My Hero: Mark Mendel

August 23, 2007 2:10 PM by Stephan Kinsella | Other posts by Stephan Kinsella | Comments (7)

Gambling Dispute With a Tiny Country Puts U.S. in a Bind tells the fascinating David-and-Goliath story of the WTO battle between Antigua and Barbuda, on the one hand, and the US, on the other.

Mendel has threatened US online gambling legislation, intellectual property law, and the WTO's fragile existence, all in one fell swoop. Amazing!

(Thanks to Jason Ditz for the link)

Update: Antigua Seriously Pushing For WTO Approval To Distribute Free Music And Movies

Long-short: Jay Cohen, an operator of an offshore sports betting operation in Antigua who had been sentenced to 21 months in prison for taking bets over the Internet from Americans, was a friend of a law partner of Mendel. Mendel looked into the matter to see if there was anything his firm could do. He ended up persuading "officials in Antigua and Barbuda, a tiny nation in the Caribbean with a population of around 70,000, to instigate a trade complaint [in 2003] against the United States, claiming its ban against Americans gambling over the Internet violated Antigua and Barbuda’s rights as a member of the W.T.O. ... [T]he dozens of online casinos based there are vital to the island’s economy, serving as its second-largest employer. "

A W.T.O. panel actually ruled against the United States in 2004, and its appellate body upheld that decision one year later. And "in March, the organization upheld that ruling for a second time and declared Washington out of compliance with its rules."

So the US is in a quandary: "Complying with the W.T.O. ruling ... would require Congress and the Bush administration either to reverse course and permit Americans to place bets online legally with offshore casinos or, equally unlikely, impose an across-the-board ban on all forms of Internet gambling -- including the online purchase of lottery tickets, participation in Web-based pro sports fantasy leagues and off-track wagering on horse racing."

And what damages does the US owe? Well, Mendel is claiming $3.4 billion in damages on behalf of Antigua. If the US refuses to pay, then what can Antigua do? Normally, "a country that wins a W.T.O. case typically demands trade penalties equal to its losses as compensation. But Antigua is so small that any ordinary trade sanctions would barely register in the United States." Therefore, "To get around that limitation, Antigua is seeking the right under international law to violate American intellectual property laws. ... Mendel, who is claiming $3.4 billion in damages on behalf of Antigua, has asked the trade organization to grant a rare form of compensation if the American government refuses to accept the ruling: permission for Antiguans to violate intellectual property laws by allowing them to distribute copies of American music, movie and software products, among others."

"For the W.T.O. itself, the decision is equally fraught with peril. It cannot back down because that would undermine its credibility with the rest of the world. But if it actually carries out the penalties, it risks a political backlash in the United States, the most powerful force for free-flowing global trade and the W.T.O.'s biggest backer.

"Think of this from the W.T.O.'s point of view," said Charles R. Nesson, a professor at Harvard Law School. "They're this fledgling organization dominated by a huge monster in the United States. People there must be scared out of their wits at the prospects of enforcing
a ruling that would instantly galvanize public opinion in the United States against the W.T.O.""