“Counterfeit and pirated goods are an increasingly global problem that requires a globally coordinated solution,” said Minister Fast. “We all have an interest in combatting counterfeiting and piracy because these activities cost billions of dollars each year in revenue and trade losses, which translates into higher prices, lost income and lost jobs for people employed in a range of industries—from film and pharmaceuticals to electronics. Counterfeit goods also pose a real threat to the health and safety of people because the producers of goods such as drugs and auto parts evade the rigorous rules, standards and guidelines that are in place to protect consumers.”

ACTA will establish new international standards for enforcing intellectual property rights. It will cover three areas: improving international cooperation, establishing best practices for enforcement and providing a more effective legal framework to address the problem of counterfeiting and piracy. It will also give innovators, artists and entrepreneurs enhanced measures to ensure their creations and associated rights are protected. Alongside Canada, Australia, Japan, Morocco, New Zealand, the Republic of Korea, Singapore and the United States also signed the agreement, which was negotiated by 38 parties in total.

Following the signature of ACTA, the Government of Canada will develop and introduce the necessary legislation to implement the agreement. The government has already taken steps to enforce and defend intellectual property rights and help balance the needs of creators and users by reintroducing its Copyright Modernization Act (Bill C-11) in Parliament on September 29. The bill informed and guided Canada’s approach to the ACTA negotiations.

“The signing of this historic international agreement and our government’s reintroduction of copyright legislation demonstrates Canada’s commitment to combatting counterfeit and pirated goods, and protecting innovation- and knowledge-based prosperity, which are key to Canada’s future economic success,” said Minister Fast.

A backgrounder on ACTA can be found here. A summary of the agreement which I prepared when the text of ACTA was agreed to can be found here.

Signing ACTA is a step towards meeting the significant counterfeiting problems identified by the RCMP in A National Intellectual Property Crime Threat Assessment, 2005 to 2008. The porous nature of our borders and the need to upgrade our border controls to world standards to reduce counterfeiting and piracy in Canada has been noted by two parliamentary committees, three Canadian trade associations, and our major trading partners. Parliamentary Standing Committee on Public Safety and National Security, Parliamentary Standing Committee on Industry, Science and Technology, Ontario Chamber of commerce, Canadian Chamber of Commerce, U.S. Trade Representative,  U.S. Congressional Anti-Piracy Caucus, European Union, and Canadian Anti-Counterfeiting Network (CACN).

1. On Saturday, October 1, the Ministry of Foreign Affairs of Japan will hold the signing ceremony for the Anti-Counterfeiting Trade Agreement (ACTA) at Iikura Guest House, Ministry of Foreign Affairs.
2. The Agreement was inspired in significant part by Japan’s proposal at the G8 Gleneagles Summit in 2005 to create a new international framework against counterfeit and pirated products, in the context of the heightened awareness of the need for a higher degree of intellectual property protection. Its negotiation has been led by a strong initiative of Japan, the United States and other key partners.
3. The negotiation has been carried out among Australia, Canada, the European Union and its Member States, Japan, the Republic of Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland, and the United States, and reached a general agreement at the negotiation meeting held in Japan in October 2010, followed by the completion of technical and translation work in April 2011.
4. The signing ceremony will be attended by the representatives of all the participants in the ACTA negotiations, and those that have completed relevant domestic processes will sign the agreement. The agreement is open for signature until May 1, 2013.
5. On the preceding day, Friday, September 30, an international symposium entitled, “Global Intellectual Property Strategy and the Reconstruction from the Great East Japan Earthquake: Eliminating Counterfeit and Pirated Products through ACTA”, will be held in Sendai as a side event of the signing ceremony.

It is widely accepted in the EU that “infringements of intellectual property rights cause widespread economic harm and that a “significant number of products infringing intellectual property rights now pose a real threat to consumer health and safety.” Further, the proper protection of intellectual property rights “is fundamental to stimulate innovation and culture in a competitive, wealth-generating, knowledge-based economy.”

The report found that the Directive had led to progress in combating intellectual property infringement by, among other things, creating high European legal standards to enforce different types of rights that are protected by independent legal regimes such as copyright, patents, trademarks and designs. However, it also found that despite an overall improvement of enforcement procedures, “the sheer volume and financial value of intellectual property rights infringements are alarming.” One reason given “is the unprecedented increase in opportunities to infringe intellectual property rights offered by the Internet.”

The Internet and digital technologies have added an extra, challenging dimension to enforcing intellectual property rights. On the one hand, the Internet has allowed creators, inventors and their commercial partners to find new ways to market their products. On the other hand, it has also opened the door to new forms of infringements, some of which have proved difficult to combat.

The multi-purpose nature of the Internet makes it easy to commit a wide variety of infringements of intellectual property rights. Goods infringing intellectual property rights are offered for sale on the Internet. Search engines often enable fraudsters to attract Internet users to their unlawful offers available for sale or download. File-sharing of copyright-protected content has become ubiquitous, partly because the development of legal offers of digital content has not been able to keep up with demand, especially on a cross-border basis, and has led many law-abiding citizens to commit massive infringements of copyright and related rights in the form of illegal up-loading and disseminating protected content. Many online sites are either hosting or facilitating the online distribution of protected works without the consent of the right holders. In this context, the limitations of the existing legal framework may need to be clearly assessed.

The EU Directive gives a broad interpretation to the concept of “intermediaries” to include all intermediaries “whose services are used by a third party to infringe an intellectual property right”. This means that intermediaries with no direct contractual relationship or connection with the infringer are subject to these measures provided for in the Directive.

Nevertheless, the report found that “uncertainties remain over intermediaries and the specific measures to which they are subject by contributing to or facilitating an infringement, regardless of their liability.” The report noted that “Internet platforms such as online market places or search engines can also play an important role in reducing the number of the infringements, in particular through preventive measures and ‘notice and take-down’ policies.”

Other EU Directives also employ a variety of means to incent or procure ISPs to cooperate with rights holders to reduce online infringement. For example, under the EU Directive on ecommerce (as in the USA, Australia and elsewhere), ISPs cannot obtain the benefit of safe harbors (exceptions from liability) when they provide hosting services, if they have actual or constructive knowledge that their systems are being used to facilitate infringement and they fail to remove or disable access to the infringing conduct. EU Member States must also under Article 8(3) of the EU Copyright Directive give their courts the power to grant injunctions against ISPs to enjoin the use of their systems by third parties who use them to infringe copyright. This jurisdiction has been used in countries such as Italy and Belgium to require ISPs to block foreign pirate sites such as The Pirate Bay.

Notwithstanding these laws, the report referred to the findings in the Staff Working Paper that accompanied the report indicating that the currently available legislative and non-legislative instruments were not powerful enough to combat online infringements of intellectual property rights effectively. The report stated that “Given intermediaries’ favourable position to contribute to the prevention and termination of online infringements, the Commission could explore how to involve them more closely.”

The report also considered whether there was a need to increase damages in IP infringement cases to ensure that they play a dissuasive role on infringements. The report observed that “Measures, procedures and remedies provided for by the Directive must be effective, proportionate and dissuasive. However, “present, damages awarded in intellectual property rights cases remain comparatively low.” The report explained that damages need to be high enough to really be dissuasive.

According to information received from rightholders, damages awards do not currently appear to effectively dissuade potential infringers from engaging in illegal activities. This is particularly so where damages awarded by the courts fail to match the level of profit made by the infringers.

The main aim of awarding damages is to place the rightholders in the same situation as they would have been in, in the  absence of the infringement. Nowadays, however, infringers’ profits (unjust enrichment) often appear to be substantially higher than the actual damage incurred by the rightholder. In such cases, it could be considered whether the courts should have the power to grant damages commensurate with the infringer’s unjust enrichment, even if they exceed the actual damage incurred by the rightholder.  Equally, there could be a case for making greater use of the possibility to award damages for other economic consequences and moral damages.

In cases where the infringer is a legal person and the rightholder fails to obtain damages because the infringer has no assets, has been liquidated or is in any other way insolvent, an assessment could be made as to whether the rightholder is able to claim damages from the company’s managing director(s) under national law, and if so under what conditions.

The report acknowledged that infringements of intellectual property rights taking place outside of the EU also constitute a major source of concern. The report stated that the Commission is addressing them in different ways, for instance by including ambitious chapters on intellectual property rights in bilateral trade agreements (such as CETA) and through participation in international initiatives such ACTA.

The EU report provides an interesting lens to compare the divergent approaches of Canada and the EU when it comes to intellectual property rights protection. For example, as noted above, the EU already has copyright laws that promote cooperation between ISPs and rights holders. This is achieved, inter alia, by conditioning ISP safe harbors on ISPs not having knowledge of infringement or taking down or disabling infringing content when knowledge of infringement becomes apparent and through measures like Article 8(3) of the EU Copyright Directive. Yet, the EU has recognized that effective measures will require even more active cooperation by ISPs.

By contrast, under Bill C-32, ISPs have almost no legal incentives to cooperate with rights holders. For example, the Bill does not condition the hosting safe harbor on ISPs taking steps to remove or disable access to infringing content even if infringement is apparent (except in the rare case where there is a take down order of a court). Moreover, there is nothing comparable to Article 8(3) of the Copyright Directive. There is only the relatively ineffective requirement to pass on notices of infringement under the notice and notice system.

The EU report also stresses the importance of damages to act as a deterrent against infringements. By contrast, Bill C-32 would make statutory damages unavailable against the most virulent pirates on the internet who are liable for enabling infringement. The Bill also could make statutory damages unavailable against pirate sites and services and other infringers which operate without motive of commercial gain.

• Traditionally viewed as being victimless, Intellectual Property (IP) crime has become a source of health and safety concern in Canada. Health, safety, and economic damages from the consumption and usage of counterfeit goods are being reported on an international scale. Victims of IP crime include, among others, people suffering from life threatening diseases who unknowingly use counterfeit medicines containing little or too many active ingredients, or toxins.
• There has been a tangible economic impact not only in terms of lost government revenue, but also on legitimate retailers having to deal with the loss in revenue to online file sharing and the availability of cheaper counterfeit products on Internet websites. Some legitimate retailers have reported difficulty in competing with vendors selling counterfeit goods at unfairly low prices, some having had to lay off staff in order to remain in operation. In more extreme cases, some have had to shut down their business.
• Loss of economic integrity is a threat posed by IP crime to Canadians and the international community. In a knowledge-based economy such as Canada’s, innovation is a key driver of economic growth, productivity and competitiveness. The creative industry has been estimated to encompass 7.4 percent of Canada’s Gross Domestic Product (GDP), and employs more than one million Canadians. The protection of Canadians’ IP Rights (IPR) is therefore vital to support innovation, creativity, and, consequently, to ensure Canada’s long-term economic prosperity.
• The depressed economy and the availability of such goods may play a role in the increasing demand for counterfeit and pirated products.
• Counterfeiting and piracy techniques have become more sophisticated rendering detection more difficult than ever.
• Counterfeiters utilize a variety of methods to evade detection at Canada’s international borders.
• IP Criminals make up an eclectic demographic ranging from organized crime groups, to small-scale retailers who sell small quantities of IP-infringing goods to supplement their income.
• In Canada, the fact that IP crime is difficult to detect, that limited enforcement resources are dedicated to it, and that sentences are not sufficiently significant to deter all serve to generate an attractive criminal undertaking, especially when compared to other crimes such as drug trafficking.
• Given criminals’ increasing awareness of the benefits of counterfeiting, more individuals, criminal networks, and organized crime groups are expected to include IP crimes in their portfolios. Furthermore, given the increasing availability of technology, counterfeiting techniques are expected to improve, rendering detection more difficult than ever.
• Although the RCMP investigated nearly 1,500 cases of IP crime between 2005 and 2008, these numbers are believed to be a fraction of the true IP crime situation in Canada.
• The total retail value of seizures reported by the RCMP alone, from 2005 to 2008, is estimated at more than 63.6 million CAD, highlighting that IP crime is a profitable line of business.
• China (including Hong Kong) is the most common source/transit country for counterfeit goods imported into Canada.
• Canada has been identified as a source of pirated DVD and CD media, primarily for domestic consumption. However, some investigations have revealed Canada as a source country for pirated media found online, as well as a transit country for various IP-infringing goods.
• Current Canadian copyright and trade-mark laws have been criticized by domestic stakeholders and majors trading partners for failing to address IP crime. This criticism stems from the fact that Canada has not implemented an “ex officio” border regime that would enable customs officers to target and detain suspected counterfeit and pirated goods, that Canada has not remedied the perceived ineffectiveness of trademark offences in the Criminal Code, and that Canada has not implemented the World Intellectual Property Organization (WIPO) Copyright Treaty (WCT).
• The notion that current legislative provisions do little to deter IP crime in Canada is generally felt by both private industry and law enforcement. Even after a successful prosecution, penalties imposed are typically mild and reflect, for the accused, the cost of doing business rather than serving as a deterrent. Judges are still faced with sentencing difficulties as there is no precedent, at this time, for imposing stiff penalties.
• International trade has systematically increased the movement and distribution of goods. As a result, border services worldwide, which are the first line of defense in identifying and preventing illicit goods from entering the country, are burdened with increases in transnational shipments.

The RCMP report re-enforces what many who have studied the problem have also concluded. Canada has a significant counterfeiting and piracy problem that is not adequately being addressed by our weak laws and enforcement practices. The porous nature of our borders and the need to upgrade our border controls to world standards to reduce counterfeiting and piracy in Canada has, for example, been noted by two parliamentary committees, three Canadian trade associations, and our major trading partners. Parliamentary Standing Committee on Public Safety and National Security, Parliamentary Standing Committee on Industry, Science and Technology, Ontario Chamber of commerce, Canadian Chamber of Commerce, U.S. Trade Representative,  U.S. Congressional Anti-Piracy Caucus, European Union, and Canadian Anti-Counterfeiting Network (CACN).

Bill C-32 does not specifically address many of the legal shortfalls in our copyright, trademark, criminal, and customs laws that are needed to alleviate the health and safety, economic and criminal problems associated with counterfeiting and piracy. The RCMP report is a further reminder that there is an issue of public importance that needs legislative and other solutions.

This posting is hardly worth responding to, except that some of his readers and syndicated readers might actually believe there is any merit in his claims.  The post is replete with bizarre assertions not backed up by any evidence or logic. set rhetoric to stun

Prof. Geist claims that Russian raids against NGOs “using the pre-text of intellectual property enforcement” “is surely connected to efforts by the U.S. government and copyright lobby groups to actively encourage Russia to increase its IP enforcement”?  What evidence does he rely on for this claim? None.

Prof. Geist relies simply on false logic. A government raids voices of opposition using the pretext of enforcing IP laws. Therefore, having effective  IP laws leads to these types of civil rights abuses. A logical conclusion? Of course not. A government not constrained by the rule of law and looking for a pretext to silence or deter opposition could use any pretext to seize property. Theft, tax evasion, bribing officials, securities violations and a myriad of other criminal offenses all come to mind as pretexts that have been used in the past to silence political opposition. Prof. Geist’s argument leads to the illogical conclusion that it would be dangerous and misguided for any countries with poor records of respecting civil rights and the rule of law to pass effective laws of any kind because they could potentially be abused, regardless of the overall social welfare associated with such laws. If the Russian government had seized the computers in issue based on a pretext that the computers were stolen, could anyone logically have concluded that general laws prohibiting theft had caused the abuses of civil liberties and that tough laws against theft are therfore dangerous and misguided?

Prof. Geist claims that “The US has regularly cited Russia in its Special 301 report, this year including it on the Priority Watch list.” He suggests this is connected to the Russian raids. But, what evidence does Prof. Geist rely on to connect that report to the Russian crackdown on dissidents? None.  

Prof. Geist claims that “The IIPA pushed the U.S. to target Russia, saying that is imperative that prosecutors bring more IPR cases.” Where does he connect the IIPA report to the crackdown on Russian dissidents? He doesn’t. It is also ludicrous to contend that a call for better enforcement of IP laws against piracy could be a reason for the Russian government to quell political dissent.

Prof. Geist also doesn’t mention that the IIPA pointed out that Russian criminal law had undergone several amendments in recent years, making the existing methodology prepared by the General Prosecutor’s Office outdated. The IIPA therefore recommended that the Ministry of the Interior, the General Prosecutor’s Office, and the Investigational Committee jointly prepare a new official uniform methodology.

Prof. Geist then turns to ACTA claiming that it “will provide Russia with a template to follow on IP enforcement” and will “export tougher enforcement measures …without including the exceptions, due process, and balancing provisions”.  However, in making these claims Prof. Geist inaccurately describes what is publically known about the draft treaty from recent leaks.

ACTA does not create any new IP rights (Art.1.3.2), nor remove any exceptions that may be available under copyright. Parties to ACTA must also ensure that enforcement procedures are “applied in such a manner as to…provide for safeguards against their abuse”. (Art 2.1) The draft Internet Chapter, for example, contains an express requirement that “Each Party’s enforcement procedures shall…  be implemented in a manner… consistent with each Party’s law, preserves principles relating to freedom of expression, fair process, and privacy [EU: , among other [US: fundamental] principles]”. (Art.4.2) Each party is also obligated to “endeavor to promote cooperative efforts within the business community to effectively address {US: copyright and related rights}{EU/J: intellectual property rights} infringement while preserving legitimate competition and consistent with each Party’s law, preserving principles relating to freedom of expression, fair process, and privacy, [EU: among other [US: fundamental] principles]”. (Art.4.3)

Prof. Geist’s claim is even more illogical when one considers the principles behind ACTA. ACTA is an attempt to codify best international practices related to the enforcement of IP including practices in Japan, the EU, Australia, and the US. If Prof. Geist’s thesis is correct, one would expect to find rampant civil liberties violations in these countries attributed to the enforcement of IP laws. Of course, Prof. Geist does not make this claim. Rather, his unsubstantiated claim is that these best practices when exported to other countries would have these effects.

Prof. Geist concludes his post with the assertion that the “recent Russian case highlights why” enforcement of tough IP laws and ACTA “is such a dangerous and misguided approach that is apt to cause more problems than it solves.” The recent Russian incident establishes nothing of the sort. set rhetoric to stun

The Statement reported on the progress of the talks which are slated to conclude following meetings in Japan this September. It also served to allay fears about the proposed contents of the treaty by again re-affirming what the treaty will not extend to.

The Statement said the following in this regard:

While ACTA aims to establish effective enforcement standards for existing intellectual property rights, it is not intended to include new intellectual property rights or to enlarge or diminish existing intellectual property rights.

ACTA will not interfere with a signatory’s ability to respect fundamental rights and liberties. ACTA will be consistent with the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement) and the Declaration on TRIPS and Public Health. The ACTA negotiators reiterated that ACTA will not hinder the cross-border transit of legitimate generic medicines, and reaffirmed that patents will not be covered in the Section on Border Measures. ACTA will not oblige border authorities to search travelers’ baggage or their personal electronic devices for infringing materials.

Participants in the meeting agreed that Japan would host the next negotiating round in September 2010. Participants committed to resolving remaining substantive issues at that round, and agreed to publicly release the full text of the agreement before deciding to sign it.

Paragraph 4 of the draft treaty states:

Each Party shall provide adequate legal protection and effective legal remedies [US: at least] against the circumvention of effective technological measures that [US: are used by, or at the direction of, ] authors, and [NZ: performers] performers and producers of phonograms [US: use] use in connection with the exercise of their rights that restrict acts in respect of their works, [NZ: performances] performances, and phonograms, which are not authorized by the authors, the [NZ: performers] performers or the producers of phonograms concerned or permitted by law. [US: In order to provide such adequate legal protection and effective legal remedies, each Party shall provide protection at least against:] Adequate legal protection shall be provided, in appropriate cases, at least against:

(a)    …the unauthorized circumvention of an effective technological measure [US: that restricts acts not authorized by the right holder and is] carried out knowingly or with reasonable grounds to know; and

(b)   the manufacture, importation, or distribution [US: of, or offer to distribute, a device or product, that circumvents an effective technological measure and is either:]  of a device that has predominant function of circumventing an effective technological measure and that is any of the following:

i. … marketed for the purpose of circumventing an effective technological measure;

ii. primarily designed or produced for the purpose of circumventing an effective technological measure; or

iii. has only a limited commercially significant purpose other than  circumventing an effective technological measure.

These provisions reflect the internationally accepted interpretation of the Internet Treaties, which requires protection against acts of circumvention as well as trafficking in circumvention devices.[1] A footnote to the above paragraph clarifies that the contracting parties are not obligated to prohibit acts of circumvention of copy control TPMs. Accordingly, the draft treaty would require protection against circumventing access control TPMs and against trafficking in access and copy control TPMs.

The internationally accepted interpretation of the Internet Treaties also does not tie any requirement for liability for circumvention activities or trafficking in circumvention devices to any infringing purpose.[2] The Internet Treaties could not be implemented properly by limiting the prohibited acts to be for an infringing purpose.[3] The draft treaty makes clear that the remedies or prohibitions against circumvention are independent from acts of infringement in Paragraph 5. The two options under consideration are the following:

Option 1

5.         Each Party shall provide that effective legal remedies [EU: adequate legal protection] against a violation of a measure implementing paragraph (4) is independent of any [J: other unlawful activities] infringement of copyright or related rights.

Option 2

5.         [US/sing/NZ/Aus?: each party shall provide that a violation of a measure implementing paragraph (4) is independent of any [J: other unlawful activities] infringement of copyright or related rights.

The draft treaty would also enable contracting parties to adopt and maintain exceptions or limitations to measures “so long as they do not significantly impair the adequacy of legal protection of those [Can: technological] measures or the effectiveness of legal remedies for violation of those measures.”

It is clear from the forgoing that the draft treaty provides some limited flexibility in how the ACTA can be implemented. However, just like the Internet Treaties, there are minimum standards. These minimum standards require:

• Protection against acts of circumventing access control TPMs;
• Protection against trafficking in copy control and access control circumvention tools;
• Protection cannot be restricted to acts that have an infringing purpose nor can acts carried out for a fair dealing purpose be excluded from protection; and
• Limitations and exceptions to the prohibitions are permitted; however, they cannot significantly impair the adequacy or effectiveness of the legal protection or legal remedies e.g., they cannot be tied to circumvention for an infringing purpose, or to a fair dealing purpose; such exceptions would not only conflict with Paragraph 5, but would also significantly affect their adequacy and effectiveness.

It has been suggested that Bill C-32’s TPM provisions go beyond ACTA’s draft provisions and can be watered down to permit an exception to cover circumvention for the purposes of fair dealing. However, neither the Internet Treaties nor ACTA would permit any such exception or limitation.

[2] ibid

[3] See, Legends and reality about the 1996 WIPO Treaties where Dr. Ficsor, the former Assistant Director General of WIPO, disagreed with the assertion by Prof. Geist that Bill C-32 could be amended to limit protection for circumvention to an infringing purpose, or alternatively “for any unlawful purpose” and still comply with the WIPO Treaties: “It should be clear from my commentary that these proposals would not provide adequate legal protection for TPMs and would not result in a Bill that would comply with the Internet Treaties.”

“Participants stressed the importance of ACTA as an agreement that will establish an international framework for their efforts to more effectively combat the proliferation of counterfeiting and piracy, which undermines legitimate trade and the sustainable development of the world economy.

While ACTA aims at establishing effective enforcement standards for existing intellectual property rights, it is not intended to include new intellectual property rights or to enlarge or diminish existing intellectual property rights.

ACTA will not interfere with a signatory’s ability to respect fundamental rights and liberties. ACTA will be consistent with the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement) and the Declaration on TRIPS and Public Health. Participants reiterated that ACTA will not hinder the cross-border transit of legitimate generic medicines, and reaffirmed that patents will not be covered in the Section on Border Measures. ACTA will not oblige border authorities to search travellers’ baggage or their personal electronic devices for infringing materials.”

Participants in the meeting agreed that the next meeting would be hosted by the United States. They also reaffirmed their commitment to continue their work with the aim of concluding ACTA as soon as possible in 2010.