American University Washington College of Law Program on Information Justice and Intellectual Property (PIJIP) Associate Director Sean Flynn testified at today’s Special 301 hearing at the United States Trade Representative’s office. This blog summarizes some of the comments made to the 301 Committee and some additional reflections on the day.
Special 301 is an informal agency adjudication to unilaterally determine foreign countries that should be listed on various “watch lists” for lack of “adequate and effective” intellectual property protection. Countries listed on the highest list – as a “priority foreign country” are slated for trade sanctions under the statute, which pre-dates the World Trade Organization accords and its multilateral dispute resolution process.
One quick reflection on the day is that it is clearly becoming more and more difficult for the 301 Committee (which is dominated by USTR staff and its views) to adjudicate between an increasing number of disputes in fact and policy in the process.
One of the key problems with the 301 process is that there is no dedicated staff to investigate every intellectual property law around the world. One junior staffer at USTR is in charge of creating the report each year, which often extends beyond 100 pages and covers over 40 countries. To fill those pages with the facts required to determine whether countries meet the “adequate and effective” standard, the process relies on industry complaints. Before 2010, industry and country filings were due on the same date – inhibiting countries from making any response to the allegations against them. And so the reports normally took uncontested facts to be true, and turned out reports in which industry compliant flowed rather cleanly from the filings into the report.
Since 2010, countries have been given a few more days for their filings that private entities, affording a small chance for rebuttal. Most countries on the list still choose not to participate in the process, which is often described by foreign government officials as being meaningless and illegitimate at best, and likely a violation of the World Trade Organization ban on unilateral trade adjudications. But some countries still fear the repercussions of being listed and there is a clear trend toward more countries challenging IIPA and PhRMA assertions in their filings. This year, for example, Korea filed a point by point rebuttal to all IIPA and PhRMA submissions, pointing out what it called “factual errors” throughout those submissions in their descriptions of Korean law and policy. Ukraine also filed a lengthy submission and brought in a top official from Ukraine for the oral hearing to dispute many of allegations against it. This puts USTR in a bind. How will it determine who is right when there are real disputes of fact in a record given the lack of adjudicatory resources or process?
In the past, the report has chosen sides from a conflicted record with little explanation as to how it determined facts. One might expect a similar pattern this year. But such denial of a conflicted record de-legitimates the process and also sets it up for legal challenges. Under the Administrative Procedures Act, USTR and the rest of the Committee is bound to act rationally — without arbitrary or capricious factual findings or legal determinations. Its failure to explain why it selects some versions of the truth over others may leave it vulnerable to challenge by affected countries under this standard.
PIJIP has made submissions to the USTR Special 301 process over the last several years on behalf of its faculty and staff and other public interest organizations. These submissions are archived at www.pijip-impact.org/special-301
PIJIP’s past submissions have had an emphasis on several core concerns:
- that the 301 process and report fails to implement stated U.S. policy promoting balanced intellectual property policy on major public interest issues, including on policies affecting access to affordable medications in poor countries and promotion of users’ rights in copyright policy;
- the definition of what is “adequate and effective intellectual property protection” cannot follow a one size fits all model where every country in the world is expected to have the same rules and interpretations as possessed by the United States – such a norm ignores the painful fact of gross income disparity in developing countries which incentivizes monopoly holders to price the great majority populations (at least 90%) out of the market;
- the process for considering public submissions is inadequate and leads to arbitrary and capricious outcomes in the report; and
- the current use and operation of the program as a set of increasingly serious “watch lists” ending in a priority foreign country listing with a specific trade sanction process violates the World Trade Organization’s ban on unilateral adjudication of trade disputes.
Today I focused on the subject of balance, which raises another issue where the process is being forced to adjudicate between competing views. The issue here is whether there is and should be a duty of the process to promote the protection of users’ rights as well as those of copyright and other IP right holders. With the growth of the internet economy, largely based in the U.S. and dependent on users’ rights in copyright for their existence — the issue is increasingly hard for U.S. trade policy to ignore.
Under Section 182 of the Trade Act of 1974 (Trade Act) (19 U.S.C. 2242), USTR is required to identify foreign countries whose policies fall under two criteria:
- those which “deny adequate and effective protection of intellectual property rights” and
- those which “deny fair and equitable market access to U.S. persons who rely on intellectual property protection.”
As the implementing agency under the statute, USTR has great discretion in how to interpret these clauses. In the past, it has essentially concluded that protection means only the affirmative protection for rights holders, not the affirmative protections in intellectual property law afforded to users. We assert that these requirements should be interpreted by USTR to include consideration of the degree to which countries deny adequate and effective intellectual property users’ rights, which it has failed to do in past reports.
Trade policy has been changing on this issue. As USTR recognized in its recent position in the Trans-Pacific Partnership Agreement negotiations, for copyright policy to serve its dual objective of promoting the creation of protected works and also to promote the creation of new works that may transform or excerpt from the prior works – copyright policy must contain a balance between owners’ and users’ rights. USTR explained:
“the balance of rights and exceptions and limitations achieved in U.S. law provides diverse benefits for large and small businesses, consumers, authors, artists, and workers in the information, entertainment, and technology sectors.”
And this is true as well of the balance required in foreign laws. If other countries provide only strong protections of copyright owners, with insufficient protections of the rights of users, then U.S. businesses large and small will be negatively affected in their ability to access foreign markets. Thus, in USTR’s words, limitations and exceptions to rights are an integral part of the overall policy – “[a]n important part of the copyright ecosystem” — not a subversion of a general rule. They are, in other words, part of the “protection” within the intellectual property system.
To be true to this principle in express U.S. policy, countries that lack major elements of balance in their copyright system should be identified and encouraged to change their laws, just as the process does for countries that lack U.S. style patent protections or copyright protections. The 301 process should, for example, advise countries to consider adopting limitations and exceptions that have the hallmark of fair use – its flexibility to adapt to new technology and contexts. The lack of such flexibility should be flagged as an element of a copyright system that makes it less adequate and effective in protecting the rights of businesses and users that rely on users rights in copyright systems, and such deficiencies should also be flagged as posing a potential market barrier to US businesses – especially internet and technology businesses.
A list of countries that would receive listing for inadequately balanced copyright systems is included in an appendix to our submission. Two countries are worthy of special mention.
PANAMA
The impact of USTR policies over the last two decades is painfully apparent in Panama’s response to the 301 notice. In this year’s submission, Panama sought to assure USTR of its “strong commitment to protect IPR, in a constant, effective and inflexible way.”
“Inflexible” as a goal of a copyright system? Unfortunately, this does not appear to be a mere translation error. As we have covered at some length in the infojustice blog, Panama made recent changes to its Copyright law to implement one of the most inflexible Copyright Acts in the world.
This year, in a free trade agreement implementing statute, Panama created copyright protections on “temporary” storage on the internet, with no protection for the kind of buffer copies necessary for popular and fully licensed streaming services. It has no fixation requirement. And no exception for transient copies. Both of which are in US law.
So companies like Pandora, youtube, Netflix are pretty much illegal in Panama unless they pay for licensing for both content and buffer copy. That is not the US rule. This a “market access” problem that should be included int he 301 report if it is committed to balance.
At the same time, Panama removed a section of its law that created broad fair use rights and added a provision that all limitations and exceptions in its law must be strictly interpreted. And it paired this reduction in rights for consumers and internet companies with a new bounty system that allows its copyright enforcement officials to personally profit from fines collected from copyright infringers of the kind its law will make of almost every internet user.
This is a horrible law that will drastically reduce opportunities for US information providers to enter the panama market and as such should find a place in 301 listing.
COLOMBIA
USTR frequently uses 301 to pressure other countries to open up the transparency of its policymaking processes for pharmaceutical companies. It should express similar concerns in countries where consumers are locked out of policy making processes on copyright. Colombia is a prime example.
Colombia’s recent FTA implementation statute is a model of the kind of unbalanced process and product that USTR should object to. On process, the Congress rushed through a full legislative reform in a week, avoiding constitutionally mandated public “readings” in the proper committees. Partially based on this failure, the Constitutional Court struck down the law earlier this year. See http://infojustice.org/archives/28380
The US should comment on that process and encourage the government to consider a full range of views.
The US should take a stand on substance as well. Like Panama, Colombia extended copyright to temporary copies on the internet with no fixation requirement and no exception for transient copies. It also implemented retransmission rights through a clause that exempted the right from all limitations and exceptions.
