International IP Policy

Copyright Protection Does Not Necessarily Foster Innovation: Intellectual Property in a Changing World (by: Patrick R. D. Sullivan)

I. INTRODUCTION

This paper will focus on several different viewpoints concerning the appropriate strength and scope of copyright law within existing intellectual property schemes and their effect on creative industries in the modern world. This topic is a highly controversial area of intellectual property theory and opinions range from militant adherence to, and even strengthening of, existing IP regimes, to the immediate rejection of copyright protection in any form. What is at issue is theft and piracy. Almost no one maintains that outright theft of property is acceptable, but the disagreement stems from widespread disagreement over the extent and scope of protection afforded to intellectual property, whether authors are actually receiving compensation for their work, and what an appropriate middle ground, if such a thing exists, would look like.

II. A BRIEF HISTORY

For thousands of years, “copies” were made by scribes. It was not until at least as early as 868 in China, and again independently in 1041 by Shi Sheng, that the first use of movable type occurred. Ultimately, however, this innovation failed to catch on because the large number of Chinese characters presented a formidable barrier to widespread commercial printing technology.[1] Later, European monks began making wood carvings that would impress an image onto paper or leather, but these were fragile and would only yield a few decreasingly clear copies.[2] Finally, in 1450, the problem was solved by a goldsmith named Johannes Guttenberg’s printing press, which finally allowed ideas to be disseminated en masse.[3] The printing press finally allowed individuals such as Luther, Jefferson, Newton, and many other influential thinkers to promulgate their respective ideas on religion, democracy, and science to the masses via this new medium.

The notion that property could be intangible did not arise until shortly thereafter, in early 17^th century mercantilist England.[4] Three-hundred years later in the United States, intellectual property law is arguably better defined than anywhere else in the world and there is still heated contention as to how it should be structured to accommodate the legal needs of creative persons and industries. Our already complex society is a rapidly developing cyber-society with unforeseen challenges and it is unclear whether existing IP regimes will continue to provide effective protection to authors without serious revision.

III. THE PROBLEM

Protection in the United States stems from Congress’s enumerated constitutional power to promote the “progress of science by securing for limited times to authors the exclusive right to their respective writings.”[5] One of the first acts ever enacted by Congress was the Copyright Act of 1790 (modernly codified as 17 U.S.C. § 101 et seq).[6] The 1790 Act only protected “books, maps, and charts for 14 years.”[7] Amendments expanded the Act for the next 100 years, but a significant overhaul did not occur until 1909 when it was expanded to include “all writings.”[8]

Despite these protections, however, large publishing firms have been complaining about the tendency of pirate printing operations to “ruin the market,” by releasing their intellectual property into the market without providing any compensation or procuring any authorization, for at least 400 years.[9] The main complaint has always been the same as it is today: they were unable to remunerate authors for “their respective writings;” and, the result would be a resignation of all talented people from the creative arts.[10] Alas, that did not happen and these arguments proceeded unchanged until the internet emerged in the 1970s.

Copyright in the modern world is faced with a stark new challenge that was missing from the pre-internet era. Namely, old-world structures are developing into digitalized versions of their former selves. Physical and practical concerns govern fewer and fewer human activities with each passing year. Take communication, collaboration, war, theft, and education as just a few examples of areas which are decreasingly subject to physical restraints. Conversations take place via email or cellphones; newspapers will not be made of paper for much longer; conference rooms are situated in online forums; communities are organizing on social networks, rather than in town squares; kinetic weaponry is slowly taking a backseat to cyber-attacks or remotely deployment mechanisms; an endless stream of academic lectures and papers on countless subjects is available electronically; and the final step in transmitting a love letter involves pressing send.

IV. The Argument Favoring Strong Copyright Protection

The general argument for strong intellectual property protection is that incentives to create and innovate weaken when the public can utilize those advances without adequately compensating the individual responsible for its creation. In the United States, protection for these works comes from 17 U.S.C. § 101, et seq. International protection stems from the Berne Convention and various other IP treaties. These frameworks are sufficiently general to allow authors, businesses, and societies to benefit from the works. As long as the work endures and is considered valuable by consumers, the creator, or one who has purchased that creation, should be entitled to preserve its integrity and value by regulating its use and unauthorized reproduction. The existing regimes are fair and flexible enough to respond to advances in technology and those who choose to disregard those laws are either violating long-held international customary norms against piracy or opportunistically taking advantage of the spoils which pirates make widely available on the open market.

Piracy has been so widely disfavored by domestic legal systems around the world that its illegality has solidified into jus cogens, a universally accepted norm of customary international law. The public’s attitude toward traditional copyright law is out of step with the laws themselves and violations range from intentional infringement to the grey areas surrounding the fair use exceptions. Nevertheless, just because the Internet allows users to share any type of electronic media, instantaneously and without regard to cost or geographic location, does not means that it should be considered ethical or legal to do so.

V. THE ARGUMENTS AGAINST STRONG COPYRIGHT PROTECTION

One of the more radical perspectives on this point, maintains that the existence of democratic government and its power to pass, enforce, and interpret law are merely revocable licenses, requiring the consent of the masses. The average consumer has widely rejected strong copyright protection in their daily lives, by failing to distinguish between widespread commercial distribution of copyrighted materials and illegally downloading the same for personal use or small-scale circulation, use, and posting. Further legislation of strong copyright “protection” is thus imposing upon the population an antiquated morality that benefits only a small group of media conglomerates and not a recodification of what the public deems out-of-step with social mores.

A more tempered argument admits the utility of existing or similar copyright regimes and supports the notion that the outright theft of an author’s intellectual property is unacceptable. Unlike radicals who wish to abolish copyright laws altogether, moderates direct their criticisms at ironclad, draconian copyright regimes, claiming that the use of copyrighted material is all too often labeled infringement, rather than fair, non-infringing use of the work. Organizations such as Creative Commons advocate a “no rights reserved” or a “some rights reserved” approach over an “all rights reserved” system.[11] Thus, authors could be entitled to sanction the use of their work for non-commercial uses and demand compensation for its commercial exploitation.

VI. WHY WE NEED SOME IP PROTECTION

Intellectual property is still property and copying that work without adequately compensating its owner is justifiably illegal because it corrodes the financial incentives of all creative persons, in all creative industries, to continue to create better work and techniques. If individuals cannot profit from innovations in their respective creative industries, new industries that would have otherwise emerged may never do so, and the current state of existing arts and techniques may be degraded or lost entirely.

The world may quickly find that the most talented individuals have opted out of a career in the creative arts, for the same reason that many parents’ eyebrows raise when their bright young college freshman informs them of his or her intention to major in pottery, xylophone performance, or theater. “How do you plan to find a job in that field? How will you support yourself? The difference between professionals in your chosen field and a large pizza is that the pizza can feed a family of four. Major in Business.” This is not meant to be humorous. It is sad.

Nevertheless, regardless of how individuals acquire their skills, those who choose to use their gifts and talents to produce creative works, and who actually do create original works, should be entitled to prosper from their efforts in much the same way that a laborer is entitled to prosper from the sweat and toil of a day’s work. It is not beyond discussion; however, whether toiling away an afternoon to write a song or a poem should entitle the author to two lifetimes worth of legal standing to bring an infringement suit over the use of that work.

VII. Industries with No Copyright Protection

The counterargument to strong copyright protection is that ironclad IP protection is not the only means, or at least not necessarily the most effective means, to maintain creative and innovative incentives. Some creative industries with virtually no copyright protection, such as the food and fashion industry, enjoy vastly greater annual profits and rates of innovative development than those with strong copyright protection. It is important to note, however, that these creative industries tend to have a greater utility than traditionally copyrightable subject matter.[12] Thus, the disparity between these profit margins is difficult to resolve by simply concluding that these industries generate more wealth simply because they enjoy no copyright protection. That be said, analyzing these industries is still appropriate, if not necessary, because they represent real-world models of creative industries that do not rely on any intellectual property protection.

Even if the policy arguments in favor of strong copyright protection are valid, they may not accurately portray the inherent drive to innovate and out-run the market. The fashion industry thrives and maintains faster rates of creative innovation than almost any other industry, despite the fact that fashion designers are not eligible for IP protection on their designs.[13] Yet, despite this lack of access to state granted monopolies, the industry remains fast-moving, extremely vibrant, highly profitable, and enormously competitive. In terms of creativity and innovation, fashion endures free market capitalism in its unbridled form.[14]

In fact, it is precisely the lack of protection that drives creativity and innovation in the industry. Designers anticipate that a design will be stolen the instant it crosses the runway.[15] Thus, they have an incentive to plan future designs (sometimes years in advance) and surround themselves with as many proactive, creative people as possible (ideally as employees) in order to maintain their position at the forefront of the industry.[16] They waste no time litigating or worrying about infringement issues. Rather, some high end designers even choose designs and materials which would break or tear if an inexpensive, weaker material were used.[17] This type of innovation shows that in a truly free market, success depends on innovating over the prior art and outsmarting the competition.

The Nigerian film industry is another example of a creative industry with negligible copyright protection. Producers in this market sustain themselves in spite of widespread piracy by flooding the market with new films, effectively out-producing the pirates and sending their own work into obsolescence. While the temporary disadvantage to this system is that the profit margins are so slim that even popular producers can only secure roughly $30,000 per film, the upside is that the art form is developing at an astonishing rate.

VIII. WHAT THE FUTURE HOLDS

We are entering a democratized period of media. Those who wish to produce are no longer precluded from doing so due to a lack of “permission” from large media conglomerates, which for the majority of the 20^th century were the only entities able to afford the production, distribution, and marketing costs associated with launching a new artist.[18] In fact, it is not unusual nowadays for a publishing firm to require an artist to have a large, self-established fan base before entering into contract negotiations. Services like YouTube, iTunes, and PayPal allow any individual with computer access to post and sell creative works online. Initially this flooded the market with as much drivel as quality work, but new mechanisms quickly arose to distinguish those with talent from those who simply have laptops. “Like” buttons, “Share” forwarding, “Star” rating systems, and number of views allowed high quality creative works to emerge from the digital swamp, go viral, and impact society in a way that never would have been possible previously.[19]

Of course, the technology to circumvent traditional 20^th century media distribution networks existed long before the internet. Anyone with a reel-to-reel tape deck or a Morse key, a short wave transmitter, and a diesel generator could have sent music or messages through the ionosphere.[20] The problem was that not many people would have gotten the message. The Internet provides an accessible forum where that information can be stored digitally and accessed an unlimited number of times.

The fact is that people are forming online communities, sharing ideas, and innovating more than ever. Consequently, creative industries and expressions within those industries are developing as never before. Open-source software collectives, comedy troupes, tattoo design communities, and breakdancing groups, to name just a few, all have open participation policies. Membership lists are comprised of individuals with different backgrounds, who speak different languages, and who often have never met face-to-face. They exchange ideas, watch and teach each other, and learn from each other. Perhaps most importantly, somewhere, someone is constantly endeavoring to improve upon the previous day’s high water mark in the art. With progress in these creative enterprises leaping forward at such breakneck speeds, stopping to worry about who owns an expression that represents one single iteration of an evolving field that is only evolving due to widespread public participation is ludicrous if not impossible.

IX. THE UNDERLYING PHILOSOPHICAL DILEMMA

That being said, I reject the notion that copying an intangible copy does not deprive the creator of possession of the original, or at least a fundamental aspect of that original which contributes significantly to its value. Part of what creates value in an object is its scarcity. While the creator retains an unaltered version of the original file, the nth copy of that file increases the supply of that object to n times the original. Once enough of these copies have been created outside of the control of the creator, the object has been effectively rendered universally available and incapable of yielding a competitive price. For this reason, the conventional wisdom reads as follows: copying the work of another increases the supply and diminishes the potential for the creator to profit, therefore copying is bad and should not be allowed without permission. But, it is downright lazy to logically arrive at a dent in profits and conclude that the cause is a monster.

This parochial viewpoint seems to stem from a value system wherein steadily rising profitability and growth are hallowed, risk is minimized or hedged at all costs, and the ferocious potential of the free market is something to be feared. This conclusion can only be reached by valuing profitability over innovation, efficiency, and perseverance. Artificial monopolies are inconsistent with long-held tenants of capitalism. Current IP regimes justify these monopolies as retroactive compensation for the labor required for innovative breakthroughs.

But, garage-tinkerers and online communities that value innovation over profitability have long been the source of major creative industry breakthroughs, not large companies with R&D budgets and IP lobbyists. Creative industries such as mountain-biking, rap music, skateboarding, comedy, and so many more were developed by enthusiasts and dissatisfied consumers, with little prospect of ever making a living off of their labor. Were they the grantees of artificial monopolies, and thus occupants of the safe harbors they provide, their focus would likely have shifted to yielding a profit from those developments, rather than continuing to innovate better versions of the original breakthroughs.

Innovation is not an endangered species, unless strong IP protection is involved. Intellectual property rights give otherwise creative individuals an incentive to stop innovating, dig in their heels, and claim that they own as much territory around their protected work as they possibly can. This is not to say that IP protection is an inherently bad thing. Rather, that the philosophical underpinnings commonly heralded in its defense are not so watertight and sometimes yield precisely the opposite results as those claimed. Namely, that innovation is the product of IP protection.

IX. SUBJECT MATTER AND DURATION

What is commonly held to be copyrightable subject matter is largely derived from other content within the genre, or varies in some trivial way from other protected works. Moreover, as technology moves beyond physical copies, it is important to reassess long held maxims of property law to ensure that they apply to the changing world which defines them. When the very nature of “things” mutates, so must the laws that govern them. This approach requires constantly questioning what should be considered “property” in the first place, what rights those who own that property are entitled to, and what remedies should be available once a violation of those rights occurs.

One foreseeable difficulty is the requirement that creative works be reduced to a tangible form in order to qualify for copyright protection. Much like the Federal Rules of Evidence, which only account for electronic evidence by analogy to pre-internet forms of tangible evidence, the most recent overhaul of the Copyright Act was passed in 1976, and thus predates the development of the internet. The Act applies to “original works of authorship fixed in any tangible medium of expression . . . from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine.”[21] The Copyright Act remains well behind the technological advances of today and is regularly applied in circumstances far beyond what its revisers could have possibly imagined.

Two of my criticisms of the rights afforded to a copyright owner are the instantaneity of the copyright protection, once the expression is fixed in a tangible medium, and the length of time during which that protection persists. For works created after 1977, copyright protection attaches when the expression is fixed in a tangible medium and persists seventy years after the death of the author, who need not even request the protection. Anonymous or pseudonymous works are protected for ninety-five years from the date of publication or one-hundred and twenty years after the creation of the work, whichever comes first.

First, it seems ironic that intellectual property is required to be fixed in a tangible medium, especially when technology is eliminating so many of the physical aspects of the pre-internet world. Second, this is radically different than patent protection, which entitles inventors to a monopoly over their creation for at most two decades, but only after the work has undergone an extensive review by a patent officer to verify the uniqueness of the creation. In my opinion, the patent process seems to be the more reasonable of the two; because, it provides a limited period of protection to those who ask for it and can demonstrate the originality of the work.

Likewise, policymakers should seriously reconsider the instantaneous attachment of copyright protection and the fact that protection can so readily attach to works of questionable novelty and originality. As an alternative, procedures such as those imposed within modern patent regimes should be considered in general. This would require creators to subject their works to, at least some, official scrutiny before the weight and authority of US federal law attach to police its infringement.

V. CONCLUSION

Traditional copyright regimes have overemphasized how much protection is required to foster innovation incentives. To be clear, by no means is rebellion against profits, unmitigated risk-taking, or total deregulation of intellectual property a responsible solution. But, allowing copyright laws to grow too strong creates a market stability that obstructs, rather than promotes, innovation. Continued breakthroughs in the areas of innovation, knowledge, intellectual property law, as well as widespread access to those developments are essential to developing a shared cultural platform which can accommodate a sustainable global market for the exchange of information and ideas. Creative industries are thriving thanks to industry-specific motivational incentives, individual creativity, and commensurate advances in technology.

WORD COUNT: 3,678

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[1] Video Tape: Tucker, J. A., The Evils of Intellectual Property, available at http://www.youtube.com/watch?v=8KSua3Nczjk.; Lemley, M., Menell, P.,and Merges, R., Intellectual Property in the New Technological Age, Aspen Publishers, 414 (2010).

[2] Id.

[3] Lemley, M., Menell, P.,and Merges, R., Intellectual Property in the New Technological Age, Aspen Publishers, 414 (2010).

[4] Video Tape: Tucker, J. A., The Evils of Intellectual Property, available at http://www.youtube.com/watch?v=8KSua3Nczjk.

[5] U.S. CONST. art. I, § 8 cl. 8.

[6] 17 U.S.C.§ 101, et seq. Lemley, M., Menell, P.,and Merges, R., Intellectual Property in the New Technological Age, Aspen Publishers, 414 (2010).

[7] Id.

[8] Id.

[9] Video Tape: Tucker, J. A., The Evils of Intellectual Property, available at http://www.youtube.com/watch?v=8KSua3Nczjk

[10] Id.

[11] Creative Commons Homepage, FAQ-What is Creative Commons, Creative Commons last accessed 11/04/2011.

[12] Video Tape: Blakely, J., Lessons From Fashion’s Free Culture, available at http://www.youtube.com/watch?v=zL2FOrx41N0 accessed 10/26/2011. (Industries which outsell and out innovate those with strong copyright protection (i.e., Films, Books, Music, etc.) include Gastronomic, Automotive, Fashion, and Furniture. Ms. Blakely asserts that things like books, movies, and music have been relegated to the domain of digital files by the public, “barely tethered to any physical reality … [B]ecause we can copy and transmit them so easily, [they] actually circulate within our culture a lot more like ideas than like physically instantiated ideas,” which were traditionally eligible for copyright protection. More on this subject can be researched at www.ReadyToShare.org.)

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] Video: Anderson, C., How YouTube is Driving Innovation, available at http://www.youtube.com/watch?v=X6Zo53M0lcY. Accessed 10/26/2011.

[19] Id.

[20] Savodnik, P., Enigma: A Russian shortwave radio station has been broadcasting mysterious patterns of beeps for decades. Why?, Wired 172 (Oct. 2011)

[21] 17 U.S.C.§ 102

IS IT APPROPRIATE FOR THE PRESIDENT TO EXECUTE AND IMPLEMENT ACTA AS AN EXECUTIVE AGREEMENT WITHOUT SENATE RATIFICATION? (Patrick R. D. Sullivan)

INTRODUCTION:

The debate at hand concerns contrary interpretations of the constitutional allocation of foreign policy powers, treaty-making authority, and the scope of the Executive’s authority to bypass the Framers’ safeguards against tyranny. Evidence based on the Constitution, documentary evidence of the Framers' intent, and judicial precedents, supports the arguments on both sides, but it seems most probable that signing the Anti-Counterfeiting Trade Agreement (ACTA) as a sole executive agreement is unconstitutional.

FOUNDATIONAL PRINCIPLES:

In the wake of the American Revolution, the States were free to pursue their own international commercial and economic initiatives.[1] They negotiated directly with local Indian tribes and sent representatives abroad to negotiate trade agreements with foreign powers.[2] The resulting lack of national unity led the founding fathers to address this when they drafted Article I of the United States Constitution by stating that “[n]o State shall, without the Consent of Congress … enter into any Agreement or Compact with another State, or with any foreign Power.”[3] This clause explicitly recognizes that States may enter into Agreements or Compacts, limits their power to do so by enumerating a congressional power over the States in this area, and fails to mention the executive branch at all.[4]

The Framers were extremely cautious about empowering any one branch or individual to unilaterally conclude treaties. Consequently, the Framers engaged in vigorous debate over which procedures would thwart the new government “from undertaking unwise international obligations.”[5] Ultimately, they settled on the “Treaty Clause,” which states that the President “shall have the Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur.”[6] Nevertheless, the President may still enter into binding international Agreements on his own authority, but this power is limited to “matters that fall within his independent powers under the Constitution.”[7]

The question this article seeks to answer is whether executing and implementing ACTA as a sole executive agreement, without Senate ratification, falls within the President’s independent constitutional powers. If it does, then the Treaty clause is, for all practical purposes, meaningless and the interchangeability of Agreements and Treaties imbues the executive branch with virtually unlimited authority in the arena of foreign affairs.[8]

TREATIES DO NOT EQUAL AGREEMENTS:

The Obama Administration, through the Office of the U.S. Trade Representative (USTR), supported the negotiation and implementation of ACTA as a sole executive agreement without the approval of the Senate or an ex ante or ex post joint resolution of both houses of Congress.[9] ACTA cannot constitute a valid treaty without ratification by two thirds of the Senate. Likewise, an ex ante or ex post joint resolution of both houses would have made it a valid congressional-executive agreement. This unilateral action implies the Administration’s belief (and that of the Bush Administration which revealed the same intention) that setting United States policy in the area of intellectual property enforcement falls within the President’s independent constitutional powers, and is therefore appropriately executed and implemented as a sole executive agreement.[10]

There is no clear line delineating the precise circumstances requiring adherence to the procedures called for by the Treaty Clause and this dilemma is by no means a recent development. In 1818, President James Monroe negotiated the Rush-Bagot Agreements with Great Britain for the purpose of demilitarizing the Great Lakes.[11] Most, but not all, parts of the Agreement fell within President Monroe’s independent constitutional powers as Commander-in-Chief of the armed forces.[12] He nevertheless submitted the matter for the advice and consent of the Senate and included “the following message: ‘I submit it to the consideration of the Senate, whether this is such an arrangement as the Executive is competent to enter into, by the powers vested in it by the Constitution, or [one which] requires the advice and consent of the Senate.’”[13]

More recently, the Reagan administration employed the opposite approach in executing the Iran-Contra Affair. The Administration reasoned that its constitutional authority justified suspending what would have been legitimate tort and commercial claims against the government of Iran. Members of the Administration (somewhat brazenly) justified their actions by claiming that they “had merely done what Congress had refused to do.”[14] The Supreme Court later validated the action, but noted the narrowness of the ruling.[15] Of central importance in the Court’s reasoning were the exact circumstances under which the executive branch acted: under emergency conditions and in an area where Congress had failed to legislate previously.[16] Not only is it difficult to contend that signing ACTA constitutes an emergency, but the very nature of the Agreement concerns intellectual property, an area of law which Congress has treated extensively[17] pursuant to its enumerated Article I power to do so.[18]

President Monroe’s self-imposed restraint is commendable and should serve as a model for future Administrations where vague separation-of-power issues come into play. The history of ACTA nowhere demonstrates such restraint and a growing portion of academia goes so far as to brand its execution and implementation as a usurpation of congressional lawmaking authority by the executive branch, the likes of which the Framers specifically set out to prevent via our elaborate system of checks and balances.[19] The Framers recognized that Congress required the unique authority to create laws, reasoning from experience that such power is simply too great for any single President. Thus, Article I begins by vesting “All legislative Powers … in a Congress”[20] and later the Necessary and Proper Clause provides Congress with the power to “make all Laws which shall be necessary and proper for carrying into Execution” not only its own powers, but also “all other Powers vested by the Constitution in the Government of the United States, or in any Department or Officer thereof.”[21]Although the congressional power to delegate its legislative authority is nowhere enumerated in the Constitution, Congress is nonetheless entitled to do so and several contrasting Supreme Court decisions illustrate the controversial issue of the appropriate allocation of power in the arena of foreign affairs.

CONTRASTING JUDICIAL PRECEDENTS:

Supporters of the legislative-executive foreign policy partnership rely on The Youngstown Case as the standard that most closely approximates the proper relationship between the two branches of government.[22] In April of 1952, President Harry S. Truman unilaterally authorized the seizure of the majority of American steel mills, which were facing widespread shutdowns due to a national labor strike. He declared the situation a national emergency and a threat to national defense and justified the action by asserting that Congress had properly delegated him the authority to act in this area pursuant to his constitutional powers as Commander-in-Chief.[23] The Court rejected this argument and found that not only had Congress not validly delegated him the authority under which he claimed to be acting, but that Congress had gone so far as to pass legislation which conflicted with the very nature of the seizure itself. Moreover, Justice Black’s opinion concluded that when the President acts pursuant to an “express or implied authorization of Congress, his authority is at its maximum,” but absent “either a constitutional grant or denial of authority, he can only rely upon his own independent powers.”[24]
Advocates of a presidential prerogative, in foreign policy making, argue that the case of United States v. Curtiss-Wright is the controlling precedent.[25] In that case, Congress granted President Franklin D. Roosevelt the power to declare the sale of weapons to Bolivia illegal and the Curtiss-Wright Export Corporation, after being accused of violating the declaration, maintained this was an unconstitutional delegation of legislative authority.[26] The court disagreed and ruled that the President is the sole voice and representative of United States in foreign relations and should be afforded a degree of discretion otherwise not afforded domestically.[27] The Court reasoned that the Constitution implicitly grants the President the sole authority to manage all aspects of foreign affairs on behalf of the nation.[28]

Since the decisions in the two cases are difficult to reconcile, resolving this troublesome foreign policy powers question by reference to Supreme Court pronouncements has been unsuccessful. Parties on both sides of this dispute have attempted to defend their respective positions by discrediting, or at least reinterpreting, the rival court decision. Youngstown can be distinguished from Curtiss-Wright by noting that the seizure of domestic steel mills was a predominantly domestic matter which required congressional authorization. Whereas the sanctions on Bolivian arms dealings were foreign affairs which justified the President’s exercise of plenary power over foreign affairs without regard to Congressional authority. Thus, a primary concern raised by critics of ACTA hinges upon whether the impact of the Agreement will be sufficiently “domestic” to be governed by Youngstown, rather than Curtiss-Wright.

THE LETTER: 75 LAW PROFESSORS OBJECT:

Consequently, when the first official draft of the Agreement was released in 2010, a vocal group of academicians drafted an open letter to President Barack Obama.[29] The group, composed of more than seventy-five law professors, raised numerous public concerns including: the “intense but needless secrecy” surrounding the negotiations; the undemocratic failure to “invite [meaningful] comments on the text, public inspection, and comment;” the advisability of establishing a “new international framework” of rules governing intellectual property enforcement; the assertion that, contrary to the claims of the USTR, the Agreement is in no way “related to any standard definition of ‘national security’ or any other interest of the United States similarly pressing or sensitive.”[30]

The letter goes on to assert that signing, executing, and implementing ACTA as a sole executive agreement is unconstitutional and unwise, asserting that such action would “usurp congressional authority over intellectual property policy” in the following ways: by failing to “explicitly incorporate current congressional policy;” by locking in substantive law which may need future revision; by complicating “legislative efforts to solve widely recognized policy dilemmas” throughout the field of intellectual property law; and finally by likely affecting “courts’ interpretation of U.S. law.”[31] Finally, the letter ends by stating the following:

Nearly 100 international intellectual property experts from six continents gathered in Washington, DC in June, 2010 to analyze the potential public interest impacts of the officially released text. Those experts – joined by over 650 other experts and organizations – found that “the terms of the publicly released draft of ACTA threaten numerous public interests, including every concern specifically disclaimed by negotiators.[32]

The expert statement notes that ACTA: will interfere with citizens’ fundamental rights and liberties; is “inconsistent with the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS);” will increase domestic border searches and “interfere with cross-border transit of legitimate generic medicines;” and will “require ‘graduated response’ disconnections of people from the internet.”[33]

Other commentators have suggested that the USTR and the Obama Administration are relying on various flexibilities within the Agreement that would preclude enforcement of the terms against the United States. Article 1.2(1) of the Agreement ends with the following language: “Each Party shall be free to determine the appropriate method of implementing the provisions of this Agreement within its own legal system and practice.”[34] The language is virtually identical to that found in the TRIPS Agreement, is invariably invoked as a defense by all countries accused of violating their obligations under the treaty, and has repeatedly been proven unpersuasive as a “get-out-of-jail-free card.”[35] Indeed, there are at least two cases concerning TRIPS violation in which the United States was a party, “once as a Plaintiff and once as a Defendant.”[36] When the United States attempted to use the defense to defeat a suit filed by the European Union concerning overbroad copyright laws, the panel rejected the United States’ defense, stating “[w]e note that while the WTO Members are free to choose the method of implementation, the minimum standards of protection are the same for all of them.”[37]

CONCLUSION:

The consequences of joining ACTA are very real and will ultimately bind the United States to a framework of international standards which is inconsistent with established United States law. The overall approach to the negotiation, execution, and implementation of ACTA runs contrary to the principles which form the cornerstones of the American constitutional democracy. The United States runs the risk of subjecting itself to international treaty obligations, without having properly adhered to the Treaty Clause of the Constitution. By executing and implementing the Anti-Counterfeiting Trade Agreement as a sole executive agreement, rather than as a treaty or a congressional-executive agreement, the Obama Administration could arguably expand the separation of powers doctrine beyond the parameters deemed acceptable by the drafters of the Constitution. Given the lack of emergency circumstances and the domestic ramifications of the Agreement, the ruling in Youngstown suggests that cooperation between the executive and the legislative branches may be a more appropriate course of action to pursue.

Nevertheless, numerous commentators refer to the majority of sole executive agreements being consistent with the principles addressed above, but it remains to be seen if somewhere among the minority of those agreements the Obama Administration could find a precedential foothold to support its action as consistent with the history and traditions of the executive branch’s supremacy in the arena of foreign affairs.

WORD COUNT: 2,734

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[1] Patterson, T.E., The American Democracy, McGraw-Hill Publishing, 23 (New York, 1990). (New Hampshire even went so far as to establish a Navy to defend its 18 mile coastline).

[2] Id.

[3] U.S. CONST. art. I, § 10 cl. 3.

[4] Id.

[5] Clark, B., Domesticating Sole Executive Agreements, 93 VA. L. REV.1573, 1581-82 (2007); Rakove, J., Solving a Constitutional Puzzle: The Treatymaking Clause as a Case Study, 1 Persp. in Am. Hist., New Series 233, 243 (1984).

[6] U.S. CONST. art. II, § 2.

[7] RESTATEMENT (THIRD) OF THE FOREIGN RELATIONS LAW OF THE UNITED STATES § 303(4) (1986); See U.S. CONST. art. II, § 2 (for a comprehensive list of enumerated Presidential powers).

[8] Clark, B., Domesticating Sole Executive Agreements, 93 VA. L. REV. 1573, 1583 (2007)

[9] Flynn, S., 2011. ACTA's Constitutional Problem: The Treaty That Is Not a Treaty (Or An Executive Agreement). PIJIP Research Paper no. 19, 4. American University Washington College of Law, Washington, D.C.; 75 Law Profs Call for Halt of ACTA, PIJIP BLOG (Oct. 28, 2010), http://www.wcl.american.edu/pijip/go/blog-post/over-75-law-profs-call-for-halt-of-acta.

[10] Id.

[11] Clark, B., Domesticating Sole Executive Agreements, 93 VA. L. REV.1573, 1580 (2007)

[12] Id.

[13] Message from President James Monroe to the Senate of the United States (Apr. 6, 1818), reprinted in 3 Journal of the Executive Proceedings of the Senate of the United States of America 131, 132 (Washington, Duff Green 1828); Clark, B., Domesticating Sole Executive Agreements, 93 VA. L. REV. 1573, 1580 (2007).

[14] Patterson, T.E., The American Democracy, McGraw-Hill Publishing, 60 (New York, 1990).

[15] Dames & Moore v. Regan, 453 U.S. 654, 675 (1984).

[16] Id.

[17] 35 U.S.C. § 101, et seq.

[18] U.S. CONST. art. I, § 8 cl. 8.

[19] See Clark, B., Domesticating Sole Executive Agreements, 93 VA. L. REV. 1573, 1580 (2007); Flynn, S., 2011. ACTA's Constitutional Problem: The Treaty That Is Not a Treaty (Or An Executive Agreement). PIJIP Research Paper no. 19, 4. American University Washington College of Law, Washington, D.C.; Over 75 Law Profs Call for Halt of ACTA, PIJIP BLOG (Oct. 28, 2010), http://www.wcl.american.edu/pijip/go/blog-post/over-75-law-profs-call-for-halt-of-acta; Jack Goldsmith and Lawrence Lessig, Anti-counterfeiting agreement raises constitutional concerns, WASH. POST, Mar. 26, 2010 available at http://www.washingtonpost.com/wpdyn/content/article/2010/03/25/AR2010032502403.html; E. Katz & G. Hinze, The Impact of the Anti-Counterfeiting Trade Agreement on the Knowledge Economy: The Accountability of the Office of the U.S. Trade Representative for the Creation of IP Enforcement Norms Through Executive Trade Agreements, 35 YALE J. INT’L L. 24 (Fall 2009).

[20] U.S. CONST. art. I, § 1.

[21] U.S. CONST. art. I, § 8 cl. 18.

[22] Youngstown Sheet & Tube, 343 U.S. 579 (1952).

[23] President Truman claimed that the requisite power to act was conferred upon him by Congress in the Defense Production Act of 1950.

[24] Youngstown Sheet & Tube, 343 U.S. 579 (1952).

[25] United States v. Curtiss-Wright Exp. Corp., 299 U.S. 304 (1936).

[26] Id at 320.

[27] Id.

[28] Id.

[29] Over 75 Law Profs Call for Halt of ACTA, PIJIP BLOG (Oct. 28, 2010), http://www.wcl.american.edu/pijip/go/blog-post/over-75-law-profs-call-for-halt-of-acta

[30] Id.

[31] Id.

[32] Id.

[33] Id.

[34] Love, J., USTR's implausible claim that ACTA Article 1.2 is an all purpose loophole, and the ramifications if true, Knowledge Ecology International Blog: Attending and Mending the Knowledge Ecosystem (Oct. 22, 2010) available at http://www.keionline.org/node/990 (last visited Oct. 11, 2011).

[35] Id.

[36] Id.

[37] Id.

SOUTH AFRICA PASSES THE INTELLECTUAL PROPERTY LAWS AMENDMENT BILL TO PROTECT TRADITIONAL KNOWLEDGE (by Mike Comin)

 

    In the intellectual property context, the term “traditional knowledge” (or as some intellectual property scholars call it, “indigenous knowledge”) encompasses traditional and tradition-based cultural expressions in the form of stories, music, dance, artworks, etc. Traditional knowledge also includes recurring expressions of traditional concepts[i] as well as knowledge about medical practices and the production of food products.[ii] Traditional knowledge is the information that people in a given community, based on experience and adaptation to a local culture and environment, have developed over time, and continue to develop.[iii] Traditional knowledge is “traditional” in the sense that it is typically passed down through specific cultural and traditional mechanisms, from generation to generation, in a manner that reflects the traditions of the community.[iv] Traditional knowledge rarely has an identifiable author, and because it is often not recorded, it exists only in the minds of the community.[v] As such, it is considered the collective property of the entire community, as opposed to belonging to a single individual or a group of individuals.[vi]

    Many indigenous populations live on the fringes of society, in desolate areas that many westerners would consider completely uninhabitable. Since they are largely cut off from the rest of civilization, traditional knowledge plays a fundamental role in protecting the livelihood of many indigenous communities, protecting the community’s health, and maintaining the resources necessary for the continued survival of the community.[vii] Some prominent examples of traditional knowledge include the use of the plao-noi in Thailand for the treatment of ulcers, the use of turmeric in India for the healing of wounds, and as I will discuss in greater detail below, the use of the hoodia plant by the San peoples in Southern Africa to stave off hunger.[viii]

    Over the past century, many large western corporations have “taken” indigenous knowledge from the source community, and have used it to generate significant profits, usually without providing any compensation whatsoever to the indigenous population.[ix] However, despite being cut off from society, indigenous populations have recently begun to learn about their intellectual property rights, and now demand to be recognized as the legitimate owners of their valuable cultural systems and indigenous knowledge.[x] According to Dr. Jane Anderson, an intellectual property law professor and scholar, “indigenous people argue that they have legitimate rights to control, access, and utilize in any way, including restricting others’ access to knowledge or information that derives from unique cultural histories, expressions, practices and contexts.”[xi] Accordingly, how to best protect the traditional knowledge of indigenous communities has become a global hot-button issue, and an international consensus has yet to be reached about how indigenous rights to the protection of their knowledge can be secured.[xii]

    South Africa has a sizeable indigenous population, and following a high profile traditional knowledge-based controversy involving the indigenous San peoples and western corporations Phytopharm and Pfizer Inc, the South African government devised legislation to fix the problem before it could get any worse. After much deliberation the South African government decided against creating a stand-alone law to provide protection for indigenous peoples. Instead, the South African government drafted an ambitious proposal that would amend South Africa’s four existing intellectual property statues in order to incorporate protection for indigenous knowledge.[xiii] Despite an outpour of criticism from a wide variety of sources, the South African government recently elected to pass the Intellectual Property Laws Amendment Bill.[xiv] Unfortunately, it appears that the costs of implementing and enforcing the Intellectual Property Laws Amendment will highly outweigh the potential benefits of the legislation.

THE SAN PEOPLES, THE HOODIA PLANT, AND THE P57 PATENT

    The San peoples, also known as “Bushmen” or Basawara, have been acknowledged as the “First Peoples” of Africa,[xv] having inhabited various hostile environments across Southern Africa for over 20,000 years. [xvi] Today, approximately 100,000 San continue to live in Southern Africa, spread out across the nations of South Africa, Angola, Botswana and Namibia.[xvii] For many years, the San peoples survived in Southern Africa primarily as hunters and gatherers, and over the course of the millennia, the San have amassed a large trove of traditional knowledge. One prominent example of this valuable indigenous knowledge is ancient San folklore describing how to use the Hoodia cactus to stave off hunger.[xviii]

    Many hundreds of years ago (perhaps thousands of years ago), the San discovered that the Hoodia plant had appetite-suppressing qualities. The San considered this knowledge the collective property of the community, and are not opposed to sharing this information, as they have been known to freely provide this information to scientists and anthropologists in exchange for small gifts.[xix] Sometime in the 1930s, the San described the powerful effects of the Hoodia plant to a Dutch researcher, who would later publish it in a book.[xx] More than 50 years later, researchers for the South African Council for Scientific and Industrial Research (“CSIR”) discovered the Dutch anthropologists reference, and began the process of isolating the Hoodia’s hunger-supressing qualities.[xxi] Eventually, the CSIR was able to isolate the extract, and patented it under the name “P57”.[xxii] Since there was no law in place protecting indigenous knowledge in South Africa in 1995 when the CSIR patented P57, there was little the San could do to protect their knowledge of the powers of the Hoodia plant.[xxiii]

    Then, in 2001, the CSIR secured a worldwide patent on P57, and soon licensed the multi-million dollar commercial rights to the intellectual property to Phytopharm, a UK based company who in turn licensed the rights to North American pharmaceutical giant Pfizer Inc.[xxiv] Following a campaign by the Working Group of Indigenous Minorities in South Africa (WIMSA) to help protect the San’s indigenous knowledge, and to compensate the San for the use of this information, a comprehensive benefit sharing agreement was reached in 2003.[xxv] The agreement, negotiated by the South African San Council on behalf of the San peoples of Southern Africa, called for the CSIR to pay the San 8 percent of all milestone payments received by them through the licensing of the P57 patent, and 6 percent of all future royalties.[xxvi] Many analysts felt that the San made a mistake by agreeing to accept such a small percentage of the potential anticipated income derived from the P57 patent, whereas other analysts felt that P57’s developers did not owe the San people any compensation, so the San should be satisfied with any amount of compensation.[xxvii] However, in July 2003, Pfizer withdrew from the project and discontinued clinical development of the project, thus rendering the issue of the San’s compensation moot.[xxviii]

SOUTH AFRICA’S INTELLECTUAL PROPERTY LAWS AMENDMENT BILL 

    Following the high profile Hoodia case, the South African government realized that the traditional knowledge intellectual property rights of indigenous peoples were not being effectively protected or enforced by their existing laws. The South African government had to determine to what extent the current intellectual property laws are suitable for the protection of traditional knowledge or whether a sui generis, or stand-alone, system would be better suited for ensuring the appropriate protection of traditional knowledge in South Africa.[xxix] The process has been at least four years in the making, as the Department of Trade and Industry first prepared a draft of the proposed legislation in 2007.[xxx] Then, following three years of introspective review, the Bill came before the Portfolio Committee, which decided to redraft the Bill to correct some critical errors.[xxxi] Ultimately, the South African government chose to forego a sui generis approach dedicated to the protection of indigenous knowledge as a separate and distinct species of intellectual property.  Instead, the National Assembly drafted a proposal that would amend South Africa’s four existing intellectual property statutes to incorporate traditional intellectual knowledge as a form of intellectual property.[xxxii] The South African government held committee meetings to discuss the Intellectual Property Laws Amendment Bill, commissioned a Regulatory Impact Assessment and invited several organizations, including the World Intellectual Property Organization (WIPO), to comment on the proposed legislation.[xxxiii]

    According to Dr. Rob Davies, the Minister of Trade and Industry, South Africa’s Intellectual Property Laws Amendment Bill was designed to provide protection for indigenous knowledge through the intellectual property law system.[xxxiv] “The main thrust of the Bill is that no registration of IP that is based on [indigenous knowledge] will be able to be effected without 1) mandatory disclosure of the [indigenous knowledge] element, 2) prior informed consent by [indigenous knowledge] owners, and 3) without a benefit sharing agreement entered into with the relevant [indigenous knowledge] owners.”[xxxv]

    Under the Intellectual Property Laws Amendment Bill, the South African Copyright Act (1978), the Performers Protection Act (1967), the Trade Mark Act (1993), and the Design Act (1993) would be amended to include certain forms of traditional knowledge protection under the premises of the respective Acts.[xxxvi] Specifically, the four statutes would be amended as follows:

1. The Performers’ Protection Act would be amended to: (1) provide for the recognition and protection of traditional performances having an indigenous origin and a traditional character; (2) provide for the payment of royalties in respect of such performances; and (3) provide for recording traditional performances.[xxxvii]

2. The Copyright Act would be amended to: (1) provide for the recognition and protection of copyright works of a traditional character; (2) provide for the establishment of a National Council in respect of traditional intellectual property; (3) provide for a national database for recording traditional intellectual property; and (4) provide for the establishment of a national trust and a trust fund in respect of traditional intellectual property.[xxxviii]

3. The Trade Marks Act would be amended to: (1) provide for further protection of geographical indications; (2) to provide for the recognition of terms and expressions of indigenous origin and for the registration of such terms and expressions as trade marks; and (3) to provide for recording traditional terms and expressions.[xxxix]

4. The Designs Act would be amended to: (1) provide for the recognition and registration of traditional designs of indigenous origin; (2) create for this purpose a further part of the designs register; and (3) to provide for recording traditional designs.[xl]

Does the Intellectual Property Laws Amendment Bill effectively protect traditional knowledge?

    Over the past several years, many intellectual property organizations, scholars and consultants provided the South African government with comments pertaining to the Intellectual Property Laws Amendment Bill. In 2009, WIPO suggested that instead of amending the four existing intellectual property statutes, the DTI should instead adopt a sui generis approach to protect indigenous knowledge.[xli] Also in 2009, South Africa’s President commissioned a Regulatory Impact Assessment (RIA) on the Intellectual Property Laws Amendment Bill. The RIA concluded that unless a sui generis approach was taken, the cost of the legislation would outweigh any possible benefits that might flow from the TK Bill.[xlii] However, instead of following the advice of WIPO and the RIA, both of which called for a sui generis approach, the DTI commissioned another RIA, which came to the opposite conclusion.[xliii]

    On October 27, 2011, Dr. Davies delivered a speech before South Africa’s National Assembly on the Intellectual Property Laws Amendment Bill. Davies acknowledged that many stakeholders were in favor of the sui generis approach, but noted that the global debate on the issue was not nearing completion any time soon, and they could not afford to sit and wait for the global community to reach a consensus on the issue.[xliv] Accordingly, Dr. Davies encouraged the National Assembly to pass the Intellectual Property Laws Amendment Bill because failure to act would encourage further unabated exploitation of communities’ heritages by unscrupulous private interests.[xlv]

    Dr. Davies then responded to concerns regarding how the Intellectual Property Laws Amendment Bill would be implemented. Dr. Davies explained to the National Assembly that the Department of Trade and Industry was already developing a comprehensive outreach strategy to take the Bill to the people in the most simple and accessible manner. Dr. Davies then assured the parliament members that field workers would be deployed throughout South Africa’s nine provinces to help implement the Bill, and that any action by the Department of Trade and Industry would be in cooperation with the sister departments of South Africa’s government. Notably, Dr. Davies concluded his speech to the National Assembly without commenting on the projected costs associated with his implementation plan, or addressing how the Intellectual Property Laws Amendment Bill would be enforced. Nevertheless, Dr. Davies’ speech was enough to convince South Africa’s National Assembly to pass the Intellectual Property Laws Amendment Bill in November 2011.

What are the likely costs and benefits of South africa’s Intellectual Property Laws Amendment Bill?

    In Dr. Davies’ speech to the National Assembly, he listed four main benefits of using the existing legislative framework to cover indigenous knowledge, rather than creating a new law specifically to deal with traditional knowledge. First, if the Intellectual Property Laws Amendment Bill is successful, it will give power back to indigenous communities who are the rightful owners of indigenous knowledge.[xlvi] Another benefit of the Intellectual Property Laws Amendment Bill is that it establishes an Alternative Dispute Resolutions (ADR) system to deal with disputes.[xlvii] Thirdly, the Intellectual Property Laws Amendment Bill also provides for the establishment of appropriate structures to facilitate the implementation of the Bill when it comes into effect.[xlviii] Finally, the Intellectual Property Laws Amendment Bill is fully compatible with all international treaties to which South Africa is a party.[xlix]

    Unfortunately, many of South Africa’s intellectual property attorneys consider the “benefits” described by Dr. Davies in his parliamentary address as entirely unenforceable wishful thinking. Owen Dean, the incumbent Anton Mostert Chair of Intellectual Property Law at Stellenbosch University and a practicing intellectual property attorney in South Africa since 1974, has been quite vocal in his belief that the Intellectual Property Laws Amendment Bill is fundamentally flawed. Professor Dean believes that the Bill will not accomplish its objective of enabling and promoting the commercial exploitation of traditional knowledge for the benefit of the indigenous communities from which it originated, that the Bill is an exercise in futility, and that the Bill will be nearly impossible to enforce.[l]

    As Professor Dean points out, intellectual property ownership is based on the concept that the original creators of the works should be the owners of the intellectual property rights stemming from those works. However, the Intellectual Property Laws Amendment Bill appears to do just the opposite, by vesting ownership of intellectual property in traditional works within the State.[li]  Dr. Davies considered the establishment of appropriate structures to facilitate the implementation of the Bill when it comes into effect to be a benefit. Among these “structures” Dr. Davies was referring is the National Trust Fund for Traditional Intellectual Property that was established by the Intellectual Property Laws Amendment Bill. Under the Act, royalties arising out of the commercial use and exploitation of indigenous knowledge are paid into the fund and held in trust for certain purposes.[lii] However, the Intellectual Property Laws Amendment Bill does not mention paying any royalties from the fund to indigenous communities.[liii] “The fund is effectively a slush fund to be utilized according to the pleasure of the registrar. Meanwhile, the communities are deprived of the ownership and benefit of the works in question.”[liv] This factor alone should have been sufficient for South Africa’s National Assembly to vote against the law, but as Professor Dean and his colleagues point out, there are other red flags as well.

    In addition for calling for the creation of the National Trust Fund for Traditional Intellectual Property, Professor Dean suspects that the law will generate significant costs by creating an “enormous edifice of bureaucracy, councils, funds, trusts, databases and registration systems.”[lv] Considering that many IP attorneys feel that the system is not capable of being enforced, these additional government departments and programs represent an exercise in futility, and a waste of countless hours by the South African government.[lvi]

    Ultimately, the biggest flaw of the Intellectual Property Laws Amendment Bill, according to Professor Dean, is that they Department of Trade and Industry attempted to work indigenous knowledge protections into the existing statutes, rather than creating a stand-alone traditional knowledge act.[lvii]  “Unfortunately, this approach overlooks a fundamental and very basic principle of each of these acts, namely that they are based on the philosophy that new creative works can be protected for the benefit of their individual originators for a strictly limited period of time subject to the condition that, upon the expiry of the term of protection, they are surrendered to the public at large and become free for use by all” as part of the public domain.[lviii]  “Traditional works on the other hand,” Professor Dean continues, “are already in the public domain and are now to be plucked from it and become the private property of traditional communities who will be entitled to remuneration for their use forever hereafter.”[lix] To illustrate just how big of a problem this represents, Professor Dean even goes as far as suggesting that most intellectual property lawyers will advise their clients to simply ignore the provisions of the Intellectual Property Laws Amendment Bill and carry on as before, because any purported traditional knowledge right which have been created will simply not be capable of being enforced.[lx]

CONCLUSION

    Ideally, the benefits of South Africa’s Intellectual Property Laws Amendment Bill outweigh the costs of implementing the legislation. However, realistically, there are far too many obstacles preventing effective enforcement, thus, I agree with WIPO and with Professor Dean that costs of South Africa’s Intellectual Property Laws Amendment Bill likely far outweigh any potential benefits. WIPO is currently drafting a model law, which will ensure that indigenous knowledge is protected in a consistent manner internationally.[lxi] But since South Africa chose to pass the Intellectual Property Laws Amendment Bill before WIPO released it’s model law, only time will tell whether the recently passed amendments to the South African Copyright Act, the Performer’s Protection Act, the Trade Mark Act, and the Design Act are the proper vehicle for protecting traditional knowledge. However, on it’s face, the Intellectual Property Laws Amendment Bill will not provide indigenous communities such as the San with the intellectual property rights they desire, nor the compensation they deserve, and it is only a matter of time before the next corporation makes millions of dollars by misappropriating knowledge or biological material from indigenous communities.

WORD COUNT:  3048

---

[i] J. Michael Finger and Phillip Schuler, Poor People’s Knowledge: Helping Poor People to Earn from Their Knowledge at 25, World Bank and Oxford University Press (2003).

[ii] Dr. Rob Davies, How we’re trying to protect indigenous knowledge, Speech by Minister of the Department of Trade and Industry on Intellectual Property Laws Amendment Bill, October 27, 2011.

[iii] Stephen A. Hansen and Justin W. VanFleet, Traditional Knowledge and Intellectual Property: A Handbook on Issues and Options for Traditional Knowledge Holders in Protecting their Intellectual Property and Maintaining Biological Diversity, at 3 (July 2003).

[iv] Id.

[v] Tim Harris, South Africa: Intellectual Property Amendment Bill – Indigenous Knowledge Simply Won’t Be Protected By This Law, Democratic Alliance distributed by AllAfrica Global Media, October 28, 2011.

[vi] See Note 3, supra at 3.

[vii] Id.

[viii] Id.

[ix] Various Intellectual Property scholars have defined this practice as “bio-piracy”.

[x] Dr. Jane Anderson, indigenous traditional knowledge & intellectual property, Center for the Study of the Public Domain at 6 (2010).

[xi] Id. at 11.

[xii] See Note 2, supra.

[xiii] Natural Justice Blog, South African Parliamentary Committee Discusses Traditional Knowledge, available at http://natural-justice.blogspot.com/2010/09/south-african-parliamentary-committee.html (September 9, 2010)

[xiv] Owen Dean, The Mad Hatter in Wonderland: South Africa’s New TK Bill, Intellectual Property Watch, November 8, 2011.

[xv] Roger Chennells, Biodiversity and Perspectives of Traditional Knowledge in South Africa, WIPO SEMINAR ON INTELLECTUAL PROPERTY AND DEVELOPMENT at 1 (May 2, 2005).

[xvi] The Working Group of Indigenous Minorities in South Africa (WIMSA), Who are the San? available at http://www.wimsanet.org/about-the-san/who-are-the-san (accessed November 20, 2011).

[xvii] See Note 15, supra.

[xviii] Id. at 3.

[xix] Id.

[xx] Id.

[xxi] Id.

[xxii] Id.

[xxiii] Id.

[xxiv] Id. at 4.

[xxv] Id. at 5.

[xxvi] Id.

[xxvii] Id.

[xxviii] CITE

[xxix] See Note 13, supra.

[xxx] Owen Dean, South Africa: TK Legislation In The New Tradition, Intellectual Property Watch at 1, available at http://www.ip-watch.org/weblog/2011/10/06/south-africa-tk-legislation-in-the-new-tradition/ (October 6, 2011).

[xxxi] Id.

[xxxii] Linda Ensor, South Africa: Proposal to Protect Traditional Knowledge ‘Doomed’, Business Day distributed by AllAfrica Global Media, May 20, 2011.

[xxxiii] See Note 5, supra.

[xxxiv] See Note 2, supra.

[xxxv] Id.

[xxxvi] See Note 13, supra.

[xxxvii] The Republic of South Africa, INTELLECTUAL PROPERTY LAWS AMENDMENT BILL at 2 (March 29, 2010).

[xxxviii] Id.

[xxxix] Id.

[xl] Id.

[xli] See Note 5, supra.

[xlii] Id.

[xliii] Id.

[xliv] See Note 2, supra.

[xlv] Id.

[xlvi] Id.

[xlvii] Id.

[xlviii] Id.

[xlix] Id.

[l] Owen Dean, Folklore Funding Myth, Financial Mail (May 14, 2010)

[li] Id.

[lii] Id.

[liii] Id.

[liv] Id.

[lv] See Note 14, supra.

[lvi] Id.

[lvii] See Note 30, supra.

[lviii] Id.

[lix] Id.

[lx] See Note 14, supra.

[lxi] See Note 5, supra. 

 

Traditional Knowledge (”TK”) vs. Intellectual Property (“IP”): Should IP right be granted to TK? How should it be done? What are the problems with fitting TK into the IP system? – From the experiences of the Korean government policies

Traditional Knowledge (”TK”) vs. Intellectual Property (“IP”): Should IP right be granted to TK? How should it be done? What are the problems with fitting TK into the IP system? – From the experiences of the Korean government policies

Jongchul.Shin[1]

Introduction – What is the traditional knowledge and why it matters?

It`s difficult to clearly define traditional knowledge with words or a short phrase. Traditional knowledge commonly refers to knowledge associated with the environment rather than knowledge related to, for example, artworks, handicrafts and other cultural works and expressions.[2] It includes knowledge historically succeeded from ancestors, such as traditional medicine, traditional cultural expression and artifacts, information on plants or general materials, and so on.[3]

Pharmaceutical companies have become to understand that they can find cures from traditional knowledge of indigenous people.[4] Design companies also try to use unique symbols or cultural expressions from traditional knowledge.[5] In other words, the markets came to understand the value of traditional knowledge.

Developed countries have technologies and money to adapt and change traditional knowledge for more profit or value. By contrast, developing countries do not have enough skills and capital to develop their traditional knowledge, and sometimes they cannot understand the value of their traditional knowledge.

It seems that like intellectual property right (“IPR”) enforcement issues there are conflicts between developed countries and developing countries for traditional knowledge.

Why do we have controversies on whether an IP right should be granted to TK?

Developed countries want to use traditional knowledge without charge and limitation, but developing countries want to get compensation for the usage of traditional knowledge.

1) For granting IPR to TK – in the perspective of Fairness

Developing countries maintain that their traditional knowledge has been exploited by developed countries. They think that developed countries have used their traditional knowledge for benefits without consent and compensation. The usage is not fair and so an IPR should be given to traditional knowledge for fair compensation.[6]

2) Against granting IPR to TK – in the perspective of Efficiency

Developed countries maintain that they have developed more value-added things from traditional knowledge by adapting it. Even though they used traditional knowledge, they have made another derivative works. As a result, they have rights, such as patent or copyright on developed traditional knowledge. They think that traditional knowledge should be in the public domain for social welfare.[7]

What are the problems with fitting TK into the IP system? – From the experience of the Korean government policies

The Korea government has implemented an e-Government project to make the government more efficient and to allow people easy to access to knowledge.[8] One of the projects was to make the national knowledge system (www.knowledge.go.kr), which included traditional knowledge in the data base.[9] The project revealed IPR issues on traditional knowledge.

1) Who has the right of TK?

Some information in the data base was traditional knowledge, such as herbal information for cures, traditional expression, or design. Some people and organizations maintained their intellectual property right. However, it was difficult to prove whether they had a real right or not. Traditional knowledge is succeeded from generations to generations. For example, the herbal information for cures has been shared with people, so the ministry of health and welfare should have difficulty in deciding whether the traditional knowledge can belong to the specific people, organization, or the public domain.[10]

2) How we can decide a distribution method in the IP system?

Even though a government or a public authority can find that specific people or organizations can get IPR on public knowledge, the problem – how to distribute the benefit – is a more difficult matter. Generally, people in an area share traditional knowledge, so a distribution method can be controversial. For example, traditional patterns or symbols can be shared within the specific area. Ministry of Culture, Sports and Tourism could give the IPR for specific people or organization inheriting traditional knowledge from ancestor. But serious problems started after the government’s decisions: members in an organization or people began lawsuits with each other for more profits.[11]

3) How long and how much do we have to compensate for TK?

Finally, for how long and for how much should traditional knowledge be compensated for is a more difficult problems. The IPR system has two opposite characteristics – encouragement for innovation by monopoly and development of access for the public.[12] If more protection for IPR was given, the public access would be weaker, so the government or public authority needs to balance the two. In addition, unlike other IPR rights, such as patents or copyrights, traditional knowledge was not created in a specific time, so it is very difficult to decide from when we starts its protection.

How should the problems be overcome?

Solutions for the protection of the traditional knowledge problem in the IPR system can be divided into “positive protection” and “defensive protection.”[13] However, those two solutions can be overlapped in reality.

The preferences on the solutions can be different with the countries. Developed countries want to use traditional knowledge with less compensation, but developing countries want to get more compensation from traditional knowledge users.

1) Positive protection

Positive protection refers to the acquisition by the TK holders themselves of an IPR such as a patent or an alternative right provided in a sui generis system.[14] This can be helpful tool to make the holder of traditional knowledge get proper compensation. However, as aforementioned, positive protection has problems, such as, who has the rights of traditional knowledge and how long and how much compensation should be given to the holder of traditional knowledge.

2) Defensive protection

Defensive Protection refers to provisions adopted in the law or by the regulatory authorities to prevent IPR claims to knowledge, a cultural expression or a product being granted to unauthorized persons or organization.[15] By defensive protection, the holder of rights can define more easily the boundary of traditional knowledge. However, defensive protection can be huddle for the use and development of traditional knowledge. Considering that the best way to protect traditional knowledge is not preservation but innovation,[16] defensive protection seems to have limitation.

Conclusion

The positions on traditional knowledge can be different with the circumstances of the countries. If a country had more traditional knowledge but less technology to use it, then it would want to get more protection for traditional knowledge.

For example, the Korea government has a strategy on bio-diversity like this: even though we now do not have enough technology for bio-industries compared with other developed countries, we should support the position of developed countries hoping to use traditional knowledge (on bio-diversity) with less compensation and less limitation. Because we have a capacity to catch-up with the developed countries in the future, if we support the developing countries’ position now, then we will have difficulties in the future.[17]

To solve the traditional knowledge problem, the rights of a holder of traditional knowledge should be clearly defined and a compensation mechanism should be established. However, it seems difficult to harmonize the consensus between the holder and the user of traditional knowledge because the compensation and distribution mechanism of benefits for traditional knowledge is close to a zero-sum game between developed countries and developing countries.

---

[1] Mr. Shin is a JD applicant of Southern Illinois University School of Law. He is a director of the Korea Communication Commission and has worked at the Commission since 1998. He has experiences with the international affair bureau (OECD, APEC, and World Bank, etc.) and the Telecommunication bureau (Competition policy, License, M&A, etc.).

[2] Graham Dutfield, Protecting Traditional Knowledge and Folklore: A review of progress in diplomacy and policy formulation, 9-10, International Centre for Trade and Sustainable Development (ICTSD), (Oct. 2002).

[3] According to one expert, traditional knowledge (or what she calls “traditional environment knowledge”) is a body of knowledge built by a group of people through generations living in close contact with nature. It includes a system of classification, a set of empirical observations about the local environment, and a system of self-management that governs resource use. See Johnson, M, Research, Research on traditional environment knowledge: its development and its role, 3-4, Ottawa: International Development Research Centre (1992).

[4] Madecassol, a wound-healing agent developed from Centella asiatica, is used to treat burns, ulcers and leprous wounds and derived from a curing formula from the indigenous Malagasy. See, Manveen Puri, Hassan Masum, Jennifer Heys, Peter A Singer, Harnessing biodiversity: the Malagasy Institute of Applied Research (IMRA), 8, BMC International Health and Human Rights (2010).

[5] In 2001, Lego launched a new range of action figures called the Bionicle. Lego used a mix of Polynesian words – including several Maori words. On behalf of three Maori groups, a New Zealand lawyer wrote to Lego objecting to the use of the Maori words. The lawyer argued that the use of the words constituted a serious trivialization of Maori culture, especially when names that have spiritual significance were being used. Initially Lego rejected the complaint. However, following negative publicity, a representative went to New Zealand to meet with the Maori groups. Following the meeting, Lego agreed that it had acted improperly and dropped the use of the word Tohunga. It also agreed to not use Maori names in future versions of the toys. See, Kim Griggs, Maori Take On Hi-tech Lego Toys, BBC News, Sept. 26, 2001, available at http://news.bbc.co.uk/2/hi/asia-pacific/1619406.stm (last visited Nov. 12, 2011).

[6] Peter Drahos, Developing Countries and International Intellectual Property Standard-Setting, 765-771, The Journal of World Intellectual Property, Volume 5, Issue 5 (2002).

[7] Ragavan, Srividhya, Protection of Traditional Knowledge, 6-8, Minnesota Intellectual Property Review, MINN. PROP. REV. 1 (2001), available at http://mipr.umn.edu/archive/v2n2/ragavan.pdf.

[8] Korea e-government projects were planned and implemented by Ministry of Information and Communication from 1998 to 2008 and after the projects the Ministry of Information and Communication changed to Korea Communication Commission in 2008.

[9] Ministry of Information and Communication, Korea`s e-Government white paper, 26-32, Korea Government (2003).

[10] Ministry of health and welfare, Annual Report 2004, 113-114, Korea Government (2004).

[11] Ministry of Culture, Sports and Tourism, Annual Report 2003, 312-317, Korea Government (2003).

[12] The IP system is the mechanism that permits monopolies of the inventors for the limited period in exchange of publication to encourage new inventions. See, Robert P. Merges, Peter S. Menell, Mark A. Lemley, Intellectual Property Right in the New Technological Age, 18-34, (5^th ed., Aspen Publishers, 2009).

[13] Dutfield, supra. n. 2 at 2.

[14] Positive protection measures include (1) UNESCO-WIPO model provisions on National Law and Illicit of Expression of Folklore; (2) The Tunis Model Law on Copyrights in Developing Countries; (3) Database rights; (4) Global bio-collecting society; (5) Compensatory liability regime. See, Graham Dutfield, 31-38, Supra.

[15] See Dutfield, supra. n. 2 at 24-31, Defensive protection measures include (1) Disclosure of origin of generic resources and associated traditional knowledge and compliance with ABS regulation; (2) TK databases; (3) Banning patents on life; (4) Misappropriation regime.

[16] The preservation model seeks to harness intellectual property rights to preserve traditional culture in its authentic form, but the innovation model encourages tradition to be adapted to serve contemporary side. The innovation model can be better strategy than the preservation model to sustain traditional cultures because traditional culture will only endure to the extent that it retains meaning and value to its source communities. See Sean A. Pager, Folklore 2.0: Why Remixing Tradition is the Best Way to Preserve It, 1-6, http://www.law.stanford.edu/display/images/dynamic/events_media/Folklore_2_Why_Remixing_Tradition_is_the_Best_Way_%20to_Preserve_It.pdf

[17] Ministry for Food, Agriculture, Forestry and Fisheries, Issue paper on Nagoya Biodiversity summit 2010, 12-13, Korea Government (2010)

THE ENFORCEMENT AGENDA: WHY EXECUTING & IMPLEMENTING ACTA AS AN EXECUTIVE AGREEMENT IS A CONSTITUTIONAL FAUX PAS. BY: Rebecca Przygoda

I. INTRODUCTION  

            On October 1, 2011 a United States Trade Representative (USTR) Ambassador, Miriam Sapiro, signed The Anti-Counterfeiting Trade Agreement (ACTA) on behalf of the President of the United States. ACTA was signed as a Sole Executive Agreement with Ambassador Sapiro stating at the signing, “This does not require further legislation on our part”.[i] The issue is that this statement raises a myriad of constitutional concerns. The main concern at issue is where the President got the authority to sign ACTA as an Executive Agreement.  While, in regards to Intellectual Property, Constitutional law seems less than exciting, it is important to understand how the Constitution fits into the regulation and procedural scheme of intellectual property.

The President approved the signing of ACTA by the USTR, an executive office of the President, with absolutely no Congressional input, approval or ratification, which raised some major concerns with the IP community and members of Congress. The president has no independent constitutional authority over intellectual property agreements per Article I of The Constitution, and there is no long historical practice of making sole executive agreements in this area. It is unlikely that having been executed as a sole executive agreement was anything more than the Executive Branch’s (The Administration) way of compromising the supreme law of the land and the checks and balances system.

The Constitution gives primary authority over intellectual property matters to Congress.[ii] Dependent primarily upon how ACTA is construed, as a treaty or agreement, implicates the Constitutional procedure that is to be followed. The key element here is defining what ACTA really is and how it should have been executed and implemented per the Constitution. More importantly, right now, the Intellectual Property community is working very diligently, finessing its laws and agreements in an effort to bring both developed and developing countries together for the greater good.  ACTA is an enforcement mechanism needed to facilitate this purpose. If the President is allowed to continue this behavior the implications it will have on the IP community, especially in the US, could be catastrophic. It would undermine the goals of the IP community regarding the integration of general society’s input within IP enforcement, by circumventing the democratic process and it would pose dangers to the general health of society in regards to counterfeit items such as pharmaceuticals.

If ACTA was in fact executed improperly, and it was, it raises issues of applicability and enforcement. When this happens the power struggle in government continues, with the effects being felt by the general public. This is unacceptable and the fact that scholars in the IP community are having to deal with this is troublesome. The goal of this article is to lend some insight into what should have happened with the signing of ACTA per the Constitution.

II. ACTA and the Constitution       

            ACTA is described as a plurilateral agreement, which establishes an international legal framework for remedies applicable to infringements on Intellectual Property rights.[iii] It seems to encompass objectives that many of the signing countries wanted to reach. 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 and regulation of IPR infringing material on the Internet. With respect to the legal framework, ACTA establishes a strengthened standard that builds on the minimum standards of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).[iv] According to the USTR, this is everything the US and most of the other member countries wanted to achieve.[v]

            Article I section 8 of the United States Constitution, enumerates Congress’ power over regulating commerce with foreign nations and Intellectual Property and Congress’ inherent power to make laws.[vi] ACTA’s main component is IP enforcement laws. Under this premise it would follow that Congress should be the sole authority on the issue per Article I.

            Article II section 2 of the Constitution provides the President can, “by and with the Advice and Consent of the Senate, make Treaties, provided two thirds of the Senators present concur”.[vii] So far, it seems as though given the instrument at issue that Congress holds the ultimate power over ACTA and its execution and implementation. The following section dissects the requirements given ACTA’s provisions and options for execution and implementation.

III. How ACTA Could  be Executed

            There are three avenues available for ACTA execution and implementation, as a treaty, as a Congressional-executive agreement, or as a sole executive agreement. The problem is ACTA does not fit comfortably into any of these options without Congressional approval.

A treaty is defined in international law as a compact made between two or more independent nations with a view to the public welfare.[viii] An international agreement of the US must relate to the external concerns of the nation as distinguished from matters of purely internal nature.[ix] As noted above the Constitution gives the President the power with consent of the Senate to enter into treaties. If there is no Congressional consent, the treaty would not be binding on the US.[x]  In order for a law to be binding on the US, the must pass through Congress. There is one exception and that is the Sole Executive Agreement. So it would follow that if ACTA is classified as a treaty, which follows because it fits the criteria and has been eluded to as such many times over in articles and publications, it would require senate approval. At the signing of ACTA the USTR made it clear it would not seek any further ratification.[xi] This means ACTA cannot be considered a treaty binding on the US.

            In order for ACTA to be binding if it is not enacted as a treaty it must be enacted as one of two Executive Agreements, the avenue of choice in this instance. Executive Agreements can be used as an alternative to treaties if it is used in the context of a Congressional executive agreement. This is a “middle ground” agreement that still incorporates senate approval in a more lawmaking form.[xii] These agreements can take two forms, ex ante or ex post.^[xiii] In the ex ante case, Congress circulates the proposal through both houses in an effort to get approval for the President to negotiate and sign without actual consent required by a treaty.^[xiv] In the ex post case, Congress delegates to the President the authority to act on the proposal and subsequently present it to Congress for ratification after sending it through the same lawmaking process as ex ante.^[xv] Congressional-Executive agreements combine Article I law making powers of Congress and the Article II powers of the President.[xvi] By making the proposal circulate through the legislative process it can be used to move some of the more unfavorable proposals through the ratification procedure, those which may have a difficult time getting the needed two-thirds Senate approval. ACTA was not presented to Congress before the signing, and as stated earlier, the Administration has no intention of presenting it for further ratification. Again the President acted alone. This means as executed ACTA was a Sole executive Agreement.

            A Sole Executive Agreement is the only avenue left that could hold ACTA as a binding agreement. The problem here is that Sole Executive Agreements are only binding on the US in matters that are unilaterally designated to the President as enumerated in the constitution.[xvii] Here the President and the USTR are relying heavily on the President’s powers, per Article II, over international affairs.[xviii]  If the Administration looks at ACTA as a voluntary agreement, the US would have discretion to implement ACTA as needed to supplement already existing domestic laws. Presidential power over international affairs takes priority over the voluntary agreement.[xix] International agreements alone do not pose a problem because they are part of the unilateral power given to the President in the constitution, but when those international agreements involve mostly if not completely intellectual property it becomes a major concern. ACTA is a major concern because it is comprised completely of remedial measures and enforcement of intellectual property rights, thereby implicating Article I Congressional powers.[xx]

IV. How ACTA should Have Been Executed

The Administration gave three reasons why the President executed and implemented ACTA as an Executive Agreement. The defense of the USTR and the Administration’s actions rests first, on the idea that ACTA does not change any existing US laws. If ACTA does not change laws, then in the Administration’s view, there is no need to invoke Article I consideration. Second, it claims that the President’s plenary powers over foreign affairs governs these proceedings, and third, that the President is authorized to do so under the Trade Act of 1974.^[xxi] This is problematic because even though it does not appear to change domestic laws the enforcement of the laws within ACTA could foster confusion when it comes to deciding what types of remedial actions are proper for counterfeiting infringements and similar violations. It is also problematic on the precedential front. For instance, this sort of action in regards to trade agreements has never happened before. Here is some precedent concerning IP agreements, the World Trade Organization (WTO) Agreement, the multilateral WTO trade agreements that a country must accept as a condition of WTO membership, and the North American Free Trade Agreement (NAFTA) – were negotiated by the President and submitted to Congress under the terms of the Omnibus Trade and Competitiveness Act of 1988 (OTCA) and the Trade Act of 1974. The OTCA provided the President with authority to negotiate and enter into tariff and nontariff trade barrier (NTB) agreements until June 1, 1993, authority that was later extended to April 15, 1994, in order to complete the GATT Uruguay Round (P.L. 100-418, § 1102, 19 U.S.C. § 2902, as amended by P.L. 103-49).^[xxii]  These agreements were executed as Congressional executive agreements and still incorporated the necessary Congressional approval. With this sort of history it seems as though not getting the necessary approval from the Senate is an ulterior motive of sorts by the Administration.  Is it necessary to fabricate this “new” procedure for executing international trade agreements for ACTA when all along other similar agreements have been executed properly per requirements of the constitution? It will be interesting nonetheless to watch how the implementation of ACTA unfolds.

            ACTA negotiations have been ongoing since the Bush Administration and there has been no indication by either President that he planned to bring this proposal to the legislature in any form. However, ironically, earlier when the Bush Administration suggested it might reach a deal with Russia on nuclear arms reduction by sole executive agreement,then-Sen. Joe Biden wrote to Secretary of State Colin Powell insisting that the Constitution required Senate consent and implicitly threatening inter-branch retaliation if it was not given.The Bush administration complied.[xxiii] As current Vice- President, one would think this matter of circumventing Congress might spark the idea that this matter may be challenged in court, or even worse this move by the President may have established a precedent to bypass Congress on other international matters related to trade, intellectual property and communications policy. [xxiv]

            Just as recent as October 12, 2011, a mere eleven days after the signing of ACTA, Congress passes three more trade agreements with South Korea, Panama, and Columbia.^[xxv] These trade agreements were sent through the proper channels and approval processes, so what happened with ACTA? The answer is simple, the President made an obvious mistake and it looks as if he trying to further a less than transparent agenda.      

V. What This Means for the United States and Intellectual Property

            The Administration’s lack of respect for the separation of powers and the constitutional process means tough times ahead for Intellectual Property. Currently, Intellectual Property is struggling to find a “one size fits all” regulatory scheme to promote development worldwide. Scholars in all areas are working together to generate ideas that can be incorporated into the already existing framework. As with any group of individuals, there is much debate on what is the best avenue to travel to arrive at a cohesive end result. Factor in the problems within the Government and you get a recipe for disaster.

            For instance one area that has been addressed in the hopes to better IP development is the integration of the civil society into the scheme of IP rights and development, creating a more flexible regime instead of such a restricted top-down approach.^[xxvi] In an effort to create a more flexible system that allows IP rights to apply to the needs of the countries involved. This is a major part of the IP Development agenda to help less-developed countries to gain a little ground.[xxvii]

In any political structure cooperation among the members is a necessary part of a working democracy. If our elected officials disregard our inherent constitutional rights, such as the election of a legislature to represent the views of the people in the lawmaking process, they will certainly disregard other important rights. This would only strengthen the political figures at the top and force society to abide by laws and agreements that they essentially did not agree with. Once golden rules of management are breached the structure is sure to crumble. We, civil society, rely on our legislatures as our voice in matters such as enforcement of laws.

If there is no set interpretation of ACTA and how it should be executed and implemented the health of the public could be in danger. Already under scrutiny for the strict impositions it carries ACTA cannot afford to be ambiguous if applied. Proponents against ACTA heavily push as to the problems it will create by delaying necessary healthcare to less developed countries. Many developing countries have no domestic pharmaceutical manufacturing capacity and governments and patients rely on imported generic medicines. Generic competition is the main driver of pharmaceutical price reductions. It is a public health necessity that the trade in affordable and legitimate medicines functions smoothly and without undue burdens. If a patient misses a lifesaving drug, even due to temporary delays, there can be potentially life-threatening health repercussions.[xxviii]  

In the US there are already heightening issues in the pharmaceutical industry causing risk to the public health. Within the last month CBS has reported twice on the generic medicine shortage and the monopolization taking place in the pharmaceutical industry. “There are several reasons for the shortages. Pharmaceutical companies are cutting production of some generic drugs because they're less profitable than brand name drugs. Shortages also result from manufacturing and quality control problems. Some hospitals and suppliers even begin to hoard some drugs if they get a hint that a shortage is coming.”[xxix] This is not a good signal of things to come in the industry. If American doctors cannot get their patients the drugs they need here they will undoubtedly look to import. The question is whether ACTA when implemented will be effective as an enforcement tool ensuring safe generics or more cost effective drugs or if it will be, upon implementation, caught in the middle of the Washington power struggle.

VI. Conclusion

            ACTA essentially sets out remedies that are available for Intellectual Property crimes concerning counterfeiting on a global level. The Administration having executed ACTA as an executive agreement has done nothing more than compromise a necessary element in IP’s fight for a solid regulatory scheme that helps broad IP development. This article discusses not so much the elements of ACTA but the constitutional procedure that applies and its possible effects if incorrectly executed and implemented. Whether ACTA is described as a treaty or agreement is really inconsequential in the end because the core of the matter is that ACTA involves intellectual property and that invokes Article I authority of Congress. 

This means Congress, not the Executive has the authority to regulate the matter. As stated in this article nothing in the Constitution gives the Executive this type of authority involving intellectual property. What is the worst part of this dilemma is that ACTA is really not a controversial matter outside the intellectual property framework. It quite possibly would have been easily approved in Congress without any problems. Instead of following the proper procedure the Administration seemingly tried to circumvent issues with Congress that did not exist.

Relying solely on the ideas that the Executive has the power over international affairs and the fact ACTA does not “seem” to change any domestic laws, seems to be nothing more than an ill-placed excuse. In a time when the President and Congress are at odds anyway this does not look to be an aisle crossing move on the part of the President. On its face ACTA may not change laws but as applied no one knows what effect it will have on domestic laws concerning intellectual property laws. One thing is certain its effect will be fatal when it gets road-blocked in Congress. This road-block is inevitable unless in a last ditch effort it is taken to the Supreme Court as a constitutional question of interpretation.

 Because an Executive agreement binds the US only internationally and not domestically, this will raise concerns and cause questions to arise at a time when implementation is crucial. This brings to mind the recent workings of the United States in the global market and leaves to question whether the President’s move in regards to ACTA was just a way to manipulate the agreement to fit his overall objective in the global market. The problem is this does not help Intellectual Property as a whole to reach their intended result. It simply creates issues like the one addressed in this article.

            Word count 3,320      

 

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[i] Ambassador Sapiro, Miriam, “Remarks by Ambassador Miriam Sapiro at the Anti-Counterfeiting Trade Agreement (ACTA) Signing Ceremony”, http://www.ustr.gov/about-us/press-office/speeches/transcripts/2011/remarks-ambassador-miriam-sapiro-anti-counterfeiting. October 2011.

[ii] US Constitution,  Art. I sec. 8  http://www.usconstitution.net/const.html#A1Sec8

[iii] Flynn, Sean. 2011. ACTA's Constitutional Problem: The Treaty That Is Not a Treaty (Or An Executive Agreement). PIJIP Research Paper no. 19. American University Washington College of Law, Washington, D.C.

[iv] Office of the United States Trade Representative, Executive Office of the President, ACTA Meeting US Objectives, http://www.ustr.gov/about-us/press-office/fact-sheets/2011/september/acta-meeting-us-objectives. Oct. 2011.

[v] Id.

[vi] US Constitution,  Art. I sec. 8  http://www.usconstitution.net/const.html#A1Sec8

[vii] Id @ Art.II sec. 2

[viii] Barron’s Law Dictionary, 5^th edition

[ix] Id. Citing the Restatement Second of Foreign Relations Law of the US §40 (1965)

[x] Flynn, Sean. 2011. ACTA's Constitutional Problem: The Treaty That Is Not a Treaty (Or An Executive Agreement). PIJIP Research Paper no. 19. American University Washington College of Law, Washington, D.C. (@ 13)

[xi]Ambassador Sapiro, Miriam, “Remarks by Ambassador Miriam Sapiro at the Anti-Counterfeiting Trade Agreement (ACTA) Signing Ceremony”, http://www.ustr.gov/about-us/press-office/speeches/transcripts/2011/remarks-ambassador-miriam-sapiro-anti-counterfeiting. October 2011. 

[xii] Flynn, Sean. 2011. ACTA's Constitutional Problem: The Treaty That Is Not a Treaty (Or An Executive Agreement). PIJIP Research Paper no. 19. American University Washington College of Law, Washington, D.C. (@ 13)

[xiii] Id. At 14

[xiv] Id at 14

[xv] Id at 14

[xvi] Id. At 14

[xvii] Id.at 15

[xviii] Art. II US Constitution

[xix] Office of the United States Trade Representative, Executive Office of the President, ACTA Meeting US Objectives, http://www.ustr.gov/about-us/press-office/fact-sheets/2011/september/acta-meeting-us-objectives. Oct. 2011.

[xx] US Constitution,  Art. I sec. 8  http://www.usconstitution.net/const.html#A1Sec8

[xxi] Flynn, Sean. 2011. ACTA's Constitutional Problem: The Treaty That Is Not a Treaty (Or An Executive Agreement). PIJIP Research Paper no. 19. American University Washington College of Law, Washington, D.C. at 20

[xxii] Grimmett, Jeanne L. , Why Certain Trde Agreements Are Approved as Congressional-Executive Agreeemetns Rather than as Treaties, April, 2002, http://fpc.state.gov/documents/organization/9553.pdf

[xxiii] Jack Goldsmith and Lawrence Lessig, Anti-counterfeiting agreement raises constitutional concerns Network News , The Washington Post 3/26/2010

 

[xxiv] Id.

[xxv] http://www.ustr.gov/about-us/press-office/press-releases/2011/october/statement-us-trade-representative-ron-kirk-congres, press release by USTR, October 13, 2011

[xxvi] Chon, Margaret, Seattle University School of Law Legal Paper Series # 11-03 Published in The Berkeley Electronic Press, Vol. 12, No. I (Jan. 2011)

[xxvii] Id.

[xxviii] http://www.msfaccess.org/sites/default/files/MSF_assets/Access/Docs/ACCESS_briefing_ACTA_ENG_2010.pdf, The Campaign for Essential Access to Medicines October 2010.

[xxix] The CBS Evening News, Jonathon LaPook, “More than 200 critical drugs in Short supply”, Sept. 27, 2011

Counterfeit Drugs Will Kill You: An Advertisement Brought to You by Big Pharma

Written By:  Spiros Alikakos

Word Count: 3,990

 

Overview

 

            Imagine that your child does not feel well. You take her to the pediatrician’s office, where the pediatrician diagnoses your child with an iron deficiency.  After reassuring you that your child will be fine, the pediatrician recommends an iron-based injection treatment weekly for the next ten weeks, and you reluctantly agree.  Around the seventh week, your child seems lethargic and in worse health than before you took her to the physician.  You take her to the emergency room, but it is too late—the medication the pediatrician was giving your child was a highly toxic counterfeit medication.  Authorities examined the packaging, but everything looked legitimate.  After further inquiry you find that this particular medication is from a batch of counterfeit substandard medications bought by the manufacturer from an Internet pharmaceutical company that no longer exists.

            Although the above scenario seems absurd in developed countries, a healthy, 22-year old woman in Argentina died of liver failure due to liver failure because of toxic counterfeit iron-based injections that she was administered due to anemia. [1]  Upon investigation, Argentinian authorities found that there was falsified paperwork that allowed these counterfeit injections to pass as branded medication.[2]  Counterfeit pharmaceuticals account for approximately 10% of the global market share of pharmaceuticals sold.[3]  In developed countries, this number drops to less than 1%, while developing countries have as much as 10% counterfeit market share values.[4] 

            There is no question that counterfeit medication is a global issue.  The Anti-Counterfeiting Trade Agreement (“ACTA”) is a TRIPS-Plus treaty that will supposedly help curb counterfeit medication at member countries’ borders, and impose penalties that will create a high deterrence factor for counterfeiters.  Through clandestine meetings and non-disclosure statements, many business leaders helped negotiate the final draft of ACTA.  Through a broader definition of the term “counterfeit trademarked goods,” a lower threshold for border patrol agents to mistake legitimate drugs as “suspect,” and a higher liability for third-parties working with suspected infringers, the business leaders may have accomplished their greatest feat—pleasing the public by reducing the amount of available substandard medications traded internationally, and pleasing Big Pharma’s financial goals by reducing the available legitimate generic medications available in the pharmaceutical market, thus forcing the world to have no choice but to buy branded medications from the powerful pharmaceutical industry (“Big Pharma”).

            This paper begins with a brief overview of counterfeit pharmaceuticals and their global effects.  After illustrating the differences in counterfeit medications, this paper describes ACTA and issues that the public should have with its enforcement strategies on counterfeit medications.  Finally, Big Pharma’s goals and its ability to negotiate a strategy to use ACTA to reduce its market competition are explained. 

 

Defining Counterfeit Pharmaceuticals and Their Effects on Global Access to Medicine

 

Is there really an international issue with counterfeit pharmaceuticals?

 

            The obvious answer to this question is yes, but to really understand how grave a problem counterfeit medicine is globally, one must examine the various statistics on the counterfeit pharmaceutical trade, and examine what definitional standards are being used in compiling these statistics.  Finally, the effects of counterfeit pharmaceutical—both benefits and drawbacks—will be described.

            “The Pharmaceutical Security Institute estimates that seizures of counterfeit drugs in 2007 increased by 24% on the previous year.”[5]  Furthermore, there are estimates that global sales of counterfeit pharmaceuticals were upwards of $75 billion in 2010, representing a 90% increase from 2005 levels.[6]  Another statistic from the World Health Organization (WHO) estimates annual earnings from counterfeit pharmaceuticals at over $32 billion.[7]  Additional studies report that more than 50% of the pharmaceuticals randomly bought from pharmacies are counterfeit, and the percentages are even higher for Internet pharmacy sales.[8]  The reason that these percentages seem extremely high, or vary greatly is because there is no accepted method to track an illegal activity.[9]  Big Pharma frequently suppresses counterfeit pharmaceutical statistics when those statistics do not suit Big Pharma’s marketing needs.  Therefore, data can only be compiled in comparison to branded drugs that are sold, and there is no standardization to account for these statistics globally.[10] 

What are “counterfeit pharmaceuticals,” and how do they compare with “substandard pharmaceuticals?”

 

            Another issue with compiling statistics on counterfeit pharmaceuticals is that there are multiple definitions for a counterfeit medicine, while a substandard medicine is defined narrowly.  According to WHO, “substandard medicines are products whose composition and ingredients do not meet the correct scientific specifications and which are consequently ineffective and often dangerous to the patient.”[11]  Included in this definition of substandard medicine are genuine branded medicines that are not up to par with specific medical standards due to counterfeiting, negligence, human error, and all other reasoning that would make the medicine medically insufficient.[12] 

            Alternatively, the WHO defines counterfeit medicines as medicines that are deliberately and fraudulently mislabeled with respect to identity and source.[13]  In this light, it is the intent of a manufacturer/supplier to misrepresent a brand or legitimate generic medicine.  Included in this definition are pharmaceuticals which are substandard per the packaging and medical claims, genuine medicines that are expired and may be of little or no medical benefit, and medicines which provide the same standard as brand medicine but are fraudulently labeled or packaged.[14] 

Therefore, a counterfeit medicine is not necessarily a substandard medicine.  This is a common misconception because the term “counterfeit” means to unlawfully forge, copy, or imitate an item.[15]  Counterfeiting is an intellectual property concept that is separate from issues concerning safety, quality, and efficacy of medicines.[16]  The European Union uses the term “falsified medicinal products” to differentiate substandard medicines from counterfeit medicine.[17]  A falsified medicinal product may contain substandard or falsified ingredients, ingredients in the wrong dosage, or no active ingredients.[18]  Due to this lack of a standard meaning for counterfeit medicines, it is not only difficult to ascertain the true depth of the counterfeit pharmaceutical problem, but it also becomes difficult to enforce policy against counterfeit pharmaceuticals because the positive and negative aspects of counterfeit pharmaceuticals become just as muddled as its definition.

Using the WHO’s definition of counterfeit medicine, what are the effects of counterfeit medicine on global health?

 

            Clearly, there is no ascertainable benefit to substandard medicines; however, as previously stated, not all counterfeit medicines are substandard.   After defining counterfeit medicines to include medicines that are not substandard, the benefits of counterfeit pharmaceuticals may be illustrated.[19]  There are many poor people in developing countries who are in desperate need of life-saving medicine.  Although these people will not be able to afford the brand medicines, it is possible that they can afford counterfeit medications that have the same medical benefits as the branded or legitimate generic medication. 

Aside from altruistic counterfeiters, there is really no incentive for a counterfeiter to create counterfeit drugs with genuine ingredients in the correct proportions; therefore, it is unlikely that counterfeiters would create drugs that are not substandard.  On the other hand, a counterfeiter usually has very low overhead costs, no research and development costs, and no advertising or marketing costs; thus it is possible for a counterfeiter to create counterfeit drugs with genuine ingredients at a fraction of the cost of legitimate medicines.  Providing a quality counterfeit drug using genuine ingredients to the masses may prove profitable if the counterfeiter can avoid getting caught. Assuming that some counterfeiters create drugs using genuine ingredients, there is a real benefit to people unable to obtain costly medicine. 

Since life-saving medicine is an expensive luxury to many people in developing countries, and many life-style enhancing medicines are expensive even in developed countries, there may be a market for counterfeit drugs with genuine ingredients.  This is not to advocate for counterfeit medicine—the intellectual property rights of the holder are injured, and the rights holder deserves a remedy, but there is not necessarily a health risk simply because the medicine is counterfeit. Counterfeit is a term of art in intellectual property law, not a medical quality standard.

            Focusing now on vital medicines for life threatening illness, the cost of a well-known anti-retroviral drug regimen in the United States is $12,000 annually.[20]  Unlicensed generic companies sell the same drug, providing the same medical benefits as the above-illustrated drug, for under $200 annually.[21] Since the medical benefit of the unlicensed generic drug is the same as the medical benefit of the branded drug in the United States, the issue affecting the extreme price difference is the intellectual property rights of the company in the United States.   This is similar to the hypothetical counterfeiter creating drugs with genuine ingredients—albeit infringing on the rights of the intellectual property rights holder, the counterfeit drug provides life-saving medicine to people who could not otherwise obtain it.

There is a tension between the world (developed and developing countries alike) having financial access to necessary medicine and respecting the intellectual property rights of the pharmaceutical industry.  The greatest benefit of counterfeit medicine is the ability for the public at large to have financial access to life-saving medications, but this is at the cost of the intellectual property rights holder.  In addition, this assumes that the counterfeiter acts in good faith and creates counterfeit medicines with genuine ingredients.  Unfortunately, since the profit margin is likely much higher by creating substandard medicines, the majority of counterfeiters likely produce substandard medicines. 

            Although counterfeit medicine benefits many poverty stricken patients in developing countries, there is a plethora of negative effects of counterfeit medicine.  The most basic counter-argument to the above-stated benefit is that while counterfeit pharmaceuticals may provide the same medical benefits as real standardized branded and legitimate generic medicines, there are definitely counterfeit medicines which are expired, repackaged and sold to the public; and there are also counterfeit medicines which are substandard and do not provide the medical benefits claimed, and will likely cause damage to the recipient’s health.[22] 

            Looking at the European Union’s term “falsified medicine,” (or fake medicine) one can see the negative impact of counterfeit medicine.  Fake medicine is a product that contains either substandard ingredients, no ingredients, or ingredients in the wrong dosage to have the claimed medical effect.[23]  The three biggest issues with fake medicine are (1) that it can lead a patient into believing he is recovering; (2) it can directly harm patients; and (3) it can lead to mutations of the disease which in turn lead to drug resistance.[24]  Medicines that do not produce an immediately observable therapeutic effect allow for a false sense of convalescence.[25]  For example, the patented drug Lipitor is frequently prescribed to lower cholesterol in patients over the course of several months.  This type of drug is ideal to counterfeiters because the effect of a substandard form (or possibly a placebo) will go unnoticed for a long time.[26]  A much darker example of fake medicine is with Malaria patients.  Malaria causes high fevers; therefore, treatment for Malaria lowers the fevers.  In a batch of counterfeit antimalarial pills in southeast Asia, the counterfeit drug did contain an active ingredient which lowered the fever, but did nothing for the Malaria, which went untreated causing the death of many patients who thought they were being treated for their Malaria.[27]  This is an example of a counterfeit medicine that is substandard or fake—given the ingredients, it could not have provided the medical claim of recovering from Malaria.

            Since fake drugs are a sub-set to counterfeit drugs, it would seem that differentiating the two would alleviate the negative aspect of fake drugs causing more harm to a patient’s health than good; however, that is much easier said than done.  Purveyors of counterfeit drugs have advanced technologically, and have mastered the art of manufacturing counterfeit medicine and replicating brand and legitimate generic packaging, which makes it difficult to discern the real medicine from the fake without actually testing the product.[28] In addition, elusive Internet pharmaceutical companies have also helped proliferate the counterfeiters’ art because it is much more difficult to find the originating source.[29]  Although technology such as RFID tags, SMS text messages from standardized branded and legitimate generic companies to suppliers with authentication codes, and stricter enforcement of medications at points of entry exist, all have there own issues and implementation barriers, which range from increased costs to increased infrastructure.[30]  India, for example, is home to around 22,000 small drug producers[31], but due to patent and trademark infringing counterfeiters, its legitimate generic market suffers.

 

ACTA: Can it help counterfeit drug enforcement?

 

What is ACTA?

 

            The Anti-Counterfeiting Trade Agreement (“ACTA”) is an intellectual property trade agreement that attempts to maximize the checks and balances member countries use specifically for trademark and copyright infringement internationally.[32]  ACTA is considered a TRIPS-Plus agreement because it “expands international law on civil enforcement, digital enforcement, border measures, and criminal enforcement of IP law.”[33]  A member country may implement broader enforcement of intellectual property rights than set by ACTA, but there is no mention of the ability to set less enforcement.[34]  ACTA negotiations set out to accomplish three main goals: (1) to enhance international cooperation between member countries; (2) to promote sound enforcement practices by all member countries regarding intellectual property rights protection; and (3) to strengthen the legal framework for intellectual property rights enforcement in the areas of criminal enforcement, enforcement at the border, civil and administrative actions, and distribution of copyrighted material on the Internet.[35]

What does ACTA have to do with pharmaceuticals? 

            Regarding the pharmaceutical industry, counterfeit medications (both substandard and simply counterfeit) would fall under ACTA’s general definition of a counterfeit trademark good.

(d) counterfeit trademark goods mean any goods, including packaging, bearing without authorization a trademark which is identical to the trademark validly registered in respect of such goods, or which cannot be distinguished in its essential aspects from such a trademark, and which thereby infringes the rights of the owner of the trademark in question under the law of the country in which the procedures set forth in Chapter II (Legal Framework for Enforcement of Intellectual Property Rights) are invoked.[36]

 

This definition adds to the confusion of a standard definition for counterfeit medicine (as previously discussed) because it has a very broad range of what can be considered counterfeit and suspected as counterfeit, and it also places the “counterfeit trademark goods” as infringing “under the law of the country in which the procedures… are invoked.”[37] 

            Pharmaceuticals are protected by drug patents, and through a note referencing the scope of ACTA’s border measures, ACTA states, “[t]he Parties agree that patents and protection of undisclosed information do not fall within the scope of this Section.”[38]  This exemption is likely due to the border detainment issues in 2008 and 2009 involving the wrongful detainment of shipments of generic medications to and from developing countries, which are generally known as the “Dutch Seizures.”[39]   During the Dutch Seizure cases, Dutch border officials judged generic medicines that were in transit under the fiction that the generic medicines were manufactured in the Netherlands, per their own judicially created IP law.[40]  Instead of allowing lawful generics to travel from India to their destination countries in Africa and Latin America, the border officials impounded and delayed the shipments.[41]  This caused people eagerly awaiting necessary drugs to go without, resulting in worse health conditions and death.

            The IP laws used to prevent lawful generic medicines from reaching their destination in the Dutch Seizures have similar aspects to ACTA’s border measures, even though under ACTA patents are excluded from its Border Measures.

Article 16:     Border Measures

 

      1.    Each Party shall adopt or maintain procedures with respect to import and export shipments under which:

(a)   its customs authorities may act upon their own initiative to suspend the release of suspect goods; and

(b)  where appropriate, a right holder may request its competent authorities to suspend the release of suspect goods.

 

       2.     A Party may adopt or maintain procedures with respect to suspect in-transit goods or in other situations where the goods are under customs control under which:

(a)   its customs authorities may act upon their own initiative to suspend the release of, or to detain, suspect goods; and

(b)  where appropriate, a right holder may request its competent authorities to suspend the release of, or to detain suspect goods.[42]

 

Although ACTA specifically excludes patents, under ACTA’s definition of counterfeit trademarked goods, legitimate generic medicine may be detained when in-transit through an ACTA member country.  Generic medicines frequently use similar packaging, and depending on the active ingredient in the formula, may even have a similar name as the brand version.[43]  Therefore, a border agent could use trademark infringement to act upon his own initiative and suspend a shipment of “suspect” legitimate generic medication on the mistaken belief that it is a counterfeit medicine.[44] 

Theoretically, this would lead to less counterfeit medication because ACTA allows for a broad range in its definition of counterfeit trademark goods and its enforcement through its border measures, but it will also likely lead to detainment of many lawfully created generic medicines.  This may also create a fear amongst shopping for affordable legitimate generic medicines from abroad because there will always be a fear that the generic pharmaceuticals will simply be detained in the in-transit country as “suspect.”  Big Pharma will gain market share through the international pharmaceutical customers’ reliance on brand medications, while taking the credit for helping to structure ACTA’s enforcement strategy in reducing some substandard medications.

Furthermore, ACTA exposes third-parties to greater liability when they provide various goods and services to medical suppliers accused of infringing protected intellectual property rights.[45] 

“[E]ach Party shall provide that, in civil judicial proceedings concerning the enforcement of intellectual property rights, it judicial authorities have the authority, upon a justified request of the right-holder or the judicial authorities, at lease for the purpose of collecting evidence, relevant information as provided for in its applicable laws and regulations that the infringer or alleged infringer possesses or controls.  Such information may include information regarding any person involved in any aspect of the infringement or alleged infringement and regarding the means of production of distribution of the infringing or allegedly infringing goods or services, including the identification of third persons alleged to be involved in the production and distribution of such goods or services and of their channels of distribution.”[46]

 

This further provides a disincentive for pharmaceutical supply chain actors to conduct business with any companies that could possibly be suspected as infringers.  In the pharmaceutical context, this is again a double-edged sword: while forcing legitimate actors in the medical trade to ensure that they are working with legitimate sources through the supply chain, ACTA will also slow (if not prevent) legitimate, life-saving generic medicine from getting to its final destination.  This will likely increase the need to rely on brand medication, or simply go without the required medicine.

            Additionally, legitimate generic companies will suffer because other actors in the supply chain will be weary of working with companies that could be accused of infringement for fear that they may be liable as well.  The allegation of assisting in trademark infringement may be enough to deter various businesses in the supply chain from conducting business with legitimate generic pharmaceutical companies, but the possibility of criminal aiding and abetting to an innocent party who may actually be working with a counterfeiter is likely enough to deter business from working with suspect pharmaceutical companies.[47]

Big Pharma: The Consummate Negotiator

            After illustrating the key problems with ACTA and its issues in protecting the world population from counterfeit medicine, there is a very common theme with almost every ACTA issue discussed—although ACTA has the potential to decrease the amount of substandard and life-threatening counterfeit drugs, there is always a strong likelihood that legitimate generic drugs will fall privy to ACTA detainment, thus preventing legitimate generic drug companies from doing business.

How was ACTA negotiatied?

            ACTA was negotiated in secret by a group of “cleared advisors” who were not necessarily government actors, nor disinterested parties regarding the methods and definitions of ACTA.  An October 28, 2010 letter to President Barack Obama from a group of eighty law professors criticized ACTA as being a “backroom, special interest deal undertaken in this case on behalf of a narrow group of U.S. content producers…”[48] Given the lack of public opinion and oversight that a much more transparent negotiation process would entail, it is not surprising that the public questions ACTA enforcement.

Who were the “cleared advisors?”

            The above-mentioned cleared advisor list was the group who were not only allowed to view ACTA drafts and documents not publically available, but the cleared advisors also participated in the negotiations by giving input into the policies involved.  In regards to the pharmaceutical industry and the effects that ACTA has on counterfeit medicine, it is interesting to point out the amount of Big Pharma companies who were cleared advisors.  Amongst other industry leaders, Big Pharma had cleared advisors from companies including Eli Lilly and Company; Merck & Company, Inc.; Schering-Plough Corporation, S.C.; Johnson & Son, Inc.; Pfizer Inc.; Abbott Laboratories, Inc.; and Johnson & Johnson.[49]

            These cleared advisors helped to draft ACTA’s language and policies, but many advisors were interested parties.  Specifically, the Big Pharma companies benefit through the broad definition of counterfeit trademarked goods, the border measures allowing in-transit member countries to apply their laws regarding suspected infringement, and creating fear of working with companies that may be suspected of infringement because this creates additional barriers for the legitimate generic pharmaceutical companies.  If counterfeit medicine companies and legitimate generic companies are reduced, then the greatest benefit is to Big Pharma because the international public will either have to buy from Big Pharma or go without medicine. 

            Similarly, the cleared advisors seemed to represent the developed countries.  Although it is up to the individual countries to decide whether to ratify ACTA, it seems as if the meekest voice in the negotiations would be the developing countries that arguably have the greatest need for legitimate quality generic medicine.  If Big Pharma was protecting its intellectual property rights, was there anyone protecting the right to medicine that the Malaria patient who cannot afford brand antimalarial pills has in obtaining quality generic medicine, or the immeasurable population who have a human right to quality medicine?

Summation

            Counterfeit medicine is a serious global issue because everyone in the world should have access to quality pharmaceuticals, but unfortunately this is not the case.  Although this paper concludes on a cynical note (that Big Pharma was looking out for its own interest in negotiating ACTA), that is not entirely the case.  The purpose of this paper was to illustrate the difficulty that ACTA and any intellectual property rights enforcement agenda following ACTA has in reducing the amount of dangerous substandard and fake counterfeit medicine in the world. 

            Beginning with the difficulty in defining counterfeit medicine and establishing that some counterfeit medicine is actually beneficial to suffering people in developing countries, this paper argues that although intellectual property rights are important to the rights holders, there is also a human right to obtaining quality medicine.  Therefore, there is a tension between these groups.

            Next, this paper explained ACTA and how it will affect people who rely on low-cost legitimate generic medicines (and even some counterfeit medicines) to survive.  It also reasoned that possibly narrowing the definitions of counterfeit trademark goods with respect to the discussed definition of counterfeit medicine, and implementing a higher standard of who is labeled an suspected infringer may help to reduce the frequency of mistaken detainment of legitimate generic drugs.

            Finally, this paper gave some motives Big Pharma had in negotiating ACTA through its cleared advisors, thus narrowing the pharmaceutical market competition through ACTA’s broad strokes in intellectual property enforcement strategies.  Again, this paper was not meant to blame Big Pharma for ACTA’s structure in pursuing counterfeit pharmaceuticals—Big Pharma was not the sole architect for ACTA, nor did Big Pharma play the only role in arguing in favor of strong protection for intellectual property rights regarding ACTA counterfeit pharmaceutical strategy.  However, Big Pharma’s role may give additional credence that instead of a good balance of intellectual property rights protection with the protection of the human right to quality medicine, Big Pharma will likely financially benefit given ACTA’s current structure. 

---

[1] World Health Organization, Counterfeit Drugs Will Kill! www.who.int/impact/resources/ImpactBrochure.pdf (Oct. 6, 2011), P. 3.

[2] Id.

[3] Alan Clock, Pharmaceutical Counterfeiting a Global Healthcare Menace: A New Technology Tool.  http://www.xstreamsystems.net/images/Pharmaceutical%20Counterfeiting-A%20Global%20Healthcare%20Menace.pdf. (October 10, 2011).

[4] World Health Organization, Counterfeit Drugs Will Kill! www.who.int/impact/resources/ImpactBrochure.pdf (Oct. 6, 2011), P. 3.

[5] Julian Harris, Philip Stevens, & Julian Morris, Keeping it Real, 7 (Int’l Policy Network, 2009).

[6] Id.

[7] Kevin Outterson & Ryan Smith, Counterfeit Drugs: The Good, the Bad, and the Ugly, 16 Alb. L.J. Sci & Tech. 525, 528 (2006).

[8] Counterfeit Drugs Will Kill! at 3.

[9] Counterfeit Drugs: The Good, the Bad, and the Ugly, at 528.

[10] Id.

[11] WHO, Medicines: Counterfeit Drugs, http://www.who.int/medicines/services/counterfeit/overview/en/ (Nov. 14, 2006).

[12] Id.

[13] Id.

[14] Alan Clock, Pharmaceutical Counterfeiting a Global Healthcare Menace: A New Technology Tool, http://www.xstreamsystems.net/images/Pharmaceutical%20Counterfeiting-A%20Global%20Healthcare%20Menace.pdf. (last accessed October 10, 2011).

[15] Black’s Law Dictionary (Bryan A. Garner, ed., 9th ed., iPhone/iPad/iPod Touch v. 2.0.0).

[16] Charles Clift, Combating Counterfeit, Falsified and Substandard Medicines: Defining the Way Forward?, http://www.chathamhouse.org.uk/, 9 (Nov. 2010).

[17] Id. at 12.

[18] Id.

[19] Counterfeit Drugs: The Good, the Bad, and the Ugly, at 528.

[20] Id.

[21] Id. at 537.

[22] Keeping it Real, at 8-9.

[23] Combating Counterfeit, Falsified and Substandard Medicines: Defining the Way Forward?, at 12.

[24] Id. at 10.

[25] Counterfeit Drugs: The Good, the Bad, and the Ugly, at 540.

[26] Id.

[27] Keeping it Real, at 10.

[28] Counterfeit Drugs: The Good, the Bad, and the Ugly, at 528.

[29] Donald deKieffer, Trojan Drugs: Counterfeit and Mislabeled Pharmaceuticals in the Legitimate Market, 32 Am. J. L. and Med. 325, 325-334 (2006).

[30] Keeping it Real, at 18-21.

[31] Id. at 9.

[32] Margot E. Kaminski, An Overview and the Evolution of the Anti-Counterfeiting Trade Agreement (ACTA), P. 2, (Jan. 1, 2011), http://www.wcl.american.edu/pijip.

[33] Id. at 6

[34] ACTA- Dec. 3, 2010, Ch. 1, Sec.1, Art. 2.1, p. 2

[35] Office of the United States Trade Representative, ACTA: Meeting U.S. Objectives

[36] ACTA- Dec. 3, 2010, Ch. 1, Sec.2, Art. 5(d), p. 3

[37] An Overview and the Evolution of the Anti-Counterfeiting Trade Agreement (ACTA), at 2.

[38] ACTA- Dec. 3, 2010, Ch. 2, Sec.3, Art. 13, Note 6, p. 9.

[39] Sean Flynn & Bijan Madhani, ACTA and Access to Medicines, P. 5, (Oct. 6, 2011), http://www.wcl.american.edu/pijip.

[40] Brook K. Baker, ACTA: Risks of Third-Party Enforcement for Access to Medicines, P. 3-4, (Oct. 1, 2010), http://www.wcl.american.edu/pijip.

[41] Id.

[42] ACTA- Dec. 3, 2010, Ch. 2, Sec.3, Art. 16, p. 10

[43] ACTA: Risks of Third-Party Enforcement for Access to Medicines, at 11.

[44] ACTA and Access to Medicines, at 5.

[45] Id. at 6

[46] ACTA- Dec. 3, 2010, Ch. 2, Sec.2, Art. 11, p. 7-8.

[47] ACTA: Risks of Third-Party Enforcement for Access to Medicines, at 11.

[48] Ltr. From Brook Baker, et. seq., to Barack Obama, President of the United States, ACTA Negotiation, 1 (Oct. 28, 2010) (http:wcl.american.edu/pijip/go/academics10282010).

[49] James Love, Who Are the Cleared Advisors That Have Access to Secret ACTA Documents?, (Submitted March 13, 2009), http://keionline.org/print/315 (October 10, 2011).

 

 

ACTA Enforcement and Counterfeit Drugs: Where Enforcement Ends Help Begins?

Written by: Marcus Noles

Introduction

            When it comes to ACTA and international Intellectual Property (IP) enforcement against counterfeit pharmaceuticals it could be said “there can be too much of a good thing.” The goal of this paper is not criticize enforcement of IP rights held by pharmaceutical manufactures, but to explore the negatives associated with enforcing international IP rights against counterfeit medications under ACTA. There is no doubt there are plenty of positive aspects to enforcing international IP rights of pharmaceutical companies against counterfeiters, but in a civilized world these positives should be weighed against the negatives that are also associated with enforcing these IP rights. For many people, especially the impoverished, the negatives of enforcement may outweigh the positives.

The World Health Organization (WHO) defines counterfeit medications to include products with the correct ingredients or with the wrong ingredients, without active ingredients, with insufficient or too much active ingredient, or with fake packaging.[1] These medicines include those that are deliberately and fraudulently mislabeled with respect to identity and/or source.[2] All kinds of medications, both branded and generic, have been counterfeited. [3] This is no small issue. These counterfeit medications can be found everywhere in the world and include anything from treatment for life threatening illnesses to antihistamines.[4] Incidents of counterfeit medications in industrialize countries, such as the U.S., are extremely low, but the presence of counterfeit drugs in developing countries is much higher. This is due to many reasons including the lack of availability of generic medications and the price of branded drugs to an impoverished population.

All counterfeit medications are not substandard medications. WHO defines substandard medications as products whose composition and ingredients do not meet the correct scientific specifications and which are consequently ineffective and often dangerous to the patient.[5] Substandard medications can result from negligence, human error, insufficient human and financial resources or counterfeiting.[6] Therefore substandard medications may be a result of counterfeiting, but not all counterfeit medications are substandard. In fact some counterfeit medications are equivalent to branded or generic drugs.

            The first section of this paper discusses some of the benefits and negatives associated with counterfeit drugs. The three factors addressed under this topic will be the need for counterfeit medications, the dangers of counterfeit medications, and the cost of counterfeit medications to drug companies. The second section will address the effects of suspect medication seizure at country borders under ACTA. There are three factors discussed under the second section including the fact that some of the seized drugs are legitimate, the seizure of the drugs deprives the people in need from access, and the benefit that some substandard drugs are intercepted. The third section will discuss the cost of compliance and education under ACTA. This section will also include an analysis of three issues including the cost of new laws, cost to educate enforcers, and the loss of counterfeit drug availability to citizens with no other alternatives.

    I. Benefits and Costs Associated With Counterfeit Drugs

 In 2005 World Bank estimated over 1.4 billion people, one quarter of the developing world population, lived below the international poverty line.[7] In 2005, this international poverty line was defined as $1.25 a day.[8] Many of the people below the international poverty line are vulnerable to disease, suffer from malnutrition, and are deprived of much needed medications. It is estimated that disease associated with poverty accounts for forty five percent of the disease burden in the poorest countries, and nearly all of the deaths are either treatable with existing medicines or preventable in the first place.[9] The impoverished are either deprived of these medications because they are not available or they are too expensive. Access to the essential medicines which could help with the suffering and death caused by curable diseases is patchy, with an estimated thirty percent of the world population lacking regular access to existing drugs.[10] Therefore people below this property line depend on counterfeit medications to help subsidize the lack of availability of brand or generic medications. In many situations counterfeit medications are the only option available. The people below the poverty line and some above it would rather take their chance with counterfeit medications than sit back and suffer from whatever issue they have because legitimate drugs are unavailable. It seems human nature to take a risk with counterfeits if they are the only option and there is a possibility the counterfeit medication received will not be substandard. In many cases these counterfeit medications are effective and save lives. As with most issues the good effects are often over looked, and the negatives take center stage.

The production of counterfeit medications often begins in developing countries where IP rights are non-existent, weak, or not enforced.[11] The unregulated markets flourish. Counterfeit medications are extremely profitable because there is such a demand for cheap pharmaceuticals worldwide.[12] In fact counterfeit drugs make up approximately thirty percent of all the medications sold in the majority of developing African nations.[13] This demand and the sale of these counterfeit medications create an income for many people who without the counterfeit trade would have no income. It does not only create income for impoverished people at the production level but also at the distribution level. Many developing nations do not have infrastructure in place to provide the needed medications, and unlike big pharmaceutical companies counterfeiters are willing to take the journey into the undeveloped back country to distribute their counterfeit medications. Assuming the counterfeit medications are not substandard this provides the impoverished people with cheap medication, and provides the counterfeiters with some income. Everyone is happy at this level. The problem arises when the drugs are substandard.

Although there are benefits, counterfeit medications have many negatives associated with them. In a general sense they pose a public health risk. This is due to the fact that many counterfeits are substandard and the drugs or chemicals contained in them can be dangerous or ineffective. The most common effect of these drugs is the failure to provide successful treatment, which occurs when the drug contains an insufficient quantity of the active ingredient, or the delivery mechanism does not function correctly.[14] The effects can vary from prolonged sickness to death. The impoverished people of many developing nations are prone to illnesses, such as malaria or HIV/AIDS, partially due to substandard living conditions and are more likely to suffer from the adverse effects of counterfeit drugs. For example, in South Africa counterfeit anti-malarial pills were found that contained a drug to temporarily lower the fever of the user, but they did not treat the malaria.[15] The users were tricked into the belief they were getting better, but in reality their malaria was going untreated and getting worse.[16] These medications can cause direct harm to the user as well. For examples, paracetamol cough syrup contaminated with antifreeze has killed hundreds of people since 1990. These counterfeit drugs can take basically any form and be dangerous to both children and adults. For example, as of March 2009 over 80 children have died in Nigeria from ingesting a teething mixture that was substandard.[17] These deaths and stories are tragically due to counterfeit medications.

Counterfeit medications also cost pharmaceutical companies in many ways. The most obvious would be that counterfeit medications take up part of the market and this affects the number of units of the medication the pharmaceutical companies sell. By selling fewer units due to counterfeiting pharmaceutical companies have to charge more for the medicine to recoup their expenditures for research and development. In 2003 the United Kingdom-based Anti-Counterfeiting Group estimated that pharmaceutical companies lost 5.8% of annual revenue due to counterfeiting, and it is estimated these number are even higher in the current market.[18] Given the global pharmaceutical market exceeds $500 billion a year, the loss from counterfeiting to pharmaceutical companies likely exceeds $30 billion dollars a year.[19]

In the long run counterfeit medications can cost pharmaceutical companies more money in research and development. When counterfeit medications are substandard and contain insufficient active ingredients their use can cause viruses to have an increased resistance to drugs.[20] This only leads to drug resistant strains which current medications will not be effective on and places entire populations at risk. In one example the director of infectious diseases at a Belgium hospital found that 30 of the 100 AIDS patients he examined in the Democratic Republic of the Congo had virus strains that resisted the standard medications.[21] In the long run this will increase cost of medications for the mutated disease because new vaccines will have to be created and tested. It is estimated the cost of developing and testing a new pharmaceutical product is upwards of $800 million.[22] This is a huge barrier when the majority of the customers for the new vaccines would be the people below the poverty line who could not afford to buy the new medications if created. Also, in many instances pharmaceutical companies are reluctant to invest money in developing a new drug for these mutated strains, because they fear their new drug will just be counterfeited and they will not be able to recoup the cost. So there is no benefit for the company to invest their time and money to develop the new medications.

Now that the benefits and negatives of counterfeit medications have been discussed, it should be obvious international enforcement of IP rights for medication is needed to protect consumers from dangerous counterfeit drugs. When analyzing enforcement a balance should be found between the positives and negatives of counterfeit medications. With the arrival of ACTA it seems the scale is tipped in favor of less access to both legitimate medications and counterfeit medications for the impoverished people of the world. This limitation of access comes from various methods of enforcement under ACTA which will be discussed in the follow sections.

    II. Effects of Suspect Medication Seizure at Country Borders Under ACTA

Access to medication is needed by everyone in the world at some point in time. One of the most serious threats to access of medication comes from ACTA raising the Trade-Related Aspects of Intellectual Property (TRIPS) requirements for border seizures of suspect products.[23] TRIPS mandates countries put in place procedures to seize suspect counterfeit, trademark and copyright goods in response to prima facia evidence from the right holder.[24] ACTA provides that a country shall adopt or maintain procedures with respect to import and export shipments under which: (a) its customs authorities may act upon their own initiative to suspend the release of suspect goods; and (b) where appropriate, a right holder may request the competent authorities to suspend the release of suspect goods.[25] The notable difference between TRIPS and ACTA is ACTA allows for custom authorities to act upon their own initiative where TRIPS requires prima facia evidence from the right holder. Footnote six of ACTA states for the purpose of this Agreement, patents are not in the scope of this section.[26] Initially this may seem to protect medications, but in reality medications are also subject to trademark laws which are not exempt from the border measures section of ACTA.

The exclusion of patents from the border measure section of ACTA was spurred from the “Dutch Seizures”, where lawful shipments of generic drugs to and from developing nations were seized.[27] The seizure was not temporary either, some of the medications were seized for months and procedures for their destruction were initiated.[28] These drugs and their shipments were legal in the countries they were associated with and by seizing the so called suspect goods the custom officials deprived the people of needed medications. As stated earlier the exclusion of patents does not solve the problem because as stated above these lawful generics could still be seized on the grounds they infringe on trademark rights. This detriment occurs through ACTA’s dramatic expansion of TRIPS border measure requirements, including requiring the authorization of seizures in cases where border agents “suspect” a medicine’s label of being “confusingly similar” to a brand, which will increase the risk of seizures of legitimate medicines.[29]

The overall problem with the border measure section of ACTA is it places too much control in the hands of custom officials who are not educated in IP rights. This problem places the loss on the people of the countries who need these medications. Many of the people who are in need of the medications do not have months or even weeks to wait for custom officials to determine if the medications are counterfeit. The viruses and diseases they have do not wait.

The benefit of ACTA’s border measures is that custom officials will intercept some substandard and equivalent counterfeit drugs. This will prevent many dangers from reaching the market, but in this process many legitimate drugs will be seized as well. The effects of fake or substandard counterfeit drugs can be somewhat overwhelming. One paper estimates there are 700,000 deaths from malaria and tuberculosis a year are attributed to fake drugs.[30]

There must be a balance between these two aspects of border measures. Many people below the poverty line are in need of these drugs before they are ever manufactured and seizure only prolongs their sickness or closes the window to use the medication entirely. The effects of some substandard counterfeit medications are devastating, but would it be better for some of these counterfeit drugs to make it through customs than to deprive people of legitimate drugs that might save their lives because they are seized by customs. The people who most need these drugs are just looking for a chance to get better. They do not care if this chance comes from counterfeit medications or legitimate brand or generic medications. It needs to be determined what is more valuable catching counterfeit medications or possibly providing someone with medicine that could save their life. The requirement of prima facia evidence under TRIPS seems like a more realistic measure for enforcing IP rights, because it requires evidence from the rights holder before the goods should be seized.  Also, another option to consider is it takes time for shipments to reach their final destination, so a procedure could be put in place where a small amount of the drugs are seized and tested or verified before pulling the whole shipment. This would take the cooperation and communication of multiple countries but when there are thousands of lives are at stake it seems a small price. This would allow the drugs to continue in route to the people who need them while it is determined if they are counterfeit. In reality this would be difficult due to various reasons and laws in different countries, but it is time to start thinking outside the box and find a solution that helps the impoverished people who need these drugs have access to them.

     III. Cost of Compliance and Education Under ACTA

Cost of compliance is hard to determine, and cannot be broken down into any exact standard. This is because the cost of compliance is not only linked to monetary value but should also include a humanitarian aspect. Through compliance and education it is possible many counterfeits could be found and removed from the market. This removes many dangers but it also removes the only hope some people have. In cases where the counterfeit medications, equivalent to brand medications, are removed from the market, the people who would have received them possibly loss their only chance for help. Yes, this would protect the IP right holders, but what is supposed to protect the people relying on these counterfeit medications, for them the cost of compliance could be their life.

Chapter III of ACTA titled “Enforcement Practices” requires countries to commit recourses to create specialized expertise on IP enforcement within its competent authorities responsible for the enforcement of IP rights.[31] In order to comply many countries especially developing countries would have to educate officials and a police force to enforce IP rights. Many officers and officials do not know how to recognize or address complicated issues with IP rights. Also, enforcement will decrease the income of many people who make or sell the counterfeit medications. In many situations in poorer countries it is hard to get officials to enforce IP rights because they do not want to take a working man’s income away, or sometimes the counterfeiter is who the official or his family get their medication from. Through enforcing the law the officials, their friends, or their family members maybe losing access to medication and that is not a cost many officials are willing to pay. If counterfeits are ever going to be eliminated or controlled people must first have access to reasonably priced legitimate drugs. ACTA also requires countries to commit resources to convince their citizens of the importance of IP as currently configured.[32] Both of these educational requirements come at a high cost due to the fact they drain much need money away from developing countries. This money could be used for various others tasks such as creating infrastructure to help people have better access to medication. There is no doubt education is important but conditions and access to medications have to improve before education will be effective. 

            Enforcement of ACTA could also cost many countries access to generic medications. Although patents are excluded from ACTA border measures, trademark and copyright claims can still be used to block generic medications from reaching those in need. For example, in 2009 German officials seized and held shipments of the generic drug Amoxicillin passing through Germany to developing countries.[33] The drugs were held four weeks because officials were confused by the similarity of the generic name Amoxicillin to the brand name Amoxil.[34] This one seizure cost the people in need of the drug four weeks just because the names were similar. Generic medications are very important to developing countries because they offer more affordable medication to impoverished citizens. For example, a few years ago the cost of treatment for HIV/AIDS by patented drugs per patient per year was between $10,000-15,000 in developed countries.[35] Generic producers in developing countries were able to provide them for as low as $300 per year, and now this generic cost has dropped to $100-150 per year.[36] If developing countries are able to make or import these generic drugs at these low costs, access to medicine significantly increases.[37] Availability of generics is a huge deal because it allows the people below the poverty line medications they can afford, but they must first have access to generics and if this access is lost it will once again leave the poor with no other options.

ACTA’s injunction provision requires all ACTA members to put in place legal elements enabling authorizes in one country to issue injunctions preventing goods from entering commerce in a third country without the third country’s officials determining whether the item infringe on its laws.[38] This could also cost many developing countries access to generic medications, because many times the laws in developing countries are much more lenient than those in developed countries. This would allow officials in a developed country to seize legally produced drugs that are not even entering their countries market and prevent them from reaching their destination. Once again this compliance with ACTA places the cost of loss of access to drugs on the shoulders of the impoverished who need these drugs.

Conclusion

            In many situation counterfeits are bad and possibly dangerous, but for some people without access to generic or brand medication counterfeits are their only hope. The poorest people in the world are the ones who physically suffer or gain or the most from enforcement measures whether from elimination of substandard counterfeits, seizure of generics, or removal of equivalent counterfeit. IP right holders do lose from counterfeits as well but their loss is more monetary. Therefore, while implementing IP enforcement agenda these impoverished people should be on everyone’s mind that is involved. The consequences of substandard counterfeit medications are devastating and everyone agrees something has to be done to stop their effects but ACTA may take enforcement a step too far and for the poorest people in the world access to medication and help may very well begin where enforcement ends.            

 

 

 

---

[1] World Health Organization, Medicines: spurious/falsely-labeled/falsified/counterfeit (SFFC) medicines, Fact Sheet No. 275, January 2010, http://www.who.int/mediacentre/factsheets/fs275/en/index.html

[2] Id.

[3] Id.

[4] Id.

[5] World Health Organization, Substandard and counterfeit medications, Fact sheet No. 275, November 2003, http://www.who.int/mediacentre/factsheets/2003/fs275/en/

[6] Id.

[7] Shaohua Chen & Martin Ravallion, The Developing World Is Poorer Than We Thought, But No Less Successful in the Fight against Poverty 34 (World Bank Policy Research, Working Paper No. 4703, 2008), http://siteresources.worldbank.org/JAPANINJAPANESEEXT/Resources/515497-1201490097949/080827_The_Developing_World_is_Poorer_than_we_Thought.pdf (documenting by region a general reduction in the number of poor living below $ 1.25 a day from 1.9 billion in 1981 to approximately 1.4 billion in 2005

[8] Id.

[9] Julian Morris, Phillip Stevens, Alec van Gelder, Incentivizing Research and Development for the Diseases of Poverty, International Policy Network, Page 5

[10] Julian Morris, Phillip Stevens, Alec van Gelder, Incentivizing Research and Development for the Diseases of Poverty, International Policy Network, Page 6

[11] Amanda Chaves, A Growing Headache: The Prevalence of International Counterfeiting Pharmaceutical Trade in Developing African Nations, Suffolf Transnational Law Review, 2009

[12] Id.

[13] Id.

[14] Julian Harris, Philip Stevens, Julian Morris, Keeping It Real – Combating the spread of fake drugs in poor countries, Page 10, May 2009

[15] Id.

[16] Id.

[17] Id.

[18] Kevin Outterson, Ryan Smith, Counterfeit Drugs: The Good, The Bad And The Ugly, page 6, 2006

[19] Id.

[20] World Health Organization, Medicines: spurious/falsely-labeled/falsified/counterfeit (SFFC) medicines, Fact Sheet No. 275, January 2010, http://www.who.int/mediacentre/factsheets/fs275/en/index.html

[21] Julian Harris, Philip Stevens, Julian Morris, Keeping It Real– Combating the spread of fake drugs in poor countries, Page 11, May 2009

[22] Julian Morris, Phillip Stevens, Alec van Gelder, Incentivizing Research and Development for the Diseases of Poverty, International Policy Network, Page 10

[23] Sean Flynn and Bijan Madhani, ACTA and Access to Medicines, Washington University College of Law, http://rfc.act-on-acta.eu/access-to-medicine

[24] Sean Flynn, ACTA’s Threat to Access to Medicines, page 5, http://infojustice.org/archives/5719

[25] Anti-Counterfeiting Trade Agreement, Dec. 3 2010, http://www.dfat.gov.au/trade/acta/Final-ACTA-text-following-legal-verification.pdf

[26] Id.

[27] Rens Andrew, Collateral Damage: The Impact of ACTA and the Enforcement Agenda on the world’s poorest people, American University International Law Review, 2011

[28] Intervention by India, Agenda item “M” – Other Business- Public Health dimension of TRIPS Agreement,  Feb 2009, http://ip-watch.org/weblog/wp-content/uploads/2009/03/intervention-by-india

[29] Sean Flynn, ACTA’s Threat to Access to Medicines, page 5, http://infojustice.org/archives/5719

[30] Julian Harris, Philip Stevens, Julian Morris, Keeping It Real– Combating the spread of fake drugs in poor countries, Page 11, May 2009

[31] Andrew Rens, Collateral Damage: The Impact of ACTA and the Enforcement Agenda on the World’s Poorest People, American University International Law Review, page 5, 2011

[32] Id.

[33] Id.

[34] id

[35] Martin Khor, Patents, Compulsory License and Access to Medicines: Some Recent Experiences, Third World Network, February 2007

[36] Id.

[37] Id.

[38] Sean Flynn and Bijan Madhani, ACTA and Access to Medicines, Washington University College of Law, http://rfc.act-on-acta.eu/access-to-medicine

Acting Out-of-Line on ACTA

Acting Out-of-Line on ACTA

Craig W. Griffin

I. Introduction

Crack! “Dastardly horseflies! I certainly cannot wait for summer to be over so these darn pests will be relegated to my memories instead of their all-too-frequent positions biting into my neck!”

“Just calm down,” James Madison sighed as he shot a dirty look at Benjamin Franklin. “You are getting far too cranky in your elder years, Ben. We have business left to address. Where was I? Oh, yes, we were discussing treaties.”

Thomas Mifflin, delegate from Pennsylvania, cut in: “I would like to be able to ensure that my patents on paper products are enforceable abroad. Hence, I believe that the new government should have broad powers to negotiate agreements with other nations that protect intellectual property.”

“We have already provided for international agreements in the Treaty Clause, Tom,” Madison responded.

“Who wants to sit here with these horseflies in the heat trying to get two-thirds of the Senate to agree to a treaty about paper? Besides, I like to do my negotiating in private, if you know what I mean.” Franklin winked.

“Fine, Ben, we will let you negotiate trade agreements on behalf of the President in private if you promise not to tell us what you mean,” Madison retorted. “I am sure that the authority for such action can be found in this document, anyways.”

Unfortunately for modern Presidents, the above exchange never occurred during the Constitutional debates. In fact, the only direction with which Americans are left regarding international agreements is located in the Treaty Clause of the United States Constitution, which states, “[The President] shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur. . . .”¹ Recently, though, the Anti-Counterfeiting Trade Agreement (ACTA) was signed by the United States in the form an executive agreement and outside of the confines of the treaty ratification process set forth in the Constitution.² If the Constitution never explicitly mentions executive agreements, though, what is the legal justification for such actions by the President?

In the following sections, this paper explores the historical background on the use of executive agreements to bypass the requirements of the Treaty Clause of the United States Constitution. It then goes on to detail the negotiating and implementation process that took place with respect to ACTA. By juxtaposing the requirements and results of ACTA against the limits of the executive power to create such international agreements outside of the Article II treaty process, a determination is made that the implementation of ACTA via executive agreement is inappropriate.

II. Background on the United States Treaty Power

The United States of America, like every other nation, has an interest in promoting its local goods abroad and ensuring the existence of foreign markets for these domestically produced wares. While trade and its related intellectual property protections can undoubtedly be furthered by the unilateral action of one nation that is taken under the hope of reciprocating action by others, the more traditional approach to achieving trade-related policy objectives overseas comes through the form of international agreements such as treaties.

In the United States, the Constitution creates an explicit mechanism for approving international agreements in the Treaty Clause.³ That provision grants the President the power to enter into treaties with foreign nations provided that he or she obtains the “advice and consent” of two-thirds of the members of the Senate.⁴ Obtaining this supermajority in the Senate is quite difficult, and the process does risk entangling international negotiations with domestic political battles. Hence, a simple negotiation for a trade deal could be turned into a time-consuming ordeal that serves only to undercut the authority and prestige of the President in the eyes of both the American public and heads of state abroad.

The Constitution, though, makes no explicit reference to any other means of creating a binding international agreement. Neither does any evidence exist in the debates from the Constitutional Convention of 1787 which indicates that the Framers ever pondered another mechanism for creating international agreements outside of the treaty ratification framework provided in Article II. Likewise, the public debates regarding the ratification of the then-proposed Constitution reveal no mention of executive agreements or other forms of international agreement besides treaties. In fact, both John Jay and Alexander Hamilton explicitly defended the treaty power as invested by Article II in both the President and the Senate.⁵ Hamilton, acknowledging criticisms of the bifurcated treaty approval process, noted the following:

One ground of objection is the trite topic of the intermixture of powers; some contending that the President ought alone to possess the power of making
treaties. . . .

With regard to the intermixture of powers, I shall rely upon the explanations already given in other places. . . . I venture to add, that the particular nature of the power of making treaties indicates a peculiar propriety in that union. Though several writers on the subject of government place that power in the class of executive authorities, yet this is evidently an arbitrary disposition; for if we attend carefully to its operation, it will be found to partake more of the legislative than of the executive character, though it does not seem strictly to fall within the definition of either of them. . . . The power in question seems therefore to form a distinct department, and to belong, properly, neither to the legislative nor to the executive. The qualities elsewhere detailed as indispensable in the management of foreign negotiations, point out the Executive as the most fit agent in those transactions; while the vast importance of the trust, and the operation of treaties as laws, plead strongly for the participation of the whole or a portion of the legislative body in the office of making them.⁶

 

Thus, not only is the idea that the President can unilaterally enter into agreements not expressly mentioned in the Constitution's text, but the idea also was explicitly rejected by the Framers at the time of ratification. From where, then, did the idea that the President can enter into international agreements outside of the Article II treaty process get its start?

In spite of the lack of textual evidence in the Constitution itself explicitly referencing the creation of agreements with other nations other than via treaties enacted under the Treaty Clause, other channels for the creation of international agreements date back almost as far as the nation itself. Thomas Jefferson, America's third President, noted the following:

It is desirable, in many instances, to exchange mutual advantages by legislative acts rather than by treaty; because the former, though understood to be in consideration of each other, and therefore greatly respected, yet when they become too inconvenient, can be dropped at the will of either party; whereas stipulations by treaty are forever irrevocable but by joint consent let a change of circumstances render them ever so bothersome.⁷

 

Jefferson, though, makes reference to “legislative acts.”⁸ These enactments, often called congressional-executive agreements,⁹ would be different than those created through the typical treaty process because these agreements would only carry the weight accorded to run-of-the-mill laws on the books—laws which may be altered at will by any future legislative enactment. They would not carry the weight and nearly inviolable nature that is inherent in treaties.

Presidents have, however, even found the typical legislative process to be too burdensome to bother them in the enactment of some agreements. Hence, a class of international agreements referred to as Presidential or sole executive agreements was born.¹⁰ Presidents utilizing this pathway to creating an agreement claim the authority not on the basis of some legislative grant of power but instead upon one of the powers expressly granted to the President in Article II. In particular, Presidents have asserted the authority to conclude international agreements on their own accord under the guise of the President's general executive authority in Article II, Section 1 of the Constitution; his role as Commander in Chief of the armed forces in Article II, Section 2, Clause 1; the President's ability to negotiate treaties and, presumably, to make agreements as a part of the negotiating process in Article II, Section 2, Clause 2; his ability to receive ambassadors and other public ministers in Article II, Section 3; and the President's duty to “take care that the laws be faithfully executed” in Article II, Section 3.¹¹

Sole executive agreements, though, are constitutionally suspect in the minds of many legal scholars.¹² Courts, however, have generally taken a more deferential view by allowing sole executive agreements to displace conflicting state laws.¹³ However, courts have generally held that such agreements cannot displace prior conflicting acts of Congress.¹⁴

 

III. The Creation of ACTA

The Anti-Counterfeiting Trade Agreement (ACTA) is an international trade agreement that was recently signed by Australia, Canada, Japan, Republic of Korea, Morocco, New Zealand, Singapore, and the United States, while representatives from the European Union, Mexico, and Switzerland also expressed their support for the pact.¹⁵ The goal of the agreement is to enhance the enforcement of intellectual property rights in signatory nations as a means of preventing piracy and counterfeiting.¹⁶

The agreement was reached outside of the confines of existing intellectual property treaties and organizations like the World Intellectual Property Organization, though, because of the staunch resistance of some nations that are also parties to those treaties.¹⁷ Instead, the agreement was crafted under a shroud of secrecy among nations that were predisposed to share particular views in relation to the enforcement of intellectual property rights.¹⁸ The negotiations themselves were closed to the public, and draft texts of the agreement were shielded from public view.¹⁹

Perhaps fearing opposition to ACTA as a result of these less-than-transparent and rather undemocratic negotiations, President Obama has decided to implement ACTA not by submitting it to the Senate for formal ratification as a treaty or even to both houses of Congress as a congressional-executive agreement, but instead he has decided to execute ACTA as a sole executive agreement.²⁰ The United States Trade Representative has asserted three justifications for implementing ACTA as a sole executive agreement, namely “(1) the agreement will be consistent with existing U.S. law; (2) the President has “plenary” powers over foreign affairs; and (3) the President is authorized by virtue of the Trade Act of 1974.”²¹ As discussed in detail in the following section, though, each of these justifications falls short under careful scrutiny.

IV. Analysis

The United States Constitution states, “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States shall be the supreme Law of the Land. . . .”²² The text refers to “treaties.”²³ The power of a President to make “treaties,” though, is expressly conditioned upon the approval of the agreement by two-thirds of the Senate.²⁴ With respect to ACTA, the President has never sought Senatorial approval, nor have any plans been disclosed to indicate that he will try and seek the consent of two-thirds of that body in the future. Therefore, the President's move to sign ACTA cannot be justified on the basis of the Article II treaty power.

The Constitution also references “Laws of the United States” which are made in accordance with the terms of the Constitution.²⁵ The Constitution, though, only creates one lawmaking mechanism for typical legislative enactments—a process known as bicameralism and presentment.²⁶ Again, though, the President has not presented ACTA to Congress or expressed any intent to do so in the future. Hence, the President's actions cannot find a legal foundation on the basis of his ability to sign and enact legislation.

Thus, the only remaining potential grounds under United States law justifying the President in signing ACTA are those assertions made by the President in defending his execution of ACTA as a sole executive agreement. First, the President claims that the agreement will be consistent with existing United States laws.²⁷ While conceivably true, the President's power to ensure that those laws are “faithfully executed”²⁸ would not extend to modifying the obligations of the law itself. The enforcement of laws of the United States is subject to the territorial jurisdiction of the federal government; the power of the executive to enforce the law would not extend to efforts to ensure that other nations enact similar laws. Instead, the interest implicated when Congress passed a particular statute was one in which Congress felt justified in encouraging or prohibiting a particular activity in the United States. The members of that body have not, by means of a single legislative enactment passing judgment on a practice taking place in the territorial confines of the United States, expressed any preference for pursuing similar policies in other nations.

The most glaring issue with the claim that ACTA is justified solely upon the basis of consistency with other legislation, though, is that ACTA actually imposes obligations that go beyond simple domestic laws. The practical effect of domestic law is to ensure that people within the jurisdiction of the United States behave in a certain way. These laws, though, impose no obligation on the government itself to behave in a specified manner. In contrast, ACTA is an agreement that explicitly calls for governments to behave in a certain manner with respect to the enforcement of intellectual property rights. Penalties for noncompliance do not accrue to individuals upon the street but to the governments themselves and the nation as a whole.²⁹

Furthermore, domestic laws can be changed at the whim of a Congress and President without legal consequence. Although existing United States jurisprudence would enable executive agreements or treaties to be changed or modified by subsequently passed laws,³⁰ the effect of doing so would be to cause the United States to be in noncompliance with ACTA. Hence, the United States would potentially be subject to sanctions or penalties under international law or international principles of comity in ways that would not be the case if Congress were to change laws absent the existence of ACTA.

The second justification listed by the President for his authority to sign ACTA, namely the President's plenary powers over foreign affairs³¹, is similarly specious. A President is, by virtue of the authority granted in the Treaty Clause³² and his power to “receive Ambassadors and other public Ministers,”³³ authorized to negotiate treaties. Negotiating treaties, though, does not amount to actually enacting new treaties or incurring new obligations for the United States government. To the contrary, such a view of the powers of the President would stand in contrast to the express language of the Constitution, which mandates the concurrence of two-thirds of the Senate.³⁴

Even an argument against Congressional involvement because of the secrecy of negotiations must fail. The exact situation in which secrecy is required for the negotiation of a treaty was contemplated by John Jay.³⁵ Instead of suggesting that the requirement of Senatorial involvement can simply be jettisoned when secrecy is desired, Jay stated the following:

The convention have done well, therefore, in so disposing of the power of making treaties, that although the President must, in forming them, act by the advice and consent of the Senate, yet he will be able to manage the business of intelligence in such a manner as prudence may suggest.³⁶

 

Hence, the intent of the Framers seems clear that the President lacks the power to enact an international agreement under his inherent powers as President—even when such action would be most beneficial to the interests of the United States.

Finally, the President's final justification for his ability to sign ACTA and bind the United States rests on the basis of the grant of authority given by the Trade Act of 1974.³⁷ That legislation, though, is no longer in force.³⁸ Additionally, the Act still required the approval of Congress by a final up-or-down vote.³⁹ Thus, the President never was given the authority to bind the United States in international agreements based upon his sole discretion.

As the foregoing discussion details, the President lacked the legal authority sign ACTA and make it a part of the body of law of the United States. However, under international law, the United States can incur legal obligations to other nations whether or not the agreement was actually properly authorized in accordance with the United States Constitution.⁴⁰ While the idea that a President can still bind the nation to treaties in violation of domestic legal requirements may seem odd, the concept can be understood in terms of the agency concept of apparent authority. The President, by virtue of his position, is “presumptively authorized to represent a state for purposes of concluding an international agreement.”⁴¹

The ability to bind the nation through international law even when the same action would not be legally cognizable under domestic law should cause the President to use his utmost care to avoid incurring any obligation for the nation that has not been expressly authorized through the processes created by its laws and constitutional structure. By instead forging ahead and attempting to implement ACTA outside of these constitutional confines in the form of a sole executive agreement, the President shows a lack of respect for the Constitution and Congress. He instead elevates himself to the position of sole lawgiver, a status which would have horrified the Framers of the Constitution.

V. Conclusion

ACTA, an international agreement created to assist the enforcement of intellectual property rights, was implemented by the President of the United States as an executive agreement. By choosing to enter into the pact in this manner, the President ignored the separation of powers embodied in the nation's Constitution and ran roughshod over the carefully crafted provisions in the Constitution providing for Congressional involvement in the making of treaties. As a result, he effectively treats himself as a king while creating another tear in the moral fabric of our government “of the people, by the people, for the people.”⁴²

 

 

 

 

 

 

 

Word count: 3390 (as counted by LibreOffice)

1U.S. Const. art. II, § 2, cl. 2.

2Juliana Gruenwald, Wyden Questions Legality of ACTA, National Journal, Oct. 12, 2011, available at http://techdailydose.nationaljournal.com/2011/10/wyden-questions-legality-of-ac.php.

3U.S. Const. art. II, § 2, cl. 2.

4Id.

5The Federalist No. 64 (John Jay), No. 75 (Alexander Hamilton).

6The Federalist No. 75 (Alexander Hamilton).

7Thomas Jefferson, The Jeffersonian Cyclopedia: A Comprehensive Collection of the Views of Thomas Jefferson 879-80 (John P. Foley ed., 1900).

8Id. at 879.

9Cong. Research Serv., S. Prt. 106-71, Treaties and Other International Agreements: The Role of the United States Senate 5 (2001).

10Id.

11Id.

12See, e.g., Laurence H. Tribe, Taking Text and Structure Seriously: Reflections on Free-Form Method in Constitutional Interpretation, 108 Harv. L. Rev. 1221 (1995).

13Cong. Research Serv., supra note 9, at 5.

14Id.

15Press Release, Office of the United States Trade Representative, Joint Press Statement of the Anti-Counterfeiting Trade Agreement Negotiating Parties (October 2011), http://www.ustr.gov/about-us/press-office/press-releases/2011/october/joint-press-statement-anti-counterfeiting-trade-ag.

16Id.

17Sean Flynn, ACTA's Constitutional Problem: The Treaty Is Not a Treaty, 26 Am. U. Int'l L. Rev. 903, 906-07 (2011).

18Id. at 907-08.

19Id. at 908.

20Gruenwald, supra note 2.

21Flynn, supra note 17, at 919.

22U.S. Const. art. VI, cl. 2.

23Id.

24U.S. Const. art. II, § 2, cl. 2.

25U.S. Const. art. VI, cl. 2.

26U.S. Const. art. II, § 7, cl. 2.

27Flynn, supra note 17, at 919.

28U.S. Const. art. II, § 3.

29Flynn, supra note 17, at 925.

30See Edye v. Robertson, 112 U.S. 580 (1884). This decision held that a treaty is “subject to such acts as congress may pass for its enforcement, modification, or repeal.” Id. at 599. Such a view stands in contrast to the tenor of treaties conveyed by Thomas Jefferson, supra text accompanying note 7.

31Flynn, supra note 17, at 919.

32U.S. Const. art. II, § 2, cl. 2.

33U.S. Const. art. II, §3.

34U.S. Const. art. II, § 2, cl. 2.

35The Federalist No. 64 (John Jay).

36Id.

37Flynn, supra note 17, at 919.

38Id. at 922.

39Id.

40Id. at 925.

41Id. at 922.

42President Abraham Lincoln, Gettysburg Address (Nov. 19, 1863).

to be presented

Chris Neal

Creative Industries

 

Hollywood’s Problem With Bollywood: How Intellectual Property Rights in India Are Sustaining a Film Industry Giant

 

            The film industry in India is the largest in the world.[i] They produce over 800 films a year and employer over six million people.  It is estimated that the industry earns $1.33 billion annually.[ii]  Bollywood is the largest part of the Indian film industry.[iii] 

            In this paper I contend that the success of Bollywood can be attributed to how the film industry reflected the culture of India, the intellectual property rights regime in India, and how the people of India interpret and apply those laws.  To do this I will first give a brief overview of the film industry in India concentrating on Bollywood aspects specifically, provide an overview of India copyright law and how it applies to the film industry, and how the interpretation of those laws have helped the Indian film industry prosper.

 

Bollywood

            The term Bollywood was not coined until the 1970s when India overtook the United States as the world’s largest film producer, but India has a long tradition of filmmaking.[iv]  The first Indian motion picture was screened in 1899 (history of Bollywood).[v]  From there the industry grew with the technology and the times to the point where it is at today, the largest film producing country in the world.[vi]   Bollywood is an industry that encompasses the many genres of film, and the term Bollywood is used to describe the Hindi language film industry that is located in Mumbai.[vii] (Mumbai was formerly named Bombay and was changed to Mumbai after British colonial control was abolished.  Bollywood is a combination of the words “Bombay” and “Hollywood”).  Bollywood films integrate their culture into every film, incorporating folksongs and dances into the movie’s storyline. [viii] They can deal with social issues, everyday life, or any other subject, but the intent of the movie is to be mainstream and give the viewer an escape and a good time usually for about three hours.[ix]

 

            Commercialization is a fundamental element of Bollywood films.  They are meant for mass appeal.  Bollywood is a private industry and the people in it want to make money.  Song and dance not only appeals to the people of India, furthering the commercial appeal of the movie, it is a way of culturalizing movies in Bollywood.  Entertainment in India has a long tradition of using song and dance and the Bollywood industry used that tradition as a staple in their movies.

            The way that Bollywood movies are financed is different from how Hollywood movies are financed.  The Bollywood film industry is fragmented, independent financiers back the movie while others pay for the rights to distribute and exhibit.[x]  After World War II many illegal war profiteers in India looked to Bollywood to launder their ill-gotten gains.[xi]  The investment of black market money into the Bollywood film industry continues, and many believe it is one of the reason for so many Hollywood remakes.[xii]  With investors who care more about making money than creating art, reproducing a hit as a cultural copy offers a better certainty of making money.

            Reliance on black market money was furthered by the fact that the Indian government did not grant industry status to Bollywood until 1998.[xiii] Now filmmakers are able to secure better sources of funding from entities such as banks, foreign investors, and India's own corporate titans such as the $8 billion Tata Group and the $13 billion Reliance Industries.[xiv]

            The content of Bollywood movies also lends itself to commercialization.  Choices like using the Hindi language, and incorporating song and dance broadened the appeal. 

India has many different dialects, but Hindi can be understood by most of the population.  By using the Hindi language, Bollywood movies were understood by a larger percentage of the population, thus broadening their appeal.

Song and dance can be appreciated by itself for its rhythm and sound.  But in India the tradition goes deeper and Bollywood capitalized on that fact.  Ancient Sanskrit drama, the traditional India theatre of the 10^th Century, and Parsi theatre all incorporated music, dance, and gesture.[xv]  Bollywood cinema takes the methods that have been used for centuries in the Indian culture and incorporates them into film.  What may seem to an outsider as a weird or unnecessary interlude into song and dance is actually an Indian entertainment expectation based on cultural history. 

Furthermore, the song and dance numbers reflected a more primal desire that otherwise could not be expressed in Indian culture.  After emancipation from British colonial rule, Indian morals censored what could be expressed.[xvi]   Before films can be publicly exhibited in India the Central Board of Film Censors must certify them.[xvii] Restrictions can be imposed on public exhibition of a film if it or any part of it is against the interests of the sovereignty and integrity of India which includes: the security of the state, friendly relations with foreign states, public order, decency or morality, and the prevention of defamation, contempt of court or the commission of any offence.[xviii]  Unlike the Western world where love and affection could be expressed through kissing and touching on film, the Indian culture did not view this as appropriate.  The song and dance numbers came to represent the feelings that could not be overtly shown.  By representing these feelings through song and dance, Bollywood was able to get the message to the audience in a socially acceptable way.  It appealed to the people of India, and by staying within the morals of society it granted the film a universal appeal.  Bollywood films were distributed to Muslim countries with similar morals, thus increasing their commercial potential.

Music did more than provide an outlet for feelings that could otherwise not be displayed.  The music in the movies provided a moneymaking opportunity in themselves.  The soundtrack to a Bollywood movie could be more lucrative than the movie.[xix]  It is not an accident that the music plays such a commercial role.  Bollywood has a system for making movies; let the beautiful people act and the great singers sing.[xx]  They employ playback singers who provide the music for the industry, while the actors lip-sync on screen.  The obviousness of the lip-syncing is not a drawback for the viewing public.  They expect to see beautiful people and hear beautiful music; they do not care if it takes two people to provide one thing.

Music also serves as a promotional tool for the movie.  It is released before the opening to draw people to the theatre.[xxi]  Just having a popular playback singer can increase theatre revenue.[xxii]  Many people have favorite playback singers and will attend a movie specifically for the purpose of hearing them sing.

The push for commercial appeal has had a negative impact on some aspects of the film industry, specifically writing.  Screenwriters of original content in India have felt underappreciated.  They fell like they are forced to rip off foreign films in order to make money.[xxiii]  This is because producers would rather go with something they know has already worked than take a chance on an original script. 

Screenwriters have a litany of other complaints including; they are paid less than playback singers and choreographers, they are only paid if the script is approved, and once the producer pays for the script the writer has no future rights at all and the producer can change and modify it at their pleasure.[xxiv]  Writers tried to remedy the problem by having their union present the copyright amendment bill to Indian parliament in 2010.[xxv]  The bill proposed greater rights to the writers and would have created a joint ownership of a film’s copyright between the producer and director.[xxvi]  Protest from the Film Federation of India (FFI) against the bill ultimately prevented any chance it had at succeeding.[xxvii]   Defeating the bill was not enough for the FFI, as some of their members subsequently called for all film producers to stop working with the writers who were behind the copyright amendment bill.[xxviii]

Bollywood was able to emerge as the largest sector of India cinema by pursuing commercial appeal in their movies.  They understood that by appealing to the largest possible audience they would be able to get the greatest return on investment.  To do this they produced in the widest understood language of the region, appealed to what past and current culture considered entertainment, and delivered it in ready-made themes that they co-opted for their culture.

 

 

India’s Copyright Laws

            Current Indian copyright law is substantially the same as United States copyright law on the books.  This can be attributed to the origins of their copyright and the global economy of today.  The origins of India’s copyright laws can be traced back to when they were a colonized by Britain.  India’s first copyright law was the Copyright Act of 1914 and it was essentially the same as Britain’s copyright because of British colonial rule at that time.[xxix]  Once India gained their independence, India adopted the Copyright Act of 1957.[xxx]  This law maintained much of the earlier act but added some modifications and additions.[xxxi]

In 1991 the United States placed India on the “Priority Foreign Countries” list and suspended duty free privileges for $60 million of Indian trade goods under the Generalized System of Preferences.[xxxii]  As a result, India amended the 1957 Copyright in 1994.[xxxiii]

            Now, India’s copyright law is governed by their amended 1957 Copyright Act.  The International Intellectual Property Alliance (IIPA) rank’s India’s amended 1957 Copyright Act as one of the most modern copyright statutes of any country.[xxxiv]  However, the laws on the books are not the problem.  India still has enforcement problems and high rates of piracy, and because of this the IIPA recommends that India remain on the Priority Watch List.[xxxv]  The amended 1957 Copyright Act brought Indian copyright law into full compliance with the requirements of TRIPS.[xxxvi]  How the copyright law has been interpreted and applied is the problem.

 

India’s Enforcement

Many Bollywood movies are “cultural copies” of movies made in the United States.[xxxvii]  It has been estimated that eight out ten movies made in Bollywood is a cultural copy.[xxxviii]  These cultural copies are not authorized by the original movie producers, but the legality of there production is rarely disputed because of three reason: 1. until recently many of the original owners where unaware of the Bollywood cultural copies, 2. the courts use a “lay person observer” test to determine in there is a copyright infringement, and 3. the courts in India are notoriously slow and back-logged.[xxxix]

            Early on, the success of Bollywood did not spill into the United States where the ideas for the cultural copies came from.  Bollywood was successful in India, other parts of Asia, Russia, and the Middle East.  Most of the success in the Westernized world was to Indian communities that had settled there.  Because of this the major studios either did not notice the cultural copy or chose to ignore it.

            Even if the United States film industry chose to intervene they would face the problem of the “lay person observer” test used by the Indian courts to determine if a copyright infringement had occurred.[xl]  In R.G. Anand v. Delux Films, the Apex court laid down the principles of what it would take for copyright infringement.[xli]  The first principle was that there could be no copyright in an idea, subject-matter, theme, or plot.[xlii]  This idea is simple and true of all creative industries.  There are only so many ideas for a movie and those ideas are rehashed from different perspectives with different degrees of success.  We are all familiar with the generic plots of movies for example; boy meets girl then something gets in the way of their love.  No one is saying that everyone who makes a tragic love story is infringing on William Shakespeare’s copyright of Romeo and Juliet.  (I am not arguing that Shakespeare was the originator of this plot, he is only being used as an example of how far back these simple plot ideas go and the limited ideas of the human condition) 

            The second principle is to determine whether or not the similarities are on fundamental or substantial aspects of the mode of expression adopted in the copyrighted work.[xliii]  If the defendant’s work is nothing but a literal imitation of the copyrighted work with some variations it would amount to a violation of the copyright.[xliv]

            The third principle states that if the viewer having seen both works is clearly of the opinion that the subsequent work appears to be a copy of the original then there is a copyright violation.[xlv] But the next principles go on to say that if the theme is presented and treated differently then the subsequent work is not a copyright violation, and the violation must be proved by clear and cogent evidence after applying the various tests.[xlvi]

            With the test open to interpretation it becomes a question of whether making a movie “Indian” inherently changes the film.  In the United States remakes and adaptations give credit to the original.  While not shot for shot recreations, the new versions of the movies acknowledge the source and compensate them for it.  Recent examples include the remake of True Grit, and the American adaptation of The Girl with the Dragon Tattoo.  Both films could have been made with similar themes to the original and not recognized the original.  With enough changes it could be argued that they were only similar themed movies.  For example, there are plenty of movies about renegade lawmen that help someone in need not named True Grit. But buying the rights to movie the new producers get something more, they get to pay homage to a movie they liked, they get a movie that already been successful, and they get an audience that is already familiar with the work that may want to see the new version and can spread publicity to those with no background of the previous film.  In India they get all of the benefits of the remake/adaptation film without having to pay for it.

            To add to the problem of proving copyright infringement in court, the foreign film industry also faces the problem of the Indian court system.  The Indian Judiciary has developed a reputation for inefficiency and ineffectiveness.[xlvii]  Indians are highly litigious and that has contributed to a large backlog of cases; the Supreme Court was reported to have more than 150,000 cases pending in 1990, the high courts had some 2 million cases pending, and the lower courts had a substantially greater backlog.[xlviii]

 

Conclusion

With all the problems of resolving possible copyright infractions it is easy to see why there have not been more suits to this point.  Until recently it was a perfect storm that led to Bollywood’s operational conduct.  A lack of awareness by Hollywood that their ideas were being co-opted, a lack of enforcement of copyright laws, and a system of financing that drove what movies would be made. 

The globalization of the world economy has changed the perfect storm, and now that there is more awareness of the problem it is unlikely to go unchallenged.  Challenging the problem has taken two distinct paths.  One is the classical suit and the other is investing in the industry.

One of the first suits brought against the Indian film industry was in 2003 when Barbara Taylor Bradford brought a copyright infringement suit against Sahara Television for allegedly making a television series out of her book, A Woman of Substance.[xlix]  While ultimately unsuccessful it shed a bright light on the cultural copy phenomenon.  Then in 2009 20^th Century Fox sued the Bollywood producer of Banda Yeh Bindass Hai, accusing them of stealing from My Cousin Vinny.[l]  The suit was ultimately settled out of court for $200,000.[li]  The suit seems to have resonated with some of the Bollywood producers and they are now starting to purchase the rights to Hollywood movies.[lii]

An alternative to suing Bollywood is investing in Bollywood.  Once India finally granted industry status to Bollywood, Hollywood began investing on order to become part of the Bollywood market.[liii]  Major studios like Warner Bros., Sony Pictures, 20^th Century Fox, and Disney are now investing in Bollywood.[liv]  This helps to alleviate some of the copyright because now Hollywood has a stake in Bollywood production.  Not only did Hollywood money flow into Bollywood, Indian money began flowing into Hollywood. Indian billionaire Anil Ambani of Reliance Industries invested some $825 million in Steven Spielberg's DreamWorks SKG Studios.[lv]  Now both groups (Hollywood/Bollywood) have an interest in protecting the intellectual property rights of Hollywood movies in India.

Creative industries are a valuable asset to the United States, especially in the export markets.  In the future I would expect to see a greater effort on India’s part to clean up their system.  As the world becomes a smaller and smaller place because of the global market the interest of Bollywood start to align with the interests of Hollywood.  Bollywood is transforming from the independent group model to a larger production company model.   At this point I expect the Bollywood production companies to begin self-regulating.  Each production company will have their own interests to protect.  This will more than likely include India going through the proper channels and acquiring the property rights to re-make American movies.  But it will also include exclusive rights to from certain Hollywood production companies that Bollywood production company’s partner with.  For example, if Disney owns a ten percent interest in Bollywood production company X, then X would have an expectation to “Indianize” Disney films.  If another Bollywood production company cultural copied a Disney film without Disney’s permission, company X would have a stake in the situation. 

Once the large Bollywood production companies begin to protect their interests, the amount of outright copying will decrease.  Until recently the interests that were injured by Bollywood cultural copies were foreign interests.  Now that interests are local, either the companies will self regulate or they will sue each other. 

The copyright laws on the books in India are already strong; the problem is with enforcement and interpretation.  When large corporate domestic interests are at stake the problems of enforcement dissipate.  By making the problem a Bollywood corporate problem instead of a Hollywood exploitation problem, I believe that the laws already in place in India will be applied in a similar manner as those in the United States, and the copyrights of Hollywood will be protected because of their effect on their Indian corporate cousins.

 

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[i] http://www.indiaonestop.com/film.htm

[ii] Id.

[iii] Id.

[iv] What is Bollywood? at http://worldfilm.about.com/od/bollywood/a/historyofbollywood.htm

[v] Id.

[vi] Id.

[vii] Id.

[viii] Id.

[ix] Id.

[x] 12 Theoretical Inquiries L. 275, Jan 2005, Bollywood/Hollywood.  Madhavi Sunder.

[xi] Id.

[xii] Id.

[xiii] Id.

[xiv] Id.

[xv] Bollywood at http://en.wikipedia.org/wiki/Bollywood#cite_ref-40

[xvi] 8 San Diego Int’l L.J. 123, Fall 2003, Bollywood is Coming! Copyright and Film Industry Issues Regarding International Film Co-Productions Involving India.

[xvii] Id.

[xviii] Id.

[xix] Supra at xv.

[xx] Id.

[xxi] Id.

[xxii] Id.

[xxiii] Intellectual property for the Intellectual: When Will Indian Screenwriters get their dues? at http://www.the-nri.com/index.php/2011/01/supporting-rights-of-indian-script-writers/

[xxiv]  Id.

[xxv] Id.

[xxvi] Id.

[xxvii] Id.

[xxviii] Id.

[xxix] 26 Suffolk Transnat’l L. Rev. 295, Copyright Problems In India Affecting Hollywood and”Bollywood”. Priti H. Doshi.

[xxx]  Id.

[xxxi] Id.

[xxxii] 7 Vand. J. Ent. L. & Prac. 259, Spring 2009.  Copyright Infringement In The Indian Film Industry.  Rachana Desai.

[xxxiii] Id.

[xxxiv] International Intellectual Property Alliance (IIPA) 2011 Special 301 Report on Copyright Protection and Enforcement at http://www.iipa.com/rbc/2011/2011SPEC301INDIA.pdf

[xxxv] Id.

[xxxvi] Id.

[xxxvii] Supra at xvi.

[xxxviii] Id.

[xxxix] Id.

[xl] (2002) PL WebJour 6, Intellectual Property Law in the New Technological Age, Justice P.S. Narayana.

[xli] Id.

[xlii] Id.

[xliii] Id.

[xliv] Id.

[xlv] Id.

[xlvi] Id.

[xlvii] Supra at xix.

[xlviii] Library of Congress, Country Studies, High Courts at http://lcweb2.loc.gov/frd/cs/intoc.html

[xlix] Supra at xxxii.

[l]   Supra at x.

[li] Id.

[lii] Id.

[liii] Id.

[liv] Id.

[lv] Id.

 

Why is the Anti-Counterfeiting Trade Agreement (“ACTA”) controversial? – In the experience of participating in the negotiation on the issue of notice and takedown

Why is the Anti-Counterfeiting Trade Agreement (“ACTA”) controversial? – In the experience of participating in the negotiation on the issue of notice and takedown

Jongchul Shin[1]

Introduction - What is the Anti-Counterfeiting Trade Agreement (“ACTA”)?

Intellectual Property Rights (“IPR”) are a tug-of-war between developed countries and developing countries. Developed countries want to get more benefits from the Intellectual Property (“IP”) system, but developing countries want to lose less from the IP system.

Unlike property law, IPR law is beyond the scope of one country, so it creates an enforcement problem. Countries having IPR cannot urge the other countries to accept their unilateral demand. Enforcement becomes one of the most important issues in IPR, because even though there is IPR, if it cannot be enforced then it will be useless for economic profits.

International society has made an effort to enhance enforcement of IPR. The developed countries introduced IP enforcement regimes such as Trade-Related-Aspect of Intellectual Property (“TRIPs”).[2] However, TRIPS was developed to increase international trade in the World Trade Organization (“WTO”), so it has many defects such as vagueness of the treaty and no direct remedies against infringement of IPR.[3] In addition, some countries like China and India have challenged on TRIPs and they sometimes overtly ignored IPR of developed countries.[4]

Some developed countries tried to introduce a more strict IP system to enhance enforcement. The Anti-Counterfeiting Trade Agreement (“ACTA”)[5] is one of their efforts. Japan proposed an anti-counterfeiting agreement in 2005 and the United States suggested a similar agreement in 2006.

A small number of countries participated in the ACTA[6] several times through informal meetings and official negotiations.[7]

I participated in discussions of some parts of the ACTA. I examined the issue of “Notice and Takedown” from the requests of the Ministry of Foreign Affairs, Ministry of Culture and Tourism,[8] and Korea Patent and Trademark Office. I will explain why the ACTA is controversial from my experiences.

Why are developing countries critics of the ACTA?

Developing countries criticize the ACTA because they believe that it only protects the benefits of developed countries. They think that the ACTA is a kind of inner-circle between developed countries to enhance IPR enforcement. Actually, some countries were not invited to the ACTA process.[9]

Why developed countries support the ACTA?

Developed countries think that as the internet and other IT develops, their valuable efforts of IPR are more infringed than before. They think that current IP systems such as TRIPs is not enough to protect them, so they support a more effective IP enforcement system

Why is the position on the ACTA different according to the countries? – In the experience of participating in the negotiation on the issue of notice and takedown

We think that if countries have more IPR then they will support the ACTA. When I examined the proposals of the ACTA, I could infer the fact that the ACTA reflected the power game between countries.

There were some suggestions of the ACTA proposals on the Notice and Take-down[10] matter related to Digital Enforcement. Two important proposals on Notice and Take-down were (1) more strict and voluntary monitoring of Internet Service Providers (“ISP”) and (2) less rigid based on the request of copyright owners to ISPs.

There are three big ISPs in Korea: Korea Telecom (“KT”), SK Telecom (“SKT”) and LG Telecom (“LGT”). They objected to the regulation of enhanced digital enforcement. They maintained that monitoring requires high costs and is actually impossible to implement. They also insisted that the enhanced regulation will violate people’s freedom of speech (the 1^st Amendment in the United States). They worried about intermediary liability and third-party enforcement by ISPs because they are not actual copyright infringers.[11] However, copyright owners and copyright associations[12] hoped to enhance the legal protection for their copyrights by increasing civil enforcements and injunctions.

Government agencies have their own customers. The main clients of the Korea Communications Commission (“KCC”) are common carriers and ISPs, but those of the Ministry of Culture and Tourism (“MICT”) are content providers. There were unavoidable conflicts between common carriers and content providers. As a result, a tug-of-war between KCC and MICT occurred.

MICT maintained that Korea should become a more competent content provider in the world (so called “Korean-Wave: Han-Ryu or Hallyu”[13]) and change the policies of copyright more actively. However, KCC objected to the opinion of MICT because the main targets of Korean-Wave were developing countries that would not take part in the ACTA and Korea`s competitiveness of contents was not enough to catch up with more developed countries like the United States.[14] In addition, if monitoring to enhance Notice and Take-down were introduced, then the increased legal and operative costs of ISPs would entail increasing service price. So, KCC suggested that we need to accept less rigid proposal – based on request of copyright owner to ISPs for Notice and Take-down.

Final arrangements between governmental agencies were made by the Ministry of Foreign Affairs (“MOFA,” like the U.S. Department of States), KCC, MICT, and Korea Patent and Trademark Office (“KPTO”). MICT and KPTO supported KCC`s positions – we were not in the position like the U.S. or Japan, so we did not need to maintain the ACTA actively. For this final decision, there were a lot of lobbyists from both sides, – common carriers and content providers to the governmental agencies. However, most of the Korean people did not know about this issue even though Notice and Take-down can impact on their internet usages.[15]

Conclusion – Positions of enforcement can be different according to the economic and political powers of the countries

I find that it is true that most of the policies are decided by power and money. Almost all of the countries are competing to get more benefits from the international society. They try to change rules for their interests and sometimes succeed. I also could infer that the amount of copyrights owned by countries would decide the position on the ACTA.

I think that ACTA cannot avoid controversy because it was secretly negotiated and has been sought by some developed countries. The ACTA may be welcomed by developed countries[16] that have a lot of copyrights but developing countries that do not have many copyrights will resist the ACTA.

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[1] Mr. Shin is a JD applicant of Southern Illinois University School of Law. He is a director of Korea Communication Commission and has worked at the Commission since1998. He has experiences with the international affair bureau (OECD, APEC, and World Bank, etc.) and the Telecommunication bureau (Competition policy, License, M&A, etc.).

[2] Agreement on Trade Related Aspects of Intellectual Property Rights, Apr. 15, 1994; Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, Legal Instruments–Results of the Uruguay Round, 1869 U.N.T.S. 299, 33 I.L.M. 1197 (1994).

[3] Peter K. Yu, TRIPs and Its Archilles` Heel, J Intell. Prop. L, 485-503 (University of Georgia School of Law, 2011).

[4] “Chinese counterfeiters have had a field day pumping out knockoffs of Apple Inc's best-selling iPhones and iPads, but one appears to have gone a step further – a near flawless fake Apple Store that even employees believe is the real deal.” Melanie Lee, Fake Apple Store in China even fools staff, REUTERS, (July 21, 2011) http://www.reuters.com/article/2011/07/21/us-china-apple-fake-idUSTRE76K1SU20110721.

[5] Anti-Counterfeiting Trade Agreement, Dec. 3, 2010, opened for signature May 1, 2011, available at http://trade.ec.europa.eu/doclib/docs/2011/may/tradoc_147937.pdf.

[6] The final list of countries negotiating ACTA includes: Australia, Austria, Belgium, Bulgaria, Canada, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, the Republic of Korea, Latvia, Lithuania, Luxembourg, Malta, Morocco, the Netherlands, New Zealand, Poland, Portugal, Romania, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, the United Kingdom, the United Mexican States, the United States, and the European Union. See, Ministry of Foreign Affairs, Report on the ACTA, 5-6 Republic of Korea (2011)

[7] Margot E. Kaminski, An Overview and the Evolution of the Anti-Counterfeiting Trade Agreement (ACTA), PIJIP Research Paper no. 17., 3-4, (American University Washington College of Law, 2011)

[8] Ministry of Culture and Tourism is in charge of general policy and enactment of IPR in South Korea

[9] Argentina, Brazil, India, and China—countries who have vested interest in more flexible IP regimes—were not invited to participate in negotiations, Id. at 5.

[10] Notice and take-down is a tool for copyright owners to make them to request to take-down infringing materials on the website from ISPs when they noticed the infringements. This concept was enacted in Digital Millennium Copyright Act to enhance enforcement of copyright law. See, Digital Millennium Copyright Act, WIKIPEDIA http://en.wikipedia.org/wiki/Digital_Millennium_Copyright_Act (last visited Oct. 5, 2011)

[11] There are three parties in the copyright infringement of the cyber space: (1) Copyright owner who created contents, (2) Copyright infringer who illegally uploads and downloads contents, (3) Internet Service Provider (“ISP”) as intermediary between copyright owner and infringer in the cyber space. In practice, the ISPs are just service provider for their customers. See Brook K. Baker, ACTA: Risks of Third Party Enforcement for Access to Medicines, PIJIP, Research Paper no. 1., 5-6, (American University Washington College of Law, 2010).

[12] For example, The Association of Korean Singer, The Association of Korea Digital Contents, Korea Broadcasting System, etc.

[13] “The Korean-Wave refers to spread of South Korean culture around the world. The term was coined in China in mid-1999 by Beijing journalists surprised by the fast growing popularity of Korean entertainment and culture in China. The Korean wave is responsible for achieving over one billion dollars in revenue annually for South Korea through cultural exports.” See, Korean Wave, Wikipedia, http://en.wikipedia.org/wiki/Korean_wave (last visited Oct. 5, 2011).

 

[14] KCC also asked to the MICT that if our content competitiveness were good, why we should maintain screen quota system for Korean movie industries against Holly Woods. See Korea Communication Commission, Issue paper on the ACTA, 3-4, Republic of Korea (2008).

[15] South Korea government will sign the ACTA in November, 2011. However, it seems that Korean government will be difficult to get approval from national assembly for secret administrative process of the ACTA.

[16] Even governments of developed countries seem to have difficulty in getting approval from their congress. See Sean Flynn, Who is Signing ACTA: State of Play Cont’d , http://infojustice.org/archives/5711 (last visited Oct. 5, 2011).