U.S. and EU scheduled to meet on ACTA, August 16

Inside U.S. Trade – 7/30/2010

The United States and European Union are scheduled to meet Aug. 16 in Washington to try reach agreement on contentious issues that have emerged between the two governments within the Anticounterfeiting Trade Agreement (ACTA) negotiations, according to informed sources.

The two governments will attempt to come to an agreement on whether the ACTA should address protection of geographic indications (GIs), patents and industrial design, and if end users would fall under the definition for commercial scale infringement, an informed source said.

The Office of the U.S. Trade Representative confirmed there will be a bilateral ACTA meeting the week of Aug. 16, but a spokeswoman did not say what will be on the agenda.

The scope of the agreement is expected to be a main issue of discussion since both governments have reached a deadlock on whether products with geographic indications (GIs) should be included in the agreement, sources said. The EU wants the infringement of GIs to be protected and enforced the same as infringements of trademarks and copyrights.

For example, in the ACTA border measure section, the EU wants the ACTA to require signatories to empower customs officials in each country to be able to seize goods suspected of infringing GIs protected by that country. The U.S. is opposed to this for fear of U.S. exports being seized abroad at the border in third countries. The EU-proposed text would not require countries to recognize specific GIs, however.

An industry source said other ACTA countries at the end of the June 28 to July 1 round of negotiations in Lucerne, Switzerland called for the EU and U.S. to work on resolving their disagreement over the scope of the agreement. These countries feared that a continued stalemate on the issue could lead to a failed agreement or a much less influential one if either government were not a signatory, this source said.

This source said other countries party to the agreement have indicated that they do not want the ACTA to become a forum for the EU and U.S. to fight over broader recognition of GIs within bilateral trade agreements.

EU Trade Commissioner Karel De Gucht called GIs a “redline” issue when addressing the EU Parliament Committee on Civil Liberties, Justice and Home Affairs (LIBE) on July 13. He questioned the benefit of the ACTA if GIs were not included in the agreement.

Another informed source said Australia, New Zealand and Canada have sided with the U.S. on the GI issue because the EU is attempting to claw back the use of old world terms for meats and cheeses that are produced in these countries under the same term. All three countries have sizable dairy industries that produce cheeses with the same names, sometimes in even greater quantities, as those produced in Europe, this source said.

A Swiss negotiator said parties to the agreement are continuing with the goal of finalizing the agreement by the end of 2010 and was aware of bilateral meetings between the EU and the U.S. in the past.

He said Switzerland is on the side of the EU on GIs but that it was not indicated in the last round of negotiations that such an issue would be a “deal breaker” for the entire agreement.

Negotiators are also debating whether patents should be completely removed from the agreement, although they have already come to a consensus on removing patents from the section on border measures. This was done to avoid situations where customs officials in ACTA signatories would be empowered to seize shipments that contain suspected patent violations, and negotiators in Lucerne admitted this was done to avoid having medications seized in transit.

While it agreed to having patents reomoved from the section on border measures, the EU wants to keep patents in other areas of the agreement because it would bolster efforts currently underway to create a unified patent law within the EU, according to a source in the EU.

The U.S. wants to take patents out of the agreement because enforcement of patent infringement could be detrimental to industrial interests by increasing costs and chilling innovation because many companies enter a “gray area” when developing new products based on other patents, this source said.

In the most recent leaked copy of the ACTA, Japan is pushing for the inclusion of patent infringement in the Internet chapter, while the U.S. supports only the inclusion of infringement of copyright or related rights, and the EU wants the infringement of all intellectual property rights to be included in this section. The inclusion of patents in this section would mean that Internet companies could be held liable when individual Internet users violate patents.

The U.S. and EU are also at odds over whether the definition of commercial scale piracy under the criminal enforcement section of the ACTA should apply to end users. The EU wants to exclude end users within this section while the U.S. wants to allow a country to be able to determine whether acts carried out by end users can be included, according to a leaked copy of the text.

There had been apparent agreement, based on a negotiating text leaked after the Lucerne round, to remove a definition that had been proposed in a previous text by the U.S. This definition from the April draft of the agreement was taken from U.S. free trade agreements, which included “significant willful” infringements that do not have direct or indirect motivation or financial gain and willful infringement for the purposes of financial gain. U.S. right holders favored this definition because it allows criminal enforcement to apply to a range of non-profit activities.

De Gucht had told the EU LIBE Parliament committee that commercial scale would not be defined in the agreement. He said that the national governments of separate member states would be able to apply their own definition of commercial scale because it is not currently defined under EU law.

The ACTA is being negotiated by the U.S., Australia, Canada, the EU, Japan, Mexico, Morocco, New Zealand, Singapore, South Korea and Switzerland. —