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Monday, 24 December 2007

Is there no justice in this world?

The IPKat's friend Nerys Hucker has sent him a startling piece from the New York Times concerning a World Trade Organization (WTO) ruling last week. It appears that the tiny Caribbean nation of Antigua and Barbuda has been gifted the right to violate copyright protection on goods like films and music from the United States as part of a dispute between the countries over the US policy of blocking Antigua's online casino sites while permitting online betting on horse races.

Right: A sad sight, as Antigua's golden beaches give way to industrial plant churning out millions of dollars of infringing products

Antigua and Barbuda had claimed damages of $3.44 billion a year. WTO said it was entitled to just $21 million, but that the compensation would be recouped through allowing Antigua to distribute copies of American music, movie and software products to that amount. The US will not be taking this lying down, though. On Friday the United States trade representative is said to have warned Antigua to avoid acts of piracy, counterfeiting or violations of intellectual property rights while talks continue.

The ruling of the arbitrator, in relevant part, reads as follows:

"B. ANALYSIS BY THE ARBITRATOR

5.6 In its request for authorization to suspend concessions or other obligations, Antigua identified certain obligations under the TRIPS Agreement, that it proposed to suspend. Specifically, Antigua indicated that it intends to take countermeasures in the form of suspension of concessions and obligations under the following sections of Part II of the TRIPS:

Section 1: Copyright and related rights
Section 2: Trademarks
Section 4: Industrial designs
Section 5: Patents
Section 7: Protection of undisclosed information.

5.7 As we have determined above, Antigua may seek to suspend obligations under the TRIPS Agreement. In order for such suspension to be equivalent to the level of nullification or impairment of benefits accruing to Antigua, it must not exceed US$21 million.

5.8 It is incumbent on Antigua to ensure that, in applying such suspension, it does not exceed this level. Antigua has declined to provide any explanation on how it proposes to apply such suspension and how it will ensure that the level of the proposed suspension does not exceed the level to be authorized by the DSB. We regret that Antigua did not find it useful to provide such explanations.

5.9 We note that our mandate does not allow us, in reviewing the equivalence of the proposed suspension with the level of nullification or impairment, to consider the "nature" of the obligations to be suspended. We understand this to mean that we may not question the complaining party's choice of specific obligations to be suspended (other than in the context of considering a claim that the principles and procedures of Article 22.3 have not been followed) and that we must assess the level of the proposed suspension, rather than its form, against the level of nullification or impairment.

5.10 At the same time, it is important that the form that is chosen in order to enact the suspension is such as to ensure that equivalence can and will be respected in the application of the suspension, once authorized. The form should also be transparent, so as to allow an assessment of whether the level of suspension does not exceed the level of nullification. We also note that the suspension of obligations under the TRIPS Agreement may involve more complex means of implementation than, for example, the imposition of higher import duties on goods, and that the exact assessment of the value of the rights affected by the suspension is also likely to be more complex.

5.11 In the light of these considerations, we note the remarks made by the arbitrators in EC – Bananas III (Ecuador), on the suspension of TRIPS obligations in that case. We consider these remarks to also be relevant to this case, in that the same considerations will be pertinent to the manner in which Antigua might implement a suspension of its obligations under the TRIPS Agreement.

5.12 Like the arbitrators in EC – Hormones (US) (Article 22.6 – EC) , US – 1916 Act (EC) (Article 22.6 – US) , and US - Byrd Amendment (Article 22.6 - EC) , we also note that the United States may have recourse to the appropriate dispute settlement procedures in the event that it considers that the level of concessions or other obligations suspended by Antigua exceeds the level of nullification or impairment we have determined for purposes of the award.

5.13 Finally, we note that Article 22.8 of the DSU provides that:
"The suspension of concessions or other obligations shall be temporary and shall only be applied until such time as the measure found to be inconsistent with a covered agreement has been removed, or the Member that must implement recommendations or ruling provides a solution to the nullification or impairment of benefits, or a mutually satisfactory solution is reached. ..."

VI. AWARD

6.1 For the reasons set out above, the Arbitrator determines that the annual level of nullification or impairment of benefits accuing to Antigua in this case is US$21 million and that Antigua has followed the principles and procedures of Article 22.3 of the DSU in determining that it is not practicable or effective to suspend concessions or other obligations under the GATS and that the circumstances were serious enough. Accordingly, the Arbitrator determines that Antigua may request authorization from the DSB, to suspend the obligations under the TRIPS Agreement mentioned in paragraph 5.6 above, at a level not exceeding US$21 million annually".

The IPKat considers it monstrous that innocent third parties face damage to their businesses, their profits and, in the case of trade marks, their goodwill, as the result of an award in a dispute to which they are not party and over which they have no control. Are there no better or more appropriate punishments available to the WTO arbitrator in such cases? Merpel is fascinated by the prospect of executing and monitoring such an award: surely there is no accounting formula that will address it. Tufty just hopes that the brake pads on the arbitrator's car aren't fakes that have been sourced from Antigua ...

Decision of the WTO arbitrator here
Further reports on this item from MajorWager, SlashDot, Antigua Sun and Casino Gambling Web.

1 comment:

maths said...

As I had also mentioned on Patry's blog, for digital music for example, with its absence of physical inventory and due to its intrinsic nature, there is seemingly no reliable recourse to monitor revenues. And so for all practical purposes, it seems that Antigua is basically getting an unlimited free pass to gorge themselves silly on US copyrighted and trademarked products.
For a layman friendly account of the implications to the music industry, you can read more at the Music2.0 site.

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