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Nov 18, 2013

The US' trade secrets demands and what they mean for journos

Leaked Trans-Pacific Partnership documents show the US is pushing for unprecedented penalties for those (like journalists) who expose trade secrets. Will Australia go along with the proposal? ANU College of Law associate professor Matthew Rimmer looks at what's at stake.

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Trans-Pacific Partnership

Last week, WikiLeaks published the draft text of the Trans-Pacific Partnership’s Intellectual Property Chapter. Its Editor-In-Chief, Julian Assange, declared:

“If instituted, the TPP’s IP regime would trample over individual rights and free expression, as well as ride roughshod over the intellectual and creative commons.”

One controversial area deserving of greater attention is the push by the United States Trade Representative for stronger protection of trade secrets across the Pacific Rim.

In its Special 301 Report for 2013, the USTR placed increased emphasis on the need to protect trade secrets, noting:

“Companies in a wide variety of industry sectors — including information and communication technologies, services, biopharmaceuticals, manufacturing, and environmental technologies — rely on the ability to protect their trade secrets and other proprietary information … The theft of trade secrets and other forms of economic espionage, which results in significant costs to US companies and threatens the economic security of the United States, appears to be escalating. If a company’s trade secrets are stolen, its past investments in research and development, and its future profits, may be lost … Trade secret theft threatens national security and the US economy, diminishes US prospects around the globe, and puts American jobs at risk.”

With much pressing by the US Chamber of Commerce, the USTR has been alarmed about economic espionage — particularly in respect to hacking by China. Such concerns are apparent in a recent dispute, when the US Department of Justice  brought an action against Chinese company Sinovel and three associated individuals for the theft of trade secrets of United States wind technology company AMSC. FBI executive assistant director Richard McFeely said: “The FBI will not stand by and watch the haemorrhage of US intellectual property to foreign countries who seek to gain an unfair advantage for their military and their industries.”

As part of its push for greater powers to enforce intellectual property, the US hopes that further reforms to trade secret protection under the TPP will provide better protection and security for its flagship technology companies.

In the TPP, there is a general agreement in the text among Pacific Rim nations that “parties shall ensure that natural and legal persons have the legal means to prevent trade secrets lawfully in their control from being disclosed to, acquired by, or used by others (including state commercial enterprises) without their consent in a manner contrary to honest commercial practices”. There also appears to be agreement that “trade secrets encompass, at a minimum, undisclosed information as provided for in Article 39.2 of the TRIPS Agreement”. This is the current obligations for members of the World Trade Organization.

However, the US has made a radical proposal:

“Each Party shall provide for criminal procedures and penalties at least in cases in which a trade secret relating to a product in national or international commerce is misappropriated, or disclosed, willfully and without authority for purposes of commercial advantage or financial gain, and with the intent to injure the owner of such trade secret.”

The US proposal on criminal procedures and penalties for trade secrets has been supported by Mexico, Canada, New Zealand and Japan. The proposal has been opposed by Singapore, Malaysia, Peru, Vietnam, Chile, and Brunei. Curiously, Australia opposes this paragraph ad referendum — which means to subject to agreement by others and finalisation of the details.

There is no text about defences and exceptions to these broad proposals for trade secret protection. This is concerning because on occasion, companies have invoked trade secrets against journalists. Apple, for instance, filed suit against the site Think Secret, claiming that there had been a breach of trade secrets. On other occasions, companies have tried to use trade secrets to frustrate public criticism. In the US, gas companies have tried to rely upon trade secrets to deny information to medical doctors who are concerned about the impact of fracking upon the health of their patients.

Furthermore, the TPP has an investment chapter. Under an investor-state dispute settlement system, intellectual property owners could challenge government regulation on the grounds that it interfered with its investments in trade secrets. That could be particularly problematic for various forms of regulatory review involving confidential information.

Trade secrets have been invoked not only in commercial matters, but also in government information. In the 1980 case of Commonwealth Fairfax, the Australian government sought to prevent Fairfax from publishing Defence Papers, relying upon copyright law and confidential information. In the 1988 Spycatcher case, the British government sought to prevent the publication of the book Spycatcher, claiming a breach of fiduciary duty, a breach of confidence, and a breach of contract. In New Zealand, there have been battles of the publication of memoirs of special forces. Given such past precedents, overly strong protection of confidential information in the Trans-Pacific Partnership could have a chilling effect upon the freedom of press, the freedom of speech and whistleblowers.

Paradoxically, the US wants to jealously guard its own trade secrets, while at the same time having complete intelligence about the world’s secrets. As revealed by Edward Snowden, the National Security Agency has engaged in massive, dragnet surveillance, at home and abroad. There has been concern that the NSA has been engaged in economic espionage, even among supposedly friendly nations. There has been even alarm among trading partners at the prospect that the NSA has conducted surveillance for its customer the USTR for trade agreements, such as the TPP, and the Trans-Atlantic Trade and Investment Partnership.

In light of such far-reaching surveillance by the NSA, could the US proposal on trade secrets backfire? Could the US itself be targeted with criminal penalties in respect of NSA surveillance if such proposals were agreed to?

The provisions of trade secret protection in the TPP are significant, broad, punitive, and over-reaching. There is far too great an emphasis upon criminal law, economic espionage, and national security in the design of regime. The unbalanced agreement seeks to provide expansive protection for the trade secrets of transnational corporations and governments, without due and proper consideration for the public interest in access to information, freedom of expression, and freedom of the press. There are insufficient safeguards in the TPP for the protection of civil liberties, human rights and internet freedom.

The TPP itself should not be a trade secret. Governments have sought to frustrate freedom of information requests on spurious grounds of national security, defence, or international relations. The public interest demands that a treaty of such scale and scope, ambition and import be disclosed for all to see.

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5 comments

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5 thoughts on “The US’ trade secrets demands and what they mean for journos

  1. James Paterson

    I wonder if this trade secrets matter also covers medical and health information . I would think that there are many items on the net that may dissapear or be taken down. As in the matter of statin drugs problem , explained in detail on the net by dozens of people including medical specialists and professors. Not sure what this trade secret matter would cover and whether explanation of troubles would be allowed. Might it also mean chemical contents don’t have to be displayed on bottling or packaging to protect persons mixing their own for cheaper?

  2. klewso

    “We might not vote in their interests …. and to our detriment….”?

  3. a_swann

    If yr interested in this stuff you should follow Dr Matthew Rimmer on twitter, he is digging up all sorts of TPP related goodies from around the net.

    TPP is an IP juggernaut that suits business plans of big corporations and makes it tougher for start ups and real innovators.

  4. Yclept

    Aboslutely not! Ignorance is bliss. Just hand over all your cash and your first born to the US corporations now. Beat the rush…

  5. klewso

    Do we ordinary voters “need to know” any/all of this?

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