Anti-Counterfeiting Trade Agreement: detrimental compromise

Latest version: http://action.ffii.org/acta/Analysis

Analysis earlier ACTA text:

Summary

The negotiating parties published the November 15 2010 version of the Anti-Counterfeiting Trade Agreement (ACTA) text.

The text is almost the same as the October version. See for the differences here.

The most important difference is an optional exclusion of patents and protection of undisclosed information from the scope of the civil measures section: "For the purpose of this Agreement, Parties may exclude patents and protection of undisclosed information from the scope of this Section."

It is a good development that Parties may exclude patents. But it is not enough. The general rule still is to include patents. Basically, the US can opt out here, for domestic reasons, while the others can still sign ACTA without exclusion. All our earlier concerns are still valid:

The EU wants strong civil measures against patent infringements in ACTA, which go beyond the present EU legislation (pdf). This approach is detrimental, patents in general are often poor in quality, with unclear scope and validity. Cases of innocent infringement are common.

The software field is plagued by patents, infringement is often unavoidable. Damages based on suggested retail prices for patent infringements are beyond any proportion. For instance, software may contain hundreds of patents, from multiple rights holders. The "invention" - if there is any - is only a tiny aspect of the product in such cases. Still, the first rights holder going to court can get damages based on suggested retail price, the second and third too, etc.

Holders of huge patent portfolios could decide to eliminate competition from startups, small and medium sized enterprises and open source projects, on their own, or by using a proxy, a patent troll. This is bad for the European small and medium sized enterprises, which provide for most of Europe's employment.

In an Answer given by Mr De Gucht on behalf of the Commission on Parliamentary questions 27 September 2010 E-4292/2010, De Gucht states: "Regarding the conduct of an impact assessment of the implementation of ACTA, the Commission notes that, since it is bound not to go beyond the EU acquis it has based its assessment of the impact of ACTA on the studies made for the 2004 Directive on the enforcement of Intellectual Property Rights (Directive 2004/48/EC(2)) and for the 2006 proposal for a directive on criminal enforcement of IPR (COM(2006)168 final) (not adopted)."

Beside the fact that ACTA does go beyond the acquis (the present EU legislation), the impact assessments do not assess possible negative effects on ICT, access to medicine and diffusion of green technology. Assessment are still to be made.

The inclusion of patents in ACTA causes serious issues with regards to access to medicine. Not protected by the Doha Declaration, diffusion of green technology may face worse problems than access to medicine. Patents have to be excluded from ACTA's civil enforcement section.

ACTA criminalises newspapers revealing a document, office workers forwarding a file and downloaders; whistle blowers and weblog authors revealing documents in the public interest and remixers and others sharing a file if there is an advantage. Even if that advantage is only indirect.

ACTA will create an ACTA Committee, which anticipates future amendments to ACTA. Requests to include language that the ACTA would operate in an open, inclusive and transparency manner were ignored.

As a policy instrument against dangerous products, ACTA fails. Serious crimes such as making and selling fake inefficient or hazardous medicaments are not primarily IP infringements, but criminal acts jeopardizing public health and safety.

Analysis ACTA Text

Behind closed doors, the European Union, United States, Japan and other governments are negotiating the Anti-Counterfeiting Trade Agreement. ACTA will contain new international norms for the enforcement of copyrights, trade mark rights, patents and other exclusive rights.

One could wonder why an anti-counterfeiting trade agreement is needed at all. The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), regional legislation like EU rules and national legislations already provide for measures against intellectual property rights infringements. There is no indication that these measures provide inadequate protection. Data contained in the U.S. Government Accountability Office report suggests that the claims associated with counterfeiting are massively overstated.

The Vienna Convention on the Law of Treaties stipulates that the history of a treaty plays a role in the interpretation of that treaty. Without full publication, ACTA will have hidden interpretations.

See also FFII ACTA page

Remove patents from ACTA

The patent system is conflicting. It aims to stimulate innovation by providing exclusive rights. These limit competition and follow up innovation. Furthermore, patent offices are rational ignorant, strengthening the examination process is not cost effective. There are many bad patents. Validity and scope only become clear in a civil trial. Patent infringements are not counterfeiting. There is no fake looks genuine, no fraudulent imitation. In many sectors, there are so many patents, with unclear scope and validity, it is impossible to tell whether one violates a patent.

Health groups point out issues with regards to access to medicine. The inclusion of patents in ACTA causes most of these problems.

Much less documented than issues with access to medicine are issues with diffusion of green technology. It is a more recent and diffuse issue. Not protected by the Doha Declaration, diffusion of green technology may face worse problems than access to medicine. Furthermore, medicines are often protected by a limited amount of patents. Complex products on the other hand may be covered by many patents. For instance, software systems may be covered by hundreds of patents. There are green software and business patents, e.g. on regulating traffic toll fees based on traffic volume/pollution. And many modern products, like hybrid cars, contain software. The problems the software sector is experiencing provide an indication of the issues the diffusion of green technology may run into with ACTA.

The software field is plagued by patents

"We are the constant target of patent lawsuits, many of which are frivolous and more than half are filed by non-practicing entities," Mike Holston, general counsel of Hewlett-Packard

"We find ourselves in a situation with more patent infringement suits than ever before and each one costs as much as $4 million," John Thompson, chief executive of software developer Symantec.

Patents create a legal minefield in the software development field. The issues are not limited to software, but the software field provides excellent examples of patent absurdities. Software is full of ideas, and unfortunately, full of patents. One third of all patents is computer-related nowadays. All software developers ignore software patents to some extent, simply because every single useful program you write infringes on several patents. Software patents hamper competition, follow up innovation and interoperability. They cause legal uncertainty and high transaction costs.

The situation is abused by patent trolls. They acquire patents at low cost, for instance by buying bankrupted companies. Their patents tend to have broad claims on trivial methods so that infringement is unavoidable. Then they extort entrepreneurs. And you can not retaliate against them. They do not produce anything, do not infringe themselves. In the U.S, even major companies, owning huge patent portfolios, want patent reform. want patent reform. They wish to limit the number of patent infringement cases and damages. Pharmaceutical companies oppose this.

The problems are especially manifest in the U.S. There is not EU wide litigation in Europe. Once the EU adopts EU wide litigation (the Union patent), patent litigation may become more populair in Europe.

Hewlett-Packard holds about 30,000 patents and is granted an average of four every day. With lower damages, trolls and small sized companies can not hurt HP, while HP can still strike against smaller competitors. A limited reform helps major companies, not small and medium sized companies, which are very innovative and provide for much employment.

ACTA contains strong measures against patent infringements.

+ injunctions in civil cases (Art 2.X.1). With an injunction a competitor or patent troll can force a company to withdraw from the market – while infringement is unavoidable.

+ also injunctions against third parties (Art 2.X.1).

+ damages based on suggested retail price (Art 2.2). This goes beyond the acquis, the present EU legislation does not mention suggested retail prices (IPRED article 13). Suggested retail prices for patent infringements are beyond any proportion. For instance, software may contain hundreds of patents, from multiple rights holders. The "invention" - if there is any - is only a tiny aspect of the product in such cases. Still, the first rights holder going to court can get damages on suggested retail price, the second and third too, etc.

+ alleged infringer has to provide information (Art 2.4).

+ effective provisional measures against party or third party to prevent an infringement of any intellectual property right from occurring (Art 2.5).

+ ACTA's Internet chapter article 2.18.1 includes expeditious remedies to prevent infringement and remedies which constitute a deterrent to further infringement against an act of intellectual property rights infringement, this includes patents. This will make life easy for anyone who likes to destroy the online software distribution of a competitor. After claiming a software product infringes patents, ISPs will have to remove software repositories and stop transmissions, to be on the safe side. The other ACTA Internet chapter may include patents.

These measures are absurd in situations where infringement is unavoidable. Holders of huge patent portfolios may decide to eliminate competition from startups, small and medium sized enterprises and open source projects, on their own, or by using a proxy, a patent troll. Patent trolls acquire excessive power.

ACTA will hamper the fight against climate change

"Stringent intellectual property rules could hamper the spread of technology needed to fight climate change." Paul David, professor of economics at Stanford University, California (IP-Watch)

The fight against climate change will inherit the problems in the software field. In a general way, like trivial patents, amassing of patents, patent trolls, frivolous lawsuits, hampering of follow up innovation and high transaction costs. And in direct ways, through green software and business patents, and through modern products, like hybrid cars, which contain software. To win the fight against climate change, fast diffusion of green technology is needed. Policy makers know that, patent trolls know that.

EPO, UNEP & ICTSD are studying role of patents in accessing green technology to be presented to the Mexico Summit on Climate. In a podcast, Nikolaus Thumm, Chief Economist of the European Patent Office, said that the key facilitator of technology transfer is licensing. He mentions people giving away essential parts of their technologies.

Patent trolls are not known for giving away anything. Injunctions (Art 2.X) will give patent trolls excessive power. The high damages ACTA proposes (Art 2.2) will drive up the costs for diffusion of green technology. While the funds are already limited, for instance, the fight against AIDS seems lost, due to lack of money. The same may happen with diffusion of green technology. The other earlier mentioned heightened civil enforcement requirements will restrict government flexibility, impede innovation and slow the development and diffusion of green technology as well. And parties may still extend border measures to patent infringements.

Unconsidered in ACTA is the situation presented in matters of public health surveillance, crisis management, civil and environmental response and related situations where cross-jurisdiction information exchange and the data associated therewith could constitute “infringing” activities. Under ACTA, both information and technology associated with data collection, aggregation, assembly and transmission and analysis could be impaired greatly enhancing the complexity of responding to events like SARS, the Avian Influenza and crisis response to natural and manmade disasters.

ACTA also evidences a clear lack of awareness on the manner in which green technology in the energy and infrastructure sectors operate. The majority of systems (for example, wind turbines, water turbines, and solar collectors) rely on cross-border up-time-management software and systems. ACTA explicitly and adversely impacts the ability to transmit grid and local data, operate feedback mechanisms to energy suppliers, and operate security protocols across international rail, air, and shipping infrastructure applications. Once again, in an effort to be responsive to the media industry, a far larger component of the global IT infrastructure is being overlooked. This, in the short term, will create unintended liabilities and, in the long term, like we’ve seen in the flow of energy from Russia into Europe, may be the source of highly politicized controversy and impairment.

Impact assessments

In an Answer given by Mr De Gucht on behalf of the Commission on Parliamentary questions 27 September 2010 E-4292/2010, De Gucht states: "Regarding the conduct of an impact assessment of the implementation of ACTA, the Commission notes that, since it is bound not to go beyond the EU acquis it has based its assessment of the impact of ACTA on the studies made for the 2004 Directive on the enforcement of Intellectual Property Rights (Directive 2004/48/EC(2)) and for the 2006 proposal for a directive on criminal enforcement of IPR (COM(2006)168 final) (not adopted)."

The impact assessments do not assess possible negative effect on ICT, access to medicine and diffusion of green technology. Assessment are still te be made.

Food technology is covered by patents as well and diffusion of food technology, to fight hunger in the world, and also to solve problems caused by climate change, will be impacted by the inclusion of patents in ACTA. Diffusion of food technology has different characteristics than diffusion of green technology and medicine. It deserves its own assessment.

Criminal measures

ACTA criminalises newspapers revealing a document, office workers forwarding a file and downloaders; whistle blowers and weblog authors revealing documents in the public interest and remixers and others sharing a file if there is an advantage. Even if that advantage is only indirect.

See our analysis at our blog.

ACTA Committee

ACTA will create an ACTA Committee, which anticipates future amendments to ACTA. KEI notes: "Among other things, the ACTA Committee may adopt rules that 'include provisions with respect to granting observer status,' as well as for 'any other matter the Committee decides necessary for its proper operation.' Requests to include language that the ACTA would operate in an open, inclusive and transparency manner were ignored."

Regarding trade marks

Claims are massively overstated

On its website, the EU Commission states: "OECD estimates that infringements of intellectual property traded internationally (excluding domestic production and consumption) account for more than €150 billion per year (higher than the GDP of more than 150 countries). According to the OECD counterfeiting and piracy undermine innovation, which is key to economic growth."

On July 13, 2010, Karel De Gucht, EU Commissioner for Trade, used the same number during a public briefing in the European Parliament LIBE Committee (Committee on Civil Liberties, Justice and Home Affairs).

The Dutch Ministry of Economic Affairs uses the same number, but calls it a calculation.

This estimate seems massively overstated.

The OECD 2008 report: "To date, no rigorous quantitative analysis has been carried out to measure the overall magnitude of counterfeiting and piracy. (...) Analysis carried out in this report indicates that international trade in counterfeit and pirated products **could have been up to** USD 200 billion in 2005" (emphasis added). The OECD only provides the highest estimate.

Felix Salmon used the OECD's own data to try to come up with a realistic estimate: "If 8% of counterfeit imports are worth $385 million, then the total value of counterfeit trade is $4.8 billion. A far cry from $200 billion, to be sure." Then he analyses how the OECD arrived at its $200 billion number. He concludes: "And that, ladies and gentlemen, is where the $200 billion number comes from. You guess what the maximum amount of counterfeiting is in the countries where it's most prevalent, being careful to use no empirical data in the process. You then double that number, double it again, and apply it to the amount of world trade: presto, you've got $200 billion."

In 2009, the OECD published an update. Using a complicated calculation, the estimate is raised. The complicated calculation hides the fact it still is an estimate.

A 2010 US Government Accountability Office report is critical about the OECD estimate: "While experts and literature we reviewed provided different examples of effects on the U.S. economy, most observed that despite significant efforts, it is difficult, if not impossible, to quantify the net effect of counterfeiting and piracy on the economy as a whole. For example, as previously discussed, OECD attempted to develop an estimate of the economic impact of counterfeiting and concluded that an acceptable overall estimate of counterfeit goods could not be developed. OECD further stated that information that can be obtained, such as data on enforcement and information developed through surveys, 'has significant limitations, however, and falls far short of what is needed to develop a robust overall estimate.' One expert characterized the attempt to quantify the overall economic impact of counterfeiting as 'fruitless,' while another stated that any estimate is highly suspect since this is covert trade and the numbers are all 'guesstimates.'" (pages 28 and 31)

Professor Michael Geist refers to a 1997 US Government Accountability Office report: "Second, the data contained in the GAO report suggests that the claims associated with counterfeiting are massively overstated. The Industry Committee previously heard from witnesses who noted that there have claims that 5 to 7 percent of world trade involves counterfeit products (some even argue that is growing). The GAO study points to the U.S. Compliance Measure Program, a statistical sampling program, that randomly selects shipments to check for their compliance with the law, including IP laws. Of 287,000 inspected shipments from 2000 - 2005, IP violations were only found in 0.06 percent of shipments - less than one tenth of one percent. This large random sample suggests that counterfeit products are actually only found in a tiny percentage of shipments. Moreover, the GAO notes that despite increases in IP seizures, the value of those seizures in 2005 represented only 0.02 percent of the total value of imports of goods in product categories that are likely to involve IP protection. In other words, the evidence from an independent, U.S. government sponsored agency points to a far different reality from that presented to the two parliamentary committees investigating counterfeiting."

The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), regional legislation like EU rules and national legislation already provide for measures against counterfeiting. Endangering public health, e.g. by selling fake or non-approved medicines, is already criminally prosecutable, regardless of whether patents or trademarks were violated in the process. Most importantly, only a thorough investigation as to the current legal and factual conditions could provide the justification for introducing more measures.

There is no indication that TRIPS agreement provisions provide inadequate protection.

Counterfeiting may be beneficial

Fake luxury goods are great advertising. "In a working paper she just finished this fall, 'The Real Value of Fakes,' Gosline interviewed hundreds of consumers who knowingly bought fake luxury apparel, many at 'purse parties' where such goods are sold. Gosline found that within two years, 46 percent of these buyers subsequently purchased the authentic version of the same product — even though other people could not necessarily tell the difference." See Those weirdly persistent counterfeiting statistics

A EU study reaches the same conclusion. "Fake goods are fine, says EU study. A new European Union-funded report has declared that buying designer goods can benefit consumers and the companies whose brands are being ripped off."

A vicious circle

Professor Annette Kur, Max Planck Institute, Munich, in a presentation: "Lastly, some rather 'incorrect' thoughts… The modern plagues of counterfeiting and piracy did not come out of nowhere – to some extent, they are rooted in the development of IP protection itself. The wider the gap becomes between production costs and the gains achieved by protected items, the more illegal copying it will attract… If rightholders are compensated for their losses by granting ever stronger rights, also the attraction will increase, and so on. It is doubtful whether imposing (ever more) drastic sanctions is able to break the vicious circle – experiences in other areas tell a different, sad story.

What to do? It is unlikely that the battle against infringement in general, and counterfeiting in particular, will be won by deploying more, and harsher sanctions. It is at least equally important that the IP system as such re-gains general acceptance and approval. Contrary to what is often held, this is not just a matter of 'education' – it might mean that the system has to change. Apart from that, serious crimes such as making and selling fake inefficient or hazardous medicaments should be targeted for what they are – not (primarily) as IP infringements, but as criminal acts jeopardizing public health and safety."

Fight dangerous products, not counterfeiting

To combat risks for public health is not primarily an IP issue. Resources are limited, especially in developing countries. Developing countries are be better off with a focus on fighting dangerous products, whether IP rights are involved or not. Up to 80% of the active ingredients in US drugs are now made overseas, many in countries where regulatory oversight does not meet US standards. Developed countries too may be better off with a focus on fighting dangerous products, whether IP rights are involved or not.

Defining counterfeiting

Only fraudulent imitations should be regarded as counterfeiting, like fake Gucci handbags (a trade mark infringement). Ambiguous cases of trademark confusion are not counterfeiting, they do not involve fraudulent imitation. Infringements of other rights than trade marks, are never counterfeiting. They do not involve fraudulent imitations.

The Max Planck Institute (MPI) stated for the IPRED 2 directive to be proportional, it is essential to define the qualification characteristics of the elements of a crime as clearly and narrowly as possible. Proportionality is a conditio sine qua non for EU legislation (art. 5 TEC). At the bare minimum, "infringing item", "commercial scale" and "intentional infringement" have to be clearly defined. The "infringing item" has to be a look alike (identity, sameness).

Likewise, without such narrow definitions, harsh civil and administrative measures are disproportional too, as they hurt legitimate business competitors as well.

Parallel importation

Parallel importation does not involve copying at all: genuine products are sold after being imported from a country where they are already being offered to the public. Parallel importation is not counterfeiting.

Normal trade mark infringements

ACTA's name is misleading. ACTA will extend far beyond counterfeiting. Both the scope is too broad (which rights are covered by ACTA, like patents) and a definition of counterfeiting is missing.

Ambiguous cases of trademark confusion are not counterfeiting, they are business conflicts. Like the conflict between Apple Corps Ltd, founded by The Beatles, and Apple Computer Inc. By addressing all infringements, ACTA sees Apple Computer Inc. as a counterfeiter. There is no reason to seize Apple computers, laptops and iPhones at the border or to destroy Apple Computers Inc's production facilities. Apple Computer Inc. is a company, not a criminal organisation. Business conflicts can be solved by paying a reasonable sum of money.

Analysis of the ACTA draft reveals many issues with regards to access to medicine. The inclusion of trade mark infringements in ACTA causes some of these problems.

There is no indication that TRIPS agreement provisions provide inadequate protection.

Remove design rights and database rights from ACTA

Design rights and database rights should not be under ACTA's scope for two reasons. First, they are relatively new, and the case law is still evolving. Second, unregistered EU Design rights arise automatically. Registered EU Design applications are given essentially no substantive examination. They are often of very dubious validity. And if they are valid, it is unclear whether the actions in question fall within the valid scope of the right.

Example: design rights. Dyson makes vacuum cleaners. Another company, Qualtex, made spare parts for these vacuum cleaners. Dyson sued Qualtex for infringing on its unregistered design rights, because the spare parts had the same appearance as the originals. Qualtex tried to defend itself by saying the parts had to be designed that way because of "must match" and "must fit" requirements, and in those cases design rights do not apply. The judge, however, ruled that those exceptions did not hold in this case.

This was a civil suit, and the result is that Qualtex had to stop making spare parts. Harsh measures are not in place here, it would significantly stifle the spare parts market. Either you do not infringe, you make a small profit. Or you do infringe, and your production facilities can be destroyed. Here too, Russian roulette.

Clearly, there is a huge difference between falsely labelled spare parts (fraudulent imitation, counterfeiting, trade mark infringement) and "generic" spare parts (correctly labelled, no counterfeiting, competitive product).

See also Vinje

Similar problems plague the definition of database rights, which are, according to the Commission's own report, surrounded by "considerable legal uncertainty" due to vague legal drafting. This stems largely from the unclear criterion of what constitutes "substantial investment" by the database owner, and which has recently been challenged in several ECJ decisions.

Allowing untested rights under the scope leads to disproportional measures.

Publish all texts

Earlier drafts will play a role in interpreting ACTA, publication of all drafts is needed. The European Parliament can not be involved in trojan horse legislation, and has to reject ACTA if not all texts are published.

In the Turco case (joined cases C-39/05 P and C-52/05 P) the ECJ has stressed the importance of access to documents, including preparatory ones, especially in the case of legislation: "Openness in that respect contributes to strengthening democracy by allowing citizens to scrutinize all the information which has formed the basis of a legislative act. The possibility for citizens to find out the considerations underpinning legislative action is a precondition for the effective exercise of their democratic rights." Note the ECJ uses the formulation "all the information".

Substantially, major parts of ACTA are legislation. Transparency has to be complete.

The Commissioner in charge of ACTA refused to give Parliament access, stating that the text of the agreement "can only be made public if all parties agree". Agreeing on secrecy was obstruction.

But the Commissioner provided Parliament with wrong information. Both the United States government and the Dutch government released the document "Maintaining Confidentiality of Documents". The document states that the ACTA documents can be given to "persons outside government who participate in the party's domestic consultation process and have a need to review or be advised of the information in these documents". There never was an obstacle to providing Parliament with all documents - U.S. corporate lobbyists received them, and they were circulated in Europe as well. In fact, since ACTA will contain civil, border and criminal measures, everybody is a stakeholder. Everybody has a need to review or be advised of the information in these documents.

The Vienna Convention on the Law of Treaties stipulates that the history of a treaty plays a role in the interpretation of that treaty. Unknown aspects of ACTA make it impossible to assess whether ACTA is proportional (Art. 5 TEU) and is compatible with internal Union policies and rules (Art. 207.3 TFEU). Parliamentary and public scrutiny is essential.

The European Parliament can not be involved in trojan horse legislation, and has to reject ACTA if not all texts are published.

Competence

Full analysis

ACTA can only be adopted after obtaining consent of the European Parliament. The Member States of the EU have a veto on criminal measures.

Article 218.10 of the Lisbon Treaty reads: "The European Parliament shall be immediately and fully informed at all stages of the procedure."

ACTA has to be compatible with internal Union policies and rules (Art. 207.3 TFEU). But not only that. EU actions also have to be proportional (Art. 5 TEU).

"Exporting EU-style enforcement legislation to foreign trading partners is an (un)official goal of EU policy. If and where legislation is (partly) flawed, export is no recommendable option." Professor Annette Kur, Max Planck Institute, Munich

The EU customs regulation and the EU IP enforcement directive (IPRED) are not limited to counterfeiting. The customs regulation led to seizures of essential medicine destined for developing countries. Even if ACTA does not surpass existing EU legislation, it will be detrimental. After signing ACTA, the EU is not free to change its legislation. It is essential the EU is able to make constructive policy changes in the future. ACTA will severely limit EU's ability to make appropriate refinements to intellectual property law.

ACTA can not export disproportional EU legislation.

National parliaments

The Lisbon treaty gave the European Parliament a veto on ACTA. The EU member states lost vetoes. What influence can national parliaments still have?

1. The EU member states have a veto on criminal measures in ACTA.

2. Receive confidential information. Above we saw the negotiating parties signed a confidentiality agreement, stating documents can be given to "persons outside government who participate in the party's domestic consultation process and have a need to review or be advised of the information in these documents". This approach has a drawback: parliaments can not discuss confidential documents openly.

3. Full disclosure of ACTA documents. Earlier drafts will play a role in interpreting ACTA, publication of all drafts is needed. Parliaments should not be involved in Trojan horse legislation, and have to reject ACTA if not all texts are published.

4. A blocking minority in the Council can stop ACTA

5. Scrutiny reservations. The Council first agrees on trade agreements, initials them, and only after that publishes them. How can parliaments force governments to publish ACTA before agreeing on it? This can be done by enough parliaments making parliamentary scrutiny reservations. Then governments can not agree on ACTA before parliamentary scrutiny, no qualifying majority can emerge prior to publication of the draft.

6. ACTA is not limited to counterfeiting, but also addresses normal infringements, which basically are business conflicts. Like Apple Corps Ltd. founded in 1968 by The Beatles and Apple Computer Inc. There is no reason to seize Apple computers, laptops and iPhones at the border or to destroy Apple Computers Inc's production facilities. Draconian measures against normal infringements are disproportional, a violation of the Lisbon Treaty. Member states may obtain the opinion of the Court of Justice as to whether the agreement envisaged is compatible with the Treaties. (TFEU 218.11)

7. Regulation 1049/2001 of 30 May 2001 regarding public access to European Parliament, Council and Commission documents, is currently being rewritten. This should be done in such a way that future problems with trade agreements containing legislation are prevented.

Context

To understand ACTA, we first have to take a look at the 1994 WTO TRIPS agreement. Prior to TRIPS, Europe and the United States could develop their own economies with low intellectual property (IP) rights protection. For instance, the Netherlands abolished patents in 1869, and did not reintroduce them until 1912.

The TRIPS agreement changed this. It forced developing countries to adopt U.S. style protection and enforcement of intellectual property rights. The world wide enforcement of IP rights created a money flow from poor to rich and limits access to medicine in developing countries.

In the 90ties, AIDS took millions of lives in Africa, pharmaceutical companies only served the upper side of the market for prices even higher than in the U.S. In 1997, President Mandela of South Africa signed a law to ensure the supply of affordable medicines. The U.S. and the EU started to pressure South Africa, the U.S. prepared trade sanctions. 41 Pharmaceutical companies sued Mandela. Then, public outrage over what was happening forced companies and governments to withdraw. Ultimately, this led to the Doha Declaration on the TRIPS Agreement and Public Health, WTO, 2001, a declaration that affirms the right of developing countries to protect the health of their populations. Since then, there is a pattern of “efforts to confuse the IP issues with those of substandard or spurious medicines” taking place at a number of international fora, according to Indian Ambassador Ujal Bhatia.

In 2008 and 2009, claiming to follow EU rules, Dutch customs seized essential medicines. Generic AIDS medicine not patented in India, nor in, for instance, Nigeria, was seized while in transit in the EU.

Deliberate confusion

Pharmaceutical companies try to minimize the effects of the Doha Declaration. They try to overextend the definition of counterfeiting. They try to label generic medicine as counterfeit.

Pharmaceutical companies are successful. The EU customs regulation and the EU IP enforcement directive (IPRED) do not make a distinction between counterfeiting and normal infringements. This led to the "Dutch seizures" of essential medicines, meant for developing countries.

Likewise, music companies try to blur the definition of commercial scale, in order to criminalise non-commercial behaviour. We witnessed this in the European Parliament first reading plenary vote of the EU criminal measures IP directive proposal (IPRED 2).

Pharmaceutical companies want patent protection to be as strong as possible. This creates problems in other sectors as well. The software field is plagued by patents. In the U.S., even major software companies, owning huge patent portfolios, want patent reform. Pharmaceutical companies oppose this.

With ACTA, the U.S. and EU try to export their excessive enforcement.

Earlier analysis

The ACTA August text analysis http://action.ffii.org/acta/Analysis-August

The ACTA April text analysis

http://action.ffii.org/acta/Analysis-April

The earlier (pre ACTA text release) analysis

http://action.ffii.org/acta/Analysis?action=recall&rev=146

Attachment: The Turco case

In the landmark ECJ judgement on the Turco case (joined cases C-39/05 P and C-52/05 P) the Court stressed the importance of the public right of access to the documents of the institutions. In general (45) and especially in the case of legislative acts (46 and 47). While ACTA is not a legislative act in the strict sense, it will be legally binding for the member states. ACTA is de facto legislation. ACTA texts should be made directly accessible.

45:

46:

47:

Attachment: Access to medicines

An awesome Lobbying Machine

Europe and the United States could develop their own economies with low IP protection. For instance, the Netherlands abolished patents in 1869, and did not reintroduce them until 1912.

In the 1980ies, Pfizer, a U.S. pharmaceutical company, started advocating to link exclusive rights with trade. [1] With trade sanctions, developing states can be forced to adopt U.S. style protection of exclusive rights.

  1. An Awesome Lobbying Machine

We start in the lower left corner. Companies that own private exclusive rights meet in advisory boards, advice the U.S. Trade Representative. Under the threat of possible trade sanctions, developing states sign bilateral Free Trade Agreements. Then they have to use their limited public resources to enforce U.S. companies' private rights.

Money flows from poor to rich.

The "Awesome Lobbying Machine" produced bilateral Free Trade Agreements and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS, 1994). TRIPS has strong protection for exclusive rights and limited flexibilities. According to a senior US trade negotiator, "probably less than 50 people were responsible for TRIPS." [1] TRIPS was followed by bilateral "TRIPS plus" Free Trade Agreements. And now ACTA.

Europe and the U.S. could develop their own economies with low IP protection. Emerging economies do not have that possibility.

Access to generic medicine: are patents more important than human lives?

AIDS took millions of lives in Africa. Protected by TRIPS, pharmaceutical companies only served the upper side of the market for prices even higher than in the U.S.

In 1997, President Mandela of South Africa signed a law to ensure the supply of affordable medicines. The U.S. and the EU started to pressure South Africa, the U.S. prepared trade sanctions. 41 Pharmaceutical companies sued Mandela. Al Gore and Chirac were involved in pressuring South Africa. Then the unexpected happened. Public outrage over what was happening forced companies and governments to withdraw.

Ultimately, this led to the Doha Declaration on the TRIPS Agreement and Public Health, WTO, 2001, a declaration that affirms the right of developing countries to protect the health of their populations. [1]

Pharmaceutical companies try to minimize the effects of the Doha Declaration. They try to overextend the definition of counterfeiting. They try to label generic medicine as counterfeit.

Seizures of medicine

Claiming to follow EU rules, Dutch customs seized essential medicines. Generic AIDS medicine not patented in India, nor in, for instance, Nigeria, is seized while in transit in the EU.

After these seizures became front page news, the then Dutch Minister for Development Cooperation Bert Koenders said that the EU rules have to change. This statement was welcomed by many. But the EU is still exporting in transit border measures in free trade agreements, like the EU – South Korea FTA.

Analysis of the ACTA draft reveals many issues with regards to access to medicine.

[1] DRAHOS, P., with BRAITHWAITE, J., Information Feudalism, Who Owns the Knowledge Economy?, Earthscan Publications Ltd, 2002

acta/Analysis-November (last edited 2011-01-23 14:21:54 by awessels)

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