Fighting the fakes

Despite the best efforts of brand owners, customs authorities and enforcement agencies, the numbers relating to global counterfeiting remain mind boggling.

Data from the Organisation for Economic Cooperation and Development indicates that international trade in counterfeit and pirated goods grew to more than $250 billion in 2008 (almost 2% of world trade) up from $200 billion in 2007.

If you are the owner of intellectual property then it is very likely you have already had to deal with this issue or will have to do so in the near future. As a rightsholder you may suffer significant financial loss as a result of rip-off versions of your product entering the market. As a consumer you are likely to have been mislead at some point or another as to the quality and legitimacy of a product you have purchased.

New Zealand is not immune to the problem. In the year to June 2009 the New Zealand Customs Service detained over 270,000 counterfeit items. Commonly targeted goods include well known clothing brands, footwear and caps; and accessories like sunglasses, watches, perfume and jewellery. More recently, the introduction of file sharing software has facilitated the copying and distribution of pirated music, movies, music and software on a large scale. Other types of goods are also being copied which are a health and safety risk to consumers including auto parts, cigarettes, medicines, food, drink and toys.

New treaty proposed

In response to increasing concerns worldwide, a group of countries, including New Zealand, have been negotiating an international treaty aimed to combat the trade and counterfeit and pirated goods. The treaty is known as the Anti-Counterfeiting Trade Agreement (ACTA). It focuses on establishing better mechanisms to enforce the rules against counterfeiting and piracy.

ACTA negotiations began in June 2008 and the aim is to conclude by the end of 2010. The participants are Australia, Canada, The European Union, Japan, Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland and the United States. New Zealand's negotiating team is made up of officials from the Ministry of Foreign Affairs and Trade, the Ministry of Economic Development and the New Zealand Customs Service.
The most recent negotiations on the proposed ACTA were held in Wellington from 12-16 April 2010. As a result of the discussions held during this round, it was agreed that the consolidated draft ACTA text would be released to the public. This has subsequently occurred and a copy of the text is available here.

Controversy

The content and format of the ACTA negotiations have been the subject of heated debate worldwide with a number of entities and individuals criticising what was viewed as a lack of transparency in negotiations. Their primary concern appears to be that negotiations are being conducted behind closed doors and that ACTA will substantially erode internet access rights to citizens around the world.

Proponents for ACTA consider that the ACTA related documents that have been leaked (and the most recent draft version that has been revealed) do not pose that great a threat to the internet access rights. The agreement appears to be largely modelled on the United States' Digital Millennium Copyright Act (DMCA). It remains to be seen whether the release of the document will change the general public's view on ACTA.

What does the ACTA treaty cover?

Current ACTA proposals would require member states to impose liability on internet service providers (ISPs) for contributory copyright infringement and for inducing infringement. Proposals also provide for safe harbours to ISPs that temporarily cache third party data or act as "mere conduits" to third party data, and lack actual knowledge of infringing content in that data. To qualify for these safe harbours, ISPs would be required to institute a notice and takedown system and insert clauses in customer contracts allowing for a graduated response to infringing activity.

The draft released also provides for criminal penalties and procedures in the cases of deliberate trade mark counterfeiting, and copyright and piracy, on a commercial scale; border protection measures for cases involving trade marks and copyright; and ex officio authority to stop goods bearing counterfeit trade marks at the border.

Counterfeiting and piracy - a big problem for music and movies

Virtually the entire developed world, accounting for half of world trade, is participating in, and depends on, the economic growth and resilience of industries that rely on copyright, patent and trade mark protection. Pervasive copyright piracy and trade mark counterfeiting are real in present danger to this engine of economic growth. Whether online or offline, the increasingly sophisticated businesses of pirates and counterfeiters are a direct threat to the economies of societies reliant on intellectual property.

For example, The International Federation Phonographic Institute (IFPI) cites a fall in music sales of around 30% between 2004 and 2009. The worst affected markets hit the countries where, despite the industries efforts, legitimate digital services have had little chance to take root. In Spain where legal problems have frustrated the ability to take action against piracy, sales fell by around 17% in 2009 and the market is now at about one third of its level in 2001.

Is ACTA the answer?

The jury is still out on whether ACTA will succeed and whether a clear, ambitious and yet practical standard will be developed from it across a range of civil and criminal enforcement topics outlined draft. But no matter what your view on ACTA, it is impossible to ignore the crippling effects illegal file sharing and other types of counterfeiting are having on the music and movie industries in particular. Something clearly has to be done.

Have your say

Submissions were called for on ACTA earlier this year and are now being considered. You can still have your say on New Zealand's national legislation which seeks to implement many provisions contained in ACTA. Submissions have been called for in relation to the Copyright (Infringing File Sharing) Bill. Submissions are open until 17 June 2010. If you would like assistance with any submission you may wish to make, please contact Ian Finch or Claire Tompkins.

By Claire Tompkins, Senior Associate

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