The Unexpected Victims: U.S. Copyright Owners and The U.S.-Antigua Internet Gambling Trade Dispute

The ongoing trade dispute between the U.S. and the Caribbean island nation of Antigua and Barbuda has produced unexpected and potentially harmful consequences for U.S. copyright owners. Antigua announced last week its plans to establish a website selling media and software protected under U.S. copyright law—and will do so without obtaining permission of its copyright owners or paying any form of royalties.

Surprisingly, Antigua has the right to establish this pirating website under international law. It won a 2007 World Trade Organization (WTO) dispute settlement against the U.S. (Dispute Settlement 25 – DS 25), where the U.S.’ blocking of Antiguan online gambling sites from U.S. customers was found to be a violation of the U.S.’ General Agreement on Tariffs and Trade (GATT) commitments. Consequently, Antigua was granted the right to suspend its WTO obligations to the U.S. under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). This has allowed Antigua to legally sell pirated U.S. copyright content in amounts not exceeding $21 million annually until the U.S. removes its blockade of Antiguan gambling websites or pays compensation. As of yet, the U.S. has done neither.

To Antigua’s credit, it has yet to enforce its entitled remedies in the six years since DS 25’s ruling. According to reports, Antigua’s main goal is not to become a copyright pirate—it simply wants the U.S. to comply with DS 25. Yet, the U.S.’ continued failure to do so has made Antigua feel that it has no other choice but to open the pirating website to pressure the U.S. into compliance.

Ultimately, U.S. copyright owners will pay the price for the U.S. government’s failure to comply with DS 25. Reports are that the U.S. government will compensate U.S. copyright owners for lost royalties who are infringed from Antigua’s pirate website. However, international copyright law gives U.S. copyright owners legal protections beyond mere royalties. Qualifying U.S. copyright owners have the right under both U.S. copyright law (17 U.S.C. § 602(a)(2)) and Antiguan copyright law (2003 Copyright Act) to restrict movements of their works across borders for commercial use, namely to prevent the unauthorized trade in protected works known as parallel importation or grey goods. As controlling the availability and flow of protected content is crucial to capitalizing on foreign markets opportunities, U.S. copyright owners whose works are infringed through the Antiguan pirate website will be harmed by their inability to control the flow or distribution of their works, with no apparent recourse or compensation under international, U.S., or Antiguan law.

As any business who has foreign IP protection concerns know, protecting IP rights abroad is hard enough even with protections under international law. The developments in the U.S.-Antiguan trade dispute are harmful beyond mere infringement as they act to undermine what minimum protections U.S. copyrighted works enjoy abroad under international law, and according to commentators, they help to establish a negative precedent that could lead to similar outcomes in larger trade disputes with potentially more severe damages for U.S. copyright owners. Time will tell whether this will come true.

What do you think of the U.S.-Antiguan trade dispute? Will you be affected by it and how?

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