Techdirt. Stories filed under "us"

US Uses Special 301 To Bully Ukraine, Likely Violating WTO

Sean Flynn — Fri, 17 May 2013 00:01:00 PDT

In this year's Special 301 report, the United States Trade Representative listed Ukraine as a "Priority Foreign Country" (aka PFC), triggering a 30 day countdown to initiate an investigation under Section 301 of the Trade Act to determine trade sanctions. 19 USC 2412(2)(A). This is only the second time that the U.S. has threatened a WTO-member country with sanctions as a PFC. And thus it is an appropriate time to ask what restrictions the World Trade Organization places on the operation of the Special 301 program. As described more fully below, any sanction of Ukraine, including removal of General System of Preferences (GSP) benefits, would likely violate WTO rules. Indeed, the listing of Ukraine as a PFC, and the more general operation of "watch lists" threatening sanctions for intellectual property matters, could be challenged under the WTO even prior to any sanction actually going into effect.

Special 301 is a Unilateral Adjudication of Foreign Countries for IP Matters both Covered and not Covered Under any Trade Agreement

Special 301 is an offshoot of the more general "Section 301" program which authorizes the USTR to unilaterally sanction foreign countries for a domestic law which either "violates, or is inconsistent with, the provisions of, or otherwise denies benefits to the United States under, any trade agreement" or which does not itself violate any agreement but nevertheless "is unreasonable or discriminatory and burdens or restricts United States commerce." 19 USC § 2411. One ground for finding an "unreasonable" policy subject to trade sanction includes the denial of "fair and equitable . . . provision of adequate and effective protection of intellectual property rights notwithstanding the fact that the foreign country may be in compliance with the specific obligations of the Agreement on Trade-Related Aspects of Intellectual Property Rights." 19 USC 2411(d)(3)(VB)(ii). Possible sanctions can include the suspension of "benefits of trade agreement concessions," "duties or other import restrictions," or the suspension of General System of Preferences (GSP) benefits. 19 USC 2411(c).

Special 301 is integrated into the Section 301 sanctioning process through a public adjudication and notification mechanism. Under Special 301, the USTR is required to annually publish in the Federal Register a list of countries that deny "adequate and effective protection of intellectual property" or "deny fair and equitable market access for U.S. firms that rely on intellectual property," and then designate among those countries the subset of worst actors to be designated "priority foreign countries." 19 U.S.C. § 2242. USTR holds an annual hearing and publishes an annual report containing two levels of "Watch Lists" below the "Priority Foreign Country" designation. As described by USTR in the 2013 report:

Placement of a trading partner on the Priority Watch List or Watch List indicates that particular problems exist in that country with respect to IPR protection, enforcement, or market access for persons relying on IPR. Countries placed on the Priority Watch List are the focus of increased bilateral attention concerning the problem areas.

Designation as a "Priority Foreign Country" is a statutory criteria that triggers a 30-day countdown during which targeted countries must "(enter) into good faith negotiations" or "(make) significant progress in bilateral or multilateral negotiations" or face an investigation under the Section 301 process for determining unilateral sanctions. Priority foreign country determinations are reserved for countries "that have the most onerous or egregious acts, policies, or practices," that "have the greatest adverse impact (actual or potential) on the relevant United States products," and for which "there is a factual basis for the denial of fair and equitable market access as a result."

This framework for unilaterally sanctioning foreign countries for intellectual property matters pre-dates the World Trade Organization's rules. Indeed, it was the lack of binding international trade adjudication, such as that created under the WTO, that was the primary justification for Congress's enactment of the 301 unilateral adjudication in the 1980s. [See 301 Historical Primer]. There has always been a serious question as to how the statutory program could continue after the WTO, and there has been one adjudication of the more general 301 program explained below.

One of the noticeable trends in Special 301 in the Post-WTO 1994 period is the steep drop off in listings of countries as a "Priority Foreign Country," most directly threatening trade sanctions. Only three countries were designated as PFCs after 1994: China in 1996, Paraguay in 1998, and Ukraine in 2001-05. Of these, only Paraguay was a member of the WTO in the year it was listed as a PFC. Ukraine was not a WTO member when it was initially listed, but now it is.

Using 301 to Adjudicate TRIPS Violations Would Violate the WTO Dispute Settlement Understanding and U.S. Law

On their face, the 301 complaints against Ukraine do not appear to raise challenges to Ukraine's implementation of the WTO agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). The 2013 Special 301 Report describes three grounds for Ukraine's PFC listing:

[T]he specific grounds for the U.S. Trade Representative’s designation of Ukraine as a PFC are: (1) the unfair, nontransparent administration of the system for collecting societies, which are responsible for collecting and distributing royalties to U.S. and other rights holders; (2) widespread (and admitted) use of illegal software by Ukrainian government agencies; and (3) failure to implement an effective means to combat the widespread online infringement of copyright and related rights in Ukraine, including the lack of transparent and predictable provisions on intermediary liability and liability for third parties that facilitate piracy, limitations on such liability for Internet Service Providers (ISPs), and enforcement of takedown notices for infringing online content.

None of these grounds explicitly refer to complaints under TRIPS. Unilateral adjudication of TRIPS violations is prohibited by Article 23 of the Dispute Settlement Understanding, explaining under the title "Strengthening of the Multilateral System":

1. When Members seek the redress of a violation of obligations or other nullification or impairment of benefits under the covered agreements or an impediment to the attainment of any objective of the covered agreements, they shall have recourse to, and abide by, the rules and procedures of this Understanding.

2. In such cases, Members shall:

(a) not make a determination to the effect that a violation has occurred, that benefits have been nullified or impaired or that the attainment of any objective of the covered agreements has been impeded, except through recourse to dispute settlement in accordance with the rules and procedures of this Understanding, and shall make any such determination consistent with the findings contained in the panel or Appellate Body report adopted by the DSB or an arbitration award rendered under this Understanding

The import of this language is fairly clear. The Dispute Settlement Understanding (DSU) procedures, and only those procedures, can be used for findings that lead to the "suspension of concessions or other obligations" under GATT.

After the WTO accords went into effect, the U.S. did not dismantle the Section 301 or Special 301 programs, which became the subject of a trade dispute in the WTO in United States – Sections 301-310. In that case, a WTO panel held that Section 301 sanctions were only still legal under the DSU because of a "Statement of Administrative Action" pledging to "base any section 301 determination" on "panel or Appellate Body findings adopted by the DSB" and only sanction countries with "authority from the DSB to retaliate."

The panel decision went further, discussing in a key package that the U.S. also could not threaten to sanction countries in ways that, if actually implemented, would likewise threaten the WTO:

Members faced with a threat of unilateral action, especially when it emanates from an economically powerful Member, may in effect be forced to give in to the demands imposed by the Member exerting the threat... To put it differently, merely carrying a big stick is, in many cases, as effective a means to having one's way as actually using the stick. The threat alone of conduct prohibited by the WTO would enable the Member concerned to exert undue leverage on other Members. It would disrupt the very stability and equilibrium which multilateral dispute resolution was meant to foster and consequently establish, namely equal protection of both large and small, powerful and less powerful Members through the consistent application of a set of rules and procedures.

After this ruling, the USTR has been relatively carefully not to use Special 301 to explicitly threaten other countries with trade sanctions for alleged violations of TRIPS. It more commonly describes Special 301 as being a component of the evaluation of whether it will grant other countries GSP benefits, which it asserts unilateral authority to determine the criteria for. And the criteria listed in the 301 reports most commonly refers to the lack of domestic policies that are "TRIPS-plus" -- i.e. go be beyond those required by the TRIPS agreement. But, as explained below, the developed countries do NOT have unilateral authority to determine GSP benefit criteria. Under the reasoning of the Sections 301-310 panel, any country on the various Special 301 Watch Lists would likely have standing to challenge the Special 301 program as threatening denial of GSP benefits for criteria that violate the WTO accords.

TRIPS-Plus standards may be challenged as not being "non-discriminatory" and "non-reciprocal" criteria tailored to "respond positively to the development, financial and trade needs of developing countries."

The U.S. legal authority for denying GSP benefits based on intellectual property policies is contained in 19 USC 2462(c), requiring consideration of the "the extent to which such country is providing adequate and effective protection of intellectual property rights." The 2013 Special 301 report signals that it intends to evoke this criteria with respect to Ukraine, stating:

When Ukraine was designated a PFC in the past, it failed to address the grounds for its designation during the following investigation. As a result, Ukraine lost its eligibility for benefits under the Generalized System of Preferences (GSP). Once Ukraine addressed the issues that led to its designation as a PFC, its eligibility for GSP benefits was reinstated.

Thus, the central question under the WTO accords may be: may the U.S. suspend GSP benefits from a country as a sanction for not adopting TRIPS-plus policies? Current law under the WTO Appellate Body provides a strong argument that the U.S. cannot maintain such policies.

The starting point for the trade law analysis is the WTO's requirement of Most Favored Nation (MFN) treatment for all members, contained in Article I:1 of the General Agreement on Tariffs and Trade 1994 (GATT). The MFN principle requires

any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country be accorded immediately and unconditionally to the like product originating in or destined for territories of all other contracting parties

By withdrawing trade benefits from one country (e.g. Ukraine), but not from other WTO-members, the U.S. GSP program facially authorizes conduct that violates MFN treatment. The conduct must, therefore, be authorized by an exemption to MFN.

GSP programs are authorized by the exception to MFN known as the GSP "Enabling Clause." The two key provisions in this clause for our purposes are located in Paragraphs 2 and 3. Paragraph 2 (footnote 3) of the Clause states that GSP programs are authorized only in so far as their criteria are "generalized, non-reciprocal and non discriminatory." Paragraph 3 of the Clause adds the additional requirement that GSP criteria "be designed and, if necessary, modified, to respond positively to the development, financial and trade needs of developing countries." The use of TRIPS-plus criteria to deny GSP benefits does not appear to meet either standard.

The WTO Appellate Body (the highest court in the WTO and the authority on matters of WTO interpretation) was tasked with interpreting the GSP enabling clause requirements in the case of EC -- Preferential Tariffs. The matter involved a challenge by India of the EC's program to award additional GSP benefits to countries that participated in a special drug eradication program. The Appellate Body held that GSP programs could have criteria that result in different benefits being afforded to different developing countries, but that such differential treatment must itself be based on criteria that meet the Paragraph 3 requirement of responding "positively to the development, financial and trade needs of developing countries." The Appellate Body explained:

In granting such differential tariff treatment, [ ] preference-granting countries are required, by virtue of the term “nondiscriminatory”, to ensure that identical treatment is available to all similarly-situated GSP beneficiaries, that is, to all GSP beneficiaries that have the “development, financial and trade needs” to which the treatment in question is intended to respond.

The Appellate Body continued:

[T]he expectation that developed countries will “respond positively” to the “needs of developing countries” suggests that a sufficient nexus should exist between, on the one hand, the preferential treatment provided under the respective measure authorized by paragraph 2, and, on the other hand, the likelihood of alleviating the relevant “development, financial [or] trade need”. In the context of a GSP scheme, the particular need at issue must, by its nature, be such that it can be effectively addressed through tariff preferences. Therefore, only if a preference-granting country acts in the “positive” manner suggested, in “respon[se]” to a widely-recognized “development, financial [or] trade need”, can such action satisfy the requirements of paragraph 3(c).

Under this standard, TRIPS-plus criteria may be challenged for being insufficiently related to the needs of developing countries and rather tailored to meet U.S. intellectual property industry export needs. The U.S. is not free to define any "needs" it chooses as GSP criteria for developing countries. The Appellate Body admonished that "a 'need' cannot be characterized as one of the specified "needs of developing countries" in the sense of paragraph 3(c) based merely on an assertion to that effect by, for instance, a preference-granting country or a beneficiary country." Such need, the Appellate Body held, must be assessed according to an "objective," "[b]road-based recognition of a particular need," such as those "set out in the WTO Agreement or in multilateral instruments adopted by international organizations."

Here, the U.S. is on the horns of a dilemma. For the criteria to be sufficiently "broad based," the WTO Appellate Body suggests that they need to be incorporated into a broad multilateral agreement like TRIPS. But the U.S. cannot unilaterally adjudicate TRIPS disputes.

The specific issues that the U.S. raises -- the administration of collecting societies, rules on the government use of copyrighted software, and intermediary liability and "enforcement of takedown notices for infringing online content" -- are not subject to broad-based international standards. None are explicitly recognized duties under TRIPS. There are very general standards in the WIPO Internet Treaties on copyright in the digital environment, but only a small number of controversial international agreements -- in the form of bilateral trade agreements with the U.S. -- contain standards on intermediary and third party liability and the enforcement of takedown notices for online infringement. The U.S. would like these to be areas of broad-based agreement, but thus far they are not.

Ukraine may also argue that using removals of GSP benefits as a sanction for disfavored policies and practices is not a "positive" use of GSP benefits. The Appellate body explained that the GSP Enabling Clause "mandates that the response provided to the needs of developing countries be 'positive,'" which it defined as "consisting in or characterized by constructive action or attitudes." It continued:

This suggests that the response of a preference-granting country must be taken with a view to improving the development, financial or trade situation of a beneficiary country, based on the particular need at issue.

It is difficult to explain the use of PFC listings under Special 301 as "positive" in this respect. The PFC listing is rather clearly designed as a threat to withdraw benefits as a punitive sanction for acting against U.S. interests, not as an enticement or reward for responding to its own development needs. As one commenter noted: "The EC rewards "good" behavior with extra preferences; the U.S. penalizes "bad" behavior by taking away preferences." Whether the WTO allows the latter use of GSP criteria as a sanction is yet to be decided by the Appellate Body.

Conclusion

The implications of the two lines of cases discussed above suggest that Ukraine has strong arguments for challenging its PFC listing, and any subsequent denial of GSP benefits, in the WTO. In addition, using the discussion of the prohibition of "threats alone" from the Section 301-310 case, other countries on the various watch lists could challenge Special 301 as implicitly threatening GSP benefit withdrawal for criteria that do not meet the WTO’s standards. Doing so and succeeding would relieve the world of a much hated vestige of the Pre-WTO "aggressive unilateralism" in U.S. trade policy.

Sean Flynn is a professor and associate director of the Program on Information Justice and Intellectual Property (PIJIP) at American University Washington College of Law.

Cross posted from infojustice.

Permalink | Comments | Email This Story

Now US And EU Want To Apply Upward Ratchet To TRIPS Itself

Glyn Moody — Tue, 7 May 2013 00:01:32 PDT

Here on Techdirt we often talk about the copyright ratchet -- the fact that for three hundred years changes to copyright have always been in one direction: longer, wider and stronger. But there's a group of countries where the copyright ratchet isn't in place yet. These are the so-called LDCs -- the Least Developed Countries -- where many of the world's poorest citizens live. That's because the main Agreement on Trade Related Aspects of Intellectual Property Rights, better known as TRIPS, explicitly allows LDCs a transitional period of ten years, during which time they are not required to meet all the stringent requirements laid down there for granting intellectual monopolies. Moreover, the TRIPS agreement specifies:

The Council for TRIPS shall, upon duly motivated request by a least-developed country Member, accord extensions of this period.

And as an article on infojustice.org notes: Last November the LDCs exercised their legal rights under the TRIPS rules, and submitted a request to the TRIPS Council requesting an unconditional extension of the transition period for as long as a country remains an LDC. The current transition period expires on 1 July 2013.

Article 66.1 of the TRIPS Agreement grants LDCs a renewable exemption from TRIPS obligations. The rationale is that LDCs need maximum flexibility to develop a viable technological base and address their constraints, and that the standard of TRIPS IP protection may be an obstacle in achieving those objectives.
The US and EU routinely insist that countries follow TRIPS to the letter, but it seems they are only too happy to ignore their own obligations when it comes to granting a further exemption to LDCs: Developed countries, particularly the United States and the European Union, have offered a poor and impractical deal of an incredibly short extension of 5 years with restrictive conditions to least developed countries that are entitled to be exempted from implementing the WTO TRIPS Agreement.

Particularly problematic is their demand that the LDCs agree to a "no-roll-back" clause, a TRIPS plus condition that will prevent LDCs from rolling back (i.e. providing a reduced degree of IP protection) their current laws, even if they adversely impact their development concerns.
"No roll-back" is another way of saying upward ratchet. But the US and EU are trying to haggle over details of an agreement that was finalized and signed back in 1994. As infojustice.org puts it: The US and EU demand, if agreed to, would actually amount to an amendment to Article 66.1, but without following proper WTO procedures as required by Article X of the WTO Agreement
That is, the US and EU are not only trying to bully smaller countries into accepting unofficial changes to negotiated agreements, in this case to lock LDCs into a system with a built-in ratchet for intellectual monopolies, but they want the upward ratchet to operate on TRIPS itself.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Permalink | Comments | Email This Story

What I Learned About My Own Daily Life From The Latest North Korean Propaganda Video

Timothy Geigner — Fri, 29 Mar 2013 18:40:00 PDT

Update: As pointed out in the comments... this is a hoax. The video is real, but the translation is made up for the sake of comedy value. Considering that Monday is April Fool's Day, where a bunch of people are going to be trying to fool others, let's just consider this a "lesson learned" and hope that we're not repeating this message again on April Fool's posts... Original post below...

I find myself in the peculiar position of having to congratulate one of my old nemeses in writing for Techdirt, North Korea. I would have thought, after having described their previous attempts at producing propaganda videos, one of which included Elder Scrolls music and the other Call Of Duty footage, that they had exhausted the human limits for laugh-inducing hilarity. As it turns out, if I'm to believe the translator of the following video, these were merely warm up acts for the true star of North Korean humor, which details daily life in America.

Now, should a mere YouTube video reach the limits of your workplace's filtering device, or that of your country, allow me to present to you some of the things I learned about my own life thanks to this wonderfully produced video.

1. All of America is covered in snow, which is a good thing because apparently all American coffee is somehow made from snow.

2. Americans, by and large, live in tents and spend all of our money buying guns to kill children.

3. There are no longer birds in America, because they have all been eaten by the gun-toting tent-dwellers.

4. It is common in modern-day America for our tents to have caved in roofs (?), but we are still proud of our tents, as well as our Green Bay Packers Starter jackets.

5. Before we stray away from our tents, note that all of them are built with supplies donated to us by North Korea.

6. Before we stray away from our propensity to eat birds, note that the most common day for the eating of birds is Tuesday.

7. Homeless people, in general, are former Republican candidates from Oregon.

8. America is very grateful to our government for the 1 cup of snow-coffee handout we all receive daily, after which we resume bird-eating and child-killing activities.

Now, should you be of the same mind as I in that you're beginning to wonder why you can't recall all of these moments in your daily life, it is useful to remember that North Korea is a country which has a dead person as its President. This is not an exaggeration. As you can see for yourself, while Kim Jong-un is indeed the country's First Chairman, neither he nor his father ever held the office of President of North Korea. That position was, and to this day is, filled by Jong-un's grandfather, Kim Il-sung, who has been dead for nearly two decades, but holds the office of "Eternal President".

I submit that no amount of pigeon-eating or tent-dwelling can hold a candle the level of crazy required to have a zombie President.

Permalink | Comments | Email This Story

Even As US Continues To Push Stronger Intellectual Property Laws Through Trade Agreements, It Ignores Those Agreements At Home

Mike Masnick — Fri, 29 Mar 2013 12:14:55 PDT

Even as the US tries to ratchet up patents, copyrights and trademarks in international trade agreements, talking about how it's essential to protect the US's interests, it's amazing how the US ignores those same agreements at home. For years, we've talked about the still ongoing situation with Antigua, where the US was clearly found in violation of trade agreements, but has refused to do anything about it (other than unilatterally changing the free trade agreement in question in its own favor).

But that's just the tip of the iceberg.

Other countries are complaining that the US has lost at a variety of hearings in front of the WTO (handling disputes over those trade agreements) and then proceeded to ignore those rulings entirely.

“The conduct of the United States unscrupulously discredits the WTO dispute settlement system and also constitutes an affront to the intellectual property rights,” an ambassador from Cuba said today at the WTO.

At a WTO Dispute Settlement Body meeting today, a number of WTO members fired shots at the US delegation for its continued failure to change its laws to comply with WTO rulings that found it out of compliance on intellectual property-related issues.

The article lists out a bunch of countries all complaining that, while the US keeps pressuring them to adopt strict IP laws, the US routinely ignores the same clauses in the various free trade agreements it signs.

“It is very ironic to observe the United States projecting laws on intellectual property, despite keeping violations as egregious as Section 211,” under which the Bacardi Company continues to market rum labelled Havana Club, a mark which is otherwise owned by Cuba and partners. “This is one of the most famous cases of trademark counterfeiting and conducting misleading advertising by a company backed by the US legislation.”

And while a number of the countries complaining obviously have other issues with the US (Cuba, Venezuela), it's not just those countries. The EU also has complained that the US has been ignoring various agreements.

Even the 27-member European Union weighed in on the Section 211 case, thanking the US for its report and adding the hope that “US authorities will very soon take steps towards implementing the DSB ruling and resolve this matter.” The EU also urged that the US comply with another IP case – Section 110(5) of the US Copyright Act – which involved the US commercial practice of playing music recordings, such as Irish music, aloud in bars without paying royalties. “We refer to our previous statements that we would like to resolve this case as soon as possible,” the EU said.

Of course, the proper response to all of this isn't just putting more pressure on the US to change its laws to comply, but a more basic solution: stop agreeing to "intellectual property" issues in trade agreements. The US has now made it abundantly clear that it will pressure countries into rules that go against its own best interests and then will ignore any rules that go against its own interests. So the most basic response is that the US is clearly not trustworthy on "intellectual property" in trade agreements, and other countries should refuse to include such provisions in any agreement with the US. Don't reward hypocrisy and bullying by allowing the US to do more of the same.

Permalink | Comments | Email This Story

South Korea Considers Dumping Draconian Copyright Law Forced On It By The US

Glyn Moody — Fri, 29 Mar 2013 08:49:24 PDT

As Mike noted a couple of days ago, international trade agreements often have the effect of constraining the power of national legislatures. Indeed, that's doubtless one of the reasons why they have become so popular in recent years: they allow backroom deals between politicians and lobbyists to set the agenda for law-making around the world, without the need for any of that pesky democratic oversight nonsense. In particular, the trade agreement between South Korea and the US is turning out to be a key limiting factor for both TPP and what US politicians might try to do about phone unlocking. This makes two recent moves to loosen South Korea's harsh copyright laws potentially important far beyond that country's borders.

The first concerns a report by the National Human Rights Commission of South Korea on human rights in the digital age. Among other recommendations, it makes several for reforming Korean copyright law. Heesob Nam provides a useful summary:

Introduction of comprehensive and open-ended fair use provisions in the Copyright Act;

Legislation of users' right capable of offsetting abusive enforcement of copyright;

Guaranteeing the reuse and access of the general public to publicly-funded information and culture;

Balanced harmony of intellectual property and the right to culture and information;

These might seem mild enough, but against the current background they are likely to be seen as quite radical in giving more rights to the public, for a change. The commission also calls for South Korea's existing implementation of the three-strikes approach to be reconsidered and, if necessary, repealed: Regulations such as copyright three-strike-out rules, technological protection measures, and game shut-down, the regulatory effectiveness of which is doubtable and may restrict the right to culture and information, need to be examined in depth to see if they infringe other constitutional rights and, if necessary, such regulations are to be revoked.
Revocation of three strikes is precisely what one Korean politician hopes to achieve, as pointed out to us by @maira: On March 24, 2013, Mr. Choi Jae-Cheon, a member of the Culture, Broadcasting, and Tourism Standing Committee of the Korean National Assembly, along with other twelve other sponsors, announced his proposal to repeal this provision of the law, which has been in force since 2009.
The problem, as is so often the case with copyright, is that the law has turned into a monster, suffering function creep and leading to disproportionate punishments. Global Voices explains: Since the law was enacted, the Korean government has sent 468,446 takedown notices to users and shut down 408 website accounts. The law has affected far more users than it was originally intended to -- it was passed with the goal of targeting users engaging in massive amounts of illegal downloading, estimated at about 1,000 users. But in fact, according to Mr. Choi's investigation based on his team's collected data from MCST [Korea's Ministry of Culture, Sports, and Tourism], among 380 users whose accounts have been shut down, 174 (45.8%) of them inflicted damages of less than US$.90. Mr. Choi argues that their punishment, which constrains their right of access to information, is much harsher than the cost they incurred. Therefore, the law not only violates legal due process -- it is also inefficient from an economic perspective, and it imposes a punishment that is disproportionate to the crime.
According to the same article, this is no mere one-off action, but part of a broader reform movement in South Korea: This and other Internet-related policies have brought together professors and activists who are forming new non-profit organizations focused on Internet rights. This emerging public coalition shows a promising sign of a new counter-force against state-guided Internet and communication policy making processes in South Korea.
That would be a hugely welcome development, which might help to bring some much-needed balance into the nation's copyright laws. And just as bad, one-sided copyright laws in one country can adversely affect the public elsewhere through trade agreements, let's hope that good, proportionate ones -- if we ever get them -- can be equally far-reaching.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Permalink | Comments | Email This Story

Now US Wants Transatlantic Free Trade Agreement With European Union To Include Turkey: Who's Next?

Glyn Moody — Tue, 19 Mar 2013 00:08:32 PDT

Last week we wrote about the important news that Mexico is asking to join what began as a bilateral trade agreement between the US and Europe, with the suggestion that Canada might follow suit. Now, via @FFII, we learn that even before Mexico's announcement, the US has been encouraging other countries to join:

Turkish Foreign Minister Ahmet Davutoglu said Wednesday US Secretary of State John Kerry wanted Turkey to be included in Transatlantic Free-Trade Area (TAFTA).

Davutoglu said they would follow closely the process of Turkey's inclusion in TAFTA.

As with Mexico's application, it would seem that the European Union doesn't get any choice in the matter. But what's really interesting here is that it confirms the impression that the US is keen to build out TAFTA to include many more countries, including some far from the Atlantic that originally defined it. The big question is now: who's next on the list?

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Permalink | Comments | Email This Story

Mexico Will Ask To Join US-EU Transatlantic Trade Agreement

Glyn Moody — Wed, 13 Mar 2013 16:39:55 PDT

Things are moving fast with the proposed US-EU transatlantic free trade agreement (TAFTA). It was only a few weeks ago that the formal announcement was made, and already another country wants to join, as pointed out by @PostActa (original in Spanish):

The Mexican government wants to be part of the negotiations of the Transatlantic Association of Trade and Investment (TTIP, in its English acronym), which the United States and European Union will be negotiating, with the idea that there will be two blocks that make up the future pact.

That is, alongside the EU block of 27 countries, Mexico is suggesting there should be a similar regional grouping in North America. Interestingly, the story says that the Mexican government will ask the US President for permission to join, with no mention of asking the EU: "It is a sovereign decision of Washington as to the approach and the negotiation strategy to be adopted", and although the U.S. government has already referred to the idea, it is something that is not yet included in a formal dialogue, and needs to be defined.
That suggests that the US is actively involved in this latest move -- maybe even its instigator -- and would look favorably on Mexico joining TAFTA. There's also a hint in the article quoted above that Canada too might join TAFTA. Having both Mexico and Canada on board would be consistent with the US's past approach, where it allowed them to join the TPP negotiations, but on fairly humiliating terms that limit their scope of action.

Whether or not Mexico and Canada become part of TAFTA, and under what terms, it's pretty clear what the US strategy here is. Just today we learned that South Korea is likely to join Japan in asking to sign up to the TPP talks. That would make TPP the defining international agreement for the entire Pacific region. TAFTA obviously aims to do the same for the Atlantic. As well as establishing the US as the key link between the giant TPP and TAFTA blocs, this double-headed approach would also isolate the main emerging economies -- Brazil, Russia, India and above all China -- if they refuse to join as presumably junior partners. That globe-spanning pair of trade pacts, it would seem, are what Obama hopes to be remembered for when he leaves office: his legacy to America -- and to history.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Permalink | Comments | Email This Story

So Much For Protecting US Interests - Most Big 'IP Intensive' Firms Are Foreign-Owned

Mike Masnick — Tue, 5 Mar 2013 12:08:00 PST

These days, it's become quite common to talk about the importance of spreading copyright maximalism around the globe based on the US's interests. After all, the US seems to be the leading country in pushing for such maximalism, and people often talk about the big copyright players and their lobbyists, as being US-centric. After all, there's Hollywood for movies, NY for publishing and NY/LA/Nashville for music. And, so much activity seems to be driven by their lobbyists -- mostly the RIAA and MPAA. However, a new study is pointing out, for all this talk of the "American entertainment industry" driving the discussion on copyright laws, that a very, very large number of these companies are actually foreign, and much of the industry is really foreign (pdf). There's a nice infographic to go along with the report as well: The paper starts out by questioning a key assumption that is made frequently, by calling out a specific statement by IP Czar Victoria Espinel:

Americans are global leaders in the production of creative and innovative services and products, including digital content, many of which are dependent on the protection of intellectual property rights.

The paper notes that many have challenged whether or not those industries are truly "dependent" on intellectual property laws, but few have explored whether or not those industries are really "American." Turns out... they're not. And, as such, if we're making policy based on just propping up the few legacy companies who run those industries, we're often funneling US money to foreign countries, rather than investing it in the US. Among the findings (many of which are in the graphic above):

Four of the "Big Six" publishers (who represent a huge percentage of English-language book publications) are foreign-owned. More than 80% of the revenue made by the Big Six goes to foreign-owned companies.
Only 7 of the world's top 50 publishers are US-owned.
The book publishing business in Europe employs twice as many people as the US
Two of the three major record labels are foreign-owned. Those two labels represent nearly 60% of the market.
13 out of the 20 best-selling artists are not American.
Half of the 50 most popular movies in the US in 2012 were filmed partly or entirely outside the US.
Over the last two years, half of all Oscar winners were foreign.
The video game market is dominated by Japanese firms, with 70% of the market for the most recent generation coming from Japan

The report finds that this carries over to the patent side as well.

Foreign companies obtained 7,000 more US patents than US companies in 2011 (likely a bigger gap in 2012)
Seven of the top 10 companies getting US patents were foreign in both 2011 and 2012.
Nearly 60% of pharmaceutical revenue is generated by foreign-owned companies.
The majority of employees in the pharma industry (including for US-owned firms) work outside the US.

Basically, the more you look, the more you realize that even with all this talk of how we need these laws to protect US interests, a significant amount of any benefits may actually be flowing right out of the country.

Permalink | Comments | Email This Story

Yes, The US Industrial Revolution Was Built On Piracy And Fraud

Mike Masnick — Tue, 5 Mar 2013 07:54:06 PST

Missed this when it first came out, but Bloomberg ran a fantastic report at the beginning of February, highlighting how piracy and fraud were key components to helping America catapult into the industrial revolution. In fact, there are reasonable arguments to be made that if the US was not a "pirate" nation, it would not have had the kind of success that it has had as the industrial world leader. We've discussed some of this in the past, and have highlighted how Eric Schiff's research showed how other countries (the Netherlands and Switzerland) industrialized by explicitly rejecting patents. The US didn't go that far, but it did involve quite frequent copying of the efforts of others and then improving on them, without fear of repercussions.

In its adolescent years, the U.S. was a hotbed of intellectual piracy and technology smuggling, particularly in the textile industry, acquiring both machines and skilled machinists in violation of British export and emigration laws. Only after it had become a mature industrial power did the country vigorously campaign for intellectual-property protection.

This is a point we've made many times as well. Patent and copyright system supporters frequently argue that stronger laws are needed to create incentives for creation and innovation. But, there are a ton of studies that show the actual pattern runs the other way. When you look at the pace of innovation before and after a change to patent laws, or if you do cross-country comparisons at the same time for similar types of economies, you quickly see that those with weaker laws show more innovation. The ratcheting up of patents is rarely about increasing incentives to innovate. Patents are put in place with the support of incumbents, knowing that it allows them to "exclude" competitors and upstarts. It is not a tool of innovation, but a tool to suppress disruptive innovation. Not having those laws (or having them widely ignored) leads to a situation in which people continually improve what's out there -- which is how the US economy took over the world during the industrial revolution.

The most candid mission statement in this regard was Alexander Hamilton’s “Report on Manufactures,” submitted to Congress in December 1791. “To procure all such machines as are known in any part of Europe can only require a proper provision and due pains,” Hamilton wrote. “The knowledge of several of the most important of them is already possessed. The preparation of them here is, in most cases, practicable on nearly equal terms.”

Notice that Hamilton wasn’t urging the development of indigenous inventions to compete with Europe but rather the direct procurement of European technologies through “proper provision and due pains” -- meaning, breaking the laws of other countries. As the report acknowledged, most manufacturing nations “prohibit, under severe penalties, the exportation of implements and machines, which they have either invented or improved.” At least part of the “Report on Manufactures” can therefore be read as a manifesto calling for state-sponsored theft and smuggling.

In fact, as the article notes, our own original Patent Act recognized this very fact, by refusing to cover foreign inventions.

Of course, the idea that loose patent and copryight laws can help nations develop economically is not a new idea. Over a decade ago, we were writing about how various officials were admitting that strong IP laws probably did more harm than good for developing nations. And, yet, the US continues to try to push its extreme maximalism for copyright and patent laws around the globe. Either they are doing this out of ignorance (a real possibility) or because they actually understand the truth, which is that other countries with IP laws like the ones in the US will see a slow down in their economic development.

Either way, those who insist that the US was founded on the principles of strong respect for "intellectual property" haven't paid that much attention to the actual history of American industrialization.

Permalink | Comments | Email This Story

USTR To Canada: 'Bow Down And Accept ACTA!' Canada: 'Yes, We Shall Do Your Bidding'

Mike Masnick — Fri, 1 Mar 2013 14:04:11 PST

The story of ACTA is well-known by now. ACTA was yet another attempt by copyright and patent maximalists to spread maximalist principles further via a secretive treaty that allowed certain industries to participate in the process, but kept out any and all concerns from public interest groups, the public itself, and innovative industries that would be harmed by the laws. Thankfully, widespread protests in the EU resulted in ACTA being declared dead there, as the EU Parliament refused to agree to ACTA. And, without the EU, it's questionable if ACTA will ever be a real treaty in any way that matters. Yes, some countries have signed it, but there are still some ratification processes necessary, and without the EU on board, the whole thing seems kind of pointless. Other negotiating countries, including Switzerland, Australia and Mexico have indicated that they are not fans of ACTA either.

Many assumed, therefore, that ACTA was dead. But... not the US apparently. Nor Canada. In an announcement today, the USTR is apparently acting as if the months of ACTA protests and the death of ACTA in Europe didn't happen. Instead, it's all about pressuring countries like Canada by claiming that they need "to meet its Anti-Counterfeiting Trade Agreement obligations." Seriously, now?

Now, if I'm a Canadian politician, this is the point where I tell the USTR to go pound sand and to recognize that the world has clearly rejected the concept of ACTA, and having just gone through a long and arduous copyright reform process (also mainly because of US demands from the likes of the USTR), that the USTR should go pick on some other country to bully.

Instead, however, we get near complete capitulation. With near perfect timing, a bill has been introduced in the Canadian Parliament to bring Canadian IP law into line with ACTA. Why would they even bother?

The core elements of the bill include the increased criminalization of copyright and trademark law as well as the introduction of new powers for Canadian border guards to detain shipments and work actively with rights holders to seize and destroy goods without court oversight or involvement.

It's really amazing that they're willing to open this can of worms, given just how strongly people fought back against ACTA elsewhere. Michael Geist has a good initial analysis of the bill at the link above, and will likely follow up to call out some more specifics in the 52 pages of changes to copyright and trademark law, but just the fact that Canada is bothering to move forward on this is troubling. It shows a Canadian government who doesn't seem to care about what the public wants, but rather feels the need to kowtow to US entertainment and pharmaceutical lobbying interests.

The first is that this bill provides a clear signal that Canada will move forward with ACTA notwithstanding some doubts over whether there is even sufficient global support to allow it to take effect (six ratifications are needed). ACTA is toxic in Europe, where officials now go out of their way to assure the public that ACTA is dead and that any new agreements will not involve efforts to revive it. ACTA has also faced serious opposition in other negotiating countries, including Switzerland (which has not signed it), Australia (where a Parliamentary Committee recommended against ratification), and Mexico (where the Senate rejected it in 2010). ACTA was promoted as a "gold standard" agreement on counterfeiting, yet the failure to garner support from many participants has left an agreement that is often cited as an example of how not to engage in international negotiations. Given the global opposition, Canadian support for ACTA is disappointing.

For many years, Canada has strongly resisted US-style copyright laws, despite tremendous pressure to do so. Watching them cave on ACTA is certainly a disappointment. Meanwhile, watching the USTR pretending as if ACTA went forward as planned is simply par for the course, and a reminder of just how completely detached from reality that organization remains. Elsewhere in the USTR's agenda release today, it mentions working with Japan to bring ACTA into force, which is somewhat laughable, considering how many countries have been rejecting it.

Permalink | Comments | Email This Story

Canada Denies Patent For Drug, So US Pharma Company Demands $100 Million As Compensation For 'Expropriation'

Glyn Moody — Fri, 8 Feb 2013 19:39:00 PST

An increasingly problematic aspect of free trade agreements (FTAs) is the inclusion of investor-state provisions that essentially allow companies -- typically huge multinationals -- to challenge the policies of signatory governments directly. The initial impulse behind these was to offer some protection against the arbitrary expropriation of foreign investments by less-than-democratic governments. But now corporations have realised that they can use the investor-state dispute mechanism to challenge all kinds of legitimate but inconvenient decisions in any signatory nation. Here's a good example of how this provision is being invoked to contest a refusal by Canadian courts to grant a patent on a drug, as explained on the Public Citizen site:

Eli Lilly and Company has initiated formal proceedings under the North American Free Trade Agreement (NAFTA) to attack Canada's standards for granting drug patents, claiming that the denial of a medicine patent is an expropriation of its property rights granted by the agreement. The investor privileges provisions included in NAFTA and other U.S. "free trade" agreements (FTAs) empower private firms to directly challenge government policies before foreign tribunals comprised of three private-sector attorneys, claiming that the policies undermine their "expected future profits." Eli Lilly's move marks the first attempt by a patent-holding pharmaceutical corporation to use U.S. "trade" agreement investor privileges as a tool to push for greater monopoly patent protections, which increase the cost of medicines for consumers and governments.

The claim that denying a patent is somehow an "expropriation" of property is pretty extraordinary. Patents are intellectual monopolies that are granted by governments; Eli Lilly does not have such a monopoly in Canada unless the government there grants it, which it does by applying its well-established laws and rules. Here's the background to the current dispute: Eli Lilly launched its NAFTA attack after Canadian courts invalidated Eli Lilly's monopoly patent rights for an attention deficit hyperactivity disorder (ADHD) drug, having determined that the drug had failed to deliver the benefits the firm promised when obtaining the patent. However, in its formal notice of intent to take Canada to a NAFTA investor tribunal, Eli Lilly makes clear that it is not only challenging the invalidation of its particular patent, but Canada's entire legal doctrine for determining a medicine's "utility" and, thus, a patent's validity. While pushing for a patent standard that would raise medicine prices, Eli Lilly, the fifth-largest U.S. pharmaceutical corporation, is demanding $100 million from Canadian taxpayers as compensation for Canada's enforcement of its existing medicine patent standards.
Basically Eli Lilly failed to deliver its side of the bargain, since the drug doesn't work very well, so Canada refused to allow the company to retain a patent that was contingent on it being effective. What's worrying is that the drug company's present action is not just challenging that decision, but the whole approach that requires drugs to work well enough to deserve a patent -- not unreasonably.

The case will not be heard before any ordinary national or even international court, with all that this implies in terms of transparency and fairness, but by a very special kind of tribunal:

The tribunals are comprised of three private sector attorneys, unaccountable to any electorate, who rotate between serving as "judges" and bringing cases for corporations against governments. The tribunals operate behind closed doors, and there are no conflict of interest rules. The tribunalists are paid by the hour and governments are often ordered to pay for a share of tribunal costs even when cases are dismissed. There is no limit to the amount of money tribunals can order governments to pay corporations. There are very limited appeal rights.

The entire approach is clearly biased towards companies and against the national governments, so the following facts will come as no surprise: Under U.S. FTAs and related deals, private investors have already pocketed over $3 billion in taxpayer money via investor-state cases, while more than $15 billion remains in pending claims.
However, bad as things are currently, they promise to get even worse if the TPP agreement is finalized in line with leaked versions: Ironically, while Canada faces an investor-state challenge from Eli Lilly, the country has joined negotiations to establish the TPP, which would expand the investor-state system further. To date, Canada has paid more than $140 million to foreign investors after NAFTA investor-state attacks on energy, timber and toxics policies. Part of Eli Lilly's claim against Canada is that the invalidation of its patent constituted an expropriation of its "investment." NAFTA does not list patents in its definition of a protected "investment," although some analysts have long worried that the broad, vague NAFTA definition could be used to attack medicine patent policies. But in the TPP, the proposed Investment Chapter explicitly names "intellectual property rights" as a protected "investment."
That is, TPP aims to formalize precisely the argument that Eli Lilly is trying to make using some rather far-fetched legal logic, discussed at length in the Public Citizen post quoted above. Moreover, it seems highly likely that a similarly far-reaching investor-state section will be included in the new Transatlantic FTA (TAFTA), now being discussed more widely.

The central problem with these investor-state provisions is that they elevate companies to the level of entire countries. Secret, unaccountable and biased tribunals with unlimited powers then enable them to overturn democratic decisions and legislation passed to preserve things like public health or the environment, simply because they would reduce corporate profits. And yet few people are even aware that such investor-state provisions exist, despite their massive impact on the lives of millions. That's a hugely troubling combination for the future.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Permalink | Comments | Email This Story

US And Europe Move On To TAFTA: Yet Another Chance To Push Through ACTA/SOPA Style IP Maximalism

Mike Masnick — Fri, 8 Feb 2013 08:40:56 PST

ACTA and SOPA may have flopped, but minor setbacks like that won't stop the onslaught of abuses from the entertainment and pharmaceutical industries looking to use the international treaty process to try to pressure everyone to keep ratcheting up protectionist laws concerning copyright, patents and trademarks. Obviously, we've been talking about the still worrisome TPP agreement involving a bunch of Pacific Rim countries, but it's not stopping there. Back in October, we warned that the US and EU were preparing a new trade agreement as well, and the preliminary plans noted that it would include a "high level of intellectual property protection, including enforcement."

More details are starting to come out as the main EU negotiator for ACTA, Karel de Gucht, came to DC to see about getting things kicked off, on an agreement that's being called TAFTA -- the Trans Atlantic "Free Trade" Agreement. Of course, instead of recognizing the lessons from previous failed efforts to push for broken maximalist policies, it appears that the plan is to try, try again. Some are already saying that this is "the opportunity to try to set the gold standard" in copyright, patent and trademark protection. The goal, as with ACTA and TPP is to ratchet up the laws, and then put tons of pressure on China and India to "respect" those laws. To put it mildly: this is stupid. Both of those countries recognize how protectionism works. We've already seen that China is becoming exceptionally good at using patent laws to basically punish foreign companies, while helping domestic Chinese companies. It seems downright idiotic to provide them with even more tools to do so.

Of course, the real questions are why do we keep letting our governments negotiate these kinds of deals, and why do we let them do so in secret?

Permalink | Comments | Email This Story

The Many Motivations Of Movie Piracy (Notably Absent: 'I Want Everything For Free')

Leigh Beadon — Tue, 5 Feb 2013 10:33:00 PST

In the recently released Copy Culture In The US & Germany survey report from the American Assembly (for which we provided the design & layout work), one small but especially interesting component is the list of reasons given for downloading TV shows and movies. The American responses were pretty evenly distributed among the various key reasons, and serve as a laundry list of things that piracy does just slightly better, or slightly more permissively, than most legitimate sources:

Why I Download TV/Movies For Free (US, Based On Americans Who Do)

While price was one of the top three reasons, this hardly paints a picture of penny-pinching freeloaders—rather, it shows emerging trends in media consumption that distributors and rightsholders simply can't keep ignoring. Absolutely none of these responses are surprising, because they are exactly the way people have been interacting with the majority of content online for years now. They share, they use multiple devices, they expect comprehensive access and a choice of sources, they want access as soon as possible, and they are put off by obtrusive advertising.

Of course, that last item is a bit of an oddity. The knee-jerk reaction among most people is that all advertising is bad, but that seems to underestimate the amount of stuff that advertising pays for or subsidizes, and that most of us happily enjoy on a daily basis. Advertising is one of those things that only ever gets badmouthed, because you only focus on it when it's bad — when it's good it doesn't register as advertising because it doesn't register as intrusive. The perennial buzz around Superbowl commercials and the 44-million views on Old Spice's famous viral ad support this notion pretty strongly.

In the world of online television, I think there's room for both subscription models and advertising-funded models — and even some combinations of both if balanced correctly. But until content providers start tackling the overall problem by catching up to pirate sources in the many areas where their services fall short, no model is going to succeed in defeating piracy.

Permalink | Comments | Email This Story

Japan Wonders Whether It Is Worth Joining TPP Negotiations After All

Glyn Moody — Tue, 5 Feb 2013 00:09:56 PST

The Trans-Pacific Partnership (TPP) agreement began as a cosy treaty between just three nations: Chile, New Zealand and Singapore. But once the US joined in 2010, this small-scale partnership suddenly became something much more significant. As USTR Ron Kirk put it in a press release at the time:

The development of our negotiating positions will be a collaborative effort with elected leaders and stakeholders here at home, in order to shape an eventual Trans-Pacific Partnership Agreement that is a new kind of trade agreement for the 21st century, bringing home the jobs and economic opportunity we want all our trade deals to deliver.

That "new kind of trade agreement" began to take shape as other major Pacific rim countries signed up: first Australia, Peru, and Vietnam, then Malaysia. More recently, Canada and Mexico have joined, albeit as junior partners with diminished negotiating powers. Another important player in the region that has expressed an interest in participating is Japan. But it seems that domestic politics may well scupper that plan: Prime Minister Shinzo Abe is facing challenges in handling the issue of Japan's participation in the talks for the Trans-Pacific Partnership free trade framework.

While Abe hopes to express willingness to take part in the talks during a summit with U.S. President Barack Obama set for late this month, he is still wavering on the issue due to strong opposition from within his own Liberal Democratic Party [LDP].
Here's where the problem lies: A strong backlash, however, is expected from some LDP members who are concerned the party will lose votes from agriculture-related sectors if Abe announces Japan's bid to join the talks.
That's not really surprising; after all, in the same press release quoted above Kirk states quite bluntly: USTR will now intensify consultations with Congress and with American stakeholders to develop objectives for the Trans-Pacific Partnership agreement negotiations, in order to enter already-scheduled talks in March with a robust U.S. view that seeks the highest economic benefit for America's workers, farmers, ranchers, manufacturers, and service providers, and that reflects our shared values on labor, the environment, and other key issues
But if US farmers and ranchers gain "the highest economic benefit", it's quite likely that those in the agricultural sector in the other TPP countries will lose out -- precisely what Japan's LDP members fear. Of course, the standard line is that free trade agreements are great because everyone gains, but the reality is not so rosy. Indeed, even the US has been suffering overall in the case of the recent FTA with South Korea, which is being held up as a model for future treaties: In the first eight months of the U.S. Free Trade Agreement (FTA) with Korea, implemented in March 2012, U.S. goods exports to Korea fell by nine percent (a decrease of more than $2.5 billion) in comparison to 2011 levels for the same months. Ironically, some of the biggest downfalls in U.S. exports occurred in the automotive and meat industries -- the two sectors that the Obama administration had promised would experience export growth under the deal. The decline in U.S. exports under the FTA brought a 21 percent increase in the U.S. trade deficit with Korea, in comparison to the same period in 2011. Using the same ratio employed by the Obama administration, this trade deficit expansion implies the net loss of over 16,000 U.S. jobs under just the first several months of the Korea FTA.
Given the fact that the US economy has already been damaged by this recent FTA, the fears in Japan that its agricultural industry will be hit, the many concerns about TPP's investor-state dispute mechanism, plus its negative impact on online freedom and access to medicines, the question has to be: why bother with an overly-complicated, secretive treaty whose risks are many and real, while the gains seem few and uncertain?

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Permalink | Comments | Email This Story

US Still 'Warning' Antigua That It Better Not Set Up Piracy Hub, Even As WTO Gives Approval

Mike Masnick — Tue, 29 Jan 2013 14:47:00 PST

This is hardly a surprise given the decade-long history we've gone through concerning the US's attempts to screw over Antigua by violating a trade agreement, and then ignoring, repeatedly, efforts by the WTO to make things right. Given that the WTO gave initial permission for Antigua to set up shop infringing on US intellectual property all the way back in 2007, it appears that Antigua has been nothing but patient. However, last week, it finally started making moves to put this "store" in place.

In response, the US has gone typically ballistic, threatening all sorts of consequences and blaming Antigua for the problems:

The United States warned Antigua and Barbuda on Monday not to retaliate against U.S. restrictions on Internet gambling by suspending American copyrights or patents, a move it said would authorize the "theft" of intellectual property like movies and music.

"The United States has urged Antigua to consider solutions that would benefit its broader economy. However, Antigua has repeatedly stymied these negotiations with certain unrealistic demands," said Nkenge Harmon, a spokeswoman for the U.S. Trade Representative's office.

Of course, what the US claims isn't supported by, well, anyone else. The WTO has now officially signed off (yet again) on the plan. Apparently the 2007 permission was merely "preliminary," but now it's official. The WTO says this is a perfectly legitimate way for Antigua to hit back at the US for its flagrant violation of international trade agreements in trying to shut down Antigua based online gambling sites.

As for Antigua's response to the US threats, the country's legal representative Mark Mendel told Wired (the link above) a bunch of things (go read the whole article), but I think this sums up the key points:

"I do think that the US has a mixed, immature and difficult domestic situation with respect to gambling in general and remote gambling in particular," Mendel told Wired.co.uk. "However, I think the main reason the US has not complied with the WTO rulings is that Antigua is such a small country they think they can get away with it. I also think that, unfortunately, some people in the US government were almost offended that Antigua chose to challenge the US and have been so persistent in its pursuit of justice that the US government has adopted unusually harsh and unyielding lines that have made it difficult to consider our issue in its proper context."

Sounds about right.

Permalink | Comments | Email This Story

10 Years Later: Antigua May Finally (Really) Set Up Official 'Pirate' Site To Get Back What US Owes In Sanctions

Mike Masnick — Fri, 25 Jan 2013 04:06:56 PST

Well here's a story that's more than a decade in the making. Way back in 2003, we first wrote about Antigua filing for sanctions against the US for its ban on online gambling. Antigua argued (with fairly strong support) that this violated a trade agreement between the US and Antigua, by blocking a form of free trade. The case was at the WTO for years, bouncing around. In 2004, the WTO ruled against the US, which the US promptly ignored. In 2005, the WTO again ruled in favor of Antigua on the issue, and the US (stunningly) responded by pretending that it had won, when it most clearly had not. Following that, the US pretended that it could just unilaterally change its free trade agreement to carve out gambling. Not surprisingly, Antigua (and the WTO) found that to be problematic.

It goes without saying that the US is big and powerful and Antigua... is not. So, as it became clear that the US intended to ignore any WTO ruling, people began to wonder if there was any remedy for Antigua over this issue. Normally, the WTO could do something with trade sanctions against the US and in favor of Antigua, but given how much Antigua relies on US trade, that would likely hurt Antigua a lot more than the US. Somewhere in the midst of this -- around 2006 -- someone somewhere floated the idea that one way that Antigua could be made whole would be to allow it to ignore US copyright laws, allowing it to "sell" copyrighted content on the cheap, without paying any royalties. That idea took on a life of its own and Antigua began pushing the idea itself around 2007. The world community started to side with Antigua over this, recognizing that the US was being completely unfair here... and the US did what the US does, and bought off a bunch of big countries to get them to shut up and stop supporting Antigua.

In late 2007, the WTO finally said that this plan of retaliatory copyright infringement could go forward in Antigua, but limited to just $21 million worth of infringement. Even so, the US immediately warned Antigua not to even think about it, or it would retaliate. There were some negotiations between the two countries that went nowhere and then... a lot of nothing. We've barely touched on the story since 2008 when Antigua once again threatened to (no, really this time!) launch a copyright infringing store with "permission" from the WTO. But, that didn't happen.

However, reports are now coming out that Antigua finally has plans in place to launch just such a store. Of course, we'll believe it when we see it, considering the decade-long posturing over this issue. Oh yeah, and, once again, the US is warning Antigua not to move forward, claiming that Antigua is acting in "bad faith" and launching the store might "serve to postpone the final resolution of this matter." Considering that the US lost at the WTO nearly a decade ago, and still hasn't "resolved" the matter, that's a fairly ridiculous claim. And, of course, the US is threatening to "retaliate" if Antigua goes forward:

"In these circumstances, Antigua has no justification for taking any retaliatory actions against the United States. Moreover, if Antigua actually proceeds with a plan for its government to authorize the theft of intellectual property, it would only serve to hurt Antigua’s own interests. Government-authorized piracy would undermine chances for a settlement that would provide real benefits to Antigua. It also would serve as a major impediment to foreign investment in the Antiguan economy, particularly in high-tech industries."

So, the short version from the US's point of view is that it's fine to ignore its own trade agreements that wrecked a significant part of Antigua's economy -- but as soon as Antigua fights back and wins, it's not allowed to make use of WTO-approved remedies after years and years of the US refusing to fix its abuses. And somehow when it finally (years and years later) moves forward with this other plan... the US argues that it would harm its international obligations? The hubris from the US is (once again) incredible, if not particularly surprising.

Permalink | Comments | Email This Story

Cyber War: A One-Sided Battle Against A Trumped Up Enemy

Timothy Geigner — Thu, 24 Jan 2013 09:36:00 PST

You would have to be a deaf and blind person with a penchant for head-burying to have missed the drum beats of a supposed cyber war the American government has been touting over the past year or so. It's a one-sided conversation that has been hyperbolic on a level normally associated with sketch comedy. Terms like "Cyber Pearl Harbor" are thrown around without any sense of historical context. In fact, many are questioning whether the entire production is simply a political game, with no real threat existing at all. Unfortunately, many more Americans have now incorporated this manufactured fear into their psyches. Still, the drum beat continues, with the United States labeling Iran as our chief enemy in this inevitable, or perhaps already occurring, cyber war.

The problem, of course, is that anyone who spends a couple minutes studying what's actually happening realizes that this is a one-sided war, likely started by the West, and our opponent is fighting against our tanks with pea-shooters.

The first shot was probably the release of Stuxnet sometime during or before 2009. Even though no one has officially claimed responsibility everyone knows who was behind it. Stuxnet hit with a bang and did a whole lot of damage to Iran's uranium-enrichment capabilities. The United States followed that up with Flame–the ebola virus of spyware.

What did the Iranians fire back with? A series of massive, on-going and ineffective DDoS attacks on American banks. This is a disproportionate response but not in the way military experts usually mean that phrase. It's the equivalent of someone stealing your car and you throwing an ever-increasing number of eggs at his house in response.

That's what makes all of this seem so monumentally silly. The government is making use of an American public, which is massively ignorant about who and what Iran is and is capable of, to go legislatively nutbars in our own country. Don't ask me why they're doing it, but they are. Perhaps more importantly, we're being told that we need legislation to protect against an incapable enemy in a war that we started. If that makes sense to you, chances are you need psychiatric care.

And even more problematic, and frustrating for me personally, is that our government isn't even putting in the effort to fool me properly. It's one thing to have Colin Powell waving a test tube at Congress and shouting "We're all going to die!", but it's quite another to have folks like Gen. William Shelton talking about potential risks in a potential war that we potentially started with a potential threat that we created by attacking it. That's entirely too much potential and not enough blatant falsehood. If the government wants to bullshit us, they can't go in half way. I need real creative lying, not nonsense reports that they have to subsequently pull because they're...you know...made up.

ProPublica reported yesterday that a widely cited Defense Department study claiming Iran's Intelligence Ministry constitutes "a terror and assassination force 30,000 strong" has been "pulled for revisions." It seems there's no proof whatsoever that the 30,000 number wasn't pulled out of thin air.

See, it's not that I'm siding with the pea-shooters here, it's that I'm more scared of the guys that started this war with their tanks. Particularly when the result is poorly-conceived legislation.

Permalink | Comments | Email This Story

'Quantum Copyright:' At What Point Does A Legal Copy Become Infringement?

Tim Cushing — Thu, 17 Jan 2013 03:03:00 PST

Laws in general aren't known for their clarity, hence the need for lawyers to rack up billable hours searching for loopholes to exploit or to try to bend them to fit the case at hand. Copyright laws, while less tangled than the infamous "Patent Thicket, " are no straightforward walk in the park, either.

Eric Hellman tackles the ambiguous nature of copyright infringement, especially as it pertains to the "region-free" aspects of the internet, in a post amusingly titled, "Heisenberg's Uncertain Copyright." (via The Digital Reader)

Hellman turns his attention to F. Scott Fitzgerald's "The Great Gatsby," and using his skills in the area of "Quantum Copyright" (a term he threw into his LinkedIn profile for a bit of fun), determines that the question of whether or not copyright infringement has occurred might depend on where the copying occurred, something that is even harder to define when the copying takes place via the internet.

It turns out that where a copy is made has consequences. Consider Fitzgerald's The Great Gatsby...

The Great Gatsby already belongs to every Australian, in the sense that Australians have the right to read and copy it for free without anybody's permission. In the US, it belongs to the CBS Corporation, and if you want to read it on Kindle, it'll cost you $7.80.

If you copy Gatsby in Australia, no problem, it's cool, because Gatsby has entered the public domain. There's an excellent version available from Project Gutenberg Australia. If you do it in the US without permission from the CBS, it constitutes copyright infringement and is punishable with jail time and statutory damages up to $150,000 per incidence of infringement. So it really matters where the copying occurs.

While Hellman exaggerates the repercussions of making a hypothetical copy (the highest statutory claims would apply only to willful infringement [which this could be, especially when infringing in order to prove a hypothesis] and the jail time only applies to criminal infringement -- which this almost certainly would not be), the fact remains that one deterrent of infringement is the underlying threat of legal action (whether civil or criminal). No doubt F. Scott Fitzgerald's estate is in no hurry to give up the American rights (and the attendant enforcement of those rights), seeing as "The Great Gatsby" earned its author all of $8,400 during his lifetime -- but generates $500,000 per year for his daughter. This secondhand largesse enjoyed by many heirs is one of the motivators behind the ever-extending copyright lengths here in this country.

Hellman posits this not-so-hypothetical situation:

Suppose you have a book sitting on a computer in Australia. The computer breaks the book into thousands of UDP packets and sends them into the Internet. Copying can't have occurred yet, because the packets aren't fixed in any form. For copyright purposes,

"Copies" are material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term "copies" includes the material object, other than a phonorecord, in which the work is first fixed. http://www.copyright.gov/title17/92chap1.html

Now suppose the packets are reassembled on my hard drive in New Jersey. A copy of "The Great Gatsby" has materialized. Has a copyright been infringed? If I was in Australia and the source of the packets was in the US, would the answer be different?

In this case, the copying process originates in a country where no copyright protection covers Fitzgerald's book. Its "assembly" in the US suddenly makes it an infringing copy. Does this make sense? More importantly, does it even matter? According to rights holders, the copy would still be infringing, simply because it was copied, at least according to the section of copyright law cited by Hellman, which states that only the owner of the copyright has the "exclusive right... to reproduce the copyrighted work."

But even that doesn't entirely clear up the situation. If no rights holder can claim this "exclusive right to reproduce" in Australia, then it would seem that "shipping" copies from Australia would be a legal act, right up until the copy "hits" the US border. Exploring this hypothetical situation further, Hellman comes up with a list of "quantum copyright" possibilities.

So we have 8 different quantum copyright location scenarios; 6 have uncertainty as to the fact of infringement:

1. Person copying, copy source, and copy destination all in US. (US law controls!)
2. Person copying, copy source, and copy destination all in Australia. (Australia law controls!)
3. Person copying and copy source in US, copy destination in Australia.
4. Person copying and copy source in Australia, copy destination in US.
5. Person copying and copy destination in US, copy source in Australia.
6. Person copying and copy destination in Australia, copy source in US.
7. Person copying in US, copy source and copy destination in Australia.
8. Person copying in Australia, copy source and copy destination in US.

So, to sum it all up, magic 8-ball style: "Answer unclear. Ask again later." More narrowly, however, the exclusive rights granted to copyright holders would find most of these situations infringing. Any copy originating in the US would violate the reproduction right as Hellman points out. Any action initiating in the US would very likely violate the holder's distribution rights. For all intents and purposes, the hypothetical copier is only 100% in the clear in instance #2, where all copying starts and stops in Australia where Fitzgerald's book is public domain. In cases where the copy is "sent" to the US from Australia, it could very well fall under the the "right to reproduce," as US consumers would be limited to "authorized" copies from the rights holders. If some Australian set up a site offering downloads of public domain books that were still under copyright in the US, the rights to reproduce and distribute would likely be pointed out as the reason any US users availing themselves of this service are actually guilty of copyright infringement. If it's under copyright in the US, then the copyright owner's rights must be respected... at $7.80 a copy.

Certainly, copyright-centered entities like the MPAA would prefer to simply have our copyright laws exported to other countries with less stringent laws, especially any sections that extend the length of copyright protection and weaken fair use/fair dealing exceptions. Getting other nations to sync up with our copyright lengths would certainly eliminate these hypothetical discussions, along with many items in the public domain. Many aspects of current copyright laws were written years ago, long before the internet made "country of origin" a meaningless term and reproductions as simple as a right-click on a mouse. What it usually boils down to, after all the discussion, is this:

You could also be a cynic and say the only thing that matters is where the judge is sitting.

Much like fair use is often determined by a courtroom appearance, the "quantum" aspects of copyright are largely theoretical -- right up to the point that someone finds themselves at the other end of an infringement lawsuit.

Permalink | Comments | Email This Story

Is The US IP System Really 'The Envy Of The World'?

Mike Masnick — Wed, 16 Jan 2013 09:11:09 PST

Outgoing director of the US Patent and Trademark Office famously likes to claim that the US patent, trademark and copyright systems are the "envy of the world." Here's just one recent example:

The fact is, the explosion of innovation—and follow-on litigation—that we see across consumer electronics hardware and software is a direct reflection of how our patent system wires us for innovation. It's both natural and reasonable that in a fast-growing, competitive market, innovators would seek to protect their breakthroughs using our patent system. While our IP system is not perfect, it is the envy of the world. It’s the strongest in the world, by far. That strength encourages investment and provides assurances to entrepreneurs as they enter the U.S. and global markets. At the same time, our focus on quality in the patent examination process overall ensures that patents are granted for true innovation, and not otherwise.

There are all sorts of fallacies or outright questionable statements in that one paragraph, but the popular IP blog, IPKat, decided to put that "envy of the world" argument to the test... and found that its readers don't agree. At all.

Do you envy the US its patent system? (300 responses)

Yes, it's brilliant 19 (6%)
Maybe, if the America Invents Act works out 28 (9%)
No way! 253 (84%)

Do you envy the US its trade mark system? (170 responses)

Sure, it's great for owners, competitors and consumers 23 (13%)
I might if I could only understand the Lanham Act 41 (24%)
Never! It's convoluted, complex and contradictory 106 (62%)

Do you envy the US its copyright system? (162 responses)

You bet! Google could not have been created anywhere else 18 (11%)
I might if there was some consensus as to what it actually is 56 (34%)
Not in this life or for many years beyond it! 88 (54%)

Yes, this is an internet poll, so reasonably-sized grains of salt should be applied. However, it was taken on a popular IP focused blog, so you would think that if the US's system was really envied, the IP practitioners who read the blog would speak up positively.

It makes you wonder: are the US systems for copyright, patents and trademarks actually envied anywhere around the world, except, perhaps, by lawyers who might profit off them?

Permalink | Comments | Email This Story

Mmmmm, Mmmmm Monopoly! USPTO To Hit New Record In Granting Utility Patents

Mike Masnick — Wed, 26 Dec 2012 11:57:46 PST

Another year... another record by the USPTO in locking up all sorts of ideas with patents. Yes, that's right, it's only early december and it's being reported that the USPTO will set a new record in utility patents, blasting through the old record, set (of course) just last year with 225,000 patents. Remember back in the early days of the patent system, when Thomas Jefferson ran the patent office despite thinking that patents might actually do more harm than good? One of the things he focused on was trying to avoid granting patents willy nilly since "abuse of frivolous patents is likely to cause more inconvenience than is countervail by those really useful." I kinda miss that Patent Office. Oh yeah, when he ran the Patent Office, it granted.. 67 patents over two years.

Permalink | Comments | Email This Story

The US's Public Domain Class Of 2013

Mike Masnick — Fri, 21 Dec 2012 19:39:00 PST

Every year, we talk about how January 1st is public domain day in many parts of the world, but thanks to constant copyright term extension, the US is left waiting and waiting and waiting -- kind of like the famous play by Samuel Beckett, which entered the public domain in many places around the world in 2011, but is still covered by copyright here.

The folks at the Public Domain Review have put together a nice list (and photo!) of the "Class of 2013": content creators whose works will be going into the public domain on January 1, 2013 in large parts of the world, including the EU, Brazil, Russia and many other places. To help out, I thought I'd put together the list of content creators whose works are entering the public domain in the US in 2013:

Yeah. It looks suspiciously like last year's list. And the year before that. And before that. And so on. Oh, and also... I hate to ruin the surprise, but next year's list? Pretty much the same. Year after that? Yeah, that too. For anyone who actually understands the value of the public domain in enriching and enhancing culture, the fact that the US -- at the behest of the entertainment industry, which has often mined the public domain for its own works -- isn't just shameful, it's downright despicable. We're stifling our own culture.

Permalink | Comments | Email This Story

White House: We Will Not Support An ITU Treaty That Blurs Telecom Infrastructure With The Info That Crosses Over It

Mike Masnick — Thu, 13 Dec 2012 11:28:00 PST

While the US's position on the ITU discussions at the World Conference on International Telecommunications has been pretty clear from the beginning, to put an exclamation point on it, the White House put out a statement saying that it will not support an agreement that tries to expand the ITU's mandate beyond telecom infrastructure and into the world of what happens on that infrastructure. The key paragraph:

But we should not confuse telecommunications infrastructure with the information that traverses it. The global consensus for a free and open Internet is overwhelming. Millions in the United States and around the world have already added their voices to this conversation, and their position is clear: they do not want the WCIT to govern the Internet or legitimize more state control over online content. Our Administration could not agree more – and will not support a treaty that sets that kind of precedent.

This is the key point. Many in the ITU seem to want to blur the distinction between the infrastructure itself and the information that runs over it. They believe that their mandate over "telecommunications" includes the specific "communications" that run over those networks. That's a massive rewriting of history. Their mandate is supposed to be focused on the technological infrastructure, rather than how it is used.

Permalink | Comments | Email This Story

China Hails ITU Internet Takeover By Blowing Its Favorite Trumpet: Distrusting The US

Mike Masnick — Tue, 27 Nov 2012 03:18:52 PST

While there's been plenty of talk about the upcoming ITU process, the ITU keeps attempting to downplay what it's trying to do -- and insisting that Russia, China and other regimes aren't looking to use the process to clamp down on the internet. Of course, proposal leaks from Russia suggest otherwise. As for China, Dave Farber points us to an editorial in the People's Daily newspaper in China from back in August that argues that the ITU process is necessary to wrest control of the internet away from the US.

This indicated the U.S. decision to retain ultimate control over the global Internet, which enabled it to unilaterally close the Internet of another country. A suddenly paralyzed Internet would definitely cause huge social and economic losses to the country.

More and more countries are beginning to question the U.S. control over the world’s Internet as the international resource should be managed and supervised by all countries together. However, the United States has conducted a pre-emptive strike, and refused to give up control over the Internet in the name of protecting the resource. The refusal reflects its hegemonic mentality and double standards.

The United States controls and owns all cyberspaces in the world, and other countries can only lease Internet addresses and domain names from the United States, leading to the U.S. hegemonic monopoly over the world’s Internet.

This is an exaggeration of reality. While ICANN has serious problems -- which we frequently discuss here -- that doesn't mean that dumping it entirely in favor of a ridiculously secretive and bureaucratic process like the ITU makes sense. The article goes on to cite the US apparently turning off the .iq domain for Iraq during the invasion in 2003. Of course, that's an interesting rewriting of history. The issue with the .iq domain wasn't quite as cut and dried as the editorial implies. First of all, .iq wasn't a widely used domain no matter what. But, more importantly, it was entirely managed and controlled by a guy in Texas who was accused of funding terrorists and eventually sentenced to 84 months in jail. It wasn't so much a case of the US government running to ICANN and saying shut down the domain, as it was a criminal investigation into separate issues that happened to scoop up the one guy who controlled the TLD. And, it should be noted that ICANN gave .iq back to the Iraqi government years ago.

This kind of stuff indicates the lengths to which the Chinese government seems willing to go to prop up the ITU process for taking over aspects of internet governance: they'll just lie and make up stories when the truth isn't particularly convenient.

Permalink | Comments | Email This Story

US Steadfast In Its Stand For Publishers Against The Disabled

Mike Masnick — Mon, 22 Oct 2012 03:16:58 PDT

We've talked a few times about how the US seems to be leading the charge to block a treaty that would increase the ability of blind and other disabled people to get around copyright restrictions to access certain works. The treaty has been in negotiations for ages -- and the US position has, at times, flip-flopped. However, now it seems firmly aligned with copyright maximalist lobbyists. The latest report from the negotiations is that publishers and the movie studios have convinced US negotiators to push back on this treaty:

The United State is playing a big major role, and led by David Kappos' USPTO, generally is aligned with the publishers in efforts to narrow the agreement and limit its benefits to persons with disabilities, and is increasingly isolated in its opposition to a decision that the nature of the "instrument" will be a treaty rather than a softer non-blinding recommendation or model law. One major objective of the US delegation is to exclude persons who are deaf. Another is to limit the exceptions to text, and exclude any audiovisual content or related rights. Both of these negotiating objectives are designed to keep the U.S. movie and television industry happy. The U.S. has also been seeking ways to support other publisher friendly provisions, even when they run counter to the robust exceptions found in U.S. law.

Siding with big studios and publishers over the best interests of the blind and the deaf? How nice...

Permalink | Comments | Email This Story

Gary Mckinnon Extradition To US Blocked By UK Home Secretary

Timothy Geigner — Tue, 16 Oct 2012 15:02:00 PDT

Way back in 2002, Gary McKinnon made his Techdirt debut when he was caught hacking into NASA and Pentagon computers from the UK in an apparent attempt to find evidence that America was covering up evidence of UFOs. Since that story, subsequent stories were done on how he basically went on an appeal-losing-tour to avoid being extradited to the United States. But now, despite all those losses, it appears the United Kingdom's version of Fox Mulder will indeed be staying in the UK and not be trotted off to the States.

UK Home Secretary Theresa May has announced that McKinnon will not be extradited due to mental illness and a fear for his safety. McKinnon reportedly suffers from both depression and Asperger's Syndrome, and experts consulting with May believe that he is a significant suicide risk if extradited.

Mrs May said: "After careful consideration of all of the relevant material I have concluded that Mr McKinnon's extradition would give rise to such a high risk of him ending his life that a decision to extradite would be incompatible with Mr McKinnon's human rights. I have therefore withdrawn the extradition order against Mr McKinnon."

Mrs May also said measures would be taken to enable a UK court to decide whether a person should stand trial in the UK or abroad - a so-called forum bar.

This move is immensely significant, as it represents the first time an extradition was blocked by a Home Secretary under the Extradition Act of 2003. As extraditions over alleged computer and IP crimes have come into vogue, with the United States leading the charge, it's a welcome sign that the UK wants to be able to review cases in which their citizens would potentially be carted across the world to face massive prison sentences (or worse). One would hope similar scrutiny would be applied in the case of Richard O'Dwyer, though Theresa May has thus far failed to do so. Instead, she has so far bowed to the will of the United States and MPAA sock puppetry in extraditing him.

To be clear, none of this suggests that McKinnon will not face a trial at home. In fact, according to May, the UK will now decide whether to bring a case against him at home.

She said it was now for the Director of Public Prosecutions, Keir Starmer QC, to decide whether he should face trial in the UK.

Where he can be tried without the added threat to his well-being. A foreign national, accused of computer crimes against the United States facing trial in his home country. How refreshing.

Permalink | Comments | Email This Story