In the wake of the recent Goldman Sachs revelations, it is clear that we are still working our way through the financial and ethical wreck imposed by investment bankers that were “too big to fail”. They represent the ‘Big Brother Corporate Bankers’ who had enormous capacity to force governments to abandon the normal purpose of governing – for the benefit of citizens.

The phenomenon of over-reach of corporate influence over the economy is not confined to the banking sector. Another industry that has increased its influence, to the extent that it can now be seen as an alternative private ‘tax collecting’ agency, is the complex intellectual property industry (IP).

It defines its tax base in terms of licensing, royalty and access agreements managed through a complex web of monopoly rights defined through copyright, trademarks and patents law.

What the IP industries have already received from government is a domestic legal framework and enforcement system that assures a stream of IP taxes extracted from and monopoly control over its goods and services. The World Trade Organization intellectual property agreement, TRIPS, provided this in full measure.

What the WTO agreement did not provide, and what the IP industry now demands, is even tougher legal enforcement and border-control measures. Now the industry wants the enforcement rules to be standardised and managed through a global regime, and to adapt national laws and enforcement practice to accommodate higher standards.

The mechanism to achieve this is through the current negotiations underway to develop an Anti-Counterfeiting Trade Agreement (ACTA).  To date the negotiating text of these negotiations has not been released but there have been a couple of substantive leaks.  The most recent leak highlights some very draconian views on how to police intellectual property.

The recent ACTA meeting held in New Zealand issued a press statement: the time is right to release the consolidated negotiating text today.  So at last, the public will now be allowed a small window into these negotiations. However, this version has a caveat — “In agreeing to release publicly this draft text in the particular circumstances of this negotiation, participants reaffirmed the importance of maintaining the confidentiality of their respective positions in trade negotiations.”

So if you want to get a sense of what some countries want out of these negotiations you will have to access the leaked version. And, now that the official text is being made public we will also be served a media campaign promoting the value of ACTA and many articles on the terrible effects of counterfeit trade  and the losses that the IP industry suffer.

Media opinion makers should do their homework before simply endorsing these views. Specifically, they should make themselves aware of the role and business model used by the IP industry and the “too big to fail” arguments that will be proffered, particularly in relation to ‘innovation’ and access to technology.

The difference between our existing WTO obligations and the objectives of ACTA are significant and include cost-shifting and applying more stringent legal penalties. These changes would give corporations or individuals who own patents, copyright or trademarks – the IP right-holders — privileged access and quasi-legal status to pursue counterfeit/illegal downloading claims. Significant commercial enforcement costs would be transferred, in various ways, to the government and/or to third parties such as internet service providers (ISPs) to police downloading activity.

The IP industry’s justification for seeking these changes is that this sector has a special place in the economy. Without enhanced protections from government, innovation will be stunted and the economy will suffer, as this quote from the negotiations claims: “…proliferation of counterfeit and pirated goods in international trade poses an ever-increasing threat to the sustainable development of the world economy…and in some cases represents a risk to consumers”. So there you have it: the IP industry (which is based on monopoly rights) must have even more government support to protect these rights, and, by the way, it is also “too big to fail” because there will be ‘‘consequences” if IP is not protected.

The ACTA approach to enhancing IP enforcement and border measures will be costly in a variety of ways. Requiring authorities to react directly to claims initiated by IP right holders rather than going through the existing administrative and court systems alters the onus of proof and shifts the legal costs from the commercial to the government sector. Initiating seizure/destruction of claimed counterfeit goods would also be fraught with problems when authorities are caught up in these processes without appropriate legal sanction.

Individual and civil rights are more easily over-ridden in such circumstances. Comments in the leaked draft text that refer to requests from the applicant IP right-holder “…to issue an interlocutory injunction intended to prevent any imminent infringement…” raise very large legal questions about motive and judgement and provide a sense of just how draconian these ACTA enforcement objectives could be.

And where in all of these negotiations is the balance of rights and obligations that was supposed to be an intrinsic part of the agreements that initially awarded these IP rights? IP taxes are embedded in all the goods and services we buy and use. They are measured in billions of dollars, and they create at-times impenetrable barriers to access to information and to basic scientific tools.

Why would it be in any country’s interest to actively raise the status of a corporate entity or an individual who just happens to own monopoly rights to intellectual property? This question is particularly relevant because there is beginning to be a more rigorous and critical approach by the institutions of government to assessing the role and value of intellectual property rights to society.

For example, Australia’s parliament has been at the forefront internationally in holding an inquiry into the patenting of gene sequences (such as breast and ovarian cancer). Our courts have also been active in making decisions on intellectual property rights related to databases and defining the legal boundaries of responsibility of internet service providers.

Crikey readers will have seen reporting on the successful outcome of the iiNet case, which was initiated in Australia and includes Channel Seven and 33 international corporations holding global IP rights. Many in the digital community questioned why iiNet was the target. Perhaps the larger question might be why Channel Seven joined this very high-powered international conglomerate of essentially foreign IP right-holders.

The 34 corporations tried through this case to make iiNet and, by example, all ISPs, responsible for policing the internet. They lost, and are appealing the judgement. The case  mirrored some of the objectives the ACTA lobby groups are seeking.

Australia is not a large holder of IP rights. To the contrary, 90% of patents are foreign-owned and copyright is also very small given the globalised nature of the music, film and media industry, which means that Australia’s copyright-collecting societies transfer a large percentage of  ‘copyright taxes’ overseas.

So are our politicians on the ball in protecting Australia’s interest? Senator Scott Ludlam attempted to get some sense out of Department of Foreign Affairs and Trade and Attorney-General’s officials at a recent Senate Estimates, but was generally unsuccessful in drawing out the consequences of the ACTA negotiations.

Let’s hope others follow his lead and take better care of Australia’s national interest. The over-reach of the IP industry has already given it too much leeway in defining and extending IP ‘rights’ and how they will be managed. Let’s make sure that a “too big to fail” attitude does not continue to define Australia’s national interest.

An innovative society cannot be nurtured if the IP corporations holding monopoly rights are allowed to determine the economic and trade rules, circumvent courts and define constraints on civil liberties. This Big Brother IP corporate industry will of course argue nothing new or innovative will develop unless they have extended protections. But this attempt to argue the “too big to fail” case is an illusion. Politicians need to take responsibility for understanding what intellectual property rights really are, and not accept what the industry claims they are. They also need to understand the social compact that underpins awarding any monopoly power.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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