In Trade Ruling, Antigua Wins a Right to Piracy

[R.A.Hettinga]

<http://www.nytimes.com/2007/12/22/business/worldbusiness/ 
22gambling.html?th=&emc=th&pagewanted=print>


December 22, 2007

In Trade Ruling, Antigua Wins a Right to Piracy

By JAMES KANTER and GARY RIVLIN

PARIS  In an unusual ruling on Friday at the World Trade  
Organization, the Caribbean nation of Antigua won the right to  
violate copyright protections on goods like films and music from the  
United States  an award worth up to $21 million  as part of a  
dispute between the countries over online gambling.

The award follows a W.T.O. ruling that Washington had wrongly blocked  
online gambling operators on the island from the American market at  
the same time it allowed online wagering on horse racing.

Antigua and Barbuda had claimed damages of $3.44 billion a year. That  
makes the relatively small amount awarded Friday, $21 million,  
something of a setback for Antigua, which had been struggling to  
preserve its gambling industry.

The United States argued that its behavior had caused $500,000 damage.

Yet the ruling is significant in that it grants a rare form of  
compensation: the right of one country, in this case Antigua, to  
violate intellectual property laws of another  the United States   
by allowing it to distribute copies of American music, movie and  
software products.

That has only been done once before and is, I believe, a very potent  
weapon, said Mark Mendel, a lawyer representing Antigua, after the  
ruling. I hope that the United States government will now see the  
wisdom in reaching some accommodation with Antigua over this dispute.

Though Antigua is best known for its pristine beaches and tourist  
attractions, the dozens of online casinos based there are important  
to the islands economy as its second-largest employer.

By pressing its claim, trade lawyers said, Antigua could set a  
precedent for other countries to sue the United States for unfair  
trade practices, potentially opening the door to electronic piracy  
and other dubious practices around the world.

Still, carrying out the ruling will prove difficult, the lawyers say.

Even if Antigua goes ahead with an act of piracy or the refusal to  
allow the registration of a trademark, the question still remains of  
how much that act is worth, said Brendan McGivern, a trade lawyer  
with White & Case in Geneva.

The Antiguans could say thats worth $50,000, and then the U.S.  
might say thats worth $5 million. He predicted that the U.S. is  
going to dog them on every step of the way.

The United States has aggressively fought Antiguas claims.

A W.T.O. panel first ruled against the United States in 2004, and its  
appellate body upheld that decision a year later. In April 2005, the  
trade body gave the United States a year to comply with its ruling.
That deadline passed with little more than a statement from  
Washington that it had decided it was in compliance.

 From the start, the United States asserted that it had never  
intended to allow free cross-border gambling or betting. Those  
activities are restricted in the United States, though some form of  
gambling is legal in 48 states.

In May, the United States said it was rewriting its trade rules to  
remove gambling from the jurisdiction of the W.T.O.

Washington has agreed on deals with the European Union, Canada and  
Japan to change the treaty but not with several other nations,  
including Antigua.

On Friday, the United States trade representative issued a stern  
warning to Antigua to avoid acts of piracy, counterfeiting or  
violations of intellectual property rights while talks continue.

The trade office said such behavior would undermine Antiguas  
claimed intentions of becoming a leader in legitimate electronic  
commerce, and would severely discourage foreign investment in the  
country.
James Kanter reported from Paris, and Gary Rivlin from New York.