Tentative remarks on leaked CETA IP chapter

Today the German Pirate party published a leaked version of the intellectual property (IP) rights chapter of the EU – Canada trade agreement (CETA), version as of 17 December 2013.

See Carta blog: Piraten leaken CETA-Dokument zu IPR (German).

At first sight, the chapter does not go beyond EU law. That is not good news, in the sense that there are serious problems with EU IP law, exportation of EU law is not a good idea. EU IP law creates problems regarding access to knowledge and participation in culture, for remix artists, sequential innovation, and for software developers.

The FFII called upon the EU commission to solve such problems and make EU law compatible with the UN International Covenant on Economic, Social and Cultural Rights (ICESCR). The commission takes the wrong turn by exporting EU IP law. If we suffer from this, the Canadians should suffer as well? We need policy space for reform, not further lock-in, nor should we export harm. Software patent trolls will be happy.

Compared with ACTA

The damages in CETA do not contain the much criticized retail price damages, which were part of ACTA, the Anti-Counterfeiting Trade Agreement, and are part of the EU – Singapore trade agreement proposal.

The injunctions do not contain “inaudita altera parte”, the much dreaded possibility to decide on injunctions without the infringer present.

So far so good. But, I do not see what was footnote 2 in ACTA, and is footnote 33 in the EU – Singapore agreement, the right to exclude patents from the scope of the civil enforcement section.

All the strong enforcement measures (damages, injunctions, provisional measures) will be available for software patent trolls.

The strong enforcement measures further create problems for access to knowledge and taking part in culture, for remix artists, and for inventors involved in sequential invention – like software developers.

Applying strong enforcement measures where they should not be applied harms citizen’s economic, social, cultural, civil and political rights.

Objectives of CETA

Article 1 states the objectives.

“The objectives of this chapter are to:
(a) facilitate the production and commercialization of innovative and creative products, and the provision of services, between the Parties; and
(b) achieve an adequate and effective level of protection and enforcement of intellectual property rights.”

Not a word about access to knowledge and participation in culture. This world needs solutions, like patent delinkage for better access to medicine, but the commission only wants better commercialization. And harming sequential innovation does not help innovation.

Article 5.1 mentions a whole series of rights treaties, such as the Berne Convention, WIPO Copyright Treaty, WIPO Performances and Phonograms Treat, Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations.

Not a word about the UN International Covenant on Economic, Social and Cultural Rights (ICESCR), which provides a much better balance than IP rights.

ISDS

Furthermore, the table of contents reveals that there will be 71 pages on investor-to-state dispute settlement (ISDS), which puts investment tribunals above our supreme courts. Investor-to-state dispute settlement gives multinationals the right to sue states before special tribunals if changes in law may lead to lower profits than expected. Multinationals can challenge reform of copyright and patent law, challenge environmental and health policies.

ISDS alone is a reason to vehemently oppose CETA.

Access to medicine

There are many provisions on pharmaceutical products. I leave these to experts in this field to comment on.

TPM

There are many provisions on technical protection measures. I do not have sufficient knowledge here, I assume they go further than WIPO treaties, otherwise there is no reason for them in this text. This then further limits EU policy space.

See also: Bits of Freedom: Hey CETA, Je Lekt Iets (Dutch)
iRights.info: Was das CETA-Abkommen fürs Urheberrecht bedeuten könnte (German)

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A word on chlorinated chicken in TTIP

These days the European Commissioner for Trade Karel De Gucht claims chlorinated chicken was not a valid concern of the TTIP negotiations.

EU investment agreements will explicitly state that legitimate government public policy decisions – on issues such as the balance between public and private provision of healthcare or “the European ban on chicken carcasses washed with chlorine” – cannot be over-ridden.

In the US it is common to use chlorine for desinfection of slaughtered poultry. The EU denies these US imports on food safety grounds under 191 TFEU (precautionary principle). The chlorinated chicken became a poster child of consumer campaign groups against the TTIP and raised suspicion of the European public against the TTIP. Clorinated poultry is a top priority of the United States trade administration and former Commissioner Verheugen already had indicated concessions in the TEC talk rounds which he could not politically enact. MEP Marietje Schaake explains the bottlenecks of TTIP:

The EU has invoked the precautionary principle to ban the import of US hormone-treated beef. Other areas of concern are chlorine-washed chicken, cherries, molluscan shellfish, tallow, raw milk and genetically modified/engineered crops (GMO/GE). High levels of consumer protection and current practices will make it difficult for both sides to compromise or adapt standards on these highly sensitive issues.

The recent EU Commission hints that chlorinated chicken was off the agenda for TTIP strike those odd who follow the transatlantic talks for a while. Here is what the United States negotiators told about the third round of negotations:

“So during the third round this week, the negotiating groups have been meeting on, again, virtually all of the areas that we would anticipate would be covered in the TTIP. And just to recall, these areas include market access for industrial and agricultural products, and of course, the rules of origin for those products; we had the regulatory and standards group which focused on technical regulations; the sanitary and phytosanitary regulations primarily in the area of food safety, regulatory coherence, and particular sectors.”

  • “Rules of origin” means geographical indications (GI), the EU agenda point.
  • “sanitary and phytosanitary regulations primarily in the area of food safety” means chlorinated poultry and similar issues on the US trade agenda.

Bloomberg reported in 2012:

Both sides will seek to lower regulatory barriers that hinder transatlantic trade, such as long-running disputes over chemicals, genetically modified foods and chlorinated chicken.

The implications of the EU Commission attempts to dismiss that the US trade demands would be considered in the package weaken the US negotiating position and test their willingness to participate in the TTIP agreement. Even more they endanger an adoption of the TTIP in the European Parliament if the demands would be considered.

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Commission says no IP harmonisation with TTIP

The Commission announced:

Given the efficiency of their respective systems, the intention is not to strive towards harmonisation, but to identify a number of specific issues where divergences will be addressed.

What does “harmonisation” mean within the European Union institutions? Addressing legal and regulatory divergences between member states.

Or as Wikipedia puts it:

In relation to the European Union, harmonisation of law (or “harmonisation”) is the process of creating common standards across the internal market.

Though each EU member State has the primary responsibility for the regulation of most matters within their jurisdiction and consequently each has its own laws. Harmonisation aims to:

create consistency of laws, regulations, standards and practices, so that the same rules will apply to businesses that operate in more than one member State, and so that the businesses of one State do not obtain an economic advantage over those in another as a result of different rules.
reduced compliance and regulatory burdens for businesses operating nationally or trans-nationally.

A objective of the European Union to achieve uniformity in laws of member states is to facilitate free trade and protect citizens.[1]

Harmonisation is a process of ascertaining the admitted limits of international unification but does not necessarily amount to a vision of total uniformity.[2]

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IP and privacy in TTIP / TAFTA

With other representatives of civil society organisations and business stakeholders, I spent an afternoon at the Dutch Ministry of Foreign Affairs talking about the ongoing talks on a proposed EU – US trade agreement (TTIP/TAFTA).

Intellectual property (IP)

Of course, the ministry assured us that TTIP will not contain ACTA-like Internet provisions or provisions that will limit access to medicine. TTIP will neither change substantial copyright nor the enforcement of copyright. We can only check this after texts are published, may that happen soon. The text of the EU-Singapore FTA is not reassuring, with examples of damages that go beyond adequate damages, creating an upward trend. See: ACTA-plus damages in EU-Singapore Free Trade Agreement.

The story on IP is that multilateral agreements are hard to conclude, the US and EU have rather similar systems, how to deal with remaining differences? The Commission follows a bottom up approach, it inventorises which issues are important for companies, the issues may regard both substantial issues and efficiency issues. The bottom up approach was earlier mentioned in A TTIP Christmas wish.

Issues that may come up in the negotiations are geographical indications (important for the EU), exportation of the EU artist’s resale right, grace period (patents), broadcasting rights, trade secrets and harmonisation of patent procedures.

Regarding the last issue, I noted that mutual recognition of patent grants should not lead to software and business patents in Europe. In 2005 the European Parliament overwhelmingly rejected the software patents directive, they should not come back by the back door.

There are no texts yet.

Privacy

Regarding privacy, the ministry pointed to GATS art 14, EU-Korea FTA article 7.50 (e) (ii) (is similar to GATS) and article 7.43, and the Charter of Fundamental Rights of the European Union article 8. The story became less convincing when the EU-US safe harbor agreement was described as providing adequate protection.

The Dutch government aims for provisions as in the EU-Korea FTA and solving conflicts resulting from the extraterritorial effects of the US Patriot Act.

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Seven people can not represent civil society

On 10 February the Information Society Project at Yale Law School organised a debate on Trade and Transparency in the Internet Age.

Below my introduction:

I would first like to thank the university for the invitation to speak here. I will say a few things about ACTA, the Anti-Counterfeiting Trade Agreement, about its lack of openness, both in the negotiation phase and in the ratification phase. After that I will say a few things about the proposed trade agreement between the United States and the European Union.

In May 2008 Wikileaks published a secret discussion paper on a proposed new international agreement, the Anti-Counterfeiting Trade Agreement, or ACTA. The discussion paper showed that ACTA could contain far-reaching enforcement measures, including criminal measures. ACTA was an alarming forum shift. For example, there is no EU criminal law aimed against intellectual property rights infringements. A few years before ACTA, the European Commission had proposed an EU criminal law against IP infringements. The European Parliament had formulated its position, the proposal was in the hands of the EU Council, the institution that represents the member states. The debates were intense, as civil society knew that badly drafted definitions could lead to criminalisation of everyday computer use.

In 2008, in the midst of the open legislative process, the council and commission started secret ACTA negotiations on the same substance. At the end of the ACTA process, the European Parliament would only be able to vote yes or no. The EU has “fast track” by constitutional design. In a yes or no vote, it could easily happen that badly drafted definitions would slip through.

After analysis of the leaked ACTA discussion paper, there was no further information. We couldn’t analyse anything, we couldn’t give feedback, we couldn’t inform citizens about developments. The only thing we could do was to protest against the secrecy of the negotiations. The FFII and the European Digital Rights initiative filed complaints with the European Ombudsman. Member of the European Parliament Sophie in ‘t Veld sued the commission. In parallel, Corporate Europe Observatory (CEO) sued the commission over secrecy of documents in the EU-India trade negotiations, arguing that documents disclosed to companies should be disclosed to citizens as well.

The complainants lost all their cases. In the EU, the legislative process has to be as openly as possible and as closely as possible to the citizens. But the protection of international relations is a mandatory exception to openness. According to EU case law, the commission can keep document secret to allow mutual trust between negotiators, see for instance In ‘t Veld v Commission.

In December 2009 the Lisbon Treaty entered into force, giving the European Parliament greater power in the conclusion of international agreements. The parliament exercised its power by adopting various resolutions on ACTA, including strong language on openness.

There were more and more leaks of ACTA negotiation documents, which showed that the commission was not always accurate in telling what ACTA was about. For instance, the commission denied that “three strikes” had ever been proposed, the leaks showed that the US did propose three strikes. The leaks made it possible to provide precise feedback, this led to some improvements in the text. For instance, in the later drafts the parties could exclude patents from the civil enforcement section. In April 2010 the parties published a consolidated draft text, this made giving further feedback possible. Neither the leaks, nor the publication of the draft text harmed the progress of the negotiations.

At the end of 2010 the negotiators reached an agreement and published the final draft. Finally, public scrutiny and open debate could start. Then, something amazing happened. The European Parliament had stressed the importance of openness in various resolutions. But now that ACTA moved over to the parliament, the parliament itself started to keep documents secret.

First, the parliament denied the existence of some parliamentary documents. There is no legal basis for this. The parliament can refuse to disclose documents, but it can not deny the existence of documents. The FFII filed a complaint with the ombudsman.

Second, two parliamentary committees asked the parliament’s legal service an opinion on the published ACTA text. The parliament refused to disclose the legal service’s opinion, stating that disclosure of the opinion would harm international relations. But how can disclosure of an opinion on a publicly available text harm international relations, as the negotiations were already over? The FFII filed a second complaint.

In this complaint the FFII argues that the decision is not compatible with the human right to take part in an informed way in important decision-making processes. The FFII refers to the International Covenant on Civil and Political Rights, and to the International Covenant on Economic, Social and Cultural Rights. States can only interfere with human rights by law, if necessary in a democratic society and only in so far as proportionate. According to the FFII, the parliament’s decision to keep the documents secret fails the necessity and proportionality tests.

All the anger over years of secrecy, and over the ACTA end result, led to massive demonstrations throughout Europe. A few months later, the parliament overwhelmingly rejected ACTA. In sum, the secrecy of the negotiations led to a substandard text, and many angry people.

In July 2013 the European Union and the United States opened trade negotiations on a Transatlantic Trade and Investment Partnership, or TTIP. The European Commission maintains that confidentiality of negotiations is needed, but also understands that secrecy of negotiations angers people. The commission moves in the direction of openness, it published proposals and created an expert group of 14 people, half business, half civil society, with greater access to information. The commission will also hold a consultation on investor-to-state dispute settlement – the most controversial aspect of TTIP.

These are steps in the right direction. But 7 people can not represent civil society. And with ACTA, academics provided essential analysis. Academics are experts, but will stay uninformed, unless there are more leaks. We are still far away from the human right of everyone to take part in an active and informed way, and without discrimination, in any important decision making process.

A proportionality test, as found in the human rights covenants could help to find the right balance. I will give two examples. First, in negotiations parties table texts, these are then known to the other party. Tabled texts can be shared with the public as well. After both or all parties tabled texts, the parties make a text with brackets. These texts can be published as well. This is standard practice in many international organisations. Openness leads to greater legitimacy, quality and a better balance.

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Make copyright compatible with the UN International Covenant on Economic, Social and Cultural Rights

I just made a personal submission to the Public Consultation on the review of the EU copyright rules.

I used the You can fix copyright website. Very handy, thanks!

I added an attachment, see below or pdf, in which I argue that copyright law has to be made compatible with the UN International Covenant on Economic, Social and Cultural Rights (ICESCR).

——–

Copyright law and the International Covenant on Economic, Social and Cultural Rights

Ante Wessels, 2014

Introduction

This note is an attachment to my submission to the 2014 Public Consultation on the review of the EU copyright rules. This note argues that copyright law has to be made compatible with the UN International Covenant on Economic, Social and Cultural Rights (ICESCR).

This note limits itself to three ICESCR rights relevant for the digital environment: access to knowledge, access to culture and authors’ rights.

The first section introduces the ICESCR. The second section distinguishes intellectual property rights and ICESCR rights. It discusses how to deal with conflicts within the ICESCR system. It argues that copyright law needs exceptions for under served markets and remix artists, and that it is questionable whether after life duration of copyright is compatible with the ICESCR. The third section discusses the right to enjoy intellectual property and concludes that the right to enjoy intellectual property does not change the conclusion that copyright law needs the aforementioned exceptions.

Some of these exceptions may best be made in substantive law. As long as they are not implemented in substantive law, enforcement law has to make such exceptions.

The European Union and the ICESCR

The EU’s legislation on intellectual property rights has to be made compatible with the UN International Covenant on Economic, Social and Cultural Rights.

The EU is obliged to respect, protect and fulfil the human rights enshrined in the International Covenant on Economic, Social and Cultural Rights (ICESCR). This follows from constitutional traditions common to the Member States (Article 6 (3) Treaty on European Union; see also ECJ case C-73/08 Bressol and Others). The EU must desist from acts and omissions that create a real risk of nullifying or impairing the enjoyment of ICESCR rights.

This note limits itself to the rights mentioned in article 15 (1) (a), (b) and (c) of the ICESCR.

Article 15 (1) (a) and (b) of the ICESCR recognize the right of everyone to take part in cultural life; and to enjoy the benefits of scientific progress and its applications. This note uses “rights to access to knowledge and culture” for these two rights.

The right of everyone to take part in cultural life includes the rights to access to cultural goods, to benefit from the cultural heritage, to be involved in creating the spiritual, material, intellectual and emotional expressions of the community, to seek and develop cultural knowledge and expressions, and to share them with others. (ECOSOC, 2009)

Under ICESCR 15 (1) (c), authors have the right to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author. This note uses “authors’ rights” for this right. The Universal Declaration of Human Rights has the same balance between the rights in article 27.

Intellectual property rights versus ICESCR rights

The Committee on Economic, Social and Cultural Rights (CESCR) clarifies in its authoritative interpretation General Comment No. 17, that it is important not to equate intellectual property rights with the human right recognized in ICESCR article 15, paragraph 1 (c): “Human rights are fundamental as they are inherent to the human person as such, whereas intellectual property rights are first and foremost means by which States seek to provide incentives for inventiveness and creativity, encourage the dissemination of creative and innovative productions, as well as the development of cultural identities, and preserve the integrity of scientific, literary and artistic productions for the benefit of society as a whole. (…) Whereas the human right to benefit from the protection of the moral and material interests resulting from one’s scientific, literary and artistic productions safeguards the personal link between authors and their creations and between peoples, communities, or other groups and their collective cultural heritage, as well as their basic material interests which are necessary to enable authors to enjoy an adequate standard of living, intellectual property regimes primarily protect business and corporate interests and investments. Moreover, the scope of protection of the moral and material interests of the author provided for by article 15, paragraph 1 (c), does not necessarily coincide with what is referred to as intellectual property rights under national legislation or international agreements.” (ECOSOC, 2006).

How to deal with conflicts between human rights, for instance the right to access to knowledge and authors’ rights? Within the ICESCR system, the rights to access to knowledge and culture have to be balanced with authors’ rights. Yu, P. (2011) recommends just remuneration for conflicts taking place within the human rights system: “Under this approach, authors and inventors hold a right to remuneration (rather than exclusive control), while individuals obtain a human rights-based compulsory license (as compared to a free license).”

General Comment No. 17 also clarifies that under ICESCR article 15, paragraph 1 (c) legal entities are not protected at the level of human rights.

Article 4 of the ICESCR provides that states may subject ICESCR rights only to such limitations as are determined by law only in so far as this may be compatible with the nature of these rights and solely for the purpose of promoting the general welfare in a democratic society. Article 4 ICESCR provides a tool to assess whether EU laws are compatible with the ICESCR. Four examples may clarify this for the digital sector.

Example one: Access to knowledge and culture. In emerging economies, there are serious access to knowledge and culture deficiencies. Karaganis et al. (2011) show that relative to local incomes in Brazil, Russia, or South Africa, the price of a CD, DVD, or copy of Microsoft Office is five to ten times higher than in the United States or Europe. There is no distribution of legal CDs and DVDs outside the capitals. Up to 90 percent of the people in emerging economies can only turn to illegal media copies.

Such problems also exist in eastern European emerging economies. Euractive.com (2012) reports: “Ivan Dikov writes in an op-ed with the Bulgarian news website Novinite that Bulgaria is a country much poorer than the remaining ACTA signatories and could not in fact assume the same responsibilities. Torrent sites such as Zamunda and Arena are the most popular websites in Bulgaria. The reason for that is not just the enormous amount of music, films, software, and books that they make available to anybody for free. The sites are not accessible from outside the country. These torrent sites are technically in violation of all sorts of copyright laws but what they offer has no alternative for the people in Bulgaria for the time being given the country’s social and economic development, Dikov argues.”

In Bulgaria, digital technology helps to solve deficiencies in access to knowledge and culture, but EU law harms this access. In Bulgaria, and other countries in similar circumstances, EU law nullifies or impairs the rights to access to knowledge and culture for many, this is neither compatible with the second condition of article 4 ICESCR, “compatible with the nature of these rights”, nor with the third, “promote the general welfare in a democratic society”.

The EU needs an under served market exception. As long as EU substantive law does not have such an exception, EU enforcement law (IPRED) has to make such an exception.

Example two: Remix artists. It is often impossible to ascertain (affordable) licenses for remixing music and movies. This interferes with various human rights:
- authors’ rights of remix artists. The ICESCR does not exclude any author (“everyone”). Artists remixing music or movies are protected at the level of human rights.
- artists and public’s access to culture rights, which include the rights to benefit from the cultural heritage, to be involved in creating the spiritual, material, intellectual and emotional expressions of the community, to seek and develop cultural knowledge and expressions, and to share them with others – as seen above.

Under current EU intellectual property enforcement law remix artists face injunctions and damages. This nullifies or impairs the human rights mentioned in this example, this is not compatible with two conditions of article 4 of the ICESCR, as it is neither compatible with these rights, nor promotes the general welfare in a democratic society.

An ICESCR compatible solution could be that the individual original authors have a right to remuneration and the individual remix artists obtain a human rights-based compulsory license.

Example three: Duration. After life, the author’s right falls away. Interference with the rights to access to knowledge and culture has to comply with article 4 of the ICESCR. It is questionable whether after life duration of copyright is compatible with the nature of these rights and solely for the purpose of promoting the general welfare in a democratic society.

Example four: Orphan works. An orphan work is a copyright protected work for which rightsholders are unknown or not traceable. Unavailability of works interferes with the rights to access to knowledge and culture. A human rights-based compulsory license with a right to remuneration may provide a solution.

The right to enjoy intellectual property

The section above showed that, from an ICESCR perspective, EU law needs exceptions for under served markets and remix artists. This section will discuss whether such exceptions conflict with the right to enjoy intellectual property.

Europe has two regional human rights instruments, the Council of Europe’s European Convention on Human Rights (ECHR) and the EU Charter of Fundamental Rights (CFR). Both instruments protect the right to enjoy property, including intellectual property.

The ICESCR rights are freedoms, they are rights inherent to the human person as such. Interference with ICESCR rights is only allowed if the interference is compatible with article 4 ICESCR mentioned above.

The European human rights instruments protect the right to enjoy property, after it is lawfully acquired. The protection is limited.

Intellectual property rights are not rights inherent to the human person as such. They are granted by law, they are rule-based privileges. They may arise by law and are limited by law. They can not interfere with rights inherent to the human person as such, unless the interference is compatible with article 4 ICESCR.

European human rights instruments protect intellectual property rights, but only after they are lawfully granted, that is, after the ICESCR article 4 test. The ICESCR article 4 test comes first.

In case of conflict between ICESCR rights and intellectual property rights, the first step is to identify and balance the ICESCR rights.

The next step is to assess whether interference of intellectual property rights with ICESCR rights is compatible with article 4 ICESCR. In the four examples above, injunctions and damages nullify the enjoyment of ICESCR rights. This is not compatible with the nature of these rights. They fail the article 4 ICESCR test.

From an ICESCR perspective, copyright law needs exceptions for under served markets and remix artists. The right to enjoy intellectual property does not change this conclusion, as intellectual property rights are law-based and have to be compatible with the ICESCR.

Conclusion

To be compatible with the International Covenant on Economic, Social and Cultural Rights, EU copyright and enforcement law need exceptions for under served markets and remix artists. It is questionable whether after life duration of copyright is compatible with the ICESCR. Some of these exceptions may best be made in substantive law. As long as they are not implemented in substantive law, enforcement law has to make such exceptions.

References

EC (2012), Civil enforcement of intellectual property rights: public consultation on the efficiency of proceedings and accessibility of measures, http://ec.europa.eu/internal_market/consultations/2012/intellectual-property-rights_en.htm

ECJ, ( 2010), Case C-73/08, Nicolas Bressol and Others and Céline Chaverot and Others v Gouvernement de la Communauté française,
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62008J0073:EN:NOT

ECOSOC, (2006), Committee on Economic, Social and Cultural Rights, General Comment No. 17: The Right of Everyone to Benefit from the Protection of the Moral and Material Interests Resulting from Any Scientific, Literary or Artistic Production of Which He Is the Author (Article 15, Paragraph 1(c), of the Covenant), 4, U.N. Doc. E/C.12/GC/17 (Jan. 12, 2006), http://www2.ohchr.org/english/bodies/cescr/comments.htm

ECOSOC (2009), Committee on Economic, Social and Cultural Rights, General comment No. 21, Right of everyone to take part in cultural life (art. 15, para. 1 (a), of the International Covenant on Economic, Social and Cultural Rights), E/C.12/GC/21, obtained from Ohchr.org
http://www2.ohchr.org/english/bodies/cescr/comments.htm

Euractive (2012), ACTA activates European civil society, http://www.euractiv.com/infosociety/acta-activates-european-civil-so-news-510533

Hargreaves, I., (2011), Digital Opportunity, A review of Intellectual Property and Growth, http://www.ipo.gov.uk/ipreview-finalreport.pdf

Karaganis, J. (ed.), (2011), Media Piracy in Emerging Economies, SSRC books, http://piracy.americanassembly.org/the-report/

Yu, P. K., (2011) Intellectual Property and Human Rights in the Nonmultilateral Era (September 12, 2011). Florida Law Review, Vol. 64, pp. 1045-1100, Drake University Law School Research Paper No. 11-04, http://ssrn.com/abstract=1926102

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EU Commission set to betray us with ISDS

Faced with massive critique, the European Commission announced a consultation on investor-to-state dispute settlement (ISDS).

ISDS gives multinationals the right to sue states before special tribunals if changes in law may lead to lower profits than expected. Multinationals can challenge reform of copyright and patent law, challenge environmental and health policies.

The Commission even announced the publication of a proposed EU text. That seems a step forward.

But a diplomatic source told EU Trade Insights that other trade deals are unlikely to change. For instance the trade agreement with Canada also contains ISDS.

So the Commission will hold a consultation on ISDS that will attract the attention, and secretly advance ISDS in other agreements…

All ISDS negotiations will have to put on hold.

Let’s not forget: ISDS is not acceptable in the agreement with the US, not acceptable in the agreement with Canada, not acceptable in the agreement with Singapore, not acceptable in any agreement.

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EU Ombudsman conflates negotiation and ratification documents

I wrote a letter to the European Ombudsman to solve a misunderstanding regarding my complaint against the European Parliament (see below or pdf).

ACTA is dead in Europe, but there are still issues with disclosure of documents. In 2012, the European Parliament refused to disclose the parliament’s legal service’s opinion on ACTA, the Anti-Counterfeiting Trade Agreement. In September 2013 I filed a complaint with the European Ombudsman against the European Parliament over this. Unfortunately, the Ombudsman didn’t want to investigate my complaint, so I asked her to reconsider her decision. Her reply now shows she misunderstood my complaint.

In her reply, she refers to a decision on negotiation documents. This clarifies what went wrong. My complaint does not regard negotiation documents, but ratification documents. Negotiation documents are made by the negotiators (Commission, governments) during the negotiations. Ratification documents are made by the European Parliament (or Council) after the negotiations, during the ratification process.

According to EU case law institutions can refuse to disclose negotiation documents to protect mutual trust among negotiators. After the negotiations, the Commission published the final text. The contested legal service’s opinion is an assessment of this published text. Disclosure of this opinion can not harm the mutual trust among negotiators.

Citizen participation in ratification processes is essential, especially if the prior negotiations were confidential. An Ombudsman decision that legal service’s opinions related to the ratification process have to be disclosed would be of major importance for citizens.

Additionally, in my complaint against the parliament I argue that EU law is not compatible with the human right to participate in decision making processes. An Ombudsman discussion on this argument could also be interesting.

Other issues

The preparatory ACTA documents are still secret, despite an EDRi complaint to the Ombudsman. The Ombudsman added an interesting Further remark to the decision: “Given that Parliament’s application of Regulation 1049/2001 is affected by commitments such as the one entered into by the Commission in this case, Parliament, as a political body, could intervene with the Commission and the Council with a view to ensuring that, in future, the very nature of Parliament, which is openly to deliberate on such issues, is not undermined.”

The parliament lied about the existence of coordinators’ minutes related to ACTA. Last year I filed a complaint with the Ombudsman against this.

Beyond ACTA, Corporate Europe Observatory has an interesting appeal running over negotiation documents and the Council appeals against the judgment of the General Court (Fifth Chamber) delivered on 4 May 2012 in Case T-529/09: Sophie in ‘t Veld v Council (Case C-350/12 P).

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complaint 1814/2013/RT

19 January 2014

Dear Ms O’Reilly,

I would like to kindly thank you for your reply on my request to reconsider your decision on complaint 1814/2013/RT. In your reply you refer to a decision on negotiation documents. This shows a misunderstanding of my complaint, as my complaint does not regard negotiation documents but ratification documents, for which disclosure is the norm. You conflate negotiation and ratification documents and erroneously apply case law on negotiation documents also on ratification documents. As the issues at stake are important and a fundamental misunderstanding came to light, I hereby ask you to reconsider your reply.

Ratification documents versus negotiation documents

It is essential to make a distinction between negotiation documents and ratification documents. Negotiation documents are made by the negotiators (Commission, governments) during the negotiations. Ratification documents are made by the European Parliament (or Council) after the negotiations, during the ratification process. Almost all negotiation documents are kept secret for a long time. Almost all ratification documents are immediately disclosed.

According to EU case law, disclosure of negotiation documents can harm the public interest as regards the protection of international relations. In 2009, I was the first in Europe to file a complaint against the secrecy of ACTA negotiation documents, Complaint 90/2009/(JD)OV. While the complaint did not lead to disclosure of documents, the Ombudsman’s formulation “citizens would have a clear interest in being informed about the ACTA” still was influential in the political process. Of course, years later, I didn’t refile a similar complaint – it wouldn’t have made sense. My present complaint does not regard negotiation documents, but ratification documents.

ACTA was initialed on 25 November 2010, this marked the end of the negotiations. The Commission published the final text, to be scrutinized and possibly ratified. After years of secret negotiations, finally public scrutiny and debate could start. The contested legal service’s opinions are assessments of the published final text. Neither the published final text nor the legal service’s opinions contain negotiation positions or anything like that.

The Parliament immediately published almost all ACTA ratification documents, such as studies, workshops, human rights assessment, debates, (draft) committee opinions and report. The Parliament only made some exceptions. First, the Parliament obscured the existence of committee coordinators’ minutes. In 2012 I filed a complaint regarding these minutes, Complaint 0262/2012/OV. Second, the Parliament refused to disclose the contested legal service’s opinions (which the Parliament produced itself in 2011, after the negotiations). While my 2009 complaint regarded negotiation documents, my 2012 and present complaint regard ratification documents.

During the ACTA negotiations, the Parliament had stressed the importance of openness. After the negotiations the Parliament produced and refused to disclose the contested legal service’s opinions – this shocked or amazed many people. At a Dutch House of Representatives’ committee meeting, 13 December 2011, minister of Economic Affairs, Agriculture and Innovation, Maxime Verhagen, said the refusal to disclose the European Parliament’s legal service’s opinion on ACTA was “gek” (odd/silly/crazy). He also said: “I support this Dutch citizen in spirit and deed”.

http://acta.ffii.org/?p=975

Why would a legal service’s opinion on an officially published text be kept secret? The Parliament did not refer to protection of the negotiations – that would not have been convincing as the negotiations were over before the documents were produced. To keep the legal service’s opinions secret, the Parliament invoked the public interest as regards the protection of international relations. The Parliament used a sole justification for invoking the public interest as regards the protection of international relations: article 18 Vienna Convention on the Law of Treaties (VCLT). The Parliament also invoked the protections of legal advice and the ongoing decision making process.

Conflating negotiation and ratification documents is unfounded

In your reply to my letter, the Ombudsman overlooks the distinction between negotiation documents and ratification documents, the Ombudsman conflates them. While my complaint is about ratification documents, the Ombudsman refers to a decision on negotiation documents. Two things go wrong here.

First, by referring to negotiation documents, the Ombudsman uses an argument which the Parliament itself did not use. The Parliament (rightly) did not conflate negotiation and ratification documents. The Parliament’s sole justification for invoking the protection of international relations is article 18 VCLT.

Second, decisions and case law on negotiation documents do not apply to ratification documents. The Ombudsman refers to Complaint 2393/2011/RA. The decision in Complaint 2393/2011/RA is based on Case T-301/10 In ‘t Veld v Commission. According to Case T-301/10 negotiation documents can be kept secret to allow mutual trust between negotiators and the development of a free and effective discussion during the negotiations (para. 119).

The decisive arguments in Case T-301/10 can not be used against disclosure in my case. Disclosure of the contested documents neither discloses negotiation positions nor disturbs mutual trust between negotiators or the development of a free and effective discussion during negotiations – as the negotiations were over before the documents were made, made by others than the negotiators, and the documents are just legal service’s opinions on a publicly available text.

As a result, Complaint 2393/2011/RA and Case T-301/10 are unrelated to my complaint. For similar reasons, Case T-529/09 Sophie in ’t Veld v Council is unrelated to my complaint. Case law on negotiation documents can not prejudice the openness of the contested legal service’s opinions.

The Ombudsman states that she has already taken a stance on similar if not identical arguments in Complaint 2393/2011/RA. This shows a fundamental misunderstanding as the Ombudsman decided Complaint 2393/2011/RA by referring to Case T-301/10, both of which, as we saw above, can not prejudice the openness of the contested documents. Ratification documents are not negotiation documents. Furthermore, in Complaint 2393/2011/RA the complainant invoked article 32 Vienna Convention on the Law of Treaties. In my case, the Parliament invoked article 18 VCLT. That is an other article.

Ratification documents

We saw above that case law on negotiation documents can not prejudice the openness of the contested documents. In my opinion, investigating my complaint involves three major questions.

First, did the Parliament err in law regarding article 18 VCLT? If the answer is affirmative, the Parliament’s sole justification for invoking the protection of international relations falls away.

Second, did I provide overwhelming public interest in disclosure? If the answer is affirmative, the protections of legal advice and the ongoing decision making process fall away.

Third, is the Parliament’s decision conform human rights law? In my complaint I argue that citizens have a human right to participate. The EU can only skip this human right by law, if necessary in a democratic society, and if proportionate.

If the answers to the first two questions are affirmative, the Parliament has to officially disclose the legal service’s opinions. If the answer to the third question is negative, the Parliament has to officially disclose the legal service’s opinions.

Documents not officially disclosed

The Ombudsman states that the documents were officially disclosed by an MEP. This is not correct, the documents could not be officially disclosed by an MEP, as they were produced upon request of committees. The coordinators of the legal affairs committee decided to release the documents, but did not actually do that. According to the Parliament, the coordinators were not competent to do this. See the 14 March 2012 answer to my 19 February 2012 confirmatory application: “(…) no decision exists to fully disclose document SJ661/11 which has been formally adopted by any competent political body of the European Parliament.”

Effet utile

In my opinion, there is a serious chance an investigation will lead to the decision that the Parliament has to officially disclose the legal service’s opinions. Indeed, why would legal service’s opinions on an officially published text be kept secret?

Citizen participation in ratification processes is essential, especially if the prior negotiations were confidential. An Ombudsman decision that the legal service’s opinions have to be disclosed would be of major importance for citizens.

This will help citizens (including me) in the future. While citizens will be able to challenge the Parliament’s error in law in the future, if made again, the procedures to do this will take so much time that the parliamentary ratification process of an international agreement will long be over before citizens (including me) will have gained access to the legal service’s opinion. Timely discussion of the Parliament’s error in law (now) and future timely disclosure of legal service’s opinions is essential for citizens’ participation in the decision making process.

Discussion of my human rights argument may bring further effet utile.

yours sincerely,

Ante Wessels

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EU faces double whammy with investor-to-state dispute settlement

In an interview with Inside U.S. Trade, European Parliament International Trade committee chairman Vital Moreira, talking about the trade negotiations with the United States (TTIP / TAFTA), defended the investor-to-state dispute settlement (ISDS) mechanism.

Under ISDS companies can sue states if new laws threaten to make expected profits lower. The cases are handled outside national court systems, by tribunals consisting of three investment lawyers. Civil society groups see ISDS as a threat to democracy.

Moreira’s defense actually shows the discriminatory nature of investor-to-state dispute settlement and that the EU faces a double whammy with ISDS, through direct effect of treaties.

Inside U.S. Trade:

“Moreira said he personally does not have a principled objection to ISDS, and actually argued that its inclusion in TTIP could provide additional protections for EU investors in the U.S.

For instance, Moreira noted that in the EU, once an international investment agreement is approved, it becomes the ‘law of the land.’ This means a foreign investor could bring legal action in a member state court or the European Court of Justice arguing a breach of the treaty. But the same is not true under U.S. law, where, without ISDS, the only recourse for a foreign investor is to argue that a government violated U.S. or state law with respect to the way its investment was treated.”

Discrimination

Moreira notes that in the US the only recourse for a foreign investor is to argue that a government violated US or state law.

That is correct. The same is of course true for local (US) investors, they too can only invoke US or state law. The US is generally regarded as having strong protection of investments and a good court system, so I do not see the problem. Moreira’s words imply that TTIP will have stronger investment protections than US and EU law.

That is legislation by the back door.

In the US, the additional protections will not be available for local investors. They will only be available for EU investors, through ISDS.

That’s discrimination.

Law of the land

In the EU, the extra investment protections will become the “law of the land”, according to Mr Moreira.

Investment treaties give foreign investors extra rights. So, US investors will have more rights before EU courts than EU companies?

On top of that US investors can also use ISDS arbitration, not available to EU companies.

That’s double discrimination.

Double whammy

Direct effect of investment treaty protection (“law of the land”) is a serious issue. Would EU courts follow the interpretations of ISDS tribunals?

That would put a captive in-crowd on top of the EU legal system.

If EU courts do not follow the interpretations of ISDS tribunals, investors can use ISDS tribunals to overturn the EU courts’ decisions.

That would put a captive in-crowd on top of the EU legal system.

That’s a double whammy.

This is where investors would like to see our governments, lawmakers and courts. Checkmate. But why would politicians like this?

Unnecessary risks

It’s unnecessary. Joseph Stiglitz, Nobel laureate in economic sciences, notes that investors that do not trust a foreign legal system can take an insurance.

Problem solved.

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European Parliament waives the right to be informed

In an interview with Inside U.S. Trade, European Parliament International Trade committee Chairman Vital Moreira said, regarding the trade negotiations with the United States (TTIP / TAFTA), that he is not now pressing the European Commission to provide parliament members with access to U.S. negotiating proposals, but that could change if the U.S. authorizes the commission to share these proposals with member states.

According to the Treaty on the Functioning of the European Union article 218 (10), the European Parliament shall be immediately and fully informed at all stages of the procedure. Apparently, the US demands that the EU violates its founding treaties. And the commission and parliament gave in. That’s not a good signal, giving in from the start. What else will we trade away?

The US is in a stronger position, the EU could use public disclosure to strengthen its negotiation position. There is so much at stake in these negotiations, details are crucial. It is irresponsible that the parliament waives its constitutional rights and gives in to secrecy demands.

In my opinion, the parliament has to correct Mr. Moreira.

Mr. Moreira also said the inclusion of investor – state dispute settlement (ISDS) in the EU-Canada Comprehensive Economic and Trade Agreement (CETA) sets a precedent in favor of its inclusion in a TTIP agreement.

“CETA is a precedent in favor of ISDS, and maybe the conditionalities there, guarantees that surround the adoption of ISDS in the CETA, could be also imported into TTIP,” he said, according to Inside US Trade.

Really? Mr. Moreira talks as if the controversial ISDS mechanism in CETA is already accepted and adopted by the EU. The negotiations are just finished, the text is still secret for (most) members of parliaments and for the public. The ratification process still has to start.

See what happens here? Secret negotiations, just some members of the European Parliament (including Mr. Moreira) had (some) access. And now it is a done deal, as far as Moreira is concerned.

This is not parliamentary oversight. The chairman of the trade committee, the man who has to ascertain openness, citizen participation and democratic scrutiny, ascertain legitimacy, quality and balance, ascertain that no tunnel vision harms the outcome, is fine with secrecy and tries to create faits accomplis (accomplished, presumably irreversible deeds).

A chairman has to try to safeguard best procedures. In my opinion, Mr. Moreira fails here.

Mr. Moreira is a social-democrat, he wants to create jobs. I fully agree with this intention. He may also genuinely believe that openness reduces the chances of an agreement being adopted. He may be right, as there will always be trade offs.

But the crucial point is that trade agreements may have perverse effects contrary to what was originally intended. Including on jobs.

Scrutiny is essential. Whatever good intentions, by harming scrutiny, Vital Moreira harms the union.

Regarding ISDS, see the next post (upcoming).

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