The novel verdict comes two years after the US refused to respect a WTO ruling that it had no right to block online gambling sites located in the tiny island nation. But will Antigua dare to take on the superpower?
The World Trade Organisation (WTO) handed down an unusual ruling on Friday 21 December, giving the tiny Caribbean island nation of Antigua and Barbuda the right to violate copyright protections on goods like films and music from the United States, as part of a dispute between the countries over online gambling. The award is worth up to $21 million.
The award follows a WTO ruling that the US had wrongly blocked online gambling operators on the island from the American market, at the same time as it allowed online wagering on horse racing. (See: WTO rules against US ban on online gambling)
Wagering on the WTO
Antigua and Barbuda had claimed damages of $3.44 billion a year. This makes the $21 million awarded a setback of sorts for Antigua, which has been struggling to preserve its gambling industry. The United States argued that its behaviour had caused damage worth only $500,000.
The ruling is very significant. It allows an extremely unusual form of compensation - the right of one country to violate the intellectual property (IP) laws of another -allowing Antigua to distribute copies of American music, movie and software products without paying the US any royalties up to $21 million. It has only been done once, and could be a very potent weapon.
By pressing its claim, trade lawyers say, Antigua could set a precedent. Now, other countries could sue the United States for unfair trade practices. And, in the event that the world's only superpower doesn't comply with WTO rulings, could potentially open the door to legalising electronic piracy and other dubious practices around the world.
Antigua is best known for its pristine beaches and tourist attractions. But the dozens of online casinos based on the Caribbean island are vital to the country's economy, as the online gambling industry is the nation's second-largest employer.
Mark Mendel, a lawyer representing Antigua, said after the ruling: ''I hope that the United States government will now see the wisdom in reaching some accommodation with Antigua over this dispute.'' But carrying out the ruling will prove difficult, other lawyers say.
Not so fast…
Even if Antigua goes ahead with piracy of music and/or films, or the refusal to allow the registration of a trademark, the question still remains of how much that act of piracy is worth.
If Antigua says it's worth $50,000, the US might claim it's worth $5 million. Looking at its intransigent attitude on the online casino issue, it seems the US is going to dog Antigua on every step of the way.
The United States has aggressively fought Antigua's claims. A WTO panel first ruled against the United States in 2004. The US appealed the decision. The appellate body upheld the decision a year later.
In April 2005, the trade body gave the US one year to comply with its ruling. All that came from the US at the end of a year was a statement from Washington that it had decided it was in compliance.
From the very beginning, the US has asserted that it has no intention of allowing free cross-border gambling or betting. The activity is restricted in the US, but some forms of gambling are legal in 48 out of the 50 states.
In May, the US announced that it would rewrite its trade rules to remove gambling from the WTO's jurisdiction. Washington has agreed to change the treaties with the European Union, Canada and Japan but not with Antigua, among several other nations.
Don't you dare!
Losing no time, on Friday itself the US trade representative issued a stern warning to Antigua to avoid acts of piracy, counterfeiting or violations of intellectual property rights while talks continue.
It said such behaviour would immediately ''undermine Antigua's claimed intentions of becoming a leader in legitimate electronic commerce, and would severely discourage foreign investment'' in the country.
Now that's a threat, and it isn't even veiled. In these circumstances, will Antigua press ahead and claim its 'legitimate' compensation, or will the US manage to keep the lid on this one too, despite the fact that the WTO, the very body it helped set up to ensure a 'barrier-free' world of trade, has said it's wrong on all counts here?