COPYCENSE

[Editor’s Note: This is the second of a three-part series on the intersection of trade agreements, foreign affairs, and U.S. copyright law. Part 1 was published on May 28; Part 3 will be published on Tuesday, June 9. Portions of this work are included in a continuing study about the framing of “piracy” and its influence on U.S. copyright law. For ease of reading and formatting, this excludes scholarly references, but replaces them with hyperlinks to source material where such links are available.]

This article summarizes the Special 301 process, including its history, its procedures, and the 2009 Special 301 report.

Background of Section 301

Section 301 of the Trade Act of 1974 (19 U.S.C. sec. 2411), as amended, is the principal statutory authority under which the United States may impose trade sanctions against foreign countries that violate, deny benefits under, or unreasonably discriminate against the U.S. government, or otherwise restrict U.S. commerce, pursuant to a trade agreement. Section 301(a) may be understood as a self-help strategy for discouraging breach of agreement by trading partners.

(a) The Patent Lobby

The seeds for the contemporary Section 301 process were sown in the mid-seventies. Partly as a reaction to the Watergate scandal, Congress adopted several reforms that sought decentralization of government and allowed private companies to influence trade policy. IBM and Pfizer were two of the first companies that recognized the need for a global approach to intellectual property protection. In the late 1970s, the CEOs of these two companies “devised a strategy to improve intellectual property protection internationally until American standards became the international norm, especially in developing countries.”

Pfizer sought “significant reform” of the Paris Convention, while IBM sought patent treaty reform and full copyright implementation under the Berne Convention (especially reforming Berne to recognize the copyrightability of software). Together, the two companies sought multilateral diplomacy through the General Agreement on Trade & Tariffs’ Advisory Committee on Trade Policy and Negotiation (“ACTPN”). Pfizer chief executive officer Edmund Pratt and IBM chief executive officer John Opel held high level positions on ACTPN.

By 1985, ACTPN was playing a major role in U.S. trade policy. Around the same time, the U.S. economy was struggling from the effects of large trade deficits with several foreign countries. Industry associations identified and blamed a foreign, monolithic enemy: “pirates.” U.S. corporate executives convinced members of Congress that America’s economy and the nation’s long term economic and innovation competitiveness would improve only if the country passed trade laws that levied stiff punishments for continuing trade violations, especially those that involved “piracy” of intellectual property.

This led to a number of changes to trade policy. For example, ACTPN recommended that the U.S. Office of the Trade Representative (“USTR”) create a post of assistant trade representative for investment; USTR did so in 1981. In 1985, ACTPN established an intellectual property task force in 1985, with Pratt, Opel, and Fritz Attaway serving. (Attaway is executive vice president and Washington general counsel for the Motion Picture Association of America, where he has worked since 1976.)

From this core, ACTPN worked to educate people in Congress and in the executive branch (especially USTR) about the importance of protecting intellectual property rights as a way of facilitating investment in developing countries. Part of the education included targeting Washington policy makers with conferences and books, both of which emphasized that American competitiveness in innovation industries was being hurt by developing countries’ failure to pass or enforce laws that protected American intellectual property. As a result, USTR spent much more time and diplomatic effort in putting intellectual property issues on the GATT Uruguay Round agenda in 1986, ultimately consulting ACTPN on a “GATT strategy.”

(The GATT Uruguay Round strategy was a “carrot and stick” approach to trade and intellectual property negotiations with developing countries. On one hand, the U.S. offered tariff concessions on agricultural and textile products and technical training on intellectual property issues. In exchange, the U.S. wanted higher levels of intellectual property protection to combat “piracy” and counterfeiting. A foreign country’s failure to comply would result in cutting the country’s aid through America’s General System of Preferences, and possible trade sanctions pursuant to Section 301 actions. Said more simply, where bilateral and multilateral trade concessions GATT Uruguay Round are the carrot, Section 301 actions are the stick, a form of unilateral sanctions.)

The Intellectual Property Committee (“IPC”) was another important trade group that started work during this period. IPC’s purpose was to be a spokesman for intellectual property-based companies and lobby their interests in Washington and Geneva. Charter members were Pfizer, IBM, Merck, General Electric, DuPont, Warner Communications, Hewlett-Packard, Bristol-Meyers, FMC Corporation, General Motors, Johnson & Johnson, Monsanto, and Rockwell International.

(b) The Copyright Lobby

While ACTPN and IPC handled multilateral GATT diplomacy strategy, the corporate owners of large copyright portfolios became concerned that the ACTPN was too focused on patent issues. Those companies began seeking their own bilateral strategy to strengthen international copyright laws, resulting in the formation of the International Intellectual Property Alliance (“IIPA”). IIPA charter members included the American Association of Publishers; the Motion Picture Association of America; and the Recording Industry Association of America. The Business Software Association and Interactive Digital Software Association since have joined IIPA.

Created in 1984, IIPA also was established to advocate an agenda for the USTR’s Section 301 report, which Congress codified in the U.S. Trade and Tariff Act of 1984. Among other things, the 1984 Trade Act clarified the Section 301 review process, for which copyright creators had lobbied. In 1985, IIPA submitted to USTR a report entitled Piracy of U.S. Copyrighted Works in Ten Selected Countries that presented data from IIPA members that estimated $1.3 billion in lost film, music, computer software, and books sales due to “piracy.”

USTR responded by initiating a Section 301 investigation against Korea. Based in part upon this initial report, IIPA lobbied Congress to institutionalize the measurement of copyright problems in foreign countries, leading to an amended Section 301.

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