Third IP Cross-Retaliation Strike Against USA at WTO

For the third time, a successful complainant against the USA at the WTO has won the right to cross-retaliate by limited suspension of intellectual property obligations.

This time, it's Brazil and the dispute involved cotton. Before, it was Ecuador and bananas and then Antigua and internet gambling. Here's the full story and an anlaysis from the must read IP Watch site.

In this case, Brazil claims that "“the value [of the award] is significant, being the second-largest amount ever authorised in the history of the WTO.” However, the USA "was “pleased that the arbitrators awarded Brazil far below the amount of countermeasures it asked for” and “grateful that the arbitrators denied Brazil’s request for unlimited ability to suspend concessions on intellectual property or services.”

HK

Is Canada Protecting Itself From Protectionism?

The Toronto Star is reporting that Stockwell Day is essentially already claiming victory in the business of the nearly trillion dollar “Buy American” bill.

Speaking in Toronto this morning, he also said Ottawa must remain vigilant as the legislation moves forward.


"This shows the importance of and the power of diplomacy," Day told a Bay Street audience of about 100 people at the Toronto Board of Trade.


He emphasized that Ottawa's "full-court press" to counter growing protectionism in Washington is being successful. The minister said there has been "enormous pressure" on Ottawa to enact retaliatory legislation against U.S. business, but he and Prime Minister Stephen Harper resisted, preferring the diplomatic route.


"Prime Minister Harper was the first world leader to raise this issue and speak against it," he said.


Noting that Canadian firms ship $11 billion in steel to the U.S. annually, Day warned that a "Buy American" policy on Washington's stimulus spending projects would have severely hurt Canada.

If Minister Day and the Prime Minister really believe that a clause to the effect that the bill will be "applied in a manner consistent with U.S. obligations under international agreements” will make this issue go away, we could be in big trouble.

Canada got seriously outsmarted on IP negotiations (particularly on the pharmaceutical patent file) and many other issues with the Americans in the FTA and NAFTA, which set the stage for the WTO agreement and much that has happened since. Now, the Americans have their sights on copyright.

Besides, we don't want to have to start a NAFTA or WTO dispute to figure out what “in a manner consistent with U.S. obligations under international agreements” means on the basis of a particular case or potentially thousands of them. These cases take many years, cost a fortune to prosecute, and have uncertain outcomes. Moreover, when the Americans don't like the outcome, they basically ignore or even flout it.

If Canada and other major G-20 powers stick together, President Obama will have not only the basis but the necessity to play hardball with Congress and to veto a protectionist bill. If Canada runs off and declares victory on the basis of something as flimsy as this, we will have played right into the protectionists' hands.

And we may never know what was discussed in the corridors that led to The Star reporting that:

He [Day] emphasized that Ottawa's "full-court press" to counter growing protectionism in Washington is being successful.

Besides, we should be entitled to assume that American law will be applied "in a manner consistent with U.S. obligations under international agreements." What else have the past 2.5 decades of trade negotiations been about? That's hardly a concession.

In Canada, at least, there is a presumption that all statutes, both federal and provincial, do comply with international treaties and should be interpreted in such a way as to ensure compliance. Thus, the kind of language that Minister Day seems so happy about would add nothing to the meaning of a Canadian statute. I would be surprised if things are different in the USA.

The new wording is at best redundant and political. More likely, it is a smoke screen. Minister Day ought to be very careful about proclaiming what amounts to "Mission Accomplished" at this stage. Once again, "it ain't over 'till its over."

HK

Free Trade Fiasco?

The possibility of a trade war with the USA is heating up. The Democrats' first major piece of legislation in the 111th Congress concerns almost a trillion dollars worth of “stimulus”. It is H.R. 1. It includes a highly protectionist "Buy American" provision for iron and steel. Reports are that the Senate could make this bill even worse, going beyond iron and steel to all manufactured goods.

Most experts agree that there are extremely serious issues for the USA under NAFTA and WTO - presumably involving such inconvenient details as national treatment, Most Favoured Nations (“MFN”), and government procurement provisions. However, it seems that Congress believes that the USA can simply flout international law. That might be good politics for practical and political purposes in the short term, but such thinking led to the “Great” depression.

Canada is rightly protesting the “Buy American” provisions in the massive stimulus bill now before Congress. However, there are persistent reports in reliable media such as here and here that Canada is seeking a special deal. That could be very problematic, even though the short term politics might seem attractive to the current Canadian Government.

First, such a deal may incur the wrath of others such as the Europeans, Japanese, and the BRIC block (Brazil, India, China, and Russia) with all of which Canada also enjoys important trade relations and whose good will Canada will need in the future as it rightly attempts to wean itself away from dependency on US trade.

Such a deal might also be illegal as such because of WTO MFN and other provisions.

Some are suggesting a "Buy North American" provision, that would include Mexico and presumably solve any NAFTA issues. However, that would not likely go over well in the rest of the world.

Moreover, what would be the most likely secret price of such a deal? Would it include a promise not to curtail oil and gas supplies to the USA, or not to fight about water, to stay longer in Afghanistan, or - and this where this gets quite relevant to this blog - to enact a DMCA North version of American copyright law satisfactory to the American entertainment industry? It is common knowledge that the Democrats have always been close to Hollywood and the music industry, and Obama's appointments to date indicate no “change” in this respect.

President Obama must veto the bill if it is as bad and as illegal as the experts say. Otherwise, his halo will be irreparably damaged, along with the whole international trade system. Canada and her allies should stand united on this front.

UPDATE:

February 4, 2009

President Obama has been saying reassuring things about this that are being reported at the moment mostly in non-American media. However, stuff can happen quickly and unpredictably in the American Congress. And whether Congress will listen to the new President at this stage and whether the new President would ultimately veto such a landmark bill if Congress does not listen, remain to be seen. Some influential Democrats, such as House Transportation and Infrastructure Committee Chairman James Oberstar (D-MN) are today, according to Inside US Trade, reportedly threatening to oppose the package unless their desired protectionist provisions are included.

When it comes to American legislation, it's safe to assume, in the words of that great American pundit Yogi Berra, that "It ain't over 'till it's over."

Moreover, in the US Congress, it's never really "over."

PS:

ICTSD has a very good analysis - the best I've seen to date - here.

HK

US - China WTO Dispute Continues

The final panel report in the US - CHINA WTO dispute has been released, confirming mixed results in which both sides can claim victory. The IP-Kat has a playful score card on the outcome.

The USA will not likely be thrilled and possibly rather dismayed that the WTO panel ruled that "the United States has not established that the criminal thresholds are inconsistent with China's obligations under the first sentence of Article 61 of the TRIPS Agreement."

Both sides can appeal.

Meanwhile, the USA remains the most egregious copyright scofflaw in the WTO with its longstanding failure to pay for public performance of music in smaller establishments (the "Section 110" dispute). The US gets away with this by paying a truly token amount of compensation to get itself off the hook.

As I said almost two years ago in this space:

The most flagrant adjudicated flouter of international copyright law is the USA. The WTO has long ago finally concluded that the USA fails to provide royalties for performing rights in many instances as a result of s. 110 of its Copyright Act. This is the most serious copyright dispute to date in the WTO and the USA is clearly unwilling or unable to do anything about coming into compliance. It has bought its way out of this violation with a paltry payment fixed by arbitration of about Euro 1,219,900 per year - a fraction of what the royalties ought to be.

The late great Sir Hugh Laddie rarely missed an opportunity to point out that counterfeit and pirated products were readily available on the streets in New York and Washington. No need to travel to Beijing.

It will be very interesting to see how the Obama administration proceeds from here. Presumably, it will be aware of the adage about living in glass houses.

HK

US v. China - WTO

GENEVA (Reuters) - The World Trade Organization (WTO) has found in China's favor in two out of three counts in a case involving protection of intellectual property rights brought by the United States, a trade source said on Thursday.

However, in Washington a U.S. trade official said the United States had won two out of three claims in the landmark case...

Looks like the parties can't even agree on who won or lost...

HK

Update: Here's some more detail from Forbes.

From Bananas to Brazil

Reuters reports that Brazil, having just won a trade-dispute over cotton against the USA, may follow the Antigua lead and cross retaliate on copyright protected U.S. films or computer games.

This technique started with Ecuador and bananas in 2000, and got really serious with Antigua and online gambling in 2007.

This could get really interesting.

And its also interesting that countries like Antigua, Israel, New Zealand and Brazil can challenge American copyright interests and the American government itself.

That seems to be something that the Canadian Government, still a G-8 member, does not wish to do.

HK

Antigua - The Mouse that Roared - and Won

Antigua is now getting ready to pocket its winnings, its WTO victory against the USA. It can suspend its TRIPs IP obligations to the tune of $21 million a year, not bad for a tiny little country.

Here's the NY Times report.

Here's the Register report, which quotes the colourful lawyer for Antigua, Mark Mendel, who is very dissatisfied with the quantum and method of calculation. He had sought $3.2 billion. And according to this article, it ain't over yet:

Unlike other WTO rulings, awards of arbitrators are not subject to review by the Appellate Body of the WTO. However, were internet gambling to continue to expand in the US - as seems almost certain - Antigua would have the right to return to the WTO to reassess the damage award. Antigua's position will also have to be revisited as the US continues its Article 21 proceedings to withdraw gambling services from its WTO commitments.

Here's Bill Patry's take on the ironic possibilities of how this amount will translate into action by Antigua. Bill says:

One wonders whose figures Antigua will use to come to that amount: the IIPA's ludicrously inflated figures, where every estimated unauthorized copy represents a 1:1 displacement of a sale at U.S. prices, or something else of Antigua's own concoction? I am betting on the latter.

Another irony is that this is about 21 times more than the US is now paying out for the sweet deal it got for flouting its obligation to pay for public performance in small establishments in the WTO "s. 110" decision.

Here's the WTO site for everything you wanted to know about this case.

And here's Jon Newton's take, and he may have first on this, at least in my travels today.

And here's where I said back in Augst that this should be taken seriously....

HK

Canada's Stronger Copyright law - a baker's dozen examples

Deirdre McMurdy has an article today on the imminent copyright bill, and the role of American Ambassador Wilkins and some of the other usual suspects.

The Ambassador is quoted as saying that "Canada is known for having the weakest copyright protection in the G8." That is nothing short of ridiculous. Worse, it is simply false and misleading.

First, the G8 includes Russia. Enough said.

Second, Canadian copyright law is MUCH stronger than US law in the following ways:

1. We have neighbouring rights. The USA doesn’t. This translates into very big bucks for record producers and performers.
2. For example, broadcasters already pay far more here than there - with about $50 million p.a. more over and above now being demanded by NRCC for rights that don't even exist in the USA.
3. We pay a fortune to SOCAN for performances in countless bars, restaurants, retail stores and other small business establishments. The USA notoriously exempts these establishments, contrary to a WTO ruling against the USA which the USA continues to flout. The USA is the most famous adjudicated current violator of international copyright law.
4. We have moral rights. The USA doesn’t.
5. Educators pay more here than in the USA. We pay far more proportionally for reprographic rights than in the USA, with far fewer exceptions for educators in our legislation. The US counterpart to Access Copyright has only a little over three times Access’s income - while normal ratios would suggest that it should have ten times the amount. Canadian educators are subject to statutory damages. American ones are not if they reasonably believe that they are engaging in fair use.
6. We have a rich blank media levy scheme that generates currently almost $40 million a year, most of which goes to the USA. The USA has nothing comparable. If CPCC gets its way, which I’m trying to prevent, we’ll have a $75 iPod “tax”, which simply couldn’t happen under US law.
7. We long ago got rid of most of our compulsory licenses, including the mechanical license for sound recordings. The USA has this and many more, which it continues to preach against to other countries.
8. We have 36 copyright collectives. The USA has less than 6.
9. We have major direct and indirect support and subsidies to collectives. The USA wouldn’t dream of it.
10. We have a full time Copyright Board with enormous policy making powers. The US mechanism is far more limited.
11. We have no parody right/exception for users, The USA does.
12. We have no distance educational exceptions. The USA does.

The problem with US copyright propaganda is that the US is a “born again” believer in copyright law, and therefore prone to overly zealous and inaccurate excessive rhetoric. Until 1976, its laws were drastically weaker than any other developed country. It didn’t even join Berne until 1989 and, even now, some question its compliance with Berne, on such issues as moral rights.

It would be very sad if our politicians were to believe the inaccurate propaganda coming mainly from the USA and CRIA. It may also be a costly political mistake to do so.

HK

"ACTA" - a New Plurilateral Policy Platform

A potentially important announcement from Washington, Brussels (EU), and Ottawa (and doubtless elsewhere) today re a proposed Anti-Counterfeiting Trade Agreement - “ACTA.”

According to US Ambassador Schwab:

The ACTA would complement the Administration’s work to encourage other countries to meet the enforcement standards of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) under the World Trade Organization, and to comply with other international IPR agreements. It will not involve any changes to the TRIPS Agreement. Rather, the goal is to set a new, higher benchmark for enforcement that countries can join on a voluntary basis. The negotiations represent a cooperative effort by the governments involved, and will not be conducted as part of any international organization.

The list of currently interested countries read a bit like preaching to the choir:

[US] Trading partners engaged in discussions so far include Canada, the European Union (with its 27 Member States), Japan, Korea, Mexico, New Zealand, and Switzerland.

Most of these countries have adequate and effective levels of substantive law and enforcement mechanisms.

So - these questions arise:

• What’s this really about?
• Will the US “insist” on ratcheting up substantive law - for example by defining downloading, “making available” and DRM/TPM circumvention as “piracy”?
• Will the US and EU insist that all countries have a common copyright term - for the sake of better and more symmetrical “enforcement”?
• Will legitimate parallel imports get caught, like dolphins in a drift net?
• Where are WIPO and WTO in this?
• Is this an exercise in plurilateral policy laundering?

There is clearly potential for positive developments here. Indeed, counterfeiting involving trade-marks is morally, economically and even criminally wrong - especially in the thankfully rare cases when health and safety are involved. Commercial scale copyright piracy is also quite wrong - although certain elements in the record industry apply the word “piracy” rather promiscuously to include all manner of private copying that they cannot control - thereby labelling hundreds of millions of ordinary internet users as “pirates.”

But some rights owner lobbyists and sympathetic officials have a tendency to conflate “effective action” on enforcement issues with substantive law augmentation. We saw an example of this in the Grokster case in the US Supreme Court, and I was asked to write an “amicus” brief on it.

What we don’t want to see are excessive barriers to the flow of legitimate goods, including parallel imports - which are legitimate by definition. There is a danger that customs officers and even lawyers won’t be sure of the difference in some cases. If that happens, millions of dollars of legitimate goods may get tied up or cost more to clear at a border. And we don’t want to see a backdoor mechanism to increase substantive laws in ways that threaten Canadian cultural and economic sovereignty.

And we don’t want to see a good cause become the pretext for bad laws. Think 9/11. The Bush administration has tried to brand many critics of its excessive post 9/11 incursions on civil liberties as soft on terrorism. And we have seen the results ranging from common inconvenience at the boarder to tragedy. Will critics of potentially excessive ACTA measures be labelled as proponents of counterfeiting and piracy, and enemies of artists and creators?

There are also the dangers of a plurilateral policy platform dominated by the US and to a lesser extent the EU - especially since the often too low but at least established minimal institutional transparency of WTO and WIPO won’t be there. We may get a fait accompli that Parliament will be asked - or told - to implement. Or some would say “rubber stamp.” That’s how policy laundering happens - things that couldn’t get of the ground domestically are agreed upon far away by a few senior bureaucrats and politicians - and are brought home effectively as domestic law. All democratic countries should be worried about this.

BTW, here's a rather balanced British view from one of my favourite felines, the IPKat.

And here's a take from IP-Watch on the formidable forces pushing this initiative including Mary Bono - who famously told Congress that:

Actually, Sonny wanted the term of copyright protection to last forever. I am informed by staff that such a change would violate the Constitution. … As you know, there is also [Motion Picture Association of America president] Jack Valenti's proposal for term to last forever less one day. Perhaps the Committee may look at that next Congress.

This may provide a clue as to where these talks may be headed...

Update: Here's Minister David Emerson jumping on the bandwagon.

HK