
(ii) In the case of section 1003, actual damages shall constitute the royalty payments that should have been paid under section 1004 and deposited under section 1005. In such a case, the court, in its discretion, may award an additional amount of not to exceed 50 percent of the actual damages.
The standards for Section 1004 Royalty payments are very precise, and not based upon “any” measure put forward by copyright owners.
Statutory limits on liabilities for Satellite carriers are inconsistent with ACTA provisions on damages:
17 USC 119. Limitations on exclusive rights: Secondary transmissions of superstations and network stations for private home viewing
(a) Secondary Transmissions by Satellite Carriers. —
(7) Violation of territorial restrictions on statutory license for
network stations. —
(A) Individual violations. — The willful or repeated secondary transmission by a satellite carrier of a primary transmission made by a network station and embodying a performance or display of a work to a subscriber who is not eligible to receive the transmission under this section is actionable as an act of infringement under section 501 and is fully subject to the remedies provided by sections 502 through 506,
except that —
(i) no damages shall be awarded for such act of infringement if the satellite carrier took corrective action by promptly withdrawing service from the ineligible subscriber, and
(ii) any statutory damages shall not exceed $5 for such subscriber for each month during which theviolation occurred.
17 USC 122. Limitations on exclusive rights; secondary transmissions by satellite carriers within local markets
17 USC 122(f)(A-B)
(f) Violation of Territorial Restrictions on Statutory License for Television Broadcast Stations. —
(1) Individual violations. — The willful or repeated secondary transmission to the public by a satellite carrier of a primary transmission embodying a performance or display of a work made by a television broadcast station to a subscriber who does not reside in that station’s local market, and is not subject to statutory licensing under section 119 or a private licensing agreement, is actionable as an act of infringement under section 501 and is fully subject to the remedies provided by sections 502 through 506 and 509, except that — (A) no damages shall be awarded for such act of infringement if the satellite carrier took corrective action by promptly withdrawing service
from the ineligible subscriber; and
(B) any statutory damages shall not exceed $5 for such subscriber for each month during which the violation occurred.
Note the limits on damages here are for “willful or repeated” act are inconsistent with the ACTA article on damages for copyright violations.
State Sovereign Immunity
Under the precedent set by the U.S. Supreme Court in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank et al. (98-531) 527 U.S. 627 (1999), Argued April 20, 1999–Decided June 23, 1999, and subsequent extensions of the doctrine of State Sovereign Immunity, there are no damages available for infringement of intellectual property by State governments.
This now applies to patents, copyright, trademarks, plant breeder rights, semi conductor designs, industrial designs, etc.
Some members of Congress don’t like the result of this Supreme Court decision, but it is the law of the land. Among other things, this provision is effectively an important element of the research exception in the U.S., since scientists working in state Universities and labs are not subject to damages for patent infringement. It also provides an important exception for damages for the infringement of plant breeder rights or copyright in the context of state educational and research institutions.
The U.S. has not yet enacted legislation to expand access to orphan copyrighted works, but when it does, ACTA will present a problem. The U.S. legislation that previously passed the Senate had restrictions on both injunctions and damages that do not meet ACTA standards. For more background on this, see: Access to Orphan Works, and ACTA provisions on damages, KEI Policy Brief 2010: 1, 20 October 2010
Below are the relevant Articles on injunctions and damages from ACTA and TRIPS.
ARTICLE 8: INJUNCTIONS
1. Each Party shall provide that, in civil judicial proceedings concerning the enforcement of intellectual property rights, its judicial authorities have the authority to issue an order against a party to desist from an infringement, and inter alia, an order to that party or, where appropriate, to a third party over whom the relevant judicial authority exercises jurisdiction, to prevent goods that involve the infringement of an intellectual property right from entering into the channels of commerce.
2. Notwithstanding the other provisions of this Section, a Party may limit the remedies available against use by governments, or by third parties authorized by a government, without the authorization of the right holder, to the payment of remuneration, provided that the Party complies with the provisions of Part II of the TRIPS Agreement specifically addressing such use. In other cases, the remedies under this Section shall apply or, where these remedies are inconsistent with a Party’s law, declaratory judgments and adequate compensation shall be available.
ARTICLE 9: DAMAGES
1. Each Party shall provide that, in civil judicial proceedings concerning the enforcement of intellectual property rights, its judicial authorities have the authority to order the infringer who, knowingly or with reasonable grounds to know, engaged in infringing activity to pay the right holder damages adequate to compensate for the injury the right holder has suffered as a result of the infringement. In determining the amount of damages for infringement of intellectual property rights, a Party’s judicialauthorities shall have the authority to consider, inter alia, any legitimate measure of value the right holder submits, which may include lost profits, the value of the infringed goods or services measured by the market price, or the suggested retail price.
2. At least in cases of copyright or related rights infringement and trademark counterfeiting, each Party shall provide that, in civil judicial proceedings, its judicial authorities have the authority to order the infringer to pay the right holder the infringer’s profits that are attributable to the infringement. A Party may presume those profits to be the amount of damages referred to in paragraph 1.
3. At least with respect to infringement of copyright or related rights protecting works, phonograms, and performances, and in cases of trademark counterfeiting, each Party shall also establish or maintain a system that provides for one or more of the following:
(a) pre-established damages; or
(b) presumptions/fn3/ for determining the amount of damages sufficient to compensate the right holder for the harm caused by the infringement; or
(c) at least for copyright, additional damages.
4. Where a Party provides the remedy referred to in subparagraph 3(a) or the presumptions referred to in subparagraph 3(b), it shall ensure that either its judicial authorities or the right holder has the right to choose such a remedy or presumptions as an alternative to the remedies referred to in paragraphs 1 and 2.
5. Each Party shall provide that its judicial authorities, where appropriate, have the authority to order, at the conclusion of civil judicial proceedings concerning infringement of at least copyright or related rights, or trademarks, that the prevailing party be awarded payment by the losing party of court costs or fees and appropriate attorney’s fees, or any other expenses as provided for under that Party’s law.
/fn3/ The presumptions referred to in subparagraph 3(b) may include a presumption that the amount of damages is: (i) the quantity of the goods infringing the right holder’s intellectual property right in question and actually assigned to third persons, multiplied by the amount of profit per unit of goods which would have been sold by the right holder if there had not been the act of infringement; or (ii) a reasonable royalty; or (iii) a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorization to use the intellectual property right in question.
The relevant articles from TRIPS follow:
Article 44 Injunctions
1. The judicial authorities shall have the authority to order a party to desist from an infringement, inter alia to prevent the entry into the channels of commerce in their jurisdiction of imported goods that involve the infringement of an intellectual property right, immediately after customs clearance of such goods. Members are not obliged to accord such authority in respect of protected subject matter acquired or ordered by a person prior to knowing or having reasonable grounds to know that dealing in such subject matter would entail the infringement of an intellectual property right.
2. Notwithstanding the other provisions of this Part and provided that the provisions of Part II specifically addressing use by governments, or by third parties authorized by a government, without the authorization of the right holder are complied with, Members may limit the remedies available against such use to payment of remuneration in accordance with subparagraph (h) of Article 31. In other cases, the remedies under this Part shall apply or, where these remedies are inconsistent with a Member’s law, declaratory judgments and adequate compensation shall be available.
Article 45 Damages
1. The judicial authorities shall have the authority to order the infringer to pay the right holder damages adequate to compensate for the injury the right holder has suffered because of an infringement of that person’s intellectual property right by an infringer who knowingly, or with reasonable grounds to know, engaged in infringing activity.
2. The judicial authorities shall also have the authority to order the infringer to pay the right holder expenses, which may include appropriate attorney’s fees. In appropriate cases, Members may authorize the judicial authorities to order recovery of profits and/or payment of pre-established damages even where the infringer did not knowingly, or with reasonable grounds to know, engage in infringing activity.