Given the history of ACTA leaks, to no one’s surprise, the latest version of the draft agreement was leaked last night on KEI’s website. The new version – which reflects changes made during an intense week of negotiations last month in Washington – shows a draft agreement that is much closer to becoming reality. Square brackets have been removed from many sections, leaving the core issue of scope of the agreement as the biggest issue to be resolved when the next round of negotiations begins in a few weeks in Japan.

Perhaps the most important story of the latest draft is how the countries are close to agreement on the Internet enforcement chapter. The Internet enforcement chapter has been among the most contentious since the U.S. first proposed draft language that would have globalized the DMCA and raised the prospect of three strikes and you’re out. In the face of opposition, the U.S. has dropped its demands on secondary liability but is still holding out hope of establishing digital lock rules that go beyond the WIPO Internet treaties and were even rejected by its own courts.

The key takeaways from the Internet chapter, noting that Canada has reserved the right to revisit elements of this chapter at a later date:

1. There is still disagreement on scope – the EU wants it to apply to all intellectual property, while the U.S. would limit to copyright and trademark. This disagreement occurs throughout the ACTA text.

2. Each party is now required to provide the means to address infringement in the digital environment, including unlawful file sharing and streaming. There are no specific requirements and the provision notes that these procedures must preserve principles related to freedom of expression, fair process, and privacy.

3. The secondary liability provisions that focused on ISP liability have been dropped entirely. Instead, the chapter requires countries to promote cooperative efforts with the business community to address infringement and says that countries may provide that authorities have the power to order ISPs to disclose subscriber information. Note that the disclosure power is not a requirement but rather something a country “may” do.

4. The anti-circumvention provisions remain somewhat in play. There is general agreement on a broad provision that largely mirrors the WIPO Internet treaties in calling for “adequate legal protection and effective legal remedies against the circumvention of effective technological measures.” If the obligation were to end there, the provision would simply ensure that all ACTA countries establish anti-circumvention rules, with all the flexibility that WIPO allows.

However, the U.S. is still pushing for two additional provisions that would define adequate legal protection and effective legal remedies in an effort to limit the flexibility that all countries agreed to with the WIPO Internet treaties in the 1990s. The U.S. approach would mandate protection against circumvention of access controls as well as include several prohibitions against devices that can be used to circumvention, potentially even including marketing circumvention devices. The EU has reserved its position on the entire additional provision, Japan opposes parts of it, and (as mentioned) Canada has reserved on the entire chapter (presumably with this section in mind). Moreover, the U.S. also supports a second provision that makes it clear that circumvention does not even require infringement of copyright. This appears to contradict recent U.S. caselaw and would raise constitutional issues in Canada. The EU has proposed deleting the entire provision.

There is one further provision of note which would open the door to exceptions and limitations to the digital lock rules, provided they do not significantly impair the adequacy of the protection. This provision is consistent with the U.S. exception approach that led this year to new exceptions for jailbreaking iPhones and unlocking DVDs in some circumstances. The EU is also opposed to this provision.

This chapter is far better than the initial U.S. proposal, but other countries – particularly Canada – should hold out for anti-circumvention rules that mirror the WIPO Internet treaties. The U.S. demands would currently have a significant impact on the debate on C-32, effectively constraining the House of Commons’ ability to tinker with portions of the digital lock rules. Moreover, the attempt to de-link circumvention from copyright infringement runs counter to a growing body of U.S. jurisprudence and appears to be a USTR attempt to re-write elements of the DMCA as interpreted by U.S. courts. I’ll post more on the rest of the leaked agreement shortly.

Update 9/7: New post on the final four chapters in ACTA: enforcement practices, international cooperation, institutional arrangements, and final provisions.