Counterfeiting of branded goods throughout the World continues to grow in large measure due to the Internet.  Online sales of counterfeit goods have surged.  Vendors, formerly secret, now sell and ship direct.  Payment is made via credit card, PayPal or Western Union.  The money hits an account and almost instantly moves to a "safe haven" jurisdiction.  While those engaged in the sale and distribution of fakes quickly understood their business was without borders by reason of the Internet, those charged with anti-counterfeit efforts remain hampered by those very same borders.  As a result, a number of countries have been negotiating an arrangement to harmonize their anti-counterfeit efforts, in short, removing the differences between jurisdictions that have posed problems in effective anti-counterfeit action.  One result is the proposed Anti-Counterfeiting Trade Agreement (ACTA).  After many secret drafts, the first official draft was released for public comment in early 2010.

After receiving detailed feedback, the negotiators concluded what they claim to be the final round of negotiations later that same year.  Because so much of the process was initially cloaked in secrecy, there was an outcry for transparency and public review and comment before being presented to the various signatory countries for formal adoption.  For example, a group of law professors in the fall of 2010 urged President Obama, by open letter, to direct the United States Trade Representative to stop its public endorsement of ACTA and to engage in a "meaningful participation process" for shaping the agreement going forward.1 Although the demand for participation was loud, the United States continued to participate in the final negotiations leading to the apparent finalization of the Act itself. 

On November 15, 2010, the participants finalized the text of ACTA.2 The premise of the Act as currently drafted states that the "effective enforcement of intellectual property rights is critical to sustaining economic growth" and "the proliferation of counterfeit and pirated goods…undermines legitimate trade and the sustainable development of the world economy, caus[ing] significant financial losses for right holders and for legitimate businesses."3   Of that there is little doubt.  However, the release of the final draft is not the end of the matter for this Act. Each participating country must now verify the draft text and thereafter submit the Act to that country's relevant authorities for ratification.4

  If ACTA were considered a treaty, in the United States it would require presentation to the Senate for ratification.  As one might expect, there is a serious question as to whether the Senate would move such an agreement forward at all, much less ratify it in the form of the text released.  The current Administration has, however, adopted the position that ACTA is not a treaty and thus there is no need to present the same to the Senate. Rather, as ACTA requires no further laws or regulations to be passed domestically in order for the United States to perform its obligations as required by the Act, the Administration's position is that  the President has the power to simply sign off on the draft directly.5  Many disagree.  For example, a group of law professors believes that the President does not have sole constitutional authority over intellectual property or communications policy, which are the main subjects of ACTA.6  The professors believe that Congress has primary authority over these matters, as it is charged with making laws that regulate foreign commerce and intellectual property.7  They are of the opinion that ACTA should not be pursued further without congressional oversight and a meaningful opportunity for public debate.8 That debate, at least in the United States, is underway in earnest.

ACTA seeks to establish a comprehensive, international framework that will guide its members on how to effectively combat the infringement of Intellectual Property Rights (IPR).9  ACTA would develop a new international standard, building on the World Trade Organization's Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), which was adopted in 1994,10 and includes provisions on the enforcement of intellectual property rights, including:

  • civil measures;
  • criminal measures;
  • customs measures;
  • Internet enforcement measures;
  • robust cooperation mechanisms among ACTA Parties to assist in their enforcement efforts; and
  • establishment of best practices for effective IPR enforcement.11

Although released to the public as the "final" draft document, there are a number of unresolved issues.  European Trade Commissioner Karel De Gucht has, for example, raised concerns about the exclusion of patent infringements from the civil litigation measures.12  More specifically, the Commissioner expressed concern that the exclusion of patent infringements from civil litigation measures may deprive many industrial sectors of the benefits of the treaty and "will lead to a blanket exclusion for the automotive, machinery, pharmaceutical, and agro-chemical sectors."13  Furthermore, as mentioned previously, commentators in the United States have generally questioned whether the President's position that he can simply sign off is correct as well as the general constitutionality of ACTA relative to United States law.

ACTA has come a long way since the beginning of negotiations in 2008.  Public Knowledge, a D.C. advocacy group that had long opposed ACTA, stated the following of the current text:

[It is] a qualified victory for those who want to protect the digital rights of consumers around the world.  Some of the most egregious provisions from earlier drafts have been removed on topics ranging from digital protection measures to the liability of intermediaries like Internet Service Providers and search engines.14

Likewise, the Recording Industry Association of America stated:

While ACTA does not provide all of the answe­rs about how governments will move forward to tackle online piracy, it is a very important multilateral statement concerning the importance of finding solutions to online theft.  It may not be a precise roadmap, but it is a powerful expression of a common vision and unity of purpose.15

Whether ACTA will be fully adopted and implemented remains to be seen.  At least six signatory countries must individually ratify the Act.16 Uniform implementation is unlikely as different countries may or may not be able to fully apply the Act.  For example, Section 3 dealing with Border Measures states:

In providing, as appropriate, and consistent with a Party's domestic system of IPR protection and without prejudice to the requirement of the TRIPS Agreement, for effective border enforcement of intellectual property rights, a Party should do so in a manner that does not discriminate unjustifiably between intellectual property rights and that avoids the creation of barriers to legitimate trade.17

While on its face the provision is reasonable and without prima facie objection, there is no clear statement as to what standards are to be applied in determining whether something done by a country along its borders to stop infringement is justifiable given what might be seen as impeding trade.  In short, some countries might well use such a provision to unlawfully block imports that are coming in at lower prices than comparable domestic goods.   Although it is clear that ACTA is not the end of the effort to harmonize global intellectual property protection and is not without faults or problems, it is, in this writer's view, certainly a needed step in the right direction.  There is little question that the Internet coupled with global trade agreements has enhanced the abilities of counterfeiters to act from safe haven countries to adversely affect the economies of countries that seek to prevent such criminal efforts.  ACTA is a flawed effort to remedy this gap in global enforcement but is very much an effort to be applauded.  It remains to be seen whether ACTA will be finally adopted in the United States and elsewhere.  To the extent it is, it will be a paradigm for developing nations and is likely to serve as a foundation for future discussions in the global anti-counterfeiting effort.