I am proud to announce that my article on Canada - South Korea Free Trade Agreement (CKFTA) has just been published by Intellectual Property Magazine. You can buy or subscribe to the magazine at http://www.intellectualpropertymagazine.com/.

The publisher generously agreed to its republication, so you can read my comments below.

MUCH ADO ABOUT CKFTA

CONTEXT

On September 22, 2014, Canada’s Prime Minister Stephen Harper and Korean President Park Geun-hye celebrated the signing of Canada-Korea Free Trade Agreement (CKFTA). This article’s objective is to provide the context for and brief comments on IP-related provisions of CKFTA.

The official Canadian summary of the Agreement’s highlights states that the Agreement “will ensure that Canadian IP rights-holders can do business with confidence in the South Korean market”^1..

This appears somewhat condescending given that Canada is not exactly known for being at the forefront of intellectual property protection. Just the opposite, since 1995, Canada has been on the U.S. Government’s Special “Watch List” as a country where IP protection is problematic^2.. Canada’s position is that its failure to adequately protect IP is an attempt to find “an appropriate balance between the interests of IP rights-holders and the interests of users.” How using somebody else’s property without permission can ever be a right is being conveniently overlooked.

The author of this article is a Canadian lawyer and does not purport to know Korean law, but statistics for both countries’ participation in international treaties on intellectual property demonstrate that Korea takes IP more seriously. Canada is a party to 10 international treaties (of which two Canada joined in 2014)^3., while Korea is a party to 18^4.:

Many IP-related provisions of CKFTA merely reference other international treaties to which Canada and Korea are parties. This is important because Canada does not enforce international treaties directly. To have the force of law in Canada, provisions of all international conventions, treaties and agreements (including CKFTA) must be implemented in national Canadian legislation.

Add to this rather vague language of Canadian statutes on intellectual property and scarcity of precedent law—and you will see the problem. How would you know if a certain provision of an international treaty needs implementation into the national legislation if two lawyers can’t agree on what the national legislation actually is? Some Canadian lawyers, myself included, believe that extensive scope of exceptions from copyright conflicts with Canada’s obligations under the Berne Convention and TRIPS, while some others believe that it doesn’t. As a result, the parties are likely to have different assumptions about how these provisions should be interpreted.

GENERAL PROVISIONS

One of the declared objectives of CKFTA is “to achieve a balance between the rights of IP right-holders and the legitimate interests of IP users.^5.” Notice that the treaty does not use the controversial words “users’ rights”, however there still remains the question, what legitimate interests do IP users have regarding intellectual property of others. Who determines what interests are legitimate? Is using someone else’s music for your YouTube videos your legitimate interest? Is copying textbooks for the purposes of education a legitimate interest? What about using pictures on a blog by a non-profit?

CKFTA reaffirms both parties’ obligations under TRIPS as a minimal standard^6., confirms the national treatment requirement^7., and opens the door for a more extensive protection for and enforcement of intellectual property, as long as such extensive protection “does not contravene CKFTA.^8.” Which, again, brings the question of users and their rights and legitimate interests. By definition, protection of exclusive rights comes at the expense of everyone other than the owner of that exclusive right. Logically, it is impossible to unilaterally offer more extensive protection to IP owners without disturbing the “balance of interest” that CKFTA purports to achieve.

TRADEMARKS

The Treaty specifically opens the door for sound trademarks and forbids limiting registrable trademarks to those that are visually perceptible^9.. This is in line with the law established in Canada after a 2012 Practice Notice by the Canadian Intellectual Property Office and the recent amendments to the Trade-Marks Act.

CKFTA requires the parties to protect collective marks (trademarks owned by an organization for the use by its members) and certification marks (trademarks for the use by anyone who meets a defined standard prescribed by the owner of the mark), whether such trademarks are protected as a separate category or not^10.. While Canadian law protects certification marks, it does not (nor do the soon-to-be-in-force amendments to the Trade-Marks Act) refer collective marks.

The Agreement confirms the right (but not an obligation) of the parties to recognize unregistered, common-law, trademarks^11..

CKFTA requires both parties to provide extra protection to well-known trademarks, whether or not such marks are registered, included on a list of well-known marks, or already recognized as well-known^12.. Such protection must be conferred even if the goods and services are not identical or even similar, as long as using the well-known trademark in relation to non-similar goods or services “would indicate a connection between those goods or services and the owner of the trademark.” The interesting thing is that Canadian trademark regime is uncertain about the status of well-known marks. The leading case is the 2006 decision of the Supreme Court of Canada in Mattel Inc. v. 3894207 Canada Inc.^13. that confirmed that difference in goods and services must be considered, however, in different cases such difference may carry greater or smaller weight. Whatever the interpretation, it is more narrow than what is commonly expected from protection conferred to well-known trademarks. Unfortunately, CKFTA does not provide more clarity whether Canada’s current standard is about to change or whether the countries would have two different standards for treating well-known marks.

GEOGRAPHICAL INDICATIONS

The parties agreed that subject to any prior rights, Korea must protect the names “Canadian Whisky” and “Canadian Rye Whisky”, and Canada must protect the names “Goryeo Hongsam”, “Goryeo Baeksam”, “Goryeo Susam”, and “Icheon Ssal” and their translations, respectively, “Korean Red Ginseng”, “Korean White Ginseng”, “Korean Fresh Ginseng” and “Icheon Rice”^14..

CKFTA establishes no new general rules for geographical indications, so its effect on Canadian laws will be rather limited.

COPYRIGHT

The Agreement reaffirms that both parties shall comply with the Rome Convention, the Berne Convention, WCT and WPPT^15.. Each party must provide that authors “have the right to authorize or prohibit all reproductions of their works.^16.” Yet, there is no indication how this provision corresponds with massive expansion of circumstances where it is legal in Canada to use works without permission and despite prohibitions from the copyright owner.

CKFTA also sets forth that the parties must provide adequate legal protection and effective legal remedies against the circumvention of technological measures used by copyright owners to prevent unauthorized use of their IP^17.. Unfortunately, however, this provision contains a qualification that a party may exclude from such protection instances where the measures are circumvented to do that which may be permitted through an applicable copyright exception. This is how the law stands in Canada, which completely defeats the idea behind the rules about technological measures. The point of these provisions is to give IP owners an effective way to deal with piracy by deeming that the very act of circumventing technological measures is an infringement. In Canada, only an act of circumventing technological measures for infringing purposes is deemed an infringement, so it is not enough to prove the fact of the circumvention.

PATENTS

This section affirms the standard requirements for patent protection—the invention must be new, involve an inventive step (be non-obvious), and be capable of industrial application (be useful)^18.. The parties may exclude from patentability inventions related to cloning, methods of medical treatment of people and animals, and otherwise if providing patent protection to an invention would go against public order and morality^19..

ENFORCEMENT

CKFTA contains provisions imposing an obligation on the parties to provide effective enforcement procedures against IP infringements and ensure that such procedures “are not unnecessarily complicated or costly” and that they do not “entail unreasonable time-limits or unwarranted delays.” It is open to a debate whether Canadian court system meets these requirements^20..

The Agreement also prescribes that certain provisions must be implemented to ensure that adequate damages are available to an IP owner whose rights have been infringed, including award of “appropriate lawyer’s fees” to the party who prevailed in trial^21..

CKFTA deals with several procedural matters. It contains a provision requiring both countries to have mechanisms to compel disclosure of information that may possess an alleged infringer that would be required for an IP owner to prove their case^22.. It specifically addresses various preliminary orders and injunctions that may be available to IP owners.^23.

BORDER MEASURES

The measures prescribed by the Agreement are in line with the Canada’s existing regime as proposed to be amended by the Combatting Counterfeit Products Act, which is due for its third hearing in parliament.

CRIMINAL PROCEDURES AND REMEDIES

CKFTA requires each party to provide for criminal procedures and penalties for the unauthorized copying of a cinematographic work from a performance in a movie theatre. Interestingly, this is the only infringement that the parties agree must be punishable criminally.

INTERNET INFRINGEMENTS

Unlike a more rigorous and effective “notice and takedown” approach, Canada has recently implemented what’s called a “notice and notice” system of dealing with internet infringements. In Canada, to avoid being held in violation of IP rights, ISPs must forward an IP owner’s notice to the subscriber (the actual infringer), but they are not required (without a court order) to disclose the subscriber’s personal information nor to ensure that the infringing materials are removed.

CKFTA does not require Canada to change this regime, but provides that a party may require that an ISP expeditiously disclose to an IP owner information sufficient to identify a subscriber whose account was allegedly used for infringement if the owner has filed a legally sufficient claim for copyright infringement^24..

CONCLUSION

While the chapter on intellectual property is one of the more extensive in CKFTA it hardly adds much to the regime already established through other international treaties, such as TRIPS, WCT and WPPT.

While free trade between countries is certainly desirable, to present the IP-related chapter of CKFTA as a legal breakthrough for either Canada or South Korea would be a serious exaggeration.

Of all the IP lawyers I know who are openly advocating for radical changes in the copyright system, William Patry is the only one who is not afraid to dig deep. Instead of founding his arguments upon novel interpretations of some obscure subparagraphs of legislative provisions or dictas in 18th century case law, Patry starts where any meaningful discussion about copyright should start – with the question why, why do we have copyright laws at all.

While I vehemently disagree with his conclusions and proposals, I have tremendous respect for Mr. Patry because, unlike most of those who agree with the substance of his proposals, he openly declares his goals and reasons, not hiding behind some illusory goal of pleasing everybody. It is an honour to have such an opponent in this philosophical debate.

William Patry has recently published his new book, “How to Fix Copyright”. In it he explains why today’s copyright laws make no sense, goes back to the foundations of copyright and asks the inevitable question why, offers an answer to that question and makes several proposals based on that answer.

Ironically, I tend to agree with most of what Patry wrote in his book. A great deal of it is nothing but brilliant and very useful. In fact, I wholeheartedly recommend it to both supporters of “stronger” copyright laws and destroyers of copyright.

As I mentioned, I disagree with Patry’s answer to the why question and, subsequently, to his proposals with respect to how copyright should be fixed. In this review, I will first briefly outline my fundamental disagreements with Mr. Patry and then illustrate them with examples from his book.

 Big problems with Patry’s position

There are several big problems that I see in Patry’s position.

The most important one is that he believes that the reason for existence of copyright laws is to benefit the public the most. I have been saying this for years: copyright laws can only exist for one of two reasons: either they focus on protecting the interests of creators and investors while disregarding the potential consequences for the public; or they focus on protecting the interests of the public while providing to creators and investors the minimal level of protection required to ensure that the public has the most amount of new works to consume.

The idea of balancing these interests is insane, even though it became mainstream. I am well known for comparing it to an attempt to balance the interests of rapists and their victims in a single piece of legislation – it just doesn’t work that way… I will be returning to this metaphor throughout this article. If you feel offended, stop reading.

The reason I respect Patry’s position so much is that he understands that the balance model is nonsensical. The reason I disagree with Patry is that in this resulting dilemma between protecting the public or the creators, he sides with the public.

Patry is in fact advocating for the Soviet model of copyright law where creators had no control over the use of their works and were only entitled to “fair” remuneration. As I wrote in my article, “Copyright and the Great Socialist Degradation”, authors created many great works in the Soviet times. Lack of exclusive right to control the use of one’s works, as Patry rightly notices, does not necessarily cause authors to abstain from creating. The problem with this, of course, is, in the words of Ayn Rand, “the man who produces while others dispose of his product, is a slave”. By taking away from the copyright owners to right to decide on what terms their works are to be used by the public, we are essentially enslaving them.

Secondly, Patry correctly makes a distinction between what the laws are and what the laws should be (in hid opinion). He understands that in order to get to the a destination, one cannot rely on the laws as they are today. He is not afraid to offer suggestions that go beyond attempts to reinterpret the existing norms. Yes, somehow he draws support from old copyright laws, such as Statute of Anne, when it tends to benefit his position.

I have two issues with this approach. You cannot have it both ways. Either we disregard all existing and past laws in the search of the perfect solution, or we are bound by such existing and past laws. Relying on provisions of the 1710 act as the basis for one’s proposals in 2012 is no more genuine than claiming that whatever laws that are in existence today are the way they should remain for the next 300 years. On the other hand, one should not forget that the Statute of Anne was adopted in the pre-Adam Smith era of capitalism, when individual rights and freedoms meant little and when the laws were but a system of privileges granted to groups and individuals. To look to these laws for guidance as to the fundamental principles of today’s copyright is no more genuine than using slavery laws as the inspiration for today’s employment standards.

Thirdly, while Patry correctly states that law is not the solution to business problems, he at the same time advocates that the new laws he suggests will be a good way to force businesses to adopt “good” business models to replace the awful retrograde business models that copyright owners around the world currently use in reliance on the outdated copyright laws. Again, you cannot have it both ways.

You don’t fix broken business models by stealing from those who attempt to run them. Free markets do a much better job at educating those whose business models are antiquated. As I explained in my article “Failed Business Models of the Past, Eh?”, piracy distorts the markets and prevents businesses relying on traditional copyright models from properly evaluating their viability.

Fourthly, Patry’s proposals are based on the assumption that today’s laws somehow prevent businesses from adopting “good” business models. They don’t. Everyone is free to relinquish control over the use of their works, and many have done so. Just because someone is prepared to give up control does not mean that the right to control should be taken away from others by force. Just because someone may be willing to pay more in taxes does not mean that everybody else should be taxed more. Even is someone (even a great majority) is prepared to sacrifice their firstborns in the name of some “higher” purpose does not mean that those who do not should be forced to do the same.

These are the big points on which we disagree. Below, I will illustrate this with specific examples from Patry’s book.read more…