I wrote this post several weeks ago, intending to explain the oddities of international copyright treatises that led to Antigua being poised to become a “copyright haven” that does not recognize US copyrights.  Many other events intervened, but I think it is still worth posting for the sake of the explanation, which some readers might find informative.  As far as I know, nothing further has occurred, and I suspect that the two governments are negotiating, after the threat from Antigua got the attention of the US.

The media and bloggers have feasted on the irony — little Caribbean island nation Antigua is going to become a copyright haven, where works from the US film and music industry can be shared freely and without constraint from copyright laws.  The US has warned Antigua not to do this, but the World Trade Organization has ruled that it is an acceptable sanction to impose on the U.S. for, of all things, not allowing Americans to gamble on Antigua’s online casino sites.  The whole thing, I think, requires some explanation.

The story really begins when the World Trade Organization (WTO) adopted an agreement, called TRIPs, for “Trade-Related Aspects of Intellectual Property Rights,” that made the Berne Convention binding on all members of the WTO.  Prior to TRIPS, the international copyright agreement known as the Berne Convention obligated its signers to do certain things, but it did not really have any “teeth.”  If nations ignored the obligations they undertook, there was little that the World Intellectual Property Organization, a U.N. body that administers Berne, could do about it.  But when the copyright requirements were made part of the obligations of all members of the World Trade Organization as part of the 1994 General Agreement on Tariffs and Trade (GATT), they suddenly gained an enforcement mechanism.  WTO members are allowed to retaliate against other WTO members that implement unfair trade practices, as defined by the GATT.

Trade sanctions usually involve the same goods and the same market — if country X refuses to buy cotton from country Y, country Y is entitled to impose a tariff on cotton from country X.  But the WTO also allows so-called cross-retaliation, where a country can redress the wrong done to it in one market by suspending its obligations in another market.

In the Antigua/U.S. dispute, cross-retaliation has been approved by the WTO.  The origin of the dispute is in the U.S. Unlawful Internet Gaming Enforcement Act from 2006, which made it illegal for off-shore gaming sites to take wagers from gamblers in the U.S.  Antigua complained that this was an unfair trade restraint, and the WTO agreed, saying that Antigua was harmed to the tune of 21 million U.S. dollars.  The ruling also affirmed the right of Antigua to take retaliatory steps against the U.S., including in different markets.  Since intellectual property is now a market governed by the WTO through the TRIPS agreement, Antigua announced, and the WTO approved, that retaliation would take the form of suspending the recognition of U.S. IP rights in Antigua.  This was an astute strategy on the part of Antigua, given how dedicated the U.S. administration is to appeasing the traditional entertainment industries. Thus it has become possible, but not certain by any means, that free Internet movie and music sites would develop on the island, which could not really be called “pirate” sites because  the failure to recognize US copyrights would be sanctioned by the WTO.

The irony of the situation is fodder to many commentators.  This column from a British paper notes that the idea of allowing cross-retaliation in the first place came from the U.S.  And Mike Masnick from TechDirt suggests that the US entertainment industry has been “hoist by its own petard,” since one of the many means by which the so-called “copyright minimalists” have sought to ratchet up IP enforcement seems to be coming back to bite them.

For my part, I think the whole dispute illustrates what a mistake it is to treat intellectual property rules, and especially copyrights, as mere trade regulations.  First and foremost, to do so ignores the underlying purpose to serve the public good that animates those rules in the U.S. and in many other nations.  When these rights become pawns in the cross-retaliation games of international trade organizations, it  becomes clear how complete the divorce is between copyright and its justification, which is to build an incentive for creators to create.  And what seemed like a good idea to the major content industries, because treating copyright as a purely trade issue would provide greater enforcement opportunities, has turned out to be a very sharp two-edged sword.

In reality, copyrights very seldom serve their proper function as incentives for creation.  Many creators are unaware of the vast period of protection their works will receive automatically and create for entirely other reasons.  For the small fraction of copyright holders who do rely on copyrights to produce income, those rights are almost always transferred to intermediaries who exploit them primarily for their own benefit, so that the incentive function is curtailed.  Witness how ardently the music and movie industry is fighting the “termination right” that was enacted in our copyright law to ensure that creators would have an ongoing opportunity to gain from their rights.  Although support for individual authors has always been the battle cry of the publishing and entertainment industry, its role as an incentive has always been dubious.  And when it becomes a chip in this poker game over trade — a bargaining position to defend online gambling, of all things — it is even more clear that concern over creativity has gone out the window.  We will hear, of course, that what Antigua has threatened will be bad for artists, musicians and actors, but those folks will likely never feel any effects if Antigua becomes a “copyright haven.”  Instead, this is a battle over trade policy that reveals just how cynical we have become over IP rights.

 

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