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Democrats: FTA threatens small software players

Democrats: FTA threatens small software players

The recently agreed text of the Free Trade Agreement (FTA) with the US sets a dangerous precedent in the intellectual property (IP) arena, stifling competition and handcuffing the actions of small software players, according to a prominent Australian Democrat.

Senator Brian Greig said the inclusion of the IP chapter to the FTA followed the American route of giving “extraordinary power and privilege to giant software companies”.

Senator Greig was upset by the proposal in the FTA to create harm­onisation of Australian and US patent laws.

He said this left the door open for the US Digital Millennium Copyright Act (DMCA) to be extended into Australian waters.

“The DMCA is a highly controversial and draconian American law established by President Clinton in 1998 after intense lobbying from vested interests in the Recording Industry Association of America [RIAA] and the Motion Picture Association of America [MPAA],” Greig said.

He was concerned small software companies and IT research firms would be the big losers and cited a host of US examples where small players got caught in the crosshairs of the multinational behemoths.

HP resorted to DMCA threats when researchers published their discovery of a security flaw in HP’s Tru64 Unix operating system, Senator Greig said. Meanwhile, educational software company, Blackboard, used a DMCA threat to stop the presentation of research on security vulnerabilities in its products.

“Big business in the US is using the Act of Parliament to do the most outrageous things,” he said.

Greig said those were just two examples — from a handful of incidents — whereby the US law was being used to threaten and financially exhaust the competition.

“By tying up competitors in the courts with claims of software patent infringement, major IT companies are abusing the legal and democratic processes to crush their opposition with the exception powers available to them through the DMCA,” he said.

Federal Minister of Trade, Mark Vaile, said the overall FTA deal offered enormous opportunities for Australian companies. Instead of stifling competition, the FTA allowed “considerable flexibility to implement its obligations in a way that reflects local interests and the local legal and regulatory environment”, he said.

On the IP front, the government said the harmonisation of Australian and US IP laws provided Australian exporters with a more familiar and certain legal environment for the export of value-added goods to the US.

Essentially, the thrust of the IP chapter included strengthening protection for copyright owners, said Paul Zawa, a partner at Allens Arthur Robinson (AAR) based in Sydney, who’s studying the implications on the Australian legislative landscape.

The commitments in the FTA suggest the Australian Copyright Act 1968 would be due for another major overhaul only three years after the substantial Digital Agenda amendments came into force in March 2001, Zawa said.

A key element involves extending the copyright protection by another 20 years. To date, Australian copyright law provides protection for 50 years from the author’s death in relation to most works.

Another key point, Zawa said, was the proposal to increase Internet Service Provider (ISP) liability.

The US statement suggested that Australia would be required to introduce a regime requiring ISP compliance with rights-holders’ requests if an ISP was to avoid liability for the infringing actions of its subscribers. This was similar to the US regime, he said.

“If an ISP in the US is notified by a rights holder that it has copyright material [and if there is no counter notice], it must remove the material or be liable for distribution ... that doesn’t exist here in Australia,” Zawa said.

“This would place more obligations on ISPs,” he said.

The move to beef up criminal and civil protection in the area of intellectual property also added another twist to the Australian scene, Zawa said.

Both countries suggest the FTA would increase criminal and civil protection against the unlawful decoding of encrypted satellite TV signals.

Essentially, the US suggested that Australian IP law should criminalise end user piracy and counterfeiting, Zawa said.

The FTA would also provide tighter controls on circumventing technological protection (such as embedded codes on discs).

But the problem was it’s too early to tell the exact impact of the FTA because a detailed document was yet to be finalised, AAR partner, Jim Dwyer, said. And for the FTA to become law in each country, it must be passed through the US and Australian domestic legislatures.

To date, Zawa said there hadn’t been much feedback from industry players.

“The people with the real interests are waiting to see the wording because they don’t want to start a panic,” he said.


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