The government of Antigua and Barbuda, twin islands in the Caribbean, is preparing to set up a system by which up to $21 million in revenue can be generated annually from U.S. copyrights, without any compensation whatsoever going to the original copyright holders -- and it's doing it with the sanction of the World Trade Organization.

That's the takeaway from Mark Gibbs' Network World article, which points out the even more painful fact that the United States may well have shot itself in the foot over this.

Copywronged

The short version: Back in 1994, Antigua and Barbuda began offering online gambling to the world and reaped a fairly sizable profit from it (some $2.4 billion in annual revenue through 2001). Then the United States declared cross-border online gambling illegal, which cut Antigua's gambling revenues by more than half by 2007.

Antigua didn't take this lying down, though. In 2003 it appealed to the WTO, and in 2004 the WTO found in Antigua and Barbuda's favor, giving the United States. one year to amend its laws. To the surprise of almost no one, the United States did no such thing. Some back-and-forth disputes ensued, but the United States. refused to budge.

Earlier this year, the WTO gave the nod to a punitive measure that would allow the island nation to recoup some of its losses by monetizing U.S. intellectual properties -- up to some $21 million a year. And the whole deal would be protected under international law.

Now, according to Gibbs' piece, Antigua and Barbuda are preparing to set up "a statutory body to own, manage and operate the ultimate platform to be created for the monetisation or other exploitation of the suspension of American intellectual property rights."

What this platform could be is still murky, but in theory it could be a government agency that sells licenses to allow individuals to resell intellectual properties. In theory, those properties could be anything: movies, books, music, software, with no limits on bundling and no price floors.

Through the TRIPS loophole

How is all this legal? A provision of the WTO's Trade-Related Aspects of Intellectual Property Rights agreement, or TRIPS for short, added intellectual property protection to the international trading system. On the surface it sounds like a good idea, but it also means that intellectual properties can be used in punitive measures against WTO member nations.

Tim Worstall of Forbes wrote about this and noted with no small irony that "it was very much the US that kept insisting that [intellectual properties] should be included in these world trade rules. Now they are included: but it's the US finding the rules attacking US copyright, not protecting it."

Some aspects of the WTO judgment as they might pertain to software are unclear. For instance, a program that needs activation from a central server -- such as Microsoft Office or Adobe Photoshop -- would be difficult to monetize in this way unless its copy protection was disabled. It's not clear if Antigua and Barbuda would be allowed to sell cracked versions of software under its scheme, but it's also not hard to see circumstances where exactly that sort of thing could happen anyway.

If the plan does go through, the most basic defense mounted by the United States may be to simply prohibit its citizens from purchasing anything from the Antiguan "pirate bay" project. What's more likely is the United States will negotiate to directly compensate Antigua and Barbuda in some form, rather than allowing that country to help itself to a veritable treasure trove of material protected under U.S. copyright.

This story, "Antigua and Barbuda: The new Pirate Bay?," was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow InfoWorld.com on Twitter.