The landmark Trans-Pacific Partnership economic trade agreement between a dozen Pacific Rim countries, reached October 5, 2015, will have important ramifications for those plying their trade in the kids entertainment business.
Generally speaking, the TPP is designed to lower trade barriers and allow for the increased free-flow of goods between member countries, which comprise 40% of the global economy. Once ratified by all member nations, it will constitute the world’s largest free trade agreement, affecting 800 million people across four continents.
As a de facto extension of the North American Free Trade Agreement between Canada, the US and Mexico, the TPP offers nine new countries (Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam) preferred access to the US market. It covers a range of economic issues such as development, environment, labor and corruption. So while it will unquestionably permeate all sectors of the economy, with what should the global kids entertainment industry be most concerned? Important changes, in fact, have been tabled on some of the issues most near-and-dear to the hearts of content makers, licensors and licensees—copyright, intellectual property and trademark protection.
According to Sydney, Australia-based lawyer Daniel Posker, a senior associate at Herbert Smith Freefalls, the TPP will establish a common set of rules, and promote consistency and copyright enforcement protection within the Asia-Pacific region, while balancing the need to support and encourage creativity and innovation. But how it actually impacts TPP member states will vary depending on their existing laws.
For example, the TPP is broadly consistent with existing international laws and agreements such as the 1995 TRIPS agreement (Trade-Related Aspects of Intellectual Property Rights), so for countries like the US and Australia, there’s unlikely to be any substantive legislative change. But other members like Canada, Japan, New Zealand and Malaysia will need to increase their term of copyright protection to the new minimum of life of the author plus 70 years.
Ottawa, Canada-based lawyer Michael Crichton says current Canadian law states copyright protection is enforced for the life of the author plus 50 years. “[The TPP] grants creators an additional 20 years of copyright protection, and essentially exclusivity over their works, which is pretty significant if you’re a film company or another organization that is responsible for enforcing creators’ rights or protecting creators’ rights,” he notes.
Another key provision outlined in the TPP, says Crichton, concerns internet service providers (ISPs). At the moment in Canada, if someone posts content on a website that he/she doesn’t have the rights to—whether it’s a movie, TV series or song—the copyright owner can notify the ISP, which then sends a notice of infringement to the website owner to take the content down. But the TPP takes things one step further.
“The TPP says that member countries need to adopt a notice-and-takedown regime, which is where the copyright owner sends the ISP a notice of infringement. Once the ISP gets that notice of infringement, it actually has to take down the infringing content it’s hosting on its servers,” says Crichton. “That’s something that exists in the US right now.”
Speaking of copyright enforcement provisions, Australia’s Posker notes the TPP also requires new minimums and consistency in terms of criminal offenses for copyright piracy, as well as the import and export of pirated goods.
“What we will hopefully see is a greater level of protection throughout this region of investments made by the entertainment industry, and hopefully it will help combat copyright piracy and IP theft generally,” he says.
“What the TPP will do is move these countries even closer to the US. So it will be a much more homogenized world.”- Gary Fechter, McCarter & English
Due to the sheer number of countries involved in the TPP agreement, and the different degrees of IP protection amongst nations, one of the overriding goals regarding trademark protection is increased harmonization between common law and civil law, according to Gary Fechter, a New York-based lP attorney with McCarter & English.
In common law countries, such as the US, UK, Australia, Canada, Singapore and Malaysia—which trace their legal systems to the former British Empire —to own a trademark is a race to the marketplace. “He who uses the trademark first owns the trademark. The second user is an infringer,” explains Fechter. However, in civil law countries like Chile, Mexico and Peru, it is a race to the trademark office. “He who registers his mark first wins, regardless of who uses it first,” he says.
And because IP protection practices in the US are so ingrained, the TPP will force other countries to adopt US standards, he adds. For example, if you’re a Peruvian company and you want to sell your successful board game or doll stateside, you will now have to comply with prescribed quality controls because a US trademark can be lost if it’s a naked license (i.e. if the licensor does not exercise adequate quality control over the licensee).
“What the TPP will do is move these countries even closer to the US. So it will be a much more homogenized world,” he says. “Any time you enter into a treaty like this with the US, because our economy dwarfs everyone else’s, the natural instinct is to integrate into the US economy, which means US standards.”
For example, Fechter posits that lower tariffs could mean more US companies in the apparel industry might opt to seek out labor in countries like Vietnam, but because the US does not allow child labor, no US manufacturer/licensor will want to work with another manufacturer that partakes in it.
“We will publicize it,” says Fechter. “No manufacturer will want to be on the front page of the Wall Street Journal with an exposé saying they are selling slave labor- and child-produced goods. So, as a matter of the way the world works, the US apparel manufacturer will raise the standard and not deal with a factory that chains women to sewing machines for 16 hours a day.”
While the cost of labor may increase in many countries, Fechter believes they will ultimately benefit by having preferential access to the US market like they’ve never had before. “The TPP will raise the standards of consumer protection and lower tariffs across the board, but the real prize will be doing business with US businessmen,” he contends.
For instance, Fechter says, if a Chilean company develops new products with creative packaging and starts selling them in the US, only to find out someone is knocking them off, an American lawyer or businessman will likely advise them to protect their property under US law.
“The business nationals of member states, doing business with the US, will then take advantage of American law, and record and seek protection for infringement of their IPs in US courts,” he says. “US courts are the best in the world regarding infringement of IP. Our courts give damages. There is a beginning, middle and end. But that’s not the case as much overseas, and certainly not with civil law countries.”
So when will it take effect? With all the pieces in place after seven years of negotiations, the next step for the TPP is ratification by all 12 member countries. “It could be a lengthy process, depending on how long each country takes,” says Posker.
Each country needs to review the final document and go through its own government process to review terms of ratification and adoption, he says. In addition, some countries, as mentioned above, will need to amend their domestic laws to put them in line with the other member nations. Any amendments will also have to be reviewed by each country’s government and passed in the usual way.
Another factor that could delay the ratification process is changes in ruling governments, which recently happened in Canada. The TPP was agreed upon by the outgoing Conservative government, but the incoming Liberal government plans to review, if not make substantive changes, before signing off on the agreement.
Even if the new Canadian government were to go ahead with the existing version of the TPP, Crichton says it’s probably at least one year (or potentially years) until it’s fully ratified and adopted as law in Canada. “These things can take months, but more often years,” he says.
Nonetheless, the TPP document itself is a big step in the right direction and will go a long way towards ensuring copyright, intellectual property and trademark protection for all member nations.
“Any move towards consistency is a good thing,” says Posker. “There is a need for strong protection and enforcement so that it still encourages innovation and creativity.”
Crichton adds that he doesn’t see any erosion of IP rights in the TPP. In some cases—like with the extension of the term of protection to 70 years—it will strengthen those rights. “It’s an agreement that is there to protect creators and rights holders,” he says. “So entities like film companies will probably welcome the continued protection of intellectual property.”
As for Fechter, he says that while the TPP will open many new doors and facilitate cross-Pacific trade, he cautions not to be lulled into thinking the world is the US.
“When you do business overseas, you have a higher rate of your IP being ripped off. It is pennywise and dollar-foolish not to engage local lawyers, so that you do all that you possibly can do, both under US law and local law, to protect yourself,” he says.