Intellectual Property Owners Pay for United States’ Snub of World Trade Organization's Ruling

In an attempt to stamp out offshore internet gambling, the United States outlawed access to offshore internet gambling.  Antigua, known for its beautiful Caribbean beaches, found the action had a negative impact on its nascent online gambling industry and complained to the World Trade Organization (“WTO”) that the action violated free trade treaties. The WTO agreed with Antigua and told the United  States to remedy the violation. Instead of complying, the United States opted to pass additional legislation – this time ordering United States banks and credit card companies to stop processing payments to online gambling businesses.

What’s All That Got to Do with the Price of Eggs?

What has online gambling and the Antigua/WTO situation have to do with intellectual property owners, you ask. I would say not much.  However . . .

Since the United States didn’t comply with the WTO ruling and the WTO really has no teeth to force compliance, the WTO took another avenue to compensate Antigua.   The WTO is allowing Antigua to disregard United States copyright, trademark, and other intellectual property rights until Antigua recovers $21 million dollars – the amount Antigua says it will lose as a result of United States online gambling laws.

Effect of the WTO decision

As a result of the WTO’s decision Antigua and Antigua-registered companies can distribute United States-produced music, movies, and software without paying any licensing fees to the rights owners. Although the WTO Ruling prohibits such distribution beyond Antigua, there are no specific safeguards in place to prevent wider distribution.

I have seen no reports on the impact of the WTO decision since its issuance last December. If the ruling and the free-flow of intellectual property in Antigua is having an effect on intellectual property holders, the intellectual property holders are being quiet about it.

(Thanks to Jaylen Johnson, J.D. Candidate 2009, Howard University School of Law, who provided research assistance for this posting.)