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February-07-2008,
Suggestions that Antigua Can't Use its Remedy in Regards to the Intellectual Property Rights are Ridiculous...By Hartley Henderson

In December of 2007 the WTO issued its compensation decision in regards to the long standing U.S.-Antigua trade dispute on internet gambling. Antigua was hoping for an amount around $3 billion, but the WTO ruled that $21 million per year was more realistic citing some arbitrary figure of what it suspected Antigua could have made if the U.S. allowed remote gambling on its horse racing products. Nevertheless, while the amount was far smaller than Antigua hoped the WTO would offer, they did throw Antigua a nice bone by allowing it to apply the compensation by suspending U.S. intellectual property rights. The WTO, fully understanding that it could not effectively punish the U.S. with any other trade sanctions, provided Antigua with that concession and Antigua hoped the mere possibility of suspending intellectual property rights would convince the U.S. to reconsider its decision to remove its commitments regarding gambling. Indeed the comments by USTR representative Sean Spicer in a statement after the decision was rendered clearly illustrated the US government's concerns. Spicer stated:

"The United States is concerned, however, that the Arbitrator agreed with Antigua's request to suspend WTO concessions not just with respect to services, but also with respect to intellectual property rights (IPR). Any authorization pursuant to the award would be strictly limited to Antigua; every other WTO Member remains obliged to protect U.S. IPR under WTO rules, including enforcement against any IPR-infringing goods. Moreover, even with respect to Antigua, it would establish a harmful precedent for a WTO Member to affirmatively authorize what would otherwise be considered acts of piracy, counterfeiting, or other forms of IPR infringement. Furthermore, to do so would undermine Antigua's claimed intentions of becoming a leader in legitimate electronic commerce, and would severely discourage foreign investment in the Antiguan economy."

Reading between the lines one can easily see that the USTR is concerned about having to justify its decision to withdraw its commitments. It clearly doesn't want to be put in a situation where it has to answer to the music, movie and software industries as to why the government has involved them in this mess. It's one thing to essentially give the finger to Dr. Errol Court from Antigua, but it's another thing to do so to Steve Jobs. Nevertheless, Antigua was given this remedy and almost immediately misinformation started coming out in regards to Antigua's right to suspend IP rights. Most of the misinformation seemed to center on some bizarre notion that the only place Antigua could sell their products was in Antigua itself. One can only assume that reporters fell for the conclusions put out in the above quoted statement by the USTR when it said that other countries are obliged to refuse the Antiguan products ,as they are pirated. However, the most blatant misinformation came from a source that should have known better. Jorgen Blomqvist, a director at the World Intellectual Property Organization (WIPO) suggested that if Antigua acted on its remedy it would be violating a different treaty that takes priority. In a statement to the Antigua Sun Blomqvist remarked: "Since both parties are parties to the Berne Convention, if they, under some other convention, start to not grant protections to each other, then they will infringe the Berne Convention. The fact that under one treaty you can make such sanctions does not relieve a country from responsibilities under other treaties."

WIPO is a U.N. agency, like the WTO, and in fact is also situated in Geneva. However, unlike the WTO it is an independent agency that is not funded through member states. Consequently its mandate may be different than the WTO. Aside from that the Berne Convention was agreed to back in the 1980s, but is generally seen as obsolete because of the new WTO property rights agreement. Many nations, including the U.S., were unhappy with the limiting scope of the Berne Convention so they negotiated a new agreement at the Uruguay Round of GATT. The WTO drew up the TRIPS (Agreement on Trade Related Aspects of Intellectual Property Rights) which the larger members like the United States and EU could accept more freely. In fact it was the United States who convinced the WTO to ensure that all countries agree to TRIPS before they are accepted as a member nation in the WTO. So to somehow argue that Antigua would be in violation of a basically insignificant and obsolete agreement should it decide to remedy itself by implementing a decision awarded to it by the WTO is ludicrous. In fairness to WIPO, a senior person at the organization stated that Jorgen Blomqvist's comments were personal and that the organization doesn't actually make public comments. They also indirectly stated that they disagreed with Blomqvist's statements. Even so, the insinuation that Antigua is somehow breaking the law by doing what it is entitled to is still out there and no doubt if and when Antigua does start acting on the decision afforded them, members of the music and movie industries will be hollering that Antigua is violating the Berne Convention. Mind you, if Mark Mendel, Antigua's lead legal counsel, is concerned about the Berne Convention it certainly can't be deduced from his statement on February 5th, "We're not worried about that at all," he told the Antigua Sun.

Antigua is now prepared to act on the WTO reward and will state its intentions to suspend U.S. property rights in the next session of the WTO. The issue which will likely cause the most tension will be the amount that the suspension of a property right is worth. To date no country has actually acted on suspending property rights, so what Antigua does will be precedent setting. Without question, in order to make the most of the $21 million and try to convince the U.S. to sit down with the country, Antigua will try and charge as little as possible for the music and movies. The United States, on the other hand, will likely approach the WTO and argue that Antigua's prices are unreasonable and don't reflect the true worth of the goods. They may try and suggest amounts similar to what songs cost on iTunes or what DVDs cost on Amazon.com. But if it does indeed come to that, the logical conclusion is that the true worth of the IP is whatever Antigua can get for it. Since Antigua keeps all revenues they would technically only be hurting themselves by undercutting the price. So if they decide to charge a penny per song, what makes that less realistic than the 69 cents or so charged by iTunes, Amazon.com or Wal-Mart? Also, if the U.S. tries to block access by American ISPs to Antiguan websites as some reporters have suggested will happen once Antigua is seen as a "pirating country," will that be in violation of the WTO decision?

We'll find out all the details soon enough, but one thing is certain: Antigua is not violating any other treaties by attempting to enforce the WTO decision. Anyone who suggests otherwise is simply swallowing the USTR snake oil.

02-07-2008
Hartley Henderson
MajorWager.com
henderson@majorwager.com

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