Copyright Exceptions, Trade Agreements, and the Digital Economy

This blog is based on a presentation I gave at the Fifth Global Congress on IP and the Public Interest last month. Thanks to Burcu Kilic for chairing the Trade track and having me present on a panel on trade agreements in the Asia Pacific.

PIJIP has researched IP and trade for a while, but we’ve mostly focused on FTAs that included the US.  This year we’ve begun to broaden our view – to look more closely at agreements like RCEP and other Asia-Pacific agreements. This fall we began a detailed comparison of CPTPP, RCEP, CETA, RCEP, EU-Mercosur, EU-Japan, and the China-Korea FTA, with a focus on the copyright and enforcement provisions, and with an eye toward provisions that affect the digital economy. In the last few weeks we’ve begun looking into the provisions in USMCA as well.

This post compares some of the existing text on two provisions: the ‘balance’ provision and protection of TPMs. It doesn’t quote most of the agreements extensively, but if you want to check the language, see PIJIP’s Table of TPP, UMCA, and non-U.S FTAs.  For the balance provision, I also share some model text for copyright balance that offers an improvement over what has been tabled in negotiations.

In the coming weeks I plan to post more blogs in this space looking at other FTA provisions relevant to the digital economy.

Provisions on “Balance” in Trade Agreements

The TPP was the first FTA to include a provision in its copyright section obliging countries to try to balance the interests of rightholders and users of copyrighted works. The provision was kept in the CPTPP, and a different version of it appears in an RCEP.

This is a new kind of provision. Most of the copyright provisions in these (and other) FTAs favor content industries. While most FTAs contain provisions saying countries may have copyright exceptions, the texts are still heavily weighted in favor of rightholders over users of copyrighted works. And this group “users of copyrighted works” includes individuals, companies, and many operating in the digital environment.

These balance provisions are the first texts tabled to say in principle that the rights of users should be equal (or ‘balanced’) to rightholders.  They could be stronger, but they are a decent starting point.

Both TPP and the RCEP provision proposed by Australia require countries to “endeavor to [achieve (TPP) /  provide (RCEP)] balance in its copyright and related rights systems” through limitations and exceptions. They both include a list of limitations – but with opening language. The TPP refers to limitations “such as, but not limited to …” and the RCEP refers to limitations “including…”

There are differences, too. TPP (but not RCEP) expressly applies the balance requirement to limitations “for the digital environment” and notes that commercial uses “may” be protected by the article. This is important. If this language carries any real protection for the rights of users, then the “users” will include firms in the ICT industries. RCEP (but not TPP), states that fair use is permissible under this article. This is important to technology firms, which often rely the flexibility of fair use because they find themselves operating in new areas that were unforeseen when laws were drafted.

Model Text on Copyright Balance

This language often faces an obvious question: what does it mean to “endeavor” to achieve balance? This is unclear, so future language may want to use more binding language. Some of the attorneys in the Global Expert Network on User Rights have drafted model FTA language on balance that moves beyond ‘endeavor to protect.’

The model text has bracketed language with three alternatives – to “shall promote”, “shall maintain”, or “shall provide” an appropriate balance in copyright.

Like the TPP and RCEP, it has an open list of permitted purposes.  The term “such as” opens the provision up to other purposes not listed, and the list explicitly includes “facilitating digital technology” as one of the areas where Parties need to provide a balance. Like the TPP, the model text says that commercial uses can be protected under this clause. Like the Australian RCEP proposal, the model specifically says that fair use can be one of the ways that countries provide balance in their copyright systems.

Paragraph 4 is especially relevant to trade in the digital environment.  It requires countries to provide copyright limitations or otherwise permit reverse engineering, text- and data-mining, indexing, search and enabling transmissions in a network.

Technological Protection Measures

All of the trade agreements except for the CPTPP require countries to put in place rules against the circumvention of TPMs used by authors and other creators to protect copyrighted works.  The TPP had included a provision requiring this, but when the U.S. left the agreement, the remaining countries suspended it.

Also note that in RCEP, there is a proposal to use the “shall endeavor to” language in the obligation to protect technological protection measures.  Of course it is opposed by Japan, Australia and Korea.

Another approach is taken in the China-Korea FTA, which says the countries “shall provide adequate legal protection and effective legal remedies against the circumvention of any effective technological measure.”  But it doesn’t require specific things like civil or criminal penalties, potentially opening up space for countries to find ways to fulfill their FTA obligations. (Of course, Korea would still need to abide by stricter Korus FTA rules.)

Perhaps a better way to deal with TPMs is to build on the Mercosur proposal in the EU-Mercosur FTA.

Most FTAs we reviewed say that Parties are required to enact anti-circumvention measures, and that they “may” have limitations to these anti-circumvention measures. However, Mercosur has proposed language requiring that Parties make sure users can benefit from copyright limitations even if it means that a TPM is circumvented. I think the language could be broader – for instance, it could include uses that don’t violate a right to begin with – but it is at least something that identifies the need to ensure that anti circumvention measures don’t block legal uses.