To: Richard Stallman
From: Jamie Love Date: October 1, 2000* Re: Proposed Hague Treaty on Jurisdiction and Foreign Judgments in Civil and Commercial Matters This is a response to your request for a basic explanation of the Hague Treaty. I don't consider myself an expert on the treaty, and am still trying to understand how it works, so these comments are preliminary. For additional information, you might contact Jeff Kovar from the US Department of State or see: http://www.cptech.org/ecom/jurisdiction/hague.html I. Background The formal title is the "Hague Treaty on Jurisdiction and Foreign Judgments in Civil and Commercial Matters." The treaty will affect a lot of different things. It was first proposed in 1992, I believe by the US government. It was in the beginning primarily about recognition of judgments from private litigation. As I understand the background, the US wanted to make it easier to collect judgments when a party did not have assets in the country where the money was owed. At this point, no one was thinking about the Internet, and the treaty was probably not of interest to very many people. Beginning in 1995, the use of the Internet and Internet commerce began to expand dramatically, and some persons began to see that the treaty would have significant consequences for ecommerce. Lots of what is done on the Internet crosses borders. The main purpose of the treaty is to provide for recognition of foreign judgments. When there is cross country litigation, the treaty addresses such issues as the jurisdiction of the court (where will the case be litigated) and which laws will apply. Different combinations are possible. You could be sued in China, but your rights might be based upon a US law, or the other way around. You could also be sued in the UK under UK laws, and if you lost the case, the judgment would be recognized in the country where you live. The treaty is designed to address nearly all private commercial litigation, so its scope is very broad. In its present draft, it would involve, for example, intellectual property claims (patent, copyright, trademark, trade secret, unfair competition, etc), libel, slander, contractual disputes, fraud, private antitrust litigation and just about anything where a court would award damages in private litigation. II. What does the Treaty Change? Individuals, organizations or firms can now be sued in foreign jurisdictions, but since it is very difficult to collect foreign judgments, people don't have to worry much, unless they have assets in that country. And, before the Internet became important, there were also fewer cases where what people did was considered of legal consequence in a foreign country. Today the Internet is important, and now speech, the distribution of software and music, and lots of other things done on the Internet are considered cross border transactions. Thus, if the Hague treaty creates domestic liability for foreign judgments, it will be a big thing. This is a form of globalization, but it is different from approaches that are based upon the international harmonization of laws. While institutions like WIPO and the WTO seek to create a global system with the same laws, the Hague treaty would create a world where things you do on the Internet could give rise to liability under laws in any Hague convention member, even when the foreign laws are far different from the laws where you live. This would be true, for example, for different laws (and legal traditions) on libel, slander, copyright, patents, trade secrets and many other things. III. ADR for Business/Consumer transactions I should also note one area where there are special rules and controversy. For Internet business to consumer transactions (B2C), the US government has blocked language in the draft treaty (Article 7) that would ensure that consumers could sue businesses in courts where the consumer lives. Business interests (with lots of help from US trade officials) are pushing for a system where consumer protection and privacy issues would be resolved by business run "alternative dispute resolution" (ADR) systems, that would largely enforce contracts of adhesion or consider industry codes of practice, like the Truste program. This is a huge priority for AOL, Microsoft, IBM and many ecommerce businesses, who seek to avoid dealing with different consumer protection and privacy laws in different countries. Thus, in the B2C transactions, businesses see the treaty as a way to reduce liability from foreign courts. IV. How would the treaty affect the free software movement? There are many areas where the treaty would present problems for the free software movement. This is a list of only a few issues. 1. People who write free software will likely be sued in foreign countries for infringement of software patents. Of course, people who live in countries without software patents will face liability for patents issued in countries where such patents are issued. But also, there will be the increased risk of being sued for really bad (overly broad, not novel) foreign patents. Many Hague member countries do not have much of an examination system, where it is even easier to get patents approved than in the US or Europe. 2. Likewise, there will be potential liability in cases alleging infringements of copyrights, violations of trade secrets, restrictive unfair competition laws, foreign sui generis database protection laws, and other types of intellectual property laws, including those foreign laws that are far more restrictive in terms of the public's rights. 3. For example, some countries do not permit reverse engineering. A software developer living in the US who does reverse engineering could face being sued in a country that banned reverse engineering. So too with other types of fair use exceptions that exist in some countries, but not in others. 4. Different national laws on digital copyright and even hyper-text linking could give rise to liability for web pages that pointed to software considered illegal under various national laws protecting digital copyrighted works. Even if the software was considered legal where you lived, it might be considered illegal somewhere else. 5. Although this isn't directly related in software development, the treaty would make it possible to be sued in libel or slander in foreign countries, where libel or slander laws would be far more restrictive than the USA. V. Where does the process stand? The Treaty has been discussed since 1992, and it was supposed to be finished this year. I only learned about the treaty earlier this year, when US NGOs heard about it from European consumer groups. The FTC and the US department of commerce provided its first NGO briefing on the treaty earlier last spring. Some American Bar Association committees and several business groups have been engaged for some time. Right now there are four important intergovernmental meetings scheduled for the proposed treaty. They include: 1. ADR and the Hague Treaty. December 11-12 in the Hague. This is a meeting co-sponsored by OECD/International Chamber of Commerce and the Hague Conference. Businesses and US trade officials are pushing to have Alternative Dispute Resolution (ADR) become a substitute for national jurisdiction on consumer protection and privacy aspects of business to consumer transactions. Apparently only 250 people will be invited to attend this meeting. 2. WIPO meeting on Hague treaty and IPR. January 30-31, 2001 in Geneva. This is potently a very important meeting for the free software movement. I am trying to find out how to participate in the meeting. 3. Ottawa II meeting on Hague Treaty and E-Commerce. Last week of February. This is a follow up to earlier experts meetings looking at the treaty in terms of ecommerce. In the last meeting a CPT lawyer was not permitted to read our statement at the meeting, but we were allowed to distribute the statement to the experts who attended the meeting. This meeting may be difficult to attend. 4. The Diplomatic Conference on the Treaty, June 2001. In theory, this is when the treaty would be adopted, or parts of it adopted, depending upon progress in negotiations. In general, there is quite a bit of work yet to be done on the treaty, including precisely those areas of interest: ecommerce and intellectual property rights. We are a big late in the process, but not too late to make a difference. VI What can be done? There are several things that could be done to address concerns about the treaty, but I might group them into the two categories of (1) fix it or (2) kill it. 1. Make it more acceptable. Specific concerns about the treaty could be addressed in the negotiations. For example, among the "fixes" that we might pursue: a. Ask the US government to push for changes that would protect US traditions in free speech, looking specifically as issues such as recognitions of foreign judgments for libel or slander, for example. b. Ask the US government to push for changes in the treaty to protect consumer IPR rights found in US laws, such as fair use under patent, copyright and trademark laws. c. Ask that intellectual property issues be excluded from the treaty altogether. This is a pretty promising strategy, given the difficulty of reconciling different national laws and the existence of other global fora (WIPO and WTO) for harmonization. d. Ask the US government to push for changes that would address problematic "unfair competition" laws in some countries. Note, for example, that in some national laws on unfair competition, it is illegal to mention a competitor's products, or to say anything critical about a brand. Under Germany competition laws Wal-Mart recently ran into trouble for lowering prices. e. CPT and other consumer groups oppose proposals for binding arbitration consumer and privacy protections. This is a very sensitive area of the treaty. f. Exclude all Internet ecommerce transactions from the treaty. This would limit the impact of the treaty to the types of transactions for which it was first intended. (2) Kill the treaty. This is feasible, but would require a fair amount of mobilization. Right now few members of Congress or the public know anything about the treaty. My own inclination is to begin by seeking fixes in the treaty, and to see how things go. If the negotiators are not interested in making changes, then option (2) becomes more important. I would add that our concerns about the treaty are very deep, and we are troubled by many different aspects of the treaty, but we are also still learning, and seeking new information. VII. Final comments. We have an NGO meeting with the US government, at the Washington, DC offices of the American Library Association on October 5, from noon to 2 pm. The US Department of Commerce and the US Department of State have agreed to try to answer several sets of questions we have submitted on the treaty. Let me know who is interested in following this. We may set a list to discuss the treaty. Sincerely, James Love Consumer Project on Technology cc: firstname.lastname@example.org <------Members of the Hague Convention=-------> http://www.hcch.net/e/members/members.html Argentina Australia Austria Belgium Bulgaria Canada Chile China Croatia Cyprus Czech Republic Denmark Egypt Estonia Finland Former Yugoslav Republic of Maced France Germany Greece Hungary Ireland Israel Italy Japan Republic of Korea Latvia Luxembourg Malta Mexico Monaco Morocco Netherlands Norway Poland Portugal Romania Slovakia Slovenia Spain Suriname Sweden Switzerland Turkey United Kingdom of Great Britain and Northern Ireland United States of America Uruguay Venezuela * a few spelling errors corrected.