What’s at Stake in the San Diego Round of the Trans Pacific Partnership Agreement (TPP)

According to Inside US Trade, Intellectual Property negotiators at the San Diego round of the Trans Pacific Partnership Agreement (TPP) Negotiations are discussing the “less controversial areas, including copyrights and general IPR provisions.” In fact, the general provisions and copyright chapters include some of the most controversial issues in the agreement – extending copyright terms for corporate works to 120 years, criminalizing the circumventing of digital locks for fair uses, and erecting a new enforcement regime in which corporations unhappy with domestic law rulings can appeal interpretations of law to international tribunals. Indeed, these are the some of the very issues, on steroids, why the parallel Anti-Counterfeiting Trade Agreement will likely be rejected in Europe tomorrow. This note summarizes some key issues at stake. 

THREATS TO THE MULTILATERAL SYSTEM: The so-called “general provisions” is where the TPP defines its relation to the 150 year old multilateral system of international intellectual property law. Even if the substantive standards in the U.S. TPP proposal were carefully edited down to the language used in current multilateral agreements, which on the whole provide far more flexibility to their members, the TPP would still introduce a serious problem of forum shopping in dispute resolution. Standard dispute resolution clauses in U.S. free trade agreements allow a complaining country to choose whether to bring a claim under an FTA or multilateral agreement dispute resolution process when the same norm is included in both.[1] But the agreements do not set up a hierarchy of interpretations – meaning that the same clause in two agreements could be interpreted differently, with no possibility of rectifying diverging decisions.[2] In addition, the leaked text of the U.S. investment proposal shows that intellectual property is being proposed as a matter subject to investor-state dispute proceedings, which allow individuals or corporations to challenge a country’s law against the agreement in an international forum. This sets up the possibility that the TPP IP provisions will in effect become an individual appeal from a country’s courts into an international forum, an intent carefully avoided in all multilateral agreements.[3]

TEMPORARY COPIES: TPP Art. 4.1 proposes to extend the minimum requirements of the right to reproduction for all protected works to include the right to exclude “temporary storage in electronic form.” The WIPO Performances and Phonograms Treaty extends the right of reproduction for performers and producers of phonograms to “any manner or form.” But proposals to include a specific right to block temporary reproduction in electronic form were considered and rejected in the negotiation.[4]

The language in TPP Art. 4.1, although included in some other US Free trade agreements, is not a full expression of U.S. law on the topic. Section 106(1) of the Copyright Act does not contain language prohibiting reproduction “in any form.” It rather prohibits reproduction of the “copyrighted works in copies or phonorecords.”[5] Nor does U.S. law include an extension to “temporary storage in electronic form.” U.S. law requires that an infringing copy be “fixed,” meaning “sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.”^[6] Likewise, the Digital Millennium Copyright Act [hereinafter DMCA] recognizes a safe harbor for “system caching.”[7]

The distinctions are particularly important for enforcement of copyright on the internet. Lower courts in the U.S. have, for example, held that copyright does not extend to buffer copies on the internet.[8] Similarly, although not a party to this agreement, the EU Copyright Directive (Directive 2001/29/EC, Article 5) contains an explicit exception for temporary reproductions addressing automated caching.[9]

PARALLEL IMPORTATION: TPP article 4.2 would create a new international legal requirement to provide copyright owners an exclusive right to block “parallel trade” of copyrighted works – that is, the trade of a copyrighteds work sold in one country (e.g. at a lower price) to another country where the same copyrighted good is also sold (e.g. at a higher price). This provision is directly contrary to the dominant multilateral rule in international intellectual property agreements protecting the ability of domestic law to determine when copyrights and other intellectual property rights exhaust.[10]

Parallel trade allows distributors to seek supplies of the legitimate copyrighted work in another market where the good is available. If for example, as is often the case, a text book is sold at a higher price in a smaller market (which might be a developing country or wealthier country with fewer residents, e.g. New Zealand), a supplier in the small market may purchase the book in the lower priced market and resell it – benefiting both consumers and the local importing firm. Studies in New Zealand and Australia have called for protection or expansion of parallel importation rights in their countries to further consumer interests.[11]

The extension of copyrights to parallel trade is unsettled in current U.S. law, and this is a prime example where the TPP could affect the contours of existing U.S. law. The issue was recently litigated in the Supreme Court in Costco v. Omega,[12] but the split decision did not finally resolve whether copyright holders have a right to prevent parallel importation in the U.S. The issue is set to be revisited in another U.S. Supreme Court case this fall — Kirtsaeng v. Wiley & Sons.

GLOBALIZING SONNY BONO COPYRIGHT TERM EXTENSIONS: Art. 4.5 of the U.S. proposal for TPP would raise the international minimum requirement for a copyright term from the current life+ 50 year period included in TRIPS, Berne and the WPPT,[13] to a new life+ 70 minimum term. It would also raise the term for works of corporate or collective authorship (e.g. many films in the U.S.) from fifty years from publication or making of the work (under TRIPS and Berne) to 95 years from publication, or 120 years from the making of the work.

Length of copyright terms is an area of law where the U.S. model should not be considered an appropriate standard for the rest of the world. The latest terms in the U.S. are the result of the controversial and much criticized “Sonny Bono Copyright Term Extension Act” of 1998.[14] As a coalition of law professors reported to Congress in opposition to that act at the time, the lengthening of copyright terms “impose severe costs on the American public without providing any public benefit. It would supply a windfall to the heirs and assignees of dead authors (i.e., whose works were first published around 1920) and deprive living authors of the ability to build on the cultural legacy of the past.”[15] These views are supported by numerous academic studies finding no public benefit, but great public cost, from extending copyright terms to the current U.S. levels.[16]

EXCEPTIONS AND LIMITATIONS: The leaked text of the U.S. proposal had a place holder for limitations and exceptions to rights. The general tendency in US FTA intellectual property chapters is to provide very strong, specific and ever expanding provisions on proprietor rights, and vague enabling clauses for, or restrictions on the scope of, limitations and exceptions. Technology companies have pushed hard for the incorporation of specific and mandatory limitations and exceptions clauses to be added to the agreements. Rumors are that the U.S. will propose in the San Diego round something to the effect of that members of the TPP will be required (read “shall”) promote something like “balance” in their copyright systems through appropriate limitations and exceptions. This is a move in the right direction. But there is a lot of distance to the goal line. In a world where consumers and technology companies had just as much say on IP policy and movie studies and pharmaceutical companies there would be as much or more focus on the harmonization of limitations and exceptions to copyright as there would to its expansion.

TECHNOLOGICAL PROTECTION MEASURES: TPP Art. 4.9 proposes to require all TPP countries to adopt a specific legal regime for the criminal punishment of individuals that circumvent technological protection measures (sometimes referred to as “digital locks”), regardless of whether such circumvention is effected for a use that is itself protected by copyright. By removing the link between illegal circumvention and copyright violation, the proposal goes far beyond the requirements of the WPPT, existing U.S. free trade agreements and settled U.S. law.

The WIPO Copyright Treaty first introduced an international standard for its members to provide legal remedies for circumventing these digital locks to violate copyright. The WCT requires its members to provide

“adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors in connection with the exercise of their rights under this Treaty or the Berne Convention and that restrict acts, in respect of their works, which are not authorized by the authors concerned or permitted by law.”[17]

It is important that this provision tied anti-circumvention remedies to copyright infringement. The article specifically requires remedies for circumvention of digital locks only “in connection with the exercise of [authors’] rights under this Treaty or the Berne Convention,” and only to prevent acts not “permitted by law.”

U.S. law is currently unclear on whether the assignment of liability for circumvention can arise independent of a violation of copyright in the use of the underlying work. The influential Federal Circuit Court of Appeals has rejected a proposed construction of the DMCA that owners of a copyright may “hold circumventors liable under under 1201(a) merely for accessing that work, even if that access enabled only rights that the Copyright Act grants to the public.”[18]

The TPP proposal is also more extreme than other FTAs. For example it eliminates the norm in other FTAs that require remedies only for a circumvention that occurs “knowingly or having reasonable grounds to know” that the action is illegal.[19] ACTA more broadly permits parties to “adopt or maintain appropriate limitations or exceptions” to anti-circumvention liability and clarifies that circumvention liability obligations are “without prejudice to the rights, limitations, exceptions, or defences to copyright or related rights infringement under a Party’s law.”[20]