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WTO Authorizes Antigua and Barbuda to Infringe US IP Rights

January 28, 2013. The World Trade Organization (WTO) authorized the tiny Caribbean nation of Antigua and Barbuda (AB) to retaliate against the US for violating WTO obligations by maintaining protectionist gambling laws that discriminate against internet gambling services provided in AB.

The retaliatory measures approved by the WTO include violation of intellectual property rights of US rights holders with a total value of $21 Million per year.

AB filed its complaint with the WTO against the US back in 2003. The US has vigorously contested the allegations, and arrogantly disregarded WTO determinations since then.

The report [MS Word] of the compliance panel was adopted by the WTO Dispute Settlement Body (DSB) on May 22, 2007. The WTO set the penalty at non-enforcement of US IP rights valued at $21 Million per year on December 21, 2007. See, arbitration report [PDF]. However, in the following five years the US neither ceased its violation, nor reached a settlement with AB. Hence, after five years of delay, on January 28, 2013, the WTO formally authorized AB to retaliate. See, authorization [MS Word].

For more detail on the history of this proceeding, see the following TLJ stories:

Protectionist Nature of US Gambling Law. The federal Wire Act does not illegalize gambling. No federal statute illegalizes gambling.

The subject is left to the states. In some states the gambling sector is a major component of the local economy, and supplies a critical part of the tax revenues. Many states and localities are providers of gambling services, which raise substantial revenues for government operations.

Offshore internet gambling operations, such as those in AB, compete with these protected forms of gambling, without making the same contributions to local economies and tax bases.

The Wire Act only illegalizes the use of interstate wire communications in gambling businesses. It provides, in part, that "Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both."

The U.S. has also carved out exceptions, such as a domestic exception for internet gambling on horse racing, but not for any offshore services such as those of AB. Hence, the WTO found the US to be in violation of its WTO commitments with respect to free trade.

The Unlawful Internet Gambling Enforcement Act (UIGEA) does not ban gambling. Rather, it targets the financial transactions associated with internet gambling.

DOJ Actions. The WTO case was based upon statutes.

However, in addition, the federal Department of Justice (DOJ) has brought heavy handed criminal actions that lend the appearance that they were not brought to protect individuals from the harms of gambling, or to protect consumers from fraudulent online gambling service providers, but rather to protect favored domestic gambling service providers from foreign competitors.

Among these is US v. Gary Kaplan, U.S. District Court (EDMo). See, story titled "Pioneer of Offshore Internet Gambling Pleads Guilty to RICO and Wire Act Charges" in TLJ Daily E-Mail Alert No. 1,978, August 18, 2009. Another is US v. Isai Scheinberg, U.S. District Court (SDNY), the 2011 foreign internet poker sites case.

Moreover, the DOJ has brought non-gambling charges, such as federal RICO and money laundering, in these actions.

See also, story titled "DOJ Fines Microsoft, Google, and Yahoo $31.5 Million for Advertising of Internet Gambling" in TLJ Daily E-Mail Alert No. 1,692, December 21, 2007.

(Published in TLJ Daily E-Mail Alert No. 2,516, January 30, 2013.)