The WTO ruling that lets Antigua suspend U.S. copyright law has its
roots in the birth of online gambling. It quickly became a major part
of the Antiguan economy, but dried up after the U.S. pulled the plug on
its agreement with the island nation. The WTO ruling gives Antigua a
new card to play: the threat of opening the floodgates on U.S.
copyrighted content.
Earlier this week, the World Trade Organization
ruled that the nation of Antigua will be allowed to turn a blind eye to
United States intellectual property rights. Put more technically,
Antigua now has the right to suspend its obligations to American
copyright, trademark and patent holders.
The ruling stems from a decade-old U.S. decision to prohibit remote
gaming -- a move that was extra painful to Antigua, where nearly 5
percent of the population was reportedly once employed in the online
gambling industry.
This story has gained extra attention because of the rumor that
Antigua plans to launch a Web portal designed specifically to
distribute -- for free -- U.S.-copyrighted software, movies, music and
the like. The U.S. has called the idea "government-sponsored piracy,"
while a counsel to the International Intellectual Property Alliance
said that "state-sanctioned theft is an affront to any society."
So the tiny Caribbean island has ruffled some feathers.
In this TechNewsWorld podcast, Mark Mendel, an attorney for Antigua
in the WTO case, joins us to discuss the situation. Mendel explains the
importance of online gambling to the Antiguan economy, as well as what
the nation plans to do with its WTO victory. He also discusses the
piracy story line, and whether we should expect to see some sort of
Antiguan-backed Pirate Bay.
TechNewsWorld: It's my understanding that the gambling
sector in Antigua had really grown into a huge money-maker. There was a
Reuters article that said it employed 4,000 people and was worth more
than $3 billion to the nation's economy.
Mark Mendel: That's right, it was just an
unbelievable part of the economy. Antigua was lucky, but also smart in
being one of the first ones out the gates on this, developing the
regulatory system and everything else. It's like anything else --
sometimes the first horse out the gate will get an advantage over the
field.
So in this time, in the late 1990s or early 2000s, Antigua was the
world leader in remote gaming. There were hundreds of companies there,
and 4,000 people is 5 percent of the island's population. It was
massive, and it was fantastic for the island. When they were at their
height, they had local people as IT technicians, hardware installers,
call center workers, accountants, finance managers, general managers --
doing all sorts of things, from the simplest to the most complicated,
which was an absolute wonder to the economy.
TNW: At this time, was the U.S. Antigua's biggest
"customer" when it comes to online gambling? Did Antigua gambling kind
of go as the U.S. went?
Mendel: Yeah, because actually when Internet
gambling started developing, there wasn't a market for it in Europe. If
you look at the development of the industry in Europe, it lagged way
behind America. The Antigua companies focused virtually exclusively on
America, not only because they thought they could, but because they're
more or less in the same time zone, there's an identification of sports
and things like that. So America was the market.
TNW: Antigua, according to the timeline I have
here, brought its first case before the WTO in 2003, and then in 2005
Antigua won a WTO ruling that said the United States prohibition of
foreign gambling services discriminated against foreign companies. That
was, at the time, thought to be a pretty major ruling, right?
Mendel: It was a major ruling. The decision really
had three parts. Fundamentally the WTO ruled that, number one, the U.S.
had made a commitment to allow unrestricted, not only remote, gaming,
but also that foreigners should have the full right to do domestic
gaming as well. So the U.S. had made that full commitment. [The second
thing was that] by criminalizing, and in essence prohibiting foreign
companies from offering these services, the U.S. was in violation of
the trade agreement. The third thing was the Americans failed to
establish that, despite the first two facts, they were entitled to
prohibit it because it was so bad that they had to [block remote
gambling] to protect the public health and morals of the country.
TNW: Let's fast forward to this week, and to the
decision in Geneva that you referenced earlier. The WTO has reportedly
authorized to -- maybe disregard is the wrong word -- but to
cast aside U.S. copyrights and intellectual property rights. Tell me if
that's being reported correctly, and kind of what it means -- what this
decision means and how it will be used as a compensatory device.
Mendel: Well, some are reporting it right and some
are reporting it completely wrong and most are reporting it both wrong
and right, which is what you would expect, you know?
But let me go back to something else: It's not a compensatory
vehicle. That's not what it's supposed to do. What happens in most WTO
cases, the losing government usually complies. They either comply or
they do something with the other country to make them happy and the
dispute goes away. So 90-something percent of these cases are resolved
very quickly and amicably. Even though the loser may not like losing,
they understand it's a system that benefits everybody and all that kind
of stuff.
Now, when you don't comply, the WTO doesn't have an army, it doesn't
have an ability to extract taxes or something like that. So,
anticipating the odd situation where somebody might not comply, there's
a provision in the WTO agreements that allows the victorious country,
in our case Antigua, to suspend certain rights that the maleficent
party, which would be the United States, has under the WTO agreements
-- not to compensate Antigua, but to pressure the American government
to conform their laws to the international requirements of the WTO.
TNW:I saw it described as a "bargaining chip." Is that accurate? Can you think of it like that?
Mendel: Well, it's a bargaining chip only in the
sense that by suspending these certain other obligations under other
agreements or other trade areas, [the WTO] intended to pressure the bad
government domestically.
What that means in our case, for example: Antigua negotiates with
the United States for years and years and years, the United States
doesn't really want to negotiate, they definitely don't want to comply,
and they haven't complied. Antigua, after 10 years of negotiating,
loses its industry and said, "What in the world can we do?"
Well, what the WTO agreements provide for is -- assuming you prove
your entitlement, which we did --[it gives] you the ability to
pressure, to punish, a completely innocent sector of the American
economy in hopes that that will bring pressure on the government to
comply or negotiate property.
So if Antigua doesn't have the clout, maybe the American software
industry, for example, or the motion picture industry -- or all of
them, intellectual property rights holders -- maybe they will have
enough clout or influence on the American government. Let's just take
Microsoft, for example. Microsoft says all of a sudden, "Wait, we're
about to have the lawful loss of an important intellectual property
right just because the American government won't work with Antigua on
online gambling?" It wasn't designed to compensate Antigua, it was
designed to bring this kind of domestic pressure to bear.
TNW: Now one thing that would seem to turn up this
pressure is the idea, however it was started, that Antigua is
contemplating setting up a portal, or a website, where people can
access and download all sorts of copyrighted material. This obviously
would be facilitated, in theory, by the WTO decision that kind of
waives the copyrights. It would seem that Antigua could have this, as
U.S. regulators have said, kind of a "government-sponsored piracy"
website. And it wouldn't even be called piracy, I guess, because there
would be no copyright to be pirating.
Is this idea of the website, which has caught a lot of attention --
is that legitimate? How did that start? Is it a threat? We kind of see
how the foundation is set for this to happen conceptually. Do you think
this will happen, or is it just bloggers running amuck with the story?
Mendel: Well, I think it's important to focus on
the rights that we got. And expressed properly, we got the right to
suspend our obligations to American copyright trademark patent holders.
Our obligation to respect their intellectual property is lawfully
suspended. So it's not piracy, it's not theft. It's authorized by
international law, though a process the Americans not only endorsed,
but designed.
We could have lost and had no remedy whatsoever. A lot press reports
we're seeing [say] "Antigua's going to be a pirate haven." And sadly,
even the early stories from the U.S. IP people, they were saying,
"Antigua is going to be a renegade and we'll have to retaliate against
them for violating our rights." We're not violating their rights. The
people they should be angry at is their own government that got them in
this mess. Because we didn't get them in this mess, the American
government did.
As far as the possibilities, there are many and some of them are
more obvious than others. At this point in time, we don't want to say
what our favorite approach is going to be. We don't want the debate to
focus on whether Antigua is going to do this or do that or hurt his
person or hurt that person. What we want the focus to be on is that we
have this right now; why this right arose; and how it could be remedied
before it's acted upon.
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