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THREE MODEL GUIDELINES APEC ANTI-COUNTERFEITING AND PIRACY INITIATIVE

Three Model Guidelines APEC Anti-Counterfeiting
and Piracy Initiative

Purpose: Consideration
Submitted by: SOM Chair

17th APEC Ministerial Meeting
Busan, Korea
15-16 November 2005

APEC MODEL GUIDELINES TO
REDUCE TRADE IN COUNTERFEIT AND PIRATED GOODS

Growing trade in counterfeit and pirated goods threatens innovation, the economic livelihoods of pioneering businesses and entrepreneurs, and the health and safety of consumers across the Asia-Pacific region and around the world. Driven by new technologies that make it easier than ever before to rapidly produce counterfeit and pirated goods in commercial quantities and by transnational networks that increasingly use global trading lanes to distribute and sell those goods worldwide, this illicit trade costs legitimate rights holders billions of dollars each year. Indeed, according to the World Customs Organization (WCO), counterfeit goods account for up to seven percent of total global trade in goods, a figure equivalent to $637 billion in 2004.

APEC economies are committed to reducing trade in counterfeit and pirated goods and to combating transnational networks that produce and distribute such goods through strong
and effective border enforcement. To that end, the following model guidelines are provided for economies’ competent authorities to deal with the inspection, suspension, seizure and destruction of goods and equipment used in cases of import, export and transshipment of counterfeit and pirated goods, recognizing existing constitutional and other legal requirements of member economies. Further, the model guidelines are indicative references that may be useful to members in improving their IPR enforcement and protection regimes; however, they do not mandate changes to existing law. At a minimum, they apply to counterfeit trademark and pirated copyright goods. Individual economies could choose to apply them to additional kinds of infringing goods.

MODEL GUIDELINES

1. IDENTIFYING AND MANAGING RISKS

To better identify and target for inspection arriving and departing shipments that may contain counterfeit and/or pirated goods, effective enforcement regimes:

(a) Identify Current Perceived Risks.

• Consulting with right holders, industry groups, other relevant stakeholders and competent authorities responsible for all aspects of intellectual property rights enforcement to identify perceived risks and promote actions to mitigate those risks wherever possible.
• Exchanging available data regarding significant customs seizures of counterfeit and pirated goods wherever possible, including via the WCO Customs Enforcement Network and/or other similar international networks.

(b) Direct Resources and Manpower Based on Identified Risks.

• Focusing enforcement resources and assets on the highest risk transactions and activities.
• Maintaining high qualification standards for customs officers and other competent authorities involved in all aspects of intellectual property rights enforcement.

(c) Take Advantage of New Risk Management Techniques.

• Sharing information on innovative mathematical and statistical approaches that may be developed to provide greater analytical targeting of shipments that could contain counterfeit and/or pirated goods.

2. MAINTAINING EFFECTIVE ENFORCEMENT PROCEDURES

In accordance with the domestic law of each member economy, effective enforcement procedures designed to empower right holders and customs and other competent authorities to restrict the import, export and transshipment of counterfeit and pirated goods:

(a) Build Partnerships with Right Holders.

• Offering interested right holders an opportunity to provide contact information that can be stored, easily updated and accessed in key ports, and taking appropriate measures to guarantee the confidentiality of such information.
• Notifying importers or exporters and right holders when a shipment of suspected counterfeit or pirated goods is detained.
• Seeking the assistance of right holders to determine whether such goods are counterfeit or pirated, with appropriate procedures to protect confidential information.
• Enabling right holders to submit applications to competent authorities for the detention of suspected counterfeit and/or pirated goods that are being imported or exported, when they have valid grounds for suspecting that the importation or exportation of such goods may take place.
• Ensuring that applications are not so burdensome or costly that right holders are discouraged from seeking detention of suspected counterfeit and/or pirated goods, while requiring adequate information and evidence to enable competent
  authorities to identify suspected infringing shipments and determine infringement.
• Allowing adequate time for right holders to comply with these and other procedures before releasing suspected counterfeit and/or pirated goods, taking into account relevant international guidelines, including the WCO Model Provisions for National Legislation.
• Providing a means to decide cases on their merits and to order appropriate remedial action (e.g., exclusion or seizure of the goods) within a reasonable and specified period of time after the right holder has produced adequate evidence of infringement and customs or another competent authority (where customs cannot determine infringement) has granted an application for suspension of release.
• Empowering right holders to take enforcement action through administrative, civil or criminal processes by providing them with the identity (including name and addresses) of the parties (importer, consignor, manufacturer, etc.) involved in the importation or exportation of such goods once a final determination is made that the goods are counterfeit or pirated.

(b) Allow Competent Authorities to Take Ex-Officio Action.

• Permitting competent authorities to act on their own initiative to suspend the release of goods when, consistent with relevant provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights and domestic law, there is prima facie evidence that the goods are infringing.
• Partnering with right holders and industry to train relevant personnel how to distinguish genuine from illegal products of all types.

(c) Remove Infringing Goods from Commercial Channels.

• With respect to destroying counterfeit and pirated goods , further development of guidelines is needed.
• Prohibiting the exportation of seized counterfeit and pirated goods in an unaltered state. In regard to counterfeit trademark goods, the simple removal of the
  trademark unlawfully affixed shall not be sufficient to permit the release of the goods into the channels of commerce.
• Sharing information with other economies regarding shipments of suspected counterfeit and pirated goods (such as information on the goods themselves and the identity of the parties involved in the import and export of those goods), in appropriate cases and to the extent allowed by the domestic law of each member economy, and using information they receive from other economies in their enforcement activities. APEC economies have established IPR Service Centers and identified Anti-Counterfeiting and Piracy Points of Contact, which may be used for this purpose. APEC economies are also cooperating through other international organizations.

(d) Complement Traditional Examinations with Innovative Techniques

• Conduct post-entry examinations of business records, methods of payment,
  purchasing contracts, and importers’ internal controls to track down illicit financial gains and expose counterfeiting and piracy business practices, when such techniques are allowed by law

3. PROMOTING AND UPHOLDING STRONG LAWS AND DETERRENT PENALTIES

To support the procedures outlined above and to better deter trade in counterfeit and pirated goods and punish violators, effective enforcement regimes are:

(a) Based on Strong Laws and Provide for Appropriate Authorities.

• Implementing fully Section 4: Special Requirements Related to Border Measures (Articles 51-60) of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights.
• Treating the willful importation or exportation of counterfeit or pirated goods and the distribution of counterfeit or pirated goods in domestic commerce as unlawful activities subject to penalties.
• Ensuring that each type of violation is subject to the jurisdiction of an appropriate competent authority, that the relationship between authorities is clear, and that there is adequate communication and cooperation between authorities.
• Bringing any Free Trade Zones (FTZs) and similar areas in each economy under the jurisdiction of the competent intellectual property enforcement authorities within the territory of each economy.

(b) Include Deterrent Penalties

• Imposing criminal and/or administrative penalties sufficient to deter trafficking in counterfeit and pirated goods, and providing for adequate civil remedies (including monetary damages).

4. ENSURING TRANSPARENCY AND FOSTERING PUBLIC AWARENESS

To ensure that members of the public – including right holders and the trading community – are aware of their rights and obligations under applicable laws and procedures, effective enforcement procedures:

(a) Ensure Transparency.

• Publishing border enforcement procedures (for example, procedures for submitting applications for the detention of suspected counterfeit and/or pirated goods, any charges and deadlines associated with such applications, and any procedures for destroying or making unusable counterfeit and pirated goods and the tools used to produce such goods that are seized by competent authorities), and penalties and any significant administrative and judicial decisions regarding those procedures with the appropriate consent of rights holders, to the maximum extent possible on the Internet.
• Identifying publicly competent authorities for intellectual property enforcement and contact points for assistance.

(b) Foster Public Awareness.

• Sponsoring targeted information campaigns and seminars for right holders and key members of the trading community, including manufacturers, retailers, freight forwarders and shippers.
• Publicizing enforcement actions wherever possible, including relevant statistics that economies may collect, such as the number of cases where goods are seized
  or destroyed at the border, administrative procedures are requested and taken, criminal charges are brought, alleged infringers are prosecuted, and criminal penalties are actually imposed.

MODEL GUIDELINES TO PROTECT AGAINST UNAUTHORIZED COPIES

APEC economies are at the forefront of the global electronic commerce revolution. An estimated 100 million Asia-Pacific households will have broadband access by 2007, and the region is expected to see double digit growth in the transmission of videos, music and games over the Internet in the next five years. However, the same advances that are opening new
electronic commerce opportunities – including dramatic growth in bandwidth and the spread of digital reproduction and compression technologies – are also enabling the widespread unauthorized copying and distribution of copyrighted works, performances, phonograms, broadcasts and cablecasts, robbing creative musicians, filmmakers, authors, software developers, and others of the benefits of their creative expressions.

Recognizing existing domestic legal requirements of member economies, and in line with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights, the Berne Convention, the WIPO Copyright Treaty, the following model guidelines are provided to help economies develop appropriate domestic measures to reduce on-line piracy, protect against unauthorized copying in digital form, and promote a safe and secure environment for the continued growth of electronic commerce. Further, the model guidelines are indicative references that may be useful to members in improving IPR protection and enforcement regimes; however, they do not mandate changes to existing law.

At a minimum, these model guidelines are with respect to works, performances and phonograms. Individual members could choose to use them with respect to additional kinds of creative expressions, such as broadcasts and cablecasts.

MODEL GUIDELINES

1. ESTABLISH PROTECTIONS FOR THE DIGITAL AGE

Model Guideline

Empower right holders to secure their creative expressions in the digital environment by granting right holders exclusive rights to authorize or prohibit, subject to appropriate exceptions:

a) The direct or indirect reproduction of their works, performances, and phonograms in any manner or form;

b) The commercial rental of the original and copies of their computer programs, works and performances embodied in phonograms to the public, as determined in the domestic law
of each member economy; and

c) The making available to the public through sale or transfer of ownership of the original and copies of their works, performances, and phonograms.

Effective application of this model guideline may include granting right holders exclusive rights to authorize or prohibit the following, subject to appropriate exceptions:

• Direct or indirect reproduction of their works, performances and phonograms in any manner or form;
• The making available to the public of the original and copies of their works, performances and phonograms through sale or transfer of ownership;
• Commercial rental to the public of the original and copies of their computer programs (including video games), and works and performances fixed in phonograms as determined by the domestic law of each member economy; and
• The making available to the public of their works over the Internet, including by means
  of on-demand, interactive communication.

2. PROVIDE EFFECTIVE ENFORCEMENT

Model Guideline

Provide in law and in fact civil, criminal, and, where applicable, administrative enforcement procedures and penalties in connection with online piracy that are available, effective against unauthorized copying in digital form, and sufficient to deter infringement in the digital environment.

Effective application of this model guideline may include:

• Providing for adequate civil and criminal remedies, and imposing criminal penalties sufficient to address existing and deter future unauthorized copying in digital form, including for willful acts of piracy on a commercial scale, including infringements committed for commercial advantage or private financial gain;
• Establishing effective administrative or judicial procedures that:
  • Enable right holders to obtain information identifying an alleged infringer, and
  • Provide for injunctive authority, and authority to impound, modify or destroy devices or products involved in infringement of copyrights or neighboring rights; and
  • Enhancing the effectiveness and deterrence of enforcement procedures by ensuring, among other things, that
  • Civil remedies are in practice awarded in amounts sufficient to compensate fully the right holder for the harm caused,
  • Criminal penalties are in practice imposed at a level sufficient to deter future infringements,
  • Competent authorities investigate and prosecute acts of infringement of copyrights and neighboring rights, including infringement on the Internet, in appropriate cases and in accordance with domestic law, and
  • If existing remedies fail to deter piracy in practice, competent authorities take appropriate action to enhance those remedies in appropriate cases.

3. SUPPORT CONSUMER EDUCATION

Model Guideline

Support consumer education campaigns to discourage infringement of copyrights and neighboring rights and to promote understanding of and respect for protected works, performances, and phonograms.

Effective application of this model guideline may include:

• Supporting campaigns and programs designed to promote respect for copyrights and neighboring rights and to educate consumers and the general public on the benefits of copyright and neighboring right protection and the risks of on-line piracy, including liability and penalties;
• Publishing enforcement procedures, any significant administrative and judicial decisions regarding those procedures, penalties, and information on significant enforcement
  actions on the Internet;
• Fostering partnerships with consumers, Internet service providers, network managers, right holders and industry organizations to develop and implement business guidelines and codes of conduct on the use of copyrighted works, performances and phonograms.

MODEL GUIDELINES
TO PREVENT THE SALE OF COUNTERFEIT AND PIRATED GOODS OVER THE
INTERNET

In recognition of the fact that commerce via the Internet creates a new channel for the distribution of counterfeit and pirated goods, and that such use of the Internet not only causes serious infringement of intellectual property rights but also threatens the health and safety of consumers, APEC member economies adopted the following model guidelines to assist each member economy in implementing appropriate domestic measures to effectively prevent the sale of counterfeit and pirated goods over the Internet, recognizing existing constitutional and other legal requirements of member economies. These model guidelines are indicative references that may be useful to members in improving IPR protection and enforcement
regimes; however, they do not mandate changes to existing law. Further, the model guidelines that apply to service provider action should be understood to be voluntary unless stipulated in the laws and regulations of the member economy in which the provider is operating.

MODEL GUIDELINES

1. Prohibition of using Internet Services for Selling Counterfeit and Pirated Goods

• Each member economy will prohibit the selling or offering for sale of counterfeit and pirated goods over the Internet.
• Internet service providers and service providers of virtual marketplaces, including Internet auction sites, (“service providers”) should maintain and publicize Terms of Use (TOU)
  which include the following:
  • Prohibition of using the service for selling or offering to sell counterfeit or pirated goods
  • Actions taken against users of the site who violate the TOU, such as takedown and termination of accounts, in cases of selling counterfeit or pirated goods

Such terms may optionally include:

• Specific examples of potentially infringing goods

2. Service Providers’ Measures against Infringement

• Service providers should take necessary measures against sellers, including restriction of access to the site, takedown, termination of accounts, and disclosure of registered information of the seller, upon receiving claims from legitimate rights holders and confirmation of infringement.
• Service providers should provide a contact point for receiving and handling counterfeiting and piracy claims.

3. Preventing Anonymous Trade of Counterfeit and Pirated Goods

• Service providers should implement effective measures to collect and maintain the identifying information of sellers, which should be sufficient to identify the seller and to enable prompt and effective communication with the seller.
• With a view to eliminating anonymous trade in counterfeit and pirated goods over the Internet, sellers should disclose sellers’ identifying information.
  • Specific examples of items to be disclosed by the sellers include, but are not limited to:
    • - Seller’s name or name of the company and its representative engaged in sales
    • Postal address of the seller
    • Phone number of the seller
• Service providers should take appropriate actions to enforce disclosure of identifying information.
• Service providers should take preventive measures against repeated non-compliance with disclosure of seller information.

4. Cooperation among Members

• Each member economy will provide contact information for an agency which will provide information on the member’s efforts to deal with the problem of sales of counterfeit and pirated goods over the Internet.
• Member economies will cooperate with other members’ domestic enforcement efforts to prevent the sale of counterfeit and pirated goods over the Internet.
  • APEC members will identify and exchange enforcement contact information.
  • APEC economies will build capacity by enhancing cooperation and sharing information and advanced practices.