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TPP Derechos C Parallel Imports and Exhaustion.Pdf Transpacific Partnership Agreement (TPPA) Intellectual Property Chapter Concerns COPYRIGHT, PARALLEL IMPORTS AND EXHAUSTION OF DISTRIBUTION RIGHTS Derechos Digitales - Chile Known proposal1 Article 4.2. Each Party shall provide to authors, performers, and producers of phonograms the right to authorize or prohibit the importation into that Party’s territory of copies of the work, performance, or phonogram made without authorization, or made outside that Party’s territory with the authorization of the author, performer, or producer of the phonogram.fn. 11 fn. 11 With respect to copies of works and phonograms that have been placed on the market by the relevant right holder, the obligations described in Article [4.2] apply only to books, journals, sheet music, sound recordings, computer programs, and audio and visual works (i.e., categories of products in which the value of the copyrighted material represents substantially all of the value of the product). Notwithstanding the foregoing, each Party may provide the protection described in Article [4.2] to a broader range of goods. The context • This proposal touches upon two copyright-related issues2: the right of parallel importation of copyrighted goods lawfully made abroad, and the exhaustion of distribution rights after first transfer of property. In effect, this creates a new exclusive right, without necessary support from research, precedent or previous international law. • Currently, no intellectual property treaty grants copyright holders an exclusive right to control the importation of works. Article 6(2) of the WCT, and Articles 8(2) and 12(2) of the WPPT, deal with the issue of the exhaustion of the right of distribution for authors, performers and producers of phonograms respectively. They do not oblige contracting Parties to regulate at all the issue of exhaustion of the right of distribution after the first authorized sale or other first transfer of ownership of the original or a copy of the work. • Article 6 of the TRIPS Agreement specifically excludes issues arising from exhaustion of intellectual property rights from WTO dispute settlement, thus allowing each party to adopt different regimes and making parallel import possible. • Section 3 of the Anti-Counterfeiting Trade Agreement (ACTA) establishes border measures for that treaty’s Parties, but includes a footnote that clarifies that there is 1 As available on August 3rd 2012 at: http://keionline.org/node/1516. 2 Parallel imports of patented good is treated elsewhere in the TPP “no obligation to apply the procedures set forth in this section to goods put on the market in another country by or with the consent of the right holder”, which is to say, parallel import of lawfully made copyright goods remains as a domestic policy issue, even in the most intensive IP treaty. The concerns • Under all important global norms for intellectual property (such as WIPO treaties and the TRIPS Agreement), copyrighted goods can be provided simultaneously through different, legitimate channels of distribution. • Parallel importing enables consumers to purchase lawfully produced goods from legitimate sources, rather than via local franchise holders. Even retailers can take advantage of it. This facilitates genuine competition between suppliers of the same or similar goods, and offers real benefits to consumers, who have access to films, music recordings, books in different languages and collectible items unavailable (or prohibitively expensive) in the local market. • Parallel imports are particularly important for smaller economies. Countries that do not manufacture certain goods, can benefit from parallel importing because they can sometimes import goods lawfully at lower prices than the locally made or distributed goods. • Almost all the countries involved in the TPPA negotiations are comparatively small, and population numbers do not allow economies of scale; thus, goods are usually more expensive when produced in the local market than if they are imported from North American or some Asian manufacturers. Even in the U.S. a block on parallel imports would clearly affect consumers and retailers, by increasing access cost and limiting their business opportunities. • The proposed Article 4.2 is not in the best interest of TPP member countries. Some negotiating parties have already adopted international exhaustion of rights into their domestic laws, with small differences. Such is the case of Australia, Chile, Malaysia, New Zealand, and Singapore. The TRIPS Agreement reserves to domestic law of WTO members to decide upon parallel imports; thus, countries that have adopted exhaustion of distribution rights will resist the change. • The U.S. proposed Art. 4.2 is not consistent with current U.S. law. In 2013, the U.S. Supreme Court, ruling Kirtsaeng v. John Wiley & Sons, Inc., held that the first sale doctrine applied to copies of copyrighted works made and sold abroad at lower prices, thus confirming the full application of the first sale doctrine in the United States. • There is fact-based support for parallel import in TPPA negotiating parties. A study in Australia recommended to lift parallel import restrictions for books.3 An earlier report, in New Zealand, ordered by the government after modifying parallel import restrictions, found that the measure had not affected the investment in and promotion of New 3 The Australian Productivity Commission reviewed whether Australia should allow parallel imports of books, in a report released in July 2009. The Australian government has not adopted the recommendation. The report is available at http://www.pc.gov.au/__data/assets/pdf_file/0004/90265/books.pdf. Zealand creative sector, but improved choices and quality of services to retailers and 4 consumers through increased competition. • Some rights holders typically oppose parallel trade in copyrighted goods, because they prefer to control and segment their markets (as shown by unnecessary schemes such as DVD zoning). This does not seem to happen in order to benefit consumers, but to maximize profits for certain rights holders, while becoming a barrier against competition and free trade and also a market abuse based on the artificial monopoly provided by copyrights. • If transport fees, taxes and tariffs are not deterrent enough for the lawful consumption of copyrighted goods, then market failure is elsewhere: in segmentation, that has been rendered moot by today’s trade practices. A new right to prohibit parallel import will affect retailers, as well as every customer who buys online, including national and local governments. Proposed solutions 1. Commitment with free trade of lawfully made goods, clearly encouraging the establishment of the national and international exhaustion of rights, following first lawful sale. 2. Clearly establish that each Party may not prohibit the importation into that Party’s territory of copies of the work, performance, or phonogram made outside that Party’s territory, if that copy is produced with the authorization of the rights holder. 3. Support free trade, by engaging in meaningful measures to ensure content providers have proper channels for availability of copyrighted goods, thus discouraging unlawful distribution. 4 For further details, see http://www.med.govt.nz/business/intellectual-property/pdf-docs-library/parallel- importing/LECG-report-impact-parallel-importing-Nov-07.pdf .
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