Asked and Answered #7: America. F$%@ Yeah!

In this episode, we celebrate the 4th of July holiday by discussing the US’s new trade agreement, the Trans-Pacific Partnership.

Music:

The Underscore Orkestra – “Americana Jam”

The Willing – “America”

Cletus Got Shot – “American Dream”

Transcript:

Hello everyone. You’re listening to “Asked and Answered,” number 7. I am John Di Giacomo. I’m internet and intellectual property attorney with Revision Legal, and “Asked and Answered” is our podcast on internet and intellectual property law. Typically I am joined by my partner Eric Misterovich, but he’s not with me today. This is the 4th of July weekend, or at least we’re going into it. Today is July 2nd. The 4th of July is my favorite holiday. Why is that? Well. 4th of July is my favorite holiday because the place that we live, Traverse City Michigan, is inherently beautiful during this time of year, and currently overlooking what is called ‘west grand Traverse bay,’ which is a bay on Lake Michigan.

It’s about 76 degrees, it’s incredibly beautiful out. There’s sailboats out there. There’s a festival being set up, it’s called the ‘National Cherry Festival,’ of all things. Which sounds kind of corny, and in some ways it is, but it’s actually a very cool thing that’s over the cherry harvest, cherry blossoms, and our local food culture. Really, I love the 4th of July because I love America, as weird as that sounds. I just spent a bunch of time traveling in Switzerland, which is an incredible country, incredibly beautiful. They do a hell of a lot of things much better than we do, but I like America … and I like freedom.

As our listeners know, this is a pirate ship … much like America was when it was founded. I have a certain place in my heart for pirate ships, and tests including government tests. Unfortunately Eric Misterovich is unable to join us today because he doesn’t like America. He’s in Canada like a communist eating maple syrup. Like a bald eagle, I’m going to solo this one. Today we’re going to talk about the Trans-Pacific partnership, which is an international treaty that is currently being discussed and will likely be signed within the near future. Like a bald eagle, I’m going to dub this show … “America. Fuck yeah.”

What is the Trans Pacific partnership? Well. The Trans Pacific partnership is a free trade agreement that is currently under negotiation between 12 countries. Those are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, The United States, and even Vietnam. Even old communist countries are now getting involved in the free trade game, which is pretty interesting to see. The TPP as I’m going to refer to it, is a massive massive treaty, and there are some pieces of intellectual property legislation contained in that treaty which are very interesting. Which is what I’m going to cover today.

I’m not going to cover all of those pieces of intellectual property legislation, but I think … I’ve picked out a few that I think are most interesting. The TPP has gotten a lot of press lately, most recently because the TPP fast track bill was signed by President Obama, which now provides him with the power that he needs to complete the negotiations over this trade bill. It’s been pretty controversial. In the internet space, the internet lost base included, TPP is seen as a massive expansion of intellectual property rights, and really a means by which American corporations have forced South Pacific nations to adopt intellectual property perspectives that are inherently American.

That might be a problem, might now be a problem. I’m not taking a position on it at all, but it’s just an interesting time to be alive as an intellectual property attorney. It’s really an interesting time to be alive as a person whose interested in global trade. Let’s take a look at some of these intellectual property provisions of the TPP. Let’s start with trademarks. The trademark provisions in the TPP are fairly straight forward. Trademark legislation in the United States falls under what’s called the Lanham act. The Lanham act requires basically the U.S Patent and Trademark office and Federal Courts to recognize trademark protection in sounds and scents.

Provided that a sound or a scent can serve as the indicator of goods or services and it be distinctive, it’s eligible for trademark protection under the Lanham act. Trips, which was the previous treaty, allowed signatories to condition trademark protection on the fact that the mark was visibly perceptible. Meaning that the mark could be seen. Now, under the leaked version of TPP, that’s not the case. You have to recognize both sound and scent marks, and that’s a change. Additionally, the TPP provides that owners of registered trademarks have the right to prohibit 3rd parties from using their trademarks in trade, and it also prohibits 3rd parties from using similar signs for goods or services that are related to those goods and services for which a trademark is registered.

The test of whether or not something constitutes infringement is whether or not the infringer is using a similar sign for goods or services that are related to those goods or services for which a trademark is registered. In contrast to that test, the Lanhum act the U.S trademark act, states that a 3rd party may not use in commerce any color-able imitation of a registered mark in connection with the offering for sale, the distribution, the advertising of any goods or services … or in connection any such use that is likely to cause confusion. The underlying idea is that the standard under the U.S Trademark Act is, consumer confusion. Where as the standard under the TPP seems at least at this first glance to be a little bit broader than the Lanham Acts prohibition on use and association with goods or services if that use is likely to cause confusion.

Rightfully so, a lot of people are concerned that this acts as a broadening of the scope of trademark law, that could have numerous unintended consequences such as free speech consequences. Now, in the United States we’ve created this famous trademark doctrine. Famous marks are given an additional amount of protection against brand delusion, which is the delusion of the brand through 3rd party uses, and tarnishment. These protections are extended even where there is no danger that consumers will be confused into believing that goods bearing a mark similar to a famous mark originates from the same source. Recall that I just said likelihood of confusion is the key test of U.S trademark law.

Well. That’s not really the test, when it comes to delusion. Delusion by bearing or tarnishment, the test is whether or not there is bearing or tarnishment. The idea is that some brands are so big that they deserve special protection. These would be brands like Coca Cola, or Disney. Brands of that size and caliber. Well, the TPP states that, “A party may not require registration of a trademark … excuse me doesn’t need to require the registration of a trademark for it to be considered well known.” Well, that’s a change. Typically registration would be needed to be considered a well known or famous mark. Let me make side note that well known is the standard under TPP, it’s not famous as it is in the U.S Act.

In determining whether a mark is well known or famous as it would be in the United States, no signatory country is allowed to require that the reputation of that trademark extend beyond the sector of public that normally deals with the relevant goods or services. A good example would be in the manufacturing industry. If there’s a manufacturing industry trademark that is famous or well known within that industry, but it’s not famous or well known outside of that industry, it can still achieve well known status under TPP. This language indicates that it will be a lot easier for a mark to be considered well known under TPP, which is concerning because especially in the United States when we adopted this delusion act, individuals were concerned that trademark owners would over-extend and use their rights to silence legitimate free speech.

A good case was the Coca Cola t-shirt case, where somebody took the Coca Cola logo and trade dressed design and used it for a t-shirt that said, ‘Cocaine.’ Basically, ‘Enjoy Cocaine.’ Well, Coca Cola doesn’t like that obviously, so why would they not extend their rights and try to prohibit those types of uses which they believe tarnishes their brand identity? Well, now there might be more opportunities for this both from a national perspective and an international perspective in light of TPP. Another change, and the final change I’ll discuss with trademark law.

Under the prior agreement, which is trips, prior treaty. Geographical indicators, which are terms that indicate a good or service based on their geographic location, such as a wine region, we contained within a separate section of the trade agreement. This was separate from trademark law. In the United State we don’t do that, we recognize trademark rights in geographical indicators if they are used as a mark, and if they have acquired what’s called secondary meaning. Now, under the TPP treaty, it appears that geographical indicators are going to be considered to be a component of trademark law. That means that signatories can allow trademark protection of geographical indicators, but there are some protections.

In a contest between a trademark owner and a geographical indicator, the generic use of a geographical indicator will serve as a defense of infringement. This is pretty much standard U.S law. For example, the cherry festival is going on right now. Cherry capital, is what we call this geographic area. We call it the cherry capital of the world. Now, if somebody uses the term cherry capital in a geographically descriptive sense, and then later it gets sued by somebody using cherry capital in a trademark sense that has acquired what we call secondary meaning, the person using cherry capital in a geographic descriptive sense would be able to use that as a defense in a trademark lawsuit. Again, this is not a huge change in comparison to U.S law, because U.S law already does this. For the purposes of a treaty, this is a pretty big change.

Now, let’s talk about copyright law. There’s some major changes coming … or at least indicated to come in TPP with respect to copyright law. At least one of the biggest changes I see is the temporary copy’s change. Under U.S law, the digital millennium copyright act, which is an act in I believe 1996 states that, “Copyright rights do not extend to temporary or transitory copies.” What does this mean? For example, a piece of code typically … when you run a piece of software a piece of code is run into ram, and is temporarily stored in ram, and loaded into ram to operate that piece of software. Now, U.S law does not extend protection to that temporary copy that is loaded into ram.

There’s a number of good reasons for this and it was litigated pretty extensively over the years, which is why it resulted in a statutory provision in the digital millennium copyright act. Under TPP, signatories are authorized to prohibit reproductions of works, including temporary reproductions of works that are stored in electronic form. This is a pretty drastic increase in the scope of copyright rights, and it potentially makes the act of loading a computer program into ram, or even catching a website in active infringement. For example, under U.S Law, internet service providers can not be held liable for the temporary storage or indexing of material.

There’s a good reason for that. We don’t want to hold Google liable for indexing for example search engine results. It’s unclear whether this exemption will remain for the signatories of TPP. Signatories of TPP can basically prohibit those types of activities, or at least that’s what it appears at this stage. Now, the next interesting piece of law is parallel imports. Parallel imports are the idea that if you buy something in another country, you should be able to import it into the United States and sell it regardless of the fact that you bought it in another country. Under U.S law we have this doctrine called, ‘copyright for sale’ doctrine.

The copyright for sale doctrine states that the first sale of a good cuts off the copyright owners right to control that good. This is why we have a robust market in used video games and movies. Those types of stores are able to sell copyrighted materials without facing the threat of a copyright infringement lawsuit. If the first sale doctrine didn’t exist, which in some cases after a case called vernor v autodesk it might not. Used video games stores would be essentially illegal because the right to control that copyrighted material would continue even after that copyrighted material was sold to the end user, or the consumer.

The first sale doctrine also implies in the United States to goods that are purchased outside of the United States. That means that if you purchase what are called grey ‘market goods.’ For example, if you go to Mexico or Argentina or Australia to buy goods that are cheaper there, for example if you want to buy a coach bag and it’s cheaper in let’s say Argentina as opposed to the United States. Those goods, if they were legitimately purchased outside of the United States can be imported into the United States and then be sold. This is important because a lot of people will buy goods from a different territory where the purchasing power is lower.

They’ll buy them at a cheaper price. They’ll import them into the United States, and then they will sell them for a rate below the market rate within the United States. Under current U.S law you can not be held liable under most circumstances for the resale of the those types of goods. Under TPP, signatories to that treaty can now either authorize or prohibit the sale of these grey market goods depending on the preference of the country. This could either increase the market for grey market goods, or it could destroy the market for grey market goods. It really depends, but it’s a pretty interesting development.

One of the big big changes for a lot of South Asian nations that are signing … or will likely sign this TPP agreement is that the copyright duration is going to be extended. TPP extends the duration of copyright protection for the life of the author plus 70 years after the authors death. This is very similar to the duration of copyright protection in the United States, which was extended via the Sonny Bono act which was very controversial. For other nations to adopt this lengthy term of copyright protections means that a lot of works that otherwise would fall into the public domain that could be re-mixed, and re-used, and built upon, will not be eligible for those types of re-uses or remixing purposes.

This is a very huge change, and it almost seems like the U.S, or U.S corporations are extending their want for longer intellectual property protection into South Asian nations, which is a large worry for a lot of people in the internet space. Now, another large worry is the anti-circumvention provisions. Anti-circumvention provisions are intended to protect against circumventing technological protection measures, typically digital rights management measures so that basically you can’t copy and underlying copyrighted work. Under U.S law, and under the TPP, there are protections against the circumvention of technological protection measures such as digital right management technologies.

TPP diverges from U.S law by prohibiting devices and services that not only have the purpose of circumventing technological protection measures, but also facilitate or enable circumvention. That’s a broader standard. A large swath of things that otherwise might be legal under U.S law may not be legal under TPP. Typically these issues arise in ink jet cartridges for example. If somebody wants to make an off branded ink jet cartridge, the argument would be that the anti-circumvention provisions would prohibit you from doing so because by doing so you’re circumventing a technological protection measure that protects against 3rd party vendors from allowing ink jet cartridges to be compatible with your current system.

The same is true for the new Keurig 2.0. We saw a lot of press about that. Now, the TPP also says that anti-circumvention provisions apply even if there’s no underlying copyright infringement. Now, in the United States we’re currently in the courts debating this issue. The question is whether or not the anti-circumvention provisions of the digital millennium copyright act were intended to protect against an underlying claim of copyright infringement. Or, whether or not they are their own cause of action. For example, in the case of an ink jet printer manufacturer, the question is if I as a 3rd part manufacturer create a ink jet cartridge, and the interoperability of that ink jet cartridge doesn’t cause an underlying copyright infringement.

I build it for let’s say an HP machine, and by building it for an HP machine and allowing it to be fitted into an HP machine I don’t violate any copyright protection. Should that actually be a violation of the anti-circumvention provisions? Well, with the TPP that’s out of the window. TPP say’s that these anti-circumvention provisions apply even if there is no underlying copyright infringement. Now, that’s a pretty big deal. We just posted something on our blog yesterday about … basically a fight in front of the U.S copyright office over 3d printer manufacturers and their fight against 3rd party creators of plastic inserts so that you don’t have to use the manufacturers plastic when you’re operating your 3d printer.

If there doesn’t have to be an underlying copyright infringement claim in order for a company like a 3d printer manufacturer to use those anti-circumvention provisions as a sword, we may see a disruption in the market for ink jet cartridges, 3d printer, plastic material, etc. This is a pretty interesting provision, and it could result in some pretty interesting changes both nationally and internationally. Now, the last thing that I wanted to talk about is damages. Under international copyright law, typically you won’t find what are called statutory damages.

Statutory damages are damages that exist because actual damages are either too costly or too difficult to determine, and so statutory damages serve as kind of a judgmental heuristic or a short cut to getting large amounts of damages without having to prove actual damages. The idea behind statutory damages is that statutory damages should be sufficiently high to serve as a deterrent for future infringements. Now, TPP requires that it’s signatories create a system of statutory damages that are sufficiently high to constitute a deterrent to future infringements. Now, Europeans typically look at U.S copyright law and they say, “What the hell are you guys doing over there?”

Why can somebody be held liable for up to $150,000 for downloading a movie. The reason why is because of statutory damages. For some reason the congress said this is the incentive for people not to download movies. We’re going to make this sufficiently high to deter this conduct, and therefore people won’t download movies. That didn’t happen obviously. That theory underlying statutory damages is now being extended by treaty to the South Asian nations, which could result in some interesting consequences. It could result in a coat tailing of fair use rights, for example.

Fair use in the United States relies on a defense. It’s not a right per say, it’s a defense to a copyright infringement lawsuit. Defenses are expensive to assert, so typically lawyers will advise clients to get a license, which results in this reciprocal world where no one challenges the rights with fair use. In the presence of huge penalties because of statutory damages, fair use starts to go even further away because no one wants to take the risk in asserting a fair use defense that they might ultimately be hit with statutory damages. It’s a real risk, and it’s a pretty interesting provision that is contained within this TPP.

That’s all I’ve got for you this week. I just want to say happy 4th of July, and I hope everybody enjoys this holiday. I hope you have a nice barbecue or whatever you like to do with your families. I’d just like to say thank you America, and ‘America, fuck yeah.’ Have a great 4th.

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