Legal piracy? Antigua gets OK to start selling copies of US hit movies, songs

The World Trade Organization ruled that the tiny island nation is entitled to suspend American intellectual property rights due to an ongoing trade dispute with the US.

Antigua and Barbuda doesn’t normally rank among threats to United States interests. The twin-island nation’s population of 100,000 rivals that of Flint, Mich., and its $1 billion economy is about as much as New York City is spending to make infrastructure fixes like repairing bridges and filling potholes.

Yet, when it comes to trade negotiations, the eastern Caribbean country is playing tough.

In what would be a first, the Antiguan government is threatening to suspend the intellectual property rights that protect the US music and film industries. It could then establish a website and sell hit songs and Hollywood blockbusters without paying royalties – legally.

This week, the World Trade Organization said Antigua had the right to take the unprecedented step in an effort to force the US to abide by a previous trade ruling. The two countries have been locked in a trade dispute for the past decade since the US prohibited the use of offshore Internet gambling sites.

The US laws in question placed bans on bet-making across borders by way of the Internet. Those laws, which had disastrous effects on the Antiguan economy, violated trade rules, the WTO ruled.

The Antiguan government refuses to reveal the details of its retaliatory plan. Whatever the government does, “we are not dealing with piracy or [intellectual property] theft,” says Colin Murdoch, Antigua’s ambassador at large. People close to the plan have long said the country intends to launch a website.

In various decisions handed down during the past 10 years, the WTO has consistently sided with Antigua. Yet, negotiators have failed to come to an agreement.

Now, Antigua is considering what it says is its only remaining option: going after popular films and music.

A bargaining chip?

An unlicensed Antiguan website might not be the boon to consumers that it seems.

US officials could still prosecute individuals for downloading songs illegally. What’s more, the Antiguan government would be limited to $21 million per year in sales to recuperate the money its economy lost when the gaming industry collapsed, according to the WTO decision.

The government says it has lost much more, placing the industry at $3.4 billion annually, according to what it says are independent estimates.

The US has lost at least two other trade rulings in which foreign countries have been allowed to suspend intellectual property rights. But those countries never did so.

“I would be surprised if [Antigua] actually incorporates a website. That would be really serious,” says Andrew Sellars, a fellow at Harvard University’s Berkman Center for Internet and Society.

Mr. Sellars believes that Antigua is trying to bring the US back to the table. The countries, otherwise close allies, have exchanged barbs over the issue.

Ngenke Harmon, a spokeswoman for the US Trade Representative, says that “government-authorized piracy would undermine chances for a settlement. It also would serve as a major impediment to foreign investment in the Antiguan economy, particularly the high-tech industries.”

The International Intellectual Property Alliance, which represents US copyright holders, strikes a similar chord.

“Should Antigua determine to move forward in this manner, it would certainly interfere with the ability to reach a negotiated resolution, and would harm the interests of Antiguans,” said Steve Metalitz, counsel to the group, in a statement.

Antigua’s attorney in the negotiations, Mark Mendel, says that if the US backs away from negotiations, it would be “cutting off its nose to spite its face."

“We’ve always been looking for employment.... As long as eight years ago we gave them proposals for limited remote gaming,” Mr. Mendel says, adding that the Antiguan government would consider US assistance on other industries as part of a settlement. “Why don’t you just sit down and find something that you can do, some market you can open for us?”

'It's about jobs'

Antiguan officials say they are not tied to the gambling issue. “At the end of the day it’s about jobs,” Ambassador Murdoch says.

In the early 2000s, Internet gambling employed some 5 percent of the nation’s workforce and supported hundreds of companies. The industry now employs between 400 to 500 people, about one-tenth of the figure at its height.

“It’s been a huge thing for us, absolutely huge,” Murdoch says. The reduction in the industry “came at a time when many other things were happening ... including the recession” that hurt tourism, the largest single source of the economy.

The Obama administration agrees that a solution should benefit the Antiguan economy, but it has not said what that might be.

This is not the first time the US has dealt with a dispute involving royalties paid to artists. In 1999, it took the opposite position in a dispute brought by the European Commission – arguing that the WTO was enforcing rules too strictly.

In that case, the Europeans argued – successfully – that small bars in the US should be required to pay the same royalties that larger venues pay for reproducing copyrighted music.

The two sides ultimately struck an agreement requiring a multimillion dollar annual payment from the US to the Europeans. It is unclear whether the US still abides by that agreement.

In the Antigua case, the US has pushed for the WTO to take a more active role in protecting intellectual property. That mirrors the position of the US government in dealing with such rights, Sellars says.

“I think that in the US, there is already a perception among Americans that the government is beholden to intellectual property holders,” he says. “We’ve seen a bigger government role in protecting” the sector.