China and ACTA: Why Is The Problem Not Made Part Of The Solution?

Medio December 2008 IP Dragon wrote about the controversial genesis of the China-less Anti-Counterfeiting Trade Agreement (ACTA) by Japan and the US (joined by Australia, Canada, the European Union, Mexico, Morocco, New Zealand, Republic of Korea, Singapore and Switzerland) whose goal it is to stem the tide of counterfeit and pirated goods that originate for the lion share from China, read here.

ACTA is not only controversial because it was born in darkness (then again out of darkness beautiful flowers grow), but also because:

- Why start a new multilateral trade agreement when the international community has already the World Trade Organization (WTO)'s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs). Then again it is hard to reform TRIPs because there are many WTO members. So the way of least resistance is to start a new trade agreement with pre-selected countries that think the same about a TRIPs plus level of IPR enforcement;

- If the People's Republic of China causes the initiators of ACTA such headaches, should they not involve this country in some way with ACTA? In the philosophy of Yin and Yang, the problem (China's lack of IPR enforcement) is existent in the solution (multilateral trade agreement) and vice versa;

- ACTA's content is unknown, so this opens the gates to speculations.

Now the United States Trade Representative has posted ACTA's 'Summary of Key Elements Under Discussion' (Summary) which gives the countours of the draft structure:

• Chapter 1. Initial Provisions and Definitions;

• Chapter 2. Legal Framework for Enforcement of Intellectual Property Rights;

Section 1. Civil Enforcement

Section 2. Border Measures:

Under discussion is whether border measures should apply not only to importations (as TRIPs prescribes) but also to export and transit of goods;

Another possible point of contention is whether travelers can import counterfeit or pirated goods for their personal use (de minimis exception);

It is no surprise that ACTA tries to solve some of the points, which especially has frustrated the US (which among other reasons brought a claim against China at the WTO: DS 362): measures to ensure that infringing goods are not released into free circulation and the destruction of goods that have been determined to infringe intellectual property rights.

Section 3. Criminal Enforcement; the holy grail (overestimated to my taste) remains criminal enforcement of IPR. In the leaked out version of the ACTA proposal of 2007, see below on page 2 here, it was proposed to apply criminal sanctions to IPR infringements on a commercial scale "IPR infringements for purposes of commercial advantage or financial gain. This sentence that I could not find back in the Summary was a bit unclear, because either you apply criminal sanctions if a commercial threshold of the infringed goods is reached (problem: which threshold is not arbitrary and what to do with infringers that keep their activities just under the threshold) or you sanction the intention of commercial advantage/financial gain plus the infringement of minimal one product.

Section 4. Intellectual Property Rights Enforcement in the Digital Environment: surprisingly no draft proposal has been tabled yet.

• Chapter 3. International Cooperation;
• Chapter 4. Enforcement Practices; I cannot stress the importance of the exchange of best practices enough. Transparence of IPR enforcement information, including statistics is key;
• Chapter 5. Institutional Arrangements;
• Chapter 6. Final Provisions.

Expect a lot more discussion when the first draft provisions are disclosed (or leaked).

UPDATE: First draft leaked; read 'Do ACTA Member Countries Want to Confront China With A Fait Accompli?'