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Background
The proliferation of counterfeit and pirated goods poses considerable challenges for legitimate trade and the sustainable development of the world economy. Trade in these counterfeit and pirated goods causes significant financial losses for right holders and legitimate businesses. It also hinders sustainable economic development in both developed and developing countries and, in some cases, represents a health or safety risk to consumers.

As a result, in October 2007, the United States, the European Community, Switzerland and Japan simultaneously announced that they would negotiate a new intellectual property enforcement treaty, the Anti-Counterfeiting Trade Agreement, or ACTA. ACTA represents a significant achievement in the fight against the infringement of intellectual property rights, particularly against the proliferation of counterfeiting and piracy on a global scale, and provides a mechanism for the parties to work together in a more collaborative manner to achieve the common goal of effective Intellectual Property Rights (IPR) enforcement. When it enters into force with all participants, ACTA will formalize the legal foundation for a first-of-its-kind alliance of trading partners, representing more than half of world trade.

Highlights

  • On Saturday, October 1, 2011, Representatives of the U.S., Japan, Australia, Canada, the E.U., South Korea, Mexico, Morocco, New Zealand, Singapore and Switzerland met in Japan for the signing ceremony for the Anti-Counterfeiting Trade Agreement (ACTA).
  • ACTA – initially designed to be a treaty, thus requiring Senate ratification in the U.S. — will likely be an "executive agreement" that cannot alter or supersede U.S. law. Fortunately, ACTA is consistent with existing U.S. law and does not require any change to U.S. law prior to implementation in the United States. In particular, ACTA is consistent with U.S. copyright, patent, and trademark laws. For example, the application of injunctive relief as provided for in the Digital Millennium Copyright Act (17 USC §512j) and other provisions of U.S. law is consistent with and implements the obligations of ACTA. The United States may therefore enter into and carry out the requirements of the Agreement under existing legal authority, just as it has done with other trade agreements.
  • ACTA provides for: (1) enhanced international cooperation; (2) promotion of sound enforcement practices; and (3) a legal framework for IPR enforcement in the areas of criminal enforcement, enforcement at the border, civil and administrative actions, and distribution of IPR infringing material on the Internet. Listed below are the most notable provisions:
    • ACTA will require that border enforcement authorities be empowered to act on their own initiative (“ex officio”) against both imports and exports of counterfeit and pirated goods.
    • ACTA will require that criminal authorities be able to act on their own initiative in piracy and counterfeiting cases, rather than waiting for a complaint.
    • ACTA will further clarify existing international requirements for the availability of criminal penalties when piracy or counterfeiting is carried out for commercial advantage.
    • ACTA will require criminal remedies for the importation or use of labels or packaging for counterfeit goods
    • ACTA will include new rules on criminal seizure and destruction of counterfeit goods, seizure of the equipment and materials used in their manufacture, and seizure of the criminal proceeds from piracy and counterfeiting offenses.
    • ACTA will clarify existing international requirements to protect against circumvention of digital security technologies (such as passwords or encryption).
    • ACTA will require parties to address copyright piracy on digital networks, while preserving principles such as freedom of expression, fair process, and privacy.
    • ACTA will enhance the international framework for civil enforcement provisions dealing with issues such as damages, provisional measures, recovery of costs and attorneys' fees, and destruction of infringing goods.
  • With respect to the legal framework, ACTA establishes a strengthened standard, as demonstrated in the highlighted parts above, that builds on the minimum standards of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). This marks a considerable improvement in international trade norms for effectively combating the global proliferation of commercial-scale counterfeiting and piracy in the 21st Century.
  • What ACTA is NOT about:
    • Seizing portable music players and laptops at the border
    • Extending the term of protection for copyrights
    • Preventing “parallel” imports
    • Filtering internet traffic for infringing copyright works
    • Limiting access to generic pharmaceuticals
    • Reducing the court’s involvement in determining infringement
    • Weakening privacy laws
    • Lowering evidentiary standards for injunctions
    • Freezing bank accounts of suspected infringers
  • Not all participants are completely satisfied with the final version of ACTA. Critics in the E.U. have suggested the trade agreement doesn't comply with Europe's data privacy laws, and have questioned its compatibility with E.U. law.

Commentary

Critics claim that ACTA has several features that raise significant potential concerns for consumers’ privacy and civil liberties, for innovation and the free flow of information on the Internet, for legitimate commerce, and for developing countries’ ability to choose policy options that best suit their domestic priorities and their level of economic development.

Additionally, the secrecy of the negotiation process has left the public with many concerns and questions. Gigi Sohn, Public Knowledge's president and co-founder, called the ACTA negotiations an "extremely flawed" process. "ACTA should have been considered a treaty, and subject to public Senate debate and ratification or, in the alternative, debated in an open and transparent international forum such as the World Intellectual Property Organization," she said. "Instead, public interest groups and the tech industry had to expend enormous resources to force the process open to permit public views to be presented and considered."

The Impact

Although this agreement does not change U.S .law, it will alter international law. Companies engaging in business on an international level will need to educate themselves on the effects of ACTA. Critics of ACTA in the U.S. have said the treaty could allow foreign organizations to target U.S. companies and websites that don't comply with overseas copyright laws. The truth of this statement has not been proven. However, ACTA leaves the door open for countries to introduce the so-called “three-strikes rule”, which would see Internet users cut off if they download copyrighted material, as national authorities would be able to order the ISPs to disclose personal information. This concern about the privatization of enforcement has the potential to impact the operations of U.S. companies.

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