Business

ACTA Text Hurts Startups, Goes Beyond EU Law, Says FFII

A controversial anti-counterfeiting agreement between the European Union, the U.S. and other countries has come in for fresh criticism after the European Commission failed to address concerns about the treaty's legality.

The Anti-Counterfeiting Trade Agreement (ACTA) was reached last year despite concerns that it would protect 'big business' at the expense of the consumer.

But the agreement, which the E.U. has not yet formally signed, deviates significantly from the existing body of E.U. law, known as the "acquis," according to a report published in January by the Centre for International Intellectual Property Studies (CEIPI) at the University of Strasbourg with the support of academics from across the E.U. That claim is something the Commission had denied last October when it said that the agreement would not require any change in E.U. legislation.

The Commission repeated its denial last month, following questions from concerned Members of the European Parliament (MEPs).

However, the Commission failed to make its point in a convincing way, according to blog post by Ante Wessels, an analyst for the Foundation for a Free Information Infrastructure (FFII).

One of the main areas of controversy concerns the damages to be paid in cases of copyright infringement and illegal downloading.The ACTA text states that the damages should be "the value of the infringed good or service, measured by the market price, or the suggested retail price," but this "does not reflect the economic loss suffered by the right holder," according to the academic experts.

Trade Commissioner Karel de Gucht said that there is no conflict between ACTA and the E.U.'s Intellectual Property Rights Directive, when asked about this by MEPs.

"Both provisions refer to ways in which courts can come to the determination of fair damages for the injured party," De Gucht said in April.

This response has enraged the FFII.

"Damages in E.U. law are based on economic loss suffered by the right holder. The academics show that ACTA goes beyond that. The Commission just calls them both 'fair', and sees no difference," Wessels said in the May 1 blog posting.

"Going beyond economic loss suffered by the right holder is not 'fair'. It disproportionally hurts, for instance, startup companies in conflict with major patent holders," he said.

ACTA also includes other forms of trademark infringements based on similarity of signs, risk of confusion and the protection for well-known trademarks against dilution. This, said FFII's Wessels, is a clear extension of the E.U. acquis, which does not cover the criminal measures called for by ACTA.

Wessels also criticized the Commission's understanding of other consequences of ACTA's drafting on E.U. law.

With E.U. work to redraft its own trademark legislation in full swing, De Gucht explained in April that during the ACTA negotiations, "The Commission insisted on a broad definition of trademark infringements in Section 3 on Border Measures, in order to keep the necessary flexibility in view of the ongoing review of the applicable E.U. legislation."

"This is idiotic," Wessels wrote. "If the E.U. wants flexibility, ACTA should have a narrow definition of trademark infringements, not a broad one. With a narrow ACTA definition, the E.U. can choose between narrow and broad. With a broad ACTA definition, the E.U. can only have a broad one too."

MEPs have pointed out that, once ratified, ACTA will become a source of European Union law and will be used by the European Court of Justice in the course of preliminary rulings for interpretation and validity of secondary law. FFII has called on Parliament to ask the European Court of Justice for an opinion on ACTA.

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