Remove IP chapter from EU - Korea Free Trade Agreement

The Foundation for a Free Information Infrastructure (FFII) calls call upon the European Parliament, the EU Member States and the Republic of Korea to remove the intellectual property rights chapter from the EU - Korea Free Trade Agreement. The EU - Korea Free Trade Agreement is a threat to software companies, companies that use software and free software projects; it undermines innovation, competitiveness and legal certainty. The intellectual property chapter actually inhibits free trade.

Summary

In October 2009, after more than two years of secret negotiations, the EU and the Republic of Korea initialed their free trade agreement. The EU - Korea Free Trade Agreement awaits ratification by the EU Parliament and member states.

The free trade agreement contains strong measures against patent infringements. It provides injunctions, high damages, seizures, destruction of production materials and removal of online software repositories. A suspicion may be enough for seizures and injunctions. An allegation may be enough to freeze assets.

These strong measures may be justified against hard core counterfeiters. They are not justified against software developers. Software patents are so broad in scope, doubtful in validity, and so numerous that unintentional infringement is unavoidable in the normal course of business. Therefore, competitors and patent trolls can always find a stick to hit software companies, companies that use software and free software projects. The whole sector is at risk.

The free trade agreement also contains border measures against patent infringements. With the numerous software patents out there, all software products and all products containing software may infringe patents. An allegation is enough to have them seized at the border. Then they stay seized until a civil court case made clear whether a patent was infringed or not. This gives competitors and patent trolls enormous power - how many small and medium enterprises, and free software projects, have the money to defend against this? It is the contrary of stimulating free trade.

The free trade agreement is based on existing EU legislation. "Exporting EU-style enforcement legislation to foreign trading partners is an (in)official goal of EU policy", professor Annette Kur, Max Planck Institute Munich, remarked in a presentation in December. She added: "If and where legislation is (partly) flawed, export is no recommendable option."

The severe consequences of flawed enforcement legislation were on display in the recent EU seizures of life saving medicine meant for developing countries. After these seizures became known, the Dutch Minister for Developmental Aid, Bert Koenders, said that he wants to change the EU rules on the enforcement of intellectual property rights, and that he would even like to violate these rules.

The seizures of life saving medicine and the treatment of software developers as hard core counterfeiters are two consequences of flawed EU legislation. Europe should be well aware that if the European Parliament and EU Member States export this flawed legislation, the agreement will be binding. We will not be able to repair our own legislation anymore. Furthermore, developments in society may necessitate policy changes. It is essential the EU is able to make constructive policy changes in the future. The EU - Korea FTA will severely limit EU's ability to make appropriate refinements to intellectual property law.

Patent infringements are not counterfeiting

If customs finds a shipment of Gucci handbags, they can easily find out whether these are genuine or fake. And if fake looks genuine, it's fraudulent imitation, counterfeiting.

Highly complex patent cases, however, are something completely different. Patents have unclear validity and scope. Whether the patent is valid, and whether the competitor infringed it, has to be decided in civil court. You can't leave that to policemen and customs officers.

One can't see at the outside whether a refrigerator infringes, for instance, a software patent. There is no fake that looks genuine. Goods infringing patents are not counterfeited goods, are not fraudulent imitations. There is just a business conflict over validity and scope of a patent. Patent infringements should never be under the scope of anti-counterfeiting measures. Harsh measures favour one party in a business conflict above others.

A threat to software companies, companies that use software and free software projects

In some fields, like software development, patents create a legal minefield. Software is full of ideas, and unfortunately, full of patents. All software developers ignore software patents to some extent, simply because every single useful program you write infringes on several patents. The broad and abstract nature of software patents makes infringement unavoidable, and most software systems infringe on multiple patents.

Large corporations cross licence vast patent portfolios; small and medium enterprises (SMEs) and newcomers are locked out, consumers are locked in. And no company is protected against patent trolls.

Patent trolls do not produce anything, you can not retaliate against them. 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. This way patent trolls extort entrepreneurs.

Software developers are treated as hard core counterfeiters

The FTA's harsh anti-counterfeiting measures are not limited to counterfeiting. The FTA contains strong measures against patent infringements, which in the case of software are unavoidable. It provides injunctions, high damages, seizures, destruction of production materials and removal of on line software repositories. A suspicion may be enough for seizures and injunctions. An allegation may be enough to freeze assets.

The free trade agreement also contains border measures against patent infringements. With the numerous software patents out there, all software products and all products containing software may infringe patents. An allegation is enough to have them seized at the border. Then they stay seized until a civil court case made clear whether a patent was infringed or not. This gives competitors and patent trolls enormous power - how many small and medium enterprises and free software projects have the money to defend against this? It is the contrary of stimulating free trade.

Details

Article 10.46 of the EU - Korea FTA gives competitors and patent trolls the possibility to issue an interlocutory injunction intended to prevent any imminent infringement. About all software companies and projects can be hit by such an injunction. This may happen to companies that use software as well. An interlocutory injunction may also be issued to order the seizure of the goods suspected of infringing an intellectual property right so as to prevent their entry into or movement within the channels of commerce. Note "suspected", that may be enough for seizure. The judicial authorities may order the precautionary seizure of the movable and immovable property of the alleged infringer, including the blocking of bank accounts and other assets. Note "alleged", that may be enough for precautionary seizure.

Article 10.47 adds destruction of goods that they have found to be infringing. If appropriate, the competent judicial authorities may also order destruction of materials and implements principally used in the creation or manufacture of those goods. The software companies' computers can be destroyed.

Article 10.48: "Each Party shall ensure that, where a judicial decision is taken finding an infringement of an intellectual property right, the judicial authorities may issue against the infringer an injunction aimed at prohibiting the continuation of the infringement." Such measures are justified in cases of fraudulent imitation. But in the software field, where all companies and projects violate patents, it suffocates innovation.

Article 10.49 provides the alternative of pecuniary compensation if the infringer acted unintentionally and without negligence. But that does not help in a field where infringement is unavoidable.

Article 10.50 sets very high damages.

Article 10.65 provides a "safe harbour" for on line hosting providers. While basically a good thing, it does not help software companies and projects. After the provider obtains knowledge of infringements, he has to act expeditiously to remove or to disable access to the information. This will make life easy for anyone who likes to destroy the on line software distribution of a competitor. After claiming a software product infringes patents, hosting providers will have to remove software repositories to be on the safe side.

Article 10.67 gives competitors and patent trolls the right to ask the customs authorities to seize software products at the border. The authorities may do this without complaint as well, if they have sufficient grounds for suspecting that goods infringe an intellectual property right. Since about all software products violate patents, they can seize about all software products at the border. Products containing software can be seized as well.

Additional remarks

Patents do not only cause problems to software. Other fields may experience the same. Well known are the problems patents cause to access to medicine. We believe patent revenues should not be made more important than innovation, competitiveness and legal certainty. As an organisation focused on software patents, we do not have an opinion on whether patent revenues should be more important than human lives. We leave that opinion to the reader.

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

What is true for patents, is true for design rights and database rights as well. Design rights and database rights should not be under the FTA's scope for two reasons. First, they are relatively new, and the case law is still evolving. Second, these rights are unexamined and may often be invalid. And if they are valid, it is unclear whether the actions in question fall within the valid scope of the right. Allowing untested rights under the scope leads to disproportional measures.

A relatively simply analysis already shows many disproportional and detrimental aspects.

acta/korea (last edited 2010-01-07 14:32:18 by awessels)

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