Areas where the Oct 2, 2010 ACTA text is inconsistent with U.S. law

Note: On October 8, 2010, Senator Wyden asked the American Law Division of the Congressional Research Service of the Library of Congress undertake and provide to Congress:

"a written, independent determination of whether the commitments put forward in the [October 2, 2010 text of the ACTA] agreement diverge from our domestic laws or would impeded legislative efforts that are currently underway. I ask the Division pay particular attention to the provisions relating to injunctions, damages, and intermediary liability."

Areas where the October 2, 2010 ACTA text appear to present conflicts with U.S. law

October 14, 2010

As an agreement, ACTA provides for a number of obligations for Parties to the agreement regarding the enforcement of intellectual property rights. The agreement either does or does not provide guidance as to the availability of exceptions to those obligations. Given that several exceptions are written into the agreement, for example the 2nd paragraph of the injunctions article, and footnotes 4, 5 an 6 in the border measures section, footnote 13 in Article 2.18, and the several areas of disputed text, one could reasonably ask, are the enumerated exceptions to remedies the only ones allowed by the agreement, or is there a different understanding that these norms are not to be taken literally. Are the dozens of cases where ACTA conflicts with current laws in the countries negotiating ACTA implicitly allowed by the new agreement? Or are have negotiators, wittingly or unwittingly, proposed changes in these law?

This note considers in particular the following Articles from the October 2, 2010 ACTA draft.

Section 2: Civil Enforcement

ARTICLE 2.X: INJUNCTIONS {Must be made available, except when adequate remuneration or compensation for infringement is available}.
ARTICLE 2.2: DAMAGES {when the infringer acted knowingly, damages adequate to compensate for the injury the right holder has suffered as a result of the infringement, and consideration by courts of "any legitimate measure of value submitted by the right holder, which may include the lost profits, the value of the infringed good or service, measured by the market price, the suggested retail price."}
ARTICLE 2.3: OTHER REMEDIES {At least with respect to pirated copyright goods and counterfeit trademark goods, . . . at the right holder’s request, its judicial authorities shall have the authority to order that such goods be destroyed, except in exceptional circumstances, without compensation of any sort.}

Section 3: Border Measures

ARTICLE 2.X: BORDER MEASURES {Authority to order the seizure and destruction of goods, except in exceptional circumstances}

Assuming the agreement literally means what it says, each of the following U.S. laws appears to be inconsistent with at least one of the above mentioned ACTA articles.

Patents

If footnote 2 is rejected, and patents are included

35 USC 271 Infringement of patent

  • 35 USC 271 (e) (3) In any action for patent infringement brought under this section, no injunctive or other relief may be granted which would prohibit the making, using, offering to sell, or selling within the United States or importing into the United States of a patented invention under paragraph (1).
  • 35 USC 271(e) (4) (C) damages or other monetary relief may be awarded against an infringer only if there has been commercial manufacture, use, offer to sell, or sale within the United States or importation into the United States of an approved drug or veterinary biological product. . .
  • 35 USC 271(e)(6)(B-C) Non-disclosed biological product patents

    ‘‘(B) In an action for infringement of a patent described in subparagraph (A), the sole and exclusive remedy that may be granted by a court, upon a finding that the making, using, offering to sell, selling, or importation into the United States of the biological product that is the subject of the action infringed the patent, shall be a reasonable royalty.

    ‘‘(C) The owner of a patent that should have been included in the list described in section 351(l)(3)(A) of the Public Health Service Act, including as provided under section 351(l)(7) of such Act for a biological product, but was not timely included in such list, may not bring an action under this section for infringement of the patent with respect to the biological product.’’.

Comment: In ACTA, you can eliminate the possibility to obtain an injunction for infringement, but only when there is compensation of some type. And you always have to provide for the possibility of damages. 35 USC 271 (e) (3) and 35 USC 271(e) (4) (C) provide provide limits on these remedies. In 35 USC 271(e)(6)(C), both injunctions and damages are eliminated. The purpose of the new (e)(6)(C) is to provide the incentive to disclose patents to potential generic competitors, so they can better evaluate the risks of investments in generic products.

35 U.S.C. 287 Limitation on damages and other remedies; marking and notice.

  • 35 USC 287 (c) with respect to a medical practitioner's performance of a medical activity that constitutes an infringement of patent.

    (c)(1) With respect to a medical practitioner's performance of a medical activity that constitutes an infringement under section 271(a) or (b) of this title [35 USC 271(a) or (b)], the provisions of sections 281, 283, 284, and 285 of this title [35 USC § §281, 283, 284, and 285] shall not apply against the medical practitioner or against a related health care entity with respect to such medical activity.

Comment: These limitations on remedies were created in response to concerns by surgeons who where threatened with liability for patent infringement when performing certain state of the art/best practice surgical methods that were patented. The U.S. did not provide an exception to the patent right, but a limit on the remedies for infringement. For this reason, it becomes as an issue in ACTA.

General or other intellectual property rights

State Sovereign Immunity
Under the precedent set by the U.S. Supreme Court in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank et al. (98-531) 527 U.S. 627 (1999), Argued April 20, 1999–Decided June 23, 1999, and subsequent extensions of the doctrine of State Sovereign Immunity, there are no damages available for infringement of intellectual property by State governments. This applies to patents, copyright, trademarks, plant breeder rights, semi conductor designs, industrial designs, etc.

Comment: Some members of Congress don't like the result of this Supreme Court decision, but it is the law of the land. Among other thing, this provision is effectively an important element of the research exception in the U.S., since scientists working in state Universities and labs are not subject to damages for patent infringement. It also provides an important exception for damages for the infringement of copyright in the context of state educational and research institutions.

15 USC 1114. Remedies; Infringement; Innocent Infringement By Printers And Publishers. In particular, the provisions of 15 USC 1114 (2).

  • 15 USC 1114 (2)(A) Where an infringer or violator is engaged solely in the business of printing the mark or violating matter for others and establishes that he or she was an innocent infringer or innocent violator, the owner of the right infringed or person bringing the action under section 43(a) [15 USC 1125(a)] shall be entitled as against such infringer or violator only to an injunction against future printing.
  • 15 USC 1114 (2)(B) . Where the infringement or violation complained of is contained in or is part of paid advertising matter in a newspaper, magazine, or other similar periodical or in an electronic communication as defined in section 2510(12) of title 18, United States Code, the remedies . . . shall be limited to an injunction against the presentation of such advertising matter in future issues . . . The limitations of this subparagraph shall apply only to innocent infringers and innocent violators.
  • 15 USC 1114 (2)(C) Injunctive relief shall not be available to the owner of the right infringed or person bringing the action under section 43(a) [15 USC 1125(a)] with respect to an issue of a newspaper, magazine, or other similar periodical or an electronic communication containing infringing matter or violating matter where restraining the dissemination of such infringing matter or violating matter in any particular issue of such periodical or in an electronic communication would delay the delivery of such issue or transmission of such electronic communication after the regular time for such delivery or transmission, and such delay would be due to the method by which publication and distribution of such periodical or transmission of such electronic communication is customarily conducted in accordance with sound business practice, and not due to any method or device adopted to evade this section or to prevent or delay the issuance of an injunction or restraining order with respect to such infringing matter or violating matter.

17 USC 512 Limitations on liability relating to material online

The following phrase is found 4 times in 17 USC 512:

A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright . . .

In Section 5 of the ACTA text concerning "Enforcement of Intellectual Property Rights in the Digital Environment," there is this footnote 13:

13/For instance, without prejudice to a Party’s law, adopting or maintaining a regime providing for limitations on the liability of, or on the remedies available against, online service providers while preserving the legitimate interests of right holders.

However, the ACTA text in Section 2: Civil Enforcement does not seem to allow for the types of exceptions found in U.S. law. Indeed, in the injunctions provisions of U.S. law, injunctions can only be eliminated in cases where right owners receive compensation for infringements.

17 USC 110. Limitations on exclusive rights: Exemption of certain performances and displays

Similarly, some of these provisions are presented as limitations on liability for infringement. Technically, the issue is: if you are not "liable for infringement" is this a limit on remedies, or an exception to the right? And if this is a limitation on liability, how does it fit with the ACTA articles regarding civil enforcement remedies (particularly since the US rejected text regarding statutory exceptions for remedies in the articles on injunctions and damages)?

(6) performance of a nondramatic musical work by a governmental body or a nonprofit agricultural or horticultural organization, in the course of an annual agricultural or horticultural fair or exhibition conducted by such body or organization; the exemption provided by this clause shall extend to any liability for copyright infringement that would otherwise be imposed on such body or organization, under doctrines of vicarious liability or related infringement, for a performance by a concessionnaire,[1] business establishment, or other person at such fair or exhibition, but shall not excuse any such person from liability for the performance;

For purposes of paragraph (2), no governmental body or accredited nonprofit educational institution shall be liable for infringement by reason of the transient or temporary storage of material carried out through the automatic technical process of a digital transmission of the performance or display of that material as authorized under paragraph (2).

17 USC 122. Limitations on exclusive rights; secondary transmissions by satellite carriers within local markets

17 USC 122(f)(A-B)

(f) Violation of Territorial Restrictions on Statutory License for Television Broadcast Stations. —

(1) Individual violations. — The willful or repeated secondary transmission to the public by a satellite carrier of a primary transmission embodying a performance or display of a work made by a television broadcast station to a subscriber who does not reside in that station’s local market, and is not subject to statutory licensing under section 119 or a private licensing agreement, is actionable as an act of infringement under section 501 and is fully subject to the remedies provided by sections 502 through 506 and 509, except that —

(A) no damages shall be awarded for such act of infringement if the satellite carrier took corrective action by promptly withdrawing service from the ineligible subscriber; and

(B) any statutory damages shall not exceed $5 for such subscriber for each month during which the violation occurred.

17 USC 119. Limitations on exclusive rights: Secondary transmissions of superstations and network stations for private home viewing

(a) Secondary Transmissions by Satellite Carriers. —

(7) Violation of territorial restrictions on statutory license for network stations. —

(A) Individual violations. — The willful or repeated secondary transmission by a satellite carrier of a primary transmission made by a network station and embodying a performance or display of a work to a subscriber who is not eligible to receive the transmission under this section is actionable as an act of infringement under section 501 and is fully subject to the remedies provided by sections 502 through 506, except that —

(i) no damages shall be awarded for such act of infringement if the satellite carrier took corrective action by promptly withdrawing service from the ineligible subscriber, and

(ii) any statutory damages shall not exceed $5 for such subscriber for each month during which theviolation occurred.

44 USC 2117. Limitation on liability

This is concerns the National Archives And Records Administration

When letters and other intellectual productions (exclusive of patented material, published works under copyright protection, and unpublished works for which copyright registration has been made) come into the custody or possession of the Archivist, the United States or its agents are not liable for infringement of copyright or analogous rights arising out of use of the materials for display, inspection, research, reproduction, or other purposes.

ORGANIZING AND MICROFILMING OF PRESIDENTIAL PAPERS; APPROPRIATION
Pub. L. 85-147, Aug. 16, 1957, 71 Stat. 368, as amended by Pub. L. 87-263, Sept. 21, 1961, 75 Stat. 544; Pub. L. 88-299, Apr. 27,
1964, 78 Stat. 183.

"That the Librarian of Congress is authorized and directed to arrange, index and microfilm the papers of the Presidents of the United States in the collections of the Library of Congress, in order to preserve their contents against destruction by war or other calamity and for the purpose of making them more readily available for study and research to the fullest possible extent consistent with any existing limitations that may have been imposed on the use of or the access to such papers by their donors or by those placing them on deposit with the Library of Congress. Neither the United States nor any officer or employee of the United States shall be liable for damages for infringement of literary property rights by reason of any activity authorized by this Act.

19 USC 1337. Unfair practices in import trade

    (l) Importation by or for United States
    Any exclusion from entry or order under subsection (d), (e), (f), (g), or (i) of this section, in cases based on a proceeding involving a patent, copyright, mask work, or design under subsection (a)(1) of this section, shall not apply to any articles imported by and for the use of the United States, or imported for, and to be used for, the United States with the authorization or consent of the Government. Whenever any article would have been excluded from entry or would not have been entered pursuant to the provisions of such subsections but for the operation of this subsection, an owner of the patent, copyright, mask work, or design adversely affected shall be entitled to reasonable and entire compensation in an action before the United States Court of Federal Claims pursuant to the procedures of section 1498 of title 28.

Related provisions

Statutes of limitations
I did not count this as one of the areas of inconsistency, but it is perhaps worth noting the frequent cases of statutes of limitations on damages, a topic not addressed in the ACTA.

Civil Remedies for non-payment of royalties on digital audio recording devices and media:

Copyright Law of the United States of America and Related Laws
Chapter 101 Digital Audio Recording Devices and Media
17 USC § 1009. Civil remedies

(d) Award of Damages. —
(1) Damages for section 1002 or 1003 violations. —
(A) Actual damages. —
(i) In an action brought under subsection (a), if the court finds that a violation of section 1002 or 1003 has occurred, the court shall award to the complaining party its actual damages if the complaining party elects such damages at any time before final judgment is entered.

(ii) In the case of section 1003, actual damages shall constitute the royalty payments that should have been paid under section 1004 and deposited under section 1005. In such a case, the court, in its discretion, may award an additional amount of not to exceed 50 percent of the actual damages.

The standards for Section 1004 Royalty payments are very precise, and not based upon "any" measure put forward by copyright owners.

Concluding comments

The U.S. is still in a position to seek changes in the ACTA text. There were earlier proposals on exceptions and limitations in the damages and injunctions sections of the agreement, that the U.S. had opposed. Perhaps more useful than a section by section rewording of possible exceptions would be a separate article dealing with the general issue of exceptions to the agreed upon obligations. The references in ACTA to Article 7 and 8 of the TRIPS were helpful, but would provide more guidance if they were tied more closely to the issue of permissible exceptions. To the extent that the negotiators would like to have some oversight over exceptions, they could create a reporting requirement for exceptions, and deal with issues that these present at a later time.

An example of a general statement on exceptions would be something like this:

"Nothing in this agreement prevents Parties from implementing in domestic law certain limitations and exceptions to the obligations set out in the agreement that are necessary to address the objectives and principles of the TRIPS agreement."

Appendix - Areas where ACTA limits future actions by Congress

Orphaned Copyrighted Works

In the 110th Congress, the Senate passed S.2913, the Shawn Bentley Orphan Works Act of 2008. The bill did not become law, partly because of outstanding issues raised by photographers. It remains, however, a very serious issue in the US and in other countries. The bill was designed to facilitate access to works by limiting the liability for infringement. This included limits on both injunctions and damages. The damages section of the ACTA text are now the most important in this regard.

In S.2913/110th, there was a general elimination of "actual damages, statutory damages, costs, and attorney's fees" in favor of "reasonable compensation" for orphaned works. The liability for infringement for certain uses by a "nonprofit educational institution, museum, library, archives, or a public broadcasting entity" was zero, so long as the use ceased when and if a right owner provided a "notice of claim of infringement."

USTR was opposed to fixing ACTA to protect the freedom of Congress to enact limits on remedies for orphaned copyrighted works. USTR claims the Copyright Office said the ACTA text is not a problem for orphan works. Earlier this year, the official at the LOC dealing with this issue was Steven Tepp. Steven Tepp now works for the Chamber of Commerce -- one of the major supporters of ACTA, where he is recused from dealing with ACTA.

Patent Reform Legislation

Congress is considering legislation to limit the methodology that can be considered determining patent damages, in direct conflict with the ACTA provisions on damages.