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Secret History of Copyright: NAFTA, USMCA, and Fair Use

Secret History of Copyright: NAFTA, USMCA, and Fair Use by Terry Hart

November 20, 2018


This blog is part of our new blog series, the Secret History of Copyright. The series will unlock some of the mysteries of the copyright world – including little-known laws, influencers, cases and much more!


After a year of negotiations, the U.S., Canada, and Mexico reached an agreement on a new trade deal in September. The agreement—the U.S.-Mexico-Canada Agreement, or USMCA—replaces the North American Free Trade Agreement (NAFTA), which went into effect January 1, 1994.

The comprehensive agreement spans over thirty chapters, including one on intellectual property rights like copyright. But following the publication of the agreement’s full text, Multichannel News’ John Eggerton reported that “Fair Use Fans Find Fault with USMCA.” Eggerton quoted both Public Knowledge and the Internet Association as being disappointed that, in their view, the agreement’s copyright provisions lacked appropriate language regarding fair use provisions.

The Computer and Communications Industry Association (CCIA), which is often aligned with both groups and shares a number of members with the Internet Association, had previously expressed similar views that the agreement needed additional language regarding limitations and exceptions like fair use. In its comments on negotiating objectives for the agreement, CCIA urged the US Trade Representative (USTR) that “NAFTA signatories should commit to establish and maintain a balanced copyright system through fair use/fair dealing limitations and exceptions.” On a side note, as I’ve argued before, CCIA’s view of “balance” is actually quite unbalanced. The existing language on limitations and exceptions strikes the appropriate balance, and the US’s fair use exception—which many copyright owners rely on regularly—is generally consistent with the language.

CCIA and others should not be too disappointed over the final copyright provisions in USMCA. The prediction that a trade agreement would undermine fair use has been made before, and experience has shown that prediction has not borne out. Who made that prediction? None other than CCIA.1

Let’s turn the clock back to 1990. The Uruguay Round of General Agreement on Trade and Tariffs (GATT) talks had been under way for several years. This was the eighth round of GATT talks since 1947. The agenda of the Uruguay Round of talks included a set of negotiations on “trade-related aspects of intellectual property rights” (TRIPS). Including intellectual property rights like copyright within the broader framework of multilateral trade discussions was a priority of several countries, including the U.S., which had identified the trade distorting effects of inadequate intellectual property protections and enforcement since at least the early 1980s.2 In April 1989, an agreement on the general framework for negotiation of TRIPS was reached, and specific proposals were subsequently tabled by a number of countries, including the U.S.3

During the Uruguay Round talks, U.S. lawmakers were dealing with a separate question: the scope of fair use for unpublished works. On July 11, 1990, the House and Senate intellectual property subcommittees held a joint hearing on H.R. 4263 and S. 2370, a pair of bills introduced to address a couple recent court decisions which drew concerns from authors, scholars, publishers, and other copyright owners over how narrowly they construed fair use against unpublished works.4

A representative of CCIA testified during the joint hearing. The bulk of CCIA’s testimony supported the bills and proffered CCIA’s views on publication and fair use in the specific context of software. But at one point, the CCIA representative turned the subcommittee’s attention to the Uruguay Round talks.

As you know, intellectual property law is one of the subjects of the current Uruguay Round of GATT negotiations. As I am sure Members of these Committees are also aware, the United States Trade Representative (USTR) has recently introduced its long-awaited proposal on Trade-Related-Aspects-of-Intellectual-Property. Article 6 of that proposal reads as follows:

Contracting parties shall confine any limitations or exceptions to exclusive rights (including any limitations or exceptions that restrict such rights to “public” activity) to clearly and carefully defined special cases which do not impair an actual or potential market for or value of a protected work.

Article 6, if accepted under the GATT and enacted into U.S. law, would significantly change section 107 of the U.S. Copyright Act, and the century of judicial decisions that it embodies, by omitting the other three factors in the fair use equation: the purpose of the use, the nature of the copyrighted work, and the substantiality of the portion used in relation to the copyrighted work as a whole.5

The CCIA concluded with certainty, “Thus, the USTR proposal would significantly narrow the scope of the fair use exception.”

The Uruguay Round reached a successful conclusion in 1993 and included an agreement on Trade-Related-Aspects-of-Intellectual-Property, dubbed the TRIPs Agreement, which did include a provision on limitations and exceptions. Article 13 of the Agreement says, “Members shall confine limitations or exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder.” The final language corresponds to Article 9(2) of the Berne Convention for the Protection of Literary and Artistic Works, first added to that agreement in 1967. Both provisions are often referred to as the “three-step test.”6 While the exact language that the USTR proposed was not adopted, the TRIPs Article does not include reference to the other fair use factors, the lack of which drew CCIA’s objections.

Which brings us to NAFTA. At the same time of the Uruguay Round of negotiations, the U.S. was negotiating a trilateral trade agreement with Canada and Mexico—talks for NAFTA began in 1991 and finished in 1992. Among its innovations, the agreement was the first to include a comprehensive chapter on intellectual property rights, including copyright. The text of the intellectual property chapter of NAFTA used the draft text of TRIPs as its starting point.7 Article 1705(5) of Chapter 17 of NAFTA was virtually identical to Article 13 of TRIPs and stated, “Each Party shall confine limitations or exceptions to the rights provided for in this Article to certain special cases that do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder.”

The question, then, is how did the fair use exception fare since NAFTA went into effect? Did its scope, as CCIA predicted, significantly narrow?

It did not. In fact, it has clearly undergone a significant expansion, which some believe has, in some court decisions, gone too far. Testifying in front of the U.S. House Judiciary Committee in 2014 as part of its comprehensive review of the copyright law, Columbia Law Professor June Besek said, “What was apparent six years ago is even more obvious now: Fair use is extraordinarily expanding.”8

But that hasn’t stopped CCIA from continuing to sound its alarm about trade agreements destroying fair use.

The alarm is unneccessary—fair use is not under attack. The final text of the USCMA includes language on exceptions and limitations that closely matches the language in the original NAFTA text and in the TRIPs Agreement. Article 20.H.9 of the USCMA provides, “With respect to this Section, each Party shall confine limitations or exceptions to exclusive rights to certain special cases that do not conflict with a normal exploitation of the work, performance or phonogram, and do not unreasonably prejudice the legitimate interests of the right holder.” It additionally states, “This Article does not reduce or extend the scope of applicability of the limitations and exceptions permitted by the TRIPS Agreement, the Berne Convention, the WCT or the WPPT.” If history is any guide, than the USMCA’s copyright provisions will not cripple fair use in the US.

References

1. Internet Association and Public Knowledge were both formed after the events discussed in this article. If they had been around at that time, it’s reasonable to assume they would have shared in CCIA’s prediction.
2. World Trade Organization, The Making of the TRIPS Agreement 58 (Jayashree Watal and Antony Taubman eds., 2015).
3. Id. at 63-65. See synoptic tables of the specific proposals here and here.
4. Fair Use and Unpublished Works: Joint Hearing on S. 2370 and H.R. 4263 Before the Subcomm. on Patents, Copyrights and Trademarks, of the S. Comm. on the Judiciary and the Subcomm. on Courts, Intellectual Property, and the Administration of Justice of the H. Comm. on the Judiciary, 101st Cong. (1990).
5. Id. at 323.
6. The term refers to the three steps that an exception must meet to be consistent with the agreement’s obligations. An exception must only be for (1) a certain special case that (2) does not conflict with a normal exploitation of the work, and (3) does not unreasonably prejudice the legitimate interests of the right holder.”
7. Charles S. Levy, Stuart M. Weiser, The NAFTA: A Watershed for Protection of Intellectual Property, 27 The International Lawyer 671, 672 (American Bar Association 1993) (“The NAFTA negotiators started with the Dunkel TRIPS Text’s provisions on intellectual property, but then built about them.”).
8. The Scope of Fair Use, Hearing before the Subcommittee on Courts, Intellectual Property, and the Internet, Committee on the Judiciary, House of Representatives, January 28, 2014, Serial No. 113-82, pg 15 (statement of June Besek); see also Patricia Cohen, Photographers Band Together to Protect Work in ‘Fair Use’ Cases, New York Times, Feb. 21, 2014 (“’Fair use started out as an exception to copyright law,’ Mickey H. Osterreicher, general counsel for the National Press Photographers, said. ‘Now it seems that copyright is the exception to fair use.’”).
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