According to a leaked document authored by the European Commission DG Trade, the secret ACTA treaty will reopen the debate on the liabilities of Internet Service Providers (ISPs) over content, as well as trying to achieve criminal sanctions in the EU under the French Presidency Sarkozy. France has already criminal sanctions for file sharers, and a law project on file sharing and "graduated response" has been recently passed the Senate. ACTA might also export the dangerous IPRED1 directive to the United States, which allow patent trolls in Europe to preventively freeze bank accounts of a company in case of "suspicion of infringement".
Here are the more relevant parts:
ACTA will also create a new international benchmark for legal frameworks on IPR enforcement, whilst fully respecting civil liberties and the rights of consumers, as is the case for the Community acquis. It is critical to have a strong and modern legal framework as is the case in the EU- so that law enforcement agencies, the judiciary, and private citizens have the most up-to-date tools necessary to effectively bring counterfeiters to justice. Areas for possible provisions include:
- Civil enforcement : e.g. the mechanisms available in EU Enforcement Directive of 2004, such as the availability of preliminary measures, preservation of evidence, damages and legal fees and costs;
- Criminal enforcement : It would be key to the effectiveness of ACTA as an enforcement instrument for it to contain clear standards for deterrent and efficient criminal action against counterfeit. There is no EU legislation in this area yet. The Commission has proposed a Directive harmonising the treatment of criminal IP infringements at EU level in 2006, but it has not been adopted so far. This means that The EU Presidency, on behalf of its Member States will coordinate this area of the negotiation and, to a large extent, define what kind of measures the EU is ready to undertake;
- Internet distribution and information technology - e.g. mechanisms available in EU E-commerce Directive of 2000, such as a definition of the responsibility of internet service providers regarding IP infringing content.
The Members of the EU are also very keen on copying provisions of the EU Enforcement Directive of 2004, which allows notably to preventively freeze bank accounts of normal businesses in case of "suspicion" of infringement.
The treaty would apply the same harsh sanctions for all IP infringements, whether they are patents or plant variety rights. ACTA might be a fuel for patent trolls, since it could lower down the threshold level for obtaining injunctions and freezing bank accounts of the suspected infringer. This is exactly what happened in the Italy recently just after the implementation in italian law of the IPRED1 directive with the Philips Vs Princo case. In this case the bank accounts of the Italian trader were frozen in advance, even before a court decision was reached:
‘Piracy’ provisions under the Enforcement Directive and patent infringement
Laura Orlando (Trevisan & Cuonzo Avvocati)
Princo Corporation, Ltd v Koninklijke Philips Electronics, Docket no. 3213/07, Court of Genoa, 18 April 2007
The Court of Genoa has issued its first decision on the application to patent infringement of the remedies introduced by Directive 2004/48 on the Enforcement of Intellectual Property Rights, dismissing the appeal filed by Princo against a precautionary seizure order over its movable and immovable property issued by a judge of the Genoa IP Chamber on the grounds that the patent infringement was committed intentionally and on a commercial scale.
During a hearing in the European Parliament on the revision of the directive, a french expert confessed that the directive was problematic in France and lowered down the threshold to obtain an injunction from "quasi-certainty of infringement" to "suspicion of infringement". He said that current judges tends to keep the old way of issuing injunctions only when they have quasi-certainty, but this could change with new judges.
This lowering of barriers to obtain injunctions for patents has been highlighted in an FFII's analysis in the problems of the IPRED1 directive:
Overheated protection attracts trolls
The broad and abstract nature of software patents makes infringement unavoidable, and most software systems unavoidably infringe on multiple patents. All companies ignore software patents to some extent, simply because every single useful program you write infringes on several patents.
The IPRED (1) Directive gave patent litigants great powers to harass software producers, seize documents and freeze assets. Harsh measures which are justified against commercial piracy enterprises, not against legitimate entrepreneurs. One could say that the Directive enhances legal security for right owners by introducing new legal insecurity for competitors.
Software entrepreneurs may well be careful in using these measures, the competitors could retaliate. But there is no way to retaliate against patent trolls. These companies do not produce anything, acquire patents at low cost for instance by buying bankrupted companies. Their patents tend to have broad claims on trivial methods so that infringement is unavoidable. While the Directive is meant to fight piracy, it gives trolls the means to extortionate entrepreneurs. Patents should never be under the scope of anti-piracy measures.
The provisions mentioned in the ACTA document resemble the IPRED (1) Directive. While "exporting" an adopted Directive may seem uncontroversial, in this case it is not, since IPRED (1) is disproportional. The fact the Community made a mistake before does not make it legitimate to export this Directive – the Community's actions have to be proportional.
It is clear that DG Trade and other delegations of Member States are pushing for provisions against "patent pirates" inside ACTA.
With the export of low injunction levels to the United States, we might have a fireworks of patent lawsuits in the US soon. The US Supreme Court made the threshold higher to issue injunctions in the eBay vs MerckExchange case (a patent troll which had a trivial patent on the "Buy Now!" feature), see the Forbes article "Supreme Court Buries Patent Trolls":
The online auction house had petitioned the Supreme Court to review the practice of automatically issuing a permanent injunction whenever a patent was found valid and infringed, arguing that the rigid standard was not grounded in the law.
At stake for eBay was the viability of the popular, fixed-price "Buy It Now" section of its Web site. MercExchange, a tiny, Virginia-based patent-holding company, won millions of dollars in damages when it successfully sued eBay for violating one of its patents related to the fixed-price auction feature.
ACTA, by exporting the harsh sanctions of the IPRED1 directive, will just do the opposite.