A recent draft of the controversial Anti-Counterfeiting Trade Agreement (ACTA) surfaced on Wikileaks this weekend. Among other things, the draft aims to strengthen the power and rights of the entertainment industry and other copyright holders, by letting them choose how they want to be compensated for copyright infringements.

ACTA is an international agreement that aims to target piracy and counterfeiting globally. The degree of secrecy surrounding the negotiations is astonishing. Many institutions, the press and various individuals have requested that the participating countries provide an insight into their plans, but none have succeeded thus far.

It almost seems they are actively blocking the public from having their say, while in contrast they continue to receive input from anti-piracy lobbyists such as the RIAA and MPAA. However, as time progresses more details about ACTA become public, largely thanks to Wikileaks.

With the most recent draft that leaked a few days ago, another piece of the puzzle is completed. The leaked draft covers a wide range of issues which are impossible to cover in one article, so here we focus on the damages section. In this section, it is explained how copyright infringers should be compensated by those who share copyrighted content.

It starts as follows:

1. Each Party shall provide that: (a) In civil proceedings, its judicial authorities shall have the authority to order the infringer of intellectual property rights to pay the right holder. (b) In determining the amount of damages of intellectual property rights, its judicial authorities shall consider, inter alia, the value of the infringed goods or service, measured by the market price, suggested retail price, or other legitimate measure of value submitted by the rights holder.

This basically means that the courts should be allowed to make those who share copyrighted content pay compensation to the rights holders. By itself this is not that groundbreaking, but combined with point (b) it means that the RIAA, MPAA and others pretty much have a carte blanche for the amount of damages they want to request.

But it gets even worse.

2. At least with respect to works, phonograms, and performance protected by copyright or related rights, and in the case of trademark counterfeiting, in civil proceedings, each party shall establish or maintain a system that provides: (a) pre-established damages

(b) presumptions for determining the amount of damages

In the footnote of paragraph 2b it is detailed that the damages should be equal to the number of infringed goods, multiplied by the profit that would have been made if the infringement had not taken place. The “would have been sold” part is crucial here. Is every copyrighted file shared to be considered a lost sale or will there be another formula to calculate the claimed loss in sales?

If this paragraph ends up in the final version of the agreement the participating countries are encouraged to come up with a standardized fine for copyright infringers based on lost profit. The way we see it this could easily lead to a situation where file-sharers face thousands of dollars in fines if their IP-address is found sharing a popular movie or music album.

The damages section of the ACTA draft continues with the following paragraph that suggests giving rights holders full control over how they want to be compensated.

3. Each party shall provide that the rights holders shall have the right to choose the system in paragraph 2 as an alternative to the damages in paragraph 1.

This is even more absurd. It basically means that the RIAA and MPAA will have the right to come up with their own damages formula, where they will probably cite one of their own studies to legitimize asking for exorbitant amounts of damages.

Even though this leaked ACTA text is just a draft, and many member states have suggested it should become less extreme, it is crystal clear that the legislation is heavily skewed towards the rights holders. The rights of the public, their privacy and the general criticism on the claimed “loss in profit” because of illegal downloading are all completely ignored.