Intellectual Property Owners Oppose Anti-Counterfeiting Agreement

July 14, 2010 ,

The Intellectual Property Owners Association (IPO) describes itself as “a trade association for owners of patents, trademarks, copyrights and trade secrets.” As such, it seems like it’s an ostensible beneficiary of the international Anti-Counterfeiting Trade Agreement (ACTA) being negotiated right now. After all, the stated purpose of the agreement is to facilitate “fighting counterfeiting and piracy, and to negotiate an agreement that enhances international co-operation and contains effective international standards for enforcing intellectual property rights”–in other words, making life easier for intellectual property owners. So why is IPO opposed to ACTA in its current state? Because it’s not good law.

A year ago, on behalf of the over 200 corporations and 11 thousand individuals who are its members, IPO sent a very gung-ho letter about ACTA to the US Trade Representative, the US ambassador to the ACTA negotiations. IPO’s members, which include many of the biggest companies with the biggest IP portfolios on the planet, were understandably very supportive of efforts to make it easier for them to enforce their IP rights worldwide. While that letter made a few alarming suggestions, like eliminating the “burdensome evidentiary requirement” of proving a certain level of illegal activity before finding someone criminally liable, two of IPO’s main goals were (1) keeping the scope of ACTA centered around counterfeiting, just like in its name; and (2) not changing domestic law. (Both eminently reasonable suggestions.)

The April draft of ACTA, though, revealed that neither of IPO’s concerns was addressed. So IPO sent a new letter to the USTR a few weeks ago, complaining that “ACTA goes far beyond addressing the subject matter of counterfeiting” and “potentially changes United States law by transforming” civil infringement into criminal acts. The ACTA draft repeatedly refers broadly to “intellectual property rights infringement” rather than “counterfeiting,” despite the fact that an infringement is not necessarily a counterfeit. As a result, the resulting scope of the draft language is far broader than what IPO (and we) were led to believe. IPO goes on to cite several specific provisions in ACTA that could change domestic law: ACTA could expand the authority of Customs and Border Patrol to seize goods; it could extend criminal penalties to cases where goods are trademark-infringing but not counterfeit; and it could make criminal penalties available for all “intellectual property rights infringement” on the Internet. The takeaway is that ACTA is upsetting many people, groups, and corporations for some simple reasons: its scope has expanded far beyond its stated intended purpose, and its focus on harsher penalties doesn’t seem like the most constructive goal. IPO isn’t the first trade association to come out against this agreement, and surely it won’t be the last either.

IPO is rightfully worried that ACTA’s focus on penalties for Internet-based infringement might result in criminal sanctions for things like using trademarks in website metadata, or buying ad space on web searches for trademarks. Both of these areas of law are still developing, but it’s worth noting that keyword and metadata cases (and many other cases too) rely heavily on exceptions and limitations to exclusive rights. Just as a copyright owner’s control over her copyrighted works isn’t absolute, neither is a trademark owner’s control over his trademarks. (Though the rules are extremely different from copyright fair use, trademark law has a body of “fair use” rules as well.)

Which brings me to another recent development: a court case where a husband and wife offering their services as luxury-car brokers through successfully argued that Toyota shouldn’t be allowed to bar them from using the word “LEXUS”. As the judge writing the opinion noted, “Trademarks are part of our common language, and we all have some right to use them to communicate in truthful, non-misleading ways.” How does this relate to ACTA? Because the result in this case comes from a limitation on trademark rights: if you’re selling a car, you’re allowed to say who manufactured it, even if you couldn’t sell a car you built yourself under that name. And ACTA demands harsher penalties, including criminal penalties, without providing for any countervailing limitations or safeguards.