Silicon Valley Fears Big Liabilities In Small Print of Proposed Trade Agreement

SAN FRANCISCO, July 1, 2010 –The office of the United States Trade Representative said Thursday that its negotiators had “made progress in building consensus,” over specific provisions in a controversial global intellectual property agreement — but it’s unlikely that whatever consensus they reached on the digital provisions will be welcomed by all back at home.

That’s because America’s major entertainment and technology industries don’t agree on what the US’ position should be, and that is likely to make the Obama administration’s commitment to reach an agreement with other countries on the accord by the end of the year difficult.

For the past two years, American technology companies and digital rights groups have been fretting over both the substance and process that’s unfurled over the Anti-Counterfeiting Trade Agreement. They’re unhappy about the secretive nature of the negotiations, and the proposal to implement America’s version of digital copyright infringement law, without any of its checks and balances, in Europe, Japan, South Korea and in many other signatory countries. (Without those checks, YouTube would have been on the hook for a billion dollars in the lawsuit launched by Viacom.)

To block this development, a coalition of 10 tech companies and rights groups mid-June submitted suggested changes [see document below] to the trade agreement to the USTR. The USTR was said to be receptive to including those suggestions in ACTA by those in the know.

The companies’ changes concern the rules regarding the unlocking of encrypted digital media, and the question of when internet intermediaries would be liable for their users’ infringements, and how much they should be made to pay.

“The problem with ACTA is a.) statutory damages, b.) being much more specific on secondary liability, so at that point, having the general exceptions as well as DMCA safe harbors, or something like that, becomes very important,” says Jonathan Band, an intellectual property lawyer in Washington, DC who represents America’s major library associations and NetCoalition, a group of web, advertising and information companies.

The “DMCA” refers to the 1998 Digital Millennium Copyright Act, America’s implementation, with modifications and additions, of the World Intellectual Property Organization’s 1996 Copyright Treaty.

The coalition includes the Consumer Electronics Association,the American Library Association, the American Association of Law Libraries, the Center for Democracy and Technology, Public Knowledge and the Computer & Communications Industry Association.

The CCIA’s members include America’s most recognized web and software companies eBay, Facebook, Google, Microsoft, Oracle and Yahoo.

Another major difference between Silicon Valley, Hollywood, and the music industry is one that both sides have been fighting about since the DMCA’s inception: the anti-circumvention provision in the proposed agreement.

Critics of the US’ DMCA say that it’s a flawed law because it prohibits and criminalizes the act of unlocking digital content rather than the act of stealing. The problem: People who have legally bought a digital film, book or tune but who want to transfer it onto another device would be classified as criminals for breaking through those locks in order to load that content onto a gadget of their choice.

But that access wording has been replicated in ACTA. The tech and rights coalition has amended the language to remove the wording about “access,” and included several exceptions.

But Steve Metalitz, a lawyer who represents the US’ biggest content and software companies internationally, and who was involved in crafting the DMCA, said the proposed changes would render copyright enforcement online ineffective.

“From what I’ve looked at, this is not surprising, given the source,” he said. “This is a group that does not think that copyright piracy is a threat to the US economy to the degree we think it is, and therefore they don’t want to see an agreement that would necessarily be an effective response, and that’s why you see some of the language in here that goes way beyond what’s in US law.”

Metalitz added that the exceptions that the coalition wants to the anti-circumvention provisions aren’t appropriate.

“This agreement is not about exceptions, because it is not about infringement — it’s about enforcement,” he said. “The other thing that this group has been calling for is to bring a lot more of the DMCA back into this. They’re basically saying: ‘We, the United States, should ram down the throats of all other countries exactly the way we deal with this.’

“We just don’t think that’s viable in international negotiations,” Metalitz said.

He added that it’s the tech companies’ approach that would require a change in the rest of the world’s laws.

“‘They say: ‘let’s spell out in excruciating detail what the safe harbors are going to be — just like in the US and if you leave out something there, that’s going to be terrible for us,’ and they say: ‘we like fair use,’ but almost no other country in the world has that,” said Metalitz.

On Thursday, the USTR said that the participants had made progress on building consensus on the provisions of ACTA that concern enforcement measures in the digital environment. It didn’t say anything beyond that.

Addressing the concerns of numerous public interest groups, the statement re-iterated that the agreement wouldn’t change existing law, nor the World Trade Organization’s Trade Related Aspects of Intellectual Property Rights agreement.

The USTR also re-iterated: “ACTA will not oblige border authorities to search travelers’ baggage or their personal electronic devices for infringing materials.”

The next round is in the United States, but the USTR did not specify when.

Editor’s Note: Don’t miss the Intellectual Property Breakfast Club Event on Tuesday, July 13, “The Anti-Counterfeiting Trade Agreement Treaty,” for FREE at Clyde’s of Gallery Place in Washington from 8 a.m. to 10 a.m. Register at http://ipbreakfast.eventbrite.com.

If you plan on attending, and have a question you’d like to submit beforehand, please submit it here. You can vote for which questions the moderator should ask too.