23 February 2014

Australia and Korea Conclude Free Trade Agreement

BipbimbapOn 17 February 2014 the legally verified text of the Australia-Korea Free Trade Agreement (KAFTA) was released to the public.

Negotiations on the Agreement were concluded in early December 2013, and the legally verified text was initialled by Chief Negotiators on 10 February 2014.  It is anticipated that the agreement will be formally signed in the coming months.

The full Agreement consists of 23 chapters with various annexes and schedules, plus four side letters.  Chapter 11 covers intellectual property aspects of the Agreement, which is the only part of the document I have read in any detail.  It is important to bear in mind, however, that no part of the Agreement exists in isolation.  Picking just one chapter and weighing up the potential gains and losses to either party is therefore not an entirely meaningful exercise.  Other parts of the Agreement reportedly deliver some major trade benefits to Australia, for example the immediate lifting of 300% tariffs on chipping potatoes, a phase-out over three years of a 500% tariff on bluefin tuna (though this may not be such good news for the tuna), and a phase-out over 15 years of beef tarriffs currently set at 40% to 72%.

The IP aspects of the KAFTA are, for the most part, not particularly unexpected and, with the notable exception of certain copyright provisions, unlikely to require legislative changes in Australia.  Unfortunately, it appears that the Agreement will oblige Australia to introduce the kind of ‘graduated response scheme’ to curtail repeated instances of online copyright infringement that I described just last week as ‘stupid’

Additionally, the copyright provisions may limit Australia’s ability to introduce ‘technology neutral’ legislation that does not distinguish, for example, between products and cloud-based services for recording and/or time-shifting broadcast programs.  These provisions might also prevent the introduction of a ‘broadcast-to-internet conversion’ service, such as that controversially provided by Aereo in a number of US markets.

Patents

Article 13.8(1) of the KAFTA requires both countries to make patents available ‘for any invention, whether a product or process, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application.’ This is almost exactly the same language as appears in Article 27(1) of the TRIPS Agreement, and therefore places no new obligations on Australia or Korea.

Additionally, however, Article 13.8(1) obliges the parties to make patents available ‘for any new uses or methods of using a known product’. Notably, by way of example, methods of medical treatment using known compounds were confirmed patentable in Australia just last year by the High Court.

Permissible exceptions to patentability in Article 13.8(2) are also based upon the language in Articles 27(2) and (3) of the TRIPS Agreement. However, where TRIPS states that members ‘may exclude’ inventions from patentability in certain circumstances, the KAFTA uses the language ‘may only exclude’. The exclusions are principally based on potentially overriding public policy concerns, such as maintaining social order, healthcare and environmental issues.

You might wonder whether this kind of prescriptive provision would prevent Australia from excluding patents for computer-implemented inventions, such as those in the Research Affiliates and RPL Central cases. However, I think that Australia would argue that, whatever the outcome in those appeals, it is compliant with the KAFTA (and TRIPS). The question in both matters is whether or not the claimed invention is a ‘manner of manufacture’, i.e. whether it even qualifies as ‘an invention’. If the answer is no (the argument would go) then it is not covered by Article 13.8(1) of the KAFTA.

The Agreement also allows for limited exceptions to patent rights (which would encompass Australia’s Crown use and compulsory licensing provisions), revocation of patents in certain circumstances (all of which are already provided for in the Patents Act 1990), a 12-month grace period (which both Australia and Korea already provide), and disclosure requirements which are consistent with those introduced by Australia’s Raising the Bar patent reforms.

Interestingly, Article 13.8(9) states that ‘the Parties shall endeavour to establish a framework for cooperation between their respective patent offices as a basis for progress towards the mutual exploitation of search and examination work.’

Trade Marks

The trade marks section of the KAFTA (Article 13.2) obliges both parties to provide for registration of trade marks, an examination system that includes providing reports and opportunities to respond in writing, a right of appeal, an opportunity for third parties to oppose the registration of trade marks, and a system for enforcing registered rights against infringers.  Australia already has such systems in place.

There is a further requirement to provide special protection for ‘famous marks’.  In the case of similar agreements, Australia has generally argued that it complies by virtue of some combination of s 60 of the Trade Marks Act 1995, provisions within the Australian Consumer Law, and the common law action for ‘passing off’.

Neither party is permitted to require trade mark licences to be registered in order to be valid and effective, i.e. the status quo in Australia.

Domain Names

Under Article 13.4, both parties are obliged to provide a dispute resolution procedure based upon the principles established in the Uniform Domain-Name Dispute Resolution Policy (UDRP) in respect of their country-code top-level domains (i.e. .au and .kr).  Assuming a reasonable interpretation of ‘based upon’, Australia already has such a system.

Copyright

There are quite extensive provisions in the KAFTA in relation to copyright and related rights, most of which (based on my limited knowledge of copyright law) are generally consistent with Australia’s existing copyright laws.  There are just two specific obligations that I wish to highlight here.

First, Article 13.9(28) requires that ‘each Party shall provide measures to curtail repeated copyright and related right infringement on the Internet.’  Australia currently has no specific provisions for dealing with repeated instances of online copyright infringement.  This will therefore presumably require the enactment of new legislation to introduce some form of ‘graduated response scheme’, such as was foreshadowed by Attorney-General George Brandis just a few days prior to the public release of the KATFA text.

Additionally, Article 13.5(14) provides that:

… neither Party shall permit the retransmission of television signals (whether terrestrial, cable or satellite) on the Internet without the authorisation of the right holder or right holders of the content of the signal and, if any, of the signal.

A footnote clarifies that ‘retransmission within a Party’s territory over a closed, defined, subscriber network that is not accessible from outside the Party’s territory shall not constitute retransmission on the Internet.’

This calls to mind the Optus ‘TV Now’ case, which was decided in Australia in 2012, and established that the current copyright laws do not permit the provision of a service whereby free-to-air broadcasts are recorded by subscriber request onto cloud-based servers, for subsequent streaming to the subscriber’s device (e.g. smartphone or computer).  Since this effectively means that a person cannot perform, via a cloud-based service, exactly the same acts that would be permissible (under existing time-shifting provisions) using a home personal video recorder (PVR), the decision immediately generated concerns about a lack of technology neutrality in Australian copyright law.

The Australian Law Reform Commission (ALRC) has since issued a report recommending the introduction of more technology-neutral laws, however it seems that the extent to which this might now be achieved could be limited by Australia’s new obligations under the KAFTA.

Conclusion

Generally speaking, the IP provisions of the KAFTA are not hugely controversial.  In some respects they go a little further than TRIPS, but not as far as at least some proposals for the Trans Pacific Partnership Agreement (TPPA).  Leaked copies of the IP chapter of the draft TPPA have attracted considerable criticism.  Australia is a party to the negotiations, and will eventually be bound by the final text of the TPPA.  Korea is not currently a party, but has expressed interest, and will therefore probably one day be bound by the Agreement.

Australia’s negotiators no doubt feel that they have achieved a pretty good outcome overall.  Taking the IP provisions in isolation, it is largely business as usual, though it is disappointing to see agreements on copyright continuing to move along a path that is broadly ‘anti-consumer’, in the name of being ‘anti-piracy’.

What do you think?  Has Australia got a good deal with the KAFTA?  Feel free to add your thoughts in the comments below.

Image Copyright (c) 123RF Stock Photos

15 comments:

Mark Summerfield said...

Intellectual property is arguably one of the least well understood by the general public, yet most pervasive, government regulated distortions to the free market. This is not surprising, given that even people well versed in IP do not agree on what IP is actually for (see, for example, our previous discussions on this point).

Whether you are ‘for’ or ‘against’ patents and other IP rights is therefore likely to depend upon their utility, or otherwise, in your particular areas of interest. Or, to put it another way, whether you are a socialist, a progressive, a conservative or a libertarian may be less important to your views on patents than, for example, whether you are a software developer, a foreign aid worker, or the CEO of a multinational pharmaceutical company.



It is depressing that so much policy is driven by self-interest rather than concern for the common good. It is only through honest discussion about what we are trying to achieve with the IP laws that we can change the IP laws for the common good.


As an aside, I'd be interested to hear your views on the Plain Packaging decision. I personally thought the dissenting decision was on-point, and wonder how far the repercussions (for the majority decision) will reach.

Mark Summerfield said...

For what it's worth, I agree with the plain packaging decision. IP legislation creates, for the most part, exclusive rights, i.e. rights to exclude others from engaging in acts falling within the scope of the right. There is no general right to use the protected IP.


A patent, for example, gives the owner a right to prevent anybody else from working the patented invention. But if working the invention would infringe the IP rights of a third party, or be contrary to other laws, the patentee is prohibited from exploiting its patent rights.


In Australia, there are long-standing restrictions on the use of trade marks in relation to certain products. Prescription drugs, for example, cannot be marketed direct to end consumers, and must generally be kept out-of-view behind the dispensing counters of pharmacies. Big Pharma has never launched a High Court challenge to the legislation that imposes these restrictions, and rightly so.


The plain packaging legislation restricts the use of branding, trade dress and trade marks in relation to a specific product category, on public health grounds. It does not restrict the rights of trade mark owners to obtain registration of their trade marks, or to prevent other parties from using those trade marks in an infringing manner.


The Commonwealth acquired nothing by enacting the legislation. It simply imposed a marketing constraint on the tobacco industry, as is its prerogative. This seems to me to be a prime example of the common good winning out against special interests. To the extent that the 'repercussions' are that the government might enact similarly beneficial legislation in the future, I cannot see the problem!

Mark Summerfield said...

The Commonwealth acquired nothing by enacting the legislation.

That seemed to be the crux of the majority decision. But just because they acquired nothing, the companies lost something of value. If I take $5 from you and burn it, I gain nothing but you lost $5.

It simply imposed a marketing constraint on the tobacco industry, as is its prerogative. This seems to me to be a prime example of the common good winning out against special interests.



But the case had nothing to do with whether the government could do this. It was merely about whether the companies should be compensated. The value lost by the tobacco companies could have been low (as suggested by the majority judgment), but this should have been calculated independently.


The repercussions are that the government could now remove things of value from people/companies without compensation. They have removed something of value from an unpopular entity (tobacco companies) without compensation, but is removing valuable rights from groups without compensation merely because they are unpopular a good principle?

Mark Summerfield said...

That [i.e. acquisition] seemed to be the crux of the majority decision. But just because they acquired nothing, the companies lost something of value. If I take $5 from you and burn it, I gain nothing but you lost $5.

That would be because s 51(xxxi) of the Constitution relates to 'the acquisition of property on just terms from any State or person...'

Of course value can be lost without property being acquired, but the Constitution does not require compensation in such cases. I cannot imagine how many Acts of Parliament since 1901 would have resulted in som,/i> loss of value to someone! It is in the nature of much legislation that it rebalances rights and responsibilities, and may result in 'winners' and 'losers' to varying degrees.

This does not, in itself, entitle the 'losers' to compensation.

It is irrelevant whether removing rights without compensation, whether due to unpopularity, public health considerations, or any other reason, is a good or bad principle. This is how our democracy works. The Constitution gives the Parliament certain powers including, in s 51(xviii), the power to legislate in respect of IP rights. It is not, however, obliged to exercise all those powers. Subject to any other Constituional constraints, what the Government giveth, the Government can taketh away! And if it gets it wrong, well that's why we have regular elections.

I must say that I am having some difficulty reconciling your stance on this issue with the positions you have taken on other issues.

Mark Summerfield said...

I'm on my phone at the moment so can't give a detailed response right now. The issues is about property not rights. I can think of few occasions where property is taken without compensation by the government. The fact this is an intangible type of property makes it a vexing issue. The dissenting opinion made a good point; I'm not saying it was necessarily right or wrong. I'm glad you don't find me boringly predictable.

Mark Summerfield said...

Of course the issue is about property, but it is also about rights. The property still exists, and still belongs to the same party. What has changed is the scope of rights associated with the property.


This can happen to tangible property, which also generally has a collection of rights associated with it. Consider, for example, what happens when land is rezoned.


The dissenting opinion was necessarily wrong. The law is what a majority of the High Court says it is, unless and until the Parliament (or, in the case of the Constitution, a two-thirds majority of the people) chooses to override it. As much fun as it might be to discuss the merits of the dissent, the position under the law is not merely a matter of opinion here.

Mark Summerfield said...

By 'necessarily right or wrong' I actually meant 'which argument I found more persuasive'. I'm pretty sure you knew what I meant, so thanks for taking the cheap point scoring opportunity.

Mark Summerfield said...

Actually I didn't. Over a number of exchanges I have formed the view that your understanding of the rule of stare decisis is not the same as mine. I genuinely do not understand what it can mean, in the context of a High Court decision, to find one argument 'more persuasive' than another, if not that one is more 'legally correct'.


It's not the Oxford Union! A High Court ruling can be unpopular, undesriable, unfortunate, or it can make for 'bad law', but it cannot, by definition, be 'wrong'. When governments dislike High Court decisions, and overrule them with legislation, they may sometimes blame the Court (because politicians love to blame someone else, and most care little for the independence of the judiciary). But the real fault more usually lies with earlier legislation that left the undesired interpretation open in the first place.


Another way of putting this is that, if you find the dissent more persuasive, maybe you need to re-evaluate some of your assumptions, because six people with a far deeper knowledge of the law than you or I reached a conclusion that trumps all of us!


With lower courts it is a different matter. If I express a view that a decision at first instance is 'wrong', I mean either that I think it will/would/should be reversed on appeal, or that it actually has been (in which case it is more than just my opinion).

Mark Summerfield said...

What are you arguing with me about? The sentence I initially wrote had two parts: first part said the dissenting opinion made a good point, second part clarified what I was not<\b> saying.

Mark Summerfield said...

In part, I am not arguing with you, merely explaining my misunderstanding of your 'right or wrong' comment. We can hardly discuss these kinds of topic if we do not understand each other!

To the extent that I am arguing, it goes directly to your view that the dissent made a 'good point'. I disagree. You might have found the point to be persuasively argued, but this does not make it 'good'. It is wrong for the reasons set out in the opinions of the majority, despite the fact that you might personally find those arguments less persuasive.

The decision came as no surprise to me. In fact, I was a little surprised that there was even one dissent. Of course, in the lead-up there was much written to suggest that Big Tobacco might have a viable case, but I have to say that I have yet to meet anyone who is both experienced in the practice of IP law and a non-smoker (or otherwise unassociated with the tobacco industry) who shared that view. It was absolutely not an unbiased position!

It's happening all over again in Ireland right now.

Mark Summerfield said...

'Good point' meaning interesting and worth consideration. I find the reasoning of any decision far more interesting than the outcome alone. It is interesting to ponder the questions it raised: is IP actually property? What does it mean to acquire IP? just to name a few.

I note that I find your comments within your blog are far more enlightening than the blog posts alone.

Mark Summerfield said...

In the case of registered rights, any debate about whether they are property is purely academic. The legislation deems them to be property, e.g. s 21 of the Trade Marks Act and s 13(2) of the Patents Act.


Dialog is usually a more enlightening form, so long as it doesn't end with someone downing a cup of hemlock!

Mark Summerfield said...

Of course the issue is about property, but it is also about rights. The property still exists, and still belongs to the same party. What has changed is the scope of rights associated with the property.

This can happen to tangible property, which also generally has a collection of rights associated with it. Consider, for example, what happens when land is rezoned.



This seems more like a legal loophole/sidestep than a fair resolution to the issue. "Yes, it's still your property, but you just can't use it" seems barely different from "it's no longer your property". I believe (but am happy to be proven wrong) that rarely are such significant and adverse changes to property rights in the physical realm (e.g. rezoning) gone uncompensated.


Again, I wonder what kind of repercussions could come from this precedent? Hypothetically, if gene patents were legislated as non-patentable subject matter, would there be any moral obligation (because there is apparently now no legal obligation) for the government to provide compensation to those affected patent holders?


I think it important to take note of dissenting opinions in the High Court because they are often have insight into (and skirt the fine line of) "the way things should be" rather than only "the way things are". Addressing what is fair as well as what is just. And this is important because Australia is founded on (and is successful largely because) the principle of fairness. Furthermore, I believe the Constitution and the laws reflect this principle, and occasionally need to be changed when they diverge too far from it.

Mark Summerfield said...

Just a quick note: that retransmission provision isn't really related to Optus TVNow. Retransmission has a technical meaning in copyright: it refers to simultaneous retransmission. Also, given US court decisions, there's a good argument it doesn't relate to Aereo scenarios. Properly understood, it's a limitation on countries' rights under Berne and Rome Conventions to have compulsory licences to allow retransmission eg via cable and satellite.

Re graduated response: that provision says nothing about means for addressing online infringement and so doesn't require graduated response. But given the iiNet decision, it might require some legislative change: although again Australia could argue it has a series of provisions which make suing individuals for repeat infringements online easier, which arguably means Australia has "provided measures" (if copyright owners don't use the measures, that's kind of their problem!). Although whether those arguments will stand up in ISDS is another question.....

Mark Summerfield said...

Thanks for sharing your expertise, Kim.

I understand that there could be other ways to 'curtail repeated copyright and related right infringement on the Internet' aside from graduated response systems. But I am not sure that anyone has really proposed any, and I am basically guessing at the thinking behind Australia and Korea agreeing to this provision. If you know of other approaches that would clearly meet the requirement, I would be interested to hear about them.

I am curious as to whether there is any established definition of 'simultaneous'? With analogue transmissions, there would not be any real issue, but with digital video there can be various stages of buffering, switching and transcoding, which can result in delays of a few seconds or more, as well as changing the format (encoding, bit-rate, quality etc) of the signal.

If a service streams a lower-quality copy to mobile devices on a fixed two-minute delay, is that a 'simultaneous broadcast'?

Do you know the reasoning behind this limitation? Why single out the internet?

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