International Trade in Intellectual Property Rights

Contents

International standards for the protection of intellectual property rights................................... 1

Trade-related aspects of intellectual property rights ...................................................................... 3
Intellectual property rights and digital media ................................................................................. 5
The international harmonisation of intellectual property rights................................................... 7
TRIPS overview .................................................................................................................................... 9
Substantive standards of protection ................................................................................................ 13
Chapter summary .............................................................................................................................. 26
Appendix: Workshop activities ...................................................................................................... 26
Legal problem-solving explained ................................................................................................ 26
Discussion points ........................................................................................................................... 28
Landmark case note ....................................................................................................................... 29
Other significant cases ................................................................................................................... 31
Practice questions ........................................................................................................................... 32
Question 1: Material facts ......................................................................................................... 32
Question 2: Issues of law and policy ....................................................................................... 32
Question 3: Rules........................................................................................................................ 32
Question 4: Arguments ............................................................................................................. 32
Question 5: Tentative conclusions ........................................................................................... 32

International standards for the protection of intellectual property rights

3.1 A rather intricate apparatus of international treaties determining standards for

copyright protection interacts in the creation of separate sets of obligations between

different parties worldwide. The reciprocal influence of such treaties is not always

complementary, as significant dissimilarities can be found in terms of substantial

law and enforcement obligations. However, treaties and conventions generally

reflect the principles of the Berne Convention for the Protection of Literary and

Artistic Rights, as governed by the World Intellectual Property Organization (WIPO)

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and the increasingly important Agreement on Trade-Related Aspects of Intellectual

Property Rights (TRIPS).

3.2 In 1886, an international conference in Berne seeking a copyright agreement

adopted the eponym Convention for the Protection of Literary and Artistic Works.

The signatories of the Berne Convention form a union for the protection of the rights

of authors in their literary and artistic works, known as the “Berne Union”. The

Berne Convention intends to protect “literary and artistic works”, encompassing

virtually every production in the literary, scientific and artistic domain such as

books, pamphlets and other writings; lectures, addresses, sermons and other works

of the same nature; dramatic and musical works; choreographic works and

entertainments in dumb show; musical compositions with or without words;

cinematographic works and those created by analogous processes; works of

drawing, painting, architecture, sculpture, engraving and lithography; photographic

works and those created by analogous processes; works of applied art; and

illustrations, maps, plans, sketches and three-dimensional works relative to

geography, topography, architecture or science. The Berne Convention also protects,

among other things, translations, adaptations and arrangements of music and other

alterations of literary and artistic works, including cinematographic and

photographic ones.1 The main features of the Berne Convention are the minimum

standard of the life of the author plus 50 years as the term of copyright for most

types of works2 and the principle of “national treatment”, requiring a Berne Union

member to provide the same rights granted by its domestic laws for its own

nationals to the nationals of every Berne Union country.3 Works published in any

1 WIPO, Berne Convention for the Protection of Literary and Artistic Works (Berne, 1886 and further
revisions and amendments) Article 2 – Protected Works, at
<http://www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html>.
2 Ibid, Article 7 – Term of Protection.

3 Ibid, Article 5 – Rights Guaranteed.

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Berne Union country and unpublished works authored by a citizen or resident of

any Berne country enjoy automatic protection.4

3.3 Since its adoption, several supplementary agreements have amended the Berne

Convention in response to technological changes so as to expand scope of the works

and rights that the Convention covers to new markets.5 Nonetheless, in the past

three decades there have been no further substantive revisions of the Berne

Convention as its administrator, the WIPO, has focused rather on the information

exchange among member states and aimed at a guided framework development in

terms of recommendations and model laws. As a result of the WIPO’s soft-power

governance, the emergence of global markets for information goods has been

followed in reverse by the increasing development of differing copyright regimes in

different nations. The inevitable clash between global markets and idiosyncratic local

copyright laws prompted a new regime at the level of public international law. In

addition, the lack of an enforcement mechanism under the WIPO apparatus justified

the claims of the promoters of a new international copyright framework under the

international trade system. Thus, not the WIPO, but the General Agreement on

Tariffs and Trade (GATT) through the 1986-1994 Uruguay Round Protocol gave rise

to a global agreement on trade-related aspects of intellectual property (IP) rights,

later known as “TRIPS”.

Trade-related aspects of intellectual property rights

4Ibid, Article 3 – Criteria of Eligibility for Protection.

5 Supplementary agreements extending the initial Berne Convention include: the 1928 Rome
Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations; the
1971 Geneva Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of
Their Phonograms; and the 1974 Brussels Convention Relating to the Distribution of Programme-Carrying
Signals Transmitted by Satellite.

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3.4 In 1994, the TRIPS Agreement introduced new cross-border trade rules with the

view to harmonising the protection and enforcement of IP rights across the world

and tallying with globalised markets. TRIPS deals with a vast array of copyright and

related rights, including trademarks, geographical indications, industrial design,

patents, layout designs and trade secrets. 6 The Agreement addresses five broad

issues:

(a) application of basic principles of the trading system and other

international IP agreements (national treatment, most-favoured-nation (MFN)

treatment and contribution to technical innovation and the transfer of

technology);

(b) obligations related to providing for adequate protection of IP rights;

(c) enforcement within the boundaries of member governments for the

effective protection of such rights;

(d) adoption of the World Trade Organization (WTO) dispute settlement

mechanism; and

(e) special transitional arrangements, including arrangements for developing

countries.

3.5 In addition, TRIPS requires that its parties abide by the substantive law

provisions of the Berne Convention with specific regard to copyright. The

Agreement also affirms that computer programs are protected as literary works

under the Berne Convention, indicating basic principles in terms of the copyright

protection of databases. Significantly, TRIPS includes in the international copyright

framework important provisions on rental rights. The agreement also contains the

“three-step-test” governing the national exceptions to copyright on the proviso that

pertain to: (1) certain special cases, (2) which do not conflict with a normal

exploitation of the work and (3) do not unreasonably prejudice the legitimate

6On the protected areas and following broad issues, see further WTO, “Intellectual property:
protection and enforcement”, at <http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm7_e.htm>.

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interests of the right-holder.7 Although the TRIPS Agreement displays the growing

importance of trade rules in the arena of international IP law by expanding the

geographical coverage of IP protection, it does not thoroughly address the most

recent and challenging developments in the digitised environment of creative

expression further than what already exists along the lines of economic regimes of

the industrialised world.

Intellectual property rights and digital media

3.6 Benefiting from TRIPS gaps in digital communication and information

technologies, WIPO could regain some of its lost relevance by proposing a new

treaty for the online environment and an update of the protections for performers,

producers of phonograms and broadcasting organisations. In 1991, WIPO started a

lengthy process involving the appointment of a committee of experts deputed to

analyse studies and reports submitted by institutional bodies worldwide with a view

to draft a special agreement. In 1996, the WIPO Copyright Treaty (WCT) and the

WIPO Performances and Phonograms Treaty (WPPT) were adopted and became law

in 2002. Significantly, the US signed both treaties and the EU readily implemented

them through the European Copyright Directive (EUCD 2001/29/EC), implying the

transposition of the treaties into the national law of EU member states.

3.7 The WCT regulates the protection of literary and artistic works virtually

overlapping the Berne Convention, although it explicitly includes computer

programs and databases in the copyright protection. In general, the WCT identifies

three specific rights (of distribution, rental and communication to the public) and

concentrates on three important issues so that it updates and expands the

7WTO, Annex 1C of the Marrakesh Agreement Establishing the WTO: Agreement on trade-related aspects of
intellectual property rights (TRIPS) (signed in Marrakesh, Morocco on 15 April 1994) Part II – Standards
concerning the availability, scope and use of Intellectual Property Rights, Article 13, at
<http://www.wto.org/english/tratop_e/trips_e/t_agm0_e.htm>.

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corresponding Berne Convention features.8 The Treaty affirms an exclusive right of

distribution to authors, allowing its signatories to determine if and under what

conditions the exclusive distribution right will apply beyond the first authorised

transfer of ownership, whereas the Berne Convention only granted this right with

respect to cinematographic works. Remarkably, in the US the distribution right

exhausts after the first sale (the “first-sale doctrine”).9 The WCT also accords the

exclusive right to authorise the commercial rental to the public of the originals or

copies of their works to authors of cinematographic works, computer programs and

works embodied in phonograms, establishing important limitations not present

under the Berne Convention.

3.8 Moreover, the WCT confers on authors of literary and artistic works the exclusive

right to authorise any communication to the public of their works, by wire or

wireless means, including by making them available via interactive on-demand

services or the like, whereas the Berne Convention limits this right to certain

categories of works and with regard to the means of communication. With particular

regard to the three main issues, the WCT prolongs from 25 to 50 years after the

author’s death minimum duration of the protection of photographic works, so that it

can match all other works under the Berne Convention. The treaty also sets forth a

framework for applying limitations of and exceptions to copyrights under the

condition of the incorporated “three-step-test”.

3.9 Last, but most important, the WCT puts forward new international rules on the

comprehensive right of communication to the public and the protection of

technological protection measures, which benefit right-holders and the copyright

industry at large, especially with regard to online media. The treaty mandates its

signatories to provide for adequate legal protection and effective legal remedies

8 On the WCT rights and issues, see further: WIPO, WIPO Copyright Treaty (adopted in Geneva on
20 December 1996), at <http://www.wipo.int/treaties/en/ip/wct/trtdocs_wo033.html>.
9 In the United States, the “first-sale doctrine” is a limitation on copyright that was recognised by the

Supreme Court in 1908 (Bobbs-Merrill Co v Straus) and codified in the Copyright Act 1976 at 17 USC
§109.

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against the circumvention of access and copy control technology measures that are

used by authors in connection with the exercise of their rights under the WCT or the

Berne Convention and that restrict acts that are not authorised by the authors

concerned or permitted by law.

3.10 Overall, the WCT can claim the merit of improving the interpretation of existing

rules in the wake of innovative technological developments due to the introduction

of updated international provisions regarding copyright. Nonetheless, the WCT

appears to work to the advantage of IP owners‘ interest over others, so that the

recent Geneva declaration on the future of WIPO urged WIPO to assume an

impartial approach on IP rights and their social benefits and costs with a view to

promote creativity. 10 As a result of the Declaration, the WIPO advanced a

development agenda concerned with balancing the global policy on IP rights, which

still registers significant incongruences among national copyright systems, despite

the WCT efforts in levelling the area transnationally.

The international harmonisation of intellectual property rights

3.11 In the face of the increasing globalisation of commerce and communication that

is upsetting the traditional roles played in art by creatives, exploiters and end-users,

copyright legal systems still vary remarkably among continents and across regions.

The present evolutionary state of national copyright regimes displays a multi-tier

approach, according to the level of technological development and relevant

implementation of international rules and treaties. Roughly speaking, copyright

laws of developing countries either do not exist at all or have not incorporated the

minimal protection standards introduced by the Berne Convention or other

international treaties. Going up the ladder, we can find legal apparatuses that

10See further Geneva Declaration on the Future of the World Intellectual Property Organization (Geneva,
4 March 2005), at <www.cptech.org/ip/wipo/futureofwipodeclaration.pdf>.

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implement the TRIPS or at least other relevant basic international trade norms. Most

of the Western countries as well as many countries in the Association of South-East

Asian Nations (ASEAN) region belong to this group of developed IP legislations. At

the top there are the most advanced regimes that have copyright laws incorporating

the WIPO Treaties. Countries such as the US, Canada, the EU members, Australia,

Malaysia and Japan have already responded to the transition from offline/analog to

online/digital media and information.

3.12 Notwithstanding enduring differences in the levels of copyright protection and

implementation of international rules, trans- and supra-national, harmonisation and

convergence of copyright laws seem to be the recognised trends. Trade interests are

certainly the driving forces behind this evolutionary development of national and

regional IP regimes, as TRIPS became the pivotal legal framework for the levelling of

the global arena of IP protection. As delineated, TRIPS implementation is at the

crossroad of the transitional process from developing to developed copyright

legislations. Conversely, the implementation of the WIPO Treaties plays a relatively

minor role and somewhat in contrast with that of TRIPS, as the former guides the

transition to the most advanced stage of copyright regimes in terms of conforming to

new technological developments rather than harmonising legal provisions.

3.13 It is actually the need for bilateral trade agreements that leads some countries to

adopt the highest standards of IP protection, thus rendering the WIPO treaties

functional to the international trade law. Similarly to all other areas of free trade, the

stronger trading countries usually negotiate the exchange of information goods,

entertainment and other art-related products on the proviso that the weaker and

less-developed counterparts become compliant to TRIPS and, secondarily, WIPO

standards. As a deliberate result, such international treaty system, in which TRIPS

plays the leading character, is effectively harmonising and making compatible a vast

array of national copyright systems, specifically in terms of prerequisites of

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copyright protection, duration and scope of protection and basic rules regarding

limitations and exceptions to copyright.

3.14 Despite these drivers for harmonisation and even in the context of the most

advanced copyright apparatuses, significant dissimilarities can be identified in the

substance of law. Therefore, in the face of powerful international trade forces seeking

uniformity, national policy makers still have some degree of autonomy regarding

how to comply with the minimal standards set forth by international treaties that not

always mean to achieve absolute conformity. National legislators often implement

alternative approaches without violating treaty obligations. 11 Especially in copyright

enforcement, there are many reasons for such persistent differences, mostly because

civil and criminal procedure laws is an area of law that has not been internationally

harmonised to the same extent as substantive copyright law, not to mention the

effect of economic, cultural, historical and other differences in law enforcement

practices. For its own intangible nature, online piracy appears to be the most evolved

IP law enforcement area in terms of involving governmental task forces and other

stakeholders across national boundaries.

TRIPS overview

3.15 The areas of intellectual property that TRIPS covers are: copyright and related

rights (ie the rights of performers, producers of sound recordings and broadcasting

organisations); trademarks including service marks; geographical

indications including appellations of origin; industrial designs; patents including the

protection of new varieties of plants; the layout-designs of integrated circuits;

and undisclosed information including trade secrets and test data.

11For examples in the EU and WCT context, see further: Urs Gasser and Michael Girsberger,
“Transposing the Copyright Directive: Legal Protection of Technological Measures in EU-Member
States, A Genie Stuck in the Bottle?”, Berkman Publication Series No 2004-10 (Berkman Centre for
Internet & Society, Harvard Law School, 2004), at
<http://cyber.law.harvard.edu/media/files/eucd.pdf>.

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The three main features of the Agreement are:

• Standards: In respect of each of the main areas of intellectual property

covered by the TRIPS Agreement, the Agreement sets out the minimum

standards of protection to be provided by each member. Each of the main

elements of protection is defined, namely the subject matter to be protected,

the rights to be conferred and permissible exceptions to those rights, and the

minimum duration of protection. The Agreement sets these standards by

requiring, first, that the substantive obligations of the main conventions of the

WIPO, the Paris Convention for the Protection of Industrial Property (Paris

Convention) and the Berne Convention for the Protection of Literary and

Artistic Works (Berne Convention) in their most recent versions, must be

complied with. With the exception of the provisions of the Berne Convention

on moral rights, all the main substantive provisions of these conventions are

incorporated by reference and thus become obligations under the TRIPS

Agreement between TRIPS member countries. The relevant provisions are to

be found in Articles 2.1 and 9.1 of the TRIPS Agreement, which relate,

respectively, to the Paris Convention and to the Berne Convention. Secondly,

the TRIPS Agreement adds a substantial number of additional obligations on

matters where the pre-existing conventions are silent or were seen as being

inadequate. The TRIPS Agreement is thus sometimes referred to as a Berne

and Paris-plus agreement.

• Enforcement: The second main set of provisions deals with domestic

procedures and remedies for the enforcement of intellectual property rights.

The Agreement lays down certain general principles applicable to all IPR

enforcement procedures. In addition, it contains provisions on civil and

administrative procedures and remedies, provisional measures, special

requirements related to border measures and criminal procedures, which

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 specify, in a certain amount of detail, the procedures and remedies that must

be available so that right holders can effectively enforce their rights.

• Dispute settlement: The Agreement makes disputes between WTO members

about the respect of the TRIPS obligations subject to the WTO’s dispute

settlement procedures.

3.16 In addition, the Agreement provides for certain basic principles, such as

national and most-favoured-nation treatment, and some general rules to ensure that

procedural difficulties in acquiring or maintaining IPRs do not nullify the

substantive benefits that should flow from the Agreement. The obligations under the

Agreement will apply equally to all member countries, but developing countries will

have a longer period to phase them in. Special transition arrangements operate in the

situation where a developing country does not presently provide product patent

protection in the area of pharmaceuticals.

3.17 The TRIPS Agreement is a minimum standards agreement, which allows

members to provide more extensive protection of intellectual property if they so

wish. Members are left free to determine the appropriate method of implementing

the provisions of the Agreement within their own legal system and practice. As in

the main pre-existing intellectual property conventions, the basic obligation on each

member country is to accord the treatment in regard to the protection of intellectual

property provided for under the Agreement to the persons of other members.

Article 1.3 defines who these persons are. These persons are referred to as “nationals”

but include persons, natural or legal, who have a close attachment to other members

without necessarily being nationals. The criteria for determining which persons must

thus benefit from the treatment provided for under the Agreement are those laid

down for this purpose in the main pre-existing intellectual property conventions of

WIPO, applied of course with respect to all WTO members whether or not they are

party to those conventions. These conventions are the Paris Convention, the Berne

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Convention, International Convention for the Protection of Performers, Producers of

Phonograms and Broadcasting Organizations (Rome Convention), and the Treaty on

Intellectual Property in Respect of Integrated Circuits (IPIC Treaty).

3.18 Articles 3, 4 and 5 include the fundamental rules on national and most-

favoured-nation treatment of foreign nationals, which are common to all categories

of intellectual property covered by the Agreement. These obligations cover not only

the substantive standards of protection but also matters affecting the availability,

acquisition, scope, maintenance and enforcement of intellectual property rights as

well as those matters affecting the use of intellectual property rights specifically

addressed in the Agreement. While the national treatment clause forbids

discrimination between a member's own nationals and the nationals of other

members, the most-favoured-nation (MFN) treatment clause forbids discrimination

between the nationals of other members. In respect of the national treatment

obligation, the exceptions allowed under the pre-existing intellectual property

conventions of WIPO are also allowed under TRIPS. Where these exceptions allow

material reciprocity, a consequential exception to MFN treatment is also permitted

(eg comparison of terms for copyright protection in excess of the minimum term

required by the TRIPS Agreement as provided under Article 7(8) of the Berne

Convention as incorporated into the TRIPS Agreement). Certain other limited

exceptions to the MFN obligation are also provided for.

3.19 The general goals of the TRIPS Agreement are contained in the Preamble of the

Agreement, which reproduces the basic Uruguay Round negotiating objectives

established in the TRIPS area by the 1986 Punta del Este Declaration and the 1988-

1989 Mid-Term Review. These objectives include the reduction of distortions and

impediments to international trade, promotion of effective and adequate protection

of intellectual property rights, and ensuring that measures and procedures to enforce

intellectual property rights do not themselves become barriers to legitimate trade.

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These objectives should be read in conjunction with Article 7 – Objectives, according

to which the protection and enforcement of intellectual property rights should

contribute to the promotion of technological innovation and to the transfer and

dissemination of technology, to the mutual advantage of producers and users of

technological knowledge and in a manner conducive to social and economic welfare,

and to a balance of rights and obligations. Article 8 – Principles, recognises the rights

of members to adopt measures for public health and other public interest reasons

and to prevent the abuse of intellectual property rights, provided that such measures

are consistent with the provisions of the TRIPS Agreement.

Substantive standards of protection

Copyright

3.20 During the Uruguay Round of negotiations, it was recognised that the Berne

Convention already, for the most part, provided adequate basic standards of

copyright protection. Thus it was agreed that the point of departure should be the

existing level of protection under the latest Act, the Paris Act of 1971, of that

Convention. The point of departure is expressed in Article 9.1 under which members

are obliged to comply with the substantive provisions of the Paris Act of 1971 of the

Berne Convention, ie Articles 1 through 21 of the Berne Convention (1971) and the

Appendix thereto. However, members do not have rights or obligations under the

TRIPS Agreement in respect of the rights conferred under Article 6 bis of that

Convention, ie the moral rights (the right to claim authorship and to object to any

derogatory action in relation to a work, which would be prejudicial to the author’s

honour or reputation), or of the rights derived therefrom. The provisions of the

Berne Convention referred to deal with questions such as subject matter to be

protected, minimum term of protection, and rights to be conferred and permissible

limitations to those rights. The Appendix allows developing countries, under certain

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conditions, to make some limitations to the right of translation and the right of

reproduction.

3.21 In addition to requiring compliance with the basic standards of the Berne

Convention, the TRIPS Agreement clarifies and adds certain specific points.

Article 9.2 confirms that copyright protection shall extend to expressions and not to

ideas, procedures, and methods of operation or mathematical concepts as such.

Article 10.1 provides that computer programs, whether in source or object code, shall

be protected as literary works under the Berne Convention (1971). This provision

confirms that computer programs must be protected under copyright and that those

provisions of the Berne Convention that apply to literary works shall be applied also

to them. It confirms further, that the form in which a program is, whether in source

or object code, does not affect the protection. The obligation to protect computer

programs as literary works means eg that only those limitations that are applicable

to literary works may be applied to computer programs. It also confirms that the

general term of protection of 50 years applies to computer programs. Possible

shorter terms applicable to photographic works and works of applied art may not be

applied.

Article 10.2 clarifies that databases and other compilations of data or other material

shall be protected as such under copyright even where the databases include data

that as such are not protected under copyright. Databases are eligible for copyright

protection provided that, by reason of the selection or arrangement of their contents,

they constitute intellectual creations. The provision also confirms that databases

have to be protected regardless of which form they are in, whether machine readable

or other form. Furthermore, the provision clarifies that such protection shall not

extend to the data or material itself, and that it shall be without prejudice to any

copyright subsisting in the data or material itself.

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Article 11 provides that authors shall have in respect of at least computer programs

and, in certain circumstances, of cinematographic works, the right to authorise or to

prohibit the commercial rental to the public of originals or copies of their copyright

works. With respect to cinematographic works, the exclusive rental right is subject to

the so-called impairment test: a member is exonerated from the obligation unless

such rental has led to widespread copying of such works which is materially

impairing the exclusive right of reproduction conferred in that member on authors

and their successors in title. In respect of computer programs, the obligation does

not apply to rentals where the program itself is not the essential object of the rental.

3.22 According to the general rule contained in Article 7(1) of the Berne Convention

as incorporated into the TRIPS Agreement, the term of protection shall be the life of

the author and 50 years after his or her death. Paragraphs 2 through 4 of that Article

specifically allow shorter terms in certain cases. These provisions are supplemented

by Article 12 of the TRIPS Agreement, which provides that whenever the term of

protection of a work, other than a photographic work or a work of applied art, is

calculated on a basis other than the life of a natural person, such term shall be no less

than 50 years from the end of the calendar year of authorised publication, or, failing

such authorised publication within 50 years from the making of the work, 50 years

from the end of the calendar year of making.

3.23 Article 13 requires members to confine limitations or exceptions to exclusive

rights to certain special cases which do not conflict with a normal exploitation of the

work and do not unreasonably prejudice the legitimate interests of the right holder.

This is a horizontal provision that applies to all limitations and exceptions permitted

under the provisions of the Berne Convention and the Appendix thereto as

incorporated into the TRIPS Agreement. The application of these limitations is

permitted also under the TRIPS Agreement, but the provision makes it clear that

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they must be applied in a manner that does not prejudice the legitimate interests of

the right holder.

Related rights

3.24 The provisions on protection of performers, producers of phonograms and

broadcasting organisations are included in Article 14. According to Article 14.1,

performers shall have the possibility of preventing the unauthorised fixation of their

performance on a phonogram (eg the recording of a live musical performance). The

fixation right covers only aural, not audiovisual fixations. Performers must also be in

position to prevent the reproduction of such fixations. They shall also have the

possibility of preventing the unauthorised broadcasting by wireless means and the

communication to the public of their live performance. In accordance with Article

14.2, members have to grant producers of phonograms an exclusive reproduction

right. In addition to this, they have to grant, in accordance with Article 14.4, an

exclusive rental right at least to producers of phonograms. The provisions on rental

rights apply also to any other right holders in phonograms as determined in national

law. This right has the same scope as the rental right in respect of computer

programs. Therefore it is not subject to the impairment test as in respect of

cinematographic works. However, it is limited by a so-called grand-fathering clause,

according to which a member, which on 15 April 1994, ie the date of the signature of

the Marrakesh Agreement, had in force a system of equitable remuneration of right

holders in respect of the rental of phonograms, may maintain such system provided

that the commercial rental of phonograms is not giving rise to the material

impairment of the exclusive rights of reproduction of right holders.

3.25 Broadcasting organisations shall have, in accordance with Article 14.3, the right

to prohibit the unauthorised fixation, the reproduction of fixations, and the

rebroadcasting by wireless means of broadcasts, as well as the communication to the

public of their television broadcasts. However, it is not necessary to grant such rights

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to broadcasting organisations, if owners of copyright in the subject matter of

broadcasts are provided with the possibility of preventing these acts, subject to the

provisions of the Berne Convention. The term of protection is at least 50 years for

performers and producers of phonograms, and 20 years for broadcasting

organisations (Article 14.5). Article 14.6 provides that any member may, in relation

to the protection of performers, producers of phonograms and broadcasting

organisations, provide for conditions, limitations, exceptions and reservations to the

extent permitted by the Rome Convention.

Trademarks

3.26 The basic rule contained in Article 15 is that any sign, or any combination of

signs, capable of distinguishing the goods and services of one undertaking from

those of other undertakings, must be eligible for registration as a trademark,

provided that it is visually perceptible. Such signs, in particular words including

personal names, letters, numerals, figurative elements and combinations of colours

as well as any combination of such signs, must be eligible for registration as

trademarks. Where signs are not inherently capable of distinguishing the relevant

goods or services, member countries are allowed to require, as an additional

condition for eligibility for registration as a trademark, that distinctiveness has been

acquired through use. Members are free to determine whether to allow the

registration of signs that are not visually perceptible (eg sound or smell marks).

3.27 Members may make registrability depend on use. However, actual use of a

trademark shall not be permitted as a condition for filing an application for

registration, and at least three years must have passed after that filing date before

failure to realise an intent to use is allowed as the ground for refusing the application

(Article 14.3). The Agreement requires service marks to be protected in the same way

as marks distinguishing goods (see eg Articles 15.1, 16.2 and 62.3).

17
3.28 The owner of a registered trademark must be granted the exclusive right to

prevent all third parties not having the owner’s consent from using in the course of

trade identical or similar signs for goods or services which are identical or similar to

those in respect of which the trademark is registered where such use would result in

a likelihood of confusion. In the case of the use of an identical sign for identical

goods or services, a likelihood of confusion must be presumed (Article 16.1).

3.29 The TRIPS Agreement contains certain provisions on well-known marks, which

supplement the protection required by Article 6 bis of the Paris Convention, as

incorporated by reference into the TRIPS Agreement, which obliges members to

refuse or to cancel the registration, and to prohibit the use of a mark conflicting with

a mark which is well known. First, the provisions of that Article must be applied also

to services. Second, it is required that knowledge in the relevant sector of the public

acquired not only as a result of the use of the mark but also by other means,

including as a result of its promotion, be taken into account. Furthermore, the

protection of registered well-known marks must extend to goods or services which

are not similar to those in respect of which the trademark has been registered,

provided that its use would indicate a connection between those goods or services

and the owner of the registered trademark, and the interests of the owner are likely

to be damaged by such use (Articles 16.2 and 16.3).

3.30 Members may provide limited exceptions to the rights conferred by a trademark,

such as fair use of descriptive terms, provided that such exceptions take account of

the legitimate interests of the owner of the trademark and of third parties (Article 17).

Initial registration, and each renewal of registration, of a trademark shall be for a

term of no less than seven years. The registration of a trademark shall be renewable

indefinitely (Article 18). Cancellation of a mark on the grounds of non-use cannot

take place before three years of uninterrupted non-use has elapsed unless valid

reasons based on the existence of obstacles to such use are shown by the trademark

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owner. Circumstances arising independently of the will of the owner of the

trademark, such as import restrictions or other government restrictions, shall be

recognised as valid reasons of non-use. Use of a trademark by another person, when

subject to the control of its owner, must be recognised as use of the trademark for the

purpose of maintaining the registration (Article 19). It is further required that use of

the trademark in the course of trade shall not be unjustifiably encumbered by special

requirements, such as use with another trademark, use in a special form, or use in a

manner detrimental to its capability to distinguish the goods or services (Article 20).

Geographical indications

3.31 Geographical indications are defined, for the purposes of the Agreement, as

indications which identify a good as originating in the territory of a member, or a

region or locality in that territory, where a given quality, reputation or other

characteristic of the good is essentially attributable to its geographical origin (Article

22.1). Thus, this definition specifies that the quality, reputation or other

characteristics of a good can each be a sufficient basis for eligibility as a geographical

indication, where they are essentially attributable to the geographical origin of the

good.

3.32 In respect of all geographical indications, interested parties must have legal

means to prevent use of indications which mislead the public as to the geographical

origin of the good, and use which constitutes an act of unfair competition within the

meaning of Article 10 bis of the Paris Convention (Article 22.2). The registration of a

trademark which uses a geographical indication in a way that misleads the public as

to the true place of origin must be refused or invalidated ex officio if the legislation

so permits or at the request of an interested party (Article 22.3).

3.33 Article 23 provides that interested parties must have the legal means to prevent

the use of a geographical indication identifying wines for wines not originating in

the place indicated by the geographical indication. This applies even where the

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public is not being misled, there is no unfair competition and the true origin of the

good is indicated or the geographical indication is accompanied be expressions such

as “kind”, “type”, “style”, “imitation” or the like. Similar protection must be given to

geographical indications identifying spirits when used on spirits. Protection against

registration of a trademark must be provided accordingly.

3.34 Article 24 contains a number of exceptions to the protection of geographical

indications. These exceptions are of particular relevance in respect of the additional

protection for geographical indications for wines and spirits. For example, members

are not obliged to bring a geographical indication under protection, where it has

become a generic term for describing the product in question (paragraph 6).

Measures to implement these provisions shall not prejudice prior trademark rights

that have been acquired in good faith (paragraph 5). Under certain circumstances,

continued use of a geographical indication for wines or spirits may be allowed on a

scale and nature as before (paragraph 4). Members availing themselves of the use of

these exceptions must be willing to enter into negotiations about their continued

application to individual geographical indications (paragraph 1). The exceptions

cannot be used to diminish the protection of geographical indications that existed

prior to the entry into force of the TRIPS Agreement (paragraph 3). The TRIPS

Council shall keep under review the application of the provisions on the protection

of geographical indications (paragraph 2).

Industrial designs

3.35 Article 25.1 of the TRIPS Agreement obliges members to provide for the

protection of independently created industrial designs that are new or original.

Members may provide that designs are not new or original if they do not

significantly differ from known designs or combinations of known design features.

Members may provide that such protection shall not extend to designs dictated

essentially by technical or functional considerations. Article 25.2 contains a special

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provision aimed at taking into account the short life cycle and sheer number of new

designs in the textile sector: requirements for securing protection of such designs, in

particular in regard to any cost, examination or publication, must not unreasonably

impair the opportunity to seek and obtain such protection. Members are free to meet

this obligation through industrial design law or through copyright law.

3.36 Article 26.1 requires members to grant the owner of a protected industrial

design the right to prevent third parties not having the owner's consent from making,

selling or importing articles bearing or embodying a design which is a copy, or

substantially a copy, of the protected design, when such acts are undertaken for

commercial purposes. Article 26.2 allows members to provide limited exceptions to

the protection of industrial designs, provided that such exceptions do not

unreasonably conflict with the normal exploitation of protected industrial designs

and do not unreasonably prejudice the legitimate interests of the owner of the

protected design, taking account of the legitimate interests of third parties. The

duration of protection available shall amount to at least 10 years (Article 26.3). The

wording “amount to” allows the term to be divided into, for example, two periods of

five years.

Patents

3.37 The TRIPS Agreement requires member countries to make patents available for

any inventions, whether products or processes, in all fields of technology without

discrimination, subject to the normal tests of novelty, inventiveness and industrial

applicability. It is also required that patents be available and patent rights enjoyable

without discrimination as to the place of invention and whether products are

imported or locally produced (Article 27.1). There are three permissible exceptions to

the basic rule on patentability. One is for inventions contrary to public order or

morality; this explicitly includes inventions dangerous to human, animal or plant life

or health or seriously prejudicial to the environment. The use of this exception is

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subject to the condition that the commercial exploitation of the invention must also

be prevented and this prevention must be necessary for the protection of public

order or morality (Article 27.2). The second exception is that members may exclude

from patentability diagnostic, therapeutic and surgical methods for the treatment of

humans or animals (Article 27.3(a)). The third exception is that members may

exclude plants and animals other than micro-organisms and essential biological

processes for the production of plants or animals other than non-biological and

microbiological processes. However, any country excluding plant varieties from

patent protection must provide an effective sui generis system of protection.

Moreover, the whole provision is subject to review four years after entry into force of

the Agreement (Article 27.3(b)).

3.38 The exclusive rights that must be conferred by a product patent are the ones of

making, using, offering for sale, selling, and importing for these purposes. Process

patent protection must give rights not only over use of the process but also over

products obtained directly by the process. Patent owners shall also have the right to

assign, or transfer by succession, the patent and to conclude licensing contracts

(Article 28). Members may provide limited exceptions to the exclusive rights

conferred by a patent, provided that such exceptions do not unreasonably conflict

with a normal exploitation of the patent and do not unreasonably prejudice the

legitimate interests of the patent owner, taking account of the legitimate interests of

third parties (Article 30). The term of protection available shall not end before the

expiration of a period of 20 years counted from the filing date (Article 33).

3.39 Members shall require that an applicant for a patent shall disclose the invention

in a manner sufficiently clear and complete for the invention to be carried out by a

person skilled in the art and may require the applicant to indicate the best mode for

carrying out the invention known to the inventor at the filing date or, where priority

is claimed, at the priority date of the application (Article 29.1). If the subject matter of

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a patent is a process for obtaining a product, the judicial authorities shall have the

authority to order the defendant to prove that the process to obtain an identical

product is different from the patented process, where certain conditions indicating a

likelihood that the protected process was used are met (Article 34).

3.40 Compulsory licensing and government use without the authorisation of the

right holder are allowed, but are made subject to conditions aimed at protecting the

legitimate interests of the right holder. The conditions are mainly contained in

Article 31. These include the obligation, as a general rule, to grant such licences only

if an unsuccessful attempt has been made to acquire a voluntary licence on

reasonable terms and conditions within a reasonable period of time; the requirement

to pay adequate remuneration in the circumstances of each case, taking into account

the economic value of the licence; and a requirement that decisions be subject to

judicial or other independent review by a distinct higher authority. Certain of these

conditions are relaxed where compulsory licences are employed to remedy practices

that have been established as anti-competitive by a legal process. These conditions

should be read together with the related provisions of Article 27.1, which require

that patent rights shall be enjoyable without discrimination as to the field of

technology, and whether products are imported or locally produced.

Layout designs of integrated circuits

3.41 Article 35 of the TRIPS Agreement requires member countries to protect the

layout-designs of integrated circuits in accordance with the provisions of the IPIC

Treaty (the Treaty on Intellectual Property in Respect of Integrated Circuits),

negotiated under the auspices of WIPO in 1989. These provisions also deal with the

definitions of “integrated circuit” and “layout-design (topography)”, requirements

for protection, exclusive rights, and limitations, as well as exploitation, registration

and disclosure. An “integrated circuit” means a product, in its final form or an

intermediate form, in which the elements, at least one of which is an active element,

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and some or all of the interconnections are integrally formed in and/or on a piece of

material and which is intended to perform an electronic function. A “layout-design

(topography)” is defined as the three-dimensional disposition, however expressed,

of the elements, at least one of which is an active element, and of some or all of the

interconnections of an integrated circuit, or such a three-dimensional disposition

prepared for an integrated circuit intended for manufacture. The obligation to

protect layout-designs applies to such layout-designs that are original in the sense

that they are the result of their creator’s own intellectual effort and are not

commonplace among creators of layout-designs and manufacturers of integrated

circuits at the time of their creation. The exclusive rights include the right of

reproduction and the right of importation, sale and other distribution for commercial

purposes. Certain limitations to these rights are provided for.

3.42 In addition to requiring member countries to protect the layout-designs of

integrated circuits in accordance with the provisions of the IPIC Treaty, the TRIPS

Agreement clarifies and/or builds on four points. These points relate to the term of

protection (10 years instead of eight, Article 38), the applicability of the protection to

articles containing infringing integrated circuits (last sub clause of Article 36) and the

treatment of innocent infringers (Article 37.1). The conditions in Article 31 of the

TRIPS Agreement apply mutatis mutandis to compulsory or non-voluntary licensing

of a layout-design or to its use by or for the government without the authorisation of

the right holder, instead of the provisions of the IPIC Treaty on compulsory licensing

(Article 37.2).

Protection of undisclosed information

3.43 The TRIPS Agreement requires undisclosed information (ie trade secrets or

know-how) to benefit from protection. According to Article 39.2, the protection must

apply to information that is secret, which has commercial value because it is secret

and that has been subject to reasonable steps to keep it secret. The Agreement does

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not require undisclosed information to be treated as a form of property, but it does

require that a person lawfully in control of such information must have the

possibility of preventing it from being disclosed to, acquired by, or used by others

without his or her consent in a manner contrary to honest commercial practices.

“Manner contrary to honest commercial practices” includes breach of contract,

breach of confidence and inducement to breach, as well as the acquisition of

undisclosed information by third parties who knew, or were grossly negligent in

failing to know, that such practices were involved in the acquisition. The Agreement

also contains provisions on undisclosed test data and other data whose submission is

required by governments as a condition of approving the marketing of

pharmaceutical or agricultural chemical products which use new chemical entities.

In such a situation the member government concerned must protect the data against

unfair commercial use. In addition, members must protect such data against

disclosure, except where necessary to protect the public, or unless steps are taken to

ensure that the data are protected against unfair commercial use.

Copyright

3.44 Control of anti-competitive practices in contractual licences: Article 40 of the

TRIPS Agreement recognises that some licensing practices or conditions pertaining

to intellectual property rights which restrain competition may have adverse effects

on trade and may impede the transfer and dissemination of technology (paragraph

1). Member countries may adopt, consistently with the other provisions of the

Agreement, appropriate measures to prevent or control practices in the licensing of

intellectual property rights which are abusive and anti-competitive (paragraph 2).

The Agreement provides for a mechanism whereby a country seeking to take action

against such practices involving the companies of another member country can enter

into consultations with that other member and exchange publicly available non-

confidential information of relevance to the matter in question and of other

information available to that member, subject to domestic law and to the conclusion

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of mutually satisfactory agreements concerning the safeguarding of its

confidentiality by the requesting member (paragraph 3). Similarly, a country whose

companies are subject to such action in another member can enter into consultations

with that member (paragraph 4).

Chapter summary

3.45 This chapter provided an overview of the international standards and trade-

related aspects of the protection of intellectual property rights, with particular

regard to the digital media environment. The chapter focused on the international

harmonisation and historical evolution of the legal principles developed in the Berne

Convention for the Protection of Literary and Artistic Rights, as governed by the

WIPO and more recently in the WTO TRIPS Agreement.

Appendix: Workshop activities

This section includes general discussion points that are preliminary to a legal

problem-solving exercise based on a case note related to select WTO-TRIPS disputes.

Legal problem-solving explained

Legal problem-solving explained

Legal problem-solving12 (LPS) is:

▪ the analysis of a set of facts which trigger one or more legal issues; and

12Adapted from Michelle Sanson and Thalia Anthony, Connecting with Law (Oxford University Press,
3rd ed, 2014).

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 ▪ the resolution of the issues, through the analysis and application of the relevant

law to the particular facts presented.

LPS models – MIRAT

▪ There are a number of LPS models all reflecting the five steps.

▪ We are going to use the MIRAT approach which applies to each issue raised in a

legal problem, including:

1. Material fact;

2. Issues of law and policy;

3. Rule;

4. Arguments/application;

5. Tentative conclusion.

MIRAT – Questions to determine the material facts

As applicable to each research problem:

▪ WHAT happened, and what is the desired outcome?

▪ WHO was responsible for the event, and to whom did it happen?

▪ WHEN did the event happen?

▪ WHERE did the event happen?

▪ WHY did the event happen?

▪ HOW did the event happen?

MIRAT – Legal issues

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 ▪ Need not be overly specific at this stage.

▪ The legal issues should be stated in the form of a question.

▪ It is often useful to approach the framing of the issues in terms of possible

rights and liabilities.

The MIRAT process – Rule

The rules (also called authoritative law) may include:

▪ precedent (statute or case law);

▪ legal principle; and

▪ policy.

The MIRAT process – From arguments to applied conclusions

Effective legal reasoning is key to:

▪ apply the law to the facts of the matter;

▪ examine the issues;

▪ find out the arguments and counter-arguments; and

▪ provide a conclusion.

Discussion points

1. Alongside the development of new digital technologies, traditional

creative industries (movie, recording and publishing) have achieved a

global marketplace, therefore facing the issues of a new business

environment of intense global exchange. How does the international

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 expansion of intellectual property law reflect the threats and

opportunities of creative expression in a digitised world?

2. The WTO claims that the Agreement on Trade-Related Aspects of

Intellectual Property Rights (TRIPS) promotes effective and adequate

protection of intellectual property rights, while reducing distortions

and impediments to international trade. WTO detractors say that the

TRIPS framework expressed in the link of intellectual property rights

with international trade is altering the pre-existing balance between

cultural and commercial interests in knowledge and, substantially, the

power of authors to control their works against publishers who

commercialise them and a public that receives, experiences and reuses

them. How is the TRIPS Agreement likely to globally affect the arts,

innovation, creativity and cultural heritage in the long term?

3. Does the greater ease of copying and distributing information require

more or less stringent intellectual property laws across the borders? Or

is there a better way beyond international trade law for the creative

and information technology industries to be commercially viable in the

globalised digital age while still paying artists and innovators their fair

due?

Landmark case note

DS160, United States – Section 110(5) of US Copyright Act

Measure at issue

Section 110 of the US Copyright Act that provides for limitations on exclusive rights

granted to copyright holders for their copyrighted work, in the form of exemptions

for broadcast by non-right holders of certain performances and displays, namely,

“homestyle exemption” (for “dramatic” musical works) and “business exemption”

(works other than “dramatic” musical works).

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Key panel findings

“Minor exceptions” doctrine: Regarding the US argument that limitations on

exclusive rights in the US Copyright Act are justified under TRIPS Article 13, as

Article 13 “clarifies and articulates the ‘minor exceptions’ doctrine”, the Panel

concluded as an initial matter: (i) that there is a “minor exceptions” doctrine that

applies to Berne Convention Article 11 bis and Article 13; and (ii) that the doctrine

has been incorporated into the TRIPS Agreement.

TRIPS Article 13 (limitations on exclusive copyrights): The Panel clarified three

criteria that parties have to cumulatively meet to make limitations or exceptions to

exclusive rights under Article 13: the limitations or exceptions (i) are confined to

certain special cases; (ii) do not conflict with a normal exploitation of the work; and

(iii) do not unreasonably prejudice the legitimate interests of the right holder. Based

on these criteria, the Panel found as follows:

“Homestyle exemption”: The Panel found that the homestyle exemption met the

requirements of Article 13, and, thus, was consistent with Berne Convention

Article 11 bis (1)(iii) and Article 11(1)(ii) as incorporated into the TRIPS Agreement

(Article 9.1): (i) the exemption was confined to “certain special cases” as it was well-

defined and limited in its scope and reach (13-18 per cent of establishments covered);

(ii) the exemption did not conflict with a normal exploitation of the work, as there

was little or no direct licensing by individual right holders for “dramatic” musical

works (ie the only type of material covered by the homestyle exemption); and (iii)

the exemption did not cause unreasonable prejudice to the legitimate interests of the

right holders in light of its narrow scope and there was no evidence showing that the

right holders, if given opportunities, would exercise their licensing rights.

“Business exemption”: The Panel found that the “business exemption” did not meet

the requirements of Article 13: (i) the exemption did not qualify as a “certain special

case” under Article 13, as its scope in respect of potential users covered “restaurants”

(70 per cent of eating and drinking establishments and 45 per cent of retail

30
establishments), which is one of the main types of establishments intended to be

covered by Article 11 bis (1)(iii); (ii) the exemption “conflicts with a normal

exploitation of the work” as the exemption deprived the right holders of musical

works of compensation, as appropriate, for the use of their work from broadcasts of

radio and television; and (iii) in light of statistics demonstrating that 45 to 73 per cent

of the relevant establishments fell within the business exemption, the US failed to

show that the business exemption did not unreasonably prejudice the legitimate

interests of the right holder. Thus, the business exemption was found inconsistent

with Berne Convention Article 11 bis (1)(iii) and 11(1)(ii).

Other significant cases

You can apply the above legal problem-solving exercise to the following cases. They

are particularly significant because of their implications for ongoing disputes in the

multilateral trading system.

• DS50 / DS79, India – Patents (US / EC): India – Patent Protection for

Pharmaceutical and Agricultural Chemical Products.

• DS114, Canada – Pharmaceutical Patents: Canada – Patent Protection of

Pharmaceutical Products.

• DS170, Canada – Patent Term: Canada – Term of Patent Protection.

• DS174 / DS290, EC – Trademarks and Geographical Indications: European

Communities – Protection of Trademarks and Geographical Indications for

Agricultural Products and Foodstuffs.

• DS176, US – Section 211 Appropriations Act: United States – Section 211

Omnibus Appropriations Act of 1998.

• DS362, China – Intellectual Property Rights: China – Measures Affecting the

Protection and Enforcement of Intellectual Property Rights.

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Practice questions

Your task is to research all the information and documentation on the selected case

and use relevant material to answer the following five questions:

Question 1: Material facts

What are the material facts of the dispute? Describe the case background in clear and

succinct business language.

Question 2: Issues of law and policy

What are the issues of law and policy involved in the dispute? Identify the key legal

questions that the complainant countries have used to frame their potential rights

against the alleged liabilities of the respondent country.

Question 3: Rules

What are the rules that govern the legal issues of the dispute? Investigate the key

statutes, precedents, legal principles and policies that were used to answer the legal

questions of the disputing countries.

Question 4: Arguments

What are the arguments that applied the rules to the facts and issues of the dispute?

Explain the key arguments of the complaining countries in support to their claims

and the counter-arguments of the responding country, as well as the final

determinations of the judging panel.

Question 5: Tentative conclusions

What are your tentative conclusions in relation to the dispute? Critically discuss

whether you agree or not with the final determination, and what in your opinion are

the long‐term implications of the outcome of this dispute for the international

trading system.

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