The suspension of US intellectual property rights stems from a dispute between Antigua and Barbuda and the United States concerning online gambling sites. In 1994, Antigua and Barbuda had passed the  allowing licenses to be granted to organizations applying to open online casinos. The industry became quite lucrative and the online gambling industry became the in Antigua reporting peak revenues of  (although other sources a much lower value).

The trouble started in the early 2000s when the United States Department of Justice began on internet gambling sites based in foreign jurisdictions. Several pieces of federal legislation, including the , the and the , prohibit (or were proposed to prohibit at the time) financing, managing, supervising, directing, or owning a gambling business. This had a on Antigua and Barbuda's online gambling industry. The profitable sector, once accounting for in 2001, shrunk to less than 7% of global online gambling market in 2007 with revenues of less than one billion.

Antigua and Barbuda the United States' prohibition on cross-border online gambling services in 2003, alleging these constraints were against the United States' obligations under the (GATS). In November 2004, the panel established by the Dispute Settlement Body (DSB) determined that the United States failed to "accord services and service suppliers of any other Member treatment no less favorable than that provide for under the terms, limitations and conditions specified in the US Schedule" contrary to Articles XVI:1 and XVI:2 of the GATS. The US appealed the decision but the Appellate Body .

In May 2005, the United States said it intended to implement the DSB's recommendations concerning changing the laws and it was given 11 months and 2 weeks to do so. However, they never really seemed to get around to it as in June 2006, Antigua and Barbuda requested a panel be established under Article 21.5 of the (DSU). The DSU applies when there is a "disagreement as to the existence or consistency with a covered agreement of measures taken to comply with the recommendations and rulings".

In March 2007, the panel confirmed that the United States had failed to properly address the rulings of the DSB. Article 22.2 of the DSU provides that in situations where a member "fails to bring the measure found to be inconsistent with a covered agreement into compliance" within a reasonable period of time the innocent member may "request authorization from the DSB to suspend the application to the Member concerned of concessions or other obligations under the covered agreements." In this case the agreements include both those under the GATS and intellectual property rights covered under the agreement on (TRIPS). In December 2007, the Arbitrator assessed Antigua's annual losses due to US restrictions on online gambling websites to be US$21 million. On January 28, 2013, the DSB authorized the suspension of concessions and obligations Antigua owed to the United States in respect to their intellectual property rights.

While Antigua and Barbuda are not the only country to demand compensation for the United States' refusal to lift restrictions on Internet gambling (for example, a was reached with the EU), they are the only country to pursue the somewhat uncommon remedy of a suspension of intellectual property rights. Perhaps they are insisting on this remedy in the hopes of negotiating a better deal. The US$21 million annually awarded by the DSB is much less than the billions the online gambling industry was claimed to be worth. In this sense it may not seem as though the punishment is sufficient for the US's transgression. However, (suspension of concessions in a sector of trade different than the sector in which the trade injury was suffered) is proposed to offer members with less economic power a meaningful mode of redress against more-developed WTO members. The threat of the suspension of IP rights could result in rights-holders pushing the government to settle the matter in an alternate manner. At this point it is not exactly clear what US intellectual property might be sold by Antigua and Barbuda or if there will be any rules concerning bundling and minimum prices. Theoretically, this could pose major problems to US IP rights-holders as their intellectual property could be sold for a mere pittance. While government authorized piracy may be anathema to some, it is certainly a valuable bargaining chip for future negotiations. With the government in the final stages of developing a platform to monetize the suspension of IP rights, it looks likes intellectual property rights are poised to take the plunge.

Corey McClary is an IPilogue Editor and a JD candidate at Osgoode Hall Law School.

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This follows the unwillingness or inability of the United States to modify its legislation that effectively banned Americans from gambling on foreign websites after under the . Antigua and Barbuda must now decide whether they will use the authority granted by the WTO and suspend some of the protection of intellectual property belonging to US rights holders.

It is not the first time that a WTO dispute-settlement panel has authorized what is known as the “cross-retaliation” involving intellectual property. Typically, when one WTO Member fails to implement the findings of a dispute-settlement panel, the other party to the dispute can be authorized to “retaliate” by imposing trade sanctions in the same area (as the dispute). However, in certain cases it is difficult, if not impossible, for certain WTO Members to retaliate in that same area. For example, when WTO panels found that its banana import quotas violated Ecuador’s rights under WTO Agreements, . This authority was never used, in part because Ecuador realized that if it did so, it would likely destroy the market for Ecuadorian music unable to compete with “free” European music.

Whether or not Antigua and Barbuda decide to retaliate as now authorized, the WTO decision is interesting on several different levels. First, it shows that, from the perspective of trade law, a dollar is a dollar. Copyright can be valued on the same common denominator as a banana or an online gambling site. For those of us who work in the area of intellectual property, this equipollency between very different types of activities and industries seems a bit contrived.

Second, the case shows that the WTO dispute-settlement system does not always work well when the “winning” party is a small country such as Ecuador or Antigua and Barbuda. A system of compensation, in which the “losing” party would actually pay the government of the “winning” party for losses incurred, exists in the WTO but it is mostly theoretical because it can only be used when the losing party agrees. This case shows that it may be time to reexamine the role of compensation in WTO dispute-settlement cases to avoid similar cases of hardly justifiable retaliation between unrelated industries.

Third, this is another case in which the United States is unwilling or unable to implement the findings of a WTO dispute-settlement panel that found it in violation of its WTO obligations. and has yet to implement the findings of that panel report, dealing with an exception preventing the licensing of music performed in most US bars, hotels, restaurants and supermarkets. This policy direction may eventually lead certain other WTO’s members to doubt the efficacy of the WTO dispute-settlement system.

In the particular case hard questions have surfaced as to the way in which the authorization given Antigua and Barbuda may be used. First, the authorization to retaliate is limited to the territory of Antigua and Barbuda. As a result, any use of that authority in the online environment will undoubtedly raise jurisdictional issues. In fact, if the authority to retaliate is used in the territory of Antigua and Barbuda in a way that affects copyright protection in other countries, including the United States, would that not constitute a violation by Antigua and Barbuda of its obligations under the TRIPS Agreement?

Second, how is Antigua and Barbuda supposed to evaluate how to leave $21 million of copyright value unprotected, given that this is the cap of the WTO authorization,  and what gain will Antigua and Barbuda make by selling copyrighted US goods? Will it affect Antiguan sellers of similar goods from non-US origins? Should one calculate the  “copyright value” (typically licensing) that is normally included in the price of such goods but will not be? What rate(s) should be used?

Third, as a matter of international law, some may question the WTO’s ability to suspend not just obligations under the TRIPS Agreement, but also under copyright treaties administered elsewhere, including the World Intellectual Property Organization (WIPO).  By somehow allowing Antigua and Barbuda not to comply with its obligations under, for example, the Berne Convention, to which both Antigua and Barbuda and the United States are party to, has the WTO Dispute-Settlement Body created a precedent that might be used in very different contexts?

Bottom line, this case demonstrates that while there are gains to be made by incorporating international legal rules in the WTO (in particular in the area of dispute-settlement), there are also potential risks in boiling all subject matter to a mere matter of dollars and cents. More importantly, a clear need has emerged for more work to be done on the interface between trade rules and rules that have their own history and normative underpinnings, such as copyright law.

Daniel Gervais is Professor of Law and Director of the Intellectual Property Program at Vanderbilt University. Before joining Vanderbilt Law School in 2008, he was Acting Dean of the Common Law Section at the University of Ottawa. His focus is on international intellectual property law. He is also Editor-in-Chief of the Journal of World Intellectual Property and editor of . In 2012, he became the first North American Law Professor elected to the Academy of Europe.

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